General Banking

General banking department is the heart of all banking activities. This is the busiest and
important department of a branch, because funds are mobilized, cash transactions are made;
clearing remittance and accounting activities are done here. Since bank is confined to provide the
services everyday, general banking is also known as ‘Retail banking’. In AB Bank LTD, the
following departments are under general banking section:

 Account Opening Section

 Cash Section
 Remittance Section
 Clearing Section
 Collection Section
 Pay order

Account Opening Section

Different Types of Accounts

Account opening is the gateway for client to enter into business with bank. It is the foundation of
banker customer relationship. This is one of the most important sections of a branch, because by
opening accounts bank mobilizes funds for investment. Various rules and regulations are
maintained and various documents are taken while opening an account. A customer can open
different types of accounts through this department, Such as:

 Current Deposit.
 Savings Account.
 Short Term Deposit (STD).
 Fixed Deposit Receipt (FDR/TDR).
 Monthly Savings Deposit Account.
 Monthly Income Deposit Account.
 Any Other type(s) authorized from time to time.

Current Account

Current account is purely a demand deposit account. There is no restriction on withdrawing

money from the account. It is basically justified when funds are to be collected and money is to
be paid at frequent interval. Some Important Points are as follows-

 Minimum opening deposit of TK.10007-is required.

 There is no withdrawal limit
 No interest is given upon the deposited money
 Minimum Tk. 1000 balance must always maintain all the time
Savings Account

This deposit is primarily for small-scale savers. Hence, there is a restriction on withdrawals in a
month. Heavy withdrawals are permitted only against prior notice. Some Important Points are as
follows-

 Minimum opening deposit of ik.5000 is required;

 Minimum Tk 1000 balance must always maintain all the time;
 Withdrawal amount should not be more than l/4th of the total balance at a time and limit
twice in a month.
 If withdrawal amount exceed l/4th of the total balance at a time no interest is given upon
the deposited money for that month.

Short Term Deposit (STD)

Normally various big companies, organizations, Government Departments keep money in STD
account. Frequent withdrawal is discouraged and requires prior notice. The deposit should be
kept for at least seven days to get interest. The interest offered for STD is less man mat of
savings deposit Interest is calculated based on daily minimum product and paid two times in a
year. Interest rate is 6.00%.

Fixes Deposit Receipt (FDR/TPR)

Fixed deposit is a deposit scheme for the customers. The time limit is given in fixed deposit
receipt. Depositors have to withdraw the interest after maturity date. If the depositors intend to
withdraw the interest earning before expiration of the maturity date the bank is not bound to pay
the interest.

Interest Rate of FDR

FDR (Tenure 1 month): 50,00,000 & above 8,00%

FDR (Tenure 3 months): 9.50%

Up to 50,00,000 Above 50,00,000 10.00%

FDR (Tenure 6 months): 9.00%

Up to 50,00,000 Above 50,00,000 9.50%

FDR (Tenure 1 year): 8.50%

Up to 50,00,000 9.00%
50,00,001 to 1,00,00,000 Above 1,00,00,000 10.00%
FDR (Tenure 2 years): 8.00%

Table: Interest Rates of FDR

 OPENING OF FIXED DEPOSIT ACCOUNT

The depositor has to fill an application form where he mentions the amount of deposit, the period
for which deposit is to be made and the name in which the fixed deposit receipt is to be issued In
case of a deposit in Joint name, AB Bank also takes the intentions regarding payment of money
maturity of the deposit The banker also takes the institution regarding payment of money on
maturity of the deposit.

 PAYMENT OF INTEREST

It is usually paid on maturity of the fixed deposit. AB Bank calculates interest at each maturity
date and provision is made on that “Miscellaneous creditor expenditure payable accounts” is
debited for the accrued interest.

 ENCASHMENT OF FDR

In case of premature FDRAB Bank is not bound to accept surrender of the deposit before its
maturity date. In order to deter such a tendency the interest on such a fixed deposit is made, cut a
certain percentage less than the agreed rate. Normally saving bank interest is during the
encashment of the instrument after maturity, the instrument have to be surrendered, the excise
duty and income tax (10%) is deducted from the total interest earned during the time of deposit.

 LOSS OF FDR

In case of a loss FDR, the customer is asked to record a GD (General Diary) in the nearest Police
Station. After that the customer has to furnish an Indemnity Bond to AB Bank, a duplicate FDR
is then issued to the customer by the bank.

 RENEWAL OF FDR

In AB Bank, the instrument is automatically renewed within seven days after the date of its
maturity if the customer does not come to en-cash the FDR. The period for renewal is
determined as the previous one.

Monthly Savings deposit Account (MSDS)

MONTHLY SAVING DEPOSIT SHCHEME is a liability product where existing and

prospective customers can open an account in his/her name r with an amount of tk.500/- or it’s
multiple. The client shall have to agree to deposit similar amount o9n monthly basis for tenure of
5 or 10 years and shall be entitled to receive a fixed amount after completion of the respective as
per the terms agreed upon. The product will be designed by H.O. from time to time.

Monthly Income Deposit Account

MONTHLY INCOME DEPOSIT ACCOUNT is a liability product where the existing customer
as well as the prospective customer can create Term Deposit in his/her name with a principal
amount of tk.100000/- or its multiple for a tenure of three or five years and shall be entitled to
receive a fixed income on monthly basis as per the terms and conditions of the product.

The principal amount, tenure and the monthly fixed income to be received by the client
(excluding levy, income tax etc. imposed by the government from time to time) will be designed
by the H. O time to time.

Deposit Double Scheme Account

“Double your Deposit” scheme allows a customer to double his/her deposit in six years at a
market competitive rate. The product offers the flexibility of premature encashment at a
predetermined value as well as the convenience of borrowing against amount, details of which
are given below:

Product characteristics

 Deposit amount will be double in six years.

 Effective rate of interest 12.25% with annual compounding.
 Ensures substantial return on customer’s deposit.
 Create long-term core deposit base for the bank.
 Deposit will be treated as fixed deposit with option of premature encashment
 Loan 80% of deposit amount.
 Opportunity to grow secured loan portfolio.
 Applicable tax on interest and other government charges will be borne by the depositor
(the amount will be deducted from the final payment to the customer).
 Minimum deposit amount BDT. 50000.
 Maximum deposit amount BDT. 5000000.
 KYC requirements: As applicable.

The product allows the flexibility of premature encashment with predetermined rates, which is a
unique feature in that no other bank offers this flexibility.
Account Opening Procedure

The account should be properly introduced by Any one of the following:

 An existing Current Account holder of the Bank.

Step 1  Officials of the Bank not below the rank of an Assistant officer.
 A respectable person of the locality well known to the Manager/Sub-
Manager of the Branch concerned.

Receiving filled up application in bank’s prescribed form mentioning what

Step 2
type of account is desired to be opened
 The form is filled up by the applicant himself / herself
 Two copies of passport size photographs from individual are taken, in
case of firms photographs of all partners are taken
Step 3  Applicants must submit required documents
 Application must sign specimen signature sheet and give mandate
Introducer’s signature and accounts number – verified by legal officer

Step 4 Authorized Officer accepts the application

Step 5 Minimum Balance is deposited, only cash is accepted.
Step 6 Account is opened and a Cheques book and pay-in-slip book is given

Table: Account Opening Procedure

Documents Required for Opening Account

Individual/Joint Account

1. Introduction of the account

2. Two photographs of the signatories duly attested by the introducer.
3. Identity (copy of passport / Employer s certificate/A certificate issued by ward
commissioner or Chairman of any respectable persons who is acceptable to the bank
regarding identification & Nationality of the person concerned).
4. Joint Declaration Form (For joint a/c only)
5. Trade License
6. Tin Number (if possible).
7. Employee’s history.
8. A transaction profile

Proprietorship account

1. Introduction of the account.

2. Two photographs of the signatories duly attested by the introducer.
 3. Valid copy of Trade License.
4. Rubber stamp.
5. TIN number (if possible).
6. Identity (Copy of passport/ Employer’s certificate/ a certificate issued by ward
commissioner or Chairman of any respectable persons who is acceptable to the bank
regarding identification & Nationality of the person concerned).
7. Trade License

Limited company

1. Introduction of the account

2. Two photographs of the signatories duly attested by the Introducer.
3. Valid copy of Trade License.
4. Board resolution of opening A/C duly certified by the Chairman/Managing Director.
5. Certificate of Incorporation.
6. Article of Association
7. Memorandum of Association.
8. All information Stated in individuals A/c
9. Trade License
10. Certificate of Commencement (In case of Public limited company).
11. List of directors along with designation & specimen signature.
12. Rubber Stamp (Seal with designation of each person)
13. Certificate of registration (hi case of Insurance Company – Obtained from department of
Insurance from the Peoples Republic of BD).

Club / Societies Account

1. Introduction of the account

2. Two photographs of the Signatories duly attested by the introducer.
3. Bio data of office bears
4. Bye laws or constitution
5. Board Resolution for Opening A/C duly certified by President’ Secretary.
6. List of Existing Managing Committee.
7. Registration (if any).
8. Rubber Stamp.
9. Permission letter from Bureau of N.G.O. (In case of N.G.O, A/C).
10. All information Stated in individuals A/c

Closing of an Account
  The closing of an account may happen,
 If the customer is desirous to close the account
 If the AB Bank finds that the account is inoperative for a long duration.
 If the court of AB Bank issues garnishee order.

A customer may close his/her account any time by submitting an application to the branch. The
customer should be asked to draw the final check for the amount standing to the credit of his/her
account less the amount of closing another incidental charge and surrender the unused check
leaves. The account should be debited for the account closing charge etc. and the authorized
officer of the bank should destroy unused check. In case of joint account the application for
closing the account should be signed by the joint account holder.

Issue of Duplicate Cheque Book

Cheque Book in lieu of lost one should be issued only when the account holder (s) personally
approaches the bank with an application/ letter of Indemnity in the prescribed pro-forma agree to
indemnify the bank branch for the lost cheque book. Fresh cheque book in the lieu of lost one
issued after verification of the signature of the account holder (s) from the specimen signature
card and only with prior approval of Manager/ second manager of the branch Cheque series
number of the new cheque book is recorded in computer ledger as usual.

Cash Section

All sorts of transaction considering cash are taken in to care in the cash department. Cash is
deposited in the name Of concern in the Bank and disbursed to the client by this department. The
functions of a cash department are described below:

1. Cash payment is made only against cheque.

2. This is the unique function of the banking system which is
CASH
known as “Payment On Demand”
PAYMENT
3. It makes payments only against its printed valid cheque.

1. It receives deposits from the depositors in form of cash.

CASH 2. So it is the “Mobilization Unit of the Banking System”
RECEIPT 3. It collects money only its receipts forms.

Table: Functions of Cash Department

Remittance Section

REMITTANCE
Remittance is another significant part of the general Banking. The bank receives and transfers
various types of bills through the remittance within the country. The bank charges commission
on the basis of bill amount.

Telegraph transfer, mail transfer, traveler’s cheque, and drafts and cheque can do remittance.
There are two steps of remittance:

 Inland Remittance.
 Foreign Remittance.

INLAND REMITTANCE

When one bank sends these IT, M.T, T.C or cheque to another bank then it will be chatted as
inland remittance. It is done within the country from one bank to another.

FOREIGN REMITTANCE

When a bank got this IT, M.T, T.C and cheque from outside bank, which is not situated in the
home country than it, will be called foreign remittance. Using these methods also has done it.

TYPES OF REMITTANCE

 Between bank and non-banks customers

 Between banks in the same country
 Between banks in the different country
 Between banks and central banking the same country

Clearing Section

CLEARING

According to the article 37(2) of Bangladesh Bank Order 1972, the banks, which are the member
of the clearinghouse, are earned as Scheduled Banks. The scheduled banks clear the cheque
drawn upon one another through clearinghouse. This is an arrangement by the central bank
where every day the representative of the member banks gamers to clear the cheque. Banks for
credit of the proceeds to the customer’s account accept cheque and other similar instruments.
The bank receives many such instruments during the day from account holders. Many of these
instruments are drawn payable at other banks. If they were to be presented at the drawer banks to
collect the proceeds it would be necessary to employ many messengers for the purpose. Similarly
there would be many cheque draft on this the messengers or other banks would present bank and
then at the counter. The whole process of collection and payment would involve considerable
labor, delay, risk and expenditure. All the labor, risk, delay and expenditure are substantially
reduced by the representative of all the banks meeting at a specific time, for exchanging the
instruments and arriving at the net position regarding receipt or payment. The place where the
banks meet and settle their dues is called the Clearinghouse. The clearinghouse sits for two times
a working day.

REASON FOR DISHONORED CHEQUE

Following are the general reasons to dishonor cheque in the process of clearing by the bank of
clearing:

 Refer to drawer.
 Not arranged tor.
 Balance insufficient.
 Effects not cleared may be presented again.
 Exceed arrangements.
 Full cover not received.
 Payment stopped by drawer.
 Payee’s endorsement irregular/illegible/ required
 Payee’s endorsement irregular, require banks confirmation.
 Drawer’s signature differs/ required.
 Alterations in date/ figures words require drawer’s full signature.
 Cheque is post dated/out of date mutilated.
 Amount in words and figure differs.
 Crossed cheque must be presented through a bank.
 Clearing stamp required/ requires cancellation.
 Addition to Bank’s discharge should be authenticated.
 Cheque crossed “Account payee only” (18) Collecting discharge irregular/ required.

TYPES OF CLEARING

1. Outward Clearing: When the Branches of a Bank receive cheques from its customers
drawn on the other Banks within the local clearing zone for collection through Clearing
House, it is Outward Clearing.

2. Inward Clearing: When the Banks receive cheque drawn on them from other Banks in
the Clearing House, it is Inward Clearing.

Types of clearing house:

There are two type of clearing house:

1. Normal Clearing House

2. Same Day Clearing House
Normal clearing house

a) 1st house: 1st house normally stands at 10 a.m. to 11 a.m

b) 2nd house: 2nd house normally stands after 3 p.m. and it is known as return house.

Same day clearing house

a) 1st house: 1st house normally stands at 11 a.m. to 12 p.m

b) 2nd house: 2nd house normally stands after 2 p.m. and it is known as return house.

Who will deposit cheque for Clearing: Only the regular customers i.e. who have Savings,
Current, STD & Loan Account in the bank can deposit cheque for collection of fund through
clearing house.

Precaution at the time of cheque receiving for Clearing, Collection of LBC, OBC & Transfer:

1. Name of the account holder same in the cheque & deposit slip.
2. Amount in The cheque & deposit slip must be same in words & in figure
3. Date in the cheque may be on or before (but not more than six months back) clearing
house date.
4. Bank & Branch name of the cheque, its number & date in the Deposit slip.
5. Cheque must be signed
6. Signature for confirmation of date, amount in words / in figure Cutting
7. Multilatitation of cheque.
8. Cheque should be crossed (not for bearer cheque).
9. Account number is in the deposit sleep must be clear.
10. Depositor’s signature in the deposit sleep.

RETURN HOUSE

Return House means 2nd house where the representatives of the Bank meet after 3 p.m. to receive
and deliver dishonored house which placed in the 1st Clearing House.

Pay Order Section

PAY ORDER

A pay order is a draft issued by one another or on its branch. The purchase of a draft makes to
the seller in local currency at the domestic center while the paying after presentation of the draft
by the beneficiary pays the beneficiary. There is also risk of loss of the draft in transit
ISSUING OF A PAY ORDER

The steps of issuing a Pat Order to be followed by client and the bank:

 The applicants have to fill up the relevant part of the prescribed application from duly
subtitled and give it to the officer of the remittance department
 The officer fills up the commission and VAT part meant for the bank’s use and requests
the applicant to deposit the amount by cash/ cheque to the cash section.
 The cash department completes their formalities and then returns back the form to the
remittance department.
 After receiving the form the remittance department prepares the Pay Order facing all the
information along with the amount in three parts duly crossed, “A/C Payee77 in the main
part and also give entry in the Pay Order issue register.

PAYMENT OF PAY ORDER

As the pay order is crossed A/C Payee, the same are presented to the issuing branch for payment
either through clearing, or for credit to the client’s account. Pay orders when presented for
payment are proceed in the remittance department. On making payment, the relative entry in the
pay order register is marked of by entering the data of payment in the pay order register duly
authenticated. The paid instruments treated as debit instrument

REFUND OF PAY ORDER

The following procedures are followed for refund of pay order by cancellation:

 The purchaser should submit a written request for cancellation of Pay order attaching
therewith the original pay Order.
 The signature of the purchaser verified from the original application form on record
 Manager second-manager’s prior permission is to be obtained before refunding the
amount on cancellation.
 Prescribed cancellation charge is recovered from the applicant and only the amount of the
draft less cancellation charge is refunded Commission postage etc. Charges recovered for
issuing the Pay order will not refunded ticket.

The DD should be affixed with a stamp “CANCELLED” under proper authentication and the
authorized officers signatures on that are cancelled with RED INK but in no cases should be
torn. The cancelled DD then kept with the relevant ticket.

SWOT analysis

As an internee, I got the opportunity to observe the performance of AB Bank Limited, their
competitive advantage and success over the banking industry. Based on my observation,
experience and knowledge, I tried to make company analysis of AB Bank Limited. For the
purpose, I used two effective tools of company analysis- SWOT Analysis and Competitive
Forces- Porter’s 5 Forces Model. This tool will elaborate the strength, opportunity of ABBL as
well as its threats and competitive factors in the banking industry. Before analyzing, a brief
description of these two tools is given here under.

SWOT Analysis

The acronym for SWOT stands for Strength, Weakness, opportunity, and Threat. The SWOT
analysis comprises of the Organization’s internal strength and weakness and external
opportunities and threats. SWOT analysis gives an organization an insight of what they can do in
future and how they can compete with their existing competitors. This tool is very important to
identify the current position of organization relative to others, who are playing in the same field
and also used in the strategic analysis of the organization.

Strengths of ABBL

The strengths of the company are the most important building blocks required for growth to take
place. AB Bank is a company that has much strength in the industry. The followings are the few
of the most relevant strengths that AB Bank has at the present time.

Accountable Corporate Governance

Good Corporate Governance is an issue of vital importance to the Board and Management of AB
Bank. The Board of Directors, as the apex level of authority, is responsible and accountable for
the overall direction and is ultimately answerable to regulatory authorities and shareholders for
the activities, strategies and performance of the company.

AB Bank board has a formal schedule of matters especially reserved for its decision including
corporate strategy, approval of budgets and balance sheet, annual financial results, Director’s
appointment, proposal for dividend, approval of major corporate transactions and credit
proposals beyond the delegated business power of the management.

Experienced Senior Management

The senior management of the bank is responsible for promoting the highest level of business
ethics and integrity. Their aim is to create and foster a culture throughout the bank that
emphasizes and demonstrates the importance of maintaining high business ethics and close
relationship with customers.

Qualify Customer service

Customers are the focal point of all the banks activities. AB Bank is committed to its customers
for excellent, innovative and speedy solutions across all customer segments. The bank provides a
full range of banking services to small and medium size companies and also to private
individuals and entrepreneurs. They have expertise corporate banking, retail banking and trade
finance.
Compensation Package

AB Bank maintains an equal opportunity in recruitment, training and promotion of all employees
regardless of gender or ethnic origin. The bank tries to pay all its employees the best
compensation package. Accordingly, AB Bank’s salary structure is revised upward on a regular
basis. The bank also keeps in employees informed about the progress of the business and their
part in it for their constant commitment to the bank. They also encourage the development of the
employee involvement in the bank through formal and informal meetings.

AB Bank Shares

Shares of AB Bank are one of the most actively traded stocks on the Dhaka Stock Exchange
(DSE) and Chittagong Stock Exchange (CSE). The continual improvement in the bank’s
underlying profitability is the reason for trust and confidence of investors on the bank.

Social Welfare

AB Bank has fully commitment towards serving the communities in which it operates. The bank
believes that healthy economy and sound banking go together. A chunk of the bank’s annual
profit is being given to the AB Bank Foundation for social welfare. The main objective of the
foundation was to invest part of the bank’s profit in poverty alleviation and community welfare.

Online Banking Services

AB Bank is among the few banks in Bangladesh, which provides the online banking services to
its customers. By using the modern banking services, AB Bank customer can withdraw or
deposit an amount of cash under the AB Bank account no matter in which branch the actual
account exist. This service gives its customer huge flexibility. More and more- urban customers
are becoming attracted to this service day by day.

Training and Development

AB Bank has a personnel-training society with good resources. They give regular training to the
officer of both middle and lower levels. Again if there is any strategy or technology change,
there will be special training program arranged based on individual needs.

Weaknesses of ABBL

The fault of an organization is the most important internal problems that might hamper the
growth rate to take place in a company. Though AB Bank is a company that has many strengths
but it also as well has some weaknesses of its own. The following are a few of the most common
weaknesses that AB Bank has at the present time.

High emphasize on fixed deposits

AB Bank gives high emphasize on fixed deposits every year, which means that they always end
up paying high interest expense for their deposit mix. Certainly, this will decrease their dealing
spread and keeps them always in pressure. So, their cost of goods sold is very high which is not
very good for any company in this competitive market.

No feedback from bottom level employees

The bottom-level employees and even the mid-level managers at AB Bank don’t take part in the
decision-making process. So the information flow is mostly one way. Though AB Bank has
some unofficial way to collect information from the bottom level employees, but it is not
effective at all.

AB Bank does not promote their brand or products on a regular basis. They seem to be over
confident over their company’s publicity. They sometimes see it as an extra expenditure. They
also don’t do much electronic media advertising. On the other hand competitor’s like- Dhaka
Bank, Dutch Bangla Bank, AB bank, Jamuna Bank and others do the opposite frequently come
up with creative adds for their banks. This is a big weakness for AB Bank, which may prove to
be very big mistake in the future. To company should concentrate more on its promotional
activities.

Immense number of employees

AB Bank currently has quite a big number of employees compared to its capabilities. This
decreases the employee’s individual efficiency as well as effectiveness, hi addition to that, a few
of the employees are not too sound and loyal as they are supposed to be. There is a tendency that
middle level managers want to avoid their responsibilities and want it to be done by others.

Agency Problem

The front desk employees are often found not to be too keen on taking care of their customers.
Though they have a long employee line in every branch, their loyalty to the company and their
ethics level are not very satisfactory. Most of the employees always think about their own
interest, which proves that agency problem is there. Some of them create unofficial groups
through which they solve each other’s problem and support each other to achieve their personal
goals, not too much concern about their personal interest.

Opportunities of ABBL

An organization’s opportunities are positive external environmental factors. An organization

should explore all possible opportunities available to it. These opportunities are intended to
improve the organization. By making improvements, the organization should be able to become
more competitive in the market the following are opportunities available to AB Bank in order for
it to become more aggressive.
Using their Good market image

AB Bank has quite a strong market image. Local people know AB Bank as a center of trust and
professional where local expertise use to serve. If they expand their business and utilize this
strength as more diversified business opportunities, they can create stronger image in the
country.

Mobile telephone bill collection

As telecommunication industry is expanding with an alarming rate recently, so AB Bank could

maintain good business relation with those telecommunication companies. They can look
forward to make some mutual agreement of responsibility of bill collections. This will give them
more liquid money, which will boost up their cash requirement.

Premium Service Banking

AB Bank can improve its customer service by tailoring the individual business needs. This
service enhancement collectively will allow a customer to manage their business finances and
cash resources more efficiently and conveniently. The services like –

 Courier
 Auto Fax Report
 Hotline (Your single point of contract)
 Inward remittance information services
 Express payments
 Foreign Exchange and Money market information

Expanding the business area

AB Bank could also boost the number of branches to take advantage of increase demand among
the existing customer with better services and thus generate more net profit. In recent years the
bank has opened al lot of new branches, which is a good sign of improvement and also a
commendable strategy.

Globalize the Business

As the bank has a strong business brand image, it holds a great opportunities to globalize their
business more extensively. They can arrange more foreign correspondent banks or by
establishing .more foreign branches as the foreign branches have better and big business
opportunities.

Upgrading the Online banking service

AB Bank’s online banking service is not up to the standard of the service the foreign banks
provide. They usually serve the sender based on the historical data, not real time basis. So, the
bank should take initiative to add some additional services for their loyal clients. This will give
them better opportunity to acquire more market share.

Expanding its network outside Dhaka and Chittagong

The bank has not been effective in increasing the number of branches outside Dhaka and
Chittagong. Most of AB Bank’s branches are targeted at the city people only; they have not
concentrated of the rural people too much. That’s why the company could not capture a large
portion of the market as well as market store. The authority of the bank needs to take this into
consideration not only for them but also for the poor rural people. After all there is question of
ethics come in every steps of business.

Government’s changing attitude towards Private Sector Development

The government is favoring private sector investment, which is good for the AB Bank, as they
can now expand their business with the favoring rules and regulations of Government of
Bangladesh. This kind of government support will lessen their problems. As AB Bank is a local
private bank it holds more diversified opportunities to do business on their own interest. They
always can expect feedback from government.

Openings to take market share away from rival firms

The private local commercial banks of Bangladesh are very similar in the way they operate. This
is especially true for the banks in the same strategic group. So if AB Bank somehow manages to
differentiate their financial products and services from the other then there is good chance that it
will gain more market share. If the bank manages to achieve diversified products and wide
banking network there is a scope for market penetration. The bank can serve more customers
groups if they expand their expanding geographic coverage and service segments. Also, AB
Bank can portray itself as different by exploiting emerging new technologies in banking and
improving services like credit card, telephone banking etc.

Threats to ABBL

An organization’s threats are negative external environmental factors. An organization should

explore all possible threats available to it. These threats are intended to diminish the
organization. By making improvements and proper monitoring of the threats, the organization
should be able to turn more competitive in the market The following are threats are available to
AB Bank in order to threaten its existence.

Fierce Competition

As the banking industry of Bangladesh has promising prospects in, AB Bank is facing strong
competition the entrance of new potential competitors. The second-generation banks like- Dhaka
Bank, Dutch Bangla Bank and Southeast Bank are the main competitors for AB Bank. Also
foreign banks operations in Bangladesh are also taking a big portion of market share. These
foreign banks have successfully created better market image than those of local banks in
Bangladesh.

Political Interference and Government Regulations

AB Bank is facing political interference in big loan sanctioning and also there is to some extent
unethical recruitment of employees. Also there is 45% tax rate for all financial institutions,
which is very high and also a real threat for the growth of the company.

Highly Capital Reserve Requirement imposed by the Central Bank

If there is liquid money crisis the market, AB Bank will find it hard to manage its capital reserve
requirement. As Banking Law Act 1991, Bangladesh Bank is regulated the capital requirement
not less than 9%. And if for some reason the bank fails to meet the reserve requirements then the
consequences and sanctions will be severe.

Decreasing banking business area

Nowadays banking businesses are being narrowing down and its services and products are also
diversifying in other sector of the financial market. Few banking services are being done by
insurance companies, leasing firms, house building loan companies and so on. So, banks are now
surviving by doing general banking, which is already threat and can be bigger in future. AB
Bank management should start to think about this issue more closely and have to take necessary
steps.

The Central Bank changing the interest rates

In Bangladesh the Central Bank decides the interest rates. They give a range and within that
range the banks have to maintain the interest rates they offer. So the result is that all the banks
end up having very similar interest rates.

Also it is the Central Government who changes the interest rates. They either increase or
decrease it depending on the economy according to the policies they want to implement. And
whatever changes the Government makes the banks of Bangladesh have to abide by it and the
amount deposits received by banks was significantly reduced as people were now investing in
other non-banking financial institutions and the stock market Also people’s tendency to take
loans increase as the interest charge on loans was also reduced. But in the recent days, due to
pressure from IMF and World Bank the Central Bank is going to increase the interest rates.

It is not up to the banks to decide what interest rate they will offer on the deposits. In fact it is the
Central Government that makes that decision for them whether the banks like it or not. Also if
the Central Government comes up with additional regulations that will mean more costs for the
banks to maintain them.

Unstable political environment of the country

The political environment of Bangladesh is quite unstable and it affects the Industry from
performing efficiently. In Bangladesh where the political environment is absolutely
unpredictable the external forces constantly keep on changing. For instance, a sudden call of
Hartal or strike might end up with the cancellation of the events. Thus, there is an enormous
possibility of incurring a huge loss.

Conclusion

AB Bank Limited is a first generation private commercial bank in the country with commendable
operating performance directed by the mission to provide prompt and efficient service to clients.
It is providing a wide range of commercial banking service. AB Bank has achieved success
among its peer group within a short span of time with its professional and dedicated team of
management having long experience, commendable knowledge and expertise in conversion with
modem banking. With all its resources, the management of the bank firmly believes that the bank
would be able to encounter problem that may arise both at micro and macroeconomic levels. The
management of the bank is maintaining an efficient portfolio in order to have a healthy growth
and retain customer satisfaction. AB Bank is engaged in modem banking. It is expected that AB
Bank by its efficient asset and liability management will not be able to maintain its trend of
growth and thus overcome the threat. Neither AB Bank nor any other commercial bank can
effectively combat risk. However, AB Bank having small and target niche market, is likely to be
less affected by restricted monetary and fiscal policy. The management of the bank is planning to
meet the required capital adequacy within the stipulated time frame. Although AB Bank is yet to
be fully automated, the bank has an adequate modem technology to meet its present requirement
and it is proceeding aggressively to enhance its technology level. Thus it can enhance its
operational procedures and can be able to take the competitive advantage over others in the
industry.

This report is being done on the subject of “General Banking Operations of AB Bank
Limited” .From the survey and observation of the study I try to gain some practical experience
on both general banking system. From the observation of my internship I have gain some
practical knowledge on general banking system as well as some elements of payment solution
system. I think this experience will set me in the advantageous position in future.

Recommendations

Although there are some problems in General Banking system, the system will become
beneficiary for both banks and clients. Bangladesh Bank can overcome such problems by taking
following steps:

 For increasing more funds customer may be offered different types of prizes.
 The account opening department needs skilled staffs for smooth workings.There is totally
a tremendous pressure on him/her. A helping hand should be given for relieving his
pressure to accurate and proper working.
 There is a great demand for Islamic banking and that should be considered. This idea is
also placed by some Islamic minded customers.
 HRD should train their employees with computer knowledge and their human resources
department should arrange training program frequently.
 Their statement should be computerized which is cost effective and safe.
 They should increase promotion campaign and they should participate in social activities
for creating good image in targeted customer mind.
 ABBL should reduce there interest rate on different credit scheme.
 Cleanliness services should be proper and up to date.

 To increase the Return on Assets, the bank needs to increase its non-interest income by
various service charges and non-traditional activities. At the same time non-interest
expenses such as overhead and advertising expenses should be reduced.
 It needs to develop internal source of funds to improve the liquidity;
GLOSSARY

List of Acronyms

Term Meaning

ACE Archive Cheque Envelope – used for archival of onus items by member

banks

Acknowledgem

nt Envelope

The envelope type issued by the BACH BACPS to the presenting bank

acknowledging receipt of an envelope and its processing status.

AE Acknowledgement Envelope

AIA Active image Archive. This is the long-term storage and retrieval

component of the AICS system.

AICS The Active Image Clearing System application used as the core clearing

application for BACH.

AIDPS Active Image Document Processing System

BACH Bangladesh Automated Clearinghouse

BACPS Bangladesh Automated Cheque Processing System

CE Cheque Envelope

Cheque A cheque is a debit or payment instrument. It covers personal

cheques, commercials cheques, money orders, demand drafts, and so

on.

Cheque

Envelope

A cheque Envelope is an electronic file that contains data related to

payment instruments. Forward Cheque Envelopes also contain image

information for the forward payment instruments. Return Envelopes

only contain non-image item data.

Clearing Inter-bank clearing forum where the images and data for items drawn

on paying banks are exchanged on behalf of the collecting banks. The

collecting banks receive credit for the value of the cheques

concerned. Items returned as Unpaid are also exchanged at Clearing.

Collecting

bank

The bank at which an item is deposited and which is generally

responsible for giving value to the customer concerned, provided the

item concerned is not returned as unpaid from the bank on which it

drawn.

CHM The clearinghouse component that performs those tasks, similar to the

participant bank module, required to validate, encrypt and decrypt,

and digitally sign information processed prior to and following

processing by the BACH BACPS.

Cheques Only A cheques-only work source is made up of transactions that comprise

a single cheque and no accompanying physical credit (deposit

voucher)

Reference

33www.AssignmentPoint.com

DIN A DIN is an internal Document Identification Number used to

identify an item. It is A sequence number that generally forms part of

the endorsement printed on each instrument by the item processing

system. The DIN can be used to trace and retrieve the item. A DIN is

unique within a business day.

Forward

Presentment

The presenting of outward clearing items, via BACPS, to their

account-holding banks for payment.

ICE Inward Cheque Envelope – used for inward forward bundles

Inward

clearing

Inward Clearing

The process by which on us items have their information validated and, as

necessary, posted to the in-house accounting system.

Outward

clearing

The deposit transactions received from Bangladesh Bank customers

are processed through Outward clearing, a process that captures the

associated payment data from the documents and transfers it to the

host accounting system (Core Banking System).

The Outward clearing process sorts and bundles transit items that

have to be paid by another bank into Outward Cheque Envelopes for

transfer to the central BACH clearing system via the PBM. On-Us

items are also generally bundled for subsequent technical and

signature validation prior to posting to the CBS.

Paying bank The bank at which the account for an item is held and that is

responsible for withdrawing funds from the account in accordance

with the drawer’s instructions and for paying these to the collecting
bank. (Sometimes also referred to as drawee bank).

Presenting

Bank

A bank that presents batches of items to another bank at clearing. For

items being cleared normally, the presenting bank may also be

referred to as the collecting bank.

Participant

Bank Module

A suite of components installed at participant banks that provides for

the delivery of outward cheque envelopes to the BACH BACPS and

the receipt of inward cheque envelopes from the BACH BACPS. The

PBM also provides for ad hoc enquiries to be issued by the

participant and the presentation of the associated responses.