Internship Report of TAREQ AZIZ

Chapter
One:
Overview of NCC Bank Ltd.
Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 1
1.1
National
Credit
and
Commerce
Bank
limited: Background
National Credit and Commerce Bank Ltd. is as a private bank in Bangladesh. It is facilitating real time online banking connecting all 80 branches nation wide. Like other banks it is also practicing liability & investment management. The National Credit and Commerce bank Ltd. registered under the Companies Act 1913. This bank came into existence as an investment company in the name and style of National Credit Ltd. on 25/11/1985 with its head office at 7-8, Motijheel C/A, Dhaka-1000. The aim of the company was to initiative taken by the members of the Board of directors and with the permission of the central Bank, it was converted in to full fledged private commercial bank in the name and style of National Credit and Commerce Bank Ltd. on 17/05/1993 with paid up capital of Tk. 39.00 crore and authorized capital of Tk.75 crore which opened the way to serve the nation from a broader platform. It carries out all banking activities through branches in Bangladesh. The bank is listed with Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited as a publicly quoted company for its shared. NCCBL has acquired commendable to its reputation customers in by a providing technology sincere based personalized service
environment. The bank has set up a new standard in financing in the Industrial, Trade and Foreign exchange business. Its various deposit &
credit products have also attracted the clients-both corporate and individuals who feel comfort in doing business with the bank.
1.2 Corporate Mission of NCCBL

To mobilize financial resources from within and abroad to contribute to Agriculture's, Industry & Socio-economic development of the country and to play a catalytic role in the formation of capital market.
1.3 Corporate Vision of NCCBL:

To become the Bank of choice in serving the Nation as a progressive and Socially Responsible financial institution by bringing credit & commerce together for profit and sustainable growth.
1.4 Corporate Objective of NCCBL:

To be recognized as the leading financial institution encourages the base of investment and develops the capital market with good profit and sound growth and contributions the formation of national capital. Provide technology based banking services and create value to customers through its products and maintain harmonious banker customer relationship.
1.5 Products & services of NCCBL
1.6 Management hierarchy of NCCBL

Managing Director (MD) Deputy Managing Director (DMD) Senior Executive Vice President (SEVP) Executive Vice President (EVP) Senior Vice President (SVP) Vice President (VP) Senior Assistant Vice President (SAVP) Assistant Vice President (AVP) Senior Principal Officer (SPO) Principal Officer (PO) Senior Officer (SO) Officer (O) Provisional officer (PO) Junior Officer (JO) Assistant officer (AO)
Chapter Two: Major Functional Department of NCCBL
**Major Functional Departments & Works Departments Anderkilla Branch
General Banking
Loan and Advance
Foreign Exchange
Accounts Opening Remittance Clearing
Accounts
Import Export
Ledger & Deposit Cash
Fixed Deposit Receipt (FDR)
2.1General Banking Department:

General banking is the starting point of and main function of all banking operations . it is the department which provides day to day services to the customer. Every day it collects deposits from the customer by allowing broking interest rate , meets there demand for cash by honoring cheques and lend it to the customer against ending interest rate .
2.1.1Account
Opening :
The main task of this department is to open an account for coustomer. There are several kinds of account may open which are given below Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 8
savings account Current account Special savings account
Fixed Deposit account
Account Opening Procedure in a flow chart:
Applicant fills up the relevant application form in the prescribed manner.
Applicant is required to fill up the spaceman signature card
For individual introduction is needed by an account holder
Account is opened
The authorized officer scrutinizes the introduction and examine the documentation submit Issuance of deposit slip and the deposit must be in cash.
After depositing the cash one cheque book is issued
2.1.2 Clearing:
Amount deposited ot withdrawn through Bangladesh banks clearing hours . there are two types of clearing 1.Inward clearing : The process through which amount is debited from this bank and credited to another bank is known as inward clearing. 2.Out ward clearing: The process through which amount credited from another bank to this bank is known as out ward clearing . Internal transfer: The process through money transfer from one account to another account of this bank is known as internal transfer. It indicates that account holder and the payee both must have account in same bank.
2.2 Cash Department:

Cash department is the most sensitive part of bank because this department deals with the cash which is the most liquid assets. Functions of this department: Cash receipts Cash payment
2.3 Remittance Section:

Remittance is the process of transfer of fund one place to another place through banking channels.
Remittance
Local Remittance
Foreign Remittance
2.3.1Local Remittance Local remittance is the process of transfer money one place to another place through bank within the country of a bank.
Mode of Local Remittance
Advice: Advice is an instrument for transferred fund from one branch to another in order to perform its internal activities. This is one kind of order payment. Payment Order (PO): Payment Order is an instrument which makes the order of payment to a certain institution from a particular bank. Demand Draft (DD): This is an instrument through which customers money is remitted to another person/ firm / organization in outside the clearinghouse area from branch of one bank to an outstation branch of the same bank or to a branch of another bank. Telegraphic Transfer (TT): This is a mode of transfer of customers money from a branch of one bank to another branch of the same bank through telegraphic.
2.3.2Foreign remittance Foreign remittance is the process of transfer of money from one country to another country via bank.
2.4 Foreign Exchange Department

What is foreign exchange? Foreign exchange refers to the process or mechanism by which the currency of one country is converted into the currency of another country. The term foreign exchange
a) The means and methods by which the currency of one country is exchange for that another. b) The causes which make such exchanges necessary.
In NCCBL, the Foreign Exchange Department has two sections: A) Import Section. B) Export Section.
2.4.1 Import Section:
Importers make payments for the goods, they buy from abroad. As per Import and Export control Act 1950, no person can indent import or export any goods into Bangladesh except in case of exemption issued by the Government of the peoples republic of Bangladesh.
2.4.2 Export Section: Export trade constitutes an important part for sustaining the long term development prospects of a countrys economy. Export Financing: Export needs finance in the following manner: Pre-shipment finance. Post-shipment finance.
Pre-shipment Finance: The exporters may avail of facilities during pre-shipment stage in the following ways1. Bock to Beck Credit. 2. Packing Credit. . Post shipment finance : Post shipment credit is gives to the exporters by banks after the actual shipment of the goods. The necessity for post shipment credit arises because the exporters who have shipped the goods have to wait for a long time for receiving payment from the overseas buyers; the period of waiting depends on the terms of payment.
. 2.4.3 L/C (Letter of Credit): Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 13
The letter of credit signifies a commitment on behalf of the buyer (importer) by the buyers bank to effect payment of the seller (exporter) subject to fulfillment of certain conditions by the seller. There are a number of parties involved in a L/C and the rights and obligation of the different involved parties will also differ from each other. The involved parties to a L/C are named below: a) Importer/ Buyer. b) Opening/ Issuing Bank. c) Exporter/ Seller/ Beneficiary. d) Advising/ Notifying Bank. e) Confirming Bank. f) Negotiating Bank. g) Paying/ Reimbursing Bank.
Application for Opening L/C: At first an importer will request bankers to open L/C along with the following documents: 1. Indent or pro-forma Invoice. 2. Import Register Certificate (IRC) 3. Taxpayer Identification Number (TIN) 4. Insurance cover note with money receipt. Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 14
5. A bank account.
L/C Application: NCCBL provides a painted form for opening of L/C to the importer. The importer gives the following information in that form: Full name and address of importer. Date and place of expiry of the credit. The mode of transmission of document. Whether the confirmation of the credit is requested by the beneficiary or not. o Whether the partial shipment is allowed or not. o The type of loading. o Brief description of the goods to be imported. o Availability of the credit by sight payment acceptance/ deferred payment. o Sales term (FOB/CIF/C&F). o Account Number. o L/C amount. o Shipping mark. o H.S code number of the goods to be imported. o IRC number. o LCA number. o Insurance Cover Note. o Country of origin. The above information is given along with the following document: o o o o Pro-forma Invoice Four set of IMP form The insurance cover note
Documents: For opening L/C the bank collects the following information: Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 15
Nature of business Required amount of limit Payment terms & condition Offered security Repayment schedule
Letter of Credit Opening Procedure Rules and Regulation: Before Open Letter Credit officer must know the following Rules and Regulations which govern International Finance & Documentary Credit.
Local rules: a) Exchange Control Regulations on Import (Guide Line-chapter-xiv-NV). b) Import policy for the year. c) Import export Act 1950. d) Custom duty, Vat, SRO. e) Rate of exchange and its application. f) List of Agency Arrangement of NCCBL. g) The Importer Exporter.
Supporting Papers to be required to open L/C

1) 2) 3) 4) 5) Valid Import Registration certificate (IRC). IRC renewal chalan copy. Parties Application for Issuance of L/C. Signed L/C application form with requisites stamp. Indent/ Pro-forma Invoice duly signed by the Importer.
6) Insurance cover note. 7) Valid membership certificate from Trade Organization. 8) Income Tax paid certificate (TIN No). 9) L/C Authorized form signed by the Importer. 10) IMP Form duly signed by the Importer. .
Flow Chart for opening of L/C for Importer Following document duly signed L/C application form LCA form IMP form authority to debit account
Documents submitted by the importer indent/ Pro-forma invoice/ insurance cover note etc. Banking examines the liability position of the importer from different departments and whether the item is importable or not.
Credit report of the exporter asked from the negotiation bank
L/C is opened and sent to advising bank through mail or telex
Positive or negative
Original IRC submitted to the bank. TIN certificate Trade license (up to date) copy Membership certificate of chamber of Commerce
Operational Procedure L/C in Export & Import Pro-forma Invoice Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 17
Contract Indenters indent

Importer, L/C opener or applicant.
Exporter or Supplier Beneficiar y
Shipment the goods
Issuing Bank This bank will deal with L/C for the buyer against supplier & through the L/C advising Bank
Negotiating Bank. This bank negotiates with issuing bank in favor of exporter for the bill and payment.
Reimbursement Bank This bank deals with payment in favor of issuing bank.
Advising Bank The bank will deal with the exporter & inform the supplier that a L/C came from the buyer.
Chapter: Three Investment Management
3.1Investment management of NCCBL:

Investment management is the professional management of various securities (shares, bonds and other securities) and assets (e.g., real estate) in order to meet specified investment goals for the benefit of the investors. NCCBLs investment management is conducted by the Treasury department who takes the superior decisions for the investment.
3.2 Investment instruments:

Like other private banks NCCBL has also its own investment instruments Investment instruments can be divided into two groups: 1. Government securities & 2. Others investments. We can elaborately see it in the chart shown below-
3.3 Investment procedure of NCCBL:

NCCBL invests money in two ways- First way is to invest in government securities like Treasury Bills, Prize bonds, Zero Coupon & another way is to invest money by purchasing debenture, shares, gold and lending money in different sectors.
3.3.1 Government Securities:

There are some kinds of government securities Where NCCBL make their investment.
Treasury bills: Treasury bill is the instrument issued by the Bangladesh Bank on behalf of the Govt. It is a short term negotiable instrument used by the government to pay the holder specific amount of money on a specified future date. There are six types of Treasury Bills based on maturity viz. 28 days, 91 days, 182 days, 364 days, 2 years & 5 years. Prize bonds: Prize bond is one of the government securities which is sold & purchased in bank. It has the same of value of Bangladeshi taka. That means 100 Tk. Prize is equivalent to 100 TK. Cash. If anybody carries a 100 Tk. or 50 Tk. or any amount of Prize bond to a bank in any branch of Bangladesh, that branch is bound to give him the same amount of money if he wants. There is a facility of this bond that after each three months draws of prize bonds takes place. The bond which will get prize the bearded will be awarded the prize money.
Zero Coupons: The bond of which has no interest rate/coupon rate. Benefit=Discount =Ownership (common stock)
3.3.2 Other Investments:

As a part of earning income, NCCBL invests their deposits in traditional and conventional methods like Cash credit, Secured over Draft Loans in different sectors: House Building, Transport & Foreign Trade, etc. All these have become very competitive and made management of the company very difficult. Also opportunities have become thereby making benefit ratios marginal.
Debenture: Debenture is a written agreement by which a public limited company takes loan from public/market. If any company fails to collect necessary money buy selling shares, then it sells debentures. Its characteristics can be defined as follows: Debenture holders are the creditors of the company. They can not participate to the activity of the company. They get a certain rate of interest. In debenture the rights are clearly written. Only public limited company can sell debentures.
Share: Joint stock companies divide its capital to some number of pieces at the ratio of same portion. Each of them are called share-Its Characteristics are narrated below: Share holders are the owner of the company.
They can take part in the activity of the company. Liable to bear not only the portion of profit but also lose. They are eligible to vote in the meeting. The rights of share holders are written in the resolution of the company. All kinds of company can sell shares. Credit operation procedure in a flow chart.
Gold: NCCBL makes his investment in gold also. Bank purchase the gold and reserved the gold in the vault.
Cash Credit & Secured Over Draft: In case of sound investment there are 7 principles which are justified strictly; 1. Safety 2. Liquidity 3. Purpose 4. Profitability 5. Security 6. Dispersal/Spread 7. National interest. Credit operation starts from selection of borrower from field level i.e. branch initially and ends with disbursing sanctioned amount after Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 24
proper documentation as per as given authorization of the bank. CIB inquiry forms are usually required for approval of loan amount of Tk. 50 lac & above.CRG is required for the loan. Bangladesh Banks NOC is required for the loan amount including the customers sister concerns loan exposure which carries above 15% of the banks total capital. The bank management can approve the loan limit up to Tk. 25 lac. Approval for loan above Tk. 25 lac requires Executive Committees/ Board of directors approval. Considering all these Banks have formulated some credit schemes based on common needs of targeted areas for dispersal of their opportunities among them. These are known as: Consumer finance, Lease finance, Personal loan, etc. Mainly these have been represented by different banks in different names. In NCCBL these are known as; Continuous Loan: 1. Secured Over Draft Against Financial Obligation[SOD(FO)] 2. Secured over Draft Against Work Order/Real Estate etc.[SOD(G)] 3. Cash Credit (Hypothecation) 4. Cash Credit (Pledge) 5. Export Cash Credit (ECC) Term Loan: 1. Project Loan 2. Transport Loan 3. House Building Loan 4. Lease Financing 5. Loan Under Syndication 6. Short Term Loan-2 Years Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 25
Demand Loan: 1. Loan General 2. Demand Loan Against Ship Breaking 3. Payment Against Documents 4. Loan Against Imported Merchandise 5. Lon Against Trust Receipt 6. Forced Loan 7. Packing Credit 8. Secured Over Draft Against Cash Incentive 9. Foreign Documentary Bills Purchased 10. Local Documentary Bills Purchased 11. Foreign Bill purchased
Loan under SME: 1. Small Business Loan 2. Consumer Finance Scheme 3. Lease Finance 4. Personal Loan 5. House Repairing & Renovation loan 6. Working Capital Loan 7. Festival Business Loan 8. Festival Personal Loan 9. Car Loan Scheme
Agro Credit:
1. Agro-based Industrial Credit 2. Crop Loan Special Credit: 1. Credit Card 2. Earnest Money Financing Scheme 3. NCCBL Housing Loan Scheme 4. Overseas Employment Loan Scheme Loan for Wage Earners: 1. Land Mortgage Loan 2. Special House Building Loan 3. Advance Against Remittance
4. Wage Earners Rehabilitation Loan
Credit operation procedure in a flow chart:
3.4 Policy of the NCCBL for the investment:

As the rule of Central Bank, NCCBL invests in Government Treasury Bill, Government Treasury Bond, Prize Bond and Zero Coupon as well as in other sectors. The main function of the bank may broadly be divided into two categories Borrowing from the public accepting deposits Invest the money for the development of trade, commerce, industry & agriculture.
The bank acts financial intermediaries between savers and investors. The profitability of a bank always depends on the efficient / sound management of fund and exploring the genuine avenues in which its resources are invested to produce the maximum profit. The policy is formulated on the basis of prevailing countries Socio economic condition, political & other related aspects from time to time and as per guideline of central bank. Actually no policy can ever be termed as final due to changing circumstances all around. As a developing country we are endeavoring to match up with the international standard where changes are made to meet the demand and requirement of the time. NCCBL complying the directives of Central Bank as per BRPD circular no. 17 dated 07.10.2003 have formulated own policies indicating the areas of investing which was duly approved by the board of directors. The main features of the policy have focused on the following areas: Trade & Commerce Industry Lease financing
SME Agriculture & Agro based Venture Housing Loan Scheme Real Estate & Civil Construction
Trade & Commerce: This broad category encompasses large business houses dealing with imported consumer items, medium and small imported business houses trading in similar lines and finally, shopkeepers, distributors, whole sellers, retailers and small manufactures scattered throughout the country. While allowing the facilities under the segment of trade & commerce bank shall ensure that mere increase in the volume of business portfolio and relevant income generated from it, is not the prime consideration as it involves payment in costly foreign exchange in case of foreign trade. Therefore trading in non-essential items shall be discouraged for the greater interest of the country. Industries: The domain of industrial financing basically comprises of: Capital financing in the form of term loan Working capital financing Financing of small and cottage industries
The term loan financing for establishment of new industries or for BMRE of existing industries is a specialized banking function. NCCBLs Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 31
policy would be a selective approach to term loan financing to small scale industries and export oriented or import subtitle industries which enjoy high degree of national economic priority. The bank for financing in this sector would prefer syndication with other banks to keep a balanced portfolio. The core of NCCBLs lending activities shall be the working capital financing to large and medium scale industries as well as of small scale of industries, while track record of operational performance of the industries, credit worthiness of the entrepreneur and reasonable security coverage shall form the basis of lending policies. The cases pertaining to working capital financing of newly set up industries will also be considered on careful examination of validity, cash flow prospects and entrepreneurial competence. The working capital financing to industrial undertakings, subject to their conforming to basic norms of financing may be prioritized putting emphasis on the export oriented ventures, competitive import substitution industries and finally on the labor intensity of the industry and industries operating in the command area of the branches. Ready made garment industries and industries having backward linkages with the garment industries and auxiliary goods manufacturing industries are cases in point. The industries dependent on imported raw materials, such as edible oil refining industries, food, chemical and allied industries may6 also be extended patronage, in the form of working capital finance, subject, however to their conforming to the basic norms of NCCBL financing. Likewise the engineering industries like iron and steel foundries, fabrication of ferrous and non-ferrous metal industries, electric goods and electronic goods manufacturing industries may as well as receive similar attention in respect of working capital financing.
Development of small industries and rural industries enjoys a high priority of the government as well as the donor countries. The set of rationale which can arguably sustain such patronage are: These industries promote employment generation. They stimulate more even dispersal and thus promote a greater quality in incomes and opportunity distribution. They draw out latent services, scare resources, especially entrepreneurship.
NCCBL has therefore to set aside some of budgetary allocation to finance small scale industries selectively providing capital finance and adequately lending working capital finance.
Lease financing: NCCBL to keep its contribution to the growth of national GDP, accelerate the total economic development by infusing the fund in productive sector in more efficient and effective way, diversify its portfolio and satisfy the customers need would go for lease finance for: Setting up of small and cottage industries/projects. BMRE of existing projects. Transports(Rural, Marine) Medical equipment/surgical/clinical/lab equipment/X-ray machine e. t. c.
Construction equipment Other fixed assets of other productive and service oriented ventures.
Consumer Financing: NCCBL keeping in mind the economic development and helping the fixed income group in fulfilling their demand to upgrade the standard of living will continue as before consumer finance scheme for: Household appliance Furniture & fixture Air conditioner Fax machine & cellular phone Motor cycle/car Other equipments
SME: A large section of business community of NCCBL consists of small and medium business owners who are conducting their business with their own resources without availing much support from financial institutions. Such businessmen are generally sincere, honest and hardworking but are often short working capital not to mention the
capital finance for expansion. Banks major concentration shall be under this sector following categories: Small Business Loan Festival Small business Financing Scheme Earnest Money Financing Scheme Financing of Service Concerns Financing of Trading Concerns Financing of Manufacturing Concerns
For embarking upon Small Enterprise Financing NCCBL shall develop fully documented product program guideline beforehand within the spirit of the Prudential Regulations for such venture. Such PPG shall incorporate objective/quantitative parameters for the eligibility of the borrower and determining the maximum permissible limit per borrower. The PPG shall be so formulated that NCCBL credit culture remains supported and dictates banks behavior when dealing with customers and managing lending portfolio of such investment. Deviations if any from these guidelines must in all cases shall be with prior approval from competent authority. Since credit policies and procedures can be never sufficiently capture all the complexities of the product. Therefore NCCBL shall however has the right to alter/amend from the prescribed guideline in terms of own policy without compromising the fundamentals of credit principals. Assets the entrepreneurs for integrity and willingness to repay.
Only lend when the entrepreneur has capacity and ability to repay. Only extend credit if bank can sufficiently understand and manage the risk. Use common sense past experience in conjunction with through evaluation and credit analysis.
Not to base decisions solely on consumers reputation accepted practice other lenders risk assessment or the recommendations of others officers.
To be proactive in identifying, managing and communicating credit risk. To be diligent in ensuring that credit exposures and activities comply with the requirement set out in product program.
Entire procedure approving, Documentations and monitoring with regard to the facility shall be similar like any normal financing under the banks policy. Agro based: Agriculture is the mainstay of Bangladesh economy being major contributor to the GDP. Though the sector is being looked after adequacy by the specialized financial institution (BKB)and the larger nationalized commercial banks, NCCBL will be keen to contribute towards the growth of economy in financing the Agrobased firms/industries specially poultry, fishery & hatchery. Financing will also be provided to export oriented Shrimp culture and fish processing industries. House Loan Scheme: Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 36
Recognizing housing problems in urban areas especially Dhaka, Narayangonj, Chittagong and other divisional head quarters are acute. Construction of buildings is not progressing as expected because of scarcity of housing loans. Many people of different professions, who have no capacity to construct/purchase house/flat but have scope to repay the cost of the same from their earnings, provided they are facilitated with the sanction of institutional loan, with a view to, creating financial capability of the prospective clients in purchasing flats/houses and in constructing houses and with the objective of exploring a profitable investment area NCCBL house Loan scheme has been introduced. Where purposes are: To help service holders, self employed persons, businessmen, professionals and also those who have the capability to repay the loan for purchase of flats/houses/construct buildings and thereby improve their quality of life. To contribute to the reduction of acute housing problems of the country. To help the prospective clients get housing loan on easy terms and without any hurdles. To Strengthen the banks lending base To increase profitability of the bank To contribute towards improvement of socio economic condition of the society.
Real Estate & Civil Construction:
In the society a reasonable number of small/big businessmen are related to the real estate and civil construction. Business considering high return, many are inclined to invest with whatever they have. Many have succeeded to reach greater heights as is evident from reasonable number of high profile businessman of the country. However it is also observed that due to extenuating circumstances many have failed. Therefore, the banks policy shall be to carefully weigh any investment in this sector only on selective basis.
Chapter: Four Liability Management

4.1 Liability Management of NCCBL:

Liability management constitutes an important part of a bank's bottom line. Use and management of liabilities, such as customer deposits, by a bank in order to facilitate lending and allow for balanced growth. In NCCBL, managements money accepted from depositors as well as funds secured from other institutions constitutes liability management. It also involves hedging against changes in interest rates and controlling the gap between the maturities of liabilities. What a bank owes, including most notably customer deposits. Bank liabilities are typically listed on the right-hand side of a bank's balance sheet because liabilities are the debts incurred by a bank. The most Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 39
important liability category of most banks is checkable deposits, which is part of the economy's M1 money supply. The largest liability category includes other types of deposits (especially savings deposits, certificates of deposit, and money market deposits) that enter into the M2 and M3 monetary aggregates. Contingent liabilities are also liabilities for the bank. Contingent liabilities are those liabilities which are potential liabilities that are not listed on the balance sheet. They are listed in the footnotes because they may never become due and payable. Like Bill Discounted, Warranties & Cross Guarantees.
4.2 Different Sources of Bank Fund (Liabilities)

There are different sources of bank fund which are liabilities for the bank. Liability management constitutes an important part of a NCCBL like other banks. Though it is a financial institution clients keep their surplus deposits and these deposits are invested in trade, commerce & industries on term basis- i.e. - Short, Medium & Long term and bank itself collects capital from other institutions and as it is a private limited company owners of this bank invest their money which is also included in the fund, which are treated as liabilities for the bank. So the sources of fund which are treated as liabilities: Owners Borrowings from other banks Deposits from clients
4.3 Procedure of collecting funds from the different sources:

Like other banks funds come from the owners then NCCBL collects funds by opening different types of deposit accounts and borrowing money from other banks with various terms and conditions. In this case different terms, conditions, policies & goal are made by the supreme level of the NCCBL. Collection from the owners: First of al bank collects its from its owners. That means the directors are the owners who invest their money in the bank. Principle fund comes from the owners of the bank. Borrowings from other banks or other institutions: To raise the fund or capital bank collects fund from different banks where different term and conditions are applicable. Collection of Deposits: For the collection of deposits this section opens different types of account for their valued customers. Selection of valued customers is very important for the bank because banks success and failure largely depends on the customers. If customers are bad they creates fraud and forgery by their account with bank and this destroys the good will of the bank. So, the section takes extreme caution in selecting its valued customers. Different types of accounts, such as Current Deposit Short Term Deposit Savings Bank Deposit Fixed Deposit
Special Savings Scheme Deposit Special Deposit Scheme Premium Term Deposit Instant Earning Term Deposit Wage Earners Welfare Deposit Pension Scheme Money Double Current deposit Accounts:
A current account is one kind of deposit A/C which fund should be payable on demand. The client deposit or withdraw any amount as many times as he wishes. Any individual, firm, company, club, associated etc may open a current account. Bank may, however refuse without assigning any reasons to open current account to anybody. Savings Bank Deposit Accounts:
This deposit is basically meant for small scale saver. There are restrictions on withdrawals money in a month. 1. 6.00% interest is provided to depositors. 2. The minimum amount of balance to be maintained with this type of account is Tk. 2000. 3. A depositor can withdraw two times in a week for more withdrawal depositors are not entitled for any interest. 4. No savings account will be allowed to be overdrawn. Short Term Deposit:
It is also known as term deposit. The interest offered for STD A/C is less that of Savings A/C. 1. Generally opened by big businessman. 2. Interest depends on the amount deposited. 3. Minimum amount of balance has to be maintained with STD A/C is Tk. 2 Lac, while open. 4. Interest is given at a rate 4.5 % (for less than Tk. 1 crore, 5 % for more that 1 crore, 5.5 % for more than 5 crore, 6 % for more than 10 crore and 2.5 % for bank to bank.) 5. Minimum amount is Tk. 5000 must be maintained.
Fixed deposit:
1. FDR is neither transferable nor negotiable. 2. It can be opened by all. 3. Provided 6.50%-12 % interest. 4. Interest rate varies on principal amount. 5. The deposited principal amounts have not fixed by the bank. 6. One can deposit any sum of amount under fixed deposit reserved. Special Savings Scheme:
This is a scheme to make the customer introduced to the banking system. Under this scheme the customers are to pay a certain amount of money at monthly interval up to a period of 5 to 10 Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 43
years.
This
scheme
includes
the following
features
for
the
convenience of the clients. 1. The monthly installment of Tk. 500 to 25000 may be deposited every month during the entire period of the scheme. 2. The duration of the scheme is 5 years or 10 years. 3. The depositors will be paid a specific amount as per the following table: Table: 1 Rate of interest of SSS @ 13 % P.A. SL no. Monthly Deposit(Tk.) Amount payable after 5 years 10
years 1 500 41,500 1,15,900 2 1,000 81,800 2,31,800 3 2,000 1,65,600 4,63,600 4 3,000 2,48,400 6,95,400 5 4,000 3,31,200 9,27,200 6 5,000 4,14,000 11,59,000 7 10,000 8,28,000 23,18,000 8 15,000 12,42,000 34,77,000 9 20,000 16,56,000 46,36,000 10 25,000 20,70,000 57,95,000 A depositor may open one or more accounts of different installments in the same branch. Loan may be extended up to 80 % of the deposit amount. Table: 2 Interest rates on various types of deposits Types of deposits Rate of interest (% per annum) FDR 3 month 12% FDR 6 month 12.25% FDR for 12 month 12.50% Short term deposit 5% Savings deposit 5% Special deposit Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 44 12.10%
scheme Premium Term Deposit: 1. Period is 2 years. 2. Tk. 10 lac and above but multiple of Tk. 1 Lac. 3. 1% above existing 12 months FDR rate or as revised from time to time. 4. Interest to be paid /credited on maturity after deducting necessary Charges and Levis etc. at simple rate. 5. Corporate bodies, individuals, trustees of provident fund/Benevolent fund etc. 6. Loan may be allowed against Lien of the receipt/instrument up to 80% of the face value of the receipt at usual lending rate of interest applicable for SOD (FO). Instant Earning Term Deposit:
1. Period is 1 year. 2. Tk. 1 Lac and above but multiple of Tk. 1 Lac. 3. 1% below existing 12 months FDR rate or as revised from time to time. 4. Interest to be paid /credited to customers A/C after deducting charges/levies etc. instantly at the time of accepting deposit. For this purpose customer will have to open /maintain account relationship with the branch. 5. Retired personnel, Housewives, widow and wage earners are the target groups. 6. Loan may be allowed against Lien of the receipt /instrument up to 75% of the
face value of the receipt at the usual lending rate of interest applicable for SOD (FO). Money Double Program:
It is term deposit product for a specific period of 6 years that will make double the principal amount of the maturity. The amount has to be BDT 1 Lac or its multiple. Interest will be paid / credit only at maturity (necessary charges & levies to be realized after payment/ crediting of interest. Interest at a predetermined Equal Monthly Rate, to be kept in provision A/C until maturity i.e. at the end of each year interest will not be accumulated with principal amount. If depositor insists for premature encashment and if it is less than 12 months no interest will be paid, only principal amount, less charges will be refunded but if it is for more than 12 months interest will be paid at existing rate, less Charges. No auto renewal and no extra benefit for post mature encashment. In case of requirement loan may be allowed against MDP receipt to the extent of 80 % of the face value at the interest of 16 % p.a. following other rules and regulations applicable for SOD (F.O).
4.4 Policy of the liability management: This Liability Management Policy encompasses the strategic
management of the balance sheet aimed at achieving sustained growth, profitability and solvency. It involves a multiplicity of management activities and responsibilities, including the formulation Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 46
of long-term strategic goals and objectives and the management of various risks including liquidity risk, interest rate risk and market risk. The Liability Management Policy of the Bank falls under the authority of the Board of Directors, who in turn assigns authority for its formulation, revision and administration to the Asset Liability Management Committee (ALCO). Ultimate responsibility for effective liability management rests with the Board of Directors. The Board of Directors has the ultimate responsibility for the implementation of and ensuring adherence to this policy. The Board will, at least annually, formally review this policy with the Banks management. The Board of Directors will, at least monthly, review the funds management activities of the Bank. This review will include: 1. Collecting deposits through deposit products with low cost is the main policy of this management of NCCBL. Current Deposit: No cost Savings Deposit: Low cost SDS, FDR, DPS: High Cost
2. Circular of the rate of interests are given by the Asset Liability Management Committee of NCCBL. 3. Special mentioned accounts are taken care specially. 4. Schedule of charges against services rendered by the bank. 5. Bank branches must maintain proper compliance in this respect (KYC, Transaction Profile, Cash Transaction Report and others) as directed time to time by Bangladesh Bank with full attention for ensuring quality service to the clients so that no genuine clients faces any harassment. Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 47
6. Further product modification and changes in the rate and policy could be done according to the country economy or the financial environment of the bank.
Chapter: Five
Financial Performance Analysis
5.1 Financial information regarding different sources of fund of NCCBL:

Deposit
Deposits of the bank as on 31.12.2010 stood at Tk. 67,961.24 million which reflects a 26.09% growth over the previous years figure of Tk. 53,900.15 million. Deposit mix is shown in the chart. Deposit (2006-2010) Figure in million
70,000 60,000 53,900 50,000 40,000 28,147 30,000 20,000 10,000 0 2006 2007 34,902 46,905
67,961
2008 Deposit
2009
2010
Sector wise Distribution of Deposits-2010 In sector wise distribution we can see that NCCBL Current deposit is in 10% STD (Short Term Deposit) is in 7 % Fixed deposit is in 78% Money Double is in 5% & others are not in sound form.
Borrowing from Other Banks:
Here we can see that NCCBL borrowed money from CITI Bank N/A, ICIC Bank Kolkata, Standard Chartered Bank London, Standard Chartered Bank Kolkata, Wachovia N/A, HSBC Bank New York.
Table: 3 Name Curren of the cy Banks Name
Amou Conver nt in sion foreig rate n per curren unit cy F.C 2010 468,94 2.53 436,87 7.22 3,396. 57 792,56 6.97 211,69 7.04 71,350 0 71,350 0 111.65 67 71,350 0 71,350 0 71,350 0 -
Amount in BDT
Amou nt in foreig n curre ncy
Conver sion rate per unit F.C 2009 69,650 0 -
Amou nt in BDT
CITI Bank N/A ICIC Bank, Kolkata SCB, London SCB, Kolkata Wachov ia N/A Mashre q Bank Kolkata HSBC Bank, New York
USD ADLR GBP ADLR
33,459, 050 31,171, 190 379,25 0 56,549, 653 15,104, 584 139,25 9,404 -
74,618 .09 -
5,197, 150 -
USD
1,951,7 78.61 -
ADLR
57,684 .57
69,650 0
4017, 730
5.2 Financial performance of the NCCBL:

As a part of Internship report on performance evaluation of Credit Management of NCC Bank Limited, I have tried to find out the Performance, Position, Problems and Effectiveness of the Bank. I have also tried to represent some case studies and tried to give a suitable suggestion as well as I can. The highlights of financial position for the last 5 years are given below: SS L. 01 02 03 04 05 06 07 08 09 11 0 Particulars Authorized Capital Paid up Capital Reserve fund and other Reserve Equity fund Deposits Loans and Advances Investment Import Business Export Business Operating Income 2006 2,500.0 0 1,201.7 9 1,215.5 8 2,417.3 7 28,147. 34 24,678. 36 3,552.0 8 17,646. 80 8,557.0 0 3,913.1 9 Figure in Million 2007 2008 2009 2,500.0 2,500.0 5,000.0 0 0 0 1,352.0 1,757.6 2,284.9 1 2 0 1,995.3 6 3,326.5 2 34,901. 77 32,687. 75 6,266.6 2 28,779. 21 9,577.9 2 5,269.0 3 2,863.6 3 4,621.2 5 46,904. 66 46,332. 69 6,526.8 2 38,796. 88 12,522. 04 7,417.6 4 4,371.6 2 6,656.5 2 53,900. 15 50,387. 68 9,671.5 3 33,078. 44 11,903. 72 9,333.0 3 2010 10,000. 00 4,501.2 5 5,771.0 9 10,272. 34 67,961. 24 63,230. 14 10,980. 81 41,245. 21 16,125. 52 10,157. 99
11 1 11 2 11 3 11 4 11 5 11 6 11 7 11 8 11 9 22 0 22 1 22 2 22 3 22 4 22 5 22 6 22 7 22 8
Operating Expenses Operating Profit Profit before Tax Profit after Tax Retained Profit Total Assets (excluding contra) Fixed Assets Number of Branches Number of Employees Earnings per Share Dividend: Cash (%) Bonus (%) Return on Equity (ROE) (%) Return on Assets (ROA) (%) Capital Adequacy Ratio Nonperforming Loans as % of Total Advances Volume of Nonperforming Loans Amount of provision against
2,645.6 2 1,267.5 7 1,056.5 1 479.22 7.83 32,615. 01 353.71 48 1,118 39.88 10.00 12.50 19.82 1.63 9.78 4.95 1,212.2 6 523.58
3,488.7 8 1,780.2 5 1,356.3 2 677.18 8.13 42,522. 85 522.00 53 1,230 50.09 30.00 20.23 1.59 10.61 4.17 1,353.3 1 644.11
5,054.1 5 2,363.4 9 1,788.9 6 882.28 5.34 57,365. 52 775.31 57 1,400 50.20 30.00 21.76 1.54 10.61 4.14 1,902.5 8 912.90
6,195.3 3 3,137.7 0 2,686.4 9 1,719.5 0 46.47 65,937. 49 849.10 65 1,496 75.26 47.00 28.49 2.61 13.55 2.84 1,420.5 7 720.22
6,057.7 9 4,100.2 0 3,248.2 3 3,271.6 8 388.11 83,554. 18 1,191.4 9 79 1,622 5.33 32.00 25.35 2.84 10.91 2.27 1425.28
742.80
1-5 years 33 33 22
Above five years Total
- 6067340387 -
731592743
21202451 -
Classified Loans
2292227318 8292058514 10980808236
9646426492 5909141270 63230141628 817256901 1191493190 1662909 1352801369 -
Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 55 Amount of provision against 282.09 388.78 456.07 Unclassified Loans Amount of provision against Off51.69 109.41 balance sheet exposures Advance/Deposit 87.68% 93.66% 98.78% Ratio (%) Sources: Annual report 2010 382937111 1847028696 - 1011380380 671951388 4388794697 111.93 509.67 93.48% 174.93 740.31 93.04%
291686289
231610880
12483153430 15020119594 83554177553
5.3 Investment &Liability Maturity Analysis in Liquidity Statement
990820544
8006304707 7671518154 66949864397
1209220742
10206345993 87264069653 74197068170 2276807437 6293712941 9357109383
Particulars month
Not more 1-3 months 3-12 month than 1
Assets: Cash in hand Balances with other Banks and 5938637936 Money at call & Short Notice Investments 238091108 19401385 70000000 731592743 37500000 139029911
Loans & Advances 12297188080 13704166666 21673219120 265951790 714891101 82550000 138684689 -
Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 56 Others assets Non Banking assets Liabilities: 300695729 16602719 155972593 Total assets: 19471461657 14508459152 22070983720 Deposits 16898400049 15206233461 19167408026 Bills payable 1011380380 Provision & other liabilities 325659432 268558886 1913404249 Total liabilities 18536135590 15491395066 21236784868 Net liquidity gap 935326067 (982935914) 834198852
Fixed assets including land, building,
Borrowing from other banks, financial
5.4 Financial Highlights

SL. 1 2 3 4 5 6 7 8 9 10 11 Particulars Paid up capital Total capital Capital Surplus Total asset Total deposits Total loans & advances Total contingent liabilities Credit deposit ratio Percentage of classified loan against total loans & advances Profit after tax & provision Amount of classified loan during current year Year under review 2010 4501253300 1003398628 0 1760322280 8355417755 3 6796124477 7 6323014162 8 1749255057 5 0.93:01 2.27% 2371678769 1425280000 Year under review 2009 2284900200 6322418616 1657218616 6593749146 3 5390015063 5 5038768320 3 1119280276 5 0.93:01 2.84% 1719502296 1420567000
agentsfinancial institutions &
Financial Institutions
furniture & fixture
12 13 14 15 16 17 18 19 20 21 22
Provision kept against classified loans Provision surplus/(deficit) Cost of fund (%) Interest earning assets Non-interest earning assets Return on investment(ROE) Return on assets(ROA) Income from investment Earning from share(Taka) Net income per share(Taka) Price earning ratio (times)
742802000
720224000
9.31% 7469162585 6 8862551697 14.95% 2.84% 1642016484 5.33 5.33 12.91
11.10% 6053255396 8 5404937495 11.08% 2.61% 1071197525 3.71 3.71 15.73
Chapter: Six Findings & Recommendation

6.1 SWOT Analysis of NCCBL

SWOT Analysis is an important tool for evaluating the Liability & Investment Managements Strengths, Weakness, and Opportunities & Threats. The SWOT analysis of NCCBL is given below:
6.1.1 Internal Factors:

Strength:
1. Existence of strict & standard Liability & Investment Management. 2. Harmonious lender (bank) & borrower (client) relationship. 3. Experienced manpower in both managements. 4. Decreasing trend of diversification in deposit and loan product. Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 59
Weaknesses:
1. Lack of trained & highly educated officers. 2. Lack of modern equipment. 3. Lack proper office space. 4. Lack of proper advertisement of the products & services.
6.1.2 External Factors:

Opportunities:
1. Can introduce more new & attractive deposit products 2. Can set a competitive interest rate. 3. Can recruit young, energetic & talented officers. 4. Can invest in lucrative sector. Threats:
1. Government policies are not in favor of the private banks. 2. Competitors providing the services to customers more effectively. 3. Competitors offer low interest rate on loan & high interest deposit scheme.
6.2 Findings:
NCC Bank Limited though performing very well a hold the better position to control its costs. Banks have some findings & analysis these are presented in the below:1. The bank has not any expand marketing department to collect deposit or provide loan to the customer as other private bank. 2. The bank has not any employees who work in the field for collecting or providing fund. 3. The bank doesnt make available advertising for attracting the people to take loan as banks investment. 4. The bank has not powerful personal software so the transaction of local branch would be lengthy. 5. The bank doesnt participate in social welfare activity so it is shown as only profit earning institution not welfare able institution. 6. Bank offers very limited types of loan products. Moreover there is a lack of proper advertisement for different loan scheme of the bank and also bank charges higher interest rate in some type of loan which makes the customer ignorant about the banks credit service. 7. Banks have total loan sanctioning process is lengthy, which is higher than the national average. The Bank takes 1(One) months or more days to sanction the loan depending on the size of loan if the clients do not delay to submit necessary documents. 8. There is a lack of proper monitoring system after sanctioning loans & advances & this can be cause of classification loan. 9. The foreign exchange of some branch are not Authorized dealer so they can not forward for any investment in import or export at short period.
6.3 Recommendations:
The existing credit policy is good enough to run the bank. But as the competition is increasing day by day the bank should take some measures so that they can distinguish it from the others. Bank can follow the following suggestion to improve their performance:1. Therefore the private Banking is competitive at this period so the NCCBL should expand a marketing department for increasing investment and collecting fund. 2. The bank should arrange powerful internet connection to reduce the time consumeing. 3. Bank should increase the loan products item & advertisement of different loan scheme. 4. Bank should increase its employees efficiency to reduce cost. Bank should reduce rate of interest in loan. 5. Bank should reduce the loan sanctioning time; which can be an advertising tool of the bank. 6. Bank should strength their monitoring system in case of collecting information about prospective borrower, this monitoring process should also continue after loan disbursement to protect the misuse of fund. 7. The advance department needs more employees to manage all the activities properly and perfectly. Bank should recruit more young and energetic officers for this purpose. 8. Employee satisfaction should be ensured for quality service. If the employee is demotivated & dissatisfaction, no further measure will work. 9. Giving authority to the Branch officials to take decisions to sanction a loan. Right now, for every loan decision is made by Area office or Head office. But to faster the speed of loan sanction the branch should be authorized to take decision. 10. The bank management can give permission to its branches to design or change lending products on the basis of local demand. 11. The bank management can reduce the interest rate. Because of high interest rate, some good loans turn to bad loans. But if the interest rate decreases than the default loan will also decrease. 12. The officers of this department should strictly follow advance procedure to make a remarkable standard Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 62
13. The bank should introduce Macro credit scheme to facilitate poor people and to play a vital role in poverty alleviation. The advance department needs more employees to manage all the activities properly and perfectly. Bank should take on more young and energetic officers for this purpose. .
Conclusion:
The all activities of a bank is related with investment or liability management. With out investment any business can not run and with out liability business can not mostly profitable. So as a financial institution every bank must operate its investment and liability to be profitable and stable in competition. The NCC bank as a private bank operates its investment and liability proper way . As a result the ratio of there profitability is increasing day by day. Since 18 years their growth rate is satisfactory. But Today is not like yesterday and Tomorrow will be different from Today. The NCC Bank Limited should increase there efficiency to adjust with competitive and challenging business world and to be a world wide inter national bank. Finally I want to conclude that during my internship program at NCCBLin Anderkila branch, chittagong almost all the desk had been observed more or less by me. This practical knowledge comparing with theoretical involves identification of strength and weakness in the branch activities and making recommendations for solving the problems identified. Though all the department and sections are covered in this internship program, it is not possible to go the depth of each activities because of limitation. However, utmost effort has been given by me to achieve the objectives of this internship program.
References & Bibliography

Books and Guideline Prepared By: Md. Tareq Aziz, ID: B- 073104 Page 64
NCC Bank Training Book- NCC Bank Ltd. Commercial Bank Management by Peter S Rose (Fifth Edition). Guidelines to fill in the CIB-01 Form Credit Information Bureau, Bangladesh Bank, 3rd Edition.
Publications Annual Reports of NCC Bank Ltd. 2010. NCC Bank Ltd. Brochure Performance Rating of Banks 2010. Financial Statement of NCC Bank Ltd.-2010.
Websites Website of NCC Bank Ltd.: www.nccbl-bd.com www.Bangladesh- Bank.org

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Chapter

Overview of NCC Bank Ltd.

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1.2 Corporate Mission of NCCBL

1.3 Corporate Vision of NCCBL:

1.4 Corporate Objective of NCCBL:

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1.5 Products & services of NCCBL

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1.6 Management hierarchy of NCCBL

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Chapter Two: Major Functional Department of NCCBL

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**Major Functional Departments & Works Departments Anderkilla Branch

Loan and Advance

Accounts Opening Remittance Clearing

Ledger & Deposit Cash

Fixed Deposit Receipt (FDR)

2.1General Banking Department:

savings account Current account Special savings account

Fixed Deposit account

Account Opening Procedure in a flow chart:

Applicant fills up the relevant application form in the prescribed manner.

Applicant is required to fill up the spaceman signature card

For individual introduction is needed by an account holder

After depositing the cash one cheque book is issued

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2.2 Cash Department:

2.3 Remittance Section:

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Mode of Local Remittance

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2.4 Foreign Exchange Department

2.4.1 Import Section:

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Supporting Papers to be required to open L/C

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L/C is opened and sent to advising bank through mail or telex

Contract Indenters indent

Exporter or Supplier Beneficiar y

Shipment the goods

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Chapter: Three Investment Management

3.1Investment management of NCCBL:

3.2 Investment instruments:

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3.3 Investment procedure of NCCBL:

3.3.1 Government Securities:

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3.3.2 Other Investments:

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Credit operation procedure in a flow chart:

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3.4 Policy of the NCCBL for the investment:

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Real Estate & Civil Construction: