Professional Documents
Culture Documents
1.2 Purpose
The purposes of this report cognates the internship purpose. The internship objective is
to gather practical knowledge and experiencing the corporate working environment
with the close approximation to the business firm and the experts who are leading and
making strategic decisions to enhance the growth of a financial institution. To this
regard this report is contemplating the knowledge and experience accumulated from
internship program. With the set guidelines and proposal by the Asian University and
with the kind advices of the organization and the internship supervisor, this report
comprise of an organization part and a project part.
The prime objective of organization part is:
To present an overview and brief introduction of HongKong and Shanghai
Banking Corporation Ltd.
The prime objectives of project part are:
Give a very brief overview of the risk analysis criteria for loan assessment.
Analysis the demography of the skip customers.
Find out if there is any relationship among the skip customers.
1.3 Scope
The scope of this report is limited to the overall description of the company, its services
and its financial performance analysis. The scope of the study is limited to
organizational setup, functions, and performances Since HSBC is still in its growth
stage in Bangladesh; it has still to go a long way to achieve its destination. The report
will mainly focus on what criteria HSBC Bangladesh is maintaining before approving
the loan facility. And if there is relationship among the customers who are defaulting to
pay the installments accordingly.
1.4 Methodology
Both the primary as well as the secondary form of information was used to prepare the
report. The details of these sources are highlighted below.
Primary Sources:
Customer database and historical data of delinquent customers.
Interviews with the approval officers as well as the sales and collection
teams.
Secondary Sources:
Internal Sources
HSBC Collection Manual
HSBC Bank's Annual Report
Group Business Principal Manual
Group Instruction Manual (GIM) & Business Instruction Manual
(BIM)
External Sources
Different books and periodicals related to the banking sector
Bangladesh Bank Circulars
Newspapers
Website information
1.5 Limitations
Being an intern of Personal Financial Services MIS department of
HSBC Anchor Tower, it was difficult to stay in continuous contact with
other departments.
As per Banks compliance, as an intern I was unable to obtain indispensable
experiences of different departments.
Details of many aspects of the services of HSBC Bangladesh Limited have
been skipped in this report due to various constraints, including time and
space, security reason.
One of the main barriers in writing this report was the confidentiality of data. Though I
had access to lot of information regarding the performance of the bank, I am unable and
not authorized to use this information due to legal restrictions.
Objectives of HSBC:
HSBCs objectives are to provide innovative products supported by quality delivery of
systems and excellence customer services, to train and motivate staffs and to exercise
social responsibility. By combining regional strengths with group network HSBCs aim
is to be the one of the leading banks in its principle markets. HSBCs goal is to achieve
sustained earnings growth and to continue to enhance shareholders value.
HSBC maintains one of the worlds largest private data communication networks and is
reconfiguring its business for the e-age. Its rapidly growing e-commerce capability
includes the use of the internet, PC banking over a private network, interactive TV, and
fixed and mobile, including wireless application protocol or WAP-enabled mobile,
telephones.
2.3
Many of the members have changed their name into HSBC, The Hongkong and
Shanghai Banking Corporation Limited to introduce the whole group under one brand
name.
Midland Bank
Hang Seng
Bank
America.
Hang Seng Bank, in which Hongkong Bank has a 62.1% equity
interest, maintains a network of 146 branches in the Hong Kong SAR,
where it is the second largest locally incorporated bank after Hongkong
Bank. Hang Seng Bank also has a branch in Singapore and two branches
Marine
Midland Bank
Banco HSBC
Bamerindus
largest in Brazil.
Hongkong Bank Hongkong Bank Malaysia is the largest foreign-owned bank in
Malaysia
Malaysia and the countrys fifth-largest bank, with 36 branches.
The British
The British Bank of the Middle East (British Bank) is the largest and
Bank of the
most widely represented international bank in the Middle East, with 31
Middle East
(British Bank)
branches throughout the United Arab Emirates, Oman, Bahrain, Qatar,
Jordan, Lebanon and the Palestinian Autonomous Area, including an
offshore banking unit in Bahrain. The bank also has branches in
Mumbai and Trivandrum, India, and Baku, Azerbaijan, as well as
HSBC Banco
Roberts
services.
The Saudi British Bank, a 40%-owned member of the HSBC Group,
has 63 branches throughout Saudi Arabia and a branch in London.
Figure 1: Banks under the HSBC Group
Other associated Group banks are British Arab Commercial Bank, The Cyprus
Popular Bank and Egyptian British Bank.
Financial Services current and savings account, mortgages, insurance, credit cards, loans,
pensions and investments. In 2000, residential mortgages across the
Group excluding Household grew by 15%, while non-mortgage
personal lending increased by over 20%. Credit cards in issue grew by
20% worldwide. Sales of repayment protection insurance and deposit
growth reached record levels. Current account balances in the UK
exceeded 10 billion for the first time at year-end 2000. The number of
customers registered for e-banking services via the internet and
telephone more than trebled in 2000. The internet generated sales of
Consumer
Finance
Commercial
Banking
the world is core strength of HSBC. During 2000, HSBC increased its
leading position in the UK business start-up market to 21% and attracted
record levels of business current and deposit account balances. Business
internet banking was offered in 20 countries and territories, and the
number of registered users more than doubled to 600,000. Money
transmission revenues, trade finance fees, wealth, savings and insurance
products all showing growth during 2000.
Corporate,
Investment
Banking and
Markets
Private Banking
2.6
Country Classifications
To ensure that the key resources (management time, capital, human resources and
information technology) are correctly allocated and that the exchange of best practice is
accelerated between entities, the group has classified the countries where it operates
into 3 categories: the large, the major and the international.
These classifications are a function of sustainable, attributable earnings, the number of
retail clients, balance sheet and size of operation. A brief presentation of this
classification is shown below:
Definition
More than one million personal clients
Sustainable earnings greater than US$ 200 million
Business Focus
Concentrated group resources on wealth management
Be a top 10 player in any market or region served
Develop cross selling, loyalty programs and value added
products.
Major: Argentina, Canada, Malaysia, India, Kingdom of Saudi Arabia, Singapore and
United Arab Emirates.
Definition
Sustainable earnings between US$ 100 - 200 million
Business Focus
Universal banks (personal, corporate, and investment
banking with domestic business)
Platforms for international group business
Next generation of large companies
Stable self funding entities
Onshore HQ
International: The rest of the world.
Definition
Earnings below US$ 100 million
Business Focus
Platforms for international group business
Limited domestic presence
Nursery for developing management
Tomorrows major businesses
Supported by offshore HQ
2.7
International Brand
A key part of the Groups business strategy, announced in 1998, is the creation of a
global brand featuring the HSBC name and hexagon symbol. The symbol is now a
familiar sight around the world. The Group has embarked on the next phase making
the HSBC brand universally synonymous with its core values of integrity, trust and
excellent customer service.
HSBC Brand & Corporate Identity:
The Hexagon logo of HSBC derives from HSBCs traditionally flag, a white rectangle
divided diagonally. The design of the flag was based on the cross of ST.Andrew, The
Patron Saint of Scotland.
HSBC brand & corporate identity represents what HSBC wants its brand to mean to its
customer. It is derived from the group:
Corporate Character:
HSBC is a prudent, cost conscious, ethically grounded, conservative, trustworthy
international builder of long-term customer relationships.
Basic Drives:
HSBCs basic drives are Higher Productivity, Team Orientation, and Creative
Organization, & Customer Orientation.
The essence of HSBC brand is integrity, trust, and excellent customer service. It gives
confidence to customers, value to investors, & comfort to colleagues.
Through the process of listening to individuals needs and then acting in partnership to
deliver the right solutions, HSBC is committed to help the clients make the most of
their financial assets.
HSBC operate on a global basis, but also work on a local level to ensure the crossborder differences are identified and any related benefits exploited. HSBC teams of
specialists ensure that whether you need solutions across the world, regionally, or
locally, and they have the skills, expertise, and resources to deliver them. They
automate as many functions as possible, even as ensuring retains control.
HSBC claims that they are the people to talk to if anyone wants the following: Global cash flow co-ordination
Enhanced risk management
Improved security and audit controls
Minimized costs and reduced operating expenses
Maximized liquidity, returns and interest benefits
Organization
Bangladesh LTD
Year of Establishment
1996
Head Office
Nature of the
Bangladesh
Multinational company with subsidiary group in
organization
Bangladesh
Shareholders
Products
Number of Offices
Gulshan,
Dhanmondi,
&
Chittagong)
Number of ATMs
06
Number of employees
250+
Technology
HSBC Bangladesh currently provides services from two of its full service branches one
in Dhaka and the other one in Chittagong. Besides these offices there are two personal
banking Booth offices located at Gulshan & Motijheel, and a new branch opened at
Dhanmondi. There is currently nine ATMs operating in Dhaka and 1 in Chittagong.
Trade Services:
As the leading provider of trade finance and related services to importers and exporters
in Asia, HSBC in Bangladesh operates a highly automated trade-processing network
and offer an Electronic Data Interchange (EDI) capability through Hexagon. The Bank
also uses SWIFT, an efficient and secure mechanism for bank-to-bank global
communications used for all trade related activities including fund transfers and
issuance of DCs (Documentary Credit).
Financial Institutions:
HSBC provides global trade services and cash management services to local banks.
HSBCs worldwide network strength, with over 7000 offices in 81 countries and
territories, coupled with a world class reputation in Trade Finance (Best Trade
Documentation Bank Euro money) and an unparalleled presence in Asia (Best
Bank in Asia Euro money), places HSBC in an ideal position to render unmatched
correspondent banking services.
HSBCs commanding presence in the USA (5th largest USD clearing bank globally),
UK (largest GBP clearing bank globally), and the Euro land (largest Euro clearing bank
in the UK) both in terms of network strength and clearing ability allows the Bank to
provide first class cash management solutions in 3 major global currencies; US dollar,
Pound sterling, and the Euro.
Payments and Cash Management (PCM):
HSBC is the pioneer in introducing electronic cash management solutions in
Bangladesh, by introducing its state-of-the-art proprietary software, Hexagon, back in
1997. This was initially made available to corporate clients only but has since been
expanded to include banks and retail clients.
With Hexagon, the Banks proprietary cash management system, corporate customers
can access banking services from anywhere in the world to view account balances and
statements, make transfers and international payments, and to open documentary
credits, by using only a PC, a modem, and a telephone line.
termed as collegial as high amounts of teamwork and participation exists between the
top and bottom parts of HSBC.
HSBC follows a 4 layers management philosophy in Bangladesh. These are Managers,
Executives, Officers, and Assistant Officers. The CEO is the top most authority of all
the levels. Managers are the departmental heads who are responsible for the activities
of their departments. They are the heads of the department who formulate strategies for
that department. e.g. Human Resources Manager. Executives have the authority next to
managers. They are basically responsible for certain activities & organizational
functions. e.g. Admin Executive. These two layers represent the management level of
HSBC Bangladesh.
Officers are the next persons to stand in the hierarchy list. They are the typical midlevel employees of HSBC organizational hierarchy. These officers are responsible for
managing the operational activities and operating level employees. The operating level
employees of HSBC who are ranked as Assistant Officer fill the last layer of this
hierarchy. They perform the day-to-day operational activities of HSBC. An
organizational hierarchy chart is shown below:
Managers
Executives
Officers
Assistant Officers
Figure 4: Organizational Hierarchy
4.2
4.3
departments that allow smooth operation of their own major departmental function. A
graphical presentation of all the departments (Major & minor) is shown below. Brief
functional descriptions of these departments areChief Executive
Officer (CEO)
Human
Resources
Services
Financial
Control
Administration
Administration
Foreign
Correspondence
Development
IT
Personal
Banking
Corporate
Banking
Marketing
DAK Branch
Trade Services
Direct Sales
Payment
Chittagong
Branch
Institutional
Banking
Promotion
Internal
Control (IC)
Treasury
Dhanmondi
Branch
Hexagon
Marketing
Administration
Network
Service
Center
(NSC)
PCM
Motijheel Booth
HUB
Gulshan
Booth
Credit
Department
Bond, ATM &
ATB
4.4
The Human Resource Manager currently heads this department. The major functions of
this department are strategic planning and policy formulation for Compensation,
Recruitment, Promotion, Training, and Developments, Personnel Services, and
Security. The HR department is very much concerned with the discipline that is set up
by the HSBC group. HSBC group has got strict rules and regulations for each and
every aspect of banking, even for non-banking purposes; i.e. the Dress Code. All these
major personnel functions are integrated in the best possible way at HSBC, which
results in its higher productivity. The Human resource officer monitors the employee
staffing and administration activities. The Training officer supervises training,
development, & rotation activities. The structure of the HR department is shown below:
Human Resource
Manager
Human
Resource
Officer
AO
Staffing
AO
Administration
Development
Officer
AO
Training
AO
Appraisal
So, the
departments are separated according to the functions they perform. Within the major
departments there are some other subsidiary departments that allow smooth operation
of their own major departmental functions.
Manager
Bond & ATM
Manager
CCR
Executive
Bond & ATM
Executive
Approval &
Operations
Officer
Bond
Manager
Product
Executive
Product
Manager
Branches
Manager
Sales
Manager
ATB
Executive
MIS
Executive
ATB
Officer
ATM
Officer
Operations
Officer
ATB
Officer
Collection
Officer
MIS
Mobile Sales
Officers
CSM
DAK Branch
CSM
Chittagong
Branch
CSM
Dhanmondi
Branch
CSM
Motijheel Booth
CSM
Gulshan
Booth
Branch Staff
Team
Branch Staff
Team
Branch Staff
Team
Branch Staff
Team
Branch Staff
Team
Operations:
Manages daily operation
Plans and directs sales and marketing
Plans for service development
Top-level authority for customers dealings and transaction
Provides required service to the customers directly
Maintains documentation and report flow vary rapidly
Helps in planning at field level
Assists PFS Head in decision-making process and researches
Assists PFS Head day-to-day work
Keeps track and inform PFS Head in present condition of the
competition in the market
4.6
Branch Network
There are five branches of HSBC, four situated at different locations in Dhaka and one
at Chittagong. Only the Dhaka office (head office) & Chittagong branch deals with
both corporate and personal banking. Other three offices only deal with the personal
banking activities. Their functions are to provide various financial services to the
consumers. These include customer services, sale of various PFS products, opening
new accounts, providing cash, remittance, and other teller services, etc. The branches
are quite decentralized for better delivery of services to customer and have their own
premises and facilities. Branch managers head these branches. Each branch is staffed
with its own team of employees. A great deal of teamwork is seen within these
branches. ATMs are situated with each branch premises.
CSM
DAK Branch
Executive (CSO)
Front Office
Executive (CSO)
Back Office
Officers
Front Office
Officers
Back Office
4.7
Credit Department
The personal banking credit department deals with the consumer credit schemes such as
the Personal loan, Car loan, Travel Loan, Personal Secured loan, etc. which are tailored
to meet the demand of individual customers. The manager of PFS credit who approves
and administers all the activities of this department. He is staffed with five approval
officers, four operations officers, and two MIS officers. The approval officers mainly
reject or approve the credit requests. After being checked by the approval officer, the
credit requests go to the operations for further processing of the application and
disbursement. This department is a member of ALCO (Asset Liability Management
Committee), which coordinates in preparation of lending analysis and data on
concentration of risk and identifies possible lending risks. This department is also
responsible for monitoring all necessary documents and securities related to loans.
4.8
ATM Center
The ATM center ensures smooth operation of the ATM machines that are located at
Dhaka and Chittagong. The ATM center is responsible for regular replenishment of the
off-site ATMs and servicing of all the ATMs. Currently a total 10 ATMs are in
operation. The ATM center also deals with issuance, termination, and servicing of the
ATM cards. On a whole, the ATM center is the department that is solely responsible for
all the activities related to ATM and is the facilitating department that enables
customers 24 hours banking support.
4.9
Bond Department
This department is under the same manager as the ATM center. They basically deal
with all the buying and selling of government bonds and treasury bills as per customer
instruction, i.e. BSP, PSP, and TSP etc. This department keeps under its control the
transactions regarding USDB, USDIB, and WEDB.
trade, and securities custody. HSBC also offers local financial institutions and banks
access to wide range of financial services available on an international basis. The
services are tailored to suit the needs of the companies. CIB has two separate wings:
Relationship management department and Hexagon. These are discussed below:
Relationship Management Department:
The RM department consists of various relationship managers who are assigned to
different corporate client to better satisfy their needs. These RMs communicate with
the clients and are solely responsible for the companies they deal with. Any information
regarding a corporate client must be communicated through the respective RM assigned
to that corporate client. A relationship manager may be assigned more than one
company and this decision depends on the chief of Corporate Banking.
Hexagon:
The Hexagon department deals with all aspects related to HSBCs unique banking
software product - Hexagon. It is the global Electronic Banking system of HSBC,
which offers the customers more convenient and efficient banking than ever before. It
is an innovative desktop banking system developed by the HSBC group, which
operates via the groups proprietary worldwide communications network.
Manager
FCD
Executive,
FC
Officer,
Accounts
Executive,
Treasury
Officer,
Financial Control
Officer,
Fund Management
Executive,
Payments
Executive,
Cash Management
Officer
Payments
Officer,
Administration
Officer,
In-house PCM
Officer,
Out-ward OCM
4.16 Treasury
This department works under FCD. Their main job is to take decisions regarding
purchase and sell of foreign currency. The purpose of treasury's operations is to utilize
the funds effectively and arrange funds at a lowest possible rate of interest, through
maintaining effective relationship with other banks and following the Government rules
and foreign exchange regulations
Executive
Administration
Officer
BSS
Executive,
IT
Officer
General Admin
Officer
System Admin
Executive
Internal Control
Executive,
NSC
Executive
HUB
Officer
Internal Control
Officer
System
Officer
Remittances
Officer
HUB
Officer
Network Services
4.19 Administration
Like any other organizations, the Admin department of HSBC makes sure that the
organizations moves on with all its departments and staffs operating according to all the
rules and regulations of the company. It also prevents any bottlenecks within the work
process and ensures smooth functioning. The admin department has two divisions
General Administration and Business Support Services.
The general admin division is pretty much similar to the admin departments of other
companies that ensure discipline and regulatory concerns. The business support
services provide supports to the departments during employee leaves and sudden
terminations so that the department can function without problems.
Manager
Marketing
Executive,
Direct Sales
Officer,
Sales Administration
HSBC Mobile
Sales Team
Executive,
Promotion
Officer,
Public Relations
Officer,
Advertising
Executive,
Marketing Administration
Officer,
R&D
Officer,
Billing & Admin
While the overall contract and the transaction are different, the DC itself does
not differ significantly from conventional DCs. A small number of clauses are
proposed to be mandatory in Bangladesh i.e. no TT reimbursement is allowed
and payment is made only upon receipt of documents at counter, the goods are
consigned to the order of the Bank, and the beneficiary has to notify the
applicant of the shipment. These are standard clauses in Bangladesh market and
are normal business practice and local norm.
Two additional documents are required for Amanah DC transaction compared to
the conventional DCs, the Purchase Transaction Notice and the Murabaha
Transaction Notice. In the Purchase Transaction notice the customer requests a
transaction whereby they will purchase goods as the bank agent and also
promises to buy the same goods from the Bank, which the Bank must accept to
go ahead with the transaction. In the Murabaha Transaction Notice, the customer
proposes to buy the goods on a deferred sales price, and agrees to pay a markup
over the purchase price of the goods, payable at a future date.
DCI
DIG
DIB
IBR
SIG
AWI
CLI
Although the above will support a full range of DC and related products, we will
be using only DCI, IBR, SIG, AWI and CLI for the time being.
4.28
Important Notes
Discrepant Documents
For each DC, one DC application and one transaction notice are required. For
partial shipments, a separate Murabaha Notification must cover each shipment.
Late payment
For late payment, the same charges will apply as with a conventional DC. These
are generated automatically by the system. No changes are necessary in the
system, however when talking to the customer interest should not be mentioned.
With the offer to buy or any time before receipt of the offer to buy, under
Shariah, the customer must inform the bank if they require any financing.
If the customer informs that they require any financing after the receipt of
the Offer to Buy, the transaction is not Shariah compliant. Bank still can
provide financing but the customer is aware that the transaction is not
Shariah compliant.
Master Murabaha Agreement (MMA):
Murabaha Notification:
MN is essentially a formal offer from the customer to purchase the goods from
the Bank. It will stipulate that the customer has obtained goods and offers
to buy the goods on "as it is" basis on the shipment date. This is again a
Shariah requirement.
Promise to Purchase:
5.1 Accounts
Savings Accounts:
Maximize wealth with daily interestUnlike other banks there is no ledger fee and any interest accrued is not
lost
Customers can issue any number of cheque or withdraw any amount
Interest is calculated on daily credit balance (not on average credit
balance) and paid half yearly
Only condition to earn interest is maintaining a minimum balance of BDT
25,000/Relationship fee is BDT 300/- per quarter if average relationship falls
below BDT 50,000/- for three months.
Current Account:
This is also a depository account basically designed for various customers. This is a
non- interest bearing accounts and the features of this account are as follows:
Opening balance TK 25,000
Average balance that should be maintained: TK 25,000
No restrictions on number of transactions
No yearly ledger fee
Non interest bearing
Free ATM card and phone banking service
Documentation: various kinds of documents are needed for the companies such
as memorandum of association, board resolution, etc. however the requirements
for individuals are same as the savings account.
Can be opened only by:
Individuals (joint or single)
Proprietorship companies
Partnership companies
Limited Companies
Liaison offices
NGOs
5.2
ATM Card
Can be linked with Savings or Current Account or both
24 Hours a day from any one of the 11 HSBC ATM outlets
DAK, DMO, DGU, DHA and CHG onsite & 5 offsite.
Maximum limit BDT 20,000/- per day per card. For PVA ATM card the
maximum limit is BDT 50,000/- per day.
You can withdraw or deposit money, inquire about your balance, check last 5
transactions, transfer funds between your accounts and make payments to
other accounts with HSBC
5.3
Power Vantage
For total financial controlAverage deposit balance should be BDT 2,00,000/Annual fee BDT 500/Penalty charge BDT 500/- half yearly, if the average deposit balance falls below
BDT 2,00,000/Free personal accident insurance coverage for BDT 1,00,000/Free endorsement of foreign currency against travel quota
Special Power Vantage ATM card with enhanced cash withdrawal facility of
BDT 50,000/- per day
An all-in-one composite statement of all your accounts under the Power
Vantage package
Special loan rages for the Personal Installment Loan
Lower processing fee for Car Loan
Fee waiver for setting up standing instructions at Auto Sweep
5.4
Time Deposit
Minimum amount to open a TMD is BDT 1,00,000/- (Individual and Joint both)
Interest is paid at maturity
Cumulative Time Deposits (Principal + Interest) is also available
Automatic roll over at prevailing rate
Time deposit is offered in Time Period (Minimum 1 month and Maximum 12
months)
Standing instruction can be given (like credit interest to other accounts)
Personal Secured Loan a loan facility up to 90% of the value of the LCY and
80% of FCY time deposit for a maximum period of 5 years
Personal Secured Credit an overdraft facility up to 90% of the value LCY
and 80% of the time deposit.
Fixed Deposit:
It is also known as term deposits. These deposits are made in the bank for a fixed
period of time. This period of time should be specified in advance. The bank needs not
to maintain cash reserves against these deposits & therefore, it offers interest rates that
are higher than the savings accounts.
Monthly Interest Bearing Time Deposit:
The simple, safe, and flexible way to enjoy guaranteed monthly returnMinimum opening amount is BDT 5,00,000/- (Individual and Joint both)
Tenure: 1-2 years
Interest is paid at a monthly basis and is transferred to another nominated
account
Automatic roll over for the 2nd year at prevailing rate.
5.5
Expatriate Account
Expatriates can open normal BDT current a/c as well as FCY current a/c
5.6
6.2
Travel Loan
Travel Loan is offered within the existing Personal Installment loan structure. The
purpose of launching this product is to attract and aid customers with their travel
related services.
Loan amount is minimum loan amount is BDT 50,000/- and maximum loan
amount is BDT 5,00,000/ Interest rate: 15%
Tenure: Maximum loan tenure is 36 months. If loan amount is BDT 4,00,000/or above then maximum tenure is 48 months.
Loan processing fee: 1% of the loan amount or BDT 1,000/- whichever is
higher + stamps BDT 170/ No personal guarantee is required
6.3
Car Loan
Eligibility- minimum monthly income BDT 20,000/-, 2 years service in a well
reputed, stable company, minimum age 25 and Maximum 56
Valid income proof documents must be furnished
No personal guarantee is required
Minimum loan amount is BDT 50,000/, maximum is 4,00,000/ For both reconditioned car and new car loan amount will be maximum 70% of
the car value
Interest rate will be 14.5% per annum
Maximum loan tenure is 60 months
Loan processing fee is 1% of the loan amount or BDT 1,000/- whichever is
higher + stamps BDT 170/ Car will be registered in Banks name (no joint registration)
Comprehensive insurance in discounted rate from selected insurance company
in Banks name is mandatory and automatically debited from customers account
every year.
CEPS salaried customers will get 0.5% discount in loan processing fee, i.e. 14%
6.4
Home Loan
Its easier than ever to own a dream home Eligibility- minimum monthly income BDT 40,000/-, 2 years service in a well
reputed, stable company, minimum age 25. The loan must end before
borrowers age reaching 57 years or retirement date, which ever is earlier.
This loan is provided for completed flats / apartments less than 20 years of
age
No personal guarantee is required
Minimum loan amount is BDT 7,50,000/- and maximum loan amount is
100,00,000/ Maximum loan tenure is 15 years, loan must be repaid prior to 57 years of age
A maximum loan amount of 70% of the total value of the apartment costing up
to BDT 50,00,000/- and 60% of the total value for the apartments over BDT
50,00,000/-. The total loan value is inclusive of the registration cost.
Interest rate is 14% per annum
Loan processing fee is 1.5% of the loan amount or BDT 20,000/- whichever is
higher + stamp charge
Security: Registered mortgage and original title deed
Insurance: Fire, earthquake, flood, cyclone
6.5
Personal Secured Loan is a simple stand by loan against the Time Deposit and NRB
Bonds and the loan is repayable in equal monthly installment.
Standby loan against TMD and NRB bonds (WEDB/USDB)
WEDB (Wage Earners Development Bond) or USDB (US Dollar Bond) issued
from HSBC and other multinational banks are considered.
Interest rate 12.5% for loan amount below BDT 5,00,000/- and 12% for loan
amount of BDT 5,00,000/- and above
Interest rate against LCY TMD is 13%
Minimum loan amount BDT 90,000/-
Maximum loan amount 90% of LCY TMD amount or WEDB and 80% of FCY
TMD or USDB
Processing fee against certificate issued from HSBC is BDT 1,000/- + stamps
BDT 170/-
6.6
Credit facility against the investmentsPersonal Secured Credit is a credit facility against Time Deposits and NRB Bonds that
enables customers to have the flexibility to meet short-term commitments without
unlocking their long-term investments.
Customers can borrow up to 90% of their LCY TMDs and WEDB value
WEDB and USDBs issued from HSBC and other multinational banks are
considered
Minimum loan amount is BDT 90,000/ Maximum loan amount 90% of LCY TMD amount or WEDB and 80% of FCY
TMD or USDBs.
6.7
Credit Card
Increase the spending powerProduct Name: HSBC Prime Co-branded Master Card Gold Card
Card Type: Local Master Card Gold Card
Card Limit: Staff Card: BDT 15,000/- to 1, 00,000/Master Card Gold Normal: BDT 50,000/- to 1, 00,000/Master Card VIP: BDT 1, 00,000/- to 2, 00,000/-
Eligibility:
6.8
HSBC offers wide range of cash financing, working capital, short, and medium-term
loans, and guarantee facilities to its corporate customers. Its offshore banking Unit
(OBU) provides US dollar denominated working capital as well as short tem finance
for capital imports to eligible businesses. HSBC is a worldwide leader in banking and
financial services whose success is based on its relationships with its clients. Whether
locally or around the world, HSBC offers a comprehensive range of services that can be
tailored to the company's needs. Some major services provided by HSBC corporate
division are Custody services, Global payment & cash management, Trade services, &
Hexagon.
6.9
HSBC's Global Payments and Cash Management services are designed to help its
clients to operate efficiently, profitably and with comprehensive support. The aim is to
provide a service that takes full account of the customers local needs as well as
regional and international requirements using our expertise and global resources of the
HSBC Group. PCM provides the following services to its clients:
Accounts & transaction management services: Structuring of bank accounts
to optimize the management and flow of funds within or across national
borders.
Trade Safe Service, HSBC absorb the bank and country risk, allowing clients to
concentrate on growing business.
So these are some of the services provided by HSBC trade services.
6.14 Hexagon
Hexagon is the HSBC Group's global electronic banking service, specifically designed
for the corporate market. It gives a customer access to one of the largest banking and
financial services organizations in the world - 24 hours a day, seven days a week.
Hexagon is one of the most advanced and easy-to-use electronic banking packages on
the market today. It has been designed to make life easier for the customers; with
Hexagon businesses can become more efficient, increase accuracy, and reduce costs.
Hexagon offers an extensive and growing range of financial services, including global
cash management, trade services, foreign exchange, and securities, all from a single
PC.
Hexagon uses the HSBC Group's Global Data Network, the largest private system of its
kind in the world. Additionally, it has a comprehensive range of system security, and
control features together with its use of full data encryption, means the data is totally
secure.
Services Provided by Hexagon:
Account information:
Hexagon provides access to all the customers accounts. In addition to the latest
available balances, Hexagon offers full statement information that can be tailored to
customer requirements.
Report Writer
The account information can be quickly and easily printed using the flexible Report
Writer Service or the information can be exported to some other formats.
Export
Export allows account details to be exported in variety formats. This enables Hexagon
to act as a true financial link between the bank's computer systems and the customer
own back-office accounting packages.
Reconciliation
This service enables the customer to reconcile his/her bank accounts.
Payments:
Transfers between accounts and payments to third parties are easily achieved in more
than 60 currencies anywhere in the world. Both priority payments and low-value
automated clearing-house payment options are available in Hexagon.
Exports Documentation:
Hexagon gives the customers the ability to view outstanding documentary credits and
bills in summary or a more detailed format, including interest details where financing
has been requested. Coupled with account information, companies are able to track the
whole export process from the point when the documentary credit is opened or bill is
presented through when settlement is made.
Import Documentation:
With the import option, a customer can easily create and amend documentary credit
(DC) applications and submit them online.
So these were some of the very important services provided by HSBCs unique banking
software HEXAGON.
Other Facilities Provided to Corporate Customers:
HSBC also offers some other facilities to its customers. They are Factoring, Forfeiting,
Guarantees, Hire Purchase Finance, Leasing, Tender Bond, and Performance Bonds. All
these services and products are designed to meet the total business needs of the
corporate clients of HSBC.
Advertising:
The promotion also coordinates all the advertising of HSBC products within
Bangladesh. Some of the advertising tools that are frequently used by the company are
as follows:
Newspapers Advertising: Regular advertisements of various products and
services of HSBC are given in some of the countries most renowned daily
newspapers.
Billboards: Huge colourful billboards with HSBC logo are found in various
major areas of Dhaka and Chittagong. These billboards emphasize on the
needs of customers and shows HSBC logo as solution to their needs.
Road Side Signposts: Medium sized multi colour signposts focusing on
various products of HSBC are found on the roadsides of various posh areas
such as, Gulshan, Dhanmondi, Baridhara, Motijheel, Banani etc.
Mails: Various product updates and new product information are regularly
sent to existing customers of HSBC.
Brochures: Various colourful brochures featuring specific products of
HSBC are being displayed and distributed to existing and potential
customers via branch offices and Mobile sales officers.
So these are some of the promotional activities managed and coordinated by the
promotion department.
Marketing Research Department:
This department formulates & executes various marketing strategies of HSBC
Bangladesh. This department also administers various marketing research activities on
the existing and potential customers of HSBC. Some research activities are as like
mystery shopping, critical incident surveys, customer suggestion surveys etc. The
results of these surveys are integrated while formulating various marketing strategies.
This department also deals with the billing and invoicing of various marketing &
advertising costs of HSBC Bangladesh.
These are the major departments of HSBC Bangladesh. Except the branches all other
departments are situated at HSBC Bangladesh head offices located at Anchor Tower,
Kawran Bazar. Most of HSBCs operation and activities are operated centrally from the
head office. But to deal with customers more completely, the branches are given
considerable authority and they operate in a more decentralized manner but subject to
verification of the respective departments.
7.2
HR Issues
Initial screening
iii)
iv)
v)
vi)
Initial Interviewed
vii)
viii)
Written test
ix)
x)
xi)
Final interview
xii)
Documentation Check
xiii)
Medical examination
xiv)
Probationary appointment
xv)
Confirmation
In order to enhance the efficiency of the employees, HSBC gives emphasis on the both
theoretical and practical training for its personnel. All the training and development
programs are aimed at two basic reasons - (1) Skill development (2) Motivation
through counselling and persuasion to change value system. For the top management or
senior managers there is provision for overseeing training arranged by HSBC group.
For the mid-level manager or other managerial level there is provision for regional
training courses. Besides, for non-management level there are training programs
arranged in different institution and also with in the organization. For the operatives,
various on the job-training program are conducted within the company. Finally, HSBC
Bangladesh limited follows a performance based promotion system for all levels of its
employees.
Performance Appraisal:
The company follows both rating and descriptive systems for the performance
appraisal. Although the appraisal system is non-participative, the employees are
annually assessed with a joint consultation with their immediate supervisor and
departmental head.
Rating is mainly done on the following factorsii)
Knowledge of work
iii)
iv)
Speed
v)
General intelligence
vi)
vii)
Diligence
viii)
ix)
Welfare Activities:
HSBC has many well-structured welfare policies for its employees. These include wellstructured wage & salary policy, medical facility, sports & cultural facilities, provision
for loans, free uniform etc. These welfare policies aim at strengthening the relationship
of the employees to the organizations and make them more responsible in their
respective positions. The brief description of the major welfare policies are stated
below:
Wages and Salary Administration:
HSBC follows a well-defined wage structure and fringe benefits for its employees. The
wage structure is updated periodically (Two years terms) by the management. The
major deciding factors arei)
ii) Average cost of living in the country due to year to year basis inflationary
trend
iii) Status of wage earners in similar organization
iv) Restrictive conditions given by the government from time to time
v) Financial benefits status in the company
vi) Components of existing wage structure:
vii) Base basic structure and conveyance allowance
The need is to identify the key emerging factors, trends & threats, opportunities, &
strategic uncertainties that can guide information gathering & analysis. Porters
approach can be applied to an industry, but it can also be applied to a market or submarket within the industry. The basic idea is that the attractiveness of an industry or
market as measured by the long-term return investment of the average firm depends
largely on five factors.
A complete understanding of the competitive area helps to guide strategy design &
implementation.
Bargaining
Power
of of
Bargaining
Power
Suppliers
Suppliers
Supplier
concentration
Supplier concentration
Number
of of
buyers
Number
buyers
Switching
cost
Switching cost
Substitute
raw
materials
Substitute
raw
materials
Thereat
of
forward
Thereat of forward
integration
integration
Threat
of of
Potential
Threat
Potential
Entrants
Entrants
Economies
of of
Scale
Economies
Scale
Brand
identity
Brand identity
Capital
requirement
Capital
requirement
Access
to
distribution
Access to
distribution
Regulatory
policies
Regulatory
policies
Switching
cost
Switching
cost
Reaction
from
existing
Reaction
from
existing
players
players
The
Industry
The
Industry
(Degree
of of
Rivalry)
(Degree
Rivalry)
Differentiation
Differentiation
No.No.
&&
Size
of of
players
Size
players
Industry
Growth
Industry Growth
Brand
Loyalty
Brand
Loyalty
Exit
Barrier
Exit Barrier
Bargaining
Power
of of
Bargaining
Power
Buyers
Buyers
Buyer
Concentration
&&
Buyer Concentration
Size
Size
Number
of of
Suppliers
Number
Suppliers
Switching
Cost
Switching Cost
Substitute
Products
Substitute
Products
Threat
of
backward
Threat of backward
integration
integration
Pressure
from
Pressure
from
Substitute
Substitute
Price
of of
substitute
Price
substitute
Product
identity
Product identity
Functional
similarity
Functional
similarity
The next force highlights the possibility of new competitors entering the market.
Existing firms may try to discourage new completion by aggressive expansion & other
types of entry barriers. The banking sector of Bangladesh seriously faces the threat of
new entrants. However the threat comes from two directions. The first threat comes
with the arrival of the multinational banks and their branch expansion particularly due
to the booming energy sector. Secondly, the continuous entries of local banks with
lower cost structure also possess a severe threat to this industry.
In the context of HSBC the various new & upcoming Banks pose a significant threat,
being new entrants in the banking sector of Bangladesh. But HSBC is aware of these
potential competitors. So it is trying to expand countrywide to make the sector
unattractive & to create entry barrier.
The fourth force is the power of suppliers that may have impact on the producers in an
industry. Companies may pursue vertical integration strategies to reduce the bargaining
power of suppliers. In the context of HSBC, suppliers are those customers and
organizations that provide financing to the firm via depository schemes. If the cost of
financing rises, then HSBC will have to increase the interest rate that it charges to its
customer in order to be remain the business. This may result in severe customer
dissatisfaction & as a result poor profitability. HSBC is aware of this devastating
situation.
Bargaining Power of Buyers:
Finally, buyers may use their purchasing power to influence the producers or service
providers. Understanding which organizations have power & influence in the
distribution channel provides important insight into the structure of competition.
In the banking sector of Bangladesh, customers have a strong bargaining power since
there are a large number of commercial banks providing similar services. Customers
have a wide range of options in deciding either go for the multinationals or turn to new
local banks for getting quality service. Others may also consider the national banks for
large credit facilities. Therefore banks have to pursue the customers with attractive
interest rates and provide them with tailor made customized services in order to attract
the customer or hunt depositors.
In the context of HSBC, the firm is more or less free from the cope of the bargaining
power of the buyers. HSBC has its own policies to carry out its operations &
employees follow those rules to deal with the customers. But too much rigidity of the
prevailing policies while dealing with the clients may under cut its client base as well
as profitability. To overcome this worst scenario a positive & personalized approach
to the needs of customer - has become HSBCs motto.
8.2
SWOT Analysis
Strengths:
Strong Corporate Identity:
HSBC is the leading provider of financial services worldwide. With its strong corporate
image and identity it can better position in the minds of customers. This image has
helped HSBC grab the personal banking sector of Bangladesh very rapidly.
Distinct Operating Procedures:
HSBC in known worldwide for its distinct operating procedure. The companys
managing for value strategy better satisfy customers needs and also keeps the firm
profitable.
Distinct Schedule:
Everyone in HSBC from the appraiser to the top management has to work to the same
schedule toward a different aspect of the same goal, interfacing simultaneously at all
level over quite a long period of time.
Strong Employee Bonding and Belongingness:
HSBC employees are one of the major assets of the company. The employees of HSBC
have a strong sense of commitment towards organization and also feel proud and a
sense of belonging towards HSBC. The strong culture of HSBC is the main reason
behind this strength.
Efficient Performance:
HSBC provides hassle free customer service to its client base comparing to the other
financial institutions of Bangladesh. Personalized approach to the needs of customers is
its motto.
Young Enthusiastic Workforce:
The selection & recruitment of HSBC emphasizes on having the skilled graduates &
postgraduates who have little or no previous work experience. The logic behind is that
HSBC wants to avoid the problem of garbage in & garbage out. & this type young &
fresh workforce stimulates the whole working environment of HSBC.
Empowered Work force:
The human resource of HSBC is extremely well thought & perfectly managed. As from
the very first, the top management believed in empowered employees, where they
refused to put their finger in every part of the pie. This empowered environment makes
HSBC a better place for the employees. The employees are not suffocated with
authority but are able to grow as the organization matures.
Companionable Environment:
All office walls in HSBC are only shoulder high partitions & there is no executive
dining room. Any of the executives is likely to plop down at a table in its cafeteria &
join in a lunch chat with whoever is there. One of the employees has said, Its exciting
to know you may see & talk to the top management at any time. You feel a real part of
things.
No Communication Barriers:
Many organizations are trying hard to avoid communication barriers & structural
bureaucracies. The little existence of authoritative barriers among the different level of
management stimulates a feeling of importance as their work get priority over the
position.
Equalization:
At HSBC, workshops are conducted periodically. On the workshops, all people
participate as equals with new members free to openly challenge top managers.
Free Exchange of Communication:
At HSBC the main objective is to setting up workshops are to remove authority from an
artificial spot at the top, & place it where the most knowledgeable people are, the
people closest to the operations. The free exchange of ideas is reinforced by a policy of
constructive confrontation. Each employee is expected to challenge ideas openly &
aggressively but never attack an individuals motives for presenting an idea.
MBO:
HSBC also has Management by Objectives (MBO) everywhere. Each person has
multiple objectives. All the employees must have to get the approval of their bosses on
what they are going to do. Later they review as how well they have performed their job
with their management as well as the peer group.
One-to-one Meeting:
The MBO makes the review a communication device among various groups. The key
to the system is a one-to-one meeting between a supervisor & a subordinate. In the
meeting, the problems in dealing with customers are put forward first & every one dug
it to solve.
Modern Equipment & Technology:
HSBC owns the best banking and information technology equipments in Bangladesh.
Its ultra modern banking systems starting from terminal pcs to HUBs are based on the
international HSBC group standards and are the latest. The Hexagon product is one of
the best examples in this context.
Visually Appealing Facilities:
HSBC has some of the best visually appealing branches and office premises in Dhaka
& Chittagong that highly attracts customers attentions and customers also feel the
international environment while banking with HSBC.
Weaknesses:
Narrow Operating Span:
HSBC has a very narrow operating span in Bangladesh. It has only 2 full service
branches in Bangladesh situated only at Dhaka and Chittagong. Various geographic
segments are currently not availing the services of HSBC due to inconvenient branch
location or absence of neighborhood branches.
HSBC currently dont have any strong marketing activities through mass media e.g.
Television. TV ads play a vital role in awareness building. HSBC has no such TV ad
campaign.
No Investment Products:
Currently, the personal banking division of HSBC does not have investment products
for its customers. Banning of investment loan by central bank posses a strong pressure
to design new products.
Lack of Customer Confidence:
As HSBC is fairly new to the banking industry of Bangladesh average customers lack
the confidence in HSBC and judge the bank as an average new bank.
Too Many Contractual Workers:
HSBC has contract workers who lack the commitment with superior quality service and
also are pretty dissatisfied as being a contractual worker. This hampers the banks
service quality as a whole.
Low Remuneration Package:
The remuneration package for the entry-level officers is considerable low. Since other
foreign and local banks offer a more lucrative salary package, it would be difficult for
HSBC to attract MBAs in future with its current salary package.
Opportunities:
High demand of Housing loans:
Since housing is one of the basic needs of people, there is a high demand of housing
loans. HSBC personal banking division can focus on this category of products and grab
these segments of customers.
HSBC is noted for its distinct operating procedures. Repayment capacity as assessed by
HSBC of individual client helps to decide how much one can borrow. As the whole
lending process is based on a clients repayment capacity, the recovery rate of HSBC is
close to 100%. This provides HSBC financial stability & gears up HSBC to be
remaining in the business for the long run.
Countrywide Network:
The ultimate goal of HSBC is to expand its operations all over Bangladesh. Nurturing
this type of vision & mission & to act as required, will not only increase HSBCs
profitability but also will secure its existence in the log run.
More Experienced & Managerial Know-how:
The top management team of HSBC is expert in banking activities. The operating
policies established by them are unique & unified. All the members of the team carry
out their management roles exhaustively. They equally contributed to HSBCs superior
leadership by carrying out their unique roles. They worked well together, respecting
each others abilities, and arguing openly without any rancor when they disagree.
Diversification:
HSBC can peruse a diversification strategy in expanding its current line of business.
The management can consider options of starting merchant banking or diversify in to
leasing and insurance. As HSBC is one of the leading providers of all financial
services, in Bangladesh it can also offer these services.
Credit Cards:
This is one of the most popular and emerging products in Bangladesh, which offers
customers total financial mobility. Various other banks and institutions are currently
offering this product. HSBC can also take advantage of this product and grab the
market share.
Acquisition:
HSBC is one of the experts in acquiring various firms and organizations. In Bangladesh
it can also diversify quickly by acquiring various local established banks and
increase its total operation within Bangladesh rapidly.
Threats:
Upcoming Banks:
The upcoming private local & multinational banks posses a serious threat to the
existing banking networks of HSBC. It is expected that in the next few years more
commercial banks will emerge. If that happens the intensity of competition will rise
further and banks will have to develop strategies to compete against and win the battle
of banks.
Losing Customers:
Absence of various products such as credit card, housing loans is causing various
customers to detract from HSBC. This is a serious threat for HSBC Bangladesh.
Moderate Levels of Customer Satisfaction:
HSBC should continuously improve its customer service strategies and the overall
service quality needs to win the customer satisfaction undoubtedly.
Default Culture:
This is a major problem in Bangladesh. As HSBC is a very new organization the
problem of non-performing loans or default loans is very minimum or insignificant.
However, as the bank becomes older this problem will arise enormously and the bank
may find itself in a more threatening environment. Thus HSBC has to remain vigilant
about this problem so that proactive strategies are taken to minimize this problem.
intranet system linking all the braches of HSBC, helps the sales officers to
know about their submitted applications status and take necessary steps
accordingly.
The approval officers assess the applications on a priority basis due to meet the SLA
(Service Level Agreement). Usually CEPS (Corporate Employment Privilege Scheme)
and Autopay loan applications are assessed by the same day. The loan of Existing
(customers having banking relationship more than six months with HSBC) customers is
assed within 48 hours where the loan of Non-Customers (customers having banking
relationship with HSBC less than six months) is assessed within 96 hours. However,
secured loans get highest priority to all the sub sections (CEPS, AUTOPAY, and Noncustomer) of applications.
Based on various criteria approval officers approve or reject the loans. First of all, they
see whether the applicant fulfils the parameters set by HSBC and the central bank.
Thereafter, they follow the rules set by the bank to assess the applications. If any
document is not provided with the application the approval officers place discrepancy,
which is updated in the database, and the MSOs are informed about the discrepancies
through loan update and make proper adjustment. Approval officers recommend the
applications to be approved or rejected or dropped after assessment. After that
applications are sent to the credit manager for reviewing and signing the documents
before forwarded to MIS for update.
Approved Loan:
Applications signed by the credit manager forwarded to MIS for updating loan status in
the database. After status is updated the application is forwarded to Operation
department. Operation staffs check whether all docs (CIB, TIN, Loan set-off form,
undated cheques) are in order. Moreover sign on irrevocable letter of authority and
demand promissory note are also checked. If everything is in order then the loan is
disbursed means money is transferred to the applicants account. As operation officers
after disbursement assign a serial number and forward the applications to the MIS to
update the disbursement input. If the file lacks in any document then it is kept
separately until the discrepancy is updated (special cases).
Rejected / Dropped / Deferred Loan:
Rejected files also get appropriate status. After updating the loan status the applications
are assigned a serial number for future references incase of re-visit or if the customer
wants to have his submitted documents back. But after a certain period of time these
applications are sent to central storage and destroyed later on.
A/C Opening
Approval officers inVerification,
case of assessing
the Etc.)
loan must comply with some basic
requirements and criteria. The group itself determines these parameters and some of
them are implied due to Bangladesh Banks regulations. Parameter like security type,
New Applications Received by
bank relationship with MIS
HSBC and other banks, age, occupation, address, references,
CIB (Credit Information Bureau) and CPV (Contact Point Verification) report, previous
experience or employment
history,Input,
loan repayment
After Primary
Applicationstrend
are etc are considered and
forwarded
to Respective
Approval
scrutinized before declaring
a customer
eligible to avail
the loan. Some of the important
Officers
parameters are discussed briefly to have an idea regarding loan assessment.
Assessment
A person with high net worth is considered
as a good candidate for loan. When a loan is
backed by property (Flat, Car) the approval officers find the loan easy and secure to
assess. In case of secured loan, mostly the security matters. At HSBC the Personal
MIS
secured loan securities like Protirakkha
Sanchaypatra, WEDB (Wage Earners Bond),
USDB (US Bond), and TMD (Term Deposits) are needed to be lien with the bank.
Applications with
Approved Applications are
Discrepancy are informed to
forwarded to Operation
MSO
by Daily
Loan Update
Department
for Disbursement
Before
sanctioning
loan the credit officers carefully
analyze whether
the customer
(Lotus Notes)
would be able to pay out the credit when due, with a comfortable margin of error. Six
aspects of loan application usually determine this. They are character, capacity, cash,
Rejected,
Deferred
collateral, condition and control.
AllDropped,
these factors
should be taken into consideration
Applications are sent to
before approving a loan.
Central Storage
Character:
The approval officer wants to know about the purpose of the loan first. They must be
convinced that the customer has a well-defined purpose for requesting bank credit and
serious intention to repay. If the officer is not sure exactly why the customer is applying
for the loan, he may ask for the clarification and comfort ness of bank. Once the
purpose is known, the approval officers must determine whether it is consistent with the
banks current loan policy.
Every loan application form of HSBC bank consist a blank area to be filled by the
customer/ borrower describing the purpose of the loan. If any kind of inconsistency
arises the approval officers have the right to ask for the proper explanation to the MSO
or even to the customers.
Capacity:
The approval officers make sure that the customer has the legal eligibility for
requesting the loan and the legal standing to sign a binding loan agreement. In HSBC
has a parameter like the minors (age below 18 yrs) as well as the people exceeding the
age limit 55 yrs would not be eligible for a loan. At the same time in case of corporate
clients the approval officers make sure that the representative from a corporation asking
for loan has the proper authority from the companys board of directors to negotiate a
loan and sign the loan agreement binding the corporation. In case of partnership
business, the approval officer might ask to see the firms partnership agreement to
determine which individuals are authorized to borrow the firm. A loan agreement
signed by unauthorized persons can be stated as uncollectible, insecure and therefore
result in substantial losses for the bank.
Cash:
While assessing the loans the approval officers concentrate mainly on the borrowers
ability to generate cash flow either from business or from salary or other income. At
HSBC, the bank statements are considered as the proof of income. There is always a
high chance that the loan application of a borrower with a strong bank statement
(inflow to the bank account) will be approved by the credit department of the Bank. In
case of unsecured loan, since no security is kept against the loan taken by the
borrowers, their ability to generate cash flow becomes the main consideration of loan
assessment.
Collateral:
Like cash inflow collateral is also important to support loan request. A person with
high net worth is considered as a good candidate for a loan. When a loan is backed by
some property the approval officers find the loan easy to make. In case of secured loan,
the security matters mostly. At HSBC the Personal secured loans are need to be backed
by the government bonds. Other requirements are negligible in this case.
Condition:
The approval officer and credit analyst must be aware of recent trends in the borrowers
line of work or industry and how changing economic conditions might affect the loan.
For instance, at HSBC the approval officers are not very interested to entertain the
businesspeople from garments industry and buying house business since, both of these
interrelated businesses are vulnerable in nature and under uncertainty. Though the
papers (bank statement and tax papers) appear to be strong at present these might turn
into weak in near future.
Control:
The bank wants to have control on the credit they have made to their customers. The
bank watches on whether law and regulation could adversely affect the borrower. At the
same time the bank sees whether the loan request meets the banks and regulatory
authorities standards for loan quality. For example, previously HSBC bank used to
give Investment Loan to the borrowers so that the borrowers can use that money to
invest on government bond at a high interest rate. However, Bangladesh government
has made the decision that no loan should be made for investing the loan amount to the
government bond. Therefore, HSBC stopped the Investment Loan scheme and is
making alternative loan products.
Structure of the Loan:
The approval officer is responsible to both the customer and the banks depositors and
stockholders and must seek to satisfy the demands of all. This requires first drafting of
a loan agreement that meets the borrowers need for funds with a comfortable
repayment schedule. The borrower must be able to comfortably handle any required
loan payment, because the banks success depends fundamentally on the success of its
customers. If a major borrower gets into trouble because it is unable to service a loan,
the bank may find itself in a serious trouble. Proper accommodation of a customer may
involve lending more or less money than asked for over a longer or shorter period than
requested. It is because many customers do not know their own financial need and
ability. Thus, the banks approval officer must be financial counselor to customer.
At HSBC, the approval officers do not sanction the amount applied for in all the cases.
What the approval officers do is that, they analyze the financial need and capability of
the borrower and carefully determine the amount the customer is capable to repay to the
bank. In addition, HSBC has prepared a flexible repayment schedule of three, four and
five years in which borrowers repay the loan through equal monthly installment.
Therefore, HSBC is not only sanctioning the loan to the potential clients but also it is
making sure that the borrowers able to serve the loan easily.
repayment, those account are written off with due approval of from Manager PFS or
Manger CRM. Analyzing the nature of skip customers of personal asset products will
reveal whether there is any natural tendency among the skip customers or if there is any
correlation among them. Moreover, analysis will help to find out the steps that should
be taken to control or bring the skip customers tendency at a nominal level
In-depth interviews were conducted with credit collection officers of the department of
CCR of PFS since they are responsible to follow up customers for repaying their loans.
In detail conversation with them, eight groups have been sorted out based on skip
customers characteristics.
These customers are facing salary problems i.e. either their employers are not paying
them or they are irregularly paid which results into irregular payment of loan
installments.
IND - Intentional Defaulter:
These customers have no intention to pay off the loan. They do not want to maintain
any kind of relationship with the bank after availing the loan.
TRA - Traceless:
Customers having invalid contact no, false references and false addresses are included
in this group. Therefore, collection officers cannot contact them and force them to pay
off the loan.
STC- Shifted to other Country:
Customers have intentionally escaped or permanently shifted to other country without
informing the bank as well as not paying the overdue of the loan. In this situation after
taking every possible step to contact customers, the loan is written-off from the book
and defined as bad and loss. But bank take legal action like filing case against the skip
customers.
OTH - Others:
Customers who have other reasons like serious illness, address change, family crisis,
temporary financial problem etc. are included in this group.
There are 74 Skip customers as of February 2005 of personal asset products of
HSBC. The analysis has been done on this database and each skip customers nature
has been derived by interviewing collection officers of CCR, PFS, and HSBC.
Analyzing Nature of Skip Customers:
The following data have been collected from the Skip customers database of MIS
department and comments are supported by in-depth interviews with credit collection
officers, tele-collector and collection supervisor of the department of CCR, PFS.
Ratio of nature of Skip customers based on their characteristics:
Nature of
Customers
LOB
IND
JOC
JOL
TRA
Products
STC
Category
FRA
CAR
Total
PIL
Grand Total
No. of
%
Customers
32
42
3
4
4
6
8
11
20
27
No3
%
4
4
6
674
8 100
68
74
92
100
From the analysis we can see that about 42% of total Skip customers are having loan
over-burden problems, 4% customers are intentional defaulters, 6% customers are not
paying due to job-switching or 11% of are job-less. 27% customers are totally traceless;
therefore payments are not coming from them. Finally, 4% customers skipped as they
move to another country without repaying the loan. Some of them found fraud (6%) or
having other problems like illness, financial crisis or have passed away.
Ratio of Asset-Products of Skip Customers:
From the above table, it is found that 92% of skip customers have taken personal
installment loan and 8% have taken car loan. The ratio of skip customers of car loan is
very low since the vehicle; insurance and registration documentation are held as the
security against the loan. If a customer reaches to Grade-6, collection officers initiate
the repossession proceedings. Besides, it is noteworthy that there are no skip customers
of personal secured credit and personal secured credit since these loans are given
against the bonds. Normally the security is encashed if the customer misses three
consecutive EMIs. Since the apartment, property insurance and documents are held as
security in the case of home loan, there is no skip customer of home loan.
Ratio of CEPS/AutoPay in Skip Customers:
Customers Type
No. of
Customers
CEPS/AUTOPAY
General
Total
15
59
74
20
80
100.00
It is found that only 15% of total skip customers are having CEPS/AutoPay
background. Since Autopay customers salary is deposited in HSBCs account, their
chances of becoming delinquent are very low. In addition, customers with CEPS
background are from high-profile companies. Their loan repayment behavior has been
good over the years.
CEPS/AUTOPAY
5
4
15
7
8
10
6
4
59
8
7
25
12
1
17
10
7
100
CAR
PIL
1
Company
Learning Spree Era
CAR
PIL
1
1
1
1
1
1
1
1
1
3
1
1
1
1
2
1
3
1
1
2
1
1
1
1
1
2
1
Travel World
West Wind Internatioal
KAFCOs
Karnaphuli Ltd
1
1
1
1
1
1
1
1
2
2
5
1
3
1
1
1
1
1
1
1
Youngone (CEPZ)
Opex Group
Orion Taxi Cab Pvt Ltd
Pathfinder Development Bd Ltd
Philips Van Heusen Far East Ltd
Quasem Zinc Ltd.
Rangs Ltd
Royal Brunei Airlines
Scholastica Ent Pvt Ltd
Sheba Electrinics (BD) Ltd
Tex-Ebo Int Pvt Ltd
1
1
1
1
3
69
2
5
74
It is found that, Opex Group have been producing highest no (5) of skip customers and
in the second place Dhaka Sheraton Hotel, British American Tobacco, Pathfinder
Development Bd Ltd have been producing the second (3) number of delinquent
customers. From interview with collection officers, it is found that those customers are
lower level employees (mainly chefs and waiters) but receive high salary (16,00025,000/=). They dont have higher education, which is a major reason for unwillingness
to pay off loans. Besides, some of them have loans with other banks or they are
intentional defaulter. Whenever they get salary, they are more interested in meeting
other commitments, family needs etc but not in paying loan installments. Collection
officers have found them very problematic and commitment- breaker.
These reasons are applicable for KAFCOs (2) employees also. Though, they get
handsome salary but they are over-burdened with other loans, which create problems in
paying loan installments.
Next, Beximco Textile Ltd (2) and Youngone (CEPZ) Ltd (2) are other riskier
companies in terms of having delinquent customers. As Beximco Textile Ltd is not a
financially strong and profitable company, they do not pay their employees regularly.
They pay them once in every 3-4 months, which create problems for a customer in
paying loan installments.
Besides, in Youngone (CEPZ) Ltd, the ratio of job-left and job-switch cases are high.
More over, this company doesnt pay its employees regularly also. Therefore, there are
some delinquent customers of this company. The Ratio of rest of the companies can be
ignored but have to be monitored closely as applicants from these companies might
give a significant rise in skip customers trend.
CAR
1
1
PIL
1
1
1
3
1
1
3
1
1
3
1
2
2
2
2
6
2
2
6
2
2
6
2
4
1
1
1
1
3
1
2
2
2
2
6
2
2
1
1
1
1
5
1
1
1
1
4
2
2
2
2
10
2
2
2
2
2
3
51
4
6
100
From the above table, it is found that 10% of total Skip customers own or work in
garment factories; dying, knitting and packaging industries or fabrics manufacturing
companies. It has been observed that, people, working in this sector are more likely to
change the job, leave the job due to irregular salary payment from the employer.
Therefore, this sector can be considered risky in giving loans.
There are about 6% skip customers in Pharmaceutical sector. From interview with
credit collection officers, it is found that, most of the people, working in pharmaceutical
companies, are sales officers. Their salary is mainly commission-based. When they fail
to reaches their sales-target, assigned by their companies, they dont get commissions.
Therefore, they face serious problems in paying loan installments.
There are 4% skip customers in dying, knitting, and packaging sector. In this sector, the
practice of job change is very apparent. Moreover it is a sensitive sector, which
fluctuates simultaneously with market-demand. Some the owners, who have taken loan
from HSBC, became skip customer due to financial instability of the firm. Another
analysis, it is found that people, who work in hotel sector, do not have good record in
loan repayment, too. Skip customers rate in this sector is like 6%, due to dependability
on the market demand heavily. Other risky sectors are Developer and Construction
suppliers sector (6%), Buying/Trading Houses (6%) etc.
People, who work in developing and construction businesses, always having shortage
of cash in hand. Whenever they get money they invest in the business as soon as
possible. Therefore, they often fail to pay loan installment due to crisis of liquid
money. The ratio of leaving job or job mobility is high in trading and marketing
business. Moreover, people who work in this sector often hide their actual salary and
avail the loan by showing their salary much higher. In addition, these people work in
sales department. Their fixed salary is very low. They totally depend on salescommission. Therefore, it is hard for them to pay loan installment when they are in a
bad situation.
In the ticketing and shipping cargo sector, is another sector where the rate of skip
customers is about 4%. Primary reason for this we say about their income level which
is not high and commission based. They are over-burdened with other loans taken from
either friends or from other banks. Therefore, they often face financial problem or
others difficulties in paying loan installments when there is downtrend in RMG,
construction, food supply business. Because these are the business that uses the cargo
service mostly.
Besides, some businessmen have become hardcore defaulters who work in buying or
trading companies. Usually, those buying houses financial stability have been very
poor and some of them are losing businesses. Showing false salary to avail the loan is
also a common practice in this sector. In addition, in some cases, it is found that, some
customers have taken loans by showing ownership of buying houses, though that house
does not exist at all. Moreover, some trading houses owner have availed loan by
representing false documents and information.
Finally, other risky sectors are- real estate business, cigarette manufacturing and
marketing etc. The ratio of rest of the sectors can be ignored as they have very
negligible percentage of total delinquent accounts.
No of
Customers
9
5
8
10
32
No of
Customers
12
8
7
5
32
%
28
16
25
31
100.00
%
38
25
22
16
100.00
Age
25-30Years
31-40Years
41(+) Years
Total
No of
Customers
15
9
8
32
%
47
28
25
100.00
It is found that, 47% of total skip customers are due to loan over burden is from 25-35
years age group, 38% customers monthly income range is 15000-25000 tk, 28%
customers service tenure is between 2-3 years. 28% of total skip customers are due to
loan over burden is from 31-40 years age group, 25% customers monthly income range
is 36000-45000 tk, 16% customers service tenure is between 3-5 years. We can find a
trend from the analysis that those who are working more than 7 yrs in a company
within income range of 15000 25000 tk are overburdened more than other categories.
Analysis implies that, most of the LOB customers work experience and income level is
not very high. Moreover, they are from young age group. From interview with the
collection officers, it is found that, in most of the cases, customer deliberately
concealed the actual purpose for taking the loan and used vague terms like Purchasing
household appliances, Personal expenditure etc. Most of these customers have
personal loans with other banks or with their friends and relatives and taken loan from
HSBC just to repay those loans. Moreover, they provided misinformation regarding
their monthly income and expenditure to lower the DB ratio. For providing false
contact number and references it was not possible for the collection team to locate or
contact them.
Intentional Defaulter:
Service Tenure
3 (+) Years
2-3 Years
Total
Monthly Income
25000 (+) tk.
15000-25000 tk.
Total
No of
Customers
4
2
6
No of
Customers
5
1
6
%
67
33
100.00
%
83
17
100.00
Age
36-45 Years
25-35 Years
Total
No of
Customers
3
3
6
%
50
50
100.00
It is found that, 67% of total IND customers have more than 3 years work experience,
83% earn more than 25000/=, 50% belong to 36-45 age group- usually all these ratio
are considered as strength for a customer. However, IND customers have taken loans
using this strength. Even they have provided valid phone numbers, addresses and
references, but later on they found as hardcore defaulters and skipped as well. Though
having the ability to pay off the loan, they are totally unconscious about payment and
they took loan without having the intention to repay.
Job Changed:
Service Tenure
2-3 Years
3 (+) Years
Total
No of Customers
2
2
4
%
50
50
100.00
Monthly Income
15000-25000 tk.
25000 (+) tk.
Total
No of Customers
3
1
4
%
75
25
100.00
Age
25-35 Years
36-45 Years
Total
No of Customers
3
1
4
%
75
25
100.00
From the analysis, it evident that 50% of total JOC customers have 2-3 years work
experience, 75% earn from 15000 to 25000/= and 75% belong to 25-35 age group. It
seems that, the trend of job switching is high in young age group. Therefore, their
service tenure is not too long. Besides, 15000 -25000/=, this income group have
tendency to change job to get more salary. However, some of them have found that they
are receiving lower salary or irregular salary in the new job than before. As a result,
they are not paying loan installments. Some of them have availed loan by applying as
service-holders, which are actually small businessmen. They do this just to avoid
providing authenticated tax paper. It has been observed that people working in
pharmaceuticals, trading -buying houses, insurance companies, advertising and media
companies and construction supply have higher tendency of job change.
Job Less:
Service Tenure
2-3 Years
3(+) Years
Total
Monthly Income
15000-25000 tk.
25000(+) tk.
Total
Age
25-35 Years
36-45 Years
45(+) Years
Total
No of
Customers
6
2
8
No of
Customers
5
3
8
No of
Customers
4
3
1
8
%
75
25
100.00
%
63
37
100.00
%
50
38
12
100.00
It is found that, 75% of total JOL customers have 2-3 years work experience, 63% earn
from 15000 25000 tk and 50% belong to 25-35 age groups. The characteristics of
JOL customers are more or less similar to JOCs characteristics. It has been found that
people working in different types of buying house, constructions supply business,
computer education centers, courier services, internet service providers (ISPs) and
RMG sectors, have higher tendency of leaving or switching to another job.
Traceless:
Monthly Income
15000-25000 tk.
45000 (+) tk
26000-35000 tk.
36000-45000 tk.
Total
Age
25-35 Years
45(+) Years
36-45 Years
Total
No of
Customers
10
6
3
1
20
No of
Customers
12
5
3
20
%
50.00
30
15
5
100.00
%
60
25
15
100.00
In this analysis it is evident that 50% of total TRA customers earn from 15000 to 25000
tk and 64% belong to 25-35 age groups. It is worth mentioning that most of TRA
customers are young and earning minimum salary to avail a loan. From interview with
the collection officers, it is found that some of TRA customers permanently left the
country. Some of them have left the job without notifying both employer and the bank.
Some of them have provided false phone number and references or addresses. So it is
too tough to contact them. Therefore, they are totally out of sight of the collection
department and considered as skip customers.
Salary Problem: (Fraud)
Service Tenure
2-3 Years
3(+) Years
Total
Monthly Income
25000-35000 tk.
35000(+) tk.
Total
Age
25-35 Years
36-45 Years
Total
No of
Customers
4
3
7
No of
Customers
5
2
7
No of
Customers
5
2
7
%
57
43
100.00
%
71
29
100.00
%
71
29
100.00
It is found that, 57% of total SAL customers have 2-3 years work experience, 71% earn
from 25000 to 35000/= and 71% belong to 25-35 age group. It seems that SAL
customers earn handsome amount of money though having service tenure not too long.
Actually, they have availed loans by providing false salary statement, which is much
higher than original. In other cases, some companies like garments manufacturing
organizations pay their employees irregularly, which make them incapable to pay loan
installments.
Fraud Activities:
Service Tenure
Less than 3 Years
3(+) Years
Total
No of Customers
3
1
4
%
75
25
100.00
Monthly Income
15000-25000 tk.
Total
No of Customers
4
4
%
100.00
100.00
Age
25-35 Years
36-45 Years
Total
No of Customers
2
2
3
%
67
23
100.00
It is found that, 75% of total fraud category customers have less than 3 years work
experience, all of them earn from 25000 to 35000 tk and 67% belong to 25-35 yrs age
group. It is significant that FRA customers do not have long work experience and
consists of young aged people. Some of them provided misinformation regarding their
employer or business concern. Post approval verification revealed that these customers
mentioned business concerned does not at all have any existence. In most cases, the
applicant mentioned their friends and colleagues as immediate relatives and cousins.
Besides, some of them have provided false tax paper, LOI etc. Actually, they have
taken loan from other banks also by using same techniques, for which they can be
considered as professionals. So it is quite evident that these types of customers had no
intention to repay the loan from the very beginning and intentionally skipped.
Others:
This group contains different types of customer like those who are temporarily job less,
having financial problem, sudden death, family crisis, illness etc. A customer may be
skipped for these various reasons. Since this group contains very few accounts, the
analysis in terms of age, income and service tenure is not done for this group. But
measures should be taken to keep this group under control.
12.3
Among five asset-products, Personal Instalment Loans (PIL) has been facing
about all of the Skip customers. This is because, no invoice, quotation, personal
guarantee or cash security are required for these loans. Even no down payment
is required to disburse this loan.
Garments
Manufacturing
Companies,
Pharmaceuticals,
Cigarette
strengths, they are totally unconscious about repayment and become traceless
after taking the loan.
A particular group, withdrawing salary 15000-25000/=, have work experience
less than 3 years and belong to 25-35 age group are more likely to switch the
job. It has been observed that people working in RMG, Buying House, Hotel
business, Trading and marketing business, insurance companies, advertising and
media companies and NGOs have higher tendency of job change.
It has been found that people working in different types of project (UN, CARE
etc), computer education centers, courier companies, internet service providers
(ISPs) and garments sectors, have higher tendency of leaving job.
A certain group of people have availed loans by providing false phone number
and references or addresses. Another group provided misinformation regarding
their employers or business concerns. Post approval verification revealed that
these customers mentioned business concerned does not have any existence at
all. In most cases, the applicant mentioned their friends and colleagues as
immediate relatives and cousins. Besides, some of them have provided false tax
paper, LOI etc.
It is also found that, most of the SAL customers have 2- 3 years work
experience, earn from 25,000 to 35,000 tk and belong to 25-35 yrs age group. It
seems that SAL customers earn handsome amount of money though having
service tenure not too long. Actually, they have availed loans by providing false
salary statement, which is much higher than original with the help of some
officers. In addition, some companies like garments manufacturing companies,
buying house, hotel services, construction and supply business pay their
employees irregularly which make them incapable to pay loan installments. In
the future these type of customer become skip customers.
For Autopay /CEPS customer the financial burden, service length, previous job
experience of the customer and social reputation and nature of the company
should be taken into consideration with greater importance.
Management should carefully handle the loan application from some particular
companies and sectors that have been producing skip and delinquent customers.
Application received from the risky sectors should be verified carefully and
more authentications should be created to assess those particular applications.
Loan applications from customers from young age group, having shorter service
tenure and lower income level, should be carefully assess
Another important thing is that HSBC should make the CIB (Credit
information Bureau) report mandatory for every sort of applicants. This report
provided by Bangladesh Bank will create more transparency about the comers,
reveal the past repayment record of loan facility from other banks, applicants
credit worthiness, integrity level would be verified by this report. Making CIB
report mandatory for the applicant I think the tendency of skip customers will
be reduced to a subsequent level.
Collection efforts should be given more emphasized to ask the customers make
the repayment regularly. Customers with due of 1 and 2 payments should be
monitored carefully and prevent them to from reaching the in due 3 category.
Legal actions taken against the skip and delinquent customers should be
strengthen to discourage the applicants becoming delinquent or skip customers.
Sales team can play an important role in reducing skip customers. Avoiding
risky sectors as well as giving importance to banks interests and profits will
persuade them to bring good customers and help to reduce the skip tendency at
a tolerant level.
Finally, the management should strictly follow group policy before proceeding
for any loan application.
with problem customers and how to deal problematic situations. Employeesspecifically sales officers should be conscious and taught about the financial aspects of
the loans so that it becomes convenient for the approval officers to assess loans.
HSBC should reduce the amount of time required to provide new ATM cards. Currently
it takes 2 weeks while some competitors can provide the card within 2 working days.
As the HSBC ATM card comes directly from Hong Kong delays are obvious. HSBC
should make necessary arrangements to produce the new cards locally in order to
reduce the customer difficulties faced in the absence of ATM card.
Advertising & Promotion:
HSBC should pursue an aggressive advertising campaign in order to build up a strong
image and reputation among potential customers. In this context, the valuable strengths
should be used for positioning the corporate image of the bank. TV ads should be aired
to reach a wider array of customers. The ads should capitalize on building strong
relationship, needs of customers and quality service of the bank rather than features of
products. Thus and offensive marketing strategy emphasizing customer satisfaction and
service quality can bring valuable business for the Bank.
Elimination of Contract Employees:
Contract employees should be eliminated from the customer service departments as
they lack the commitment and willingness to serve customers. One serious mistake can
take away valuable customers and years of relationship.
Control over the Mailing Network:
HSBC should strictly monitor the courier services that are engaged in delivering mails
and documents. Huge amounts delivery failures are being piled up at branches. So
HSBC should have some control over its couriers and ensure proper delivery of mails
and documents.
In order to improve the Net Interest Margin and Net Operating margin, HSBC will have
to focus on every element of operating and non-operating expense. If the bank can
reduce the cost, it will result in the improved margins.
First task is to make sure that the file was actually received at our
end by tracing it in the Intransit Mail tracker.
Then ask all the Approval officers one by one about the file (as
some times they have to receive the file directly for some high
graded customers due to top managements decision)
If the file is still missing then we have to inform the introducer for
the last resort for this kind of problem, re-apply for the loan (this is
not encouraged).
Recommendation:
Arousal of this kind of situation is not unexpected as the volume of the files processed
each day is on the increasing trend. Due to shortage of the space and improper storage
facility this might happen. But the officer in charge has to be extra careful to reduce the
margin of error as low as possible. If the file is not found then there is a possibility that
the officer in charge might feel panic, but there is no need to panic but they must be
careful that the error rate in data maintenance goes down significantly.
Case Study: 2
Reject File Missing
Problem Statement: Some times due to misplacement or faulty maintenance of data
in the database, the file goes missing.
Action:
Procedures to follow in this kind of situations:
Track in the In-Transit mail tracker to make sure that the file was
actually received at our end for processing on the first hand.
Ask the Approval Officer, who assessed the file about the file status.
If the approval officer assures of returning the file to the MIS then
we have to perform a thorough search in the rejected file bunch. This
is the last step that has to be performed, as the file must be found
during this process of missing file retrieval.
Recommendation:
If the approval officers are a little more concerned about the files they have assessed
then this kind of problems can be taken care of the very early stage of the problem. As
every day they are receiving two loan status updates, in which if the information is not
available or faulty, they can correct the information and prevent the future problems
that will arise from here.
Case Study: 3
Cheque Return or Change
Problem Statement: Some times due to misspelling or some other types of technical
faults the cheques are returned to the customer for new issuance of Cheque.
Action:
Procedures to follow in this kind of situations:
Then the introducer arranges for new Cheque with all after
technicality measurements is met.
During this time the file stays with the Operations Department for
the replaced cheque, on receipt of which the fund will be disbursed.
Recommendation:
If the introducers become little more cautious then this kind of problems can be
avoided very easily. As more or less the majority potion of the Cheque replacement
problems are due to the amount or simple spelling mistakes. Being a little more
cautious they can avoid this kind of situations by carefully filling up the required fields.
Case Study: 4
Write off letter
Problem Statement: Not in time delivery or not the right recipient or the customers
social value and status is hurt, as the past record was not taken in to consideration.
Action:
Procedures to follow in this kind of situations:
Make sure that the history of the customer is taken into consideration
while performing the job.
Recommendation:
Make sure that the write offs and set offs are not interchanged, as both of them are
closure from the book.
Case Study: 5
Facility Offer Letter
Problem Statement: This is the letter that is offered to the customer immediate after
disbursement of the fund in the customers account. They might have not been informed
in time so they can use the fund for their desired purposes.
Action:
Procedures to follow in this kind of situations:
In loan update the introducer can know about the status, or they can
check in the system of their respective branch, or can make a phone
call in case of urgency to know if there is any discrepancy.
Recommendation:
The letter has to be timely dispatched by the operation department. The introducer must
carefully study the loan update so that they can inform their customers timely.
Case Study: 6
Conflict Among Different Departments and Group
Problem Statement: Some times the inter-department misunderstanding becomes
really a great problem. As the communication is the key and the departments has to
work in a harmony to keep the whole system working. If the flow is interrupted by any
reason the entire process suffer, as it will not be able to bring out the desire output.
Action:
Procedures to follow in this kind of situations:
Recommendation:
Development of personal level relationship is the key to deal with this kind of
situations. But the involvement and acknowledgement from the top management has to
be there. If the top management wants to deal with the matter in a formal way then they
should be involved. If they want the matter to be solved at the root level from where the
problem has arisen then in most of the cases the in charge officer is dealing with the
problem. Here the Service Level Agreement (SLA) comes in handy.
Case Study: 7
Collection Problem (Defaulter customer)
Problem Statement: Some times the customer fails to meet the deadline for their
installment payment. This can happen in many scenarios like the customer is willing to
pay but due to some unavoidable circumstances the customer could not pay the
installment on time. In other scenario the customer is not willing to pay any more
amounts. In other cases the worst one is the customer goes abroad without informing.
Going abroad cannot be considered as an assured defaulter of loan repayment. As the
respective customer might be in an urgent situation to move out side the country.
While dealing with customers, especially the 1 st bucket customers the collection
process has to be really cautious taking into consideration the past record of the
customers repayment history.
Action:
If the customer is in the 1st bucket and the previous loan repayment
is satisfactory that means the front-end collection come into action.
Recommendation:
Studying the customers behavior carefully to make sure that he is a good customer and
their reputations in the society is not hurt due to some of the misdeeds by the collectors
as they might deal with something really sensitive, that can make a significant impact
in the peoples mind as well as in the society.
Case Study: 8
Intransit Mail Problem
Problem Statement: In the Intransit mail applications and the required supplement
documents are received by MIS for processing purposes. The timing for receiving the
mail has been a major problem for a long time. This has been almost a regular problem
that the mails are not arriving or receiving on time. As a result the volume of pending
applications and docs goes up by a significant margin (mail packets received after cut
off time according to the SLA are considered as pending for the following working
day). Also some times the introducers (MSOs) are coming carrying only their
customers applications. As a result this becomes tough for us to keep track for the
received applications. Missing applications and Cheques are worse case in terms of
intransit mail.
Action:
Procedures to follow in this kind of situations:
Follow the SLA to the point and deliver the mails on time. To do this
they might have to start few minutes earlier than they usually start
for the delivery towards destination from the branch.
In case of some emergency they are most welcome to MIS but this
has to be pre informed via other media, like Lotus Notes or
Telephone. Here Lotus Notes is preferable, as this is considered as
safe and secure official electronic memo writing and delivery
system.
Recommendation:
Follow the SLA as specifically as possible and be respectful to the duties and activities
of the other department as the respect will earn respect.
Case Study: 9
Month End Pressure of Disbursement
Problem Statement: Disbursement pressure at the month end has been enormous for a
long time. As the introducers become more active and the customers are looking for
some quick funds for their urgent necessity. Also the factor of incentive comes in to
action here. As the MSOs are looking forward to make the customer avail the loan so
that he or she can earn points on the basis of the volume and amount disbursed during
the month as well as meets their sales target. As a result almost everybody is looking
forward for the disbursement of the loan within the same month.
Action:
Procedures to follow in this kind of situations:
Recommendation:
MSOs should be conscious more about their sales target and keep the sales effort same
round the month rather than wait for the month end to come. And operation department
can employ extra workforce to handle the month end pressure with more ease.
Case Study: 10
Customer letter regarding the reschedule, reduce interest, or set off loan
Problem Statement: Some times customers come with many kind of request like
rescheduling of installment, reducing interest rate, or loan set off.
Action:
Procedures to follow in this kind of situations:
Recommendation:
The respective branch should handle this kind of requests or application so that the
customers can be sure about whether it is possible to perform the reschedule or change
of interest rate. Here both customers and operation time will be saved.
Case Study: 11
Operational mistakes disbursing the loan
Problem Statement: Some times the Operations Department makes mistakes while
disbursing the loan. Then in most of the cases the matter is solved at the officer in
charge. But some times the client might be a highly valuable customer for the bank; in
that kind of cases the top management has to be in the scene to settle the matter.
Action:
Procedures to follow in this kind of situations:
Recommendation:
During work there will be mistakes; this is what a multinational environment teaches. It
also teaches, never to make the same kind of mistakes, again and again. But In the
operations department while working with lots of data that has to be maintained
manually in to the system, there is always chance of error. This is why people involved
in the loan process have to be very careful about the process.
Case Study: 12
HUB Problem
Problem Statement: Some times the HUB system fails. Also this has been a major
problem that the network is not providing ample support, the computers are not
providing service of the expectation level and the printing (Hardware) systems are not
of the standard and quality.
Action:
Procedures to follow in this kind of situations:
Recommendation:
Inform the IT for any kind of problem with the computer or the network. This has not
been a standard practice to troubleshoot the system by the user only. There is a great
advantage of this kind of standard practices. The IT is solely responsible for all sort of
maintenance, as a trouble shooter gives them the edge as they have the idea what can be
the problem with system, because all the systems are almost of the same category with
similar software installed on it. Employees should be given a short overview about the
problem that arises and possible solution. This might save valuable time and data.
Case Study: 13
Insufficient Fund Problem
Problem Statement: Some times the customers do not have sufficient amount
available at the account to pay for the loan-processing fee. As a result the disbursement
remains at hold position. As a result the loan gets the status of approved but the
customer cannot avail the fund, as the system requires some extra fund available from
which it deducts its charges.
Action:
Procedures to follow in this kind of situations:
Recommendation:
This kind of situation can be easily handled or reduced if the introducer of the loan
informs the customers about the fees or charges well before the disbursement. Or the
introducers can inform their respective customers as soon as they come to know that
the loan has been approved.
Case Study: 14
Disbursed in Different Account
Problem statement: One day a customer called the credit department and told that
the sales officer informed him that his loan application was approved on a certain date.
But even after the approval the loan was not disbursed to his account. And when the
sales officer checked the database, he did not find any discrepancies regarding the loan
application. What was the problem then?
Action:
After the objection, the operations department was looking for the cause of not
disbursement. After checking the system it was found that the loan amount had been
disbursed to another account. And it happened due to wrong debit authority number,
which was written by the sales officer in the application. Partially the operation
department was also liable for this mistake because before disbursement it was
operation departments duty to check all the necessary points of the applications for the
fund transfer. If the checking was done carefully, then it would have come out that the
applicants master account number does not match the debit authority number. Right
after the problem identification, it was checked in the system whether the account
holder had withdrawn the disbursed money or not. Luckily the account holder did not
withdraw the money and a hold instruction was given on the system to hold the account
for some period. After that the fund was transferred to the applicants account.
Recommendation:
The checking should be done very minutely and carefully. It should be done in such a
way that a single point of checking couldnt be missed in any cases. The respective
executives and officers should give more attention while doing the disbursement and
fund transfer respectively.
Case Study: 15
Waive the Penalized Amount:
Problem statement: A customer was enlisted as Grade-5 in the database of the bank.
Legal proceeding is going to be started by bank against the defaulter. One day, an
officer of the default customer called the credit department and requested for
reschedule of his boss loan according to their wish. While talking with the collection
officer, the applicants officer misbehaved with the collection officer saying that they
had harassed his boss a lot for the collection of the due EMIs. He also told that due to
business problem his boss couldnt repay the EMIs on time. His boss was then ready to
repay the loan in three installments and he would also settle the loan in the next three
months. But he wanted a favor. He requested to waive the penalized amount that was
incurred due to legal proceedings and accrued interest. The problem was that the
officials could not waive the penalized amount according to banks policy.
Action:
After the request pledged from the customer, the top executives of the credit
department called a meeting and came to a decision agreed by all that the applicants
request would be entertained as he could not repay the installment amount due to his
business problem. As he wanted to settle the disputes so why not give him the chance
of repayment by waiving him the penalty. After the decision, the customer was
informed that his application was granted. After that, the customer repaid the loan in
the next three months.
Recommendation:
While assessing a loan application applicants business condition, integrity, credit
worthiness etc should be checked very carefully.
Internship Report
Prepared By
Md. Iqbal Hasan
MBA- (2D)
ID-980032