Internship Report Proposal

On

Prepared For:

Moh. Sogir Hossain Khandoker

Associate Professor

Department of Finance

Jagannath University, Dhaka.

Prepared By:

Md. Mazharul Islam

Id: 091541

Reg. No: 082264

Session: 2008-2009

3rd Batch

Department of Finance

Faculty of Business Studies

Jagannath University, Dhaka.

“Sustainable Financial Inclusion and Poverty Alleviation through Smart Banking:

A Case of Bank Asia Ltd”

Department of Finance Jagannath University, Dhaka 1 | P a g e

1. Introduction to the Study

1.1 Introduction:

The access to finance debate has strongly focused over the past years on the provision of

credit. But there seems to be a shift lately, with a number of stakeholders and policy-makers

“rediscovering” the benefits and the crucial role of savings, as a core basic banking service.

This is undoubtedly connected to the crisis context, and the value of building a safety net to

be used in case of extreme need. It is also linked to the fast expansion of microcredit, and the

evidence that to reach its full effectiveness, microcredit has to be accompanied by micro

saving, as a key enabler to finance productive activities.

„When we want to help the poor, we usually offer them charity. Most often we use charity to

avoid recognizing the problem and finding the solution for it. Charity becomes a way to

shrug off our responsibility. But charity is no solution to poverty. Charity only perpetuates

poverty by taking the initiative away from the poor. Charity allows us to go ahead with our

own lives without worrying about the lives of the poor. Charity appeases our consciences.‟

- Dr. Muhammad Yunus

Yunus is essentially highlighting the difference between CSR and sustainable financial

inclusion. Financial inclusion, for banks, has become one of the underlying principles of their

business activities. Access to finance is an essential driver of economic growth in developing

and transition economies. It is also important in developed economies, where it stimulates the

social inclusion of certain groups of the population. Access to finance empowers people,

gives them the opportunity to have an account, to save and invest, to insure their homes or to

take a loan and in many cases to break the chains of poverty.

The poor can be empowered by financial inclusion, i.e. giving them the initiative and

encouraging them to participate in the financial system of the Bangladesh. Bangladesh

Government has already run a project named “Ekti Bari Ekti Khamar” along with 3 renowned

private commercial bank for this purpose. Bank Asia is playing a critical role in this regard.

If economic development should ultimately result in individual freedom, the contribution of

the Banking sector to economic development will not be complete unless and until they

empower the bottom of the pyramid through financial inclusion.

Financial inclusion or in other words, bigger and deeper banking systems go hand in hand

with more advanced economic development. The purest purpose of money – in particular in a

dematerialized form – is to serve as a more efficient means of exchange than do barter and

counter-trade. The purpose of bank based money as opposed to pure cash is two-fold. First, it

is a better store of value. Second, it allows economies to gear up their working capital

(savings) to form also a platform for long-term capital (investment) through the maturity

transformation process that only banks can effectively make. Obviously money, and more

particularly bank-based money, can only provide these advantages when the transaction costs

of operating a bank account are below the inefficiency costs (and middle-man‟s margin) of

managing barter and counter-trade. All this is particularly crucial in poorer developing

countries, where evidence shows that availability of credit does increase economic activity

but to become financially self-sustaining, this has to be augmented by small scale savings

mobilization.

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1.2 Review of Literature

Bangladesh Government, donors, and international financial institutions across the globe

have increasingly recognized that access to financial services can play a pivotal role in

poverty alleviation and in decreasing the vulnerability of poor people. Though never part of

the Millennium Development Goals (MDGs) set in 2000, financial inclusion as an issue has

moved up the agenda of emerging and developing countries, including at the G20 in 2011 and

through the Alliance for Financial Inclusion, which led to 35 emerging and developing

countries‟ central banks committing themselves to financial inclusion in 2012.

Yet 2.5 billion people remain financially excluded. In most developing countries, more than

two-thirds of the adult population has no access to formal financial services, and in sub-

Saharan Africa, financial exclusion is as high as 76 per cent. Exclusion is typically highest

amongst women, youth and the very poorest segments of society.

The low and unpredictable income of poor people makes it difficult for them to bank with

formal financial institutions. Likewise, national and international banks have struggled to find

a business case for reaching the world‟s poorest people given the expectations of their

shareholders and the desire for sufficient profit margins. As a result, poor people have largely

discounted formal financial institutions and vice versa. Instead, they have traditionally relied

on potentially exploitative yet reliable moneylenders. The microcredit boom of the 1990s

sought to engage poor people in the semi-formal financial sector, but some irresponsible

credit lending by profit-oriented institutions has seen the sector called into question. There

has also been increased recognition that poor people need a range of financial services not

just credit, given that their incomes are „low, unpredictable and irregular‟ . Financial inclusion has been defined as „the provision of access to appropriate, convenient,

usable, valuable and affordable financial services and products to the widest part of the

population, especially through the delivery of basic banking services to the low income

people and the still unbanked, as a way out of poverty‟ (WSBI Santiago Declaration 2009).

As per the definition, the products and services offered under financial inclusion should fulfill

a number of requirements that fall into three dimensions: the geographical dimension, by

providing financial products to underserved population in rural and remote areas; the product

dimension, by offering accessible and affordable services, adapted to the specific needs of

low income population and the time dimension, by maintaining a more permanent

relationship with clients and following more stable policies in the good and bad times.

1.3 Rationale of the Study:

The report titled “Sustainable Financial Inclusion and Poverty Alleviation through Smart

Banking: A Case of Bank Asia Ltd.” is prepared as an integral part of the internship program

of the undergraduate degree in Department of Finance, Jagannath University. To get

acquainted with different financial model and theory theoretical knowledge is not enough for

a student of Department of Finance. There always exists massive gap between theoretical

knowledge and its practical implementation with present technology based world. This report

is to bridge up this gap.

Department of Finance Jagannath University, Dhaka 3 | P a g e

Bank executives looking to attract new customers while engaging and reducing the attrition

of existing customers can use alternate delivery channels as an end to their means. In this

report, I aim to examine the critical success factors and challenges that exist in the delivery

financial inclusion in Bangladesh. This report will be helpful to understand the relationship

among General banking and Alternative delivery channel or Smart Banking. And also the

performance trend of Bank Asia. The research approach will be to investigate and discover

the range of answers to our research questions and then present findings, solutions, and

conclusions to readers.

1.4 Background of Bank Asia Limited:

Bank Asia has been launched by a group of successful entrepreneurs with recognized

standing in the society. The management of the Bank consists of a team led by senior bankers

with decades of experience in national and international markets. The senior management

team is ably supported by a group of professionals many of whom have exposure in the

international market.

The asset and liability growth has been remarkable. Bank Asia has been actively participating

in the local money market as well as foreign currency market without exposing the Bank to

vulnerable positions. The Bank's investment in Treasury Bills and other securities went up

noticeably opening up opportunities for enhancing income in the context of a regime of

gradual interest rate decline.

Bank Asia Limited started its service with a vision to serve people with modern and

innovative banking products and services at affordable charge. Being parallel to the cutting

edge technology the Bank is offering online banking with added delivery channels like ATM,

Tele-banking, SMS and Net Banking. And as part of the bank's commitment to provide all

modern and value added banking service in keeping with the very best standard in a globalize

world.

2. Objectives of the Study

The objective of the study may be viewed as:

General objective

Specific objective

2.1 General Objectives:

The primary objective of my internship program is to gain practical work experience in the field

of Banking Business that helps me to complete my BBA program required under Department of

Finance, Jagannath University and get an overall idea of how financial inclusion eliminates

poverty through smart banking and specially the performance of Bank Asia Ltd on this

context.

Department of Finance Jagannath University, Dhaka 4 | P a g e

2.2 Specific Objectives:

More specifically, this study entails the following aspects:

To assess the existing modules of financial inclusion.

To identify major challenges of Bank Asia to formulate financial inclusion.

To explore the way of poverty elimination from in Bangladesh.

To know the Online Bank Management Software and its applications.

To analyze the performance of Bank Asia Limited with the help of different

statistical tools

To know how e-banking satisfy customers‟ needs and wants effectively and

efficiently.

To make the necessary recommendations to solve the problems of alternative delivery

channel of Bank Asia Limited.

3. Duration of the Study:

3 months Internship Program (effective from 4th

August to 3rd

November)

4. Research Methodology

This report is mainly prepared by the secondary sources of information and some few

primary sources of information like. The research was an exploratory approach and data

collection and analysis are qualitative in nature. For this purpose, different recognized census,

government rules, regulations, policies, and laws, newspapers, national and international

journals, periodicals have been consulted. Besides this, Internet has been widely used since

the report focuses on Online and Electronic Banking system. Data collection and analysis

were made during the Internship period at Bank Asia Limited.

4.1 Primary Sources of data:

The primary data of this report were collected through:

Personal Observation.

Direct interview & Conversation with the Officers

Practical experiences obtained from the corporate office of Bank Asia Limited

Expert‟s opinion.

Official records.

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4.2 Secondary Sources of data:

I have gathered the secondary data via following sources:

Texts regarding Electronic Banking.

Annual report of Bank Asia Limited.

Printed outlines and documentation supplied by Bank Asia Limited.

Annual Financial Statement of last 4 years of different Banking Institutions.

Website of Bank Asia Limited (http://www.bankasia-bd.com/).

Internet sources.

5. Data Analysis & Presentation Technique

In order to analyze gathered data, I plan to use statistical software like SPSS, E-Views that

will run different statistical test, Correlation, regression and such. Besides SPSS and E-Views

I will use MS-Excel to generate charts and graph of different ratio analysis. The data will be

presented through graphs for better visual understanding.

6. Limitations

In preparing this report, many obstacles came in my path. These are:

Primary data is always hard to work on because of authenticity.

Time is another hindrance to prepare a quality report.

The time is not enough to prepare this report because of maintaining full time Office

hour during internship.

Due to bank restrictions, much relevant information is not possible to represent in the

report.

Department of Finance Jagannath University, Dhaka 6 | P a g e

Bibliography

Md. Ibrahim Khalil, Iqbal Ahmad, and Md. Delwar Hossain Khan, „Internet Banking: Development and

Prospects in Bangladesh’,

Rudolph Strong, University of Wisconsin Stout, strongr6116@my.uwstout.edu , ‘ICT BANKING

STRATEGIES DESIGNED TO GROW AND RETAIN E-COMMERCE: ALTERNATE DELIVERY CHANNELS’

CUSTOMER BASE’ Issues in Information Systems (Volume XII, No. 1, pp. 1-6, 201)

World Savings Bank Institute (WSBI) & European Savings Banks Group (ESBG). (2011). Corporate

Governance and Access to Finance, Perspectives 62. Retrieved on 15.08.2011 from www.wsbi.org

References

Alliance for Financial Inclusion is a global network of financial policymakers from developing and emerging

countries working together to increase access to appropriate financial services for poor people.

Demirguc-kunt, Asli, Levine and Ross, „Finance and Inequality: Theory and Evidence‟, 2009.

Klapper and Demirguc-Kunt, „Measuring Financial Inclusion: The Global Findex Database‟, World Bank Policy

Research Paper 6025, 2012.

AKM Mahtab Hossain, Department of Computer Science and Information Management, School of Advanced

Technologies, AIT, Thailand and Conditions (10/2005). ANZ Bank, Internet, Phone, ATM and EFTPOS

Banking – Your Guide (10/2005).

Guangying Hua, (April 2009), “Internet Banking and Commerce”, Journal of internet

banking, vol. 14, no.1 (http://www.arraydev.com/commerce/jibc/2009-04/Online%20Banking_GHua.pdf)

Vijay M. Kumbhar , M. A. SET, NET, GDC&A, DIT and M. Phil (Economics), International Journal of

Business and Management Tomorrow Vol. 1 No. 1 , ‘ Alternative Banking Channels and Customers’

Satisfaction: An Empirical Study of Public and Private Sector Banks’

Websites:

http://www.infosys.com/finacle/solutions/thought-papers/Documents/role-alternate-channels.pdf

http://www.tefen.com/fileadmin/editorial/Best_of_Tefen/Banking.pdf

http://www.svtuition.org/2011/05/alternate-banking-delivery-channels.html

http://www.avanzasolutions.com/Techronicle/alternate-delivery-channels

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