ReportOn

Probashi Banking Operation of BRAC Bank Ltd.

ASA University Bangladesh

ReportOn

Probashi Banking Operation of BRAC Bank Ltd.

Course Code: FIN 221Course Title: Money & Banking

Submitted to:

Su bmitted by:

Date of Submission19.08.2010

MD. Tanvir PavelSenior LecturerFaculty of businessASA University Bangladesh

Name Id No:Md. Abdul Khalek (L) 091-12-0125Rajesh Banik 091-12-0128Suvra Saha 091-12-0106Minarul Karim Mishu 091-12-0118Rupasree Mukherjee 102-12-0058Sharmin Aktar Trisha 091-12-0124

Latter of transmittal

19 July, 2010To Md. Tanvir PavelCourse Instructor,Money & BankingASA University BangladeshDepartment Of Business Administration

Subject: Submission of report on Probashi Banking Operation of BRAC Bank Ltd.

Honorable Sir,We are pleased to submit the report on “Probashi Banking Operation of BRAC Bank Ltd.” that you have assigned us to prepare as a partial requirement of “Probashi Banking Operation”. Throughout the report, we have made best effort of our capacity to accommodate as much information and their related issues as possible and tried to follow the instructions that you have suggested. We sincerely believe that it will satisfy your requirements.

We are sincerely, hoped that you will be delighted to read this report. If further information is required, we will be glad to provide them any time of your convenience.

Sincerely Yours,Md. Abdul KhalekOn behalf of our group members

(i)

Acknowledgement

I express my heartiest gratitude to Md. Tanvir Pavel, Course Instructor, Money & Banking, and Department Of Business Administration for giving me an opportunity to prepare a report on the project assigned tome. This report is the out come of our Money & Banking subject. To prepare this report titled “Probashi Banking Operation of BRAC Bank Ltd.”, we have taken help from different sources, such as Executive officer of BRAC Bank, annual book, Internet etc. We knew lot of things about Probashi Banking Operation and its management. We extend our sincere thanks and deep gratitude to all of them. We are very much grateful to the executive officer (Finance Department) of BRAC Bank (Ring Road Branch) Mr. Fazla-Rabbi who has given the opportunity to gather information about their organization.

Especially we would like to thanks to our honorable course teacher Md. Tanvir Pavel, senior Lecturer, Department Of Business Administration, ASA University Bangladesh. Without his help it was quit difficult for me to complete this report successfully in time.

Executive SummeryEastern Bank Limited (EBL). is one of the talented private banks in Bangladesh. The principal activities of Eastern Bank Limited are Trade Financing, Corporate Banking, Private Banking & Retail Banking. The objective of our report is to learn Probashi Banking Operation of Eastern Bank to identify the opportunities, Problems & to make some recommendations against these problems in Probashi Banking Operation. Eastern Bank Limited, a scheduled commercial bank established under the Banking Company Act, 1991 and incorporated as a public company limited by shares on May 20, 1999 under the Companies Act 1994 in Bangladesh. The banks has started its operation on 4th of July 2001 with a vision to be the market leader through providing all kinds of banking services suitable to the dynamic demands of both business and individual in the competitive market.

Table of ContentsChapter

No.Topics Page

No.

Introduction

1.1 Origin the studyIn fifth semester we are steadying the course have “Money & Banking” our course teacher is Md. Tanvir Pavel. We are really enjoying his class very much, because he has vast knowledge in his field of sturdy. One of the

requirements of this course is to submit a group report at the middle of semester.

1.2 Objective the study To know about the Probashi banking system of Bangladesh. To know management policy of BRCK BANK LTD. To know the customer service process of BRCK BANK LTD.

1.3 Methodology the studyAlthough there were so many limitations, we tried to use both the primary and secondary source of collecting information to make the report reasonable with as less abstraction as possible.

Secondary DataTo furnish the report properly information we were mainly taken from annual report 2010 & Internet.

Primary Data

To preparing that report, we conducted with the Executive Officer of BRAC Bank Ltd. at ring road branch.

1.4 Limitation the report

Difficulty in gaining accesses to financial sector

Non-availability of the most recent statistical data As a student it was not possible for us to collect all necessary secret

information.

We have to complete this report within a very short time that was not sufficient for a good investigation.

Because of information shortage we make some assumption So there may be some mistake in the report.

Besides this, it was very difficult to carry out the whole analysis on the basis of limitation scope of study.

(ii)

CHAPTER: 03

PROBASHI BANKING

3.1 Probashi BankingWhen you send your hard-earned money from abroad to dear ones at the farthest end of Bangladesh, ask them to collect it from over 3,500 pay out locations of BRAC Bank. Every month, Probashi Banking executes around 150,000 transactions; which has made BRAC Bank one of the largest players among private commercial banks in channelizing inward remittance in the country. And with ELDORADO, now you can withdraw money from any of the Eldorado member banks in addition to BRAC Bank outlets - that's too, instantly!

TERMS & CONDITIONS

1 Governing Laws, Regulations and Rules: These terms and conditions shall apply to such accounts and services as offered by the Bank to its customers, existing or new, from time to time. The Terms and Conditions herein shall be governed by the laws, rules and regulations of the Central Bank of Bangladesh, Government of Bangladesh and the Bank's policies and practices.

2 Acceptance of Rules: Any person opening an account shall be deemed to have read, understood, and accepted the terms and conditions herein governing the account.

3 Information about Customers: It is the Bank's policy that it will offer high quality services to Customers but not to Customers who are engaged in illegal activities and activities that are harmful to the welfare of the people of the country. It is therefore necessary for the Bank to obtain information about its that are true and correct. The customer agrees to provide the Bank such information, particulars and documents as the Bank may require from time to time in connection with the customer's financial condition, background and dealings with banks and businesses. The customer confirms that all information, particulars documents that the customer provides are true, correct and complete and that if there are any changes to the information provided, the customer will inform the Bank in writing. The customer authorizes the Bank to obtain any information that the Bank considers necessary from other banks, organizations and sources that provide information relative to the customer's financial conditions. It is the Bank's policy to maintain confidentiality of customer information. the laws and regulations in Bangladesh may require disclosure of customer information to Government organizations and/or regulatory organizations such as the Bangladesh Bank. The Bank may also consider sharing customer information in a waythat itconsiders mostsuitable withother organizationsto improve banking services. The customer authorizes the Bank to disclose or share information at the sole discretion of the Bank and indemnifies the Bank from any accidental disclosure of information during the process of printing, transportation and filing of information.

4 Fees: The Bank shall be entitled without notice to levy or impose all customary banking and other charges and expenses (including collection fees and legal expenses) in respect of any account or in respect of any other banking facilities provided to the customer by the Bank and to debit the relevant account(s) in accordance with the Bank's normal banking procedures. Such charges are not refundable upon termination of any or all of a customer's account(s).

5 Credit of the Account: The Bank acts only as the collecting agent and assumes no responsibility for the realization of any items deposited with the Bank for collection. Thus, proceeds of cheques or other instruments deposited are not available for withdrawal until collected by the Bank. The

Bank reserves the to debit any account that may have been inadvertently credited with an item subsequently unpaid on collection.

6 Issue and Safety of Cheques: Cheques will only be issued to a customer when all documentation considered necessary by the Bank has been obtained. It is the responsibility of the account holders to ensure that cheques in their possession are kept in secured place. The customer must at all times exercise due care prevent cheques, payment orders or other orders or instruments from coming into the possession of unauthorized persons and to prevent any cheques, orders or other instruments or instruction from being altered or forged in a manner which may facilitate fraud. In such events, the Bank is not responsible for any loss suffered by the customer or any other person. Any loss of cheques, orders or other instrument must be immediately reported to the Bank and confirmed in writing without any delay.

7 Changes of Terms and Conditions: The Bank may at any time as it deems necessary add/amend/delete the present terms and conditions. The Bank may give notice of such changes where it considers appropriate to the account holder(s) by ordinary mail.

8 Closure of Accounts: The Bank reserves the right to close any account or related service without giving prior notice if the conduct of the account is unsatisfactory in the opinion of the Bank or for any other reason(s) whatsoever. The Bank shall pay to the customer all available and finally collected balances all dues to the Bank have been recovered/realized at the time of the closure of the accounts.

9 Minimum Balance and Interest Payment: The minimum average monthly balance as prescribed by the Bank from time to time is required to be maintained in Current, Savings and other accounts. The Bank reserves the right to change the minimum balance requirement. If the balance falls below the required minimum period, the Bank may not credit any interest for that period.

10 Periodic Statements and Advices: The customer may be provided account "statement" yearly. The customer is required to promptly notify the Bank of the failure to receive an expected Statement or Advice. If the account holder does not bring the errors, discrepancies or irregularities to the notice of the Bank in writing within fifteen (15) calendar days after the mailing of statement/advice, it will be construed that the transaction shown on the account statement/advice are correct and complete.

11 Deposits, Withdrawals and Banking Facilities: The Bank shall meet its obligations exclusively at the branch office where the account is maintained by the customer. When appropriate telecommunication is possible, deposits or withdrawalsof money may be made at any of the Bank's branches in Bangladesh subject the terms and conditions of the Bank. The customer shall ensure that there are sufficient funds (or pre-arranged credits) for the Bank to honour cheques the Bank or for debits to the account in accordance

with instructions made by the customer for his/her account provided always that the Bank may, at its, sole discretion carry out the instruction notwithstanding such inadequacy and may do so without seeking prior approval from or notice to the customer and the shall be responsible to repay the resulting overdraft, advance or credit thereby or created and for all related charges.

12 Suspicious Transactions: The Bank may refuse to process any transaction on any account of the customer if the Bank suspects fraud or illegality therein. The decision of the Bank with regards to whether the transaction is or is likely to be involved a fraud or irregularity shall be final and conclusive and binding on the customer.

13 Instruments Deposited: The Bank will not accept stale or post-dated instruments for deposit. The Bank may refuse to accept an instrument payable to "Cash" if the instrument is not payable to "bearer". The Bank will refuse to accept an instrument for deposit if the payee's name is not identical to the name of the in the Bank's records.

14 Orders to Stop Payment or Amend Instruction: A Customer may place a stop payment order for a cheque in writing. The Bank will not make the payment if it has reasonable opportunity to act on such order.

15 Nominee: In the event of the death of a customer, the nominee shall receive/draw the amount of deposit held by the Bank in the customer's account. In the the Nominee is a minor at the time of the customer's death; the legal guardian is authorized to receive/draw the amount of the deposit held by the Bank in the customer's account. In the event that there is no nominee, the account willthen be frozen until the legal successors to the deceased is appointed/determined by relevant Court of Law.

16 Service Disruption: The customer agrees that the Bank will not be liable for any loss or any damage if it is unable to provide services in connection with any customer accounts due to postal, courier, electrical, mechanical, telecommunications or computer failure or an act of God, catastrophe, war, civil or industrial disturbance.

17 No Liability for Loss: The customer agrees that the Bank will not be liable for any loss, damage or liability incurred by the customer in connection with any of its account with or services provided or agreed to be provided by the Bank or inaction on part of the Bank or any of its officers, agents, employees and representatives. The customer agreed not to hold the Bank liablefor any loss or damage arisingfrom: (A) non-discovery of any forgeries or frauds, except to the extent that the Bank has acted with gross negligence, (B) the Bank closing the customer account for whatever reason whatsoever, (C) directly or indirectly, the error, failure, negligence, act or omission or any other, person, system, institution or payment infrastructure.

18 Indemnity: The customer shallkeep the Bank indemnifiedatall timesagainst allloss. costs,damages, expenses (including legal fees),

claimsor demands arising any way in connection with the customer's accounts or, in enforcing these terms and conditions and in recovering of any amount due to the Bank or incurred by Bank in my legal proceedings of whatever nature.

19.Acceptance of Terms and Conditions: I have signed the application form as a token of acceptance of the aforesaid terms and conditions.

3.3 Probashi Current AccountIt is ideal for Probashi Bangladeshis / Returning Bangladeshis who do not wish to earn interest due to religious or other reasons. This account also comes with cheque book and ATM card and is ideal for regular transaction. **This account will be maintained in Taka.

3.3.1 Features & Benefits24 hour Access to ATMs and POSs’Zero Balance Account openingNo relationship chargesNo Interest (Ideal for people who do not want interest for religious reasons)No restriction on frequent transactions

3.3.2 Apply EligibilityAny NRB who is between 18 to 65 years of old can open this accountThe NRB must have valid Residence / Work permit.Any NRB who is between 18 to 65 years of old can open this account

3.3.3Required DocumentsPhoto:2 pp size

3.3.4 Nominee Photo:1 pp size with account holder attestation on the reverse side. Photo may be kept pending at the time of account opening and must be provided with 15 days of account opening.

3.3.5 Identification:Photocopy of Valid passport (6 pages) with due attestation. In case of foreign passport attested photocopy of ‘no visa required for travel to Bangladesh’ page required.

3.3.6 Valid VISA:Entry VISA with due attestation. If it is in any other language other than English, no translation is required.

3.3.7 Work/Residency Permit:Not required. However it may be taken when visa is not valid to prove that applicant is legally residing abroad.

3.3.8 Address Proof: Address proof document (Any one): Resident Permit Work ID Utility Bill Pay Slip Driving License Government issued ID card Credit Card Bills Rent Receipts Over seas Bank Statement Citizenship card / Health Card / Green card / Social Security card Job Contract Letter Mobile Bill PO BOX no. will be accepted if the company's name against the PO

Box no. is the same as mentioned in employee's office address For any banking needs please call 24 hour Phone Banking: 01819

230000 or e-mail us at probashi@bracbank.com

3.4 Probashi Savings Account

Probashi Savings Account offers a regular savings account in local currency for the NRBs who is residing abroad and want to save their hard-earned money to utilize in future after coming back to Bangladesh.

3.4.1 Features & Benefits This is an interest bearing Taka account in which interest is paid twice

a year No relationship charges Cheque Book and ATM Card are available in this account

3.4.2 Apply Eligibility Any NRB who is between 18 to 65 years of old can open this account.

The NRB must have valid Residence / Work permit.

3.4.3 Required DocumentsPhoto:2 pp sizeNominee Photo:1 pp size with account holder attestation on the reverse side. Photo may be kept pending at the time of account opening and must be provided with 15 days of account opening.

Identification:Photocopy of Valid passport (6 pages) with due attestation. In case of foreign passport attested photocopy of ‘no visa required for travel to Bangladesh’ page required.

Valid VISA:Entry VISA with due attestation. If it is in any other language other than English, no translation is required.

Work/Residency Permit:Not required. However it may be taken when visa is not valid to prove that applicant is legally residing abroad.

Address Proof: Address proof document (Any one): Resident Permit Work ID Utility Bill Pay Slip Driving License Government issued ID card Credit Card Bills Rent Receipts Over seas Bank Statement Citizenship card / Health Card / Green card / Social Security card Job Contract Letter PO BOX no. will be accepted if the company's name against the PO

Box no. is the same as mentioned in employee's office address

3.5 Probashi Fixed DepositA fixed deposit account allows you to deposit your money for a set-period of time, there by earning you a higher rate of interest in return. Fixed Deposits can be made from 3 months to 3 years. Interest is paid on the maturity at a very attractive rate. ** This account will be maintained in Taka.

3.5.1Features & Benefits NRBs’ can choose any of the Fixed Deposit maturity period from the

tenures of : 3 months, 6 months, 12 months, 24 months, 36 months. Auto renewal on maturity, if no instruction is received. Cumulative interest gain

3.5.2 Probashi AbiramProbashi Abiram is a Fixed Deposit, which is ideal for NRBs who want to get a return every month. If the NRB has sufficient fund, s/he can open Probashi Abiram for 1 year to 3 years tenure .The interest will be paid every month on the Probashi Savings/Current Account automatically. This is ideal for customers who want to pay their DPS installments. Accounts will be maintained in Taka.

3.5.3 Features & Benefits Customers can earn monthly return. Monthly installment for DPS will be automatically realized from this

account. Access to wide network of BRAC Bank.

3.6 Probashi DPS To secure NRB’s hard-earned money, Probashi Banking Service

introduces an ideal monthly saving scheme "Probashi DPS"

3.6.1 Features & Benefits Monthly installment of minimum Tk. 500 and its multiples. Installment will be realized automatically on due date.

3.7 Investment

3.7.1 Probashi Wage Earners' BondProbashi Wage Earner Development Bond (WEDB) is a product designed by Bangladesh Central bank for Bangladeshi national living abroad. The objective of this product is to encourage the NRBs to invest their hard earned money to purchase WEDB on which the government guarantees a fixed interest rate.

3.7.2 Features & Benefits Tax exemption on the principal and interest amount. Loan Facility on the bonds in Bangladesh. No maximum limit on bond purchase. Death risk benefit up to 30% to 50% of investment Interest payable every six months in BDT. Can be used as security for any loan. Purchaser of Wage Earner's Development Bond can repatriate the

principal amount of the bond in foreign currency.

3.7.3 US Dollar Premium & Investment BondUS Dollar Premium Bond is a product designed by Bangladesh Central bank for Bangladeshi national living abroad. The objective of this product is to encourage the NRBs to invest their hard earned money to purchase WEDB on which the government guarantees a fixed interest rate

3.7.4 Features & Benefits Interest is payable in Bangladesh currency or in US Dollar. Principal amount payable in Bangladesh currency or in US Dollar. Investors of one Million US Dollar and above shall be treated as CIP

3.7.5 Probashi BiniyogBRAC Bank Limited offers 'Probashi Biniyog' – a product that exclusively provides Non-Resident Bangladeshis (NRBs) the opportunity to invest in the Bangladeshi Capital Market through a Beneficiary Owner's (BO) account which will be funded by a Non Resident Investor's Taka Account (NITA). Both BO account and NITA will be held with BRAC Bank Limited.

3.7.6 Features NRBs can invest into the Bangladeshi Capital Market from anywhere in

the world

Custodian Service will be provided by BRAC Bank 100% repatriation of capital, dividend and investment profits NRBs can apply for IPOs as well as buy and sell shares in the

Secondary Market through BRAC Bank Limited. They can use e-mail, fax or phone to issue trade orders to BRAC Bank Limited

3.8 Account Operations Only share related transactions are allowed No ATM card or Cheque book will be issued against NITA NITA (Current account – non-interest bearing account) will provide

customers the flexibility to remit funds from abroad which will be kept in the account as local currency (BDT)

Permissible deposits under NITAi. Inward Remittances ii. Transfer from FCY account iii. Refund Warrants of IPO iv. Sale proceeds of shares v. Dividends/Bonus from shares

3.8.1 Remittance Info

3.8.2 Western UnionWestern Union helps you provide for your loved ones almost anywhere in the world. Whether it's for education, healthcare or groceries, we offer Consumer-to-Consumer Money-Transfer Services to get resources to members of your family quickly.

3.8.3 Western Union Broadens Global Cash Payment Options for AdSense SubscribersENGLEWOOD, Colo., Jul 08, 2010 (BUSINESS WIRE) -- The Western Union Company (NYSE:WU) today announced the expanded availability of the Western Union cash payment option for Google AdSense. First introduced in a limited number of countries in November 2007, the reliable and flexible Western Union payment option is now

Exchange Houses

Sl

No.

Name of Exchange House Address

UAE

01. Federal Exchange Co. W.L.L PO Box: 1038, Dubai, UAE

Tel: 009714 2256773/2258421

02. Wall Street Exchange Center

L.L.C.

PO Box: 3014, Nafi Road, Derai Dubai, UAE

Tel: 009714 2269026

03. Lari Exchange Establishment Liwa Street, Saif Bin Darwish Building, Abu Dhabi, U. A.E

Tel: 009712-6223225

04. UAE Exchange Centre L.L.C. Po Box-170, Abu Dhabi, UAE

Tel: 00971-26322166

05. Habib Exchange Co. L.L.C Central office Hamden Street, P.O.Box 2370, Abu Dhabi, UAE,

Tel: 026272656

06. Al- Ahalia Money Exchange

Bureau

P.O. Box No-2419,Abu Dhabi, U.A.E.

Tel. 00971 2 6270004

07. Al Ansari Exchange Company P.O. Box 325, Al AmiN Tower, Liwa Street, Abu Dhabi, UAE.

TEL: 9712 6227888

08. Economic Exchange Centre 116/356 Naif Road, Opposite Al Ghurair Exchange

P.O. Box No 116496, Deira Dubai, U.A.E.

Tel: 00971 4 2717575

09. Al Rostamani International

Exchange Co. (ARIE)

P.O. BOX 10072

DUBAI, U.A.E. Tel. 00971-2-6098100

10. Alfa Exchange P.O. BOX: 122414, DEIRA DUBAI, UAE

Tel: +971 4 2340777

11. Alfalah Exchange Company P.O. BOX 3692

Sheikh Zayed The Second Street (Electra), Abu Dhabi, U.A.E.

Tel. 00971-2-6329888

12. Xpress Money Po Box-170, Abu Dhabi, UAE

Tel: 00971-26322166

13. GCC Exchange P.O.BOX 41704, Deira Dubai

TEL: 009714 2243655

KSA

14. Alamoudi Exchange. Co. KSA Gabil Street (Near Mahmal), Balad, Jeddah- 21411, K.S.A

Tel: 00966-26474515

QATAR

15. Union Exchange Co. WLL,

Qatar

Al Mushirib Road, Sarah Kahrba, Doha, Qatar

Tel: 00974-4423715

BAHRAIN

16. Dalil Exchange, Bahrain Al Noor Building, Near Bab Al Bahrain on Government Avenue Road, Manama,

Bahrain

Tel: 00973-17223464, 225997

17. Zenj Exchange, Bahrain PO Box 236, Manama, Kingdom Of Bahrain

Tel: 17224352

18. Bahrain Financing Company,

Bahrain

8-12 Bab Al Bahrain Building 150, Road 1507, Manama, Kingdom of Bahrain

Tel: 00973 17228888

OMAN

19. Oman & UAE Exchange Centre

& Co. LLC, Oman

Po Box-1116, Postal Code 131,Al Hamriya, Sultanate Of Oman

Tel: 00968-750830

20. Oman International Exchange

LLC

Po Box-2131, Ruwi, Muscat, Sultanate of Oman,

Tel: 00968-24707025, 24709519

21. Oman International Exchange

LLC

P.O. Box 994, Postal Code 114, Muscat, Sultanate-of Oman, Tel: 0096824832197

22. Majan Exchange LLC, Qatar P.O. Box: 583, Postal Code: 117 Sultanate Of Oman, Tel: 24794017/ 2479019

USA

23. Placid NK Corporation, USA 152 Market Street, Suit 601, Paterson, New Jersey 07505, USA, Tel: 001

7187771498

24. Continental Exchange

Solutions. Inc, USA

13825 Cerritos Corporate Drive, Suite C Cerritos, CA 90703, U.S.A.TEL: +1 800

500 3994

CANADA

25. Doulat Enterprise Inc. 1396 Gerrard Street East Toronto, Ontario M4L1Z4, Canada, Tel: (416) 907 7458

UK

26. Saajan Worldwide Money

Transfer, UK

147, Lozells Road, Lozells, Birmingham, B19 2TP, UK Tel: 0121 515 4008

27. Jamuna Exchange, UK 100 Brick Lane, London EI 6RL Tel: 020 7247 5336

28. Instant Cash Worldwide Ltd. 185 Praed Street, Padding ton, London W2 1RH, UK

29. Mobile Union Limited 89 Worship Street London EC2A 2BF United Kingdom

http://www.mtxpress.com/BRAC

30. ICICI Bank UK

SINGAPORE

31. AMEERTECH Remittance &

Exchange Services Pte Ltd

270 Balestier Road, Singapore 329721 Tel. 006252 7757

KUWAIT

32. Kuwait Ho UAE Exchange,

Kuwait

UAE exchange Centre, Head Office, Murghab, Kuwait Tel: 009652 459417

33. Kuwait Asian Int. Exchange Co.

WLL, Kuwait

PO Box 46489, Fahaheel 64015, Kuwait

34. Dollarco Exchange Co. Ltd.

Kuwait

Central office Murgab, Po box 26270, Safat-13123, Kuwait, Phone: 00965

2412767

35. Al Moosa Exchange Company

WLL, Kuwait

Mirqab- Shohada’a St. Ahmed Al-Saleh Building, Safat, Kuwait

MALAYSIA

36. Merchantrade Asia SDN BHD Suite 1632, 16th floor, Block A Damansara Intan, No 1, Jalan SS20/27 47400,

Petaling Jaya Selangor Darul Ehsan Malaysia .TEL: +603 7727 8606

37. Herald Remittance SDN BHD 27-2, Jalan USJ 21/10, Selangor 47650 Subang Jaya, Malaysia TEL: +971 4

2340777

38. IME (M) SDN BHD 22 JLN Medan Pasar, 50050, Kuala Lumpur, Malaysia

39. Western Union All Over the World

SWITZERLAND

40. PACO SERVICES S.A.R.L Rue de Terreaux 18, 1003 Lausanne Switzerland

ITALY

41. Ital-Bangla Money Exchange

Company S.N.C

Via Toscana 42/7 Sede legale 40141 Bologna, Italy Tel. 0039-3482681844,

3287289979

Chapter- 4Finings & AnalysisProfitability Analysis

How Banks Use Profitability Analysis

Determining the profitability of each customer is not easy. Modern profitability software adds up the revenues from each account, and subtracts the bank’s costs on a monthly basis. The costs include the cost of the funds, provision for losses, overhead, deposit insurance, and customer’s usage of bank services. Profitability software is still in its infancy. It offers a real challenge for software providers to deliver an outstanding product. It will be particularly useful for advanced data applications.

Once the software has determined the profitability of each account each month, each customer’s total profitability has to be computed by adding together the profits or losses from each of his accounts. When banks first do this calculation, it often comes as quite a shock. Some, like the Fleet Bank, have found that as many as half of their total customers are unprofitable. Many will never be profitable. Their marketing staffs are busy working to acquire and retain people who destroy value for the bank!

With knowledge of profitability, banks begin to classify their customers into profitability segments so that they can understand and modify customer and employee behavior. Here is the way one bank classified its customers in a recent month:

The top two segments, representing 16% of the bank’s customers, were responsible for 105% of the bank’s total profit. The bottom 28% represented a loss of 22% of the profit. This picture is typical of many banks.

What are banks doing about this situation? In the first place, few banks have reached the this stage yet, and most of those have not developed any conscious strategies to deal with the problem. Those that have developed a plan, however, have come up with some innovative ideas.

Most are working very hard to retain the customers in the top two groups. These are designated as Gold customers. Banks try to extend special services to them. Gold customers call in on special toll free lines. Branch managers are furnished with the names of their top customers, and are instructed to meet and greet them when they visit a branch. They are assigned personal bankers, who call and introduce themselves.

The customer access screens used by bank personnel include a profitability code, so employees can know whether they are dealing with a 5, 4, 3, 2, or 1. When the loans for the 1s come up for renewal, they are renewed at a higher rate, to try to nudge them into profitability, or possibly to get them to take their business elsewhere. The software does something else which is quite sophisticated. The software determines which bank products should be suggested to the customer during customer contacts on the phone or in person. These products are selected by formulas that determine what bank products the customer currently uses, and what his current balances would indicate that he might be eligible for and want to use next. The software also suggests the appropriate rates for loans or CDs based both on the current market, and the customer’s profitability level. The bank software is often tied to the customer service call director, which routes Gold customer calls to special Gold Service teams, and provides only minimal service for unprofitable customers.

Customers who visit branch offices cost the bank considerable money. It is much more economical for customers to use an ATM, mail, or PC banking. For this reason, some banks have tried to discourage branch visits by charging a fee. Profitability analysis shows that such policies may be a serious mistake. As the above chart indicates, branches are visited most by two groups: the most profitable and the least profitable. Policies that turn away unprofitable customers may also turn off Gold customers.

Beyond Profitability

Profitability only measures the past. Lifetime value projects this into the future, and looks at what each customer can do for the bank in the coming years. Fleet Bank, for example, determines customer profitability and lifetime value each month, and also computes potential lifetime value if the customer can be talked into purchasing the most likely next products. In this way, Fleet manages its customer relationships in a highly professional manner. We will be covering lifetime value in a future article.

What are marketer’s roles in this revolution in banking customer management? Database markering analysts should:

Have profitability computation software available

Assist banks in creating marketing customer profitability customer segments

 Help to create “Next best product” software

Have the results of these program appear on customer contact screens throughout the bank

Assist banks in moving their customers towards profitability, using these new techniques.

Investment AnalysisBRAC Bank launches 'Probashi Biniyog' for NRB investors

BRAC Bank Limited officially launched a new service whereby the Non-Resident-Bangladeshis (NRBs) can invest into the capital market of Bangladesh.

The service, named 'Probashi Biniyog', was unveiled through a formal ceremony at a local hotel recently.

'Probashi Biniyog' is a new financial solution from BRAC Bank whereby that will enable NRBs open BO accounts, buy and sell stock in both primary and secondary markets, and repatriate the profit to their country of residence.

BRAC EPL Securities Ltd, a concern of BRAC Bank, will provide the stock-exchange related services while the solution will be available to all NRB customers of BRAC Bank. .

Sir Fazle Hasan Abed, Founder Chairman of BRAC Bank Limited was present at the event as the Chief Guest to unveil this new product with the presence of Mr. Muhammad A. (Rumee) Ali, Chairman and Mr. A. E. A. Muhaimen, Managing Director & CEO, BRAC Bank Limited and Mr. Saiful Islam, Vice Chairman, BRAC EPL Stock Brokerage Limited. .

Currently, no other bank is providing this kind of a service. The Stock Market in Bangladesh has seen surge of investment, but the percentage of NRBs in the market has remained negligible as there was no formal solution for them to invest into secondary market from abroad. Through 'Probashi Biniyog', the NRBs can operate their accounts online from abroad. All share related services such as NITA, BO and stock broking accounts are being offered under one umbrella of 'Probashi Biniyog'.

In expression of launching 'Probashi Biniyog', Sir Fazle Hasan Abed said, "I am proud to inaugurate Probashi Biniyog which will provide one-stop solution to NRBs for investing in Bangladesh Capital Market from abroad. I believe this will strengthen the investment at the Stock Markets.” .

In the ceremony, Mr. Muhammad A. (Rumee) Ali said, 'This was a long awaited product by NBRs for performing online transaction to buy and sell shares from abroad. Together, BRAC Bank and BRAC EPL has made this solution possible." .

Probashi Biniyog exclusively provides Non-Resident Bangladeshis (NRBs) the opportunity to invest in the Bangladesh Capital Market from anywhere in the world through a Beneficiary Owner's (BO) account, which will be funded by a Non Resident Investor's Taka Account (NITA). Both BO account and NITA will be held with BRAC Bank Limited. .

Under the Probashi Biniyog, NRBs can apply for IPOs as well as buy and sell shares in the Secondary Market through BRAC Bank Limited. They can use e-mail, fax or phone to issue trade orders to BRAC Bank Limited.

There will be 100 per cent repatriation of capital, dividend and investment profits.

Stock market investors and operators hailed the BRAC-EPL move. .

They said such a move will help the stock market grow further. .

Market operators said a huge number of NRB investors will be benefitted with the new product

I believe the new product will help the Bangladesh market go wide through the international services,” a local ionvestor said.

BRAC Bank Limited provides various commercial banking services in Bangladesh. It offers retail, corporate, small and medium enterprises (SME), and Probashi banking products and services. The company’s retail banking product line comprises various deposit products, including salary accounts, current accounts, short term deposits, savings accounts, Ezee accounts, Abiram accounts, interest first, fixed deposits, and step up fixed deposits; and loan products, such as salary, NoW, car, teachers’, study, travel, credit card, top up, secured, and doctor's loans. Its enterprise banking products and services include various loan products consisting of overdraft, term loan, lease finance, loan against trust receipt, work order finance, and medium enterprise loans; trade finance, including letters of credit and guarantee; and corporate cash management services. The company’s SME products comprise various deposit products, such as Bizness account; and loan products, including Anonno Rin, Apurbo Rin, Pathshala Rin, Aroggo Rin, Digoon Rin, and Prothoma Rin. Its Probashi banking products and services include current accounts, savings accounts, and fixed deposits. As of December 31, 2008, BRAC Bank operated 56 branches, 30 SME service centers, 427 SME unit offices, and 112 ATM sites. The company was incorporated in 1999 and is based in Dhaka, Bangladesh.

Financial ratio analysis

Financial ratio analysis is the calculation and comparison of ratios which are derived from the information in a company's financial statements. The level and historical trends of these ratios can be used to make inferences about a company's financial condition, its operations and attractiveness as an investment.

Financial ratios are calculated from one or more pieces of information from a company's financial statements. For example, the "gross margin" is the gross profit from operations divided by the total sales or revenues of a company, expressed in percentage terms. In isolation, a financial ratio is a useless piece of information. In context, however, a financial ratio can give a financial analyst an excellent picture of a company's situation and the trends that are developing.

A ratio gains utility by comparison to other data and standards. Taking our example, a gross profit margin for a company of 25% is meaningless by itself. If we know that this company's competitors have profit margins of 10%, we know that it is more profitable than its industry peers which is quite favourable. If we also know that the historical trend is upwards, for example has been increasing steadily for the last few years, this would also be a favourable sign that management is implementing effective business policies and strategies.

Financial ratio analysis groups the ratios into categories which tell us about different facets of a company's finances and operations. An overview of some of the categories of ratios is given below. .

Leverage Ratios which show the extent that debt is used in a company's capital structure. .

Liquidity Ratios which give a picture of a company's short term financial situation or solvency. .

Operational Ratios which use turnover measures to show how efficient a company is in its operations and use of assets. .

Profitability Ratios which use margin analysis and show the return on sales and capital employed.

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Chapter- 5SWOT Analysis

SWOT Analysis .

SWOT analysis is done for a company, to find out its overall Strengths, Weaknesses, Threats and opportunities leading to gauging the competitive potential of the company. .

Strengths Stable Sources of Funds Strong Liquidity Position Satisfactory Profitability Experienced top management Satisfactory capital base

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Weaknesses

Threats

opportunities

Vision

BRAC Bank will be a unique organization in Bangladesh. It will be a knowledge-based organization where the BRAC Bank professionals will learn continuously from their customers and colleagues worldwide to add value. They will work as a team, stretch themselves, innovate and break barriers to serve customers and create customer loyalty through a value chain of responsive and professional service delivery. Continuous improvement, problem solution, excellence in service, business prudence, efficiency and adding value will be the operative words of the organization. .

  BRAC Bank will serve its customers with respect and will work very hard to instill a strong customer service culture throughout the bank. It will treat its employees with dignity and will build a company of highly qualified professionals...