Consumers Credit Scheme

of

Prime Bank Limited

Submitted by

1.1. An Overview

In general sense we mean “Bank” as a financial institution that deals with money. There are different types of banks like Central bank, Commercial bank, Savings bank, Investment bank, Merchant bank, Co-operative bank etc. But when we use the term bank it generally means ‘commercial bank’ that collects the deposit from surplus unit of the society and then lends the deposits to the deficit units.

Now-a days banking sector is modernizing and expanding its hand in different financial events every day. At the same time the banking process is becoming faster, easier and is becoming wider. In order to survive in the competitive field of the banking sector all organizations are looking for better service opportunities to provide their fellow clients. So it has become essential for every person to have some idea on the bank and banking procedure.

Internship program so called work attachment program is essential for every BBA student because it helps him or her to acquaint with the real life situation. As bank is one of the most important financial intermediaries; so I have selected a bank, i.e., the Prime Bank Limited, which is one of the leading banks in the new banking arena of our country.

Internship program has been included to BBA curriculum for producing talent, up-to-date and smart, efficient executives. Internship means gaining supervised experience. Internship program offers an opportunity to know the environment of a particular organization. By undergoing this program, I have developed and refined my theoretical knowledge gained in the classroom situation. This program provides exciting experience of planning, culture, behavior of employee and management style of that organization which helps me to fill the gap between theoretical and real business world.

Theoretical knowledge does not make a person perfect. To implement the academic knowledge, practical knowledge related to it is important. A perfect coordination between theory and practice is important in the context of modern business world. In order to resolve the dichotomy between theory and practice, the different university arranged Internship Program as a partial completion of BBA program. This program is necessary for every student to complete his or her academic degree. Internship program brings student closer to the business theory and practical and thereby help them to substantiate their knowledge so that they can prepare themselves to start a successful career.

Under the internship program, every student is assigned to and organization with a view to acquire practical knowledge. After taking practical knowledge, each student is required to prepare a report on the selected organization under the guidance of his or her assigned teacher will examine it before awarding BBA degree.

As a participant in this, I was place under Prime Bank Limited, MIS Unit, Head Office, Dhaka. In preparing the report, I have incorporated the suggestion from correspondents to mention here.

This report is mainly emphasized on Consumers’ Credit Scheme of Prime Bank Limited -comparative study with leading private Banks.

The report also focuses on problem faced by this bank in rendering its service to its customers along with the recommendations for the situations on them.

Despite of all my efforts, printing mistake deficiencies for which I am only responsible. My efforts will be successful if this report serves the purpose.

There exists huge deference between theoretical knowledge and practical knowledge. This report is an outcome of practical study. Since it is mandatory for the BBA program of Department of Management Information Systems, Institute of Business Studies, DarulihsanUniversity, to make a proper blending of students theoretical knowledge with the practical exposure which they have earned in their internship program.

This report is an integral part of every student course curricula and the gaining of her practical training. It ensures the practical knowledge on a specific matter, which is assigned to the students by their respective teachers or otherwise known as supervisor.

The Title of my report is “Consumers’ Credit Scheme of Prime Bank Limited” This report is assigned by the HR department of Prime Bank Limited and approved by the Supervisor of Department of Institute of Business Studies, DarulIhsanUniversity.

1.2. ORGANIZATION OF THE REPORT

The report is mainly divided into four major parts:

The Organization part

The Project part/ Comparative analysis of Consumers’ Credit Scheme

The organization part includes the company profile, company background, vision, mission, goal, objective, Board of Directors, Management, branches.

The project part dictates about the Consumers’ Credit schemes of PBL.

1.3.OBJECTIVESOF THE REPORT

The main objective of the internship program is to familiarize myself with real market situation and compare it with bookish concept. The main objective of this report is to have an assessment about Consumers’ Credit Scheme of Prime Bank Limited. In addition the study seeks to achieve the following objectives:

  • To know about the Consumers’ Credit Scheme of PBL, to identify its features and to compare this Scheme with the same schemes of other private sector banks.
  • To familiarized with practical job environment.
  • To have an exposure on the financial institution especially on banking environment of Bangladesh.
  • To give a brief overview of Prime Bank Ltd. and the day to day functions and services offered by the bank
  • To analyze the Islamic Banking situation and performance of Prime Bank Limited.
  • To justify the extent of the use of MIS in Consumer Credit Scheme.

1.4.Scope

This report has been prepared through extensive discussion with bank employees, other leading commercial private banks, and with the clients. Prospectus provided by the banks at time of preparing the report, I had a great opportunity to have an in depth knowledge of “Consumer Credit Scheme” of Prime Bank Limited comparing with other prevailing commercial private Banks in our environment. The scope of this report is not only limited to the Prime Bank Ltd., but also the report is analytical based on practical observation, about the Consumers’ Credit Schemes of various Private sector Banks operation in our environment.

1.5.METHODOLOGY OF THE REPORT

The nature of this report is descriptive, so instead of doing any survey or using sampling method, observation method is used to complete this qualitative research. Most of the necessary information has been collected by face to face interview with the employees working in this department, personal investigation with bankers, and maintaining daily diary which contains all the activities that has been observed in the bank.

1.5.1.Population: The study was conducted on the consumers’ Credit Scheme of Prime Bank Limited. Therefore, for the purpose of the study consumers’ credit schemes of all the branches of Prime Bank Limited were constraints of population of the study.

1.5.2.Sampling Unit: Only one branch of Prime Bank Limited would be the sampling unit for the study, i.e. Motijheel Branch, Dhaka.

1.5.3.Sampling Technique: Random sampling used for the purpose of the study,

1.5.4.Sources of Data:The report is based on both primary and secondary sources of information. Interviewing the managers and officers of the bank, talking to the customers has provided the primary sources of information. Furthermore, different publications of the bank, annual reports, and the bank website were the secondary sources of data.

a)Primary Sources:

Guidelines and suggestions from CCS in charge of Prime Bank limited.

Interviewing with the bank officials, specially the principal officer of Consumers’ Credit Scheme of Prime Bank Ltd, Motijheel Branch.

b)Secondary Sources:

Annual report of Prime Bank Ltd.

Published Booklet of Prime Bank Ltd.

Various published documents of other competing banks.

1.5.5.Data Collecting Technique: Fort the purpose of the study two methods of techniques used:

a)Observation

b)Interview

1.6.LIMATATIONS

Observing and analyzing the broad performances of a Bank and one of its Branches, moreover when the sample is only one branch, is not an easy job by this short duration of time (only one month). I am a not an employee of Prime Bank Ltd. Some data could not be collected due to security reason. However, omitting this, the report will help me understand the whole system of Consumers’ Credit Schemes on Banks in our environment.Some fetters at the time of preparing the report are tagged on below:

  • The insufficiency of information is main constraint of the study. Moreover employees are not interested to provide all information due to security and other corporate obligation.
  • The employees and clients are busy to provide me time for interview.
  • Inexperience and time limitation were the constraints of the study.

2.1.PROFILE OF PRIME BANK LTD

Prime bank Limited was incorporated as a public limited company in Bangladesh as a Banking Company under the Companies Act 1994 and commenced it’s banking business with one branch from 1995. Now is has 44 branches all over Bangladesh. Out of the above 5 branches are run under Islamic Shariah, which is substantially differs from other branches run on a commercial conventional basis. The bank is listed with Dhaka Stock Exchange and Chittagong Stock Exchange as a publicly quoted Company for it’s general class of shares.

2.2. COMPANY BACKGROUND

In the backdrop of economic liberalization and financialsector reforms, a group of highly successful local entrepreneurs conceived an idea of floating a commercial bank with different outlook. For them, it was competence, excellence and consistent delivery of reliable service with superior value products. Accordingly, Prime Bank Ltd. was created and commencement of business started on 17th April 1995. The sponsors are reputed personalities in the field of trade and commerce and their stake ranges from shipping to textile and finance to energy etc.

As a fully licensed commercial bank, a highly professional and dedicated team is managing Prime Bank Ltd. with long experience in banking. They constantly focus on understanding and anticipating customer needs. As the banking scenario undergoes changes so is the bank and it repositions itself in the changed market condition.

Prime Bank Ltd. has already made significant progress within a very short period of its existence. The bank has been graded as a top class bank in the country through internationally accepted CAMEL (Capital, Asset, Management, Earnings and Liquidity) rating. The bank has already occupied an enviable position among its competitors after achieving success in all areas of business operation.

Prime Bank Ltd. offers all kinds of Commercial, Corporate and Personal Banking services covering all segments of society within the framework of Banking Company Act and rules and regulations laid down by our central bank. Diversification of products and services include Corporate Banking, Retail Banking and Consumer Banking right from industry to agriculture, and real state to software.

The bank has consistently turned over good returns on Assets and Capital. During the year 2005, the bank has posted an operating profit of Tk. 1520.34 million and its capital funds stood at Tk 2808.00 million. Out of this, Tk. 1400.00 million consists of paid up capital by shareholders. The bank’s current capital adequacy ratio of 9.96%is in the market and much above the stipulated line of 8%. In spite of complex business environment and default culture, quantum of classified loan in the bank is very insignificant and stood at less than 0.96%

Prime Bank Ltd., since its beginning has attached more importance in technology integration. In order to retain competitive edge, investment in technology is always a top agenda and under constant focus. Keeping the network within a reasonable limit, their strategy is to serve the customers through capacity buildingacross multi delivery channels. Their past performance gives an indication of their strength. They are better placed and poised to take their customers through fast changing times and enable them compete more effectively in the market they operate.

2.3. VISION, MISSION, GOAL AND OBJECTIVE

Vision

To be the most efficient bank of terms of customer service, profitability and technology application.

Mission

  • Cost reduction through integration of technology at all levels.
  • Continuous improvement in it’s business policies and procedures.

Goal

On delivery of quality service of all areas of banking activities with the aim to add increased value to shareholders investments and offer the highest possible benefits to the customers.

Strategic Priorities

To have sustained growth, broaden and improve the range of products and services.

Objective

  • The main objective of Prime Bank Ltd. is to maximize the profit through customer satisfaction which very much reflects the idea of fundamental marketing concept. It has been pursuing to earn maximize profit by providing best and improved customer service.
  • To ensure high return on investment and with different products and services.
  • To remain as the market leader, diversification of business and the automation of banking operation.
  • To play a significant role in the economic growth of this country.
  • To strive for profit and sound growth.

2.4 COMPANY ORGANOGRAM

Sl. No. / Designation
01 / Managing Director
02 / Deputy Managing Director
03 / Senior Executive Vice President
04 / Executive Vice President
04 / Senior Vice President
05 / Vice President
06 / Senior Assistant Vice President
07 / Assistant Vice President
08 / First Assistant Vice President
09 / Senior Executive Officer
10 / Principal Officer
11 / Senior Officer
12 / Management Trainee
13 / Officer
14 / Junior Officer
15 / Assistant Officer
16 / Trainee Assistant

2.5. Hierarchy of Prime Bank Ltd.

Chairman

Board of Directors

Executive Committee

Managing Director

Additional Managing Director

Deputy Managing Director

Senior Executive Vice President

Executive Vice President

Senior Vice President

Vice President

Senior Assistant Vice President

Assistant Vice President

First Assistant Vice President

Senior Executive Officer

Executive Officer

Principal Officer

Senior Officer

Management Trainee Officer

Junior Officer

2.6. Performance At A Glance

(Tk. in Million)

Particulars / 2005 / 2004 / 2003 / 2002
Paid-up Capital / 1,400.00 / 1,000.00 / 700.00 / 600.00
Total Capital / 3,177.32 / 2,476.06 / 1,958.12 / 1,665.10
Capital Surplus/Deficit / 307.19 / 401.53 / 477.21 / 594.00
Total Assets / 41,506.29 / 32,361.62 / 24,249.13 / 19,359.93
Total Deposit / 36,022.46 / 28,069.24 / 20,483.23 / 16,481.60
Total Loans and Advances / 31,916.11 / 23,219.67 / 16,492.22 / 12,686.85
Total Contingent Liabilities and Commitments / 23,683.08 / 20,531.79 / 16,351.42 / 13,263.78
Credit Deposit Ratio83% / 89% / 83% / 81% / 77%
Percentage of Classified Loans Against Total Loans % Advances / 0.96& / 1.52% / 1.89% / 1.48%
Profit after Tax & Provision / 568.20 / 611.94 / 375.46 / 418.14
Amount of Classified Loans during current year / 308.21 / 246.23 / 214.45 / 86.96
Provision kept against Classified Loan / 127.00 / 174.00 / 249.44 / 122.81
Provision Surplus/Deficit against Classified Loan / 20.28 / 52.66 / 85.98 / 25.27
Cost of Fund / 7.07% / 6.62% / 7.32% / 7.27%
Interest earning Assets / 37,438.63 / 29,137.28 / 21,936.70 / 17,178.17
Non-Interest earning Assets / 4,067.66 / 3,224.34 / 2,295.65 / 2,180.76
Return On Investment (ROI) / 6.59% / 6.36% / 6.58% / 6.55%
Return On Assets / 1.5% / 2.16% / 1.72% / 3.86%
Income from Investment / 259.52 / 196.15 / 167.77 / 130.75
Earnings per Share / 40.59 / 61.19 / 37.55 / 59.73
Net Income per Share / 40.59 / 61.19 / 37.55 / 69.69
Price Earning Ratio / 16.40 / 14.37 / 6.98 / 5.15

2.7. Branch network of Prime Bank Limited

Prime Bank Limited expanded and consolidated it’s customer base in both of its core business and retail banking. As up to the period the bank retained its lead by increasing the network of branches to the tune of 37 in no. upto 30th December, 2005 shown in figure as follows.

Note: IBB stands fro Islamic Banking Branch Out of 43 branches no. of IBB is 5

2.8. FUNCTIONAL STRUCTURE

2.8.1. GENERAL SERVICE DIVISION (GSD)

The functions of GSD are classified as Establishment and General Banking

(a) Establishment The main function of GSD is to procure and supply the tangible goods to branches of PBL. Those are

Tangible functions of opening a branch, for example, interior decoration, making lease agreement.

Print all security papers and bank stationeries, forms, registers and distribute them to the branches.

Purchase and distribution of bank’s furniture and fixtures.

Find out the demand of equipment from the branches and divisions and arrange the purchase and delivery of them to the branches concerned.

Install and maintain different facilities in different branches.

(b) General Banking

General Department performs the majority functions of a bank. It is the core Department of any bank. The activities of GB of PBL are mainly divided into the following categories:

Account opening section.

Local remittance section.

Online branch banking section.

Deposit scheme section.

Clearing section.

Collection section.

Cash section.

Accounts section.

2.8.2. HEAD OFFICE ACCOUNTS

It deals with the Head Office transactions with banks and its different branches and these are recorded under the following headings.

  • Income and Expenditure Positioning: It maintains all the income and expenditure information.
  • Cash Section: It handles cash expenditure for office operations and payments.
  • Bills Section: It deals with inland bill transactions.
  • Salary and Wages Section: Salary and wages of head office executives are given from this account.
  • Provident Fund. Employees provident fund are maintained here.

2.8.3. CONSOLIDATION OF BRANCH ACCOUNTS

All branches of PBL have to periodically send their income and expenditure, profit and loss accounts to head office. This division consolidates all these information and makes statements to submit to Bangladesh Bank.

2.8.4. CREDIT DIVISION

The main functions of this division are:

  • To manage PBL’s credit portfolio.
  • Receive credit proposal from branches.
  • Appraise and approve the proposals.
  • Sanction letters and send them to branches.
  • Monitor and follow up the loans and advances provided by the bank.
  • Set up prices for credits and ensure their effectiveness.
  • Prepare various statements to submit to Bangladesh Bank.

2.8.5. INTERNATIONAL DIVISION

This division is responsible for monitoring and supervising the foreign exchange dealings of the bank. It performs the following functions:

  • Making guidelines and frameworks for foreign dealings complying the rules of Bangladesh Bank.
  • Circulating instructions of Bangladesh Bank.
  • Maintaining correspondence with foreign banks and exchange houses with which it has exchange arrangement.
  • Monitoring NOSTRO accounts with banks in abroad.
  • Fixing and sending foreign exchange rates to Authorized Dealer (AD) branches and Bangladesh Bank.

2.8.6. TREASURY