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Organization Overview
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1.0 Profile of the Organization
The importance of financial intermediaries in the development of the overall economy of
country cannot be described in short. From the inception of the civilization the banking sector
dominate the economic development of a country by mobilizing the saving from the general
people and channeling those saving for investment and thus economic development and
growth. The importance of commercial banks after the ravage of the liberation war to develop a
better economy was severally needed and it is needed now and will be required in future also.
In time-to-time Government of Bangladesh agreed to permit the private commercial banking in
the country.
To fulfill the demand as well as to improve the commercial banking service in our country, The
Mercantile Bank Limited is scheduled bank that was incorporated in May 20, 1999 under the
Companies Act 1994, commenced its operation on June 2, 1999. It emerged as a new
commercial bank to provide efficient banking services and to contribute socio-economic
development of the country. It availed its registration as a banking company under the Banking
Company Act 1993 from the Bangladesh Bank.
The Bank provides a broad range of financial services to its customers and corporate clients.
The Board of Directors consists of eminent personalities from the realm of commerce and
industries of the country.
- Recognition and award: Different professional and regulatory bodies have
honored MBL frequently. In 2009, The Institute of Chartered Accountants of
Bangladesh (ICAB), the highest Accounting Body in Bangladesh awarded theBank for publishing its Annual Report-2008. In the Financial Sector-Banking
Category, ICAB was kind to recognize our Bank with 'Certificate of Merit' for its
best Published Accounts & Reports. This ICAB award has proved our financial
transparency, efficiency in banking operation and full disclosure of all material
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financial and corporate information. In 2009, Refugee and Migratory Movements
Research Unit (RMMRU) have also honored MBL with Sonar Manush Sheba
Award for its contribution to foreign remittance management.
Within a short time the bank has been successful in positioning itself as progressive and
dynamic financial institution in the country. The is now widely acclaimed by the business
community, from small entrepreneur to big merchant and conglomerates, including top rated
corporate and foreign investors, for modern and innovative ideas and financial solution. Thus
within this short time it has been able to create an unique image for itself and earned significant
solution in the banking sector of the country as a bank with a difference.
Mercantile banks time line overview:
Date Function
May 20, 1999 Incorporation of the bank
June 02, 1999 Commencement of business
October 29, 2000 Opening of 10 th branch
July 03, 2002 Opening of 15 th branch
June 30, 2003 Publication of prospectus for IPO
October 21- 22, 2003 Subscription for shares
December 24, 2003 Opening of 20 th branch
February 16, 2004 Listed in Dhaka Stock Exchange
February 26, 2004 Listed in Chittagong Stock Exchange
December 29, 2004 Opening of 25 th branch
December 05, 2006 Opening of 30 th branch
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December 17, 2007 Opening of 40 th branch
November 24, 2008 Opening of 42 nd branch
June 06, 2009 Inauguration of brokerage house operation
October 22, 2009 Opening of 45 th branch
December 30, 2009 Opening of 65 th branch
The Year 2009 was the challenging one for the financial sector. As the Year 2009 was much
crucial for the world economy, it had to pass through such an incessant economic catastrophe,originated in USA with the debacle of sub-prime mortgages, which no one witnessed since
1930's. The economic slowdown was so wide-reaching that almost every economy of the world
had been affected mainly from September 2008. The world economy's deepest post-war
downturn has resulted in higher rate of unemployment in many countries including robust
economies like Russia, USA, UK, Japan, China, and India. The economic disaster had impelled
huge increase in corporate defaults worldwide. International business volume had been
dwindled significantly. In spite of this world economic fall down since 1930's Great
Depression, Bangladesh Economy remained resilient in 2009, attaining 5.88 % Real GDP
growth in the fiscal year 2008-09. Though it was the lowest growth over the last 5 years,
performance of the economy was satisfactory compared to that of other developing nations.
Almost all the macro-economic indicators showed positive trend during the period under
review. The Year 2009 was the challenging one for the financial sector. The incessant fall-out
of international credit market due to world economic meltdown resulting sluggish growth has
put significant pressure on financial performance of banks and financial institutions worldwide.
Mercantile Bank Ltd. Achieved continuous growth in almost all arenas of its business despite
this economic crisis, facing intensified competition of the industry. The Bank remained in
financial strong position with its continued focus on the vision of becoming country's finest
corporate citizen, providing excellent and need-based customer service.
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The Bank mobilized deposits of BDT 58.30 billion as at December 31, 2009 compared to BDT
49.54 billion, till 2008. Total loans and advances stood at BDT 48.30 billion at the end of 2009
that was BDT 41.99 billion at the end of 2008. Import business stood at BDT 60.59 billion in
2009 compared to BDT 56.53 billion in 2008. Export business stood at BDT 46.30 billion in
2009 as against BDT 43.11 billion in 2008. The Bank collected foreign remittance of BDT
5.06 billion in 2009 compared to BDT 4.72 billion in 2008.
In 2009, the Bank was able to make profit before Tax of BDT 1.66 billion as compared to 1.28
billion indicating 29.73% growth. Net profit attributable to shareholders stood at BDT 807.52
million. The return on equity remained 18.80% during 2009 and Earning per Share (EPS) stood
at BDT 37.41. Non Performing Loan (NPL) ratio reduced to 2.54% in 2009 as compared to
2.86% in 2008.
MBL made adequate provision against Classified Loans which is significantly higher than last
year. Adequate provision made the Bank stronger than before. Tier-1 Capital stood at BDT
4.24 billion at the end of 2009 compared to that of BDT 3.47 billion at the end of 2008. Tier-2
Capital reached to BDT 758.91 million at the end of December 2009 as compared to that of
BDT 660.29 million at the end of 2008. Return on Assets (ROA) increased to 1.22% in 2009
from 1.10% in 2008 and Return on Equity (ROE) also increased significantly to 18.80% from
17.75% in 2008. The Capital Adequacy Ratio (CAR) increased to 10.48% in 2009 as against
that of 10.17% in 2008. Net Interest Margin (NIM) stood at 3.58% at the end of 2009,
suggesting a healthy growth in Net Interest Income.
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Efficiency is our strength is the motto of Mercantile Bank Limited. So the motto itself is self-
explanatory to deliver the vision of the bank. Mercantile Bank limited is prepared to meet the
challenge of the 21st century well ahead of time. To cope with the challenge of the new
millennium and to build its strength it hired experienced and well-reputed banker of the
country from the inception. The bank has efficient and dedicated professionals and equipped
with modern technology to provide the best service in the need of the people and thus to realize
its vision. So the Bank defined:
Vision:
To make the finest corporate citizen.
Mission:
Will become most caring, focused for equitable growth based on diversified
deployment of resources, and nevertheless would remain healthy and gainfully profitable
Bank.
Core values:
- For the customers: Providing with caring services by being innovative in the
development of new banking products and services.
- For the shareholders: maximizing wealth of the Bank.
- For the employees: respecting worth and dignity of individual employees
devoting their energies for the progress of the Bank.
- For the community: strengthening the corporate values and taking environment
and social risks and reward into account.
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1.1 Mercantile Bank Limited at a Glance:
Name of The Bank Mercantile Bank Limited.
Registered Office Dhaka
Web Address www.mercantilebank.com
Date of Incorporation June 2, 1999
Total Number of Branches 60 (October 2010)
Chairman Md. Abdul Jalil, M.P
Managing Director AKM Shahidul Haque
Auditors Morshed Alam
Chairman
A. S. M. Feroz Alam
Director
Mohd. Selim
Director
Total Capital Fund BDT. 4,995.43Million (December, 2009)
Paid-up Capital BDT. 2,158.42Million (December, 2009)
1.2 Company Image and logo:
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Mercantile Bank limited Bank is a solid, forward looking, modem foreign bank with a long
record of sound performance. The effort that Mercantile Bank Limited makes in order to
portray the Bank as a brand image is very strong and successful. The general image of
Mercantile Bank Limited is that its efficiency is its strength.
1.3 Management of the Bank:Boards of directors are the sole authority to take decision about the affairs of the business. Now
there are 22 directors in the management of the bank. All the directors have good academic
background and have huge experience in business. Md. Abdul Jalil is the chairman of the bank.
The board of directors holds meetings on a regular basis.
Executive Committee: The Executive Committee consists of the seven members from the
Board of Directors. This committee exercises the power as delegated by the Board from time to
time and approves all matters beyond the delegation of Management.
Management Committee: The Management Committee consists of the Acting Managing
Director, Deputy managing directors and Senior Executive Vice Presidents. They discuss about
the progress on portfolio functions. Different ideas and decisions, guidelines regarding
deposits, lending and management of Human and Material resources are the main concern of
this committee. All these committees meet on a regular basis for discussing various issues and
proposals submitted for decisions.
Organizational structure of Mercantile Bank Limited
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1.4 Ownership structure:
From the top to the bottom management body of Mercantile Bank Limited can be divided into
four levels:
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Executive Vice President &
Head of Branch
Vice President
First Vice President
Asst. Vice President
First Asst. Vice President
Principal Officer
Senior Executive officer
Executive Officer
Probationary Officer
Officer
Assistant Officer
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Top Level Management
Executive Level Management
Mid Level Management
Junior Level
1.5 Objective of the Bank:
The objective of the Mercantile Bank Limited is specific and targeted to its vision and to
position itself in the mindset of the people as Efficiency is our strength. The objectives of the
Mercantile Bank Limited are as follows:
Strategic objectives:To achieve positive Economic Value Added (EVA) each year.
To be market leader in product innovation.
To be one of the top three Financial Institutions in Bangladesh in terms
of cost efficiency.
To be one of the top five Financial Institutions in Bangladesh in terms
of market share in all significant market segments they serve.
To develop the standard of living of the limited income group by providing Consumer Credit.
To finance the international trade both in import and export.
To carry on the foreign exchange business, including buying and selling
of foreign currency, travelers cheque issuing, international credit card
issuance etc.
To encourage the new entrepreneurs for investment and thus to develop
the countrys industry sector and contribute to the economic
development.
Financial objectives:
To achieve 20% return on shareholders' equity or more, on average.
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New technology:
Adopting the state-of-the art technology in banking operations.
1.6 Principal Activities:
The principal activities of the Bank are banking and related businesses. The banking
businesses include deposits taking, cash withdrawal, extending credit to corporate
organization, organizing syndication deals, retail and small and medium enterprises, trade
financing, project financing, lease and hire purchase financing, issuance of local and
international credit cards etc. The mode of banking includes conventional and Islamic
Banking. The services are provided through both traditional and modern products. It also
performs investment banking and advisory services through Merchant Banking and
Investment Division Through its Off-shore Banking Units it provides banking business
involving Non Resident foreign currency denominated assets and liabilities.
1.7 Strategy:
Banking sector in Bangladesh made satisfactory performance during 2009. Growth of
export and record inward remittances had eased pressure on dollar. However, import
performance was downsized by decline in prices of commodities and other non-food items
(including oil) along with decline in capital machinery import. The situation improved to
some extent in the last quarter of 2009. Monetary policy aimed at ensuring highest possible
output checking inflation up to tolerable level helped the Banking sector to cope up with
the situation. Bangladesh Bank apart from their indirect measures took direct measures to
reduce lending rate for corporate and medium size customers with a view to reduce interest
spreads of commercial banks.
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Besides, the banking and financial industry experienced further intensification of
competitive pressure as the national and international banks operating in Bangladesh
strongly pursued the banking and financing needs of the Corporate, Retail, SME and Credit
Card sector customers through diversification of products and services and extending
automated banking services with ATM, Debit card facilities and Internet Banking. Rates of
interest became very competitive for deposit and lending. As a consequence of reduction of
interest rates on lending, banks cut their rates on deposit to maintain spread.
As the Government maintained the interest rate on savings instruments, a portion of small
savers who have long been the stable depositors of the banks were attracted to those
Government savings instruments. Besides, the bullish capital market also attracted small
savers significantly as the gain from capital market was tax exempted. Mercantile Bank
Limited will focus on growing earnings over long term at a rate that will keep it above the peer group benchmark. In doing so, Mercantile Bank Limited will focus on its delivery
channels, technology, people and its brand for growth of the shareholders value.
The growth plan of Mercantile Bank Limited centered on its five customer group;
Corporate, Retail, SME, Merchant and Investment Banking, Treasury. Specific strategies
are being implemented for each of them. The plan contains following strategies:
Branch Cluster Management:
An effective Cluster Management (Branch Mentorship) was introduced
whereby the Senior Management is becoming directly involved with Head of Branches
in their marketing drives for assets, liabilities, and other issues. Now the Head of
Branches are exposed to more matured thoughts and ideas through Mentors resulting in
qualitative improvement of their business and operational activities.
Brand Image:
Employees are well trained to provide efficient service thereby enhancing the
Brand Image further. Image of the bank would be harnessed through advertisement in
TV, Newspapers, different print Medias, outdoor ads, transit advertising and trade
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shows. It will make Mercantile Bank Limited with its symbol as a bank with different
care for its customers.
Capital Adequacy:
To maintain adequate capital base to support the asset growth as well as ensure
compliance
Capacity Building:
In order to successfully implement the strategy, the in house capacity
development is important. This is to be done through continuous training of the
employees.
Stress on new products:
PBL shall continue to provide new services to its customers with support of its
superior information technology platform;
Expansion of network for Retail and SME:
Extend business to existing clients through a wider product range and penetrate
new markets through expansion of network in rural areas;
Structured finance:
Accelerate the growth of large and medium lending through syndication;
More savings products:
More savings products with attractive features will be developed for the small
savers, which will be rewarding for both the customers and Mercantile Bank Limited.
Employee motivation:
To cultivate, develop and motivate the people of Mercantile Bank, rewarding
excellence, motivating and enhancing mediocrity.
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1.8 Financial Product and Services:
The Bank has launched a number of financial products and services since its inception. Among
these, Monthly Savings Scheme, Family Maintenance Scheme, Double Benefit Deposit
Scheme, Quarterly Benefit Deposit Scheme, 1.5 Times Benefit Deposit Scheme, Advance
Benefit Deposit Scheme, Consumer Credit Scheme, Small Loan Scheme, Lease Finance
Scheme, Overseas Employment Loan Scheme, Car Loan Scheme, Home Loan Scheme and
SME Loan have received wide acceptance among the people. These products and services are
described below:
Deposit Products:
Monthly Saving Scheme:
It is our significant product; introduced to attract small savers for building up
their habit of savings and thereby build up a healthy capital base for the
economy. The monthly installments are in various sizes and one can adopt the
schemes for a period of 05 years, 08 years or 10 years. Investor gets a lump sum
(principal plus interest) at the maturity of the scheme. Installment amount
should be deposited within the first 10 days of each month. In case of failure,5% of monthly installment will be charged as late payment fee which will be
added with the installment amount. In case of premature encashment, interest
will be paid at Savings rate. The incumbent depositor can get a loan facility of
maximum 80% of his deposited amount. At the end of 2009, BDT 13.58 billion
was deposited against that of BDT 9.79 billion in 2008 recording 38.71%
growth in this scheme.
Monthly Benefit Deposit Scheme:
Under this scheme, depositor will get a certain sum of money in each month
proportion to his/her deposit during the entire tenure. Benefit starts right from
the first month of opening an account under this scheme and continues up to
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five years. On maturity, the principal amount is paid back. Objectives of this
scheme are: help the retired persons for investing their retirement benefits,
create investment opportunities for Non-Resident Bangladeshi, etc. Minimum
deposited amount is BDT 50,000 or its multiples and the tenure is Five (05)
years. This scheme is also known as "Family Maintenance Deposit Scheme
(FMD)". Under this scheme total amount of BDT 1.86 billion was deposited up
to the end of 2009.
Double Benefit Deposit Scheme:
Under this scheme, deposited amount will be double in a tenure of Seven and
Half (7.5) years. Minimum deposited amount should be BDT 10,000 or its
multiples. In case of premature encashment interest will be paid on Saving A/c
Rate. Loan may be granted up to maximum 80% of the deposited amount, but
minimum principle amount must be BDT 20,000. At the end of 2009 total
amount of BDT 6.93 billion was deposited under this scheme.
Quarterly Benefit Deposit Scheme:
The 'Quarterly Benefit Deposit Scheme' will be maintained for a period of 3(three) years and the minimum amount of deposit is BDT 50,000.00 (fifty
thousand) or its multiples. Interest will be paid on quarterly basis. Benefit starts
right from the first quarter of opening the account. On maturity, principal
amount will be paid back. Savings account is needed to maintain this scheme.
Loan may be granted up to maximum 80% of the forced encashment value on
the date of loan processing. During the period of continuation of loan, quarterly
benefits will be credited only to the loan account. Deposit under this scheme
increased to BDT 229.40 million in 2009 from BDT 145.35 million in 2008.
1.5 Times Benefit Deposit Scheme:
Under the '1.5 Times Benefit Deposit Scheme' a deposit of minimum BDT
50,000.00 (fifty thousand) or its multiples will be received for a period of 4.25
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years. On maturity 1.5 times of the deposited amount will be paid back to the
account holder. In case of premature encashment interest will be paid on Saving
A/c Rate. However, no interest shall be paid if premature encashment takes
place before expiry of 1 (one) year. Loan may be granted up to maximum 80%
of the deposited amount. Total amount of Deposit under this scheme increased
significantly to BDT 233.67 million from just 139.37 million at the end of
2008.
Advance Benefit Deposit Scheme:
Under this Scheme, one can deposit a certain amount of money for two years.
The depositor will receive the benefit on yearly basis. The benefit amount of
first year will be received in advance at the time of deposit. On maturity, the
depositor will get back the principal amount with the benefit amount of second
year. That is Interest is paid in two phases, first phase paid initially BDT 9,500
and second phase paid BDT109, 520 after maturity against BDT 1, 00,000.
Loan may be granted up to maximum 70% of the deposit. This is also known as
"Agrim Munafa Amanat Prokolpo (AMAP)". BDT 76.92 million was deposited
under this scheme at the end of 2009.
Loan Products:
Consumer Credit Scheme:
Consumer Credit Scheme is one of the popular areas of collateral-free finance
of the Bank. People with limited income can avail of credit facility to buy
household goods including computer and other consumer durables. Total
exposure under this scheme was BDT 49.83 million at the end of 2009.
Small Loan Scheme:
This scheme has been designed especially for the businessmen longing for
credit facility for their business and can't provide tangible securities. Total
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amount of BDT 15.40 million was deployed under this scheme at the end of
2009.
Lease Finance:
This scheme has been designed to assist and encourage the genuine and capable
entrepreneurs and professionals for acquiring capital machinery, medical
equipments, computers, vehicle and other items. Flexibility and term and
conditions of this scheme have attracted the potential entrepreneurs to acquire
equipments of production and services and repay gradually from earnings on
the basis of "Pay as you earn." Total exposure under this scheme was BDT
356.50 million at the end of 2009.
Doctors' Credit Scheme:
Doctors' Credit Scheme is designed to facilitate financing to fresh medical
graduates and established physicians to acquire medical equipments and set up
clinics and hospitals and thereby make the medical facilities upgraded and
available to the mass people. BDT 7.06 million was disbursed under thisscheme till the end of 2009.
SME Loan Scheme:
Small and Medium Enterprise (SME) Loan Scheme has been introduced to
provide financial assistance to new or experienced entrepreneurs to invest in
small and medium scale industries with a comparatively low rate of interest as
the same is assisted by the Bangladesh Bank with refinancing facilities.
Exposure under this scheme experienced significant growth of 44.39% and
amounting to BDT 983.39 million at 2009 end from that of BDT 681.08 million
at the end of 2008.
Personal Loan Scheme:
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Personal Loan Scheme has been introduced to extend credit facilities to cater
the needs of low and middle-income group for any purpose. Government and
semi-government officials, employees of autonomous bodies, banks and other
financial organizations, multinational companies, reputed private organizations
and teachers of recognized public and private schools, colleges and universities
are eligible for this loan. Total Loans and Advances under this scheme
increased to BDT 364.38 million up to 2009 from that of 279.78 million at the
end of 2008.
Car Loan Scheme:
Car Loan Scheme has been introduced to enable middle-income people to
purchase Cars/SUVs/Jeeps. Government and semi-government officials,
employees of autonomous bodies, banks and other financial organizations,
multinational companies, reputed private organizations, teachers of recognized
public and private universities and businessmen are eligible for this loan. Total
amount of BDT 201.98 million was disbursed under this scheme up to
December 2009.
Home Loan Scheme:To meet the growing need of housing for middle and lower-middle income
people, MBL has introduced Home Loan Scheme. We also support the
Bangladesh Bank's Home Loan Refinance Scheme. The Scheme will also boost
up the growth of housing sector. Such loan shall be available for purchase or
construction of new apartments for self-residing purpose.
Overseas Employment Loan Scheme:
Overseas Employment Loan Scheme is designed to facilitate the Bangladeshi
youths seeking employment abroad but unable to meet the expenses to reach the
workplace from their own sources. The ultimate objective of the scheme is to
promote skilled -skilled manpower to different countries across the world as
well as to provide support to Government Policy considering priority of this
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sector. By availing loan under this scheme, the active youths of middle and
lower middle class can get overseas employment by avoiding borrowing from
the illustrious class or village 'mohajon' at a very high cost or selling their
paternal properties. The scheme will also help fetching foreign currency for the
country as well as fulfill the Bank's commitment to encourage Micro-lending
for poverty alleviation, improve the quality of life and thereby contribute to
socio economic development of the country.
Financial highlights for the year 2009 & 2008:
(BDT in million)SL
NO. PARTICULARS 2009 2008
1 Paid-up Capital 2,158.42 1,798.68
2 Total Capital Fund 4,995.43 3,387.17
3 Capital Surplus/Deficit 226.86 120.41
4 Total Assets 66,166.52 55,928.72
5 Total Deposits 58,033.47 49,538.35
6 Total Loans and Advances 48,295.55 43,419.36
7 Total Contingent Liabilities andCommitments 21,757.17 1 9,917.86
8 Credit Deposit Ratio (in %) 83.22 87.65
9 Percentage of Classified Loans against TotalLoans and Advances (in %) 2.59 2.96
10 Profit after Tax and Provision 807.52 615.88
11 Amount of Classified Loans during the year 261.24 348.47
12 Provision kept against Classified Loans 629.70 5 78.20
13 Provision Surplus 1.09 -
14 Cost of Fund (in %) 8.81 9.19
15 Interest Earning Assets 57,471.28 4 9,941.85
16 Non-interest Earning Assets 8,695.24 5,986.87
17 Return on Investments (ROI) (in %) 8.75 10.46
18 Return on Assets (ROA) (in %) 1.22 1.10
19 Income from Investments 696.66 520.33
20 Earning Per Share (BDT) 37.41 28.53
21 Net Income Per Share (BDT) 37.41 28.53
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22 Price Earning Ratio (approximate) 11 Times 12 Times
1.9 SWIFT:SWIFT is the Society for Worldwide Inter-bank Financial Telecommunication, a member-
owned cooperative through which the financial world conducts its business operations with
speed, certainty and confidence.
Mercantile Bank enables its clients to transfer funds to their beneficiaries through the most
efficient channels, which are available from the bank. They facilitate quick and easy transfer of
their funds by assuring complete security.
SWIFT Branches List:
Sl. No. Branch name SWIFT code
1 Main MBLBBDDH001
2 Karwan Bazar MBLBBDDH002
3 Agrabad MBLBBDDH003
4 Rajshahi MBLBBDDH004
5 Dhanmondi MBLBBDDH005
6 Banani MBLBBDDH006
7 Khatun gonj MBLBBDDH007
8 Nayabazar MBLBBDDH0119 Mohakhali MBLBBDDH012
10 Motijheel MBLBBDDH013
11 Elephant Road MBLBBDDH014
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12 Mirpur MBLBBDDH015
13 Jubilee Road MBLBBDDH016
14 Uttara MBLBBDDH017
15 Gulshan MBLBBDDH019
1.1.0 Mercantile Bank Limited Brokerage House:Mercantile Bank Limited Brokerage House has been developed to ensure development of
sound capital market and to provide higher, better and diversified services to a wide range
of customers. MBL is offering high quality products and services at a competitive rate.
Mercantile Bank Limited Brokerage House offers full-fledged international standard
brokerage service with margin loan facility. We are also a full service Depository
Participant (DP) of Central Depository Bangladesh Ltd. (CDBL). The brokerage service is
designed to provide customers with necessary support profitably in the stock market.
MBL is dedicated to provide high level of professional and personalized services to itsdomestic and international clients at a reasonable cost. MBLs services are comprehensive
in nature, including brokerage, margin loan, CDBL facilities, and research and custodian
needs of customers.
Reason for MBL Brokerage House:
- Professionally trained staffs are engaged.
- Chosen as the preferred broker by most foreign/international and high-net
worth investors
- Corporate member of Dhaka Stock Exchange
- Depository Participant (DP) of Central Depository Bangladesh Ltd
- Margin Loan facilities
- Maintains International
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- MBL has a strong commitment to its corporate, institutional and individual
clients.
1.1.1 Card facilities:MBL card holder can enjoy the following benefits and much more:
No Cash Withdrawal Fee:
For withdrawals of cash from MBL ATM by MBL cardholders no cash advance fee is
necessary and from any other Q-cash ATM the fee is Tk.10 only. MBL is the only bank
offering such unique facility. Moreover, our VISA Cardholders can also withdraw cash
from any Visa logo ATM locally and internationally.
Acceptability:
International/Dual card is accepted all over the world at millions of outlets and ATMs.
A Dual card is also accepted in most of the big cities like Dhaka, Chittagong, Khulna,
Rajshahi, Sylhet at more than 10,000 outlets including 4500 POS. It covers various
kinds of merchants like hospital, hotel, restaurant, department store and the card has
accessibility to any outlet having VISA logo.
Credit Facility:
Mercantile Bank Ltd. Visa Credit card offers maximum 45 days credit facilities free of
interest and minimum payment is 5% of outstanding billing payment for easy
repayment and convenience of the customers.
Supplementary Card: A Principal cardholder (local) may apply for more than one supplementary card where
one supplementary card is free. Expenses made by supplementary card will be charged
to the principal card.
Advance against Credit card:
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MBL cardholder can take advance as term loan up to 50% of the card limit to be repaid
on the monthly installment basis. Any POS transaction over TK. 20000 but not
exceeding 50% of the credit limit is convertible to Personal loan/CCS and to be repaid
on monthly installment basis. Repayment period of such loan may be from 6 months to
36 months.
Overdraft Facilities:
Overdraft facilities up to 80% of the credit card limit may also be allowed for payment
of the installment of scheme deposit with our Bank.
Payment of Utility Bill:
Payment of utility bills like telephone bills, gas bills, electric bills, water bills, may be
settled by card.
1.1.2 Online Banking:Online Banking has so far been activated with 42 Branches of the Bank from January 01, 2006.
Online service is now available for all customers Both Cash deposit and withdrawals, Cheque
Deposits and Transfer in CD, SB, STD, Loan accounts (Cheque Bearing within limit) and
Monthly Savings Scheme (MSS) .
Online Banking Times:
Sunday to Thursday, Hours - 9:00 am to 3:00 pm
Saturday, Hours - 9:00 am to 12:00 noon (only in open branches on Saturday)
Service charge: For Monthly Savings Scheme (MSS) TK. 10 (Ten only)
including 15% VAT per transaction. Yearly service charge is not applicable.
Account wise Online Banking Limit (cash withdrawal, deposit and
transfer):
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- Maximum Deposit Limit: No Limit for Online Cash Deposit
Transaction per day per Client.
- Maximum Withdrawal Limit: Tk. 300,000.00 per transaction.
Cumulative withdrawal shall not be more than TK.600,000.00 per day
Charges for Online Banking:
Intra City* Inter City** Mode of realization
Free
Up to BDT 1,00000 - TK. 50.00Up to BDT 2,00000 - TK. 100.00
Up to BDT 3,00000 - TK. 150.00
Up to BDT 4,00000 - TK. 200.00
Up to BDT 5,00000 - TK. 250.00
Up front Cash
*Intra City Transaction: Branches under Same City Corporation Areas.
**Inter City Transaction: Branches outside City Corporation Areas.
1.1.3 Remittance Services:
Mercantile Bank Limited maintains a strong network with the Overseas Exchange Companies
& Banks in different parts of the world ensuring better remittance services for its customers.
The following are the list of Overseas Exchange companies/Banks having arrangement with
mercantile Bank Limited:
Name of the Exchange Company PresenceRumana Money Services UK Wall Street Exchange Centre UAEAl-Ahalia Money Exchange Bureau UAE
Naaz Exchange Limited CanadaXpress Money Services Global
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Euro-Bangla Money Transfer Ltd UK National Exchange Company S.R.L ItalyAl Moosa Exchange Company KuwaitAN Express Ltd UK SN Money Exchange Limited UK
Trust Exchange UK limited UK Economic Exchange Company UAEManiflo Money Exchange Inc USABangladeshi Money Exchange Ltd CanadaGlobal Exchange Italia Srl, Italy ItalyRupali Exchange (Europe) Ltd UK Al-Zaman Exchange W.L.L Qatar ICICI Bank Canada
1.1.4 Mercantile SMS Banking Service:
Your Bank at your Fingertip expresses the modern compatibility of Mercantile Bank
Limited. As the time goes by, life style changes. To keep up, MBL welcomes you to SMS
Banking Service, one of the most modern banking services. MBL SMS banking Service isconvenient, safe, low-cost, fast and available round the clock.
MBL SMS Banking Service offers:
Access to account balance
Last 3 transaction inquiry
Cheque status inquiry and many more.
1.1.5 Import Export Business:
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Import and export is a core business area of the Bank. Bank's performance in this area during
2009 was satisfactory. During the period under review, total import and export business
transacted were BDT 60.59 billion and BDT 46.30 billion respectively. The growth of import
and export business was 7.19% and 7.40% in 2009 and 2008 respectively. The growth of
export gave the Bank an edge in managing required foreign currency to meet L/C commitments
1.1.6 Inward Foreign Remittance:
Hard-earned remittance of the Bangladeshi expatriate working abroad plays significant role in
the overall development of the economy. Amid the world economic turmoil, countless
Bangladeshi expatriates had to return to the country, losing their job in the foreign lands. In
spite of this adverse economic situation, growth of inward foreign remittance of the Bank was
consistent. In 2009, the Bank handled BDT 5.06 billion of remittance business compared to
that of BDT 4.72 billion in 2008. MBL continues to assist the overseas Bangladeshis to remit
their hard-earned money to their beneficiaries swiftly and safely. The Bank has opened several
Branches in the rural areas with urban areas as well, aiming to aid the remitters to remit their
money to their beneficiaries living in those rural areas.
MBL maintains a strong network with the Overseas Exchange Companies & Banks to ensure
quicker and safer remittance services. The Bank has signed agreements with different overseas
exchange companies including USA, Canada, UK, Italy, Japan etc. so that the remitters caneasily send their money to their beneficiaries. As well, negotiation with more Overseas
Exchange Companies is in progress. MBL has signed International Representation Agreement
with globally reputed Money Transfer Company "Western Union Services". This arrangement
helps us to provide better service to the expatriates sending their money to their dependents,
relative, friends & family members residing in Bangladesh. An agreement with Bangladesh
Post Office (BPO) has been signed for the distribution of inward foreign remittance. BPO
provides services through its 450 designated outlets under this arrangement across the country.
As a result, a new horizon has been opened for the Bank to extend its remittance services to the
doorstep of beneficiaries easily, quickly and safely. Very soon, MBL intends to launch an
Exchange House in U.K, namely-"Mercantile Bank Exchange House" to make the remittance
service convenient for the expatriates living in U.K.
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1.1.7 Corporate Social Responsibility of MBL:Corporate Social Responsibility (CSR) has been described as corporate citizenship, moral and
transparent business values, ecological sustainability or corporate charity. It is a business
practice to deliver sustainable and ethical values to the equity holders, employees, customers,
environment, society, government and other stakeholders at large.
Mercantile Bank Limited (MBL) is fully committed to conduct its business activities in an
economically, environmentally and socially sustainable manner. The Bank always fosters the
motive in mind to build an ever-lasting warm relationship with the customers, employees,
capital providers, community people, regulatory bodies and other stakeholders. Keeping thismotive in mind, MBL always cares all of its stakeholders and the community people since its
inception.
For Community:
As we all know that banks act as a 'Trustee' for the society. Therefore, MBL behaves in
a responsible and ethical manner with the community people. The Bank always
contributes towards changing the quality of life of the people as the Bank wishes to see
them leading their life in a standard way. The Bank serves by adhering closely the
national policies and thereby contributing towards the progress of the nation. In
maintaining its responsibilities to the society where it operates its business activities,
MBL focuses in the areas of employment, education, professional development and
contribution to the underprivileged people.
Employment:
MBL plays an important role in creating job opportunities for the people. Each
year, the Bank creates employment opportunities for fresh graduates as well as
experienced officials. In 2008, a total of 169 fresh graduates have joined with
MBL family. The new recruits have joined as Probationary Officers (82) and
Assistant Officer (87). Besides, experienced bankers are also being appointed in
the Bank as and when required. At the end of 2008, the Bank has 1,115 officials
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in its payroll. Moreover, Bank's financing to the SME sector will indeed
promote employment generation.
CSR Activities of the Bank in 2008 and one year back:
(Amount in BDT) AASector Wise Spending 2008 2007Donation to Mercantile Bank Foundation 100,00,000 40,00,000Education 390,000 100,000Health 200,000 25,000Disaster/Relief 1,530,000 10,400,000Others 50,000 90,000Total 12170000 14615000
Education:
MBL desires for an educated nation. The Bank through its Foundation,
patronizes the education sector of the country. The Bank provides scholarship
to the needy and brilliant students of different educational institutions. Best two
MBM graduates of BIBM get financial awards from the Bank. In the year under
review, the Bank has provided scholarship worth BDT 1 lakh in this regard. The
children of the employees of the Bank also get scholarship for brilliant results.
MBL has also donated BDT 1.00 million to Bangla Academy for research in
Bengali Literature with a view to aid academic research, which would
eventually uphold Bangladeshi culture across the Globe.
Professional Development :
Professional education has been encouraged in MBL. The Bank believes that to
be more professional one should gather professional knowledge. The Bank is
continuing its supports to the professional bodies as it continued earlier. The
Bank encourages it employees to complete Banking Diploma by rewarding
BDT 5,000 for completion of part-I and BDT 7,000 for completion of part-II.
Support to Destitute:
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MBL always shares the well and woe of the distressed people. Mercantile Bank
Foundation has been set up to give financial support to the underprivileged
communities. Through this Foundation, the Bank concentrates on addressing
the needs of physically disable people such as blind, acid victims etc. The
people of our country are used to be the victims of natural calamities every now
and then. The Bank strives to assist the victims of natural disaster by providing
financial help in rehabilitation and rescue purpose. In the year 2008, the Bank
donated BDT15.30 lakh for helping the disaster victims.
For Customers:
MBL provides the most efficient and need-based services in every aspect of its business
by being more innovative and professional. The needs and expectations of the
customers drive us to the development of new banking products and services. MBL
uses trained personnel and state-of-art technology for delivering prompt services to the
customers.
The Bank has high reputation for delivering better customer service and is also
committed to uphold its image in coming days. Customer Service Excellence is an
integral part of its strategy to stay ahead in an extremely competitive banking industry.
To attain a continuous improvement in customer service, all branches of our Bank have
established 'Customer Complain and Suggestion Box'. At branch level, officials are
deployed to assist and interact with customers on banking queries and provide prompt
solutions of the queries.
A number of banking products has been launched for the people who have traditionally
been excluded from the banking services. 'Women Entrepreneurs DevelopmentScheme' has been introduced in the Bank for the women who are experienced but
dearth of capital is hindering their initiatives to start business. An agreement with
Women Entrepreneurs' Association, Bangladesh (WEA) has been signed to encourage
women entrepreneurs to come forward in the business. They have also introduced SME
services for the marginal people of our country.
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For Employees:
MBL, which has 1,115 employees provides due importance for promoting the well being
of its employees by offering attractive remuneration and other fringe benefits.Employees' remuneration and benefits packages are monitored and regularly reviewed to
ensure a competitive package in the industry. Incentive bonus from yearly profit is also
rewarded to the employees on performance basis. Employees are awarded all sorts of
supports to pursue professional educations. The Bank provides its employees personal
loan facilities such as car loan, furniture loan and other loan to make their life easier and
comfortable. Growth and progression opportunities for employees are available in the
Bank. With competitive remuneration packages and employees' well being is looked after
through attractive benefits such as medical coverage, loans at lower rate of interest for
housing and car as well as other forms of financial assistance. MBL seeks to provide a
standard quality of life to its employees.
The Bank ensures a hygienic and convenient work environment for its employees.
Performance and merit are the basis of promotion for the employees. The Bank respects
the worth and dignity of individual employees. Importance has been given for building
skill and efficiency of the employees to do their assigned day-to-day jobs with due
confidence by bringing them in the 'Training Net'. For this purpose, Training Institute of the Bank has been refurbished in a large and well-equipped premise located in Swadesh
Tower, 41/6 Purana Paltan, Dhaka, which has a well-resourced library. The trainees are
being provided residential amenities in the Training Institution.
For Equity Holders:
Maximization of wealth of the equity holders gets top listed priority in the Bank. MBL is
committed to its capital providers to deliver fair returns on their investment. Equityholders are always concerned to see their institution progressive. The Bank runs its
business activities keeping in mind as its shareholders wish to see it. MBL is consistently
delivering a superior return to its shareholders and investors. In 2008, Dividend Payout
Ratio was 58.41%.The Bank has achieved BDT 34.24 as EPS and declared Stock
Dividend at 20% in the year 2008.
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For Environment:
MBL is concerned with conservation and preservation of the environment. There is a
rising level of awareness and demand to address the issue of sustainability of theenvironment because the whole world is increasingly experiencing the devastating effects
of environmental changes for Green House affects due to Global Warming. The Bank is
mindful of its responsibilities to the future generations by playing its part in promoting
environmental awareness and in the conservation of the environment.
The Bank takes environmental issue very cautiously while financing new projects. It
finances only in those projects, which are environment-friendly. Early detection of
environmental risks is an integral part of credit appraisal system of the Bank. Ecological
damage will sooner or later harm not only the society but also the Bank in the form of
loan losses or image problems. In this regard, the Bank sent two officials to the Hague,
Netherlands for training on 'Environment and Social Management Course for Financial
Institutions' conducted by FMO, Netherlands. The Bank creates awareness among people
of the community about the effects of environmental pollution and its consequences.
For Cultural Activities:
MBL fosters the culture of various communities. The Bank is relentlessly supporting
traditional games and sports by taking some non-profit initiatives. As a recognized
benefactor of culture, the Bank provides funding for the publication of art books that
familiarize the Bank. A variety of cultural institutions have been benefited by the
initiatives of the Bank. The Bank also supports the writers, musicians and other
performers in their inventive activities.
The Bank patronizes different cultural activities. The Bank has sponsored a number of
cultural programs encouraging different communities. The Bank has sponsored NationalChess Championship, Tennis competition and Swimming competition in different times.
In 2008, the Bank was the Official Sponsor of '23rd National Swimming Championship
Competition' arranged by Bangladesh Swimming Federation. BDT 1 (one) million has
been donated to celebrate this ceremony.
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Mercantile Bank Foundation:
Mercantile Bank Foundation has been established to act as a helping hand to the
community people and Bank's commitment towards CSR. The Foundation always playsits role by extending charitable and beneficial social services. The Foundation has been
promoting a dialogue between the Bank and its community for over nine years. Through
its programs, the Foundation strives to preserve and promote cultural heritage and
support artistic expression. It also provides funding for state-of-art research, as well as for
innovative projects in the areas of education, social insertion and disability.
Objectives of Mercantile Bank Foundation: Mercantile Bank Foundation has
been formed with the aim of achieving some objectives, which has been stated
below:
1. To take possible initiatives in increasing social well being and alleviating
poverty from the country.
2. To support the education by establishing new educational institutions,
providing stipends/ scholarship to the poor and brilliant students.
3. To provide awards to the Scholars in eight significant arenas for their
outstanding contribution. These arenas are:- Bengali Language and Literature
- Education and Culture
- Research on Liberation War
- Economy and Economic Research.
- Commerce and Industry
- Medicine, Science and Technology
- Journalism and
- Sports
4. To assist research activities on Bengali Literature through Bangla Academy.
5. To support the writers and publishers through purchasing their books and
distributing these to different educational institutions on the occasion of
national and historical days.
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6. To assist the unemployed young to make them self-sufficient.
7. To assist the rootless and distressed orphans through taking appropriate steps
for their mental perfection and self-support.
8. To support in establishing hospitals, clinics, etc. for the improvement of the
health sector, to donate one time financial endowment to the poor artiste,
literature-patron and fatal disease-affected poor patients, to support the poor
father for arranging his daughter's marriage, to help poor but bright students.
Financing of the Foundation:
The Bank contributes 1% of Operating Profit or BDT 4.00 million, which is the
maximum. The Sponsors of the Bank donates to the Foundation a lump sum
amount at a time or amount on yearly- basis from their own funds or their own
business source. Also different grants and donations from persons or,
organizations of home and overseas are being used to financing the foundation.
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1.1.8 Human Resource Development:
MBL invests extensively in its human resource development to build up its employees'
capabilities. The goal is to empower staff and create a culture that encourages and
rewards staff for their commitment, creativity and teamwork in order to respond rapidlyto the ever changing customer needs and the market place. Their employees have shown
remarkable agility in dealing with the challenges of new ideas. The successful
implementation of various strategic initiatives, have demonstrated their resilience,
determination and commitment to embrace change. They are always aligned with the
strategic direction of the Bank.
A smart officer wins the heart of a customer by delivering services to the customers'
expectation. Taking that into consideration, MBL has formulated its Human Resource
Policy incorporating ample benefits to be provided and returns to be expected from the
employees. Employees are the valuable assets and the Bank intends to make its
employees more valuable, nurturing their knowledge and skills.
They put utmost care for the welfare of their employees. They always ensure congenial
working atmosphere for their employees. They provide attractive compensation package
to all level of executives, officers and staffs and considering the continuous change in the
price level and living cost, they revise the compensation package at a regular time
interval. Alongside the festival bonus, the deserving employees are rewarded as per their
performance with accelerated promotion and other incentives. Their objective is to create
a genuine partnership with their employees by providing appropriate incentives and
rewards for performance.
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leading telecommunication company to deliver banking services through using its mobile
network. This initiative will provide access to affordable financial services to the
customers including local money transfer, business payments like Utility Bill, Insurance
Premium, and Loan Installments etc.
1.2.0 SWOT Analysis of Mercantile Bank Limited:
STRENGTH WEAKNESS
1. Quantities approaches to reduce the
risk classification.
2. Assign adequate power to the top
management to monitor credit
operation.
3. Clearly specifies the documentation
process to reduce the risk of
classification.
4. Provide guideline to furnish loans
only to small-scale industries for
short time, which minimizes huge
loss.
5. Clearly define measure in dealing
with foreign exchange transaction.
6. Strong procedure in selection of new
borrowers.
1. The techniques specified for credit
appraisal is not sufficient.
2. More dependency rests on
Government sources for deposit
mobilization.
3. Service offered is not adequate.
4. High price of loan applicant form.
5. Harder rules and regulations for loans and advances.
OPPRTUNITIES THREATS
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1. Suitable for small-scale business,
which growing day by day.
2. Government and other International
agencies positive attitude toward
low classification rate.
1. Upcoming Banks and their unique
features. .
2. Reduced Government support in
future.
Introduction of the Study
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2.0 Literature review:
In my report I have tried to focus on the Performance Management System of Mercantile Bank
Limited. There have been so many reports and articles done before by other people over this
issue. In literature review I will try to draw attention over some of those articles.
According to sumtotal.com, a renowned website of performance management solutions;
Performance management is essential to building a productive and engaged workforce.
Performance management solutions enable one to automate appraisals, close skill gaps, and
manage career and succession plans. With these critical capabilities in play, one can quickly
align ones talent pool with their overall business goals.On the other hand, another renowned HR website About.com reveals that, Managers cite
performance appraisals or annual reviews as one of their most disliked tasks. Performance
management eliminates the performance appraisal or annual review and evaluation as the focus
and concentrates instead on the entire spectrum of performance management and improvement
strategies. These include employee performance improvement, performance development and
training, cross training, challenging assignments, 360-degree feedback and regular performance
feedback.
But setting up of an effective performance management system is not that easy. That is why D
& B creditability corp. encloses the way of building an effective performance management
system. They are saying that: setting up a good performance management system doesn't
happen overnight or by accident. One need to consider its design and carefully plan how it will
work before managers begins using it to evaluate employees.
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A performance management system should provide employees with these four basic benefits:
A clear understanding of job expectations
Regular feedback about performance
Advice and steps for improving performance
Rewards for good performance
The goal of a performance management system is to help boost employee performance and,
ultimately, the productivity of the business. For it to be effective, a performance management
system should incorporate the following critical elements:
Updated Job Descriptions:
Job descriptions should clearly describe the employee's current duties and
performance expectations. Position descriptions should be specific, clearly
defining the job function, required skills, deadlines and goals, and should
delineate expectations for the employee's relations with peers and customers.
Keep job descriptions current, especially during times of organizational change.
Rapid growth and downsizing inevitably add new responsibilities and shift
employees' workloads.
Performance Measures and Standards:
Once you have job descriptions in place, you need to establish performance
standards that describe what constitutes below average, average, and above-
average performance. Start by thinking about the best- and worst-case scenarios
until you reach realistic standards for measuring performance.
Next, determine how you're going to measure the expectations outlined in the
job description. This requires both objective and subjective methods of
assessment. In some situations it's easy to gauge performance by looking at thenumbers: for example, how many new accounts an employee brought in or how
many products an employee assembled.
Quantifying an employee's coping skills, customer service skills or attitude is
much more difficult. Some managers also have biases or poor evaluation skills.
Establish clear guidelines and measures that eliminate potential bias and
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prevent evaluators from subjectively determining what constitutes excellent and
unacceptable behavior.
Evaluator Training:
Research shows that managers with poor communication or interpersonal skills
are often the downfall of a company's otherwise sound performance
management program. All managers need training on how to communicate and
how to conduct fair, nonjudgmental and consistent appraisals. An effective
performance management system will administer training to managers before
they conduct their first reviews.
Guidelines for Improvement:
Institute basic policies to cope with employee weaknesses and poor
performance. Decide if you'll provide training or mentoring for employees
exhibiting sub par performance. Set guidelines that outline how long it should it
take an employee to improve and what steps will be taken if the employee fails
to show improvement.
Employee Input:
Solicit and evaluate staff suggestions for your performance management
program. Incorporate employee input into your program or system as needed.
Compensation and Rewards:When employees perform well they should be compensated. Rewards keep
morale high, generate loyalty and foster additional improvement. But closely
linking pay hikes and promotions to performance appraisals is a contested issue.
Critics say that too close a tie between performance evaluation and
compensation may be punishing or unfair to employees who don't overachieve.
Regardless of how and when one chooses to compensate his/her employees, an above-average
appraisal deserves acknowledgment. It has to be making sure that employees are being
consistently rewarded for their hard work.
One of the research papers, from University of California Berkeley states that:
An effective performance management process sets the foundation for rewarding excellence. It
becomes more useful:
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- By linking individual employee work efforts with the organizations mission and
objectives, the employee and the organization understand how that job contributes
to the organization.
- By focusing attention on setting clear performance expectations (results + actions
& behaviors), it helps the employee know what needs to be done to be successful
on the job.
- Through the use of objectives, standards, performance dimensions, and other
measures it focuses effort. This helps the department get done what needs to be
done and provides a solid rationale for eliminating work that is no longer useful.
- By defining job-mastery and career development goals as part of the process, it
makes it very clear how the current position supports employee growth and the
additional opportunities the employee needs to explore.- Through regular check-in discussions, which include status updates, coaching, and
feedback, it promotes flexibility, allowing you and the employee to identify
problems early and change the course of a project or work assignment.
- By emphasizing that an annual appraisal should simply be a summary of the
conversations held between you and the employee during the entire cycle, it shifts
the focus away from performance as an annual event to performance as an on-
going process.
An effective performance management process, while requiring time to plan and implement,
can save you and the employee time and energy. Most importantly, it can be a very effective
motivator; since it can help you and the employee achieve the best possible performance.
Martin Fisher described the several forms of performance management system in his book
Performance Appraisals. According to him the purpose of performance appraisal is to
improve the organizations performance through the enhanced performance of individuals. In
his book he showed the assumption of people regarding performance appraisal. Many people
refer to a number of more specific positive purposes of performance appraisal. Such as-
To review past performance.
To assess training needs.
To help develop individuals.
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To audit the skills within an organization
To set targets for future performance.
To identify potential for promotion.
But there are some negative perceptions about performance management as well. Morenegatively people may believe that performance appraisal is simply used by the organization to
apportion blame and to provide a basis for disciplinary action. Some people see it as a stick
that management has introduced with which to beat people. And if this is there attitude- with or
without cause- performance appraisal is doomed to failure. Even if the more positive objectives
are built into the scheme, problems may arise because:
They may not all be achievable.
They can cause conflict.
For example, an appraisee is less likely to be open about any shortcomings in past performance
during a process that affects pay or promotion prospects, or which might be perceived as
leading to disciplinary action.
It is therefore important that performance appraisal should have specific objectives. Not only
should the objective be clear but also they should form part of the organizations whole
strategy. In this way the key objectives can be incorporated into the appraisals, highlighting
areas for improvement, new directions and opportunities.
Alan Fowler gave a good definition of the objective of performance appraisal in PM plus, June
1991. He suggested that: Staff work best when they know what they have to do, how well,
they have to do it and how well they are thought to have done, so they need to talk to their
managers at least once a year about this, and their managers need to take their staffs views
into account when setting work goals and deciding who needs what training.
The following are some examples of the definitions used by various organizations:
Cambridge shire County Council, for example, is quite clear that the objectives
of performance review meetings are to: Look back on what has been accomplished.
Look forward to what needs to be accomplished.
Identify how individuals can be helped to improve their contribution in their
present jobs
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Clarify the jobholders career prospects, aspirations and intentions.
These objectives are all positive. There is no reference to identifying weaknesses; no
implication that the process is about attaching blame.
The national Australia Group Ltd states that their scheme is: Based on the
simple idea that when people know and understand what is expected of them, and have
been able to take part in forming these expectations, they can and will perform to meet
them. The group gave the following reasons for introducing the scheme:
We need to be offered encouragement and support to perform well.
When our performance is assessed it needs to be as objective as possible.
We should all be part of the same process of performance assessment.
We need to believe and have confidence that the system is fair to everyone.
We need everybody to be trained so that the approach is fully understood and can be applied
consistently.
We all need to be involved in the process with advance information, time for preparation and
an opportunity to assess ourselves.
At MENCAP the aims and principles of their performance management
and development system were defined as follows:
Aims:
- To increase mutual understanding of performance requirements.
- To note and recognize achievements.
- To note and analyze any problems in meeting requirements.
- To provide the opportunity to discuss aspirations and concerns about career
prospects and the present job.
- To define or, redefine future objectives
- To agree action plan.
- To agree self- development and training needs. Principles:
- Concentrates on developing strengths as well as addressing performance problems.
- Based on open and constructive discussion.
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- An everyday and natural management process, not just a once- a year event and
not just a form filling exercise.
BP exploration defined the objectives of their performance management system
as follows:
Our stated objective is to achieve a best in class world position. We are dependent on the
contribution of each and every one of our people to get there. We need to focus on
performance- how to do everything we do better- and this means how we manage our people,
just as much as it means discovering new oil-fields, improving our profitability, managing
our costs or, upgrading our public image.
We need to focus on how, on a day-by-day basis, we deliver performance improvements-
even if what we are already doing is of a very high standard. To achieve this we need to
change the way we work together and the way performance is discussed. Managers and
others responsible for reviewing performance will be assessed on how well they do this.
HP information plc have defined the objectives of their performance appraisal
systems which are being stated as follows:
To improve performance management in HP Information plc.
To review past and present work performance.
To improve future performance.
To set performance objectives. To identify training and development needs.
To provide a rational basis for salary recommendations.
To develop communication and working relationship.
One of the objectives of this scheme is to provide data for pay proposals. Although, as noted
above, this can cause problems, many organizations do include a rating system in their
schemes which influences performance related pay awards. Their reason for doing this is quite
clear: if you are going to reward people according to their performance, your decision must be based on a proper review and assessment of their performance.
As per McGregor, Performance appraisal is necessary because it:
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Provides systematic judgment needed to back up salary increases, transfers, demotions,
and terminations.
It is the means of telling how the subordinate is doing, suggestions needed to change
the behavior, attitude, job knowledge, skills of the employee.
The superior uses it for the coaching and counseling of the individual.
And as per Levinson, performance appraisal is important because it:
Gives Feedback for performance
Basis for changing and improving of behavior
Provides data for future assignments and compensation.
Michael Armstrong in his book Armstrongs Handbook of Performance Management has
clearly defined Performance Management. In his words: Performance management is a
systematic process for improving organizational performance by developing the performance
of individuals and teams. It is a means of getting better results by understanding and managing
performance within an agreed framework of planned goals, standards and competency
requirements. Processes exist for establishing shared understanding about what is to be
achieved, and for managing and developing people in a way that increases the probability that
it will be achieved in the short and longer term. It is owned and driven by line management.
He also stated the problem of performance management in his book: Performance management
is often referred to as the Achilles heel of HRM. All modern organizations face the challenge
of how best to manage performance. That is, they must determine the best ways to set goals,
evaluate work and distribute rewards in such a way that performance can be improved over
time. While all firms face similar challenges, the way a firm responds to these challenges will
depend on where the firm is located and the context within which it is operating. Differences inculture, technology or simply tradition make it difficult to directly apply techniques that have
worked in one setting to a different setting.
2.1 Rationale of the study:
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4.1 I am proposing this study to know about the performance management system of
Mercantile Bank Limited.
4.2 Gathering knowledge which will help me in future to establish a better performance
management system.
4.3 From the study the University gets information of performance management activities and
strategies of the Mercantile Bank limited which may help them to modify their system
2.2 Statement of the problem:
I chose the topic to learn how Performance Management System works in an organization and
to relate the theoretical learning with the practical experience. This topic will help me to know
the reason for Evaluation, person who should benefit from the evaluation, what type of
evaluation should be used and what problems might be encountered. How PMS is helping in
managing the overall performance of the employees, to identify that.
2.3 Scope of the Study:
The scope of the report was to get a real life exposure. I have got the opportunity to observe
what is actually happening in a company, how they are planning their performance
management system and how they are using the methods of the PMS and also influence them
can have over the development of the employee performance in the organization.
As I worked in the Human Resource division, head office of the Mercantile Bank Limited, I
got the opportunity to learn different part of Human Resource activities. To conduct a study on
PMS concept I have gathered valuable information from our university library & Mercantile
Bank Limited. I have also got some information from web site.
2.4 Objectives of the study:
The main objective of the practical orientation of the bank is to have an overall picture of how
the bank runs their Performance Management System and HR functions.
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(a) Broad objective: To analyzing the performance management system of Mercantile Bank
Limited.
(b) Specific objectives:
To know the type of evaluation process they are using.
To know the problems they are facing.
To know whether their performance management system has any
relationship with the downsizing.
To know their process of performance appraisal documentation.
To identify how their performance management system does help them with employee
development
2.5 Methodology:
This report has been prepared on the basis of experience gathered during the period of
internship. For preparing this report, I also got information from annual report and website of
the Mercantile Bank Ltd. Actually, this study is descriptive in nature. Maximum data were
collected from the primary sources. The details of the work plan are furnished below:
Data collection method: Relevant data for this report has been collected primarily by
direct investigation of different records, papers, Documents, operational process and
different personnel. Structured questionnaire has been used & Information regarding
office activities of the bank has been collected through consulting and discussion with
bank personnel.
Data sources: Both primary and secondary source of data are used to complete this
study. These two sources are explained below:
1. Primary sources:
o Face to face interview with the bank officers and staffs.
o Through consulting with officials of the branch.
o Notes taken from day to day working
2. Secondary sources:
o Different manuals, circulars, files and documents of the MBL.
o Different websites including the website of MBL.
o Different text books of Human Resource Management.
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o Journals and newspapers.
2.6 Limitation of the study:There were some constraints in preparing this report. But at the same time I tried to make an
adjustment with those problems.
The officer of the Human Resource Department was reluctant to provide information
about the company policies and the HRM strategy they were following.
It was very difficult to collect the information from various personnel for the job
constrain.
Bank policy was not disclosing some data and information for various reasons. The department people always remain busy due to lack of supporting employees so
they could not dedicate their full efforts.
Because of the limitation of information some assumption was made. So there may be
some personal mistake in this report.
The time 3 months are not sufficient to know all activities of the HRD to prepare the
report.
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Interpretation & Conclusion
3.0 Performance Management System of Mercantile Bank Limited (MBL):
One of the agenda of the Human Resource Department is continuous development of the
employees so that they can cope with the rapidly changing business environment. Innovation is
a major priority that we want to promote. Accordingly, through performance management
system employees are being developed and enhanced performances and related competencies.
In MBL, performance evaluation programs are being undertaken annually for the employees toseek opportunities for skill improvement and to help them to guide for career management
system.
The evaluators of MBL are basically persons who are holding any managerial post, such as-
senior executive vice president, Vice president, assistant vice president. They are experts and
highly qualitative officers from inside the organization. These performance evaluation
programs were found highly effective in developing MBLs peoples knowledge, skill &
abilities to perform their assigned jobs in a better way. MBLs performance management
systems involve numerous activities, far more than simply reviewing what an employee has
done. These systems fulfill several purposes. One of the purposes of MBLs performance
management system is to improve the organizations performance through the enhanced
performance of individuals. Though they are often constrained by difficulties in how they
operate. Performance management is closely related to rewards. Organizations basically
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allocate rewards based on either performance or membership criteria, but this is not always the
case, few organizations actually reward employees based on their performance. In MBL, they
reward their employees both based on performance and membership criteria. As performance
based rewards they have: merit pay and incentive pays (such as- bonuses, increment and profit
sharing option). In MBL promotions are being made over three years performance.
The performance management process of MBL:
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1. Establish performance standards.
2. Set measurable goals.
3. Measure actual performance.
4. Compare actual performance withstandards
5. Review the appraisal
6. If necessary initiate corrective action.
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Each employee of MBL receives a yearly increment based on his or her performance.
According to performance appraisal the amount of increment varies. That means if an
employee performs well she/he will get an improved increment. On the other hand if an
employees performance is unsatisfactory then she/he will get decreased amount of increment
or, no increment at all. In MBL they follow a set of questions to evaluate the performances of their employees. This set of questions is known as Annual Confidential Report (ACR), which
consists of 15 questions. The rating scale is 0 to 3 for each question. That means the evaluator
can rate an individual question from 0 to 3 based on the employees performance, where 0
refers Below Average and thus 1 = Average; 2 = Good and 3 = Excellent.
The managers of each division and branches perform this evaluation. For example, in main
branch and branches inside Dhaka the evaluation process is done from SEVP (Senior
Executive Vice President) up to AVP (Assistant Vice President). And in branches outside
Dhaka generally AVPs (Assistant Vice President) are responsible for evaluation. In MBL
scope for self- evaluation is low. They compare their employees to some given standards. Their
measurable performance ratings are given below:
1. Reliability, commitment, sense of belonging and responsibility: In MBL an
individuals reliability, commitment, sense of belonging and responsibility is being
evaluated to understand how reliable and committed employees are toward the
organization. And whether they have any sense of belonging and responsibility. As
these criteria is very crucial for an organization to understand their employees better
and to hold them in the organization for a longer period of time.
2. Knowledge of banking, skill and awareness to rules and policies and its
implementation: In banking sector it is necessary that an employee should have
knowledge about banking system and she/he should also have sufficient skills and
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awareness to organizational rules and policies and implement these properly.
Employees should be well aware of the banks rules and policies and should know how
to implement those.
3. Competence, ability to do and get things done (leadership to train, guide,
supervise and utilize manpower): Competence refers to the behavioral requirements
of a role to carry out the work satisfactorily. It is what people bring to work in the form
of different types and levels of behavior. In MBL competencies are being measured by
following criteria:
Achieves high level of performance from team.
Defines objectives, plans and exceptions clearly.
Continually monitor performance and provide good feedback.
Maintains effective relationships with individuals and the team as a whole.
Develops a sense of common purpose in the team.
Builds team morale and effectively motivates individual members of the team
by recognizing their contribution while taking appropriate action to deal with
poor performers.
4. Initiative, drive and enthusiasm: The employees of MBL are being also evaluated on
the basis of their initiative ness and enthusiasm. They are being observed whether they
have the sustained energy and determination in the face of obstacles to set and meet
challenging targets, in compliance with quality, time and diversity standards and
delivering the required business results. Following points are being marked while
evaluating this section:
Agrees on achievable goals at the start of each project.
Strives toward targets.
Refuses to settle for second best.
Monitors tasks for accomplishment, quality and timeliness. Asks for feedback.
5. Quality and quantity of work: Quality and Quantity of work is also being observed
and given high priority. Employees have been leaded, encouraged, inspired and
supported to develop confidence and capability to help them realize their full potential
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to develop quality of work. Quantity of work can also be developed through similar
activities. And then they are being measured on some criteria.
6. Marketing ability: Marketing ability refers to an employees willingness and ability to
give priority to customers, delivering high quality services that meet their needs.
Through this standard an employee is being evaluated whether she/ he cares for
customers, concerned for people, has competitiveness, enterprise, excellence, sees
growth as major objective, market and customer oriented and productive. An employee
should possess following qualities in order to get excellent rating on this section:
Respond to customer requests promptly.
Treat all customers with respect.
Do not make assumption about customer needs, but asks lots of questions to
clarify them.
Take the initiative in developing policies to meet customer needs.
Try to see things from customers points of view- finds out about the pressure
of their world so as to relate to their concerns.
Request feedback from customers to ensure satisfaction and shares the results.
Know when and how politely to decline an inappropriate customer request.
7. Learning ability and analytical thinking: Analytical thinking is about bringing
disciplined analysis to data and situations, to see cause and effect and to use this to
make effective decisions. This is important in enabling to prioritize and take important
decisions based on an assessment of the impact and implication of the likely outcomes.
The ability of learning and analytical thinking can be developed by an individual
her/himself. MBL remarks analytical ability on following criteria:
When faced with a problem, gather as much information as necessary about it
before identifying root causes and possible solutions.
Bounce ideas off others to understand how they might tackle a problem. Break down large pi
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