General Banking Southeast Bank

An overview of Southeast Bank Limited:

Southeast Bank Limited is a listed scheduled bank in the private sector and

established under the ambit of Bank companies Act 1991 and incorporated as a

Public Limited Company under the Companies Act, 1994 on March 12, 1995.

The Bank started commercial banking operations effective from May 25, 1995.

During the short span of time the Bank had been widely acclaimed by the

business community raging from small entrepreneurs to large business houses

and industrial conglomerates, including the top-rated industrial borrowers for

visionary business outlook and innovative financing solutions. Thus within this

period of time the Bank has been able to create an image for itself and has

earned significant reputation in the country’s banking sector as a bank with

vision.

The Bank has been sponsored by a group of eminent entrepreneurs of the

country headed by Mr. Alamgir Kabir (FCA), Chairman of the board of

Directors. Currently it has 19 branches operating at the strategic location of the

country. In the third generation bank SBL has an excellent financial

performance in the new comers.

Highlights of the Bank:

The Bank was incorporated on March 12, 1995 as a Public Limited Banking

Company.

The Bank commenced its business on May 25, 1995 and has already

completed successful 7 years of operation.

The Bank has been listed with the Dhaka Stock Exchange Limited and

Chittagong Stock Exchange Limited since 1999.

The authorized capital of the Bank is TK. 500.00 million and paid up

capital is TK. 363.00 Million as on 30th June 2002.

The Bank has been paying reasonable dividend to the shareholders every

year.

The Bank has a network of 19 branches at May 5, 2003.

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The Bank has been maintaining adequate provision against its non-

performing assets.

Special Features of the Bank:

a) It has been performing conventional commercial banking activity and

striving to introduce Islamic Banking functions.

b) It is the pioneer in introducing and launching different customer friendly

deposit schemes to tap the savings of the people for channeling the same

to the productive sectors of the economy.

c) For uplifting the standard of living of the limited income group of the

population the Bank has introduced Consumer Credit Schemes by

providing financial assistance in the form of loan to the consumers for

procuring household durables, which have had encouraging responses.

d) The Bank is committed to continuous research and development so as to

keep pace with modern banking.

e) The operations of the Bank are fully computerized so as to ensure quick,

prompt flawless and services to the customers.

f) The Bank has introduced camera monitor system (CCTV) to strengthen

the security services inside the Bank premises.

Mission of SBL:

After doubling itself in size and soundness Southeast Bank Limited has

been consolidating its position and preparing itself for the new

millennium by upgrading technology, training its work force,

restructuring organizationally and creating a new work culture.

High quality financial services with state of the art technology

Fast customer service

Sustainable growth strategy

Follow ethical standards in business

Steady return on shareholders’ equity

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Innovative banking at a competitive price

Attract and retain quality human resource

Commitment to Corporate Social Responsibility

Establishment of Southeast Bank Ltd:

Southeast Bank Limited is a scheduled commercial bank in the private sector established under the ambit of Bank Company Act, 1991 and incorporated as a Public Limited Company under Companies Act, 1994 on March 12, 1995. The Bank started commercial banking operations on May 25, 1995. During this short span of time the Bank is successful in positioning itself as a progressive and dynamic financial institution in the country. The bank had been widely acclaimed by the business community, from small entrepreneurs to large traders and industrial conglomerates, including the top-rated corporate borrowers for its forward - looking business outlook and innovative financial solutions. Thus within this very short period of time it has been able to create an image and earn significant reputation in the country's banking sector as a Bank with Vision. Presently, it has 30 branches. .

The Government of Bangladesh has licensed Southeast bank Limited to provide banking and financial services and facilities in Bangladesh. In view of the above, the Bank within a period of 10 years of its operation achieved a remarkable success and met up capital adequacy requirement of Bangladesh Bank.

It has been growing fast as one of the leaders of the new generation banks in the private sector in respect of business and profitability as it is evident from the financial statements for the last 11 years.

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Organizational Structure of Southeast Bank Ltd:

Southeast Bank divides the whole Bangladesh into four potentials divisions and operates their banking activities and provides services for the consumers.

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Management Structure:

Organogram of Southeast Bank Ltd:

Board of Directors of Southeast Bank Limited:

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MD and President

DMD 1 DMD 2

SEVP

EVP

SVP

VP

First VP

SAVP

Junior Officer

SPO

PO

EO

SO

Officer

AVP

The board members are strong and prominent industrialist and business

entrepreneurs of the country. Each and every one has their own several

businesses in the field of manufacturing and services. Among the members

some of them are appointed as Chairman in some needy organization of

Bangladesh Government to accelerate and expand its business. The 15-member

board has the strongest teamwork to accelerate its business in the banking

sector.

Mr. Alamgir Kabir, a prominent industrialist, business entrepreneur and

philanthropist are the present Chairman of the Board of Directors of Southeast

Bank Limited. He is the pioneer industrialist, Chairman, Managing Director

and an active social worker of the country. Several numbers of Schools,

Colleges, Madrasas, Mosques and Roads are constructed and funded in

university by his contribution in the country.

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List of the Board of Directors:

01. Mr. Alamgir Kabir - Chairman

02. Mr. Ragib Ali - Vice Chairman

03. Mr. Muhammad Abul Kashem - Director

04. Mr. Azim Uddin Ahmed - Director

05. Mr. Tahnoun A. Harun - Director

06. Mr. Md. Akikur Rahman - Director

07. Mr. Syed Shahid Ali - Director

08. Mr. M. A. Ahad - Director

09. Mr. Sirat Monira - Director

10. Mrs. Jusna Ara Kashem - Director

11. Mrs. Duluma Ahmed - Director

12. Mrs. Rehana Rahman - Director

13. Mrs. Rabeya Khatun Chowdhury - Director

14. Mr. A.H.M Moazzem Hossain - Director

15. Dr. Ziadi Sattar - Director

16. Mr. Mahbubul Alam - Managing Director

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SBL has 06 individual departments to perform different banking

function operation and many legal affairs. These are:

Division of Bank

Administration Division

The division controls all the administrative activities of the bank.

General Banking Division

Activities regarding general banking are cash affairs, opening new branches,

customer service and legal affairs.

Audit and Inspection Division

The role of this division is to conduct extensive visit to various branches all the

branches and check and observe their performances and take notes on the

issues, which they think are not fit to the originality.

Credit Division

Various types of loans and advances are initiated, followed up and recovered

through this division.

Financial Control Division

Central accounts division does all the A/Cs related activities here. All the

branches send their monthly and daily statement to the Head Office. This bank

is using PC Bank 2000 for their electronic data management system.

International Division

To deal foreign exchanges business, which is known as international division.

Management Strategy

The deposit schemes of SBL include current, savings and fixed deposits. In

Line with other banks in the peer group this bank has also introduced several

attractive savings packages like Pension Savings Scheme (PSS), Education

Savings Scheme (ESS), Marriage Savings Scheme (MSS), and savers benefit

deposit scheme. SBL has a wide Cluster of lending packages, which include

commercial lending, working capital, house building loan, small medium and

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large scale industry loan, loan against export, and other consumer loans. SBL

has always been one of the major players in the country in promoting

diversified banking services. Over the years it has provided sincere and timely

services through the innovation of multifarious modern banking products. The

major areas where SBL provides financing facilities are corporate banking,

micro credit financing, investment in leasing and house building financing

companies and various loan syndication. SBL has introduced SWIFT to

facilitate quick fund transfer and Reuter to facilitate foreign trading. With eight

other banks this bank gives its customers the facilities of shared ATM services

throughout day and night; i.e. 24 hours banking.

The business strategy of SBL is to strengthen its traditional lending in small

retail business, following a conservative lending approach in the areas of large

and medium industrial ventures. The management approach of maintaining

loan quality is also appreciable. Although Bangladesh economy is led by

garments sector, it is worth noting that the exposure of the bank in this sector is

negligible. Therefore, the existing depressed scenario of garments will have

little impact on the bank. The bank is constrained by limited branch network.

Management Information System

Presently the bank uses PC Bank/M, a branch banking software developed by

Leads Corporation developed on SQL on Windows platform. The Head office

and the branches use the software for book keeping, automatic interest

calculation, daily transaction listing and audit trails, auto maturity and auto

renewal of FDRS, automatic integration of customer’s ledger and general

ledger, printing of General Ledger position including balance of subscribers,

monthly income and expenditure position etc. The bank has joined the shares

ATM Network Bangladesh offered by ETN along with eight member banks.

This service is presently available in Dhaka, Chittagong and Sylhet. SBL is a

member of SWIFT. It has also installed Reuter System at the head office to

have live access to information from international money market for detailed in

Foreign Exchange. But from the viewpoint of ideal requirement for a modern

bank, completing with international banks, the IT facilities of SBL need further

improvement.

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Types of Account:

Current Deposits Account:

Savings Account:

Short Term Deposits (STD):

Fixed Deposit Receipt (FDR):

Monthly savings scheme:

Monthly income scheme:

Characteristics of different accounts of Southeast bank:

Current Deposits Account:

The characteristics of the current account are different from savings account. In current account there is no interest on the current account. The depositor can withdraw the money from any time when he needs money, but withdraw at must be in transaction hour. The minimum limit of opening a current account in the Southeast Bank is TK.5000. But in order to enjoy the facilities of current account an account holder must pay TK. 2000 per year as service charge to the bank.

This kind of account is most suitable for private, individuals, traders, merchants, importers and exporters, mills and factory owners etc.

There are different types of current account. They are and their requirements are:

Individual current account:a. Introducerb. Photograph attested by the introducerc. Passport/commissioner certificated. Nominee signature & photograph

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Proprietorship Account:a. Introducerb. Photograph attested by the introducer c. Passport/commissioner certificated. Nominee signature & photographe. Trade licensef. TIN certificateg. Seal

Partnership Account:

a. Introducerb. Photograph attested by the introducerc. Passport/commissioner certificated. Trade licensee. TIN certificatef. Partnership Deed registered with joint stock companyg. Seal

Private Limited Company Account:a. Photograph of directors & signatoriesb. Passport/commissioner certificatec. Trade licensed. TIN certificatee. Certified copy of Memorandum & Articles of Associationf. Certificate of incorporationg. Bio data of each director or list of Directors as per return of joint stock

company with signatureh. Board Resolution for opening Account with the Bank i. Seal

Public Limited Company Account:a. Photograph of directors & signatoriesb. Passport/commissioner certificatec. Trade licensed. TIN certificatee. Certified copy of Memorandum & Articles of Associationf. Certificate of Incorporationg. Certificate of commencement of Businessh. Bio data of each director or list of directors as per return of joint stock

company with signaturei. Board Resolution for opening Account with the Bankj. Seal

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Account: Southeast Bank provides savings account primarily for

Small - scale savers. The main objective of this account is to boost up of thrift. Hence, there is restriction on with drawers in a month. It is a monthly product. Heavy withdrawn are permitted only against prior permission. The bank gives 6% interest rate against savings account and also charge tk 1000 per year as service charge.

o Minimum amount of tk 5000 is required as initial deposit.

o Frequent withdrawal is not encouraged.

o Normally withdrawal is not allowed more than ¼ Th of the balance.

o 7 days notice is required for withdraw of large amount.

o The rate of interest is 6% on this account.

Short Term Deposits (STD):

In short term deposit account, the deposit should be kept for at least six months to get the interest. Southeast Bank offers 5.5 % interest on STD account. Normally various big companies, organizations Government Departments keep money in STD account. For this type of account frequent withdrawal is discouraged. Deposit should be kept for at least seven days to get interest prior notice is required for withdrawal at the money from STD account.

Fixed Deposit Receipt (FDR):

Fixed deposits are the deposits in which an amount of cash is deposited in bank for a fixed period specified in advance. These deposits are time deposits. Normally the money on a fixed deposit is not repayable before the maturity data of a fixed period. At the time of opening the deposit account, the banker issues a receipt acknowledging the receipt of money on deposit account. It is popularly known as FDR. Southeast Bank gives different interest rate for different interest rate for different period of such as-

But if the account holder is 60 years old then he will get interest rate 13 % and his designation will be senior citizen.

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Monthly savings scheme:

A small savings today will provide account holder comfort tomorrow. It is a monthly savings scheme that secures people is future with ease.

Savings period & monthly installment rate:

The savings period is for 5,8,10 on 12 years. Monthly installment rate is tk 500/-, 1000/-, 2000/-, on 5000/- up to 50000/-.

Interest rate of monthly savings scheme:Southeast Bank introduces this

scheme for the middle class people. On the basis of this scheme, people can saves a big amount & can reinvest their big amount in another scheme. As a result, it helps to accumulate a big capital, the market. The interest rate of this scheme is 12.50 %.

o Monthly installment deposit

o The savings amount is to be deposited within the 10th of every month. In case holidays the deposit amount is to make on the following day.

o The deposits may also be made in advance.

o The depositor can have a separate account in the bank from which a standing instruction can be given to transfer the monthly deposit in the scheme’s account.

o In case the depositors fail to main the monthly installment in time, then 5 % on over due installment amount will be charged. The charge will be added with the following months installment and the lowest charge will be tk 10/-.

Period Interest

1 month 11.50 %2 month 11.75 %3 month 12.50 %4 month 12.50 %5 month 12.50 %

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Payment on MaturityMatured Amount (Taka)

Monthly installment (Tk 500 on multiple up to tk

50000)

3 years 5years

500/- 20700/- 38135/-1000/- 41400/- 76270/-5000/- 207000/- 381350/-10000/- 414000/- 762700/-50000/- 2070000/- 3813500/-

In case of urgent, depositors can avail a loan of maximum 80 % against the lien of MSS amount deposited.

Other terms & Conditions:

One can close his account before maturity.

If the monthly installment remains unrealized due to insufficient balance for four consecutive months , the account will be automatically closed.

In case of premature & automatic closure of the account the account will be settled as per the terms detailed below:

Relationship Rate of interest

Less than 12 installments. Nil12 on more but less than 36 installments. Prevailing saving rate.

36 on more but a than 60 installments. 3 years matured amount rest as per prevailing savings rate.

Monthly income scheme:

A monthly income scheme that really manes good sure. Sure investments for steady returns are:

1. Highlights of the scheme.

2. Minimum deposit tk 25000/-.

3. Higher monthly income for higher deposit.

4. The scheme is for a 3 or 5 years period.

5. Monthly income will be credited to the depositor’s account on the 5th each month.

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Deposit account IncomeTk. 25,000 250Tk.50, 000 500Tk.1, 00,000 1,000Tk.2, 00,000 2,000Tk.5, 00,000 5,000Tk.10, 00,000 10,000

Double Benefit Scheme:

Southeast bank have different types of account rather than traditional account. This account secures a capital after a specified period and also provides benefit at the death of the account holder. If a depositors deposit Tk 100000 now he will get Tk 200000 after 6 years. But if the depositors die after anytime after deposit money then his nominee will get double immediately that is of death of depositors.

Types of Loan:

Bank lending is important for the economy in the sense that it can simultaneously finance all of the sub-sectors of financial arena, which comprises agricultural, commercial and industrial activities of a nation.

By the primary security, we mean the financial claim of holder against the real sector of economy. In banking sector, the financial claim of bank against issuer, (called investors, borrowers and deficit units). The credit department of the bank performs this core function of a bank. In This case, the relationship of bank and customer is that of the creditor and debtor.

The word “CREDIT” is derived from Latin word “credo” meaning ‘I believe’. In general credit means the granting of a period of time by a creditor to a debtor at the expiration of which the latter must pay the debt.

From a banker’s point of view, credit is the confidence of the lender on the

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ability and willingness of the borrower to repay the debts at a future date.

The credit policy of any banking institution is a combination of certain accepted, time tested standards and other dynamic factors dictated by the realities of changing situations in different market places.

The accepted standards relate to safety, liquidity and profitability of the advance whereas the dynamic factors relate to aspects such as the nature and extent of risk, interest on margin, credit spread and credit dispersal. In formulating a credit judgment and making quality credit decision the lending officer must be equipped with all information needed to evaluate a borrower’s character, management competence, capacity, capital, ability to provide collaterals and external conditions which may affect his ability in meeting financial obligation.

Types of Loans and Advances Offered By SBL:SBL offers the following types of loans and advances:

Secured Overdraft (SOD) Loan (General) House Building Loan (Staff) Demand Loan Transport loan Industrial Credit House Building Loan (General) Transport Loan (Staff) Cash Credit (Hypothecation) Past Due Bills. Loan against Trust Receipt (LTR)

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Different types of interest rate charged on advances offered by SBL:

Types of Advances Interest

Rate

Features

Secured Overdraft

(SOD)

13% -- 15% Continuous advance facility given for one year but can be renewed

after the expiry of the time. Given against I.C.B. unit, FDR,

Sanchaypatras and Work Orders.

Loan (General) 12% -- 15% Given against Personal guarantee, Hypothecation of goods and land

and building.

House Building

Loan (Staff)

7% Given against Personal guarantee, land and building.

House Building

Loan (General)

15% Given against Personal guarantee, land and building.

Transport Loan

(Staff)

7% Given against Personal guarantee and hypothecation of vehicle.

Transport Loan

(General)

15% Given against Personal guarantee and hypothecation of vehicle.

Demand Loan 7% -- 14.5% Given against Personal guarantee and cash collateral securities.

Industrial Credit 12.5% --

15%

Given against land and building along with machinery, personal

guarantee of Directors and hypothecation of raw materials.

Cash Credit

(Hypothecation)

11% -- 15% The bank sanctions a short-term arrangement by which a customer is

allowed to borrow money up to a certain limit for a certain time. Given

against Registered mortgage of land and building, hypothecation of

goods and personal guarantee of Directors.

Past Due Bills 15% Given against Bills Receivables.

Loan against Trust

Receipt (LTR)

11% -- 15% Advance allowed for retirement of shipping documents and release of

goods imported through L/C. the goods are handed over to the

importer under trust with the arrangement that sale proceeds should be

deposited to liquidate the advances within a given period. Given

against Bills Receivables, hypothecation of imported goods, Trust

Receipt, personal guarantee, registered mortgage of land and building.

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Different advances offered by SBL

Different Types of Credit Facilities:

All types of credit facilities can be broadly classified into two:

Funded and

Non funded

6.1 Funded Credit:

A Funded credit facility that a bank offers to a customer, result in actual disbursement of cash to the customer or to any designated supplier of the customer. In order to provide funded facility to a customer, the bank has to incur real liability before hand, i.e., the bark has to arrange for funds primarily through accepting deposits or otherwise. Funded facility affects the balance sheet of the bank both in terms of increase of liability and increase of assets.

Funded credit facilities may be classified into four types:

I) LoansII) Cash CreditIll) Overdraft and

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Funded Credit Facility

Non-Funded Credit Facility

Overdraft (OD)

Cash Credit (CC)

SOD

Letter of Guarantee

Letter of Credit (L/C)

Term Loan

TOD CC Pledge

CC Hypothecation

House Building

Loan

Transport Loan

Loan General

Project Loan

Staff Loan against

Provident Fund

Staff House Building

Loan

IV) Bill purchased & discount.

Loans may be a ‘demand loan’ or ‘time loan’ or term, loan’. Demand loan is

payable on demand which is allowed for a short period to meet short-term

working capital need. Time loan is payable within one year and term loan is

allowed for one year to five years, usually for capital expenditure such as

construction of factory building, purchase of new machinery, modernization of

plant etc

Cash Credit facility is allowed against pledge or hypothecation of goods.

Under this arrangement the borrower can borrow any time within the agreed

limit and can deposit money to adjust whenever he does have surplus cash in

hand.

Overdraft is an arrangement between a banker and his customer by which the

latter is allowed to withdraw over and above his credit balance in his current

account. This is a temporary accommodation of fund to the client.

Academically, basic difference between cash credit and overdraft is that

businessmen use cash credit for longer period on yearly renewal basis, while

overdraft is allowed occasionally and for short-term duration.

Bill discounted and purchased:

o Discount :

Banks allow advances to the clients by discounting bill of Exchange / pro. note

which matures after a fixed tenor. In this method, the bank calculates and

realizes the interest at a prefixed rate and credit the amount after deducting the

interest from the amount of instrument.

o Purchase of bill:

Banks also make advances by purchasing bills, instead of discounting, which

are accompanied by documents of title of goods such as bill of lading or

railway receipts etc. In this case the bank becomes the purchaser/ owner of

such bill, which are treated as security for the advance. This is allowed

primarily relying on the credit worthiness of the client.

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Other important funded advances / facilities are:

i) Against import bills (Bills under L/C, i.e., BLC)

Advance against Bills under Letter of Credit are originated from the

lodgment of shipping documents received from foreign banks against

letter of credit established by the bank.

ii) Loan against Imported Merchandise (LIM)

Under loan against imported merchandise bank release the imported goods through the nominated clearing agent of the bank. In this case bank holds the possession of the goods. Importer takes delivery of the goods from the bank’s warehouse against payment. It is one type of forced loan.

iii) Trust Receipt (TR)

Advance against Trust Receipt to the client are to release shipping

documents for taking delivery of merchandise, which is hypothecated, to

the bank.

iv) Packing Credit

It is one type of Pre-Shipment export finance. Packing Credit is a short-

term credit granted by a bank to an exporter to facilitate purchase of raw

materials for the purpose of manufacturing processing, packing and

exporting the finished goods. The credit is granted after the evidence of

a letter of credit or a firm contract in favor of the borrower and against

the security of inventory purchased by the borrower.

Non-Funded Credit:

Non-funded credit facility to a customer refers to a bank’s commitment to a third party on behalf of the customer. The commitment itself constitutes facility but does not involve cash outflow from the bank. The bank’s commitment essentially states that in the event of occurrence/non occurrence of a particular event, within a particular date, due4 to a particular reason or reasons, the bank shall pay a specific sum of money to the third party upon claim in a particular manner. Though these types of facilities are primarily none funded in nature but at times it may turn into funded facility. As such a liability against these types of credit facilities are termed as ‘contingent liability’ and do not affect the balance sheet of the bank at the time of commitment but contain the possibility.

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The non-funded facilities are:

Letter of Credit:

A banker’s documentary credit is an instrument or letter issued by a bank on

behalf of and for the account of the buyer of the merchandise. By this

instrument the bank undertakes that the bill(s) of exchange of the beneficiary

(the seller of the merchandise) drawn on the buyer, or on the issuing bank, or

on another bank designated in the instrument, strictly according to the

conditions stipulated in the instrument, will be dully honored by acceptance

and/or payment depending upon the issuance of the bill(s) of exchange in

questing

Guarantee

In banking, it is an irrevocable obligation of a bank to pay a certain sum of

money in the event of non-performance of a contract by the third party. The

basis of guarantee is always a contractual relationship between principal debtor

(account holder) and creditor (beneficiary), which is either a contract that has

been definitely concluded or a relationship in its pre-contracted as is the case

with the tender guarantee. This relationship is referred to as the principal or

underlying relationship or contract. The contract of guarantee is independent of

this underlying relationship.

Functions of Credit Department:

The followings are the functions of credit department:

1) Interviewing the prospective borrower.2) Receiving the credit information assembled and placed in the customer’s

credit file.3) Processing and sanctioning of credit facilities to the customer.4) Disbursement of credit facilities to borrowers in accordance with

established procedures.5) Recording of credit facilities.6) Preparing vouchers pertaining to credit facilities disbursed and recording of

relevant entries.7) Controlling of securities and proper custody of documents.8) Follow up and recovery of credit as per due date.

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9) Computation and checking of interest accrued on loans and advances and recording entries thereof.

Credit and Marketing Fundamentals:

a) To place a high priority on the quality of credit exposure, new proposals

must meet Bank’s credit criteria and existing portfolio should be under

constant review for improving risk positions.

b) Maximization of profit is the basic aim of the bank, as such every profit

opportunity should be explored and professional skills be employed in this

direction.

c) Growth of the size of customer base through constant alertness towards

profitable business opportunity.

d) To avoid unnecessary wastage of time and energy, clear, concise and

summary type communications should be used.

e) To be thoroughly familiar with the Bank’s policies and functions.

f) To put every effort in reducing and containing the size of classified

advance portfolio.

g) To keep the expense burden of credit operations to he barest minimum

and endeavor to improve the cost efficiency of credit operation.

h) To contribute one’s best in all matters where his approval, concurrence

or other action is involved.

i) To apply strong commonsense in all credit matters by raising question-

Does this makes sense? Is there a better way? How to improve on this?

j) To avoid all temptations which may jeopardize or compromise the

Bank’s risk assets?

The Initial Loan Interview;

The initial interview is generally held at the officer’s bank or, on occasion, at

the client’s business. The objective of an initial loan interview is to ascertain

whether the loan request warrants further consideration (and the additional time

and expense) that is entailed in a credit investigation, follow-up interviews and

financial statement analysis.

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The beginning of a loan interview sets the tone for all that follows. The credit

officer of SBL should establish a relaxed but business like atmosphere. The

credit officer should greet the client with a warm handshake, introduce him or

herself by name and ask the client fell ill at ease, which can hinder

communication during the interview. A small amount of light conversation

before the interview can be helpful. There is, however, a distinction between

being friendly and being unprofessional. Referring to a client using a flip term

such as buddy may perhaps be well intentioned but it is certainly

unprofessional.

Process of handling loans:

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Getting loan proposal from the Client

Collecting information

Evaluating project and proposal

Evaluating by agent

Evaluating Collateral

Legal assessment

Branch level evaluation

About Client About Projects

DecisionSanctioning and Documentation of loan

Disbursing loan

Supervision of the loan

Recovery of the loan

Usual recovery

Legal recovery

Head office Level

Branch Level

Functions of Southeast Bank Ltd:

Banking Operation of Southeast Bank Limited:

General Banking:

This is the department where the most transaction of a commercial bank takes

place. This department includes:

Deposit Banking

Cash Department

Transfer of Remittance through Demand Draft (DD), Telegraphic

Transfer (TT), Pay Order (PO), Outward Bills for Collection (OBC),

Inward Bills for Collection (IBC), Bankers Cheque (BC) and Security

Deposit Repayment (SDR).

Customer Relation and

Other parts of General Banking

Clearing and reconciling different balances through Bangladesh Bank

Human Resources Development:

Human is the resources that were developed through professional training and

orientation courses that are organized by Bangladesh Institute of Bank

Management (BIBM), other professional institutions and officers were also

send to different institution and seminar held abroad under the auspicious of the

banks a major correspondents. Moreover staffs were also update through on the

job training, which is the integral part of the job. The various function of a

bank (in branch) is given in the following:

Cash Department:

This is the department where all sort of transaction are considered in cash. Cash

is receipt from the client to deposit to their account or to the concern client for

transaction as well as disbursement.

Remittance:

Remittance is the main part of general banking. The banks receipt and disburse

various types of bills through remittance within the country. Remittance is

another important sector of Southeast Bank Limited from where it earns a lot of

foreign exchange every year. Remittance means to send or transfer money from

one place to another. Against this bank charges some commission from the

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client. Moreover bank charges commission on the basis of the bills amount.

Mainly there are two types of remittances they are Inward remittance and

Outward remittance.

a. Inward Remittance:

Inward remittance deals with funds from overseas. It can be

i. Cash remittance through TT (Telegraphic Transfer)

ii. Remittance due to export

b. Outward Remittance:

Outward remittance is fund remitted to overseas on behalf of performed in the

following way:

i. Telegraphic Transfer

ii. Demand Draft (DD)

iii. Mail Transfer

iv. Remittance due to import.

Types of Remittance are:

PO (Pay Order)

TT (Telegraphic Transfer)

DD (Demand Draft)

IBC (Inward Bills for Collection)

OBC (Outward Bills for Transfer)

Pay Order (PO):

Pay Order is a system of making payments that were drawn on the bank issuing

them. There is no sort of fraud or any of cheque bouncing. A pay order is

issued within the city, which are the members (Bank) of the Bangladesh Bank

clearing house (metro city). It is issued the client, who have the account

relationship with the bank, by debiting the clients account and credit bills

account payable. In case of no-customer, pay order amount of commission

were receipt in cash and kept in the daily suspense account until payments

made through clearing house.

When the clients submit PO in their bank, the bank then send it to the

clearinghouse for collection. And as it was receipt by the member (issuing

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bank) of the clearance house, then they verify it and send bank to the respecting

bank and payment made by debiting the accounts payable. Entering in Boucher

through fund transfer system held these transactions.

Demand Draft (DD):

DD is same as PO but it can be drawn other branches of Southeast Bank, Sonali

Bank and Bangladesh Bank. Usually DD is within the country were as PO

within the city.

Telegraph Transfer (TT):

Telegraph is one of the fastest ways of transferring fund. All incoming out

going telexes are in the telex room and test key examined by a designated

officer. Payment of incoming TT’s is made either issuing DD or PO depending

upon the client’s requirement. All the time TT’s were issued to clients, who

have account relationship the bank. No TT’s were accepted unless they have

the account in the bank.

Sanchayapatras:

Sanchayapatras are other types of business of the bank or any other financial

institution, who gives interest on the basis of deposit and maturity. There are

various types of sanchaypatras on the basis of maturity and amount. They are

given below:

Eight years Protirakkha Sanchaypatra (PSP)

Five years Bangladesh Sanchaypatra (BSP)

Six-month interest bearing Sanchaypatra (SP)

Three-month interest bearing Sanchaypatra (SP)

Other Services:

SBL has other services and products like:

o Locker Services

o Grameen Phone Bill Collection

o Convertible Taka Account

o Foreign Currency Account

o Different Consumer Savings Schemes

Pension Savings Schemes (PSS)

Education Savings Schemes (ESS

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Marriage Savings Schemes (MSS)

Foreign Exchange:

Types of Foreign Exchange:

There are many types of services regarding foreign exchange provided by the SBL. These can be segregated in to three categories:

Export, Import, Foreign Remittance.

It is important to know about the process of export and import. Opening Letter of Credit (L/C). Receiving goods and services from overseas through import. Sending goods and services to overseas through export. Issuing travelers cheque.

Letter of Credit: Letter of Credit is an agreement between an importer and the bank (issuing bank). Documentary Letter of Credit is a Conditional Undertaking of Payment. The bank provides letter of credit in order of purchase goods from the exporter. The bank act on behalf of the both clients to deal with the exporter and the clients make the payments after receiving the good accordingly. To open an L/C the following things are required:

Current Account holder with good transaction IRC (Import Registration certificate) Import Policy. Letter of Credit authorization form duly registered with. Contract/Indent. Insurance Coverage. Contingency Liability Boucher L/C Registration.

Negotiating Documents: A negotiation of documents under L/C is the usual method of finance by exporter at the post shipment stage. In this system, after shipment of goods the exporter present relative documents to the negotiating bank for negotiation. An exporter is required to submit the following documents for negotiation.

Bill of exchange: Exporter generally used it. Bill of Lading: Bill of lading is a shipping document that the

shipping agencies issued by captain of the ship after receiving the goods.

Commercial Invoice: It generally contains the buyer name and address, seller name and address, detail description of the goods, unit and total amount.

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Certificate of Origin: This is the document of the goods origin. It provides the chamber of commerce or the govt. authorization organization.

Packing List: A list of goods exported by the exporter company. Insurance Coverage: Provided insurance companies after covering

insurance. IMP form: Provides by Bangladesh Bank.

Export: Export is the process of selling goods and services to other country. It has an immense contribution to generating income for the bank. The total volume of export handled by bank in 2001 was Tk. 2,675.05 million against Tk. 1,319.51 million in 2000.

Requirement for the Export Procedure:

To export any goods or services to overseas, the exporter should have to attach the photocopies if the following documents with the update the export registration certificate (ERC).

Bill of Exchange

Commercial Invoice

Certificate of Origin

Packing List.

Insurance Coverage.

Beneficiary certificate where the exporter tells about the goods want to export.

Beneficiary mail address including fax no

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Opening back to back L/C:

Back to back L/C is a letter of Credit backed by the original L/C of mother L/C to open a new L/C. The bank provides it to the exporter to import the raw material from overseas in order to produce the exportable commodity for the importer. It encourages the exporter to produce more exportable goods. In this case the bank offers some additional facilities i.e. 120 days to pay back the money where in case of Import; L/C is issued for 60 days.

Import:

In line with the experience of developing countries import payments of increased over the years. The total import business handle by the SBL in the year 2001 was Tk. 12,187.37 million and in the year 2000 it was Tk. 11,239.14 million. The imported items were mainly industrial raw material, consumer goods, fertilizer, machinery, old ships for scrapping, recondition car etc. The growth in import business was increased to 8.44% to previous year.

Import formalities:

To import an item the importer makes an agreement with the supplier. If supplier have any local agent, then importer use mail or fax. The importer holds a valid import registration certificate (IRC) to import goods in Bangladesh provided that the goods are permissible item as per govt. import policy. To import anything in large quantity L/C is the easiest way of transaction, where both party gets benefit. This import transaction are conducted with the help of documentary letter of credit established by the importers bank in favor of the supplier and advise through an agent bank located in the supplier’s country.

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L/C Margin:

L/C margin varies customer-to-customer and bank-to-bank. Generally it depends:

Relationship between banker and customer

Seasonal factor

Feature of goods

Special Functions of Southeast Bank Limited:

ATM:

This is the fastest growing modern banking concept. SBL should grab this

opportunity and take preparations for launching ATM. Since SBL is a local

bank, they can form an alliance with other contemporary banks in launching

the ATM. Standard Chartered has already successfully launched the ATM.

Credit Cards and Tele banking:

These are the new retail banking services provided by the foreign banks. SBL

can evaluate the option of launching credit cards and Telebanking system.

There are the recent developments in the banking sector and SBL should also

evaluate the option of doing it.

On-line banking:

SBL should move towards the on line banking operations. It is high time that

they should go for this because the foreign banks as well as some local banks

are already in to the on line banking operations.

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Introduction of SBL’s own savings scheme:

This can be another new retail product for SBL. They can start introducing

their own savings scheme or pension scheme for different professions. For

example, Standard Chartered Grindlays has SYFANZ and PLANZ and

Standard Chartered also has similar offers. Therefore for attracting more

depositors, the management should consider the option of its own savings

scheme.

Corporate scheme:

This is an innovative way of attracting corporate clients to the bank. Instead of

providing CCS to executives of various companies, SBL can introduce a

special scheme for corporate officers for the purchase of consumer durable at

an attractive interest rate. In this way, the bank will be able to attract a lot of

corporate clients and in the long run the bank would be benefited by getting

business for the bank from the corporate clients in terms of L/C, Loans and

advances etc. for example, officers of BTC, Lever Brothers, Square,

Beximco can be entered in to the corporate scheme.

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SWOT Analysis

SWOT Analysis is an important tool for evaluating the company’s Strengths,

Weaknesses, Opportunities and Threats. It helps the organization to identify

how to evaluate its performance and scan the macro environment, which in turn

would help the organization to navigate in the turbulent ocean of competition.

Strengths

Company Reputation

SBL has already established a favorable reputation in the banking industry of

the country particularly among the new comers. With in a period of seven

years, SBL has already established a firm footing in the banking sector having

tremendous growth in the profits and deposits. All these have leaded them to

earn a reputation in the banking field.

Sponsors:

SBL has been founded by a group of prominent entrepreneur of the country.

Each of them belongs to large industrial conglomerate of the country Mr. Ragib

Ali, head of the Board, Mr. Yusuf A. Harun former president of FBBCI and

Mr. Azim Uddin Ahmed, Vice Chairman of the bank.

Leadership :

The Management Executives of Southeast Bank is headed by Mr. Syed Abu

Naser Bukthtear Ahmed, President & Management Director, who has more

than 32 years of banking experience in Bangladesh and overseas.

To perform banking operation and other banking related activities Mr. M. A.

Muhith, Deputy Managing Director and of Human Resources Division,

working actively here for growth, expansion and diversification.

Top management:

Like the CEO and DMD the top management of the bank is also a major

strength for the SBL and has contributed heavily towards the growth and

development of the bank. The top management officials have all worked in

reputed banks and their years of banking experience, skill, and expertise will

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continue to contribute towards further expansion of the bank. At SBL, the top

management is the driving force and the think tank of the organization where

policies are crafted and often cascaded down.

Market share profitability:

As already mentioned earlier, SBL has established a fin-n footing among the

new comers in the banking industry of Bangladesh. They have already

achieved a high growth rate accompanied by an impressive profit growth rate

in 2000. The number of deposits and the loans and advances are also increasing

rapidly.

Strong financial resources:

Southeast Bank Limited has strong financial resources to run the banking

business. In the year 2000 the capital fund of the bank including paid up

capital, reserves, retained earnings stood at around Tk 56.00 core. It is expected

that in the near future the banks financial resources will get much stronger.

Facilities and Equipment:

SBL has adequate physical facilities and equipment’s to provide better service

to the customers. The bank has computerized banking operations under the

software called PC Bank. Counting machines in the teller counters have been

installed for speedy service at the cash counters. Computerized statements for

the customers as well as for the internal use of the banks are also available. All

the branches of SBL are equipped with telex or fax facilities. The Head Office

and the Dhaka & Chittagong based branches also have Internet facilities.

Impressive Branches:

SBL has earned a reputation in the banking sector for establishing impressive

branches. The Gulshan Branch, Dhanmondi Branch, KawranBazar Branch and

Uttara Branch and the Agrabad Branch are the most lavish and impressive

branches of SBL. This creates a positive image in the minds of the potential

customers and many people get attracted to the bank. This is also an indirect

marketing campaign for the bank for attracting customers. The other branches

of the bank are also impressive and are compatible to foreign banks.

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Interactive Corporate Culture:

SBL has an interactive corporate culture. Unlike other local organization,

SBL’s working environment is very friendly, interactive and informal. There

are no hidden barriers or boundaries while interactive among the superior or the

subordinate. The environment is also lively and since the nature of the banking

job itself is monotonous and routine, SBL’s lively work environment boosts up

the sprit and motivation of the employees. At the same time, music system in

the office also plays a key role in making the environment lively.

Team work at mid level and lower level:

At SBL’s mid level and lower level management, there are often team works.

Many jobs are performed in-groups of two or three in order to reduce the

burden of the workload and enhance the process of completion of the job.

People are eager to help each other and people in general are devoted to work.

Relatively less intervention from the Board of Directors compared to

other banks:

At SBL, the scenario is relatively better in terms of intervention of the board in

management practices compared to other banks. Though, in a private bank

there are often undue interventions from the board regarding the processing of

credit facilities. However, at SBL the scenario is somewhat better and has

fewer interventions from the board in the management practices. However,

certain interventions from the board are inevitable in a Bangladesh Bank.

Weaknesses:

No Vision:

The greatest irony is that despite claiming to be “A Bank with Vision” which is

used as its advertising platform and mission statement, the bank as of today has

failed to develop a prescribed set of vision as it embarks in to the cyber age of

twenty first century. The bank still could not identify the core area of business

and where it should concentrate in its business, as the new millennium is about

to start. The bank does not have any long-term strategies of whether it wants to

focus on retail banking or become a corporate bank. Till now, the bank is in a

nowhere situation. Unofficially, retail banking is discouraged but at the same

time the bank is not being able to pull itself away from retail banking. At the

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same time SBL has failed to be a full-fledged corporate bank. The path for the

future should be determined right now.

Advertising and Promotion:

This is a major set back for SBL and one of its weakest areas. SBL does not

pursue an aggressive marketing campaign. It does not expose itself to the

general public and are not in the lime light unlike other banks. Other than the

neon sign at Farm gate Over Bridge, SBL does not have neon sign or any

advertisement in the city. As a result people are not aware of the existence of

this bank.

Poor Recruitment:

During its inception, SBL has not recruited competent people in filling up its

lower and some mid level positions. Other than the recruitment of the

Probationary Officers and Management Trainees, people who were recruited

from banks for the lower management are not competent enough to provide the

best output. As a result the services of the bank are being jeopardized. The

external search of the bank in attracting people from other banks had flaws in it

and the right people were not taken from the right bank.

Reference appointment:

This is one of the set backs of SBL and will have a long-term repercussion on

the quality of Human Resource. Many people have been recruited under the

reference of the recommendation of the Board of Directors, which has become

a chronic disease in the PCB’s. As a result, people having inadequate

qualifications and experience have been recruited only because of their ties

with the sponsors. The practice must be stopped considering the future of the

bank and it is very important to have a component workforce.

Disguised Employment:

This has also become growing problem at SBL. Currently there are “Too many

heads but few hands.” Again this is related to the problem of reference

appointment. There are people who are only drawing salaries at the end of the

month but making a minimum or no contribution towards the organization. On

the other hand there are officers who work hard but are not apprised

accordingly.

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Poor Service Quality:

This has become a major problem for the bank. The customer service quality in

all the departments and in most of the branches is very low. The quality of the

service at SBL is lower than those in the contemporary banks such as Dhaka

Bank, Prime or Dutch-Bangla. Where as SBL was suppose to provide services

compared to those in the FCB’s, they are not being able to complete with its

contemporary rivals in terms of service quality. If this trend continues, SBL

will soon fall into the category of the traditional banks. The service quality is

worst in the General Banking Division, as there are several system errors.

Low remuneration package:

The remuneration package for the entry and the mid-level management is

considerably low. The compensation package for SBL entry-level positions is

even lower than the contemporary banks. Under the existing low pay structure,

it will be very difficult to attract and retain MBA’s at SBL. Since foreign banks

pay double that of SBL, it will be very difficult to attract competent MBA’s in

future for SBL. Therefore SBL will fall to attract competent NOA’s and retain

them if they do not revise their pay structure.

Human Resources Department:

The HR department is another weak area of SBL. The HR department is very

small relative to the size of the bank and other than the Head of HR wing; the

staffs in this wing are incompetent to be an official in the HR department. Most

of the HR practices and policies are not being followed or implemented here.

The annual performance appraisal report of the employees has not been

scrutinized yet and employees are not getting the required feedback. There is

also no prescribed set of promotion policies. The bank is still practicing the

traditional method where solely the experience or length of service is

considered as the criteria for promotion. On the other hand, a criterion for work

output or productivity is not considered. Moreover, the HR department is only

confined in the Head Office and does not have any role in the branch level

activities.

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Centralized Decision-Making:

At SBL corporate decisions the CEO, DMD and other top management

officials craft policies and strategies and then they are cascaded down. At times

the Board of Directors is also engaged in making corporate decisions. As a

result of this practice there is only a top down flow of communication at SBL.

The scope for bottom up communication is very limited and many bright ideas

or opinions are not being able to climb up the ladder to the top management.

Ideas remain their forever.

Noise Pollution:

This has become another major problem SBL. Since there are no cubical

shaped offices, there is a tremendous noise in each department of the Gulshan

Branch. The noise greatly hampers the work activity and the level of

concentration. This is the problem of having an open space office where

everyone is communicating with each other and creates noise.

Lack of qualified system operators and computer operators:

Currently at SBL’s head office and in the Branches, there are system operators

who do not have any background academic knowledge on computer

applications. As a result they frequently make mistakes in the preparation of

various computerized statements. At the same time, computer operators do not

have the skill to carry out their activities.

Few staff meetings:

It has been observed that there are very few staff meetings and departmental

meetings at the branch level. During the last four months there was only one

staff meeting and one departmental meeting. This is not a good management

practice.

Limitations of the PC Bank:

PC Bank is not modern and comprehensive banking software. It does not

provide adequate support in providing the services. It is not user friendly and

management should consider replacing the PC Bank system by a more

comprehensive banking system.

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Opportunities

Diversification:

SBL can pursue a diversification strategy in expanding its current line of

business. The management can consider options of starting merchant banking

of diversify in to leasing and insurance. By expanding their business portfolio,

SBL can reduce their business risk.

Product line proliferation:

There are several opportunities for SBL to expand its product line. In this

competitive environment SBL must expand its product line to enhance its

Sustainable Competitive Advantage (SCA). As a part of its product line

proliferation, SBL can introduce the following products.

ATM:

This is the fastest growing modern banking concept. SBL should grab this

opportunity and take preparations for launching ATM. Since SBL is a local

bank, they can form an alliance with other contemporary banks in launching

the ATM. Standard Chartered has already successfully launched the ATM.

Credit Cards and Tele banking:

These are the new retail banking services provided by the foreign banks. SBL

can evaluate the option of launching credit cards and Telebanking system.

There are the recent developments in the banking sector and SBL should also

evaluate the option of doing it.

On-line banking:

SBL should move towards the on line banking operations. It is high time that

they should go for this because the foreign banks as well as some local banks

are already in to the on line banking operations.

Introduction of SBL’s own savings scheme:

This can be another new retail product for SBL. They can start introducing

their own savings scheme or pension scheme for different professions. For

example, Standard Chartered Grind lays has SYFANZ and PLANZ and

Standard Chartered also has similar offers. Therefore for attracting more

38

depositors, the management should consider the option of its own savings

scheme.

Introduction of corporate scheme:

This is an innovative way of attracting corporate clients to the bank. Instead of

providing CCS to executives of various companies, SBL can introduce a

special scheme for corporate officers for the purchase of consumer durable at

an attractive interest rate. In this way, the bank will be able to attract a lot of

corporate clients and in the long run the bank would be benefited by getting

business for the bank from the corporate clients in terms of L/C, Loans and

advances etc. for example, officers of BTC, Lever Brothers, Square, Beximco

can be entered in to the corporate scheme.

Separate schemes for service holders :

The bank as a part of expanding its loan portfolio can assistance in terms of giving

loans to service holders under various professions under a separate scheme. The bank

can provide assistance to Engineers, Doctors, Lawyers and other professions under a

separate scheme. Standard Chartered Grindlays has already introduced such a scheme

for different professions.

Threats

Multinational Banks

The emergence of the multinational banks and their rapid expansion poses a

potential threat to the new PCB’s. Due to the booming energy sector, more

foreign banks are

Expected to arrive in Bangladesh. Moreover, the already existing foreign bank

such as Standard Chartered is now pursuing an aggressive branch expansion

strategy. This bank is establishing more branches countrywide and is expected

to get into for operation soon. Since the foreign banks have tremendous

financial strength, it will pose a threat to local banks to a certain extent in terms

of grabbing the lucrative clients.

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Upcoming Banks:

The upcoming private local banks can also pose a threat to the existing PCB’S.

it is expected that in the next few years more local private banks may emerge.

If that happens the intensity of competition will rise further and banks will have

to develop strategies to complete against an on slaughter of foreign banks.

Contemporary Banks:

The contemporary banks of SBL such as Dhaka Bank, Prime Bank and Dutch-

Bangla are its major rivals. Prime Bank and others are carrying out aggressive

campaign to attract lucrative corporate clients as well as big time depositors.

SBL should remain vigilant about the steps take by these banks, as these will in

turn affect SBL strategies.

No new deposit creation:

This is a problem and a threat faced by the whole banking sector of

Bangladesh. Due to the current economic slowdown, there is hardly any new

deposit creation as they’re few investments and savings accompanied by a

galloping inflation. As a result the new banks are not being able to attract

absolutely new depositors but rather they have to hunt or snatch away

depositors from other banks. Moreover, due to financial turmoil in Southeast

Asia, foreign remittance of Bangladeshis is also decreasing due to the massive

retrenchment. Therefore all these adversaries are blocking the creation of new

deposits and banks are operating by snatching away depositors from one to

another.

Default Culture :

This is a major problem in Bangladesh. As SBL is a very new organization the

problem of non-performing loans is very minimum or insignificant. However,

as the bank becomes older this problem arises and the whole community

suffers from this chronic disease. SBL has to remain vigilant about this

problem so that proactive strategies are taken to minimize this problem if not

elimination.

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