Chapter-1

1.1 Introduction of the report:

The word ‘Bank’ is derived from the word ‘Bank’ or ‘Banquet’. Bank or
Banquet means a bench. The early bankers transected their money leading
activities sitting on the benches in a market place. According to others, the
word ‘Bank’ is originally derived from the German word ‘Back’ meaning a
joint stock fund. However, the term ‘Bank’ has been in use from the Middle
Ages in connection with the business of money leading.

Originally, `Banker’ or ‘Bank’ was defined as a person who carried on business

of receiving money, collecting of drafts, honoring checks drawn upon it. Over
the years the banking business has undergone many changes and now it covers
a wide range of activities. According to modern concept, banking is a business
which deals with borrowings, leading and remittances of fund as well as many
ancillary businesses connected thereto.

Modern banks play an important part in promoting economic development of a

country. Banks provide necessary funds for executing various programs
underway in the process of economic development. They collect savings of
large masses of people scattered through out the country, which in the absence
of banks would have remained ideal and unproductive. These scattered
amounts are collected, pooled together and made available to commerce and
industry for meeting the requirements. Economy of Bangladesh is in the group
of word‘s most underdeveloped economies. One of the reasons may be its
underdeveloped banking system. Government as well as different international
organizations have also identified that underdeveloped banking system causes
some obstacles to the process of economic development. So they have highly
recommended for reforming financial sector. Since 1990, Bangladesh

1
Government has taken a lot of financial sector reform measurements for
making financial sector as well as banking sector transparent, formulation and
implementation of these reform activities has also been participated by
different international organization like World Bank, IMF etc.

1.2 Objective of the report:

The main objective of education is to make a complete man. No knowledge
becomes complete without practical exposure. To acquire knowledge
completely we must do some practical applications of it in addition to
theoretical knowledge. Thus the objectives of the report are:

1. To make myself more confident and active in future to handle my job.

2. To know about the Previous & present banking system of National Bank
Limited.

1.3 Methodology:
The methodology of the report includes direct observation, oral communication
with the employees of all departments of Mirpur Branch, studying files,
circulars etc and practical experience. The report includes both quantitative as
well as qualitative data. To make the report more meaningful and presentable,
two sources of data and information have been used as follows:

• Primary Sources of Information

• Secondary Sources of Information

1.3.1. Primary Sources of Information:

Primary data are collected from the respective officers of various desk and files
studies.

2
1.3.2. Secondary Sources of Information:
The Secondary Sources of Information are:

• Annual Report of NBL

• Website of NBL.

1.4 Limitation of the Report:

Every thing has its limitations. My report is not also out of weakness. For some
certain causes, I could not effort to conduct my report properly. I have
considered the following causes as the limitations of the study. This Bank has
some policy for not disclosing some data and information for obvious reasons
that could be very much essential.

3
 Chapter-2

2.1 Introduction of National Bank Limited:

National Bank Limited has its prosperous past, glorious present, prospective
future and under processing projects and activities. Established as the first
private sector bank fully owned by Bangladeshi entrepreneurs, NBL has been
flourishing as the largest private sector Bank with the passage of time after
facing many stress and strain. The members of the board of directors are
creative businessmen and leading industrialists of the country. To keep pace
with time and in harmony with national and international economic activities
and for rendering all modern services, NBL, as a financial institution,
automated all its branches with computer networks in accordance with the
competitive commercial demand of time. Moreover, considering its forth-
coming future, the infrastructure of the Bank has been rearranging. The
expectation of all class businessmen, entrepreneurs and general public is much
more to NBL.

Keeping the target in mind, NBL has taken preparations to open 15 new
branches and 5 SME centers by the year 2009. In addition, we are further
expanding our presence through developing and expanding the SME financing,
Any Branch Banking and Off-shore Banking facilities. The emergence of
National Bank Limited in the private sector was an important event in the
Banking arena of Bangladesh. When the nation was in the grip of severe
recession, the government took the farsighted decision to allow the private
sector to revive the economy of the country. Several dynamic entrepreneurs
came forward for establishing a bank with a motto to revitalize the economy of
the country.

4
National Bank Limited was born as the first hundred percent Bangladeshi
owned Bank in the private sector. From the very inception, it was the firm
determination of National Bank Limited to play a vital role in the national
economy. We are determined to bring back the long forgotten taste of banking
services and flavors. We want to serve each one promptly and with a sense of
dedication and dignity. The then President of the People's Republic of
Bangladesh Justice Ahsanuddin Chowdhury inaugurated the bank formally on
March 28, 1983 but the first branch at 48, Dilkusha Commercial Area, Dhaka
started commercial operation on March 23,1983. The 2nd Branch was opened
on 11th May 1983 at Khatungonj, Chittagong.

At present, NBL has been carrying on business through its 131 branches spread
all over the country. Since the very beginning, the bank has exerted much
emphasis on overseas operations and handled a sizable quantum of home
bound foreign remittance. It has drawing arrangements with 415
correspondents in 75 countries of the world, as well as with 37 overseas
Exchange Companies located in 13 countries. NBL was the first domestic bank
to establish agency arrangements with the world famous Western Union in
order to facilitate quick and safe remittance of the valuable foreign exchanges
earned by the expatriate Bangladeshi nationals.

This has meant that the expatriates can remit their hard-earned money to the
country with much ease, confidence, safety and speed. NBL was also the first
among domestic banks to introduce international Master Card in Bangladesh.
In the meantime, NBL has also introduced the Visa Card and Power Card.

The Transparency and accountability of a financial institution are reflected in

its Annual Report containing its Balance Sheet and Profit & Loss Account. In
recognition of this, NBL was awarded Crest in 1999 and 2000, and Certificate
of Appreciation in 2001 by the Institute of Chartered Accountants of
Bangladesh. The bank has a strong team of highly qualified and experienced

5
professionals, together with an efficient Board of Directors who play a vital
role in formulating and implementing policies.

2.2 Vision of National Bank Limited:

Ensuring highest standard of clientele services through best application of latest
information technology, making due contribution to the national economy and
establishing ourselves firmly at home and abroad as a front ranking bank of the
country have been our cherished vision.

2.3 Mission of National Bank Limited:

Our mission is to continue our support for expansion of activities at home and
abroad by adding new dimensions to our banking services which have been
ongoing in an unabated manner. Alongside, we are also putting highest priority
in ensuring transparency, account ability, improved clientele service, as well as
our commitment to serve the society through which we want to get closer to the
people of all strata. Winning an everlasting seat in the hearts of the people as a
caring companion in uplifting the national economic standard through
continuous up gradation and diversification of our clientele services in line
with national and international requirements is the desired goal we want to
reach.

2.4 Function of National Bank Limited:

• To maintain all types of deposit A/Cs.
• To make investment.
• To conduct of reign exchange business.
• To conduct other Banking services.
• To conduct social welfare activities.
• To work for continues business innovation and improvements.
• To bui1d up strong-based capita1ization of the country.
• To ensure the best uses of its creativity, well disciplined, well manages and
perfect growth.

6
 Chapter-3

3.1 Deposit Collection:

Deposit is the lifeblood of a bank. From the history and origin of the banking
system. We know that deposit collection is the main function of a bank.

3.1.1 Accepting deposits:

The deposits that are accepted by NBL like other banks may be classified in to-

a) Demand Deposits
b) Time Deposits

3.1.2 Demand deposits:

These deposits are withdrawn able without notice, e.g. current deposits.
National Bank Limited accepts demand deposits through the opening of, -
a) Current account
b) Savings account
c) Call deposits from the fellow bankers

3.1.3 Time deposits:

A deposit which is payable at a fixed date or after a period of notice is a time

deposit.
National Bank Limited accepts time deposits through Fixed Deposit Receipt
(FDR), Short Term Deposit (STD) and Beard Certificate Deposit (BCD) etc.

While accepting these deposits, a contract is done between the bank and the
customer.
When the banker opens an account in the name of a customer, there arises a
contract between the two. This contract will be valid one only when both the
parties are competent to enter into contracts. As account opening initiates the
fundamental relationship & since the banker has to deal with different kinds of
persons with different legal status, National Bank Limited officials remain very
much careful about the competency of the customers.

7
3.2 Deposits beehives of last five years:
Deposits 2005 2006 2007 2008 2009
Current 5,157,689,93 6,178,409,30 8,24,747,03 8,782,589,42 10,398,061,3
deposit 4 0 2 0 33
& other
account
Bills 455,124,300 665,728,459 1,343,146,1 1,23,527,712 1,285,541,18
payable 24 3
Savings 8,002,250,85 10,023,258,1 11,423,416, 13,233,056,2 16,509,865,8
bank 2 26 41 13
deposit
Fixed 13,305,103,8 15,502,105,7 17,608,092, 24,554,075,1 31,605,724,0
deposits 00 00 14 65 61
Term 6,856,411,00 7,965,541,73 9,322,999,8 12,364,361,5 17,023,623,5
deposits 1 3 93 12 97
Bearer 15,825,000 15,825,000 15,825,000 15,825,000 15,825,000
certificat
es of
deposit

3.2.1. Chart of deposit behavior

8
 80,000.00
70,000.00
60,000.00
50,000.00
40,000.00
deposits
30,000.00
20,000.00
10,000.00
0.00
2005 2006 2007 2008 2009

Diagram: Deposits beehives of last five years

3.2.3. Table showing Deposits beehives of last five years

Deposits 2005 2006 2007 2008 2009
Total 32,984.05 40,350.87 47,961.22 60,187.89 76,838.64
Deposits

3.3. Credit creation:

9
As a continued process National Bank Ltd, followed the course of its own
credit policy within the framework and guidelines outlined by the Government,
Bangladesh Bank and Head office of National Bank Ltd. in respect of
deployment of its loan able fund. The Bank continued to explore and diversify
the area of its operation to extend credit facilities throughout the year to the
various productive sectors on priority basis.

3.3.1. Corporate Banking:

Letter of Credit (LC), Letter of Guarantee (LG). Overdraft, Short Term Loan,
Lease Finance, Loan Against Trust Receipt (LATR), Work Order Finance,
Emerging Business, Syndication, Term Loan, Project Finance, Bill Purchase,
Bank Guarantees.

3.3.2. Major Types of Loans and Advances:

a) Home Loan

b) SME Loan
c) Consumer Loan
d) Trade Finance

10
3.4 Credits of last five years

credits 2005 2006 2007 2008 2009

Loans & 27,020.21 32,709.68 36,475.74 50,665.07 65,129.29
Advances
Provision 251.13 307.43 514.91 784.91 959.91
for
Unclassified
loans
Provision 716.07 854.18 947.74 1,121.76 1,195.86
for
Classified
loans

Note: Taka in million.

3.4.1. Chart of loans & advances

11
 Overdrafts
Lease Finance
Home Loan
SME Loan
Consumer Loan
Trade Finance

3.4.2 Table showing Loan & Advance in different field

Loan & Overdrafts Lease Home SME Trade

Consumer
Advance Finance Loan Loan Loan Finance
2009 15372.9 12810.8 10248.6 7686.47 5124.31 5124.31

3.5 Income of National Bank Ltd:

12
Income is essential for any kind of business National Bank Ltd earned profit by
their investment and the operating income of interest receivable, income on
investment, commission, exchange, & other incomes, at a glance with
comparing the actual result of previous year and the budgeted figure for the
next coming year which is distributed into two quarters.

3.5.1 Interest Income:

Income through the operating income of interest receivable, income on
investment .

3.5.2. Non –Interest Income:

Income through commission, exchange, & other incomes .

13
3.6. Income of last five years

Income 2005 2006 2007 2008 2009

Interest 2,512.17 3,674.32 4,288.80 5,786.71 6821.40
Income
Interest 1897.83 2,449.76 2,833.45 3,594.84 4,490.34
Expenses
Non – 1,690.32 2,054.48 2,893.83 3,106.36 4,184.75
Interest
Income
Non – 1,453.34 2,132.26 2,134.08 2,174.40 3,118.11
Interest
Expenses
Profit 851.32 1,146.78 2,215.10 3,123.83 3,397.70
before tax
&provision
Profit after 271.67 507.49 1,238.11 1,517.43 2,070.47
tax

Note: Taka in million.

3.6.1. Chart of Interest Income.

14
 7,000.00

6,000.00

5,000.00

4,000.00
income
3,000.00 expenses
2,000.00

1,000.00

0.00
2005 2006 2007 2008 2009

Diagram: Interest Income &Expenses of last five years

3.6.2. Chart of Non-Interest Income.

15
 4,500.00
4,000.00
3,500.00
3,000.00
2,500.00
income
2,000.00
expenses
1,500.00
1,000.00
500.00
0.00
2005 2007 2009

Diagram: Non-Interest Income &Expenses of last five years

Chapter-4

4.1 Problems of National Bank:

4.1.1 General banking Department

16
• In general banking department they follow the traditional banking system, the
entire general banking procedure is not fully computerized.
• They are not using Data Base Networking in Information Technology (I)
Department. So they have to transfer data from branch to branch and branch to
head office by using floppy disk and sure it is not a good system.
• According to some clients opinion introducer is one of the problems to open
an account. If a person who is new of the city wants to open account, it is a
problem for him/her to arrange an introducer of SB or CD accounts holder.

4.1.2 Loans and Advances Department:

 NBL uses numerical credit scoring model.
 Sanction of all types of loan of NBL increasing day by day.
 NBL loan business is really good than the other bank.
 NBL time of repayment of installment is not sufficient for the
clients.
 NBL want much more condition from the other bank.
 NBL have the opportunity to introduce other types of loan like
student loan, Teacher loan and agriculture loan etc.
 The amount of NBL house loan is much lower than other bank.
 Rate of interest of NBL is moderate.
 Refinancing of household loan is moderate comparing to others
bank
 NBL providing much higher car loan to the other bank.
 Down payment of car loan is very much lower.
 NBL travel loan is much lower than other bank.
 Down payment of travel loan is required for the NBL
 The maximum amount of education loan is much lower than
other bank.
 Rate of interest of education loan is moderate to the other bank
and it is vary comfortable to the other client.

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4.1.3 Other Problem:

• National Bank doesn't give their attention on advertisement. As a competition

market it is too much important for any organization to increasing their
advertisements procedure.

4.2 Recommendation:

4.2.1General Banking Department:

• If the enter general Banking system is fully computerized then they satisfy the
customer by provide fast service.
• If they establish networking system with their branches then it can easily
transfer data within short time.
• If they cancel the introducer system then they can collect more deposit
through new account and it also satisfied the customer.

4.2.2 Loan and Advance Department:

 Interest rate should be decreased.
 They should refinancing 100% of loan amount.
 Down payment may be stopped for taking advantages to the other bank
 They should offer some other types of loan. I.e. Student loan, Teacher
loan, Agriculture loan.
 The clients of loan should be facilitated with online bank and other
benefits.
 National Bank Ltd. should upgrade its website regularly and providing
details information of loan scheme.
 The amount of household loan should be increased.

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  For the successful handling of loan operation, proper monitoring and is
essential. Customer’s information should be uploaded regularly for the
proper supervision and monitoring.
 The bank may also promote loan operation through different advertising.
 The bank may charge flat interest rate to get a comparative advantages
over other bank.
 The bank should requite some energetic executives to ensure timely
recovery of disbursed of loan.

4.2.3 Foreign Exchange Department:

• In Foreign Exchange Department it is require communicating with foreign

bank frequently and quickly. To make the process easy and quick the whole
system should be computerized and modern communication media for example
e-mail, fax, Internet should be used.

4.2.4 Other Problem:

• National Bank should give more attention to advertisement to create more

attraction among their customer, which is collect, more deposit and increase
investment scope.

4.3 Conclusion:

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We moved a long way from the time when the banks were deposit taking and
money-lending institution. The old concepts, attitudes and methods in banking
have undergone a marked change all over the world. Modern Banking is an
outcome development driven by changing financial activities and lifestyle.
Bangladesh has not lagged behind. Banks are required to participate in the
nation building activities and act as agent for bringing about socioeconomic
changes.

Reference:
National Bank Limited (2009), “History of NBL”, Retrieved as December
05, 2009, from
www.nblbd.com.
National Bank Limited (2009), “NBL Products”, Retrieved as December
13, 2009, from
www.nblbd.com.
National Bank Limited (2009), “Annual report” 2007-2008, National
Bank Limited, Dhaka,
Bangladesh.

Appendix:
NATIONAL BANK LIMITED

20
 Deposit Interest Rate
Circular Letter No. 2760
September 29, 2009.

Sl Category of Deposit Deposit Interest Rate Remarks

No. Effect from Oct. 01, 09
1. Savings 4.50%
2. Short Term Deposit: 1.00%
For Financial Institution and Non 4.00%
Bank Financial Institution
For Institutional deposit other than 3.00%
Financial Institute and Non-
Banking Financial Institute
(irrespective of slab/amount)
3. FDR for 1 month and above but 4.50%
less than 3 months
4. FDR for 3 months and above Below25.00 7.50%
but less than 25.00 lac & above 7.75%
6 months 1.00 core & above 8.00%
5. FDR for 6 months & above Below25.00 7.50%
but less than 1 year 25.00 lac & above 7.75%
3.00 core & above 8.00%
6. FDR for 1 year and above Below25.00 7.50%
25.00 lac & above 7.75%
3.00 core & above 8.00%

3.5-2 Books and Ledger maintain by Mirpur Branch(See the

appendix)

Sl No Particulars Of Statement
1 Marginal Deposit A/C

21
2 Summation & Balance Of Ledger
3 Fixed Deposit A/C
4 Short Term Deposit A/C
5 Call Deposit A/C
6 Statement Of Demand Bill For Collection Outstanding
7 Statement Of Usence Bill For Collection Outstanding
8 Suspense A/C
9 Sundry Deposit A/C
10 Payment Order A/C
11 Cash Certificate
12 Statement Of Unclaimed Deposit
13 Profit & Loss Entries
14 Analysis Of Expenditure A/C (Revised)
15 Closing Balance Of General Ledger(After Passing Of Closing Entries)
16 Statement Of Dead Stock Article Supplied Vide Instruction Circular No.136
Dt.30-07-97
17 Statement Of Stamps A/C
18 Statement Of Interest Received & Paid
19 Income Receivable A/C (Adjusting A/C Dr. Balance
20 Unpaid Expenses A/C (Adjusting A/C Cr. Balance)
21 Detail Statement Of Bank Guarantees Issued
22 Branches Statistic
23 Statement Showing The SHB Loan
24 Cash Credit (Pledge)
25 Cash Credit (Hypothecation)
26 Overdrafts
27 Loan A/C
28 Inland Bills Purchased & Discounted
29 Demand Drafts Purchased
30 Postested Bills A/C
31 Annual Return Of Particulars Of Advances.
32 Suit Filed By The Bank
33 Suit Filed Against The Bank
34 Ancillary Statement-1 Relating To Particulars of Advances
35 Ancillary Statement-11 Relating To Particulars Of Advances
36 Ancillary Statement-111 Relating To Particulars Of Advances
37 Statement Of Interest Suspense A/C
38 Advance Deposit And Advance Rent A/C
39 Payment & Security Deposit A/C
40 Drafts Payable A/C
41 Statement Of Certificate Of Stock Of Stationary
42 Stamped Certificate Of Balance With Other Banks (With Reconciliation
Statements)
43 Statement Of Outstanding Foreign Import Usance Bills Received For
Collection.
44 Revaluation Statement Of Foreign Currency Notes On Hand.
45 Statement Of Contingent Liabilities As On 31-12-2002.
46 Statement Of Import Letter Of Credits Outstanding.

22
47 Statement Of Balance With Foreign Correspondent.
48 Statement Of Export L/Cs Confirmed On Behalf Of Correspondents
Outstanding
49 Statement Of Pad Outstanding.
50 Statement Of Foreign Bills Purchased/Negotiated Outstanding.
51 Statement Of Overdraft/Advances Against Export Bills Sent For Collection
Outstanding.
52 Statement Of Packing Credit/OD Export Outstanding.
53 Statement Of Lim.
54 Statement Of Deposit Insurance Scheme For The Half Year Ended On 31st
December 2002.
55 Statement Of Depreciation Of Dead Stock Articles.
56 Forward Sales Outstanding.
57 Forward Purchased Outstanding
58 Borrowing From Foreign Banks Outstanding
59 Outstanding Foreign Bills Rediscounted
60 Wage Earners Development Bond.
61 Statement Of Loans & Advances & Recovery Against Classified Loans &
Advances.
62 Statement Of Advances By Lending Categories.
63 Statement Of Loan & Advances Analysis Of Maturity Grouping.
64 Statement Of Loan & Advances Analysis Under Board Categories.
65 Statement Of Loan & Advances Analysis Under Significant Concentration

66 Statement Of Deposit Analysis

(FDR,DPS,BCD,STD,BSCD,CA(CR),CC(CR),
LA (CR), NECD Other Deposit Of Maturity Grouping.

Glossary:

AD : Authorize Dealer
A/C : Account

23
ACH : Automated Clearing House
ADV : Automated accounting advice
ATM : Automated Taller Machine
BMRE : Balancing Modernizing Rehabilitation and Expansion
CC : Consumer Credit
CD : Current Deposit
CDBL : Central Depositary Bangladesh Limited
CEO : Chief Executive Officer
CL : Consumer Credit
CRR : Cash Reserve Rate
DD : Demand Deposit
DMD : Deputy Managing Director
DPS : Deposit Pension Scheme
FDD : Foreign Demand Deposit
FDD : Foreign Demand Draft
FDR : Fixed Deposit receipt
HO : Head Office
L/C : Letter of Credit
LIM : Loan against Imported Merchandise
LO : Local Office
LR : Local Remittance
LTR : Loan against Trust Receipt
MD : Managing Director
MT : Mail Transfer
NFCD : Non-Resident Foreign Currency Deposit
PAD : Payment against Documents
PD : Primary Dealer
PLS : Personal Loan scheme
PO : Pay Order
PS : Pay Slip
RFCD : Resident Foreign Currency Deposit Account
SHBL : Staff House Building Loan
SLR : Statutory Liquidity Reserve
STD : Short Term Deposit
SVP : Senior Vice President
TC : Travelers Cheques
TL : Large and Medium Scale Industry (Term Loan)
TT : Telephonic Transfer
NBL : National Bank Limited

24