You are on page 1of 64

[Dedicated To My Mother]

COMPARISONS FOR BANK VIVA


HEMAL JAMIUL HASAN

Banking Career in Bangladesh

[Dedicated To My Mother]

Hemals Speech

01.10.2015

In the name of ALLAH, the infinitely Compassionate and Merciful


Banking Career in Bangladesh (BCB) is a platform that helps us to
develop ourselves through making friendship, sharing our knowledge,
thoughts, values to each other. I think, it is not only a group of
thousands but also a bonding of family. We, Admin Panel, always try
to give our best efforts to make the group more effective day by
day. Here, one point must be mentioned that without your inspiration
& co-operation it is never possible and it will be not

Comparisons For Bank VIVA is a book that helps you to take better
preparation for Bank VIVA. It contains 349 Comparisons and if
you go through this book you will know about around 1000 terms those
are very much important for Bank VIVA as well as for Real Job
Practice. When making this E-Book, I always considered the necessity
of both- Jobseekers and Jobholders so that they can cut a good figure
in every stage of Bank VIVA.

Wishing success in Bank VIVA.

Hemal Jamiul Hasan


MBA (AIS) & BBA (AIS), RU
Administrator, BCB Group
himurajbari@gmail.com
01918-756-456 (8 P.M.10 P.M.)

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Powered By:
Banking Career In Bangladesh
We Are A Family
www.facebook.com/groups/bankingcareerbd/

&
TheProjectProfiles
Endeavor to Excel the Entrepreneurial
Power is Our Motto
A House of Quality Financial Accounting Solutions, Project Profiles, Financial and Accounting
MS Excel Template for Simple & Complex Business, Analytical Report and Presentation Making.
www.theprojectprofiles.com
Cell: +880-1611-550772

Hemals Important Posts


https://www.facebook.com/groups/bankingcareerbd/745446955552883/
Copyright@ www.facebook.com/himurajbari88/

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

AASB

150

Arbitration

89

Branding

73

Absolute Advantage

135

Area

30

Breakeven Point

139

Absorption Costing

140

Assessment

284

Absorption Costing

201

Assets

179

Accountability

281

Assets

151

Accounting

225

Auction

85

Accounting

19

Audit

276

Accounting

20

Back To Back LC

334

Accounting Profit

120

Bad & Loss Loan

11

Accounts Payable

149

Bai-Istisnaa

331

Accounts
Receivable

149

Bai-Muajjal

330

Accreditation

294

Bai-Murabaha

330

Accrual

204

Bai-Salam

331

Accrual Basis
Accounting

157

Balance Of Payment

93

Balance Of Trade

93

Accruals

147

Balance Sheet

144

ACH

256

Bank Guarantee

241

Acquisition

296

Bank In Panic

46

Acquisition Method

160

Bank In Run

46

Activity Based
Costing

203

Bank Loan

245

Advertisement

78

Bank of America

251

Advertising

74

Bank Overdraft

Advising Bank

340

Bank Rate

Advising Bank

341

Agenda

Broad Money

BS

42

Budget Deficit

111

Business Risk

265

Call Option

325

Capital

186

Capital Account

338

Capital Expenditure

195

Capital Gain

175

Capital Gains

176

Capital Goods

124

Capital Intensive

275

Capital Lease

189

Capital Market

324

Capital Market Line


(CML)

316

Capitalism

101

Cartel

99

245

Cash Basis
Accounting

157

234

Cash Discount

168

Bank Rate Repo


Rate

Cash Dividend

326

293

Banks NBFIs

Cash Flow

181

Aggregate Demand

98

Barter

92

Cash Flow Projection

146

Agreegate Demand

41

Basel I

348

Cash Flow Statement

141

Agreegate Supply

41

Basel II

348

Cash Flow Statement

146

AIS

20

Basel III

348

AIS

291

Basic EPS

25

Allocation

171

Bidding

85

Amortization

217

Bill Discounting

148

Amortization

154

Bill of Exchange

249

Annual Report

212

Biodata

58

Annuity

174

Black Money

126

AOA

90

Blue Collar

61

Apple

15

Book Value

214

Apportionment

171

Bookkeeping

225

Approach

285

Borrow

235

Arbitrage

317

Boss

273

Arbitrage

318

Brand

79

Central Bank

Central Bank

231

Centralisation

283

Certification

294

Chart

35

Cheque

226

Cheque

248

Cheque

249

Circle

36

Classical Economics

105

Classical Economics

114

Close Market

128

Code of Conduct

280

Copyright@ www.facebook.com/himurajbari88/

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Code of Ethics

280

Cost of Capital

167

Depreciation

217

Collateral

315

Cost of Capital

178

Expansion

125

Collateral Security

339

Cost of Equity

167

Derivatives

314

Combination

33

Cost of Equity

177

Devaluation

113

Commercial Bank

Cost Pull Inflation

40

Diluted EPS

25

Commercial Bank

Cost Reduction

196

Direct Cost

24

Commercial Bank

230

Cost Unit

202

Direct Costs

165

Commercial Bank

231

Coupon Rate

306

Direct Marketing

69

Commercial Bill

232

Covariance

32

Direct Tax

14

Commercial Invoice

81

Cover Letter

57

Direct Tax

263

Commercial Paper

232

Credit

198

Discount Rate

228

Commercialization

301

Credit Balance

180

Commodity Money

117

Credit Card

258

Diseconomies of
Scale

108

Common Stock

308

Credit Note

246

Dismissal

60

Comparative
Advantage

135

Credit Risk

349

Dividend

175

Doubtful Loan

11

Compensation

48

Dow Jones (DJIA)

309

Composite Number

37

Duty

16

Compound Interest

185

Duty

223

Condition

87

Duty

261

Confirming Bank

341

E-Banking

244

Consumer Goods

124

EBIT

172

EBITDA

172

Economic Capital

47

CRR

CS RS SA BS

42

Currency

100

Current Account

338

Current Account

227

Current Assets

161

Custom Duty

222

Content Theory

50

Continuous Loan

193

Customer
Satisfaction

70

Contracting

297

Customer Value

70

Economic Profit

120

Contractionary
Monetary Policy

18

CV (Curriculum
vitae)

304

Economics

123

Contractionary
Monetary Policy

Debit

198

Economies of Scale

108

342

Debit Balance

180

Economies of Scale

121

Contribution Margin

155

Debit Note

246

Economies of Scope

121

Conventional
Bannking

343

Decentralisation

283

Efficiency

300

Decision Making

292

EFT

255

Elastic

116

Elasticity of Demand

103

Elasticity of Supply

103

Copyright

75

Deferral

204

Copyright

305

Deferred LC

337

Corporate Banking

45

Deficit Budget

17

Corporate Banking

229

Deflation

131

Correlation

32

Deflation

94

Cost

22

Demand

98

Cost Accounting

192

Demand Draft

226

Cost Accounting

166

Demand Draft

242

Cost Center

158

Demand Loan

193

Cost Centre

202

Demand Pull Inflation

40

Cost Control

196

Depreciation

113

Cost of Capital

184

Ellipse

36

Equity

170

Equity

179

Equity

186

Equity

314

Evaluation

284

Evaluation

286

Excise

221

Excise Duty

222

Copyright@ www.facebook.com/himurajbari88/

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Excise Duty

264

GAAS

208

IFRS

150

Exempt (VAT)

260

Gain

327

IFRS

218

Expansionary
Monetary Policy

342

GATT

28

IFSC Code

247

Expansionary
Monetary Policy

GDP

134

Impairment

154

18

109

Expected Return

312

Imperfect
Competition

Expense

22

Implicit Cost

216

Expense

328

Import LC

335

Explicit Cost

216

Income

176

Export LC

335

Income Statement

141

Extrinsic Motivation

66

Factoring

148

Fair Value

162

FASB

206

Fiat Money

117

Final Dividend

307

Finance

19

Finance

123

Financial Accounting

GDP GNP
Giffen Goods

104

Globalisation

107

GNP

GNP

134

Going Concern
Concept

188

Indemnity

91

Goldman Sachs

250

Independent Events

34

Goods

83

Indirect Cost

24

Gross Income

183

Indirect Costs

165

Gross Margin

155

Indirect Marketing

69

Gross Profit

199

Indirect Tax

14

Gross Profit

23

Indirect Tax

263

Gross Profit

163

Inelastic

116

166

Gross Working
Capital

211

Financial Accounting

192

Group

68

Financial Leverage

190

Guarantee

91

Financial Risk

265

Guaranty

39

Financial Statements

212

Hedge Funds

320

Financing

26

Hedgers

127

Fiscal Deficit

111

Hedging

317

Fiscal Deficit

106

Herzberg Theory

49

Fiscal Policy

Hiring

54

Inferior Goods

80

Inferior Goods

104

Inflation

131

Inflationary Gap

344

Inspection

276

Integration

187

Interest Rate

306

Interest Rate

228

Interim Dividend

307

Internal Audit

205

Forward

313

HRD

52

Forward

322

HRM

52

Internal Control &


Compliance Risk

347

Franchising

303

Human Capital

147

Intrinsic Motivation

66

Free Market

102

Human Capital

53

Inventory

151

Free Trade

102

Human Capital

173

Inventory

209

FTA

130

63

233

181

Human Resource
Management

Investment

Fund Flow

26

53

319

Funding

Human Resources

Investment

12

143

220

Investment Bank

Future Value

IAS

230

321

218

Investment Bank

Futures

IAS

206

224

322

IASB

IRR

Futures

208

207

311

GAAP

IASB

IRR

343

207

243

Islamic Banking

GAAP

IBAN Code

282

219

347

ISO 17025

GAAP

ICT Risk

219

271

220

IFRS

ISO 27001

GAAP

ISO 27001

270

Copyright@ www.facebook.com/himurajbari88/

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

ISO 27002

271

Macroeconomics

138

ISO 9001

270

Management

21

ISO 9001

272

Management

ISO 9001

282

ISO 9002

272

J.P. Morgan Chase

Monopolistic
Competition

118

289

115

Management
Accounting

Monopolistic
Competition

192

Monopoly

99

250

Managerial
Functions

268

Monopoly

115

J.P. Morgan Chase

251

Managerial Roles

268

Monopoly

132

Jareep Khatiyan

43

Margin

82

Monopoly

133

Job Analysis

65

Margin of Safety

139

Monopsony

133

Job Description

55

Marginal Cost

210

Mortgage

239

Job Enlargement

62

Marginal Costing

201

Motivation

56

Job Enrichment

62

Marginal Utility

96

Motto

295

Job Evaluation

65

Market Economy

122

MOU

86

Job Specification

55

Market Risk

349

Mudaraba

329

Journal

197

Market Value

162

Mudaraba Post
Import (MPI)

332

Keynesian
Economics

114

Market Value

214

275

77

Murabaha Import Bill


(MIB)

332

Labour Intensive

Marketing

Layering

187

Marketing

73

332

LC

240

Marketing

76

Murabaha Trust
Receipt (MTR)

329

241

71

Musharaka

LC

Marketing Concept

Leader

273

Markup

82

Leadership

289

49

43

Maslow Theory

Mutation Khatiyan
Survey/Jareep
Khatiyan

Lease

299

Mass Marketing

72

Mutual Funds

320

Ledger

197

Master Card

257

88

334

Mutually Exclusive
Events

34

Lessee

Master LC

Lessor

88

Merchant Bank

12

NASDAQ

309

Levy

262

Merchant Banking

233

NASDAQ

310

Liability

170

Method

285

NBFIs

Liability

200

MICR Code

238

Need

137

Liberalisation

107

Microeconomics

138

NEFT

236

License

298

Microsoft

15

Negotiation

89

License

299

Minutes

293

105

Licensing

303

MIS

21

Neoclassical
Economics

291

101

142

MIS

Neoliberalism

Liquidity

290

183

235

Mission

Net Income

Loan

239

122

145

Loan

Mixed Economy

Net Income

90

Net Profit

23

Loan against
Imported
Merchandize (LIM)

MOA

336

MOA

86

Net Profit

164

Monetary Policy

Net Profit

199

Loan against Trust


Receipt (LATR)

336

Net working Capital

211

Niche Marketing

72

Long Run

95
328

97

Loss

Nominal Exchange
Rate

Money

100

Money Market

324

Monitoring

286

Copyright@ www.facebook.com/himurajbari88/

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Nominal GDP

112

Perpetuity

174

Nominated Bank

340

Personnel
Management

63

PESTEL Analysis

266

Physical Capital

173

Placement

187

Policy

278

Population Variance

31

Positive Economics

136

Post Shipment
Finance

333
333

Non Scheduled Bank

Non Tariff Barriers

129

Noncurrent Assets

161

NOPAT

145

Normal Goods

80

Purchase

287

Purchase Method

160

Put Option

325

Qualitative Data

38

Quality Assurance

288

Quality Control

288

Quantitative Data

38

Quota

119

Rate of Return

178

Real Exchange Rate

97

Real GDP

112

Realization

213

308

Recession

94

Prepayments

147

Recession

125

132

Present Value

143

Recessionary Gap

344

On Shore Bank

13

Primary Markets

323

Recognition

213

One Way ANOVA

29

Primary Security

339

Recruiting

51

Online Banking

244

Prime Number

37

Recruitment

67

Open Market

128

Privatization

301

Recruitment

54

Operating Lease

189

Problem Solving

292

Relevant Cost

152

Operating Leverage

190

Process Theory

50

Remuneration

48

Operating Profit

163

Procurement

287

Repo Rate

Operating Profit

164

Product Cost

194

Repo Rate

234

Operational Risk

349

Productivity

300

Required Return

312

Operations Manager

269

Profession

59

Reserve

169

Opportunity Cost

210

Profit

156

Reserved Money

Options

321

Profit Center

158

Responsibility

281

Outsourcing

297

Profit Maximization

44

Resume

57

Patent

305

Profitability Index

191

Resume

304

Patent

302

Proforma Invoice

81

Resume

58

Pay Order

242

Program

279

Retail Banking

45

PayPal

258

Project

279

Retail Banking

229

Peak Of Business
Cycle

345

Project Manager

269

Return on Equity

177

Promissory Note

248

Revenue

327

Perfect Competition

109

Promotion

76

Revenue

182

Perfect Competition

110

Provision

169

Revenue Deficit

106

Perfect Competition

118

Provision

200

Revenue Expenditure

195

Perimeter

30

PTA

130

ROA

215

Period Concept

188

Public Relations

74

ROCE

153

Period Cost

194

Public Relations

84

ROE

153

Permit

298

Publicity

78

ROE

215

Permutation

33

Publicity

84

Routing Numbers

253

Normative
Economics

136

NPV

224

NPV

191

NYSE

310

Occupation

59

Pre Shipment
Finance

Off Shore Bank

13

Preferred Stock

Oligopoly

110

Oligopoly

Copyright@ www.facebook.com/himurajbari88/

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

RS

42

Strategy

278

Turnover

159

RTGS

236

Sub Standard Loan

11

Two Way ANOVA

29

RTGS

237

Sunk Cost

152

Unsecured Loan

27

SA

42

Supply Chain

277

Unsecured Loans

252

Salary

64

Surplus Budget

17

Usance LC

337

Sales

159

Survey Khatian

43

Value Chain

277

Sales

182

Swap

313

Variable Costing

140

Sales Tax

264

SWIFT

237

VAT

221

Sample Variance

31

SWIFT Code

254

Visa Card

257

Satisfaction

56

Swift Code

238

Vision

290

Saving Account

227

Swift Code

243

WACC

311

SBLC

240

SWIFT Code

253

Wages

64

Swift Code

247

Want

137

323

SWOT

267

Warranty

39

Secured Loan

27

SWOT Analysis

266

Warranty

87

Secured Loans

252

Table

35

Wealth Maximization

44

Security

315

Takeover

296

Tariff

119

Weighted Average
Cost of Capital

184

Tariff

261

Tariff Barriers

129

Tax

16

Tax

223

Tax

262

Tax Avoidance

259

Tax Evasion

259

Team

68

Scheduled Bank
Secondary Markets

Security Market Line


(SML)

316

Selection

67

Selling

77

Selling Concept

71

Services

83

Short Run

95

Simple Interest

185

Situational
Leadership

274

Slogan

295

SLR

10

SLR

Social Capital

47

Solvency

142

Sort Code

254

Specialized Bank

Termination

60

Tier 1 Capital

346

Tier 2 Capital

346

Tier 3 Capital

346

Total Utility

96

TOWS

267

Trade

92

Trade Discount

168

Trademark

75

Trademark

79

Trademark

302

Traditional Costing

203

Transformational
Leadership

274

Speculation

318

Speculation

319

Speculators

127

SRR

10

Staffing

51

Statement of Affairs

144

Statutory Audit

205

Stock

209

Trough Of Business
Cycle

345

Stock Dividend

326

Turnover

156

White Collar

61

White Money

126

Wire Transfer

256

Wire Transfer

255

WTO

28

Zero Rated (VAT)

260

Copyright@ www.facebook.com/himurajbari88/

Banking Career In Bangladesh (BCB)

Fiscal Policy VS
Monetary Policy

GDP VS GNP

Broad Money VS
Reserved Money

Bank Rate VS Repo


Rate

Banks VS NBFIs

Scheduled Bank VS
Non Scheduled
Bank

Comparisons For Bank VIVA


Hemal Jamiul Hasan

In economics and political science, Fiscal Policy is the use of government revenue
collection (mainly taxes) and expenditure (spending) to influence the economy. The two
main instruments of fiscal policy are changes in the level and composition of taxation and
government spending in various sectors. These changes can affect the following
macroeconomic variables, amongst others, in an economy: i) Aggregate demand and
the level of economic activity, ii) Savings and Investment in the economy, iii) The
distribution of income. Monetary Policy is the process by which the government, central
bank, or monetary authority of a country controls (i) the supply of money, (ii) availability of
money, and (iii) cost of money or rate of interest to attain a set of objectives oriented
towards the growth and stability of the economy. Monetary policy is maintained through
actions such as increasing the interest rate, open market operations, or changing the
amount of money banks need to keep in the vault (bank reserves).
Gross domestic product (GDP) is the market value of all officially recognized final goods
and services produced within a country in a given period of time. Gross national
product (GNP) is the market value of all the products and services produced in one year
by labor and property supplied by the residents of a country. Unlike Gross Domestic
Product (GDP), which defines production based on the geographical location of
production, GNP allocates production based on ownership.
Broad money refers to sum of currencies outside banks and deposits (time deposit and
demand deposit) held in banks. Reserve money refers to sum of currency issued (currencies
outside banks and currencies in tills) and deposits held in Bangladesh bank. Broad Money=
Reserve Money Reserve Money Multiplier.
Bank rate is the interest rate at which a nation's central bank lends money to domestic
banks. Often these loans are very short in duration. Managing the bank rate is a preferred
method by which central banks can regulate the level of economic activity. Repo rate is
the discount rate at which a central bank repurchases government securities from the
commercial banks, depending on the level of money supply it decides to maintain in the
country's monetary system. Bank rate usually deals with loans, whereas, repo or repurchase
rate deals with the securities. The bank rate is charged to commercial banks against the
loan issued to them by central banks, whereas, the repo rate is charged for repurchasing
the securities. No collateral is involved in a bank rate. But a repurchase agreement uses
securities as collateral, which are repurchased at a later date.
The major difference between banks and FIs are as follows: i) FIs cannot issue cheques,
pay-orders or demand drafts. ii) FIs cannot receive demand deposits, iii) FIs cannot be
involved in foreign exchange financing, iv) FIs can conduct their business operations with
diversified financing modes like syndicated financing, bridge financing, lease financing,
securitization instruments, private placement of equity etc.
The banks which get license to operate under Bank Company Act, 1991 (Amended upto
2013) are termed as Scheduled Banks. The banks which are established for special and
definite objective and operate under the acts that are enacted for meeting up those
objectives, are termed as Non-Scheduled Banks. These banks cannot perform all functions
of scheduled banks. There are 56 scheduled banks in Bangladesh who operate under full
control and supervision of Bangladesh Bank which is empowered to do so through
Bangladesh Bank Order, 1972 and Bank Company Act, 1991. Scheduled Banks are
classified into following types: i) 6 state owned commercial banks, ii) 2 specialized banks,
iii) 39 private commercial banks (31 conventional + 8 shariah based), iv) 9 foreign
commercial banks. There are now 4 non-scheduled banks in Bangladesh which are: i)
Ansar VDP Unnayan Bank, ii) Karmashangosthan Bank, iii) Probashi Kollyan Bank, iv) Jubilee
Bank.

Copyright@ www.facebook.com/himurajbari88/

Banking Career In Bangladesh (BCB)

Central Bank VS
Commercial Bank

Commercial Bank
VS Specialized
Bank

CRR VS SLR

10

SLR VS SRR

11

Sub Standard Loan


VS Doubtful Loan VS
Bad & Loss Loan

Comparisons For Bank VIVA


Hemal Jamiul Hasan

There are certain basic differences between a central bank and a commercial bank. They
are: (i) The central bank is the apex monetary institution, which has been specially
empowered to exercise control over the banking system of the country. The commercial
bank, on the contrary, is a constituent unit of the banking system. (ii) The central bank does
not operate with a profit motive. The primary aim of the central bank is to achieve the
objectives of the economic policy of the government and maximize the public welfare
through monetary measures. The commercial banks, on the other hand, have profit
earning as their primary objective. (iii) The central bank is generally a state-owned
institution, while the commercial banks are normally privately owned institutions. (jv) The
central bank does not deal directly with the Public. The commercial banks, on the contrary,
directly deal with the public. (v) The central bank does not compete with the commercial
banks. Rather it helps them by acting as the lender of the last resort. (vi) The central bank
has the monopoly of note-issue, whereas the commercial banks do not enjoy such right.
(vii) The central bank is the custodian of the foreign exchange reserves of the country. The
commercial banks are only the dealers in foreign exchange. (viii) The central bank acts as
the banker to the government, the commercial banks act as bankers to the general public.
(ix) The central bank acts as the bankers' bank: (a) The commercial banks are required to
keep a certain proportion of their reserves with central bank; (b) the central bank helps
them at the time of emergency; and (c) the central bank acts as the clearing house for
the commercial banks. But, the Commercial banks perform no such function.
Commercial bank is a financial institution that provides services, such as accepting
deposits, giving business loans and auto loans, mortgage lending, and basic investment
products like savings accounts and certificates of deposit. Specialized bank is established
for specific objectives like agricultural or industrial development.
The cash reserve ratio (CRR), reserve requirement is the minimum fraction of customer
deposits and notes that each commercial bank must hold as reserves or place in current
account maintained with the central bank rather than lend out. The day-end balance of
the account maintained with the central bank in the Bangladesh Taka (BDT) is considered
as the CRR. The conventional banks are allowed to maintain the SLR in the form of assets
in cash or gold or in the form of un-encumbered approved securities. However, the Islamic
banks and financial institutions may now meet their SLR through Islamic bonds as per Islamic
Bond Regulation 2004. The banks are now allowed to maintain the CRR at 6.0 per cent on
daily basis, but the bi-weekly average has to be 6.5 per cent. The conventional banks will
have to maintain SLR at minimum 13 per cent with the Bangladesh Bank (BB) while the
Shariah-based Islamic banks must maintain minimum 5.50 per cent SLR with the central
bank.
The conventional banks are allowed to maintain the SLR in the form of assets in cash or
gold or in the form of un-encumbered approved securities. However, the Islamic banks
and financial institutions may now meet their SLR through Islamic bonds as per Islamic Bond
Regulation 2004. The conventional banks will have to maintain SLR at minimum 13 per cent
with the Bangladesh Bank (BB) while the Shariah-based Islamic banks must maintain
minimum 5.50 per cent SLR with the central bank. As per Section 24 of the Bank Company
Act 1991 (Amendment upto 2013), 20% of current years profit of the Bank is required to be
transferred to Statutory Reserve until such reserve together with share premium account
equals to its paid up capital.
Any continuous loan will be classified as: i) Sub-standard if it is past due/overdue for 03
(three) months or beyond but less than 06 (six) months. ii) Doubtful if it is past due/overdue
for 06 (six) months or beyond but less than 09 (nine) months iii) Bad/Loss if it is past
due/overdue for 09 (nine) months or beyond. Any Demand Loan will be classified as: i)
Sub-standard if it remains past due/overdue for 03 (three) months or beyond but not over
06 (six) months from the date of expiry or claim by the bank or from the date of creation of
forced loan. Ii) Doubtful if it remains past due/overdue for 06 (six) months or beyond but
not over 09 (nine) months from the date of expiry or claim by the bank or from the date of
creation of forced loan. Iii) Bad/Loss if it remains past due/overdue for 09 (nine) months
or beyond from the date of expiry or claim by the bank or from the date of creation of
forced loan. In case of Fixed Term Loans: - i) If the amount of past due installment is equal
to or more than the amount of installment(s) due within 03 (three) months, the entire loan
will be classified as ''Sub-standard''. ii) If the amount of past due installment is equal to or
more than the amount of installment(s) due within 06 (six) months, the entire loan will be
classified as ''Doubtful". Iii). If the amount of 'past due installment is equal to or more than
the amount of installment(s) due within 09 (nine) months, the entire loan will be classified
as ''Bad/Loss''. The Short-term Agricultural and Micro-Credit will be considered irregular if
not repaid within the due date as stipulated in the loan agreement. If the said irregular
status continues, the credit will be classified as 'Substandard ' after a period of 12 months,

Copyright@ www.facebook.com/himurajbari88/

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

as 'Doubtful' after a period of 36 months and as 'Bad/Loss' after a period of 60 months from
the stipulated due date as per the loan agreement.

Investment Bank VS
Merchant Bank

Investment banks specialize in large and complex financial transactions such as


underwriting, acting as an intermediary between a securities issuer and the investing
public, facilitating mergers and other corporate reorganizations, and acting as a broker
and/or financial adviser for institutional clients. A merchant bank is a financial institution
that provides capital to companies in the form of share ownership instead of loans. A
merchant bank is a bank that deals mostly in (but is not limited to) international finance,
long-term loans for companies and underwriting. Merchant banks do not provide regular
banking services to the general public.

On Shore Bank VS
Off Shore Bank

Onshore banking simply refers to a bank that is located in your country of residence. In
Onshore Banking the account and the holder of the account are subject to the laws, tax
and foreign exchange rules of the country in which it is held. An offshore bank is a bank
located outside the country of residence of the depositor, typically in a low-tax jurisdiction
(or tax haven) that provides financial and legal advantages.

14

Direct Tax VS
Indirect Tax

A direct tax will refer to any levy that is both imposed and collected on a specific group of
people or organizations. An example of direct taxation would be income taxes that are
collected from the people who actually earn their income. Indirect taxes are collected
from someone or some organization other than the person or entity that would normally
be responsible for the taxes. A sales tax, for instance, would not be considered a direct tax
because the money is collected from merchants, not from the people who actually pay
the tax (the consumers).

15

Apple VS Microsoft

Apple- Software & Hardware, Microsoft- Software.

Tax VS Duty

i) Both duty and tax are the revenues generated by a government for its effective
functioning. Duty in broader terms is a kind of tax only. But there are differences between
the two entities. ii) Duty is levied upon goods only, whereas tax is levied on both goods and
individuals. iii) Tax is a term used in respect of income such as property tax, wealth tax,
income tax etc., whereas duty is used in terms of goods only such as customs duty, excise
duty. iv) Duty is generally a tax levied on good going out or coming inside a country. Duties
are sometimes referred to as border taxes. v) Higher duties are levied on some categories
of products to discourage people from using them. Taxes are mostly progressive in nature

17

Surplus Budget VS
Deficit Budget

i) A deficit budget situation means that the expenses of a government has exceeded the
tax income during that period, whereas a surplus budget scenario means that the tax
income of a government exceeds its expenses. ii) In general, budget deficit is very
common, while budget surplus occurs rarely. iii) During periods when budget surplus occurs
tax reduction may be granted, but which is not available during budget deficit periods. vi)
Interest rate on and treasuries and securities will be high during the period of budget
surplus, which is not common during budget deficit period. v) Spending of a government
will be high when there is a budget surplus, whereas saving, cost cuttings, and borrowing
will be high when there is a budget deficit.

18

Contractionary
Monetary Policy VS
Expansionary
Monetary Policy

An expansionary monetary policy (e.g., decrease in interest rates) increases the supply of
money. An expansionary monetary policy might be used during a recession to encourage
banks to extend credit to consumers and entrepreneurs. A contractionary monetary policy
(e.g., increase in interest rates) would conversely shrink the money supply, and might be
used to prevent or control inflation during a period of economic growth.

Accounting VS
Finance

Accounting and finance are both forms of managing the money of the business, but they
are used for two very different purposes. One of the ways to distinguish between the two is
to realize that accounting is part of finance, and that finance has a much broader scope
than accounting. Accounting is the practice of preparing accounting records, including
measuring, preparation, analyzing, and the interpretation of financial statements. These
records are used to develop and provide data measuring the performance of the firm,
assessing its financial position, and paying taxes. Finance, on the other hand, is the efficient
and productive management of assets and liabilities based on existing information.

Accounting VS AIS

Accounting is a systematic process of identifying, recording, measuring, classifying,


verifying, summarizing, interpreting and communicating financial information. It reveals
profit or loss for a given period, and the value and nature of a firm's assets, liabilities and
owners' equity. An accounting information systems combines traditional accounting
practices such as the Generally Accepted Accounting Principles (GAAP) with modern
information technology resources.

12

13

16

19

20

Copyright@ www.facebook.com/himurajbari88/

10

Banking Career In Bangladesh (BCB)

21

Management VS
MIS

22

Cost VS Expense

23

Gross Profit VS Net


Profit

24

Direct Cost VS
Indirect Cost

25

Basic EPS VS Diluted


EPS

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Management in businesses and organizations is the function that coordinates the efforts of
people to accomplish goals and objectives by using available resources efficiently and
effectively. Management includes planning, organizing, staffing, leading or directing, and
controlling an organization to accomplish the goal. Resourcing encompasses the
deployment and manipulation of human resources, financial resources, technological
resources, and natural resources. Management information system, or MIS, broadly refers
to a computer-based system that provides managers with the tools to organize, evaluate
and efficiently manage departments within an organization. In a management
information system, modern, computerized systems continuously gather relevant data,
both from inside and outside an organization. This data is then processed, integrated, and
stored in a centralized database (or data warehouse) where it is constantly updated and
made available to all who have the authority to access it, in a form that suits their purpose.
The terms 'cost' and 'expense' are commonly used words in the fields of business,
economics and accounting. Most often these terms can be used interchangeably without
issue. In accounting however, the terms have quite different meanings. Basically, sacrificing
resources (money) to acquire products is called a cost. Using up the value of those
products to generate revenue for a business is called an expense.
For a company, gross profit equates to gross margin, which is sales minus the cost of goods
sold. Thus, gross profit is the amount that a business earns from the sale of goods or services,
before selling, administrative, tax, and other expenses have been deducted. For a
company, net profit is the residual amount of earnings after all expenses have been
deducted from sales. In short, gross profit is an intermediate earnings figure before all
expenses are included, and net profit is the final amount of profit or loss after all expenses
are included.
Manufacturing costs may be classified as direct costs and indirect costs on the basis of
whether they can be attributed to the production of specific goods, services, departments
or not. Direct costs can be defined as costs which can be accurately traced to a cost
object with little effort. Cost object may be a product, a department, a project, etc. Direct
costs typically benefit a single cost object therefore the classification of any cost either as
direct or indirect is done by taking the cost object into perspective. A particular cost may
be direct cost for one cost object but indirect cost for another cost object. Costs which
cannot be accurately attributed to specific cost objects are called indirect costs. These
typically benefit multiple cost objects and it is impracticable to accurately trace them to
individual products, activities or departments etc.
The basic earnings per share is a total amount of earnings per share that is calculated on
the basis of a number of shares issued at that time. The basic EPS is calculated according
to the following formula: Basic EPS = (Net Income Preference Dividend) number of issued
shares. It is also used in the calculation of price-earnings ratio. Basic EPS represents the
measure of profitability of a business, and represents the true price of a share. However, an
individual must know that if two companies generate same EPS, it doesnt mean they are
representing the same financial performance. It is possible that one company may have
efficiently used its equity, while the other company may have issued more shares in order
to arrive at the same amount of basic EPS. On the other hand, the diluted EPS shows
earning per share a business could earn, if all the warrants, stock options, convertibles, and
other exercisable dilutive securities were taken into account along with the additional
number of shares issued at that time. As you can see that diluted EPS is calculated by
accounting for the warrants, convertibles (stocks and bonds), stock options and all other
financial instruments that can be converted into shares. It shows the amount of EPS after
dilutive financial instruments are exercised. If you look at it from the investors perspective,
diluted EPS is not considered favorable, because it shows the EPS after conversion of all the
dilutive securities into shares while no change in the net income occurs.

Copyright@ www.facebook.com/himurajbari88/

11

Banking Career In Bangladesh (BCB)

26

Funding VS
Financing

27

Secured Loan VS
Unsecured Loan

28

GATT VS WTO

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Every company requires capital to run its business, and it is impossible to continue business
without injection of money from time to time. There are different ways to collect money
and keep the business running. Sometimes, companies borrow loan from banks and other
financial institutions, or they can also take funds from investors in the form of share capital.
Retained earnings are also utilized for this purpose. No matter what way they use for to
collect money, it can be done either by funding or financing. Generally, funding and
financing are interchangeably used in the financial world, but there is a difference
between these two terms. Funding is actually the money provided by companies or by a
government sector for a specific purpose, whereas, financing is a process of receiving
capital or money for business purpose, and it is usually provided by financial institutions,
such as, banks or other lending agencies. Funding is an amount of money provided by the
organization or government on the basis of an agreement. It is usually free of charge. There
may be certain contractual requirements in that agreement, but there are no
requirements to pay back the capital. The most common facilitators that normally fulfill the
funding needs of an organization are the donations made by governments, or
philanthropists. Financing, on the other hand, is an amount of capital or the sum of money
provided to an organization with the expectation to repay, and organizations are liable to
pay back the capital amount along with a certain percentage of interest. Therefore, the
repayment also includes an interest component. It is usually provided by financial
institutions like banks, or investors like venture capitalists, business angels, shareholders, etc.
The first and most prominent difference between a secured or unsecured loan is using a
collateral against the loan. In case of a secured loan, a bank keeps an asset as a collateral
against the amount of loan issued to a borrower. The asset can be anything that a
borrower owns, such as, a house, car, financial instruments, or any other property that can
be converted into cash. On the other hand, as the name suggests, no collateral is required
for an unsecured loan. It is usually issued to a borrower on the basis of his good credit
standing or a good credit history. No asset or property of a borrower is kept as a collateral
in case of an unsecured loan. This is the reason why the rate of interest charged on
unsecured loans is higher as compared to secured loans. The higher rate is charged to
minimize the risk of loss that a financial institution faces. The term period of a secured loan
is longer than a term period of an unsecured loan, and again, this is done to reduce the
risk by offering a short time period on an unsecured loan. In case of a secured loan, you
can write off an interest charge for tax purposes. This can be done if a primary property,
such as a house, is secured as collateral against the loan. However, it is important to
understand that you will be risking your property if you are unable to repay the loan. On
the other hand, you cannot write off the interest charge for tax purposes in case of
unsecured loan, because there is no collateral involved.
The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement
regulating international trade. It was created in 1948 and lasted until 1993. World Trade
Organization (WTO) was formed as a replacement for GATT in 1995 with the purpose of
supervising and liberalizing international trade. WTO has a more permanent structure
compared to GATT. WTO also monitors trade in services and trade-related aspects of
intellectual property rights, in addition to trade in goods. There are various bodies or
agreements that have been made around the world in order to maintain peace and
justice among the different countries. The main purpose of such bodies is to regulate talks,
trade and other rules and regulations among the different countries of the World. The most
popular bodies are the United Nations and the World Trade Organization. Though there
are a few similarities between the GATT and the WTO, they are distinctly different from each
other. The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement
regulating international trade. It was created in 1948 with a purpose of substantial
reduction of tariffs and other trade barriers and the elimination of preferences, on a
reciprocal and mutually advantageous basis. It was originally placed under the ITO
(International Trade Organization), which was supported by the United Nations (UN). When
the ITO failed to ratify, GATT evolved into the World Trade Organization (WTO). There a few
major flaws in the GATT structure such as not enough enforcing power, which led to many
disputes among the members. Also, the rules and regulations that were created under
GATT were temporary in nature. World Trade Organization (WTO) was formed as a
replacement for GATT in 1995 with the purpose of supervising and liberalizing international
trade. The organization deals with regulation of trade between participating countries, it
also provides a framework for negotiations and formalizations of trade agreements. It is
also responsible for enforcing trade laws, agreements and resolving disputes. The WTO was
created with the purpose of being a stronger and having a more permanent framework
compared to the previous GATT. It also monitors trade in services and trade-related
aspects of intellectual property rights, in addition to trade in goods. The WTO has a total of
157 member countries.

Copyright@ www.facebook.com/himurajbari88/

12

Banking Career In Bangladesh (BCB)

29

One Way ANOVA


VS Two Way
ANOVA

30

Area VS Perimeter

31

Sample Variance
VS Population
Variance

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Anova refers to analysis of relationship of two groups; independent variable and


dependent variable. It is basically a statistical tool that is used for testing hypothesis on the
basis of experimental data. We can use anova to determine the relationship between two
variables; food-habit the independent variable, and the dependent variable health
condition. The difference between one-way anova and two-way anova can be attributed
to the purpose for which they are used and their concepts. The purpose of one-way anova
is to see whether the data collected for one dependent variable are close to the common
mean. On the other hand, two-way anova determines whether the data collected for two
dependent variables converge on a common mean derived from two categories. Oneway anova is used when there is only one independent variable with several groups or
levels or categories, and the normally distributed response or dependent variables are
measured, and the means of each group of response or outcome variables are
compared. When there are two independent variables each with multiple levels and one
dependent variable in question the anova becomes two-way. The two-way anova shows
the effect of each independent variable on the single response or outcome variables and
determines whether there is any interaction effect between the independent variables.
Two-way anova has been popularised by Ronald Fisher, 1925, and Frank Yates, 1934. Years
later in 2005, Andrew Gelman proposed a different multilevel model approach of anova.
Area is a physical quantity that expresses the extent of any two-dimensional shape or
figure, or planar lamina in a plane. To understand it better consider the thickness to be
given or constant, then the area would be the amount of material needed to fashion a
model of a particular shape. In contrast to this, perimeter is a measure of the length of the
path that surrounds a two-dimensional shape or figure. To understand it better, think of
measuring the length of the outline of a shape. The perimeter is important in cases where
the length of the boundary is important. 1. Area-expresses the extent of any twodimensional shape or figure, or planar lamina in a plane, consider the thickness to be given
or constant, then the area would be the amount of material needed to fashion a model
of a particular shape; perimeter is a measure of the length of the path that surrounds a
two-dimensional shape or figure, think of measuring the length of the outline of a shape.
The perimeter is important in cases where the length of the boundary is important. 2. Units
of area are squared, such as cm2, m2; units of perimeter are not squared such as cm, m.
3. Area needed when the enclosed region needs to be considered, such as plot size;
perimeter needed when the length of the boundary is needed, such as when building a
fence.
Variance is a numerical value that shows how widely the individual figures in a set of data
distribute themselves about the mean. That is how far each number is from the mean, and
thus from each other. A variance of zero value means all the data are identical. More the
variance, more are the values spread out about mean, hence from each other. Less the
variance, less are the values spread out about mean, hence from each other, and
variance cant be negative. Population variance refers to the value of variance that is
calculated from population data, and sample variance is the variance calculated from
sample data. Due to this value of denominator in the formula for variance in case of
sample data is n-1, and it is n for population data. As a result both variance and
standard deviation derived from sample data are more than those found out from
population data.

Copyright@ www.facebook.com/himurajbari88/

13

Banking Career In Bangladesh (BCB)

32

Covariance VS
Correlation

33

Permutation VS
Combination

34

Mutually Exclusive
Events VS
Independent Events

35

Table VS Chart

36

Circle VS Ellipse

37

Prime Number VS
Composite Number

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Covariance and correlation are two concepts in the field of probability and statistics. Both
are concepts that describe the relationship between two variables to each other. Also,
both are tools of measurement of a certain kind of dependence between variables.
Covariance is defined as the expected value of variations of two random variates from
their expected values while correlation is the expected value of two random variates.
To simplify, a covariance tries to look into and measure how much variables change
together. In this concept, both variables can change in the same way but without
indicating any relationship. Covariance is a measurement of strength or weakness of
correlation between two or more sets of random variables while correlation serves as a
scaled version of a covariance. Both covariance and correlation have distinctive types.
Covariance can be classified as positive covariance (two variables tend to vary together)
and negative covariance (one variable is above or below the expected value compared
to another variable). On the other hand, correlation has three categories; positive,
negative, or zero. Positive correlation is indicated by a plus sign, a negative sign for
negative correlation, and 0 for uncorrelated variables. Both covariance and correlation
have ranges. Correlation values are in the scale of -1 to +1. In terms of covariance, values
can exceed or can be outside of the correlation range. In addition, correlation values are
dependent on units of measure of X and Y. Another notable difference is that a
correlation is dimensionless. In contrast, a covariance is in units, which is formed by
multiplying the unit of one variable to another unit of another variable. Covariance focuses
the relationship of two entities such as variables of sets of data. In contrast, correlation can
involve two or multiple variables or data sets and their relationships.
Combination is defined as the selection of objects, symbols, or values from a wide variety
like a large group or a certain set with underlying similarities. In a combination, the
importance is made on the choice of the objects or values themselves. One combination
comprises one value plus another value (as a pair) with or without additional values (or as
a multiple). Values or objects in a combination do not require order or arrangement. The
combination can also be random in nature. Also, the values or objects can be considered
as alike or the same in comparison with each other. A combination, with relation to
permutation, can be several in numbers while permutation can be less or single in
comparison. On the other hand, permutation is also the selection of objects, values, and
symbols with careful attention to the order, sequence, or arrangement. Aside from giving
an emphasis on these three things, permutation gives the values or objects destinations
by virtue of assigning them into a specific placement with each other. For example, a
certain value or a combination of values can be assigned as the first, second, and so on.
Independent events means that the occurrence or outcome of one event does not
influence the occurrence of another event. Mutually exclusive events means that the
occurrence or presence of one event entails the non-occurrence of the other.
Independent events are expressed mathematically as pr (x and y) = pr (x) . pr (y) while
mutually exclusive events are expressed as pr (x and y) = 0.
A table is the representation of data or information in rows and columns while a chart is the
graphical representation of data in symbols like bars, lines, and slices. A table can be simple
or multi-dimensional. While there are several types of charts, the most common are pie
charts bar charts, and line charts. Texts are seldom used in charts while they are often used
in tables. A chart is used to help understand a large amount of data and its components
while a table is used to keep track of information such as quantities, numbers, names,
addresses, and other details.
A circle is basically a line which forms a closed loop. In a circle, the set of points are
equidistant from the center. It is a closed curve which has an interior and an exterior. It is
attained when the plane intersects the right circular cone perpendicular to the cone axis.
A circle is a two-dimensional figure whereas a disk, which is also attained in the same way
as a circle, is a three-dimensional figure meaning the interior of the circle is also included
in the disk. The eccentricity of a circle is zero. An ellipse is attained when the plane cuts
through the cone orthogonally through the axis of the cone. A circle is a special ellipse. In
an ellipse, the distance of the locus of all points on the plane to two fixed points (foci)
always adds to the same constant.
In natural numbers, which are one to infinity, that is, [1, 2, 3, 4, 5 infinity]; those numbers
which can have only two factors, one is the number 1 and the other is the number itself,
are called prime numbers. Simply put, those numbers which can be divided only by 1 and
themselves are called prime numbers. All the numbers other than prime numbers, except
1, are composite numbers because they have more than two factors. That is, composite
numbers can be divided by 1, themselves, and some other numbers also.

Copyright@ www.facebook.com/himurajbari88/

14

Banking Career In Bangladesh (BCB)

38

Qualitative Data VS
Quantitative Data

39

Warranty VS
Guaranty

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Qualitative data collection is a method in which the characteristics, attributes, properties,


qualities, etc. of a phenomenon or thing is described. It is the description of data in a
language rather than in numbers. This method does not measure the characteristics but
describes them. Quantitative data collection is a method in which data that can be
numerically counted or expressed is collected. This data is useful for experiments,
manipulated analysis, etc. and is represented by histograms, tables, charts, and graphs. It
deals with measurements like height, length, volume, area, humidity, temperature, etc.
The necessity of a guarantee emerged as a means of protection to safeguard the right of
the consumer. With the strength of the guarantee, a seller is liable to make the complete
replacement of the purchased item, incase it was found to be below the prescribed
standard. This is given by the seller or the manufacturer of a product to the customer and
remains valid for a fixed period. The guarantee is a legal instrument irrespective of whether
the customer paid for the article or not. Likewise, the warranty is also an instrument to
safeguard the rights of a consumer. It requires payment on the part of the customer to
make it legally viable as in the case of an insurance policy. With the strength of the
warranty, the seller or the manufacturer is liable to face the judicial courts if the seller or the
manufacturer fails to comply with the provisions of the warranty on their part. Warranty is
only relevant to the repairing of articles. A guarantee is generally given by manufacturers
whereas the warranty is provided by most of the retail sellers or distributors. In a case of
motorcycle purchase, there is the guarantee from the manufacturer and the seller has to
provide the warranty on the vehicle from his part.

Cost Pull Inflation VS


Demand Pull
Inflation

Aggregate supply is the total volume of goods and services produced by an economy at
a given price level. When there is a decrease in the aggregate supply of goods and
services stemming from an increase in the cost of production, we have cost-push inflation.
Cost-push inflation basically means that prices have been "pushed up" by increases in costs
of any of the four factors of production (labor, capital, land or entrepreneurship) when
companies are already running at full production capacity. With higher production costs
and productivity maximized, companies cannot maintain profit margins by producing the
same amounts of goods and services. As a result, the increased costs are passed on to
consumers, causing a rise in the general price level (inflation). Demand-pull inflation occurs
when there is an increase in aggregate demand, categorized by the four sections of the
macroeconomy: households, businesses, governments and foreign buyers. When these
four sectors concurrently want to purchase more output than the economy can produce,
they compete to purchase limited amounts of goods and services. Buyers in essence "bid
prices up", again, causing inflation. This excessive demand, also referred to as "too much
money chasing too few goods", usually occurs in an expanding economy.

Agreegate Demand
VS Agreegate
Supply

In macroeconomics, aggregate demand (AD) or domestic final demand (DFD) is the total
demand for final goods and services in an economy at a given time. It specifies the
amounts of goods and services that will be purchased at all possible price levels. In
economics, aggregate supply (AS) or domestic final supply (DFS) is the total supply of
goods and services that firms in a national economy plan on selling during a specific time
period. It is the total amount of goods and services that firms are willing and able to sell at
a given price level in an economy.

42

CS VS RS VS SA VS
BS

CS Khatiyan : This khatiyan was prepared under Bengal Tenancy Act 1885. This is known as
Cadastral Survey. This survey started from ramu of Coxs Bazar upazila on 1888 and ends
on
1940.
RS Khatiyan : After 50 years of CS survey another survey was held on. This survey was known
as Revisional Survey and the khatiyan made from this survey is known as RS Khatiyan. The
purpose of this survey is to update the amount of land, owners name and possessors
name.
It
is
more
authentic
than
the
CS
khatiyan.
SA Khatiyan : This Khatiyan was prepared under State Acquisition and Tenancy Act 1950.
Actually this is not a practical Survey or this is not based on field survey. This khatiyan was
made on the information was given by the Zamindar or Landlord. SA khatiyan means State
acquisition khatiyan or Settlement Attestation. It is also known as PS khatiyan or Pakistan
Survey
Khatiyan.
This
is
not
an
authentic
khatiyan.
BS Khatiyan : This is the more authentic khatiyan than all other khatiyan. A survey was
started on 1970 which is continuing till now. This survey is known as Bangladesh Survey and
the khatiyan made from BS survey is known as BS Khatiyan or Bangladesh Survey Khatiyan.

43

Mutation Khatiyan
VS Survey/Jareep
Khatiyan

Mutation Khatiyan: Normally Khatyan is made through jareep. But jareep does not always
take place. Property may be transferred in-between two jareeps. Then the change of
ownership needs to be reflected in the Khatiyan. Such kahtiyan done through mutation
proceedings is known as mutation khatiyan. AC Land office does this.

40

41

Copyright@ www.facebook.com/himurajbari88/

15

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Survey/Jareep Khatiyan: Khatiyan is prepared through land survey. This survey is


conducted by Land Record and Survey Department situated at Tejgoan. It has its own
press to print Khatiyan. Khatiyan are given nomenclature according to the name of the
survey i.e. CS khatiyan, RS Khatiyan SA Khatiyan etc

44

Profit Maximization
VS Wealth
Maximization

45

Retail Banking VS
Corporate Banking

46

47

Financial Management is concerned with the proper utilization of funds in such a manner
that it will increase the value plus earnings of the firm. Wherever funds are involved,
financial management is there. There are two paramount objectives of the Financial
Management: Profit Maximization and Wealth Maximization. Profit Maximization as its
name signifies, refers that the profit of the firm should be increased while Wealth
Maximization, aims at accelerating the worth of the entity. The major differences between
profit maximization and wealth maximization are: 1. The process through which the
company is capable of increasing is earning capacity is known as Profit Maximization. On
the other hand, the ability of the company in increasing the value of its stock in the market
is known as wealth maximization. 2. Profit maximization is a short term objective of the firm
while long term objective is Wealth Maximization. 3. Profit Maximization ignores risk and
uncertainty. Unlike Wealth Maximization, which considers both. 4. Profit Maximization
avoids time value of money, but Wealth Maximization recognizes it. 5. Profit Maximization
is necessary for the survival and growth of the enterprise. Conversely, Wealth Maximization
accelerates the growth rate of the enterprise and aims at attaining maximum market share
of the economy.
The banking industry is divided into two major banking components known as retail
banking and corporate banking. Retail banking and corporate banking services are
offered mostly by commercial banks who maintain separate divisions for their retail
customers and corporate clients. In some instances, commercial banks team up with
investment banks to provide a number of investment banking capabilities to their business
clients. Retail banking serves the needs of individual customers and includes services such
as accepting deposits, maintaining savings and checking accounts, and providing loans
to individuals for a variety of purposes. Corporate banking serves the needs of business
customers and offers savings accounts, checking accounts, loan facilities, credit facilities,
trade finance, foreign exchange, etc. solely for companies and businesses.

Bank In Run VS
Bank In Panic

A situation that occurs when a large number of bank or other financial institution's
customers withdraw their deposits simultaneously due to concerns about the bank's
solvency. As more people withdraw their funds, the probability of default increases,
thereby prompting more people to withdraw their deposits. In extreme cases, the bank's
reserves may not be sufficient to cover the withdrawals.

Economic Capital
VS Social Capital VS
Human Capital

In finance, mainly for financial services firms, economic capital is the amount of risk capital,
assessed on a realistic basis, which a firm requires to cover the risks that it is running or
collecting as a going concern, such as market risk, credit risk, legal risk, and operational
risk. It is the amount of money which is needed to secure survival in a worst-case scenario.
Firms and financial services regulators should then aim to hold risk capital of an amount
equal at least to economic capital. Typically, economic capital is calculated by
determining the amount of capital that the firm needs to ensure that its realistic balance
sheet stays solvent over a certain time period with a pre-specified probability. Therefore,
economic capital is often calculated as value at risk. The balance sheet, in this case, would
be prepared showing market value (rather than book value) of assets and liabilities.Social
Capital is an economic idea that refers to the connections between individuals and entities
that can be economically valuable. Social networks that include people who trust and
assist each other can be a powerful asset. These relationships between individuals and firms
can lead to a state in which each will think of the other when something needs to be done.
Along with economic capital, social capital is a valuable mechanism in economic growth.
Human capital is the stock of knowledge, habits, social and personality attributes, including
creativity, embodied in the ability to perform labor so as to produce economic value.
Alternatively, Human capital is a collection of resourcesall the knowledge, talents, skills,
abilities, experience, intelligence, training, judgment, and wisdom possessed individually
and collectively by individuals in a population. These resources are the total capacity of
the people that represents a form of wealth which can be directed to accomplish the
goals of the nation or state or a portion thereof.

Copyright@ www.facebook.com/himurajbari88/

16

Banking Career In Bangladesh (BCB)

48

Compensation VS
Remuneration

49

Maslow Theory and


Herzberg Theory

50

Content Theory VS
Process Theory

51

Staffing VS
Recruiting

52

HRM VS HRD

53

Human Resources
VS Human Capital

54

Hiring VS
Recruitment

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Compensation, ideally, refers to a form of monetary payment for either the performance
of some work or service or as a recompense for a damage or injury suffered. It is, therefore,
of a financial nature. In contrast, Remuneration is a broader term and refers not only to
monetary payment for the performance of a work or service, but also includes nonmonetary payments such as medical insurance, family support, housing, transport, pension
schemes and/or other retirement benefits. Ideally, it is inclusive of Compensation paid to
an employee for damage or injury suffered by the employee.
Maslow theory talks about the needs that are to be fulfilled in order to motivate a person
while Herzberg theory talks about the causes of satisfaction and dissatisfaction. Herzbergs
theory explains the factors that lead to motivation and demotivation. According to
Maslows hierarchy of needs, human needs can be classified into five basic categories as
physiological needs, security needs, belongingness needs, esteem needs and selfactualization needs. According to Herzbergs two factor theory, there are two factors as
hygiene factors and motivational factors which affect the employees level of satisfaction.
Difference between content theory and process theory is that, content theory emphasizes
on the reasons for changing the human needs frequently while process theory focuses on
the psychological processes which affect motivation, with regard to the expectations,
goals, and perceptions of equity. Content theory or need theory can be identified as the
earliest theories related with the concept of motivation. It outlines the reasons for
motivating an individual; that means it explains the necessities and requirements that are
essential to motivate a person. These theories have been developed by various theorists
such as Abraham Maslow Maslows Hierarchy of Needs, Federick Herzberg Two factor
theory and David McClelland Need for achievement, affiliation and power. Process
theories outline various behavioral patterns of individuals in fulfilling their needs and
requirements. There are four process theories such as Reinforcement, Expectancy, Equity
and Goal setting.
Recruitment is the process of attracting the suitably qualified set of people to apply for a
particular post in an organization while staffing involves selecting, deploying, and retaining
the employees within the organization. Staffing begins with the individuals entry to the
organization and continues throughout the process until the employee leaves the
company. However, recruitment is done at the initial stage of staffing. Recruitment can be
performed through internal sources as well as through external sources, and staffing is
primarily an internal process.
HRD and HRM are both practices that deal with human resources of a company. Usually
in large organizations, there exists entire departments dedicated to HRM where trained
professionals work together solely towards the amelioration of this aspect, dealing with
both HRD and HRM functions. HRD is human resource development. HRM is human
resource management. HRD deals with functions such as performance development and
management, training, career development, mentoring, coaching, succession planning,
tuition assistance, key employee identification, etc. HRM deals with functions such as
employee training, recruitment, performance appraisals as well as duly rewarding the
employees. HRD is a part of HRM. HRM deals with all HR initiatives while HRD only deals with
the development factor. HRM functions are more formal than of HRD functions.
The terms human capital and human resources are closely linked to one another because
they look at how current and potential human skills can be used to gain the maximum
efficiency and profitability. The major difference between human capital and human
resources is that human resources are the human potential that can be drawn from a vast
pool of resources. Human capital refers to the skills, expertise that are already invested and
utilized. Human resources need to be hired, trained, developed and provided with
opportunities and challenges in order for them to be realized. Over the time, human
resources can then be converted to human capital, which are human skills, capabilities
and competencies that have been invested and engaged in business operations while
delivering results and output.
Recruitment is carried out to entice the best available talent in the market towards the job
openings in an organization. Hiring is a part of the recruitment process. Hiring is the final
step in a recruitment drive where the right candidate gets chosen, and he is handed over
a contract.

Copyright@ www.facebook.com/himurajbari88/

17

Banking Career In Bangladesh (BCB)

55

56

57

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Job Description VS
Job Specification

Job description is a full description of the responsibilities and duties that a job entails.
Making a job description is essential for a HR manager before the organization advertises
vacancies. This is to ensure that the right candidates apply for the job after reading the job
description. Candidates know in advance what their roles and responsibilities would be
once they are selected for the job as also the tasks they would be required to perform. A
job description contains the designation, the work conditions, the nature of duty, the
relationship with other employees and superiors, qualifications required, and tasks and
responsibilities expected to be done by the candidate. Job specification is a tool that
allows management to let applicants know the skills, level of experience and education,
and abilities that they are required to have to be able to fit easily into a job in an
organization. In fact, a job specification enables the management to have in mind the
kind of candidate they are looking for. Whenever there is a vacancy in an organization, it
is this job specification that helps the management to go for recruitment as they know the
type of candidates they want in the organization. A job specification is all about the skills
and abilities required in a candidate along with a brief description of the job requirements.

Motivation VS
Satisfaction

Motivation refers to any stimulus that controls and guides human behavior. In an
organizational setup, motivation could be anything from incentives, perks, promotion and
even encouragement from the boss on completion of a given task. There was a time when
money was considered to be the most important motivational factor, but today, after a
series of experiments beginning with Hawthorne studies, it is well known that motivation
plays a crucial role in the behavior and performance level of the employees and money
is just one of the myriad motivational factors. Salary, increments, promotions, etc are
extrinsic motivation factors and drive behaviors and even productivity level of employees.
Satisfaction refers to a feeling that people have when they have completed a job that is
considered difficult. In fact, having done the job well is what brings satisfaction to most
people. The pleasure or joy of doing a job is what is called as job satisfaction. There are
very few who get job satisfaction despite getting a high salary and other perks and
incentives.

Cover Letter VS
Resume

Cover letter is a tool that intends to introduce a candidate to people who matter in a
company. A good cover letter tells all about your desire and why you should be preferred
over other candidates. Resume is a document that tells cold facts about your past
educational and career experience to prospective employers. It lets the reader know the
positions you have held in the past and what responsibilities you have shouldered in
previous organizations. A cover letter is not necessary when sending your resume in a
company, but when well written, it compliments a resume. A cover letter should not be a
copy of the resume and should not cover the facts already revealed in a resume. A cover
letter is more of a tool that introduces a candidate to hiring authorities in a company and
requests them to consider the applicant for a particular job opening. Resume highlights
your accomplishments and past achievements like work experience and jobs handled
while a cover letter tells why you should be preferred over others for a particular job

58

Resume VS Biodata

59

Profession VS
Occupation

60

Dismissal VS
Termination

61

Blue Collar VS White


Collar

Resume focuses more on educational and work experiences while Biodata focuses more
on biographical information. Resume lets a prospective employer select an individual for
a particular job while Biodata is more useful for government and matrimonial services as it
includes more personal details. Biodata is used in southeast Asian countries while Resume
is used all over the world.
Profession is more respectable and higher earning than a mere occupation. Profession
requires earning a degree through higher education that imparts specialized knowledge.
Occupation could be anything from driving a truck to working as a wood cutter in a factory
while profession could mean being a doctor, lawyer, engineer or an administrator.
Profession is a subset of occupation.
Termination is usually looked down upon as it normally entails any wrongdoing on the part
of the employee. Dismissal is a sort of punishment for a delinquent employee. Termination
is an end of contract, whereas, in dismissal, the employee can be acquitted of his charges
by a court and reinstated back to his job. In termination, there are no benefits for the
employee while there may be some benefits allowed by the management in the case of
dismissal.
In general, jobs that require people to use their brains instead of their muscle power are
classified as white collar jobs. White collar workers work in offices and have an environment
that is different from what blue collar workers get in factories and industrial plants. White
collar jobs are considered higher paying, and workers get salaries and perks; whereas, blue
collared workers receive daily or monthly wages. However, this distinction between blue
collared and white collared workers is getting blurred with many jobs requiring high manual
skills, and receiving high pay.

Copyright@ www.facebook.com/himurajbari88/

18

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

62

Job Enlargement VS
Job Enrichment

This is a process that pertains with increasing the range and scope of duties and
responsibilities of a job. At first, this is perceived as a challenge by the employee and taken
in a positive manner, however, when he sees that there is no reward associated with
increased responsibilities and no previous duty has been removed from the job, his
motivation levels go down. Job enrichment is a job design technique that is not focused
upon making the job more interesting and to reduce monotony. The focus here is to instill
a sense of achievement, and provide a sense of involvement with the job and the
company. A feeling of personal growth and a sense of responsibility is what the end goal
of this job designing technique.

63

Human Resource
Management VS
Personnel
Management

HRM and PM are mostly used to explain the set of activities to match people to
organizational needs. PM has a narrow scope, which is traditional and deals mostly with
routine tasks (staffing, payroll, labour laws) administration and static. HRM has a broad
scope, which evolved from PM, but in addition to the administration tasks, contributes to
an organizations success holistic and strategic.
Wages and salary both pertain to the income of a person, though being different
concepts. Wages are mostly associated with employees hired at hourly rates, while salary
is associated with employees who get yearly packages. Salaried employees do not get
any additional money if they put in higher number of hours, but employees working on
hourly wages get 1.5 times or twice their hourly rates for all hours in addition to the minimum
agreed number of hours (usually 40 hours) in a week.
Despite being a part of the broader job evaluation process, job analysis is an important
program in itself. While job evaluation aims at finding the net worth of different jobs in an
organization with the aim of finding salaries and wage differentials, job analysis tries to find
out everything about a specific job including the role, responsibility, working conditions,
skills required, demands and hazards associated with a job. Management of any
organization always endeavors to make the salaries and wages associated with jobs
attractive so as to able to compete with other companies in luring better talent.

64

Salary VS Wages

65

Job Analysis VS Job


Evaluation

66

Intrinsic Motivation
VS Extrinsic
Motivation

Intrinsic motivation is a feeling of happiness, relaxation, achievement or accomplishment,


whereas extrinsic motivators are rewards that are tangible such as money, medals, trophies
etc. However, praise or approval of others can also work as extrinsic motivation. Intrinsic
motivation comes from within whereas extrinsic motivation comes from the outside. In real
life, people need both intrinsic and extrinsic motivation.

67

Recruitment VS
Selection

Recruitment is the process of searching the candidates eligible for employment. It also
consists in making the eligible candidates apply for the corresponding jobs. On the other
hand selection involves the various steps employed to choose the right candidate for the
right job. These steps may include screening and interviewing.

Group VS Team

A group is usually composed of 2-4 members that work interdependently with each other
to a significant degree. They are committed to work together and willing to be handled by
a leader. Though they are interdependent with each other but still they have individual
responsibility that they have to perform, and that specific accountability, when done well,
can help the group accomplish their goals. A team is considered to work interdependently
and is committed to achieve one common goal. They share the responsibilities and deliver
results until they reached the conceived output of their efforts. They are usually composed
of 7-12 members and are helping each other to develop new skills to which it can help
improve their performance. They dont usually rely on a leader for supervision.

Direct Marketing VS
Indirect Marketing

Direct marketing can be classified as direct communication with carefully targeted


individual customers to obtain an immediate response and for creating long term
relationships. In simple terms, direct marketing is the method of directly reaching out to
customers. It is an aggressive form of convincing the customers for sales to happen.
Examples of direct marketing are telephone marketing, direct mailers, direct response
marketing television (DRTV), and online shopping. If there is no direct communication
between the customer and the seller, it can be classified as indirect marketing. This method
is mass-media oriented, where the audience is high in numbers. Also, it is targeted and
appeals to a wide array of customer segments. Indirect marketing is usually successful as
reminders for customers about the product or service when customers are already
customers of the product or service. Notable example of indirect marketing is advertising.

68

69

Copyright@ www.facebook.com/himurajbari88/

19

Banking Career In Bangladesh (BCB)

70

Customer Value VS
Customer
Satisfaction

71

Selling Concept VS
Marketing Concept

72

Niche Marketing VS
Mass Marketing

73

74

75

Comparisons For Bank VIVA


Hemal Jamiul Hasan

From a theoretical background, the value is the total perceived benefit exceeding the
total perceived cost. Customers evaluate the trade-off between the benefits they are
acquiring and the price they are paying for those benefits. Customer value can be shown
as an equation as below: Customer Value = Total Customer Benefits Total Customer Costs.
Customer satisfaction can be classified as the match between customer expectations of
the product and the products actual performance. Customer expectation and how they
understand the actual product performance is more emotional. Satisfaction is felt by an
individual and not thought. So, it differs from person to person and is very complex to
quantify.
Selling concept can be classified as persuading and convincing customers to purchase
goods of the firm by extensive promotional modes. The promotion tools used were
advertising and personal selling. Selling concept believes that customers will not buy
enough unless they are pushed to buy. Still, for certain products, selling concept is being
used. Examples are life insurance, retirement plans, and firefighting equipment. The selling
concept has its drawbacks. This concept only advocates sellers side. The customers side
has been neglected. The drawbacks of the selling concept lead to new thinking in the
business world. With more options and higher disposable income customer had the luxury
to choose what they wanted. Also, their demand power increased. Therefore, a question
arose in the business community that is what do customers want. These changes of
mindset led to the rise of the marketing concept. Marketing concept can be classified as
the collective activity of satisfying customer wants and needs while meeting the
organization objectives. Simply, its the process of satisfying the customers while making a
profit . Marketing concept treats the customer as the king.
Niche marketing strategy is defined as a marketing initiative proposed to capture a
relatively small number of buyers in the market. Niche marketing strategy always intends to
capture a clearly defined target market. For example, Sensodyne as a toothpaste can be
identified as a product utilizes niche marketing strategy. The product is not catered to the
society at large, rather it states, Sensodyne for sensitive teeth. Mass marketing strategy
intends to appear in the whole market without confining into a small market segment. Mass
marketing appears in the entire market and intends to capture the whole consumer base.
The objective of such a strategy is to reach the maximum number of consumers as possible.
In here, it is easy to identify a products marketing strategy. Mostly mass marketing applies
intense advertising and promotion. If a product is promoted intensely via TV commercials,
billboards, etc. it depicts the product utilizes mass marketing. For an example, assume a
product like Coca-Cola. Intense marketing activities of the company intends to capture
almost all the consumers in the world regardless of the income, lifestyle, profession, age,
etc. of the consumer. Therefore, heterogeneous consumers are seen under mass marketing
with distinct needs.

Branding VS
Marketing

Branding is a strategic decision. One way to think about it is by analogy: branding is to a


company as personality is to a person. A brand is an identity, a point of view, tone,voice
and a distinct look. Branding is more than colour scheme and a a logo, it is a philosophy.
It drives everything a company does, from customer service to business development to
sales to yes, marketing. Marketing, in contrast to branding, is a tactical process. It is the
allocation of resources to promote awareness of your brand, products and services. This
ranges traditional marketing channels like TV ads and billboards to newer channels like
search engine marketing (SEM) and social media efforts.

Advertising VS
Public Relations

Advertisement is a paid form of promotion whereas public relations (PR) is more or less a
free promotional tool. Advertisement buys time slots on electronic media and space in print
media, to carry the message across. On the other hand, there is no such buying in public
relations. Company has control over the content of advertisement whereas it can only
hope for a totally positive point of view from the media. There is a difference in public
perception as public relation is not seen as a deliberate effort of the company whereas
public knows that the company has paid for time on electronic media. While
advertisements can be repeated many times for as long as the company desires, PR
releases are a onetime affair only.

Trademark VS
Copyright

Copyright is used to protect intellectual products like works of art, music, songs, movies,
plays, books, poems, texts etc. whereas trademark is a tool that is used to protect names
and words used by a business, to let consumers know the source of the products. It is
common to see books and movies being granted copyrights whereas business names,
slogans, and logos are given trademarks for protection. While copyright is used to prevent
others from copy and reproduce literary works, trademark cannot prevent others from
making or selling same products. All a trademark does is to identify the source of a product
to allow a consumer know from where it has come.

Copyright@ www.facebook.com/himurajbari88/

20

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Marketing VS
Promotion

Marketing consists of many activities and promotion is just a part of marketing. Marketing
can exist without the help of promotion, but promotion cannot exist independently.
Promotion is all about creating a positive public awareness about the product, and it
involves strategies like advertisement and publicity. Marketing starts from identifying
consumer needs and continues from production and selling, to finally providing after sale
service to customers. Advancement of a product or service is at the focus of promotion
while identification and satisfaction of customer needs is at the focus of marketing.

Marketing VS
Selling

Marketing is a concept, a strategy that is a heady mix of many activities aimed at


increasing sales while selling is the final act of buying by the end consumer at a point of
sale. While the end result of both marketing and selling is same i.e. sale, marketing is all
about creating a favorable ground for selling to take place. Marketing requires identifying
the needs of customers and then producing and introducing the product to satisfy the
needs and demands of the customers. Selling takes place in a one to one situation at a
point of sale whereas marketing is all the research and planning that goes into making a
product successful. Marketing requires promotion and advertising to create a positive
awareness about the product. Selling takes advantage of marketing to close the deal.

Advertisement VS
Publicity

Advertising and publicity are two different tools to promote a company, product, or an
individual. Advertising is paid form of marketing while publicity is a free tool of marketing or
promotion. Advertising is a controlled form of promotion where the advertiser controls the
content and the time slot if the commercial is meant for radio or TV. Advertising is
sometimes not seen as reliable, and many become suspicious when they know that the
article or program is sponsored. Publicity depends upon media relations, and good media
relations can help in suppressing negative information about a company or a product.

79

Brand VS
Trademark

A brand is developed over a course of time with consistent quality that is appreciated by
customers. A trademark is granted by trademark and patent office, and is a legal device
that protects the owner in case of unlawful use of the trademark. Brand helps in
identification of the product and the company, while trademark helps in preventing others
from copying. If a brand has not been registered, anyone can copy it, and there is no
provision of any penalty, while in case of trademark violation, there is severe penalty.

80

Normal Goods VS
Inferior Goods

Economists classify goods as normal or inferior depending upon change in their levels of
consumption with increase in income levels. If consumption levels of goods go up with the
rise in income levels, they are grouped as normal goods. If consumption level goes down
with the increase in income, goods are categorized as inferior goods.

76

77

78

81

Proforma Invoice VS
Commercial
Invoice

82

Margin VS Markup

83

Goods VS Services

Sometimes also referred to as Predict Invoice, after both sides agree upon a deal, Proforma
invoice serves the purpose of informing the prospective customer all about the form and
content of the actual invoice that follows suit. Actually, importer makes a request for such
a document from the exporter that contains every detail about the transaction that is to
take place such as name of the cargo, unit price, specification, pricing, total value, terms
of payment. This Proforma invoice is used by the importer to apply for an import license or
foreign exchange from the relevant government department. It has to be remembered
that Proforma invoice is not final or formal, and it cannot be used for collection of money.
The amount and pricing mentioned in Proforma invoice are always subject to change, and
so mentioned in the Proforma invoice. This implies that Proforma invoice is at best
estimation in nature and a final invoice, called commercial invoice always gets issued after
Proforma invoice. Commercial Invoice is actual bill of the transaction that takes place. It is
issued by the seller to the buyer, and carries all details about the prices of the items supplied
along with relevant taxes and customs being charged from the buyer. In most cases, the
details contained in a commercial invoice are same as that in a Proforma invoice, but
sometimes there are changes that reflect changes in the rates of cargo and customs. It is
commercial invoice that is used by a government to assess exact duties to be collected
from the buyer. These invoices are also used by many countries as a proof so as to keep a
check on imports. Any seller or exporter must check with the importer as to what are exact
requirements that need to be included in the commercial invoice.
Mark up and margin are two different ways of looking at profit in a business. Mark up is the
percentage that is added to cost price and makes up the MRP. Margin refers to the
percentage of profit a shopkeeper gets on his investment.
Goods are tangible while services are intangible. The quality of goods, once produced,
does not vary. However, the quality of services is dependent upon the service provider and
may vary greatly. You own goods, but you utilize services. The ownership of goods is
transferable. The ownership of services is not transferable. The customer involvement in
services is remarkably higher than in goods.

Copyright@ www.facebook.com/himurajbari88/

21

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

In reality, public relations is a sum of all activities that are undertaken to mold public
opinion in the desired direction. It works on the principle of making perception a reality in
the minds of the customers. Publicity can take many forms such as news coverage, feature
articles, talk shows on TV programs, blogs, and letters to editors and so on. The main
function of publicity is to draw attention of the media towards the products and services
of the company. The goal of PR and publicity is similar and that is to attract the attention
of media towards the products of the company but publicity is just a part of the whole PR
exercise that is undertaken to generate goodwill and credibility for the company in the
eyes of the public (potential customers).
Auction is a very old tradition of selling or buying of goods and services which allows the
highest bidder to get hold of the product or the service. Bidding is the act of
making/placing bids. In ancient times, women were sold and purchased through auction.
Similarly, bonded labor was also sold and purchased in this fashion. While open auction is
a more popular system of auctioneering, sealed auction is the manner in which
government contracts and tenders are awarded.
MOA or Memorandum of Agreement is a document of agreement composed between
two parties to cooperate on a project that has been agreed upon previously. Also known
as a cooperative agreement, a MOA helps two entities work together to achieve agreed
upon objective. It is a written agreement of understanding between two parties and can
be used between individuals, governments, communities or agencies as a convenient tool
for heritage projects. An MOU or a Memorandum of Understanding describes a
convergence of will between two or more parties. It is a multilateral or a bilateral
agreement that indicates an intended common line of action. Used in instances where the
parties involved cannot or do not imply a legally enforceable agreement, an MOU is also
known as a more formal alternative to a gentlemans agreement. There are four legal
elements, also known as the four corners in a binding contract. These elements are
consideration, offer, intention and acceptance. In private law, the term MOU is also used
as a synonym for a letter of intent.
Warranties and conditions are essential to a sale of goods contract to ensure that both
parties to the contract are fulfilling the claims or promises that were made in the contract.
Conditions are terms that need to be fulfilled in order for the contract to go through. A
warranty is not as essential as the conditions; it is a guarantee that the buyer receives from
the seller that all the information provided about the product is true. In the event that
conditions are not met, the party that suffers can terminate the entire contract, but in
warranty, this does not apply; instead, the buyer has the right to claim for damages.
A lease agreement lays out the use/rent of an asset over a specific period. There are two
parties to a lease agreement, known as the lesser and lessor. A lessee is the party that is
entitled to use the asset as per terms stated in the lease agreement for a specific period of
time, by paying an agreed upon periodic payment. A lessor is the legal owner of the asset
and is the party that allows the lessee to use the asset for a specific period of time, for a set
amount of rent.

84

Public Relations VS
Publicity

85

Bidding VS Auction

86

MOU VS MOA

87

Condition VS
Warranty

88

Lessor VS Lessee

89

Negotiation VS
Arbitration

Negotiation involves direct talking between two parties at loggerheads while, in


arbitration, parties talk through their representatives in front of an arbitrator. Negotiation
involves some give and take whereas there is no lost ground in arbitration. Negotiation is
less costly than arbitration that requires services of attorneys and arbitrator.

MOA VS AOA

MOA and AOA stand for memorandum of association and articles of association
respectively and are important source of information for shareholders and other
stakeholders in a company that has been duly incorporated. MOA is the Charter of the
company that outlines the nature of the business, aims and objectives whereas AOA
outlines the rules and regulations for internal management in doing the business. While
MOA is a must for all the companies, AOA is not so; its not a must for companies limited by
shares to have its own AOA. MOA is the supreme document for a company AOA shall not
violate MOA. Alteration of MOA is restricted while AOA can be altered through a special
resolution. Though both AOA and MOA reveal information about the company, it is AOA
that is of particular interest for shareholders and potential investors. Taken together MOA
and AOA are referred to as Constitution of the company.

Indemnity VS
Guarantee

A guarantee is a promise to someone that a third party will meet its obligation to them. If
they do not pay you, I will pay you. An indemnity is a promise to be responsible for another
persons loss and to agree to compensate them for any loss or damage on mutually
agreed terms. For example, one agrees to pay the difference of repairs if they exceed a
certain limit.

90

91

Copyright@ www.facebook.com/himurajbari88/

22

Banking Career In Bangladesh (BCB)

92

Barter VS Trade

93

Balance Of
Payment VS
Balance Of Trade

94

Deflation VS
Recession

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Trade and bartering are methods that have been used for the purpose of obtaining
required goods and services over the years. Barter is a system of trade in which one party
exchanges products, goods and services in order to obtain required products, goods and
services possessed by another. In a barter system, no money exchanges hands between
the buyer and the seller. Trade, on the other hand, is a broader term which includes barter
system, purchase of goods using money, international trade between countries,
commodities trading, currency trading, stocks and bonds trading, etc. The main difference
between barter and trade is that while barter trade does not involve money, other forms
of trade occur with currency used as a medium of exchange. An important point to note
is that the invention of trade whether barter or otherwise has developed a useful system
under which individuals, businesses and nations can exchange or sell off the products or
goods held in excess and purchase or obtain desired products, goods and services.
Balance of payments records all of the countrys transactions and inflows and outflows of
funds between the local economy and foreign economies. All international transactions
during the year are recorded in the balance of payments; transactions undertaken by both
the private and the public sectors are taken into account when calculating the balance
of payments. Inflows of funds to the country are recorded as credits and any outflow of
funds from the country are recorded as debits. The balance of payments consists of 3 main
components; current account, capital account and financial account, where each
account tracks different types of transactions. The current account records all inflows and
outflows from the international sales and purchases of goods and services, earnings on
investments, and unilateral transfers. The capital account records capital flows to and from
a country including sales and purchases of assets, transfers of goods and assets, gifts,
remittances. The financial account records all inflows and outflows of funds in relation to
international investments, foreign reserves and gold, foreign direct investments, etc.
Balance of payments records all international inflows and outflows of funds to and from
foreign countries. The balance of trade is a component of the balance of payments and
is recorded under one of the main components of the balance of payments; the current
account. While the balance of trade shows only the difference between the value of a
countrys total imports and exports of goods and services, the balance of payments shows
an overall view of the countrys financial status by taking into consideration transfers of
capital, transfers of assets and funds, international investments, sales and purchases of
assets, remittances, gifts, unilateral transfers, changes in reserves, etc. The balance of trade
is narrower in scope as it does not take into consideration the capital and financial
transactions. The balance of payments, on the other hand, is more comprehensive as it
covers all international transactions and, therefore, offers a true and fair view of countrys
financial status and economic performance.
Deflation and recession are similar to one another in that they both result in a period of
economic downturn. The outcomes of both deflation and recession are quite similar in that
they both cause high levels of unemployment, reduction in investment, lower product
output and thereby cause negative economic growth. In both situations, the central bank
reduces interest rates to stimulate economic activity by increasing investment, spending
and output. Despite these similarities, there are a number of differences between the two.
Deflation occurs when an economy experiences low price levels. It occurs as a result of
low money supply in the economy where there are insufficient funds to create demand for
goods and services to match the supply level. A recession occurs when an economy
experiences continuously low economic growth as a measure of the countrys GDP.
Recession can be caused by both inflation and deflation and can result in negative growth
in economic activity.

Copyright@ www.facebook.com/himurajbari88/

23

Banking Career In Bangladesh (BCB)

95

Short Run VS Long


Run

96

Total Utility VS
Marginal Utility

97

Nominal Exchange
Rate vs Real
Exchange Rate

98

Aggregate Demand
VS Demand

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Short run and long run are concepts that are found in the study of economics. While they
may sound relatively simple, one must not confuse short run and long run with the terms
short term and long term. Short run and long run do not refer to periods of time, such as
explained by the concepts short term (few months) and long term (few years). Rather, short
run and long run shows the flexibility that decision makers in the economy have over
varying periods of time. Short run refers to a period of time within which the quantity of at
least one input will be fixed, and quantities of other inputs used in the production of goods
and services may be varied. Production of goods and services occur in the short run. Firms
can increase output in a short run by increasing the inputs of variable factors of production.
Such variable factors of production that can be increased in the short run include labor
and raw materials. Labor can be increased by increasing the number of hours worked per
employee, and raw materials can be increased in the short run by increasing order levels.
The long run refers to a period of time in which the quantities of all inputs used in the
production of goods and services can be varied. In the long run, all factors of production
and costs involved in the production are variable. The long run allows firms to
increase/decrease the input of land, capital, labor, and entrepreneurship thereby
changing levels of production in response to expected losses of profits in the future. In the
long run, a firm can enter an industry that is deemed profitable, exit an industry that is no
longer profitable, increase its production capacity by building new factories in response to
expected high profits, and decrease production capacity in response to expected losses.
Utility is a term in economics used to describe satisfaction and fulfillment that a consumer
derives from the consuming a particular product or service. Total utility is the aggregate or
total satisfaction that a customer receives through consuming a specific good or service.
Marginal utility refers to the additional satisfaction or fulfillment that a customer derives from
consuming additional units of a particular product or service. As each unit of the product
will have its own marginal utility, the total of all marginal utilities and the initial satisfaction
derived from consuming the product will make up the total utility of a product.
Nominal exchange rate and real exchange rate show the rate at which one currency can
be purchased for another. Nominal exchange rates are the rates that are displayed at
banks and money changers. Real exchange rates are a bit more complicated and show
how many times an item of goods purchased locally can be purchased abroad. Nominal
exchange rates are the rates at which the currency is exchanged for. Nominal exchange
rates are the rates that you find displayed at banks and money changers, and the rate at
which you can exchange foreign currency for local currency or vice versa. For example,
lets take the exchange rate between India and the USA as $1 = INR60, this means that a
tourist from the States who wants to purchase Indian currency will be able to obtain 60
Indian Rupees for 1 US dollar. Exchange rates are always displayed in terms of the amount
of currency that can be purchased for one unit of another currency. Real exchange rates
measure rate of exchange a bit differently. Real exchange rates show the ratio between
the local price levels and price levels in a foreign country. Real exchange rates shows how
much of goods and services purchased in one country can be exchanged for goods and
services of another country. The equation for calculating real exchange rates are, real
exchange rate = nominal exchange rate X domestic price / foreign currency. Lets take
an example to explain this clearly. You need to know the rate of 1 kg of rice between the
US and India. Lets assume the price of 1kg of rice in India as 80 INR, and the price of 1kg
of rice (of equivalent quality) in US as $4. The exchange rate is $1 = INR60. This will be
calculated as, real exchange rate = 60 4 / 80 = 3.
Aggregate demand and demand represent the main differences between the study of
macroeconomics and microeconomics. Aggregate demand is the total demand in an
economy at different pricing levels. Demand is defined as the desire to buy goods and
services backed by the ability and willingness to pay a price. Aggregate demand shows
the total spending of the entire nation on all goods and services while demand is
concerned with looking at the relationship between price and quantity demanded for
each individual product. Aggregate demand is the total demand in an economy at
different pricing levels. Aggregate demand is also referred to as total spending and is also
representative of the countrys total demand for its GDP. The formula for calculating
aggregate demand is: AG=C+I+G+(X-M), where C is consumer spending, I is the capital
investment, G is government spending, X is exports, and M denotes imports.

Copyright@ www.facebook.com/himurajbari88/

24

Banking Career In Bangladesh (BCB)

99

Cartel VS Monopoly

100

Money VS Currency

101

Neoliberalism VS
Capitalism

102

Free Trade VS Free


Market

103

Elasticity of
Demand VS
Elasticity of Supply

104

Giffen Goods VS
Inferior Goods

Comparisons For Bank VIVA


Hemal Jamiul Hasan

A monopoly is a market in which one single large firm will control the entire market for a
particular product or service. A cartel is formed by a group of individuals, organizations, or
producers/suppliers of a particular product or service and is set up to control production
and sales and pricing. The main difference between the two is that monopolies have only
one dominant player who single handedly controls the production, sales, and pricing of a
particular product, whereas cartels are groups of such dominant organizations that work
together to manipulate the market to their benefit.
Money is a medium that can be exchanged or traded for good and services. Money can
be used to measure the value of those goods and services at the current market price.
Currency is any form of money that is circulated publicly. Currency can include hard
money such as coins made out of metal or soft money such as money bills made of paper.
The main difference between money and currency is that money is the actual value that
is traded for goods and services, and currency is the paper money or coins that we carry
around to make our day to day payments.
Capitalism is a philosophy that is dominant in the western world and is slowly becoming
popular in all parts of the world. It refers to free market economy that means no
interference or regulation from the state and markets regulating themselves being driven
by forces of demand and supply. This is a system that encourages profit motive and
entrepreneurship. Ideally, there is less and less participation of the state in industries and it
confines itself with administration and maintaining law and order. Capitalism is an
economic system that is ideally characterized by freedom or laissez-faire. It is a system
where rule of law is supreme, and the market is not governed by the state. Neoliberalism is
a collection of economic policies that have emerged in the last 2-3 decades and which
favor economic liberalization, open markets, free trade, deregulation, removal of license
and quota system, and so on. Neoliberalism as a term was coined in the mid-thirties, to
popularize a kind of liberalism that was different from the classic liberalism. Over a long
period of time, Neoliberalism has come to mean many diverse things to diverse groups of
people.
Free market and free trade are concepts that are related to one another and they both
promote economic freedom for buyers and sellers. A free market is a domestic market in
which there is no government intervention and all prices, costs, decisions are based on
market forces of demand and supply, and voluntary exchange. Free trade will eliminate
all kinds of trade barriers such as tariffs, quotas, taxes, embargos, and promotes tax
holidays, subsidies and other forms of support to encourage domestic production and
promote free trade between countries. The purpose of free markets is to reduce external
influences on prices, costs, consumer decisions, and individual/corporate freedom of
choice, whereas the purpose of free trade is to promote international trade among
countries.
Price elasticity of demand and price elasticity of supply are concepts closely related to
one another as they consider how demand or supply will be affected by changes in price.
Price elasticity of demand shows how changes in demand can occur with the slightest
change in price. Price elasticity of demand is calculated by, PED = % change in the
quantity demanded / % change in the price. Price elasticity of supply shows how changes
in price can affect quantity supplied. Price elasticity of supply is calculated as, PES = %
change in the quantity supplied / % change in the price. One major difference between
elasticity of demand and elasticity of supply is that demand and supply respond differently
to an increase/decrease in price; demand tends to increase when price falls, and supply
tends to fall when price falls.
Giffen goods and inferior goods are very similar to each other in that giffen goods are
special types of inferior goods. Both these types of products do not follow the general
demand patterns laid out in economics and are, therefore, special types of products that
are treated differently by consumers as market prices and income levels change. Giffen
goods are goods for which demand will fall when price falls as people do not tend to
purchase more of a giffen good even if prices are low because they will look for better
alternatives, or will spend their money on something else. As income rises people will spend
less on inferior goods as they can now afford more expensive, better quality alternatives.

Copyright@ www.facebook.com/himurajbari88/

25

Banking Career In Bangladesh (BCB)

105

Classical
Economics VS
Neoclassical
Economics

106

Fiscal Deficit VS
Revenue Deficit

107

Liberalisation VS
Globalisation

108

Economies of Scale
VS Diseconomies of
Scale

109

Perfect Competition
VS Imperfect
Competition

110

Perfect Competition
VS Oligopoly

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Neo classical economics and classical economics are two very distinct schools of thought
that define the economic concepts quite differently. Classical economics was used in the
18th and 19th century, and neo classical economics, which was developed towards the
early 20th century, is followed till today. Classical economics believes in a self-regulating
economy with no government intervention, with the expectation that resources will be
used in the most efficient manner to meet needs of individuals. Neo classical economics
operates with the underlying theory that individuals will strive to maximize utility and
business will maximize profits in a market place where individuals are rational beings who
have full access to all information.
A revenue deficit occurs when the organization does not receive as much net revenue as
they projected earlier. Net income is the difference between the income for the period
and expenses for the period. A companys net revenue may not reach the projected
amount when either the income for the period is lower than projected or the expenses for
the period are higher than projected. Every organization, whether a company or a
government will monitor previous years incomes and expenses and project the income
and expenses for the following year, to predict the surplus or deficit they will arrive at the
year end. A fiscal deficit occurs when the expenses for the period are higher than the
actual revenue. When the organization or government suffers a fiscal deficit, there will be
no excess funds to invest in the development of the organization/country. A fiscal deficit
would also mean that an organization/government will have to borrow funds to make up
for the deficit which will result in higher levels of interest expenditure. A fiscal deficit can be
caused by an unexpected expenditure such as a fire destroying company premises, or a
natural disaster that requires the government to reconstruct housing.
Globalization and liberalization are concepts closely related to one another, and both
globalization and liberalization refer to relaxing social and economic policies which results
in better integration with an economy and between nations. Globalization is the greater
integration among countries and economies for trade, economic, social and political
benefits. Liberalization generally refers to removal of restrictions; usually government rules
and regulations imposed on social, economic, or political matters.
Economies of scale and diseconomies of scale are concepts that go hand in hand. They
both refer to changes in the cost of output as a result of the changes in the levels of output.
A company would have achieved economies of scale when the cost per unit reduces as
a result of an expansion in the firms operations. Diseconomies of scale refers to a point at
which the company no longer enjoys economies of scale, at which the cost per unit rises
as more units are produced.
Perfect competition is where the sellers within a market place do not have any distinct
advantage over the other sellers since they sell a homogeneous product at similar prices.
There are many buyers and sellers, and since the products are very similar in nature there
is little competition as the buyers needs could be satisfied by the products sold by any
seller in the market place. Since there are a large number of sellers each seller will have
smaller market share, and it is impossible for one or few sellers to dominate in such a market
structure. Imperfect competition as the word suggests is a market structure in which the
conditions for perfect competition are not satisfied. This refers to a number of extreme
market conditions including monopoly, oligopoly, monopsony, oligopsony and
monopolistic competition. Oligopoly refers to a market structure in which a small number
of sellers compete with each other and offer a similar product to a large number of buyers.
Since the products are so similar in nature, there is intense competition among market
players, and high barriers to entry since most new firms may not have the capital,
technology to startup.
Perfect competition is where the sellers within a market place do not have any distinct
advantage over the other sellers since they sell a homogeneous product at similar prices.
An oligopoly is a market situation in which the marketplace is controlled by a small number
of sellers that offer a similar product at a comparable price level. The main difference is
that, in a perfectly competitive market place, the product is simpler and can be produced
and sold by anyone; therefore, there are fewer barriers to entry. On the other hand, in an
oligopoly, the product sold is more complex and requires large capital, technology, and
equipment which make it difficult for new players to penetrate.

Copyright@ www.facebook.com/himurajbari88/

26

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Budget Deficit VS
Fiscal Deficit

A budget deficit will occur when an organization/government does not earn enough
revenue to cover its expenditure. There are a number of types of budget deficits that
include revenue deficits, fiscal deficits and primary deficits. The main causes for a deficit
to occur would be the organizations/governments inability to raise sufficient funds (as
projected earlier) or could also be as a result of unexpected expenditures. A budget deficit
is not healthy for the government/organization as this means that additional funding will
be required to balance the deficit, for which interest will have to be paid in large sums. The
solution to a budget deficit for a government would be to increase taxes, find new avenues
for revenue and reduce government spending. A fiscal deficit is a type of budget deficit
and occurs when the income for the year is insufficient to cover the expenses incurred.
When the organization or government suffers a fiscal deficit, there will be no excess funds
to invest in the development of the organization/country. A fiscal deficit would also mean
that an organization/government will have to borrow funds to make up for the deficit
which will result in higher levels of interest expenditure. A fiscal deficit can be caused by a
revenue deficit or an unexpected expenditure such as a fire destroying company
premises, or a natural disaster that requires the government to reconstruct housing.

Nominal GDP VS
Real GDP

GDP is one of the most commonly used economic measures that represent the strength of
an economy by showing the value of the total goods and services that are produced by
a country. Nominal GDP does not take into account the changes in the prices (due to
inflation/deflation) and is calculated at current market prices for that month or quarter.
Real GDP, on the other hand, takes into account the effects of inflation and deflation and
shows the actual value of the total goods produced.

113

Devaluation VS
Depreciation

Devaluation and depreciation are both instances when the value of a currency falls in
terms of another currency, even though the manner in which this happens is quite distinct.
Devaluation of a currency happens when a country deliberately reduces the value of its
currency in terms of another currency. Depreciation of a currency occurs when the value
of the currency falls as a result of the forces of demand and supply.

114

Classical
Economics VS
Keynesian
Economics

Classical economics and Keynesian economics are both schools of thought that are
different in approaches to defining economics. Classical economics was founded by
famous economist Adam Smith, and Keynesian economics was founded by economist
John Maynard Keynes. Classical economic theory is the belief that a self-regulating
economy is the most efficient and effective because as needs arise people will adjust to
serving each others requirements. Keynesian economics harbors the thought that
government intervention is essential for an economy to succeed.

Monopolistic
Competition VS
Monopoly

Monopoly and Monopolistic competition describe market situations, which are quite
distinct to each other in terms of the level of competition, level of market power, types of
products sold, and pricing structure. When a monopoly situation exists in the market, this
means that there is one large seller who has the greatest market power, which results in
very low levels of competition. A monopolistic market is one where there are a large
number of buyers but a very few number of sellers. The players in these types of markets sell
goods which are different to each other; therefore, are able to charge different prices.
Monopolistic markets have few barriers to entry for new firms, whereas monopoly markets
have high entry barriers because the market is controlled by one large company.

Elastic VS Inelastic

Elastic and inelastic are both economic concepts used to describe changes in the buyers
and suppliers behavior in relation to changes in price. When a change in price results in a
large change in the quantity that is supplied or demanded of a particular product, it is
referred to as being elastic. When a change in price does not greatly affect the quantity
demanded or supplied, that particular product is referred to as inelastic. Goods, which
are elastic, are usually goods which have easily replaceable substitutes, and goods, which
are inelastic, are usually necessities or goods which are habit forming.

111

112

115

116

Copyright@ www.facebook.com/himurajbari88/

27

Banking Career In Bangladesh (BCB)

117

Commodity Money
VS Fiat Money

118

Perfect Competition
VS Monopolistic
Competition

119

Tariff VS Quota

120

Accounting Profit
VS Economic Profit

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Commodity money is very different from the type of currency that we use currently.
Commodity money refers to currency that has been created out of a metal or substance
that is of value, and therefore carries a value from what it is made out of, as opposed to
other forms of currency that have a value printed on its face. For example, a gold coin is
much more valuable than a mere $1 bill since the gold itself as a commodity carries a
higher value, as opposed to a $1bill which is worth $1 because of the value that is printed
on its face (and not because the paper on which it is printed on is worth anything).
Commodity money is quite risky to use, as it may face unexpected appreciation or
depreciation. For example, country As currency is made of a precious metal silver, and
the demand for silver in the world market falls, then the currency of currency A would
experience an unexpected depreciation. Fiat money is the kind of money that we use
today that is not made of any precious substance and does not carry a value of its own.
These forms of currency have been passed through a government tender and do not have
any value to itself (intrinsic value). Fiat money is also not backed by any form of reserve
such as gold, and since it is not made of any valuable substance, the value of this currency
is in the faith that has been placed in it by the government and the people of the country.
Since it is printed as legal tender, it is widely accepted. Fiat money can be used for any
payment within the country or region in which it is used. Fiat money is also very flexible and
can be used in the payment of a variety of amounts, large and small.
Perfect and monopolistic competitions are both forms of market situations that describe
the levels of competition within a market structure. A market with perfect competition is
where there are a very large number of buyers and sellers who are buying and selling an
identical product. A monopolistic market is one where there are a large number of buyers
but a very few number of sellers. The players in these types of markets sell goods which are
different to each other, and therefore, are able to charge different prices. Monopolistic
competition describes an imperfect market structure quite opposite to perfect
competition. Perfect competition explains an economic theory of a marketplace which
does not happen to exist in reality.
Tariffs are taxes imposed on imported goods, to desist importers from importing them in
large numbers as well as to provide relief to domestic producers and save them from
competition that may be leaning in favor of imported goods. For example, if the cost of
imported steel in a country is less than that produced by steel manufacturers in the country,
the government can use tariffs to impose taxes on imported steel to make it at par or even
costlier than domestically made steel. The measure is protectionist in nature and does not
provide a level playing field to imported steel. However, the step may sometimes be
necessary to encourage domestic manufacturers of steel. This is why taxes levied on
imported goods are specifically kept for a certain period, to allow domestic producers to
develop and become ready to face competition from foreign producers of steel. If
domestic producers are still feeling the heat despite having imposed tariff on an imported
product, the government of a country has another weapon up its sleeve in terms of quotas,
also called import quotas. It can slap an import quota of the product, which implies the
quantity that can enter the country though imports have been restricted for a specific
period. Thus, imported goods, despite being cheaper than domestic products are not able
to make such a large impact than when they are freely imported inside the country. Quota
can be used in conjunction with a tariff, or it can be used alone, to restrict the quantity of
a product from foreign countries entering domestic markets. Quotas are believed to
increase corruption as some importers are prone to bribing government officials to allow
their company to import the goods while disallowing others. Quotas also lead to smuggling,
hurting domestic economy further. If government believe imported whiskey is hurting
domestic producers, it can impose import quotas but people who get used to high quality
imported whiskey crave for it making it profitable for smugglers.
Accounting profit and economic profit both denote a form of profit that a company
makes, even though their calculation and interpretation are quite different. Accounting
profit only considers the explicit costs that a firm incur while economic profit, in addition,
considers the implicit opportunity cost that is incurred in choosing one alternative over the
other. Another difference is that accounting profit will always be higher than economic
profit as economic profit considers the additional opportunity costs borne by a firm.
Accounting profit is recorded in a firms income statement, whereas economic profit is
usually calculated for internal decision making purposes. It is a common opinion among
economists that an accounting profit overestimates revenues because they do not
consider opportunity costs, and economic profits are critical to choose the option that
brings about the highest value.

Copyright@ www.facebook.com/himurajbari88/

28

Banking Career In Bangladesh (BCB)

121

Economies of Scale
VS Economies of
Scope

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Economies of scale is about gaining benefits by producing large volume of a product,


whereas economies of scope brings benefits by producing a wide variety of products by
efficiently use of the operations. Economies of scale refer to reduction in average cost for
a single product, whereas economies of scope refer to lowering average cost of producing
two or more products. Economies of scale has been known for a long-time, whereas
economies of scope is relatively new approach to business strategy. Economies of scale
use the most efficient process, whereas economies of scope uses the same process to
produce similar products using high technology.
In the Market Economy consumers and businesses can take free decisions on what to
purchase and what to produce. Whereas within Mixed Economy the production,
distribution and other activities are limited for free decisions and both private and
government intervention is visible. Market Economy has less intervention of the government
as opposed to the Mixed Economy.
The branch of knowledge that concerns to the production, consumptions and transfer of
wealth is known as economics. That is, it analyses how the scarce resources are allocated
by the forces of supply and demand. Economics can be broadly subdivided into micro
economics and macro economics. Microeconomics analyses the behavior of individuals
and firms. It, more focuses on how decision making process is taking place in individual
economic units. Theory of demand, theory of firms, and demand for labour are some of
the main topics that are discussed in more detail under microeconomics.
Macroeconomics deals with broader concepts like unemployment, inflation, and
government policies. Finance means, the management of the large amount of money.
The fund management revolves around the interconnection among time, risk and money.
Private finance, public finance, and business finance are the main three areas of finance.
Private finance deals with the income of an individual or a family. It is also known as
personal finance. Public finance focuses more on financial activity of a country (or
government). It is also known as state finance. Business finance refers to financial decisions
of enterprises. Business finance is also known as corporate finance. Finance can be seen
as a sub set of economics. Finance management tries to identify how a company can
finance its operations such that it would be able to find the possible mix of debt and equity
that makes the cost of capital lower.
Capital goods are goods used to make more consumer goods, whereas consumer goods
are goods meant for the use of end consumers only. One buys consumer goods from retail
stores for personal, family, or household use. Capital goods are bought by companies
desirous of making the consumer goods. Machines, tools, equipments are examples of
capital goods, whereas bread, butter, cold drinks, TV, laptops etc (in fact everything that
is used by people) are examples of consumer goods.

122

Market Economy VS
Mixed Economy

123

Economics VS
Finance

124

Consumer Goods
VS Capital Goods

125

Expansion VS
Recession

A sustained period in which real GDP is rising is an expansion; a sustained period in which
real GDP is falling is a recession.

Black Money VS
White Money

White money is the income that one generates after paying taxes as per the provisions and
can keep openly in his bank account and also spend it in any manner he wants. On the
other hand, kickbacks, bribes, money earned through corruption, and money that has
been saved utilizing unfair means is called black money. As income and sale taxes have
not been paid on such money, this money needs to be kept underground.

127

Hedgers VS
Speculators

Hedgers are mostly producers of commodity. They hedge to minimize their risk at the time
of harvest as they fear they would lose out on their profit if the prices of the commodity go
down. For example a corn farmer may sell corn futures prior to harvest as a hedge against
drop in corn prices. It is hedgers who are principally responsible for setting up of futures
market. Speculators are players who anticipate profits by rising prices and buy futures
contract of producers. They do it thinking they are buying low and will sell when it is high
later. Speculators are not producers and are traders who add liquidity in the market by
putting in money in the market. It is clear that a developed futures market requires active
participation of both hedgers and speculators.

128

Close Market VS
Open Market

If the market conditions are such that all economic actors have free access to participate,
it is called an open market. In contrast, a market where there are barriers in the form of
duties and taxes is called a closed market or a condition referred to as protectionism. In
reality, it is hard to find a truly open market which is why economists have opted for a new
term which is free competition

126

Copyright@ www.facebook.com/himurajbari88/

29

Banking Career In Bangladesh (BCB)

129

Tariff Barriers VS Non


Tariff Barriers

130

FTA VS PTA

131

Inflation VS
Deflation

132

Monopoly VS
Oligopoly

133

Monopoly VS
Monopsony

134

GDP VS GNP

135

Absolute
Advantage and
Comparative
Advantage

Comparisons For Bank VIVA


Hemal Jamiul Hasan

The purpose of both tariff and non tariff barriers is same that is to impose restriction on
import but they differ in approach and manner. Tariff barriers ensure revenue for a
government but non tariff barriers do not bring any revenue. Import Licenses and Import
quotas are some of the non tariff barriers. Non tariff barriers are country specific and often
based upon flimsy grounds that can serve to sour relations between countries whereas
tariff barriers are more transparent in nature.
PTA stands for Preferential Trade Agreement, and is an economic pact between
participating countries to help improve quantity of trade by gradually reducing tariffs
between participating countries. The barriers to trade are not altogether removed, but a
preference is shown towards participating countries in comparison to other countries of
the world. There are departures from WTO in the sense that duties and tariffs are reduced
significantly. WTO aims to have same tariffs and duties in international trade between
countries but in the case of PTA, these tariffs are reduced much more than what GATT
allows. FTA stands for Free Trade Agreement, and is considered to be an advanced stage
in trade between participating countries of a trade block. These are countries that agree
to eliminate altogether artificial barriers and tariffs in trade between participating
countries. Countries that share cultural links and geographical links are much more likely to
have a trade block of this magnitude. One such block is European Union where free trade
is practiced between the countries of the union.
Inflation, though it leads to increase in prices and redistribution of income in favor of the
rich, is a lesser of the evil than deflation. Inflation does not lead to lowering of national
income which deflation does. Deflation causes wide scale unemployment which inflation
does not. As deflation causes profits to tumble, pessimism sets in thus leading to a slowing
down of economy and output. It is possible to control inflation through many monetary
policies while it is very difficult to reverse the process of deflation. In fact, mild inflation has
been seen as good for economy as it leads to economic development. All economists
however feel that inflation should not be let out of control which can have devastating
effects on economy.
Monopoly is a market condition where there is only one player dominating the market, and
consumer has no options. Oligopoly is a situation where there are two or more players
dominating the market but substitute products closely resemble each other thus creating
a situation which is similar to monopoly. However, true oligopoly is ideal as it induces
competition and brings down prices while at the same time improving the quality of
product.
Monopoly and Monopsony are imperfect market conditions that are just opposite of each
other. While in monopoly there is one manufacturer or service provider controlling the
industry, in Monopsony, there are several producers but a single buyer. Both are not good
for people as they allow hegemony of the producer in monopoly and that of buyer in
Monopsony. Monopsony is commonly seen in the labor market where there are many
laborers but only one buyer to use their services.
GDP is defined as the total value of all the goods and services produced within a country
in a given period of time which is usually taken a calendar year. It is calculated in the
following manner. GDP= consumption+ investment+ government spending+ (exportsimports). GNP on the other hand is the gross national product which is a figure obtained
by adding all the income generated by nationals of the country made within or outside
the country to the GDP. Thus the major difference between GDP and GNP is that while
GDP takes into account income generated within the country, GNP takes into account
income generated by the nationals, whether they are within the country or residing outside
the country. The two factors of location and ownership are important to understanding
GDP and GNP. If we are talking about the US, if there is an output that takes place within
the US irrespective of the ownership, it is included in its GDP. On the other hand, GNP
calculates economic output based upon ownership. This is why it takes into account output
generated by American companies operating outside the US.
Absolute advantage is the advantage of one country over another if it can produce higher
number of goods with the same resources than other countries. On the other hand,
comparative advantage is the ability of a country to make a particular item better than
other countries. Under absolute advantage, mutually beneficial trade is not possible,
comparative advantage provides for mutually beneficial trade between countries.
Opportunity cost is a factor that is taken into consideration when talking about
comparative advantage, while it is only cost that is a factor when absolute advantage is
talked about.

Copyright@ www.facebook.com/himurajbari88/

30

Banking Career In Bangladesh (BCB)

136

Positive Economics
VS Normative
Economics

137

Need VS Want

138

Macroeconomics
VS Microeconomics

139

Breakeven Point VS
Margin of Safety

140

Absorption Costing
VS Variable Costing

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Positive economics is objective and fact based, while normative economics is subjective
and value based. Positive economic statements do not have to be correct, but they must
be able to be tested and proved or disproved. Normative economic statements are
opinion based, so they cannot be proved or disproved.
A need is something that is necessary for the survival of a person. If the need is not
available, then you may find it extremely difficult to survive. Hygienic water is a need for
the survival of man. This is so because without water he cannot survive for sure. Hence, it is
one of the needs along with shelter and clothing. A want indicates something that a person
wishes or desires to possess. In the case of a want, a person may need it either now or
sometime later. It is hence understood that you can still continue to exist even in case you
do not get the want that you desired to possess. This is the major difference between a
need and a want. A need is essential for your survival, but a want is not. If the need is not
available, then you may find it extremely difficult to survive. But a want does not pose this
challenge.
Macro economics is that branch of economics that deals with the economy as a whole
and the decisions revolve around indicators such as the GDP, unemployment and
consumer prices indices. The output of a country, inflation, savings, unemployment,
international economic policies and policies on export and import tend to govern the
macroeconomics as macro refers to a larger picture and therefore takes into consideration
the whole economy. Macro economic policies are used by corporations and the
government at large to predict an outlook for their businesses or to find out feasibility for
the survival of any new business. Microeconomics is that branch of economics that studies
the nature of individuals. By individuals, the focus is more on households and their demand
and supply patterns governed immensely by prevailing interest rates, the inflationary
conditions of the economy and therefore their purchasing power. When the demand for
a basket of goods or services increases, or the supply of such decreases, the price
accordingly increases. When the demand decreases and the supply for the goods
increase then the price decreases so that the quantities are sold out. This is how he demand
and supply adjust in the economy.
Breakeven point is the most vital figure that comes under breakeven (Cost-VolumeProfit)analysis. It is the sales volume at which a business covers all costs (both fixed costs
and variable) from the sales revenue that earns. Therefore, at the breakeven point zero
profit is recorded. Breakeven point can be calculated as follows: BEP (in units) = Total Fixed
Costs / Contribution per Unit. Where, Contribution per Unit = Selling Price per Unit Variable
Cost per Unit. There is an alternative way to calculate BEP that can be illustrated as follows:
BEP (in dollars) = Total Fixed Cost / Average Contribution Margin per unit. Margin of safety
is an important concept comes under breakeven analysis. This can simply be defined as
the difference between actual sales and breakeven sales. This is usually calculated in a
ratio form and is determined via following two formulas: MOS = Budgeted Sales Breakeven
Sales or MOS = (Budgeted Sales Breakeven Sales) / Budgeted Sales.
Absorption costing, which is also known as full costing or traditional costing, captures both
fixed and variable manufacturing costs into the unit cost of a particular product. Therefore,
the cost of a product under absorption costing consists of direct material, direct labour,
variable manufacturing overhead, and a portion of a fixed manufacturing overhead
absorbed using an appropriate base. Since absorption costing takes all the potential costs
into accounts in the calculation of per unit cost, some people believe that it is the most
effective method to calculate the unit cost. This approach is simple. Moreover, under this
method the inventory carries a certain amount of fixed expenses, so by showing a highly
valued closing inventory, the profits for the period will also be improved. However, this can
be used as an accounting trick to show the higher profits for a particular period by moving
fixed manufacturing overhead from the income statement to the balance sheet as closing
stocks. Variable costing, which is also known as direct costing or marginal costing considers
only the direct costs as the product cost. Thus, the cost of a product consists of direct
material, direct labour and the variable manufacturing overhead. Fixed manufacturing
overhead is considered as a periodic cost similar to the administrative and selling costs and
charged against the periodic income. Variable costing generates a clear picture on how
the cost of a product changes in an incremental manner with the change in level of output
of a manufacturer. However, since this method does not consider the overall
manufacturing costs in costing its products, it understates the overall cost of the
manufacturer. The similarity between Absorption Costing and Variable Costing is that the
purpose of both approaches are the same; to value the cost of a product.

Copyright@ www.facebook.com/himurajbari88/

31

Banking Career In Bangladesh (BCB)

141

Income Statement
VS Cash Flow
Statement

142

Liquidity VS
Solvency

143

Present Value VS
Future Value

144

Statement of Affairs
VS Balance Sheet

145

Net Income VS
NOPAT

146

Cash Flow
Statement VS Cash
Flow Projection

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Income Statement is prepared based on the accrual basis (Income and expenses of a
particular period are considered). Cash Flow Statement is prepared based on the cash
basis (Actual money flows are considered). Income Statement provides information about
profitability and owners equity. Cash Flow Statement provides information about liquidity
and solvency of a business. Income Statement is an application of accounting policies,
and standards and concepts are comparatively higher. Cash Flow Statement has a less
number of standards, policies and concepts to follow. Hence, its objectivity is high. Income
Statement is prepared referring to various records and ledger accounts. Cash Flow
Statement is prepared using income statement and balance sheet details.
The terms liquidity and solvency are both associated to a firms ability to repay the
borrowed funds to its lenders or creditors. Liquidity is used to refer to a firm that has financial
difficulties but is still able to repay its loans in some manner. Liquidity may put the firm in the
risk of bankruptcy, but since the firm possesses some assets they are safe and are able to
cover some of their debts even if they have to sell the assets to do so. Insolvency refers to
a firm that has no assets or cash and is unable to obtain borrowed funds to ease debt. In
this case, the firms only option would be bankruptcy since they have no assets to cover
their debts.
Present value is the current value of future cash flow. Future value is the value of future
cash flow after a specific future period. Present value is the value of an asset (investment)
at the beginning of the period. Future value is the value of an asset (investment) at the end
of the period that is being considered. Present value is the discounted value of future sums
of money (Inflation is taken into consideration). Future value is the nominal value of future
sums of money (Inflation is not taken into account). Present value involves both discount
rate and interest rate. Future value involves interest rate only. Present value is more
important for investors to decide upon whether to accept or reject a proposal. Future value
shows only the future gains of an investment, so the importance for investment decision
making is less.
Balance sheet, also known as the statement of financial position (for not for profit
organizations), is an indicator of the financial position of a given entity to a specific date.
It reports aggregate balances of assets, liabilities and equity accounts as the end of a
certain period, usually a year. Balance sheet measures financial health of a business entity.
Therefore, by analyzing balance sheet figures, the stakeholders can arrive at various
decisions particularly for planning volatility of future earnings. Statement of affairs (SOA) is
also identified as a record of financial position of a particular business entity at a given
time. The key purpose of SOA is to afford relevant information for the interested parties such
as shareholders, customers, employees, competitor, etc. Rather than exhibiting book
values of the assets and liabilities, SOA considers the amount at which the organization can
recover after selling off their assets and settling their outside obligations. When looking at
the similarities between Balance Sheet and Statement of Affairs one can say that both
statements talk about financial position of a particular business entity in terms of liquidity.
Net income is the amount of funds that are left over once all expenses incurred in the
business have been reduced from the income for the period. The net income figure
appears on the companys income statement. As net income is derived from reducing all
expenses from income, the net income number offers a quick overview of the companys
financial health. NOPAT or net operating profit after tax as its name suggests removes the
effect of tax from the equation and offers an accurate look at the earnings if the company
had no debt. NOPAT offers a clear look at the operating efficiency of unleveraged firms,
as it does not include the companys tax savings. Companies that do not have debt have
no interest expense and, therefore, their NOPAT is equal to the net profit. In other words,
NOPAT is the amount of operating profit that would be available to shareholders after tax,
if the company held zero in debt. NOPAT can be calculated in a few ways: NOPAT =
Operating profit x (1 Tax Rate) or NOPAT = Net Profit After Tax + after tax Interest Expense
after tax Interest Income or NOPAT = (1-Tax Rate)* EBIT
Cash flow statement and cash flow projection are both financial statements that are
prepared with the aim of obtaining a clear picture of a firms financial position. While cash
flow statement offers an overview of the firms current years inflows and outflows, cash
flow projection, on the other hand, projects the firms inflows and outflows that are to be
expected in the future. While both offer managers additional information for decision
making, cash flow projection in particular offers detailed information for future planning.
Cash flow projection aids businesses to make important decisions about the firm s
finances. Accurate cash flow projections are essential to the financial health of a firm.

Copyright@ www.facebook.com/himurajbari88/

32

Banking Career In Bangladesh (BCB)

147

Accruals VS
Prepayments

148

Factoring VS Bill
Discounting

149

Accounts Payable
VS Accounts
Receivable

150

151

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Accruals and Prepayments are essential as they show the companys stakeholders the
types of revenues and expenses expected by a firm, and help the company managers in
decision making and planning. Accrued revenues are those that the company has already
earned, but has not received cash for. Accrued expenses, on the other hand, are the
expenses that have been incurred, but cash has not physically been paid out. If a customer
paid for the purchase of goods and services in advance, before the goods or service were
delivered or provided, this would be recorded as a prepaid income. On the other hand, if
the company paid for raw material purchases in advance before these raw materials were
received this is recorded as a prepaid expense. The main difference between accruals
and prepayments is that accrued income and expenses are those that are yet to be paid
or received, and prepaid income or expenses are those that have been paid or received
in advance.
In factoring receivables, the trader sells their unpaid invoices to factoring companies such
as banks and financial institutions at a discounted rate. Then these factoring companies
immediately pay the trader the value of their invoices minus a fee. This is very convenient
to the seller as he is not only able to recover his receivables faster , but factoring also
improves cash flow by releasing funds which would be tied up for an indefinite period. In
the process of factoring receivables, factoring companies are also responsible for
maintaining all credit control activities including management of the sales ledger and
collecting debts directly by contacting customers. In bill discounting, the seller of goods
draws up a bill of exchange on the buyer of the goods and then discounts the said bill of
exchange with a bank or financial company. The seller is able to get immediate finance
minus the fee charged by the finance firm. Bill discounting lets the seller recover their
receivables faster thereby improving cash flow. Before purchasing the bill, the bank or
financial institution has to consider a number of factors including the risk of non-payment
associated with the bill and the amount of time remaining for the bill to become due. A bill
with lower risk and shorter duration of becoming due is preferred. Once the buyer of the
goods makes the payment to the bank the transaction is settled.
Accounts payable and receivable are two key accounting terms which are determined
by credit sales and credit purchases. The business organization that sells its goods to the
customers on credit basis has the right to collect the respective amounts from the
customers, which is known as accounts receivable, an asset. On the other hand, the
business organization that purchases goods and services including raw material, bears the
liability to pay off the respective amount to its supplier, which is known as accounts
payable, a liability of the business.

IFRS VS AASB

The Australian Accounting Standards Board (AASB) is the Australian governing body who
engages in developing, implementing and maintaining the accounting standards by
adhering to the Australian company law. The main functions of the Board are set out
according to the Australian Securities and Investments Commission Act 2001. International
Financial Reporting Standards (IFRS) can be considered as a set of international
accounting standards issued by the International Accounting Standards Board (IASB) with
the objective of maintaining equal accounting standards among all the countries. Business
organizations are following these standards when preparing the financial statements at the
end of the period. The IFRS framework provides a set of principles for financial reporting.
IFRS allows management a greater flexibility in preparing the financial statements of the
company. When competing in the international market, it would be highly beneficial to
have the financial statements according to the international standards.

Inventory VS Assets

Assets are the resources owned by the company, and it can be categorized as financial
resources (capital, shares), physical resources (buildings, furniture, machines and
equipments), human resources (employees, executives, managers) , etc. For accounting
purposes, all the resources have been classified as fixed assets and current assets. Inventory
can be classified into three main categories as raw materials, work in progress and finished
goods which are considered as current assets which can be converted into cash within a
shorter period (less than one year). The turnover of inventory represents one of the primary
sources of revenue generation and earnings for the companys shareholders and the
owners. Therefore, when preparing the financial statements, inventory is indicated in the
balance sheet, under the heading of current assets.

Copyright@ www.facebook.com/himurajbari88/

33

Banking Career In Bangladesh (BCB)

152

Sunk Cost VS
Relevant Cost

153

ROCE VS ROE

154

155

156

157

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Sunk costs and relevant costs are both expenses that result in an outflow of cash and
reduce a firms income and profitability. Since sunk costs are incurred in the past, they are
a type of irrelevant cost that do not affect future cash flows and, therefore, are not
considered when making decisions about a firms future. On the other hand, relevant costs
are costs that will be incurred in the future, as a result of a decision made presently and,
therefore, must be considered in managerial decision making. It must however be noted
that when making pricing decisions for a long term, all costs including relevant and
irrelevant must be taken into consideration. This is because in order for a business to be
afloat in the long term the prices quoted should offer a sufficient margin to cover all costs
incurred (relevant and irrelevant both). Therefore, total costs must be factored in when
making long-term financial decisions such as investment appraisal, expansion, new
ventures, selling off business units, etc.
Return on equity (ROE) is a formula very useful for shareholders and investors who invest in
the firms equity, as it allows them to see how much return they can obtain from their equity
investment. In other words, ROE measures a companys profitability as a percentage of the
equity and total ownership interests in the business. Return on equity is a good measure of
the companys financial stability and profitability, as it measures profits made by investing
shareholders funds. Return on equity is calculated by the following formula: Return on
Equity = Net Income/Shareholders Equity. Return on capital employed (ROCE) displays the
companys ability to generate profits from all capital that it employs. ROCE shows the
companys profitability when taking into consideration the total equity as well as the
liabilities and debt within which the company operates. ROCE is calculated as follows:
ROCE = Earnings Before Interest and Tax (EBIT) / Capital Employed.

Amortization VS
Impairment

Impairment and amortization both come together in the accrual principle of accounting
that requires a company to record assets at their fair market value. There is, however, a
number of major differences between the two. Impairment occurs when the value of the
assets reduces drastically as a result of damage to the asset, an asset becoming obsolete,
or other scenarios in which the assets value falls, which creates the need for the value of
the asset to be written down to its true market value. Amortization is the continuous process
under which the assets cost is expensed over its useful life. The value of the asset is reduced
by a proportionate amount, which is recorded as an expense in the income statement.
This is done to show the fair value of the asset, as the value of assets reduces with time.

Contribution Margin
VS Gross Margin

Gross margin and contribution margin are quite similar to another and are important
indicators of a companys profitability. The gross margin (also called the gross profit margin)
is the percentage of total sales that is retained by the company once all costs associated
with producing and selling goods and services have been accounted for. The contribution
margin is calculated by reducing the variable costs of making a product from the sales
revenue to reveal what is left over to pay for fixed expenses. When calculating gross
margin, the cost of goods sold that is reduced from total revenue can include fixed costs
and variable costs, whereas the contribution margin is calculated by reducing only
variable costs from total revenue.

Turnover VS Profit

Turnover and profits are both terms that appear on a firms balance sheet. Turnover is the
income that a firm generates through trading its goods and services. A profit is made when
a firm is able to make sufficient income to surpass its expenses. Turnover is an important
component used in calculating the companys profit, as the turnover makes up the largest
portion of the companys income. High turnover is an indication that the business is
growing, and the demand for the companys goods and services are increasing while high
profits indicate financial stability and business success. Growth in turnover may not
necessarily mean the company is making profits since the costs may still be quite high.

Cash Basis
Accounting VS
Accrual Basis
Accounting

Accruals basis and cash basis are accounting methodologies used to record and report a
companys transactions. The major difference between the two is in the timing of the
revenues and expenses are recognized. According to the cash basis, revenue is
recognized only when the money is received and expenses are recognized only when the
cash is paid. Accruals basis, on the other hand, records transactions as they are incurred.
Revenues are recorded as soon as the business is made aware of a receivable and
expenses are recorded as soon as the business is made aware of payables.

Copyright@ www.facebook.com/himurajbari88/

34

Banking Career In Bangladesh (BCB)

158

Cost Center VS
Profit Center

159

Sales VS Turnover

160

161

162

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Companies are made up of a collection of units, divisions, and sections known as operating
units. Some units create large revenues and profits for a firm while some units result in costs
and expenses. However, both types of operating units result in profits and may generate
profits either directly or indirectly. Profit centers such as sales divisions are profit centers that
are responsible for a large amount of company profits. Cost centers such as research and
development, marketing, customer service, IT and maintenance result in large short term
costs but, without these departments, a company cannot make long term profits; therefore
cost centers are essential to the smooth running and long term profitability and success of
businesses.
Sales and turnover refer to the very same thing and are used interchangeably on a profit
and loss account. Sales and turnover refer to the income that is generated by the trade of
goods and services. The sales and turnover numbers can be calculated by multiplying the
unit price by the number of units sold. Figuring out the companys sales or turnover for a
period of time will help project future numbers, which can in turn help manage future
production capacity.

Purchase Method
VS Acquisition
Method

There are 2 accounting methods; namely, acquisition accounting and purchase


accounting that are used in recording large transactions such as mergers and acquisitions.
The purchase method in accounting is the new standard that is being used as opposed to
the older acquisition accounting method. The purchase method of accounting is quite
similar to the acquisition method of accounting in that, in both methods, the company that
is being acquired will be listed at its fair value and the difference between the fair value
and purchase price will be recorded as goodwill. However, the purchase method does not
allow a company to create a provision for restructuring to account for any future losses or
costs associated to restructuring that occur during the acquisition. The purchase method
is seen to be more accurate than the acquisition method as any losses that are associated
with the acquisition must be reported immediately.

Current Assets VS
Noncurrent Assets

Current assets and noncurrent assets are important components in a companys balance
sheet that shows the value of the total of the assets held in a firm. Current assets are those
that can be quickly and easily converted into cash. Noncurrent assets, on the other hand,
are held for longer periods of time, and usually include items that are not held with the
intention to sell within a period of 12 months. Noncurrent assets also cannot be converted
into cash quickly and are not as liquid as current assets.

Fair Value VS
Market Value

Fair value and market value are measures that are frequently used when determining the
value of an asset. Even though they may sound similar, the way in which either is calculated
is quite different to one another. Market value is the value that an asset can be bought
and sold for in a market place. The market value of an asset will be determined by the
demand and supply for it. The fair value of an asset is calculated by using financial models
that take into consideration the total of the present value of the future cash flows that can
be generated from the asset. The fair value is not always equal to the market value, and
could be higher or lower depending on how valuable the asset is to the purchaser.

163

Gross Profit VS
Operating Profit

164

Operating Profit VS
Net Profit

165

Direct Costs VS
Indirect Costs

Gross profit and operating profit are important calculations aimed at measuring the
profitability levels of the firm. Gross profit is the amount of sales revenue that is left over
once the cost of goods sold has been reduced. Operating profit is the profit that a firm
makes from its core/main operations. It is calculated by subtracting the companys total
operating expenses for the year from the revenue. The major difference between these
two is that gross profit is calculated by reducing costs directly related to producing and
selling the goods and services while operating profit is calculated by reducing all other
expenses from the gross profit figure.
Net profit and operating profit are two important components in the study of accounting.
Both sound very similar to each other and are, therefore, consistently confused to mean
the same thing. In simple terms, operating profit is the profit that a firm makes from its
core/main operations and does not include extraordinary items that do not occur in the
normal course of business, in its calculation. Net profit is calculated by including
extraordinary expenses/income, reducing interest costs, depreciation and taxes from
operating income. Operating profit is an indication that the firm performs its core
operations efficiently and effectively, and net profit is a good indicator of how profitable
the company has been over the past year.
Direct costs are costs that can be directly related to the production of goods and services.
Indirect costs are costs that cannot be directly associated with the production of goods
and services. The main difference between direct and indirect costs is that direct costs can
be charged directly to a particular product, service, or unit. Indirect costs need to be
apportioned among the various departments within the organization by using some
method of allocation.

Copyright@ www.facebook.com/himurajbari88/

35

Banking Career In Bangladesh (BCB)

166

167

168

Financial
Accounting VS Cost
Accounting

Accounting is divided into two main categories known as financial accounting and cost
accounting. Financial accounting is the process used to record transactions and report
summarized financial information in order to display a precise picture of the companys
financial performance, financial standing, and financial position. Cost accounting is used
to evaluate costs that are incurred throughout the production process by looking into the
variable costs and fixed costs that are incurred during each step of production. Financial
accounting looks at the company as a whole while cost accounting concentrates on
improving performance in certain divisions, units, locations, etc. The major differences
between the two lie in the purpose for which they are created, the statements that are
produced, and the type of information that are collected for the documents that are
produced.

Cost of Capital VS
Cost of Equity

The cost of capital is the return that is needed by investors for providing capital to the firm,
and this acts as a benchmark that new projects need to meet in order for the project to
be considered. Cost of equity refers to the return that is required by investors/shareholders,
or the amount of compensation that an investor expects for making an equity investment
in the firms shares. The major difference between cost of capital and cost of equity is that,
cost of equity is the return required by shareholders to compensate for the risk taken to
invest shares and cost of capital is the total return required from the investment in securities
(debt and equity both).

Trade Discount VS
Cash Discount

A trade discount is an incentive provided to a customer to purchase more of a product.


Cash discounts are provided to customers either when a customer pays an invoice within
a specific period of time, or when the customer makes a cash payment to the seller instead
of using checks or credit cards. A trade discount is provided on the purchase of goods,
and a cash discount is provided at the time the payment on the invoice is made.

169

Reserve VS
Provision

170

Liability VS Equity

171

172

Comparisons For Bank VIVA


Hemal Jamiul Hasan

While provisions are generally seen to be negative since they reduce income levels,
reserves are seen as positive as they add onto the companys profitability and can be used
to provide for unexpected future losses, distribution among shareholders, or reinvestment
in the business. Provisions provide for any losses, expenses, liabilities, or depletion in assets
that have been known and expected. The main reason for creating a reserve is to be able
to meet any unknown losses that may occur in the future. In contrast, the main reason for
creating a provision is to provide for losses that have been known and are expected. A
reserve can only be created if the company is profitable, but provisions are made
regardless of whether the company is making a profit or loss.
Both liabilities and equity are important components in a firms balanced sheet. The
accounting equation clearly shows the relationship between liabilities, assets and equity.
The equity (or capital) in a firm is equal to the difference between the value of its assets
and liabilities. Equity and loans can serve the same purpose by funding an investment or
project. However, equity is different to liabilities because liabilities represent an obligation
that must be met by the firm. On the other hand, equity represents the amount of funds
invested in the firm which can be either owners contributions or shareholders investment
in the firms stock.

Allocation VS
Apportionment

Allocation and apportionment are methods that are used to divide up costs among
various cost centers depending on which department or cost center each cost or portions
of each cost belong. The major difference between allocation and apportionment
methods are that allocation is used when the overhead can be directly related to one
department and cost center, and apportionment is used when the overhead arises from
a number of departments. In allocation, the entire amount of the cost will be allocated to
one department, and in apportionment proportions of the costs will be divided among
their respective cost centers. Allocation is much easier and simpler to do as the expense
will directly be related to one cost center. Apportionment can, however, be quite tricky as
the percentage of the cost that needs to be assigned to each department may be difficult
to decide.

EBIT VS EBITDA

EBIT refers to Earnings Before Interest & Tax and measures a companys profitability. EBIT is
also used to evaluate a companys ability to earn income on a continuous basis as a result
of ongoing business operations. EBIT is calculated as, EBIT = Revenue Operating Expenses.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortization. The EBITDA
acts as an indicator of a firms financial performance and is useful in making comparisons
between competitors, since accounting and financing effects are not considered and,
therefore, do not affect the EBITDA. EBITDA is calculated as, EBITDA = Revenue Expenses
(all other expenses excluding Interest, Taxes, Depreciation, Amortization).

Copyright@ www.facebook.com/himurajbari88/

36

Banking Career In Bangladesh (BCB)

173

Human Capital VS
Physical Capital

174

Annuity VS
Perpetuity

175

Dividend VS Capital
Gain

176

Capital Gains VS
Income

177

Cost of Equity VS
Return on Equity

178

179

180

181

182

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Human capital and physical capital are both types of capital resources that are essential
for the smooth running of any business. Human capital refers to the skills, training,
experience, education, knowledge, know-how, and competencies contributed by
humans to a business. Physical capital refers to assets which themselves have been
manufactured and are used for production of other goods and services.
Annuities and perpetuities are similar to each other in that they both make payments at
regular intervals and they are both paid as a form of return for an investment made. An
annuity is known as a financial asset that will periodically pay a set amount of cash over a
defined period of time such as 5 years, 10 years, 20 years, etc. A perpetuity is referred to as
a stream of cash flows that will be paid at regular intervals, and will continue for an eternal
period of time.
When an investment in made in stocks, there are two types of financial returns that can be
enjoyed by the investor; those are dividends and capital gains. Capital gains are defined
as the gains that arise from the sale of a capital asset that is used for business purposes, or
is held for a period of more than one year. Dividends are not considered to be a capital
gain as they are a form of income received by the shareholder. The tax rate for capital
gains will be higher than tax applied for dividends.
Profits can be in the form of income or capital gains; which will depend on how the asset
is characterized, the time period held, and the purpose for which the asset was utilized.
Capital gains are defined as the gains that arise from the sale of a capital asset that is used
for business purposes, or is held for a period of more than one year. Income, on the other
hand, refers to any funds inflow that arises from the sale of an asset which is not considered
to be a capital asset.
Cost of equity refers to the return that is required by investors/shareholders, or the amount
of compensation that an investor expects for making an equity investment in the firms
shares. Return on equity is a formula very useful for shareholders and investors who invest in
the firms equity as it allows them to see how much return they can obtain from their equity
investment. One of the main differences between the two is that cost of equity in the
perspective of the business is a cost, and return on equity in the companys perspective is
an income.

Cost of Capital VS
Rate of Return

Cost of capital refers to the cost incurred in obtaining either equity capital (the cost
incurred in issuing shares) or debt capital (interest cost). The rate of return refers to the return
that can be obtained by investing capital in business activities and growth. When deciding
between investments of similar risk levels, an investment should only be made if the return
is higher and cost of capital is lower than the alternative.

Equity VS Assets

Equity is a form of ownership in the firm and equity holders are known as the owners of
the firm and its assets. Equity is commonly obtained by small organizations through the
owners contributions, and by larger organisations through the issue of shares. Assets are
commonly known as anything with a value that represent economic resources or
ownership that can be converted into something of value such as cash.

Debit Balance VS
Credit Balance

The double entry system requires that a debit and credit entry of equal amount be made
for a transaction to be recorded completely. A debit and credit balance arises once all
these debit and credit entries made on a T account are balanced. The main difference
between these two balances is that, a debit balance will appear on an account that is an
asset, expense or loss, and a credit balance will appear on an account that is a liability,
income, or capital account.

Fund Flow VS Cash


Flow

A firms cash flow statement will clearly show the movement of cash around the business,
how the cash has been coming in and where it has been spent. The funds flow statement,
on the other hand, shows the movement of working capital with the company during the
period of reporting. The two statements are both prepared specifically to obtain an
overview of the companys liquidity (ability to pay its debts).

Sales VS Revenue

Sales and revenue are very similar to each other in that both refer to income that is
received by a firm. The sales for a service provider firm will be harder to value since the
value of the service provided may vary, whereas the sales for an organization that sells
products are easier to value since sales is the total selling price of the units of goods sold.
Revenue, on the other hand, refers to the total income that a firm receives including its
sales income.

Copyright@ www.facebook.com/himurajbari88/

37

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

183

Gross Income VS
Net Income

Gross income and net income are both important values in an income statement even
though they are quite different in how they are calculated. Net income is the amount of
funds that are left over once all expenses incurred in the business are accounted for. Gross
income is calculated by deducting the cost of goods sold from net sales (this is the number
that you get once the returned goods have been reduced from the total good sold.

184

Weighted Average
Cost of Capital VS
Cost of Capital

Cost of capital is the total of cost of debt and cost of equity, whereas WACC is the
weighted average of these costs derived as a proportion of debt and equity held in the
firm. Both, Cost of capital and WACC, are made use in important financial decisions, which
include merger and acquisition decisions, investment decisions, capital budgeting, and for
evaluating a companys financial performance and stability.

Compound Interest
VS Simple Interest

Interest is the cost of borrowing funds from a bank/financial institution or the income gained
from depositing funds in such an institution. There are two types of interest payments, which
are simple interest and compound interest. As for simple interest the interest amount will be
calculated only on the amount that was initially deposited, called the principle.
Compound interest, on the other hand, is calculated, not on just the principle amount, but
also on the interest that getting added on every year. Compound and simple interest are
very different from each other in that simple interest gives a smaller return, and compound
interest gives a much larger rate of return.

186

Equity VS Capital

Equity and capital are both terms used to describe the ownership or monetary interest in
the company that is held by the companys owners. Capital in the usual context of
accounting and finance means the amount of funds that is contributed by the owners or
investors of the business, to purchase assets or capital equipment required for the running
of the business. Equity represents the claim that shareholders have, once the liabilities have
been reduced from business assets. When assets exceed liabilities, positive equity exists and
in the case that liabilities are higher than assets, the company will have a negative equity.
In accounting terms, shareholders equity is the sum total of financial capital contributed
by the owners and the retained earnings in the balance sheet.

187

Placement VS
Layering VS
Integration

Despite the variety of methods employed, money laundring is not a single act but a
process accomplished in 3 basic stages which are placement, layering and integration.
Placement refers the physical disposal of the initial proceeds derived from illegal activity.
Layering is a series of transactions or movement of funds with the aim of distancing them
from their source. And integration means re-entry of funds into the legitimate economy
through investment in: real estate, luxury assets or business ventures.

188

Going Concern
Concept VS Period
Concept

Going Concern concept relates with the long life of the business. A business is intended to
continue for an indefinitely long period. Period concept ensures the making of financial
results at frequent intervals.

185

A leasee should classify a lease transaction as a capital lease if it includes a noncancelable


lease term and one or more of the four criteria mentioned below. Otherwise, it is an
operating lease. Four criteria are i) the agreement specifies that ownership of the assets
transfers to the leasee. ii) the agreement contains a bargain purchase option. iii) the
noncancelable lease term is equal to 75% or more of the expected economic life of the
asset. iv) the present value of the minimum lease payments is equal to or greater than 90%
of fair value of the asset.
The operating leverage may be defined as the firm's ability to use fixed operating costs to
magnify the effects of changes in sales on its earnings before interest and taxes (EBIT).
Financial leverage results from the presence of fixed charges in the firm's inccome stream.
It is defined as the ability of a firm to use fixed financial charges to magnify the effects of
changes in EBIT on the EPS.

189

Capital Lease VS
Operating Lease

190

Operating Leverage
VS Financial
Leverage

191

NPV VS Profitability
Index

NPV is found by subtracting a project's initial investment from the present value of its cash
inflows discounted at the firm's cost of capital. Profitability Index is a ratio found dividing
the present value of cash inflows determined by required rate of return by project's intial
initial investment.

192

Financial
Accounting VS
Management
Accounting VS Cost
Accounting

Financial Accounting refers to the discipline of recording and classifying the monetary
effects of business transaction and events of a enterprise for the purpose of nalysing, and
financial repoorting the result to a variety of interested parties. Management Accounting
refers the presentation and utilization of accounting information in such a way as to assit
management in the creation of policy and in the day-to-day operation of undertaking.
Cost Accounting is the provision of such analysis and classification of expenditure as will
enable the total cost of any particular unit of production to be ascertained with

Copyright@ www.facebook.com/himurajbari88/

38

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

reasonable accuracy and at the same time to disclosure exactly how such total cost id
constituted.

193

Continuous Loan VS
Demand Loan

194

Product Cost VS
Period Cost

195

Capital Expenditure
VS Revenue
Expenditure

196

Cost Control VS
Cost Reduction

197

Journal VS Ledger

198

Debit VS Credit

199

Net Profit VS Gross


Profit

200

Liability VS Provision

201

Absorption Costing
VS Marginal Costing

The loan accounts in which transactions may be made within certain limit and have an
expiry date for full adjustment will be treated as continuous loan. Examples: cash credit,
overdreaft etc. The loans that become repayable on demand by the bank will be treated
as demand loan. If any contingent loan or any other liabilities are turned to forced loan
(without prior approval as regular loan) those too will be treated as demand loan.
Examples: PAD, FBP, IBP etc.
Product Costs are those cost which are identified with the product and included in
inventory value. Period Costs are the costs which are not identified with product or job and
are deducted as expenses during the period in which they are incurred.
Capital expenditure provides benefits to future periods as classified as an asset; a revenue
expenditure is assumed to benefit the currentbperiod and is classified as an expense.
Cost control can be defined as the comparative analysis of actual costs with standards or
budgets to facilitate performance evaluation and formulation of corrective measures.
Cost reduction may be defined as an attempt to bring costs down.
Journal is a book of prime entry; that is, whenever a transaction occurs it must be recorded
soon after in the journal. The entry made is known as a journal entry. The process of
recording in the journal is called journalizing. The journal entry says that what account to
be debited and what account to be credited, also it contains a narration that says for
what reason the corresponding entry has been made. Some main types of journals are
general journal, purchase journal, sales journal, etc. A transaction must be recorded in the
general journal, or one of the other special journals. Journal contains data in the historical
order of occurrence. A ledger can be defined as an accounting book of final entry where
transactions are listed in separate accounts. Ledger contains many accounts (normally
known as T- accounts). The transactions, which are recorded in the journals, are grouped
accordingly and transformed to the corresponding correct accounts in the ledger. This
process of recording data is known as posting. Financial statements (also known as final
accounts) like statement of comprehensive income (income statement), statement of
financial position (balance sheet) are often derived from ledger. Ledger accounts can be
checked for the accuracy, that is, when add up all the debit balances in ledger at any
given date or time must be equal to the summation of all credit balances in the ledger.
For an individual, there is difference between debit and credit and can be easily
understood when he deposits money in his bank account and it shows as credit in his
account. On the other hand, debit takes place when he withdraws money or issues check
to another person or party. However, in accounting, no difference is made between debit
and credit and they are merely ways of recording transactions in a financial statement.
This system of accounting is known as double entry accounting.
Gross profit is total sales minus total cost of goods. It does not take into account operating
expenses. Net profit is arrived at after deducting operating expenses from gross profit. In
most businesses, net profit is always lower than gross profit.
In a broader sense, provision is nothing, but liability, and considered an obligation of a
business to be met in near future implying cash outflow. However, on closer inspection,
provision appear to be a special type of liability. This is because of certainty that is normally
associated with liability, and which is lacking in the case of provision. This means that we
are accepting provision and liability to be similar, but not saying this clearly, but accepting
them as two points on a continuum.
Though, marginal costing and absorption costing are two traditional costing techniques,
they have their own unique principles that draw a fine line that separates one from
another. In marginal costing, contribution is calculated, whereas this is not calculated
under absorption costing. When valuing the stocks under marginal costing, only the
variable costs are considered, whereas valuation of stock under absorption costing
includes costs incurred for the production function also. Generally, the value of inventory
is higher under absorption costing than marginal costing. Marginal costing is often used for
internal reporting purposes (facilitate the decision making of managers), while absorption
costing is required for external reporting purposes, such as income tax reporting.
Contribution must be calculated under marginal costing system, whereas gross profit will
be calculated under absorption costing method.

Copyright@ www.facebook.com/himurajbari88/

39

Banking Career In Bangladesh (BCB)

202

Cost Centre VS Cost


Unit

203

Activity Based
Costing VS
Traditional Costing

204

Accrual VS Deferral

205

Internal Audit VS
Statutory Audit

206

207

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Cost center or centers add to overall cost structure of a company though they also
indirectly lead to profits. These profits are hard to calculate. Examples of cost center are
R&D, marketing, advertisement department etc. Cost unit is a specialized unit in a
company that tracks costs incurred by various departments as also estimates and cost
saving measures for different departments.
In traditional costing system, allocation of indirect costs is made based on some common
allocation bases such as labour hour, machine hour. The main drawback of this method is
that, it pools all the indirect costs and allocates them using the allocation bases to
departments. In most of the cases, this allocation method does not make sense as it pools
the indirect costs of all products of different stages. In the traditional method, it allocates
overheads first to the individual departments then reallocates the costs to products.
Especially in the modern world, traditional method loses its applicability as a single
company produces larger number of different types of product without using all
departments. So, cost experts came up with a new concept call activity based costing
(ABC), which was simply reinforced the existing traditional costing method. Activity based
costing (ABC) can be defined as an approach to costing that identifies individual activities
as fundamental cost objects. In this method, the cost of individual activities are assigned
first, and then, that is used as the basis of assigning cost to the ultimate cost objects. That is
in activity based costing, it assigns over heads to each activity first, then reallocates that
cost to the individual product or service. Number of purchase order, number of inspections,
number of production designs are some of the cost drivers used in allocating overhead
costs.
Accrual is recognition of revenues and it leads to cash receipt or expenditure. So accrual
revenue refers to recognition of revenue that has been earned but not yet received.
Similarly accrual expense is recognition of expense that has been incurred but the
payment has yet not been made. On the contrary, deferral is recognition of receipts and
payments after actual cash transactions. So in the case of deferral revenue you receive
the cash but its recognition is done later. Similarly, you pay out cash to cover for wages of
employees but recognize it later in your books.
While the objective of statutory as well as internal audit is same and that is to verify the
financial performance of the company and to ensure that all rules and regulations are
followed in book keeping, the scope of statutory audit is much wider than internal audit.
Internal auditors are answerable to the management whereas statutory auditors are
responsible to the shareholders.

IASB VS FASB

FASB and IASB are two different apex bodies that have been working to have uniformity in
financial reporting by developing standards for accounting all over the world. Of the two,
FASB, that stands for Financial Accounting Standards Board is the older, having been
established in 1973 in the US. IASB is an independent, privately funded board established
in 2001 in London with a stated objective of development of accounting standards to be
applied in all parts of the world. In 2002, the two apex bodies signed a memorandum of
understanding to work in close cooperation with each other to develop accounting
standards that are uniform and transparent.

GAAP VS IASB

It is an independent, private body that is engaged in setting standards for accounting


principles applicable upon all countries of the world. It is based in England. IASB came into
existence in 2001 replacing IFRS, and in the last 10 years has done much to promote uniform
accounting standard in many parts of the world. The operations of IASB, which is made up
of a board with 16 members, are funded by banks and other institutions that have interest
in promoting uniform accounting standards worldwide. Generally Accepted Accounting
Principles, or GAAP as they are popularly known all over the world are set of guidelines
issued by IASB, from time to time, to maintain a standard of accounting that is transparent
and uniform across the world. The need to harmonize accounting principles arose mainly
because every country had its own standards when it came to reporting and recording
financial transactions by accountants of companies. This was because of cross cultural
differences as well as accounting traditions peculiar to a country. With companies
becoming multinational, uniform accounting standards became all the more necessary to
let potential investors compare the performance of a company operating in different
countries.

Copyright@ www.facebook.com/himurajbari88/

40

Banking Career In Bangladesh (BCB)

208

GAAP VS GAAS

209

Inventory VS Stock

210

Opportunity Cost VS
Marginal Cost

211

Gross Working
Capital VS Net
working Capital

212

Annual Report VS
Financial
Statements

213

214

Comparisons For Bank VIVA


Hemal Jamiul Hasan

GAAP (Generally Accepted Accounting Principles) is a set of rules meant for companies
to help and assist in preparing financial statements that are followed in all parts of the
world. These are accounting principles, standards and procedures that are adhered by
companies while preparing financial statements. GAAP are not a single rule but provide
many ways in which transactions can be recorded and reported by companies. GAAP are
being sought to impose upon companies worldwide in an attempt to let investors have a
minimum level of consistency and transparency in the financial statements of companies
when they are trying to compare the performance of two companies located in different
countries of the world. GAAS (Generally Accepted Auditing Standards) is a set of guidelines
for auditors that are meant to help them in the audit of companies in such a way that these
audits are accurate, are consistent, and are verifiable. These guidelines ensure that
auditors do not miss on any material information. GAAS help in ensuring highest quality of
auditing in a manner that it is possible to compare audits of various companies easily.
GAAS require auditors to have a certain level of proficiency and also requires them to
maintain a high level of independence. GAAS ensure professionalism from auditors which
helps them prepare audits in the most transparent and unbiased manner.
Stock and inventory are used interchangeably which is not correct. Stock pertains to goods
only, both in terms of quantity as well as its monetary value. Inventory is the sum of stock
and assets that include plant and machinery
Opportunity cost is described as the sacrifice of the highest value of a good that one has
to forego to obtain another while marginal cost is the cost incurred on producing an
additional unit in a factory. There are some who equate marginal cost with opportunity
cost.
Working capital is the liquidity of a company and has two definitions namely gross working
capital and net working capital. Gross working capital is the total of all current assets and
does not hold much significance for the investors. Net working capital is the excess of
current assets over current liabilities of a company which is why it is an important indicator
of companys financial health.
Financial statements and annual report of a company are different documents that
provide different information to all stakeholders. While financial statements, as the name
implies, provide all the information regarding financial activities of the company, annual
report is much more than mere numbers reflected by a financial statement. Annual report
is wider in scope and includes, letter from the CEO as well as future plans and strategies of
the company apart from financial statements.

Realization VS
Recognition

Recognition of the revenue is a continuous process in a profitable business and is


calculated by subtracting the expenses incurred in carrying out the business from the
revenues generated. If profitability is not there in business then it is the realization of losses
that are to be observed. A companys recognition of revenue is not dependent on the
way the business is carried out like its a cash sale or credit sale. As soon as a credit sale
takes place revenue is recognized and is not depended on the time when payments will
be received. Realization of the revenue starts only after recognition of the revenue ends.
Whether it is profit or loss the realization is reported formally in the account books.
Realization of the revenue is the accurate figure and a true indicator of the health of the
company. Realization of revenues is immediate in a cash business but in business carried
out on credit realization is made when payments are received.

Book Value VS
Market Value

The book value and the market value of a company can be very different. The book value
is the true indicative of the companys worth where as market value is the projection of
companys worth. Book value is calculated on the basis of all the tangible assets which are
physically present with the company and can be touched, felt or sensed. The market value
is calculated according to the book value plus the value of intangible assets. The book
value is generally calculated at a fixed interval of time to assess the companys
performance where as market value is calculated only in cases of acquisitions and
mergers.

Copyright@ www.facebook.com/himurajbari88/

41

Banking Career In Bangladesh (BCB)

215

ROE VS ROA

216

Implicit Cost VS
Explicit Cost

217

218

It is the Return on Equity, so the net profit is divided by total equity. The result is expressed in
terms of percentage so you know what the expected rate of return on a fixed investment
in a company based upon past performance is. Among all the indicators used to judge
the performance of any company, ROE is perhaps the most important. It basically tells how
effectively a company uses the shareholders money. ROE= Annual net income/average
shareholders equity. This is called return on assets and here net profit is thus divided by
assets. It is a measure of how efficiently a company uses its assets. It is clear that higher this
ratio, the better the performance of a company as with same assets, if the company is
getting better profits, obviously it is performing more efficiently. Thus if the assets remain the
same, as in the case of a manufacturing company with the same plant, factory and
machines, and the profits increase, its ROA will go up implying a much better
performance. The ratio of ROA also tells how capital intensive a company is. A low ROA
with huge assets indicates poor asset usage by the company.
Implicit cost is considered as the cost that has occurred on an enterprise but is not initially
reflected and reported as a direct expenditure. It is usually referred to as the deficit from a
potential revenue. It is a result when the person renounces his capacity to gain higher
profitability. This is equates when a company forgoes the satisfaction and benefits that a
specific project might generate. Explicit cost is the cost that is solidly reported based on
numbers and statistics. This actual cost is very detailed in terms of the figures that were
generated. It provides a clear and continuous cash flow from expenses that dont
necessarily proved to be obvious about it and establish the right from the thought of
profitability. Bottom line, this type of cost is often shown as the tangible aspect of the
business and pretty much considered as the revenue.

Depreciation VS
Amortization

Both depreciation and amortization are shown in the debit column and are a liability of
the company. Being non cash expense, they act as a liability that decreases the earning
of the company but help in increasing the cash flow of the company. While depreciation
requires calculation every year, amortization is pretty straight forward and you know how
much amortization expense to be added to the liability column every year over the life
span of the intangible asset. But the biggest difference between the two terms lies in the
fact that depreciation applies to tangible assets while the word amortization is used for
intangible assets.

IAS VS IFRS

The International Accounting Standards or in short IAS are standards issued by the IASC
from 1973 to 2001 that dictate how events and transactions should reflect on a companys
financial statements. The International Financial Reporting Standards or in short IFRS is the
current and updated version of the IAS and is issued by a new standard making body, the
IASB. If there are any contradictions in the IFRS with the old IAS, the IFRS should be followed.

219

GAAP VS IFRS

220

GAAP VS IAS

221

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Excise VS VAT

When it comes to inventory measurement, GAAP assumes that its value is to be ascertained
on the basis of FIFO, LIFO and weighted average method but IFRS does not permit using
LIFO for the value of inventory. Where services are provided, GAAP only takes money as
revenue and does not take into account any pending service. But if IFRS is being used for
accounting, even part services can be converted into revenue. If it is not possible to
calculate revenue, IFRS makes use of zero profit method. In construction business, GAAP
allows for recognition of contract if it is not completed and it can be shown in the financial
results. But in IFRS, though it recognises the % of completion method, gross profit approach
of % completion is not allowed.
GAAP refers to General Accepted Accounting Principles; IAS refers to International
Accounting Standards. Both GAAP and IAS are accounting principles that are used to
record, summarize and analyze financial results of companies. GAPP is specific to a
country;
IAS
is
an
internationally
accepted
standard.
IAS is an initiative of International Accounting Standards Committee (IASC). GAAP differ
from country to country, but most countries try to incorporate changes adopted by IASC
in their GAAP. IAS was introduced to have uniformity in the accounting principles across
the world and thereby to have a fair analysis and comparison of performance of different
companies.
Both excise duty and VAT are indirect taxes that add to the kitty of the government. In fact,
excise and VAT form a bulk of the revenues generated by the government. However, the
two taxes are different. Excise is the tax levied on the manufacture of goods. VAT is the tax
levied on consumption of goods. If the manufacturer does not sell and uses the good
himself, he does not have to pay any excise duty. But since he sells it as a higher price, he
has to pay the excise tax. VAT is not paid by the vendor who purchases the goods from
the manufacturer but by the end consumer in the chain. The vendor has already paid
excise duty to the manufacturer who deposits it to the government.

Copyright@ www.facebook.com/himurajbari88/

42

Banking Career In Bangladesh (BCB)

222

223

224

225

226

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Excise Duty VS
Custom Duty

Excise duty as discussed earlier is an indirect tax and is levied on the manufacturer on the
goods manufactured by him that are to be sold within the country. Excise duty is levied
along with another tax that can be sales tax or VAT. Excise duty constitutes the largest
proportion of taxes in the price of a good. Unlike sales tax, excise duty is charged ad
valorem, that is it is generally calculated on the number of goods or in volume of liquid like
gasoline. Every country has its own ways of imposing excise duty and is calculated as per
the guidelines issued by that particular country. Custom duty also known as consumption
duty is collected by the authorities on the goods imported by an importer and are meant
to be sold in the country. The custom duty is levied on the goods whose value is determined
by its assessable value. This assessable value has been developed by World Customs
Organisation and has given codes to every product known as H.S Codes that can be of
four to ten digits. The rate of custom duty is decided by the government of the country in
which the goods are being imported. The custom duty generally caries a very high rate on
products like tobacco and liquor.

Duty VS Tax

Both duty and tax are the revenues generated by a government for its effective
functioning. Duty in broader terms is a kind of tax only. But there are differences between
the two entities. Duty is levied upon goods only, whereas tax is levied on both goods and
individuals. Tax is a term used in respect of income such as property tax, wealth tax, income
tax etc, whereas duty is used in terms of goods only such as customs duty, excise duty. Duty
is generally a tax levied on good going out or coming inside a country. Duties are
sometimes referred to as border taxes. Higher duties are levied on some categories of
products to discourage people from using them. Taxes are mostly progressive in nature.

IRR VS NPV

To know whether a project is feasible in terms of returns on investment, a firm needs to


evaluate it with a process called capital budgeting and the tool which is commonly used
for the purpose is called IRR. This method tells the company whether making investments
on a project will generate the expected profits or not. As it is a rate that is in terms of
percentage, unless its value is positive any company should not proceed ahead with a
project. The higher the IRR, the more desirable a project becomes. This means that IRR is a
parameter that can be used to rank several projects that a company is envisaging. IRR
can be taken as the rate of growth of a project. While it is only estimation, and the real
rates of return might be different, in general if a project has a higher IRR, it presents a
chance of higher growth for a company. This is another tool to calculate to find out the
profitability of a project. It is the difference between the values of cash inflow and cash
outflow of any company at present. For a layman, NPV tells the value of any project today
and the estimated value of the same project after a few years taking into account inflation
and some other factors. If this value is positive, the project can be undertaken, but if it is
negative, it is better to discard the project. This tool is extremely helpful for a company
when it is considering to buy or takeover any other company. For the same reason, NPV is
the preferred choice to real estate dealers and also for brokers in a stock market.

Bookkeeping VS
Accounting

Both are different sections of finance department, bookkeeping involves the keeping of
systematical record of companys financial activity, where as accounting is the next
section, which analyze these records to prepare different reports and proposals.
Bookkeeping in the procedure, which helps the management to manage day-to-day
financial activity of company, whereas Accounting justifies these financial actions and find
their reasons. In large companies, accounting department is also very large to analyze the
fiscal activity of business, on the other hand, an individual usually does Bookkeeping or at
the most two people are involved in this activity, even in big companies.

Cheque VS
Demand Draft

Cheque and demand draft are both mechanisms that are used to make payments, settle
transactions and to transfer funds to other accounts or individuals. A cheque serves as an
order made to a bank directing the bank to pay a specified sum to a certain person from
an account that is held under a specific name with the bank. Payment through a cheque
is not guaranteed as a cheque can be dishonoured or stopped. A cheque is a negotiable
instrument and is payable only on demand. A demand draft is a payment instrument that
is used in the transfer of funds from one bank to another branch of the same bank or to
another financial institution. A demand draft is guaranteed, therefore, cannot be
dishonored, and funds are directly transferred from one account to another. The main
difference between a cheque and a demand draft is that unlike a cheque that requires a
signature to be cashed, a demand draft does not require a signature to transfer funds.

Copyright@ www.facebook.com/himurajbari88/

43

Banking Career In Bangladesh (BCB)

227

Current Account VS
Saving Account

228

Discount Rate VS
Interest Rate

229

Retail Banking VS
Corporate Banking

230

Investment Bank VS
Commercial Bank

231

Central Bank VS
Commercial Bank

232

Commercial Paper
VS Commercial Bill

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Current accounts and savings accounts are quite distinct from each other due to their
various features and the purposes for which they are used. However, it must be kept in
mind that banks have modified their various types of savings and current accounts, and
the line between the two is starting to blur. There is, however, a number of differences that
stand out. The main purpose of a savings account is to save funds for the future. The
purpose of opening a current account is to deposit check and manage payments. Savings
accounts pay a higher rate of interest while current accounts usually do not pay interest.
Current accounts also offer overdraft facilities, online payment facilities, and automatic bill
payment facilities that are not provided to savings account holders.
Discount rates and interest rates are both rates that are paid and received for borrowing
or saving money. There are 2 meanings to the word discount rate, and it may either refer
to the rate that is used by firms to calculate the present values of future cash flows, or the
rate that is charged by the central banks for overnight loans taken out by depository
institutions. Interest rates, on the other hand, refer to the rates that bank charge when loans
are provided and the rates that are paid to individuals who deposit and maintain savings.
Interest rates are determined by the forces of demand and supply and are regulated by
the central bank. Deposit rates (overnight fund rates) are determined by the central bank
by taking a number of factors into consideration.
Retail banking and corporate banking services are offered mostly by commercial banks
who maintain separate divisions for their retail customers and corporate clients. In some
instances, commercial banks team up with investment banks to provide a number of
investment banking capabilities to their business clients. Retail banking serves the needs of
individual customers and includes services such as accepting deposits, maintaining savings
and checking accounts, and providing loans to individuals for a variety of purposes.
Corporate banking serves the needs of business customers and offers savings accounts,
checking accounts, loan facilities, credit facilities, trade finance, foreign exchange, etc.
solely for companies and businesses.
Investment banks and commercial banks are the two main divisions in the banking industry.
The main difference between the two types of banks is in relation to securities trading.
Commercial banks offer a variety of services that include maintaining deposits and offering
loans, but they do not deal with securities trading. On the other hand, securities trading are
a main area of business for investment banks as investment banks offer IPO and
underwriting services, securities trading, investment, and merger and acquisition services.
The two also differ in terms of the customers that require their services. Customers of
commercial banks include individuals and business customers while customers of
investment banks include large corporate clients, governments, individual investors, group
investors, etc.
Commercial banks offer banking products and services to individuals and businesses.
Central banks offer products and services to the countrys government and other
commercial banks. While there are a number of commercial banks in a country with many
branches, there is only one central bank that oversees the entire banking operation.
Central banks have the power to print money and control the countrys monitory policy.
Commercial banks and the government hold accounts at the central bank as the central
bank is the bankers bank and the government s banks. The central bank regulates the
entire banking system and balances funds between commercial banks. While commercial
banks offer lending services to individuals and businesses, central banks offer loans to the
commercial banks.
Commercial paper and commercial bill are both financial instruments used by banks.
Commercial paper is used by banks to raise finances for a short time period. The buyer gets
CP at a discounted rate, while he gets face value on maturity. Commercial bill is an
instrument that helps companies to get advance payment for the invoices they raise after
making sales to their customers. Commercial paper is used by banks to meet their shortterm obligations, while commercial bills help companies to get money in advance, for sales
they make.

Copyright@ www.facebook.com/himurajbari88/

44

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

233

Investment VS
Merchant Banking

An investment bank is a financial institution that engages in the issuance of securities on


behalf of its client. Investment banks are the banks, which facilitate both the investor, who
is in search for good investment opportunity and the investee, who is searching for capital
to invest in viable projects. Unlike other types of banks, investment banks are not accepting
deposits from customers; that is, investment banks do not provide regular banking services
to the general public. The main Investment banking activities are issuance of securities,
underwriting of securities, providing financial related consultancy services to companies,
assisting companies in the acquisition and mergers, and similar services. JP Morgan, Bank
of America, Merrill Lynch, Goldman Sachs, Morgan Stanley, and Credit Suisse are some of
the world renown investment banks. Merchant bank is a bank that mainly deals with
international financial activities such as foreign real estate investment and long term
company loans. Merchant banks do not provide regular banking services to the general
public. Nowadays, merchant banks provide underwriting services and consultancy
services for wealthy institutions, as well as individuals. Issuance of letter of credit,
international fund transfer, foreign corporate investment and foreign real estate investment
are some examples of services offered by a merchant bank. Merchant banks offer capital
in exchange for share ownership. The main sources of income of a merchant bank are fee
for the consultancy that they provided and interest for the capital provided. Some of the
financial institutions mentioned above (e.g: JP morgan) have begun as merchant banks.

234

Bank Rate VS Repo


Rate

Both bank rate and repo rate are financial instruments in the hands of the apex bank of a
country to control money supply in the economy. While bank rate is the rate of interest at
which central bank grants long term loans to commercial banks, repo rate is the rate of
interest at which banks can get short term loans to meet shortfall of funds in their operations

Loan VS Borrow

In the sentence mentioned above the word loan is used in the sense of give and hence
the meaning of the sentence would be the bank gave loans for agriculturists on an
agreement. Another important difference between the two words is that a loan is given
under a condition that it should be repaid within a certain period of time. The time period
normally varies as according to the repaying capacity of the person who accepts the loan.
On the other hand, a person borrows money from his friend or his relative sometimes not
under any condition. The money is simply lent in good faith that it will be returned duly.
Hence there is no binding rule about the return of the money in the case of borrowed
money. Borrowed money may not carry any interest on it. On the other hand a loan always
carries some interest on it. In other words the person who accepts the loan should return it
along with interest.

RTGS VS NEFT

RTGS is an acronym that stands for Real Time Gross Settlement and it is indeed a very
popular fund transfer mechanism between two banks or two different branches of a single
bank on real time and gross basis. NEFT stands for National Electronics Funds Transfer and
is very similar to RTGS as it is an online system of transferring funds between banks. If one
talks about differences between RTGS and NEFT, it is clear that RTGS is real time and gross
settlement, whereas NEFT is a net settlement process. As it is conducted in real time, RTGS
is also considered to be one of the fastest fund transfers through banking channels. In sharp
contrast, NEFT takes much longer than RTGS.

RTGS VS SWIFT

It stands for Real Time Gross Settlement and is the fastest way to send money from one
bank account to another within the country. SWIFT stands for Society for Worldwide
Financial Telecommunication and was established in 1973 in Brussels. It was founded to
facilitate easy communication between financial institutions all over the world. SWIFT
supplies software and other services to banks and other financial institutions.

MICR Code VS Swift


Code

MICR stands for Magnetic Ink Character Recognition and is a foremost technology being
employed by nearly all banks and other financial institutions for processing of checks
(cheques) these days. Instead of the manual processing of checks (cheques) earlier, which
took a lot of time and effort, MICR makes it possible for computers to process the
information encoded in checks (cheques) and thus thousands of cheques can be
processed in a single day, saving a lot of time and money and allowing very fast and
efficient transfer of money across banking institutions. Another factor that goes in favor of
MICR is the fact that the code can be easily read by people unlike barcodes that require
scanners to be read. So a cheque can be verified manually also with the help of MICR
code. SWIFT stands for Society for Worldwide International Financial Telecommunication
and is actually an alphanumeric code that identifies your financial institution. This code
makes it faster and simpler to send money electronically from one country to another. In
fact, SWIFT codes are used for international money transfer only.

235

236

237

238

Copyright@ www.facebook.com/himurajbari88/

45

Banking Career In Bangladesh (BCB)

239

Loan VS Mortgage

240

LC VS SBLC

Comparisons For Bank VIVA


Hemal Jamiul Hasan

A simple loan is a loan that needs no collateral whereas mortgage is a loan where the
borrower has to keep his property in the name of the bank till he repays the loan amount
in full. A simple loan is unsecured, carries high rate of interest, and is for a shorter time
period. A mortgage is secured, carries lower rate of interest, and is given for a longer time
period.
A Letter of Credit is a type of guarantee for a seller that he will receive timely and correct
payments from his clients. This is a financial instrument that has become very popular in
international trade in modern times. Because of many uncertainties in cross border trade,
particularly as buyers are not known personally to suppliers, letter of credit is a comfortable
cover and an assurance to the supplier that he will not suffer any losses or damages
because of non payment or default on the part of the buyer. The issuing bank initiates
transfer of funds to the supplier once certain conditions mentioned in the contract are
fulfilled. However, the bank also safeguards the interest of the buyer by not paying the
supplier until it receives a confirmation from the supplier that the goods have been
shipped. SBLC are very flexible financial instruments also referred to as sui generis. They are
very versatile and can be used with modifications to suit the interests and requirements of
the buyers and sellers. The essence of SBLC is that the issuing bank will perform in the case
of non performance by the buyer or when he defaults. This is an assurance to the supplier
in situations when he does not know the buyer personally or there has not been previous
experience of trade with him. However, the beneficiary (supplier) needs to give proof or
evidence of non performance by the buyer to obtain payment through SBLC. This
evidence is in the form of a letter strictly according to the language of the contract and
satisfying to the bank.

241

LC VS Bank
Guarantee

Major difference between a LC and a BG is that the issuing bank does not wait for a default
from the buyer unlike BG where a formal request is made by the supplier to this effect. In
this sense, a BG is more risky for the supplier as he has to wait till the bank clears his dues.
Bank is liable to pay in the case of a BG in case of a default by the buyer whereas an LC is
a direct responsibility of the issuing bank. BG is therefore called a second line of defense
while LC guarantees timely payments for the supplier. LC is more of an obligation on the
part of the issuing bank that has to transfer the funds once criterion mentioned in the
contract are fulfilled. LC is thus more for ensuring timely and correct payments.

242

Pay Order VS
Demand Draft

Pay order and demand draft are basically used for the same purpose, but are different
from each other. A pay order is a mode of payment that is to be cleared in the very specific
branch of the bank that issued it. Demand draft is a mode of payment that gets cleared
in any branch of the issuing branch.

243

Swift Code VS IBAN


Code

SWIFT code is for identification of a bank or business while IBAN is International Bank
Account Number. IBAN is used by customers to send money abroad while SWIFT is used by
banks to exchange financial and non financial transactions. IBAN allows for easier and
faster money transfers worldwide.

244

Online Banking VS
E-Banking

Online banking and e-banking are modern ways to conduct banking transactions sitting
in the comfort of ones own hoe without going to the bank physically. E-banking is broader
in spectrum than online banking in the sense that it encompasses the use of ATM cards for
withdrawal of money and making payments to merchants even without going online.

245

Bank Overdraft VS
Bank Loan

246

Credit Note VS
Debit Note

247

IFSC Code VS Swift


Code

While a loan is for large amount of money and for a longer duration, bank overdraft is a
borrowing facility from the bank to its current account holders that allows one to draw
money to meet emergencies in business. One has to repay both a loan and overdraft, but
in the case of a loan it is through an EMI while one is at liberty to repay in installments and
interest applies only the rest amount from the overdrawn money. While one has to apply
for a loan afresh every time one needs money, overdraft is a continuing facility from which
one can draw money anytime depending upon exigencies.
A debit note has the opposite effect of a credit note. A buyer issues a debit note to the
supplier when he is wrongly overcharged or when he is returning goods. A debit note can
be issued by the supplier when he has mistakenly undercharged a buyer.
SWIFT code is for international money transfer while IFSC code is used for money transfer
within India. SWIFT code has been developed by ISO while IFSC code has been developed
by RBI. SWIFT code has 8 or 11 characters while IFSC codes contain 11 characters. Both
SWIFT and IFSC codes are business identification numbers.

Copyright@ www.facebook.com/himurajbari88/

46

Banking Career In Bangladesh (BCB)

248

Cheque VS
Promissory Note

249

Cheque VS Bill of
Exchange

250

Goldman Sachs VS
J.P. Morgan Chase

251

Bank of America VS
J.P. Morgan Chase

Comparisons For Bank VIVA


Hemal Jamiul Hasan

While a cheque is a one time payment, a promissory note is a promise made to pay back
a loan; either in installments or in one go at a later date. Cheque is drawn on a bank
whereas promissory note can be made by any individual in favor of another person. In
case of a promissory note there are two parties called the maker and the payee, whereas
in case of a cheque there are three parties, the drawer, the drawee, and the payer.
Cheque can be drawn in favor of oneself but a promissory note is always made in favor of
another person. Cheques can be conditional but this is never a case with promissory notes
While a Cheque can only be drawn on a banker, a bill of exchange can be drawn on any
party or individual. There is no need for acceptance in case of a Cheque but a bill of
exchange must be accepted before the drawee can be made liable upon it. While there
is no grace period in the case of a Cheque and it must be paid immediately by the banker,
there is usually a grace period of 2-3 days in the case of a bill of exchange. A Cheque is
either crossed or uncrossed while there is no such requirement in a bill of exchange. In the
case of a bounced Cheque, notice of dishonor is not necessary but it is a must in case of
bill of exchange. A Cheque needs no stamp but it is necessary in case of bill of exchange.
You can stop payment in case of a Cheque but it is not possible in case of a bill of
exchange.
When it comes to global investment banking and securities, Goldman Sachs emerges as a
top player. It is a very old firm having been founded in 1869 and has its headquarters in
lower Manhattan area of New York. The company is involved in providing various financial
services such as mergers and acquisition advice, underwriting, prime brokerage and asset
management to thousands of its clients. Its client profile has individuals as well as
corporations and even governments. Goldman Sachs also provides services in equity deals
and is a major player in the government security market. This financial company is involved
in various financial activities such as retail and investment banking, global securities, asset
management, and many other financial services. It has assets worth more than $2 trillion
and is the 2nd largest banking institution in the US on the basis of its market capitalization.
In terms of deposit base in the country, it is third only after Bank of America and Wells Fargo.
The company operates the largest hedge fund in the US with assets worth more than $54
billion. Earlier known as J. P. Morgan, it got its current name after acquisition of Chase
Manhattan Corporation in 2000. The company uses its brand name Chase for retail banking
and credit cards in US. The headquarters of the company are in New York, while the
headquarters of its bank are in Chicago.
Talking of differences, while Bank of America is primarily a bank operating in other financial
services, J. P. Morgan is an investment firm also operating as a bank. It has offices in more
than 60 countries of the world. In terms of market capitalization, J. P. Morgan Chase is the
largest financial organization in the world with an asset base of more than $2 trillion. Both
bank of America and J. P. Morgan Chase have had their share of controversies. While BOA
got a bad name when it suddenly raised interest rates for many of its customers which
included even those who had a good credit history. This move created a furor and faced
mush criticism from all quarters. J. P. Morgan Chase got involved in sales that nearly brought
bankruptcy to a county in Alabama. The case went to US Securities and Exchange
Commission where the company lost and had to pay fines of nearly $722 million.

Secured Loans VS
Unsecured Loans

Secured loans are the loans for which you give some kind of guarantee to the financial
institution that lends money regarding the repayment of the loans. Unsecured loan on the
other hand is the loan offered to you on the basis of your credit rating that is supposed to
be good to be eligible to get the loan. The type of guarantee that you can give to the
financial institution in the case of secured loans may be in the form of assets, car or any
other vehicle, documents related to investments made in banks and stocks and the like.
On the other hand business people who are not interested in providing their assets as
guarantee usually opt for unsecured loan simply by virtue of their existing credit rating.

253

SWIFT Code VS
Routing Numbers

Routing numbers and SWIFT codes are unique identifiers for financial institutions. Routing
numbers are used for transactions within the US while the SWIFT codes are used for
international wire transfers. Routing numbers are nine digits in length while SWIFT codes can
be eight eleven alphanumeric characters. Routing numbers are also used for electronic
payment processing via ACH, bill pays and paper drafts. SWIFT codes are used for
international wire transfers only.

254

SWIFT Code VS Sort


Code

The SWIFT code is an alphanumeric international code that you use in order for you to send
money to another country. It identifies the country and bank of your recipients account.
The sort code is a six digit code in three pairs (i.e. 12-34-56) that is used by British and Irish
banks for domestic money transfers. Take note that a transfer from a British account to and
Irish account is considered as an international transfer.

252

Copyright@ www.facebook.com/himurajbari88/

47

Banking Career In Bangladesh (BCB)

255

Wire Transfer VS EFT

256

ACH VS Wire
Transfer

257

Master Card VS
Visa Card

258

PayPal VS Credit
Card

259

Tax Evasion VS Tax


Avoidance

260

Exempt VS Zero
Rated (VAT)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

EFT is the process of transferring funds electronically whereas wire transfer is the act of
transferring funds from one account to another. Wire transfer is bank-to-bank transaction
and more useful and convenient for fund transfers internationally while EFT, in addition to
wire transfer, is also suitable for domestic transactions like paying for bills, groceries and
other merchants.
ACH (Automated Clearing House) transfer and Wire transfer are two of the most common
methods in sending or transferring money. ACH needs the financial institutions or
establishments to be a member of the ACH network prior to engaging in transactions while,
in Wire transfer, anyone with a bank account can do a transfer. ACH usually deals with
large volumes of payments or amounts and are more of business-to-business transaction
whereas wire transfer is more of a personalized transaction and more suited for ordinary
people.
Master card can be used world wide at more than 23 million locations. It is important to
note that the Master card does not issue the credit cards to the customer directly. Instead
the issuance of Master cards is in the hands of the banks that have taken up the services
of Master Cards. Any payments that we make to our banks for the usage of a Master card
go to the bank and not to the Master Cards. Master cards generate its income by issuing
its services to these banks. Visa cards have a customer base present in billions and a direct
competitor for Master Cards. Visa Cards are accepted around the world, and like Master
Cards, the service payments charged by banks to their customers, goes towards the bank
and not to Visa Cards. Visa cards receive its service payment from the banks issuing the
Visa Cards services worldwide. It is a generalized concept now, that wherever you can pay
with your Master Card, you can also use your Visa Card.
PayPal is mode of payment, which facilitates payment on the internet, an alternative of
traditional paper money. Nowadays, instead of paying through cheques and money
orders for your shopping, you pay through PayPal. You need to have a PayPal account to
get advantage of this facility; you can recharge this account from a bank account or
credit card. You can issue a PayPal cheque or can directly transfer money to the
recipients bank account. You have to pay a nominal fee if you use PayPal for commercial
purposes. If you receive money in your PayPal account from other source, you have to pay
some amount. PayPal operates nearly all over the world, but few countries have no access
to PayPal. PayPal is applicable to 19 currencies in the world; user can send, receive and
hold their funds in nearly 190 countries. A small plastic card, which is acting as a mod of
payment these days is called credit card. You can do shopping by making a promise to
the bank that you will return this amount. There is a limit on your credit card, which draws
a line for your debt, the amount that you can borrow from bank. Your bank can issue you
a credit card, or you can have your account with a credit card company. Once you shop
by using your credit cards, your bank will send you a monthly bill, for which the minimum
amount, which is mentioned by bank, you have to pay by due date or you, can make the
full payment to the bank, to avoid interest. Having a Credit Card makes things easy and
you do not have to calculate your balance before making a transaction. You can
purchase an item and then can pay back to your bank later.
Tax avoidance and tax evasion are both methods used by individuals and businesses to
minimize or completely avoid the payment of taxes. Tax avoidance is done by complying
with the rules and regulations, yet at the same time by finding any loopholes in the laws of
taxation and taking advantage of such shortcomings. Tax evasion is an illegal mechanism
used in order to avoid the payment of taxes. Tax evasion goes against any taxation laws
set in the country and is done in an unfair manner. Examples of tax avoidance include tax
deductions, artificial transactions created with the aim of gaining a tax advantage,
changing business structures to reduce tax rates, establishing companies in countries that
offer reduced tax rates also known as tax havens, etc. Examples of tax evasion are untrue
financial reporting, window dressing of financial accounts, hiding assets and income,
claiming false deduction, avoiding payment of taxes due, etc. The main difference
between tax evasion and tax avoidance lies in that tax evasion is illegal, whereas tax
avoidance is a legal method used to reduce tax payments that at times can be unethical
in nature.
VAT is the value added tax that is charged when selling goods and services. The price of
these goods and services include the VAT amount. There are different types of VAT rates
that apply to different types of goods and services. Zero rates goods and exempt goods
are similar to one another in that they both do not charge VAT on the goods and services
sold. Retailers that sell zero rates goods can reclaim VAT on any purchases that are directly
related to the sale of zero rates goods. On the other hand, retailers of exempt goods
cannot claim back the VAT on the purchases related to exempt goods.

Copyright@ www.facebook.com/himurajbari88/

48

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Duty VS Tariff

Duties and tariffs are both taxes that a countrys government will impose on the import and
export of goods and services. These terms are quite similar to one another and are most
often used interchangeably. Both tariffs and duties are imposed for the same purposes
which are to protect domestic industries and companies, earn government income, and
reduce trade deficits. A duty can also refer to customs duty that is imposed on goods that
are brought into a country by tourists and other individuals. While duties and tariffs can be
beneficial to a country, there are also a few disadvantages. The main issues with these
taxes are that they protect local producers too much, and by not exposing domestic
producers to international competition, they will remain within the same quality standards
and inefficiencies, and the industry as a whole will remain underdeveloped in comparison
to more efficient foreign industries.

Tax VS Levy

Taxes are fees that are imposed on corporations and individuals by a countrys
government. Taxes are used for the purpose of running of the government, investment,
development, infrastructure, healthcare, public safety, law enforcement, etc. A tax levy
will be imposed in the event that the tax payer fails to make tax payments or fails to work
out a tax payment arrangement. If the taxpayer defaults on their tax payments the
government can issue a levy to seize the assets and recover the amount due in taxes.

263

Direct Tax VS
Indirect Tax

The tax that is realized directly from the individual upon whom it is levied is called a direct
tax while the taxes that are collected from intermediaries rather than those who actually
pay them are called indirect taxes. The example of a direct tax would be income tax which
is also called a progressive kind of tax. On the other hand sales tax is an example of indirect
tax as the tax is collected from the merchants who in turn collect it from the end consumers.
Indirect taxes are also called regressive taxes as they lead to an increase in inequalities in
the society. They can however be made progressive if rich are made to pay them while
poor are exempted from paying these taxes.

264

Excise Duty VS
Sales Tax

265

Business Risk VS
Financial Risk

261

262

266

SWOT Analysis VS
PESTEL Analysis

Excise duty and sales tax are two different taxes. Excise duty is on production whereas sales
tax is on sale of the product. Excise duty is paid by the manufacturer whereas sales tax is
born by the end consumer.
Financial risk is the risk that a business will not be able to generate enough cash flow and
income to pay their debts and meet their other financial obligations. Financial risk is more
related to the percentage of leverage that a company holds and the debt that is used to
finance business operations as opposed to the actual operations of the business. A
company that holds a higher level of debt has a higher possibility of defaulting and not
being able to meet their financial obligations. Therefore, companies with higher debt have
a higher financial risk. Financial risk can arise from volatile interest rates, exchange rate risk,
and companys debt to equity ratio, etc. Business risk is the risk that a business faces in not
being able to generate adequate income to cover operating expenses. Operating
expenses of a business include utility costs, rent cost, wages and salaries, cost of goods
sold, etc. Business risk can arise from a number of factors such as fluctuations in demand,
market competition, costs of raw materials, etc. Business risk can be divided into systematic
risk and unsystematic risk. Systematic risk is the risk of the downturn that is faced by the
entire industry or economy. Systematic risk can be caused by a number of factors such as
the recession, war, inflation, volatile interest rates, natural disasters, etc. Since these factors
affect all businesses in one market or the entire economy, they are known as systematic
risk. There is not much that individual business owners can do to combat systematic risk.
Unsystematic risk, on the other hand, varies from one business to another. Unsystematic risk
can arise from poor management decisions, strategic moves, investments, etc. The best
method to reduce unsystematic risk is to diversify the portfolio of businesses held, by
including businesses from different markets and industries into the portfolio. This means that
even if one company is experiencing a downturn this can be overcome by the favorable
performance in another business.
SWOT represents Strengths, Weaknesses, Opportunities and Threats. SWOT is used to
evaluate a companys internal environment by identifying the strengths and weaknesses
and also to evaluate the external environment by identifying the opportunities and threats.
PESTEL factors are useful in evaluating the external environment (macro environment) of
the organization. PESTEL stands for political, economical, social, technological, ecological
and legal factors. The major difference between SWOT and PESTEL analysis is that PESTEL is
used to analyse a companys external environment while SWOT can be used for both
internal as well as external evaluations. SWOT Analyses can be used to identify the current
market position of the company while PESTEL is used to identify the impact of external
environmental factors which may affect the business operations, especially when
expanding the business operations into various other regions.

Copyright@ www.facebook.com/himurajbari88/

49

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

267

SWOT VS TOWS

The major difference between SWOT and TOWS analysis is the order that the managers are
concerned about the strengths, weaknesses, threats and opportunities in making strategic
decisions. In TOWS analysis, initial focus is on threats and opportunities, which may lead
towards productive managerial discussions about the things which happen in the external
environment rather than considering about the companys strengths and weaknesses. In
SWOT, inward analysis starts first; that is, the companys strengths and weaknesses are
analysed first in order to harp on the strengths to capture the opportunities and identify the
weakness to overcome them.

268

Managerial
Functions VS
Managerial Roles

Managerial functions involve the duties and responsibilities of a manager. In an


organization, a manager is responsible for performing core functions like planning,
organizing, directing/leading, coordinating and controlling. Similarly, a manager needs to
perform various roles in performing various activities such as interpersonal role,
informational role, and decisional role.

Project Manager VS
Operations
Manager

The project manager is responsible for completing the project within a specified budget,
and the time frame. The duty of the operations manager is to reduce the overall cost while
maximizing the profits or returns. The project manager is responsible only for the budget
relating to a particular project that he/she is working on that time and the operational
manager is responsible for the departmental budget. Project managers are appointed for
a particular project within a certain period. However, operations manager is responsible
for ensuring the smooth flow of business operations within the organization. Comparatively,
operations manager has more responsibilities than a project manager in the organization.

ISO 9001 VS ISO


27001

ISO 9001 is a standard which outlines the requirements for maintaining quality throughout
the management system. The latest version is the ISO 9001:2008. It is a framework that can
be used in developing the processes through quality improvements and achieving
organizational success. ISO 27001 standard is to ensure the information security and data
protection in organizations worldwide. This standard is so important for business
organizations in safeguarding their customers and confidential information of the
organization against threats. Implementation of the information security management
system would ensure quality, safety, service and product reliability of the organization that
can be safeguarded at its highest level.

ISO 27001 VS ISO


27002

The ISO 27001 standard expresses the requirements for information security management
in organizations and ISO 27002 standard provides support and guidance for those who are
responsible in initiating, implementing or maintaining Information Security Management
Systems (ISMS). ISO 27001 is an auditing standard based upon auditable requirements,
while ISO 27002 is an implementation guide based upon best practice suggestions. ISO
27001 includes a list of management controls to the organizations while ISO 27002 has a list
of operational controls to the organizations. ISO 27001 can be used to audit and certify the
organizations Information Security Management System and ISO 27002 can be used to
assess the comprehensiveness of an organizations Information Security Program.

ISO 9001 VS 9002

ISO 9001 standard is the most updated version of the international standards compared
to ISO 9002. The major difference between ISO 9001 and ISO 9002 is that ISO 9001 is a model
for quality assurance in design, development, production, installation while ISO 9002 is a
model for quality assurance in production, installation and servicing. Therefore, ISO 9001
sets out the requirements for an organization where the business processes range from
design and development, to production, installation and servicing and ISO 9002 is
appropriate for organizations where they do not concern on designing and developing
the products, as it does not include the design control requirements of ISO 9001.

Boss VS Leader

A boss can be identified as an individual who acts as an immediate supervisor for a specific
set of employees who are having the authority to make certain decisions on behalf of the
company. The term boss can be used to refer to any employee in the company who is at
a higher level including a supervisor, executive, manager, director or CEO. A leader is a
person who can influence the behavior of others. They are always working towards
achieving the organizational vision and always inspire and motivate their subordinates at
work. Being a leader requires much commitment towards achieving success. Leaders are
considered as role models for everybody, and they inspire the people who are around
them. Employees get motivated to work with such people. They listen to their subordinates
and empower them. Best performers are rewarded by good leaders. Bosses are highly
concerned about the outcomes of a process and the leaders feel responsible for the
process of that outcome and the people who see it out.

269

270

271

272

273

Copyright@ www.facebook.com/himurajbari88/

50

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

274

Transformational
Leadership VS
Situational
Leadership

Transformational leaders act according to the vision and inspiration and situational leaders
act according to a particular situation. Transformational leaders are charismatic
personalities, which have been useful to inspire and motivate the workers to change their
behaviours and develop them up to expected levels of quality standards. A number of
factors are linked with situational leadership, including resources, external relationships,
organizational culture and group management but the transformational leadership style
does not have any link with the organizational culture. Transformational leadership can be
considered as a single preferred style while situational leadership can be applied with
leadership skills in order to motivate and inspire the employees to act according to the
given situation.

275

Labour Intensive VS
Capital Intensive

Capital intensive and labor intensive refer to types of production methods followed in the
production of goods and services. Capital intensive production requires more equipment
and machinery to produce goods; therefore, require a larger financial investment. Labor
intensive refers to production that requires a higher labor input to carry out production
activities in comparison to the amount of capital required.

Audit VS Inspection

An inspection is when a facility, building, equipment, machinery, or even a process is being


closely observed with the aim of verifying that it meets a certain set of standards. Audits
are based on a set of predetermined guidelines and standards and are more formal and
planned out. Audits are usually carried out once a year, whereas inspections are done
frequently than that and could be weekly or monthly.

Supply Chain VS
Value Chain

Value chain and supply chain are both processes that are adopted by firms, to manage
the production and value addition activities of the firm aimed at providing the customer
with a good quality product that is able to satisfy their needs at a low cost. The supply chain
is concerned with the manufacturing of the product and sale and distribution, whereas
value chain takes another step further and looks at how additional value can be created
for the product through organizing the companys operations in a manner that provides
the best value for the lowest cost. The main difference between supply chain and value
chain is that supply chains follow the product from the supply to the customer whereas, in
a value chain, the starting point is at the customer; evaluating customers needs and then
tracking back to manufacturing to determine how the processes can be modified to meet
these needs.

Strategy VS Policy

Strategy of a business organization is reflective of the thinking of those at the top of its
management and the action that the management plans to take. It is the job of the
management to set goals that are sought to be achieved and the strategy is a statement
that lets stakeholders know the thinking of the management as to how they plan to
achieve these goals. To an investor or a shareholder, the strategy document is an
important reminder regarding the thinking process of men who matter in a company. A
policy lies at the core of all decisions taken by the management of a company. It serves
as a guide while taking decisions though the policy is not a statement that is written in black
and white that has to be applied in day to day operations. Policy statement is like a
guidebook that helps management to take important decisions and clears all doubts as
to the direction a company should take.

276

277

278

279

Project VS Program

280

Code of Ethics VS
Code of Conduct

281

Accountability VS
Responsibility

A project manager needs to monitor and manage tasks, while a program manager
monitors and controls projects. Projects are of shorter duration, whereas programs can last
for years. Projects have narrow scope, whereas a program has much wider scope. In a
program, focus is always on the manager (leadership), while in case of project; focus is on
management of people involved. Project has a start as well as well defined end. On the
other hand, program is a bunch of projects with no definite end.
Codes of conduct are rules and regulations that are to be followed strictly by the
employees of a company, and could lead to their removal if they show disregard to these
codes. Codes of ethics are behaviors or actions that are unwritten rules and regulations,
and their violation is frowned upon by the company, though not prohibited under law.
Codes of ethics are not specific, and their violation leads to no punishment, though they
are expected to be followed. Codes of conduct require strict adherence, or one has to
incur penalty
Accountability and Responsibility are two words that are quite often confused due to the
similarity between their meanings. Strictly speaking, these two words have to be
understood differently. The word accountability is generally used in the sense of
answerability. On the other hand, the word responsibility is used in the sense of liability
or dependability. This is the basic difference between the two words.

Copyright@ www.facebook.com/himurajbari88/

51

Banking Career In Bangladesh (BCB)

282

ISO 17025 VS ISO


9001

283

Centralisation VS
Decentralisation

284

Assessment VS
Evaluation

285

286

Comparisons For Bank VIVA


Hemal Jamiul Hasan

ISO 17025 is about accreditation, and ISO 9001 is about certification. ISO 17025 is for
laboratory accreditation, and ISO 9001 is for quality management. ISO 17025 governs the
quality of the product, and ISO 9001 does not govern the quality of the product. ISO 17025
contains a main clause (clause number 4-Quality management system) derived from ISO
9001:2000. ISO 17025 have five main clauses, and ISO 9001 have eight principles. ISO 17025
contains technical requirement, and ISO 9001 does not contain the technical requirement.
ISO 17025 contains the factors that determine the correctness and reliability of tests and
calibrations, but ISO 9001 does not include those factors related to correctness and
reliability.
Centralization and decentralization are important concepts in devolution of powers and
authority in an organization. Highly centralized structure refers to an organization where
decision making powers are in the hands of remaining few at the top and the structure is
called a top to bottom approach. Decentralized structure is one which adopts a bottom
to top approach and allows devolution of powers at lower levels. Decentralized structures
are seen as a necessity in todays context with bigger and bigger corporations coming into
existence. Centralization and decentralization are important concepts used in many other
fields too.
Evaluation is carried out to analyse the impact of the actual project and to see whether it
is in line with the agreed strategic plans. Assessment is the process of documenting, usually
in measurable terms, knowledge, skills, attitudes and faiths. Assessment of employee skills
can be very helpful to the organization. Assessment paves the way for the final evaluation
of the organization or the company as a whole. Evaluation reviews progress; it identifies
problems in planning or implementation. Evaluation aims at outcomes. Assessment aims at
execution.

Approach VS
Method

Approach refers to an act or means of coming near or approaching as in the expression


made an approach. In the expression needs a new approach, the word approach
has the sense of a way of dealing with a person or a thing. A method on the other hand
is a word meaning a way or a process. It refers to the manner in which a work is
executed. This is the main difference between approach and method. You approach a
problem with a view to tackle it. On the other hand you resort to a method with a view to
solving it. In other words you can say that the word approach is based on tackling things
whereas the word method is based on solving problems.

Evaluation VS
Monitoring

Through monitoring, you can review progress whereas through evaluation you can identify
problems in planning. Monitoring is more of a requirement. On the other hand, evaluation
is more of a tool. Evaluation helps in finding out whether the organization is working better
and efficiently wheras monitoring helps in identifying whether the plans are carried out
effectively. Evaluation forms the vision of an organization whereas monitoring becomes the
framework of the project. It can also be said that monitoring leads to evaluation.

287

Purchase VS
Procurement

288

Quality Assurance
VS Quality Control

In corporate world, the word procurement has come to be referred to the set of activities
that need to be performed to acquire the right material from the right vendor at the best
possible rates at just the right time to maximize benefits for the company. On the other
hand, purchase is just the transactional part of the entire process called procurement.
Purchase is the most basic form of procurement. Procurement involves much more than
simple acquisition of goods and services as negotiation as well as logistics is also
encompassed in this term.
While quality control is a set of activities designed to evaluate a developed product,
quality assurance or guarantee pertains to activities that are designed to ensure that the
development and maintenance process is adequate and the system meets its objectives.
Quality control focuses on finding defects or anomalies in the deliverables and checking if
the defined requirements are the right requirements. Testing is one example of a quality
control activity, but there are many more such activities that make up quality control.
Quality assurance ensures that the process is well defined and appropriate. Some
examples of quality assurance are methodology and standards development. Any quality
assurance review would typically focus on the process aspect of a project or task, for
example, are requirements being defined at a level of detail that is accepted and proper.

Copyright@ www.facebook.com/himurajbari88/

52

Banking Career In Bangladesh (BCB)

289

Leadership VS
Management

290

Vision VS Mission

291

MIS VS AIS

292

Decision Making VS
Problem Solving

293

Agenda VS Minutes

294

Accreditation VS
Certification

295

Motto VS Slogan

Comparisons For Bank VIVA


Hemal Jamiul Hasan

The biggest difference between leadership and management arises from the way they
motivate people who work around them as this sets the tone for all other aspects of an
organization. By definition, management has an aura or authority vested in it by the
company. Subordinates work under it, and largely do as they are told. This is transactional
style in that managers tell workers what to do and workers do because they are promised
a reward (salary or bonus). Management is normally paid to get things done within the
constraints of time and money. Management tends to come from stable backgrounds and
lead relatively comfortable lives. This makes them averse to taking risks and they seek to
avoid conflict as far as possible. In terms of people, they like to run a happy ship.
As mentioned above a vision is a concept or a goal that the seer or the individual strives
to achieve. Vision pertains to the ultimate goal of an individual, a firm, organization or a
country as a whole. Mission is the action pertaining to a group of individuals who have
united with a common intent. Mission pertains to a social organization, a nongovernmental organization or a political movement. For an example in a political
movement, the mission can be to create a political system that is fair and just. This
movement works towards achieving this mission.
This computer based information system is known as Management Information System
(MIS), today forms the backbone for any organization to function smoothly. MIS has
invaluable information that can be used effectively to evaluate past decisions and to plan
accordingly to predict future operational success. Accounting Information System, or AIS,
on the other hand is a subset of MIS and pertains to a system of keeping a record of
accounting books and financial statements along with sales and purchase records and
other financial transactions. This system is extremely crucial in maintaining the account
system of any organization.
Decision making in short can be called as the process of action plan. Action plan includes
the calculation of the time needed to solve the problem. It also looks at the time needed
for the implementation of the solution. It deals finally with the communication of the plan
to all those involved in the implementation of the solution. Problem solving consists in jotting
down the description of the various causes of the problem in terms of question such as
where, how, with whom and why. Decision making is all about finding solutions to all these
questions such as how, where, with whom and why through the forming a plan that has to
be implemented.
Agenda is the schedule of a meeting and tells the sequence of events during the meeting
to let the guests prepare in advance. Minutes refers to the official record of the
proceedings of a formal meeting. Minutes are important to remind what happened during
a meeting on a future date if people forget.
Accreditation is done by an approved agency that has been accepted as standard and
organizations apply for accreditation to prove their worth to outsiders. Certification is mostly
in the case of individuals though products are also certified by governmental agencies, to
maintain quality and to reassure consumers about the reliability and efficiency of these
products. Educational institutions apply for accreditation with the state university or the
Federal university. Certificates are awarded to individuals as in IT industry to confirm the
skills of people. Accreditation is a stamp of approval by a third party about procedures.
Motto is a phrase or sentence that contains a belief or an ideal. It works as a guiding
principle for an individual or an entire organization. Companies make use of motto to
motivate their employees and keep them visible at important places inside the premises.
Time is money. Honesty is the best policy. Time and money wait for none. Do not do unto
others what others dont want to do unto you. Be brave. A slogan is a catchy phrase or
sentence that used mostly by businesses and political parties to attract new members and
clients. It is also used by organizations, whether they are commercial or not. Religious and
charitable organizations make heavy use of slogans to keep their flock together. A slogan
can be a very powerful marketing tool as it can appeal to the customers of a company in
such a manner that they support the brand and be loyal to it. Slogans are simple but
impressive in the sense that they can be understood by all. Take a look at the slogans of
some of the popular companies: Life is good (LG), Think different (Apple), The king of beers
(Budweiser), American by birth, Rebel by choice (Harley Davidson).

Copyright@ www.facebook.com/himurajbari88/

53

Banking Career In Bangladesh (BCB)

296

297

298

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Takeover VS
Acquisition

Acquisitions and takeovers are quite similar to each other, and in both acquisitions and
takeovers, the acquirer firm purchases the target and both firms will operate as one larger
unit. The reasons for which either an acquisition or takeover occurs is also quite similar, and
usually occurs because combined operations can benefit both firms through economies
of scale, better technology and knowledge sharing, larger market share etc. During both
an acquisition and takeover, the acquirer is entitled to all assets as well as liabilities of the
target firm. The only major difference between the two is that a takeover is usually a hostile
act, whereas an acquisition is usually an agreed upon well planned operation.

Outsourcing VS
Contracting

Outsourcing, or rather offshoring, is a process where a company gives the contract of some
of its noncore business processes to companies in foreign countries to save on money and
time. Outsourcing has become controversial in recent times with people in western
countries feeling their jobs are being given to people in third world countries. Contracting
is a process where companies have a control of the outsourcing company but decide to
purchase goods or services as per a contract that is made in writing. When the supplier of
the service or product owns the business, then the process is termed as outsourcing, but
when the company receiving products or services owns the service providing company, it
is termed as contracting. In contracting, ownership of the supplier remains with the ordering
company, but it instructs the supplier on how to go about providing services

Permit VS License

There is very little difference between a license and a permit as both require permission
from authorities to carry on certain activities or business. Permits are restrictive and
temporary in nature whereas licenses are permanent. Permits require occasional
inspection and safety regulations and a person may be required to obtain permits even
after obtaining a license to start a business. A drivers license s a classic example of a
license that makes a person eligible to drive a car on the road whereas a drivers permit
imposes a restriction upon a person to have an older person sit behind him on the
motorcycle until he becomes eligible to drive a car or motorcycle on his own.
The decision between a lease and a license is an important one, since it defines the level
of authority the land lord has over their property. A lease agreement will give the landlord
less control and whereas, under a license, the landlord can conduct inspections and
ensure the property is maintained well. When making a decision to let out a property, a
landlord who trusts his tenants and would have no need to keep his rights of maintenance
and inspection will use a lease agreement. A landlord who, on the other hand, requires
more control and wishes to make sure his property is maintained and well kept will sign a
licensing agreement.
A car is said to be more fuel efficient than other cars in its class if it gives higher mileage
than other cars per liter of gas. Using the same inputs, achieving higher outputs is said to
be more productive than those achieving lower outputs. If an economy produces more
goods and services with the same inputs like natural resources and manual labor than
another economy, it is said to be more efficient than the other economy. Higher
productivity is not always a result of higher efficiency as there are other factors at work
also. A manufacturer is obviously more efficient than his competitors if he achieves lower
cost per unit of goods

299

Lease VS License

300

Efficiency VS
Productivity

301

Commercialization
VS Privatization

Commercialization refers to the process of turning a free activity into a paid one or
introducing a product that begins to sell whereas it was earlier free. Privatization refers to
taking government control in many activities and selling them to private enterprise.

Patent VS
Trademark

Patent gives the right to the inventors to stop other people from manufacturing their
invention. Trademark is a logo, image, text, or even sound that has the power to remind
people about the products and services of a company. Patent is given in the field of
inventions and mechanisms that have never been produced before. Even medical cures
(drugs and therapies) are considered under patents. Trademarks are used by businesses to
identify their goods or services.

Franchising VS
Licensing

In franchising, the very fact that the company name and logo is utilized by the franchisee
reflects upon the level of relationship between the company and the franchisee. The
company places its faith in the person and he has to maintain the quality and standards
of the product. In licensing, the company does not grant exclusive territorial rights to the
licensee and retains the right to grant more licenses in the same geographical area to
other persons as well. This becomes a headache for a person as he faces stiff competition
from others who are selling the same product. Licensing is beneficial in monetary terms as
there are better margins for the licensee.

302

303

Copyright@ www.facebook.com/himurajbari88/

54

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

CV is short for curriculum vitae and lists a persons past work experience, the description of
major projects undertaken, the academic qualifications and the personal skills that the
person possesses that determines their compatibility with the skills required for the job
applied for. The CV is more detailed. A resume, like the curriculum vitae, also lists the
summary of a persons past jobs and experience as well as educational background. The
resume is relatively shorter than a CV and is the primary tool used by most employers to
determine the compatibility of the candidate with the job opening.
Copyright covers the works of authorship like literary, musical and dramatic work. On the
other hand, patent protects those inventions that are new and useful. Copyrights are arts
based while patent are science-based protections. To apply for copyright , authorship must
be original and real medium. The requirements for patent are new, useful and non-obvious.
As the authorship work created, protection from copyright begins. While, patent protection
is not applicable, until patent is properly issued.

304

CV (Curriculum
vitae) VS Resume

305

Copyright VS Patent

306

Coupon Rate VS
Interest Rate

Coupon Rate is the yield of a fixed income security. Interest rate is the rate charged for a
borrowing. Coupon Rate is calculated considering the face value of the investment.
Interest rate is calculated considering the riskiness of the lending. Coupon rate is decided
by the issuer of the securities. Interest rate is decided by the lender.

Interim Dividend VS
Final Dividend

Dividends are profits that are distributed among the companys shareholders. There are a
number of different types of dividends including interim dividends and final dividends.
Interim dividends are paid from undistributed profits that have been brought forward.
Interim dividends may be paid quarterly or every six months depending on the reserves
that the company holds. Final dividends will be paid at the end of the financial year. Since
final dividends will be paid out once the companys end of year financial statements have
been prepared and audited, the decisions regarding final dividend payments will be
fuelled by more insights and information on the companys financial health. The main
difference between interim dividend and final dividend are the time period in which
dividend payments are made.

Preferred Stock VS
Common Stock

Both common stock and preferred stock represent the ownership interest in a firm, and are
entitled to dividends and capital gains and can be traded on a stock exchange at any
time. There are a number of differences between the two types of stock. Preferred
stockholders receive dividends before common stockholders. Preferred stock holders also
receive a fixed income, whereas common stockholders income will depend on the
companys performance; in the years that the company performs well common
stockholders will receive more dividends than preferred stock holders. Common
stockholders are entitled to votes, which is not the case for preferred stockholders.

NASDAQ VS Dow
Jones (DJIA)

The Dow Jones Industrial Average (DJIA) is one of the most widely used stock market
indexes. The DJIA tracks 30 stocks from 30 large U.S. firms that are the major players in their
respective industries. The companies that are included in the DJIA are companies that are
traded on the New York Stock Exchange. Companies such as Microsoft and Exxon Mobil
make up the DJIA, and the index is calculated by adding the price of the 30 stocks and
dividing the total by a number known a Dow divisor. The DJIA was founded by Charles
Down in 1896 and was made up of 12 stocks at the time. The DJIA is the most popular, best
known, and most widely quoted market index. The NASDAQ composite index tracks
around 2500 stocks that are traded on the NASDAQ stock exchange. The NASDAQ
composite index was founded in 1971 alongside the establishment of the NASDAQ stock
exchange, the worlds very first computerized stock exchange. The NASDAQ composite
index is followed by many professionals and investors since it coves a broader range of
stocks and provides a more comprehensive view of the performance of the smaller and
larger stocks. Alongside the index, NASDAQ also refers to the NASDAQ stock exchange in
which over 5000 stocks are traded. NASDAQ is an electronic computerized stock market
which was the very first of its kind to be established in 1971.

307

308

309

Copyright@ www.facebook.com/himurajbari88/

55

Banking Career In Bangladesh (BCB)

310

311

312

313

314

Comparisons For Bank VIVA


Hemal Jamiul Hasan

NASDAQ VS NYSE

There are a number of stock markets that operate around the world, out of which the New
York Stock Exchange (NYSE) and NASDAQ are two prominent stock markets in the United
States. The NYSE and NASDAQ are prominent stock exchanges in the United States in which
majority of the worlds equities are traded. As public exchanges, both NASDAQ and NYSE
are under obligation to follow the requirements that have been put forth by the Securities
and Exchange Commission (SEC). There are a number of differences between the stock
exchanges in terms of how they operate, the listing cost, types of stocks traded, etc. The
NYSE is an auction market in which the highest bid is matched with the lowest ask while the
NASDAQ is a dealers market in which dealers trade directly with investors. NYSE operates
electronic as well as floor trades, whereas NASDAQ is a completely computerized system.
NASDAQ is home to high tech companies that are startups (or recently publicly listed) with
great growth potential, whereas NYSE is home to some of the oldest most established firms;
this may be due to the fact that listing costs for the NYSE is much higher than for NASDAQ.

WACC VS IRR

IRR (Internal Rate of Return) is a tool used in financial analysis to determine the
attractiveness of a particular project or investment, and can also be used to choose
between possible projects or investment options that are being considered. IRR is mostly
used in capital budgeting and makes the NPV (net present value) of all cash flows from a
project or investment equal to zero. In simple, IRR is the rate of growth that a project or
investment is estimated to generate. It is true that a project might actually generate a rate
of return that is different to the estimated IRR, but a project that has a comparatively higher
IRR (than the other options being considered) will have a greater chance of ending up
with higher returns and stronger growth. WACC (Weighted Average Cost of Capital) is a
bit more complex than the cost of capital. WACC is the expected average future cost of
funds and is calculated by giving weights to the companys debt and capital in proportion
to the amount in which each is held (the firms capital structure). WACC is usually
calculated for various decision making purposes and allows the business to determine their
levels of debt in comparison to levels of capital. The following is the formula for calculating
WACC: WACC = (E / V) Re + (D / V) Rd (1 Tc). Here, E is the market value of equity
and D is the market value of debt and V is the total of E and D. Re is the total cost of equity
and Rd is the cost of debt. Tc is the tax rate applied to the company.

Expected Return VS
Required Return

Required return and expected return are similar to each other in that they both evaluate
the levels of return that an investor sets as a benchmark for an investment to be considered
profitable. The required rate of return represents the minimum return that must be received
for an investment option to be considered. Expected return, on the other hand, is the return
that the investor thinks they can generate if the investment is made. If the security is valued
correctly the expected return will be equal to the required return and the net present value
of the investment will be zero. However, if the required return is higher than the expected
rate the investment security is considered to be overvalued and if the required return is
lower than the expected the investment security is undervalued.

Swap VS Forward

Derivatives are special financial instruments that derive their value from one or more
underlying assets. Forwards and swaps are both types of derivatives that help organizations
and individuals hedge against risks. A forward contract is a contract that promises delivery
of the underlying asset, at a specified future date of delivery, at an agreed upon price
stated in the contract. A swap is a contract made between two parties that agree to swap
cash flows on a date set in the future. The major difference between these two derivatives
is that swaps result in a number of payments in the future, whereas the forward contract
will result in one future payment.

Derivatives VS
Equity

Equity and derivatives are financial instruments that are quite different to each other. The
main similarity between the two is that both equity and derivatives can be purchased and
sold, and there are active equity and derivative markets for such trade. Equity refers to the
capital contributed to a business by its owners; which may be through some sort of capital
contribution such as the purchase of stock. Derivative is a financial instrument that derives
its value from the movement/performance of one or many underlying assets. The main
difference between derivatives and equity is that equity derives its value on market
conditions such as demand and supply and company related, economic, political, or
other events. Derivatives derive their value from other financial instruments such as bonds,
commodities, currencies, etc. Certain derivatives also derive their value from equity such
as shares and stocks.

Copyright@ www.facebook.com/himurajbari88/

56

Banking Career In Bangladesh (BCB)

315

Collateral VS
Security

316

Capital Market Line


(CML) VS Security
Market Line (SML)

317

Arbitrage VS
Hedging

318

Arbitrage VS
Speculation

319

Investment VS
Speculation

320

Hedge Funds VS
Mutual Funds

321

Futures VS Options

322

Forward VS Futures

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Collateral refers to any asset that is pledged to the bank by the borrower when taking out
a loan; which the bank uses to recover losses in the event that the borrower defaults on his
loan. There are special types of loans that can be taken out by pledging securities as
collateral; this is referred to as securities based lending, where the borrower will pledge his
securities portfolio to obtain funding. A portfolio of securities is subject to fluctuation in value
(in response to market changes), and in the event that the portfolio value falls, the lender
may ask the borrower for additional collateral.
The SML and CML are both concepts related to one another, in that, they offer graphical
representation of the level of return that securities offer for the risk incurred. Both CML and
SML are important concepts in modern portfolio theory and are closely related to CAPM.
There are a number of differences between the two; one of the major differences is in how
risk is measured. Risk is measured by the standard deviation in CML and is measured by the
beta in SML. The CML shows the level of risk and return for a portfolio of securities, whereas
SML shows the level of risk and return for individual securities.
Traders in todays marketplace continuously use various tactics to obtain higher levels of
return, and to ensure that the levels of risk suffered are minimized. Arbitrage and hedging
are two such measures, which are quite different to each other in terms of the purpose for
which they are used. Arbitrage is where a trader will simultaneously purchase and sell an
asset with hopes to make a profit from the differences in the price levels of the asset that is
bought and the asset that is being sold. Hedging is a tactic used by traders to minimize
possible risk, and thereby loss in income resulting from changes in the movement, in price
levels.
The aim of both arbitrage and speculation is to make some form of profit even though the
techniques used are quite different to each other. Arbitrage traders take lower levels of
risk, and benefit from the natural market inconsistencies by buying at a lower price from
one market and selling at a higher price at another market. Speculation is done by trading
instruments such as stocks, bonds, currency, commodities, and derivatives, and a
speculator looks to make a profit through the rising and falling of the prices in these assets.
Speculation and investment are often times confused by many to be the same thing, even
though they are quite different to each other in terms of the asset that is being invested in,
the amount of risk taken, investment holding period and the expectations of the investor.
The main similarity between investing and speculating is that, in both instances, the investor
strives to make a profit and improve his financial returns. The major difference between the
two is the level of risk that is taken on. An investor tries to make satisfactory returns from
funds invested by taking lower and moderate levels of risk. A speculator, on the other hand,
takes a much larger amount of risk and makes investments that may yield abnormally large
profits or equally large losses.
Mutual funds and hedge funds are both managed by portfolio managers who select a
number of attractive securities, pull them into a portfolio and manage them in a manner
that provides the highest return to investors of the fund. A mutual fund represents a pool of
funds that have been collected from a number of investors which is then utilized in
investments such as stocks, bonds and other money market instruments. A hedge fund, on
the other hand, is much more aggressively managed and often undertakes more high level
and risky investment strategies.
Options and futures both are derivative contracts that allow the trader to trade the
underlying asset and obtain benefits from changes in prices of the value of the underlying
asset. An Options contract is a contract that is sold by the option writer to the option holder.
The contract provides the trader with the right and not the obligation to buy or sell an
underlying asset for a set price during a specified period of time. Futures contracts are
standardized contracts that list out a specific asset to be exchanged on a specific date or
time at a specified price. The exercising of a futures contract is an obligation and not a
right. The major difference between these two contracts is that the options contract gives
the trader an option as to whether he wants to use it, whereas the futures contract is an
obligation that does not give the trader a choice.
Functions performed by both futures and forwards contracts are similar to each other, in
that they allow the user of the contract to either buy or sell a specific asset at an agreed
upon price during a specific time period. Futures contracts are standardized contracts that
list out a specific asset to be exchanged on a specific date or time at a specified price.
Forward contracts personalized agreements between two private parties, which therefore,
make their terms and conditions much relaxed. Both forward contracts and futures
contracts are similar to each other in that they are both used to hedge risk and accomplish
the common goal of risk management.

Copyright@ www.facebook.com/himurajbari88/

57

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Primary Markets VS
Secondary Markets

Primary and Secondary markets refer to markets which assist corporations obtain capital
funding. The difference between these two markets lies in the process that is used to collect
funds. The Primary market refers to the market where new securities are issued by the
company that wishes to obtain capital and is sold directly to the investor. The secondary
market refers to the market where securities that have already been issued are traded.
Instruments that are usually traded on the secondary market include stocks, bonds, options
and futures. The main difference is that, in the primary market, the company is directly
involved in the transaction, whereas in the secondary market, the company has no
involvement since the transactions occur between investors.

Money Market VS
Capital Market

Money markets and capital markets provide investors access to finance which are used
for growth and further expansion, and both markets trade on computerized exchanges.
The main difference between the two markets is the maturity periods of the securities
traded in them. Money markets are for short term lending and borrowing, and capital
markets are for longer periods. The forms of securities traded under both markets are
different; in money markets, the instruments include treasury bills, certificates of deposit,
bankers acceptances, commercial papers and repo agreements. In capital markets,
instruments include stocks and bonds. As an individual investor, the best place to invest
your money would be in the capital markets, either the primary market or secondary
market. In the perspective of a large financial institution or corporation looking for larger
funding requirements, the money market would be ideal.

325

Call Option Vs Put


Option

If you exercise call option, you enter into a contract with a broker that authorizes you to
buy a stock at a price anticipated by you at a specified date. This price is known as strike
price. If your anticipation is right and the stock prices rise more than the strike price, you
have the right to get them at the strike price which is how you make profit through call
option. On the other hand a put option is just the opposite of a call option and here you
strike a bargain to sell shares at the strike price. If the prices of the share do fall below the
strike price, you can buy them from the market at the prevalent prices and then sell them
to the buyer at strike price thus making money.

326

Cash Dividend VS
Stock Dividend

Cash dividends are cash distribution of net income to its stockholders. Whereas, stock
dividends are the distribution of additional shares of the same class of stock.

327

Revenue VS Gain

Revenues are the inflows or other enhancement of the assets or settlement of the liabilities
during a given period that result from the entity's ongoing major operation. Gains are
increases in the equity from the peripheral or incideental transactions and from all other
transactions except those resulting from revenues or investment by owners.

328

Expense VS Loss

Expenses are outflows or using up of the assets or incurrences of the liabilities or


combination of both that result from the entity's ongoing major operation. Losses are
decreases in equity from the peripheral or incindental transactions of an entity and from
all other transactions except those resulting from expenses or distribution to owners.

Mudaraba VS
Musharaka

Mudaraba is a partnership in profit whereby one party provides capital and the other party
provides skill and labour. The provider of capital is called "Shahib al-maal", while the
provider of skill and labour is called "Mudarib". So, Mudaraba may be defined as a contract
of partnership where the Shahib al-maal provides capital to the Mudarib for investing it in
a commercial enterprise by applying his labour and endeavor. Both the parties share the
profit as per agreed upon ratio and the losses, if any, being borne by the provider of funds
i.e. Shahib al-maal except if it is due to breach of trust i.e. misconduct, negligence or
violation of the conditions agreed upon by the Mudarib. If there is any loss incurred due to
the reasons mentioned above, the Mudarib becomes liable for that. Musharaka may be
defined as a contract of partnership between two or more individuals or bodies in which
all the partners contribute capital, participate in the management, share the profit in
proportion to their capital or as per pre-agreed ratio and bear the loss, if any, in proportion
to their capital/equity ratio.

323

324

329

Copyright@ www.facebook.com/himurajbari88/

58

Banking Career In Bangladesh (BCB)

330

331

332

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Bai-Murabaha VS
Bai-Muajjal

The term Bai-Murabaha has been derived from Arabic words 'Baiun' and 'Ribhun'. The
word 'Baiun means purchase and sale and the word 'Ribhun' means an agreed upon
profit. Bai-Murabaha means sale on agreed upon profit. Bai-Murabaha may be defined
as a contract between a buyer and a seller under which the seller sells certain specific
goods (permissible under Islamic Shariah and the Law of the land), to the buyer at a cost
plus agreed profit payable in cash or on any fixed future date in lump-sum or by
installments. The profit marked-up may be fixed in lump-sum or in percentage of the cost
price of the goods. The term Bai-Muajjal has been derived from Arabic words Baiun and
Ajalun. The word Baiun means purchase and sale and the word Ajalun means a fixed
time or a fixed period. " Bai-Muajjal " means sale for which payment is made at a future
fixed date or within a fixed period. In short, it is a sale on Credit. Bai-Muajjal may be defined
as a contract between a Buyer and a Seller under which the Seller sells certain specific
goods permissible under Islamic Shariah and Law of the land) to the Buyer at an agreed
fixed price payable at a fixed future date in lump sum or within a fixed period by fixed
instalments. The seller may also sell the goods purchased by him as per order and
specification of the Buyer. In this Bank, Bai-Muajjal is treated as a contract between the
Bank and the Client under which the Bank sells the goods, purchased as per order and
specification of the Client, to the client at an agreed price payable at any fixed future
date in lump sum or within a fixed period by fixed instalments. Thus it is a Credit sale of
goods by which ownership of the goods is transferred by the Bank to the Client but the
payment of sale price by the Client is deferred for a fixed period.

Bai-Salam VS BaiIstisnaa

The term Bai-Salam has been derived from Arabic words Baiun and Salamun. The word
Baiun means purchase and sale and the word Salamun means advance. Bai-Salam
means advance purchase and sale. Bai-Salam may be defined as a contract between a
Buyer and a Seller under which the Seller sells in advance the certain commodity
(ies)/product(s) permissible under Islamic Shariah and the law of the land to the Buyer at
an agreed price payable on execution of the said contract and the commodity
(ies)/product(s) is/are delivered as per specification, size, quality, quantity at a future time
in a particular place. In other words, Bai-Salam is a sale whereby the seller undertakes to
supply some specific Commodity (ies) /Product(s) to the buyer at a future time in exchange
of an advanced price fully paid on the spot. Here the price is paid in cash, but the delivery
of the goods is deferred. Istisna'a is a contract between a manufacturer/seller and a buyer
under which the manufacturer/seller sells specific product(s) after having manufactured,
permissible under Islamic Shariah and Law of the Country after having manufactured at
an agreed price payable in advance or by instalments within a fixed period or on/within a
fixed future date on the basis of the order placed by the buyer.

Murabaha Import
Bill (MIB) VS
Mudaraba Post
Import (MPI) VS
Murabaha Trust
Receipt (MTR)

Payment made by the bank against lodgement of transport documents of goods imported
through L/C is called MIB. It is an interim investment for a maximum period of 21 days
connected with import and is generally liquidated against payment usually made by the
party for retirement of the documents for release of imported goods from the customs
authority. In conventional banking this type of investment is called Payment Against
Document (PAD). Normally importer pay the duty & sales tax of the impoted goods after
arrival at the port. Due to shortage of fund or some other reasons, sometimes importer
approach the L/C opener bank to assist him for retirement of the imported goods. In some
cases importer do not come forward to retire the goods. In these cases the L/C opener
bank themselves arrange to retire the goods by pledge in Godown under banks lock &
key. This type of payment (forced loan) is called MPI. This is a temporary arrangement for
a maximum period of 90 days. Within this time limit, the importer borrower will release the
goods at a time or gradually after making payment to the bank. In traditional banking this
type of investment is called LIM (Loan against Imported Merchandise) or LAM (Loan
Against Merchandise). MTR is a type of investment allowed by a bank on trust to his
experienced, reliable & reputed importer for retirement of shipping documents and release
the imported goods. Under this arrangement the importer borrower will deposit the sale
proceeds of imported goods which are under his control at a time or gradually within a
maximum period of one year. In traditional banking this type of facility is called Trust
Receipt (TR).

Copyright@ www.facebook.com/himurajbari88/

59

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

Pre Shipment
Finance VS Post
Shipment Finance

Pre Shipment finance is a short term working capital finance specially provided to an
exporter against the documentary evidence of having entered into export commitment.
Pre Shipment Finance is granted at the stage prior to the shipment of goods and such
finance is given to procure raw material, for paying manufacturing and packing charges
and payment of insurance premium and freight. As and when the goods are shipped and
shipping documents are obtained the pre shipment finance is to be liquidated against the
proceeds of export documents tendered. The banks grant pre shipment finance against
documentary evidence either by way of an export letter of credit or a contract. Letter of
Credit constitutes the most frequently used instrument for export of goods from
Bangladesh. Readymade garments, which comprise a large chunk of Bangladeshs
export, are invariably exported against L/C because the underlying L/C constitutes the
basis for opening Back to Back L/C (both local and foreign) for procuring fabric and
accessories. The Pre Shipment finance is categorized broadly as per following: 1. Back to
Back L/C (Inland and Foreign), 2. Export Cash Credit (ECC), 3. Packing Credit (PC). This
type of credit refers to the credit facilities extended to the exporters by bank after shipment
of the goods against export documents. Necessity for such credit arises as the exporter can
not afford to wait for a long time for payment to local manufacturers/suppliers. Before
extending such credit, it is necessary to obtain report on creditworthiness the exporters and
financial soundness of the buyers as well as other relevant documents connected with the
exporter in accordance with the rules and regulations in force. Banks in our country
extended post-shipment credit to the exporters through: 1. Negotiation of Documents
under L/C., 2. Purchase of DP & DA bills., 3. Advance against Export Bills surrendered for
collection.

Master LC VS Back
To Back LC

When a business deal is made for buying & selling between buyer & merchandiser then the
buyer gives permission to his bank to open an L.C. of approx amount & send it to
merchandisers bank. Then this bank informed to merchandiser that an L.C. is accepted.
This L .C is called MASTER L.C. Then MERCHANDISER takes decision about the manufacturer
for collecting raw materials .when merchandiser choose supplier then he tell the supplier
to send a pro-forma invoice. After getting p .I. merchandiser tell to his bank to open an L
.C send to the suppliers bank. This L. C is opened from mother L .C which is given to
merchandiser. This L .C is called back to back or b to b L.C.

335

Import LC VS Export
LC

Import LC is used for import of goods from other countries. It could either be a sight LC
(payable immediately) or deferred LC (payable at a specific date in the future). Import
LC is opened by the bank on behalf of its customer for the import of raw materials, capital
machinery, consumer goods, food, chemicals, vehicles, etc. Margin is collected from the
customer and kept in a separate account. On receipt of documents from the negotiating
bank, payment is made by debiting the PAD account in the customers name for sight LCs
or sending an acceptance, undertaking to pay at a later date (for usance LCs). Export LC
is extensively used in Foreign Trade to facilitate the smooth conduct of the export business.
Banks play the role of intermediaries to get the transaction through, even though the buyer
and the seller may not know about each others background. Export LCs clear the
uncertainty between the buyer and the seller with the bank undertaking to settle the
obligations in time. Export LC in favor of the customer is received by the bank, which
advises the LC to the customer. When the customer ships the goods as per LC terms and
submits the relevant documents to the bank, the bills are either purchased or sent for
collection to the LC issuing bank. The amounts drawn against Export LCs are endorsed on
the back of the original LC.

336

Loan against
Imported
Merchandize (LIM)
VS Loan against
Trust Receipt (LATR)

LIM is the short-term loan to the Importer, if he fails to retire the bill within the stipulated time.
In LIM, after releasing the goods from the Customs authority, the possession of the goods
remains with the Bank i.e. under banks lock & key. Like Lim, LTR is Post Shipment Import
Trade finance given by the Bank to the Importer. Difference is, in Lim, the possession of the
released goods remains under banks control but in LTR, the Goods remains with the
Importer. But he is holding the goods not as their owner but as an agent for the Bank.

337

Usance LC VS
Deferred LC

ULC: Required bill of accepatance for accepatance, used by the industrial units basically
for raw material procurement, maturity is determined upon presentation of documents
and calculated from the certain point of time. DLC: do not require bill of exchange, date
of payment at maturity is defined and mentioned in LC.

333

334

Copyright@ www.facebook.com/himurajbari88/

60

Banking Career In Bangladesh (BCB)

338

Capital Account VS
Current Account

339

Primary Security VS
Collateral Security

340

Advising Bank VS
Nominated Bank

341

Advising Bank VS
Confirming Bank

342

Expansionary
Monetary Policy VS
Contractionary
Monetary Policy

343

Conventional
Banking VS Islamic
Banking

344

Recessionary Gap
VS Inflationary Gap

345

Peak Of Business
Cycle VS Trough Of
Business Cycle

Comparisons For Bank VIVA


Hemal Jamiul Hasan

The current account of a country consists of all transactions relating to trade in goods and
services and unilateral (or unrequited) transfers. Service transactions include costs of travel
and transportation, insurance, income and payments of foreign investments, etc. Transfer
payments relate to gifts, foreign aid, pensions, and private remittances, charitable
donations etc. received from foreign individuals and governments to foreigners. The
capital account of a country consists of its transactions in financial assets in the form of
short-term and long-term lendings and borrowings, and private and official investments.
In other words, the capital account shows international flow of loans and investments, and
represents a change in the countrys foreign assets and liabilities. There are two types of
transactions in the capital accountprivate and government. Private transactions include
all types of investment: direct, portfolio and short-term. Government transactions consist of
loans to and from foreign official agencies.
Primary Security is one which is deposited by the borrower himself and thus provides the
main cover for the advance made. Primary security may be either personal Security or
Impersonal security or both. A form of secondary protection sometimes required by a bank
and intended to guarantee a borrower's performance on a debt obligation. The primary
security on a substantial business loan is typically the thing that is being financed, such as
a factory, company car or shipment, but secondary or collateral security might also be
requested by a bank to help assure that the loan will be repaid.
Advising bank means the bank that advises the credit at the request of the issuing bank.
Nominated Bank means the bank with which the credit is available or any bank in the case
of a credit available with any bank.
Advising bank means the bank that advises the credit at the request of the issuing bank.
Confirming bank means the bank that adds its confirmation to a credit upon the issuing
bank's authorization or request.
The central bank of a country can adopt an expansionary or contractionary monetary
policy. An expansionary monetary policy is focused on expanding, or increasing, the
money supply in an economy. On the other hand, a contractionary monetary policy is
focused on decreasing the money supply in the economy. The central bank uses its
monetary policy tools to increase or decrease the money supply.
In Conventional Banking, money is a commodity besides medium of exchange and store
of value. Therefore, it can be sold at a price higher than its face value and it can also be
rented out. Time value is the basis for charging interest on capital. Interest is charged even
in case the organization suffers losses by using bank's funds. Therefore, it is not based on
profit and loss sharing. While in Islamic bank, Money is not a commodity though it is used
as a medium of exchange and store of value. Therefore, it cannot be sold at a price higher
than its face value or rented out. Profit on trade of goods or charging on providing service
is the basis for earning profit. Islamic bank operates on the basis of profit and loss sharing.
In case, the businessman has suffered losses, the bank will share these losses based on the
mode of finance used (Mudarabah, Musharakah).
If real GDP < Potential real GDP (full employment GDP), then a recessionary gap exist. At
the same time: Unemployment rate > natural rate of unemployment. Since more job
seekers are in the market, they tend to settle with a lower wage. Lower wage will lower the
AS curve and causing the price to decrease. Lower price will increase consumption. This
process will continue until the economy reaches the long run equilibrium (potential real
GDP). If real GDP > Potential real GDP (full employment GDP), then an inflationary gap
exist. At the same time: Unemployment rate < natural rate of unemployment. Since job
seekers are less than job openings in the market, employers are forced to raise the wage
to attract new workers. High wage will decrease the AS, and raise the price. Higher price
will lower consumption. This process will repeat until the long run equilibrium is reached.
A sustained period in which real GDP is rising is an expansion; a sustained period in which
real GDP is falling is a recession. The point at which an expansion ends and a recession
begins is called the peak of the business cycle. Real GDP then falls during a period of
recession. Eventually it starts upward again (at time t2). The point at which a recession ends
and an expansion begins is called the trough of the business cycle.

Copyright@ www.facebook.com/himurajbari88/

61

Banking Career In Bangladesh (BCB)

Comparisons For Bank VIVA


Hemal Jamiul Hasan

346

Tier 1 Capital VS Tier


2 Capital VS Tier 3
Capital

TIER 1 CAPITAL called 'core capital' comprises of highest quality of capital elements that
consists of: a) paid up capital b) non-repayable share premium account c) statutory
reserve d) general reserve e) retained earnings f) minority interest in subsidiaries g) noncumulative irredeemable preference share h) dividend equalization account. TIER 2
CAPITAL called 'supplementary capital' represents other elements which fall short of some
of the characteristics of the core capital but contribute to the overall strength of a bank
and consists of: a) general provision b) revaluation reserves (for fixed assets, securities,
equity instrument etc) c) all other preference share d) subordinated debt. TIER 3 CAPITAL
called 'additional supplementary capital' consists of short term subordinated debt (original
maturity less than or equal to five years but greater than or equal to two years) would be
solely for the purpose of meeting a proportion of the capital requirements for market risk

347

Internal Control &


Compliance Risk VS
ICT Risk

INTERNAL CONTROL AND COMPLIANCE RISK arises from error and fraud in operating
activities due to lack of standard internal processes, people and systems. ICT RISK arises
from unauthorised access to internal server, illegal tempering and malicious actions in
information systems.

348

Basel I VS Basel II
VS Basel III

349

Credit Risk VS
Operational Risk VS
Market Risk

The first accord was the Basel I. It was issued in 1988 and focused mainly on credit risk by
creating a bank asset classification system. This classification system grouped a bank's
assets into five risk categories: 0% - cash, central bank and government debt and any
OECD government debt, 0%, 10%, 20% or 50% - public sector debt, 20% - development
bank debt, OECD bank debt, OECD securities firm debt, non-OECD bank debt (under one
year maturity) and non-OECD public sector debt, cash in collection, 50% - residential
mortgages, 100% - private sector debt, non-OECD bank debt (maturity over a year), real
estate, plant and equipment, capital instruments issued at other banks. Basel II improved
on Basel I, first enacted in the 1980s, by offering more complex models for calculating
regulatory capital. Essentially, the accord mandates that banks holding riskier assets should
be required to have more capital on hand than those maintaining safer portfolios. Basel II
also requires companies to publish both the details of risky investments and risk
management practices. Basel II uses a "three pillars" concept (1) minimum capital
requirements (addressing risk), (2) supervisory review and (3) market discipline. The first pillar
deals with maintenance of regulatory capital calculated for three major components of
risk that a bank faces: credit risk, operational risk, and market risk. The second pillar provides
a framework for dealing with systemic risk, pension risk, concentration risk, strategic risk,
reputational risk, liquidity risk and legal risk, which the accord combines under the title of
residual risk. The third pillar aims to complement the minimum capital requirements and
supervisory review process by developing a set of disclosure requirements which will allow
the market participants to gauge the capital adequacy of an institution. "Basel III" is a
comprehensive set of reform measures, developed by the Basel Committee on Banking
Supervision, to strengthen the regulation, supervision and risk management of the banking
sector. These measures aim to: (i) improve the banking sector's ability to absorb shocks
arising from financial and economic stress, whatever the source, (ii) improve risk
management and governance, (iii) strengthen banks' transparency and disclosures. The
reforms target: (i) bank-level, or microprudential, regulation, which will help raise the
resilience of individual banking institutions to periods of stress. (ii) macroprudential, system
wide risks that can build up across the banking sector as well as the procyclical
amplification of these risks over time.
A credit risk is the risk of default on a debt that may arise from a borrower failing to make
required payments. The credit risk component can be calculated in three different ways
of varying degree of sophistication, namely standardized approach, Foundation IRB,
Advanced IRB and General IB2 Restriction. IRB stands for "Internal Rating-Based Approach".
Operational risk is "the risk of a change in value caused by the fact that actual losses,
incurred for inadequate or failed internal processes, people and systems, or from external
events (including legal risk), differ from the expected losses". For operational risk, there are
three different approaches basic indicator approach or BIA, standardized approach or
TSA, and the internal measurement approach (an advanced form of which is the
advanced measurement approach or AMA). Market risk is the risk of losses in positions
arising from movements in market prices. For market risk the preferred approach is VaR
(value at risk).

To help others is the best way of being happy


[Hemal Jamiul Hasan]

Copyright@ www.facebook.com/himurajbari88/

62