Problem with giving service for the society in case of CBE Finkile Branch

CHAPTER ONE

INTRODUCTION

1.1. Background of the organization

The state Bank of Ethiopia was found in 1942 with an objective forming the duties of both
commercial and central bank in 1963 established as Share Company to take over the commercial
banking activities of the state bank of Ethiopia. In the 1974 revolution, commercial bank of
Ethiopia got its strength by emerging with privately owned Addis Ababa Bank. Since then it has
been playing significant role in the development end over the country.

The Commercial Bank of Ethiopia, which is striving to embark in to world class commercial
Bank, rendering state of the art and reliable service to its millions of customers both locally and
abroad. The business strategy of the bank focus on the stake holders it serves. On Nov 30, year
2013 the number of branches reached 738 and stretched across the length breadth of the country.
CBE combines a wide capital base with more than 14356 talented and committed employees. In
2013 whom it regard as its key asset for banking development.

The state owned commercial bank of Ethiopia still dominates the market in terms of asset
deposit, capital and customers base and branch network, deposit the growing competition from
private Bank over the last 15 years. This make it one of the most reliable and strong commercial
Bank in the country and the region. Its strong capital base above 67 years of rich experience in
the market and large branch network throughout the country enable the bank to accommodate
large demand for banking service, bank from private and public companies and to increase its
overall revenue on sustainable bases.

VISION
To become world class commercial bank in the year of 2020. The term world class in this context
presumes efficiency; good cooperate with governance and move toward best international
banking practices.

MISSION
They are committed to maximizing share holders value through enhanced financial
intermediation and unparallel customer’s satisfaction. They strongly believe that reliability and
public confidence is the base of our success.

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 Problem with giving service for the society in case of CBE Finkile Branch

1.2 Background of the study

Different change and factor have been influenced giving service performance in recent year.
Technology announcement and regularity bodies have caused the service policy to re examine
its purpose intention and methodology because of this the profession has improved from
transaction based approach to arise based focus. Therefore all these change have affected the
servicing performance.

Although it is difficult to remove poverty from its roots ,it is how ever possible to reduce
it to the minimum and saving can be prove to be a powerful instrument in this direction
.societies can also be organized for people living in back word areas and belonging to
the socially under privileged sections of the societies .people can get employment
opportunity through the various projects ,planned and executed by these societies and
the activities of labour ,capital organization and enterprise can be properly coordinated
.So that ,since societies have a great contributions in the development of a nation, there
should be a need of bank service for them from external parties.
Based on the above facts the study investigation is to assess the challenges or problems
of commercial bank of Ethiopia for giving services to the primary societies.

Commercial bank of Ethiopia Finkile branch was established date 2013-05-24 with the manager
name was Asfawu Tilahun. It is sub branch of Haramaya, the distance from Haramaya 5km and
Addis Ababa 525 km.

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 Problem with giving service for the society in case of CBE Finkile Branch

1.3 Statement of the problem

Banking performance is examination of internal and external system in which functions by

measuring and evaluating effectiveness of other control. External performance is an
independent appraisal function established with an organization to examine and control its
activities as a service to the society. External performance review service procedures to
ascertain whether the performances are consistent with established objective and goal.

The customer or client’s broad view of trends and control helps raise awareness of risks before
they become problems that can affect virtually every business unit within an organization. The
researchers observed that previous researches conducted by other researchers did not show in
how to encourage the organization to give services to the society and prepare strong relation
with customer especially to student of Haramaya University. This study would try to assess the
performance of banking system through analyzing and giving service practice of CBE Finkile
Branch and recommend or give solution for the problem observed so far.

Generally, the following questions are considerable in the servicing

practice
 Does the employee of the organization apply service standards, procedures and
policies in working environment?
 Does the employee of the organization proceeding on the basis of independent
professional?
 Does the external performance in CBE are skilled in dealing with people in
communicating effectively?

 Does the client of the commercial bank of Ethiopia at Finkile branch give service
to customers especially to the students found in Haramaya University?

 Does the bank gives services properly, timely, in good manner?

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 Problem with giving service for the society in case of CBE Finkile Branch

1.4 .objective of the study

1.4.1. General objective

The general objective of the study is to evaluate and examine whether the commercial bank of
Ethiopia at Finkile branch performing practice in giving service to the society is effective and
efficient or not.

1.4.2 Specific objectives

i. To assess the challenges related with rules and regulations of lending process of
commercial bank of Ethiopia.
ii. To assess the challenges of commercial bank of Ethiopia due to banking risk in
giving service to the societies.
iii. To examine the challenges of related with competitors of commercial bank of
Ethiopia in financing societies.
iv. To identify the quality of service of worker in commercial bank of Ethiopia.

1.5. Significance of the study

This study would contribute many of organizations and various individual:

 Various problems that related to giving services would be

investigated and presented to the organizations for the purpose
of coping with it.
 The finding of this study suggests the possible solution of
external service related to problems that leads the organization
to apply the proper in giving service principle.
 The finding of this research helps the researchers to elaborate
the knowledge and know how about workers serve the society.
 This helped the clients in this organization to know their role in
their profession.

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 Problem with giving service for the society in case of CBE Finkile Branch

So that, the study believed to be that it fills the gap in formulating the existing working
and financing strategies of the bank. Furthermore the boundary of the study is limited
the challenges of commercial bank of Ethiopia; Finkile branch the researcher hope that
this study will used for:

 For the users.

 As a sources of document.
 As an information for other bank and financial institutions.

In addition, the members of the bank workers of financing, students of Haramaya

University, and any person who need to know the principles of financing and constraints
of lending process will get clear information from this study.

1.6. Scope of study

As the researcher is not investigating all commercial banks of Ethiopia region the study
was limited only to Finkile branch and also the study does not go further rather than
assessing the problem of commercial bank of Ethiopia in giving service to societies

1.7. Limitation of study

During the process of gathering primary and secondary data for the purpose fulfilling
this investigation the researcher had committed with various difficulties that will be a
barriers for the study. These are:

 Shortage of time.
 Lack of finance or budget.
 Lack of reference material.

Even though the above constraints are faced by the researcher during the time of the
research work, the researcher had strictly worked to cover those gaps to run the study
accordingly.

Through sharing data gathering activities, the researcher fastens the work and solved
the time constraints. Financial constraints was also solved through sharing the costs by
collecting from family and other relative together .Even though, there is shortage of
written materials and others. But researcher made struggle to come up with the
solution through efficiency and effective performance, so that; researcher can
confidently say this investigation is successfully performed.

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 Problem with giving service for the society in case of CBE Finkile Branch

CHAPTER TWO

LITERATURE REVIEW

2.1 Theoretical review

Devine defines a commercial bank as a mutual society formed composed and governed
by working people themselves for encouraging regular savings and planting small loans
on casters’ of interest and payment.

A Commercial bank must be essentially for merchant in character must in credit, which
satisfies the requirements ‘idea credit. (Hajela, 1990)

2.1.1difinition of commercial bank

The aim of commercial banks should be to satisfy the needs of individual customers in a
local community. There should be one rule operating local money for local development
commercial banks should be focus on customers who are farmers small entrepreneurs
and locals what is most important is to combine merchant values with effectiveness if a
banks aim is profit the bank should become the commercial one.

The aim of commercial bank should be to correct faults of market and solve its
members .The aim of commercial is to solve their members and focuses on the needs of
the local society therefore commercial ideology should be combined with economics in
the rural economy the first and for most farming is natural base for commercial banks.

2.1.2 Objective of commercial bank

The primary objectives of a commercial are to encourage thrift and self and to raise
resources by way of deposits and to lend for any worker or investor. Hence the basic
tenet of the commercial bank is to encourage the saving habits of its members.

Commercial banks by pooling their saving create a joint guarantee for their borrowings
and consequently the first steps towards the grants of commercial bank is organization
of individual saving in collective form .The movement is very definitely a school for first
and commercial worker saving credit first the basis fund, which are then employed for
granting credits and for securing the confidence of depositors and client. (Yonas Chaka,
2006E.C)

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 Problem with giving service for the society in case of CBE Finkile Branch

Though, the customers of the bank are involved to get services and help from our
branch that found in Haramaya university especially students HU are invited to be
served by our organization using:

 ATM
 Mobile banking system
 Online system
 Deposit saving and credit taking
 Use western union, xpress money, money gram etc.by yonas Chaka

2.2 historical reviews

2.2.1 Commercial bank of Ethiopia

In any country there is a banking regulation act (as applicable commercial societies). In
Ethiopia by the time being there was no commercial bank, which is in operation but, the
commercial bank of Ethiopia has got a license and it is presently in the process of
formation, every legality aspect of the bank has been already done, but country’s
banking regulation state that a commercial institution with a share capital (paid up) of
75,000,000 and above is eligible, to become a commercial bank; commercial bank of
Ethiopia paid capital did not rich the specified amount, this the only left out
requirement to begin the banks operation. As per my perception the paid capital set by
the country’s banking regulation is too much is this poorest country in the world, so the
government with the concerns body has better come access the solution for such
problem. . (TadesseKenea, 2004)

2.2.2commercial bank of Ethiopia: finkile branch

The commercial bank of Ethiopia before have many branch that found in Ethiopia from
those finkile branch is one of the most and modern that established in 2005E.C.even
though within two years it have more than 2000 customers,30clients,one manager,
supervisor and the like. (Asfaw tilahun 2006).

Despite of their performance there are many problems that phase the action, some are
as follows

 Lack of awareness in saving money

 Lack of experience to use
 Problem with network
 Cutting of fibber optics
 Problem with time schedule and the like are some problem that found in
finkile branch.

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 Problem with giving service for the society in case of CBE Finkile Branch

CHAPTER TH REE

3. METHODOLOGY

3.1 DESCRIPTION OF THE STUDY AREA

The study was conducted in Oromia regional state, Eastern Hararge zone in Bate town
which is located 525Km from capital city of Ethiopia, Addis Abeba. Bate town is
bounded in four directions by different district. Those are by Eastern- Harar district, by
western- Haramaya woreda, by Southern – Kobolcha and by Northern – Fedis district.
According to census of 2012 the total population of the town was 5,352. Among these
2,201 are males and 3151are females. Total area of occupation is 249.35 square
kilometres. The population density of the town per square kilometre is 227.25. The
climate condition of the Bate town is woynadega. In this area chat and sorghum is the
very well-known cultivated products. Especially this area is well known by export chat
to abroad country. In this area there are different types of bank. Such as NIB
international Bank, Awash Bank, commercial Bank and cooperative Bank of Oromia are
there. From these the study was conducted on commercial bank of finkile branch.

The researcher choice Bate commercial bank of Ethiopia (CBE) for the following
reasons.

 this bank is found near to were the researchers live,

 it is comfortable for obtaining full information,
 It is also less in transportation cost.
 The researcher access the problem directly

3.2 Types and Source of data

The study was conducted with both primary and secondary data sources. Primary data
sources are from the respondents and collected through interview and semi- structure
questionnaires. And also the secondary data was collected from the annual reports,
pamphlets and some records of the bank as well as some books and magazines from the
library.

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 Problem with giving service for the society in case of CBE Finkile Branch

3.3 Sample size and Sample techniques.

By taking into account sufficiently and consistency of data that they have, the study was
conducted with purposive sampling techniques. In this technique the researcher used as
the sample from primary societies who ever happens to be accessible good information.
And also those societies should be founded nearest to the study area. From the total
population four (4) primary societies, the researcher selected and primary societies as a
target groups purposively.

The total numbers of bank members are 30. And then the researcher was taken 10
individuals from the members. Besides, the researcher took half of the members of bank
randomly select to give the necessary information for the study. So, that the study has
14 members of sample size. 10 participants’ were from members of the bank and 4
participants were from members of primary societies.

3.4 Method of data collection

The study was used a wider range of methods including observation, interview and
questionnaire that contain both open ended and closed questions.

Through these collection methods the researcher was collected both primary and
secondary data, the primary data would be collected by observation, interview,
questionnaire and key information interview. The secondary data was
collected/gathered from secondary data sources: such as review of books publish
research report.

3.5Method of data analysis

. To analyze the data collected the researchers use qualitative approach in which different factor
or data collected were described by word without any numerical measures.

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 Problem with giving service for the society in case of CBE Finkile Branch

CAPTER FOUR

4. RESULT AND DISCUSSION

4.1. The study of findings

According to the study under taken, commercial bank of Ethiopia finkile branch had
been faced with enormous challenges or problems from its inception till know. To
tackle those constraints for better performance future development activities, the study
was raised a possible solution and suggestions for the bank as well as other concerned
bodies.

4.2. Problem faced by commercial bank

The following issue based on the finding and analysis that cause for the problems.

 Commercial bank of Ethiopia finkile Branch are not qualified because they
lack knowledge and knowhow of current principles and standard of service
function..
 Procedures are not properly implemented by the employees of the
commercial bank of Ethiopia Finkile branch..
 The customers and concerned body did not aware the employees about the
activities.
 The planned and properly designed training and development program is
not prepared over though there is training in the organization
 The researchers know that the organizations data were needed by different
parties for different reasons. The Commercial Bank of Ethiopia Finkile
Branch data is not available for external parties

4.3. Possible solution.

Among the solutions which were gotten from the respondents, the following are the
crucial and advantageous one.

The bank should develop human resource capacities and knowledge of values,
advantages and benefit of services through training and education. Should develop its
business potential; including entrepreneurial and managerial improve social and
economic wellbeing, taking into account the need to eliminate all form of discrimination.

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 Problem with giving service for the society in case of CBE Finkile Branch

The government should provide a supportive policy and legal frame work consistent
with the nature and functions of commercial bank and guided by the commercial values
and principle. The bank should develop the technical and vocation (skill)
entrepreneurial and managerial abilities, knowledge of business potential, and general
economic and social policy skills of members, workers and managers and improve their
access to information and communication technologies.

The bank should promote the adoption of measures that provide for safety and health in
the work place of the bank.

4.3.1 Manpower
In many organizations, lack of manpower in giving service is a major challenge. The
number of customer determines the complexity of the organization for the society.
According to the comments of customers of commercial Bank of Ethiopia Finkile
Branch, before applying the currently in use smart banking system, there was only few
bank.

Following the government’s strategy of business process re engineering, hiring the right
person to the right title to keep the quality of the activities and to safeguard both the
employees on the service area in the organization. Their ability is mainly approved by
keeping the quality of their controllers’ activities, i.e, more than any of other staff,
branch controllers should be conscious to take percussion on banking operation.

4.3.2 Attitude of the society

According to the manager, the internal worker has skill in communicating with people.
The communication skill of the worker helps them to make close interaction with the
workers of the organization.

Even though the society those found in Bate town as well as student of Haramaya
University feel there are some problem that has been face them.

. The communication skill they have may not help them to create health and careful
relationship in the work environment in which they can measure and evaluate the
working performance of each unit of the organization. Since, the worker of this branch
has no sufficient skill to communicate the society, as result the attitude of the society to
use bank is less.

Also the society live around this town have no enough information how, they use the
bank system for different things like saving, depositing, borrowing and taking loan.

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 Problem with giving service for the society in case of CBE Finkile Branch

CHAPTER FIVE

5 CONCLUSIONS AND RECOMMENDATION

5.1 Conclusion
A commercial bank is a bank formed by government and labour organization for the
purpose of accumulating their collective funds and the savings of their individual
members, manages their financial interest. And helps to satisfy the needs for personal
credits to their individual members the bank surplus are distributed between
shareholders depositors and borrowers of placed to reserve.

The primary motive of commercial bank is to encourage savings. Such loans are given
out of the saving collected from among the members. As the data gathered from the field
survey implies commercial bank of Ethiopia play enormous roles in financing primary
societies.

Based on the finding of the study, the following conclusions were made by the researcher:

 Giving service is very important for the overall operation of the organization in
ensuring the fairness of financial statement, evaluating whether the activities in the
bank operated effectively and efficiently, and detecting incorrect financial
transaction records in banking activity.
 However external practice of commercial bank of Ethiopia Finkile Branch is not
qualified because they lack knowledge and knowhow of current principles and
standard of helping costumer.
 Procedures are not properly implemented by the employees of the Commercial Bank
of Ethiopia Finkile Branch.
 The planned and properly designed training and development program is not
prepared over though there is training in the organization. The training program
given at the district levels is not sufficient and it is not supported by any visual aids
and practice.
 The manager correct faults through review with the accountants and vice manager of
the branch after the problem occurred.

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5.2 RECOMMENDATION
Based on the analysis of the field survey results that had been conducted throughout
the study, the following recommendation should be for worded by the researcher.

In order to improve its management and administration capacity this is vital

basis for the improvement of overall activities.
 The bank should have to be disseminate knowledge of how modern forms
of mobilization and utilization of funds among staff members.
 Awareness creation efforts and information about the current situation
should a strategically structured and given for the committee and
departments.
 The bank should have improved and modern planning and coordination.
 The bank should have improved supervision and over control skills.
 The bank should strictly flow the lending principles to overcome the
existence of loan delinquency.

Generally for the better performance future activities and for the attainability, of its
objectives the bank should be engaged with ATM analysis programs and should
strength the friendliness/ politeness relationships with its customers.

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 Problem with giving service for the society in case of CBE Finkile Branch

5.3 Time schedule

Task name Week one Week two Week three Week four

Preparing interview 

Evaluating the proposal  

Writing the proposal  

Submitting and presenting 

final proposal report

5.4 Budget allocation

5.4.1Material, equipment and supplies

Type Unit Amount required Price(birr) Total price

Flash disk No 1 130:00 130:00

Cd drive No 3 8:00 24:00

pen Pack 3 4:00 12:00

paper Pack 40 0.25 10:00

print No 21 1:00 21:00

copy No 21 0.50 10.50

total 207.50

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Glossary of terms
Almighty – name or title for God.

Barriers- a fence or other obstacle that prevent access.

Entrepreneurial-a person who set up a business

Ideology-the set of beliefs characteristics of a social group or individual

Inception-the establishment or starting point of an intuition or activity

Mobilization-prepare or organize for active service

Pamphlets-a small booklet containing information or argument about subject

Privileged-special benefit or honour

Restricts-keep under control

Tremendous-very great, extremely good or impressive excellent

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Reference
Devin, (2005) Commercial Banking, 2nd Edition

J. Subramany, (2006) commercial legal system.

Tn. Hajela, (1994) Commercial principles, problems and practices, 6th Edition.

Divid N Recchuite, 1982. Banking service concept and standard. University of Nottre
Dame.

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