1.

INTRODUCTION:

Prime Bank Ltd. is operating as a scheduled bank under the banking license issued by
Bangladesh Bank, the Central Bank of the country on April 17, 1995 through the opening
of its Motijheel Branch at Adamjee Court Annex Building, Motijheel commercial area,
Dhaka-1000. PBL was actually registered under the Companies Act of 1913 with its
registered office at 5, Rajuk Avenue, Motijheel commercial area, Dhaka-1000 which was
later shifted to Adamjee Court Annex Building, 119-120, Motijheel commercial area,
Dhaka-1000.

As a fully licensed commercial bank, Prime Bank Limited has being managed by highly
professional and dedicated team with long experience in banking. Further Details on
Prime bank and its organization and its branches are provided in Appendix are: Profile of
Prime Bank Limited (PBL), organogram, hierarchy of Prime Bank, Branch Network of
Prime Bank, Departments of PBL, Credit department of PBL. The credit facilities are
generally provided by the bank in two broad categories. They are: Non-Funded Facilities,
Such as: Letter of credit (L/C), Letter of Guarantee (L/G) and. Funded Facilities, Such as:
Loans, overdrafts, other advances. Loans are provided through different schemes.
Consumer Credit Scheme (CCS) is one of them.

Consumer Credit Scheme is a form of credit that is becoming very popular in recent
years. Banks that can operate CCS effectively make huge profit from this scheme. The
demand of this scheme is increasing day by day. Now a days the standard of living is
very high and people want to consume more products. But because of consistent
inflation there is huge money but few products .So, the price of all product is high. In
this situation this scheme seems very attractive to people who want to consume but do
not have enough money to spend on this products. Besides this people take loans for
investing share market and purchasing fixed asset like land, building, flat etc. For all
these reasons this schemes becoming more popular.
Prime Bank is one of those local banks who are successfully operating Consumer Credit
Scheme. Prime bank provide eleven type of loan under this scheme. These loans can be
classified in two categories. Such as: Secured loans like Home loan, Car loan, House
hold durables, Doctor’s loan, loan against salary and Unsecured loans like Education
loan, Any purpose loan, Marriage loan, CNG conversion loan, Hospitalization loan,
Travel loan.

In compare with local banks service of Consumer Credit Scheme of Prime bank is very
satisfactory but in compare with multinational bank the service under this scheme is not
satisfactory at all. For this reason CCS of Prime bank can not attract High profile
customers like multinational banks but it is mostly preferred by people who prefer local
banks.

2. SCOPE OF THE STUDY

The study intends to provide a brief but complete idea about the functions of Consumer
credit of Prime Bank Limited. For this purpose data was collected from primary and
secondary sources.
Through this study an evaluation of the performance of Prime Bank limited in Consumer
Credit Scheme has done and some problems have been identified that hinder the better
performance. Finally, recommendations have been mentioned to improve the
performance of the bank in CCS sector.

3. RATIONALE OF THE STUDY

In this study the activities consumer credit scheme of Prime Bank Limited has been
described. As this Scheme is in the growing stage this sector has to face dynamic changes
and has to handle diversified clients with diversified demand. By this study the functions
of CCS in different steps of loan sanctioning has been described. Through this study a
current scenario of the performance of CCS of Prime Bank in compare with other banks
has been stated. This study will help to find out the problems of CCS of Prime Bank
which negatively affect the performance of CCS. At the end of this study some
recommendation has also been prescribed that can be helpful for Prime Bank to improve
their performance in CCS.

4. OBJECTIVES OF THE STUDY

4.1. Broad Objective:

The broad objective of the study is to describe the Consumer Credit Scheme of Prime
Bank limited.

4.2. Specific Objectives:

 To identify the functions of Consumer Credit Scheme of Prime Bank Limited.

 To evaluate the performance of Prime Bank limited in Consumer Credit Scheme.

 To identify the problems observed in the Consumer Credit Scheme of Prime Bank
Limited.
 To prescribe some recommendations to improve the performance of Credit
department of PBL

5. RESEARCH METHODOLOGY:

This research is an exploratory research. Secondary sources are used in this study.
Secondary sources used in this study are: different ‘Procedure Manual’ published by
PBL, Annual Report, study of old files, previous internship reports, web sites.
6. LIMITATIONS OF THE REPORT:

Some limitations of this study are:

 Insufficient time to know all activities of the branch and prepare the report.
 Shortages of sufficient data for comparing
 It was very difficult to collect the information from various personnel for their job
constraint.
 Every organization has their own secrecy that is not exposed to others.
 Errors rise from the lack of practical knowledge and experience.

7. DISCUSSIONS, ANALYSES & FINDINGS

Products of PBL offered under CCS:

The products of Prime Bank with their financing items under CCS loan are given below:

Interest Highest Stamp

Name of Different Products Rate Limit fee
(%) (Tk) (Tk)
1. Car Loan: Normal 2000000 600
Car, Jeep, Station Jeep, Pick up Van, Cover Van, Bus, car:15%
Truck, Ambulance and any other vehicle for own use. Cargo/Pick
 up: 16%
2. Doctors Loan: For the Doctors only. 17% 1000000 300
3. Advance Against Salary: Any qualified person 17% 300000 300
4.Education Loan: For Study purpose only 17% 500000 300
5.Travel Loan: For traveling purpose, 17% 200000 300
6. Marriage loan: For wedding only. 17% 300000 300
7.CNG Conversion Loan: To convert into CNG 17% 100000 300
8.Any Purpose Loan: For emergency need 17% 300000 300
9.Hospitalization Loan: For treatment in hospital 17% 500000 300
10. Household Durables:
For purchasing Motor Cycle, Refrigerator, Personal
Computer, Audio-Video, equipment, Photocopier / Fax 17% 500000 450
Machine, Other Home Electric Appliance, Small PABX
System, Furniture, television, Mobile Phone Set, Any
Other Household Durables
11. Home loan:

For purchasing apartment or house, Constructing new 13% 5000000 450

house.

Prime Bank charges 1% service charge and 1% risk fund for all products other than for

Car loan, Doctor’s loan, Advance against salary and CNG Conversion loan. Any

interested person within the age of 25 to 60 can apply for loans. For more details the PPG

and credit policy are provided as appendix.

Objectives of the Scheme:

 Financing the middle class limited income group.

 To ensure the credit facility to the both middle class Limited income group and
upper class income group.
 To improve the standard of living of limited income group through financing in
purchasing necessary goods.
  To participate in the socio-economic development of the country.

Eligibility of the customer:

Any interested person within the range of age 25 to 60 and having a permanent job or the

permanent employees of the following organization can apply for the CCS loan of Prime

Bank.

 Government Organizations.
 Semi-Government and Autonomous Bodies.
 Banks, Insurances Companies or any other financial institutions.
 Armed Forces, B.D.R, Police and Ansar.
 Private Organizations having corporate structure.
 Teachers of Universities, Colleges and Schools.
 Permanent employees of locally established and renounced Public Limited
Companies.
 Permanent employees of Multinational Companies.
 Permanent employees of Bank acceptable companies
 Professionals such as Doctors, Engineers, Lawyers, Architects, Chartered
Accountants, Journalists, and self employed person etc.

Discourage list of the customer:

The following are the people who should be discouraged in extending credit facilities

under this scheme:

 People Involve in frequently transferable jobs.

 The employees of enterprises which do not have good reputation.
 Employees having salary less than taka 10,000 per month.
Loan Sanction Process:

At first we have to understand the loan sanction process of PBL because all the activities
of CCS arise from this process. This process consists of some steps. These are given
bellow:

1. At first, Customers approach any commercial branch of the bank or bank’s agents
approach to the clients.
2. Then bank receives relevant documents from the customers.
3. Then they forward a proposal to the Head Office.
4. Head office analyzes the customer’s credit worthiness. In this steps bank also
verify the customers by third party.
5. After assessment the Head office select the eligible consumers and sanction the
loan.
6. Head Office then forwards a sanction letter to the branch and give the
disbursement authority to the branch.
7. Branch modifies the sanction letter as per their need and advice to the customer to
provide the additional documents they needed.
8. Customer gives acceptance and requests the branch for disbursement.
9. Finally, Branch completes all documentation and disburses the loan.

Functions of CCS of Prime Bank:

While sanctioning a loan mainly 4 types of function have to be done.

 1. Assessment
2. Documentation
3. Disbursement
4. Monitoring & Recovery

The functions of CCS of Prime Bank Limited are decentralized. That’s why assessment is
done by Head Office, Documentation and Disbursement are done by branches and
Monitoring & recovery is done by both Branch and head office.

1. Assessment:

Basically Assessment of customer is the function of Head office. But sometimes branches
also assess customer for confirmation if they have suspicion about any customers. 5c is
used to assess customers’ credit worthiness. The elements of 5c are: Character,
Capacity, Collaterals, Condition and Cash. The information collected through
application form is used for assessment and third party verification is also used.

2. Documentation:

An important function of CCS department is collecting all required information from the

customer before disbursement of loan. For CCS loan, Bank usually uses two types’

documents. One is application from and other one is charge document. List of these

documents are given bellow and for details please see at Appendix.

Application Form:

The contents of application form for CCS loan of different banks are almost the same and

these are as follows.

 Personal Details of Applicant (s)

 Employment Details
  Loan Details
 Financial Details.
 Particulars of Guarantors
 Quotation
 Letter of assurance
 Declaration
 Certification of the organization
 Two copy of Photographs
 Copy of national ID card

Charge Documents:

Charge documents are set for documents that contain different rules, terms and

conditions. If the borrower of CCS loan agrees with all these terms and conditions

regarding the loan s/he needs to sign all the documents. If any disagreements or

irregularity occurs in future, these documents will be exercised to suit against the

borrower. Before the disbursement of CCS loan, the following documents must be signed

by clients: The stamps needed for these documents are paid by the clients. The list of the

basic documents is given bellow.

 Letter of Guarantee:

 Letter of Hypothecation

 Demand Promissory Note

 Letter of Installment

 Letter of Disbursement

 Letter of agreement.

 Letter of Authority
Specimens of all this documents are attached in the appendix.

3. Disbursement:

Loan amounts under loan facilities disbursed only when all security documentation is in
place. CIB report is obtained, as appropriate, and clean. A sample documentation and
disbursement checklist is attached as Appendix. When loan is granted, the amount of loan
is entered in the account of the customer and he is allowed to draw cheques up to the
amount agreed upon.

4. Monitoring & recovery:

Head office prepares regular report of over limit and overdue, mainly engaged in
monitoring and branches are mainly involve in recovery. Besides CCS recovery
department are also engaged in recovery. Recovery department take steps by their
own or they take helps from different recovery agencies. For recovery many
procedure are followed. Such as: Letter, Follow up & Persuasion over phone
Reminder letter, Single visit, Group visit Letters to Guarantor, Employer. Bank gives
warning on legal action and takes legal action only when there is no other way of
recovery. This is the last approach preferred by bank. This step is taken by head
office. The approaches of recovery to various customers can be showed as follows:

Consumer Credit Department In case of Soft clients

Recovery Department In case of Hard clients
(Sometimes take help from recovery agencies)
Head office In case of Legal suit

Evaluation of CCS of Prime Bank:

Consumer Credit Scheme is one of the most attractive Schemes for both clients and bank.
Because of the continuous improvement of the standard of living attractiveness of CCS is
also increasing day by day. For this reason all of the banks are trying to improve their
performance in CCS. Though CCS of every bank is similar but CCS sector of every bank
have some positive and negative points that affect their performance to the customers.
The strong and weak points of CCS of PBL are discussed bellow:

Positive points of CCS of PBL(+ points):

1. Prime Bank has already launched every product available under CCS. Not all
other banks have already launched all of these products yet. This characteristic of
CCS of PBL is positively considered by customers while taking decision of taking
loan under CCS.

2. Prime bank Have a large number of brunches all over the country. It already has
90 brunches all over the country and the number is increasing day by day. This is
a very strong point of prime bank over other local banks.

3. Prime bank has a huge number of branches. As a result of this it has a large
customer base. This huge customer base is very helpful for CCS because every
customer of different schemes can be a possible customer of CCS.

4. Prime bank provides more prompt service than any other local bank.

5. No hidden charge is available in the CCS schemes of PBL while many other
banks charge hidden cost from the customers.

6. Prime bank has not charged early settlement fee.

7. The high reputation of PBL as a bank that practices customer oriented banking is
another strong point of CCS of PBL. Besides this In this year PBL has received
 SAFA (South Asian Federation Of Accountants) award as the “Best Bank” and
also received ICBA for “best presented accounts” and ICMAB for “best corporate
governance” award.

8. Telephone inquiries of consumers of PBL get highest response.

9. The well-behaved and generous employee base of CCS of Prime Bank is another
positive side of CCS of PBL.

10. Employees of CCS successfully build and maintain long term relationship with
customers.

11. Prime Bank always tries to match their policy with the government policy and
customer needs which increases its acceptability to customers.

Negative points of CCS of PBL(- points):

1. PBL is very conservative in customer selection.

2. CCS of PBL charge comparatively higher interest rate than some other banks.

3. In case of home loan PBL chare 0.5% risk fund which is nil in CCS of many other
bank.

4. PBL do not apply selective segmentation while multinational banks identify

selective customer segments and making profit by serving these segments. For
example Standard Chartered bank treats Grameen Phone employees specially.
Standard chartered charge only 50% or nil service charge from employees of GP
and also allow rebate for them.
 5. PBL do not have any plan to practice fast track banking.

6. Documents demanded by CCS of PBL are huge in compare with multinational

bank.

7. Another negative point is the lengthy procedure of loan sanctioning. It will take
10-15 days for sanctioning a loan under CCS of PBL.

8. The credit policy of Prime bank is not flexible.

9. Absence of younger people as high officials is another negative side of PBL in

compare with multinational banks.

10. The current market situation of CCS is not clearly known to PBL because of its
weak R&D sector. For this reason it can not compete with multinational banks
and can not get high profile customers.

11. Do not give enough emphasize on CSR (Corporate Social Responsibility) in

compare with multinational banks.

After all, it can be said that performance of CCS of PBL is satisfactory while comparing
with other local banks but not at all satisfactory while comparing with multinational
banks.

Problems of CCS of Prime Bank:

Though PBL is one of the local bank who can profitably operate Consumer Credit
Scheme, there are some problems which affects the performance of CCS of PBL. The
problems are discussed bellow:

Problem-1:
Monitoring is comparatively weak than other banks. For this weakness bank have to
tolerate more overdue. It takes a long time to find out that exactly which loan’s
installments are overdue and how many installments are overdue. When it has been
identified that which loans have lapses than a huge overdue amount has already piled up
and collection of a huge amount is always difficult than that of a small amount.

Problem-2:

Prime Bank Limited does not establish any link with any multinational company consists
of huge employee base and salary amount. Multinational Banks earn huge profit from this
type of liaison. For example, Standard Chartered Bank have link with Grameen phone
and Bangla Link and HSBS have link with Robi and Citycell. The whole salary amounts
of these companies provide a huge deposit for these banks.

Problem-3:

In spite of a loan being classified as a bad debt interest has been charged continuously.
When a loan is classified as a bad debt then generally bank does not charge interest
against that loan. But in PBL because of technical problem interest has been charged
continuously till the loan has not been released.

Problem-4:

Lack of Proper Employee selection, Motivation & Training. Assign right person at right
place in right time is the main task of HRM. Like any other local bank PBL also can not
do this task effectively. For these reason, lack of efficient employee is becoming a
problem for PBL like other local banks.

Problem-5:
Marketing Department of PBL is weak. PBL is suffering for lack of efficient sales people
like other local banks. The research and development sector of marketing is not much
effective.

Problem-6:

Computer and IT department is really weak. For IT problem Service of CCS and other
sector is affected negatively.

Problem-7:

The paper complication and lengthy procedure of CCS is a common complain of clients.

Problem-8:

Centralized Control of Head Office over brunches. Head Office centrally holds the whole
power of sanctioning CCS loans which is not appreciated by vital clients.

Problem-9:

Lack of job description and specification. The Job description and Job Specification and
the responsibilities for each possession in the Branch are not clearly specified. For this
reason confusion arises among employees.

Problem-10:

Lack of Job Rotation is another problem. In PBL job rotation is not practiced adequately.

Problem-11:

Shortage of man power.

8. RECOMMENDATIONS:

1. For successful handling of the Consumer Credit Scheme, proper monitoring and
supervision is essential. And for proper monitoring “management information
system” is required. So the Prime Bank should utilize its MIS efficiently and
update its MIS.

1. PBL should take steps to establish link with multinational companies consist of
huge employee base and salary amount.

2. Selective customer segmentation should be introduced. Branch officials should

classify the clients and serve them according to their need and their contribution
to the revenue of bank. Special facilities and service should; be introduced for
special customers.

3. Proper Employee selection, Motivation & Training. HR division and IT Division

should work together in arranging training session for the employees on the basis
of need.
4. Research and development sector has to be more active to survive this
competitive banking world.

5. The effectiveness and efficiency of computer and IT department must be

improved.

6. Paper complication should be reduced and easy and simple procedure should be
developed and used in case of CCS loan.
 7. Head Office may delegate some authority to the branch to sanction the proposal
of some important clients of the branch.

8. Bank should clarify the Job description and Job Specification and the tasks to be
performed for each job in the Branch

9. Job rotation should be practiced more often.

10. The credit policy should be more flexible and should be updated.

11. Employee base should be increased to provide more prompt service.

12. PBL should take steps to involve in fast track banking like multinational banks.

13. PBL should give emphasis to CSR. Now-a-days, Companies and banks are
getting involved to CSR not only for social good but also to build reputation. CSR
is also using as a tool of publicity.

Above all, the management should be more up to date about the whole banking world and
should prepared for competing with the multinational banks.

9. CONCLUSION:

The Prime Bank Ltd. is a large local bank in our country. For any kind of loan and
advances PBL is always preferred by people who preferred local. The banking sector
plays an important role in the success of economic development of the country. But this
sector has been suffering from so many problems like corruptions, unsatisfactory
performance level or overdue loan, poor recovery rate and unethical and illegal
influences in decision-making process etc. These problems can be overcome through
increase employees’ efficiency by training & motivating, enhance recovery rate, strictly
prohibiting unethical & illegal influences in decision making process etc. There is no
alternative of skilled and trained manpower. So, continuous banking and business related
training, learning and development are essential for 'The Prime Bank ltd. to enrich
knowledge and develop skills and competences to succeed in today’s dynamic banking
world and to compete with multinational banks. To reach its expected goals, Prime Bank
Limited has to compete with multinational and foreign banks along with local bank. After
all, PBL must be put special attention to its employees, customer segmentation, service
quality and IT and R&D sector.