INTERNSHIP REPORT

AN OVERVIEW OF BANGLADESH BANKING INDUSTRY AND FINANCIAL

PERFORMANCE EVALUATION OF MERCANTILE BANK LIMITED

Submitted to:
Mr. Anwar Zahid
Lecturer & Coordinator
Department of Finance
School of Business
Independent University, Bangladesh (IUB)

Submitted by:
Sadaf Bin Hossain
ID: 1620287
Program: BBA, Course: BBA 499A
Major in Finance
School of Business
Independent University Bangladesh (IUB)

Submission Date:
27/09/2020
Letter of Transmittal:
27/09/2020
Mr. Anwar Zahid
Lecturer & Coordinator
Department of Finance,
School of Business
Independent University, Bangladesh (IUB)
Plot 16 Block B, Aftabuddin Ahmed Road, Bashundhara R/A, 1229, Dhaka.

Subject: Submission of Internship Report.

Dear Sir,
It’s a great pleasure and honor for me to present my internship report entitled “An overview of
Bangladesh Banking industry and Financial Performance evaluation of Mercantile Bank Ltd.”
with due gratefulness and admiration. As per requirement for the BBA Graduation, I have completed
the internship report under your supervision.
Throughout the study, I have tried to provide proper and adequate information as possible and tried to
maintain the instruction that you have suggested. I put my best efforts to make this report as much
detailed as possible. I sincerely believe that this report would satisfy and meet the requirements and
will serve the purpose of my dissertation.
I request you to acknowledge my temporary job report for additional evaluation. Your thoughtful help
and thought will be exceptionally valued.

Tanking You,
Yours sincerely,
Sadaf Bin Hossain
Id: 1620287
Major in Finance,
School of Business
Acknowledgement:
First, I would like to pay my gratitude to the almighty ALLAH who has enabled me to present this
report successfully. To complete successfully any type of project, requires help from several
individuals and I have taken help from different persons during internship program for the preparation
of this report.
Blessing I have successfully completed my internship report on Mercantile Bank Ltd. I must express
my deep gratitude to my University supervisor Mr. Anwar Zahid Sir for his guidance and instructions
in conducting the internship program successfully.
I would like to thank my organizational supervisor Mr. Mohd. Mozzadded Ahmed Sir (Assistant Vice
President) who helped me a lot to learn about banking and its administrative works. Also helped me
with proper data which were required for my internship report. I would like to thank also Mr. Md.
Samsul Arefin Sir (Executive Officer) who also helped me to collect information regarding my
internship report. I am also thankful to the officials Mr. Rakibul Bashar (Trainee Assistant Officer),
Mrs. Maliha Hema (Management Trainee Officer), Mr. Md. Tushar Tuhin (Senior Executive Officer)
who always guided me and helped me by providing valuable information’s. My special thanks goes
to officials Mr. Yasin Arafat and Mrs. Nusrat Zaman who also helped me a lot. Also I would like to
thanks all the officials who contributed for my report by helping me as well as guided me to learn
Banking and its activities. Without their co-operation it would not be easy to complete the report. They
supplied valuable information to me.
Table of Contents

Executive Summary........................................................................................................................................... 1
Chapter - 1 ......................................................................................................................................................... 2
Introduction ..................................................................................................................................................... 2
1.1 Company Profile.................................................................................................................................. 3
1.1.1 Vision, Mission, Objectives etc. ......................................................................................................... 4
1.1.2 Corporate Division/ Department etc. .................................................................................................. 6
1.1.3 Details of the Product Line and Services............................................................................................ 7
1.1.4 Operation Details .............................................................................................................................. 11
1.1.5 Philanthropic Activities / CSR.......................................................................................................... 15
Chapter- 2 ........................................................................................................................................................ 19
Internship Experience .................................................................................................................................... 19
2.1 Job Responsibilities ............................................................................................................................. 19
2.2 Functions of the Department: .............................................................................................................. 21
Chapter - 3 ....................................................................................................................................................... 22
Internship outcome/ issue analysis/ empirical analysis ................................................................................. 22
3.1 Analysis of Banking Industry in Bangladesh ...................................................................................... 22
3.2 Finding Pear Group ............................................................................................................................. 25
3.3 Identify a specific issue and analyze the issue..................................................................................... 27
3.4 Recommendations based on the outcome of the analysis .................................................................... 38
Chapter - 4 ....................................................................................................................................................... 39
4.1 Conclusion and implications ................................................................................................................ 39
Implications: .............................................................................................................................................. 39
Conclusion ................................................................................................................................................. 40
References ........................................................................................................................................................ 41
Appendix A ...................................................................................................................................................... 43
Appendix B ....................................................................................................................................................... 45
List of Tables:
Name of Table List Page No:
Table: 1 Company Profile. 03
Table: 2 Board of Directors name and Designations 04
Table: 3 the scholars who have been honored with Mercantile Bank 16
Table: 4 MBL contributions on different educational program. 17

List of Figures:
Name of Figure List Page No:
Figure: 1 MBL Head Office 02
Figure: 2 Corporate department/ divisions 06
Figure: 3 the Hierarchy of Main Branch 07
Figure: 4 Scholars who are honorably awarded in 2019 16
Figure: 5 MBL Abdul Jalil Education Scholarship Award Program 17
Figure: 6 The Function of the department 21
Figure: 7 Bangladesh non-performing loans 24
Figure: 8 Bangladesh private sector credit growth 25
Figure: 9 Paid-up Capital of the Banks 26
Executive Summary
The report is based on my experience which I have gathered from Mercantile Bank Ltd. by working
as internee for three month of period. An internship program is a golden opportunity for a student to
apply the theoretical knowledge in real life experience by working under any organization physically.
So I got the opportunity to working under a well-known reputed private commercial bank in
Bangladesh and gather information about banking activities and its financial performance.
The internship report is on “an overview of Bangladesh Banking Industry and Financial
Performance evaluation of Mercantile Bank Ltd”. The report contains of a brief discussion about
Bangladesh Banking industries growth, problems, opportunities as well as financial performance of
Mercantile Bank Ltd. compared with other five private commercial banks. The objective of the
research of the report are to study and analyses the problems of both Bangladesh banking industry and
financial support of a company with proper suggestions to minimize the issues.
The report is mainly divided in to four chapter. First chapter is the details of the organization where
organizations, profile, mission, vision, service line, and social responsibilities are briefly discussed.
Chapter 2 is about job responsibilities and faction of the department where my working experience
and learned objectives has been briefly discussed as well as the function of the department that I
worked under also discussed with a present of model of the function. The chapter 3, the most
significant chapter is about selection criteria of the compared banks, period of analysis, financial
performance of the Mercantile Bank Ltd. with other five compared banks by presenting the graphical
analysis and recommendation based on the analysis. The final chapter, the chapter four ended up with
implications and conclusion. I tried to present all the necessity materials which is able to cover up my
objectives and also presented my own justification in implications which is based on my thoughts after
completing the internship.

Page 1 of 46
 Chapter - 1

Introduction
Mercantile Bank Ltd. has been established to serve banking requirement to a broad range of individuals
and corporates. Mercantile Bank Ltd. constrained offers undeniable universal standard of banking
administration to both its individual and corporate clients. All the activities and works are closely
monitored by Bangladesh bank (Central Bank of Bangladesh). It is undeniable that Mercantile Bank
Ltd. is contributing both in Bangladesh economy and Banking sector by providing different financial
products, profitable utilization of funds, helping industrialization, boosting export, creating
employment opportunities and improving the quality of life. The contributing on overall socio-
economic development is also unavoidable. The Bank offers standard rates and items to all customers.
It has demonstrated notoriety in serving clients by keeping up solid compliance practices and
outrageous moral standard.

Figure: 1 MBL Head Office

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1.1 Company Profile
Mercantile Bank Limited (MBL) was established by group of perceptive investors of aiming
significant contribution to the financial system for sustainable economic growth of Bangladesh. Since
its inception in June 2, 1999, the Bank has created a credible brand impression and achieved its
customers trust and loyalty. MBL is enlisted in Dhaka Stock Exchange (DSE) and Chittagong Stock
Exchange (CSE) on February 16, 2004 and February 26, 2004 respectively.
Mercantile Bank Ltd. has been able to establish itself as a leading third generation private commercial
bank by dint of its prudent policy guidance with proper execution, wide range of banking products and
admirable customer services. The core activity of the bank are to provide all kind of commercial
banking services such as, deposit mobilization, Corporate Banking, SME and Consumer Business,
Discounting bills, Foreign Exchange Business, Off Shore Banking, Treasury Function, Card Business,
Mobile Banking (My Cash), Internet Banking, Locker Service and Islamic Banking etc. MBL creates
cards services to its customers by providing Debit Card, Credit Card, VISA Dual Prepaid Card, VISA
Medical Card, VISA International Student Card, VISA international Hajj Card and International/Dual
Cards with various up-to-date facilities. The bank is also providing 24/7 ‘MBL Contact Center’
services to its customers.
Mercantile Bank is incessantly giving efforts to improve competitive edge and reinforce its position as
one of the leading banks across the country by actively managing its balance sheet to address external
volatilities in order to consistently increase the value of shares and among shareholders, leveraging on
digital solution to drive cost competitiveness and deliver a superior customer experience, continuously
assessing the efficiency and effectiveness of its operations against best in class benchmarks and
transforming MBL’s human resources as agents of change with the capacity to deliver economic value
to stakeholders.
Mercantile Bank Ltd. demonstrates strong commitment to implement sustainable business practices.
Hence it formulates business strategies in consideration with UN Sustainable Development Goals and
focus robustly on assets growth is underpinned by a solid business strategy that ensure its opreations
are managed safely, reliably and optimally.

Table: 1 Company Profile.

Registered Name Mercantile Bank Limited.

Date of incorporation May 20, 1999

Date of commencement of Business June 02, 1999

Authorized Capital BDT 12,000 million

Number of Branches 148
Number of AD Branches 22
Number of ATMs 181
Web www.mblbd.com

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 Table: 2 Board of Directors name and their Designations.

SL Name Designations
1 Mr. Morshed ALam Chairman
2 AL-Haj Akram Hossain (Humayun) Vice Chairman
3 Mr. Mohd. Selim Vice Chairman
4 Mr. Md. Shahidul Ahsan Chairman, Executive Commitee
5 Dr. Md. Rahmat Ullah Independent Director, Chairman, Audit Committee
6 Mr. Md. Anwarul Haque Chairman, Risk Management Committee
7 Mr. A. S. M Feroz Alam Director
8 Mr. M. Amanullah Director
9 Mr. Md. Abdul Hannan Director
10 Mr. A.KM. Shaheed Reza Director
11 Mr. Md. Nasiruddin Chowdhury Director
12 Al-Haj Mosharref Hossain Director
13 Mr. M.A Khan Belal Director
14 Dr. Md. Hamid Ullah Bhuiyan Independent Director
15 Mr. Md. Quamrul Islam Chowdhury Managing Director & CEO

1.1.1 Vision, Mission, Objectives etc.

Vision
Would make finest corporate citizen.

Mission
Will become most caring, focused for equitable growth based on diversified deployment of
resources and nevertheless would remain healthy and gainfully profitable bank

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Objectives of the Report
The primary goal of the examination is to get a distinct thoughts regarding banking works and activities
such as how banks open different accounts for clients, Maintain these accounts, Efficiently serving
the customers, Take deposits and clearing the cheques, Maintaining the pay-orders, providing the loans
based on different objectives, Foreign exchanging, Export-import and so on. In additional, the work
and activities of front-desk officers and employees. Besides, the financial sector and economic impacts
of banks on a developed country like Bangladesh is also a mostly focused part on this examination. It
is may not be possible to work on every divisions in a limited time frame (3 month). However, I am
luck to work on three different divisions such as Account Opening section, pay-order and BEFTN and
foreign exchange division under Mercantile Bank. I have accumulated information about the general
exercises/activities of this divisions and also I had the solid chances of understanding this activities by
working with various officers and employees. The significant part of this report is to researching the
various parts of the banking sector such as banking issues, system, observing, guidance and
possibilities. The report additionally should covers the analytical performance and comparison of the
selected organization. So, in spite of the fact that the title of the report “AN OVERVIEW OF
BANGLADESH BANKING INDUSTRY AND FINANCIAL PERFORMANCE EVALUATION OF
MERCANTILE BANK LIMITED” exceptionally extensive zone, the particular targets are also
covered,
Accounts Opening –
✓ General Banking exercises.
✓ Opening different accounts such as Current Deposits (CD), Deposit Pension Scheme (DPS),
Fixed Deposit Receipts (FDR) and Taqwa (Islamic Banking).
✓ Verification and prevent money laundering issues.
✓ Updating and maintaining the accounts.
✓ Debit card, Credit card and cheque book distributions.
Pay-Orders, BEFTN and RTGS –
✓ Receiving pay-orders from clients.
✓ Recoding details of the pay-orders in recording book on daily basis
✓ Receiving payments of pay-order and posting it on recording book
✓ BEFTN and RTGS transaction and processing
✓ Cheque clearing and processing
Foreign Exchange –
✓ Issuing Letter of Credit (LC) to a foreign bank
✓ Documentations for LC
✓ Terms, conditions and payment of LC
✓ Different types of LC and its activities
✓ Filing the documents and keep manual records of the LC exchanges.

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1.1.2 Corporate Division/ Department etc.
Corporate division of Mercantile Bank Limited plays a significant role for the Bank. The major
corporate operations are operates under the CEO’s guidance.

Managing Director & CEO

Chief Risk Officer (CRO) Deputy Chief Chief Small Chief Ant Chief Operating
Business Officer Business Officer Money Laundering Officer (coo) &
(DCBO) (CSBO) & Head of ICCD
Compliance Officer
(CAMLCO)

-Credit Risk Management -Corporate -Mobile Banking -International Division -Regional Officers & all
Division Baking Division Division -Branches Division other Branches
-Special asset -Agriculture Credit -IT Division -Offshore Banking (Operations Only)
Management Division Division -Card & ADC Division -General Service Division
-Central Law Division -Research & Division -NRB Division -MIS Division
-Risk Management Planning Division -Consumer & -General Banking -Central Clearing Division
Division -Islamic Banking Retail Banking Division -Compliance Unit
-Sustainable Finance Unit Division Division -AML & CFT Division -Monitoring Unit
-ICT Security Unit -SME Financing -Treasury Back Office
Division
-Agent Banking
Division
-Institutional
Liability Marketing
Department
-Public Relation
Department

Figure: 2 corporate department/ divisions

Two other Departments such as, Human Resource Division and Finance Department are also working
significantly under CEO’s guidance.

Page 6 of 46
The Hierarchy of the Main Branch –
First Vice President / D.M.D

Senior Vice President/ Manager Operation

Assistant Vice President

First Assistant Vice President

Principal Officer

Senior Executive Officer

Executive Officer

Officer

Management Trainee Officer

Assistant Officer

Trainee Assistant Officer

Figure: 3 the Hierarchy of Main Branch

1.1.3 Details of the Product Line and Services

Mercantile Bank Ltd. providing its services with a view of customer’s satisfactions. As a financial
institution the Bank has all most all the Product/ Service line up that is approved by the BB. Each
service line has several significant sub-services/ scheme which is controlling successfully by the
Officers. All the scheme is organized according to customers demand. Some may have less demand
but still Mercantile Bank Ltd. servicing this demands for the customer’s welfare.

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Deposits
This line is for all the depositors who wants to deposit their money in Mercantile Bank Limited in
different categories. Some scheme is time sensitive, some are savings, some are interest and some are
none.
Current Deposit Scheme:
Current deposit Account holds for regular transaction with no restrictions. Account holders can enjoy
this scheme by unlimited deposit and withdrawal of money. Basically this special scheme designed for
Business Banking transactions.
Savings Bank Account Scheme:
This Scheme has been designed and developed for those who wants to save their income. The
restriction is present for both amount and frequency of withdrawal. This scheme is also pays interest
(2.50%) for the Account holders. Basically it is for individual savers.
Fixed Deposit Scheme:
This Scheme is designed for those who wants to save a large amount of money for a long and fixed
period of time. The interest rate is high by the period of time such as-
Less than 3 month – 4.00% (any amount)
Above 3 month to 2 year – 6.00% (any amount)
Double Benefit Deposit Scheme:
Under this Scheme the deposited money gets double within 9 year. The effective interest rate is 8.01%
Monthly Benefit Scheme:
The depositors need to deposit fixed amount of money on a monthly basis and the time duration is on
three year to five year. This is very suitable for retired persons to save and invest their retirement
pensions.
Three to five years the interest rate is 6.90% for simple rate, 7.12% for effective rate.
Monthly Savings Certificates Scheme:
This is a financial investment with high interest paying scheme. The monthly installment sizes are 250,
500, 1000, 1500, 2000, 5000 and in multiple of 5000 to BDT 25000.
The interest rate is 7.25% for simple rate and 7.50% for effective rate.

Also the Mercantile Bank is providing family and pension scheme, School Banking, MBL bonus
saving certificates, super benefit deposit scheme, quarterly benefit deposit, Special Notice Deposit
loan) and Taqwa (Islamic Banking) scheme.

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Loans
This line of services is for all the customers who needs to borrow funds from the Mercantile Bank
Limited on a different categories and purposes.
Personal Loans Scheme:
Personal Loan facility offers unsecured & terminating credit facility for any legitimate purposes to an
individual earning person. This scheme is actually designed for instant meet up with financial
requirements. Loan limit is 50,000Tk to 50Lac Tk with 5 years’ time period, with completive interest
rate.
Home Loans Scheme:
This Loans is specially designed for home/apartment purchasing purposes with lucrative features. Any
Bangladeshi (Single or jointly with spouse/son/daughter) can take this Loan. Loan limitation is BDT
120 Lac with 25 years for construction of building and 20 years for purchasing flat, with competitive
Interest. Loan-Equity Ratio, 60:70 for construction & renovation purpose and 70:30 for purchasing of
Apartment.
Car Loans Scheme:
This facility gives an individuals to own a new/Re-Conditioned Car by on Loan. This loans only can
be obtained by the mentioned purposes. Any Bangladeshi Nationality is eligible for this Loans. The
Loans limitations is 40 lac, for 6 years for brand new and 5 years for Re-Conditioned Vehicle, with
competitive interest. Loan equity ratio 50:50.
Education Loans Scheme:
Education Loan scheme is for any Bangladeshi National students for financing educational expenses
both inside and outside of the country. As Loan limitation maximum 5Lac for study in Bangladesh and
20Lac for abroad study. The time duration depends on nature of courses.

Apart from these schemes, Mercantile Bank also offering Collage loan, Doctor’s loan and Rural
Development loan,

Foreign Trades
Foreign exchanges especially foreign currencies are the major part of this Scheme. All most all
currencies have grate demand but major currencies such as, Dollars, Euros, Yen, Won, GBP are the
mostly traded objects.
Export and Import (LC):
LC means assurance or commitment of bank to payment of another bank (foreign). This is an
obligation from export’s bank to the importer banks for import of any permissible legal item from both
local & foreign sources.

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Currency Trades:
All type of common currencies are available to trade with a specific rate. The department always keeps
records and updates this rates. There is commission charge from each currency sold.

SME Financing
Small and Medium Enterprises (SME) always needs financing to expand their business and market.
SME is currently contributing significantly in Bangladesh Economy. In order to promote the SME
sector of Bangladesh, Mercantile Bank Ltd. has set-up some scheme which is successfully contributing
in this sector.
Term Loan:
This scheme is named by CHAKA by the Bank and introduced for business expansion and produce
capital machinery and other fixed assets of the business. Loan limitations is 50lac to 75 lac with a
duration of 1 year to 5 year. Collateral free up to 8lac with condition. The borrower must be
experienced in the particular field and aged should be 201 to 60 years. Usually interest rate is 14%.
Continuous Loan:
This special scheme known as SAMRIDDHI and recognized for to meet up with any acceptable
working capital management of the business. Loan limitation is 50 lac to 75lac with 1 year duration
(renewable). The borrower should have experienced in the particular field and aged between 21 to 65
years. Usual interest rate is 14%.
Short Term Sessional Loan:
This scheme is for to meet up short term sessional need of the business. Loan limit is 50lac to 75 lac
with a duration of 9 month (maximum). The interest rate is 14%.

Apart from these schemes, the Bank is also offering Women loans, a mix loan (term, time &
continuous), foreign trade finance.

Others
Apart from the major banking services Mercantile Bank also providing some additional services
according to the customers’ demands. Some are already introduced in the market and some are got
approval from the BB to show up in the market. The services are Online Banking, I-Banking, MBL
Cards and Locker Service.
Mercantile Bank Ltd. is also working for Mobile Banking services as well as with agent banking as
per based on customer demand. Both the service line got the permission from the BB and soon
Mercantile Bank Ltd. going to launch this two services successfully.

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1.1.4 Operation Details
Mercantile Banks operations are divided into the number of services that the Banks involved. Each of
the activities are completely separated from the departments as a result operations are also separated.
From General banking line to Top Management all activities all are controlled by the department’s
heads.

General Banking Division

The division is basically front desk oriented and related with accounts opening, accounts maintenance,
deposits/ withdraw of cash, BEFTN, EFTIN, security service, servicing the customers. Generally it is
considered as the direct customer’s service center.

1. General Banking Services:

Customer service is the basic purpose of any Bank, Mercantile Bank Ltd. is very concerns about their
clients. Mercantile Bank Ltd. is trying to get more frequent and efficient in customers service by
improving day by day. Currently they provide the following services to the customers-
Account Opening:
The division of Account Opening section works in two part of processing.
Firstly, a paper based information gets collected from the clients who are willing to open an account
based on schemes. This process also involved by collecting verification certificates/ papers such as,
copy of Smart Card (National Id Card) both the account holders and nominee (second account holders
if it is joint Account), TIN certificates, income sources, photos of both for account holders and
nominee, also account holders must need to introduce an another account holder of the Mercantile
Bank. Secondly, after collecting all the information’s and verifications, this details gets input by the
Senior Officers into the online server of Mercantile Bank Ltd. After getting the authorization of the
account opening request from the Senior Executive Officers, the account successfully gets enable for
the transaction. Account holders must need to deposit at least 1000tk during account opening session.
However, the process and the rules are most similar for all the accounts based on schemes, some sort
of functions are different for the operation/ transaction.
Transaction profile:
This is another separated special part of customer’s verification by taking some controversial data from
the customers to prevent of Money Laundering. The information’s that are taken by the Bank are-
✓ Customers earning sources or nature of business
✓ Nature of Transaction
✓ Expected amount of monthly transactions
✓ Expected number of monthly transactions
✓ Expected amount of monthly cash transition
✓ Expected number of monthly cash transaction
✓ Customers and Account verification and inquires

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Customers Account Verification and inquires:
After opening of the account, clients are always welcomed to any kind of quires such as, knowing the
account balance, hard copy of Bank Statement, Transactions, updating information’s, correcting wrong
information’s.
Bank also keep the records of all transactions and maintained them with profile basis. Verification
process specially done by Anti-Money Laundering (AML) Department which always keep tracks of
transactions and amount of transactions.
Account Transfer:
Customers sometime changes their living places or branches according to their ease of transactions.
This specially occurs when customers moving one town to another. As a result customers also needs
to change Banks branch which done by the Account Opening section.
Closing Account:
Sometime customers stop their transactions or the purpose of the account usage gets done which
means the account is no more useful for the account holders, so the customers can close the account
by noticing the account opening division with a application of account close.
Mercantile Bank Ltd. gets no rights to close the dormant accounts or the accounts with ‘Zero’ balance
until the customer itself close the account. So the account still exists until customers notify to close it.
Cheque Book Issue:
In the account opening time a separated pieces of paper provided to the account holders regarding
Cheque Book which known as Cheque book requisition. This paper is signed by the account holders
which later verified by the authorities by matching the sign and verification of the account holders.
Cheque Book doesn’t provided immediately, it takes time, approximately a week. The Cheque Book
contains 10 to 50 leaves according to the account type and charges 60 tk for each cheque book to order.
Only account holders are able to receive the Cheque Book but on behalf of the account holders others
can also receive but only on based on the authorization letter of the account holder with the sign of
both the account holder and the receiver. Later account opening division matched the signs and then
provides the Cheque Book.
Debit Card and Credit Card Issue:
In the account opening form there is an option which asks to the client whether they are willing to have
a Debit Card or not. If customers wants Debit Card then the division take the order and provide the
Card after a certain periodic of time along with a paper of pin number. This process is very
controversial so the Officers always provides it to the actual account holders or non-account holders
can also be collect but with the authorization letter signed by both the account holder and the receiving
person. Account opening verifies this sign by matching both the signs and then provides.
Like the Debit Card issuance, Credit Card also issued in a same process. For Credit Card the Card
holders need to verify separately specially by the earnings statement of the Card Holders. The
limitation of the amount also depends on the earnings of the holders.

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Pay-Orders (PO):
The Pay-Order is basically for payments without cash. Sometime clients also carry it instead of caring
large number of cash for security purpose. Pay-Order also works as an assets for the clients. To issue
Pay-Orders Bank charges commission and VAT from the clients.
Savings Certificates:
This is another type of transaction that the clients like to use more both as future assets and profit from
savings. There are different schemes present according to the time period and profits. Customers are
open to purchase them by submitting the verified documents.

2. Clearing House:
The Clearing Cheque means that clients deposits one Banks Cheques to another Bank. Only Scheduled
Banks are able to use this certain criteria and as a Scheduled Bank of BB, Mercantile Bank Ltd. also
able to use this criteria and has a Clearing Room also. The Cheque Clearing House Division also
receives all the Scheduled Banks cheques and after receiving it puts a seal “Received for Collection”
on the voucher and also put another seal called “Crossing” on the left corner in the cheque. Basically
this cheques are collets for pass or return and the place where this settled their clearing cheques known
as Clearing House. This all process is organized by the BB. The settlement is done by two shifts such
as morning and evening shifts.
BEFTN and RTGS
This is online way of transactions with one bank to another, both works similar except RTGS is fastest
and amount limitations required.

3. Cash Departments:
This is banks one of the major task. Basically it requires money deposits and withdraws. Mercantile
Bank Ltd. conduct this task on regular banking hours. In the main branch customers have to collect
token for deposit and withdraw of funds. There are 12 counters so customers’ needs to less wait. The
activities are similar as other banks. All type of (scheme) deposits and withdraws are done by this
section. Also banks receives payments such as, utility bills, credit cards fees and so on. Mercantile
Bank Ltd. also accepts LankaBangla’s credit cards payments.

Credit Division
This is the considered as second major division in any Bank whose primary task is to provide loans
and advances to the clients. There is a difference between loans and advances. The loans are provided
on a long term basis and whereas advances which is provided on a short time basis.
Mercantile Bank continuing this task successfully by providing loans and advances to the reputed
clients and business organizations.

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 1. Credit Approval Authority
Senior Credit Management Committees are basically responsible of any credit approvals. Loan
Administration Division also keep records of all the credit approval and transactions.
Credit Approval Process:
Short amount of loans are made by regional departments but for the large size of loans decisions taken
by centrally however, Head of the Bank (DMD of the head branch), Head of the Loan Division, top
managements, all are mainly involved.
Credit Administration:
After gathering all the information’s and security documents from the clients the Credit Administration
departments start to verify them. The verification is very critical process to do as high risk is involved
here. Under this division some sub-division is also present to ease the work of this verification process.
Credit documentations:
Basic work of this division is the verification of the documents for loan and advances. All type of
security papers, mortgage issues, down-payment, agreement of terms and condition of loans and
advances and so on.
Loan Disbursement:
After all the important documents are placed properly the administration department disburse the loan
to the borrowers account. Borrower will get a pre-notice for opening a loan account where the loanable
will be transferred from the loan administration department.
Risk management:
A sub-division also work as risk management that rise from the loan disbursement. To control the risk
or minimize the risk this division working all along and making proper loan disbursement.

2. Collection and Remedial Management

This process done by two different process which is –
Monitoring:
Once the loan is disbursed to the customer the second process come which is tracking the loan and
receiving the scheduled payment with interest. This division tracks the loan whether the borrowers
using the loan for the mentioned purposes or using the loan for illegal investment. All the scheduled
payments such as, installments, annuity, receiving principal with interest are by this division.
Recovery:
The recovery process start when the borrower default to make the scheduled payment or principal with
interest. Also takes necessity steps for recovery the payments.

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Foreign Exchange:
The foreign exchange or forex department is responsible for all type of foreign exchanges including
currency trade, letter of credit, export-import, foreign remittance. This department and its divisions
may not be present properly in very Mercantile Bank Ltd. branches however, the Main Branch operates
this service properly and regularly.

1. Currency Trade:
This division works for all type of common currency trades with the help of global rate. Currency rate
is very important in this operations. The Officers keep themselves updated all the time with market
rates of currencies. Whenever customers comes to trade Bank exchange this currencies with the latest
rates. Basically this currencies disburses in the customer’s account.

2. Export and Import (LC):

Another most important task of the Mercantile Bank Ltd. is LC or Letter of Credit. Firstly Banks clients
contacts with the Bank regarding products of export and import. Bank on behalf of the customer
pays/receive in foreign currency from foreign bank who’s also working on behalf of another client.

Accounts Departments
The work of accounts department is very significant as they are involved with all type of financial
records and calculations. The department always monitor all the financial movement of the Bank.
Especially in Head Branch the department closely monitors this. The most significant works the
division do is auditing. This auditing take place quarterly basis where all the financial transactions
records and verify by the division. BB also involved with auditing and monitor Banks all financial
transactions.

1.1.5 Philanthropic Activities / CSR

Mercantile Bank Foundation has begun to work since 2000 with a view to enforce Bangladesh Banks
guidelines for carrying out wide Corporate Social Responsibility (CSR) activity with the help of the
foundation. The well-established Foundation is currently performing its task in a more organized,
standardized and in a sustainable manner. Mercantile Bank Foundation (MBF) has remarked all its
successful activities with a soul purpose of improve the quality of life of the past 20 years.in additions,
the foundation is eagerly working for Mercantile Bank Abdul Jalil Scholarship Program.

Page 15 of 46
Mercantile Bank Award
Every year MBF provides an esteemed award to the nationally notable intellectual personalities of the
society for their remarkable performance in their respective fields.

Figure: 4 Scholars who are honorably awarded in 2019

Table: 3 the scholars who have been honored with Mercantile Bank Award- 2019 are as follows –

Areas Scholars Rewarded

Education & Culture Dr. Tofail Ahmed

Freedom Fighter and Liberation war based Captain Shahabuddin Ahmed, Bir Uttom
research
Economic and Economic based Research Bangladesh Fishers Research institute,
Mymensingh
Commerce and Industry Mr. Abul Kashem (Abul Khair Group)

Sports Mr. Mosharraf Hossain Khan (Swimming)

MBL Young Bankers’ Appreciation Award

‘MBL Young Bankers Appreciation Award’ is the name of inspiration which encourage the young
bankers to be future leader in financial industry. MBF every year organized this Award and select
some young bankers from different banks based on their academic performance of the year. The
selection criteria depends on five step competitive process.

Page 16 of 46
Education Scholarship Program
“Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all”
with this motto Mercantile Bank Abdul Jalil Education Scholarship has made a bridge of hope for poor
meritorious students who enthusiastic to full-fill their dreams. Since 2011 the Bank is working on this
CSR project with students. Education Scholarship program is an expression of MBL’s motive towards
hands of future generation of the country.
A glimpse of MBL providing of scholarship among the students who have successfully passed J.SC,
SSC and H.S.C to carry on their future studies is given below –

Table: 4 Mercantile Bank Ltd. contributions on different educational program.

Category Scholarship Amount (BDT in million) No. of Tenure

Beneficiary (Period)
J.S.C 5.06 421 1 Year
S.S.C 5.27 351 1Year
H.S.C 5.01 237 1 Year
Graduation O.23 4 4 Year
Total 15.56 1013

Figure: 5 Mercantile Bank-Abdul Jalil Education Scholarship Award Program

Page 17 of 46
Institutional Support
MBF of Mercantile Bank also contributes by derationing in different educational intuitions to improve
the educational facility, student’s heaths, free book distribution, environment and so on.

Disaster Management
Mercantile Bank Ltd. donates winter preventions every year to Prime Minister’s Relief and Welfare
Fund support to help the cold stricken poor people of the country. Also Bank takes all the necessity
steps including salvations during the any kind of natural disasters.

Health and Medical

MBL CSR is working for the end of preventable deaths of newborns, water-borne disease and other
communicable disease, deaths and injuries from road traffic accidents, death and illnesses from
hazardous chemicals and air, water and soil pollution and contamination. Those areas are also
emphasize in SDGs. Mercantile Bank also donates for different hospitals and individual patients in
each year.

Mercantile Bank donations to Gonoshasthaya Dialysis Centre

Mercantile Bank Ltd. donates to Gonoshasthaya Dialysis Centre to establish an ultra-modern dialysis
unit consisting of specialized facilities. The Bank as 2019 contribution, donated 25 lac Taka to the
Centre.

Mercantile Bank Donations to SWAC

As per of the CSR projects Mercantile Bank Ltd. also donates to the Society for the Welfare of Autistic
Children (SWAC). Every year Bank contributes for the organizations and the last year 2019, Bank
donated 10 lac taka to the organization.

Sports, Arts & Culture

Mercantile Bank always support and appreciate of art and culture. As a recognized beneficiary of
culture, MBL takes some non-profit initiatives every year. From time to time Cultural institutions have
been donated for organize cultural events. Moreover, the Bank supports the writers, musicians and
other performers in their inventive and creative activities.

Other Social Projects

The Bank also contributes on other Social activities such as organizing social events, Campaigns,
entertainment events, sponsoring and so on.

Page 18 of 46
 Chapter- 2

Internship Experience
It was incredibly delightful pleasure for me to get a chance to work for one of the best reputed and
well known Private Commercial Bank in Bangladesh. I was assigned as internee (03 month period) for
the Main Branch of Mercantile Bank Ltd. which is located, 63, Dilkusha C/A, Dhaka- 1000, right
beside the Head Office. I have joined as Internee on 10th of August as per based on the Joining letter
date which was provided by the HR Department.
On the First day of my Joining, Firstly I have been introduced and welcomed by the Executive Officer
(EO) Mr. Md. Shamsul Arefin Sir who is also act as admin of the Main Branch and the Assistant Vice
President (AVP) Mr. Mohd. Mozzadded Ahmed Sir who was also my Corporate Supervisor. Later EO
Mr. Md. Samsul Arefin Sir who also takes responsibilities of all the interns, took me to the Account
Opening Division, in General banking line and introduced me with the Officers of the Division. I been
guided by the three Officers in this Division. In the end of the day, before I leave from the office I
went to the Managing Operation’s (MOP) Sir’s office and introduced myself. The MOP Sir was very
kind and helpful and I had a good conversation with him. Being seated on the front desk I have
performed multiple task from this Division including observation of the operations and division’s
activities as well as serving the customers. I hadn’t fixed duties however, I performed all the given
task honorably and peacefully with help of the Officers. At the beginning, I Performed non-
computerize task such as writing and numbering the files. Later I could use the computer for excel
work such as data entries. I also performed task from two other different Division but the duration of
the working period was very little.
I am glad that I could work with the different Officers as well as Senior Executives whom where so
helpful and respectful to everyone and me as well. The amount of responsibilities and task that I have
learnt in this short period of time is indescribable in few words. The tasks not only taught me academic
activities but also taught me proper behavior, customer relation, presenting yourself including
academic services, value of time, manners, respect, formal activities, handling pressures, punctual,
managing the clients, decision making, and group work and so on. The passing time with the Officers
also memorable. I am actually so pleased by the amount of love and honor that I got from them. The
messengers (Peons) were also much helpful and respectful towards me and also learnt lot of from them.
In the end, I would say, the first experience of a job life not only just taught me how to work but also
taught me how to adjust with job life. The Officers always seen me as a fast learner and helped me in
every possible ways. The amount of valuable direction I have gather, should also be mentioned.
Finally, It is such a great program that I believe, that the educational institutions are offering with help
of the Organizations in light of student’s future progress and enter into the job life.

2.1 Job Responsibilities

The workplace time starts 10am at the first part of the day. There are five working days, Sunday to
Thursday. However, as a Main Branch, Saturday also count as working day but last for the half period

Page 19 of 46
of time. Interns do not need to come on Saturday. Office time close at 6:30pm but for the interns the
closing hour is 5pm. My daily exercise starts with the beginning of available time.
➢ 9:30 to 10am enter into the workplace.
➢ 10am as the Banking hours begins, I start managing the clients who comes for account related
problems or queries.
➢ 11am (Approx.) the cheque book arrives from the Head Office and my part is to receive the
cheque book by matching with the enlisted name and number of books.
➢ As soon as I receive the cheque books, my second part starts by Matching the cheque books
with the listed names and then writing down the cheque book starting and ending numbers on
the cheque requisition page, lastly seal the cheque books including the issued date and as final
part put the cheque books in the locker.
➢ Although Debit Cards do not arrive everyday but whenever it comes my first part is to receive
the cards and match the number of cards with the listed names. Then with a help of an Officer,
I write serial numbers on both the pin issued envelope and Debit Card envelope. As final part
of the task, I put the Card and pin issued envelope inside the lockers. Sometime as additional
part of the work, I also entry the Card and pin details in excel file.
➢ When the new Cheque Book and Debit Cards arrives firstly I send them text messages through
official smartphone of the Bank on their registered phone numbers to let them know that their
Cheque Book or Debit Cards is ready. Also I calls the clients as remainder whose Cards and
Cheque Books were ready and arrived long time ago but not received yet.
➢ Apart from the Cheque book and Debit card task I also perform accounts opening task where I
communicate with the clients and provide them all the valuable information’s regarding
account opening functions. When the clients comes with all the necessity documents, I also
help them to fill-up the account opening form by verifying the documents and writing on the
form by myself on behalf of the account holder (except signature).
➢ Since I am performing the Debit Card and Cheque Books most of the tasks as receiving and
preparing them to deliver, l also perform the delivery duty. Whenever clients comes to collect
Debit Cards and Cheque books, the Officers firstly verify the clients and take requisition letter
and (If clients sends someone else to collect) as part of my job, I bring the Card and Cheque
Books from the locker according to matching with the owner names and take the signatures
from the receiver in recording book.
➢ I also worked for pay-order activities such as recording the pay-orders in the recording book
on a daily basis and also whenever customers issued pay-orders and pays the bill for it, my part
is also to record them and marked as paid on the recording book.
➢ Apart from these activities I also performed foreign exchange activities under foreign exchange
department. Here I worked on verification of the documents by checking the documents which
is provided by the clients. My job was to check whether the clients presenting proper documents
or not.
➢ Also I put the documents together and filed them with the name of LC number and then keep
records manually by writing on register book
➢ Basically I leave from work on 5:00pm however, when the working pressure is high I leave
lately.
The task I performed there is not on daily basis. Sometime when I had not any work to do, I used
my leisure times by observing the Officers daily works.

Page 20 of 46
2.2 Functions of the Department:
As a main branch of the Mercantile Bank Ltd. the Bank had numerous departments but the department
that I worked under is General Banking and the functions are –

General Banking Department –

❖ Account Opening department
❖ Cash Department
❖ Local Remittance and Pay-Order section
❖ BEFTIN and EFTIN section
❖ Islamic Window
❖ DPS/ MSS section
❖ FDR section
❖ Cheque Clearing Room
❖ Remittance and Savings Certificates section
❖ M.O.P office.
❖ Account authorization section

Savings
FDR Certificates

DPS
Cash
Islamic
Window Counter
Cheque
Clear

Pay
BEFTIN/ EFTN orders
& IT

IT
M.O.P
Office
Account Opening
Entry/Exit

Figure: 6 The Function of the department

Page 21 of 46
 Chapter - 3

Internship outcome/ issue analysis/ empirical analysis

3.1 Analysis of Banking Industry in Bangladesh
Banking sector of Bangladesh is one of the major sectors, which is contributing numerously in the
national economy. The sector is associated with a number of banks in various categories. All are
performing significantly to grow up the banking sector and the country’s economy as well. Among
them the commercial banks are playing vital role in this sector. (Ahamed, 2014)
After liberation Bangladesh had 2 Bangladeshi banks, 10 Pakistani banks and 14 foreign banks. The
owners of this Pakistani banks and top executives left the country with their resources. This put the
banking sector growth bit slower and unstable condition. To overcome form this scenario government
implemented lots of changes which slowly start developed the sector. (Ahmad, 2020)
Remarkable objectives and developments has been achieved by banks in Bangladesh banking industry.
It has brought several positive changes in terms of expansion, modernization, quality of assets,
application of international standards, technology adaptation, capacity development efforts, corporate
governance and improved regulatory and supervisory environment. The development is not, however,
for all banks. (Habib h. M., Banking industry: Bangladesh perspective, 2018)
Banking sector of Bangladesh especially in terms of size of economy in compare to other developed
countries like Bangladesh is larger. Bangladesh bank is the principal controller of all the banks in
Bangladesh. (Chowdhury, 2017)
Private Commercial Banks now-a-days have successfully occupied a great potion of the total banking
sector through several years of journey. After liberation of 1971 all banks except few foreign banks
branches were nationalized. But later this nationalization viewed as a doomed picture of NCBs
(National Commercial Banks) because of careless in management activities. For that instance, PCB
(Private Commercial Banks) appeared again in 1982 in the banking sector. It divided into two part of
period and a growth of PCBs has been found according to the periods. (Islam, 2014)
Commercial banks in Bangladesh plays a vital role by keeping national savings and invest them as
credit in the market but bad debts, aggressive loans, misuses of funds all are collapsing the entire
banking sector. However, Last three decades after the presents of several banking sector in Bangladesh
private national banks become most successful in the economy. (Amin, 2000)
Banking sector is become lifeblood in Bangladesh economy. In terms of different activities of earning,
investments, credit ratios, the banking sector of Bangladesh is not running smoothly. This is especially
for private commercial banks. The unpredicted changes of ratios define how complex is sector is going
day by day. (shahinoor, 2018)
The State-Owned banks in Bangladesh have always criticized due to its low quality of service, wide-
spread corruption and scams etc. although in remote areas in terms of agricultural finance the banks
have much higher contribution than other banks. More than 70 percent of these banks are in rural areas
whereas there is only 41% private banks are presents. However, in terms of business performance
perspective, these banks are getting worse day by day. Many steps were taken to improve their
activities but all ended in non-productive outcome. Bangladesh Bank appointed some Board of
Directors for these banks but also ended up with no change. The situation gone worse when this people

Page 22 of 46
involved themselves to politics and regulated them under their own well-fare. BASIC Bank is the
example of them. (Sohel, 2016)
Public listed companies especially banks counted worst year in 2018 compare to 2017 in terms of
dividend payout. Similar picture was seen in state owned banks as well. Several bad decisions were
involved for this situation however, SCBs enjoying a good shape of growth in deposits and advances.
(Bakht, 2019)
Islamic Bank Bangladesh Limited introduced in Bangladesh in 1983 and since then six more full-
fledged private Islamic banks, 10 conventional banks with parallel Islamic banking services and a
number of conventional banks with Islamic banking service have been established. Since then, the
Islamic banking continued to show its remarkable growth. However, IBBL (Islamic banking
Bangladesh) is facing numerous problems or challenges. First, they have not been successful in
interest-free mechanism. Second, the risk of profit sharing is so high that almost all of the Islamic
banks in Bangladesh have resorted to those techniques of financing .As a result there is facing a lot of
genuine criticism. Islamic banking practice are expanding into conventional banks, as a result full-
oriented Islamic banks are falling under risk of competitions. (Mamun, 2015)
Islamic banking is holding more than 20% of total banking deposit and 23% of total credit in the
market. In terms of ROI and NPL it also performing well. However, the challenges like slow diversify
portfolio, insufficient knowledge and skills, low product innovations, showering the growth of this
banks in the market. (Sultana, 2017)
Specialized Banks in our country which was created on some specialized purposes are failed to meet
its actual requirements. Their contribution in commercial sector especially in rural areas is very
significant. The diversification of their activities to gaining control over financial assets is still far
away. However, by retain in the market with help of government, they still contributing for the rural
people. (Zico, 2011)
In September 2019 the loan recovery was estimated for specialized bank .300 BDT bn which was
lower than last quarter Jun 2019. 2015 was the highest year since 2004 and worst ever on September
2019. The average collection is 1.620 BDT bn in between 2004 to 2019. Which indicates that
specialized banks are regularly updates its reports to BB. (Bank, 2019)

NPL (Non-performing loans) impact on Bangladesh Economy

Banking system is now facing a slow-motion banking crisis, mostly because of government banks but
some private banks are also involved. The bigger concern is NPL (Non-Performing loans). The
authority of the banks, political elites, top business executive all are influencing the banks to assigned
loans in their favor which is resulting defaults. The estimation is crossed to Tk 1.0 trillion (USD 12
billion). Half of it is owned by six state-owned banks which are now recovering by tax-payers money
and rest are owned by private and foreign owned banks. The share of NPL is now stands to 11 percent
of the total loan portfolio. And including restructured and rescheduled the share of NPL goes to 20
percent. (Mahmood, 2019)
Non-performing loan is now much concern part in banking sector of Bangladesh. Due to aggrieve turn
of NPL the economy is facing some challenges like low loanable fund, employee turnover, low growth
of industries, and more rich-poor gap. Some banks are also facing bankruptcy. (Emran, 2019)

Page 23 of 46
The potential reason for high NPL is that financial institution ended up with wrong choice of
borrowers. This because of lack of poor lending practice as well as misuse of power. Failing to
determine potential entrepreneur especially the new one is also a reason. The most affected one is tied
up with corruption. (Ahmed, 2019)
There is always a criticism about NPL of banks in Bangladesh. In March 2019 the estimated ratio of
NPL was 11.9 percent. The data updates quarterly to the BB and BB reported the NPL rising day by
day in the market. The media reported that mismanagement, poor lending technics, corruption are the
most affected objectives. The country economy will be under in great danger if it continues. Infect,
countries health and education budget is now covered by NPL which is now new challenges for the
government. (Rahman, 2019)

Bangladesh Non-Performing Loans

10.00%

9.00%

8.00%

7.00%

6.00%

5.00%
2011 2012 2013 2014 2015 2016 2017 2018

Figure: 7 Source: TheGlobalEconomy.com. The World Bank

Covid-19 Challenges
Bangladesh banking already facing challenges for Bad Loans, now starting of year 2020 the new
challenges arrived in the global world, Covid-19. Before early march when first corona virus case
found in the country, the country was expecting a good year. Covid-19 and resulting lockdowns put
the banking sector under more pressure. In other words, the pandemic hit when the economy was
vulnerable. (Pesek, 2020)
Risk management is always a significant part in banking sector of Bangladesh. Under corona war, all
financial institutes are preparing for economic crisis. Both external and internal activities are now
vulnerable and under uncertainty. Cash reserve ratio have been changed along with NPL ratio. (Habib
h. M., Risk management by banks in post-Covid-19 situation, 2020)

Page 24 of 46
The banking sector for any country is consider as a key player for the economy and as a developing
country Bangladesh needs to be more careful and in terms of planning to get rid of situation like corona
virus impact. While facing issues like NPL the corona virus impact will increase the level of NPL in
upcoming days. It is also a chance for the banks to purchase new assets with a low cost. (Paul, 2020)

Private Sector Credit Growth

10.00%

9.80%

9.60%

9.40%

9.20%

9.00%

8.80%

8.60%
Dec-19 Jan-20 Feb-20

Figure: 8 Source: Bangladesh Bank

3.2 Finding Pear Group

Banks always have a great impact on a country’s economy since it directly related to financial part of
the economy. So, banks are always counted as a most significant industry in whole over the world.
Comparison are always present in any kind of industry but in terms of banking its very common and
mostly criticized part. Currently under scheduled banks, there are 42 private commercial banks, 6 state
owned banks, 3 specialized banks, 8 Islamic banks and 9 foreign banks are operating in Bangladesh.
Although all this banks almost works similar activities and purposes but their growth, earning, profit
share, capital, ownerships are different. Bangladesh Bank acts as a parent of all banks and tracks all
kind of records. All banks are highly recommended by BB to publish its significant public data to
public. As a result it is become easy to evaluate banks and track their activities.

Page 25 of 46
Justification of peer group
It is always important to compare by similar environment and resources that banks are experiencing.
Generations always an issue in terms of comparing banking industry. Especially generations of banks
draws a picture of growth and development of banks. Generation gap between banks gives us clear
idea about how establishment of banks differ to one to another as well as impact on their performance.
Good-will, position in market, capital. Currently there are four generations of banks are present in
Bangladesh.
1st Generation (before 1991)
2nd Generation (after 1991 – before 1999)
3rd Generation (after 1999 – before 2010)
4th Generation (after 2010 – present)

Mercantile Bank Ltd. is in under 3rd generation and for peer group to compare, five private
commercial banks are chosen and the banks are: Bank Asia, BRAC Bank, Jamuna Bank, Mutual
Trust Bank and Premier Bank.

Paid Up Capital (In Million)

11103.87 10725
9371.58
7492.25 8000.81
5733.63

MERCANTILE BANK ASIA BRAC BANK JAMUNA BANK MUTUAL TRUST PREMIER BANK
BANK BANK

Figure: 9 Paid-up Capitals of the Banks

Paid up capital shows us how much these banks pulled fund from the market for future developments
and growths. Mercantile bank Ltd. positioned 3rd among the other compared banks. Mercantile bank
Ltd. successfully used the fund.

Page 26 of 46
3.3 Identify a specific issue and analyze the issue
The most common method of comparing banks performance is analyzing the ratios. Different ratios
measures different categorical performance of banks. This ratios that identify banks performance some
are good if it is higher whether some are low. Most significant ratios are always given in their (Banks)
annual reports and some are needed to be calculate.
To comparing financial performance of Mercantile Banks with other five Banks such as- BRAC Bank,
Bank Asia, Mutual Trust Bank, Jamuna Bank and Premier Bank significant ratios are also taken to
measurement there performance and analyses them.

Categories of comparing Ratios

There are ten ratios that are taken from four certain categories of financial measurement to analyses
the different types of financial performance for the banks. These are-
Operating profit ratio: Return on Assets (ROA), Return on Equity (ROE), Return on Investment
(ROI), Net Interest Margin (NIM), Cost of Funds, and Credit Deposit Ratio (CD).
Performance Ratio- Burden Coverage Ratio (BCR), Efficiency Ratio.
Credit Quality- Non-Performing Loans (NPL).
Capital Measures- Capital Adequacy Ratio (CAR).

Investigate period
The more the period (Time) of comparison is, the more healthy the analysis is. Analyzing banks by
ratios always time sensitive. It is always important to choose the most recent year so that most recent
data can be found to compare. Current year’s data will not be found unless years end or proper data
may not be present yet. Ending period could be for five years, ten years, fifteen years or infinity.
To comparing Mercantile Bank Ltd. with other five mentioned Banks, the time period is taken by most
recent year 2019 to 2015 closest year from current year.

Analyzing the Issues

The comparison has taken for Mercantile Bank with five other mentioned Banks such as BRAC Bank,
Bank Asia, Mutual Trust Bank (MTB), Jamuna Bank and Premier Bank. The ratios are presented in
graphically for all the banks including Mercantile Bank. The performance of each of the years of each
of the particular ratios for all the compared banks are elaborated and compared briefly with Mercantile
Bank Ltd.

Page 27 of 46
Return on Assets (2015-2019)
Return on Assets (ROA) is a calculation that shows how profitable the company is in terms of its total
assets. Its gives us a clear idea about how efficiently the company is using its assets to generate earning.

ROA = Net Income / Total Assets

Return on Assets
2.10%

1.90%

1.70%

1.50%

1.30%

1.10%

0.90%

0.70%

0.50%
2015 2016 2017 2018 2019

Mercantile Bank BRAC Bank Bank Asia MTB Jamuna Bank Premier Bank

In 2015, it seemed that Mercantile Bank wasn’t much concerned on their ROA performance or present
of mismanagement from the authority on assets performance, causes as Mercantile Bank
underperformed than the most of the compared Banks and only performed equally than Premier Bank.
In 2016, Mercantile Bank focused on ROA performance and start performing well, after bad
performance since last year and as a result Bank performed better than all the compared banks except
BRAC Bank and Jamuna Bank.
In 2017, Mercantile Bank ROA performance experienced again a great positive changes like previous
year. This indicates that Mercantile Bank carefully start managing their assets to make sure for better
return in the market.
In 2018, after a good positive changes on the last two consecutive years Mercantile Bank experienced
a bad assets management resulted as ROA decline. Which causes that most of the compared Banks
performed better.
In 2019, it seemed that Mercantile Bank still poorly managing their assets and ROA performance
experienced a farther decline in the market which also indicates a bad compared position among the
compared Banks.

Page 28 of 46
Credit to Deposit Ratio (2015-2019)
Credit to Deposit Ratio (CD Ratio) sometime refers to as Loan to Deposit Ratio used to calculate a
bank’s total loans that it provided to the market compare to deposit that bank get it from the market. If
the ratio is high that means bank may not have sufficient liquidity to cover any kind of unfortunate
expenses as well as if the ratio is low that means bank is not earning much as it should be.

CD Ratio = Total Loans/ Total Deposit

Credit to Deposit Ratio

95.00%

90.00%

85.00%

80.00%

75.00%

70.00%
2015 2016 2017 2018 2019

Mercantime Bank BRAC Bank Bank Asia MTB Jamuna Bank Premier Bank

In 2015, Mercantile Bank CD ratio showed a good result among the compared banks which also
indicated of sufficient amount of fund that Mercantile Bank had to meet up with sudden expenses.
In 2016, Mercantile Bank CD ratio increased and resulted as more liquidity crises which showed bad
indication in the market but good indication is that other most of the compared Banks also cut a bad
performance.
In 2017, Mercantile Bank didn’t experienced much positive changes which also indicates of
misjudgment of the authority to meet up with liquidity disbursements however, performed better than
Premier Bank and Jamuna Bank.
In 2018, in seemed that Mercantile Bank wasn’t much concerned about their CD ratio performance
and might face a serious liquidity crises, as a result all the compared bank performed better than
Mercantile Bank.
In 2019, CD ratio performance for Mercantile Bank still seen no progress and again indication of poor
judgment of the authority on liquidity crises by compared to other compared Banks.

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Non-Performing Loan Ratio (2015-2019)
A non-performing loan (NPL) refers to a loan that is default in the market and the borrower is failed
to make the schedule payment in time. The time is depend on specific period and the industry type.
The period is basically 90 days or 180 days.

Non-Performing Loan = Non-performing loans/ Total loans

Non-Performing Loan
7.00%
6.50%
6.00%
5.50%
5.00%
4.50%
4.00%
3.50%
3.00%
2.50%
2.00%
2015 2016 2017 2018 2019

Mercantile Bank BRAC Bank Bank Asia MTB Jamuna Bank Premier Bank

In 2015, Mercantile Bank performance on NPL ratio showed satisfactory performance by earning
better than most of the compared Banks.
In 2016, it seemed Mercantile Bank distracted from its NPL performance by providing more non-
performing loans in the market but still became good performer than Bank Asia and Premier Bank.
In 2017, after performing badly in the previous year it seemed Mercantile Banks risk management
team start focusing on the NPL performance and cut a better performance by performing better than
all the compared Banks except BRAC Bank.
In 2018, NPL ratio of Mercantile Bank indicates provide of more non-performing loan in the market
which causes increasing of the NPL ratio again since 2016 year and became better performer than
Mutual Trust Bank only.
In 2019, Mercantile Bank NPL ratio performance shows more mismanagement of risk management
team by increasing of NPL ratio cautiously from the previous year but still performed better than
Mutual trust Bank and Premier Bank.

Page 30 of 46
Capital Adequacy Ratio (2015-2019)
Capital Adequacy Ratio (CAR) also known as Capital to risk-weighted assets ratio (CRAR) refers to
Banks available capital to banks risk-weighted credit measurement. Two types of capital measures
here and these are tier-1 capital and tier-2 capital. It basically measures the banks sufficient ability of
meeting the reasonable amount of loses. The more CAR ratio banks gets the more it safe and able to
meet its financial obligations.

CAR = (Tier-1 Capital + Tier-2 Capital)/ Risk Weighted Assets

Capital Adequacy Ratio

18.00%
17.00%
16.00%
15.00%
14.00%
13.00%
12.00%
11.00%
10.00%
9.00%
8.00%
2015 2016 2017 2018 2019

Mercahtile Bank BRAC Bank Bank Asia MTB Jamuna Bank Premier Bank

In 2015, Mercantile Bank CAR ratio didn’t much contributed for the Bank and only had greater
performance than Premier Bank.
In 2016, Mercantile Bank Risk Management Team not only focused on the CAR performance but also
achieved a remarkable performance among the compered Banks and also Bank became successful by
being able to cover up any sudden losses.
In 2017, it seemed that Mercantile Bank distracted from focusing on CAR performance and might face
a default situation on covering losses, as a result CAR ratio for Mercantile Bank decreased than
previous year and became only better performer than Jamuna Bank.
In 2018, Mercantile Bank CAR ratio increased than previous year which indicates a good alarm for
the Bank after decreased on CAR ratio on previous year however, their performance in compared to
other compared Banks was average
In 2019, it seemed that CAR ratio for Mercantile Bank started growing again as it experienced an
increase in CAR ratio since the previous year and as a result Bank was successfully was able to cover
up it sudden losses.

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Net Interest Margin (2015-2019)
Net interest Margin (NIM) measures the net interest income that the banks/ organization gains by
earning interest from its provided credits such as loans and mortgage to its payable interest such as
interest from its savings account and certificate of deposits (CDs). Positive NIM suggest that the banks
are performing it profitably whereas negative means banks inefficiency investment.

Net Interest Margin = (Investment Return – interest expenses)/ Average Earning Assets.

Net Interest Margin

5.00%

4.50%

4.00%

3.50%

3.00%

2.50%

2.00%

1.50%
2015 2016 2017 2018 2019

Mercantile Bank BRAC Bank Bank Asia MTB Jamuna Bank Premier Bank

In 2015, Mercantile Bank NIM ratio indicates that Bank top executives were very much concerned on
the NIM ratio, as a result the Bank cut a better performance than most of the compared Banks.
In 2016, NIM ratio for Mercantile Bank experienced a good positive growth in the market as well as
also an indication of good management by the top executives by increase of the ratio and became good
performer than the most of the compared banks.
In 2017, Mercantile Bank poorly managed their NIM ratio performance and as a result NIM ratio
decreased but still managed to perform well among the compared Banks.
In 2018, it seemed that Mercantile Bank start focusing again on their NIM performance and tried to
improve the performance as a result the ratio increased again after underperformance since last year
and cut a good result among the compared Banks.
In 2019, Mercantile Bank continued to perform well in the market and the NIM ratio performance seen
a good positive changes which also indicates a better performance among the compared Banks.

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Return on Equity (2015-2019)
Return on Equity (ROE) is the measures of profitability of the business in terms of equity. It shows
how much the business is earning per money of shareholders equity. Generally ROE 15-20% is good.

Return on Equity = Net Income/ Average Shareholders’ Equity

Return on Equity
25.00%
23.00%
21.00%
19.00%
17.00%
15.00%
13.00%
11.00%
9.00%
7.00%
5.00%
2015 2016 2017 2018 2019

Mercantile Bank BRAC Bank Bank Asia MTB Jamuna Bank Premier Bank

In 2015, Mercantile Bank ROE showed not much progress in the market by performing on an average
in compare to the compared banks as well as, as a result Mercantile Bank wasn’t much profitable in
terms of equity management compared to the most of the compared Banks.
In 2016, it seemed that Mercantile Bank management team start focusing on their ROE performance
as a result ROE performance have seen some progress by increasing and became more profitable than
the previous year as well as by compared Banks.
In 2017, Mercantile Bank ROE start growing in the market since last year by continuous increase in
the market as a result the Bank became more Profitable than the previous year as well as better
performer than the most of the compared Banks.
In 2018, the performance of ROE for Mercantile Bank declined after continuous progress since 2016,
as a result the Bank became less profitable in terms of equity management than the previous year
however, the Bank still managed to perform better than the most of the compared Banks.
In 2019, the ROE ratio fall one step farther which the indication of continuous bad performance by the
management team in terms of equity management and profitability and as a result the performance in
terms of ROE ratio for Mercantile Bank by compare to the compared Banks wasn’t much satisfactory.

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Return on Investment (2015-2019)
Return on Investment (ROI) measures the efficacy of investment by comparing net profit from
investment to cost of investment. Simply it refers return on money from investment. Higher ROI means
investment is profitable compared to its cost, so if ROI is positive means its investment is worthy. ROI
is very common method to ratio analysis especially in comparison part.

Return on Investment = (Current Value of Investment – Cost of Investment)/ Cost of Investment

Return on Investment
14.00%

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%
2015 2016 2017 2018 2019

Mercantile Bank BRAC Bank Bank Asia MTB Jamuna Bank Premier Bank

In 2015, Mercantile Bank ROI ratio showed a great and remarkable performance by performing better
than all the compared banks which also indicated the efficient investment of the Mercantile Bank and
its efficient management of top executives.
In 2016, Mercantile Bank ROI ratio lost track from performing better in the market, resulted as ratio
declined however, Bank ROI performance still management to performed better than all the compared
Banks except Jamuna Bank
In 2017, Mercantile ROI ratio performance experienced a bad performance by declined in the market
which also indicated that the top executives lost track on focusing the ROI performance and as result
the Bank performed less well than the most of the compared Banks.
In 2018, ROI performance of Mercantile Bank increased again since drop of the last year which
showed efficient investment again in the market and became best performer than all the compared
Banks except Bank Asia.
In 2019, Mercantile Bank ROI performance not only seen progress again in the market by increasing
again sine last year but also cut a remarkable performance by becoming better performer than all the
compared Banks.

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Efficiency Ratio (2015-2019)
Efficiency Ratio measures the banks non-interest expenses to net income, which indicates how Banks
are meeting with expenses in terms of its revenue. Lower Efficiency Ratio means banks are operating
better. Efficiency Ratio of 50% or under is considered optimal. If the Efficiency Ratio is increases
means Banks expenses are increasing or its revenue are decreasing.

Efficiency Ratio = Expenses/ Revenue

Effienency Ratio
65.00%

60.00%

55.00%

50.00%

45.00%

40.00%

35.00%
2015 2016 2017 2018 2019

Mercantile Bank BRAC Bank Bank Asia MTB Jamuna Bank Premier Bank

In2015, Mercantile Bank performed better in terms of efficiency by achieving a better performance in
compared to other compared banks which indicated that bank successfully meet with it expenses in
compared to its revenue.
In 2016, Efficiency ratio for Mercantile Bank increased greatly which the indication of bad
performance as well as closer to default of meeting with expense, as a result all the compared Banks
performed better than Mercantile Bank.
In 2017, Mercantile Bank top management seemed focused on the efficiency performance which the
indication of ratio decreased as well as performed average in compare to the compared Banks.
In 2018, the top management of Mercantile Bank seemed less focused on the efficiency performance
again which the indication of ratio to increase again, as a result Mercantile Bank didn’t performed
much better than the compared Banks.
In 2019, Mercantile Bank efficiency ratio drooped again after increase of the last year which the
indication of better performance for the year, as a result compared Banks couldn’t performed better
than the Mercantile Bank.

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Cost of Deposit (2015-2019)
Cost of Deposit/ Fund refers to the interest that the banks pays for using funds in its business, especially
this interest generates from the depositors. Generally lower cost means better return on the short or
long-term fund usage. Banks shows this in percentage.

Cost of Fund= Financial Expenses on Liabilities/ (Average interest bearing Deposit + Borrowing)

Cost of Deposit
8.00%

7.50%

7.00%

6.50%

6.00%

5.50%

5.00%

4.50%
2015 2016 2017 2018 2019

Mercantile Bank BRAC Bank Bank Asia MTB Jamuna Bank Premier Bank

In 2015, Mercantile Bank cost of deposit indicated that Bank wasn’t much concerned about their cost
of deposit performance which appeared by their high ratio than the other compared banks.
In 2016, Mercantile Bank cost of deposit seemed focused by the top managements and the ratio
deceased however, all the other compared Banks performed more, better than the Mercantile Bank.
In 2017, Mercantile Bank cost of deposit dropped again which the indication of top management start
concerning about the performance and the ratio start preforming well, but still performed less better
than other compared Banks.
In 2018, cost of deposit increased again for the Mercantile Bank which means the Bank paid much for
its used funds and as a result most of the compared Banks performed better than Mercantile Bank
except BRAC Bank.
In 2019, Mercantile Bank cost of deposit ratio increased again in the market which means more cost
for used funds as well as less concerned by the top managements, as a result other compared banks
performed better except BRAC Bank.

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Burden Coverage Ratio (2015-2019)
The Burden Coverage Ratio means the difference between net-non interest incomes/loss to average
assets. Basically it shows how the net assets yield will be burdened by the net expenses of the bank.
This method of comparison is rare and hardly seen.

Burden Coverage Ratio = (Non-Interest Income - Non-Interest Expenses)/ Average Assets

Burden Coverage Ratio

120.00%
110.00%
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
2015 2016 2017 2018 2019

Mercantile Bank BRAC Bank Bank Asia MTB Jamuna Bank Premier Bank

In 2015, Mercantile Bank burden coverage ratio was satisfactory in terms of interest payments which
is the solid example of better performing than the compared Banks
In 2016, the ratio increased which the indication of better performance as well as in terms of successful
interest coverage, as a result Mercantile Bank performed better than all the compared Banks.
In 2017, the ratio of Mercantile Bank increased again and it seemed that managements are much
concern about the performance and as a result performed better than all the compared Banks.
In 2018, burden coverage ratio drooped for Mercantile Bank which means the bad performance in
compares to the compared Banks.
In 2019, the ratio wasn’t much satisfactory which the indication of less coverage for interest expenses
and as a result Mercantile Bank performed average compared to the selected Banks.

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3.4 Recommendations based on the outcome of the analysis
Mercantile Bank always concern about their banking performance. It is hard to judge and recommend
based on only five years performance, because Mercantile Bank along with five other compared Banks
all are in the market since more than 20 years. The ratios that are taken to compare them, may not give
us clear result of comparison as some other conditions are also involved with their performance.
However, this limited time and method of analysis (ratio) can give us a short idea about the outcome
of the performance as well as a small recommendation.

Recommendations
Overall performance of Mercantile Bank is satisfactory. However, several changes and decisions may
improve their performance more and take them one step further than the current position.
 Firstly, Mercantile Bank need to focus on continuous positive growth on performance. This
may not be easy to maintain continuously but at least may try to prevent the falling rates so that
retain in best position in the market.
 Benchmark is the one of the better option to improve the performance for any organizations,
Mercantile Bank may follow the method to improve their Performance also.
 Mercantile Bank should hire most efficient top managements who not only guide the bank but
also prove efficiency in terms of decision making.
 NPL is the current concerns of banking sector as many banks are facing issues like bankruptcy,
Mercantile Bank need to focus on its NPL ratio much and should careful on every credit
decisions specially in terms of loans.
 The years that Mercantile Bank ratios underperformed than other compared banks, the Bank
should justify the reasons of bad performance and try to learn and improve the obligations for
bad performance.
 The years that Mercantile Bank had better ratios should be marked as well, so that bank can
mark the objectives of better performance and try to improve them more.
 The most focused ratios are ROA, ROE and ROI for any organization in terms of comparison,
Mercantile Bank need improve this ratios first to become look stronger competitor in the
market.
 In terms of banking comparison, CD ratio, ROA, NIM and NPL are the common ratios that are
used to comparison, so Mercantile Bank need to carefully focus on this ratios.
 ROE is the ratio that attracts investors most, Mercantile Bank also need to focus on ROE
improvement so that Bank faces no/less difficulty to raise the capital from the market.
 Finally, being good from all the sides isn’t much easy. There are ups and downs in performance
and also bad times involved. So Mercantile Bank need to handle those situations efficiently
and should make sure not becoming number one but at least being a strong competitor in the
market.

To be the best performer in the market there is no limit of improvement. Success do not come by in
one night. Mercantile Bank need to work lot to improve their ratios. Being number one should not be
the priority being compared with the best should be the target.

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 Chapter - 4

4.1 Conclusion and implications

Implications:
Based on my completing the report especially with the financial data, I have found some necessity
steps that could bring some positive changes both for Bangladesh Banking industry as well as
Mercantile Bank Ltd. as per my experience and justifications the implications are given below –
Financial data’s that are publically presents, should be shown and justify by the authorities to
the employees so that they would understand how their activities are impacting in banking
sector. Any kind of progressive adaptations should be fast and with proper research the
adaptations should be add value to the banks. BB can also contribute on it. Bangladesh Bank
should frequently communicate with not only the top managements but also employees to have
proper understanding between everyone.
It is high time that banks should hire some fresh-graduates instead of running for experience,
fresh graduates always comes with high adaptability and as fast learner which seen harder in
professionals.
Since every movements of the banks impact directly in economy so banks need more
justifications before any adaptability or movement in the market.
Banks are currently obtain funds only from BB whenever it’s in financial trouble, there should
be an ease obtain of funds from foreign banks to prevent the pressures on BB. This will also
maintain a good relationship with foreign countries as well as banks can learn lots of from
foreign banks.
Mercantile Bank Ltd. should briefly discuss about their annual report’s outcomes with the each
employees so that employees can have better understand about the bank and its performance
over the years.
Banking ratios are one of the best way to evaluate banks and compare them with one to another.
Mercantile Bank Ltd. should briefly discuss this matter with their all employees to know how
the bank is performing in the financial sector.
Apart from financial performance Mercantile Bank should also focus on its environmental
issues, employee’s satisfactions, improvements of works and customer-employee relationship
so that bank can conduct its activities by performing well in all sector.
Mercantile Bank Ltd. can set up a complain box in each branches where all the customers
complain will be seen and justify individually by the top management of the branches and will
take necessity steps to prevent this issues by happening again. Even head office of the banks
can also view this complains and provide proper solution to the branches.
Mercantile Bank Ltd. need to build stronger customer relationship by empowering the
employees to share their own ideas and solutions which must be authorized by the
managements before implements so that actual necessity steps should be placed to implement.
Customers are highly satisfied or not by the service of the employees should be testified also
by surveying on customers and let the employee’s know about service and the impacts on
customers.
There could be a new division in all branches of Mercantile Bank Ltd such as “customer care
division”. Where customers can physically discuss all type of their problems with the care

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 division employee’s. Later this care division employees will discuss the matters with front-line
employees.
A meeting on daily basis should also be take place after banking hour with the manager, top
executives to employees on their daily activities, problems, changes and so on. As open
conversation employees can share their thoughts as well.
A weekly meeting should also be held between all the departments’ employees to have proper
knowledge on other sector and activities as well.
There should be incentive option for all the employees who are providing the banking services
on weekends.
Since, remote areas are now filling up with factories, companies, offices so Mercantile Bank
can think of to set up limited new branches in those areas.
Mercantile Bank Ltd. should also create more opportunities for fresh graduates and create a
scheme of loan for them with minimum interest to start something after graduation and
contribute more on preventing the poverty from the country

Conclusion
As Bangladesh is an underdeveloped country and its financial sector impact on its economy
significantly, especially from banking side. Commercial Banks in Bangladesh currently have seen
some progress in developing and growth in the market but still banks are losing its values in customers.
Share price fall, NPL, lack of proper guidance and decisions all are might be the reason but the
opportunity that banks can create for the people of Bangladesh is more than that. All it just need a
proper guidance. Bangladesh government need focus more in this sector. Banks are the main
remittance collector which increasing of foreign currency inflows, to grow up any business banks are
working as 3rd party by proving funds, for individuals banks are not only creating job opportunities but
also providing funds that helps them to become an entrepreneur, banks are providing security of
national wealth by keeping it in safe hand. It’s clearly indicates how banks are involved in every sector
and providing all the necessity requirement to develop a nation. Economy and financial performance
of the banks are struggling since the birth of this country. Recourses are not utilizing properly. For
many decades Government have seen adapting objectives to improve the performance. Although
banking sector is currently experiencing a hard time, it will not last long if banks use some fresh heads
on decision making and guidance.
Mercantile Bank Ltd. involved in Bangladesh financial sector in 3rd generation. Time to time it
development in the market and become one of the customer’s first choice bank. The bank believed in
customer’s satisfactions rather than business. It provide all the requirement to develop the financial
market. Currently more than 30 services in different product line is available in the market based on
customers’ requirements. The banks financial performance did not do much well however, it have
achieved all the satisfactory requirement that it needed to be. In my case, after all the analysis and
research, I trust my investigations may give some sort of ideas to analysts who want further
examinations on Bangladesh Banking sector and its development.

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Appendix A
Mercantile Bank Ltd. Income Statement
2019 2018 2017 2016 2015

BRAC Bank income Statement

2019 2018 2017 2016 2015

Bank Asia Income Statement

2019 2018 2017 2016 2015

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Jamuna Bank Income Statement
2019 2018 2017 2016 2015

Premier Bank Ltd. Income Statement

2019 2018 2017 2016 2015

Mutual Trust Bank Income Statement

2019 2018 2017 2016 2015

Page 44 of 46
Appendix B
Mercantile Bank Ltd. Balance Sheet Statement
2019 2018 2017 2016 2015

BRAC Bank Balance Sheet Statement

2019 2018 2017 2016 2015

Bank Asia Balance Sheet Statement

2019 2018 2017 2016 2015

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Jamuna Bank Balance Sheet Statement
2019 2018 2017 2016 2015

Premier Bank Ltd. Balance Sheet Statement

2019 2018 2017 2016 2015

Mutual Trust Bank Ltd. Balance Sheet Statement

2019 2018 2017 2016 2015

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