Chapter I

Introduction

INTRODUCTION
1.1 Introduction

In the age of globalization, the importance of the banking sector is beyond description. The
banking sector is going ahead with the improvement of new technological innovation. Banks
are the major financial institution which plays a major role in the financial system of a
country. Bank is a financial institution which deals with money. Not all banks are the same.
There are different types of banks such as co-operative banks, savings banks, investment
banks and central banks. Because of its transitional role, the banking system occupies a vital
place in a country’s economy. Banking sector creates its new and strong position in our
economy by taking advantage of its strong heritage build on trust and by its new innovation
of products and services. That created a higher value for its respected customers and
shareholders.

Banking sector shows its commitment to support our social-economic development by giving
loan in our agricultural, industrial, and commercial and consumer credit sector. In the process
of acceptance of deposits and invest these deposits by the provision of loans and advances.
Banks are a very old financial institution, has become a caring banking through its dedicated
and shows its professionalism with new innovative services in the areas of banking.

In service sector banking is a very emerging field in today’s family and business life. E-
banking has made our life very easy and comfortable because e-banking gives an opportunity
to complete a transaction at home. In our country, banking is a profitable industry than many
other countries in the world. After the liberation war, most of the bank was under government
control.

The banking sector is a highly competitive sector in the country. A small country like
Bangladesh has as many as 62 Schedule banks and 5 Non-scheduled banks, there are 6 state-
owned commercial banks, 41 private commercial banks, 8 Islamic banks, 9 foreign
commercial banks. Last five years, the banking sector witnessed remarkable growth and
economic development. By introducing internet banking, mobile banking or SMS banking
services are changing the global trend of the banking business. Introducing digital signature
for online shopping and other transaction added the banking services new dimension. Today
banks like National Commercial Bank, Sonali Bank Ltd. need to back customer confidence
and skilled personnel to increase their service quality. An internship program is a prerequisite
for acquiring a BBA degree. Limited as Internee and selecting topic “Overall Banking
Activities of Sonali Bank Limited”. I was placed in Sonali Bank Limited, New Court
Building Branch for a period of 45 days. This internship is an orientation to the entire
working activities of Sonali Bank Limited and a study on an overall banking area.

1.2 Background of the Study

Every invention comes from necessity. As a result, the banking world has been undergoing
rapid and fundamental changes. The speed of these changes has been maintained even after
the global financial turmoil experienced during the past few years. All over the world, the
dimension of the banking sector has been changing rapidly due to deregulation, technological
innovation and globalization to cope with this changing situation.

The banking system has also been changed now banks must compete in the market place both
with local institutions as well as foreign ones. To survive and thrive in such a competitive
banking world, two important requirements are development of appropriate financial
infrastructure by the central bank and the development of 'professionalism' in the sense of
developing an appropriate manpower structure and its expertise and experience. It is well
recognized that there is an urgent need for better-qualified management and better-trained
staff in the dynamic global market. Bangladesh is not an exception to this trend. Banking in
Bangladesh is facing challenges from a different angle though its prospect is bright in the
future.

1.3 Significance of the Study

This internship report is an important partial requirement of BBA program. This training will
help to improve knowledge and learning become perfect when it is associated with theory and
practice. The internship program constructs a relation and builds a bridge between the real-
life state of affairs and theoretical concepts, and that was taught in the classroom. Through
this internship program, students can establish contacts and networking. Networking may
help to get a job in practical life. That is, a student can train and prepare themselves for the
job market. At present, the banking sector is one of the most established areas in Bangladesh.
In the process of forming a good economic system, banks are playing an important role in the
country. A poor country like Bangladesh has an overwhelming number of unemployed
educated graduates. As they have no internship experience they have not been able to gain
normal professional experience of establishing a networking system, which is important in
getting a job. After completing my Bachelor of Business Administration (BBA) in
Management as a student of RMSTU, I wanted to complete my internship program from a
reputed bank which would be helpful for my future professional career. I got the opportunity
to perform my internship in Sonali Bank Limited (SBL). I was spent to New Court Building
Branch, Rangamati. It was 45 days practical orientation program. This report has been
prepared on the basis of practical experience on the day to day banking activities under the
close supervision of my internal guide teacher.

1.4 Objectives of the Study

The objective of this study is to have a clear concept and some practical experience about the
following:

1.4.1 General Objectives

 To know about the overall banking activities of a commercial bank and gain practical
experience in the job field.

1.4.2 Specific Objectives

• To get enough knowledge about the general banking activities of Sonali Bank
Limited.
• To gain knowledge about the credit-related operations and maintenance in Sonali
Bank New Court Building Branch.
• To find out the procedure of Loan and Advances that followed by Sonali Bank
Limited.
• To gain an idea about security and loan recovery procedures.
• To point out the major findings of the report & provide some valuable
recommendations based on them.
Chapter II

METHODS
 CHAPTER II
Methods of the Study

To successfully complete my study I followed a methodical way. I visited the bank every
day, inspected the references, talked with employees and customers. I collected data from
primary and secondary sources. Data sources, the period of data collection, processing and
analysis of data are briefly presented in this section. To identify the implementation,
supervision and monitoring practices interview with the employee and extensive study of the
existing file and practical case observation was done.

2.1 Data Sources

To perform the study data sources are to be identified and collected, the data are to classified,
analyzed, interpreted and presented in a systematic manner. In order to make a report, two
sources of data and information have been used widely.

The Primary sources are:

 Face-to-face conversation with the respective officers and staffs of New Court
Building Branch, Sonali Bank Limited.
 Direct communication with the client (randomly select).
 Practical work exposures from the different desks of different departments at the
Branch of the Bank.
 Relevant file study as provided by the officers concerned.

The Secondary sources are:

 Annual Report and prospectus of Sonali Bank Limited.
 Different books regarding general banking activities.
 Periodical publications by Bangladesh bank.
 Different publications regarding general banking activities.
 Information provided on the internet about general banking of Sonali Bank Limited.
 Website of Sonali Bank Limited.
2.2 Sampling Unit

The research sample is comprised of 20 respondents of New Court Building Branch of Sonali
Bank Limited (SBL). The breakdown of respondents is as follows:

SAMPLE FRAMEWORK
CUSTOMER 10
EMPLOYEE 10
TOTAL 20

2.3 Sampling Procedure Methods

I have surveyed respondents conveniently and judgmentally. Even though, there were some
refusals during the interviews from different respondents, where few people refused to
participate in the survey either because they were in a hurry or they were unwilling to do so.

2.4 Questioner Design

Based on the discussion with the employee of the bank and by gathering ideas from literature
review, I have developed a questioner and developed ten different questions (ten for
customers and ten for employees) to collect responses.

2.5 Period of Data Collection

Practical Orientation in the bank has started on 01 December 2019 and the duration of this
data collection was 30 days.

2.6 Processing and Analysis of Data

Collected data were compiled and processed with the aid of MS Word. The raw data was
collected from various sources. The Excel program has also been used for the table, figures,
percentages, charts & graphical presentation. Mostly descriptive statistics were used to
achieve the objectives of the report.
2.7 Limitations of the Study

 Learning all the banking functions within just 45 days was really tough.
 Another limitation of this report is the bank’s policy of not disclosing some data and
information for obvious reasons, which could be very much useful.
 The bank authority was very busy, so they could not give me enough time to discuss
various problems.
 In the case of performance analysis, secondary data are used..
 I couldn’t add some updated information due to the bank’s new annual report was yet
not published.
 This is my first experience on a job, so there may arise some faults though I have tried
my level best.
 All available data couldn't be verified.
 Due to lack of adequate studies of the loan sanction, disbursement, monitoring &
recovery process.
 Lack of published materials.
 Chapter III

Organization Overview
 CHAPTER III

Organization Overview
This chapter emphasizes the historical background of Sonali Bank Limited and also includes
organization structure, financial condition, products & services, etc.

3.1 Historical Background of Sonali Bank Limited

Soon after independence of the country Sonali Bank Ltd emerged as the largest and leading
Nationalized Commercial Bank by proclamation of the Banks Nationalized Order 1972
(Presidential Order-26) liquidating the then National Bank of Pakistan, Premier Bank and
Bank of Bhawalpur. As a fully state owned institution, the Bank had been discharging its
nation-building responsibilities by undertaking government entrusted different socio-
economics schemes as well as money market activities of its own volition, covering all
spheres of the economy.

The bank has been converted to a public Limited Company with 100% ownership of the
government and started functioning as Sonali Bank Limited from November 15, 2007, taking
over all assets, liabilities and business of Sonali Bank Limited. After corporatization, the
management of the bank has been given the required autonomy to make the bank competitive
& to run its business effectively. On September 14 of 2009, Sonali Bank started business
activities of merchant banking by establishing a subsidiary company named “Sonali
Investment Limited”. Islamic banking activities were introduced by the bank in Dhaka,
Chottogram, Khulna, Sylhet, Bogura from 29th June of 2010 through “Islamic banking
window”. Sonali bank has already engaged in the duty of maintaining corporate social
responsibilities; by establishing a “Sonali foundation”. After corporatization, the management
of the bank has been given the required autonomy to make the bank competitive & to run its
business effectively.

To meet excellence and success there is no alternative of training that helps the employees of
the bank to develop their skills and work efficiently. To provide necessary training to the
employees the bank has established „Sonali bank staff college‟ in Dhaka. Moreover, there are
also training institutions of Sonali bank in Chottogram, Rajshahi, Khulna, Bogura, and
Mymensingh.
In order to develop in the field of international banking, Sonali bank established a full
subsidiary company in the United States of America; named „Sonali Exchange Company
Incorporate (SECI). At present, it has 9 branches of its own. Also in 2001 sonali bank
successfully started its banking activity in the United Kingdom as Sonali Bank (UK) Limited.
This bank was established by joint ownership of the Sonali Bank and Bangladesh
government. At present, it has 6 branches in all over UK. Even Sonali bank has its own
agent’s office in Riad, Jeddah and the Kuet of the United Kingdom of the Saudi Arabia.
Sonali Bank is also engaged in “Remittance businesses” with 55 banks and exchange houses
of different countries, including the Middle East. Sonali Bank also provides its foreign trade
facilities to its customers through its authorized 45 branches and also with 617 foreign
correspondence of different countries across the world.

Sonali Bank Limited is governed by a Board of Directors consisting of 11 (Eleven) members.

The Bank is headed by the CEO & Managing Director, who is a well-known Banker and a
reputed professional. The corporate Headquarter of the bank is located at Motijheel, Dhaka,
Bangladesh, this is the main commercial center of the capital.

3.2 Corporate Vision and Mission

Vision: Socially committed leading banking institution with global presence.

Mission: Dedicated to extend a whole range of quality products that support divergent needs
of people aiming at enriching their lives, creating value for the stakeholders and contributing
towards socio-economic development of the country.

3.3 Core Values

The core value proposition of Sonali Bank Limited consists of the following key elements
which would assist the Bank in perceiving its employees to work as a team towards
accomplishment of assigned duties and responsibilities for achievement of desired objectives.
The core values include:

 Ethics: Everyone must ensure adherence to ethical practices of banking.

 Objectivity: All persons will have definite objectives in carrying out their tasks.
  Integrity: Protection and safeguard of national and customer’s interest are vital
elements for societal trust.
 Excellence: Excellent performance and effectiveness are pre-conditions to ensure
quality service to the large customer base of the Bank.
 Commitment: Every employee is committed to work up to the expected level to
ensure satisfaction of valued customers.
 Accountability: All employees are responsible for their activities and will remain
accountable to their respective superior for accomplishment of tasks.
 Transparency: Information to be kept open for all so that stakeholders can have
proper ideas about the activities of the Bank.
 Team Work: Open communication, discussion and interaction amongst the
employees would ensure unification of actions and efforts towards achieving the
common goal(s).
 Self-Reliance: Each employee will have an ownership attitude towards the Bank and
self confidence in his work for the betterment of the Bank.
 Innovation: New and innovative products are the needs of the time for which
continuous action oriented researches are being carried out.

3.4 Corporate Profile

Name of the Company Sonali Bank Limited

Chairman
Managing Director & CEO
Company Secretary
Legal Status
Genesis
Date of Incorporation
Date of Vendor's
Agreement
Registered Office
Mr. Ziaul Hasan Siddiqui
Mr. Md. Ataur Rahman Prodhan
Mr. Tauhidul Islam
Public Limited Company
Emerged as Nationalized Commercial Bank in 1972,
following the Bangladesh Bank (Nationalization) Order
No. 1972 (PO No. 26 of 1972)
03 June 2007
15 November 2007
35-42, 44 Motijheel Commercial Area, Dhaka, Bangladesh

Authorized Capital Taka 6,000.00 Crore

Paid-up Capital Taka 4530.00 Crore
 Number of Employees 17,965
Number of Branches 1224
Phone-PABX 9550426-31, 33, 34, 9552924
FAX 88-02-9561410, 9552007
SWIFT BSONBDDH
Website www.sonalibank.com.bd
E-mail itd@sonalibank.com.bd
Table 01: Corporate profile of Sonali Bank Limited
(Source: https://www.sonalibank.com.bd)

An overview of New Court Building Branch, Sonali Bank Limited

In order to complete my Internship, I worked in Sonali Bank Limited, New Court Building
Branch Rangamati as an Internee. The branch is the Chest Branch or Principal Branch of all
other Branches of Sonali bank limited in Rangamati. Its Located near Court Building Road,
Rangamati. This Branch performs as an agent of the government. The Branch performs all
the activities of such Domestic Branch as well as disposes of clearinghouse activities for
Bangladesh Bank. It also works as a treasurer of the government. This Branch is not a
Corporate Branch, but yet the main branch of Rangamati. Like all other branches, this branch
also performs almost the same activities and services to the customers under Sonali Bank’s
managements and Bangladesh Banks regulations. There are 14 branches under this Principle
branch of Sonali Bank Limited, Rangamati. Those are Baghaichhari, Banarupa, Baraichhari,
Barkal, Bilaichhari, Chandraghona, Ghagra Jurachhari Kaptai, Kawkhali, Longadu,
Naniarchar, New Court Building, and Rajasthali.

Branch Profile

Name of the Branch New Court Building Branch

Address Rangamati Sadar, Rangamati
Branch Manager Mr. Md. Amir Azim
Legal Status Public Limited Company
Genesis Emerged as Nationalized Commercial Bank in 1972,
following the Bangladesh Bank (Nationalization) Order No.
1972 (PO No. 26 of 1972)
Branch Code No. 54197
Routing Number 200840431
Branch Status Principle Branch as well as Domestic Branch
Number of Employees 30
 Number of Branches Under 14
Supervision
Phone-PABX 88-0351-62361, 63086
SWIFT BSONBDDH
Website www.sonalibank.com.bd
E-mail brnewcourt@sonalibank.com.bd
Working Hours Sunday - Thursday (Except Holidays)

Performance of Sonali Bank Limited at a Glance

(in million)
Particulars 2018 2017
Deposit 1093866 1064311
Loans and Advances 464083 423218
Classified Loans 121883 149302
Import 257020 1155300
Export 32503 28494
Foreign remittance 144194 129601
Operating Profit 20257 11955
Net Profit 2264 7092
Capital Adequacy Ratio 10.10 10.35
Manpower (Officer) 14671 15308
Manpower (Staff) 2600 2993
No of Branches 1215 1211
Authorized Capital 60000 60000
Paid up Capital 45300 41300
Table 02: Authorized & Paid-up Capital (2014-18)
(Source: Annual Report 2018)
3.5 Capital Structure:

The capital structure of Sonali Bank Ltd. is quite strong. At present, the Authorized Capital of
the company is BDT 60 Billion (BDT 1000.00 crore) divided into 6,000,000,000 ordinary
shares of BDT 100 each.
 Year Authorized Capital Paid-up Capital

2018 60000 45300

2017 60000 42300

2016 60000 38300

2015 60000 38300

2014 60000 31200

Table 02: Authorized & Paid-up Capital (2014-18)

(Source: Annual Report 2018)

Graphical Presentation

Capital Structure
70000

60000

50000

40000

30000

20000

10000

0
2014 2015 2016 2017 2018

Authorised Capital Paid-up Capital

Figure01: Authorized & paid up capital

(Source: Annual Report 2018)
3.6 Branches and Subsidiaries

At present, the number of Sonali bank can be identified with the number of 1224 in total 1222
branches represent the countries inward banking activity and the rest of 2 branches are
situated in foreign country. Sonali bank maintains there inward activity through 1222
branches, in which 752 branches are providing banking activities in villages and rural areas.
And the rest numbers of 467 branches are established to cover the cities and towns of the
country.

Among these 1222 branches, 46 branches are declared as “Authorized dealer (AD)” branches
through the Sonali Bank performs its foreign trade activities for its customers. The New
Court Building Branch is one of the branches of Sonali Bank Limited. For the record the two
foreign branches are carrying the banking activities in Kolkata (West Bengal) and Shiliguri in
India. To support country’s internal banking activity there are 11 general managers (GM)
offices, 46 principal offices and 16 regional branch offices all over Bangladesh. Sonali bank
is performing its official activities under the direction of 46 different departments of its head
office.

1. Total No of Branches 1224

a) No of Foreign branches 2
b) No of Local branches 1222

i) No of Rural Branches 752

ii) No of Urban Branches 467
2. No of Regional Offices 16
3. No of Principal Offices 46
4. No of G.M. Offices
11
Table: Total Number of Branches
(Source: https://en.wikipedia.org/wiki/Sonali_Bank)

Subsidiaries:

1. Sonali Exchange Company Incorporated (SECI) having 10 (Ten) branches in USA.

2. Sonali Investment Limited (Merchant Banking) having 4 (Four) branches at
Motijheel, Paltan, Uttara, Mirpur in Dhaka and 1 (One) branch in Khulna,
Bangladesh.
3. Associates:
 Sonali Bank (UK) Limited having 2 (Two) branches in UK.
 Sonali Polaris FT Limited.
 4. Representative Offices: (3) one in Jeddah (KSA) one in Riyadh (KSA) and one in
Kuwait.
5. Correspondence: 639

3.7 Management Systems

Organogram: (Functions Wise): Sonali Bank is the largest nationalized commercial bank in
Bangladesh. The head office of the bank is located at motijheel commercial Area which is the
controlling Headquarter. GM office is the divisional Headquarter of a Division. Principal
office is the district Headquarter which has jurisdiction over the entire area of a District. The
principal office is the local point of the bank’s administrative zone of the District. The
regional officer is situated in the Thana level within the district, is under control and
supervision of the principle office of the district. Regional officer is responsible for their
activities to the principle office. Regional heads exercise control and supervision the overall
the branches within their jurisdiction and keep the head of the principal office informed the
progress of their respective areas from time to time.

Head Office

G.M Office

Principle Office

Regional Office

Branch Office
Figure:
Functional Hierarchy of Sonali Bank Limited

Organogram: (Position Wise): The management of the bank is vested on a board of

directors, subject to overall supervision and directions on policy matters by the board which
is constituted in terms of Bangladesh Bank (Nationalization) Order 1972. Board of directors,
constituted by thirteen members has the authority to organize, operate and manage its affairs
on commercial consideration within the board policy of government. There are directors
appointed by the government. Other members of the board including MD are also
government appointed out of that at least three have the experience in the field of Finance,
Banking, Trade, Commerce, Industry and Agriculture. The managing director is the Chief
Executive of the bank. He executes all the activities under the direction of the board. All line
and staff personnel of bank’s are own recruitment except a member of the board of Direction.

Board of director

Managing director

Deputy Managing Director

General Manager

Deputy General Manager

Assistant General Manager

Senior Principle Officer

Principle Officer

Senior Officer

Officer
Organogram (Branch wise): This organogram consists of five positional designation of the
branch employees.
 Senior Principle Officer
Principle Officer
Senior Officer
Officer Cash
Officer

3.8 The Principle Activities of the Bank:

The principal activities of the bank are providing a comprehensive range of financial services,
personal and commercial banking, trade and services, cash management, treasury, securities
and custody services and also performing Government treasury functions as an agent of the
Bangladesh Bank. It offers various banking services such as personal banking, rural banking,
international banking, industrial financing as well as SME banking and Islamic banking
(saving for Hajj). For its retail customers, it offers savings, remittance and deposit products
including savings deposit, Daily profit schemes as well as education deposit, medicare
deposit, marriage savings deposit and rural deposit schemes. Core activities are following

 Receiving money on deposits.

 Conducting cash transactions of customers who have a current account.
 Attending bills of exchange and draft of customers.
 Section of loan.
 Provide other services to the customer’s
 Transfer of money
 Collection of receipts.
 Collecting interest, dividends, rents, pension, etc.
 Acts as an advisor

Products & Services offered by Sonali Bank Limited:

Islamic Banking Services
 Core Business:
 Corporate Banking Deposit Products:

 Project Finance  Al-Wadeeah Current

 SME Finance Account(AWCA)

 Remittance  Mudaraba Savings Account(MSA)

 Lease Finance  Mudaraba Special Notice Deposit

Account(MSNDA)
 Consumer Credit
 Mudaraba Term Deposit
 Trade Finance
Account(MTDA)
 Loan Syndication
3.17  Mudaraba Hajj Saving
 Foreign Exchange Account(MHSA)
 Dealing International Trade  Mudaraba Sonali Monthly Deposit
 NGO-Linkage Loan Scheme(SMDS)

 Investment.  Mudaraba Monthly Profit

Scheme(MMPS)
 Government Treasury Function
 Money Market Operation
 Rural and Micro credit

Other Business Branches under Supervision by New

Court Building Branch
 Government treasury bills.
 Locker Service.
Investment Products:
 A.T.M card.
 Utility Bills Collections.  Bai-Murabaha

 Ancillary Services  Bai-Muajjal

 Merchant Banking.  Bai-Salam

 Bai-Istisna
 Hire Purchase Under Shirkatul
Melk(HPSM)
 Ancillary Services

Collection: Payment:

 Gas bills.  Pension of employees of Government

 Electricity bills. and other Corporate Bodies.

 Telephone bills.  Bangladesh Bank employee’s

pension.
 Water/Sewerage bills.
 Army pension.
 Municipal holding Tax.
 British pension.
 Passport fees, visa fees and
 Students' stipend/scholarship.
Travel tax.
 Customs & Excise duties.  Govt. & Non-Govt. Teachers' salary.

 Source tax and VAT.  Food procurement bill on behalf of

the Government
 Jakat fund.
 Hajj deposit.
Sale & Encashment/Purchase:
Social Services:
 Savings Certificates.
 Old age allowances.
 ICB Unit Certificates.
 Widows, divorcees and destitute
 Prize Bonds.
women allowances.
 Wage Earner's Development Bonds.
 Freedom Fighters' allowances.
 US Dollar Premium & Investment
 Rehabilitation allowances for
Bond.
acid survival women.
 Lottery tickets of different Semi-
 Maternal allowances for poor
Govt. and Autonomous Bodies.
women.
 Sanchaypatra.
 Disability allowances.
 Public Service Commission's
application form.
 Judicial Service Commission's
application form.
 Exchange of soiled / torn notes.
 CHAPTER IV

GENERAL BANKING
 Chapter IV

General Banking

General banking is the heart of business banking activities. General banking department
performs the core function of a bank operates the day-to-day transactions. It is the storage
point of all kinds of purposes in transactions. General banking is the main part of banking
activities. All of the banking operations start with general banking. It is the repository point
where customers can store all kinds of purposes in transactions. General banking is the side
where banking offers different alternatives to the clients to deposit and remit their money. To
encourage the clients, the bank offers different options in front of their clients. Most of these
options are very much similar between the banks, but the customer services and facilities may
not be the same. Every branch of every bank has to maintain the General Banking
department. It takes care of lot of important banking activities mainly collecting the deposit
from customers. General Banking Department is mostly expected to maximize the number of
customers. It is the introductory department of the Bank to its customers. Sonali bank, the
principal branch has all the required sections of General Banking.

4.0 Sections of General Banking:

General
Banking

Accounts Bills and Loan and

Cash Deposit Remittance Accounts
Opening Clearing Advance
Section Section Section Section
Section Section Section
4.1 Accounts Opening Section

Account Opening is the gateway for clients to enter into a transaction with the bank. It is the
foundation of the banker-customer relationship. There are various kinds of functions perform
by the accounting opening section which are-

a) Opening an account,
b) Check book issuing and
c) Closing an account.
A customer can open different types of accounts through this department. We can explain in
the bank’s deposit section.

a) Requirements of Opening an Account in various purpose:

Current Account: There are procedures that are to be followed for opening a current
account:

 The person has to collect the prescribed application.

 Then he has to submit all those documents to the bank officer.
 Then provide NID and signature where it is needed.
 After all of the formalities, the account is opened and number will be posted.
 And lastly, the account holder will get the check book. And along with the form the
account holder will have to submit NID, passport size photograph, an identifiable
signature, photocopy of bills like paper, telephone and electricity.
 And 1000 TK is needed to open the account.

a) Proprietorship Firm: There is an account opening form for proprietorship firm

provided by Sonali Bank Limited. For this account, a customer must need to submit
the following papers with the form:
 Introduction of the account.
 Two photographs of the signatories duly attested by the introducer.
  Copy of trade license.
 Seal of concern.
b) Partnership Firm: There is an account opening form for partnership firm provided
by Sonali Bank Limited. Introduction for running an account is given in this form.
Enclose Documents require for partnership account:
 Introduction of the account.
 Two photographs of the signatories duly attested by the introducer
 Partnership letter duly signed by all partners.
 Partnership Deed duly certified by Notary Public.
 Copy of Registration (if any).
 Seal of the concern.
 Update Trade License.

c) Limited Company: There is an account opening form used for a limited company.
There are two kinds of limited company. The bank always takes precautions for
opening this type of accounts. Several documents submitted by the clients should be
checked carefully by bank to be legally in safe position.
Enclosed Document for Limited Company Account:
 Introduction of the account.
 Two photographs of the signatories duly attested by the introducer.
 Signature and seal of the client.
 Trade license.
 Certified copy of memorandum and articles of association.
 Certificate of incorporation.
 Broad resolution for opening account duly certified by the chairman/ managing
director.
 List of directors along with designation and specimen signature.
 Certificate from the registrar of a joint stock company is entitled to commence
business (in case of public Ltd. Company.)
  Certificate from broad of investment (in case of joint venture or foreign Co),
 Work permit order from ministry of industry (In case of foreign nation),
 Join venture agreement (in case of joint venture).

2. Savings Account (Individual/Joint): Savings account (SB) is meant for the people of the
people lower and middle classes, who wish to save part of their incomes to meet their future
needs and intended to earn income from their savings. From savings account the account
holder can deposit money so many times the holder wishes. But the holder cannot withdraw
money more than two times in a week. Also, the holder cannot withdraw money more than
TK 20,000 at a time without any permission from the bank. The holder is given interest on
their deposited amount after a certain period at a certain rate. The holders of this type of
account are mainly students, teachers, employees, householders.

For opening of this type of accounts, the following requirements are necessary:

 The person has to collect the prescribed application.

 Then he has to submit all those documents to the bank officer.
 Then provide NID and signature where it is needed.
 Photograph attested by the introducer. An introducer of Sonali Bank.
 For joint accounts, signatures of all the account holders are necessary.
 After all of the formalities, the account is opened and number will be posted

b) Check Book Issue

There are some procedures to be followed to issue a check book. At first customers need to
fill up a form. Name and account will be written on the requisition slip. Then the officer in
charge will sign the requisition slip and in the register.

c) Closing an Account:
During my internship period, I have learned how to close a bank account before maturity. In
order to do so the client will submit an application form to the bank. After accepting the
application the bank will deduct service charge as closing fee from the balance and rest of the
money is given to the account holder.

Bank closes an Account in the following situations:

 When a customer submits a written application to the bank to close his account.
 When a customer does not follow the appropriate guideline
 When the bank is properly informed about the message of death of the account holder.
 When the bank gets a notice regarding the insanity of his customer.

4.2 Cash Section

The most functional area of the bank is Cash section. Cash section is an important section
where cash transactions are made. The officers who are in charge of cash section have to
deal with a lot of cash. Cash from the vault is handed over to the officers who are handling
the cash opening balance. Some procedures need to be followed in the cash section. A fixed
balance with payments and receipts will be in the cash opening section. And it will be the
closing balance. Some amount will be added to the vault. And the bank will adjust the
amount at the end of the day. Sonali Bank is a commercial bank so they have to deal with lots
of receipts and payments. There are various systems maintain by cash officer that is under:

 Vault management
 Cash Payment
 Cash Receive
 Safe deposit and locker management

4.2.1 Cash Receiving Procedures:

The work of cash receiving counter is to examine the deposit slip. Depositor uses the
prescribed deposit slip supplying by the bank for depositing cash, Check, draft, pay order etc.
in all types of deposit the teller must check the following things:

 The slip has been properly filled up. The title of the account and its number.
 The amount in figure and in words is same.
  Instrument signed by the depositor.
 Data of the instrument.

After checking all these things the teller will accept cash, Check, draft, pay order etc. against
deposit slip. The teller will place the cash in cash drawer according to denominations. The
teller will place signature and affix “cash received” and record in the cash received register
book against the account number. At the end of this procedure, the cash officer passes the
deposit slip to the computer section for posting purpose and returns the customer’s copy.

4.2.2 Cash Payment Procedures:

In this section I gathered practical experience about how a check is honored and how cash is
paid. In order to safeguard the position the banker has to observe the following precaution
before honoring a Check:

1) Presenting the check: If any A/C holder would like to draw money from his A/C he at
first has to issue a check supplied by the respective bank. Then he has to present the check to
the concerned officer after duly signed.

2) Token Issue: After receiving the check, the officer examines the followings

 Account number of customer

 Issuing date of check
 Amount of money mentioned in the check.
 Amount position/balance position of the customer.
 Whether the customer has signed behind the check or not.
 After that, the officer enters the amount of money, token number, and account
number in the daily transaction register. The register is usually called day book.

3) Verifying the check: At this stage, the check is sent to the principal officer (second
officer) to verify it. To examine the validity of the check, the second officer compares the
customers signatures given on the check with that on the signature card kept in his custody.

4) Honoring the check: If all the factors are satisfactory, the check is honored by the second
officer.

5) Check cancellation: At this stage, the officer signs across the check to pay the money.
6) Drawing money: After the check is signed by the second officer, the customer returns the
token to the cash payment section and draws his money.

4.2.3 Dishonor of Cheque: A banker can dishonor a cheque in the following situation:

 Insufficient fund.
 Payment stopped by drawer.
 Alternation require in drawer signature.
 Effect not clear in the cheque.
 Exceed arrangement in cheque.
 Fill cover note received.
 Payee’s endorsement irregular/illegible/required.
 Drawer signature different and required.
 Cheque is postdate/mutilated/out of date.
 Clearing stamp required cancellation.
 Cheque crossed “accounts payee only”.
 Collecting bank’s discharge irregular/ required.

4.2.4 Books maintained by cash department:

 Vault Register: This is the book where amount of cash available in the branch is
maintained. That is, the amount in the vault register book.
 Cash Receive Register: This register keeps record of all incoming cash.
 Cash Payment Register: Similar to the cash register book, this books keeps tracks of
all outgoing cash that is all payments.
 Cash Position Register: This is the book where cash balance is recorded by counting
the notes and coins that are physically available. The balance in this book is compare
with the vault register, which should be the same. In case there is an error, then the
figures would not match but if no discrepancy is found then anything is to be worried
about.
 Other Registers:
  Money Remittance Register
 Prize Bond Register
 Stamp in hand Register
 Safe deposit register
4.2.5 Automatic Machine use in cash Section

 Money Counting Machine: With the help of this machine officer can easily count
the money. It save time and also provide accuracy.
 Money Detector Machine: This machine helps officer to find out the fake money.

4.3 Deposit Section

Deposit is the lifeblood of the bank. From the history and origin of the banking system, we
know that deposit collection is the main function of a bank. The officer of the deposit section
maintains account number of all the customers of the bank. They use different code number
for different account. The officer makes position three types of transactions such as cash,
clearing and transfer section. This section performs the following tasks:

 Post kind of transactions.

 Provide on demand report.
 Cheque maintenance.
 Preparation of day transaction position.
 Preparation of closing monthly transaction position

4.3.1 Types of Deposit Scheme:

1. Fixed Deposit: Fixed deposit is very popular to fixed income earners. A depositor has to
deposit money with bank at a time. The deposited amount is drawn at the end of maturity
of the contract. But in case of emergency a depositor can withdraw money before
maturity. The interest rate on fixed deposit varies according to the duration of deposit.

Characteristics of Fixed Deposit:

 Fixed deposit may be of different terms.

  The bank issues a receipt rather than check to the depositor. The receipt is called
fixed deposit receipt (FDR).
 FDR is the most transferable.
 FDR can be used as security against loan.
 Interest rate on fixed deposit is usually higher than other deposit.

2. Savings Deposit: Generally individuals or service oriented organization use savings

deposit. This type of depositor can deposit money as much time as he or she wants in a
working day. But he cannot withdraw his or her deposited amount frequently.

Characteristics of Saving Deposit:

 Banks pays 3.5% interest on savings deposit

 Minimum Tk. 100/- is required for initial deposit.
 Savings deposit is suitable for service holder person of middle level income,
students, teachers, laborers etc.

3. Current Deposit: The persons or institutions which need frequently to deposit or

withdraw money are the users of current deposit. Generally businessmen use current
deposit. This type of depositor can deposit or withdraw money as much time as he needs
in a working day without giving any notice to the bank.

Characteristics of Current Deposit:

 No interest is paid on current deposit

 Initial amount of current deposit has to be deposited in bank tk.1000.
 Bank cannot invest current deposit. Because bank has to pay the deposited
amount on demand.
 This type of deposit is suitable for businessmen, industrialists, government,
nongovernment and autonomous body.

4. Double Benefit Scheme (DBS): Double Benefit Scheme (DBS) Account is a time
specified deposit scheme for clients where the deposited money will be doubled on
 maturity. It's a great option to double your unused money after a specific time. Amount to
be deposited TK.10000 or its multiple; Deposited amount will be doubled in 6 years;
DBS accounts can be opened both for Individual and Corporate bodies.

5. Monthly Savings Scheme (MSS): Dreams may turn into reality through Southeast bank's
Monthly-Savings Scheme (MSS). It's a hassle Free Deposit. Loan of Maximum 80%
against the lien of the MSS amount deposited can be availed. It can close the account
before maturity.

6. Pension Savings Scheme (PSS): It offers clients to save their hard earned money every
months for a secured future. Loan of Maximum 80% against the lien of the PSS amount
deposited can be availed. Client has to pay the Installment amount by 15th day of a
Month. Advance Installment can be provided. Installment amount can be given from any
branch of our Bank.

7. Millionaire Deposit Scheme (MDS): Millionaire Deposit Scheme (MDS) Account is a

time specified monthly deposit scheme for clients where the deposited money will
become millions on maturity. With this great offer, you can become a millionaire after a
specified term. Tenor is 4, 5, 6, 7, 8, 9 and 10 years term; Credit facility for maximum of
2 years can be availed at any time during the period of the scheme. MDS Account can be
opened both for Individual and Corporate bodies.

8. Deposit Pension Scheme (DPS): It is a government program. Government of Bangladesh

started the program in 1983. DPS was fully stopped in 1994 by the Bangladesh bank
circular. Here the deposit limit is tk.100 to tk.500 for a period of 10yrs and 20yrs.Interest
on the invested amount will be compound at the rate 15% and calculated on yearly basis.

9. Sonali Bank Special Deposit and pension Scheme (SDPS): Now the days Sonali Bank
offer a Deposit pension scheme named Sonali Bank Deposit and pension scheme (SDPS)
started from 1996. Generally service holder operates this account. Interest rate of SDPS
is: 5 years10%, 10 years12%.It have been stopped in the year 2000.

Deposit Schemes at a glance

 SL. No Name Of Scheme Duration Installment Rate of Interest
Amount
01. Sonali Deposit Scheme (SDS) 5 years 500/- to 10,000/- 8.5% (Compound)
02. Education Deposit Scheme 10 years 500/- to 10,000/- 8.0% (Compound)
(EDS)
03. Medical Deposit Scheme 10 years 500/- to 10,000/- 8.0% (Compound)
(MDS)
04. Rural Deposit Scheme (RDS) 7 years 100/- to 1000/- 9.0% (Simple)
05. Marriage Scheme (MSS) 10 years 100/- to 500/- & 8.5% (Compound)
1,000/- to
10,000/-
06 Monthly Earning Scheme 3 years 50,000/- or times 9.95% (3years) &
(MES) & 10.8% (5years)
5 years (Simple)
07. Double Benefit Scheme (DBS) 6.6 50,000/- or times 11.25%
years (Compound)
08. School Banking Scheme (SBS) --- Minimum 100/- 6.0% (Compound)
09. Sonali Bank Daily Product --- Minimum 5.0% (Compound)
(SBDP) 20,000/-
10. Retired Savings Scheme (RSS) 3 years Minimum 1 Lac 11.0% (Simple)
11. Sonali Bank Retired Savings (3-5 Minimum 3 Lac 13%(3-5yrs)
Scheme (SBRSS) years) & 14%(6-15yrs)
(6-15 (Simple)
years)
12. Sonali bank deposit pension 3-15 10% (Simple)
scheme (SBRSS) years
13. Sonali Bank Millionior Scheme 3-20 8% (Compound)
(SBMS) years
14. Shadheen Sanchay Scheme 5/10 Minimum 1000/- 3% (Compound)
Years

4.4 Bills & Clearing Section

Clearing and bills section is an important section of General Banking. For safety and security
in financial transaction people use financial instrument like DD, PO, and cheques, etc.
Commercial banks collect these financial instruments on behalf of their customers. In this
process the bank used to collect and clear the financial instruments through their customer’s
account, is known as clearing and collection. At the Principle Branch of Sonali Bank plays
the role of Clearing House for all banks located in Rangamati. Because here Bangladesh bank
is not available so Sonali Bank plays the role of clearing house on behalf of Bangladesh bank.
The main function of this section is to collect financial instrument on behalf of the customers
through Bangladesh bank clearing house, outside bank clearing (OBC), Inter branch clearing
(IBC). Upon receipt of the instruments this section examines the following things:

 Whether the paying bank within Rangamati District.

 Whether the paying bank outside of Rangamati.
 Whether the paying bank is its own branch.

4.4.1 Clearing house: Clearing House is a place in the Central Bank where different banks
come to settle their interrelated liabilities.

4.4.2 Types of Clearing House:

1. Inward Clearing: When a particular branch receives instruments which on them and
sent by other member bank for collections are treated as inward clearing.
2 Outward Clearing: Outward clearing held if the instruments are to collect by the
specified branch within Rangamati district and not for their own branch.
Here the following procedures are followed:
 Receive of the client duty signed instruments.
 Checking for any apparent discrepancy.
 Clearing stamps are affixed on the instrument and on the deposit slip.
 Branch code number also affixed on the instruments.
 The authorized signature endorses instruments.
 Particulars of the instruments and vouchers are recorded in the “outward
cleaning” register.

4.4.3 Short Collection (SC):

Customers deposit cheque, drafts etc. for collection, attaching their deposit slip. Instruments
within the range of clearing are collected through local clearinghouse. But the other, which is
outside the clearing range, is collected through SC. Then they will forward the bill to that
particular branch. SC number entered on the forwarding letter.
Charge for SC:

Amount Minimum Amount Commission Postage Charge Vat

Any amount TK. 50 0.10% 20 15% on Commission

4.4.4 Inward Bills for Collection (IBCA): In this case bank will work as an agent of the
collection bank. The branch receives a forwarding letter and the bill. Next steps are:

 Entry in the IBCA register, an IBCA number given.

 The instrument is sent to clearing for collection.
 An IBCA is dispatched in this regard.
 If dishonored in this case the instrument is returned to the collecting branch along
with return Memo indicating the cause of dishonored.

4.5 Remittance Section

In this section bank transmits money from one account to another within in the country or
outside the country. It is also one of the crucial area since the bank officers have to deal with
a lot of money. During my internship period I have experienced how they work in the
remittance section. In this section the officers receive the money from foreign branch and
transfer the money to the proffered branch. If the amount exceeds $ 2000 then the officers
have to fill a ‘C’ form.

4.5.1 Types of Remittance: There are two types of Remittance, which are- Local Remittance
and Foreign Remittance.

1) Local Remittance: When money is transferred through one place to another place within
the country, it is called local remittance. Sonali Bank has highest number of branches all over
the country and offers various kinds of remittance facilities to the public. The main
instruments issued by Sonali Bank for remitting funds are:

 Pay-Order (PO).
 Demand Draft (DD).
 Telegraphic Transfer (TT).
  Mail Transfer (MT).

 Pay-Order: Pay-order is used to remit the money within local area. Usually people
use this pay-order when they want to transfer money to a close distance. For
example, if we want to remit fund from one place of Dhaka to another place, we
generally use payment order.
The commission that the bank gets as per Bangladesh bank rule is given below:

Amount Commission

Tk. 1 upto Tk.1000 Tk.23(Tk.20 commision+Tk.3 VAT)

Tk. 1001 upto Tk.100,000 Tk.35(Tk.30 commision+Tk.5 VAT)

Tk.100,001 above Tk.115(Tk.100 commision+Tk.15 VAT)

 Demand Draft: Demand Draft is one of the common instruments of remitting fund.
It is an instrument that is drawn on one banker office to another or other banker’s
branch to pay certain sum of money to the named person. It is generally used to remit
fund from one corner of the country to another. For example, if we want to remit
fund from Dhaka to Khulna we use DD. DD is very popular instrument for remitting
money from one corner of the country to another.

Procedures of remitting money through DD are mentioned below-

 A credit voucher will be given to the sender of money and he needs to complete
the form which is known as DD application form. Then the sender will deposit the
cash for the remitting fund.
 After the completion of the application form, the sender will place the cash in cash
receipt section.
 Then the officer asks for fees and accepts the cash and count the cash. After that,
the voucher will be received by an officer of remittance section.
 The concerned officer will register the amount of cash and he will prepare a
formal demand draft.
 The officer in charge will check the demand draft. Then if it’s ok he will sign and
store the voucher.
  Then the DD will send to the receiver.
 After that the DD issuing branch will send some instructions to the receiving
branch.
 After receiving the DD, the receiver branch will fill up the formalities along with
the amount that they get from the sender branch.

 Telegraphic Transfer (TT): Sometimes the remitter of the fund wants the money
to be available to the receiver’s account immediately. In that case bankers arrange
to remit fund telegraphically. Here the remitter bears the additional charge for
telex/telephone. In case of urgency of transferring the money people use
telegraphic-transfer. In this way they can remit money immediately.

 Mail Transfer (MT): It is an instrument that is drawn by one banker office on

another or other banker’s branch to pay certain sum of money to the named person.
This instrument is not given to the holder but the bank carries it and a message is
sent to the particular branch. It is generally used to remit fund from one corner of
the country to another.

2) Foreign Remittance

The procedure to transfer money from one country to another country through bank or other
govt. authorized agencies is called foreign remittance. The Sonali Bank, New Court Building
Branch, Rangamati does not provide foreign remittance facility to its customer directly.

 Procedures for Western Union, Spot cash, Trans-fast, Xpress money:Customers

show pin number to the banker for payment. If 8 digits, it will be spot cash, If 16
digits, it will be Xpress money, if 10 digits, it will be Western Union, If 13 digits, it
will be Trans-fast. Then the banker logs in that site and confirms payment by
matching information.
 EFT and BFTN:From various countries, amount is directly transferred to the branch
of the clients. Now, share bonus, fund transfer and salary of Government and Private
organization are given through BFTN.
4.6 Dispatch Section
Banking is the business of correspondence. Lot of mail comes to the bank and dispatch from
the branch daily. Lot of my document causes much loss for bank. That is why bank has to
record all Mail received and dispatched through the bank.

 Mail receiving: All mail comes to the bank recorded in this desk. For this reason a
register book maintained called inward mail register. A number is given on receiving
mail and records particulars of document in the register book.
 Mail Dispatching: Before dispatching mail from the bank must be record in outward
mail register. A number is given on the mail. Destinations, date of dispatch are
recorded in that register book.

4.7 Account Section:

This is a very much crucial section for each business concern. As such this is a crucial
department for a commercial bank. Records of all the transactions of every department are
maintained here. Accounts section verifies all financial amounts and contents of transactions.
Every working day all the account is balanced and reconciled to remove any discrepancy.

The overall activities of account section are as follows:

 Record all transaction in the cash book.

 Record all transaction in general and subsidiary ledger.
 Prepare daily fund function, weekly position, periodic statement of affairs etc.
 Prepare necessary statement for reporting purpose.
 Make salary statement and pay salary.
 Pay all expenditures on behalf of the branch.
 Branch to branch fund remittance and support for account treatment budgeting for
branch.
 Make charge for different type of duties.

4.8 Loan Section

Sonali Bank follows some criteria to provide a loan which are liquidity and safety. So it lends
to the any person or project in which there is an assurance of getting the money back. Sonali
Bank allows loans to the concerned people who has liquidity of money. And for safety the
borrower needs to show some security. He/she has to have the capacity and willingness to
repay the loan amount. And provide surety to the bank of paying the loan amount. And Sonali
Bank does not provide a loan of big amount as it increases the risk. So it will provide loan
after some analysis.

4.8.1 Types of loan offered by SBL

Depending on the varied nature of finance, all the loaning activities are brought beneath
the following major heads:

1. Secured Overdraft (SOD): Secured overdraft is a continuous advanced facility.

Under this facility, customers are allowed to overdraw from his current account up to
his credit limits sanctioned by the bank. The interest is charged on the amount
withdrawn from the account only, not on the sanctioned amount. Sonali bank
sanctioned SOD against different security. Based on different types of security, we
can divide SOD in the following categories.
 SOD (General): This type of over draft is allowed to the individuals against.
Financial obligations i.e. lien of FDR or defense savings certificate, ICB unit
certificate etc.
 SOD (Others): This type of over drafts is allowed against assignment of advance is
generally allowed for a specific purpose. It is not a continuous loan.
 SOD (Export): This type of over draft is allowed to purchasing foreign currency to
make payment against L/Cs where the exporter cannot materialize before the date of
import payment.

2. Loan (General):
Short term, Long term loans allowed to individual/firm/industries for a selected
purpose except for an explicit amount and usually owed by installments fall into this
head. This type of loaning is especially allowed to accommodate finance beneath the
classes (i) Massive & Medium Scale trade and (ii) little .Very often term financing for
(i) Agriculture & (ii) Others are also included here.
3. Cash Credit (CC): Cash Credit (CC) is an arrangement by which a banker allows his
customer to borrow money up to a certain limit for meeting the working capital
requirements of existing industries. It is operated like overdraft account. The borrower
withdraw cash from his/her CC account and depositing money, he can adjust his loan
account Sonali Bank charges interest on the daily balance basis in the account.
Depending on charging security there are two forms of cash credit-
 Cash credit (Hypothecation): Hypothecation is a legal transaction whereby
goods are made available to the lending banker as security for a debt without
transferring possession of goods. Since the goods always remain in the
physical possession of the borrower, there is much risk to the bank. So, in
sanctioning CC, additional security (Collateral) is obtained.
 Cash Credit (pledge): Pledge is the bailment of goods as security for payment
of a debt or performance of a promise. In a contract of pledge, the borrower
(pledge) must deliver the goods pledged to the pledge (Pawnee) either actually
or constructively.

4. House building loans: Somali bank provides long term advances for building
residential house. Advances for construction of residential houses against real estates
as primary securities as allowed by banks up to tk.5.00 lacks per party (including cost
of land) minus any loan taken from HBFC for these purpose. The rate of interest for
“House Building Loans” is 16% per annum and maximum repayment period is 12
years. In such cases, parties have to pay down payment of 30% of the total amount
and rest of the amount should be repaid within 2 years.

5. Other Loans to Staff:

Loans allowed to staff apart from for House Building shall be sorted beneath head
workers Loan (General).

6. Lease finance:
Lease Financing is one among the foremost convenient sources of feat capital
machinery associate degreed instrumentation whereby a consumer is given the chance
to own a prerogative to associate degree quality typically for associate degree in
agreement amount of your time against payment of rent. It is a term financing
repayable by installment. Time Loan: this can be just one occasion money
 accommodation for brief amount most twelve months to meet some specific purpose.
The loan is adjustable inside the validity and not renewable and no transaction is
allowed.

7. Consumer loans:
The main purpose of the scheme is to improve life standard of the consumers by
providing them loans for purchasing house hold items, for example, computer,
television, freeze, motor, car & cycle, air- condition & cooler, furniture etc. Various
commercial banks offering various types of loans to the consumer so that they can
enjoy these innovations and fixed a very easy installment process to repay that money.
Somali Bank is offering loan calling Consumer Credit scheme in various types of
goods. The loan is owed by monthly installment inside a set amount.

8. Staff Loan: Staffs of Somali Bank are provided with „Staff Loans” for buying
motorcycles and bicycles, for wedding of their sons or daughter etc. Bank provides
this advance facility under installment system. The amount of loan is recovered from
their monthly salary. Staff of Sonali bank can take this type of loan. Sonali bank
provide staff loan in various purpose among the Sonali bank staff.
These are given below:
 Sonali bank house building loan. Sonali Bank also provide loan for flat.
 Motor cycle loan.
 Computer loan.
Here, interest rate of loan is very small. Interest rate is 5 percent. Bangladesh bank set
up the interest rate. Security of house building or flat is land, the amount of computer
loan is 75 thousand taka. In any staff is disable to pay his loan then the bank taking it
from his provident funds.
 CHAPTER V

ANALYSIS & DISCUSSION

5.1 Loan Proposal and Sanction Process:

The total process of proposal and sanction is a continuous process. In a particular stage the
describe loan is sanctioned or rejected by the authority. The total process consist maximum of
6 steps:

Step 1– the client apply for a certain amount of loan in a prescribed form which is
available in the branch office. He has to mention the amount; the purpose, the
mortgage property that he can assure and the time when he wish to enjoy the amount.
Step 2– The branch manager and the cashier then take the responsibility to visit and
evaluate the concern. They have to prepare a credit report mentioning the present
condition, assets and liabilities ratio, and reputation along with the origin of the
concern. He should be some recommendation about the dependency of the firm.
Step 3– Then the credit report is forwarded to the original office for approval. In the
regional office two dealing officer under the direct supervision of AGM made some
other recommendations by considering the credit report and direct investigation. Then
they will justify the net worth of the concern and its economic position.
Here if the amount is with the ability of the regional head (AGM) he can sanction the
loan. Otherwise the proposal file will be forwarded to the principal office. If the
dealing officers found something dissatisfied they can reject the proposal.
Step 4- The head of the corporate branch (DGM) can sanction a certain level of
amount greater than the regional office. Here the file is strictly observed by the
dealing officers under the direct supervision of DGM. He may sanction the mentioned
amount or reject for the logical cause or send to the GM office or Head office for the
further consideration.
Step 5- After reviewing every aspect of the loan proposal the GM can approve the
proposal up to certain level. He may reject or send the file to the managing director
for the director’s approval. Here it may be sanctioned or rejected.
Step 6- after the approval of the proposal in any of the stage region to the board of
directors. Bank send the proposal file along with the necessary papers of the mortgage
and to verify the validity of the ownership of the property for a little dissatisfaction of
the solicitor the proposal may be rejected. Otherwise he will request the bank to
disburse the amount.
5.2 Requirements of Loan Proposal:

Following items are required to prepare a Loan proposal:

 Loan Application (4 copies).

 Photograph and Educational Certificates (4 copies).

 Required Papers as per ownership of the firm.

 Scheduled of Mortgage Properties and relevant Papers.

 NID Card & Trade license.

 No objection letter from his superior (if he is n Govt. Employee).

 Declaration of Tangible/intangible Assets/liability.

 Actual deed of Land/building as Collateral Security.

 No objection letter from Environmental Department.

 Permission letter from local Authority in establishment of the Project.

 Current year tax Payment Receipt of Union council.

 Thorn less certificate of 12 years from Sub-Register Office.

 Documental evidence on behalf income and Testimony of Tax payment.

 No objection letter from the Govt. or any other Authority on the Land mortgaged to
the Bank as security of credit which is sanctioned by the Same Authority.

 In the case of Company Attested copies of Memorandum of Articles, Articles of

Association, Certificate of Incorporation, Commencement of Business.

 Audited Profit & Loss Account of last three years of his any running business.

 Declaration about the source of equity of his own.

 Sight plan of the project and root plan of the proposed loan.

 Feasibility study/ Viability study of the project from different aspect such as
Technical, Management, Socio-Economical, Economical aspect.

 Tender sheet (including Catalogue, Detail specification) need to be submitted through

local Intender.
  Permission letter from GAS/Electricity authority (if needed).

5.3 Overdrafts sanctioning procedure and documents:

Following procedures and documents are maintained and required to sanction an Overdrafts

Procedure:

 Application by the borrower with the instrument against their intersected to

credit.
 Bankers will verify the documents from the issuing authority and get clearances.
 The credit officer will recommend for sanction.
 The sanctioning authority will sanction the advance.
 After documentation the bank will open an overdraft account and issue a
checkbook.

Documents:

The borrower will fill and sign all internal documents of the bank as-

 Demand Promissory Note.

 Demand Promissory Note Delivery Letter.
 Letter of Lien.
 Letter arrangement
 The instrument duly discharged by the borrower or the third party.
 In case of third party letter of lien cum guarantee.
 The document should be duly stamped, signed by the borrower and interested in
the document execution register.

5.4 Small business loan sanctioning procedure and documents:

Sanction procedure:

The sanction procedure of small business loans are as followers:

  The borrower will apply for sanctioning credit in white paper.
 Banker will examine the borrower’s current account statement and transaction.
 Banker will collect confidential report from other banks and other business
man.
 Security checking, valuation and observing perfection by the lending officer.
For checking collateral security (Land and Building) banker will collect CS,
SA and RA records of the land, Mutation and Non-Encumbrance Certificate.
 For loans more than tk.5 Lac, collateral security is required.
 The borrower will fill up the prescribed application form.
 The credit officer will prepare loan proposal and credit report.
 The proposal will move to the sanctioning authority with commend and/or
recommendation of management of every step of the hierarchy.
 If the proposal is approved, bank will prepare a sanction letter and the
borrower will receive it.

Documents:

The borrower will fill and duly sign all internal documents of the bank, as

 Demand promissory Note.

 Demand Promissory Note delivery Letter
 Agreement for Hypothecation / Pledge of goods.
 Letter of Authority
 Letter of Continuity.
 Contact of Bailment of Goods (Pledge)
 Agreement of Banks Right of Set-off (Pledge)

Other documents are:

 Trade license.
 Account Statement of the business.
 Statement of the borrower’s property.
 Original title deed and registered mortgage for collateral security.
 Insurance Policy (on the joint name of the borrower and the bank)
  All the documents must be duly stamped.

5.5 Micro credit sanctioning procedure and requirements:

Procedure of sanctioning micro credit:

 The customer shall apply with a full project profile which contains the
management and organization, marketing, technical and financial aspects of
the project.
 Banks financial analyst will analyze the profile. Before this he will collect
necessary papers and documents from different sources. Banks engineer will
visit the premise and will furnish a technical report.
 If the applicant is apparently seems to be eligible to get the credit he has to fill
the prescribed application form. The application with other papers and the
project profile will be sent to the head office. The financial analyst will
prepare a financial report. The application will be accompanied by
recommendations of the financial analyst, officer in charge of the credit
department and the branch incumbent.
 The proposal will be appraised by another financial analyst of the micro credit
division of the head office and will be forwarded to the proper sanctioning
authority.
 If the proposal is approve, head office will prepare a sanction letter with detail
terms and conditions of the loan and send it to the branch again.
 If the borrower signed in the sanction letter accepting the terms and
conditions, the agreement is made.
 After documentation and creation of charges on securities, the first installment
will be disbursed with the fulfillment of terms like utilization of the
borrower’s equity capital.

Papers needed to be submitted by the borrower:

 Borrower / Borrower’s personal character certificate, statement of properties

and other businesses, income tax certificate etc.
  Original title deed of the property of the project.
 Trade license.
 For limited company, letter of incorporation, memorandum and articles of
association and for public limited company, certificate of commencement of
business.
 Lay out plan of the project.
 Valuation Certificate of the property.

5.6 House Building Loan:

Procedure: Maintaining following procedures

 Application for credit by the borrower with following documents.

 Estimated cost and building layout plan prepared by engineer and
architect.
 Certificate from RAJUK.
 Tax Payment receipt.
 Borrower monthly income statement
 Original title deed of the land.
 The credit officer will prepare a credit report.
 Banks lawyer will verify the documents.
 Branch will send the proposal to the head office with proper recommendation.
 Engineer of the head office will analyze the documents and place for approval.
 If the loan is approved, the branch will issue a sanction letter.

Documents:

The borrower will fill and sign all internal documents of the bank as-

 Demand promissory note.

 Demand promissory note delivery letter.
 Original title deed.
 Registered Mortgage Deed.
  Insurance Policy.
 All the documents should be listed in the document execution register and
signed by the borrower.

5.7 Lending Policy of SME Loan:

Loan Limit:  BDT 50,000/-(Fifty thousand) to BDT

500,000,00/-(Five crore);
Criteria of Borrower:  Bangladeshi Citizen minimum 18 (eighteen)
years old;

 Loan defaulter, Bank-Rupt, Mentally

wreaked person cannot apply for loan;

 Women Entrepreneurs highly encourage to

apply.
Nature of Project/Enterprise:  Proprietorship Enterprise;

 Registered Partnership Enterprise;

 Private Limited Company;

 Joint Venture Company except Public

Limited Company.
Security:  The collateral security free loan limit for
male entrepreneurs is up to Tk. 5 lac.

 The collateral security free loan limit for

women entrepreneurs is up to Tk. 10 lac
Period  Project/Term Loan: Maximum 5 years
(project period may flexible according to
Project nature)

 Working capital/Trading Loan: 1 year,

renewable at the end of period.
Repayment  Project/Term Loan: Monthly/quarterly
basis repayable within loan period.

 Working capital/Trading Loan: Daily

basis or fully repayment within loan period.

5.8 Staff Loan:

Staff loans are LAPF, MCL, and CL. LAPF is loan against provident fund and extended to
the bank employees for the purpose of repair of house, marriage of son or daughter and for
medical treatment of family members.

MCL is for purchase of motorcycle and CL is for computer. Though these loans are fully
secured, credit officer should be careful in documentation and inspection of whether the
money serves the purpose. These loans are term and medium term loans. Interest rate of such
loan is only 9% per annum.

 Staff loans (MCL, CL):

1) 20 times of the basic salary is provided as SHBL.
2) Bank rate is changed 9%, time to time.
3) Repayment is adjusted from their monthly salary.
4) Repayment is made at equal monthly installment.
 Staff loan against provident fund:
1) Time limit is 10 years or rime of retirement whichever is lower.
2) Interest rate is 6.5% (Changes time to time).
3) Security: a) Demand promissory note.
b) Band lien against future fund.
4) Repayment is made at equal monthly installment.
5) Repayment is adjusted from their monthly salary.

5.9 Lending policy of personal loan:

1. Loan size:
 Maximum loan size will be Tk.10 lac
2. Criteria of borrowers:
 Any employed/self-employed tax-paying individual having a reliable source of
income.
 Government job holders are highly prioritized.
3. Security:
 No collateral security is required but
  Collateral security is required when it’s more than 4 lac.
4. Maximum term of loan:
 60 months
5. Repayment method:
 Equal monthly installment.
6. Documents:
The borrower will fill and sign all internal documents of the bank as-

 Demand Promissory Note.

 Demand Promissory Note Delivery Letter.
 Letter of Lien.
 Letter arrangement
 In case of third party letter of lien cum guarantee.
 Must have an account at that branch

5.10 Securities of Loan

Some loans and Bank advance are issued to the customers against security. Sonali Bank also
grants loans in term of security. Security is a policy that helps the bank to recover the loan
from the borrower, even if the borrower is unable to repay the borrowed loan.

Security creates an obligation on the borrower to make the payment on time. Sometimes bank
wants some tangible security from which he can obtain repayment in case the borrower is
unable to meet his obligations. Without taking such security the business of money lending
would be too speculative. Security can be classified as

1. Personal Security
2. Primary security.

Personal Security: In all advances the banker has a right if action against the borrower
personally. Still then bank takes demand promissory notes from the borrower. Sometimes the
banker in addition to borrower’s personal security obtains guarantee from a respectable third
party as personal security. These securities may be termed as personal security.
Primary and collateral Security: Primary security is that security which is regarded as the
primes cover for an advance and ordinary is tendered by the borrower himself. The term’s
collateral security is applied to security tendered by the first party or third party to secure as
advance. The common methods of charging security are:

 Pledge: When goods are bailed as security against advance of performance of a

promise then it is called pledge. Ownership remains with the pledge and profession
lies with the pledge that acquires and special priority and lien so long his loan is not
repaid.
 Hypothecation: It creates a charge on property or goods for the amount of the debt.
The owner retains his ownership as well as possession. But in case of default bank
will be the legal owner of the goods.
 Mortgages: Transfer of an interest in specific immovable property for the purpose of
securing the payment of money advanced or to be advanced by way of loan, existing
or future debt, and the performance which may give rise to a pecuniary liability.
 Lien: Lien is a right to retain goods/ properties belonging to the debtor given to the
creditor as security until he has discharged the debt due. Lien entitles the retainer to
only retain the goods. He cannot sell the goods in the absence of a contract to the
contrary.
 Guarantee: Guarantees are obtained from third parties to secure advances under
different situations such as in case of clean advances which are subject to credit
restrictions. Or in case of advances to a partnership firm, limited company, where
collateral security in the form of real estate/ FDR BSPs are owned by third person etc.
Guarantee should never be accepted from minors and persons of unsound mind,
insolvent person who cannot enter in to a valid contract.
 Insurance: Insurance is a written and definite contract between two parties which
one party pays to the other party. The insurer provides a definite sum of money called
premium in consideration of which the insurer agrees to indemnify the losses, under
agreed terms and conditions. This insurance policy can be a security for the bank in
the time for sanctioning loans.
5.10 Rates of Interest against various types of loan:

Serial no. Types Interest Rates

1. OD 11%

2. SME 9%

3. SBL 9%

4. Staff Loan 9%

5. Staff HBL 5%

6. Personal Loan 13%

7. Micro Credit 9%

Table: Rates of Interest against various types of loan

(Source: SBL, New Court Building Branch, Rangamati)

5.11 Loan Recovery Procedure

Sonali Bank’s profitability and sustainability mostly depends on the recovery of its
outstanding amount. 80% of bank’s earnings comes from advances. A poor recovery rate
indicates the weak condition of the banking operation and vice versa.

Recovery procedure is very much complex and lengthy. It also takes time and money. The
main responsibility of bank manager and advance/loan officer is recover the outstanding
loan.. The loan recovery procedure is divided into several steps. They are as follows:

 Reminder: Reminder to the client is given through a formal communication channel.

A letter is written and properly signed on the bank’s papers. This letter is issued
several times to remind the honorable loaner to repay his/her outstanding portion.
 Demand Notice: Demand notice is issued before one month being due of outstanding
loan or installment. It is sent to the borrower.
 Legal Notice: If the borrower does not repay their respective loans and interest
after maturity being received the demand notice by the bank; then bank sends
 legal notice under registered with acknowledgement by post to the borrowers.
Before taking any legal action against the borrower the bank should send
lawyer notice to him.
 Special Notice: Besides the above two notices, a special notice signed by DC,
TNO is sent to the respective borrower to keep mental pressure on him for
repaying the loan.
 Field Recovery: Loan officer tries to recover loan through I.O. receipt by visiting the
spot and houses of the borrower.
 Case Filing: If all the procedure except legal action of recovering loan becomes
failed then certificate case is filed against the borrower. If the borrower is in the
following category then the case has to be filed with priority:
 Unwilling to repay loan although he is financially solvent.
 Every effort of loan recovery becomes failure.
 Detrimental to the interest of bank loan.
 Loan recovery with the help of interest exempting: The loan amount which
become more than double in principal and interest and which is not possible to
recover with the help of legal actions then this loan can be recovered by exempting
interest. By this the bad loan can be recovered.

5.12 Loan recovery scenario of New Court Building Branch (5 years):

Types of 2015 2016 2017 2018 2019 (30.06.19)

loan

A/ Amount A/ Amoun A/ Amoun A/ Amount A/C Amount

C C t C t C
OD 142 111.00 241 168.00 301 288.00 163 254.00 127 55.00
PL 195 452.00 271 385.00 246 511.00 309 652.00 159 125.00
SBL 9 15.00 18 29.00 19 35.00 16 25.00 8 9.00
MCD 4 8.00 5 6.00 34 15.00 52 9.00 15 6.00
 SME 6 24.00 3 14.00 10 22.00 6 11.00 2 6.00
HBL 85 311.00 107 395.00 14 122.00 12 85.00 4 15.00
Staff loan 15 26.00 29 55.00 38 25.00 20 15.00 23 24.00

Source: SBL, New Court Building Branch, Rangamati (2014-15, 2015-16, 2016-17,
2017-18, 2018-19) Unpublished Report

5.13 Learning Aspects:

During my 45 days internship program at Sonali Bank Limited, New Court Building Branch I
observed as much as possible the entire department and all the desks of the branch. . The
branch did not fix any responsibilities for an interns. Mainly I have done different types of
jobs in different desks whenever assigned. I tried so far I can sink in the depth of practical
knowledge. I emphasized on my highest effort to achieve the objectives of internship
program. I gained practical knowledge on banking activities.

Dispatch: Any kind of letter DD, TT, MT, PO, Cheque and Telex are recorded with dispatch
no. and receiver and sender name, address in this section.

Deposit section: During internship period I learned how to open a Bank account, how to fill
up the customers bank account opening forms and known the requirements for creating a
deposit account. I also deal with the clients and verifying their documents.

Loan section: By working this section I known about various type of loan and advance and
their interest rates, sanctioning procedure and securities. And I always tried to collect
information about the loan disbursement and recovery statement of New Court Building
Branch.

I also participated in several activities like issuing check books, updating loans data to the
CIB database.
 CHAPTER VI

Problems, Recommendations and

Conclusions
Problems

 As a commercial bank, Sonali Bank Limited still follows the traditional banking
system
 The number of officers in loans & advances department is insufficient to provide
service huge number of customers of New Court Building Branch.
 Excessive Classified Loans.
 Sometimes inefficient allocations of resources have created a huge amount of Bad
debt.
 Absence of service providing mentality.
 It provides compensation according to the government pay scale.
 Lack of adequate, update, and accurate information from the management information
system.
 Somewhat manual based because maximum employees are not expert in
computerized technology.
 There are some irregularities in sanctioning loans and advances to the customers. The
concerned bankers are involved in such irregularities for their personal benefits and
interest
 Lack of skilled and efficient employees and demands for more employees in loan
department.
 Number of ATM booths are not satisfactory, SBL have to give more emphasize on
increasing number of ATM booths.
 There is a limitation of technological support such as available ATM booths at
different places than private banks.
 The modern technology is not used in the recruitment and selection process. The
backdated methods are using for selection till today.
 The major problem of NCBs of Bangladesh is the quality of service.
 Banking process is lengthy and time consuming
  Lack of disclosure of details information in annual report.
 Trade Union is becoming a threat to provide quality service.

Recommendations:

 Political power: Political power should not be considered to maintain credit

management module and project finance procedure. In our Bangladesh most of the
cases procedure is too weak for financing so, ultimate result is being bankrupted.
 Banking Policy: Policy should be distinctive and dynamic which has more
acceptability to the borrowers. Policy should be made at the consideration of regional,
financial, continental, demographical, economical, psycho graphical.
 Customer's convenience: For customer’s convenience, Sonali Bank Limited should
provide more personnel to deliver faster services to their honorable customers.
Relationship and database banking should be initiated immediately.
 Employee Training Facilities: The entire training department should be well
informed regarding their goal and objective. It is essential to execute company
objective into individual target. The bank should take initiative to develop the
employees in modernized way to serve the Clients.
 Borrowers Selection: Select borrower with carefully for giving loan and carefully
asses their financial capacity. Borrower’s qualification, experience, reputation will be
must consider.
 Establishing rationalized procedure: The credit sanction and disbursement
procedure is quite lengthy. Legal procedure for recovery should be simplified and
rationalized.
 Employee Motivation: The bank should provide more financial and non-financial
motivation for its employees. Give more bonus, increasing salary structure and
provide various allowances and also provide job security to employees.
 Product differentiation: Keeping the pace with the time, many new products should
be developed on the basis of customers’ need and wants.
  Marketing: Emphasis on online marketing because virtual world has more expanded
than the real world.
 Establishing better monitoring and auditing system: If the Board of Director
appoint professional auditor for the organization when every employees are
accountable for their performance to the auditors. And professional auditor’s
monitoring system is better than internal audit.

Conclusions
At the very initial stages of financial development of any country, commercial banks play a
major role providing financial services to the development. Sonali Bank Limited is the largest
commercial bank in Bangladesh. It has been maintaining and serving its clients with goodwill
over the years. It has a large portfolio with huge assets to meet up its liabilities and the
management of this bank is equipped with the export bankers and managers in all level of
management. Sonali Bank Ltd. is much different bank in any other bank because its activities
are vast and unique. Its deposits and loans are huge compared to other banks. It finances for
government projects, provides unique services to people in need. The bank provides all the
conventional banking service as well as some specialized financing activities to the economy.

Sonali Bank Ltd. is the largest and biggest national Commercial Bank in Bangladesh. People
have expectation from this bank. Profit earning is not its main objective but also provide
better services for the mass people. This bank interest rate is lower than any other bank.
Though the recent scenario of disbursing and recovering position of this bank is not
satisfactory but it is common picture for all nationalized commercial banks. Though the bank
has many limitations but the bank has continued its lending operation in the productive and
priority sectors covering agriculture, industry, trade & commerce with on aim to augment
agriculture output, create employment opportunities, poverty alleviation, self-employment &
rural economic development.

By providing the several type of loan of the bank is playing the vital role for the development
of Bangladesh economy. It provides their service in the every class of people. The branch of
the SBL in all over the country, so people can get their service easily.
Practical knowledge involves identification of weakness of the branch and making
recommendations to overcome the weakness to make it a highly efficient branch.