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TABLE OF CONTENTS

L e t t e r o f T r a n s m i t t a l i v S u p e r v i s o r s D e c l a r

a C c f I B A w e v e

t e a r F a

i o r t t e o m I C n k c k l e m e i i c u

n v i f i

v i n o d g n t E x t i

v S r L o F r i t T e

e u y

m m a v i i i i s t f i g u e s x L i s o f a b l s x i

SL. No.

CHAPTER ONEIntroduction
Page No.

1. 1Background of the Study011. 2Objectives of the Study011 . 3 S c o p e o f t h e

S 2 4 t t S

t u d y 0 1 . L i m i t a i o n s o f h e t u d y 0 2

CHAPTER TWOMethodolog y of the Study

2 1 o i 2 2 i S A . 3

. I d o . S o t r

n u n

t c 0

r t 3

e l e c t n o f u d y e a 0 3 2

P o p u l a

t a S 0 4 i T q . 5 C

i n a 3 S n e u

o n d m p l e 2 . a m p l g c h n i e 0 4 2 a l t l a e

D o

c 0 6 t T U 2 7 T L

t i 4 2 S t a i c a o o l s e d . S t u i m e i n e

o n . t i s l s 0 4 d y

a n d C o s t 0 5

CHAPTER THREE

Overview of the Bank


3 . 1 B a n k s i n o u r c o u n t r

y 0 6 3 . 2 I n t r o d u c t i o n o f I F I C B a n k 0 6 3. 3Milestones in the Development of IFIC BANK 063. 4Objective of the Bank 073 . 5 M i s s i

o n o f t h e B a n k 0 7 3. 6Management Structure073. 7Human Resources Development (HRD)093. 8 Activities at A glance 09

SL. No.

CHAPTER FOUR Results and Discussions


Page No.

Deposit Management of IFIC Bank Limited

4 . 1 I n t r o d u c t i

o n o f D e p o s i t M a n a g e m e n t 1 0

4 . 2 O b j e c t i v e s o f D e p o s i t M a n a g e m e n t 1 0 4. 3Various Deposits Accounts Served by IFIC

Bank104 . 3 . 1 C u r r e n t D e p o s i t A c c o u n t 1 1 4 . 3 . 2 S a v i n g D e p o s i t A c c o u n t 1 1 4 . 3 .

3 S o . 3 T D A 2 3 2

F D R e c t i n 1 2 4 3 . . 1 S h o r t e r m e p o s i t c c o u n t 1 4 . 3 . . T e r m

D t 4 S o B 4 1 y I S

s 1 2 4 . D e p o s i t c h e m e s f I F I C a n k 1 3 4 . . M o n t h l n c o m e c h e m e 1

3 4 . 4 . 2 P e n s i o n S a v i n g S c h e m e 1 3 4 . 4 . 3 E d u c a t i o n s a v i n g s S c h e m e 1 4 4. 4. 4Double Return

Deposit Scheme144. 4. 5Three Years Deposit Plus144 . 5 U t i l i z a t i o n o f D e p o s i t F u n d 1 5 4 . 5 . 1 I F I C B a n k T r e a s u r y D i v i s i o n 1

5 4. 5. 2Major Functions of Treasury Division154 . 6 C u s t o m e r S e r v i c e s f o r t h e D e p o s i t o r s 1 6

Loan Management of IFIC Bank


4 . 7 L o a n M a n a g e m e n t 1 6 4 . 8 O b j e c t i v e s o f L o a n M a n a g e m e

n t 1 7 4 . 9 L o a n P o l i c y o f I F I C B a n k L i m i t e d 1 7 4. 10Various Types of Loans, Advances and Investment184 .

1 1 L o a n s a t a g l a n c e 1 8 4.12Loan Management Practice of IFIC Bank and Guideline of Bangladesh Bank 244 . 1 3 C r e d i t

R a t i n g o f I F I C B a n k 2 8 4. 13. 1CAMELS Rating of BanksBangladesh 284 . 14Deposit and Loan Management in A b r o a d 2 9 4.1

5Recent Performance of Deposit and Loan Management30

CHAPTER FIVESummary of the Findings and Discussions

5 1 A o B

. S W O T n a l y s i s f I F I C a n k 3 2

SL. No.

CHAPTER SIXConclusion and Recommendation


Page No.

6 o u n

. n s 3

1 c i 3

C l o 6

. o d s

2 R e c m m e n a t i o n 3 3

References and Bibliography


35

Appendix
36

S T F E e

L O I G S P

I F U a

S R g

F 1 O r g a n i z a t i o n a l S t r u c t u r e o f I F I C

B 2 A P o B

a n k 0 8 F L o a n p p r o v a l r o c e s s f I F I C a n k 2 6

S T T

L I S O F A B L

E e
T 1 e o S 3 2 a S

S a m p l S i z e f t h e t u d y 0 T P r i m a r y n d e c o n d a r y

S o u r c e s o f D a t a 0 4 T 3 S t u d y T i m e l i n e 0 5 T 4 A c t i v i t i e s A t a G l a n c e o f I F I C

B a n k 0 9 T 5 R a t e o f F D R 1 2 T6Monthly Income Scheme13T 7 E d u c a t i o n S a v i n g

S 1 8 s a g 8 9 R o B

c h e m e 4 T V a r i o u L o a n s t a l a n c e 1 T C r e d i t a t i n g f I F I C a n k

L t d 2 8 T 1 0 C A M E L S R a t i n g o f B a n k s i n B a n g l a d e s h 2 8 T-11Recent Performance of Deposit and Loan Management30 T -

1 A o B L

2 n f a t

S W O T a l y s i s I F I C n k d 3 2

CHAPTER ONE

Introduction
1. 1 Background of the study
Banking system occupies an important place in a nations economy. It plays a pivotalrole in the economic

development of a country and forms the core of the moneymarket in an advanced country. Early banking system served mainly as depositors for

funds, while the more modern system has considered the supplying of credit their main purpose. A Bank not only accepts money or deposits, but it

also lends money andcreates its own credit, Crowther has defined a bank as a dealer in debts- his own andof other people . Sawyers states

, We can define a bank as an institution whose debts(bank deposits) are widely accepted in settlement of other peoples debts to each otherThe

commercial bank has one important characteristic that distinguishes it from allother kinds of financial institutions. This important distinction is that

it alone can holddeposits to be drawn upon by check; it has the power to create and destroy money,within limits, through the use of loans and demand deposits.

Commercial banks lendmoney by creating demand deposits and retire loans by canceling demand deposits.I nternational Finance Investment and

Commerce Bank Limited (IFIC Bank) is a banking company incorporated in the Peoples Republic of Bangladesh withlimited

liability. It was set up at the instance of the Government in 1976 as a jointventure between the Government of Bangladesh and sponsors in the

private sector with the objective of working as a finance company within the country. To fulfill therequirement of B.B.A program, this report has been made on the

basis of DepositManagem ent and Loan Management of IFIC Bank.

1. 2 Objectives of the Study


There are some objectives for making this report,

those are as follows:

To fulfill the requirement of BBA program.

To asses the different Deposits and Loan policies

of IFIC Bank Limited.

To identify and suggest the scopes of improvement in DepositManagem ent and Loan

Management of IFIC Bank Limited.

1. 3 Scope of the Study

The study has focused on the following areas of IFIC Bank Limited:

Procedure for different Deposits and Credit facilities.

Loan and Credit appraisal system of this Bank.

Management efficiency in

Deposits, Loan and Advances.

Organization structures and responsibilities of management etc.Each of the above areas would be critically analyzed in order

to determine theefficiency of Deposits and Loan Management of IFIC Bank Limited.

1. 4 Limitations of the Study


Many problems appeared in the way of conducting

the study. These are as follows:

Time limitation is a big factor, which hinders the data collection process. Onlyforty five days are not enough to study deeply all types of

deposit, loans andadvances and their management process.

The distance of head office of IFIC Bank is so far from Dinajpur Branch.

Because of being private limited companies, IFIC Bank Limited keeps someinformation restricted. As a newcomer, there was a lack of previous experience

in this concern. Many practical matters have been written from own observation that may vary from personto person.

CHAPTER TWOMethodology of the Study

2. 1 Introduction

The study has been performed based on the information extracted from different sourcescollected by using a specific methodology. The methods of completing the

report have includedsome steps which are followed by one by one.

2. 2 Selection of the Study Area

The area of the study was Dinajpur Branch of IFIC Bank. The Dinajpur Branch of IFICBank

was selected purposively because of easiest communication, comfortable workplace,fully computerized accounts maintenance, well decorated and air conditioned facilities

thathelped to collect the information easily. A fully operational computer network; Local Area Network (LAN) and Wide Area Network (WAN) installation having reliable and securedcommunicat

ion also helped to collect reliable data.

2. 3 Population and Sample

All the Branches of IFIC located in everywhere in Bangladesh has been taken into considerationas population. Sample

is the representative part of the population. In case of this study thesample includes the manpower of the Dinajpur Branch of IFIC Bank Limited:

N a m e o f t h e p o s t N u

m b e r o f S a m p l e First Assistant of Vice President 01S e n i o r M a n a g e r 0 1 M a n a g

e r 0 1 Senior officer, Librarian/Medic al officer, Security o f f i c e r 1 0 Class05Classv05C l i e n


t s 0 Grand Total 43
Table: T-1: Sample Size

2. 4 Sampling Technique

Here non-probability judgmental sampling has been used that attempts to obtain a sample of convenient element based on the judgment.

2. 5

Data collection
In order to carry out this study, two

sources of data have been used. a) Primary data b) Secondary data

Primary Sources

Respective officer(s) and employee(s) of IFIC Bank were interviewed by

anunstructured questionnaire.

Direct communication with the clients

Exposure on different desk of the bank

File study etc

Expert opinion: Head of the Department comprisedof Deputy General Manager, Manger and AssistantManager.

Official records etc. Table: T-2: Primary and Secondary Sources of Data Collection

2. 6 Statistical Tools Used

Tabular presentation

Techniques of Percentage (In ratio)

CAMELS rating technique etc.

2. 7 Study Timeline and Cost


D a t e A c t i v i t i e s April 29, 2010Joining as internee at Dinajpur Branch, IFIC Bank

LimitedM a y 1 3 , 2010Selection of the t o p i c May 14 to May 25, 2010Collecting the secondary data from different sources

Secondary Sources

Annual Report of IFIC Bank Ltd.

Periodicals published by the Bangladesh Bank

Different publications regarding banking functions ,

deposits, foreign exchange operation, deposit and credit policies of IFICBank Limited.

Journal

Banking related text books, Newspapers, andManuals.

Research papers, training materials

Internet

June 02-June 23, 2010Analyzing the secondary

data J u n e 2 4 , 2010Preparing a questionnaire to collect primary d a t a June 24 to June 30, 2010Collecting primary data July 01-July 30, 2010Analyzing both primary and

secondary data to prepare the report A u g 0 6 , 2010Completi on of the reportAug 08, 2010Submissio n of the draft r e p o r t Aug 08 to Aug 16, 2010Correction of

the report A u g u s t 17,2010Submis sion of the report Table: T-3: Study Timeline

*
Cost of visiting the Bank, stationery cost

etc is little in amount and are notmentionable here.

CHAPTER THREE

Overview of the IFIC Bank Limited

3. 1 Banks in our country

There are about 48 scheduled banks in our country. The central Bank of our countryis Bangladesh Bank, established in

1971. There are four nationalized commercial

banks namely Agrani, Janata,

Rupali, and Sonali Bank. Nine (9) foreign banksoperate their banking activities in our country. Now there are four specialized banksin our

country. The number of private commercial banks in our country is thirty (30).IFIC Bank Limited is one of the leading commercial bank in our country.

3. 2 IFIC Bank Limited


International Finance Investment and Commerce Bank Limited (IFIC Bank) is a bankingcompany incorporated in the Peoples Republic of Bangladesh with

limited liability. It wasset up at the instance of the Government in 1976 as a joint venture between the Governmentof Bangladesh and sponsors in the private sector with the objective of

working as a financecompany within the country and setting up joint venture banks/financial institutions abroad.The Government of the Peoples Republic of Bangladesh now

holds 33% of the share capitalof the Bank. Leading industrialists of the country having vast experience in the field of tradeand commerce own 35% of the share capital and the rest is held by the general public.

3. 3 Milestones in the Development of IFIC BANK


a)1976-Established as an Investment & Finance Company under arrangement of jointventure with the govt. of Bangladesh. b)1980-Commenced

operation in Foreign Exchange Business in a limited scalec)1982Obtained permission from the Govt. to operate as a commercial bank d)1983-Set up a its first overseas joint venture (Bank of

Maldives Limited) in theRepublic of Maldives ( IFICs share in Bank of Maldives Limited was subsequentlysold to Maldives Govt. in 1992)e)1985Commenced operation as a fullfledged commercial

bank in Bangladeshf)1987Set up a joint venture Exchange Company in the Sultanate of Oman, titledOman Bangladesh Exchange Company (subsequently renamed as Oman

InternationalExchang e, LLC).

g)

1993- Set up its first overseas branch in Pakistan at Karachi.h)1993-Set up its second overseas branch in Pakistan at Lahorei)1994-Set up

its first joint venture in Nepal for banking operation, titled NepalBangladesh Bank Ltd. j)1999-Set up its second joint venture in Nepal for lease financing, titled NepalBangladesh Finance & leasing Co. Ltd. (which was

merged with NBBL in 2007) k)2003-Overseas Branches in Pakistan amalgamated with NDLC, to establish a jointventure bank: NDLC-IFIC Bank Ltd., subsequently renamed as NIB Bank Ltdl)2005-Acquired

MISYS solution for real time on-line banking application.m)2006Corporate Branding introduced, Visa Principal and Plus (Issuer and Require)Program Participant Membership obtained

n)
2008- Observing 25
th

Anniversary of Customer Satisfactiono)2009-64 Branches offering Real Time On-line banking facility. p)2010-All Branches of IFIC Bank is

operating under stateof-art world class Real TimeOn-line Banking Solution.

3. 4 Objective of the Bank


o

To enhance savings tendency of the people by offering attractive

and lucrativenew savings scheme.


o

To encourage and motivate new entrepreneur to establish industries and business in line with development

of the national economy.

3. 5 Mission of the Bank

The mission of IFIC Bank is to provide service to clients with the help of a skilledand dedicated

workforce whose creative talents, innovative actions and competitiveedge make position unique in giving quality service to all institutions.

3. 6 Management Structure
The thirteen members of the Board of Directors are responsible for the strategic planning andoverall policy guidelines of the Bank. Further, there is

an Executive Committee of the Boardto dispose of urgent business proposals. Besides, there is an Audit Committee in the Board tooversee compliance of major regulatory and operational issues.

The CEO and ManagingDirector, Deputy Managing Director and Head of Divisions are responsible for achieving business goals and overseeing the day to day operation. The CEO and Managing

Director isassisted by a Senior Management Group consisting of Deputy Managing Director and Headof Divisions who supervise operation of various Divisions centrally and coordinatesoperation of branches.(Figure: F-1)

Organizational Structure & Responsibilities (Deposits and Loan perspective): Here the Organizational Structure & Responsibilities of IFIC Bank can be

depicted as followsat a glance: Figure: F-1: Organizational Structure of IFIC Bank Limited BoardManaging Director D e p u t y Managing DirectorIntern al Audit

( O t h e r Direct Report)Head of CreditRisk ManagementHead of RecoveryHead of Corporate/Commercia l BankingCredit ExecutivesCreditAppr ovalCreditAdministrat ionCredit Manager Consumer

FinanceCredit AnalystTeamManager CreditADMN.Consu mer Finance Disbursement TeamCustodian TeamMonitoring TeamCompliance Team

Corporate BankingExecutivesRe lationship Manager Consumer FinanceRelationship Manager TeamBusiness / ProductDevelopment

3. 7 Human Resources Development (HRD)


Human Resources Development is focused on recruitment and inhouse training for both onthe job and

off the job Bank staff members through the Banks Academy. IFIC Bank Academy the oldest institution in the private sector was conceived of as an inhouse trainingcenter to take care of the training needs of the

Bank internally. Academy is fully equippedwith a professional library, modern training aids and professional faculty. Library has about4941 books on banking, economics, accounting, management,

marketing and other relatedsubjects. Main training activities consist of in-depth foundation programmes for entry levelManagement Trainees. Specialized training programmes in the areas like general

banking,advance, foreign exchange, marketing and accounts etc. are also organized by the Academydepending on need. During its 23 years of existence, Academy not only conducted courses,workshops

and seminars as required by the Bank, but it also organized training programmesfor the Bank of Maldives, Nepal Bangladesh Bank Limited and Oman International ExchangeLLC.

3. 8 Activities AT A Glance

The IFIC Bank engages in wide range of activities from small scale lending to largeindustrial project financing. It involves export

and import financing as well as manyother services, its range of activities at a glance are as follows: Loans and dvancesTrade financeDepos

itsOther services Project loanWorking capital loanCash creditOverdraftPackin g credit &trust receiptHouse buildingfinanceImport financeGuarantee and so onExportImportCurre

nt accountSavings accountShort term depositsFixed depositBearer certificate of deposit Non resident foreigncurrency deposit accountResident foreigncurrency accountSpecial saving

schemeSafe custody (locker)Travelers ChequeDemand draftPay order Telegraphic transfer Selling and buyingforeign currencyStanding instructionLease financing

Table: T-4: Activities At A Glance

CHAPTER FOUR Results and Discussion Deposit Management of IFIC Bank Limited
4. 1 Deposit Management The managerial process involved

in collecting, organizing, maintaining andutilization of the deposit schemes/deposits fund is called Deposits Management. TheDeposits

Management of IFIC Bank Limited involves the following aspects.

Providing various Deposit Accounts & Schemes

Collecting Procedures of Deposits Fund

Customer Service for Depositors

Utilization of the Deposits Fund

Performance Appraisal of

Deposits Management 4. 2 Objectives of Deposit Management IFIC Bank Limited gives special importance on savings. The Objectives and

principles of theSavings Policy of the Bank are:

To encourage people to save for self and for the country as a whole.

To develop a sustained savings

habit among the people.

4. 3 Deposit Accounts served by IFIC Bank limited


This part covers only following types of accounts-1.Current Deposit Account2.Savings Deposit

Account 3.Fixed Deposits Receivers (FDR) Accounts

Short Term Deposit (STD)

Account, Term Deposits.

4.3.1 Current Deposit Account


General Procedures/Characteris tics:
a.

CD accounts are unproductive in nature as banks loanable fund isconcerned.

Sufficient fund has to be kept in liquid form, as currentdeposits are demand liability. b.Thus huge portion of this fund become non-performing. For this reason

banks do not pay any interest to CD Accountholders.c. There is no restriction on the number and the amount of withdrawalsfrom a current account.
d.

Service charges are recovered form the depositors since the bank make payments and collect the bills, drafts, cheques, for any number of times, daily.e.In

practice of IFIC Bank, a minimum balance of Tk. 2000 has to bemaintained. 4.3.2 Savings deposit Account General Characteristics:

As per BB instruction 88% of SB deposits are treated as time liability and 12% of itas demand liability.a.Interest is paid on this account. IFIC Bank offers a

reasonable rate of 5%of interest for SB A/C.


b.

Generally, banks require a 7-day prior notice if the total amount of one or more withdrawals on

any date exceeds 25% of the balance of the accountunless is given, but in IFIC Bank there is no restriction about drawingmoney form savings account.c.Minimu

m Balance of Tk. 2000 is to be maintained.d.Inte rest will be counted on the average balance of month.
e.Service charges:

Balance up to 5,000/- free for charge

Balance 5,001/- up to 25000/- charges of TK. 100/

Balance 25,001/and above charges of TK. 300/-

4.3.3 FDR Section This branch maintains a separate section for maintaining fixed Deposit. FDR is animportant factor for the bank and volume of FDR determines

the investment base of the Bank. This section deal with the customers of short-term deposit (STD), termdeposit (TD) A/C.

4.3.3.1 Short term deposit Account (STD)


General Characteristics:

Customers deposit money for a shorter period of time.

The interest offered for STD is less than that of savings deposit

In practice. IFIC Bank offers 2-4% rate interest for STD account.

Volume of STD A/C is generally high.

Frequent withdrawal is discouraged and requires prior notice.. 4.3.3.2 Term Deposits General Characteristics:

Popularly, it is known as Fixed Deposit Receipt (FDR), Term deposits aremade with the bank for a fixed period of time.

The banks need not to maintain cash reserves against these deposits andtherefore, the bank offers high rate of interest on such deposits.

In IFIC Bank, fixed deposit account is opened for only 3, 6 & 12 months. Types of FDR maintained by this branch along with their respective interest rate.

P e r i o d s P r o p o s e d

R a t e P e r A n n u m Less Than 1 CroreAbove 1 crore But Less Than 5 croreAbove 5 Crore3 months8.25%8 . 5 % 9 . 0 0 % 6 m o n t h s 8 . 2 5 % 8

. 5 % 9 . 0 0 % 12 months 8 . 0 0 % 8 . 2 5 % 8 . 7 5 % Table: T-5: Rate of FDR

4. 4 Deposit schemes The IFIC Bank has already introduced 4 (four) yielding deposit scheme, which have been highly acclaimed

by the depositors. These are.1.Monthly Income Scheme (MIS)2.Pension Saving Scheme (PSS)3.Durable Return Deposit Scheme (DRDS)4.Three

Years Deposit Plus (3YDP)


5.

Education Savings Schemes (ESS) 4.4.1 Monthly Income Scheme Under Monthly Income Scheme any individual can

keep the deposit in taka 50,000or in multiples thereof. There is no upper limit. Deposit Tk. 50,000Tk. 1,00,000Tk. 2,00,000Tk. 5,00,000

Benefit eachmonth (for 3years) T k . 3 5 0 T k . 7 0 0 T k . 1 , 4 0 0 T k . 3 , 5 0 0 Table: T-6: Monthly Income Scheme Benefits negotiable for

deposit of Tk. 10,00,000 or above. Payment of benefit willstart after 30 days of deposit. In case of extreme emergency if any individual make premature

enactment, interest will be paid at savings rates. Depositors can also availloan up to 90% of the deposit. Nomination is also acceptable. No photograph or

introduction is required for opening this account. Bangladeshis living abroad mayalso open this account for providing fixed amount of income

to their dependent/familie s in Bangladesh. 4.4.2 Pension Saving Scheme General Characteristics: a. Interest paid on this account 9.50%

and tenure is 3 or 5 years. b. A person of 18 years of age and above having a sound mind will be eligible to openan account in his / her own name.

c. PSS account can not be opened in the name of minor, in joint names, or in name of any institution.

d. An account can be transferred from one branch to another branch of the bank by a writtenapplication of the account holder. A fee of TK. 200/- is payable as banks service charge.

4.4.3 Education Saving Scheme These days providing a good education for children are really costly. To ensure bearing such costly education expenses of

children every body need to start savingsearly. The scheme provides opportunity for meeting educational expenses of childrenat school, college or

university.Keep deposit of Tk. 25,000 or any multiple thereof for 5 years. There is no upper limit. Children can maintain their educational cost on monthly basis

for subsequentfive years or lump sum at maturity.Term Deposit Monthly benefitFor 5 yearsor lump sum payment5 Years Tk. 25,000Tk. 980Tk.

44,0005 Years Tk. 50,000Tk. 1,960Tk. 88,000 Table: T-7: Education Saving Scheme Loan can allowed up to 85% of deposits. In case

of extreme emergency if any onemake premature enactment, interest will be paid at saving rate. The student in themerit list will be awarded

special stipend/ gift. 4.4.4 Double Return Deposit Scheme Minimum deposit of this is 25,000 or its multiples. Term of this deposit is 8 and years. An order instrument

mentioning the amount payable after maturity shall beissued favoring the depositors. However, if required, the instrument may bediscounted at

the counter of issuing Bank at 8.50% interest for the remaining periodof maturity provided further that under no circumstances, the depositor shall get lessthan the

deposit at the initial period.. 4.4.5 Three Years Deposit Plus Minimum deposit of this is 50,000 or its multiples. Term of this deposit is 3 years.An order instrument

mentioning the amount payable after maturity shall be issued favoring the depositors. The instrument shall not be enchased

before maturity.However , if required, the instrument may be discounted at the counter of issuingBank at 8.50% interest for the remaining period of maturity

provided further thatunder no circumstances, the depositor shall get less than the deposit at the initial period.

4. 5 Utilization of Deposits Fund

Basically like others Bank IFIC also carry on their business with the deposits fund.For maintaining & utilizing the deposits fund IFIC Bank Treasury Division dealswith

the utilization of deposit fund. 4.5.1 IFIC Bank Treasury Division The Treasury Division of IFIC Bank is engaged with Cash Management, Liquidity Planningand Liquidity Protection.

It is also conscious to protect all the banks Assets and Profitsagainst loss due to domestic as well as global financial realities, particularly Interest andExchange Rate fluctuations. The Treasury Department

is also regarded as a Profit Center,which generates income by trading instruments in the Financial Market. The Treasury isconstituted with well setup Front Office, Mid Office and Back Office.

4.5.2 Major Functions of Treasury

Fund Management

Management of Statutory Requirement

Investment

Trading of F Ex. & Money Market Instruments

Asset Liability Management

Risk ManagementIFIC Treasury has four

different desks, which are specialized in their own area to provide best services with respect to pricing, best possible solution for customer requirement andmarket information. The

different Treasury Desks are as follows: Foreign Exchange Desk IFICForeign Exchange Desk is one of the leading market maker in spot, swaps, and forwardtransactions in inter-bank market.

The Bank has good sources of Foreign Currency throughits own export customers, Nonresidence Remittances and local & multinational corporatehouses remittances/exports. The Treasury is

connected to the International Market through on-line Dealing Platforms of different international banks and controls the foreign depositfunds. Money Market Desk Money market dealers arrange short

and medium term deposit funds at most economicalterms which are required by the bank aside from customer deposit mobilization efforts. Instress liquidity condition the desk always manages sufficient fund to

provide business needs. Investment Desk Investment desk in Treasury Front Office operates within the policy frame approved by theBoard of Directors of the Bank. Deposit fund

invested in different securities both for maintenance of SLR & income generating activities. The philosophy is to manage andmaximize income within certain parameters and limits. Asset Liability Management Desk

Asset Liability Management is one of the major functions of IFIC Bank Treasury. Objectiveof the desk is to ensure efficient allocation of deposit and other fund within an acceptable,measurabl

e and defined risk structure. 4

. 6 Customer Services for the depositors The IFIC Bank ensures better customer services. IFIC Bank has the

followingarrange ment of remittance within and outside the country:( a ) P a y order (b)Demand d r a f t (c)Telegra phic transfer etc.

Loan Management of IFIC Bank Limited

4. 7 Loan Management The word Loan is directly related with Credit in Banking activities.

The wordcredit comes from the Latin word Credo meaning I believe. It is a lenders trust in a persons/ firms/ or companys ability or potential ability and intention to repay. In other

words, credit/loan is the ability to command goods or services of another in return for promise to pay such goods or services at some specified time in the future. For a bank, it isthe main source of profit and

on the other hand, the wrong use of credit would bring disaster not only for the bank but also for the economy as a whole. Credit management is a dynamicfield where a certain standard of long-range

planning is needed to allocate the fund in diverse field and to minimize the risk and maximizing the return on the invested fund. Theoverall success in loan and credit management

depends on the followings:

The banks credit policy,

Portfolio of credit,

Monitoring,

Supervision and follow-up of the loans and advances

4. 8 The objective of the Loan management The objective of the credit management is to maximize the performing asset and theminimization of the non-

performing asset as well as ensuring the optimal point of loan and advance and their efficient management. 4. 9 Loan Policy of IFIC Bank Limited

One of the most important ways, a bank can make sure that its loan meet organizational andregulatory standards and they are profitable is to establish a loan policy. Such a policy givesloan

management a specific guideline in making individual loans decisions and in shaping the banks overall loan portfolio In the feature, credit principles includes the general guidelinesof providing credit by branch manager or

credit officer.In IFIC Bank Limited they follow the following guideline while giving loan and advance tothe client.

Credit advancement shall focus on the development and enhancement

of customer relationship.

All credit extension must comply with the requirements of Banks Memorandum andArticle of Association, Banking Companys Act, Bangladesh Banks

instructions,other rules and regulation as amended from time to time.

Loans and advances shall normally be financed from customers deposit and not outof temporary funds or

borrowing from other banks.

The bank shall provide suitable credit services for the markets in which it operates.

It should be provided to those customers

who can make best use of them.

The conduct and administration of the loan portfolio should contribute with in definedrisk limitation for achievement of profitable growth and

superior return on bank capital.

Interest rate of various lending categories will depend on the level of risk and types of security offered.

4. 10 Various Types of Loans, Advances and Investment IFIC Bank Limited generally gives short-term fund to various sector of the countrylike industrial loan, agricultural loan,

consumer credit and so on. Shortterm loan isgenerally payable on demand or at short notice.In practice however banks allowmidterm and

also some longterm loan. Bank's credit creates deposit in the country. Loan on the basis of security: On the basis of the security bank credit is of two types:

Clean or unsecured credit

Secured credit Clean credit: These are the advances of the bank, \\'hich are disbursed based on the personal security of the borrower. Such

advances are not made to the ordinary customer of the bank, these types of credit are given to the valued customer who has a good creditstanding. Secured credit: In case of the secured advances the

bank has recourse to the security inaddition to the personal security of the borrower. It means that the borrower is also liable for any shortfall that may arise after the sale proceeds of the security.

4.

11 Loans At a Glance
Sector wise loans provided by IFIC Bank Limited are discussed briefly as follows:

Types of LoansTer

ms and conditio ns
Easy Loan (Personal Secured)

Loan Size: Depend on value of security.

Tenure: 12 months as SOD, 36 months asloan General / Term loan.

Rate of interest: 2% above that the FDR but not less than 10.50%. 14.50% againstPSS or other financial obligation.

Consumer Durable Loan

Loan Size: Max. 1.00 lac.


DER: 80:20 Tenure: Min. 12-36 months


DBR: 33%

Rate of interest: 16.50%

Porua Loan(Education )

Loan Size: Max. 3.00 lac withoutsecurity, Max. 8.00 lac with security.

DER: 70:30 Tenure: Min. 12-48 months


DBR: 35%

Rate of interest: 16.50% Thikana Loan (House Building)

Loan Size: Max. 75.00 lac


DER: 70:30

Tenure: Max. 15 years


DBR: 35% Rate of interest: 15.00% Pheshajeebi Loan

Loan Size: Max. 5.00 lac withoutsecurity,

Max 10.00 lac with security.


DER: 60:40 Tenure: Min 12 months, Max 48 months


DBR: 33% Rate of interest: 16.50%

Auto Loan

Loan Size: Max. 20.00 lac


DER: 70:30 Tenure: Min 12 months, Max 60 months


DBR: 35%

Rate of interest: 15.50% Festival Loan

Loan Size: Max. 0.50 lac

Tenure: Min.& Max. 12 minths


DBR: 35%

Rate of interest: 16.50% Any Purpose Loan

Loan Size: Max. 3.00 lac.

Tenure: Min 12 months, Max 36months

DBR: 35%

Rate of interest: 16.50% Marriage Loan

Loan Size: Max. 3.00 lac

Tenure: Min 12 months, Max 36months

DBR: 35%

Rate of interest: 16.50% CNG Conversion Loan

Loan Size: Max 1.00 lac

Tenure: Min 12 months, Max 36

months

DBR: 35% Rate of interest: 16.50% Home Renovation / Interior Decoration Loan

Loan Size: Max. 3.00 lac

Tenure: Min 12 months, Max 36months


DBR: 35% Rate of interest: 16.50% Medical Loan

Loan Size: Max. 3.00 lac

Tenure: Min 12 months, Max 36months


DBR: 35% Rate of interest: 16.50% Holiday Loan

Loan Size: Max. 3.00 lac

Tenure: Min 12 months, Max 36months


DBR: 35% Rate of interest: 16.50%

Loans on Small & Medium Enterprise


There are 15 (Fifteen) products under Small & Medium Enterprise. Which are follows asunder:

Types of LoansTer ms and

conditio ns
Easy Commercial Loan

Loan Size: Depend on the value of security.


Tenure: 12 months

Nature: OD/ Loan General.

Rate of interest: 2% above that the FDR & other financial obligation but not lessthan 10.50%. Retailers Loan

Loan Size: Max. 2.00 lac.

Tenure: Max. 24 months for TK. 1.00lac, Max. 30 months for TK. 1.50 lac,Max. 36 months for above TK. 1.50 lac.

Rate of interest: 16.00% Transport Loan

Loan Size: Max. TK. 50.00 lac.

Tenure: Max. 48 months.

DBR: 60%

DER: 60:40

Nature: Term Loan Rate of interest: 15.50%

Legal Mortgage required.

Commercial House Building Loan

Loan Size: Max. TK. 50.00 lac.

Tenure: Max. 60 months.


DBR: 60%

DER: 70:30

Nature: Term Loan Rate of interest: 15.00%

Legal Mortgage required Possession Right Loan

Loan Size: Max. TK. 5.00 lac.

Tenure: Max. 36 months.


DBR: 50% DER: 50:50 Nature: Term Loan.

Rate of interest: 16.00% Contractors Loan

Loan Size: Max. TK. 50.00 lac.

Tenure: Max 12 months.


DER: 50:50

Nature: SOD

Rate of interest: 15.50%

Legal Mortgage required Bidders Loan

Loan Size: Max. TK. 50.00 lac.

Tenure: Max 12 months.

Nature: Loan Gen. (Revolving)

Rate of interest: 15.50% Working Capital Loan

Loan Size: Max. TK. 50.00 lac.

Tenure: Max 12 months.


Nature: Cash Credit. Rate of interest: 15.50% Project Loan

Loan Size: Max. TK. 50.00 lac.

Tenure: Max. 60 months.


DER: 70:30 Rate of interest: 15.50%. Bank Guarantee

Loan Size: Max. TK. 50.00 lac.

Tenure: As required by borrower.

Rate of interest: As per prescribed rate.

DER / Margin: Banker customer relationship.

Loan Against Imported Merchandise (LIM)

Loan Size: Max. TK. 50.00 lac.

Tenure: Nature of goods and as per Bangladesh Bank guideline.

Rate of interest: 15.50%.

DER / Margin: Banker customer relationship Loan Against Trust Receipt (LTR)

Loan Size: Max. TK. 50.00 lac.

Tenure: Nature of goods and as per Bangladesh Bank guideline.

Rate of interest: 15.50%.

DER / Margin: Banker customer relationship. Letter of Credit (L/C)

Loan Size: Max. TK. 50.00 lac.

Tenure: As required by borrower.

Rate of interest: As per prescribed rate.

DER / Margin: Banker customer relationship. Muldhon Loan

Loan Size: Min. TK.2.00 lac, Max.TK.50.00 lac.

Tenure: Max.36 months for TK. 5.00lac, Max. 60 months for above TK. .5.00 lac.

Nature: Term Loan. Rate of interest: 16.50% withoutcollateral security, 15.50%

withcollateral security. Woman Entrepreneurs( Prottashaya):

Loan Size: Min. TK.0.50 lac, Max.TK.3.00 lac.

Tenure: Max. 18 months for TK.

0.50lac, Max. 24 months for TK. 1.00 lac &Max. 36 months for loan up to TK. 3.00lac.

Nature: Term Loan. Rate of interest: 15.00%

Loans on Agriculture Sector:


There are 5 (Five) products under Agriculture Sector. Which are follows as under:

Types of LoansTerms and conditions Krishi Saranjam Rin

Loan Size: Min. TK.0.50 lac, Max.TK.10.00 lac.

Tenure: Min.12 months, Max. 36 months.

Nature: Lease Finance.

Rate of interest: 12.00%

Collateral Security: Preferable but notmandatory. Shech Saranjam Rin

Loan Size: Min. TK.0.20 lac, Max.TK.10.00 lac.

Tenure: Min.12 months, Max. 36

monthsup to loan for TK. 3.00 lac, Max. 60months above 3.00 lac.

Nature: Term Loan. Rate of interest: 12.00%

Collateral Security: Above 1.00

lacrequired collateral security.

DER: 70:30 Poshupokhi & Matshokhamar Rin

Loan Size: Min. TK.0.20 lac, Max.TK.3.00 lac.

Tenure: 12 months.

Nature: Term Loan. Rate of interest: 12.00%

Collateral Security: Above 1.00 lacrequired collateral security.

DER: 70:30

Phalphosali Rin

Loan Size: Min. TK.0.20 lac, Max.TK.3.00 lac.


Tenure: 12 months. Nature: Term Loan. Rate of interest: 12.00%

Collateral Security: Above 1.00 lacrequired collateral security.

DER: 70:30 Phasali Rin

Loan Size: Min. TK.0.20 lac, Max.TK.1.00 lac.

Tenure: Depending on nature crops cycle,Min. 6 months, Max. 12 months.

Nature: Short Term Loan / Loan Gen.

Rate of interest: 12.00%

Collateral Security: Personal guarantee of spouse/parent/other family member acceptable to the bank.

Table: T-8: Various Loans At A Glance

4. 12 Loan Management Practice of IFIC Bank and guidelines of Bangladesh Bank


Comparing IFIC Banks current loan

management system with Bangladesh Banks guidelinewe see that IFIC Bank lacks some of the best practices in banking industry which can begenerated in the following way

Loan and Credit Policies/ Lending Guidelines: IFIC Bank Limited has no writtencredit policy though it follows some policy. As there is no written credit policy, branch managers sometimes get confused whether

to go with a project or not.IFIC Bank Limited should have a lending guideline available in every branch so thatcredit officers can take quick decision whether to accept or reject a project. Thelending guideline

should include the following- Industry or business segment focus. Types of loan facilities Details of single borrower/ group limit Lending caps Discouraged business type Loan facility Parameters Cross Border risk

Credit Assessment & Risk Grading: Though credit is properly assessed in IFICBank Limited, but there is no risk grading system applied here. It should adopt acredit risk grading system

to ensure account management, structure and pricing arecommensurate with the risk involved.

Approval Authority of the loan: In Bangladesh Banks guideline it is written

thatApproval authority should be delegated to individual executives and not to committees to ensure accountability in approval process. But in IFIC Bank Limitedwe see that every credit goes to

the board via credit committee. As a result, wastage of time occurs and no one is held accountable for a bad loan.

Segregation of Duties:

According to Bangladesh Bank Guideline Banks should aimto segregate the following lending functions to improve the knowledge levels andexpertise in each department:

Credit Approval/ Risk Management

Relationship Management/ Marketing

Credit AdministrationIn small branches of IFIC Bank Limited only single loan

officer do all the jobs like loanmarketing, risk assessing and credit administration.

Internal Audit: IFIC Bank Limited has a segregated internal audit/ control department charged with

conducting audit of all departments as suggested byBangladesh bank guideline.

Preferred Organizational Structure: Currently IFIC Bank Limited does not

followthe preferred management structure as suggested by Bangladesh Bank guideline. Thekey feature in the preferred management structure is the segregation of Marketing/Relationsh

ip function from approval/Risk management/ Administration function.

Approval process: According to Bangladesh Banks best practice guideline,

therecommending or approving executives should take responsibility for and be heldaccountable for their recommendations and approval. The recommended delegatedapproval

authority levels are as follows:

Head of Credit/CRM Executives_________ _Up to 15% of capitalManaging Director/ CEO ______________ Up to 25% of capitalEC/ Board

_________________ ________ All exceed 25% of capitalBut in IFIC Bank Limited we see that every credit proposal goes to Executivecommittee i.e. board.

Loan Approval Process of IFIC Bank Limited: Head of Corporate (Marketing)Head of Credit / CRM TeamApproved/Decli ned as per delegationDeputy Managing Director Approved/Declined as

per delegationManaging Director Approved/Declined as per delegationBoard of DirectorsApproved/D eclinedRelationship Manager (RM)Assessment of credit application and

preparing credit proposalCreditCommi tteeRecommended toForward toBeyond capacityrecommended toBeyond capacityrecommended toBeyond capacityrecommended to

Figure: F-2: Loan Approval Process of IFIC Bank Limited

Credit and Loan Administration: The Bangladesh Bank guidelines suggest thatCredit administration be strictly segregated

from relationship management/marketin g. As a result the possibility of controls being compromised or issues not being highlighted at the appropriate level can be avoided. The credit administrationhas the following functions-

Disbursement Custodial duties Compliance requirementIn IFIC Bank Limited credit officers under supervision of Branch Credit In-charge or Manager also carry out all the three functions of credit

administration. But CreditMarketing and administration is yet to be segregated.

Loan and Credit Monitoring: To minimize credit losses, monitoring procedures andsystems should

be in place that provides an early indication of the deterioratingfinancia l health of a borrower. Early identification, prompt reporting and proactivemanagemen t of Early Alert Accounts are prime

credit responsibilities of all relationship Managers. An early Alert Account is one that has risks or potentialweakness of a material nature requiring monitoring, supervision or close attention

bymanagement.In IFIC Bank Limited credit monitoring is also done by credit In charge or branchmanagers. As a result Early Alert Accounts do not get that much attention as needed.

Loan and Credit Recovery: According to Bangladesh Bank guideline the recoveryunit (RU) of CRM should directly manage accounts with sustained deterioration.

Credit Risk Management (CRM): Oversight of the banks credit policies, procedures and controls relating to all credit risks arising from corporate/comm

ercial/institutional banking, personal banking, & treasury operationsis called credit risk. Credit Risk management is handled by Credit approval Authority,Internal Auditors, Relationship

Management/Marketi ng (RM), Credit AdministrationDepart ment etc.

Incentive Program for loan: The BBk guideline also encourages Banks to introduceincentive

programs for the Recovery Unit Account Managers to bring down the NONPerforming Loans (NPLs) IFIC Bank Limited currently has no incentive program as itdoes not have any Recovery Unit.

4. 13 Credit Rating of IFIC Bank Limited

Credit Rating Information and Services Limited (CRISL) has assigned A(pronounced as single A) rating in

the long term and ST - 2 in the short term toInternational Finance Investment and Commerce (IFIC) Bank Limited for the year 2010.

CREDIT RATING ON IFIC BANK LIMITEDL o n g TermShort Term S u r v e i l l a n c e R a t i n g 2 0 1 0 A S T 2 E n t i t

y R a t i n g 2 0 0 9 A S T 3 O u t l o o k S t a b l e D a t e o f R a t i n g J

u n e 2 9 , 2 0 1 0 Table: T-9: Credit rating of IFIC Bank Limited

4.13.1 CAMELS Rating of Banks Bangladesh


Capital, Asset, Management,

Earning, Liquidity and Sensitivity (CAMELS) Rating of different commercial banks in 2010 were done recently by the regulatory authority. The serialis made on the basis of performance of

2009and local banks first, then foreign banks. R a n k B a n k N a m e Strong or A-class banks Prime Bank Ltd., Shahjalal Islami Bank Limited , Commercial Bank of Ceylon, State

Bank of India, StandardChartered Bank, Citi N.A Satisfactory or Bclassbanks Standard Bank Limited, Exim Bank Ltd., Mercantile Bank, NCC Bank, BASIC Bank, Pubali Bank, Southeast

Bank,Mutual Trust Bank Limited, Dutch-Bangla Bank, Premier Bank, The Trust Bank, Bank Asia, Jamuna Bank, BRACBank, One Bank, Dhaka Bank, Eastern Bank, Islami Bank Bangladesh Ltd., Uttara Bank,

National Bank, The CityBank, Social Investment Bank, Habib Bank, National Bank of Pakistan, Bank Alfalah, Woori Bank, HSBC Fair or C-class banks First Security Bank, IFIC Bank

, AB Bank, United

Commercial Bank, Al-Arafah Islami

Bank, BangladeshShilpa Rin Sangstha, Agrani Bank Ltd, Rupali Bank Ltd. Marginal or D-class banks Sonali Bank Ltd, Janata Bank Ltd, Bangladesh Shilpa Bank Bangladesh

Krishi Bank, Rajshahi Krishi Unnyan Bank Unsatisfactory or Eclassbanks Bangladesh Commerce Bank, Oriental Bank Ltd Table: T-10: CAMELS Rating of Banks Bangladesh

4. 14 Deposits and Loan Management in Abroad: Joint Ventures Abroad


Bank of Maldives Limited IFIC is the first among the banks in the private sector to

have operations of deposits and loansmanagement in abroad. In 1983, the Bank set up a joint venture bank in Maldives known as'Bank of Maldives Limited' (BML) at the request of the Government of the

Republic of Maldives. This is the only national bank in that country having branches throughout thatcountry. IFIC Bank managed the affairs of BML from 1983 to 1992. IFIC Bank sold itsshares in 1992 to the

Government of the Republic of Maldives and handed over the Management of BML to Maldives Government. NIB Bank Ltd., Pakistan: IFIC Bank had two branches in Pakistan,

one in Karachi and the other in Lahore. KarachiBranch was opened on 26th April 1987, while Lahore Branch was opened on 23rd December 1993. To meet the Minimum Capital Requirement (MCR) of the State Bank of

Pakistan, theOverseas Branches in Pakistan have been amalgamated with a reputed leasing company inPakistan named National Development Leasing Corporation Ltd.

Nepal Bangladesh Bank Ltd. (NB Bank): Nepal Bangladesh Bank Ltd. (NB Bank), a joint venture commercial bank between IFICBank Ltd. and Nepal nationals, started operation with effect

from June 06, 1994 in Nepalwith 50% equity from IFIC Bank Ltd. Nepal Bangladesh Finance & Leasing Limited (NB Finance): Nepal Bangladesh Finance & Leasing Co. Ltd.

(subsequently renamed as Nepal BangladeshFinance & Leasing Ltd.), another joint venture leasing company between IFIC Bank Ltd. and

Nepali Nationals, started its operation on April 18, 1999 in Nepal. IFIC Bank presently holds15% share in the company. Oman International Exchange LLC (OIE) Oman International Exchange LLC

(OIE), a joint venture between IFIC Bank Limited andOman nationals, was established in 1985 to facilitate remittance by Bangladeshi wage earnersin Oman. IFIC Bank holds 25% shares, and the balance 75% is held

by the Omani sponsors.

4. 15 Recent Performance of Deposit and Loan Section of IFIC Bank


AccountsYea r2010,MarchY

ear-2009, December Total Loans and Advances39,222, 528,529 Taka37,793,886, 7 2 3 T a k a Total Deposits and other Accounts4 7 , 5 9 2 , 9 4 9,475

Taka50,017,960,8 08 Taka Table: T-11: Recent Performance of Deposit and Loan Management From the above table it is clear that the recent performance of Loan Management is moreefficient than

Deposits Management of this bank

Chapter Five
Summary of the Findings and Discussions

The following points came out while analyzing the findings of this study:1.Total deposits amount is decreased in 2009 compared to 2008 due to economic regression and inefficiency of deposit management.

2.
IFIC Bank Limited has Real time online banking activities at all the Branches.3.IFIC Bank Limited has the website, which has not been updated and it is less informative.

4.
IFIC Bank Limited has poor ATM Card/Credit card facility. Five Booths are locatedin Dhaka and Chittagong city. This discourages the depositors.

5.

Banking operation in abroad (in Maldives, Nepal, Oman etc.) is satisfactory for IFICBank Limited than that of others.6.IFIC Bank Limited has 65 Branches in Bangladesh. More branches are needed

incompetitive market. It has some proposed branches which going to be established asearly as possible.

7.

Deviation with income statement of IFIC Bank Limited was lower than that of thecontestants,

which shows low risk of operating results.8.Investments and liabilities of IFIC Bank Limited appeared off-putting.. Investment inloans and advances was the highest deviating factor along with borrowings,

totalliabilities, and total equity.

9.

Due to unavailability of local capital market, IFIC Bank Limited has been sufferingfrom investing idle fund in liquid venture. The largest source of fund

was depositfollowed by a tiny portion of equity capital.

10.

IFIC Bank can recruit experienced, efficient and knowledgeable work force asit offers good working environment.

11.
Lack of awareness and understanding clogged the ways of credit disbursementfor IFIC Bank Limited. Credit to total asset ratio has been the lowest for IFIC Bank Limited compared to other

generations and industry average. 12.Loan processing time and interest rate of IFIC Bank Limited are high than that of other Bank 13.IFIC Bank Limited has performed poorly in

terms of the percentage of nonperforming loans, which has increased the requirement for income cut to escalate theamount of provision against classified loans (bad loans).

14.

It has a vast year of experience since its establishment in 1976.So, from this above discussion it is clear that IFIC Bank has some strengths and weakness. Toovercome the weakness some policy

guidelines should be taken.

5. 1 SWOT Analysis

SWOT Analysis is an important tool for evaluating the companys Strengths,Weakn esses,

Opportunities and Threats. The SOWT analyses of IBBL are presented below: S stands for StrengthW stands for WeaknessO stands for OpportunityT stands for Threat

Strength

Foreign Exchange business

Overseas joint Venture ( InMaldives, Nepal, Oman etc)

Real time online Banking inall branches

Vast years of experience sinceits establishment in 1976

Has a research division

Sound financial strength

Already achieved a goodwillamong the clients

Weakness Lack of well-trained humanresource in some branch.

lacks aggressive advertising

The procedure of creditfacility is to long compare toother banks.

Employees are not motivatedin some areas.

Absence of structuredmarketing and credit policy

Lack of coordination amongthe branches and Head Office

Poor ATM Card/Credit cardfacility

Website is not updated and itis less informative. Opportunities

Emergence of Ebanking willopen more scope for IFIC Threats

The worldwide trend of mergers and acquisition in

Bank

IFIC Bank can introduce moreinnovative and moderncustomer service.

Many branches can be open inremote location.

IFIC Bank can recruitexperienced, efficient andknowledgeable work force asit offers good workingenvironment.f inancial institutions

Frequent taka devaluation

andforeign exchange ratefluctuation

Lots of new banks are comingin the scenario with newservice.

Local competitors can capturehuge market share by offeringsimilar products.

Table: T-12: SWOT Analysis of IFIC Bank

Chapter SixConclusion and Recommendatio ns


6. 1 Conclusion

A banker can not sleep well with bad debts in his portfolio. The failure of commercial banksoccurs mainly due to bad loans, which occurs due to inefficient management of the loans andadvances

portfolio. Therefore any banks must be extremely cautious about its lending portfolio and credit policy. So far IFIC Bank Limited has been able to manage its credit portfolio skillfully and kept the classified

loan at a very lower rate. But all things around us are changing at an accelerating rate. Today is not like yesterday andtomorrow will be different from today. Given the fast changing, dynamic

global economyand the increasing pressure of globalization, liberalization, consolidation and disintermediation , it is essential that IFIC Bank Limited has a robust deposit and loanmanagement

policies and procedures that are sensitive to these changes.

6. 2 Recommendation s
To improve the Deposit and loan Management

culture, IFIC Bank Limited should adoptsome of the industry best practices that are not practiced currently. These are:

ATM Card/Credit card facility should be increased not only in Dhaka and

Chittagongcity but also in all over the country.

More branches should be established to compete with other commercial banks.

IFIC Bank Limited should have a clear

written lending guideline that should includeIndustry and Business Segment Focus, Types of deposits and loan facilities, SingleBorrower and group limit, Lending caps, Discouraged Business Types, Loan

FacilityParameters and Cross boarder Risk.

It should adopt a credit grading system and the borrowers risk grades should beclearly stated on credit application.

Approval authority should be delegated to individual executives rather thanExecutive Committee/ Board to ensure accountability. It should has the followings:* Credit Approval / Risk Management* Reltaionship

Management / Marketing Management* Credit Administration etc.

The organization structure should have to be changed to put in place the segregationof the Marketing/

Relationship Management function from Approval / Deposits andLoan Management / Administration function.

An Early Alert Account system should be introduced

to have adequate monitoring,supervisi on or close attention by management.( An early Alert Account is one thathas risk and potential weaknesses of a material nature)

There should be a Recovery Unit to manage directly accounts with sustained deterioratio n. To encourage Recovery Unit incentive program may also introduced.

To minimize credit loan losses, monitoring procedures and systems should be in place that provides an early indication of the deteriorating financial health of a borrower.

Timely corrective action should be taken to address findings of any internal,external or regulator inspection/audit.

Development of the standard of living of the limited income

group by offeringconsumer credit scheme should be brought.

It is needed to boost up mobilization of savings both from urban and rural areas.

Model of participatory banking should be developed.

It is needed to develop competitive, most modern scientific and social welfareoriented banking institution on the country.

To ensure stability and sound growth while enhancing the value of shareholdersinvestme nt.Above all the Bank should ensure a high level of transparency and ethical standards in alloperations and a congenial atmosphere

which will attract competent work force. It should besocially responsible making effective contribution to national development.

References and Bibliography


o

IFIC Bank Limited, Working Manual for Deposits and other accounts, 2010
o

IFIC Bank Limited, Working Manual for Loan and Advances, 2010
o

IFIC Bank Limited, Annual Report, 2009

IFIC Bank Limited (1989): Memorandum and Articles of Association


o

IFIC Bank Limited: Central Account Deposits.


o

Bank Book of Instructions (General Banking) IFIC.


o

Bangladesh Laws on Banks and Banking.


o

Industry. Journal of Economic Policy2009, Review, 1-18.


o

Bangladesh Bank (2009). Prudential Regulations for Consumer Financing.Ahmed, Iftekhar Uddin, Crisis of Credit Management, Ruprekha Publisher, Mirpur Dhaka.Credit Management

(Planning, Appraisal and Supervision) edited by S.L.N Simha,Indian Institute of Financial Management and Research.Ministry of Finance. (2009).The Activities of Banks and Financial Institutions, 2008-

2009. Publication No. 329 EX-1400, Dhaka, Bangladesh Government Press.Kothari, C.R. Research Methodology (Methods and Techniques) Revised edi.2
nd

, New Age International Publishers.Ali, A., & Howlader, R. A. (2005). Banking Law and Practice. Agami Prakashoni,Dhaka, Bangladesh
o

www.bangladeshbank .org
o

www.ificbank.bd.com

Appendix

Various questions that were used in unstructured questionnaire are mentioned below:1.What is the

background of IFIC Bank Limited?

2.

Please mention some milestones of development of this Bank?3.What are the objectives of the bank?

4.

What is its mission? 5.What is the hierarchy of the organizational structure of IFIC Bank?

6.

Please explain about the deposit management.7.What are the main

objectives of deposit management?8.How many deposits account are served by IFIC Bank?9.How many deposit Schemes offered by IFIC Bank?10.How IFIC Bank utilize the deposited funds? 11.What is loan

management?12.For whom you provide loans?13.Please mention some categories of loans with respective terms and conditions? 14.What is your plan to reduce bad loans? 15.What are the main problems in deposit

and loan management? 16.What are the strengths of IFIC Bank?17.What are the weaknesses of IFIC Bank?18.What are the opportunities of IFIC Bank? 19.What are the threats of IFIC Bank?

20.
What are the prospects of IFIC Bank

?
21.What are the proposed branches of IFIC Bank to be established?22.Has any plan to increase

the ATM card facilities? If yes, mention please.

23.

What are the present and prospected manpower of your bank?

24.

Are the employees satisfied? If not, why? 25.Do you take any policy to improve the CAMELS Rate?
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