REPORT ON BANK ASIA

TABLE OF CONTENTS

PREFACE

We moved a way from the time when the banks were deposit taking and money lending institution. The old concepts, attitudes and methods in banking have undergone a marked change all over the world, and Bangladesh has not lagged behind Banks are required to participate in the nation building activities and act as agent bringing about socioeconomic change. At the beginning of 1900, we observe era of unprecedented all round growth since nationalization of commercial banks. Entering a new millennium, banking needs become more acute than ever before as a result the branch network has widened and functional dimensions have broadened. Thus the field of banking industry has enormously increased in all spheres and it would not be exaggerated to say that the banking industry could now be looked upon as the pivotal force, which the economic activity revolves. It is also true because of interdependence that has developed between banks and economic growth. The Bank Asia Ltd is a third generation bank in the growing sector of Bangladesh. It has a promise to fulfill every possible customers needs and serve the society with high efficiency and satisfaction. As a private commercial bank it has to face severe competition as there are banks currently carrying out then operations in Bangladesh. Its competitive strength lies in setting high standard of integrity and in providing total satisfaction to its customers. Its team of dedicated professionals is committed to provide unparalleled services by using the latest technologies. It is really a great honor for me to have an opportunity to work as an intern in the Bank Asia Ltd. During my internship. I found myself as a part of its committee workforce and I put the utmost effort to bring the relevant facts and figures with respect to the preparation of the internship report. Page #- 1

REPORT ON BANK ASIA

ACKNOWLEDGEMENT

First of all, we remember the almighty. Completion of any thing require supports from various sources we are very much fortunate to get the sincere guidance and supervision from a number of persons. Foremost, we would like to convey my sincere gratitude to Dr. Toufic Ahmed Choudhury, Program Director, MBM program, BIBM for his encouragement and cooperation in writing this report. Again I am indebted to Dr. Toufic Ahmed Choudhury for his sincere guidance. This report has been prepared under supervision of my Associate Professor, Abdul Jalil Chaudhury and I respectfully acknowledge his guidance and help. I would like to express my deepest gratitude to the Vice President & Manager Mr. Md. Sazzad Hossain, Head of the Uttara Branch for his heartiest cooperation. I would like to thank to Mr. Md. Inamul Islam, First Assistant Vice President & Sub Manager & Mr. Md. Mortuza Ali, First Assistant Vice President & Credit Incharge. No words are strong enough to hold the thanks and gratitude. I want to express to then named Mr. Md. Arshad Alam (Officer), A.F.M. Tanvir Ahsan (Probationary Officer), Nazmul Mubarak (Junior Officer) and other officers of Bank Asia Ltd., Uttara Branch. I remember all the care and love of my friends who made my every existence more meaningful and worthy.

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REPORT ON BANK ASIA

CHAPTER ONE: INTRODUCTION

1.1 Historical Background of the Bank Asia:

The economy of Bangladesh has been experiencing a rapid growth since the 90s. Industrial and agricultural development, international trade, inflow of expatriate Bangladeshi workers remittance, local and foreign investments in construction, communication, power, food processing and service enterprise ushered in an era of economic activities. Urbanization and lifestyle changes concurrent with the economic development created a demand for banking products and services to support the new initiatives. A group of highly acclaimed businessmen of the country grouped together to respond to this need and established Bank Asia Limited in the year 1999. Bank Asia came into the headlines and attention of everyone when it acquired the operation of Bank of Nova Scotia, a Canadian Bank. This is the first time that a local private bank acquired any operation of a foreign bank in Bangladesh. The breakthrough was possible for some visionary decision-makers and also dedicated team of professionals who are constantly putting all their best efforts to establish the bank as one of the leading concern in the industry. The acquisition agreement was signed on the very auspicious evening of February 6, 2001 and the takeover of all operations of the Bank of Nova Scotia started on February 17, 2001 Scotia

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REPORT ON BANK ASIA branch is the only chartered member of SWIFT (Society For Worldwide Inter-bank Financial Telecommunication) among Bank Asias other branches. SWIFT is widely used for purposes like fund transfers, L/C and guarantee issuance that can be made instantly. In January 01, 2002 Bank Asia also taken over the operation of Muslim Commercial Bank of Pakistan. The Bank Asia incorporated as a public limited company under the Companies Act. 1994. The bank started its commercial operation on November 1999 with an authorized capital of Tk.800 million and paid up capital of Tk.218 million. The paid up capital of the bank stood at Tk.930 million as on 31st December 2005.

1.2 Objective of the study

1) The primary objective of this report is to fulfill known about to local organization. 2) To get a detail idea about the BANK ASIA LIMITEDs banking services, environment, performance, strategies, capabilities, manager roles, skills, goals and so on. 3) While working as a team member of BANK ASIA LIMITEDs operation, we are identify few obstacles and attempt has been made to provide few suggestions in order to enhance the said banks performance in future.

1.3 Methodology
1.3.1 Sources of Data Collection Information used in this report has been collected from both primary and secondary sources. Primary data were collected mainly through the writers observation of the approval process and monitoring techniques, informal interviews of executives, officers and employees of Bank Asia Limited.

Majority of the information were collected from the secondary sources, which include books, publications, reading materials and various circulars and reports published by Bank Asia Limited.

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REPORT ON BANK ASIA

1.4 Limitations of the study:

There were certain limitations regarding the study that is summarized below: Deficiencies in data required for the study. Field practice varies with the standard practice that also created problem. Time provided for conducting the study is another important constraint. Sometimes the concerned personnel may not provide enough time due to rush banking hours. Another limitation was that the data gathered could not be verified for accuracy.

CHAPTER TWO: An overview of the BANK ASIA LIMITED

2.1 Strategies of the Company BANK ASIA LIMITED supports free enterprise and a competitive market system. Its business decisions and territorial expansions of business are based on sound economic principles and reliable market surveys, with a view for long-term profitability and adding economic value. These are essential as profitability is a measure of both efficiency and market confidence in Bank Asia Ltds service while the quantum of economic value-added is indicative of how far the returns create shareholder value. Hence, BANK ASIA LIMITED is committed to staying over the competition through constant innovation of technology based products and efficiency enhancement, as well as, being responsive to the requirements of our customers and partners, in so far as our ability to adhere to industry best practices e.g. Core Risk Management principles are unimpaired. 2.2 Mission statement of the Bank Asia Ltd.

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REPORT ON BANK ASIA To assist in bringing high quality of service to our customers and to participate in the growth and expansion of our national economy. To set high standards of integrity and bring total satisfaction to our clients, shareholders and employees. To become the most sought after bank in the country, rendering technology driven innovative services by our dedicated team of professionals.

2.3 Corporate objectives Bank Asias objectives are reflected in the following areas: Highly personalized service. Customer-driven focus. Total commitment to quality. Contribute in the economy. Quality of human resources. Commitment to its clients at each level. The company believes that communication with, and feedbacks from its clients help it achieve its goal of providing world-class products and services. Bank Asia regularly conducts client satisfaction surveys and make immediate accommodations and adjustments where needed. It also constantly monitors its standards, and strives to meet clients requirements. 2.4 Values Considered as Guiding Factors All the activities and decisions of Bank Asia are based on, and guided by, these values: Page #- 6

REPORT ON BANK ASIA providing innovative and highly consumer friendly technological service which adds value( like thumbs pay) Placing the interests of clients and customers first. A continuous quest for quality in everything the company does. Treating everyone with respect and dignity. Conduct that reflects the highest standards of integrity. Teamwork- from the smallest unit to the enterprise as a whole. Being good citizens in the communities, in which they live and work.

2.5 Board of Directors Bank Asia has been launched by a group of successful entrepreneurs with recognized standing in the society. The first Board of Directors of the bank was constituted with thirteen Directors. M Syeduzzaman, former Advisor to the government in-charge of the Ministry of Finance is currently Chairman of Bank Asia. He is also known for his clear-sighted and dispassionate assessment of the countrys socioeconomic situation. Mr. M. Syeduzzaman -Chairman Mr. A. Rouf Chowdhury - Vice Chairman (RANGS Group) Mr. Arifur Rahman Sinha -Vice Chairman (Sinha Group) Other Directors: Md. Shafiuddin Chowdhury Mr. Mohd. Safwan Choudhury Mr. Md. Sirajul Haque Mr. Nafees Khundker

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REPORT ON BANK ASIA Mr. Md. Anwar Hussain Mr. Murshed S. Chowdhury Ms. Mahrina Chowdhury Mr. Jahir Uddin Mr. Romo Rouf Chowdhury Mr. Rumee A. Hossain Ms. Sabrina Chowdhury Mr. Shamsul Alam Mr. Mir Shahjahan Ms. Monowara Haque

2.6 Management Team The BANK ASIA LIMITED Management Team comprises of a group of twelve people and each of them comes with a resourceful working background and is committed in leveraging their experiences to take BANK ASIA LIMITED to greater heights by ensuring top line revenues with dynamic capabilities. This Management Team is unique in being able to envision the need of the business by bringing in a mixture of advanced technology solutions know-how and revamping the organizational make- up for maximum profitability. Other than the CEO, the remaining Management Team Members each head a function: Syed Anisul Huq President & Managing Director Mr. Erfanuddin Ahmed DMD (Operations, Credit & IT) Mr. Aminul Islam DMD (HR & Company Secretary) Mr. S. M. Shamsul AlamSEVP (Head of Core Risk Management) Mr. S. M. Khorshed Alam SEVP (Zonal Head-Chittagong) Mr. Tanweer Rahim EVP (Marketing) Mr. Irteza Reza Chowdhury EVP (International Division)

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REPORT ON BANK ASIA Mr. Nasirul Hossain SVP (Head of Credit) Mr. Md. Azhar Ali Miah SVP (Head of Audit) Mr. Abu Bakar Lasker VP (Head of credit Admin.) Mr. Md. Ashrafuddin Ahmed FVP (Board Secretariat) Mr. Asadul Karim FVP (Financial Control) Mr. S.M. Jahangir Akhter FVP (Information & Communication Tech) This mix of people is persistent to provide unparallel service to its customers, come up with timely and innovative products and services and to enhance the capabilities of its people while emphasizing on the latest technology. This team is to drive the business to maximize the operational excellence and efficiency through acquisition of talent, developing systems, processes and people and through blending in of these to let customers revel in with fulfillment and permanency. 2.7 Corporate Responsibility A successful business is defined by its relationship with its shareholders, customers, employees, business partners and the community in which it operates. BANK ASIA LIMITED aims to tap into the synergy of these relationships and create a collectively beneficial business environment. Its responsibilities are as follows:

Shareholders To safeguard shareholders investment and to create and add economic value. Customers To satisfy the unique needs of our customers by offering safety to their trust, provide innovation and flexibility in delivered service, that creates value for their business thereby enhancing their commercial success and, in turn, ours. To take due care and diligence in ensuring that regulatory norms are not breached in extending service to customers and other constituents.

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REPORT ON BANK ASIA Employees: To recognize that employees are our greatest asset and to ensure that they have a safe and conducive working environment with equitable and competitive terms and conditions of service. The Bank promotes a culture of trust, and the development and best of human talent and resource. Business partners: To cultivate meaningful, mutually beneficial and successful long-term relationship with our partners, suppliers and contractors based on trust and understanding. Community: To be a responsible corporate citizen and conduct business in a manner that promotes sustainable development for both BANK ASIA LIMITED and the community it serves. This involves full compliance with local laws and regulatory authorities, and giving due consideration to cultural, social and environmental impact in all commercial decisions. 2.8 Banking Activities of Bank Asia Operations, Credit & IT: The main purpose of the operation department is to maintain and ensure free flow the overall activities. 2.8.1 HR & Company Secretary In the evolving banking arena innovation and specialization will be the key to maintaining competitive edge. A transparent process to recruit the best talent is successfully established through the Human Resource Department. The human resource department conveys a number of training and development programs throughout in an effort towards continuous development of the Human product of the bank. Both internal and external trainers conduct in-house training programs and these programs are continuously updated to reflect the latest development in the banking as well as information technology sector. By the end of 2005, the manpower strength is increased to 397 from 331 at the end of the previous year.

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REPORT ON BANK ASIA 2.8.2 Marketing The Marketing Department is responsible for the coordination of all marketing activities of the Bank; ensures marketing activities are in compliance with state and federal regulations; develops various marketing concepts, objectives, materials, advertisements, programs, press releases, and other special events approved by senior management and the Board of Directors. The department provides guidance and coordinates implementation efforts with respect to the installation of new or existing products and services. The Marketing Department is also responsible for being the primary contact of public relations and media contacts, advertising, and certain business development activities that promote the spirit, philosophy, dedication, and general direction of the Bank. 2.8.3 International Division International Division develops and service comprehensive personal financial relationships within affluent International target market through a professional sales effort and identifies qualified International potential clients. The department initiate contacts assess need; present an array of products and services, and close sales. This department is responsible for the management and total servicing of the international client relationship, and for the growth and profitability of the largest, most complex and profitable relationships in the unit. 2.8.4 Credit The Credit Division is responsible for gathering and analyzing credit information on current and potential borrowers; determines the advisability of granting credit for diversified types of loans Duties also include assisting loan officers in writing loan requests; promoting business for the Bank by maintaining good customer relations and referring customers to appropriate staff for new services. 2.8.5 Audit & Internal Control The Audit & Internal Control Department is responsible for developing, implementing and communicating Treasury Bank Audit's vision, mission, goals and strategies. To ensure that critical business and regulatory processes are in place and working, this department develops and maintains an effective relationship with business partner management, helps business partners Bank Asia Limitedance their business strategy with appropriate risk management controls and encourages business unit manage-

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REPORT ON BANK ASIA ment to self-assess its business environment and develop action plans around 'gaps' that could impact sound risk management or success in meeting business plans. The division also ensures that staff understands and is appropriately aligned to the company's objectives/values, and stay abreast to tactics employed by Audit and the business units they review. Other duties include assuring that adequate resources and training are provided to staff, sufficient to ensure full compliance with all regulatory requirements.

2.8.6Financial Control This department of BANK ASIA LIMITED is responsible for the all of the Bank's fiscal operating results, such as cost accounting, budgets, regulatory agency and government reports ensuring the safeguard of Bank assets. The Financial Control Department also counsels senior management on fiscal control and profitability; prepares, presents and interprets financial reports to senior management; adheres to tax laws and regulatory compliance to properly reflect the financial position of the Bank. 2.8.7 Information & Communication Tech The Information & Communication Department is responsible for the Bank's electronic and cash management-based products and services, including the development, deployment and maintenance of Bank's Internet web site; assists account and business development officers in the sales of related products and services. The department also performs direct supervisory duties of department staff; coordinates staff for coverage in all related areas of the department; ensures various department activities or projects run smoothly and efficiently. 2.9 Management Practices in Bank Asia Working Environment 2.9.1 Health Adequate priority is accorded to the health and safety of our employees, primarily through providing safeguards to branches with appropriate security arrangements, i.e. employment of both physical premises are under regulatory requirement to conduct periodic drills for a systematic approach both to prevent any security breaches and to promote a cultural security and safety awareness. This involves

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REPORT ON BANK ASIA managing health and safety as any other critical business activity with periodic reporting, appraisals and improvements made. For more specific details, consult the Health and Safety Guidelines in banks Human Resource Department.

2.9.2 Environment While conducting due diligences on credit facilities request, BANK ASIA LIMITED will strive to ensure environmental issues are appraised with the same regard as any other business factors. To the extent deemed practical, BANK ASIA LIMITED will raise and recommend compliance with local environmental laws to all its borrowing relationships. We firmly believe in long-term sustainable development and investment decisions will only be made when the bank is convinced, taking into account all relevant feedback, that any environmental impact will be minimal and that will not be more than what is necessary to achieve the ends. 2.9.3 Teamwork Teamwork and cooperation is an important aspect of the work ethics in BANK ASIA LIMITED. BANK ASIA LIMITED leverages on the dynamics of their collective skills, knowledge and experience to achieve the best for their customers. BANK ASIA LIMITED views its employees as its greatest asset and recognizes the pivotal role that meritocracy plays in setting rewards and penalties to safeguarding the interests of its employees. It respects the incidence of conflicts arising in the workplace and seeks the amicable resolution of continuous issues in a manner that is constructive, open, honest and ultimate beneficial to al parties involved. 2.9.4 Handling Information: Clear, honest and open communication is maintained in BANK ASIA LIMITED to ensure full accountability, subject to business confidentiality. Any information not released to the public by Corporate Office communications is considered confidential and sensitive information and is handled on a need-to-know basis that the job involved so requires in the organization.

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REPORT ON BANK ASIA

2.9.5 Administration: All employees are responsible for fully understanding and complying with Bank Asia Limiteds Code of Business Conduct. Violation of the Code is not tolerated and violators are subject to local laws where relevant, and may also face disciplinary action and dismissal. Additionally, Branch Managers and Executives at appropriate Department Head levels are required to record their acknowledgement and duly raising awareness of their reports, the values and principles of the Code of Conduct periodically. 2.10 Five years activities at a glance Particulars Authorized Cap. Paid up Capital Total Assets Total Deposit Total Loans & Adv. Import Export Total Income Total Expenditure Operating Profit EPS(Taka) Dividend No. of Branches 2005 1200 930 23380 18500 17870 26352 13964 2525 1724 801 41.24 30% 19 2004 1200 744 17811 13471 11861 18942 7104 1868 1209 659 39.48 25% 17 Year ended Dec.31 (Figures in Taka Million) 2003 2002 2001 1200 800 800 600 235 218 12600 8458 4722 10431 7008 3849 8190 5449 3013 14556 7761 3954 5996 5336 1136 1498 931 480 1079 702 355 419 229 125 35.97 48.51 29.33 24% 28% 18% 14 12 7

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REPORT ON BANK ASIA 2.11 Organizational Hierarchy Managing Director Executive Vice President Senior Vice President Vice President Senior Astt. Vice President Astt. Vice President Senor Executive Officer Executive Officer Senior Officer Officer Junior Officer Astt. Officer Trainee Officer Probationary Officer

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REPORT ON BANK ASIA

CHAPTER THREE: General Banking

3.3 Customer Service: Customer service is the important and indispensable desk where any visitor or client can get answer of his/her quarry. The activities of the General Banking are as follows: 1. Providing information to the visitors. 2. Providing information regarding Bank Asia Limitedance of the client 3. Issue and reissue pass book. 4. Providing ATM cards to the depositors. 5. Opening new accounts and proper documentation. 6. Preparing KYC profile, Transaction Profile and conduct risk analysis 7. Supplying deposit slip book 8. Assist in preparing solvency certificate 9. Counseling to the clients 10. Verifying the signature before honor a Cheque 1. Providing information to the visitors: The bankers in the customer service department provide valuable information to the clients and new services that are added. 2. Providing information regarding Bank Asia Limitedance of the client: some clients have the query about the Bank Asia Limitedance for last three months or to know the present Bank Asia Limitedance position and using stealer-2001 customer service personnel provide the printed hard copy of the current Bank Asia Limitedance of the different deposits or through conversation of the current status.

3. Issue and reissue Cheque/pass book: Customer Service personnel issue Cheque/pass books when a client opens an account. It contains a sealed number when which is printed on the top of the pass-

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REPORT ON BANK ASIA book. When the Cheque book is finished then the client provide the number in a token collected from the customer service then the customer service personnel manually fix the number in the seal and imprinted in the new Cheque book and reissue in the name of the clients. This re-issued Cheque books are maintained with due care in a steal box according chronological date order because any Cheque book missing is the cause of the negligence of the banker. In front of the Pass Book BE number is provided to make proper maintenance, usage and counting of the Pass Books supplied from the Corporate Office. Before supplying Cheque/pass book a document is maintained whether photocopy or written and verify the signature to certain the right person collect the passbook. 4. Providing ATM cards to the depositors: Any client looking for ATM card fill up a stipulated form named Any Branch Time Online where he/she provide some information of his her name , date of birth, Parents name , mailing address, contact number and after usually 15 days they are issued from the corporate office . There was a plan for providing ATM cards for every saving account holder and service charge is Tk.100 monthly. 5. Opening new accounts and proper documentation: In case of opening an account different aspects come forward like A. Eligibility opening an account: a. Whether the a/c holder is minor or not if minor then the criterion who will operate the a/c on his / her behalf b. Whether he/she is bankrupted or c. Whether he /she has the social value d. Verify the persons name , identification and relation with the bank e. Source of income ( in case of large deposit), occupation f. Address This portion is undertaken by any customer service department personnel to verify whether the person is eligible to open the account and understanding the need and authenticity to open the account it assists in fill up the KYC (Know Your Customer) profile as well as calculating the risk factor analysis of the account holder.

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REPORT ON BANK ASIA B. Formalities to be performed to open an account/ documentation: An individual customer has to follow proper documentation requirements before opening an account with the bank. The proper documentation is as follows: for Savings , Current , STD & Fixed: Properly signed, fill up the specimen card / signature card which is scanned for further signature or other verification 1. Two copies of recent passport photograph duly attested by the existing account holder. 2. One copy of nominee photograph duly attested by the existing account holder. 3. An introducer, who might be an account holder in the bank. If the person has no known account holder, in that case any bank in which he has an account that bank certificate. An employee can open an account with the employer certificate. 4. The Account opening form should be properly filled and signed in the due places. 5. Fill up the transaction profile which assist in preparing transaction profile fill up. 6. Photocopy of the passport original passport should be duly sighted or any photo contained ID card duly attested by the existing account holder. 7. TIN (Tax Identification Number) is optional.

Pay Order procedure:

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When Person X issue a pay order in favor of Person Y Person Y collects from Person X Person X Person Y

Issue Pay order Bank Asia Uttara Br.

Deposit Eastern Bank Motijheel Br

Send The Pay Order

Bank Asia
Principal Office

Clearing House

Eastern Bank Principal Office

3.5 Demand Draft, Telegraphic Transfer (TT) & Traveler's Cheque a) Demand Draft Demand Draft (DD) is another popular way to transfer fund outside the metropolitan clearing area. In this case the issuing bank has a branch on that area. Issuing branch and the paying branch must be different. b) Telegraphic Transfer (TT)

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REPORT ON BANK ASIA Under Telegraphic Transfer one branch may advice to another branch to transfer a certain amount of money to a specific persons account. It is very much easier system to remit fund due to on line banking system. Commission for 'TT is 0.15% c) Traveler's Cheque: Traveler's Cheque issued by bank to enable a traveler to obtain cash in foreign currency when abroad. traveler has to sign the Cheque twice, once in the presence of the issuer and again in the presence of the paying bank. Foreign exchange regulation of Bangladesh set a yearly quota traveler can't carry ore than $ 3000 for his travel purpose in a year. Out of which he like 50% cash dollar and 50% traveler Cheque. But only medical treatment purpose one array $10,000 subject to permission of Bangladesh Bank after approval of Medical. Generally CITI Bank N.A, American Express bank sells travelers Cheque. Bank Asia collect this Cheque from them sells it to the client. Bank inform. CITI Bank NY or American Express Bank NY that a traveler Cheque has been issued detailing value and Cheque number. Bank Asia charges 1% commission on value of the Cheque and Tk.100 for endorsement charge. The traveler have to travel within 14 days from the date of issue of Cheque. Bank issued traveler Cheque based on following documents1. Valid Passport & Visa 2. Confirmed Air ticket Bank endorsed passport and ticket at the time of issuing Cheque.

3.6 Issuance of ATM Card

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REPORT ON BANK ASIA Now we are in the ages of modern technology. People are trying to adopt the innovation of advanced technology to make their life easier. Automated Teller Machine Card is the sign of adopt ion of advanced technology. Bank issue this card to the customer against their account. Customer can withdraw money at any time at any where in specific bank booth by using ATM card. So the customer has no hurry to withdraw money in banking hour by issuing Cheque. Bank Asia provides ATM card facility to their client. 3.7 Teller and Cash Management Teller and Cash Management deals with cash deposit and cash withdrawals. 1.They receive money- from customers against deposit slip provided by the bank 2.pay cash to the client against Cheque issued by the customer. 3.They also receive outward Cheque to credit the custom account through clearing. Cash department maintains two registers; one is for daily cash Bank Asia Limitedance and another is for vault reserve. Daily cash Bank Asia Limitedance must be equal to the vault reserve. Excess money over the limit of vault is transferred to the feeding. There are two person dealing with cash management and another two authorized persons, who hold the key position to maintain the vault. 3.8 Accounts Department Accounts: Accounts department is responsible to prepare the accounts, trial Bank Asia Limitedance. Interest processing, financial statement, daily position monthly SBS report and profitability of the branch he also maintained daily vouchers. He is also responsible to prepare a report of monthly, half yearly and yearly financial position of the branch.

Clearing Clearing House is a centralized system for settling inter-bank indebtedness praising from the transfer of deposit from one person to another. This is a house where commercial bank settles their claims. This is done in a place known as clearing house under the supervision of Bangladesh bank. The functional process of clearing house is mentioned below. 1. Each bank has a representative for the clearing-house

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REPORT ON BANK ASIA 2. Representative of each bank visit the clearing-house with Cheques, pay orders deposited to his bank. 3. Clearing House determines the ultimate Bank Asia Limitedance payable to each other. 4. Final settlement is done through the clearing-house by debiting / crediting their respective account with the clearing house.

Clearing

Inward Clearing

Outward Clearing

Inward clearing Inward Clearing are those Cheques and pay order which are issued by the client of Bank Asia, Uttara Br. in favor of another person. These Cheques and pay orders sent by those banks where they deposited and it comes to the Uttara Br. through Principal office.

Processing of Outward Clearing

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REPORT ON BANK ASIA 1. Entry into Register accordingly 2. Entry into Stelar 3. Put the clearing seal along with date in each and every Cheques 4. Endorse each and every Cheques accordingly 5. All Cheques and drafts sent to feeding branch along with list for clearing purpose. 6. Send IBDA ( Inter-branch Debit Advice) to principal office 7. As soon as the principal office informs about the Cheques are bounced a reverse entry is given in the Stelar system 8. Next day the dishonored Cheques are returned back to the branch 9. These Cheques are returned back to the customer after having- authorized persons in the outward clearing Cheque return registered.

CHAPTER FOUR: Credit Appraisal

Commercial Banks and financial institutions intermediate between lenders and borrowers. These financial intermediaries collect deposit and disburse it as loan and advance to the individual people or businesses. The loans and advances should be given to them who has the certain and predicted cash flow to repay the credit. If the fails to analyze the clients ability of repaying the loan and the projects future cash flows, possibility of default may arise due to the fact. So the importance of appraisal can hardly be overstated in sanctioning any loan. In fact the purpose of appraisal is to be sure that the proposed advance will be save, liquid, and profitable, and for acceptable propose covered by adequate security. So, it is imperative that the credit appraisal process must be standardized, through, strict, and guided by prudent discretion. Again, at the time of credit appraisal the bank must come to an acceptable compromise between over cautious stance and under cautious stance. The credit appraisal process here at Bank Asia limited is a detailed and through one, complying to the central banks standards as well as analyzing all feasible sources of risk. Though there is a prescribed format for appraising the potential borrower, the creativity of the credit officer is very important for

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REPORT ON BANK ASIA identifying various aspects of the investment proposal. Bank Asia therefore allows some room for flexibility, which may enrich the appraisal or make it a more complete one.

4.1 Type of Projects Financed The making of loan and advance is always with a view to making profit for the bank. As the bank mobilize savings from the general people in the form of deposit the most important task of it is to disburse the said deposit as loan or advance to the mass people for the development of commercial, industrial, agricultural and other types of economic activities where there is need of fund for investment. The possibility of the banks depends on the efficient manner and avenues in which the resources are employed. Bank Asia has made so far efficient use of the deposit and has the classified rates under control. The Bank Asia Limited disburse loan in different form. Bank Asia finances new projects as well as existing businesses. The induction of the borrower may arise from any employee of the bank any client of the bank or the client himself can approach for credit. Bank Asia gives loan in different purposes that include: SOD ( against share, work order, financial obligation, FDR, Export) Cash Credit Loan (general) Loan Against Trust Receipt Payment Against Document Consumer Credit Scheme Local and Foreign Guarantees Inland Bill Purchase Foreign Bill Purchase & others

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REPORT ON BANK ASIA 4.2 Portfolio of Credit Loan mix reveals the diversification sought by the Bank Asia in its loan placements. As we know diversification reduces the level of default risk that is associated with large concentration of loans in a single category. The loan mix should be quantified and described in the credit policy. Bank Asia offers loan in almost all the mode. They are cash credit, over draft, payment against documents, term loan etc. The credit disbursed in every mode as on 30-09-2006 is given belowMode SOD OD Personal Credit Staff Loan Term Loan LTR Local Bill Purchase Consumer Loan Total 30-09-2006 2,28,34,453.00 12,23,59,109.00 5,20,440.00 63,86,355.00 19,51,07,105.00 24,22,560.00 4,58,161.00 1,45,45,716.00 36,46,33,898.00

4.3 Delegation of Lending Authority To assure proper and orderly conduct of the banking operation, and a transparent credit sanction system, the bank gives most power to its board of directors for all big loan proposals. The managing director has authority to approve any loan proposal for short-term loan equal to or lower than Tk. 5.0 Million. All other short-term, medium-term and long-term loan proposals must go through the board of directors, which ensures uniformity and discipline in the Banks credit operations, and facilitates keeping Banks portfolio in line with its credit policy. The bank has planned to empower some of its top executives with some lending authority. But this plan is yet to be implemented. 4.3.1 Approving Authority In Bank Asia the credit proposal to through certain steps that are ordered in terms of hierarchy. The board of director is the ultimate authority and it delegates different power to the different committees. In Bank Asia Limited there are following hierarchies in approving credit facilities.

Branch Credit Page #- 25 Section

Head Office Credit Committee

Managing Director

Board of Directors

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4.3.2 Branch Credit Section The branch credit section is headed by the branch manager and the other members are credit in-charge, and any one nominated by the branch manager and the credit officer who prepare the proposal and appraises the client. As the ultimate performance of the branch depends on the loan and advance portfolio, the branch credit section extensively analyzes the proposal and sends it to the head office credit section for processing. 4.3.3 Head Office Credit Section After receiving the loan proposal from different branches, credit committee (HO) seats after certain for analyzing the proposal. The credit officers review the proposal and look for what other information is needed to provide with it to present before the managing director. Here they also appraise the loan proposal in the same way the branch does. The HO credit section is responsible for the following activities: The committee evaluates the quality of the lending staff posted in the branch and take appropriate steps to made them efficient and effective. After getting the credit proposal from branches, HO credit committee analyzes it and recommends it to the managing director. Ensuring that all the required information and documents are collected and are in order. Confirming that the credit proposal is consistent with the existing credit policy of

the bank and not inconsistence with the central bank guideline. 4.3.4 Managing Director After analyzing and reviewing the loan proposals received by the head office credit section. The loan proposals are forwarded to the managing director for sanction. The managing directors, then, Approves the credit facility as delegated by the Board of Directors. If any credit proposal is beyond his authority, sends it to the Board of Directors.

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REPORT ON BANK ASIA Supervisors implementing the directives of the Board of Directors. Communicate the result of all the above function to the Board of Directors.

4.3.5 Board of Directors If the credit demand of the client exceeds the delegated power of the Managing Director, the proposal is send to the Board of Directors for approval. The Board of Directors has, in Bank Asia; retain the following credit related responsibilities in their hand: * Delegating authority to approve and review credit. * The Board of Directors will approve the credit for which authority is not delegated to anybody. * If the credit proposal/extension for credit is contrary to the Bank Asia Limiteds written credit policy, Board of Directors will analyze it thoroughly and will (not) approve it. The Board of Director will establish the credit-related policy and procedures of the Bank.

4.4 Steps in Loan Processing and Appraisal Before sanction credit, there are some stages the proposal has to come across. The steps are as under:

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REPORT ON BANK ASIA

1. Request for Credit from the client to a Branch

2. Credit Application form filled up by the customer & collection of document

3. Scrutinizing the documents and CIB Analysis

4. Analyzing the information*

5. Preparing the proposal

6. The proposal goes to the Board of Directors through other necessary steps

7. Sanctioning of the credit

8. Informing the client, Loan Disbursement, Supervision and Monitoring

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REPORT ON BANK ASIA * Step 4, i.e. analyzing the information, is a huge job, comprising of the following laborious and crucial activities: Appraising the client or credibility appraisal. Appraising the business. Managements competence or capability appraisal. Financial strength analysis. Credit demand analysis. Security appraisal and valuation.

This part of credit appraisal is concerned with whether there is a strong financial standing of the Borrower Company and its directors. The following information are required: Net-worth statement of all the directors Paid-up capital Investment in business Leveraged (Equity Multiplier) Cash flow Allied deposit in Bank Asia Limited Tangible net-worth of the business for the lasts three years and projected two years. Total Asset- Total Dept Overall group strength (if applicable) Business performance

Also, in order to get a clear picture of the financial viability of the business credit is asked for, Bank Asia credit authority emphasizes on financial viability analysis of the client, using some spreadsheet programs. The clients submit last three years audited/un-audited financial statements and two forecasted income and Bank Asia Limitedance sheet in the time of applying for credit. Using that data and the banks standardized spreadsheet format called Spreadsheet, the credit officer calculates different ratios, cash flow, risk and return measures, working capital, and two standard credit scores (Y Score and Z score). Findings of the Spreadsheet provide the credit section with all the analysis of the financial

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REPORT ON BANK ASIA information, and some guidelines as to whether the client is bankable or not. In a word, it gives the credit appraiser meaningful insight of the financial standing of the borrowing. 4.8.3 Liability Position Analysis Facility from Bank Asia Limited & other bank taken by the client must be provided while applying for credit facility. The credit officer looks for Existing facility enjoying by the Client Company from the Bank Asia Limited and other banks. Existing facilities for the sister concerns if applicable. Debt to Asset ratio. Here the credit officers needs to look for the Nature, limit, outstanding, overdue, CL status, security value of the credit facilities. Whether the amount outstanding are classified or not. Monthly installment payment or fixed charge coverage performance of the client.

4.8.4.1 Previously used LRA (Lending Risk Analysis)

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REPORT ON BANK ASIA

LENDING RISK BUSINESS RISK

INDUSRTY RISK
SUPPLY RISK SALES RISK

COMPANY RISK
MANAGEMENT RISK MANAGEMENT MANAGEMENT

SECURITY RISK
SECURITY CONTROL SECURITY COVER

COMPANY POSITION PERFORMANCE RISK RESILIENCE RISK

LRA is a powerful tool for analyzing the myriad of risks that can be involved with any business operation. Bangladesh Bank requires all the scheduled banks to perform LRA before sanctioning any big loan. The risks covered in the LRA form are divided into two main risks: Business risk and Security risk. Business risk is divided into Industry risk and Company risk, while Company risk emerges from

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REPORT ON BANK ASIA Management risk and company position risk. Here follows the breakdown of the risk factors in the LRA: There are further breakdowns of these 8 risks and scoring scales against all of those constituent factors. At the end, all the scores are summarized in the following scoring panel, and then a scoring matrix is used to determine the overall quality of the loan. 4.9 Loans & Advances As a private commercial Bank Asia has some inherit commitments to its society. And it provides loans and advances which can gear up the economic activity. Bank Asia Limited has been extending facilities to the potential, productive and priority sectors per instruction from Bangladesh Bank. For bank good loans are most profitable asset. A big portion of operating income is derived from lending. This activity is done by the loans and advanced department. Classification of loans 1. Industrial Loan The Bank provides industrial loan to its clientele. It is sanctioned for 5 years or above. In order to get loan from the bank clients are obligated to fulfill the certain requirements provided by the bank. 2. Term Loan The term of loan is determined on the basis of gestation period of a project and generation of income by the use of the loan. Such loans are provided for seasonal agricultural activities, farm machinery, dairy, poultry, transport facilities, extension of tea gardens and development of horticulture, fishing etc. It is categorized into three segments. 3. Over Draft. (OD) The overdraft is one kind of advance. In this case, the customer is allowed to overdraw his or her current account by drawing checkups more that the available Bank Asia Limitedance up to an agreed limit within a certain period of time but not exceeding more than one year, against acceptable securities. These facilities are granted to the customer only after reviewing the credit standing; financial ability and status of the customer as well as the purpose have been favorable established. The overdraft limits

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REPORT ON BANK ASIA is based on "ADVANCE LINE OF CREDIT", available on a receiving basis and reviewed prior to expiration of the agreed of time the bank customer. a) OD Against Pledge of goods: Overdraft against pledge of goods may be extended to the borrowers against pledge of raw materials or finished goods as security. This is given accordingly to credit and margin restrictions imposed by Bangladesh Bank and Bank Asia head office time to time. Here the customer signs a duty stamped letter of pledge by which the customer surrenders the physicals possessions of the goods to effective control of the Bank. The ownership of the goods remains with the borrow. The outstanding liabilities are adjusted out of the sales proceeds.

CHAPTER SIX: SWOT Analysis

SWOT Analysis of Bank Asia Ltd. Every organization is composed of some internal strengths and weaknesses and also has some external opportunities and threats in its whole life cycle. The following will briefly introduce the audience to the Bank Asias internal strengths and weaknesses, and external opportunities and threats as I have explored in the past ten weeks.

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REPORT ON BANK ASIA 6.1 Strengths. 6.1.1 Superior quality- Bank Asia provides its customers excellent and consistent quality in every service. It is of highest priority that customer is totally satisfied. 6.1.2 Dynamism- Bank Asia draws its strength from the adaptability and dynamism it possesses. It has quickly adapted to world class standard in terms banking services. Bank Asia has also adapted state of the art technology to connect with the world for better communication to integrate facilities. 6.1.3 Financial strength- Bank Asia is a financially sound company backed by the enormous resource base of the mother concern RANGS group. As a result customers feel comfortable in dealing with the company. 6.1.4 Efficient management- All the levels of the management are solely directed to maintain a culture for the betterment of the quality of the service and development a corporate brand image in the market through organization wide team approach and open communication system. 6.1.5 State of the art technology- Bank Asia utilizes state-of-the-art technology to ensure consistent quality and operation. The proof of that can be found in one of its branches, Scotia that is equipped with Reuters and SWIFT. All these facilities will be introduced in every branch very shortly. 6.1.6 ExpertiseOne of the key-contributing factors behind the success of Bank Asia is its employees who are highly trained and most competent in their own field. Bank Asia provides their employees training both in-house and out side job. 6.1.7 In-house utility- Bank Asia is free from dependence from the ever-disruptive power supply of our public sources. The required power is generated by the company through generator fed on diesel. Water generation at present is also done by deep tube wells on site and is abundant in quantity.

6.1.8 Excellent working environmentBank Asia provides its workforce an excellent place to work in. Total complex has been centrally conditioned. The interior decoration was done exquisitely with the choice of soothing colors and blend of artistic that is comparable to any multinational bank.

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REPORT ON BANK ASIA 6.2 Weaknesses 6.2.1 Limited workforceBank Asia has very limited human resources compared to its financial activities. There are not many people to perform most of the tasks. As a result many of the employees are burdened with extra workloads and works late hours without any overtime facilities. This might cause high employee turnover that will prove to be too costly to avoid. 6.2.2 Problem in delivery- Few of the Bank Asias products offered to its clients like Money++ and Personal Credit (PC) are lying idle due to proper marketing initiative from the management. These products can easily be made available in attractive way to increase its client base as well as its deposit status. 6.3 Opportunities 6.3.1 Government support- Government of Bangladesh has rendered its full support to the banking sector for a sound financial status of the country, as it is becoming one of the vital sources of employment in the country now. Such government concern will facilitate and support the longterm vision for Bank Asia. 6.3.1 Evolution of e-bankingEmergence of e-banking will open more scope for Bank Asia to reach the clients not only in Bangladesh but also in the gloBank Asia Limited arena. It will also facilitate wide area network in between the buyer and the production unit of Bank Asia to smooth operation to meet the desired need with least deviation. 6.4 Threats 6.4.1 Mergers and acquisitionsThe worldwide trend of mergers and acquisition in financial institutions is causing concentration the industry and competitors are increasing in power in their respective areas. 6.4.2 Poor telecommunication infrastructureAs previously mentioned, the world is advancing towards e-technology very fast. Though Bank Asia has taken effort to join the stream, it is not possible to complete the mission due to the poor technological infrastructure of our country.

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REPORT ON BANK ASIA 6.4.3 Frequent currency devaluationFrequent Taka Devaluation and foreign exchange rate fluctuations and particularly South-East Asian currency crisis adversely affects the business gloBank Asia Limitedly. 6.4.4 Emergence of competitorsDue to existence of unlimited demand in financial sector, it is expected that more financial institutions will be introduced in the industry very shortly. And we have already seen such cases in our country that lots of new banks are coming in the scenario with new services. Bank Asia should always be prepared for the competition in the coming years.

CHAPTER SEVEN: Findings & Recommendation

Findings & Recommendation 1. Like all modern banks, Bank Asia also has a website to introduce the bank and its products and services. But to me there is still a lot of scope to improve this website by providing more detailed information about different services and products and performance of the bank. It should update it on regular basis. Though at the moment it can be argued that very few potential customers seek information about product from web, but as Bangladesh is being connected to the submarine cable shortly, more and more people will use internet in the near future because it will be the cheapest and the most convenient way of obtaining information. Therefore, negligence in this area can jeopardize the future of the potential products, like online-banking, which is being popular nowadays to many customers because it saves time. 2. The role of IT in bank is to reduce or replace the manual works, which will save staff hours, and in turn, which will be translated into higher profitability for the bank. The current IT support being used in Bank Asia can meet only a partial requirement of the officials. It is extremely slow. It takes time to perform any instruction for example: to get the daily trail Bank Asia Limitedance, the employee has to wait for long time. Therefore, the bank is not being able to derive benefit from the investment in the IT department.

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REPORT ON BANK ASIA Though, it is unrealistic to expect that at this stage, this bank is ready to make a substantial investment in this sector but for long-term benefit; this should be kept in mind. Because all the successful foreign commercial banks like HSBC, SCB are successfully using integrated database software systems and thus saving a lot. Therefore, in these organizations Profit Per Employee is higher than the others, which is a key indicator of performance measurement of Banks.

3. In Bank Asia it was evident that there is a specialization of particular product or services in different branch. Some are specialized in remittances and foreign trades and some are in credit etc. It is not bad but extreme specialization has its opportunity cost. If one branch is only dependant on a single product for its profitability, then there is a risk that the branch will collapse in case of collapse of that particular product. Product diversification can be only safeguard against this risk. So higher management should set an optimum level of share of profit from the particular product. If any branch exceeds that optimum level from its specialization, higher management should push that branch to increase the portfolio of other product to ensure diversification.

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