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Internship Report
Banks Growth, Revenue and Expenses are afected by Standard
Chartered Bank deposit and which helped by selling diferent
products to the customers
!repared by
Akhlakun Nobi Chowdhury
"#$ %&' ()& %*%
+orth South ,niversity
Table of content
1 Introduction 1
2 Back Ground of Standard Chartered Bank 1
2.1 Standard Chartered Bank in Bangladesh 1
2.2 Customer of SCB 2
2.3 Banking Services offered by SCB 2
3 n overvie! of the SCB Services affect to Bank Gro!th
" #evenue earning
3
ii
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8
3.1 Current ccount 3
3.2 Savings ccount $
3.3 Short Term %e&osit ccounts '
3.$ Time %e&osits '
3.' ccess ccount '
3.( )i*ed %e&osit (
3.+ )oreign Currency Current ccount +
3., -on. #esident )oreign Currency %e&osit ,
3./ #esident )oreign Currency %e&osit ,
3.10 1illionaire Schemes /
3.11 1onthly Savings Schemes /
3.12 Convertible Taka ccount 10
3.13 Cash 2ine 10
$ Com&osition of %e&osits in SCB 11
$.1 %e&osit 1i* 11
' )ormation of 3ricing %e&osit Services 13
( )unctional Cost nalysis of %e&osit Services 1'
+ )inding " nalysis 1/
, Conditional 3ricing 30
/ Conclusion 31
10 #ecommendation 31
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1. Introduction
This report has been prepared as a requirement of the internship program. The report was
based upon the organization name as Standard Chartered Bank. And my report was
competed abo!e the one perfect named nationa saes go!erness. The main work of this
department to represent Standard Chartered Bank by seing different product and it aso
heped the re!enue earning and money circuation on market This report wi definitey
increasing the knowedge about "ationa saes of Standard Chartered bank# and the !arious
ser!ices and know how the nationa saes support to meet SCB profit and pro!iding a most
important foreign bank in Bangadesh. "ationa saes mean it saes many kind of bank
product to different customer and charge an interest rate# which is bank profit.
2. Back Ground of Standard Chartered Bank
Standard Chartered Bank deri!es its name after two banks $ Standard Bank of British South
Africa and the Chartered Bank of %ndia# Austraia and China. The merger took pace in &'('.
Standard Chartered Bank is reguated by the Bank of )ngand and is a cearing bank in the
*nited +ingdom.
The new miennium brought with it two of the argest acquisition in the history of the bank,
the acquisition of the -rind ays Bank from the A". group for a consideration of /&.01
biion and acquisition of the Chase Consumer Banking Corporation in the 2ong +ong for /
&.02 biion.
2.1 Standard Chartered Bank in Bangladesh
The Chartered Bank opened in Chittagong in &'18# which was# at that time# the eastern region
of the newy created 3akistan. The branch was opened mainy to faciities the post,war re,
estabishment and e4pansion of South and South )ast Asia. The Bank opened its first branch
in 5haka in &'(( and shifted it6s headquarter from Chittagong to 5haka after the birth of the
7epubic of Bangadesh in &'8&. Currenty SCB has 2( branches in Bangadesh and 9any
other cash office and AT9.
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2.2. Customer of SCB4
Two of the business target specific customer groups:
Consumer banking meets the needs of indi!idua customers.
Corporate and institutiona banking meets the needs of companies# banks and other
financia institutions.
2.3. Banking Services offered by SCB
The bank is ser!iced into se!era di!isions and business units# which are aso further sub,
di!ided. The di!isions are mainy based on some ser!ice ines designed for and pro!ided to
targeted customers# other di!isions and units are there to support the business acti!ities of the
ma;or ser!ice based di!isions. The foowing is the ist of the di!isions of SCB in
Bangadesh. "ote that the di!isions are itte different compared to the ma;or areas of the
-roup.
Consumer Banking %ivision
Cor&orate Banking Grou&
Treasury %ivision
)inancial Institution %e&artment 5)ormer Institutional Business Grou&6
Card %ivision
Information and Technology %e&artment
Custodial and Clearing Service
7&eration
2egal and Com&liance
8*ternal ffairs
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3. n overvie! of the SCB Services affect to Bank Gro!th " #evenue
earning
5eposits are huge amount of money coected by the banks. %t is the iabiity of the
bank. 5eposits are the foundation upon which banks thri!e and grow. These are one of the
unique items on a bank baance sheet that differentiates it from other types of firms in
according to business nature. Though it is such kind of nature# it is so much important and
most necessary items for any bank. A bank coects deposits from the sa!ers of the country
and wants to utiize it in to !arious sectors of the country for earning profit.
5eposits generate cash reser!e# and it is out of the e4cess cash reser!es a bank hods for
which new oans are created. There are two factors regarding managing deposit ser!ices for a
bank# which are:
<hether or not deposit funds ha!e been raised at the owest
possibe cost.
<hether enough deposits are a!aiabe to fund the oans a bank wishes to
make.
%nfect both the cost and amount of bank deposits banks can se to the pubic are
hea!iy infuenced by the pricing schedues for competiti!eness and effecti!eness of any
bank. Based on these two factors# functiona cost anaysis of deposit ser!ices and pricing
poicy of SCB is e!auated in this report.
"ow standard chartered bank pro!ide their ser!ice by the team name as nationa saes
go!ernance. "ationa saes go!ernance means they maintain the e!ery product ike sa!ing#
current account and aso maintain the corporate account mainy company account it6s opened
to support the partnership business. And those entire products can easiy open by the great
fu support of centra screening unit =CS*>.
Central Screening 9nit aunched on "o!ember '# 2??( under the super!ision of saes
-o!ernance# "ationa Saes of Consumer Banking 5i!ision. %n this unit# a products of
nationa saes are smoothy and timey. CS* heps branches in increasing 3@C ser!ice time
for customer# minimize TAT for account opening and o!era branch ser!ice quaity.
3.1 Current ccount
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To open a Current Account one has to deposit a minimum of Taka.A?#???. And account
hoder of those account need to ha!e a!erage baance of Taka A?#??? at a time# 2af yeary a
charge of Taka A?? wi be debited. And beow A# ??#??? haf yeary charge of taka &??? wi
be debited# and the cosing charge for those accounts is Taka 2A?# and if it is cosed before si4
months# the charge wi be Taka A??.
3.2 Savings ccount
To open a Sa!ings Account one has to deposit a minimum of Taka. 2#??#??? and Taka
0#??#??? for )4tra Baue Sa!ings Account =)BSA> and aso interest rate counted when
deposit amount at minimum baance 2#??#???. And account hoder of those account need to
ha!e a!erage baance of Taka &#??#??? at a times# otherwise a charge of Taka A?? wi be
debited. And the cosing charge for those accounts is Taka 2??# and Taka 0?? for )BSA
accounts. %f the ACC is cosed before si4 months# the charge wi be Taka A?? and Taka &???
for )BSA.
Conventional Savings ccount
Account opening amount is B5T 2# ??#???. 9onthy a!erage baance in the account must
stay abo!e the threshod of B5T 2# ??#??? for earning interest for that particuar month. The
bank credits interest in sa!ings account e!ery si4 months =generay in Dune and 5ecember>.
:I3 Savers ccount
This product is introduced to target high net,worth consumers who has enough weath to
maintain B5T A??#??? and abo!e. Account opening amount is B5T A??#???. 9onthy
a!erage baance in the account must stay abo!e the threshod of B5T A??#??? for earning
interest for that particuar month.
8arn ttractive Interest
To get interest# a you ha!e to do is to:
9aintain a minimum baance of B5T & Eac. abo!e at a times during a month.
Can not withdraw through any one debit of more than B5T 2A#??? or &?F of
a!aiabe baance# whiche!er is ower in a particuar month.
"umber of debits permissibe in a week must not e4ceed two transactions.
Interest #ates for the Savings ccount
Monthly Average Balance Rate
Beow B5T 2??#??? ?.??F
B5T 2??#??? up to B5T &?#???#??? 2.8AF
B5T &?#???#??? and abo!e 0.??F
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:I3 Savers ccount
%nterest 7ates for the B%3 Sa!ers Account
Monthly Average Balance Rates
Beow B5T A??#??? ?.??F
B5T A??#??? up to B5T &A#???#??? 1.??F
B5T &A#???#??? and abo!e A.??F
3.3 Short Term %e&osit ccounts4
Short,Term 5eposit =ST5> is a deposit !ehice that earns fi4ed interest bearing
account and the deposit is repayabe at a fi4ed date or at demand. ST5 account is suitabe for
any person or organization that is entited to recei!ing interest in Bangadesh can open an
ST5 account that ha!e a substantia amount of ide funds but those funds can be caed into
use at any time. %t is the practice of the Bank to open a transactiona account before opening
an ST5.
The minimum opening baance in SCB for an ST5 account is B5T. 2#A?#???. %n addition# to
earn interest on ST5 account customer needs to maintain a!erage baance of abo!e B5T.
2#A?#???. ST5 is a non,transactiona account. So customer wi not get either 5)B%T card or
cheque book.
3.$. Time %e&osits
5eposits maintained in the Time 5eposits or Term 5eposits accounts can be
withdrawn on the e4piry of a fi4ed period of time ony. 5eposits in Sa!ings Accounts# @i4ed
5eposit Accounts# 7ecurring 5eposit Accounts =9onthy Sa!ings Scheme# 9iionaire
Scheme> are fa in this category.
3.'. ccess ccount
9inimum amount opening a Access account is T+ 2?#??? but no interest earn this
amount interest ony earned when an Access account ha!e a minimum baance &??#??? Taka.
At Standard Chartered# we ne!er stop making banking more con!enient for you. Gur
e4tensi!e network of Automated Teer 9achine =AT9> and non,branch ser!ices et you bank
with ease
3o!er of ccess ccount
Access is a non,branch banking soution that gi!es the customer more fe4ibiity with:
Access to 21 AT9s in si4 ma;or districts
Access to free e,Statement faciities
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Access to state,of,the,art Ca Centre faciities
"o minimum baance fees
%nterest is accrued monthy and paid haf yeary
"o chequebookH A transactions done eectronicay
)!ery withdrawa took a fee T+ A?
Access Account is a Sa!ings Account without any cheque book faciity designed for
indi!iduas ony. The minimum opening baance for this account is B5T 2?#???. %n Access
Account customer don6t recei!ed a checkbook# they wi ony be abe to carry out their
transaction their AT9 card. @or that peope ony pay an annua fee of B5T &A?I &AF BAT
for their AT9 card. The interest rate and the conditions appying to it wi be simiar to that of
our Sa!ings Account. 3eope are required to maintain a minimum baance of B5T &??#??? in
order to en;oy interest on your deposits. They are not required to keep a minimum baance in
order to keep your Access Account. 3eope can deposit and withdraw money =cash or cheque>
absoutey 21 hours a day through our Automated Teer 9achines =AT9>. 3eope can
transfer funds to other accounts. Jou wi ha!e to !isit any of our branches during baking
hours to transfer funds. But 3eope cannot use branches to withdraw cash. But they can use
branches to deposit money.
%nterest 7ates for the Access Account
Baance beow Tk & Eac ?.?F
Baance between Tk. & Eac,A Eac 2.8AF
Baance between Tk. A Eac,&? Eac 0.??F
Baance abo!e Tk. &? Eac 0.??F
3.(. )i*ed %e&osit
Standard Chartered @i4ed 5eposits make your money work for you. <ith the
ad!antage of Standard CharteredKs e4pertise# resources and e4perience# you can assure of
ma4imizing the growth potentia of your sa!ings safey. <ith our wide range of fi4ed
deposits products# you ha!e the option to earn a !ery high interest. Standard Chartered wide
range fi4ed deposit products are the perfect combination of iquidity and returns. Jou ha!e
the freedom to choose from the desired period from one month to @i!e year. %f you need cash
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before the end of your fi4ed deposit term# G!erdraftCEoan faciities is obtainabe against
security of @5 without osing the interest earning L the @5. 3remature encashment wi resut
in forfeiture of interest. The minimum opening baance and to earn interest on @i4ed 5eposit
account is ony B5T &??#???.
@i4ed 5eposit Accounts =@5> are aso caed Time Eiabiities because the money is payabe
on the e4piry of a fi4ed period of time ony. The customer suiting hisCher con!enience
chooses this time period. The rate of interest for deferent periods is different. This account is
appropriate for both organization and individual# who e4pects to earn interest on a ump sum
amount of money that they can keep# in!ested for specific time period.
Interest rate matri* for )%
Tenor
BDT. 2 M &
Below
Above BDT. 2 M &
up to BDT. !M
Above BDT. ! M
& up to BDT. " M
Above BDT. "M
& 9onth A.2AF A.A?F A.8AF (.??F
0 9onths A.8AF (.??F (.2AF (.A?F
( 9onths (.??F (.2AF (.A?F 8.??F
& Jear 8.??F 8.2A F 8.A? F 8.A? F
2 Jears 8.??F 8.2A F 8.A? F 8.2A F
0 Jears 8.2AF 8.A?F 8.A?F 8.A?F
1 Jears 8.A?F 8.8AF 8.8AF 8.A?F
A Jears 8.8AF 8.8AF &?.??F &?.??F
%f the customer needs the money before the @5 period is o!er# then the customer can
withdraw the money by en,cashing the @5. %n that case# if the money was in the @5 for ess
than 0 months then no interest wi be credited to the customer. %f the fund was in the @5 for
more than 0 months but ess than the @5 period# then the customer wi be credited %nterest in
Sa!ings Account rates.
3.+. )oreign Currency Current ccount
Appicabe to Bangadeshis working abroad# it can be opened in *S5# -B3 and Jen
without restriction on transaction frequency. %t can be operated through nominees in absence
of the accounthoder. @und remains in foreign currency and is freey remittabe.
;ey features4
5eposit can be made in foreign currency ony =Cash# TC or 5rafts or transfer
from other @CJ account>
Cash withdrawa from the account is in oca currency
@und 7emittance to any pace in and out of the country =without restriction>
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Gny a few seected categories of indi!iduas and organizations can open @CJ account. They
are:
Bangadesh nationas residing abroad.
@oreign nationas residing in Bangadesh.
@oreign firms registered abroad and operating in Bangadesh.
@oreign missions# )4patriate empoyees of foreign missions or
companies.
These accounts can be opened with #$ero balance%& since# most of these account wi recei!e
inward remittance from abroad. Cheque book is issued in this account. %t is the ony @CJ
account where chequebook is issued.
3.,. -on. #esident )oreign Currency %e&osit
Short,term foreign currency deposit account is suitabe for Bangadeshi6s i!ing
abroad# offering competiti!e interest rates a!aiabe in both oca and internationa markets.
The 9inimum Gpening Baance for "@C5 account is *S5 &??? or -B3 A?? for indi!iduas.
Gpening 5eposit shoud be at east *S5. 2A#??? Gr equi!aent -B3 for oca and foreign
organizations. There are no fees and charges in "@C5 account.
)eatures include4
%nterest paid in foreign currency
Can be opened for a term of & month# 0 months# ( months or &2 months
%nterest rates are tiered =based on amount and term>
%nterest payabe on maturity
Automaticay renewabe =with or without interest>
Can be used as security against personaC commercia oan
7emittance in both oca and foreign currency to any pace in and out of the country.
%nterest rates of "@C5 accounts are paid at @oreign,Currency 5eposit 7ates# which is based
on internationa market rates and Bangadesh Bank guideines , to be ad!ised by -oba
9arkets to a branches from time to time. "@C5 is a term deposit account. So# if the account
hoder wants to prematurey withdraw the deposit then he wi ha!e to forfeit interest.
3./. #esident )oreign Currency %e&osit 5#)C%6
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7esident @oreign Currency 5eposit Account is aowed for Bangadeshi residence
ony. The 9inimum Gpening Baance for an 7@C5 account is *S5 &??? or -B3 A??
equi!aent currency. There are no fees and charges in 7@C5 account.
7@C5 Account offers you the con!enience and fe4ibiity of managing your foreign
currency reated issues to some e4tent:
%nterest bearing foreign currency account
9uti,currency deposit faciity: *S5# )*7# -B3
%nternationa Credit Card issuance faciity against 7@C5 account
%nterest rates of 7@C5 accounts are paid at @oreign,Currency 5eposit 7ates# which is based
on internationa market rates and Bangadesh Bank guideines , to be ad!ised by -oba
9arkets to a branches from time to time. "@C5 is a term deposit account. So# if the account
hoder wants to prematurey withdraw the deposit then he wi ha!e to forfeit interest.
3.10. 1illionaire Schemes
The 9iionaire Scheme is a deposit scheme targeted for peope with high disposabe
income and with a propensity to sa!e that income. %t is different from the other sa!ings
schemes because it is a high,!oume scheme with higher returns.
The scheme promises the customer that the baance of their account wi be a miion B5T at
the end of A years ' months and after &? years they wi recei!e more than &.' miion taka.
Customers wi buy units of these schemes. @irst they wi ha!e to make an initia deposit of
B5T. &??#??? after that they wi ha!e to deposit a fi4ed sum of B5T. &?#??? e!ery month
based on the units they buy. %nterest on a deposits wi be cacuated daiy and wi be added
to the deposit at the end of the month. The scheme is for a fi4ed period. At the end of the
period customers wi get a fi4ed amount back.
3.11. 1onthly Savings Schemes 51SS6
These schemes are sod on unit basis. @irst initia deposit of B5T &?#??? is made after
that a fi4ed sum amount of B5T &#??? has to be deposited e!ery month based on the units
they buy. %nterest on a deposits is cacuated daiy and is added to the deposit at the end of
the month. The scheme is for a fi4ed period. At the end of the period customers wi get a
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fi4ed amount back. At present Standard Chartered Bank offers two types of 9SS: =i> 7ainy
day sa!ings scheme and =ii> 9arriage sa!ings scheme.
3.12. Convertible Taka ccount
Con!ertibe Taka Account is a specia type of account# which can recei!e funds in
@CJ# but the baance wi con!ert into a Taka. The baance in that account can be freey
repatriated abroad or can be disbursed ocay in Taka. The account hoder can issue a @CJ
for tra!e purpose. Con!ertibe Taka Account can be opened by the foowings:
5ipomatic 9issions
*" Grganizations
"on,profit %nternationa Bodies
@oreign Contractors L Consutants engaged in specific pro;ects under
-o!ernment agencies
)4patriate empoyees of such missionsC organizations who are
residents in Bangadesh
@oreign Airines L Shipping Eines
<ith the opening of a current account in SCB# customers wi get chequebook. %f the current
account is in the name of a person or ;oint indi!iduas wi aso get 5ebit card. Doint account
hoders wi get 5ebit for each person ony if the mode of operation is singy. Gtherwise# ;oint
account hoders wi ony get chequebook. Current Account for organizations =non,person>
wi not get 5ebit card. Soe proprietorships do get 5ebit cards if the proprietor asks for it.
)ach bank wi forward to BC5 =now B735># Bangadesh Bank a copy of the schedue of
charges and commissions. Any changes to such schedues as may be made from time to time
must be forwarded to Bangadesh Bank forthwith.
3.13. Cash 2ine
A product that offers you the best of both words# permitting ready access to cash without
disrupting interest,earnings on fi4ed in!estments. %t pro!ides ready access to cash against
quasi,cash in!estment papers ike Terms 5eposits# Sa!ings Certificates# <age )arnersK
5e!eopment Bonds# %CB *nits certificates etc.>.
&?
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$. Com&osition of %e&osits in SCB
%n pricing deposit ser!ices# bank management shoud cosey pay attention to growth and
profitabiity of the deposit products that any bank offers. This is because of the intense
competition among the 3CB6s# @CB6s and "CB ="ationaize Commercia Bank>6s and other
speciaized banks in Bangadesh which infect tends to raise deposit interest cost whie
owering e4pected returns. Based on this# this report has undertaken the growth pattern of
deposit ser!ices of SCB. 3attern of the deposits growth in SCB actuay shows how
effecti!ey whoe deposit ser!ices are managed. @or this reason# here o!era compositions of
deposits in SCB# which ha!e been coected from the period of 9ay 2?&? to 5ecember 2?&?#
are shown.
5eposits are coected both from consumers and from corporate cients. %n this case# both the
sources are shown beow =figures in B5T miion>:
ctual
%e&osit 1ay.10 <un.10 <ul.10 ug.10 Se&.10 7ct.10 -ov.10 %ec.10
Corporate
&(#82?.
??
&8#8&8.?
?
&8#('0.?
?
&8#(?'.?
?
&8#(02.?
?
2&#&(0.
??
2&#(88.
??
2&#8??.?
?
Consumer
00#808.
??
00#2(&.?
?
00#&&&.?
?
00#&&&.?
?
00#18'.?
?
00#028.
??
00#81(.
??
00#'02.?
?
Total
%e&osit
'0=$',.
00
'1=/+/.0
0
'1=,0$.0
0
'1=+20.0
0
'2=111.0
0
'$=$/0.
00
''='3$.
00
''=(32.0
0
@rom the abo!e figure it is found that# deposit coection from both the sources has shown a
steady increasing trend among these periods.
$.1 %e&osit 1i*
To be specific# deposit coection from different products offered by SCB is shown beow.
This time# deposit coection from corporate customers of SCB is recognized:
$.1.a. Cor&orate Clients %e&osits 1i*
B%T m > 7ct 10 > -ov 10 > %ec 10
CCA 1#2(8 A#018 (#AA'
&&
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8
SCA 108 AA8 808
Ca 1#88? 8#28? &?#'88
@5 0#880 0#02A 2#82?
9.
5eposit &#?A8 A?' A'8
Total 1$=$2' 1+=01/ 21=+00
2ere it is cear that# since ma4imum corporate cients use bank deposit for business
transactions# therefore Current Account and Ca 5eposit Account =ink of Current Account>
which are non,interest bearing accounts ha!e the higher deposit coection trend. Therefore#
on this basis it can be argued that# as of 5ecember 2?&?# Current Account and Ca deposit
Account consist ma4imum share of 0?F and A&F of a deposit coection respecti!ey#
where as @i4ed deposit and Sa!ings Account consist of ony &0F and 0F respecti!ey# and a
itte portion is occupied by 9onthy Sa!ings Schemes which is 0F.
$.1.b. Consumer Banking %e&osit 1i*
%n this situation# deposit coection from consumer6s e!e in different products is identified.

B%T m > 7ct 10 > -ov 10 > %ec 10
CCA 0#'22 1#828 A#?'0
SCA &1#'&? &A#'0A &A#80(
Ca 2#A?A 2#(1& 2#(1A
@5 '#?&2 &?#00& &?#1A'
Total 30=3$/ 33=(3$ 33=/32
As genera consumers are the sa!ers of a nation# from the abo!e statistics it is cear that#
ma4imum deposit coection came from Sa!ings Account and @i4ed 5eposit Account# which
are a interest,bearing accounts.
Thus# ;ust as the other way around of corporate cient6s deposit coection as per 5ecember
2?&? statistics# for consumer banking Sa!ings Account and @i4ed 5eposits Accounts had the
arger share of deposit coection which are 1(F and 0&F respecti!ey# where as Current
Account and Ca deposit Account ony occupied &AF and 8F respecti!ey.
$.1.c. Combined Situation
B%T m > 7ct 10 > -ov 10 > %ec 10
C? 8#&8' &?#?8A &&#(A2
S? &(#&88 &8#'?( &(#181
Call 8#08A '#'2& &0#(02
)% &&#'A( &2#210 &0#28'
1. &#?A8 A?' A'8
&2
2
8
%e&osit
Total $$=++$ '0=('3 ''=(32
%n this o!era situation# it has been found that# deposit coection remains highest unti
5ecember 2?&? from Sa!ings Accounts ony# where as Ca deposit accounts and fi4ed
deposit accounts consists of simiar deposit coection.
Based on this# as 5ecember 2?&? statistics# sa!ings account consists of 2'F of deposit
coection and current account consists of 2&F deposit coection. Gn the contrary Ca
deposit Accounts and @i4ed 5eposit accounts consists of 2AF and 21F of deposits
coections respecti!ey where as 9onthy Sa!ings Schemes occupied ony &F.
'. )ormation of 3ricing %e&osit Services
1ethods 9sed by SCB
%n pricing deposit ser!ices# any bank needs to pay attention between the growth and
profitabiity. %n such a situation# bank management must decide if it whishes to attract more
deposits and hod a those it currenty has by offering depositors at east market determined
price# or whether a bank is wiing to oose funds by offering customers terms different from
what the market requires.
Based on these assumptions# pricing poicy of SCB has undertaken the condition of current
market situation which incude the foowing factors argey:
9arket competition
Target market
"umber of e4isting customers SCB has.
Time Eength of each 5eposit Ser!ices.
%nfation rate.
T,Bi rate.
%ndustry growth and performance.
9arket trend regarding e4change rate mo!ement.
Gther economic factors ike @5% infow# credit market iquidity# amount of
foreign aid recei!ed# remittance recei!ed# and foreign e4change reser!e o!er a
particuar period.
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8
@or setting interest rate# SCB mainy foowed the market determine price foowed by other
@oreign Commercia Banks =@CB>. SCB has more or ess simiar pricing of their deposit
ser!ices ike other @CBs6.
Gn the con!erse# besides these macro and micro economic factors# SCB mainy prices its
deposit ser!ices by an estimation based on past and present deposit coection depending on
the particuar product and ser!ices SCB offers
2ere !oume indicates what wi be the a!erage baance after opening an account within a
month. These !oumes are again categorized by four types. These four types incude:
Category one $ where consumers wi ha!e the a!erage baances
beow 2.A Eac.
Category two , where consumers wi be maintaining their deposit
baance on an a!erage of abo!e 2.A Eac but beow A Eac.
Category three $ where consumers wi be maintaining their
deposit baance on an a!erage range of AEac to &A Eac.
Category four, where depositors wi maintain their deposits &A
Eac and abo!e.
Based on these four categories# deposit coections ha!e been estimated o!er a specified
month and after this interest income has been determined incuding fund income. %nfect
setting interest rate for a deposit product is actuay the main price for which customer is
charged. The more a customer deposit to a particuar account with the highest time ength the
higher is the interest rate heCshe is offered and !ice !ersa. 7eason behind this is# after
coection of these deposits from the consumers# Consumer Banking 5epartment ends the
deposits to the -enera 9arket at higher interest they offer to the customers. The difference
between these two interest rates is the re!enue of that particuar department.
Gther than this# customers are aso charged for the ser!ices they are taking from the bank
which is known as fund income. @or charging fees# SCB considers some aspects shown
beow:
Type of the ser!ice
Time required pro!iding the ser!ice compare to other banks.
3re!ious month a!erage baance of a particuar customer.
Turn o!er time.
Cost of that ser!ice.
"umber of transaction made o!er a month by a customer.
&1
2
8
Si4 month a!erage baance has been maintained or not.
5epending on these primary factors# SCB keep charges from the depositors as ser!ice fee.
<hie pro;ecting M@und %ncome#N it is estimated that a fi4ed portion of pro;ected account
hoders wi maintain for instance si4,month a!erage baance# and others wi not. %n the same
way# it wi be estimated that# a fi4ed portion of the account hoders wi cross their
transaction imit o!er the counter for which they wi be charged. This is how the o!era
pricing poicy has been prepared absoutey based on estimation refecting the past and
present state.
(. )unctional Cost nalysis of %e&osit Services
)ach deposit ser!ice is often priced high enough to reco!er most or a of the cost associated
with the deposit ser!ice pro!ided by any bank. Standing on this# cost associated with deposit
ser!ices incude !arious parts which are mentioned beow:
5irect Cost =staff cost# premises and equipment cost# other cost>.
-TS Cost
3ro;ect cost
Ser!ice dei!ery cost
Gther Aocated cost.
A detai cost anaysis for deposit ser!ices in SCB is iustrated by the foowing process#
where costs ha!e been shown for commercia banking to support the a ser!ices. @or the
month of "o!ember 2?&? and 5ecember 2?&?, as an instance:
Commercial Banking Cost
BDT in 'illion -ov 11 %ec 10
5irect Costs:
Staff Costs &&.10 &&.'1
3remises L )quipment Costs 1.81 1.&(
Gther Costs 8.'( &1.?8
Total Direct (osts 2".2 )!.*
Tota -TS Costs 8.?8 '.&A
Tota 3ro;ect Costs ?.?? ?.??
Tota Ser!ice 5ei!ery Costs '.?1 '.81
Tota Aocated Costs 20.00 21.88
Total Commercial Banking Costs ('.'( +$.0$
This tabe re!eas that# staff cost is the ma;or cost and cost regarding premises incudes a the
branches SCB currenty has. Gther costs are se!era misceaneous costs# which are software
supports for# maintain an account# stationery# computer maintenance# ega etc where
&A
2
8
communication cost has found as one of the highest items of these costs. Sum of these three
types of cost is Tota 5irect cost for maintaining deposit reated a ser!ices# which was 2A.&2
and 0?.&8 for these specified months respecti!ey. -TS cost is cost associated with %T sector
for software maintenance and impro!ement mainy. 2ere# pro;ect cost actuay re!eas the
cost associated with unching of any new product where market research is necessary. Since#
no new product has been aunched between these two monthsO therefore no pro;ect cost was
recognized. Ser!ice dei!ery incudes direct and indirect costs to pro!ide ser!ice at the
branch# courier ser!ices# and other equipments. Gther aocated are a cost regarding office
maintenance at SCB.
By adding up the abo!e costs and the reated figures# tota commercia banking cost was
determined for the month "o!ember 2?&? was (A.A( miion and for 5ecember it recorded
higher cost which was 81.?1 miion in oca currency =Tk.>.
3ricing %e&osit Services
5eposits are usuay priced separatey from oans and other bank ser!ices. This report
considers pricing method of Current Account as an aggregate mode of a deposit ser!ices
offered by SCB. There are se!era steps whie pricing an account. A the numbers is based
on an o!era estimation and the estimation is backed by the past and present e4perience from
the deposit ser!ices offered to the customers. %n,depth anaysis of this pricing poicy is shown
beow step by step refecting pro;ection of three consecuti!e months# which are Gctober
2?&?# "o!ember 2?&? and 5ecember 2?&?.
8stimation of Total -umber of ccount to be o&ened
@or opening an account# at first it is anticipated that# there are three source of opening in
account at SCB# which are:
5irect Saes
3riority
Branch
Through these sources# any account is opened at SCB. @or direct saes# there are direct saes
e4ecuti!es who are mainy responsibe for door,to,door saes. And for priority saes# ha!ing
sound channe and reation SCB offers high,income peope to ha!e a deposit ser!ice with
SCB. %nfect# branch is the ma;or source of account opening where consumers came by their
own need to open any account at SCB.
&(
2
8
Gther than these specified sources# whie pricing the deposit ser!ice# it has categorized the
baance and the !oume =a!erage baance that SCB e4pect to gain for each account> among 1
parts as mentioned earier which are +,igures in BDT -!!!.:
Category one, where consumers wi ha!e the a!erage baances
beow 2.A Eac and Boume is e4pected as 08.?8.
Category two, where consumers wi be maintaining their deposit
baance on an a!erage of abo!e 2.A Eac but beow A Eac and !oume
e4pected as 01A.?0.
Category three, where consumers wi be maintaining their deposit
baance on an a!erage range of AEac to &A Eac with e4pected !oume
81A.0&.
Category four, where depositors wi maintain their deposits &A
Eac and abo!e with e4pected !oume 0&A(.&A.
Based on this# the figure beow shows the pro;ected number of accounts that SCB pans for
these three months# where the tabe shows that# tota number of accounts is estimated to be
opened by the respecti!e months are &(8# 22(# and 28( which refects that# SCB e4pects an
increase of its deposit ser!ices after e!ery month
The point to mention here is the part by part anaysis where it shows that for ess the 2.A Eac
Tk. baance tota number of accounts SCB e4pects is ony 21 where it is 1? when the baance
is e4pected to be abo!e &A Eac.
5ays per month 0& 0? 0&
-o of
accounts 7ct 10 -ov 10 %ec 10
P 2.A Eac 0 && &8
%irect Sales 2.A Eac,,A Eac 8 &( 2(
A Eac ,, &A Eac &0 &' 28
Q &A Eac &2.?? 28.?? 22.??
Total4 3(.00 +$.00 /3.00
P 2.A Eac &&.?? '.?? &2.??
3riority 2.A Eac,,A Eac 2(.?? 0&.?? 08.??
A Eac ,, &A Eac &8.?? 21.?? 0'.??
Q &A Eac &'.?? &(.?? 2A.??
Total4 +3.00 ,0.00 11$.00
P 2.A Eac &?.?? &A.?? &A.??
Branch 2.A Eac,,A Eac 2?.?? 22.?? &8.??
A Eac ,, &A Eac 2?.?? 2?.?? &(.??
Q &A Eac '.?? &A.?? 2?.??
Total4 '/.00 +2.00 (/.00
P 2.A Eac 21.?? 0A.?? 1A.??
&8
2
8
Total PA Eac A1.?? ('.?? 82.??
A Eac ,, &A Eac A?.?? (0.?? 82.??
Q &A Eac 1?.?? A'.?? (8.??
Total 1(,.00 22(.00 2+(.00
This is how the pricing poicy considers each and e!ery account incuding their opening
baances.
8stimating Total c@uisitions
2ere# the word acquisitions means# the o!era e4pected baance of the abo!e pro;ected
accounts# which SCB is going to gain. This is cacuated by mutipying the number of
accounts to be opened by each and e!ery channe =ike through branch or through direct
saes> with the !oume estimates for each and e!ery category.
The underying tabe shows the amount of SCB e4pects form each group =@igures in B5T
K???>:
Boume Boume
P2.A Eac 08.?8
A Eac,&A Eac
81A.0&
2.A Eac , A Eac 01A.?0
Q &A Eac
0&A(.&A
Based on these abo!e e4pectations# tota acquisitions ha!e been estabished as:
c@uisition4 Channel !ise 7ct 10 -ov 10 %ec 10
P 2.A Eac &&1.21 1&8.88 (8A.11
%irect
Sales
2.A Eac,A Eac 28(?.2& AA2?.12 8'8?.(8
A Eac $ &A Eac '(8'.?8 &1&(?.'A 2?&20.1A
Q &A Eac 08880.82 88082.2( ('10A.01
Total4 '0$3+.3$ 10,$+2.'0 //21$./1
P 2.A Eac 1&8.88 012.82 1A(.'(
3riority 2.A Eac,A Eac 8'8?.(8 &?('A.8& &0&&?.''
A Eac $ &A Eac &2(8?.02 &8888.A& 2'?(8.2&
Q &A Eac A''((.8' A?1'8.10 88'?0.8?
Total4 ,202(.++ +/$2$.$+ 121'3,./(
P 2.A Eac 08?.8? A8&.2? A8&.2?
Branch 2.A Eac,A Eac ('??.A2 8A'?.A8 (2&?.18
A Eac $ &A Eac &1'?(.2( &1'?(.2( &&'2A.?&
Q &A Eac 281?A.08 18012.28 (0&20.?1
Total4 '0'/2./' +0$10.31 ,1,2/.+2
P 2.A Eac '&0.'2 &002.8? &8&0.(?
Total 2.A Eac,A Eac &8(0&.1? 208?(.8' 282'2.&0
A Eac $ &A Eac 082(A.(A 1('A1.82 (&&&A.(8
Q &A Eac &2(21(.?8 &8(2&2.'8 2&&1(2.&8
Total4 1,30'+.0' 2',30+.2, 302',3.',
&8
2
8
This situation can best described by one of the abo!e e4ampes# for direct saes channe it is
estimated that number of accounts woud be 0 =5ecember> who wi be ha!ing baance of
beow 2.A Eac and thus acquisition woud be 0R08.?8 S &&1.21 which is the resut shown in
the second coumn of this tabe. This is how SCB e4pects to gain an amount of tota
&80?A8.?A =figures in B5T K???> deposit Gctober 2?&?.
8stimation of verage Balance
@or estimating the a!erage baance per month# firsty 3eriod )nd Baance is designed and
then a!erage of that period end baance is cacuated. %n this case# pricing structure considers
Tota number of Acquisition of each category S 3eriod )nd Baance. @or an instance from the
acquisition tabe# period end baance for the month "o!ember 2?&? who wi be ha!ing
baance beow 2.A Eac is 221(.82. Thus# with the hep of period end baance# a!erage
baances ha!e been cacuated for each month. This is:
7ct 10 -ov 10 %ec 10
38 Balance P 2.A Eac '&0.'2 221(.82 0'(?.02
2.A Eac,A Eac &8(0&.1? 12108.2? 8?80?.00
A Eac , &A Eac 082(A.(A 8122?.08 &1A00(.?1
Q &A Eac &2(21(.?8 0&21A'.?A A20'2&.20
Total4 1,30'+.0' $$13($.3$ +$3/$+./2
vg. Balance P 2.A Eac 1A(.'( &A8?.02 0&?0.A2
2.A Eac,A Eac '0&A.8? 0?A01.8? A(A81.2(
A Eac , &A Eac &8(02.80 (?810.?& &&1888.2?
Q &A Eac (0&20.?1 2&'0A2.A( 1&8&'?.&1
Total4 /1'2,.'3 312210.(/ '/2('(.13
+. )inding " nalysis
"et %nterest %ncome and "et @und %ncome are cacuated on a!erage baance maintained each
and e!ery month. @or pricing a deposit ser!ice# it is the hardest thing to determine what
shoud be the interest rate that wi be offered to the consumers# which wi aso offset the
cost reated with deposit ser!ices. Before going into the cacuation of interest income and
fund income# it is necessary to ha!e the idea how deposits are used by any bank.
%ncase of SCB# after coecting the deposits from the customers =corporate cients or genera
consumers># Consumer Banking 5epartment of SCB end the whoe portion of deposits =after
maintaining reser!e requirement> to the -oba 9arket 5epartment with higher interest rate
than the interest rate offered to the customers. The difference between these two interest rates
is the "et %nterest %ncome for the Consumer Banking department.
&'
2
8
Then -oba 9arket 5epartment6s ;ob is to end those deposits to the consumers =oan
seekers> with higher interest rate and the difference between those rates is the interest income
for the -oba 9arket 5epartment. This o!era process can be described by the foowing
diagram:
This diagram shows the interest income for Consumer Banking department is 4F where as
interest income for -oba 9arket is yF. This is how the re!enue is cacuated associated
with the interest e4pense.
8stimating -et Interest Income
@or estimating net interest income# since this report ony takes consideration of Current
Account as an aggregate repica of a the deposit ser!ices# therefore it has estimated that
8.A?F is the interest income per deposit ser!ices under each category. Since this is a Current
Account# and as mentioned earier no interest rate is offered to Current Account# thus ending
the deposits of current accounts to -oba 9arket department with the interest rate of 8.A?F
is whoy the interest income for the Consumer Banking 5epartment. 2a!ing no interest
e4pense# for this specific product# Consumer Banking department has no interest income as
we. Based on this# "et %nterest income is cacuated as shown in the ne4t page tabe
+,igures in BDT -!!!.:
-II4 1 7ct 10 -ov 10 %ec 10
8.A?F P 2.A Eac 2.'A &?.2& &8.&?
8.A?F 2.A Eac,A Eac (?.&( &'8.2? 00?.?8
8.A?F A Eac , &A Eac &2?.01 0'2.0? (('.A1
8.A?F Q &A Eac &1(8(&.?8 A?'''1.8& 888&''.2'
Total4 1$(/$$.'2 '10'/$.$2 ,+/21+.01
At this point# for the category of baance beow 2.A Eac# net interest income is estimated as
2.'A which is the mutipication of ==8.A?FR 1A(.'(>C0(?>R 0& where 8.A?F is the interest
they are getting from the -oba 9arket 5epartment per deposit ser!ice of current accounts
Consumer
Banking
Global Market
Consumers
Consumers
2?
2
8
and 1A(.'( is the a!erage baance who wi be ha!ing a!erage baance of beow 2.A Eac# 0(?
is the number of days in a year and 0& is the number of days in Gctober. This cacuation is
done on the basis of monthy interest income. The reason behind this is# interest on deposits
are gi!en yeary to the consumers for which it is needed to cacuate the income per month
depending on number of days each month has. This is how net interest income is identified
o!er a specified month.
8stimating -et )und Income
@und income is separate from interest income of deposit ser!ices. @und income is the fees
paid by the customers depend mainy upon the account baance and the !oume of account
acti!ity. @or estimating fund income# pricing poicy has gone through three different
assumptions# which are:
Assumption &: A?F of the accounts wi be beow & Eac baance#
threshod who wi be charged B5T A?? Tk. As a!erage baance fee.
Assumption 2: A?F of the accounts wi be beow & Eac baance#
threshod who wi do &? transactions per month and wi be charged
CT@ =Counter Transaction @ee> B5T &? per transaction.
Assumption 0: &??F of the accounts wi be charged for the
AT9C5ebit Card Annua @ee of B5T (??.
Standing on these assumptions# "et @und %ncome is pro;ected shown in tabe beow:
-)I4 1 7ct 10 -ov 10 %ec 10
P 2.A Eac 2&.( &.8A 2.2A
2.A Eac,A Eac 18.( 0.1A 1.&
A Eac , &A Eac 1A 0.&A 1.&
Q &A Eac 0( 2.'A 0.0A
Total4 1'1.2 11.3 13.,
Cacuation of this fund income mainy in!o!es the percentage amount of each assumptionO
number of transaction wi be made o!er a month incuding the fee for the transaction#
a!erage baance fees# and debit card annua fees. %mportant thing to be mentioned for this is#
instead of doing the cacuation with the a!erage baance# fund income has in!o!ed tota
number of accounts. That means that# fund income is estimated based on the o!era
estimation of how many accounts wi be so far opened on a gi!en month and as the number
of accounts increases# fund income aso increases and !ice !ersa. @or e4ampe# this tabe
2&
2
8
shows that# fund income for Gctober is 0( under the category beow 2.A Eac. This cacuation
procedure is:
21R.AR&?R.?&I21R.AR.AI21R.( S 0(
<here# 21S tota number of accounts estimated to be opened by Gctober 2?&?.
.A S A?F# which is the percentage of account hoders# wi do more than &?
transactions per month.
&? S number of transaction made o!er the counter for which customer is charged.
.&? S B5T amount charged for each o!er the counter transaction +,igures in BDT
-!!!..
.A S B5T amount charged for ha!ing a!erage baance of beow & Eac where A?F
account hoders are charged ony +,igures in BDT -!!!..
.( S B5T amount charged for AT9C5ebit Card Annua fee where &??F account
hoders are charged +,igures in BDT -!!!..
This is howO net fund income is pro;ected on this pricing poicy.
CannibaliAation
Cannibaization is the process of estimating number of accounts that wi be cosed by the
customer after a whie and the remaining fund is transferred to another ess costy account by
customer6s own wiing. This is a specia case# where finding some deposit ser!ices e4pensi!e
to maintain by any indi!idua customer and then open a ess costy account to maintain
threshod cose the pre!ious account. This is howO cannibaization is defined in pricing
deposit ser!ices. @or e4ampe# a customer needs to maintain B5T &??#???.?? Eac minimum
per month to a!oid the a!erage baance fee of B5T of A?? for hisCher sa!ings account. %f the
customer does not wish to maintain this amount# heCshe can simpy cose the sa!ings account
and open an Access Account where no a!erage baance fee is charged by transferring the
ree!ant fund after gi!ing account cosing charge. <hie pricing deposit ser!ices# this specia
case is taken under consideration because of the dynamic nature of account maintenance
which effect argey to the re!enue of the deposit ser!ices. This type of cannibaization not
ony effect to the interest income but aso affects the fund income as we.
5espite the fact that# cannibaization aso incude another item which is known as M*p,sodN
item. This means athough it is estimated that# some number of accounts wi not perform as
they shoud be by the type of the deposit ser!ice# there are sti some chances remain which
wi act as the deposit ser!ice was from the !ery beginning. 9eaning after opening a sa!ings
account# it wi act as sa!ings account and wi not turn into Access account# which is reay
22
2
8
sod up with the origina nature. This is done to be !ery perfect in measuring price and poicy
for the deposit ser!ice aimed to minimize the estimation error as far as possibe.
The foowing tabe shows this process:
CannibaliAation4 -o. of a?c 7ct 10 -ov 10 %ec 10
&?F P 2.A Eac 2 1 A
2?F 2.A Eac,A Eac && &1 &(
0?F A Eac , &A Eac &A &' 2A
0?F Q &A Eac &2 &8 2?
Total4 $0.20 '3./0 ('.(0
CannibaliAation4 :olume
&?F P 2.A Eac '&.0' &00.28 &8&.0(
2?F 2.A Eac,A Eac 082(.28 18(&.0( A(A8.10
0?F A Eac , &A Eac &&&8'.8? &1?8(.12 &8001.8?
0?F Q &A Eac 08880.82 AA8(0.8' (0108.((
Total4 '2,+1.1/ +$,$$./$ ,+(03.1$
9&.sold4 :olume
AF P 2.A Eac 1A.8? ((.(1 8A.(8
AF 2.A Eac,A Eac '0&.A8 &&'?.01 &1&1.(&
AF A Eac , &A Eac &8(0.28 2018.81 0?AA.88
2F Q &A Eac 2A21.'2 0821.2( 122'.21
Total4 '3('.$+ +32,./, ,+,'.31
-et cannibaliAation volume
&?F P 2.A Eac 1A.8? ((.(1 8A.(8
2?F 2.A Eac,A Eac 28'1.8& 0A8&.?2 1210.82
20
2
8
0?F A Eac , &A Eac '0&(.1& &&808.(8 &A288.'2
0?F Q &A Eac 0A018.'? A2&0'.(0 A'2?'.1&
Total4 $+'0'.+2 (+'1'./+ +,,1+.,3
As per this tabe# it is estimated that &?F of accounts beow 2.A Eac baance category wi be
cannibaized where as it is 2?F for the category 2.A Eac to A Eac. This is how# the estimation
is figured out. Cacuation incudes percentage of estimation mutipied by the tota number
of accounts to be opened for cannibaization in terms of number of accounts and in case of
cannibaization !oumeO the !oume SCB e4pects to gain under each category mutipies
percentage of cannibaization. That is# for Gctober 2?&?# percentage of cannibaization is
&?F for beow 2.A Eac baance category and cannibaized number of accounts is 2 which is
the mutipication of &?FR21 where 21 is the Tota number of accounts to be opened as
mentioned earier. @or cannibaized !oume# resut for Gctober 2?&? beow 2.A Eac baance
category# resut is '&.0' which is equi!aent to &?FR08.?8 where 08.?8 is !oume e4pected to
gain per deposit ser!ice.
9&.Sold :olume
*p,sod !oume shows us the deposits which are reay sod out without any change of the
ser!ice type. Based on this definition# from the past and present e4perience it is estimated that
beow 2.A Eac baance to ti &A Eac# AF of tota acquisitions are up,sod and ony 2F
acquisitions are up,sod for the baance abo!e &A Eac. as found earier# tota acquisitions for
the Gctober 2?&? for beow 2.A Eac category is '&0.'2 and the percentage for up,sod item
estimated as AF which resuts in 1A.8?.
"et cannibaization !oume is that amount of deposits which carry the chance to be changed
from one particuar type of account to another particuar type made by the consumer for their
own con!enience. This is the subtraction of up,sod !oume from the cannibaized !oume to
minimize the error whie estimating cannibaization as far as possibe.
)inding -II " -)I after cannibaliAation
This part consists of finding net interest income and net fund income after detecting the
cannibaized !oume to be specified in re!enue source. @or net interest income# instead of
mutipying the interest income with the a!erage baance under each category# it counts the
interest income for net cannibaization !oume. Same procedure is foowed to find out the
net fund income keeping the same estimations of different fees and charges. @or fund income
instead of cannibaized !oume it is cacuated with the cannibaized number of accounts.
This is:
21
2
8
-II .2 5CannibaliAation6 7ct 10 -ov 10 %ec 10
8.A?F P 2.A Eac ?.0? ?.10 ?.A?
8.A?F 2.A Eac,A Eac &8.?A 20.?( 21.8(
8.AF
A Eac , &A
Eac (?.&8 8A.8& 8'.&0
8.A?F Q &A Eac 228.2' 00(.81 01A.0'
Total4 30(.,1 $3'.(1 $'/.2+
-)I .2 5CannibaliAation6
P 2.A Eac 2.&( ?.&8 ?.20
2.A Eac,A Eac '.82 ?.?8 ?.?8

A Eac , &A
Eac '.'0 ?.'A &.20
Q &A Eac &?.8? ?.8' &.?&
Total4 32.(1 2.0+ 2.'$
8stimating of -et #evenue
"et re!enue is estimated by adding up the "et "%% =net interest income> and "et "@% =net
fund income>. "et "%% is the difference between net interest income and net interest income
after cannibaization. Same goes to "et "@% which is the difference between net fund
incomes to net fund income after cannibaization. Based on the abo!e data and information#
net re!enue that SCB e4pects is shown in the foowing tabe +,igures in BDT -!!!.:
-et -II
52 .16 7ct 10 -ov 10 %ec 10
8.A?F P 2.A Eac 2.(( '.88 &8.(?
8.A?F 2.A Eac,A Eac 12.&& &81.&1 0?A.02
8.AF A Eac , &A Eac (?.&8 0&(.1' A8?.1&
8.A?F Q &A Eac &1(A02.88 A?'(A8.'8 8888A0.'&
Total4 1$((3+.+1 '101',.3, ,+,+'+.2$
-et -)I 52.16
P 2.A Eac &'.11 &.A8 2.?0
2.A Eac,A Eac 08.88 0.08 1.?2
A Eac , &A Eac 0A.?8 2.2& 2.88
Q &A Eac 2A.2? 2.?8 2.0A
Total4 11,.'/ /.23 11.2(
-et #evenue
P 2.A Eac 22.&? &&.0A &'.(0
2.A Eac,A Eac 8?.'' &88.A2 0?'.01
A Eac , &A Eac 'A.21 0&8.(' A80.28
Q &A Eac &1(AA8.'8 A?'((?.?1 8888A(.2A
Total4 1$(+'(.30 '101(+.(1 ,+,+(,.'0
2A
2
8
This re!eas that# SCB estimates net re!enue to be increased within e!ery month for the
current account. This aso incudes the cost of the deposit ser!ices and then net income is
figured out.
8stimating of -et Income
"et income is o!era income from the deposit ser!ices after subtracting tota cost from net
re!enue. <hie costing of different ser!ices of consumer banking# cost for deposit ser!ice is
not detected separatey. After cacuating the o!era cost of Consumer Banking# it is
estimated that ony a few portion of minimum a!erage baance =which must be maintained by
an account hoder to reach the break e!en point on short term deposits> is estimated as cost
under each category. That6s how tota cost is determined and thus the net income from any
type of deposit ser!ice.
%n this time# it has been estimated that# rate of cost is ony 2.A?F of a minimum a!erage
baance at break e!en. This break,e!en baance is the resut of present and past e4perience#
which infect made the basement for coming up with the break,e!en baance. Beow this
baance# cost wi be higher than the income and !ice !ersa. Based on this assumptions and
data as the foowing tabe shows shown earier# net income that SCB e4pects to generate in
these three months:
ST% 7ct 10 -ov 10 %ec 10
verage balance
2.A Eac,A Eac &102&.?1 A8281.&( &&(0A8.1A
A Eac , &A Eac 2(A1?.'( '28'0.01 &82A&(.2&
Q &A Eac 88?('.&8 0?8(''.82 A88822.81
Total4 12+/31.1, $',,++.32 ,(((/+.$0
Cost
2.A?F 2.A Eac,A Eac 0?.80 &20.02 22(.2A
2.A?F A Eac , &A Eac A8.&1 &''.'8 00A.1A
2.A?F Q &A Eac &88.11 ((1.A( &&20.A1
Total4 2+'.$1 /,+.,( 1(,'.2$

-et Income 1$($,1 '0/1,0 ,++0,3
This is howO net income for e!ery month is estimated fuy supported by the price charged for
deposit ser!ice.
8stimation of 3roBected Cost &er %e&osits
Based on these abo!e assumptions and poicies# tota commercia baking cost for "o!ember
2?&? and 5ecember 2?&? can be used to cacuate the per deposit ser!ice cost. %n this case#
this report has estimated on a!erage what woud be the deposit ser!ice cost. Tota commercia
the tota e4isting number of accounts di!ides that SCB banking cost maintains =appro4imate
2(
2
8
!aue is assumed> for this cacuation where tota number of accounts pro;ected based on the
growth rate of deposit ser!ice# which is around 'F. This is:
Amount in B5T -ov 10 %ec 10
tota commercia banking cost (A#A(0#'?A.(0 81#?0A#88A.8?
tota number of Accounts =appro4.> 1?#???.?? 10#???.??
3er de&osit Cost 1=(3/.10 1=+21.+(
Cost nalysis 1odel
3re!ious data tes us about after assuming on a!erage reated amount of cost associated with
a singe deposit ser!ice. This cost does not necessariy re!ea the true e4penditure picture
associated to maintain a deposit ser!ice. Thus# this report has came up with a Cost Anaysis
mode by which it woud be abe to particuary determine cost for each deposit ser!ice
incuding the !ariabes it effects.
%n this case# for identifying the cost reated with a deposit ser!ice# the report considers ony
Current Account as an aggregate mode for a deposit ser!ices where interest e4pense is not
incuded for the cost anaysis part. This cost anaysis function is de!eoped with the process
anaysis. That is# it breaks down the whoe part into e!ery singe possibe process incuding
the minimum time require aong with abor e4pense and space required to compete each and
e!ery process. %n this way# this report has come up with a requirements !ariabe for each
acti!ity for each specified e!e. 9utipication by each requirement !ariabe by the
corresponding input prices yieds an estimated cost of the acti!ity and thus the summation
o!er the acti!ities then produces the estimated cost function. Standing on this# the cost
function is de!eoped in term of function of other dependent !ariabes which is:
C =3# A# 2> S T C
n
=3# A# 2>
<here# C S Cost
3 S !ariabe of input prices
A S tota number of Accounts
2 S "umber of items per month
n S each source of cost
2ere#
2 S 2
T
I 2
B
2
T
S "umber of teer items per month
2
B
S "umber of non,teer items per month
And now# processing cost for an account ser!ices has di!ided into four parts# which are:
28
2
8
Account maintenance cost
Teer 2anding
Back 7oom 3rocessing
Statement maiing
Cost @unction
. ccount 1aintenance Cost
This process incudes preparing edger baances on day,to,day basis# cacuating and
checking the a!erage baance# daiy record and up gradation of accounts# proofing# sorting a
items for each depositor and then cacuation of ser!ice charge.
Thus# if we assume
a
?
S ser!ice charge per month per account
a
&
S processing charge per item per month
Therefore# C
&
=3# A# 2> S a
?
A I a
&
2 UUUUUUU. 58@uation. 16
<here# n is repaced with & as first source of cost.
This equation impies that# cost of account maintenance is associated with tota ser!ice cost in
addition to tota item processing cost.
B. Teller Candling
This incudes cost regarding processing of each teer items. Based on dependent !ariabes
that affect the teer handing cost# et6s assume that:
t
T
S minutes required for a teer transaction
e
T
S teer empoyee e4pense per minute
And the capita cost#
7
T
S space required for a teer transaction
B=y> S !aue of space y
+
T
S cost of teer equipments and teer window construction
k S cost of capita
ThusO C
2
=3# A# 2> S t
T
e
T
2
T
I 2
T
V B=7
T
> I k +
T
W
S 2
T
Vt
T
e
T
I B =7
T
> I k +
T
WUUUUUU. 58@uation. 26
<hich impies that# teer,handing cost arises from the two specific areasO one is teer
transaction e4ecution and another is o!era cost to create this opportunity at the Bank
premises.
28
2
8
C. Back #oom 3rocessing Cost
Back room processing incudes processing of recei!ed incoming items from teer# cheque
book processing# and transactions with Bangadesh bank for cash disbursement and check
handing of other banks etc. Thus# if it is assumed that#
t
B
S minutes required for back room handing of an account
e
B
S back room empoyee e4pense per minute
A S tota number of Accounts
B S !aue of space
7
B
S space required for back room processing incuding storage of items.
+
B
S cost of back room equipment
k S cost of capita
Therefore# cost function wi be:
C
0
=3# A# 2> S e
B
t
B
A I VB =7
B
> I k +
B
W A UUUUU58@uation. 36
%n this time# back room equipment cost can be negigibe and thus ignored because these
equipments are ine4pensi!e and durabe.
%. Statement 1ailing " 7ther 1ailing
These incude monthy statement and maiing of other etters to account hoders for different
purposes. The ree!ant !ariabes coud be:
e
9
S empoyee e4pense for maiing ser!ices
t
9
S time required for processing and printing
a
9
S combined cost for statement printing and others
3
9
S a!erage postage cost for courier ser!ices
A S tota number of Accounts
Thus: C
1
=3# A# 2> S =e
9
t
9
I a
9
I 3
9
> A UUUUUU.. UU 58@uation. $6
Again# 3
9
S <
9
R 7
9
R A
<here# <
9
S a!erage weight of each en!eop
7
9
S per weight a!erage cost rate according to distance of destination.
A S tota number of Accounts
This impies that# empoyee cost# tota cost of statement printing and postage cost is the area
of cost for this source.
8. Cost )unction
Based on these four equations# now the cost function for a MCurrent AccountN is de!eoped#
which is:
C

=3# A# 2>
2'
2
8
S a
?
A Ia
&
2 I2
T
Vt
T
e
T
IB=7
T
> I k +
T
W Ie
B
t
B
A I VB =7
B
> I k +
B
WA I=e
9
t
9
I a
9
I 3
9
> A
S A Xa
?
I e
B
t
B
IB =7
B
> I k +
B
I e
9
t
9
I a
9
I 3
9
Y I a
&
2 I 2
T
Vt
T
e
T
IB =7
T
> I k +
T
W
That is# if a demand deposit ser!ice is separated by these three components the account
maintenance =A># teer handing =2
T
> and a item processing =2># then cost function can be
best described in terms of incrementa and a!erage cost of the components.
Another important factor for this cost function is the A!erage Boume of each account
maintained by the depositor. This a!erage !oume aso affects the cost function. To find out
the affect of this a!erage !oume of each account# it need to go through the costs arises for
each a!erage !oume# meaning cost for an account which has a!erage !oume beow 2.A Eac
is not same as cost for another account which has a!erage baance more than 2.A Eac. %n this
case# higher the a!erage baances# higher the cost it incurs.
Thus# if we assume Z S mutipier of each category =Category e!e as mentioned earier>
Then based on the pre!ious data# it can be de!eoped that how many times a A Eac a!erage
baance cost rather than 2.A Eac a!erage baance of an account. That is how# for each category
of a!erage baance =or Boume> cost can be figured out ony for short term.
Thus the cost function woud be for each category:
C

=3# A# 2>
Z VA Xa
?
I e
B
t
B
IB =7
B
> I k +
B
I e
9
t
9
I a
9
I 3
9
Y I a
&
2 I2
T
Xt
T
e
T
IB =7
T
> I k +
T
YW
,. Conditional 3ricing
A conditiona method of pricing deposit ser!ices in which the fees paid by the customer
depends mainy upon the account baance and the !oume of the account acti!ity. %n this time#
a bank sets up a schedue of fees in which the customer pay a ow fee or e!en no fee if the
deposit baance remains abo!e some fi4ed minimum e!e# but a higher fee is assessed if the
a!erage baance fas beow the minimum. Thus# the customer pays a price conditioned on
how he or she uses the deposit.
SCB has aso this sort of conditiona pricing poicy# for which customer pays a price
conditioned on how a consumer uses the deposit. A conditiona pricing poicy for Current
Account is shown ne4t page which is maintained by SCB:
7eationship @ee4
%f monthy a!erage baance in the account fas beow B%T.
'0=000 in any month during si4,month period then a
reationship fee of B%T.'+' =Actua fee B5T.A?? I&A FBAT>
is charged to the customer.
0?
2
8
Cheque Book issuance @ee:
=2
nd
item onward>
B%T. 230 =Actua fee B5T. 2??I&A FBAT> =appicabe for
accounts not maintaining required monthy a!g. baance>
*ncoectibe cheque,book L
5ebit Card destruction charges
B%T. 2,+.'0 5Actua fee B5T. 2A?I &AF BAT>
Transaction Charges:
B%T. 11.'0 =Actua fee B5T. &? I&A FBAT>O for e!ery G!er,
The,Counter transaction after the 8th transaction of the month
Stop 39T %nstruction @ee: B%T. 230 =Actua fee B5T. 2??I &AF BAT>
Charge for Bouncing a
Cheque:
B%T. 1100 =Actua fee B5T. &???I &AF BAT>
Account Cosure Charge: B%T. '+' =Actua fee B5T. A??I &AF BAT>

2ere# first two cases are conditiona depending on the monthy minimum a!erage baance of
each customer. Gther than these first two cases# from the third situation it does not depend on
monthy minimum baance. These are required for e!ery customer e4cept M3riority
Customer.N 9a4imum ser!ices are free for these category customers in SCB. The reason
behind this is the opening account baance and !oume of transaction. 9inimum opening
baance for priority customers in SCB is B5T 0A Eac and it has been identified that# these
priority account hoders usuay records huge amount of both debit and credit transactions a
o!er a year. %n other way around this high !oume of transactions infect offset the free
ser!ice. That is howO pricing schedue is aso set up to target a specia customer segment of
the society.
/. Conclusion
Banker actuay prefer to raise funds by seing those types of deposits that
cost the bank east amount of money# or when re!enue generated by the use of deposits are
considered# greatest net re!enue after a e4penses. According to @CA program =@unctiona
Cost Anaysis program by @edera 7eser!ed Bank in *SA># the data re!ea that demand
deposits are typicay among the cheapest deposits that banks se to the pubic. %nfect check
processing and account maintenance costs are ma;or e4pense items# the absence of reguar
interest payment or ow rate of interest payment actuay keep the cost of demand deposits
ow. Sa!ings deposits are reati!ey cheap for banks because of the ow interest rate they
carry, most banks usuay pay owest interest rate in the market at sa!ings deposits. Gn the
other hand# demand deposits incur much greater operating e4penses for a bank due to the
high empoyee and equipment cost associated with processing checks and recording deposits#
whie these Macti!ity e4pensesN are far ess for time deposits.
0&
2
8
Gn this regard# it can be concuded that from the o!era report# SCB has a successfu poicy
to raise its deposits funds with the owest possibe cost as shown in the cost tabe where cost
is assumed ony 2.A?F for each a!erage baance under corresponding category. Therefore#
one of the factors are managing and pricing deposit ser!ices are profitaby e4ecuted by the
bank currenty. The growth rate and deposit coection aso indicates that SCB has propery
managed its pricing poicy and thus abe to meet its oans demand with the fund rose from the
depositors.
10. #ecommendation
Gther side of the coin re!eas that# other than pricing poicy# M@und %ncomeN poicy
for SCB is an up scae poicy among the competitors. 2ere# % woud ike to suggest
that# SCB shoud ower its fees charged on different ser!ices.
Another suggestion % woud ike to offer is whie estimating se!era charges fee#
current poicy does not dea with the actua cost that occurs. %n this case# SCB shoud
come up with an effecti!e cost mode by which each and e!ery possibe cost of
maintaining a deposit ser!ice wi be focused and thus pricing wi be set up.
02
BIB2I7G#3CD4
Brochures and pubications of SCB products
Annua report of the year 2?&? of SCB
3ricing guides of different issuers
E8BSIT8S 59#2S6
Some websites are !isited for coecting some secondary data# which are:
http:CCwww.standardchartered.com