Chapter-1

Introduction

1.1 Introduction

The word “Bank” refers to the financial institution deals with money. Commercial banks
are the primary contributors to the economy of the country. On the other hand they
are borrowing money from the locals and lending the same to the business as loans and
advances. So the people and the government are very much dependent on these banks as
the financial intermediary. Moreover, banks are profit earning concern, as they collect
deposit at the lowest possible cost and provide loans and advances at higher cost. The
differences between two are the profit for the bank. Involvement of the banking sector in
different financial events is increasing day by day. At the same time the banking process
is becoming faster, easier and the banking arena is becoming wider. As the demand for
better service increases, the banking organizations are coming with innovative ideas. In
order to survive in the competitive field of the banking sector, all banking organizations
are looking for better service opportunities to provide to their clients. As a result, it has
become essential for every person to have some idea on the bank and banking procedure.
A student takes the internship program when he or she is at the last leg of the bachelor’s
degree; internship program brings a student closer to the real life situation and thereby
helps to launch a career with some experience.

1
1.2 Background of the study

The term paper program is an opportunity for the students and it a great significant for
us. It familiarizes the students with the practical business operations. The students of
term paper program get the chance to understand the real business world closely and
familiarize themselves with internal and external of business. It gives them an
opportunity to develop the analytical skill and scholastic aptitude.

Mercantile Bank Limited (MBL) was incorporated in Bangladesh as a banking company

under the company acts 1913 and commenced operation on 2nd June 1999. Numerically
it is just another commercial bank, one of many now operating in Bangladesh, but the
finders are committed to make it a little more different and a bit special qualitatively.
This bank will have a new vision to fulfill and a new goal to achieve. It will try to reach
new heights for realizing its dream. Mercantile Bank Limited (MBL), a bank for 21st
century, it is not a mere slogan. The bank has been manned with talented and brilliant
personnel, equipment with most modern technology so as to most efficient to meet the
challenges of 21st century. As regards the second slogan of bank Efficiency is our
strength is not a mere pronouncement but part of their belief, which will inspire and
guide them in their long and arduous journey ahead.

This study is conducted to examine the performance appraisal system of MBL as well as
to find the problems of performance appraisal system of the bank add to make suggestion
to resolve the problem regarding performance appraisal system of the bank. We should
remember that this is the easy competitive. Every bank should be competent enough to
face the completion in the work. Employs are important factor of the suggestion. So, they
should be given importance to achieve describing goal. Therefore, effective performance
appraisal system should be adopted so as to they can be motivated. The present study to
cusses on the problems of performance appraisal system as well as the processing
resolving that problems. This study is conducted for academic purpose which in guided
by Prof. Dr. Md. Alauddin, Head Department of Management, Dhaka College, Dhaka.

2
1.3 Need for the study

It refers to how well someone is doing the assigned job. Performance appraisal system is
a continuous process in every large scale organization. Performance appraisal system is
the systematic evaluation of the performance of employees and to understand the
abilities of a person for further growth and development.

Performance appraisal system is the process of assessing the performance and progress
of an employee or of a group of employees on a given job and his/her potential for future
development. So, performance appraisal system is a must for all organizations.

3
1.4 Scope of the Study

Mercantile Bank Limited is one of the new generation banks in Bangladesh. The scope
of the study is limited to the Nayabazar Branch only. The report covers the
organizational structure, background, functions and the performance of the bank.

4
1.5 Objectives of the Study

The objectives of the orientation are—

1. To study various desk works of the satmoshjid Road Branch of Mercantile Bank
Limited.
2. To analyze overall performance of the branch as well as Mercantile Bank limited.

5
1.6 Limitation of the study

 Time is the first limitation as the duration of the program is very few days only.
 Another limitation of the report is Banks policy is not disclosing some data and
information for obvious reason, which could be very much useful.

6
 Chapter-2

Review of Literature

2.1 Introduction

This chapter served as the foundation for the development of this study. An overview of
the extensive historical research related to performance appraisal system, as well as the
theories of motivation related to performance appraisal systems is presented.

2.2 Review of Literature

Cummings (1973)1inan article titled, “A Field Experimental Study of the Effects of

Two Performance Appraisal Systems”, reported the results of a field experiment
designed to test the effects of manipulating several elements of an operative level
performance appraisal system. First, the multi purposive nature of appraisal in formal
organizations is discussed. This is followed by a brief overview of the literature on
performance appraisal. The design and results of the study at hand are then discussed.

Patton (1973) in his paper on “Does performance appraisal work?” states that
performance appraisal can be a powerful force for performance improvement at
both the individual and the corporate level, but few companies in the US and
even fewer in Europe have learned to tap its full potential. Examining the
differences between European and US performance appraisal practices, the author
finds that some European companies have more than caught up with their American
counterparts. He offers guidelines to over comes difficulties prevalent on both sides of
the Atlantic.

Randell (1973) in his paper titled ““Performance appraisal: purposes, practices and
conflicts”, discusses the collection of information from and about people at work. It
attempts to structure the field, define key problems, expose sources of conflict and point
the way to resolving major difficulties.

7
Taylor and Wilsted (1974) in their article titled “Capturing Judgment Policies: A Field
Study of Performance Appraisal” used mathematical models of judgment policy for
evaluating 625 performance reports during a single rating cycle. Linear and nonlinear
analyses are used to describe the cues most important in determining the overall ratings.
In addition, performance rating policy is compared with stated policy for each of the
raters.

Bedeian (1976) in his paper titled “Rater Characteristics Affecting the Validity of
Performance Appraisals” states that the task of developing effective performance
appraisal systems is one of the most preferred contemporary problems of personnel
administration. An abundance of literature is available detailing the problems and
difficulties inherent in subordinate appraisals. Numerous studies have made suggestions
for rating format and content changes. Some have even suggested the elimination of
appraisal. More recently, an identifiable body of knowledge which seriously casts doubt
on the use of supervisor’s judgment in evaluating employee performance has begun to
emerge. The purpose of this paper is to explore this emerging body of knowledge and to
examine its ramifications for performance appraisal.

Decotiis and Petit (1978)7in their article titled, “The Performance Appraisal Process: A
Model and Some Testable Propositions”, present a literature based model of the
determinants of the accuracy of performance ratings. The model indicates that the major
determinants of accuracy are:

(a) Rater motivation;

(b) Rater ability; and

(c) Availability of appropriate judgmental norms. Several propositions and suggestions

for further research are derived from the components of the model.

2.3 Conclusion

Under the above circumstances we can see that an effective performance appraisal
system is needed for all kinds of organization. Become promotion employs, fruit benefits
and other financial and non-financial benefits all provided depending on their
performance.

8
 Chapter-3

Conceptual Frame Work

3.1 Introduction

Employee performance appraisal system in the modern business environment became a

part of the performance management process. New approaches in this field emphasize
that the influence of organizational context has a significant role in performance
measurement. Considering the above, the main purpose of this paper is to develop a
conceptual framework for employee performance appraisal system emphasizing the role
of the organizational context factors in establishing customized performance criteria
considering that performance management should include information on main strategic
processes in order to provide strategic alignment to the major objectives of the
organization. Moreover, according to Pulakos (2009), considering organizational
context in developing employee performance appraisal system systems and processes
leads to establishing performance criteria and standards customized according to
employee performance appraisal system contexts in order to define different
requirements for different positions. Also, recent studies on the issue of the
organizational context of employee performance appraisal system systems and processes
outline the role of the social context emphasizing daily behaviors and interactions as
factors for enhancing efficacy of performance management. Furthermore, Levy,
Silverman & Cavanaugh (2015) underline the role of social context in influencing the
efficacy of employee performance appraisal systems and processes.

9
3.2 Meaning of Performance

There are different views on what performance means.

According to Brumbrach (1988, cited in Armstrong, 2000):

‘Performance can be actions as well as their consequences. Behaviors originate from a

performer and convert performance from a concept to an act. Not just the instruments for
results, behaviors are also outcomes in their own right – the product of mental and
physical effort applied to tasks – and can be judged apart from results.’

The above definition considers performance to be involving both the actions, in other
word behaviors, taken during the process in attempting to achieve goals and outputs
obtained as a result from the effort.

Following this, Armstrong (2000) emphasizes the need for managers to deal with the
potential of employees and accomplishments while managing performance.

To determine if performance has been achieved, measures have to be developed to

appraise the accomplishments and establish the rate at which it has been accomplished.
Above all, performance should be about the decision and action taken with available
information at any existing situation.

3.3 Meaning of Appraisal

Performance appraisal system also known as performance review, formally documents

the achievements of an individual with regards to set targets. It is a component of PMS.
The system has become an essential management tool in today’s organizations.
Managing employees’ performance can be said to be as important as any other work that
all managers execute during the year.

Grote (2002) describes performance appraisal system as a formal management tool that
helps evaluate the performance quality of an employee. Schneider and Beauty as cited in
Patterson (1987) define it as a process which apart from evaluating also identifies and
develops human performance.

10
According to Karol (1996) performance appraisal system includes a communication
event planned between a manager and an employee specifically for the purpose of
assessing that employee’s past job performance and discussing areas for future
improvement.

3.4 Conclusion

From the above reviews, it can be seen that no such research has been done to show if
performance appraisal system really acts as a motivator to employees. Bratton and Gold
(2003) and Bowles and Coates (1993) claimed motivation to be one of the purposes of
appraisals. It remains unconditional to know whether performance appraisal system has a
role to play in employees’ motivation. The research will therefore try to answer the
following research questions:

 Does the Performance appraisal system affect employees’ motivation?

 Does the system affect more a specific category of employees?

 How do employees perceive the PAS at the MRA?

 How do employees perceive feedback?

 Does the trust put on the appraiser influences the employees’ motivation?

11
 Chapter- 4

Methodology of the Study

4.1 Introduction

There are four main aspects of the research methodology: design, sampling, data
collection, the data analysis. If inappropriate methodology is used, or if appropriate
methodology is used poorly, the results of a study could be misleading.

4.2 Sources of Data

The report is based on both primary and secondary sources of information. Interviewing
the managers and officers of the bank, employees of its competitors & and customers has
provided the primary sources of information. Furthermore the secondary sources of
information are the different annual reports kept in the Bank.

4.3 Sample Selection

In general, Appraisal trials aim to obtain a homogeneous sample which is not necessarily
representative of any target population. Appraisal trials often recruit those participants
who are most likely to benefit from the intervention. Thus, the more strict criteria for
inclusion and exclusion of subjects in Appraisal trials often make it difficult to locate
participants: after verification of the eligibility criteria, just one out of ten possible
candidates will enter the study. Therefore, Appraisal trials usually show limitations to
generalize the results to the entire population of patients with the disease, but only to
those with similar characteristics to the sample included in the study. These peculiarities
in Appraisal trials justify the necessity of conducting multicenter and/or global studies to
accelerate the recruitment rate and to reach, in a shorter time, the number of patients
required for the study.

In turn, in observational studies to build a solid sampling plan is important because of the
great heterogeneity usually observed in the target population. Therefore, this

12
heterogeneity has to be also reflected in the sample. A cross-sectional population-based
study aiming to assess disease estimates or identify risk factors often uses complex
probabilistic sampling, because the sample representativeness is crucial. However, in a
case-control study, we face the challenge of selecting two different samples for the same
study. One sample is formed by the cases, which are identified based on the diagnosis of
the disease of interest. The other consists of controls, which need to be representative of
the population that originated the cases. Improper selection of control individuals may
introduce selection bias in the results. Thus, the concern with representativeness in this
type of study is established based on the relationship between cases and controls
(comparability).

4.4 Methods of data analysis

Statistical Package for applied for data analysis using the descriptive statistical method
specifically frequency distribution which is simply a compute list of all possible values
or scores for a particular variable, along with the number of times that each value or
score appraisal in the data set.

4.5 Conclusion

It is a great pleasure for me to have practical exposure in Mercantile Bank Limited,

Nayabazar Branch. Because without practical exposure it could not be possible for me to
compare the theory with practice, and it is well established that theory without practice is
blind. I have completed my term paper in Nayabazar Branch of Mercantile Bank
Limited. During the practical orientation, I have observed the function of Investment
Banking, and overall banking activities that comply with the sound business operations
of Mercantile Bank of Bangladesh. Its performance specially based on prompt and swift
services is busier than other department of Mercantile Bank Limited of Nayabazar
Branch & the Bankers are maintaining a peaceful & reliable relation with the clients or
customers. According to my survey I can find that the potential customers are the
Businessmen whose motto to the Car loan for full fill their business purpose or need.
Naturally everybody organization has some problems but the organizations are not stop

13
their activities, they must go on. I hope the Bank can find out their problems & solve it
as soon as possible. Thought the more and more customers are coming in the branch
through this department resulting deposit of the branch is increasing day to day.

In a word, the performance of Mercantile Bank Limited, Nayabazar branch is growing

rapidly and the volume of remittance is increasing effectively. At last it can be said that,
Mercantile Bank Limited will be turned into a dynamic Islamic Bank in the country and
will expand its Banking Business all over the country to provide the banking services to
the groups including the deserving Economic groups of the society who have no easy
access to the banking channel. This will help for alleviation of the poverty, income
generation, creation of employment opportunity, up-gradation of the standard of living of
the lower economic groups, which will also contribute to the emancipation of national
economy of the country.

14
 Chapter-5

Profile of Mercantile Bank Limited

5.1 Introduction

Mercantile Bank Limited. Mercantile Bank Limited emerged as a new commercial bank
to provide efficient banking services and to contribute socio-economic development of
the country. The Bank provides a broad range of financial services to its customers and
corporate clients.

5.2 Background of Mercantile Bank

Mercantile Bank Limited is adjudged as one of the leading bangs in Bangladesh. The
bank is a blend of development and commercial bank. It has been established to promote
banking activities in the country.

Mercantile bank ltd was incorporated on May 20, 1999 and it started its operation on
June 02, 1999. It was established as banking company under the companies Act 1913.
The bank is governed by the bank companies Act 1991.According to CAMEL rating,
the was given the top ranking after applying all the ten creation that are required to
judge a bank’s overall performance, informed banking sources said.

The Authorized Capital of the Bank is Tk. 1200 million and the Paid -up Capital is Tk.
799.41 million. Total employe more than 16,000 at the end of November 2012.

The first branch of MBL was opened at Dilkusha commercial area in Dhaka on the
inauguration day of the bank. At the end of 2011, the number branches of the bank stood
at 80, including 5 SME / krishi branches, of which 57 branches are located at major trade
centers of the country and other 23 branches are at rural areas of country.

The Bank provides a broad range of financial services to its customers and corporate
clients. The Board of Directors consists of eminent personalities from the realm of
commerce and industries of the country.

15
The Bank is manned and managed by qualified and efficient professionals. The former
Governor of the Central Bank of Bangladesh was the Chief Advisor of the Bank. He
brings with him a wealth of experience of managing both public and private sector
banks.

Vision of the bank


 Would make finest corporate citizen

Mission of the bank

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

Objectives of MBL


 Strategic Objective

 to achieve positive Economic Value Added (EVA)each year.

 to be market leader in product innovation.

 to be one of the top three Financial Institutions in Bangladesh in terms of cost
efficiency.

 to be one of the top five Financial Institutions in terms of market share in all
significant market segments serve.

16
5.6 Corporate Cultural of MBL

Culture is a strong medium to uphold the rich heritage and tradition of our country.
Regular cultural programs are a must to keep our tradition moving forward. Believing so,
UCB contributes in culture throughout the year. We also support any kind of endeavors
to explore the country’s rich cultural heritage. Our initiatives are taken mostly from
grass-root level so that the talents and skills may come from rural and district level. Our
activities in "Culture" include:

 Financial support to different cultural groups and associations.

 Financial support to poor artists.
 Donation to institutions/ associations who work for development of art & culture
etc.
 Organizing art competition, photography completion etc to provide opportunity
to children to blossom their latent talent.
 Arranging and supporting different classical cultural events.
 Promotion and support to local cultural traditions.
 Awareness on preserving rich cultural heritage of Bangladesh.
 Financial support and Scholarship to young and budding talents.
 Initiatives taken for the purpose of study /exploration of our socio-cultural
revolution.

5.7 Management hierarchy of MBL

Principles and Values:

Mercantile Bank Limited is committed to five core business principles:

 Outstanding customer service.

 Effective and efficient operations.
 Strong capital and liquidity.
 Prudent lending policy.
 Strict expense discipline.

17
  Mercantile Bank Limited also operates according to certain key business values.
 Commitment to truth and fair dealing.
 Hands-on management at all levels.
 Commitment to quality and competence.
 A minimum of bureaucracy.
 Fast decisions and implementation.

5.8 Social Responsibility of MBL

Corporate Social Responsibility (CSR) or Sustainable Responsible Business is a form of

corporate self-regulation integrated into a business model. Ideally, CSR policy would
function as a built-in, self-regulating mechanism whereby business would monitor and
ensure their adherence to law, ethical standards and national or international norms.
Business would embrace responsibility for the impact of their activities on the
environment, consumers, employees, communities, stockholders and all other members
of the public sphere. It is a commitment to improve community well-being through
discretionary business practices and contributions of corporate resources. However it is
not charity but it is a core business strategy of an organization.

Today Corporate Social Responsibility is becoming an increasingly important activity to

businesses nationally and internationally. CSR is the way in which an organization
strikes a balance between economic, social and environmental imperatives on the one
hand and the expectations and welfare of the shareholders on the other. This implies that
Social responsibility is the responsibility of an organization for the impacts of its
decisions and activities on society and environment, through transparent and ethical
behavior that is consistent with sustainable development and the welfare of the society.

18
In Mercantile Bank, we believe that financial sustainability goes hand in hand with the
development of the communities and environment in which we operate. Our CSR is the
continuing commitment by business to behave ethically and contribute to economic
development while improving the quality of life of the workforce and their families as
well as of the local community and society at large. We believe that investing in today is
building for tomorrow. MBL Family always tries to be a responsible partner of our
customers, shareholders employees, communities, and other stakeholders attaching
highest priority to ethical conduct and integrity. This includes monetary donations and
aid given to nonprofit organizations and communities.

Donations are made in areas such as the arts, education, housing, health, social welfare
and the environment, among others, but excluding political contributions and
commercial event sponsorship. Mercantile Bank Foundation Bank’s CSR activities are
planned and implemented as business strategies after considering what we should do and
how we should do it as a Foundation. Our CSR activities assist to solve societal issues
and contribute to both economically and socially. Mercantile Bank Foundation (MBF)
believes that our responsibility extends beyond our core business to the society in which
we operate. Actually, MBF has been promoting a dialogue between the Bank and its
community people.

Core focus of the Foundation is to work for the distressed and disabled people around the
country throughout its course of compassionate operation. Mercantile Bank Foundation
are committed to helping exponentially more people improve their lives by having access
to core services like education and healthcare, because we believe that accessible and
available core services is foundational to breaking the cycle of poverty. In order to
achieve this goal, MBL is a strong and dynamic organization which follows an adaptive
approach through effective program and service.

Objectives of Mercantile Bank Foundation

Mercantile Bank Foundation has been formed with the aim of achieving some underlying
objectives including:


 To take possible initiatives in increasing social wellbeing and poverty alleviation.

19
 
 To support the education by establishing new educational institutions, providing
stipends/ scholarship to the poor but brilliant students.

 To provide awards to the Scholars in different significant arenas for their
outstanding contribution, as they uphold nation’s pride brightly even across the
geographical boundaries.

These arenas are:

Bengali Language and Literature, Education, Culture, Liberation War based Research,
Economics and Economics related Research, Healthcare, Science and Technology,
Industry and Commerce, Journalism, Agriculture based Research and Development

Sports


 to assist research activities on Bengali Literature through Bangla Academy

 to assist the unemployed young to make them self sufficient

 to assist the rootless and distressed orphans and mentally retarded children
through taking appropriate steps for their mental perfection and self-support

 to support in establishing hospitals, clinics, etc. for improvement of the health
sector, to donate one time financial endowment to poor artists, literature-patron,
for ailing fatal diseaseaected poor patients, to support poor fathers for arranging
their daughter’s marriage and to support writers and publishers through
purchasing their books.

 Mercantile Bank Foundation has been working constantly since 2000 just after a
year of its inception as a responsible corporate citizen. MBL’s social
responsibilities are overseen by the Mercantile Bank.

 Foundation. MBL contributes 1% of its Operating Prot or BDT 4.00 million,
which one is maximum, to the Mercantile Bank Foundation every year, and from
this amount, the Foundation cares the distressed and disabled people of the
country. MBF has relentlessly pursued a range of activities with the sole purpose
of benefits target people.

20
CSR Activities in MBL


 Social responsibility is an ethical framework and suggests that an entity, be it an
organization or individual, has an obligation to act for the benefits of society at
large. It is a duty for every individual has to perform so as to maintain a balance
between the economy and the ecosystems. In Bangladesh, as one of the key
stakeholders, Mercantile Bank can play a vital role in development and response
to the society through its regular practice. Our sustainability strategy is connected
to our vision, would make nest corporate citizen. We leverage on the connections
and relationships we have formed in order to win hearts and achieve prosperity
for all. Guided by our Core Values of Teamwork, Integrity, Growth, Excellence
and Efficiency, and Relationship Building, our place should be at the heart of the
communities we serve. MBL’s Corporate Responsibility initiatives are normally
based on the three key pillars of our Society, Economy, and Environment.

 Corporate social responsibility (CSR) is a broad term used to describe a
company's e-

 Segment wise contribution under CSR activities of Mercantile Bank in 2017 is
furnished below: (BDT in Million)

 Corporate Social Responsibility (CSR)-continued

 Corporate Social Responsibility (CSR)-continued

 Mercantile Bank Foundation always tries to continue broadening the scope of its
impact through its pioneering social programmers. It is continuously exploring
methods of extending the reach and effectiveness of its activities in order to full
its long term vision. From foundation, MBL each year on its founding
anniversary award some noted intellectual personalities of the society for their
outstanding performance in their respective olds.

 In continuation, during 2017, the Foundation of the Bank provides awards to 11
(eleven) Scholars for their outstanding contribution indirect areas under the
heading “Mercantile Bank Award-2017”. The Award includes a Gold Medal (2
Vori), a Crest and one time nancial endowment worth BDT 1.00 lac. Hon’ble
Commerce Minister of People's Republic of Bangladesh, Mr. Tofail Ahmed, M.P
was the Chief Guest of the program. Mr. Fazle Kabir, Governor Bangladesh Bank
was present as special guest and Shahidul Ahsan, Ex-Chairman of the Bank
presided over the program.

21
 
 The Scholars who have been honored with Mercantile

Awardees of Mercantile Bank Award-2017

5.9 Conclusion

MBL is well positioned to meet the challenge and will take the opportunity of benefit
from economic growth. The bank would serve as partner and advisor of the clients to
trade, commerce and industry. This strategy is supported by wide spectrum of products
and services.

The mission of the bank is to be utmost trustworthy stakeholder, careful, committed for
equitable and sustainable growth based on diversified deployment of fund/resources
leading the bank to the peak of healthy and wholesome financial institution. If the bank
is going to succeed internationally, it must know as much or more than its customers and
competitors. A single misstep may not only cost its company business, it can lead to big
delays and stiff fines. Unfortunately, most information about international trade is
targeted at big companies with large logistics and legal staffs that know how to navigate
the maze of import-export rules and regulations. Small and midsize companies lack the
resources – and often the training – of larger corporations.

MBL is maintaining a well-structured communication from top to bottom level. Each

official should be valued and treated as a part of the bank and they must have the

22
privilege to devote themselves for the betterment of service of the bank. MBL places
utmost importance on managing foreign exchange. The whole process includes
management of export, import, remittance, Foreign Exchange Risk, and successful
completion of trade.

The bank always tries to increase its foreign exchange performance. As the bank is
located in commercial area it is a great opportunity for the bank to attract customers.
Though it has some problem with its foreign exchange department, it is always trying to
accelerate its foreign trade.

Overall, the bank must make a positive attempt to be more outward looking in their goals
and aware of what is happening. They must also emphasize on the domestic scenario
more closely and analyze any certain trends and strategies of their competitors. The bank
must accept any failures and think of them as an objective to pursue future goals instead
of blaming such failures on other factors.

23
 Chapter-6

Analysis and Findings

6.1 Introduction

The analysis is based on the feedback of the customers who are receiving services from
the bank. The results are presented according to the various services quality and
customers satisfaction. Each dimension consists of two specific questions. The results of
the survey are presented according to these questions that were asked to the respondents
with the help of a structured questionnaire. The analysis is as follows:

SWOT Analysis

In order to manage strategically SWOT analysis is very vital. In the process of

analyzing SWOT managers identify the Strengths and Weaknesses of the company and
also the Opportunities and Threats to the company. There are some strengths,
weaknesses, opportunities and threats of MBL that I found when I worked with my
study. They are pointed out below:

Strength:


 MBL is a well-capitalized bank with potential to increase capital base.

 MBL believes in Teamwork basis work & feel that a loyal and motivated
team can produce extra ordinary results.

 MBL Board of Directors is homogenous.

 Computerized customer services (online banking).

 MBL has the reputation of being the provider of good quality services to its
potential customers.

 Lending financial service provider identity countrywide. With its strong
corporate image and identity it has better position in the minds of customers.

 MBL has a bulk of qualified, experienced and dedicated human resources.

 Interest of loan is lower in MBL than other bank.

24
 
 Availability of strong marketing activities through mass media e.g.
Television.

Weakness:


 Lack of feasible industrial venture

 Lack of socio economic stability

 Lack of proper industrial counseling and guidance

 Shortage of trained manpower and logistic support.

 Lack of incentives and publicity

 Shortage of working capital

 Technological limitations

 Political unrest situation

 Heavy competition with other private commercial Banks

 Sales and marketing department are not including in this bank.

 Lack of opportunities for profitable investment.

 Unfavorable business environment.

 Increasing cost burden.

 No practice of productivity measurement.

 Lack of accountability.

 Limited number of branches.

Opportunities:


 Public confidence.

 Minimization of risk.

 Bangladesh has a huge customer base for maintaining several accounts .so; MBL
has the opportunity to keep these customers by reducing its current fees and
charges.

 Our country’s growing population is gradually and increasingly learning to
adaptation of consumer finance. As the bulk of our population is middle class,
different types of products have very large and easily pregnable market.

25
Threats:


 The upcoming private local & multinational banks posses a serious threat to the
existing banking network of MBL.

 Competitive pressure from rivals.

 Industrial downward trend due to recession, inflation & unemployment.

 Now -a –day’s different foreign and private banks are also offering similar type
of product with an almost similar profit margin for declining profit.

Conclusion

Mercantile Bank Limited, a specialized state owned scheduled bank having 42 branches
in the country, is financing small-scale industries. Mercantile Bank Limited is unique in
its objectives. It is a blend of development and commercial banking services.

The main objective of the study was to find out the productivity of the Mercantile bank
from 2001 to 2005. It is very difficult to comment on such a critical subject. In the
present study the Bank performance were analyzed from four different but related angles,
i.e. coverage, inputs, outputs and sect oral productivity.

Loan and Advances is an important asset in the bank's portfolio because it is the main
income-generating avenue. The bank did very well in financing industries. The
commercial loan scheme also better but micro credit sector could not do significant
during the study period.

Remittance and foreign exchange services also showed a better performance in the last
two years of the study period than the rest three years.

26
6.3. Findings of the Study


 It is a lengthy process.

 To get the loan Client have to open an account in the bank

 Bank provides average range of loan amount.

 In yearly they get low Investors/ Clients for this scheme

 Bank is flowing the same rate for this scheme from the last 3 years.

 The Banks in Bangladesh has faces a lot of illegal pressure from Political
persons, Directors and Management of the Bank for approval of loan. In that
cases MBL also are bound to approve the loan without any assessment and
rationality for them.

 The risk managers have often insufficient time for credit risk management. Huge
workload and hurries for loan approval prevent them from through assessment.
So, it is very troublesome to manage the risk in a prudent manner for the risk
managers.

 A third party (CPV- Contract Person Verification) verifies the account holders or
grantors all documents as the relevant required document are perfect or not
perfect. In CPV there is no one for bank and customers. Banks have to depend on
CPV verification to approval the loan.

27
 Chapter-7

Conclusion and Recommendation

7.1 Introduction

Bank is a financial institution which deals with money. Not all banks are the same. There
are different types of banks: co-operative banks, savings banks, investment banks and
central banks. Because of its transitional role, banking system occupies a vital place in a
country’s economy. It confirms distribution and re-allocation of assets and keeps up the
motion of economic activities. As monetary intermediaries, banks stand between
investors who invest capital and debtors who demand capital. It assembles asset for both
the public and private sectors, and provides inventive answers to meet the requirements
of entrepreneurs and government agencies. Thus the banking segment plays a key role in
the evolution of Bangladesh’s economy. After the independence of Bangladesh in 1971,
six state owned commercialized banks were composed, two state owned banks that
specialized in lending to the agriculture and industry, three foreign banks including
Standard chartered bank. The banking industry has faced momentous expansions from
1980’s.

Private Banks has entered in banking industry, Micro finance banks grew rapidly, which
has provided assistance to meet the needs of poor citizens. Foreign trading is a large
business which is run by commercial banks. Foreign trade means the exchange of
capitals and services across the border. Expertise is provided by commercial banks.
Foreign trade requires a flow of goods from seller to buyer and payment from buyer to
seller. Here, bank plays as a conciliator between the buyer and seller.

28
7.2 Recommendations


 The process of sanctioning an auto-loan is very time consuming. Management
should give more effort to reduce the time of processing a loan.

 The branch manager should have some discretionary power to sanction the Auto
loan.

 They should renew their Scheme rate by proper authorization of Bangladesh
banks.

 They should create awareness among the new investors for this Scheme by
providing some advertisement in newspaper, magazine or in other media.

 The Auto Loan Policy of the Bank is very complicated. Bank need to make it
easy and understandable. So that all credit officer can understand the instruction
and follow this instruction correctly at the time of risk management.

 The management must be careful to sanctioning that auto-loan which is
recommended by powerful bodies. Because these loans sometimes become more
risky.

 To reduce the auto-loan risk the original documents of the client must be verified
thoroughly. If manager sanction the auto-loan without the verifying original
documents, that may involves more risk.

 To reduce the default risk the repayment capacity of loan of the auto-loan client
should be properly investigated. Otherwise, here have the chance to default.

 Bank has a few numbers of tools and techniques such as DBR (Debt-Burden
Ratio) to assessment the auto-loan risk. Bank need to introduce new and advance
risk assessment tools and techniques.

29
7.3 Conclusion

It is a great pleasure for me to have practical exposure in Mercantile Bank Limited,

Nayabazar Branch. Because without practical exposure it could not be possible for me to
compare the theory with practice, and it is well established that theory without practice is
blind. I have completed my internship in Nayabazar Branch of Mercantile Bank Limited.
During the practical orientation, I have observed the function of Investment Banking,
and overall banking activities that comply with the sound business operations of
Mercantile Bank of Bangladesh.

Its performance specially based on prompt and swift services is busier than other
department of Mercantile Bank Limited of Nayabazar Branch & the Bankers are
maintaining a peaceful & reliable relation with the clients or customers. According to my
survey I can find that the potential customers are the Businessmen whose motto to the
Car loan for full fill their business purpose or need. Naturally everybody organization
has some problems but the organizations are not stop their activities, they must go on. I
hope the Bank can find out their problems & solve it as soon as possible. Thought the
more and more customers are coming in the branch through this department resulting
deposit of the branch is increasing day to day.

In a word, the performance of Mercantile Bank Limited, Nayabazar Branch is growing

rapidly and the volume of remittance is increasing effectively.

At last it can be said that, Mercantile Bank Limited will be turned into a dynamic Islamic
Bank in the country and will expand its Banking Business all over the country to provide
the banking services to the groups including the deserving Economic groups of the
society who have no easy access to the banking channel. This will help for alleviation of
the poverty, income generation, creation of employment opportunity, up-gradation of the
standard of living of the lower economic groups, which will also contribute to the
emancipation of national economy of the country.

30
Appendix

 Picture: Source: www.MBL.com.bd

31
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