Table of Contents
Letter ofCertificate ii
Certificate ofCompletion of Internship Program
Letter ofTransmittal iii
Acknowledgement iv
ExecutiveSummary v
Objectives ofthe Study vi
Origin of theReport vi
Methodology ofthe Study vii
Limitations ofthe Study viii
Chapter-1: Introduction
1.1
|
Origin of Banking Industry
|
2
|
1.2
|
Present Status of Banking Industry
|
4
|
1.3
|
Prime Bank Limited- at a glance
|
5
|
1.4
|
Operation of Prime Bank Limited in Sylhet
|
6
|
1.5
|
Islamic Mode of Operation
| |
1.6
|
Islamic Banking in the 21st Century
|
Chapter-2: GeneralBanking Department
2.1
|
Account Opening Section
| |
2.2
|
Application Form for Current/Saving Account
|
9
|
2.3
|
Deposits Accepted By Prime Bank Ltd.
|
9
|
2.4
|
Bills and Clearing Section
|
10
|
2.5
|
Inward Cheques
|
10
|
2.6
|
Outward Cheques
|
15
|
2.7
|
Outward Bills for Collection (OBC)
|
17
|
2.8
|
Clearing
| |
2.9
|
Receiving Cheques for Collection
| |
2.10
|
Cheques and Crossing
| |
2.11
|
Issuing Cheques Book
| |
2.12
|
Remittance for Funds
| |
2.13
|
Pay Order/Bank’s Cheque
| |
2.14
|
Bank Draft
| |
2.15
|
Mail or Telex Transfer (TT)
| |
2.16
|
Fixed Deposit
| |
2.17
|
Cash Section
|
20
|
2.18
|
Receiving Cash
|
21
|
2.19
|
Disbursing Cash
|
21
|
2.20
|
Locker Service
|
22
|
2.21
|
Closing of an Account
|
23
|
2.22
|
Observations and Recommendations
|
23
|
Chapter-3:Accounts Department
3.1
|
General Account
|
24
|
3.2
|
Extract
|
26
|
3.3
|
Debit Voucher
|
26
|
3.4
|
Statement of Affairs
|
26
|
3.5
|
Functions Provided by Accounts Department
|
27
|
3.6
|
Daily Tasks
|
28
|
3.7
|
Periodical Tasks
|
28
|
3.8
|
Observations
|
29
|
Chapter-4:Credit Department
4.1
|
Loans and Advances Offered by Prime Bank Ltd.
|
33
|
4.2
|
Deposit/ Loan Ratio
|
33
|
4.3
|
Credit Details
|
34
|
4.4
|
Three Factors Considering in Granting Credit
|
35
|
4.5
|
Feasibility Report
|
35
|
4.6
|
Credit Control Mechanism
|
37
|
4.7
|
Reserve Ratio
|
45
|
4.8
|
Credit Monitoring
|
47
|
4.9
|
Issuance Procedure of Guarantee
|
49
|
4.10
|
Credit Extension
|
50
|
4.11
|
Recovery Process
| |
4.12
|
Total Amount of Retail Credit in Sylhet
|
Chapter-5:Foreign Exchange Department
5.1
|
Important Terms on Foreign Exchange
|
52
|
5.2
|
Forms of Documentary Credit
|
52
|
5.3
|
Parties to Letter of Credit
|
53
|
5.4
|
Import Section
|
53
|
5.5
|
Application for Opening L/C
|
58
|
5.6
|
Delivered Forms by Bankers to Importers
|
61
|
5.7
|
Preparation of L/C by Bankers
|
64
|
5.8
|
Post-Import Financing
|
64
|
5.9
|
Export Section
|
65
|
5.10
|
Parties to Export Transaction
|
66
|
5.11
|
Services Provided by Prime Bank Ltd. against Export L/C
|
68
|
5.12
|
Foreign Remittance Division
|
68
|
Chapter-6: Performanceof Prime Bank Limited
Chapter-7: ConcludingJuncture
7.1
|
Findings and Analysis
|
76
|
7.2
|
Recommendations
|
80
|
7.3
|
Conclusion
|
82
|
Bibliography 85
Appendix 86
Chapter 01: INTRODUCTION
Banking system occupies an important place in a nation’s economy because of its intermediaryrole; it ensures allocation and reallocation of resources and keeps up themomentum of economic activities. A banking institution is indispensable in amodern society. It plays a pivotal role in the economic development of acountry and forms the core at the money market of any country. In a developing country like Bangladesh
1.1 Origin of Banking Industry
a) WorldPoint of View
The history of banking is as old as the history of many. Generally, to the necessity forkeeping the money safe, the business of banking comes in to existence. Theevolution if money solved the problem of ‘Barter System’. Earlier there are twogroups of people. One group felt the need of honest and faithful person to keeptheir surplus money safe and the other group owing to transaction felt the needof some person who could provide money. As a result based on two groups a kindof businessman came in to picture. They used to keep the money as deposit forsecurity and give loans to the needy people. This is how the banking sector hasdeveloped.
The English word‘Bank’ is derived from the Italian word ‘Banco’. The Latin word ‘Bancus’ andthe French word ’Banque’ which means a bench. They are of the opinion that themedieval.
European banker(i.e. moneychanger and moneylenders) transacted their banking activities on thebenches in the market place. This money changing and money lending business isknown as banking business.
b) BangladeshPoint of View
Banking industryis very important financial institution in the country and the present economicstate of Bangladesh Bangladesh West Pakistan . After that,‘Bangladesh Bank’ was established according to the order of Bangladesh Bank andthis order effective from 16th December 1971 . Bangladesh Bank was given the duty to act as theCentral Bank of Bangladesh
After that in1972 nationalization order was declared and all commercial banks werenationalized except foreign banks. Thus six nationalized banks were formed.They are Sonali Bank, Agrani Bank, Rupali Bank, Pubali Bank, and Uttara Bank.
1.2 Present Status of Banking Industry
Banking Businessplays vital role in driving and manipulating the total financial management andeconomy of any country. There are 52different types of Banks operating in Bangladesh
In the recentyears, Islamic Banking has beenintroduced which is a notable point in the existing banking system. Out of theestablished private banks four of them are Islamic Banks.
Besides thebanking sector, there are some non-banking financial institutes, whichcontribute in financing the economy of the country. These institutions financein different sector like housing, industries etc. which contributes towards thedevelopment of the country.
1.3 prime bank limited: Ata glance
Prime BankLimited is a fast growing private sector Bank and the Bank is already at thetop slot in terms of quality service to the customers’ add the value additionto the shareholders. Prime Bank Ltd. was incorporated under the Companies Act,1994 on February 12, 1995 .
Prime BankLtd. being a banking company has been registered under the Companies Act 1913with its registered office at 5, Rajuk Avenue Dhaka 1000. Later it was shifted to Adamjee Court Annexbuilding, 119-120, Motijheel Commercial Area, Dhaka - 1000. It is a full licensed scheduled Commercial bank set up in the privatesector in pursuance of the policy of the Government to liberalize banking andfinancial services.
The bank operates as a scheduled bank under banking license issued byBangladesh Bank, the central bank of the country on
The bank has already occupied an enviable position amongits competitors after achieving success in all areas of business operation.Prime Bank Ltd. offers all kinds of Commercial Corporate and Personal Bankingservices covering all segments of society within the framework of BankingCompany Act and rules and regulations laid down by our central bank.Diversification of products and services include Corporate Banking, RetailBanking and Consumer Banking right from industry to agriculture, and real stateto software.
1.4 Operation of Prime Bank Limited inSylhet:
Prime Bank started its operation in Sylhet in the firstquarter of 1996. To provide the service to consumers of Sylhet, Prime BankLimited extend its branch in Laldighirpar, Sylhet in January 10, 1996 . This branch nowacts as the central branch of Sylhet zone. To consolidate its position inSylhet the Islamic Banking branch in Amberkhana started its operation on December 17, 1997 . Theopening of the Amberkhana branch pronounced the Management’s vow to strengthenIslamic Banking operation alongside conventional banking for the consumers ofSylhet. To better serve the clients,Uposhahar branch of Sylhet came into operation on December 4, 2005 . To solidify the position andconsidering the demand of consumers, Subidbazar Branch started its operation onOctober 25, 2007 .
Prime BankLimited has started its operation as a Conventional Bank in April 1995. Fromits inception as an Islami Bank the bank has proven itself to be worthy of itsslogan of ‘Bank with a Difference’,through successful operation of Islami Banking.
Prime Bank has started its Islami Bankingoperation through its first Branch being inaugurated at 19, Dilkusha C/A, Dhaka on 18 December 1995 . Since then it has so far has established four morebranches at different locations in the Country. Because of its popularity andmanagement’s commitment toward social well being gradual expansion of PrimeBank’s Islami Banking operations is assured.
Followings are the salient features of IslamicBanking, as is practiced in Prime Bank Limited:
Ø Allactivities are conducted according to Islamic Shariah.
Ø Interestfree monetary operations.
Ø FollowingIslamic principles in its investment portfolio.
Ø Conductwelfare activates etc.
The properoffers an alternative perspective, imperative and vision of challenges andopportunities of Islamic banking in the 21st century with a view toresponding adequately to the problem of globalization of poverty andcolonization of our future, this adequately to the problem of globalization ofpoverty and colonization of out future, this paper provides a forum for hardtalk on harsh social realities. Therefore, an attempt is made to unfold, someof the fundaments issues of Islamic banking in the 21st century,although special referee is made to utterly neglected area of non-formal andvoluntary sector banking., as a case study, the operational thrust of the ‘Prime Bank Ltd., a concept of 21stCentury participatory three sector banking model , established in November 22,1995 in Dhaka, Bangladesh , is review with a view to providing an empiricalbasis for and in-depth understanding of an alternative paradigm of IslamicBanking.
It is arguedthat Islamic Banking in the 21st century needs ‘discontinuous leaps’a change in paradigm, to clear the backlog of history. It is however, felt theIslamic Banking in the 21st century will face the great challenge ofour time but it would create great opportunities as well. For both Muslim andNon-Muslim countries, if and only, it works for developing participatoryeconomy beyond market, arrest the present trend toward the globalization ofpoverty and colonization, concentration of ownership and beneficiaries ofIslamic Finance, redefine the role of Islamic formal corporate finance,rediscover new package for empowerment of families of both the rich and thepoor at the grass-root level, help developing of voluntary sector banking formobilization and capitalization of savings and investment.
Chapter 02: General BankingDepartment
Financial institution/intermediary that mediates orstands between ultimate borrowers and ultimate lenders is known as bankingfinancial institution. Banks perform this function in two ways- taking depositsfrom various areas in different forms and lending that accumulated amount ofmoney to the potential investors in other different forms. General bankingdepartment aids in taking deposits and simultaneously provides some ancillariesservices.
General bankingis the front-side banking service department. It provides those customers whocome frequently and those customers who come one time in banking for enjoyingancillary services. In some general banking activities, there is no relationbetween banker and customers who will take only one service from bank. On theother hand, there are some customers with who bank are doing its businessfrequently. Prime Bank LimitedGeneral banking is divided into five sections-
Ø Account Opening Section.
Ø Bills and Clearing Section.
Ø Remittance Section
Ø Fixed DepositReceipt Section.
Ø Cash section.
2.1 ACCOUNTOpening Section:
Under thissection, Prime Bank Ltd. officer opens different types of accounts on the necessityof clients. The procedure of opening account is given is given below-
Procedure for Opening Of an account:
Before openingof a current or savings account, the following formalities must be completed bythe customer:
Ø Application on the prescribed form
Ø Furnishing photographs
Ø Introduction by an account holder
Ø Putting specimen signatures in the specimen card
Ø Mandate if necessary
After fulfillingthe above requirements, Prime Bank Ltd.provides the customer a “pay-in- slip book” and “a checkbook”.
2.2 APPLICATION FORM FOR CURRENT/ SAVINGS ACCOUNT:
Followings arethe contents of the application form for opening Savings or Current account in Prime Bank Ltd. -
Type of theAccount: Individual/ Joint/ Proprietorship/ Partnership/ Limited Company/ Club/Society/ Co-operatives
Name of theApplicant(s):
Father’s/husband’s Name:
Present Address:
PermanentAddress:
Date of Birth:
Nationality:
Occupation:
Nominee(s)’Name:
SpecialInstruction of Operation of the Account (if any)
Initial Deposit
SpecimenSignature (s) of the Applicant (s)
Introducer’sInformation (Name, Account Number, Specimen Signature)
In case of Joint Account, Operationinstruction of the account Signature (s).
In case of Partnership Account, Partner’sSignature.
The following formality along with thedocuments is to be completed before opening an account:
Ø Two copies of photograph of the Account Holder(s) duly attested by the Introducer.
Ø Account to be introduced properly.
Ø Introducer’s signature on Account Opening formis to be verified by an officer.
Ø Letter of thanks to Account Holder(s) andIntroducer is to be sent under registered post.
In case of joint account, operationalinstructions are to be signed by the Join Account Holders.
In case of Club/ Society, Up to datelist of office bearers, Copy of Government approval (if registered)
In case of Non- Government College/School/Madrasha/ Muktab, Up to date list of the Governing Body/ Managing committee.
In case of Minor’s Account, -
a) Putting the word “MINOR” afterthe title of the account.
b) Recording special instruction ofoperation of the account.
c) The account opening form is to befilled in and signed by either of the parents or the
legal guardian appointed by theCourt of Law & not by the Minor.
In case of Limited Company,-
Certified truecopy of the Memorandum & Articles of Association of the company.
Certificate ofIncorporation of the company for inspection and return with a duly certifiedphotocopy for bank’s records, Latest copy of Balance Sheet, Authorization forits operation duly certified by the Chairman/ Managing Director of the company.
2.3 DEPOSITS ACCEPTED BY Prime Bank Limited
Deposits thatare taken by Prime Bank Ltd. are:
Contributory Savings Scheme Education Savings Scheme Short Term Deposit Double Benefit Deposit Scheme Resident Foreign Currency Deposit Account Monthly Benefit Deposit Scheme Fixed Deposit Scheme Lakhopati Deposit Scheme Foreign Currency Account Non-resident Foreign Currency Deposit Account Non-resident Investors Taka Account Prime Millionaire Scheme
Theoretically,total deposits are divided into categories on the basis of withdrawalprocedure, ‘Time deposit’ & ‘Demand deposit’. In case of demand depositmoney is withdrawn on demand. It includes current deposit & saving deposit.On the other hand, A deposit which is payable at a fixed date or after a periodof notice is a time deposit. ‘Prime BankLtd.’ accepts time deposit, For example, FDR. Short Term Deposit (STD) ishybrid A/C in which the features of current and saving account exist. In shortTerm Deposit account the deposit should be kept for at least seven days to getinterest.
2.4 BILLS AND CLEARING SECTION:
‘Prime Bank Ltd.’ Local Office branchperforms the bill clearing function through Local office. ‘Prime Bank Ltd.’ Local office acts as the agent of all ‘Prime Bank Ltd.’ branches for theclearing house of the Bangladesh Bank. There are two types of cheque, whichare-
Ø Inward Clearing Cheque
Ø Outward Clearing Cheque.
2.5 INWARD CHEQUES:
Inward chequesare those ones drawn the respective branch which have been presented on otherbanks and will be cleared / honored through the clearing house of BangladeshBank. For example, the cheque drawn on ‘PrimeBank Ltd.’ Local Office Br.
Accounting treatment:
Customer’sA/C Debit.
‘Prime Bank Ltd.’ General A/c credit.
2.6 OUTWARD CHEQUES:
Outward chequesare those ones drawn on other bank branch which are presented on the concernedbranch for collection through clearing house of Bangladesh Bank. These chequesare called outward cheques.
For example, thecheque drawn on Mercantile Bank LTD, Kawran Bazar Br has been presented on ‘Prime Bank Ltd.’ Local Office Br.
2.7 OUTWARD BILLS FOR COLLECTION (OBC):
By OBC, we mean that those cheques drawn on other bankswhich are not within the same clearing house. Officer gives OBC seal on thistype of cheques and later sends a letter to the manager of the branch of thesome bank located in the branch on which cheque has been drawn. Aftercollection of that bill branch advises the concerned branch in which chequeshas been presented to credit the customer account through Inter Branch CreditAdvice (IBCA).
In absence ofthe branch of the same bank, officer sends letter to manager of the bank onwhich the cheques is drawn. That bank will send pay order in the name of thebranch. This is the procedure of OBC mechanism.
2.8 CLEARING:
The scheduledbanks clear the cheques drawn upon one another through the clearinghouse. ‘Prime Bank Ltd.’ is a scheduled Bank.According to the Article 37 (2) of Bangladesh Bank Order, 1972, the banks thatare the member of the clearinghouse are called as Scheduled Banks. This is anarrangement by the central bank where everyday the representative of the memberbanks gathers to clear the cheques. The place where the banks meet and settletheir dues is called the clearinghouse. The clearinghouse sits for two times aworking day.
The ‘Prime Bank Ltd.’ Local Office Br sendsthe instruments through Inter Branch Debit Advice (I.B.D.A). ‘Prime Bank Ltd.’ Local Office acts as anagent in this case. For this, Local Office branch gives the following entries,
‘Prime Bank Ltd.’ General A/C (Local OfficeBr) ---------------Dr.
Customer’sA/C-------------------------------Cr.
If theinstrument is dishonored, the instrument is returned to the Local Office branchthrough I.B.D.A. along with the following entries,
Customer’sA/C---------------Dr.
‘Prime Bank Ltd.’ General A/C------------------Cr.
2.9 RECEIVING CHEQUES FOR COLLECTION:
In ‘Prime Bank Ltd.’, cheques of itscustomers are received for collection from other banks. In case of receivingcheques, following points should be checked very carefully-
Ø The cheques should not carry a date older thanthe receiving date for more than 6 months. In that case it will be a ‘stalecheque’ and it will not be allowed for collection.
Ø The date of the cheque should not be more than 1day’s forward than the receiving date.
Ø The amount in figures and words in both sides ofthe pay-in-slip should be same and it should also be same with the amountmentioned in figures and words in the cheque.
Ø The name mentioned in the cheque should be samein both sides of the pay-in-slip and it should be the same with the namementioned in the cheque.
Ø The cheque must be crossed.
2.10 CHEQUE AND CROSSING:
A “Cheque” is abill of exchange drawn on a specified banker and not expressed to be payableother wise than on demand. [According to section-6, negotiable Instrument Act,1881.]
A cheque may be classified into:
An open cheque that can present for paymentby the holder at the counter of the drawer’s bank.
A crossed cheque that is to be paid onlythrough a collecting banker.
Crossing cheque
A cheque is saidcrossed when two transverse parallel lines with or without any words are drawnacross the face. Crossing may be general, special or restrictive.
2.11 ISSUING CHEQUE BOOK:
Following procedures are maintained by ‘Prime Bank Ltd.’, Local Office forissuing checkbook:
Ø Firstly the customer will fill up the checkrequisition form.
Ø The leaves of the checkbook under issue arecounted to ensure that all the leaves and the blank requisition slip are intact.
Ø The officer writes A/C number and branch name onall the leaves of the checkbook.
Ø The name and the A/C number of the customer arethan entered in the checkbook register against the particular checkbook series.
Ø Lastly the checkbook is handed over to thecustomer after taking acknowledgement on requisition slip.
A cover filecontaining the requisition slip is effectively preserved as vouchers. If anydefect is noticed by the ledger keeper, he makes a remark to that effect on therequisition slip and forward it to the cancellation officer to decide whether anew checkbook to be issued to the customer or not.
2.12 REMITTANCE OF FUNDS:
Remittance offunds is ancillary services of ‘PrimeBank Ltd.’. It aids to remit fund from one place to another place on behalfof its customers as well as non- customers of bank. ‘Prime Bank Ltd.’ has its branches in the major cities of thecountry and therefore, it serves as one of the best mediums for remittance offunds from one place to another.
The maininstruments used by ‘Prime Bank Ltd.’,Local Office Br for remittance of funds.
-Pay Order/Banker’s check.
-DemandDraft.
-TelegraphicTransfer.
2.13 PAY ORDER/ BANK’S CHEQUE.
The pay order isan instrument issued by bank, instructing itself a certain amount of moneymentioned in the instrument taking amount of money and commission when it ispresented in bank. Only the branch of the bank that has issued it will make thepayment of pay order. The banker’s cheque must come the branch for paymentwherever it is presented.
Issuingof Pay Order:
The proceduresfor issuing a Pay Order are as follows:
Ø Deposit money by the customer along withapplication form.
Ø Give necessary entry in the bills payable (PayOrder) register where payee’s name, date, PO no, etc is mentioned.
Ø After scrutinizing and approval of theinstrument by the authority, it is delivered to customer. Signature of customeris taken on the counterpart.
A customer can purchase PO in different modes:
By cash:
Cash A/C
|
Debit
|
Bills payable (
|
Credit.
|
Income on commission A/C
|
Credit.
|
By account:
Customer’s A/C
|
Debit
|
Bills payable (
|
Credit.
|
Income on commission A/C
|
Credit.
|
By transfer:
Prime General/ other Dept Clients A/C
|
Debit
|
Bills payable (
|
Credit.
|
Income on commission A/C
|
Credit.
|
PO A/C is thecurrent liabilities of bank, which is acquired to be discharged bybeneficiaries against cash or through an account.
Settlement of a PO :
When PO is submitted by collecting bank through clearinghouse, the issuing bank gives payment.
Bills payable (
|
Debit
|
Prime General A/C
|
Credit.
|
But beforegiving payment it is duty for issuing to observe whether endorsement was givenby the collecting bank or not, then the instrument is dishonored and marking‘Endorsement required’.
Cancellation of a Pay Order:
If a buyer wantsto cancel it, he should submit a letter of instrument in this regard and alsoreturn the instrument.
Adjustment entrywills be-
Bills payable (
|
Customer A/C------------------Cr.
|
When PO islost:
If the instrument is lost, the holderwill inform to the issuing bank immediately. Bank will mark ‘stop payment’ onthe Bills payable (PO ) Register. Buyer willthen ask for a new instrument by submitting a GD copy, and indemnity bond. Anew instrument will be delivered.
2.14 BANK DRAFT:
The personintending to remit the money through a pay order has to deposit the money to beremitted with the commission, which the banker charges for its services. Theamount of commission depends on the amount to be remitted. On issue of the payorder, the remitter does not remain a party to the instrument i) Drawer branchii) Drawee branch iii) Payee. This is treated as the current liability of thebank as the banker on the presentation of the instrument should pay the money.The banker event on receiving instructions from the remitter cannot stop thepayment of the instrument. Stop payment can be done in the following cases:
Ø Loss ofdraft before endorsement: in this case, “Draft reported to be lost, payee’sendorsement requires verification” is marked.
Ø Loss ofdraft after endorsement: In this case, the branch first satisfies itselfabout the claimant and the endorsement in his favor.
Accounting treatment:
In case ofissuing of the instrument:
Cash/ customer’s A/C---------------------Dr.
Prime General A/C (Drawn onbranch)--------------Cr.
Income A/Ccommission---------------------------Cr.
After givingthese entries an Inter Bank Credit Advice is prepared which contains thecontrolling number, depicting that the branch is credited to whom it is issued.
An I.B.C.A.implies the following entries,
Prime General A/C Issuing Branch---------------Dr.
Drawn on branch-------------------------Cr.
Charges:
A commission of0.15% is taken on the draft value & Tk.50/= is taken as postal charge.
Cancellation:
To cancel anissued DD, the client has to submit an application. Issuing branch then sendsan Inter Branch Debit Advice (I.B.D.A) to the drawn branch against previouslyissued I.B.C.A.
After that thefollowing entries are given,-
General A/C drawn onbranch------------------------------Dr.
Client’s A/C--------------------------------------------------Cr.
Issuing of Duplicate DD:
If the customerwants to issue a duplicate DD, than customer is asked to do the followingformalities,-
Ø Making a general diary (G.D.) in the nearestPolice Station.
Ø Furnishing an Indemnity Bond in Tk.50/= stamp.
The bankerimmediately marks “stop payment” in the register after receiving theapplication from the customer and a duplicate DD is issued.
2.15 MAIL OR TELEX TRANSFER (TT):
Telex transferis another widely used mode for remittances of funds. In case of telex transferthe message for transfer of funds is communicated through tested telex. ‘PrimeBank Ltd.’ generally recovers from the telex charges in addition to the usualservice charges.
Issuing of TT:
‘Prime BankLtd.’ follows the following procedures:
Ø The customer deposits money with ‘Prime BankLtd.’ to be sent.
Ø The customer obtains a cash memo containing TTserial number.
Ø TT serial number, notifying part name is mentionedin the telex message.
Ø The Telex Department confirms transmission ofthe telex.
Accounting entries for TT:
Cash A/C/ Client’s A/C-----------------------Dr.
Prime General A/C(Local Office branch)---------------Cr.
Procedures for the incoming TT:
After receivingthe telex, it is authenticated by test. TT Serial number is verified by the “TTin-Concern branch” register. The following entries are given in the vouchers,-
Prime General A/C(Local Office branch)-----------------------Dr.
Client’sA/C------------------------------------------Cr.
Tk. 50/= istaken as postal charge. The minimum commission is Tk. 50/= or o.15% of theamount whichever is higher.
2.16 FIXED DEPOSIT:
Fixed deposit isone, which is repayable after the expiry of a predetermined period fixed byhim. The period varies form 3 months to 1 year. These deposits are notrepayable on demand but they are withdrawable subject to a period of notice.Hence, it is a popularly known as ‘Time Deposit’ or ‘Time Liabilities”.Normally the money on a fixed deposit is not repayable before the expiry of afixed period.
Before opening aFixed Deposit Account a customer has to fill up an application form whichcontains the followings:
Amount infigures, Beneficiary’s name and address, Period, Rate of interest, Date ofissue, Date of maturity, Instructions:
- To be renewed automatically with interestfor the next period.
- Not to be renewed for nextperiod.
- Pay interest to accountno. (-------) on maturity.
In case of FixedDeposit Account the Bank needs to maintain a cash reserve. So ‘Prime Bank Ltd.’offers a high interest rate in Fixed Deposit accounts. The Interest ratesfollowed by ‘Prime Bank Ltd.’ in Fixed Deposit accounts are,-
For 3 months
|
@ 11.25%
|
For 6 months
|
@ 11.50%
|
For 1 year or above
|
@ 11.75%
|
The FDR becomesrenewed automatically in ‘Prime Bank Ltd.’ if the customer does not encash itwithin 7 days of maturity. In case of encashment of F.D.R in maturity,following accounting treatments are given:
Excise Duty onFDR--------------------Dr.
Income Tax oninterest ----------------Dr.
FDRA/C----------------------------------Dr.
CashA/C---------------------------------Cr.
Interest on FDRA/C--------------------Cr.
If the customerwants to draw the interest only, then following entries are given-
Interest on FDRA/C-----------------Dr.
Cash A/C-----------------------------Cr.
In case of‘before maturity enactment’ interest is calculated for the days from the dateof opening the FDR account.
2.17 CASH SECTION:
The cash sectionof any branch plays very significant role in general banking department.Because, it deals with most liquid assets The SIBL Local Office Br has aequipped cash section. This section receives cash from depositors and pay cashagainst cheque, draft, PO , and pay in slipover the counter.
2.18 RECEIVING CASH:
Any people whowant to deposit money will fill up the deposit slip and give the form alongwith the money to the cash officer over the counter. The cash officer countsthe cash and compares with the figure written in the deposit slip. Then he puthis signature on the slip along with the ‘cash received’ seal and records inthe cash receive register book against A/C number.
At the end ofthe procedure, the cash officer passes the deposit slip to the counter sectionfor posting purpose and delivers duplicate slip to the clients.
Accounttreatment:
Particulars
|
Dr./Cr.
|
Cash A/C
|
Dr.
|
Customer’s A/C
|
Cr.
|
2.19 DISBURSING CASH:
The drawn thatwants to receive money against cheque comes to the payment counter and presentshis cheque to the officer. He verifies the following information-
Date of thecheque, Signature of the A/C holder, Material alteration, Whether the cheque iscrossed or not, Whether the cheque is endorsed or not, Whether the amount infigure and in word correspondent or not.
Then he checksthe cheque from computer for further verification.
After checkingeverything, if all are in order the cash officer gives amount to the hold andrecords in the paid register.
Accounttreatment:
Particulars
|
Dr./Cr.
|
Customer’s A/C
|
Dr.
|
Cash A/C
|
Cr.
|
The cash sectionof ‘Prime Bank Ltd.’ deals with all types of negotiable instruments, cash andother instruments and treated as a sensitive section of the bank. It includesthe vault which is used as the store of cash instruments. The vault is insuredup to Tk. 60 lacs. If the cash stock goes beyond this limit, the excess cash isthen transferred to Head Office. When the excess cash is transferred to ‘PrimeBank Ltd.’ Head Office. The cash officer issues IBDA.
Accounttreatment:
Prime General A/C
|
Dr.
|
Cash A/C
|
Cr.
|
When cash isbrought from ‘Prime Bank Ltd.’ Head Office,
Accounttreatment:
Cash A/C
|
Dr.
|
SIBL General A/C
|
Cr.
|
2.20 LOCKER SERVICE:
‘Prime BankLtd.’ Local Office Br is providing facility of locker service for the purposeof safeguarding the valuable property of customers. The person or organizationthat has any account in bank branch can enjoy this service. They keep theirvaluable assets in banker’s custody. Customers have right to look after with akey of their individual locker provided by bank. ‘Prime Bank Ltd.’ maintainsthe following types of lockers:
------ Large locker.
------ Medium locker.
------ Small locker.
For enjoyingthis service, clients have to give charge yearly Tk. 1500, Tk. 1250 and Tk. 700for large, medium and small locker respectively.
2.21 CLOSING OF AN ACCOUNT:
For two reasons,one can be closed. One is by banker and other is by the customer.
By banker,
If any customerdoesn’t maintain any transaction within six years and the A/C balance becomeslower than the minimum balance, banker has the right to close an A/C.
By customer,
If the customerwants to close his A/C, he writes an application to the manager urging him toclose his A/C.
Closing process for current & savingsA/C:
Ø After receiving customer’s application theofficer verifies the balance of the A/C.
Ø He then calculates interest and other chargesaccumulated on the A/C.
Ø If it bears a credit balance, the officer writesadvice voucher. He gives necessary accounting entries post to accounts section.
Ø The balance is returned to the customer.
Ø And lastly the A/C is closed.
2.22 OBSERVATIONS &RECOMMENDATIONS:
Theoreticallyany person can purchase pay order, demand draft and telex transfer bydepositing money and commission. But then person who wants to purchase theseshould have account in the bank branch. These will discourage customers totransact with bank.
In opening A/Csome additional documents are needed as compared with theoretical record. Liketrade license, member of Dhaka chamber ofcommerce and industry (DCCI) in Dhaka city.Again some documents are not essential practically as referred in theory.
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