Transcript Document

Chapter-1&3
The Overview of Bank, it’s Structure and
Services
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Md. Masukujjaman, Lecturer, NUB
What is Bank?
• A bank is a Financial intermediary accepting
deposits and granting loans; offers the widest
menu of services to any financial institution.
Bank actually links the people whose have
abundant of fund and who have not in a dedicated
and systematic way and becomes the part of
development of any economy and country.
Like other FI, Bank also sell their financial asset
and thereby accommodate financing and
investment
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What is Bank Management?
• Management of a bank’s daily operations
perfectly within some rules and regulations
through some sophisticated as well as
traditional ( long term practice) way can be
regarded as the bank management.
Controlling ranges from the deposit ,lending,
fund ,defending external and internal threat
especially the goodwill of the banks indeed.
So, Management of banks functions efficiently is
called bank management
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Financial Market & Banks
• Market where financial instruments
are traded on
• Can be classified broadly as
– Capital market (share, bond)
Bangladesh Bank
Market place: DSE,CSE (controlled by SEC)
Participants- investors and borrowers(company)
– Money market
(debt, banker’s acceptance)
Market place: Banking and non banking institutions
(controlled by central bank -Bangladesh Banks)
Participants- Savers and borrowers
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Economic policy and banks
• Each of the country actually control
their economy by
– Fiscal policy
• Related with the control of money flow by the
tax and government expenditure
– Monetary Policy
• Involve with control of money flow of the
economy through Central Banks reserve and
lending policy .
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Banking system of Bangladesh
• Brief Sketch of Banking System in Bangladesh
• Finance Division
Bangladesh Bank (Central bank)
SOCBs
PCBs
FCBs
SOSCB
NBFIs
» •SOCB-State Owned Commercial Bank (4 nos.)
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•FCPCB-Private Commercial Bank (30 nos.)
B-Foreign Commercial Bank (9 nos.)
•SCB-Specialized Commercial Bank (5 nos)
•NBFI-Non Banking financial Institution (29 nos)
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State owned commercial Banks
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Sonali Bank
Janata Bank
Agrani Bank
Rupali Bank
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Private commercial Banks
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AB Bank Ltd
BRAC Bank Limited
Eastern Bank Limited
Dutch Bangla Bank Limited
Dhaka Bank Limited
Islami Bank Bangladesh Ltd
Pubali Bank Limited
Uttara Bank Limited
IFIC Bank Limited
National Bank Limited
The City Bank Limited
United Commercial Bank Limited
NCC Bank Limited
Prime Bank Limited
SouthEast Bank Limited
Al-Arafah Islami Bank Limited
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Social Islami Bank Limited
Standard Bank Limited
One Bank Limited
Exim Bank Limited
Mercantile Bank Limited
Bangladesh Commerce Bank Limited
Mutual Trust Bank Limited
First Security Islami Bank Limited
The Premier Bank Limited
Bank Asia Limited
Trust Bank Limited
Shahjalal Islami Bank Limited
Jamuna Bank Limited
ICB Islami Bank
Moon Bank Limited
United Bank Limited
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Foreign commercial Banks
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Citibank na
HSBC
Standard Chartered Bank
Commercial Bank of Ceylon
State Bank of India
Habib Bank
National Bank of Pakistan
Wo Bank
Bank Alfalah
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Specialized development
commercial Banks
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Grameen Bank
Bangladesh Krishi Bank (Govt.)
Bangladesh Development Bank Ltd (Govt.)
Rajshahi Krishi Unnayan Bank (Govt.)
Basic Bank Ltd (Bank of Small Industries and
Commerce) (Govt.)
Bangladesh Somobay Bank Limited(Cooperative
Bank) (Govt.)
Ansar VDP Unnyan Bank (Govt.)
Karmosangesthan Bank
Exim Bank
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Non-banking Financial
Institutions
• Depository institutions offering
commercial loans operated under the
‘Non Banking Financial Institutions Order,
1989’ of Bangladesh Bank.
– NGOs , Leasing firms, insurance com’s, etc.
Non bank financial institution is now
becoming the competitor of the bank with
their similar packages of services.
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Services banks offer to public
• Traditional bank services:
– Offering savings deposits
– Carrying out currency exchanges
– Discounting commercial notes and making
business loan
– Safekeeping of valuables and certification of value
– Supporting government activities with credit
– Offering checking accounts (Demand deposits)
– Offering trust services
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Services banks offer to public
• Recently added bank services:
– Granting consumer loans
– Financial advising
– Cash management
– Offering equipment leasing
– Making venture capital loans
– Selling insurance services
– Selling retirement plan
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Large door to an old bank vault
Services banks offer to public
• Dealing in securities:
– Security brokerage services and security
loan
– Offering mutual funds and annuities.
– Offering merchant banking servicesd
Because of having extensive competition with the non-bank
institute, banks are increasingly becomes the “one stop”
service provider
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Role of banks for economy
• The many different roles banks
play in the economy:
– Intermediation role
– Payment role
– Guarantor role
– Risk management role
– Savings role/investment advisor loan
– Safekeeping /certification of value rol
– Policy role
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Illustration of banks services in
BD (Uttara Bank)
A. Special Loan Scheme:
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Consumer credit scheme
Personal loan
Small Business Loan
Building repair loan
B. Saving deposit scheme:
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Savings Accounts
Short Term Deposit Accounts
Fixed deposit receipt Accounts
Double benefit deposit scheme
Monthly deposit scheme
Source: Uttara Bank ltd. retrieved on 2010, Website:www.uttarabank-bd.com
C. International Banking:
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1. Foreign currency accounts
2. Non-Resident Foreign Currency Deposit
Account
3. Resident Foreign Currency Deposit Account
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Trends demanding efficient
bank management
• Trends:
– Service proliferation
– Rising competition
– Deregulation
– Rising funding costs (existence of stock mkt.)
– Technological revolution.
– Consolidation and Geographic expansion
– Globalization of banking
– Increased risk of failure
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Career opportunities in Banking
Loan officer
Credit analyst
Loan workout specialist
Mergers of Bank operation
Branch Managers
System analyst
Auditing and control
personel
Bank examiner and specialist
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Trust department specialist
Teller
Security analyst and trader
Marketing personnel
Human resource managers
Investment banking
specialist
• Bank training specialist
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Factors Affecting Organisational
Structure of Banks
Banks can be classified into three groups in terms of size
and asset concentration – small, medium and large.
The following are the factors affecting organisational
structure:
 Size
 Services offered
 Technology – new skills, management style etc.
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Illustration:1
Board of Directors
Chief Administrative Officer (Board
Chairman/President/CEO/Managing Director
Accounting &
Operations Division
Lending Division
Or Loans Department
Commercial
Loan Officers
Consumer Loan
Officers
Accounting & Audit
Department
Operations
(check clearing, posting,
Account verification, &
Customer complaint)
Fund-Raising &
Marketing Division
Tellers or
Customer Service officers
Trust
Division
New Accounts
Personal
Trusts
Advertising &
Planning
Business
Trusts
Organizational Structure of Banks
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ORGANIZATIONAL STRUCTURE
Illustration:2
Board of Director
Secretariat
Managing Director
Public Relation
Secretariat of M.D.
General Manager
Adm.& A/C.
LPO
Regional
Office
Rangpur
Regional
Office
Thakurgoan
Regional
Office
Phanchogor
General Manager
Operating
General Manager
Audit& Recovery
General Service Dept.
Resource &
evelopment Dept
Loan Recovery Dept-1.
Central Account
Dept-1
Budget& Cost Control
Dept.
Loan Recovery
Dep-2.
Central Account
Dept-2
Branch control
Dept.
Loan Recovery
Dept-2
Personnel
Management Dept.
Loan & Advance
Dept-2
Regional Audit
office- 18
Training institute
Loan & Advance
Dept-1
Dhaka
Branch
Zonal
Office
Rajshahi
Branch
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Regional
Office
Naugoan
Regional
Office
Nawabgong
Regional
Office
Natore
Zonal
Office
Pabna
Branch
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Branch
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Branch
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Branch
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Branch
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Branch
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Branch
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Branch
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Branch
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Branch
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Regional
Office
Sirajganj
Branch
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Branch
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Regional
Office
Dinajpur
Branch
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Branch
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Branch
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Zonal
Office
Dinajpur
Regional
Office
Lalmonirhat
Regional
Office
Nilfamary
Branch
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Regional
Office
Kurigram
Branch
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Regional
Office
Gaibanda
Regional
Office
Natore
Zonal
Office
Pabna
Regional
Office
Sirajganj
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Board of Directors
• Comprises of directors Appointment from the Promoters/share
holders heading a Chairman. Appointed/approved by the
Government
• No rules regarding no. of members in a board of director .In
America it is 5-25 (practiced).
• No specific qualification (academic) is not required. but must not
be insolvent and be a sound person.
Responsibilities:
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Formulating policies
Appointment of CEO
Appointment of chairman of Board of Directors
Taking Investment decision of the bank
Call for money issuing share
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Managing Director
Responsibilities:
• Oversee the total administrative matter
• Regulate the daily operation
• Have the authority to take decision (not policy decision)
• Recruit employee through HRD
• Act as the secretary of the board of directors meeting
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Standing committee
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Executive committee
Loan committee
Investment committee
Salary and employee relation committee
Audit committee
Trust committee etc.
Risk management committee.
Beside these banks also form Special Committee for special occasions or
situations.
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Types of banks (Structural)
• Unit Banking
• Branch banking
• Bank Holding Company
Organisation/Chain banking
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Unit banking –
Banking system whereby all services of banks are
offered from one office.
- Such office may have offer facilities such as, drive-in
windows, automated teller machines, retail store point-ofsale terminals that are linked to the banks’ computers
system, and internet website.
It facilitates in the following way:
Greater control
Prompt decision
Greater verification of operation and function
Offering unique product and services.
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Branch banking
 Branch banking is a system where full range banking services are
offered from several locations, including a head office, and other
one or more full-service branch offices.
– Head office or registered office is guided and managed and
controlled by a single board of directors, of which the MD is the
CEO
– Actual operation is performed at the braches but controlled by the
branches through manual, instructions, guidelines ,statements etc.
– Branches are managed by the managers having appropriate
business, financial, administrative power delegated to head office.
– Each Brach is treated as separate unit for business and performance
purpose. But for total performance the brach performance is
aggregated.
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 Advantages
- Branching allows for greater efficiency
- It provides for easy, improved and convenience
services to customers
-Branching reduces transaction costs for customers
-Branch provides security against the risk of failure –as it
leads to increase in assets
- It leads to growth in the banking industry
that is
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Scale of operation
Risk diversification
More coverage in utilization of Fund
Area development
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Disadvantages
- Full branching may lead to increase in
operation/service cost
- It may lead to edging out of competitors
- It may lead to variation in type and quality of
services of a bank
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Bank Holding Company Organisation/Chain
banking –
This is a form of banking organisation whereby companies
act as corporations chartered for the purpose of holding
stock (equity shares) of one or more banks. This facilitates
access to large pool of capital at the capital market
- One-bank Holding Companies
- Multi-bank Holding companies
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Thank You Very Much
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