An Overall Banking System of Jamuna Bank Ltd Essay Example

has already ranked as one of the quality service providers & is known for its reputation. Jamuna Bank Ltd. offers different types of Corporate and Personal Banking Services involving all segments of the society within the purview of rules and regulations laid down by the Central Bank and other regulatory authorities. For over a decade, the rapid advancement in information and communication technology has significantly affected the banking industry.Banks and other financial institutions have improved their services as financial intermediary through adopting various Information Technologies.

Technology has become a tool that facilitates banks' organizational structures, business strategies, customer services and related functions. The recent "Information Technology (IT) revolution" has exerted far-reaching impact on economics, in general, and the financial service industry, in particular.

Organizational Objects

1. To earn and maintain CAMEL Rating “Strong”.
2. To establish relationship banking and improve service quality through development of strategic Marketing plans.
3. Be one of the best banks of Bangladesh.
4. To introduce fully automated systems through integration of information technology.
5. Achieve excellence in customer services and superior to all competitors.
6. Discuss the concept of technology driven banking system.
7. Assess the present scenario of technology driven banking in Bangladesh.
8. Identify future prospects of technology driven banking in Bangladesh.
9. Identify future challenges of technology driven banking in Bangladesh.
10. Identify measures that can be taken to overcome the challenges of technology driven banking in Bangladesh.

Methodology of the Study

This study uses both primary and secondary data. Primary data were collected through field level study and personal interview with the different officials of Private Commercial Banks (PCBs), Nationalized Commercial Banks (NCBs) and Foreign Commercial Banks (FCBs). The secondary data were collected from relevant articles, magazines, newspapers, periodicals, annual

reports of various banks, websites of the banks and different authentic web publications.Out of 47 schedule banks in Bangladesh 38 banks (Figure 2) are selected for this study because this study is conducted on those banks that are providing personal and/or corporate banking services. All the specialized and foreign banks that are not providing any personal banking and/or corporate banking services are excluded from the study.

Chapter Two

Bank’s Mission and Vision:

Vision: To become a leading banking institution and to play a pivotal role in the development of the country. Mission:The Bank is committed to satisfying diverse needs of its customers through an array of products at a competitive price by using appropriate technology and providing timely service so that a sustainable growth, reasonable return and contribution to the development of the country can be ensured with a motivated and professional work-force.

Organogram

Board of Directors: Board of Directors of the Bank is a unique combination of both private and Government sector experience. Currently it consists of 13 members elected from the share holders.

There are seven directors that represent the sponsors and general public and senior officials in the rank and status of Additional Secretary/Joint Secretary represent the Government. Managing Director is the ex-officio Director of the Board. In line with the guidelines of Bangladesh Bank, a three member Audit Committee of the Board of Directors has been formed to assist the board in matters related to Audit and Internal Control System of the Bank. Board of Directors 1Al-haj Md. Belel HossainChairman 2Gazi Golam MurtozaVice Chairman 3Md.

Motior RahmanManaging Director 4Engr. A. K. M.

Mosharraf HussainDirector Al-haj. M. A. KhayerDirector 6Md.

Mahmudul HoqueDirector 7Md. Tajul IslamDirector 8Al-Haj Nur MohammedDirector 9Engr. Md. Atiqur

rahmanDirector 10Al-Haj Md.

Rezaul Karim AnsariDirector 11Farhad Ahmed AkandDirector 12Kanutosh MajumderDirector 13Golam Dastagir Gazi Bir ProtikDirector 14Fazlur RahmanDirector 15Shakhawat Abu Khair MohammadDirector 16Md. Sirajul VaroshaDirector 17Md. Ismail Hossain SirajiDirector 18A. S. M. Abdul HalimIndependent Director Management Structure The fourteen members of the Board of Directors are responsible for the strategic planning and overall policy guidelines of the Bank.

Further, there is an Executive Committee of the Board to dispose of urgent business proposals. Besides, there is an Audit Committee in the Board to oversee compliance of major regulatory and operational issues. The CEO and Managing Director, Deputy Managing Director and Head of Divisions are responsible for achieving business goals and overseeing the day to day operation. The CEO and Managing Director are assisted by a Senior Management Group consisting of Deputy Managing Director and Head of Divisions who supervise operation of various Divisions centrally and co-ordinates operation of branches.

Key issues are managed by a Management Committee headed by the CEO and Managing Director. This facilitates rapid decisions. There is an Asset Liability Committee comprising member of the Senior Executives headed by CEO and Managing Director to look into all operational functions and Risk Management of the Bank.

Product and Services

Jamuna Bank Limited (JBL) engages in wide range of activities from small scale lending to large industrial project financing.

It involves other many services.Its range of products ;amp; services at glance are as follows: DepositLoans And AdvanceForeignOther service Current accountLoans (General)Demand draft Savings accountLTR (Quarterly)Import L/C, Pay order Short term depositCash Credit HypoForeign RemittanceTelegraphic transfer Fixed depositLease Financing (Monthly) Other deposit under schemeLoans Ag. Staff House BuildingSelling and buying Foreign currency Special savings deposit scheme SOD (Financial Obligation) SOD (General)

SOD (FDR) Consumer Credit Scheme SME Loan LDBP PAD (Cash) PAD (Back to Back) Demand Loan ABP-(BTB L/C) Demand Loan ABP-(D/P L/C)

Product Description

Deposit: A total deposit of Tk. 91 Crore in June 2011. Endeavor is underway for augmenting low cost deposit by accommodating good customers at competitive price. For healthy growth of business JBL puts emphasis on no cost and low cost deposit all the time. A number of savings schemes are in place for mobilizing long term deposits which can be planned to be invested in term loans in-the area lease finance, project finance and consortium finance with a view to having better yields.

JBL’s such move will motivate the people to have good savings habit, as well. Current Account: Most businessmen maintain current deposit accounts in order to make their daily business activities. This accounts funds change most frequently than any other accounts because customers use to withdraw and deposit funds in regular basis. JBL current account meets the needs of individual and commercial customers through the schedule benefit. A Current Deposit Account may be opened by individual, firm, company and club, association, body corporate etc.Short Term Deposit Account: Deposits held in this account are payable on short notice.

Normally corporate bodies, bank and financial organizations invest their funds temporarily. Now-a-days, private individuals having sound financial means also open this type of deposit accounts. Savings Account: It is a sound savings for retail customer. Savings bank deposit is popular account maintained in banks. The bank provided Debit card facility for every savings account holder.

Thus the account holder can withdraw money from any ATM booths available in the country.Any Person or Persons of more than 18

years having sound mind can open and operate this account singly or jointly. In case of a person below 18 years, a guardian can open and operate this account on his or her behalf. Clubs, Societies, Sole proprietorship firm, Partnership firms, Limited companies either public or private and other similar organization are eligible to open such account. Fixed deposit: JBL offers fixed deposit for different interest rate for different period of time. In the receipt holders name and other particulars are kept as secrete documents on the bank.

In the documents the name of nominee is also incorporated. If any holder of the receipt wishes to en cash receipt before the maturity the bank usually do not pay the interest in the same rate but pays a lump sum amount of interest to the FDR holder. Features - Interest is compounded once a quarter - Loan may be allowed up to 80% of the deposited amount under lien. - Excise duty and source tax etc. are deductible from the depositor profit. Interest rate: 1month and less than 3monthes- 10% 3monthes and less than 6monthes- 12% 6monthes and less than 12monthes- 12% 2monthes and Above- 12% Monthly Saving Scheme (MSS): Monthly saving scheme is a nature of time deposit and it was introduced in 1983.

According to this scheme the investor was required to deposit a fixed amount of money per month Tk. 500/- Tk. 10000/- for a period of 5 years and 10 years. Profit on the invested amount is compounded at the rate of 12. 42% for maturity.

But the profit rate often varies as the bank follows Islamic shariah Banking Law.

Banking Service

The following technology driven banking

services are selected for this study: Core Banking.

Core banking is a general term used to describe the services provided by a group of networked bank branches. Bank customers may access their funds and other simple transactions from any of the member branch offices.

Internet Banking The Internet Banking provides a secure medium for transferring funds electronically between bank accounts and also for making banking transaction over the Internet. Any Branch Banking Any branch banking is the service where an account is accessible from any branch of a particular bank. In Bangladesh the term is widely popularized as online banking. Automated Teller Machine (ATM)ATM means computerized machine that permits bank customers to gain access to their accounts and permit them to conduct some limited scale banking transactions with a magnetically encoded plastic card and a code number.

Point of Sale (POS) Point of Sale (POS) service is an innovative electronic money transferring system that allows the customers of banks to pay for their purchases through their ATM and credit card at any POS enabled retailer. Debit Cards Debit cards are linked directly to the bank account of its holder. The holder of debit card can use it to buy goods or withdraw cash and the amount is taken from the bank account right away.Credit Cards A credit card is a form of borrowing. Credit cards allow its holder to 'buy goods now and pay later' - called 'buying on credit'. They aren't linked to the bank account of the customers.

Chapter Three

Overall Banking System Loans and Advances

Though there was an unfavorable business environment due to political turmoil throughout the year JBL was in constant efforts to explore different areas

of credit operation and could raise the credit portfolios to Tk. 100 Crore in June 2011 with an increase of Tk. 80 Crore (25%) over that of the preceding year. Its credit facilities were concentrated on Trade Finance, Agriculture and related sector, project finance, wholesale and retail trade, transport sector, hospital & diagnostic centers and syndicate financing for big projects, capacity additions to the manufacturing sector and structured financing for developing infrastructure of the country. Initiatives are underway for helping small and medium entrepreneurs in the ventures for which, in JBL, we are developing SME credit products and strategies.

JBL has also increased lending activities to small consumers through Consumer Credit Scheme. Some Popular Credit Scheme: Depending on the various nature of financing, all the lending activities have been brought under the following major heads: CC Hypo (Cash Credit Hypothecation) Cash Credit allowed against hypothecation of an asset is known as Cash Credit (Hypo) of goods on which charge of lending bank is created. For Cash Credit (Hypo) Bankers take following precaution: · The banker carefully verifies the stocks of the hypothecated assets and their market price. · Obtains periodical statement of stock duly signed by the borrower.

Ensure dial docks are duly insured against fire, burglary with bank clause. · Obtains sufficient collateral securities. Identify that whether the goods are ready saleable and whether they have good demand in the market. · Ensure the borrowers trustworthiness. CC Pledge (Cash Credit Pledge): Cash Credit allowed against pledge of goods is known as Cash Credit (Pledge).

For Cash Credit (Pledge) the borrower pledges his goods to the banker as a security against the credit facility. The ownership of pledge

goods remains with thepledged. The bank remains the effective control of borrower but under lock and key of the bank stored in the custody of borrower but under lock and key of the bank. Banks appointed guards are taken care of those goods round the clock.The banks delivered the pledged goods to the party by turns against payment. For Cash Credit Pledge following points are taken into consideration before allowing: · Whether the quality of goods is ascertained.

Whether the goods are easily saleable and those goods must have good demand in the market. The quality of goods is ensured. The goods cannot be perishable and will not deteriorate in quality as a result for short and long duration. The borrower has the absolute title of goods. The prices of the goods have to steady and are not subject to violent change. Goods should be stored in the presence of a responsible bank office.

Ensure that stocks are duly insured against fire, burglary, with bank clause. Stocks must be invocated regularly byresponsible bank office. · The locks of the store are scaled and keys are kept in the bank. Overdraft: The overdraft is always allowed on a special A/C operated upon cheques. The customers may be allowed a certain limit up to which he can overdraw within a specific period of time. In an overdraft A/C withdrawal and deposit can be made any number of times within the limit and prescribed period.

Interested is calculated and charged only on the actual debit balances on daily product basis. Overdraft are three types:

1. Temporary overdraft (TOD).
2. Clean overdraft (COD).
3. Secured overdraft (SOD).

Payment against Document (PAD): Payment made by the Bank

against lodgment of shipping documents of goods imported through L/C falls under this head. It is an interim advance connected with import and is generally liquidated against payments usually made by the party for retirement of the documents for release of imported goods from the customs authority. It falls under the category "Commercial Lending". Loan against Imported Merchandise (LIM): This is as similar as CC Pledge.

But these loans are provided to the selected customers with internal contract.Loan against Trust Received (LTR): Under this arrangement, credit is allowed against trust receipt and the exportable goods remain in the custody of exporter but he is required to execute a stamped export trust receipt in favor of the bank. Where the declaration is made that he holds Purchased with financial assistance of the bank lit trust for the bank. Local/Foreign Documentary Bills Purchased (LDBP/FDBP): Under this arrangement, credit is allowed for exporter for or exportable goods.

Banks provide all the agency commission. Its pay back period is 21 days. Letter of Credit: Issuing letter of credit is one of the important services for JBL.A letter of credit is a document authorizing by the bank for a specific amount of money. Two types of L/C are provided by JBL.

Demand Loan ABP Back T o Back L/C) Demand Loan ABP (Deferred Payment, L/C) Loans (General): When an advance is made in a lump sum repayable either in fixed monthly installment or in lump sum and no subsequent debit is ordinarily allowed except by way in interest and incidental charges etc. This is loans (general). Loan is allowed for a single purpose where the entire amount may be required at a time

or ina number of installments within a period of short Spam.After disbursement of the entire loan amount, there will be only repayment made by the borrower. Loan once repaid in full or in part cannot be drawn again by the borrower.

Entire amount of the loan A/C in the name of the customer and is paid to hen through his SB/CD A/C. Sometimes loan amount are disbursed in cash. This loan is repayable within few months or few years. Consumer Credit Scheme : Consumer credit is recently new field of micro credit activities; people who have limited income can avail of this credit facility to buy any household effects including car, computer, household and other commercial durables.JBL plays a vital role in extending the consumer credit.

Software information of the bank: The Jamuna bank Ltd. alloys use flora software. Flora is a IT company. The Bank contract with Flora to using the flora software.

International Trade Services:

Import Business: The total import business handled by the Bank in June2011 was Tk.

92. 25 million compared to Tk. 72. 50 million in the preceding year registering a rise of Tk.

19. 75 million being 27. 4 percent. A sizeable L/C's were also opened by the Bank in the year under review.The import items included industrial raw materials, machinery, consumer goods, fabrics, accessories etc. Export Business: In Jamuna Bank Ltd., there is export business. Procedures for opening accounts: Opening account with a bank is the way of creating a banker customer relationship. In other words, it is a contract between banker and customer. With this contract, bankers enter into certain obligations and responsibilities. Proper introduction serves as a precaution against fraud and forgeries

and safeguard against inadvertent overdraft to bank.Obtaining proper introduction may absolve the banker from the charges of negligence for conversion.

So, while opening a new account, emphasis would be given without exception to introductory reference and inquiry. The following instruction to be followed while opening account: - Introduction of Account to be obtained from a respectable client acceptable to bank. Closing an Account: During the study we were taught how to close a bank account before maturity. In order to close an account before maturity the holder has to place a written application to the bank.After receiving the application the bank will deduct service charge at an amount necessary for the respective account as closing fee from the balance and rest of the money is given to the account holder. When Bank Closes an Account: The relationship between bank and his customer is a contractual one and may be terminated by either of them.

Bank closes an account in the following situations: -If a customer places written application to the bank to close his account.a. If the customer does not properly follow the rules and regulations necessary to operate his account.b. If the bank is notified the message of death of a customer. c. If the bank receives a notice regarding the insanity of his customer.d. If the bank receives a garnishee order from court.e.

Others.Check Dishonored by Bank: During the internship program, I was taught how a check is dishonored by bank. The statutory duty of a bank is to honor his customer’s check. But a bank can dishonor a check for various reasons.

Some of the reasons for that a bank dishonors his customer’s check are stated

below- Ifa. the customer’s account position is not okay, that is if the amount of money mentioned in the check is greater than customer’s deposit.b. the check is torn.c. the check is post dated or a stolen checksd. the customer’s signature given on the check is a forged one or does not tally with his specimen signature kept in bank custody.e. the check is not submitted to the customer within banking hour.f. the duration of issuing the check is more than 6 months.g. Other.

Chapter Four

Performance Overview of the Bank

Jamuna Bank Ltd, since incorporation as a private commercial bank in the country from 2001, continued to maintain its stable position in the industry.

The bank has been able to show a strong performance in business and financial accounts.With better customer service, fulfillments of commitments to corporate social responsibilities, ensuring sound corporate governance, bank consolidated a solid presence with the customers and general public and in the industry. During the year under review, significant improvement was evident in deposit mobilization, advance portfolio augmentation and recovery of nonperforming loan. Foreign trade, in terms of import, export and inward foreign remittance have also shown noteworthy growth in the year 2010.

Profit for the year has steadily improved compared to the profit of the preceding year.Expansion and renovation of branch, soft launching of ATM services, Debit Card Issuance and bringing more branches under online facility are among the other highlights of activities of bank.

Challenges of Technology Driven Banking:

The challenges for technology driven banking are:* Inefficient and inadequate knowledge of the bank management about the technology driven banking.

• Lack of proper strategic plan to gain and retain market share of the indigenous banks.

Chapter Five

Findings

They have not sufficient efficient employees to operate different department in the bank. So they should increase efficient employees in different department. Staff meetings and departmental meetings at the branch level does not held or very few which is very essential to develop service quality as well as problem solving. But this practice is very few.

So It may create major problem in future. The bank is operated through 67 numbers of branches that are very few. So few number of branches are a barrier to improve bank growth.  ATM booth service is an online popular service. The bank’s online service is very poor. So if they want to survival in competition market they should introduce online service as early as possible.

Technology that JBL is using for their banking system is not up dated. Now there is some international bank in Bangladesh, they are very fast and very up dated. JBL is losing their clients because of lack of technology.  The management of AIBL takes no risk when they give loans to their clients. They are very slow in decision-making. They sometimes fail to take the current opportunities for this slow decision making process.

The Jamuna Bank is too much centralized. For each and every work branch office has to get permission from the

head office. The head office tightly controls each and every branch office.This dependency on head office causes slow down their activities.

Conclusion

As one of the commercial bank, Jamuna Bank Ltd. has to survive in this competitive environment. For this, the major task of the bank is to manage its assets and liabilities in an efficient way. To make the assets especially loan and advances, banks must have to perform well in this competition.

Otherwise this loan default culture will never end. At the beginning the company does not expand the product for wide range of customer but now they are interested to expand it in wide range because of its demand and profitably.It also has a positive impact for other products of the bank. So, now they are providing more and more services to retain present customer and attract the new. They are trying to make a competitive cost by providing more benefits than the competitors.

Government and the consumer rights organizations are getting more conscious and creating more pressure to them, the services are expected to be increase day by day. Now-a-days technology driven banking services are not 'nice to have' but an 'impossible to survive without' for all banks. It has changed the traditional banking system drastically and made banking service easy and accessible.But Bangladesh is a developing country with limited infrastructure facility and limited skilled manpower. Computer literacy of the people is very poor and information technology is in the infant state.

A well functioned tech based banking system is dependent on the availability of a backbone network connecting the whole country; reliable and secure information and telecommunication infrastructure; ICT penetration in the banking sector; skilled

operational personnel; and legal and regulatory framework. Both individual and joint efforts are needed to overcome the constraints in promoting the technology driven banking in the country.Thus by providing these various services, Jamuna Bank Limited is playing a vital role in the banking system as well as in the economy of Bangladesh.

Reccomendations

From the study, consumer behavior analysis, its importance and its relation specifically towards Jamuna Bank Ltd, are understandable. Based on the findings and identified key success factors, some policy implications that are found goes for suggestion to Jamuna Bank Ltd. are mentioned as follows:* Market is very competitive. It is very difficult to retain the existing customer of the bank. So the client can switch to another bank from this bank any time.

Bank should fixed-up specific types of client strategy according to the different character of client. Considering banking attributes, the respondents have ranked the banks using four point rating scale. Most of the respondents think and have opined that the Bank’s Environment, client service, security and mortgage, technological support (ATM, Online Banking etc. ) of Jamuna Bank Ltd are need to be improved. The authority should keep an eye to these issues. Review their business strategy and create the required space for adopting technology driven banking. Fortify ICT department through providing training to IT employees and rocuring essential hardware and software.

Create separate unit in each branch for rendering ICT related operational activities under the supervision of the ICT department. Train all staff about the basic ICT related matters. It is also focused that the respondents actually interested about retail loan under different banner like home loan, education loan, professional loan and car loan

etc.

Bibliography

1. Journal of Marketing; (2002), Volume 3, Dept of Marketing, Rajshahi University.
2. Annual Report 2008, Jamuna Bank Limited.
3. Annual Report 2007, Jamuna Bank Limited.  Prudential Guideline for Credit provided by Jamuna Bank Limited.