General Banking and Factors Influencing Propensity to Savings

Chapter: 07
Summary of Findings, Recommendation and Conclusion
Chapter overview

Page no.

7.1. Introduction

81

7.2. Summary of findings

81

7.2.1. Factors increasing the level of banks savings

81

7.2.2. Factors impeding the level of banks savings

81

7.2.3. Suggestions for improving saving mobilization

81

7.3. Recommendation

82-83

7.3.1. General banking activities of basic bank limited

82

7.3.2. Factors influencing propensity to savings:

83

7.4. Conclusion

84

7.5. Bibliography & references

85

7.6. Appendix

86-88

Chapter Summary of Findings, Recommendation and Conclusion

7.1. INTRODUCTION
The purpose of this study was to investigate the factors influencing mobilization of savings in
banks. Using questionnaires and interview schedules, the researcher collected data from banker
and customers. Data was then presented and analyzed accordingly. This chapter provides the
summary of findings, recommendations and conclusions.

7.2. SUMMARY OF FINDINGS

This section presents the findings of the study sub-divided into three parts: Factors increasing the
level of banks savings, Factors impeding the level of banks savings and suggestions for
improving saving mobilization.
7.2.1. Factors increasing the level of banks savings:
On factors that affect savings positively, the respondents indicate that safety of funds, online
banking facilities, secured transaction process, favorable attitude of bank personnel, competitive
interest and service charges and Quick/Prompt service are the most serious factors in that order.
7.2.2. Factors impeding the level of banks savings:
Both customers and bank staff agree on the following as factors affecting deposit mobilization:
Political Instability, High level of taxation, Low level of income, Limited diversity of deposit
products, High inflation rate. These factors are both internal and external to the bank. This calls
for the bank to address the concerns raised by both the bank employees and customers. Strategies
to deal with these concerns need to be put in place in order to mitigate the impediments and raise
deposit levels.
7.2.3. Suggestions for improving saving mobilization:
To encourage savings the respondents recommend adjusting interest rates paid for deposits,
encouraging advanced technologies, developing innovative products which meet the diverse
needs of the society, rewarding savers by offering a wide range of facilities and educating all
staff on the products available and on proper customer care practices.

General Banking and Factors Influencing Propensity to Savings

7.3. RECOMMENDATION
This section presents the recommendation for general banking activities of BASIC Bank Limited
and factors influencing propensity to savings. The first part of this section represents the
recommendation for improving the general banking activities of BASIC Bank Limited.

7.3.1. General banking activities of basic bank limited:

Once an outstanding BASIC Bank Ltd is now facing a huge amount of loss. The Bank that used
to be a standard itself is now in a fragile situation. Although not every branch of this Bank is not
at fault, for some branches, overall performance is not meeting up the standards nowadays. There
can be so many reasons behind this bad performance. However, the following steps may be taken
to recover this situation

The bank should introduce some new products as there are a few to attract new clients. Even
though it is a state owned bank, it operates like a private bank. Hence, to compete in this
modern era of banking where private banks are leading, its a duty of BASIC Bank to enhance
its products and services. New products should be included in its portfolio.

For marketing these products, BASIC Bank should find out a proper way so that the general
people get to know about it. In this case, they may go for door to door operations. In this way
new clients will be interested to take deposit scheme in the bank.

Introducing and marketing new products will not attract customers if the bank does not give
guarantee of proper and well-organized services. For this the bank needs to make sure that
whenever withdrawing money it has enough cash reserve.

Using technology is always of great help whenever there is a need for providing faster services.
BASIC Bank should use more computerized and internet based.

Research and development activities should be taken into consideration.

Loan portfolio should be designed in such a way that there is chance of defaulting. For this,
they can rely on different renowned credit rating companies so that the loss of bad debt can be
removed to some extent.

Effective strategies must be undertaken against defaulters.

Office should be fully decorated to attract clients to take its services.

The bank should unconditionally continue to follow its own rules and procedures.

Chapter Summary of Findings, Recommendation and Conclusion

The bank can introduce reward system for good borrowers as well as punishment for bad
borrowers.

Management must try to think how to increase the profit or shareholders value. They must try
to work freely without any influence.

7.3.2. Factors influencing propensity to savings:

Arising from the findings of the study, the following recommendations are made:

An exhaustive analysis of the real needs of customers and effective segmentation of

customers on the basis of their particular needs should be adopted. Extensive
diversification of the range of products and services offered with a view to effectively meet
the needs of the population.

Banks should design savings products that are accessible, flexible, profitable, liquid, and
attractive.

Financial institutions should implement internal monitoring and risk management policies
in order to guarantee the security of savings deposits.

Continuous training and or in-service courses should be mounted for bank staff to equip
them with product knowledge and customer care services.

The study also recommends the development and extensive use of technology
infrastructure to support the diverse savings services and products.

Commercial banks should develop an effective communication policy based on

dissemination of the best practices and instruments for the promotion of savings designed
to educate customers in the responsible management of their savings.

The banks should also increase interest rates on customer deposits payable to customers to
encourage longer and bigger savings, reduce bank charges and make service provision
increasingly customer friendly.

General Banking and Factors Influencing Propensity to Savings

7.4. CONCLUSION
BASIC Bank limited although a state-owned bank, operates like a private bank. The name
itself contains a meaning that is to develop the small industries in Bangladesh. Though it
is not confined only in the improvement of industrial sector, it has also scattered its activities
in green banking and different CSR activities. This is very sorry to say that despite all its
activities the bank has to find itself in a very bad situation recently. However if precautionary
steps are taken the bank can regain its previous form. Working in General Banking
Department helped me to learn a lot and made my internship program complete. I have
learnt how a bank operates, how clients are handled, how calmly a situation is controlled and
many more.
To conclude, I would like to say that BASIC Bank will surely come out of its recent
status only if they try to be more careful in disbursing its loans. To bring back its strong
existence the management must think of revolutionary initiatives so that this inconvenience
will never be there to bother in future.
The second part of the study represents the analysis of factors influencing propensity to
savings. A strategy for the mobilization of universal savings plays a key role in the distribution
of wealth and in the social and geographic integration. The act of savings is a necessity for every
individual, whatever the level of wealth of a country and of its population. At the microeconomic level, savings are fundamental to the ability of individuals to meet basic needs such as
housing and education, as well as to cope with unforeseen events and accidents and to ensure an
income in old age.
This study has established that the factors increasing the level of banks savings are
safety of funds, online banking facilities, secured transaction process, favorable attitude of bank
personnel, competitive interest and service charges and Quick/Prompt service. On the other
hand, factors impeding the level of banks savings are Political Instability, High level of taxation,
Low level of income, Limited diversity of deposit products, High inflation rate. However, by
following the given recommendations, the level of banks savings can be increased.

Chapter Summary of Findings, Recommendation and Conclusion

7.5. BIBLIOGRAPHY & REFERENCES

1. http://www.investopedia.com/
2. http://www.bangladesh-bank.org/
3. http://www.basicbanklimited.com/
4. http://www.bdbl.com.bd/
5. http://www.myaccountingcourse.com/
6. Annual Report of BASIC Bank Limited, 2015
7. https://www.scribd.com
8. Protap Kumar Ghosha, Sutap Kumar Ghoshb and Lubna Mahjabin Khan (2015), Current
Trend of Bank Selection Criteria of Retail Customers in Bangladesh: An Investigation,
Global Business & Finance Review, Volume. 20.
9. Mohammad Ali Tareq, Savings Mobilization Behavior of NCBS In Bangladesh, Australian
Journal of Business and Economic Studies Volume 1 No. 2 September 2015
10. Athukorala P. (1998), Interest Rates, Savings and Investment: Evidence from India, Oxford
Development Studies, June.
11. Giovannini A (1983). The Interest Rate Elasticity of Savings in Developing Countries,
World Development, July.
12. Gupta K. L (1987), Aggregate Savings, Financial Intermediation and interest Rates,
Review of Economics and Statistics, May.
13. Warman F. and Thirlwall A. P (1994), Interest Rates, Savings, Investment and Growth in
Mexico 1960-90: tests of the Financial Liberalization Hypothesis, The Journal of
Development Studies, and July.
14. Thirlwall A. P (1974 a) Inflation, Savings and Growth in Developing Economies (London:
Macmillan).
15. Bayoumi, T. (1993b). Financial Saving and household Saving, Economic Journal, Vol.
103, November, 1432-1443.
16. Bosworth, B. (1993). Savings and investment in an Open Economy, Washington D C:
Brooking Institution.
17. Dayal-Gulati, A. and C. Thiman (1997). Saving in South East Asia and Latin America
Compared: Searching for Policy Lessons, Working Paper WP/97/110.

General Banking and Factors Influencing Propensity to Savings

7.6. APPENDIX
Factors affecting propensity to savings
(Only for Internship Report purpose)

Name of the respondent :

Gender

Male

Age

Below 25

Profession

Service

Educational Background:
Monthly income (TK,000) :

Female
25 to 35
Business

SSC and below

Below 20

HSC
20 to 35

35 to 45
Banker

Above 45 years
Student

Others

Bachelor

Masters and above

35 to 50

above 50

A. Please rate () your opinion about the following statement regarding internal and
external factors increasing the levels of bank savings.
Items

Level of agreement
Strongly
agree

Favorable bank policy

Competitive interest on savings
Competitive interest and service
charges
Safety of funds
High income level
Quick/Prompt service
Secured transaction process
Favorable attitude of bank personnel
ATM facilities
Online banking facilities

Agree

Neutral

Disagree

Strongly
disagree

Chapter Summary of Findings, Recommendation and Conclusion

B. Please rate () your opinion about the following statement regarding internal and
external factors impeding the levels of bank savings.
Items

Level of agreement
Strongly
agree

Agree

Neutral

Low level of income

Large spread between deposit
and lending rate
Lack of bank soundness
High level of taxation
High inflation rate
Political Instability
Limited diversity of deposit
products
Negative staff attitude and
poor responsiveness
High transaction cost
Inadequate marketing tactics

. Thank you

Disagree

Strongly
disagree

General Banking and Factors Influencing Propensity to Savings