Thesis Report

On

Appraisal on Investment Commercial Bank of Bangladesh: A Case Study

Selected Sample Bank

Prepared By
Rifat Salman
ID No: BBA-051 15940
Batch: 51H
Major: Accounting
Department Of Business Administration
Stamford University Bangladesh

Supervised by

Farjana Yeshmin
Associate Professor
Department of Business Administration
Stamford University Bangladesh

Submitted to
Department of Business Administration
Stamford University Bangladesh

Date of Submission: 14th May, 2018

i
 Letter of Transmittal
Date: 14th May, 2018

Farjana Yeshmin
Associate Professor
Department of Business Administration
Stamford University Bangladesh

Subject: Submission of thesis report.

Dear Sir,

Here is the thesis report on Appraisal on Investment Commercial Bank of Bangladesh: A

Case Study Selected Sample Bank as per the requirement of the BBA Program and your
instruction.
It was great and interesting opportunity for me to obtain some practical experience through this
study and know how theoretical knowledge is applied in the real world.

Thank you very much for your cordial co-operation with the guidelines and inspiration to
undertake such a study and help me to take my knowledge into a new high.

Sincerely,

------------------------------
Rifat Salman
ID No: BBA-051 15940
Batch: 51H
Major: Accounting
Department Of Business Administration
Stamford University Bangladesh

ii
 DECLARATION

I here announce that the extensive study entitled Appraisal on Investment Commercial Bank
of Bangladesh: A Case Study Selected Sample Bank conducted on four commercial bank
(Dutch Bangla Bank Limited, Exim Bank Limited, Prime Bank Limited and Mercantile Bank
Limited) prepared in partial accomplishment of the requirement for the award of the degree of
Bachelor of Business Administration from Stamford University Bangladesh. I declare that this is
my original work and not put forward for the award of any other degree/diploma/fellowship or
other similar term or honor.

-----------------------
Rifat Salman
ID No: BBA-051 15940
Batch: 51H
Major: Accounting
Department Of Business Administration
Stamford University Bangladesh

iii
 CERTIFICATE

This is to certify that the thesis report on Appraisal on Investment Commercial Bank of
Bangladesh: A Case Study Selected Sample Bank for the degree of Bachelor of Business
Administration (BBA) major in Accounting from Stamford University Bangladesh carried out
by Rifat Salman, ID No: BBA 051 15940 under my supervision.

This paper has been prepared under my guidance and is a record of the bonafide work carried out
successfully.

-----------------------------------
Farjana Yeshmin
Associate Professor
Department of Business Administration
Stamford University Bangladesh

iv
 Acknowledgement

On behalf of successful accomplishment of this report, first, I would like to thank the almighty
Allah. Subsequently, with warm gratitude from the deepest of my heart, I would like to
remember all of them who have helped me from every side in accomplishing this report as well
as my thesis program. I feel very much happy that I got a fabulous opportunity to carry on my
project and thesis program on such an attention-grabbing topic as Appraisal on Investment
Commercial Bank of Bangladesh: A Case Study Selected Sample Bank conducted on four
commercial bank (Dutch Bangla Bank Limited, Exim Bank Limited, Prime Bank Limited and
Mercantile Bank Limited)

I would like to admit my honorable academic supervisor Farjana Yeshmin, Associate Professor,
Department of Business Administration, Stamford University Bangladesh for guiding me from
start to end in preparing this report. The final accomplishment of this work would not have been
possible without his immense assistance and care.
In essence, I would like to say that project and thesis program on Appraisal of Investment in a
Commercial Bank of Bangladesh: A Case Study Selected Sample Bank Helped me largely in
acquiring useful insights about highly utilizing my academic knowledge in terms of practical
orientation. Moreover, as my thesis was very much realistic and early efficient in nature, the
assistance from all my guides made me able to apply easily the concepts and tools into practical
field. My efforts as well as those of my supervisors will be fruitful if this work is brought into
effect.

v
 Executive Summery

The goal of investment/credit management is to maximize a bank’s risk-adjusted rate of return

by maintaining lending/credit risk exposure within acceptable parameters. Banks need to manage
the credit risk inherent in the entire portfolio as well as the risk in individual credits or
transactions. Banks should also consider the relationships between credit risk and other risks.
The effective management of credit/lending risk is a critical component of a comprehensive
approach to risk management and essential to the long-term success of any banking organization.
Institutions manage it in different ways. In assessing credit risk from a single counterparty, an
institution must consider three issues: Default Probability, Credit Exposure, and Recovery Rate.
While financial institutions have faced difficulties over the years for a multitude of reasons, the
major cause of serious banking problems continues to be directly related to lax credit standards
for borrowers and counterparties, poor portfolio risk management, or a lack of attention to
changes in economic or other circumstances that can lead to a deterioration in the credit standing
of a bank’s counterparties. Credit analysis refers lending/credit risk in which a loan officer
attempts to evaluate a borrower’s ability and willingness to repay. Generally through lending/
credit analysis the loan officer analyze all available information to determine whether the loan
meets the bank’s risk-return objectives. To analyze credit three techniques are used: Qualitative
analysis, Quantitative analysis and Credit Risk Grading. In the qualitative analysis the bank
usually analyze the 5 C’s of the customer Character, Capacity, Cash, and Condition & Collateral.
Knowledge and learning become perfect when it is associated with theory and practice.
Theoretical knowledge gets its perfection with practical application. As our educational system
predominantly text based, inclusion practical orientation program, as an academic component is
as exception to the norm. As the parties, educational institution and the organization substantially
benefit from such a program, it seems a “win-win situation”. It establishes contracts and
networking contracts. Contracts may help to get a job. That is, students can train and prepare
themselves for the job market. My report will discuss the comparisons between Dutch Bangla
Bank Limited, Exim Bank Limited, Prime Bank Limited and Mercantile Bank Limited perform
better in spite of being interest free banks. The purpose of this report is to evaluate its
performance through ratio analysis; trend analysis, regression etc.

vi
 Table of Content

Contents PAGE NO.

Letter of Transmittal ii
Declaration iii
Certificate iv
Acknowledgement v
Executive Summary vi

Chapter: 1

Introduction

1.0 Introduction 1
1.1 Background of the Study 2
1.2 Literature Review 3
1.3 Objective of the Study 6
1.3.1 General Objective 6
1.3.2 Specific Objective 6
1.4 Methodology of the Study 7
1.4.1 Technique of analysis: 7
1.4.2 Source of data: 7
1.5 Scope of the Study 8
1.6 Limitations of the study 8

vii
 Chapter: 2

Background of the Organization

2.1 Dutch Bangla Bank Limited. 9

2.1.1 An overview of the Organization 10
2.1.2 Mission 11
2.1.3 Vision 11
2.1.4 Ownership structure 11
2.1.6 Composition of the Board 12
2.1.7 Management Structure 13
2.1.8 Dutch Bangla Bank Limited Risk Management Framework 14
2.1.9 Key Figures 14
2.1.9 HRD Division 15
2.1.10 Balance Sheet 16
2.1.11 Profit and Loss Account (Income Statement) 17
2.1.12 Case flow Statement 18
2.2 An Overview of the Organization 18
2.2.1 Vision 19
2.2.2 Mission 20
2.2.3 Corporate Culture 21
2.2.4 Milestone in the Development of the Organization 21
2.2.5 Composition Board 22
2.2.6 Management Structure 23
2.2.7 Risk Management 24
2.2.8 Product & Service Offerings 24
2.2.9 About Deposit Products 24
2.2.10 Achievements 25
2.2.11 Operational Area of the Bank 25
2.2.12 HRD Division 26
2.2.13 Balance Sheets 27

viii
2.2.14 Profit and loss Account 28
2.2.15 Cash flow statement 29
2.3 Prime Bank Ltd. 30
2.3.1 An overview of the Organization 30
2.3.2 Mission 31
2.3.3 Vision 31
2.3.4 Objectives of PRIME BANK LIMITED 31
2.3.5 Board of Directors 32
2.3.6 Composition of the Board 33
2.3.7 Management Structure 34
2.3.8 Risk Management 34
2.3.9 Key Figures 35
2.3.10 HRD Division 35
2.3.11 Balance Sheet 36
2.3.12 Profit and Loss Account 37
2.3.13 Cash Flow Statement 38
2.4 Mercantile Bank Limited 39
2.4.1 An overview of Mercantile Bank Limited 39
2.4.2 Vision, Mission, strategic statements 39
2.4.3 Management Structure: 39
2.4.4 Capital and Reserves 40
2.4.5 Milestones in the development of organization 41
2.4.5 Risk Management 41
2.4.6 Division wise Branches of MBL 42
2.4.7 Key Figures 43
2.4.8 Balance sheet 43
2.4.9 Profit and Loss Account 45

ix
 Chapter: 4

General Activities of the Organization

3.1 General Banking of Dutch Bangla Bank 48

3.1.1 General Banking 48
3.1.2 Deposit Accounts of Dutch Bangla Bank Limited 49
3.1.3 Account Opening Procedure According to Deposit Characteristics 50
3.1.4 Procedures for Opening Accounts 50
3.1.5 Proprietorship Firm 51
3.1.6 Partnership Concern 51
3.1.7 Private Limited Company 51
3.1.8 Public Limited Company 52
3.1.9 Clubs / Association / society 52
3.1.10 Corporation / Autonomous Bodies 53
3.1.11 Account of constituted Attorney 53
3.10.12 General Practice for All Types of Account 53
3.1.13 Issuance of Cheque Book 54
3.1.14 When Cheque Book 56
3.1.15 Incidental Charges for Services 57
3.1.16 Transfer of an 58
3.2 3.2 General Banking of Exim Bank Limited 67
3.2.1 General Banking: 67
3.2.2 Accounts opening Section: 67
3.2.3 Account Opening procedure: 67
3.2.4 Types of Accounts 69
3.2.5 Deposit Section 70
3.2.6 Demand deposits: 70
3.2.7 Time deposits: 71
3.2.8 Cash section 71
3.2.9 Functions of Cash Department 71

x
3.2.10 Remittance Section 72
3.2.11 Local Remittance 72
3.2.12 Foreign Remittance 72
3.2.13 Clearing Section 73
3.2.14 Clearing: 73
3.2.15 Clearing House 73
3.2.16 Member of Clearing House 73
3.2.17 TYPES OF CLEARING 73

3.2.18 Accounts Section 73

3.3 General Banking of Prime Bank Limited 75
3.3.1 General Banking 75
3.3.2 Account Opening Section: 75
3.3.3 Types of Account: 76
3.3.4 Procedure to open an Account: 77
3.3.5 Activities & papers necessary for opening an account: 79
3.3.6 Local Remittance Section: 80
3.4 General Banking of Mercantile Bank Limited 88
3.4.1 general banking department 88
3.4.2. account opening section 88
3.4.3. current deposit (cd) account 89
3.4.4. savings bank (sb) account 90
3.4.5. fixed deposit receipt (fdr) 90
3.4.5. other term deposit accounts 90
3.4.6 double benefit deposit scheme (dbds) 92
3.4.7. family maintenance deposit (fmd) 93
3.4.9 quarterly benefit deposit scheme 94
34.10 times benefit deposit scheme 95
3.4.11 advance benefit deposit scheme (abds) 96
3.4.12. requirements of opening an account 97

xi
3.4.13. documents needed for opening each account separately 97
3.4.14. documents that are given to the account holders 97
3.4. 15 issuing cheque book to the customers 16
3.4.16 transfer of an account 100
3.4.17 closing of an account 101
3.4.18 remittance section 101
3.4.19 payment order/pay order (po) 102

Chapter: 4

Appraisal on Investment in a Commercial Bank of Bangladesh: A Case Study

Selected Sample Bank

4.0 Analysis 104

4.1 Dutch Bangla Bank Limited 104
4.1.2 Investment Mechanism of Dutch Bangla Bank Limited 104
4.1.3 Objectives and Principles of investment: 105
4.1.4 Investment Policy of the Dutch Bangla Bank Limited 105
4.1.5 Investment Strategy of the Dutch Bangla Bank Limited 105
4.2 Investment Mechanism of Exim Bank Limited 106
4.2.1 INVESTMENT POLICIES 106
4.2.2 SPECIAL FEATURES OF THE BANK 106
4.3 Investment Mechanism of Prime Bank Limited 107
4.3.1 AIMS OF PRIME BANK LIMITED 107
4.3.2 OBJECTIVES OF PRIME BANK LIMITED 107
4.3.3 INVESTMENT SCHEMES 107
4.4 Investment Analysis Mercantile Bank 110
4.4.2 Investment Mechanism of Mercantile Bank Limited: 110
4.4.3 Objectives and Principles of investment: 111
4.4.4 Investment Policy of the Mercantile Bank Limited: 111

xii
4.4.5 Investment Strategy of the Mercantile Bank Limited: 111
4.5 Data Analysis 111
4.5.1 Sector wise Investment 112
4.5.2 Dutch Bangla Ltd. 112
4.5.3 Sector wise Investment Exim Bank Limited 112
4.5.4 Sector wise Prime Bank Limited 112
4.6 TREND ANALYSIS OF THE Dutch Bangla Bank, Exim Bank, Prime Bank 113
and Mercantile Bank Limited
4.6.1 Least Squares Method for Straight Line Trend 115
4.6.2 Dutch Bangla Bank Limited 115
4.6.3 Exim Bank Limited 116
4.6.4 Prime Bank Limited 116
4.7 Financial Indicator 117
4.8 Findings of the Study 124
4.9 Comparative SWOT analysis 125
4.9.1 SWOT ANALYSIS of Dutch Bangla Bank Limited 125
4.9.2 SWOT Analysis for Exim Bank Ltd. 127
4.9.3 SWOT Analysis of Prime Bank Limited 130
4.9.4 SWOAT Analysis of Dutch Bangla Bank Limited 132

Chapter: 5

Recommendation & Conclusion

5.1 Recommendation 136

5.2 Conclusion 137
References 138

xiii