1.

1 Introduction

Commercial Bank of Ceylon Limited commenced its operation in Bangladesh by acquiring

the Bangladesh operations of Credit Agricole Indosuez (CAI) in 2003. The high performance of Commercial Bank of Ceylon Limited is a reflection of the qualities and attributes that has been accepted by people advocating good management practices in the corporate sector. The event marked the first ever acquisition of multinational bank by a Sri Lankan bank and is a direct consequence of Commercial Bank of Ceylon Ltds continued commitment towards business expansion. The bank possesses a strong corporate clientele and it has set its vision to be a strong regional bank providing superior personal banking services. CBC was adjudged the Best Bank in Sri Lanka for 8 consecutive years up to 2006 by the Global Finance Magazine based in US and for 5 consecutive years up to 2005 by The Banker magazine based in UK. In Sri Lanka, Commercial Bank of Ceylon Ltd. is known as the largest and fully networked banking environment provider. The bank enjoys the reputation of having an unrivalled employment of information technology and a very reliable ATM network around the country. In his report Managing Director of the bank remarked that the Bank's new Vision places a premium on having a strong international presence by 2011. After outperforming its peers in the home country, the bank is now in Bangladesh to continue with its legacy of success. While emphasizing social responsibility and community services, Chairman of the bank MJC Amarasuriya in his speech said the bank is committed to help build Bangladesh economy by rendering professional banking services. He also expressed his interest in offering SMR related services in future. The chairman CBCL would continue introducing innovative products and services, providing more investment opportunities to individual investors and business community. (The News Today,2006)

1.2. Commercial Bank in Bangladesh In 2003 Commercial Bank acquired Credit Agricole lndosuez (CAl) operations in Bangladesh consisting of 2 branches in Dhaka and Chittagong and the 2 booths in Gulshan and Sonargaon. CAI Bangladesh has been in operation since 1981 and is the second largest foreign bank in Bangladesh. It is also a well-capitalized and profitable bank with healthy financial ratios. Credit Agricole, one of the largest banks in France, acquired Banque Indosuez in 1996 to create the wholesale international banking arm. Today, CAI operates in 50 countries and reported net banking income of EUR 2,644 million (about Rs. 286 billion) in 2002. (Sunday Observer, 27 July 2003) Though the proposed acquisition was on the basis of a fully-fledged branch operation, Commercial Bank tried its best to preserve the national identity of the Bangladesh operation and its banking traditions inherited from CAI, a statement said. CAI's disposal of Bangladeshi operations was a part of the Bank's global repositioning strategy. Commercial Bank, while continuing CAI's strategy would further extend the reach and range of services in Bangladesh. Over a period, our bank would strengthen the retail banking side as well, for which Commercial Bank has made its name in Sri Lanka. This represents the first acquisition of a foreign bank by a Sri Lankan bank and paves the way for Commercial Bank to become a regional player. The formal taking over of CAI's Bangladeshi operation took place on November 6 2003. The official opening ceremony was held on 10th December 2003 attended by Governor of Central Bank of Sri Lanka, Governor of Bangladesh Bank and many other distinguished guests, including diplomats, corporate customers, representatives of foreign multi-nationals and other well wishers. Apart from Sri Lanka, it operates in Bangladesh and contemplating exploring into the Indian banking sector as well. In Bangladesh, it started its operation by taking over the Bangladesh operations of credit Agricole Indosuez (CAI). In Sri Lanka, Commercial Bank Of Ceylon Ltd. is known as the largest and fully networked banking service provider. The bank enjoys the reputation of having an unrivalled employment of information technology and a very reliable ATM network around the country. It has been adjudicated the best bank in Sri Lanka by magazines like Global Finance, The Banker, Business Today, Etc for several consecutive years at a row.

1.3. An Introduction to the Private Sector Banking Industry in Bangladesh A Bank is a financial institution whose task is to channelize funds from surplus unit to deficit unit in the form of loans and advances to generate sufficient spread for its sustainable existence Banks and financial institutions play an important role in financial intermediation and thereby contribute to the overall growth in the economy. At present the financial system in Bangladesh consists of the central bank, commercial bank and other nonbank financial institutions. Commercial banks can be divided into following groups. Nationalized Banks Specialized Banks Private Commercial Banks Traditional Private Commercial Bank Islami Private Commercial Bank. Foreign Banks

1.4. A Brief History of Commercial Bank of Ceylon Limited. The journey started in 1920 when The Eastern Bank Ltd. opened a branch office at Chatham Street, Colombo. In 1939, the branch Office of the Eastern Bank, situated at Chatham Street was shifted to the previous Commercial Bank, City Office premises, situated at 57, Sir Baron Jayathilake Mawatha.The Chartered Bank acquired the share capital of Eastern Bank Ltd in 1957.Finally in 1969 the Commercial Bank of Ceylon Limited was duly incorporated in Sri Lanka then Ceylon with Eastern Bank holding 40% of its equity. It was incorporated in Sri Lanka on June 25,1969, under the Companies Ordinance and quoted in the Colombo Stock Exchange in March 1970.The following table summarizes Commercial Bank of Ceylons journey. Eighty Seven Years Tradition Year 1920 Event(s) The Eastern Bank Ltd. opened a branch office at Chatham Street, Colombo

1939

The Branch Office of the Eastern Bank, situated at Chatham Street, was shifted to the previous Commercial Bank, City Office premises, situated at 57, Sir Baron Jayathilake Mawatha. The share capital of Eastern Bank Ltd. was acquired by the Chartered Bank. The Commercial Bank of Ceylon Limited was duly incorporated in Sri Lanka (then Ceylon) with Eastern Bank holding 40% of its equity. The business of the Colombo branch of the Eastern Bank was acquired by the Commercial Bank of Ceylon Limited. The Business of the Eastern Bank Ltd. was taken over by the Chartered Bank. Two new Branches were opened at Galewela and Matale. A new branch was opened at Matara. The Business of the Galle, Jaffna and Kandy branches of the Mercantile Bank Ltd. was acquired by the Bank. Two new branches were opened at Wellawatte and Kollupitya. The Chartered Bank transferred its business to Standard Chartered Bank. A new branch was opened at Kotahena. The Foreign Currency Banking Unit was formed in order to promote off-shore banking business. The Bank promoted a property development company, namely Commercial Development Company Ltd., to construct a Headquarters building for the Bank. The Bank enjoyed 40% equity participation in this company. A new branch was opened at Negombo. A new branch was opened at Hikkaduwa. The Headquarters of the Bank was shifted to "Commercial House" , 21 Bristol Street, Colombo 1, bringing the operations of Head Office to a centralized location. The Bank embarked on a computerization programme which would progressively cover the entire branch network. A new branch was opened at Hingurakgoda. The Foreign Department of the Bank was elevated to the status of a fullyfledged branch. This move completed the reorganization process where by three independent offices representing City Office, Foreign Branch and Head Office were created, segregating the different operations. An associate company, Commercial Insurance Services (Pvt) Ltd., was formed in which the Bank enjoyed 40% equity participation. A new branch was opened at Maharagama. An associate Leasing Company, Commercial Leasing Ltd., was formed Three new branches were opened at Borella and Kegalle. Automated Teller Machines were installed at the Foreign, Borella, Nugegoda, Kotahena and Kollupitiya branches.

1957 1969

1971 1972 1973 1974 1975 1979 1980 1981 1983 1984

1985

1987 1988 1990

1991

1992

Two new branches were opened in the Katunayake Free Trade Zone and Narahenpita. An associate Company, Commercial Stock Brokers (Private) Ltd., commenced operations. The Bank enjoyed 40% equity participation in this company. Seven new branches were opened at Pettah, Battaramulla, Mutwal, Wennappuwa, Koggala, Embilipitiya and Galle. The Bank sponsored Fund Management Company, Commercial Fund Management (Pvt.) Ltd. was formed for the purpose of operating unit trusts. The Bank enjoyed 50% equity participation in this company. International Comprehensive Banking System (ICBS) was introduced linking nine metropolitan branches. Three new branches were opened at Kanadana, Maradana and Akuressa. An Automated Teller Machine was installed at Wellawatte Branch. Three new branches were opened at Minuwangoda, Keyzer Street, Panadura and they were linked to the International Comprehensive Banking System. ATMs were installed at City Office, Minuwangoda, Keyzer Street, Panadura, Maradana and Battaramulla Branches. Religious ceremonies were held and a special bonus of one month's salary was paid to mark the 25 th anniversary of the Bank. Two new branches linked to the ICBS were opened at Aluthgama and Kaduwela. The existing branches at Kurunegala, Mutwal and Pettah were linked to the ICBS. ATMS' were installed at Aluthgama, Kaduwela, Kurunegala, Mutwal and Pettah branches. Five new branches with ICBS linkage were opened at Old Moor Street, Katugastota, Nuwara-Eliya, Chilaw and Gampaha. The existing branches at Galle City, Matara, Negombo, Matale and Katunayake(FTZ) were also linked to the ICBS. ATMs were installed in these branches except in Katunayake (FTZ). The bank increased the Shareholding in Commercial Development Company Ltd., to 94.55% through a share swap. Eight new branches were opened at Ratmalana, Kirullapone, Union Place, Colombo 7, Ratnapura, Kuliyapitiya, Badulla and Anuradhapura. The existing branches at Kandy, Kandana, Maharagama, Hikkaduwa, Wennappuwa, and Kegalle were also linked to the ICBS. Automated Teller Machines were installed in these branches and in Katunayake (FTZ) branch. 365 day branch at Colombo 7 Branch was opened. Sophisticated Online Banking System which permits clients to conduct a variety of banking transactions through their personal telephone, personal computer or laptop was installed. All branches except Jaffna were linked to the ICBS. Banking and supermarketing were combined by opening the first "MiniCom" at the Staple street Cargills Food City outlet. Rated as the Best Bank in Sri Lanka by Global Finance. Launched internet Banking. 5 new branches, 4 Customer Service Points and 2 MiniCom outlets were opened. Rated as the Best Bank for the second consecutive year.

1993

1994

1995

1996

1997

1998

1999 2000

2001

Received SL AA+ rating from Fitch Ratings Lanka Ltd. Rated as the Best Bank in Sri Lanka by Global Finance for the third consecutive year. Selected as the Bank of the Year by The Banker Magazine. Opened the 100th branch at Kaduruwela and Gold trading Unit at the Foreign Branch. Selected as the No.1 Corporate in Sri Lanka by "Business Today" Magazine. Rated as the Best Bank in Sri Lanka by "Global Finance" for the fourth consecutive year. Selected as the Bank of the Year by "The Banker" Magazine for the second consecutive year. Fitch Ratings Lanka Ltd. upholds the SL AA+ rating in their annual review. Winner of the overall National Award for HRM 2002. South Asian Federation of Accountants (SAFA) ranks the Bank's Annual Report for 2001 to be the first in the Financial Sector. Rated as the Best Bank in Sri Lanka by "Global Finance" for the fifth consecutive year. Selected as the Bank of the Year by "The Banker" Magazine for the third consecutive year. Fitch Ratings Lanka Ltd. upholds the SL AA+ rating in their annual review. SAFA rates Annual Report 2002 as the Best Presented Accounts of the Financial Sector. The Institute of Chartered Accountants of Sri Lanka (ICASL) ranks the Annual Report 2001 of the Bank as the Overall Winner, the Winner of the Financial Sector and Winner of Corporate Governance Disclosure Award. The operations of Credit Agricole Indosuez in Bangladesh is taken over. The first service point at Arpico Super Centre was opened at Dehiwela. Rated as the Best Bank in Sri Lanka by "Global Finance" for the sixth consecutive year. Selected as the Bank of the Year by "The Banker" Magazine for the fourth consecutive year. Fitch Ratings Lanka Ltd. upholds the AA+ (sri) rating in their annual review. SAFA rates Annual Reports 2002 and 2003 as the Best Presented Accounts of the Financial Sector. The ICASL ranks the Annual Reports 2002 and 2003 of the Bank as follows: Award 2003 2002 Winner Winner Winner nd Joint 2 Runners up

2002

2003

2004

Overall Winner Banking Sector Winner st Corporate Governance Disclosure Joint 1 Runners up Corporate Social Responsibility Joint 1st Runners up

Overall HRM winner in the Large Service Sector and winner - most innovative HR Practices. Commercial Bank Social Responsibility Trust was set up in September. 2005 Rated as the Best Bank in Sri Lanka by Global Finance for the seventh consecutive year. Selected as the Bank of the Year by The Banker Magazine for the fifth consecutive year. Fitch Ratings Lanka Ltd. upholds the AA+ (sri) rating in their annual review. SAFA rates Annual Report 2004 as the Overall Winner and the Best Presented Accounts of the Financial Sector. The ICASL ranks the Annual Report 2004 of the Bank as the Overall Winner, the Winner of the Financial Sector and the Winner of Corporate Governance Disclosure Award. Won three awards at the National Business Excellence Awards - 2005 organized by the

National Chamber of Commerce. Raises US $ 65 million 2-year syndicated loan with an option to extend it for a further year at the option of the lender, the first such loan by a non-sovereign corporate in the country. Makes a scrip issue on the basis of 1:1. Introduces the first mobile ATM in the country. 1.5. Corporate Information about Commercial Bank of Ceylon Limited. Commercial Bank of Ceylon Limited is a Sri Lankan bank with its head office at "Commercial House", 21, Bristol Street, P.O. Box 856, Colombo 1, Sri Lanka. It is a public limited liability company incorporated in Sri Lanka on June 25, 1969 under the Companies Ordinance No. 51 of 1938 and quoted in the Colombo Stock Exchange in March 1970.A licensed commercial bank under the Banking Act No. 30 of 1988. The Company Registration Number is PBS 600 and Tax Payer Identification Number (TIN) is 124006007. 1.6. Commercial Bank of Ceylon Limited Achievements
"Robintex - Financial Mirror - Partex Business Awards 2006"

Commercial Bank of Ceylon Limited was adjudged as the "Best Foreign Bank" in Bangladesh at the "Robintex - Financial Mirror - Partex Business Awards 2006".
'Best Performing Foreign bank' in Bangladesh - 2005

Bangladesh branch of Commercial Bank of Ceylon recently won the Financial News Services (FNS) Business Award 2005 for the 'Best Performing Foreign Bank' at a gala ceremony at the hotel Purbani on 4th December 2005.
Arthakantha Business Award 2004

Commercial Bank of Ceylon Ltd received the Business Award for 2004 - Banking sector awarded by the Arthakantha magazine in Bangladesh on May 20, 2005 at the Winter Garden of Dhaka Sheraton Hotel. Commercial Bank of Ceylon was chosen as the recipient of the award as a successful organization with high dynamism, global competitiveness and ethical standards who have made outstanding contribution to its respective sector.
'Best Foreign Bank' in Bangladesh - 2004

The Commercial Bank's Bangladesh branch has been adjudged the 'Best Foreign Bank' at the 'The Industry Business Awards 2004', held recently in Bangladesh organized by the Bangladesh's "Weekly Industry Magazine". The award was presented to Commercial Bank

for its outstanding performance in providing banking services as well as the contribution made to the country's economy.

AA from CRISL

Commercial Bank of Ceylon Limited received a rating of AA from Credit Rating Information Services Limited (CRISL). It was the highest ever rating for any financial institution in Bangladesh. 1.7. Bank Deposit Mobilization Since independence deposit mobilization in Bangladesh has grown significantly thanks to the phenomenal growth of private banks and NGOs offering limited banking services in the rural areas. 1.7.1. Fig: Deposit Growth Trend in Bangladesh
Bank Deposit 70000

Taka in Crores

60000 50000 40000 30000 20000 10000 0 95/96 96/97 97/98 98/99 99/00 00/01

Years

(Source: www.bangladesh-bank.org)

2.1. Scope of the Study This internship report covers the activities performed by the Customer Service Department of Commercial Bank of Ceylon Limited, Sylhet Branch such as Account opening, Payment procedure of TT, Chequebook issuing procedure etc. Besides this, finding problems in the total process and provide possible solutions for Commercial Bank of Ceylon Limited will be another scope of this report. The project limits itself to understanding and analyzing the activities of Customer Service Department than aiming for an extensive analysis of the entire business handled by Commercial Bank of Ceylon Limited. A performance analysis of the activities of Customer Service Department was carried out to determine the progress made since Commercial Bank of Ceylon Limiteds inception and the potential it holds for the years to come.

2.2. Rationale of the study Contemplated as the best bank in Sri Lanka by magazines like Global Finance, The Banker, Business Today, etc. for several consecutive years, Commercial Bank of Ceylon commenced its operation in Bangladesh in 2003 by acquiring the Bangladesh operations of Credit Agricole Indosuez (CAI). The bank enjoys the reputation of having an unrivalled employment of information technology and a very reliable ATM network around the country. It wants to see itself as a growth oriented regional bank with a vision to be a strong south Asian regional player. It emphasizes its responsibilities as a corporate citizen and ensures high ethical standards in overall conducts. Moreover it wants to be the market leader in introduction of products and services. The internship report covers an extensive analysis of the activities of the Customer Service Department of Commercial Bank of Ceylon Limited to determine the functioning of a multinational bank in our country.

2.3. Objective of the Study 2.3.1. Objective in General To gain job experience and view the application of theoretical knowledge in the real life. 2.3.2. Project Objective The objectives of the internship report are highlighted as follows: To represent the unique features of Commercial Bank of Ceylon Limited. To cover an extensive analysis of the activities of Customer Service department of Commercial Bank of Ceylon Limited and indicating the steps taken by the bank to improve the quality of services provided to customers. To study the various products offered by the Customer Service Department of Commercial Bank of Ceylon Limited to its clients contributed by the new inventions of information technology (IT). To show the strengths, weaknesses, opportunities and threats for Commercial Bank of Ceylon Limited. To determine the level of satisfaction regarding various bank-services from the viewpoint of customers. Finding problems in the processes performed by the Customer Service Department and providing possible solutions to rectify them.

2.4. Methodology of the Study For collecting relevant and adequate data it is necessary to follow proper methodology. No one can collect relevant information without proper methodology. It is impossible to prepare an effective report without correct and proper information, To collect the relevant information, I adopted the following methods: Studying Financial Statements of Commercial Bank of Ceylon Limited. Conducting questionnaire survey. Browsing different websites. Meeting with employees of Commercial Bank of Ceylon Limited.

10

 Consult the book of Bangladesh Bank Guidelines. Examining different product brochures of Commercial Bank of Ceylon Limited. 2.5. Data Analysis Techniques A questionnaire report was prepared to gather data from the clients of the bank in respect of customer satisfaction. The features of Commercial Bank of Ceylon Limited and benefits offered to customers by it were compared with those of two other foreign banks. The attributes of a nationalized bank were also compared with the features of Commercial Bank of Ceylon Limited. Data were also collected from secondary sources and analyzed. 2.6. Limitations of the Study I faced some limitations while preparing the report that are mentioned below. One major limitation was the time constraint. Due to time restriction, the project is concentrated on data collection as much as possible. Some essential data could not be gathered because of confidentiality concerns. Another limitation was that the data gathered could not be verified for accuracy.

11

3.1. Commercial Bank of Ceylon Limited Bangladesh under probe 3.1.1.Mission Redefining Convenience in financial services One of its prime future targets is consolidation and growth in the corporate banking sector. At the same time, it also wants to diversify into personal banking as well. Commercial Bank of Ceylon Ltd. wants to focus on contributing to the Bangladesh economy at corporate as well as personal banking level which is totally in line with its mission. And while doing so it intends to differentiate itself from its competitors by its superior service. Commercial Bank of Ceylon Ltd. wants to see it as a growth oriented regional bank with a vision to be a strong south Asian regional player. It emphasizes its responsibilities as a corporate citizen and ensures high ethical standards in overall conducts. Moreover, it wants to be the market leader in introduction of products and services. And in achieving its goals it relies on its well-trained and knowledgeable work force. In Sri Lanka, Commercial Bank of Ceylon became the Overall Winner of the National HRM Award-2002, at the first ever National HRM Awards Convention. The bank not only concentrates on upgrading the knowledge of its workforce but also developing loyalty, among its employees, to the organization. From the Chairmans review it is evident that the goal is to provide a broad array of options and make banking and financial services truly customer friendly. 3.1.2. Capital & Reserve The reserve ratio constitutes of two parts-the cash reserve ratio and the statutory liquidity ratio. The cash reserve has to be maintained in cash. And the CRR is 4% at present. On the other hand, the statutory liquidity reserve can be maintained by securities, such as the treasury bill, along with cash. At present, the SLR is 12%. 3.1.3. Capital Base Commercial Bank of Ceylon Limiteds paid up capital is BDT 1,000,000,000

12

3.1.4. Mission Statement To deliver optimum value to the Customers Employees Shareholders and The nation.

3.1.5. Vision To be THE preferred financial services organization in Sri Lanka, having an international presence by the year 2010. 3.1.6. Slogan Our interest is in You! 3.1.7. Future Targets Consolidation and growth in corporate banking Diversification into personal banking, targeting ambitious growth in this sector with the help of new products. Focus on contributing to the Bangladesh economy at corporate as well as personal banking level. Differentiating itself in the market by its superior service. 3.1.8. Values Integrity Effectiveness Passion Innovation Leadership

13

3.1.9. Workforce The total number of employees of Commercial Bank of Ceylon in Bangladesh is around 128 at present. The Banks total staff strength as at end 2006 was 3415. Of them,388 are new recruits during the year. 3.2. Branches Commercial Bank of Ceylon started its operation only in 2003 after acquiring Credit Agricole Indosuez. Consequently, Commercial Bank of Ceylon Ltd. began its operation with the branches and booths owned by CAI, which included 2 branches in Dhaka and Chittagong and 2 booths in Gulshan and Sonargaon. Thereafter, Commercial Bank of Ceylon Limited has opened up two other branches in Dhaka, which are located at Dhanmondi and Uttara, and another in Sylhet. Its network is still very limited in terms of its number of branches. However, the bank looks forward to setting up more branches in the near future. In Sri Lanka the number of delivery points in the network is 150 comprising of 125 branches, 7 CSPs, 17 Supermarket outlets and a Counter and 269 ATMs. 3.2.1. Organogram of Bangladesh Operation of CBC

Bangladesh operation of CBC

Dhaka Operation

Chittagong Operation

Sylhet Operation

Dhanmondi Branch Motijheel Branch Uttara Branch

Agrabad Branch

Dargahgate Branch

Gulshan Booth

Sonargaon Booth

14

3.2.2. Ways to Bank with Commercial Bank of Ceylon Limited. Commercial Bank of Ceylon Limited manage banking the way thats most convenient for the customer and the way one do business-face to face, or via the Internet. Branch Banking: Full counter service is available at 5 branches, 2 booths across the country and trained staff and the same high level of service in all of the branches. The nearest branch banking service is at: Mukti Bhaban 71,Agrabad Commercial Area, Chittagong. Tel: 713325-7, 713322, 713324 BEPZA Complex, House 19D, Road 6 Dhanmondi R/A, Dhaka 1205. Tel: 9676768, 8652784-5 47 Motijheel C/A, P.O. Box 3490, Dhaka 1000. Tel: 9566565, 9566566 Plot#12, road # 14, Sector # 4, Uttara Model Town, Dhaka. Tel:0189-229388 982, Dargagate, Sylhet. Tel:0189-245519. Booths: 73, Gulshan Avenue, Dhaka.Tel:9882774, 8824275, 8824380 Pan Pacific Sonargaon, Room L-112 107, Kazi Nazrul Islam Avenue, Dhaka 1215. Tel: 8111959 Offsite ATMs: 42, Satmosjid Road, Dhanmondi R/A, Dhaka Sanmar Ocean City, Shop No. 1 & 2, 997 CDA Avenue, East Nasirabad, GEC Circle, Chittagong. 3.2.3. Chart: Branches and ATM Expansion

15

3.3. Key Areas of Operation Some major areas where Commercial Bank of Ceylon Ltd. specializes as a bank are stated below. Corporate Banking The Corporate Banking Division comprises of the Foreign Branch, the Corporate Finance Unit (CFU), the Off-shore Banking center and the Bangladesh operations. This division with its expertise in Trade Finance, Corporate Finance, Project Financing, Leasing Factoring, Working Capital Financing and related services caters mainly to the banking needs of the large to medium sized domestic corporate customers and multinational corporate clients. Personal Banking The Personal Banking Division is responsible for the successful operation of the network of delivery channels that caters mainly to the banking needs of personal customers and small and medium enterprises. The Bank continues to have one of the largest computer networks in the country with a total of 150 branches/service points and 269 ATMs as at end of 2006. The Personal Banking Division is responsible for the following activities: Successful operation of the extensive network of delivery channels, which caters mainly to the banking needs of personal customers and small & medium enterprises. . The eight Regional Offices which make an important contribution to the excellent performance of this Division by decentralizing and expediting the process of decision making relating to credit and operations of Branches. Issue of "CAT", ATM cards and Credit & Debit cards under . franchises.

Channeling low cost funds mobilized in excess of the lending requirements of this Division

16

to the Corporate Banking Division and the Treasury for their lending and investment activities. Treasury The Treasury is primarily responsible for the following activities. Managing the liquidity Exchange positions Exposure to market risks Mobilizing resources from domestic as well as international markets. Achieving preferred balance sheet mix and Maximizing the returns there from whilst minimizing the risk to the Bank.

The contribution made by the three broad business divisions viz. the Corporate Banking, the Personal Banking and the Treasury to the profits and business volumes of the Bank is summarized below:

2006 Rs. Mn. Profit before Tax: - Corporate Banking - Personal Banking - Treasury Total 1,681.16 2,225.61 306.78 4,213.55 39.90 52.82 7.28 100.00 %

2005 Rs. Mn. %

1,635.09 1,760.38 246.49 3,641.96

44.90 48.34 6.76 100.00

Loans and Advances (Gross): - Corporate Banking - Personal Banking Total Deposits: 85,306.11 68,868.24 154,174.35 55.33 44.67 100.00 69,148.75 52,881.66 122,030.41 56.67 43.33 100.00

17

- Corporate Banking - Personal Banking

40,851.41 116,782.66

25.92 74.08

34,614.27 92,987.01

27.13 72.87

Total

157,634.07

100.00

127,601.28

100.00

3.4. Management Information System From the beginning of its journey in 2003 Commercial Bank Ceylon has been laying great emphasis on the use of improved technology. It has started its banking in Bangladesh with online operation system. Commercial Bank of Ceylon Ltd. operates through a very sophisticated and in-depth computer system called ICBS. All data regarding all departments are integrated client wise. Different sub-menu and software make friendly and optimum use by its employees and on-lone user. As a result the bank is able to give the services of international standards. Commercial Bank of Ceylon Ltd. Bangladesh is connected through VSAT with Colombo, Head Office. In Bangladesh it operates through VSAT, DDN,and Lease line. The chart below is showing their connectivity. 3.4.1. Organogram of Management Information System of

Commercial Bank of Ceylon Limited.

Commercial Bank of Ceylon Ltd. Head Office, Colombo Commercial Bank of Ceylon Ltd. Motijheel Head Office, Dhaka Commercial Bank of Ceylon Ltd. Chittagong Office. Commercial Bank of Ceylon Ltd. Uttara Branch Office Commercial Bank of Ceylon Ltd. Sylhet Office.

Commercial Bank of Ceylon Ltd. Dhanmondi Branch Office 18

Commercial Bank of Ceylon Ltd. Gulshan Booth Commercial Bank of Ceylon Ltd. Sonargaon Booth

3.5. The Softwares used by Commercial Bank of Ceylon Limited. The softwares used by Commercial Bank of Ceylon Limited are described below. ICBS (International Comprehensive Banking System) This is the core software of the bank. All the banking transactions can be done through it. It enables new models to add in the system. AS 400 Based on Colombo, the software is the database of ICBS. It is used for opening accounts and any account related information can be obtained through it. Lotus Notes IBM developed this software and Commercial Bank of Ceylon Ltd. is licensed user of it. It is basically a e-mail software with a maximum limit of 25 mb. If the limit is exceeded then mails are transferred to another local mail software. Outsider mail is scanned through virus scanner before enable the employees to open it. SWIFT (Society for Worldwide Interbank Financial Telecommunication) It is universally accepted banking software used by many banks all over the world. Unlike Telex and Fax, it is a better and authenticated media. Here for every transaction message format is different. ABT (Alliant Branch Network) It is a teller-based network. This is interfaced with AS400. It has online mode and offline mode. All the transactions are done through it.

19

Eximbills This module is dedicated for Trade Finance activities. At the end of the day IT department uploads data into AS400. SRP (Salary Remittance Package) By using this software commercial bank enables its corporate customers to make online payments such as salaries, overtime, commission etc. Through it client can make the payment to staff by forwarding a data diskette to the bank. As this is totally online process staffs can withdraw money from the nearest ATM. 3.6. Organogram of the Organizational Hierarchy of Commercial Bank of Ceylon Limited.

Country Manager

Chief Operating Officer

General Manager Corporate Banking

General Manager Risk and Compliance

Deputy General Manager International Trade Deputy General Manager Chittagong Branch Manager Sylhet Branch

Consultant Business Promotion

Deputy General Manager

Senior Manager Treasury

Senior Manager Customer Service

Senior Manager Finance/ Accounting

Senior Manager Information Technology

Deputy Manager Internal Audit

Manager Treasury Back Office

Manager Personal Banking/ Dhanmondi Branch

Manager Uttara Branch

Manager Gulshan Booth

20

Deputy Manager Sonargaon Booth

Assistant Manager Administration

3.7. Correspondent Relationship The Bank established correspondent relationships with a number of foreign banks. The bank has set up letter of credit on behalf of its valued customers using its correspondents as advising and reimbursing Banks. The Bank maintains a need based correspondent policy, which is gradually expanding. The number of foreign Correspondents is 23. 3.8. Departments of Commercial Bank of Ceylon Limited. Departmentation helps to ensure efficiency and specialization in an organization. Its especially, pivotal when it comes to large organizations. If it were not for departmentation, the limitation on the number of subordinates that can be directly managed would have restricted the size of the organizations. Grouping activities and people into departments make it feasible to expand organizations. The following departments help Commercial Bank of Ceylon Limited run efficiently. Customer Service This department deals with the regular transactions. The cash section accepts deposits, receives/pays cash and deals with the clearinghouse. The remittance section deals with fixed deposit, draft, pay order, telegraphic transfer, account opening, retail foreign currency trade, etc. Trade Finance This department deals with letter of credits for both import & export purposes. Its responsibilities also include bank guarantees. Corporate Banking This department, with its expertise in Trade Finance, Corporate Finance, Project Financing, Leasing, Factoring, Working Capital Financing and related services caters mainly to the 21

banking needs of the multinational corporate clients and large to medium size domestic corporate customers. The Corporate Banking Division comprises of the Foreign Branch, the Corporate Finance Unit (CFU), the Off-Shore Banking Centre and the Bangladesh operations. Personal Banking Division. The Personal Banking Division is responsible for the operation of the network of delivery channels, which caters mainly to the banking needs of personal customers, and small and medium enterprises. Forex and Treasury The responsibilities of the department include management of liquidity and exposure to market risk, mobilization of resources from domestic as well as international institutions and banks. Human Resources Department The HRD is responsible for recruiting, training and retaining the workforce of Commercial Bank of Ceylon Ltd. It also deals with their compensation package. The department keeps track of the employees in order to evaluate their performance.

Administration This department manages all the administrative chores related to the regular upkeep of Commercial Bank of Ceylon Ltd.. Moreover, its responsibilities include taking care of all the rental agreements, insurance, advertisement, notice publishing, etc. Credit Department The credit department looks after all the risk related issues of the bank and measures credit risk. This department provides the customers with the loan and keeps track of it to make sure the loan would be repaid. Accounts Department This department is liable for preparing the financial statements and report Commercial Bank of Ceylon Ltd.s financial performance during a period. It also prepares and manages the budget. Information Systems Department Commercial Bank of Ceylon Ltd.s Bangladesh operation is linked via satellite to Colombo. This department looks after that. It also handles the banks It based functions. 22

Audit and Compliance Internal auditing is the prime activity of this department. Periodically, this department audits the financial statements and makes sure that the Bangladesh Bank guidelines are properly followed. This department also assists the external auditors.

Risk This department deals with measurement of risk of different organizations, projects and individuals and determining if a loan facility can be extended and if the return is fair enough for assuming the risk. 3.8.1. Organogram of Departments of Commercial Bank of Ceylon Limited.

Board of Directors

Managing Director

Corporate Banking

Personal Banking

Treasury

Finance & Planning

Informatio n Technology

HR

Services

Inspection

23

4.1. Financial Performance of Commercial Bank of Ceylon Limited.

Commercial Bank of Ceylon is a comparatively new bank in the banking scenario of Bangladesh. Having already proved its efficiency in Sri Lanka, where its virtually unrivalled and deemed the best by many, its only a matter of time before it establishes itself as one of the leading banks here. The Bank received A rating by CAMEL Rating. The five indicators used in the rating system are: (i) Capital Adequacy (ii) Asset Quality (iii) Management Soundness (iv) Earnings and (v) Liquidity. 4.1.1. Capital Commercial Bank of Ceylon Limiteds paid-up capital is Tk 1,000,000,000. Year 2002 2003 2004 2005 Capital employed (Rs.Mn) 7754 11684 13911 15768 Share capital (Rs.Mn) 1324 2603 2603 3327 (Source: Annual Report, Commercial Bank of Ceylon Limited, 2006) 2006 15843 2428

24

Capital Employed (Rs Mn) 20000 Rs Mn 15000 10000 5000 0 2002 2003 2004 Year 2005 2006

Share capital (Rs.Mn)

4000 3000 2000 1000 0 2002 2003 2004 2005 2006

Year

4.1.2. Assets As of 31st December, total assets of Commercial Bank of Ceylon Limited amounted Rs.223974 million. The Group's total assets grew from Rs. 180.135 billion to Rs. 224.061 billion at end 2006 representing a growth of Rs.43.926 billion or 24.38%. Year 2002 2003 2004 2005 2006 Total Assets (Rs. Mn) 73352 110280 138473 180077 223974 (Source: Annual Report, Commercial Bank of Ceylon Limited, 2006)

25

Total Assets (Rs. Mn)

250000 200000 150000 100000 50000 0 2002 2003 2004 2005 2006

Year

4.1.3. Deposits As of 31 December 2006, Deposits of the bank stood at Rs. 157.634 billion. Below is an autopsy of this amount. Banks deposits grew by 23.54%. Year Deposits (Rs. Mn) 2002 54585 2003 75705
Deposits (Rs. Mn)
200000 150000 100000 50000 0 2002 2003 2004 Year 2005 2006

2004 98730

2005 127601

2006 157634

(Source: Annual Report, Commercial Bank of Ceylon Limited, 2006) The deposit mix of Commercial bank of Ceylon Limited in the year 2006 is shown below. Types of Accounts Percentage of total Current Accounts 9% Savings Deposits 27% Time deposits 30% Certificate of deposit 2% Current Accounts-FCY 3% Savings Deposits-FCY 14% Time Deposits 15% (Source: Annual Report, Commercial Bank of Ceylon Limited, 2006)

26

Deposit Mix

15%

9%

Current Accounts Savings Deposits Time deposits Certificate of deposit Current Accounts-FCY Savings Deposits-FCY Time Deposits

14% 3% 2% 30%

27%

4.1.4. Loan
The amount of loans disbursed in recent years and sector wise classification of loans are shown below. Year 2002 2003 2004 2005 Gross loans and 55549 71392 96223 124433 advances(Rs Mn) (Source: Annual Report, Commercial Bank of Ceylon Limited, 2006)
Gross loans and advances(Rs Mn) 200000 150000 100000 50000 0 2002 2003 2004 2005 2006

2006 156504

Year

Sectoral Classification of loans and advances are shown below. Sectors Percentage of total Imports 13% Consumption 4% Services 13% Housing & 6% Construction Commercial Trading 6% Others 27% (Source: Annual Report, Commercial Bank of Ceylon Limited, 2006) Sectors Exports Tourism & Allied Industrial Agriculture & Fishing Percentage of total 11% 3% 16% 1%

27

Sectoral Classification of loans and advances

11% 27% 3% 16% 1% 6% 4% 13%

6% 13%

4.1.5. Profit The pre-tax profit of the Bank increased to Rs. 4,213.545 million after providing for Rs. 1.654 billion towards the pension plan and the payment of Financial VAT for the year ended December 31, 2006 as against a pre-tax profit of Rs. 3,641.960 million in 2005, recording a growth of 15.69%. Net income increased by 41.03% to reach Rs. 12.515 billion Year 2002 2003 2004 2005 Profit before tax (Rs. Mn) 1525 1954 2504 3642 Profit after tax (Rs. Mn) 1206 1477 1685 2364 (Source: Annual Report, Commercial Bank of Ceylon Limited, 2006)
Profit before and after tax
5000 4000 3000 2000 1000 0 2002 2003 2004 2005 2006 Profit before tax (Rs. Mn) Profit after tax (Rs. Mn)

2006 4214 2013

Year

4.2. Financial Goals and Achievements

The table below shows the financial achievements of Commercial Bank of Ceylon Limited. Goal Achievements Goal Financial Indicator (%) Return on Average Assets Return on Average Shareholders Funds Growth in Income Growth in Profit after Taxation Achievements 2006 1.00 12.73 51.99 (14.87) 2005 1.48 15.93 31.00 40.33

Over 2 Over 20 Over 20 Over 20

28

Growth in Total Assets Dividend Rate Capital Adequacy Ratios (Group) Tier I Tier I & II (Total Capital)

Over 20 Over 40 Over 8 Over 13

24.38 50.00 7.62 11.58

30.04 45.00 9.68 12.08

4.3.Financial Highlights: 4.3.1.Growth in Business Volume Year Net Loans & Advances Deposits 2002 50 58 2003 63 67 2004 90 93 2005 120 124 2006 150 155

(Source: Annual Report, Commercial Bank of Ceylon Limited, 2006)

29

Grow th in Business Volum e(Rs Bn)

160 140 120 100 80 60 40 20 0

Net Loans & Advances Deposits

2002

2003

2004 Year

2005

2006

4.3.2. Revenue to Government Year To Government of Sri Lanka (Rs.Mn) To Government of Bangladesh (Rs.Mn) 2002 500 0 2003 550 250 2004 1000 250 2005 1500 400 2006 2650 550

(Source: Annual Report, Commercial Bank of Ceylon Limited, 2006)

Revenue to Governem ent

3500 3000 2500 2000 1500 1000 500 0 2002 2003 2004 Year 2005 2006 To government of Bangladesh To Government of SriLanka

30

4.3.3. Sources and Distribution of Income For the year ended December 31 Sources of Income Interest Income Foreign Exchange Profit Commission Income Investment Income Others 2006 2005 2004 2003 Rs. Rs. Mn.Rs. Mn.Rs. Mn. Mn. 19,532 13,033 9,584 7,931 1,439 587 874 397 2,011 1,760 1,377 1,051 305 441 217 401 1,182 279 238 279 24,469 16,100 12,290 10,059 4,218 1,697 222 623 1,069 753 477 4 272 538 939 10,059 2002 Rs. Mn. 6,613 464 824 179 284 8,364 3,747 1,312 200 402 920 579 321 257 1 327 877 8,364

Distribution of Income To Depositors/ Debenture holders as Interest 11,955 7,226 4,878 To Employees as Emoluments 4,374 2,364 2,132 Depreciation set aside 376 299 260 Provision for possible Loan Losses 655 415 699 To Providers of Supplies & Services 1,919 1,527 1,373 To Governments as Taxation (Including 3,178 1,905 1,264 Deferred Tax) -Income Tax 2,201 1,278 819 -National Security Levy -Debits Tax 6 4 4 -Financial Value Added Tax 971 623 441 To Shareholders as Dividends 911 869 650 To Reserves 1,101 1,495 1,034 24,469 16,100 12,290 (Source: Annual Report, Commercial Bank of Ceylon Limited, 2006)

4.3. Operating Highlights Banks Deposits Grew By 23.54% to Reach Rs. 157.634 Billion 31

Banks Loans & Advances Grew By 25.77% to Reach Rs. 156.504 Billion. The Growth Rates Of Both Deposits And Advances Of The Bank Are Believed To Be Higher Than The Industry Averages Banks Total Assets Grew By 24.38% To Reach Rs. 223.974 Billion. Banks ROA Dropped To 1.00%, which was 1.48% in 2005. Banks Provision Cover 60.41% which was 53.85% in 2005. Banks Non-Performing Assets Ratio (NPA) is 2.74%, which was 3.22% in 2005. Groups Pre-Financial Vat And Pre-Tax Profit Rs. 5.292 Billion which was Rs. 4.293 Billion in 2005. Group's Pre-Tax Profit Rs. 4.321 Billion which was Rs. 3.668 Billion in 2005. Group's Post-Tax Profit Rs. 2.072 Billion which was Rs. 2.358 Billion in 2005 Group's Capital Adequacy Ratios Tier I & Tier I & Ii 7.62% & 11.58% which were - 9.68% & 12.08% in 2005. (Source: Annual Report, Commercial Bank of Ceylon Limited, 2006)

4.4. Income Statement

32

For the year ended December 31,

2006

2006 US$ 000

2005 US$ 000 157,809 127,758 70,830 56,928 5,753 17,249 7,049 86,979

Change in

% 44.24 42.21 57.00 23.81 132.68 8.47 96.30 33.85

Income Interest income Less: Interest expenses Net interest income Foreign exchange profit Fee and commission income Other income

227,624 181,691 111,206 70,485 13,386 18,710 13,837 116,418

Less: Operating expenses Personnel costs Premises, equipment and establishment expenses Provision for staff retirement benefits Loan losses and provisions Other overhead expenses 23,811 20,860 14.15

13,046 16,873 6,094 17,398

11,406 2,313 4,066 12,635

14.38 629.49 49.88 37.70

77,222

51,280

50.59

Profit from operations Add/(Less): Share of profit/(Loss) before tax of Associate Companies

39,196

35,699

9.80

Profit before taxation Less: Provision for taxation

39,196 20,474

35,699 12,524

9.80 63.48

Profit after taxation

18,722

23,175

(19.21)

Attributable to: Equityholders of the parent -

33

Minority Interest

Basic Earnings per Ordinary Share

0.12

0.15

(20.00)

Diluted Earnings per Ordinary Share

0.12

0.14

(14.29)

Dividend per Ordinary Share

0.05

0.04

25.00

Exchange Rate of 1 US Dollar was Rs. 107.50 as at 31.12.2006 (Rs. 102.02 as at 31.12.2005) Balance Sheet

As at December 31,

2006 US$ 000

2005 US$ 000

Change in 2006 %

ASSETS Cash and short-term funds Balances with Central Banks Government Treasury Bills and Bonds Commercial paper Securities purchased under re-sale agreements Dealing securities Investments held for sale Investments held to maturity Treasury Bonds maturing after one year Bills of Exchange Loans & advances Lease receivable within one year Lease receivable from one to five years

127,802 116,964 112,003 3,933 42,726 1,348 2,032 12,965 186,278 30,588 1,281,171 28,237 60,141

182,933 88,661 111,842 3,995 7,921 1,786 30,302 96,143 27,351 1,067,283 24,350 45,052

(30.14) 31.92 0.14 (1.55) 439.40 (24.52) (57.21) 93.75 11.84 20.04 15.96 33.49 34

Lease receivable after five years

162 2,006,350

78 1,687,697 1,050 4,251 11,602 29,328 29,723 1,470 1,765,121

107.69 18.88 (60.76) (5.10) 31.41 (11.32) 0.69 2.24 18.04

Investments in associate companies Investments in subsidiary companies Interest and fees receivable Other assets Property, Plant & Equipment Intangible assets Total Assets

412 4,034 15,246 26,008 29,928 1,503 2,083,481

LIABILITIES Deposits from customers Dividends payable Borrowings Securities sold under re-purchase agreements Other liabilities Tax payable Deferred taxation Debentures 133,302 78,177 13,449 5,400 62,144 1,936,106
SHAREHOLDERS FUNDS

1,466,363 1,047 176,224

1,250,748 2,258 131,220

17.24 (53.63) 34.30

111,637 59,948 8,016 2,099 44,633 1,610,55

19.41 30.41 67.78 157.27 39.23 20.21

Share capital Statutory Reserve Fund Reserves Shareholders funds Minority Interest Total shareholders' funds and Minority interest

22,588 13,288 111,499 147,375 -

32,615 13,929 108,018 154,562 -

(30.74) (4.60) 3.22 (4.65) -

147,375

154,562

(4.65)

35

Total liabilities, shareholders funds and minority interest 2,083,481 Commitments and contingencies Net Assets Value per Ordinary Share (US $) 498,827

1,765,121 462,203

18.04 7.92

0.97

0.95

2.11

4.5.Decade at a Glance (Rs. Mn.)

For the year ended December 31 Operating Results Income Interest income Interest expenses Foreign Exchange profit Commission & other income Operating expenses & provisions Profit before income tax Income tax on profit 2002 2003 2004 2005 2006 CAGR %

8,364 6,613 (3,747) 464 1,097 (2,902) 1,525 (321)

10,059 7,931 (4,218) 397 1,731 (3,887) 1,954 (477)

12,290 9,584 (4,878) 874 1,832 (4,908) 2,504 (819)

16,100 13,034

24,470 19,532

21.95

(7,226) (11,955) 587 2,479 (5,232) 3,642 (1,278) 1,439 3,499 (8,301) 4,214 (2,201) 21.93

Net profit for the year

1,204

1,477

1,685

2,364

2,013

16.61

As at December 31
Assets Cash and short-term funds Balances with Central Banks 1,835 3,244 9,002 5,233 12,136 6,320 18,663 9,045 13,739 12,574

36

Government Treasury Bills and Bonds Commercial paper Securities purchased under re-sale agreements Dealing Securities & Investments held for sale Investments held to maturity Treasury Bonds maturing after one year Bills of Exchange

8,654 1,080 832 _ 905 782 2,552

15,930 546 6,184 _ 2,006 600 2,495

5,522 560 399 110 2,340 14,378 2,799

11,410 408 808 182 3,091 9,808 2,790

12,040 423 4,593 363 1,394 20,025 3,288 25.34

Loans and advances 5,317 Bank Lease receivable

47,350 7,088 1,921

60,585 9,518 3,364

82,605

108,884 1,921 7,088

137,726 3,364 9,518

5,317

69,155 Investments in associate companies Investments in subsidiary companies Other assets Property, Plant & Equipment and Intangible Assets TOTAL ASSETS 78 424 2,149 1,546 73,352

105,945 78 429 2,167 1,661 110,280

132,486 109 429 2,553 2,896 138,473

172,177 215,683 107 434 4,177 3,182 180,077 44 434 4,434 3,379 223,974 24.35

Liabilities
Deposits from customers Dividends Payable Borrowings Securities sold under re-purchase agreements Other liabilities & Deferred Taxation Tax Payable Debentures 54,585 118 4,200 1,938 4,218 39 500 75,185 190 5,406 10,580 4,843 148 2,244 98,730 230 9,090 9,050 3,735 483 3,244 127,601 157,634 230 113 13,387 11,389 6,331 818 4,553 18,944 14,330 8,984 1,446 6,680 25.23

65,598

98,596

124,562

164,310

208,131

37

Shareholders' Funds Share capital Reserve fund Reserves

1,324 1,009 5,421

2,603* 1,009 8,072

2,603 1,009 10,299

3,327** 1,421 11,020

2,428*** 1,429 11,986

TOTAL LIABILITIES & SHAREHOLDERS' FUNDS Commitments and contingencies

73,352 24,082

110,280 38,158

138,473 180,077 43,942 47,154

223,974 53,624

24.35

2002 Ratios Return on average - shareholders' funds (%) 16.61 Income growth (%) 1.96 Return on average assets (%) 1.82 Rate of dividend (%) 50.00 Ordinary share dividend cover (times) 5.20 Gross dividends to ordinary shareholders (Rs. Mn.) 208.95 Advances to deposits and refinance (%) 92.59 Property, Plant & Equipment to shareholders' funds (%) 19.93 Total assets to shareholders' funds (times) 9.46 Capital Funds to Liabilities including Contingent Liabilities (%) 8.65 Cost/Income Ratio (%) 55.46 Liquid assets to liabilities (%) 27.88 (As specified in the Banking Act No. 30 of 1988) Group Capital Adequacy (%) Tier I Tier I & II Information on Ordinary Shares Market value of a voting share (Rs.) Basic earnings per share (Rs.) Price earnings ratio (times) Net assets value per share (Rs.) Earnings yield (%) Dividend payout ratio (%) Other Information No. of employees No. of branches/CSPs/MiniComs/ Service Points - Sri Lanka No. of branches/booths Bangladesh No. of Automated Teller Machines 2,399 109 _ 143 200 8 8 48 13 18 14.94 15.07

2003 15.20 20.26 1.61 50.00 3.70 348.25 86.16 14.22 9.44 8.54 55.87 23.95

2004 13.16 22.17 1.35 60.00 3.48 418.10 89.52 20.81 9.95 8.26 56.78 23.17

2005 15.93 31.00 1.48 45.00 3.34 639.36 90.64 20.75 11.42 7.46 54.28 24.51

2006 12.73 51.99 1.00 50.00 2.54 714.00 92.49 21.33 14.14 6.05 61.10 22.64

13.43 15.46

10.78 13.16

9.68 12.08

7.62 11.58

144 9 8 69 13 27

159.75 10 8 84 13 29

135.50 15 9 98 11 30

190.00 13 15 104 7 39

2,648 116 4 166

2,863 125 4 188

3,168 134 5 223

3,415 150 7 278

5.1. The Products and Services Offered by Customer Service Department

38

Commercial banks creative banking solutions are served with hi-tech backbone offering worldwide access. It is committed to fulfill every possible customer need by providing modern banking facilities to the customer. Commercial Bank of Ceylon Limited has built up a track record of success in capital and asset management. Its team of dedicated professionals is committed to provide an unparalleled service and to bring maximum benefits for the stakeholders. Its a great pleasure for Commercial Bank of Ceylon Ltd. to introduce different packages.

5.1.1. Depository product

Commercial Bank of Ceylon Limited is now offering different types product for mobilizing the savings of the general people.

5.1.2. Loan Product

Commercial Bank of Ceylon Limited is offering the following loan and advance product to the client for financing different purpose that fulfill the requirements of the bank and have good return to the investment as well as satisfy the client.

Deposit Products
Current Deposit Saving deposit Account Bonus Savings Account SHAMRIDDHI STD Account Money Market Account Fixed Deposit Dream Planners Savings DOLLARSMART

Loan Products
Personal Loan Scheme Project Finance Working Capital Financing Industry Financing Short Term Loan Long Term Loan

The innovative products and services available are as follows: ATM Facility with Bangla Screen Holiday Banking Foreign Currency & Non Resident Foreign Currency Account Salary Remittance Package Internet Banking. 5.1.3. Interest Rate paid to different Deposit Liabilities

39

Serial Application 1. 2. 3. 4. 5. 6. Current Account Savings Account (Half Yearly Interest) Savings Account (Monthly Interest) Bonus Savings (Half Yearly Interest)

Up to Tk.2 M Nil 5.00% 4.75% 5.00%

2M& above Nil 5.00% 4.75% 5.00% 4.50%7.00% 4.50% 7.50%

SHAMRIDDHI Tiered Savings (Half-Yearly Interest) 4.50%7.00% STD -General Customers 4.50% -Minimum Balance BDT 100 MIO *Applicable for the customers who agree to maintain the respective minimum balances at all times to get benefit of the rates Money Market Account (MMA) 5.00% Interest Paid Monthly; Rate will be revised on the first day every month; Minimum Balance to earn interest=100K; Minimum Interest rate=General STD Rate

7.

5.00%

5.2. Salient Features of Different Products and Services Offered by Commercial Bank of Ceylon Limited DOLLARSMART It is a term deposit account in USD.DOLLARSMART can be opened for 3,6 or 12 month periods and is a truly convenient offer. Loans for NRB up to 90% can be taken against DOLLARSMART. Benefits High rates of interest on the deposits is one reason, but there are several more important reasons that make DOLLARSMART so attractive. The interest is paid in US dollars. Both the interest and the principal are repatriable for NRB and foreigners. And to top it all, the interest is tax-free for NRB. Eligibility

40

Nonresident Bangladeshis (NRB) or foreigners in Bangladesh can avail DOLLARSMART. On the corporate side, Bangladeshi exporters with FCY retention deposits and 100% foreign owned companies in the EPZ can also avail DOLLARSMART. Savings Account CBC has designed a savings account with the potential to earn half-yearly interest. Current interest rate is 5.00% p.a. Features Opening balance any amount Minimum balance to earn interest is BDT 25,000 Interest is calculated daily and paid half yearly ATM card & Internet Banking facility. Eligibility: Anyone Short Term Deposit Its a penalty free, instant access account which gives competitive rate of interest. Sweep facility is available on this account. Unlimited Deposits/ withdrawals are possible from this account. Bonus savings Account Bonus Savings Account is a savings account with the potential to earn half-yearly interest bonuses. At first, the client earns the standard savings account interest rate (currently 5.00%) applicable to his or her funds-make no more than 2 withdrawals during the 6 month period between the 1st January to 30th June or between the 1st July to 31st December to earn halfyearly 50% interest bonus. If withdrawal requirements are exceeded during the year, the interest rate reverts to the standard interest rate. Features: Open the account with BDT 100,000 A minimum ongoing balance of BDT 25,000 to earn interest. Interest is calculated daily and paid half yearly. ATM Card Facility Internet Banking Facility And if not more than two withdrawals are made then customer is awarded with 50 % bonus on interest. Eligibility: Anyone 41

SHAMRIDDHI Savings Account Shamriddhi is an innovative Tiered Savings account specially designed to offer higher returns for higher balances. Combining all the scattered savings a client can reap elevated returns with the following features. Features: Minimum balance Tk. 50,000/ Higher the balance Higher the Interest No restrictions on withdrawals ATM card facility Loan/overdraft facility of deposit balance. Free of charge Internet Banking facility. Eligibility: Anyone Balance Range 50,000-100,000 100,001-500,000 500,001-1000,000 1,000,000-2,000,000 Above 2,000,000 *Present savings rate 5% Rate of Interest 0.5% below the normal savings rate 0.5% above normal savings 1% above normal savings 1.5% above normal savings 2% above normal savings

Money Market Account This is a deposit account combining the flexibility of a call deposit account with the high interest applicable on Time Deposits. Commercial Banks Money Market Account is a revolutionary deposit product designed to increase the earning power of customers fund. Money market account is a short-term deposit with high returns. Commercial Bank of Ceylon Limited is the only bank, which is offering this unique product. The client receives all the features he needs to run his organization on a daily basis, plus an attractive rate of interest (based on Money Market rates) coupled with easy, immediate access to his money- no notice required. The rate of interest is reviewed every month- this rate will operate for 1 month. The interest is calculated daily and it is paid on the last business day of each month. The current interest rate is 7.00% p.a. and is effective from 1st September,2006. Features: Based on Money Market Rates Minimum Deposit BDT 100,000

42

 Interest calculated daily and paid monthly No notice period to access funds/withdrawals. ATM card facility Internet Banking facility. Interest is fixed on last Monday of every month depending on the market condition. So if the market is better performing then high return is guaranteed. Eligibility: Anyone. Dream Planner Savings (Deposit Pension Scheme) (DPS) It is an all-new Deposit Pension Savings Account, which guarantees an attractive return for monthly deposit at the end of the guaranteed period. In this scheme, available deposit monthly installments are BDT 1000, 2000, 3000,5000, and 7000 after 3, 5, 7 years depositors receive a handsome amount of money. Features: Monthly deposit may be deposited on any business day of each month. It gives higher interest rate for the monthly deposit. The customer can choose a monthly affordable deposit amount from BDT 1000, 2000, 3000, 5000 or 7000. Plan the realization of his dream from the optional periods of 3, 5 or 7 years. In emergency one may encash his deposit prematurely at any time. If it is withdrawn after 6 months of opening, interest will be paid at the rate applicable to a normal savings account. The customer may also avail loan facility up to 80% of his principal amount in deposit against the lien of DPS after 2 years of opening the account. Monthly Deposit BDT 1000 BDT 2000 BDT 3000 BDT 5000 BDT 7000 Eligibility: Anyone. Penalty: In case of failure to deposit monthly installment in time, an amount of tk.50 per month will be charged with the next installment. 43 In 3 years 39,662.00 79,325.00 118,988.00 198,314.00 277,639.00 In 5 years 70,065.00 140,131.00 210,197.00 350,328.00 490,459.00 In 7 years 103,624.00 207,250.00 310,875.00 518,125.00 725,375.00

 Fixed Term Deposit: Fixed Term Deposits offer the customer maximum returns on his large cash deposits. One can select from a range of investment terms and investment amounts suitable to his needs and get a guaranteed rate of return over the term of the investment. In emergency client is allowed to take 95% loan of deposit amount. Eligibility: Anyone. Interest Rate paid to FDR Serial 1 2 3 4. 5. 6. Application FDR for 3 months (Annual Interest) FDR for 6 months (Annual Interest) FDR for 1 year (Annual Interest) 30<and50 Mio FDR for 2 year FDR for 3 year 5 year FDR (High 5 FD) Interest Rate 9.00% 9.50% 10.00% 10.00% 10.00% 12.00% 9.60% 9.60% 9.60% Any Amount Any Amount

FDR- Monthly Interest 7. 1 year FDR- (Monthly Interest) 8. 9. 2 year FDR- (Monthly Interest) 3 Year FDR- (Monthly Interest)

ATM Facility with Bengali Screen Commercial Bank provides the first ever ATM facilities with Bangla Screen in Bangladesh. The customers can enjoy ATM facilities in their mother tongue with many attractive features. Holiday Banking (Dhanmondi Branch) Commercial Bank of Ceylon offers Holiday Banking facility to all CBC customers on all holidays from 9:30 am to 12:30pm at the Holiday Banking Centre, Dhanmondi Branch. Foreign Currency Accounts (FC accounts) and Non-Resident Foreign Currency Deposit Accounts (NFCD) Foreign Currency Accounts can be opened in the names of Bangladeshis employed overseas Nonresident foreigners Foreign companies (100% foreign owned) 44

 Type-A companies in Bangladesh Such accounts now can be maintained as long as the account holders desire. FC Plus is a high yielding Foreign Currency Account where the interest rate is linked to the LIBOR (London Inter Bank Offered Rate), internationally accepted benchmark of foreign currency interest rates. It guarantees progressively higher interest rates for higher balances, giving the best return on foreign currency investment. FC PLUS account pays more than any other foreign currency account and more than overseas deposit rates. It gives progressively higher interest rates for higher balances for deposit maintained in US Dollar (USD), Euro (EUR), Australian Dollar (AUD) and Pound Sterling (GBP). Upto 4,000 (USD,EUR,GBP,AUD) Regular Foreign Currency Savings Rate For 4,001 to 25,000 1 month LIBOR rate For 25,001 to 50,000 1 month LIBOR Rate+0.10% For 50,001 to 100,000 1 month LIBOR Rate+0.15% For 100,001 and above 1 month LIBOR Rate+0.25%

(LIBOR-London Inter Bank Offered Rate) Non-Resident Foreign Currency Deposit Accounts (NFCD) These are special accounts primarily meant for Bangladeshi nationals working abroad. The customer may open this account either while he is employed abroad or within 30 days of his return to Bangladesh. The NRFC account enables to save hard-earned foreign exchange and earn interest too in the same foreign currency. Joint accounts are possible provided all account holders are employed abroad. Funds from these accounts are freely remittable to any country. The accounts can be opened either in Euro Dollar or in US dollar at the option of the account holder. These accounts could be opened with a minimum of USD 5,000 or equivalent or more, for periods ranging from 1,3,6 and 12 months where higher rates of interest are paid.Interest will be calculated on the daily balance and credited to the account quarterly enabling the customer to earn much more than published rates. Special rates of interest could be negotiated for larger Fixed Deposits. The interest earned on NRFC accounts is free of all taxes. All types of inward remittances in foreign currency will be accepted in the credit of NRFC ACCOUNTS.

45

 Salary Package This wonderful scheme is only for the corporate clients who maintain their company Account with the Bank. If the company has more than 15 employees and average salary of each employee is above BDT 15,000 can avail the following benefits. Benefits: Zero service charge on their account. Zero charge for any transfer between branches of CBC in Bangladesh. Zero charge for chequebook. Internet banking facility at reduced fee of BDT 500/ Free ATM card. Internet Banking Manages finances from a PC or laptop ComBank Online is a simple, convenient and secure way of accessing Commercial Bank accounts on-line. In order to access our Internet Banking service one will need to have an account with Commercial Bank and Internet access available on their computer. ComBank Online allows to monitor payments, view real-time information (account balances and transaction details), move money between commercial Bank accounts, pay bills instantly, download account information to software packages, view account history up to the last 5 years, order a copy statement or chequebook, and communicate with the Bank using the secure messaging facility.

46

5.3. Organogram of Customer Service Department, Commercial Bank of Ceylon Limited.

Head of Customer Service Department Senior Manager

Assistant Manager Overall cash supervisor Assistant Manager Corporate remittance Reporting through Motijheel Assistant Manager FDR/CDR issuance and encashment

Deputy Manager Sonargaon Booth

Officer Validation and cancellation of all types of cheque Junior Officer Validation and cancellation of all types of cheque Officer Clearing Representative Junior Officer Cash deposit and payment Clerk Cash deposit and payment

Officer

Senior Clerk Assistant Manager Account opening delivery of statements Senior Clerk Travelers cheque, FC notes sale/purchase Senior Officer Prepares overall weekly, monthly and quarterly report for Bangladesh Bank Banking Assistant Assisting in Bangladesh Bank reporting

Clerk Cash deposit and payment

47

5.3.1.Organogram of Customer Service Department, Commercial Bank of Ceylon Limited (Sylhet Branch)

Head of Branch Officer Personal Banking

Executive Personal Banking

Assistant Branch Head

Executive Personal Banking

Officer (Credit) GT GT

Officer (Customer Service) GT GT

Officer (Cash & Clearing) GT GT

Officer (Foreign Exchange) GT GT

5.4. Types of Deposit Accounts and their formalities. There are several types of Deposit Accounts, which a customer can select to suit the flexibility and the tenure of investment one requires. Savings Accounts Savings accounts encourage savings habit among the general public. Only Bangladeshi nationals are allowed to open savings accounts with Commercial Bank of Ceylon Limited. The account can be open only in BDT and the minimum deposit to open the account shall not be less than tk.25000 (twenty five thousand) only. Interest is awarded on the balance of the account. The number of withdrawals is generally restricted. Requirements to open an account are as follows: 1.The applicant should duly fill up the application form. 2. Specimen signature card duly completed. 3.Two passport size photograph of the Account holder/Authorized Signatories to be attested by the introducer. 4. Nominee form duly completed with the photograph. 5. Introductory reference to be obtained from account holder acceptable to the bank.

48

6.Copy

of

valid

passport

of

the

account

holder/

or

certificate

from

Ward

Commissioner/Chairmans citizen identification. Commercial Bank of Ceylon Limited offers following types of accounts and the formalities in addition to the previous are as follows: Current account

In the name of individual:

Current account can be maintained either by Bangladeshi nationals or foreign nationals. The accounts can be maintained in either Bangladeshi Taka or any other foreign currency. The minimum amount require to open a current account in local currency is tk. 25,000 (twenty five thousand) only. Followings are the formalities of opening a current account: 1.The client has to fill up an account opening form; terms and conditions are printed on the back of the form. The form contains the declaration clause, special instructions etc. 2.Speciman signature card should be duly filled. 3.Two copies of passport size photograph affixed with the form. 4.Copy of valid passport of the account holder/Voter ID or certificate from Ward Commissioner/Chairmans citizen identification. 5.Nominee form duly completed. 6. Letter from organization, where applicable. Documents required to open Sole proprietorship Accounts Specimen Signature Card duly completed Copy of Trade Licence duly attested (original to be shown to the Branch Manager) 2 photographs of the proprietors and authorized signatories if any duly attested by the introducer. Copy of valid Passport of Proprietor and Authorized Signatories or Identification Letter/Card from employer or certificate from Ward Commissioners/ Chairmans citizen identification. Certificate of seal impression, where applicable. ***and or any document /paper as may be required by the Branch Manager.

49

Documents required to open Partnership Accounts Specimen Signature Card duly completed Copy of Trade Licence (original to be shown) duly attested Copy of Registered/Notarized contract/partnership deed duly attested (original to be shown) Copy of valid Passport of all the Partners and Authorized Signatories or Identification Letter/Card from employer or certificate from Ward Commissioners/ Chairmans citizen identification. 2 photographs of all partners and authorized signatories if any duly attested by the introducer. ***and or any document /paper as may be required by the Branch Manager. Documents required to open Personal/Joint Accounts Individuals/Joint Account Specimen Signature Card duly completed 2 photographs of the Account holder/ Authorized signatories to be attested by the introducer. Copy of valid Passport of Account holder and Authorized Signatories or Identification Letter/Card from employer or certificate from Ward Commissioners/ Chairmans citizen identification. Letter from Organization, where applicable. Nominee form duly completed. Special conditions for Joint Accounts Any balance to the credit of the account is and shall be owned by us as joint depositors. Any liability whatsoever incurred in respect of the account shall be joint and several. Number of signature required to withdraw funds. Joint account in the name of minor: A minor cannot open an account in his own name due to the incapacity to enter into a contract. He can open an account in Commercial Bank of Ceylon Limited in joint name of another person who will be the guardian of the minor.

50

An account opening register for every types of account is maintained in the bank. An account number is given for each account and the description of the account is entered in the computer. According to the rules of the bank a letter of thanks is sent to the account holder. FC Account-individuals Specimen Signature Card duly completed 2 photographs attested by the introducer. Copy of valid Passport with valid visa . Letter of Introduction from mission/embassy/organization, where applicable. Copy of Work permit where applicable. Permission under 18 A from Bangladesh Bank, where applicable. Employers Certificate (For Bangladeshi Wage Earners)* Nominee form duly completed, where applicable. ***and or any document /paper as may be required by the Branch Manager. Documents required for opening Limited Company-BDT To open an account for a limited company, Officer asks for the following documents. Specimen Signature Card Duly Completed with details of delegation. Particulars of all director/authorized signatory, duly certified by Chairman/ company secretary as per attached specimen. Copy of Minutes of board resolution concerning opening and operation of bank accounts duly certified by the Chairman/Company secretary. Certified Copy of Certificate of incorporation. Copy of certificate of commencement of business from the register of Joint Stock of companies, where applicable duly attested. Copy of certified Memorandum and Articles of Association from the Register of Joint Stock of Companies duly attested. Two photographs of director/authorized signatories attested by the introducer. Copy of valid passport of each director/authorized signatories/major shareholders duly attested. Copy of Power of Attorney of signatories duly attested-if any. Copy of Certified Form XII from Joint Stock Company concerning updated list of directors. 51

 Latest copy of Balance sheet. Documents required to open Limited Company/Branch/Liaison Office- FC Specimen Signature Card Duly Completed with details of delegation. Particulars of all director/authorized signatory, duly certified by Chairman/ company secretary as per attached specimen. Copy of valid passport of Directors/authorized signatories/major shareholders with visa (applicable for residents) Copy of Work permits where necessary. Two photographs of director/authorized signatories attested by the introducer. Copy of Govt. Registration (BOI/EPZ) Copy of Board resolution regarding opening and operation of bank accounts duly certified by the Chairman/Company secretary. Power of Attorney of signatories, if any. Copy of certified Memorandum and Articles of Association duly attested. Certified Copy of Certificate of incorporation. Copy of certificate of commencement of business, where applicable . Copy of Permission under 18A/18B from Bangladesh Bank copy of contract, where applicable. Certified Copy of Certificate of incorporation. ***and or any document /paper as may be required by the Branch Manager. Documents required to open Accounts by Clubs/Societies/Associations/NGOs: In case of these sorts of accounts Commercial Bank of Ceylon Limited requires the following documents: Particulars of all Executive Committee Members/authorized signatories as per specimen attached duly certified by the Chairman/President. Two photographs of all Executive Committee Members/Office bearers/authorized signatories attested by the introducer. Copy of all valid passport of associates/Office bearers/authorized signatories. Copy of certified constitutions by laws.

52

 Copy of minutes of Executive Committee meeting authorizing opening of account and authorization to the signatories duly certified by the Chairman/President. Copy of certificate of Registration duly attested, where applicable. Copy of Registration from the NGO Bureau, applicable for NGOs duly attested. 5.5. Most important Task and Responsibilities of Customer Service Department 1. Opening of different kinds of accounts. 2. Issuance of chequebooks. 3. Closing of accounts. 4. Marketing of Banks products to the customers and also to non-customers who expected to be valued clients. 5. Preparation & posting of vouchers related to account opening. 6. Issue of Letter of thanks to the Account opener, scanning of signature & photographs. 7. To issue & encash FDR and perform all other functions related to FDR. 8. To attend office 15 minutes ahead of the office hours and shall not leave office without completion of daily works and initimation to Branch Manager. 9. To perform any other job as and when assigned by the superiors for the interest of the bank. 5.6. Cheque Book Prepare According to section 6 of negotiable instruments act, 1881, a cheque is A Bill of Exchange drawn on a specified banker and not expressed to be payable other wise than on demand. To facilitate withdrawals and payments to third parties by the customer, Commercial Bank of Ceylon Limited provides a chequebook to the customer. Cheque Book contains 25 leaves for savings account while for current account; it is 50 leaves. A chequebook issuing register is maintained which contains name of the account holder, account number, the chequebook number, leaf number and issuing date. The chequebook contains requisition slip, which is used by the customer to obtain new chequebook. When all the leaves are used, the customer submits slip to the bank. A senior official then issues a new chequebook and subsequent entries given in the register. If the chequebook is lost, the customer has to inform it to the bank. It is then noted in the system and all the transaction from the previous chequebook is stopped. Customers then fill new requisition slip and after fulfilling all the formalities, a new chequebook is issued.

53

5.6.1.Cheque Book Issue procedure: Customer duly fills up the requisition slip

After submitting by the customer a senior officer verifies the signature and other relevant information Then it is delivered to the assigned officer responsible for issuing chequebook. He in turn verifies the information. The name of the account holder, account type and account number is typed in the Stencil paper

Assigned officer put the entry in Chequebook issuing register. The name of the account holder, account type and account number is typed in the Stencil Paper.

And finally chequebook is printed and kept it in the basket from where it is delivered to the customer

5.7.Responsibilities of the Officer: Describe the products and services offered by the bank to the customer attractively. Give quick service to the client. Handling them with smiling face. Maintaining a good customer relationship. Checking account no, balance no, cheque serial and date carefully. Take each customer with greater importance. 5.8. Other tasks

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 Pay order issuing procedure Pay order payment procedure TT issuing procedure 5.9. Remittance The main instruments used for remittance of funds from one place to another are as follows.

Telegraphic Transfer

It involves sending advice of transfer by the bank to the branch of a correspondent bank through telegraphic message. Where the money is required to be sent urgently, telegraphic transfer may be requested by the sender. He is required to pay the cost of telegram and other expenses.
Demand Drafts (DD) Demand Draft is an order to pay money, drawn by the bank upon the correspondent bank for

a sum of money payable to order on demand. A draft cannot be drawn payable to bearer of a named payee or payable to bearer. Issuance of demand Draft While issuing demand draft an official must be confirmed about the branch where the DD is to be issued or drawn as asked by the applicant. Applicants on banks prescribed from for DD is obtained from the applicant duty filled and exchange/commission computed correctly at the prescribed rate. On receipt of cash voucher, DD will be issued and record to DD issue register filling the appropriate columns.

55

5.9.1.Local Remittance Pay order Issue Procedure A pay order is a written unconditional order, to pay a certain sum of money, to a specified person or to his order. In other words, it can be said as the banker cheque. It is payable at the bank branch wherefrom it is issued. The drawer and the drawee is the same bank/ branch. In whose favor, the pay order is issued is called the payee (i.e. the beneficiary). It is used to transfer money from one person to another, where payment through cheque is not acceptable to someone. Sometimes banks also use pay orders for settlement of payment of their own. Filling up P.O. application i.e. Form G 9 by the client Signature verify by the authorized officer

By transfer Cheque

By cash payment

Receive the cheque and confirm the acceptability of the cheque i.e. whether the cheque should be honored or not.

Cash received by the officer and signed and sealed by him in the voucher

If honored debit the amount in the clients personal account and signed & sealed by the officer in the voucher.

Posting in the Pay Order Module and pass entries in the PO register

Preparation of the Pay Order, putting protector and signed by two officers

Issue to the client and signature is received on the Form G 9

56

5.9.2. Foreign Remittance Foreign Remittance includes inward remittance and outward remittance. Inward Remittance includes the followings: TT DD TC Purchase Cash Dollar Purchase Outward Remittance includes the followings. TT DD TC Sale Cash Dollar Sale Student remittance Most common method of remitting money from one place to another is through Bank Drafts. A bank draft is an order by one bank to the correspondent bank to pay a specified sum of money to the person named therein or to his order. Bank Draft Issue Procedure Filling up Bank Draft application or Form G 9 by the client Receive cash or transfer cheque from the client Authorized officer verifies the signature on the application form

If the receiving currency from the client and sending currency of the Bank Draft is not same (e.g. BDT to USD) then Form TM is filled up by the client

Then in the draft block name of the account holder, account number, favoring person or institutions name, amount and date of issue is written.

Entry is passed on the Bank Draft Register. Bank draft is prepared and protector is put. Two authorized officers then sign it. Bank Draft is given to the customer for his signature on the form G 9.

57

5.10.Telegraphic Transfer through SWIFT

Telegraphic transfers are by far the quickest method of transferring funds from one place to another. The remaining branch sends a telegraphic message to the other end, to pay a certain sum of money to a named payee. Such a message is sent through SWIFT. Access to it is allowed only to authorized officers. The receiving branch, after thoroughly checking the SWIFT message, acts on it.

TT Issue Procedure
Filling up Swift application or Form G 9 by the client Filling of TT application by the client

Receive cash/transfer cheque from the client

Authorized officer verifies the signature on the application form

If the receiving currency from the client and sending currency of the TT is not same (e.g. BDT to USD) then Form TM is filled up by the client.

Entry is given to the Outgoing Remittance Register. Message is prepared on the system. And sent to the desired destination.

Every transaction should be informed to the Dealing Room

5.11.Student Remittance

58

Commercial Bank of Ceylon Limited releases foreign exchange to the Bangladeshi nationals going abroad for studies. Fulfillment of Certain requirements of Bangladesh Bank is necessary. Student remittance is allowed for regular course of studies: Undergraduate Graduate Post-graduate in recognized foreign educational institutions in any foreign country. It is the proper way of remitting money for the students as per Bangladesh Foreign Exchange Guideline. 5.11.1. Salient features of Student Remittance CBC maintains a specialized and exclusive department equipped by experienced officers of the bank. Application processing fee of CBC is the lowest amongst the multinational banks in Bangladesh. Wire transfer of payment through SWIFT is quick and safe. Remittance can be possible in 13 different currencies.

6.1. Industry Analysis

59

Industry analysis reviews industry trends and competitive strategies. Analyzing the industry environment requires an assessment of the competitive structure of the organizations industry. It also requires analysis of the nature, stage, dynamics and history of the industry. Internal analysis serves to pinpoint the strengths and weaknesses of the organization as. company strengths lead to superior performance whereas company weaknesses translate into inferior performance. The need is to identify the key emerging factors, trends and threats, opportunities and strategic uncertainties that can guide information gathering and analysis. Porters approach can be applied where the basic idea is that the attractiveness of an industry or market as measured by five factors on which firm depends largely. 6.1.1. Chart: Porters five forces model (adopted from Hill & Jones, 2004) Risk of entry by potential competitors Brand Loyalty Absolute Cost advantage Economies of scale Customer Switching costs Government regulation

Bargaining power of suppliers No of substitutes Threat of Forward integration Switching costs No of buyers

Intensity of rivalry among established firms Industry Competitive Structure Industry Demand Exit Barriers

Bargaining power of buyers Threat of backward integration No. of suppliers Switching costs Buyer Concentration and size Large quantity purchase leverage

Threat of substitutes No of close substitutes The relative price and performance of substitutes Rivalry among Existing competitors

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The rivalry refers to the competitive struggle among the competitors and the growth in the industry depends upon the intensity of competition. A high amount of competition is observed in the banking sector of Bangladesh. Banks compete against other banks using competitive weapons such as their low cost of operation and syndication. Commercial Bank of Ceylon Limited is a new entrant in Bangladesh Banking Industry as a multinational bank. There are other international and local banks that also take part in the competition and are aggressive in nature. Risk of entry by potential competitors Potential competitors are companies that are not currently competing in an industry but have the capability to do so if they choose. The banking sector of Bangladesh seriously faces the risk of entry by potential competitors. However, the risk is two way in nature. The arrival of the multinational banks and their branch expansion as a result of the booming energy sector and the continuous entry of local banks with lower cost structure pose a severe threat to this industry. The various new and upcoming banks pose a significant threat in the context of Commercial Bank of Ceylon Ltd. So it is trying to expand countrywide to make the sector unattractive and to create entry barriers. Bargaining Power of Buyers The third of Porters five competitive forces is the bargaining power of buyers. Finally buyers may use their purchasing power to influence the producers or service providers. A large number of commercial banks in the banking sector of Bangladesh are providing similar services. Customers have a wide range of options in deciding where to bank. They can either choose multinational banks or turn to new local banks for getting quality service. Nationalized banks are preferred for large credit facilities. In order to attract the customers banks have to pursue them by providing customized packages with attractive interest rates. Commercial Bank of Ceylon Ltd. has its own policies to carry out its operations and employees follow those rules to deal with the customers. But while dealing with the clients too much rigidity in the prevailing policies may under cut its client base as well as profitability. A positive as well as personalized approach to the needs of customer has become Commercial Bank of Ceylon Ltds motto.

Bargaining Power of Suppliers

61

The fourth of Porters five competitive forces is the bargaining power of suppliers. In the context of Commercial Bank of Ceylon Ltd. suppliers are those customers and organizations that provide financing to the firm via depository schemes. Companies may pursue vertical integration strategies to reduce the bargaining power of suppliers. If the cost of financing rises, then Commercial Bank of Ceylon Ltd. will have to decrease the interest rate that it charges to its customer in order to remain in the business. This may result in customer dissatisfaction, which can lead to poor profitability. Threat of Substitute Products Substitutes- products of different businesses or industries that can satisfy similar customer needs that satisfy the same customer needs are important sources of competition. Commercial Bank of Ceylon Ltd. continuously faces the threat of various substitute products launched by its strong competitors in the market place such as1.Launch of DPS by DHAKA Bank. 2.Various consumer credit schemes offered by other banks with lower interest rates and cost. 3. The lower service charges at other local banks discourage a wide group of customers to hold account in Commercial Bank of Ceylon Ltd.

6.2. Evaluation of External and Internal Environment of Commercial Bank of Ceylon Limited. Strength Weakness 62 Opportunity

Threat

The overall evaluation of a companys strengths, weaknesses, opportunities and threats is called SWOT analysis. (Kotler, 2003-2004) Its central purpose is to identify the strategies that will best align, fit or match a companys resources and capabilities to the demands of the environment in which it operates. (Hiil & Jones, 2004). The SWOT analysis comprises of the organizations internal strength and weakness and external opportunities and threats. SWOT analysis gives an organization an insight of what they can do in the future and how they can compete with their existing competitors. STRENGTHS Dynamism Commercial Bank of Ceylon Ltd draws its strength from the adaptability and dynamism it possesses. It has quickly adapted the world class standard in terms of banking services. Financial Potency

Commercial Bank of Ceylon Ltd. received AA rating by the Credit Rating information Services Ltd (CRISL). It was the highest ever rating for any financial institution in Bangladesh. Well-organized Management All the levels of the management are solely directed towards maintaining a culture for the betterment of quality of service and development of a corporate brand image in the market through organization wide team approach and open communication system. State of Art Technology Commercial Bank of Ceylon Ltd utilizes state-of-art technology to ensure consistent quality and operation. The branches are equipped with SWIFT. Commercial Bank of Ceylon Ltd has also adapted state of the art technology to connect the world for better communication to integrate facilities. Expertise One of the key-contributing factors behind the success of Commercial Bank of Ceylon Ltd. is its highly trained employees who are most competent in their own field. Commercial Bank of Ceylon Ltd. provides their employees training both in-house and outside job. 63

In-house Utility Commercial Bank of Ceylon Ltd. is free from dependence from the ever disruptive power supply of our public sources. The company generates the required power through generator fed on diesel when power supply is disrupted. Excellent Working Environment Commercial Bank of Ceylon Ltd. provides its workforce an excellent place to work in. Total complex has been centrally conditioned. It is renovating the interior decoration with the exquisite choice of soothing colors and blend of artistic that is comparable to any multinational bank.

Introduction of products and services In 2003, Commercial Bank of Ceylon Ltd. started its operation in Bangladesh. But with in a short period of time it has already adopted with environment of the country. It has introduced products like Money Market Account for the first time in Bangladesh.

Weaknesses
Inadequate Workforce Commercial Bank of Ceylon Ltd has very limited human resources compared to its financial activities. There are few people to perform most of the tasks. As a result many of the employees are burdened with extra workloads and works late hours without any overtime facilities. This might cause high employee turnover that will prove too costly to avoid. Insufficient Deposit As Commercial Bank of Ceylon Ltd is comparatively new bank in Bangladesh, it is faced with deposit limitation than its competitors. Proper marketing initiative from the management can easily make its products available and thus increase its client base as well as deposit status. Fewer Branches Commercial Bank of Ceylon Ltd has fewer branches than its multinational and domestic competitors. Such as Standard Chartered Bank has 18 branches and Uttara Bank Limited has 198 branches and 12 regional offices whereas it is consists only 5 branches and two booths. Centralized System

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Commercial Bank of Ceylon Ltd is more hierarchy-driven compared to other multi-national banks. The organization needs to achieve flat-management structure.

Opportunities
Vast market The population of Bangladesh is continuously increasing at a rate of 7.3% per annum. The countrys growing population is gradually and increasingly learning adaptation of consumer finance. As the bulk of our population is middle class, different types of products have very large and easily approachable market. Huge consumer Base

Bangladesh has a huge consumer base maintaining several accounts. So Commercial Bank of Ceylon Ltd has the opportunity to keep these middle class segments. Government Support As it is becoming one of the vital sources of employment, Government of Bangladesh has rendered its full support to the banking sector. Such government concern will facilitate and support the long-term vision of Commercial Bank of Ceylon Ltd.

Threats
Frequent Currency devaluation Frequent Taka devaluation and foreign exchange rate fluctuations and particularly Southeast Asian currency crisis adversely affects the business globally. Emergence of competitors Due to the existence of unserved demand in financial sector, it is expected that more financial institutions will be introduced in the industry very shortly. And lots of new banks are coming in the scenario with new services. Commercial Bank of Ceylon Limited should always be prepared for the competition in the coming years. 6.3. Highlights of the Banks Activities in 2006 Deposits grew by 26.35% and Loans & Advances recorded a lower growth of 17.84%, in Taka, consolidating CBCs position in Bangladesh further. Two more branches were opened at Sylhet and Uttara bringing the total number of branches and booths in Bangladesh to seven and increased the number of ATMs to 9 including 2 at off-

65

site locations, reflecting commitment of the bank to the country and exhibiting the desire to gradually move into Retail Banking. The number of "CAT" cards issued during the year exceeded 3,000. Agreement was signed with the Bangladesh Export Processing Zone Authority (BEPZA) to open a booth at its Chittagong premises with a view to provide better services and to facilitate the investors. Three new products were introduced namely, "High5FD", a unique 5-year fixed deposit account, "Shamriddhi", a tiered savings account designed to offer higher returns and "DotCom", a savings account for teenagers. e-Banking Unit was set up offering settlement of payments through electronic transaction system, assistance in remittances from foreign countries, Internet Banking Services etc.

6.4. Commercial Bank of Ceylon Limited-A Comparison to Other Multinational Banks. Savings and Current Accounts Product Features Commercial Bank of Ceylon Limited Standard Chartered Bank HSBC

66

Minimum Account Balance Minimum Balance Fee

BDT 25,000(Savings) Monthly average BDT 50,000(Current) balance of BDT 100,000 (Savings) BDT 50,000 (Current) None None

BDT 50,000

None

Calculation Interest is calculated and Payment on daily balance of Interest from BDT 25,000 and above and paid half yearly or monthly. Account BDT 230 Closing Fee Time taken to 1 working day after delivery opening account Chequebook Relationship None Fee

Interest is calculated on average monthly balance and paid half yearly BDT 200

Interest is calculated on daily balance from BDT 50,000 and above and paid half yearly BDT 300

With ATM card cheque book is provided instantly BDT 500 half yearly

2 working days after opening account BDT 300 per quarter No restrictions on withdrawals or upper interest limit.

Restriction on No restrictions on Monthly interest is number of withdrawals or forfeited if customer withdrawals upper interest limit withdraws or issue cheque/transfer more than 1/10th of balance or writes more than 2 cheques a week, without 7 days prior notice. Ledger Fee BDT 500 annually No Fee Phone Banking ATM Booth N/A Total ATM 04 Free Total ATM 21

No Fee Free Total ATM 11 Free BDT 150

Annual ATM None (BDT 345 once BDT 150 charge in issuing) Card replacement fee Credit Card facility Branch coverage BDT 300 per card BDT 300 per card

N/A

Yes

Yes

07

30

09

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Deposit facility in ATM booth Online Transaction Fee Chequebook Fee Counter Cheque Inter city transaction

1 (only available in In all booths Chittagong ) Nil Yes

In all booths

Yes

Yes Free Free

yes BDT 50 Applicable None Yes Yes Yes Business Account N/A

Yes BDT 200 Free None Yes Yes Yes Nil N/A

Inter Banking BDT 1500 annually Financial kiosk SMS Banking Bills pay Center Distinctive product Holiday Banking Service Nil Nil Nil Money Market Account Available

Fixed Deposit Account Product Features Product Name Commercial Bank of Ceylon Limited FDR Monthly Interest Bearing Fixed Deposit Standard Chartered Bank Fixed EZEE Deposit FDR HSBC Time Deposit Monthly Interest Bearing Time Deposit

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Minimum Balance Interest Cycle

BDT 50,000 Interest is paid on maturity

Tenure

Condition for premature encashment

intervals 3,6,12 3,6,12 3,6,12 months months months and 1,2,3 and 2,3 and 2,3 years years years If withdrawal is No interest if made before 6 withdrawn in 1 months, interest is month and savings paid at savings rate account interest rate and after 6 months, 3 if withdrawn before months FDR rate is maturity. applicable.

BDT 50,000 Interest is paid on a monthly basis 1,2,3 years

BDT 100,000 Interest is paid on maturity

BDT 100,000 Interest is paid at

quarterly

BDT 500,000 Interest is paid on

maturity

1,3,6,12 months

BDT 500,000 Interest is paid on a monthly basis 1 and 2 years

No interest if withdrawn in 1 month and savings account interest rate if withdrawn before maturity.

Foreign Currency Account Product Features Opening Balance Time taken to delivery Cheque Book Ledger Fee Minimum Relationship Fee FC ATM Card Commercial Bank of Ceylon Limited USD/GBP 500 1 working day after opening account USD 10 yearly None Not Available Standard Chartered Bank USD/GBP 1000 2 working days after opening account Monthly USD 2.3 None Not Available HSBC USD/GBP 1000 2 working days after opening account None BDT 300 per quarter Available against NFCD or RFCD

6.5.Analysis Based on Questionnaire Survey 1. Client comment on preference about the products offered by CBC: 50% 0f the total interviewee mentioned that the Money Market Account is the most attractive package among the innovative offers of CBC. DOLLARSMART was preferred by only 5% of them. Product Percentage of Client 69

Money Market Account Short Term Deposit Bonus Savings Account Dream Planner Savings Dollarsmart

50% 12% 10% 10% 5%

10% 10%

5%

Money Market Account Short Term Deposit 50% Bonus Savings Account Dream Planner Savings Dollarsmart

12%

Fig: products preferred by the clients. 2. Client comment on branch network of CBC 40% of the interviewee faced problems because of limited branch network .

Yes 40% No 60%

Yes No

Fig: Percentage of clients faced problems because of limited branch network 3.The number of clients using ATM cards is about 60% of the total. 4.Client comment on interest calculation and payment method of CBC: 50% of interviewee made comment on the interest calculation and payment method of CBC is very good where only 15% said that interest calculation and payment method of CBC is not satisfactory. Very Good 50% Good 35% Not satisfactory 15% Should be changed None

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60% 50% 40% 30% 20% 10% 0% Very Good Good Not satisfactory

Fig: Interest payment method of CBC- Comments of clients. 5.The clients are enjoying Internet Banking service with Commercial Bank of Ceylon. Internet Banking offers the following services Balance inquiry Request for cheque books Printing own bank statement Account History for 5 years Setting up of standing orders Payment of Bills Status of deposited cheques Option to download historical data Combank international and other credit Card settlements.

6.Client comment on the problems faced by them. The problems faced by the customers of Commercial Bank of Ceylon Limited are as follows: 90% of the Client complained about the ATM service and while low interest rates and inadequate product packages was also mentioned. Problems ATM service Lower interest rate (compared with local banks) Lack of Consumer loan packages Percentage of the clients 90% 70% 40%

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Problems faced by the CBC clients

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Percentage of clients

90% 70% 40%

ATM service

Low er interest rate (compared w ith local banks)

Lack of Consumer loan packages

Problems

Findings 1. The package that attract clients attention more than any other packages is the Money Market Account because of its distinctive nature and interest calculation and payment method. Large part of the interviewee find the interest calculation and payment method of CBC attractive and innovative compared to other multinational banks. They think Money Market Account is the most attractive package because of its daily interest calculation method. 2. The entire interviewees think that CBC branches are very few for providing banking services all over the country. They also said that the location of some other banks is better than Sylhet Branch, CBC.

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3.The clients possess a positive idea about the service charge imposed by CBC compared to other multinational banks. 4. Commercial Bank of Ceylon Limited provides online transaction services which are viewed positively by the clients. Online transaction system surpass traditional way of transactions by the following points: Promptness Security and confidentiality of customer information Easy access to information

5. Most of the interviewee has introduced other customers to Commercial Bank of Ceylon Limited, which is a very positive sign for the well being of the bank. It also reflects the fact that CBC has been able to build effective customer relationship. 6.Holiday Banking Service is a new addition by the Commercial Bank of Ceylon in the era of banking service, which is available only at Dhanmondi Branch. The local clients are very much interested about Holiday Banking Service. Introducing such services can generate huge response in this region. 7.The clients are satisfied with the CBC remittance services. Sylhet is the leading foreign currency earning region of the country. Transmitting money through SWIFT technology is of great use to the customers. 8. The customers are facing problems because of the following reasons.

Only one ATM booth has been installed in Sylhet. The ATM booth is not always effective for withdrawal of money. There is lack of some packages in the area of consumer loan and student remittance. The customers have suggested that Commercial Bank of Ceylon Limited should emphasize on consumer loan schemes and student remittance. Though the clients appreciate the interest calculation and payment method of Commercial Bank of Ceylon Limited. But the interest rate is much lower in relation to that of local Commercial Banks.

9. The customers mentioned the followings that they thought needed for promoting the packages of CBC.

Using electronic and print media Introducing innovative products Offering higher interest rates Sponsoring social Programs 73

8.1. Recommendations Taking into account all the findings and data the following recommendations are made.

Improving the service quality should be focused and in order to do that proper attention and equal contribution of higher authorities with the employees are required to keep the work updated.

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To survive in competitive market, SBL in Sylhet branch should be offer retail banking and SME banking. For this, SBL in Sylhet branch can be improve in their investment sectors. Branch management right to approve minimum TK. 5 lac to sanction credit by branch manager. Establishment of performance-based salary system and job rotation can lead to the followings. Interaction and cooperation among employees will increase. Employee knowledge and skills will improve. Employees should be trained with the basic knowledge of how each department works. More skilled and competent personnel can be identified and properly nurtured. The electronic banking services should be strengthened to play a vital role in the well being of the bank. New products and services should be launched to meet the diversified needs of customers offering competitive interest rates. The bank can provide souvenirs and gifts to the customers as a token of friendship. CBC can participate in various social programs to build a socially responsible image that can help in building customer trust. Electronic and print media can be used to promote the products.

These above recommendations will help to rearranging some infrastructures, which will support the large customers based service of Commercial Bank of Ceylon Limited.

8.2. Conclusion Commercial Bank of Ceylon Limited is comparatively new in the banking industry of Bangladesh though it has been able to portray itself as a reliable bank and the growing number of its customers indicates its acceptance among clients.

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The opportunities given to me as an internee of knowing how Commercial Bank of Ceylon Limited uses its competitive advantage and its growth in Bangladesh and through out the world are valuable. In the highly competitive banking industry, the commercial banks are trying to promote their products with innovative and specialized financial services. Advances in information technology made it easier for banks to offer those financial services conveniently. The demand for services in a convenient and secured way has given customers the opportunity to choose among the service providers, the banks. Aided with various competitive advantages Commercial Bank of Ceylon Limited tries to establish its presence in the SAARC region with the 100% integrated online banking services. In this regard Commercial Bank of Ceylon Limited has a customer-oriented approach, which leads to its superior service quality. The effort to write the internship report on an analysis of the activities and performance of Commercial Bank of Ceylon Limited is a mere step to portray its aptness in context of present modern and dynamic banking business. Financial Goal

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