A

Project

On

CITY BANK

SUBMITTED BY

JAYAPRAKASH RACHMALLA

Roll no.: 72

(T.Y.B.C.B.I.SEMESTER -V)

PROJECT GUIDE

PROF. GURUNATHAN PILLAI SIR

SUBMITTED TO

UNIVERSITY OF MUMBAI

RAJASTHANI SAMMELANS

GHANSHYAMDAS SARAF COLLEGE

OF ARTS & COMMERCE

AFFILIATED TO UNIVERSITY OF MUMBAI

REACCREDATED BY NAAC WITH A GRADE

S.V. ROAD, MALAD (WEST)

MUMBAI -400064

A.Y : 2016-17

1
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions in the
completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do this project.

I would like to thank my Principal Dr. Sujata Karmarkar for providing the necessary facilities required for
completion of this project.

I take this opportunity to thank our Chief Coordinator Dr. Lipi Mukherjee and Course Coordinator Prof. Urvi
Jain for their moral support and guidance.

I would also like to express my sincere gratitude towards my Project Guide Prof.Gurunathan Pillai Sir whose
guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books and magazines
related to my project.

RAJASTHANI SAMMELANS

GHANSHYAMDAS SARAF COLLEGE

OF ARTS & COMMERCE

AFFILIATED TO UNIVERSITY OF MUMBAI

REACCREDATED BY NAAC WITH A GRADE

S.V. ROAD, MALAD (WEST)

MUMBAI -400064

A.Y : 2016-17.

2
 CERTIFICATE

This is to certify that Mr. JAYAPRAKASH RACHMALLA Roll no : 72 of Third Year

B.Com (Banking & Insurance ) Semester V has successfully completed the project on CITY
BANK under the guidance of Prof (Gurunathan Pillai Sir) in the Academic Year 2016-17.

Project Guide : Principal:

Date :

External Examiner :

Date : College Seal :

3
 DECLARATION

I, JAYAPRAKASH RACHMALLA , a student of Ghanshyamdas Saraf College of Arts &

Commerce, Malad (West) T.Y.B.Com(Banking & Insurance) SEMESTER-V hereby declare
that I have completed my project on CITY BANK in the Academic Year 2016 - 17 . This
information is true and original to the best of my knowledge.

Date : Signature of Student :

4
 INDEX
Sr. No Topics Page No.

Executive Summary
Research Methodology
Objective Of Study
Scope Of Study
Limitation Of Study

Introduction 12
1
1.1 Introduction 13
1.2 Work Schedule 14

Overview Of Bank 15

2.1 Evolution Of World Bank 16

2 2.2 The Emergence Of Modern 16
/ Baking
2.3 Banking In India 17
2.4 Company Status 19

General Baking 35

3.1 Account Opening Section 36

3.2 Local Remittance 40
3.3 Online Banking 46
3.4 Deposit Scheme Of CBL 47
3 3.5 Utility Service Scheme 49
3.6 Clearing Section 51
3.7 Collection Section 52
3.8 Account Section 53
3.9 Cash Section 54
3.10 Conclusion 56

5
Sr. No Topics Page No.
Loan And Advances 57

4.1 Salient Features Of City Bank

Credit Policy 59
4.2 Credit Portfolios And Ratio Of CBL 59
4.3 Types Of Bank Credit 60
4.4 Types Of Advances Offered By 61
CBL
4.5 Procedure Of Giving Advance 63
4.6 Lending Principle 64
4 4.7 Securities 65
4.8 Documentation 66
4.9 loan Schemes Offered By CBL 71
4.10 Issueing Of Bank Guarantee 78
4.11 Credit Disbursmen 78
4.12 Credit Monitoring, Follow-Up And 79
Supervision
4.13 Classification Procedure 80
4.14 Conclusion 81

Problem & Recommendation 82

5 5.1 Problem 83
5.2 Recommendation 84

Conclusion
6 88
Bibliography
7 89

6
 Executive Summary

This report is based on Impact of Corporate Social Responsibility on Corporate Financial performance in
context of City Bank in India. Previous studies have already shown positive relationship between Corporate
Social responsibility Bank Size, Bank Risk, Advertising Intensity, and Corporate Financial performance. But
this cannot be generalized for all the Organization or Industry that is why this Research has been conducted.

This Research has tried to find out whether Corporate Social Responsibility Bank size, Bank Risk, and
Advertising Intensity has an effect on Corporate Financial performance in context of City Bank in India.
This report has mainly concentrated on Corporate Social responsibility compared to others independent
variables such as Bank Size, Bank Risk and Advertising Intensity.

At the end of this research it was found that there is a significant relationship between City Corporate Social
responsibility and Corporate Financial Performance. The research also found out there is no significant
relationship between City Size, Risk, advertising Intensity and Corporate Financial Performance.

7
 Research Methodology

For smooth and accurate study everyone has to follow some rules & regulations. The study input were
collected from two sources:

(a) Primary sources

(i) Practical desk work
(ii) Face to face conversation with the officer
(iii) Direct observations
(iv) Face to face conversation with the client
(v) Consultation with the Following Persons
MR. Md. Abdul Halim, Senior Vice President & Manager, CBL, BB Avenue Br.
Mr. A.S.M Shokrana, Vice President, PBL, BB Avenue Br.
Mr. Mohammad Mortaja, Senior Executive Officer, Credit Department, CBL,BB Avenue Br.
Md. Sohel Rana, Officer, Accounts Section.

(b) Secondary sources

(i) Annual report of City Bank Ltd.
(ii) Files & Folders
(iii) Memos & Circulars
(iv) Daily diary (containing my activities of practical orientation) maintained by me,
(v) Various publications on Bank,
(vi) Websites,

Different circulars sent by Head Office and India Bank.

8
 Objectives of the study

The objective of the study is to gather practical knowledge on banking system and operation. This internship
gives us a chance to co-ordinate with the theoretical knowledge and the practical experience. The following
are of objective for internship in bank:

To apply theoretical knowledge in the practical field.

To have exposure to the functions of general banking section.
To analyze the service procedure of Prime Bank Ltd.
To know the banking operation.
To know the area of General Credit.
To know the process of loan disbursement.
To know the process of loan collection.
To know the documents of credit.
To know the import & Export finance procedure.

9
 Scope of the Study

In this report, three major areas in commercial banks have been covered which are:

(a) General banking section.

(b) Credit section.
(c) Foreign exchange section

10
 Limitations of Study

There were some problems while I have undergone the internship program. A wholehearted effort was
applied to conduct the internship program and to bring a reliable and fruitful result. In spite of having the
wholehearted effort, there exits some limitations, which acted as barrier. The limitations were ---

The study was limited only to the City Bank Limited, B.B. Avenue Branch.
Another Problem was time constraints. The duration of my internship Program was only two months.
But this time is not enough for a complete and fruitful study.
The Bank was a busy one having heavy rush of people, whom officers need to deal with. So
allocation of time for an internee is very much tough for the officers of the bank.
Sometimes I was assigned to do some jobs without explaining why this work is to be done. This
situation has created a lot of problems to understand why a specific function is being performed.

11
INTRODUCTION

12
1.1 Introduction
Economic history shows that development has started everywhere with the banking system and its
contribution towards financial development of a country is the highest in the initial stage. Schumpeter
(1933) regarded the banking system as one of the two main agents (other being entrepreneurship) in the
whole process of development. Keynes also emphasized the role of banking services in the process of
economic development of a country, while SHE was addressing the House of Lords regarding International
and Monetary System (quoted in Sharma 1985). Moreover Alexander Gerschenkron (1962) in his popularly
known Gerschenkrons Hypothesis explained the banking system as the key role player at certain stage of
the industrialization process.

Modern banking system plays a vital role for a nations economic development. Over the last few years the
banking world has been undergoing a lot of changes due to deregulation, technological innovations,
globalization etc. These changes in the banking system also brought revolutionary changes in a countrys
economy. Present world is changing rapidly to face the challenge of competitive free market economy. It is
well recognized that there is an urgent need for better, qualified management and better-trained staff in the
dynamic global financial market. India is no exceptions of this trend. Banking Sector in India is facing
challenges from different angles though its prospect is bright in the future.

The course under B.B.A program designed with an excellent combination of theoretical and practical
aspects. The whole course is divided into eight (8) semesters of 6 months each. After the completion of 8 th
semester consisting of theoretical exposure, the students are sent to different organization to obtain some
practical exposure in different sectors which would help them in taking up more professional courses in
M.BA. As a student of B.B.A, I have assigned to B.B. Avenue branch, The City Bank Ltd. for my
internship.

As MY program director directed us to present the report in different way that will be based on the personal
observations from each department. I have described each department I have worked in by followingg way:

13
(1) Understanding:

In this part I have tried to make acquaintance with the departments I have worked of this branch.

(2) Things are done here

In this part I have tried to see the things what are being done in each department of the branch.
(3) Personal observations:
In this part I have tried to present my personal observations from each department of this branch. I had an
opportunity to be acquainted with the practical banking prevailing in Banga Bandhu Avenue Branch, The
City Bank Ltd. The knowledge, which has been acquired in my Internship Period, I have tried my level best
to show in this report.

1.2 Work schedule

Department Rotation:

NAME OF THE FROM TO NUMBER OF Schedule

DEPARTMENT DAYS Source:

Suggested
General Banking 24-05-06 18-06-06 26
by Branch
Credit department 19-06-06 Till now
Manager,
City Bank Ltd, B. B. Avenue Branch.

14
OVERVIEW OF BANK

15
2.1 Evolution of the Word Bank:
The word bank originated from Italian word Banca which means long bench. In ancient time Italian Jews
merchant used to do business of lending money by sitting on the bench. It is assumed that the word bank
derived from the word Banca. To meet the expense of war of 1171 one type of credit certificate was
launched in Italy at an interest rate of 5%. It was called as Monte in Italian language and Banke in German
language when German language was widely used in Italy. As a result the word Banke gradually changed to
the word Banca from which the word Bank originated.

2.2 The Emergence of Modern Banking:

The linguistics and etymology suggests an interesting story about banking origins. Both the old French
word Banque and the Italian word Banca were used centuries ago to mean a bench or moneychangers
table. This describes quite well what historians have observed concerning the first bankers, who lived more
than 2000 years ago. They were money changers, sitting usually at table or in a small shop in the
commercial district, aiding travellers who came to town by exchanging foreign coins for local money or
discounting commercial notes for a fee in order to supply merchants with working capital.

The first bankers probably used their own capital to fund their activities, but it was not long before the idea
of attracting deposit and securing temporary loans from wealthy customers became a source of bank
funding. Loans were then made to merchants shippers and landowners at rates of interests low as 6 percent
per annum to as high as 48 percent a month for the riskiest ventures! Most of the early bank was Greek in
origin.

The banking industry gradually spread outward from the classical civilizations of Greece and Rome into
northern and western Europe. The early bank in Europe were places for safe keeping of valuable items
(such as gold and silver bullion) as people were fearing loss of their asset due to war, theft, or expropriation
by government. When colonies were established in North and South America, old world banking practices
were transferred to the new world.

2.3 Banking in India

Since early British rule, the history of banking in India territory shows that the traditional trade-networks
developed before the banks invaded rural areas. And the banking services have slowly flourished in India
territory. Even today, in many places, moneylenders provide credit services. Small shopkeepers and
businessman use informal credit at high interest rate, traditional Mahajan,s money lending business

16
gradually declined due to expansion of bank and the micro credit programs of NGOs, Cooperative banks
and government agencies.

Public Sector Banks:

During the liberation war in 1971, the economic, political, and social systems including the banking system
were severally damaged. At that time, all big and medium financial institutions except two small banks had
their head office in the West Pakistan. The non-Bengali owners and managers of the financial
establishments that operated in East Pakistan had abandoned them. After independence in 1971, the new
government had to take over management and ownership of all such institutions. The bank Nationalization
Order 1972 was issued to nationalize banks and financial institutions (except those incorporated abroad) in
order to control chaos in the field of ownership, party bureaucracy, the intelligentsia, and pressure group. By

several orders six nationalized commercial banks (NCB), one industrial bank (BSB), one agricultural

bank (BKB), and one industrial development financial institution (BSRS) were created The banks and
financial institutions, which originated during the Pakistan period and were merged, and renamed and
functioning after independence of India. In the year 1983, the government allowed private sector to
participate in the banking business. The Pubali Bank and the Uttara Bank were denationalized in 1985, due
to non-profitability. This action reduced the number of NCBS to four. Such restructuring of public sector
banks was in order to play their role in industry, agriculture, exporting, self employment etc.

Private commercial banks:

Taking advantage of the liberalization policy of the government regarding participation of private sector in
the banking business, a number of private banks were established in and after 1983. With the emergence
of private banks in India, a competitive situation in the sector has been created. Now there are 52
commercial banks in India. The emergence of private banks has added a new dimension to the banking
system in India. The private commercial banks show a steady growth in terms of number of branches
deposits and advances.

17
Foreign banks:

The state bank of India opened one branch July -September 1975. In 1975, the four foreign banks operating
in India were: American Express International Banking Corporation, Grind Lays Bank, The Chartered Bank
and the State Bank of India. Now there are more than 15 foreign banks.

The historical process shows the influence of the various social groups in the governance of the country and
the banking systems. During the British regime banking was concentrated only in the areas of commercial
and administrative importance. With the independence of India and Pakistan, the banking sector had to be
reshaped. The government of Pakistan had to take major initiatives for the growth and extension of banking
services to the different sectors of the economy and also to different regions.

Independence of India was yet another major change in the banking sector. Immediately after independence
of India, banks started their operations under full government ownership. Later, some of the banks were
denationalized and the government allowed banks to be established in the private sector. Banking operations
have been diversified and a number of specialized banks were established. Development finance institutions
also exist to supplement the baking sector in an effort to boost the economy; government has been following
a pragmatic policy relating to the banking sector in India.

Despite many odds and problems now facing banking sector, it is expected that it would be able to meet up
the challenges ahead, particularly of the nest century.

18
2.4 Company Status

2.4.1 Background of City Bank Limited

City Bank Ltd started its operations on 28 March 1983 with an authorized capital of Tk 200 million divided
into 2,000,000 ordinary shares of Tk 100 each and paid up capital of Tk 34 million, of which Tk 30 million
was paid up by its promoters and the remaining amount by the government of the People's Republic of
India. In 2000, the banks paid up capital rose to Tk 160 million, of which Tk 80 million was subscribed by
the sponsors/promoters and the remaining amount by the general public. On 31 December 2000, the banks
reserve fund was Tk 263.1 million as compared to Tk 125.22 million in 1995. But there was shortfall in
total capital adequacy ratio of the bank during 1997-2000 as per BIS (Bank for International Settlement)
standards to be followed by banks operating in India.

The management of the bank is vested in a 13-member board of directors. That includes the chairman and a
vice-chairman. The managing director is the chief executive. Three deputy-managing directors, three
executive vice presidents, fourteen vice presidents, fifty-four assistant vice presidents and some other
employees of different categories assist him. The total number of employees of the bank stood at 1,845 at
the end of business year 2000. That time the bank had 76 branches throughout the country. Sixty-one of
them were urban and 15 were rural. It had 6 regional offices established at the 6 divisional towns/cities.

The bank conducts all types of commercial banking activities. Core businesses of the bank include deposit
mobilization, lending and foreign exchange dealings. At the end of the initial year of its operations in 1983,
the total deposits were Tk 320.2 million, which rose to Tk 11,603.2 million in 2000. Total and net loans and
advances of the bank amounted to Tk 9,964.6 million and Tk 7,698.2 million respectively in December
2000. The broad economic sectors in which the bank provides lending are agriculture (0.80%), term loans to
large and medium scale industries (18%), housing (1.75%), working capital and commercial lending (35%),
import (9.9%), export (10.5%) and others (24.05%).

The quality of the banks lending assets deteriorated due to huge non-performing loans. The ratio of its
classified loans was 43% in 1997, 40.85% in 1999 and 39.57% in 2000. Total assets of the bank including
off-balance sheet items accounted for Tk 30,806.9 million in 2000, when its gross earning assets and liquid
assets were valued at Tk 14,884.3 million and Tk 6,430.8 million respectively. In 1999, the total foreign
exchange business handled by the bank stood at Tk 9,838.3 million (import 87%). Dealings in foreign
remittances were only Tk 815 million during 1999. Out of its 76 branches, 19 are now authorized to deal in

19
foreign exchange. The bank has correspondent relationships with 255 bank/bank offices and other financial
institutions abroad.

Total investment of the bank at the close of the year 1999 was Tk 1,492.8 million, of which Tk 1,140
million was in TREASURY BILL. Other investments included those in shares and securities. The income on all
investments that year was Tk 101.1 million. The bank earned an operating income of Tk 1,356.5 million and
incurred operating expenses of Tk 375.7 million in business year 2000. Net profit of the bank before
deducting tax and provision for classified loans stood at Tk 188.3 million in the same year. After
appropriation of operating profit with accumulated losses of Tk 121.6 million, the bank still suffered a
cumulative loss of Tk 66.7 million up to December 2000.

Source: Internet

2.4.2 Goals and objectives of The City Bank Limited

To build up strong pillar of capital.

To promote trade, commerce and industry.
To discover strategies for achieving systematic growth.
To improve and broaden the range of product and services.
To develop human resource by increasing employment opportunities.
To enhance asset of shareholders.
To offer standard financial services to the people.
To create congenial atmosphere so that the client becomes interested to deal with the prime bank limited.
To keep business morality.
To develop welfare oriented banking service.
To offer highest possible benefit to customers.
As to its position among its counterparts is held high to let the viewers cast their very first look at it.
To carry on the business of discounting and dealing in exchange of specie and securities and all kinds
of mercantile banking.
To provide for safe-deposit vaults and the safe custody of valuables of all kinds.
To carry on business as financiers, promoters, capitalists, financial and monitory agents,
concessionaires and brokers.
To act as agents for sale and purchase of any stock, shares or securities or for any other momentary or
mercantile transaction.

20
 To establish and open offices and branches to carry on all or any of the business abroad and within
the country provided prior permission is obtained from India bank.

2.4.3 Operation
The City Bank Limited, since its inception is an IT-focused Bank. The bank has by now a network of 77
branches strategically located in different cities. All the branches are functioning in computerized
environment and integrated through Wide Area Network (WAN) .The branches are full fledged units and
can provide all commercial and investment banking service raging from small and medium enterprises to
big business conglomerates and houses.

The Bank always tries to reduce its dependence on interest earnings by giving more emphasis on the fee
based income through introduction of capital market operation and Leasing .The Capital Market operation
includes Portfolio Management, Investors Account, Underwriting, Mutual Fund Management etc.

The Bank introduced modern system of Leasing Operation as in practice with Banks in all other countries
of the world. The Lease Finance portfolio of the bank is the first of its kind in a Commercial Bank in India.

Entrepreneurship Development Training is arranged to impart operational skill and modern technique of
management to introduce new entrepreneurs in the field of industrialization on the basis of participatory
finance.

City Bank Limited is one of first few Indian Banks who have become member of SWIFT (Society for
Worldwide Inter-Bank Financial Telecommunication). SWIFT is a member owned co-operative, which
provides a fast and accurate communication network for financial transactions such as letters of Credit,
Fund transfer etc.

Prime Bank Limited is operating branches on both interest based Banking and Islamic Sariah based
Banking. The Islamic Sariah based Banking is completely different From the conventional one.

The Bank is Maintaining separate set of accounts for Islamic Banking branches according to the standard
adopted by Financial Accounting and Auditing organization for Islamic Financial Institution.

City Bank Limited will try to achieve excellence in customer service. The customer is most important for
them. Their policy is customer driven. The Bank has introduced Special Savings Schemes; Special Credit
Scheme for the benefit of the low-income group, especially for the self employment of the educated youth.

21
2.4.4 Mission and vision of City Bank Limited
The effort of City Bank Limited is focused on delivery of quality service in all areas of banking activities
with the aim to add increased value to shareholders investment and offer highest possible benefits to the
customers. There must have the mission as well as vision what should back every efforts of the
organization. as it is said that mission without vision is a daydream and vision without mission is a
nightmare.

Mission:
To contribute to the socio-economic development of the country.
To attain highest level of customer satisfaction through extension of services by dedicated
and motivated team of professionals.
To maintain continuous growth of market share ensuring quality.
To maximize banks profits by ensuring its steady growth.
To maintain the high moral and ethical standards.
To ensure participative management system and empowerment of human resources.
To nurture an enabling environment where innovativeness and performance is rewarded.
Vision:
To be the leading bank in the country with best practices and highest social commitment.

22
 2.4.5 Managerial Hierarchy of City Bank Ltd.

Chairman
Vice Chairman
Top Management Directors
Managing Director
Asstt. Secretary

Deputy Managing Director

Executive Level Senior Executive Vice President
Management Executive Vice President
Senior Vice President
Consultant
First Vice President
Vice President
Senior Assistant Vice President
Assistant Vice President

First Assistant Vice President

Mid Level Senior Executive Officer
Management Executive Officer
Principal Officer

Senior Officer
Junior Level Management Trainee
Management Officer
Junior Officer
Assistant Officer

23
2.4.6. SOWT Analysis
From my practical observation, I get the following Strength opportunity, weakness and threat (SOWT).

Strength:
It has well reputation in the market
Not engaged in unfair business practice.
Concentrated market.
Officers are highly educated.
Executives are highly qualified and experienced.
Bank has many attractive deposit schemes.
Well-furnished and Air-conditioned Bank.
Efficient management practice in the Bank.

Weakness:
Deposit is lower than advance.
Short time experience of the Bank.
Officer has limited experience and not enough trained.
Long-term credit is not sufficient.
Small market shares in Banking-business.

Opportunities:
Can increase the credit scheme.
Can increase the advertising of the Bank.
Private Banks becomes more reliable to local public.
Govt. has banned some Jatiya Sanchaya patra.
Threat:
o There are many competitors in the market.
o Competitors have more deposit.
o Ruling Government is not conducive in the viewpoint of the Bank.
o Govt. imposes tax and VAT on profile.
o Govt. pressures to reduce interest rate

24
2.4.7 Performance Review of The City Bank Ltd.

Performance at a Glance (amount in million TK.):

Particulars 2001 2002 2003 2004 2005

Authorized Capital 400.00 400.00 400.00 1750.00 1750.00
Paid-up- Capital 160.00 240.00 240.00 480.00 720.00
Statutory Reserve 160.00 173.10 213.81 378.42 604.61
Other Reserve 103.12 240.60 240.60 240.60 240.60
Retained Earnings 80.00 130.00 102.78 78.43 33.17
Total Shareholders Equity 503.12 783.70 797.21 1417.47 1958.40
Deposits 17183.98 19683.30 20046.31 22236.96 30647.83
Loans and Advance 12729.22 13884.90 14778.55 17027.84 23326.34
Import 13503.20 12262.60 17292.74 17909.94 21363.21
Export 3982.10 6213.50 7719.70 12198.69 18218.97
Investment 1977.95 2511.40 3379.26 3161.38 3648.27
Total Asset 20726.40 24481.60 23698.56 26375.56 35303.74

Total Income 1749.07 2120.89 2475.04 2707.84 3476.85

Total Expense 1341.68 1569.66 1799.17 1785.79 2227.99
Profit Before Provision 407.39 551.23 675.87 922.05 1248.86
Total Provision 1840.80 485.60 472.41 99.00 117.93
Profit Before Tax 222.59 65.63 203.46 823.05 1130.93
Provision for Tax 142.59 52.30 190.00 442.79 590.00
NET Profit After Tax 80.00 13.33 13.46 380.26 540.93
Return on Equity (%) 17.27% 2.07% 1.70% 34.34% 32.05%
Return on Asset 0.42% 0.06% 0.06% 1.52% 1.75%
Capital adequacy Ratio 6.63% 8.16% 6.56% 9.78% 9.63%
(%)
Credit Deposit Ratio 74% 71% 74% 77% 76%
EPS (TK.) 50.00 5.55 5.61 79.22 75.13
Book Value Per Share 314.45 326.54 329.37 230.70 272.00
(TK.)
market Value Per 266.80 300.00 227.65 877.75 770.75
Share(TK.)
No. of employee 1688 1751 1692 1803 1829
Executive 141 142 164 178 203
Officers 958 1011 943 1032 1022
Staffs 589 598 585 593 604
No. of Branches 76 76 77 77 77
A/D Branches 20 20 20 20 20
No. of Shareholders 3256 3027 3247 3486 5678
Source: Annual Report 2005

25
Capital & Reserve
CBL as a first generation bank has strengthened its capital base by raising the authorized capital to TK.
1750 million and paid up capital to Tk.720 million. The capital adequacy ratio was 9.65 at the end of 2005.

Deposits
The deposit as at 31st December 2005 rose to Tk.30648 million registering a growth of 38% over preceding
year (Tk.22236 million).

Deposit mix of bank as on 31st Dec. 2005 stood as follows:

S.L No Type of Deposit Amount in % of share
million Tk.
1. Current and others 5090.48 16.61
2. Savings 5820.42 18.99
3. Short term 2324.90 7.59
4. Fixed deposit 12451.65 40.63
5. Scheme 4960.38 16.18
Total 30647.83 100%

Loans and advances

The Bank continued to reengineering process to raise its assets portfolio by implementing new credit policy
with diversified and well-structured asset portfolio and separation of responsibilities and segmentation of
divisions. The outstanding amount of loans and advances as on 31 st December 2005 stood at Tk.23326
million with a record growth of Tk.6298 million (37%). The outstanding amount at the same period of
previous year was Tk.17027 million. City bank Limited has a plan to maintain the following proportions to
design and maintain credit portfolio:

26
 Table: Comparative Position of Sector Wise Exposure

As on 31.12.05
SL.
Sector Amount (in
No. TK. % of share
million TK.)

1 Agriculture 171.00 0.73

2 L & M Industry (Term Loan) 3542.30 15.19

3 Working Capital & Commercial lending 8739.79 37.47

4 Export Finance 3762.40 16.13

5 Import Finance 4094.61 17.55

6 Housing 224.46 0.96

7 Others 2791.74 11.97

Total 23326.30 100.00

27
28
Non-Performing Loan
Non-performing loan dropped to Tk.1332 (5.71% of total loan portfolio) million only from an amount of
Tk.1800 (10.48% of total loan portfolio) million of previous year.

In million Tk.

During 2005 a significant amount of Tk.303 million was recovered from non-performing loan.

29
Import
Import growth in 2005 is19%(Tk.17910 in 2004 to Tk.21363 in 2005).

Export
The bank achieved significant growth (49%) in 2005.

30
2.4.8 PRODUCTS AND SERVICES OF CBL
Since commencement of banking operation, City bank Limited has not yet only gained enormous popularity
but also been successful in mobilizing deposit and loan products. The bank has made significant progress
within a very short time period due to its dynamic management and introduction of various consumer-
friendly loan and deposit products. All the products and services offered by the bank can be classified under
two major heads:

Deposit Products
Monthly Benefit Deposit Scheme
Fixed Deposit Scheme
Saving Deposit Account(Three Stage Saving Scheme)
NFCD (Non Resident Foreign Currency Deposit Account)
NITA (Non Resident Investors Taka Account)

Loan Products
Consumers Credit Scheme
Lease Finance
Hire Purchase
Small and Medium Enterprise Credit Scheme
Loan Against Shares and Securities
House Building Financing Scheme
Financing Scheme For Contractors
Computer Software Financing Scheme
City Bank Maser Credit Card
City Bank VISA Credit Card
Working Capital Financing
Import Financing
Export Financing
Industrial Financing

31
Other Service
Consistent with the modern edge and competing in the competitive market, City Bank Limited has
introduced some innovative banking services that are remarkable in a country like India. The services
offered by the bank are as follows:

On-line Banking
The bank has set up Wide Area Network (WAN) across the country within its all branches to provide on-line
branch banking facility to tits valued customers. The service named Finacle Core has opened up several
possibilities of improved customer services. Under this facility client of one branch are able to do banking
transaction at any other branch of the bank. The bank hosted its Web Site (www.citybank.com) to facilitate
dissemination of information about the banking services and facilities of City Bank Limited all over the
world.

Information Technology in Banking Operation

Prime Bank Limited has adopted automation in banking operation from the first day of its business. The
main objective of this automation is to provide efficient and prompt services to its valued clients. At present
all the branches of the bank are computerized under UNIX operating system to provide best security to the
information. City Bank Limited is providing comprehensive range of banking services with utmost care and
efficiency to its customers. Auto Teller Machine is used to count money properly to save clients valuable
time as well. The customer can draw money/cash from their account within a minute. s

SWIFT Service
City Bank Limited is one of the first few Indian Banks to obtain membership of SWIFT (Society for
Worldwide Inter-bank Telecommunication). SWIFT is a members owned cooperative which provide a first
and accurate communication network for financial transactions such as Letter of Credit, Fund Transfer etc.

32
2.4.9.Recent Performance at a glance of Banga Bandhu(B.B) Avenue Branch

Year Deposit target (in crore) Achievement (in crore) %

2005 60 57.35 94.5
2006(JAN- 73.67 73.34 99.55
JUNE)

Year Profit target (in crore) Achievement (in crore) %

Year Export target (in crore) Achievement (in crore) %
2005 7.00 6.20 88.57
2005 52 73.05 140.45
2006(JAN-
Year 4.50 3.34 74.22
2006(JAN- Import
87.50 target(in crore) Achievement
46.27 (in crore) %
52.88
JUNE)
Year Recovery target (in lac) Achievement (in lac) %134.14
2005
JUNE) 100 134.14
2005 180 18 10.00
2006(JAN- 40
100 49.11
3.30 7.549.11
JUNE)

Year Advance target (in crore) Achievement (in crore) %

2005 80 86.36 107.95

2006(JAN- 105.68 94.82 89.72

JUNE)

Recovery of Classified Loans

Recovery of Classified Loans up to 31 st December 2000: TK.20.93 lac. After this year the year wise
recovery position of classified accounts are given below:

Year Classified amount at the year end Recovery during the year
(in 000 TK.) (in 000 TK.)
2001 23,777 3,266
2002 15,695 172
2003 14,855 13,353
2004 1,013 1,138
2005 1,232 2,502

33
2006(Jan.- June) 118.76 lac 2.30 lac

Statement of Overdue Bill of Entry

Year 2001 2002 2003 2004 2005 Total Total Amount

B.B.Avn. Br. Nill 2 Nill Nill 3 5 U.S. $ 27,026.20

34
Recovery and defaulting installments and amount under consumer credit scheme for
the month of May 2006:

1. No. of total borrowers : 62

2. Total authorized loans
3. Total amount disbursed
4. Total amount recovered
5. Total amount outstanding
6. Total overdue amount
: TK. 4,466,710.00
: TK. 4,466,710.00
: TK. 3,873,335.00
: TK. 1,881,506.88
: TK. 509,300.00

Position of newly developed liability products (Jan-June 2006)

Name of the product Total a/c opened Total amount

TSS (Three Stage Saving Scheme) 768 2,400,000
MBS (Monthly Benefit Scheme) 06 2,250,000
JSS (Juniors Savers Scheme) Nill -
LSS (Lachpoti Savings Scheme) Nill -

35
GENERAL BANKING

36
At first I have been placed in the General Banking Department. General Banking department performs the
majority functions of a bank. It is the core department.

In fact, bank operates with the peoples money. And this process starts with the General Banking
department. The activities of the General Banking Department of CBL are mainly divided into the following
categories:

Account Opening Section,

Local Remittance Section,
Online Branch Banking Section,
One Stop Utility Services Section,
Deposit Schemes Section,
Clearing Section,
Collection Section,
Cash Section,
Accounts Section,

3.1 Account Opening Section:

To establish a Banker and customer relationship Account opening is the first step. Opening of an account
binds the Banker and customer into contractual relationship. But selection of customer for opening an
account is very crucial for a Bank. Indeed, fraud and forgery of all kinds start by opening account. So, the
Bank takes extremely cautious measure in its selection of customers.

3.1.1 Types of Account:

Current Account.
Savings Account.
Fixed Deposit Account.

37
3.1.2 Procedure to open an Account:
For opening an account, at first the prospective account holder will apply for opening an account by
filling up account opening form. Account opening form consists of the name of the branch, type of
account, name of the applicant(s), present address, permanent address, passport number (if any), date
of birth, nationality, occupation, nominee(s), special instruction (if any), initial deposit, specimen
signature(s) of the applicant(s), introducers information etc.
The prospective customer should be properly introduced by the followings:
i. An existing customer of the bank.
ii. Officials of the bank not below the rank of Assistant Officer.
iii. A respectable person of the locality who is well known to the manager or authorized officer.
Two copies of passport size photograph duly attested by the introducer.
Signature of the prospective account holder in the account opening form and on the specimen
signature card duly attested by the introducer.
Then the concerned authority will allocate a number for the new account.
The customer than deposit the initial deposit by filling up a deposit slips. Initial deposit to open a
current account in PBL is Tk. 1000.00 and saving account is Tk. 500.00.

After depositing the initial deposit, the account is considered to be opened. CBL maintains all of its
accounts in computer. After depositing the initial deposit, CBL records it in the computer by giving new
account number. Then it issues chequebook requisition slip by the customer. Then it distributes all relevant
papers to respective department.

3.1.3 Activities and papers necessary for opening an account:

(A) Joint Account:

If the account is a joint account, then the joint account holder should submit a declaration and operational
instructions of the account along with their signature. The declaration is

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 this account shall be joint and several.

(B) Partnership firm:

The following documents have to be submitted for preparing an account of a partnership firm:

38
 Partnership deed.
(a) If the partnership firm is a registered one, then one copy of registration forms.
(b) If not, then a copy of certificate from the notary public.

(C) Limited Company:

For the opening of an account of a limited company, following documents have to be submitted:
A copy of resolution of the company that the company decided to open an account in the City
Bank.
Certified true copy of the Memorandum & Articles of Association of the Company.
Certificate of Incorporation of the company for inspection and return along with a duly
certified Photocopy for Banks records.
Certificate from the Registrar of Joint Stock Companies that the company is entitled to
commence business (in case of Public Ltd. Co. for inspection and return) along with a duly
certified Photocopy for Banks records.
Latest copy of balance sheet.
Extract of Resolution of the Board/General Meeting of the company for opening the account
and authorization for its operation duly certified by the Chairman/Managing Director of the
company.
vii) List of Directors with address (a latest certified copy of Form-XII)

(D) Club/Society:
Following documents have to be obtained in case of the account of the club or society:
Up to date list of office bearers.
Certified copy of Resolution for opening and operation of account.
Certified copy of Byelaw and Regulations/Constitution.
Copy of Government Approval (if registered).

39
(E) Cooperative Society:
Following documents have to be obtained in case of the account of Cooperative Society:
Copy of Byelaw duly certified by the Co-operative Officer.
Up to date list of office bearers.
Resolution of the Executive Committee as regard of the account.
Certified copy of Certificate of Registration issued by the registrar, Co-operative societies.
(F) Non-Govt. College / School / Madrasha / Muktab:

Following documents have to be obtained in case of the account of non-govt. college / school / madrasha /
muktab:

Up-to-date list of Governing Body/Managing Committee.

Copy of Resolution of the Governing Body/Managing Committee authorising opening and
operation of the account duly certified by Gazetted Officer.
(G) Trustee Board:

Following documents have to be obtained in case of the account of trustee board:

Prior approval of the Head Office of CBL.

Certified copy of Deed of Trust, up to date list of members of the Trustee Board and certified
copy of the Resolution of Trustee Board to open and operate the account.
(H) Minors Account:

Following documents have to be obtained in case of the account of minor:

Putting the word MINOR after the title of the account.

Recording of the special instruction of operation of the account.
The AOF is to be filled in and signed by either the parents or the legal guardian appointed by
the court of law and not by the minor.

40
3.2 Local Remittance:
Local remittance is one of the main components of general banking. The activities of local remittance are
---

i. Telegraphic Transfer,
ii. Demand Draft issue,
iii. Pay order.
iv. Pay slip.

3.2.1 Telegraphic Transfer (TT):

It is an order from the issuing branch to the drawee bank / branch for payment of a certain sum of money to
the beneficiary. The payment instruction is sent by telex and funds are paid to the beneficiary through his
account maintained with the drawee branch or through a pay order if no account is maintained with the
drawee branch.
Procedure of issuing TT:
Following procedures are followed while issuing of TT:
The applicant fills up the relevant parts of the prescribed application form in triplicate, duly signed
the same and gives it to the GB.
GB will fill up the commission part for banks use and request the applicant to deposit necessary cash
or cheque at the cash booth.
GB will prepare telex in appropriate form, sign it and send it to the telex operator for transmission of
the message.
GB will prepare necessary advice. Debit advice is sent to the client if clients account is debited for
the amount of T.T.
T.T. Confirmation Advice is sent to the drawee branch.
Credit Ticket (second copy of the application form) is used to credit the CBL General Account.
The first copy of the application form will be treated as Debit Ticket while the second copy will be
treated as Credit Ticket. The third copy will be handed over to the applicant as customers copy.

41
Accounting Treatment:
For telegraphic transfer, PBL gives the following entries---
Clients Account Dr.
City General Account Cr.
Telex Account Cr.
Commission Account Cr.

Payment of T.T.
On receipt of T.T. the drawee branch passes payment instructions the following entries if the T.T. is found to
be correct on verification of the Test number
a) City General Account Dr.
DAD Account TT Payable Cr.

b) DAD Account TT Payable Dr.

Clients Account/Pay Order Cr.

In case the beneficiary does not maintain any account with the drawee branch a pay order will be issued in
favor of the payee and sent to his banker / local address as the case may be.

Every branch maintains a prescribed T.T. Payable Register. All the particulars off T.T. are to be
properly recorded in this register duly authenticated. A separate Type of T.T. confirmation advice is sent to
the drawee branch on the same day. On receipt of T.T. confirmation advice, the particulars of T.T. are
verified with reference to particulars already recorded in the T.T. payable register.

3.2.2 Demand Draft (DD):

Sometimes customers use demand draft for the transfer of money from one place to another. For getting a
demand draft, customer has to fill up an application form. The form contains date, name and address of the
applicant, signature of the applicant, cheque number (if cheque is given for issuing the DD), draft number,
name of the payee, name of the branch on which the DD will be drawn and the amount of the DD. The form
will be duly signed by the applicant and by the authorized officer.

Process of issuing Local Draft:

Followed procedures are followed while issuing local draft
Get the application form properly filled up and signed by the applicant.
Complete the lower portion of the form for the banks use.

42
 Calculate the total amount including the banks commission.
If the cheque is presented for of the local draft, the officer should get the cheque duly passed
for payment by the authorized person and record the particulars of local draft on the back of the
cheque.
If the client wants to debit his account for the payment of the draft amount, the officer should
get the account holders signature verified properly, from signature card on record of the branch and
debit clients account for the total amount including commission.
The first copy of the application form will be treated as Debit Ticket while the second copy
will be treated as Credit Ticket and kept by the GB. The third copy is handed over to the applicant as
customers copy.
The GB Department maintains a prescribed L.D. Issue Register. All the required particulars of
LDs issued by CBL should be entered in that register duly authenticated.

Issue of Duplicate Draft:

Duplicate Draft is not normally issued unless getting of satisfactory evidence is produced regarding loss of
the draft. If the L.D. is reported to be lost or stolen, the issuing branch on receipt of a written request from
the purchaser may issue a duplicate draft

Before issuing duplicate L.D. the branch should observe the followings

i) Verify the purchasers signature on the request letter from the signature appearing on the
original application form.
ii) Immediately issue a stop payment instruction to the drawee branch under advice of head
office and obtain confirmation of non-payment the L.D. in acquisition.
iii) After the drawee branch has acknowledged the stop payment order and confirmed that the
local draft in acquisition remains unpaid at their end, the issuing branch should obtain an
Indemnity Bond on stamp paper as per prescribed format from the purchaser duly signed by
him. The branch will thereafter write to head office for their approval to issue a duplicate
draft.
iv) The head office on receipt of the request from the issuing branch will immediately issue a
caution circular to all the branches regarding the lost of the local draft asking them to record
stop payment.
v) The head office will thereafter issue clearance to the issuing branch for issuing for issuing a
duplicate draft in lieu of original reported lost.

43
 vi) On receipt of the clearance from head office, the issuing branch will issue a completely fresh
draft marking clearly the words duplicate issued in lieu of original draft no.
dated .in bold letters on the top of the front page of the draft. The printed serial
number on the draft should not however be struck off. Intimation should be given to the
drawee branch furnishing full particulars of the duplicate draft.
vii) The particulars of the duplicate draft must resemble those of the original draft in all respects,
i.e., all the particulars to the duplicate draft must be identical with those in the original draft.
No further IBCA is to be issued for the duplicate draft.

viii) Prescribed duplicate issuance charge is to be recovered for issuing the duplicate draft and
credited to Income Account.

Cancellation of Local Draft:

The followings are followed while canceling a L.D.

The purchaser should submit a written request for cancellation of the L.D. attaching therewith the
original L.D.
The signature of the purchaser will have to be verified from the original application form.
Managers prior permission is to be obtained before refunding the amount of draft.
Cancellation charge is to be recovered from the applicant and only the amount of the draft less
cancellation charge should be refunded. Commission charge, posted charge etc. recovered for issuing
the L.D. should not be refunded.
The original entries are to be reversed giving proper narration. An IBDA for the cancelled L.D.
should be issued on the drawee branch.
Cancellation of L.D. should also be recorded in the L.D. Issue Register.

Payment of L.D.:
While payment of L.D. CBL performs the following functions
i) On receipt of Credit Advice (IBCA) from the issuing branch the following entries are to be
passed
City General Account Dr.
DAD Account Cr.

44
 ii) When L.D. is presented for payment at the paying branch, its details are to be carefully
examined with reference to the following points
a) Whether the draft is drawn on the Local office.
b) Whether the draft is crossed or not. Amount of crossed draft is not paid in cash to the
payee but to be paid to his account with a bank.
c) Draft must have to be signed by two authorized officers of the issuing branch. Their
signatures are to be verified from the specimen signature book for being sure that draft
that the draft is genuine. The verifier should put his initial.
d) Endorsement on the back of the draft must be regular in case the draft is presented
through clearing.
e) The amount of the draft should not exceed the amount written in red ink at the top of
the draft.
f) The payee is to be properly identified in case of cash payment.
g) The particulars of the draft i.e. the draft number, date, amount and the name of the
payee should be verified from the L.D. Payable Register.
iii) In case of payment, the draft should be cancelled with red ink. The date of payment should be
recorded in the L.D. Payable Register.

Accounting Treatment:
While payment:
DAD L.D. Payable Account Dr.
Clients Account Cr.
An IBCA should be sent with this.
Stop payment of Local Draft:
The payee or purchaser of the draft cannot give stop payment instruction to the drawee branch. If the paying
branch receives a request from the purchaser of the draft for stopping payment of the draft, it will ask the
purchaser to approach the issuing branch about the purpose. The paying branch should however exercise
necessary precaution in this regard. Only the issuing branch can issue instruction for stop payment of the
draft under special circumstances.

3.2.3 Pay Order (PO):

For issuing a pay order, the client is to submit an application to GB in the prescribed form. This form should
be properly filled up and signed. For issuing pay order CBL charges commission on the following rate

45
 # For Party TK 50 plus VAT 15%
Other than Party:
# For Tk. 1 to 50,000, the commission is Tk.50 plus VAT 15%
# For Tk. 50,001 and above, the commission s Tk. 100 plus VAT 15%

Payment of Pay Order:

The pay order is presented to the bank either through clearance or for credit to the clients account. While
payment, relative entry is given in the pay order register with the date of payment.

Cancellation of Pay Order:

The following procedure should be followed for the cancellation of the pay order:

The client should submit a written request for canceling the pay order attaching therewith the original
pay order.
The signature of the purchaser will have to be verified from the original application form.
Managers prior permission is to be obtained before refunding the amount of the pay order.
Cancellation charge is to be recovered from the applicant and only the amount of the pay order less
cancellation charge should be refunded. Commission recorded for issuing of the original pay order
should not be refunded.
Then the officer should write cancelled on the pay order
The original entries should be reversed with narration.
Cancellation of the pay order should also be recorded in the register.

46
3.3 Online Banking:

3.3.1 Finacle Core:

The Bank has set up a Wide Area Network (WAN) across the country to provide Online Branch Banking
facility to its valued clients. Under the Scheme, clients of any branch shall be able to do banking transaction
at other branches of the bank.

Under this system a client will to be able to do following type of transactions:

Cash withdrawal from his/her account at any branch of the Bank irrespective of location.
Cash deposit in his/her account at any branch of the Bank irrespective of location.
Cash deposit in other's account at any branch of the Bank irrespective of location.
Transfer of money from his/her account with any branch of the Bank.
Any amount can be deposited or transferred under Prime Line. In the system, however, at present
there is a limit for cash withdrawal through bearer or by account holder himself.

3.3.2 Requirement of Finacle Core service:

The Clients who has account in City bank or who will open account in City bank and would be interested to
maintain substantial deposits in Savings, Current or STD accounts, will be eligible to get Finacle Core
Service.

Intending and eligible clients have to apply in prescribed application form to the branch to get the online
service from the bank. The client should submit two copies photographs and signature cards along with the
application form. To avail the Finacle Core service, no charge should be paid for online transaction within a
locality where the account is domiciled. But charges should be paid by the customer for inter city online
transaction.

Online Transaction Membership Fee:

Membership fee of Tk. 50/- per month for the Online Branch Banking Service.

47
3.4 Deposit Schemes of City Bank Limited
Bank is the largest organization of mobilizing surplus domestic savings. For poverty alleviation, we need
self-employment, for self-employment we need investment and for investment we need savings. In the other
words, savings help capital formations and the capital formations help investments in the country. The
investment in its turn helps industrialization leading towards creation of wealth of the country. And the
wealth finally takes the country on road to progress and prosperity. As such, savings is considered the very
basis of prosperity of the country. The more the growth of savings, the more will be the prosperity of the
nation.

The savings rate in India is one of the lowest in the world rate of domestic saving being 17.78 %. In order to
improve the savings rate, Financial Institutions responsible for mobilization of savings should offer
attractive Savings Schemes so that the marginal propensity to save increases. The savings do not, of course,
depend only on the quantum of income but largely depend on the habit of savings of the people.

CBL has formulated the following Savings Schemes:

Monthly Benefit Deposit Scheme,
Fixed Deposit Scheme,
Three Stage Savings Scheme,

3.4.1. Monthly Benefit Deposit Scheme

This is a Deposit Scheme where the depositor gets a fixed amount of profit every month without
disturbance to the principle. The Scheme is designed to attract:

1) The retirement benefits of service holders.

2) The investment of Wage Earners who want to pay a fixed amount monthly to their familys
dependents in India from the profit of their investment.
3) The deposit of those persons who intend to meet the monthly expense of their family from the
income of their deposit.
4) Investment of fund of Trusts and Foundations which award monthly Scholarships / Stipends to
students.
5) Trusts and founders or other associations, which award monthly scholarship/stipends to students etc.

48
Features
Deposit Amount
Tk. 1,00,000 to TK. 1,00,00,000
Period
The scheme is for 2years/ 3 years/ 5 years.
Return
Term Deposit (TK.) Monthly Interest (TK.) Interest After Tax (TK.)
2 years 1,00,000 900 810
3 years 1,00,000 900 810
5 years 1,00,000 945 850

Taxes if any, applicable.

Additional Benefit
These MBDS allows you to enjoy loan facility up to 90% of your deposit amount.
Terms & Conditions
Payment of monthly profit shall start from the subsequent month after a clean minimum gap of 30
days from date of deposit.
Normally, the deposit will not be encashable before maturity. But if any depositor intends to
withdraw his deposit before maturity, the following rules will apply:
- No benefit including interest shall be allowed for premature encashment within one year.
- If the accounts/ deposits are closed/ encased after one year of its opening, benefit shall be
allowed on the deposits at exiting savings deposits rate.
- If the amount of monthly profit already paid exceeds the amount payable at exiting savings
rate, the difference shall be realized from the principal deposit amount, if and when necessary.
- If the client fails to deposit installment for consecutive 3 months, in this case the scheme will
be closed for adjusting loan.
In case of death of a depositor, the A/C shall cease to be operative and the amount deposited so far
shall be paid to the nominee, as mentioned in the account opening form, and in absence of nominee,
to the legal heirs of deceased as per rules in force.

3.4.2 Three Stage Savings Scheme (TSSS)

49
For regular income people it is a good opportunity to deposit money for long term in high interest rate.
Details are:

Term: 2 years/4 years/6 years

Monthly deposits: Tk.500-Tk.5000

An example of total sum after maturity (where monthly installment Tk.500):

Term Interest Rate Total sum after maturity

1 year 8% Tk.13, 093 (1st stage)
2 year 9%
3 year 10% Tk.28, 955 (2nd stage)
4 year 11%
5 year 12% Tk.48, 548 (3rd stage)
6 year 13%

3.5 Utility Services Scheme:

Like any other country of the world, the people living in the urban areas of our country lead a very busy
life. Times are very valuable to them. Despite this, they are to waste their valuable time at the counter of.

Different Banks and other Institutions for payment of their monthly bills of different utility services like
Electricity, Telephone etc. They, as such, face enormous difficulties for payment of their monthly bills in
time. Such inconveniences of the urban people can be removed by making an arrangement to collect all the
bills of various utility services at one Point.

50
Scope of Services: -
The scheme is designed to provide all the required services to the customer in making payment of their
following bills on their behalf from the counter of the Bank:
To pay Electricity Bills
To pay Telephone Bills
To pay Gas Bills
To pay WASA Bills
To pay Insurance Premium
To pay House Rent
To collect House Rent
To pay Municipal Taxes
To collect Pension Money
Issuance and Renewal of License of TV, Radio, etc.
Any other like Services.

Objectives
To help the customers in payment of their different utility Bills in time and thereby relieve them of
their worries and save their valuable time.
To help different corporations/ organizations in timely collection of their Bills.
To help the senior citizens of the country in collecting their Pension Money every month.
To extend financial assistance to the customers by way of overdraft in timely payment of their Bills.

51
Deposit Rate Offered by CBL
SL. Particulars Deposit Rate
01. Short Term Deposit
a) Below Tk.1.00 Crore 5.00%
b) From Tk. 1.00 Crore but below 6.00%
10.00 Crore
C) Tk 10.00 Crore and above 6.50%
02. Saving Deposit 6%
03. Fixed Deposit (FDR) Up to 1.00 Crore
a) 1-3 Months 11%
b) 4-11 months 12%
c) 1(One) Year and above 13%

3.6 Clearing Section

According to the Article 37(2) of India Bank Order, 1972, the banks, which are the member of the
clearinghouse, are called as Scheduled Banks. The scheduled banks clear the cheque drawn upon one
another through the clearinghouse. This is an arrangement by the central bank where everyday the
representative of the member banks gathers to clear the cheque. Banks for credit of the proceeds to the
customers accounts accept Cheque and other similar instruments. The bank receives many such instruments
during the day from account holders. Many of these instruments are drawn payable at other banks. If they
were to be presented at the drawee banks to collect the proceeds, it would be necessary to employ many
messengers for the purpose. Similarly, there would be many cheque drawn on this the messengers of other
banks would present bank and them at the counter. The whole process of collection and payment would
involve considerable labour, delay, risk and expenditure.

All the labour, Risk, delay and expenditure are substantially reduced, by the representatives of all the banks
meeting at a specified time, for exchanging the instruments and arriving at the net position regarding receipt
or payment. The place where the banks meet and settle their dues is called the Clearinghouse.

52
3.6.1 Activities of the Section:
(a) Preparation of Clearing Outward and Inward Lodgement and record maintenance of the same.
(b) Batch posting as and when required.

On receipt of instruments, the same is endorsed here. Then clearing section will sent IBDA to head Office
for clearing purpose and on receipt of IBCA from Head Office amount is credited to customers account and
vice versa. If the instrument is return then the same is given back to the customer.

3.7 Collection Section:

Checks, drafts etc. are drown on bank located outside clearing house are sent for collection. B.B. Avenue
Branch collects its clients above-mentioned instruments from other branches of CBL and branches other
than CBL. In case of out ward bills for collection customers account is credited after finishing the collection
processor. And in case of in ward bills customers account is debited for this purpose. So it place dual role as
follows:

i) Collecting Banker
ii) Paying Banker.

3.7.1 Activities of the Section:

Preparing of Outward and Inward Collection Item.
Inter-Branch Transfer.
Batch posting and checking as and when required.
Other works as and when require.

Collection is done when

(i) Paying Bank is located out side Dhaka City.
(ii) Paying Bank is other branches of PBL situated inside Dhaka City.
(i) Paying Bank is outside Dhaka City:
CBL sends Outward Bills for Collection (OBC) to the concerned paying bank to get Inter Bank Credit
Advice (IBCA) from paying Bank. If the paying bank dishonours the instrument, the same is returned to
principal Branch.

(ii) /The Paying Bank of their own branches inside Dhaka City:

53
Collection Department sends transfer delivery item to other branches of same bank situated inside Dhaka
City. Upon receiving IBCA customers a/c is credited.

3.7.2 Procedures for Outward Bills for Collection:

Depositing the cheque along with

deposit-slip

Crossing of the cheque are done

indicating the Branch as collecting bank

Endorsement Payees A/C will be

Credited on realization is given

Entries are given in the Outward

Clearing Register
Commission for Collection:
Minimum TK. 50 to maximum TK.700.

3.8 Accounts Section:

In banking business transactions are done every day and these transactions are to be recorded properly and
systematically as the banks deal with the depositors money. Any deviation in proper recording may hamper
public confidence and the bank has to suffer a lot. Improper recording of transactions will lead to the
mismatch in the debit side and credit side. To avoid these mishaps, the bank provides a separate department
whose function is to check the mistakes in passing vouchers or wrong entries or fraud or forgery. This
department is called Accounts Department.

Besides these, the branch has to prepare some internal statements as well as some statutory statements,
which are to be submitted to the Central Bank and the Head Office. This department prepares all these
statements.

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3.8.1 Functions of Accounting Department:

We can divide the functions of accounting department into two categories. One is day-to-day task and
another is periodical task.

a. Day to day functions: Here day-to-day function refers to the every day tasks. Accounting
department of CBL performs the following day to day functions:
Recording of transaction in the cashbook, general and subsidiary ledger.
Preparing the daily position of deposit and cash.
Making the payment of the expense of the branch.
Recordings of inter branch fund transfer.
Checking whether all the vouchers are correctly passed.
Recording the voucher in the voucher register.
Packing and maintains the total debit and total credit vouchers.

b. Periodical functions: Periodical functions of accounts department include the preparation of

different weekly, fortnightly, monthly, quarterly and annual statement. The accounts department prepares the
following statements:
Monthly statement of deposits, loans and advances, profit and loss etc.
Quarterly statement of deposits, loans and advances, profit and loss etc.
Yearly statement of deposits, loans and advances, profit and loss etc.
Yearly statement of classified Loans and Advances.
Statement of Affairs.
Yearly Budget of the Branch, etc

3.9 Cash Section:

Cash section is a very sensitive organ of the branch and handle with extra care. Operation of this section
begins at the start of the banking hour. Cash officer begins his/her transaction with taking money from the
vault, known as the opening cash balance. Vault is kept in a much-secured room. Keys to the room are kept
under control of cash officer and branch in charge. The amount of opening cash balance is entered into a
register. After whole days transaction, the surplus money remain in the cash counter is put back in the vault
and known as the closing balance. Money is received and paid in this section.

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3.9.1 Cash Receipt:
At first the depositor fills up the Deposit in Slip. For saving account and current account same
Deposit in Slip is used in this Branch.
After filling the required deposit in slip, depositor deposits the money.
Officers at the cash counter receives the money, count it, enter the amount of money in the register
kept at the counter, seal the deposit in slip and sign on it with date and keep the banks part of the
slip. Other part is given to the depositor.
In this branch, i.e., B.B.A.Branch, two different officers maintain two different books for entering
such entries. One officer and other accounts by another officer maintain all deposits of saving
account.
At the end of the day entries of both of these registers are cross checked with the register kept at the
cash counter to see whether the transactions are correct or not.

3.9.2 Cash Payment:

When a person comes to the bank to cash a cheque, he/she first gives it to the computer desk to know
the position of the check and posting of the cheque. If the account has sufficient fund the computer in
charge will post it into the computer, will sign it and seal it.
This cheque is then sent to the concerned officer. There are two officers who verify the cheques one
for savings and similar types of account and another for current and similar types of account.
After receiving the cheque respective officer first checks it very carefully for any kind of fraudulent
activity. (S) He also checks the date of the cheque, amount in word, amount in figure and signature of
the drawer.
If the instrument is free of all kind of error the officer will ask the bearer to sign on the back of it.
He will then put his/her initial beside the bearers signature. S/he will also sign it on its face; will write
down the amount by red pen.
Then the cheque will be sent to the cash counter. At the cash counter bearer will be asked again to sign
on the back of the instrument.
The cash officer will then enter the details of the cheque in his/her register and will pay the money to
the bearer.
At the end of the day these registers will be compared to ensure the correctness of the entries.

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3.10 Conclusion
Bank is the largest organization of mobilizing surplus domestic savings. Attractive Savings Schemes
are offered by CBL such as Contributory Savings Scheme, Monthly Benefit Deposit Scheme, Special
Deposit Scheme, Education Savings Scheme, Fixed Deposit Scheme, City Bank Money Scheme, City
Bank Insured Fixed Deposit Scheme as well as different accounts to save money. Schemes are designed
concentrating in different purposes to help the fixed income group people to help in need. Bank-Officials are
also whole-hearted and dedicated to serve their customer with utmost care.

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LOAD AND ADVANCE

58
Services Offered by Credit Department

Bank is a financial intermediary whose prime function is to move scarce resources in the form of credit
from savers to those who borrow for consumption and investment. The word credit is derived from the
Latin word credere, which means to trust. The fundamental nature of credit is that an element of trust
exists between buyer and seller-whether of goods or money. In a modern industrial society Banks are
uniquely important because of their ability to create money. Lending comprises a very large portion of a
Banks total assets and forms the backbone of the Bank and interest on lending constitutes the highest
proportion of income of a Bank. As such credit quality remains the prime indicator of its commercial
success. Unsound credit reduces the ability of a Bank to provide credit towards profitable borrowers and
undermine liquidity and solvency. Therefore lending is very important for the profitability and success of a
Bank.

When a bank advances a loan, it does not pay the amount in cash. But it opens an account in his name and
allows him to withdraw the required amount by cheque. Banks provide credit facilities to businessmen by
way of loans and advances, overdraft and cash credit. When a loan is granted or overdraft is sanctioned, the
amount of loan or overdraft is entered in the account of the customer and he is allowed to draw a cheques up
to the amount agreed upon. Thus the bank creates a deposit in the name of the borrower. Basically credit is
the function by which people can perform their job by depositing and lending money from the bank with an
implied interest rate and bank performs here as a middleman. Banks create money and credit. It happens in
two ways. First, when a customer is granted loan, he has to sign a promissory note and receive in turn, a
banks demand deposit, or cash. The promissory note does not act as money but it receives money and can
readily spend almost everywhere. Thus it creates credit. Second, the entire systems of banks also create
money as the deposits generated by lending flow from bank to bank. By law, each bank must set aside a
fractional reserve behind each deposit it receives and the remaining excess can be loaned out. No single bank
can lend out more than its excess reserves, the entire banking system can create a multiple volume of deposit
money through credit creation.

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4.1 Salient features of City banks Credit Policy:
Assets are built based on customers deposit, which should not exceed 90% of customers based
deposit.
Rate of interest is variable based on customers integrity and risks associated.
Type of security varies on the basis of risks associated in credit.
Diversification from all angel viz. type of credit, geographical location, size of credit, sectors and
sub-sectors etc.
Credit operations are carried out in branch through branch credit committee as per authority
delegated to head of branch and through Head Office Credit Committee in respect of credit sanction
authority delegated to the CEO.
Credit Risk Grading is done in all cases.
Assessment of volume or amount of credit properly.
Utmost care is taken in providing loans to directors.

4.2 Credit Portfolios and Ratio of City Bank Limited:

The Bank continued to reengineering process to raise its assets portfolio by implementing new credit policy
with diversified and well structured asset portfolio and separation of responsibilities and segmentation of
divisions. The outstanding amount of loans and advances as on 31 st December 2005 stood at Tk.23326
million with a record growth of Tk.6298 million (37%). The outstanding amount at the same period of
previous year was Tk.17027 million. City bank Limited has a plan to maintain the following proportions to
design and maintain credit portfolio:

As on 31.12.05
SL.
Sector Amount (in TK. % of
No.
million TK.) share

1 Agriculture 171.00 0.73

2 L & M Industry (Term Loan) 3542.30 15.19

Working Capital & Commercial

3 lending 8739.79 37.47
4 Export Finance 3762.40 16.13
5 Import Finance 4094.61 17.55
6 Housing 224.46 0.96

7 Others 2791.74 11.97 60

Total 23326.30 100.00

Table: Comparative Position of Sector Wise Exposure

4.3 Types of Bank Credit:

Modern banking operations touch almost every sphere of economic activity. The extension of bank credit is
necessary for expansion of business operations. Bank credit is a catalyst for bringing about economic
development. Without adequate finance there can be no growth or maintenance of a stable output. Bank
lending is important to the economy, for it makes possible the financing of agricultural, commercial and
industrial activities of a nation. The credit facilities are generally allowed by the bank may be in two broad
categories. They are:
1. Funded Facilities:
Funded facilities can also be divided into the following categories:
Loans:
i) Continuous Loans
ii) Demand Loans.
iii) Term Loans up to 5 years
iv) Term Loans over 5 years
v) Short Term Agro-Credit and Micro credit
Overdrafts:
Against hypothecation of goods/stock
Against pledge of goods/stock
Against any other permissible securities.
Other advances:
Against import bills.
Against imported merchandise.
Against Trust receipts (T/R).
Against Export Bills Purchased/Discounted
Against Work order
Against other securities.

2. Non-Funded Facilities:
Letter of credit (L/C)

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 Letter of Guarantee (L/G)

4.4 Types of Advances Offered by CBL:

1. Secured Advances:
A. The following type of secured advances are allowed against tangible securities subject to margin
restrictions:
Loan (General)
House Building Loan
Other Loans to Staff
Cash Credit (Hypothecation)
Cash Credit (Pledge)
Hire-Purchase
Lease Financing
Consumers Credit
SOD (FO)
SOD (WO)
SOD (OT)
SOD (EXPORT)
SOD (IMPORT)
PAD (Payment Against Documents)
BLC (Bills Against Letter of Credit)
LIM (Loan Against Import Merchandise)
LTR (Loan Against Trust receipt)
IBP
Packing Credit
FDBP (Foreign)
FDBP (Local)
FBP

B. These advances are allowed against the following securities:

Shares of various Companies approved by Head Office from time to time and listed in the Stock
Exchange.

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 Term Deposit Receipts issued by any Branch of our Bank.
Lien on balance in Savings A/C, Current A/C. and other Savings Schemes
Government Promissory Notes.
Various Sanchaya Patras
Surrender value of Life Insurance Policies.
WEDB
Assignment of bills against work orders/supply orders and receivables.
Stock of goods in trade (Permissible goods only) pledged or hypothecated.
Hypothecation of power driven vehicles or watercraft.
Hypothecation of capital Machineries and equipments.
Immovable Property.
Imported merchandise - pledged or hypothecated.
Trust Receipts.
Import Bills (PADs)
Bills Purchased
Scheduled Bank/Insurance Guarantees
Export Bills
Inland Bills.
Personal Guarantee
Corporate Guarantee

2. Unsecured Advances:
An unsecured or clean Advance is one, which is granted to a constituent without obtaining any security. In
such case only charge documents are held an unsecured facility may be allowed in exceptional
circumstances, only for a short period, with definite repayment arrangement, subject to restrictions imposed
by India Bank or any other competent authority, with prior approval of Head Office, to a customer on the
basis of his personal credit worthiness, standing and reliability.
A. Unsecured Advances include:
i) Clean Overdrafts, and
i) Clean Loans.
B.

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 I. A customer should not ordinarily be permitted to overdraw his account without security. However, an
unsecured facility may be allowed in exceptional circumstances, only for a short period, with definite
repayment arrangement, subject to restrictions imposed by India Bank or any other competent
authority, with prior approval of Head Office, to a customer on the basis of his personal credit
worthiness, standing and reliability.
II. It shall not be granted unless the Sanctioning Authority has full confidence in the ability and
reputation of the customer to repay it, on demand, or at its maturity if it is a loan. Definite
arrangements for repayment, whether by installments or otherwise, must, as a rule, be made.

4.5 Procedure of Giving Advance:

1. The borrower has to apply to CBL for loan by filling up of a specific application form.
2. After receiving loan application form, CBL sends a letter to India Bank for obtaining a report when loan
amount exceed 100 lac. This report is called CIB (Credit Information Bureau) report.
3. After receiving CIB report, if the bank thinks that the prospective borrower will be a good borrower, then
the bank will scrutinize the documents. In this stage, the bank will look whether the documents are properly
filled up and signed.
4. Then come processing stage. In this stage, the bank will prepare a proposal. A proposal contains all
relevant information (e.g. name of the client, type of the loan, amount of the loan, period of giving loan,
security, date of application, financial data, etc.) Branch incumbent (Local Office) has the discretionary
power to sanction loan (SOD) up to Tk.25 lac against financial obligations by informing head office. But in
that case, the branch manager has to give attention on the following matters:
a) The interest of the loan must not be less than 14%, and
b) The borrower must maintain 10% margin.

Except this case, the branch manager has to send a proposal to the head office. It Is fall under the
delegation of Managing Director (MD), the MD approves the loan. If it is again beyond the delegation of
MD, head office will prepare a proposal and submit it before the executive committee of the Board. The
proposal has to be approved by the executive committee (EC).

After getting the proposal approved head office issue a sanction advice. According to that sanction advice,
at the branch the following activities are done:
1. A sanction advice will be prepared in favour of the client.
2. After the sanction advice, bank will collect necessary documents (charge documents).

64
 3. After receiving all the documents, the bank will disburse the loan to the borrowers. For
withdrawing the loan amount, customer creates a current account and the loan amount is
transferred to this account.

4.6 Lending Principles:

The bankers have to follow some principles or policies or take into consideration some factors for lending
money on sound basis. In working out these principles, or constituents a banker is exposed to the following
three basic questions.
Is the borrower credit worthy?
Are loan terms, or in other words, loan agreements properly structured and documented?
Has the bank been able to perfect its claim on the assets or securities?

If a banker handling a credit can find the answers to the above three basic questions in a proper fashion
lending operation carried out by him based on the same is expected to be sound. To answer the question as to
whether the borrower is credit worthy a banker is to have clear idea about the following Cs concerning the
borrowers.

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 i. Character
ii. Capacity
iii. Cash Flow
iv. Collateral
v. Condition
vi. Control

The 6Cs reflect the following points, which should be kept in mind for sound lending:
Judicious selection of Customers
Purpose
Safety
Security
Liquidity
Adequate return (Profitability)
Supervision
National/Social interest
Credit Control Policy of India Bank

It is to be always remembered that the Bank is the custodian of public money and as such we must be
judicious, careful and selective while lending out the depositors money to ensure timely recovery. The
deciding factors for recovery of loans are selection of right type of borrowers, end-use of credits and
effective follow-up and proper supervision.

4.7 Securities:
To make the loan secured, charging sufficient security on the credit facilities is very important. The banker
cannot afford to take the risk of non-recovery of the money lent. CBL charges the following two types of
security, -
Primary security: These are the security taken by the ownership of the items for which bank provides
the facility.

66
 Collateral security: Collateral securities refer to the securities deposited by the third party to secure the
advance for the borrower in narrow sense. In wider sense, it denotes any type of security on which the bank
has a personal right of action on the debtor in respect of the advance.

Modes of Charging Security:

There are different modes of charging security are exercised by the bank:
1. Pledge:
Pledge is the bailment of the goods as security for payment of a debt or performance of a promise. A pledge
may be in respect of goods including stocks and share as well as documents of title to goods such as railway
receipt, bills of lading, dock warrants etc. duly endorsed in banks favour.
2. Hypothecation:
In case of hypothecation, the possession and the ownership of the goods both rest the borrower. The
borrower to the banker creates an equitable charge on the security. The borrower does this by executing a
document known as Agreement of Hypothecation in favour of the lending bank.
3. Lien:
Lien is the right of the banker to retain the goods of the borrower until the loan is repaid. The bankers lien is
general lien. A banker can retain all securities in his possession till all claims against the concern person are
satisfied.

4. Mortgage:
According to section (58) of the Transfer of Property Act, 1882 mortgage is the transfer of an interest in
specific immovable property for the purpose of securing the payment of money advanced or to be advanced
by way of loan, existing or future debt or the performance of an engagement which may give rise to a
pecuniary liability. In this case the mortgagor does not transfer the ownership of the specific immovable
property to the mortgagee, only transfers some of his rights as an owner. The banker exercises the equitable
mortgage.

4.8 Documentation:
Documentation can be described as the process or technique of obtaining the relevant documents. In spite of
the fact that banker lends credit to a borrower after inquiring about the character, capacity and capital of the
borrower, he must obtain proper documents executed from the borrower to protect him against wilful
defaults. Moreover, when money is lent against some security of some assets, the document must be
executed in order to give the banker a legal and binding charge against those assets. Documents contain the

67
precise terms of granting loans and they serve as important evidence in the law courts if the circumstances so
desire. Thats why all approval procedure and proper documentation shall be completed prior to the
disbursement of the facilities.

4.8.1 Charge Documents:

Following charge documents are necessary while giving loans.

Letter of guarantee:
This is a document given by the proprietor, directors or the third party in favor of the principal debtor. The
beneficiary of this document is the bank. Surety is bound to pay the guaranteed amount if such situation
arises.
Counter guarantee:
The principal debtor agreeing that if the guarantor pays any amount, the principal debtor is bound to pay this
amount gives this guarantee.
Letter of authority:
By this letter, the principal debtor gives the authority to the bank to debit the current account or investment
account of the principal debtor for the following cases:
i. Wages of the stock keeper and stock guard.
ii. Rent of the stock.
iii. Insurance premium and
iv. Any other expenses regarding these functions.
Letter of recall the loan:
This letter is given to the bank by the borrower, giving the bank the right of recalling the loan amount at any
time if the borrower fails to repay any one of the installments. And the borrower cannot protest such
recalling.
Letter of continuity:
By this letter, the borrower agrees that the promissory note given by the bank will be act as security for the
repayment of the ultimate balance or sum remaining unpaid on account of the overdraft or advance.
Letter of revival:
By this letter, the borrower agrees that he will be liable to bank for payment of the promissory note with
interest in respect of all present and future indebtedness liabilities secured thereby which promissory note is
to remain in force with all relative securities, agreements and obligations.
Joint promissory note:

68
This promissory note is given to the bank by the borrower if the borrowers are more than one person.
Single promissory note:
The borrower to the bank gives this promissory note if the borrower is a single person.
Letter of undertaking
This document is given to the banker by the borrower acknowledging the right to cancel the facility at any
time with or without intimation to the borrower.
Loan disbursement letter:
By this letter, the borrower request to disburse the loan sanctioned in his favor by the bank. All the persons,
in whose names the account is opened, should sign the letter.
Charge over bonds or certificate of shares etc.:
It is a document given by the borrower to the banker declaring that the stocks, shares, debentures, securities
and investments which are now deposited to the bank and which may from time to time be deposited by the
borrower shall stand charged and hypothecated to bank as security for the payment to bank on demand of the
balance of the loan amount and of any other indebtedness and liability to the bank of any kind whether
mature or accruing and whether incurred alone or jointly with others and whether as principal or surety
including all interest document, commission, expenses, charges and costs incurred by the bank in relation
any such indebtedness or liability.
Letter of lien against fixed deposit receipt:
By this letter, the borrower gives the right to the bank to hold the Fixed Deposit Receipt (FDR) if the
borrower fails to repay or adjust the loan on demand or discharge the liabilities to bank. In this letter, FDR
number, issuing branch, name of the favoring person and amount are written.
Letter of authority to encash FDR:
By this letter, the borrower gives the right to bank to encash the FDR in case of need. Here the amount and
address of the bank of issue and the signature of the holders are given.

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Memorandum of deposit of title deeds:
It is a deed that is necessary in case of mortgage by deposit of title deed or equitable mortgage. Here the
mortgagor agrees that he has deposited necessary documents of the property to the bank.
Hypothecation of goods to secured a demand cash credit or overdraft or loan account:
Here the amount of loan, interest, and the name of the borrowers are written. Here the bank and the
borrowers agree on the following terms:
Security
Balance due to the bank
Borrowers not to the encumber or parts of the goods
Sale
Inspection
Insurance
Margin
Interest rate
Repayment
Sale of goods
Deficiency
Surplus
Statement of account
Continuing security
Title
Saving
Change of borrowers and
Notices.
Guarantee by third party:
Sometimes third party guarantee is needed for allowing loan. Here third party gives the guarantee that of the
principal debtor fails to repay the loan, and then the guarantor will be bound to repay the loan to bank.
Hypothecation of vehicle:
This document is necessary in case of transport loan. Here the borrower hypothecated the vehicle to the
bank. In case of failure of repay the loan, bank will sell the vehicle to collect the money.

4.8.2 Documents required for relevant advances:

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1. Loan:
a. D P Note signed on revenue stamp
b. Letter of arrangement.
c. Letter of disbursement.
d. Letter of partnership (partnership firm) or Board of resolution (limited companies).
e. Letter of pledge.
f. Letter of hypothecation.
g. Letter of lien and ownership / share transfer form (in case of advance against share).
h. Letter of lien for packing credit.
i. Letter of lien (in case of advance against F D R)
j. Letter of lien and transfer authority.(in case of advance against P S P, B S P)
k. Legal documents for mortgage of property (As draft by legal adviser)
l. Copy of sanction letter mentioning details of terms and condition duly acknowledge by the borrower
m. Trust receipt.

2. Overdraft:
a. D P Note.
b. Letter of partnership.
c. Letter of arrangement.
d. Letter of continuity.
e. Letter of lien.
f. Letter of lien and ownership /share transfer form (in case of advance against share).
g. Letter of lien and transfer authority.
h. Legal documents for mortgage of property.
3. Cash Credit:
a. D P Note.
b. Letter of partnership.(in case of partnership farm) or Board of resolution (in case of limited
company)
c. Letter of arrangement.
d. Letter of continuity
e. Letter of hypothecation [In case of cash credit (Hypothecation)]
f. Legal documents for mortgage of property
g. Letter of pledge or Agreement of pledge. [In case of cash credit (pledge)]

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 4. Bills purchased:
a. D P Note.
b. Letter of partnership. (in case of partnership farm) or Board of resolution( in case of limited
company)
c. Letter of arrangement.
d. Letter of acceptance, where it calls for acceptance by the drawee.
e. Letter of hypothecation of bill.

4.9 Loan Schemes Offered By CBL:

Consumer Credit Scheme
General Loan Scheme
Lease Finance
Small and Medium Enterprise
House Building/Apartment Loan Scheme

4.9.1 Consumer Credit Scheme:

Consumer Credit is the credit, which is provided to people having fixed but regular income for acquiring
consumer durables and other assets for personal use to service from their monthly income. Consumer credit
is a collateral free credit.
Objectives of the scheme:
To sell our services to a wide range of customers and increases our CCS portfolio.
To introduce and carry on collateral free credit operation.
To improve the standard of living of the fixed income bracket people.
To take part in the socio-economic development of the country.
To ensure access to credit by mass people as far as possible.
Security:
a. The client will submit crossed cheque in advance for all the stipulated instalments in favour of the bank
towards repayment of loan including interest.
b. The customer will provide following personal guarantee/Bank Guarantee/Insurance guarantee according
to the Banks Prescribe forms/financial instruments.

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 Name of security Particulars
For Employee of govt. semi-govt.& corporate organizations.
Personal For Businessmen and employees of Non Corporate Private

Guarantee Organizations.
Financial Personal Guarantee will be waived.
Instruments
Bank Personal Guarantee will be waived.
Guarantee
Insurance Personal Guarantee will be waived
Guarantee
Ownership of Sole name of Bank/Joint name of Bank and customer.
vehicles
Insurance for Comprehensive coverage from acceptable
Vehicle Insurance companies.
Corporate For corporate arrangement with Head Office approval.
Guarantee

Charge Documents:
Letter of declaration
Demand Promissory Note
Loan agreement under consumers Credit Scheme
Letter of Hypothecation
Letter of Guarantee
Letter of Authority
Other Required charge documents
For a car or any other vehicles:
Photocopy of Blue Book/ Certificate of Registration
Photocopy of Certificate of Insurance.

Supervision and Monitoring:

The mechanism of supervision and monitoring are as follows.
Regular checking the balance of clients SB/CD A/Cs.
Regular communication with defaulting customers and guarantors- physically/over telephone.
Issuance of letter to customers immediately after dishonour of cheque.

73
 Issuance of letter to defaulting customers and respective guarantors.
Contact the employers of the defaulting customers (After 03 overdue instalment).
Issuance of legal notice to the customers and guarantors prior to the classification of the loan
Issuance of appreciation / greeting letter to the regular customers.
Periodical visit to the customer to maintain relationship and supervision of supplied articles.
Legal actions to be taken after all possible efforts to recover the Banks dues have gone in vain.

4.9.2 General Loan Scheme

Depending on the various nature of financing, all the lending activities have been brought under the
following General Loan:
Short term Loan
Medium term Loan
Long term Loan

More specifically this is classified as follows:

i) Continuous Loans: For Small Enterprise Financing(SEF), Consumer Financing(CF), Orher
than SEF &CF etc.
ii) Demand Loans: For SEF, CF,& others.
i) Term Loans up to 5 years: For SEF, CF (other than HF &LP), House Financing (HF),
Loans for Professionals to Set Up Business (LP), Others(other than SME & CF)
vi) Term Loans over 5 years: For the same as previous.
vii) Short Term Agro-Credit and Micro credit

The loans are allowed to individual/firm/industries for a specific purpose but for a definite period and
generally repayable by installments fall under this head. This type of lending are mainly allowed to
accommodate financing under the categories (i) Large & Medium Scale Industry and (ii) Small & Cottage
Industry. Very often term financing for (1) Agriculture (ii) Others.

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4.9.3 Lease Finance
Lease financing is one of the most convenient long-term sources of acquiring capital machinery and
equipment. A client is given the opportunity to have a right to use an asset, usually for an agreed period of
time, against payment of rent. The lease is obligated to make lease payment until the expiration of the lease
agreement, which corresponds to the useful life of the asset.
Objectives
City Bank Ltd. has introduced the lease finance with the following objectives:
To assist the genuine and capable entrepreneurs for acquiring Capital Machinery and Equipments to
undertake enterprises without equity.
To encourage the new and educated young entrepreneurs to undertake productive venture and
demonstrate their creativity and thereby participate in the national development.
To participate in the industrial development of the country.

Lease Items/ Equipment

City Bank Ltd. offers lease finance for acquiring the use capital machinery, equipments, medical
instruments, automobiles etc. The customers are entitled to decide the specification, price and model of the
lease item/ equipment. Bank will purchase the item (s) in accordance with the specifications given by the
clients.
Security
The entrepreneur will be required to provide the following securities:
1.The lease items will remain in the name of the Bank i.e. Bank will be the sole owner of the leased
items.
2.Collateral securities having liquidation value covering at least 100% of the amount of finance.
3.Deposit of Listed Shares, National Savings certificates, ICB unit certificates, Assignment of Life
Insurance Policies, Bank Guarantee, and Insurance Guarantee etc. will also be acceptable as collateral
securities.
4.In case of existing industrial units requiring BMRE, change may be created the existing Fixed
Assets as collateral securities for the finances. In case of existing Automobile enterprise, creation of charge
on the existing vehicles will also be acceptable as collateral securities.
5.
In case of default in payment of lease rental for consecutive 2 (two) months, the Bank will
take over the lease items without giving any prior notice.

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 In case of taking over the lease items by the Bank before maturity the Lessee will be liable
for the loss, if any, caused to the Bank for such Premature taking over.
The Bank will exercise close and intensive supervision of such project. An officer of the Bank
will be engaged separately for supervision of such projects to ensure proper utilization of the lease
items and time repayment of the monthly rentals.

Transport Leasing:

Transport is one of the most widely traded lease items in the developed as well as developing countries of
the world. The reasons behind success of transport leasing in many countries could by attributed to tax
benefit, efficiency in found management and above all to the fact that user could exclusively use the leased
transport by paying reasonable rental.

The major issues of transport leasing are detailed below:

1. Selection of Vehicle

The customer has the right to decide the brand of vehicle, negotiate the price with the manufacturers of
dealers, and arrange after sales services with the supplier.

2. Acquisition Cost

The acquisition cost shall be the actual purchase price after bargaining and all other incidental expenses
incurred by the Bank including financial expenses.

3. Lease Term

In case of Transport leasing, the term shall be maximum 4 (four) years starting from the date of execution.
But when the lease is cancelled for any reason the lessee will have to return the vehicle to the Bank together
with the stipulated loss value mentioned in the agreement.

4. Lease Rental

Lease rentals calculated on the basis of acquisition cost and lease term shall be paid monthly.

5. Insurance

The vehicle shall be covered by Insurance throughout the lease term with the coverage decided by the Bank.
The lessee shall pay the premium.

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 6. Repair & Maintenance

The lessee shall be obliged to maintain the vehicle for ensuring its normal operation and shall be solely
responsible for loss/ damage as long as it is in his possession. Accordingly, repairing and maintenance cost
for normal operation during the lease period shall be borne by the lessee.

7. Registration

The lessee will arrange the registration of the vehicle in the name of the Bank at his own cost and also pay
annual taxes and fees payable to the concerned authority. In case of his failure, Bank will do it and recover the
cost from him.

4.9.4 Small and Medium Enterprise Credit scheme:

It is the prime concern for the nation to generate income through creation of job opportunity and
employment. Creation of job opportunity in large scale is not a easy task. What can be done is to help self-
employment through financial support. For this Reason City Bank has chosen the scheme SME to boost up
entrepreneurs with innovative idea, spirit and potentiality.
Objectives of the Scheme:
To Provide credit Facilities to the Small and Medium size entrepreneurs in urban and sub-urban areas.
To flow credit for creation of employment and generation of income
To assist potential entrepreneurs.
To assist dependence on moneylender.
To make the small and medium enterprise self-reliant.
To develop saving habit and making acquaintance with banking facilities.
To inspire for undertaking small projects for creation of employment.
Securities
a) Registered mortgage of loan and building (if available).
b) Mortgage / Assignment of possession right.
c) Assignment of security money, advance rent,
if any.
d) Assignment of trade receivable not older than 90 days.
e) Hypothecation of machineries, equipment, vehicles, stock-in-trade, raw materials, work-in-process
and finished good.
f) Personal Guarantee from person acceptable to the bank.

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 g) Post dated cheque.
h) Lien on deposits/saving certificates/financial certificates.
i) Any other securities to be deemed suitable by the bank depending on the situation like insurance
guarantee, assignment of contract, security money etc.

Period of Loan:
a) In case of continuous loan: 01(one) year.
b) In case of Term Loan: 5(five) years or above.

Mode of Repayment:
i) In case of continuous loan credit turnover in the account must be equal to the limit in a quarter and full
adjustment within the validity period.
ii) In case of term loan, the loan should be repaid by monthly instalments through post-date cheques as per
schedule.
iii) Sale proceed should be deposited in the account regularly.
4.9.5 House Building / Apartment Loan Scheme
Loans allowed to individual/enterprises for construction of house (residential or commercial) fall under this
type of advance. The amount is repayable by monthly installment within a specified period. Such advances
are known as Loan (HBL-GEN).

Loans allowed to our Bank Employees for purchase /construction of house shall be headed Staff Loan
(HBL-STAFF).

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4.10 Issuing Of Bank Guarantee:
Bank Guarantee is a profitable product of a bank. Sometimes customers need bank guarantee for their
business purposes. CBL offers three types of guarantee
i. Bid bond: This guarantee is given to the business people for the purpose of participating in
the tender.
ii. Performance guarantee: This guarantee is in favour of the client for assuring that the client
will perform some specific works.
iii. Advance payment security: By this guarantee, CBL gives assurance of payment in case of
advance payment. It helps in deposit mobilization.
The procedure of each guarantee is same. For issuing bank guarantee, customers have to apply to CBL in
their own pad. Then bank issue guarantee on judicial stamp. But the conditions for issuing bank guarantee
are that ---
1. Customers must maintain a current account.
2. Customers must keep certain percentage of guaranteed money as margin.
a. Furthermore, customer has to maintain certain some other requirements.

4.10.1 Accounting Treatment Regarding Bank Guarantee:

While issuing guarantee, bank performs the following function:
Customers Liability Dr.
Bankers Liability Cr.
Bankers liability becomes credit because the guarantee becomes the liability of the bank. If the bank pays
the guaranteed amount to the beneficiary, then CBL reverses the entry and collects money from the customer
and issues the bank draft. But sometimes, while the guarantee remains unused, customer gives another
written in his own pad. Then again bank reverse the previous entry. CBL also issue revolving bank
guarantee.

4.11 Credit Disbursemen

Having completely and accurately prepare the necessary loan documents, the loan officer ready to disburse
the loan to the borrowers loan account. After disbursement, the loan needs to be monitored to ensure
whether the terms and conditions of the loan fulfilled by both bank and client or not.

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4.12 Credit Monitoring, Follow-Up And Supervision:
Credit monitoring implies that the checking of the pattern of use of the disbursed fund to ensure whether it is
used for the right purpose or not.
CBL Officer checks on the following points:
a. The borrowers behaviour of turnover.
b. The information regarding the profitability, liquidity, cash flow situation and trend in sales in maintaining
various ratios.

Lending Rate Offered by CBL:

Sl. Particulars Lending Rate

1 Term Loan (Project Loan) 14.00% to 16.00%
2 Working Capital Funding 16.00%
3 Pre-Shipment Export Credit (Packing Credit) 7.00%
4 Trade Finance (Cash Credit, Hire Purchase, TR Loan, 16.00%
IBP etc)
5 Small/Cottage and SME (Term Loan) 16.00% to 18.00%
6 Other Special Program (Other than Commercial) 16.00%
7 Others: -
a) Loan against FDR, MBDS, CCS and all 3.00% above the Deposit
other scheme Deposit of Prime Bank Limited Rate
b) Loan against Shares 14.00% to 16.00%
Source: Advance Department, City Bank, B.B. Avenue Branch

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 4.13 Classification Procedure:
After the date of expiry, if the borrowers do not adjust their loan, CBL at first gives a notice to them. The
period of giving notice depends on the nature of the loan. For continuous loan, CBL gives notice for three
months. For five-year term loan, CBL gives notice for six months. And for more than five-year term loan, CBL
gives notice for more than 12 months.
After giving notice, if the borrower does not repay the loan, the loan will be considered as classified.
5th STAGE CLASSIFICATION
Classification Length of overdue Rate of
Status Demand Continuous Term Loan Term Loan Provision
Loan Loan (Below 5 Yr) (Above 5 Yr)
Unclassified (UC)

Standard 0 to 2 months 0 to 2 0 to 2 months 0 to 2 1%

months months
Special 3 months or 3 months or 3 months or 3 months 5%
Mention above but above but above but or above
Account below 6 below 6 below 6 but below
(SMA) months months months 12 months
Classified (CL)

Substandard 6 months or 6 months 6 months or 12 months 20%

(SS) above but and above above but or above
below 9 but below 9 below 12 but below
months months months 18 months
Doubtful 9 months or 9 months 12 months or 18 months 50%
(DF) above but and above above but or above
below 12 but below below 18 but below
months 12 months months 24 months
Bad & Loss 12 months or 12 months 18 months or 24 months 100%
(BL) above and above above or above

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Following measures are available for non-repayment of loan-
To issue notice for adjustment
To issue legal notice for filing suite.
To encash securities (in case of demand loan)
To issue legal notice for selling the hypothecated goods (in case of transport loan, cash credit-
hypo).
To issue suite for foreclosure.
Finally to sue in money loan court or insolvency court which is suitable.

4.14 Conclusion
Credit Management policies and techniques used in CBL at present is comparable to international standards.
The officials follow the policy very strictly. They are choosy and conservative in sanctioning loan. The
proposal is thoroughly scrutinized by the loan sanctioning authority. The total function of the credit division
is monitored periodically. The banks classified loan to the total Advance is very low. Management and
others related to City Bank are trying to formulate new services and products.

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PROBLEMS, RECOMMENDATION

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5.1 Problems
City Bank Ltd. is one of the most potential Banks in the banking sector. It has a large portfolio with huge
assets to meet up its liabilities and the management of this bank is equipped with the expert bankers and
managers in all level of management. So it is not an easy job to find out the drawbacks of this branch.
According to my observation and study the following limitations are prevailing:

Insufficient industrial loans:

It seemed to me that the bank having a large amount of deposit is not encouraging the large scale producers
that much of long term industrial loans to accelerate the economy as well as to help the economy to solve
unemployment problem.

Improper Division of Labour In The Desk:

There is lack of division of labour in the branch. Therefore every body has to handle every type of banking
services. This decreases the level of performance of the personnel, though it reduces monotonousness. But
lack of division of labour hampers the discipline of working environment. So customers are to wait for some
time for the desired service, which is contrary to the Bakings objective.

Insufficient Manpower:
The number of human resources in import section and in clearing section is really insufficient to give
services to huge number of customers. So, number of staff should be increased in those sections.

Lack of having Business Knowledge

Most of the personnel have no business education. So the are making mistakes in some cases like selection
of customers, financial analysis, dealing with customers, selection of account holders and in some other
cases.

Semi skilled Human Resources:

Human resource is another sector for the branch to be developed urgently. Human resources, in many cases,
have limited banking knowledge. Majority of the human resources have limited basic knowledge regarding
money, banking, finance and accounting.

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Insufficient Cash Counting Facility:
Cash section is not well equipped. Limited cash counting machines create bottleneck which delay to serve to
customer.

Improper Maintenance of Files:

City Bank Ltd. gives personalized services. They cannot properly maintain the customer files. In many
cases, application forms are not properly filled up and documents are not properly filed.

Improper Maintenance of Office Premises:

B. B. Ave. Branch is supposed to be very neat and clean and well decorated. But sometimes it loses its
glamour. The cleaners are not regular in their duties and files and papers are kept here and there by the
officers during the busy hour. Moreover, the sitting arrangement is very insufficient comparing with the
number of customers.

Incomplete Communication System and Maintenance of Machineries:

Sometimes Communication System remains out of order and it is also true for the photocopiers. Less
attention is given on proper maintenance of phone, computer, fax machine and photocopier.

Insufficient Forms and Vouchers:

There are always shortages of application forms, vouchers, etc. in the branch.
Slow online service:
Online service is not dynamic and modernized. Sometimes services are being delayed. For this reasons,
customers are to wait for long time, which is a threat for loosing customer.

5.2 Recommendation
It is a large organization and banking is a complex and comprehensive task. So it is difficult for me, by my
little knowledge, to recommend to solve the problems. But as an eyewitness of some problems I am just
giving some instructions, which may be followed.
So for the improvement of the service the following measures may be taken:

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Providing more industrial loans:
Much of long term industrial loans should be provided to accelerate the economy as well as to help the
economy to solve unemployment problem.

Ensure Proper Division of Labor In The Desk:

To ensure proper service proper division should be maintained.

Ensure Sufficient Manpower:

The number of human resources in import section and in clearing section is really insufficient to give
services to huge number of customers. So, number of staff should be increased in those sections.

Need Personnel having Business Knowledge

Most of the personnel have no business education. So selection of employee from business school can give
proper solution.

Development of Human Resources:

Human resource is another sector for the branch to be developed urgently. Human resources, in the branch,
need to be equipped with adequate banking knowledge. Majority of the human resources must have basic
knowledge regarding money, banking, finance and accounting. Without proper knowledge in these subjects,
efficiency cannot be optimized. Bank can arrange training program on these subjects.

Cash Counting Procedure Should Be Developed:

Cash section should be well equipped. More cash counting machine should set up.

Ensure Proper Maintenance of Files:

City Bank Ltd. gives personalized services. All the officers have to give concentration to the customers,
while maintaining the customer files. Every staff should try to reduce these irregularities.

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Ensure Proper Maintenance of Office Premises:
B. B. Ave. Branch is supposed to be very neat and clean and well decorated. This habit must be changed.
Moreover, the sitting arrangement is very insufficient comparing with the number of customers. So this
branch of CBL must pay attention to this issue.

Ensure Proper Communication System and Maintenance of Machineries:

Sometimes Communication System remains out of order and it is also true for the photocopiers. Attention
should be given on proper maintenance of phone, computer, fax machine and photocopier.

Ensure Sufficient Forms and Vouchers:

There are always shortages of application forms, vouchers, etc. in the branch. These Forms and vouchers
must be maintained in sufficient quantity. Otherwise, customer service will be hampered

Offer Some Loan and Deposit Scheme Exclusively for The Premium Customers:
All the lending and savings packages offered to the Premium customers are same as offered to the general
customers, excepting the waiver of service charges for Premium Ones. City Bank Limited should try to
introduce more attractive lending and savings scheme to its Premium customers to create more business for
the Bank. The Bank can pay more attention to this segment of customers, as it is the most solvent group from
which income can be generated if the package is designed properly.

More Gifts and Discounts for The Premium Customers:

Premium Customer should be offered occasional gifts and discounts, which can make the Premium Service
more attractive and keep consumer delight. The interest rates on several loan and deposit schemes should be
differentiated for the Premium customers.

Fast online service:

Online service should be dynamic and modernized. Sometimes services are being delayed. For this reasons,
customers are to wait for long time, which is a threat for loosing customer.

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Conclusion & Bibliography

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6.0 Conclusion
Notwithstanding some limitations The City Bank Ltd. is doing better and holding a good percentages of
market share in banking sector. CBL, the first generation bank in India came into being in 1983 under the
entrepreneurship of 12 prominent businessmen in the country. Established with the objective of bringing
about a qualitative change in the sphere of banking and financial management, the bank today serves its
customers spread across 77 branches within India and 300 overseas connections.

CBL provides services tailored to the specific needs of the customers in the area of trade, comers and
industry, besides the domestic network. While services like Credit Cards, ATMs and SWIFT payment
systems are already in place, the bank plans to introduce Real Time Online Integrated Banking System with
all modern delivery channels in the future.

CBL has earned recognition at the national and international level. It was one of the 12 banks in India to be
evaluated by ASIA WEEK for Asset, Deposit and Profit and was ranked among the top 500 banks in Asia.
Besides, the bank also received the Top Ten Company awarded from the Prime Minister of The Peoples
Republic of India for the period 1992-93. So, if the Bank can remove all of its present problems, it will be
able to reach to its mission & vision.

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7.0 Bibliography:
Brochures of City Bank Limited.
City Banks Website-www.citybank.com
City Bank Annual Report 2005.
George H. Hempel and Donald G. Simonson (1998), Bank Management: Test and Cases, 5 th Edition,
New York: South-Western Pub.

Joel Bessis (2001) Risk Management in Banking, 3rd Edition, New York: John Wiley & Sons Ins.

Peter S. Rose (2001), Commercial Bank Management, 5th Edition, New York: Irwin Professional Pub.

Peter S. Rose and Sylvia Conway Hudgins (2003), Bank Management & Financial Services, 5 th
Edition, New York: McGraw-Hill.

Reading Materials on General Banking & Credit Department.

Radhaswami, M. and S. V. Vasudevan (2000), Text Book of Banking, 3 rd Edition, New Delhi: S. Chand
& Company Limited.

Timothy W. Koch and Steven Scott Macdonald (2002), Bank Management, 5 th Edition, New York:
South- Western Pub.

Woelfel, Charles J. (1994), Encyclopedia of Banking and Finance 10 th Edition, New Delhi: S. Chand
& Company Limited.

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