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Compensation Practices of National Bank Limited

Introduction

Bank provides necessary funds for executing various programs in the process of economic
development. they collect savings from large masses of people spread throughout the country, &
lending these deposit who actually need this for meeting the financial requirement. Bank plays a
vital role in the economy by providing means of payment and mobilizing resources. Bank is the
most important financial institution in the economic development of a country depends on the
development of banking sector. Today’s modern banks are not only providing traditional banking
but also expanding the many financial services

The main objective of this report is to analysis Compensation practice and employee satisfaction
in Banking Industry, here focus on to identify the influential factors and their relationship. In this
report discuss on the compensation practice of National Bank Ltd as a private sector commercial
bank. Finally evaluate the relationship between the compensation paid and the growth of
satisfaction of employees in their own job and compare the performance with the standard set by
the global market.

Background & History


National Bank Limited (NBL) has its prosperous past, glorious present, prospective future and
under processing projects and activities. NBL Established as the first private sector bank 100%
owned by Bangladeshi entrepreneurs, it has been prosperous as the largest private sector Bank
with the passage of time after facing many stress and strain. The members of the board of
directors are creative businessmen and leading industrialists of the country. To keep pace with
time and in harmony with national and international economic activities and for rendering all
modern services, NBL, as a financial institution, automated all its branches with computer
networks in accordance with the competitive commercial demand of time. Moreover, considering
its fourth-coming future, the infrastructure of the Bank has been rearranging. The expectation of
all class businessmen, entrepreneurs, and the general public is much more to NBL.

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Then President of the People's Republic of Bangladesh Justice Ahsanuddin Chowdhury
inaugurated the bank formally on March 28, 1983, but the first branch at 48, Dilkusha
Commercial Area, Dhaka started commercial operation on March 23, 1983. The 2nd Branch was
opened on 11th May 1983 at Khatungonj, Chittagong. At present, NBL has been carrying on
business through its 200 branches & Agri Branches spread all over the country. Since the very
beginning, the bank has exerted much emphasis on overseas operations and handled a sizable
quantum of homebound foreign remittance. It has drawing arrangements with 415
correspondents in 75 countries of the world, as well as with 37 overseas Exchange Companies
located in 13 countries. NBL was the first domestic bank to establish agency arrangements with
the world famous Western Union in order to facilitate quick and safe remittance of the valuable
foreign exchanges earned by the expatriate Bangladeshi nationals. This has meant that the
expatriates can remit their hard-earned money to the country with much ease, confidence, safety
and speed.

NBL was also the first among domestic banks to introduce international Master Card in
Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power Card. The Bank
has in its use the latest information technology services of SWIFT and REUTERS. NBL has been
continuing its small credit program for disbursement of collateral free agricultural loans among
the poor farmers of Barindra area in Rajshahi district for improving their livelihood. NBL
stepped into a new arena of business and opened its Off Shore Banking Unit at Mohakhali to
serve the wage earners and the foreign investors better than before.

Since its inception, the bank was aware of complying with Corporate Social Responsibility. In
this direction, we have remained associated with the development of education, healthcare and
have sponsored sporting and cultural activities. During times of natural disasters like floods,
cyclones, landslides, we have extended our hand to mitigate the sufferings of victims. It
established the National Bank Foundation in 1989 to remain involved with social welfare
activities. The foundation runs the NBL Public School & College at Moghbazar where present
enrolment is 1140. Besides awarding the scholarship to the meritorious children of the
employees, the bank has also extended financial support for their education. It also provided
financial assistance to the Asiatic Society of Bangladesh at the time of their publication of
Banglapedia and observance of 400 years of Dhaka City.

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The Transparency and accountability of a financial institution are reflected in its Annual Report
containing its Balance Sheet and Profit & Loss Account. In recognition of this, NBL was
awarded Crest in 1999 and 2000, and Certificate of Appreciation in 2001 by the Institute of
Chartered Accountants of Bangladesh.

The bank has a strong team of highly qualified and experienced professionals, together with an
efficient Board of Directors who play a vital role in formulating and implementing policies.

Methodology:

Primary data sources: The following methodology will be followed for the study based on
observation and interpretation. Data sources are scheduled on an informal discussion with
officials & HR Rule book of the Bank.

Secondary data sources: Secondary data are data collected for some purpose other than the
main facts. Secondary data are quick source of background information. I also collected
information from secondary data sources. The sources are:

 Internet
 By conducting with employees of the Bank.
 From internal circular letter of the Bank.

Mission

Efforts for expansion of our activities at home and abroad by adding new dimensions to our
banking services are being continued unabated. Alongside, we are also putting highest priority in
ensuring transparency, accountability, improved clientele service as well as to our commitment to
serve the society through which we want to get closer and closer to the people of all strata.
Winning an everlasting seat in the hearts of the people as a caring companion in uplifting the
national economic standard through continuous up gradation and diversification of our clientele
services in line with national and international requirements is the desired goal we want to reach.

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Vision

Ensuring highest standard of clientele services through the best application of latest information
technology, making due contribution to the national economy and establishing ourselves firmly
at home and abroad as a front-ranking bank of the country are our cherished vision.

Total Compensation & Benefits (C&B)

Compensation refers to all forms of financial returns & tangible services & benefits employees
receive as part of an employment relationship. Compensation is one kind of commitment. NBL
tries to provide following financial & non-financial compensation & benefit to their respective
employees & staffs.

Total Compensation &


Benefits

Financial Retirement Others Benefits Non financial


Benefits Benefits Benefits

1. Gross salary 1. Provident fund 1. Maternity 1. Leave


2. Superannuation Benefits
2. Incentive 2. Training
Bonus fund 2. Medical
3. Festival Bonus 3. Gratuity Allowance
4. Leave encashment 3. Car Loan 3. Job Security
(Equal to basic)
5. Welfare & Death 4. EHBL Loan
4. Family
Benefits 5. Personal
environment
Accident
Policy

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Financial Benefits

Gross Salary
Gross salary is the term used to describe all of the money you've made while working at your
job, figured before any deductions are taken for taxes, employee security and health insurance. If
you work more than one job, you'll have a gross salary amount for each one

Salary Scale/Pay structure

The Bank is committed to follow a fair, competitive and flexible remuneration policy. The Board
of director is the final authority for approval of this policy and will amend and review the policy
on recommendation of Management Committee periodically.

The remuneration policy of the bank will cover all persons engaged in permanent service of the
bank. The different job grades at National Bank are as follows:

Sl. No Designation Gross Salary Facilities Bank’s


Car as per rule
01 Managing Director - Bank’s Car
02 Additional Managing Director 3,42,200.00 Bank’s Car
03 Deputy Managing Director 2,52,000.00 Bank’s Car
04 Senior Executive Vice President 1,83,600.00 Car Loan
05 Executive Vice President 1,68,400.00 Car Loan
06 Senior Vice President 1,43,000.00 Car Loan
07 Vice President 1,23,000.00 Car Loan
08 Senior Assistant Vice President 1,14,800.00 Car Loan
09 Assistant Vice President 1,07,300.00 Car Loan
10 Senior Principal Officer 87,400.00
11 Principal Officer 69,900.00
12 Senior Executive Officer 55,200.00
13 Executive Officer 46,000.00
14 First Executive Officer 36,800.00
15 Junior Officer 29,900.00
16 Trainee Assistant Officer 20,700.00
17 Computer Operation 27,300.00
18 Staffs 21,300.00

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Bonus Policy
Bonus is an extra payment in addition to fair and reasonable normal salary. It is an incentive
payment not a routine salary. Therefore, it must be strictly linked only with effort and
profitability of the Bank.

The Bonus Policy of the NBL is as follows: -


Festival Bonus: Two festival bonuses have been given every calendar year: Bonus is always on
the basis of the Basic pay.

Incentive Bonus: if enough funds are available to pay dividend over 12% to the stockholders,
then one incentive bonus may be given to the employees of the Bank. It will be decided by the
Board of Director.

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Retirement benefits

Provident fund (PF)


PF deposit schemes are designed to honor our corporate employees. Employee Provident Fund
Offers the employees to create a Security Deposit in the form of a Fixed Deposit that can be
withdrawn only with due consent from the Company.
The benefits of provident fund are given to the employees of the Bank in accordance with the
recognized Provident Fund Rules as per section 2(52) of Income Tax Ordinance, 1984. The
Provident Fund was recognized with effect from 31 March, 1987. The Fund is operated by a
Board of Trustees consisting of 6 (six) members of the Bank. All confirmed employees of the
Bank contribute 10% of their basic salary as subscription to the Fund. The Bank also contributes
equal amount to the Fund. Interest earned from the investments of fund is credited to the
members account on yearly basis.

Gratuity
A sum of money paid to an employee at the end of a period of employment. The Bank operates a
funded gratuity scheme with effect from 01 July, 2005, which is administered by a Board of
Trustees consisting of 4 (four) members. Provision has been made for liabilities under gratuity
scheme in compliance with BAS-19 and Bangladesh Bank instruction provided in letter No. DBI
1 (private)/82/2008-257 dated February 20, 2008.
All employees who have been in the Banking service for a minimum period of 12 years without
break, shall be eligible to have the benefit under the gratuity. The amount payable will be
calculated 01 (one) month’s basic (last basic pay) for each completed year of service with
National Bank Limited up to retirement/death.

SL Employee designation Basic pay per Service period Total Gratuity


month
01 Vice President Tk.1,00,000/- 30 Years Tk.30,00,000/-

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Welfare & Death Benefits
Any member of NBL whether on regular or contract basis (in house or outside) shall be entitled
to become member of Scheme from the following month of his/her joining in NBL on payment

of regular monthly subscriptions and shall get all admissible benefit under NBL employees
Welfare Scheme. Employee members who retire normally shall get full welfare benefit on
retirement. The welfare benefit against death shall be calculated as per same norms of welfare
benefits & it also include funeral benefits.
Calculation of Welfare benefits & death benefits -
Rank Monthly Total Yearly Welfare benefits Funeral
Subscription Subscription on retirement & benefit
Rate death benefits per
year of service
Managing Director 1000,00 12,000.00 30,000.00 80,000.00
Additional Managing Director 800.00 9,600.00 27,000.00 80,000.00
Deputy Managing Director 700.00 8,400.00 27,000.00 80,000.00
Senior Executive Vice President 600.00 7,200.00 25,000.00 80,000.00
& Executive Vice President
Senior Vice President to 500.00 6,000.00 20,000.00 80,000.00
Assistant Vice President
Officer 300.00 3,600.00 15,000.00 60,000.00
Staff 100.00 1,200.00 10,000.00 50,000.00

Suppose an employee has been retired from the service of the Bank, then he/she get following
welfare benefit.
Name of the Designation Last place of Welfare benefit Period
Payable amount of welfare
Employee posting per year of service
benefit on retirement

Tk.20,000/-
Any Branch 21 Years Tk.4,20,000/-
Mr XYZ Ex-AVP

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Superannuation fund
Superannuation is an organizational pension program created by a company for the benefit of its
employees. It is also referred to as a company pension plan. The Bank operates a Superannuation
Fund Trust by a Board of Trustees consisting of 5 (five) members. The death-cum-survival
benefits are given to the employees as per the eligibility narrated in the Trust Rules. The fund got
recognition from the National Board of Revenue with effect from July 01, 2005, as per Part-A of
First Schedule of Income Tax Ordinance, 1984. The Bank contributes to the fund annually as per
superannuation fund rules.

Admissible Benefits under Superannuation fund


1. Death Benefit: 100% of the admissible amount will be paid to the nominee/heir(s) of the
employee in the event of death during tenure of service irrespective of period of service
of the concerned employee. The employees on contract service including Managing
Director will also be entitled to this benefit.

2. Survival benefit:

I. Total Disability: 100% of the admissible amount will be paid to an employee in


case of his/her total disability during service irrespective of period of service
because of any accident or otherwise resulting to loss of both hands or both feet or
sight of both eyes or one hand and one foot or one hand and sight of one eye or
one foot and sight of one eye. The employees on contract service including
Managing Director will also be entitled to this benefit.

II. Partial disability: 50% of the admissible amount will be paid to an employee in
case of his/her partial disability during service irrespective of period of service
because of any accident, heart attack or any other severe diseases resulting to loss
of one hand or one foot or sight of one eye or any other limes of the body making
the employee incapable to continue service in the bank. The employees on
contract service including Managing Director will also be entitled to this benefit.

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III. Retirement: On retirement from service after completion of normal service
period or on voluntary retirement, 50% of the admissible amount will be paid to
the concerned employee who completes at least 20 (twenty) years continuous
service in the bank. Superannuation benefit shall be admissible once in the service
i.e. on retirement or on completion of contractual period as per rules stipulated
above.

Benefits Under Superannuation Fund Scheme:

Under the scheme the following financial benefit may be admissible to the employees of the
Bank subject to fulfillment of prescribed terms and conditions as under:

Designation Amount
MD/AMD/DMD Tk.12.00 lac
SEVP/EVP/SVP Tk.10.00 lac
VP/SAVP/AVP Tk. 8.00 lac
SPO/PO Tk. 6.50 lac
Sr. Officer/Officer Tk. 5.00 lac
Prob. Officer /Asstt. Officer/ Junior Officer Tk. 4.50 lac
Staffs Tk. 2.50 lac

Leave Encashment
Earned leave shall not be accumulated more than 4 months (120 days). Those employees who
have accumulated leave for more than 120 days will not accumulate any further leave to the
existing accumulated leave. After retirement an employee has 120 days earned leave then he /she
can en-cash of their leave on the basis of last basic pay. Suppose
SL Employee Basic pay per Basic pay per Total unveiled Total amount
designation month day leave
01 Vice President Tk.90,000/- Tk.3,000/- 120 days Tk.3,60,000/-

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Other benefits

Other benefits include maternity benefits, medial allowance, and employee house building loan
& computer and car loan at a concessional rate.

1. Maternity Benefits

From date of joining, a female employee who shall be entitled to Maternity benefits as under:

1. 6 (six) months maternity leave with full pay.


2. Maximum twice may be availed during the employment period.
3. Maternity benefits in form of Cash is Tk.5,000/- only
4. Extra 6 months non paid maternity leave is also given to the employees

2. Medical allowance

In order to encourage all Executives/Officers/Staffs to work in an efficient manner by way of


providing health security NBL introduced further medical benefits to all employees. This benefit
is over and above the normal monthly allowance. This benefit is not mandatory by any law but
NBL Board only introduced such benefits to ensure that all employees dedicate themselves to
NBL for its continuous growth, better clientele service and good health. Obvious monthly
medical allowance does not cover the expenses for hospitalization for major illness where
prolong hospitalization are necessary including surgery.

Employee: All confirmed employee who is in the permanent payroll. The Facility also covers
their wife and maximum two dependent children.

Declaration: A declaration form required to be filled-in and signed in duplicate by individual


employee. The first copy of the declaration form should be forwarded to Head Office,
Administration Division for their record and the second copy should be retained by the branch
which should be kept in the personal file of concerned employee. Please note that only wife and
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two children whose names and particulars will appear in the declaration form will be eligible for
this facility.

3. Car Loan Scheme

In 1989 NBL has introduced a Car Loan Scheme for its Executives ranking from senior
Executive Vice President to Asstt. Vice President which included payment of Lump sum
maintenance cost along with reimbursement for Limited units of fuel consumption and wages of
the Drivers. In the meantime, various qualitative changes have taken place in the Bank. NBL is
emerging with a new commitment in the Banking Sector which is being reflected in its ever
increasing profitability. All these have become possible due to the devotion & commitment of the
people working in it. To uphold the morale of these people and to make them more motivated
and devoted to the cause of the Bank, it has become necessary to revise the existing Transport
Policy to make it more relevant to present day needs.
Eligibility Car Loan Scheme
(I) In addition to MD, AMD, DMDs will remain outside the car loan scheme (ii) SEVPs, EVPs,
SVPs, VPs will get the loan on their approach under car loan scheme (iii) AVPs & SAVPs will
get car under loan scheme on the basis of their performance to be assessed by the Management.
Amount of loan: The eligible employees of Bank will get the interest free loan as under:-
(i) SEVP/SVP maximum loan limit Tk.14.00 lac

(ii) VP/SAVP/AVP max. Loan limit Tk.12.00 lac

4. NBL Employees House Building loan (EHBL):

An employee must have 5 years of service length and above are eligible to apply for employee
house building loan. The amount of loan shall not exceed the actual cost & other expenses
relating to the land or construction of house or readymade flat of 200 month’s basic salary at

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time of sanction of the loan or position wise entitlement of loan amount whichever is lower
subject to maximum amount as below.

Designation wise entitlement of EHBL


Managing Director To be decided by EC/Board
Additional Managing Director Tk.120.00 Lac
Deputy Managing Director Tk.100.00 lac
Senior Executive Vice President to Executive Vice President Tk.80.00 Lac
Senior Vice President to Assistant Vice President 60.00 Lac
Senior Executive Officer to Senior Principal Officer 50.00 Lac
Executive Officer to Junior Officer 40.00 Lac
Staffs 20.00 Lac

1 Personal Accident Policy


The Executive Committee of the Board of Directors in its 453 rd meeting held on 01.08.13
approved the proposal for employee’s risk protection in the event of any accident takes place
resulting in death or disability putting an employee or his family in a sudden hardship for
unforeseen risk coverage through implementation of Accident Policy with a non-life insurance
company.

The Executive Committee of the Board of Directors has approved the Personal Accident Policy
are as follows: -

1. A scheme be launched titles “Employees Accident Risk Coverage Scheme”


2. Under the scheme Bank shall obtain insurance coverage for its employees from any non-
life insurance company of the country for a period not exceeding 01 (one) year with
option for renewal on yearly basis. The policy shall cover death or disability caused by
accident.
3. The maximum sum insured of Personal Accident Policy shall be as follows: -

Category Range of Designation Amount of


sum-insured
A Managing Director 15.00
B Additional Managing Director to Senior Executive Vice President 13.00
C Executive Vice President to Asstt. Vice President 12.00

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D Senior Principal Officer to Senior Executive Officer 10.00
E Executive Officer to Probationary Officer (After confirmation) 8.00
F First Executive Officer to HR Contract (After absorption) 5.00
G Staff and sub-staff (regular) 3.00

Non-financial Benefits

Leave Policy

Earned leave:

1. Employee shall be entitled to Earned leave on full basic pay at a rate 30 days for each
calendar year.
2. Earned leave shall be credited to the employee leave account on the first day of each
English Calendar year i.e. on the first January every year.
3. Earned Leave is credited up to 120 days in account of employees. After crediting 120
days, all leaves are omitted.
4. At the time of retirement, if 120 earned leave days will be existed in the account of
employees then employee can avail leave en-cash benefits on the basis of the per day
basic salary of last pay

Casual leave:

1. Casual leave means a leave of absence for a very short period granted to an employee
who may be unable to attend duty during such period due to sudden illness or urgent.

2. An employee will be entitled to enjoy casual leave to a maximum of 15(fifteen) days in


calendar year with full pay. Maximum 3 (three) days casual Leave can be taken at a time.
If extended further the entire leave period shall be treated and converted into Earned
leave and accordingly.

Sick Leave:

The sick leave shall be 14 days in a calendar year with full pay. Following issues relating to sick
leave should be taken into consideration while sanctioning sick leave. An employee shall be
entitled to enjoy sick leave up to a maximum of 14 days only in a calendar year. Such leave can

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be availed only on medical grounds and on production of medical certificate from a registered
and recognized medical practitioner acceptable to the Bank.

Advance Leave

Up to 10 days may be allowed as per existing service rules & for more, if required, approved by
the Managing Director of the bank.

Quarantine Leave:

Quarantine leave may be granted by the competent authority not to attend the Office for a period
of 10 (ten) to maximum 15(fifteen) days on the recommendation of a qualified medical Officer in
case of attack by cholera. Small Pox, Plague, Diphtheria, Typhoid, Fever, Measles, Mumps and
Cerebra-Spinal Meningitis etc. This leave will be with full pay.

Exceptional Leaves such as Study Leave, leave without Pay, Quarantine Leave, Leave with the
permission to leave the country or any leave exceeding 60 days will be sanctioned by the
Managing Director/Additional Managing Director.

Job Security

Family Environment

"Every single employee is someone's son or someone's daughter. Like a parent, a leader of a
company (or team) is responsible for their precious lives."

Findings

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Recommendation

Conclusion

Reference
1. www.nblbd.com
2. By conducting with employees of the Bank.
3. From internal circular letter of the Bank.
4. HR Rule Book of the Bank

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