final report

An Evaluation of the Activities of RFC (Retail Finance center)

An Evaluation of the Activities of RFC (Retail Finance center)

A Study on The City Bank LimitedDate of Submission: 27th January, 2011

Submitted to Mohammed Masum Iqbal

Assistant professorDepartment of Business Administration

Daffodil International University

Submitted byMd. Azizur Rahaman

Id no-071-11-1586Batch: 16th

Program: BBA (Finance and Marketing)

Department of Business Administration


Letter of Transmittal

January 27, 2011Mohammed Masum IqbalAssistant ProfessorDepartment of Business Administration

Daffodil International UniversitySubject: Submission of the Internship Report.Sir,

I would like to submit the Internship report, which was done on The City Bank Ltd. The internship program has given me the opportunity to combine my theoretical knowledge with practical experiences.

The report contains a descriptive study on evaluation on the activities of RFC.I provided the findings which I have derived from my exploration in this field.

Your valuable advice, suggestion and guidance have helped me to prepare the report with ease. I will be very glad, if you kindly accept this report.

Yours truly,

MD. Azizur Rahaaman

Id no: 071-11-1586

Acknowledgement First of all I present my due rewards to all mighty Allah who give me the opportunity to prepare this report. In preparing this report considerable amount of thinking and informational inputs from various sources were involved. I express my sincere gratitude to everyone who contributed towards making this report possible. Major contributions were received from officials at The City Bank Ltd. First of all I would like to especially thanks to the authorities of The City bank Ltd because they give me the prized opportunity to do my internship at their prestigious organization. The experience and knowledge gained at The City Bank Ltd helped me immensely to address and understand all the elements related to my report, which I otherwise would not have understood so well.

My Sincere gratitude goes to my honorable teacher Mohammed Masum Iqbal for his absolute support, co-operation and encouragement that he extended to me from the first day.

I would like to specially thank M. A. Quiyum, manager of asset operations of RFC in The City Bank Ltd. In spite of having a very busy schedule time, he made sure in every way that I acquire the best possible exposure and knowledge during my tenure as an intern.

Last but not the least I would like to thank the respondents of my survey. The report will not have been possible without their valuable inputs.

DECLARATION

I hereby declare that this report is a presentation of my original research work and that it has not been submitted anywhere for any word. Whenever contribution of others are involved, every effort is made of indicate this clearly, with due reference to the literature, and acknowledgement of collaborative research and discussion.

The work has done under the guidance of Mohammed Masum Iqbal, at the Daffodil International University.

Md. Azizur Rahaman

Id no: 071-11-1586 Department of Business Administration


In my capacity as supervisor of the candidates report, I certify that the above statements are true to the best of my knowledge.

Mohammed Masum IqbalReport Supervisor

Department of Business Administration


Date:

Executive summaryRetail banks are raising their game across the board and across the globe. Retail banks are developing and adapting their distribution channels to meet the needs of increasingly demanding customers: branches are more attractive and better designed; Web sites are more secure; and call centers offer quicker solutions to customers problems. One of the most remarkable success stories of last 50 years banking industry globally has been the conceptualization and innovative execution of banking with individual customers, their friends & families. The industry has termed it as Retail Banking or Personal Banking or Consumer Banking; and it has now - at a very rapid pace become the major revenue line for most of the top banks in the world. City Bank, too, recently has started its journey in Retail Banking. City Retail - add a little city to your life is the new brand-mantra, the pay-off line for City Retail. In this report, the study tries to discuss about the different retail products of the City Bank Ltd and also try to discuss about the important functions of the retail finance center.The present study focuses on evaluation of the activities of RFC (retail finance center).

Table of contents Particulars

Page no

Part-01

Introduction

9

Objectives of the study

10

Methodology 11

Limitations and Significance of the study12

Part-02 (Organization part)

MISSION, VISION AND OBJECTIVE OF CBL

13

Organogram Of CBL14

Services of CBL

15

Functional division of CBL15

SWOT Analysis of RFC of CBL

16-17

Retail products of The City Bank Ltd18-28

Part-03 (Learning part)

Activities of RFC

29

Credit Procedure for Retail LendingMajor Parts of RFC

3232

Application Process by Branch and Sales

34

Application Process by RFC

35

Credit Decision

36

Disbursement process

38

Retail loan process flow at City Bank39

Discussion and analyses40-70

Part-04

Problems 71

Recommendations 72

Conclusions

73

Bibliography

74

Questionnaire

75-76

Part-01IntroductionThe City Bank Limited (CBL) is the first private sector bank in Bangladesh. The bank has been operating since 1983 with an authorized capital of Tk.1.75 billon. The noble intention behind starting this bank was to bring about qualitative changes in the sphere of Banking and Financial Management. Today the City Bank serves its customers at home and abroad with 83 branches spread over the country and about three hundred oversea correspondences covering the entire major cities and business center of the world. The CBL was incorporated as a public limited company with limited liability on the 14th March, 1983 and its formal inauguration was on March 27, 1983 under company act, 1913 in Bangladesh with the primary objective to carry on all kinds of banking business. The City Bank Ltd. recently has started its journey in Retail Banking. More than 700 staffs have been trained so far on the vital concepts of service excellence and sales. Retail banking refers to banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks. Services offered include: savings and transactional accounts, mortgages, personal loans, debit cards, credit cards, and so forth. Here this report is based on RFC of The City Bank Ltd. So first of all, this study will try to know about RFC (Retail finance center). Retail Finance Center is the centralized retail risk management and lending operation body under Retail Banking Division. So this study will try to discuss about the process, activities of the RFC of The City Bank Ltd and also try to evaluate the effectiveness of RFC.Objectives of the study

The main objective of this report is to evaluate the activities of RFC. The specific objectives of the report are as follows.

1) To explain how the RFC of the City Bank Ltd operates;

2) To describe the procedure of RFC of The City Bank Ltd;

3) To find out how RFC of The City Bank Ltd maintains a comprehensive guideline for managing retail credit risk and lending operations risk;

4) To measure the performance of RFC of the City Bank Limited;

5) To identify the problems related to the operations of RFC of The City Bank Limited;

6) To make some recommendations to solve the problems.

Methodology 1) Research type: Conclusive research. 2) Sources of data:A) Primary source: Managers and Sales officers. B) Secondary source: Website of the City Bank, Brochures and publications of CBL products, Annual report of the year 2009 of CBL3) Target Population: BSSM (Bank Sales Managers) and all of the officers who are related with sales)

4) Sample size: 20

5) Sampling technique: Convenience sampling applied to collect the data. 6) Data collection methods:

a. Face to face interviewing technique was applied to collect the primary data from the bank sales manager and sales officers with a questionnaire. Limitations: The time limitation was one of the major problems for this report. Some of the relevant papers and documents were strictly prohibited.

The employees are very busy with their jobs, which lead a little time to consult with them. Relevant data and document collection were difficult due to the organization confidentiality. Most of the source has no capability to response the questions on my questionnaire. Significance of the StudyThis study has been demonstrated about the quality about the retail products, functions, management and sources evaluation on the RFC of the City Bank Ltd. This reason, this study will help the management of the City Bank Ltd is to determine the problem and prospect of RFC of the City Bank Ltd. Part-02Organization part The main objective of the study is to determine activities of RFC. So first of all, the study tries to describe about the City Bank Ltd. MISSION, VISION AND OBJECTIVE OF CBL

Mission of CBL

To contribute to the socioeconomic 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 nurture an enabling environment where innovativeness and performance is rewarded

Vision of CBL

To be the leading bank in the country with best practices and highest social commitment

Retail Banking Strategy of the City Bank Ltd

The City Bank Ltd. recently has started its journey in Retail Banking. More than 700 staffs have been trained so far on the vital concepts of service excellence and sales. In the product side ATM fleet has been launched, Debit card and credit has been issued, SMS Banking has been offered, 3 new deposit products have been introduced, manifold in the endeavor to build a Retail Banking brand namely City Retail Happiness Counts.

Figure 1: Organogram of CBL

Services of CBL

The CBL concentrates the following categories of banking services-

General banking,

Retail banking

Loans and Advances,

-SME (Small & Medium Enterprises)

-Corporate

International Trade and Foreign Exchange,

-Export

-Import

-Remittance

Online Banking Services,

Debit Card and Duel Currency Credit Card Facilities.FUNCTIONAL DIVISIONS OF CBL

The Bank accomplishes its functions through different functional divisions/ departments. The divisions/departments along with their major functions are listed below:

Financial Division

(Financial planning, budget prepartion and monitoring

(Payment of salary

(Controlling inter-branch transaction

(Disbursement of bills

(Preparation of financial reports and annual reports

(Preparation/Review of returns and statements

(Maintenance of Provident Fund, Gratuity, Superannuation Fund

(Reconcilliation

Credit and risk management

(Loan administration

(Loan disbursement

(Project evaluation

(Processing and approving credit proposals of the branches

(Documentation, CIB (Credit InformationBureau) report etc

(Arranging different credit facilities

(Providing related statements to the Bangladesh Bank and other departments

Human Resource Division (HRD)

(Recruiting

(Training and development

(Compensation, employee benefit, leave and service rules program and upgration

(Placement and performance appraisal of employees

(Preparing related reports

(Reporting to the Executive Committee/ Board on related matters

(Promotional campaign and press release

Information Technology (IT) Department

(Software development

(Network management and expansion

(Software and Hardware management

( Member banks reconcilliation

(Data entry and processing

(Procurement of hardware and maintenanceBranches Control & Inspection Division

(Controlling different functions of the branches and serch for location for expansion

(Conducting internal audit and inspection both regularly and suddenly

(Ensuring compliance with Bangladesh Bank (BB), monitoring BBs inspection and external audit reports

Retail Division(ATM card, Credit and system operation and maintenance

(SWIFT operation

(Credit Card Operation (Proposed)

(Customer and vendor relationshipSWOT Analysis of RFC of CBL

Strenghts

(Experienced and efficient management team and human resource

(Quaity products and services

(Company reputation and goodwill

(Large number of Branches all over the country

weakness (Lack of adequate marketing (advertising and promotion) effort

(Lack of full scale automation

(Lack of training facilities of the City Bank Ltd. opportunities

(Regulatory environment favoring private sector development

(Value addition in products and services

(Increasing purchasng power of people

(Increasing trend in international business

Threats

(Frequent changes of banking rules by the Central Bank

(Market pressure for lowering of lending rate

(National and global political unrest

(Default culture of credit

Retail products of The City Bank Ltd

City Bank is a major player in Bangladesh wholesale banking industry to offer the full scope of innovative, customized solutions and services. We offer service at the highest level. Their focus is not on short-term profit, but on building long-term relationships and standing by our clients whenever they need us. They have a unique business focus on enabling project financing, trade, investment and supply chain financing for clients. They are committed to using our country wide network to facilitate our clients' growing trade and investment flows and supply chain financing needs across our business footprint.

Now the study tries to describe the retail products of The City Bank Ltd. A) Deposit1) Current Account2) Savings Account

3) City Onayash

4) City Shomridhdhi

5) City Projonmo

6) City IchchapurunB) FDRC) Loan

1) City Drive

2) City SolutionD) Card

1) Debit Card

2) VISA ElectronE) Credit Card

1) VISA Classic Local

2) VISA Classic Dual

3) VISA Gold Local

4) VISA Gold DualCity drive

Owning a car is no longer a luxury. Car for your family is now a matter of fulfilling a necessity. Appreciating that basic need, City Bank introduces City Drive, a tailor-made auto loan scheme for individuals.

Features

1) Loan amount ranging from Tk. 300,000 to Tk. 20,00,000

2) Car financing up to 90% of reconditioned or new vehicle price

3) Lower interest rate & upto 100% financing for loan against cash security

4) Loan tenor 12 to 60 months

5) No hidden charges

6) Competitive interest rate

7) Loan processing fee 1% of loan amount

Eligibility

1) Age: 22 to 60 years

2) Experience: Salaried executive total 1 year including 6 months with current employer

3) Experience: Business person/propofessional 1 year

4) Monthly income: Minimum Tk. 30,000

City solution

Dream Vacation? Son's admission to a foreign university? Medical treatment? Daughter's wedding? House renovation?

Whatever the occasion or requirement may be, City Solution - any personal loan from City Bank - is there to solve all your problems and to fulfill all your dreams. You can access this facility from our selected branches across the country.

Features

1) Loan amount ranging from Tk. 50,000 to Tk. 1000,000


3) No guarantor required for the loan amount up to Tk. 3 lac


5) Competitive interest rate

6) Processing fee 1.5%

Eligibility

1) Age: 22 to 60 years

2) Experience: Salaried executive total 1 year including 6 months with current employer3) Experience: Business person 2 years4) Experience: Professional 1 year5) Minimum monthly income: Salaried executive Tk. 15,000self employed Tk. 25,000 and business person Tk. 30,000City express

City Express Cash is a fully secured and revolving facility for any legitimate purpose. The security for the loan should be ideally CBL FDR. Bank would finance against clients CBL FDR or other banks/NBFIs security.

City Express Loan is a fully secured and terminating (EMI Based) loan facility for any legitimate purpose. Bank would finance against clients CBL FDR or other bank FDR/NBFIs security.

This is any purpose secured loan for any legitimate purpose.

Features

1) Minimum loan amount Tk. 50,000 & Maximum 90% of the Present Value of CBL FDR or any other security

2) Quick processing

3) Minimum documentation


5) No guarantor required


Processing Fees

For express cash, 0.5% of approved limit

For Express Loan, following slab wise fee will be applicable

Eligibility

Age: 18 +

Must be Bangladeshi

Any eligible individual, who will provide the cash security

Current account

Our current account meets the needs of individual and commercial customers through our schedule benefit.

Interest Rate: Nil

Customer Benefit: 1) Cheque-book facility

2) Opportunity to apply for - safe deposit locker facility 3) Collect foreign remittance in both T.C. & Taka draftTransfer of fund from one branch to another by

1) Demand Draft

2) Mail Transfer

3) Telegraphic Transfer

4) Transfer of fund on Standing Instruction Arrangement

5) Collection of cheques through Clearing House.

6) Online banking service. Savings account

It is a sound savings for retail customer. We give the major facilities and services to our customer through 84 branches allover in Bangladesh with our skilled manpower.

Interest Rate : 4.00

Customer Benefit:

a) Cheque-book facility

b) Opportunity to apply for - safe deposit locker facility

c) Utility payment service

d) Collect foreign remittance in both T.C. & Taka draft.

Transfer of fund from one branch to another by

1) Demand Draft

2) Mail Transfer

3) Telegraphic Transfer

e) Transfer of fund on Standing Instruction Arrangement

f) Collection of cheques through Clearing House

City Onayash

City Onayash - earn easy on your savings account, earn profit every month!

City Onayash is a unique kind of savings account which calculates interest on your daily balance and pays interest to you every month.

It is a major departure from the conventional savings account available in the market. All such accounts calculate interest on the average or lowest balance of the month, while City Onayash does on daily product basis. Not only that, while those conventional savings accounts pays interest only twice a year - in December and June - City Onayash pays it to you every month. Happiness at each month end!

Eligibility:

1) Age: At least 18 years

2) Nationality: Bangladeshi

Availability: All 84 of City Bank branches spread across the country.

What you need to do: Just fill up the City Onayash account opening form and hand it over to our branch staff. That's it! Enjoy saving in a unique way!

Special Feature:

1) Withdraw and deposit cash as you wish - without at all having your monthly interest earning eligibility.

2) No hidden or undisclosed fees or charges or profit-cutting

3) Interest forfeiture rules of a common conventional savings account do not apply here. So, stay tension-free-100%

4) Every month's interest earning goes into your account automatically. What better way to take care of you family's recurring monthly expenses?

Interest Rate: 3.00

City ShomridhdhiCity Shomridhdhi - A unique offer from City Bank

City Shomridhdhi is an exceptional DPS product that is distincity more attractive than the prevalent DPS products in the market. You receive a hefty sum at the end of the term against your monthly deposit of small installments. It's a perfect way to secure your financial future!

Features 1) No initial deposit required

2) Monthly installment deposit ranges from Tk. 500 to Tk. 20,000

3) Flexible tenor of 3, 5, 7 and 10 yearsCity Projonmo City Projonmo financial safety for your future generations backed by complete immense protection!

City Projonmo is a unique monthly deposit scheme that you open for your kids to safeguard their future against all uncertainties and risks. As a guardian of the child you can open this account which builds great & unmatchable savings for you over the years. By the time your child is past his or her school age, there is this sufficient cash in your hand to take care of his / her higher education, marriage or other such large expenses.

However, the most interesting part of this scheme is the full insurance protection that you automatically enjoy. This simply means, in case of death or total physical collapse of the parent or guardian, the bank will pay the full value of the scheme for the full term no matter in reality how many months or years have been actually completed by you.

City Ichchapurun

City Ichchapurun great opportunity to earn against your savings every month!

This product allows you to earn interest and enjoy interest every month that accrues in your fixed deposit account, no matter what the term of the deposit is. It helps make your financial planning more disciplined, and your life more organized. While your fixed deposit remains untouched and well-kept for future, you keep on getting the profit on a monthly basis. What better way to take care of your monthly recurring expenses like childrens education or school fees, house tutors remuneration, utility bill payments, saving money in some DPS scheme?

CITY Visa Electron Debit Card - By your side, round the clock Now comes the Visa Debit Card from City Bank. Your life, therefore, becomes hassle-free and safe; and it is Visa Electron branded, which makes you the proud owner of a meaningful plastic.

Features: 1) Cash withdrawal from 500+ Visa ATMs 24/7/365 all over the country2) Shop and dine at hundreds of merchant Visa outlets all over the country3) Balance enquiry

4) PIN Change

5) Mini statement

6) Cash withdrawal @ Taka 12 per transaction at 583 DBBL ATMs

7) Cash withdrawal @ Taka 10 per transaction at 110 Q-cash network ATMs

Eligibility:

If you are an individual and have a savings, current or STD account in CBL, you are eligible avail this card. Just drop in any nearby CBL branch, collect an application form and submit duly filled up form. Within shortest time you will get the card delivered at your mailing address or at your designated branch.

Visa local classicThis is a local Visa Credit Card which is valid only in Bangladesh.

It can only be used in local currency (BDT) within the country. This type of credit card has a limit ranging from BDT 10,000 to BDT 49,999. This type of card has designed for medium earner category customers.

Usage

Local Classic/Silver Card (For Domestic use only)

Limit

Local Classic/Silver Card BDT 10,000 BDT 49,999

Visa classic dual

This is basically one plastic that has dual options to make transaction in two currencies. Its acceptance jurisdiction is in country and outside country in BDT and USD respectively. Classic dual is for the medium earner category customers. Its credit limit is USD 100 to 1000 and BDT 10,000 to BDT 49,999.

Usage

Dual Classic/Silver Card (For both International & Domestic use)

Limit

Dual Classic/Silver Card BDT 10,000 BDT 49,999 + US$ 500 USS$ 1,999

Visa gold local

This type of card is taka card of which acceptance jurisdiction is only in Bangladesh and transaction currency is BDT. The differences between these two cards are higher credit limit than classic card. Credit limit of Visa Gold card is ranging from BDT 50,000 to BDT 5, 00,000. This type of card has been designed for the higher earner category customers.

Usage

Local Gold Card (For Domestic use only)

Limit

Local Gold Card BDT 50,000 BDT 500,000

Visa gold dual

This is a high value dual card remaining other features same with classic dual. Gold dual is also for the higher earner category customers and its credit limit is USD 1,001 to 4000 and BDT 50,000 to BDT 500,000. A secured dual cards limit will be maximum USD 28,000 against lien on RFCD or ERQ account.

Usage

Dual Gold Card (For both International & Domestic use)

Limit

Dual Gold Card BDT 50,000 - BDT 500,000 + US$ 2,000 US$ 3,000

Credit Cards:

The American Express Credit Card

The American Express Gold Credit Card.

Corporate Cards:

The American Express Corporate Card

The American Express Gold Corporate Card.

The American Express Credit Card

Your American Express Credit Card gives you the following benefits:

Complimentary companion Mercedes Benz coach return tickets from Dhaka to Cox's Bazaar on Baghdad Express

Complimentary companion tickets for entry & all rides for Fantasy Kingdom and Water Kingdom

6% cash back at Agora Superstores & Nandan Megashops

Travel Emergency & Medical Assistance abroad*

Double Benefit City Shield & All Accident Insurance

* Available only for American Express Credit Cardmember Dual CurrencyThe American Express Gold Credit Card

Your American Express Gold Credit Card gives you the following benefits:

Complimentary companion return ticket from Dhaka to Kolkata on Jet Airways

Complimentary buffet at The Westin Dhaka round the year

Complimentary access to the City Bank American Express lounge at Zia airport

Complimentary access to countrys first Fast Track channel at Zia airport immigration

6% cash back at Agora Superstores & Nandan Megashops

Travel Emergency & Medical Assistance abroad

Double Benefit City Shield & All Accident Insurance

Part-03

Learning part

Activities of RFCThis study finds that RFC deals with four retail products of The City Bank Ltd. Other retail lending products of this bank are maintained by all branches of The City Bank Ltd.

1) City solution

2) City drive

3) City express (cash and load)

4) Credit cards ( specially American Express credit cards)

RFC has to manage some risk to maintain their operations efficiently and effectively. This study try to analyze what types of risk RFC manage to maintained their operations efficiently and effectively.

Risks:

Credit Risk or Default Risk

Operation Risk

Market Risk (commodity, interest rate, currency risk)

Incapacity to manage

Rewards:

Higher spread & profitability

Long term relationship with consumer

Small ticket size leads lower risk

Brand visibility

Cross selling opportunity

Key Credit Risk:Identification Risk:

Fake ID or Income Document (TIN, Bank Statement )

Imprudent KYC

Tracing Risk (rented house without fixed phone)

Risk Management Tools :

Communicating with issuing banks

Communicating with family members & employers

CPV report

Income Assessment Risk:

Inflated Bank Statement and inflated turnover

Overstated salary certificate or letter of introduction

Risk Management Tools:

Income Validation Process

Credit Check

Debt Burden Ratio ( Proportion of debt over monthly income)

Average balance in the bank statement

Bank Statement Assessment

Communicating with HR to verify salary

Guarantors Risk:

Fake Guarantee

Guarantor is not aware of loan amount


Contact Point Verification

Communicating with guarantor and checking whether he is willing to stand as guarantor of applied loan amount

Documentation Risk:

Fake bank statement and ID documents submission

Fake application submission

Collection Risk:

Applicant of remote area

Instable business

Not pay master

Defaulter of other bank


Not encouraging credit facility in outside branch command area

Checking the existing EMI payment and if required ensuring confidential credit report from facility providing banks

CIB report

Dedicated collection team

Credit Procedure for Retail LendingPurpose of Credit Procedure Manual for Retail Lending:

To manage the credit risks associated with the product

To ensure specific risk management tools, standard asset operation process and quality retail loan portfolio

To ensure unique credit practice for risk management and operation of retail lending

What is retail finance center?Retail Finance Center is the centralized retail risk management and lending operation body under Retail Banking Division.Why Retail Finance Centre Supporting business growth and ensuring capacity to manage the business momentum

Implementing core credit process and managing credit risks

Minimizing operation and documentation risk products

Ensuring portfolio quality

Major Parts of RFC

The total RFC can be divided into four teams which are Risk Assessment Team will underwrite the applications

Asset Operation Team will manage loan disbursement and documentation

Collection Team- will pursue the delinquent customer to manage portfolio

MIS Team will manage identification risk, CPV and generate loan MIS

Income and ID Documents

Photograph and business card

Photo ID/Voter ID/ Driving license/ Copy of Passport

Bank Statement for last 6 months

Copy of TIN related doc

Letter of Introduction (LOI) from applicants employer or salary certificate or pay slip along with major information like joining date, job status and salary break up

For business person copy of Trade license/Memorandum of Articles/Memorandum of Association

For professionals, copy of professional certificate

Relationship between branch & RFC

1) Supportive but not compromising

Credit Process of Retail Finance

Target Customers Salaried Executive:

Businessperson: Self Employed: Non Target Customers CBL Negative listed individuals

Journalist of reasonably lower level & non reputed publications & Lawyers

Employees of the firm which has a poor repayment history in business loan with us

Employees of un reputed Proprietorship & Partnership Firms

Politicians & Individuals having political affinity

Travel agents and C & F agents of lower level

Defense officials below Major level

Public Figures and media personality

Application Process by Branch and Sales Customer completely fills-up the loan application pack (LAP) and drops it to the sources

Respective Manager of sourcing channels will take extra measures to check whether the application form is fully filled up

Managers of sourcing channel will verify customer signature in the application form, mark original seen in the photocopied documents before sending the LAP to RFC

Managers of sourcing channel will fulfill the documentation checklist attached in the LAP (Loan Application Pack) through branch

Fresh applications from all sources will be forwarded to credit MIS (RFC) through document tracker

Application Process by RFC RFC MIS Officer will receive the applications and input the LAP information in the daily MIS

MIS officer will put unique serial or tracking number on the application and hand over the applications to CPV agents for verification

MIS officer will distribute the LAPs among the analysts

MIS will send daily loan status report to sourcing channels via e-mail

MIS officer will send back the LAPs to the source as and when advised by credit analyst

Analyst will pre-screen the LAP and if any discrepancy is found will send back to source for further review

Credit Analyst will analyze whether application meets PPG criteria, documents requirement and prudential regulations of Bangladesh Bank

Credit analyst will perform de-duplication and negative check list, prepare approval sheet

Credit analyst can return the LAP back to source for any document deficiency and credit analyst can send any query or ask for any clarification from source

Credit Manager/ Manager RFC/HORFC/HOPA/HORB/DMD (Business)/ MD will approve or decline the applications as per delegation of lending authority (DLA).

Credit Decision

The Credit Analysts will assess the income of the applicant based on the income assessment guideline.

Credit Manager reviews the documents to come to an approval/decline decision.

However a Credit Analyst may also decide to defer an application back to the source or hold prior to make any approve/decline decision.

Factors that Decide Approval of Facility:

Informative Loan KYC

Satisfactory income reflection or credit flows

DBR

Residential status and other income sources

Social and business profile of the applicant

Existing loan repayment behavior

Satisfactory CIB and CPV

Faster Assessment and approval at RFC

Major Frequent Omissions (FOS):

Incomplete loan application and documentation

Loan KYC is not properly filled in

No signature verification or document attestation

Using fluid in the LAP

Front cover of the LAP is not fulfilled (account IC, ID )

No branch name, RMs Name and date in loan application

No waiver request

Contact Point Verification (CPV) CPV report authenticates applicant's all personal information provided to the bank at the time of applying

Third party agents conducts the CPV on behalf of the Bank

Branches outside CPV agents coverage, will do the CPV

Disbursement processStep 1 All the charge documents are duly signed by the applicant (Signature of the customer in the LAP and charge document should be matched with that of Finacle). Customer will only sign on the charge documents and no over writing or fabrication is allowed in the charge documents.

Step 2 UDCs must be undated, crossed, in favor of The city Bank Ltd and amount in figure & word must be same.

Step 3 In case of cash covered loan, FDR must be duly discharged and all necessary supporting documents must be attach with FDR

Step 4 For auto loan: Registration and insurance should be as per Purchase order (engine no, chassis no, model and HP with City Bank Ltd). Insurance should be for full car price and comprehensive insurance is required from our listed insurance company

Step 5 RM/Sales manager will verify the signature of customer in the LAP and security only with pencil marking SV (signature verified).

Retail Loan Process Flow at City Bank

Discussions and analyses Data analysis procedure:

The data analysis for this study conducted through Statistical Package for Social Science software or SPSS version 17.The study also tested reliability of the instrument so that it enables to produce a robust and valid result.

Exhibit 1

Frequencies

Statistics

X1-The RFC of the City Bank maintained their operations efficiently and effectively

NValid20

Missing0

X1-The RFC of the City Bank maintained their operations efficiently and effectively

FrequencyPercentValid PercentCumulative Percent

ValidDisagree15.05.05.0

Moderately agree315.015.020.0

Agree1050.050.070.0

Strongly agree630.030.0100.0

Total20100.0100.0

Descriptive Statistics

NRangeMinimumMaximumMeanStd. DeviationVariance

X1-The RFC of the City Bank maintained their operations efficiently and effectively203254.05.826.682

Valid N (listwise)20

ExplanationFrom the above table, study finds that most of the BSSM and sales officers agree that the RFC of the City Bank Ltd maintained their operations efficiently and effectively. So Bank sales manager and sales officers are satisfied with the operations of RFC.

Exhibits 2Frequencies

Statistics

X2-The relation between RFC and source is good

NValid20

Missing0

Mean3.05

Median3.00

Mode3

Std. Deviation.826

Minimum2

Maximum5

X2-The relation between RFC and source is good




Agree420.020.095.0


Total20100.0100.0

Explanation:

The study uses 5 point likert scaling questionnaire in this report. So that average mean is 3.00. The statement is that the relationship between RFC and source is good. From the above graph, the study finds that most of the BSSM and sales officers moderately agree that the relation between RFC and source is good. From the above table the study finds that the mean, median and mode of this statement are 3.05, 3.00 and 3.00. So BSSM and sales manager moderately agree with the above statement. But they are not highly agreed with the statement. So RFC should give consideration on this matter.


Statistics

X3-The City Bank Ltd develops their nretail products based on the needs and wants of the customer

NValid20

Missing0

Mean3.25

Median3.00

Mode3

Std. Deviation.786

Minimum2

Maximum5

X3-The City Bank Ltd develops their retail products based on the needs and wants of the customer




Agree315.015.090.0


Total20100.0100.0

Explanation:

The statement is that The City Bank Ltd develops their retail products based on the needs and wants of the customer. From the above graph, the study finds that most of BSSM and sales manager moderately agree that The City Bank Ltd develops their retail products based on the needs and wants of the customer. From the above table study finds that the mean, median and mode of this statement are 3.25, 3.00 and 3.00. So BSSM and sales officers moderately agree with the above statement. But they are not highly agreed with the statement. So RFC should give consideration on this matter.


Statistics

X4-Retail loan products increase the profitability and brand identity of the City Bank ltd

NValid20

Missing0

Mean3.65

Median4.00

Mode4

Std. Deviation.489

Minimum3

Maximum4

X4-Retail loan products increase the profitability and brand identity of the City Bank ltd


ValidModerately agree735.035.035.0

Agree1365.065.0100.0

Total20100.0100.0

Explanation:

The statement is that Retail loan products increase the profitability and brand identity of the City Bank ltd. From the above graph, the study finds that most of the BSSM and sales officers agree that that Retail loan products increase the profitability and brand identity of the City Bank ltd. From the above table the study finds that the mean, median and mode of this statement are 3.65, 4.00 and 4.00 which are higher than average mean. So they are agreed with the above statement. But they are not highly agreed with the statement.

Exhibits 5

Frequencies

Statistics

X5-Retail products of the City Bank Ltd helps the consumer to meet their important or personal financial requirements

NValid20

Missing0

Mean3.50

Median3.00

Mode3

Std. Deviation.761

Minimum2

Maximum5

X5-Retail products of the City Bank Ltd helps the consumer to meet their important or personal financial requirements




Agree735.035.090.0


Total20100.0100.0

Explanation:

The statement is that Retail products of the City Bank Ltd help the consumer to meet their important or personal financial requirements. From the above graph, the study finds that most of the BSSM and sales officers moderately agree that the City Bank Ltd help the consumer to meet their important or personal financial requirements. From the above table the study also finds that the mean, median and mode of this statement are 3.50, 3.00 and 3.00 which are equal or higher than average mean. Exhibits 6

Frequencies

Statistics

X6-The retail banking of the City Bank Ltd has transformed into a "buyer market" from a sellers market

NValid20

Missing0

Mean3.30

Median3.00

Mode3

Std. Deviation.571

Minimum2

Maximum4

X6-The retail banking of the City Bank Ltd has transformed into a "buyer market" from a sellers market




Agree735.035.0100.0

Total20100.0100.0

Explanation:

The statement is that the retail banking of the City Bank Ltd has transformed into a "buyer market" from a sellers market. From the above graph, the study finds that most of the BSSM and sales officers moderately agree that the retail banking of the City Bank Ltd has transformed into a "buyer market" from a sellers market. From the above table the study also finds that the mean, median and mode of this statement are 3.30, 3.00 and 3.00 which are equal or higher than average mean. So the above graph indicates that BSSM and sales officers moderately agree with the above statement. But they are not highly agreed with the statement. So Management should give emphasize on this matter. Exhibits 7

Frequencies

Statistics

X9-Interest rate of retail lending products of the City Bank Ltd is lower than other banks in Bangladesh

NValid20

Missing0

Mean2.95

Median3.00

Mode3

Std. Deviation1.050

Minimum1

Maximum4

X9-Interest rate of retail lending products of the City Bank Ltd is lower than other banks in Bangladesh


ValidStrongly disagree315.015.015.0

Disagree210.010.025.0


Agree735.035.0100.0

Total20100.0100.0

Explanation:

The statement is that Interest rate of retail lending products of the City Bank Ltd is lower than other banks in Bangladesh. The study finds that BSSM and sales officers moderately agree that Interest rate of retail lending products of the City Bank Ltd is lower than other banks in Bangladesh. The study also finds that the mean, median and mode of this statement are 2.95, 3.00 and 3.00 which are equal or nearer to average mean. Exhibits 8Frequencies

Statistics

Asset operation team always manage loan disburse and documentation procedure effectively

NValid20

Missing0

Mean4.30

Median4.00

Mode4

Std. Deviation.657

Asset operation team always manage loan disburse and documentation procedure effectively


ValidModerately agree210.010.010.0

Agree1050.050.060.0


Total20100.0100.0

Explanation:

The statement is that Asset operation team always manage loan disburse and documentation procedure effectively. So the study finds that BSSM and sales officers agree that Asset operation team always manage loan disburse and documentation procedure effectively. From the above table we can also see that the mean, median and mode of this statement are 4.30, 4.00 and 4.00 which are equal higher than average mean. So we can say that sources agree with the above statement. But they are not highly agreed with the statement.


Statistics

X14-Credit analyst of RFC are effective to analyze consumers financial ability

NValid20

Missing0

Mean3.00

Median3.00

Mode3

Std. Deviation.858

Minimum1

Maximum4

X14-Credit analyst of RFC are effective to analyze consumers financial ability


ValidStrongly disagree15.05.05.0

Disagree420.020.025.0


Agree630.030.0100.0

Total20100.0100.0

Explanation:

The statement is that Credit analysts of RFC are effective to analyze consumers financial ability. From the above graph, the study finds that BSSM and sales officers moderately agree that Credit analyst of RFC is effective to analyze consumers financial ability. From the above table the study also finds that the mean, median and mode of this statement are 3.00, 3.00 and 3.00 which are equal to average mean. Exhibits 10T-Test

One-Sample Statistics

NMeanStd. DeviationStd. Error Mean

X1-The RFC of the City Bank maintained their operations efficiently and effectively204.05.826.185

One-Sample Test

Test Value = 3

tdfSig. (2-tailed)Mean Difference95% Confidence Interval of the Difference

LowerUpper

X1-The RFC of the City Bank maintained their operations efficiently and effectively5.68819.0001.050.661.44

Explanation Here, the t-test statistic is 5.688, and the significance level is 0.000. This means that the null hypothesis can be rejected and alternative hypothesis can be accepted with a high level of confidence from a statistical perspective. From a practical standpoint, in terms of RFC of the City Bank ltd, the mean of 4.05 is somewhat higher than the midpoint of 3 on the 5-point scale. So this study indicates that BSSM and sales officers are totally agreed that The RFC of the City Bank ltd maintained their operations efficiently and effectively.

Exhibits 11T-Test



X2-The relation between RFC and source is good203.05.826.185

One-Sample Test

Test Value = 3


LowerUpper

X2-The relation between RFC and source is good.27119.789.050-.34.44

Explanation

Here, the t-test statistic is .271, and the significance level is 0.789. This means that the null hypothesis can be accepted. From a practical standpoint, in terms of RFC of the City Bank ltd, the mean of 3.05 which is equal to average mean. So this study indicates that BSSM and sales officers moderately agree that the relation between source and RFC is good. Exhibits 12

T-Test



X4-Retail loan products increase the profitability and brand identity of the City Bank ltd203.65.489.109

One-Sample Test

Test Value = 3


LowerUpper

X4-Retail loan products increase the profitability and brand identity of the City Bank ltd5.94019.000.650.42.88

Explanation

Here, the t-test statistic is 5.940, and the significance level is 0.000. This means that the null hypothesis can be rejected and alternative hypothesis can be accepted with a high level of confidence from a statistical perspective. From a practical standpoint, in terms of RFC of the City Bank ltd, the mean of 3.65 is somewhat higher than the midpoint of 3 on the 5-point scale. So this study indicates that BSSM and sales officers moderately agreed that Retail loan products increase the profitability and brand identity of the City Bank ltd

Exhibits 13T-Test



X6-The retail banking of the City Bank Ltd has transformed into a "buyer market" from a sellers market203.30.571.128

One-Sample Test

Test Value = 3


LowerUpper

X6-The retail banking of the City Bank Ltd has transformed into a "buyer market" from a sellers market2.34919.030.300.03.57

Explanation Here, the t-test statistic is 2.349, and the significance level is 0.030. This means that the null hypothesis can be accepted with a high level of confidence. Here, the mean of this statement is 3.30 which are equal or higher than average mean. So this study finds that BSSM and sales officers moderately agreed that the retail banking of the city bank ltd has transformed into a buyer market from a seller market.

Exhibits 14T-Test



X11-Asset operation team always manage loan disburse and documentation procedure effectively203.85.813.182

One-Sample Test

Test Value = 3


LowerUpper

X11-Asset operation team always manage loan disburse and documentation procedure effectively4.67719.000.850.471.23

Explanation

Here, the t-test statistic is 4.677, and the significance level is 0.000. This means that the null hypothesis can be rejected and alternative hypothesis can be accepted with a high level of confidence from a statistical perspective. From a practical standpoint, in terms of RFC of the City Bank ltd, the mean of 3.85 is somewhat higher than the midpoint of 3 on the 5-point scale. So the study finds that BSSM and sales officers agreed that Asset operation team always manage loan disburse and documentation procedure effectively

Exhibits 15

T-Test



X14-Credit analyst of RFC are effective to analyze consumers financial ability203.00.858.192

One-Sample Test

Test Value = 3


LowerUpper

X14-Credit analyst of RFC are effective to analyze consumers financial ability.000191.000.000-.40.40

Explanation

Here, the t-test statistic is .000, and the significance level is 1.000. This means that the null hypothesis can be accepted. The mean of this statement is 3.00 which indicates that sources moderately agreed that credit analyst of RFC are effective to analyze consumers financial ability. Exhibits 16Independent samples test

T-Test

Group Statistics

GenderNMeanStd. DeviationStd. Error Mean

X10-RFC of the City Bank LTD maintained a comprehensive guideline for managing retail credit risk and lending operation riskmale153.67.617.159

female53.40.548.245

Independent Samples Test

Levene's Test for Equality of Variancest-test for Equality of Means

95% Confidence Interval of the Difference

FSig.tdfSig. (2-tailed)Mean DifferenceStd. Error DifferenceLowerUpper

X10-RFC of the City Bank LTD maintained a comprehensive guideline for managing retail credit risk and lending operation riskEqual variances assumed.172.683.85718.403.267.311-.387.920

Equal variances not assumed.9137.708.389.267.292-.412.945

Explanation

From the above table, we can see that t-test statistic is .857 and .913 and significance level is .403 and .389. this means that the null hypothesis can be accepted which indicates that there is no difference between male and female in case of the above statement.

Exhibits 17T-Test

Paired Samples Statistics

MeanNStd. DeviationStd. Error Mean

Pair 1Asset operation team always manage loan disburse and documentation procedure effectively3.8520.813.182

MIS team can manage identification risk and CPV3.3520.933.209

Paired Samples Correlations

NCorrelationSig.

Pair 1Asset operation team always manage loan disburse and documentation procedure effectively & MIS team can manage identification risk and CPV20.003.988

Paired Samples Test

Paired DifferencestdfSig. (2-tailed)

MeanStd. DeviationStd. Error Mean95% Confidence Interval of the Difference

LowerUpper

Pair 1Asset operation team always manage loan disburse and documentation procedure effectively - MIS team can manage identification risk and CPV.5001.235.276-.0781.0781.81019.086

Explanation

The top table shows paired sample statistic, the mean for asset operation is 3.85 and the mean for MIS is 3.35. The t value for this comparison is 1.810 and it is significant at the .086 level. Thus we can accept the null hypothesis that two mean are equal. So we can say that sources have favorable perceptions on Asset operations and MIS team.

Exhibits 18T-Test

Paired Samples Statistics

MeanNStd. DeviationStd. Error Mean

Pair 1Asset operation team always manage loan disburse and documentation procedure effectively3.8520.813.182

Credit analyst of RFC are effective to analyze consumers financial ability3.0020.858.192

Paired Samples Correlations

NCorrelationSig.

Pair 1Asset operation team always manage loan disburse and documentation procedure effectively & Credit analyst of RFC are effective to analyze consumers financial ability20.226.337

Paired Samples Test

Paired DifferencestdfSig. (2-tailed)

MeanStd. DeviationStd. Error Mean95% Confidence Interval of the Difference

LowerUpper

Pair 1Asset operation team always manage loan disburse and documentation procedure effectively - Credit analyst of RFC are effective to analyze consumers financial ability.8501.040.233.3631.3373.65519.002

Explanation

The top table shows paired sample statistic, the mean for asset operation is 3.85 and the mean for MIS is 3.00The t value for this comparison is 3.655 and significant at the .002evel. Thus we can reject the null hypothesis that the two means are equal. So the study indicates that sources have favorable perceptions on Asset operation team than Credit analyst team.

Analysis on the three retail products of The City Bank Ltd

Name of the product/year20092008

City solution 449,051,298119,703,270

City drive3,283,111,540914,122,102

City express1,251,561,819166,491,108

Part-04Problems IdentifiedThis study finds out some problems on RFC. Those problems are

1. It has been found that the relationship between RFC and source (BSSM and sales officers is not so good. BSSM and sales officers said that they dont get adequate support from the RFC of The City Bank Ltd. 2. It is revealed that the retail products of The City Bank Ltd were not developed based on the needs and wants of the customers. 3. It is observed that Credit analyst of RFC is ineffective to analyze consumers financial ability. BSSM and sales officers said that Credit analyst team is an important part of RFC. But sometimes they failed to analyze application PPG criteria, documents requirement and prudential regulations of Bangladesh Bank properly. 4. It has been found that Interest rate of retail lending products of the City Bank Ltd is higher than other banks in Bangladesh. For example, interest rate on auto loan of The City Bank Ltd is 15% to 16% but interest rate on auto loan of HSBC is 11% to 16%. Interest rate problem is another problem of The City Bank Ltd.

Recommendations 1) RFC should maintain good relationship with BSSM and sales officers because BSSM and sales officers are conducts important part of retail banking division. 2) Customer is everything for a service oriented industry. So every organization should develop their products based on the need and wants of the customers. So the management of The City Bank Ltd should develop their products based on the needs and wants of the customer. 3) RFC of The City Bank Ltd should give concentration on their Credit analyst team. Because most of BSSM and sales officers think that Credit analyst team unable to properly analyze consumers financial ability. To increase the effectiveness of Credit analyst team, RFC should arrange some training and should recruit effective credit analyst.

4) Since BSSM and sales officers think that Interest rate of retail lending products of the City Bank Ltd is not lower than other banks in Bangladesh. So The City Bank Ltd should decrease the interest rate of retail lending products.

Conclusion

Retail banking continues to be an industry making seriously successful gains, with record setting profits being reached year on year and a growing brand presence on the high street and internet. However, in an era of unprecedented competition and proliferating choice within the industry, successful operators must remain in tune with customers banking needs and their expectations of the sector. Retail banks are raising their game across the board and across the globe. Clear opportunities for expansion exist, but many banks are failing to adequately capitalize on the enormous potential of the key growth channels online and mobile sales forcesbecause the performance of these channels does not yet meet customer needs and expectations. From the analyses and findings of the study, the study finds that RFC of The City Bank Ltd maintained their operations efficiently and effectively. The different teams of RFC also maintain their operations efficiently and effectively. But management of the City Bank Ltd should give more focus on need, and wants of the customer and Credit analyst team of RFC. RFC should give better service to BSSM and sales officers and RFC should maintain a good relationship to increase the value of the organization. Because if RFC failed to manage their operations properly then whole retail banking division of The City Bank Ltd will be negatively affected.

BIBLIOGRAPHY Textbooks

Murray R. Spiegel & Larry J.Stephens, Theory and Problems of Statistics, 3rd Edition, McGraw-Hill, 1999. Naresh k. malhotra, Marketing research, 5th editionOther Publications(Brochures and publications of CBL products

(Annual report of the year 2009 of CBL(Credit Card Brochures and pricing guides of different issuers

Websites (URLs)

Some websites are visited for collecting some secondary data, which are:

http://www.thecitybank .com/

http://www.visa.com/

Questionnaire

On

EFC of the City Bank Ltd

1) The RFC of The City Bank maintain their operations efficiently and effectively

a) Strongly disagree b) disagree c) moderately agree d) agree e) strongly agree

2) The relation between RFC and source is good


3) The City bank Ltd develops their retail products based on the needs and wants of the customer


4) Retail loan products increase the profitability and brand identity of the City bank Ltd


5) Retail products of the City Bank Ltd helps the consumer to meet their important or personal financial requirements


6) The retail banking of the City Bank has transformed into a buyer market from a sellers market


7) Retail lending products of the City Bank Ltd leads to higher consumption and production in the economy


8) The different requirements of the consumers to get the retail loan are easier than other banks in Bangladesh


9) Interest rate of retail lending products of The City Bank Ltd is lower than other banks in Bangladesh


10) RFC of The City Bank Ltd maintain a comprehensive guideline for managing retail credit risk and lending operation risk


11) Asset operations team always manage loan disburse and documentation procedure effectively


12) Collection team can pursue the delinquent customer to manage the portfolio of The City Bank Ltd


13) MIS team can manage identification risk, CPV and generate loan MIS


14) Credit analyst of RFC are effective to analyze consumers financial ability


Name:

Designation:

Sex: 1) Male 2) Female

Branch/Sales

Customer

Underwriting or credit decision

Receiving applications

Application Processed and forwarded by Branch/Sales

Sending Approved/Decline status to Source

Branch/Sales Sends required disbursement doc to RFC

RFC Disburses the Loan to customer A/c

Partnership & Family Owned Businesses

Individuals as Consumers

Small & Medium Sized Companies



Large Local Corporates

Retail Finance Center

Retail Loan Process Flow at City Bank

Branch/Sales

Small & Medium Sized Companies


Individuals in

Business


Audit Committee

Executive Committee

Chief Advisor

Board of Directors

HEAD OFFICE

Managing Directors

Deputy Managing Directors

Audit & Inspection Division

Company Secretary

Central Accounts Division

Credit Division

Marketing, Development & General Banking Division

General Services Division

Human Resources Division

International Division

Information Technology Division

Research & Planning Division

Treasury & Money Market Division

Board Secretariat & Share Department

Cost Control Department

Law & Recovery Department

Card Cell

PAGE 2

final report

Documents

internship report

report possible

report considerable

internship program

azizur rahaman id

azizur rahaaman id

bba finance

theoretical knowledge