management study on basic bank

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FORMAL REPORTFORMAL REPORT

General Management ofBASIC Bank Limited with Special

Emphasis on SWOT

Management and OrganizationGroup-1, EMBA, Spring- 2010

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Formal Report

OnGeneral management ofBASIC Bank Limited with Special Emphasis on SWOT

Prepared for:

Dr. Ahmad A N Neaz, DSScProfessor

American International University - Bangladesh

Prepared by:

Md Ashraful Islam

ID: 10-93574-1

Md Habibur Rahman Khan ID: 10-

93678-1

Sayeed Hossain

ID: 10-93677-1

Qumrul Hassan

ID:10-93486-1

Novera A zaman

ID:10-93574-1

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Date of Submission: 16 February 2010Group G- 1, EMBA, Fall- 2010

American International UniversityBanani, Dhaka

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16 Febrruary 2010

Dr. Ahmad A N Neaz, DSScAmerican International UniversityDhaka

Subject: Submission of Report.

Dear Sir,

We are the students of EMBA in your University. It is a great pleasure for us to submit the

report, as part of academic curriculum, to you for your further evaluation. The report is

prepared on General management of BASIC Bank Limited with special emphasis

on SWOT. We have tried our best to prepare the report and to make it a worthy one.Each aspect of the problem is considered and studied as required.

If any confusion arises or any further explanation is needed, we will be readily available

to explain the matter to you, as the situation required.

Sincerely yours,

Md Ashraful Islam

ID: 10-93574-1

G1

Md Habibur Rahman Khan

ID: 10-93678-1

G1

Sayeed Hossain

ID: 10-93677-1

G1

Qumrul Hassan

ID:10-93486-1

G1

Novera A zaman

ID:10-93574-1

G1

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Acknowledgements

It has been a wonderful experience to prepare a paper on the " General management of

BASIC Bank Limited with special emphasis on SWOT". To prepare the paper we were

largely dependent on internet to get the required information. We also talked to the

officials of BASIC Bank Limited for required information. We would like to express our

gratitude to faculty teacher professor Dr. Ahmad A N Neaz, DSSc for his continuous

support and guidance to prepare the report. Our deepest appreciation to Professor Dr.

Ahmad A N Neaz, DSSc and the officials of BASIC Bank Limited for their spontaneous

assistance. Thanks all.

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Table of Contents

Heading PageChapter-1 AN OVERVIEW OF BASIC BANK LIMITED 1

1.1 Background of BASIC Bank Limited 11.2 Organization Vision, Mission and Goal 11.3 The Bank Offers 21.4 Branch Network in Bangladesh 31.5 Achievement 3

Chapter-2 ORGANIZING & MANAGING HUMAN RESOURCES2.1 Organizational Structure 4

2.1.1 Board of Directors 4

2.1.2 ORGANOGRAM of Basic Bank 52.1.3 Management 62.2 Functional Divisions of Basic Bank 62.3 Human Resource 6

2.3.1 Recruitment 72.3.2 Training 7

Chapter-3 THE ESSENTIALS OF PLANNING3.1 Organizational Mission 83.2 Types of Planning 8

3.2.1 Strategic planning 8

3.2.2 Intermediate planning 83.2.3 Operational planning 93.3 Organizational Objectives 93.4 Priorities 103.5 The Planning/Control Cycle 10

Chapter-4 SWOT ANALYSIS OF BASIC BANK4.0 SWOT analysis 114.1 Strength 11

4.1.1 Bank Assets 114.1.2 Strong SME financing 12

4.2 Weakness 124.3 Opportunities 12

4.3.1 Industry and Services 124.3.2 Other Banking policy 134.4 Threats 13

4.4.1 Threat to Industries 134.4.2 Default cultures 134.4.3 Banking vs Technology 13

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Chapter-5 CONCLUSION5.0 Conclusion 145.1 Recommendation 15

BIBLIOGRAPHYBIBLIOGRAPHY 15

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CHAPTER-1

AN OVERVIEW OF BASIC BANK LIMITED

1.1 General information.

BASIC (Bangladesh Small Industries and Commerce Bank Limited) Bank Limited is one

of the leading private commercial bank having a wide network of 33 branches across

Bangladesh and plans to open few more branches to cover the important commercial

areas in Dhaka, Chittagong, Sylhet, Khulna and other areas in 2010. BASIC Bank

registered under the Companies Act 1913 on the 2nd of August 1988, started its

operations from the 21st

of January 1989. It is governed by the Banking Companies Act1991. The Bank was established as the policy makers of the country felt the urgency for a

bank in the private sector for financing Small Scale Industries (SSIs). At the outset, the

Bank started as a joint venture enterprise of the BCC Foundation with 70 percent shares

and the Government of Bangladesh (GOB) with the remaining 30 percent shares. The

BCC Foundation being nonfunctional following the closure of the BCCI, the Government

of Bangladesh took over 100 percent ownership of the bank on 4 th June 1992. Thus the

Bank is state-owned. However, the Bank is not nationalized; it operates like a private

bank as before.

1.2 Vision, Mission and goal of BASIC Bank Limited

1.2.1 Vision of BASIC Bank

To provide best banking service to all kinds of people, and contribute the

economic development of the country.

1.2.2 Mission

Providing high quality product and service through by latest technology

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1.2.3 Goal of BASIC Bank

Every organization has to set up their organization goal to do business that will

mach up with their strategy. To set up mission is very important task for the

organization. Because for doing business it plays an impartment role to cope up

with the organizational structure. So the goal the BASIC Bank are -

To employ funds for profitable purposes in various fields with special emphasis

on small-scale industries.

To undertake project promotion on identify profitable areas of investment.

To search for newer avenues for investment and develop new products to suit

such needs.

To establish linkage with other institutions which are engaged in financing

micro enterprises.

To cooperate and collaborate with institutions entrusted with the responsibility

of promoting and aiding SSI sector.

1.3 The Bank Offers

The Bank offers the different types of product and services, that are described below:

Term loans to industries especially to small-scale enterprises

Full-fledged commercial banking service including collection of deposit, short term

trade finance, working capital finance in processing and manufacturing units and

financing and facilitating international trade.

Technical support to Small Scale Industries (SSls) in order to enable them to run

their enterprises successfully.

Micro credit to the urban poor through linkage with Non- Government Organization

(NGOs) with a view to facilitating their access to the formal financial market for the

mobilization of resources.

In order to perform the above tasks, BASIC Bank works closely with its clients, the

regulatory authorities, the shareholders (GOB), banks and other financial institutions.

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1.4 Country wide Branch Network

At present, there are twenty-nine conveniently located branches in all over Bangladesh.Location of these branches are given below:

1 DHAKA[Twelve Branches in the capital city] 9 SAIDPUR

2 CHITTAGONG,[Seven Branches in the commercial

city]

10 BOGRA

3 NARAYANGANJ 11 KHULNA

4 NORSHINNGDI 12 JESSORE

5 RAJSHAHI 13 SYLHET

6 RONGPUR 14 BARISAL

7 GAZIPUR 15 CHAWMUHONI

8 COMILLA 16 SIRAJGONJ

1.5 Achievement

The performance of BASIC Bank Limited has been satisfactory since its inception inrespect of all the measurement parameters. The total assets of the Bank increased toTaka 46,651.53 million at the end 2008 from Taka 38,773.91 million in the previous year.The growth rate was 20.31 percent. Deposit rose from Taka 31,947.98 million in 2007 to

Taka 38,368.23 million in 2008 showing a growth rate of 20.09 percent. All out effortswere made to improve the recovery rate and control non-performing loans and advances.Although the recovery rate of project loans remained stable in the neighborhood of 96percent the proportion of non-performing loans to total loans increased to 3.25 percent in2008 from 3.70 percent in 2007. Year 2008 was a period of high growth in loans andadvances with 22.48 percent increase compared to 23.86 percent increase in 2007.Growth of industrial finance was moderate and loans to small and medium industries was23.91 percent of total loans and advances Emphasis on the maintenance of quality ofassets remained the centerpiece of the Bank's business strategy.

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CHAPTER-2

ORGANIZING & MANAGING HUMAN RESOURCES

2.1 Organizational Structure

The Bank is organized with a Board of Directors and a managerial body. The Board of

Directors which is the highest policy making body lay down the major policy guidelines,

and the managerial body looks after the day-to-day operation of the Bank.

2.1.1 Board of Directors

The Government of Bangladesh appoints all the Directors of the Board. The

present Board of Directors is as under:

2.1.2 ORGANOGRAM OF BASIC BANK

NAME OF BOARD OF DIRECTORS:

Mr. Sheikh Abdul HyeBacchuChairman, BASIC BankLtd & Former Memberof Parliament .

Mr. Jahangir Akhand Salim

Director, BASIC Bank Ltd &

Founder President Chandpur

Chamber of Commerce and

Industries

Ms. Razia Begum

Director, BASIC Bank Ltd

& Additional Secretary

Ministry of Education

Mr. Shakhawat

HossainDirectorBASIC Bank Ltd& FormerCommissioner ofCustoms

Mr. Bijoy Bhattacharjee


& Joint Secretary

Finance Division, Ministry of

Finance

Mr. Ashraf Mohammad

Iqbal


& Chairman, Bangladesh

Small and Cottage

Industries Corporation

Mr. Md. AnwarulIslam, FCMADirector, BASIC Bank

Ltd & ManagingDirectorARS Lube BangladeshLtd

Prof. Dr. Kazi AkhtarHussainDirector, BASIC Bank Ltd

& Chairman Department ofAccounting and InformationSystems, Islami University,Kushtia

Mr. AKM. SajedurRahmanManaging Director,

BASIC Bank LtdHead OfficeDhaka

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Figure: Organogram of BASIC Bank

2.1.3 Management

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CHAIRMANCHAIRMAN

GM

(Audit & Inspection)

(Admin)

GM

(Audit & Inspection)

(Admin)

GM

(Operation)

GM

(Operation)

Personal

Division

Deputy General ManagerDeputy General Manager

Assistant General Manager.Assistant General Manager.

ManagerManager

Deputy ManagerDeputy Manager

Assistant ManagerAssistant Manager

OfficerOfficer

Assistant OfficerAssistant Officer

BOARD OF DIRECTORS

Central

Accounts

Establishment and

Branch ControlIndustrialCredit and

Micro

Credit

Division

InternationalDivision

MANAGING DIRECTORMANAGING DIRECTOR

GM (Administration)GM (Administration)

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The Managing Director heads the management. He is assisted by the General

Managers and Departmental Heads. The Branch Managers of the Bank report

direct to the Managing Director and the Heads of Departments. Thus, quick

decision making is ensured.

2.2 Functional Divisions of Basic Bank

The bank has 33 branches throughout the country. At the head office level there are 12

divisions most of which have more than one functional department which are headed by

a DGM. The names of the divisions are:

Personnel Division (PD).

Establishment & Common Service Division.

Human Resources Development Division.

Secretarys Division (Aboard Division).

General Credit Recovery Division.

Industrial development finance division.

International division.

Control development & coordination division.

Audits an inspection division

Planning, research and statistics division.

Computer system and procedures division.

Law division.

2.3 Human Resource

Human resource is the main driving force and quality human resources are the key to the

success of todays banking business. Keeping the view in mind the Bank maintains the

quality of its human resources by strict recruitment and intensive training. Most

employees are comparatively young in age yet mature in experience. As at end 2008 the

total employee strength was 735.

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2.3.1 Recruitment

The bank follows a strict recruitment policy in order to ensure that only the best

people are recruited. The Bank, so far, has recruited four batches of entry-level

management staff, all of whom have got excellent academic background.

2.3.2 Training

Intensive training program, on a regular basis, is being imparted to employees ofboth managerial and non-managerial levels. The Bank has established its owntraining institute in 2005 with modern facilities. In 2008 the institute arranged 27

training courses and provided training to as many as 517 employees of the bank.In the same year, a total of 602 employees were provided with training in variousfields. Out of them 11 employees participated in training courses held abroad.

CHAPTER-3

THE ESSENTIALS OF PLANNING

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3.1 Organizational Mission

To provide best development and commercial banking services to the common people of

Bangladesh. And to provide special support to the small-scale business enterprises so

that, they can play an important role in the economic development of the country.

3.2 Types of Planning

Ideally, planning begins at the top of the organizational pyramid and filters down. The

rationale for beginning at the top is the need for coordination.

3.2.1 Strategic planning

Determining, how to pursue long-term goals with available resources. Basic Bank

Limited has some strategic planning. They are as follow:

Financial establishment of small units industries and businesses and

facilitate their growth.

Steady and sustainable growth.

Investment in a cautious way.

Adoption of new building technology.

Profit maximization.

Establishing small industries.

3.2.2 Intermediate planning

Determining, how to subunits contribution with allocated resources. The branch

manager planning to improve his/her branch is the intermediate planning. They are

like:

Becoming number one branch.

Good recovery rate

Increasing the gross profit of the branch.

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3.2.3 Operational planning

Determining, how to accomplish specific tasks with available resources. In a

branch of Basic Bank Limited, there are three division, (1) General Banking (2)

Foreign Exchange (3) Credit Division. Every department has a departmental head.

So this department manager planning is operational planning.

3.3 Organizational Objectives

BASIC Bank Limited dedicated their service to the nation through active

financial participation in all segments of economy, small industries, trade,

commerce and service sector etc.

The Banks main manifest to progress as an institution par excellence to

customer satisfaction.

Global Banking has change rapidly and BSIC as worked hard to adapt to these

changes.

To pay a vital role in human development and employment generation.

To undertake project promotion to identify profitable areas of investment.

To search for newer avenues for investment and develop new products to suit

such needs.

To establish linkage with other institution which are engaged in financing micro

enterprise.

BASIC keeping pace with the changing environment.

To corporate and collaborate with institutions entrusted with the responsibility

of promoting and aiding SSI sector.

Deep commitment to the society and growth of national economy.

3.4 Priorities

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Defined as a ranking of goals, objectives, or activities in order of importance, priorities

plat a special role in planning. By listening long-range organizational objectives in order

of their priority, top management prepares to make later decision regarding the allocation

of resources.

3.5 The Planning/Control Cycle

Figure: The Planning/Control Cycle

Basic Bank Limited planning sets in motion activities to accomplish the planned

objectives.

Basic Bank Limited has a monitoring system to magnifying there planning.

Quick monitoring and feedback to top management.

Basic Bank Limited follow the upward communication to there employee for better

planning and controlling.

CHAPTER-4

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SWOT ANALYSIS OF BASIC BANK

4.1 SWOT Analysis

The analysis of strengths, weaknesses, opportunities and threats; commonly referred as

a SWOT analysis is very important to evaluate the performance of any company. It can

be categorized into internal and external analyses, where internal analysis contains

strength and weakness, and external analysis contains opportunity and threat. Here, we

have made an endeavor to analyze the SWOT of BASIC Bank in a very limited scope.

Figure: The SWOT Analysis Chart

4.2 Strength

4.2.1 Bank Assets

The main strength of the Bank as identified by us is its assets. During the year

2008, total assets of the bank increased by 20.333% to taka 46,651.53 9 million

from taka 38,773.91 million of 2007.

SWOT Analysis

Internal Analysis

External Analysis

Strength Weakness Opportunity Threats

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4.2.2 High Recovery Rate

The recovery percentage of loan of the Bank in the year 2006, 2007 and 2008 was

86%, 87% and 88% respectively. Thus, the Bank has a better recovery compared

to that of other institutions engaged in large loan and commercial financing. In loan

recovery proceedings, BASIC has used the strategy of offering a 50 percentinterest remission as an inducement for settlement after a decision is rendered

but before execution.

4.3 Weakness

4.3.1 Lack of Modern Banking Facilities

Lack of modern banking facilities is identified as the biggest weakness of the

Bank. The clients of the Bank are deprived of modern banking facilities like online

banking, internet banking, ATM service etc.

4.3.2 Insufficient Number of Branches

Though the Bank has got 33 branches, still it is felt that it is insufficient. As one of

their goals is to employ funds with a special emphasis on small-scale industries,

they should have more number of branches allover the country.

4.4 Opportunities

4.4.1 Industry and Services

The industry sector, lifted by export-oriented manufacturing, robust performance.

The services sector is also expanding in line with rapid growth in industry.

Manufacturing expansion is supported by a turnaround in manufacturing exports,

industrial imports and expansion of industrial credit. But emerging infrastructure

constraints, particularly power shortages, held back the growth potential in

manufacturing. The output of small-scale manufacturing also registered strong

performance with 11.4% growth; the increase covered food items, textiles, leather,

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apparel, wood products, paper products, chemicals, metal products and

nonmetallic mineral products. Production of non-manufacturing items also

increased with gas production increasing by about 9.3% and electricity by 5.1%.

4.4.2 Opportunity of the Banking

The following opportunity may be availed by the BASIC bank:

Mortgage Services

Consumer Lending Services

Credit Card Services

Auto Finance

Banking Services

Insurance

4.5 Threats

4.5.1 Threat to Industries

Threat to industries is also considered as a threat to BASIC Bank as small

industries are the main focus of the Bank. The global recession has curved the

growth of our export-oriented industries. The political instability and present power

crisis have badly infected our industrial sector. The SME scheme of other banks

also a potential threat to the BASIC bank.

5.5.2 Default Culture

Default culture is very much familiar in our country. For a bank, it is very harmful.

So the management should be aware of this event and should take some

preventive measure to overcome this problem.

4.5.3 Banking vs. Technology

Banking and Financial Business can not survive without the support of technology.

Banking efficiency only comes from progress of technology. The absence of

modern banking facilities which are mainly technology based are already identified

as a weakness of the bank. This may divert the clients of the Bank to other banks.

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CHAPTER-5

Conclusion

5.0 ConclusionBASIC is unique in terms of constitution, its mandate, its objectives and modus operandi

it is a blend of commercial and development ideology. It was established as the policy

makers of the country identified the requirement of a financial Institution in the private

sector for financing Small Sector Industries (SSI). Through this institution has established

it self as a performing body in the market bur still BASIC Bank is expected to develop and

maintain strong competitive edge in this specialized sector in the years ahead.

The Banks specialization is development of trade, business and other commercial

activities. It covers the full range of services to the exporters and importers extending all

sort of facilities like cash credit, export credit limit, short term loan, local and foreign and

bill purchase option. The Basic Bank launched the Micro Credit program in 1994. The

Bank also plans to maintain its focus on managing capital and costs to maximize

shareholders' value. In this environment, The Bank expects to make further gains in

revenue, income and return on capital.

Although Government of Bangladesh is the sole shareholder of this Bank, but the way of

thinking ahead is quite inspiring and goal oriented. BASIC is a trend setter in the banking

industry. Continual improvement in different segments with a proactive attitude can make

a difference. Online Banking is mandatory to cope with todays dynamic economy and

BASIC is heading towards the implementation of Online Banking within two years from

now.

BASIC is redefining the traditional banking concepts and transforming it into relationship

banking. BASIC considers the Borrower as clients. The mutual relationship is the

essence of long term success in the banking industry. The ever increasing competitive

nature of banking business determines the direction of the bank. Sustainability in better

performance is the prime focus in BASIC Bank.

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management study on basic bank

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