Life & Beauty: January 2012

General Banking

Financial institution/ intermediary that mediates or stands between ultimate borrowers and ultimate lenders is knows as banking financial institution. Banks perform this function in two ways- taking deposits from various areas in different forms and lending that accumulated amount of money to the potential investors in other different forms.

General Banking is the starting point of all the banking operating. General Banking department aids in taking deposits and simultaneously provides some ancillaries services. It provides those customers who come frequently and those customers who come one time in banking for enjoying ancillary services. In some general banking activities, there is no relation between banker and customers who will take only one service form bank. On the other hand, there are some customers with who bank are doing its business frequently. It is the department, which provides day-to-day services to the customers. Everyday it receives deposits from the customers and meets their demand for cash by honoring cheques. It opens new accounts, demit funds, issue bank drafts and pay orders etc. since bank in confined to provide the service everyday general banking is also known as retail banking.

General Banking consists of the many sections in the branch. These are:

 Customer Service.

 Account Opening/Closing.

 Remittance.

▫ Payment Order Issue

▫ Demand Draft Issue/Collection

▫ T.T. Issue/Collection

▫ Endorsements

▫ IBC/OBC Collection.

 Deposit Department.

 Locker Service.

 Account’s Department.

▫ Clearing.

▫ Transfer.

▫ Cash.

Customer Services of MUTUAL TRUST BANK LIMITED: Professional merit and Competency, Flexibility, Determination and Dedication are the core resources that MTBL consider to be of paramount importance for building a client oriented modern banking. Customer satisfaction is MTBL foremost professional undertaking. Therefore, a satisfied client is MTBL precious product and they consider them MTBL ambassador in the market.

Customer Service In Charge:

Mr. Kazi Imamul Haque (Senior Officer) who guide me as a friend.

Account Opening of MTBL:

Under this department, MTBL officer opens different types of account on the request of clients. The procedure of opening account is given bellow:

Types of Accounts:

General Products are:

 Current Deposit:

Interest Rate 0.00%

▫ Individual Account

▫ Joint Account

▫ Proprietor Ship Account

▫ Limited Company Account

 Savings Deposits:

Interest Rate 6.25%

▫ Individual Account

▫ Joint Account

▫ Proprietor Ship Account

▫ Limited Company Account

 Short Term Deposits:

Interest Rate 6.00%

▫ Individual Account

▫ Joint Account

▫ Proprietor Ship Account

▫ Limited Company Account

 Fixed Deposits:

Fixed deposit is one, which is repayable after the expiry of a predetermined period fixed by him. The period varies form 1 month to 12 months. These deposits are not repayable on demand but they are withdrawable subject to a period of notice. Hence, it is a popularly known as ‘Time Deposit’ or ‘Time Liabilities”. Normally the money on a fixed deposit is not repayable before the expiry of a fixed period.

Before opening a Fixed Deposit Account a customer has to fill up an application form which contains the followings:

▫ Amount in figures

▫ Beneficiary’s name and address

▫ Period

▫ Rate of interest

▫ Date of issue

▫ Date of maturity

▫ Instructions:

- To be renewed automatically with interest for the next period.

- Not to be renewed for next period.

- Pay interest to account no. (-------) on maturity

▫ Special instruction

▫ How the account will be operated (singly or jointly)

▫ Signature (s)

▫ FDR no.

Then a FDR account is opened and it is recorded in the FDR Register which contains the following information,-

▫ FDR A/C no.

▫ FDR (Fixed Deposit Receipt) no.

▫ Name of the FDR Holder with address

▫ Maturity period

▫ Maturity date

▫ Interest rate

In case of Fixed Deposit Account the Bank needs to maintain a cash reserve. So MTBL offers a high interest rate in Fixed Deposit accounts. The interest rates followed by MTBL in Fixed Deposit accounts are:

 Interest Rate:

1 months and above but less than 3 months: 8.50%

3 months and above but less than 6 months: 11.00%

6 months and above but less than 12 months: 11.25%

12 months and above: 11.75%

Source: GB Department & Banking Operations Division, circular REF: IC#BOD/21/07, Date: 04-06-2007

The FDR becomes renewed automatically in MTBL if the customer does not encash it within 7 days of maturity. In case of encashment of FDR in maturity, following accounting treatments are given:

Excise Duty on FDR--------------------Dr.

Income Tax on interest --------------Dr.

FDR A/C---------------------------------Dr.

Cash A/C----------------------------------------Cr.

Interest on FDR A/C---------------------------Cr.

If the customer wants to draw the interest only, then following entries are given:

Interest on FDR A/C-----------------Dr.

Cash A/C---------------------------------------Cr.

In case of ‘before maturity enactment’ interest is calculated for the days from the date of opening the FDR account.

Festival Sanchay Prokalpa are:

 Eid-Ul-Azha Sanchaya Prokalpa:

Interest Rate 10.00%

 Eid-Ul-Fitre Sanchaya Prokalpa:

Interest Rate 10.00%

 Durga-Puja Sanchaya Prokalpa:

Interest Rate 10.00%

 Buddha-Purnima Sanchaya Prokalpa:

Interest Rate 10.00%

 Boro-Din Sanchaya Prokalpa:

Interest Rate 10.00%

MTBL Consumer Banking Products are:

1. Brick by Brick Savings Scheme

2. Monthly Benefit Plan

3. Save Everyday Plan

4. Childrens Education Plan

5. Consumer Credit Scheme

6. BestInvest Plan

7. Unique Savings Plan

Some of MTBL Consumer Products

 1. Brick By Brick Savings Scheme:

Monthly Installment 5 Years* 8 Years* 10 Years*

* The maturity value is an indicative figure. Tax/Excise Duty will be deducted as per govt. rules. 90% Loan Advantage on deposited amount. Thereafter in multiples of Tk. 5000 up to a limit of Tk. 100,000.

 2. MTB Monthly Benefit Plan:

Deposit Amount Income Amount for 3-year plan* Income Amount for 5-year plan*

* The maturity value is an indicative figure. Tax/Excise Duty will be deducted as per govt. rules. 90% Loan Advantage on deposited amount.

 3. Save Everyday Plan:

Saving money for the future is a common practice in any society. Savings help you to build a better tomorrow. Regular saving makes a man become disciplined, self confident and successful.

MTBL offers you "Save Everyday" Plan. The primary advantage of this plan is that you are absolutely free to choose your own time for depositing money into this account. You can deposit daily, weekly or monthly. The choice is yours, but the transactions will have to be within the Bank's transaction hour.

This is a 5 year plan and you will be required to open the account with an initial deposit of Tk. 2500/= only. We offer you very attractive interest rate which is accrued in this account on a daily basis.

 4. MTB Education Plan:

Monthly Installment 4 Years* 7 Years* 9 Years*

* The maturity value is an indicative figure. Tax/Excise Duty will be deducted as per govt. rules. 90% Loan Advantage on deposited amount.

 5. Consumer Credit Scheme:

In order to make a significant contribution in the living standards of the people of medium and low income category, MTBL has introduced a scheme called "Consumer Credit Scheme". With a view to materialize the dreams of those who are unable to make one time investment from their own savings, one can now afford to buy necessary household equipments and thus improve the standard of living.

All sorts of household durables eg. Television, Refrigerators, Computers, Air Conditioners, Video Cameras, Washing/ Drying Machines and Furnitures are allowed under this scheme. One can buy Motorcycle too under this programme.

The collateral security is minimum and the interest rates are one of the lowest in the market. Please contact the nearest branch for details.

 6. BestInvest:

BestInvest offers you efficient high return investment plan. This plan helps you to build up a sizeable income in easy and affordable installments. This plan allows you to own 5 times the initial invested amount. BestInvest offers two separate and convenient term deposit periods for 4 years and 6 years respectively.

BestInvest is available in units worth Tk.50,000/- each. You will invest Tk.10,000/- as down payment for purchasing 1 (one) unit and the Bank will provide loan for Tk.40,000/-. The customer also has the option to buy units in multiples of Tk. 50,000/- but maximum upto Tk. 1,00,00,000/- (one crore).

This is a unique high return plan catering to all income group. So do not miss the opportunity.

Customized Products are:

 MTB Double Saver Plan:

Deposit Amount Maturity Value after 6 Years*

* The maturity value is an indicative figure. Tax/Excise Duty will be deducted as per govt. rules. 90% Loan Advantage on deposited amount.

 MTB Triple Saver Plan:

Deposit Amount Maturity Value after 11 Years*

* The maturity value is an indicative figure. Tax/Excise Duty will be deducted as per govt. rules. 90% Loan Advantage on deposited amount.

 MTB Millionaire Plan:

Monthly Installment Year Maturity Value*

* The maturity value is an indicative figure. Tax/Excise Duty will be deducted as per govt. rules. 90% Loan Advantage on deposited amount.

 7. MTB Unique Savings Plan:

Unique Savings Plan is an any day, any amount savings plan. The beauty of this plan is that a customer can deposit any day, any time and any amount.

Unique Savings Plan offers you to deposit any amount of your choice but not less than Tk. 500/- for 3/4/5 years. This is a high income plan with withdrawal facilities. The withdrawal facility will help you at the time of any emergency. You can withdraw 50% of the deposited balance for once a month. At maturity you will get a handsome amount.

Procedure of Account Opening:

Account Opening (Normal Account):

▫ Collect an Account opening form from the Bank.

▫ Fill all the requirements of the form.

▫ Nominee is must be specified.

▫ Photograph is most important for any account.

▫ The account holder sign of his/her own self in front or the specific bank principle Officer in the account opening form.

Account Opening (Saving Account):

▫ Collect an Account opening form from the Bank.

▫ Fill all the requirements of the form.

▫ Nominee is must be specified.

▫ Photograph is most important for any account.

▫ The account holder sign of his/her own self in front or the specific bank principle Officer in the account opening form.

▫ To open this account the most important things is that Passport Photocopy or the Word Commissioner Certificate must have to add with the account opening form.

Account Opening (Current Deposit Account):

▫ Collect an Account opening form from the Bank.

▫ Fill all the requirements of the form.

▫ Nominee is must be specified.

▫ Photograph is most important for any account.

▫ To open this account the most important things is that Passport Photocopy or the Word Commissioner Certificate must have to add with the account opening form and also enclose the form 12 with the account opening form.

Checklist of Documents to be obtained for various types of ACCOUNTS:

 Sole Proprietorship:

1. Signature Card.

2. Photograph of signatories attested by introducer.

3. Copy of valid Trade License.

4. TIN Certificate.

5. 18-A permission from Bangladesh Bank (for GSA & Agents only).

 Partnership:

1. Signature Card.

2. Photography of signatories attested by introducer.

3. Partnership Deed.

4. Partners letter of authority to open account and authorization for operation.

5. Copy of valid Trade License.

6. 18-A permission from Bangladesh Bank (for GSA & Agents only).

 Limited Liability Company:

1. Signature Card.

2. Photograph of signatories attested by introducer.

3. Copy of Memorandum and Articles of Association (Certified by RJSC).

4. Copy of Certificate of Incorporation and commencement of business (In case of public Ltd. Co.).

5. Copy of Board Resolution to open the account and authorization for operation.

6. List of Directors and signatories along with addresses.

7. Latest copy of From XII.

 Association/Trust/Society:

1. Signature Card.

2. Photograph of signatories attested by introducer.

3. Copy of Resolution of governing body to open the account and authorization for operation.

4. Copy of consolation / bylaws/ rules.

5. Certificate of registration.

6. List of authorized signatories and members of the governing bodies along with address.

7. Trust Deed (for Trust account only).

Interest Posting to Client’s account:

 Bangladesh Government has circulated that, 10% deduction from the Bank’s Internal Account’s. This 10% tax deduction from the client’s interest.

 Other wise another circulation is that, from the OBC collection every bank cut off there OBC commission as income account, here Bangladesh Bank said that 15% money cut off from the OBC collection as Vat on Others.

Cheque Book Issues:

Types of Cheque Book’s:

▫ Savings Account – 10 Leaves

▫ Current Deposit Account – 10 Leaves

▫ Current Deposit Account – 25 Leaves (CDTF)

▫ Current Deposit Account – 50 Leaves (CDF)

NB: CDTF: Current Deposit Twenty Five

CDF: Current Deposit Fifty

Cheque Issuing is Two Types:

 Direct requisition slip

 Cheque Book’s requisition slip

Customers Service Officer receives these types of slip from the client’s and gives the cheque books under processing. Processing means Cheque Book’s collect from the VOLT and the put account number in the cheque book, write down the serial number of the cheque book in the requisition slip and cheque book register, then Verified client signature. After all this things the Principal officer sign in the cheque leaves and sent the cheque book to another Principal officer for sign, after his sign the client receive the cheque book. These things the Principal Officer for sign, after his sign the client receive the cheque book. Then Principal Officer posting that cheque books leaves number in the computer data processing system.

A cover file containing the requisition slip is effectively preserved as vouchers. If any defect is noticed by the ledger keeper, he makes a remark to that effect on the requisition slip and forward it to the cancellation officer to decide whether a new checkbook to be issued to the customer or not.

Account Closing:

For two reasons, one can be closed. One is by banker and other is by the customer.

By banker: If any customer doesn’t maintain any transaction within six years and the A/C balance becomes lower than the minimum balance, banker has the right to close an A/C.

By customer: If the customer wants to close his A/C, he writes an application to the manager urging him to close his A/C.

Different procedures are followed in cash of different types of A/C to close:

 Fixed deposit A/C is closed after the termination of the period.

 Brick by Brick A/C is very easily closing if one of the clients didn’t pay his/her monthly installment at the bank three months one after one, in this way three months.

 Another account’s will be closed on the parties advice, if they want to close any one of the account clients must have to submit an A/C closing letter through des pass. Then the Sr. Principal Officer checks it out and closes the A/C.

Closing process for current & savings A/C:

 After receiving customer’s application the officer verifies the balance of the A/C.

 He then calculates interest and other charges accumulated on the A/C.

 If it bears a credit balance, the officer writes advice voucher. He gives necessary accounting entries post to accounts section.

 The balance is returned to the customer. And lastly the A/C is closed.

But in practice, normally the customers don’t close A/C willingly. At times, customers don’t maintain any transaction for long time. Is this situation at first, the A/C becomes dormant and ultimately it is closed by the bank.

Remittance:

Remittance of funds is ancillary services of MTBL. It aids to remit fund from one place to another place on behalf of its customers as well as non- customers of bank. MTBL has its branches in the major cities of the country and therefore, it serves as one of the best mediums for remittance of funds from one place to another.

The main instruments used by MTBL, Dilkusha Branch for remittance of funds.

▫ Payment Order Issue/Collection

▫ Demand Draft Issue/Collection

▫ T.T. Issue/Collection

▫ Endorsements

▫ Travelers Cheque Issuance

▫ IBC/OBC Collection.

Payment Order Issue/Collection:

The pay order is an instrument issued by bank, instructing itself a certain amount of money mentioned in the instrument taking amount of money and commission when it is presented in bank. Only the branch of the bank that has issued it will make the payment of pay order.

Issuing of Pay Order:

The procedures for issuing a Pay Order are as follows:

▫ Deposit money by the customer along with application form.

▫ Give necessary entry in the bills payable (Pay Order) register where payee’s name, date, PO no, etc is mentioned.

▫ Prepared the instrument.

▫ After scrutinizing and approval of the instrument by the authority, it is delivered to customer. Signature of customer is taken on the counterpart.

Different modes of PO when a customer can purchase:

By cash:

Cash A/C Debit

Bills payable (PO) A/C Credit.

Income on commission A/C Credit.

By account:

Customer’s A/C Debit

Bills payable (PO) A/C Credit.

Income on commission A/C Credit.

By transfer:

MTBL General/ other Dept Clients A/C Debit

Bills payable (PO) A/C Credit.

Income on commission A/C Credit.

PO A/C is the current liabilities of bank, which is acquired to be discharged by beneficiaries against cash or through an account.

Settlement of a PO:

When PO submitted by collecting bank through clearing house, the issuing bank gives payment.

Bills payable (PO) A/C Debit

MTBL General A/C Credit.

But before giving payment it is duty for issuing to observe whether endorsement was given by the collecting bank or not, then the instrument is dishonored and marking ‘Endorsement required’.

Cancellation of a Pay Order:

If a buyer wants to cancel it, he should submit a letter of instrument in this regard and also return the instrument.

Accounting treatment: Adjustment entry wills be-

Bills payable (PO) ---------------Dr.

Customer A/C------------------Cr.

When PO is lost:

If the instrument is lost, the holder will inform to the issuing bank immediately. Bank will mark ‘stop payment’ on the Bills payable (PO) Register. Buyer will then ask for a new instrument by submitting a GD copy, and indemnity bond. A new instrument will be delivered.

Demand Draft Issue/Collection:

The person intending to remit the money through a Demand Draft (DD) has to deposit the money to be remitted with the commission which the banker charges for its services. The amount of commission depends on the amount to be remitted. On issue of the DD, the remitter does not remain a party to the instrument: i) Drawer branch ii) Drawee branch iii) Payee. This is treated as the current liability of the bank as the banker on the presentation of the instrument should pay the money. The banker event on receiving instructions from the remitter cannot stop the payment of the instrument. Stop payment can be done in the following cases:

 Loss of draft before endorsement: In this case, “Draft reported to be lost, payee’s endorsement requires verification” is marked.

 Loss of draft after endorsement: In this case, the branch first satisfies itself about the claimant and the endorsement in his favor.

Accounting treatment:

In case of issuing of the instrument:

Cash/ customer’s A/C---------------------Dr.

MTBL General A/C (Drawn on branch)----------Cr.

Income A/C commission---------------------------Cr.

After giving these entries an Inter Bank Credit Advice is prepared which contains the controlling number, depicting that the branch is credited to whom it is issued.

An IBCA implies the following entries,

MTBL General A/C Issuing Branch -------Dr.

Drawn on branch------------------------------------Cr.

Role of the Drawn Branch:

After receiving the IBCA lodgment is done by the branch. The following entries are given “DD In-Issuing branch” register:

Issuing branch A/C-------------------------Dr.

Bills Payable ---------------------------------------Cr.

(After receiving an IBCA)

Bills Payable (DD) A/C--------------------Dr.

Client’s A/C--------------------------------Dr.

Entries are given in “DD In-Issuing branch” register:

Issuing branch A/C-----------------------Dr.

Bills Payable---------------------------------------Cr.

(After receiving an IBCA)

Bills Payable (DD) A/C------------------Dr.

Client’s A/C------------------------------Dr.

Charges:

A commission of 0.15% is taken on the draft value & Tk.50/= is taken as postal charge.

Cancellation:

To cancel an issued DD, the client has to submit an application. Issuing branch then sends an Inter Branch Debit Advice (IBDA) to the drawn branch against previously issued IBCA.

After that the following entries are given:

General A/C drawn on branch---------Dr.

Client’s A/C ---------------------------------------Cr.

Issuing of Duplicate DD:

If the customer wants to issue a duplicate DD, than customer is asked to do the following formalities:

 Making a general diary (GD) in the nearest Police Station.

 Furnishing an Indemnity Bond in Tk.50/= stamp

The banker immediately marks “stop payment” in the register after receiving the application from the customer and a duplicate DD is issued.

T.T. Issue/Collection:

Telex transfer (TT) is another widely used mode for remittances of funds. In case of telex transfer the message for transfer of funds is communicated through tested telex. MTBL generally recovers from the telex charges in addition to the usual service charges.

Issuing of TT:

MTBL follows the following procedures:

 The customer deposits money with MTBL to be sent.

 The customer obtains a cash memo containing TT serial number.

 TT serial number, notifying part name is mentioned in the telex message.

 The Telex Department confirms transmission of the telex.

Accounting entries for TT:

Cash A/C Client’s A/C -----------------------Dr.

MTBL General A/C (Dilkusha branch)---------------Cr.

Procedures for the incoming TT:

After receiving the telex, it is authenticated by test. TT Serial number is verified by the “TT in-Concern branch” register. The following entries are given in the vouchers:

MTBL General A/C (Dilkusha branch)-------Dr.

Client’s A/C-------------------------------------------Cr.

Tk. 50/- is taken as postal charge. The minimum commission is Tk. 50/- or o.15% of the amount whichever is higher.

Endorsements:

MTBL endorses US$ in passports. To endorse US Dollar, the client has to apply in the prescribed from (TM Form).

The following entries are given in this regard:

Cash or Customers’ A/C-----------------Dr.

Foreign Currency on Hand< Dollar Special> ---------Cr.

IBC/OBC:

By OBC, we mean that those cheques drawn on other banks which are not within the same clearing house. Officer gives OBC seal on this type of cheques and later sends a letter to the manager of the branch of the some bank located in the branch on which cheque has been drawn. After collection of that bill branch advises the concerned branch in which cheques has been presented to credit the customer account through Inter Branch Credit Advice (IBCA).

In absence of the branch of the same bank, officer sends letter to manager of the bank on which the cheques is drawn. That bank will send pay order in the name of the branch. This is the procedure of OBC mechanism.

Actually OBC comes from the out side bank’s branch, or inter branches. Suppose AGRANI Bank, Jatrabari Branch sent a Cheque, which no: 012536, Tk. 5,00,000/- to Mutual Trust Bank Limited against AGRANI Bank Motijheel Corp. Branch. So this cheque could be an OBC. Now what Mutual Trust Bank Limited has to do? MTBL tries to collect this cheque through Bangladesh Bank Clearing House, and credited clients account.

OBC Collection Process:

Create a Voucher against OBC: S/D A/C OBC Tk. 5,00,000/-

.10% Cut off as Commission on OBC Tk. 500

15% Cut off as Vat on Others Tk. 75

Tk. 20/- Cut off as Postage Recovery Tk. 20

Total Tk. 595/-

In this condition MTBL got the cheque amount of Tk. 5,00,000/-, but after cut off the commission, vat and postage recovery MTBL will be credited the amount Tk. (5,00,000 – 595)= Tk. 4,99,405/- in party account.

Bangladesh Bank Circulation about OBC:

Bangladesh Bank has circulated some things about OBC. These are given below:

 If the cheque amount will be under Tk. 1,00,000/- then bank’s OBC commission will be charged at .15%.

 If the cheque amount will be above Tk. 1,00,000/- to Tk. 5,00,000/- then Bank’s OBC commission will be charged at .10%.

 If the cheque amount will be above Tk. 5,00,000/- then Bank’s OBC commission will be charged at .5%.

 Against the OBC the Government Tax will be realized on 15% on Commission Amount.

 Postage Recovery will be realized Tk. 20/- for each OBC.

Locker Service:

MTBL Dilkusha Branch is providing facility of locker service for the purpose of safeguarding the valuable property of customers. The person or organization that has any account in bank branch can enjoy this service. They keep their valuable assets in banker’s custody. Customers have right to look after with a key of their individual locker provided by bank. MTBL maintains the following types of lockers:

▫ Large locker.

▫ Medium locker.

▫ Small locker.

For enjoying this service, clients have to give charge yearly Tk.2500/-, Tk.2000/- and Tk.1500/- for large, medium and small locker respectively.

Accounts Department

Accounts Department is play most vital role in Banking. Accounts Department is a department with which each and every department is related. It records the profit & loss A/C and statement of assets and liabilities by applying “Golden Rules” of book-keeping. The functions of it are theoretical & computerized based. MTBL Dilkusha Branch records its accounts daily, weekly, and monthly every record. MTBL Dilkusha Branch Accounts Department in Charge: Mr. Kazi Imamul Haque, Sr. Executive Officer (having 12 years of experience in banking sector). Another officer’s are: Mr. Tarek, (Officer), Mr. Hamid (Teller-Officer), Mr. Sohel(Teller-Officer).

This entire executive’s helps me a lot in my internship program at MTBL. They didn’t guide me as an Internee; they guide me as a training officer of MTBL to gather practical knowledge about Banking. They tried there best to inform me every thing about accounts department. I hope I knew every thing that gave me as a new comer in banking sector.

Basically Accounts Department is not alone. Accounts department is a mix of as follows:

1. Cash

2. Transfer

3. Clearing

CASH

Mr. Kazi Imamul Haque, Sr. Executive Officer and Mr. Md. Tarek (Officer) is the cash in charge. Both of the two senior executives help’s me lot to get practical knowledge and prepare this report.

The cash section of any branch plays very significant role in Accounts Department. Because, it deals with most liquid assets the MTBL Dilkusha Branch has an equipped cash section. This section receives cash from depositors and pay cash against cheque, draft, PO, and pay in slip over the counter. Every bank must have a cash counter where customer withdrawn and deposit there money. When the valued client’s deposit their money at the cash counter they must have to full fill the deposit slip his/her own, then they sing as the depositor option’s then they deposit their money through cash officer at the cash counter.

SEVERAL TYPES OF DEPOSIT SLIP

There are several types of deposit slip as follows:

 Current Deposit A/C Slip,

 Saving’s Deposit A/C Slip,

 Festival Deposit A/C Slip,

 Brick By Brick Deposit A/C Slip,

 Pay order Slip,

 Demand Draft Slip,

 T.T. Slip.

After paying this kind’s of slip, the valued client waits for the deposit slip book out side of the cash counter. The cash officer deposit the money in there account through computer software, while the depositors account credited, then the cash officer put a seal in the deposit slip and return it to the client.

RECEIVING CASH:

Any people who want to deposit money will fill up the deposit slip and give the form along with the money to the cash officer over the counter. The cash officer counts the cash and compares with the figure written in the deposit slip. Then he put his signature on the slip along with the ‘cash received’ seal and records in the cash receive register book against A/C number.

At the end of the procedure, the cash officer passes the deposit slip to the counter section for posting purpose and delivers duplicate slip to the clients.

Account treatment:

Cash A/C--------------------- Dr.

Customer’s A/C------------- Cr.

DISBURSING CASH:

The drawn who wants to receive money against cheque comes to the payment counter and presents his cheque to the officer. He verifies the following information:

▫ Date of the cheque

▫ Signature of the A/C holder

▫ Material alteration

▫ Whether the cheque is crossed or not

▫ Whether the cheque is endorsed or not

▫ Whether the amount in figure and in word correspondent or not

Then he checks the cheque from computer for further verification. Here the following information is checked:

▫ Whether there is sufficient balance or not

▫ Whether there is stop payment instruction or not

▫ Whether there is any legal obstruction (Garnishee Order) or not

After checking everything, if all are in order the cash officer gives amount to the holder and records in the paid register.

Account treatment:

Customer’s A/C Dr.

Cash A/C Cr.

The cash section of MTBL deals with all types of negotiable instruments, cash and other instruments and treated as a sensitive section of the bank. It includes the vault which is used as the store of cash instruments. The vault is insured up to Tk. 60 lacs. If the cash stock goes beyond this limit, the excess cash is then transferred to Principle Branch Office. When the excess cash is transferred to MTBL Principle Branch Office the cash officer issues IBDA.

Account treatment:

MTBL General A/C Dr.

Cash A/C Cr.

When cash is brought from MTBL Principle Branch Office.

Accounting treatment:

Cash A/C Dr.

MTBL General A/C Cr.

TRANSFER

Transfer is not a critical sector in banking but it is very important. Transfers play a vital role in banking sector. So now we have to know what transfer is: basically transfer is a type of register maintaining matter. In this register officer write down every day transactions in Debit and Credit side then the officer calculate both the side of the register if both side shown same amount, it means that the total day’s transaction is completely okay.

CLEARING

Clearing is one of the magical parts of banking. I really enjoyed this part of the accounts department and banking sector. In Mutual Trust Bank Limited clearing in charges Mr. Md. Jahir Ahmed (Officer), I did work with him. I went Bangladesh Bank lot’s of time with Mr. Md. Jahir Ahmed.

What is Clearing House?

In Bangladesh Bank, there is a very large room, which contains fifty (50) or more tables for each bank that is called the clearing house.

Nature of clearing house:

 1st Clearing House

 Return Clearing House

Clearing House Process:

Every bank has an officer of clearinghouse who is work with Bangladesh Bank clearing house. Acutally most of major client deposit their account in different kinds of bank cheques. Clearing officer check all the cheques and deposit slip very carefully and then he received the cheque. After that the clearing officer posting all the cheques in computer software which is recognized through Bankgladesh bank computer department. Then clearing officer seal all the cheques in advance date after that the officer endorsement all the cheques and sign all the cheques. All the cheques are posted in the computer by branch wise, then officer print the entire document and staple all the cheques by branch wise this is called schedule of clearing house. It is a very difficult job to staple all the cheques, because some time’s the cheques are huge in quantity, it may be 250 to 400, this is very vital job because every cheque must have to staple very carefully, it means cheque amount and the print sheet amount and cheque branch must have to be same. If the cheques staple in wrong direction, the cheque may be return from another bank, that’s why MTBL not to be able to credited party account.

Then the clearinghouse officer copying all the document in two floppy dist as per Bangladesh Bank requirement. When the clearing officers enter the clearinghouse, his first job is that the floppy dlivered to the Bangladesh Bank computer department.

All of the procedure the clearing in charge goes to the Bangladesh Bank clearing house before 10 am in the morning. The clearing officer check all the bank’s cheque and he put all the cheques in bank wise, like as this another bank’s delivered there cheques in MTBL desk. Then the officers of MTBL have to calculate all the cheques by using calculator machine, Staple pin remover, and then he divided all the cheques as MTBL Branch wise.

Types of Clearing Cheque:

MTBL Dilkusha Branch performs the bill clearing function through Bangladesh Bank. MTBL Dilkusha Branch acts as the agent of all MTBL branches for the clearing house of the Bangladesh Bank. There are two types of cheque which are-

1. Inward clearing cheque

2. Outward clearing cheque.

INWARD CHEQUES:

Inward cheques are those ones drawn the respective branch which have been presented on other banks and will be cleared / honored through the clearing house of Bangladesh Bank. Then the cheque is called inward cheque of MTBL Dilkusha Branch.

Accounting treatment:

Customer’s A/C Debit.

MTBL General A/c credit.

OUTWARD CHEQUES :

Outward cheques are those ones drawn on other bank branches which are presented on the concerned branch for collection through clearing house of Bangladesh Bank. These cheques are called outward clearing cheques.

RECOGNIZED BANK’S AS THE MEMBER OF BANGLADESH BANK CLEARING HOUSE WITH THEIR CLEARINGHOUSE CODE:

SL No.

Name of Bank

Code

Agrani Bank

Al-Baraka Bank Bangladesh Limited

Al-Arafah Islami Bank Limited

Arab Bangladesh Bank Limited

Bangladesh Bank

Bangladesh Commerce Bank

Bangladesh Krishi Bank

Bangladesh Shilpho Bank

Bangladesh Shilpo Rin Sangstha

Bank Asia Limited

Brac Bank Limited

Citi N.A Bank Limited

Cradit Agricole Indosuez

Dhaka Bank Limited

Dutch Bangla Bank Limited

Eastern Bank Limited

First Security Bank Limited

Habib Bank Limited

HSBC Limited

IFIC Bank Limited

Islami Bank Bangladesh Limited

Jamuna Bank Limited

Janata Bank

Marcentile Bank Limited

Mutual Trust Bank Limited

National Bank Limited

National Bank of Pakistan

National Credit and Commerce Bank Limited

One Bank Limited

Prime Bank Limited

Pubali Bank Limited

RAKUB

Reason for the Return Cheques:

Memorandum.

MUTUAL TRUST BANK LIMITED

__________ Branch Date:_____________

Cheque(s) No:_________________ for Taka ________________

Is/are returned un-paid for reason(s) no_____________________

Not arrange for

Effects not cleared, may be present again.

Exceeds arrangement.

Full neither covers nor received.

Payments stopped by drawer.

________ Payee’s endorsement irregular requires bank’s confirmation.

________ Payee’s endorsement irregular, illegible / required.

Drawer signature differs / required.

Alteration in Date / figures / words required drawer’s full signature.

Cheque is post dated / out of date / mutilated.

Amount in word and figure differs.

Crossed cheque must be presented through a Bank.

Clearing stamps required.

Addition to Bank discharge should b authenticated.

Cheque crossed “Account’s Payees Only”.

Collecting Bank discharge irregular.

SCOPES:

MTBL has a good General Banking & Account Department.

It is one of the leading banks in Bangladesh.

Information is available.

Book’s notes and journals are available.

Extract:

Extract is a statement of all originating and responding transactions among inter–branches through inter branches debit and credit advice. At the end of the day, all the debit and credit advices of different department come to accounts department. It makes extract in light of all advices.

Actually extract shows the balance of MTBL Dilkusha Branch general A/C. The objective of preparing it is to know how many transactions have been originated and responded by the respective branch per day. Branch has to send it its Head Office keeping one photocopy.

Debit Voucher:

For making cash payment like entertainment, conveyance, Account Department writes a debit voucher. Amount is withdrawn through cash section by presenting debit voucher.

Statement of affairs:

Accounts section prepares the statement of affairs for finding the profit /loss as well as amount of assets and liabilities of concerned branch per day. Theoretically; it is called financial statement and has two parts:

Income and Expenditure A/C.

Statement of assets & liabilities.

AMORTIZATION AND DEPRECIATION:

Amortization is the allocation of the cost of an intangible asset to expense. For example: prepaid expenditure, prepaid insurance and goodwill etc. Amortization schedule is determined by the decision of management.

Depreciation is a process of cost allocation of assets not a process assets valuation.

Fixed Assets have been show at written down value.

Depreciation is charged at the following rates on reducing balance method on all fixed assets other than motor vehicles, which are deprecated on straight-line basis:

Particulars of assets

Rate of Depreciation

Immovable Property

2.50%

Furniture

10%

Interior Decoration

10%

Office Equipment

20%

Motor Vehicles

20%

Books & Periodicals

10%

Assets purchased during the year are depreciated from the date of acquisition.

FUNCTIONS PROVIDED BY ACCOUNTS DEPARTMENT:

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

Besides the above, the Bank has to prepare some internal statements as well as some statutory statements which are to be submitted to the central bank. Accounts Department prepares these statements also. The department has to submit some statements to the Head Office, which is also consolidated by the Head Office late on.

The tasks of the Accounts Department of MTBL Dilkusha Branch may be seen in two different angles:

Daily Tasks.

Periodical Tasks.

DAILY TASKS:

The routine daily tasks of the Accounts Departments are as follows--------

o Recording the daily transactions in the cashbook.

o Recording the daily transactions in general and subsidiary ledgers.

o Preparing the daily position of the branch comprising of deposit and cash.

o Preparing the daily Statement of Affairs showing all the assets and liability of the branch as per General Ledger and Subsidiary Ledger separately.

o Making payment of all the expenses of the Branch.

o Recording inter branch fund transfer and providing accounting treatment in this regard.

o Checking whether all the vouchers are correctly passed to ensure the conformity with the ‘Activity Report’; if otherwise making it correct by calling the respective official to rectify the voucher.

o Recording of the vouchers in the Voucher Register.

o Packing of the correct vouchers according to the debit voucher and the credit voucher.

PERIODICAL TASKS:

The routine periodical tasks performed by the department are as follows:

o Preparing the monthly salary statements for the employees.

o Publishing the basic data of the branch.

o Preparing the weekly position for the branch which is sent to the Head Office to maintain Cash Reserve Requirement (C.R.R).

o Preparing the monthly position for the branch which is sent to the Head Office to maintain Statutory Liquidity Requirement (C.R.R).

o Preparing the weekly position for the branch comprising of the break up of sector-wise deposit, credit etc.

o Preparing the weekly position for the branch comprising of the denomination wise statement of cash in tills.

o Preparing the quarterly statements (SBS-2 and SBS-3) where SBS-2 shows “classification of deposits excluding inter bank deposits, deposits under wage earner’s scheme and withdrawals from deposits accounts” and SBS-3 shows “classification of advances (excluding inter bank) and classification of bills purchased and discounted” during the quarter.

o Preparing the budget for the branch by fixing the target regarding profit and deposit so as to take necessary steps to generate and mobilize deposit.

o Preparing an ‘Extract’ which is a summary of all the transactions of the Head Office account with the branch to reconcile all the transaction held among the accounts of all the branches.

Observations & Recommendations:

After this part (General Banking), I think this is the most vital part for every bank in Bangladesh or any other country. Mutual Trust Bank Limited is a private sector bank. This is most probably consumer base bank. Mr. Kazi Immamul Haque as Sr. Executive Officer, Mr. Md. Masudur Rahman as Sr. Officer and Mr. Md. Tarek as Officer doing their duty very care fully and helps me a lot together practical knowledge but in this sector (General Banking & Accounts Department). I found some things is wrong, these wrong things are in the A/C Opening side.

Theoretically any person can purchase pay order, demand draft and telex transfer by depositing money and commission. But the person who wants to purchase these should have account in the bank branch. These will discourage customers to transact with bank.

In opening A/C some additional documents are needed as compared with theoretical record. Like trade license, member of Dhaka chamber of commerce and industry (DCCL) in Dhaka city. Again some documents are not essential practically as referred in theory. For example, the photo of the person who will open A/C, and sometime introducer.

There is a rule to deposit at least an amount of money in case of opening an account. But it is not strictly followed. Sometimes more money is asked from a new customer who discourages him to open an account in the bank. I think the amount should be fixed at a level that is not altered from customer to customer.

In case of crossing cheque I did not observe any crossing with “Not negotiable” as much as I stayed in bank orientation. Though theory have been given emphasis on the effect of “A/C pay only” and “not negotiable”. The role of “Not negotiable” is not so much. There is no provision in law regarding “A/C payee crossing”. But it has been developed in practice. If the words, “A/C payee” are added to a crossing, it becomes an A/C pay crossing.

The degree of relationship between banker and customer determines how much theory is deviated from practical work.

When a client try to open an A/C he must have to need an introducer, sometime it may create a problems for the clients.

Under this department, practice strictly supports theories. There is not too much discrepancy between them. All the functions of Account Department provided by MTBL Dilkusha Branch are based on accounting theories and procedures.

In case of amortization there is no pre-determined rate on which it will be charged. It fully depends on the decisions of the executives of Accounts Department or the instruction of H/O.

In case of depreciation only the straight-line is to be followed, but there are other methods of charging depreciation, such as-double decline, sum year-digit methods etc are used as method of depreciation. These are not followed by MTBL except the straight line method.

This department plays a vital role in the management information system. Management collects different types of information from this department.

Reason for the Return Cheques:

Memorandum.

MUTUAL TRUST BANK LIMITED

__________ Branch Date:_____________

Cheque(s) No:_________________ for Taka ________________

Is/are returned un-paid for reason(s) no_____________________

Not arrange for

Effects not cleared, may be present again.

Exceeds arrangement.

Full neither covers nor received.

Payments stopped by drawer.

________ Payee’s endorsement irregular requires bank’s confirmation.

________ Payee’s endorsement irregular, illegible / required.

Drawer signature differs / required.

Alteration in Date / figures / words required drawer’s full signature.

Cheque is post dated / out of date / mutilated.

Amount in word and figure differs.

Crossed cheque must be presented through a Bank.

Clearing stamps required.

Addition to Bank discharge should b authenticated.

Cheque crossed “Account’s Payees Only”.

Collecting Bank discharge irregular.

SCOPES:

MTBL has a good General Banking & Account Department.

It is one of the leading banks in Bangladesh.

Information is available.

Book’s notes and journals are available.

Extract:

Debit Voucher:

For making cash payment like entertainment, conveyance, Account Department writes a debit voucher. Amount is withdrawn through cash section by presenting debit voucher.

Statement of affairs:

Income and Expenditure A/C.

Statement of assets & liabilities.

AMORTIZATION AND DEPRECIATION:

Depreciation is a process of cost allocation of assets not a process assets valuation.

Fixed Assets have been show at written down value.

Depreciation is charged at the following rates on reducing balance method on all fixed assets other than motor vehicles, which are deprecated on straight-line basis:

Particulars of assets

Rate of Depreciation

Immovable Property

2.50%

Furniture

10%

Interior Decoration

10%

Office Equipment

20%

Motor Vehicles

20%

Books & Periodicals

10%

Assets purchased during the year are depreciated from the date of acquisition.

FUNCTIONS PROVIDED BY ACCOUNTS DEPARTMENT:

The tasks of the Accounts Department of MTBL Dilkusha Branch may be seen in two different angles:

Daily Tasks.

Periodical Tasks.

DAILY TASKS:

The routine daily tasks of the Accounts Departments are as follows--------

o Recording the daily transactions in the cashbook.

o Recording the daily transactions in general and subsidiary ledgers.

o Preparing the daily position of the branch comprising of deposit and cash.

o Preparing the daily Statement of Affairs showing all the assets and liability of the branch as per General Ledger and Subsidiary Ledger separately.

o Making payment of all the expenses of the Branch.

o Recording inter branch fund transfer and providing accounting treatment in this regard.

o Recording of the vouchers in the Voucher Register.

o Packing of the correct vouchers according to the debit voucher and the credit voucher.

PERIODICAL TASKS:

The routine periodical tasks performed by the department are as follows:

o Preparing the monthly salary statements for the employees.

o Publishing the basic data of the branch.

o Preparing the weekly position for the branch which is sent to the Head Office to maintain Cash Reserve Requirement (C.R.R).

o Preparing the monthly position for the branch which is sent to the Head Office to maintain Statutory Liquidity Requirement (C.R.R).

o Preparing the weekly position for the branch comprising of the break up of sector-wise deposit, credit etc.

o Preparing the weekly position for the branch comprising of the denomination wise statement of cash in tills.

o Preparing the budget for the branch by fixing the target regarding profit and deposit so as to take necessary steps to generate and mobilize deposit.

o Preparing an ‘Extract’ which is a summary of all the transactions of the Head Office account with the branch to reconcile all the transaction held among the accounts of all the branches.

Observations & Recommendations:

The degree of relationship between banker and customer determines how much theory is deviated from practical work.

When a client try to open an A/C he must have to need an introducer, sometime it may create a problems for the clients.

In case of amortization there is no pre-determined rate on which it will be charged. It fully depends on the decisions of the executives of Accounts Department or the instruction of H/O.

This department plays a vital role in the management information system. Management collects different types of information from this department.

Sunday, January 29, 2012

General Banking