standard bank assignment..(Law).docx

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ASSIGNMENT ON

COMMERCIAL BANK(STANDARD BANK

BANKING LAW &

PRACTICE

SUBMITTED TO

SUBMITTED BY

SK. ALAMGIR HOSSAIN

GROUP NO- 21

LECTURER 7TH

BATCH, BBA.DEPARTMENT OF FINANCE

DEPARTMENT OF FINANCE

AGANNATH UNI!ERSITY

DATE OF SUBMISSION " 2#$%$2%1'

NAME ID NOKISHANDATTA B-12%2%%%0EASIN ARAFAT B-12%2%%2MD.AKRAM

HOSSAIN

B-12%2%%

YEAKUBHOSSAIN

B-12%2%%#%

MD.RASAD

B-11%2%%

Introduction

The services of commercial bank primarily revolve round

mobilization of deposits and lending the same to those needing

nance for their business and other activities. A broader denition

of a bank is any nancial institution that receives, collects,

transfers, pays, exchanges, lends, invests, or safeguards money

for its customers.

Commercial bank

Commercial banks specialize in loans of commercial nature

especially short term loans to industries and businesses and

individuals.

Commercial banks are the oldest fnancial institutions. The

occupy and important position in the fnancial landscape

o nearly every country.

Standard Bank Limited (SBL) was incorporated as a ublic

!imited Company on "ay ##, #$$$ under the Companies Act,

#$$% and the &ank achieved satisfactory progress from its

commercial operations on 'une (), #$$$. *&! has introduced

several new products on credit and deposit schemes. +t also goes

for Corporate and etail &anking etc. The &ank also participated

in fund *yndication with other &anks. Through all these myriad

activities *&! has created a positive impact in the "arket.

b!ectives

- To be a dynamic leader in the nancial market in innovating

new products as to the needs of the society.

- To earn positive economic value addition /0A1 each year to

- To top the list in respect of cost e2ciency of all the

commercial &anks.

- To become one of the best nancial institutions in

&angladesh economy participating in the most signicant

segments of business market that we serve.

"ision

To be a modern &ank having the ob3ect of building a sound

national economy and to contribute signicantly to the ublic

/xche4uer.

#ission

To be the best private commercial bank in &angladesh in terms of

e2ciency, capital ade4uacy, asset 4uality, sound managementand protability.

$ctivities o Standard Bank

5eneral banking is the front6side banking service department. +t

provides those customers who come fre4uently and those

customers who come one time in banking for en3oying ancillary

services. The o2cers of this department have to perform the

following tasks7

#1 Account opening and close.

81 Collection of cash, che4ue from customers.

)1 +ssuing of 9:, pay orders, che4ue books and demand draft.

%1 Assisting customer to open various deposit scheme.

;1 Conducting clearing house activities.

<1 Collection of local and outward bills.

CS% $ctivities

*&! donates crest and che4ue to war wounded 9reedom

9ighter

*&! donates a che4ue at deceased Army 9amily of

&: "utiny.

*&! donates a che4ue for 9lood 0ictim people

*&! serves the people setting up a temporary eye

treatment pro3ect

*&! donates che4ue = crest to meritorious student

*&! contributes donation for 0ictims of &: "utiny

*&! has donated computers to *chool *tudents at

%ole o Commercial Banks in

&conomic 'evelopment

The &anking *ector has for centuries now formed one of the pillars of economic

prosperity. +ndeed history provides us with some starting information regarding how

banks provided nance for imperialist ventures in newly ac4uired colonies. >ver

time banks have formed an important part in providing an avenue for both savings

and investments.

!and, !abor, capital and entrepreneurs are the basic economic resources available

to business. ?owever, to make the use of these resources, a business re4uires

nance to purchase of the land, hire labor, pay for capital goods and pay for

individuals with specialized skills. :etail role of commercial banks in economic

development is given below7

• Trade 'evelopment

The commercial banks provide capital, technical assistance and other facilities to

businessmen according to their need, which leads to development in trade.

$riculture 'evelopment

Commercial banks nance the most important sector of the developing economics

i.e. agriculture, short, medium and long6term loans are provided for the purchase of

seeds and fertilizer, installation of tube wells, construction of warehouses, purchase

of tractor and thresher etc.

Industrial 'evelopment The countries, which concentrated on industrial sector made rapid economic

development. *outh @orea, "alaysia, Taiwan, ?ong @ong and +ndonesia have

recently developed their industrial sector with the help of commercial banks.

• Capital ormation

Commercial banks help in increasing the rate of capital formation in a country.

Capital formation means increase in number of production units, technology, plant

and machinery. They nance the pro3ects responsible for increasing the rate of

capital formation.

• 'evelopment o orein Trade

Commercial banks help the traders of two dierent countries to undertake business.

!etter of credit is issued by the importerBs bank to the exporters to ensure the

payment. The banks also arrange foreign exchange.

• Transer o #oney

Commercial banks provide the facility of transferring funds from one place to

another which leads to the growth of trade.

• #ore *roduction

A good banking system ensures more production in all sectors of the economy. +t

increases the production capabilities of the economy by strengthening capital

structure and division of labor

• 'evelopment o Transport

The commercial banks nanced the transport sector. +t has reduced unemployment

on one hand and increased the transport facility on the other hand. emote areas

are linked to main markets through developed transport system.

• Sae Custody

The business concerns and individuals can make themselves tension free by

depositing their surplus money in banks. The banks also provide them the facility of

lockers to keep their precious articles and necessary documents safe.

• Increase in Savin

Commercial banks persuade the people to save more. :ierent saving schemes

with attractive interest rates are introduced for this purpose. umber of bank

branches is opened in urban and rural areas.

• Construction o +ouses

Commercial banks provide credit facilities to their customers for the purchase or

construction of houses.

• $ssistance to ,overnment

&y providing funds to government for development programs, the commercial

banks share the government for economic stability.

• Increase in &mployment

A countryBs economic prosperity depends on the development of trade, commerce

industry, agriculture, transport and communication etc. These sectors are nanced

by the commercial banks and employment opportunities are increasing.

• Savin in #etallic %eserve

Che4ues and drafts etc works like money. +n this way the need of precious metals to

make coins reduces and metallic reserve of the country can be utilized on other

important matters

• Credit Creation

Commercial banks are called the factories of credit. They advance much more than

what the collect from people in the form of deposits. Through the process of credit

creation, commercial banks provide nance to all sectors of the economy thus

making them more developed than before.

• *roper use o #oney

eople deposit their saving in the banks, so the scattered money becomes a huge

amount in the way, which can be used for dierent pro3ects in a proper way.

• inancial $dvices

Commercial banks also give useful nancial advices to promote the business of their

customers, besides credit facilities.

• Increase in Investment

Commercial banks mobilize savings of the people. They make them available to the

farmers, traders and industrialists for the development of agriculture, trade and

industry.

• Success o #onetary *olicy

Dnder the supervision of central bank, all scheduled commercial banks make eort

for the success and ob3ectives of monetary policy. This 3oined eort of commercial

banks makes the economic development possible.

• -se o #odern Technoloy

The use of modern technology in less developed countries is only possible in the

presence of developed commercial banking as it can be the main source of their

funds.

These funds are utilized for the import of modern technology from developed

countries.

• &port *romotion Cells

+n order to boost the exports of the country, the banks have established export

promotion cells for the information and guidance to the exporters.

• &conomic *rosperity

/conomic prosperity of a country depends on number of factors including the

development of commercial banking. A sound banking system promotes the

economic status of the people by providing them short, medium and long6term

loans.

• Trainin Center

Commercial banks established many trading centers for their employees to

modernize the banking system of a country. +n this way the banking experts

enhance their abilities and contribute towards the development of country.

Types o deposit products

- Current :eposit

- *avings :eposit

- *hort Term :eposit

- 9ixed :eposit

- :eposits Dnder *cheme

SBL %eular 'eposit *roramme ( S%'* )

E +f any monthly installment remains unpaid for ; ve1

consecutive months, the account will be closed automatically and

the account will be settled as detailed other page 76

%elationship/

Tenure$pplied Interest

!ess than #one1

yearo interest

"ore than # year

but less ) years*avings ate

"ore than ) yearsbut less ; years

"atured value of ) yearsand rest as per prevailing

interest rate on savings rate

"ore than ; years

but less #( years

"atured value of ; years

and rest as per prevailing

interest rate on savings rate.

+f failure to pay monthly installment on due dates heFshe will pay

penalty of Tk. 8(F6Twenty1 next subse4uent installment.

#onthly Installment0 Tenure and #aturity "alue

1ill be as per ollo1in Schedule23

Installm

566 766 8666 9666 9766 7666 86666

) Gears#8,)

%#,8%( I8,%H(#,(),#

8,(<,8

%,#8,%%

; Gears88,;

%;H;,8%;

#,;(,;

#,II,#

),H<,)

H,;8,I#

H Gears)%,H

#,#;,;

8,)#,#

8,I$,(

;,HI,)

##,;H,(

#( Gears;H,#

#,$(,;

),I#,8

%,H<,I

$,;%,%

#$,($,H

SBL %eular Income *roramme ( S%I* )

#. *&! egular +ncome rogram is an income program, which

helps you to earn a monthly xed

amount on your deposits at *&! for period of # year.

8. :eposit of Tk. ;(,(((F6 9ifty Thousand1 and multiples thereof

but maximum limit of

Tk. 8;,((,(((F6 Taka Twenty 9ive !ac1 and Tk. ;(,((,(((F6

Taka 9ifty !ac1 at a time for the

individual customer and the company respectively. :epositor

will earn #8 e4ual monthly prot.

'epositor can earn money due date as per ollo1in

schedule23

'eposit

$mount

806606

906606

506606

:066066

"onthly +nterest

ayable%(( I(( #,<(( 8,%((

),8(( =

SBL 'ouble Income *lus ( 'I< ) *roramme

#. :eposit of Tk. #(,(((F6 Ten Thousand1 and multiples thereof

will be acceptable under this

program.

8. A specially designed receipt shall be issued for the deposit

under this program.

). The instrument shall be issued for H years.%. At maturity after H years the depositor will get double plus

;. +f any depositor intends to withdraw his deposit before

maturity, the following rules will apply 76

• o benet including interestFprot shall be allowed for pre6

mature encashment within # one1

• +f the accountsFdeposits are closedFen6cashed after # one1

year of its opening interest shall

be allowed on the deposit at prevailing 9: +nterest ate.

<. The instrument will be acceptable as collateral security against

any investment sub3ect to

registering lien with the issuing &ranch.

H. +n case of instrument get lost, the procedure for the issuance of

a duplicate receipt will be thesame as applicable in case of loss of 9:.

Types o loan products

• *ecured overdraft

• 5eneral !oan

• ?ouse building !oan

• *ta !oan

• Transport !oan

• !oan Against Trust eceipt

• ayment against document

• acking Credit

• !ease 9inance

• *"/

• Consumer Credit

• &ill urchase

Consumer Credit Scheme 2

!ending rate has been shown in the following table where xed

rate &angladesh bank instructed rate1 and mid6rate are given.

&ank may re6x K#.;( over the mid rate considering the risk

involvement. These rates are eective from 'uly (#, 8(#%.

SL *articulars ied %ate

#id %ate

(# Consumer Credit *cheme *ta1 #8.((L 66(8 Consumer Credit *cheme Commercial1 66 #<.;(L

#.((L additional interest rate will be charged for default inpaymentF ad3ustment. All other charges, commissions and fees

shall remain unchanged.

+ouse Buildin Loan 2

!ending rate has been shown in the following table where xed

rate &angladesh bank instructed rate1 and mid6rate are given.

&ank may re6x K#.;( over the mid rate considering the risk

involvement. These rates are eective from 'uly (#, 8(#%.

SL *articularsied

68 +ouse Buildin Loan (Sta=) >.66? 33

69 +ouse Buildin Loan

(Commercial)

33 8@.66?

65 +ouse Buildin Loan

(%esidential)33 8@.66?

#.((L additional interest rate will be charged for default in

paymentF ad3ustment. All other charges, commissions and fees

shall remain unchanged.

Aecessary papers and documents There are various kinds of &ank Accounts which people are

looking for. These accountBs opening go through some procedure.

e4uired information for opening a bank account varies from bank

to bank. 9ollowing are the most common information re4uired

with every bank.

Individual and oint $ccount (Salary and Current)• &ankBs prescribed Account opening application form to be

signed by the applicant in front of respective bank

personnel1,

• Two assport *ize hotographs of the Account holders1

attested by the introducer,

• *pecimen *ignature Card To be signed by the applicant in

front of respective bank personnel1,• /stimated Transaction role, and

• Any of the following +dentication :ocuments Current valid

passportF 0alid driving licenseF 0oter +: CardF Armed 9orces

+: cardF A &angladeshi employer +: card bearing the

photograph and signature of the applicantF A certicate from

any local government organs such as Dnion Council

chairman, ward commissioner etc1. +n this case the certier

should attest applicantBs photograph along with signatureF Trade license with photograph can be accepted for

individualBs identication1, i.e. any document showing

photograph, signature and address of the customer issued

from a dependable authority "anagers and *upervisors

have to apply 3udgment1 are acceptable.

• T+ umber.

• >ne assport *ize hotographs of the ominees1 attested

by the Account holder.

All photocopies should be veried with the original and attestedby an authorized o2cer of the &ank.

Limited Company $ccount

• &ankBs prescribed Account >pening application form,

• Certied copy of the "emorandum = Articles of Association

of the Company,

• Certicate of incorporation,

• Certicate of commencement of &usiness 9or ublic !imited

Companies only1,

• /xtract of the &oard resolution sanctioning the account

opening and signing authority,

• !ist of the :irector with address in specied from,

• hotograph of the signatories,

• Copy of valid Trade !icense,

• +ntroducerBs signature in the AFC opening form and at the

back of the photographs1 of Account holders1,

• !ist of names with Appointment letter and *pecimen

*ignature of the ersons authorized to operate the Account,

• The personal identity of all the directors or benecial

owners1 proprietor of the 9irm has to be established by any

of the documents as mentioned in +ndividual or 'oint

Customer category.

:istinction between conventional

commercial bank and +slamic

commercial bank

Characteristic Islamic

commercial

Conventional

commercial

Business

rame1ork

9unctions and

operating modes

are based on

*hariah and +slamic

banks must ensure

that all business

activities are

incompliance with

shariah

re4uirements.

9unctions and

operating modes

are based on

secular principles,

not religious laws

or guidelines.

Interest

charin

9inancing is not

interest iba1

oriented and

should be based on

risk6and6reward

sharing.

9inancing is

interest oriented,

and a xed or

variable interest

rate is charged for

the use of money

Interest on

deposits

Account holders do

not receiveinterestriba1 but

may share risk and

rewards of

investment made

by the +slamic bank

:epositors receives

interest and aguarantee of

principle payment

%isk sharin in

fnancin

+slamic banks oer

e4uity nancing

with risk sharing

for a pro3ect or

venture. !osses areshared on the basis

of e4uity

participation.

isk sharing is not

generally oered

but is available

through venture

capital rms andinvestment banks,

which may also

participate in

management.

estrictions +slamic banks are

allowed to

participate only in

economic activities

that are *hariah

compliant.

Traditional banks

may nance any

lawful product or

service

Makat >ne of thefunctions of the

+slamic &anks is to

collect and

distribute zakat.

Traditional banksdo not collects and

pay any religious

enalty on

default

+slamic banks are

not allowed to

charge penalties

for their

enrichment. They

may however allow

imposition of

default or late6

payment

penaltieson the

Traditional banks

normally charge

additional money

compound

interest1 in case of

late payment

grounds that these

penalties

discourage late

payments or

defaults, whichimpose

administrative

costs on bank for

processing and

collecting the

amount owed.

enalties may be

donated to a

charity or used tooset collection

Avoidance of

gharar

Transaction with

elements of

gambling or

speculation are

discouraged or

forbidden.

*peculative

investments are

allowed

Customer

elationship

The status of client

is that of partner

and investor

The status of a

client is one of

creditor and debtor

*hariah

supervisory

/ach +slamic bank

must have a

supervisory board

to ensure that all

its businessactivities are in line

with *hariahBs

re4uirement

Traditional banks

do not have such

re4uirements

Conclusion

The Standard Bank Ltd facilitate payments by means of credit

instruments like che4ues, drafts, telegraphic transfers, letters of

credits and other means of payment including credit and debitcards. Nithout these services domestic and international trade

could not have possibly progressed much beyond the old system

of barter. +n the words of Nalter leaf7 OThe banker is the universal

arbiter of the worldBs economyP.

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