PART- ONE:Introduction to the report

 

Origin of the report

 

This report is an Internship Report prepared as a requirement for the completion of the BBA Program of the Department of Finance, University of Dhaka. The primary goal of internship is to provide an on the job exposure to the student and an opportunity for translation of theoretical conceptions in real life situation. Students are placed in enterprises, organizations, research institutions as well as development projects. The program covers a period of 3 months of organizational attachment.

 
After the completion of BBA program, Md. Mazedul Hoque of BBA 7^th Batch was placed in Standard Chartered Bank, Bangladesh for the internship program under the guidance of my department advisor Mr. Md. Humayan Kabir. As a requirement for the completion of the program I needed to submit this report, which would include an overview of the organization I was attached with and elaboration of the project I was supposed to conduct during the internship period.
 
I was placed in the Islamic Banking Centre of the Bank, under the direct supervision of Mr.Saniyat Rahman, the Manager of Islamic Banking Center of Standard Chartered Bank Bangladesh.
 

1.2 Scope:

The scope of this report is limited to the overall descriptions of Islamic banking services provided by Standard Chartered Bank Bangladesh.

1.3 Methodology & Source of Information

In the organization part, much information has been collected from different published articles, journals, brochures, web sites and previous internship reports. All the information incorporated in this report has been collected both from the primary sources and as well as from the secondary sources.

Primary Source of Information

q  Discussion with officials of SCB
q  Face to face and telephone conversations with customers
q  Data from the company’s documents and SCB’s computerized information system
 

Secondary Sources of Data

q  Previous reports and journals relevant to the banking industry
q  Other published documents of Bangladesh Bank
q  Relevant SCB paper and published documents
 

1.4 Limitations:

Past and present financial information that are confidential could not be accurately obtained. Alike all other banking institutions, SCB is also very conservative and strict in providing financial information. In such cases, I have relied upon certain assumptions, which are only amateur estimates. As many of the analysis on the obtained data are based on my sole interpretation, there may be some biases, as lack of knowledge and depth of understanding might have hindered my ability to produce an absolutely authentic and meaningful report. Moreover, Islamic Banking is newly introduced banking line to SCB; there was unavailability of past financial data.
 

1.5 Banking Industry in Bangladesh – An Overview

 
Banking industry in Bangladesh is characterized as a highly competitive and highly regulated sector. With a good number of banks already in operation and a few more in the pipeline, the market is becoming increasingly competitive by the day.
 
The commercial banks of the country are constantly looking for ways to develop their market and product offers to remain ahead of others. A significant amount of regulation by Bangladesh Bank prevents the scope of introducing newer products into the market and thereby restricts a banks’ ability to outperform others with a diversified product range.
 
However, recent trends have shown banks shifting away from vanilla products (basic products) towards higher value added products that are highly structured, to meet the needs of the clients.
 
The Banking Industry in Bangladesh is one characterized by strict regulations and monitoring from the central governing body, the Bangladesh Bank. The chief concern is that currently there are far too many banks for the market to sustain. As a result, the market will only accommodate only those banks that can transpire as the most competitive and profitable ones in the future.
 
Currently, the major financial institutions under the banking system include:

• Bangladesh Bank
• Commercial Banks
• Islamic Banks
• Leasing Companies
• Finance Companies

 
Of these, there are four nationalized commercial banks (NCB), 5 specialized banks, 11 foreign banks, 26 domestic private banks and 4 Islamic Banks currently operating in Bangladesh. Their proportions are shown in figure 01.
 
Figure 01 Source: Scheduled Bank Statistics, Bangladesh Bank
 
All local banks must maintain a 4% Cash Reserve Requirement (CRR), which is non-interest bearing and a 16% Secondary Liquidity Requirement (SLR). With the liberalization of markets, competition among the banking products and financial services seems to be growing more intense each day. In addition, the banking products offered in Bangladesh are fairly homogeneous in nature due to the tight regulations imposed by the central bank.
Competing through differentiation is increasingly difficult and other banks quickly duplicate any innovative banking service.
 
Foreign banks are playing a very important role in the country’s banking sector. These banks are holding 9% of the countries total deposits (shown in figure 02). These banks are inventing innovative products and ideas in the banking industry. Local banks are learning from these banks and in some cases duplicating their products.
Figure 02 Source: Scheduled Bank Statistics, Bangladesh Bank
 
 
Some of the banks, including local and foreign, are playing their role in the socio-economic development of the country.
 

PART- TWO: About STANDARD CHARTERED BANK

History of Standard Chartered Bank

 
The Standard Chartered name came to life with the friendly merger of the two original banks- the Chartered Bank of India, Australia and China, and the Standard Bank of British South Africa. The Chartered Bank was founded by James Wilson following the grant of a royal charter by Queen Victoria in 1853, while the Standard Bank was founded in the Cape Province of South Africa in 1862 by John Paterson; Chartered opened its first branches in Bombay, Calcutta and Shanghai in 1858, followed by Hong Kong and Singapore in 1859. With the opening of the Suez canal in 1869 and the extension of the telegraph to China in 1871, Chartered was well placed to expand and develop its business. Traditional business was in cotton from Bombay, indigo and tea from Calcutta, rice in Burma, sugar from java, tobacco from Sumatra, hemp in Manila and silk from Yokohama.
 
In South Africa, Standard, having established a considerable number of branches was prominent in financing the development of the diamond fields of Kimberley from 1867 and extended its network to Johannesburg when gold was discovered there in 1885. It is reported that half the output of the second largest gold field in the world passed through the then Standard Bank.
 
Both banks- at that time still quite separate companies-survived the First World War and the depression, but were directly affected by the wider conflict of the Second World War in terms of loss of business and closure of branches. Following the war, each however, acquired other small banks along the way and spread their networks further. In 1969, the decision was made by Chartered and by standard to undergo a friendly merger. Further expansion also took place in Standard Chartered’s traditional markets in Asia and Africa.
 
In 1993, Sir Patrick Gillam the then chairman of the group, made it clear that standard chartered would grow and develop its strong franchises in Asia, the Middle East, and Africa using its operations in the United Kingdom and North America to provide customers with a bridge between these markets. Secondly, it would focus on consumer, corporate and institutional banking, and on the provision of treasury services- areas in which the group had particular strength and expertise.
 
In august 2000, the acquisition of Grindlays bank was completed. This made standard chartered the leading international bank in Bangladesh and other countries of South Asia, strengthened the group’s competitive position in the Middle East.
 
Now in 2006, Standard Chartered has emerged as one of the leading banks of the world. The activities of the bank are spread world wide.
 

2.2 Standard Chartered Bank in Bangladesh

 
Standard chartered bank started its operation in Bangladesh 1948. The first branch was opened in the port city of Chittagong and the branch was opened mainly to facilitate the post-war reestablishment and expansion of South and Southeast Asia. Including the Grindlays experience the bank’s presence in this country dates back to 1905. It is the oldest bank in Bangladesh and the only bank that never closed its doors in its 100 years of banking operation in this country. While all foreign banks had suspended their operations after the liberation war of Bangladesh, standard chartered (Grindlays operations) remained open and became the first international bank to extend credit lines to the new country in 1972. Standard chartered (Grindlays operation) is also the first bank to open the first external letter of credit (LC) in Bangladesh in early 1972. Moreover, the bank had assisted the Bangladesh bank with re-construction of the records that were destroyed during the liberation war and with setting up of the exchange rate mechanism.
 
Today standard chartered bank is the largest international bank in Bangladesh with 25 offices and 35 ATM’s spread over 6 cities- Dhaka, Chittagong, Khulna, Sylhet, Bogra and Narayangonj. The acquisitions of Grindlays bank in 2000 and the commercial banking business of American Express Bank in Bangladesh in 2005 are reflections of the bank’s increasing commitment to Bangladesh. Standard Chartered bank is also continuing its investments for ensuring world-class services along with an array of international products for its clients.
 

2.3 Ethics of Standard Chartered Bank

 
Standard Chartered reputation is critical to being the world’s leading emerging markets bank. The preservation and enhancement of that reputation depends upon its businesses operating to the highest standards of ethical conduct.
 
The Bank face a particular challenge to uphold consistent standards of conduct while at the same time respecting the culture and varying business customs of all the countries in which it operates.
The principles that govern the behavior of its business and employees are reflected in a Group Code of Conduct. The Group Code of Conduct is a practical working document which guides employees through the many difficult conduct issues which confront them on a daily basis. Complying with each element of the Code will not always be easy but the employees recognize that they will be judged not just by what is set out in the Code but on how this is reflected in their day to day activities and the behavior.

Standard Chartered Bangladesh

 
Strategic Intent:            The world’s best international bank
Leading the way in Asia, Africa and the Middle East
 
Brand Promise:            The Right Partner
 
Values:                                    Responsive
Trustworthy
Creative
International
Courageous
 
Approach                     Participation
Focusing on attractive, growing markets where we can leverage our customer relationships and expertise
 
Competitive positioning
Combining global capability, deep local knowledge and creativity to outperform our competitors
 
Management discipline
Balancing the pursuit of growth with firm control of costs and risks
Commitment to
Stakeholders, Customers
Passionate about our customers’ success, delighting them with the quality of our service
 
Our people
Helping our people to grow, enabling individuals to make a difference and teams to win.
 
Communities
Trusted and caring, dedicated to making a difference.
 
Investors
A distinctive investment delivering outstanding performance and superior returns
 
Regulators
Exemplary governance and ethics wherever we are
 

Growth of Standard Chartered Bank Bangladesh

 
Standard Chartered is celebrating its 100 years of operation (including Grindlays operation) in Bangladesh. In the last hundred years the bank has undergone a lot of change s. The ultimate goal of these changes was the overall growth of the bank. In 1993, there was an organizational re-structuring, which led to a substantial expansion of the Bank’s business. It increasingly invested in people; technology and premises as its business grew in relation to the country’s economy. Since then its performance is showing a rising trend in Bangladesh as well as all over the globe. The change in strategy, performance and growth, adapted by Standard Chartered is clearly evident in the following comparison between its performances in 1995 to that in 2004.
 

Year 1995		Year 2004
-Lack of revenue momentum -Over layered organization -Weak risk control environment -Basic product offering- vanilla product -High cost structure		-Revenue driven target/goal -Revenue diversification & sustainability -Strong risk management culture in place -Higher value-added , customized product -Cost efficiency

 
 
 
All the foreign banks combined hold 9% in deposits as compared to 29% by private commercial banks and 62% by nationalized commercial banks. The comparative performance (holding market share) of Standard Chartered in terms of deposit and advance are presented separately in the following figures:
 
 
Figure: 03                                                         Figure: 05
(Source: Scheduled Bank Statistics, Bangladesh Bank)
 
From the above figure we see that of the 9% held by foreign banks in total deposits, SCB alone commands 60% of the deposits. In terms of advances made, Standard Chartered Bank holds the leading position among the foreign banks with a market share of approximately 46%.
 
2.5 Standard Chartered Bangladesh:  Performance analysis
 
Financial ratios are the indicators of the performance of an organization. To evaluate the performance of Standard Chartered Bangladesh in 2004 and 2003, some financial ratios are calculated and evaluated below:
 

Ratios	Ratio type	2004	2003
ROI	Profitability ratio	39.27%	42.63%
ROA	Profitability ratio	4.00%	3.48%
Net Profit Margin	Profitability ratio	45.52%	40.01%
Advances/ Deposits ratio (%)	Risk ratio	77.68%	86.30%

Table 01: Financial ratios of SCB
 
From the table 01 above we get three profitability ratios and a risk ratio. Except ROI (Return On Investment) all other three ratios are showing better performance of SCB than its preceding year. ROA (Return on Asset) which represents the earnings after tax over the bank’s asset and net profit margin are reflecting satisfactory performance of Standard Chartered Bank. ROI has decreased slightly in 2004 but is still showing very satisfactory performance of the bank. From advances/ deposits ratio, we see that risk of the bank has decreased than its previous year.

2.6 Activities of Standard Chartered Bank

 
Activities of Standard Chartered Bank includes the followings:
 

2.6.1Corporate Banking Group

 
Standard Chartered Bank offers it local customer’s wide variety of financial services. All the accounts of corporate clients, which mainly comprise the top local and multinational companies operating in Bangladesh, are assigned to Relationship managers who maintain regular and close contact to cater top their needs.
 
The objective of this department is to maintain a thorough knowledge of the clients’ business and to develop positive relations with them. This is maintained through interactions to offer timely advice in a n increasingly competitive business environment. The expertise of the Institutional Banking and Treasury groups is also available whenever required. The unique Offshore Banking Unit (OBU) in Savar provides a full range of facilities to overseas investors. The Corporate Banking Group in Bangladesh has displayed a spirit of community involvement by working with NGOs to underwrite soft loans. Standard Chartered offers its corporate customers a wide variety of lending needs that are catered with skilled and responsive attention. They provide project finance and investment consultancy, syndicated loans, bonds and guarantees and local and international treasury products.
 

2.6.2 Trade finance

 
The trade finance of standard Chartered bank takes care of the commercial activity related issues, particularly those related to import and export finance services. Some of the services are:

• Trade finance facilities including counseling, confirming export L/C and issuing of import L/Cs, backed by its international branch and correspondent loan network.
• Bond and Guarantees
• Project finance opportunities for import substitution and export oriented projects

 

2.6.3 Treasury

 
The foreign exchange and money market operation of the Standard Chartered Bank in the world is extensive. Exotic currencies happen to be one of its special areas of strength. A 24-hr service is provided to customers in Bangladesh through the Bank’s network of dealing centers placed in the principal areas of the world. The Bank’s treasury specializes in offering solutions to those who wish to manage  interest rate and currency exposure s that result from trade, investment and financing activities of other dynamic economies of the region.
 

2.6.4 Institutional Banking Group

 
The IBG of Standard Chartered Bank offers a wide variety of products and services to banks and financial institutions. It has global links with leading bank institutions and agency arrangements through its network of offices in 40 countries. The Bank offers a full range of clearing, payment collection and import-export handling services. The bank offers foreign missions, voluntary organizations, consultants, airlines, shipping lines and their personnel, the following services: Current accounts in both Taka and other major foreign currencies and Convertible Taka accounts.
 

2.6.5 Consumer Banking

 
Superior retail banking services comprising of a wide range of deposit and loan products are offered by Standard Chartered Bank to its individual customers. The consumer banking division constantly faces
 
challenges and meets them by developing new products and services to fulfill the specific requirements of local TU. The Bank offers a 24-hour service in Bangladesh through its Money-link ATM Network and Phone-link Phone banking Services.
 

 Custodial services: The Equitor

 

Headquartered in Singapore, Standard Chartered equitor fulfils the groups’ strategic commitment to the provision of custodial service in Asia. The equitor’s customers are primarily foreign global custodians and broker/dealers requiring cross-border information as well as sub-custodian services. Standard Chartered Bank, Bangladesh is responsible for the planning in Bangladesh, but the overall management of the custody business is based in Equitor’s international business strategy.

 

Support services

Operations

Operations are the part of the support division that helps to run the businesses of the bank in a smooth and controlled manner.  Since it helps mainly in processing the works of the business units, any mistakes made can be easily detected and on time.  Following are the main functions of the operations department:
Central operations deals with the closing and opening of accounts and other payment and account related processing of the Personal Banking division. Treasury operations help to deal with the processing works of the treasury division. Loan Administration Unit (LAU) deals with the processing of the Corporate Banking division.
 
Finance, Administration and Risk Management
 
The support department performs the following activities:
±  Administration, audit and back office operation
±  Taking care of taxation and financial control of the Bank
±  Keeping track of overall credit operation
 
Information Technology Center
 
This department is instrumental in the running of all the computerized operations of the bank.  They help in the implementation and generation of computerized reports.  Another duty of the department is to maintain communication with the rest of the world.

Human Resource Department

 
This department manages recruitment, training and career progression plan.  Standard Chartered Bank highlights the importance of developing its people to create a culture of customer service, innovation, teamwork and professional excellence.
 

Legal and compliance

In the UK, Standard Chartered Bank is regulated by the Bank of England, while in Bangladesh local banking laws regulate it and rules set by the Ministry of Finance and Bangladesh Bank. The local restriction involves a licensee from Bangladesh Bank to operate banking business in Bangladesh.  Standard Chartered Bank complies by the rules and regulations seriously.  It also encourages its staff to conform to an internal culture of ethical behavior and sensitivities to the culture and religion of the country.  There is a mandatory training on Company Code of Conduct for all staff members.

Some of the key areas that the Legal & Compliance department has to take care of are: any kind of legal issues, to advise the CEO regarding all matters and the management on legal and regulatory issues, correspond regulatory compliance issues to MESA Regional Head of Compliance, and supervise internal control (e.g. internal audit).
 

External Affairs

 
This department deals with advertising, public relations, promotions, partial marketing which involves disseminating new products and services to customers and above all ensuring service quality.
 
Credit

The credit department approves the loans of Corporate Banking division.  The approval is mainly based on the risk analysis of the corporate clients done by the Corporate Banking division.

 

2.7 SWOT Analysis of Standard Chartered Bank

 

The SWOT analysis comprises of the organization’s internal strength and weaknesses and external opportunities and threats. SWOT analysis gives an organization an insight of what they can do in future and how they can compete with their existing competitors.

Strengths:
q  For more than 55 years in Bangladesh, SCB is known to bear the Banking Experience that provides it the strength of being the market leader in the foreign banking sector. Unlike any other multinational bank in Bangladesh, the long-term success of SCB is attributed to this strength of SCB whereas the long-term success of a bank heavily depends on its reputation while dealing with very sensitive commodity like money.
 
q  The first bank in Bangladesh to issue Money link (ATM) card is SCB. By grabbing the opportunity that exists in the market SCB, as the market leader, showed the most substantial corporate strength among the foreign banks.
 
q  SCB has a bulk of qualified, experienced and dedicated human resources.
 
q  SCB is the only one among the foreign banks that has been able to utilize its extensive marketing efforts in order to capture a wide customer base at a very short time.
 
q  SCB’s dedication is supreme in providing the best phone banking services in town. It is also keen to provide unmatched and instant 24 hour banking service and has recently opened the Call Centre at Lotus Kamal Tower in Nikunjo, Dhaka.
 
q  In order to exude innovativeness and creativeness, SCB tries its best to come up with customers’ banking problems and solve them. Another recent step taken by them is starting the Evening Banking service, which will be open from 6 pm to 8 pm in the evening. The customer, who has to keep his transactions stopped for 18 hours until the next banking hour arrives, will be benefited, as this will reduce the lag and hassle associated with it.
 
Weaknesses:
 
q  Banks, who are offering better prospects, now enjoys customers switching to them as SCB offers low deposit rates and has set the minimum balances too high. Furthermore, long waiting cues, moderate customer service, non-functioning ATM machines and outrageously high charges lead to SCB being noted for these weaknesses as well. As a result, a large amount of customers have ceased transactions with the bank. Many customers’ accounts have become overdrawn due to fees that have been charged by the bank’s computer system for as long as three years because they have either simply not cared to close their accounts, or thought that they have been closed automatically.
 
q  The banking industry is now experiencing the contractual employment fever that has started up and SCB has also fallen prey to it. Self-interest of the employees are actually hindering their performance because SCB is employing individuals from other agencies and giving them tough targets to reach and thereby not giving them the full benefits of a permanent employee. For example, many accounts are opened by Direct Sales Executives by luring customers with loans, which they ultimately do not receive, and also opening accounts for customers who can hardly maintain the account and do not even pay the minimum opening amount. Even though SCB is getting benefited in the short run, the implications are long run losses.
 
q  During the last 10 years the banking industry has become considerably monopolistic and hence SCB is starting to lose its market share to its rivals due to low barriers to entry, and the local banks’ increasing aggressiveness
 
 
q  SCB is also facing problem in its system of collection and disbursement of cash. Many customers do not bear the proper knowledge as to the process of depositing and withdrawing money. The bank does not take many steps to assist them either. The system of withdrawal and deposit may be new and different from the system the customers have come across at local bank. Many of
 
q  these customers or people they send to the bank on their behalf, are not educated and hence they face difficulty in the system of deposit or withdrawal. For instance, since the system of deposit is not that vivid, customer often drop the counterfoil of the deposit slip with the main copy into the slip box. Consequently, in many such cases it happened that a smart clerk picked up both the papers and took the money. Then there were no documents left for the bank or the customer to prove that he/she deposited the money.
 
q  Because the way SCB makes charges to accounts cannot be properly explained, many customers believe and complain about the unethical banking of SCB.
 
q  While dealing with its customers- especially in Consumer Banking, SCB emphasizes more on short-term profits than focusing on the maintenance of a long-term healthy relationship with them. This suffering of SCB from myopia- i.e. shortsightedness leads it to pursue strategies in such a myopic manner, and so in the long run, it may undergo severe losses. Another weakness of the bank that can be sighted as well is Poor coordination and communication between the head office and branches. As the head office undertakes many projects, the activities are hampered due to some activities of the branches. Even after the head office’s carefully thought out action plan for a project, they still face problems in executing because the branches are not well aware of such a project and therefore, their actions do not comply with what is required for the ultimate success of the project.
 
Opportunities:
 
q  Standard Chartered Bank was approved of the permission to start Islamic Banking from The Government of Bangladesh. The bank now has a whole new prospect opening up and also the opportunity to introduce a wide array of Islamic Banking products. It also has the prospect of expanding its customer base. The country’s growing population is gradually and increasingly learning to adapt to and use the banking service. As the bulk of our population is middle class, and Muslim, different types of Islamic Banking products will have a very large and easily pregnable market.
 
 
q  SCB has rigorous credit screening policy and it is over conservative. By freeing their credit screening policy a little, they may be able to pursue many opportunist business ventures. SCB also has a good consumer base that maintains several accounts at once. SCB has the opportunity to keep these customers by reducing its current fees and charges and positioning attractively in middle class segment.
 
q  More Branches around Dhaka specially and all over Bangladesh will enable SCB to capture more market share, and hold a stronger competition against local banks.
 
q  By offering more attractive interest rates, and lowering the minimum balances eligible for interest, the bank can attract a lot of the old customers who have strewn away to other banks as well as new customers.
 
 
Threats:
q  Increased competition by other foreign banks is a threat to SCB. At present HSBC and CITI Corp are posing significant threats to SCB regarding retail and business banking respectively. Furthermore, the new comers in private sector such as Prime Bank, Dutch Bangla Bank, EXIM Bank, BRAC Bank, Southeast Bank, Mercantile Bank, Social Investment Bank, Islami Bank and Bank Asia are also coming up with very competitive products. With customers shifting to these banks, SCB’s profits, as well as market share is falling, and it faces the threat of being wiped out by competition.
 
q  In today’s economy, substantial amount of savings is remaining idle. Currently foreign direct investment in the country is very low. These economic situations of the country indicate political threats.

PART- THREE:Islamic Banking in Standard Chartered Bangladesh-ins & outs

 

Introduction

 
The Islamic financial services industry, comprising Islamic banking, Islamic insurance (takaful) and the Islamic capital market, is an area that has grown to become an increasingly substantial segment within the global financial market and has gained considerable interest as a viable and efficient alternative model of financial intermediation. Growing awareness of demand for investing in accordance with Shariah principles on a global scale have been the catalyst towards making the Islamic services industry s flourishing industry. This is also a reflection of the increasing wealth and capacity of investors, both Muslim and non-Muslim, to seek and invest in new investment products that serve their needs.
 
Islamic banks today represent the majority of Islamic financial institutions, which are spread worldwide. The emergence of Islamic banking was a result of a revival of interest to develop an Islamic economic system as well as the increasing demand from Muslims worldwide for products and modes of investment that are in compliance with Shariah principles. The pioneering establishment of Islamic banks had been the catalyst for growth and provided the foundation for the development of the Islamic financial services industry as a whole.
 

3.2 Islamic Banking: Characteristics

 
Islamic banks are characterized by the following features:

• Transactions those are free from the payment and receipt of a fixed or predetermined rate of interest.
• Transactions those are based on profit and loss sharing (PLS) arrangements where the rate of return is not fixed prior to the undertaking of the transactions.
• Business activities and investments those are undertaken on the basis of permissible activities.
• Transactions those are free from elements of unreasonable uncertainty.
• Payments of Zakat (alms or taxes) by the Bank.
• Transactions that operate through shariah-compliant modes of financing.
• Establishment of shariah supervisory boards. These boards are responsible for reviewing, scrutinizing and endorsing the activities and operations of Islamic banks to ensure that their activities are in line with Shariah principles.

 

3.3 Overview of the evolution of Islamic banking

 
Islamic finance has a long history and, in fact some of the concepts and instruments commonly used today such as mudharabah and musharaka can be traced back to pre Islamic days. After the establishment of Islam in the Middle East, Islamic principles were applied to trade financing practices then and were further formalized and institutionalized. Most of the early formal structures were developed in relation to state-based financing to aid and support business activities.
The increasing European influence during the period of colonialism resulted in the adoption of European-style financial institutions and products by most of the Islamic countries. However, by the 1960s, Islamic countries began to re-examine their financial services industry and establish financial system compatible with shariah principles. This eventually laid the ground for modern Islamic banking.
The creation of modern Islamic financial institutions began with the establishment of Islamic banks. Its rapid growth was, to a large extent, aided by a period of prosperity for the Arab world, which benefited from rising oil prices. The huge amounts of wealth in the region provided a source of substantial liquidity for the nascent Islamic banks. As a result of its early head-start, Islamic banking is today the most developed component in the Islamic financial system and Islamic banks represents the bulk of Islamic financial institution worldwide.
 
Early experimentation with Islamic banking took the form of a savings bank that operated on a profit sharing basis in the Egyptian town of Mit Ghamr in 1963. This bank functioned more as a saving institution rather than as a commercial bank. The first recognized interest-free commercial bank was Nasser Social Bank. It was established in Cairo in 1971 with the objective of developing a social security system in Egypt.
 
The next milestone was the founding of the Islamic Development Bank (IDB) in 1975 under the auspices of the Organization of the Islamic Conference (OIC). The main functions of the IDB was to provide assistance- in the form of equity capital and loans for Shariah-compliant projects-for the economic development and social progress of member countries as well as to promote Islamic banking worldwide.
 
The establishment of IDB was a catalyst for the establishment of Islamic banks in other Muslim countries. The Dubai Islamic bank was incorporated immediately after the establishment of IDB in 1975. Various approaches were used towards establishing an Islamic banking system by different countries. Some
 
 
countries such as Iran and Sudan converted their entire financial systems to become an interest-free system. By contrast, in majority of countries, the Islamic banking system developed in parallel with the conventional banking system. Malaysia, Egypt and Saudi Arabia have dedicated Islamic banks, as well as conventional banks that offer banking services based on shariah principles. The Islamic units of conventional banks are commonly known as “Islamic windows”. These Islamic units are required to maintain separate current/ clearing accounts for their Islamic banking operations and, in some jurisdiction; they are required to appoint Shariah advisers to advice on the day-to-day operation of Islamic windows.
 
The strong growth of Islamic financing continues to be driven by increasing demand; not only by those who invest in such instruments in order to meet their religious obligations, but also by others, including non-Muslims, who find some of the risk-return features attractive, or investors who subscribe to ethical investment philosophies. Islamic finance is becoming a prominent segment of the global financial market with the most active global financial centers for Islamic financial activities located in London and New York. Many of the global financial players such as Citigroup, HSBC and Standard Chartered, among others, have recognized the potential market demand for these products and have built their capacity and capabilities to originate, distribute and make markets in Islamic financial products.
 

Figure 06: Geographical spread of countries that offer Islamic Banking Products
 
Islamic Banking industry all over the world
(At a glance)
 

Table: 02
Source:  Report of the Islamic Capital Market Task Force Of the
International Organization of Securities Commissions,
July 2004
 

3.4 Islamic Banking

In Standard Chartered Bank Bangladesh
 
In recent days Islamic banking has emerged a prominent and potential segment of the global financial banking industry. As a moderate Muslim country, Bangladesh has become a potential market for Islamic banking. For this reason, most of the conventional banks of the country are launching Islamic banking services in their product line. Standard Chartered, the leading multinational bank of the world, has also utilized this opportunity. With the objective to grow market share and to cater the Islamic minded customers’ shariah based Islamic banking was launched at Standard Chartered Bangladesh in December 2004.
 

3.4.1 Islamic Banking Products of Standard Chartered Bangladesh

 
Currently SCB is offering three Islamic banking products comprising two financing facilities and one deposit product.
 
Financing facilities are
(a)                Islamic personal finance
(b)               Islamic auto finance
The single deposit product is
(a)                Islamic current account
 
 
Islamic personal finance (IPF)
 
Islamic personal finance is a clean financing facility offered to individuals for some given purposes and is to be repaid by equated monthly installments. The formal launch of Islamic Personal Finance took place in December 2004. In the first year of operation of Islamic Banking Centre, IPF became its core area of business.
 
 
Areas of financing

• Purchase of miscellaneous household appliances
• Purchase of personal computers
• Purchase of refrigerator
• Purchase of audio-video equipment
• Purchase of furniture
• Hospitalization or other emergency medical needs
• House renovation
• Purchase of office equipment / accessories
• Office renovation
• Marriages in family
• Advance rent payment
• Overseas trips

 
Murabaha financing facility
Standard chartered provides Islamic Personal Finance under Murabaha financing facility.
 
Murabaha facility: Meaning
 
It is one of the most widely used instruments for short-term financing based on the traditional notion of purchase finance. In this sale, the buyer (client) knows the price at which the seller obtains the object to be financed, agrees to pay a premium over the initial price. It is an agreement that refers to the sale and purchase transaction for the financing of an asset or project, whereby the cost and profit margin (mark-up) are made known and agreed to by all parties involved.
As practiced in the market for Murabahah arrangements, the financier undertakes to buy the asset required by the client for resale to the client at a higher price as agreed upon by both parties and this can be settled in cash or in installments as specified in the agreement.
 
To Standard Chartered –
 
Murabaha facility means the financing facility provided herein through the purchase of the asset by the bank from the seller at the cost price and the subsequent sale of the asset by the bank to the customer for the sale price, with payment on the payment dates.
 
Murabaha agreement
 
The asset financing agreement containing the terms and conditions of asset financing on Murabahah basis made by and between Standard Chartered Bank and the customer. This agreement will serve as the basis for settlement of future disputes between the Bank and the customer.
 
 
The terms and conditions of Murabaha agreement
 
Conditions precedent:
 

1. Subject to the terms and conditions contained into the agreement, the bank shall purchase the asset from the seller on the basis of immediate delivery and upon immediate payment terms. Subsequently, the Bank shall sell the asset to the customer at the sale price and otherwise in accordance with the terms of the agreement and in the event that any asset warranty has been issued in respect of the asset the bank shall transfer such asset warranty to the customer.
2. Purchase of the asset by the bank shall only be subject to the condition that customer has duly filled up the application form with accurate information and there being no material adverse event or situation occurring prior to the disbursement of the cost price to the seller and subject to the creation of the security and completion of all security formalities prescribed by the bank as stipulated in clauses below, including the completion/ execution of the following documents:
   • A letter of hypothecation of asset in favor of the bank evidencing or creating first priority charge over the asset.
   • Power of attorney in favor of the bank.
   • Irrevocable standing instructions and/ or post dated cheques.
   • Such other documents as the bank may require from time to time.
3. In the event that any of the above are not received by the bank within 45 days of the date of payment of the cost price, the request for a Murabaha facility shall be deemed to have lapsed, unless otherwise stated by the bank in writing, and the customer shall be liable for all expense borne by the bank in relation to the same and the agree to indemnify the bank against all loss cost and damages.

 
 
Customer’s representation and warranties
 
The customer hereby represents and warrants as follows:
 

• Promptly pay all monthly installments of the sale price on the payment dates until the entire sale price has been paid including any charges and other expenses payable under the agreement.
• That information provided to the bank by the customer in the application and other documents are accurate and the customer has fully understood the terms and conditions mentioned in the application form and agree that the said terms and conditions are part of this Murabahah agreement.
• That there are no material legal or administrative proceedings pending or threatened against the customer; and
• Immediately advise the bank of any change in the customer’s address.
• The sums owing from the customer to the bank shall be such as may be certified by a duly authorized officer of the bank and the customer agrees to accept the same as conclusive.
• The customer will pay all taxes, duties, penalties, expenses or charges in respect of the Sale Price, insurance payments or in respect of the Murabahaha facility granted under this agreement or arising from the sale of the asset. In case the bank pays such an amount the customer will pay the same to the bank within 3 days of demand or in case of failure to do so the bank is authorized to debit any account of the customer with the bank at its discretion( without being obliged to do so ).
• The customer will not create any charge,
• Lien or encumbrance whatsoever over the asset except in favor of the bank without express written consent of the bank.

 
Delivery of asset
 
Upon signing this agreement the customer shall irrevocably undertake to provide the bank with the following documents:

• The registration certificate of the asset indicating (1) the customer as owner of the asset and (2) the interest of the bank in the asset pursuant to the letter of hypothecation.
• Acknowledge of asset receipt signed by the customer; and
• If required by the bank, a comprehensive original insurance policy in relation to the asset, specified herein below showing the bank’s interest as first loss payee and beneficiary of all proceeds of the policy.

 
The customer further undertakes after the purchase of the asset from the bank the following:
 

• To keep the asset in sound and usable condition and repair and in full working order and to advise the bank within seven days of any accident resulting in the total loss of the asset;
• To keep the ownership of the asset in the customer’s name and not to transfer ( or attempt to transfer) the ownership of the asset or any of the customer’s right in respect of the asset without the written approval of the bank; and
• Not to take the asset outside the geographical limits of Bangladesh without the written consent of the bank.

 
Upon fulfillment of the conditions, the customer shall take delivery of the asset and shall be entitled to utilize the asset in any manner the customer wishes, provided that such utilization is lawful and proper and not contrary to the terms of the agreement. In the event that the customer does not fulfill the conditions, the bank will not be obliged to fulfill its obligations under the agreement.
 
The asset will be the sole responsibility of the customer as from the moment the customer takes delivery of the same from the bank.
 
The customer may not sell the asset or transfer the ownership of the same before payment to the bank in full of the sale price and all charges and costs payable by the customer under the agreement.
 
Additional security
 

• Give irrevocable standing instructions authorizing the bank to deduct from the account(s) of the customer the Sale price and in case of the death of the customer to deduct the entire sale price and any other amount payable to the bank in terms of this agreement ( irrevocable standing instruction), and or:
• At the request of the bank, the customer shall issue post dated cheques in favor of the Bank for the amounts corresponding to the sale price drawn in favor of the bank (post dated cheques). The bank may encash the post dated cheques at any time on or after the date specified on the relevant post dated Cheques with respect to the payment of the installments of sale price or any other amount due under this agreement.
• The customer hereby irrevocably authorizes the bank to debit any of the customer’s accounts withheld with the bank or any other financial institution within the Standard Chartered Group all amounts owing under this agreement, provided that the customer shall remain liable to the bank until all of the customer’s obligation under the agreement have been fully discharged.

 
Prepayment
 

• In the case of a prepayment the bank may (at its absolute discretion) choose to give a rebate on the Murabahaha price in accordance with the bank’s financing policies in force at the relevant date.
• The customer is allowed to make prepayment of the full sale price to the bank only after six months of the Murabahaha facility.

 
 
Bank not liable for asset’s condition
 

• The customer accepts that the asset is sold by the bank to the customer on “as is” basis and accordingly hereby waives any and all rights the customer might otherwise have under any applicable law to claim against the bank in respect of any apparent or latent defects in the asset [or on any other grounds whatsoever] in relation to the asset or its purchase in accordance with the terms of the agreement.
• The customer acknowledges that the Bank is not the manufacturer of supplier of the asset and that the Asset has been selected by the Customer independently and without any reliance on the judgment of the Bank. The Bank shall not be deemed to give any warranty or representation whatsoever (including, without limitation, conditions, warranties or representations as to the description, suitability, merchantability, fitness for purpose, value, condition, design or operation of any kind or nature of the asset) whether arising by implication, by law or statute or otherwise and without prejudice to the generality of the foregoing any such warranty or representation is hereby expressly excluded.
• The Bank shall, to the extent possible upon the sale of the Asset to the Customer be deemed to assign to the customer all rights in relation thereto or otherwise arising out to the purchase of the asset by the bank, which have vested in the bank. The bank shall have no liability to the customer whatsoever in the event that any warranties or contractual rights relating to the asset are not fully and effectually transferred from the bank to the purchaser.
• The bank will not be liable under law or otherwise in respect of the asset purchased on behalf of the customer or sold under and in terms of this agreement, with regard to condition, existence, quality, defects in title, subsisting encumbrances, delivery or non-delivery, value or otherwise fitness for use of the asset and the bank will be relying on the representation of the customer / seller as to the same.
• It is hereby specifically agreed that the bank shall have no obligation of any kind with respect to warehousing, servicing, of maintains the asset. The bank disclaims any liability for the condition, fitness, or quality of the asset and makes no warranty express of implied, with respect to such asset or the title thereto the customer hereby agrees to hold the bank harmless against all losses, expenses, damages, claims, suits, or other liabilities of any kind whatsoever arising from of in connection with the Asset or this agreement or sale of asset to the customer or obtaining repossession of the Asset or the documents relation to the asset including but not limited to any stamp withholding or other tax to be paid in connection herewith or with respect to the state price of the asset.

 
Default:
 
The bank may declare all amounts outstanding hereunder, or outstanding in connection herewith, as immediately due and payable by the customer if any of the following events occurs:

• The customer fails to perform or observe any of the terms of this agreement; or
• The customer fails to make payment of the outstanding on demand of the bank; or
• The representation and warranties made by the customer becomes untrue; or
• The customer fails to make payments of any sums due to the bank under the agreement on payment date after the bank has sent a notice to the customer stating that the customer is in default; or
• The customer becomes a defaulter either as a borrower or surety under any other agreement either with the bank or any subsidiary, affiliate, associate or other company, bank or financial institution belonging to the Standard Chartered Group on any account whatsoever or with any other financial institution or bank in Bangladesh.
• The customer provides incomplete or materially inaccurate or misleading information in connection with the agreement.
• If the police or any authority of the Government seize the asset for any reason whatsoever; or
• If the customer transfers or attempts to transfer the asset to any person without written consent of the bank; or
• Any proceeding for bankruptcy, liquidation and/ or attachment is instituted against the customer; or
• Any person and/or government authority attaches or attempts or threatens to attach the asset in implementation of a court order issued against the customer or in an attempt to recover debts from the customer; or
• If the customer is imprisoned, dies and/or becomes unable, in the opinion of the bank, to perform the customer’s obligations under this agreement.

Remedies
 
In the event of the occurrence of an event of default;

• The customer shall deliver the asset in sound condition and in full working order to the Bank at the address specified in the agreement  or to such other place, as the bank shall notify to the customer, provided, however, that if no such delivery takes place, the bank shall in any event be entitled to take possession of the asset wherever  located;
• The customer shall pay to the bank in full all sums outstanding under the agreement; and
• The Bank shall have the absolute right to repossess and sell the asset and set off the sale proceeds against all sums due from customer under the agreement.

 
Waiver
 
The obligations of the customer here under shall not be affected by any act, omission or circumstance which might operate to release the customer from the customer’s obligations hereunder or affect such obligations in any way, and in particular the customer obligations shall not be affected by:
 

• Any time or indulgence granted or composition made with any other person; or
• The variation, extension, compromise or renewal of, or release from any term or condition of the agreement; or
• The refusal or failure to perfect or enforce any term of the agreement or any rights or remedies against the customer or any other person.

Assignment

• The customer may not assign or transfer all or part of its obligations under the agreement without the bank’s prior consent.
• The bank may at any time assign or transfer all or any of its rights, benefits and obligations under the agreement. The bank agrees that any assignment of its rights, benefits and obligations will be conducted in accordance with guidelines established by the bank and approval by Shariah Supervisory Committee of the Bank.

 
Indemnity
 
Without prejudice to any other rights and remedies which the Bank may posses, the customer will be liable for and will indemnify the bank against any and all of the following events that may occur after the customer’s purchase of the asset from the bank:

• Any loss or damage to the asset.
• All loss, damage or expense incurred or sustained by the Bank in the repossession of the asset, including but not limited to administrative fees and/ or storage costs and any other legal costs incurred by the bank in the enforcement of the terms of the agreement.
• All costs and expenses incurred or sustained by the bank in the repossession of the asset, including but not limited to administrative fees (in relation to returned cheques or otherwise) and/ or storage costs and any other legal costs incurred by the bank in the enforcement of the terms of the agreement.
• In any legal action or proceedings between the bank and the customer arising out of or in connection with this agreement, no party shall claim or plead any entitlement to interest on any judgment debt except and compensation for delayed payments that may be payable under the law relating to the recovery of finances by the Bank.

 
 
Islamic Auto Finance (IAF)
 
The Standard chartered Islamic auto finance offers a flexible and affordable auto finance facility with easy repayment options and freedom to choose repayment period-from 1 to 5 years depending on vehicle type. Customers can have a maximum finance amount of 75% of the car value with a maximum finance of BDT 4000000. There is no requirement to provide personal guarantee or cash security to qualify for Islamic auto finance.
 
Criteria for applying Islamic Auto Finance:
 

• A Bangladeshi citizen.
• Between 23 to 60 years of age.
• A salaried or self-employed person earning a minimum of BDT 25000 per month.
• Maintaining a savings or current account with standard chartered Bank for at least six months or with another bank in Bangladesh for at least a year.
• A resident of Dhaka, Chittagong or Sylhet.

 
 

Musharaka Financing Facility
 
At standard chartered Islamic Auto Finance is provided under diminishing Musharaka financing mode.
 
Diminishing Musharaka: Meaning
 
Diminishing Musharaka is a newly developed financial contract under which both the financial institution and the client share the ownership of the financed asset. The periodic payment of the client contains two parts; a rental payment for the part of the property owned by the Islamic financial institution and a buy-out part of that ownership. Over time, the portion of the asset owned by the client increases, until he owns the entire asset and the contract is eventually terminated.
 
Diminishing Musharaka Agreement
 
This agreement sets out the term and conditions upon and subject to which the bank has agreed to participate in the property on the basis of a diminishing musharaka financing arrangement with the customer.
 
 
Terms and conditions of the agreement
 
 
Registrations and Title of the property
 

• The property shall be registered jointly in the name of the customer and the Bank under the laws pertaining to registration of such properties. The customer however acknowledges that title, beneficial ownership and right of property in and to the property shall at all times remain vested in the bank and the customer in proportion to their respective shares in the participation amount. The customer covenants and agrees not to do or perform any act prejudicial thereto, and without limiting the generality of the foregoing, not to do any act to encumber, convert, pledge, sell, assign, rehire, underlet, sub-lease, lend, abandon, give-up possession, damage or destroy the property.

 

• Payment of all taxes incidental to transfer and registration of title, if applicable, shall be the sole responsibility of the customer.

 
The payment of any costs, expenses, taxes or other moneys with regard to the property by the customer shall not affect the respective shares of the parties in the property.
 
 
Use of the property
 

• At the request of the customer, the Bank hereby agrees to allow the customer to exclusively use the property for his/her own and his /her family’s transportation subject to the conditions of the agreement.
• The rental values of the property shall be distributed between the parties on a pro rata basis in accordance with their respective share in the participation amount which represents the respective party’s undivided share in the beneficial ownership of the property.

 
Payments and accounts
 

• The customer shall make monthly payments of such amounts and on such dates as may be advised by the bank from time to time.
• All payments to be made by the customer under this agreement shall be made in full, without any set-off or counter claim whatsoever, on the due date and when the due date is not a business day, the next business day.
• If, at any time, the customer is required to make any deduction or withholding in respect of taxes from any payment due to the bank under this agreement, such deduction or withholding will be the sole responsibility of the customer in respect of such payment. The customer shall ensure that the bank receives on due date, a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the customer shall indemnify the bank against any losses or costs incurred by the bank by reason of any failure of the customer to make any such deduction or withholding. The customer shall promptly deliver to the bank original or copies of any receipts, certificates or other proof evidencing the amounts (if any) paid or payable in respect of any deduction or withholding.

 
Security
 
As security for the performance of the customer’s obligation hereunder, the customer shall:

• Create a lien on all his / her title and interest in the property in favor of the bank.
• Execute such further deeds and documents as may from time to time be requested by the bank for the purpose of more fully securing and or perfecting the security created or to be created in favor of the bank;
• Create such other securities to secure the customer’s obligations under the Principal Documents as the bank may require the customer to finish from time to time.

 
Fees and expenses
 

• The customer shall pay to the bank within 15 days of a demand being made, all expenses (including legal and other ancillary expenses) incurred by the bank: (a) in connection with the negotiation, preparation and execution of the principal documents and of amendment or extension of or the granting of any waiver or consent under the principal documents; and (b) in contemplation of, or otherwise in connection with, the enforcement of, or preservation of any rights under the principal documents.

 
 
Covenants for the use of the property
 
The customer hereby agrees and undertakes that:

• The customer shall at all times use and occupy the property carefully and prudently.
• The property shall be used for the normal and usual purpose for a vehicle of the customer and his / her family, and , except with prior permission of the bank, for no other purpose whatsoever;
• The customer shall comply with all relevant laws, rules, regulations, orders and direction, whether of the federal or any provincial government or of any municipal or local authority or of any court, tribunal or other competent authority or officer;
• The customer shall not sell, transfer, assign or otherwise dispose of, or sub-lease, let for hire, give on license, or part with the possession of, or in any way mortgage, hypothecate, pledge, charge or otherwise encumber, the property.

 
 
Maintenance of the property
 

• The customer agrees, at its own cost and expense, to be responsible for the performance of all maintenance and repair required by the property.
• The customer and the Bank agree to assume responsibility for any maintenance (in the proportion of their respective shares in the participation amount held by the parties at that may be required to the property.
• The customer also agrees to be responsible for and forthwith to pay all fees, taxes, fines or  penalties of any nature and by and to whosoever payable and relating to the ownership (to the extent of customer’s share in the beneficial ownership of the property), use and occupation of the property.

 
Insurance, accidents, injuries and indemnification
 

• The customer, on behalf of the bank, shall procure insurance coverage from reputable Islamic insurance companies offering protection under the Islamic concept of takaful. The property shall be comprehensively insured (with a reputable Islamic insurance company to the satisfaction of the Bank) against all insurable risk, which shall include, but not be limited to fire, theft, accidents, vandalism, riots and acts of terrorism. The insurance shall cover both the Bank’s interest in the property, the customer may its own cost procure insurance in the aforesaid manner to protect his / her own interest in the property.
• The customer shall indemnify and save harmless the bank from and against any and all claims, losses, costs, damages, suits, expenses, including but not limited to attorney’s fees, which the bank may sustain or incur as a result of any accident or injury, whether fatal or otherwise suffered by, or any damage or loss occurring to any person or property and however resulting form or traceable or relatable to the occupation, or use of the property by the customer, and his/her employees or agents or to any failure on the part of the customer to observe and perform any of the obligations under this agreement.
• The customer further indemnifies the bank against any loss or actual expenses which the bank shall certify as rightly incurred by as a consequence of: (a) any default in payment by the customer of any sum under this agreement, (b) the occurrence of any event of default, and (c) arising out of any misrepresentation or negligence of the customer.
• All proceeds of insurance related to the property shall be deposited directly to the bank by the relevant insurance company. It shall at all times be the responsibility of the customer to ensure that any and all insurance proceeds are deposited directly to the bank. In case any insurance proceeds are paid to the customer, the customer shall hold the same in trust for the bank and shall deposit such insurance proceeds to the bank within seven calendar days of receiving the same from the insurance company.

 

• In the event the proceeds of the insurance procured on behalf of the bank consist of payment arising out of the total loss of the property, such proceeds shall be utilized firstly towards payment of such installments and secondly the remaining amounts shall be applied by the bank in its direction towards any amounts payable by the customer to the bank.

 
 
Default and termination
 
(1)There shall be an event of default, if in the sole opinion of the bank:

• Any representation or warranty made, or deemed to be made, or repeated by the customer in or pursuant to the principal documents, or in any document delivered pursuant to this agreement is found to be incorrect;
• Any indebtedness of the customer;
• The customer makes an assignment or arrangement for the benefit of its creditors;
• The customer: (a) voluntarily or involuntarily becomes the subject of proceedings under the bankruptcy or insolvency law, or procedure for the relief of financially distressed debtors; (b) has been unable or has admitted in writing its inability to pay his/her debts as they mature to the bank or to any other party or the financial institution; or (c) had a receiver or administrator appointed for all or any part of its assets or business;
• If the property is used in an unlawful or abusive manner;
• If the insurance obtained by the customer in respect of the property is cancelled in whole or in part;
• Any cost, charges and expenses under the principal documents shall remain unpaid for a period of seven days after notice of demand in regarding the same has been received by the customer from the bank.
• If the property is attached or seized by any person by order of the court or any administrative order;
• Customer’s failure to meet any of its obligations under this agreement; and
• Any other event or circumstances arising out of customer’s negligence or default which may result in the customer’s failure to meet its obligations under this agreement.

 
(2) Upon the occurrence of an event of default, the bank shall be entitled (but not obliged) to take over the property by giving a notice in writing to the customer (take over notice).
(3) Upon receipt of a takeover notice, the customer shall hand over vacant and peaceful possession of the property to the bank; the customer shall continue to remain liable to pay the rent to the bank.
 
 
Representations and warranties
 
The customer hereby represents and confirms that:

• The customer has not defaulted in respect of any payment obligation (whether relating to loan, finance or otherwise) or any other type of obligation owed to any bank or financial institution; and
• The customer has not defaulted in payment of any taxes or other dues owed to the government or any local authority.

 
Credit procedure of IPF and IAF
 
The credit procedures embody the core processes and principles for processing, assessing, approving and managing the credit risks associated with the products. The credit procedure of IPF and IAF is described below:
 
Account initiation
 
Target market process
 
Target market:
 
Target market of Islamic Personal Finance has been divided into four distinct segments. Segment 3 and 4 are divided into six and two sub segments respectively. These are:
Segment 01:
 
Employees of listed multinationals and corporate bodies which have corporate and salary a/c relationship with SCB.
Segment 02:
 
Employees of Supra National i.e. UNICEF, ILO, FAO, WB etc.
 
Segment 03:
 

• Category 01: Employees of corporate bodies which have salary a/c with SCB by practice.
• Category 02: employees of corporate bodies which have salary a/c with other bank.
• Category 03: employees of corporate bodies which disburses salary in cash.
• Category 04: Businessmen.
• Category 05: self employed professionals like architects, Engineers, Chartered Accountants and Land Lords.
• Category 06: Self employed doctors whose major income comes from private practice.

 
Segment 04(Working women-Salaried Executives):
 

• Category 01: Employees of corporate bodies which have salary a/c with SCB (if any customer meets segment 1 / 2 criteria she will be treated as Segment 1 / 2 customer; else the application will be treated as segment 04.)
• Category 02: employees of corporate bodies whose salary transferred to other bank or who receives salary in cash.

 
Marketing plan
 
Marketing plan includes methodology for sourcing the customers and the promotional activities to be taken to promote the products.
 
Methodology for sourcing the customer:
 
Segment 01
 
Corporate bodies are identified from a list of large local and multinational corporates. Direct Selling Executives (DSEs) set up appointments in these companies and visit the appropriate department from where a list of employees is obtained. Potential customers are tracked down from the obtained list of employees and they are contacted either through phone calls or when the DSE visits the organization.
 
 
Segment 02
 
Those customers are generally contacted only when any employee from such company informs that he/she is interested in loan. Since this is a low priced segment, the customers are not voluntarily marketed by DSE/ PFC/ STM/STM.
 
Segment 03 and 04
 
Customers in these segment are contacted the DSEs themselves. DSEs reach the customer by making cold calls, through references from existing customer or by random selection.
 
 
Promotion
 
Newspaper ads are given at different points in time. Considering cost and marketing requirements. Several outdoor and indoor visuals like bill board, posters, banners, brochures are installed for market awareness.
 
 
Distribution Channel
 
IPF and IAF are mainly sourced through following distribution channels:

1. Direct sales
2. Branch cross sell / walk in.
3. Priority Banking

 
Receipt and Custody of Application
 
At distribution channel
 

1. Direct Sales: DSEs receive applications from customer and submit to sales officer/ Assitt Manager/ Manager for security. After scrutinizing, they verify the signature, recommends the application, input the customer information in loan locator and forward the same to credit along with the loan locator ID. They also maintain a register of applications sent to credit unit. The register contains the name of the applicant, employer/ business concern, DSE name, application sent date and a control number.

 

1. Branch cross sell / Walk In: PFC/STM receives the applications from customer and scrutinizes the application. After scrutinizing, PFC / STM recommend the application, input the customer information in loan locator and forward the same to CCU with a courier control sheet along with the loan locator ID.

 

1. Priority Banking: Same as Branch. The only exception is applications are handled by PSO/ARM/CRM instead of PFCs/STMs.

 
Authority:
 

• DSEs are authorized to receive applications from customers.
• PFCs/ Sales Officers/ Assitt Sales Manager/ Sales Managers/ Priority Service Officers/ Customer Relationship Managers are authorized to scrutinize and forward IPF as well as IAF after recommending / supporting at their end.

 
At credit
 
Applications are received by a credit support staff (CSS) through loan locator with date and time stamped in application from who maintain an spreadsheet that contains name of the applicant, loan amount, a/c no ( if SCB customer), profession, employer/ name of business concern, received from, received date and application status. After performing necessary input in spreadsheet CSS perform bank statement calculation i.e. average balance and credit turnover for businessmen & self-employed professionals and later applications are distributed among credit analysis. Who then assess the applications to arrive at an approval/ decline decision? After scrutiny if Credit Appraiser satisfy himself with application meeting PPG criteria, a Credit Checklist & Basel II Data Checklist (as per Appendix III) are prepared and hand over the application to CSS for performing verification wherever necessary. CSS later prepare a list of applications along with their detailed information containing name of the applicant, residence address and phone no, residential status, mobile phone no, guarantee details including guarantee amount and hand over to Verification Agency (VA). After performing verification, AV provide a report for each application. If verification report is positive Credit Analyst
 
(CA), Senior Credit Analyst (SCA), Credit Manager (CM) or Country Credit Manager (CCM) approve the loan as per their authority level. All approved application must go through de-duplication and negative checks.
 
After approval and keeping necessary update in spreadsheet, CSS sends the approved documents to “Asset Operations along with the approval list. Approval decisions are notified to the soured through fax or E-mail.
 
At asset operations
 
Documentation, QC & MIS:
 

• Upon receipt of approved documents from credit, support staff of loan operations acknowledge through loan locator, put acknowledgement on the control sheet.
• Officer documentation, QC & MIS verify credit approver’s signature, checks all documents, credit condition(s) and other condition(s) if any.
• If the documents are in order and credit/ other conditions are met, officer issues limit loading instruction (LLI) and Security Compliance Certificate (SSC) for loan disbursement.

 
Loan Admin:
 

• After receiving the LLI and SCC, Loan admin verifies the signatures and then hand over the LLI and SSC to processor.
• Approver verify LLI and approve the loan and past due account in the system
• Processor then

-amend risk grading classification in the master level
-amend individual relationship
-set the prescribe profit rate
-set standing instruction in between finance (loan) and customer   -account.
-set the limit with the expiry date in finance (loan) account.
-prepare vouchers by debiting the finance account and crediting to customer account. And also debiting customer account to realize the processing fees (1% of the limit or BDT 1000
 
 
which ever is higher + 15% VAT) and stamp charges and crediting to the respective P & L and Stamp account and posts in the system.
 
 
Security Management
 
 
Acceptable types of security
 
IPF is an unsecured product and, hence, no security is taken from customers. However, for customer falling into segment 3 except for category 6 and segment 1 & 2, a third party guarantee is taken as a secondary recourse to the borrower.
For IAF there is no requirement to provide personal guarantee or cash security as well.
 
Procedures of early settlement of IPF and IAF
 

1. at distribution channel:

• PFC/STM/PSO/ARM/CRM receives application from the customer, inform him/her the amount required to settle the loan (outstanding + accrued interest + early settlement fee)
• They verify the signature of the customer and send the application to asset operations.

1. at asset OPS:

• Retrieve the files along with PDC & UDC. If sufficient fund is available, prepare the closing instruction and send to loan admin.
• At loan admin processor take necessary steps to settle the facilities.

 
 
Collection and remedial Management
 
The collection process for Islamic Personal Finance and Islamic Auto Finance starts when the customer fails to meet one or more contractual payment. It therefore becomes the duty of the collection department to minimize the outstanding delinquent receivable and credit losses.
 
 
Objective of collections is to build a cost effective collections process which is risk aware, pro-active and information based. Its purpose is to assist business growth and maximize profitability while maintaining balance between risks and reward over the life-cycle the products.
 
Collection unit’s responsibility will commence from the time an account becomes delinquent until it is regularized by means of payment or closed with full payment amount collected.
 
When any customer fails to pay his/ her contractual monthly payments of islamic personal finance or monthly rent payments of Islamic auto finance, collection people identify the delinquent accounts and take their steps to recover the amount outstanding by making phone calls, sending legal notices etc.
 
 
Islamic Current Account
 
People’s greatest assets are their principles. Keeping it in mind, Standard Chartered has introduced Islamic Current Account in Bangladesh in December 2005. Now customers can enjoy convenient, fast moving transactions with the assurance of knowing that their account is Islamic shariah-compliant.
 
 
Islamic Current Account: Key features
 

• Funds deposited in an Islamic current account are used only in a Shariah-compliant manner, as per the established guidelines of standard Chartered’s shariah supervisory committee.
• There are no interest related charges on Islamic current account.
• Minimum account opening balance is BDT 50000.
• The standard chartered Islamic current account is all about flexibility and convenience. Depositors can make withdrawals and deposits without any restrictions.
• The account can be operated from any of 25 branches of SCB located in the different parts of Bangladesh.
• Depositors in Islamic current account enjoy all the modern banking facilities like other conventional account holders in SCB.
• There are no ledger fees and monthly minimum balance fees in Islamic current account.

 
Islamic Banking Division of
Standard Chartered Bank:
Performance analysis
 

Islamic Banking Division of SCB: SWOT Analysis

SWOT analysis of Islamic banking centre is done below to get an insight of the internal strength and weaknesses and external opportunities and threats of Islamic banking centre of SCB.

 
Strengths:
 
q  The main strength of Islamic Banking Center of Standard Chartered is the renown of Standard Chartered Bank in the banking industry. Potential customers are well known about SCB and its services. That is why market is almost ready for the Islamic Banking unit of the bank and market processing cost is very nominal.
 
q  Islamic Banking unit of SCB can easily attract those customers who want to get a combined service of Islamic banking and modern banking.
 
q  Islamic Banking unit of SCB is using the same infrastructures that are used for conventional banking. For example, Islamic personal finance or Islamic auto finances are sold at all the branches of the Bank all over Bangladesh. So Islamic banking unit can easily operate their business without establishing separate branches. Thus the unit is minimizing its cost.
 
q  The unit is utilizing the efficient and dedicated Direct Selling Executives of Standard Chartered for selling its products. This minimizes operating cost of the unit as well as ensures prompt sale of its products.
 
q  Standard chartered has a twelve years experience in Islamic banking globally. Islamic Banking unit of SCB is directly supervised from Dubai and a strong Shariah Supervisory Committee.
 
Weaknesses:
 
q  Islamic banking unit of standard chartered is offering only one deposit product and two finance products. That is why there is little opportunity for borrowers and investors to do banking with Islamic banking window of SCB.
q  Advertisement and campaign are vital factors for promotion of any products. Though SCB does huge promotional campaign for its different products, but it does very little for its Islamic banking products.
q  Being a conventional bank, Standard Chartered has introduced Islamic banking as a new line of business. It is always a tough job for a conventional bank to attract customers for Islamic banking. Some people may not like to do so with a conventional bank.
q  Islamic banking unit of SCB has its main office at Gulshan and no other particular branch at Bangladesh. It operates its banking works through the conventional branches of SCB. But the conventional branches give little emphasis on islamic banking.
q  Islamic banking centre of SCB has little workforce to conduct its banking activities. The centre is been conducted by only three personnel.
 
 
Opportunities:
 
q  Islamic banking centre of SCB has started its journey before one year. The bank now has a big opportunity to introduce a wide array of Islamic Banking products. It also has the prospect of expanding its customer base. The country’s growing population is gradually and increasingly learning to adapt to and use the banking service. As the bulk of our population is middle class, and Muslim, different types of Islamic Banking products will have a very large and easily pregnable market.
q  With its present infrastructures and market renown, Standard Chartered can promote its islamic banking products with ease and within a very short period of time.
Threats:
q  Standard Chartered is facing severe competition from its rival banks in the industry. Various local and foreign banks have started Islamic banking in line with conventional banking. Recently
q  HSBC has started islamic banking service called Amanah. These are threatening islamic banking unit of SCB.
q  Presence of usual Islamic banks like Islamic Bank Bangladesh Ltd, Al Arafah Islamic Bank etc threatens the Islamic banking windows of conventional banks like SCB.

4.2 Feasibility analysis

 
Is it feasible for SCB to run Islamic banking?
 
Islamic banking is a very potential and fast growing banking sector in Bangladesh. Standard Chartered launched Islamic banking globally before 12 yeas to grasp a new market segment. In Bangladesh, it started its journey in December 2004. Was it a feasible decision? The answer can be found by analyzing the last year’s performance of Islamic Banking Division of SCB as well as its potential future performance.
 
In 2005, Islamic banking division of SCB has earned an amount of BDT 108214279 by investing in Islamic personal finance and Islamic Auto Finance. In terms of profitability the figure is a very handsome one. The division has an immense opportunity to accelerate its profitability for the following reasons:
 

• Islamic banking division of SCB can easily attract the customers by providing modern banking facilities along with Islamic banking products.
• Islamic banking division of SCB can use the already established infrastructures of SCB and thus minimize its operating expenses.
• Standard Chartered can use its global experience in Islamic banking in Bangladesh and can make it a profitable venture.
• By adding new products in Islamic banking product line, SCB can grip a greater portion of Islamic banking market in Bangladesh.

 

• Introducing effective promotional campaign SCB can attract people to its Islamic banking products.
• If SCB could use the competitive advantages that it has over its local competitors, it can grasp a greater market share.

 

• Standard chartered has only 25 branches all over the country which are not good enough to serve the huge people in the country. By increasing the number of branches and establishing separate islamic banking branches, greater no of people can be brought under islamic banking services.

 
From the above discussion, it is evident that Islamic banking division of Standard Chartered Bangladesh could be a very important segment of its business in Bangladesh.
In 2005, it has shown a good performance and is expected to generate superior performance in future. So, it was right decision of Standard Chartered Bangladesh to start Islamic banking and is very feasible to drive the banking services.
 

PART- FIVE: Findings and Conclusion

 

Findings and Conclusion

 
The Islamic financial services industry is an area that has grown to become an increasingly substantial segment within the global financial market and has gained considerable interest as a viable and efficient alternative model of financial intermediation. Islamic banks today represent the majority of Islamic financial institutions, which are spread worldwide. Islamic banking is a fast flourishing segment of modern banking industry worldwide. As the second largest Muslim country, Bangladesh is a highly potential market to flourish Islamic banking industry.
 
Keeping this in mind, Standard Chartered Bank Bangladesh has introduced shariah based Islamic banking services in December, 2004 with the objective to grow market share and to cater the Islamic minded customers.
 
Islamic banking is a very potential and fast growing banking sector in Bangladesh. Standard Chartered launched Islamic banking globally before 12 yeas to grasp a new market segment. In Bangladesh, it started its journey in December 2004. Islamic banking division of SCB can use the already established infrastructures of SCB and thus minimize its operating expenses. Standard Chartered can use its global experience in Islamic banking in Bangladesh and can make it a profitable venture. By adding new products in Islamic banking product line, SCB can grip a greater portion of Islamic banking market in Bangladesh. Introducing effective promotional campaign SCB can attract people to its Islamic banking products. If SCB could use the competitive advantages that it has over its local competitors, it can grasp a greater market share. Standard chartered has only 25 branches all over the country which are not good enough to serve the huge people in the country. By increasing the number of branches and establishing separate Islamic banking branches, greater no of people can be brought under Islamic banking services. From the above discussion, it is evident that Islamic banking division of Standard Chartered Bangladesh could be a very important segment of its business in Bangladesh.
 
Utilizing Standard Chartered’s 12 years of global experience in Islamic banking and the ready infrastructure in Bangladesh, it can be expected that Islamic Banking Division of SCB will grip a greater portion of Islamic banking market in Bangladesh in near future.

Bibliography

 
1. Standard Chartered Bank Bangladesh, The Murabaha Agreement;
 
2. Standard Chartered Bank Bangladesh, The Musaraka Agreement;
 
3. Bangladesh Bank, A Manual Of Banking Industry In Bangladesh;(Dhaka:2001)
 
Another Report
 
 
ABBREVIATIONS:
 
AOF                              Accounting Opening Form
ATM                              Automated Teller Machine.
 
BAL                              Banking Arrangement Letter
BB                                Bangladesh Bank
BCA                              Business Credit Application
BDT                              Bangladeshi Taka
BFS                               Business Financial Service
BIL                               Business Installment Loan
BIBM                            Bangladesh Institute of Bank Management
BSE                               Branch Sales Executive
BSSM                            Branch Sales and Service Manager.
 
CC                                Credit Card
CIB                               Credit Information Bureau
CSM                              Customer Service Manager
CSO                              Customer Service Officer
CSR                              Customer Service Representative.
 
DBR                              Debt Burden Ratio
DP Note                        Demand Promissory Note
DSE                              Direct Sales Executive.
 
EMI                               Equated Monthly Installment
EVSA                             Extra Value Savings Account.
 
FCB                              Foreign Commercial Bank
FCY                              Foreign Currency
FDR                              Fixed Deposit Receipt
FL                                 Flexi Loan.
 
GB                                General Banking
GBP                              Great Britain Pound.
 
ICB                               Investment Corporation of Bangladesh
IPO                               Initial Public Offering
IQMS                            Intelligent Queue Management System
IRC                               Import Registration Certificate
ISA                               Investment Savings Account
IVR                               Interactive Voice Response.
 

KYC                              Know Your Customer.
LC                                Letter of Credit
LTV                              Loan of Total Value.
 

MNC                             Multi National Corporation.
 
NCB                              Nationalized Commercial Bank
NGO                             Non – Government Organization
NPL                              Non Performing Loan.
 
OD                                Opening Date /
Over Draft
OSA                              Operating Savings Account.
 
PCB                              Private Commercial Bank
PDC                              Post Dated Cheque
PFC                               Personal Financial Consultant
PIN                               Personal Identification Number
PL                               Personal Loan
PO                                Pay Order.
 
 
Q–Management              Queue Management.
 
 
RFCD                            Resident Foreign Currency Deposit
RMG                             Ready Made Garments.
 
 
SCB                              Standard Chartered Bank
SOD                              Secured Over Draft
STD                              Short Term Deposit
STM                              Sales Team Manager.
 
 
TP                                Transaction Profile
TIN                               Telephone Identification Number /                                                     Tax Identification Number.
 
 

UDC                              Undated Cheque.
 
 

VAT                              Value Added Tax.
 
 

WEDB                           Wage Earner’s Development Bond.
 
 

2.0 ORGANIZATIONAL OVERVIEW

 
The Standard Chartered Bank PLC is an international banking and financial services group that is incorporated in the U.K. with its headquarters in London. It has a unique international network. It now spans in the developed and emerging economies of the world, after been built over 140 years.
Standard Chartered Bank PLC primarily focuses its activities in Asia, Africa, and Middle East. This bank plays an invigorating role in linking the world’s developed economies with emerging markets and provides personal banking, corporate baking, institutional banking consumer finance and custodial services. The act of the bank is to provide the most efficient, consistent and timely services and to be the bank of choice in its principal territories.
Globally, the key resources of Standard Chartered Bank includes: – a network of over 600 offices in 48 countries and, a staff of about 25,000 people managing assets of around 47 billion pounds. Standard chartered bank’s international businesses in personal banking, corporate banking and standard chartered markets are its special strengths.
Global strategies of Standard Chartered Bank are to build and grow strong businesses in East and South East Asia – the Asia Pacific Region; to enhance historical position in the MESA region; and, to concentrate operations in the OECD in those activities that support Standard Chartered Bank’s remarkable franchise in newly industrialized and emerging markets
 

2.1 MISSION, VISION AND OBJECTIVES OF STANDARD CHARTERED BANK

 

2.1.1 Mission

The mission of the bank is to become a highly competitive modern and transparent institution comparable to any of this kind at home and abroad.

2.1.2 Vision

A Bank with Vision is the motto of Standard Chartered Bank. The vision is to be the most efficient financial intermediary in the country. The relentless journey to achieve that vision started in 1995, since the very inception of the Bank. The journey still continues and will never stop. Standard Chartered Bank sets a high standard for itself and every achievement of the bank is a striving agent to reach a new height.

2.1.3 Objectives

Whether in treasury, consumer, or corporate banking, Standard Chartered Bank is committed to provide the best. Meeting the demand of discerning customers is not the sole objective. The Bank believes that to provide standard financial services is to deliver a quality that makes every transaction a pleasurable experience. The bank also believes that Customer is always right and in the core of everything. So providing them friendly and personalized service, tailor-made solutions for business needs, global reach in trade and commerce at the doorsteps and high yield on investments are the core objectives of the bank. But the bank also tries to do the best in conjunction with achieving the ultimate objective of a business organization – Wealth Maximization.

2.2 BACKGROUND OF STANDARD CHARTERED BANK

Standard Chartered Bank has a history of about 150 years.  The name “Standard stems from the two original banks from which it was founded – the “Chartered Bank” of India, Australia and China and the “Standard Bank” of British South Africa. A Royal Charter granted by Queen Victoria of England established the “Chartered Bank” in 1853.  Another Scot, John Paterson in 1862, founded the “Standard Bank”.
The two banks expanded and prospered with time and decided to merge in 1969.  On January 30, 1970 the new shares of the Standard and Chartered Banking Group Limited were listed in the London Stock Exchange.  Queen Elizabeth II opened headquarters of the Standard Chartered Bank PLC on March 20, 1986.  Becoming stronger after the merger, Standard Chartered Bank embarked upon serious expansion in Europe and the United States, The Standard Chartered Merchant Bank was built up from a number of acquisitions made during the 1990s.  In the last thirty years, Standard Chartered Bank has experienced continuous growth, which led to its becoming one of the top 100 listed banks in the world.  It was also judged the best bank in the Asia-Pacific region in 1993 and 1994 for its rate and excellent service.
In August 2000 Standard Chartered Bank as its strategy to grow acquired the ‘Grindlays’ part from ANZ. Buying Grindlays from ANZ now propels it from number five to number one among international banks in India, with some choice extra footholds in the Middle East.
At 1.3bn U.S dollars, it is hard to complaint hat Standard Chartered has overpaid. The financial ease is less compelling for ANZ shareholders, as there are advantages to getting out of a strategically peripheral business. This acquisition of Grindlays Bank has added 6000 employees and 4 countries to Standard Chartered’s existing network of 27,000 employees and 570 offices in 50 countries.
The end result is that Standard Chartered, which went into the 1997 Asian Crisis with strong business in Hong Kong, Singapore and Malaysia, emerges with additional core markets in India and Thailand.
The deal has made Standard Chartered the largest foreign bank by assets in India, Pakistan and Bangladesh and the second largest in Sri Lanka and the United Arab Emirates. The bank had been seeking to expand in the region since the end of the Asian economic crisis, and has finally become successful in its expansion. The primary goal of the integration is to combine the best of both companies.

2.2.1 Company Image and Logo

 
Standard Chartered Bank is a solid, forward looking, modem foreign bank with a long record of sound performance. The effort that Standard Chartered Bank makes in order to portray the Bank as a brand image is very strong and successful.  The general image of Standard Chartered Bank is that it is “Trustworthy, efficient, helpful and committed.” The logo of the bank depicts the merger of two banks.
 

2.3 STANDARD CHARTERED BANK IN BANGLADESH

The Chartered Bank started operating in Bangladesh in 1948, opening a branch in Chittagong. The branch was opened mainly to facilitate the post-war reestablishment and expansion of South and Southeast Asia.  The Chartered Bank opened another branch in Dhaka in 1966, where it is still headquartered. After the merger of the Chartered Bank with the Standard Bank in 1969, the Standard Chartered Bank took up a program of expansion. It increasingly invested in people; technology and premises as its business grew in relation to the country’s economy.  In 1993, there was an organizational re-structuring, which led to a substantial expansion of the Bank’s business.  Today the bank has in total four branches in Dhaka apart from the Chittagong branch, including an offshore branch at the Savar Export Processing Zone.
Bangladesh is under the MESA region, with the controlling office in Dubai.  Its correspondent relationship with Sonali Bank, the largest bank in Bangladesh, gives its customers access to all major centers in the country.  Standard Chartered Bank’s worldwide network facilitates convenient connections with foreign trade and remittance business. Standard Chartered Bank’s branch banking license in Bangladesh allows it to offer a full range of banking services.
Since the organizational restructuring in 1993, the amount of deposits and loans in 1997 has increased by more than five times.  There is an overall increasing trend of Standard Chartered Bank’s market share in terms of deposits and advances.  In 1995, the market share in terms of advances was 20%, which peaked to 29% in 1996 and fell by 3% in 1997.  In the case of deposits, the market share of Standard Chartered Bank increase 16% in 1995 to 18% in 1996, and increased by another 2% in1997. In terms of profit before taxes, there is a rise from eight million BDT in 1990 to its highest amount of 750 million BDT in 1998.  The largest increase of 438% took place in 1991. Although the growth rate began to decline gradually from 1993 (from a 170% to 5% in 1998) the overall increase reflects a substantial positive trend. Standard Chartered Bank’s growth in terms of profit and market share depicts an overall positive trend.
 

Branches of Standard Chartered Bank all over the country:
2.3.1 After acquisition

This acquisition has made Standard Chartered/Standard Chartered Grindlays bank the largest foreign bank in this country. An integration team from Standard Chartered Bank in London is to come time to time in Dhaka to settle the process of the acquisition of the ANZ Grindlays Bank. The team comprising of officials from both Standard Chartered and Grindlays are working on staff and branch rationalization.
But the whole process will take about one and a half years and meanwhile both the banks will continue to work as legal entities. Though there may not be many changes at the lower and mid-levels of the banks, there may be some changes and redundancies in the higher level. But those who will have to leave will get a handsome compensation package.
The integration was comprehensive and is being managed as a distinct process. Meanwhile, the business is kept going to provide uninterrupted customer service and to deliver the desired results.
Standard Chartered Bank after acquiring Grindlays expects to relocate its own and acquired branches upon regulatory consent. There are places where both Standard Chartered Bank and SCGB have branches and there are other places with perceived demand for branches, but the Bangladesh Bank does not want to give permission for opening any new ones. Standard Chartered Bank, known for its technological edge is the forerunner in automated teller machines, telebanking, treasury and lately corporate banking solutions. Grindlays is the market leader in credit cards, corporate advisory services and personal banking.
 

2.3.2 The Organization Structure

The Standard Chartered Bank in Bangladesh has its headquarters and three branches in Dhaka and one branch in Chittagong, while they are going to open one in Sylhet very soon.  While the full range of services is available at the headquarters, other branches offer specific services appropriate for the location.  At the headquarters, the bank mainly consists of two divisions:
The first one is “Business” and another is “Support”.
 
The business division has the following departments:
±  Corporate Banking Group (CBG)
±  Treasury (TSY)
±  Institutional Banking Group (IBG)
±  Consumer Banking (CB)
±  Custodial Services (CUS)
Standard Chartered Bank is primarily corporate driven.  Corporate banking generates more than 40% of its revenue group while Treasury contributes more than 20% to the overall revenue. The rest is generated from Personal Banking, Custodial services and Institutional Banking.
 
The Support division provides assistance to the above business activities and consists of some departments.  And these departments are: – Operations, Finance, Administration and Risk Management, Information Technology Center, Human Resource Department, Legal and Compliance, External Affairs and, Credit department
 
Figure 1: Organizational Organ-o-gram.
Source: Human Resource Department of Standard Chartered Group
 

2.3.3 Chain of Command

 
Chartered Bank in Bangladesh follows a hierarchical pattern of command. The Chief Executive Officer (CEO), Osman Morad reports to the Regional General Manager, MESA in Dubai. All the department heads at the headquarters report to the CEO.  A manager or senior manager who reports to the head of the division heads the s. In Chittagong, however, since there are two major business activities, a manager or senior manager, who reports directly to the head of the respective division in Dhaka, heads each. The Custodial Service division at the headquarters reports to the Head of Corporate Banking.
 
The respective branch managers are responsible for the performance of their unit.  Each branch is organized functionally along line divisions with some support facilities and the manager assigns tasks to his/her subordinate personnel and supervises their performance, instructions are often given without necessary details and clarifications.
 

2.3.4 Management

The goal of Standard Chartered Bank is to be the “Bankers of First Choice.” Towards that goal, the overall planning in the Organization is done at the headquarters level in Dhaka by a Management Committee (MANCO), headed by the CEO and consisting of the business heads of Corporate Banking, Consumer Banking, Treasury, and from the support divisions the heads of Human Resource, Operations and Finance Departments.  They meet once a month, or when a special situation arises, to plan the strategic decisions.
 

2.4 BANKING SERVICES OF THE STANDARD CHARTERED BANK IN BANGLADESH

 
There are two types of services provided by the Standard Chartered Bank; and they are –
1)    Business or Corporate Financial Services
2)    Retail or Consumer Financial Services
 
 

But these two services can be classified further by the following ways:

 
Figure 2: Banking Services of Standard Chartered Bank
 

2.5 ACTIVITIES OF STANDARD CHARTERED BANK

2.5.1 Corporate Banking Group

Standard Chartered Bank offers its local customers a wide variety of financial services. All the accounts of corporate clients, which mainly comprise the top local and multinational companies operating in Bangladesh, are assigned a Relationship manager who maintains regular and close contact to cater to their needs.  The objective of this department is to maintain a thorough knowledge of the client’s business and to develop positive relationships with them.  This is maintained through interactions to offer timely advice in an increasingly competitive business environment. The expertise of the Institutional Banking and Treasury groups is also available whenever required.  The unique Offshore Banking Unit (OBU) in Savar a full range of facilities to overseas investors.  The Corporate Banking Group in Bangladesh has displayed a spirit of community involvement by working with NGOs to underwrite soft loans.  Standard Chartered Bank offers its corporate customers:
 
±  The wide variety of lending needs are catered to with skilled and responsive attention
±  Project finance and investment consultancy
±  Syndicated loans
±  Bonds and Guarantees
±  Local and International Treasury products
 
The trade finance of Standard Chartered Bank takes care of the commercial activity related issues, particularly those related to import and export finance services.  Some of the services are:
 
±  Trade finance facilities including counseling, confirming export L/Cs and issuing of import L/Cs, backed by its international branch and correspondent loan network
±  Bond and Guarantees
±  Project finance opportunities for import substitution and export oriented project
 

2.5.2 Treasury

The foreign exchange and money market operation of the Standard Chartered Bank in the world is extensive.  Exotic currencies happen to be one of its specials areas of strength. A 24 hour-service is provided to customers in Bangladesh through the rd Bank’s network of dealing centers placed in the principal of the world.  The Bank’s treasury specializes in offering solutions to who wish to manage interest rate and currency exposures that result from trade, investment and financing activities of other dynamic economies of the region. Treasury operations are developed in line with changing market conditions to Y’-! the best services to its customers.  According to BAFEDA (Bangladesh Exchange Dealers Association), Standard Chartered Bank presently controls 42% of the local foreign exchange market’s traded volume.
 

2.5.3 Institutional Banking Group

The IBG of Standard Chartered Bank offers a wide variety of products and services to banks and financial institutions.  It has global links with leading banking institutions and agency arrangements through its network of offices in 40 countries.  The Bank offers a full range of clearing, payment collection and import-export handling services.  The bank offers foreign missions, voluntary organizations, consultants, airlines, shipping lines, and their personnel the following financial services:
±  Current accounts in both Taka and other major foreign currencies
±  Convertible Taka accounts (these funds are freely convertible to major international currencies)
Following are the variety of financial products offered by this department:
 

2.5.4 Vostro Accounts

IBG, Bangladesh maintains Vostro Accounts of banking and financial institutions worldwide. Customers maintaining such accounts can remit funds throughout the country through the Standard Chartered Bank branch network as well as through – Chartered Bank’s local correspondent relationships.
 

2.5.5 Nostro Accounts

In order to increase and promote the correspondent banking business worldwide, IBG uses Nostro accounts to Bangladeshi banks and financial institutions in almost all the Standard Chartered Bank global network.  Group branches and sides provide full clearing and payment services in the UK, USA, Hong Kong, Malaysia, Singapore and many African countries.  Worldwide payments services are facilitated by a network of branches supported by electronic cash management (available in select locations), fund transfer system and membership of SWIFT.

2.5.6 Consumer Banking

Superior retail banking services comprising a wide range of deposit and loan products are offered by the Standard Chartered Bank to its individual customers.  The Consumer Banking division constantly faces challenges and meets them by developing new products and services to fulfill the specific requirements of local TU Bank offers a 24-hour service in Bangladesh through its Moneylink ATM network and Phone-link Phone Banking services.
 

2.6 THE CLIENT RELATIONSHIPS

Client Relationships unit conducts direct business with different corporate business entities of Bangladesh. It has over 300 corporate customers in Dhaka & Chittagong. The clients are served by different teams of trained and dedicated professionals.
 

1. Global Corporate: This team deals with the corporate customers who have business with Standard Chartered Bank in other countries of the world.

 

2. Large Local Corporate: This team deals with local corporate houses who have an annual turnover of USD 300 million or more along with the their subsidiaries.

 

3. Local Corporate: This team deals with local corporate houses that have an annual turnover in between USD 50 million to 300 million and its subsidiaries.

 

4. Channel Finance: This team provides services to the suppliers of the corporate customers. The volume here is earmarked with the linked corporate customers.

 
5. Transactional Sales: This team deals with clients who do no   need capital financing or credit facilities, but need to have better cash management solutions.
 

2.7   SWOT ANALYSIS

 

S	4Sound profitability and growth with good internal capital generation

4Larger corporate client base
4Experienced and efficient management team and human resource
4Quaity products and services
4Better infrastructural facilities
4Company reputation and goodwill
 
W
4Small market share
4Limited branch network
4High concentration on fixed deposits and largescale loans
4Lack of full scale automation
 
O4Scope of market penetration through diversified products
4Automation of transaction processes and online branch banking
4Government’s policy of encouraging heavy inflow of foreign investment
4Regulatory environment favoring private sector development
4Value addition in products and services
4Increasing purchasng power of people
4Increasing trend in international business
 
T4Increased competition for market share in the industry
4Frequent changes of banking rules by the Central Bank
4Market pressure for lowering of lending rate
4National and global political unrest
4Default culture of credit
 
 

2.8 PRODUCTS OFFERED BY STANDARD CHARTERED BANK

 

2.8.1 Products

• Personal Banking
• Commercial Banking
• Trade service

2.8.2 Personal Banking

 

A. Deposits Savings Account Access Account Current Account Fixed Deposit Foreign Currency Current Account Graduate Account Millionaire Scheme Monthly Savings Scheme Education Savings Scheme Non-Resident Foreign Currency Deposit Resident Foreign Currency Deposit (RFCD) STD Account

B. Loans Personal Loan Auto Loan Flexi Loan Mortgage Loan SME Banking Cash line

2.8.3 Personal Banking
 
Standard Chartered offers premium retail banking services to individual customers with a large variety of deposit and loan products. Standard Chartered Bank’s Consumer Banking business continuously meets the challenges of developing new products and services to match the specific requirements of customers.
A. Deposits
 
Savings Account
Standard Chartered Savings Account is a convenient and right way to manage money. Standard Chartered Bank work hard to give its customers the best return on their investment. It provides customers the following facilities:
 
ü  Earn Interest
ü  Banking through ATM
ü  Any Branch Banking
ü  24-hour Banking Convenience
ü  State-of-the-art 24-Hour Call Centre
ü  SMS Banking and e-Statements
ü  Paying Customers’  Bills is as easy as pressing a button
ü  Regular additional benefits
Access Account
Access is a non-branch banking solution that gives the customer more flexibility with:
ü  Access to 24 ATMs in six major districts
ü  Access to free e-Statement facilities
ü  Access to state-of-the-art Call Centre facilities
ü  No chequebook, all transactions done electronically
ü  Annual ATM fee of only BDT 150
 
Current Account
A frequent transaction account that provides customers both convenience and flexibility. Put an end to your worries about carrying large sums of money when they need it. Standard Chartered Bank Current account is an efficient and convenient way of handling their daily finances. It provides customers:
 
ü  24-hour Banking convenience
ü  Any Branch Banking
ü  State-of-the-art 24-Hour Call Centre
ü  Debit Card
ü  Regular additional benefits
 
Fixed Deposit
Standard Chartered Fixed Deposits make your money work for you. With the advantage of Standard Chartered’s expertise, resources and experience, you can assure of maximizing the growth potential of your savings safely.
 
ü  Any Branch Banking
ü  Perfect combination of liquidity and returns
ü  Debit Card
ü  Any Branch Banking
ü  State-of-the-art 24-Hour Call Centre
ü  Regular additional benefits
Foreign Currency Current Account
Applicable to Bangladeshis working abroad, it can be opened in USD, GBP and Yen without restriction on transaction frequency. It can be operated through nominees in absence of the accountholder. Fund remains in foreign currency and is freely remittable.
 
Graduate Account
Graduate Account is a customized Savings Account for ongoing graduate and post-graduate university / college students, who are at least 18 years old.
 
ü  Interest bearing Savings Account
ü  Sure return!
ü  Graduate Account Debit Card
ü  I-Banking
ü  Paying your bills is as easy as pressing a button
ü  Graduate Account – Tuition Protection Accidental Death Insurance plan
 
Millionaire Scheme
Start with BDT 100,000 and deposit BDT 10,000 per month and become a millionaire in just 5 years 9 months.
 

Tenor	Initial Deposit	Monthly Deposit	Total Payment by Customer	Profit	Value at Maturity
5 years / 9 months	100,000	10,000	790,000	229,429	1,019,429
10 years	100,000	10,000	1,300,000	896,631	2,196,631

Figure3: Millionaire Scheme
 
Non-Resident Foreign Currency Deposit (NFCD)
 
A short-term foreign currency deposit account suitable for Bangladeshis living abroad, offering competitive interest rates available in both local and international markets.
 
Resident Foreign Currency Deposit (RFCD)
Resident Foreign Currency Deposit Account is allowed for Bangladeshi residence only. RFCD Account offers you the convenience and flexibility of managing your foreign currency related issues to some extent:

• Interest bearing foreign currency account
• Multi-currency deposit facility: USD, EUR, GBP
• International Credit Card issuance facility against RFCD account

 
STD Account
 
Standard chartered Call account offers you the convenient way to save for the future, as well as enjoying easy access to your money.
ü  Earn Interest on Daily Basis
ü  Affordable Minimum Balance
ü  Any Branch Banking
ü  24-hour Banking Convenience
ü  SMS Banking and e-Statements
ü  State-of-the-art 24-Hour Call Centre
ü  Debit Card
B. Loans
Personal Loan
Personal Loans from Standard Chartered are the most flexible of their kind in the market. Unlike the conventional banking at Standard Chartered, you do not need to provide any cash security to avail Personal Loan from us. The loan amount may range from BDT 60,000 to BDT 1,000,000 depending on your income.
Auto Loan
With Standard Chartered Auto Loan, it is easier than ever to buy the car of your dream. It offers you a flexible and affordable loan with easy repayment options, all wrapped in a very convenient package. We finance a maximum of 75% of the car value. The loan amount may range from BDT 200,000 to BDT 5,000,000 for new / reconditioned cars and from 200,000 to BDT 1,000,000 for used cars.
Flexi Loan
Flexi Loan from Standard Chartered is a loan facility that has been custom designed to fit your needs. Highest Loan amount is BDT 1200K depending on income assessment.
SME Banking
Our Business Financial Services (BFS) is now SME Banking. SME Banking supports the banking needs of Small & Medium Enterprises (SMEs). This is a one-stop solution for all sorts of banking requirements. SME Banking offers the following products:

• Business Loan
• Overdraft facility
• Trade Finance & Working Capital

 

2.8.4 OTHER SERVICES

Credit Card
Standard Chartered Bank (STANDARD CHARTERED BANK) issues both VISA and MasterCard Credit Cards, the two renowned Credit Card brands. Our product range includes:
Local Card

• Visa Silver Credit Card
• Visa Mini Card
• MasterCard Silver Credit Card
• MasterCard Gold Credit Card
• MasterCard Platinum Credit Card
• MasterCard Cricket Card

International Card

• Visa Silver Credit Card
• Visa Gold

Priority Banking – an exclusive service offer
 
Priority Banking – a privileged service offered to our selected customers. Bank promises you services that are personal, professional, privileged, private and profitable. This unique service, offered by only Standard Chartered Bank in Bangladesh, comes with a range of attractive benefits.
 
Phone Banking Service
 
Standard Chartered Bank is the first bank in the country to offer automated 24-hour Phone banking service. Our phone banking services include balance enquiry, fund transfer, change of TIN, cheque-book request, statement request, foreign currency exchange rate etc., which are available through telephones from the comfort of home, office or car.
 

THE BANKING INDUSTRY OF BANGLADESH

 
The gradual improvement in the overall policy environment has enabled Bangladesh to improve its economic performance in recent years. Successive governments in Bangladesh have been confronted with the problem of stimulating the economic growth rate in a country where a substantial segment of the population lives below the subsistence level. Economic policies are still guided by five year plans. Nevertheless, some progress has been made over the years, such as self -sufficiency in food grain production, reducing the population growth rate, poverty alleviation and boosting export income. The GDP growth per annum has been about 5 percent on an average from 1994-2000; Per capita GDP was $363 in 1999-2000.
The Banking Industry in Bangladesh is one characterized by strict regulations and monitoring from the central governing body, the Bangladesh Bank. The chief concern is that currently there are far too many banks for the market to sustain. As a result, the market will only accommodate only those banks that can transpire as the most competitive and profitable ones in the future.
Currently, the major financial institutions under the banking system includes:-

• Bangladesh Bank
• Commercial Banks
• Islamic Banks
• Leasing Companies
• Finance Companies

Of these, there are four nationalized commercial banks (NCB), 5 specialized banks, 11 foreign banks, 26 domestic private banks and 4 Islamic Banks currently operating in Bangladesh.
 
Figure 4: Schedule of Banks (Source: Bangladesh Bank Annual Report 2004-2005)
All local banks must maintain a 4% Cash Reserve Requirement (CRR), which is non-interest bearing and a 16% Secondary Liquidity Requirement (SLR). With the liberalization of markets, competition among the banking products and financial services seems to be growing more intense each day. In addition, the banking products offered in Bangladesh are fairly homogeneous in nature due to the tight regulations imposed by the central bank.
Competing through differentiation is increasingly difficult and other banks quickly duplicate any innovative banking service.
 

3.1 MARKET SEGMENT

The banking industry of Bangladesh is mainly divided into two sectors, such as Specialized Banks (SBs) and Commercial Banks (CBs). The Specialized Banks are those banks that deal with specific sectors or industry of an economy. For instance, Bangladesh Krishi Bank (BKB) only deals with the agricultural sector of the economy; Bangladesh Shilpa Bank (BSB) only deals with the industrial sector of the economy, etc.
 
On the other hand, Commercial Banks are Scheduled Banks that are operating in the country under the rules and regulations of the Central Bank. Commercial banks in turn can be grouped as Nationalized Commercial Banks (NCBs); Foreign Commercial Banks (FCBs) and Private Commercial Banks (PCBs) with three different segments, such as 1^st Generation Private Commercial Banks, 2^nd Generation Private Commercial Banks, and 3^rd Generation Private Commercial Banks.
 
The Bangladesh Bank (BB) Order created in 1972, authorized Bangladesh Bank (BB) as the central bank of the country. Bangladesh Bank Order 1972 and the Banking / Companies Act 1991 mainly guide the commercial banks in Bangladesh. Commercial Banks in Bangladesh are not allowed to do business other than just banking. Normal activities include borrowing, raising or taking up of money, lending or advancing of money with or without security. They are also authorized to issue letters of credit, trade in precious commodities and buying and selling of foreign goods excluding foreign bank notes. They are also authorized to trade in bills of exchange, promissory notes, coupons, drafts, debentures, certificates and other instruments approved by Bangladesh Bank (BB). Banking companies are required to provide safe vaults and are authorized to collect money and securities.
 
All banks operating in Bangladesh with different paid-up capital and reserves having a minimum of an aggregate value of Tk. 5 million and conducting their affairs to the satisfaction of the Bangladesh Bank have been declared as scheduled banks in terms of section 37(2) of Bangladesh Bank Order 1972. Now in terms of section 13 of Bank Company Act, 1991, the minimum aggregate capital is Tk. 200 million.
 
After liberation, the banks operating in Bangladesh (except those incorporated abroad) were nationalized. These banks were merged and grouped into six commercial banks. Of the total six commercial banks, Pubali Bank Ltd. and Uttara Bank Ltd. have subsequently been transferred to the private sector with effect from January 1985. Moreover at present there are 51 scheduled banks operating all over the country. Out of these, 9 are state-owned (including five specialized banks), 30 are private commercial banks (including four Islami banks) and the remaining 12 are foreign commercial banks (including one Islami bank).
 
The name of all the banks operating in Bangladesh and their year of incorporation are given in table 1.
 
Table 1:  Name of the Banks operating in Bangladesh

DATE OF INCORPORATIONNationalized Commercial BanksSpecialized BanksSonali Bank1972BKB1972Janata Bank1972BSB1972Agrani Bank1972BSRS1972Rupali Bank Ltd.1972RAKUB1987  BASIC1988Private Commercial Banks1^st Generation Private Banks(1982 – 1988)2^nd Generation Private Banks(1992 – 1996)Arab Bangladesh Bank Ltd.1982Eastern Bank Ltd.1992Uttara Bank Ltd.1983National Credit & Commerce Bank Ltd.1993National Bank Ltd.1983Prime Bank Ltd.1995Islami Bank Bangladesh Ltd.1983Dhaka Bank Ltd.1995IFIC Bank Ltd.1983Southeast Bank Ltd.1995United Commercial Bank Ltd.1983Al-Arafa Islami Bank Ltd.1995The City Bank Ltd.1983Social Investment Bank1995Pubali Bank Ltd.1984Dutch-Bangla Bank Ltd.1996Al-Baraka Bank Ltd.1987 3^rd Generation Private Banks(1998 – Present)Foreign Commercial BanksBangladesh Commerce Bank1998Standard Chartered Grindlays Bank1905Mercantile Bank Ltd.1999Standard Chartered Bank1948Standard Bank Ltd.1999American Express Bank Ltd.1996One Bank Ltd.1999State Bank of India1975Exim Bank Ltd.1999Habib Bank Ltd.1976Premier Bank Ltd.1999Muslim Commercial Bank1994Mutual Trust Bank Ltd.1999National Bank of  Pakistan1994First Security Bank Ltd.1999CITI Bank, N.A.1995Bank Asia Ltd.1999HSBC1996The Trust Bank Ltd.1999Shamil Islami Bank1997Jamuna Bank2001Credit Agricole Indosuez1997Shahjalal Bank2001Hanvit Bank1999BRAC Bank2001Mashreq2001
Source: Bangladesh Bank.
OTHER BANK STATUS
 

3.2 CURRENT STATUS OF THE BANKING INDUSTRY

 
The Banking Industry of Bangladesh at present is in the growth stage. Almost every year new private banks are coming up, new branches are opening within two to three months, new customers are coming to open an account in different banks. As a result, according to July 30, 2004 there are 4 nationalized commercial banks, 5 specialized banks, 30 local private commercial banks and 12 foreign commercial banks operating in this country. Moreover, as on July 30, 2004 there are 27,881,322 numbers of deposit accounts and 7,462,785 numbers of advance accounts in the banks.
 

3.3 MARKET SIZE AND MARKET GROWTH RATE

Market size of an industry can be measured by many ways, such as Total Revenue, Volume of production number of customers and so on. However, in case of the Banking sector the measurement of market size is quite peculiar as both the total amount of deposits and advances are taken into consideration.
The following figure shows that the percentage of total branches of all the banks in the year 2004:
 
Source: Scheduled Bank Statistics, Bangladesh Bank, July – Sept 2004; Economic Trends, March 2004.
 
The largest provider of advances among all the banks is the Nationalized Commercial Banks. With their high number of branches scattered throughout the country NCBs topped the list with Tk. 290,800 million in 2005 (September) remotely followed by Private Banks (Tk. 181,380 million). The share of advances of the SBs and PCBs are increasing at an alarming speed than the NCBs.
However, the share of FCBs is consistent. Therefore, table 2 shows advances by category of banks.
Table 2:  Advances by Category of Banks (Amount in million Taka)

Source: Scheduled Bank Statistics, Bangladesh Bank, July – Sept 2003.
 
Again NCBs also dominate in the total deposits. It can be seen from the table below that over the years the share of NCBs, FCBs, and SBs are decreasing, whereas the share of PCBs is increasing significantly. Therefore, Figure 6 shows the deposits by category of banks.
 
Source: Scheduled Bank Statistics, Bangladesh Bank, July – Sept 2004.
 
 

3.4 INDUSTRY’S COMPETITIVE FORCES

 

3.4.1 Rivalry among the Competitors

In the banking industry, rivalry among the competing banks is moderate to high due to the following reasons:
–       Major rivals are equal or close to in size and capability (revenue and volume).
–       Exit barriers are high.
–       New private banks are snatching share from the NCBs and each other’s customers by providing extra benefits.
–       Slow market growth due to the sluggish economy.
–       Depositor’s cost of switching banks is low.
 

3.4.2 Substitutes

There are substitute financial institutions that do many of the activities and transactions of a bank in the leasing field but these financial and leasing institutions are too small in size. These institutions can shrink the profit margin of commercial banks. Industrial Leasing and Development Company Ltd. (IDLC), Industrial Promotion and Development Corporation (IPDC), United Leasing Company are the key players. They provide industrial leasing to many companies in the country. Vanik Bangladesh Ltd., a merchant bank provides investment counseling and credit services among its other financial activities. But some of the operations of the banks like exporting / importing have no substitutes.
 

3.4.3 Power of Suppliers

Depositors are considered to be the suppliers of the banks. There are thousands of depositors from all walks of life. There are businessmen, service holders, farmers, students and people from virtually any other professions who are depositors of the banks. Big amount depositors have strong powers in determining interest rate of their deposits. However, the following table (table 3) would provide information regarding depositors of different categories of banks:
 
Table 3: Deposits (no. of accounts) of Different Categories of Banks as on 30.09.2004 (Amount in million Taka):

Types of Bank	No. of Accounts	Amounts	Deposits per Account
NCB	21,049,573	400,662	19,034
SB	3,428,061	44,880	13,092
PCB	4,210,770	222,300	52,793
FCB	129,775	60,256	464,311
Total	28,818,179	728,098

Source: Scheduled Bank Statistics, Bangladesh Bank, July – Sept 2004.
 
Sector wise distribution of deposits is given in table 4 for individual types of banks:
 
Table 4: Deposits Distributed by Sectors and Types as on 30.09.2004 (Amount in million Taka):

Source: Scheduled Bank Statistics, Bangladesh Bank, July – Sept 2004.
 

3.4.4 Power of Buyers

Creditors are considered to be the buyers of the banks. There are thousands of creditors from all walks of life. Mainly businessmen are the major buyer of Bank’s credit. Big amount creditors have strong powers in determining interest rate of their credit amounts. Banks distinguish their prime customers from others by setting a prime interest rate for them. However, the following table (table 5) would provide information regarding creditors of different categories of banks:
Table 5: Advances (no. of accounts) of Different Categories of Banks as on 30.09.2004
(Amount in million Taka):

Source: Scheduled Bank Statistics, Bangladesh Bank, July – Sept 2004.
 
If amount of advances were distributed sector wise, it would look like the following table:
 
 
Source: Scheduled Bank Statistics, Bangladesh Bank, July – Sept 2005.
 

3.5 MARKET CAPITALIZATION

 
The total market capitalization of 1^st generation PCBs is TK. 5,420.87 million as on September 22, 2002 with the highest capitalization of IBL of Tk. 1,649.76 million and the lowest capitalization of Tk. 298.24 million of Uttara Bank Ltd. In the table (table 6) below it can be seen that for all the banks market value is lower than the book value, which implies that public cannot trust these banks.
Table 6: Market Capitalization of 1^st Generation Banks:

Source: Scheduled Bank Statistics, Bangladesh Bank, September 22, 2002.
 
The total market capitalization of 2^nd generation PCBs is Tk. 6,988.15 million as on September 22, 2002 with the highest capitalization of Tk. 1,680 million of Eastern Bank Ltd. and the lowest capitalization of Tk. 322.38 million of Al-Arafa Islami Bank. In the table below (table 7) it can be seen that the market value is greater than the book value for most of the banks, which implies that public’s acceptability for these bank is higher.
Table 7: Market Capitalization of 2^nd Generation Banks:

Source: Scheduled Bank Statistics, Bangladesh Bank, September 22, 2002.
 

STANDARD CHARTERED BANK’S Market standing  in the banking sector

 

3.6.1 FINANCIAL HEALTH OF STANDARD CHARTERED BANK

3.6.1.1 Income Statement

Standard Chartered Bank (STANDARD CHARTERED BANK) reported interest income for the year 2005 to be BDT 1,216.9 M and it was 13.3% higher than previous year (BDT 1073.6 M in 1999). Most of this income was from discounted credit bill negotiation (BDT 413.0 M) followed by loans and advances (BDT 345.8 M), fixed loans (BDT 150.9 M) and revolving loans (BDT 142.4M). Other than that the bank also earned form loans to Bangladesh Bank and other banks, personal lending and call money.
 
Table 8: Analysis of Income Statement (STANDARD CHARTERED BANK) at a Glance (2004-2005)

All Figures in BDT (Mio.)
 

3.6.1.2 Balance Sheet

During the year 2005 the bank had BDT 224.2 M cash in hand and it was 56.1% less than previous year. The also decreased the amount of money they deposited with Bangladesh bank. This was mainly due to the huge balance of BDT 722.2 M they maintained with other financial institutions and the call money of BDT 395.0 M.
Standard Chartered Bank decreased their investment by 30% (From BDT 2,875.8 M in 1999 to BDT 2,012.3 M in 2005) and increased the amount of credit given to customers in the form of loans, cash credits, overdraft, etc by 26.6% (BDT 7,355 M in 2004 and BDT 9,310.6 M in 2005). Other than that total amount of bills discounted and purchased during the year was BDT 693.6 M.
The company also mentioned fixed asset of BDT 8.5 M in 2005 and other assets of BDT 1,513.6 M. The other assets were mainly the increase in assets due to exchange fluctuation and the banks balance with head office and other foreign branches.
Total liabilities of the company were BDT 14,869.8 M and it was 18.9% higher than previous year. This increase was manly due to the borrowings from other banks and financial institutions and deposit of SCGB.
Net worth of the company changed due to the additional retained earnings for the year.

3.7 MARKET SCENARIO

3.7.1 Competitive Standing of STANDARD CHARTERED BANK

 

• Standard Chartered Bank has a large capital base that gives it an edge over competitors. It is currently a provider of the highest range of products. It has a leading market position in Cash Management and Trade-related services, which provides the platform to drive future growth.

Figure 8: Competitive position of Standard Chartered Bank in 2003

Source: Annual Review, STANDARD CHARTERED BANK, Bangladesh 2003.

It is very much evident from the figure above that STANDARD CHARTERED BANK’s current position in the market is still commanding and likely to stronger than the other banks in the near future.

• Nationalized Commercial Banks (NCB) are less regulated than Standard Chartered Bank but NCBs are burdened with inefficiency and low quality lending portfolio, though those banks continue to dominate government businesses (90%) mainly due to regulatory advantages and geographic reach.
• Foreign Commercial Banks (FCB) continue to hurt the margin. They are the major competitors in Cash with a strong product range.

–          HSBC and Citi Bank NA, have limited capital and  network

–          American express has already wrapped up its corporate operations and thereby has decreased its competitive position in the market.

• Private Commercial Banks (PCB) with migrated skills from foreign banks are slowly moving away from vanilla products and age-old systems to higher value added products.

 
Figure 9: Branch-wise share, deposit, loans & advances, reserves, and foreign

exchange

of Standard Chartered Bank:
Source: Activities of Banks And Financial Institutions, 2003-2004
 

3.7.2 Competitive Performance of Standard Chartered Bank

 
As per the Annual Review Standard Chartered Bank, Bangladesh (2004), Standard Chartered Bank’s product mix seems to be more profitable compared to that of the market. The market, on the whole, is more dependent on cash management and deposit products to generate revenue. In contrast,
 

Standard Chartered Bank has successfully generated the highest proportion of revenue from its trade-related activities.
Figure 10: Competitive position on lending, trade, cash
Source: Annual Review Standard Chartered Bank, Bangladesh, 2004
 
Standard Chartered Bank enjoys the number one position in Cash Management, and Trade activities. Due to a more conservative approach in lending activities Standard Chartered Bank has reduced its exposure in this area.
 
 

Products	No1	No.2	No. 3
Cash	Standard Chartered Bank	CITI	HSBC
Trade	Standard Chartered Bank	Islami	NBL
Lending	Islami	EBL	Uttara

Table 9: Competitive standing of STANDARD CHARTERED BANK Products; Source- Annual Review STANDARD CHARTERED BANK Bangladesh 2004
 

1. Competitive position of Standard Chartered Bank  IN Cash Management Services

 
The cash management service of the bank is clearly ahead of the competitors, thanks largely to a strong product range and the bank’s appetite in this segment. It is hoped that the competitive edge the bank holds in this segment will provide the platform needed to drive the future growth of the bank.
 
In this field of activity the immediate competitors are the foreign banks, namely HSBC and Citibank who also offer a diverse range of products, similar to those of Standard Chartered Bank.
 

B .Competitive position of Standard Chartered Bank in Trade
 
Standard Chartered Bank enjoys the number one position in the market in trade-related activities. The major competitors in this area are the private commercial banks, namely

Islami Bank and National Bank.
 

3. Competitive position of STANDARD CHARTERED BANK in Lending

Standard Chartered has fallen behind in lending due to its conservative stance on taking too large an exposure on the comparatively volatile Bangladeshi market. As a result, the bank has shifted its portfolio from lower to higher quality lending.
Islami, Eastern and Uttara Bank have an edge in this area through leveraging their extensive local network and strong positioning.
 
 
From the figure above it is apparent that in comparison to EBL and Islami bank Standard Chartered Bank holds a very awful position.
 
 

 
 
 

CHAPTER – 4:FINDINGS

 

4.0 FINDINGS

 

• It is the second largest private bank of the country having a market dominance of roughly 67% among foreign banks.

 

• It has one of the largest capital bases.

 

• Its portfolio includes the biggest names.

 

• Long standing presence in the country and therefore longest standing relationships.

 

• It has a technological edge over its competitors.

 

• It has the widest distribution network among foreign banks through its own branches and correspondent banks.

 

• It has the intention of working only with the upper class people. So, the blue-collar people are deprived of having the service of STANDARD CHARTERED BANK.

 

• A limited branch is one of the major concerns for STANDARD CHARTERED BANK in comparison to other commercial banks.

 

• STANDARD CHARTERED BANK has more and high fees and charges like minimum balance fee, ledger fee etc. compared to its rivals. These hidden costs hinder STANDARD CHARTERED BANK to grow with customers.

CHAPTER-5: RECOMMENDATION
STANDARD CHARTERED BANK has some threats and weaknesses that will turn down the operation of this bank to a great extent. It is been seen that customer complaint has increased recently than before for this reason it is high time that the employees are trained up more to avoid future mishaps. Some recommendations are proposed below.
 
ª  In the deposit accounts the new emerges in the market are providing a higher rate of interest compared to STANDARD CHARTERED BANK and for this reason the MANCO might give a second thought about re-fixing the rate.
 
ª  The latest entrant BRAC Bank is planning to launch a similar product like Personal Loan for Consumers with a lower rate and charge. STANDARD CHARTERED BANK should take precautionary measures to keep their products viable to customers both new and old.
 
ª  STANDARD CHARTERED BANK should lower its charges immediately to prevent the loss of customers.
 
ª  STANDARD CHARTERED BANK senior officials should be more cooperative to their subordinates and arrange for workshops/ training programs to keep them motivated in their work.
 
ª  The establishment of more branches may boost up the chance of becoming more customer base for STANDARD CHARTERED BANK.
CHAPTER-6: CONCLUSION
 
As an organization the Standard Chartered Group has earned the reputation of top foreign banks operating in Bangladesh. The organization is much more structured compared to any other foreign bank operating in Bangladesh. It is relentless in pursuit of business innovation and improvement. It has a reputation as a leader in financing manufacturing sector.
 
With a bulk of qualified and experienced human resource, Standard Chartered can exploit any opportunity in the banking sector. It is pioneer in introducing many new products and services in the banking sector of the country. Moreover, in the retail-banking sector, it is unmatched with any other foreign banks because of its wide spread branch networking thought the country.
 
This report tries to figure out most of the indicators of problems and strengths of STANDARD CHARTERED BANK as a foreign bank in the competitive banking sector of Bangladesh. A severe cut throat competition is going on currently in this sector and that’s why STANDARD CHARTERED BANK has to work out with different dimensions like – product diversification, market forecasting, proactive activities undertaken by STANDARD CHARTERED BANK and some suggestion to get rid of the predicaments that exist.
 

Introduction

Origin of the Report

This report is a requirement of BBA Internship Program and includes experiences during internship. Internship report contains intern’s experience with the host organization and also  gives the intern an opportunity to know the host organization and its business. This report is about the Customer satisfaction of Standard Chartered Bank in Bangladesh as the host organization is the same and the interns were assigned to work in Consumer Bank division of this host organization
 
Objectives
The main objectives of this report to study and evaluate the customer satisfaction at Standard Chartered Bank in this country and also to understand customer satisfaction about SCB’s alternate delivery channel such as Call Centre. and thereby provide such recommendation.
 
Methodology
This is a report with independent and dependant observation narrated all through the report. To write this report information were collected from both the primary and secondary sources. Surveys needed to be conducted during preparation of this report.
 
Primary Sources
A number of bankers, existing customers were interviewed to get information.
 
Secondary Sources
Data was also collected from various manuals, journals, publications as well as web sites.
 

Limitations

§  Respondents were reluctant to respond while conduction oc the survey.

• Limitation of time was one of the most important factors that shortened the present study. Due to time limitation many aspect could not by discussed in the present study. Due to time constraints, the sample size had to be restricted to 50 only.
• Confidentiality of data was another important barrier that was confronted during the conduct of this study. Every organization has their own secrecy that is not revealed to others. While collecting data at Standard Chartered Bank, personnel did not disclose enough information for the sake of confidentiality of the organization.
• Rush hours and business was another reason that acts as an obstacle while gathering data.

 
 
Banking in Bangladesh
Standard Chartered Bank started its business in Bangladesh in 1948, opening its first branch in the port city of Chittagong. The bank increasingly invested in people, technology and premises as its business grew in relation to the country’s thriving economy. At present the bank has 18 offices in Dhaka Chittagong and Sylhet, including the country’s only offshore banking unit inside the Dhaka Export Processing Zone at Savar.
 
Extensive knowledge of the market and essential expertise in a wide range of financial services underline strength to build business opportunities for corporate and institutional clients at home and abroad. Continuous upgrading of technology and control systems has enabled the bank of offering new services, which include unique ATMs, Phone banking and other alternate channels.
 
Standard Chartered’s services in Bangladesh, ranges from Personal & Corporate Banking to Institutional Banking, Treasury and Custodial services.
 
Standard Chartered is highly reputed in providing flexible and innovative financial services solutions. Their expertise is in corporate and institutional banking including cash management, trade finance and custodial services, consumer banking and treasury operations. They adopt a proactive approach in tailoring customized packages to meet customers’ ever-changing needs. They apply state-of-the-art technology to automate daily operations and electronic delivery system has been put in place to ensure that transactions are handled swiftly and efficiently. Customer Service Centers are staffed with experienced Cash Products Specialists to ensure that all customers are well served. The currency of the country is the Bangladesh Taka (SWIFT code: BDT). Foreign exchange has been significantly liberalized and the Taka is partially convertible. Standard Chartered fully understands the importance of time, convenience and efficiency to the success of business. They make easy the complex financial world and help to maximize every opportunity.
 
With over 140 years of experience in trade finance and an extensive international branch network, Standard Chartered is committed to help   in every competitive environment. To keep pace with changing needs, they will constantly review comprehensive cash; trade and treasury products and services, ensuring that a full range of flexible and innovative services is always available wherever needed.
 
Standard chartered is the world leading emerging market bank. Its employees 28000in over 500 offices in more than 50 countries in the Asia Pacific reason, South Asia, Africa, the Middle East, the United Kingdom, and the Americas.
 
 
The bank serves both consumer and wholesale banking customer. The consumer banking provide credit cards, ATM cards, personal loan, mortgage, and deposit taking activity and wealth management services to individual and medium size business.
 
 
The wholesale banking provides services to multinational, regional and domestic corporate and institutional clients in trade finance, cash management, custody, lending, foreign exchange, interest rate management and debt capital markets.
 
With nearly 150 years in the emerging markets the bank has unmatched knowledge and understanding of its customers in its markets. Standard chartered recognizes its responsibilities lies to its staff and to the communities in which it operates.
 
Standard chartered bank intends to set standards as the market leader in Bangladesh by providing efficient, friendly and modern fully automated on line service on a profitable basis. Standard Chartered Bank goal is to provide mass financing to enable mass production and mass consumption and thereby contribute to the development of Bangladesh.
 
SCB is surviving in the large banking area through its unique products. In Bangladesh SCB is the only bank, the first in offering 100 % integrated on-line, banking services through iBanking or internet banking.
 
SCB is gradually growing up to establish itself in the banking arena of Bangladesh with Islamic banking to be the leader in terms of services qualities and developing partners of the people of the country.
 
SCB will promote broad based participation in Bangladesh economy through the provision of high quality banking services.
SCB believes that the pursuit of profit and development goals is mutually reinforcing.
 
Standard Chartered Bank is a socially responsible institution that will not lend to businesses that have a detrimental impact on the environment and the people. SCB will adhere to highly professional and ethical business principle and internationally recognize banking accounting standard. They talk that extra mile with enthusiasm and empathy to serve customers and to solve problems together so that customers succeed in business and remain loyal to bank.
 
Every SCB professional will be committed to excellence in all that he/she does they will have a keen desire for success, determination to excel and a drive to be the best. They will individually and jointly learn continuously from their customers and professional colleagues around the globe to improve the way they do business so that they are the best.
 
SCB is a world class Bank in terms of service quality and establishing relationships that helps its customer to develop and grow successfully. It is a bank of choice both for its employees and its customers, the model bank of the world.
 
Banking is the backbone of national economy. All sorts of economic and financial activities revolve round the axis of the bank. As the industry produces goods and commodities, so does the bank creates and controls money-market and promotes formation of capital. From this point of view, banking-a technical profession- can be termed as industry. Services to its customers are the products of banking industry besides being a pivotal factor in promoting capital formation in the country. As all economic and fiscal activities revolve round this important ‘Industry’, the role of banking can hardly be over emphasized.
 
Circumstances being such, it becomes imperative to find out the role that now playing in the country and analyze its operational aspects so as to ascertain the importance of this delicate financial sector and its over all impact on our national economy. To ascertain the role of banks and to analyze its operational aspects and its overall impact on our national economy a through study as to its distribution, expansion and contribution is essential to comprehend its past, present and future bearings for the growth and development of the banking sector of the country. In the global context, the role of banks is far – reaching and more penetrating in the economic and fiscal discipline, trade, commerce, industry, export and import- all carried through the bank. Banks are the only media through which international trade and commerce emanate and entire credit transactions, both national and international.
 
Approval of New Banks
Opening of the recently permitted new banks, without implementation of the needed reforms, could lead to unethical competition and horse- trading in the country’s troubled banking sector, according to the bankers.
 
Entry of new banks in the market under the present situation will lead to unethical competition and horse-trading in the banking sector. The problems like non-performing loans in the sector may also worsen. The size of the market and the present state of economic activity did not provide adequate scope for business for a large number of banks with poor management and outdated operating systems. This would obviously lead to unethical practices in the sector. Adding the lack of skilled hands at the top and mid-level management of banks could also result in “horse-trading”.
 
Mr. Lutfar Rahman Sarkar, Ex-governor Bangladesh Bank echoed his views and said “Allowing the new banks, without restoring discipline and resolving their numerous problems, will create unhealthy atmosphere and unethical banking in the whole country.” The banks would obviously resort to unethical means of capturing or retaining business, such as undercutting interest or bribing official to attract government deposits. These would vitiate the atmosphere of the banking sector.
 
A top official of another multinational bank said approval of the new banks by the government was against the global trend. “When the global trend is merger and acquisition of the small business entities, the government is permitting numerous new banks.”
Foreign banks were all prepared to snatch the country’s limited market, with potentials of new business opportunities. Government step at this time should have been to strengthen local banks through undertaking needed reforms.  Instead of doing that new banks were permitted further squeezing the business opportunities.
 
Another senior private banker said, “Running a bank is very difficult in a country like Bangladesh, with inadequate and ineffective legal framework. Permitting new banks without addressing the problems was obviously wrong decision”.
 
The private banks had concentrated their activities only in a few areas. The new banks would also try to share the most potential market, forcing others to face tougher competition. This would also restrict other to expand fast to cater to the banking needs of the people in other areas.
 

The international Monetary Fund (IMF) and the World Bank earlier asked the government to reconsider its decision to permit new banks without restoring discipline in the sector, crippled by huge amount of bad debts.

Following is the Strategic Analysis Report of Standard Chartered Bangladesh Limited (SCB).
Standard Chartered Bank: Background

Operation Starting in Bangladesh…
Standard Chartered Bank started its business in Bangladesh in 1948, opening its first branch in the port city of Chittagong. The bank increasingly invested in people, technology and premises as its business grew in relation to the country’s thriving economy. At present the bank has numerous offices in Dhaka Chittagong and Sylhet, including the country’s only offshore banking unit inside the Dhaka Export Processing Zone at Savar.
 
Extensive knowledge of the market and essential expertise in a wide range of financial services underline our strength to build business opportunities for corporate and institutional clients at home and abroad. Continuous upgrading of technology and control systems has enabled the bank of offer new services, which include unique ATMs and Phone-banking and other alternate channels.
 
Standard Chartered’s services in Bangladesh, ranges from Personal & Corporate Banking to Institutional Banking, Treasury and Custodial services.
 
Standard Chartered is one of the world’s most international banks headquartered in London. This is summary of the main events in the history of Standard Chartered and some of the organizations with which it merged.
 
 
History
The Early Years
Standard Chartered is named after two banks which merged in 1969. They were originally known as the Standard Bank of British South Africa and the Chartered Bank of India, Australia and China. Of the two banks, the Chartered Bank is the older having been founded in 1853 following the grant of a Royal Charter from Queen Victoria. The moving force behind the Chartered Bank was a Scot, James Wilson, who made his fortune in London making hats. James Wilson went on to start The Economist, still one of the world’s pre-eminent publications. Nine years later, in 1862, the Standard Bank was founded by a group of businessmen led by another Scot, John Paterson, who had immigrated to the Cape Province in South Africa and had become a successful merchant. Both banks were keen to capitalize on the huge expansion of trade between Europe, Asia and Africa and to reap the handsome profits to be made from financing that trade. The Chartered Bank opened its first branches in 1858 in Calcutta and Mumbai. A branch opened in Shanghai that summer beginning Standard Chartered’s unbroken presence in China.
 
The following year the Chartered Bank opened a branch in Hong Kong and an agency was opened in Singapore. In 1861 the Singapore agency was upgraded to a branch which helped provide finance for the rapidly developing rubber and tin industries in Malaysia. In 1862 the Chartered Bank was authorized to issue bank notes in Hong Kong. Subsequently it was also authorized to issue bank notes in Singapore, a privilege it continued to exercise up until the end of the 19th Century. Over the following decades both the Standard Bank and the Chartered Bank printed bank notes in a variety of countries including China, South Africa, Zimbabwe, Malaysia and even during the siege of Marketing in South Africa. Today Standard Chartered is still one of the three banks which prints Hong Kong’s bank notes.
 
Expansion in Africa and Asia
The Standard Bank opened for business in Port Elizabeth, South Africa, in 1863. It pursued a policy of expansion and soon amalgamated with several other banks including the Commercial Bank of Port Elizabeth, the Colesberg Bank, the British Kaffarian Bank and the Fauresmith Bank. The Standard Bank was prominent in the financing and development of the diamond fields of Kimberly in 1867 and later extended its network further north to the new town of Johannesburg when gold was discovered there in 1885. Over time, half the output of the second largest goldfield in the world passed through the Standard Bank on its way to London. In 1892 the Standard Bank opened for business in Zimbabwe, and expanded into Mozambique in 1894, Botswana in 1897, Malawi in 1901, Zambia in 1906, Kenya, Zanzibar and the Democratic Republic of Congo (D.R.C.), in 1911 and Uganda in 1912. Of these new businesses, Botswana, Zanzibar and the D.R.C. proved the most difficult and the branches soon closed. A branch in Botswana opened again in 1934 but lasted for only a year and it was not until 1950 that the Bank re-opened for business in Botswana.
 
In Asia the Chartered Bank expanded opening offices in, Myanmar in 1862, what is now Pakistan and Indonesia in 1863, the Philippines in 1872, Malaysia in 1875, Japan in 1880 and Thailand in 1894. Some 34 years after the Chartered Bank appointed an agent in Sri Lanka it opened a branch in 1892 to take advantage of business from the tea and rubber industries. During 1904 a branch opened in Vietnam. Both the Chartered and the Standard Bank opened offices in New York and Hamburg in the early 1900s. The Chartered Bank gaining the first branch licence to be issued to a foreign bank in New York.
 
The Impact of War
Even the First World War offered opportunities for expansion when the Standard Bank set up a branch in Tanzania shortly after British troops occupied the formerly German administered Dares Salaam in September 1916. Both banks survived the inter-war years but the world trade slump led to the closure of operations in the Canary Islands, Liberia, the Netherlands, and Equatorial Guinea. Disaster struck the Chartered Bank’s office in Yokohama, Japan, when it was destroyed by an earthquake in 1923 killing a number of staff. The Chartered Bank was particularly effected by the Second World War when numerous Asian countries were occupied by Japan.
 
The Post War Years
After the Second World War many countries in Asia and Africa gained their independence. This led to local incorporation in some countries, particularly in Africa. Other operations such as those in Iraq, Angola, Myanmar and Libya were nationalized, while in Indonesia the Jakarta office was destroyed in an attempted coup d’etat. In 1948 the Chartered Bank opened in Bangladesh and during 1957 it acquired the Eastern Bank. The Eastern Bank gave the Chartered Bank a network of branches including Aden, Bahrain, Beirut, Cyprus, Lebanon, Qatar and the United Arab Emirates. The Bank also entered into a joint venture to form the Irano-British Bank which opened for business in 1959. The bank grew rapidly and had 24 branches when it was nationalized in 1981. By the mid 1950s the Standard Bank had around 600 offices in Southern, Central and Eastern Africa. Its network grew substantially in 1965 when it merged with the former Bank of British West Africa which had some 60 branches in Nigeria, 40 branches in Ghana and eleven branches in Sierra Leone in addition to operations in Cameroon and Gambia. Despite these acquisitions and expansion into new countries such as Mexico, South Korea and Oman (1968), both the Standard and Chartered Bank networks were comparatively small. Both viewed the future with some trepidation as the need to protect themselves from acquisition became ever more apparent. Standard Chartered PLC In 1969 the decision was made by the Standard Bank and the Chartered Bank to undergo a friendly merger thus forming Standard Chartered PLC. It was one year later that the descendants of the “Chartered Bank of India, Australia and China” were finally permitted to open a representative office in Sydney, Australia. Standard Chartered subsequently acquired the UK based Hodge Group, in which it already had a minority shareholding, and the Wallace Brothers Group. The Hodge Group brought to Standard Chartered an extensive network of UK offices specializing in installment credit and industrial leasing, and after a period of rationalization its name was changed to Chartered Trust Limited. Standard Chartered’s operations in Jersey emerged from the integration of other Hodge Group businesses with those of Wallace Brothers Bank (Jersey), Limited.
 
Standard Chartered decided, after the merger, to expand the Group outside its traditional markets. In Europe a number of offices were opened including Austria, Belgium, Denmark, Ireland, Spain and Sweden as well as several major cities in the UK. Standard Chartered also opened offices in Argentina, Canada, Colombia, the Falkland Islands, Panama and Nepal. In the USA a number of offices were opened and three banks were acquired. These included the Union Bank of California which gave Standard Chartered a presence in Brazil and Venezuela. The opening of a branch in Istanbul in 1986 was overshadowed by a far more dramatic event when Lloyds Bank of the UK made a hostile take-over bid for Standard Chartered. Standard Chartered won its right to remain independent but entered into a period of considerable change.
 
By the late 1980s Standard Chartered already had considerable exposure to third world debt. To this were added provisions against loans to corporations and entrepreneurs who could not meet their commitments. Standard Chartered reviewed its operations and decided to focus on its core strengths of Consumer Banking, Corporate & Institutional Banking and Treasury in its well established operations in Asia, Africa and the Middle East. This led to a series of divestments notably in Europe, the United States and Africa. During this time staff numbers were reduced; businesses not considered core were sold or closed; associate holdings disposed of; unprofitable branches closed and back office functions consolidated. In addition expensive buildings were sold with the proceeds reinvested in the business, and the senior management team was radically changed and strengthened.
 
Standard Chartered in the 1990s
Even within this period of apparent retrenchment Standard Chartered expanded its network, re-opening in Vietnam in 1990, Cambodia and Iran in 1992, Tanzania in 1993 and Myanmar in 1995. With the opening of branches in Macau and Taiwan in 1983 and 1985 plus a representative office in Laos (1996), Standard Chartered now has an office in every country in the Asia Pacific Region with the exception of North Korea. In 1998 Standard Chartered concluded the purchase of a controlling interest in Banco Exterior de Los Andes (Extebandes), an Andean Region bank involved primarily in trade finance. Standard Chartered is now focused on providing cross border services to its Latin American core customer base, composed of multinational corporations, international financial institutions and select large local corporations. In 1999, Standard Chartered acquired the global trade finance business of Union Bank of Switzerland. This acquisition makes Standard Chartered one of the leading clearers of dollar payments in the USA. Standard Chartered also opened a new subsidiary, Standard Chartered Nigeria Limited in Lagos, acquired 75 per cent of the equity of Nakornthon Bank, Thailand; and agreed terms to acquire 89 per cent of the share capital of Metropolitan Bank of the Lebanon.
 
Standard Chartered Today
Standard Chartered employs 38,000 people in 950 locations in more than 50 countries in the Asia Pacific Region, South Asia, the Middle East, Africa, the United Kingdom and the Americas. Standard Chartered is one of the world’s most international banks, with employees representing 80 nationalities.
 
Standard Chartered PLC is listed on both the London Stock Exchange and the Stock Exchange of Hong Kong and is in the top 25 FTSE-100 companies, by market capitalisation.
 
It serves both Consumer and Wholesale Banking customers. Consumer Banking provides credit cards, personal loans, mortgages, deposit taking and wealth management services to individuals and small to medium sized enterprises. Wholesale Banking provides corporate and institutional clients with services in trade finance, cash management, lending, securities services, foreign exchange, debt capital markets and corporate finance.
 
Standard Chartered is well-established in growth markets and aims to be the right partner for its customers. The Bank combines deep local knowledge with global capability.
 
The Bank is trusted across its network for its standard of governance and its commitment to making a difference in the communities in which it operates.
 
 
Country Classifications

To ensure that key resources (management time, capital, Human resources and information technology) are correctly allocated and that the exchange of best practice is accelerated between entities, the group has classified the countries where it operates into 3 categories: the large, the major and the international.

These classifications are a function of sustainable, attributable earnings, the number of retail clients, balance sheet and size of operation. A brief presentation of this classification is shown below:

Figure 1: Country Classifications of SCB

 
History of Grindlays Bank
Captain Grindlays established Grindlays and Company with partner in 1828. The name was changed to Grindlays Christian and Mathew’s in 1839, which again changed to Grindlays and company in 1853. The first branch was opened in India at Church Lane,
 
Kolkata in 1854 and the other Indian branches autonomous from London were opened by Grindlays and company in 1864. They were acquired by National Provincial Bank Limited in 1924. National Bank of India acquired Grindlays and Company in 1858 and begun to operate as National and Grindlays Limited.
 
Acquisition of ANZ Grindlays Bank by Standard Chartered Bank
In August 2000, the US $1.34 billion acquisition of Grindlays Bank was completed. This made the Standard Chartered Bank the leading international bank in India and the other countries of South Asia. The acquisition strengthened the Group’s competitive position in Middle East and brought to the group a respected private banking business.
 
Standard Chartered Bank has taken the advantage of the expansion opportunities. Buying Grindlays from ANZ now propel it from number five to number one among international banks in India, with some choice extra footholds in the Middle East. At 1.34 billion US dollars, it is hard to complain that Standard Chartered Bank has overpaid. The financial ease is less compelling for ANZ shareholders, as there are advantages of getting out of a strategically peripheral business. This acquisition of Grindlays Bank has added 6000 employees and 4 countries to Standard Chartered Bank’s existing network of 7000 employees and 570 offices in 50 countries. The end result is that Standard Chartered Bank, which went into the 1997 Asian crisis with strong business in Hong Kong, Singapore and Malaysia, emerges with additional core markets in India and Thailand.
 
The deal has made Standard Chartered Bank the largest foreign bank by assets in India, Pakistan and Bangladesh and the second largest in Sri Lanka and United Arab Emirates. The bank has been seeking to expand in the region since the end of the Asian economies crisis, and has finally become successful in its expansion. The primary goal of the integration is to combine the best of the both the banks, and put right people in right jobs on the basis of fairness and equitability.
 
In September 2000, the group agreed to acquire Chase’s Hong Kong consumer banking business for US$1.32 billion, which makes Standard Chartered Bank the leader in Hong Kong cards. At that time it was also announced that the chartered Trust had been sold to Lloyds TSB for 627 million pounds.
 
Until September 2002, both Standard Chartered and Standard Chartered Grindlays operated under the same management but as separate entities. With effect from September 2002, the merger was complete and Standard Chartered Bank started operating as single entity.
 
Acquisition of AMEX in Bangladesh
Standard Chartered Bank has signed an Agreement to acquire the commercial banking business of American Express Bank Limited in Bangladesh.
 
AMEX started its business in Bangladesh in 1966 by opening its first branch in Dhaka with a capital of BDT 20 million. Subsequently, the second branch was opened in 1967 in Chittagong; third branch was opened in 1999 in Dhanmondi and the fourth branch was opened in 2004. AMEX also has four booths in Dhaka and Chittagong as well as an in-branch offshore Banking Unit opened in 2001 to serve the export oriented businesses.
 
In Bangladesh, American Express’ operations include commercial banking, correspondent banking, foreign exchange services and consumer banking. Its operation also includes Financial Institutions and Travel Related Services, but these are not part of the acquisition of AMEX business in Bangladesh.
 
 
Why is SCB acquiring the AMEX business in Bangladesh?

• Good deposit base
• Good corporate clientele
• Attractive talent pool
• Branch licenses
• Defensive strategy

 
In May, SCB received a NO-OBJECTION-CERTIFICATE to proceed with the BPA from the Bangladesh Bank and have since signed an Agreement with AMEX. Standard Chartered Bank plans to migrate AEBL customers to SCB over a three month Transition Period starting August 01, 2005. From November 01, 2005 all AMEX customers can visit SCB branches. The acquisition will add 3 branches, and 3 booths to the existing network.
 
SCB at a Glance:
 
Name of the Organization:                             Standard Chartered Bangladesh LTD.
 
Year of Establishment:                                   1948.
 
Head Office:                                                   Motijheel, Dhaka 1000, Bangladesh
 
Nature of the organization:                             Multinational company with subsidiary group in Bangladesh.
 
Capital:                                                            Paid up capital: TK 4380 million
Deposit – Tk 4,980 million
Advance – Tk 3,255 million
 
Shareholders:                                      SCB group shareholders
 
Products:                                                         Shown in detail
 
Management:                                                  Chief Executive Officer
Chief Operating Officer
Manager, Personal Financial Services
Head of Corporate Banking
Manager, Human Resources
Manager, Marketing
 
Number of Offices:                                         18 (10 in Dhaka, 3 in Chittagong and 1 in each of these places Savar, Sylhet, Khulna, Bogra  and Narayanganj. )
Number of ATM’s:                                          25
Technology:                                                    Offers full online banking from branch to branch and also from Dhaka to Chittagong.

Service Coverage &

Customers:                                                     Serves individual and corporate customers within Dhaka & Chittagong.
Customers of SCB
Two of the business target specific customer groups:

• Consumer banking meets the needs of individual customers.
• Corporate and institutional banking meets the needs of companies, banks and other financial institutions.

Figure 2 Relationship between Respective Customers to Different Departments

 
 

	Individual				Organization

 
 
 
Companies        Banks and other
Financial Institutions
 

		Consumer Banking				Corporate & Institutional Banking
	Treasury

 
 
 
 
 
Banking services
Standard Chartered Bank is providing two types of services.
1)    Business or Corporate Financial Services
2)    Retail or Consumer Financial Services
Business Banking of SCB
It is very true that major contribution to the bank’s equity has been from business banking sector. It provides several types of services under business banking (Figure below). As it shows, for example SCB offers corporate banking facilities to both local corporate and multinationals. Besides, it also provides commercial, Industrial, Quasi Government or Correspondence, treasury banking facilities and consumer banking services
.
 
Figure 3:Business Banking of SCB
 
 
Source: Corporate Banking, SCB
 
 
Corporate Banking
 
SCB is recognized as the leading financial institution in corporate finance services in Bangladesh. A professional management team caters to the needs of its clients and provides them with a wide range of financial services some of which are project financing and investment constancy, syndicated debt and equity, bond and guaranties, local and international treasury products.
 
 
Institutional Banking
 
This service of SCB is designed for different fund based organizations like donor agencies, NGOs, voluntary organizations, foreign missions, airlines, shipping lines and their personnel with the facilities like convertible and non-convertible current accounts, convertible Taka accounts, which are freely convertible to major international currencies, local and foreign currency remittances through a large network of branches and correspondence.
 
Commercial Banking
 
SCB offers different commercial banking facilities to all commercial concerns specially those with particular involvement with import and export finance. It provides the finance facilities like trade finance facilities including counseling, confirming export L/Cs and issue of import L/Cs backed by its international branch and correspondent network. It also provides bonds and guarantees, investment advice, leasing facilities, project finance opportunities.
 
Quansi Governmental Banking
 
The Quasi Government Service of SCB helps the government by providing different financial service like efficient and knowledgeable management of trade business (import and export), skills in barter, swaps and counter trade deals. In addition, the opportunity of debenture finance for new projects, possibilities of hard currency loans and lease deals, the opportunity of syndicated hard currency, financing of loans and import L/C, highly efficient account management and remittance handling within the country or aboard.
 
Treasury Banking
 
The treasury of SCB is one of the leading treasuries that offers foreign exchange requirements, provides market commentaries, economic forecasts and advisory to its major corporate clients. To keep its customers’ up to date with what is happening in the money markets, SCB has “Weekly Treasury Updates”.
 
Consumer Banking Services
 
The service of PFS and Credit Card Services are known as Retail Banking or Consumer Banking. Consumer/Retail banking deals with the providing the bank services to individuals on a one-to-one basis. Superior retail banking services comprising a wide range of deposit and loan products are offered by the Standard Chartered Bank to its individual customers.  The Consumer Banking division constantly faces challenges and meets them by developing new products and services to fulfill the specific requirements of local and foreign customers. Bank offers a 24-hour service in Bangladesh through its Moneylink ATM network, Phone-link Phone Banking services, Auto BillsPay and iBanking, which are known as ‘Alternate delivery Channels’.
Products Range of SCB
>>Deposits:

• Current Account (LCY)
• Access Account
• Savings Account
• Extra Value Savings Account
• STD/Call Account
• Fixed Deposit Account
• Monthly Savings Scheme
• Millionaire Scheme
• Current Account (FCY)
• RFCD
• NFCD
• Welcome Pack

 
>>Loan Facilities

• Personal Loan
• Auto Loan
• Mortgage Loan
• Flexi Loan
• Cashline

The above are discussed in details later in the report.
Since, here we are dealing with the consumer bank division; it is being emphasized more in the report.
Consumer Banking Services Channels: Here customers are provided services through mainly 3 channels as below

1. Priority Banking
2. Branches
3. Direct Sales

1. Priority Banking – an exclusive service offer

Priority Banking – a privileged service offered to our selected customers. We promise you services that are personal, professional, privileged, private and profitable. This unique service, offered by only Standard Chartered Bank in Bangladesh, comes with a range of attractive benefits:
•    Personal dedicated Relationship Managers.
•    Separate Priority Suites for providing personalized banking services and transactions with maximum confidentiality.
•    Priority Banking membership – Free.
•    Preferential rate of interest on deposit & advances (at the discretion of the management)
•     Commission-free Foreign Currency endorsement and issuance of Traveller’s Cheques.
•    Traveller’s Cheque encashment – Free.
•     Entitlement of Priority Banking Privileges beyond Bangladesh territory (International
recognition as a Priority Banking customer in Standard Chartered Bank all over the world)
•    Access to the VIP lounge (Balaka Business class lounge) of Dhaka Sheraton Hotel at Zia International Airport (including immediate family members accompanying) irrespective of the airlines or the class the customer is flying.
•    A 20% discount on food and soft beverages at Balaka restaurant (opposite to the Balaka Business class lounge).
•    Priority Suites in Dhanmondi, Gulshan and Uttara in Dhaka and Nasirabad in Chittagong.
•     Swifter service in clearing cheques and in-house cheques transfers.
•     Issuance of personalized Priority Chequebook – Free.
 
•    Access to 24 hour call centre – Free
•     Moneylink /ATM card replacement charge – Free.
•     Higher withdrawal limit of BDT 50.000/- on Moneylink / ATM /Debit Card
•     Full Waivers on charges of Pay Order and Demand Draft issuance up to BDT 100.000/-.
•     25% Discounts in Locker charges.
•    Full waivers on issuance of Bank certificates – Balance Confirmation Certificate, Certificate of Interest, Solvency Certificate) in Priority Banking letterheads.
•     Duplicate statement (current & previous year) – Free.
•     Provision for Car Parking.
•    Ability and flexibility to conduct banking transaction over phone through Call Centre.
•     Full waiver on online (one city to another city) transactions
•     Full waiver on Student File Maintenance(i.e.BDT 4000Y-)
•     Discount for the purchase of plot and / or flat with AMIN MOHAMMED FOUNDATION (Real Estate)
•     Exclusive lifestyle privileges in the following GIFTS & JEWELLERY shops: o    Naba Rupa o    Oriental Pearl o    New Augnibeena Jewellers
•    Special privilege (Business class check) in the following AIRLINES: o    Malaysian Airlines o    EVA o    Silk Air
•     Discounts in the following HEALTH CLUBS: o    Pan Pacific Sonargaon Hotel o    Dhaka Sheraton Hotel o    Club Amazon
•     Exclusive lifestyle privileges in the following SHOPS: o    Sports World
o    Pick & Pay Supermarket Chain o    Agora (Separate Billing counter) o    Rajeshwary (Chittagong)
•     Exclusive lifestyle privileges in the following RESTAURANTS: o    DHAKA
o    Pan Pacific Sonargaon Hotel o    Dhaka Sheraton Hotel o    Spitfire o    Sajna o    Olive Garden o    CHITTAGONG o    Chutny Mary o    Snoopy Restaurant o    Chung King Restaurant
•     20% – 30% Discount in HOTEL SARINA
•     Special privilege in the following HOSPITAL & DIAGONISTIC CENTRES: o    DHAKA
o    Conscious Health Services Ltd. (House-25A, Road-6 Dhanmondi) o    The Ibn Sina Trust (Road – 9A, Dhanmondi) o    CHITTAGONG o    Sensiv (14 Jamal Khan Road)
•     Exclusive lifestyle privileges in the following APPAREL SHOPS: o     DHAKA
o    Sarovar Sarees (House-1, Road-138, Gulshan-1) o    Saree Sagar (Kashba Centre, 2nd Floor, Dhanmondi) o    United Colors of Benetton (Gulshan-1) o    CHITTAGONG
 
o    M/S Citi Center (1002 CDA Avenue)
o    Gardenia (147, Central Plaza OR Nizam Road)
o    Top Shop Top Men (7 Premier University, Probortak Circle)
o    Sundaari (66/67 Central Plaza OR Nizam Road)
o    Collection (183 Central Plaza OR nizam Road)
•     Exclusive lifestyle privileges in ART & HOME DECOR: HOME ART COLLECTION (1702 Hosna Mansion, Chittagong)
•    Dedicated Customer Relationship Personnel at the Priority Centres
•    Dedicated Customer Relationship Personnel at the Priority Centres
All you have to do is maintain a minimum balance of BDT 3.5 Millions in your personal account(s) and sign up as a Priority customer.
 
 

1. Branches:

It serves the bank’s general customers, unlike priority banking where selected customers are being served. Here also customers are deal with personally. Apart from its financial products Customer service is the most vital factor for an organization especially for banks.  It becomes a matter of utmost importance because a bank is directly involved with its customer. To run the business safe and sound, a bank must have to maintain a good relation with each and every customer.
 
Basically a SCB provides cash deposit service, utility bill payment service, small finances, corporate or business finance service, loan related services etc. Standard Chartered Bank has qualified service team who can provide the best service to the customers and can make the customer a satisfied one. The products and services that are basically provide its customers are presented bellow:

• Account Opening
• Basic requirement to open a personal account and salary account:
• To open an EVSA Account or a STD/Call Account :
• Business account
• Resident Foreign Currency Deposit (RFCD)
• Non-Resident Foreign Currency Deposit (NFCD)
• Foreign Currency Account
• Fixed Deposit
• Other Types of Account
• Chequebook
• Accounts Statement and Certificate
• Closing an account
• Purchase of Sanchaya Patra on Behalf of a customer
• Different types of queries
• Credit Card Services
• ALICO Insurance Premium Pay Service
• Saving Schemes Services of Standard Chartered Bank
• Locker Service
• Others

 

1. Direct Sales:

 
Direct Sales employees do not have any physical office, they have to roam around and collect customers from anywhere.
 
 
Personal Banking Services
 
SCB started its personal banking services in March 1992. Besides usual deposit services, consumer finance services of SCB have been most popular. This section of report discussed all these personal banking services; consumer finance services of SCB have been most popular. Standard Chartered offers premium retail/consumer banking services to individual customers with a large variety of deposit and loan products. Our Consumer Banking business continuously meets the challenges of developing new products and services to match the specific requirements of customers.
To offer our customers a greater banking convenience, we have introduced many modern banking facilities that include:
– Evening Banking
– Largest 24-hour ATM Network
– VISA Debit Card
– State-of-the-art 24-hour Call Centre
– Internet Banking
– e-Statements
– SMS Banking
– Auto BillsPay Service
– 24-hour BillsPay Services
This section of report discusses all these personal banking services provided by SCB.
 
 
a) Deposit Services
SCB has the deposit services for its customers. SCB’s deposit services are shown in the figure below:
 
Figure 4: Deposit Services
Source: SCB’s Official Document
 
b) Locker Facilities
SCB’s locker service allows the customers to keep their valuable in a safe and secure place and access the same at convenient times. These strong and heat resistant steel lockers lodged in reinforced concrete steel vault, round the clock security guards, sophisticated anti-burglary alarm systems provide maximum protection to the valuables of customers.
 
c) Government Bonds
Like other banks, SCB provides its customers with bond services. Three types of government bonds are available with the bank. These bonds are sold and related accounts are maintained according to the already established procedures.
 
 
d) Consumer Finance
SCB first introduced consumer finance in Bangladesh and until today they are the market leaders. It has varieties in financing its retail customers with innovative products. These include different types of credit and saving schemes shown in the following Figure.
 
 

Figure 5: Scheme Offered Under Consumer Finance Of SCBSource: External Affairs division, SCB
 
Different Loan facilities of Consumer Banking

• Personal Loan

Conventional banking at Standard Chartered, one does not need to provide any cash security to avail Personal Loan from it. The loan amount may range from BDT 60,000 to BDT 1,000,000 depending on one’s income.
A very flexible Personal Loan – to meet your assorted needs like:
•    Purchase of miscellaneous household appliances
•    Purchase of personal computers
•    Purchase of refrigerator
•    Purchase of audio-video equipment
•    Purchase of furniture
•    Hospitalisation or other emergency medical needs
•    House renovation
•    Purchase of office equipment / accessories
•    Office renovation
•    Marriages in family
•    Advance rent payment
•    Overseas trips
 
No cash Security:
The great news is no cash collateral is required to obtain this loan. This means no requirement of submitting the fixed deposits to the Bank for the period of the loan as security. Some documents from one’s employer or the guarantee of a reputed person (as defined by the Bank) will suffice.
Tailored Repayment Period:
Monthly instalments can be tailored to meet customers’ convenience and budget. Customer can choose to repay the loan in 12 to 60 equal monthly instalments depending on the loan amount.
Competitive Cost:
Personal Loans from Standard Chartered offer some of the most competitive interest rates available in the market. Depending on one’s job criteria the interest rate varies from 13% to 15%.
Processing Fee:
1% or BDT1,000 whichever is higher.
Convenient:
At Standard Chartered, they believe in delivering the services to customers doorsteps. Just call them.
 

• Auto Loan

With Standard Chartered Auto Loan, it is easier than ever to buy the car of one’s dream. It offers ya flexible and affordable loan with easy repayment options, all wrapped in a very convenient package. They finance a maximum of 75% of the car value. The loan amount may range from BDT 200,000 to BDT 5,000,000 for new /reconditioned cars and from 200,000 to BDT 1,000,000 for used cars.
Easy conditions to realise your dream car:
•     Salaried Executives / Self-employed Individuals
•    Minimum Age: 23 years (for salaried executives) and 25 years (for self-employed individuals)
•     Maximum Age: 65 years
•    Work Experience: Minimum 1-year service experience for salaried executives & 3 years for self-employed individuals.
•     Nationality: Bangladeshi
•     Minimum net income: BDT 25,000 for both salaried individuals and self employed persons per month.
Wide range vehicle types and brands to choose from:
•    New Vehicle: Car, Station Wagon, Jeep, 4-Wheeler Jeep, Microbus (Pick up or any vehicle for commercial use is not included in this scheme)
Selected Brands for new vehicles: BMW, Jaguar, Mercedes Benz, Volvo, Toyota, Honda, Nissan, Mitsubishi, Suzuki, Maruti, Hyundai, Opel, Rover, Fiat, Tata, Daihatsu, Daewoo, Mahindra
•     Reconditioned Vehicle: Car, Station Wagon, Jeep, 4 Wheeler Jeep, Microbus (Pick up or any vehicle for commercial use is not included in this scheme) Selected Brands for reconditioned vehicles: Toyota, Honda, Nissan, Mitsubishi
•     Vehicle: Car, Station Wagon, Jeep, 4 Wheeler Jeep, Microbus
Selected Brand for used vehicles: Toyota only
 
Vehicle Age specifications:
•     New Vehicle: Never used and ready for first time registration
•     Reconditioned Vehicle: Ready for first time registration and maximum age of the vehicle at the end of the loan must not be more than 10 years.
•    Used Vehicle: Ready for second time registration and maximum age of the vehicle at the end of the loan must not be more than 10 years.
Tailored Repayment Period:
Auto Loan from Standard Chartered has been custom designed, which lets you drive your dream car
while providing you the convenience of repaying.
Maximum Repayment period
Brand New cars: 60 months
Reconditioned cars: 60 months for Toyota, 48 months for others
Used cars: 36 months
 
Competitive Cost:
We offer you one of the most competitive rates in the market. Our interest rate is only 13% per annum. However, you can enjoy lower interest rate if you prefer to deposit some security.
Processing Fee:
For loan amount from BDT 200,000 to BDT 399,000 : BDT 5,000″. For loan amount from BDT 400,000 to BDT 999,000 : BDT 7,500. For loan amount 1,000,000 and more: 1 % of loan amount.
Convenient:
At Standard Chartered, we believe in delivering our services to customers’ doorsteps.
 

• Flexi Loan

Tailored
Flexi Loan from Standard Chartered is a loan facility that has been custom designed to fit your needs. Highest Loan amount is BDT 1200K depending on income assessment.
 
Flexi Repayment:
Loan amount: 100K – 499K
Max Tenor Allowed: max 36 Months
Loan amount: 500K- 999K
Max Tenor Allowed: max 48 Months
Loan amount: 1000K-1200K
Max Tenor Allowed: max 60 Months
Flexi Security:
Flexi Loan offers you the option of choosing the amount of security that you wish to provide to the bank as collateral for your loan. The security amount may range from 30% to 100% of the amount.
Flexi Cost:
Flexi loans offer you some of the most competitive and flexible interest rates available in the market.
•    13% per annum when 100% or more secured by readily encashable securities acceptable to the bank.
•     14% per annum when 50% to 99% secured by readily encashable securities acceptable to the bank.
•     15% per annum when 30% to 49% secured by readily encashable securities acceptable to the bank.
Processing Fee:
1% or BDT1000 whichever is higher.
 
A very Flexible Loan:
Purpose:
House renovation, furniture or other household items for personal/family use, electrical and electronics including computer and accessories for personal use, marriage for primary family members, office renovation, medical treatment, higher education and purchase of office equipment/ accessories and travel abroad.
 
Convenient:
At Standard Chartered, we believe in delivering our services to customers’ doorsteps.
 

• Mortgage Loan- The Home Loan

Standard Chartered Mortgage Home Loan ?to realise your dream home
•    Loan amount includes registration cost
•    No cash security
•    No personal guarantee from third party
•    Interest calculated on Monthly Reducing Balance
Everyone dreams of a sweet home. And this dream comes true with a little effort. Standard Chartered is ready to help you in this effort so that your dream comes true. Be it your first home or renovating/refinancing your existing one, or a second one, you can avail our Mortgage Home Loan ?the best home loan in town.
Standard Chartered Mortgage offers you
•     Competitive interest rate with no hidden cost. Interest calculated on a monthly reducing balance, which enables you to save money in your instalment amount
•     Simple & easy documentation
•    No personal guarantee from third party and no additional cash security
•    Flexible loan amount
•     Refinancing
•     Financing includes registration cost
•    Partial or full prepayment options
•    Loan approval within the shortest possible time
Who can apply?
Profession: Applicant should have at least three years of service/ professional/ business track records
Minimum Age: 30 years
Maximum Age: Retirement age or 60 years less loan term, whichever is earlier
Proposed Property: Any leasehold residential property including purchase of second hand property
Flexible Loan Amount
Maximum Loan: BDT 7,500,000
Maximum 70% of the property value (including registration cost)
Minimum Loan: BDT 1,000,000
Easy Terms and Repayment Option
•    Maximum loan term up to 15 years
•    Repayment: Loan will be repaid by equal monthly instalment (EMI) and the instalment is calculated on monthly reducing method with no additional hidden interest or charges
•    Convenient Security
•    Registered mortgage of the property or any other equivalent property in favour of Standard Chartered Bank.
Processing Fees
Loan Processing Fees: 0.25% of the loan amount Documentation Fees: 1% of the loan amount

• Cashline:

A product that offers the best of both worlds, permitting ready access to cash without disrupting interest-earnings on fixed investments. It provides ready access to cash against quasi-cash investment papers like Terms Deposits, Savings Certificates, Wage Earners’ Development Bonds, ICB Units certificates etc.).
Other features:
•    Both Revolving & terminating options
•    High utilization Limit (based on security value)
•    Quarterly payment of Interest (only on the outstanding amount)
•    No commitment fee (on unused limit)

• SME Banking

Our Business Financial Services (BFS) is now SME Banking. SME Banking supports the banking needs of Small & Medium Enterprises (SMEs). This is a one-stop solution for all sorts of banking requirements. SME Banking offers the following products:
•   Business Loan
•   Overdraft facility
•   Trade Finance & Working Capital
•     Overdraft Facility
Overdraft facility can be offered up to 95% of the fixed deposit maintained with Standard Chartered Bank. Interest rate on overdraft would be within the range from 10% -13% p.a.
•     Business Loan
Business Loan (partially secured) is for asset financing such as Machinery, vehicles, long-term working capital needs.
Features of Business Installment Loan:
•    Maximum & minimum loan amount is BDT 1.2 M and BDT 5M respectively.
•   Maximum Tenor: 5 Years
•   Interest rate:
 
Table 2: Interest Rates for SME Banking

Loan Amount	Tenor	Interest Rate
BDT 1.2M to 2M	36 months	14.00% p.a.
BDT 2M to 5M	60 months	15.00% p.a.

 

 

Table 14: Process of Call Centre Cards functionaliy

Sl.	Service	Service Provider	Turn Around Time	Fees & Charges
1	Status of Card Application	CSR only	Immediately	Nil
2	Card Account Inquiries	IVR and CSR	Immediately	Nil
3	Card Activation- new & renewed	CSR only	Immediately	Nil
4	Card Block	CSR only	Immediately	Nil
5	Re-instatement & Replacement	CSR only	As per Card Operation SLA	Nil
6	Address / telephone number amendment	CSR only	As per Card Operation SLA	Nil
7	Duplicate Statement & Change of statement cycle/date	CSR only	As per Card Operation SLA	Nil
8	Reward Redemption	CSR only	10 Working Days	Nil
9	Safety Net de-enrolment/ re-enrolment	CSR only	Executed on the same day if Instruction is received by Card Operation before 11:00 AM	Nil
10	Instabuy Transfer	CSR only	As per Card Operation SLA	As per Bank policy
11	Online TIN Generation	CSR only	Immediately	Nil
12	Authorization	CSR only	Immediately	Nil
13	Card Cheque Activation and stop Cheque	CSR only	Immediately	Nil

Note: To avail all these facilities, the customer must come through Tin Validation.
 
Other Information on Call Centre:

• There is no extra charge for using the Call Centre. However, normal fees and charges, relating to products & services, continue to apply.
• Yes. Both the IVR & CSRs are available 24 hours a day, 7 days a week, 365 days a year.
• The TIN (Telephone Identification Number) is a unique and secret password issued to each user to ensure confidentiality of information. One needs the TIN to access IVR and gather information about his/ her account(s)/ credit card(s). For accountholders, the TIN is generated by Account Services while for cardholders, the customer generates his/ her own TIN on-line through the IVR.
• No, the TIN is unique to this service.
• In case of accountholders, the customers should be requested to complete a Call Centre Form, which will then be forwarded to Account Services for TIN generation. For credit cardholders, he/ she should be advised to contact the Call Centre where the CSRs will run a security check. After which, the customer can generate his new TIN on-line.
• Yes, the TIN may be changed by selecting the option ‘To change your TIN’ for accountholders & cardholder.
• The customer should be instructed to apply for a replacement TIN immediately by selecting the above mentioned options.
• The last 10 transactions in the account can be heard.
• The customer can only transfer funds between accounts under the same master and local currency. This will take effect right after the transaction.
• The customer has to access the IVR through his bank account and TIN. He/ she selects the option of ‘Credit card payment’ and follows instructions given by the IVR. The payment will be updated in the credit card in the next two hours.

 
I-banking
Definition: a simple, hassle-free and secure internet banking service available to all Standard Chartered Bank customers in Bangladesh .
Standard Chartered Bank’s Internet Banking service is the fast and easy answer to the financial management needs of it’s customers, allowing them to bank from wherever they are, whenever they desire, in total security and confidentiality. No more queuing and it’s absolutely free!
SCB’s iBanking offers instant access to a wide range of online banking services and the latest promotions. Because it has been designed for speed and ease of use, it takes only a few minutes to complete a banking transaction or get up-to-date account details. iBanking is a convenient, user-friendly way of staying informed and in control of one’s account from anywhere in the world.
 
Objective
To provide simple, hassle-free, and secure internet banking service to all Standard Chartered Bank, Bangladesh customers.
 
Attain service excellence in terms of:

• Easy 24 hour accessibility
• Security
• Convenience
• Quality
• Technology  based structured solutions

 
Services Offered

• Account services: view relationship with the Bank at a glance, check account balance, view and download statements, order statements and cheque books.
• Fund transfer: transfer funds between own Standard Chartered Bank accounts. (Even if under different master).
• Standing order: Request the set-up of standing orders ( accounts and Cards)
• Cheque status: check the status of cheque issued from accounts.
• Utility bill Payment: Pay utility bills online.
• Credit Card payments: Pay from the account to card, both of which should be linked with iBanking.
• Credit card services: View card statement, check the balance, and apply for a credit limit increase.
• Loan services: view loan type and amount, outstanding balance and overdue amount, if any.
• Personal information: change existing password.
• Market watch: get updated on foreign exchange rates.

 
Criteria for iBanking access
 
All customers including Credit Card only customers are eligible for iBanking with the exception of the following:

• Customer with a company account.
• Where the mandate to operate is “jointly or both” / jointly or all and the customer does not have any other relationship with the bank.
• Customers having Convertible accounts
• Customers having any Foreign Currency accounts (excluding RFCD accounts).

 
How to apply for iBanking
Method 1

• Customers submit a completed Ibanking Application Form
• Receives his/her ibanking ID by email.
• Customer collects the password from his specified branch in 3 working days.
• Logs on to www. Standardchartered.com/bd and starts enjoying our ibanking services.

 
Method 2
 

• The customer visits the website
• Fills out the iBanking application form online and creates his own iBanking ID.
• Then prints, signs, and drops the form at any SCB branch, along with a copy of valid passport.
• Collects password from specified branch after 3 working days.
• Logs on to the website.

 
Minimum requirements:
 
Please log on the website. While log on the customer have to make sure no other window is open.

• Internet Explorer version 5.8 or above.
• Java soft version 1.3.1_11 ( JRE)

 
Important information on iBanking:

• There is no extra charge for using this service. However, normal fees and charges, relating to products & services, continue to apply.
• Yes. This service is available 24 hours a day, 7 days a week, 365 days a year.
• Yes. The customer will be able to access the service as long as he/ she is able to access the Internet.
• They are unique secret words/ characters issued to each user to ensure confidentiality. One needs both of them to login.
• No, the internet banking ID and Password are unique to this service.
• If the customer has a TIN, instruct him/ her to contact the Call Centre at # 8961151 or 0173 041400-19. If he/ she doesn’t have a TIN, request him to complete the iBanking Replacement PIN Form. Forward the form to Account Services after verifying signature.
• Yes, the password may be changed, using the ‘Change of Password’ service, anytime.
• Please ask the customer to change his/ her password immediately by choosing ‘Personal Update’ and change password online.
• Yes. The summary of his/ her account profile can be seen at the Personal Homepage once he/ she has logged-in to iBanking.
• Yes, the transactions belonging to all his/ her accounts can be viewed in the Account information section under the Account Services.
• Transactional history up to one year for accounts and the last two statements for credit cards can be viewed.
• Yes. The latest transactions or historical transactions, for a period up to one year from the current date, can be downloaded to save the information.
• No. The Mail Box is only for communication between the customer and SCB. For security reasons, we do not accept any instruction relating to financial transactions through the Mail Box.
• One can only transfer funds between his/ her own SCB accounts that are linked in iBanking. This will take effect right after the transaction. For credit card Payment
• One can transfer upto BDT 1M.
• The customer can view his/ her current SCB Credit Card statement online and the two previous card statements anytime, anywhere. All he/ she needs to do is to click on Card Information under Card Services and select the statement that he/ she wishes to see.
• The statements are segmented as:
• Current transactions: Here one can view all transactions recorded after the last month’s statement.
• Last statement: This will be the last month’s statement.
• Prior statement: This will be the statement ‘prior’ to the last month’s statement.
• He/ she can make payment to his/ her SCB Credit Card bills by simply clicking on Card Payment under Card Services and selecting the card that he/ she wishes to make the payment to. The payment will be updated in the card account in the next 2 hours.

 
BillsPay
Definition: 24-hour BillsPay Centre.  The BillsPay Centre is Standard Chartered’s one-stop bill payment solution. It is an automated service that is designed to ease the customer’s bill payment problems. Customers can stop by these Centers and use the machine at any time of the day or night to make bill payments. They can also send someone else with a copy of their bill to make the payment on their behalf.
 
Location: the BillsPay Centres are located at the following branch premises-
Dilkusha, and Dhanmondi # 2.
 
Features available:
Bank Payments

• § Credit Card payment
• § Bank Deposit

The customer can make credit card payments or even deposits into his/ her account round the clock. All he/ she has to do is select the preferred option and key in the amount they wish to pay/ deposit. Next the mode of payment has to be selected – the customer has the option of paying/ depositing cash, cheque or debit instruction (if an SCB accountholder). He/ she must put the cash/ cheque/ debit instruction inside the envelope and sealed it, write the transaction number on the envelope and drop it in the machine. A maximum of six payments/ deposits can be made through one transaction, e.g. deposit a cheque of Tk 10K for making five payments (amounting to a total of Tk 10K) for five different credit cards.
 
Utility Payments

• DESA
• DESCO
• BTTB

 
Payment of DESA, DESCO and BTTB bills can be made through BillsPay. After selecting the preferred option, the amount the customer wishes to pay has to be keyed in. Then the mode of payment selected — the customer has the option of paying/ depositing cash, cheque or debit instruction (if an SCB accountholder). He/ she must put the cash/ cheque/ debit instruction inside the envelope and sealed it, write the transaction number on the envelope and drop it in the machine. A maximum of six payments/ deposits can be made through one transaction, e.g. you may deposit a cheque of Tk 10K for making five different payments (amounting to a total of Tk 10K) to BTTB. But payment cannot be made to different billing companies under one transaction number.
Customers don’t have to sign up for this service. In fact, customers can send their representatives at any time of the day to make their payments/ deposits.
The machines are serviced twice daily. Payments made until midday are updated in the system on the same day while payment made after noon are updated the following working day.
 
Process of BillsPay Centre
 
The customers can make credit Card payment or payment of DESA, DESCO and BTTB through the BillsPay machine.  After selecting the preferred option, the amount the customer wishes to pay has to be keyed in. then the mode of payment selected- the customer has the option of paying or depositing cash, check or debit instruction. He must put the cash, cheque or debit instruction inside the envelop and sealed it, write the transaction number on the envelop and drop it in the machine. The machines are serviced twice daily. Payments made until midday is updated in the system on the same day while payment made afternoon are updated the following working day.
 
Important information on BillsPay centre:

• Services of SCB BillsPay Centres are available 24-hours a day, 365-day a year. It allows customers the ease of making payment round the clock.
• The customer no longer needs to queue up at branches to pay utility bills or settle credit card outstanding or to even make a deposit into his/ her account. The BillsPay Centre gives you the option of making these payments as and when you want to.
• This is another unique feature of SCBs BillsPAY Centre … even if you are not an account holder of Standard Chartered Bank you will be able to use it’s services.
• You can use the BillsPay Centre to pay your BTTB, DESA and DESCO bills. You can also settle your SCB credit card (both VISA and MasterCard) outstanding and make deposits to your Standard Chartered Bank account.
• The three BillsPay Centres are located at our Dilkusha, Gulshan and Dhanmondi # 5 branch premises.
• The customer can send a representative to any of our BillsPay Centres to pay his/ her utility bills. Please note that a copy of the bill statement is required to make payment.
• Yes, anyone can make deposit(s) into your Standard Chartered Bank account. Please ensure that the correct account number is input into the machine.
• No. He/ she has the option of paying through either cash or cheque. Payment can also be made through a debit instruction, if he/ she is an accountholder.
• The payment is updated within the same working day if made by 12:00 pm. Payments made after 12:00 pm is updated by 12:00 pm of the next working day.
• Yes, they can but the payments will be updated only the next working day.
• No, money cannot be withdrawn from the BillsPay Centres. The service is designed to accept payments only.

 
 
ATM Services
 
Automated Teller Machine (ATM) is a fast, easy and convenient way for you to withdraw or deposit cash and also avail other services without having to step into a branch.
 
Number of ATMs
Standard Chartered has 27 ATMs in Bangladesh. The ATMs within branch premises are:

Dhaka	Chittagong	others
Dilkusha Main

Motijheel (ALICO)
Gulshan
Kawran Bazar
Sheraton
Banani
Uttara
Dhanmondi( 2 & 5)Nasirabad
AgrabadKhulna
Bogra
Sylhet
Narayanganj
 
The offsite ATMs are located in Dhaka and Chittagong. They are:

Dhaka	Chittagong
Johnson Road

Tejgaon
BAT( Mohakhali)
Syamoli
Shanker
Pallabi
Uttara
Motaleb Plaza
A R PlazaJ.K. Road
 
How to use the ATM?
A Debit Card is produced against each account. A computer generated Personal Identification Number (PIN) is issued against the card. Both the card and PIN have to be collected from the branch. Insert the card into the machine and type in your PIN. The machine verifies the PIN against the card and if they match, allows availing the desired services.
 
Services available through the ATM

• Cash Withdrawal:  a maximum of BDT 20,000 can be withdrawn from an account daily. Higher cash withdrawal limit will be applicable for priority Banking, Excel Banking and EVSA customers.

 

• Cash deposit: customers can deposit cash through the cash deposit option shown on the ATM screen. Deposits through ATMs located within branch premises are credited the next working day and those made through offsite ATMs, after two working days.

 

• Cheque Deposit: Cheques can be deposited in the same way as cash.

 

• Mixed or Instruction Deposit: customers can deposit cash or cheque or instruction in the ATM, at the same time.

 

• Balance Enquiry: enquiry about the account balance anytime, any day.

 

• Mini Statement: printout of account’s last 10 transactions may be taken from the ATM instantly.

 

• Fund transfer: transfer fund between accounts under the same master.
• Chequebook Request: Chequebook can be requested.

 

• Statement Request: Statements requested through the ATM are sent by courier to the corresponding address recorded in account.

 

• Utility Bill Payment: both banking account and Credit cardholders can pay their Vanik, Aktel, Citycell, Grameenphone and BTTB bills through the ATM. But have to register to pay for the particular utility.

 

• Cash Advance: a credit cardholder can withdraw cash from his card account.

 
Important information on BillsPay centre:

• The reasons why debit cards get captured while transaction
• He/ she can collect the captured card the following day from the branch if the ATM is located within the branch premises. For offsite ATMs, the customer needs to go to the branches mentioned below:

• If the user takes more than 15 seconds to transact an option.
• If the magnetic field at the back of the card is faulty.
• If the wrong PIN is given three times consecutively.

Captured at Collect from
Johnson Road, Hadi Mansion
Plaza A.R, Shyamoli, Pallabi, Dhanmondi# 5
Shankar, Dhanmondi# 2
Mascot Plaza, Uttara Branch
Tejgaon & BAT Banani Branch
Gulshan 1 Gulshan Branch
Motaleb Plaza, Sheraton

• The customer should contact the Call Centre (# 8961151 or 0173 041400-19) immediately and instruct them to stop the card. He/ she can also go to a branch to report the loss. The Branch or Call Centre staff will block (which we term ‘making a card HOT’) the card in the system that will ensure it cannot be used.
• If the customer has blocked the card through the Call Centre, he/ she can fax an instruction to them (# 8963236) to issue a replacement card. Otherwise, he/ she should go to the nearest branch to request a replacement.
• It takes three working days for the replacement card to be ready.
• The replacement card has to be collected from the branch. The customer can specify any branch that he wishes to collect the card from. He/ she should mention the branch from which the card is to be collected, on the request form.
• the bank cannot issue a dummy card while the replacement is under process
• No delegation of authority is allowed in this regard.
• Debit card is valid for five years from the month of issuance.
• BDT 600/- plus 15% VAT is charged for the card annually.
• BDT 300/- plus 15 % Vat is charged as replacement fee.
• The annual fee is charged December of every year.
• No, there is no charge involved in such situations.

 
OTHER ATERNATE CHANNELS:
SMS Banking Facility
This feature provides cardholders an easy 24-hour direct access to their Credit Card balance information through their Grameenphone or Citycell mobile by sending a message to 2727. They will get a message in return containing the outstanding balance. It is called PULL SERVICE.  Cardholders availing this service will also receive a monthly mini-statement through SMS, absolutely free of charge. It is called PUSH SERVICE. To avail this service any one has to sign up for it by filling the SMS Banking Application Form.
 
 
E-Statements
This is a secure and prompt way to receive Credit Card’s monthly statement through e-mail address instead of receiving a paper statement. Cardholders can choose a maximum of 3 e-mail addresses for receiving their statements. In case of delivery failure (for any reason), a paper statement will be sent to the cardholder’s mailing address. The statements are available in pdf format and can be viewed by acrobat reader. The customer needs to fill out the e-statement application form.
 

Why it is an alternative delivery channel

Call Center, ATM, Auto BillsPay, iBanking are sort of backup office to help clients in their transactions or banking. The purpose of it is to reduce the rush in branches and divert customers to use alternate channels to avail bank services. There are many matters that can be solved over telephone like check the account balance, credit card balance, pay utility bill, cheque book request etc. but which can not be solved over phone clients will go to the branches for those matters only like deposit money, withdraw money, collect cheque book etc. customers can have self service banking. That is why, it is alternate channel.

Call Centre
General overview
A call centre is a central place where customer or non-customer calls are handled by an organization, usually with some amount of computer automation. Typically, a call centre has the ability to handle a considerable volume of calls at the same time, to screen calls and forward those to someone qualified to handle them. It was tested by staff orientation on 5^th July, 2004. Finally it was established on 25^th July, 2004 for customers.
 
Objective: To provide cost effective alternative delivery channel to customers in order to attain service excellence in terms of:

• Convenience
• Quality
• Responsiveness
• Easy accessibility
• 24 hours one Window service
• technology based solution(IVR)

 

Necessity-

• increasing Customer expectation

Convenience

Easy access

Responsiveness

24/7 One Window service

Technology based solution

• Alternate channel

Divert calls from branch

Reduce queues

Resulting in enhanced branch service quality

• Feedback centre of the Bank

One point complaint

Effectiveness of marketing campaigns

Response to new products and services

• Competitive edge

Call centre with IVR

 
Services offered: Standard Chartered Bank’s 24-hour Call Centre is the easy answer to our customer’s banking needs. No more queuing at the branches and it’s absolutely free. The call centre has two components: The automated system IVR (Interactive Voice Response) and the human Interface CSRs (Customer Service Representative). The CSR are divided into 2 units: Branch banking and Credit Cards. The services are provided through both IVR and CSR as detailed below:
 
Services Offered—CSR (Customer Service Representative)
Branch Banking-CSR

• Account inquiries
• Balance confirmation, interest, Sanchay Patras, and loan related certificate request
• Stop payment of cheque
• ATM hot marking and replacement request
• Pay order and demand Draft
• Duplicate statement and change of statement cycle or date
• Complaint resolution

 
Credit Card-CSR

• Authorization- manual, forced and reversals
• Card account inquiries
• Card activation-new and renewed
• Card block, replacement and re-instatement address, telephone number change
• Duplicate statement and statement cycle change
• Instabuy transfer
• Online TIN generation
• reward redemption
• merchant queries
• safetyNet re- enrolment

 
Services Offered-IVR (Interactive Voice Response)
 
IVR-Non financial

• Balance inquiry
• Transaction details
• Foreign currency exchange and deposits rates
• Product information
• Duplicate statement by mail
• Cheque book request
• Forms by fax

 
IVR-financial

• Fund transfer
• Utility bill payment from account or credit card
• Credit card bill payment
• Transfer from card to bank account

 
How to apply for service at the SCB Call Centre:
 
To avail SCB’s call centre services, a bank accountholder (liability or asset) has to complete the Call Centre Form available at the branches. The application is forwarded to Account Services for generating the TIN (Telephone Identification Number). The customer can collect TIN from his desired branch after two working Days from the day of submission of the submission of the application.
 
For credit card customers, the TIN is generated online. The cardholder contacts the call centre and after the necessary security checks have been conducted, generates the TIN himself.
The Process
 
Call 8961151 or 0173041400-19
Press 1 for Bangla or 2 for English
Press 2 for Credit Card services
Press 3 to generate a new or forgotten TIN
Call will be forwarded to CSR. After verification, customer call will be sent back to IVR to generate the 4 digit TIN.
 
Note:
A TIN will remain valid even if it is not used for any period of time.
In case of replacement TINs, the previous TIN is deactivated automatically when the new TIN is generated.
 
Ensuring Service Quality
In Standard Chartered Call Centre service quality is ensured in every moment. Customers can have their banking through IVR themselves. They do not need to talk with the Agents of call centre. This process is very easy. The customers will follow the instructions of the IVR and finish the call. On the other hand, customers can talk with the customer representative to meet their queries. Again there are some options where the call is diverted to agents directly. To ensuring the service quality of agents, some techniques are followed. They are
 

• Every transaction through IVR is monitored in the next morning. Like: Chequebook Request, utility bill payment, fund transfer and credit card payment. Supervisors get the print of all IVR transactions from the system.
• To ensure quick service agents are divided into two parts.

1. Branch Banking: 20
2. Credit Card: 35

 
Customers call at 8961151 or 0173041400-19, the call is received by any of the CSR who is free at that time. These numbers are hunting numbers. There is an electronic board which shows the agents performance. The board is presented below:
 

	AG	NOT READY	CALL IN WAIT	MX_T
BRN
CRD
ATH

 
AG= total agents who are available. It is connected with the computer EBBS system. If any CSR sign up for that day, he is available in the board.
NOT READY= who are not ready
CALL IN WAIT= customers who are waiting in the line when all CSR are busy.
MX_T= maximum time for each call.
 
When customers are in wait, it is showed in board and an alarming sound is created. Then to reduce it quick step is taken.

• Moreover, there is a system of CALL RECORD. Call centre Manager and Quality Assurance Manager go through these records daily to ensure the quality of service.

• There are shifting method of CSR working hour. By rotation, they do their duty.

 
Table 15 :Number of Shifts

SHIFTS	BRN (BRANCH)	CRD( CARD)
MORNING	10	15
EVENING	8	12
NIGHT	2	3

Source: Call Centre, Standard Chartered Bank
 
 
Organogram of Call Centre
The Organogram of Call Centre is presented below:
 
Figure 11: Organogram of Call Centre
 
 
Figure : Organogram of Call Centre
 
Table 16: Process of Branch banking functionality
Process of Call Centre

SL	Service	Service provider	Time	Fees & Charges
1	Request for change of statement cycle	CSR	Same day if received before 1pm	Nil
2	Cheque book request	IVR	Req to a/c service-next working day

Collection from branch-  2 working days2303Hot marking of lost ATM cardCSRImmediateNil4Request for replacement of cardCSRReq to a/c service-next working day
Collection from branch-2working day3455Request for statement for last one monthIVR2 days if received before 11 amnil6Request for statementCSRNext day if received by 1 pmNot more than 11507Stop payment of chequeCSRimmediate1 page 115, full 5758Issuance of certificateCSRNext working day2309Pay order or demand draftCSRNext working day100-500
Source: Call Centre, Standard Chartered Bank
 
Call Centre Agreement
To sign up for Call Centre service, customers have to get TIN (Telephone Identification
Number). It is the secret number to have access to the call centre. They go to the branch to fill
up the Call Centre Form which includes Date, Customer’s Name, Account No, Date of Birth,
Mother’s Name and Customer’s Signature. Most important thing, customers have to agree with
the terms and conditions of the Call Centre Agreement. The terms and conditions are:
 

1. Authorize the bank to follow on customer’s instructions over telephone.
2. Understand, acknowledge, confirm and accept that TIN is the valuable security for the Call Centre facility and can not disclose the said Telephone Identification Number to anyone without prior notice to the bank. Customers are solely responsible for safe proper custody and control of the TIN.
3. Customers irrevocably indemnify the bank from any liability for any loss, damage, claims or legal proceedings that may arise as a result of accepting and executing any instruction through telephone.
4. Bank has right to make request/demand for clarification/written confirmation before processing any transaction in the account according to telephone instruction.
5. Bank may cancel right to Call Centre facility at any time without assigning reason.
6. Confirm and agree with the bank about the risks associated with the Call Centre facility.

 

 
Account Related Services (Press 1)

1. Balance Query:  it is done through IVR only. After Pressing 1 for account service, customers have to enter 11-digit account number and 4 digits TIN. IVR informs about account balance both available and ledger balance.
2. Utility Payment: customers can pay their Grameen Phone, Aktel. Citycell, Banglalink, and Prisma Digital Bill through IVR.

 

	Customers side	Bank side
To sign up	First have to sign up for it by filling CALL CENTRE FORM in branch along with a copy of last paid bill.	Bank will contact with the utility company to verify the signature of subscriber and the telephone number.
To pay bill	If sign up is done, then they can pay bill from the next month. Press 21(after TIN validation) and can pay 12 utility payments. IVR will read out those telephone numbers that are sign up.	The payment will make the account debited immediately and on the next day call centre send the bill to utility partner. It requires 2 working days.

 

3. Transactions Detail: Press 21 to get date and amount of last 10 transactions. IVR will read out 5 first then again 5 after pressing 1.
4. Duplicate Statement:

	Customers side	Bank side
Last 30 days	IVR can give last 30 days statement. Customers have to press 22, and then the statement of 30 days will automatically print from the IVR	Call centre then mail it to his address within 7 days. But transactions have to exist.
Within 1 Year	If want more than 1 month, have to talk with CSR (PRESS 0).	CSR takes the request by filling the A REQUEST FORM. Call Centre can provide statement within 1 year. Print it and send it to branch to collect it.
More than 1 year	If want more than 1 year, have to talk with CSR (PRESS 0).	The request is send to Account service that can provide more than 1 year.

 

5. Credit Card Payment:   go to 3 for credit card payment. Then 1 for Visa and 2 for MasterCard. Press 16 digit card number and the amount to paid. It will debit the account after 2 hours.
6. Fund Transfer: if any one has more than 1 accounts can transfer fund under same master and same local currency. (PRESS 5)

7. Cheque Book Request:   After account and TIN validation, go to 6, IVR reads out the instruction. To confirm have to press 1.
 

N/A	Customers side	Bank side
N/A	Most of the customers do not press 1 to confirm cheque book request. If not, then IVR do not get the request.	Call centre next day prints out the request from the system. They find out whether the customers have more than 10 leaves unused. If have no request is taken. Phone the customers to know from which branch they will collect the cheque book.

 
Credit Card Services (Press 2)

1. Balance Query: everything inclusive- outstanding balance, credit limit available, cash available, accumulated Treasure Points for Rewards, etc. ( PRESS 1)
2. Last statement Details: Last month’s statement balance, minimum amount due. Also the date and amount of the last payment made.
3. Transactions Detail: Press 222 to get date and amount of last 10 transactions. IVR will read out 5 first then again 5 after pressing 1.
4. Utility Payment: customers can pay their Grameen Phone, Aktel. Citycell, Banglalink, and Prisma Digital Bill through IVR.

 
 

	Customers side	Bank side
To sign up	First have to sign up for it by filling CARDS UTILITY SET UP FORM in branch along with a copy of last paid bill.	Bank will contact with the utility company to verify the signature of subscriber and the telephone number.
To pay bill	If sign up is done, then they can pay bill from the next month. Press 21(after TIN validation) and can pay 12 utility payments. IVR will read out those telephone numbers that are sign up.	The payment will make the account debited immediately and on the next day call centre send the bill to utility partner. It requires 2 working days.

 

5. To activate card, to report stolen card and card application: have to talk with the CSR about these problems. CSR will first check the security details which include name, mother’s name, date of birth, last use, last paid amount and date, etc.
6. To generate new or forgotten TIN: Call will be forwarded to CSR. After verification, customer call will be sent back to IVR to generate the 4 digit TIN.
7. Forms by Fax:  Press 7 from accounts and Press 5 from Cards. Just press the fax number in the fax option and the desired forms will be faxed to the customer. The forms are utility set up form; address change form account service form etc.

 
Currency & Deposit Rates
Press 3 customers can have hear the rates or fax it to him. The rates are US Dollar, Pound Sterling, Euro, Japanese Yen, Australian Dollar, Canadian Dollar, etc.
 
Product Information
Customers can talk with the CSR or have fax about the products of Standard Chartered Bank. The information are about Banking accounts, Personal Loan, Auto Loan, Credit Card, Flexi Loan, Priority Banking , etc.
 
Call Centre usage Picture
Table 18: Customers’ Responses

Month	Total call Received	Cheque book request	Utility payment
May	1,25,220	410	TK. 96,000
June	1,39,547	527	TK. 75,825
July	1,41,908	550	TK. 120,500

(Source: Call Centre)
 
 
The Survey
 
I have seen that there are many customers of Standard Chartered Bank who are not aware of Call Centre. Even they do not know what it is. I asked 100 customers whether they know about call centre and have TIN or not. About 65 have TIN and 35 do not know what it is.
 
 
Figure 12: Awareness of TIN
 
Awareness of TIN
 
Then, I asked those customers who have TIN and know about it how much they use the call centre. This picture is frustrating. Most of them have TIN but they do not use it because they do not know how to use it. Some are very cautious. But they are annoyed because they don’t get the line of the phones. Among 100 respondents 45 uses frequently, 35 sometimes and 25 never uses.
 
Figure 13: Frequency of Usage
 
Frequency of Usage
 
In My survey when I asked 100 customers (age limit 25-45) over the Telephone about the Call Centre. The questionnaire given by the call centre is attached with report. I asked which service they use frequently. I find the table below:
Table 19: Ranking of services

Service of call centre	Rank
Balance Query	1
Cheque book request	2
Statement & certificate request	3
Credit card payment	4
Utility payment	5
Card activation & status query	6
Others (pay order, ibanking, product info etc.)	7

Source: Survey Questionnaire
 
The Satisfaction Level of customers
When I asked the customers about their satisfaction level, they responded to me in the following way:
Figure 14: Satisfaction Level of Customers
 
 
So, it is clear that Call Centre service is satisfying customers need. Their satisfaction level is excellent. Some one is so delighted with the service quality that they told me Call Centre is very convenient.
 

Questionnaire

 
Customer Detail
 

Customer Name:

Account No:

Card No:

Age:

Contact No:

 
Profession:
 
 

1. Have you heard the Name of SCB Call Centre?

• Yes
• No

1. Do you know what it is? —————————————————–
2. Have you got your TIN (Telephone Identification Number)?

• Yes
• No

1. Do you know what it is?
2. Do you know the telephone number of Call Centre?

1. Have you ever tried it?

• Yes
• No

1. If no, why? ——————————————————-

———————————————————————-

1. If yes, then

• Frequently
• Sometimes
• Very often

1. Which telephone number do you use most?

• Mobile ( 0173041400-19)
• T&T( 8961151)

1. Do you think it is necessary?

1. Is it convenient? Does it save your time?

1. Are you satisfied with the service?

1. Do you want any change or modification in the service?

1. Do you face any problem? What they are? ……………………………

1. Give your suggestion regarding the problems?

1. Do you know the Discount Campaign continuing through the Call Centre?
2. Have you tried for it?

1. Have you heard the Call Centre Contest “YOU HAVE YOUR SAY, WE MAKE YOUR DAY”?

1. Have you tried for the contest?

1. If no, then why not you are interested?

1. Call Centre is Convenient because ……………………………….

1. Do you know what services are given by Call Centre?

1. Which service is used the most?

• Balance inquiry
• Chequebook request
• Statement request
• Credit card related

1. Have you talked with the Customer Service Representative (Agent)?

1. Are you satisfied with their call response?

1. Any comments regarding the CSRs service?

 
Apart from the Telephone Survey mentioned above I was also in charge of calling customers to find out whether they have any questions, queries, complains regarding SCB products, service quality and other bank related issues. Such response will only help the Bank to improve in better ways to serve its customers even more in futures. This also gave me way to find out the Evaluation of Customer Satisfaction Level at Standard Chartered Bank.
 
The Summary
Response from Customer Calls
 

A telephone survey was done on customers who were withdrawing Tk. 300,000 (Tk. 3 Lac) and above.

On one hand, customers seemed to be either too happy with Standard Chartered Bank, its image, products, services. On the other and very much contrary to the former opinion is the utter and bitter opinion on us. Quoting Mr. Md. Mushihur Rahman Senior Manager, British American Tobacco Bangladesh BATB, “unfortunately our Company account is with your bank and I have no hand over it. But I have transferred all my Personal account of me and my family members from SCB. I have also talked to my Colleagues and relatives and they all seem to be very frustrated with SCB so much so that most of them transferred elsewhere from SCB and some are thinking of it.”

The complains that were received were mainly belonging to these fields:

• Issues related to Credit card
• Service charge high
• Employee behavior at branches
• Limited Branches
• Long queue
• ATM Machine disorder
• Low Interest rate for depositors
• Difficulty in obtaining loan
• Cheque dishonor
• Not receiving Bank statement
• and worst of all Total Fund transfer to another Bank
• There were also provision for Miscellaneous complains where there were problems including Car parking issues, difficulty in understanding the IVR system of Call Centre.

The Survey

Number of respondents: 508

Question to respondents:

• Do you have any complain/query/suggestion regarding our bank?
• If no complain, may you please suggest us ways so that we can improve. This is you helping us to serve you better.
• For respondents who were reluctant to make complains fearing an unexpected occurrence.

The following is the complaints made against specific branch and employees. Most of the time, respondents could give description of the person they are complaining against. They could not recall names.

Branch and ATM Machine related problems

• Motijheel Branch (ALICO Building) & Banani ATM are mostly out of order
• A branch should be placed at Old Town of Dhaka City.
• Our Clients do not at all accept SCB cheques. This is due mainly to the long queues that they fear.
• Hadi Mansion has long queue. There needs to be more deposit and withdrawal outlets in Motijheel.
• Mostly ATMs are out of order in Hadi & Dhanmondi. The guards who are in charge of ATM are not cooperative.
• Number of counters in Uttara should be increased.
• It always takes more than one hour to deposit/withdraw money from Dhaka Main.
• ‘Too many customers’ is the root of all evils. And that is why the ‘long queue’ is an important issue SCB should look into.
• Tk 2.5 Lac was deposited in his account, which does not belong to him! He then informed the bank and asked to find out who does this money belong to? This was in Banani or DD2. Then SCB rectified the mistake. The respondent claims this is too big a mistake to be committed by such a reputed bank.
• No client is willing to receive SCB cheque although Service quality is very good.
• Gulshan branch should also be having Saturday Banking.
• Long queue is a real problem. Almost half day of my office is gone when we wait in the long lines. ATM Machine does not work at most times of all the places.
• Motijheel branch has to have more counters. My client never accepts SCB cheques.
• There should be more booth in Khilgaon, Old town, Jatrabari, Mitford Area, North South Road. Sometimes ATM can’t give us Tk 20,000 from Kakrail branch and ATM machine is very slow of Hadi Mansion.

Employee related complains

• The lady in Hadi mansion in the Customer Relations in the account holder counter was very rude. She insulted the respondent saying the money notes that he brought were dirty and that he should learn manners while coming to a renowned bank such as ours. This took place Sep 25 2005. There was only one lady beside the gentleman serving account holders that day. The respondent got very upset and claimed SCB should not claim itself to be a “rich man’s bank.”
• Employee behavior is very rude in general. If this keeps going, SCB will soon find no customers.
• DD2 is bad but DD5 is good. She went today to the person who deals with Sanchai Potro in DD2. She is defected by legs and she was made to wait standing for 45 min. The lady in DD2 who was rude was 25-28 yr old. She was healthy and had short hair. She did the work but took long time. The respondents repent that without relationship maintenance a bank can not move forward.
• Very slow inattentive behavior by Gulshan, Banani branch employees. All ppl were in lunch when she went to pick up bank statement. She was kept waiting for half-hour. When everyone came back from lunch she didn’t even attend the customer rather she referred to yet another lady. She was kept waiting for almost one hour for a work for a job which only takes less than a minute.
• Customer Relationship Managers are not well mannered.
• Respondent wanted to change his signature from DD5. So he was advised to go to Hadi Mansion. He can’t recall the name but says the person he met in Hadi Mansion now sits in Gulshan Branch. He misbehaved with him and says for no reason. Other SCB people sought excuse from this customer. He was furiously angry and wanted to close account with us.
• In Hadi Mansion there is lady in teller who is rude to everyone at large. She has long hair, medium height.
• Employee behavior in Karwan Bazar and Uttara branch especially the loan employee is very unprofessional. They are indeed lacking proper education and training in bank related issues. There has to be education and training. Very shallow knowledge and amateurs.
• DD5 and Uttara employees are rude and non-cooperative.
• People are highly dissatisfied with employees especially at Uttara. She herself had bad experience with Uttara employees but is unwilling to disclose about them.
• Rude behavior by guards.
• In Hadi Mansion Counter 7, the respondent was depositing a payorder of Tk 3 Lac and asked for it to be cleared that very day. But the person serving him very rudely said that if the amount was Tk 5 Lac he could deposit the payorder right away. Employee behavior should be more polite and less restrictive.
• At Karwan Bazar Branch, Customer representatives and the Branch Manager should learn customer relations.

 

Following is the graphical presentation and the findings of the complains made by the respondents.

Figure 15: Detailed Summary of Customer Response

Very Satisfied:

 

21% of the 508 respondents has expressed their level of satisfaction to be high with the bank. A few respondents also mentioned particular employees they are specifically happy on.

Satisfied:

Amazingly true with the study is that respondents were found to be too satisfied with SCB’s performance or they were too dissatisfied. As low as 1% were found to be moderately satisfied with SCB.

Credit card:

3% has complains regarding Credit card. Complains include:

• Applied for credit card but didn’t get any. He is in LPR and that’s why he was denied from Karwan Bazar.
• He is really dissatisfied with Credit card. He has been receiving calls from SCB that, he is going to get a gift for the Card. But it has been 3 yrs now.
• Applied for credit card but it was denied although she had all the necessary documents.
• SCB should not charge us for using credit card. In India and Pakistan Banks send credit cards in customers’ home and on the contrary SCB is charging for using one.
• Credit card takes too much irritation while it searches about us. We are with SCB for 10 yrs. SCB should be able to find out about us through our dealings and transactions.
• SCB called him frequently to take a card and then disregarded him of the card.  The reason was shown to be not satisfactory. The person has Amex Gold card, VISA and Master Card. And now after inviting him for the card, they refuse him for no apparent reason. It’s utterly ridiculous to him.

High service charge:

5% has complains regarding high service charge. Complains include:

• He complains he was unduly charged Tk.. 500 + VAT for a problem by the Bank. SCB. The bank found he fell short of Average Balance actually this never happened.
• Very high charge. SCB has cut Tk 1000 for a Bank statement for last 5 yrs.

Interest rate:

1% has complains regarding Interest rate to be low for depositors compared to other foreign and local banks. Complains include:

• Interest rate is very low when we deposit. The rest of the not-so-famous banks offer higher interest rates against deposits.
• Interest rate for depositors should be more attractive.

Loan:

1% has complains regarding Loan. Complains include:

• Very deceptive loan, first they seem to be lucrative but later on they turn out to be really expensive.
• Car loan is obtainable much easily elsewhere in better terms but it is scary in SCB. She get  frequent loans from EXIM and One Bank.
• Loan obtaining is very difficult.
• Home loan says it will take only 24 hrs but he applied for 6 months and no result. HSBC’s home loan is much easier to get.

Cheque dishonor:

2% of the respondents complained against their cheques being dishonored frequently. Complains include:

• Cheque dishonor is very frequent. Signature if not matched then cheque is dishonored right away.
• Cheque dishonor is very frequent. Signature if not matched then cheque is dishonored right away.

Not receiving Bank statement:

1% of the respondents were receiving bank statement irregularly or not at all. Complains include:

• After changing his address, he received two bank statements only. It has been long he is not receiving one.
• Do not receive Bank statement from Dhanmondi branch regularly. He gave the new address, and also received some statements but very irregularly.

Total Fund transfer to another Bank:

3% of the respondents are going to or already has transferred to another bank. Complains include:

• Transferred to Janata Bank.
• Her husband switched to HSBC and is also requesting her to switch to HSBC from SCB.
• She totally transferred to EXIM, due to slowness of SCB employees, low interest rate.
• Her father who is government service holder is switching is account to another bank.

ibanking:

Two customers had problems regarding ibanking. Complains include:

• He uses iBanking and has not received Local Card even after applying twice.
• He applied for ibanking but it has been a month and he isn’t informed of anything.

Others:

6% of the respondents had problems regarding issues that are not mentioned above. They include:

• SCB is unwilling to make pay order after 1 p.m., while other banks are doing it after 4 p.m. Importers undergo demurrage as pay order is done late.

• SCB has no right to ridicule poor people. They have to wait for three long hrs. Mangers are really not cooperative and friendly.

• It is too much showy and spends much on buildings, and other unnecessary enhancements but less on customer service.

• He was not provided a certificate for a remittance from USA. This was in Gulshan branch. Now he is receiving the certificate from a different bank.

• Signature is not matching with his original one very frequently in Hadi Mansion branch. In all other banks there seems to be no problem as such.

• Account opened in Dhaka Main but cheques are always dishonored in other branches including DD2 DD5 and Uttara. All the branches except his principle branch complain that “Signature is not matching”.

No phone number/ not available/ No response/ Not available in the country:

43% of the respondents could not be availed due mainly to a few reasons including, no response from the phone numbers, wrong numbers, not available presently in the given numbers, not in country.

This is indeed alarming as the sample size was halved due to the unavailability of the respondents.

 

Other complains include:

• Technical difficulties – Some customers are discouraged to use the IVR system of Call Centre as they complain they do not understand the automated voice well. Complain include, ‘Call center is vague. When I try to call, it’s too many complications to go through before getting the information I really want.’
• Parking problem – It is not a privilege but a mandatory requirement for the customers that should be provided to the bank. Gulshan branch has no parking.
• Utility bill (t&t phone) of Sep is paid by SCB in October. Aug payment made to Sep. It is always delayed by the bank for which the customer has to pay Penalty fees with his Utility payment.

Out of 508 respondents, 126 were satisfied and 205 were dissatisfied. Figure below gives a graphical representation.
Table 20: Customers Satisfied or Dissatisfied

 
Figure 16: Distribution of Satisfaction & Dissatisfaction level
 
Out of 205 dissatisfied customers, the distribution to different problems are shown below. The various causes are listed and following that is the graphical representation.
Table 21: Customers’ Complains
 

 
 
 
Figure 17: Distribution of dissatisfied Customers
 
Limitations:
 

• Respondents are much occupied and busy most of the times. Due mainly to this, I believe, Customer Responses would be a lot more descriptive.

 

• The main means of this Survey is Telephone. A separate telephone may be thought to be used. As Call Centre phone is utilized, the calls are most of the times delayed.

 

• Respondents’ Contact numbers are not up-to-date in the database. This is yet another hindrance to a bigger population size for our study. The Call List that is provided for the respondents to be called does not the up-to-date numbers and sometimes no number at all.

SWOT Analysis
Strong corporate Identity
SC is the leading provider of financial services worldwide. With its strong corporate image and identity it can better position in the minds of customers. This image has helped SCB grab the personal banking sector of Bangladesh very rapidly.
 
Wide range of Financial Product Offerings
SCB serves both Consumer and Wholesale Banking customers. Consumer Banking provides credit cards, personal loans, mortgages, deposit taking and wealth management services to individuals and small to medium sized enterprises. Wholesale Banking provides corporate and institutional clients with services in trade finance, cash management, lending, securities services, foreign exchange, debt capital markets and corporate finance.
 
Deep Local Knowledge with Global Capability
Standard Chartered is well-established in growth markets and aims to be the right partner for its customers. The Bank combines deep local knowledge with global capability.
 
The workforce comprises over various nationalities (including 45 at senior management level in the Headquarter) and close to half is female. SCB wants to lead by example in building a multi-talented, diverse and representative workforce and leadership. The simple logic behind SCB’s commitment to diversity and inclusion is to attract and retain the best talent and harness the differences individuals bring, enabling them to realize their full potential. SCB sees individual differences as strengths, allowing them to deliver higher performance and true competitive advantage. The Diversity Council provides a strategic, global focus to diversity and inclusion in the Bank.
 
Distinct Operating Procedures
SCB in known worldwide for its distinct operating procedure. The company’s Managing for Value strategy better satisfy customers needs and also keeps the firm profitable.
 
Distinct Schedule
Everyone in SCB from the appraiser to the top management has to work to the same schedule toward a different aspect of the same goal, interfacing simultaneously at all level over quite a long period of time.
 
Strong employee bonding and belongingness
SCB employees are one of the major assets of the company. The employees of SCB have a strong sense of commitment towards organization and also feel proud and a sense of belonging towards SCB. The strong culture of SCB is the main reason behind this strength.
 
Efficient Performance
SCB provides hassle free customer service to its client base comparing to the other financial institutions of Bangladesh. Personalized approach to the needs of customers is its motto.
 
Young Enthusiastic Workforce
The selection & recruitment of SCB emphasizes on having the skilled graduates & postgraduates who have little or no previous work experience. The logic behind is that SCB wants to avoid the problem of ‘garbage in & garbage out’. & this type young & fresh workforce stimulates the whole working environment of SCB.
 
Empowered Work force
The human resource of SCB is extremely well thought & perfectly managed. As from the very first, the top management believed in empowered employees, where they refused to put their finger in every part of the pie. This empowered environment makes SCB a better place for the employees. The employees are not suffocated with authority but are able to grow as the organization matures.
 
Companionable Environment
All office walls in SCB are only shoulder high partitions & there is no executive dining room. Any of the executives is likely to plop down at a table in its cafeteria & join in a lunch chat with whoever is there. One of the employees has said, “It’s exciting to know you may see & talk to the top management at any time. You feel a part of things”.
 
No Communication Barriers
DBD has tried hard to avoid communication barriers & structural bureaucracies. The little existence of authoritative barriers among the different level of management stimulates a feeling of importance as their work get priority over the position.
 
Equalization
At SCB workshops are conducted periodically. On the workshops, all people participate as equals, with new members free to openly challenge top managers.
 
Free Exchange of Communication
At SCB the main objective is to setting up workshops are to remove authority from an artificial spot at the top, & place it where the most knowledgeable people are, the people closest to the operations. The free exchange of ideas is reinforced by a policy of “constructive confrontation”. Each employee is expected to challenge ideas openly & aggressively, but never attack an individual’s motives for presenting an idea.
 
MBO
SCB also has Management by Objectives (MBO) everywhere. Each person has multiple objectives. All the employees must have to get the approval of their bosses on what they are going to do. Later they review as how well they have performed their job with their management as well as the peer group.
 
“One-To-One” Meeting
The MBO makes the review a communication device among various groups. The key to the system is a “one-to-one” meeting between a supervisor & a subordinate. In the meeting, the problems in dealing with customers are put forward first & every one dug it to solve them.
 
Modern Equipment & Technology
SCB owns the best banking and information technology equipments in Bangladesh. It ultra modern banking systems starting from terminal pc’s to HUB’s are based on the international SCB group standards and are the latest. The Hexagon product is one of the best examples in this context.
 
Visually Appealing Facilities
SCB has some of the best visually appealing branches and office premises in Dhaka & Chittagong that highly attracts customers’ attentions and customers also feel the international environment while banking with SCB.
 
Wide Operating Span
SCB has a many branches in Bangladesh and mentionably many at Dhaka. Due to the convenient branch location and presence of neighborhood branches, people are currently obtaining the many-faced services of SCB.
 
Strong Branding Activities
SCB in the world around has sound marketing activities. It is known to sponsor Music Concerts, Charity shows very regularly in Bangladesh. Like international matches sponsored by Head SC, SCB too sponsors cricket Matches of National, Local as well as School-College Level. It also sponsors billboards at various significant places around the major cities of the country.
 
Achievement of High Customer Confidence
As SCB is operating successfully for more than one decade in the banking industry of Bangladesh, customers throughout the country has put high level of confidence in SCB and judge the bank as an ‘Expert’ at what it serves.
 
Credit Cards, Debit Card and ATM
All of these services are directed towards receipt of money with ease and absolute safety in a politically and socially volatile country such as ours. Not just that, it also reduced and at times eliminate the need to carry huge amount of cash by the pocket round busy working days.
 
Value addition through Acquisition
SCB is one of the experts in acquiring various firms and organizations. In Bangladesh it can also diversify quickly by acquiring various local established banks and increase its total operation within Bangladesh rapidly.
 
Distinct Operating Procedures
SCB is noted for its distinct operating procedures. Repayment capacity as assessed by SCB of individual client helps to decide how much one can borrow. As the whole lending process is based on a client’s repayment capacity, the recovery rate of SCB is close to 100%. This provides SCB financial stability & gears up SCB to be remaining in the business for the long run.
 
Countrywide Network
The ultimate goal of SCB is to expand its operations to whole Bangladesh. Nurturing this type of vision & mission & to act as required, will not only increase SCB’s profitability but also will secure its existence in the log run.
 
More Experienced & Managerial Know-How
The top management team of SCB is expert in banking activities. The operating policies established by them are unique & unified. All the members of the team carry out their management roles exhaustively. They equally contributed to SCB’s superior leadership, by carrying out their unique roles. They worked well together, respecting each other’s abilities, & arguing openly & without any rancor when they disagree.
 
 
Weaknesses
No Investment Products
Currently the personal banking divisions of SCB do not have investment products for its customers. The banning of investment loan by central bank posses a strong pressure to design new products.
 
Too Many Contract Workers
SCB has contract workers who lack the commitment with superior quality service and also are pretty dissatisfied as being a contract worker. This hampers the bank’s service quality as a whole. This also increases the risk of internal information of SCB being leaked out to potential and incumbent competitors.
 
Low Remuneration Package for Entry Level Officers
The remuneration package for the entry level officers is considerable low. Since other foreign and local banks offer a more lucrative salary package, it will be difficult for SCB to attract MBA’s in future with its current salary package.
 
Concentration on Varied Financial Products
In the eyes of Industry Analysts, SCB is pursuing an aggressive differentiation with respect to its Financial Products as a means of expanding its current line of business. The management is now considering the option of congratulating new parents of a new born baby so that since its birth the baby can run account with SCB. Instead of providing so many varied to the customers SCB should concentrate on what it does best and that is ‘Relationship Banking’.
 
 
Very Little Active Account Being Maintained Till the End
This is a serious problem faced at SCB. The numbers of default accounts are increasing at an increasing rate. At various branches people are opening the account and then discontinuing suddenly without letting SCB Authority formally closing the account. This Problem was known to us from Employee at mid-level Management in the Head Office Branch of SCB.
 
No Transparency Regarding the Decisions Taken By Upper Management
The communication flow is always downward at SCB. The problems, queries, suggestions and comments by employees at entry level re seldom or never considered.  Upper level bosses take a decision which may mean to lower level employees that decisions are tailored towards meeting the self interest of upper level employees. This is at times true creating a situation of no transparency regarding the decisions taken by the upper management.
 
Loss of Valuable Market Information due to Top-Down Communication Method
Lower level employees interact with customers the most. They know best what customers want, when do they want, how do they want. They are the first ones to become aware of the market changes. As SCB do not take lower level employees in decision-making process, they lose valuable market information that can be achieved without heavy expenses on market research due to Top-Down Communication Method.
 
Opportunities
High Demand of Housing Loans
Since housing is one of the basic needs of people, there is a high demand of housing loans. SCB personal banking division can focus on this category of products and grab this segment of customers.
 
Rules and Regulations Becoming Easy and Relaxed
This comes as a big and lucrative opportunity for all the foreign banks operating in Bangladesh. To encourage and facilitate more FDI, the State of Bangladesh has relaxed many stringent banking laws. More are under the process of reformation.
 

Growing Awareness among People toward Quality of Service and Technology

People of Bangladesh are becoming more learned through imposition of higher investment of Human Capital. They now need the services of a state-of-the-art bank more than ever. Also as, many Bangladeshi people are living abroad more than in any time of history they can use most use of SCB foreign bank like SCB.

Growing Customer Consciousness about The Risk Management Capability of The Banks
In continuation with the last point, a growing customer consciousness in visible about the risk management capabilities of a bank. People now can feel that more than the bureaucratic banks of the State, the foreign banks are much more efficient and profit-oriented with the money that people keep with them. This is a huge opportunity to be exploited.
Threats
Upcoming Banks
The upcoming private local & multinational banks posses a serious threat to the existing banking network of SCB. It is expected that in the next few years more commercial banks will emerge. If that happens the intensity of competition will rise further and banks will have to develop strategies to compete against and win the battle of banks.
Default Culture
This is a major problem in Bangladesh. As SCB is a very new organization the problem of non-performing loans or default loans is very minimum or insignificant. However, as the bank becomes older this problem will arise enormously and the bank may find itself in a more threatening environment. Thus SCB has to remain vigilant about this problem so that proactive strategies are taken to minimize this problem.
 

Low Foreign Exchange Reserves in The Country With Falling Exports

Alarmingly, the country’s export rate is falling. This poses threat to SCB as less transaction will be covered by tem leading to lower profitability in future.

Stricter Regulations against the Foreign Banks

Although many rules are eased out, the State is still very cautious about the activities towards foreign banks. The government rather possesses a bossy attitude toward foreign banks.

Standardized Product Offerings from The New Local Private Banks

The local banks with increasing investment is becoming strong and utilizing state of the art technology in banking. This poses serious competitive threat to SCB.

Slowdown In Global Economy
Not just Bangladesh, but the whole global economy has slowed down due to the war and unmerciful events taking place, posing serious threat to economic and financial institutions of the world. SCB is not different.
 
 
Strategic Analysis
Corporate Level Strategy
SCB’s corporate level strategy is acquisition and strategic alliance with successful and lucrative companies of the country. Before that let’s have a look at global corporate strategy of Standard Chartered Bank.
Global acquisitions
1928:  Captain Grindlays established Grindlays and Co. with a partner.
1839:  Grindlays and Co. changed its name to Grindlays Christian and
Mathews.
1853:  Grindlays Christian and Mathews changed again to Grindlays and Co.
1854:  First branch opened in India at Church lane, Calcutta.
1864:  Grindlays an Co opened in Indian branches autonomous from
London.
1924:  Grindlays and Co. acquired by National Provincial Bank Ltd.
1958:  Grindlays and Co. was absorbed by National Bank of India and begun
to operate as National and Grindlays Bank Ltd.
1961:  Acquisitions of eastern branches in India and Pakistan by Lloyds
Bank.
1969: Capital structure rearranged as a result of which Lloyds Bank acquired
41.17% and City Bank acquired 40% shares respectively of Grindlays
Holding Ltd.
1975: Capital structure of Grindlays Bank Ltd made up as follows: 49%
Shares held by City Bank,51% shares held by Grindlays Holding
Ltd.(of which 41.17% owned by Lloyds Bank)
1984: In September 1984, ANZ expanded its horizons with the acquisition of
Grindlays Bank (established 1828), giving its representation in about
50 countries.
1988: In December 1988, ANZ acquired post office Bank Ltd, a major retail
Bank  operating solely in New Zealand.
1990: National mutual bank of Australia and national mutual bank New
Zealand Ltd. Were acquired in 1990 by ANZ.
 
The Merger of Standard and Chartered Bank
These acquisition and expansion into new countries such as Mexico, South Korea and Oman (1968), both the Standard and Chartered bank networks were comparatively small. Both viewed the future with some trepidation as the need to protect themselves from acquisition became ever or apparent. Standard Chartered PLC in 1969 the decision was made the Standard chartered and the Chartered Bank to undergo a friendly merger thus forming Standard Chartered PLC. It was one year later that the descendents of the Chartered Bank of India, Australia. Standard Chartered subsequently acquired the UK based Hodge Group in which it already had a minority share holding, and the Wallance of UK offices specialization its name was changed to Chartered Trust Ltd. Standard Chartered operations in jersey emerged from the integration of other Hodge group business with those of  Wallance Brothers Bank(jersey)Ltd.
 
Acquisition of ANZ Grindlays bank by Standard Chartered bank
In the 1800s July three came into existence by the Royal Charter-Standard Chartered, Chartered Bank and Grindlays Bank. On July 31,2000 those three has became one as Standard Chartered completed its us$ 1.34 billion acquisition of Grindlays Bank and the associated Grindlays Private Banking business from ANZ, forming the premier international banking group in South and Middle East Asia.
 
Despite this acquisition now being completed, two banks will continue to operate as separate legal entities for the foreseeable future,combini9ng market knowledge and best practice where appropriate to achieve  the groups market leading goal.
 
The future vision of Standard Chartered Bank is to become the premier international banking group in this region, utilizing the rich talent pool for the groups global group plans, driving growth through a strategy led by Consumer Banking and taking advantages of this region at a low cost, high-tech processing center.
 
The main idea behind acquisition and merger is to make an investment and usually involves more than mere case. When two separate legal entities every organization aspect of both companies are expected to change be it internal and external. Such management decision is taken for a variety of reasons but the ultimate aims are to add up shareholders wealth. For banks operating in the consumer and wholesale banking sector, earning depends largely on the interest margin as well as the service charges. For this increasing customer base is a easy since they have to complete with local banks which is in many cases are backed by governments have quite a strict control on the financial market and the institutions.
 
The government and autonomous banks largely dominate our countries banking sector. Thus competing them in interest figure become for both foreign and local banks. The only way to attract customer is through providing high quality services. Also they have to be very innovative in financial products since they have to compete the government again in the highly profitable saving instruments sand low interest loans.
 
Standard Chartered Bank, the largest and one of the oldest foreign banks in the country has been successfully operating business in corporate and consumer banking sector since long. It has introduced many new financial consumer and corporate product like money builder in the market. Recently the bank attracted a great deal of attention through its acquisition of another foreign bank operating in Bangladesh named” ANZ Grindlays (refer to appendix) from August 2001, the two competing bank will complete the acquisition process and operate from the same platform. This is a concept like Bangladesh where acquisition of two large distinct organizations is still far fetched.
 
In Bangladesh….
In Bangladesh SCB has acquired in the following years:
2001: ANZ Grindlays Bank
2005: American Express Bank.
 
Apart from this SCB has strategic alliance with leading telecommunication Service Providers Grameen Phone and Citycell.
 
Business Level Strategy
SCB follows Differentiation Strategy….
SCB give high concentration to product differentiation. They believe in satisfying the largest number of market variability. And that is why, its not surprising that their products and services accommodate 5 whole pages in our report as shown above.
 
SCB Needs To Concentrate On Cost Focus Strategy Along With Differentiation Strategy
 
Analysts point out that SCB should also concentrate on reducing the high cost that it charges customers for the provision of products and services. Although it has a high customer base due to offering various products to various customers, but it should realize the threat from local and other foreign banks that others are offering at lower prices.
 
Thus to sustain the competitive advantage and to hold on to the market SCB should focus on cost reduction too.
 
Functional Level Strategy
 
Marketing Strategy
 
SCB Bangladesh is planning to launch consumer banking in near future. Through this new finance facility for executives and high net worth individuals, SCB is trying to gain the customer base for consumer banking from the existing Corporate and Financial Institution client base. At the same time the bank will try to attract new Corporate and Financial Institutions with offering this new facility. So executive finance product will be considered as a part of integrated cash management solution. The marketing strategy for the product will be carried out in two stages:

Primary Stage:

At the beginning the product will be delivered to the executives Corporate and Financial Institutions with which SCB have existing relationship. The product will also be included in the relationship proposals for new clients. The cash management sales team and the relationship managers of Corporate Banking and Financial Institutions will therefore perform the personal selling to the customers.

Later Stage:

At later stage when SCB will start consumer banking, Direct Sales Associates (DSAs) will be appointed to source the customers. DSAs will be chosen based on :
a) Existing Citigroup relationships for other products (e.g. cash management)
b) Experience of the promoters/owners
c) Number of sales executives (SEs)
d) Geographic coverage capability.
Compensation for these DSAs will be fixed and variable (linked to the amount of business originated).
 

Location

The extension of credit facilities under the Advances program is only carried out at the branches. However the SCB can deliver the location utility to the product using its existing infrastructure of courier services for monthly payment collection.
 

Pricing Strategy

The price for this product is its interest rate. While setting the price SCB kept the following consideration:

• Since the loan at SCB is fully secured by readily encashable Govt. instruments or deposits in the Bank, the risk is very low. Therefore the interest rate can be kept low.
• SCB expects to keep its cost of fund at 8.25%. Therefore, at 10.50% interest rate there will be a spread earning of 2.25%.
• The minimum interest rate offered by the competitors is 11%.  SCB’s offer will be 50 basis points less than the competitors.
• The product will be offered to the executives ring fence the corporate and financial institution clients. This will offer SCB the opportunity to cross-sell other corporate lending products with higher spreads.
• In order to avail the finance facility a person has to have an account in SCB. This will offer a customer base for SCB’s consumer banking which will be launched in the near future.

Considering all those factors, the interest rate for the product is set very low to attract the customers. The proposed interest rate for executive finance facility is 10.50% per Annum.

Promotional Strategy

Image and Brand Building

SCB has already established itself as a reliable and customer focused bank in the corporate world through delivery of superior products and service according to the needs of the customer. The bank is nowadays taking a proactive role in addressing the legal issues such as Anti Money Laundering and development issues like foreign trade and foreign remittances. Such image and brand building will certainly increase the image of the product and will receive a competitive advantage in the mind of brand value seekers.

Publicity and Other Promotions

SCB is currently advertising in the popular daily newspapers expressing its expansion plan in Bangladesh. The formal product launching can be announced through an advertisement in the newspaper. SCB can also publicize the product launching through a seminar focusing on financing needs of the executives and how SCB is offering the solution.   Apart from these personalized offer letters or proposals to the corporate executives can be send with follow-up by the Relationship Managers or Cash Management Sales Team.
 
 
HR Practice
Below is the representation of how one work team operate at every SCB Branch.

Business Delivery Issues at SCB

Staffing

Initially the Executive Finance facility & Collections Unit will be manned by:

–          1 officer with application processing and credit assessment responsibilities

–          1 officer with repayment monitoring, collection and recovery responsibilities

–          1 officers with facility processing in the system and security lodgment responsibilities

In total it will be a 3-member team responsible for all Executive Finance facility related activities. It is expected that this team will be adequate enough of handling total number of loans to be generated by: (a) Sales Team, (b) 1 Dhaka branch and (c) 1 Chittagong Branch.

The head count will have to be increased only if SCB opens more branches, i.e., more than six branches and if SCB operates with more than one Sales Team.

Process Flow

The full Work Flows of Consumer Finance facility will be as follows:

Flow 1:

®     Application with signed security documents received by Direct Sales Agent (DSA) or Branch staff from customers

®     Application screened by Cash Operations who perform an initial credit check. Okay ones forwarded to CCO/COO/ Head of Corporate Banking /CRM or the Board as appropriate for approval.

®     If approved, customer is informed by DSA / initiating person.

Flow 2:

®     Customer comes to Branch for either purchase of securities or to deliver securities, which are already purchased by him. Leaves the same with Branch Staff / Sales representative in branch

®     For newly purchased securities, DSA goes to customer to get the physical securities signed / released by him

®     All documents including physical securities are forwarded to Consumer Finance facility & Collections Unit by Branch / Sales representative in Branch.

Flow 3:

®     Officer Credit Operations carefully checks security documentation, physical securities and other necessary documents to ascertain that every piece of paper is in order and nothing is pending

®     If so, the Credit Admin.  Uploads the facility in system and credits customer’s account in case it is a loan.

®     Same Officer forwards the set of documents to the other Officer in charge of security lodgment and system cross check

®     This second Officer Credit Operations checks if everything is inputted correctly in the system by first Officer

®     This second officer then lodges securities in the excel based spread sheets or manual ledger and stores those in fire proof cabinet under dual key control

®     Credit Admin.  Advise the operations team to prepare the Manager’s Check.

 

Flow 4:

®     Customer is informed by a letter /DSA to come to the branch to collect the money from the account

®     Sales Officer records point for the sale against individual DSA’s performance record sheet

Any change in the above Work Flows must be recommended by the Head of Operation and approved by the Chief Operating Officer of the Bank.

The process flow is illustrated in the diagram below:

 

 
Financial Strategy

Capacity Utilization

Following is a profit expectation for the year ending of the current year and two years following that.
 

The Executive Loan is proposed to be launched by June 2005. The expected number of accounts for the Executive Loan services per year in SCB for next three years as follows:

Table 22:

902003003 Year Loans31570010504 Year Loans2250755 Year Loans235075Number of Accounts Expected45010001500Utilization Rate (for overdrafts)70%72%75%
 

Considering the demand for consumer loan among executives, the proposed target seems to be comfortably achievable.

Equal Monthly Installment Calculation

For installment loan the interest is accrued every month on EMI (Equal Monthly Installment) basis unless otherwise specified. For overdraft facilities the interest servicing is made quarterly. To calculate the installment amounts the formula of Present Value Annuity will be used.
 
According to the formula, as used at SCB
 
 
Where PVA _n = Present Value of an Annuity for n periods (Loan Amount)
C = Equal Payments (Installment Amount)
k = Interest Rate for the 1 Period

Therefore the formula used will be like the following:

Profitability

The assumptions on which these projections are based are given in Cost and Revenue assumption parts.

The forecasted financial highlights of the project for the first three years of operations are as follows:

Table 23: Profitability
(Tk. ‘000)

 

Taxation

The tax rate for the company is assumed to be 40%.
Problem Analysis
At SCB, following are the main problems that we have noticed that is hampering the in greater corporate achievements.  As seen in the SWOT Analysis, SCB has indeed more strengths than weaknesses. But the company lacks serious attention to the HR growth and development which is of utmost necessity if a company needs to succeed.
 
The problems identified are:

• Employees at SCB can be divided into two large categories, front office job and back office job. Back office job involves in the activities of corporate and business level managers while front office job involves in the activities of functional level managers. The financial, functional as well as department related work target set for employees at front office are indeed unquestionably high. It is indeed difficult for an employee to start meeting company objectives right after they have joined the company. Thus pressure on front office job is immensely high.

 

• As per our interview with a couple of employees at lower and mid level management, we came to the conclusion that the pay at these levels is not of proper ratio as to what is paid to the top management. This creates further distance between the upper and lower level of managers. As a result, workers get demotivated and their morale goes down. The overall effect is in lower productivity.
• Rotational day off (RDOs) is a privilege that’s only kept for upper level management. The lower level management goes through similar and at times even more rigorous pressure than upper level management. Thereby, they too need RDOs. Like the point above of differential payment, such privilege for upper level management too create gap between workers.

 

• More training is required at the entry level for employees at SCB. The employees at upper level management is sent o be given training both on-the-job as well as off-the-job. At its extreme, off-the-job training involves employees bring taken to countries outside Bangladesh.

 
It is important, to send upper level employees for training as they are involved with making important strategic decisions and it is equally important to send lower and mid level employees to training as they are involved in the implementation of those important strategic decisions. Without them such decisions will never see reality.
 

• Communication at SCB is downward. They believe in top-down change. Here a strong CEO or the top management team analyses how to alter strategy and structure and thereby recommend a course of action and the move quickly to restructure and implement changes in the firm. This drastic nature of change results in poor adaptation by all the employees at the lower hierarchical levels. This leads to poor productivity.

 

• The top management wants to claim the culture to be that of a subsidiary of a foreign company that is prevailing in each branch of SCB. However, the culture is always inherited from the culture of the employees of top level. The top level people being local, has a bossy attitude toward lower level employees rather than a friendly attitude that is evident is the Headquarter of Standard Chartered culture at London. This pose problem as employees down the hierarchical level face problem as to how they should act. In pen and paper the culture is supposed to be of multicultural in nature and accept the diversities. On the other hand, they see a different culture is actually prevalent at workface.

 
For example, a top level manger at London makes his own coffee, which is also supposed to be he corporate culture of the Bangladesh subsidiary. Instead, top level managers are given Personal Assistants in this country which violates the overall corporate culture and increases Bureaucratic cost.
 

• Promotion is indeed a difficult aspect to obtain at SCB. Employees are given generous pay increases but very seldom are they given promotions compared to other foreign and locally owned banks in town.

 
This poses problem as workers who are looking forward to self-actualization rather than have pay increases are demoralized.
 

• Conflict arises at SCB just like at any other company. This is the struggle that arises when the goal directed behavior of one organization group blocks the goal directed behavior of another. Different functions and departments at SCB have different orientations, so if decisions favor one group over another then organizational conflict is very likely to arise.

 
These are the few major problems faced at SCB.
Alternative strategies
Out of the many problems discussed I feel that Organizational Conflict at SCB is the biggest obstacle that is hindering SCB at better achieving its organizational goals. Before proposing various alternative strategies let us first explore the source and types of Organizational Conflict:
 
Organizational Conflict emerges and hinders organizational performance highly. The five stages and sources of conflict are:
 
Figure 19: Stages in the Conflict Process
 
 
Latent Conflict
 
This is the first stage and this is potential conflict that has not occurred yet. But it has al the possibilities of flaring up when the time comes.
 
At SCB, I have seen that top level managers see high pay rises, they enjoy regular and routine Rotational day off. They also mange promotions with high involvement in politics. Off the job training to abroad is also facilitated only for them.
 
On the contrary, employees at lower and mid level enjoy no such pay rise, rotational day off, off the job training to countries abroad. Neither can they manage promotion for self actualization.
 
This creates adverse and unexpected situations. Without having to expect it, the lower level employees bear Latent Conflict in regard to their superiors. This can flare up anytime is the employees suffering ask for strategic changes to be brought about.
 
Perceived Conflict
Latent conflict can quickly lead to Perceived Conflict. This occurs as managers at SCB discover that actions of another group, in this case the upper management,  is obstructing their achievements and operations. They start to react to situations, and from the perceived stage they go quickly to the third stage.
 
Felt Conflict
 
It is at this point that mangers start to personalize at SCB the conflict. Opinions polarize as one function or division starts to blame the other for causing the conflict. E.g. Finance dept. blaming the Corporate Finance dept. typically there is a marked lack of cooperation at this stage, and integration among functions breaks down as group start to develop and “us vs. them” mentality.
 
Manifest Conflict
At this point, the conflict among functions or divisions comes into the open, and each group at SCB strives to thwart the goals of the other. Groups compete to protect their own interest and block interest of other groups. Naturally, this blocks change and prevents SCB from adapting to its environment and achieving strategic goals.
 
Manifest can take many forms. The most obvious is fighting or a lack of cooperation among to managers as they start to blame the managers of other function or divisions at higher level at SCB.
 
The other forms of Manifest conflict are transfer pricing battles between divisions and knowledge hoarding. If managers refuse to share customer information, a company can not develop synergy among departments. And all the benefits of having so many employees will be lost.
 
Conflict Aftermath
The long term effects of the above conflict emerge in the last process of conflict that is the, conflict aftermath. At SCB, a change in strategy, led to conflict among managers at different level over information share. Then lower level managers with the help of corporate personnel resolve the problem to everyone’s satisfaction and re-established good working relationships. Instead of this, if the matter was settled by the intervention of corporate mangers, who imposed the decision then possibilities will be left for further conflict to arise.
 
A new round of intense clashes is inevitable in near future at SCB. This is due mainly to the unresolved problems as mentioned above.
 
The various alternatives I propose to combat the problem of Organizational conflict include:

• Bottom up Management

In this Management approach, managers at all levels are included in the decision making process. Over time a detailed plan of future actions is made with employees so that they can meet the goals they have created on their own. The emphasis is on participation of SCB employees and keeping them informed at all times. This reduces conflict as managers can tell their problems to be solved along with decision making process.
 
If employees are heard of then at the first place conflict source can be reduced or eliminated altogether.
 

• HR Practice

Good HR Practice can also reduce or eliminate Organizational conflict. Following are the ways in which attributes of HR can help achieind reduced conflict in working environment.
 
Basic Salary
Standard Chartered Bank recognizes productivity as the basis of determining the salaries of the employees. The management of the bank thinks that their salary level is appropriate and the employees I have surveyed and interviewed have conformed to this idea. As stated by the employees, they are satisfied with their current salaries and identify their salary levels proper in accordance to the salary level of other similar organizations.
 
No overtime option is provided by Standard Chartered Bank. On this overtime issue, two employees have placed different views. The relatively newer employee have asked for overtime option and pay whereas the other one is happy with no overtime option. On one thing all three of them agree is that no discrimination exists in the organization in determining the salary.
 
Incentives
Standard Chartered Bank provides incentive to the employees in form of different kinds of bonuses. For good performance, cash bonus is offered. Employees are satisfied with this current reward policy. Management also thinks that the present rewarding policy is effective in encouraging the employees. So, they are not thinking of any alteration or modification in the reward system. However, the number of rewarded employees varies each year. According to the management, it depends on target achievement.
 
Benefits and Services
Standard Chartered Bank provides additional benefits and services. These vary a little according to employee status. Medical allowance and insurance are offered to all the employees. Some are provided with car facilities. Though the management has not mentioned any particular reason, but it can be assumed that this facility is provided for the high ranked officers.
 
As stated by the employees, they are satisfied with the benefits provided. Management has not received any complaint or demand from the employees about the given benefits yet, but they think that cash benefits encourage the employees most. However, one of the employees has asked for transport allowance for all. Another employee has identified free credit card as the most attractive benefit!
 
Orientation
Formal orientation is provided to the new employees. According to the management, the orientation procedure is narrowly carried out. The main objective of undertaking orientation is to acquaint the new employees with the job and the organization. The focus of the orientation is strongly on specific job related issues.
 
The newer employee thinks the orientation is quite narrow and he is not satisfied at all. However, the other employee thinks the orientation is quite broad and satisfying. From the above findings, I assume that there might have been a change in the orientation procedure over the last six years. There might have been some other problems with the orientation style as the employees have identified general organization issues as the focus of the orientation program instead of specific job related issues.
 
Placement
Standard Chartered Bank has both zonal (inside Bangladesh) and global posting options. According to the management, posting is decided on the basis of performance. For global posting, experience is also an important issue. In case of full time employees, occurrence of terminations is very rare. Standard Chartered Bank considers individual preference or problem of an employee while deciding transfer/ posting. The whole decision process is completely unbiased. Both the employees have agreed with the management on these entire placement issues.
 
 
Counseling
According to the management and the older employee, the counseling procedure of Standard Chartered Bank is formal. The focus of counseling is to advice, to communicate and to resolve job related problems. This counseling program helps the employees to cope more and better with the job and the organization.
 
However, the new employee is completely unaware of the existence of counseling tradition in his organization. He even has not sought for any counseling program. I can assume that, his orientation to the organization was not compact and proper and that is why he does not know about this important prevailing program, which is strongly driven by employee interests.
 
Lastly we have the role of Organizational politics as solution to combat conflict.
 

• Organizational Politics

This is a set of tactics that strategic managers engage in to obtain and use the power to influence organizational goals and change strategy and structure to further their own interest.
 
This in discussed in further detail as I propose SCB to use this strategy as the best one to combat conflict.
 
Recommendation plan
Out of the alternative strategies, I believe that role of Organizational Politics can best solve the problem of Organizational Conflict at SCB.
 
Organizational Politics
Like other organizations, SCB too has a pyramid shaped organogram. Managers who can reap benefit by imposing political decisions can get rewards and promotions. This helps the organization in turn in reducing conflict.
 
No one knows for certain what will happen as political grouping occur. Letting people pursue their own interest may mean that the company’s own interest is being pursued. Competition among managers stemming from self interest may lead to more cohesive and friendly working environment.
 
If SCB can maintain the checks and balances in its top management circles, politics can be a healthy influence, for reducing conflict.
 
Thus, organizational politics can prevent conflict occurring between lower and upper level of management, promote healthy working environment and avert organizational decline due to unnecessary latent conflict giving birth to conflict aftermath in its worst scenario.
 
Politics can also be a means to facilitate promotions of lower level employees by the help of the superiors they are following. However, this method has the disadvantage creating inequality among entry level workers.  Employees not having to adhere to the involvement of politics will soon find themselves helpless at the whims of powerful superiors.
Figure 20: Effect of Organizational Politics on Performance
 
As is evident from the figure above politics can contribute to positive performance and reduced conflict to the point A. an increase in the level of politics from point A will lead to Bureaucratic cost, decline in performance and high conflict in the functional divisions.
Care should be taken so that politics does not get out of control beyond point A and SCB fragments to competing interest groups instead of cohesive workforce.
 
Implementation Plan
Before the implementation plan let’s have a closer look at the HR department. And then I suggest three integrating mechanisms on the HR department of SCB for the carrying out of the best recommended strategy and that is to use politics in a healthy manner to help reduce the potential and already existing conflict at SCB.
Standard Chartered Bank is the world’s leading emerging markets bank headquartered in London. Its businesses however, have always been overwhelmingly international. Today Standard Chartered employs 30,000 people in over 500 offices in more than 50 countries primarily in countries in the Asia Pacific Region, South Asia, the Middle East, Africa and the Americas.
Standard Chartered Bank started its business in Bangladesh in 1948, opening its first branch in the port city of Chittagong. The bank increasingly invested in people, technology and premises as its business grew in relation to the country’s thriving economy. At present, the bank has six offices in Dhaka, Chittagong and Sylhet, including the country’s only offshore banking unit inside the Dhaka Export Processing Zone at Savar.
Standard Chartered Bank’s services in Bangladesh, ranges from Personal & Corporate Banking to Institutional Banking, Treasury and Custodial services.
 
For the implementation plan I have proposed three integrating mechanisms through which organizational politics can be safely fostered. It can also be taken care that politics does not get out of control beyond point A and SCB fragments to competing interest groups instead of cohesive workforce.
 
Liaison Roles
 
SCB can improve its interventional coordination and reduce conflict in this method. As the volume of contacts between two departments increases, one of the ways of improving coordination is to give lower level managers the responsibility for coordinating with higher level employees. These meetings can be held daily, weekly or monthly or as per requirement.   The responsibility for coordination is part of the employees’ full time job but through these roles a permanent relationship forms with upper level employees which in turn help reduce conflict.
 
Furthermore, liaison roles offer a way of transferring and sharing information across the organization which is important for SCB.
 
 
Task Force and Permanent Teams
Figure 21:

Dept A

Dept C

Dept B

Dept C

Task Force and Permanent Teams
 
Task Force
 
At SCB, when more than two divisions share common problems, I have analyzed that the above integrating mechanism is of limited value because they do not provide enough coordination.  The solution I suggest in this regard is to adopt a more complex form of integrating mechanism called a task force. Lower and mid level employees are assigned to a task force created to solve specific problems. Essentially, task forces are ad hoc committees, and they are responsible for reporting to the top level management on the issues addressed and solutions recommended. Task forces are temporary in nature because once the issue giving rise to conflict has been solved, employees return to their normal roles in their own departments or assigned to other task forces.
 
Permanent Teams
In many cases the issues addressed by a task force recurs. To deal with such issues, SCB must establish a permanent integrating mechanism such as a permanent team. Such an activity obviously requires a great deal of integration among decisions if new financial products and services are to be successfully introduced by SCB. The importance of teams in the management of the organizational structure can not be over-emphasized.  Essentially, permanent teams are the SCB’s standing committees, and much of the strategic directions of SCB have to be formulated in their meetings. A complex organization like SCB, employees need intensive face-to-face sessions in which employees at all level can understand each others viewpoints and develop a cohesive organizational strategy. This will surely reduce potential and existing conflict.
 
Contingency Plan
A contingency plan is required as our recommended solution as the introduction of Organizational Politics may not be implemented due to the following unexpected events. But all of them have the possibilities to occur in future which will make our strategy not work for the achievement of organizational goals.
 
Corporate Obstacles
Politics is an unwelcoming factor at Standard Chartered Bank. It is of serious crime to unionize among workers. If anyone is found involved in direct or indirect politics, it is not invited with a nice manner.
 
Divisional Obstacles
Similar factors operate at this level. Politics may not be facilitated as mangers fear ni losing jobs. They also fear that if a follower becomes powerful enough to deny the influences the manager, then it will be to the disadvantage of the manager. Poltics affect different divisions at different ways. As it may serve the purposes of one group at the expense of the favor of the other.
 
Functional Obstacles
The similar obstacle is present at functional level. Different divisions have different strategic orientations at SCB. Lower level employees have short term, target directed efficiency orientation. On the contrary, upper level management is oriented toward long term technical goals and satisfying shareholders’ expectations. Thus, politics at this instance may fail to bring about necessary cohesion and instead may lead to further conflict. This will make our recommended strategy for SCB null and void.
Individual Obstacles
At the individual level too, people may resist politics because they are either comfortable with their current pay and status or they fear that involvement in politics will make them less acceptable to the top management of the company. At AT&T there was instance of thousands of lay-offs of its managers every few year due to involvement in politics. This discourages employees to get involves in politics even today.
 
As I see due to above reasons politics may not be facilitated to combat conflict at work place. In this regard I recommend changes in yet another HR aspect and that is changes in incentives, bonus, and introduction of training programs at the low and mid level. Details are as follows:
 

• Basic Salary: this is to be increased at entry level to reduce the possibilities of latent conflict with upper level management.

 

• Incentive: annual financial incentives and oral appreciations by colleagues and superiors can also help reduce conflict.

 

• Benefits: including house rent, holiday expenses can be provided based on the performance of entry level employees. Having a good time outside work place for sometime increases productivity and give way for a happy and satisfied workforce. This, in turn, reduces the chances for conflict.
• Orientation: regular orientation can be held so that employees feel that they are a indispensable and integral part of the company.

 

• Counseling: trained counselors can be hired to convey the messages of root level to the top level if the former is not very open with the latter. This very gap creates conflict. And need to be reduced with the help of professional counselors.

 

• Placement: job rotations to different branches and placement in a different area of operation can help reduce conflict. New acquaintance and adaptation accommodates more time of employee and leave him/her with less time for conflict.

 

• Off-the-job Training to outside Countries: like their superiors, lower and mid level employees should be given the chance for a Off-the-job Training to outside countries. This will reduce both potential and felt conflicts that have already been existing.

 

• Introduction of Bottom-up Management: involving low and mid level managers in decision making will make them feel part of the company and not just subordinates who are hired to follow orders. This reduction of gar reduces chances for conflict.

 
 

Conclusion

A bank is an intermediary institution, which deposited customer’s money and again invests it to another customer to reach the goal as well as specific objective. A bank can not be able to reach the goal until it makes the customer satisfied by providing services as much as the customer needs.
After preparing this report it becomes very evident to say that there should be a goal to make the customer always happy and satisfied with the service, only then a bank can run its business safe and soundly in this competitive era.
 

Appendix

Bibliography

• SCB Annual Report
• SCB Brochure
• Strategic Management Book
• www.standardchartered.com
• www.standardchartered.com/bd
• Interview with Mr. Salahuddin (Finance Manager, Karwan Bazar Branch)
• Mr. Saeed Ul Hoque (Personal Financial Consultant, Uttara Branch) of Standard Chartered Bank
• Periodicals and Booklet about Standard Chartered Background History
• Call Centre, Standard Chartered Bank
• Brochures of Call Centre
• IVR Flow, Call Centre