Executive Summary

This study attempts to identify the factors related to service performance of all the nationalized &
private commercial banks of Bangladesh in a portfolio. It identifies the relationship between age,
educational background, profession, and length of involvement, types of services obtained by the
consumers from the banks and the service quality factors. An extensive survey has been
performed with a structured questionnaire to identify the factors that differentiate the service
provided by Private commercial banks(PCBs) & nationalized commercial banks(NCBs). The
sample clients were selected from DhakaCity. 30 respondents were interviewed from several
banks. In selecting sample, it was assumed that the bank clients of DhakaCity are more sensitive
compared to other cities of Bangladesh, as their education level is higher. The sample clients
were selected randomly at the banks while interviewing. Descriptive statistics was used in the
analysis. Again observational method also used while making service portfolio data gathered
from respective bank websites & several journals. Factor analysis was done to identify the
service quality factors of the banks. Correlations between the factors and age, educational
background, profession, length of involvement, and types of service obtained were identified to
know the relationships. In order to explore the relationship & differences with the overall service
performances, multiple regression analysis was performed. Results show that the most important
service quality factor of banks is personal attention to the clients. It is also found that there is a
significant difference between the expected and perceived service quality between PCBs &
NCBs. A significant correlation between the performance of promises in time and professions of
the consumers is observed. Perceived service quality factors have significant relationship &
differences between the PCBs & NCBs with the overall service quality of the banks which
indicates that the factors identified have strong influence on the overall service performance.
Chapter 01
Introduction
Bank is very old institution that is contributing toward the development of any economy and is
treated as an important service industry in modern world. In Bangladesh banks are main vehicles
for mobilizing invisible funds and channel those funds to faster the growth of productive sectors of
the economy in the absence of a healthy capital market. After the creation of Bangladesh, then
the government nationalized all the commercial banks and financial institution functioning in the
East Pakistan. But during 1982-83 government allowed commercial bank to operate in private
sector side by side with the public sector banks to start a meaningful and constructive

competition in the banking sector. Now about two decades in Bangladesh that bank is operating
under both public and private sector. Several analysis has been done to identify which sector is
able is in the lead position. But it is commonly believed that the NCBs are engulfed with the
vicious problems of corruption, inefficiency, loan default e.t.c although the private commercial
banks are efficient in their commercial activities and solving the problem of loan default.
Bangladesh economic overview:
The economic situation facing Bangladesh as it emerged from the war of independence in 1971
included the highest rural population density in the entire world, an annual population growth rate
between 2.5 and 3 percent, chronic malnutrition for perhaps the majority of the people, and the
dislocation of between 8 and 10 million people who had fled to India and returned to independent
Bangladesh by 1972. The new nation had experienced huge difficulties on its journey like serious
shortage of essential food grains and other staples because of period of war disturbance; Foreign
exchange capital were infinitesimal, there was a changeable situation in banking and monetary
system.
Introduction of Banks in Bangladesh & overall Scenario:
During the Mughal period, there were different types of gold coins in circulation that encouraged
people to engage in monetary transactions and profit-motivated financial activities. Many
individuals and some families attained special reputation in trading and in finance. One such
family, that of jagat sheth, had branches of its monetary business in dhaka, Hughli and
murshidabad. Mughal rulers patronised the banking business of Jagat Sheth family and others,
and also used to borrow money from them when needed. People could convert their valuables,
mostly gold and silver, into currency with minimum cost at Mughal mints. Monetary transactions
and transfer through hundi (bill of exchange), along with cash transaction, was in vogue during
the Mughal period. The revenue received from zamindars and dues there from were sent to the
government treasury through family-based financial or banking institutions. People from different
classes were also involved in monetary trading which helped the evolution of banking in that
period. A major landmark was the establishment of the Hindustan Bank in 1700 AD at calcutta
Established in 1784; the Bengal Bank was the first British-patronised modern bank in India.
Dhaka Bank started to operate as a commercial bank in 1806. The Bengal Bank opened its first
branch in Dhaka by purchasing Dhaka Bank in 1862. In 1873, it opened its two branches in
sirajganj and chittagong. Another branch of Bengal Bank was opened in chandpur in 1900. Six
branches of Bengal Bank were in operation in the Bangladesh region until the partition of bengal
in 1947 and these branches were located at Dhaka, Chittagong, mymensingh, rangpur, Chandpur
and narayanganj. The banking system in the territory of Bangladesh grew slowly during the

British and Pakistan periods. There were only 25 bank branches in 1901 and the number grew to
668 in 1946.
The banking system in Bangladesh started functioning with 1,130 branches of 12 banks inherited
from Pakistan. These banks were nationalised and renamed after being merged. The the banks
were the sonali bank (The National Bank of Pakistan, The Bank of Bawalpur, The Premier Bank),
agrani bank (Habib Bank, Commerce Bank), janata bank (United Bank, Union Bank), rupali bank
(Muslim Commercial Bank, Standard Bank), pubali bank (Australasia Bank, Eastern Mercantile
Bank) and uttara bank (Eastern Banking).
Bangladesh bank, the central bank of the country, was set up on 16 December 1971 by the
Bangladesh Bank Order 1972. The government accepted the assets and liabilities of the Deputy
Governors office of the State Bank of Pakistan in Dhaka and declared the Bangladesh Bank as a
fully effective and permanent central bank.
Review of Literature
With respect to the Performances of Bangladeshi Commercial Banking sector, foreign and
national experts undertook number of studies. Some of the notable ones are mentioned below:
Some of the notable ones are; Bhattacharya (2007), Chowdhury and Islam (2007), Jahangir, Shill
and Haque (2007), Chowdhury (2002), Siddique and Islam (2001), Al-Shamrnari and Salirni
(1998), Avkiran (1997), Bhatt & Ghosh (1992), Hossain & Bhuiyan (1990), Swamy & Vasudevan
(1985), Ahmed & Jamsheduzzaman (1985) Bhattacharya (2007) pointed out that six major recent
policy measures include: reduction of bank rate and lending rate, linking classified loans to large
loan sanctioning; rationalization and merger of bank branches, measures for loan recovery, and
demarcation of responsibilities between the management and the board and decision on cash
reserve ratio. Chowdhury and Islam (2007) stated that deposits and loan advances of
Nationalized Commercial Banks (NCBs) are less sensitive to interest changes than those of
Specialized Banks (SBs). So SBs should not make abrupt change in lending or deposit rates by
following the NCBs. If NCBs change their lending or deposit rates, their deposits or loans and
advances will be affected less than those of SBs. Moreover, deposits of NCBs have higher
volume and higher volatility than those of SBs. On the other hand, loans advances of NCBs show
a higher volume and higher volatility than those of SBs. However, SBs offer higher deposit rates
and charge higher lending rates than NCBs. That is why the interest rate spread of SBs was
higher than that of NCBs.
Jahangir, Shill and Haque (2007) stated that the traditional measure of profitability through
stockholders equity is quite different in banking industry from any other sector of business, where
loan-to-deposit ratio works as a very good indicator of banks profitability as it depicts the status

of asset-liability management of banks. But banks risk is not only associated with this asset
liability management but also related to growth opportunity. Smooth growth ensures higher future
returns to holders and there lies the profitability which means not only current profits but future
returns as well. So, market size and market concentration index along with return to equity and
loan-to-deposit ratio grab the attention of analyzing the banks profitability. Chowdhury (2002)
observed that the banking industry of Bangladesh is a mixed one comprising nationalized, private
and foreign commercial banks. Many efforts have been made to explain the performance of these
banks. Understanding the performance of banks requires knowledge about the profitability and
the relationships between variables like market size, banks risk and banks market size with
profitability. Indeed, the performance evaluation of commercial banks is especially important
today because of the fierce competition. The banking industry is experiencing major transition for
the last two decades. It is becoming imperative for banks to endure the pressure arising from
both internal and external factors and prove to be profitable.
Hossain and Bhuiyan (1990) stated that there is no universally accepted operational definition of
performance measures. In broad sense performance level of an enterprise can be measured by
the extent of its organizational effectiveness. In the context of services rendered towards public
the performance of an organization can be 2viewed as the extent to which its work is carried out
within established specifications for goods and services produced, to the general satisfaction of
the clientele served, within given cost and time constraints, and in such a manner as to support
or contribute to the achievement of the organization objectives. In measuring performance level
of a bank Swamy and Vasudevan (1985) used per employee, deposits, advances, profits etc.
Chowdhury (2002) observed that the banking industry of Bangladesh is a mixed one comprising
nationalized, private and foreign commercial banks. Many efforts have been made to explain the
performance of these banks. Understanding the performance of banks requires knowledge about
the profitability and the relationships between variables like market size, banks risk and banks
market size with profitability Indeed, the performance evaluation of commercial banks is
especially important today because of the fierce competition. The banking industry is
experiencing major transition for the last two decades. It is becoming imperative for banks to
endure the pressure arising from both internal and external factors and prove to be profitable.
Siddique and Islam (2001) pointed out that the Commercial Banks, as a whole, are performing
well and contributing to the economic development of the country. The average profitability of all
Bangladeshi banks collectively was 0.09% during 1980 to 1995 which means that a profit of TK
0.09 was earned by utilizing assets of TK 100. In every aspect of profit, banking sector
contributes the national economy as well as to the individual organization. Despite overall growth

of the banking sector being positive, the performances of different categories of banks were not
equally attractive.
Bhatt & Ghosh (1992), observed that the profitability of commercial banks depend on several
factors some of them are endogenous and some exogenous. The endogenous factors represent
control of expenditure, expansion of banking business, timely recovery of loans and productivity.
The exogenous factors consist of direct investments such as SLR (Statutory Liquidity Ratio),
CRR (Cash Reserve Ratio) and directed credit programs.
Financial institutions, in recent years, have changed its mode of income; this was the result of
technological innovation, deregulation and the growing dependency of individual and the country
as a whole. The income stream of the FIs comes from the non-interest sources. For example US
commercial bank in the year 2004 earned around 42% of operating income from non-interest
sources compared to 32% and 20% only in 1990 and 1980. This indicates a new horizon
generation for the FIs. Despite the fact that part of the increase in non-interest income is due to
diversification into mines of business such as investment banking, venture capital and insurance
underwriting, there were also significant growth in fee-paying and commission- paying service
linked to traditional retail banking. Conversely, the shift towards non-interest income of US bank,
in recent years, has not improved the risk-adjusted return to a greater extent. For bank, both in
the US and elsewhere, several researchers have explored relationship between strategies,
market conditions, technological change and risk adjusted financial performance to better
comprehend their linkage.
Among the motives for diversification, as found by santomero and Eckles (2000) are rapid growth
objective, achieving efficiency through economies of scale and scope, and reduction of firm
specific risk, etc. A number of reasons exist as to why focus versus diversification is important in
the framework of FIs and banks.
Focus versus diversification has been the center of recent corporate Service discussions. A large
amount of evidences suggest that diversification destroys value that leads to the concept
popularity termed as diversification discount. Several theories have explained this as riskaversion (Amihud and Lev, 1981), managers-shareholders agency problems (Denis, Denis and
sarin, 1997, and Cornett et al., 2001), and power struggles between and among different
segments of any form (Rajan, Servaes and Zingales, 200). Some these researches have also
tried to establish a connection between their theories and the cross-sectional variation in
diversification discounts and premia. Using somewhat coarser measures, Hughes Lang, Mester
and Moon (1996), Saunders and Wilson (2001), and Berger and Deyoung (2001) critically and
deeply examined the geographical diversification. Whatever the impact of diversification on

banks performance, the degree of increase or decrease in stockholders value in the profit
making institutions is unclear. Many studies found that diversification bring a reduction in the
stockholders value, result in inefficient and less profitable investment, and cross-subsidization of
loss generating operation (Wernerfelt and Montgomery, Scharfstein, 1998; 1988; Berger and
Ofek, 1995; Lang and Stulz, 19945; Siggelkow, 2003). Leaven and Levine (2007) conducted a
rigorous study to determine the impact of diversification on the market value of large banks from
42 countries. The study of Leaven and Levine (2007) suggest that the market values of those
banks were lower who were diversified compared to those where were not and thus
diversification did not generate adequate economies of scope to accelerate the market
valuations. Moreover, such diversification may generate agency problems in the banks (Leaven
and Levine, 2007).
Performance of bank has been a key issue related to the diversification debate. It is interesting to
observe that many researches have found the diversified firms have profitability track compared
to the non-diversified or less diversified firms. But this necessarily does not prove the matter that
diversification improves or augments profitability of firms although there is an observed tendency
for non-diversified to poor performs compared to their diversified. Caprio and Wilson (1997)
examined the cross-country evidence of a relationship between on-balance sheet loan or credit
concentration and bank insolvency. Berger, Demsetz and Stahan (1999) found that consolidation
in financial services industry had been dependable on average with superior diversification of risk
but could bring little or no improvements in cost efficiency. Finally, quite a few papers such as
Gehrig (1998), DellArricia, Friedman, and Marquez (1999), Boot and Thakor (2000) have
focused on the unpleasant effect of fierce competition resulted from diversification on bank credit
quality. Referring to the performance issue, Strioh (2004a), in a rigorous study on the US
community banks found evidence of favorable impact of diversification within the major
operational activities of banks e.g, interest bearing and non-interest transaction although such
impact was not available across those broad activities.
However, institutions including bank always move towards product diversification over the time to
maintain competitiveness and survival this is also true as observed in the case Bangladesh. As
found the literatures, this study will also focus on the impact of this study will also focus on the
impact of this product & Service diversification.
Objective of the study:
Specific objective of this study is as follows:

To measure the service performance of these NCBs & PCBs.

To make a comparison among all the NCBs & PCBs based on service performance.

To create a portfolio of these commercial banks those are operating in Bangladesh.

To find out the roles that can be played by these banks to contribute more to the economic
sector.

Overall objective of this study:

In this study there will be a brief portfolio & comparison between Nationalized Commercial Banks
& Local private commercial bank. The criteria will be product, Services, Benefits and Facilities
what customers get from different banks.
Research design & Methodology:
This section includes identification of data source, sample design, sample selection,
questionnaire design, data collection, and analysis of data. The details are as followsData Source
To test the hypothesis that clients perception about service performance of these banks whether
satisfactory or dissatisfactory required primary data have been collected from published reports
and annual reports of these four banks and annual report of Bangladesh bank. Secondary data
have been collected by using a 5 point likert scale.
Sample design:
This study is mainly based on both observation method based on the service provided by all
commercial banks & questionnaire survey of clients all commercial banks located in Dhaka City.
The expert opinion shows that there are more than 1,00,000 clients getting services from different
banks operating in DhakaCity. 30 Sample clients were selected for the survey from this
population.
For observation method all data & sources are collected from the websites of respected PCBs &
NCBS.
It was also thought that the banks clients selected for this study are heterogeneous in terms of
their accounts/ transactions with the banks.
Sample Selection:
The sample clients or customers were selected from the branches of the selected banks located
in DhakaCity. The sample clients were selected from the branches located in four bank clusters
including Motijheel, Gulshan, Dhanmondi, and Uttara of Dhaka City. This sample includes the
clients of corporate and other branches of the selected bank clusters. In selecting sample, it was
assumed that the bank clients of DhakaCity are more sensitive in getting service compared to
other cities of Bangladesh, as they are more with higher education. This was also proved by the
research (Ruyter and Bloemer, 1997). The clients were selected randomly at the spot/bank while
interviewing. The number of respondents from the selected banks was determined based on the
volume of financial activities performed by the banks such as, deposits and advances/loans.

Questionnaire design & Data collection:

A questionnaire has been used to assess the service quality of the bank, where 5 points scale
was used ranging from 1 (highly satisfied) to 5 (highly dissatisfied). Background information of the
respondents is added with the questionnaire in order to identify the correlation with the service
quality factors these data has been collected.
Data Analysis:
After collecting data, a comprehensive screening process was done. Incomplete and biased data
were sorted out and deleted from the data bank. Both descriptive and inferential statistics were
used in the analysis. Descriptive statistics was used to depict the specific situation of specific
position of the banks and other aspects relating to service performance. Both observation method
& testing the hypotheses, Factor Analysis was performed with the help of sample size 30.
Correlations between service quality factors and age, education, profession, length of
involvement and types of services obtained were identified to know the relationships. In order to
explore the relationship of the service quality factors with the overall performance of the banks,
multiple regression analysis was performed.
Hypothesis of the study:
The only hypothesis of this study is as follows:
H0: Clients perception about the service performance of these banks is not satisfactory.
H1: Clients perception about the service performance of these banks is satisfactory.
Chapter 02
Common Services performed by the NCB,s & PCBs
General & Retail Banking Services
Principle Activities
The principle activities of the bank are banking and related business. The banking business
includes deposits taking, extending credit to corporate organizations, retail and small & medium
enterprises, trade financing project financing, lease and hire purchase financing, issuance of local
and international credit cards, inward foreign remittance etc. The mode of banking includes
conventional and Islamic banking. It also performs merchant banking function under the license
issued by Securities and Exchange Commission, Bangladesh.
General Banking
Account opening section
Opening an account is the first step for creating a relationship between customers and the Bank.
Opening of an account binds the Bank and customer into contractual relationship. But selection
of customer for opening an account is very crucial for a Bank. Indeed, fraud and forgery of all

kinds start by opening account. So, the Bank takes extremely cautious measure in its selection of
customers.
Types of account:

Current Account

Savings Account

Fixed Deposit Account

Issuing Various Deposit Schemes:
Following savings scheme are provided by Prime Bank Limited
01. Contributory saving scheme:

This is a Savings Scheme in which a person gets the opportunity to build up savings by
contributing monthly installments and receives an attractive fixed amount at the end of a specified
term. The Scheme is designed to help the fixed income group to save money and build up sizable
funds with which they can go for some income generating venture to improve the quality of their
life and/or meet any future financial obligations.
Education Savings Scheme:
This scheme provides a unique opportunity to the parents to make a future provision for the
educational expenses of their children when they enter into Schools, Colleges and Universities
out of the benefit of a small amount of savings with the Bank at an opportune moment.
Short Term Deposit:
A short term deposit (STD) account is a running account with amounts being paid into and drawn
out of the account continuously. These accounts are generally opened by Business Organization,
Public Institution, and Corporate Bodies. It is an interest bearing deposit. Interest is calculated on
daily basis as per Banks Prescribed Rate and is credited to account on half yearly basis.
Double benefit Deposit scheme:
A short term deposit (STD) account is a running account with amounts being paid into and drawn
out of the account continuously.
Resident Foreign Currency Deposit Account:
Persons ordinarily resident in Bangladesh may open and maintain Resident Foreign Currency
Deposit (RFCD) accounts with foreign exchange brought in at the time of their return from travel
abroad.
Non Resident Taka Account:
The Taka accounts maintained with banks in Bangladesh by private individuals, firms and
companies resident outside Bangladesh are known as Non-resident Taka Accounts. The salient
features of the Scheme are given below:

The accounts of foreign nationals residing in Bangladesh and foreign firms and companies
located and operating in Bangladesh and accounts of U.N. and its organizations are, however,
treated as resident accounts and kept outside the scope of Exchange Control.
The accounts of Bangladesh nationals who leave the country except those who hold office in the
service of Bangladesh Government are required to be treated as non-resident Taka account so
long they remain outside Bangladesh.
Prior permission of Bangladesh Bank is necessary for opening non-resident Taka accounts.
Non-resident Taka account may, however, be opened without prior permission of Bangladesh
Bank for crediting the proceeds of remittances received from abroad through normal banking
channel.

House Building Deposit Scheme:

The depositor will have the option to choose any installment size at the time of opening of the

A/C. and will not be allowed to change the size of installment afterwards. A person can also open
more than one account but House Building Loan facility shall be on one account only.
Account in the name of minors can be opened too under the Scheme but without insurance
coverage.

Monthly Benefit Deposit Scheme:

This is a Deposit Scheme where the depositor gets monthly benefit out of his deposit. The
scheme is designed for the benefit of the persons who intend to meet the monthly budget of their
families from the income out of their deposit.
Fixed Deposit Scheme:
Different features for every bank is fixed with there respected offer & service.
Lakhopati Deposit Scheme:

Monthly Installment size, tenure and terminal value of the scheme will be as follows:
At present no income tax will be deducted from the interest earned. But in future for any

change in the government policy Bank reserves the right to deduct income tax.
The depositor will have the option to choose any installment size and period at the time of

opening of the account and will not be allowed to change the size of installment afterwards. A
person can open more than one account for any size of installment in any branch of the Bank.
Account in the name of minors can be opened too under the Scheme as per standard

procedure for minor accounts.

The specified amount on maturity at any slab shall be paid after one month from the date of

deposit of the final installment.

The installment shall be payable by the 8th day (in case of holiday the next working day) of

every month. Advance payment of any number of installments is acceptable.

If a depositor fails to pay 3 (three) consecutive installments he will have to pay 5% fine of the
overdue installments to regularize the account. If he fails to pay more than 3 (Three) installments
he will cease to remain under the purview of the scheme and the deposit will be treated as Savings

Bank deposit and interest will be paid on the deposited amount at prevailing SB A/C rate subject to
completion of 1 (one) year of its opening.

Foreign Currency Account:

Bangladesh nationals residing abroad, foreign nationals residing abroad or in Bangladesh,
foreign firms registered abroad and operating in Bangladesh or abroad, and foreign missions and
their expatriate employees in Bangladesh can open Foreign Currency (FC) accounts. The salient
features of the Scheme are given below:
Foreign exchange earned through business done or services rendered in Bangladesh can not
put into this account.
Credits to a foreign currency account may be made against inward remittances of foreign
exchange in any form or by transfer from another FC account.
Local as well as foreign payments may be made freely from foreign currency accounts.
No payment in foreign exchange can be made to or on behalf of any resident in Bangladesh.
Payments from these accounts received by residents, unless generally or specifically authorized
by Bangladesh, must be converted into Taka.
Banks may pay interest on such accounts at rates determined from time to time.
Different types of Foreign Currency Account include the following:
1. FC Accounts of Overseas Bangladesh Nationals
2. FC Accounts of Duty Free Shops
3. FC Accounts of Joint Venture Contracting Firms
4. FC Accounts of Bangladeshis Working in Foreign organizations
Non Resident Foreign Currency Deposit Account:
All non-resident Bangladesh nationals and persons of Bangladesh origin including those having
dual nationality and ordinarily residing abroad are entitled to maintain interest bearing time
deposit account named Non-Resident Foreign Currency Deposit (NFCD) Account with the
Authorized Dealers. These accounts may be maintained in US dollar, pound sterling, Euro or
Japanese yen; initially with minimum amount of US$ 1000 or pound sterling 500 or equivalent.
Non- resident Investors Taka Account:
The non-resident investor shall open a Non-resident Investors Taka Account (NITA) with any AD
branches of Prime Bank Limited, with freely convertible foreign currency remitted from abroad
through normal banking channel or by transfer of funds from the non-resident investors foreign
currency account, if any, in Bangladesh. The salient features of the Scheme are given below:
No local funds from any sources other than those mentioned at (1), (4) and (5) above can be
credited to NITA.

No loan facilities shall be allowed by the ADs in the Non-resident Investors Taka Accounts.
Millionaire schemes.
Local Remittance
Local remittance is one of the main components of general banking. Local remittance related
general banking activities include:

Demand draft issue

Pay order
Online banking
Technology is fast changing in the banking sectors. The services are now technology based
service where one can get payment from every brach.
Check book
If someone wants to collect cheque book then he has to follow some procedures. There is
requisition form included: account title, address of the phone number, two spaces for signature of
the account holder. After fill up the requisition form account holder submit the form then
authorized officer verifies the signature of the account holder then cheque book is issued by the
name of the account holder. One cheque book register is fully maintained by including date of
issue, cheque series number, name of the account holder and signature of the account holder.
Cash section
Cash section is a very sensitive organ of every branch and handled with extra care. Operation of
this section begins at the start of the banking hour. Cash officer begins his/her transaction with
taking money from the vault, known as the opening cash balance. Vault is kept in a much secured
room. Keys to the room are kept under control of cash officer and branch in charge. The amount
of opening cash balance is entered into a register. After whole days transaction, the surplus
money remain in the cash counter is put back in the vault and known as the closing balance.
Money is received and paid in this section.
Cash receipt
This section is responsible to receive money from customers to deposit in their money and for
many other purposed. Customers are required to fill a deposit in slip to deposit their money. After
receiving the money the respective officer counts it, enters the amount of money in the register
kept at the counter, seals the deposit in slip and signs on it with date and keeps the banks part of
the slip. Other part is given to the depositor. At the end of the day entries of both of these
registers are cross checked with the register kept at the cash counter to see whether the
transactions are correct or not.
Cash payment

This section is responsible to pay cash to customers whenever they come to withdraw money
from their accounts. When a person comes to the bank to cash a cheque(s) he first gives it to the
computer desk to know the position of the check and posting of the cheque. If the account has
sufficient fund then the cheque is sent for further processing which includes verification of two
different officers. If the cheque is cleared by them for payment then the cash officer enters the
details of the cheque in his/her register and pay the money to the bearer. At the end of the day
these registers will be compared to ensure the correctness of the entries.
Utility service provided by All Commercial Banks
Logistic and Support Services is providing the following utility services. Head Office and

Branches are providing the following utility services:

Gas Bills ( Commercial & Industrial)
Mobile telephones bills
American Life Insurance Company
Electric Bills (DESCO)
Broadband Internet bills
Clearing section
According to the Article 37(2) of Bangladesh Bank Order, 1972, the banks, which are the member
of the clearinghouse, are called as Scheduled Banks. The scheduled banks clear the cheque
drawn upon one another through the clearinghouse. This is an arrangement by the central bank
where everyday the representative of the member banks gathers to clear the cheque. Banks for
credit of the proceeds to the customers accounts accept Cheque and other similar instruments.
The bank receives many such instruments during the day from account holders. Many of these
instruments are drawn payable at other banks. If they were to be presented at the drawee banks
to collect the proceeds, it would be necessary to employ many messengers for the purpose.
Similarly, there would be many cheque drawn on this the messengers of other banks would
present bank and them at the counter. The whole process of collection and payment would
involve considerable labor, delay, risk and expenditure. All the labor, Risk, delay and expenditure
are substantially reduced, by the representatives of all the banks meeting at a specified time, for
exchanging the instruments and arriving at the net position regarding receipt or payment. The
place where the banks meet and settle their dues is called the Clearinghouse.
Collection section
Checks, drafts etc. are drown on bank located outside clearing house are sent for collection. The
Branch collects its clients above-mentioned instruments from other branches and branches of
other areas. In case of out ward bills for collection customers account is credited after finishing

the collection processor. And in case of in ward bills customers account is debited for this
purpose. So it places dual role as follows:
i) Collecting Banker
ii) Paying Banker.
Activities of this section:

Preparing of Outward and Inward Collection Item.

Inter-Branch Transfer.

Batch posting and checking as and when required.

Other works as and when require.

Accounts section
In banking business transactions are done every day and these transactions are to be recorded
properly and systematically as the banks deal with the depositors money. Any deviation in proper
recording may hamper public confidence and the bank has to suffer a lot. Improper recording of
transactions will lead to the mismatch in the debit side and credit side. To avoid these mishaps,
the bank provides a separate department whose function is to check the mistakes in passing
vouchers or wrong entries or fraud or forgery. This department is called Accounts Department.
Besides these, the branch has to prepare some internal statements as well as some statutory
statements, which are to be submitted to the Central Bank and the Head Office.
Function of accounts department:
1.
A.
Day to day functions:

Recording of transaction in the cashbook, general and subsidiary ledger.

Preparing the daily position of deposit and cash.

Making the payment of the expense of the branch.

Recordings of inter branch fund transfer.

Checking whether all the vouchers are correctly passed.

Recording the voucher in the voucher register.

Packing and maintains the total debit and total credit vouchers.
1.

B.

Periodical functions:

Periodical functions of accounts department include the preparation of different weekly,

fortnightly, monthly, quarterly and annual statement. The accounts department prepares the
following statements:

Monthly statement of deposits, loans and advances, profit and loss etc.

Quarterly statement of deposits, loans and advances, profit and loss etc.

Yearly statement of deposits, loans and advances, profit and loss etc.

Yearly statement of classified Loans and Advances.

Statement of Affairs.

Yearly Budget of the Branch.

Retail Banking

Retail Banking/Consumer Credit:

Retail banking has immense potentialities in Bangladesh. Some of the services are:
Home loan (Swapna Neer),
Consumer loan (house hold durables),
Car loan,
Doctors loan,
loan against salary,
Education loan,
Marriage loan,
CNG conversion loan,
Hospitalization loan and
Any purpose loan.
Loan Services
The product or services for which the cost will be calculated is the Loan & Advance. In a bank
there are different loans and advance product against which the borrower are given financial
facilities. Though the name Credit implies that providing loan facilities to the client is the job of
the Credit department only. But International trade finance facilities are the job of the Foreign
Exchange section/department. In the following table department- wise product list is given:
Loan and advance products are given from both credit and foreign exchange department. The
loan product of both the departments is given arranged in the following table. The time given for
different products does vary according to the formalities required. In PBL the loans are given
mostly to the known customers. So some formalities are done when the client approached first.
All types of loans and advances have primarily been divided into two major groups:
a) Fixed term loan: These are made by the Bank with fixed repayment schedules. Fixed term
loans are categorized into three based upon its tenure which is defined as follows: Short term: up
to 12 months, Medium term: More than 12 and up to 36 months, Long term: More than 36
months.
b) Continuing Loans: These types of loan having no fixed repayment schedule but have an
expiry date. In that date those loans are renewable on satisfactory performance of the customer.

Prime Bank Limited has following most visible loan products for the general customers:
Consumer Credit Scheme.
Lease Finance.
House Renovation Loan.
Small and Medium Enterprise.
HouseBuilding Finance Scheme (Corporate Client)

Festival Business Loan.

Credit Card.
Festival Personal Loan.
Working Capital Financing.
Import Financing.
Export Financing.
Industrial Financing.

House Building / Apartment Loan Scheme

Loans allowed to individual/enterprises for construction of house (residential or commercial) fall
under this type of advance. The amount is repayable by monthly installment within a specified
period. Such advances are known as Loan (HBL-GEN). Loans allowed to our Bank Employees
for purchase /construction of house shall be headed Staff Loan (HBL-STAFF).
Credit Risk
In order to provide financial assistance to the limited income group for raising their standard of
living by acquiring domestic durables like Refrigerator, T.V., Washing machine, Furniture,
Computer, Motor Car, etc., Prime Bank have introduced a Scheme to improve the quality of life
particularly of the fixed income earner of the society.
Credit Risk Consumer Credit Scheme
Household Durable Loan

Car Loan

Doctors Loan

Advance against Salary

Any Purpose Loan

Travel Loan
CNG Conversion Loan

Education Loan
Marriage Loan
Hospitalization Loan

The Service Private Commercial bank offer to public

Services Banks Have Offered Throughout History
Carry out Currency Exchanges: History shows that one of the first services offered by banks
was currency exchanges, a bank stood ready to trade one form of currency, such as dollars, for
another, such as Euro or Yen, in return for a service fee. Such exchanges were important to
travelers in the ancient world, as they are today, because the travelers survival and comfort
depended on gaining access to the local currency of the country or city through which they were
journeying. In todays financial marketplace, trading in foreign currency is carried out primarily by
the largest banks due to the risks involved and the expertise required carrying out such
transactions.
Discounting Commercial Notes and Making Business Loans: Early in their history. Bankers
began discounting commercial notes; in effect making loans to local merchants who sold the

debts (accounts receivable) they held against their customers to a bank to raise cash quickly. It
was a short step from discounting commercial notes to making direct loans to businesses for
purchasing inventories of goods or for constructing new facilities.
Offering Savings Deposits: One of the earliest sources of funds consisted of offering savings
deposits, interest-bearing funds left with banks for a period of weeks, months, or years,
sometimes bearing relatively high rates of interest. According to historical records, banks in
ancient Greece paid as high as 16 percent in annual interest to attract savings deposits from
wealthy patrons and then made loans to ship owners sailing the Mediterranean Sea at loan rates
double or triple the interest rate that bankers were paying to their savings deposit customers.
Safekeeping of Valuables and Certification of Value: During the middle Ages, banks began
the practice of holding gold, securities, and other valuables owned by their customers in secure
vaults. They would also, when asked, assay the market value of their customers valuables,
especially gold and jewelry, and certify whether or not these so-called valuables were worth
what others had claimed.
Supporting Government Activities with Credit: During the middle Ages and the early years of
the Industrial Revolution, the ability of bankers to mobilize large amounts of funds and make
loans came to the attention of governments in Europe and America. Frequently, banks were
chartered under the proviso that they would purchase government bonds with a portion of any
deposits they received. This lesson was not lost on the fledgling American government during the
Revolutionary War. During the Civil War, Congress created a whole new federal banking system,
agreeing to charter national banks provided these banks purchased government bonds, which
were used to help fund that war.
Offering Checking Accounts (Demand Deposits): The Industrial Revolution in Europe and the
United States ushered in new banking practices and services. Probably the most important of the
new services developed during this period was the demand deposit, a checking account that
permitted the depositor to write drafts in payment for goods and services that the bank had to
honor immediately. Offering demand deposits proved to be one of the industrys most important
services because it significantly improved the efficiency of the payments process, making
business transactions easier, faster, and safer. Now the checking account concept has been
extended to the Internet and to so-called smart cards, which represent funds that can be spent
electronically to pay for purchases of goods and services.
Offering Trust Services: For many years banks have managed the financial affairs and property
of individuals and business firms in return for a fee that is often based on the value of properties
or the amount of funds under management. This property management function is known as trust

services. Most banks offer both personal trust services to individuals and families and commercial
trust services to corporations and other businesses. Through a personal trust department,
customers can set aside funds for the education of their children, for example, with the bank
managing and investing the money until it is needed. Even more commonly, banks act as
trustees for wills, managing a deceased customers estate by paying claims against the estate,
keeping valuable assets safe and productively invested, and seeing to it that the legal heirs
receive their rightful inheritance. In their commercial trust departments, banks manage security
portfolios and pension plans for business firms and act as agents for corporations issuing stocks
and bonds. !his requires the trust department to pay interest or dividends on the corporations
securities and retire maturing corporate securities by paying off their holders.
Special Services Due to Change in Technology:
Internet Banking: Customers need an Internet access service. As an Internet Banking customer,
he will be given a specific user ID and a confident password. The customer can then view his
account balances online. It is the industry-standard method used to protect communications over
the Internet.
To ensure that customers personal data cannot be accessed by anyone but them, all reporting
information has been secured using Version and Secure Sockets Layer (SSL).
Home Banking: Home banking frees customers of visiting branches and most transactions will
be automated to enable them to check their account activities transfer fund and to open L/C
sitting in their own desk with the help of a PC and a telephone.
Electronic Banking Services for Windows (EBSW): Electronic Banking Service for Windows
(EBSW) provides a full range of reporting capabilities, and a comprehensive range of transaction
initiation options. The customers will be able to process all payments as well as initiate L/Cs and
amendments, through EBSW. They will be able to view the balances of all accounts, whether with
Standard Chartered or with any other banks using SWIFT. Additionally, transactions may be
approved by remote authorization even if the approver is out of station.
Automated Teller Machine (ATM): Automated Teller Machine (ATM), a new concept in modern
banking, has already been introduced to facilitate subscribers 24 hour cash access through a
plastic card. The network of ATM installations will be adequately extended to enable customers to
non-branch banking beyond banking.
Tele Banking: Tele Banking allows customers to get access into their respective banking
information 24 hours a day. Subscribers can update themselves by making a phone call. They
can transfer any amount of deposit to other accounts irrespective of location either from home or
office.

Swift: Swift is a Bank owned non-profit co-operative based in Belgium servicing the financial
community worldwide. It ensures secure messaging having a global reach of 6,495 Banks and
Financial Institutions in 178 countries, 24 hours a day. SWIFT global network carries an average
4 million message daily and estimated average value of payment messages is USD 2 trillion.
Swift is a highly secured messaging network enables Banks to send and receive Fund Transfer,
L/C related and other free format messages to and from any banks active in the network. Having
SWIFT facility, Bank will be able to serve its customers more profitable by providing L/C, Payment
and other messages efficiently and with utmost security. Especially it will be of great help for our
clients dealing with Imports, Exports and Remittances etc.
Services Banks Have Developed More Recently
Granting Consumer Loans: Historically, most banks did not actively pursue loan accounts from
individuals and families, believing that the relatively small size of most consumer loans and their
relatively high default rate would make such lending unproved- table. Early in this century,
however, bankers began to rely more heavily on consumers for deposits to help fund their large
corporate loans. Then, too, heavy competition for business deposits and loans caused bankers
increasingly to turn to the consumer as a potentially more loyal customer.
Financial Advising: Bankers have long been asked for financial advice by their customers,
particularly when it comes to the use of credit and the saving or investing of funds. Many banks
today offer a wide range of financial advisory services, from helping to prepare tax returns and
financial plans for individuals to consulting about marketing opportunities at home and abroad for
their business customers.
Cash Management: Over the years, banks have found that some of the services they provide for
themselves are also valuable for their customers. One of the most prominent examples is cash
management services, in which a bank agrees to handle cash collections and disbursements for
a business firm and to invest any temporary cash surpluses in short- term interest-bearing
securities and loans until the cash is needed to pay bills. While banks tend to specialize mainly in
business cash management services, there is a growing trend today toward offering similar
services for consumers.
Offering Equipment Leasing: Many banks have moved aggressively to offer their business
customers the option to purchase needed equipment through a lease arrangement in which the
bank buys the equipment and rents it to the customer. Regulations originally required customers
using equipment leasing services to make lease payments that would eventually cover the full
cost of purchasing the rented equipment and to be responsible for any repairs and taxes
incurred.

Making Venture Capital Loans: Increasingly, banks have become active in financing the startup costs of new companies, particularly in high-tech industries. Because of the added risk
involved in such loans, this is generally done through a venture capital firm, a subsidiary of a
bank holding company such as Citigroup Venture, Inc. Bankers may also bring in other investors
to help share the risk.
Selling Insurance Services: For many years, bankers have sold credit life insurance to their
customers receiving loans, thus guaranteeing loan repayment if borrowers die or become
disabled. Moreover, in the 19th and early 20th century, many bankers sold insurance and
provided financial advice to their customers, literally serving as the local communitys all-around
financial service store.
Selling Retirement Plans: Bank trust departments are active in managing the retirement plans
that most businesses make available to their employees, investing incoming funds and
dispensing payments to qualified recipients who have reached retirement or become disabled.
Banks also sell deposit retirement plans (known as IRAs and Keoghs) to individuals holding
these deposits until the funds are needed for income after retirement.
Offering Security Brokerage and Security Underwriting Services: Allover the world the
largest banks are seeking to become financial department stores, hoping to fulfill all the
financial service needs of their customers with one stop, becoming all-purpose financial firms.
One of the biggest of all banking service targets in recent years, particularly in the United States,
has been dealing in securities, executing buy and sell orders for security trading customers
(referred to as security brokerage services) and marketing new securities to raise funds for
corporations and other institutions (referred to security under writing services.)
Offering Mutual Funds and Annuities: Concerned that many banks have offered too-low
interest rates on traditional deposit accounts, many customers have come to demand so-called
investment products from their banker, especially mutual fund accounts and annuities that offer
the prospect of higher yields than are currently available on conventional bank deposits. These
products also carry more risk. Annuities consist of long-term savings plans that promise the
payment of a stream of income to the annuity holder beginning on a designated future date (such
as at retirement). In contrast, mutual funds are professionally managed investment programs that
acquire stocks, bonds, and other securities that appear to fit the funds announced goals (such
as to maximize income or to achieve long-term capital appreciation). Some banking firms have
organized special subsidiary organizations to market these services (e.g., Citicorps Investment
Services) or entered into joint ventures with security brokers and dealers.

Offering Merchant Banking Services: Bank today are following the footsteps of leading
financial institutions all over the globe in offering merchant banking services to larger
corporations. These services are officially defined as the temporary purchase of corporate stock
to aid the launching of a new business venture or to support the expansion of an existing
company. Hence, a banker providing this service becomes a temporary stockholder and bears
considerable risk that the stock purchased may decline in value. In practice, merchant banking
services often encompass the identification of possible merger targets, providing strategic
marketing advice, and offering hedging services to help customers manage risk, especially the
risk of loss due to changing currency prices and interest rates.
The Service Nationalize Commercial Bank (NCBs) bank offer to public
There are some limitations of Nationalize Commercial Bank thats why Nationalize Commercial
Banks offer fewer services than the Private Commercial Banks to public.Thats are under
describe.
Carry out Currency Exchanges: History shows that one of the first services offered by banks
was currency exchanges, A bank stood ready to trade one form of currency, such as dollars, for
another, such as Euro or Yen, in return for a service fee. Such exchanges were important to
travelers in the ancient world, as they are today, because the travelers survival and comfort
depended on gaining access to the local currency of the country or city through which they were
journeying. In todays financial marketplace, trading in foreign currency is carried out primarily by
the largest banks due to the risks involved and the expertise required carrying out such
transactions.
Discounting Commercial Notes and Making Business Loans: Early in their history. Bankers
began discounting commercial notes; in effect making loans to local merchants who sold the
debts (accounts receivable) they held against their customers to a bank to raise cash quickly. It
was a short step from discounting commercial notes to making direct loans to businesses for
purchasing inventories of goods or for constructing new facilities.
Offering Savings Deposits: One of the earliest sources of funds consisted of offering savings
deposits, interest-bearing funds left with banks for a period of weeks, months, or years,
sometimes bearing relatively high rates of interest. According to historical records, banks in
ancient Greece paid as high as 16 percent in annual interest to attract savings deposits from
wealthy patrons and then made loans to ship owners sailing the Mediterranean Sea at loan rates
double or triple the interest rate that bankers were paying to their savings deposit customers.
Supporting Government Activities with Credit: During the middle Ages and the early years of
the Industrial Revolution, the ability of bankers to mobilize large amounts of funds and make

loans came to the attention of governments in Europe and America. Frequently, banks were
chartered under the proviso that they would purchase government bonds with a portion of any
deposits they received. This lesson was not lost on the fledgling American government during the
Revolutionary War. During the Civil War, Congress created a whole new federal banking system,
agreeing to charter national banks provided these banks purchased government bonds, which
were used to help fund that war.
Offering Checking Accounts (Demand Deposits): The Industrial Revolution in Europe and the
United States ushered in new banking practices and services. Probably the most important of the
new services developed during this period was the demand deposit, a checking account that
permitted the depositor to write drafts in payment for goods and services that the bank had to
honor immediately. Offering demand deposits proved to be one of the industrys most important
services because it significantly improved the efficiency of the payments process, making
business transactions easier, faster, and safer. Now the checking account concept has been
extended to the Internet and to so-called smart cards, which represent funds that can be spent
electronically to pay for purchases of goods and services.
Automated Teller Machine (ATM): Automated Teller Machine (ATM), a new concept in modern
banking, has already been introduced to facilitate subscribers. But only one Nationalize
Commercial Bank (NCB) offers this service.
Granting Consumer Loans: Historically, most banks did not actively pursue loan accounts from
individuals and families, believing that the relatively small size of most consumer loans and their
relatively high default rate would make such lending non profitable.
Financial Advising: Bankers have long been asked for financial advice by their customers,
particularly when it comes to the use of credit and the saving or investing of funds. Many banks
today offer a wide range of financial advisory services, from helping to prepare tax returns and
financial plans for individuals to consulting about marketing opportunities at home and abroad for
their business customers.
Offering Mutual Funds and Annuities: Concerned that many banks have offered too-low
interest rates on traditional deposit accounts, many customers have come to demand so-called
investment products from their banker, especially mutual fund accounts and annuities that offer
the prospect of higher yields than are currently available on conventional bank deposits. These
products also carry more risk. Annuities consist of long-term savings plans that promise the
payment of a stream of income to the annuity holder beginning on a designated future date (such
as at retirement). In contrast, mutual funds are professionally managed investment programs that
acquire stocks, bonds, and other securities that appear to fit the funds announced goals (such

as to maximize income or to achieve long-term capital appreciation). Some banking firms have
organized special subsidiary organizations to market these services (e.g., Citicorps Investment
Services) or entered into joint ventures with security brokers and dealers.
Limitations based on observation Method
Major problems faced by Private Commercial Bank:
After analyzing the performance evaluation of selected private commercial banks of Bangladesh,
we still find that there is some major problems. Those are:
Political influence
Directors influence
Political turbulence situation
Lack of law in necessary defaulting loan.
Recovery the Defaulters loan is a prolonged procedure.

There is lack of honest, sincere & capable entrepreneur.

Nepotism & favoritism in recruitment, selection & promotion policy.

Lack of honesty, sincerity & commitment of bank officials.

Major Problems faced by NCB:

Nationalized commercial banks in our country are facing problem regarding their technological

in advancement. Their employee has lack of IT knowledge.

Each and every process done in these banks are manual not automated. So it takes much

longer time to do any task by bank.

NCB in our country dose not have enough skilled manpower. They dont have highly qualified

designated person. So they are facing problems regarding decision taking.

NCB has huge number of branches in different sectors in our country. But profits are not

coming from all of these branches. Some of these branches are called loosing branch. These
branches are mainly opened because of providing social welfare to distinct areas of our country.
But these branch are generating severe losses in every year and because of that total net profits of
NCB goes down.
The internal environments of NCB are not so reach. They are having problems regarding

enough free space. They have lack of systematic management services due to handling their huge
number of clients.
Only NCB is financing the agricultural sector in Bangladesh which is totally non-profitable

business for any bank. Sonali bank is providing in much greater extent than any other NCB. So it
also brings losses for our state owned banks.
Interest rate of NCB is much lower than any other private commercial bank in Bangladesh.

Their highest interest rate is 13% where as private commercial bank charge around 18-18.5%. And
for rural development state owned banks charge around 8% interest rate (for agro based sector)
and most of the time these loan are default. So it also a loss project for NCB.
The compensation package for the employee of NCB is not satisfactory. Thats why it does not
bring any motivation to them. And the result is these people are providing poor service which
ultimately effects the reputation of the bank.

Chapter 03
Results and Analysis from Questionnaire Survey
Demographic Factors
Age:
We have surveyed on 30 recipients and they are mostly ranged between 20-30 years and 30-40
years.
Gender:
We have surveyed on 30 recipients and on this surveyed both male and female customers are
involved. In the figure we can see that male customer was 70% and female was 30%.
Occupation:
Most of our surveyed consumers are Students and others are service holder and Business Man
Education:
The education level of our surveyed recipients are mostly Graduate and Post Graduate(60%).
Income level:
Customer income level ranges mostly 15000-25000 Taka and 25000-35000 Taka.
Which type of Bank you have got any services:
30 % of the respondents respond that they got service from national commercial banks & 70 % of
the respondents think that they get services from private commercial banks.
Frequency Distribution Table

Private Commercial bank

How would you assess the greeting from the bank employee while you enter any private
commercial bank?

In. the figure we can see that 71.4% customers said good, 28.6% customers said Average.
How much time do you have to wait in the private commercial Bank to get your work done?
In the table we can see that 28.6% customers said average time and 71.4% customers said short
time.
In table we can see that most of the 28.6% customers said they are satisfactory and 71.4%

customers said they are friendly.

How knowledgeable are the employees of private commercial bank in answering your
enquiries/questions?

In the table we can see that most of the 71.4% customers said they are good and 28.6%
customers said they are satisfactory.

Do you think the private commercial bank ATM service is easy to access?
In the table we can see that most of the 71.4% customers said good, 28.6% customers said
satisfactory.

Are you satisfied with the installment procedure and interest rate that you have to pay after
taking loan in private commercial bank?

In the table we can see that most of the 57.1% customers said they are good, 42.9% customers
said they are satisfactory.
Nationalized Commercial Bank
In the figure we can see that 14.3% customers said good
In the figure we can see that 14.3% customers said good
In the figure we can see that 14.3% customers said good
The figure we can see that 28.6% customers said Poor
The figure we can see that 28.6% customers said satisfactory
The figure we can see that 28.6% customers said Satisfactory
Correlation Analysis
Correlation (often measured as a correlation coefficient, ) indicates the strength and direction of
a linear relationship between two random variables. The objective of this procedure is to examine
the inter consistency among Independent Variables.
Correlations-Private commercial bank
Chapter 04
10.0 Comparison between PCBs (Private commercial banks) & NCBs (Nationalized
commercial banks) in Bangladesh:
First of all the most important perspective that customers are looking for now a days are
diversified products. Because diversified products offers a consumer number of different facilities.
Now a days PCB is very effectively maintaining this business from this perspective. But we are
not saying that Islami Bank or Foreign Bank or NCB does not have diversified products. They all
have differentiated products all over Bangladesh but in terms of PCB it is less.
Then we are saying about services. Now a day a consumer wants to go that bank which can give
him a better and quick service. From this perspective PCB is maintaining its leading position
because NCB is not that much efficient in providing better and quick service.
Some of the well-known PCB is providing online Banking. Through online banking facility a client
can easily transfer his money from one account to another account instantly. So he doesnt need
to go to the bank and deposit money and waiting for the transfer process. For an example Dhaka
Bank, Dutch Bangla Bank is providing this type of facility. So far it is not provided by any NCB or
FB or IB. So customer prefers to go in PCB.

When a customer wants to be a client in any particular bank he wants to avoid all types of
harassments. For example to open an account is much easier in any PCB then NCB. So still in
this case consumers prefer PCB.
From the perspective of consumer perception, some customer has the perception that it is better
to go in NCB than PCB. Even though they aware of the products and service of PCB, they still
wants to be a client of NCB.
In our country many customer has less reliability on PCB than NCB. They think that any time CB
could be bankrupted. If it happens then they will lost all their invested money and these money
can be never recoverable. As there is no chance to be bankrupted in case of NCB, so they prefer
to go NCB.
Another perspective is loan scheme. Most of us have a tendency to take loan when we are falling
in any financial crisis. So we sort out those banks who are giving loan with less interest rate. In
case of NCB, they have much lower interest rate than PCB. So consumer prefers to go in NCB.
[ The identified reasons behind customer satisfaction regarding most of the PCBs:
*Overall Environment of the bank.
*Quick services
*Well Behaved Employees.
*Knowledge about the service.
*Smartness and Professionalism.
*Online banking.
*ATM Services
[ The identified reasons responsible for customer dissatisfaction regarding most of the NCBs:
*Service Charge
*Current Deposit Rate
*Number of ATM Booth/no booths
*Lack of efficient employees
Recommendations
Recommendations to solve problems of PCB:
To solve the private commercial banks problem we have some recommendation. The

Recommendations are as follows:

They should work without any influence of political leader & There directors.
Government should create some law to recover defaulting loan.
Nepotism & favoritism in recruitment, selection & promotion policy should be avoided.
They should increase their service level.
Their employees should be more honest, sincere& committed.

Recommendations to solve problems of NCB:

All those major challenges faced by NCB mentioned above are taken into consideration from the
perspective of Sonali Bank and Janata Bank. To solve these problems some recommendations

are given below:One of the most positive sight of NCB is they have nationwide network which is not available

among any private commercial bank. Sonali bank has around 1180 branch, Janata bank has
around 800 and Agrani has around 600-650 branches. If it is possible to generate profit from all of
these bracnhes it will highly increase their profit margin. Some of their branches are loosing
branch. If somehow they can close those branches or merge with another profitable branch then
these banks can reduce their losses.
As previously mentioned in one of the major problems that lack of skilled manpower but these

banks has experienced manpower which is a big asset for them. If they could bring more
experienced manpower for their top management than chances of taking wrong decision will be
reduced and they can minimize their risk of having loss in many different projects.
As we all know export and import business cant run without L/C and L/C requires international

reputation which is available among NCB. Basically Sonali bank has got the highest international
reputation. For these reason they dont need to submit their creditworthiness in the international
market. If this system can be more flexible for other stated owned banks than their reputation will
also is well-recognized.
Another plus point for NCB is trustworthiness. Mass people rely on NCB with their eyes close
because there is no chance of liquidation. So investment in these banks is totally risk free. But
sometimes it not happens the way we think. Few years back we have seen that Rupali Bank was a
state-owned bank. But for some reason they were in a situation of bank craft. Their chance of
recovery rate was only 40%. Thats why now it is privatized. Now government owned 49% and
private owned 51%. So to avoid these types of risk and also to maintain the trustworthiness among
people NCB should bring efficiency in their management system and provide better cliental
service.

Conclusion
The aspiration with which this project paper has been prepared is to provide readers an overview
regarding Differences between Private Commercial Banks and Nationalized Commercial Banks &
to provide a service based portfolio of NCBs & PCBs. The study tried to find out all major
problems and challenges that different bank are facing now a days. The study tried to give some
necessary recommendation from my point of view. Finally after describing comparative
performance evaluation of different banks the study makes a comparison between different banks
in our country. As because development of a bank is a complex process requiring a strong
dedication to learning, sharing of knowledge and being responsive to the needs of the people. So
Banks need to place a strong emphasis on their organizational development. Hope that this effort
will be beneficiary to the readers who are willing to know the problems and challenges that
different banks are facing in our country and their performance aspects of banking sector and

have a foresight based on that. It is mentioned earlier that service quality is the difference
between the expected and perceived services.. The analysis also identified five perceived service
quality factors such as, reliability, assurance, responsiveness, empathy and tangible bank
facilities. These findings do not exactly match with the findings of Parasuraman and Zeithamls
(1985) five dimensions of service quality. The reasons could be attributed by the contextual and
the cultural differences.
Perceived service quality factors including personal attention to the clients and tangible physical
facilities are similar to the expectations of the bank clients. However, bank clients expect that the
bank employees will perform their promises in time, be courteous and knowledgeable in handling
the banking operation, which are absent in the banks located in DhakaCity.
Among the expected service quality factors, performing promises by the employees is the most
important factor. Promise or commitment of the employees is reflected when they show sincere
interest to solve the problems of the clients. When the employees fail to serve according to the
desire of the clients it is perceived that the service is poor. If the employees fail frequently to meet
the commitment, clients become frustrated and they lose the trust on the services provided by the
bank. This indicates that the promise of the employees should be performed timely and
accurately without any failure.
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References -Websites:
http://en.wikipedia.org/wiki/List_of_Banks_in_Bangladesh
http://islamicfinanceupdates.wordpress.com/2008/10/07/islamic-banking-blooms-in-bangladesh/
http://globalwebpost.com/farooqm/study_res/i_econ_fin/sarker_ibanking_bd.pdf
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