Pubali Bank Ltd recently organised a discussion title ‘Loans under Consumers Credit Scheme’ for all senior executives and officers of the bank.

Managing Director of Pubali Bank Limited Helal Ahmed Chowdhury presided over the meeting, said a press release.

Khurshid-Ul-Alam, Mah- bub Mustafizur Rah- man and Safiul Alam Khan Chowdhury, deputy managing directors of the bank were present at the meeting held at the head office of the bank.

They exchange their views in the meeting regarding consumers credit loans.

Source: daily-sun, Bangladesh/13th Dec 2010

DHAKA: Bashundhara Fo-undation will disburse Tk 2.3 million to poor people as interest-free loan in Banchharampur upazila of Brahmanbaria district in this month of victory of the nation.

The soft loans will be distributed at the Foundation office at the ancestral home of Ahmed Akbar Sobhan, chairman of Bashundhara Foundation, at Durgarampur village next Thursday.

Md Mosharraf Hossain, who is in charge of the foundation, said: “Small credits worth over Tk 1.53 crore have so far been distributed among 2,800 beneficiaries, who have either become self-reliant or are on way to becoming self-dependent.”

Nearly 340 members will get over Tk 23 lakh as interest-free small loans Thursday, he informed.

Mainal Hossain Chowd- hury, coordinator of the foundation, will attend the function as chief guest while local elite and media personalities will remain present. — BSS

Bank Asia Ltd has given higher studies scholarships to nine meritorious students of Tarail Upazila of Kishoreganj District.

Irteza Reza Chowdhury, Senior Executive Vice President of the bank handed over the scholarship money to the students at a function on Saturday, said a press release.

Md Ishrat Uddin Ahmad, Upazila Chairman, Tarail was present at the function as special guest.

A large number of people including students, teachers, journalists, businessmen and local elite attended the function.

As part of its corporate social responsibility, Bank Asia offers scholarships for higher studies to the meritorious students in the rural areas, where the bank has branches.

A total of 93 students were selected for Bank Asia’s higher studies scholarships programme for the current year. So far 214 students received Bank Asia higher study scholarship.

Source: daily-sun, Bangladesh/13th Dec 2010

In Bangladesh now different commercial banks and the non banking financial organizations are operating there business. And every organization now involved attracting the retail customers that means the middle income group people of the country. To draw their attention the sells persons of different organization try to knock every possible door. These activities of different organization increase the interest about this sector. As both commercial banks and the non financial institutes are in the market, so it makes confusion to the general people about the activities of these organizations. This article helps the customers to makes differentiate between these.

Banks, usually a corporation, that accepts deposits, makes loans, pays checks, and performs related services for the public. The Bank Holding Company Act of 1956 defines a bank as any depository financial institution that accepts checking accounts (checks) or makes commercial loans, and its deposits are insured by a federal deposit insurance agency. A bank acts as a middleman between suppliers of funds and users of funds, substituting its own credit judgment for that of the ultimate suppliers of funds, collecting those funds from three sources: checking accounts, savings, and time deposits; short-term borrowings from other banks; and equity capital. A bank earns money by reinvesting these funds in longer-term assets. A Commercial Bank invests funds gathered from depositors and other sources principally in loans. An investment bank manages securities for clients and for its own trading account. In making loans, a bank assumes both interest rate risk and credit risk.

The commercial banks are described now a day by many agents of economic development and social change. Their functions and roll are undergoing revolutionary changes client coverage and extended beyond imagination.

While many people believe that banks play only narrow roll in the economy taking deposit and making loans the modern banks has bad to adopt new roles to remain competitive and responsive to public needs. Baking’s principal roles today are as follows:

The intermediary role:
Transforming saving received primarily from household into credit for business firm and others in order to make investment in new building, equipment and other goods.

The payment role:
Carrying out payment for goods and services on behalf of their customers.

The guarantor role:
Standing behind their customers to pay off customer debts, when those customers are unable to pay.

The risk management role:
Assisting customer in preparing financially for the risk of lost to property and persons.

The saving / investment advisers’ role:
Aiding customers in fulfilling their long rang goals for a better life by building, managing, and protecting savings.

The safekeeping/certification of value role:
Safeguarding a customer’s valuables and appraising and certifying their true market

The agency role:
Acting on behalf of customers to manage and protect their property or issue and redeem their securities.

The policy role:
Saving as a conduit for govt. policy in attempting to regulate the growth of the economy and pursue social goals.

Non-bank financial institutions represent one of the most important parts of a financial system. In Bangladesh, NBFIs are new in the financial system as compared to banking financial institutions (BFIs). A total of 25 NBFIs are now working in the country. The NBFIs sector in Bangladesh consisting primarily of the development financial institutions, leasing enterprises, investment companies, merchant bankers etc. The financing modes of the NBFIs are long term in nature. Traditionally, our banking financial institutions are involved in term lending activities, which are mostly unfamiliar products for them. Inefficiency of BFIs in long-term loan management has already leaded an enormous volume of outstanding loan in our country. At this backdrop, in order to ensure flow of term loans and to meet the credit gap, NBFIs have immense importance in the economy. In addition, non-bank financial sector is important to increase the mobilization of term savings and for the sake of providing support services to the capital market.

The basic difference may include:-

• A Bank is an organization that accepts customer cash deposits and then provides financial services like bank accounts, loans, share trading account, mutual funds, etc.
• A NBFC (Non Banking Financial Company) is an organization that does not accept customer cash deposits but provides all financial services except bank accounts.
• A bank interacts directly with customers while an NBFI interacts with banks and governments
• A bank indulges in a number of activities relating to finance with a range of customers, while an NBFI is mainly concerned with the term loan needs of large enterprises
• A bank deals with both internal and international customers while an NBFI is mainly concerned with the finances of foreign companies
• A bank's man interest is to help in business transactions and savings/investment activities while an NBFI's main interest is in the stabilization of the currency

Besides the differences between the both commercial banks and the non banking financial institutions they play both for the development of the economic structure of the country. If the both play positively than it can be said that, the development of the country is sure.

- Article Written By: Md. Mahfuzur Rahman, BankInfoBd

References:
http://wiki.answers.com/Q/Difference_between_bank_and_nonbanking_financial_institution
http://bbamba.info/Articles/Business/Roles-of-Commercial-Bank.html
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=574481
http://www.answers.com/topic/bank

Mercantile Bank Ltd has strengthened its efforts to fortify the theme of 'financial inclusion', a tool for combating poverty and knowledge banking as well.

Financial inclusion aims to include more people in the banking process.

In Bangladesh, where only 13 percent of the population has a bank account and 33 percent a mobile phone, relevant parties are considering using mobile phones to deliver banking to the unbanked.

"Since financial inclusion is viewed as a high policy priority in Bangladesh, for more inclusive and more equitable economic growth, we have initiated a good number of projects aiming to strengthen the theme with a thrust on SME, agro-economy and IT-driven technology," managing director (acting) of the bank AKM Shahidul Haque told The Financial Express in an interview recently.

"The bank has now 61 branches, but by the end of this month (December), we will have four more branches, of them 46 will be urban, 14 rural and 5 SME/Agri," Mr Shahidul added.

He said in compliance with the Bangladesh Bank directive, the Mercantile Bank is working to bring the huge rural population under the banking network to ensure economic development.

"Moreover, we are committed to empower women class of the society as far as economic activities are concerned because women consists more than fifty per cent of our total population," the Mercantile Bank chief executive said.

He said the deposit and credit schemes of Mercantile Bank has reached to the remote villages of the country in testimony to the bank's thrust on financial inclusion.

"The biggest strength of the bank lies on its expanded customer base, at present, we have more than half a million deposit customers," Mr Shahidul added.

Putting an accent on the thriving IT-driven technology, Mr Shahidul said the new generation bank has already adopted core banking solution (T 24) from Swiss-based Temenos.

"We have already shared ATM network but we will have our own network in near future," the Mercantile MD (acting) said.

He said clients will get the opportunity to transfer money through using mobile technology by early next year and moreover the bank plans to launch retail banking through mobile. This will enable the bank to provide internet-based services to the customers.

A new subsidiary-Mercantile Bank Securities Ltd- will also begin its operation to strengthen the capital market services offered by the bank.

Besides, one new 'exchange houses' will be opened in Birmingham to boost the remittance business of the bank. Permission for opening two more exchange houses outside the country is under process.

The bank has drawing arrangement with 20 exchange houses in 7 countries of the world, out of which Western Union and Express Money have global presence.

"We have achieved 34 per cent growth in our operating profit till October, 2010 against the corresponding period of 2009," Mr Shahidul mentioned.

Similarly deposit, loan, import and export business of the bank registered significant growth during the same period.

"We have introduced policy and guidelines in every aspect of banking activities including initiatives to ensure sustainable and profitable business growth through development, acquisition and retention of potential human resources and high yielding customers by institutionalizing relationship banking across the Bank through building a team of dedicated, efficient and professional workforce; harnessing their core competence with good business practices to remain ahead of others," he said.

The Bank is building capacity of manpower of different tiers by enhancing level of competencies and job knowledge and uplift employees morale and loyalty by motivation and training through the best HRM practices that fully utilizes performance-based compensation scheme.

Regarding the compliance of Bangladesh Bank directive on raising paid-up capital to Tk 4.0 billion by 2011, the managing director said that Mercantile Bank has already achieved the same in 2010.

Commenting on the critical challenges of the banking sector, the MD said implementation of Basel-Two remains a major area in this regard.

"The supervisory review process under Basel-Two is being strengthened in line with our bank's efforts to face the core challenges of the banking sector," the Mercantile Bank chief executive said.

Mercantile Bank is one of the best performers in CSR activities also.

Source: The Financial Express, Bangladesh/12th Dec 2010