Internship Report on Retail Banking Operation of Private Commercial Banks


AB Bank Limited, the first private sector Bank under Joint Venture with Dubai Bank Limited, UAE incorporated in Bangladesh on 31st December 1981 and started its operation with effect from April 12, 1982. As a fully licensed commercial Bank, AB Bank Limited is being managed by a highly professional and dedicated team with long experience in banking. The Bank has been graded as a top class Bank in the country through internationally accepted CAMEL rating. AB Bank Limited offers all kinds of Commercial, Corporate and Personal Banking services covering all segments of society within the framework of Banking Company Act and rules and regulations laid down by Bangladesh Bank.

The aim of the Bank is to participate actively in the socioeconomic development of the nation by operating a commercially sound banking system. To accept deposit from the customer and to lend the deposit again to customer is the Prime business of AB Bank.
The main activities of AB Bank are Commercial Banking, Corporate Banking, Retail Banking and Islami Banking. AB Bank’s products can be broadly classified in two groups i.e. Depository product and Lending product.
The AB Bank Limited is offering different loan and advances products to the client for financing diverse purposes that fulfill the requirements of the Bank and have good return on the investment as well satisfy clients. Their few loan and advances products are – General Loan Scheme, Lease Finance, House Building / Apartment Loan Scheme, Small and Medium Enterprise (SME), Consumer Credit Scheme, Hire Purchase, Advance against Share, Industrial Financing Export Financing, Industrial Financing.
AB Bank Limited introduced “consumer Credit Scheme” in the year 1997 to enhance the living standard of the people of limited and fixed income group. It provides financing for the purpose of purchasing household products, car, and equipment for medical services etc. It also provides CCS loan to meet emergency needs, to arrange marriage, to enjoy vacation, to meet educational expenses and to convert a vehicle engine into CNG.
Prime Bank Limited, Dhaka Bank Ltd., Eastern Bank Ltd., South East Bank limited and Mercantile Bank limited are considered as the competitors of AB Bank Limited regarding CCS loan.

Prime BankLimited, Eastern Bank Limited and South East Bank Limited provides an attractive Education loan for their customers. The interest rate of Prime Bank Limited, Eastern Bank Limited, South East Bank Limited and HSBC are 18%, 17.5%, 17.5% and 18% respectively. No down payment for AB Bank, Eastern Bank and HSBC but it is 10% for Prime Bank and 25% for South East Bank. One can repay the loan within five years.
The popularity of Consumer Credit Scheme is increasing day by day. This product is popular because Bank can disburse this loan within a short time, with fewer amounts and the loan is also easily recoverable. Keeping the popularity to Consumer Credit Scheme in mind, most of banks are offering this product. So competition is increasing day by day in CCS program.

Commercial banks mediate or stand between ultimate borrowers and ultimate lenders and help transfer of funds from one to another. A commercial bank does this by borrowing funds from the savers and then makes loans to borrowers. The value of bank’s intermediation services is reflected by the difference of the interest rate received by the bank from the borrower and that paid out to the depositors. This difference is the gross earnings of a commercial bank. From gross earnings the cost of doing business are subtracted. The costs of a bank include bank’s employee payroll, cost of relevant equipment, materials and facilities etc. What remains after paying taxes, is the bank’s profit, which is distributed among the equity holders.

While many people believe that banks play only a narrow role in the economy; taking deposits and making loans. The modern bank has had to adopt new roles to remain competitive and responsive to public needs.
During the period of 1981-82, there were seven private commercial banks were established. Those were the following:
a) Two denationalized banks: Public Bank Limited & Uttara Bank Limited
b) Four newly established banks:
1) Arab-Bangladesh bank Limited
2) The City Bank Limited
3) National Bank Limited
4) UnitedCommercial Bank Limited
c) One bank converted from a finance company:
International Finance Investment and Commerce Bank Limited
Now there are 52 commercial banks are continuing their operation in the country.
Among those 52 banks AB Bank is one of the leading & first Private Commercial Bank of Bangladesh. Today most of the leading commercial banks established a separate department named Retail Banking Division/ Dept. This Dept. mainly provides loans under Consumer Credit Scheme.
April 12, 2007 marks a milestone for AB. On that day, AB Bank celebrated the Silver Jubilee of its operation. In retrospect, AB commenced its journey as a private commercial bank, on April 12, 1982, with the mission-“to be the best performing Bank in the country and the region”. From the time of incorporation, Arab Bangladesh Bank Ltd. acquired confidence and trust of the public and business houses by rendering high quality services in different areas of banking operations, professional competence and employment of the state of art technology.
Today AB Bank is extending credit facilities in all sectors covering commercial credit lines to the business community. In addition to that other facilities like consumer credit, student loan scheme, PC loan, loan against DSC, supervisory credit to the farmers, weavers in the agricultural sector etc. to be extended for development of the country.
This internship report is a mandatory requirement of the Bachelor of Business Administration (BBA) program under Dhaka University; this report entitled - "Retail Banking Operation of Private Commercial Banks (PCBs): The Case of AB Bank " - is a connived depiction of the three months service period at Retail Banking Division, Corporate Head Office in Arab Bangladesh Bank Limited.

This report will cover the details of AB Bank’s practices about various Consumer Credit Schemes. Now a day Consumer Credit Schemes are very much important for fixed income people. In this report, I will try to focus on the various Consumer Credit Schemes, its functions, its history, using business correspondence analysis of this sector as well as its role in our economy. It will also cover the consumer credit procedures and performance of AB Bank Ltd.
 This Three months service period has helped me to match my theoretical knowledge with practical understanding. As an employee of AB Bank Limited I was provided with the topic ‘Retail Banking Operation of PCBs: The case of AB Bank Ltd.’ will be submitted to Dr. M. Khairul Hossain, Prof. of Department of Finance.
The objectives of the study are as follows:
 Broad Objective
The purposes of this report cognates the internship purpose. With the set guidelines and proposal by the internship supervisor, this report focuses on how Arab Bangladesh Bank Limited evaluates its Consumer Credit proposals through its Retail Banking Operation.
General Objective
The general objective of the report is
Ø To know about the management system of AB Bank Limited as a private commercial bank, its formation, and its functional, operational and financial aspects.
Ø To identify different Consumer Credit Schemes available in AB Bank Limited.
Ø To know detail of Consumer Credit Schemes in Prime Bank Limited.
Ø To know the important criteria required for the attainment of CCS loan.
Ø To justify the extent of the use of MIS in Consumer Credit Scheme.

Both the primary as well as the secondary form of information was used to prepare the report. The details of these sources are highlighted below:

                                               Source of Data



                                    Figure 1.1: Sources of data

Primary Sources
  • My Practical Experience
  • Bank’s database.
  • Interview with the concerned employees.
Secondary Sources
  • AB Bank’s credit manual
  • AB Bank’s annual report
  • Different books and periodicals related to the banking sector
  • Bangladesh Bank Circulars
  • Newspapers
  • Website information
1.4              Limitations
Ø  The study limited only on Retail Banking Division of AB Bank.
Ø  As a new employee it was very difficult for me to get access to the database due to the confidentiality of data.
Ø  Non-cooperative behavior of some of the employees has hampered the quality of the report to some extent.
Ø  Time provided for conducting the study is another important constraint.
Ø  The employees in AB Bank Limited are so much busy in their responsible fields; they could hardly provide little time to discuss with them.