Chapter-1

Introduction

1
1.1 Prelude
A Deposit is a current commitment of fund for a period of time in order to derive future payments
that will compensate the investor for (i) The time the funds are committed, (ii) The expected rate
of inflation and (iii) The uncertainty of the future payments. Deposit is the action of deploying
funds with the intention and expectation that they will earn a positive return for the owner. Funds
may be invested in either real assets or financial assets. When resources are used for purchasing
fixed and current assets in a production process or for a trading purpose, then it can be termed as
real investment. The establishment of a factory or the purchase of raw materials and machinery for
production purposes are examples in point. On the other hand, the purchase of a legal right to
receive income in the form of capital gains or dividends would be indicative of financial
investments.

Deposit management consists of acquisitions of stable and low-cost deposit for the banking
business. Banks are not only dealer’s in money but also manufactures of credit money. It is in the
sense of manufacturing that the concept of credit creation is used. Similarly deposit creation is an
important function of commercial banks. Without deposit they cannot lend at all. When the banks
receive cash from customers, deposit are created. These deposits may be current, saving or fixed.
Depositors choose the types on the basis of their needs and requirements like, safety, convenience
or earning. People deposit their income in commercial banks because bank vault are safer that
home coffers. The bank attracts deposits from the people either by means of offering interests or
facilities. Business people want seek for facilities rather than interest.

1.2 Review of Literature:

Banks deposits have been studied by various economists in different manners. In a comprehensive
case study Jayanal Ud-din Ahmed (2009) finds that growth of deposit is affected by various factors
such as GDP, interest rate and expansions of bank branches. However these factors do not effect
deposit growth directly and in order to have a comprehensive picture the macroeconomic condition
of the country must be studied.

Study of deposit and credit deposit ratio by M. Syed Ibrahim (2011) suggests that there is a
positive relationship between demand and time deposits. The growth of deposits per bank office

2
since 2000 has been more than the growth of credit per bank office. His study also shows that
investment deposits ratio and ratio of priority sector advances to total advances have improved
during the period. The author concludes that overall operational efficiency of scheduled
commercial banks has improved.

S. Venkatesan (2012) studied the trend and growth of deposit mobilization of scheduled
commercial banks in Tamil Nadu for a period of 10 years (1999-2009). He used compound 29
growth rate and substantiated his findings with simple regression analysis. He concluded that
deposit mobilization in all forms of deposit shows considerable growth barring certain exceptions
in case of term deposits. A significant decline in number of accounts of current deposit was noticed
along with a rise in average amount per account. The author did not study the business implications
of the changing structure of current deposits. K.Karthikeyan and S.Vadivel Raja (2014) noticed
that deposit mobilized by public sector banks during 2003 to 2012 reflect increasing trend although
there is no significant difference between current, savings and term deposits of public sector banks
in India.

J.U.J Onwumere, et. al. (2012) studies the impact of interest rate liberalization on savings and
investment. Finding of the study shows that deposit rate had a negative non-significant impact on
savings in Nigeria. It is evident from the study that high interest rate due to liberalization have not
helped to increase savings and investments of the depositors in Nigeria.

V L Deekshitulu and Kumar (2012) observed that there are no general explanation for the growth
or decline of deposit and the same will depend on many individual bank specific, category specific,
industry specific, and sector specific factors. Banks should plan their strategies keeping in view of
all these specific factors to which they are more exposed.

Tomola M. Obamuyi (2013) attempts to study deposit mobilization and loan diversification
functions performed by banks in Nigeria. Banks were found to perform efficiently both this
functions. The author found that there is positive relation between deposits mobilized and bank
lending and majority of the bank income is generated from advance and investments and therefore,
bank should concentrate on both the factors to increase their profitability.

Rubina Afroze (2013) aims to give an overall idea on the Interest Rate Spread of the commercial
banks in Bangladesh from 1974-2011. She concluded that their lies a significant correlation

3
between spread and deposit rates. There is no significant relationship between lending rate and
spread. Study also concluded that spread prevailing in the Bangladesh banking system was high
as compared to those of its neighboring countries.

M R Das (2013) observed that interest rate deregulation has not made huge impact on growth of
deposit mobilized and sluggish macroeconomic situation prevailing in 2011-12 are one of the
biggest reason for decline in the growth rate of (Current and Saving Account) CASA deposits as
well as their share in respective banking group. He suggested that bank should provide interests
on current account, open more branches in rural areas, and intensify their efforts to increase the
growth rate of CASA deposits over a period of time. Banks are also advised to differently classify
their interest rates on short term deposits and advances.

After analyzing the data from 2000-01 to 2012-13 and studying the impact of total saving deposit
on GDP, Deepti Sharma and Mamta Ranga in 2014 observed that there exists a strong relation
between total savings and deposits. They added that deposits must be attracted from all sources to
enable the banks to increase their credit and positively influenced the GDP and economic growth
of the country.

Tafirei Mashamba, et. al. (2014) used ordinary least square method to analyze the relationship
between interest rate and deposit mobilized in Zimbawean commercial banks for the period 1980-
2006. Taking natural logarithms, the analysis shows that with increase in inflation, deposits
decreases because households are expected to buy properties to cushion themselves against loss of
purchasing power of money. There is negative relationship between interest rate margin and
deposits as potential savers gets discourage with low returns but there is positive relationship with
financial deepening and deposits. Thus it can be said that interest rate is major determinant of
deposit mobilization. Such conclusions were also drawn by Siyanbola Trimisiu Tunji, Sobande
David and Adedeji, Samuel Babatunji (2012) earlier. However the study of Paul Ojeaga and
Omosefe Odejimi (2014) observed that although nominal interest rate had strong positive effects
on deposits, income was also found to be significant variable influencing deposits. The authors
conclude that in the context of Nigerian economy, institutional factors and monetary policy had
little influence on commercial banks.

4
1.3 Objective of the Study
The main objective of the study is to critically evaluate the Deposit management practices of
Exim Bank Ltd. To achieve this main objective the study has covered the following specific
objectives

1. To recognize the policies and strategies involved in Exim Bank Ltd.

2. To evaluate the deposit management performance of Exim Bank Ltd.
3. To identify the problems associated with respect to the policies & strategies, products &
services & deposit management performance of Exim Bank Ltd.
4. To suggest some important policy measures for improving deposit management practice
of Exim Bank Ltd.

1.4 Scope of the Study

This thesis is limited to Deposit Management Practices of Exim Bank Ltd. The study has covered
of deposit management of Exim Bank Ltd for 5 years from 2012 to 2016.

1.5 Methodology of the Study

In this study the main area is the analysis of profit Deposit Management Practices of Exim Bank
Ltd. The data collected for the purpose have been analyzed and examined critically on the light of
various statistical tools and selected financial ratios. Research physically visited and discussed
with executives and top-level management to prepare the thesis. The methodology of the study is
given as under:

1.5.1 Population and Sample:

Population: All the Commercial Bank in the Geographical area of Bangladesh.

Sample: Exim Bank Ltd.

1.5.2 Collection of Data:

There are two major sources of data. Here data have been collected from the secondary sources
which are as follows

 Secondary Sources of Data:

5
Relevant secondary data have been collected from the following sources:
 Annual report of Exim Bank ltd (2012-2016)
 Various prospectus, financial statement and Boucher of the bank.
 Website of Exim Bank
 Books
 Various Publications
 News Paper

1.5.3 Analysis of Data

The collected data has been analyses through different statistical and financial tools like ratio
analysis mean, SD and CV and different diagram and charts and also used to show the growth
performance.

1.6 Importance of the Study

Today’s banking sector is modernizing and expanding its hand in different financial. Events every
day. At the same time the banking process is becoming faster, easier & is becoming wider. In order
to survive in the competitive field of the banking sector all organization are looking for better
service opportunities to provide their fellow clients. So it has become essential for every person to
have some idea on the bank & banking procedure.

1.7 Limitations of the Study

While undergoing the study, I was enthusiastically trying to present the topic in a concrete manner.
In doing so, I was confronted some problems as follows:

 The main limitation of the study is the time constraints. A period of three month is not
sufficient to prepare the thesis and gather knowledge on the vast area of banking activities.
 Sufficient records & publications as well as up to date information are not readily available.
 Another Limitation is the Lack of in-death banking knowledge.
 The bank personnel always remain busy due to lack of supporting employees. So, they
could not dedicate their full efforts.
 Another limitations are the Bank policy not to disclose sensitive data & information for
obvious reason.

6
 Chapter-2
Policies and Strategies involved
in Deposit Management of
Exim Bank Ltd.

7
2.1 Introduction
Deposit of the bank at the end of the year 2014 was TK. 67,961.24 million, which was more than
deposit of 2014. From 2014 to 2016 bank deposits has been increased than that previous year. This
is happening because increasing confidence of customer to EXIM BANK LTD inspires people to
make more and more deposited to EXIM BANK LTD.

Deposit Structure of Exim Bank Ltd.

Al-Wadiah
Current Deposit

Installment Mudaraba
Term Deposit Saving Deposit

Mudaraba short Mudaraba Term

Term Deposit Deposit

Fig: Deposit Structure

2.2 Deposit Policies/ Guideline

In the above analysis we have seen that EXIM BANK LTD Bank Ltd has no written deposit policy
though it follows some policy. As there is no written policy, branch managers sometimes get
confused whether to go with a project or not. Thus, EXIM BANK LTD Bank Ltd have a deposit
guideline available in every branches so that credit officers can take quick decision whether to
accept or reject a project. The lending guideline should include the following-
• Types of deposit
• Details of single borrower/ group limit
• Industry or business segment focus.

8
2.2.1 Deposit Administration
The guidelines suggest that Credit administration be strictly segregated from relationship
management/ marketing. As a result the possibility of controls being compromised or issues not
being highlighted at the appropriate level can be avoided. The credit administration has the
following functions-
• Disbursement
• Compliance requirement
• Custodial duties

2.2.2 Account Opening Policy

The Banker must keep on his record the particulars of each account holder and his introducer
namely, full name, address, occupation, specimen signature, nominee etc. The particulars are
essential for identification of the account holders individually so that the banker can discharge his
obligation to everyone correctly and to the extent due.

 Account Opening Form

 Enclosing Documents
 Specimen Signature
 Recording of Specimen Signature
 Custody and Safe
 Initial Deposits
 Thanks Letter
 Issue of Cheque Book

2.2.2.1 Account Opening Form

Each banker has his own printed forms, more or less alike, for opening different types of accounts.
The relative form is required to be filled up correctly and authenticated by the proposed account
opener under his dated signature at the time of opening the account. This document is very
important as it governs the relationship between the banker and the account holder, containing an

9
undertaking by the latter that he agrees to comply with the banker’s existing rules for conduct of
such an account.

2.2.2.2 Enclosing Documents

Each account opening form consists of Know Your Customer (KYC-from April, 2002 it is
mandatory) form, Transaction profile, and Nomination form. In KYC form interested account
opener described himself, about name, occupation, address, and introducer and so on. In
Transaction profile he or she filled estimated monthly transactions. And Nomination form is fills
up to identify account holders nominee or nominees who will be paid up total or portion of the
account’s balance if the account holder died. Except Nomination Form all those are needed for
company and other organization. With those documents, some other identification documents like
passport, Union Perished Chairman Certificate, Ward Commissioner Certificate, Voter ID Card,
Corporate ID card, Memorandum of Associations, Articles of Association, Trade License etc. must
be enclosed with the opening form.

2.2.2.3 Specimen Signature

One or more specimens of the account opener’s usual signature are maintained by the banker on
his record. These are the signatures the banker recognizes for the purpose of customer’s signing
cheque on the account and issue of other instructions to him or her for execution. Any instruction
of the customer under signature not in conformity with the specimens is not to be acted upon by
the banker under any circumstances.

2.2.2.4 Recording of Specimen Signature

Each specimen signature should be individually attested by an authorized officer under his
signature and any unattested signature recorded with the banker should be arise doubt as to its
genuineness. Where fresh signatures are required to be recorded subsequently the same can be
done either on the original signature card if there is space or on a separate signature card. In both
the cases the signatures should be attested individually by an authorized officer and the date of
recording the signatures should also be noted. But fresh signatures should not be recorded unless
requested for by the account holder in writing showing reason and he is known to the banker or
properly identified, as otherwise a cheat may put in a signature to defraud the banker.

10
2.1.2.5 Custody and Safe-keeping of Signature Cards
The signature cards should always be kept under such a proper custody as to prevent them from
falling into unauthorized hands and also to exclude the possibility of fraudulent substitution
thereof. There are instances of frauds and forgeries where additional signatures were subsequently
inserted in the signature card without authorization or the signature card itself was replaced
containing fresh signatures and cheque were paid without noticing the tampering. These frauds
and forgeries would not have been possible had the absence of attestation of the signatures
individually and the necessity of safe custody of the signature cards been not ignored by the bank
officer.

2.2.2.6 Initial Deposits

The initial deposits for opening an account may be for any amount but the bankers sometimes
prescribe a minimum. This initial deposit should be in cash or at the most if unavoidable, a cheque
drawn by the account opener in favor of or a banker’s draft payable to the banker with whom the
account is opened. A cheque collected for initial deposit in an account cannot be said to have been
collected for a ‘customer’ in good faith and without negligence for the purpose of protection under
section 131 of N/A if the account opener has no tile to the cheque.

2.2.2.7 Thanks Letter

After initial deposits the banker doesn’t issue cheque at the same time. Bank sends Thanks Letter
to thanking the account openers to open accounts in its branch. This letter treats customers as
honorable persons as well as it creates good faith and relationship with the bank. But most
important thing of this letter that it is one kind of technique to verify the validity of the customers
given information. Because, when the registered letter is returned because of wrong information
about their name or addresses, it cannot be explained that there is a possibility of fraudulent. And
then banker must have to stop the accounts and issue of the cheque.
2.2.2.8 Issue of Cheque Book
If the account opener is known person, then cheque book can be issued before the Thanks Letter.
For issue of a cheque book there should be a request from the account holder. The first one is
issued on basis of the request printed on the account opening form but not before the account is
opened. No cheque book will be issued except by an authorized officer. While issuing a cheque

11
book the account number should be noted on each leaf. This is essential for identification of the
concerned account easily on receipt of a cheque on any other account. Immediately, after issue of
a cheque book, its number should be noted on the ledger page of the account under dated
authentication of an authorized officer.

2.3 Deposit Collection Policy

Deposit is the lifeblood of a bank. From the history and origin of the banking system. We know
that deposit collection is the main function of a bank.

Accepting deposits
The deposits that are accepted by Exim Bank Ltd.like other banks may be classified in to, —
a) Demand Deposits
b) Time Deposits

a) Demand deposits
These deposits are withdrawn able without notice, current deposits. Exim Bank Ltd.accepts
demand deposits through the opening of,-
i) Al Wadiah Current account
ii) Mudaraba Savings account
iii) Call deposits from the fellow bankers
b) Time deposits
A deposit which is payable at a fixed date or after a period of notice is a time deposit. Exim Bank
Ltd. accepts time deposits through Al Wadiah Fixed Deposit Receipt (FDR), Mudaraba Short Term
Deposit (STD) and Bearer Certificate Deposit (BCD) etc.
While accepting these deposits, a contract is done between the bank and the customer. When the
banker opens an account in the name of a customer, there arises a contract between the two. This
contract will be valid one only when both the parties are competent to enter into contracts. As
account opening initiates the fundamental relationship & since the banker has to deal with different
kinds of persons with different legal status, Exim Bank Ltd. officials remain very much careful
about the competency of the customer

Types of Deposit Accepted By Exim Bank Ltd.

12
Account opening is the gateway for clients to enter into business with bank. It is the foundation of
banker customer relationship. This is one of the most important sections of a branch, because by
opening accounts bank mobilizes funds for investment. Various rules and regulations are
maintained and various documents are taken while opening an account. A customer can open
different types of accounts through this department. Such as these three types of accounts are most
important for bank. And another account are following
 Fixed Deposit Receipt (FDR) Account
 Deposit Scheme Account.
 Bearer Certificate of Deposit

Mudaraba Savings account

Any individual person, local bodies, club, society, association, house wife, student, non-profitable
organization etc. can open a Savings Bank Deposit A/c with Exim Bank Ltd. Saving Bank Deposit
is both and demand deposit, of which 10% is demand and 90% is time deposit and account holder
can withdraw his/their deposits twice in a week up to a certain limit.

Required Documents
 Prescribe A/c opening form to be filled in properly.
 A/c to be introduced properly.
 2 (Two) copies of recent passport size photograph of each person to be attested by the
introducer.
 Nationality Certificate (Photocopy of valid passport/ Voter ID/ Certificate from union
praised chairman/ ward commissioner/
valid driving license) to be submitted.
 Photocopy of TIN certificate (If any).
 1 (One) copy of passport size photograph of nominee to be attested by the account
holder.

Customer Benefit
Cheque book facility
Opportunity to apply for safe deposit locker
Utility payment service

13
 Collect foreign remittance
Transfer of fund from one branch to another by-
– Demand draft
– Mail transfer
– Telegraphic transfer
– Online banking service.

Al Wadiah Current Deposit Account

Exim Bank Ltd. facilitates customers with different types of Al Wadiah Current account. There
are Al Wadiah Current accounts for individuals, proprietorship firms; partnership firms, Joint
Stock Company, school, college, association, trust and N.G.O. Account opening form for these
categories are different.
Some terms and documents may differ but the overall process of account opening is similar to that
of the saving account. Here I like to state what kinds of information to be furnished in the form
and which documents customer should provide.

Al Wadiah Current account (individual)

Exim Bank Ltd. head office for opening a current personal/ individual account. A customer should
meet the following requirements to see an account has been opened in his/ her name
 Name of the applicant
 Profession or business of applicant
 Address of the applicant
 Photographs of the applicant
 Introduced by an account holder of the branch
 Signature on the application form
 Signature on the specimen signature card
 Verification of details and signatures by authorized officer.

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Al Wadiah Current account (Proprietorship)
To open a proprietorship Al Wadiah Current account photocopy of trade license, attached by the
concerned officer, is required along with the procedure mentioned for individual Al Wadiah
Current account.

Al Wadiah Current account (Partnership)

Opening procedure of a partnership Al Wadiah Current account is almost same as the opening of
individual Al Wadiah Current account but some additional documents are required which are
follows
 Partnership deed
 Letter of partnership
 Trade license

Al Wadiah Current account (Joint Stock Company)

All the formalities of individual Al Wadiah Current account opening should be met for the opening
of Joint Stock Company; additionally, following documents also should be submitted to the bank.
These documents are
 Registration certificate from Register of joint stock companies
 Certificate incorporation
 Memorandum of association
 Articles of association
 Annual audit report
 Copy of board Resolution containing
 The authorized persons have to operate the bank account on behalf of the company.
 Name of the persons authorized to deal documents with the bank.
Exim Bank Ltd. Al Wadiah Current account meets the needs of individual and commercial
customers through its schedule benefit.
Customer Benefit
 Cheque book facility
 Opportunity to apply for safe deposit locker facility
 Collect foreign remittance in both T.C. and Draft.

15
  Transfer of fund from one branch to another by
o Telegraphic Transfer
o Demand Draft
o Mail Transfer
o Collection of cheque through clearing house
o Online banking service.

2.4 Payment Policy

Payment system consists of the value channels for facilitating transactions needs for various
personal or institutional requirements. If one or more components of the payment system fail, the
spillover effects can spread through domestic and international financial systems and markets.
Such failure(s) may threaten the stability of the currency and the financial markets. The failure of
a system or a participant can cause other participants to fail and is thus able to transmit shocks
within the financial infrastructure.
For this reason, control measures and instruments are needed to be in place for minimizing the
threats and risks in the payment system - which can only be achieved thorough Payment Systems
Oversight (PSO) under sound legal and regulatory framework.
Payment systems interlink banks and other financial intermediaries. In a crisis situation, problems
can spread through such links from the problem institution to other institutions. This can endanger
the stability of the financial infrastructure and is known as systemic risk. Oversight aims at
ensuring that the systems are set up in such a way as to minimize the risk potential. Exim Bank
Ltd. are concerned about the smooth functioning of payment systems for a number of reasons
 Exim Bank Ltd. aim to maintain systemic stability in payment systems.
 Exim Bank Ltd. are concerned with the efficiency of payment systems.
 Exim Bank Ltd. are concerned with the security of the payment instruments used by the
public, their confidence in the payment system.
 Exim Bank Ltd. Payment systems are an essential vehicle for the implementation of
monetary policy. Oversight aims at safeguarding the transmission channel for monetary
policy.

16
Oversight is an iterative process comprising the following elements
 Formulation of the policy stance setting the general framework, criteria and standards;
 Evaluation of compliance with the policy stance collection and analysis of information on
the overseen entity and implementation actions
 Enforcement of the policy stance inducing the system to take steps to fulfill the criteria and
standards. This could be done by using formal regulatory powers or alternatively by moral
suasion.

Payment Systems Oversight (PSO) objectives are as follows -

 To ensure payment systems are safe, efficient, effective and reliable
 To promote the quality and range of national payment systems
 To facilitate the development of modern and innovative systems to meet the evolving needs
of participants continuously
 To ascertain that the benefits of investment are extended to the general public
 To prevent the abuse of the payment instrument and systems.

17
 Chapter-3
Deposit performance of Exim
Bank Ltd

18
3.1 Introduction
Deposit Mix is a combination of a term deposit in Exim Bank Ltd Limited and an investment in
one or more of the mutual funds managed and distributed by Exim Bank Ltd Limited Asset
Management. Bank is the largest mobilize of surplus domestic savings. For poverty alleviation,
we need self-employment; for self-employment, we need investment and for investment we need
savings. In other words, savings help capital formations and the capital formations help
investments in the country. The investment in its turn helps industrialization leading towards
creation of wealth of the country. Moreover, the wealth finally takes the country on road to
progress and prosperity. As such, savings is considered the very basis of prosperity of the country.
The more the growth of savings, the more will be the prosperity of the nation. The savings rate in
Bangladesh is one of the lowest in the world, rate of domestic saving being 17.78 %. In order to
improve the savings rate, Financial Institutions responsible for mobilization of savings should offer
attractive savings schemes so that the marginal propensity to save increases. The savings do not,
of course, depend only on the quantum of income but largely depend on the habit of savings of the
people.

3.2 Deposit Mix of Exim Bank Ltd Limited:

Table-3.1 [In million]
Particular 2012 2013 2014 2015 2016
7633 7674 8723 8944 9548
Al- Wadiah Current
100% 100.6% 114.28% 102.5% 106.8%
Deposits (CD)
2629 2765 2805 2641 2975
Mudaraba Short
100% 105.17% 101.44% 94.15% 112.64%
Notice deposits
7477 8198 9832 11167 12989
Mudaraba Savings
100% 109.64% 119.93% 113.57% 116.32%
deposits
12414 17581 23123 29810 35430
Mudaraba Term
100% 141.62% 131.52% 128.92% 118.85%
Deposit
527 627 891 1215 1492
Special Savings
Scheme 100% 118.98% 142.10% 136.36% 122.88%
112 161 218 360 506
Special Notice 100% 143.75% 135.40% 165.13% 140.56%
deposits
Money Install Based 25020 27164 34152 38888 61191
Deposit 100% 108.57% 125.72% 289.55% 157.35%
Total 95,131 110,062 133,489 140,869 169,827
Source: Annual report of Exim Bank Ltd Limited

19
Analysis: In 2012 Al- Wadiah Current Deposits (CD) is 100%, Mudaraba Short Notice deposits
(SND) is 100%, Mudaraba Savings deposits (SD) is 100%, Mudaraba Term Deposit 100%, Special
Savings Scheme is 100%, Special Notice deposits is 100%, Money Install Based Deposit is 100%.

In 2013 Al- Wadiah Current Deposits (CD) is 100.6%, Mudaraba Short Notice deposits (SND) is
105.17%, Mudaraba Savings deposits (SD) is 109.64 %, Mudaraba Deposits Scheme is 141.62%,
Special Savings Scheme is 118.98%, Special Notice deposits is 143.75%, and Money Install Based
Deposit is 108.57%.

In 2014 Al- Wadiah Current Deposits (CD) is 114.28%, Mudaraba Short Notice deposits (SND)
is 101.44%, Mudaraba Savings deposits (SD) is 119.93%, Mudaraba Deposits Scheme is 1031.52%,
Special Savings Scheme is 142.10%, Special Notice deposits is 135.40%, and Money Install Based
Deposit is 125.72%.

In 2015 Al- Wadiah Current Deposits (CD) is 102.5%, Mudaraba Short Notice deposits (SND) is
94.15%, Mudaraba Savings deposits (SD) is 113.57%, Mudaraba Deposits Scheme is 128.92%,
Special Savings Scheme is 136.36%, Special Notice deposits is 165.13%, and Money Install Based
Deposit is 289.55%.

In 2016 Al- Wadiah Current Deposits (CD) is 106.8%, Mudaraba Short Notice deposits (SND) is
112.64%, Mudaraba Savings deposits (SD) is 116.32%, Mudaraba Deposits Scheme is 118.85%,
Special Savings Scheme is 122.88%, Special Notice deposits is 140.56%, and Money Install Based
Deposit is 157.35%.

20
3.3 Al-Wadiah Current Deposit Position:
Al Wadiah Current account is purely a demand deposit account. There is no restriction on
withdrawing money from the account. It is basically justified when funds are to be collected and
money is to be at frequent interval. Some important points have been discussed in the project part.
Table-3.2 Position of al-wadiah current Deposit [In million]
Year Al-Wadiah Current Deposit Growth Rate
Total Bank (%)
2012 7633 100
2013 7674 100.54
2014 8723 114.28
2015 8944 117.18
2016 9548 125.09
Average 8504.4
Source: Annual report of Exim Bank Ltd Limited

Figure-3.1: Figure has been completed by annual report of Exim Bank Ltd Limited
12000
9548
10000 8723 8944
7633 7674
8000
6000
4000
2000
100 100.54 114.28 117.18 125.09
0
2012 2013 2014 2015 2016
Al- Wadiah Current Deposit Growth Rate

Source: Annual report of Exim Bank Ltd Limited

Analysis: The above table & figure shows Al-Wadiah current deposit shows an increasing &
decreasing trend the Al-Wadiah current account in 2012 was 7633 and 2013was 7674 which was
downward then base year and its growth rate in 2013 was base year and 2014 was 100.54 which
was upward then base year. The Al-Wadiah current deposit 2014 was 8723 and 2015 was 8944
which was upward then the base year and its growth rate 2015 was 114.28 and 2015 was 117.18
which was upward then base year. The Al-Wadiah current deposit 2016 was 9548 which were

21
higher than previous one year and growth rate in 2016 was 125.09 and it’s higher than previous
one year.
3.4 Mudaraba Savings Deposit Position:

This deposit is primarily for small-scale savers. Hence, there is a restriction on withdrawals in a
month. Heavy withdrawals are permitted only against prior notice. Some Important Point have
been discussed in project part
Table-3.3
Position of Mudaraba Savings Deposit [In million]
Year Mudaraba Saving Deposit Growth Rate
Total Bank (%)
2012 7477 100
2013 8198 109.64
2014 9832 131.50
2015 11167 149.3
2016 12989 173.72
Average 9932.6
Source: Annual report of Exim Bank Ltd Limited

Fig-3.2: Figure has been completed by annual report of Exim Bank Ltd Limited

14000 12989

12000 11167
9832
10000
8198
7477
8000
6000
4000
2000
100 109.64 131.5 149.3 173.72
0
2012 2013 2014 2015 2016
Mudaraba Saving Deposit Total Bank Growth Rate

Source: Annual report of Exim Bank Ltd Limited

Analysis: The above table & figure Mudaraba Savings deposit shows an increasing & decreasing
trend the saving account in 2012 was 7477 and 2013 was 8198 which was upward then base year

22
and its growth rate in 2012 was base year and 2013 was 109.64 which was upward then base year.
The Mudaraba saving account 2014 was 9832 and 2015 was 11167 which was upward then and
base year and its growth rate 2014 was 131.50 and 2015 was 149.35 which was downward then
base year. The Mudaraba saving account 2016 was 12989 which were higher than previous one
year and growth rate in 2016 was 173.72 and it’s higher than previous one year.
3.5 Mudaraba Term Deposit Position
Table-3.4
Position of Mudaraba Term Deposit [In million]
Year Mudaraba Term Deposit Growth Rate (%)
Total Bank
2012 12414 100

2013 17581 141.62

2014 23123 186.27
2015 29810 240.13

2016 35430 285.40

Average 23671.6

Source: Annual report of Exim Bank Ltd Limited

Fig-3.3 figure has been completed by annual report

40000
35430
35000
29810
30000
25000 23123

20000 17581

15000 12414

10000
5000
100 141.62 186.27 240.13 285.4
0
2012 2013 2014 2015 2016

Mudaraba Term Deposit of Total Bank Growth Rate %

Source: Annual report of Exim Bank Ltd Limited

23
Analysis: The above table & figure Mudaraba Term Deposit shows an increasing & decreasing
trend the Mudaraba Term Deposit in 2012 was 12414 and 2013 was 17581 which was upward then
base year and its growth rate in 2012 was base year and 2013 was 141.62 which was upward then
base year. The Mudaraba Term Deposit was 2014 the amount 23123 and 2015 was 29810 which
was upward then and base year and it’s growth rate 2014 was 186.27 and 2015 was 240.13 which
was down ward then base year. The Mudaraba Term Deposit 2016 was 35430 which were higher
than previous one year and growth rate in 2016 was 285.40 and it’s highest than previous one year.
3.6 Mudaraba Short Notice deposits Position
Table-3.5
Position of Mudaraba Short Notice deposits Deposit [In million]
Year Mudaraba Short Notice Growth Rate
Deposit (%)
Total Bank
2012 2629 100
2013 2765 105.17
2014 2805 106.69
2015 2641 100.46
2016 2975 113.16
Average 2763
Source: Annual report of Exim Bank Ltd Limited

Fig-3.4: Figure has been completed by annual report of Exim Bank Ltd Limited

3500
2975
3000 2765 2805
2629 2641
2500

2000

1500

1000

500
100 105.17 106.69 100.46 113.16
0
2012 2013 2014 2015 2016

Mudraba Short Notice Deposit of Total Bank Growth Rate %

Source: Annual report of Exim Bank Ltd Limited

24
Analysis: The above table & figure Mudaraba Short Notice deposits shows an increasing &
decreasing trend the Mudaraba Short Notice deposits in 2012 was 2629 and 2013 was 2765 which
was upward then base year and it’s growth rate in 2012 was base year and 2013 was 105.17 which
was upward then base year. The Mudaraba Short Notice deposits was 2014 the amount 2805 and
2015 was 2641 which was downward then and base year and it’s growth rate 2014 was 106.69 and
2015 was 100.46 which was downward then base year. The Mudaraba Short Notice deposits 2016
were 2975 which were higher than previous one year and growth rate in 2016 was 113.16 and it’s
higher than previous one year.
3.7 Special Saving Scheme position
Table-3.6
Position of Special Saving Scheme [In million]
Year Special Saving Scheme Position Total Growth Rate (%)
Bank
2012 527 100
2013 627 118.987
2014 891 169.07
2015 1215 230.55
2016 1492 283.11
Average 950.4
Source: Annual report of Exim Bank Ltd Limited
Fig-3.5: Figure has been completed by Annual report of Exim Bank Ltd Limited

1600 1492
1400 1215
1200
1000 891
800 627
600 527
400 230.55 283.11
118.987 169.07
200 100
0
2012 2013 2014 2015 2016

Special Saving Scheme Position Total Bank Growth Rate %

25
Source: Annual report of Exim Bank Ltd Limited

Analysis: The above table & figure special saving deposit shows an increasing & decreasing trend
the special saving deposit in 2012 was 527 and 2013 was 627 which was upward then base year
and its growth rate in 2012 was base year and 2013 was 118.99 which was upward then base year.
The special saving deposit was 2014 the amount 891 and 2015 was 1215 which was upward then
and base year and it’s growth rate 2014 was 169.07 and 2015 was 230.55 which was downward
then base year. The special saving deposit 2016 was 1492 which were higher than previous one
year and growth rate in 2016 was 283.11 and it’s lower than previous one year.
3.8 Special Deposit Scheme position

Table-3.7
Position of Special Deposit Scheme (In millions)
Year Special Deposit Scheme Growth Rate
Total Bank (%)
2012 112 100
2013 161 143.75
2014 218 194.64
2015 360 321.43
2016 506 551.79
Average 271.4
Source: Annual report of Exim Bank Ltd Limited
Fig-3.6 Figure has been completed by annual report of Exim Bank Ltd Limited

600 551.79
506
500

400 360
321.43
300
218
194.64
200 161 143.75
112 100
100

0
2012 2013 2014 2015 2016

Special Deposit Scheme Growth Rate %

Total Bank

26
Source: Annual report of Exim Bank Ltd Limited
Analysis: The above table & figure Special Deposit scheme shows an increasing & decreasing
trend the Special Deposit scheme in 2012 was 112 and 2013 was 161 which was upward then base
year and its growth rate in 2012 was base year and 2013 was 143.75 which was upward then base
year. The Special Deposit scheme was 2014 the amount 218 and 2015 was 360 which was upward
then and base year and it’s growth rate 2014 was 194.64 and 2015 was 321.43 which was upward
then base year. The Special Deposit scheme 2016 was 506 which were higher than previous one
year and growth rate in 2016 was 551.79 and it’s lower than previous one year.

27
3.9 Return on Asset (ROA):
This ratio is a measure of the net profit (Earning after interest and Taxes) to the total assets of a
firm. A firm should earn adequate return on assets in order to show its higher earnings power.
Therefore, a higher ROA indicates higher earning power, whereas a lower ROA indicates lower
earning power of a firm.

Return on Asset (ROA) = (Net Profit ÷ Total Assets) × 100

Table 3.8 Return on Assets (ROA) (Taka in Million)

Year Net Profit Total Assets Net Profit as percentage of

Total Assets
2013 190.26 28372.65 0.671
2014 276.21 34616.95 0.798
2015 308.46 41171.81 0.749
2016 303.79 51510.00 0.590
Average 0.702
Source: Annual report of Exim Bank Ltd Limited

Fig-3.7 Figure has been completed by annual report of Exim Bank Ltd Limited
Return on Assets
0.8 0.749
0.671 0.679
0.7
0.59
0.6

0.5

0.4

0.3

0.2

0.1

0
2013 2014 2015 2016

Return on Asset

28
Source: Annual report of Exim Bank Ltd Limited

Analysis: The above table & figure ratio indicated the net profit as percentage of total Assets. The
ratio increased in 2014 compare to the previous year 2013. Then the ratio experienced a downward
trend last two years. The ratio was largest during the year 2014 (0.798) and smallest during the
year 2016 (0.590) while average ratio was 0.702 during the study period.

3.10 Return on Equity (ROE):

This ratio reveals how equity capital have been utilized by the firm. The earning of a satisfactory
return is the most desirable objective of a business. The return on Equity the ratio of net profits to
owners’ equity reflects the extent to which this objective has been accomplished.

Return on Equity = (Net Profit ÷ Shareholders Equity)

Table 3.9 Return on Equity (Taka in Million)

Year ROE
2012 10.24%
2013 16.54%
2014 17.07%
2015 15.85%
2016 9.29%
Source: Annual report of Exim Bank Ltd Limited
Fig-3.7 Figure has been completed by annual report of Exim Bank Ltd Limited
Return on Equity
18 16.54 17.07
15.85
16
14
12 10.24
9.29
10
8
6
4
2
0
2012 2013 2014 2015 2016

29
Source: Annual report of Exim Bank Ltd Limited
Analysis: The above table & figure ratio indicated the Return on equity. The ratio increased in
2013 compare to the previous year 2012. Then the ratio experienced a upward trend last one years.
The ratio was largest during the year 2014 (17.07) and smallest during the year 2016 (9.29) &
2012 is (10.24).

30
 Chapter-4
Problems Associated with the
Deposit Management practices
of Exim Bank ltd.

31
4.1 Introduction
The term is usually applied to a deposit, lien, or mortgage voluntarily given by a debtor to a creditor
to guarantee payment of a debt. Security furnished the creditor with a resource to be sold or
possessed in case of the debtor’s failure to meet his or her financial obligation. In addition, a person
who becomes a surety for another is sometimes referred to as a “Security.”

Most major problems have been either explicitly or indirectly asks for executives and professional
of Exim bank. Identify the caused for problems of deposit management practices of Exim bank by
weaknesses in are two contradictory concepts. One cannot be effective without the other. But
excess of one may slowdown the other. Too much squeezing of any of the two cans also aggravate
the situation. Interest based banks maximize their profit subject to cost of funds as it is in a position
to know in advance, with a reasonable degree of certainty, the amount of profit it may earn in the
short term. Through the use of hedging it can also determine the level of profits in the long run.
Under the PLS system. Discussion with officers of the Head Office revealed that if the Bank
collects more deposit, it would be able to advance credit to more viable projects. To combat the
problem of mobilizing deposit in the form of credit.

4.2 Problems Associated with the Deposit Management practices

Maturity Mismatch of Deposit

Discussion with officers of the Head Office revealed that if the Bank collects more deposit, it
would be able to advance credit to more viable projects. To combat the problem of mobilizing
deposit in the form of credit, Exim Bank Ltd should focus on intensive marketing effort.

Technological Problem

Exim Bank Ltd does not provide internet banking facility therefore technologically advanced
people do not open account in the bank. SMS banking facility is not available which is essential
nowadays for depositors, they have to come the bank to know their account balance. Banking
software is not up to date there are lot of software bugs therefore often bank officials face

32
interruption in their work, they also used windows which is out of date. Banking service is not fast
enough often customer need to wait for a long time for service.

Complexity Account Opening

Exim bank Limited faces problem Complexity Account opening system. Because, there deposit
product is complexity they faced so many problems in deposit management.

Staff Efficiency

Exim Bank Limited faces the problems Staff Efficiency. The lack of proper knowledge of their
employee in deposit content work they faced so many problems in their deposit management.

Unavailability of ATM

There are shortage of ATM booth in Exim bank ltd. as a result, customers fell in problem
in their emergency.

Islami Shariah Based Counseling Service

There are shortage of Islami Shariah Based Counseling Service. As a result, customer & people
didn’t know about Islami Shariah Based Service.

33
 Chapter-5
Summary of the Findings,
Policy Implication &
Conclusion of Exim Bank ltd.

34
5.1 Summary of the findings

Summary of the findings are given below:

 The bank’s deposits mostly comprise on the term deposit. The cost of deposits is little bit

higher.

 In 2016 the almost 43.23% of the total deposits are in the form of fixed deposits. Whereas

6.22% is in the form of al-wadiah current deposit and 12.29% is in the form of mudaraba

savings deposit and 14.01% is in the form of the special savings scheme. Mudaraba short

notice deposit position is 4.75%.

 The al-wadiah current deposit 2016 was 9548 which were higher than previous one year

and growth rate in 2016 was 125.09% and it’s higher than previous one year.

 The mudaraba saving deposit 2016 was 12989 which were higher than previous one year

and growth rate in 2016 was 173.72% and it’s higher than previous one year.

 The Mudaraba Term Deposit Position 2016 was 35430 which were higher than previous

year and growth rate in 2016 was 285.40% and it’s higher than previous one year.

 The Short Term Deposit 2016 was 35430 which were higher than previous one year and

growth rate in 2016 was 285.40% and its highest than previous one year.

 The Mudaraba short notice 2016 was 2975 which were higher than previous one year and

growth rate in 2016 was 113.16% and it’s higher than previous one year.

 The special saving deposit 2016 was 1492 which were higher than previous one year and

growth rate in 2016 was 283.11% and it’s lower than previous one year.

 The Special Deposit scheme 2016 was 506 which were higher than previous one year and

growth rate in 2016 was 551.79% and it’s lower than previous one year.

35
 5.2 Policy Implication
Since this an exploratory research, hence the recommendation given are not decisions rather they

are only suggestions to improve the default rate. The Implications are made on the basis of

suggestion of problems.

i. Maturity mismatch of deposit should maintain this smoothly operate their Deposit Product.

ii. Exim Bank provide internet banking facility for available for all product and customer
therefore technologically advanced people open account in the bank.
iii. Exim Bank Limited facility doing available for all branches which is essential nowadays for
depositors.
iv. Bank authority recruit young, talent & experience people for its activities.
v. ATM System Should has to be developed in banking system in Exim Bank and Exim Bank
Limited has to increase their ATM booth across the country to meet up the customers
demand.
vi. There is properly of Islami Shariah Based Counseling Service. As a result, customer &
people know about Islami Shariah Based Service.
vii. The bank has to improve their deposit policy. The deposit of the bank should be more
diversified.

Though bank takes protective measures proper customer selection is made but in reality often
adverse selection is made.

36
5.3 Conclusion

Banks have their own unique strategy, which leads to their objectives. Some wishes to grow faster
and achieve some long-range growth. On the other hand some banks want to lead a quit life
minimizing risk and convey an image of a sound bank. Exim Bank Ltd Limited is pretty new in
its operation. Even though the financial analysis on the banks performance seems the banks doing
very well in the banking industry of Bangladesh and has prosperous future.

Exim Bank Ltd Limited has established goodwill through innovative products and services.
Technology development has opened up a new dimension in the development of creative products,
efficient services and customer satisfaction. The bank must cope with this technological
advancement its present status.

37
 References
http://www.EXIM BANK LTDbd.com/html/homepages.php
http://www.EXIM BANK LTDbd.com/download/Disclosure_Framework_DEC_2016.pdf

Publications:
Several Booklets from Exim Bank Ltd Limited
Several News letters from Exim Bank Ltd Limited
Books and guideline.
Exim Bank Ltd Limited Training book-Exim Bank Ltd Limited Ltd.
Commercial Bank Management by peter S Rose (Fifth Edition).

Website:
http://www.Exim bank-bd.com/home/about
www.Bangladesh-bank.org.

Others:
Library of Southern University of Bangladesh
Library of Exim Bank Ltd Limited
Financial performance responses to the bank manager by Exim Bank Ltd Limited.

38