Post on 21-Jan-2023
Comparison BetweenPrivate Bank and Public
PAD-201
SEC-01
Table of Contents
Executive Summary 03
AB Bank 4-9
Sonali Bank 10-13
Comparison Between AB Bank and Sonali Bank 14-17
Conclusion 18
Reference 19
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Comparison BetweenPrivate Bank and Public
PAD-201
SEC-01
There are two types of bank in any economic condition. One is Private bank and another one is public bank. In a countries perspective both plays an important role. Private Banks basically work for profit, on the other hand profit is not the only thing that public bank consider. Beside profit they think for the welfare of thecitizens. Public bank also plays an important role in controlling the banking system of a country. This case work is done on the comparison between Private and Publicbank. We select AB Bank and Sonali Bank to do this compression. Both banks are leading bank in Bangladesh, AB Bank from private sector and Sonali Bank from public sector. This case will discuss about the difference between this two banks like their working process, mission-vision, management system, their problems etc. This discuss will help to find out the difference betweenthe public and private bank in Bangladesh.
Executive Summary
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Private Banking Sector in Bangladesh comparing two Private Banks:
Private Banks play a great role in economic development
of a country. Bangladesh is at least developing country
and its economy is agro-base. Poverty is the main problem
in this country. In this situation private helps to
remove poverty in our country. As a result, banks collect
money from large number of people, which is made for the
commerce and industry for meeting the requirements. Now
banks offer the widest range of financial services and
perform a lot of financial functions. Thus banks prove
that they are the key factor for the economy and business
as well. We are emphasizing on a brief analysis of two
Private Banks of Bangladesh named:
AB BANK
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SEC-01
AB Bank Limited
Other (will be providing by grp members.)
Introduction:
AB Bank Limited, the first private sector bank was
incorporated in Bangladesh on 31st December 1981 as Arab
Bangladesh Bank Limited and started its operation with
effect from April 12, 1982.
AB Bank is known as one of leading bank of the country
since its commencement 31 years ago. It continues to
remain updated with the latest products and services,
considering consumer and client perspectives. AB Bank has
thus been able to keep their consumer’s and client’s
trust while upholding their reliability, across time.
During the last 31 years, AB Bank Limited has opened 85
Branches in different Business Centers of the country.
One foreign Branch in Mumbai, India and a wholly owned
Subsidiary Finance Company in Hong Kong in the name of AB
International Finance Limited.
To facilitate cross border trade and payment related
services, the Bank has correspondent relationship with
over 220 international banks of repute across 58
countries of the World. In spite of adverse market
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conditions, AB Bank Limited which turned 31 this year,
concluded the 2012 financial year with good results. The
Bank’s consolidated profit after taxes amounted to Taka
650 crore which is 21% higher than that of 2011.
Mission: “To be the best performing bank in the
country"
Vision: "To be the trendsetter for innovative
banking with excellence & perfection"
Problems:
Though AB Bank is the first private sector Bank in the
banking arena of Bangladesh there are few unpleasant
truth that customer has to face in reality. As weakness
always hidden in strengths. So not being aware about the
weakness is likely to surplus the number of threats to be
count. We have come across a number of problems of this
organization we like to mention below-
Having well organized organizing personals, firing
of experience employees every year randomly make it
a bit unstable in management system. Each time the
organization fires some people which takes some time
to fill the holes and to set the wheels on track.
Recently some executives have to leave the bank for
management decision. The panic will seize over the
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Managing director, Additional Managing
director Deputy Managing Director, Senior Executive Vice President, Executive Vice
President
Senior Vice President, Vice
President
Senior Principal Officer
Principal Officer, Senior Officer
Senior Assistant Vice President, Assistant Vice
PresidentOFFICER
bank and manpower efficiency will go downward for
such steps.
AB bank being the leading private institution
possess a well-defined hierarchy but recently
employees and customers are facing problems like
systems, services, support due to lack of
charismatic leadership of top management. The
hierarchy model of AB bank is stated here
TOP MANAGEMENT MIDDLE MANAGEMENT WORK FORCE
MANANGEMENT
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The IT (Information technology) sector is
comparatively weak.
AB Bank does less CSR (Corporate social
responsibilities) activities.
The distance between firing employees and filling
the holes was little larger in the past. It results
slow movement of works.
AB Bank is facing problem with their front line
officers. According to customers the level of
satisfaction is not upto the mark.
Research Methodology:The report is based on both primary and secondary sources
of information. Our primary research was conducted via
means of interviewing employees of AB Bank Limited. We
interviewed three level of employees for the purpose of
our analysis (i.e. regarding emphasize of private sector
bank in Bangladesh). We interviewed them on telephonic
conversation, personal interview and among the
respondents; some of them were family members. Our
secondary research was conducted by scanning through
related issues of certain journals, company website,
annual plans and newspapers. We also used internet in
finding other secondary evidences.
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SEC-01
Findings
Through conducting this research we came to know that
different managerial skills and competency are followed
in different manner based on type and requirement of
organization. However, the institution is facing some
problems due some specific reasons. Some findings
regarding the research on first private bank of
Bangladesh are-
On-line banking: AB Bank is providing its clients to
do banking sitting on their chair which attained a
good customer base in the market and customers
satisfaction. Enhancing the limit of banking area to
the doors surely represents its’ strength.
SMS banking: With the handiness of introducing the
SMS banking, which enables the clients to keep in
touch with his/her account just give it an upper
hand to be on the top line.
Marketing: The marketing sectors of AB bank ltd.
shows its’ capacity to go beyond the borders and
having a firm grip on international economy system.
A look on the local market can easily point out the
position of the bank in the competition. It can even
change the marketing policy to keep the pace with
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SEC-01
the market. They always try to do innovative
promotions such as they made advertisement with two
famous singers HABIB WAHID and FERDOUS WAHID which
represents bonding among generations. Beside these
they have celebrated 25 years ceremony, family night
programmed recently at Basundhara convention center,
encouraging students for the future.
Share market: Even in the road of share market this
bank is playing a vital role involving huge amount
of capital in the sector which later on becoming an
ultimate portion of the whole share market
controlling the facts.
Experienced stuffs: Most of the employees of the
bank is highly trained and experienced in their
respective sectors. So the employees are well aware
about their duty and responsibility.
Credit Rating: The Credit rating of AB Bank is
“AA3” for long term and “ST-1” for short term which
reflects it is a first grade institution.
Management system: Though having well organized
organizing personals, firing of experience employees
every year randomly make it a bit unstable in
management system. Each time it fires some people it
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takes some time to fill the holes and to set the
wheels on track.
Interest rate: Net interest Margin on the decline.
Recommendation:
* There should be a slight change in the strategy of
managerial persons regarding management issues.
* AB Bank can increase its market share and number
of customers by strengthens IT sector investment.
*By expansion of ATM network and by launching first
track service like other banks.
*By increasing CSR activity and advertisement for
public interest, AB can enhance its customer base.
*The bank should focus on expanding its loan
syndication and project financing business into
bigger projects.
Interview:
Contact personals:
1. Mr. Syed Aminul Islam
Senior Executive Vice President & Head of Recovery,
Head Office, Dhaka.
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2. Mr. Md Sadiqur Rahman
Relationship Manager
Progoti soroni branch, N.R Tower, Block-3,
Baridhara, Dhaka
3. Mr. Islam Aubvhi
Officer (Customer service),
Progoti soroni branch, N.R Tower, Block-3,
Baridhara, Dhaka
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Introduction
After liberation war in 1971, three banks National Bank
of Pakistan, Premier Bank and Bank of Bahawalpur merged
into Sonali Bank. In 15th November, 2007 the bank became
completely state owned and became Sonali Bank Limited
which is now the largest nationalized commercial bank.
The bank has total 1200 branches in Bangladesh, from
which 11in Bangladesh connecting people almost everywhere
in the country. Sonali Bank has authorized capital of BDT
10 billion and has BDT 9 billion of paid up capital. The
bank is helping build the economy of the nation and still
keeping up to its reputation by carrying out the social
commitment for which they are entrusted.
They are providing all types of services to the people
like Savings and Current accounts, money transfer through
Demand Draft, Pay Order, Mail Transfer, and Telegraphic
Transfer etc. They have lots of Deposit schemes, and also
SONALI BANK
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SEC-01
Credit Schemes where loans are given to help the
permanent Government employees, Semi Government
employees, Autonomous and recognized bodies. They also
have Rural Credit Scheme for the 85% of the population
living in rural areas where 75% of the people earning
living from agriculture which is boosting the growth of
the economy. There is another scheme called Microcredit
which is for the poor people living below the poverty
level who can only afford to take small loans. This is
very beneficial for those people and about 20 projects
under this scheme is in progress. Sonali Bank also gives
long term loans known as Industrial Finance against new
industries in Bangladesh like Garments, Hospitals, and
Pharmaceuticals etc. At last it has International banking
which developed expertise in international trade and
business.
Vision: Socially committed leading banking institution
with global presence.
Mission: Dedicated to extend a whole range of quality
products that support divergent needs of people aiming at
enriching their lives, creating value for the
stakeholders and contributing towards socio-economic
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SEC-01
development of the country.
Slogan: Your trusted partner in innovating banking
Problems
Even though Sonali Bank Limited is the largest
nationalized commercial bank, it has many drawbacks and
lacking as well.
The largest banking scandal known as the Hallmark-
Sonali Bank Loan Scandal which happened due to
illegal transfer Tk 36.48 billion (US$460 million)
in loans between 2010 and 2012 due to high level of
corruption inside the company and
The bank is suffering from many default loans which
is almost Tk 124.71 billion which is 33.92% of the
total lending.
Lack of security in the vault rooms. The branches of
Sonali bank are housed in a very poorly constructed
buildings or old houses with faulty structures where
proper security measures cannot be taken.
Work place environment is below average. No air-
condition, old furniture etc and also the necessary
items are missing which are required to do jobs.
Limited space makes the environment even clumsier
and messy.
Very low salaries compared to any other private
banks. For example an officer gets Tk 11,000 a month
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while officers of the same level at private banks
get a minimum of Tk 16,000 a month.
IT sector is much backdated. Usage of very old
personal computers which sometimes do not work
properly. Even some of the employees do not have
computers to work with.
Equal opportunities are not given to employees.
Merited and sincere
employees are not given the opportunities they
deserve and much deprived from it. Employees who
have power and links are given priority over others
even if they don’t deserve.
Bribing
The assigned works are not completed in due time and
drag them for days, months, even for years.
Research methodology:
We have prepared this report based on both primary and
secondary findings of information. For our primary
sources we did some personal interviews from where we
gathered information regarding the employee’s services of
sonali bank. We also conducted few telephone interviews
and some employee background survey which included their
family opinion.
For secondary research we scanned through annual reports
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of sonali bank. We also conducted through internet
journals, blogs, and newspaper. For information details
we used internet as secondary media.
Findings:
Through our research findings, we came across some of the
public sector banking problems which are affecting the
public sector services. Sonali bank is the largest
nationalized commercial bank. But there are few other
drawbacks related to their management and services. The
following are the list of problems that we have
encountered through our research.
Corruption is one of the leading reasons behind losing
the reputation of public sector. Sonali bank was accused
for loan scandal which happened due to the illegal
transfer of Tk 36.48 billion ($ 460 million) between 2010
and 2012 due to the high level of corruption inside the
company. The bank is suffering from many default loans
which is 33.92% of the total lending. Sonali bank
provides vault services. But most of their
bank branches are located at old buildings where proper
security measure is a questionable factor.
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Working environment is very poor. What is mostly needed
for an employee is a proper working environment where
they feel comfortable while carrying out their hardships.
But our research conducts that the sonali bank has a very
poor working environment which affects their employees’
health. No air condition, which is suffocating due to
less ventilation. Limited space makes the surroundings
clumsier and messy.
Sonali bank provides very low wages compare to other
banks. Say for example , a private job holder is paid
around tk16000 a month, whereas sonali bank gives tk
11000 a month.
The most significant problem of public organizations/
bank is lack of time. The assigned works are not
completed in due times and it takes months and sometimes
years to finish the work.
Bribe is another highlighted problem in public sector.
Consumers have taken this assumption for granted that
bribing is the only effective way to get the work done in
public sector.
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Profit motive vs. service orientation:
It is true that both the banks have profit motives. But
as a public organization, Sonali bank does a lot of CSR
(corporate social responsibilities) activities compare to
AB Bank. In 2010, Sonali bank under the CSR, gave tk 6.3
million, in 2011- tk 1.8 million, in 2012- tk 2.6
million, in 2013- tk 4.9 million and in 2014 up until
March 18- tk 0.9 million as grants to many
people/organizations.
The main objectives for the CSR activities were:
Providing scholarship for carrying on the education
process of the poor students.
Taking many projects to help the physically and
mentally handicapped person.
Giving support for the protection of the memory of
our liberation war.
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Donations for the victims of many natural calamities
etc.
On the other hand, AB does very less CSR activities. But
AB bank should increase their CSR activities for public
interest; and by doing this, AB bank can enhance its
customer base.
Political direction:
Public administration works under political direction and
scrutiny. They put into effect the policies made by
elected members of the legislature (law-makers) and
potential executive, while private administration is not
subject to political direction. As a public bank, Sonali
bank is influenced by political direction, but AB bank is
not. There is an exception in the time of an emergency.
For example, when Rana plaza
incident happened last year at Savar, AB bank and Sonali
bank worked together hand to hand along with other
organizations
Size of the administration:
Sonali bank has total 1200 branches in Bangladesh, from
which 11 in Bangladesh connecting people almost
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everywhere in the country. On the other hand, AB Bank
Limited has opened 85 branches so far in different
business centers of the country.
Red Tapism vs. promptness:
Red Tapism is seen most of the time in public
administration. On the other hand, in private
administration, works are done fast. After analyzing the
findings of these two banks, it is seen that in Sonali
bank, the assigned works are not completed in due times
and it takes months and sometimes years to finish the
work. On the other hand, in AB bank, any assigned works
will take less time to complete successfully. AB bank has
the characteristic of doing things without delay. So,
promptness is there in AB Bank.
Wages :
Sonali bank provides very low wages compare to AB Bank.
An employee of Sonali bank gets around 11000 tk per month
whereas; the employee working in AB bank gets around tk
16000 per month.
Taking Bribe:
Bribe is one of the highlighted problems in public
sector. In Sonali bank, bribery happens most of the time
because consumers have taken this assumption for granted
that bribing is the only effective way to get the work
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done. Bribery happens here because of red Tapism which
topic was mentioned earlier. The work is done very slowly
in public sector. On the other hand, there is no option
for taking bribe in AB bank.
Equal opportunities to the employees:
Equal opportunities are not given to employees in Sonali
Bank. Merited and sincere employees are not given the
opportunities they deserve and much deprived from it.
Employees who have power and links are given priority
over others even if they don’t deserve. So, there is
corruption. On the other hand, in the AB bank, employees
are given equal opportunity in the company. Those who
perform well are promoted from one position to another.
Qualification of the staffs:
Employees are very important for every organization. Most
of the employees of AB bank is highly trained and
experienced in their respective sectors. The employees
are also well aware about their duty and responsibility.
Sonali bank has also trained and experienced employees
but there are also many employees in the bank who join by
performing corruption, for example by giving bribe. These
corrupted employees are not even qualified for the post
they grab.
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Technology:
The IT sector of Sonali bank is much backdated. There are
usages of very old personal computers which sometimes do
not work properly. Even some of the employees do not have
computers to work with. On the other hand, AB bank has a
strong IT (Information technology) sector compare to
Sonali Bank.
Workplace environment:
Work place environment of Sonali bank is below average.
No air-condition facility is there. Old furnitures as
well as the necessary items are missing which are
required to do jobs. Limited space makes the environment
even clumsier and messy. The workplace environment in AB
bank is very friendly. The arena is properly air
conditioned proper ventilation facility is there. Every
employee has their own desk to
work properly. There are sufficient resources in the bank
and the employee has the access to all information which
they want to check during completion of a task.
Security in the vault rooms:
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The vault security system of Sonali Bank is vulnerable.
The branches of Sonali bank are housed in a very poorly
constructed buildings or old houses with faulty
structures and there, proper security measures cannot be
taken. It’s very alarming for any bank. On the contrary,
apart from a proper work environment, AB bank also has a
very good security system as well. It keeps its customers
all information in the right order. The branches of AB
bank are housed in a strongly constructed building and
their vault security system is very strong compare to
Sonali Bank.
Management system :
Though having well organized organizing personals, firing
of experienced employees in AB bank every year randomly
makes it a bit unstable in management system. It is not
that much easy to fill up that blank position quickly.
Recently, some executives have to leave the bank for
management decision. If this continues, the panic will
seize over the bank and manpower efficiency will go
downward for such steps. Sonali bank does not fire their
employees rapidly. One thing is again needed to be
mentioned is corruption. Apart from firing an experienced
employee, if the authority wants to fire a dishonest
employee, that employee can get rid of the problem by
offering bribes to the authority, and if the authority is
corrupted, they will take the bribe and won’t take any
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action against employee, as a result he can stay. This
happens in Sonali bank as well as many public
organizations.
Both private and public bank is essential in terms of an economy. Private Banks play a great role in economic development of a country. Bangladesh is at least developing country and its economy is agro-base. Poverty is the main problem in this country. In this situation private helps to remove poverty in our country. As a result, banks collect money from large number of people, which is made for the commerce and industry for meeting the requirements. Public banks are providing all types ofservices to the people like Savings and Current accounts, money transfer through Demand Draft, Pay Order,Mail Transfer, and Telegraphic Transfer etc. They have lots of Deposit schemes, and also Credit Schemes where loans are given to help the permanent Government employees, Semi Government employees, Autonomous and recognized bodies. They also have Rural Credit Scheme forthe 85% of the population living in rural areas where 75%of the people earning living from agriculture which is
Conclusion
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boosting the growth of the economy. There is another scheme called Microcredit which is for the poor people living below the poverty level who can only afford to take small loans. This is very beneficial for those people and about 20 projects under this scheme is in progress. So those are the basic difference between private and public bank and these two are essential for aeconomy.
http://bankinfobd.com/banks/40/Sonali_Bank
http://bdresults24.com/job/recruitment-result/sonali-bank-senior-officer-officer-cash-ff-quota-written-result-wwwsblteletalkcombd/
http://www.sonalibank.com.bd/
http://www.ulab.edu.bd/CES/documents/Hallmark_Sonali_Jan_13(sm).pdf
http://bdnews24.com/business/2013/09/18/sonali-bank-in-debt-trap
Reference
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