Comparison Between Private Bank and Public Bank

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

Page1


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

Page2


PAD-201

SEC-01

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

Page3


PAD-201

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

Page4


PAD-201

SEC-01

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

Page5


PAD-201

SEC-01

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

Page6


PAD-201

SEC-01

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.

Page7


PAD-201

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

Page8


PAD-201

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

Page9


PAD-201

SEC-01

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.

Page10


PAD-201

SEC-01

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

Page11


PAD-201

SEC-01

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

Page12


PAD-201

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

Page13


PAD-201

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

Page14


PAD-201

SEC-01

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

Page15


PAD-201

SEC-01

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.

Page16


PAD-201

SEC-01

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.

Page17


PAD-201

SEC-01

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.

Page18


PAD-201

SEC-01

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

Page19


PAD-201

SEC-01

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

Page20


PAD-201

SEC-01

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.

Page21


PAD-201

SEC-01

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:

Page22


PAD-201

SEC-01

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

Page23


PAD-201

SEC-01

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

Page24


PAD-201

SEC-01

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

Page25






http://www.sonalibank.com.bd/




http://bankinfobd.com/banks/40/Sonali_Bank

Comparison Between Private Bank and Public Bank

Documents

Transcript of Comparison Between Private Bank and Public Bank