Prime Bank Credit Card a comparative analysis with other cards in the market and contribution towards the company growth

INTRODUCTION:

Prime Bank Ltd is a fast growing private bank. In Prime Bank has focused for providing high quality customer service at a very competitive price. PBL efforts are directed at diversification of product and service. Offering customers a wide variety of choices and options have remained cornerstone of their business strategy. In this backdrop PBL has launched credit card business in collaboration with a global player like Master Card. Master Card is one of the top 20 brands in the world. An alliance with these as its Principal Member is definitely a big advantage from marketing point of view. Policy planners of the bank through that large majority mainly in the cities & towns would prefer payment through usage of plastics in the form of credit card. A market with upscale customers existed for card. Accordingly in December 1999, Master Card credit card was launched bringing new dimension to their product line. Since credit card operation required real time on line connectively the bank made substantial investment in the technology and other infrastructure in related areas. High quality international software and top of the line hardware was deployed. Key person to manage the strategic operations was trained home and abroad. With initial teething problems over, the bank successfully issued local and international card within a record time. Since journey was for steady and sustainable growth. Objectives of the study: Methodology Of The study:

b) Methods of data collection: 

Limitations of the study:

 CHAPTER: 2

                   

OVERVIEW OF CREDIT CARD SYSTEM Introduction of Credit Card: 

History:

Transition from paper money to plastic money:

What is Credit Card?  Different types of Credit Cards in the world:

The market? 

Credit Card in Bangladesh:

Market players	Start of local credit cards operation
ANZ Bank	January 1995
National Bank Limited	March1997
Vanik Bangladesh Limited	March 1998
Prime Bank	November 1999
Dhaka Bank	August2001

Advantage and Limitation:
CHAPTER: 
FUNDAMENTALS OF CREDIT CARD SYSTEM
Card holder:
Issuer:
Agent Banks:
Acquirer:

Merchant:
Operations of the Master card International:
 (B) Card and System Security:
Card production Security:

The report basically deals with “ Prime Bank Credit Card – A competitive analysis with other cards in the market and contribution toward the company growth”.

1.       To make a general evaluation of the existing status of the P.B.L. credit card service.

2.       To make a comparative study on P.B.L. and other Banks and financial institutions of Bangladesh with reference to PBL Credit Card.  

3.       To assess the impact of Credit Card on Organizational Growth especially on P.B.L.

4.       To get an overview of the Bank.

5.       To verify the scope for the improvement of credit card service.

6.       To find out how credit card system works.

7.       To analyze current credit card market in Bangladesh.

8.       To suggest suitable measures to remove the existing problems & improve the present condition of Prime Bank’s Credit Card.

The study required information regarding the past & present condition of Prime Bank Ltd. Necessary data and information were gathered by surveying people, in-depth interview, annual report, making observations and through working in different sections of the Card Division of P.B.L

a) Sources of Data: The following sources had been used for the purpose the purpose of collecting data as required for this report:

Primary sources: I) Observation, ii) Personal interview through questionnaire iii) Oral & informal interview with officers and employees of the Card Division of PBL.

Secondary Sources: I) Annual and other periodical reports of P.B.L. ii) Various manuals (conditions of use guides) and brochures, iii) Service rules & iv) Miscellaneous publications.

i) Questionnaire survey:

Two sets of questionnaire were used to collect information for the study, from customers and Banks. Open ended, close ended and multiple questions were set in the questionnaire for the credit card holders.

ii) Observation:              

During internship, I was assigned to work in Customers’ service. After having developed the questionnaire, interview of customers and different banks were taken. The personal in-depth interviews were held with the executives of P.B.L; N.B.L; S.C.G and VANIK. Through observation different issues of Card Division were noted. Sampling size was minimum 20 and maximum 100 and sampling procedure was convenient.  For the attitude rating of the cardholder I use Likert Scale. Likert scale means a measure of attitudes ranging from very negative to very positive. It is designed to allow respondents to indicate how strongly they agree or disagree with carefully constructed statements relating to an attitudinal objects.

In course of my internship I faced a number of problems that may be termed as the limitations of the study. These were:

1.       I could not spend sufficient time required to make an in-depth study on such an important subject because of time constraint.

2.       It was very difficult to get the actual information. In many cases, the questionnaire had to be explained elaborately to the respondents.

3.       Sufficient records, publications were not available. The constraints narrowed the scope of real analysis.

The ‘Credit Card’ has lately been a curious topic of discussion in our country. It is a new arrival in the monetary fashion from the western front. In the late 1940s, a number of US banks started issuing their customer script that could be used like cash in local shops. Many common people cannot understand the meaning of credit card because it sounds mysterious to them Questions like the following are being posed:

a)            What is a Credit Card?

b)            Is it just an alternative to paper money?

c)            Is it something like a cheque that is just an ancillary to the currency in vogue?

d)            How can it be used/ operated?

The credit card can contribute to our country’s economy to change the practice of cash dealings.

In the late 1940s, a number of US banks started issuing their customers scrip that could be used like cash in local shops.. The Franklin National Bank (New York)- now EAB (European American Bank)-formalized in practice by introducing the first modern credit card in 1951. California-based Bank of America extended the idea through out the United States by introducing the bank Americard  (now VISA) in 1960 and franchising a single bank in each major city as its local affiliate. These affiliates were responsible for signing contracts with merchants to accept cards as payment, as well as enrolling cardholders in their respective areas.

At this time, a group of enterprising US banker who were not ‘franchises’ of Bank Americard created their own network by accepting one another’s local credit cards. On August 16, 1966, the group formed the Inter bank Card Association (ICA), which later became Master Card International.

Credit card is a plastic card bearing an account number assigned to a card holder with a credit limit that can be used to purchase goods and services and to obtain cash disbursements on credit, for which a card holder is subsequently billed by an issuer for repayment of credit extended at once or on an installment basis. (Minimum amount).    

Physically, Credit card is a layered piece of hard plastic with holograms and security features. It also carries a strip of magnetic tape on the back, which is loaded with electronic data including the cardholder details. The strip is read electronically by specialized machines called Point of Sale (POS) Terminals at merchants or Automatic Teller Machines (ATM) in bank premises or elsewhere. It is developed on the technology of microchips and cryptography, which have bred a new generation of payment system. It is only today that the revolution in information technology has fully hit the area of retail payments. The card is rectangular, looking rather like the familiar phone card. Its distinguishing feature is that it acts as cash, may be a large account being only a small piece of documented plastic. This is why it is popularly called ‘Plastic Money’.

There are three types of credit cards:

·         Bank Cards: issued by banks (for example, Visa, Master Card and Vanik Card). These cards are available in our country.

·         Travel and Entertainment (T&E) cards, such as American Express and Diners Club. American Express cards are available

·         House cards- That are good only in one chain stores T&E cards House cards have same terms and conditions. These cards are not available in our country.                    

ANSI Standard X 4.13 –1983 is the system used by most national credit card system. Here some number stand for the following cards:

The first digit in any credit card signifies the system:

·         Travel /Entertainment cards

·         Visa

·          Master Card

·         Vanik

The structure of the card number varies by the system For example American Express card numbers start with 37, Cartle Blanche and Diners Club with 38.

Master Card: Always first digit is 5.Digits two and three, two through four, two through five or two through six are the bank number. This is called BIN (Bank Identification Numbers). The digits after the bank number up through digit 15 are the account number and digit 16 is a check digit.

               Credit card of the Prime Bank Limited has following aspects First digit indicates master card number, Second digit to six digits indicates bank identification number, Seventh digits identifies cycle, Eighth digits through fifteen digits indicates account number, in the this number fourteen digits is stand for supplementary card number and fifteen digits is stands for card replacement number and Sixteen digits are for check digits.

Visa: Always first digit is 4. Digits two through six are the bank number, digits seven through twelve or seven through fifteen are account number and digit thirteen or sixteen is a check digits.

American Express: Started with 37, digits three and four are type and currency, digits five through eleven are the account number, digits twelve through fourteen are the card number and digit fifteen is a check digit.

Vanik: Started with 6, two through six are the bank number, The digits after the bank number up through digit 15 are the account number and digit 16 is a check digit.

In less than 40 years the growth of the payment services industry has soared. At the end of 1977, there were 78 cards in circulation per (banked) person globally (including Master Card, Visa, American Express, Vanik and Diners Club Card). The total gross dollar volume on those cards in 2001 was more than USD 5 trillion.

ANZ Grindlays bank pioneered local credit card business in Bangladesh in January 1997 and by far, it has become the most successful in this business. But initially it started by only acquiring merchant transaction for Visa and Master card (i.e. an international travellers can use his international Visa or Master card in a local outlet and the merchant can receive the payment from ANZ Grindlays bank Bangladesh.) In January 1997 ANZ introduced its local currency VISA and Master card. With the branch support in all metropolitan cities, ANZ cards are widely accepted in the major outlets in these cities (At present there are about 2000 merchants in all over Bangladesh.)

Table:  Market players and credit card operations

There are many advantages of credit cards. It is safer than the paper money. Risk free and hazard free, a card can be attributed to a huge amount of money. So, it offers the largest portability. One can also avoid the toil of finger counting changes in this system. Dollar, Pounds or Taka can be plundered, stolen or lost. But there is no such fear with card. The card holder is given a code number called PIN (Personal Identification Number) without which a card cannot be used for taking cash money or it cannot be used if the card holder advises the Bank to block his/her card. The credit card can be used to pay after all sorts of shopping. It may be payable in hotels, motels, restaurants, handicraft shops, jewelry shops, can service centers, tailoring shops, music arcades, groceries, departmental stores, diagnostic centers, stationery shops and airlines.

If one wants to go urgent shopping but one hasn’t cash money in hand, there will be no problem; credit card will help one buy as soon as one wishes. Various types of bills can also be paid by means of Credit Cards.

International card can help in traveling to various countries. With this card one can travel around the world. Buying air tickets, booking hotels, etc.  All can be done comfortably by using the credit facility.

Limitations:

The Credit Card has also some limitations. These are:                     

1)       All shopping centers may not be equipped with the card facilities. So, the cardholders cannot avail themselves of the opportunity of using them anywhere they would like.

2)            Many restaurants and shopping centers having card facilities do not accept a small amount of bill, which the customer wants to pay the amount by credit card.

3)          Thirdly, because of ceiling-touch income bracket along with other criteria, only a small number     of people in Bangladesh can practically qualify for holding cards and enjoy its fantastic facilities.

4)           Many cardholders do not know how and in what place cards should be used.

One of the participants in Credit Card transaction is the Cardholder who is solicited, screened and approved by the issuer. The letter establishes a line of credit for the customer and issues the credit card.

The Cardholder uses the credit card either to purchase goods and services from a merchant or obtain a cash advance from a member for which the cardholder receives a monthly bill from the issuer.

The second participant in Credit Card transactions is the Issuer. The Cardholder’s financial institution (usually called the issuing member or issuer) is a licensed member of Master Card and /or Visa. The Issuer:

: Issues the card to the approved cardholder.

: Receives and pays for transactions from Master card and/or Visa

: Bills collects from the cardholder.

The issuer also benefits from the services of a Third Party and /or association in processing information and payments.

Managing a credit card program is expensive and some small financial institutions prefer to offer credit cards to their customers without taking on the complications and responsibilities of becoming an issuing member.

These small financial institutions can contract to become an issuing agent of an issuing member. The issuing agent solicits cardholder applicants for the issuer generally through take-ones made available at its branches. The issuer, in turn, issues the card in its name has the cardholder relationship, makes all of the Credit decisions and completely manages the card program. It the agent Bank’s name appears on the card, and then the agent bank must be an affiliate/associate member of Master Card/Visa Int’l.

The issuer usually keeps most of the income from the cardholder account: the agent member may not receive small compensation for providing the application. While the issuing agent’s income from this arrangement is small, it does retain customers who might take their business elsewhere if a Credit Card Program were not available at their local financial institution. When the issuing agent’s name appears on the card it tends to preserve the financial institution-Card holder relationship.

The acquiring member or acquirer solicits, screens and accepts merchants into its Credit Card Program. The acquire is a member of Master Card and /or Visa and holds a written agreement with the merchant to:

·          Accept the merchant’s sales slips.

·          Provide the merchant with credit card authorization terminals, instruction, and contracted support services.

·         Handle and process the credit card transactions.

The acquirer usually charges the merchant a merchant discount for handling the transactions. The acquirer is licensed by Master card and /or Visa and agrees to follow the operating rules and regulations of the two associations. Master Card and Visa provide various services to the acquirer, including authorization and settlement processing, interchange and resolution to member disputes. Many financial institutions are both issuers and acquirers: As issuers they maintain the cardholder relationship. As acquirers, they maintain the merchant relationship.

The Merchant can be virtually any company, which meets the qualification standards of Master Card and/or Visa and an acquirer. Typical merchant business includes retail stores, restaurants, airlines, mail order companies, and health plans to name a few Master Card and Visa both require that the merchant be financially responsible and of good repute. The merchant has a written agreement with the acquirer to accept the Credit cards as payment and to abide by the terms of the agreement.

Bank net a global Master card Tele communication networks. It is used primarily to send and receive authorization, clearing, and settlement transaction. Bank net provides the following benefits-

How does Bank network?

Like other Tele communication all data pass through a central switching center (a star network configuration). Through the world Master card has 16 switching center. Among those 7 switches are exits in US and rest of them exits whole world. In Asia two switch are exit.(Bhahrain & Singapore) Recent Master card is going to establish more switch .This network  is very fast and expensive.

The Banknet network offers several routes that information can travel along to arrive at any given distention. This is called a distributed network & also refereed to as Peer-to- Peer (PTP) architecture. Compare to Star network it is cheaper.

Network Layout:

Member host computer system – is the gateway through which Master card merchants and card holder have access to the vast Master card payment system.. To ensure good services to merchants and cardholders it is important to manage communication from host system to the Master card Interface Processor (MIP) efficiently.

Master card Interface Processor (MIP)

Data enters the Banknet through MIP’s, which perform two general functions for the members:

MIPs are joined to the Banknet network through Tele communication centers called ‘Nodes’ or ‘Switches’. Each node is like an intersection on the system, which access to at least two other nodes. Before entering the network, a member’s data enclosed in a packet by the sending MIP. When a packet reaches its destination, the receiving MIP arranges all the packets in sequences for processing.

Member Host Connection:

The connection from banks host computer system to a MIP depends on the number and types of the services provided to merchants and cardholders .The member host connection may involve one or more of the following options; 

Ê       On-line  - Banks host computer can be directly connected to     an on-    site MIP at bank business location.

Bank can communicate to an off-site MIP using standard communication software and locally available Telecommunication access. Members who are in remote areas or do not have the transaction volume to warrant using on-site MIP may find MIP sharing a viable option..

Ë   Off- line  - Bank can use Banknet PC file express a personal computer connection to the Master Card mainframe in St Louis, for sending and receiving bulk files over Telephone lines.

Bank can use Computer-Assisted Telex Services (CATS), an authorization processing system offered to members who are not on-line.

Applications:

Master Card system applications are divided into two major categories: authorization which is primarily done On-line with immediate response time and bulk data processing such as Clearing and Settlement.     

Authorization:

Authorization is the process by which a payment card transaction is either approved or declined by an issuer or its authorized agent or by Master card on behalf of the issuer. The authorization is required before the merchant completes the transaction. To facilitate authorization, the central site host computer maintains the member master and other organization support files. Payment and card transaction are approved or decline by an issuer in one of voice authorization or POS terminal authorization.

Standard authorization process is step-by-step procedure for authorization the use of Master card .For terminal authorization these seven steps process is complete in an average 2.1 seconds (MIP to MIP) if the issuer and acquirer are different parts of the world.

Step 1: The cardholder gives the card to the merchant.

Step 2: The merchant starts the authorization process by either:

Step 3: The acquirer host computer system sends an authorization request message to the Banknet network through the acquirer MIP.

Step 4: The Banknet network sends the authorization request message through the issuer MIP. The issuer MIP sends the authorization request to the issuer host computer.

Step 5: The issuer host computer processes the authorization request and sends an authorization request response.

Step 6: Banknet routs the response to the acquirer or its agent.

Step 7: The acquirer or agents delivers the response to the merchant.

Each day, millions of cross-border and local Master card transactions involving hundreds of millions of dollars, are “cleared” and  “settled” via the Banknet Tele communications network using the Interbank Network for Electronic Transfer (INET). Clearing is the process of exchanging transactions details between an acquirer and an issuer to facilitate posting of a cardholder account, handle retrieval request and reconcile a member’s settlement position. Issuers, acquirer and INET play and assume the following responsibilities in the clearing process.

Acquirer::

·      

It is the process by which funds are exchanged between members for the net value of monetary transaction such as sales transactions, cash disbursement, merchandise credits and miscellaneous records. In this process Master card instructs the Master card settlement bank to transfer funds to those members in a credit position and to debit any members who are in a debit position. The bank through with the settlement process occurs is called the settlement bank.

International Settlement:

When acquirer and issuer are located in different countries the settlement amount is calculated is either US Dollar or in some cases local currency .For local currency the members settlement amount is determined in US Dollar & then converted to the local currency for payments. Funds transfer is subject to international two days standards.

Local Settlement:

Master card offers this service to accommodate members in the same country who need to clear all their transactions through INET and who desire to settle transaction with in the country in their local currency. Members participating in local settlement process their domestic transaction through a local settlement bank at an agreed upon inter change rate(s). Master card credit and debit advisement are sent to a member designated local bank.

Security and Fraud:

 Security is the main feature in the card business. For the security purpose the following actions are involve.

 Card production security occur by the following two steps—

1. Plastic Procurement:

Institution is responsible for obtaining cards from a plastics manufacturer. Master card periodically in the security Bulletin lists manufacturers, embowers and encodes that have been inspected and are in compliance with Master card minimum-security standards.

2. Card security features:

To minimize fraudulent the following steps are occur----

Master card signature panel—Signature panel helps to avoid fraudulent activities also provides authentication of the cardholder.

Identification of card source--- The ordering member or affiliates ICA number the month and the year the order was placed and the manufacturer’s name placement of this information on the card is at the card designer’s discretion.

Expiration date—No longer than two years from the issue date.

Master card embossed character—A special character, which is difficult to reproduce. This is appeared on the front of the cards.

 Hologram—A three dimensional insignia created with a laser.

Indent printing – Account number printed in reverse italic type on the card signature panel.

Two-card validation Codes (CVC1 &CVC2) – One of these 3 digits codes in printed on the signature panel following the account number and other is encoded on the magnetic stripe.  

CHAPTER: 4

 

ANALYSIS OF INDUSTRY COMPETITOR

                                    n         National Bank Limited

                             n         Standard Chartered Bank

                             n         Prime Bank Limited

NATIONAL BANK LIMITED

Establishment and Operation:

National Bank Ltd. has been established in 1983. It is working as a well-established reputed commercial bank in Bangladesh. A long termed vision governing body and skilled human resources is the main reason to get this position.

            Chairman                               : Abu Taher Mia

            Managing Director                : Rafiqual Islam Khan

            Company Secretary  : Md. Abdur Rahman Sarker

Objective:

Ø         To maximize the facilities to the client and shareholders in systematic way

Ø         Expand the multinational service in economic sector to reach the mass people

Ø         To ensure the maximum utilization of manpower by increasing efficiency and growth of productivity

Ø         To encourage saving attitude in different classes in the society

Ø         To gain confidence by easing the international transaction in internal trade

Ø         Analyzing the realistic demand by consumers needs and provide short and long term finance.

Ø         To activate the capital market by facilitating the banking system

Ø         Utilizing the latest technology for the best service to the customer.

Ø         To bring and strengthen banking discipline and thus creating the long-term compatibility with the customer by giving the best service.

Ø         To improve the corporate image in home and abroad.

Present company Financial Position at a Glance:

				(Tk. in million)
Year	1998	1999	2000	2001
Authorized Capital	1000.00	1000.00	1000.00	1000.00
Paid up Capital	396.16	430.27	430.27	430.27
Income	1808.66	1871.54	2988.90	3285.06
Expenditure	1407.69	1667.75	2064.75	2268.42
Net Profit before Tax	400.97	203.59	333.75	400.68
Assets/Liabilities	33617.50	36545.28	47148.08	48732.10

Branches: 75 al over the country.

Card Division:

i.          Establishment: March 1997

ii.         Human Resources:

            a. Executive :           3         

            b. Non Executive     :           37

            c. chnical                    :           3

             Total                          :           43

iii.        Card Base:

            a. Gold Card              :           2000

            b. Silver Cared          :           7000

             Total                          :           9000

iv.        Trend Analysis:

Year	2000	2001	2002
Issued Card	2000	2700	1400
Surrendered Card	43	58	63
Income from Card (in million Tk)	45.00	95.00	85.00
Marketing Expenditure (% of income)	10	5	2
POS Machine (no)	20	5	2
Merchant	125	425	700

Target People to be Served:

            Ø      Mainly salaried person

            Ø      Income Tk. 10000 or more selected for silver card, if other thing remain same.

            Ø      More than Tk. 55000 or more selected for gold card.

            Ø      For international card the prospect cardholder have to open a RFCD account

            Ø      Card is issued in security basis.

iv.        Customer Positioning:

            Ø         Price and Competitive offering is the key focal point of offering. NBL card has the following options.

            Ø         Acceptance: An international Master Card from National Bank Limited is accepted at million of establishments across the world and home including 5-star hotels, restaurant, departmental store and establishments offering diverse services.

            Ø         Security: When a NBL Master Card holder automatically covered under Personal Accident Insurance against loss of life for as high as Tk. 5 lakh in case of air travel free of cost.

            Ø         Credit Cushion: It has revolving loan facility. You can avail a free credit facility from 15 days if you settle your full dues within payment due date.

            Ø         In Case of Lost Card: If a Card holder lost his card he have to report to the Credit Card Division and they will provide a replacement card on payment of prescribed fees. Card Division is open 25 hours a day, 365 days a year.

            Ø         Supplementary Card Facility: A Cardholder can get supplementary card for his relatives. The expense of supplementary card will charged to the account of principal cardholder.

            Ø         Cash Advance: Cash drawing facility through approved channels is available in some cases to meet your emergency requirement at a prescribed fee.

            Ø         Need not pay Fully at a Time: NBL gives the opportunity of being flexible in repayment schedule suiting to convenience of cardholders.

            Ø         No Interest or Charges: Payment in full within the payment due date and enjoy a free credit facility from 15 days to 45 days.

vii.       Merchant Commission:

            2% to 3% (average 2.8%) on agreement basis.

viii.      Marketing Activities:

            a. Number of DSE               : Nil

            b. advertising exp.               :5%

            c. Merchant Marketing         : 3 people

            NBL maintain strong personal relation with its cardholders and merchant by giving prompt and customize service. They believe relationship marketing is key success to gain customer loyalty.

STANDERD CHARTERED BANK

Establishment and Operation:

The early years:

            Standard Chartered is named after two banks when merged in 1969. They were originally known as the Standard Bank of British South Africa and the Chartered Bank of India. Australia and China of the two banks, the Chartered Bank is the older having been founded in 1953 following the grant of a Royal Charter from Queen Victoria.

Standard Chartered today:

            Today Standard Chartered is a international bank focused on the merging markets in which it has worked for over 100 years in Asia, Africa, the Middle East and Latin America. It has a network of over 500 offices in more than 50 countries, and its headquarter is in London.

In Bangladesh:

            The Chattered Bank opened in Chittagong in 1948, which was, at the time, the eastern region of newly created Pakistan. The branch was opened mainly to facilitate the post-war re-establishment and expansion of South and South East Asia. The Bank opened its first branch in Dhaka in 1966 and shifted its headquarter from Chittagon to Dhaka after the birth of Republic of Bangladesh in 1971. At present, the bank has 8 branches over the country by acquiring ANZ Grindleys Bank (2000).

Objective:

Vision:

            ‘To be renown as the top ferforming baking group serving Australia, New Zealand and in the international market.

Values:

            Ø         The Bank holds the following values:

            Ø         To have a strong customer focus and to build a relationship based on integrity superior services and mutual benefit.

            Ø         To strive for profit and sound growth.

            Ø         To work as a team to serve the best interest of the group.

            Ø         To work for continuous business innovations and improvements.

            Ø         To value and respect people and make decisions based on merits.

            Ø         To provide recognition and rewards on performance.

Mission

            Standard Chattered Bank credit card division mission statement states, “Touch the power”

            SCB is a banking and financial services group that aims to be an outstanding financial institution providing a broad rage of services in the banking and non-banking financial sectors.

Branches: 18 all over the country.

Card Division:

i.          Establishment: March 1995 [ANZ Grindlays Bank]

ii.         Human Resources:

iii.       

            a. Executive              : 26

            b. Non Executive                   : 300

            c. Technical                : 2

            Total                                       : 328

iii.        Card Base:

            a. Gold                       : 10000

            b. Silver                      : 60000

              Total                         : 70000

iv.        Trend Analysis:

Year	2000	2001	2002
Issued Card	6000	10000	38000
Income from Card (in million Tk)	120.00	170.00	300.00
Marketing Expenditure (%of income)	20%	10%	15%
POS machine (no)	220	350	500
Merchant	1400	2100	3500

v.         Target People to be Served:

            Segmentation profile:

            Geographic:

            Primarily located in major urban areas / centers of the country i.e. Dhaka, Chittagong, Khulan, and Sylhet.

Demographic

Age: 18 to 70 years

Income: Monthly minimum income of 10,000.00 and/ or above

Education: Graduates

Profession: Executives, govt. officials, defense personnel, housewives, entrepreneurs/ businessman

Psycho graphic:

Life style:

Mobile, sociable high achievers, motivated by status, style conscious, exposed of international media/ lifestyle, English is first language after Bangla.

attitude aspiration attracted to international offers, progressive, independent.

v.         Operational Structure of Card Service Division:

            The Cards services Division (CSD) has six units namely, Risk Assessment, Collections, Merchant Services, Operation Services, Issuing Services continuously corking on improvement and wide acceptance of Standard Chartered cards. A manager who reports directly to the Head of Cards heads each of these units. The Head of Cards in responsible for overall operation of CSD. A sales team known as Direct Sales Agents work alongside these units to build up the customers base.

a.         Risk Assessment:

            It is the section where the applications for new cards are received or limit enhancements are approved. This department determines eligibility of the applicants on the basis of the information provided by the application with the relevant documents. For example, if the applicant is a service holder then he/ she has to submit his/ her salary certificates, on the other hand, if he/ she is businessperson then he/ she has to submit income tax return certificate. On the Basis of these documents, the risk assessment department screens out those applicants who are not eligible. This department uses the cervices of a consultancy firm (third Party) to assist in the verification process. Once the applicant is selected to be eligible for a credit card, an initial credit limit is set. This limit is extended on the basis of customer instruction after six months of use and is supported by the customer/s financial capability.

b.         Collection:

            This department deals with the collection process. The collection process of credit card starts when the cardholder has failed to meet on or more contractual payments (i.e minimum 10% payments) or exceeds the allocated credit limit or both in which case the cardholder becomes a delinquent. It therefore becomes the duty of the collections department to minimize the outstanding delinquent receivable and credit losses. The collection process involves the following.

            *          Services (updating status).

            *          Issues bills to customers and remind them the due date of payments.

            *          Locates and reminds defaulters of their obligations.

            *          Legal enforcement in case of grosses default

c.         Merchant Services:

            A merchant is a shop, outlet, hotel or restaurant the accepts credit card. This department, also known as Acquiring Department, bring in new merchants to expand the business of the credit cards. The basic job of this departments is to encourage the sellers to accept the credit cards and if they agree they become merchants of Stan chat. This department also takes up promotional activities to boost up the transactions at the merchant stores and set s up POS terminals to make credit card transactions easier and quicker.

d.        Operational Services:

            Basically this department deals with the payments and data submission related to the credit cards. For each transaction the Operations Department processes the customer sales, prepares the bills for the customers, gives authorization to the merchants about the acceptability of the cards, deals with excess usage beyond credit limit and arranges to settle payments to the merchants. Among other tasks this department also prepares warning bulletin for merchant to prevent fraudulent transactions and take actions against any such case.

e.         Customer Services:

            Customer Services department deals with customers in the following manners:

            *          Issuance of approval letters, decline letters, renewed letters, replacement letters and enhancement letters.

            *          Issuance of credit cards and personal identification numbers (PIN)

            *          Issuance of renewed and replacement cards and PINs.

            *          Answering customer queries.

            *          Mitigating discrepancies regarding bills/ payments.

            *          Handling customer instructions such as reporting lost card.

f.          Issuing Services:

            The Issuing Department of CSD has the responsibility and accountability of issuing debit cards for account holders while providing services through Nigh & Day Banking. Debit card is a plastic card by a bank to enable its customers with checks accounts to pay for goods and services at certain retail outlets by using the telephone network to debit their check accounts directly. Presently the Cards Service Division (CSD) of Stan-Chat bank is issuing debit card known as ACCESS card. The Bank has installed Automated Teller Machines (ATM) almost two years ago for the benefit of its debit cardholders. From the ATM debit cardholders can withdraw cash withdraw cash against their account at any time of the day or night. At present (June 2000), Stan-Chat has issued around 55000 debit cards for its account holders.

vi.        Customer Positioning:

            According to the management the core features involves 3C’s

            C- clean leading

            C- convenient

            C- cash advantage

            Standard chartered credit Card comes with a winning combination of value packed features and benefits.

Ø        Wide acceptance:

            Standard chartered Credit Card is accepted at more than 3,500 outlets around the country. You can use your Card for everyday purchases as well as for high value purchases. Our wide range  of merchants include hotels restaurants, airlines & travel agents, department stores, hospitals and diagnostic centers, jewelry shops, electronics and computer shops, leather goods, mobiles and internet service providers and many more. This number is increasing everyday to cater to your growing needs.

Ø        Easy Credit

            With Standard Chartered Credit Card you have the convenience to pay as little as 5% of your outstanding on the Card account every month, thus having the power and flexibility to plan your payments.

Ø        Instant Cash Advances:

            Standard Chartered Credit Card gives you access to cash up to 50% of the credit limit. You can withdraw cash advances from all Standard Chartered ATMs around the country, thus having access to cash 24 hours-a-day. Besides, cash advance can also be taken from any of our branches across to country.

Ø        Safe and Secure:

            You do not need to carry cash anymore if you are carrying Standard Chartered Credit card. If you loose you card, you are protected against financial charges from the moment you report the loss to us.

Ø        Air Accident Insurance:

            The Standard  Chartered Credit Card gives you free air accident insurance coverage up to Tk. 100,000 (for Silver Card) or Tk. 500,000 (for Gold card). This coverage is also applicable for supplementary Cardholders.

Ø        Supplementary Card:

            You may apply for Supplementary Cars (s) for your spouse, parents, sisters, brothers, friends or children over 18 years of age. All charges incurred on the Supplementary card (s) are reported on he monthly statement. Besides, for your peace of mind you can assign monthly spending limit on each supplementary Card.

Ø        Financial security in times of need:

            Safety Net is designed to cover the cardholders credit card outstanding balance when has is unable to meet financial liabilities due to permanent total disability or death. Under these circumstances, the outstanding balance on credit card account will be waived.

vii        Merchant Marketing commission:

            A merchant is a shop, outlet, hotel or restaurant that accepts credit card. This department, also known as acquiring Department, brings in new merchants to expand the business of the credit cards and if they agree they become merchants off Stan chat. This department also takes up promotional activities to boost up the transactions at the merchant stores and sets up POS terminals to make credit card transactions easier and quicker. Initially, the Banks cards market was very small with only 29 merchants. Currently, the total number of merchants is around 3500.

Commission is set up on agreement with merchant in bargaining system. It varies merchant to merchant in reputation and volume of sales. The rate falls from 1.5% to 4%.

viii.      Marketing activities:

            a. Number of DSE                : 150

            b. Advertising Exp.              : 10%

            c. Merchant Marketing       : 5 People

Ø        Advertising:

            Awareness and intention development through advertisement in print media, sign and billboard.

Ø        Public Relation:

            SCB Maintain a good public relation with valued Cardholder and Merchants (Hotel Pen Pacific Songargaon).

Special Promotional Offer:

            The bank offer special to its Cardholders time. Such as-

            n         Discount 5% to 20% in various renowned restaurant and first food store, i.e. Chillis Chines & Thai Restaurant, La Villa, Royal Orchid, Hot Hut, Sajna, Santoor, Hotel Agrabad etc.

            n         Discount in payment in Five Star Hotel i.e. Hotel Pan Pacific Sonargaon (20%).

            n         Discount in payment in air tecket i.e. Malaysia Airlines.

            n         Special offer package tour at discount.

            n         Special gift for the honus point cardholders

            n         Air Insurance

            n         Discount in different promotional period.

ix.        Innovation:

            Standard Chattered is going to market a special card which have three facilities in a single card (Debit, Credit, ATM Facilities). They found that there is a demand of the proposed card in Bangladesh, and the cost of production will vary significantly.

PRIME BANK LIMITED

Background of the Company:

            The present day banking structure has evolved over several decades. The far- reaching program of economic reform is being carried out at present towards efficient utilization of scarce resources and the development of private entrepreneurship. In a fast changing business environment, financial intermediaries are gradually being left to be guided by market forces rather than regulation. Competition is strengthened by the entry of new and innovative providers of financial services through the development of Money Market and Capital Market. Under the ongoing financial liberalization program, Prime Bank Limited emerges as a bank in private sector to operate in the commercial arena of Bangladesh.

            Prime Bank Limited was established on 17^th April 1995. It is a full licensed scheduled Commercial Bank set up in the private sector in pursuance of the policy of the Government to liberalize Banking and Financial services. The Bank has made significant progress within a very short period owing to its competent Board of Directors, dynamic Management and introduction of various customer friendly deposit and loan schemes. PBL achieved to be one of the A- grade banks in the year 1997 as per CAMEL (Capital, Asset, Management, Earnings and liquidity) rating according to Bangladesh Bank.

Values

            *          The Bank holds the following values:

            *          To have a strong customer focus and to build a relationship based on integrity superior services and mutual benefit.

            *          To work as a team to serve the best interest of the group.

            *          To work for continuous business innovations and improvements.

            *          To value and respect people and make decisions based on merits.

            *          To provide recognition and rewards on performance.

Corporate Profile

            Registered office: Adamjee Court Annex Building-2

            119-120, Motijheel C/A

            Dhaka- 1000, Bangladesh

            Cable: PRIMEBANK

            Phone: 9567265, 9570747-8 PABX

            Telex: 642459 PRIME BJ

            Fax: 88-02-9567230, 9560977, and 9566215

            E-mail: Primebank@bangla.net

            Swift: PRBLBDDH

            Chairman: Mizanur Rahman Bhuiyan

            Management Director: Shah Md. Nurul Alam

            Additional Managing Director: M Shahjahan Bhuiyan

            Secretary: Md. Anwarul Islam Khan

            Auditors: Hoda Basi Chowdhury & Co.Chartered Aounts

            Hawiader Yunus & Co. Chartered Accounts.

Current Position

            Prime Bank Limited is a fast growing private sector Bank and the Bank is already at the top slot in terms of quality service to the customers and value addition for the shareholders. The Bank made satisfactory progress in all areas of business operation 2002. Despite difficult circumstances, the Bank closed the year with a number of achievements. The Bank further expanded and consolidated its customer base in both of its core businesses and retail banking. The Bank retained its lead positing with the capital adequacy ratio of 12.43% as on December end 2002, which is well above the stipulated requirement of 8%. The return on asset (ROA) was 3.73% well above the industry average, during the year under review, the network of branches increased to 27 with a branch at madhabdi to focus on rural development and deepen our stake in agricultural sector. We are very selective in locating branches so that customers can be better served. This year we have already planned to add a few branches to our network, which will give the Bank strategic advantage in terms of operation and business potential.

            In 2002, the Bank consolidated its position and retained its product line and financial services aimed at various target groups. In a challenging market conditions, the Bank continued to provide more innovative products and better service to retain the market share.

					(in million Tk.)
YEAR	1998	1999	2000	2001	2002
Authorized Capital	1000.00	1000.00	1000.00	1000.00	1000.00
Paid up Capital	200.00	400.00	400.00	500.00	600.00
Reserve Fund	93.70	319.23	573.73	761.43	807.92
Equity Fund	262.51	668.46	895.28	1258.26	1526.41
Deposits	5313.25	7660.02	11168.72	13259.87	16902.29
Loans & Advances	3127.77	5121.03	7707.05	9074.94	12686.85
Investment	606.30	964.81	1524.54	1730.74	1996.  23
Income	673.88	1029.24	1515.63	1987.58	2250.96
Expenditure	638.51	668.22	922.43	1231.49	1503.12
Net Profit before Tax	17.39	316.77	526.20	705.09	696.84
Fixed Assets	60.84	99.56	125.18	174.27	218.50
Assets Liabilities	5732.93	8616.17	12845.86	15736.94	20047.7
Number of Employees	362	452	518	613	730
Return on Assets (%)	4.50	5.30	4.61	4.80	3.73

Fig: Current financial Position at a glance (Source: Annual report, 2002)

Asset and liability committee (ALCO)

            The management of Bank’s asset and liability is managed by ALCO at Head Office. The committee generally maps the strategy for liquidity management, reduction of interest rate risk, market risk and maturity gap. In addition, ALCO provides the Bank continued access to different funds including inter bank so that liquidity risk is low. The pricing policy for different kinds of liability and asset is also determined in this committee.

The Bank ensures its available funds to meet obligation of maintaining Statutory Liquidity Ratio (SLR) and investment of liquid assets in a profitable manner. As on 31^st December 2002, PBL had liquid assets of Tk. 4,387.49 million as detailed below:

Cash in hand (Tk. in million)	237.57
Balance with Bangladesh Bank	1084.77
Balance with other Banks	2233.92
Money at Call	630.77
Investment in Liquid Assets	201.23
Total	4387.49

            Prime Bank Limited always gives emphasis on maintaining sufficient liquidity and cash flows to ensure uninterrupted customer services. As on 31 December 2002 our ratio of liquid assets to total asset was 21.89%.

Lands and Advances

            With a view to improving the quality and soundness of loan portfolio, credit risk management methods were undated in 2002. The Bank is now applying a new system  credit risk assessments and lending procedures by stricter separation of responsibilities between risk assessments and lending decisions and monitoring functions. The Bank monitors its exposure to particular sectors of economy on an ongoing basis.

As at the end of 2002, total loans and advances amounted to Tk. 12,686.85 million up by 40% compared to Tk. 9,074.94 million in 2001. As before, the Bank continued to extend credit facilities to trade Finance, Project Loans, Working Capital and consumer credit etc.The Bank has all along encouraged small business group and supported Small and Medium Enterprises (SME). Agriculture and It sectors both got priority from the Bank in line with national interest. the Bank had also extended long term loan to a number of projects under syndicated financing arrangement with banks and financial institutions.

Portfolios of Loans and advances as on December 31, 2002 is given below:

Sl.No	Sector	Tk. in million	% of total loans
1.	Agriculture	58,99	0.46%
2.	Large and medium Scale Industry (Term Loan)	2,832.55	22.33%
3.	Working Capital	1,604.13	12.64%
5.	Commercial Lending	1,675.55	13.45%
6.	house Building Loan	4,244.05	3.09%
7.	Small and Medium Enterprise	392.12	0.90%
8.	Consumer Credit Scheme	114.70	3.73%
9.	Others	473.57	10.18%
	Total	12,686.85	100%

The bank was incorporated in Bangladesh as a banking company under companies Act 1994. It has 27 branches and a booth located at Dhaka Club, Dhaka, all over Bangladesh. It carries out all the banking activities through its branches in Bangladesh. Out of the above, two branches of the bank are run under Islamic Shariah, the modus operandi of which is substantially different from other branches run on commercial conventional basis. The bank is listed with the Dhaka and Chittagong Stock Exchanges as a Publicly Quoted company for is general class of shares.

Branches: 27 all over the country.

Card Division:

i.          Prime Bank Card Service:

            * Establishment: 18^th November, 1999

            * Home Base: Adamjee Court Annexe Building-2

            * 119-120, Motijheel C/A, Dhaka-1000

            * Main Business: Issuance of credit cards and acquisition of merchants.

            * Issued Brand of Credit Card: MasterCard

            * Initial Investment: Taka 15 million

ii.         Human Resources:

            a. Executive    : 2

            b. Non Executive       : 37

            c. Technical    : 1

            Total                            : 39

iii.        Product Assortment:

            International Card:

            * Gold Travel Quota [credit limit $ 1,500-$3,000]

            * Gold RFCD [ on deposit balance $3,000-$5,000]

            * Gold Retain Quota [ $ 6,000-$ 20,000]

            * Silver Travel Quota [ credit limit $ 1,000]

            * Silver RFCD

            * Gold Board/Employee [ Tk. 25,000-5,00,000]

            * Gold VIP [ Tk. 1,00,000-5,00,000]

            * Gold Normal [ Tk. 50,000-5,00,000]

            * Silver Padma [Tk. 30,000-50,000]

            * Silver Meghna [ Tk. 20,000-29,000]

            * Silver Jamuna [tk. 10,000-19,000]

iii.Card Base:

Card Type:	International	Local	Total
a. Gold	841	4067	4908
b. Silver	468	5049	5517
Total	1309	9116	10425

iv. Per month Analysis:

Trend Analysis:

	2000	2001	2002
Issued Card	4131	4114	3058
Surrendered Card		528	1424
Advance in credit card (Tk. in million	250.60	313.90	379.70
Income from Card (Tk. in million)	10.30	32.70	50.70
Marketing Expenditure (% of income)	1.00	1.80	2.50
Profit (Tk. in million)	2.70	25.10	27.40
Outstanding amount (Tk. in million)	60.10	93.00	121.30
POS Machince (on)	0	10	173
Merchant (no)	10	120	350

vi. Target People to be Served:

Prime Bank Focuses the following group of people for our Card Marketing:

*          Employee, Executives, and the Directors of Banks, Insurance and other type of Financial Institutions Companies.

*          Directors and Executives of export oriented Garments Industries.

*          Members of renowned Clubs and Societies.

*          Doctors and Engineers.

*          Employees of Foreign and Multinational companies

*          Directors of 100% Export Oriented Leather and other Industries

*          University and College Teachers

*          Employees of Mobile Telephone Service Provider i.e. Grameen phones, SHEBA Telecom, Aktel etc.

*          Govt. high officials (DS and above)

*          Renowned businessmen in the society

*          Members of Chamber of Commerce and Industries

*          Defense officers

*          High officials of renowned NGOs, International Voluntary Organization.

Priority:

            1.         Our first priority is our existing valued account holders of our Branches.

            2.         Employees of the reputed organizations who are getting at least Tk. l 0,000/- per month.

            3.         Employees of Bank or financial institutions.

            3.         Corporate Clients of Prime Bank.

vii.       Operational Structure of Card Service Division

            The Card Division of Prime Bank Limited is divided into eight departments are as follows:

            1.         Marketing Dept.

            2.         Credit Analysis Dept.

            3.         Operating Dept.

            4.         Accounting Dept.

            5.         Recovery Dept.

            6.         Acquiring Dept.

            7.         International Card Monitoring

            8.         Customer Services Dept.

            I had to work in these sections turn by turn. I started my learning experience from Operation Department from 12^th October and ended in Marketing on 12^th January. And in the mean time, I had traveled all the sections in due time.

1. Marketing

            Card Marketing is one of the important departments in Card Business. PBL has a marketing team who works as agent on commission basis called them SDA (Direct Sales Agent). The DSA's bri11g card applications from potential and prospective cardholders and submit the application form to the credit analysis department. The job of DSA's is limited to this function only. Usually they contact the prospective customers over phone to make appointment and than they visit the customers. At the end of month they get the commission according to the number of approved applications from the Card management.

Verification:

The first job of the Credit Analysis Department is verification of card application and authentication of customer's financial base and status. To verify the application and customer we have set rules, which need to be strictly followed.

2.         Credit Analysis:

After proper verification of full documentation the verification officers submit the application to the credit analysis officer to cross check the information. The officer sets the credit limit according to the set rules and cardholder choice. The officer hands over the application for making business proposal. The proposals get approved / rejected by the management. The approved applications are handed over to the operation department for next processing.

3.         Operation Section:

Operation department deals with the cardholder very closely. In fact, Operation Dept. is the heart of card Business. The job of the operation dept is described in detail bellow:

a.         Data Capture: Approved proposals are handed over to the operation dept for further processing. The first job is data capture. The assigned officers capture cardholder data in the mother computer for processing the card. The data capture is performed in the software specially developed for card operation.

b.        End of Day Processing: At the end of day the prime task of operation dept is to process all the functions performed in the day. The assigned officer processes the EDP (End of Day Processing). At the end of the process, card software makes an embossing file to make the plastic card ready for using.

            c.         Embossing File: The assigned embossing officer embosses the plastic cards using a scanner to scan the image of cardholder, prints the photo in the plastic and then embosses the card by an embossing machine. The cards are then ready then ready to hand over to the Card Delivery Section.

d.        Card Delivery: The Card Delivery Section delivers the cards according to the source of card application received. We receive card application from DSA's, directly from cardholder and from branches. The cards are delivered accordingly.

            e.         Card Activation: once the cardholder receives the card, the cardholder needs to send back the acknowledgements slip to card division. The assignment officer collects all the card acknowledgement slips and verifies the signature of the cardholder from the card application forms. List all the card number in a register and handover the Operation Depal1ment for activation. The verified numbers are then activated for use through the software.

            f.         Purchase through Cards: The cardholders use the card in the shop that has logo of MasterCard in the door or those shops that accepts MasterCard Credit card. Any shop that has agreement with a bank to accept MasterCard must accept Master Card cards issued from any issuer of the world. The shop can accept card in three ways:

                        i.          Manual Authorization: The shops need to call the card center over phone to get an approval code, which gives the authentication of card number and the cardholder, if the cardholder has available limit in the card he will get the approval code.

                        ii)     Electronic Authorization: the shops are provided with an EDC (Electronic Draft Capture) machine. The cards are then swiped in the machine in a specified system and the approval codes are printed in the paper attached in the machine.

                        iii)    Floor Limit Authorization: At times some shop does not have any machine at the1r end. These types of shops, have an agreement with the issuing bank that they can serve the customer if the total value of the purchase is less than a specified amount. The shops submit the sales slips to the bank and the bank then update the cardholder account according to the billed amount in the sales slip. Prime Bank Limited does not deal with Floor limit transaction.

            g.         Settlement:

                        i.       On-Us-Card:

                        Cardholder ® Shop ® Bank ® Cardholder Billing

                        ii.     Not-On-Us-Card:

                        Cardholder ® Shop Acquiring Bank ® Master Card int’l ® Issuing Bank ® Cardholder Billing ® Cardholder payment

4.         Accounts Dept:

            a.         Receiving Cheque / IBCA / ETCA, from various branches, collect and posting them in the various card accounts.

            b.         Check EDP report if found any discrepancy take necessary action immediately.

            c.         As per EDP report prepare all kinds of voucher and posting them in the proper ledger . 

            d.         RFCD a/c maintains properly and collects adequate fund from RFCD a/c for various card a/c from various branches.

e.         Reconciliation with ID / F AD.

            f.         Settlement of Local card transaction bill with NBL / ST ANDARD CHARTERED bank.

            g.         Settlement of International card bill and reconciliation with ID and MasterCard Int'l

            h.         Daily Merchant payment procedure through IBAC or Pay order issue.

            i.          Maintenance all kinds of late payment; Excess limit charge and other dispute charges etc.

            j.          Monthly and quarterly MIS report submit to the MC and our Management.

• 
  

5.         Recovery Section:

            Collection of outstanding amount from the delinquent cardholders is sometimes very much crucial and difficult. However, the total collection process in the card division is detailed bellow:

                        a.         Telephonic contact with each of defaulter

                        b.         Preparing MIS on overdue accounts of the Card.

                        c.         Preparing reminders letter for all defaulters.

                        d.         Corresponding with other branches of our Bank to follow up their defaulters.

                        e.         Legal Procedure

                        f.          Serving legal notice to the defaulters  cardholders.

                        g.         Physical visits to the delinquent cardholders.

                        h.         Appear at the court for legal procedures.

                        i.          MIS for dishonored cheques.

                        j.          Preparing CL for overdue card accounts.

6.         Acquiring and Merchant Marketing:

            a.         Making new Merchants

            b.         Merchant Services ,

            c.         Preparation of proposal for Merchant set-up

            d.         Installation of POS / Manual machines at the merchant end.

            e.         Settlement of Disputed transactions at merchant end.

            f.         Delivery to merchant payment.

            g.         MATCH (Member Alert to Control High-Risk Merchants) report to MasterCard Int’l.

7.         International Card Monitoring:

            a.         Endorsement of Passport on issuance of Travel Quota Cards, Reporting on spending amount to branches for realization and on word reporting to Bangladesh Bank.

            b.         Travel Quota Card Transaction monitoring.

            c.         Reporting to Bangladesh Bank on issuance each retention Quota Card .

            d.         Monthly Summary report of all International card Accounts. e. Monthly of Int’l cards issued against balance of RFCD AIC.

8.         Customer Service:

            a.         Answer all types of customer quires relating to application to cards, filling up application form, transactions, payments, A/C balance, service charges, dispute, and problems faced at merchant end, etc.

            b.         Receive cardholder's documents such as:

                        Application forms, request for enhancement of card limit, change of card type, lost & found report, replacement of cards, request for PIN, acknowledgement slips, change of address/designation and auto debit instructions, waiver of service charges, cancellation of card account, transaction disputes, IBCA from branches, etc. All papers are forward to the relevant sections at the end of the day.

            c.         Receive of cheques and forward to the Account Dept. at the end of the day after proper record keeping.

            d.         Prepare proposals for waiver of various charges i.e late payment penalty, interest and excess limit charges upon cardholder's written request and proper justification. Prepare proposal for exemption of annual fees.

            e.         Persuade cardholders to continue card who apply for closure of card account. f. Prepare proposals for cancellation of card account.

            g.         Follow up customer queries relating to various disputes.

            h.         Reply to cardholder's queries in written or over phone.

            i.          Help cardholders in understanding the rules of interest calculation.

            j.          Follow up cardholder payment pattern and remind them over phone to make the payment with in due date.

            k.         Maintain individual register for all customer letters and application forms received.

viii. Customer Positioning:

            Three unique reasons to own Prime bank's MasterCard Credit Card

*          Reduction on annual MasterCard fee and other charges

*          Flexible payment term

*          Enhanced cash advance facilities

            Other Features and Benefits of Prime Bank's credit cards:

            1.         Revolving credit limit.

            2.         No account.

            3.         Convenient-easy purchase/repayment.

            4.         Security -robbery/if list.

            5.         Prestigious.

            6.         First photo card.

            7.         Minimum payment and also easy payment.

            8.         No lean or no charge.

            9.         Additional card issuing facility.

            10.       World-class brand.

            11.       Minimum interest.

            12.       Service centers are ill most important places.

            13.       Minimum 20 days and maximum 50 days interest free period.

            14.       Plastic money.

            15.       Convenient way of bill payment.

PROCESS NEEDED TO BE FULFILLED TO HAVE A CARD

            The Master Card of Prime Bank Limited can be obtained through direct sales agent or through the bank branch network. The prime criterion for getting the card is the regular income of the clients. It is not mandatory to have an account of the client to get a Master Card. After receiving the application, generally it takes three days for issuing the card. But sometimes more time is required for further verifications. Two types of cards issued by Prime Bank Limited based on the security:

            Ø         Unsecured Card

            Ø         Secured Card.

            Unsecured Card: In case oful1secured card Prime Bank Limited don't take any security (as collateral) against the issuance of the cards.

            Secured Card:-But in case of secured card the bank requires security against the card. These may include share certificate, Sonchoipotro, FDR, Business solvency, Telephone number, Third party guarantee etc,

            The customer can use the Card at all the merchant locations that display the Master Card sticker. The card will be valid usually for two years and then it can be renewed.

FACILITIES OF THE CARD

The card provides the following facilities:

            Ø         The Cardholder can use the card to make payments to the merchants against purchase of all goods and services.

            Ø         The card can be used for availing cash advances from any branches of Prime Bank Limited or any member of Master Card of any Merchant authorized to make cash advances; as may be agreed upon by Prime Bank Limited.

            Ø         The card can be used for availing cash advances by the use of the Card on any ATM of Prime Bank Limited or of Master Card. 20% cash can be withdrawn from the ATM terminals.

CREDIT LIMIT

Ø         Prime Bank Limited may sanction any credit limit, i.e. the maximum of credit available to the card holder which can be accessed at any time and can terminate or modify or vary such facilities or credit limit without prior notice

Ø         Unless the credit limit is imposed in relation to in relation to each Card account, the imposed credit limit is the limit applicable to the aggregate of the balances due to PBL on all Card Accounts of Principal cardholder and all supplementary cardholders.

Ø         Notwithstanding any credit limit that may be sanctioned by PBL in its absolute discretion authorize and allow any Card Transaction even though the Credit Limit would be or has been exceeded or refuse to make or approve any advance or authorized of approve any Card transaction Notwithstanding that the credit limit is not exceeded.

LOSS OF CARD OR DISCLOSURE OF PIN: 

Ø         The Cardholder shall not disclose any person the PIN assigned to the Card immediately upon learning that the Card is stolen or the PIN is disclosed. The Cardholder shall report it 1.0 PBL followed by written confirmation containing Cardholder's signature on the said loss. The Cardholder shall at the request of the PBL furnish PBL with a statutory declaration in such a form as PBL may require and F.I.R/ Police report and /or any other information as PBL may require. But if the lost card is found or recovered, the cardholder shall not make use of the card but shall immediately cut it into halves and return the same to PBL.

Ø         Notwithstanding the loss on the theft of any card or disclosure of the PIN in respect of any Card, PBL charge and debit the Card Account the amount of each and every Card Transaction made of effective before written confirmation by the Cardholder of such loss, theft or disclosure is received by PBL. Replacement of Card may be made to the Cardholder on payment of required charges in this regard.

CHARGES TO CARD ACCOUNT:

PBL may charge and debit the Card Account the amount of each and every Card Transaction made or effected, whether by the Cardholder or any other person with or without the Cardholder's knowledge or authority notwithstanding that the balance due to PBL on the Card Account may as a consequence of any such charge or debit exceeding any credit limit that may be sanctioned. For existing Fees and Service Charges, one may contact Card Division at PBL's Head office or any Branch of PBL.

CASH ADV ANCE FEE :

In respect of each Cash Advance made through the use of any Card and or the PIN, PBL charge and debit the Card Account a fee as decided from time to time.

PAYMENT:

Ø         The following stated therein shall be paid to the Card Division at PBL's Head office within the payment due date in respect of each Card Account Statement:

a.         At least the aggregate of the minimum payments specified as such in the Card Account Statement.

b.         The amount, if any, by which the outstanding balances stated therein exceeds the credit limit of the Card Account Statement.

Ø         If outstanding balances stated in Card Account statement is not paid in full within the Payment Due Date stated therein, PBL may charge and debit the Card Account calculated on a daily basis, subject to minimum monthly finance charge of 2.50% or such other sum as may be determined from time to time by s PBL without notice.

Ø         On the amount of each and every charges stated in that Card Account Statement as from the date when such charge was incurred or was posted to the Card Account, as PBL may elect, to the billing date stated in that Card Account Statement and on thc entire outstanding balance from the billing date stated in that Card Account Statement until the full payment of the outstanding is made.

Any payment made by a Cardholder shall be a plied in the following order:

Priority	Payment applied for
1st	Any over limit amount
2nd	Any over due amount
3rd	Cash Advances
4th	Service Charges
5th	Fees
6th	Purchases

Ø         In respect of payment of Cardholder (Card Type-Gold/Silver) to PBL, charges shall be made by Banker's draft Payable in US$ or any other settlement mode acceptable to PBL. If PBL decides to accept payment tendered in some other currency, payment will not be made in the Card Account. Charges incurred in any currency other than US$ will be converted into US$ at rates that will not be less favorable to Cardholder than the rate arrived at by use of an inter bank m existence within 24 hours that PBL or any authorized Agent posses the charge plus 1% of the converted amount. An official rate will be used where required by law.

OTHER CHARGES AND FEES:

PBL may charge and debit the card relating to any Card

Ø         An annual service fee for the issue or renewal of the Card at such rate as PBL may prescribe from time to rime without notice and such fee shall not be refundable in any event.

Ø         Where any cheque or Bankers' Draft drawn to the order of PBL by Cardholder (or pursuant to Cardholder's authorization) is not honored for the full amount thereon, PBL may assess a Service Charge for each Cheque so dishonored or returned to reimburse PBL for the cost and expenses of collection.

            Ø         An administrative fee or such amount as PBL prescribe from time to time without notice for the replacement of the card or for the provision of any records, statements, sales drafts, credit vouchers or other documents relating to the use of the Card or Card Account and copies thereof at the request of any Cardholder.

            Ø         A charge for each travel airline or hotel reservation made through the use of the Card which is subsequently cancelled or not taken up and such charge shall be at the rate prescribed by the Merchant with or through whom the reservation was made or at such rate as prescribed from time to time without notice; and

            Ø         Payment to PBL is not Where by any arrangement executed between any Cardholder and financial institution, any payment is to be made to PBL for the credit of any Card Account, whether at regular intervals or otherwise, a fee of such amount as prescribed from time to time without notice for each occasion when any effected at the time when such payment should have been effected in accordance with such arrangement.

CREDIT POLICY

Criteria for approving credit card:

In selecting Card Members, we will categorize prospects in 3 groups:

Group A: Who will be given membership upon application (10-20%) (Pure White)

Group B:        Who will not be given membership under any circumstances (Pure Black) (5%)

Group C:        Majority of the prospects whose case will be decided after credit (Gray Area) evaluation, on a case basis (75-80%)

            As we gain experience it will be our endeavor to reduce the percentage of “C” group and covert them either in “A” or in “B” so as to become more efficient.

Our selection of membership will be as follows:

Group (A) who will get

            Ø         Any one who is agreeable to keep under lien Tk. 3,00,000/-

            Ø         Directors of all commercial Bank.

            Ø         Asst. GM/AVP and above in any Bank.

            Ø         Any Borrowers who have credit limit of Tk. 25 lac and above with our Bank provided no overdue.

            Ø         Customers also maintain average balance of Tk. 5 lac with any Bank.

            Ø         Customers who maintain average balance of Tk. 2 lac in our Bank.

            Ø         Chairman & Directors of all Government Corporation, Local Bodies.

            Ø         GM and above in Bangladesh Bank.

            Ø         Deputy Secretary and above in the Govt. Secretariats.

            Ø         All Doctors who have private practice.

            Ø         All Vice Chancellors, Professors of Universities

            Ø         All Lawyer who have Bar-at-Law degree and in regular practice.

            Ø         Corporate Customers of other Bank enjoying credit facility of Tk. 5 Crore and above, which are not overdue/ classified.

Following will not be issued Credit Card

            Ø         Students and pupil who does not have regular job.

            Ø         Borrowers who have classified loans.

            Ø         Minors, Lunatics, Bankrupts, Defaulters and insolvent are not eligible to become Prime Bank’s Cardholders.

            Note: We would prefer that the Cardholders will be Prime Bank’s client- other banks clients may also become our Cardholder fulfilling the required criteria mentioned below. However, efforts shall be made to convince other banks clients to become our account holders which will ease the collection process and customer service. Issuance of Prime Bank Master Card to individuals and to Corporate members under Corporate guarantee shall be decided on case to case basis:

Following points should be given due consideration:

a.         Amount and stability of Prospective Cardholder’s Income.

b.         Home, Car, Telephone and other moveable and immovable property-ownership.

c.         Current financial commitment.

d.         Previous credit history especially whenever recommended by our own branches or any other schedule commercial banks of Bangladesh.

e.         Age, Marital Status, Dependence and nature of job.

f.          Credit Worthiness.

Credit Worthiness:

At present, we do not have any credit rating company in our country and information on the customer from the third party is also not always reliable. Therefore, we need to make our own scoring system. Sine it will be a very difficult to prepare a standard scoring system to assess everybody’s credit worthiness so we shall also have top substantially depend on judgmental analysis to make decision on every individual cases. cases. Every individual case shall be unique and separate from others.

Documents and Papers needed from prospective Card Applicant:

Type of  Cards

Name of Documents	A	B	C	D	E	F	G	H	I
Application Form	Ö	Ö	Ö	Ö	Ö	Ö	Ö	Ö	Ö
Photograph	Ö	Ö	Ö	Ö	Ö	Ö	Ö	Ö	Ö
List of Directors (to be certified by Chairman	Ö					Ö
Corporate Guarantee (Specimen enclosed)	Ö		Ö	Ö		Ö
Export performance Certified by bank	Ö
Personal Undertaking (specimen enclosed)		Ö	Ö	Ö					Ö
Passport Photocopy (1st 7 pages and Dollar endorsed pages during the year))	Ö	Ö	Ö	Ö	Ö	Ö		Ö	Ö
Salary Certificate (Certified copy of Income Statement)		Ö			Ö	Ö
PF Statement, if salaried person		Ö			Ö	Ö
Proof  of Residence (if own)		Ö			Ö	Ö
Income Tax Return (where applicable)	Ö		Ö	Ö
Balance Sheet, PL & Trading A/c.2 yr.			Ö
Import Documents Retired in the last Financial year and last 12 months Certified by Bank.				Ö
Non Exporting Producers Turnover as declared in Tax Return.	Ö	Ö							Ö
Lien on FCD or RFCD A/C. (where applicable)		Ö	Ö	Ö	Ö	Ö			Ö
Lien of FDR or PSP (where applicable)	Ö
Others (Specify).

“Ö” Represents to be obtained

REQUIRED DOCUMENTS WITH APPLICATION

            1. Required documents for international Card Under Corporate Guarantee  of Exporting House:

            a.         Application Form

            b.         Recent color Photograph (two copies PP size)

            c.         A copy of Memorandum and Articles of Association (to be certificated by Chairman).

            d.         Board of resolution (Specimen enclosed)

            e.         Corporate Guarantee (Specimen enclosed)

            f.          Export performance certificate (certificated by Bank)

            g.         Photocopy of valid Passport (1^st to 7^th pages)

            h.         Last year Audited Balance sheet.

            i.          Lien confirmation of FC A/C (specimen enclosed)

            j.          Copy of latest bank Statement of the company (last 6^th months)

            2.         Required documents for International Card Against Travel quota:

            a.         Application Form

            b.         Recent color Photograhp (two copies p.p. size)

            c.         Personal Undertaking (Specimen enclosed)

            d.         Photocopy of Passport (1^st to 7^th pages including dollar endorsed pages during the Year)

            e.         Salary Certificate (Where applicable)

            f.          PF statement, if salaried person

            g.         Proof of residence (if own)

            h.         Income Tax return (Where applicable)

            i.          Lien on FDR, PSP, SB, CD A/C etc (Where applicable)

            j.          Copy of latest bank Statement of the applicant (last 6^th months.)

            3.         Required documents for International Card Against Balance in RFCD A/C

            a.         Application Form

            b.         Recent color Photograph (two copies p.p. size)

            c.         Photocopy of valid Passport (1^st to 7^th pages dollar endorsed pages during the year)

            d.         Lien confirmation of RFCD A/C

            e.         Copy of latest bank Statement of he applicant (last 6^th  months)

            4.         Required documents for individual Local Card:

            a.         Application Form

            b.         Recent color Photograph (two copies p.p. size)

            c.         Photocopy of Trade license (Where applicable)

            d.         Photocopy of valid Passport (1^st seven pages)

            e.         Salary Certificate (Where applicable)

            f.          Proof of residence (if own)

            g.         Income tax return (Where applicable)

            h.         Copy of latest bank Statement of he applicant (last 6^th months)

            5.         Required documents for Local card Under Corporate Guarantee:

            a.         Application Form

            b.         Recent color Photograph (two copies p.p. size)

            c.         A copy o Memorandum and Articles of Association (to be certificated by Chairman)

            d.         Board of resolution (Specimen enclosed)

            e.         Corporate Guarantee Specimen enclosed)

            f.          Photocopy of valid Passport (1^st seven pages)

            g.         Salary certificate (Where applicable)

            h.         PF Statement, if salaried person

            i.          Proof of residence (if own)

            j.          Income Tax return (Where applicable)

            k.         Copy of latest bank Statement of the company (last 6^th months)

PROPOSAL ANALYSIS MATRIX

            Presently Credit card limits are fixed in a way not based on any Matrix. The task may be made easy, scientific, uniform and systematic if a Matrix is developed and approved for assessing the Credit card limit taking into consideration of the important criteria comprising credit worthiness of the Cardholders.

            Prompt delivery of service is also a prerequisite to make a break through in the highly competitive market. As such, the approving authority should also be well defined and precise so that decision is taken very promptly within the defined and approved Matrix.

            With this end in view the following Matrix has been developed for scoring the Credit Card limit proposals:

	Points for profession		Points for Income level (Monthly Income)	Point for other consideration
1	Fixed salaried Person	5	Tk. 6000-Tk.10000-40 Tk. 100001-Tk.15000-41 Tk. 150001-Tk.20000-42 Tk. 200001-Tk.25000-43 Tk. 250001-Tk.30000-44 Tk. 300001-Tk.40000-45	1. Ownership of house in municipal area (in own name-10 parents/Joint name-5	5
2	Professional i.e Doctors Engineers, Bankers, chartered Account	5	Tk. 400001-Tk.50000-46 Tk. 500001-Tk.60000-47 Tk. 600001-Tk.70000-48 Tk. 700001-Tk.80000-49 Tk. 800001-and above50	2. Ownership of car	5
				3. Ownership of T&T telephone	2
				4. customer of our Bank having other credit facilities, which are regular or considerable deposit	2
				5. Having credit card of other Bank	2
				6. Average bank-balance of last 6 (six) months	5
				7. Personal suitability	5
				8. Income Tax Assessment up to date	2
				9. Holding passport	2
				10. Spouse earns	2
				11. Club Members	2
				12. Married	2
				13. Age        45-60Years-4        35-45 Years-3        35-45 Years-2        35-45 Years-1	4
		10	50		40

Points for profession                                     10

            Points for Income level                    50

            Points for other consideration         40

                                    Total points                100

B. Assessment of Credit Card limits based on the points scored:

Total Points Scored		Credit Limit
1.	50	-	Tk. 10,000
2.	51	-	Tk. 12,000
3.	52	-	Tk. 14,000
4.	53	-	Tk. 16,000
5.	54	-	Tk. 17,000
6.	55	-	Tk. 18,000
7.	56	-	Tk. 20,000
8.	57	-	Tk. 21,000
9.	58	-	Tk. 22,000
10.	59	-	Tk. 24,000
11.	60	-	Tk. 25,000
12.	61	-	Tk. 27,000
13.	62	-	Tk. 30,000
14.	63	-	Tk. 32,000
15.	64	-	Tk. 34,000
16.	65	-	Tk. 35,000
17.	66	-	Tk. 37,000
18.	67	-	Tk. 38,000
19.	68	-	Tk. 40,000
20.	69	-	Tk. 42,000
21.	70	-	Tk. 44,000
22.	71	-	Tk. 46,000
23.	72	-	Tk. 48,000
24.	73	-	Tk. 50,000
25.	74	-	Tk. 52,000
26.	75	-	Tk. 54,000
27.	76	-	Tk. 55,000
28.	78	-	Tk. 56,000
29.	79	-	Tk. 57,000
30.	79	-	Tk. 59,000
31.	80	-	Tk. 60,000
32.	81-85	-	Tk. 61,000-Tk.75,00
33.	86-100	-	Tk. 76,000-Tk100,000

C.        Before sanctioning credit limit necessary due diligence shall have to be done.

D.        Residence/ Office of the applicant may be visited by the concerned Bank’s representative, if required.

E.         Effort should be make to collect credit information on he applicant informally as fare as possible.

F.         In special cases personal interview of he applicant may be arranged with high ups of credit Card Division to collect more information and to know him more intensely.

G.        Credit Card limit for more than Tk. 1,00,000 shall be given in very special and deserving cases having scored more than 90. Limit above Tk 1 lac have be approved by head office credit commitee.

H.        For enhancement of credit card limit, utilization o the existing limit and repayment behavior of the Card Holder is evaluated.

Problems of PBL Card Division:

            *          Vision and mission is not well specified.

            *          The market is not well defined.

            *          Inter section relation is not well correlated

            *          Lack of proper marketing knowledge

            *          Always in a pressure from the higher authority.

            *          Lack of proper management

            *          Lack of motivation.

            *          Switching tendency of the employees.

            *          Improper logistic support.

            *          Lack of technical person.

            *          Lack o training facilities

            *          Decisions taken by higher authority of not match with the implementation’s view.

            *          Slow return on investment.

            *          Lack of technical support (software, hardware, tele-communication etc.)

b. PBL Credit Card Vs NBL Credit Card:

The following table shows the customers’ perceptions towards NBLs and PBLs Credit Card. The customers were asked to compare the PBL Credit Card With that of NBL regarding some features and the answers are arranged in the table-

Prime Bank Credit Cards:--	Strongly Disagree (-2)	Disagree (-1)	Indifferent (0)	Agree (+1)	Strongly Agree (+2)	Score
i) It has more retail access	5	2	3	8	2	0
Ii) Easy operation in transaction	1	5	7	6	1	+1
Iii) Annual fees are reasonable.	1	2	5	8	4	+12
Iv) Different types of Cards and                                           its limit	0	2	3	4	1	+4
v) Charges and interests are reasonable	2	4	7	5	2	+1
Vi) Easy bill payment system	3	5	4	5	3	0
Vii) Customer service is better	0	4	4	10	2	+10
Viii) Cash Advance fees is reasonable..	3	5	7	3	2	-4

Table: Customers views on PBL Vs NBL

Examining the above table it can be seen that customer perceive the PBL as better than NBL in the following four respects:

  PBL has Easy operation in transaction than NBL

  PBL has Different types of Cards and its limit Than NBL

  PBL has better customer service than NBL.

  PBL ‘s cards have less annual fees & charges than NBL.

    PBL Scored positive on the above criteria. It was also found that customers are equally satisfied with the PBL and NBL in case of retailer access, technology used and bill payment system, as their score on that feature becomes zero. Again it was found from the survey that customers scored PBL negatively on the point “ Cash advance fee ”. This represents that customers satisfaction in using the PBL credit card is lower compared to NBL credit card.. There fore the study come to the point that removing the above problems PBL could retain enough customers, which would strengthen its competitive position in the market.

The market share of PBL is higher than that of NBL. The study found that there are approximately 134000 credit card holders in Bangladesh. Among those PBL has 10500 and

NBL has 9000 cardholders (Source: HO, PBL.). So, PBL posses 7.83 % and NBL possesses 6.72 %of the total market share.  But the interesting thing is the study found that NBL earns more profit than PBL. In the year of 2002,NBL earns a profit of more than 350.0 lacs (approx.) whereas PBL earned only 273.95 lac. (Source: HO, PBL). The study at this point tried to find out the reasons behind this and came up with the following-

  The difference of the profit resulted from the marketing strategy they adopt. NBL is heavily focused on the international card and most of their outstanding card is International. As a result their cash inflow is more secured as each and every international cardholder has to lien a fixed amount against its card account as per rules. So cardholders regularly pay his dues amount. But the situation is quite different in case of PBL. Most of the PBLs outstanding card is local. As a result its recovery figure is not as good as it is in the NBL. The study has found that only 30.54% of the total outstanding has been recovered in the month of March 2003 (Source: HO, PBL). So the amount of profit is less than that of NBL. Again, as NBL mostly focuses on the international card, it has developed some criteria to be more competitive in this regard. The table-6 shows that NBL gives more cash advance facilities to the international cardholders than PBL does. While NBL provides 30% cash withdraw facility to both Gold and Silver cardholders, PBL provides only 20% to the Gold Cardholders and 15% to the Silver cardholders. Again, cash advance fee for the international card in NBL is lower than that of PBL. While the cash advance fee for the international card in NBL is 2.5%, it is 3 % in PBL. This comparative strategy has made NBL stronger than PBL. To sum up we can say that in respect of numbers, PBL’s position is better than NBL. But it needs to increase its recovery position. PBL is local mainly local oriented while NBL is global oriented. To have the better market position, PBL has revised its fees and charges effective from February 2003. Now it is time to see the impact of those changes.

c. PBL Credit Card Vs Standard Chartered Bank (SCB) Credit Card:

Standard Chartered Bank is the first institution in Bangladesh that inaugurates credit card business in this country. It commenced its business in credit card from 1995 and has absorbed the largest market share. Among134000cardholders, Standard Chartered has approximately 102000 cardholders, which is 76.12 % of the total market share. On the other hand, Prime Bank Limited commenced its card business from 1999 and has obtained only 7.83% market share. So in this scenario, to compare PBL with SCB is nothing but to compare a plant with a big tree and this research has been done in keeping this idea in mind.

The research had tried to identify some major difference between PBL and SCB. This difference of the features of card is presented in the following table.

Standard Chartered Bank	Prime Bank Limited
1. It has 21 ATM machine of its own and cardholders can enjoy it	1. It has no ATM machine of its own but cardholders are allowed to use SCB’s ATM.
2. 50% Cash withdraw facility from both ATM and cash counter.	2. 20% Cash withdraw facility from SCB ATM and 50%Cash withdraw from its cash counter.
3. No cash advance fee	3. Cash advance fee is 3% or Tk.150 whichever is higher.
4. Cardholders can have statement from ATM machine any time.	4. Statement is sent only once a month.
5. No international MasterCard but it has international Visa card.	5. It has MasterCard both local and international. It hasn’t launched Visa card yet.
6. No special facility for the banker	6. Annual fee is 50% for the banker.
7. More than 4000 own machine in the merchant shop around the country.	8. Approximately 400 owned machines in merchant shops around the country.

The above unique features of SCB made it possible to do aggressive business. It’s not the fact that only SCB has unique competitive feature over PBL. Rather, PBL also has some competitive feature over SCB. For example it can be seen in the table that Annual fees, Return cheque fee, PIN replacement fee, of SCB are higher than that of PBL. But the rests fees and charges of PBL are higher or equal to those of SCB. As a result SCB is competing over PBL as well as other banks and financial institutions.

The research has also identified that the credit policy of the Standard Chartered Bank (SCB) is very seeker. It sanctions a higher credit limit to the cardholders compare to other banks and financial institutions do. The logic behind it is very simple. The SCB wants to remain the highest market shareholder. In addition it continuously monitors and evaluate different segments and change the target market segment what PBL doesn’t do.

The research has also found that SBC does very aggressive marketing than PBL. In SBC each marketing officers is under a team and each team has a target not fulfilment of which result in fired from the organization. As a result the marketing people in SBC becomes more professional. But in PBL marketing people don’t work in team. They work individually and get a certain commission in each card. There is no target.

The permanent officers run the recovery section of the PBL. The recovery flowchart of PBL is given in the figure. Almost the same thing is followed by the SCB but they don’t do it of their own. Rather, they hand over the duties to a certain agency that work for a commission basis.

In comparing PBL with SCB, the study also looked for the customer’s perceptions toward each of the institutions regarding their credit card facilities. The responses of the cardholders are scored in the table.

Prime Bank Credit Cards:--	Strongly Disagree (-2)	Disagree (-1)	Indifferent (0)	Agree (+1)	Strongly Agree (+2)	Score
i) It has more retail access	0	2	16	2	0	0
Ii) Easy operation in transaction	2	3	12	2	1	-3
Iii) Upgraded technology is used	3	5	8	4	0	-7
Iv) Different types of Cards.	0	2	9	6	3	+10
v) Charges and interests are reasonable	0	3	5	7	5	+14
Vi) Easy bill payment system	3	1	12	3	1	-2
Vii) Customer service is better	0	1	12	3	4	+10
Viii) Retailers welcome the Card	3	2	11	2	2	-2
Ix) It gives more satisfaction	3	2	10	4	1	-3

Table. Customers’ views on PBL Vs Standard Chartered.

The figure represents that customer’s perceptions on PBL credit card are negative compared with the SBC except for charges, customer service and different types of cards. The respondents perceived the SBC and PBL equally in case of retailer access.

d. PBL Credit Card Vs Dhaka / Vanik Credit Card:

It has been already mentioned that Vanik is the only credit card Company in Bangladesh issuing credit card under its own brand name. Dhaka bank has marketed Vanik’s credit card under a co branded name “Dhaka-Vanik Card”. On the other hand PBL issue the credit card under the membership of MasterCard International. Compare the market share, the study found that Dhaka-Vanik has more market share than that of PBL. Dhaka- Vanik has approximately 8500cards in circulation whereas PBL has 10500. The study also found major difference in their marketing policy. PBL’s marketing strategy is commission basis. A number of marketing officers are being recruited on a commission basis and there is no target and fixed salary for them. But in case of Dhaka-Vanik, the strategy is quite target oriented and there is a minimum fixed payment for the marketing people. The responsibility of marketing is being handed to a different agency. Another crucial factor is that Dhaka-Vanik is totally local oriented. It has no international card whereas PBL has both local and international credit cards.

Now let’s look at the tablle-6. Examining the table carefully it can be seen here that PBL’s competitive position regarding annual fees and charges is stronger than that of Dhaka-Vanik. PBL annual fees for Gold and Silver are TK.2000 and TK. 1000 whereas Dhaka-Vanik charges Tk.3000 and Tk. 1500 respectively for the same. Replacement fee for the PBL Gold card is also lower than that of Dhaka-Vanik. In PBL, replacement fee is Tk.500 and Tk 300 for Gold Local and Silver Local respectively.  Whereas it is Tk. 1000 and Tk.500 respectively in case of Dhaka-Vanik.. Another competitive feature of PBL over Dhaka-Vanik is that PBL provides cash withdraw facility from both ATM and cash counter while Dhaka-Vanik doesn’t provides any cash withdraw facility from ATM machine.

Despite the competitive weakness regarding annual fees, Dhaka-Vanik also developed some competitive features. It has been shown in the table –6.4.2 that late penalty fee, return check fee, cash advance fee, minimum amount due, etc. in Dhaka-Vanik are lower than those of PBL. This feature of the Dhaka-Vanik has a great impact on its market share.

Now let’s see how the consumers compare the perceive the PBL credit cards in respect of Dhaka-Vanik credit card. 

Prime Bank Credit Cards: - CXX-	Strongly Disagree (-2)	Disagree (-1)	Indifferent (0)	Agree (+1)	Strongly Agree (+2)	Score
i) It has more retail access	0	0	20	0	0	0
Ii) Easy operation in transaction	1	2	13	2	2	+2
Iii) Upgraded technology is used	1	1	12	3	3	+6
Iv) Different types of Cards its limit	0	1	9	8	2	+11
v) Charges and interests are reasonable	0	0	20	0	0	0
Vi) Easy bill payment system	0	1	13	4	2	+7
Vii) Customer service is better	1	2	10	3	4	+7
Viii) It gives more satisfaction	1	2	12	4	1	+2

Table 6.8: Customers views on PBL Vs Dhaka-Vanik.

The above table shows that the customer view on the PBL credit card is better than Dhaka-Vanik credit card. All the consumers are indifferent in case of retail access, and bill payment system. Most competitive features of PBL over Dhaka-Vanik is its different types of card & limit and upgrade technology

CHAPTER: 6

 

Contribution of Prime Card to the Company (PBL) Growth

            Prime Bank has already completed three years of operation card business. Because the card market was showing growth with the increasing acceptability of plastic money in many outlets, the business had become intensely competitive. More players had entered into the market and some others were preparing for entry into the same. As increasing number of customers were turning to the convenient features of credit card usage, we had stepped up marketing efforts to retain and enlarge our market share. We have already hired a group of marketing executives purely on commission basis to solicit prospective customers to be our cardholders. That has resulted in increasing the customer base and similarly we had enlarged merchant network for acquiring business as well.

            Since then the journey was for steady and sustainable growth. Here are some of our growth indicators, which will justify the expectations of the Board with card business. The bank’s earning capacity grew and the customers got a new product of plastic money which gave them convenience.

Brief overview of cost for Card Division

            A. Foxed Assets schedule for the year-2002

Particulars	Fixed assets before depreciation	Depreciation charged	Fixed assets after depreciation
Equipment and Machinery	9280756.82	1,331,730.64	7949026.18
Furniture	214541.34	18733.30	195808.04
Total	9495298.16	1350463.94	8144834.22

B. Operating Expenses

Depreciation	13.50	232.74
Interest on prime general	80.44
Salary and allowances	49.26
Other expenses	89.54

            C. Income from Card business:

Fee local	92.71	506.69
Fee International	63.31
Merchant commission	22.41
Other Income	328.26

            D. Profit generated from card business

Profit

273.95

Some Important Ratio Analysis

Sl. No	Particulars	Up to June-02
1	Return on Assets (ROA)	23.01%
2	Return on Expenses	106.03%
3	Yield on advances	20.73%
4.	Cost of fund	10.50%

Growth of Income and Profit of credit Cards

Particulars	2000	2001	Growth Over 2000 (%)	2002	Growth Over 2001 (%)	Estimated Year
Income
Fees (local)	16.95	76.45	351	92.71	21	111.25
Fees (Int’l)	39.59	39.61	0	63.31	60	75.97
Merchant Commission	0.00	5.31	531	22.41	322	26.89
Other Income	46.65	205.68	341	328.26	60	393.91
Total Income	103.19	327.05	217	506.69	55	608.03
Profit	28.62	253.08	784	373.95	48	448.74

Contribution of Card Division to the mother concern is as follows:

Income (Tk. in million)

	2000	2001	2002
Prime Bank Card. Div.	10.30	32.70	50.70
PBL	1515.63	1987.58	2250.96

Expenditure  (Tk. in million)

	2000	2001	2002
Prime Bank Ltd.	922.43	1231.49	1503.12
PBL Card Division		7.40	23.27

Profit   (Tk. in million)

	2000	2001	2002
Prime Bank Ltd.	526.20	705.09	696.84
PBL Card Division	2.70	25.10	27.40

Separate Identity:

Though Card Division is under Head Office, prime Bank Limited, but it has separate identity. Its transaction code is 130 and it has to calculate income, expenditure and profit as the other brunches of PBL. Credit Card business is quite different from other banking business. It cannot collect deposit from people. The classified loan (30%), interest rate (30%) and slow rate of return makes it specialized banking services.

Issues and Challenges:

The credit card business has many issues and challenges as well. Unlike any other country,we issue two separate cards one for local taka currency and one for dollar for international usage. One global card for local and international usage will simplify the process and customers will be much benefited. This may even lead to growth in card usage. In line with liberalized economy and open market concept, more reforms are required to encourage people to use credit card outside Bangladesh.

One other issue, which leads the growth of card business, is connectivity. The success of this business is dependent upon availability of communication line round the clock. Since we rely on BTTB for our connectivity, it has become increasingly difficult to keep the line up at a desired level. Poor infrastructure and inadequate maintenance often cause disruption. However in order to provide quality service to the customers, Prime Bank Limited is looking into state of the art solution outside BTTB.

Defaults on credit cards are both an issue and challenge for the card operations. To keep defaults at a minimum level has become an uphill task. Once our society consisted of conservative people with relatively low spending and minimum borrowing habits. But the scenario has undergone changes,. Delinquency rate in card business has registered upward benchmark of 20% defaults, the interest rate has been kept as high as 30% per annum. Since the credit is allowed to cardholder without any security, the bank can hardly recover from organized group of defaulters. Existing recovery laws are inadequate and the loan courts take unusually long time. Prime Bank has engaged recovery agent on commission basis on recovered amount. There is a need for constructive reform to recover bank’s money and the sooner it is done it is better for the country.

CHAPTER: 7

RECOMMANDATION AND CONCLUTION

RECOMMENDATIONS:

         The potential market for credit cards in Bangladesh is estimated to be 30,000,000 (30 million) users. The users of credit card facilities have been growing day by day all over the world, particularly in ASIA. Prime Bank Ltd. is one of the topmost private Commercial Banks in the country and it has been operating quite successfully. Although it has a healthy and steady growth in sales trend of credit cards, the organization needs to address some of the bottlenecks found out from the survey conducted for the concerned study .In an attempt to solve various problems so far identified in this study, the following recommendations can be put forward: 

         As we know, periodic job change increases the productivity and readiness for change, Card Division should practice job change periodically in order to make their employees efficient in every field and also to increase their acceptability to possible changes.

          The office should be trim and tidy as well as well decorated because when a customer enters the Card Division, he / she should feel comfortable and take the bank in his confidence. It also boosts efficiency of the officers and staff and instills in them a sense of discipline and cleanliness

         Officers should pay more sincere attention to solve the customers’ problems. 

         PBL has no ATM machines. They always depend on the Standard Chartered ATM machines. Therefore, PBL should procure their own ATM machines.

         PBL depend on BTTB line some times this line keeps remain down. For this reason it creates problem for the cardholders. PBL should take alternative way for this matter. 

         Card Division should put maximum emphasis on the merchant marketing because it is very essential to steadily increase the number of credit card holders and also play vital role for earning profit.

         Prompt customer services is required for win the customer minds.

         PBL should wishes to the card holder in different occasion..

         PBL should reduce cash advance fee. It creates negative effect to the cardholder. It is also a bad sign for the future business.

         PBL should not so conservative about credit limit of the cardholder, It causes some card cancelled.

         PBL should upgrade their soft ware. By this software it is not easy to count bonus point of a cardholders. More over excess limit charges occur two times (when card holder not pay amount with in the month).

         PBL should publish and widely distribute Discount booklets so that they can attract customers’ attention. Wide and effective publicity should also be given through radio, television, newspapers and periodicals. Merchants should be also put within the purview of the advertisement campaign in future. Brochures containing various terms and conditions of credit card should be published both in English and Bengali and widely circulated.

           Card division should encourage sabbaticals in order to aid career development of the employees. By doing so, the Bank will be able to increase the productivity of the employees.

         PBL should offer training programs, particularly on credit related electronic banking frequently for the suitable, painstaking officers of Card Division because the Division being a technical sector in the Banking industry, employees working here should have sufficient knowledge about the working of the whole system. The authority should also provide off the job training programs so that the employees might be capable enough of solving any impending problem. They should set long term strategies in this regard.

         The salary structure for the employees of the Card Division should be rationalized .If the management fails to consider the issue of appropriate pay scales, there is a strong likelihood that the Bank will lose some efficient and experienced employees. The policy should be to allow competitive salary and good incentives in order attract and retain excellence in service.

         The financial and other service benefits provided by PBL should also be increased as most of the employees feel that these are much less than those provided by other similar banks. The management should take the matter in their prior concern in order to keep efficient and experienced hands in the interest of a bright future of the Bank.

         Annual charge for credit cards should be sufficiently reduced so as to discourage surrender of cards. The charge for additional cards should also be reduced.

         Card Division should endeavor to provide better service to the cardholders outside Dhaka City. To achieve this objective they may consider creating an efficient and effective Card Division in each of the Bank’s main branches in the Divisional Headquarters outside Dhaka.

         As the number of delinquent cardholders is growing day by day, Card Division should reasonably increase manpower in recovery section. They should appoint an experienced lawyer on full time basis dealing with the critical cases. Commensurate with the growing card base more employees should be appointed to shoulder the increasing work load.

         Before issuing credit cards, Card Division should meticulously verify the applicant’s income from salary, status and other required particulars because many cardholders have a tendency to furnish erroneous information in their applications.

          Card Division may appoint a recovery agency so as to ensure better recovery.

         PBL’s direct marketing effort must be implemented more precisely and elaborately to ensure maximum market coverage both for merchant and cardholders.

         Arrangement for offering attractive gifts & prizes should be made so that the number of credit card holders’ increases day by day.

         Facilities for Internet shopping, payment of WASA, electricity, telephone bills, etc. through credit cards should be introduced as early as possible. This will bring in a good deal of popularity for PBL credit cards.

         Last but not the least; industrious and worthy employees of Card Division should be suitably rewarded. This will affect them psychologically and, at the end, will make them responsive, cost-effective and efficient resulting in increased productivity.

CONCLUSION:

The system of payment through credit card has been gaining enormous popularity throughout the world. In ASIA, the growth of Banking in this sector is highest. It has a lot of potential in Bangladesh, too, and has already made considerable inroad into our economic domain. There is still a wide scope for substantial expansion of sales of credit cards. PBL can capture a big chunk of the business by providing such services as to satisfy customer needs. Only a better and an effective and efficient work force under a dynamic management can achieve the objective. Better people means a better organization can flourish by as much as its people allow it. It is believed that if the recommendations laid down heretofore are followed, PBL can be a hunting ground of a great many potential customers

Bibliography

·         Principles of Marketing: Seventh Edition, Philip Kotler.

·         Introduction To The Strategic Management Process: Fifth Edition, Lloyds L.Byars; Leslie W.Rue.

·         Marketing Management: Ninth Edition, Philip Kotler; Gray Armstrong.

·         Prime Bank Annual Report (2001, 2002 )

·         Brochure of Standard Chartered Bank, VANIK and  National Bank.

·         Business Research Methods :Sixth Edition, William Zikmund.