CHAPTER-ONE
Introduction
1.1 What is internship?
Internship means practical training through attending the particular work physically. Practical training means a way through which a person or a trainee can gather experience about the related subject practically and be able to apply his theoretical experience in the field of real life action. Practical training paves the way for gaining practical knowledge through activities other than reading textbooks and attending formal academic courses. Practical training is necessary to achieve complete knowledge about something. Internship program is a form of practical training. I firmly believe, practical training can open the inner eyes of a man. The works conducted during the Internship Program will expand the horizon of our practical knowledge. For the students of MBA of the Department of Finance and Banking internship is an academic requirement. For the internship every student is required to work in a selected institution to enhance his practical experiences. The internship is managed and supervised by a supervisor who is a teacher of the department. For my internship, I was sent to the Investment Corporation of Bangladesh under the supervision of Sohel Rana, Assistant professor, Department of Finance and Banking, University of Rajshahi
1.2 Objectives of Internship
The objectives of internship concern so many things. To be specific, the objectives of the internship program undertaken by department of Finance and Banking, University of Rajshahi
1) Classification of and familiarity with the selected institution. It helps the trainee to know the institution as a national organization contributing to the economic development of the country.
2) It provides the opportunity for the trainee to see how the theories he learnt from academic lessons are applied in the practice of real life.
3) It helps him to evaluate the relationship existing among cost, volume and profit of the selected institution.
4) It teaches the trainee to be able to identify various problems of the institution and ways of solving them.
5) It prepares the trainee for the future challenges of modern business world.
1.3 Importance of Internship
Internship program is the great importance and significance under the circumstances of the present competitive business world. Its importance is gradually increasing due to the development and expansion of industries. Industries are the main elements of production and supply of consumer goods; Business industries need highly skilled personnel for proper functioning. Internship prepares the trainee for the tough job conditions and future challenges of business activities. The trainee learns how to adapt himself in situations quickly and how to work in a team environment. Internship increases the interpersonal communicate skill of the trainee as it introduces the functioning of corporate institutions. In addition internship helps a trainee to fulfill his practical knowledge and makes him fit for important jobs.
1.4 Chapter Plan of the Study
This report is written to serve the purpose of "Internship Report" for the MBA program of the assigned student in the Finance and Banking, University of Rajshahi
Chapter-1 : Introduction
Chapter-2 : An Overview of ICB
Chapter-3 : Activities of Different Department of ICB
Chapter-4 : An Overview of ICB, Rajshahi Branch
Chapter-5 : Findings of the study
CHAPTER-TWO
An Overview of ICB
2.1 Introduction
The Investment Corporation of Bangladesh (ICB) was established on October 1, 1976 under the Investment Corporation of Bangladesh Ordinance (No. XL of 1976) to encourage and broaden the base of investments, develop the capital market and mobilize savings and to provide for matters ancillary thereto. It is involved in stock underwriting, stock trading, portfolio management, operating mutual funds both open-ended and close ended. The establishment of ICB is a major step in a series of measures undertaken by the government in the past years to accelerate the pace of industrialization. The re-creation of ICB has met the long felt need to provide institutional support to meet the equity gap of the industrial enterprises in absence of which the process of industrialization in the private sector was slowed down. Through the enactment of the Investment Corporation of Bangladesh
2.2 Historical Background of ICB
After liberation in view of socio-economic changes the scope for private sector investment in the economy was kept limited by allowing investment in projects up to Tk. 25 lacs. The new Investment Policy which was announced in July, 1974 provided for an expanded role of private sector by allowing investment in a project up to Tk. 3 crores. This ceiling has further been raised to Tk. 10 crores. In spite of the adequate facilities an incentives provided to the private sector, encouraging response was not forthcoming. One of the reasons, among others, was the lack of institutional facilities which provided underwriting support (like from ICP) to industrial enterprises which was required to raise the much needed equity fund. Thus the need for re-activation of capital market/stock market was keenly felt. In the revised investment policy which was announced in December, 1975.Government announced its decision to reactivate the stock exchange and examine the question of re-creation of Investment Corporation of Bangladesh. Accordingly, a committee of officials examined the matters and recommended for recreation of ICB.
2.3 Main Objectives of ICB
ø To encourage and broaden the base of investments.
ø To develop the capital market.
ø To mobilize savings.
ø To promote and establish subsidiary for business development.
ø To provide for matters ancillary thereto.
2.4 Sources of Capital
Every organization collects funds from several sources. It may be internal sources or externals. In case of Investment Corporation of Bangladesh
2.5 Capital Structure
The present capital structure is given to following
Table No – 1:
As on 30 June 2005 (Tk. in crore) | |
Authorized capital | 100.00 |
Paid-up capital | 50.00 |
Reserves | 84.11 |
Retained profit | 5.36 |
Government Long-term Loan | 5.25 |
Debentures | 61.80 |
Others | 24.89 |
Total | 231.41 |
Source: ICB Annual Report (2004-05)
2.6 Shareholding Position
Table No – 2:
The shareholding position as on 30 June, 2005
Sl no. | Shareholders | No. of shareholders | No. of Shares | Percentage of shareholding |
| | Government of | 1 | 13,50,000 | 27.00 |
| | Nationalized Commercial Banks | 4 | 11,37,220 | 22.74 |
| | Development Financial Institutions | 2 | 6,81,550 | 13.63 |
| | Insurance Corporations | 3 | 6,18,286 | 12.37 |
| | Bangladesh Bank | 1 | 6,00,000 | 12.00 |
| | Denationalized Private Commercial Banks | 2 | 4,54,263 | 9.08 |
| | Private Commercial Banks | 3 | 28,286 | 0.57 |
| | Foreign Commercial Banks | 2 | 26,531 | 0.53 |
| | First BSRS Mutual Fund | 1 | 6,900 | 0.14 |
| | Other Institutions | 9 | 26,949 | 0.54 |
| | General Public | 927 | 70,015 | 1.40 |
Total | 955 | 50,00,000 | 100.00 |
Source: ICB Annual Report (2004-05)
2.7 Functions of ICB
ø Underwriting of initial public offering of shares and debentures.
ø Underwriting of right issue of shares.
ø Direct purchase of shares and debentures including placement and equity participation.
ø Providing lease finance singly or by forming syndicate.
ø Managing Investor's Accounts.
ø Managing Mutual Funds and Unit fund.
ø Operating on the stock exchanges.
ø Providing investment counsel to issuers and investors.
ø Participating in government divestment program.
ø Participating in and financing of joint-venture projects.
ø Introducing new business products suiting market demand.
ø Dealing in other matters related to capital market operations.
ø To supervise and control the activities of the subsidiary companies.
2.8 Business Policy of ICB
The Corporation has adopted a realistic business policy framework within which its operation is conducted. The corporation in its operating acts on commercial considerations with regard to the interest of industry and commerce, investment climate, capital market depositors, investors and to the public interest generally.
ø To act on commercial consideration with due regard to the interest of industry, commerce, depositors, investors and to the public in general.
ø To provide financial assistance to projects subject to their economic and commercial viability.
ø To arrange consortium of financial institutions including Merchant Banks to provide equity support to projects and thereby the risk of underwriting
ø To develop and encourage entrepreneurs.
ø To diversify investments.
ø To induce small and medium savers for investment in securities.
ø To create employment opportunities.
ø To encourage investment in agro-based and IT sectors.
2.10 Management of ICB
The Head Office of the corporation as per the requirement of the ordinance of ICB is located at Dhaka. The general direction and superintendence of the corporation created in a board of directors, which consists of persons including the chairman and managing director of ICB
The board of directors consists of the following directors:
a) The Chairman to be appointed by the government.
b) The Directors to be appointed by the government from among persons serving under the government.
c) One Director to be nominated by the Bangladesh Bank
d) The Managing Directors, Bangladesh Shilpa Bank, Ex-office.
e) The Managing Directors, Bangladesh Shilpa Rin Sangstha,Ex-office.
f) Four other Directors to be elected by the shareholders other than the government, BB, BSB and BSRS.
g) The Managing Director of ICB to be appointed by the government.
2.11 Different Departments of ICB
The main divisions along with the Departments of ICB can be illustrated in the following table:
Table No – 3:
Divisions | Departments |
a. Merchandising | 1. Investors |
2. Shares | |
b. Funds | 3. Unit fund |
4. Unit registration and procurement | |
5. Mutual funds | |
c. Loan appraisal | 6. Loan appraisal |
7. Economic and business research | |
d. Computer | 8. System analysis |
9. Programming | |
10. Data management | |
e. Legal affairs | 11. Public issue |
12. Law | |
f. Implementation and loan recovery | 13. Project implementation |
14. Recovery and follow up | |
g. Audit and methods | 15. Audit and method (Head office) |
16. Audit and method (Branches) | |
h. Accounts and finance | 17. Central accounts |
18. Project loan accounts | |
i. Administration finance | 19. Personnel |
20. Establishment | |
j. Secretary's | 21. Secretary’s |
22. Public relations |
Source: ICB Annual Report (2004-05)
2.12 Branches of ICB
1. Chittagong
2. Rajshahi Branch
3. Khulna
4. Barisal
5. Sylhet Branch
6. Bogra Branch
7. Local office Dhaka
2.13 Product of ICB
2.13.1 Private Placements
ICB is authorized to act as an agent of the issuers and investors for private placements of securities. Under this arrangement, ICB places securities to individuals/institutions on behalf of the issuer for which it charges fees. ICB also acquires shares/securities for its own portfolios.
2.13.2 Custodian and Banker to the Issues
To act as the custodian to the public issue of open-end & closed-end mutual funds, ICB provides professional services. It also acts as the banker to the issues and provides similar services similar services through the network of its branches. Fees in this regard are negotiable.
2.13.3 Mergers and Acquisitions
Companies willing to expand their business through mergers or acquisitions or to divest projects that no longer fit into present scale of operation contact the Corporation. ICB provides professional services & advice in respect of shaping up the cost and financial structures to ensure best possible operational results. Besides, in case of divestment, the corporation, through network and established business relationship, bring buyers and sellers together, help them negotiate final agreement and advice on the emerging corporate structure.
2.13.4 Corporate Financial Advice
Companies and Government enterprise intending to go public often seek professional & financial advice on corporate restructuring & reengineering. ICB through its expertise provides such services.
2.13.5 Bank Guarantee Scheme
ICB introduced Bank Guarantee scheme in 2002-03. ICB provided (i) Bid Bond for enabling the business people to participate in any tender or bidding; (ii) Performance Bond for helping the business community to continue their business smoothly by fulfilling their obligations promised by them to their clients; and (iii) Customs Guarantee for solving different disagreements between the customs authority and the business classes at the initial stage. The maximum limit of guarantee is Tk. 2.0 crore and would be issued against at least 20 percent cash and 80 percent easily cashable securities or against 100 percent cash margin. Re-guarantee from other financial institution is required for guarantee against the amount exceeding Tk. 2.0 crore.
2.13.6 Consumer Credit Scheme
As part of business diversification program ICB has introduced “Consumer Credit Scheme” in 2003-04 looking at the need of various household commodities of different professionals of government, semi-government, autonomous bodies and some established private sector organizations. Under this scheme one can enjoy minimum of Tk. 1.0 lac but maximum of Tk. 5.0 lacs credit facilities. The rate of interest on the loans reasonable and competitive
2.13.7 Lease Financing
ICB provides lease finance mainly for machinery, equipment and transport. ICB is in a position to provide professional advice and financial assistance to the intending clients. The period of lease, rental, and charge and other terms and conditions are determined on the basis of type of assets and the extent of assistance required by the applicants. Good responses have been received from the intending lessees since inception of this scheme in 1999.
2.13.8 ICB Unit Fund
It is on open-ended Mutual Fund through with the small and medium savers get opportunity to invest their savings in a balanced and relatively low risk portfolio. ICB has so far declared attractive dividends on units every year ranging from Tk. 11.5 to Tk. 25.0 per unit. Investment in units enjoys tax benefits, amount being applicable as per law. However, under the ICB’s restructuring program new unit certificates are being sold by ICB’s subsidiary company, the ICB Asset Management Company Ltd.
2.13.9 ICB Mutual Funds
ICB has so far floated eight closed-end mutual funds. The First ICB Mutual Fund was floated on 25 April 1980, while the Eighth ICB Mutual Fund was floated on 23 July 1996. The aggregate size of these funds is Tk. 17.5 crore. As on the 30 June 2004, 33646 certificate holders own these funds. Dividends declared on the funds were very attractive ranging from 14.0 to 200.0 per certificate fro 2003-04. Investors show overwhelming interest in all the ICB Mutual Funds. One can invest in such funds through the stock exchanges with which these funds are listed. Through corporate restructuring, new mutual funds are being floated through “ICB Asset Management Company Ltd.” – a subsidiary of ICB.
2.13.10 Investors’ Scheme
The Investors’ Scheme was introduced in June 1977. Over the years, this scheme has grown tremendously, ICB, at its discretion; may grant up to two times loan against the assets of an account subject to a maximum limit of Tk. 3.0 lacs. An accountholder may use the combined balance of his/her equities and loan to buy shares/ securities. To help the investors to develop diversified and balanced portfolio to minimize risk and earn a reasonable return, ICB provides professional advice and other support services. Under the restructuring program, ICB operates and manages only the old accounts and new accounts are being opened and managed by the ICB Capital Management Ltd. – a subsidiary of ICB.
2.13.11 Advance against ICB Unit certificate scheme
Advance against ICB Unit Certificates Scheme was introduced in 1998, especially designed for the ICB unit holders to meet their emergency fund requirements. One can borrow maximum of Tk. 85 per unit by depositing his/her unit certificates under lien arrangement from any of the ICB offices where from such unit certificates were purchased. The rate of interest on the loan is reasonable and competitive.
2.13.12 Advance against ICB Mutual Fund certificates
Advance against ICB Mutual Fund certificates scheme was introduced in 2003, designed for the ICB Mutual Fund certificate holders to meet their emergency fund requirement. One can borrow maximum of 50 percent value of last one year’s weighted average market price of certificates at time of borrowing by depositing his/her certificates under lien arrangement from any of the ICB offices. The rate of interest on the loan is reasonable and also competitive.
CHAPTER -THREE
Activities of Different Department of ICB
3.1 Introduction
There are twenty-two Departments under ten Divisions of ICB. The entire organization functions properly as a result of the apt interaction among the different Departments. During my internship with ICB I discovered a sound working environment and the presence of an efficient administration.
3.2 Administration of ICB
Investment Corporation of Bangladesh (ICB) is providing different category of financial and banking services. Nature of different divisions/departments varies, such as Economic and Business Research (EBR) Department, requires teamwork, Loan Appraisal Division requires professional work, Funds division needs chain work. Managing Director is entrusted with authority to transact the regular business of the organization; he may delegate some authority to the officials of the corporations. However, most of the policy decision are taken by the different committees with the approval of managing director and where required of the Board. It is the discretionary authority of the Board to constitute the executive committee and to nominate its Chairman to assist the Board in the discharging of the function stated under the ordinance. The Board may appoint such other committees it deems appropriate to assist it in the efficient discharge of its functions. So far, Board has appointed two such committees, Economic and Business Research committee and Loan Appraisal Committee, headed by General Manager.
3.3 Manpower
The corporation’s manpower strength is enhanced by 35 persons through recruitment of 14 officers and 21 employees at different levels during 2000-05. This appointment was made mainly to add dynamism in the overall activities of ICB through the uses of computer technology. On the other hand, two officers resigned and one officer retired from the services of ICB. One officer got promotion as general manager and joined in another bank. The total manpower as on 30 June 2005 stood at 396 which were 365 on the same date of last year. Out of 396 people, 254 were officer and 142 non officer employees. The total number of female employees was 59, including 44 officer representing 14.9% of the total manpower. With this manpower and administrative body of ICB, it is performing in the following departments:
1. Merchandising Division
The activities of Merchandising Division are conducted under two different Departments, namely:
i) Investors Department
ii) Shares Department
i) Investors Department
Investors Department deals with "Investor's Scheme", which started operation on 13 June 1977. The main functions of this Department are follows:
ø Investors Department opens and maintains accounts (investor's account) for individual investors for diversified investment in listed securities.
ø Investors are allowed to open such accounts with a minimum deposit of Tk. 5000. Against each of this account the investor can have an investment loan currently at 1:2 ratio with his/her deposited amount. The highest among one can have, as investment loan is Tk. 30,000.00.
ø An individual can open an account by filling up the account opening form, which is to be purchased from the corporation paying Tk. 10.00 and completing other required formalities.
ø An individual investor can open a maximum of two accounts; one in his own name and the other in joint name.
ø An investor can operate any account if he/she is permitted to do so by the concerned account holder. Presently one individual can operate maximum five accounts at a time.
ø The investor can withdraw money from his account keeping a minimum balance of Tk. 5000.00 or securities valuing Tk. 5000.00 in the account.
ø The investor can close down the account. In that case, the ID delivers the cash balance and securities after adjusting the loan (if any) to the investor.
ø
Operational activities of the investors’ scheme in 2004-05
Table No – 4:
particulars | 2004-05 | ||
Head office | Branches | Total | |
No. accounts opened | - | - | - |
No. of accounts closed | 288 | 519 | 807 |
No. of net operative accounts | 26152 | 22728 | 48880 |
Deposits received | 9.68 | 13.09 | 22.77 |
Loan disbursed | 62.66 | 96.84 | 159.50 |
Investments made | 57.46 | 60.80 | 118.26 |
Interest accrued | 16.73 | 8.36 | 25.09 |
Interest Waves | 12.28 | 6.78 | 19.06 |
Recovery of margin loans | 73.46 | 106.14 | 179.60 |
Fund withdrawal | 16.94 | 23.24 | 40.18 |
Source: ICB Annual Report (2004-05)
Profession-wise classification of the investment accountholders as on 30 June 2005
Table No – 5:
Occupation | No. of accountholders | Percentage |
Public & private sector employees | 21264 | 44 |
Business/Agriculturist | 3389 | 7 |
Retired persons | 2568 | 5 |
Housewives | 15095 | 31 |
Engineers, Doctors and Lawyers | 2600 | 5 |
Other | 3964 | 8 |
Total | 49399 | 100 |
Source: ICB Annual Report (2004-05)
ii) Shares Department:
Shares Department can be called the custodian of all shares held by ICB. Share Department is divided into five sections, which are:
- Investor Portfolio Section:
Investor portfolio section is related with the activities of sending shares and debentures to the company and receives shares and debentures after registration. This section also collects declared dividend, bonus and right share from the companies involved.
- Sales and Withdraw Section:
Sales and withdraw section receives sales and withdraw order from the investors Department and verifies physical existence of the securities.
- Funds Portfolio Section:
Funds portfolio section deals with the sales and withdrawals of mutual funds portfolio, unit fund portfolio and ICB portfolio.
- Securities Reconciliation Section
This section is connected with the reconciliation of securities to check any reconciliation of securities to check any discrepancy, which arise to the actual number and the amount in the accounts.
- Procurement Section
This section is engaged in collection of dividends, interest etc. declared by the companies whose shares are held by the ICB and its other accounts.
2. Funds Division
The main activities of funds division are conducted under three departments which are-
i. Unit Fund
ii. Unit registration and procurement department
iii. Mutual funds
i) Unit Fund:
Legal status and objectives of the fund
Investment Corporation of Bangladesh (ICB) was established in 1976 with the objectives of acceleration industrialization and economic development of the country through development of capital market by mobilizing savings and encouraging and improving the investment climate in the country with particular emphasis placed on broadening the base and scope of investments as well as tapping marginal investors. Keeping in line with these objectives, unit fund is to accelerate industrialization and economic development of the country by way of mobilizing savings of small and medium savers and channeling those in the productive industrial sector. Thus, the scheme induces the small and medium savers to participate in the activities of industrial development of the country.
This department deals with ICB unit, which is an open-end mutual fund. The responsibility of managing the fund rests on Investment Corporation of Bangladesh
ø Sales of units to the investors.
ø Reconcile the amount received and unit certificates send to the agent.
ø Transfer the units, if applied for with the prescribed form.
ø Splits the units, if applied for.
ø Transmission of units in case of death of the unit holder.
ø Issue and distribution of CIP (Cumulative Investment Plan) Certificates.
ø Marketing of lien on units if necessary.
ICB Unit Fund
At a glance (2000-01 – 2004-05)
Table No – 6:
Particulars | 2000-01 | 2001-02 | 2002-03 | 2003-04 | 2004-05 |
Gross Issue Unit Amount | 2793232 28.75 | 2842578 29.26 | 1710155* 17.44 | 1728270* 17.97 | 1627339* 17.09 |
Repurchase Unit Amount | 4063013 41.99 | 3337975 34.54 | 1816132 18.60 | 1976294 20.79 | 2139325 |
Net Issue Unit Amount | (1269781) (13.24) | (495397) (5.28) | (105977) (1.16) | (248024) (2.82) | (511986) (6.37) |
Cumulative Net Loss Unit Amount | 41715909 478.72 | 41220512 473.44 | 41114535 472.28 | 40866511 469.46 | 40354525 463.09 |
Investment (As on 30 June) at cost at market price | 423.55 376.76 | 397.32 270.28 | 431.33 314.75 | 604.59 626.63 | 637.09 700.89 |
No. of Securities (held in the Portfolio as on 30 June | 247 | 254 | 262 | 266 | 271 |
Net Income | 51.43 | 50.96 | 45.54 | 49.71 | 61.11 |
Distributable | 66.16 | 67.06 | 61.90 | 61.04 | 75.15 |
Dividend Per Unit (Tk.) | 12.00 | 12.30 | 12.30 | 11.50 | 12.00 |
Dividend Amount | 50.06 | 50.70 | 50.57 | 47.00 | 48.42 |
Undistributed Income | 16.10 | 16.36 | 11.33 | 14.04 | 26.73 |
Selling Price of Unit Opening (Tk.) Closing (Tk.) | 108 115 | 108 116 | 106* 111 | 108* 115 | 109* 118 |
Yield on Opening Price (percentage) | 11.11 | 11.39 | 11.60 | 10.65 | 11.01 |
Source: ICB Unit Fund Annual Report (2004-05)
Dividend Performance of ICB Unit Fund
ii) Unit Registration and Procurement Department:
This department performance the following functions:
ø Posting all the information related to sale, transfer and repurchase from the statements received from unit sales department of ICB.
ø Preparation of dividend list from the ledger posting and CEP marketing/cancellation.
ø Splits the units, if applied for.
ø Consolidates the units, if applied for.
ø Delivering the certificates, forms, brochures, annual reports etc. to all the issuing offices as per their requisition.
ø Reconciliation of blank unit certificates.
iii) Mutual Funds Department:
Mutual fund is a closed fund, which is issued once. The size of the fund and the number of certificates are determined earlier, which cannot be increased or decreased. Up to June 2000 the Investment Corporation of Bangladesh
ø Maintenance of ledger with the name, address and number of certificates along with distinct number for each mutual funds separately.
ø Issue of certificates among the holders.
ø Verify the signature of the holders in the 117 form.
ø Renunciation of certificates, if applied for by the holders.
ø Registration in the name of transferee after getting approval form the competent authority.
ø Preparation of dividend list from the ledger position.
ø Obtaining approval from the management with regard to selection of bank branches and opening of suitable accounts for payment of dividend to the certificates holders as well as list of signatories authorized o sigh the dividend warrants.
ø Providing the list of signatories to the central department and to open the bank account for payment of dividend through the central accounts.
ø After declaration of dividend, on management's approval to advice computer department for printing of final dividend warrants in the name of the certificates holders as per the dividend list and after obtaining the dividend warrants from the computer department sinning those for signing to the authorized signatories.
ø Distribution/dispatch of final dividend warrants to the certificate holders after completing necessary formalities.
ø Arrangements for re-dispatched.
ø Receiving application for change of address correction of names and forwarding the same to the computer department for correction.
ICB MUTUAL FUND
ICB has played a pioneering role in the development of close-ended Mutual Funds in Bangladesh
ICB has been able to declare attractive dividends on its Mutual Funds during 2004-05 as previous year. Among the 8 Mutual Funds the highest dividend of 210.00 percent on the Second ICB Mutual Funds, with lowest being 15.00 percent declared on the Eighth ICB Mutual Funds during the year under review. The rate of dividends for the previous year ranged from 14.00 to 200.00 percent. In 2004-05 the market prices of all the Mutual Funds on Dhaka Stock Exchange Ltd. & Chittagong Stock Exchange Ltd. were above their par values, reflecting strong performance of the Funds. Average dividend yield on these 8 listed Mutual Funds worked out to Tk. 7.71 per certificate based on closing price. The rate of dividend declared by First ICB Mutual Fund ranked first amongst all the listed companies that declared dividend during 2004-05. ICB has been succeeded to a greater extent in broad basing equity ownership through Mutual Funds as is evident from the number of certificate holders, which was over 31000 as on 30 June 2005.
Operational Highlights
Launching
Table No – 7:
Name of the Fund | Date of Launching | Paid up Capital (Taka in lac) |
First ICB Mutual Fund | 25 April 1980 | 50.00 |
Second ICB Mutual Fund | 17 June 1984 | 50.00 |
Third ICB Mutual Fund | 19 May 1985 | 100.00 |
Fourth ICB Mutual Fund | 06 June 1986 | 100.00 |
Fifth ICB Mutual Fund | 08 June 1987 | 150.00 |
Sixth ICB Mutual Fund | 16 May 1988 | 500.00 |
Seventh ICB Mutual Fund | 30 June 1995 | 300.00 |
Eighth ICB Mutual Fund | 23 July 996 | 500.00 |
Total | 1750.00 |
Source: ICB Mutual Fund Annual Report (2004-05)
Portfolio Position
Table No – 8: (As on 30 June 2005)
Name of the Fund | Cost of Portfolio (Tk in Lac) | Market Value of the Portfolio (Tk) | Market price per certificate (Tk) | No. of Certificate holders |
First ICB Mutual Fund | 311.83 | 1309.34 | 2655.00 | 973 |
Second ICB Mutual Fund | 284.23 | 312.28 | 820.00 | 994 |
Third ICB Mutual Fund | 417.28 | 472.75 | 697.00 | 2748 |
Fourth ICB Mutual Fund | 381.57 | 456.77 | 564.00 | 2152 |
Fifth ICB Mutual Fund | 599.39 | 712.71 | 341.00 | 3923 |
Sixth ICB Mutual Fund | 942.31 | 1002.38 | 217.75 | 9712 |
Seventh ICB Mutual Fund | 1109.48 | 1220.93 | 217.75 | 3163 |
Eighth ICB Mutual Fund | 1154.32 | 1278.82 | 205.25 | 7671 |
Total | 5200.41 | 6765.98 | 31336 |
Source: ICB Mutual Fund Annual Report (2004-05)
Operational Result
Table No – 9: (As on 30 June 2005)
Name of the Fund | Net income (Tk in Lac) | Distributable income per Certificate (Taka) | Ex-dividend intrinsic value per certificate (Taka) |
First ICB Mutual Fund | 101.72 | 640.71 | 2551.20 |
Second ICB Mutual Fund | 40.38 | 222.03 | 336.56 |
Third ICB Mutual Fund | 52.31 | 153.04 | 260.39 |
Fourth ICB Mutual Fund | 71.30 | 161.67 | 297.99 |
Fifth ICB Mutual Fund | 61.01 | 49.12 | 207.12 |
Sixth ICB Mutual Fund | 115.79 | 27.91 | 123.17 |
Seventh ICB Mutual Fund | 62.72 | 29.35 | 150.56 |
Eighth ICB Mutual Fund | 106.55 | 28.86 | 138.76 |
Source: ICB Mutual Fund Annual Report (2004-05)
Consolidated position of portfolios of ICB Mutual Funds
Table No – 10: (As on 30 June 2005)
Sl. no. | Particulars | First ICB Mutual Fund | Second ICB Mutual Fund | Third ICB Mutual Fund | Fourth ICB Mutual Fund | Fifth ICB Mutual Fund | Sixth ICB Mutual Fund | Seventh ICB Mutual Fund | Eighth ICB Mutual Fund |
1. | No. of companies | 48 | 56 | 71 | 77 | 92 | 121 | 118 | 116 |
2. | No. of Securities | 48 | 58 | 72 | 78 | 92 | 122 | 122 | 118 |
3. | Total investment at cost (Tk. in lac) | 311.83 | 284.23 | 417.28 | 381.57 | 599.39 | 942.31 | 1109.48 | 1154.32 |
4. | Market Value (30 June 2005) | 1309.34 | 312.28 | 472.75 | 456.77 | 712.71 | 1002.38 | 1220.93 | 1278.82 |
Source: ICB Mutual Fund Annual Report (2004-05)
Dividend Performance
Table No – 11: (Tk per certificate)
Mutual Funds | Financial Year | ||||
2000-01 | 2001-02 | 2002-03 | 2003-04 | 2004-05 | |
First ICB Mutual Fund | 170.00 | 175.00 | 180.00 | 200.00 | 210.00 |
Second ICB Mutual Fund | 40.00 | 42.00 | 45.00 | 50.00 | 55.00 |
Third ICB Mutual Fund | 45.00 | 50.00 | 50.00 | 50.00 | 52.00 |
Fourth ICB Mutual Fund | 38.00 | 40.00 | 40.00 | 45.00 | 48.00 |
Fifth ICB Mutual Fund | 23.00 | 24.00 | 24.00 | 24.00 | 27.00 |
Sixth ICB Mutual Fund | 17.00 | 17.50 | 17.50 | 17.50 | 18.50 |
Seventh ICB Mutual Fund | 14.00 | 14.50 | 14.50 | 15.00 | 16.00 |
Eighth ICB Mutual Fund | 13.00 | 13.50 | 13.50 | 14.00 | 15.00 |
Source: ICB Mutual Fund Annual Report (2004-05)
3. Loan Appraisal Division
Loan appraisal division has two departments under it:
i) Loan appraisal department
ii) Economic and business research department.
i) Loan appraisal department
ICB provides financial support to the public limited companies through underwriting and bridge financing. Bridge financing is now very selective and done on priority basis. Before financing this department verifies the viability of the project.
ii) Economic and business research department
This department provided service to various interested groups. EBR also participates in the decision making process. The main functions of this department area:
ø To take part in the portfolio management decision.
ø Prepare annual report of ICB, mutual funds and unit fund.
ø Manage business development cell.
ø Collect information about DSE, CSE, public issue, half-yearly accounts of the listed companies etc.
4. Computer Division
Computer division is one of the most important divisions of ICB. Though the division is established recently, it brings dynamism in all the works of the corporation. It has reduced paper works and changed the corporation into a modern, smart and efficient institution.
A strong networking environment exists among the different departments of ICB, which is controlled by the computer division. The main purpose of computer division is to maintain the existing networking environment of ICB and develop some customize software for different departments in order to fulfill the total automation planning by the Investment Corporation of Bangladesh
Computer Division has three departments under it :
i) System analysis department
ii) Programming department
iii) Data management department
The computer division of ICB is a relatively small division. Presently, the departments under this division do not work independently. In near future the three departments will be separated according to their working methodology.
The head of computer division is a DGM. Two system-analysts worked under him. The duty of the system-analysts is to maintain the network. They also participate in the analysis of different software systems develop for the various departments of ICB. In brief, they are responsible for the total computer system of ICB. Besides them two programmers and three assistant programmers develop software for the ICB. These software's are generally developed in Oracle, Developer-2000, Fox-Pro etc. But some leading software companies of Bangladesh
Table 12:
SL. No. | Name of the Software | Developer |
1 | Merchandising operation management | Leads corporation |
2 | Mutual fund script and ownership | Leads corporation |
3 | Stock exchange index publication | Leads corporation |
4 | Software for IPO | Leads corporation |
5 | Project implementation management | Beximco computer |
6 | Software for PMIS | Beximco computer |
7 | Software for financial feasibility analysis for project | Beximco computer |
8 | Software for meeting minute storage and retrieval and software for Lawsuit tracking | Beximco computer |
9 | Unit sales & repurchase information | Beximco computer |
10 | Central account | Colonel corporation |
Source: ICB Annual Report (2004-05)
Computer division of ICB is not a profit earning division but it performs a pivotal role. This division makes the interaction among various departments possible, easier and efficient. This division provides information, which is vital to other departments as well as to other companies. The dynamism of ICB depends on this division.
5. Legal Affairs Division:
The legal affairs division has to departments under it :
i) Public Issue Department
ii) Law Department
i) Public Issue Department
The ultimate objectives of providing bridging loan or direct underwriting is to help the projects to go for public issue. This the public issue department is a vital department in the context of the ICB organogram. This department is empowered to.
ø Visit and collect audited financial statement from the sponsors;
ø Analyze the financial statement of on-going projects;
ø Advise, purse sponsors for going for public issue;
ø Assist sponsors to prepare prospects for issuing shares and debentures;
ø Examine the prospectus submitted by the sponsors & make arrangement for its approval;
ø Advise companies in issuing allotment letters and refund warrants;
ø Make necessary adjustments of bridging loan of concerned company;
ø Make liaison with the recovery and follow up department regarding realizing of dues/over dues.
ii) Law Department:
This is a specialized department and empowered to
ø Process all legal matters.
ø Prepare legal documents, advance agreements, shares agreements, demand promissory notes memorandum and deposit of title deed etc.
ø Arrange exception of underwriting-cum-advance agreement, underwriting agreement and supplementary documents etc.
ø Process litigation cases, prepare legal not ices, refer cases to legal advisor and co-ordinate with legal advisor in the court.
ø Prepare necessary board memos for placement in the board meeting relating to relating to litigation and legal affairs.
6. Implementation and loan recovery division
This division has to departments under it:
i) Implementation department
ii) Recovery and follow up department
i) Implementation department
Project implementation department helps to give the physical shape of a project through close supervision. It also helps in implementation of the sanctioned projects, follow-up the project until the start of commercial operation and makes recommendations for additional loans, if necessary.
ii) Recovery and follow up department
This department is engaged in recovering the following types of loans:
ø Bridge loan
ø Debenture loan
ø Share repurchase
ø Loan against unit fund
Recovery Policy:
The loan recovery and follow-up department classifies loans as "Good loan", "Substandard loan", "Doubtful loan", and "Bad loan". recovery policy is different for these different types of loans. In order to recover doubtful and bad loans the steps followed by this department are:
ø Issuing of reminder letter.
ø Ceasing the validity of NOC (No. objection certificate). NOC is generally issued for granting working capital loan.
ø Giving reminder via telephone and visits to the company.
ø Informs the CIB (Credit information bureau) of Bangladesh Bank of the defaulting borrower.
7. Audits and Methods Division:
The main functions of this division is conducted through two departments:
i) Audit and Methods (Head office)
ii) Audit and Methods (Branches)
This division performs four types of audit namely, internal audit, external audit, statutory audit and Bangladesh Bank Audit (Special audit). It also advises ICB to adopt and practice different new methods.
8. Accounts and Finance Division:
There are two departments under this division:
i) Central accounts department
ii) Project loan accounts department
i) Central accounts department
All kinds of payments of ICB are made by central accounts department. This department provides various information, such as consolidated trial balance to EBR, to help in preparing financial statements for publishing annual report. This department also prepares the following vouchers:
ø Journal voucher
ø Bank voucher
ø Credit voucher
ø Investor credit voucher
ii) Project loan accounts department
This department mainly deals with the calculation of interest, the dates of submission of interest etc. of the projects, which are financed by ICB.
9. Administration Division:
The proper functioning and interaction among the different departments of ICB is ensured by this division. This division has two departments :
i) Personnel department
ii) Establishment department
i) Personnel department
This department deals with the human resource issues of the organization. Functions of this department are :
ø Recruitment
a) Direct recruitment
b) Promotion
ø Training programs
ø Disciplinary action
ø Salary
ii) Establishment department
The activities of this department are :
ø Total purchase of office furniture and fixing or maintenance regarding the purchased material.
ø Replacement initiation according to government rule.
ø Loan facilities to the employees (house building motor etc.).
10. Secretary's Division
The secretary's division has two wings
i) Secretary's department
ii) Public relations department
i) Secretary's department
This department is responsible for:
ø Contact with the board of directors.
ø Arrangement of board meetings.
ø Determine the remuneration of directors.
ø Submission of proposal to the board meeting.
ii) Public relations department
This department conducts all necessary interactions with shareholders, visitors and anyone seeking information about the activities of ICB.
3.4 Role of ICB in developing the Capital Market of Bangladesh
The development of capital market is pre-condition of the economic development of a country. It is a long drawn out process and is dependent on the socio-economic program of a nation. For rapid industrialization a developed capital market is essential especially the share market. Through share market the savings of small savers can be mobilized and channeled into the productive sector.
Capital market may be defined as the demand for and supply of capital as a reproductive capacity, which involves both loan and equity. The capital market actually caters the need of fund for industrialization. The capital market may be divided into two segments; the non-securities segment primarily dealing in terms of loans and mortgages, and the securities segment dealing in stocks/bonds/certificates. ICB as a development bank plays a vital role for developing the capital market of Bangladesh
ICB has played pivotal role to develop the country's capital market. ICB as the national investment house, was the lone organization to perform the activities by creating demand of securities, and on the other hand to ensure the supply of securities in the stock market. The investor's scheme of the corporation provides the required impetus to the capital market by creating a class of investors who are oriented towards investing in corporate stocks. The operation of investor's scheme thus creates demand for securities to match the supply of securities which serves two important objectives: first, the small and medium savings are mobilized for investment in industrial sectors and second, the companies find it easier to mop-up capital by issue of shares because of the existence of large investor class. Moreover, the floatation of mutual funds and issuance of unit certificates by ICB has strengthened the stock market. Through investor's scheme, mutual funds, and unit fund mechanism, ICB has been able to mobilize huge social savings which otherwise would remain static.
3.5 Progress of ICB in the past years
Table No – 13:
Milestones | |
Date of Establishment/ Commencement | |
ICB | October 1, 1976 |
Investors' Scheme | June 13, 1977 |
First ICB Mutual Fund | April 25, 1980 |
ICB Unit Fund | April 10, 1981 |
Second ICB Mutual Fund | June 17, 1984 |
Third ICB Mutual Fund | May 19, 1985 |
Fourth ICB Mutual Fund | June 6, 1986 |
Fifth ICB Mutual Fund | June 8, 1987 |
Sixth ICB Mutual Fund | May 16, 1988 |
Entry as country's Nodal DFI in SADF | May 7, 1992 |
Seventh ICB Mutual Fund | June 30. 1995 |
Decision for 100% Automation | July 14, 1996 |
Eight ICB Mutual Fund | July 23, 1996 |
Purchase of | December 11, 1997 |
Participation in equity of SARF (Unit Fund) | January 16, 1998 |
Advance Against Unit | October 12, 1998 |
Term Deposit | January 13, 1999 |
Lease Financing | April 22, 1999 |
The Investment Corporation of | July 5 and 6, 2000 |
Formation and Registration of 3 Subsidiary Companies | December 5, 2000 |
Computer Training Program. | March 25, 2001 |
Source: ICB Annual Report (2004-05)
3.6 ICB Subsidiary Companies
The major activities of ICB have been divided into three subsidiaries from the year 2001. Descriptions about these three companies have been given below:
3.6.1 ICB Capital Management Ltd.
ICB Capital Management Ltd. is a fully owned subsidiary of investment Corporation of Bangladesh. The company obtained license from the Securities and Exchange Commission to act as Issue Manager. Underwriter, Portfolio Manager and to carry out other merchant banking operations under the Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Regulations, 1996. The Company started operations form from July 1, 2002 through a gazette notification of the government. The Company has a separate Board of Directors comprising 3 members from the private sectors having good academic qualification, expertise and experience in the field of business, finance and investment. The MD of ICB is the Chairman of he Board. The Company has excellent working environment being equipped with logistics and computer facilities.
Objectives of ICML
- Provides the best possible investment avenue for your savings.
- Provides investment opportunity to maximize returns.
- Provides investment counseling to minimize risk.
- Broaden the base of investment.
- Contributes to the growth of industrialization with employment generation.
Opening and operating ICML Investor’s Account
ø Any Bangladeshi adult citizen, Corporation bodies and statutory organizations are eligible for opening an Investment account. persons of unsound mind or minors are not allowed to open such account. Minimum deposit for opening account is Tk. 10,000.00 (Ten Thousand) only. There is no fixed ceiling of additional deposit. Account holder may deposit any amount in phases according to his convenience.
ø Maximum two account can be opened by an individual. One account in his own name and another jointly with other person. Corporate bodies/ statutory organizations shall not be allowed to open joint account.
ø Account can be opened by property filing in prescribed application form and complying with other all-requisite formalities.
ø At the time of opening account, the account holder(s) shall have to appear in person before the authorized officer of the company for completing legal formalities.
ø An account holder(s) can nominate another person to operate portfolio account in the prescribed form at the time of opening account. the operator shall carry authority to operate the accounts freely. The actions of the operator in respect of operating portfolio accounts will be treated as actions of the assigned to an individual who has an existing account in the company. In case of joint account, either or both of the holders can operate the account.
Closing the Investor’s Account
An account holder can close his account by adjusting the entire debit balance including margin loan, interest, service charges, brokerage commission and other charges (if any). After payment of full debit balance, the account holder can withdraw the securities and credit balance from the account at the time of closing. Accounts once closed shall not be allowed to revive. However, the same individual/ institution can open fresh account with the company fulfilling the company fulfilling all requirements.
INVESTMENT CORPORATION OF BANGLADESH
HEAD OFFICE
Deposit Position
Date from 16/06/05 to 20/12/05
Table No – 14:
Serial no | Transaction Name | Total amount | Debit/Credit |
1. | Additional deposit | 4850825.00 | Credit |
2. | Application for share | 9476000.00 | Debit |
3. | Cost of share | 9864035.87 | Debit |
4. | Final dividend | 1309.00 | Credit |
5. | Initial deposit | 4373400 | Credit |
6. | Interest for the quarter | 69050.67 | Debit |
7. | Internal transfer of fund | 57500.00 | Credit |
8. | Internal transfer of fund | 57500.00 | Debit |
9. | Loan repayment | 79500.00 | Credit |
10. | Portfolio management fee | 8915.86 | Debit |
11. | Refund of application money | 5868.00.00 | Credit |
12. | 2252177.64 | Credit | |
13. | Withdrawal fund | 666500.00 | Debit |
Source: ICB Annual Report (2004-05)
3.6.2 ICB Asset Management Company Ltd.
The responsibility of this subsidiary company is to manage new mutual funds and unit funds. Under this new arrangement there will be four different groups or aspects to manage the mutual funds. They are trustee, sponsor, asset management and custodian. For these provisions the operational cost of the newly issued mutual funds are higher than the previous ones. Up to June 2005, the company floated two closed-end mutual funds and two open-end mutual funds. Out of these four funds, two mutual funds, namely “ICB AMCL Islamic Mutual Fund” – a closed-end mutual fund and “ICB Mutual Fund”- a closed-end mutual fund and “ICB AMCL Pension Holders’ Unit Fund” – an open-end mutual fund, were floated during 2004-05. During the year, the company has successfully managed these funds.
3.6.3 ICB Securities Trading Company Ltd.
ICB Securities Trading Company Limited started its brokerage activities on 13 August 2002. during the year under review, the company has significantly expanded its activities to be become one of the most active brokers of both DSE and CSE like in the preceding year. The Company performs trading activities of securities for general investors alongside the institutional investors. With a view to involving more investors’ in the securities market, ISTCL carryout its brokerage activities through its branch offices in four divisional towns namely, Chittagong , Sylhet, Barisal
Stock Brokerage Functions of ISTC up to 2004-05
Table No-15:
Particulars | 2004-05 | 2003-04 | ||||
DSE | CSE | Total | DSE | CSE | Total | |
Total turnover | 7522.52 | 1667.85 | 9190.37 | 2477.10 | 837.76 | 3314.86 |
Transaction | 914.41 | 287.85 | 1202.26 | 632.07 | 426.76 | 1058.83 |
Portion of ISTCL in total turnover (percentage) | 12.16 | 17.26 | 13.08 | 25.52 | 50.94 | 31.94 |
Source: ICB Annual Report (2004-05)
Functions
1. Facilitating individuals/ institutions to make applications in the initial public offerings of securities
2. Providing brokerage services for buying and selling securities listed with the Stock Exchange.
3. Acting as member of the Stock Exchanges and of over- the – counter markets.
4. Performing other related activities.
Capital Structure
Table No – 16: (As on 30 June 2005)
Authorized Capital | Tk. 50.00 Crore |
Paid Up Capital | 1.25 Crore |
Retained Earnings | 56.36 Lac |
No. of Share holder | 7 |
Source: ICB Annual Report (2004-05)
3.7 Financial results of subsidiary companies
A brief summary of financial result of the subsidiary companies of ICB for 2004-05 and 2003-04 is given below.
Table No – 17:
Particulars | ICB Capital Management Ltd. | ICB Asset Management Co. Ltd. | ICB Securities Trading Co. Ltd. | |||
2004-05 | 2003-04 | 2004-05 | 2003-04 | 2004-05 | 2003-04 | |
Income | 12.78 | 4.07 | 5.81 | 2.44 | 4.60 | 2.75 |
Expenditure | 6.72 | 1.99 | 2.28 | 1.36 | 3.20 | 1.86 |
Gross profit | 6.06 | 2.08 | 3.53 | 1.08 | 1.40 | 0.89 |
Net profit | 5.45 | 1.90 | 3.42 | 1.08 | 0.88 | 0.56 |
EPS (Tk.) | 68.11 | 23.69 | 68.38 | 21.66 | 69.97 | 44.83 |
NAV (Tk) | 169.47 | 142.35 | 159.74 | 110.77 | 179.09 | 139.13 |
Dividend (Tk.) | 15.00 | 10.00 | 18.00 | 12.00 | 30.00 | 25.00 |
Source: ICB Annual Report (2004-05)
3.8 Overall Financial Analysis of ICB
The International Accounting Standards (IAS)-17 and IAS-27 have been adopted by the Institute of chartered Accounts of Bangladesh (ICAB) in the recent past, which are related to lease Financing and Consolidation of Accounts of Subsidiaries. The IAS-17 and IAS -27 have been followed while preparing accounts for 2004-05 along with other applicable rules as adopted in Bangladesh
The overall financial position of ICB has improved during the year, compared to the previous year. Financial results of ICB’s own and those of after consolidation of accounts with its subsidiaries and some key financial ratios relating to profitability, liquidity and solvency are given below-
Statement of financial results and some key financial ratios
Table No – 18:
Particulars | ICB | Consolidated (ICB &Subsidiaries) | ||
2004-05 | 2003-04 | 2004-05 | 200-04 | |
Financial Result: | ||||
Total Income (Tk. In Crore) | 170.38 | 137.35 | 187.82 | 143.49 |
Total Expenses (Tk. In Crore) | 82.72 | 92.10 | 86.29 | 93.83 |
Profit Before Provision (Tk. In Crore) | 87.66 | 45.25 | 101.53 | 49.66 |
Provision Made (Tk. In Crore) | 65.73 | 27.11 | 69.85 | 27.98 |
Net Profit (Tk. In Crore) | 21.93 | 18.14 | 31.68 | 21.68 |
Financial Ratios: | ||||
| 12.87 | 13.21 | 16.87 | 15.27 |
| 9.27 | 6.64 | 12.75 | 7.82 |
| 15.73 | 14.65 | 20.91 | 16.94 |
| 43.87 | 38.84 | 63.36 | 46.41 |
| 281.63 | 270.33 | 305.65 | 279.17 |
| 6.00 | 8.15 | - | - |
| 27.35 | 25.75 | 26.75 | 30.96 |
| 4.56 | 3.16 | 2.16 | 2.64 |
| 1.11:1 | 1.10:1 | 1.15:1 | 1.14:1 |
| 32:68 | 39:61 | 30:70 | 38:62 |
Source: ICB Annual Report (2004-05)
Interpretation of Ratios
Return on Investment | : Net Profit /Total Assets * 100 |
Return on Equity | : Net Profit / Total Equity |
Earning Per Share | : Net Profit / No of Shares Outstanding |
Price Earning Ratio | : Market Price Of The Share/ Earning Per Share |
Book Value Per Share | : Total Equity / No of Shares Outstanding |
Dividend Yield | : Dividend Per Share/ Market Price Per Share |
Current Ratio | : Current Assets / Current Liabilities |
Debt Equity Ratio | : Debt / Shareholder Equity |
CHAPTER-FOUR
An Overview of ICB Rajshahi Branch
4.1 Location of the Branch
Rajshahi is a divisional city and it is one of the busiest places of North Bengal. Many business organizations and educational institutions such as silk industries, small and cottage industries, various shops and markets, schools, colleges, university, medical and clinics are situated in Rajshahi to meet the financial support for these organizations institutions and individuals. Shaheb Bazar is the busiest place in Rajshahi and it is also called the heart of the city. This branch serves the Shaheb Bazar area as well as Whole City Gaffer Plaza
4.2 Current Organogram of the Branch
4.3 Operational activities of the Branch
ICB Rajshahi Branch is solely operated by the direct instruction and supervision of the Head office. All policies and regulations are formulated by the Head office and these are implemented through its branches including this branch. Rajshahi Branch offices do not provided of underwriting, Bridge financing and other such as activities for development of Industry. The sector in which the Head office gives loan is supervised by the branch office. The branch offices also do the functions.
1. Investment Account Management
2. Unit Fund Management
3. Mutual Fund Management
4. To maintain the different types of voucher
5. To participate in the primary market transactions directly
6. To participate in the secondary market by ICB securities trading company Ltd. Rajshahi Branch.
4.4 Investors’ Account Scheme
To enhance the merchandising operation of ICB, “Investment Scheme” started on 13th June 1977 to collect funds from the middle class investors to boost up the capital market. The main objective of this scheme is to provide the best service and increase the general peoples. Participation in the capital market. Under the is more than 80 thousand investor’s account have been opened and the number is increasing day by day.
This department performs following operations:
ø An investor can open minimum two accounts, one against own name and the other in joint name.
ø The Investors’ Department opens and maintains investors’ accounts of individual investors for diversified investment in listed securities.
ø Concessionaire rate of interest, presently 12.5% per annum calculated quarterly is charged on the loan, but no interest is paid on any credit balance of the account.
ø An investor can purchase two types of share from the account, primary and secondary. Also these could be sold by adjusting the loan amount. Now investors’ department charges @ 0.50% as brokerage commission for purchase and sale of securities.
ø An investor can operate any account other than the own, if the account holder assigns so by providing attorney. Presently an account holder can operate maximum five accounts at a time.
ø The department receives purchase order in a prescribed form the investors. Presently investor’s department has started suggesting the investor to make ones’ own portfolio to avoid losses in case of purchases of bad securities.
ø Investors are allowed to open such accounts with minimum deposits of Tk. 10000.0 against which loan is provided to the account holders currently at 1:1 ratio subject to ceiling to Tk. 3.00.000.00 change time to time.
ø The department also receives sale order in a prescribed form the investors. The proceeds of sale are credited to respective account.
ø The investors’ department supplies three types of statement and Balance Sheet.
ø The investor can withdraw securities form the account by adjusting the outstanding loan amount.
ø The investor can also withdraw money by keeping minimum balance of Tk. 5000.00 or securities valuing Tk. 5000.00 in the account.
ø Investors can close down the account. in this case, investors’ department delivers the cash balance and securities to the investors after adjusting the loan.
4.4.1 Objectives of the Investment Account
The main objective of the investment account is:
I. To create a group or investor to buy and sell share directly through Stock Exchange from the Branch.
II. To provide the best service and increase the general people’s participation in the capital market.
4.4.2 Limitation of the Investment Account
The limitation of the investment A/C is that this account can be opened only in the name of person but not in the name of any company or corporation or any other institution.
4.4.3 Classification of Investors
Investors irrespective of their occupation had been inverted their savings under Investors’ Scheme. However, salaried Government and Non-Government employees, retired personnel, housewives and working women had shown much more interest in investment under Investor’s Scheme on reflected in the following table:
Occupation – wise classification of the investment account holders
Table No – 19:
Occupation | No. of account holders as on 30 June, 2005 | Percentage |
| Salaried Government / Non-Government Employees | 2202 | 57.40 |
| Retired Personnel | 123 | 3.32 |
| Engineers, Doctors and Layers | 165 | 4.15 |
| Business/Agricultures | 560 | 14.47 |
| Housewives /Working Women | 272 | 7.35 |
| Workers | 167 | 4.97 |
| Others | 263 | 8.35 |
| Total | 3752 | 100 |
Source: ICB Rajshahi Branch
4.4.4 Operational Activities of Investor’s Scheme in Rajshahi Branch:
Table No – 20:
Particulars | 2001-02 | 2002-03 | 2003-04 | 20004-05 | Cumulative As On 30 June 2004-05 |
| No. Of Accounts Opened | 21 | 00 | 00 | 00 | 7058 |
| No. Of Accounts Closed | 220 | 22 | 22 | 224 | 3306 |
| Net Operative Accounts | 119 | (22) | (224) | 3925 | 3752 |
| Deposit Received | 161.71 | 122.58 | 234.25 | 274.37 | 2350.75 |
| Loan sanction | 61.01 | 1.92 | 132.12 | 346.56 | 2684.64 |
| Investment made | 113.60 | 13.45 | 330.53 | 577.93 | 3566.20 |
| Interest Accrued | 94.36 | 102.41 | 55.54 | 65.85 | --- |
| Margin Loan/ Interest Recovery | 94.35 | 177.403 | 126.13 | 120 | --- |
| Fund Withdrawal | 61.03 | 38.26 | 105.86 | 292 | 1267.29 |
| Brokerage Commission Received | | | 3.15 | 6.19 | |
Source : ICB Rajshahi Branch
4.4.5 Rebate Benefits Activities In Investment Account:
Table No – 21: (Taka in Lac)
| SL. No. | Particulars | Financial Year2003-04 | Financial Year 2004-05 | Cumulative Up to 30 June, 2005 |
| | Application received: | | | |
| | No. of investment account | 769 | 59 | 1588 |
| | Amount of down payment | 71.35 | 9.84 | 95.17 |
| | Amount rebate payable | 208.43 | 27.07 | 284.11 |
| | Amount payment for effective rebate | 72.69 | 9.84 | 158.70 |
| | Interest during the period of rebate | 37.79 | 36.91 | 84.81 |
| | Effective rebate benefits: | | | |
| | No. of investment account | 727 | 59 | 1458 |
| | Amount of rebate benefits paid | 204.84 | 27.07 | 275.24 |
| | Total amount received with down payment | 71.35 | 9.84 | 162.50 |
Source : ICB Rajshahi Branch
4.4.6 Sectorial Investment Under Investment Scheme Rajshahi Branch
Table No – 22:
SL. No. | Sector | Financial year 2003-04 | Financial year 2004-05 |
| 1. | Banks | 79.32 | 150.32 |
| 2. | Investment | 42.97 | 25.28 |
| 3. | Engineering | 9.92 | 27.41 |
| 4. | Food & Allied | 13.22 | 5.84 |
| 5. | Fuel & Power | 33.06 | 40.22 |
| 6. | Jute | -- | 0.55 |
| 7. | Apparel | 36.35 | 96.13 |
| 8. | Pharmaceutical & Chemical | 49.58 | 78.81 |
| 9. | Paper & Printing | 6.62 | 2.14 |
| 10. | Service & Real Estate | 9.91 | 23.27 |
| 11. | Cement | 3.30 | 17.21 |
| 12. | Miscellaneous | 39.66 | 93.55 |
| 13. | Insurance | 6.62 | 17.10 |
| | Total | 330.53 | 577.93 |
Source: ICB Annual Report (2004-05)
4.5 Deposit
a) The investor has to deposit with at least Tk. 10,000 at the time of opening an account.
b) The investor can transfer his/her surplus amount to another account the investor can transfer his/her deposited money into another account after closing his/his operating account.
Term Deposit
Table No – 23: Term Deposit
| SL. No. | Particulars | Financial Year 2003-04 | Financial Year2004-05 | Cumulative Up to 30 June, 2005 |
| 1. | Deposit received | 2000.00 | 340.00 | 20,240 |
| 2. | Cash flow (Principal) | 5150.00 | 880.00 | 6030 |
| 3. | Interest expenses | 1221.00 | 982.41 | 2450 |
| 4. | Net balance (1-2) | (3150) | (540) | 1028.82 |
Source : ICB Rajshahi Branch
4.6 Accounting Procedure
The bonus/surplus of the investor, the money of selling share, the refund of IPO etc. are credited to the investment account ledger and interest, commission (about to buying and selling share) the transfer fee of share the buying of share, the money of application in IPO etc. are advanced to the debited to the investment A/C ledger. The surplus of investor is brought out by adding and deducting debit/credit.
4.7 Voucher Maintain
Voucher can be divided into four sections
a) Debit Voucher
b) Credit Voucher
c) Internal Office Debit Voucher
d) Internal Office Credit Voucher
Besides there are also many kinds of voucher
1. General Voucher
2. Internal Voucher
3. Bank Credit Voucher
4. Bank Payment Voucher
5. Journal Voucher
6. Petty Cash Voucher
a) Debit Voucher: The Debit voucher is made when the investor takes money from his/her accounts. The investor has to offer Manager to the issue in the field of ICB taking money from the investor for the advantages of them if any one applies for the investor for the share of ICB, the Debit voucher is made. If ICB do the function of underwriting it gets 10% commission.
b) Credit Voucher: The credit voucher is made for the money which ICB receives from investor as primary or as additions deposit this voucher is made against the cheque of dividend.
c) Internal Office Debit Voucher: This voucher is made against the given order to buy share by the investor.
d) Internal Office Credit Voucher: Inter office credit voucher is a made for the given order of selling by the investor. This voucher is two made against the given order of buying share by the investor. It also made for dividend.
Other kinds of voucher are discussed below-
1. General Voucher: General voucher is used as internal voucher. For example when the interest of an previous account is not calculated then it adjust takes place through general voucher. Again general voucher charge in order to buy and sell share by ICB.
2. Internal Office Voucher: Only the money can be transferred from one account to another account through this voucher. An investor can maintain move than one accounts. The voucher which is made for transferring money is called internal transfer voucher.
3. Bank Credit Voucher: Prepared for all deposit other than initial and additional deposits in investment account.
4. Bank Payment Voucher: Prepared for all payment other payment for investment account.
5. Journal Voucher: Prepared for adjustment of entries and for petty cash.
6. Petty Cash Voucher: Prepared for all petty expenditures.
4.8 Loan
- ICB does not give any loan in cash. It provides loan in order to buy share advertisement debenture. The investor can buy share, mutual fund according to his/her wish against the deposited money and loan. ICB helps at the time of buying this financial instrument but it does not give any assurance to buy.
- ICB does not provide any loan in order to buy unit certificate.
- According to the ratio of 1:3 after establishing ICB has given loan of Tk. 3000 against Tk. 1000 of investment A/C. This ratio is fix at 1:2 for the next time. The share market had been increasing from June to November, 1996 and as a result ICB has changed it at 1:3 last of all ICB has stopped the providing loan. When the market has crash then the ratio has been change at 1:2 to stable the price of share market and to increase the trade volume in market. At present ICB provides loan at the ration ICB provides loan at the ratio of 1:2. That is to say one investor can take Tk. 2000 as loan against the Tk. 1000 from the Corporation maximum two lacs is to be offered as loan to an investor.
4.9 Recovery of loan ICB Rajshahi Branch
Table No – 24: Tk. In lac
| Particulars | Financial Year | |
| 2003-04 | 2004-05 | |
| Investment A/C Capital | 110.00 | 105.00 |
| Interest | 16.00 | 15.00 |
Source : ICB Rajshahi Branch
4.10 Investment in Marginal Loan to Investor
Financial Year 2002-05 (Tk. In Lac)
Table No – 25:
| 2001-02 | 2002-03 | 2003-04 | 2004-05 |
| 725 | 800 | 132 | 347 |
Source : ICB Rajshahi Branch
4.11 Cost of Investment Account
ø After opening the investment A/C if any investor take the loan then he/she should be pay 12.50% compound interest on that loans.
The formula of this interest is:
(The amount of loan X Day) X 12.50%
365
ø In a year ICB calculates the interest for four times
ø ICB cut off 0.50% commission from the investor account in order to and selling share. This commission had been started from the July 1997.
Besides the following expenditure is followed by the investor-
ø The cost of essential papers.
ø Te cost of cash in deposited cheque/draft
4.12 Fund/Share Withdrawn
ø The investor should have credit balance of Tk. 5000 or equivalent share. If he/she wants to withdraw of fund/share from the Investment Account fund. The investor has to apply with a withdrawn from for withdrawing fund and the investor has to apply in the specific form to manager of branch office in order to withdrawing share.
ø If the investor is dead, his/her nominee can take this share/money. In that case the nominee has to collect death certificate from local chairman or from word commissioner and should be apply with these documents to the manager of branch for withdrawn of share/money. If there is joint account and one owner is dead, the another partner has to submit only medical certificate and withdrawn money from the investment account.
4.13 Closing Account
If the investor wants to close his/her account, he/she will have to submit an application. There are two ways closing A/C.
1. Sale
2. Fund or share
4.14 Statement of Account
The investor can get statement on the account by 6 months. The statement of calculation is shown in the schedule form, which has been printed by ICB
Date | Particulars | Debit | Credit | Balance |
| | | | | |
4.15 Income and Expenditure of Rajshahi Branch
The income particulars are interest on margin loan 12.50% per quarter, interest on deposit (FDR) in other bank, commission on sale/purchase (0.005).05%, interest on Mortgage.
The expenditures are management fee, interest paid on FDR, office rent, office maintenance (Stationary, Dividend Warrant Collection Charge), training and transfer fees, computer maintenance and others (Telephone bill Electronic bill).
Comparative Position of income & expenditure (Tk. In crore)
Table No – 26:
Particulars | 2000-01 | 2001-02 | 2002-03 | 2003-04 | 2004-05 |
Income | 1.24 | 1.26 | 1.86 | 19.46 | 17.47 |
Expenditure | .2290 | .425 | 1.99 | 17.20 | 14.82 |
| Profit | 1.01 | .8395 | (.13) | 2.26 | 2.65 |
Source : ICB Rajshahi Branch
During the financial year 2004-05, this branch earned a total income of Taka 17.47 crore by way of margin fixed deposit return (FDR), savings a/c, mortgage, commission. The total expenditure of Taka 14.82 crore, on account of management fee, interest paid on FDR, office maintained, training transfer, computer maintains and others. So, it is clear that this branch has shown gain in this financial year 2004-05 Taka 2.65 crore with addition of previous year the net income was Taka 2.26 Crore.
4.16 Participation in Stock Market
ICB directly participates in the stock exchange function. Before 16 June 2005, Rajshahi Branch could not directly participate in the stock exchange. As the ICB Securities Trading Company Ltd. has been inaugurated in Rajshahi, ICB Rajshahi Branch directly participates in the Stock Exchange Market.
Objectives to participate in stock exchange
The main objectives to participate through ICB are as following:
ø To attend the large number of investor in the stock market.
ø To balance the transaction of share in stock market.
ø To encourage access the different company in the stock market for sound supply of share.
4.17 Share Trading Activities
Table No – 27: (Taka in lac)
| SL. No. | Particulars | Financial Year 2003-04 | Financial Year2004-05 | Cumulative Up to 30 June, 2005 |
| | Share purchase from IPO Number Amount | 16,710 16.71 | 44300 44.33 | 12,46,346 902.44 |
| | Share purchase from the secondary market Number Amount | 270,000 284.24 | 280,000 533.60 | 21,78,659 2625.14 |
| | Share sales in the secondary market Number Amount | 540,605 365.99 | 6,15,000 689.32 | 24,42,047 1409.93 |
Source : ICB Rajshahi Branch
4.18 Unit Fund Activities:
Table No – 28: (Taka in lac)
| SL. No. | Particulars | Financial Year 2003-04 | Financial Year2004-05 | Cumulative Up to 30 June, 2005 |
| | Unit Sales Number Amount | 69,569 75.14 | 65,813 71.73 | 2,856.49 |
| | Unit Repurchase Number Amount | 59,805 63.22 | 69,850 76.67 | 1425.73 |
| | Net Sales Number Amount | 9,764 10.54 | (4,037) (4.94) | 1430.76 |
Source : ICB Rajshahi Branch
4.19 Advances Against Unit Fund
Table No – 29: (Taka in lac)
| SL. No. | Particulars | Financial Year 2003-04 | Financial Year2004-05 | Cumulative Up to 30 June, 2005 |
| A. | Deliver | 12.58 | 12.48 | 28.48 |
| B. | Advance Payment (Principal) | 9.02 | 15.81 | 28.90 |
| C. | Interest Income | 1.66 | 1.50 | 5.14 |
| D. | Net Balance (A-B) | 3.56 | 12.15 | 12.15 |
Source : ICB Rajshahi Branch
4.20 Computer Division
Computer division is one of the most important divisions in ICB. Though the division is established recently, it brings pace in all the work of the Corporation. It reduces paper jobs and also saves the time. For example, to check the balance of an account holder, Investors department need not go the account department but can do the job by using the workstation of the department. A strong networking environment exists among the different department of ICB that is mainly controlled by computer division. The main purpose of computer division is to maintain the existing networking environment of ICB and generate some application for different departments in order to fulfill the total automation planning by the Investment Corporation Bangladesh
Computer division is comprises of three department
1. System Analysis
2. Programming
3. Data Management
ICB developed a set of software to automate and support its main business and management operations the software are merchandising operation management system, mutual funds management system, stock exchange index publication IPO management, personnel management information system, unit sales and repurchase management system, accounting application, mutual fund reconciliation, share reconciliation etc.
During the year ICB branches also started using merchandising software. 11 pc’s were procured during the fiscal year to mitigate the increasing at head office and branch office.
4.21 Legal Actions
The corporation takes the resources of legal actions against those recalcitrant defaulting borrowers who did not come forward to repay loans despite repeated persuasion and reminders. Branch office doesn’t take any action against the borrowers. Head office takes a part of legal actions against that borrower. Recently head office has taken legal action by case field against tow firms Shahmokhdhum Silk Mills and Fashion Wear. Shahmokhdhum Silk mill has closed. Fashion wear is already sold.
4.22 Human Resources Management
Human Resource Management is one of the most important divisions in ICB. It brings pace in all the works of the Corporations. Human resource planning decision is taken by personnel department through head office. There are no particular Human Resource divisions in this branch.
Name of the management personnel are as follows:
Rafiqul Islam Manager/ Senior Principal Officer
Mrs. Sultana Begum Principal Officer
Mr. Abdul Mottalib Principal Officer
Md. Kamrul Islam Assistant Programmer
Mr. Sk. Rafiqul Islam Data Entry Operator
Md. Ershadunnabi Sarker Steno Typist
Employment Planning
Employment planning is a part of the overall human resource plan. It focuses on the numbers of employees and the qualification requires to achieve the organization objective. In the total overall human resources plan employment plans are integrated with other human resource activities including compensation training and employee relations.
Recruitment:
Recruiting encompasses decision about choosing (i) communication method, (ii) Recruiters, (iii) Recruitment Message, (iv) Required Applicant Qualification. Recruiting take place both when employer search for candidate out side organization (External recruiting) and inside the organization (internal recruiting).
Corporation take two recruiting search are as follows:
I. Internal Recruiting: Corporation at first try to cover demand employee for organization. Such as promotion, transfer, layoff, termination.
II. External Recruiting: When the Corporation do not cover internal recruiting then the Corporation recruiting such outside the organization.
Communication Method: Corporation follows to communication method
1. Employee referrals 2. Advertising
Training:
Training is a systematic process of changing behavior knowledge of motivation of present employees to improve the match between employee characteristics and employment requirement. Training is closely to other human resource activities. As part of total human resource development program, Corporation endeavored to develop the skill, knowledge, and professional competence of employees by arranging various in house and local program-training courses. Corporation received local training on different subjects including accounting software, lease financing, project financing, risk management, merchant baking, credit management, banking laws and practices, computer & trade union activities etc.
Training Program of the Corporation:
Technically equipped skill and component employees play the key role to the success of the business. Teams of competent, devoted and motivated personnel are always working activity to achieve the projected goal. Considering their importance the management regularly evaluate their performance and takes necessary measures. Offering them training at home and abroad a regular phenomenon. Corporation take to hand training program improvement performance and skilled for the employee. Corporation given training program two methods. On-the-job training: Superior authority taken step on-the-job training program for office staff. Off-the-job training: Superior authority taken step off-the-job training program.
Compensation
Compensation refers to all forms of financial returns tangible services and benefit employees as part of an employment relationship. Compensation means different things to different people; it depends on a person perspective. As employees we may think of our own compensation as a return for our efforts or a reward for satisfactory or outstanding work. For most of us, the pay we receive for the work we per form is the major sources of personal wealth, tense it is an important determinant of our economic and social well being. Management have two views of compensation. First and most pay is major operating expenses. Labor cost in many organization account for more than so percent of total operating expenses. In addition to being and expense, pay influence employees work behaviors and attitudes.
Government Regulations:
Corporation provided compensation by government regulation. The government influences pay both directly though laws regulation and controls and indirectly through its socioeconomic policies. Government fiscal and monetary policies affect demand for employees. The government more directly affects compensation through wage controls and guide line, which limit increase in compensation for certain workers at certain items and laws that establish minimum wage rate, wage and hour regulation and prevent discrimination.
CHAPTER-FIVE
Findings of the Study
5.1 Problems of ICB
ø No. of employee in Investment Corporation of Bangladesh Rajshahi Branch is not enough to provide proper customer service.
ø The public issues of all the public limited companies assisted by ICB are not satisfactory; as a result the small and middle class investors are sometimes facing loss and getting fully motivated to withdraw investment.
ø Investor cannot know information due to not arrange for seminar, symposium and workshop by this Branch.
ø ICB has decided the dividend of unit Fund artificially, which can cause problems in future.
ø At present investors are not allowed to open an account in the ICB Rajshahi Branch.
ø This branch maintains lot of ledger book every day that takes much time and leaves less time for customer services.
ø Data all sections are not fully computerized.
ø The officials are not interested in supplying available data due to confidential limitations.
ø Lack of good security hinders the way to make efficient portfolio.
ø Some companies do not pay dividend consistently over the yeas that ultimately affect the performance of Mutual Funds because the earning of the fund is dependent upon the returns of the included securities.
ø Some companies tend to conceal material information or sometimes provide misinformation in their financial statements, which impedes the analysis of the securities and the fund management.
ø Securities that are included in the Mutual Funds are not reshuffled regularly.
ø Certificate holders sometimes do not get the warding timely. This causes harassment to the certificate holders.
ø This branch faces the lack of projector
ø Lack of expert to solve computer related problem.
5.2 Suggestions concerning the existing problems:
ø No. of employee has to be increased in Investment Corporation of Bangladesh of Rajshahi Branch.
ø The public issues of all the public ltd. companies should be assisted by ICB to remove the problems faced by small and middle class investors.
ø The Branch should arrange for seminar, symposium and workshop to inform Customers and clients regarding the activities of the branch.
ø ICB should not decide the dividend of unit Fund artificially
ø Though ICB doesn’t permit to open an account it created an opportunity open an investment account in capital asset management ltd.
ø Accounts of ledger book should be recorded in the computer.
ø The officers should be more cordial in supplying data related to their activities.
ø Effective securities measures should be taken to make efficient portfolio.
ø
ø This branch should arrange for computer expert to solve computer problems.
ø There should be specified time frame for redemption for of the Mutual Funds, which is a common criterion for the investment instruments like Mutual Fund. In Bangladesh Bangladesh
Conclusion
During the Internship program I have learned practical knowledge in the investment sector. As a financial institution ICB is an investment Banker. But the functions of ICB are not same as other commercial bank. ICB Rajshahi Branch is solely operated by the direct instruction and supervision of the head office. The head office formulates all policies and regulations and these are implemented through its branches including this branch.
ICB Rajshahi Branch is playing the leading role to develop the capital market in the Northern Area of Bangladesh. ICB as the National Investment house was the loan organization to perform the activities by creating demand of securities and on the other hand to ensure the supply of securities in the stock market. The investor’s scheme of the Corporation provides the required impetus to the capital market by creating a class of investors who are oriented towards investing in corporate stocks. Management of Mutual Funds and Unit Fund operation of Investment Accounts was the cornerstone of merchandising operations, which had a positive on the capital market. During the year 2005, ICB Securities Trading Co. Ltd and ICB Capital Management Ltd. have been introduced to make the ICB activities more dynamic.
Since the number of employee of Investment Corporation of Bangladesh of Rajshahi Branch is not enough with respect to number of investors. So, the investors do not get proper customer service by them.
At last I can say that in spite of various problems ICB, Rajshahi Branch is a profitable institute.