Introduction:

Prime Bank limited is a fast growing private sector bank and the bank has focused for
providing high quality customer service at a very competitive price. PBL efforts are
directed at diversification of products and services. 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 Mastercard. Mastercard 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. The policy planners have found a showing growth of card
market with the increasing acceptability of plastic money in many outlets; the business
has 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, PBL had steeped up
marketing efforts to retain and enhance their market.
This report is basically deals with A Competitive Analysis of Prime Bank Credit Card
with the Credit Cards offered by Standard Chartered Bank and National Bank
Limited and its contribution towards the company growth.

Overview of the problem:

This paper emphasize that all tasks assigned to a marketing research manager, none is
more critical that analysis competitors activities, performance and potentially in credit
card market in Banking area that effect the projection in the future periods are
fundamentals to architectonic a long term strategic plan and designing appropriate
marketing strategies.
In a research project is has been identified that the sales growth become negative for
the last few months. Through this research proposal I like to identify the factors,
which affect large in consumer preference at the time of selecting a particular
companies credit card and find out prospective solution to overcome those
shortcomings. At the same time in this exercise, it is tried my best to identify the
variables that are significantly collateral in competitive advantage and by
distinguished cardholders and merchant effect in performance.

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Objective of the study:

The main objective of the study is it explore and examine the underlying issues critical
to developing and maintaining long term exchange relationship with the customers of
the PBL. More specifically through this study I like to find out the lacking of PBL in
terms of its competitive competitors.
1. To identify the competitors of the PBL.
2. Identify the customer (cardholders) preference that differentiates the services
of PBL Card with the competitor in the market.
3. Identify the merchant preference in credit card transaction.
4. Identify the share of heart of cardholders in charging credit card.
5. To identify the share of dollars in credit and changing in total expenses.
6. Identify the different changes, interest and service fees that give the competitive
advantage in credit card market.
7. The preference of merchant in credit card transaction.
8. Potentiality of credit card.
9. Find the variables that act as competitive advantage in credit card market.

Research Questions:
To achieve the objectives the following major research questions are
identified:

1. What are the factors affect customers at the time of evaluation of the offerings
of credit card of different competitors?
2. Who are the competitors of PBL Credit Card and their performance
comparing with Prime Bank Credit Card?
3. What type of benefits do consumers expect from credit card and what type of
difficulties they face at the time of using it?
4. What type of differentiations exists in the competitive of credit card according
to its interest, service charge and fees?

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Methodology:
Once the research objectives are finalized the next logical step to achieve the objectives
is to decide the methodology to be followed. In order to achieve the primary objective,
quantitative method, in particular case study approach, appear more appropriate in
collecting necessary data. Survey method can be use for research purpose through
using a structured questionnaire that will be prepared both for cardholders and
merchants.

Data Collection: Both the primary and secondary form of information and also
requires a depth observation of the phenomenon to be investigated is used to achieve a
report which is more meaningful and presentable. But most of the data are primary.
The details of these sources are given below:

Primary Sources:
Major source of collecting information is questionnaire, which will be
prepared both for cardholders as well as for merchant.
Another source of information may be discussions with the officers of credit
card division through in depth interview of the competitive companies.
Practical work exposure in the credit card division may consider another
source of information.

Secondary Sources:
Brochures of different banks, their annual report, research publications,
annual report of BIBM on Bank Management can be the secondary sources
for collecting information.
Dhaka Commercial bank Management.
Dhaka Security and Exchange Commission who store information of all the
banks operating in our country.
Layout: All necessary parts of conventional formal report have been followed. The
readers are expected to get a different taste from this report.

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Time and Budget Schedule:

For the proposed research we need to set a time set and required budget schedule,
which may help to determine for further research step:

Time Schedule
Tasks

Time

1. Preparing a Research Proposal

1 Weeks

2. Completion of Literature review

1 Week

3. Developing interview guideline and Negotiation with the

2 Weeks

cardholders and merchant

4. Data collection

2 Weeks

5. Data transcription

2 Weeks

6. Data Analysis

2 Weeks

7. Completions report writing, preparing recommendation

2 Weeks

and submission.
Total

12 Weeks

Project Budget
Subjects
1. Collection of literature

Costs
Tk. 2,000.00

2. Salary of the field investigators

Tk. 10.000.00

3. Tape Recorder, Telephone Charge and stationary

Tk. 1,000.00

4. Data Collection

Tk. 2,000.00

5. Data Transcription

Tk. 2,000.00

6. Printing and other costs

Tk. 3,000.00

Total

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Tk. 20,000.00

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CHAPTER-1
THEORITICAL BACKGROUND
Every firm competing in an industry has a competitive strategy, whether explicit or
implicit. This strategy may have been developed explicitly through appalling process
or it may have evolved implicitly through the activities of the various functional
departments of the firm. Left to its own devices, each functional department will
inevitably pursue approaches dictated by its professional orientation and the
incentives of those in charge. However, the sum of these departmental approaches
really equals the best strategy.

Competition
Competition includes al the actual and potential rival offerings and substitutes that a
buyer might consider.
We can broaden the picture further by distinguishing four levels of competition, based
on degree of product substitutability:

1. Industry competition: A company sees its competitors as all companies making

the same product or class of products. Volkswagen would see itself as competing
against all other automobile manufacturers.

2. Form competition: A company sees its competitors as all companies

manufacturing products that supply the same service. Volkswagen would see itself
competing against not only other automobile manufacturers but also against
manufacturers of motorcycles, bicycles, and trucks.

3. Generic competition: A company sees its competitors as all companies that

compete for the same consumer dollars. Volkswagen would see itself competing with
companies that sell major consumer durables, foreign vacations, and new homes.
Essentially developing a competitive strategy is developing a broad formula for how a
business is going to compete, what its goals should be, and what policies will be needed
to carry out those goals.

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Process for Formulating a Competitive Strategy

A. What is the Business Doing Now?
1. Identification
What is the implicit or explicit current strategy?
2. Implied Assumptions
What assumptions about the companies' relative position, strengths and
weaknesses, competitors and industry trends must be made for the current strategy to
make sense?
B. What is happening in the Environment?
1. Industry Analysis
The key factors for competitive success and the important industry opportunities and
threats?
2.Competitors Analysis
What are the capabilities and limitations of existing and potential competitors, and
their probable future moves?
1. Societal Analysis
What important governmental, social, and political factors will present
opportunities or threats?
2. Strengths and Weaknesses
Given an-analysis of industry and competitors what are the company strengths and
weaknesses relative to present and future competitors?
C. What should the business be doing?
1. Tests of Assumptions -an strategy
How do- the assumptions embodied in the current strategy compare with the analysis
in B above?
2. Strategy Alternatives
What are the feasible strategy alternatives given the analysis above? Is the current
strategy one of these?
3. Strategy Choice
Which alternative best relates the company's situation to external opportunities and
threats?

STRUCTURAL ANALYSIS AND COMPETITIVE STRATEGY:

An effective competitive strategy takes offensive or defensive action in order to create
a defendable position against the five competitive forces. Broadly, this involves a
number of possible approaches.
Positioning the firm so that its capabilities provide the best defense against
the existing array of competitive forces.
Influencing the balance offered through strategic, thereby improving the
firm's relative position; or
Anticipating shifts in the factors underlying the forces and responding to
them, thereby exploiting change by choosing a strategy appropriate to the new
competitive balance before rivals recognize it

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The Structural Analysis of Industry:

The intensity of competition in an industry is neither a matter of confidence nor bad
luck. Rather, competition in an industry is rooted in its underlying economic structure
and goes beyond the behavior of current competitors. The state of competition in an
industry depends on five basic competitive forces, which are show in Figure:
POTENTIAL
ENTRANTS
(Threats of new
entrants)

SUPPLIERS
(Bargaining
power of
suppliers)

INDUSTRY
COMPETITOR
Rivalry among
existing firms

BUYERS
(Bargaining
power of
buyers)

SUBSTITUTES
(Threats of
substitute products
of services)
Fig: Driving Forces Industry Competition

Generic Competitive Strategies:

Three Generic Strategies:
In coping with five competitive forces, there are there potentially successful generic
strategic approaches to outperforming other firms in an industry.
1. Overall cost leadership
2. Differentiation
3. Focus
OVERALL COST LEADERSHIP
The first strategy an increasingly common one in the 1970s because of popularization
of the experience curve concept, is to achieve overall cost leadership in an industry
through a set of functional policies aimed at this basic objective. Cost leadership
requires aggressive construction of efficient -scale facilities, vigorous pursuit of cost
reductions from experience, tight cost and overhead control, avoidance of marginal
customer accounts, and cost minimization in areas like R&D, service, sales force,
advertising, and so on.

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DIFFERENTIATION
The second generic strategy is one of differentiating the product or service offering of
the firm. Creating something that is perceived industry wide as being unique.
Approaches to differentiating can take many forms: design or brand image (Fieldcrest
in top of the line towels and linens: Mercedes in automobiles) technology) Hysteria in
lift trucks Macintosh in stereo companions Coleman in camping equipment) features
(Jennie air in electric ranges); customer service Crown cork and seal in metal cans)
dealer network (Caterpillar Tractor in construction equipment,) or other dimensions.
Product
Form
Feature
Performance
Conformance
Durability
Reliability
Repair Ability
Style
Design

Services
Ordering Ease
De4livery
Installation
Customer Training
Customer
Consulting
Maintenance
&
Repair
Miscellaneous

Personnel
Competence
Courtesy
Credibility
Reliability
Responsiveness
Communication

Channel
Coverage
Expertise
Performance

Image
Symbols
Media
Atmosphere
Events

Table: Differentiation variables

FOCUS
The final generic strategy is focusing on a particular buyer group, segment of product
line, or geographic market; as with differentiation focus may take many forms,
Although the cost and differentiation strategies are aimed at achieving their objectives
industry wide, the entire focus strategy is built around serving a particular target very
well and each functional policy is developed with this in mind.
Strategic Advantage
Uniqueness Perceived
By the Customer

Industry Wide

Strategic Target
Particular
Segment only

DIFFERENCIATIO
N

Low Cost Position

OVERALL COST
LEADERSHIP

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FOCUS
Fig: Three Strategic Strategies

A FRAMEWORK OF COMPETITOR ANALYSIS:

Competitive strategy involves positioning abusiveness to maximize the value of the
capabilities that distinguish it from its competitors. It follows that accentual aspect of
strategy formulation is perceptive competitor analysis. The objective of competitor
analysis is to develop a profile of the n attune and success of the likely strategy changes
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each competitor might make, each competitors probable response to the range of
feasible strategic moves other firms could initiate, and each competitors probable
reaction to the array of industry changes and broader environmental shafts that might
occur.
Fig: Components of a Competitor Analysis
What drive the competitor?

What the competitor is doing

and can do?

Future Goal

Current strategy

At all levels of management

and in multiple decisions.

How the business is

currently competing?

Competitors Response Profile

Is the competitor satisfied with its
current position?
What likely moves or strategy shifts will
competitors make?
Where is competitor vulnerable?
What will provoke the greatest and
most effective realization by the competitor?

Assumption

Capabilities

Held about itself and the

industry?

Both Strengths and

weaknesses.
.

Areas Competitor Strengths and Weakness

Products
Standing of products, from the user's point of view, in each market segment
Breadth and depth of the production
Dealer/Distribution
Channel coverage and quality
Strength of channel relationships
Ability to service the channel
Marketing and Selling
Skills in each aspect of the marketing mix
Skills in market research and new product development
Training and skills if the sales force

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Operations
Manufacturing cost position-economies of scale, learning
equipment etc.
Technological sophistication of facilities and equipment
Flexibility of facilities and equipment
Proprietary know-how and unique patent or cost advantages
Skills in capacity addition, quality control, tooling, etc.
Location, including labor and transportation cost
Labor force climate, unionization situation.
Access to and cost of raw materials
Degree of vertical integration

curve

of

Research and Engineering

Patents and copyrights
In house capability in the research and development process
(product
research, process, research, development, imitation, etc)
R&D staff skills in terms of creatively, simplicity, quality reliability etc.
Access to loused sources of research and engineering.
Overall Costs
Overall relative costs
Shared costs or activities with other business units
Where the competitors is generating the scale or other factors that are key to
its cost position.
Financial strength
Cash flow
Short and long term borrowing capacity (relative debt equity aeration)
New equity capacity over the foreseeable future
Financial management ability, including negotiation raising capital, credit in
venturous and accounts receivable
Organization
Unity of values and clarity of purpose in the organization
Organizational fatigue based on recent requirements placed on it
Consistency of organizational arrangements with strategy
General Managerial Ability
Leadership qualities of CEO; ability of CEO to motivate
Ability to coordinate particular functions or groups of functions (e g
manufacturing with resource coordination)
Age training and functional orientation of management Depth of
management
Flexibility and adaptability of management
Corporate portfolio
Ability of corporation to support planned changes in all business units in terms
of financial and other resources
Ability of corporation to supplement or reinforce business unit strengths
Others
Special treatment by or access to government bodies
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Personnel turnover

Value chain:
To diagnose competitive advantage it is necessary to define a firm's value chain for
competition in a particular industry. Starting with the generic chain, individual value
activities are identified in the particular firm. Each generic category can be divided
into discrete activities, as illustrate for one generic category in the following figure
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
Inbound
Logistics

Operations

Advertising
Marketing
Management

Outbound
Logistics

Marketing
&
Sales

Service

Sales Force
Technical
Administration Literacy

Promotion

Fig: The generic Value chain.

STRUCTURAL ANALYSIS WITHIN INDUSTRIES

Dimensions of Competitive Strategy
Companies' strategies for competing in an industry can differ in as wide variety of
ways. However the following strategic dimension usually capture the possible
differences among a company s strategic options in a given industry:
Specialization: the degree to which to which it focuses its efforts in terms of the
width of its line the target customer segments an the geographic markets served;
Brand identification: the degree to which it seeks brand identification rather
than competitors based mainly price or other variables. Brand identification can be
as sieved inverting sales force or variety of other means.
Push versus pull: the degree to which it seeks to develop brand identification
with the ultimate consumer directly versus the support of distribution channels in
selling its product.

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Channel selection: the choice of distribution channel ranging from company

owned channels to specialty outlets to broad line outlets.
Product quality: its level of product quality in terms of raw materials
specifications, adherence to tolerances, features, and so on;
Technological leadership: the degree to which it seeks important to note that a
firm could be a technological leader but deliberately not produce the highest quality
product in the market quality and technological leadership do not necessarily go
together;
Vertical integration: the extent of value added as reflected in th level of
forward and backward interruption adopted in clouding whether th firm has captive
distribution exclusive or owned retail outlets an in house service network and so on;
Cost position: the extent to which it seeks the low cost position in
manufacturing and distribution through investment in cost minimizing facilities and
equipment;
Service: the degree to which it provides ancillary services with its predict line
such as engineering assistance and in house service network credit and so forth. This
aspect of strategy could be viewed as part of vertical integration but of vertical
integration be is usefully separated for analytical purposes;
Price policy: its relative price position in the market. Price position will usually
be related to the relationship between a unit and its parent such other variables as
cost position and product quality but price is a distinct strategic variable that must
be treated separately;
Leverage: the amount of financial leverage and operating leverage it bears;
Relationship with parent company: requirements on the behavior of the unit
based on the relationship between a unit and its parent company. The firm could be a
highly diversified conglomerate, one of a vertical chain of businesses part of a cluster
of related businesses in general sector a subsidiary o foreign company an dos no. The
gnarr of the relationship with the parent will influence the objectives with which the
firm is managed the resources available to it and perhaps determine some operations
or functions that it shares with other units;
Relationship to home an host government: in international industries the
relationship the firm has developed or is subject to with its home government as well
as host governments in foreign countries where it is operating.

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Competitive Advantage
Marketing Mix
Marketers use numerous tools to elicit desired responses from their target markets.
These tools constitute a marketing mix. Marketing Mix is the set of marketing tools
that the firm uses to pursue its marketing objectives in the target market.
McCarthy classified these tools into four broad groups that he called the four Ps of
marketing: product, price, place, and promotion.
Robert Lauterborn suggested that the sellers four Ps correspond to the customers four
Cs.
Four Ps
Four Cs
Product
Customer solution
Price
Customer cost
Place
Convenience for customer
Promotion
Communication with customer
Winning companies will be those who can meet customer needs economically and
conveniently and with effective communication will get advantage against competitor.

Marketer Responses and Adjustments

Marketers also are rethinking their philosophies, concepts, and tools. Here are the
major marketing themes as the millennium approaches:
Relationship marketing: from focusing on transactions to building long-term,
profitable customer relationships. Companies focus on their most profitable
customers, products, and channels.
Customer lifetime value: From making a profit on each sale to making profits
by managing customer lifetime value some companies offer to deliver a constantly
needed product on a regular basis at lower price per unit because they will enjoy the
customer's business for a longer period.
Customer share: from a focus on gaining market share to a focus on building
customer share. Companies build customer share by offering a larger variety of
goods to their existing customers. They train their employees in cross selling and up
selling.
Target marketing: from selling to everyone to trying to be the best firm serving
well defined target markets. Target marketing is being facilitated by the proliferation
of special-interest magazines, TV channels, and Internet newsgroups.
Individualization: From selling the same offer in he same way to everyone in
the target market to individualizing and customizing messages and offerings.
Customers will be able to design their own product features on the company's Web
page.
Customer database: from collecting sales data to building a rich data
warehouse of information about individual customers' purchases, preferences,
demographics, and profitability. Companies can "Data mine" their proprietary

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databases to detect different customer need clusters and make differentiated

offerings to each cluster.
Integrated marketing communications: from heavy reliance on one
communication tool such as advertising or sales force to blending several tools to
deliver a consistent brand image to customers at every brand contact.
Channels as Partners: From thinking of intermediaries as customers to
treating them as partners in delivering value to final customers.
Every employee a marketer: From thinking that marketing is done only by
marketing, sales, and customer support personnel to recognizing that every employee
must be customer-focused.
Model-based decision-making: from making decisions on intuition or slim data
to basing decisions on models and facts on how the marketplace works.
These major themes will be examined throughout this book to help marketers and
companies sail safely through the rough but promising waters ahead. Successful
companies will be those who can keep their marketing changing as fast as their market
place and market space.

Tools for Tracing and Measuring Customer Satisfaction:

Complaint and suggestion systems:
A customer-centered organization makes it easy for its customers to deliver
suggestions and complaints. These information flows provide companies with many
good ideas and enable them to act quickly to resolve problems.
Customer satisfaction surveys: Studies show that although customers are
dissatisfied customers will complain. Most customers will buy less or switch
suppliers. Complaint levels are thus not a good measure of customer satisfaction.
Responsive companies measure customer satisfaction directly by conducting periodic
surveys.
Ghost shopping: Companies can hire persons to pose as potential buyers to
report on strong and weak points experienced in buying the company's and
competitors' products. These mystery shoppers can even test whether the company's
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Lost customer analysis: companies should contact customers who have stopped
buying or who have switched to another supplier to learn why this happened. Not
only is it important to conduct exit interviews when customers first stop buying, but
it is also necessary to monitor the customer loss rate. If it is increasing, this clearly
indicates that the company is failing to satisfy customers.

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Today, more and more companies are recognizing the importance of satisfying and
retaining current customers. Here are some interesting facts bearing on customer
retention:

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Acquiring new customers can cost five times more than the costs involved in
satisfying and retaining current customers. It requires a great deal of effort to
induce satisfied customers to switch away from their current suppliers.
The average company loses 10 percent of its customers each year.
A 5 percent reduction in the customer defection rate can increase profits by 25
percent to 85 percent, depending on the industry.
The customer profit rate tends to increase over the life of the retained customer.
A satisfied customer tells about the company or product to 5/6 people, but on
the other hand a dissatisfied customer tells to 15 to 18 people from his
experience.

Adding Financial Benefits:

Two financial benefits that companies can offer are frequency marketing programs
and club marketing programs. Frequency marketing programs (FMPs) are designed
to provide rewards to customers who buy frequently and / or in substantial amounts.
Frequency marketing is an acknowledgment of the fact that 20 percent of a company's
customers might account for 80 percent of its business.
Adding social Benefits:
Here company personnel work on increasing their social bonds with customers by
individualizing and personalizing customer relationships. Following table contrasts a
socially sensitive approach with a socially insensitive approach to customers.
Good Things
Initiate positive phone calls
Make recommendations
Candor in language
Use phone
Show appreciation
Make service suggestions
Use "we" problem-solving language
Get to problems
Use jargon or shorthand
Personality problems aired
Talk of "our nature together"

Bad things
Make only callbacks
Make justifications
Accommodative language
Use correspondence
Wait for misunderstandings
Wait for service requests
Use "owe-us" legal language
Only respond to problems
Use long-winded communications
Personality problems hidden
Talk about making good on the past

Adding Structural Ties:

The company may supply customers with special equipment or computer linkages that
help customers manage their orders, payroll, inventory, and so on.

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CHAPTER -2
ANALYSIS OF GENERIC COMPETITION
Cash
Cheque
Different Types of card
Credit Card

CASH
The present day in convertible paper money and other credit instruments, which
serve, as close substitutes for money called near money are only a recent development.
The paper money (Cash) was not used circulation before the French Revolution; paper
money (Cash) is a competitor of modern invention plastic money (credit card). People
today are not habituated in plastic money. The main reason is to use Cash in
transactions are easy acceptability, Government circulation, easily accessible, store
value, social preference and reluctant of change new medium (credit card) rather than
cash.

CHEQUE
A cheque is an unconditional written order, advanced by a customer to his bank, to
pay on demand a specified sum of money to or to he order of the person named therein
or the bearer of the instrument. A cheque is defined by Negotiable Instrument Act as a
bill of exchange drawn on a specified banker and not expressed to be payable
otherwise that on demand. Cheques came into use in 1875. Crossed Cheque, Bearer
and Order cheque are the different form of cheque, hi selling of goods; cheque is used
in large transaction like industrial market.

DIFFERENT TYPES OF CARD

Bank Card:
Transactions card giving a bank's customers' ability to pay for goods and services at
retail merchant, and get cash at bank teller window or at ATMs. A bankcard may be a
credit cad, tied to a pre-approved line of credit or a Debit Card, drawing funds from
the holder's checking or saving accounts. A bankcard is also used as identification
when cashing a check.

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Debit Card/Assert Card:

A plastic card used to initiate a debit transaction. In general, these transactions are
used primary to purchase goods and services and to obtain cash, for which the
cardholder's asset account is debit by the issuer.
There are two types of Debit cards currently is use in USA: national Debit Cards, such
as -the Visa Debit difference is that the national debit cards were designed specifically
as retail payment cards; bank debit card were issued first as ATM access cards and
later as general purpose transaction cards.

Travel and entertainment (T & E) Cards:

Charge cards used to pay for hotel, airlines and others business related expense.
Diners Club, followed by American Express in 1958, issued the first travel card in
1950. Travel Card differs from bank credit cards in several ways. They typically are
30-day charge accounts, with payment due in full before the next billing cycle, the
accountholder receives copies of the original sales drafts (called Country Club billing)
with the monthly billing statement, and some T & e card plans, usually corporate
cards, gibe the C/H a quarterly summary of charges to the card.

Smart Card:
Bank card containing a computer chip for identification, special purposes processing
and data storage. The computer ship has the ability top perform various
computations, such as validating the C/H's PIN, authorizing retail purchases, verifying
account balances and storing personal records. A smart card's internal memory may
also store pertinent information on a consumer's relationship with a bank, brokers,
insurance company or medical history time the card is used. Also called chip card or
memory card.

ATM card:
An unattended self-service terminal activated by a card and cardholder validation
method (CVM) that providing cash withdrawal. It also may perform other functions
including basic banking functions such as accepting deposits, ordering transfers
among accounts, accepting, loan payments and answering account balance inquiries.

CREDIT CARD:
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 in read electronically by
specialized machines called Point of Sale (POS) Terminals at merchants or Automatic
Teller Machines (ATM) in bank premises or elsewhere.

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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 folly 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 large account being only a small piece of documented plastic. This is why it is
popularly called 'Plastic Money'.

HISTORY OF CREDIT CARD:

Credit was first used in Assyria, Babylon and Egypt 3000 years ago. The bill of
exchange - the forerunner of banknotes - was established in the 14th century. Debts
were settled by one-third cash and two-thirds bill of exchange. Paper money followed
only in the 17th century. Christopher Thornton, who offered furniture that could be
paid off weekly, placed the first advertisement for credit in 1730.
From the 18th century until the early part of the 20th, tallymen sold clothes in return
for small weekly payments. They were called "tallymen" because they kept a record or
tally of what people had bought on a wooden stick. One side of the stick was marked
with notches to represent the amount of debt and the other side was a record of
payments. In the 1920s, a shopper's plate - a "buy now, pay later" system - was
introduced in the USA. It could only be used in the shops that issued it.
In 1950, Diners Club and American Express launched their charge cards in the USA,
the first "plastic money". In 1951, Diners Club issued the first credit card to 200
customers who could use it at 27 restaurants in New York. But it was only until the
establishment of standards for the magnetic strip in 1970 that the credit card became
part of the information age.
In the late 1940s, a number of U.S. 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 the practice by introducing the first
modern credit card in 1951.
California-based Bank of America extended the idea throughout 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 U.S. bankers 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 Interbank Card Association(ICA) which later
became MasterCard International.

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The word credit comes from Latin, meaning, "trust".

The first use of magnetic stripes on cards was in the early 1960's, when the
London. Transit Authority installed a magnetic stripe system.
San Francisco Bay Area Rapid Transit installed a paper-based ticket the
same size as the credit cards in the late 1960's.

Functions:
(i) Single Money
Credit card can be used in world wide as a Single money in transaction with safety. A
MasterCard can easily be accessible in sub-Sahara or in Siberia.

(ii) Emergency situation:

In emergency situation (2am) when there is no money at home credit card can be
charge for transaction or cash withdrawal from ATM booth.

(iii) E-commerce:
E-commerce is a new business arena in modern world. Buyer and seller can transact in
online and sell goods in terms of credit card.

(iv) Late Payment in Transaction:

if there is no money at hand now, one can charge credit card. But the amount such
transactions have to pay to the bank within a future time context.

(v) Cash advance facilities:

Credit card can be used to withdraw ATM booth or cash advance facilities from the
bank within the credit limit.

(vi) Security:
It gives more security rather than carrying cash.

(vii) 24 hours transaction:

Credit card is accessible in transaction within any time of the day

(viii) Social status:

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Anybody can pay bill by credit card and it relief him from money counting hassle.

(ix) Traveling:
In traveling credit card is the best friend. In some constrains it is not possible to
endorse sufficient amount foreign currency. In such situation credit card is the best
option.

(x) Money is the second God:

It is said that money is the second God. In crisis situation whenever anybody lost his
all things in a new place, credit card can relief his hassle because others cannot use it.
So it cannot be robbed.
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Parties related to Credit Card:

There are four parties related to credit Card.
1. Card Holder
2. Issuer.
3. Acquirer.
4. Merchant.

Cardholder:
The Cardholder is solicited, screened and approved by the issuer, which establishes a
line of credit for the customer and issues the credit card.
The Cardholder uses Credit Card either to purchase goods and services from a
merchant or to obtain a cash advance from a member for which the cardholder
receives a monthly bill from the issuer.

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 and collects from the cardholder
The issuer may also benefit from the services of a third party and/or association in
processing information and payments.

Agent Banks
Managing a credit 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
its name, has the cardholder relationship makes all of the Credit Decisions, completely
manages the card program. It the agent banks name appears on the card, then the
agent bank must be in foliate/associate member of Master Card/Visa Int' 1.
The issuer usually keeps most the income from the cardholder account the agent
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While the issuing agents income this from arrangement is small, it does, retain
customers who might take their business else-where if a Credit Card Program were
not available at their local financial institution. When the issuing agents name appears
on the card it tends to preserve the financial institution-Cardholder relationship.

Acquiring
The acquiring member or acquirer solicits, screens, and accepts merchants into its
Credit Card Program.
The acquirer 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, instructions,
and contracted support services
Handle and process the credit
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.
MasterCard and Visa provide various services to the acquirer including authorization
and settlement processing, interchange and resolution of member disputes.
Many financial institutions are both issuers and acquirer. As issuer they maintain the
cardholder relationship. As acquirers they maintain the merchant relationship.

Merchant
The Merchant can be virtually any company, which meets the qualification standards
of MasterCard and/or Visa and an acquirer. Typical merchant business includes retail
stores, restaurant, airlines, mail order companies, and health plans to name a few.
MasterCard 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.

Definition of Various Credit Card and Terms:

Gold Card
Visa or MasterCard Credit Card with a maximum credit limit of USD 5000/-, and
frequently higher. These cards have a higher annual fee than standard bank credit
card, and are marketed to consumers with above average incomes. Sometimes called
prestige card or premium cards.

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Also, American Gold Card, which differs from bank, issued cards. American Express
issues the card, but the credit line is arranged separately, by a bank acting as an agent
for the card issuer, and varies among banks. American Express travel Related Services
Co. issued the first gold cards in 1966 and has claimed a proprietary right to the name,
a claim the court have not upheld.

Secured Credit Card

A Credit card backed by a deposit account is issued to marginally qualified borrowers.

Affinity Card
Credit Card promoted under a sponsoring agreement between an organization and a
card-issuing bank. In exchange for making available its membership list, the sponsor
receives some compensation from the issuing bank, usually part of issuer's net interest
income. The issuer may waive annual fees for affinity cardholders, or even offer the
card at a lower rate than ordinary bankcards.

Co-branded Card
Visa or MasterCard Credit card jointly sponsored by a bank and a retail merchant,
such as departmental store. Co-branded cards may be issued at less cost than
conventional retail private label cards, and give issuing bank access to new customers.
Cardholders may be given incentives, such as discount on merchandise, rebates, or
discounts off purchases. A co-branded card has a tie-in with a specific merchant rather
than an association or professional group. It also can be used at other merchant.
Contrast with Affinity cards.

Islamic credit card

Shariah laws of contract Three fundamental principles
1. Principles of Justice
2. Principles of transparency
3. Principles of Maslah
Why Islamic credit card?
An alternative mode of payment for Muslims to make retail purchases.
To broaden the product offering of Islamic banks
To capture customer and niche market segment.
To compete with conventional banking products

Definitions: Debit card: A card issued to a customer with available balance in his
account.
Charge card: A card that provides a credit facility up to a ceiling but not
revolving.
Credit card: Revolving credit.

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Benefits
To customer
-Convenience
-Cash advance
-Grace period

To the Bank
-Customer satisfaction
-Profit Mechanism
-Network acceptance

[Source: Seminar-Dhaka Sheraton, August 20, 2001]

DEFINITIONS
1. Affinity and Co-Branded Card Program
A program created to offer the issuers the opportunity to issue affinity or co-branded
cards as well as life-style or specialized custom-feature cards targeted at potential
cardholders having common interests or membership in an organization.
2. Affiliate Member
A type of MasterCard member that participates indirectly through an association of
member or a Principal member in the activities of this corporation (for example: by
issuing MasterCard cards or by accepting transaction records from merchants).
3. Bank Identification Number
A unique number, of which the first position is 5, assigned by MasterCard
international to identify member transactions and accounts. The BIN is the first six
digits of a cardholder account number, and it is the second through seventh position of
the 23-digit acquirer's reference number. Also known as the prefix.
4. Banknet Telecommunication Network
The MasterCard worldwide telecommunication network. The primary "data
transport" communications facility that links all MasterCard customers and
MasterCard data processing centers into a single online financial network.
5. Card Validation Code
A two-part security feature. CVC 1 is a 3-digit value encoded on tracks 1 and 2 in
three contiguous positions in the "discretionary data" field of a magnetic stripe on a
MasterCard. CVC2 differs from CVC1 and is indent-printed into the tamper-evident
signature panel on the card. The CVC is intended to inhibit the alteration or misuse of
card data and enhance the authentication of card.
6. Check Digit Routine
An algorithm that is performed on the primary account number (PAN) to ensure that
the numbers were not transposed or miss keyed. The result is the last position of the
account number, or check digit.

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7. Counterfeit Card
An instrument or device embossed, printed, or otherwise bearing MasterCard marks,
so as to purport to be a MasterCard card issued by a member or affiliate. But that is
not a MasterCard card because the embossing or printing thereon was not authorized,
or because the MasterCard card has been altered or re-fabricated, even though it was
validly issued initially.
8. Chip
A piece of silicon etched with electronic circuits. The microprocessor chip has an
operating, a programming, and a data memory that allows internal processing to take
place and provides additional storage capacity.
9. Chip Card (Smart Card)
A Card with logic capabilities and data storage capabilities to enhance card
functionality and security (for example pay telephone cards)
10.EMV
A joint project started in 1993. To define global specification for chip-based credit and
debit cards. The EMV specifications are divided into three parts- card specification,
terminal specification, and application specification. The latest version of EMV is
known as EMV2000, Integrated Circuit Card Specification for Payment System,
Version 4.0 December 2000.

Business Card In America:

Below are credit cards tailored especially for businesses:
Fleet Platinum Visa Business Credit Card
Save with a 0% introductory APR on purchases and balance transfers for up to six
months, and a low variable rate, currently 10.99%, on purchases and balance
transfers thereafter. Generous credit line up to $50,000, online account access,
discounts on business products and services, free additional cards for employees, and
more.
Advanta Platinum Business MasterCard
No annual fee credit card especially for small businesses. Offers credit lines up
$100,000. Get a 0% APR on purchases and balance transfers for the first 9 months you
have the card.
Blue for Business from American Express(r)
Blue for Business from American Express works much like a traditional credit card
with revolving credit line. It offers a 2.9% introductory APR for 6 months, then a fixed
11.99% fixed rate afterwards. Unlike most Amex cards, there is no annual fee, and you
can extend payments over time. Also offers business discounts at FedEx, Hertz, Hilton
Hotels, Mobil and more. Of course, it also extends the perks American Express is
known for, such as travel accident insurance, car rental insurance, baggage loss
insurance and more.
American Express(r) Business Gold Card
This card offers basically the same features as the Blue for Business card above,
although it has a little different payment arrangement. Like most American Express

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cards, you pay off your balance monthly, unless you use the Business Flex program,
which lets you draw out payments over time, but at a higher APR than the card above.

FEATURES OF AN IDEAL CREDIT CARDHOLDER

From the point of view of the bank an ideal credit cardholder is the one having
following features:
Uses the card extensively for purchasing merchandise and services, thus
generating service charge revenue.
Makes use of the credit aspect of the card ideally by perpetually keeping his
or her credit limit near maximum, thus generating interest.
Makes large infrequent purchase, thus reducing processing costs per
transaction. Is not delinquent in making the minimum monthly payments and did not
default and thus reducing bad debt losses.

CREDIT CARD IN BANGLADESH

In Bangladesh three banks have already introduced credit cards. These are Prime
Bank, National Bank, Standard Chartered Grindlays Bank, American Express Bank
issues charges cards only. Very recently Janata Bank a nationalized commercial bank
in Bangladesh has also came up with its own smart card called "Ready Cash". A good
completions swiftly growing up and it is expected that more banks national or
international Government or private will enter the new place of business.
Standard Chartered Grindlays Bank took a pioneering role in introducing credit cards
in Bangladesh. It started acquiring Visa and MasterCard nearly 10 years back. In the
first few years its operational area was very limited and concentrated only at the large
hotels and restaurant. In 1997 the bank decided to launch full-scale card operation
and very realistically brought a wide range of people under is service systems. It is now
giving a wide range of card services thorough multifarious quality facilities. Standard
Chartered Grindlays Bank issues only local credit card. It has Visa Silver, MasterCard
Silver and MasterCard Gold.
Prime Bank Limited obtained Principal Membership of Master Card International in
the month of May 1999. Within a period of six months, the bank successfully launched
MasterCard-Credit Card, which created a new dimension on its customer service and
consumer financing. Prime Bank Limited is planning to expand their card facilities
even further so that more and more people can be benefited from both the emotional
and functional needs.

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Name of the Institutions

Establishment
Period

Brand

Credit
base

National Bank Ltd.

March, 1997

MasterCard

9000

6.72

Standard
Chartered March, 199
(Grindlays)Bank

MasterCard
VISA

102000

76.12

Prime Bank Limited

November, 1999

MasterCard

10500

7.83

Vanik Bangladesh Ltd.

March, 1998

Vanik

8500

6.35

Dhaka Bank Ltd.

August, 2001

Vanik

4000

2.98

134000

100

Total

card Market
Proportion (%)

National Bank burst into the world of credit card in October 1997. It has Gold
international and Gold local and Silver international and Silver local. National Bank
Limited first issues International Card in our country. They started to issue local cards
in the year of October 1999.
Vanik a Sri Lanka - Bangladesh joint enterprise has also come forward with its won
credit card service in recent time. It has started its operation in the year 1998. They
have their own card called Vanik Card; one is known as Gold another is Classic.
More and more people are getting interested in credit card facilities. To observe the
success of the credit card operations of other banks, Premier Bank Ltd, Jamuna Bank
Ltd., The City Bank Ltd. and Southeast Bank Ltd have taken measures introduce their
own cards.

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CHAPTER -3
ANALYSIS OF FORM COPPETITOR
MasterCard
VISA
Vanik

MasterCard
Membership:
MasterCard is an association nearly 22,000-member financial institution worldwide.
As part of its role in partnership with its members, MasterCard performs such central
functions as:
Creating global and regional marketing programs and promotions to
support
the MasterCard brand
Providing expert systems including secure, reliable, state-of the art
transaction processing
Developing new products, services and technologies
Setting and enforcing politics and standards for card use acceptance

Benefits of MasterCard Membership:

Payment cards are a proven means of generating profit and strengthening customer
relationships. Additional benefits of MasterCard membership are access to: -The known and globally accepted MasterCard brand
An integrated product and service offering that can customize to appeal to
different types of customers
Reliable and cost-effective transaction processing

Operation
Banknet Telecommunication Network:
Banknet, a global MasterCard telecommunications network, lets you communicate
with other members and with MasterCard. It is used primarily send and receive '
authorization, clearing and settlement transactions.

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The MasterCard Banknet provides the following benefits: ~

Flexibility, through an adaptive and reactive renting network
Reliability, through rerouting capabilities and back up facility
Efficiency, through a peer-to-peer architecture and pack let-switching
protocol
Expandability with redesign
Intelligence of a distributed network.
Speed (average 2.1- second response time)

Standard Authorization Process:

Here is the standard step-by-step procedure for authorizing the use of a
MasterCard card.
Step 1: The cardholder gives the card to the card to the merchant
Step 2: The merchant starts the authorization process by either placing a call
to acquirer or its agent entering the transaction into POS terminal
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 to the issuer MIP. The issuer host computer (MasterCard Interface processor)
Step 5: The issuer host computer processes the authorization request and
sends an authorization request response
Step 6: Banknet routes the response to the acquire agent or its agent,
Step 7: The acquirer or agent delivers the response to the merchant

Standard Authorization Flow

Card Holders

Merchant

Acquirer Host

M
I
P

Mastercar
d
Banknet
Switch

M
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Issue
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In its authorization request response, the issuers can advice the merchant to take one
of the following actions:
Approve
Decline
Capture Card
Refer to Card Issue

Card Program Business

There are two categories of payment card business: issuing and
acquiring. Many MasterCard members participate in both
categories.
An issuing member (issuer) handles all aspects of the cardholder
relationship, including solicitation of cardholders and
maintenance of cardholder's account.
An acquiring member (acquirer) assumes the responsibilities of
the merchant relationship, including merchant acquisitions and transactions
settlement.

Issuer information need:

Estimated number of cardholders.
Projected transaction volume and monetary amount.
Estimated proportion of cardholders who will revolve their account
balance.
Appropriate interest rate and annual fees.
Products needs within your market.
Approximate number of people who will apply for quality for, and use their
products.
Current market competition.
Cost of conduct card business.
Projected interchange and others sources of revenue.
Projected profit.

Acquirer information needs:

Number of visitors of the to the geographic area and their country of origin
Estimated demographic spending
Estimated number of merchants
Average value of individual goods and services
Average customer purchase
Competitors' merchant discount rate possibilities of renting selling pointof-sale (POS) equipment
Legal issues
Market potentials
Average interchange and other cost
Available technology

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Issuer income:
Fee income
Annual fee
Supplemental card fee
Cash advance fee
Late payment fee
Access limit fee
Insufficient fund fee
Enhancement fee
Merchandising income
Interest income:
Billing date calculation
Average daily balance calculation
Posting date calculation
Interchange Income:
International
Domestic
On us transaction
Foreign exchange income

Card Issuance Expenditure:

Cost of funds
Losses
Fraud
Credit
Operation and services
Transactional fees
Cash disbursement accommodation fee
Banknet access fee
Authorization service charge

Acquire income
Merchant discount rate
Cash disbursement accommodation fee
Rental / sale or equipment and supplies
Cost of fund

Acquirer business expenditure

Interchange fee
Cost of fund
Operation and processing expense
Merchant marketing and services
Losses
Fraud
Credit
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Cardholder decision factors:

(i) Price
(ii) Geographical convenience
(iii) International acceptances
(iv) Bank affiliation / loyalty
(v) Enhancement / card product differentiation
(vi) Credit policy

Merchant decision factors:

(i) Geographical convenience
(ii) Loyalty
(iii) Pricing
(iv) Payment scheduling and timing
(v) Credit arrangement
(vi) Service and support
(vii) Additional service.

Product
1. MasterCard Card:
This general-purpose payment card offers unsurpassed global acceptance, letting
customers purchase goods and services at participating merchants.
2. Gold MasterCard Card:
This product targets an upscale market and delivers increased profitability as a result
of greater frequency of use, higher spending, and larger average outstanding balance
3. MasterCard Business Card:
This card offers members incremental revenue and relationship with corporate clients
with members.
4. Co-Branded and Affinity Programs:
This programs help issuer to segment to market and gain additional customers to
incremental volume.
5. MasterCard Travelers Cheques:
Sold by members and through Thomas Cook network locations around the world,
travelers' cheques give consumers a secure, convenient alternative to carrying cash.
6. Maestro POS Debit Program:
The only global, online point-of sales (POS) debit service with a single, unifying
acceptance mark and brand; Maestro provides cardholders a payment alternative to
cash or cheque that is quick, convenient and secure.

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Services:
1) MasterCard/Cirrus ATM Network
A single network distinguished by the MasterCard and Cirrus marks, it offers
worldwide cash access 24 hours a day, 365 a year, at Automatic Teller Machine (ATM)
that permit cash withdrawals and other bank services.
2) Priority Cardholder Service:
These are the Lost and Stolen Card Reporting (LSR), Emergency Card Replacement
(ECR), and Emergency Cash Advance (EGA) service, which protect all MasterCard
cardholders against improper use of their cards if their cards are lost or stolen, and
provided critical assistance.
3) Master card global service:
This will be a cost-effective telecommunications based service that makes emergency
assistances for cardholders traveling outside their country more accessible.
4) The MasterCard/ Thomas Cook Alliance:
Provides cardholders with access to routine and emergency travel-related service at
Thomas Cook travel and bureaux de charge locating worldwide.
5) Card Enhancement service:
Card enhancement provides valuable advantage and convenience for cardholder, offer
members tools to maximize a portfolio's and build brand preference. These services
include
Master Assist Travel Assistance Service
Master Phone Telephone Service
Product and Service Positioning.

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VISA CARD
STANDARD CHARTERED INTERNATIONAL VISA CREDIT CARD LAUNCH
VISA Card: August 2002

PRODUCT
Visa Classic
Visa Gold

NUMBER OF CARD
30,000 (Both classic and gold)

PER MONTH CARD ISSUED

Average 1,000 cards; in the year 2000 SCB issued about 12,000 cards.

ISSUANCE / ELIGIBILITY CRITERIA

Cardholder between the age of 21 and 70
Cardholder is a Bangladeshi national
Against RFCD Account* Balance (to be kept under lien)
Against Exporter's Retention Quota FCY Account* Balance (to be kept
under lien)
Maintained in any Bank.
Card cannot be issued to more than top 3 executives of
any exporting firm.
All cards issued to the top executives of an exporting firm
must be taken from only one issuing bank.

CREDIT LIMIT
Card Type

Minimum Limit

Maximum Limit

Visa Classic (426376)

US $ 500

US $ 4,500

Visa Gold

US $ 5,000

US $ 20,000

(426378)

LIEN AMOUNT
Card Type
Visa
(426376)

Credit Limit
Classic US $ 500

Lien Amount

LTV

US $ 556

90%

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Visa
(426378)

US $ 2,500

US $ 2,778

90%

US $ 4,500

US $ 5,000

90%

Gold US $ 5,000

US $ 5,556

90%

US$ 10,000

US$ 11,112

90%

US $ 20,000

US $ 22,223

90%

FEATURES / BENEFITS
Worldwide recognition and acceptance
Accepted in more than 150 countries around he world including Bangladesh.
Accepted at over 18m establishments worldwide including 3,000 merchant in
BD
Accepted at over 556k ATMs worldwide displaying the Visa log
Accepted at over 398k visa member offices worldwide.
Easy and flexible credit and repayment options
Maximum 45 days interest free period
Monthly minimum repayment of 5% or US $10, whichever is greater
Instant cash advance up to 50% of the credit limit.

Service & Price Guide

International
Visa Gold

International
Visa Classic

General
Payment due date
15 days
15 days
from statement date
Minimum amount due
5% or $10 whichever is higher
Cash advance
50% of credit Limit
Maximum interest free
45 days
45 days
days available
(incase of 100% payment of current
balance on or before due date)

International
Visa Gold

International
Visa Classic

Fees
Annual Fee (US $)
Annual fee for
Supplementary card (US $)
Card replacement fee (US$)

120.00

70.00

60.00
15.00

35.00
15.00 (per card)

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Other fees & charges (all cards)

Finance charge on all transaction types, calculated from statement date

till repayment date
(calculated on average daily balance method)
2.5% per month (30
days)
Over limit charge (US $)
15.00
15.00
Late payment charge (US $)
15.00
15.00
(If minimum due is not paid within Due Date)
Duplicate statement (US$)
5.00
5.00
Returned cheque (US$)
15.00
15.00
Outstation cheque processing (US $)
10.00
10.00
Copy of sales voucher (US$)
15.00
15.00 (up to a maximum of 3 months)
Certificate charge (US$)
15.00
15.00

Cash Advance fee

2.5%
2.5%

Safe and secure

Photo-sign feature
Cardholder protection in case of loss/stolen report
24-hour customer service
Supplementary cards
Four supplementary cards on one account
Separate spending limits for supplementary card(s)
Replacement of only supplementary card(s) in case of lost / stolen
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VANIK
Vanik a Sri Lanka - Bangladesh joint enterprise has also come forward with its won
credit card service in recent time. It has started its operation in the year 1998. They
have their own card called Vanik Card; one is known as Gold another is Classic. It has
now 9000 (Apx.) cardholders in credit card market.

Vanik- Dhaka Bank

Dhaka Bank has introduced new products like Credit Card, ATM Card and Automatic
Phone Banking service in selected branches in recent years. Dhaka Bank Credit Card
has earned wide acceptability and reputation within a very short time. The bank has
developed the process such mat it can deliver the Credit Card within only seven days
against security: for unsecured card it takes only ten days. It has also networked at all
branches in Dhaka, Chittagong, Sylhet, Narayangonj and Savar. To offer any branch
banking facility for the convenience of the customer.
Dhaka Bank at a Glance:
Opening of the Card Business
August 2001
Human resource
Executive -3, Non-executive -8
Card Base:
4000 (40% Gold Card and 60% Classic)
Per month Issued Card:
230 (Average)
Credit Limit:
Tk. 10,000 to 49,000 = Classic Card
Tk. 50,000 to 1,00,000 = Gold Card
Customer Positioning:
Bill payment in Petrol Pump, and Auto Debit facility (Grameen Phone, Citycell). They
are also going to deal with North South University where the students will pay their
fees in Vanik Credit Card.
Marketing Activities:
20% of their income from Card goes to marketing expense. They have 15 DSAs and
card selling through branch is one of their main Cards selling effort. They expand a
large share for advertising of Cards.

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Chapter 4
ANALYSIS OF INDUSTRY COMPETITOR
National Bank Limited
Standard Chartered Bank
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

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Objective:
To maximize the facilities to the client and shareholders in
systematic way
Expand the multinational service in economic sector to
reach the mass people
To ensure the maximum utilization of manpower by
increasing efficiency and growth of productivity
To encourage saving attitude in different classes in the
society
To gain confidence by easing the international transaction in
internal trade
Analyzing the realistic demand by consumers' needs and
provide short and long-term finance.
To activate the capital market by facilitating the banking
system
Utilizing the latest technology for the best service to the
customer.
To bring and strengthen banking discipline and thus
creating the long-term compatibility with the customer by giving
the best service
To improve the corporate image in home and abroad.
Present Company Financial Position at a Glance:

Year

2002

2003

2004

(Tk.
million)
2005

Authorized Capital

1000.00

1000.00

1000.00

1000.01

Paid up Capital

396.16

430.27

430.27

430.29

Income

1808.66

1871.54

2988.90

3285.01

Expenditure

1407.69

1667.95

2064.75

2268.4:

Net Profit before Tax

400.97

203.59

333.75

400.6

Assets/ Liabilities

33617.50

36545.28

47148.08

48732.1

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Branches: 75 all over the country

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Card Division:
i. Establishment: March 1997
ii. Human Resources:
a. Executive
b. Non Executive
c. Technical
Total
iii. Card Base:
a. Gold Card
b. Silver Card
Total Card

: 3
: 37
: 3
: 43
: 2000
: 7000
: 9000

iv. Trend Analysis:

Year

2002

2003

2004

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

POS Machine (no)

20

210

325

Merchant

125

425

700

iii. Target People to be served:

Mainly salaried person
Income Tk. 10000 or more selected for silver card, if other thing remain same.
More than Tk. 55000 or more selected for gold card.
For international card the prospect cardholder have to open a RFCD account
Card is issued in security basis.
iv. Customer Positioning:
Price and Competitive offering is the key focal point of offering. NBL card has
the following options:

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Acceptance: An international MasterCard 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.
Security: When a NBL MasterCard 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.
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.
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 24 hours a day, 365 days a year.
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.
Cash Advance: Cash drawing facility through approved channels is available in
some cases to meet your emergency requirement at a prescribed fee.
Need not Pay Fluffy at a Time: NBL gives the opportunity of being flexible in
repayment schedule suiting to convenience of cardholders.
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.

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STANDARD 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 1853 following the grant of a Royal Charter from Queen
Victoria.

Standard Chartered today:

Today Standard Chartered is an 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 postwar 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 Chittagong to
Dhaka after the birth of Republic of Bangladesh in 1971. At present, the bank has 28
branches over the country by acquiring ANZ Grindleys Bank (2000).

Objective:
Vision:
To be renown as the top performing banking group serving Australia, New Zealand
and
in the international market.

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 range of services in the banking and non-banking
financial sectors.

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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 strive for profit and sound growth.
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.

Branches: 18 all over the country.

Card Division:
i. Establishment: March 1995 [ANZ Grindlays Bank]
ii. Human Resources:
a. Executive : 26
b. Non Executive
: 300
c. Technical
: 2
Total
: 328
iii. Card Base:
a. Gold
b. Silver

Total

: 10000
: 60000
: 700000

iv. Trend Analysis:

Year

2003

2004

2005

Issued Card

6000

10000

38000

Surrendered Card

120

208

320

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

Table: Annual Report of Standard Chartered Bank

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v. Target People to be Served:

Segmentation profile:
Geographic:
Primarily located in major urban areas/ centers of the country i.e. Dhaka, Chittagong,
Khulna, and Sylhet.
Demographic:
Age:
Income:
Education:

18 to 70 years
Monthly minimum 10,000.00 and/or above
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 is
responsible for overall operation of CSD. A sales team known as Direct Sales Agents,
work alongside these units to build up the customer 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 applicant 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 a 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 services 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.

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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 that accepts credit card. This
department, also known as Acquiring Department, brings in new merchants to expand
the business of the credit cards. The basic job of this department 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 sets 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.

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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 3 C's

C - clean leading
C - convenient
C - cash advantage
Standard chartered credit Card comes with a winning combination of value- packed
features and benefits.

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, departmental 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.

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.

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 ATM's 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 the country.

Safe and Secure

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

Air Accident Insurance

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

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Supplementary Card
You may apply for Supplementary Card(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.

Financial security in times of need

Safety Net is designed to cover the cardholders credit card outstanding balance when
he 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, bringing in new merchant to
expand the business of the credit cards. The basic job of this department is to
encourage the sellers to accept the credit cards and if they agree they become
merchants of SCB. 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 in reputation and volume of sales. The rate falls from 1.55 to 4%.
viii.

Marketing Activities:
a) Number of DSE
: 150
b) Advertising Exp.
: 10%
c) Merchant Marketing:5 People.

Advertising:
Awareness and intention development through advertising in print media, sign and
billboard.

Public relation:
SCB maintains a good public relation with valued Cardholders and merchants (Hotel
Pan Pacific Sonargaon)

Special promotion Offer:

The bank offer special to the cardholders time to time. Such asDiscount 5% to 20% in various renown restaurant and first food
steres, i.e. Chillis Chineses &Thai Restaurant, La Villa, Royal Orchid, Hot Hut, Sajna,
Santoor, Hotel Agraba etc.

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Discount in payment in Five Star Hotel i.e. Hotel Pan Pacific

Sonargaon (20%)
Discount in payment in air ticket i.e. Malaysia Airlines
Special offer package tour at discount
Special gift for the bonus point cardholders.
Air insurance
Discount in different promotional period.
ix. Innovation:
Standard Chartered is going to market a special card, which have three facilities in a
single card (Debit, Credit, ATM Facility). They found that there is a demand of the
proposed card in Bangladesh and the cost of production will vary significantly.

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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. hi 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 fall 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.

Objective of PBL:
Vision
To be the most effective bank in terms of customer service, profitability and
technology application
Mission
PBL mission statement states, " Bank with a different"
Prime Bank is a banking and financial services group that aims to be an outstanding
financial institution providing a broad range of services in the banking and nonbanking financial sectors.
Continue improvement in our business policies and procedures
Cost reduction throw integration of technology at all levels
Efforts and Focused
On delivery of quality service in all are of banking activities with the aim to add
increased value to shareholders investment and offer highest possible benefits to the
customers.
Strategic Priorities
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To have sustained growth, broaden and improve range of products and services.

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 1

19-120, 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
: [email protected]
Web site
: www.prime-bank.com
Swift
: PRBLBDDH
Chairman
: Qazi Saleemul Huq
Managing Director : M Shahjahan Bhuiyan
Secretary
: Manash Kumar Ghosh
Auditors
: Hoda Vasi Chowdhury & Co. Hawlader Yunus & Co
Chartered Accounts
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
in 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%.

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The return on assets (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

2001

Authorized Capital

1000.00

1000

1000

1000

4000

Paid up Capital

500.00

600

700

1000

1400

Reserve Fund

362.92

448.93

602.89

815.89

1055.98

Equity Fund

1258.26

1526.41

1781.86

2239.80

2808.00

13259.87

16902.29

20483.23

28069.24

36022.46

Loans & Advances

9074.94

12686.85

16492.22

23219.67

31916.11

Investment

1730.74

1996.23

2749.71

3083.81

3939.50

Income

1100.14

1196.20

1593.69

1970.37

2406.43

Expenditure

448.36

592.28

592.28

824.23

886.09

Net Profit before Tax

705.09

696.84

769.91

1064.24

1200.83

Fixed Assets

174.27

218.50

265.17

321.68

372.12

15736.94

19358.93

24249.13

32361.62

41506.29

613

730

777

894

1024

3.38%

2.38%

1.72%

2.16%

1.54%

Deposits

Assets/ Liabilities
Number of Employees
Return on Asset (%)

2002

2003

2004

Fig: Current financial position at a glance (Source: Annual report, 2005)

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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 fund 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
31st December 2005, PBL had property and assets of Tk. 41,506.29 million as detailed
below:
2005
Taka
273,115,879

2006
Taka
203,753,581

3,077,524,975

2,043,945,640

403,023,839

1,653,795,077

3,939,495,059

3,083,812,400

31,916,112,508

23,219,673,305

Other asstes

372,118,317

321,681,640

Non-Banking Assets

344,898,190

654,955,145

41,506,288,767

32,361,616,788

Cash in hand
Balance with Bangladesh Bank
Balance with other Banks
Money at Call
Investment in Liquid Assets

Total

Prime Bank Limited always gives emphasis on maintaining sufficient liquidity and
cash flows to ensure uninterrupted customer services. As on 31 December 2005 our
ratio of liquid assets to total asset was 21.89%.

Loans and Advances

With a view to improving the quality and soundness of loan portfolio, credit risk
management methods were undated in 2005. The Bank is now applying a new system o
credit risk assessment 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.

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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, 2005 is given below:
SI. No
1.

Sector

Tk. in million

Agriculture

2.

Large and medium Scale Industry

2,832.55

22.33

3.

Working Capital

1,604.13

12.64%

4.

Export Finance

1,675.55

13.32%

5.

Commercial Lending

4,244.05

33.45%

6.

House Building Loan

392.12

3.09%

7.

Small and Medium Enterprise

114.70

0.90%

8.

Consumer Credit Scheme

473.57

3.73%

9.

Others

1,291.19

10.18%

12,686.85

100%

Total

% of total loans

Automation in Banking Operation

Technology integration for automation of business process and procedures is an
integral part of our customer service. Since the very beginning, we have made
conscious efforts for induction and up gradation of information technology at various
levels to gain competitive edge over the others. Process of selecting top quality banking
software was in an advanced stage and the Bank had already short listed three
solutions from internationally reputed firms. We needed high performance, scalable
online banking software so that customer service was rendered more efficiently and
new products were deployed with little loss of time. In that exercise, we were looking
into a total solution to our needs. Putting multiple delivery channels had also been
considered for extra capacity building in customer service by doing away with
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All our branches are now in an automated environment as far as customer

transactions are concerned and excepting a few branches in locations not accessible by
lease line all other branches are under a wide area network. For remittance and fund
transfer purpose, our customers could take the advantage of online facility. We had
already undertaken initiatives to look into the possibility of connectivity outside BTTB
to keep our online service at a desired level and without interruptions. We are pleased
to inform you that our website (www.primebank.com) was frequently visited from
home and abroad. The site was always updated with current information about our
services and products. Rate of interest on various deposit products sere also available
in ten website.
The bank was incorporated in Bangladesh as a banking company under companies
Act 1994. It has 44 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 its general class of
shares.

Branches: 44 all over the country.

Card Division:

I. Prime Bank Card Service:

Establishment : 18th 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
b. Non Executive
c. Technical
Total

:2
: 37
: 1
: 39

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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
Local Card:
Gold Board/ Employee
Gold VIP
Gold Normal
Silver Padma
Silver Meghna
Silver Jamuna

[Tk. 25,000- 5,00,000]

[Tk. 1,00,000- 5,00,000]
[Tk. 50,000- 5,00,000]
[Tk. 30,000- 50,000]
[Tk. 20,000- 29,000]
[Tk. 10,000-19,000]

iv. Card Base:

Card Type:

International

Local

Total

a. Gold

841

4067

4908

b. Silver

468

5049

5517

Total

1309

9116

10425

v.

Per month average Card issued : 350

vi. Trend Analysis:

2004
4114

2005
3058

Surrendered Card

528

1424

Advance in credit card (Tk. in million) 250.60

313.90

379.70

Income from Card (Tk. in million.)

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 Machine (no)

10

173

Merchant (no)

10

120

350

Issued Card

2003
4131

10.30

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vii. 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:
Our first priority is our existing valued account holders of our Branches.
Employees of the reputed organizations who are getting at least Tk.10,000/- per
month. Employees of Bank or financial institutions.
Corporate Clients of Prime Bank.

viii. Operational Structure of Card Service Division:

The Card Division of Prime Bank Limited is divided into eight departments are as
follows:
i. Marketing Dept.
ii. Credit Analysis Dept.
iii. Operating Dept.
iv. Accounting Dept.
v. Recovery Dept.
vi. Acquiring Dept.
vii. International Card Monitoring
viii. Customer Services Dept.
I had to work in these sections turn by turn. I started my learning experience from
Operation Department from 6th July and ended in Marketing on 6th octoberJanuary.
And in the mean time, I had traveled all the sections in due time.

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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 DSA (Direct
Sales Agent). The DSA's bring card applications from potential and
prospectivecardholders 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 then 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:
b. End of Day Processing
c. Embossing File:
d. Card Delivery:
e. Card Activation
f. Purchase through Cards: MasterCard cards issued from any issuer
of the world. The shop can accept card in three ways:
Manual Authorization:
Electronic Authorization:
Floor Limit Authorization:
g. Settlement:
i. On-Us-Card:
Cardholder

Shop

Bank

Cardholder Billing

ii. Not-On-Us-Card:
Cardholder
Issuing Bank

Shop

Acquiring Bank

Cardholder Billing

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Master Card Int'l

Cardholder payment

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4. Accounts Dept:
Receiving Cheque/ IBCA / ETCA, from various branches, collect and posting
them in the various card accounts.
Check EDP report if found any discrepancy take necessary action
immediately.
As per EDP report prepare all kinds of voucher and posting them in the
proper ledger.
RFCD a/c maintains properly and collects adequate fund from RFCD a/c for
various card a/c from various branches.
Reconciliation with ID / FAD.
Settlement of Local card transaction bill with NBL / SCB.
Settlement of International card bill and reconciliation with ID and
MasterCard Int'l.
Daily Merchant payment procedure through IBAC or Pay order issue.
Maintenance all kinds of late payment, Excess limit charge and other dispute
charges etc.
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:
Telephonic contact with each of defaulter
Preparing MIS on overdue accounts of the Card.
Preparing reminders letter for all defaulters.
Corresponding with other branches of our Bank to
follow up their defaulters.
Legal Procedure.
Serving legal notice to the defaulters.
Physical visits to the delinquent cardholders.
Appear at the court for legal procedures.
MIS for dishonored cheques.
Preparing CL for overdue card accounts.

6. Acquiring and Merchant Marketing:

Making new Merchants
Merchant Services
Preparation of proposal for Merchant set-up
Installation of POS / Manual machines at the merchant end.
Settlement of Disputed transactions at merchant end.
Delivery to merchant payment.
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.
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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 A/C.

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.

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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:
58

A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
M.
N.
O.

Revolving credit limit.

No account.
Convenient-easy purchase /repayment.
Security - robbery/if list.
Prestigious.
First photo card.
Minimum payment and also easy payment.
No lean or no charge.
Additional card issuing facility.
World-class brand.
Minimum interest.
Service centers are in most important places.
Minimum 20 days and maximum 50 days interest free period.
Plastic money.
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:
Unsecured Card
Secured Card.
Unsecured Card: In case of unsecured 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.

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SPECIAL FEATURES OF MASTER CARD:

Prime Bank Ensures High Level of Security by
inserting the Photograph of the cardholder on the
Card.
20 to 50 days credit form the date of transaction.
When cardholder receives monthly statement, he
can either choose to pay in mil or just minimum due
amount shown on the statement. No interest is
charged if he pays in full within payment due date.
It provides services 24 hours a day, 365 days a year and the service is provided all
over the world.
It does not require any joining or administrative fees.
There is a bonus provision for annual fees in the case of local card. If card user
accumulates 10,000 Prime Bank Bonus Point for his Gold Card or 8,000 Bonus Point
his Silver Card in a year then he can enjoy Card without fees (Tk. 507- purchase: 1
Bonus point).
There is another provision for International card as well. If he accumulates 20,000
Prime Bank Bonus Point for his Gold Card or, 10,000 Bonus Point for his Silver Card
in a year then he enjoy our Card without fees ($ 1 purchase: 1 Bonus).
Dhaka-Bangkok-Dhaka (Business Class) Air ticket: if the cardholder can
accumulate 100000 Bonus point.
Dhaka-Katmandu-Dhaka (Economy Class) Air ticket: if the cardholder can
accumulate 50000 Bonus point.
Dhaka-Cox's Bazaar-Dhaka (Business Class) Air ticket: if the cardholder can
accumulate 25000 Bonus point. ft Cash advance facilities.
MasterCard accepts 1,39,00,000 locations in all over the world.
The cardholders have access to cash from more than 200000 Master Card ATM
locations and have 20 million POS (point of sale) terminals all over the world.

TERMS & CONDITIONS OF MASTER CARD CREDIT CARD:

There are some terms and conditions of the Prime Bank Limited Master Card. The
following terms and conditions are included in the agreement:
1. "PBL" means Prime Bank Limited
2. "ATM" mans any Automated Teller Machine or Terminal.

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3. "Card" Means any Card issued by PBL bearing the name MasterCard or the
service mark of MasterCard (whether or not it also bears the name or mark of any
other person or entitles) to the principal Cardholder/Supplementary Cardholder for
use on their Card Account and includes any such Card issued in replacement or
renewal thereof. All Cards issued for use on Card Account remain the property of PBL
at all times. The issue of a Card is conditional upon the comprehensive and truthful
completion of PBL's Credit card Application Form and PBL's utmost satisfaction on
the information furnished in Credit Card Application Form.
4. "Cardholder" where used in relation to any Card means the person being eligible
for entering into a contract who has been issued a card to operate a Card Account and
where used in any other case means Principal Cardholder or any Supplementary
Cardholder.
5."Card Account" in relation to any Card means the account designated and
maintained by PBL in relation to that Card provided that where only one account is
designated and maintained by PBL for all the Cards issued to the Principal
Cardholder and every Supplementary Cardholder, any reference to Card Account
shall mean that Account accessed by Cardholder's Card.
6. "Card Account Statement" means a statement or statements by PBL of the amount
charged debited and/or paid to Card account(s) stated therein. Card Account
Statement shall detail all transactions processed to the Card Account during the
statement period.
7. "Card Transaction" means an advance or payment made in any currency or by
Travelers Cheques or other forms representing an amount of any currency but shall
not include any withdrawals from any account with PBL.
8. "Cash Advance" means an advance or payment made in any currency or by
Travelers Cheques or other forms representing an amount of any currency but shall
not include any withdrawals from any account with PBL.
9. "MasterCard" means MasterCard International Incorporated.
10. "Merchant" means any person or entity with whom PBL or any member of
MasterCard has a subsisting agreement relating to the use and or acceptance of the
Card in payment to such person of entity whether for goods, services or changes
incurred and or to obtain Cash Advances for such person or entity.
11. "Outstanding Balance " in relation to any Card Account Statement means the
outstanding balance in favor of PBL as stated therein or where more than one
outstanding balances is stated therein the total of all the outstanding balance stated
herein.
12. "PIN" in relation to any Card means the Personal Identification Number assigned
by PBL to that Card which will be used for accessing Cardholder's nominated Card
Account through an ATM.
13."Principal Cardholder" means the person to whom a Card is issued on his
application alone.

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Fig: Gold Card

Fig: Silver Card
14."Supplementary Cardholder" means the person (other then the Principal
Cardholder) to whom a Card is issued on the application or request of the Principal
Cardholder whether alone or joining with such person.
15."Payment Due Date" means the last date of payment and is usually 15 days from
the date of statement, if not otherwise mentioned, and specified on the Card Account
Statement. At least, the Minimum Payment Due (excluding the overdue amount) must
be paid by the Cardholder within the due date at Card Division of PBL's Head Office.
Any overdue/over limit amount must be paid immediately.
16."Company" means when used in relation to a Cardholder shall include
(I) Company of which such Cardholder is Director or Employee,
(ii) Business Enterprise of which such Cardholder is the sole proprietor
and
(iii) Firm of which such Cardholder is a Partner.

FACILITIES OF THE CARD

The card provides the following facilities:
The Cardholder can use the card to make payments to the merchants against
purchase of all goods and services.
The card can be used for availing cash advances from any branches of Prime Bank
Limited or any member of MasterCard of any Merchant authorized to make cash
advances; as may be agreed upon by Prime Bank Limited.
The card can be used for availing cash advances by the use of the Card on any
ATM of Prime Bank Limited or of MasterCard. 20% cash can be withdrawn from the
ATM terminals.

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CREDIT LIMIT
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.
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 the Principal cardholder and all
supplementary cardholders.
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 cash advance
or authorize or approve any Card transaction Notwithstanding
that the credit limit is not exceeded.

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LOSS OF CARD OR DISCLOSURE OF PIN:

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 to 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.R7 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.
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 ADVANCE 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:
The following stated there in 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.
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.

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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 the
entire outstanding balance from the billing date stated in that Card Account Statement
until the full payment of the outstanding is made.

Priority
1st
2nd
3rd
4th
5th
6th

Payment applied for

Any over limit amount
Any over due amount
Cash Advances
Service Charges
Fees
Purchase

Marketing:
a. Number of DSAs
b. Advertising Exp.
c. Merchant Marketing

: 30 Person
: 2.50 % of Income
: 2 Person

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

Public Relation:
SCB Maintain a good public relation with valued Cardholders and Merchants (Hotel
Pan Pacific Sonargaon)

Special Promotional Offer:

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

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.

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With this end in view the following Matrix has been developed for scoring the Credit
Card limit proposals:
Points For
Points for Income Points For Other considerations
Profession
Level
(Monthly Income)
1

Fixed
salaried
person

Tk 6,000-Tk 10,000-40

Professional
i.e
Doctors,
Engineers,
Bankers,
Chartered
Accounts

Tk 10,001-Tk 15,000-41

1 . Ownership of house in
Municipal area (in own name- 10
parents / Joint name- 5)

Tk l5,001-Tk 20,000-42

2. Ownership of car

Tk 20,00 1-Tk 25,000- 3. Ownership of T & T telephone

43
4. Customer for our Bank having
Tk 25,001-Tk 30,000-44 other credit card facilities, which
are regulr or considerable deposit
Tk 30,001-Tk 40,000-45
5. Having credit card of other
Tk 40,00 1-Tk 50,000- Bank.
46
6. Ave. bank Balance of last 6
Tk 50,001-Tk 60,000-47 months.
Tk 60,001-Tk 70,000-48

7. Personal Suitability

Tk 60,001-Tk 70,000-48

8. Income Tax Assessment up to

date

Tk 70,001-Tk 80,000-49
Tk 80,001 and above-50

5
2
2
2
5
5
2
2

9. Holding Passport
10. Spouse earns
11. Club Members
12. Married
13. Age:
45-60 years : 4
35-45 years: 3
25-35 years: 2
20-25 years:1

10

50

2
2
2

4
40

Points for profession

10
Points for Income level
50
Points for other consideration____ 40
Total points
100

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

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.

Total Points Scored

50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81-85
86-100

Credit Limit
Tk. 10,000
Tk. 12,000
Tk. 14,000
Tk. 16,000
Tk. 17,000
Tk. 18,000
Tk. 20,000
Tk. 21,000
Tk. 22,000
Tk. 24,000
Tk. 25,000
Tk. 27,000
Tk. 30,000
Tk. 32,000
Tk. 34,000
Tk. 35,000
Tk. 37,000
Tk. 38,000
Tk. 40,000
Tk. 42,000
Tk. 44,000
Tk. 46,000
Tk. 48,000
Tk. 50,000
Tk. 52,000
Tk. 54,00
Tk. 55,000
Tk. 56,000
Tk. 57,000
Tk. 59,000
Tk. 60,000
Tk. 61, 000-Tk 75,000
Tk. 76,000 -Tk 100,000

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Before sanctioning credit limit necessary due diligence shall have to be

done.
Residence / office of the applicant may be visited by the concerned Bank's
representative, if required.
Effort should be m86ade to collect credit information on he applicant
informally as fare as possible.
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.
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 committee.
For enhancement of credit card limit, utilization o the existing limit and
repayment behavior of the Card Holder is evaluated.
The customer who frequently utilizes the full limit and repayment is also as
per schedule; his limit may be enhanced up to 25% without approach of the
customer and which may be advised to the customer.

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 aggressive marketing activities
Lack of motivation
Switching tendency of the employees
Improper logistic support
Lack of technical person
Lack o training facilities
Decisions taken by higher authority do not match with the implementer's view.
Slow return on investment
Lack of technical support (software, hardware, tele-communication etc.)

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CHAPTER-5
Analysis of Secondary Data

In issuing NBL takes defensive strategy. They issue card on security and strong
recommendation than any other bank. They take special facility and services to their
existing cardholders. They do not feel to issue as much as possible rather best service
to the customer. NBL cards are sold on pull marketing activities like, corporate
bonding, -branch offering, signboard and advertisement at print media. In the year
2003, 2004 and 2005 NBL issued approximately 2000, 2700 and 1400 cards and now
have no DSE.
Standard Chartered takes aggressive marketing activities to capture the
market. Already it proves itself as a market leader. It already has DSA. In the year
2003,2004 and 2005 SCB issued approximately 6000, 10000, 38000 MasterCard, which
proves their growth (40% and 73.7%).
Prime Bank issues card in other defensive way, but they do not follow as NBL.
PBL basically offer salaried persons. The DSEs are newly introduced in marketing
activities. In 2003, 2004 and 2005 PBL issued 4131,4114 and 3058 cards.

Fig: Number of Credit Card ogf Prime bank in the year 2003, 2004and 2005
In case of surrendered NBL says that every year they loose 3% of the total
cardholders. On the bother hand SCB reduces it in 2% by giving better and
competitive services. But the rate of PBL surrendered is higher than the others. In the
year 2004 and 2005 numbers of surrendered cards are 5287 and 1424.
NBL proves efficiency in cards by increasing its income with less number of
cards comparisons with competitors. On the other hand SCB shows a pioneer market
leader advantage with efficiency and strong marketing knowledge on cards. PBL
income from card shows the potentiality to improve in this field. On the other hand,
PBL expenditure is now a headache of higher authority. The fixed cost is (35 X 12)=
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Tk.42 million and variable cost is Tk. 6 million now. In each contrary, income has to
increase.

Marketing expenditure of NBL and SCB is a competitive approach to hit PBL.

PBL on other hand expense very little on marketing expenditure and promotional
campaign.

Fig: Number of POS Machine and Merchant of each Bank.

As a market leader SCB explore merchant and POS terminal. It has already
500 POS machine and 3500 merchants over the country. On the other hand NBL has
325 POS machine and 600 merchants. But PBL is growing as their competitor. Already
it has 173 POS machine and 350 merchants in Dhaka city within two years.

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Comparative Evaluation of Fees and Charges of Credit Card of

PBL with the fees charged by other different Companies on
Credit Card Market:
Prime Bank Ltd.
(PBL)

Standard Chartered National Bank Ltd.

Bank (SCB)
(NBL)

Classic
Card
$40

Gold Card

International

Gold
Card
$80

Local

Tk.2,000

International
Local

Annual
Fees
(Primary Card)
Silver Gold
Card
Card
$70
$90

Silver
Card
$90

Tk.1,000 Tk.3500

Tk.1750 Tk.2000

Tk.1500

$20

$20

$15

$15

$50

$35

Tk.500

Tk300

Tk500

Tk.200

Tk.1000

Tk500

$60

$35

$90

$50

Tk.1000

Tk.500

Tk.1000

$800

$120

Replacement
Card

Supplementary
Card
Annual Fee
First
Free
Card(Local)
Second
Card Tk.1,000
and
Onward(Local)
Card
Replacement

Free

International

$20

$20

$15

$15

$50

$35

Local

Tk.500

Tk.300

Tk.500

Tk.200

Tk.1000

Tk.500

International

$10

$10

$15

$15

$10

$10

Local

Tk.500

Tk.500

Tk.500

Tk.200

Tk.500

Tk.500

Tk.600

PIN
Replacement

Late
Fee

Payment

International

$10

$10

$15

71

$15

$15

$15

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Local

Tk.300

Tk.200

Tk.500

$300

Tk.500

Tk.350

International

$20

$15

$15

$15

$15

$15

Local

Tk.500

Tk.300

Tk.500

Tk.300

Tk. 500

Tk350

Over Limit fee

Emergency
Tk.150, or 3%, of 2.5%
of
the Iterest @ 2.5% per
Cash Advance Advance
amount Withdrawal amount month
Facility
whichever is higher.
Interest
Rate
(per Month)
International

2.5%

2.5%

2.5%

2.5%

2%
on 2%
Daily Basis
2%
2%

Local

2.5%

2.5%

2.5%

2.5%

International

20%

15%

50% of Credit limit

Local

50%

50%

50% of Credit limit

5% of the Credit limit

plus amount excess of
Credit limit.

Return Cheque
Fee
International
$10

$10

$15

$15

$10

$10

Local

Tk350

Tk250

T500

Tk500

Tk100

Tk100

Statement
Retrival Fee
International

$5

$5

$5

$5

$5

$5

Local

Tk50

Tk50

Tk50

Tk50

Tk50

Tk50

Cheque
Collection
International

$20

$15

$10

$10

$15

$15

Local

Tk250

Tk250

Tk100

Tk100

Tk100

Tk100

Cash Limit

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Strength and Weakness Analysis:

Ranking 1-5, 5=Strong Position, .1=Weak Position
PBL
1.

SCB

NBL

5
5
4

4
3
4

5
3
5
5
5

1
4
3
4
1

4
2
3

4
5
5

4
4
4

3
5
5

5
4
4

4
3
4

4
3
3
5
3
3

5
5
5
3
5
5

3
1
4
1
1
3

3
2
3

5
4
5

2
3
2

3
3
5
4
3
3

5
5
3
5
5
4

2
3
4
3
4
3

Card
a. Developed Technology
3
b. Credit Card
3
c.
Charges
and
Interest 3
Reasonable
d. Photo
5
e. Credit Processing Time
5
f. Card Base
3
g. Faster Approval
3
h. Innovation
4

2.

Service
a. Cash Advance Facilities
b. ATM Service
c. Customer Service

3.

Merchant Marketing
a. Good Merchant Relation
b. Faster Payment
c. Faster Approval

4.

Marketing
a. Promotional Activities
b. Direct Sales Effort
c. Public Relation
d. New Marketing Targeting
e. Aggressive Marketing Strategy

5.
6.

Financial Strength
Managerial Ability
a. Risk Analysis
b. Managerial Capability
c. Number of Employees

7.

Corporate Profile
a. Financial Resources
b. Reinforce Business Capability
c. Non-classified Loan
d. Corporate image
e. Product Assortment

8.

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Customer Positioning

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CHAPTER-6
Market Survey (Gathering Primary Data)

Card Market Analysis

Merchant Market Analysis

Factors Considered by the Cardholders:

1. Dependent variables: Percentage of average expenditure in credit card
transaction;
2. Independent variables:
Preference in buying goods
Ranking of transaction medium in preference
3. In credit card preference

Insufficient retail stores number

Problem in operation in transaction
Retailers are reluctant in credit card transaction
Problem in credit card payment
Easy transaction in cash rather than credit card
Fraud transaction may occur

4. More credit card other than PBL

5. Preference in MasterCard categories
6. Comparison MasterCard Vs VISA / Vanik MasterCard:
Has more retail access.
More ATM access.
Charges are lower.
Transaction is easier than VISA / Vanik.
7. Comparison PBL credit cards with NBL card facilitate.
Prime Bank Credit card:

Has more retail access (than NBL).

Ease operation.
Has more cash advance facilities.
Have different types of cards and its limit.
Charges and interests are reasonable.
Ease in bill payment system.
Customer service is better.
Is welcomed by the retailers.
Gives more satisfaction (than NBL).

8. Comparison PBL credit card with Standard Chattered credit card facilities.
Prime Bank credit card
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Has more retail access (then SCB)

Ease operation.
Has more cash advance facilities.
Have different types of cards and its limit.
Charges and interests are reasonable.
Ease in bill payment system.
Customer service is better.
Is welcomed by the retailers.
Gives more satisfaction (than SCB).

For Merchant:
Dependent variables: Percentage of selling goods in terms of credit card.
Independent variables:
Preference in selling goods
Ranking of transaction medium preference in selling
1. Problems of credit card:

Late bill Payment

Rate of commission
Slow approval
Lack of logistic support
Less profitability

2. Percentage of selling goods in terms of credit card

3. Compare MasterCard with VISA/ Vanik MasterCard:
Technology is better than VISA/ Vanik Faster approval
Profitability is more
Cardholders are more in numbers than VISA/ Vanik
4. Compare Prime Bank Credit facilities with National Bank Credit Card
facilities
PBL Credit Card:

Machine online is better than NBL

Better payment system
Service is better
Upgraded technology
Machine types (of line) are convenient
Less time taking for authorization
Rate of commission is less
Mode of payment is satisfactory than NBL

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5. Compare Prime Bank Card facilities with Standard Chartered facilities

PBL Credit Card:
Machine online is better than SCB
Better payment system
Service is better
Upgraded technology
Machine types (of line) are convenient
Less time taking for authorization
Rate of commission is less
Mode of payment is satisfactory than SCB

METHODOLOGY
Literature Review of Credit Card

Discussion
with DM

Interviewing
Industry Expert

Secondary
data analysis

Qualitative
Research

Environmental Context of The Problem

Management Decision Problem

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Marketing Research Problem

Approach to the Problem

Objective/
theoretical
Foundation

Analytical
Model:
Descriptive,
Mathematical

Research
Questions

Hypotheses

Single Cross-Sectional Research Design

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Factors
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Survey Research

Telephone Interviewing

Personal Interviewing

Non-comperative Scaling Techinique:

Structure Questionnaire

Stratified Sampling with SRS

Data Collection

Data Coding & Conversion

(Metric To Categorical)

Data Analysis
Frequency Distribution
Cross Tabulation
Parametric Test
N-way ANOVA
Multiple Regressions

Findings and Result

Recommendation

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Research Design:
(i) Kind of information to be obtain:
Information relevant to the problem derived from competitor of the PBL card,
merchant, and cardholders.
(ii) Method of administrating the questionnaire:
Forward and backward linkage types of questionnaire are designed to collect the data.
Personal interview is the main technique of collection date from merchant, cardholder
and competitors (NBL and SCB).
(iii) Scaling technique:
Likert scaling.
Source of Data:
Data collection is based on primary and secondary data and also requires in depth
observation of the phenomenon to be investigated in order to achieve the objectives
test of hypothesis.
(iv) Types of questionnaire: Open-ended questionnaire and close-ended questionnaire (Multiple
Dichotomous)
Time - 5 minutes
Length - 2 page [each for cardholder and Merchant]
Approaches to the problem

and

Model Building:
Verbal Model:
Analysis the competitors performance in the credit card market that effect the
customer client satisfaction comparing with PBL card
Geographical Model
PBL
NBL
SCB

Offerings
> Product
> Price
> Place
> Promotion

Competitive
Advantage

Mathematical Model:
Y= a + bx
Where,
Y= Preference of PEL card
a = Competitive performance
b = Weight of independent variables
x = Independent variables

Performance
of PBL card

Rate of credit
card charge

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Statistical tools and Models:

Cardholder Analysis
Multiples Regression:
Y=B0+B1X1+B2X2+B3X3.....................+BkXk+ e

Estimated equation--A
Y=a+blxl+b2x2+b3x3+b4x4+b5x5 + b6x6
Where,
Dependent variables:
y = Percentage expenditure in credit card
a = is the estimator of he Bo
b = coefficient of weight
Independent variables:
Credit Card hasx1 = Insufficient retail stores number
x2 = Problem in operation in transaction
x3 = Retailers are reluctant in credit card transaction
x4 = Problem in credit card payment
x5 = High interest and charges
x6 = Easy transaction in cash rather than credit card
x7 = Fraud transaction may occur

Factor analysis
Xi = Ai1F1+ Ai2F2+ Ai3F3+ ......................... + Ai9F9 + ViUi

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Where,
Xj
AIJ
F
Vj

= i th standardized variables
= Standardized multiple regression co-efficient of variables on common Factor j
= Common factor
= Standardized regression co-efficient of variables i on Unique factor
Ui = Unique factor for variables

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Variables:
Comparison MasterCard with VISA / Vanik
V1: Master card has mean retail access than VISA / Vanik
V2: MasterCard has more ATM access than VISA / Vanik
V3: MasterCard charges are lower than VISA / Vanik
V4: MasterCard Transaction is easier than VISA / Vanik.

Comparison Prime Bank credit card with National Bank credit card facilitiesV1: PBL card has more retail access then NBL
V2: PBL machine online is better than NBL
V3: PBL payment system is better than NBL
V4: PBL service is better than NBL
V5: PBL has upgraded technology than NBL
V6: PBL machine types (of line) are convenient than NBL
V7: PBL takes less time for authorization than NBL
V8: PBL rate of commission is less than NBL
V9: PBL mode of payment is satisfactory than NBL

Comparison Prime Bank credit card with Standard Chartered credit card
facilities:
V1: PBL card has more retail access then SCB
V2: PBL machine online is better than SCB
V3: PBL payment system is better than SCB
V4: PBL service is better than SCB
V5: PBL has upgraded technology than SCB
V6: PBL machine types (of line) are convenient than SCB
V7: PBL takes less time for authorization than SCB

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V8: PBL rate of commission is less than SCB

V9: PBL mode of payment is satisfactory than SCB

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Frequency Analysis:
Transaction form; Rank cash; Rank cheque; Rank credit card; Rank debit card.

Factors affects in credit card expenditure:

Insufficient retail store numbers;
Problems in operation in transaction;
Retailers are reluctant in credit card;
Problem in credit card payment;
High interest and charges;
Easy transaction in cash rather than credit card;
Fraud transaction may occur;
More credit can other than PBL;
Rank gold card;
Rank silver card;
Rank debit and credit facilities in a single.

MasterCard Vs VISA / Vanik:

More retail access;
More ATM access;
Low charges;
Easy operation in transaction.

PBL Vs NBL / SCB:

More retail access;
Easy operation in transaction;

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More cash advance facilities;

Different types of cards and limit;
Charges and interest are reasonable;
Easy bill payment;
Better customer service;
Retailers welcome the card;
Gives more satisfaction.

Personal Identification of the Respondent:

Expense in credit card; Age limit;
Educational background; Occupation;
Income limit.

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Merchant Analysis
Multiple Regression Analysis:
Multiples Regression Model:
Y=Bo+B1X1+B2X2+B3X3.....................+BkXk +e
Estimated equation
Y = a+b1x1+b2x2+b3x3+b4x4+b5x5
Where,
Dependent variables:
y = Percentage of sales in credit card
a = is the estimator of he Bo
b = coefficient of weight
Independent variable:
Problems of credit card:
X1 = Bill payment is late
X2 = Rate of commission have to surrendered
X3 = Approval is slow
X4 = Logistic support is not adequate
X5 = Shrunk Profitability.

Factor Analysis
Comparison master card will VISA / Vanik
V1: MasterCard technology is better than VISA/ Vanik
V2: MasterCard approval is faster than VISA/ Vanik
V3: MasterCard is more profitable than VISA/ Vanik
V4: MasterCard has more cardholders than VISA/ Vani

Companion Prime Bank facilities with National Bank:

V1: PBL machine online is better than NBL
V2: PBL payment system is better than NBL
V3: PBL service is better than NBL
V4: PBL technology is unguarded than NBL
V5: PBL machine types (of line) are convenient than NE
V6. PBL takes less time for authorization than NBL
V7: PBL rate of commission is less than NBL
V8: PBL mode of payment is satisfactory than NBL

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Comparison Prime Bank facilities with Standard Chartered Bank

V1: PBL machine online is better than SCB
V2: PBL payment system is better than SCB
V3: PBL service is better than SCB
V4: PBL technology is unguarded than SCB
V5: PBL machine types (of line) are convenient than SCI
V6: PBL takes less time for authorization than SCB
V7: PBL rate of commission is less than SCB
V8: PBL mode of payment is satisfactory than SCB

Frequency Analysis:
Transaction form; Rank cash; Rank cheque; Rank credit card; Rank credit.

Factors affect in credit card selling:

Late bill payment; Rate of commission surrendered; Slow approval; Lack of logistic
support; Less profitability; Sales in credit card.

MasterCard Vs VISA / Vanik:

Better technology; Faster approval; More profitability; More cardholders; Machine
online is better.

PBL Vs NBL/ SCB

Better payment system; Services are better; Upgraded technology; Machine types (of
line) are better; Less time taking for authorization; Rate of commission is less; Mode
of payment is satisfactory.

Operationalization and Measurement of variable

Cardholder Analysis:
Multiple Regression Analysis:
Dependent variables: Metric in nature
Independent variable: Metric in nature
Measurement is done by using 5 point Likert scale)
Strongly disagree = 1, Disagree =2, Indifferent = 3, Agree = 4,Strongly agree = 5
Factor analysis:
Variable (measurement is done by using by 5 point Likert scale)

Merchant Analysis:
Dependent variables: Metric in nature
Independent variable: Metric in nature
Measurement is done by using 5 point Likert Scale

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SOURCE OF DATA
Secondary data:
Secondary data has been collected from the Annual report, brochure, and in-depth
interview with the employer working in the card division of different organization.

Primary Data:
Primary data has been collected from the respondents (cardholders merchant) by
questionnaire.

Sample Design
(1) Population:
All credit cardholders in Bangladesh
All merchant engage in credit card transaction.
(2) Sample frame:
Cardholders of PBL with having one or more than one competitors card
PBL merchant having transaction relation with competitor.
(3) Sample technique:
Individual credit cardholder
Individual merchant
Extend- Dhaka city
Time-July 5 to October 5, 2006
(3) Sampling technique:
Non-probability and convenience sampling (for cardholders)
Bayesian technique (selecting sample depending or prior information
of merchants)
(4) Sample size:

50 cardholder
20 Merchant

(5) Executing the sampling process:

Collection of data knocking in the working place and personal relation (for
cardholders)
Collection address and information of the merchant and collect responses.
QUESTIONNAIRE AND INSTRUMENT
Open-ended and close-ended questionnaire (both for cardholders and
merchants)
Data analysis has done by using SPSS-10.0 and
Microsoft Excel

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LIMITATION:
Sufficient data is not available to measure the problem.
Competitors are reluctant to provide adequate data when they knew I am
doing internee in Prime Bank.
Respondents got it difficult to response the scaling techniques.
Lack of lab facilities made troubles to work smoothly.
The working time from 9 am to 5 pm made trouble to me to get
information, analysis and report writing,
Respondents are tremendously busy. So they gave me a little time to work
with them.
As per my desire we do not get sufficient respondents (Prime Bank
cardholders who have least one other Banks credit card).
Respondents responses biased for some response of the questionnaire and
social views.
In fact I tried only for SPSS software but other software might be used for
its betterment.
To get 50 responses of cardholders and 20 responses of merchants makes a
heavy load for a single person like me.
Credit card is a new product in Bangladesh, so respondents do not know
much of it.
Comparison analysis sometime made the respondents biased influences of
corporate image.
Prime Bank card operation is a newly (3 years) launched phenomenon. So it
is tough to compare with other competitors that are well established in the
market.

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Findings And Discussion:

Analysis of Primary Data
Cardholders
Cross-Tabulation Statistics:
Chi-square test of user status and level of customer satisfaction.
Hypothesis Testing:
Customers with high user status of Credit Card hold low level of satisfaction and vice-versa.

Hypotheses:
H0: No association between user status of Credit Card and level of customer satisfaction.
H1: Association between user status of Credit Card and level of customer satisfaction.
( Level of significance ) =.05
Explanation:
Since the value of significance level ( at .05 level ) is greater than the probability of the
Chi-square test & other cross tabulation statistics (.ooo), we can conclude that the H0
can be rejected and H1 can be accepted. So there is association between user status
and the level of satisfaction of customer.
The approximate Chi-Square is 16.881 with 6 degrees of freedom, which is significant
at 0.05 level. The value of KMO Statistics (0.346) is denotes lower calculation of factor
analysis.

Multiple Regressions:
A statistical technique that simultaneously develops a mathematical relationship
between two or more independent variables and an internal scaled dependent
variables.

Ho: there is no relation existing between the dependent variable and independent
variable(s).
From the SPSS output our significance is 0.045 is less than the significance of 0.05, the
null hypothesis of equal population means is rejected.
Moreover, Multiple Regression equation
^

Y = a+b1x1+b2x2+.+bk xk
= 1.492 + 0.237X1+ 0.756X 2 + (-0.109)X3 + (-0.0089)X4+ (-0.541)X5 + (0.0040)X6 +
(-0.0737) X7

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Here,
a = 1 .492 which indicates that regression line will cross the y-axis at point 1 .
492.
bi = 0.237 which indicates that if Xi (insufficient retail store number) change by
one unit then y (percentage in credit card expense) will change by 0.237 unit.
This condition will be same for all other variables as per output.
From the co-efficient co-relation matrix we found,
Fraud transaction may occur has a positive co-relation with Problem in operation in
transaction (0.053), Easy transaction in cash rather than credit card (0.075), High
interest and charges (0.3 10) is one of the main reason for credit card expense.
In other hand, Easy transaction in cash other them credit card has positive co-relation
with Problem in credit card payment (0.019), High interest and charges (0.206), Retailers
are reluctant in credit card transaction (0.090) and Insufficient retail store number
(0.371) denotes that the cash is in a better competitive position them credit card.

Factor Analysis:
MasterCard Vs Visa / Vanik:
Based on Initial Eigenvalue we have chosen two factors and from the
communalities matrix we can see that Vi and V2 are highly co-related. On the other
hand Vs and 4 are highly co-related which we can see in both factors. Though our
null hypothesis is The variables are not co-related in the population so the null
hypothesis is rejected.
From the co-relation we found two factors:
1. More access (Vi and V2)
2. Charges and transaction (V3 and V4)
There are 4 (66.0%) non-redundant residuals with absolute value >0.05.

PBL Vs NBL
Based on initial Eigenvalue we have chosen four factors (Greater than 1.00)
Factor 1: Vi ,V7 and V9

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Factor 2: V2and V4
Factor 3 : V5 and V6
So the hypothesis is rejected.
The appropriate Chi-Square is 114.160 with 36 degrees of freedom, which is
significant (0.000) at the 0.05 level. The values of KMO statistics (0.586)
There are 18 (50%) non-redundant residuals with absolute values.

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PBL Vs SCB
Based on initial Eigenvalue we have chosen four factors:
Factor 1: V, ,V2
Factor 2 :V5 and V9
Factor 3 : Vs, Ve and Vg
Factor 4 : V4 and V7
So the hypothesis is rejected
The approximate Chi-Square is 74.688 with 36 degrees of freedom. Which is
significant (0.000) at 0.05 level. The value of KMO statistics 0.485 may denote Factor
analysis may not be perfect.
There are 19 (52%) non-redundant residuals with absolute value.

Merchant Analysis
Multiple Regressions:
Ho = there is no relation exist between the dependent variables and independent
variable(s).
From SPSS output our significance is 0.961 is more then the significance of 0.05, the
null hypothesis of equal population means is not rejected.
More over, multiple regression equation^

Y = a + b1x1+ b2 x2.........................bkxk
= 3.549 + 0.357 x1+ (-0.200) x2 + (-0.115) x3 + (-0.081) X4+ (-0.203) x5
Here,
a = 3.549 which indicates that regression line will cross the Y axis at point 3.549.
bi = 0.357xi which indicates that if Xi (Late bill payment) change by one unit
than Y (percentage in credit card selling) will change by 0.357 unit. This condition will
be same for all other variables as per output.

Factor Analysis
MasterCard Vs. VISA/Vanik:
Based on initial Eigenvalue we have chosen only one factor from the communalities
matrix, we can see all the variable are correlated.
The approximate Chi-Square is 10.545 with 6 degrees of freedom, which is not
significant at 0.05 level. The value of KMO statistics (0.568) denotes lower calculation
of factor analysis.
There are 6 (100.00%) non redundant residuals with absolute values > 0.05

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PBL Vs NBL
Based on initial Eigenvalue we have chosen 3 factor from the communalities matrix we
can see thatFactor 1: Vi
Factor 2 : V2 , V7 and V8
Factor 3 : V3 ,V4 V5 and V6
The approximate chi-square is 56.544 with 28 degrees of freedom, which is significant
at 0.05 level. The value of KMO statistics (0.606) denotes significance the analysis.
These are 18 (64.0%) non-redundant with absolute value.

PBL Vs SCB
Based on initial Eigenvalue we have chosen 3 factor from the communalities matrix we
can see thatFactor 1: V4
Factor 2: V?
Factor 3: Vi V2 V3 V5 and V6
The approximate chi-square is 75.757 with 28 degrees of freedom, which is significant
(0.000) at 0.05 level. The value of KMO statistics (0.696) denotes significance the
analysis.
These are 16 (57.0%) non-redundant residuals with absolute value.

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FINDING
(Primary Data)
Analysis of cardholder:
74 % people prefer cash as a form of transaction and only 26% in credit.
78.7% of respondent believe that insufficient number of retail outlets is a
problem of credit card and another 21.3% strongly agree in this matter.
80.9% of valid respondent remarked that credit card has a problem in
transaction and another 10.6% strongly agreed such statement.
In reluctance of credit card by retailers 40% of the respondent agreed on
the statement, in other case 36% are indifferent.
42% of respondent face problem in bill payment. In the other side 14% tick
strongly disagrees and 38% are in indifferent.
In high rate of interest and charges of credit card 63.8% of the respondent
strongly agreed on the statement and 63.8% moderately agreed on the
statement.
70.2% of total valid percentage agrees upon that cash is easier transaction
form that credit card. But in other side 14.9% disagreed on such statement.
100% of valid respondent believe that fraud transaction is a problem of
credit card, where 72.3% agreed on the statement and 27.7% strongly
agreed on such statement.
Preference of card in ranking:
Preference
Rank l
Rank 2

Rank 3

Total

Gold

45

50

Silver

46

50

Debit and credit

48

50

Analysis of form competitor

72% of respondent agreed that master card has more retail access than
VISA or Vanik. On the other hand 12% disagreed on such matter.
58% of total respondent agreed that MasterCard has more ATM access
than VISA or Vanik. But 40% of respondent are indifferent such comment.
54% respondent mentioned than MasterCards charges are lower than
VISA or Vanik In the other contrary 42% respondent indifferent and 4%
remerged disagree in such statement.
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 In case of easy operation in transaction 28% disagreed that MasterCard is

not easier than Visa or Vanik in transaction. Again 20% agreed on such
statement. On the other hand 42% are indifferent in such statement.

Analysis of Industry Competitor:

PBL Vs NBL
14% of respondents agreed upon that PBL have more retail access than
NBL. On the other hand 26% of total respondent disagreed on such
statement. The largest number 30(60%) remarked indifferent.
94% of respondent do not find any different in operation of transaction.
In cash advance facilities, 32% agreed upon that PBL is better. OB the other
had 22% disagreed on such statement. 40% are indifferent.
20% respondent agreed that PBL offers different types of card and limits
than NBL 4% disagreed on such statement. On the other hand 74% are in
different.
PBL charges and interest are reasonable in such statement 50%
respondent disagreed on such statement and another 50% were indifferent.
10% of respondent agree upon that PBL bill payment is easier. But 90% of
respondent are indifferent is such factor.
PBL provides better customer service has been agreed by 44% of
respondent. But 52% are indifferent between PBL and NBL in this factor.
8% respondent remarked that PBL and is well accepted by the retailers,
But 90% of total respondent are indifferent.
20% of respondent replied PBL card give more satisfaction than NBL. 78%
do not feel any difference between PBL and NBL in satisfaction.

PBL Vs SCB
88% respondents disagreed that PBL has more retail access than SCB in
which 12% strongly disagree on such statement.
62% respondent agreed that SCB card is easier in transaction than PBL.
On the other hand 38% are indifferent.
40% respondent agreed on SCB has more cash advance facilities. In other
contrary 52% are indifferent.
PBL offers different types of cards and limits -in such reply 14% agreed on
such statement, 60% disagreed and 26% are in neutral.
50% of the respondent does not agree that PBL offers reasonable charges
and interest than SCB. On the other hand 44% are indifferent..
72% of the respondent reply that there is no significant difference between
PBL and SCB in bill payment system. But 22% says that SCB is better than
PBL.
78% of total respondent remarked that PBL customer service is not better
than SCB, which 14% strongly disagreed on PBL service quality.
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 24% retailer welcome SCB card rather PBL card other (76%) are
indifferent.
Only 2% respondent reply that PBL card give more satisfaction that SCB.
On the other hand 56% says that SCB card give more satisfaction than
PBL.

Merchant:
In preference of the transaction from 100% of the respondents (merchant)
like cash rather than credit.
Preference of ranking of transaction form.
Rank 1

Rank 2

Rank 3

Rank 4

Cash

19

Cheque

18

Credit Card

17

Credit

17

Factor affect in credit card selling:

90% of the respondent reply that late bill payment is one of the major cause
not to prefer in credit card selling, in which 30% of he respondent strongly
agree on such statement. Only 10% disagree on such statement.
Rate of commission is other problem of selling in credit card transaction.
70% of the respondents agree upon such statement, where in 30% strongly
agreed on such remark. On the other kind 20% replied disagree.
60% of total responses show that slow approval is a problem of credit (card)
selling in which 25% strongly agree on such problem. 10% remarks
disagree from their belief.
Lack of logistic support is a complicated head. 50% of the respondents are
indifferent in such comment. On the other head 25% agree and 25%
respondents disagree on such statement.
Selling in credit card shrunk profitability. 85% respondents agree upon
such statement in which 30% strongly agree on such opinion. Only 10%
disagreed on such statement.
Sales in credit card:
Below 5%

15%(of Total respondent)

5% to 10%

20%

10% to 20%

45%

20% to More

20%
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Analysis of Form Competitor

40% respondents believe that MasterCard technology is better than VISA
or Vanik. In the other hand 40% respondent disagree upon such statement,
where in 5% strongly disagree.
MasterCard provide faster approval than VISA / Vanik, in such statement
only 35% merchant agreed upon such issue. But 45% respondents do not
agree upon such statement in which 10% remark strongly disagrees.
11.30% of respondent agreed that MasterCard provide more profit than
VISA / Vanik. On the other hand 15% disagree upon such comment.
70% of total respondent believe that MasterCard cardholder are more in
numbers than the VISA / Vanik.

Analysis of Industry Competitor:

PBL Vs NBL
65% respondent (merchant) agrees upon than PBL payment system is
better, where in 10% strongly recommend on PBL.
PBL service is better than NBL, 55% respondent agreed on such remark, in
which 10% strongly agree upon such remark. Only 25% are not satisfied
with this opinion.
Only 20% respondents believe that PBL uses upgraded technology. On the
other hand 10% believe cast for opposition.
30% respondents believe that PBL machine (of line) are better than NBL.
Only 5% disagreed on such remark, and 65% are indifferent.
25% respondent found that PBL give less time in authorization than NBL.
But 10% disagree on such remark. On the other hand 65% are indifferent.
In case of commission 75% respondent reply that there is no difference
between PBL and NBL. But 10% agree upon and 15% disagree upon such
statement.
40% are satisfactory on mode of payment of PBL rather than NBL. But
15% believe in negative.

PBL Vs SCB:
65% respondents believe that SCB machine online is better than PBL. Only
10% believe that PBL is better.
35% of total respondent remark that PBL payment system is better than
SCB. Where in 5% strongly agree upon such statement, On the other hand
45% disagreed on such statement.
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 70% respondent reply PBL service is not upto the mark of SCB, where in
20% strongly neglected. Only 10% remarked on better PBL service.
PBL technology is upgraded than SCB, in such statement 75% do not agree
upon such statement. Only 15% reply positive on such remark.
50% of total respondent do not find any difference between PBL and SCB
machine of line. 20% favor PBL and 30% favor SCB.
In taking authorization 30% believe PBL takes less time then SCB. On the
other hand 25% favor SCB rather PBL. But the largest portion 45% does
not find any difference.
Rate of commission is a competitive scenario in card merchant market.
25% of respondent agree upon that PBL commission is less than SCB where
in 10% strongly agreed on such statement. On the other hand 30% remark
on SCB. But 45% do not find any difference.
In mode of payment 35% remark favorably to PBL rather than SCB, in
which 5% strongly favor to PBL. On the other hand 20% disagree in such
statement. The largest portion (45%) does not find any difference in PBL
and SCB payment system.

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CHAPTER-7
Managerial Implication
PBL card division should set a specific mission which is clear and
achievable. Then they should analysis their resources and potentiality to set
specific mission towards that mission.
They need to define their market first. In cardholders analysis they should
identify the potential cardholders who will easily use card in their purpose.
In such case income, social status and family background should need to
take account.
Inter-section co-ordinate is very poor. Most of the division taken does not
know by others. Sometimes problem arise in one end do not want to solve
by others. Each section feels that they do the best and complicated work and
others do not. In such contrary rotation or changes of table or end will
helpful to know others works. They should need to motivate in a single team
towards the corporate objective and finally they must need to have
transparency between the sections.
To avoid extra pressure it is needed to have transparency between division
and higher authority by which they can know the real scenario and take
strategic decision.
There is a tendency of employees to switch for better options. In some cases
they switch to the competitors organization. In such cases it is really
harmful for the organization. To reduce switching of employees PBL should
motivate its employees to feel PBL as their organization. In this case special
financial, social and personal benefits need to increase and job security and
environment needs to be improved.
To increase efficiency of the executives PBL needs to provide training
facilities by which they can run the division efficiently.
To increase efficiency and better customer service PBL need to increase
better logistic support like providing better software, improve better
telecommunication network and other technical support.
Credit card is a new habit in our country. So its current rate of return is
very low. Some of us compare credit banking with other retail banking and
get frustrated. Though its present is not well, but in future it has a
tremendous opportunity. So PBL should focus on future need to get prepare
itself for the next time context.

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For Cardholders
In preference of transaction form Cash is most preferred by the
cardholders. There might be some advantages in cash rather than credit
card. So the demand of credit card might have to be increased by
developing awareness campaigns and focuses the importance, facilities that
may not get from the cash transaction.
Among the different cards (debit, ATM. credit) there is a great demand of
debit card. Social factors are one of the main causes of such effect. In our
society very few people like to financial on credit card. Facilities provided
by debit card may include in credit card. Makes those group conveniences
in auto-debit formula from his personal account. In other option, PBL can
introduce debit card facilities in a single card, which, SCB is already going
to launch few months later.
Insufficient retail number is a great problem for cardholders who wish to
pay cards. In such case PBL should increase merchant number. This will
habituate more cardholders and the volume of transaction will increase.
Line down, illiterate merchant, electricity, etc. sometimes makes problem in
credit transaction. PBL should use better technology, give merchant
education and provide substitute electricity device in EDC machine.
To improve retailer reluctance PBL should campaign the merchant and
make them the facilities if transaction. PBL may organize a seminar where
prospect merchant and merchant who are in this group should be invited. In
such seminar experienced merchants (like Agora, Electra, Apon) will share
their experience, and cost analysts will show the social and economical
benefits.
A great portion of cardholders feel that there might be fraud transaction
and it is an important cause in volume of transaction in credit card. In such
contrary PBL should understand the security policy of cardholders and
make them free and fear in credit card transaction.
There is a great demand of gold card rather then silver card to the
cardholders. In such case PBL should make ease the matrix by which more
cardholders can get gold card. It will give them mental satisfaction that will
enhance more volume of transaction in credit card.
VISA and Vanik is a strong competitor of MasterCard (in form
competition). More retail access, more ATM access and low charges are the
competitive advantage of MasterCard holders than VISA/Vanik holders. In
other case some people believe that VISA operation is faster than
MasterCard. PBL should introduce VISA as soon as possible because there
is a huge demand of VISA card. As late as it will loose its market share
cumulatively.
In some cases there are very limited difference between NBL and PBL.
Operation in transaction, cash advance facilities, bill payment system,
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retailers well acceptance of card etc. To get competitive advantage PBL

should increase more facilities.
A large portion of respondent remarked that NBL offers low charges and
interest rate. But we found that only interest rate (PEL - 2.5%, NBL - 2%)
is a great factor in pricing where as the others charges are reasonable. In
such contrary interest rate should be cut off in a competitive offering.
Standard Chattered Card got some competitive advantage against Prime
Card like more retail access; easy operation in transaction; charges and
interest are reasonable; better customer service; retailers acceptance and
more satisfaction. In this situation, PBL should concentrate the above
factors sincerely. PBL should increase the merchant number by aggressive
marketing activities, increase promotional tools and increase expenditure in
marketing. Better technology should provide that makes the transaction
easy within the least possible time. At the same time corporate image and
service developed that creates a competitive brand image in the market.
Only 10% respondents transact 5% to 10% of total expenditure in credit
card. To increase the volume and frequency of transaction, PBL should
increase awareness campaign to the target income group of the society.
It is found that age 25 to 40 years group expends the largest volume in
credit card. So marketing activities should special focus on such group and
give more supplementary card to increase the volume of transaction.
PBL should collect more information about its client to send gifts and for
other promotional program. By this the rate of recovery will be higher when
the cardholders feel a social tie with PBL. PBL can send:

Birthday gift, marriage anniversary gift

Special offer
Corporate offer (PBLs other products)
Co-offer with other organization

PBL should focus the target group who will use card frequently. It may be

Age limit 20 to 40 years

Well family background
Middle-middle class to upper higher-class income group
Upper class supplementary cardholders like-wife, children etc.
Who frequently tours foreign countries

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For Merchant
Most of the merchants prefer cash as a form of transaction. There are some
special benefits in cash rather than credit. PBL has to identify those
demerits like-late bill payment; rate of commission surrendered; slow
approval; lack of logistic support; less profitability in credit card
transaction. To get a competitive advantage PBL should send merchants
bill as early as possible.
Rate of commission is a major factor in charging card. In such case PBL
should set a dynamic commission policy that might reduce merchant
obligation. They can set spell commission system in terms of volume of sales.
Such as
Monthly sale (Tk.):

Rate of commission

1.00

to 25 000

3.00 %

25 000 to 50 000

2.75 %

50000 to 100000

2.50 %

100 000 to 200 000

2.25 %

More than 200 000

2.00 %

Special concentrate on the high volume present and prospect merchant who
transact 10% or more sales in credit card. From a survey we found tat 65%
respondents sell more than 10% in credit sales (card), and among them
more than 20% sales on credit card is one-fifth of the total respondent
(merchants).
Most merchants do not find any discrimination among VISA, Vanik and
MasterCard. But a group of them believe that VISA can get faster approval.
So PBL has to improve its communication network to compete with SCBs
VISA.
PBL get competitive advantage over NBL by providing better payment
system; upgraded technology; better machine of line service and
satisfactory mode of payment. To hold this advantage PBL should improve
the facility with fastness and efficiency. To improve better payment system
PBL can open merchant account in convenient branch by which merchant
can get payment within the shortest time. An on line system can improve the
best payment service.
Standard Chattered Bank is the market leader of credit card market. To
hold that position it takes some competitive positioning strategy that
strongly differentiates from NBL and PBL. A good portion of merchants
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believes that SCBs machine on line is better than PBL. So PBL should
improve its BTTB line or have to find other alternatives that give better
than the present.
To get better relation with merchants PBL should improve services, less
time to take authorization; competitive commission offer and use better
technology that can provide competitively better service.
SCB is a multi-national bank with good corporate reputation in
Bangladesh. So merchants feel prestigious to open an account in SCB. In
such situation they can get their payment in on line where PBL is in
traditional way. So PBL should improve its faster payment system.
There are complains that PBL service is not up to the mark of SCB. In such
contrary PBL service should improve in a competitive mark.
But some other extent machine (of line) service; time taking authorization;
commission policy should be improved and upgraded to get competitive
advantage against SCB and NBL.

Card Division:
Credit card culture is a new phenomenon in our society. Most of the people
do not know much about it. To expand its total market Prime Bank should
take steps to build awareness and interest in the general mass. PBL can take
the following strategies:
Collect the different business, government, NGO and other social concern
(from Yellow Page or other sources) and write later to the CEO or in charge
about credit card (what is credit card, function of credit card, uses,
facilities, ATM uses, present world view and user rate in different countries
and as well as PBL credit card offer)
Formulate business or group offer to the particular offer to the particular
business or non-business organization with a bundle of benefits addressing
the CEO. Female DSAs should be appointed to deal special prospect
Approach to the present A/C holders in different branches in a rebate as a
promotional tool so that the prospect cardholder being a deposit on the
bank as security.
A relationship with merchant will be strong when the merchant will be a
cardholder of PBL. In two types of relationship PBL can get more
transaction from merchant and can be good valued cardholders. In such
case-giving merchant in least cost would be a promotional tool.
Some cardholders get problem when they use the card for the first time. In
this case PBL can provide information of full function of a card, uses of a
card, ATM operation, cash withdrawals, fraud transaction in the time of
dispatch of the card from the Card Division.

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 In response of credit limit increase claimed by the cardholders, PBL should

assure that when the cardholder would follow the ideal rules of the credit
card transaction limit will be provided according to his desire.
Marketing people are less motivated in their job. DSAs says that their
remuneration is only on the commission basis, like as follows
Card issued 1 to 19
= Tk.300 per card
Card issued 20 to 24
= Tk.375 per card + Tk.1000 mobile bill
Card issued 25 or more = Tk.400 per card + Tk.1000 mobile bill
In such situation they feel job insecurity. To increase Motivation they need to
fix monthly amount and other financial incentives with the commission.
On the other hand who deals with merchant marketing sometimes become
frustrated. They feel that they do not get enough as their effort, labor and
output. They want a commission on the total merchant income.
In Account section, officers feel a load of work in the traditional manner.
They deserve better software that will reduce paper and other unnecessary
works.
In Operation section officers want better software and better
communication system mat can provide better and faster service to the
cardholders. It is also needed to train of the service providers.
In the Recovery side, it is very difficult to collect the due amount or bad
debts sometimes. In such case, efficient recovery agent is needed to recruit
as commission basis.
In case card process time, Card proposal and analysis and verification
department should faster their activities with least time that may bring
competitive advantage over the competitors.
There are complains of Cardholders and Merchants on Customer Service
Department. As customers problem is linked with other ends, when the
Customer Service Department is unable to solve it, they should divert the
call to the perfect end.
Marketing people (card, merchant) need a proper training of how to handle
a prospect customer to develop awareness, interest, desire and action to
make him a final customer. It can be done through hiring experts in sales
and marketing in different organization and university teachers.
Today customers are harder to please. They are smart, more price
conscious. More demanding, less forgiving and approach by more
competitors with equal or better offers. The challenge according to Jeffrey
Gitomer, is not to produce satisfied customer; several competitors can do
this. The challenge is to produce loyal customer. We can invest the following
customer relationship building to increase loyalty:

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 Reactive Marketing: The sales person sales the product and encourages the
customer (cardholders, merchants) to call if he/she has questions, comments
or complains.
Accountable Marketing: The sales person phones the customer a short term
after the sales to check whether the product is meeting expectation.
Proactive Marketing: The company sales person contract the customer from
time to time with suggestions about improved product uses or helpful new
products.
Partnership Marketing:The company works continuously with the
customers to discover ways to perform better. PBL should need to follow
above steps.
Slow inter-branch transaction often create problem in payment due date
of the cardholders. Some cardholders complained that they paid before the
payment due date, but they faced penalties and got a bad impression on
card division. In such situation, online inter-branch transaction or better
transaction process need to develop to minimize complains.
Merchant Marketing is a new competitive arena of retail banking. Standard
Chartered Bank has a strong relation with retailers. As a result most of the
good merchant has an account in SCB. As a result SCB got a competitive
advantage on faster payment on credit card to their merchant. PBL need to
establish co-relation with Merchant Marketing Section of Card Division
with Merchant Marketing Section of Marketing Division in a contingency
approach to take a strategic marketing strategic to capture new merchant
(deposit collection and credit transaction through POS machine) and
provide better services.

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CHAPTER-8
Contribution of Prime Bank Card to the Company (PBL) Growth
Prime Bank has already completed three years of operation in 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 banks 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. Fixed Assets schedule for the year-2005
Particulars

Equipment
machinery
Furniture
Total

Fixed
assets Depreciation
before
charged
depreciation
and 9280756.82
214541.34
9495298.16

1,331,730.64

7,949,026.18

18,733.30
1350463.94

195,808.04
8,144,834.22

B. Operating Expenses
Depreciation
Interest on prime general
Salary and allowances
Other expenses

13.50
80.44
49.26
89.54

232.74

C. Income from Card business:

Fee local
Fee International
Merchant commission
Other income

Fixed
assets
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92.71
63.31
22.41
328.26

506.69

D. Profit generated from card business

Profit

573.95
102

Some Important Ratio Analysis:

SI. No

Particulars

Up to June-05

Return on Assets (ROA)

23.01%

2
3
4

Return on Expenses
Yield on advances
Cost of Fund

106.03%
20.73%
10.50%

Growth of Income and Profit of credit cards

(Figure in lac)
Particulars

2000

2001

Growth
Over 2000

2002

Growth
Over -2001

Estimated
year-2003

Income
Fees (local)
Fees (Intl))

16.95 76.45
39.59 39.61

351%
0%

92.71
63.31

21%
60%

111.25
75.97

Merchant
Commission
Other Income
Total Income

0.00

531%

22.41

322%

26.89

46.65 205.68
103.19 327.05

341%
217%

328.26
506.69

60%
55%

393.91
608.03

Profit

28.62 253.08

784%

373.95

48%

448.74

5.31

(Estimated growth is 20% in the year 2003 over the year 2002)

Fig: Sharing Profit & Income in the Year 2005

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

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Income (Tk. in million.)

Prime Bank Card
PBL

2003
10.30
1515.63

2004
32.70
1987.58

2005
50.70
2250.96

2004
1231.49
7.40

2005
1503.12
23.27

Expenditure (Tk. in million.)

Prime Bank Ltd.
PBL Card Division

2003
922.43

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Profit (Tk. in million.)

Prime Bank Ltd.

PBL Card Division

2003
526.20
2.70

2004
705.09
25.10

2005
696.84
27.40

Fig: Explanation of income and expenditure through graph.

Fig: Profit Structure of the credit Card of Prime Bank

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 make 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

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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 trend making the issue uneasy.
Though in Bangladesh market we are yet to hit the global benchmark of 20% defaults,
the issuers have become more selective. In order to offset the loss from default, 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 banks money and the
sooner it is done it is better for the country.
Alliances and partnership with other business houses has become the order of the day
so that core strength can be fully exploited. Prime Bank has been looking forward for
such alliances and partnership to address new segments of the card market, which has
not yet been reached by them. Their strategy is to reduce the cost of doing business
and utilize the full capacity of our infrastructure.
The upshot is to make or create new avenues for business growth. It has already made
alliance with HSBC for issuing credit cards on their behalf. This alliance will help it to
access up market in the society. PBL expect quick surge in the card issue area from
HSBCs customer base. The Bank is also talking to Scholastica, a leading English
medium school for issuing exclusive cards for the parents of the school children. PBL
has also signed an agreement with another local bank EXIM Bank to issue cards on
their behalf and provide all support services. All these are likely to contribute in our
growth and overall profitability in the days to come.

New Market Opportunity:

HSBC
HSBC is interested in issuance of local credit card for their customers. According to
their estimate, they have a base of 20,000 customers who are likely to be cardholders.
This base is likely to expand progressively with addition of new customers every
month. The relationship will be:
1) Prime Bank will be fully responsible for credit risk, collection activities, funding,
and interest income. Bad debts would be for Prime Bank Limited
2) Prime Bank Limited would do card issue and embossing.
3) Annual membership fee would be split at a certain ratio.
4) Merchant acquiring would be Prime Banks responsibility.
5) Merchant commission would be split at a certain ratio.
To add to the above, HSBC has put forward a draft business model containing
approximate cost benefit analysis of co-branding credit card with Prime Bank
Limited. The net income from this segment would be Tk. 57,910,000.00

Notes to the Financial Statements for the year ended 31 December,

2005, 2004, 2003 of Prime Bank Ltd.
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Assets:
Particular

2005

2004

2003

Credit Card

38,364,537

18,100,845

15,032,503

Particular

2005

2004

2003

Credit Card

30,891,896

1,989,484

Particulars

2005

2004

2003

Credit Card Income

(Note-23.2)

44,478,662

33,660,981

31,109,491

Particulars

2005

2004

2003

Annual Fees

16,762,978

11,984,599

14,624,380

Late Payment fees

5,808,884

4,415,793

3,851,114

Inter-change, Markup, excess limit, cash

advance fees etc.

10,995,655

7,991,503

8,612,099

Others

10,911,145

9,269,085

4,021,898

2005
14,262,626

2004
10,867,651

2003
12,413,348

Liabilities:
-

Operating Income:

Credit Card Income:

Expenses:
Particulars
Credit Card Expenses

Receipt from operating activities:

Particulars

2005

2004

2003

Credit Card Income

44,478,662

33,660,981

31,109,491

2005
38,364,537

2004
18,100,845

2003
15,032,503

2004
1,989,484

2003
-

Increase of assets:
Particulars
Credit Card

Increase of Liabilities:
Particulars
Credit Card

2005
30,891,896

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CONCLUSION
The popularity of credit cards in Bangladesh looks set to grow by leaps and bounds as
domestic and foreign banks capitalize on the nations infant credit card market and
growing affluence. Card segment will undergo skyrocketing growth in future, sparked
by fierce competition from several other banks. An increased use of credit card and
foreign exchange cards coinciding with the expansion of personal banking services,
cross-border business and travels is helping the explosion. We=w Prime Bank is fully
aware of this explosion. Prime Bank has already renewed our marketing efforts to
increase our market share. PBL is trying to improve its quality in the competitive card
market with its limited resources and always try to monitor the competitors trail.

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