CHAPTER II

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Historical Background:
First Security Bank Limited is one of the leading financial institutions in the private sector in
Bangladesh. Since its inception on, 29 August 1999 it has been achieving steady progress and
commendable growth in all spheres of its activities. During the past five years, First Secrtiy Bank
has been endeavoring to make a perpetual contribution to the financial service industry by
providing personalized services to its ever increasing customers, mobilizing funds from different
sources to meet the growing investment needs and helping to unfold the growth potential of the
economy. The Bank has thus over the years proved to be a success story in the private sector
initiatives.
FSBL was incorporated in Bangladesh on 29 August 1999 as a banking company under
Companies Act 1994 to carry on banking business. It obtained permission from Bangladesh
Bank to establish the Bank on 22 September 1999. The Bank carries Banking activities its twelve
(12) branches in the country. To establish Banking through the introduction of a welfare
oriented banking system and also ensure equity and justice in the field of all economic activities,
achieve balanced growth and equitable development through diversified investment operations
particularly in the priority sectors and less development areas of the country. To encourage
socio-economic and financial services to the low income community particularly in the rural
areas people.

Objective and Financial Highlight:

The name of 'First Security Bank Ltd.' is derived from the insight and long nourished feelings of
the promoters to reach out to the people of all walks of life and march together towards
prosperity in a sprit of secured ness.
The main objectives of the bank are:
 Be one of the best banks of Bangladesh.
 Achieve excellence in customer services and superior to all competitors.
 Cater to all differentiated segments of retail and wholesale customers.
 Be a high quality distributor of products and services.
  Use state of the art technology in all spheres of banking (such as ATM-Services, Home
Banking, Tele banking, Mobile banking etc.).

The environment under which the bank had operated last year was strenuous. Challenges had to
be negotiated externally and internally. The rate of economic growth which was steady for the
past few years albeit at a level lower than the desired rate, actually took a dip during the year.
Due to unrest political conditions, last year commerce and industry of the country functioned
below capacity. Banking sectors was not exception to this negative in pact. FSBL, starting in
October 1999, had only little experience of operation. As a new bank, the initial attitude of the
customers were that of wait and see approach. However, the situation gradually improved and
the bank was able to attract reputed and prime names in the market and generated an increasing
volume of business to obtain a great interest to the customer. Bank is waiting for a remarkable
achievement for the coming year and with the blessings of God it can declare dividend in near
future.

Branches:
The bank has now twelve branches at Dilkusha, Mohakhali, Dhanmondi and Bangshal, Gulshan
(Dhaka) Agrabad and Khatungonj, Jubilee Road, Keranihat branch (Chittagong), Biswanath
(Sylhet), Rangpur branch and Sylhet branch. More new branches in the coming year will help the
bank to improve its image with concurrent salutary impact on client servicing and financial
results. Through this branch the bank is trying to serve all of its valued customers by providing
different types of banking and non-banking services.
A Strategy That Work:
We are convinced that our bank has put in place the correct strategies to ensure success as we
hope to embrace challenges of the 21st century. Our guiding principal remain unchanged;
executing more efficiently and more effectively than our competitors, concentrating on our core
business, building on our strengths and motivating and relying upon the employees of FSBL.
Above all we will stay focused on the needs of our customers.
Diversity-in our products, services, customers, employees, and locations-will remain an
important component of our long term business plans. This strategy allows us to explore new
opportunities in the market we serve. We plan to seek additional opportunities in the
international arena.
Domestically, we will keep building the infrastructure and business processes required to support
our increasing focuses on customer relationship management. A crucial element in our strategy is
to continuously improve the way we work, so that efficiently and productively climb steadily.
We believe our superior productivity record will provide advantages for our shareholders and
customers.

First Security Bank People:

At first security bank, we have retained our proud tradition of putting people first: our customers,
as well as our employees and members of the communities we serve. The First Security Bank is
a team of our employees is dedicated to working together to ensure their Bank's success. Our
people are a major factor behind the superior financial results that we achieve.

We continue to invest heavily in training and developing our staff. New courses will be offered
in future years to strengthen employees' skills in diverse areas, such as effective management of
people and customer relationship buildings.
Financial sector reform:
Our ability to remain competitive and enjoy continued growth is, to some extent, depend on the
financial sector policy framework under which we operate. If FSBL and the Bangladeshi banking
sector in general - is to thrive and grow both domestically and on the world stage, we require a
new policy framework that reflects the realities of today's rapid changing markets.
We are in complete agreement with Bangladesh Government's plans to review and thoroughly
access the financial sector, and set the future framework for the industry. At FSBL, we support
the process of review that is taking place, and we are committed to play a constructive role in the
formation of revised financial sector policy. We will remain consistent advocates of a policy
vision that is in the national interest, on that encourages more competition and more choice for
Bangladeshi customers and businesses.
We strongly believe that FSBL will continue to grow and prosper, and the Bangladeshi's
financial sector policy will to support strong, successful institutions. The key to the future is to
remain focused on all our overall strategy and fundamental things we do that we have made
successful; offering first rate service to our customers and working together as an effective team.

Out Look
One of the prime objectives of the bank is to be a provider of high quality products and services.
The bank also caters to the needs of its corporate clients and providers a comprehensive range of
financial services to national and multinational companies. In view of the challenges of todays
banking and high growing technological revolution in a not-so.

Distant future, the bank is contemplating to introduce HOME BANKING, ANYWHERE

BANKING, ATM Services and Debit/Credit Card services for our esteemed clients within the
shortest possible time.

Within Bangladeshi banking system, our traditional core strengths - risk management, expense
management, our diverse business, customer satisfaction and our strong team of people - will
allow us to succeed.

We have a great opportunity to build additional business. We are the banks that are not too big to
care- about our shareholders, about our customers; about our employees and about the
communities we serve. We are putting people first.
Organizational Structure of FSBL

CHAIRMAN

Managing Director (MD)

Senior executive vice-president (SEVP)

Executive Vice-President. (EVP)

Senior Vice-President. (SVP)

Vice-President. (VP)

Senior Assistant Vice-President. (SAVP)

Assistant Vice-President. (AVP)

Senior Principal Officer (SPO)

Principle officer (PO)

CORPORATE INFORMATION
AS ON 31ST DECEMBER 2004:
Date of Incorporation : 29 August 1999.
Inauguration of 1st Branch : 25th October 1999.
(Local office, Dhaka)
Authorized Capital : Tk. 1,500.00 million.
Paid-up Capital : Tk. 320.00 million.
Deposit : Tk. 9443.57 million.
Investment : Tk. 8500.27 million.
Foreign Exchange Business : Tk. 11064.50 million.
Number of Branches : 12

Comparative position of corporate information from 2000 to 2004 is given below:

(Taka In Million)

Particulars 2000 2001 2002 2004

Authorised Capital 500.00 1000.00 1000.00 1,500.00

Paid-up Capital 200.00 200.00 200.00 320.00

 Reserve fund 7.02 10.35 42.03 210.99
Total Equity 189.59 211.24 253.66 16169.27
Total deposit 1484.93 3081.50 5230.30 9443.57
Total investment 868.27 2539.50 4102.61 8500.27
Total foreign -- 3797.99 5799.54 11064.50
Exchange Business
Import -- 2222.60 3750.60 7413.90
Export -- 1514.50 1988.40 3650.60
Remittance -- 60.89 60.54 82.90

Function
The functions of First Security Bank Bangladesh Limited are as under:
 To maintain all types of deposit accounts.
 To make investment.
 To conduct foreign exchange business.
 To extend other banking services.
 To conduct social welfare activities through all over the country.
Functions Performed By the Bank
The Bank specializes in meeting the international and commercial banking needs of large, small
and middle market business of both domestic and international clients through an ever-expanding
network and full spectrum of financial services include:-
 Conventional deposit taking and lending facilities.
 Trade finance and development.
 Consortium and project finance.
 Equipment leasing facilitation and credit management.
 Under writing and guarantees.
 Capital and money market operations.
 International payment and transfer.
 Foreign currency dealings and portfolio management.

FSBL have started online banking

The objective of the Bank is to provide efficient banking service to the community. Bank ensures
special service to the backward community with their newly launched products. More over Bank
develops a wide range network to facilitate the import & export business.

The Global and Bangladesh Economy

The biggest boost to global growth from 2000 to 2002 came from the US. Where GDP growth in
2000 was 5.0%, economic growth also got momentum in Asia., the Euro are, Latin America, and
the doldrums economy in Russia, Central and Eastern Europe. World trade volume rose by over
12% in 2000, more than double the growth rate recorded in 1999, with the developing countries
affected by the 1997 global financial crisis (Latin America and developing Asia) remaining at the
forefront in world trade volume growth. Despite economic sloth enveloped the Asian economy in
1997-98 the year 2000 could make headway to reach to the growth of 4.8% being the best
growth performance in past 13 years.
South Asia sustained its growth in 2000, with aggregate GDP remaining at 5.8%, despite a
slowdown in the Indian economy. GDP growth in India slowed marginally because of lower-than
expected growth in agriculture sector output and slower growth in the industry sector.
Bangladesh performed well in 2000, although the country was engulfed with devastating flood
having adverse affect on economy.
The Bangladesh economy recovered in FY2000 (ending 30th June) with GDP growth of 5.5%,
compared with GDP growth of 4.9% in FY1999 as a result of continued implementation of
economic reforms, pragmatic approach in macro economic management and creation of an
agriculture friendly environment in the country. Thus, FY2000 recorded highest ever food grain
production of 24.9 million tons compared with only 21.8 million tons in FY1999. The growth
rate of industry sector output increased to 5.6% in FY2000, form 4.9% the preceding year. The
services sector- comprising trade, transport, catering, financial intermediation, public
administration and professional service-maintained growth of 5.0%, slightly higher than in
FY1999. With the trade deficit remaining at almost the same level as the previous year and 14%
growth in remittances, the current account deficit declined to 1% of GDP in FY2000, compared
with 1.4% of GDP the preceding year. While foreign exchange reserves declined to only $1.3
billion in mid-November, December 2000 saw a slight increase to $1.5 billion (equivalent to less
than two months’ imports).

Recent Changes in the Bank Industry

 The following changes have occurred in the banking industry of Bangladesh during the
last one-year or so.
 Export financing by Bangladesh Bank to provide the support to the exporter.
 A large number of non-profitable branches of different banks has been closed down.
 The banks are now required to keep the cash reserve in home currency.
 There has been an important change occurred in lending structure.
 There has also been a changed in the deposit collection by the banks. Banks with at least
five years maturity will get public fund.
 The power of chairman has been reduced regarding decision-making.
There is a new rule for large loans. Bank must go for consortium if credit amount cross 50% of
paid-up capital to a person or a group. A bank cannot sanction direct credit of more than 30% of
its paid-up capital to a person or a single group. The remaining 20% loan facility can be given as
non-funded credit like L.C. or through other instruments. This rule is not applicable to public
organization that takes loans against government guarantee. (September 9, 2001).
The above rule is made to reduce the non-performing loans of banks.
The government has planned to cap commercial banks’ interest rate on term loans since in a
competitive banking environment the interest rate should be low but the opposite is happening in
our country. (September 22, 2002).
The committee on default loans has recommended that banks will be able to immediately write
off loans classified as bad for five years or more. Banks will be able to write off loans or
advances anytime that are classified as bad or loss and which the banks could not recover after
taking all measures. However, the board of directors of a bank will be the final authority for
writing off bad loans. A few days ago Bangladesh Bank – the central bank of Bangladesh got the
status of autonomous body.