1. Loans from other banks (interbank funds) are booked in the account of owner / management while the obligation to pay back and the interest charged to banks.
2. Funds from depositors was not remitted to the banks but are used by the owner / management / bank clerk and had not recorded in the books of banks (fictitious deposits). Advice specially marked deposits of banks, signed by the owner / management.
3. Higher interest rate of deposit and savings accounts belongs to the owner / management and / or family, which effect in banks unable to compete because of high interest cost for personal gain.
4. Giving credit to the owner / management of banks and or family, then returned to deposited the funds in bank with a higher interest rate from the counter.
5. Mortgage interest payments and penalties by the debtor, which was recorded on the owner / bank clerk saving account
6. Fictitious expenditures and the money taken by the owners / managers / employees of banks made higher / mark up.
7. Expenditures for the benefit of the owners / managers / employees privately which not include an operational bank.
8. The practice of banks in the bank, the owner / managers / employees engaged in lending and borrowing funds for their own / personal use bank facilities using an escrow account.
9. Window dressing practices, engineering reports that are inconsistent with the actual fact, cover the existing flaws and violations.
10. Practice of tax avoidance, evasion of tax payments.
Cases of Banks Fraud (3)
Cases of Banks Fraud (2)
1. Giving credit to the owner / management and or related companies and / or family with no warranty, violate the Legal Lending Limit, was never paid, paying by bank.
2. Collecting loan repayment from debtors by the owner / management / employee ‘s Bank for its own sake and not deposited to the bank. Debtor account remains unpaid / paid.
3. Giving credit to the debtor and partly to the bank officer. Credit fund be shared between the debtor and the bank officer.
4. Installment Loans from grant to related party programs that actually appropriate provisions are not entitled.
5. Liquidation of debtors collateral as loan repayment, but the money from the liquidation are taken by owners / managers / employees of the Bank.
6. Ordered to the director to send funds to the account of shareholder without the support of DSS or other evidence sufficient for it. Is clearly the embezzlement of Bank funds for shareholder interests and engineering books in order not to appear in the books of the Bank.
7. Credit transactions / underlying transaction (which is not included in the postal bank accounts) and even do double bookkeeping through an escrow account / creditor accounts (savings) as well as a general creditors. Credit funds obtained from the owners / shareholders or from the activities of fictitious savings or deposits.
8. Loan losses in not accordance with the criteria for the purpose of funds collection will not be included in bank accounts or even if included only small numbers.
9. Allocation of bank funds to the owner / management to private interests.
10. Sale of property (assets) of banks with a price below the reasonable price or the existence of a bank’s assets with a certain price and none book value after depreciation
Cases of Banks Fraud (1)
1. A loan officer creating fictitious 90 loans in a branch office is expanding rapidly. He paid back the old loans using the new loans. Collusion with the supervisor and internal examiner.
2. A loan officer pays a small businessman to use his name and address to create a loan for his personal needs. Repayment has not been done.
3. An administrative officer is receive unofficial returns when he bought the computer and office furniture at a price above the market price. He went to look for another job.
4. A loan officer in rural areas and attract disburse loans in cash. He took a portion of the payment. Said to have lost proof of payment of the loan. Most borrowers do not ask for proof of payment.
5. A credit manager approve 13 large loans to small entrepreneurs, he took back some of the loans for private purposes. He has the power to approve loans.
6. A fund manager send some money to his bank account personality, intends to pay it immediately. He later transferred to other management positions.
7. A branch manager approved the loan on their family who do not pay back. When arrears increased, he withdrew the new loan to reduce the level of arrears. When arrears increased again, he stole money from the cash to pay back the loan.
8. A loan officer took the cost of borrowing which not an official petition for their own interests.
9. Additional credit limit to certain borrowers since the beginning credits, when the bad loans (on rescheduling / restructuring) without known / approved by the borrower, so that what is stated in the offering letter does not the same with start credit limit.
10. Fictitious credit by using ID cards and the identity of debtors who had paid off, its credit fund used for the benefit of bank management / employee or for other purposes where the fact that the debitor in question does not exist at all in the bank loan
Needs of Profesional Education in Islamic Banking
Since early 20th century the core concepts of Islamic Banking to profit sharing is still an academic study by Muslim scientists, in this case, more of the economist or bankers who doubted the Islamic banking system can be applied in the economic system. Meanwhile, conventional banking as we know it today having a process of evolution and testing that has been running with a well-established for centuries in the community. With the passage of time long enough, then it is not surprising that most of the public perceptions of the embedded notion that there is only one of the world banking system, namely the bank operating system with interest. Understanding that the bank with interest are definitive understanding of the business world, and the principle of academic literature on the various economic experts of banking.
There are still many people who have not an exactly perception about the activities of Islamic bank. Many people interpret Islamic bank as a conventional bank using the results in calculating the credit and funds deposit. Such perception can be understood because information and publicity about the activities of Islamic banks was minimal. Entering the gates of the understanding of Islamic bank will be faced with a new paradigm, a notion or a completely new outlook and mindset for a moment to forget the conventional banks.
One of the operational needs of Islamic banks is a human resources (HR) with a quality and qualified human resources. Islamic banks human resources must be able to translate the vision and mission statements contained in Islamic banks concept correctly, especially relating to lawful and illicit products. Therefore, Islamic banks are required qualified HR to run the Islamic Banking operations. Many problems of Islamic Bank caused by among practitioners of Islamic Banking is not fully understood.
Manpower skilled at the operational level, such as bank tellers, cashiers, customer service, or the salesman is likely met through non-formal education in the form of professional education. Educational advantages of this model is the freedom to design curriculum and teaching materials according to Islamic bank practice requirements, study time is relatively short, applicative in learning methodologies, have on the job training in Islamic bank, and Islamic bank practitioner teachers.
Prospect of Education Rural Bank
In line with the mission of the national banking system to improve social welfare and as an agent of development, the presence of rural bank would be enormous benefits for economic development, especially the local economy that encourages the real sector.
Rural bank is one of the local banking financial institutions which could accommodate the needs of urban communities in the region / district to service savings, deposits and credit, especially segments of the market is mostly informal micro-entrepreneurs in the areas of Rural bank markets.
Rural bank existence until now has been tested and effective in providing financial services micro and small scale, this can be seen from the ability of rural banks in disbursing funds in the form of credit. Develop a rural bank is one of the main strategies of the Indonesian economy in creating a better and stronger. The success of rural bank through periods of economic crisis can not be separated from the support of micro-scale businesses that are resistant to extreme changes in the economy.
But the success and sustainability of micro enterprises must also be supported by the quality of its human resources are therefore considered very important for governments and economic actors to have an intelligent human resources and resilient.
To improve the quality of human resources needs to be provided quality education and it is certainly also require financing that is not small. Hence the need for financial institutions that have special attention for providing funding assistance for the development of education whether it be the provision of facilities and infrastructure as well as for improving academic quality in educational institutions.
Financial institutions which conformed to the above requirement is the Rural Bank specializing in financing educational development.
On the other hand social demand for higher education is increasing, therefore the existence of institutions both formal and non formal education also will be growing. To accelerate development in the field of education course required of financial institutions that have a core business concern in education.
To evaluate the feasibility of Education Rural bank in qualitative and quantitative research must be done more focus on resources such as rural banks and the location of the target market.
Business Scope Education Rural bank:
I. Funding
Rural bank can accept deposits in savings and time deposits with a target market:
A. Public
B. Foundations and educational institutions from kindergarten to university
C. Parents and students
D. Foundation and courses institutions
Apart from third-party deposits, Education Rural Bank may also raise funds from other banks or from other non-bank financial institutions.
II. Lending
The number of third party deposits and funds from both parties that have been collected plus the owners of the paid-up capital, Education Rural Bank can lend funds to the general public and particularly civitas academic and their institutions. The types of credit that can be offered based on its use, among others:
A. Credit for Teacher / Lecturer
B. Credit for Education Foundation
C. Credit for Management Education
D. Credit for students
Credit can be given in the form of working capital or investment and consumption.
III. Capital
Capital stock paid in the form from:
A. Foundation / educational institutions
B. Individual
C. Government agencies
D. Local governments
E. Companies
F. Parent / Student
Bank Budgeting Control
Budgeting is a blueprint of the bank exposed in a standard format that makes sense business:
• Contains strategic vision of bank
• It can be used as a means of internal and external communications
• Useful as a means of assessing capital requirements
• A tool to plan, measure and improve performance
• Can be used as basis for a decision
A good bank budgeting can function as:
• Tool to check reality
Budgeting bank compiled in an objective, critical, and realistic
• A working tool
Bank budgeting could be used to make the aims and objectives as a means of evaluating and controlling performance in future
• Sending messages
Bank budgeting can communicate bank thoughts and messages to employees, directors, owners, and investors from outside bank
• A motivational tool
Bank budgeting can be used as direction / purpose to employees about what they accomplished
• A management development tool
Bank budgeting can help management to analyze internal and external conditions are favorable and endangering the bank continuity
• A roadmap
Bank budgeting can help guide bank operations in both good times and bad times.
One important function of management is monitoring, both monitoring and supervision in the narrow sense in a broader sense as a control. Properties rose supervision can also be distinguished in the form of supervision in the form of qualitative and quantitative.
The aim of control is:
1. For preservation and security of the bank’s property
2. To encourage the achievement of better working efficiency
3. To encourage compliance with established policies
4. To encourage the existence of financial administration in a timely, efficient and thorough.
In relation to control of the bank budgeting can be used as a tool to anticipate potential problems will arise in the future to be prevented as early as possible by solving the problem rigorously. So bank budgeting is an Early Warning System (EWS) in controlling the course of the bank.
In its role as an Early Warning System so there are various techniques that can be used for evaluation banks budgeting for information / feedback in order to improve work plans and budgets will come or for other purposes. Evaluation realization of bank budgeting can be done periodically depending on the needs bank whether monthly, quarterly, semi annual or annual. However, advisable to evaluate the realization of bank quarterly budgeting in order to identify if there distortions so that adjustments can be made as necessary. The simple analysis techniques can be used is variance analysis and financial ratio analysis.
A. Variance Analysis
Analysis of variance is an analysis to know the difference between one thing with another thing to be compared. Conceptual and systematic comparison between bank budgeting and realization suggests a wide range of differences that will have meaning if it held an evaluation of observation (examination), the deeper and produce conclusions that will be useful as a means of improvement and future planning.
Variance analysis can be done through two approaches, analysis of variance in qualitative and quantitative analysis of variance.
1. Qualitative analysis of variance
After a bank budgeting completed, and then implemented by each level of management in budgeting then it will be useful as guidance about what to do and goals to be achieved, and the legality of the actions to be performed. After the period of bank budgeting is completed traveled so every level of management will soon know whether what is done during this period as planned. Difference between planned with that has been realized is called variance . Variance itself can be favorable or unfavorable . Identify whether these variances are favorable or unfavorable depending on the type of activities of bank concerned.
2. Quantitative analysis of variance
To sharpen the qualitative analysis of variance, analysis of variance of the quantitative magnitude of variance was split into two elements, namely elements of the transaction volume and price of the element size used in the transaction. It may well be an activity is seen from the volume is considered favorable but the unfavorable views of the designated price.
A Bankable Business Management for Micro Enterprises
A. Importance of Business Management for Micro Enterprises
Existence of micro-businesses is very important for developing economy some region. Micro-enterprises have a unique characteristics compared to medium sized business. One specific characteristic is difficult to separate between corporate financial management with personal financial management. The other important characteristic is the big profit margins, although not so with their business turnover. Business and personal expenses are often derived from cash inflows, in which is included with venture capital, so that micro-businesses who do not have good finance management will be hampered the development effort can not even survive long because venture capital is declining.
At the time of diminished capital needs help micro finance from banks, cooperatives, etc.. But if no changes are made by the business and management orientation of micro-business owners at a time not so long like the previous events would not happen again. Add capital more … Borrow more … So that debt over time increasingly swollen and micro business eventually went bankrupt. Finally, reduced confidence in financial institutions and banks / financial institutions will be very selective in choosing which will be financed micro-enterprises. Keywords: Management of good and right would be very important for the development businesses themselves and also can increase the trust of financial institutions for micro-enterprises.
B. Bank and non-bank financial institutions interest
In managing the funds, banks or financial institutions apply the prudential principle because the money of banks or financial institutions are funds obtained from the owners, and public borrowing. The prudential principle be done because there are 2 (two) of interest is the desire to gain profit and the desire to maintain the security of the owners of funds banks or financial institutions, the ability to repay loans from other financial institutions and the ability to restore the funds from the public. Even some banks and financial institutions in connection with the prudential principle is to apply the fix in the form of asset collateral to guarantee loans primarily to the credit for micro enterprises. Provision of fixed asset collateral is the last way out if the loan could not be return anymore.
Basically, the bank / non bank financial institutions are very interested to provide micro credit to micro-businesses because the profit margin is very large so this means that micro enterprises have the ability and opportunity to grow rapidly with the assumption that if management attempts are being made properly. Under these conditions, banks / financial institutions to give primary attention on how micro enterprises which will be funded to manage their business.
Therefore we need the existence of a training institution that serves as a facilitator between the banks / financial institutions for micro-enterprises so that the interests of banks / financial institutions and micro-enterprises can be accommodated properly. In the end, the bank will easily give credit and micro enterprises can evolve rapidly so that the regional economy will also increase.
Product and Services Marketing Strategy
The marketing concept is very important for the business world in order to attract consumers by offering various types of products / services. The most important thing is how the company / bank can treat both new and old customers to keep existing and loyal to the products / services. It needs a good marketing plan, starting from the hospitality front office personnel of the company / bank. If the consumer served well they would feel very comfortable and very appreciated.
Development of marketing concepts company / bank started from the concept of product, sales and marketing concepts. This concept aims to build image and reputation, consumer understanding, and match the product and service to consumers.
Products and services marketing management is the process of planning and execution of concepts, pricing, promotion, and distribution of products and services, and ideas to create exchanges with customers who obtain satisfaction and organizational target company / bank itself. In other words that the marketing management of products and services aimed at how the company / bank can seize the heart of society, so its role as a profit center can be run well.
Process management and disposal of products / services can be done optimally through optimalitation of all available resources to achieve an adequate level of profitability.
Analysis of the competitive situation will help management to decide where to compete and how to determine appropriate marketing strategies to deal with competitors in each target market. To face competition, the company / bank must develop appropriate marketing strategies. Duties of competitive marketing strategy is to move the business from current position to a stronger competitive position. There are nine major elements in the preparation of a strategy that are Segmentation, Targeting and Positioning, Differentiation, Marketing Mix, Selling, Brand, Service and Process. The nine elements constitute a whole that are interconnected and affect.
The quality of the marketing strategy will be able to deliver the company / bank on success. Success is measured by how well companies meet customer satisfaction in a way that more effectively and efficiently than competitors. By knowing the consumer perceptions in assessing a product / brand, we can know their expectations to be met.
Consumer perception is very important notice to positioning the product, because perception is a basic factor that could encourage consumers to make purchases or shape consumer behavior.
The success of the company / bank in applying good marketing is highly dependent on knowledge, skills and quality of human resources and image of products and services
Bank Costing Methode
In this era of globalization, the banks can expand without being limited by region and country. Banking industry in such a rapid growth while on the other side is not as fast as the development of real sector growth in banking. Imaginable and we have experienced together that there is very high competition among banks for the real fight over funds from real sectors other than monetary sector. Characteristics of the banking industry is that each bank has a similar product with other bank products, which differ only in service quality. Under conditions of high levels of competition who then existence and sustainability of the bank will depend on how well the bank’s efficiency level. Talking about the efficiency of the highly related to the cost incurred by the bank which is the economic sacrifice to achieve the bank’s main objective is obtaining the maximum profit. There are various methods for calculating costs in the bank, one of them is product cost allocation method.
The purpose of the calculation method of cost allocation is wearing the product, divide, an ‘indirect direct’ a number of costs to products (or customers, or branch offices, or other cost centers as determined by an organization). Calculation of the Allocation Based Costing using the allocation base to distribute indirect costs among various products. An allocation base is a way to distribute costs among the various products for example based on the number of direct labor hours or number of account balances from one financial product specific. Allocation based costing are relatively simple to implement and provide insight on how much the cost for each product. Calculation of Activity-Based Costing explore many significant costs through the process of a number of products. Procurement of products consists of a number of separate processes, for example, the loan application process, loan disbursement, as well as credit monitoring and credit billing. For example, credit for the employee and not an employee of the credit to be allocated in the processing core on the basis of employees’ time spent. In the case of employees not directly take the time to the processing core but provides support functions, so this time recorded in the general group called “support activities”. In most cases a proportion of head office costs significantly, including in this group. Charges for certain core processes have been determined on the basis of opportunity time employees, these costs are then involved in a variety of products on the basis of reasonable cost. Simple example is, as soon as you determine the cost for processing a loan application – the cost is the amount of the loan application logical. Each product is then absorbed the cost of processing the loan application is proportional to the number of credit applications received for each loan product. Different processing will have different costs.
Allocation Based Costing advantages are
- Fewer steps.
- Faster, easier, and cheaper.
- Consistent with the income statement.
- Effective way to investigate additional targets.
Allocation Based Costing disadvantages are
- Relies on subjective input
- Simply allocate costs.
- Volume-related allocation basis can not explain the diversity of products and over-burdening the products the “big”.
Activity Based Costing Advantages are
- Browse (instead of allocating) the cost of a causal link.
- Help management understand how and why the need to procurement costs
- Focus on activities that are meaningful to employees and management
- Recognizing the cost and the circumstances or purpose of causing an activity requiring a longer time.
- Help management focus on where to reduce costs through research, key points and high-cost activities.
- Help management to understand business processes better.
Activity Based Costing disadvantages are
- Incorporate additional measures of cost allocation to activities
- More complicated, time consuming and expensive to implement
- Relies on subjective input.
Based on the advantages and disadvantages of each of these methods then the bank can determine which method will be used adapted to the purpose, conditions, readiness of information systems and human resource bank. The final result expected is the bank will know which products are efficient and productive sehinggan information can be used for product pricing decisions, product penetration, or even creating new products.
Money Motive
At the higher prices as the current, people must begin to calculate spending well. In addition there are also some people to make an investment asset. In theory, there are three motives of holding money:
1. Transaction Motive
2. Precautionary Motive
3. Speculative Motive
ad.1. Transaction Motive
The first priority use of revenues one used for transactions of everyday shopping needs such as consumption, education, transportation, etc.
ad.2. Precautionary Motive
Once the money for the transaction needs met, then people would allocate part of their income for purposes of remaining on guard against sudden needs or needs that can be predicted in the future. This motif usually applied in the form of savings, deposits, or insurance.
ad.3. Speculative Motive
If someone has met the needs of the transaction and look after him with a sufficient guard, and if there are still substantial residual income then that person will begin to allocate their funds to invest, whether in the form of short-term investments and long-term, fixed asset investment, or not fixed, real or a derivative, etc..
Finally, society as a conservative with good earnings will be allocated sequentially starting from transaction motive, precautinary motive, and the last speculative motive. But there are some people who are brave enough to alter the sequence motif above the level of life expectancy will soon change. Aren’t we…..