General Banking

General Banking Parities and Credit management of Jamuna Bank. A study on Rajshahi Branch

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Chapter One Introduction

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Introduction
1.1 Origin of the Study Practical orientation works as a bridge between the academic and the practical knowledge. The internship program is a compulsory part of BBA degree and it is a preparatory step towards a career. It constitutes of practicum for a student and makes him/her to know about the working environment of an organization. This program consist of 12 weeks for fulltime job assignment i.e. organization attachment and report writing the internship program for a student is usually organized to match the area of concentration under the supervision of a faculty. 1.2 Background of JBL: Jamuna Bank Limited (JBL) is a Banking Company registered under the companies Act, 1994 with its Head Office at printer Building 5 Rajuk Avenue, Dhaka- 1000.The sponsors of Jamuna Bank Limited are highly successful leading entrepreneur of the country having stakes in different segments of the national economy. These are eminent industrialists and businessman having wide business population both home and abroad, the bank started its operation from 3rd June, 2001 with.

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1.3 Objectives The primary goal of this study internship is to provide an on the job exposure to the student and create an opportunity for translation of theoretical concepts to practical situation. • To know the banking system of JBL view in the form of its overall activities. • To describe the credit management system of JBL. • To measure the financial performance of JBL. • To evaluate its achievement.
•

To compare the performance of goal achievement.

1.4 Methodology of the study: Methodology provides various strategies and technique to solve research Problems. In order to make the report more meaningful and presentable, two sources of data and information have been used widely which are discussed below. Primary Data: I depend mainly on primary data source the sources of the study primary data is collected from groups of people who are related with this bank.

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The primary sources are as follows• Face-to-face conversation with the respective officers, and staffs of the Branch. • Informal conversation with the depositors and non-depositors. • Informal conversation with the creditors and non-creditors • Relevant files and documents study as provided by the concerned executives. Secondary data: I try to search secondary data to sophisticate this report. Various books, articles, manuals, journals, and information about their organizational profile are used as my secondary data sources Method of data collection: Usually data is collected through methods • Questionnaire method • Observation method • Interview method • Schedules and • Other methods which are include • Warranty cards, distributor audits, Pantry audits, Consumer panels, depth interviews etc. Among these methods, I have applied two classes method mainly • Unstructured Questionnaire method • Observation method

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Data analysis I have assigned all the collected data in some table regarding customer/user, and bank and I have used some statistical tools to analyze the data. Statistical tools The following descriptive statistical tools have been used on the study that are: • Table • Bar chart • Average • Percentage

Table Table is used to arrange the collected data in a logical order. Bar chart Trough this tools all the collected data are presented on the basis of two criteria. One criterion remains in the X axis and another criterion remains in the Y criterion. Average Average is the divide of total frequency of all the data with the total number of data.

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1.5 Limitation of the study Almost in all study project quite a few problems creep up while conducting the study. The major limitations are described bellow: • Although I received co-operation from the concerned officials, they were not always able to give me much time, as they were busy with their work. • Time is an important issue in data collection and report writing. As I have been given a specific deadline for submission, observation and learning all the banking operations within short time was really tough. • Another limitation of this report is non availability of more recent data and information of different activities of JBL and Bank’s policy @ strategies of non disclosing some data and information for some reasons, which could be very much useful. • Some respondents were conservatives and most of the clients was businessman, so it was very hard to take interviewed properly. • As the study was conducted within Rajshahi Branch where a few person was found to interview. So the finding from benders in limited. In spite of all these limitations I have tried to up the best effort as far as was possible.

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CHAPTER TWO Organizational Overview

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2.1 Background of JBL: Jamuna Bank Limited ( JBL) is a Banking Company registered under the companies Act, 1994 with its Head Office at printer Building 5 Rajuk Avenue, Dhaka- 1000.The sponsors of Jamuna Bank Limited are highly successful leading entrepreneure of the country having stakes in different segments of the national economy. These are eminent industrialists and businessman having wide business population both home and abroad, The bank started its operation from 3rd June ,2001 with. 2.2 Management: Jamuna Bank Limited in managed by highly professional people the present Managing Director of the Bank Md. Motiur Rahman forward looking senior banker having decades of experience and with discipline knowledge to his credit both at home and a abroad. He is supported by an educated and skilled professional team with diversified experience in finance and banking. The management of the bank constantly focuses on the under standing and anticipating customers need and offer solution there of Jamuna Bank Limited has already been achieve tremendous progress within a short time of its operation .The bank is already ranked as one of the quality service providers and known for its operation.

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2.3 Objective: • To earn and maintain CAMEL rating strong. • To establish relationship banking and service quality through development of Strategic Marketing Plans. • To remain one of the best banks in Bangladesh in terms of profitability and Assets Quality • To introduce fully automated systems through integration of Information Technology. • To ensure an adequate rate of return on investment. • To keep risk position at an acceptable range (including any off balance sheet risks) • To maintain adequate liquidity to meet maturing obligations and commitments. • To maintain adequate control systems and transparency in procedures. • To develop and retain a quality work force through an effective Human Resources Management System. • To ensure optimum utilization of all available resources. • To pursue an effective system of management by ensuing compliance to ethical norms, transparency and accountability at all levels.

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2.4 Vision and mission of JBL: The vision of JBL is to become a leading baking institution and to play at profile role in the development of the country. Mission: The bank is Committed to satisfying diverse heeds of its Customers Through an array of Products at Competitive Price by Using opera pirate technology and providing timely service so that sustainable growth, reasonable return and Contribution to The development of The Country Con be ensured wit a motivated and professional work – farce.

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2.5 Corporate slogan: “YOUR PARTNEOP FOR GROWTH’’

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2.7 Capital: The bank is highly Capitalized new generation bank million reactively. 2.8 Services: JBL of this different types of Corporate and personal Banking service inhaling all segments of The society within The purview of the rules and regulation as laid down by 2.9 JBL Corporate Culture Employees of JBL share certain common values, which helps to create of JBL Culture. • The client comes first. • Search for professional excellence. • Opemess to new ideas & new methods to encourage creativity. • Quick decision-marking. • Flexibility and prompt response. • A sense of professional ethics. 2.10 Strategies • To raise up capital up to Tk. 1000.00 million by 2005 • To manage and operate the Bank in the most efficient manner to enhance financial performance and to control cost of fund.
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with an

Authorized capital and paid up capital to Tk.1600 million and Tk. 858

General Banking Parities and Credit management of Jamuna Bank. A study on Rajshahi Branch

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• To strive for customer satisfaction thought quality control and delivery of timely services. • To identify customers credit and other banking needs and monitor their perception towards out performance in meeting those requirements. • To review and update polices, procedures and practices to enhance the ability to extend better services to customers. • To train and develop all employees and provide them adequate resources so that customers needs can be responsibly addressed. • To promote organizational effectiveness by openly communicating company plans, policies, practices and procedures to all employees in a timely fashion. • To cultivate a working environment that fosters positive motivation for improved performance. • To diversify portfolio both in the retail and wholesale market. • To increase direct contact with customers in order to cultivate a closer relationship between the Bank and its customers. 2.11 Islamic Bank Jamuna Bank has started its Islamic Banking bared on the Principle of Islamic shariah. It has opened two Islamic Banking branches at Nayabazar Dhaka and Jubille Rood , Chittagong . More Islamic Branches are going to be conducted The Islamic Banking of Jamuna Bank Limited a shariah, Board
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Comprising eminent Thinkers and intellectuals at The country has been farmed . 2.12: Treasury Function: JBL treasury is playing role in the local money market. Considering its volume and activities particular Bank has nominated JBL as no. of the primary Dealers (out of mine) of Profile treasury function services on behalf of Bangladesh Government.

2.13 Growth Index and Future Plan: • Dealing Room service for corporate customers and high net worth individuals. • Introducing more innovative product and services. • Opening new branches including Islamic Banking Branch. • Expansion of Business network at home an abroad.

1.14: Correspondent Banking Relationship: To provide clientele services in respect of international trade, it has established banking relationship with 461 correspondent banks in 107 countries covering major trade and financial centers at home and aboard. 2.15 Corporate Governance: The determination to establish, sustain and increase its strength for a strong base as a Customer – oriented bank with a transparent management , Due Care has been taken to improve Corporate Governance ‘As part of This, The
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bank is now following The Under mentions Corporate governance principles ; 1. According to Bangladesh Bank directives, The number of Directors in The Board is 13. 2. Chairman of the Board and CEO 3. The Bank has an Executive Committee and an Audit Committee of The Board. 4. The Audit Committee is Composed of 3 members as prescribed by Bangladesh bank. 8. The Bank has farmed a Management Committee which takes various management decisions, works Policies and reviews The interval control system. 5. The Board reviews ns approves various policies for meticulous Compliance by The management 6. The Board/Executive Committee of the Board reviews The polices / guidelines issued by Bangladesh Bank regarding operation of The Banking Industry. 7. The Board/ Executive Committee of the Board approves The credit Proposal as per approved policy and Bangladesh Bank griddling/ Regulations 9. The Audit Committee at The Board of Directors of The Bank is also reviewing and evaluation The internal Control activities at The Bank in order to establish a strong internal control culture within the Bank.

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10. The Audit Committee reviews audit report of the branches in its regular meeting and for development / Correction. 2.16 Product That are Marketing By Jamuna Bank Limited are as Under: 1. Deposit Product: Current Product Short term Deposit Savings Deposit Fixed Deposit Rate Monthly Saving scheme Monthly Benefit scheme Lakhpati scheme Millionaire scheme Katipati scheme Marriage scheme Education saving scheme 2. Lending Product: A. Continuous Loan: B. Secured over Draft Against Financial obligation (SOD) C. Secured over Draft Against work order / Real Estate Cash Credit (Hypothecation) Cash Credit (Pledge) Expert Cash Credit (ECC)
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B. Demand Loan: Loan General Demand Loan Against ship Breaking Payment Against Documents (PAD) Loan Against Trust Receipt (LTR) Farced Loan Pacing Loan Secured over Draft Against Cash Incentive Foreign Documentary Bills purchased (FDBS) Loan Documentary Bills Purchased (LBBP/IDB) Project Loan Transept Loan House Building Loan Small Business Loan Consumer Finance scheme Lease Finance scheme 3. Money Transmission Products: Payment order / security Deposit Receipt (PO/SDR) Demand Draft (DD) Telegraphic Transfer (TT) Outstation Bills For Collection (OBC) Traveler’s cheque

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4. Intenatianal Business Products : Letter of Credit (L/C) Back-to Back Letter of Credit (BTBL/C) Buying & selling of Foreign Exchange Foreign Demand Draft (FDD) Foreign Telegraphic Transfer (FTT) 5. Special Fee Earning Products: Bank Guarantee (B/G) Foreign Bank Guarantee (F.B./G) Credit Card Portfolio Management Issue Management Underwriting Brokerage House Locker service 6. Social Services Product: Collection of Zakat Fund Collection Bank of Hajj Deposit

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CHAPTER THREE
General Banking

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General Banking
During my practical internship training I was placed Jumna Bank, Rajshahi Branch. From this branch I have learned a lot about general banking . General Banking consists of different sections. These are account opening section, book issue, Renitence section, , clearing and bill section, clean cast section, Cast section. 3.1: Account opening section: There are my types of accounts in Jamuna Bank Rajshahi Branch. Among there the following are fore most for customer service. Saving service Current Account. Fixed Account. Deposit Account. 1. Lakhpati Deposit scheme. 2. Kotipoti Deopsit scheme. 3. Monthly scheme. 4. Education saving scheme. 5. Millionaire deposit scheme . 6. Marriage Deposit scheme. 7. Double Triple Growth Deposit Scheme. 8. Monthly Scheme.

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CURRENT DEPOSIT ACCOUNT (CD/A/C) Current Deposit Account is a running and active account, which may be operated upon any number of times of times during a working day . There is no restriction on the number and the amount withdrawals from a CD A/C. Ordinarily no interest is paid on these deposits. It is purely a demand deposit account it is suitable when funds are to be collected and money is to be paid away at frequent interval. The primary objective of CD A/C is to save big customers and businessmen. Joint stock companies, public authorities etc. from risk of handling a lot of cash themselves. Section 3(b) of the Negotiable Instrument Act 1881 provides that the deposit accepted by the banker are repayable on demand or otherwise and withdrawal by cheque, draft, order or otherwise. There are several types/categories of CD A/C are available in ACCBL, Rajshahi Branch such as: I. Individual /Joint II. Proprietorship III. Partnership IV. Societies/ Club V. Limited Company
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Basic requirements for is required to be filled up correctly and authenticated by the proposed: 1. A/C opener under his / her dated signature at the time of opening the A/C. 2. A/C opener has also to declare that he / she shall comply with to bank rules in force from time to time for the conduct of the A/C by his/her signature on the back of the form. 3. The applicant should be introduce by an introducer, the person who has an A/C in this ranch , by his /his /her signature , A/C type & A/C number and two passport size photographs duly attested by the introducer from whom the banker may make inquiries of the applicant. 4. Every A/C opener is required to supply specimens of signature on the A/C opening form and signature card. Specimen signature are the signature the banker recognizes for the purpose of customer’s signing cheques on the account and issue of other instructions of him for execution. 5. These signature cards should indexed and filed in an alphabetical order and should always by dept under such a proper custody as to prevent them from falling into unauthorized hands and also to exclude the possibility of fraudulent substitution thereof. 6. A/C opener’s citizenship certificate is needed to open a CD A/C .

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7. Customer should fill up Customer Transaction profile of prevent Money Laundering under Money Laundering Prevention Act 2002 and KYC (know your Customer) Profile form. 8. To fill up nominee form by introducing the nominees (s)’s photograph by his /her /sing nature and nominee(s)’signature. 9. In case of joint A/C all the person concerned should sing the A/C opening form and they should give a special instruction that the A/C will be dine singly by one jointly. 10. When A/C in name of business organization then valid trade license must required. 11.In case of Limited Company required papers are Memorandum and Article of Association, Certificate of Incorporation, Certificate of commencement and permission of working. 12. In case of social organization or club the required papers are Copy of Constitution and Resolution. 13. For partnership business a copy of partnership agreement. 14.The A/C opener should open a CD A/C by depositing minimum amount Tk.1000/- which is proposed minimum balance by the bank and which should be mentioned on the A/C opening form. 15. After all the A/C opening formalities have been completed the banker open the CD A/C by the name of the applicant and give a CD A/C number. CD A/C code is 002503100.
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16. Then the banker provide to the A/C holder pay –in-slip by which the A/C holder deposit as much money as he /she can. The processed minimum balance or initial deposit for opening a CD A/C deposited by this slip. 17. To deposit fund to his /her A/C the party first fill up the ‘ pay –in –slip’’ supplied by the bank where name of A/C ,A/C no., amount in cash have to write down in figure and in word. At the below of the slip depositor sing and authorized officer sign should be given. 18. After that banker provide chequebook for withdrawal of money to the A/C holder. The chequebook should be providing after submitting of all necessary papers for opening an A/C. After completing the formalities banker should sent thanks letter to the customer to his/ her present address. Procedure of closing of an A/C If the holder wants to close his /her A/C then he/ She would write an application addressing Manager of JBL Rajshahi Branch. After inquiring necessary information bank can close the A/C by following way The banker write close mark on the A/C opening form . Destroy the chequebook or outstanding cheque leaf and write the series of destroyed cheque below the application . After deducting A/C closing charge as Tk. 50/- he will provide rest amount to the A/C closer.

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keep the A/C opening Form , Destroyed cheque , Signature card and Application of closing A/C for seven years . SAVINGS BANK ACCOUNT (SB A/C) Savings A/Cs are interest bearing deposit accounts. These A/Cs are open for small/ medium depositors. the objective of this A/C is to save small severs money , SB A/C be opened in the name of any about individual of jointly who is / are mentally sound and in the name of club, association and similar institutions subject to production of their By laws and Article of association acceptable to the bank, Basic requirements for opening of a SB A/C: 1. A/C opener under his / her dated signature at the time of opening the A/C. 2. A/C opener has also to declare that he / she shall comply with to bank rules in force from time to time for the conduct of the A/C by his/her signature on the back of the form. 3. The applicant should be introduce by an introducer, the person who has an A/C in this ranch , by his /his /her signature , A/C type & A/C number and two passport size photographs duly attested by the introducer from whom the banker may make inquiries of the applicant. 4. Every A/C opener is required to supply specimens of signature on the A/C opening form and signature card. Specimen signature are the signature the banker recognizes for the purpose of customer’s signing

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cheques on the account and issue of other instructions of him for execution. 5.These signature cards should indexed and filed in an alphabetical order and should always by dept under such a proper custody as to prevent them from falling into unauthorized hands and also to exclude the possibility of fraudulent substitution thereof. 6. A/C opener’s citizenship certificate is needed to open a CD A/C. 7. Customer should fill up Customer Transaction profile of prevent Money Laundering under Money Laundering Prevention Act 2002 and KYC( know your Customer ) Profile form. 8. To fill up nominee form by introducing the nominees (s)’s photograph by his /her /sing nature and nominee(s)’signature. 9. In case of joint A/C all the person concerned should sing the A/C opening form and they should give a special instruction that the A/C will be dine singly by one jointly. 10. When A/C in name of business organization then valid trade license must required. 11. In case of Limited Company required papers are Memorandum and Article of Association, Certificate of Incorporation, Certificate of commencement and permission of working. 12. In case of social organization or club the required papers are Copy of Constitution and Resolution.
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13. Initial deposit for opening the SB A/C is tk . 1.000- and the A/C may be closed where the balance falls below Tk. 1.000% 14. the A/C opener should open a SB A/C by depositing minimum amount tk . 500/- which is proposed minimum balance by the bank and which should be mentioned in the A/C opening form . 15 .After al the A/C opening formalities have been completed the banker open the SB A/C by the name of the applicant and give a SB A/C number. SB A/C code no is 002502100......... 16. Depositor (s) Deposit money in his/ her A/C as often as he /she likes. Bank may accept cheques . Drafts . payment order. Dividend warrant interest warrants etc. on behalf of the A/C holder fort collection . 17. Withdrawals can be made only by cheques supplied by the bank. A depositor may withdraw money from his/ her A/C twice in a week . Frequent withdrawal is not encouraged. 18. Depositor (s) may withdraw his /her deposited money up to 25% 7 (seven) days notice is required. In the event of contravention of the rule. the depositor’s will not be given any interest in this account for that month . After completing the entire formalities banker should sent thanks letter to the customer to his / her present address. Interest on SB A/Cs: All SB A/Cs must be balanced twice; before and after application of interest. the application of interest must be on the basis of monthly minimum balance of the respective A/Cs taking into consideration of the deposit up to 6th of
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every month as per prescribed rate Interest is paid to the account twice in a year . IR rate against SB A/C is 6% if the depositor likes to close his /her SB A/C procedure is same as CD A/C only A/C closing charge is tk 50/- which will be deducted from the A/C FLXED DEPOSIT RECEIPT (FDR ) FDR is a type of account is opened for fixed period of time. it is not transferable and not negotiable. Many expert bankers think that FDR is not an A/C. it is merely a deposit receipt. it is popularly known as time deposit . Because these deposits are not repayable on demand but they are withdrawal subject to a period of notice. The prospective fixed deposit holder is expected to fill up an application from prescribed for the purpose stating the amount and the period of deposit the application itself contains rules and regulations of the deposit including the space for specimen signature by using FDR a party can take loan against FDR about 80% of the amount / Requirements of FDR: 1. The Willing person first come to the bank and collects a prescribed form 2. Then he /she will fill up the prescribed form with necessary information i.e. name address. About nominee, specimen sing, amount and period of FDR. 3. FDR A/C o&peer’s one copy of passport size photograph and nominee’s one copy of passport size photograph. which attested, by the A/C holder should be attached with FDR from
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4. After fill up the FDR from the A/C opener will be deposit the amount that he / she make fixed deposit then Bank officer give FDR A/C code no. is 0300............ 5. Authorized officer writes voucher of FDR in the following way in single credit voucher amount of FDR in figure& in word along with FDR A/C no., FDR no favoring name period interest rate, 6. Authorized officer then issue an FDR to the FDR A/C opener 7. FDR contains name of depositor deposited amount both in figure &in word date of issue date of maturity interest rate period and signature of two Authorized officers. 8. Authorized officer give the FDR to the A/C holder after taking his/her sing on the back of the FDR, which left to the bank. 9. Rate of interest on FDR are: Sl no 01 02 03 04 Terms of FDR FDR for 01 (one )month FDR for 03(three ) month FDR for 06 (six) month FDRfor12 (twelve) month Rate of interest 10.00% 12.00% 12.00% 12.25%

Source: Office Record of JBL, Rajshahi Branch 10.Banker should enter all necessary information in the FDR register or in the FDR logger book The process of giving interest :

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- When party come to the bank at FDR maturity ate for filleting only interest on FDR or want to make encashment of FDR then following way banker transfer money 1. Single debit voucher interest calculated amount 2. Putridity voucher interest calculated amount 3. Party debit voucher interest source tax and excise duty calculated here 4. Single credit voucher Here calculate source tax excise duly and rest amount is interest payable in three separate voucher Source tax is 10% of interest on FDR and excise duty is tk 120/- when the amount is Tk 1 lac or less Tk 250 then the amount is more the Tk 1lac but less than tk 10 lac and tk 550 then above Tk 10 lac Excise duty only payable at the year end or at the encashment of FDR. Sill these Excise duty and source tax amount keep in the sundry deposit A/C and after one or three months these entire amount are transfer to the Govt tax office Accounting procedure of FDR: • For issue of FDR against cash debit cash A/C and Credit FDR A/C • For issue of FDR against cash debit cashyp acand Credit FDR A/C • For payment of intermesh on FDR- Debit Exp A/C int on FDR and Credit FDR A/C (PARTY) • For realization of tax deduction at source Debit FDR A/C and credit sundry deposit A/C tax at source • For payment of interest to the A/C holder through pay slip Debit FDR A/C and Credit bills payable A/C pay slip issued
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• For payment of interest to the A/C holder A/Cs debit FDR A/C and credit SB / CD A/ Cs • For pre matured encashment of FDR Debit FDR A/C and credit income A/C penalty Encashment of FDR or only interest of FDR amount is given through cash debit or PO or transferring to the FDR A/C holder’s any type of A/C Maintenance of all kind of Account Opening For: Maintenance of account opening form is much important since it contains information regarding operation of account and account holder Hence all kind of account opening forms should be preserved in Guard file with proper care Before preserving account opening forms in the Guard file there should check out whether every requirement for opening the account is fulfilled Brief of Different special Deposit Schemes: Lichgate Deposit Scheme: To become a lakhpati is a dream to most of the people of Bangladesh especially to the lower and lower middle class income group. We experience or expectations and wants are enormous in nature in our small span of life. To meet our deposit and wants we need right plan. Keeping the above in mind JBL has introduced Lakhopati Scheme, which has flexibility in report of maturity and monthly installment as on affordable capacity. Savings plan and Benefit: Tenor 3- years
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Monthly Deposit TK.1395/-

Maturity value Tk.1.001ac

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4- years 5- years 6- years 7- years 10- years

TK.1695/TK.1275/TK.995/TK.800/TK.460/-

Tk. 1.001ac Tk. 1.001ac Tk. 1.001ac Tk. 1.001ac Tk.1.00 1ac

Source: Millionaire Deposit Scheme, JBL, Rajshahi Branch It is a dream for many small savers to become a Millionaire. The word millionaire is really exciting. This dream can be a reality if we have a calculated plan and strong determination. JBL has introduced Millionaire Deposit Scheme which has flexibility in respect of period and monthly deposit as per affordable capacity for giving a sum of Tk: 1.00(one) million i.e. Tk. 10(ten) lac at time. Savings plan and Benefit: Tenor 3-years 4- years 5- years 6- years 7- years 10- years 12- years 15- years Monthly Deposit Tk.23950/Tk.16950 Tk.12750/Tk.9950/Tk.8000/Tk.4600/Tk.3345/Tk.2170/Maturity value Tk.10 1ac Tk.10 1ac Tk.10 1ac Tk.10 1ac Tk.10 1ac Tk.10 1ac Tk.10 1ac Tk.10 1ac

Source: Kotipati Deposit Scheme, JBL, Rajshahi Branch.

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To become Kotipati is simply a dream for the most of the populace of Bangladesh. It is realizable for high income group who have strong determination and savings habit. If we decide and plan to save money from our regular income we can own Tk 1.00 crore easily by making a planned savings. In this regard, JBL has introduced ``Kotipati`` Deposit Scheme `` offering the savings plan fit to our dream to be a Kotipati by monthly deposit at our affordable capacity. We can take advantage of the ``Kotipati`` Deposit Scheme `` form JBL and plan for our golden future accordingly. Savings plan and Benefit: Tenor 3-years 4-years 5years 6-years 7years 10-years 12-years 15-years 18-years 20-years Monthly Deposit tk . 239,500/tk . 169,500/tk . 127,500/tk . 99,500/tk . 80,00/tk . 46,000/tk . 3345/tk . 21,485/tk . 14,330/tk . 11,100/Maturity value tk. 1 crore tk. 1 crore tk. 1 crore tk. 1 crore tk. 1 crore tk. 1 crore tk. 1 crore tk. 1 crore tk. 1 crore tk. 1 crore

Source: Kotipati Deposit Scheme, JBL, Rajshahi Branch. Double/ Triple Growth Deposit Scheme: For people who have cash flow at this moment and want to get it double /tripled quickly JBL has introduced Double/ Triple Growth Deposit Scheme
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that offers us to make double/ Triple your money within 6(six) years and 9.5 (nine and a half) years respectively resulting an high rate of interest. Tenor Fixed Fixed Characteristics: Minimum deposit : Maximum deposit: Monthly Benefit Scheme (MBS): Jamuna Bank limited has introduced monthly Benefit scheme (MBS) for the prudent persons having ready cash and desiring to have fixed income on monthly basis out of it without taking risk of loss and without encasing the principal amount this scheme offers highest return with zero risk. A person can plan his/ her monthly expenditure with the certain monthly income under the scheme. Deposit plan and Benefit Tenor Monthly benefit /profit against deposit of tk.1.00 (one ) lac 5-years 3-years 1-years 6-months tk.1020/tk.1000/tk.875/tk.850/Tk . 1(one0 lac Any amount multiple of tk 1(one ) lac Monthly Deposit 6 years 9.5- years Maturity value Double amount Triple amount

Note : Government tax and other charges, if any are included with the above benefit/ figure
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Characteristics: * Minimum deposit : * Maximum deposit : account *Upon maturity the term may be renewed for the next tenure. Monthly Savings Scheme (MSS): Savings is the best friend in our bad days. Small savings can build up a prosperous future savings can meet up any emergencies. JBL has introduced Monthly Savings Scheme (MSS) that allows us to save on a monthly basis and get a handsome return upon maturity .If we want to build up a significant saving to carry out our cherished dream, JBL MSS is the right solution. Marriage Deposit Scheme: Marriage of children, especially daughter is a matter of great concern to the parents. Marriage of children involves expense of considerable amount, prudent parents make effort f gradual building of fund as per their capacity to meet the matrimonial expense of the children specially daughters parents get relief and can have peace of mind if they can arrange the necessary fund for marriage of their children no matter whether they survive not till the marriage occasion it can be a great help to the parents if there is any scope of deposit of a modest amount as I their financial capacity which grows very fast at high rate of interest yielding a size amount on maturity.; with this end in view JBL
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tk 1(one) lac Any amount multiple of tk. 1(one)

*After opening the account, the profit element will be deposited in that

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has introduced Marriage Deposit Scheme which offers us and opportunity to build up our cherished fund by monthly deposit of small amount at your affordable capacity.

Tenor

Monthly Deposit Tk1000./Tk1500/Tk2000/Tk2500/Tk1000/Tk1500/Tk2000/Tk2500/Tk1000/Tk1500/Tk2000/Tk2500/Tk1000/Tk1500/Tk2000/Tk2500/Tk1000/Tk1500/Tk2000/Tk2500/-

Maturity value tk 86.875/tk1.30.315. /Tk1.73.750/Tk2.17.190/Tk1.32.430/Tk1.98.645/tk 2.64.860/tk3.31.075/tk2.20.760/tk3.31.140/tk4.41.520/tk5.51.900/tk2.76.440/tk4.14.660/tk5.52.875/tk6.91.095/tk4.24.115/tk 6.36.175/tk 8.48.230/tk 10.60.290/-

5.5years

7.5years

10.5years

12.years

15.years

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Tk1000/18years Tk1500/Tk2000/Tk2500/below the age of 18-years alongwith legal guardian. Education Saving Scheme (ESS):

tk 6.36.020/tk9.54.030/tk 123.72.040/tk15.90.050

Eligibility: Marriage Deposit account can be opened in the name of children

Education is a basic need of every citizen, Every parent wants to impart proper education to Education is the pre-requisite for socio economic development of the country As yet there is no arrangement of free education to the citizens form the government level. As such there should be pre-arrangement of fund to ensure higher education of the children Otherwise higher education may be hindered keen to change of economic condition income of the parents at the future time when higher education shall be required today` s higher education is becoming expired day by day parents can get relief and can have peace of Ming if they can arrange the necessary fund for higher education of their children As such JBL has introduced `Education Savings Scheme ` which offers an opportunity to build up cherished fund by monthly deposits of Small amount at affordable capacity of customer or initial lump sum deposit to Yield handsome amount an a future date to meet the educational expenses under this Scheme customer has different attarctive options to avail the future benefit i.e. withdrawal of the total amount accumulated in lump sum or withdrawing monthly benefit to meet educational expense keeping the
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principal amount intact or to withdraw both principal and accumulated profit monthly for a certain period. Tenor Monthly Deposit Benefit Option-1 Lump sum withdrawal on Tk.58,420/= Tk.87630/= Tk.1,16,840/= Tk.1,46,050/= Tk.97,640/= Tk.1, 46, 460/= Tk 1,95,280/= Tk.2,44,100/= Tk.72,930/= Tk.1,45,860/= Tk.2,18, 790/= Tk.2,91,720/= Tk.3,64,650//= Tk.1,38,220/= Tk.2,76,440/= Tk.4,14,660/= Tk.5,52,875/= Tk.6,91,095/= withdrawal option Option-2 Monthly benefit during the principal de sit and interest Tk.1000/= Tk.1500/= Tk.2000/= Tk.2500/= Tk.1000/= 6-years Tk.1500/= Tk.2000/= Tk.2500/= Tk.500/= Tk.1000/= 8 years Tk.1500/= Tk.2000/= 4 years Tk.2500/= Tk.500//= Tk.1000/= 12-years Tk.1500/= Tk.2000/= Tk.2500/= Tk.1225/= Tk.1840/= Tk.2450/= Tk.3060/= Tk.2050/= Tk.3075/= Tk.4100/= Tk.5125/= Tk.1530/= Tk.3060/= Tk.4590/= Tk. Tk.2900/= Tk.5800/= Tk.8700/= Tk.11,600/= Tk.14,500/=

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Option: B
Initial Deposit Period Option-1 Lump sum Monthly benefit during the next 5(five) maturity principal interest Tk. 1.00 lac 3-yrs Tk. 1,34,925/5-yrs 7-yrs Tk. 2.00 lac 3-yrs 5-yrs 7-yrs Tk. 3.00 lac 3-yrs 5-yrs 7-yrs Tk. 5.00 lac 3-yrs 5-yrs 7-yrs Tk. 166615/Tk.207615/Tk.269850/Tk.333230/Tk.415230/Tk.404775/Tk.499845/Tk.622845/Tk.674625/Tk.833080/Tk.1038080/Tk. 3500/Tk.4560/Tk.5660/Tk.7000/Tk.8720/Tk.8490/Tk.10500/Tk.13080/Tk.14150/Tk.17500/Tk.21800/Tk.2200/Tk.3056/Tk.3070/Tk.4400/Tk.6130/Tk.4605/Tk.6600/Tk.9195/Tk.7675/Tk.11000/Tk.15325/Tk.2830/Tk.1535/years deposit Monthly benefit during the next after 5(five) years after maturity and and amount intact encashing encashing principal deposit withdrawal onmaturity Option-2 Option-3

Note: (i) Duties and taxes are payable by the customer as per government rules. ii. The customer has the option for withdrawing total accumulated amount including principal on maturity date at a time or taking monthly benefit during the next 5(five) years after maturity encashing principal deposit and
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interest or monthly benefit during the next 5(five) years from the date of maturity keeping the principal deposit amount intact. Eligibility: Education Savings account can be opened in the name of children below the age of 18-years along with legal guardian. Some Special ' Terms & Conditions for all the Schemes: • Bank reserves the right to close the scheme if customers fail to deposit 3-consecutive installments. • If the Scheme is closed within 6-months, customer will get the deposited amount only and no interest/profit will be paid for the Scheme. If it is closed after 6-months, customers will get the deposited amount along with the interest at the normal savings rate upto the time of closure. • Duties and taxes on the deposit, if any, are payable by the customers as per government rules. • The above figures are indicative only and subject to change from time to time. • Money Laundering Prevention Act shall be exercised as per rules of Bangladesh Bank. And Special Service Debit Card JB Bank has launched debit card of VISA brand in August 2008 with access in local market. It is one of the most popular services provided by the bank

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outside the world. Coming days it will be also popular in Bangladesh. So in this purpose JBL take perfect step. Procedure for obtaining Debit card is given below: At first the applicant should fill up the prescribed application form, which is available at: a) Card Division JBL Bank Head Office b) All branches of JBL Bank Required Documents with application form are as follows: a) Photograph b) TIN certificate c) Salary certificate for salaried personnel d) Trade License memorandum and article of Association/Partnership deed for businessman. e) Bank Statement f) Copy of any utility bill as proof of residence g) Passport Copy (if any) h) Driving license/Voter !D/Office lD (if any) i) Car/House ownership document (if any) Age Limit of the card applicant should be 21 to 60 years and Minimum Income: Tk10000 for Classic card and Tk 30(300 for Gold Card. a) Lower interest rate b) Lower fees and charges c) Free supplementary card 'hot one) to spouse only d) Cash advance facility through ATM
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In JBL, Rajshahi branch there are only five members of this branch have credit card. It is not introduced to the outside customer of the bank but application forms are available here. 4 any customer wants to be a credit card holder bank always welcome him/her. This facility will be popular soon this branch.
AN IMPORTANT DISCUSSION ON CHEQUE

A cheque is defined in section of Negotiable Instrument Act. 1881 as " A cheque is a dill of exchange drawn on specified banker not express to be payable otherwise than on demand". So a cheque is an unconditional order of the drawer in writing bearing a date to the banker maintaining his account to pay on demand to a named person, his order or bearer, a certain specified sum of money, expressed in both figures and words. The deposits accepted by the banker should be withdrawal by chouse. A cheese in general valid for 6 months from the date of issue and it may be bear future date. The law does not specify whether the amount of a cheque is required to be expressed both in words and figures. But as per banking practice the amount is stated both in words and figure. There are 3 parties in a cheque issued. j) The Drawer- The customer who issues the order i.e. A/C holder. k) The Drawee- The banker on whom the order is issued. l) The payee- The beneficiary who is to receive the payment.

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The salient features of a cheque – 1) Instrument in writing. 2) An unconditional order. 3) On a specified banker. 4) Payee to be certain. 5) A certain sum of money. 6) Payable on demand. 7) To be singed by the drawer. Material pats of a cheque – Date Amount Payee Place Crossing a) Open Cheque: (i) Order cheque- In case of an order cheque it should purport to be endorsed by or on behalf of the payee (ii) Bearer cheque- A bearer cheque is payable to the bearer and the banker is discharged from !inability by payment in due course to the bearer thereof. A bearer cheque is always a bearer one and no endorsement can make it payable otherwise than to the bearer thereof.

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b) Crossed Cheque: The drawer or the holder thereof can cross a cheque generally or specially to a banker. The crossing must be on the face of the cheque. There must be two lines drawn transverse and parallel. There can not be any general crossing without the two transverse lines, with or without the words and company or abbreviation thereof, though the name of a banker without the lines is sufficient to constitute a speck! crossing. A perforated crossing is not disputed. The crossing of a cheque is a material part of the cheque. General crossing is not done to bills of exchange or promissory notes. Effect of crossing – Crossing affects the mode of payment of the cheque. The cheque is not more payable to the payee or holder at the counter of the bank. The payment of crossed cheque can be obtained only through banker. The crossing assures that only rightful holder gets payment. Even if wrongful person got the payment that can be traced out through banker. Even if wrongful person got the payment that can be treced out through banker In case of specially crossed cheque the payment should be made through that bank.

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Account payee cheque- A cheque marked 'account payee ' or 'payee 's account only ' between the two parallel lines of general crossing is said to be crossed 'account payee ' and ceases to be negotiable. Reason for Return of cheque or Dishonor of cheque: Insufficient fund Amount in figure and word differ Cheque is undated/post daited/stale E ha we Vs signature differs/requires Payment stopped by the Drawer Crossed cheque must be presented through bank Other specific reasons Issuance of a chequebook: For issue of a chequebook there should be a request from the account The first one is issued on the basis of the request form fill up with necessary information by A/C holder. Subsequent issue should be done only on the strength, of the duly signed requisition slip as attached to the chequebook unless the relative chequebook or the requisition slip is reported lost or destroyed by the A/C holder and. loss is properly noted on the banker 's records. An Authorized officer will issue chequebook as following way• Single and uniform branch sea! to be used on each leaf of the cheque book if not done earlier. • A/C no. Sea! to be affixed on each leaf carefully to ensure that the seals on each leaf are clear and distinct. This is essential for identification of

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the concerned A/C easily on receipt of a cheque for payment and also as a precaution against fraudulent use of a cheque on any other A/C. • The Authorized officer must sign in full beside the printed no. on each and every leaf of the chequebook by using carbon paper at the back side of the leaf so that his signature also appears on the back of the leaf. • The name of the A/C is written down on the face of the chequebook and on the requisition slip and the word "issued on" along with the date of issuance is also written down or, the requisition slip. • Immediately after issue of a chequebook, A/C name, A/C no., cheque serial no. should be recorded in the Cheque Book Issue register serially and acknowledge by the A/C holder or his/her representative before taking delivery of the chequebook as well as posted in the computer. REMITTANCE AND BILLS Remittance means transfer of money from one place to another. The JBL remits through the network of their branches throughout the entire country and thus this dank serves as the best medium for remittances. There are different modes of remittance such as – Demand Draft : Under Negotiable Instrument Act. Sec. 85(A) "A DD is an order to pay money drawn by one office of the bank upon other office to the same bank for a sum of money payable to order on demand".

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Procedure for issuance of DD: 1 At first the party collect the prescribed application form and filled it with necessary information 'i.e. name of the payee, A/C no., name of branch, amount to be send, DD sender name and address. 2. After completing entire information the Authorized officer calculate commission and vat and said to the DD sender the amount to be deposit to cash counter or in cheque form. 3. Calculation of commission and vat- 0.1% of sending amount is the commission and 15% of commission is the vat. 4. Cost memo given to the concerned person which include all information along with total amount (include vat & commission). 5. Then DD issued and given to the party. The DD block should be signed by two P.A. holding officer before given to the customer. 6. If DD amount is more than 20,000 then there should be a test no. (which is made by some confidential no. by Authorized officer). The DD receiving branch should pay to the party before match the test number. 8. DD particular should be entering into a DD transfer register and no. should be write in the DD form and block. 9. After completion of all formalities the DD receipt become active. Then DD receiver can convert this DD into cash through his/her A/C. 10. Issuance of advice in quadruplicate of which two copies to be sent to paying branch, one copy to the HO, CAD and rest one copy to be retrained with the issuing branch, as 01C.
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Procedure for payment of DD: 1. The particulars of the DD are to be checked with the advice and signatures by the Authorized officer of the DD paying branch. 2. The Authorized officer should verify the test no. 'if any). If any problem occurs then he can contact with the DD issuing branch. 3. Then the officer enter particular of that DD in to the DD payable register. 4. After completion of all formalities the banker can make payment of that EDE). 5. In case of non-receipt of advice, the drowse branch will make payment by debiting to suspense account and inform to the issuing branch immediately. Accounting Procedure: (a) On receipt of DD by the paying branch Debit Bills payable-DD payable Credit Party 's A/C or clearing (b) On receipt of advice by the paying branch Debit IBTA, Issuance branch Credit Bills payable-DD payable (c) In case of payment w1thout advice Debit Suspense account DD paid without advice Credit Bills payable-DD payable The adjustment of suspense account Debit IBTA, Issuance °ranch Credit Suspense account DD paid without advice
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Payment Order (PO) A Payment Credit is an instrument, which is issued and paid a certain sum of money to the person thereon or to his/her order. Unlike cheque, there is no possibility of dishonoring PO. Bank takes out money of the PO in advance. It is mainly used for making a remittance to the local creditor. That is, it is a commercial paper issued by bank with in the same clearinghouse. Drawer and drawer of the PO) is the same branch. The PO) is not a negotiable instrument and cannot be endorsed or crossed like a bankers draft. This instrument is generally used in tender, bids, earnest money etc. The purchaser of PO deposits money or transfer money from his A/C to the bank for issuance of a PO. After collecting of money Authorized officer issue a PO with the name of drawer and payee and other relevant information. Drawer should give charge for issuance of PO to the bank. The charge for issuance of PO is Tk. 254 is charge and Tk.4/- is vat i.e. in total Tk. 29/-. This charge is minimum for issuing a PO but it varied with the amount. In a PO receipt there should be sign of two Authorized officers. PO can be converting into cash through an application and transfer to the PO holder A/C. Security Deposit Receipt (SDR) SDR is the medium of transferring money. It is mainly used in security purpose. It is issue to an organization. No interest is given for it. If a person wants to give payment to a party or for lottery or other purpose, but want to due for sometimes. Then in this case he asks or request to the bank for issuing an SIR.

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Procedure of issuance of SDR:
1. Applicant gives cash or transfer money by cheque to issue SDR. 2. In SIR there should be received from (sender name), on A/C of (payee), amount in figure and in word, date etc. 3. After issuing of SDR the right of converting the amount into cash is by A/C payee. 4. In any case or any time the drawer want to back the money then he/she should released the SCR from receiver by his/her sign and sea! (K any). 5. There is an opportunity for getting loan against SCR. The loan amount against SDR is about 80% of the SIR amount. 6. Drawer should give charge for issuance of SCR to the bank. The charge of SDR is Tk. 10/- is charge and Tk. 2/- is vat i.e. in total Tk. 12/-. This charge is minimum for issuing a SCR but it varied with the amount. 7. In a SDR receipt there should be sign of two Authorized officers. SDR can be converting into cash through an application and transfer to the SDR holder A/C. Clearing And Bills Collection Clearing House: The clearinghouse is an assembly of the locally operating scheduled banks for exchange of cheques, drafts and other demand instruments drawn on each other and received from their respective customers for collection ') The house meets at the appointed hour or, all working days under the chairmanship of the central bank or its agent as the basis of the prevailing banking practices. The net dues receivable or payable arrived at after offsetting the total amount
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of the instruments received with that of the instruments delivered, are adjusted through the respective banker 's account maintained with the chairman banker. There are two types of clearing such as outward clearing and inward clearing. Where inter banks transactions are occurred then banks A/C are maintained in a clearinghouse. In a clearinghouse aH representative branches of all bank 's A/Cs must be kept to maintain transaction A/C. Normally Bangladesh Bank takeover this responsibility but absence of Bangladesh Bank, Sonali Bank take over this responsibility. The first clearinghouse 9-10.30 A.M. and on the same day the return house is 12:00-1:00 P.M. After collection of various types of instrument the representative, of these instrument to the BB, scrutinize the instrument, write detailed about the instrument in the clearing register, prepare house page according to main schedule i.e. write all about cheques in computer and make a hardcopy and store it in floppy disk. Then goes to first house for clearing. After that he goes to the second house to know about clearing of instrument or return of that. Since almost all commercial banks are under the clearinghouse of Bangladesh Bank so BB transfer money from one bank 's A/C to another bank 's A/C and make balance between them. The detailed process of clearing is described in OBC and IBC section. During bills collection procedure banker acts as an agent for the customer. JB, Rajshahi Br. receive different types of instruments, such as cheque, PO, DID, SCR etc. from its customers for collection. It also pays on behalf of its customer for those
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instruments that come to it through clearinghouse. There are two forms of collection, such as follows – Outward Bills for Collection (OBC): Instruments drawn on the other banks received by JBL are known as OBC. It is collected through clearinghouse. Inward Bills for Collection (IBC): IBC refers to the instrument drawn on JBL, Rajshahi Br. and received by other banks in the clearinghouse by the representative. Cash/Accounts Section Cash section is a very important and busy section of NGG-BL, Rajshahi Br. So this section should be handling with extra care. There are two cash officer in this branch as cash receiving officer and cash payment officer. Operation of this section begins at the start of the banking hour. Cash officer begins his transaction with taking money from the vault, which is known as the opening cash balance. There are several activities under this section such as- cash payment cash received, cash soling, vault maintenance, posting of information in computer. Cash Payment Section: Clients may give cheque to other party, bank, self-drawn, for DD issue, or anyone. The payment officer makes the payment. He just collects any kind of instrument, which verified by the authorized officer i.e. signature of the drawer should be, verified and makes payment. It should be written in the cash payment scroll register and initiated or signed by authorized officer. The denomination is written in the katcha register and also backs side of the
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cheque or other instrument. Then give cash payment seal with date on that instrument, write the amount in figure and in word by red ink and denomination on the back of the instrument. After completing all these it should be posted in the computer by data entry officer. At the end of the day these scroll numbers of the register will be compared to ensure the correctness of the entries. Receiving Section: Receiving of money are many form such as i) ii) By cheque By SPS

iii) For DD and soon Cash receiving officer check important information in the cheque or other type cash receiving instrument i.e. name of the A/C, A/C no., form of deposit, amount in figure and in word and sign of the depositor. At receiving time he should check the money especially duplicate money, count it by hand or by counter machine. Then give cash received sea! with date on that instrument, give a scroll no., and write the amount in figure and in word by red ink and denomination on the back of the instrument. Entry the received amount to the cash receiving scroll register and send the instrument with counter toll to the authorized officer for signature or initial in he cash receiving register. After completing all tinese it should he posted in the computer by data entry officer. At the end of the day these sera!; numbers of the register will be compared to ensure the correctness of the entries. Cash Sorting:
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Receiving amount is sorted i.e. make ail money 's edge one side and scrutinize all the money, one Ode money is good condition and other side money is had condition which will he sent to Bangladesh Bank. And also find out the duplicate note. After that make bundle of money and count by counter machine Making hole on the bundle for stitch. Stitch and bind bundles with cotton by using bank 's receipts. After this processing money bundles should be kept in vault because there is permission by insurance that counter amount is not above 5 lac. Lose money should he count and match with cash balance book. Vault Maintenance: Vault is one of the risky places of bank. There should be carefulness of taking care of it. Vault of this branch is kept in a much secured room and keys to the room are kept under control of cash officer and branch incumbent. The maintenance of the key set is classified among three people so that single one cannot open the vault to protect the forgery. First key of both the locks of the safe will remain with the cash-in-charge, one key will remain with deputy Manager and other key will remain with the Manager. Keys against each individuals should be recorded in Key register against their name and duplicate keys will be deposited in the feeding branch/other bank as safe deposit withdraw able under joint signature of the key custodians and received of which to be recorded in safe-in -safe-out register.
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Vault contains three type of locker. One locker contains cash, another one contains security documents i.e. chequebook, FDR block, SDR Block, PO block, DD & test key book etc., other one necessary document of loans and advances. Vault limit is 25 lac. Banker should remit cash to Bangladesh Bank A/C when exceeding 25 lac. Otherwise if any accident happens the bank cannot claim against insurance company. Carrying of remittance to the Bangladesh Bank should be 20 lac. Because in making of insurance the condition of vault limit and carrying remittance are 25 lac and 20 lac. So if these conditions are not satisfied then in case of any accident the bank cannot claim against insurance company. Another condition is that cash counter limit is 5 lac. Whenever the amount is exceed then cash officer should kept the excess amount to the vault. A vault register is maintained in Order to ascertain the clear position of cash while cash is out or in. Posting Of Information On Computer: With the help of software named Bankstar, Data entry officer posted all information regarding A/C opening, loan and advance and so on, which are mention below - Deposit A/C no. with relevant information - Cheque serial - Loan/Advance A/C no. and relevant information. - Cash payment from an A/C - Cash received in an A/C - And therefore balance of each A/C - DP S A/C no. and relevant information
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- Several types of statements And so on other type of A/C 's information. Almost information regarding banking activities is stored in the computer. At the day end all the calculation regarding deposit, loan and other services are drained which is known as day end. Interest rates offered by Jamuna Bank limited, Rajshahi Branch: Jamuna Bank limited, Rajshahi Branch is offering various lucrative interest rates for variance types of depositors. These rates are comparatively high then any bank prevailing in Rajshahi City Corporation area.

JAMUNA BANK LTD.
Interment Rate on Deposits Sl. No. 1 2 3 Particulars Short Term Deposit Savings Deposit: Urban/Rural Saving Deposit: Non Chequing & No withdraval for 6 months Saving Deposit: Non Chequing & No withdrawal for 1 year 4 5 6 7 FDR for 1 (One) month FDR for 3 (Three) months FDR for 6 (Six) months FDR for 1 (one) year 10.00 12.00 12.00 12.25 8.00 Rate 5.50 6.00 7.50

Source: Office Record of JBL, Rajshahi Branch. Department of BBA University of Information Technology & Sciences

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Rate

14 12 10 8 6 4 2 0

Source: Office Record of JBL, Rajshahi Branch.

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CHAPTER FOUR
Credit Management

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4.1 Introduction to Credit:
The word ‘credit’ derives from Latin word ‘crudere’ means ‘to trust’. The fundamental nature of credit is that, an element of trust exists between buyer and seller whether of goods or of money. Credit may also be defined narrowly or broadly. Narrowly credit is simply the opposite of debt. Debt is the obligation to make future payments. Credit is the claim to receive these payments. Credit is finance made available by one party (lender, seller or shareholder/owner) to another (borrower, buyer, corporate or non-corporate firm), i.e. from surplus unit to deficit unit. Credit is the outcome of financial intermediation the very major service offered by Bank financial institution. The economic basis of financial intermediation lies in the economies of scale in portfolio management and in the law of large numbers. Lenders have preference for financial intermediation because of: Low risk Greater liquidity Convenience and Other auxiliary services. Borrowers have preference for financial intermediation because of: Availability of big pool of funds that can satisfy big individual demands. Greater certainty of the availability of funds at all times. The rate of interest charged is generally lower than that charged by other lenders. Regulated financial institutions do not fleece small borrowers in the manner moneylender do.
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Broadly, credit is finance made available by one party (lender, seller) to another party (borrower, buyer). 4.2 Organizational Structure for Credit Operation Head Office Board EC MD DMD Corporate Division Credit Division
Credit Administratio n Divisiona

Internal Audit

General Credit Deptt.

SME Deptt.

Trade Finance Deptt

Leasing Deptt

Syndication & Structured Finance

CRM Deptt.

Recovery and Legal Deptt.

Branch Head of Branch
Credit Marketing Team Credit Team approval Credit administration Team Credit Term Recovery

Source: Annual Report of JBL. At the minimum, one officer shall be placed in the Credit Administration unit immediately at each branch who shall work independently under administrative and working control of Credit Administration Detpp., Head Office Department of BBA University of Information Technology & Sciences

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4.3 Credit Administration Flowchart Functions of Credit Administration Division

Disbursement

Custodian

Monitoring

Compliance

approval from CRM

Obtaining Security Documentation as per approval

Conditions & Covenant Breach Monitoring

Returns to BB, CIB Reporting, default list circulation

Completion of security Documentation

Safely Storing Loans/Security Documents (fire proof

Monitoring of Past Due, Limit, Expiry & Documents Deficiency

Maintain BB Circulars & ensure compliance by all Depts.

Limit Creation & Complying Disbursement Check list

Ensure Collateral is Insured & Properly Values.

Disbursement

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* Periodically means: Risk Grade >6 4–6 1–3

Review Frequency Quarterly Semi-Annually Annually

4.4 Importance of Bank Credit (Macro and Micro Aspect): One of the primary functions of commercial banks is sanctioning of credit to the potential borrowers. Bank credit is an important catalyst for bringing about economic development in a country. Without adequate finance there can be no growth or maintenance of a stable economy. Bank lending is important for the economy, for it makes possible the financing of agriculture, commercial and industrial activities of a nation. At the same time, a bank will, therefore, distribute its funds among various sectors in a manner as to derive sufficient incomes. At Macro Level: Credit influences and is influenced by quality of money supply, level of economic activity or GNP, imports, exports and net foreign assets At Micro Level: Credit influences the behavior of economic sector (Industry, Agriculture etc.) and the behavior of economic agents (Business Firm, Financial Institution, Household etc.). At Macro Level: Credit provides vital linkage among government sector, private sector, financial sector and foreign sector. Credit is an important determinant of money creation and enhances of production, consumption and national income.
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Credit influences imports and capital movement and enhance the outcome of balance of payment. Excessive credits can lead to inflation, over importation, capital flight and balance of payment deficit. At Micro Level: There are two-way relationships between credit and deposit. Delivery of credit is the core function of banks and interest on credit constitutes the major part of bank income. Credit is important to business and industrial firm. Banks provide financing for import, working capital and investment etc. Credit is important to agriculture. Bank provides crops loan and financing for agro-based business and for investment. Credit is important to household. Since it enables them to incur expenditure in excess of income in a given time period. Thus credit supplements savings. 4.5 Target Customers of Jamuna Bank Limited Rajshahi Branch: The customers for loan service are categorized as follows: i. ii. iii. iv. v. Individual person. Sole proprietorship firm. Partnership firm. Private Limited Company. Public Limited Company.
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vi. vii.

Government and semi Government Organization. Bank employee.

4.6 Importance of Credit Policy: Bank can maintain regulatory standard in maintaining loan to the customers. Bank can make sure the profitability of the loan. Loan policy give loan officer and bank management specific guidelines in making individual loan decision and shaping the banks overall portfolio. Bank loan portfolio should reflect what the loan policy says. 4.7 Elements of a Good Credit Policy: 1. Goal Statement: A goal statement must contain the size, maturity and quality of the loan. 2. Specification of the Lending Authority i.e. Loan giving capacity. 3. Line of Responsibilities: Responsibility of the officers of credit department (Term of preference: TOR) 4. Operating Procedure for; Soliciting Reviewing Evaluating and credit of Maximum loan limit, types,

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Making decision on customer loan application 5. 6. Documentation: Which document should be taken for each loan? Line of Authority: It says who is responsible for maintaining and reviewing the credit file document. 7. 8. Guidelines for taking, evaluating and perfecting loan collateral. Policy and procedure for setting interest rates and fees and the terms for repayment of loans. 9. 10. 11. 12. A statement of quality standards applicable to all loans. A statement of loan limits policy. A description of the banks principal trade area. A statement of the preferred procedure for detecting, analyzing and working out problem loan situation. 13. Policy guidelines for rehabilitation of seek project of non-performing loan or rescheduling of loan.

4.8 Lending Principles Followed by Jamuna Bank Limited: As liquidity and profitability are conflicting considerations, Jamuna Bank Limited , Rajshahi Branch as a bank, while employing the funds pays due regard to both profitability and liquidity. In order to secure a balance between liquidity, profitability and security, Jamuna Bank Limited follows the following principles of sound lending -

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Liquidity: It means that while lending, adequate care has to be taken so that the liquidity is not compromised. That’s why, Jamuna Bank Limited chooses such securities which posses sufficient liquidity. Safety: Jamuna Bank Limited exercises the lending function only when it is safe and that the risk factor is adequately mitigated and covered. Safety depends upon – a) The security offered by the borrower; and b) The repaying capacity and willingness of the debtor to repay the loan with interest. Diversity: In order to minimize risk, Jamuna Bank Limited invests its funds in different types of securities of different industries situated in different regions of the country. Yield: From the commercial point of view, Jamuna Bank Limited considers sufficient yield or return while financing a project. Productive Purpose: Jamuna Bank Limited exercises its lending function only on productive purpose.

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4.9 Types of Loans and Advances Offered by Jamuna Bank: Jamuna Bank Limited offers following types of loans and advancesa) b) c) d) e) f) g) h) Secured Overdraft (SOD) Cash Credit (CC) Staff Loan House Building Loan Transport Loan Mid-term Loan Bills Purchased and Discounted Industrial Credit.

4.9.1 Secured Overdraft (SOD): It is a continuous advance facility. By this agreement, the banker allows his customer to overdraft his current account up to his credit limits sanctioned by the bank. The interest is charged on the amount, which he withdraws, not on the sanctioned amount Jamuna Bank Limited sanctions SOD against different security. Based on different types of security, we can divide SOD in the following categoriesFig.: Types of Secured Over Draft
SOD (General) Secured Over Draft (SOD)

SOD (Others) SOD (Export)

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Source: Official Records of Jamuna Bank Limited, Rajshahi. Branch. 1. SOD (General): Advances allowed to the individuals/firms against financial obligations i.e. lien of F.D.R. or Defense Savings Certificate (P.S.P), ICB Unit Certificate etc. 2. SOD (Others): Advances allowed against assignment of work order for execution of contractual works falls under this head. The advance is generally allowed for a specific purpose. It is not a continuous loan. 3. SOD (Export): Advance allowed to purchasing foreign currency for payment against L/Cs (Bank to Back) where the exporter cannot materialize before the date of import payment. The processes of extending SOD are as follows – a. b. The party must have a current account with the branch If the ownership of the firm is proprietorship, then a trade

license must be submitted and in case of a limited company, all the documents required to open a current account should be submitted. The financial statements of the concerned firm should also be submitted. c. The party must maintain a good transaction with the branch and

have a good turnover rate. d. The party will apply to the officer in charge of credit department

of the branch for SOD arrangement e. The concerned officer of the branch will give him a Credit

Application Form and the party will have to fill up this form. In this form he
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discloses all the information about his concern, purpose of the loan, description of security, etc. f. The concerned officer will prepare a “Credit Line Proposal”,

where he writes about the business concern, details of proprietors/directors of the concern, management structure, and the existing credit facilities, the particulars about the facilities that asked for – such as margin limit, date of expiry, details of security, and any other relevant information. Then the proposal is sent to the Head Office, General Advances Division for approval. g. sanctioned. h. After the loan is sanctioned, the branch will issue two copies of a The responsible Department of the General Advances Division

will appraise the proposal and if it seems to a viable then the loan will be

sanction advice, where all the terms and conditions set by the bank is mentioned. The borrower is advised to write, “accepted” on the original copy if he is satisfied with the terms and conditions of the bank and retain the duplicate one as record. 4.9.2 Cash Credit (CC): Cash Credit (CC) is an arrangement by which a banker allows his customer to borrow money up to a certain limit. CC is a favorite mode of borrowing by traders, industrialists etc. for meeting their working capital requirements. It is operated like overdraft account. Depending on the needs of the business, the borrower can draw on his cash credit account at different time and when he gets money can adjust the liability Jamuna Bank Limited.
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Charges interest on the daily balance in the account. Depending on charging security there are two (02) forms of cash credit – Cash Credit (Hypothecation): The mortgage of movable property for securing loan is called hypothecation. Hypothecation is a legal transaction whereby goods are made available to the lending banker as security for a debt without transferring either the property in the goods or either possession. The banker has only equitable charge on stocks, which practically means nothing. Since the goods always remain in the physical possession of the borrower, there is much risk to the bank. So, it is granted to parties of undoubted means with the highest integrity.
CC (Hypothecation)

Cash Credit (CC) CC (Pledge)

Fig.: Types of Cash Credit (CC) Cash Credit (Pledge): Pledge is the bailment of goods as security for payment of a debt or performance of a promise. Bailer in this case is called the “Pawnor” and the bailee is called the “Pawnee”. In a contract of pledge, Pawnor must deliver the goods to the Pawnee either actually or constructively. Transfer of possession is the judicial sense, is essential in the valid pledge. In case of pledge goods the
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bank acquire the possession of the goods or a right to hold goods until the repayment for credit with a special right to sell after due notice to the borrower in the event of non-repayment. The processes of opening a CC account are shown in the following flow chartThe interested party must have a current account and good transaction with the branch

Applies for CC pledge or hypothecation arrangement

Fills up the “Credit Application Form” as provided by the respective officer

The concerned officer prepares a “Credit Line Proposal” (CLP) detailing all relevant information

Sends the CLP to the Head Office, General Advances Division for necessary action

Head Office, General Advances Division examines the proposal and if finds it viable then sanctions it and sends it to the branch

The branch issues two copies of “Sanction Advice”, one for its own record and the other for the party to keep.

Source: Official Records of JBL, Rajshahi Branch.
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CC (HYPOTHECATION) a. It is a charge against a property for a debt where neither the ownership nor the possession is passed to the Banker. b. It is granted only to first class parties.

CC(PLEDGE) a. It is a charge against a property for a debt where the ownership remains to the borrower but

c. Instrument–Hypothecation the possession is passed to the Banker. Deed b. Instrument – Pledge deed d. Possession of goods is surrendered to the lender when called upon to do so. c. In case of default, Bank may sell the Charge is then converted to pledge. security on giving the debtor reasonable notice of sale.

4.9.3 Staff Loan:
Jamuna Bank Limited provides advances to the staffs for buying motorcycles and bicycles, for wedding of their sons or daughters etc. It is called “Staff Loan”. Bank provides this advance facility under installment system. At the end of each month, when the staffs used to withdraw their salaries, bank takes a fixed amount from the salary of each of the concerned staff that takes this loan. 4.9.4 House Building Loan: House Building Finance Corpora Jamuna Bank Limited (HBFC) is the main institution to meet the requirement of loans in this field but Jamuna Bank Limited also supplement to this sector. Advances for construction of residential houses against real estates as primary securities as allowed by banks. Jamuna Bank Limited may grant advances for construction of commercial building also against real estates.
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4.9.5 Purchase and Discount of Bills: Purchase and Discount of Bills is also a special form of advances Jamuna Bank Limited normally purchase demand bills of exchange that are called “Drafts” accompanied by documents of title to goods such as Bill of Lading, Railway of Truck receipt. The purchase of bills of exchange drawn at an issuance, i.e., for a certain period maturing on a future date and not payable on demand or sight is termed as discounting a bill and the charge recovered by Bank for this is called “Discount”. 4.9.6 Mid-Term Loans: Jamuna Bank Limited or other commercial banks, because of their capital structure, constitution and liquidity consideration, are advancing for short term on principle. But modern banks have stated lending a safe proportion of their demand and time liabilities for fairly long periods to House Building, Industrial, Agricultural, Transport and many other sectors. Such loans are repayable by installments over a number of years ranging from 2 to 12 (Agricultural Loans ranging from 6 to 15 months), so far as, nature and conduct are concerned. 4.9.7 Transport Loan: Advances are allowed against hypothecation of “Power-Driven Vehicles” (PDV) including water crafts for genuine transport business to sufficient credit parties at 30% margin and suitable guarantee from persons of sufficient and standing where considered necessary mortgage of urban immovable property, registered or equitable, are also to be obtained by way of
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additional securities or in suitable case. In case of acceptance of mortgage, the minimum margin may be reduced up to 10 percent. These loans should be repayable within maximum period of two years, which is subject to renewal with approval from Head Office. 4.10 Procedures for Giving Advances: The General Advances Department of Jamuna Bank Limited Rajshahi Branch,usually follows the below-mentioned procedures and steps for sanctioning any kind of advances as available with the branchIn the first step, the prospective borrower has to apply to Jamuna Bank Limited Rajshahi Branch, for loan by filling up of a specific Application form. The Application form (Request for Credit Limit) contains following particularsName of the Borrower Account No. Business address (with telephone no.)/Residential address and Permanent address Introducer’s name, A/C no. and address Date of establishment/ Incorporation Trade license number, date and expiry date (Photocopy of trade license enclosed) GIR/TR no. and amount of income tax paid last year Constitution/Status (Mention whether sole proprietorship/ partnership/ Public Ltd. company/ Private Ltd. company).
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Particulars of Individual/ Proprietor/ Partners/ Directors (Name and Designation, Father’s/ Husband’s name, present and permanent address with Telephone no., % of shares held) Experience and background of Individual/Proprietors/ Partners/Directors Full particulars of assets in the personal name of Individual/ Proprietor/Partners/ Directors with valuation Names of Subsidiaries/Affiliates, percentage of share holding and nature of business Nature and details of business/products (for which credit facility is applied for), Markets (Present market price per unit, Factory price), Estimated sales for next one year. Credit facilities required (type, amount, period, purpose and mode of adjustment) Details of securities offered with estimated value (Primary security, Collateral security, market value of the security) Details of liabilities in the name of the client or in the name of any other Partners/Directors or Subsidiaries/Affiliates with JBL Bank and other banks, if any (Name of the Bank, Account no., Nature of advance, amount, security and validity of limit) Balance Sheet/Income Statement or Statement of Accounts of the following years attached (Preferably last 3 years) Other relevant information Proposed debt/equity ratio
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Signature of the Applicant In the second step after receiving the loan application form JBL Bank, Shaheb Bazar Branch, Rajshahi, sends a letter to Bangladesh Bank for obtaining a report from there. The purpose of this report is to being informed that whether the borrower has taken loan from any other bank; if ‘yes’, then whether these loans are classified or not. In the third step, after receiving CIB report if the Bank thinks that the prospective borrower will be a good borrower, then the bank will scrutinize the documents. In this stage, the branch will look whether the documents are properly filled up and signed. In the fourth step, i.e., the processing stage, the branch will prepare a Proposal. A proposal contains following relevant information – Name of the Borrower Nature of Limit Purpose of Limit Extent of Limit Security Margin Rate of Interest Repayment Validity The branch incumbent has the discretionary power to sanction loan (SOD) up to Tk.25 lac against financial obligations by informing Head Office. But in

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that case, the DGM of the branch has to give attention to the following mattersThe interest rate of the loan must not be less than 14.5%; and The borrower must maintain 30% margin. Except this case, the branch has to send the proposal to the Head Office. Head Office will prepare a minute and submit it before the Executive Committee (EC). The minute has to be passed by the EC. After passing the minute, it will be sent to Bangladesh Bank for approval in case of the followingIf the proposed limit exceeds 20% of bank’s equity If the proposed limit against cash collateral securities exceeds 25% of banks equity. After getting the approval from Bangladesh Bank, it will again come to the Head Office. The HO then prepares a “Sanction Advice” and sends it to the branch. A Sanction Advice usually contains the following particulars amongst other detailsName of borrower Facility allowed Purpose Rate of interest Margin

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Period of the loan and mode of adjustment Security Other terms and conditions. The borrower receives the advice and returns a copy of this letter duly signed by him as a token of having understood and accepted of the specified terms and conditions. In the fifth step, after receiving the sanction advice, the branch will collect necessary documents. Documents mean any written record, which serves as evidence in respect of a transaction and may be described as anything that is obtained for recording a transaction. Documentation is a very important aspect of loans and advances. It may be described as the process or technique of obtaining the relevant documents/papers for securing advances. A banker must obtain proper documents to be executed by the borrower to protect the Banks interest. Moreover, when money is lent against security of some assets, the document must be got executed in order to give to the banker a legal and binding charge against those assets. The documents for loans and advances can be classified into the two categories namely charge documents and security documents. Charge Documents are a set of printed and prescribed forms, which are executed by the borrowers to protect Bank’s interest while bank is providing loan/advances. Different types of advances are allowed to the customers against different types of securities. All securities are not suitable for all types of advances. There is common type of charge documents for types of advances. These are as followsDepartment of BBA University of Information Technology & Sciences

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Demand Promissory Note Letter of Arrangement Letter of Disbursement Balance Confirmation Certificate Specific types of charge documents are required for Commensuration types of securities/ facilities. The types of advances made by the JBL, Branch, Rajshahi, to its customers and probable securities offered by them are listed belowTypes of Advances LAOS Probable Securities Lien of various kinds of Sanchaypatras, Government. Securities, Debentures etc LSM LIM TR Secured Overdraft Mortgage of Immoveable Properties Pledge of Imported Merchandise Trust Receipt obtained in lieu of Import Documents Sanchaypatra, Non-resident Foreign Currency Deposit (NFCD) etc. Cash Credit Pledge or Hypothecation of stock in trade, Goods produce and merchandise LAFB FDBP LBP PAD Shipping Document for Export Shipping Document for Export Bank’s Acceptance Shipping Documents for Import
(Source: General Advance Dept. JBL Branch, Rajshahi.)

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In the sixth step, after verifying all the documents the branch disburses the loan to the borrower. A “Loan Repayment Schedule” is also prepared by the branch and is given to borrower. In the seventh step, after the disbursement of the loan the bank follows the borrower in the following mannerConstant supervision Working Capital assessment Stock report Break Even analysis Rescheduling of repayment In the eighth step, the loans are repaid in installment. This installment is according to bank directives. Some loans are repaid all at a time. If any loan is not repaid then notices served to the customer. Sometimes legal actions also taken for recover the loan.

4.11 Credit Risk Analysis:
Credit Risk Analysis is a technique by which the risk of the loan is calculated. Experienced people of General Advance Department in JBL Branch, Rajshahi, do this analysis. It is a ranking which total score are 100.

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Credit Risk Grading Score sheet: Grading Superior Short SUP Score Fully cash secured, Secured by govt./Int. Bank Guarantee 85+ 75-84 65-74 55-64 45-54 35-44 < 35

Good Acceptable Marginal / Watch list Special Mention Substandard Doubtful Bad and Loss

GD ACCPT MG/WL SM SS DF BL

Source: General Advance Dept. JBL, Rajshahi Branch.

In Credit Risk Analysis, following aspects are analyzedA. Financial Risk Leverage Liquidity Profitability Coverage B. Business / Industry risk Size of business Age of business Business outlook Industry growth Market competition Entry / Exit barriers

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C. Management risk Experience Second line / Succession Team work D. Security risk Security coverage (Primary) Collateral coverage (Property Location) Support (Guarantee) E. Relationship Risk Account Conduct Utilization of limit (Actual/ Projection) Compliance of Covenants / Conditions Personal deposits.

4.12 Types of Security: JBL Branch, Rajshahi charges the following two types of security1. Primary security 2. Collateral security. The modes of charging securities usually followed by the branch are as followsPledge Hypothecation Lien Mortgage
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Lien: Lien is the right to retain possession and not right of ownership. Banks lien is general lien over its own financial obligation to clients. Property under lien cannot be realized/sold and proceeds thereof cannot be appropriated without notice to the owner and sometimes without court’s order. Hypothecation: This is mortgage of moveable by an agreement and here neither possession nor ownership is transferred. Hypothecated goods cannot be sold out/disposed off without notice and court’s order. However, if a special power of attorney is taken in that case can be disposed off without going to the court. Pledge: Pledge is the bailment of goods as security for payment of a debt or performance or promise. Here, title and ownership are not transferred. Pledge goods may be sold out and proceeds thereof may be appropriated towards adjustment of Liability in case of failure of the borrower to repay or fulfill the terms and conditions. Mortgage: Mortgage is the transfer of interest in immoveable property to secure the repayment of money advanced. Ownership remains with the mortgagor. In case of equitable mortgage Court Order is necessary and in case of registered mortgage Court’s order is not necessary for sale/disposal of the mortgaged property for adjustment of advance.

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4.13 Common Methods of Charging Security and Their Nature of Security:
Mode Nature of security and its characteristics a. Cash, cash collateral and documents of the title to the goods b. It is the right of banker to hold the debtor’s property until the debt is discharged – generally retained by the bank in its own custody or to the hands of third party with lien marked. c. The third party cannot discharge it without the permission of the bank. d. In case of need bank needs the permission from the court to sell the property a. Borrower transfers the right of property or debt to the bank Life insurance policies, supply bills, book debt of the borrower can be assigned a. Moveable stock of raw material, finished goods, merchandise b. Pledge is also lien but here bank enjoys more right. c. Physical transfer of goods to the bank is must. d. Bank can sell the property without the intervention of any court, in case of default on loan. a. Moveable stock of raw materials finished goods, merchandise. b. Goods remain in the hands of debtor, but documents of title to goods are handed over to the banker. This method is also called ‘equitable charge’. c. Bank inspects the goods regularly to judge it’s the quality and quantity for the maximum safety of its loan. a. Mortgage is the transfer of specific immovable property – like land, building, plant etc. b. Most common type of mortgage is legal mortgage in which ownership is transferred to the bank by registration of the mortgage deed. c. Another method called equitable mortgage is also used in bank for creation of charge. Here mere deposit of title to goods is sufficient for creation of charge. Registration is not required. In both the cases, the mortgaged property is retained in the hand of borrower. a. Intangible asset (goodwill) b. It is used in foreign exchange business – it will be discussed thereon

Lien

Assignment

Pledge

Hypothecation

Mortgage

Trust receipt

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4.14 Loan Classification Procedure: 4.14.1 Importance of Loan Classification: Loan classification attempts to categorize the debt information in a systematic manner. Loan classification is defined in terms of degree of risk associated with loans. Classification of loans mean and include only such assets of the balance sheet of a bank which do not yield interest income and which have remained past due for some quarters. The enormity of the loan classification status of Bangladesh can be gauged from the figures of total classified loan in the country. Loans are generally categorized in Bangladesh as either unclassified or classified. Loans are classified which are judged to have a reduce chance of repayment. Loans are classified as substandard, doubtful and bad/loss as per classification guidelines by the Bangladesh Bank. The status of loan classification in Bangladesh depicts a worsening situation of the Banking sector in Bangladesh in subsequent years after the implementation of Financial Sector Reform Program. Loan classification made two pronged attacks on the activities of banks. Fist, interests applied on loans are not taken into account because such interests are to be taken into account only on its realization. Second, banks have to make provisions on classified loans as per guidelines provided by the Bangladesh Bank from out of the income earned by them on performing loans. 4.14.2 Objectives of Loan Classification: Find out net worth / adjusted capital of bank Help for assessing financial soundness of a bank Calculate the required provision and the amount of interest suspense
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Put the bank on sound footing in order to develop sound banking practice in Bangladesh. 4.14.3 Importance of Loan Classification Strengthen credit discipline Improve loan recovery positions Make planning for future course of loan

4.14.4 Type of Loans to be Reported in CL:
For application of classification criteria, loans are divided into the following:
SL. Types of No. Loan a. Continuous Definition These are those advances, which do not have any set schedule for drawing or disbursement but usually have a terminal date of full adjustment or repayment. e.g. OD, CC, etc. The loans which become payable after serving demand notice by the bank concerned are termed as Demand loan. e.g. forced LIM, PAD, FBP, IBBP, etc. These are loans, which have a specific term for repayment as specified in the loan agreements. e.g. project finance, industrial finance, etc. The credits, which are categorized as short term in the Annual Credit Programs issued by the Agricultural Credit Department (ACD) of Bangladesh Bank from time to time, are termed as Short Term Agricultural Credit (STAC). The credits disbursed in agricultural sector having repayment due up to and including 12 months from the date of first disbursement will also be included in this loan category. Short-term micro-credit means loan up to Tk. 10,000.00 and having repayment due up to and including 12 months. These loans may he termed as non-agricultural credit, Sawnirvar credit, weaver’s credit or credit against bank’s own project. Reported to be in CL-2

b. Demand

CL-3

c. Term

CL-4

d. Short Term agricultural / Micro

4.14.5 Basis for Loan Classification: According to BRPD Circular No.16, 1998 all loans and advances and are classified on the basis of two criteria viz.:
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Objective Criteria and Qualitative Judgment (QJ) Criteria The above criteria along with definitions are described in the following table: A. Objective Criteria
SL. No. 1. Status Unclassified (UC) Types of Loans All Continuous Demand Term (Less than 5 years) Term (More than 5 years) Short Term Agricultural/ Micro Continuous Demand Term (Up to 5 years) Term (More than 5 years) Short Term Agricultural / Micro Continuous Demand Definition Current loans with required/ adequate eligible securities. Overdue is more than 3 months but less than 6 months Overdue is more than 3 moths but less than 6 months from the date of serving notice / creation of forced loans. If the defaulted amount of installment is equal to installment/installments payable in more than 6 months but less than 12 months. If the defaulted amount of installment is equal to installment/installments payable in more than 6 months but less than 12 months. Overdue is more than 12 months but less than 36 months Overdue is more than 6 months but less than 12 months. Overdue is more than 6 months but less than 12 months from the date of serving notice/creation of forced loans. If the defaulted amount of installment is equal to installment/installments payable in more than 12 months but less than 18 months. If the defaulted amount of installment is equal to installment/installments payable in more than 18 months but less than 24 months. Overdue is more than 36 months but less than 60 months. Overdue is more than 12 months Overdue is more than 12 months but less than 12 months from the date of serving notice / creation of forced loans. If the defaulted amount of installment is equal to installment/installments payable in more than 18 months. If the defaulted amount of installment is equal to installment/installments payable in more than 24 months. Overdue is more than 60 months

2.

Sub-standard (SS)

3.

Doubtful

4.

Bad/Loss

Term (up to 5 years) Term (More than 5 years) Short Term Agricultural/ Micro

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B. Qualitative Judgment (QJ) Criteria
SL. No. Status Types of Loans

Definition
A loan is considered sub-standard when the degree of

Sub-standard (SS) Doubtful Bad/Loss (BL)

All

risk of non-payable is so high and there is reasonable prospect that the loans condition can be improved. Chances of recovery is uncertain

All

No security held. Borrower not traceable. Time barred loan cases. No hope for recovery.

4.14.6 Sources of Data for Preparation of CL: Loan ledger/ Records Instruction from Head Office/ Bangladesh Bank Calculated Derived Calculated / Derived Copies from previous classification forms Invention/Bin cards 4.14.7 Eligible Securities: Gold/Gold Ornaments 100% Govt. securities / FRS Shares / Debentures etc. 100% Un expired guarantees (Govt./Bangladesh Bank) 100% Readily salable goods under control of bank 50% and Market value of mortgaged property 50% The bank should assess valuation of securities
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4.14.8 Calculation of Interest on Classified Advances: Interest on substandard and doubtful loan accounts should be credited to “Interest Suspense Account” instead of crediting the same to the interest income account. Calculation of interest on Bad/Loss loan accounts should be deferred instead of calculating the same on those accounts. If there is any recovery on the above accounts that recovery/ portion of recovery will be treated as interest recovery, not principal recovery. After adjustment of interest due, principal portion of respective loan account will be adjusted later on.

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4.15 Existing Process of Handling Loans:
The process of sanctioning a loan is as follows:
Getting Loan Proposal from Party About Project Collection Information Evaluating Project and Proposal About Party

BR. Level Evaluation Legal Assessment

Evaluating Collateral Evaluation by Agent Branch Level Decision Principal Officer Leave

Sanctioning and Disbursing Loan

Supervision of Loan

Legal Recovery Recovery of Loan Usual Recovery

Source: Official Records of JBL, Branch, Rajshahi.

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4.16 Guarantee: The branch offers three types of Guarantee that are as followsa) Tender or Bid Bond Guarantee: The tender guarantee assures the tendered that tenders shall uphold the conditions of his tender during the period of the offer as binding and that he/she will also sign the contract in the event of the order being granted. b) Performance Guarantee: A Performance guarantee expires on completion of the delivery or performance. Beneficiary finds that as a guarantee, the contract will be fulfilled in every respect and can retain the guarantee as per provision for long time. Including a clause stating that the supplier can claim under the guarantee, by presenting an acceptance certificate signed by the buyer, can counteract this. c) Advanced Payment Guarantee (APG): This type of guarantee is given against work order. This idea can be made clear with the help of an example. Before the beginning of Jamuna Bridge construction, the Government collected money from different sources to pay the contractors in advance. But there was a risk for the Government that the contractors might not do there construction work even they were paid in advance. So the Government asked Bank Guarantee from them. Then the contractors submitted Bank Guarantee to the Government. This type of Guarantee is called Advanced Payment Guarantee.

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4.17 Issuance Procedure of Guarantee: Bank guarantee is a contractual relationship between the account (client) and the beneficiary. For issuing Bank Guarantee, a customer has to apply to the branch in his or her own pad. Normally the bank prepares the format of the guarantee. The proposal for Bank Guarantee contains the following particularsName of the Borrower with address Nature of Facility Extent of Facility Purpose Security Margin Commission Validity Beneficiary Liability position of the Borrower – a) Nature of Facility b) Extent of Facility c) Drawing Power d) Margin amount (Tk.) e) Outstanding/Net exposure (Tk.)
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f) Validity. Then Bank issues Bank Guarantee of Judicial Stamp. The conditions for issuing Bank Guarantee area. The customer must maintain a Current Deposit (CD) account b. The customer must keep certain percentage of guaranteed money (usually 2%) as margin. Bank charges 0.50% commission on the guaranteed money per quarter (i.e., 3 months) After realizing all the above charges, Bank then issues the Guarantee. For this issuance, Banker’s Liability is created and the following entries are givenCustomer’s Liability --------------Dr. Banker’s Liability------------------Cr. When the guarantee is expired, the guarantee is marked as “cancelled” and the following entries are givenBanker’s Liability------------------Dr. Customer’s Liability --------------Cr. The branch also issues Revolving Guarantee. A Guarantee issue Register is maintained to record following information about GuaranteeName of the Customer Account no.
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Guarantee no. Issuing Date Date of Approval/ Reference no. Beneficiary of the Guarantee Amount of Guarantee Margin (percent and amount) Commission Date of Expiry. 4.18 Industrial Sectors Financed by JBL: Followings are the sectors that are financed by JBL under its Industrial Credit Scheme – Composite Textile Textile Spinning Oven Fabrics Neat Fabrics Export-oriented Garments Sweater Factories Garment Accessories Printing and Packaging Paper and Board Mills
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Cold Storages Tannery, Footwear and Rubber Industries Engineering Industries Chemical Industries Glass and Ceramics Industries Partex Board Industries Cement Industries 4.19 Classification of Industrial Credit of JBL: JBL classifies its overall industrial credit into three (03) broad headings. These are as follows1) 2) 3) Small and Cottage Industries; Medium and Large Industries; and Working Capital.

4.20 Sources of Funds for Industrial Credit: The sources of funds for industrial credit operation in case of JBL Bank are as follows1) 2) Foreign Aid; and Own Funds.

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The sources of foreign aid are as follows – 2nd IDA Credit Scheme 3rd IDA Credit Scheme EXIM Bank (India) Credit NORAD Grant Scheme 30 Million RMB Yuan from China. The sources of own funds are as followsSpecial Credit Program Waivers Credit Scheme “Bikalpa” Loan Program Youth Self-financing Program JBL Industrial Credit Scheme Special Investment Program in Small and Cottage Industries Credit Guarantee Scheme Self-financing Program for Private Doctors Consortium Financing Investment in Computer and Software

4.21 Consortium for Industrial Credit: JBL has consortium agreement with the following banks and financial institutions for industrial credit purpose –
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a) b) c) d) e) f) g)

Janata Bank Bank Rupali Bank Bangladesh Shilpa Bank (BSB) Bangladesh Shilpa Rin Sangsta (BSRS) Investment Corporation of Bangladesh (ICB) Eastern Bank Limited

4.22 Application for Industrial Credit: Getting loans or advances is not that easy for an entrepreneur from any commercial bank. S/he has to follow some prescribed ways to acquire the loans or advance and it demands some preparation from the part of the borrower because the amounts that will be sanctioned by the bank are not of its own. The public deposits these amounts. So it is very risky for a bank to lend to the borrower. If the bank fails to recover that money then it should be paid from its own fund. As a result, banks fixed a systematic way to minimize this lending risk and try to use the money properly. A loan proposal for any kind of industrial credit offered by JBL generally requires the followings – Application for the loan Required papers for ownership of the industry Schedule of mortgaged properties and relevant papers
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Market reputation of the applicant Other Banks’ opinions about the previous money lending Feasibility Study CRG Report Financial Spread-sheet Analysis (FSA) Credit Report Go-down Inspection Report Valuation Certificate (to be done by the engineer of the bank) Trade License and CIB Report Certificate from approved Advocate in respect of immoveable property Commercial Invoice Certificate of Origin Memorandum of Association and Articles of Association No Objection Certificate (NOC) form the Local Authority and form the Ministry of Environment CS, RS and SA of the land Mutation Certificate Affidavit and Personal Guarantee General irrevocable Power of Attorney

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4.23 Project Appraisal: It is the reinvestment analysis done by the banker before a project he approved. Project appraisal in the banking sector needed for the following reasons: To justify the soundness of an investment To endure repayment of bank finance To achieve organizational goals To recommend it the project is not designed properly 4.23.1 Techniques of Project Appraisal An appraisal is a systematic exercise to establish that the proposed project is a viable preposition. The appraising officer checks the various details submitted by the promoter in first information sheet credit application form, feasibility report. JBL, Bangladesh considers the following aspects in appraising: 1) Entrepreneur

Entrepreneur/promoter has to be creditworthy and competent enough to run the proposed industry. Preference given for educated/knowledgeable sponsors, who know about their business concern, have technical know-how and expertise in the line of proposed industry Who have own land and building for running the project

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Have experience in working abroad Sponsors with innovative ideas Sponsors must have net worth more than 2.5 times of the equity required for investment in the project Who have good dealings with the bankers/outside parties and has social contacts and standings. Have an account in JBL. Sponsors requiring group findings may be given financial assistance provided for each other etc. 2) Viability of the Project

The project should be viable from organizational, technical, commercial, financial and economic points of view. A. Technical viability It implies the assessment of various requirement of actual production process. It involves a critical study of following factors: 1. Location and site of the project: Selection of the optimum location, therefore, revolves around the joint consideration and evaluation of the following factors – Raw materials supplies Transportation facilities Power and fuel supply
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Water manpower Natural and climate factor 2. Size of the plant/project 3. Technology, plant and equipment- the study should consider some important technological factors with regard to plant and equipment, viz.: Adequacy and suitability of the plant and equipments and their specification Plant layout Balancing of different sections of the plant Reputation of the machinery supplies, etc. Building and layout- the operative efficiency of industrial project also depends on the layout. B. Commercial viability This study indicates evaluation of a project’s feasibility in terms of market. The market analysis contains: Market prospect and potential for the product has to be fully assured at competitive prices. Marketing channel for the product should be accessible to the entrepreneur.

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C. Financial viability Analysis of financial viability is an essential part of project appraisal. The financial analysis focuses the following for judging this viability: • Cost of the project and means of finance: It is necessary to make a preliminary assessment of the project and the means of the financing it. If the cost of the project is too high that it is not possible to mobilize the resources of that magnitude through the available resources, the project is out of question. • Investment profitability analysis: several capital budgeting techniques are used for judging profitability of a project. • Financial ratio analysis: • Breakeven analysis. • There should be reasonable debt equity ratio as determined by the Bank on individual case basis. • Debt service coverage ratio should be at least 2.5 times at the optimum level of production. • IRR should preferably be not less than 20 percent. D. Economic viability The project should ensure benefit to the national economy and create sufficient opportunity. Generation of employment Income distribution
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Self reliance Development of small scale industries and ancillary business Improvement of quality of life and well-being Environmental issues Opportunity cost E. Management and Organizational Viability: It is very important for the success of a project because, if the management is incompetent a good project fail. So it is necessary to evaluate the following things: 1. Overall background of the promoter 2. Their academic qualification 3. Business and industrial experience. 4. They’re past performance. 4.23.2 Head Office Approval: Upon receipt of the credit line proposal from the branch the Head Office again appraises the project. If it seems to be a viable one, the HO sends it to the Head Office Credit Committee (HOCC) for the approval of the loan. The Head Office Credit Committee (HOCC) considers the proposal and takes decision whether to approve the loan or not. If the loan is approved by the HOCC the HO sends the approval to the concerned branch.

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4.23.3 Sanction Letter: After getting the approval of the HO the branch issues the sanction letter to the borrower. A sanction letter contains the following particulars amongst other details: Name of borrower. Facility allowed. Propose. Rate of interest. Margin Period of the loan and mode of adjustment. Security. Other terms and conditions. The borrower received the letter and returns a copy of this letter duly signed by the borrower as a token of having understood and acceptance of the terms and conditions above.

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4.23.4 Documentation: If the borrower accepts the sanction letter, the Documentation starts. Documentation is a written statement of fact evidencing certain transactions covering the legal aspects duly signed by the authorized persons having the legal status. For the term loan following documents should obtained. Joint Promissory Note. Certificate copy of Memorandum and Articles of Association Letter of Arrangement. Letter of Disbursement. Letter of Installment. Letter of Continuity. Letter of Revival. Letter of Request. Trust Receipt. Counter Guarantee. Stock Report. Letter of Disclaimer. Status Report. Letter of Lien. Letter of Hypothecation. Letter of Guarantee. Documents relating to Mortgage.
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4.24 Disbursement Procedures of Industrial Credit:
The disbursement procedures of industrial credit done by the JBL Branch, Rajshahi are showing in the following flow chart:

Submission of application with relevant papers attached

Project sight inspection by the concerned bank officials, engineers from the Head Office and experts

Applicant’s profile, financial standing, sight inspection report are examined by the officials of the branch

Submission of the branch’s appraisal report to the Industrial Credit Division (ICD), Head Office

If ICD approves the project, then it sends Sanction Letter to the branch mentioning the “Debt Equity Ratio”

Documentation is done and the customer deposits the equity

Project implementation and follow-up by the officials of the branch

Source: Industrial Credit Department of JBL Branch, Rajshahi

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4.25 Presentation and Interpretation of Data:
Table-4.1: Statement of Total Classified Loans and Advances and Recovery of.
JBL Limited, Rajshahi. Branch

Year 2002 2003 2004 2005 2006

Amount of Outstanding Recovered Classified Loans Amount at the end Percentage Amount During and Advances (in of the month (in of Recovery the Year (in Tk.) Tk.) Tk.) 51238000 7797000 43441000 15.217% 46480000 7945000 38535000 17.0934% 32161000 2064000 30097000 6.418% 30233000 2833000 27400000 9.371% 27676000 8209000 19467000 29.66%
60000000 50000000 40000000 30000000 20000000 10000000 0

Source: Audited Annual Reports of Jamuna Bank Limited, Rajshahi. Branch .

The Table-4.1 and the Graph show that the amount of Total Classified Loans and Advances has decreased from the month June 2008 to December 2008. It is a positive symptom for the branch. The percentage of recovery was also favorable in the month of December.

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Table-4.2: Statement of various Loans and Advances of Jamuna Bank Limited, Rajshahi. Branch as on 31-12-2008.

Loans and Advances Industrial Credit Staff Loan Loans (others) Small and Micro Credit Overdraft Cash Credit Bills Discounted and Purchased Loan Against Imported Merchandise (L.I.M) Payment Against Documents (P.A.D)

Amount (in TK.) 116579231.68 54205227.30 9092501.00 319750.93 11451088.40 64828611.96 1418975.00 2445674.45 10892845.00

Percentage to Total 42.98 % 19.98 % 3.35 % 0.12 % 4.22 % 23.90 % 0.52 % 0.90 % 4.02 %

Source: Statement of Affairs of as on 30-12-2008.
) . k T n i ( t n u o m A 14000000 12000000 10000000 80000000 60000000 40000000 20000000 0

Loans & Advances

Source: Statement of Affairs of JBL, Rajshahi Branch.

Jamuna Bank Limited, Rajshahi. Branch as on 31-12-2008.
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The Table-4.2 and the Graph show that the branch mainly provide large amount of Loans and Advances to the Industrial Sectors then through Cash Credit, Staff Loan, Overdraft, P.A.D, Loans (others), L.I.M, Bills Discounted and Purchased and Small and Micro Credit respectively.
Table-4.3: Statement of Continuous Credit (classified) and Recovery of continuous credit .
Month June July August September October November December Amount of Classified Loans and Advances Recovered Amount Outstanding Amount at the (in Tk.) During the Month (in Tk.) end of the month (in Tk.)

26625000 22859000 15127000 14094000 13351000 22859000 14094000

1140000 5968000 7897000 1140000 956000 1122000 7897000

20657000 20657000 20657000 20657000 20657000 20657000 20657000

Source: Audited Annual Reports of. Jamuna Bank Limited, Rajshahi Branch. as on 31-12-2008..

The Table-4.3 and the Graph show that the amount of Classified Continuous Credit has decreased from the month of June 2008 to December 2008, but the Recovery rate was not satisfactory.

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Table-4.4: Statement of Demand Loan (Classified) and Recovery of Jamuna Bank Limited, Rajshahi Branch. Amount of Recovered Classified Amount Loans and During the Advances Year (in Outstanding Amount at the end of the Month (in Tk.) Year (in Tk.) Tk.) 5091000 1556000 3535000 June 3555000 230000 3555000 July 3555000 210000 3505000 August 3424000 123000 3301000 September 3301000 108000 3193000 October 3555000 500000 3555000 November 3424000 50000 3301000 December

6000000 5000000 4000000 3000000 2000000 1000000 0
Amount of Classified Loans and Advances (in Tk.) Recovered Amoun t D uring the Yea r (in Tk.) Outstanding Amou nt at the end of the Yea r (in Tk.)

Source:. Audited Annual Reports of. Jamuna Bank Limited, Rajshahi Branch. as on 31-12-2008.

The Table-4.4 and the Graph show that the amount of Classified Demand Loan has decreased from the month June 2008 to December 2008 but the Recovery rate is not desirable against Classified Demand Loan.
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Table-4.5: Statement of Term Loan (classified) and Recovery of Jamuna Bank Limited, Rajshahi Branch
Amount of Recovered Outstanding Classified Amount Amount at Loans and During the the end of Advances Year (in the Year (in (in Tk.) Tk.) Tk.) 19137000 18962000 175000 20066000 20018000 48000 19479000 12715000 6764000 12715000 10961000 1754000 11024000 10961000 63000 13479000 12715000 764000 20066000 11024000 9042000

Month
June July August September October November December

Statement of Term Loan (classified) and Recovery of Jamuna Bank Limited, Rajshahi Branch
Monthwise classified term loan and Recovery
25000000 20000000 15000000 Amount 10000000 5000000 0 Month August Month November
Series1 Series2 Series3 Series4

Source: Audited Annual Reports of JamunaBank Limited, Rajshahi. Branch,

The Table-4.5 and the Graph show that the amount of Classified Term Loan (upto-5 years) has decreased from the year 2004 to 2008. On the other
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hand the percentage of Recovery has increased. This trend is satisfactory for the branch.
Table-4.6: Statement of Term Loan (over 5 years) (classified) and Recovery of JBL, Shaheb Bazar Branch, Rajshahi.
Month June July August September October November December
30000000 25000000 20000000 Series1 15000000 10000000 5000000 0 Series2 Series3

Amount of Classified Loans and Advances (in Tk.)

26625000 22859000 15127000 14094000 13351000 22859000 14094000

5968000 7897000 1140000 956000 1122000 7897000 956000

20657000 14962000 13987000 13138000 12229000 14962000 13138000

.

Source:. Audited Annual Reports of. Jamuna Bank Limited, Rajshahi Branch. as on 3112-2008.

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Table-4.7: Statement of various Interest Rate charged by JBL, Branch, Rajshahi.

Types of Advances Agriculture Agriculture-based Industry Large and Medium Term Working Capital Export

Interest Rate 8-10% 10-11% 13% 13.5-14% 7%+Service charge 1%. If expired then 14%

Commercial Lending Cottage Industry Others

14-14.5% 12-12.5% 11-14%

Source: Central Accounting and Fund Management Department of JBL.

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CHAPTER FIVE
Financial Performance Analysis

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Financial Performance
5.1 Measurement of banking/financial Performance We must focus on measuring how well banks perform in serving their customers and in providing acceptable returns to their stockholders. Increasingly, bankers are being freed by both competition and regulatory pressure to asses their banks performance over time relative to other banks. Two key dimensions of bank performance: Profitability and exposure to risk. Profitability is clearly the more important, because satisfactory profits preserve the banks capital providing it with a base for future survival and growth. for larger banks, the value of their stock in the market is the best overall indicator of whether they are achieving adequate profitability relative to the risk they have assumed. However the stock of many medium and small size banks is often actively traded, so, that stock price provides has reliable guide for management. These banks must focus instead on certain key profitability rations. Such as return on assets return on equity capital and the net interest margin of interest revenues minus interest costs. Each of these ratios can be divided into several key components to help the management of a bank find out where its earning problem really his. Pursuit of bank profits must be tempered with concern for risk. Management must pay particular attention to: • Credit risk-The profitability of substantial losses on loans and other assets due to borrower default.
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• Liquidity risk – The danger of running short of immediately spendable funds when they are needed. • Market risk – Adverse changes in the value of a banks assets and liabilities. • Interest rate risk – Potential damage to the banks spread between interest revenues and interest expenses due to changing interest rates. • Earning risk – The possibility of fluctuations in net income. • Solvency risk – The possibility of the bank failure.

A banks management and shareholders must carefully mainter each of these forms of risk. So as a progressive bank JBL in always conscious about these two factors of financial measurement.

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Comparative position of the Branch on number of Types of A/C and total amount as on 30.06.07 and 30.06.08
Types of A/Cs Number of A/Cs 30.06.07 30.06.08 Total Amount (in lac) 30.06.07 30.06.08 Growth 30.06.07 to 30.06.08 377.29

Deposit CD SB STD FDR Scheme other (sundry bills payable etc.) total deposit Advance (CC (H) SOD (work order) SOD (FDR) SOD (P.O) SOD (Scheme) SME CCS LTR Total Advance Total Income Total expenditure Operation Profit Impart No. of Import L/C Export No of Export Document Holded Remittance (local) Remittance (Foreign) Guarantee Issued Department of BBA

200 201 8 1991 528 2 1128 8 4 9 1 4 0 4 6 36 9 -

342 400 10 366 1444 5 2567 26 8 27 5 12 2 9 19 108 34 5749 -

44.19 103.56 1387.01 1723.50 1723.50 2790.21 6152.30 796.82 70.80 22.30 1.00 36.24 113729.69 1339314 62715184 17433 40638 53606

481.12 63.80 176.74 5345.67 6935.16 3934.60 22337.03 1812.40 973.00 83.11 9.00 34.30 1272.50 9.00 1353.00 39020226 288886 10631538 -

19.61 73.18 3954.66 5211.66 6544.39 16187.79 1015.68 902.20 60.81 9.00 34.30 12 8.00 123.30 1316.76 276472 149955 436002 361167 88245 5749 342309

128883 395915

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Source: Financial statement of Rajshahi Branch. Branch’s Deposit Mix as on 30.06.08 Deposit Mix Current Savings Short term deposit FDR Special deposit Amount (fig. in lac) 481.12 63.80 176.74 5345.67 6935.16

Source: Financial statement of JBL, Rajshahi Branch.
Amount (fig. in lac)

7000 6000 5000 4000 3000 2000 1000 0 Current Sakings Short t erm deposit FDR Special deposit

Source: Financial Performance of JBL, Rajshahi Branch.

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The consolidated statement of Provisional income and expenditure can help to know about a banks position with respect to the profit or loss. The income and expenditure of the branch as on June/08 and December/07 and therefore net profit or loss has shown in the following tables. The objective of these tables to determine how much improvement made by this branch with respect to the financial condition.

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Statement of provisional Income & Expenditure up to June/2008
INCOME Head of account Balance up to Previous month During Current Month 1 interest on Loans, Advances & others: 2 interest on invest in Approved Securities: 3 interest on call Loan : 4 interest on Other Bank Deposit: 5 interest on F.A/C: 6 income from Non-banking Assets : 5,590,642.00 7 commission : 8 Discount Received: 9 Exchange Gain : 10 Brokerage : 11 Rent Recovered : 12 income on investment in Shars/Debenture 13 Sale on Revaluation of assets : 14 Other Receipts: 15 interest on Jamuna General General Accounts : TOTAL INCOME 30,544,865.54 8,475,350.89 39,020,216.43 122,618.36 1,210,424.00 252,329.89 2,129,615.00 374,948.25 3,340.039.00 1,197,436.00 6,788,078,00 1,286.18 1,286.18 23,619,895.00 4,895,970.00 28,515,865.00 Cumulative Total

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HEAD OF ACCOUNT

Balance up Previous month

During Current Month 4,712,241.52

Cumulative Total

1 interest Paid: (Deposits) 14,452,822.86 2 interest Paid Borrowing: (Call Depo) 3 Exchange Loss : 4 interest on Overseas Accounts: 5 Discount & Commission Paid : 6 Charges of banks 7 Salary : 8 Allowances : 9 Provident Fund + ESS Fund 10 Bonus : + Exgratia 11 Security Services + Off Cleaning 12 Directors Fees: 13 Meeting Expenses Directors Refreshment 14 Rent rates & rates Taxes: 15Rent on Lease Assets 16 insurance: 17 Power & Electricity & WASA dill 18 Other Professional Charges : 19 Legal Expenses: 20 Postage & Communication Charges 21 Telephone (Office): 22 Telephone (Res): 23 Auditors Fees : 24 Depreciation: 324,700.00 255,936.50 57,5000.00 1,536.00 65,800.00 113,627.00 482,920.00 7,145.81 1,329,060.00 950,585.00 99,490.00 212,743.00 178,712.00

19,165,.64.38

5,162.81 274,030.00 168,259.00 19,898.00 53,186.00 39,783.00 12,78.62 1,603.090.00 1,118,844.00 119,388.00 265,929.00 218,495.00 -

96,084.00

579,004.00

5,000.00 25,000.00

70,800.00 138,627.00 -

51,450.50 16,500.00

307,387.00 74,000.00 1,536.00

162,400.00

487,100.00

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25 Repairs, Renovation & Maintenance: 26 Loss on Sale of investment: 27Stationery Expenses: 28 Computer Consumable Stationery 29 Advertisement & rusticity: 30 Entertainment:

34,690.00

14,765.00

49,455.00 -

140,378.00 25,075.00

37,462.00 6,200.00

177,840.00 31,275.00 -

34,933.00

28,655.00 8.00

63,58

31Car Entertainment:

250,300.00

55,062.00 305,362.00

32 Books, Periodicals, Newspaper & Magazine 33 Subscription: 34 Donation: 35 Traveling Expenses: 36 Conveyance, Cartage Freight & Lab our: 37 Business Level inventive for Staff: 38 IPO 39 welfare: 40 Training & Uniform: 41 Liveries & Uniform: 42 Medical Expenses: 43 write off of Assets 44 Office Utility Expenses 45 Miscellaneous 46 Preliminary expenditure 47 interest on Jamuna General Account TOTAL EXPENDTTURE

3,810.00

774.00 4,584.00

105,983.00 7,576.00

35,585.00 1,409.00

141,568.00 8,985.00

348,369.00 73,285.00 421,654.00 3,022,824.00 22,506,516.17 5,882,161.83 3,022,824.00 28,388,678.0 0

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Total Lancôme Total Expenditure Operating print Operating Prong on Current Month Operating prang up to previous Month

39,020,216.43 28,388,678.00 10,631,538.43 2,593,189.06 8,038,349.37

Statement of provisional Income & Expenditure up to December 2007
INCOME Balance up to Head of account 1 interest on Loans, Advances & others: 2 interest on invest in Approved Securities: 3 interest on call Loan : 4 interest on Other Bank Deposit: 5 interest on F.A/C: 8 Discount Received: 7 commission : 9 Exchange Gain : 10 Brokerage : 11 Rent Recovered : 12 Income on Investment in Shars/Debenture 13 Sale on Revaluation of assets : 14 Other Receipts: 15 interest on Jamuna General Accounts : TOTAL INCOME 241,656.25 8,866,360.00 36,015,381.86 5,570,859.93 193,082.05 434,738.30 8,866,360.00 41,586,241.79 7,240,489.00 536,018.88 7,776,507.88 51,248.44 51,248.44 Previous month 19,615,628.17 During Current Month 4,841,759.00 Cumulative Total 24,457,387.17 -

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Balance up HEAD OF ACCOUNT 1 interest Paid: (Deposits) 2 interest Paid Borrowing: (Call Depo) 3 Exchange Loss : 4 interest on Overseas Accounts: 5 Discount & Commission Paid : 6 Charges of banks 7 Salary : 8 Allowances : 9 Provident Fund + ESS Fund 10 Bonus : + Exgratia 11 Security Services + Off Cleaning 12 Directors Fees: 13 Meeting Expenses Directors Refreshment 14 Rent rates & rates Taxes: 15Rent on Lease Assets 16 insurance: 17 Power & Electricity & WASA dill 18 Other Professional Charges : 19 Legal Expenses: 20 Postage & Communication Charges 21 Telephone (Office): 22 Telephone (Res): 23 Auditors Fees : 24 Depreciation: 25 Repairs, Renovation & Maintenance: 26 Loss on Sale of investment: 27Stationery Expenses: 120,252.00 743,645.00 59,723.00 484,654.52 116,636.00 4,178.00 111,218.00 271,914.00 1,056,924.00 9,158.12 2,246,711.00 1,019,316.00 155,726.00 204,530.00 351,000.00 Previous month 18,579,439.28

During Current Month 1,926,813.00

Cumulative Total 20,506,252.28 -

796.83 227,430.00 128,680.00 18,873.00 212,330.00 56,800.00

9,954.95 2,474,141.00 1,147,996.00 174,599.00 416,860.00 407,800.00 -

96,924.00

1,153,848.00 3,900.00

9,000.00 13,000.00

120,218.00 284,914.00 -

50,892.60 1,500.00

535,547.12 118,136.00 4,178.00

136,866.00 18,029.00

880,511.00 77,752.00 -

11,790.00

132,042.00

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28 Computer Consumable Stationery 29 Advertisement & rusticity: 30 Entertainment: 31Car Entertainment: 32 Books, Periodicals, Newspaper & Magazine 33 Subscription: 34 Donation: 35 Traveling Expenses: 36 Conveyance, Cartage Freight & Lab our: 37 Business Level inventive for Staff: 38 IPO 39 welfare: 40 Training & Uniform: 41 Liveries & Uniform: 42 Medical Expenses: 43 write off of Assets 44 Office Utility Expenses 45 Miscellaneous 46 Preliminary expenditure 47 Interest on Jamuna General Account TOTAL EXPENDTTURE

34,335.00 9,615.00 100,972.00 468,732.00 9,293.00

4,990.00

39,325.00 9,615.00

10,982.00 41,294.00 691.00

111,954.00 510,026.00 9,984.00

118,479.00 22,077.00

36,145.00 1,235.00

154,624.00 23,312.00 -

11,900.00 53,335.00

-

11,900.00 53,335.00 -

523,764.00

68,602.00

592,366.00 -

2,852,437.00 29,739,963.92

1,245,792.00 4,319,455.43

4,098,229.00 34,063,319.35

Total Lancôme Total Expenditure Operating print Operating Prong on Current Month Operating prang up to previous Month

41,586,241.79 34,063,319.35 7,522,922.44 1,251,404.50 6,275,417.94

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5.2 Evaluation of this branch: To evaluate this branch with respect to this report concentrate on three important areas such as. Deposit, Advances and profit. Comparison is made in respect of deposit. Advances and profit position. Table: Deposit growths during last three years. Year 2006 2007 2008 Amount (Figure in core) 32.26 17.26 69.45

Amount (F igure in core)

70 60 50 40 30 20 10 0 2006 2007 2008

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Table: Break up of Advances of JBL. Rajshahi Brnach. Year 2006 2007 (30.06.2007) 2008 (30.06.2008)
Amount ( Figure in lac)

Amount (Figure in lac) Nill 927.10 4116.12

4500 4000 3500 3000 2500 2000 1500 1000 500 0 2006 2007 (30.06.2007) 2008 (30.06. 2008)

Source: Financial Statement of JBL, Rajshahi branch. Table: Comparative Profit positions of this branch.

Year 2006 2007 2008

Amount (Figure in lac) 32.71 75.22 106.31

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Amount (F igure in core)

70 60 50 40 30 20 10 0 2006 2007 2008

Source: Financial Statement of JBL, Rajshahi branch.

To see above three tables it can be said that with respect to the deposit. The Jamuna Bank limited of Rajshahi Branch is on the leading or growing position with respect to advances position of this branch is increasing day by day. But advances are leaver in this branch because of Rajshahi is not so busy area like Dhaka or others place. On the other aspect as profit position this branch is increasingly with the previous year. Because of Rajshahi branch is new one, Branch of this Bank. So, it this branch going on this way and try to developed its policy, services and other aspect than it will be achieve its target position than other branch bank.

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CHAPTER SIX
Findings of the Study, Problems and Recommendation

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Findings of the Study, Problems and Recommendation
6.1 Findings: Bank is an institution where The clients keep their surplus fund and bank make it ready for investment in appropriate trade, Commerce and industry with a view to earn Profit. The JBL, Rajshahi Branch is not exceptional and lend them to the borrower to earn Profit, This Process done Through a system. In the internship Program I have learned about its banking system includes all the activities needed to run the bank to conduct. Most of the activities in this Branch are done Computerized. I also learned about their banking environment and Culture. Actually warmly greeting. Helpful attitude of the employees at this branch attract The Customers. The Bankers of This branch have to work an Three “s’’ Such as service, security and secrecy. This image Creates good will for This branch in The banking market .The slogan of This bank is ‘’ Your partner for growth’’ which reflect of this bank. The branch mainly provide large amount of Loans and Advances to the Industrial Sectors then through Cash Credit, Staff Loan, Overdraft, P.A.D, Loans (others), L.I.M, Bills Discounted and Purchased and Small and Micro Credit respectively. I have found that there is not a single classified loan in this branch which is positive sign for smooth growth. I have also founded of this bank position is increases day by day in every sector.
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6.2 Problems:
The Customers are face a booth Problem to withdraw money through ATM Card; because. The branch has to own booth facilities. There is not sufficient computer for official activities. Insufficient manpower is another Problem of This branch .I observed that bank fails to attend all customers to a time due to its shortage of manpower. Investment increases not with the pace of deposit Interest rates for different types of loans and Advances vary to different customers. 6.3 Recommendation: To minimize those mentioned Problems The authorities of JBL should take necessary measures. Some recommendations are made here by which the bank may be benefited. The banks Authority should increase in its booth facilities. because Customers are very much interested to use ATM Card, Computer plays a vital role in all the banking activities .so Computer software should be developed to run this branch smoothly. The branch is a new one, and the age of it is about three years . It is too early to comment on its Performance. However, the date shows that the branch exceeds its deposits target while fails to achieve investment target.

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The bank should take necessary steps to augment its investment to increase its income. The Bank’s Authority should increase manpower. Because day-to-day customer of this branch is increasing. So, with out increasing manpower it is almost difficult to attend all the customers. A prospective customer is allowed to take credit facilities at a lower interest rate. Again, the interest rate is changed at a higher rate to a customer who is not so prospective. The management should be minimized the problems. The management should be encourage this types of borrowers who are established a new business. One of the key factors for development of a bank is its position/place, which this branch has. So, If other factors are emphasized and maintained then this branch will able to create a good image in the banking sector.

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Conclusion
The prosperity of a country depends upon its economic activities like any other spheres of modern socio economic activities. Banking is a powerful medium of bringing about socio economic; agriculture, commerce and industry provide the bull of a country’s wealth. Without adequate banking facility these three can not flourish for a rapid economic growth. A fully developed banking system can provided the necessary boost. The whole economy of a country is linked up with its banking system. Bangladesh is a developing Country. Without development of its banking sectors this country cannot progress rapidly. With this view the Government of Bangladesh permits a good number of banks to flourish. The Jamuna bank limited is one of the reputed banks engaged in banking business to serve the people as well as the country. During Internship Program at JBL. Rajshahi Branch, I experienced a good idea about banking. Here banking means to me a whole idea about bank or an organization. If other information about a bank as a whole: the services provided to the Costumers, the policies if fallow etc. I gather knowledge on the general banking Practices and Credit management of JBL. i.e. how do they deal with the customers, they Provide what types of policies they apply for making more income / profit what types of technology they have used in the banking operation? I have identified some Problems which this branch has encountered and made recommendation on these problems to overcome. An attempt is also made in this report to evaluate the performance of this branch compared to the previous years of this branch.
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Last of all I want to say that I have no knowledge about banking operation but I get suitable idea about bank. I want to thanks to JBL & UITS to provide me such opportunity to do internship here thus I have learned a lot about banking operation.

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Bibliography
Annual Report of Jamuna Bank Ltd. Financial Statement of Jamuna Bank Ltd. K. Douglas Hoffman & John E. G. Bateson; Essentials of Services Marketing: Concepts, Strategies & Cases. Kothari, C.R (2003); Research Methodology Methods & Techniques printed at Ram print grapy, Delhi, India. Kotler, Philip (2001); Marketing Management; The Millennium Edition, Prentice-Hall of India private limited, New Delhi. Kotler, Phillip and Armstrong; Principles of Marketing, Published by Asoke K. Ghosh: Prentice-Hall of India private limited, 7th edition. Loudon, David L. and Bitta Albert J. Della (1993); Consumer Behavior Concepts and Applications; Third Edition, printed Irwin, INC. Malhotra, Naresh K, Hall John, Shaw Mike and Crisp Mike; Marketing Research; Published by Asok K. Ghosh, Prentice - Hall of India Private Limited. Rahaman Dr. Mizanur: Snatok Bazarzalkaran; Published by Bijoy chandra Roy; Newage Publication, Khaka. Stanton W. J. & others (1991); Fundamentals of Marketing; 9th Edition, Inc, USA.

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Bibliography: Annual Report of Jamuna Bank Ltd. Financial Statement of Jamuna Bank Ltd. K. Douglas Hoffman & John E. G. Bateson; Essentials of Services Marketing: Concepts, Strategies & Cases. Kothari, C.R (2003); Research Methodology Methods & Techniques printed at Ram print grapy, Delhi, India. Kotler, Philip (2001); Marketing Management; The Millennium Edition, Prentice-Hall of India private limited, New Delhi. Kotler, Phillip and Armstrong; Principles of Marketing, Published by Asoke K. Ghosh: Prentice-Hall of India private limited, 7th edition. Loudon, David L. and Bitta Albert J. Della (1993); Consumer Behavior Concepts and Applications; Third Edition, printed Irwin, INC. Malhotra, Naresh K, Hall John, Shaw Mike and Crisp Mike; Marketing Research; Published by Asok K. Ghosh, Prentice - Hall of India Private Limited. Rahaman Dr. Mizanur: Snatok Bazarzalkaran; Published by Bijoy chandra Roy; Newage Publication, Khaka. Stanton W. J. & others (1991); Fundamentals of Marketing; 9th Edition, Inc, USA. Department of BBA University of Information Technology & Sciences