Internship Report on Loans and Advances of Pubali Bank Limited

1

Internship Report

on

Loans and Advances of Pubali Bank Limited

Nawabpur Branch Dhaka.

By

Sonjoy Kumar Ghosh

MBA Program 2004 (6th Batch)

Roll No. 327 (Sl No. 222)

Stream: Strategic & International Management

Supervisor

Mrs.Rubina Maleque

Associate Professor

Department of Management Studies

Faculty of Business Studies

University of Dhaka


University of Dhaka.

Dhaka-1000.

February 15, 2007.

Dated:15 February,2007

2

To

Mrs.Rubina Maleque

The Internship Supervisor

MBA Program


University of Dhaka

Subject: Solicitation for Acceptance of the Internship

Report

Dear Sir/Madam,

I have the pleasure to submit an elaborate internship

report, one of the most important requirements for the

MBA program. I was assigned to work at Pubali Bank

Limited-Nawabpur Branch, where I have observed closely

& studied different practical aspects of the banking

institution. I would like to say has been a great

experienced for me to work in Pubali Bank Limited, which

enlarges my practical knowledge about banking

operations.

I have given my utmost effort to reflect experience, skill

and knowledge, which I acquired at the time of orientation

in Bank through this report. All of my efforts will be

successful if the report can serve its purpose.

3

Thanking You.

Sincerely Yours

……………….

Sonjoy Kumar Ghosh

MBA Program (Major in SIM)

Roll No. 327, Serial no.222



University of Dhaka

Acknowledgement

First of all I would like to thank Almighty God because I

have completed my study in due time. Then I also give

thanks to my honorable Supervisor, Mrs.Rubina Maleque,

for providing me the necessary direction to do the study on

the topic. I also grateful to Mr. Shym Sundar Banik,

Manager of Pubali Bank Limited Nawabpur Branch,I also

greatful to Partho Protim Acharzo,Senior Officer of Pubali

Bank Limited, Nawabpur Branch, and the other officials

of Pubali Bank Limited, Nawabpur Branch, for their co-

operation in completing my internship and by providing

important information and different materials.

4

Sonjoy Kumar Ghosh

MBA Program (Major in SIM)

Roll No. 327

Serial No.222



University of Dhaka.

Declaration

I Sonjoy Kumar Ghosh, hereby declared that the presented

report of internship named “Internship report on Loans and

Advances of Pubali Bank Limited” is prepared by me after

5

successfully completion of 3 months work in Pubali Bank

Limited, Nawabpur Branch, Dhaka.

I also conform that the report is only prepared to meet my

academic requirement not for any other purpose. It will not

act anything that will hamper Bank’s confidentiality and

interests. It might not be use with the interest of opposite

bodies of Pubali Bank Limited.

Sonjoy Kumar Ghosh

6

Experience In Pubali Bank Limited As An Intern

One of the modern concepts of economics is financial development. All over

the world the financial development has started with the commercial Banking

system and the diffusion or scriptural money through the economy. At the

very initial stages of financial development of any country, commercial banks

play a major role providing financial services to the economy. Banking studies

are divided into two categories, they are Theoretical & practical. Co-

ordination of theory and practical subjects in the field of Banking studies gets

due importance at this moment when the whole are taking preparation to enter

into a new Millennium. But in spite of this, we find a gap existing between

Theory & practical knowledge. To minimize this gap between Theory &

practices, MBA program of Dhaka University has introduced practical

orientation in different Banks. It is believed that it brings the students

concerned with this program closer to practical area of Financial Institution

and projection of knowledge.

To fulfill this objective, I have prepared an Internships Report on "Loans &

Advances of Pubali Bank Limited”, Nawabpur Branch. During this period, I

have gathered various types of banking knowledge from banking experts of

respective Bank and tried to apply my academic knowledge as well as

personal competence to the best. I have also tried my best to cover all the

significant dimension of the topic assigned.

7

I along with other 10 students go to the Pubali Bank Limited head office

situated at Motijheeel and reported to the Senior Officer of Pubali Bank

Limited. The Pubali Bank Limited authority cordially received us.

Then each of us was sent to the different branches of Pubali Bank Limited on

10th Octobor, 2006. I was placed in Pubali Bank Limited Nawabpur Branch

for field study from 10th Octobor ’06 to 10

th January 2007. I reported to Mr.

Shym Sundar Banik, Managing Director of the said Branch and briefed

something about his branch and promised me to give any kind of information

needed. Then I have started to observe the activities held on that branch and I

have found the following major functions:

1. General Banking

Various types of deposit A/C, Transfer, Works of Cash Section, Subsidiary

Register Day Book, Clean Cash, General Ledger, Remittance (P/O, DD, MT,

TT) Bills Department, Clearing House, Pubali Bank Limited General A/C etc.

2. Loans and Advances

General Advances, Industrial loan, rural & micro credit etc.

Concerned officers of the branch showed and discuss with me about General

Banking.

Concerned officers of the Investment Section of the Branch showed the

various files and discussed with me how to provide Loan to the Prospective

sector of the country.

8

Executive Summary

One of the vital parts of MBA program is internship program. At

the end academic course work one need to compete the internship

to gain practical knowledge to have an experience of

implementation of acquired theoretical knowledge. However, at

the end of my MBA course work I was placed in Pubali Bank

Limited at Nawabpur Branch, the largest commercial bank of the

country. During my internship period I have studied almost all the

section of the branch. General banking sector, Loans and advance

Section etc. At the end of my three months internship, I have

gained a thorough knowledge about all of those.

Pubali Bank started its journey as the largest public commercial

bank with a great hope and aspiration. But now it is a private Bank.

Still this bank controls a significant portion of all banking

transactions. With the up gradation of technology the bank is also

trying to keep pace.

This report intends to give a comprehensive view of the bank. It

consists of seven parts. First part consists of introduction and

background of the study. Second part consists of a brief history of

9

Banking . Third part consists of Organizational overview of Pubali

Bank Limited. Forth part deals with general banking. Fifth part

involves loans and advances. Sixth part involves papers to be

submitted to get a loan and finally seventh part consists conclusion

and recommendation.

Particulars

Page No.

Letter of transmittal

Acknowledgement

Declaration

Experience as an Intern

Executive Summary

Chapter I: Introduction of the Report 1-6

1.1. Background of the study 2

1.2. Justification of the report 2

1.3. Schedule of internship 3

1.4. Objective of the study 4

1.5. Methodology of the study 4

1.6. The flow chart of the study 5

1.7. Sources of data

6

Table of Contents

10

1.8Limitation of the study 6

Chapter II: A Brief History of Banking 7-10

2.1. Introduction 8

2.2. Evolution of the World Bank 8

2.3. Emergence of Modern Banking 9

2.4. Bank Development in Bangladesh 9

Chapter III: Overview of Pubali Bank Limited 11-24

3.1. History of Pubali Bank Limited 12

3.2. Performance of Pubali Bank Limited 13

3.3. Organizational structure of Pubali Bank

Limited 17

3.4. Managerial Hierarchy of Pubali Bank

Limited 18

3.5. Corporate Branches of Pubali Bank

Limited 19

3.6. Highlights 20

Chapter IV: General Banking Services of Pubali Bank Limited 25-46

4.1. Account Opening 26

4.2. Types of Deposit Account 28

4.3. Operation of Cheques

31

4.4. Transfer of Account 32

4.5. Dormant Account 32

4.6. In-operative Account 33

4.7. Closing of an Account 33

4.8. Bank Remittance(DD/MT/TT&PO)

33

11

4.9. Suspense and Sundry Deposit Account 39

4.10. Establishment 39

4.11. Dispatch Section 39

4.12. Local Short Credit

4.13.Short Credit 41

4.14.Demand Draft Received for Collect 42

4.15 Transfer Scroll

43

4.16 Clearing House

43

4.17 Clear Cash Book

44

4.18 The General Ledger

45

Chapter V: Loans and Advances 47-69

5.1. Introduction 48

5.2. Classification of General Advances 52

5.3. Credit Policy of Pubali Bank Limited 58

5.4. Interest Rate Policy 58

5.5. Total Credit Line 59

5.6. Restrictions 60

5.7. Principles of General Advances 60

5.8. Industrial Credit Department 67

Chapter VI: Papers to be Submitted to Get a Loan 70-88

6.1. For Fresh/New Proposal 71

6.2. For Renewal/ Enhancement Proposal 72

6.3. Application for Advances(For Individuals&

Firms) 73

12

6.4. Credit Proposal & Approval Form 79

Chapter VII: Conclusion 89-96

7.1. Problem Findings 90

7.2. Policy Guidelines/Recommendations 92

7.3. Concluding Remarks 95

Bibliography

13

CHAPTER-1

INTRODUCTION OF THE REPORT

14

CHAPTER-1

INTRODUCTION OF THE REPORT

1.1 Background of the study

In the age of globalization, the importance of banking sector is beyond

description. Banking sector is going ahead with the improvement new

technological innovation. Introduction of modern technology has made

banking sector user friendly and more competitive. The banks of Bangladesh

are not lag behind. The banks of Bangladesh are keeping pace. To survive in

the financial market and to play significant role both technological

implementation and skill manpower are accessory in which Department of

Management Studies of D.U. is playing a significant role. By providing skilled

manpower, Department of Management Studies ahs given the banking sector a

momentum. And the internship program has made the effective. By studying

at the University of Dhaka, one gains an extensive theoretical knowledge and

the internship program makes that knowledge effective. Theoretical

knowledge has a great value but without having theoretical knowledge it

might be vain. In this regard, the internship program is fulfilling the lacking of

practical knowledge of the graduates of Department of Management Studies.

After completing the internship program the graduates become more effective

in that particular field.

1.2 Justification of the Report

Due to market economy the competition among nationalized, foreign and

private commercial banks and the expectation of the customers become

rapidly growing concerning the banking operation & how customer service

becomes more attractive. Reciprocating the sentiment, commercial banks are

trying to elevate their traditional service to a better standard, to meet the

challenging needs. Side by side, these banks have now concentrated their

attention towards diversification of their products for better performance of

15

their existence. Under the above circumstances, it has become necessary for

Pubali Bank, a leading commercial bank, to focus its' attention towards the

improvement of the customer service through its' multi-purposeful activities.

That is why it is quite justified to make an in-depth study about its operation

and evaluate service provided by this bank and scope for its' improvement.

This is the exploratory study that evaluates the functions of Pubali Bank. The

study may help formulating policy regarding the ideas relating to the feelings

of the customers & bankers. Now it is hoped that it may have some

significance to Pubali Bank and those who want to develop Pubali Bank.

Since financial area is my preferred area to build up my career, this study will

vehemently help me to go forward and improve my career path.

1.3 Schedule of Internship

On the very first day at the Pubali Bank, I was welcomed by the Managing

Director of Nawabpur Branch, Mr. Shym Sundar Banik. I was assigned for

practical orientation at Nawabpur Branch of Pubali Bank. During my practical

orientation, I was guided by Mr. Shajhan Mahmood, SPO, of the branch. He

gave me some direction in choosing, schedule or orientation at various

departments of the branch; I started with General Banking Department. The

schedule, although not water-tight has given below:

Date of Orientation (2006) Departments

10 Octobor ’06- 25November ‘06 General Banking

26November’06-10 January ‘07 Loans & Advances

16

1.4 Objective of the Study:

� Application of theoretical knowledge in the practical field.

� Understand the real management situation and try to suggest for

improving existing problems.

� To analyze the financing system of the Bank to find out if the Bank has

any field to improve upon and to have greater contribution towards

country's economy.

� To examine the profitability and productivity of the Bank.

� To acquire knowledge about the every day banking operation of Pubali

Bank.

1.5 Methodology of the Study

While conducting the study, sources were explored for primary information

and data. But hardly any updated data could be found. In the absence of

updated information or data dependence on secondary data has been

inevitable. However, whenever possible primary data has been used. Data

were also collected by interviewing the responsible officers and from some

documents & statements printed by the Pubali Bank. Pubali Bank also helped

me in collecting data providing books and Bank’s annual report.

17

1.6 The flow chart of the Study

PRIMARY SOURCES

a) Official records of Pubali Bank

b) Face to face conversation

SECONDARY SOURCES

a) Annual report

b) Working papers

c) Office files

d) Selected Books

e) Printed forms

PLANNING

DESIGNING THE LAY

OUT

QUESTIONNAIRE

DEVELOMENT

COMMUNICATING

THE APPROACH

-THE LITERATURE REVIEW

-THEORIETICAL

CONSIDERATION

METHODOLOGY

COLLECTING INFORMATION

ANALYZING

PREPARING THE REPORT

SUBMISSION OF THE

REPORT

18

1.7 Sources of Data

The following sources have been used for the purpose of gathering and

collecting data as required.

Primary Data

a) Official records of Pubali Bank

b) Face to face conversion

Secondary Data

a) Annual report

b) Working papers

c) Office files

d) Selected Books

e) Printed forms

1.8 Limitation of the study

Although I have obtained wholehearted Co-operation from employee of Pubali

Bank Nawabpur Branch, they were extremely busy. So they were not able to

give much time as they and I would like. Besides, total duration of internship

is not sufficient to give me more than a superficial idea of the functioning of

the various departments I was rotated through. On they way of my study, I

have faced the following problems which may be termed as the

limitation/short coming of the study. These are as follows:

a) The main constraint of the study was insufficiency information, which

is required for the study.

b) Since the Bank personnel are very busy with their activities, as a result

they failed to co-operate with me to complete this report.

c) The major limitation of the study was shorter time period. For an

analytical purpose, adequate time is required. But I was not given

adequate time to prepare such as in-depth study.

d) Such a study was carried out by me for the first time. So, in-experience

is one of the main factors that constituted the limitation of the study.

19

CHAPTER-2

A BRIEF HISTORY OF BANKING

20

CHAPTER-2

A BRIEF HISTORY OF BANKING

2.1. Introduction:

. A bank is one, who in the ordinary course of his business receives money,

which he repays by honoring cheques of persons from whom or on whose

account he receives it. Banks deal mainly with money and credit. They

purchase and sell money and credit.

2.2. Evolution of the Word “Bank”:

Etymology deals with the roots and origin of the word ‘bank’. According to

some writers the word bank derived from the word BANCO, BANCUS,

BANQUE, and BANC, all of which mean bench upon which the early bankers

used to display their coins and transact business in the market place.

According to the some other writers the word ‘bank’ has been derived from

the German word ‘BANKE’ which means a joint stock fund. Banking in the

ancient times was largely confined to money changing and money lending.

21

2.3. Emergence of Modern Banking:

In middle Europe the bankers of Lombardy were very famous. They planted

the seed of modern banking in England. Among those prominent bankers we

can named one who were famous not only in banking but also in political

history in Europe. These Lombardy people were very much disturbed in 13’s

by internecine work that was followed by plunder by Kaiser Frederick two.

Lombardy people in large number as a result started migrating to more settled

countries such as England, French, and Belgium.

2.4. Bank Development in Bangladesh:

During Mughal period, indigenous banking flourished. The Subarna bank the

bullion trading community used to do banking in the then Bengal. At the

British time banking in the form of agency house, exchanging house started to

flourish in kolkata., especially in the wake of the swadeshi movement.

In 1947 after the separation of Bengal, bank business faced a severe disaster as

non-Muslim bankers migrated to India. In order to rebuild the bank business

State bank of Pakistan was established as a central bank of Pakistan in 1948.

In 1971 Bangladesh became independent. After liberation “Bangladesh bank

was automated with the asset and liabilities of former “State bank of

Pakistan”. There were several banks before independence of Bangladesh as

follows:

(1) The national bank of Pakistan

(2) The bank of Vowalpur ltd.

(3) The premier bank ltd.

(4) The Habib bank ltd.

(5) The commerce bank ltd.

(6) The united bank ltd.

(7) The union bank ltd.

(8) The Muslim commercial bank ltd.

22

(9) The standard bank ltd.

(10) The Australasia bank ltd.

(11) The eastern mercantile bank ltd.

(12) The eastern banking corporation ltd.

Bangladesh Bank nationalization Order promulgated on 26 March in 1972.

After the liberation war the above 1st three banks were converted to The

Sonali Bank, The 2nd two banks were converted to The Agrani Bank, the

next two banks were converted to The Janata Bank, the next three banks

were converted to The Rupali Bank, the next one bank was converted to The

Pubali Bank and the last bank was converted to The Uttara Bank.

23

CHAPTER-3

ORGANIZATIONAL OVERVIEW OF

PUBALI BANK LIMITED

24

CHAPTER-3

ORGANIZATIONAL OVERVIEW OF PUBALI BANK LIMITED

3.1 History Of Pubali Bank LImited

Welcome

PUBALI BANK LIMITED

is the largest

Commercial Bank in

Private Sector in

Bangladesh. It provides

mass banking services

to the customers

through its branch

network all over the

country. This Bank has

been playing a vital

role in socio-economic,

industrial and

agricultural

development as well as

in the overall economic

development of the

country since its

inception through

savings mobilization

and investment of

funds. During the last 5

years the growth rate

of bank's earnings is

more than 25% on

average.

Head Office

The Bank was initially emerged in the Banking scenario of the then

East Pakistan as Eastern Mercantile Bank Limited at the initiative

of some Bangalee enterpreneurs in the year 1959 under Bank

Companies Act 1913 . After independence of Bangladesh in 1972

this Bank was nationalised as per policy of the Government and

renamed as Pubali Bank. Subsequently due to changed

circumstances this Bank was denationalized in the year 1983 as a

private bank and renamed as Pubali Bank Limited. The Government

of the People's Republic of Bangladesh handed over all assets and

25

liabilities of the Pubali Bank to the Pubali Bank Limited. Since then

Pubali Bank Limited has been rendering all sorts of Commercial

Banking services as the largest bank in private sector through its

branch network all over the country.

3.2 Performance of Pubali Bank Limited:

Share Capital:

The authorized capital and Paid up Capital of the Bank stood at Tk.5000.00

million and Tk.400.00 million respectively in 2005. Out of total 7591

Shareholders, 4 nationalized institutions including the Govt.of the People's

Republic of Bangladesh held shares of Tk. 11.72 million. The remaining

shares of Tk.388.28 million were held by various institutions and individuals.

Statutory and Other Reserves:

During the previous year the statutory reserve and other reserve of the bank

stood at Tk.2107.76 million, out of which statutory reserve was Tk.1250.12

million, other reserve was Tk.857.64 million. During the year under review

the total reserve stood at Tk,2481.21 million at the end of the year due to

increase of general reserve by Tk.573.45 million from current year's profit.

Deposits:

The total deposit at the end of the previous year was Tk.

39789.70million.During the year under review the amount stood at Tk.

44443.03 million which was 11.69% higher than the position of the Previous

year.

Borrowing from other Banks:

The borrowing from other Bank, for the business purpose, was Tk.320.20

million as on 31.12.2005.Such borrowing during the previous year was

Tk.131.62 million.

26

Foreign Exchange Business:

Earning from call Loan:

Due to active participation in the inter Bank money market ,total earning from

call loan during the year amounted to Tk.429.28 million which was high by

Tk. 142.83 million over the amount of previous year.

a) Import business

During the year the bank handled import business worth Tk. 26033.80 million.

During the

previous year ,the amount was Tk. 18024.30 million.

b) Export business:

The Bank handled export business worth Tk. 15271.10 million during the

year as against Tk.13670.50million in the previous year.

c) Inward Foreign Remittance:

Non resident Bangladeshis sent foreign exchange equivalent to Tk. 14860.30

million during the year ,which was Tk. 11753.00 million during the previous

year.

Investments:

Total investment of the Bank was Tk. 5742.12 million during the previous

year. The sectors of investments were mainly Govt. Bonds , Treasury Bills,

Approved Debenures,Shares and Debentures of Private institutions.

Advances:

The total advances of the Bank during the previous year amounted to Tk.

27542.33 million which was Tk. 32639.68 million during the current year.

The Bank made advances mainly in sectors such as commercial loan, import

and export business, term loan to large and medium scale industries, house

building loan, consumer's credit loan.

27

Position of Profit and Loss:

The total income and total expenditure of the Bank during the year were

Tk.4435.90 million And Tk. 3063.27 million respectively resulting in a profit

of Tk. 1372.63 million before making provision for bad and doubtful debts

and income tax.

Branch Expansion and Modernization:

During the year under review 23 branches were shifted to new premises in

more suitable places and 19 branches were refurnished and modernized.

Information Technology and Automation:

For providing quick customer service all the 350 branches of the bank

have been computerized including branches situated at the remote areas

like Sandwip,Mehidigonj etc. As a result , quick and better customer's

service is being possible with less manpower .Bank started to develop an

improved Multi user client server Architecture System Software called

Pubali Integrated Banking System(PIBS) enabling to provide one stop

service to its clients. The Bank entered in internet world through

introduction of its web-site www.pubalibangla .com as a result , the name

of pubali Bank ltd. included in world Electronic Database. To meet the

demand of time Pubali Bank Ltd. has entered into ATM World.

Man- power& Training

This year, the numbers of officers and employees of the Bank stood at 5088,

sixty eight on different subjects were organized at the Bank’s Training

Institute and 1740 officials of different levels participated training besides

these, Bank utilized the training services rendered by other training

institutions.

In August 2005 a one- day National Workshop was held at Dhaka which was

attended by all the 350 branch Managers, 16 Regional managers and senior

executives of Head Office of the Bank. On the occasion, 18 Branch Managers

were awarded for their outstanding performance.

Audit& Inspection Bank’s Audit Term audited 233 branches & offices during the year under

review while inspection of all the 350 branches was conducted by Bank’s

Inspection Team.

28

Meeting of the Board of Directors& its Committees

During the year 2005, 39 meetings of the Board of Directors were held. Policy

decisions on different issues were taken in these meeting.

Appointment of Auditors

M/s. Ahmed & Co., Chartered Accountants, M/s.Syful Alam & Co. Chartered

Accounts and M/s.K.M.Alam Khaleque & Co., Chartered Accounts were

appointed Auditors of the bank for 2005 in the 22nd Annual General Meeting.

But due to dissolution of M/.K>M.Alam Khaleque & co., the other 2(two)

Chartered Account firms audited the statement of accounts with Due

permission of Bangladesh Bank and Securities exchange Commission.

Conclusion

The Board of Directors expresses its gratitude to all Clients, Shareholders and

Partners for extending support and co-operation in the activities of the Bank

during the 2005.the Board of Directors thanks Government of the People’s

Republic of Bangladesh and Bangladesh bank for their co-operation and

guidance.

The Directors also wish to place on record the sincere appreciation and thanks

for the sincere and dedicated services and co-operation extended by the

officers and employees towards overall performance of the Bank during the

year under review.

29

3.3 Organizational Structure of Pubali bank limited:

Designation in ascending order

Sl. No. Designation

1. Managing Director

2. Deputy Managing Director

3. Senior Executive Vice President

4. Executive Vice President

5. Senior Vice President

6. Vice President

7. Senior Assistant Vice President

8. Assistant Vice President

9. First Assistant Vice President

10. Senior Executive Officer

11. Executive Officer

12. Principal Officer

Senior Officer 13.

Management Trainee

14. Officer

15. Junior Officer

Assistant Officer 16.

Trainee Assistant

30

3.4 Managerial Hierarchy of Pubali Bank Ltd:

Chairman

Board of Directors

Executive Committee

Managing Director

Additional Managing Director

Deputy Managing Director

Senior Executive Vice President

Executive Vice President

Senior Vice President

Vice President

Senior Assistant Vice President

Assistant Vice President

First Assistant Vice President

Senior Executive Officer

Executive Officer

Principal Officer

Senior Officer

Management Trainee Officer

Junior Officer

Top Management

Executive Level

Management

Mid Level

Management

Junior Level

Management

31

3.5 Corporate Branches Of Pubali Bank Limited

CORPORATE BRANCHES INFORMATION

Branch

Name Postal Addresss

Police

Station

Phone /

Telex

Agrabad 99, Agrabad Comm. Area

Dist. - Chittagong Bangladesh

Doublemooring 880 31 716388,

716409 633116

PBAGB BJ

B. B. Avenue 65, B.B. Avenue

Dhaka-1000 Bangladesh

Motijheel 880 2

9550600 880 2 9555406

632236 PUBBA BJ

C.D.A C.D.A. Building

P.O. - GPO Chittagong

Dist. - Chittagong Bangladesh

Doublemooring 880 31

611381, 634710

633117 PBCDA BJ

Dhaka

Stadium

8, D.I.T. Extension

Road Lal Bhaban


Motijheel 880 2

9555565 632389

PBLDS BJ

Foreign

Exchange

24, Motijheel

Comm. Area


Motijheel 880 2

9561858 880

2 9550952 632411

PUBFE BJ

Karwan Bazar Jalalabad Bhaban 22, Karwan Bazar


Tejgaon 880 2 8114080

632322 PBLKR BJ

Mohakhali 99, Mohakhali Comm. Area Dhaka-1212 Bangladesh

Gulshan 880 2 8811044 632287 PBMKH BJ

32

Motijheel Sena Kallyan

Bhaban 195, Motijheel

Comm. Area Dhaka-1000

Bangladesh

Motijheel 880 2

9551071 880 2

9550635/110 671431

PBMJL BJ

Principal 26, Dilkusha Commercial Area

Dhaka-1000

Bangladesh

Motijheel 880 2 9557323 880

2 9552449

880 2 9557323

671528 PBLLO BJ

3.6 HIGHLIGHTS

As at 31st December(in million taka) Particulars

2001 2002 2003 2004 2005

Authorised capital 5000.00 5000.00 5000.00 5000.00 5000.00

Paid –up Capital 200.00 200.00 200.00 200.00 400.00

Reserve fund and

other Reserve

1338.29 1740.80 1931.76 2107.76 2481.21

Deposits 32291.00 33730.10 35852.60 39789.71 44443.03

Advances 23583.00 26189.50 26282.69 27542.33 32639.68

Investments 4165.80 4400.80 4938.86 5742.12 5536.84

Import Business 12573.00 10500.00 12141.30 18024.30 26033.80

Export Business 11228.00 10214.00 11648.20 13670.50 15721.10

Bridge Finance 8.40 8.30 7.90 7.80 7.29

Total Income 3660.20 3823.50 3569.30 3455.32 4435.90

Total Expenditure 2488.70 2575.70 2704.10 2830.41 3063.27

Pre-Tax Profit 626.50 724.00 345.20 244.90 1042.63

Net Profit 407.20 398.20 189.80 134.70 573.45

Total Assets 39068.30 41895.90 43502.25 46593.28 52671.44

Fixed Assets 565.60 591.30 582.60 545.40 546.48

OTHER

INFORMATIONS

No. of Employees 5050 4987 4983 4797 5088

No. of Shareholders 6601 6563 6506 6562 7591

No. of Branches 349 350 350 350 350

Earning per

Ordinary

Share(Taka)

203.61 199.11 94.92 67.65 143.36

Source-Annual Report of Pubali Bank Limited 2005.

33

Source- Annual Report of Pubali Bank Limited 2005.

34


35


36


37

CHAPTER-4

GENERAL BANKING SERVICES OF

PUBALI BANK LIMITED

38

CHAPTER-4

GENERAL BANKING

4.1 Account Opening:

4.1.1 The procedures followed for Opening an Account

� Account Opening Form: At first you have to fill up a form given by

the respective bank where you are going to open an account. This form

contains some information such as: -

a) Name of the Branch.

b) Date.

c) Title of the Account.

d) Special instruction.

e) Name of Account folder.

f) Occupation.

g) Address.

h) Description of initial Deposit.

i) Verification of the introducer.

� Specimen Signature: Specimen Signature is very important to identify

the drawer. This signature is kept in a special card along with drawer's

name. This card contains: -

a) Title of Accounts.

b) Specimen Signature of the guarantor of the Account.

c) Allotment of Account number.

� Pay in slip: It contains filling up of all the particulars of Account and

Cash tendered for deposit. Voucher marked new Account.

� Cheque requisition Slip: It contains: -

a) Verification of Signature.

b) Entry made in cheque issue register.

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� Ledger: Ledger contains:

a) Entry of Account particulars from account opening form in the ledger.

b) Position of the voucher and cheque requisition slip.

c) Supervision of this posting by officer in charge

� Issue of Pass Book

� Filling up the Account opening form in the appropriate file under

custody.

4.1.2 Partnership Firm

� The consent of all partners.

� Partnership Deed.

� Mandate contains:

i. The name of the person who will authorize to operate the

Account.

ii. The extent of authority given to such persons.

iii. Personal Account and a Firm's Account.

iv. Creation of mortgage.

v. The retirement of partner.

vi. The death of partner.

vii. The insolvency/insanity of a partner

4.1.3 A Joint Stock Company

For opening a company account some documents are needed which are given

below:

o Certificate of Incorporation in original along with a true copy.

o Copy of Memorandum & Articles of Association certified up to date.

o Certificate of Commencement of Business original along with a true

copy.

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This is not required when

i. The company is private limited company.

ii. The Company is registered before the first day of April

1914 & invites the public to subscribe shares.

iii. The company is limited by Guarantee

� Balance Sheet and profit and loss statement.

� The Board Resolution

� Mandate

4.2 Types of Deposit A/C:

Deposit forms the life-blood of a commercial bank. If can't carry on its

business only with as own capital. It accepts deposits from the customers on

one side and lends it to other borrowers/ customers. By this way it earns some

margin of interest, which is one of the most important remunerative sides of its

business. In short we can say, bank is an intermediary, which mobilizes funds

from surplus economy to deficit economy. Banks deposits can broadly be

classified into the following categories:-

Demand deposit- These are repayable whenever the customer asks.

Time deposit- These are repayable after the expiry of period agreed at the time

of opening the deposit account. In a Bank, the following types of accounts are

opened:-

� Current Account.

� Savings Bank Account.

� Fixed Deposit Account.

� Call Deposit Account.

� Deposit Pension Scheme.

� Special Deposit Pension Scheme.

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Current Account

It is purely a demand deposit account. There is no restriction on withdrawing

money from this account. As many withdrawals are allowed the customers. It

is suitable when funds are to be collected and money is to be paid away at

frequent interval.

Current Account is most suitable for private individuals, traders, merchants,

importers and exporters, mill and factory owners, limited company's etc.

For opening of a current Account minimum deposit of Tk. 1000/- is required

along with introductory reference, No interest is given the Current Account

deposited money.

Savings Bank Account

This deposit is primary for small-scale savers. The main object of this account

is promotion of thrift. Hence there is restriction on withdrawals in a month.

Heavy withdrawals are permitted only against prior notice.

� Minimum amount of Tk. 200.00 is required as initial deposit.

� Frequent withdrawal is not encouraged.

� Normally withdrawal not allowed more than 1/4th of the balance with

maximum of Tk. 1000/- in a week.

� 7 days notice is required for withdrawal of large amount.

� The rate of interest is 6.50% against S.B Account.

Fixed Deposit Account

It is popularly known as "Time Deposit". Because these deposits are not

repayable on demand but they are withdrawable subject to a period of notice.

The prospective fixed deposit holder is expected to till up an application from,

prescribed for the purpose, stating the amount and the period of deposit. The

application itself contains the rules and regulations of the deposit including the

space for specimen signature.

� Payment made on expiry of agreed period.

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� Payment demanded before expiry of agreed date then Penalty is

charged.

� Introducer is not needed.

� Copies of Party and 2 copies of Nominees photograph is needed.

� Loan is sanctioned against FDR.

Interest Rate

Rate of Interest is varies on the period of maturity date.

Duration Rate of Interest

From 3 months and above but less than 6 months 7.5%

From 6 months and above but less than 9 months 8%

From 1 years and above but less than 2 year 8.5%

From 2 years and above but less than 3 year 9%

Short Term Deposit Account

Short Term Deposit Account is same as Current Account. Here money is kept

for a very short time. A notice is needed prior withdrawal of money.

• 6% interest is given for the actual period.

• Notice Period is varies from 7 days to 30 days.

Call Deposit Account

Mainly opened by organization calling tender in which (the suppliers,

contractors etc.) deposit requisite amount of carnets money favoring the

organization-calling tenders. It is termed as Call Deposit since organization,

which opens these accounts, may call withdrawal of the deposited account any

time after the expiry of the tender period. No interest is allowed.

Deposit Pension Scheme

A depositor can open any Deposit Pension Account for deposit of Tk. 200/-,

Tk. 300, Tk. 500/- in each month. And for this the depositor will have to

deposit the specified amount of money by the 8th day of each month either in

cash or in cheque. The depositor of this account can select more than one

nominee for claiming the deposited money after his death.

A depositor can withdraw the total amount of deposit (Principal + Interest) at

a time after a specific period of 10 or 20 years and for this he will be entitled

to get Tk. 26344/- for 10 years & Tk. 1,32,920/- for 20 years, after deposit of

Tk. 100/- per month.

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4.3 Operation of Cheques:

A cheque is an unconditional order in writing; Drawn on a specified Banker

signed by the drawer requiring the Banker to any on demand a certain sum in

money to or to the order of specified person or to the bearer and which does

not order any act to be done in addition to the payment of money. Thus a

cheque involves Three Parties: -

• Drawer

• Drawee (The Banker)

• Payer (To whom cheque is to be paid)

The following Procedure in passing a cheque is observed:

� The cheque receiving clerk scrutinizing the cheque as to date

amounts and signature and hand over the presenter with token

number which will also written at the back side of the cheque and

pass to the ledger keeper after giving a seal.

� The cheque will again be scrutinized by the ledger keeper who

satisfies himself as to the order of the cheque and the amount that

does not exceed the credit balance.

� The ledger keeper then debited the amount from respective account

in the ledger book and will pass to the authorized officer who

satisfies himself by verifying signature of the account holder very

carefully to protect any kind of fraudulence and then pass it to the

cash officer for payment.

� The presenter presents his token in the counter and cashier makes

payment receiving the token after verifying the token given by the

receiving clerk and will demand a signature to verify with the

previous one.

The procedure discussed earlier is fully manual system which is totally absent

Nawabpur Branch. Because, the cash payment & receipt system are fully

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computerized which faster the whole customer service. And as a result, now-a

day they are not maintaining their previous system and not keeping any ledger

book.

4.3.1 Stopped Cheques

• The stopped cheques register will be kept by the manager or the

accountant.

• Immediately on receipt of a letter or telegram to stop payment of a

cheque, the time of its receipt should be noted thereon under the

initial of the manager or the account.

• The ledger keeper concerned and he passing officials should be

informed immediately and particulars of the cheques register under

authentication or the manger or accountant. The time of receipts of

the recording of the stopped cheques register being noted on the

letter also under the initials of the clerk and the manager or

accountant.

4.4 Transfer of Accounts:

When an account is transferred from one office to another, the account

opening form etc. signed at the time of opening account and any forms or

documents signed subsequently which are necessary for its proper conduct at

the time of transfer, must be forwarded under cover of form, to the office to

which card (s) and standing instruction if any, no exchange should be charged

on such transfer. Attention is invited in this connection.

As far as possible, the fullest, information regarding the character, means

standing of the constituents and the way to the account has been conducted

must be given to the receiving office.

4.5 Dormant A/C:

• All Current accounts which have not been operated upon for six

months should be marked in Red ink "CARE-DORMANT

ACCOUNT- FIRST WITHDRAWAL TO BE REFERRED TO

THE MANAGER". The ledger should be scrutinized for this

purpose by a number of the supervising staff in March, June,

September & December each year.

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• All savings accounts which have not been operated upon for

one year should also be marked in Red ink.

4.6 In-operative A/C:

• No withdrawal what so ever should be permitted on as in-operative

account without the specific permission of the manager who will

satisfy himself beyond doubt that the withdrawal in order.

• Annually on the 29th June, the balances of all accounts, which have

lying in in-operative current account for ten years, should be

transferred to the unclaimed deposit A/C.

• The account opening forms, specimen signature cards, either or

survivorship forms and all other documents relating to the in-

operative accounts transferred to the unclaimed deposit account

must be kept separately in the strong room in the personal custody

of the Manger.

4.7 Closing of an Account:

A banker can close the account of his customer or justices the stoppage of the

operation of the Account under following considerable circumstances: -

• Notice given by the customer himself

• Death of customer

• Customer's insanity and insolvency

• Order of the court.

4.8 Bank Remittance (DD/MT/TT & PO):

One of the most important aspects of the Commercial Banks is rending

services to its customers. Among different services render by a Commercial

Banks to its customer remittance facilities are very well known and popular to

the customers. The word "Remittance" means sending of money from one

place to another branch within the country. There are two types of Remittance:

Inward & Outward.

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The Commercial Banks Remittance facilities to its customer is to enable them

to avoid risk arising out of theft or loss in carrying cash money from one place

to another or making payment to some one in another places. Banks take the

risk and ensure payment to the beneficiary in exchange of a little bit benefit

known as Exchange or Commission.

Considering the Urgency and nature of transaction, the mode of Bank

remittance may be categorized as: -

� Demand Draft (DO)

� Mail Transfer (MT)

� Telegraphic Transfer (TT)

� Payment Order (PO)

The following register books are to be maintained for remittance concern:

-

� DD. MT. TT Advice Register

� DD Payment register Day Book

� TT Payment Register Book

� Ex-Advice Payment Register Book

4.8.1 Demand Draft:

Demand Draft is an instruction payable on demand. It is negotiable instrument

issued by the branch Bank containing an order to another branch of the same

Bank to pay a certain sum of money to a certain person or order on demand.

This instrument can be purchased by a customer from a particular Bank branch

for himself or for beneficiary and can handed over to the purchaser for

delivery to the beneficiary. The payee or beneficiary will claim the proceeds

of the instrument by producing the same to the concerned paying branch.

Demand Draft may be paid in cash to the payee on proper identification or the

proceeds may be credited to his account. Banks issue drafts for a nominal

commission. The commission depends upon the amount to be transmitted. The

purchaser of the draft needs not to be a customer or account holder of the

Bank. Draft can be crossed also.

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Issuance of Demand Draft

While issuing demand Draft, an official must be confirmed about the existence

of the Bran where the DD is to be issued or drawn as asked for by the

applicant. Application on Banks prescribed form (F-117) for DD be obtained

from the applicant duly filled and signed by then. Thereafter, Applicant will be

asked to deposit the amount or DD and exchange Commission commuted

correctly at the prescribed rate. On receipt of cash voucher will be passed and

scrolled by the officers. DD will be issued and recorder to the DD issues

register filling the appropriate columns. Test number (if required) is affixed on

both DD and Advice as per instruction.

It is mentionable here that DD application is treated as Credit Voucher or SBG

A/C (IBT A/C) and reported to HO, Recon, Division showing credit entry

against contra Branch (paying Branch). For any amount of DD issued, a

relative DD Advice and sent to paying branch where the Advice converted

into Voucher.

The minimum exchange of demand drafts or Bank Drafts is Tk. 17/-

(including VAT Tk. 2/-) for the amount of Tk. 1 to Tk. 9000. After that that

exchange is charged Tk. 1.5 for each Tk. 1000/-.

Procedure of Payment

Proceeds of Demand Draft is received by the paying bank as and when it

responds the relative advise on the receipt of DD Advises from different

branches, the paying banker will verity the genuineness of the Advice by way

of verifying the number and signature. Beside this, Drafts payable can be

made without the Advice of issuing Bank and on that time the payment is

called Acceptance Payment. Total amount of advice will be debited to SBG

A/C and credited to Drafts payable A/C on production of Demand Draft by the

beneficiary payment will be made by Debit to the account credited earlier. If

the payment is to be made before receipt of the Advice, DD is paid being

recorded in Ex-Advice Register by Debiting the Drafts Payable Ex-Advice

A/C (DD paid without Advice). On receipt of the Advice, it will be entered

into DD/MT Advice Received Register or Draft Payable Register and the

amount will be credited to Drafts Payable A/C. DD paid without Advice as the

case may be.

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Before making payment of the DD, the branch will ascertain the genuiness of

its issuance as well as the genuiness of the payee. Open Drafts may be paid on

proper identification of the payee and crossed Drafts can never be paid in cash

over the counter.

Cancellation of Draft

In some cases, the purchaser of the bank draft may ask the issuing branch to

return the amount of DD stating its non-requirement. In these cases, the

issuing Branch will obtain written application from the purchaser whose

signature must be tallied with the signature obtained earlier. An amount Tk.

25/- be recovered from the purchaser as cancellation charges and will be

Credited to the Commission A/C the purchaser will acknowledge receipt of

the proceeds writing the words received payment by cancellation and will

sign. On revenue stamp to be affixed on the revenue of the Draft. In this case,

payment is made by Debit to PBG A/C and a relative cancellation advice is

sent to the Issuing Branch.

4.8.2 Mail Transfer

The facility of transforming money by Mail is available to customers having

some sort of an account with the Bank. The remitter deposits the amount to be

transferred with small commission with the remitting Branch. It is an Advice

issued by a Branch to another Branch for crediting the specified amount to the

account of the payee maintained with them. It is a non-negotiable instrument

and generally is not handed over to the customer rather sent through Post

Office to the concerned Branch for credit to the respective amount. In some

cases, proceeds of MT. may be paid to the beneficiary by issuing Payment

Order (PO) if he maintains no account with that branch.

In such cases, Full Address of the beneficiary requires to be mentioned by the

applicant. On that time, MT itself treated Advice as well as credit voucher also

of the paying branch, no separable advice is issued by the issuing branch. On

receipt of the MT genuineness is determined by means of verification of

signature and test number (if any payment is made by debit to issuing branch

through PBG A/C and reported to Head Office for reconciliation.

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Remittance or money by Mail Transfer is relatively cheaper, quite safer and

convenient. Mail Transfer is affected not only for remittances within the

country but also for international remittances. MT for local transfer (say,

within the area of Dhaka) a special MT register book is maintained as in the

case like DD. MT normally issued from branch to branch of the same Bank.

An extra document is needed for Mail Charge.

Normally the Mail is given Tk. 25/- for the amount Tk. 50,000/- and above.

Below 50,000/- there is no any Mail Charge. The commission charged for MT

is given below

Tk 1 up to Tk. 49,000/- Tk. 15/-

Tl. 50,000/- and above Tk. 40/-

Specimen Receipt (MT/TT)

4.8.3 Telegraphic Transfer

Telegraphic transfers are affected by telegram, telephone, or telex as desired

by the remitter. Transfer of founds by telegraphic transfer is the most rapid

and convenient but expensive method. For this, telegraphic need to be

available in all the areas. In this case, the issuing branch sends a message

telegraphically to credit the specified amount to the beneficiary through his

A/C maintained with them or by issuing TT, PO, if A/C is not maintained by

the beneficiary, Telegraphy message may be codes but must be tested. Paying

branch will decode the TT being satisfied on the contents will make payment

by debit to issuing branch entering the TT into TT Register and preparing a

credit voucher for credit to the payees A/C. But, for big amount of TT or in

case of any doubt, confirmation must be obtained before making payment.

Date: ......................

Payees Name: ................................................................

Branch Name: ...............................................................

Amount: ................................... Exchange...................

Commission: ........................ Postal Charge: ...............

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4.8.4 Payment Order

Bank's payment order is an instrument which contains an order for payment to

the paid to effect local payment whether on behalf of the Bank or its

constituents. In the beginning stage, PO was issued only to effect local

payments of Bank own obligations. But, at present, it is also issued to the

customers which they can purchase to deposit as security money or earnests

money. The Bank's payment orders are in the form of receipts and issued by

joint signature of two officials. It ensures payment to the payee as the money

deposited by the purchaser of O is kept in the Bank's own A/C named

"Payment Order A/C". Payment of this instrument to be made from the branch

it has been issued. It is not transferable and, therefore, it can only be paid to: -

• The payee on identification.

• The payee's Banker, who should certify that the amount would

be credited to payee's A/C.

• A person holding the letter of authority from the payee whose

signature must be authenticated by the payee.

• The purchaser by cancellation provided the original PO is

surrendered by him to the Bank.

Duplicate PO

As Bank's Payment Order is not transferable, Duplicate thereof is issued to the

purchaser without obtaining letter of indemnity provided they confirm in

writing that the originals have been lost and that these will be returned to the

Bank whenever traced.

Duplicate DD

In some cases, it may be happened that the DD is lost and reported to the

concerned Branches. In this case, issuing Branch will communicate with the

paying Branch and will obtain confirmation regarding non-payment of the DD

& Payment Branch will exercise cautions against payment of DD including

caution marking on the respective DD advice with the words "Care Reported

Lost" issuing Branch will then issue a duplicate DD on obtaining of indemnity

bond from the Applicant signed by two persons known to the Bank s sureties.

In such case, duplicate DD be marked with the words:

"DUPLICATE IN LIEU OF ORIGINAL NO ......."

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Insurance of duplicate DD be noted against the entry of original one.

4.9 Suspense and Sundry Deposit A/C:

Under Bank's regulations not more than two suspense

accounts shall be kept at any branch. The only accounts of

this nature allowed are, therefore, suspense account for debit

items and suspense account for credit items, the former being

a general ledger account and the latter a current account.

4.10 Establishment:

Maintenance of salary Register & Preparation of salary voucher & returns,

Provident Fund, Pension Found Rules, Medical Facilities, Leave Rules

Records, Income Tax, T. A rules, Group Insurance. Beside this, the total

branch information Targeting Profit, Achieved Profit, Total Outstanding loans

and Advances etc. maintained here.

4.11 Dispatch Section:

Dispatch section is fully controlled by the Establishment Department. Any

kind of letter DD, TT, MT, Cheque and Telex also are transferred and received

through this section, There are two types of letter they continuously received.

They are:

a) Inward (Registered/ Unregistered) letters

b) Outward (Registered/ Unregistered) letters

At first recording is required whether it is Inward or Outward Registered/

Unregistered letters. Then, letters are disbursed to their respective destination.

Inward letters are firstly segmented according to their different sections and

after that an entry is given to the Inward Register book. For local letters which

area is not far from the branch are delivered through Messengers. In such

cases, firstly the entry is to be made in Dispatch register Book and then a Peon

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Book is to be maintained which contains only Dispatch No... and Receiver's

Address. For this, the Messenger will get Tk. 20/- as convince.

A special Register Book is to be maintained for TT, MT, DD, P/O and for

Cheque another book is reserved. Stamp, Envelope which is kept under cash

officer and in a small box can be inspected at any time. to meet the expense of

Stamp and envelope a Dr. Voucher is needed for withdrawal money from the

Branch Account. For registered letters, Vouchers are to be recorded here as

document.

Books Maintained

� Local Dispatch Khata (including Peon Book).

� Register Dispatch Khata (For Registered Letters).

� Ordinary Register Khata (For Unregistered Letters).

� Inward Register Books.

� Special Register Books for DD, MT, TT etc. and for Cheque

respectively.

4.12 Local Short Credit (LSC)

If a cheque or bill comes to Pubali Bank from another branch of Pubali Bank

or other than Pubali Bank outside the Clearing Area, then Pubali Bank

Collects that Check from that Pubali Bank or through nearest Pubali Bank of

that Bank. The collecting Pubali Bank collects by the process of LSC from

other Bank and sends a TRA (Transfer Responding advice) to the payee Bank.

For example, if a customer of Pubali Bank Dilkusha Corporate Branch, Dhaka,

deposits a cheque of Rupali Bank Ltd., Pabna then the procedure done by the

collecting Pubali Bank is as follows:

a) The cheque is first deposited through a received seal with the help of a

slip.

b) The collecting bank gives a crossing with "Pubali Bank Dilkusha

Corporate Branch". It indicates that the mentioned Bank is the

collecting Bank.

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c) Entry for outward Clearing register is given with clearing seal and

giving the cheque a "S" (subsidiary) seal.

d) The cheque is then registered in SC register and a SC number is given.

e) Endorsement is given like "Payee's A/C will be credited on realization.

The agent of collecting branch will do as follows:

i) Entry has to be given to LSC register along with number.

ii) Then the instrument is sent to clearing for collection. For this case,

the accounting procedure is

Clearing A/C of Payee Dr.

Clearing Adjusting A/C Cr.

iii) If the instrument is honored, then

Clearing A/C of Payee Dr.

Pubali Bank General A/C Cr.

If any payment is dishonored then the Payee Branch sends a non-payment

Advice to the Collecting Branch.

4.13 Short Credit

Customers deposit (cheque, drafts etc.) for collection along with deposit slip.

Instruments within the range of clearing are collected through Local clearing

House but for outside the clearing house ranges are collected through SC. For

example, customer of Pubali Bank Dilkusha Corporate Branch, Dhaka,

deposits a cheque of Pubali Bank, Pabna Branch. For this purpose, the

collecting Bank Pubali bank Dilkusha Corporate Branch, Dhaka will do as

follows:

i) The cheque is first deposited through a Received seal with the help

of a slip.

ii) The collecting Bank gives a crossing with "Pubali Bank Dilkusha

Corporate Branch". It indicates that the mentioned Bank is the

collecting Bank.

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iii) Entry for forward Clearing Register is given with Clearing seal

and giving the cheque a "S" (subsidiary) seal.

iv) The cheque is then registered in SC Register and a SC number is

given.

v) Endorsement is given like "Payee's A/C will be credited on

realization".

Accounting procedure after SC collection:

Pubali Bank General A/C Dr.

Customers A/C Cr.

Customer A/C Dr.

Commission A/C Cr.

P & T A/C Cr.

4.14 Demand Drafts received for Collect:

a) All the Inward Demand Drafts will be received by the Managers or

Accountant and examine by him to ensure that there is no unreasonable

gap between the dates of purchased receipt at branch. Cases of delay

will be reported to the Head Office & a copy to the Regional Office of

the purchase office. These will be numbered with D.D.R numbers,

promptly acknowledge, entered individually in the Demand Draft

received for realization register, without passing any entries.

b) Clearing cheque and cheque on the branches will be paid or returned

unpaid the same day. Other Demand Drafts entered in the register will

be presented or payment to the drawee through the cash department.

c) On realization the proceeds together with the overdue interest, if any

Demand Draft will be credited to the purchasing offices in the Pubali

Bank General Account sending Transfer Responding, Advises (TRA)

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and reported to Head Office on schedule. Unpaid DDR's will be

returned to the purchasing offices along with the objection Memo.

4.15 Transfer Scroll:

a) The Bank transfer scroll the object of which is to balance the transfer

vouchers before the Clean Cash Book is posted will be written up by a

clerk. The clerk responsible for presentation of the vouchers will enter

in the transfer sheet simultaneously ant the supervising official passing

the transfer vouchers will authenticate the entries.

b) All cheques and transfer vouchers will be entered in the transfer scroll

sheet and numbered with their scroll number under initials of the scroll

writer. All transfer vouchers, including those which are not

individually entered in the transfer scroll/sheet, will be branded with

the paid or received date stamp.

4.16 Clearing House

As a cheque payment order or bill come from a Bank within the range of local

Clearing House then it is sent for collection through Clearing House. The

Cheque may be crossed or not, if a customer of Pubali Bank deposits a cheque

of another Bank which is within clearing, then Pubali Bank will Credit his

Account and collect it (cheque). Though the amount is credited in the

customers account but will not get the money until the cheque is honored.

Collection procedure for clearing:

i) The cheque is first deposited through a received seal with the help

of a slip.

ii) The collecting Bank gives a crossing with "Pubali Bank Dilkusha

Corporate Branch". It indicates that the Mentioned Bank is the

Collecting Bank.

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iii) Then an entry has to be given in the Outward Clearing Register

along Clearing and an "S" (subsidiary) Seal.

iv) After that, the cheque has to be sent to Pubali Bank Local Office

along with other cheques (if any). These sorts of vouchers are

prepared for this purpose.

If the cheque is drawn on other branch of Pubali Bank within the same

Clearing area then it needs be collected through inward Clearing House of

Pubali Bank itself.

If the cheque is or other than Pubali Bank then the Cheque has to be sent to the

Bangladesh Bank Main Clearing House through Pubali Bank Local Office

clearing house.

4.17 Clear Cash Book

The clean cash book which is the abstract of cash day's transactions classified

under the general ledger headings, will be compiled from the totals of the

various books subsidiary to the clean cash book including the day books in

which the relative vouchers have been entered in details under authentication

and will be cheeked there form by unauthorized official.

Clean Cash Book is written to:

� Test the arithmetical accuracy of one day transaction.

� Consolidate one try transaction.

� Help position in the general ledger.

� Test the closing cash balance of the branch.

Procedure:

� The clean cash book writer must see before taking the total in the clean

cash book from the subsidiary books/ day books that the books duly

checked and authenticated by the authorized officials.

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� The clean cash book will be checked daily from the subsidiary

registers/ day books by an authorized supervising official who will

agree the entries under each head the respective registers/ day books.

� Bach morning the Manger will scrutinize the whole of the previous

day's vouchers.

� After the daily balance all vouchers should be collected by the clean

cash book writer and handed over to a supervising official who will

lick them up overnight, under protection from Fire, together with all

current records.

4.18 The General Ledger:

The Accounts to be kept in Branches General Ledgers are as under:

� Pubali Bank General Account

� Fixed Deposit Account

� Short Term Deposit Account

� Fixed Deposit Interest Account

� Savings Bank Account

� Call Deposit Account

� Current Account

� Pay Order Account

� Drafts Payable Account

� Drafts Payable Ex-advice Account

� Demand Loan Account

� Cash Credit Account

� Foreign Bill Purchase & Negotiable Account

� Bill for Collection Account

� Force Loan Against Back to Back L/C Account

� Advance Against Merchandise Account

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� Discount Account

� Interest Account

� Exchange Account

� Commission Account

� Charges Account

� Profit & Loss Account

� Stationery Account

Observation:

Performance of General banking of this Branch is good. This is one of the

profitable branch or Pubali Bank. Customer service is good. Cash section is

fully computerized and free from Y2K problem and as a result money

transaction occurs very quickly.

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CHAPTER-5

LOANS AND ADVANCES

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CHAPTER-5

LOANS AND ADVANCES

5.1 Introduction:

Pubali Bank Limited, being one of the largest Commercial Bank, had some

prejudice to finance directly on priority basis to Agriculture, Industry and

Commerce sector for strengthening the economic base of the country. Pubali

Bank Limited plays the key role to oil the Economic Wheel of the Country.

Beside this, Pubali Bank has been maintaining all Government Policies its

Pioneer position in extending loans to Government Bodies, sector corporations

and private enterprises. The Bank gave predominance to the Govt. policy of

financing men or small means with enterprising spirit of investment and

provided finance as easy terms and a logical rate or interest as was during the

last few years.

Pubali Bank Limited continued to extend its lending operation in the

productive and priority sectors both public and private covering agriculture,

industry, trade and commerce.

The granting of advances is one of the most important functions of a Bank and

the test of a Bank's strength depends considerably on the quality of its

advances and the proportion they bear to the total deposit. Although receipt

from Exchange, Commission and Bank's Charges contribute a fair amount of

the profits of Commercial Bank, its earnings are chiefly derived from interest

charged on loans and discounts. A wise and prudent in regard to Advances is,

therefore, considered an important sector inspiring confidence in the

depositors and customers of a Bank. Following are the basic principles or

sound lending which each banker follows when considering an advance

proposal.

Safety

The first guiding principles of a Banker should be "Safety First", so far as his

advances are considered, because the very existence of a Bank depends of the

Safety of its outstanding which should never, therefore, he sacrificed to the

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profit earning capacity of its advances. Consequently, to maintain a Banking

concern in sound condition, it is very essential that the safety of its advances

to customers should be above suspicion. Extreme care should be taken that the

fund rent out are not subject to any risk or being lost. The Banker is to ensure

in the best possible manner that the money advanced by him goes to the right

type of borrower and is utilized in such way that it will not only be safe at the

time of lending but will remain so throughout, and after a useful purpose in the

trade or industry where it is employed, is repaid with interest.

Liquidity

Bank's can invest in two types of terms viz. Long term and Short term. Banks

feel very risky in long-term investment. So, they normally invest in Short term

investment to maintain the liquidity of the Bank. The Liquidity of an Advance

means its repayment on demand or on due date or after a short notice. The

loan must stand fair chances or repayment according to the requirement

achieve. It is almost important that Bank loan must be repaid as they become

due otherwise; the liquidity position of the Bank is endangered. The major

cause of Bank's failure has been had liquidity. The period of the advance and

the case with which it will be repaid are very important. Even in the case of

fully secured advances if it is feared from the very beginning that the advances

would only he recovered by selling the securities it is not considered a good

advances. It must, therefore, always ensure that the advance will be repaid

from resources other that the securities pledged.

The basic problem in advance Viz. Graduate Reeducation and eventual

repayment is the crux of the while matter. A Banker would be failing in his

duty to safeguard the interest of his depositors and the shareholders if his

credit policy does not take full cognizance of this problem and not provide a

method for gradual repayment and final recovery of the money advance.

Profitability

Equally important is the principle of profitability in Bank advances. Like other

Commercial institutions, Banks must make profit where there is no profit

banks do not invest. Firstly, they have to pay interest on the Deposits received

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by them. They have to incur expenses on establishment stationery etc. They

have to make provision for depreciation of their fixed assets and also for any

possible bad or doubtful debts. After meeting all these items of expenditure,

which enter the running cost or Bank, a reasonable profit must be made. The

landing rate of Bank is based on all these considerations. It is sometimes

possible that a particular transaction may not appear profitable in itself, but

there may be some ancillary business available, such as deposit from the

borrower other concerns or his foreign exchange business, which may highly

remunerative. In this way, the transaction may on the whole be profitable for

Bank.

Purpose

Another significant principle which is to be kept in view when advancing is

the Purpose. The purpose for which lending is made should he productive as to

ensure definite source or repayment. Banks discourage advances for Harding

Stocks or for Speculative activities.

There are obvious risks involved therein apart from the antisocial nature of

such transactions. The Banker must closely scrutinize the purpose for which

the money is required and ensure as far as he can, that the borrower applies the

money borrowed for a particular purpose accordingly. Purpose has assumed a

special significant in the present-day concept or Banking.

Diversification of Risks

The security consciousness of a Banker and the integrity of the Borrower are

not adequate factors to keep the Banker on safe side. What is more important

is the diversification of Risk. This means, he should not lend a major portion

of his loan able funds to any single Borrower or to an Industry or to one

particular Region. In fact, the entire Banking business is one of taking

calculated risks and a successful banker is an expert in assessing such risks.

He is keen on spreading the risks involved in lending over a large number of

Borrowers, over a large number of Industries and Areas, and over different

types of securities; the advances must not be in one particular Industry. Too

many eggs should not be placed in one basket, because any adversity faced by

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that particular Industry will have serious effect on the Bank. Slump does not

normally affect all Industries and business simultaneously.

Security

Whenever a money lender lends money he must be consider carefully the

changes of his being repaid by the Borrower and is therefore not normally

content to rely on the obligation or the Borrower alone but wants some

tangible security from which he can obtain repayment in case the Borrower is

unable to meet his obligations. Without taking such security the business of

money lending would be too speculative. The Banker also making advances

and loans naturally wants to secure him by some reliable security. Security is

considered as insurance or a caution to fall back upon in case of emergency.

Bankers may realize it and reimburse themselves if the well calculated and

certain source of repayment unexpectedly fails. It is, however, incorrect to

consider an advance proposal from the point of view of security alone. An

advance is granted by a good banker on its own merits, that is to say with due

regard to its safety, capacity liquidity purpose etc. and after looking in to the

character, capacity and capital or the Borrower and not only because the

security is good.

Sources of Repayment

A sound credit is one where timely repayment is assured. So, before giving

financial accommodation, a Banker should consider the source from which

repayment is promised. In some instances, debentures, which are to be

redeemed in few month times or a lire policy, which is to mature in near

future, may be offered as security. Advances against such security give no

trouble.

Sometimes customers may apply for loans for additional Working Capital for

their business and undertake to repay out of the profits over a period. In such

cases, the Rate at which the customer can reasonably hope to repay should be

ascertained. An examination of the audited accounts may guide the Banker in

knowing the repayment capacity of the customer.

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Suitability

Even when an Advance satisfies all the aforesaid principles it may still not be

suitable. The Advance may be encountered to National interest. These

Principles may have to be amended to a certain extent. Suitability of Advance

from National viewpoint has therefore come to be regarded as a basic principle

of Lending.

The Integrity & Reliability of the Borrower

The last and the most fundamental principle of lending are the integrity and

reliability of the borrower. To avoid bad debt, it is the basic factor before any

loan proposal can be considered. The success of any business depends upon

the ability of the Banker to study borrowers. The study of a borrower involves

the study of the five C's of the Party. This five C's refer to Parties:

� Character

� Capacity

� Capital

� Conduct &

� Capability

Instead of five C's some authors mention the five R's. This five R's indicates

Parties:

� Reliability

� Responsibility

� Resources

� Respectability &

� Return

5.2 Classification of General Advances:

Bank is service as well as profit oriented organization. So, making of loans

and advances have always been prominent and profitable function of a bank.

Sanctioning Credit to customers and others out of the funds at its disposal is

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one of the Principle services of a modern Bank. Advances made in Pubali

Bank in different natures, such as, Cash Credits (CC), Overdrafts, Small 1-

loans, Demand Loans, Bills purchased & discounted, House building Loans

and Staff Loans etc. Pubali Bank deals with the money from the depositors

repayable on demand. So, it can't afford to lend their funds for long periods.

5.2.1 Cash Credit (CC):

A cash credit is an arrangement by which the customer is allowed to borrow

money up to a certain limit. This is a parliament arrangement and the customer

need not draw the sanctioned amount at once, but draw the amount as and

when required. He can put back any surplus amount, which he may find with

him. Thus, Cash Credit is an active and continuous process in which Deposits

and Withdrawals going on frequently. Interest is charged only for the amount

withdrawn and not for the whole amount charged. It is operated in the same

way s a current account on which an Overdraft has been sanction. Cash Credit

accounts are, however, maintained in a separate ledger. Primary securities

under consideration in case of Case Credit are goods, produce and

merchandise. This is the most favorite of borrowing by large commercial and

industrial concerns. On account of the advantage that a customer need not

borrow at once. He can either draw or repay, in whole amount or in part, the

amount advanced at any time to suit his convenience. Cash Credits are of two

Types, such as:

Hypothecation

In case of "Hypothecation", possession of goods not transferred to the Bank &

therefore such all advances can thus only be granted to a person in whose

integrity the Banker has full confidence and Cash Credit in the form of

"Hypothecation" is normally accompanied with Mortgage of Immovable

Properties.

Cash Credit is the favorite mode of Borrowing by traders, Industrialists,

Agriculturists etc. for meeting their working capital requirements. This type of

facility is always against Pledge of goods, produce and merchandise. In a

manufacturing company, whose stocks of raw materials and manufactured

goods constantly fluctuated, it is difficult for the bank to control such charges;

so "Hypothecation" facilities are allowed to them. The same is true of the

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small traders and small industrialists who can't offer their stocks for Pledge but

can only hypothecate the stock in their shop. In this case, Ownership and

Possession of the goods remain with the borrower although by virtue of the

"Hypothecation" agreement. The Bank can take Possession of the goods if the

Borrower defaults.

Pledge

In case of "Pledge" the possession of the goods is delivered to the Creditor i.e.

Banker. It is therefore, regarded as the most secured type of Advance. Cash

Credit in its truest sense is against pledge of goods. It is a separate ledger. In

addition, Goods Ledger, Go-down Register, Go-down Key register, Go-down

Index Card etc. are also maintained. Deliveries of goods are made on the

strength of delivery order issued by the Banks and goods are received through

goods Challans deposited Borrower. The person who transfers the goods is

called Pledger (Party) and to whom it is transferred is called the Pledge (The

Banker).

Duties of the Banker (Pledge)

� The Pledge is bound to take that much care of the goods pledged which

an ordinary prudent man would take of his own goods under similar

circumstances.

� The Pledge must make use of the goods pledged according to the

agreement is entitled to terminate the contract and claim damages, if

any.

� The Pledge must deliver the goods to the Pledge on repayment of the

debt. It is duty of the Pledge to deliver the goods according to the

direction of the Pledge.

� The Pledge must deliver to the Pledge any increase or profit which

may have occurred from the goods bailed for example, dividend on

shares.

� The Pledge is responsible to the Pledge for any loss, destruction or

deterioration of the goods is not returned at the proper time.

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5.2.2 Overdraft

In case of Advance sanctions by way of overdrafts, the customer is sanctioned

a limit up to which he can overdraw his current account within a stipulated

period. This is a fluctuating account here in the balance some times may be in

credit and sometimes in debit and overdrawn amount must always remain

within the sanction limit. From the customer point of views, this arrangement

is advantageous, as he is required to pay interest on the amount actually used

by him.

Overdraft facilities are generally Granted to Businessmen for expansion their

business against securities of stock in trade, Shares, Debentures, Government

Promissory notes, fixed Deposit, Life Insurance Policies, Gold and Gold

ornaments etc. In some cases, where the overdraft is allowed with no other

security except the personal security of the borrower.

5.2.3 Small Loans

It refers to the lending allowed to small traders, collage industries, small-scale

industries and self-employed persons. The maximum ceiling for this loan is at

present Tk. 5000/- for small traders and self employed persons. Tk. 2,00,000/-

for cottage industries and small-scale industries, such loans are generally

production/ development oriented rather than security oriented & this is the

way of emphasis in these cases is on the purpose of the advance as well as

skill regulation and capacity of the Borrower. The security requirements are

substituted are substituted the end-use and frequent supervision of the credit.

5.2.4 Demand Loan

This is the fixed type of lending in its original form. The entire amount is paid

to the debtor at on time, either in cash or by transfer to his current or savings

bank account. No subsequent debit is ordinarily allowed except by way of

interest, incidental charges, insurance premium, expenses incurred for the

protection of the security etc. A separate ledger is used for the maintenance of

this account and as no subsequent withdrawal is allowed, no cheque is issued

into this account. The following types of demand loan:

� Secured Demand Loan against Stock Exchange, Paper Securities,

Goods, Produce and Merchandise.

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� Staff Demand loan.

5.2.5 Staff Loan

Pubali Bank provides advances to the staffs for buying Motorcycles and

bicycles, for wedding their sons or daughter etc. It is called Staff Loan. Bank

provides this advance of this sector under installments. At the end of each

amount, when the staffs withdrawn there salary, Bank takes Tk. 525/- of the

salary from the concerned staffs in any advances.

5.2.6 House Building Loan

House Building Finance Corporation (HBFC) is the main institution to meet

the requirement in the field but Pubali Bank also supplement to this sector

Advances for construction of residential houses against real states as primary

securities as allowed by Banks up to Tk. 500 lacks per party (including cost of

land) minus any loan taken from HBFC for these purpose. Pubali Bank may

grant advances for construction of commercial Building also against Teal

states. The rate of interest for all such loans is 16% per annum and Maximum

repayment period is 12 years. In such cases, parties have to pay down payment

of 30% of the total amount and rest of the amount should be repaid within 2

years.

5.2.7 Purchase and Discount of Bills

Purchase and discount of Bills is also a special form of advances. Pubali bank

normally purchase demand Bills of exchange that are called drafts

accompanied by documents or title to 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". This is not very common in our country and is normally

limited with the discount of Foreign Bills; inland Bills are rarely discounted of

an organized Bill market.

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5.2.8 Mid term Loans

Pubali Bank or 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 those loans and time to be fixed from advancing with

minor variations as though limits are not withdraws by a time and these are

allowed to be payable on installments or phases but no subsequent debit

transactions are allowed to the Borrowers in the account beyond the

disbursement of sanctioned limit.

5.2.9 Consumer Credit

Technological improvement around the whole world is increasing day by day.

But, the per capita income restricted the consumer from enjoying such

improvement. In Bangladesh most of the people are standing below the

minimum standard of living. As a result, they can't always do whatever they

like or they can't buy whatever they want. For Example if we see the

Television or computer market, we will find a huge expense behind this. On

the other hand, it is very hard to live without Television now-a day. To solve

this problem, various Commercial Banks offering various types of loans to the

consumer so that they can enjoy these innovation and fixed a very easy

installment process to repay that money. Pubali Bank also offering loan calling

Consumer Credit Scheme in various types of goods like Television Mobile

Phone etc. 14% interest is allowed in this scheme.

5.2.10 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

equitable are also to be obtained by way of additional securities or in suitable

case. In case of acceptance of mortgage, the minimum may be reduced up to

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10 percent. These loans should be repayable within maximum period of two

years, which is subject to renewal with approval from Head Office. There are,

however, restriction of Bangladesh about extending discredit facilities existing

capacity and capital assets that is running Buses, Cars, and all other taps of

vehicles or Launches. Advances are allowed only for creating additional

capacity such as acquisition of new Buses, Trucks, Coasters, and Taxies etc.

5.3 Credit Policy of Pubali Bank Limited:

The credit policy pursed by Bangladesh Bank is to be aimed at ensuring

development of scare Bank resources in the best possible manner for

increasing Production, employment and Real income within its objectives.

Both selective and qualitative credit can't were adapted to the socio-economic

priorities, distributive and justice need for containing money supply within a

safe limit.

Pubali Bank takes the policies, which help the development of several sectors

of the country under general credit division and for achieving the proposed

goals of the principles of Agricultural, Economical, Industrial and

Trade.Following the guide lines of Bangladesh Bank, this is the credit policy

of Pubali Bank. This policy is changeable. If Bangladesh Bank resists

providing credit in any sector Pubali Bank does not provide any credit in those

sectors.

5.4 Interest Rate Policy:

Bank takes the policy of the rate of interest only for encouraging the rural

savings or investment. If the rate of interest is low, the velocity of money will

be increased.

5.4.1 Bank Rate

Bank rate is decreased from 8 percent to 7.5 percent by Bangladesh bank and

which the Governing Body of Pubali Bank approves also.

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5.4.2 Savings Rate

In order to increase the savings, Pubali Bank offered 7.75 percent against

savings deposit.

5.4.3 FDR against Loan:

Keeping margin 10 percent of face value, bank provide loan against 90 percent

of residual FDR. Rate of interest is now 8.5 percent. It is a kind of short-term

loan for 12 months.

5.4.4 Staff Loan

Bank provides this loan according to the grade of the staffs for their housing,

buying motor cycle and bicycle, children's education and marriage ceremony

etc. Its rate of interest is 6.5%.

5.4.5 Shares Against

Bank provides loan against shares which 50 percent of previous 6 months to

the customers. It's rate of interest in 16 percent and not more than 12 months.

5.5 Total Credit Line:

There are various types of loans in the credit under General Advance Division

excluding public sector.

� Chemical Industry: It includes the soap, on and chemical factory.

� Rice, flour and oil mills: To install action of machine and working

capital.

� Steel and engineering concern including re-rolling mills.

� Hides and skins: Here it sanction and processing.

� House Building Loan: Generally it is known as second mortgage loan.

Additional money was supplied after the loan given near House

Building Finance Corporation.

� Jute Loan: Cash Credit and segregate both are sanctioned to the private

jute industry.

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� Spinning Mills: Here also Cash Credit and segregate loan are

sanctioned as working capital.

� Small Loan: All types are working capital below two lacs in any

trading concern.

� Credit to Textile Mills.

5.6 Restrictions:

General Advances are restricted in the following sectors:

� Frog leg

� Leather of Deer

� Leather of Snake

� Hemp

� Wine

� Opium

� Elfish etc.

5.7 Principles of General Advance:

The principles of general advances management policy of any Banking

institution is needed to be very systematic. It needs to have certain accepted

standards and flexibility so that the policy can change in different realities and

situations. Beside this, L.C. Mathur says that "An ideal advance is one which

is granted to a reliable customer for an approved purpose in which that

customer has adequate experience, safe in the knowledge that the money will

be used to advantages and repayment will be made within a reasonable period

from trading receipts or known maturities due or on about given date".

The accepted standards relate to Safety, Liquidity and Profitability of the

Advance where as the dynamic factors relate to aspects such as the nature and

extend or risk. Head Office issues General Principles about the conduct of

advance. In all types of Business dealings, officers and employees must be

guided by the Principles or honesty, integrity and safeguard the interest of the

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depositors and shareholders of the Bank. They should strictly adhere to the

Banking laws Rules and Regulations of the govt. of Bangladesh, the

instruction issued by Bangladesh Bank Head Office from time to time that

affects business practice of the bank. However, the key to safe, liquid, health

and profitable credit operation depends in the quality of judgment used by the

officers making lending decisions. The principles are described below

precisely:

5.7.1 Credit Investigation

Before sanctioning any credit to the Borrower the concern Branch of that Bank

firstly investigate about the Borrower, Project, acceptability, market situation

etc. Various types of investigation are discussed below:

Purpose:

Purpose should be the primary guiding principle, which is kept in view. The

purpose for which lending is made should be productive as to ensure definite

source of repayment. Banks discourage advances for Harding stocks or for

speculative activities. There are obvious risks involved there in a part from the

antisocial nature or such transaction. Banker must closely scrutinize the

purpose for the borrower applies a particular purpose accordingly. Purpose has

assumed a special significance in the present day concept of Banking.

Selection of the Borrower:

A Banker would select Borrower/ Entrepreneurs who would take loan from

the Bank for their Business purpose or industry purpose. A prudent Banker

should always notice background, Character, Capital, Capacity and Purpose of

the Borrowers/Entrepreneurs. An entrepreneur who does not live at the

commanding area and what is has social status. The Banker should consider

this decide to pay loan to the Entrepreneurs.

Verification of the Primary Securities:

Whenever a moneylender lends money he must consider carefully the changes

of his being repaid by the Borrower and is therefore not normally content to

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rely on the obligation of the borrower above but wants some tangible security

from which he can obtain repayment, in case the borrower is unable to meet

his obligations. The Banker also, making advances and loans, naturally wants

to secure himself by some reliable security. Security is considered as an

insurance to fail back upon in case or emergency. Bankers may realize it and

reimburse themselves if the well calculated and most certain source or

repayment unexpectedly fails. An advance is granted near a good Banker on

its own Merits, that s to say with due regard to its Safety, Liquidity purpose

etc. and looking after into the character, capacity of the borrower and not

because the security is good.

In the case of advances against Hypothecation or stock, stock statement is to

be or twice a month as per terms of sanction. The certificate at the foot of the

state should be signed by an Authorized person to operate the Account. These

statements are to be carefully verified to see the turnover of stock, the price of

the Goods, Quality of goods etc. The price must be made market price or

invoice price whichever is lower. A copy of the statement is kept at the Branch

and the other one is sent to Head Office/regional Office.

Verification of the Cultural Security

Collateral Security is a security, which is Immovable from one Place to

another. A Branch Manger always should notice the verification of the

collateral securities that Bank sanctioned to the Borrower. A Manger should

verify:

� Location

� Possession

� Situation

� Present market Value

� Force sale value of the security as if the Bank can sale the security

when the borrower fail to repay.

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5.7.2 Requirements of Loan Proposal

Following items are required to prepare a Loan proposal:

� Loan Application (4 copies).

� Photograph and Educational Certificates (4 copies).

� Required Papers as per ownership of the firm.

� Scheduled of Mortgage Properties and relevant Papers.

� Nationality Certificate & Trade license.

� No objection letter from his superior (if he is n Govt. Employee).

� Declaration of Tangible/intangible Assets/liability.

� Actual deed of Land/building as Collateral Security.

� No objection letter from Environmental Department.

� Permission letter from local Authority in establishment of the Project.

� Current year tax Payment Receipt of Union council.

� Thorn less certificate of 12 years from Sub-Register Office.

� In case of BUSIC, actual allotment and possession letter is needed

from BISIC.

� Documental evidence on behalf income and Testimony of Tax

payment.

� No objection letter from the Govt. or any other Authority about the

Land mortgaged to the Bank as security of credit which is sanctioned

by the Same Authority.

� In the case of Company Attested copies of Memorandum of Articles,

Articles of Association, Certificate of Incorporation, Commencement

of Business.

� Audited Profit & Loss Account of last three years of his any running

business.

� Declaration about the source of equity of his own.

� Sight plan of the project and root plan of the proposed loan.

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� Feasibility study/ Viability study of the project from different aspect

such as Technical, Management, Socio-Economical, Economical

aspect.

� Tender sheet (including Catalogue, Detail specification) need to be

submitted through local Intender.

� Permission letter from PDB/REB/GAS/Electricity authority (if

needed).

5.7.3 Sanction of Loan

When a Branch Manager writes a letter to accepting all terms and conditions

of loan, it is called loan sanction. The conditions which are included in the

loan sanctions these are given bellow:

a) Limit.

b) Primary Securities.

c) Collateral Securities.

d) The Rate of Interest

e) Expiry date.

f) Repayment.

g) Documentation.

h) Others Condition.

5.7.4 Charge Creating with Joint Stock Company

The following terms and conditions are included in the charge creation with a

Joint Stock Company:

� Simple Mortgage Deed

� Form 'L'

� Floating Charge

� Personal Guarantee

� List of Machineries

� Letter of Continuity

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� Board Resolution

� Articles or Association & Memorandum or Association

5.7.5 Disbursement of Loan

Loan disbursement has to be made after completion documentation and

observance of the sanctioning terms against rising of equity by sponsors as

laid down. Disbursement against import is to be made through an opening or

Irrevocable L.C favoring the foreign supplier on execution or contract.

Disbursement against local Machinery and Building construction is to be made

to the supplier of Equipment's through Inland L/C. Each Phase of loan

Disbursement to be supervised by Bank official so that Borrower is given

scope of diversion funds to anywhere tends to purpose other than the project

and the phase of implementation of the project to be effectively supervised and

borrowers persuaded for completion or Project in time. There are mainly three

most important factors in the loan disbursement, such as:

� Completion of Documentation.

� Verification of Stocks.

� All Important Documentation

5.7.6 Supervision

Supervision is very important in the aspect of Loan /Sanctioning and

Disbursing process. Because, if the Bank failed to identify the real borrower ,

Bank will incur the total loss. In this context, Branch Manger will exercise his

commonsense and proper case in handling advances by them or any other

appropriate authority. This has to realize by the Manger that he is the corner

stone of the Bank and the overall success of Bank depends to large extent

upon him. His total work represents himself to the local public and the

Management as a successful or unsuccessful Branch Manager. Only he can

control Advances judiciously to save the Bank fro-falling Losses. The entire

necessary document has been duly failed in stamped and correctly executed by

the borrower. He has to alert about the following things:

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� A proper authority covering operation and conferring power to

overdraw is held in respect of accounts of permeated upon by persons

other than the borrowers themselves.

� It should be seen by him that the Advance does not contravene and law

directed by Bangladesh bank or the lending policy of the Bank.

� Security is correctly valued and is easily salable.

� Proper storage and custody are made.

� Stipulated margin is maintained.

� Adequate Insurance, where necessary has been taken.

� There is quick turnover of stocks.

� Operations of customers account.

� The Balance of the account remains very near or goes beyond the

drawing limit or there is no good turnover.

� The Balance is stagnant.

� Cheque drawn by the party is returned for storage of fund.

� Post-date cheques are issued by the Party.

� Cheques drawn by the Party are frequently countermanded financial

position.

5.7.7 Recovery

Advance is such kind of arrangement that its clients are repayable this either

on demand at the expiry of fixed period or as per repayment schedule agreed

upon while granting the facilities. If a loan is repayable on installment is not

repaid on due date. Overdraft and Credit are legally repayable on Demand,

although the Bank seldom exercises the right but in certain customers. In the

case, when loan is repayable in installment, entire loan usually becomes

immediately recoverable of at the option of the Bank.

Banks generally feel Risky their advances under the following cases:

I) If the death occurs either of the Borrower or of the

Guarantor.

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II) If the Borrower is reported to have committed as act of

insolvency or has filed and application for his insolvency.

III) Dissolution the Partnership.

IV) Liquidation the Borrowing Company.

V) Failure to renew the documents sufficient before the expire

of the limitation.

VI) If there any serious deterioration in the financial position of

the Party.

VII) If the Borrower failed to maintain the stipulated margin.

VIII) Change the Bank policy of lending.

IX) The policy of the selective credit control by Bangladesh

Bank.

X) Detection of any other undesirable feature in the Account.

5.8 Industrial Credit Department (ICD):

Industrial credit department are advanced three types of credit they are:

� Pubali Bank Industrial Credit Scheme (Project)

� Pubali Bank Industrial Credit Scheme (Working Capital)

� Pubali Bank Industrial Credit Scheme (Agro. Based)

5.8.1 Preparation of Loan Proposal

To get Advances or loans from Banks, it is not very easy way to acquire. It

demands some preparation from the Borrower. Because, which the amount is

sanctioning by the banks is not of its own. The public deposits this amount, so

it is very risky for Bank to lend this to the Borrower. If the Bank fails to

recovery 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 proper

use of the money. Proposal requires:

� Loan Application.

� Required Paper as per Ownership of the Industry.

80

� Schedule of Mortgage Properties and Relevant Papers.

� Market reputation.

� Other Bank opinion about the previous money Lending.

� Feasibility Study.

� Lending Risk Analysis.

� Financial spread sheet analysis.

� Credit scoring.

� Forwarding.

� Valuation of Certificate.

� Trade License & CIB Report.

� Commercial Invoice.

� Certificate of Origin.

� Memorandum of Association & Articles or Association.

� No objection Certificate from Local Authority and from Ministry of

Environment.

� C.S, R.S & S/A of Land.

� Mutation Certificate.

� Affidavit and Personal Guarantee.

� General Irrevocable Power of Attorney.

Loan Sanction, Disbursement and Recovery Procedure almost same as

General Advances.

Working Capital Management involves the financial and Management of the

Current assets of the Firm/industry. A Firms/industries ability to properly

manage Current assets and the associated liability obligations may be

determine how well it is able to survive in the short run, When a Firm/industry

is unable to meet its current assets (payment of labor, raw materials etc.) then

the Firm/Industry to the Bank for Working Capital. After proper investigation,

Bank sanctions Working Capital for that Firm.

81

Since 1973-74 Pubali Bank started to disburse in Agricultural Credit Program.

The lion share of the disbursed credit goes for crop; the credit is being

disbursed in a limited scale for the income group under various programs.

Interest Rate Policy

The interest rate on Loan and advances has been rescheduled according to the

following table effective from 1 August approved in the 877th board meeting

of Director held on 13 July 2006 and all other interest rates which were

effective before will be deemed invalid.

Nature of deposit/loans & advances Rescheduled

interest rate

(effective from 01-

08-06)

1. Savings Deposit 7.75%

2. Short Term Deposit 6%

3. From 3 months and above but less than 6 months 7.5%

From 6 months and above but less than 9 months 8%

From 1 years and above but less than 2 year 8.5%

From 2 years and above but less than 3 year 9%

4. DPS 10%

5.Loans more than 3 years

a) 5 Year Term

b) 10 Year Term

c)No loan is given again share.

d)Demand loan @12%

e)Loan against provident fund @10%

f)Loan against own contribution in provident fund

@12@

g)HBL-House building loan@ 15%

11%

12%

82

CHAPTER-6

PAPERS TO BE SUBMITTED TO GET

A LOAN

83

CHAPTER-6

PAPERS TO BE SUBMITTED TO GET A LOAN

6.1 FOR FRESH / NEW PROPOSAL

(PAPERS TO BE SUBMITTED/ ENCLOSED)

BY BANK:

01. FORWARDING

02. FL-60 (in prescribed form)

03. FL-56: HYPOTHECATION OF STOCKS

04. ACCOUNT STATEMENT ( OF PREVIOUS ONE YEAR )

05. DECLARATION OF LIABILITY FROM THE BANK

06. PHYSICAL VERIFICATION REPORT

07. VALUATION CERTIFICATE

08. OTHER BANK’S OPINION

09. CERTIFICATE OF OBTAINING OF PARTICULARS

10. CIB FORM (in prescribed form)

BY THE BORROWER:

01. APPLICATION OF THE BORROWER


03. HYPO OF STOCKS FROM THE BORROWER

04. PROFIT-LOSS & BALANCE SHEET STATEMENT

05. LIABILITY DECLARATION IN THE BORROWER’S PAD

06. PERSONAL NET WORTH (in prescribed form)

07. CONSENT LETTER OF CO-SHARER ( IF ANY )

08. PHOTOGRAPHS

PHOTOCOPY:

01. SHOP RENT RECIEPT / COPY AGREEMENT

02. RENT RECEIPT OF THE LAND

03. INCOME TAX CERTIFICATE

04. MUNICIPAL TAX RECIEPT ( IF IN THE MUNICIPAL AREA)

05. TRADE LICENSE

06. PHOTOCOPY OF TITLE DEED, BIA-DEED, MUTATION PARCHA (WITH DCR)

07. LEGAL OPINION FROM BLA

08. COPY OF NON-ENCUMBENT CERTIFICATE

09. COPY OF SATISFACTION CERTIFICATE FROM THE BLA

84

6.2 FOR RENEWAL/ ENHANCEMENT PROPOSAL

(PAPERS TO BE SUBMITTED/ ENCLOSED)

BY BANK:

01. FORWARDING


03. FL-56: HYPOTHECATION OF STOCKS

04. ACCOUNT STATEMENT ( OF PREVIOUS ONE YEAR )

05. DECLARATION OF LIABILITY FROM THE BANK

06. PHYSICAL VERIFICATION REPORT

07. VALUATION CERTIFICATE

08. CERTIFICATE OF OBTAINING OF PARTICULARS

09. CIB FORM (in prescribed form)

BY THE BORROWER:

09. APPLICATION OF THE BORROWER


11. HYPO OF STOCKS FROM THE BORROWER

12. PROFIT-LOSS & BALANCE SHEET STATEMENT

13. LIABILITY DECLARATION IN THE BORROWER’S PAD

14. PERSONAL NET WORTH (in prescribed form)

15. CONSENT LETTER OF CO-SHARER ( IF ANY )

16. PHOTOGRAPHS

PHOTOCOPY:

01. SHOP RENT RECIEPT / COPY AGREEMENT

02. RENT RECEIPT OF THE LAND

03. INCOME TAX CERTIFICATE

04. MUNICIPAL TAX RECIEPT ( IF IN THE MUNICIPAL AREA)

05. TRADE LICENSE

06. PHOTOCOPY OF TITLE DEED, BIA-DEED, MUTATION PARCHA (WITH DCR)

07. LEGAL OPINION FROM BLA

08. COPY OF ENCUMBENT CERTIFICATE

09. COPY OF SATISFACTION CERTIFICATE FROM THE BLA

10. COPY OF PREVIOUS SANCTION LETTER

85

PUBALI BANK LIMITED

6.3 APPLICATION FOR ADVANCES

(FOR INDIVIDUALS AND FIRMS)

Sl. No. .....................................

........................................ Copy

Date .......................................

The Assistant General Manager

Pubali Bank Limited

Nawabpur Road Branch

Dhaka

Dear Sir,

I / We request you to kindly grant / renew / enhance / extend me / us an

advance in the form of Cash Credit / Overdraft / Demand Loan / Bank

Guarantee amounting to Tk. ......................... (Taka

.........................................................) on usual terms and conditions. I / We

state the following particulars and bind myself / ourselves to furnish you with

any other information & comply with required formalities which you may at

any time require:-

1. (a) Name of the applicant / firm

(in block letter)

:-

(b) Father’s name & age of the applicant

(in case of individual)

:-

(c) Name, age and official status of husband if the applicant is a lady

:-

2. (a) Business address with phone no.

if any.

:-

(b) Present residential address

:-

3. Name / style of the A/c. and Number with date of opening with the Branch.

:-

4. Nature of the applicant (individual/ proprietorship/ partnership firm)

:-

Photo

86

5. Permanent address with father’s / husband’s name of individual/

proprietor / partners.

:-

Details of assets held with value

Name and Father’s / husband’s name

Comprising of Value

a) Mr. .................................................... i)

S/o. ................................................... ii)

Address: ........................................... iii)

......................................................... iv)

Tk.

...........................

.

Less Liabilities Tk.

...........................

.

Net Worth Tk.

...........................

.

Contd. ..................... P/2

Page No. 2

b) Mr. .................................................... i)

S/o. ................................................... ii)

Address: ........................................... iii)

......................................................... iv)

Tk.

............................


............................

Net Worth Tk.

............................

c) Mr. .................................................... i)

S/o. ................................................... ii)

Address: ........................................... iii)

......................................................... iv)

Tk.

.........................

...

87


.........................

...

Net Worth Tk.

.........................

...

6. Nature of Business (Whole Seller/ Retailer/

Manufacturer)

:-

7. Capital (own investment)

:-

8. Borrowing powers (in case of partnership firm).

:-

a) Copy of partnership deed (to be attached)

b) Copy of decision taken for the proposed loan / advance duly

signed by all the partners (to be

attached).

9. a) Name & address of other bankers & borrowing, if any, from them with

full particulars of Credit facility

:-

b) Name and address of the previous

Bankers, if any

:-

10. G.I.R. No. / T.I.N. No.

:-

11. Trade licence No.

12. How long in the particular business or industry

:-

13. Purpose for which the facility is required :-

14. Items of manufacture or trade

:-

15. Amount of facility required

:-

16. Mode of repayment

:-

88

Contd. ..................... P/2

Page No. 3

17. Nature of security offered

a) Description of stocks to be pledged /

hypothecated

:-

b) Full description of immovables

offered for mortgage with location,

Area & nature of construction &

Present market value/ estimated

forced sale value

:-

c) Name & Father’s/ husband’s name

of the owner of property proposed to

be mortgaged.

:-

d) Relationship of the owner of the

property with the borrower

:-

Details Value

18. Property of the firm

:- a) Movable Tk.

.................

..........

b) Immovable Tk.

.................

..........

19. a) Name of the guarantor(s) if any

:-

b) Father’s name

:-

c) Present occupation

:-

d) Present Address

:-

e) Permanent address :-

20. Present financial position of guarantor

:- List of Assets

Comprising of Value

of

Asset

i)

ii)

89

iii)

iv)

Tk.

............

............

..

Less liabilities with

other guarantees

Tk.

............

............

..

Net worth Tk.

............

............

..

21. Liabilities of sister concerns (if any)

: a) with our bank :

b) with other bank :

22. Present liabilities in different accounts

: a) with our bank :

b) with other bank :

Contd. ..................... P/3

Page No. 4

22. i) Net worth as per last year’s balance

sheet dated ............... or statement of

affairs dated .............. (to be enclosed) :-

ii) Last year’s total purchase/ productions :-

iii) Last years total sales :-

iv) Last year’s total gross/ net profit/ loss :-

24. Others relevant particulars, if any :-

25. Declaration :

90

I/ We ........................................................................ S.o./ W.o.

............................................................... permanent resident of

............................................... P.S. / Thana .......................... Dist

.......................... by occupation .................................................................. by

faith ......................................................... at Present carrying on business of

.................................................................................... on proprietorship/

partnership basis under the name and style

................................................................................................

................................................................ at

............................................................................ P.S./ Thana

................................................... Dist ......................................... do hereby

solemnly on oath declare and affirm as follows:-

1. That I/ We have not taken any loan or enjoyed any facility in my/ our

personal name or in the name of my/ our proprietorship/ partnership firm

from any other branch of Pubali Bank Ltd. or any other Commercial Bank

save and except as stated under 9 (a) & (b) above.

2. That the statement made above is true and nothing has been concealed and

if at any time it transpires that I/ We have suppressed fact regarding

availing of a loan facilities from the bank, I/We shall be criminally liable.

Date: ..................................

.............................................

SIGNATURE

(Price of each set in quadruplicate is Tk.35/- only

for individual & Tk.100/- for firms).

91

N.B. : Original and Duplicate to be forwarded to H.O. by branch through

Regional Office

. with proposal. Triplicate to be kept with the branch while the 4th copy

is for applicant.

PUBALI BANK LIMITED

(CREDIT PROPOSAL AND APPROVAL FORM)

6.4 NAWABPUR ROAD BRANCH, DHAKA

Branch Ref. No.

................................................................................................

Date

......................

..............

Regional Office Ref. No.

..................................................................................

Date

......................

..............

02. Account

No.

:

03. Date of a/c

opened :

04. Date of

first

01. Customer’s Name :

sanction :

05. Address with phone no.

Present Address

:

Permanent

Address

:

Factory/ Business

:

F.L.-60

(REVISED)

92

06. Legal Status : Individual/ Proprietorship/ Partnership/

Private Limited Company/Public Limited Company

07. Date of Establishment/ Incorporation

............................................................................................................

G.I.R./ TIN

No.........................................................................................................................

..........................

08. Name of the Proprietor/ Partners/ Directors:

Name & Residential address with

Father’s/ Husband’s name & Phone

No.

Age Share

holding in

%

Position Personal

Net

Worth

(details

attached)

Tk.

Tk.

Tk.

09. Capital structure :

a) For Limited Companies:

Authorised Capital : Tk.

Paid-up Capital : Tk.

Total Capital Funds (Net worth) : Tk.

b) For Individuals, Proprietorship & Partnership:

Investment in Business (Net worth) : Tk.

Contd.-.........................Page no.-2

PAGE NO. -2

10. (a) Nature and details of Business/ Products:

(b) Market/ Place of business/ Areas of main operation:

(c) Sales:

93

Actual Sales Estimat

ed

Sales

Sales ⇒⇒⇒⇒

Products

⇓⇓⇓⇓ 2003 2004 2005 2006

Tk. Tk. Tk. Tk.

Total Sales

11. (a) PRESENT PROPOSAL (Fresh/ Renewal/ Enhancement)

Date of application

by the

customer

...............................

(Amount in Taka)

Existing Limit Proposed Limit Nature of facilities Amount of

Limit

Date of

expiry Outstandi

ng

Limit

approa

ched

for

Limit

recomm-

ended

Expiry

Cash Credit

(Pledge)

Cash Credit (Hypo)

Overdraft

Loans

LIM

LATR

Packing Credit

Export Bill

Purchased

(F.B.P.)

Inland Bill

Purchased

(I.B.P.)

L/C (Sight)

L/C (Usance)

Back to Back L/C

Bank Guarantee

Others (Specify)

TOTAL

Enclose: Indent/ Proforma Invoice where applicable. For L/C, LIM & LATR

proposal, amount of Duty, VAT etc. Landed cost & approximate market price

to be mentioned.

94

Contd.-.........................Page no.-3

PAGE NO. -3

11. (b) Credit facilities granted to subsidiary/ affiliates/ associates/ sister

companies with extent of interest of the applicant borrower:

Name of the Borrower Nature of

facilities

Limit Outstandin

g

Expiry Security/

collatera

ls

Extent

of share

holding

11. (c) Details of other business of the applicant not included in 11(b)

above:

Name of the Business/ Firm Nature of

Business

Extent of

share holding

Investment in

the Business

(in Taka)

11. (d) Total Facilities (Limit) in favour of the group:

( in Taka)

Existing

Proposed

(Fresh/ Enhancement) Total

Cash :Tk. :Tk. :Tk.

Contingent :Tk.

.

:Tk.

.

:Tk.

.

Tk.

.

Tk.

.

Tk.

.

12. Particulars of the proposed limit:

(a) Purpose of the Limit:

12. (b) Securities

Value

(i) Details of Primary Securities

95

(ii) Details of Collaterals (As per valuation certificte in details attached

herewith)

Total Value of Collaterals Tk. .................................... Force Sale Value

Tk. .................................

12. (c) Repayment arrangement:

Contd.-.........................Page no.-4

PAGE NO. –4

13. (a) Account performance: ( for the period from ................................... to ............................... )

(in Taka)

Balance Nature of Account Debit

Summation

Credit

Summation Maximum Minimum

Deposit Accounts

C/C (Pledge)

C/C (Hypo)

Loans

Overdrafts

Margin Deposits

LIM/ LATR/ PAD*

Total L/Cs opened (Foreign) Nos. Tk.

Total L/C opened (Local) Nos. Tk.

Total Guarantee issued Nos. Tk.

Total Foreign Bills purchased Tk.

Total Inland Bills purchased Tk.

(*Detailed statement should be attached)

13. (b) Account Profitability: (For the same period as above)

Nature of Account Interest Commission Other revenue Total

Deposit Account

Margin Account

Cash Credit

Loans

96

Overdrafts

Export Bills

Import L/Cs

Local L/Cs/ G’tee

Collection/ Remitt.

Others (Specify)

TOTAL

14. History of Relationship with the Customer: (How and when the relationship started?/ State if the repayment/

adjustment have been regular etc.)

Contd.-.........................Page no.5

PAGE NO. –5

15. Bank/ Trade checking/ CIB report (Brief Synopsis).

16. Opinion on Customers Management: (Education, Training background and past experience of key Management

Personnel to be mentioned.)

17. Other Bankers, Extent of relationship, facilities available, outstanding etc.:

Name of the Bank

& Branch

Name of the

Customer

Nature of

facility

Validity Securit

y Value

Outstand-

ing

Status of

account

(Whethe

r

classifie

d or

regular)

97

18. Industry Condition: (How others in the same business/ industry are doing,

name of 2/3 Leading Companies)

19. Competitive position of the Customer: (Pricing/ Marketing/ Special Advantage and any other)

20. Any adverse comments from Last Inspection/ Audit Report. (Our Bank & Bangladesh Bank)

21. Future Business Projection:

22. If there is any Guarantor, details of Guarantor’s Background, Net worth and Liabilities with the

Bank.

Contd.-.........................Page no.6

PAGE NO. –6

23.(a) Comments on the financial statements for the last 3 (three) years:

(State whether audited or unaudited)

Name of the Audit Firm if a/cs are audited:

SALES/ PROFITABILITY: Audited/

Unaudited

2003

Audited/

Unaudited

2004

Audited/

Unaudited

2005

Sales Tk. Tk. Tk.

Cost of Goods Sold* Tk. Tk. Tk.

98

GROSS PROFIT Tk. Tk. Tk.

Selling General, Admin,

Financial Expense & Depreciation

Tk.

Tk.

Tk.

OPERATING PROFIT/ LOSS Tk. Tk. Tk.

Add Other Income Tk. Tk. Tk.

Less: Other Expenses Tk. Tk. Tk.

Net Profit/ Loss before Income Tax Tk. Tk. Tk.

Income Tax

Tk. Tk. Tk.

NET PROFIT/ LOSS after Income

Tax

Tk. Tk. Tk.

INVENTORY/ RECEIVABLES:

Inventory/ stock in trade Tk. Tk. Tk.

Receivables Tk. Tk. Tk.

EQUITY:

Assets Tk. Tk. Tk.

Liabilities Tk. Tk. Tk.

Equity (= Assets minus Liabilities) Tk. Tk. Tk.

* For trading Firms Cost of Goods sold to be ascertained as under:-

Costs of goods sold = Opening stocks + Purchase + Carriage inward/ Freight – Closing stock

CASH FLOW: 2004 2005

Net Profit Tk. Tk.

Depreciation + Write offs Tk. Tk.

Accounts Payable Incr./ (Decr.)

**

Tk. Tk.

Receivables (Incr.) / Decr.

***

Tk. Tk.

Inventory (Incr.) / Decr.

****

Tk. Tk.

Other (Uses) / Sources Tk. Tk.

NET OPERATING CASH FLOW Tk. . Tk.

.

** If the Current years figure is higher than previous years figure then the

difference amount is increase in cash flow & vice versa.

*** If the Current years figure is higher than previous years figure then the

difference amount is decrease in cash flow & vice versa.

**** If the Current years figure is higher than previous years figure then the

difference amount is decrease in cash flow & vice versa.

Contd.-.........................Page no.7

PAGE NO. –7

99

23. (b) Important Ratios: 2003 2004 2005

Current Assets i) Current Ratio :

Current Liabilities

=

Current Assets – Inventory ii) Quick Ratio :

Current Liabilities

=

Liability iii) Leverage :

Equity

=

365 X Inventory iv) Inventory Turn

over in days :

Cost of Goods Sold

=

365 X Receivables v) Receivables

Turn

over in days

:

Sales

=

Net Sales vi) Total Assets

Turn over :

Total Assets

=

Gross Profit X 100 vii) Gross Profit to

Sales :

Sales

=

Net Profit X 100 viii) Net Profit to

Sales :

Sales

=

Selling General &

Admn. Expenses X 100

ix) Selling,

general,

& Admn.

Expenses to

sales

(%)

: Sales

=

Net Profit X 100 x) Return on

Equity

(%)

:

Equity

=

Please enclose Balance sheet, Trading/ Manufacturing & Profit and Loss

Account of the applicant firm/ company for the last three years.

24. Details of Fixed Assets with valuation:

(For Limited Companies search be made with Registrar of

Joint Stock Companies to Ascertain any encumbrances) Value

Description Date / Year

Acquired Written down as

per Balance Sheet Market

Encumbran

ce if any

100

25. Any special consideration/ significant information about the customer/ transaction:

Contd.-.........................Page no.8

PAGE NO. –8

26. (a) All procedures in respect of opening of account have been

complied with YES / NO

(b) All necessary documents establishing the borrowers legal entity

have been obtained YES / NO

(c) Existing Securities/ Banking documentations and collaterals with

their valuation have been checked and they are in order YES / NO

(d) Documents establishing that proposed advance is within

authorisation and borrowing powers of the applicant have been

obtained.

YES / NO

(e) All assets offered as security/ collateral have been verified to be

free from all encumbrances. YES / NO

(f) Security documents as prescribed have been obtained/ will be

obtained alongwith complete set of borrowing documents YES / NO

(g) The borrower is a director/ shareholder of our Bank, if yes, the

extent of share holding (value Tk. ...................................... ) YES / NO

27. RECOMMENDATION OF BRANCH MANAGER:

AUTHORISED OFFICER

Name:

MANAGER

Name:

101

Designation:

Designation:

(Separate sheets may be attached to give detailed

information for any column)

28.RECOMMENDATION OF REGIONAL OFFICE:

AUTHORISED OFFICER

Name:

Designation:

REGIONAL MANAGER

Name:

Designation:

102

CHAPTER-7

CONCLUSION

103

CHAPTER-7

Conclusion

7.1. Problems Findings:

There are several problems which I practically observe of PBL as follows:

1. Lack of Segmentation:

The Bank has no segmentation to handle different type of

customers. They are equally treating of all the customers to provide

service. But high status clients seek on extra honor from Bank or

institution.

2. Lack of Up to Date Decoration:

The Branch is not decorated with ultra modern facility and not so

nice to look at. Their furniture’s and relevant materials are not so

high standard.

3. Work Environment is not so suitable:

The work environment is noisy and full of crowd sometimes. It is

bad for any financial organization and also bad for security. There

is no siting arrangement of good no of people.

4. Hard Rules & Regulation to Open A/C:

The procedures to open an account are full of hard & fast rules and

regulations (as per Bangladesh Bank). But compare to other Bank

prime bank is not as flexible as they are doing to open A/C or

attract customers.

5. Root level Clients are deprived From Deposit:

Many root level customers come and back to pavilion with a

frustration. So they are neglected and deprived to get banking

service.

104

6. Lack of Sufficient Computers & Technology:

Computers are carrying need of any organization in the age of

technology. But the branch has only 4 computers to use by almost

27 employees. This is very few to run the task through computer.

Lack of good software and format PO, DD are manually prepared in

the branch.

7. Non-quality Photocopy Machine:

The branch has only one photocopy machine which is sometimes in

clinical death. The output of this machine is not ensuring the

quality of original documents. So it is an image problem of the

Bank.

8. Un Smart Peon, Messenger, Security & Tea Bay:

It is a matter of great regret that the peon staffs of the branch are

lazy, whimsical, and above all illiterate to behave and work with

someone.

9. Customer Objectives:

Many customers complain to me to improve and first the service as

well as behavior of the staff as it is a private bank.. Customers

require especially quick, accurate service and good behavior from

bankers.

10. Lack of Good Cooperation:

Every organization has this type of problem. But it should be

minimized to faster the service as it is the financial institution and

one depends to another to complete a process fully.

11. Some Sort of Ego:

Some employees of this branch feel always some sort of ego that

they are something different. But this is not a symbol of good sign.

Ego drive is harmful for team work specially.

12. Lengthy Procedures & Process:

The scheduled activities of the bank like A/C opening A/C closing

and issuing of solvency certificates are delay sometimes due to lack

of proper initiates. This tendency is bad for banking good service.

105

CSS maturity and closing require 3 days, which is an image of

Govt. Bank.

13. Low Interest Rate Cannot Attract Customers:

Compare to many others Banks prime Bank offer low interest rate

to depositors. So they are not interested to keep there money in

low rate of interest. The PBL management is only hunting to ward

low cost and no cost deposit.

14. Customers’ Complains:

Customer’s all complains are related with lengthiness and time

consuming of tasks. The small depositor like CSS A/C holder claim

to receive money instantly. But it is not possible for slow and lack

of cordial interruption of the management.

7.2. Policy Guidelines / Recommendations:

On the basis of theoretical analysis and practical experience of 3 months

internship program. I may suggest the following issues:

1. Provide Up To Date Technology:

The branch should be more technologically rich than present time.

Then all manual tasks will be converted into computerized system

2. Information Cell Establishment:

Each and every branch should establish an information cell with

one/two dump smart executives who will be able to provide all sort

of information regarding banking and respective branch. In my

question Almost 200 responded are agreed with my proposal.

3. Provide Nice Decoration:

Now a day’s private Bank is an image building and most nice

environment organization. So the decoration should be unique and

better than our competitors.

4. Handling Customers Well:

I think the staffs of the branch should be trained up how to handle

different type of customers. The training should not limit only GB,

Credit, And Foreign exchange etc.

106

5. Behavior Modification of the Employees:

Very few employees’ behavior should be modified enough to

maintain positive attitude toward banks. They should always think

it is a private bank and fully service oriented organization.

“Customer is the king / Queen” they should remember it almost

every time in office or out side the office.

6. Maintain Service Quality:

We believe in quality not quantity. Quality is an important

phenomenon of service organization always quality should achieve

the pick of standard. If quality of service is good then 50% problem

will be automatically reduced.

7. Offer Competitive Interest Rate:

PBL should offer high competitive interest rate to attract depositor

to increase the liquidity. Then it will able to deal with call money

business in the age of fluting rate of exchange.

8. Site Selection of Branch:

Management should carefully consider the location to set up a new

branch. Because it is a question-which is vital to deal business?

Answer is location, location and location.

9. Deposit Mobilization:

Prime Bank has to increase their deposit mobilization growth. Also

AB bank has to take necessary action to maintain and improve their

deposit mobilization growth rate.

10. Operating Income:

For the maximizing the operating income, prime bank should try to

take necessary action to increased the operating income.

11. Reduce Expenditure:

Very essential to reduce the expenditure of the prime bank. Prime

bank expenditure is very high other than two banks.

12. Remove Slow Rate of profit:

107

Prime bank profit is increased previous year but grow rate is low.

So take necessary steps to increase the profit.

13. Foreign Trade:

Foreign trade increase is the essential for the prime bank. The

maximum amount of total earning comes from foreign trade.

14. Performance Increase:

Prime Bank should increase their performance by engaging efficient

decision maker in the managerial level.

15. New Planning:

All commercial banks including both nationalized and private should

introduce performance planning system for increasing their

operational efficiency or purpose the following other

recommendation:

• It should utilize properly idle money, because idle money is

one of the major problems of banking sector.

• Proper standard should be set by the movement for

comparative performance measurement.

• Proper decision should be taken for banking sector which

should not be changed rapidly.

• Proper training should be given in order to create efficient

personnel.

• World Bank’s prescription for banking reform programmed

should bee analysis before implementing.

16. Proper Autonomy:

Private Banks should be give proper autonomy and be kept free

from political and other sorts of intervention. Though, autonomy

does not mean lack of monitoring by the authority, yet it has

advantages of being quick and flexible in implementing different

plans and programs.

108

7.3. CONCLUDING REMARKS:

From the detail discussions above I can easily conclude that In spite of all

problems Pubali Bank Ltd. is the fastest growing private commercial bank in

the country. The bank is already at the top slot in terms of quality service to

the customers and value addition for the shareholders because, despite difficult

circumstances, the Bank closed the year of 2005 with a number of

achievements. The Bank also made satisfactory progress in all areas of

business operation up to June 2006. The Bank further expanded and

consolidated its customer base in both of its core businesses and General

Banking Services.

109

7.4 Bibliography

1. Annual Report, Pubali Bank Ltd, 2004

2. Annual Report, Pubali Bank Ltd, 2005

3. Different Instructions Circular,Issued by Pubali Bank Head Office.

4. Website: www.pubali-bangla.com

Advices & Suggestions are given by the following persons:

� Mr. Shym Sundar Banik,Managing Director of Pubali

BankLimited,Nawabpur Branch

� Mr. Shajhan Mahmood, Principal Officer, Pubali Bank

Limited,Nawabpur Branch

� Mr. Partha Pratim Acharja, Senior Officer, Pubali

BankLimited,Nawabpur Branch

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