Internship report.pdf

1

Chapter

one

Introduction

2

Introduction

The internship program of BBA is a partial requirement to take test of real life challenge conducted by the

intern. It is the important part of BBA program. This program is three month duration. During this period I

have worked closely with the employee of Uttara Branch. This report presents the outcomes of the study

during the internship- Janata Bank Limited. I was assigned to topic “Practice of Retail

Loan&AdvanceofJanata Bank Limited.

Internship Report prepared as a requirement for the completion of the BBA program of the Independent

university, Bangladesh. The primary goal of internship is to provide an on the job exposure to the student

and an opportunity for translation of theoretical conceptions in real life situation. Students are placed in

enterprises, organizations, financial institutions, research institutions as well as development projects. The

program covers a period of 8-12 weeks of organizational attachment.

After the completion of Four-year academic BBA program I, Md.Enamul Hoque, student of Independent

University, Bangladesh was placed in Janata Bank Bangladesh Limited for the Internship Program. As a

requirement for the completion of the program I need to submit a report, which includes “Retail Loan&

Advance of Janata Bank Ltd”.

1.1 Background of the study

It is very important to have a practical application of the knowledge acquired from any academic course of

the study, because only a lot of theoretical knowledge will become fruitless if it is not applied in the

practical life. So we need proper application of our knowledge to get some benefit from our theoretical

knowledge to make it fruitful. Such an application can be possible through internship.

The internship program exercise a significant importance as it enables a student to familiar with the

practical business activities. The student work closing with the people of an organization and learn about the

function of that organization. This program enables a student to develop his analytical skill and scholastic

aptitude.

As part of the internship program of bachelor of Business Administration course requirement, I was

assigned for doing my internship in Janata bank Ltd for the period of three months. During my internship

period in the Janata Bank Ltd. To Branch, I worked under Credit,Remittance, Deposit, and loan and

advance department. I worked under the supervision of principal & executive officer and assistant officer,

for their assistance and guidance in completing this report.

1.2 Origin of the Report

Credit is the central function, as it is known as the heart of financial institutions like Banks. Because

through effective and efficient credit practice, overall risk of the institutions can be alleviated. As so, each

banking institutions follows the policies and rules of CRM provided by Bangladesh Bank. Bangladesh Bank

introduced new accounting policies with respect to loan classification, provisioning and interest suspense in

1989 with a view to attaining international standards over a period of time. As a result, all the financial and

non-financial institutions are involved in credit practice and concentrating more to provide better service

with maintaining a better credit policy to uphold its own financial growth.

Bachelor of Business Administration (BBA) program requires usually a three months attachment with an

organization followed by a report assigned by the supervisor in the organization and endorsed by the faculty

3

advisor. As a mandatory requirement, opportunity of doing the internship was derived from the organization

‘JanataBank Limited.’ During the period of 10 weeks in Credit segment of CRM Division (assigned from

the organization), the organizational works and other relevant works and facts of the division was worthy

learning for me. With the help of my organizational supervisor, it was able to gather understanding on

assessing the creditworthiness of the borrowers through different issues, terms and policies. Consequently,

the topic for internship report “Retail Loan& Advance: JBL” has been chosen by me and approved by my

Academic Supervisor to prepare. This report includes the learning of the Credit division that was

experienced during internship period and also other relevant functional works on Credit.

1.3 Objective of the report

This report emphasizes the importance of Retail loan & Advance of banking in the context of Credit Risk

Management of the commercial banks in Bangladesh along with the conditions of Janata bank Limited. A

huge work has been performed for preparing this report. The objectives behind this research paper are

pointed below:

Broad Objectives

The broad objective of this report is to figure out the situation of banking sector along with credit policies

governed by the CRM division of various commercial banks of Bangladesh like Janata bank Limited. In this

report, to measure performance in lending of the commercial banks is another objective of the report.

Specific Objectives

Other specific objectives have also been determined for this report:

Other specific objectives have also been determined for this report:

To point out the opportunities of credit financing.

To have a brief understanding on the CRM policies and procedures.

To get an idea on the overall performance of The JBL.

To figure out The JBL’s position in the banking industry in SME context.

1.4 Scope of the Report

The report focuses mainly the potentials of Credit practice deriving from the efficient Credit Risk

Management. Besides the areas that the report is been prepared are-

Credit risk appraisal system under BB policies for credit risk management.

Credit risk management of the JBL

Credit contribution in the economy.

Each area mentioned above is related to the topic variable- Credit Analysis and Credit Risk Management.

Statistical data and the analysis have been included that focuses on the topic. Lastly, all the areas and parts

of the report have been critically analyzed to fulfill the objective of the report.

1.5 Literature Review

For financial institutions, there is a wealth of both theoretical and empirical literature that establishes the

importance of economic stability for financial sector development; the preeminence of competitive market

forces to establish interest rates and allocate credit; the critical role of supporting infrastructure (regulatory,

4

supervisory, legal, accounting, and auditing systems); and the need for well-governed and well-managed

financial institutions.

main focuses are on the nature of the intermediations process, the unique features of intermediaries and

instruments and the trends in the development of new instruments in financial risk management. The

principal focus of this project has been on how well banks and other financial firms perform in serving their

customers and in providing acceptable returns to their owners.

In present, Credit sector of commercial banks are grabbing the interest of all economists, scholars, as well as

general people. Its rapid growth and increased contribution to the GDP of the economy motivated the

financial and non-financial institutions to provide better credit services. But though there are some obstacles

of credit financing like high risk as low capitalization, insufficient assets, inability of meeting collateral

requirements etc. of the borrowers, an efficient Credit Risk Management can drive the institutions to

provide financing to needy community.

Therefore, this report is prepared to work out that an efficient CRM can sustain the credit financing through

the better services provided by the commercial banks in Bangladesh.

5

Chapter

Two

Janata bank Limited

Organizational Part

6

2.1. Background of Janata Bank Limited

Janata Bank Limited, one of the state owned commercial banks in Bangladesh, has an authorized capital of

Tk. 20000 million (approx. US$ 283.33 million), paid up capital of Tk. 11000.00 million. Immediately after

the emergence of Bangladesh in 1971, the erstwhile United Bank Limited and Union Bank Limited were

renamed as Janata Bank. On 15th

November, 2007 the bank has been corporative and renamed as Janata

Bank Limited. Janata Bank operates through 881 braches including 4 overseas branches at United Arab

Emirates. The Bank employs more than 15020 persons.

The Board of Directors is composed of 13 (Thirteen) members headed by a Chairman. The Directors are

representatives from both public and private sectors.

The Bank is headed by the Chief Executive Officer & Managing Director, who is a reputed banker. The

corporate head office is located at Dhaka with 10 (ten) Divisions comprising of 38 (thirty eight)

Departments.

2.2. Vision

To become the effective largest commercial bank in Bangladesh to support socio- economic development of

the country and to be a leading bank in South Asia.

2.3. Mission

Janata Bank Limited will be an effective commercial bank by maintaining a stable growth strategy,

delivering high quality financial products, providing excellent customer service through an experienced

management team and ensuring good corporate governance in every step of banking network. The mission

of the bank is to actively participate in the socio- economic development of the nation by operating a

commercially sound banking organization, providing credit to viable borrowers, efficiently delivered and

competitively priced, simultaneously protecting depositor’s funds and providing a satisfactory return on

equity to the owners.

2.4. Objective

The objectives for which the bank is established are as follows

To carry on, transact, undertake and conduct the business of banking in all branches.

To receive, borrow or to raise money on deposit, loan or otherwise upon such terms as the company

may approve. To provide for safe-deposit vaults and the safe custody of valuables of all kinds.

To carry on business as financiers, promoters, capitalists, financial and monitory agents,

concessionaires and brokers, dealing in exchange, securities and all kinds of mercantile banking etc.

The Bank divides its operation mainly three parts:- General Banking, Foreign Exchange and Loan &

Advances.

General Banking: General Banking is the starting point of all the banking operating. General Banking department aids in

taking deposits and simultaneously provides some ancillaries services. It provides those customers who come frequently

and those customers who come one time in banking for enjoying ancillary services. In some General Banking activities,

there is no relation between banker and customers who will take only one service form bank. Bank in confined to provide

the service everyday general banking is also known as retail banking.

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General Banking consists of the many sections in the branch. These are:

General Banking

Local Remittance

Section

Bills and Clearing

Section

Cash Section

Dispatch Section

Foreign Exchange: Every sovereign country in the world has a currency, which is a legal tender in its

territory, and this currency cannot be used as money outside its boundaries. So when ever a country buys or

sells goods and services from across its boundaries, the resident of the two countries have to exchange

currencies.

Feature of Foreign Exchange Markets-

Global Markets, 24 Hours Market, No Geographical Location etc.

Foreign Exchange Rates and products-

TT, Bills of collection rates, OD transfer rate, TDY, Spot, Tom, Fwd etc.

Loans and advance:

Loans and advances are started at gross amount. Provision and interest suspense against loans and advances

are shown separately as liability. Interest income is accounted for on accrual basis until the loans and

advances are defined as Special Mention Account (SMC) or classified as per Bangladesh Bank guidelines.

Provision for loans advances are given below-

General provision on: consumer Financing (House financing (2%), Loan to Professional (2%), and other

than (5%), all other credit, small and medium Enterprise (provision rate-1%), short term Agriculture

(provision rate-2%) etc.

Specific provision on: Substandard loans and advances (provision rate-20%), doubtful loans and advances

(provision rate-50%), Bad/Loss loans and advances (provision rate-100%)

2.5. International Award

Recently The Bank has been recognized internationally and domestically for its good performance.

Janata Bank Limited achieved remarkable progress in the year 2010.

International Award -"World's Best Bank Award-2009 in Bangladesh



Account Opening

Section

8


2.6. Business Prospects

Surplus Capital Adequacy after IPO subscription

Business expansion in capital market,Gradual expansion of branch network and Progressive

automation of the branches

Expansion of ATM and Credit Card

2.7. Internet Banking

Internet Banking NRB: Internet Banking of Janata Bank Limited provides the following facilities:

Current/Savings/STD account status

FDR account status

Advance account status

Loan account status

Allow user to change their PIN code/password

Internet Banking General

Future facilities of Janata Bank Limited

L/C Opening Request

A/C Opening Request

Internet A/C Opening Request

Cheque Book Issue Request

Standing Instructions and Others

2.8. FIG: Core Values of Janata Bank Limited

2.9. Presentation of the programs of JBL

Some programs have in Janata Bank Uttara Model town. Some points are given below-

-Social corporate responsibility

JBL

Diversify

Dignity

Integrity

Growth

Accountab

ility

Profession

alism

http://203.76.102.165/loginN.asp

http://203.76.102.165/login.asp

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-Loan

-Advance

-Foreign trade

-Scheme

-Savings bound (JBL also provides different types of bounds)

-Remittance (tow types)

Local Remittance

Foreign Remittance etc.

Corporate Social responsibility: Janata Bank is aware of the responsibilities of corporate citizenship it is

their responsibility to improve the living standard of poor people, health care, Sports, education etc. That

system has no other banks.

Loans and Advances:

Total Loans and Advances of the Bank stood at tK166359 million as of 2009 as compared to TK 144678

million in 2008 , registering a growth rate of 14.86%. The bank attached due importance to sectoral needs in

sanctioning loans and advances during 2009 and credit facilities were extended mainly to productive

priority sectors.

Foreign Trade: In the pace of resurfacing the economy from world financial crisis , import and export

financing business was impressive in this year. During the year , the bank achieved export credit growth of

3.78%. While import credit growth reduced by 8.40% . Import remained confined mainly to consumers

goods, capital machineries and industrial raw matarials . Major export items were readymade garments,

shrimps, tea and non-traditional ones.

(Taka in Million)

Particulars 2010 2009 2008 2007 2006

Import 118515 118525 129413 84065 128809

Export 183744 88653 85418 71855 70897

Deposit Schemes

Savings Deposit(Intt: o5%), Short Term Deposit(Intt: 3.50%), Term Deposit(Intt: o5.00%),Janata Bank

Limited Sanchaya (Savings) Pension(Intt: o9.00),Current Deposit(Intt: o5%) , Fixed Deposit(Intt: 15%) ,

Advances

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

2005 2006 2007 2008 2009

Advances

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Foreign Currency Deposit(Intt: o6%.00) , Monthly Savings Scheme(Intt: o7.oo%) , Monthly Profit Based

Savings Scheme(Intt: 07.50%) .

Remittance:

Foreign Remittance

Foreign Remittance means transfer of Foreign exchange from one country to another country through

banking or authorized channel. (Taka in Million)

Year Janata Bank Ltd Growth (%) National Growth (%)

2009 56190 22.35 738773 19.85

2008 45924 24.83 616442 36.41

2007 36788 25.70 451890 17.78

2006 29267 10.14 383665 28.83

Local Remittance: Local Remittance means transfer of money from one Place to another place in own

country through banking or authorized channel.

2.10. International Banking

Janata Bank Limited has already established a worldwide network and relationship in international Banking

through its 4 (four) overseas branches and 1198 foreign correspondents. The Bank has earned an excellent

business reputation in handling and funding international trade particularly in boosting export & import of

the count

2.11. New/ Special Products

Financing IT Sector

Financing of Industries

Ready Cash

Windows for SMEs

Loan to Travel Agencies

Loan to Diagnostic Centers

NRB Escrow Account

NRB Gift Cheque

2.12. Financial Highlights

Five years comparative Financial and Operational performance

(Taka in Million)

Particulars 2006 2007 2008 2009 2010

AuthorizedCapital 8,000 8,000 8,000 2,000 20,000

Paid up Capital 2,594 2,594 2,594 5,000 5,000

Reserve Fund 1,727 3,224 4,183 8,860 10,224

Deposits 182,947 198,636 221,336 246,175 286,567

http://www.janatabank-bd.com/jb7.htm

http://www.janatabank-bd.com/jbMap_indstry.htm

http://www.janatabank-bd.com/jbmap2.htm

http://www.janatabank-bd.com/jbmap5.htm

http://www.janatabank-bd.com/loan_tta.htm

http://www.janatabank-bd.com/loan_tdc.htm

http://www.janatabank-bd.com/NrbEsc_ac.htm

http://www.janatabank-bd.com/NrbGft_ch.htm

11

Advance 138,493 121,200 144,678 166,359 225,732

Investment 24,785 55,862 57,824 52,533 57,514

Revenue 16,272 18,522 20,922 24,074 30,614

Cost 12,059 13,559 13,919 15,496 18,577

Operating Profit 4,213 4,963 7,003 8,578 12,037

Provision for Loans /

Assets

10,707 11,698 9,051 8,748 8,975

Net Profit - 1,681 3,145 2,982 4,907

Export 70,897 71,855 85,418 88,653 118,515

Import 128,809 84,065 129,413 118,525 183,744

Total Number of

Employees

14,772 13,860 13,379 13,122 12826

No. of Foreign

Correspondent

1,198 1,198 1,202 1,208 1,215

No. of Branches

(Including 4

Overseas Br.)

848 848 849 851 861

997324

763164

722916

618321 611765

(Taka in Million)

2006 2007 2008 2009 2010

Fig: Grapicaly show the Financial Performance (2006to 2010)

Comment: Since, the Financial highlight of Janata Bank Limited is higher in 2010 it indicates the bank is

able to meet its better performance. Therefore, it can be said that the financial position of the bank is

satisfactory.

12

Chapter

Three

Report part

13

31

Retail loan

&

Advance

Janata Bank Limited

14

Practice of Loan & Advance

Practice of Credit

According to the different product and services the bank has to provide to their customer, Loans & Advance

has the major impact in respect of both bank and also for their customer. The making of loan and advance is

always profitable for the bank. As banks assemble savings from the general people in the form of deposit,

the most important task is to disburse the said deposit as loans and advance to the mass people for the

development of commercial, industrial and the people who are in need of fund for investment. Like other

financial institution, the main purpose of the commercial bank is to make profit. Because loans and advance

is the main asset of the bank, from where the bank has their interest income, which is the main source of

income for the financial institution like bank. Mutual Trust Bank also knows the debt financing is cheaper

than equity financing. So, in this way the bank helps to build up the industrial infrastructure of the country

by giving them opportunity of being financed by using the debt capital. Loans & advance also helps to pull

up the operating and financial leverage. But to get the loans and advance the investors has to follow some

terms and condition which falls under the policy and practice of the bank instruction booklet.

3.1.1 Policy & Practice

1. Aggregate loans and advances shall not exceed times the Banks net worth or 65% of customers deposit

whichever is lower (excluding loans and advance covered by specific counter -finance arrangements).

2. Within the aggregate limit of loans and advances as mentioned in (1) above 50% of lending will be small

industry sector in accordance with prescribed norms of the government and the central bank in terms of the

banks objectives with 50% to the commercial sector. No term loans will be approved for the commercial

sector. Exceptions will be rare and will require approval of the Executive Committee.

3. All lending will be adequately secured with acceptable security and margin requirement as lay down by

the Head office credit committee.

4. The bank shall not incur any uncovered foreign exchange risk (currency exposure) in the lending of

funds.

5. The bank shall not incur any risk of exposure in respect of unmatched rates of Interest of funding of

loans and advances beyond 15% of outstanding loans and Advances.

6. End- use of working capital facilities will be closely monitored to ensure lending used for the purpose for

which they were advanced.

7. Country risk in loans and advances will be accurately identified and shall be within the country limits if

any approved for the bank. The same treatment will be given to country risk arising out of contingent

liabilities relating to Letters of credit and letters of guarantee.

15

Figure 3 – 1: Credit product

3.2 Credit Facilities:

JBL is providing different attractive credit facilities to the different class in society. As credit is the heart of

a bank JBL has felt to develop its credit facilities to the various class of society on their extreme need

3.2.1 Retail Products:

Under the retail banking arena of JBL, the organization is providing some awesome Loan products as

financial facilities. The products are:

3.2.1.1 JBL Home Loan:

Home Loan Scheme has been introduced to facilitate people to fulfill their dream of a home of their

own. It has been designed o help people to get home loans on easy terms and without any hassle.

Planning to own a home is one of life’s most rewarding challenges. Whether it is purchasing a new

house or a new apartment, JBL has a wide range of home loan options that can be customized to

customer’s specific need. An experienced, dedicated team of experts and a complete loan package is in

place, to meet all customers’ housing finance needs. JBL Home Loan helps the customers to fulfill

their dream.

Credit

Products

Retail Corporate SME

1. JBL Home

Loan.

2. JTB Auto

Loan.

3. JBL Personal

Loan.

4. JBL Home

Equity Loan.

1. Term

Finance.

2. Working

Capital Finance.

3. Trade Finance

4. Syndication

& Structured

Finance.

5. Offshore

Banking

1.MTBKrishi.

2.MTBMousumi.5

3. MTB Small

Business.

4.MTB Green

Energy Loan

16

Features:

Aggregation of co-applicant’s income

Competitive interest rates

Quick and simple processing and approval time

Loan for apartment under construction

Partial or early settlement options available

Eligibility:

Any financially able person

Age: minimum 21 and maximum 65 years at loan maturity

For 100% cash covered loan: Age- minimum 18 and maximum 70 years at loan maturity

Minimum Income Range:

Salaried person Tk. 25,000

Self employed Tk. 30,000

Businessperson/Land lord/Land lady Tk. 40,000

Experience

Salaried person : 3 years

Self employed : 3 years

Businessperson : 3 years

Loan Takeover Plan:

An exclusive offer for other bank’s credit worthy customers who can transfer their Home Loan outstanding

to MTB with both preferential interest rate and waiver of processing fees.

Eligibility:

Minimum 12 months loan EMI repayment history with existing bank

Property location and other eligibility criteria of general loan are applicable

Benefits of Takeover Plan:

1% reduced rate from regular interest rate

Additional loan amount facility over takeover amount

No processing fee for takeover loan amount

No processing fee for additional loan amount

Required documents:

Loan application

Applicant’s National ID/Driving License/Passport copy

Photographs of applicants (studio photo)

Salary certificate for salaried person

Trade license for businessperson

Personal and business account statement for last one year

Applicant’s TIN certificate

Copies of all existing loans’ sanction letter and repayment history for last one year

Rental deed for rental income and ownership deed of rented property

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Apartment allotment letter/Deed of agreement/property ownership deed

Other all property related documents’ copy

3.2.1.2 JBL Auto Loan:

A person has desire to own a car to enhance his/her standard of living. JBL has come to help those people

who have kind of dream. JBL offer lucrative interest rates that would pleasantly surprise its customers.

MTB Auto Loans are built for utmost speed and competence. JBL Auto Loan is available for financing both

new and reconditioned cars.

Features:

Loan amounts from Tk. 3,00,000 to Tk. 20,00,000

Financing up to 80% of vehicle price

Flexible repayment of 12 - 60 months

No hidden charges

Competitive interest rate

Easy documentation and quick processing

Option for early settlement

Eligibility:

Age: minimum 21 and maximum 60 years at the end of loan maturity

Experience: Salaried executive total - 2 years

Business person/self employed - 2 years

Monthly income: Minimum Tk. 30,000

Loan Amount EMI schedule

12 24 36 48 60

3,00,000 27,007 14,475 10,327 8,274 7,059

4,00,000 36,010 19,300 13,769 11,032 9,412

6,50,000 58,515 31,363 22,374 17,926 15,294

7,50,000 67,517 36,188 25,816 20,684 17,647

10,00,000 90,023 48,250 34,421 27,578 23,529

15,00,000 1,35,034 72,375 51,632 41,367 35,293

20,00,000 1,80,046 96,499 68,842 55,156 47,057

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3.2.1.3 JBL Personal Loan:

MTBL has providing Personal Loan to its customers to fulfill their little needs with extreme emergency.

Craving to buy a new laptop? Thinking of a wonderful holiday? Need financial assistance for child’s higher

education? Want to purchase home appliances? Require marriage-related expenses? A JBL Personal Loan is

one-stop-solution for all financial needs to fulfill any of desires like above examples. JBL Personal Loan is

simple, convenient and quick.

Features:

Any purpose personal loan for salaried executives, business persons, land lord/ land lady and self

employed individuals

Loan amounts from Tk. 50,000 to Tk. 10,00,000

Flexible repayment option of 12 - 60 months

No hidden charges

Competitive interest rate

Easy documentation and quick processing

Option for early settlement

Eligibility:

Age minimum 21 and maximum 60 years at loan maturity

Experience:

Salaried person : 1 year with 6 months permanent employment status

Self employed : 1 year of practice in the profession

Businessperson : 2 years of involvement in the same nature of business

Minimum monthly income:

Salaried executive Tk. 15,000

Self employed Tk. 30,000

Businessperson/Land lord/Land lady Tk. 40,000

Loan Balance transfer or Take over:

Customers enjoying EMI based personal loan with other banks may enjoy the facility of Loan Balance

Transfer.

Eligibility:

Minimum 6 loan EMI repayment with existing bank

Minimum takeover loan amount is Tk. 200,000 and maximum Tk. 9,50,000


No processing fee for loan takeover or balance transfer

Interest rate will be 1% less than ongoing rate

Approved loan amount may be higher than the takeover loan amount

3.2.1.4 JBL Home Equity Loan:

MTB Home Equity loan provides a packaged financial assistance to individuals for fulfillment of their

dream home. It’s time to get customers’ coveted home by JBL Home Equity Loan.

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Features:

Loan for house construction, extension, renovation, face upliftment, finishing work

Loan amounts from BDT 5,00,000 to BDT 1,00,00,000

Loan tenor from 3 to 25 years

Loan amount up to 80% of the property value

Financing at different stages of construction work

Partial disbursement facility of approved loan

Aggregation of co-applicant’s income

Competitive interest rates

Quick and simple processing and approval time

Partial or early settlement options available

Eligibility:

Any financially able person

Age: minimum 21 to maximum 65 years at loan maturity

For 100% cash covered loan: Age - minimum 18 to maximum 70 years at loan maturity

Minimum Income Range:

Salaried person Tk 25,000

Self employedTk 30,000

Businessperson/Land lord/Land lady Tk 40,000

Experience

Salaried person : 3 years

Self employed : 3 years

Businessperson : 3 years

Loan Takeover Plan:

An exclusive offer for other bank’s credit worthy customers who can now transfer their Home Loan

outstanding to MTB with both preferential interest rate and waiver on processing fees.

Eligibility:

Minimum 12 months loan EMI repayment history with existing bank

Property location and other eligibility criteria of general loan are applicable


1% reduced rate from regular interest rate

Additional loan amount facility over takeover amount

No processing fee for takeover loan amount

No processing fee for additional loan amount

Required documents:

Loan application

Applicant’s National ID/Driving License/Passport copy

Photographs of applicants (Studio photo)

Salary certificate for salaried person

Trade license for businessperson

20

Personal and business account statement for last one year

Applicant’s TIN certificate

Copies of all existing loans’ sanction letter and repayment history for last one year

Rental deed for rental income and ownership deed of rented property

Deed of agreement/property

21

Chapter

Four

A General View of Loan Procedure

22

There is no hard and fast procedure of managing credit, yet is should follow the instructions of the

Bangladesh Bank, Central Bank of Bangladesh and the Circular of Head Office from time to tome. The first

step of credit proceedings is the request for credit from the clients. Then scrutinizing and collection of

information from primary (CIB) and secondary sources take place. Credit appraisal and evaluation is the

most important part of credit management. On the basis of evaluation approval is given by the higher-

authority with certain conditions to be fulfilled. Sanction of credit is done by the sanctioning officer, who

has the authority to sanction the Credits. After fulfilling the conditions the credit is disbursed. Credit

monitoring and reviewing start from the time of disbursement. In case of fault of repayment bank has some

distinct rules of legal action to fix the problem

Figure: 4-1 Loan product

4.1 Requests from the Client

Bank provides credit facilities to the people who are credit worthy to the bank. Credit worthiness depends

on the credibility, financial capability, and feasibility of the project and management ability of the credits to

earn profits. When bank is satisfied with all these then the client is provided with the requested credit. At

this point it should be mentioned that the client has to go through an interview where his credit potentiality

is justified through critical observation. When credit officer is satisfied with the customer he is asked to

submit an application and to fill up a form with specific details.

Request from the Client

Scrutinizing & Collection of Information

Disbursement of Credit

Sanction of Credit Mentioning Terms and Condition

Credit Apprising & Presentation of Credit Proposal for Approval

Approval of Credit

Credit Administration

Credit Monitoring and Classification of Accounts

Taking Precaution/ Legal Action against Delinquent Clients

23

4.1.1Credit Application:

Completeness of information can best be obtained by requesting the applicant to fill out a comprehensive

application. Psychological attitudes toward the seriousness of credit obligations are improved when the

application is rather formal and complete.

When the customer fills in the application, it is well for the interviewer to look over the form and to provide

supplemental information, which will assure completion of the blanks not filled in, or which probes more

deeply into the questionable areas. It is well to provide space on the form for the recording of more

information after the customer has left. Points in favor of having the applicant fill out the form is that fewer

skilled credit personnel are necessary and that more customers can be accommodated in the same space.

4.1.2 Submission of Application:

The borrower are provided with an instruction paper, which help him or her to prepare the loan proposal

properly

Information for loan application should be furnished in prescribed First Information Sheet (FIS) in

triplicate in each page / set should be duly sealed and signed by the applicant(s)/ sponsor(s).

Complete information should be furnished in respect of each item supported by documentary evidences,

wherever necessary, to avoid further reference / delay/ rejection of the application.

The Bank reserves the right to reject the application forthwith if the information given in the form is

incomplete and not fully documented in all respects.

Information may provide in additional sheet of papers, if required .How ever also ensure that all the fact

/ evidences has been enclosed properly including three feasibility reports/detailed study reports on loan

proposal.

The client are required to deposit with the application the project examination fee and also apportion of the

equity at the following rate either by cheque or pay order or demand draft drown in favor of Mutual Trust

and payable in any scheduled Banks within the country.

Memorandum and Articles of Association together with the certificate of registration /incorporation

commencement of business of the company duly certified by the managing director of the company

should be submitted.

No objection certification from the appropriate authorities for setting up the project on land wherever

required should be submitted. Title deed of land, together with non-encumbrance certificate from the

District Register or Sub- Register should be submitted.

Certificates from the surveyor for determining the price of land of the project /price of adjacent land

sold during last three years should be submitted. Also to be submitted are site/ mouza map.

Machinery layout plan, price quotation of three suppliers together with illustrated brochures and

literatures should be submitted for both import and local machinery.

Consent letter from Power Development Board / Rural Development Board/ Gas Authority / Pollution

Control Board should be submitted whatever required.

Soil Test / Water Test report (if required).

Nationality certificate along with attested passport size photographs of the directors/ partners /

proprietor should be submitted.

Declaration of asset and liability of the proposed directors / partners/ proprietor.

24

Declaration of payment of income tax should be submitted.

Letter of prime banker of the company/ firm/ person should be issued with a copy to the Mutual Trust

Bank as per given annexure.

Give reason for seeking additional loan for expansion/ balancing/ repayment/ of the existing unit. Also

provide information relating to existing line of products, rated/ actual/annual production capacity for the

past operation years, sales performance and financial position of the company.

4.2 Scrutinizing and Collection of information

This is one of the most important parts of the loan procedure to collect information of clients to verify

giving loan to them. Generally this portion is done by collecting CIB report from Bangladesh Bank.

However information are gathered in two ways:

a. Direct Inquiry:

Direct inquiry is one of the common methods of obtaining information to verify facts presented on the

application of during the interview of an applicant for an initial credit transaction. A careful distinction is

made between obtaining credit information directly form sources having such facts and between buying

somewhat similar credit data in the form of prepared reports from the credit reporting bureaus and agencies.

b. In-file ledger fact:

In-file ledger facts are one of the most important sources of information available to credit committee

whether to accept or reject a larger amount of credit from an established credit customer. From the in-file

records, credit analysts have at their disposal the experience of the concern with the customer. They know

the customer's payment habits, the complaints registered, and the collection efforts, if needed to keep the

customer in line with the established terms.

4.3 Credit Apprising & Presentation of Credit Proposal for Approval

When credit officer is satisfied with his credit worthiness, financial capability, management ability and

feasibility of the project through credit appraisal of clients in a prescribed form, he can hope for credit from

the bank. Credit appraisal is done through 'credit appraisal form'. Ratio analysis is give importance in case

of project finance. But most of the medium quality loans are given on the basis of financial capability of

repaying and credit worthiness of the client. Lending risk analysis is done in a prescribed form in case of

large amount of loan, above 50 Lac.

Credit officer prepares a credit proposal along with the prescribed 'Credit Proposal Form'. Credit officer

measures the risk associated with the credit facility. No credit proposal can be put for approval unless there

has been a complete written analysis. It is absolute responsibility of the Proposing Officer to ensure that all

necessary proposal documentation have been collected before the facility request is sent to the Sanctioning

Officer.

4.4 Approval of Credit

4.4.1 Branch credit committee:

It is to be headed by the Branch Manager, other members to be selected by the manager in consultation with

Head Office

4.4.2 Head Office credit committee:

Head office credit in accordance with authority established and delegated by the Board of Directors.

25

Reviewing, analyzing and approving extension of credit in accordance with authority established and

delegated by the Board of Directors.

Evaluate the quality of tending staff in the bank & take appropriate steps to improve upon.

Recommending credit proposal to the Executive Committee/Board of Directors which are beyond the

delegated authority.

Ensuring, that all elements of Credit application i.e. Forms, Analysis of statements and other papers

have been obtained and are in order.

Confirming that the transaction is consistent with existing loan policy and Bangladesh Bank guidelines & if

not the Committee may prepare a recommendation form an exception to or change in policy for

consideration by the Executive Committee/Board of Directors

4.4.3 Executive committee:

Approving credit facilities as delegated by the Board of Directors.Supervising the implementation of the

directives of the Board of Directors.Reviewing of each extension of credit approval by the Head Office

Credit Committee/Managing Director. Keeping Board of Directors informed covering all these aspect.

4.4.4 Board of Directors:

After establishing overall policies and procedures for approving and reviewing credits, delegating authority

approves and review credits. Approving credit for which authority is not delegated. Approving all

extensions of credit which are contrary to bank's written credit policies.

Most important step of providing credit facility is the sanctioning of credit. Because sanctioning authority is

responsible for any discrepancy. In this step all the documentation is completed and the customer is sent an

advising letter for the credit facility along with all the terms and conditions.

Norms maintained in sanctioning of credits are described below

Credit will be sanctioned and disbursed strictly in terms of the approved Credit Operational Manual of

the Bank and Head Office Circulars issued from time to time.

All norms informed through the Circulars of Credit Division in particular and all other relevant circulars

in general, which are to be followed meticulously while exercising power.

Credits will be subject of Bangladesh Bank restriction.

The party to whom credit will be allowed should be as far as possible within the command area i.e. Area

of operation of the Branch. Deviations, if any are to be explicitly explained in the proposal.

No Sanctioning Officer can sanction any credit to any of his/her near relations and to any firm/company

where his relations have financial interest. Such cases should be sent to the Head Office.

All Sanctioning Officers maintain a Sanctioned Register for recording serially all the credits sanctioned

by him. Sanctioning officer will accountable for non-recovery due to his injudicious decision.

All approval of credit facilities must be conveyed under dual signature. Ideally both the signatories must

have the required lending authority. If however, two lending officers of the required lending are not

available, one of the signatories must have the required authority.

4.6 Disbursement of Credit

Disbursement of credits presupposes observance of all norms and procedures, which are conveyed through

different Circulars of Head Office, issued from time to time.

The disbursement procedures or timing of disbursement depend on the client or the progress of work of the

construction. The disbursement can be made two or three stage or more depending on the above conditions.

26

Mode of Repayment:

The loan shall be adjusted by monthly installment basis. The repayment will start from months of the date

of first disbursement ( it may charge according to the terms and conditions of the agreement.

Collateral:

The land and the construction on the land are normally given as collateral. It no changes-

Charge documents to be obtained:

a) DP note

b) Letter of disbursement

c) Letter of Installment

d) Letter of guarantee

e) Letter of undertaking

f) Latter of agreement

g) Irrevocable general power of attorney

h) Memorandum of deposit of title deed

4.6 Credit Administration and File Maintenance

The credit file for each facility shall contain all information necessary to facilitate ready monitoring of that

facility. It should contain a through history of the customer relationship to help credit officer': track any

problems, assist a newly assigned credit officer in understanding the customer and make the lending process

transparent. Primary items in Credit File include: A popular disbursement procedure is essential for

implementing a project, small or big, within the essential time or cost. However the constant monitoring of

the projects on the one hand and timely mobilizing the equity on the other hand cannot be under estimated

for efficient implementation of a project. The following factors are taken into account.

After machinery contract is finalized the bank will open irrevocable letter of credit on behalf of the

borrower in the joint name of the bank and the borrower.

Disbursement of the foreign currency loan is made automatically as soon as irrevocable letter of

credit for import of machinery is established and the foreign supplier makes shipment of

machinery.

The local currency loans are to be made available to the project after satisfactory and full utilization

of equity by the borrowers by creating by required physical facilities (tangible asset) for the project.

The sponsor has to request for release of local currency loan to the bank supported to the paper like

progress report, statement of account, documents.

The local currency loan of the bank to be disbursed in one or more installment according to the

nature of the project.

The borrower must use the loan for the purpose for which the advance is extended.

The borrower shall apply the proceeds of the loan exclusively to finance the cost of the goods and

services required to carry out the project. Foreign currency shall be disbursed only for goods and

services that have neither been paid for in Bangladeshi currency not were produced in.

If the completion of the project or its successful operation is hindered or delayed because the fund s

available are inadequate to ensure its completion. It should be the responsibility of the borrower to

27

make prompt arrangements in accordance with financial plan approved by the bank to provide the

necessary fund.

Credit application and Credit approval notes/analysis. Evidence of credit approval and data upon

which approval was granted together with any comments, if appropriate.

Copy of sanction and loan agreement. A checklist along with copies of all legal & banking

documents obtained / to be obtained. Details and 6 monthly updated information of all related

facilities to the name customer group,

All supporting data such as financial statements and analysis, references, credit investigation results,

CIB & other Bank reports and notes of all discussions with the borrower and other relevant parties

with paper clipping.

Correspondences call reports, site visit reports, stock report etc. each credit file shall be maintained

in a secured location and where access restricted to authorized personnel's only. Copies of the

information may be kept where regular access is required.

4.7 Credit Monitoring and Reviewing

It is the responsibility of the Manager to monitor the over all profile and risk aspect of the credit

portfolio in accordance with the criteria set down in the Bank Credit Policy. Such monitoring shall be

evidenced from the comments of the Manager in monthly Call/Visit Report and be kept in the Credit

File with a copy to the Head Office.

This Review shall be formally performed at intervals prescribed by Head Office but it is the

responsibility of the Manger to ensure at all times that the credit portfolio meets the standard set forth by

the Bank.

4.7.1 Factor Analyzed in the Loan Mentoring

Credit policy of the Mutual Trust Bank Limited has set forth the guideline that must be followed in

the time of loan review. After getting the review of the loan portfolio from the branch level the

assigned officer of the head office credit department state stated the analyzing and preparing the

report. The following factors are taken into consideration at the time of monitoring the loan and

advance.

The account has not excess over limit

The terms and condition of the sanction letter are strictly followed

The value of the collateral security of the loan is adequate

There is not any unfavorable situation in market, economy and political conditions, which may

endanger the reliability of the borrower account

The analysis of the borrower’s business performance and comparison of the projected and

actual to find any deviations.

4.8 Steps against Delinquent Clients

When a problem loan is detected the responsible loan officer takes the corrective action and tries to

minimize the loan losses by allowing different facilities to the client. The steps are followed by the Mutual

Trust Bank to manage the clients are:

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4.8.1 Persuasion:

This is to step practice at Mutual Trust Bank to manage the problem loan. This step involves:

Open discussion with the borrower

Discussion with third party to find out the underlying reasons.

Issuing the “1st Reminder” letter of inform the due date and due installments.

If the party does not respond issuing the “2nd

Reminder” and then “3rd

Reminder” letter.

4.8.2 Negotiation:

If the percussion failed, the loan officer negotiated a plan of action with the borrower to save both the bank

and the borrower from possible loss. This calls for certain sacrificing on the part of the bank and borrower

in their mutual interest. The plan of action in JanataBank consists of the following:

Revise the loan agreement

Concession of interest (If the client is difficult to manage)

Reschedule of the loan and giving installment facility to repay the overdue amount beside the

regular installment.

4.8.3 Litigation:

If the client failed to repay the loan even after rescheduling the loan, Mutual trust bank goes for the taking

the legal action against the delinquent client to recover the loan. The branch manager sent a letter to the

head office credit department informing the borrower’s reluctance to repay the loan. Following measure is

taken:

Filing case against the client

Assigning the loan officer for assisting the lawyer.

The Branches will submit a monthly statement of the credits allowed under the discretionary powers of the

Manager to the Head Office irrespective whether the same are outstanding or not on the date of return.

The responsibility for review and classification of credit facilities starts at Branch level. The frequency of

the supervision and monitoring depends on the classification of credits

29

Chapter

five

Credit Risk Management

30

The Credit Risk Management Division is vital for the efficient functioning of JBL. It critically scrutinizes

the credit proposals from risk weighted point of view before sanctioning approvals ensuring a high quality

credit portfolio. The goal of credit risk management is to maximize a bank's risk-adjusted rate of return by

maintaining credit risk exposure within acceptable parameters. Banks need to manage the credit risk

inherent in the entire portfolio as well as the risk in individual credits or transactions.

Credit Risk:

Credit risk is the possibility of failure of a borrower to meet agreed obligation. With the present days de-

regulation and globalization, the bank’s range of activities has increased. Expansion of the bank’s lending

operations, covering a risk areas and therefore to work out robust credit risk management policy.

At JBL, credit risk may arise in the following forms –

Default Risk

Exposure Risk

Recovery Risk

Counter Party Risk

Related Party Risk

Legal Risk

Political Risk

To mitigate credit risks, following measures are in place at JBL:

(a) Mission, Vision and objectives

(b) Credit principles

(c) General policy guidelines in conformity with BB guidelines and industry best practices.

(d) Rigorous credit process

(e) Sector wise lending caps

(f) Lending policy and strategy to different areas

(g) Collecting CIB of BB.

(h) Critical assessment of repayment capacity in pre-investment analysis stage

(i) Credit Risk Grading of the client

(j) Provision for Insurance coverage

(k) Taking Collaterals

(l) Annual credit review

(m) Vigorous monitoring follow up

(n) Periodic review of market situation and industry exposure

Credit Principles:

In managing credit risk effectively JBL:-

Maintains a judicious ratio between Loan and Deposit

Pursues a credit that aims at credit expansion by maintaining credit quality

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Does not compromise with standards of excellence

Ensures that all credit extensions comply with regulatory norms, prevailing laws, rules and

regulations

Extends credit facilities in such a manner that each extension become rewarding and ensures

superior return on capital

Extends credit facility upon adequate pre-investment analysis and repayment capacity of the client

Avoids credit concentration through rational diversification of credit

Avoid name lending. Credit is allowed on business consideration, after ascertaining viability, credit

requirement, and quality of advance, security offered, cash flows and risk level

Credit risk management is processed through various steps but mainly it is performed in four key parts.

These are -

Figure 4-2:

Credit Risk

Management Process (4 key Parts)

These parts are performed through different steps starting from the collection obligors’ data to disbursement

throughout various calculations, and then monitoring transaction through creating loan classification and

provisioning and at last process of recovery. An important part of credit risk management is to measure it.

This requires a credit assessment of loan applicants. The bank employ credit analyst who review the

financial information of a corporation applying for loans and evaluate their creditworthiness. The evaluation

should indicate the possibility of that a firm meet its loan payment so that the bank can decide whether to

grant the loan. A brief description of Credit Risk Management from BB context is the main subject matter

of this section.

5.1 Credit Analysis

The term credit analysis is used to describe any process for assessing the credit quality of the borrower or

obligor. While the term can encompass credit scoring, it is more commonly used to refer to processes that

entail human judgment. One or more people, called credit analysts, will review information about the

counterparty. This might include its balance sheet, income statement, recent trends in its industry, the

current economic environment, etc. They may also assess the exact nature of an obligation. For example,

secured debt generally has higher credit quality than subordinated debt of the same issuer. Based upon this

analysis, the credit analysts assign the borrower (or the specific obligation) a credit rating, which can be

used for making credit decisions.

Credit Analysis

Credit Disbursement

Credit Monitoring

Credit Recovery

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When a customer requests for a loan, bank officers analyse all available information to determine whether

the loan meets the bank’s risk-return objectives. Credit analysis is essentially default risk analysis in which

a loan officer attempts to evaluate a borrower’s ability and willingness to repay. In accordance with BB

guidelines here are steps briefly discussed -

5.1.1 Lending Guidelines:

In credit analysis part, at first the loan officers/ risk managers have to judge the collected information

through credit application from the RM (relationship manager) according to lending guidelines i.e. the credit

policies of the banks. These policies should include the following:

Industry and business segment focus - where a clear identification of the business/industry should be

provided so that it constitutes the majority of the bank’s loan portfolio.

Types of loan facilities – a clear identification of the types of loan that should be permitted.

Single Borrower/Group Limits/Syndication - details of the bank’s Single Borrower/Group limits

should be included as per Bangladesh Bank guidelines.

Lending Caps - Banks should establish a specific industry sector exposure cap to avoid over

concentration in any one industry sector.

Discouraged Business Types - Banks should outline industries or lending activities that are

discouraged. For example, as a minimum, the following should be discouraged

o Military Equipment/Weapons Finance

o Highly Leveraged Transactions

o Finance of Speculative Investments

o Logging, Mineral Extraction/Mining, or other activity that is ethically or environmentally

sensitive

o Lending to companies listed on CIB black list or known defaulters

o Counterparties in countries subject to UN sanctions

o Share Lending

o Taking an Equity Stake in Borrowers

o Lending to Holding Companies

o Bridge Loans relying on equity/debt issuance as a source of repayment.

Loan Facility Parameters - facility parameters (e.g., maximum size, maximum tenor, and covenant

and security requirements) should be clearly stated.

Cross Border Risk - Borrowers of a particular country may be unable or unwilling to fulfill principle

and/or interest obligations. It is distinguished from ordinary credit risk because the difficulty arises

from a political event, such as suspension of external payments, synonymous with political

33

&sovereign risk and Third world debt crisis. For example, export documents negotiated for countries

like Nigeria.

5.1.2 Credit Assessment:

In Credit risk assessment, RMs originate all the assessment results in the form of Credit Application prior to

the granting of loans, and at least annually thereafter for all facilities which is approved by the CRM. The

RM is held the owner of the customer relationship, and responsible to ensure the accuracy of the entire

credit application submitted for approval. RMs must be familiar with the bank’s Lending Guidelines and

should conduct due diligence on new borrowers, principals, and guarantors. All banks should have

established Know Your Customer (KYC) and Money Laundering guidelines which should be adhered to at

all times.

Credit Applications should summaries the results of the RMs risk assessment and include, as a minimum,

the following details:

o Amount and type of loan(s) proposed.

o Purpose of loans.

o Loan Structure (Tenor, Covenants, Repayment Schedule, Interest).

o Security Arrangements.

In addition, following risk areas are also addressed-

o Borrower Analysis - The majority shareholders, management team and group or affiliate companies

should be assessed.

o Industry Analysis - Any issues regarding the borrower’s position in the industry, overall industry

concerns or competitive forces should be addressed and the strengths and weaknesses of the borrower

relative to its competition should be identified.

o Supplier/Buyer Analysis - Any customer or supplier concentration should be addressed, as these could

have a significant impact on the future viability of the borrower.

o Historical Financial Analysis - An analysis of a minimum of 3 years historical financial statements of

the borrower should be presented. The analysis should address the quality and sustainability of earnings,

cash flow and the strength of the borrower’s balance sheet. Specifically, cash flow, leverage and

profitability must be analyzed.

o Projected Financial Performance - A projection of the borrower’s future financial performance should

be provided for the term facilities (tenor > 1 year), indicating an analysis of the sufficiency of cash flow

to service debt repayments, insufficient projected cash flow for repaying debts will not be granted.

o Account Conduct - For existing borrowers, the historic performance in meeting repayment obligations

(trade payments, cheques, interest and principal payments, etc) should be assessed.

o Adherence to Lending Guidelines - Credit Applications should clearly state whether or not the proposed

application is in compliance with the bank’s Lending Guidelines which should be approved by the

Bank’s Head of Credit or Managing Director/CEO.

o Mitigating Factors - Mitigating factors for risks identification in the credit assessment should be

identified. Possible risks include, but are not limited to: margin sustainability and/or volatility, high debt

load (leverage/gearing), overstocking or debtor issues; rapid growth, acquisition or expansion; new

34

business line/product expansion; management changes or succession issues; customer or supplier

concentrations; and lack of transparency or industry issues.

o Loan Structure - The amounts and tenors of financing proposed should be justified based on the

projected repayment ability and loan purpose. Excessive tenor or amount relative to business needs

increases the risk of fund diversion and may adversely impact the borrower’s repayment ability.

o Security - A current valuation of collateral should be obtained and the quality and priority of security

being proposed should be assessed. Loans should not be granted based solely on security. Adequacy and

the extent of the insurance coverage should be assessed.

o Name Lending - Credit proposals should not be unduly influenced by an over reliance on the sponsoring

principal’s reputation, reported independent means, or their perceived willingness to inject funds into

various business enterprises in case of need.

These situations should be treated with great caution. Rather, credit proposals and the granting of loans

should be based on sound fundamentals, supported by a thorough financial and risk analysis.

5.1.3 Risk Grading:

Risk grading is a key measurement of a Bank’s asset quality and as such, it is essential that grading is a

robust process. All facilities should be assigned a risk grade. Where deterioration in risk is noted, the Risk

Grade assigned to a borrower and its facilities should be immediately changed. Borrower Risk Grades

should be clearly stated on Credit Applications.

Credit risk grading is an important tool for credit risk management as it helps the Banks & financial

institutions to understand various dimensions of risk involved in different credit transactions. The

aggregation of such grading across the borrowers, activities and the lines of business can provide better

assessment of the quality of credit portfolio of a bank or a branch. The credit risk grading system is vital to

take decisions both at the pre-sanction stage as well as post-sanction stage.

At the pre-sanction stage, credit grading helps the sanctioning authority to decide whether to lend or

not to lend, what should be the loan price, what should be the extent of exposure, what should be the

appropriate credit facility, what are the various facilities, what are the various risk mitigation tools to

put a cap on the risk level.

At the post-sanction stage, the bank can decide about the depth of the review or renewal, frequency

of review, periodicity of the grading, and other precautions to be taken.

In this risk grading tool, credit applicant’s aggregate risk factors are graded after grading and scoring each

risk factors. Here is a table of risk grading and how the risk grading is

Grading Short Name Number

Superior SUP 1

Good GD 2

Acceptable ACCPT 3

Marginal/Watch list MG/WL 4

35

Special Mention SM 5

Sub standard SS 6

Doubtful DF 7

Bad & Loss BL 8

Table 4-5: Scores of different risk grades

The more conservative risk grade (higher) should be applied if there is a difference between the personal

judgment and the Risk Grade Scorecard results. It is recognized that the banks may have more or less Risk

Grades; however, monitoring standards and account management must be appropriate according to the

assigned Risk Grade, the definitions of the risk grades are given in the appendix-B.

5.2 Credit Disbursement

Credit disbursement occurs after assessing all the formal documents like credit application, other business

documents of the borrower, financial sheets, CIB report, CRG score sheet etc. According to BB guidelines

the disbursement procedures take place in the following ways-

Security documents are prepared in accordance with approval terms and are legally enforceable.

Standard loan facility documentation that has been reviewed by legal counsel should be used in all

cases. Exceptions should be referred to legal counsel for advice based on authorization from an

appropriate executive in CRM.

Disbursements under loan facilities are only be made when all security documentation is in place.

CIB report should reflect/include the name of all the lenders with facility, limit & outstanding. All

formalities regarding large loans & loans to Directors should be guided by Bangladesh Bank

circulars & related section of Banking Companies Act. A sample documentation and disbursement

checklist is attached, which banks may wish to use to control disbursements.

After disbursement procedure the approval procedures take place. The approval process must reinforce the

segregation of Relationship Management/Marketing from the approving authority. The responsibility for

preparing the Credit Application should rest with the RM within the corporate/commercial banking

department. Credit Applications should be recommended for approval by the RM team and forwarded to the

approval team within CRM and approved by individual executives. Banks may wish to establish various

thresholds, above which, the recommendation of the Head of Corporate/Commercial Banking is required

prior to onward recommendation to CRM for approval. In addition, banks may wish to establish regional

credit centers within the approval team to handle routine approvals. Executives in head office CRM should

approve all large loans.

5.3 Credit Monitoring:

To minimize credit losses, monitoring procedures and systems should be in place that provides an early

indication of the deteriorating financial health of a borrower. At a minimum, systems should be in place to

report the following exceptions to relevant executives in CRM and RM team:

36

Past due principal or interest payments, past due trade bills, account excesses, and breach of loan

covenants;

Loan terms and conditions are monitored, financial statements are received on a regular basis, and

any covenant breaches or exceptions are referred to CRM and the RM team for timely follow-up.

Timely corrective action is taken to address findings of any internal, external or regulator

inspection/audit.

All borrower relationships/loan facilities are reviewed and approved through the submission of a

Credit Application at least annually.

Computer systems must be able to produce the above information for central/head office as well as local

review. Where automated systems are not available, a manual process should have the capability to produce

accurate exception reports. Exceptions should be followed up on and corrective action taken in a timely

manner before the account deteriorates further. The exception covers the area of Loan Classification and

Provisioning and the Early Alert Accounts if the account deteriorates.

5.3.1 Loan Classification & Provisioning

In order to strengthen credit discipline and bring classification and provisioning regulation in line with

international standard, Bangladesh Bank issued a master circular on loan classification and provisioning

through BRPD circular no 5 dated June 5, 2006. The revised policy covers an independent assessment of

each loan on the basis of objective criteria and qualitative factors which is appended below:

Loan Criteria Loan Classification Loan Classification Requirement

Continuous/

Demand

loan/term

loan

Overdue If not repaid/renewed within the fixed

expiry date for repayment from the

following day of the expiry date.

SMA If remains overdue for 90days or more.

Interest Suspense

Account

Interest accrued on Special Mention

Account (SMA) will be credited to Interest

Suspense Account.

Sub-Standard If it is overdue ≥ 6 months but > 9 months.

Doubtful If it is overdue for ≥ 9 months but > 12

months.

Bad/Loss If it is overdue for ≥ 12 months.

Fixed term

loans (within

5 years)

Defaulted Installment If not repaid within due date.

Sub-Standard If the amount of Default installment is due

≥ 6 months installment.

Doubtful If the amount of installment is due ≥ 12

months.

Bad/Loss If the amount of installment is due ≥ 18

months.

Fixed term

loans (more

than 5 years)

Sub-Standard If the amount of Default installment is due

≥ 12 months installment.

Doubtful If the amount is due within 18 months.

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Bad/Loss If the amount is due within 24 months.

Short term

Agriculture

and Micro-

credit

Irregular If not repaired within due date.

Sub-Standard If the irregular status continues after 12

months.

Doubtful If the status continues for 36 months.

Bad/Loss If the status continues for 60 months.

Table 4-6: Loan classification based on Qualitative factors & Objective criteria

5.3.2 Early Alert Accounts

As a part of ongoing monitoring process, an account may be found to have some weakness, which clearly

indicates the symptom of non-repayment of loan. This type of account should be reported in the Early Alert

Account. The loan accounts excluding micro credit/scheme loan which have potential risk in deteriorating

the quality of the assets and may cause nonpayment of the loans & advances and those loan accounts which

require special care as well as monitoring in order to maintain the quality of the assets, will have to be

reported in the Early Alert Account.

The potential risk may be arisen from the following area:

Industry concern.

Ownership/Management concerns.

Balance sheet weaknesses.

Cash Flow Weaknesses.

Poor Account Conduct.

Expired Limit/Pending Documents.

Therefore, all the credit officers will carefully and constantly monitor all the corporate (Business) clients

who are enjoying credit facility from our bank and while monitoring, if any account is found to be showing

weaknesses which may result in the non-performing of the loan, then immediately treat the account as Early

Alert and accordingly report the same to the Head Office. How and when the account will be treated as

Early Alert is briefly explained in the appendix-C.

5.4 Credit Recovery

The Recovery Unit (RU) of CRM should directly manage accounts with sustained deterioration (a Risk

Rating of Sub Standard (6) or worse). Banks may wish to transfer EXIT accounts graded 4-5 to the RU for

efficient exit based on recommendation of CRM and Corporate Banking. Whenever an account is handed

over from Relationship Management to RU, a Handover/Downgrade Checklist should be completed. The

RU’s primary functions are:

Determine Account Action Plan/Recovery Strategy.

Pursue all options to maximize recovery, including placing customers into receivership or

liquidation as appropriate.

Ensure adequate and timely loan loss provisions are made based on actual and expected losses.

Regular review of grade 6 or worse accounts.

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In RU, the RM experiences the Non-Performing loans. In such cases, assessment of NPLs are executed

though following steps-

NPLs account management- through assigning an account manager who is responsible for

coordinating and administering for action plan/recovery of the account.

Account transfer procedures

NPLs monitoring

NPLs provisioning and write off.

The management of problem loans (NPLs) must be a dynamic process, and the associated strategy together

with the adequacy of provisions must be regularly reviewed. A process should be established to share the

lessons learned from the experience of credit losses in order to update the lending guidelines.

39

Chapter- Six

Research Part

40

6.1 Statement of the Problem

Description the cause of poor&Lake Customer services about Credit Banking department, Loan on interest

and find out the solution of this problem.

6.2 Methodology

6.2.1 Population size

The population size of this study has been consisted of the borrower and employee of Janata Bank Ltd. My

target population is all customer of JBL. The stratified probability sampling approach has been selected for

this study. For collection of primary data survey was conducted in February2013-April 2013.

6.2.2 Sample Frame

The sample frame of this study consists of the clients of Janata Bank Ltd. A total of 40 respondents was

considered .The stratified provability sampling approach was selected for this study.

6.2.3 Duration-90 days

6.3 Analysis of Data

For analysis of data used SSPS & Microsoft Excel in the personal computer. To entry data coding option

was used at the initial stage. The measure of correlation, hypothesis testing, co-efficient, index numbers, and

regression analysis were applied in the analysis of data. In addition, basic statistical techniques of different

measures of central tendency were also used in analyzing data.

6.3.1 Types of Data

In this report, both types of data have been used for analysis-

Qualitative data

Quantitative data

Qualitative data as like the issues, risks of SMEs and practices of CRM and oppositely, statistical data of

different issues and findings of analysis as quantitative data has been used in this report.

6.4 Sources and Collection of Data

The data of this study were collected through questionnaire interview conducted in Janata bank-Uttara

model town corporatebranch,Dhaka.For the secondary sources different articles , research publications, and

internet has also been reviewed.

Both primary & secondary information used for this study:

41

Primary source

Primary sources are the materials upon which other researchers are performed or it can be said the sources

where raw data can be collected. Here, data have been collected through personal observation the employee

& client attitude, behavior and activity during internship program in General banking segment of Uttara

Model town Branch in The JBL. Most of the information was collected from the survey & other senior

employees by recording their answers through face to face interview.

Secondary source

Secondary source interprets and analyzes primary sources. These sources are one or more steps removed

from the event. Secondary sources may have pictures, quotes or graphics of primary sources in them. Some

types of secondary sources include: textbooks, magazines, articles, histories, criticisms, encyclopedias

etc. From secondary following sources were used to collect necessary data:

1) Credit Banking Policy Manual of the Banks.

2) General Banking Instruction Manual of the Banks.

3) Circulars, letters and memos issued by the Banks and regulatory organization i.e. Bangladesh

Bank and Govt.

4) Prudential Guidelines on Credit Risk Management issued by Bangladesh Bank.

5) Annual report of JBL.

6) Annual report of Bangladesh Bank.

7) News papers and journals from websites.

6.5 Budget

Project duration= 90 days

Name Taka

Transportation Cost 900/-

Phone Bill 500/-

Printing Cost 1500/-

Snacks 800/-

Total Expenditure 3700

Table-7: Budgeting for report

6.6 Work Plan

To conduct the report I took 3 months and my work plan is given below:

Week Tasks

1 Week Hypothesis and Questionnaire Development

3 Weeks Survey and Personal Interview

3 Weeks Secondary Data collection

2 Weeks Data analysis and decision making

3 Weeks Report preparation and Submission

Table-8: Work plan of my report

42

6.7 Limitation of the study

The present study was not out of limitations. But as an internee it was a great opportunity for me to know

the banking activities in Bangladesh - especially of JanataBank. Some constraints are appended bellow:

Lack of Information or Data: Adequate and in-depth well-organized information is not available for

access. Though the officials tried to assist, sometimes their working pressure couldn't give me

proper assistance what I needed. There is some information which need special permission from top

level is not always achievable.

Time Constraint: It is something like impossible to cover the entire Loan and Advance Performance

and performance phenomena exploiting a three month time period while an employee or an officer is

awarded with one or two year probationary period to do his or her particular job.

Secrecy of Information: Some of the information needed to explore the current marker scenario of

the company was not disclosed.

Comparison Status: I have had opportunity to compare the General Banking system of the JBL with

that of other contemporary and common size banks. But there was no proper credit banking

information in other bank. So it is difficult to compare every subject of general banking.

Lack of Experience: Though I have prepared many reports before, I had no experience of internship.

So inexperience is one of the main constraints of the study.

Procedure:

For conducting this study personnel were randomly selected from the total personnel. There are four tests in

research. They are follows:

1. Z test

2. T test

In the data analysis I have utilized liker scale, which is consisted of strongly disagree, disagree, neither

agree nor disagree, agree and strongly agree.

Z test is followed in the analysis. Because we know that if there are being more than 30 of sample size, Z

test is accepted. Although in data analysis there are have more than 30 that means 40 of sample size, Z test

is utilized.

Results:

In the measure therewere 40 respondents as sample size of the final size of the study. The findings of the

study are presented graphically and in table from, as well in mathematical analysis in the following parts of

this report.

The responder’s gender:

The total sample size is 40. Out of that 65% of respondents are male and 35% of respondents are female. In

following represented graphically:

43

Chart-2: Gender of responders

The responder’s age:

Out of total respondents divided into four groups, there are (i) 20-30 years, (ii) 30-40 years (iii) 40-50 years

and (iv) more than 50 years. In blowing give graphically presentation of respondents’ age group.

0

5

10

15

20

25

20-30 30-40 40-50 More than 50

Series 3

Series 2

Series 1

Graph-7: responder’s age

44

6.8 HYPOTHESIS TO BE TESTED

For fulfilling the objectives some related hypothesis have been developed for this study:

1. H1: Accuracy of banking records has positive effect on customer satisfaction.

2. H1: The distinctive loan ofInterestrate of JBL draws the attention of customers.

3. H1: The Competitive loan of interest rate meets customer satisfaction.

4. H1: Loan on interestJBL is lower than other competitive Bank

5. H1: Retail Credit System of JBL can develop customer business

6. H1: Credit Committee Of JBLUttara branch is skillful& helpful

7. H1: The employees of JBL always keen to help customers.

8. H1: Staff of Credit section provide trustworthy customers service.

9. H1: Credit system of JBL is effective part on customer satisfaction.

10. H1: Commitment to the customers is the effective method of JBL to attentioncustomers

HYPOTHESIS TESTING

H1 H2 H3 H4 H5 H6 H7 H8 H9 H10

1= Strongly

disagree

2 2 16 7 3 5 1 2 4 3

2= Disagree 5 6 15 10 6 3 3 2 3 5

3= Neither

agree nor

disagree

1 2 1 2 3 2 0 1 5 3

4= Agree 14 13 5 8 12 13 16 14 18 17

5= Strongly

Agree

18 17 3 15 16 17 20 21 10 12

Total 161 157 84 138 152 154 171 180 147 150

Average 4.02 3.92 2.1 3.45 3.8 3.85 4.27 4.5 3.67 3.75

Standard

Deviation

1.20 1.24 1.29 1.51 1.324 1.387 0.985 1.054 1.227 1.23

Z-Cal Value 8 7.47 -1.66 4.13 6.19 6.16 11.35 10.78 6.18 6.41

Table-9: Summary of the Respondents towards hypothesis

45

01. H1: Accuracy of banking records has positive effect on customer satisfaction.

H0: Accuracy of banking records has negative effect on customer satisfaction.

HO: μ = 2.5

HA: μ > 2.5

N = 40

Here = 4.02

σ = 1.20

Z cal= ( – μ)/ (σ/√n) = 8

At 5% level of significance, the value of Z-Distribution table is: Z0.05 = 1.645

Since Z cal>Z tab, the null hypothesis is not acceptable. So at 5% level of significance, it can be said that

Accuracy of banking records has positive effect on customer satisfaction.

Fig-1: Respondents’ view towards accuracy of banking records has positive effect on customer satisfaction

02. H1 The distinctive product and services of JBL draw the attention of customers.

H0: The distinctive product and services of JBLdosen’t draw the attention of customers.

HO: μ = 2.5

HA: μ > 2.5

N = 40

strong disagree

5% disagree 13%

neither agree nor disagree

0%

agree 36%

strong agree 46%

H1

46

Here = 3.92

σ = 1.24

Z cal= ( – μ)/ (σ/√n) = 7.47


Since Z cal<Z tab, the null hypothesis is acceptable. So at 5% level of significance, it can be said that the

distinctive product and services of JBL draw the attention of customers.

Fig-2: Respondents’ view the distinctive product and services of MTB draw the attention of customers.

03. H1: The Competitive interest rate meets customer satisfaction.

H0: The Competitive interest rate does not meet customer satisfaction.

HO: μ = 2.5

HA: μ >2.5

N = 40

strong disagree

6%

disagree 3%


6%

agree 35%

strong agree 50%

H 2

47

Here = 2.1

σ = 1.29

Z cal= ( – μ)/ (σ/√n) = -1.67

At 5% level of significance, the value of Z-Distribution table is : Z0.05 = 1.645


Customers can transact cash quickly.

Fig-3: The Competitive interest rate does not meet customer satisfaction.

04 H1: Credit system of JBL is easier then other competitive Bank

Ho: Credit system of JBL is not easier then other competitive Bank

HO: μ = 2.5

HA: μ > 2.5

N = 40

Here = 3.45

σ = 1.51

Z cal= ( – μ)/ (σ/√n) = 4.13

strong disagree

40%

disagree 37%


4%

agree 12%

strong agree

7%

H 3

48


Since Z cal< Z tab, the null hypothesis is acceptable. So at 5% level of significance, it can be said that the

Competitive interest rate meets customer satisfaction.

Fig-4 Credit system of MTBL is easier then other competitive Bank

05. H1: Retail Credit System of JBL can develop customer business

Ho: Retail Credit System of JBLcan not develop customer business

.

HO: μ = 2.5

HA: μ > 2.5

N = 40

Here = 3.8

σ = 1.324

Z cal= (X – μ)/ (σ/√n) = 6.19


Since Z cal< Z tab, the null hypothesis is acceptable. So at 5% level of significance, it can be said that The

convenient ATM location of JBL represents the attention of customers.

strong disagree

16%

disagree 24%


5%

agree 19%

strong agree 36%

H 4

49

Fig-5: Respondents’ view the convenient Retail Credit System of MTBL can develop customer business

6. H1: Credit Committee Of JBLUttara branch is skillful& helpful

Ho: Credit Committee of JBL Uttara branch is not skillful& helpful

HO: μ = 2.5

HA: μ > 2.5

N = 40

Here = 3.85

σ = 1.387

Z cal= (X – μ)/ (σ/√n) = 6.16


Since Z cal< Z tab, the null hypothesis is acceptable. So at 5% level of significance, it can be said that the

employees of JBL always keen to help customers.

strong disagree

9% disagree 15%


8% agree 30%

strong agree 40%

H 5

50

Fig-6: Respondents’ view the employees of JBL Credit Committee Of MTBL Tongi branch is skillfull&

helpful

7. H1: The employees of JBL always keen to help customers.

H0: The employee of JBL does not always keen to help customers.

HO: μ = 2.5

HA: μ > 2.5

N = 40

Here X = 4.27

σ = 0.985

Z cal= (X – μ)/ (σ/√n) = 11.35


Since Z cal>Z tab, the null hypothesis is not acceptable. So at 5% level of significance, it can be said that staff

of Cash section provide trustworthy customers service.

strong disagree

8% disagree 8% neither

agree nor disagree

6%

agree 34%

strong agree 44%

H 6

51

Fig-7: Respondents staff of The employees of JBL always keen to help customers.

8. H1: Staff of Credit section provide trustworthy customers service.

H0: Staff of Creditsection does not provide trustworthy customers service

HO: μ = 2.5

HA: μ > 2.5

N = 4o

Here X=4.5

σ = 1.054

Z cal= (X – μ)/ (σ/√n) = 10.78



faster remittance service is efficient method of JBL customer’s satisfaction.

strong disagree

4%

disagree 7%


0%

agree 40%

strong agree 49%

H 7

52

.

Fig-8: Respondents’ view towards Staff of Credit section provide trustworthy customers service

9. H1: Credit system of JBL is effective part on customer satisfaction.

H0: Credit system of JBL is not effective part on customer satisfaction.

HO: μ = 2.5

HA: μ > 2.5

N = 40

Here X= 3.675

σ = 1.227

Z cal= (X – μ)/ (σ/√n) = 6.18



online banking of MTB is effective part on customer satisfaction.

strong disagree

5% disagree

5%


4%

agree 34%

strong agree 52%

H 8

strong disagree

10% disagree 8%


12%

agree 45%

strong agree 25%

H 9

53

Fig-9: Respondents’ view towards Credit system of JBL is effective part on customer satisfaction

10. H1: Commitment to the customers is the effective method of JBL to attention customers.

H0: Commitment to the customers is not the effective method of JBL to attention customers.

HO: μ = 2.50

HA: μ > 2.50

N = 40

Here X = 3.75

σ = 1.235

Z cal= (X– μ)/ (σ/√n) = 6.41



commitment to the customers is the effective method of JBL to attention customers.

Fig-10: Respondents’ view towards commitment to the customers is the effective method of JBL to

attention customers.

strong disagree

9% disagree 13%


8%

agree 43%

strong agree 30%

H10

54

In my research part I have also done Regressions by SPSS. In my research are given bellow.

Interpretation:

We would like to say our variable is

Dependable:

Loan on interest rate

In dependable:

1. Customer satisfaction

2. Credit system.

Regression:

Regression is the measure of average relationship between two or more variable in terms of original units

of data.

Expected mean and standard deviation:

Descriptive Statistics

Mean

Std.

Deviation N

Loanon interest

rate 3.1250 .88252 40

customer

satisfaction 3.9313 .63546 40

credit system 3.9500 .71830 40

In my linear regression loan on interest rate is low and credit system is high. standard deviation measure the

variability of individual variables. Standard deviation is low in customer satisfaction. So customer

satisfaction is less risky with more expected mean. So customer satisfaction is acceptable.

55

Covariance and correlation:

Correlations

Loanoni

nterestrat

e

customer

satisfactio

n

credit

system

Pearson

Correlation

Loanoninterestrate 1.000 -.045 .069

Customersatisfacti

on -.045 1.000 .292

Creditsystem .069 .292 1.000

Sig. (1-tailed) Loanoninterestrate . .391 .337

customer

satisfaction .391 . .034

credit system .337 .034 .

N Loanoninterestrate 40 40 40

customer

satisfaction 40 40 40

credit system 40 40 40

Coefficient Correlations (a)

Mode

l

credit

system

customer

satisfactio

n

1 Correlation

s

credit system 1.000 -.292

customer

satisfaction -.292 1.000

Covariance credit system .044 -.015

customer

satisfaction -.015 .056

a Dependent Variable: loanoninterestrate

Covariance and correlation measure how to variables are randomly related. It measures the positive or

negative related to other variable. In these case loan on interest and credit system are positive correlation

each other but customer satisfaction is negative correlation with loan on interest rate and credit system. In

the same way model 1 customer satisfaction is negative correlation compare with credit system. Covariance

is also a positive relation with credit system and negative relation with customer satisfaction.

Multiple R

Multiple regressions is the model that define, relation between dependable variable (y) and one or more in

in dependable variable (x). When regression occurs in one variable, it is called simple regression and when

it occurs more than two (2) it is called multiple regressions.

R square:

56

A statistical measure that represents the percentage of a fund or security's movements that can be explained

by movements in a benchmark index.

R2 is simply the square of the sample correlation coefficient between the outcomes and their predicted

values, between the outcomes and the values of the single regressions being used for prediction.

Model Summary(b)

Mode

l

R R Square

Adjusted

R Square

Std. Error

of the

Estimate Change Statistics

R Square

Change

F

Change df1 df2

Sig. F

Change

R Square

Change

F

Change df1 df2

1 .097(a) .009 -.044 .90181 .009 .175 2 37 .840

a Predictors: (Constant), credit system, customer satisfaction

b Dependent Variable: loanon interest rate

ANOVA(b)

Mode

l

Sum of

Squares df

Mean

Square F Sig.

1 Regressio

n .284 2 .142 .175 .840(a)

Residual 30.091 37 .813

Total 30.375 39

a Predictors: (Constant), credit system, customersatisfaction

b Dependent Variable: loanoninterstate

An ANOVA is an analysis of the variation present in an experiment. It is the test of hypothesis that the

variation in an experiment is no greater than that due to normal variance of individuals characteristics and

error in their measurement. The test in ANOVA are based on the F- ratio, thevariation due to experimental

error. The hypothesis is reject if the F-ratio is significally large enough that that the possibility of it

equaling1.0 is smaller than somepre- assigned criteria such as .05.

So in my hypothesis is smaller and it is .175. So it is acceptable.

Multiple regressions:

Multiple R 0.097

R Square 0.009

http://en.wikipedia.org/wiki/Pearson_product-moment_correlation_coefficient

57

Multiple R: Our regressions result is very near from the 1. So there is a very higher positive correlation

between dependable and in dependable variable.

R square: R2 value is .009 It almost near 0. So there is a less possibilities correlation coefficient between

the outcomes and their predicted values.

Coefficient:

This model define is a statistics model its main purpose is the prediction of future outcomes on the basis of

other related information. An R2 near 1.0 indicates that a regression line fits the data well, while an R

2

closer to 0 indicates a regression line does not fit the data very well.

Coefficients X Variable 1 credit system= 1.00

X Variable2 customer satisfaction= -.292

Coefficient: In these regression changes credit system is 1.00 and customer satisfaction is-.292 against one

(1) unit of loan on interest rate. This data does not fit very well. Because R2

is very close to the 0.

Coefficients(a)

M

o

d

el

Unstanda

rdized

Coefficie

nts

Stand

ardize

d

Coeffi

cients t Sig.

95%

Confidence

Interval for

B

Corre

lation

s

Collinea

rity

Statistic

s

B

Std.

Error

Be

ta

Lowe

r

Boun

d

Upper

Bound

Zero-

order Partial

Pa

rt

Tole

ranc

e

VI

F B

Std.

Erro

r

1 (Consta

nt) 3.081 1.063 2.899 .006 .927 5.234

custome

r

satisfact

ion

-.099 .238

-

.07

1

-.417 .679 -.580 .382

-

.04

5

-

.068

-

.06

8

.9

15

1.09

3

credit

system .110 .210

.08

9 .522 .605 -.316 .536

.06

9 .086

.08

5

.9

15

1.09

3

a Dependent Variable: loanoninterestrate

Beta. Beta is a systematic risk. It cannot be divert. It always measure the total market risk. Total market risk

is one(1). In this regressions customer satisfaction beta is -.071. It means less possibilities to profit against

less risk. On other other hand Credit system beta is .081. It is close one. It is ideally absolute possibilities to

profit with actual risk.

http://en.wikipedia.org/wiki/Pearson_product-moment_correlation_coefficient

58

Findings

Findings according to the respondents’ opinion toward hypothesis:

1. At 35% of respondents agree; 45% of respondents are Strongly Aggree and 12.5% of respondents

are disagreed that accuracy of banking records has positive effect on customer satisfaction.

2. At 2.4% of respondents disagree; 5% of respondents are neither disagree nor agreed that the

distinctive product and services of JBL draw the attention of customers.

3. At 40% of respondents strongly dis agree and 37.5% of respondents are disagree and 7.5% of

respondents are strongly agreed that competitive interest rste cannot customer satisfaction.

4. At 20% of respondents agree and 37.5% of respondents are strongly agree and 25% of respondents

are disagree that credit system of JBL is not easier then other bank .

5. At 30% of respondents agree and 40% of respondents are strongly agreed and 7.5% of respondents

are neither disagree nor agreed that the Credit system of JBL can develop customer service.

6. At 30% of respondents agree and 40% of respondents are strongly agreed and 7.5% of respondents

are neither disagree nor agreed that Credit Committee JBL Is skill & helpful .

7. At 35% of respondents agree and 52.5% of respondents are strongly agreed and .04% of respondents

are neither disagree nor agreed that Staff of JBL always keen to customer help.

8. At 45% of respondents agree and 25% of respondents are disagreed and 12.5% of respondents are

neither disagree nor agreed that staff credit committee give trustworthy service

9. At 45% of respondents agree and 12.5% of respondents are disagreed and 25% of respondents are

strongly agreed that Credit system of JBL is effective part on customer satisfaction.

10. At 42.5% of respondents agree and 30% of respondents are strongly agreed and 7.5% of respondents

are neither disagree nor agreed that commitment to the customers is the effective method of JBL to

attention customers.

59

7.2 Recommendation

Although every hypothesis have accept alternative hypothesis, some of customer do not agree. So based on

my experience, I would like to put my some recommendations:

1. Janata Bank should be increasing their Credit Monitoring speed.

2. Should be design for summarize the financials and necessary information of the clients

3. Janatacan be flexible their interest rate.

4. Janata Bank should be easier the Credit system then other competitive Bank.

5. The Credit system of JBLmaybe more helpful for develop their Customer business

6. The employee of Credit committee of JBL Try to develop their system

7. Credit committeecan try keen to customer service

8. Credit department service can be faster with honesty.

9. Credit service can be efficient

10. Sufficient Workforce & allocate a standard Risk Assessment time

8.1. Conclusion

As an organization Janata Bank Limited has earned the reputation of top banking operation in Bangladesh.

The organization is much more structured compared to any other public commercial bank in Bangladesh. It

is relentless in pursuit of business innovation and improvement. It has a reputation as a partner of consumer

growth.

With a bulk of qualified and experienced human resource, Janata Bank Limited can exploit any opportunity

in the banking sector. It is pioneer in introducing many new products and services in the banking sector of

the country. Moreover, in the overall-banking sector, it is unmatched with any other banks because of its

wide spread branch networking thought the country.

The current situation of Janata bank Limited is satisfactory. But in the age of competition if the bank does

not provide extra ordinary that means superior services than it will be difficult to continue banking because

every body wants to maintain quality. In general banking portion Janata Bank Limited has some problem.

On the other hand in Ratios – liquidity, efficiency and leverage ratio of Janata Bank Limited is satisfactory

which indicates better position of Janata Bank Limited. But profitability ratio of the bank is not satisfactory

so Janata Bank Limited should take necessary steps to beat the overall problem as early as possible. And

when Janata Bank Limited is able to overcome this type of problem then it would be more structured

compared to any other bank operating local or foreign in Bangladesh.

60

9.1. Bibliography

1. Annual report 2010, Janata Bank Limited, Dhaka,

2. www.Janatabank.com

3. BB policy Guidelines for GB.

4. JBL’s internal documents of GB.

5. www.reportinternee.com

6. Working Report of Credit Policy with CRM guideline

Appendix

BB-Bangladesh Bank

CRM-Credit Risk Management

SMA - Special Mention Account

NPL - Non Performing Loan

FSS - Financial Spread Sheet

KYC - Know Your Customer

CIB - Credit Information Bureau

GB- General Banking

CRG - Credit Risk Grading

RM - Risk Manager/ Relationship Manager

SME - Small & Medium Enterprise

JBL-Janata Bank Ltd

CRGM- Credit Risk Grading Manual

EAS - Early Alert System

SS- Substandard

DF- Doubtful Loan

BL- Bad Loan

http://www.janatabank.com/

http://www.reportinternee.com/

61

QUESTIONNAIRES FOR CUSTOMER OF JANATA BANK LIMITED, UTTARA MODEL TOWN

CORPORATE BRANCH

Sir,

I‘m Md.Enamul Hoque, a student of BBA (Major in Finance and minor in accounting) from Independent

University, Bangladesh (IUB). I am conducting a report on topic, “Retail Loan &Advance of Janata Bank

Ltd.” For my BBA 499 Practicum course. I need your valuable opinion. Let me assure you that all the

information provided by you will be used only for academic purpose and kept under strict secrecy.

Customer Information

Name:

Gender: □ Male □ Female

Ag: □ 20 – 25 Years □ 26 – 45 Years □ More than 45 Years

Occupation: □ Service holder □ Student □ Businessman □ Housewife

□ Others…………........................

i. Accuracy of banking records has positive effect on customer satisfaction.

Strongly Disagree Neither agree Agree Strongly

Disagree nor disagree Agree

2----- 5------ 1----- 14------ 18------

ii. The distinctive product and services of JBL draw the attention of customers.



2----- 6------ 2----- 13------ 17------

iii. The Competitive interest rate meets customer satisfaction.



16----- 15------ 1----- 5------ 3------

62

iv Credit system of JBL is easier then other competitive Bank



6----- 10------ 2----- 8------ 14------

V Retail Credit System of JBL can develop customer business



3----- 6------ 3----- 12------ 16------

Vi Credit Committee Of JBLUttara branch is skillfull& helpful



5----- 3------ 2----- 13------ 17------

Vii The employees of JBL always keen to help customers.



1----- 3------ 0----- 16------ 20------

Viii Staff of Credit section provide trustworthy customers service



2----- 2------ 1----- 14------ 21------

Ix Credit system of JBL is effective part on customer satisfaction.



4----- 3------ 5----- 18------ 10------

X Commitment to the customers is the effective method of JBL to attention customers

63



3----- 5------ 3----- 17------ 12------

iv. Do you have any recommendation about the way of develop our Credit System?

…………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………

…………………………………………………………………………………………………………………

………………………………………………………………………..………………………………………

…………………………………………………………..……………………………………………………

… ……………… ……………

Thank You

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