Premier- Comparison of Products

8/10/2019 Premier- Comparison of Products

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ACKNOWLEDGEMENT

This is an attempt to make an analysis of various

deposit and loan scheme of the Premier bank as

part of the internship program. However to

make this I am indebted to many persons for

their ideas and assistance.

First of all, I would like to express my

indebtedness to my course coordinator s.

Imrana !esmin, lecturer, arketing "epartment,

"#, for helping me and giving assistance in

preparing this report.

I would like to thank to r. .$. !ousuf %han,

anaging "irector, Premier &ank, to allow me

for the program in this well'reputed

organi(ation. I)m very grateful to the anager of

&anani &ranch of the Premier &ank, and every

o*icial of that branch for their continuouscooperation, sharing their time, supplying

necessary documents, and giving suggestions

and supervisions.


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EXECUTIVE SUMMARY

Like other Commercial Bank the Premier Bankalso invest their money to earn

profit. But they are differs in the manner of operation. The Premier Bank is a

customer-oriented bank and their motto is Service First. The philosophy of

The Primer Bank is to be the most carin! and customer friendly provider of

financial services" creatin! opportunities for more people in more places. The

Primer Bank is committed to ensure stability and sound !ro#th #hile enhancin!

the value of shareholders investments. $s bank of ne# millennium Primer Bank

a!!ressively adopt technolo!y at all levels of operations to improve efficiency

and reduce cost per transaction. To ensure a hi!h level of transparency and

ethical standards in all business transaction it trains and e%uip fresh recruits for

buildin! a stron! foundation and appoints skilled manpo#er to cope #ith the

!ro#in! business need. &t provides con!enial atmosphere" #hich #ill attract

competent #ork force. $s a business firm the main tar!et of the Primer Bank is

to earn profit but the Premier Bank not only !ives emphasis on profit. &t is also

socially responsible and strives to uplift the %uality of life by makin! effective

contribution to national development. The Premier Bank is !radually comin! up

as a ma'or bank in Ban!ladesh and makin! si!nificant contribution to national

economy. The last three-year business performance of the Premier Bank is

remarkable. The result #as lar!ely due to confidence and loyalty of the

customer. The Premier Bank is no# more encoura!ed and strivin! for

e(cellence #ith the !uidance of the valued shareholder and directors. The

Premier $ccomplishments continue to accumulate #hile they remain focused

on providin! best bankin! service to their customers. To improve efficiency and

effectiveness of the bakin! service" they are buildin! up infrastructure tointroduce )nline Bankin! facility" Credit Card system as soon as possible. The

Premier Bank is also #orkin! actively to set up ne# branches in different prime

location to ensure their presence closer to their customers.


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PREFACE

INTRODUCTION:

*arly bankin! system served mainly as depositors for funds" #hile the more

modern system have considered the supplyin! of credit their main purpose. $

Bank not only accepts money or deposits" but it also lends money and creates

its o#n credit" Cro#ther has defined a bank as a dealer in debts- his o#n and

of other people. Sa#yers states" +e can define a bank as an institution #hose

debts ,bank deposits are #idely accepted in settlement of other peoples debts

to each other

The class of financial institutions called commercial banks has one important

characteristic that distin!uishes it from all other kinds of financial institutions.

This important distinction is that it alone can hold deposits to be dra#n upon by

check" &t has the po#er to create and destroy money" #ithin limits" throu!h the

use of loans and demand deposits. Commercial banks lend money by creatin!

demand deposits and retire loans by cancelin! demand deposits.

The functions of modern commercial banks are numerous and overlap #ith

those of such other financial institutions. They are most sharply differentiated

from other financial institutions by the character of their principal liabilities. )nly

commercial banks hold demand deposits" #hich constitute the most important

component of money supply" thus banks are uni%ue amon! non-!overnmental

institutions as administrators of demand deposits and as money issuers. They

influence not only sie of the money stocks but also the allocation of funds andthus the direction and use of resources #ithin the system as a #hole. The

banks are in fact the heart of the modern currency system

OBJECTIVES OF THE STUDY:

There are some ob'ectives for makin! this study" those are as follo#s/

0. To !et a practical orientation and increase one1s e(posures.


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2. To !et clear ideas about the bankin! activities.

3. To familiarie oneself #ith a practical situation.

4. To !et an orientation bet#een theory and practice.

5. To analye the different deposit and loan scheme of The Premier

Bank Limited as a #hole.

SOURCE OF DATA

Sources of information for #ritin! this report are/

a. 6ifferent Procedure 7anual" published by The Primer Bank.

b. Personal e(perience !ained by visitin! different desks.

c. Study of old files.

d. Personal investi!ation #ith bankers.

e. 6ifferent circulars sent by 8ead )ffice of The Premier Bank andBan!ladesh Bank.

f. $nnual 9eport.

STRUCTURE OF THIS REPORT

&n the very be!innin! of this report a brief description of The Premier Bank

has been furnished and then in the subse%uent chapters" elaboration of the

t#o departments of branch" say :eneral bankin! and Credit has been !iven.

$t last fe# pa!es of the main repot" some problems in bankin! #hich are

observed #hile doin! #ork in the branch are detected alon! #ith some

recommendations to overcome these problems.

SCOPE OF THE STUDY

The Primer Bank Limited is one of the leadin! banks in Ban!ladesh but the

scope of the study is limited to the Banani Branch only. The report covers the


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or!aniational structure" back!round" functions and the performance of the

bank.

LIMITATIONS OF THE STUDY

)nly three months are not enou!h to study deeply all types of deposit and

advance.


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OVERVIEW OF THE PRIMER BAN LIMITED:

Bank! in "#r $"#n%r&:

The banks play an important role in the economy of the country. $fter

liberation e(pects the forei!n banks all banks #ere nationalied. These banks

#ere mer!ed and !rouped into si( commercial banks. )f the total si(

commercial banks ;ttara and Pubali #ere transferred to private sector from

0o# there are four nationalied commercial banks namely $!rani"

?anata" 9upali" and Sonali Bank. There are five specialied banks in our

country. &n addition to this" 42 private commercial banks are e(istin! in our

country at present.

THE PREMIER BAN

The Primer Bank Limited has created a ne# #ay of its o#n bankin! arena of

Ban!ladesh in terms of service to customer and value addition to its

stakeholders. &n has incorporated in Ban!ladesh as a bankin! company on

0@th ?une 0


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To develop the standard of livin! of the limited income !roup by

offerin! consumer credit scheme.

To boost up mobiliation of savin!s both from urban and rural areas.

To develop the model of participatory bankin!.

To develop competitive" most modern scientific and social #elfare

oriented bankin! institution on the country.

To finance the industry" trade and commerce throu!h conventional #ay

as #ell as by offerin! various customers friendly credit products.

MISSION OF THE BAN:

To be the most carin! and customer friendly provider of financial

services" creatin! opportunities for more people in more places.

To ensure stability and sound !ro#th #hile enhancin! the value of

shareholders investment.

To a!!ressively adopt technolo!y at all levels of operation to improve

efficiency and reduce cost per transaction.

To ensure a hi!h level of transparency and ethical standards in all

business transacted by the bank.

To provide con!enial atmosphere #hich #ill attract competent #ork

force .

To be socially responsible and strive to uplift the %uality of the life by

makin! effective contribution to national development.

ACTIVITIES:


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The Premier Bank en!a!es in #ide ran!e of activities from small scale

lendin! to lar!e industrial pro'ect financin!. &t involves e(port and import

financin! as #ell as many other services" &ts ran!e of activities at a !lance

are as follo#s/

L"an! an'

a'(an$e!

Tra'e

)inan$e

De*"!i% O%+er !er(i$e!

Pro'ect loan

+orkin!

capital loan

Cash credit

)verdraft

Packin! credit

trust receipt

8ouse

buildin!

finance

&mport finance

:uarantee

*(port

&mport

Current account

Savin!s account

Short term deposits

Fi(ed deposit

Bearer certificate of

deposit

>on resident forei!n

currency deposit

account

9esident forei!n

currency account

Special savin! scheme

Safe custody

,locker

Travelers Che%ue

6emand draft

Pay order

Tele!raphic

transfer

Sellin! and buyin!

forei!n currency

Standin!

instruction Lease financin!

AUTHORI,ED AND PAID UP CAPITAL:

$uthoried capital of the bank is taka 0@@@.@@ million and paid up capital of

the bank 222.@@ million as per 6ecember 30st2@@0.

CAPITAL ADE-UACY RATIO:

Capital ade%uacy ratio of the bank stood at 02.4AD on risk-#ei!hted asset on

6ecember 30st2@@0" #hich is #ell above the stipulated =D re%uired for the

bank operation in Ban!ladesh.

DEPOSITS:

6eposits of the bank have sho#n a remarkable increase by 0


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[email protected] million in the precedin! year. The bank has introduced several

'e*"!i% !$+eme!to encoura!e and mobilie savin!s. $s-

7onthly income scheme.

7onthly savin!s scheme

*ducation Savin!s scheme

Students credit pro!ram for hi!her education

Consumer credit scheme

9ural credit scheme- poverty alleviation

Fi(ed deposit scheme

LOAN AND ADVANCES:

Bank continued to e(tent credit facilitates to industries" trade" and commerce

productive and priority sectors and to small and medium enterprises. 6urin!the year 2@@0" credit e(panded by taka


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INVESTMENT:

&nvestment of the company for 2@@0 #as [email protected] million #here in 0


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PROFILE:

Pr")i/e")

Premier Bank Limi%e'

PBL

PBL is a private

commercial

bank

*stablished in

0


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YEARLY PERFORMANCE OF THE BAN:

Taka in 7illion

Par%i$#/ar! 2333 4555 4552 4554

$uthoried Capital 0@@@.@@ 0@@@.@@ 0@@@.@@ 0@@@.@@

Paid up Capital 222.@@ 222.@@ 222.@@ 23


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DIFFERENT DEPOSIT OF PREMIER BAN

CURRENT DEPOSIT ACCOUNT

6enera/ C+ara$%eri!%i$!:

a. C6 accounts are unproductive in nature as banks loanable fund

is concerned. Sufficient fund has to be kept in li%uid form" as

current deposits are demand liability.

b. Thus hu!e portion of this fund become non-performin!. For this

reason banks do not pay any interest to C6 $ccountholders.

c. There is no restriction on the number and the amount of

#ithdra#als from a current account.

d. Service char!es are recovered form the depositors since the

bank make payments and collect the bills" drafts" che%ues" for

any number of times" daily.

e. Businessmen and companies are the main customers of this

product.

f. The Banks !rant the loans and advances throu!h current

accounts.

!. &n practice of Premier Bank" a minimum balance of Tk. 2@@@

has to be maintained.

SAVIN6S DEPOSIT ACCOUNT


$s per BB instruction ==D of SB deposits are treated as time liability and

02D of it as demand liability.

a. &nterest is paid on this account. Primer Bank offers a reasonable

rate of =.5D of interest for SB $HC.


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b. :enerally" banks re%uire a A-day prior notice if the total amount of

one or more #ithdra#als on any date e(ceeds 25D of the balance

of the account unless is !iven" but in Premier Bank there is no

restriction about dra#in! money form savin!s account. $ny time

holders may dra# money of any amount #ithout prior notice.

c. :enerally householders" individuals and other small-scale savers

are the clients of this account.

d. 7inimum Balance of Tk. 2@@@ is to be maintained.

e. &nterest #ill be counted on the avera!e balance of month.

f. >o service char!e as it is an interest bearin! account.

FDR SECTION:

This branch maintains a separate section for maintainin! fi(ed 6eposit. F69

is an important factor for the bank and volume of F69 determines the

investment base of the Bank. Basically this is the mobiliation unit of the

Bank. This section deal #ith the customers of short-term deposit ,ST6" term

deposit ,T6 $HC" bearer certificate of deposit ,BC6.

SHORT TERM DEPOSIT ACCOUNT .STD0


a. Customers deposit money for a shorter period of time.

b. ST6 account can be treated as semi-term deposit .

c. ST6 should be kept for at least seven days to !et interest.

d. The interest offered for ST6 is less than that of savin!s deposit

e. &n practice. Premier Bank offers E.5D rate interest for ST6

account.


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f. Iolume of ST6 $HC is !enerally hi!h. &n premier Bank" various

bi! companies" or!aniations keep money in ST6 accounts.

!. Fre%uent #ithdra#al is discoura!ed and re%uires prior notice.

TERM DEPOSITS


a. Popularly" it is kno#n as Fi(ed 6eposit 9eceipt ,F69" Term

deposits are made #ith the bank for a fi(ed period of time.

b. The banks need not to maintain cash reserves a!ainst these

deposits and therefore" the bank offers hi!h rate of interest on

such deposits.

&n Premier Bank" fi(ed deposit account is opened in t#o forms- 7idterm

,7T6" #hich is less than one year" and the other is Tem 6eposit" #hich is

more than one year. Types of F69 maintained by this branch alon! #ith their

respective interest rate.

Period 0 2

7onths

3

7onths

E

7onths

02

7onths

24

7onths

3E

7onths

Proposed rate

per annum

=.A5D


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c. There is prescribed interest rate on such funds.

Ban!ladesh Bank has order to close all these accounts and not to open any

further accounts.

The Premier has already introduced 4 ,four yieldin! deposit scheme" #hich

have been hi!hly acclaimed by the depositors. These are.

0. 7onthly Savin! Scheme ,7SS

2. 7onthly &ncome Scheme ,7&S

3. *ducation savin! Scheme ,*SS

4. Special 6eposit Scheme ,S6S

MONTHLY INCOME SCHEME:

;nder 7onthly &ncome Scheme any individual can keep the deposit in taka

5@"@@@ or in multiples thereof. There is no upper limit.

YOUR DEPOSIT:

Tk. 5@"@@@ Tk. 0"@@"@@@ Tk. 2"@@"@@@ Tk. 5"@@"@@@

BENEFIT EACH MONTH

FOR 7 YEARS:

Tk. 45@ Tk.


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6epositors can also avail loan up to =5D of the deposit. >omination is also

acceptable. >o photo!raph or introduction is re%uired for openin! this

account. Ban!ladeshis livin! abroad may also open this account for providin!

fi(ed amount of income to their dependentH families in Ban!ladesh.

EDUCATION SAVIN6 SCHEME:

These days providin! a !ood education for children are really costly. To

ensure bearin! such costly education e(penses of children every body need

to start savin!s early. The scheme provides opportunity for meetin!

educational e(penses of children at school" colle!e or university.

eep deposit of Tk. 25"@@@ or any multiple thereof for 5 years. There is no

upper limit. Children can maintain their educational cost on monthly basis for

subse%uent five years or lump sum at maturity.

Term 6eposit 7onthly benefit

For 5 years

or lump sum

payment

5 Jears Tk. 25"@@@ Tk.


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Bank. &n that case" the discountin! bank" or!aniation" firm or person may

hold the instrument till maturity or present at the counter of issuin! Bank for

immediate payment at the discountin! rate.

The amount payable at maturity a!ainst deposit of Tk. 0.@@ lac is sho#n

belo#/

Term! Ini%ia/ De*"!i% Pa&a9/e a% Ma%#ri%&

5 Jears Tk. 0"@@"@@@ Tk. 0"E5"@@@.@@

A Jears Tk. 0"@@"@@@ Tk. 2"@@"@@@.@@

0@ Jears Tk. 0"@@"@@@ Tk. 3"@@"@@@.@@

The depositors may select nominees. &n case of death of the depositor" the

amount at discounted rate #ill be payable to the nominee or the nominees or

in the absence of nomination" to the le!al heirs of the depositors. Loan facility

may be allo#ed up to =@D of deposit a!ainst lienH pled!e on such instrument

at Banks prescribed rates and rules. &n case of lost instrument" duplicateinstrument shall be issued as per rules of instrument in F69. The depositor

shall fill up to prescribed form desi!ned for this purpose. The Bank reserves

the ri!ht to make chan!esH alteration amendmentH additionH modification etc

to the account and to its related char!es fees etc at any timesH sta!es #ithout

assi!nin! any reason #hatsoever.

SECTOR WISE DEPOSIT OF YEAR 4552

De*"!i% Taka

Current 6eposit 05


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*ducation Savin! Scheme 2"AE@"


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SECTOR WISE DEPOSIT OF YEAR 4554

De*"!i% Taka

Current 6eposit 30E"05@"[email protected] E.@3D

Savin! 6eposit E5@"4=5"5A0.A@ 02.42D

Short Term 6eposit 204"355"4@@.E@ 4.@


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#il l p rovide in terest to the c l ients and the s imple ans#er is K

advance. +hy the bank provides advances to the borro#ers-

a. To earn interest f rom the borro#ers and !ive the depositors

interest back.

b. To accelerate economic development by provid in! di f ferent

industrial as #ell as a!ricultural advances

c. To create employment by provid in! industria l loans

d . To pay the emp loyees as #e l l as meetin! the interes t o f

depositors and s hareholders.

Credit is a continuous process. 9ecovery of one credit !ives rise

to ano ther c red it . &n this p rocess o f revolvin! o f funds" bank

earns income in the form of interest. $ bank can invest i ts fund in

man y #a ys . B ank m akes l oa ns and ad vances t o t ra der s"

businessmen" and industr ia l ists. 7oreover nature of credi t may

dif fer in terms of securi ty re%uirement" d isbursement provision"

terms and condit ions etc.

+e o ften use l oans and advances as an a lterna ti ve to one

another. But academically this concept is incorrect. $cademically

advances is the combinat ion such i tems #here loans is a par t

on ly. For th is cred i t sect ion o f the banks is kno#n as advance

sect ion. $cademica lly $dvance is the combined form o f the

fol lo#in! items

$dvances

Cash Credit+orkin! CapitalLoans )verdraft Bills Purchased

$nd 6iscounted


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Vari"#! %&*e! ") a'(an$e! an' in(e!%men%:

$ commercial bank !enerally !ives short-term fund to various sector of the

country like industrial loan" a!ricultural loan" consumer credit and so on.

Short-term loan is !enerally payable on demand or at short notice. &n practice

ho#ever banks allo# midterm and also some lon!-term loan. Banks credit

creates deposit in the country .&t means that the borro#er of the credit spends

that money in makin! payment to his other creditors" Those people deposit

that money partly or #holly to their accounts on their respective banks.

Loan on the basis of security

On the basis of the securit bank credit is of two t!es"

#lean or unsecured credit

$ecured credit

C!ean cre"it%hese are the ad&ances of the bank' (()hich are disbursed

based on the !ersonal securit of the borrower* $uch ad&ances are not

made to the ordinar customer of the bank' these t!es of credit are

gi&en to the &alued customer who ha&e a good credit standing*

Secure" cre"itIn case of the secured ad&ances the bank has recourse

to the securit in addition to the !ersonal securit of the borrower* It

means that the borrower is also liable for an shortfall that ma arise

after the sale !roceeds of the securit* %he notable feature is that a

secured loan is co&ered b the assets owned b the borrower or b a third

!art the market &alue of which is not in an !oint of time is less than the

amount of loan* %he securit ma be !ledged' mortgaged' h!othecated'

guaranteed or lien* +,am!le of some good securities are land' building'

machiner' stock in trade' documents of the title to goods' -D.' share'

debenture' bills recei&able etc*

C!assification on the basis of the nature of the !oan


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O&erdrafts

#ash credit

Demand loan

O#er"raftO&erdraft are those drawings which are allowed b the

bank in e,cess of the balance of the current account u! to a s!ecified

amount for a definite !eriod of time* %he ad&ances ma be clear or

secured %he customer can freel o!erate on his account But this t!e ofad&ances is irregular in nature* In !ractice a bank ma also sometimes

allow o&erdrawing in current account without an !rior arrangement in

order to honor a che/ue of a &alued customer who has drawn it for a little

higher amount than balance* %his t!e of ad&ance is known as tem!orar

ad&ances'

Cash cre"it #ash credit accounts are basicall current account

and are o!ened under !rior arrangement for allowing credit facilities*

%he basic distinction between cash credit and the o&erdraft is that in

case of o&erdraft an account is o!ened with an intention of credit

balance and in case of cash credit there is an account for drawing an

ad&ance' cash credit facilities are allowed through these accounts are

known as cash credit ad&ances' another ad&ances allowed through

current accounts are known as o&erdraft* %he !rimar securities

against which ad&ances are gi&en are generall marketable securities'

stock in trade of the borrower etc' In case of such ad&ances the

borrowers gi&e !ledge or 0!othecation of the securities and take

deli&er wholl or !artl according to his business re/uirement* In a

word cash credit are ad&ances' which are made based on the !ledged'

or h!othecation of the borrowers securit*

Cash cre"it $hy%o&%his t!e of cash credit is made to the indi&idualfirm' retailer' wholesaler as well as the industr* Generall this t!e of


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credit is gi&en to the firm to meet the working ca!ital re/uirement of

the firm against the h!othecation of the goods the traded as the

!rimar securit* It is allowed under the categor1

2i34#ommercial 5ending4 when the borrower is other than an industr)

and 2ii3 working ca!ital4 when the client is an industr*

Cash cre"it $%!e"'e&In this t!e of credit cash credit are allowed to

indi&idual firm' retailer' wholesaler' and also to the industr to meet

their working ca!ital re/uirement against the !ledged of the goods as

the !rimar securit*

De(an" Loan A demand loan is an ad&ance for a fi,ed amount*

%he disbursement of demand loan in each case is made at a lum! sum*

An subse/uent de!osit of fund is considered the reduction of loan

amount* %he borrower is not !ermitted to an further borrowing with

same securit* If additional drawing is re/uired beond the original

loan amount a fresh loan is need to be granted and the outstanding of

the original loan is adjusted*

E)%ort financin' +,!ort financing is that kind financing to the &arious

!arties of the bank which is re/uired to facilitate e,!ort* %he major

earnings of our e,!ort comes from the read1made garments sector till

now* $o the e,!ort financing of our bank is mainl concentrated to the

garments industries of our countr* +,!ort financing is mainl of two

t!es*

6* 7re shi!ment financing

8* 7ost shi!ment financing

*re shi%(ent financin'1 this is the credit facilit e,tended to the

e,!orter !rior to the actual shi!ment of goods for e,!ort1 $uch credit

includes


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i' 9orking ca!ital solel for +,!ort

ii 7rocuring and !rocessing for raw materials

III' 7acking and trans!orting of goods for e,!ort

i&* 7ament of insurance !remium

& Ins!ection fee

&i' -reight charge etc

Pre shipment credit facilities are essentially a short form credit" #hich is to be

li%uidated by purchasin! of e(port bill coverin! the particular shipment. :enerally the

Pre shipment credit takes the follo#in! forms-

7acking credit Back to back credit .ed clause letter of credit

*ac+in' cre"itPackin! credit" is usually a short-term advance !ranted by the bank to an e(porter forassistin! him to buy" process" pack and ship the !oods. Such a credit facility isallo#ed usually by #ay of cash credit #ith or #ithout any security. 6ependin! on thearran!ement made by the customer the loan may be disbursed #ithout creatin! anychar!e on the !oods. &n that event the borro#er submits the e(port bill to the bank

and the bank ad'usts the advance by ne!otiation of their documents. $lternatively the!oods purchased or produced from time to time may be pled!ed or hypothecated tothe bank to cover the advance

,ac+ to bac+ cre"it" It is a secondar credit o!ened b the ad&ising

bank in fa&or of a domestic su!!lier on behalf of the beneficiar of the

original foreign 5:#* %he beneficiar of a documentar credit for fulfilling

his obligation under the credit o!en a counter credit in fa&or of another

!art to shi! the goods of his !urchaser or im!orter* %his is known as back

to back letter of credit-e" c!ause !etter of cre"it under this L/C the issuing bank instructs the

negotiating bank to make ad&ance to the beneficiar u! to an aggregate

amount in order to enable him to !urchase and !rocess merchandise* %he

ad&ance with interest is to be realized on !urchase of the e,!ort bill to be

tendered b the e,!orter* In this case all risk goes to the issuing bank

since the issuing bank undertake the !ament of such ad&ance with

interest* In the e&ent of non deli&er of shi!!ing documents b the


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beneficiar in time the issuing bank will reco&er the amount of ad&ance

!lus interest with other charge from the a!!licant who assume all risk

*ost shi%(ent financin' 7ost shi!ment financing is a financial

accommodation e,tended to an e,!orter against e,!ort document after

actual shi!ment of the goods* ;ormall the !eriod of recei&ing !ament

&aries from < to = months* But an e,!orter is a manufacturer or a regular

su!!lier and has to make immediate !ament to the su!!lier of raw

materials' local seller of goods or to !rocure goods for further shi!ment*

$o an e,!orter alwas feels necessit of !ost shi!ment bank)s finance to

o&ercome his re&ol&ing need of working ca!ital in the !rocess of e,!ort

trade*

*urchase of e)%ort bi!! $.D,*&

It is also termed as the foreign document bill for !urchase or -DB7* %his is

the most widel used method of bank finance in the e,!ort trade It is the

!urchase of e,!ort bill at the !ost shi!ment stage* In e,!ort' customerwho draws an e,!ort bill waits for its !ament b the drawee and face

immediate crisis of fund to maintain the usual flow of trade acti&it* 0ere

the bank e,tend financial accommodation to the concerned e,!orter b

allow him to enjo a -B7 2foreign bill !urchased3 limit with !rior a!!ro&al

of the head office* %he bank allows the e,!orter taka e/ui&alent of foreign

bill amount after deducting its discount and commission as !ar e,isting

rule* 9hile!urchasing an e,!ort bill the bank a!!lies ruling OD buing

rate of e,change*

Ne>"%ia%i"n ") '"$#men%!:>e!otiation of documents under the letter of

credit is the usual method of financin! e(porter at the post shipment sta!e. &n

this system after the shipment of !oods" the e(porter present the relative

document to the ne!otiatin! bank for ne!otiation .The documents that are

obtained should be verified strictly #ith the terms and condition before

ne!otiation.

P"!% im*"r% )inan$in>:


27/37

L"'>men% ") im*"r%! 9i// ") e?$+an>e:The liabilities of openin! banker

under the import letter of credit are dischar!ed #hen payments are made to

the e(porter b ne!otiation of the bills by the advisin! i.e. the ne!otiatin!

banker. These payments in forei!n currency convert to advances to the

importers accounts in e%uivalent local currency as soon as the bills are

received and accounted for throu!h the bill of e(chan!e account. The total

outstandin! in the bill of e(chan!e account appear as advances on the

customer account until the importers retire the bill or the bank clear the

!oods. The openin! bank as holder for the value holds the bills.

Loan a'ainst i(%orte" (erchan"ise9here the im!orter fails to retire

the documents e&en after the arri&al of the consignment' the banker clear

the goods and takes the deli&er of the same b !aing customs dut and

sales ta, etc* %he bill amount along with other e,!enditure incurred b

the bank is accounted for in his books as loan against im!orted

merchandise 25IM3 b transfer credit of the bill amount to the bill of

e,change account* %hese outstanding are actuall not direct ad&ances to

the customer account* In case of 5IM the !ossession of the good is under

the control of the bank* %he customer graduall !as the bank for the

re!ament of 5IM

Lo"'(ent of in!an" !etter of cre"it" %he bills drawn b the beneficiar

under an inland letter of credit are negotiated b the ad&ising branch and

!aments are made against on behalf of the o!ening branch through inter

branch general account* Immediatel on recei!t of the bill' the o!ening

branch reimburses the negotiating branches b debit to DD. account in

case of demand bill and BB. account in case of issuance bill4* %he amount

of the bill then a!!ears in the books of the o!ening branch as ad&ance on

account of the bill recei&ed for realization and the documents are held b

it as holder for &alue until retired b the o!ener*

L"an a>ain!% %r#!% re$ei*% .LTR0: $dvances allo#ed for retirement of

shippin! documents and release of !oods imported throu!h LHC falls under

this head. The !oods are handed over to the importer under trust #ith the


28/37

arran!ement that sale proceeds should be deposited to li%uidate the

advances #ithin a !iven period.

C/a!!i)i$a%i"n "n %+e 9a!i! ") !e$%"r ") $re'i%:

AGRICUITURE CREDIT

#redit facilities to the agricultural sector falls under this categor* It is

subdi&ided into two major heads4

a) Loans to primary' producers:

%his sector of agricultural financing refers to the credit facilities allowed to

!roduction units engaged in farming' fishing' forestr or li&estock but does

not include traders of agricultural !roducts*

b) Loans to input dealers/distributors:

It refers to the financing allowed to in!ut dealers and 2or3 distributors in

the agricultural sectors* Until the Bank mobilizes enough funds and

e,tends its outreach to rural areas' there would not be much sco!e for

disbursement of loans to !rimar !roducts*

TE-M LOAN .O- LA-GE /MEDIUM SCALE INDUST-0

This cate!ory of advances accommodate the medium and lon! term financin! for

capital machinery and e%uipment of ne# industries and of the e(istin! units #ho are

en!a!ed in manufacturin! !oods and services.

Term financin! to tea-!ardens is also be included in this cate!ory dependin!

on the nature and sie of investment re%uires.

TE-M LOANS .O- SMALL /COTTAGE INDUST-IES

%hese are the medium and long1term loans allowed to small > cottage

manufacturing industries* $mall industr is !resentl defined as those

establishments whose total in&estment in fi,ed ca!ital such as land'

building' machiner and e/ui!ment 2 e,cluding ta,es and duties3 does note,ceed


29/37

Bangladesh Bank sometimes !ro&ides interest subsid at &aring rates to

the banks on loans e,tended under this categor'

1O-KING CA*ITAL

5oans allowed to the manufacturing units to meet their working ca!ital

re/uirements' irres!ecti&e of their size' big' medium or small' fall under

the categor* %hese are usuall continuing credits and as such fall under

the categor* %hese usuall take the character of continuing credits*

E2*O-T C-EDIT

Credit facilities allo#ed to finance e(ports a!ainst letter of Credit Hand H or

confirmed e(port orders fall under this cate!ory. &t is accommodated under

the heads M*(port Cash Credit ,*CC" Packin! Credit ,PC" Forei!n

6ocumentary Bills Purchased ,F6BP" Local *(port Bills Purchased etc.

COMME-CIAL LENDING

$hort1term loans and continuing credits allowed for commercial !ur!oses

other than e,!orts fall under this categor *It includes im!ort financing'

financing for internal trade' ser&ice establishment' etc* ;o medium and

long term loans are accommodated here* %his categor of ad&ances are

allowed in the form of 2I3 5oan against im!orted merchandise 25IM3' 2ii3

5oans against trust recei!t 25%.3' 2iii3 7ament against im!ort documents

27AD3' 2i&3 $ecured O&erdrafts 2$OD3' 2&3 #ash #redit 2##3' 2&i3 5oan

2Gen*3' etc for commercial !ur!oses*

UNDE- S*ECIAL C-EDIT SCHEME

a3 #onsumers credit scheme

b3 .ural credit scheme for !o&ert alle&iation

c3 Monthl income scheme

d3 Monthl sa&ing scheme

e3 +ducation sa&ing scheme


30/37

f3 $tudents Micro credit !rogram for higher education

g3 Other such schemes as and when introduced b the Bank *

OTHE- C-EDITS

$ny loan that does not fall under any of the above cate!ories is considered under the

cate!ory MothersM. &t includes loan to ,& transport e%uipment" ,ii construction #orks

includin! housin! ,commercialHresidential" ,iii #ork order finance" ,iv personal

loans" etc.

A"#ance" to #arious %ersons

$nyone capable of openin! of an account can borro# from the bank. There are

certain types of borro#ers in re!ard to #hom the bank must take care in complyin!

#ith the le!al and other formalities to safe!uard his interest.

Min"r: :enerally a minor is not entitled to !et any credit facilities from the

bank accordin! to the la#. This is because of the fact that a minor is not

le!ally capable of enterin! into a valid contract. But the scenario #ill be

different #hen the advances are made to the minors 'oint or partnership firm

account because in this case the credit #ill be recoverable from the person

other than the minor.

Joint account Generall !ersons o!erate under a joint account do not

entitled to get the o&erdrawing* As such a re/uest for ad&ance is made b

all the !art and debt created thereb will be joint liabilit* In the e&ent of

death of one account holder the bank can take recourse to the sur&i&or or

to the legal re!resentati&e of the deceased !artner*

*ro%rietorshi% fir( An ad&ance ma be allowed to the firm name

against the charge document e,ecuted b the !ro!rietor* It is not !ro!er

to allow an ad&ance in the name of the firm through the !ro!rietor)s

!ersonal account but it is the !ro!rietor who is solel res!onsible for the

ad&ances granted to the !ro!rietorshi! firm*


31/37

*artnershi% fir( 9hile allowing the credit facilit to the !artnershi!

firm the bank should ha&e a co! of registered !artnershi! deed on his

record to note if there is an s!ecial !ro&ision regarding bank account and

borrowing of the firm* +&er !artner is se!aratel and jointl liable for the

debts of the firm to full e,tent of his means* %he bank will make scrutin

that the re/uest for the ad&ance and the mandate for the o!eration and

e,ecution of the documents signed b all the !artners* It)s a registered

mortgage of firm)s !ro!ert and is offered to secure an ad&ance* %his

should be !ro&ided for in the joint mandate' as a !artner has no im!lied

authorit to gi&e a registered mortgage of the firm@s !ro!ert*

Limi%e' $"m*an&: &n most of the cases the ma'or borro#er of the bank are

the limited companies. $s like the other case" securities should be offered in

case of sanctionin! credit to the limited company account. +hen the %uestion

of !rantin! any credit facility to a limited company arises" the bank #ill

e(amine the relative resolution of the director to find #hether the loan facility

#ill !ive personal benefit to the directors. &n practice" in most of the cases the

memorandum and articles of association contained provisions for the

borro#in! po#er of the directors. &n addition to the securities offered by the

company and irrespective of #hether they are sufficient or not for !ivin! the

advance" they should insist on the personal !uarantee of the directors #hich

#ould not only further secure the advance but also sho# the directors o#n

confidence in the company and impel them to take steps for repayment of the

loan.

Non3tra"in' concern ;o credit should be gi&en to the non1trading

concern unless there is a resolution of the managing committee in this

res!ect* Borrowing b such an organization should be !ro!erl secured*

-or these organizations unless incor!orated under the com!an act' ha&e

no legal entit and can not be sued b their names and also the indi&idual

members who administer the fund are not !ersonall liable*


32/37

Co3o%erati#e society %he borrowings of the coo!erati&e societ from

other than its members are restricted to a ma,imum amount datelined

annuall at a general meeting of the societ subject to the a!!ro&al of the

registrar of coo!erati&e societ* 9hile granting ad&ance to the coo!erati&e

societ' the bank should ensure this re/uirement* ;ormall ad&ances to

the coo!erati&e societ are !ro!erl secured and where no securit is

a&ailable at least !ersonal guarantee of the office bearer should be

obtained*

Cor%oration an" *ub!ic bo"y generall the borrowing !ower of the

cor!oration or the !ublic bod is laid down on the relati&e act* %he bank

before allowing an ad&ance should ascertain b the reference to the said

act*

E)ecutor4 a"(inistrator4 an" trustee where the bank is re/uired to

allow an ad&ance through the e,ecutorshi!s or administratorshi! account

the same should be allowed onl against s!ecific securit or at least

against third !art) guarantee*

Li5ui"ator4 recei#er %he 5i/uidator or recei&er can raise loan for the

!ur!ose of discharging their res!ecti&e duties against the securit of the

!ro!ert of the concern com!an or the insol&ent* Before allowing such

ad&ance the bank &erif the detail terms and condition of their

a!!ointment regarding the bank account and borrowings*

N"n re!i'en%: the bank is !enerally not permitted to !rant loan and

advances ,secured or unsecured to the non-resident account holder #ithout

prior approval of Ban!ladesh Bank.

Consu(er cre"it sche(e


33/37

#onsumer credit scheme offer the customer to bu their needed item

without !aing the full cost of the item* Bank used to bu the !roduct in

fa&or of the customer* #ustomer needs to re!a the loan with a fi,ed

installment for a certain !eriod of time* %he installment consists of

!rinci!al !ament as well as interest* $ince Bangladesh is one of the

!oorest countr in the world the majorit of our !o!ulation is forced to

li&e a substandard life* %he middle class famil can)t afford to bu their

essential utilit !roduct with their fi,ed monthl income* In this

connection banks in our countr has introduced the scheme of consumer

credit to e,tend credit facilit to limited and fi,ed income grou! to

im!ro&e their standard of li&ing* 5ike our countr consumer credit is &er

!o!ular in most of the de&elo!ed and de&elo!ing countr* #onsumer credit

is designed to finance the fi,ed income !eo!le to bu essential commodit

to be re!aid on installment basis at different rate for different !roduct*

#onsumer credit scheme is based on the trust and the consumers abilit

and willingness to re!a*

Ma6or ob6ecti#es

%o e,tend credit facilit to the limited income grou!*

%o de&elo! standard of li&ing of middle and u!!er middle class*

%o !artici!ate in the socio economic de&elo!ment of the countr*

%o e,tend credit to a wide range of customers

Subsi"iary ob6ecti#e%o !ro&ide in&estment facilit to the de!ositor of the bank*

%o !o!ularize bank)s !roduct among the mass !eo!le*

%o increase the relationshi! network of the bank*

%o increase the number of beneficiar through small t!e of credit*

%o establish a !artici!ator economic sstem*

E!i'ibi!ity of the c!ient


34/37

Different banks ha&e set u! different criteria to get the loan* Among them

the commons are"

63 Age 8? to ears

83 $er&ice holder in go&ernment' semi go&ernment organization'

autonomous bodies' cor!orations' multinational cor!orations' local

renowned com!anies' teachers of educational institution' officers of

armed forces' members of !rofessional bodies etc* %he a!!licant

must ha&e a credible re!utation* In 7remier Bank' monthl

dis!osable income should not be less than '???61 or three times of

the monthl installment for ser&ice holders*


35/37

Others

0ome re!airs' redecoration' and reno&ation*

Security8co!!atera!

Generall it de!ends on the bank)s assessment of risk in making the

credit* Banks !refer financial instrument like -D.' $a&ings certificate'

9age +arners De&elo!ment Bond' h!othecation of asset' shares of1

!ublic limited com!an* 7remier Bank uses the h!othecation of asset as

securit for financing consumer durable and &ehicles* 0!othecation of the

!urchased item shall be the !rimar securit against the loan* But unlike

the consumer durableE loan for medical e,!enses' holida' marriage'

home re!air etc* will &irtuall be on clean basis* In case of loan against

&ehicles joint registration of the &ehicle shall be made*

Guarantee

.e!ament commitment is re/uired to be guaranteed b the em!loer or

high official* Incase of 7remier Bank at least two !ersonal guarantees shall

be furnished b the borrower whoare acce!table b the bank*

Docu(entation

As !er bank regulation credit contract re/uire the following documents"

63 %he client should a!!l the loan under consumer credit in the

Bank)s !rescribed form* %aka 8? to be realized for each a!!lication

form

83 7rice /uotation of the items to be !urchased


36/37

E5uity %artici%ation

*%uity in the form of mar!in shall be at least 05D of the value of the item

e(cept for vehicle. For vehicle it should be at least 3@D. The client before the

disbursement of the loan shall deposit the amount of e%uity.

Interest rate

Interest rate is 6CF !er annum*

Char'es"

%here are three t!es of charges

H 6F of risk fund on the loan amount

H 8F of ser&ice charges on the loan amount

H $tam!ing charge of taka =?:1

-e%ay(ent arran'e(ent

9: #onsumer will re!a the loan 8C:


37/37

b* 5etter of #ontinuit

c* 5etter of agreement

d* 5etter of Disbursement

e* 5etter of .e&i&al

f* 5etter of 0!othecation

g* 5etter of %rust .ecei!t 2consumer credit3

h* 7ersonal Guarantee of the Guarantors

i* Mone recei!t and the deli&er chalan for the item !urchased

Disburse(ent *roce"ure

6* $igning the re/uisite charge document*

8* .ecei&ing 8C'

Date post:	02-Jun-2018
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