ShoShi

INTERNSHIP REPORT ON

“Financial Performance Analysis”

- Of Janata Bank Limited

Submitted To:

Controller Of Examinations

National University

Gazipur-1704

Supervised By:

Md. Masuduzzaman Biswas

Co-ordinator

BBA (Professional) Department

Pabna College, Pabna

Submitted By:

K. M. Yousuf Hasan

Roll: 1060351 Registration:1069532 Session: 2009-2010

Program: BBA (Professional), Major: Finance


National University

National University, Gazipur

Date of Submission: February 28, 2015

January 17, 2013


Co-ordinator

BBA (Professional) Department


Subject: Submission of internship report.

Dear Sir,

This is my pleasure to present my Internship Report entitled- Financial Performance

Analysis of Janata Bank Limited.

I would like to thank you for assigning me this subject to prepare the internship report.

This task has been given me opportunity to explore one of the most important aspect

of the Financial Performance Analysis of Janata Bank Limited. I have invested my

every effort to depict the General banking functions performed by JBL.

I believe that the knowledge and experience I gathered during the internship period,

will be helpful in my future professional life. I will be grateful to you if you kindly

accept this report.

Thanking you for your time and kind supervision.

Sincerely Yours,

K. M. Yousuf Hasan

Roll: 1060351 Registration: 1069532

Session: 2009-2010

Program: BBA (Professional), Major: Finance


i

LETTER OF TRANSMITTAL

This is to certify that K. M. Yousuf Hasan, a student of BBA, Roll: 1060351,

Registration: 1069532, has successfully completed his Internship program and

submitted the report entitled Financial Performance Analysis of Janata Bank Limited

as a partial fulfillment of the requirement of Bachelor of Business Administration

(BBA) degree from the Department of BBA(professional) in Finance major, Pabna

College, Pabna.

He has done his job according to my supervision and guidance. He has tried his best to

do this report successfully. I think this program will help him to build up his future

career.

I wish his success.


Co-ordinator

BBA (Professional), Department


ii

CERTIFICATE OF SUPERVISOR

To Whom It May Concern

This is to certify that K. M. Yousuf Hasan student of BBA (Professional) Department

Pabna College, Pabna major in Finance completed his 03 month Internship program

from 10 December, 2014 to 28 February 2014 successfully with Janata Bank Ltd.

During his Internship, he maintains regularity, obedient to company policy and rules.

I wish great success of his future carrier path.

Best Regards’

Md. Shahinur Rahman

Manager

Janata Bank Ltd, Mohakhali Branch, Dhaka-1200

iii

It is great opportunity for me to complete my internship in “JANATA BANK”. I

wish to acknowledge the assistance of all those people who have contributed a lot and

without their support and cooperation this report could not have been completely

successful.

First, I would like to express my gratitude to almighty ALLAH to give me the

strength to complete the report within the stipulated time. I would like to thank the

Higher Authority of Pabna College for giving me every facility & opportunity to

complete all necessary tasks to prepare the report on such a wonderful and learning

issue. I am deeply indebted my teacher Md. Masuduzzaman Biswas, Co-ordinater,

BBA (Professional) Department, Pabna College, Pabna for his whole-hearted

advice and guidance. Without his suggestions, comments and lucid discussion from

time to time and also giving valuable instructions and suggestions to complete this

paper in an appropriate manner, it would have never been possible on my part to make

the report a good one. Actually he acted as a great source of spirit.

It will be very ungrateful if I don’t say my gratitude to the Janata Bank in charge Mr.

Harun ur Rashid (DGM), Mohakhali Corporate Branch Unit of Janata Bank Limited

who helped me a lot during my whole research period. Lastly, I like to give many

special thanks and inexpressible greets to Mr. Dewan Ashraf and Shib Sankar Roy

(EO), & In-Charge, Mohakhali Corporate Branch Unit of Janata Bank Limited,

Mohakhali, Dhaka and others for giving me advice, inspiration and support. Thanks

for all from the core of my heart.

iv

ACKNOWLEDGEMENT

The main focus of this report is on the Financial Performance Analysis of Janata

Bank Limited. In order to focus on the Financial Performance Analysis of Janata Bank

Limited, the study focuses on different loan and advances of Janata Bank Limited,

industry wise Loan and advances and recovery of Loan and advances of Janata Bank

Limited. The study has been conducted mainly based on secondary data. The data are

collected for the period of five years from 2009 to 2013. Some information has also

been collected from the discussion with the officers.

Trend analyses are mainly conducted to analyze credit management. Results of the

study show that there is an increasing trend in deposit and loan of Janata Bank Limited

over the years. Janata Bank Limited has increased its loan advances over the years in

import, export and industrial credit. The classified loan as percentage of total loan and

advances has decreased over the years. The bank should introduce new types of

attractive deposit product, assess the client properly and monitor the customer behavior

properly. Thereby the bank can improve its credit management performance and can be

a leading bank in the banking sectors.

v

EXECUTIVE SUMMARY

Chapter-1 Introduction 02-0 4

1.1 Origin of the Report 02

1.2 Objectives of the Report 02

1.3 Methodology of the Report 03

1.4 Scope of the Report 03

1.5 Limitations of the Report 04

Chapter-2 Company Overview 06-13

2.1 History of JBL 06

2.2 Mission Statement 06

2.3 Vision Statement 07

2.4 Corporate Objective 07

2.5 JBL at a Glance 07

2.6 Strategies of JBL 08

2.7 Function of Janata Bank Limited: 09

2.8 Human Resources Department: 09

2.9 Organizational Hierarchy: 10

2.10 Organization Structure 11

2.11 Services Provided By Janata Bank Limited 11

2.12 Different product of JBL 13

Chapter-3 Analysis & Evaluation 16-15

3.1 Definition of Loans and Advances 16

3.2 Loans and Advances of JBL 16

3.3 Credit management 17

3.4 Classification and provisioning of non- 17

TABLE OF CONTENT

performing loans

3.5 Types of Loans and Advances of JBL 21

Financial Performance Analysis of JBL3.6 General Procedure of Sanctioning Loans and

Advances

23

3.7 Recovery Programs to be taken by JBL 28

3.8 Recovery Patterns and Loan and Advances 29

3.9 Problems in Loan Recovery 30

3.10 Credit Analysis 33

3.11 borrower Creditworthy 34

3.12 Loan Monitoring 36

3.13 Handling of Non-Performing Loans 37

3.14 Implications 37

3.15 Principles of Sound Lending 37

3.16 Total deposit of JBL 38

3.17 Total Investment of JBL 40

3.18 Loans and Advances 41

3.19 Credit to Deposit Ratio 43

3.20 Investment to Deposit Ratio 44

3.21 Industry wise Loan and Advances in 2013 45

3.22 Credit Distribution in jute industries 47

3.23 Credit Distribution in Tannery 54

3.24 Credit Distribution in Export 56

3.25 Credit Distribution in Import 57

3.26 Credit Distribution in Industrial credit 59

Chapter- 4 Findings, Conclusion and

Recommendation

62-64

4.1 Major Findings of the Study 62

4.2 Recommendation 63

4.3 Conclusion 64

Acronyms

JBL Janata Bank Limited

PAD Payment against documents

LTR Loan against trust receipt

ECC Export cash credit

CIB Credit Information Bureau

List of Table and Illustrations

SL. List of Table Page No.

2.1 Total Corporate Branches 8

2.2 Organizational Hierarchy 10

2.3 Services Provided By Janata Bank Limited 12

2.4 Different product of Janata Bank Limited 13

3.1 Classification and provisioning of non-

performing loans

17

3.2 trend of deposit 38

3.3 trend of Investment 40

3.4 trend of Loan and Advances 41

3.5 trend of credit to deposit ratio 43

3.6 trend of Investment to deposit ratio 44

3.7 trend of Industry wise Loan and advances 47

3.8 trend of jute industries 47

3.9 trend of tannery industries 48

3.10 trend of Export Credit 50

3.11 trend of Import Credit 51

3.12 trend of Industrial Credit 53

3.13 trend of area basis loans and advances 55

3.14 trend of Classified loans and advances 56

3.15 trend of Bad/Loss for Classified loans and

advances

57

3.16 trend of Income from Investment 59

List of Illustrations

2.1 Organizational Structure 11

3.1 Total Deposit 39

3.2 Growth Rate of Deposit 39

3.3 Total Investment 40

3.4 Growth Rate of Total Investment 41

3.5 Loans and Advances 42

3.6 Growth Rate of Loans and Advances 42

3.7 Credit to Deposit Ratio 43

3.8 Investment to deposit ratio 45

3.9 Industry wise Loan & Advances 46

3.10 Credit Distribution in jute industries 47

3.11 percentage of Credit Distribution in jute

industries

48

3.12 Credit distribution in tannery 49

3.13 percentage of Credit distribution in tannery 49

3.14 Credit distribution in export 50

3.15 percentage of Credit distribution in Export 51

3.16 Credit distribution in import 52

3.17 percentage of Credit distribution in Import 52

3.18 Credit distribution in Industrial credit 53

3.19 percentage of Credit distribution in Industrial

Credit

54

3.20 Geographical area basis distribution of loans

and advances

55

3.21 Classified Loans and Advances 56

3.22 Classified Loans and Advances 57

Introduction

1

Chapter One

1.1. Origin of the Report:

Now a day, education is not just limited to books and classrooms. From education the

theoretical knowledge is obtained from courses of study, which is only the half way of

the subject matter. Practical knowledge has no alternative. The perfect coordination

between theory and practice is of paramount importance in the context of the modern

business world in order to resolve the dichotomy between these two areas. Therefore,

an opportunity is offered by Dept. of Finance, University of BUBT, for its potential

business graduates to get three months practical experience, which is known, is as

“Internship Program”. For the competition of this internship program, the author of

the study was placed in a bank namely, “Janata Bank Limited” for a period of three

months (24th June, 2013 to 24th September, 2013).

1.2. Objectives of the Report:

Broad objective:

The broad objective of the study is to analyze the credit management of Janata Bank

Limited.

Specific objectives:

In order to analyze the credit management of Janata Bank Limited, the following

objectives can be listed as the specific objectives of the report.

To know the lending and recovery procedure of Janata Bank Limited.

To examine the trend of deposit and credit of Janata Bank Limited over the

year.

To analyze the industry wise and division wise loans and advances of Janata

Bank Limited.

2

To analyze the nonperforming loan of the Janta Bank Limited.

1.3. Methodology of the Report:

The study, Credit management of Janata Bank Limited, is descriptive in nature. The

study has been conducted mainly based on secondary data. Secondary data are

collected for the period of five years from 2009 to 2013. To analyze the credit

management of Janata Bank Limited, data are collected from annual report of Janata

Bank Limited. Website of Janata Bank Limited and different books are also sources of

the secondary data. Though the uses of primary data are limited in the study, some

information has also been collected from discussion with the officers of Janata Bank

Limited. Trend analysis is conducted to analyze the credit management of Janata

Bank Limited. Trend of deposit, credit, division wise and industry wise loan and

advances are analyzed in the study. The analysis of nonperforming loans is also made

to analyze the credit management of Janata Bank Limited. The trend line, pie diagram

are used to analyzed the credit management of Janata Bank Limited. The software like

Microsoft office and Microsoft excel are used for analyzing and reporting data in the

report.

1.4. Scope of the report:

The study, the Credit Management of Janata Bank Limited, is mainly limited to the

analysis of credit management Janata Bank Limited. The study encompasses the

overview of the Janata Bank Limited, lending and recovery procedure and trend of

loan and advances. Division wise loan and advances, industry wise loan and advances

3

and credit recovery performance of Janata Bank Limited also fall within the scope the

report

1.5. Limitations of the Report:

To prepare a report on the topic like this in a short duration is not easy task. From the

beginning to end, the study has been conducted with the intention of making it as a

complete and truthful one. In preparing this report some problems and limitations

have encountered which are as follows:

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

required for the study. There are various information the bank employee

cannot provide due to security and other corporate obligations.

As the data, in most cases, are not in organized way, the bank failed to provide

all information.

Due to time limitation, many of the aspects could not be discussed in the

present report.

Since the bank personnel were very busy, they could not pay enough time.

Lack of opportunity to access to internal data.

I had to base on secondary data for preparing this report.

Legal action related information was not available.

Lack of in-depth knowledge and analytical ability for writing such report.

4

Organization Overview

5

Chapter Two

2.1. History of Janata Bank Ltd:

Janata means people. This is a progressive Bank. Immediately after the emergence of

Bangladesh in 1971, the erstwhile United Bank Limited and Union Bank Limited

were nationalized and renamed as Janata Bank. It has been operating since it's

inception in 1972 both in Bangladesh and overseas. Janata Bank Ltd. has been playing

a significant role in the economic development of the country by mobilizing savings

and channelizing funds into different productive sectors. It is also a major player in

the fields of micro-credit and software development.

Janata Bank Ltd, the second largest commercial Bank in Bangladesh, has an

authorized capital of Tk 20000 million, paid up capital of Tk 8125 million. The Bank

has a total asset of Tk. 44,038.90 corer as on 31st December 2013.

Janata Bank Ltd. Operates through 886 branches including 4 overseas branches at

United Arab Emirates. It is linked with 1223 foreign correspondents all over the

world. The Bank employs more than 15(fifteen) thousand persons. The corporate head

office is located at Dhaka with 38 (thirty eight) Department. As a part the conscious

development of existing Human Resources, Janata Bank through its three training

institutes during the year 2013 imparted training to 4699 officers and staffs. It

computerized 90 important branches; nonstop services introduced in 88 branches;

ONLINE Banking in 60 important branches under important branches under

implementation; ATM, EFT facilities.

2.2. Mission of Janata Bank Ltd:

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.

6

2.3. Corporate Vision:

We aim to provide financial services to meet customer expectations so that customers

feel we are always there when they need us, and can refer us to their friends with

confidence. We want to be a preferred bank of choice with a distinctive identity. To

build a sustainable and respectable financial institution. To be a leading Commercial

Bank, with a social focus, assisting in the economic development of the country. The

Profit of the bank used for the Socio-economic development of the nation as a whole.

2.4. Corporate Objective:

The main objective of Janata Bank Limited is to provide all types of banking service

at the doorsteps of the people. The bank participates in various social and

development programs and also takes part in implementation of various policies and

promises made by the government

2.5. JBL at a Glance:

JBL is one of the largest commercial Bank in Bangladesh.

It operates through 886 fully computerized branches ensuring best possible

and fastest services to its valued clients.

The bank has more than 1223 foreign correspondents worldwide.

Total number of employees nearly 18,976.

The Board of Directors consists of 10 members.

7

Total Corporate Branches of Janata Bank Limited:

Local Office 1

Corporate-1 Branch 12

Corporate-2 Branch 40

Overseas Branch 04

Grade-1 Branch 204

Grade-2 Branch 209

Grade-3 Branch 296

Grade-4 Branch 120

Total Branches : 886

Table2.1. Total Corporate Branches

2.6. Strategies of JBL:

JBL Bank Limited mainly follows top down approach to take necessary decisions for

the company. Basically they follow the centralize strategy where the Head Office of

the Bank control and monitor all the activities of its branches. In case of marketing

strategy they basically depend on ‘word of mouth’ as they are already well reputed for

its long-term service in the banking industry.

8

2.7. Function of Janata Bank Limited:

1) Mobilization of savings of the people and safe keeping of all types of deposit

account.

2) Providing banking services to common people through the branches.

3) Introduce modern Banking services in the country.

4) Providing various information, guidance and suggestions for promotion of

trade and industry keeping in view of the overall economic development of the

country.

5) Finance under small business of self employed clients.

6) Finance of farming and non-farming activities to rural people including

purchase of agricultural equipments.

7) Developing new products Market surveys before making any finance

8) Monitoring diversification of portfolio among different sectors.

2.8. Human Resources Department:

In the Janata Bank, this department deals with the employees as the core resources of

the organization. This department mainly emphasize on the recruitment selection of

the employees. They are also motivating the employee to work efficiently and

effectively.

9

2.9. Organizational Hierarchy:

No. Name of Directors Position

1. Dr. Abul Barkat Chairman

2. Dr. Jamaluddin Ahmed FCA Director

3. Mr. Md. Nazibar Rahman Director

4. Advocate Balaram Podder Director

5. Mr. Dabir Uddin Ahmed Director

6. Dr. Md. Abdur Rouf Sardar Director

7. Al-haj A.K.M. Shahjahan Director

8 Dr. R.M. Debnath Director

9 Mr. Md. Emdadul Hoque Director

10 Mr. S.M. Aminur Rahman CEO & MD

Table2.2. Organizational Hierarchy

10

2.10. Organization Structure of Janata Bank Ltd:

Figure-2.1. Organization Structure of JBL

2.11. Services Provided By Janata Bank Ltd

General Service Savings Account

Current Account

Corporate Account

Short term Deposit

Deposit Service

Fi Fixed Deposit Scheme

Special Savings Scheme

Special Deposit Scheme

11

Education Saving Scheme

Loan Scheme Loan General

Terms Loan

Transport Loan

Project Loan

Loan against Imported Merchandise

Loan against Trust Receipt

Loan Against Packing Credits

Loan Against House Building

Housing Loan Scheme

House Repairing Loan Scheme

Consumers Finance Scheme

Festival Small Business Loan Scheme

Festival Personal Loan Scheme

Small Business Loan Scheme

Personal Loan Scheme

Cash Credit

Table2.3. Services Provided By Janata Bank Ltd

Special service provided by Janata Bank Limited:

12

a) Sale of admission froms of Dhaka University: Janata Bank Limited provide

special service sale admission froms of Dhaka University.

b) Receipts of admission related money: Janata Bank Limited receipts admission

related money.

c) Doing various academic transactions: Janata Bank Limited also doing various

academic transactions.

2.12. Different product of Janata Bank Limited:

Taka in million

Sl.

No.

Name of product No of

loanees

Outstanding

Amount 2013

%

1 Crop loan program 354905 8132.83 48.26

2 4% interest for Pulses,Oilseeds,

Spices&Maize Crops

6262 203.40 1.21

3 Agriculture& Irrigation Equipment 174 10.00 0.06

4 Fisheries &shrimp culture Credit 818 172.13 1.02

5 Financing “ women entrepreneurship” 190 54.55 0.32

6 Diversified Credit Program 48204 1041.38 6.17

7 Credit for forestry/ horticulture nursery 720 11.25 0.07

8 NGO linkage loan 44 661.63 3.92

9 Financing goat and sheep farming 8370 103.86 0.62

13

10 Gharoa project 3389 68.13 0.40

11 Small business Dev. Loan 144 4.49 0.03

12 Credit program for employees 84852 2866.37 17.00

13 Doctor’s loan 48 11.04 0.07

14 Cyber-café loan 8 1.03 0.01

15 Credit for disable people 109 1.67 0.01

16 Consumer’s Credit 837 176.78 1.05

17 Agro Based project 480 581.75 3.45

18 Interest free credit program 170 1.70 0.01

19 Others 117911 2749.80 16.32

Total 627635 16853.79 100.0

Table2.4. Different product of Janata Bank Limited

14

Analysis & Evaluation

15

Chapter Three

3.1. Loans and Advances:

The main focus of Janata Bank Credit Line/Program is financing business, trade and

industrial activities through an effective delivery system. Janata Bank offers credit to

almost all sectors of commercial activities having productive purpose.

The loan portfolio of the Bank encompasses a wide range of credit programs covering

about 200 items. Credit is also offered to 15 (fifteen) thrust sectors, as earmarked by

the govt., at a reduced interest rate to develop frontier industries. Credit facilities are

offered to individuals, businessmen, small and big business houses, traders,

manufactures, corporate bodies, etc.

Following the guidelines of Bangladesh Bank, credit facilities have been extended to

productive and priority sectors. The outstanding advance of the bank is Tk 257801

million on 31st December 2013. In credit facilities, the Bank has given due importance

to sartorial needs and requirements of both public and private sector.

3.2. Loans and Advances of JBL:

The Bank continued to consolidate and diversify its portfolio in 2013 to have a

diversified client base and portfolio distribution across the sectors to reduce client

specific concentration and industry specific concentration and to reduce overall

portfolio risk. Total loans and advances of the bank stood at Tk. 257801 million

during the year 2013 as compared to Tk. 225732 million of the previous year . Sector

wise allocation of advances revealed a well- diversified portfolio of the bank with

balanced exposure in different sectors. Janata Bank Limited Mirpur-1 Branch is

situated in Mirpur, and Dhaka which is very imported place of Dhaka city. It is a very

big and important branch of JBL. The Branch give various Kinds of Loan to the

16

borrower like CC Hypo (Cash Credit Hypo), CC Pledge (Cash Credit Pledge),

Overdraft (Second Overdraft), UHRL (Uttaran House Repairing Loan), SBL (Small

Business Loan), PL (Personal Loan).

3.3.Credit Management

Loans or credits comprise the most important asset as well as the primary source of

earning for the banking institutions. On the other hand, loan/credit is also the major

source of risk for the bank management. A prudent bank management should always

try to make an appropriate balance between its return and risk involved with the loan

portfolio. Credit appraisal process is the tool, which helps the bank to predict the risk

and return on the proposed project for credit disbursement. To get a clear idea about

credit appraisal process we need to know the key factors of credit appraisal

procedures.

3.4. Classification and provisioning of non-performing loans:

a. Types of

classification

1st stage 2nd stage 3rd stage 4th stage 5th stage

Period

overdue

Period

overdue

Period

overdue

Period

overdue

Period

overdue

Unclassified Less than

18 months

Less than

12 months

Less than

19 months

Less than 6

months

Less than 3

months

Substandard 18 months

or more but

less than

36 months

12 months

or more but

less than

24 months

9 months

or more but

less than

24 months

6 months

or more but

less than 12

months

3 months or

more but less

than 6

months

Doubtful 36 months 24 months 12 months 9 months 3 months or

17

or more but

less than

48 months

or more but

less than

36 months

or more but

less than

24 months

or more but

less than 12

months

more but less

than 6

months

Bad More than

48 months

36 months

or more

36 months

or more

24 months

or more

12 months or

more

b. Rate of

provision

Unclassified:

Standard 5% 2% 2% 2% 1%

SMA 5% 5% 5% 5% 5%

Classified:

Substandard 20% 20% 20% 20% 20%

Doubtful 50% 50% 50% 50% 50%

Bad 100% 100% 100% 100% 100%

c. Period of

classification

Annual

basis

Half yearly

basis

Half yearly

basis

Quarterly

basis

Quarterly

basis

For loan classification Bangladesh Bank also issues circular time to time after

27/12/1994 like BPRD circular no 16,9,2,9 and 17 of 6/12/1998, 14/5/2001,

15/3/2005, 25/8/2005, 6/12/2005 and 2006 respectively. Some of these are as follows:

Status, type and definition of classification

Status loan type Definition of status

Unclassified . all current loan all current loans with

18

required eligible security

Sub Standard (SS)

When degree of risk for

non-payable is high but

there is reasonable respect

that the loan condition can

be improved

Continuous/demand/ term

loan

(less than 5 years)

more than 5 years

short term agri. credit and

micro credit

overdue is more than 3

months but less than 6

months if default amount

of installment is equal to

installment payable in 6

months

If default amount of

installment is equal to

installments payable in 12

months.



months

Doubtful (DF)

When chance of recovery is

uncertain

Continuous and demand

Term loan less than 5

years



months




months.

19

More than 5 years

Short term agri. credit and

micro credit




to 18 months.

Overdue is more than 36


months.

Bad/ loss (BL)

No security held, borrower

not traceable, time barred

loans, no hope of recovery

Continuous and demand

Term loan

(up to 5 years)

more than 5 years

Short term agri. credit and

micro credit


months



installment payable in18

months.



installment payable in 24

months.


months

20

Table3.1. Classification and provisioning of non-performing loans

3.5. Types of Loans and Advances of Janata Bank Limited:

Loan product:

21

a) Continuous Loan:

Secured over draft against financial obligation.

Secured over draft against work order.

Cash credit (Hypothecation).

Cash credit (pledge).

Export cash credit (ECC).

b) Demand loan:

Loan general.

Demand loan against ship breaking.

Payment against documents (PAD).

Loan against trust receipt (LTR).

Forced loan.

Packing credit.

c) Term loan:

Project loan.

Transport loan.

House building loan.

Small business loan.

Consumer finance loan.

Lease finance.

Personal loan.

3.6. Lending procedure of Loans and Advances of JBL:

22

The following procedure is applicable for giving loans and advances to the customer.

These are:

a) Party’s application

b) Filling form-A

c) Collecting CIB report from Bangladesh Bank

d) Processing loan proposal

e) Project appraisal

f) Head office approval

g) Sanction letter

h) Documentation

i) Disbursement

A. Party’s application:

At first borrower has to submit an application to the respective branch for loan, where

he/she has to clearly specify the reason for loan. After receiving the application from

the borrower Bank officer verifies all the information carefully. He also checks the

account maintained by the borrower with the Bank. If the official becomes satisfied

then he gives form-A (prescribed application form of Bank) to the prospective

borrower.

B. Filling Form –A:

23

After satisfying with party’s application the applicant need to fill Form-A. It is the

prescribed form provides by the respective branch that contains information of the

borrower. It contains- Name with its factory location, Official address and telephone

number, details of past and present business, its achievement and failures, type of loan

needed etc.

C. Collecting CIB Report from Bangladesh Bank:

After receiving the application for advance, Janata Bank Limited sends a letter to

Bangladesh Bank for obtaining a report from there. This report is called CIB (Credit

Information Bureau) report. Janata Bank Limited generally seeks this report from the

head office for all kinds of Investment. The purpose of this report is to being informed

that whether the borrower has taken loan from any other Bank; if ‘yes’ then whether

the party has any overdue amount or not.

D. Processing loan Proposal:

After receiving CIB report from Bangladesh Bank, then respective branch prepare an

Investment proposal, which contains terms and conditions of Investment for approval

of Head Office. Documents those are necessary for sending Investment proposal are

Loan application, photograph of the borrower duly attested, personal information of

borrower, CIB report, legal opinion, trade license, stock report, net worth calculation

of business and individual, working capital assessment, financial statement, SME

information and CRG. Janata Bank Limited prepares the proposal in a specific form

that contains following relevant information-

Borrower,

capital structure,

24

Address,

Account opening date,

Introduced by type of business,

Particulars of previous sanctions,

Security (existing and proposed),

Components on the conduct of the account,

Details of deposit,

Liabilities with other Banks,

CIB report,

Rated capacity of the project (item wise),

Production/purchase during the period,

Sales during the period,

Earning received for the period.

E. Project Appraisal:

It is the pre-investment analysis. Project appraisal in the Banking sector is important

for the following reasons:

To achieve organizational goals.

To recommend if the project is not designed properly.

To justify the soundness of an investment.

To ensure repayment of Bank finance.

25

Techniques of Project Appraisal:

An appraisal is a systematic exercise to establish that the proposed project is a viable

preposition. Appraising officer checks the various information submitted by the

promoter in first information sheet, application for Investment and Investment

proposal.

Janata Bank Limited considers the following aspects in appraising a proposal.

Technical viability

Commercial viability

Financial viability

Economic viability

The Head Office (HO) mainly checks the technical, commercial and financial

viability of the project. For others HO is dependent on branch’s information. But

when the investment size is big, then the HO verifies the authenticity of information

physically.

F. Head Office Approval:

When Head office receive appraisal from the branch then, Head Office again

appraises the project. If it seems to be a viable one, the HO sends it to the Board of

Directors for the approval of the Investment. The Board of Directors (BOD) considers

the proposal and takes decision whether to approve the Investment or not. If the BOD

approves the Investment, the HO sends the approval to the concerned branch. The

respective officer of Head Office appraises the project by preparing a summary named

“Top Sheet” or “Executive Summary” and then he sends it to the Head Office Credit

Division for the approval of the Loan. The Head Office Credit Division considers the

26

proposal and takes decision whether to approve the Investment or not. If the

committee approves the Investment; the HO sends the approval to the concerned

branch.

G. Sanction Letter

After getting the approval of the HO the branch issues sanction letter to the borrower.

A sanction letter contains:

Name of borrower,

Facility allowed,

Purpose,

Rate of interest,

Period of the Investment and mode of adjustment,

Security and Other terms and condition.

H. Documentation:

If the borrower accepts the sanction letter, the Documentation starts. Documentation

is a written statement of fact evidencing certain transactions covering the legal aspects

duly signed by the authorized persons having the legal status. The most common

documents used by the Janata Bank Limited for sanctioning different kinds of

Investment are:

Demand Promissory Note,

Letter of Arrangement,

Letter of Disbursement,

Letter of Installment,

27

Letter of Continuity,

Trust Receipt,

Counter Guarantee,

Stock Report,

Letter of Lien,

Status Report,

Letter of Hypothecation,

Letter of Guarantee

Documents Relating to Mortgage.

I. Disbursement:

After sanction and completion of all formalities the respective officer disburses the

loan. The officer writes cheque and provides it to the borrower. For this borrower has

to open an account thorough which he/she can withdraw the money.

3.7. Recovery Programs to be taken by JBL Ltd.

To establish credit supervision and monitoring cell in the bank

To re-structure the loan sanctioning and distributing policy of the bank

To sanction loans and advances against sufficient securities as best as

possible

to give more powers to the branch manager in credit management decision

making process

28

To offer a package of incentives to the sound borrowers

To give more emphasis on short term loans and advances

To impose restrictions on loans and advances for sick industries

To take legal actions quickly against unsound borrowers as best as

possible within the period specified by the law of limitations.

3.8. Recovery Patterns and Loan and Advances

Generally Janata bank Ltd. sanctions loans and advances to every sector of an

economy. Before going into details of recovery performance, we have to be familiar

with some terms used in recovery performance:

Disbursement: highest outstanding balance on any date during the reporting

period minus outstanding balance at the end of the preceding period.

Demand for recovery: overdue at the end of the reporting period plus recovery

during the reporting period.

Recovery: highest outstanding balance on any date during the reporting period

minus outstanding balance at the end of the recovery period.

Outstanding: Outstanding figures in the ledger at the end of the reporting

period.

Overdue: Demand for recovery minus recovery.

3.9. Problems in Loan Recovery

There are a lot of reasons for which the loan recovery of the bank is very defective. In

most cases, problems may be raised from sanctioning procedures of loan,

investigation of the project, and investigation of the loans etc. that is, the problem in

29

loan recovery proves the outcomes of the default process in loan disbursement. The

main reasons of poor loan recovery are categorized in four broad types as follow:

A. Problems created by economic environment

The following problems arise from the effect of economic environment:

1. Changing in the management pattern: Changing of management patterns

may delay the recovery of mature loan.

2. Changing in industrial patterns: The nationalized banks sometimes sanction

loan to the losing concern for further improvement of the respective sector, but

in most cases, they fail to achieve progress.

3. Operation of open market economy: In our country mainly industries

become sick and also close their business on account of emerging of open

market economy. The cost of production is high and the quality of goods is not

of required of standard. As a result, they become the losing concerns and the

amount of bad loan increases.

4. Rapid expansion of business: There are many companies which expand their

business rapidly, but the expansion is for short time. In the long run, the

amount of classified loan increases.

B. Problems created by government

The following problems are arisen by the government:

1. External pressure: Janata Bank Ltd. has also faced many problems in

the loan recovery process as a part of continuous pressure from various

interested groups.

30

2. Loan to government organization: Janata Bank Ltd. is bound to

sanction loan to government organization, though these are losing

concern. For this reason, banks faced problems in loan recovery.

3. Legal problems: Existing rules and regulations are insufficient to cover

the legal aspects of loan recovery. As a result, defaulters can get

release easily from all charges against them.

4. Frequent changes in government policies in regard to recovery of loan.

C. Problems created by the bank:

The following problems are created by the banks:

1. Lack of analysis of business risk: Before lending, Janata Bank Ltd. does not

properly analyze the business risk of the borrowers and the bank cannot

forecast whether the business will succeed or fail. If it fails to run well, the

loan becomes classified.

2. Lack of proper valuation of security or mortgage property: In most cases,

bank fails to determine the value of security against the loan. As a result, if

the loan becomes classified, the bank cannot recover its loan through the sale

of mortgage.

D. Other general causes of poor loan recovery:

Apart from the specific reasons creating problems to recoup loan, there exists some

other general causes which have a great impact on creating the problems which are

faced by the Janata Bank Ltd. under study in the loan recovery process. These are:

1. Early sanction and disbursement of loan to the borrowers without proper

inspection of the project by the bank on account of pressure from lobbying

group.

31

2. Lack evaluation of technical and economic feasibility of the program.

3. Delay in disbursement of credit.

4. Credit is not allowed to actual entrepreneurs.

5. Lack of proper supervision.

6. Illiteracy of borrowers.

7. Negative attitude of borrowers to repay the loan.

8. Deterioration of the value system of the borrowers.

9. Money borrowers use their loan-money other than specified project, i.e., if

the loan is sanctioned for industrial purpose; they use the money in house

building or purchase of land for their own purpose.

10. Sometimes borrowers invest their money outside the country. Many

borrowers transfer loan money to abroad where they deposited this money in

their own account or spent some other purpose.

11. Sometimes local borrowers are found to be so much compelled to grant them

loan without proper study due to some unexpected reasons. Since these

borrowers are capable of getting loan by exercising their influence, they can

also escape the repayment liability.

12. Problems responsible for non-implementation and delayed implementation

of project for which the entrepreneurs of the project cannot repay the loan.

The causes of failure may be:

Failure to ascertain the economic availability of the projects

Time lag between approval and sanctioning of the projects

Import of machinery and raw materials both are the problems

of paucity of foreign exchange and procedures of licensing.

32

All of these reasons discussed above are general reasons for problems loan recovery

of Janata Bank Ltd. Besides these, there are some specific reasons for loan recovery

problems faced continuously by Janata Bank Ltd. They are as:

Loans are given under fictitious names and enterprise

Loans are given without sufficient securities

Approval of the loans in excess of the branch manager’s power

Improper monitoring and supervision of credit

Political misuse if loan programs operated by the public sector banks

Lack of timely action against willful defaulter

Loans are sometimes for economically unsound project.

Problems in loan recovery are the outcome of the default on loans disbursements in

the earlier period.

3.10. Credit Analysis: What makes a Good loan?

Credit analysis is the analysis of financial statement of business customers for the

purpose of lending. It is conducted to determine whether the customer is creditworthy

and whether the customer has sufficient cash flows and backup assets to repay the

loan. The following major issues should examine in credit analysis:

Is the borrower creditworthy?

33

Whether purpose of the loan is consistent with bank’s credit policy and

government regulations?

Whether customer/or his business have the ability to generate enough

cash to repay the loan.

Whether sufficient security has been offered. So that in the event of

default bank’s fund can be recovered.

Fixing amount of loan, terms and conditions, documentations, etc.

meet the needs of the borrower and to protect the interest of the bank.

3.11. Is the borrower Creditworthy?

Janata Bank Limited analysis borrowers credit worthiness by the following ways:

A) Character:

To determine whether the borrower has a responsible attitude towards

borrowed funds and whether he will have every effort to repay what is

owed.

Responsibility, truthfulness, serious purpose, and serious intention to

repay loans make up the characters of the borrower.

B) Capacity:

Whether customer requesting loan has the authority to request loan and

have the legal standing to sign loan agreement and documents.

C) Economic Condition/ Assets:

34

Whether borrower has sufficient assets to repay the loan.

Other loans and liabilities of the borrower.

D) Credit history/Credit habit:

Whether loans borrowed by the customers previously and how those

earlier loans were handled.

Whether there is any loan default earlier.

Whether legal action has ever been taken against him for recovery of

default loan.

E) Credit Rating:

Credit Ratings of the borrower by credit rating agencies.

F) Purpose of the loan:

Customer must have a well-defined purpose for requesting the loan.

The purpose of the loan must be consistent with the bank’s existing

credit policy.

The purpose of the loan also should have consistent with government

regulations.

3.12. Loan Monitoring:

35

Loan monitoring is important to know whether the loan is disbursed correctly or not.

If the monitoring authority thinks that the loan is risky then they want to recover the

loan as early as possible. It includes a reporting system and communication

arrangement between the borrower and the lending institution. The following steps are

followed by respective officer.

Regular communication with the defaulter customers and guarantors

physically and over telephone.

Regular checking the balance of SB/CD/STD accounts of the borrower.

Issuance of appreciation or greeting letter to the regular customers.

Issuance of letter to customers immediately after dishonor of cheque.

Issuance of legal notice to the defaulter customers and guarantors prior to

classification of the loans.

Periodical visit with the customers to maintain relationship and supervision of

supplied articles.

Legal action to be taken after failings all possible efforts to recover the bank’s

due.

3.13. Handling of Non-Performing Loans:

36

If a borrower cannot repay installment or interest on a loan after it has become due

then it is called default loan or non-performing loan. It is known as non-performing

because the loan can’t “perform” or generate income for the bank.

3.14. Implications:

The implication of non-performing loans are not only depriving of interest but also

stoppage of creating new loans for blockage of the fund and erosion of banks

profitability, liquidity and solvency, which might sometimes lead towards collapse of

a bank. So, it is become essential for policy makers of a bank to study the loan default

scenario on a routine basis for estimating classified loan, making appropriate

provisioning, adopting effective recovery strategy and thus ensuring soundness and

efficiency of the bank.

3.15. Principles of Sound Lending:

a) Safety:

‘Safety first’ should be guiding principle of a banker. Janata Bank Limited exercises

the lending function only when it is safe and the risk factor is adequately mitigated

and covered. Safety depends upon:

The repaying capacity and willingness of the borrower is to repay the

advance.

The security offered by the borrower.

b) Liquidity:

37

The liability of a Bank is repayable of demand or at a short notice. So the Bank has to

maintain its liquidity at a sufficient level. Investment on building, plant, machinery,

land etc. cannot be recovered quickly, so it is less liquid.

c) Profitability:

Profitability is the pre condition for investment. Each individual and organization

invests to get some positive output. Profit is needed to pay interest to depositors,

depreciation, and maintenance, declare dividend to share holders, provide or reserve

against bad and doubtful debts etc. So Janat Bank Limited also disburses advances

when they see positive return from investment.

d) Security:

Security is first condition for sound lending. To ensure safety of advances, Banks

takes different types of securities like land, work order etc. Banker should ensure that

the securities are adequate, marketable and free from encumbrances before disburse

the loan.

3.16. Total deposit of JBL:

Year 2009 2010 2011 2012 2013

Total Deposit(Taka

In Millions)

198635.68 221335.75 246175.05 286566.89 361676.69

Growth Rate of

Deposit

8.57% 11.42% 11.22% 16.41% 26.21%

Table 3.2: trend of deposit

Source: Janata Bank Limited, Annual report 2009-2013

Graphical Presentation

38

Figure-3.1: Total Deposit

Figure-3.2: Growth Rate of Deposit

Interpretation:

The above graph shows an upward trend in total deposit mobilization of JBL from

2009 to 2013. In 2009, the total deposit was Tk. 198635.68 million but in 2013 it was

Tk. 361676.69 million. Growth rate of deposit has increased over the years except in

2009. This is due to increase in branches and increase in interest rate over the years.

3.17. Total Investment:

39

Year 2009 2010 2011 2012 2013

Total Investment(taka in

Millions)

55862.93 57823.53 72533.2 57514 90905.8

6

Growth Rate of Investment 1.25% 3.50% 25.44% -

20.71%

58.06%

Table 3.3: trend of Investment


Graphical Presentation

Figure-3.3: Total Investment

40

Figure-3.4: Growth Rate of Total Investment

Interpretation:

The graph shows that the total investment of Janata bank Limited has increased over

the years. In 2009 the total investment was Tk. 55862.93million. It was increased to

Tk. 90905.86 million in 2013. That means investment has increased by Tk.

35042.93million from 2009 to 2013. The growth of investment has however

fluctuated over the years.

3.18. Loans and Advances:

Year 2009 2010 2011 2012 2013

Loans and Advances(in

millions)

121204 144678 166359 225732 257801

Growth Rate of Loans and

Advances

-12.00% 19.37% 14.99% 35.69% 14.21%

Table 3.4: trend of Loan and Advances


Graphical Presentation:

41

Figure-3.5: Loans and Advances

Figure-3.6: Growth Rate of Loans and Advances

Interpretation:

The loans and advances of Janata Bank Limited have increased over the year. In 2009

the total loans and advances was Tk. 121204 million but it was increased to Tk.

257801 million in 2013. It means loans and advances have increased by Tk. 136597

million from 2010 to 2013. Though there is an upward trend in loan and advances, its

growth rate has fluctuating over the years.

3.19. Credit to Deposit Ratio:

Credit to deposit ratio measures the portion of deposit is in the form of loans and

advances

Credit to Deposit Ratio = Total Credit / Total Deposit

Year 2009 2010 2011 2012 2013

Credit to

Deposit Ratio

61.02% 65.36% 67.58% 78.77% 71.28%

42

Table 3.5: trend of credit to deposit ratio


Figure-3.7: Credit to Deposit Ratio

Interpretation:

There is an increasing trend of credit to deposit ratio of JBL from 61.02% in 2009 to

78.77% in 2009. However, the credit to deposit ratio has decreased from 78.77% in

2009 to 71.28% in 2013. This indicates that efficiency of the JBL in using its deposits

into loan and advances.

3.20. Investment to Deposit Ratio:

43

Investment to deposit ratio measures the portion of deposit used for investment. The

more the ratio is the more the bank is using its deposit as investment

Investment to Deposit Ratio = Total Investments / Total Deposits

Year 2009 2010 2011 2012 2013

Investment

to Deposit

ratio

28.12% 26.12% 29.46% 20.07% 25.13%

Table 3.6: trend of Investment to deposit ratio



44

Figure-3.8: Investment to deposit ratio

Interpretation:

The investment to deposit ratio has fluctuated over the year. The investment to deposit

ratio of Janata Bank Limited in 2009 was 28.12%, in 2010 it has decreased at 26.12%.

However, the investment to deposit ratio has reduced from 28.12% in 2009 to 25.13%

in 2013.

3.21. Industry wise Loan and Advances in 2013:

SL. No. Particulars Taka in Millions In Percentage

1 Import Credit 60,633 23.51%

2 Industrial Credit 41,551 16.11%

3 Export Credit 38,195 14.82%

4 Rural Credit 16,352 6.34%

5 Jute Industries 4,627 1.79%

6 Others 96443 37.41%

Table 3.7: trend of Industry wise Loan and advances



45

Figure-3.9: Industry wise Loan & Advances in 2013

Interpretation:

The pie graph shows that Janata Bank Limited uses large portion of fund in import

financing which is 23.51% of total credit. The JBL distributed 16.11% in industrial

credit. The JBL provided loan in export and rural credit respectively 14.82% and

6.34% in 2013.

3.22. Industry wise distribution of loans and advances :

a) Credit Distribution in jute industries:

Year 2009 2010 2011 2012 2013

Credit Distribution in jute

industries(taka in millions)

8,997.50 8,809.30 9,201.20 12,703.80 4,627.90

46

Jute industries credit as a

percentage of total credit

7.42% 6.09% 5.53% 5.63% 1.80%

Table 3.8: trend of jute industries



Figure-3.10: Credit Distribution in jute industries

Figure-3.11: percentage of Credit Distribution in jute industries

Interpretation:

The graph shows that the credit distribution in jute industries has fluctuated year by

year. In 2009, Credit Distribution in jute industries was Tk. 8,997.50 million but in

2013 it was Tk. 4,627.90 million. That means Credit Distribution in jute industries

decreased by Tk. 4369.6 million from 2009 to 2013. The jute industries credit as a

percentage of total credit has decreased by 5.62% from 2009 to 2013.

47

b) Tannery:

year 2009 2010 2011 2012 2013

Credit distribution in tannery(taka in

millions)

4150.60 4,613.30 5,315.80 4,722.50 4100

Tannery credit as a percentage of

total credit

3.42% 3.19% 3.20% 2.09% 1.59%

Table 3.9: trend of tannery industries



Figure-3.12: Credit distribution in tannery

48

Figure-3.13: percentage of Credit distribution in tannery

Interpretation:

The graph shows that credit distribution in tannery has increased from tk 4150.6

million in 2009 to tk 5315.8 million in 2009. The tannery credit, however, decreased

over the last two years. However, the tannery credit as a percentage of total credit has

decrease from 3.42% in 2009 to 1.59% in 2013.

c) Export credit

year 2009 2010 2011 2012 2013

Credit distribution in

export (taka in millions)

14,835.9 15,550 19,082.7 28,266.5 38,195.6

Export credit as a


12.24% 10.75% 11.47% 12.52% 14.82%

Table 3.10: trend of Export Credit



49

Figure-3.14: Credit distribution in export

Figure-3.15: percentage of Credit distribution in Export

Interpretation:

The graph shows that the credit distribution in export has increased from Tk 14835.9

million in 2009 to tk 38195.6 million in 2013. That means Credit Distribution in

export increases by tk 23359.7 million from 2009 to 2013. The export credit as a

percentage of total credit has increased by 2.58 % from 2009 to 2013.

d) Import credit:

50

year 2009 2010 2011 2012 2013

Credit distribution in import

(taka in millions)

14,216.5

0

32,510.0032,704.

80

52,760.00 60,633.7

0

Import credit as a percentage

of total credit

11.73% 22.47% 19.66% 23.37% 23.52%

Table 3.11: trend of Import Credit



Figure-3.16: Credit distribution in import

Figure-3.17: percentage of Credit distribution in Import

51

Interpretation:

The graph shows that the credit distribution in import credit has increased year by

year. In 2009 credit distribution in import credit was Tk. 14216.50 million but in 2013

it was Tk.60633.50 million. That means credit distribution in import credit increases

by tk 46417 million from 2009 to 2013. The import credit as a percentage of total

credit has increased by11.79 % from 2009 to 2013.

e) Industrial credit:

year 2009 2010 2011 2012 2013

Credit distribution in

Industrial credit (taka in

millions)15,963.90 17,160.00

22,372.07 40,054.00 41,551

.00

Industrial credit as a


13.17% 11.86% 13.45% 17.74% 16.12

%

Table 3.12: trend of Industrial Credit



52

Figure-3.18: Credit distribution in Industrial credit

Figure-3.19: percentage of Credit distribution in Industrial Credit

Interpretation:

There is an increasing trend in credit distribution in industrial credit. In 2009 Credit

Distribution in industrial credit was Tk. 15963.90 million but in 2013 it was Tk.41551

million. That means credit distribution in industrial credit has increased by tk 25587.1

million from 2009 to 2013. The industrial credit as a percentage of total credit has

increased by 3.12 % from 2009 to 2013.

3.23. Geographical area basis distribution of loans and advances for year 2013:

53

SL.No. Particulars Taka in millions Percentage

1 Dhaka Division 180,960.03 70.67%

2 Chittagong Division 37,983.00 14.83%

3 Khulna Division 15,769.00 6.16%

4 Barisal Division 2,569.00 1.00%

5 Rajshahi Division 9,644.00 3.77%

6 Sylhet Division 1,554.00 .61%

7 Rangpur division 7,593.00 2.97%

Table 3.13: trend of area basis loans and advances



Figure-3.20: Geographical area basis distribution of loans and advances

Interpretation:

54

The above diagram shows that Janata Bank Limited distributed large portion of its

total credit in Dhaka Division. In Dhaka Division JBL distributed 70.67% whereas

bank distributed 14.83% in Chittagong Division and 6.16% in Khulna division. It has

been viewed that only 1% of their geographical credit distribution goes to Barisal

division and .61% goes to Sylhet division and 2.97% in Rangpur division.

3.24. Classified Loans and Advances as a percentage of Total Loans and

Advances:

year 2009 2010 2011 2012 2013

Classified Loans and Advances (Tk.

in Millions)

19230 14630 13,424 11,192 14343

Classified Loans and Advances as a

percentage of Total Loans and

Advances

15.87% 10.11% 8.07% 4.96% 5.56%

Table 3.14: trend of Classified loans and advances



Figure-3.21: Classified Loans and Advances

55

Figure-3.22: Classified Loans and Advances as a percentage of Total Loans and

Advances

Interpretation:

The classified loan has decreased over the years except in 2013. The classified loan as

percentage of total loan has decreased from 15.87% in 2009 to 4.95% in 2009. This is

good sign for the loan. However the classified loan as a percentage of total loans has

increased in 2013.

3.25. Bad/Loss for classified loans and advances:

year 2009 2010 2011 2012 2013

Bad/Loss for classified loans

and advances(Tk. in

Millions)

15145 11694 10250 9399 10195

Bad/Loss percentage of Total

Loans and Advances

78.75% 79.93% 76.36% 83.98 71.08

Table 3.15: trend of Bad/Loss for Classified loans and advances


56


Figure-3.23: Bad/Loss for classified loans and advances

Figure-3.24: Percentage Bad/Loss for classified loans and advances

Interpretation:

The graph shows that, the Bad or Loss as a percentage of Classified Loans and

Advances of janata Bank Limited has fluctuated over the years. In 2009 the Bad or

Loss as a percentage of Classified Loans and Advances was 78.75% but in 2013 it

stood at 71.08%. This indicates that bank has succeeded to prevent its classified loan

to become bad or loss.

57

3.26. Income from Investment:

year 2009 2010 2011 2012 2013

Income From Investment (taka

in millions)

1574 4157 5602 6956 6109

Percentage of Income From

Investment

2.81% 7.19% 7.72% 12.09% 6.72%

Table 3.16: trend of Income from Investment



Figure-3.25: Income from Investment

58

Figure-3.26: Percentage of Income from Investment

Interpretation:

The graph shows that income from investment has increased from tk 1574 million in

2009 tk 6109 million in 2013. The percentage of income from investment has

fluctuated over the years. The percentage of income from investment has decreased

from 12.09% in 2009 to 6.72% in 2013.

59

Findings, Recommendation

and Conclusion

60

Chapter four

4.1 Major Findings:

The major findings from the analysis of credit management of Janata Bank Limited

are the followings.

The total deposit of Janata Bank Limited has increased over the years. The

growth rate of total deposit has also increased over the year except in 2009.

There is an increasing trend in loan and advances of Janata Bank Limited over

the years. However, the growth of loan and advances has fluctuated over the

years.

Loan and advances in jute and tannery as percentage of total loan and

advances has decreased over the years of analysis.

Janata Bank Limited has increased its loan advances over the years in import,

export and industrial credit.

JBL concentrated more on Dhaka division to provide loan and advances in

2013.

The classified loan as a percentage of total and advances has decreased from

15.87% in 2009 to 5.56% in 2013.

61

4.2 Recommendation

The following recommendations can be made based on the findings of analysis of

credit management of Janata Bank Limited.

Bank should give more effort to maintain and improve its trend of deposit by

developing new savings instruments like Probashi Current Account of Brac

Bank Limited that provides the depositors with online banking facility.

JBL provides lower portion of credit in Sylhet and Barisal Division which

were 0.61% and 1.00% respectively in 2013. The bank should increase their

percentage of credit in Sylhet and Barisal Division.

Bank should make valuation of security and mortgage property properly

before sanctioning loan to prevent the loan from being classified.

Bank should monitor the borrower to ensure the proper use of loan.

The JBL should asses the client properly by screenings the information of

client regarding his character, capacity, capital.

62

4.3 Conclusion:

Credit management is becoming more and more important in today's competitive

business world. It is all the more important in the context of Bangladesh. The tools for

improving management of consumer credit risk have advanced considerably in recent

years. Therefore, as a responsible and reputed commercial bank, Janata Bank has

instituted a contemporary credit risk management system. From the study, it is evident

to very sector and preferential treatments to some big clients should also be stopped.

However that the bank is quite sincere in their approach to managing the consumer

credit risk though there are rooms for improvement. They have to be more cautious in

the rec, they follow an in-depth procedure in assessing the credit risk by using the

credit risk grading techniques which provides them a solid ground in the time of any

settlement. From the discussion in this report, it has become clear that credit risk

management is a complex and ongoing process and therefore financial institutions

must take a serious approach in addressing these issues. They have to be up to date in

complying with all the required procedures and must employ competent people who

have the ability to deal with these complex matters. Utmost importance should be

given to environment and obviously for efficient and effective credit risk management

process.

63

C.R Kotheri, Research Methodology, Second Edition, 2003-2004, Wishwa

Prakashan, Calcutta, India.

Janata Bank Limited, Annual Report of Janata Bank Limited 2009



Janata Bank Limited, overview of Janata Bank Limited <http://www.janatabank-

bd.com/jb1.htm> viewed 17 October 2013.

Maheshwari ,S.N. Banking law and practice, 11th edition,2013

64

BIBLIOGRAPHY

Date post:	25-Dec-2015
Category:	Documents
Upload:	faruk
View:	215 times
Download:	2 times