Specialized Commercial Bank Bangladesh

Operational Efficiency & Financial Performance

Chapter-1

Introduction & Background of the Study

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1. Introduction to the Study:

1.1 Background:

As a requirement of partial fulfillment of MBA major in Finance a thesis report is assigned to me

on “Operational Efficiency & Financial Performance of Specialized Commercial Banks of

Bangladesh”. Operational Efficiency & Financial Performance is an important decision making

issue for any bank. I prepared the thesis report with great interest. To prepare this thesis report I

collected data from different reliable sources. Then I started analyzing based on those data.

Theoretically, I know that the operational efficiency and financial performance is different for

different bank and the performance of bank can be measured by different analysis. The thesis

report contains different analysis like bank Ratio analysis, Trend analysis, Comparative analysis,

etc. The complete report on “Operational Efficiency & Financial Performance of

Bangladesh” actually proves my academic knowledge also increase my analytical ability.

1.1.2 Scope of the Study:

Operational Efficiency & Financial Performance of Specialized Commercial Banks of

Bangladesh is an important topic. Different banks operational efficiency and financial

performance are different. As a student of MBA major in finance, it is very essential for me to

the banks financial performance and efficiency. To prepare this thesis report I have learn how the

financial analyst measure the financial performance of a company. As preparation of this thesis

report give me such knowledge on specialized commercial banks and their performance and their

operational efficiency and financial performance, that’s why I choose this topic.

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1.2 Objectives:Objectives:1.2.1 Broad Objective:

The primary objective of this thesis report is to know about the operational efficiency and

financial performance of specialized commercial banks of Bangladesh.

1.2.2 Specific objectives:

To learn about specialized commercial bank in Bangladesh.

To learn how financial analyst analyze the financial ratios of the bank.

To learn about the financial performance of specialized commercial banks of

Bangladesh.

To learn about the trend analyze of specialized commercial banks.

To learn how the specialized commercial banks finance their assets.

1.3 Methodology of the Study:

1.3.1 Types of study:

This study aims at analyzing the “Operational Efficiency & Financial Performance of

Specialized Commercial Banks of Bangladesh”. The study has attempted to provide an overall

scenario of Operational Efficiency & Financial Performance of Specialized Commercial

Banks of Bangladesh. Where clearly analyze 3 commercial banks of financial performance and

their operational efficiency.

It was not possible to collect data by discussing with different personnel because here I worked

with specialized commercial banks it is not possible to discuss with a lot of personnel. That is

why it had no personnel involvement. That is why most of the information from the secondary

sources.

1.3.2 Sources of Data:

Primary data collection: Primary data collected through discussion one with another

and also by taking help of the supervisor’s suggestions.

Secondary data: I did not visit any bank. That is why secondary data was collected by

visiting institutions website and I also collect data from Bangladesh Bank library and

also by purchasing the annual reports.

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This report mainly based on secondary data but to know, evaluate and understand secondary data

primary data also become important.

1.3.3 Model Used:

This report is prepared on the basis of secondary data of specialized commercial banks by

visiting website & by studying their annual report. There are some theoretical discussions about

4 specialized commercial banks. Here I used some analysis like financial ratio analysis, trend

analysis, and performance analysis etc. To calculate the ratio I used the general formula that is

learnt in Commercial Bank Management. I also use some bar and line graph to clearly show the

analysis.

1.3.4 Organization of the Report:

The thesis report on “Operational Efficiency & Financial Performance of Specialized

Commercial Banks of Bangladesh” Contain different analysis. The first chapter of the report

includes Introduction of the report, the second chapter Overview of Banking industry in

Bangladesh, the third chapter contain a brief Introduction of 4 Specialized Commercial Banks,

forth chapter contain Ratio analysis, Trend analysis, and Comparative analysis of Specialized

Commercial Banks of Bangladesh, the fifth chapter includes Findings of Study. At the last

chapter contain a Conclusion and Recommendations.

1.4. Limitations of the Report:

The sources of the information are collected from institutions website and annual report and also

from Bangladesh Bank library.

Every task has some limitations. I faced some usual constraints during the research period.

Though I have given utmost effort to prepare this report but there are some limitations of the

study. These are as follows-

Collecting Information

Communication

Secrecy of Information

Different Format Data

Technological Problem

Financial Data Complexity

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Chapter -2

Overview of Banking Industry in Bangladesh

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2. Banking Sector in Bangladesh:

2.1 Introduction:

First modern banking was introduced in 1668 in Stockholm as 'Savings Pis Bank' which opened up a new era of banking activities throughout the European Mainland.

In the South Asian region, early banking system was introduced by the Afgan traders popularly known as Kabuliwallas. Muslim businessmen from Kabul, Afghanistan came to India and started money lending business in exchange of interest sometime in 1312 A.D. They were known as 'Kabuliawallas'.

A bank is a financial institution licensed by a government. Its primary activities include

borrowing and lending money. Many other financial activities were allowed over time.

All over the world the dimension of Banking has been changing rapidly due to deregulation,

technological innovation and Globalization. Banking in Bangladesh has to keep pace with the

global change. Now banks must complete in the market place both with local institution as well

as foreign ones. To survive ad thrive in such a competitive banking world, two important

requirements are development of appropriate financial infrastructure by the central Bank and

development of “Professionalism” in the sense of developing and appropriate manpower

structure and its expertise and experience. To introduce skilled Banker, only theoretical

knowledge in the field of banking studies is not sufficient. An academic course of the study has a

great value when it has practical application in real life situation.

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2.2 Number and Types of Banks:

The number of banks in all now stands at 49 in Bangladesh. Out of the 49 banks, four are Nationalized Commercial Banks (NCBs), 28 local private commercial banks, 12 foreign banks and the rest five are Development Financial Institutions (DFIs).

Sonali Bank is the largest among the NCBs while Pubali is leading in the private ones. Among the 12 foreign banks, Standard Chartered has become the largest in the country. Besides the scheduled banks, Samabai (Cooperative) Bank, Ansar-VDP Bank, Karmasansthan (Employment) Bank and Grameen bank are functioning in the financial sector. The number of total branches of all scheduled banks is 6,038 as of June 2000. Of the branches, 39.95 per cent (2,412) are located in the urban areas and 60.05 per cent (3,626) in the rural areas. Of the branches NCBs hold 3,616, private commercial banks 1,214, foreign banks 31 and specialized banks 1,177.

Bangladesh Bank (BB) regulates and supervises the activities of all banks. The BB is now carrying out a reform programmer to ensure quality services by the banks.

Bangladesh Bank:

Bangladesh Bank (BB) has been working as the central bank since the country's independence. Its prime jobs include issuing of currency, maintaining foreign exchange reserve and providing transaction facilities of all public monetary matters. BB is also responsible for planning the government's monetary policy and implementing it thereby. The BB has a governing body comprising of nine members with the Governor as its chief. Apart from the head office in Dhaka, it has nine more branches, of which two in Dhaka and one each in Chittagong, Rajshahi, Khulna, Bogra, Sylhet, Rangpur and Barisal.

Commercial Banks:

The commercial banking system dominates the financial sector with limited role of Non-Bank Financial Institutions and the capital market. The banking sector alone accounts for a substantial share of assets of the financial system. The banking system is dominated by the four State Owned Commercial Banks, which together control more than 30% of deposits and operates 3383 branches (50% of the total).

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Specialized Banks:

Out of the five specialized banks, two (Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank) were created to meet the credit need of the agricultural sector while the other two (Bangladesh Shilpa Bank (BSB) and Bangladesh Shilpa Rin Sangtha (BSRS)) are for extending term loans to the industrial sector of Bangladesh, another bank is Bank of Small Industries & Commerce Bangladesh Ltd.

2.2.1 Nationalized Commercial Banks (NCBs):

1. Sonali Bank

2. Janata Bank

3. Agrani Bank

4. Rupali Bank

2.2.2 Private Commercial Banks (PCBs):

1. Mutual Trust Bank Limited

2. BRAC Bank Limited

3. Eastern Bank Limited

4. Dutch Bangla Bank Limited

5. Dhaka Bank Limited

6. Islami Bank Bangladesh Ltd

7. Uttara Bank Limited

8. Pubali Bank Limited

9. IFIC Bank Limited

10. National Bank Limited

11. The City Bank Limited

12. NCC Bank Limited

13. Prime Bank Limited

14. Southeast Bank Limited

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15. Al-Arafah Islami Bank Limited

16. Social Islami Bank Limited

17. Standard Bank Limited

18. One Bank Limited

19. Exim Bank Limited

20. Bangladesh Commerce Bank Limited

21. First Security Islami Bank Limited

22. The Premier Bank Limited

23. Bank Asia Limited

24. Trust Bank Limited

25. Shahjalal Islami Bank Limited

26. Jamuna Bank Limited

27. ICB Islami Bank

28. AB Bank

2.2.3 Foreign Commercial Banks:

1. Citibank

2. HSBC

3. Standard Chartered Bank

4. Commercial Bank of Ceylon

5. State Bank of India

6. Habib Bank Limited

7. National Bank of Pakistan

8. Woori Bank

9. Bank Alfalah

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2.2.4 Specialized Development Banks:

Out of the specialized banks, two (Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank) were created to meet the credit needs of the agricultural sector while the other two ( Bangladesh Shilpa Bank (BSB) & Bangladesh Shilpa Rin Sangtha (BSRS) are for extending term loans to the industrial sector. The Specialized banks are:

1. Bangladesh Krishi Bank

2. Rajshahi Krishi Unnayan Bank

3. Bangladesh Shilpa Bank

4. Bangladesh Shilpa Rin Sangstha

5. Bank of Small Industries & Commerce Bangladesh Ltd.

2.2.5 Other Bank:

1. Ansar VDP Unnayan Bank

2. Bangladesh Samabai Bank Ltd. (BSBL)

3. Grameen Bank

4. Karmasansthan Bank

2.3 Services of the Bank:

Accounts, Current, FDR, PDS, Deposit Scheme:

2.3.1 Current Account: Generally this sort of account opens for business purpose. Customers can withdraw money once or more against their deposit. No interest can be paid to the customers in this account. If the amount of deposit is below taka 1,000 on an average the bank has authority to cut taka 50 from each account as incidental charge after every six months. Against this account loan facility can be ensured. Usually one can open this account with taka 500. One can open this sort of account through cash or check/bill. All the banks follow almost the same rules for opening current account.

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2.3.2 Savings Bank Account:

Usually customers open this sort of account at a low interest for only security. This is also an initiative to create people's savings tendency. Generally, this account is to be opened at taka 100. Interest is to be paid in June and December after every six months. If money is withdrawn twice a week or more than taka 10,000 is withdrawn (if 25% more compared to total deposit) then interest is not paid. This account guarantees loan. Almost all the banks follow the same rules in the field of savings account, except foreign banks for varying deposit. On an average, all the banks give around six percent interest.

2.3.3 Special Services:

Some Banks render special services to the customers attracting other banks.

2.3.4 Internet Banking:

Customers need an Internet access service. As an Internet Banking customer, he will be given a specific user ID and a confident password. The customer can then view his account balances online. It is the industry-standard method used to protect communications over the Internet.

To ensure that customers' personal data cannot be accessed by anyone but them, all reporting information has been secured using Version and Secure Sockets Layer (SSL).

2.3.5 Home Banking:

Home banking frees customers of visiting branches and most transactions will be automated to enable them to check their account activities transfer fund and to open L/C sitting in their own desk with the help of a PC and a telephone.

Electronic Banking Services for Windows (EBSW)

Electronic Banking Service for Windows (EBSW) provides a full range of reporting capabilities, and a comprehensive range of transaction initiation options.

The customers will be able to process all payments as well as initiate L/Cs and amendments, through EBSW. They will be able to view the balances of all accounts, whether with Standard Chartered or with any other banks using SWIFT. Additionally, transactions may be approved by remote authorization even if the approver is out of station.

2.3.6 Automated Teller Machine (ATM):

Automated Teller Machine (ATM), a new concept in modern banking, has already been introduced to facilitate subscribers 24 hour cash access through a plastic card. The network of ATM installations will be adequately extended to enable customers to non-branch banking beyond banking.

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2.3.7 Tele Banking:

Tele Banking allows customers to get access into their respective banking information 24 hours a day. Subscribers can update themselves by making a phone call. They can transfer any amount of deposit to other accounts irrespective of location either from home or office.

2.3.8 SWIFT:

SWIFT is a bank owned non-profit co-operative based in Belgium servicing the financial community worldwide. It ensures secure messaging having a global reach of 6,495 Banks and Financial Institutions in 178 countries, 24 hours a day. SWIFT global network carries an average 4 million message daily and estimated average value of payment messages is USD 2 trillion.

SWIFT is a highly secured messaging network enables Banks to send and receive Fund Transfer, L/C related and other free format messages to and from any banks active in the network.

Having SWIFT facility, Bank will be able to serve its customers more profitable by providing L/C, Payment and other messages efficiently and with utmost security. Especially it will be of great help for our clients dealing with Imports, Exports and Remittances etc.

2.4 Bangladesh: Money and Banking sector review:

2.4.1 Monetary & Credit Policy:

The central bank of Bangladesh rolled out its monetary policy for the second half of the current fiscal year ending June 2011, and predicted more than 7.0 percent GDP growth for the South Asian country in the 2011-12 fiscal years.

Bangladesh Bank (BB) said the half yearly monetary policy, spanning from January to July 2011, is designed to support the government's policies and programs in pursuit of faster inclusive economic growth and poverty reduction.

The monetary program like previous one for July to December period has been chalked up in line with the national budget for 2010-11 (July 2010-June 2011) fiscal year which set the country's real GDP target at 6.7 percent, it said.

"Monetary policies will be maintained on a growth supportive stance to help promote faster inclusive economic growth, with due vigil against inflationary pressure,”

During the past financial year the money supply increased 21% (June 2011 compared to June 2010), through September 2011 the money supply has increased since June 2011 at an annual rate of 12%.

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2.4.2 Narrow Money:

This entry, also known as "M1," comprises the total quantity of currency in circulation (notes and coins) plus demand deposits denominated in the national currency held by nonbank financial institutions, state and local governments, nonfinancial public enterprises, and the private sector of the economy, measured at a specific point in time. National currency units have been converted to US dollars at the closing exchange rate for the date of the information. Because of exchange rate movements, changes in money stocks measured in national currency units may vary significantly from those shown in US dollars, and caution is urged when making comparisons over time in US dollars. Narrow money consists of more liquid assets than broad money and the assets generally function as a "medium of exchange" for an economy.

Stock of narrow money: $13.98 billion (31 December 2010 est.) $10.92 billion (31 December 2009 est.)

2.4.3 Broad Money:

This entry covers all of "Narrow money," plus the total quantity of time and savings deposits, credit union deposits, institutional money market funds, short-term repurchase agreements between the central bank and commercial deposit banks, and other large liquid assets held by nonbank financial institutions, state and local governments, nonfinancial public enterprises, and the private sector of the economy. National currency units have been converted to US dollars at the closing exchange rate for the date of the information. Because of exchange rate movements, changes in money stocks measured in national currency units may vary significantly from those shown in US dollars, and caution is urged when making comparisons over time in US dollars. In addition to serving as a medium of exchange, broad money includes assets that are slightly less liquid than narrow money and the assets tend to function as a "store of value" - a means of holding wealth.

Stock of broad money: $57.21 billion (31 December 2010 est.) $63.03 billion (31 December 2009.)

2.4.4 Domestic Credit:

This entry is the total quantity of credit, denominated in the domestic currency, provided by banks to nonbanking institutions. The national currency units have been converted to US dollars at the closing exchange rate on the date of the information.

Stock of domestic credit: $64.71 billion (31 December 2010 est.) $53.59 billion (31 December 2009 est.)

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2.4.5 Current Bank deposit and credit:

Bank Deposit:

(Taka in Millions)

Percentage Changes of October, 2011 over

Items October, 2011

September, 2011

October, 2010

September, 2011

October, 2010

Demand Deposits

482746 470495 439796 2.6 9.77

Time Deposits

3532864 3488925 2924464 1.26 20.8

Total 4015610 3959420 3364260 1.42 19.36

Bank Credit:

(Taka in Millions)

Percentage Changes of October, 2011 over

Items October, 2011

September, 2011

October, 2010

September, 2011

October, 2010

Advances including

money at call & balances

3404730 3355933 2832840 1.45 20.19

Bills 211221 209184 164486 0.97 28.41

Investments 820081 777732 577803 5.45 41.93

Total 4436032 4342849 3575129 2.15 24.08

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Chapter -3

Specialized Commercial Banks & Their Operations in Bangladesh

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3. Specialized Commercial Banks & Their Operations in Bangladesh:

3.1 Bangladesh Krishi Bank (BKB):

The major occupation of the people of Bangladesh is "Krishi". Krishi is a Bengali word which means "Agriculture". About 85% of the population depends directly or indirectly on agriculture which contributes a significant portion to GDP.

Bangladesh Krishi Bank (BKB) has been established under the Bangladesh Krishi Bank order 1973 (President's Order No 27 of 1973). BKB is Banking Company under the Banking Company Act-1991. Its Head Office is located at Krishi Bank Bhaban, 83-85 Motijheel Commercial Area, Dhaka-1000, Bangladesh.

The primary objective of BKB is to provide credit facilities to the farmers for the development of agriculture and entrepreneurs engaged in development of agro-based and cottage industries.

The Bank is guided in accordance with the policies and principles of the Government of the Peoples Republic of Bangladesh. BKB has an authorized capital of Tk. 15,000 Million (Taka Fifteen thousand Million) only and paid up capital of Tk. 9000 Million (Taka Nine thousand Million) only which is fully paid by the government. The Bank started commercial functioning since 1977 to generate more loan able fund from the idle rural and urban savings and invest them for the betterment of our economy.

The Bank operates its function through its 952 branches (except Rajshahi Division) of which 822 are rural and 130 are urban. It has 15 foreign exchange (Authorized dealer) branches. In the field level the Bank has 8 Divisional, 21 Chief Regional and 30 Regional offices for close supervision of the branch activities. For smooth operation, s a part of internal control and compliance system, the bank has also 56 field level audit offices of which 5 at Divisional and 51 at Regional levels. In the Head Office the Bank has 4 Divisions headed by General Managers and 28 Departments including Local Principal Office and Training Institute headed by Deputy General Managers. The existing strength of Bank's manpower is 9430 against the approved strength of 13680 as on 30 December, 2010.

The Bank has a Board of Directors comprising of 12 members. The Board is headed by a Chairman. The Directors represent both public and private sectors and are appointed by the government. The Board Chairman is generally an experienced professional/ex-professional who has wide acceptability and rapport.

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The Managing Director is the Chief Executive of the Bank. He is appointed by the government.

The Bank has two posts of Deputy Managing Directors and is appointed by the Government.

The Bank has 14 posts of General Manager. They are also appointed by the Government.

In the Head Office there are 4 Divisions each headed by a General Manager. The divisions are:

Administration Division

Planning & Operation Division

Accounts Division and

Loan Recovery Division

Under the control and supervision of the above four divisions 28 departments are working in the head office headed by Deputy General Managers.

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3.1.2 Executive Profile of Bangladesh Krishi Bank:

3.1.2.1 Board of Directors (BKB):

Name Designation

Mr. Khondkar Ibrahim Khaled Chairman

Md. Mukter Hussain Managing Director

C. Q. K. Mustaq Ahmed Director

Mr. Mosharraf Hossain Director

Mr. Md. Humayun Khalid Director

Mr. Alauddin A. Majid Director

Mr. Mahbubur Rahman Bhuyan Director

Mohammad Muslim Chowdhury Director

Mr. Shahabuddin Ahmed Director

Md. Shah Alam Siddiqui Director

Md. Habibur Rahman Director

Md. Malek Newaz Secretary

3.1.2.2 Executive Profile of (BKB)

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Name Designation

Md. Mukter Hussain Managing Director

Md. Joynal Abedin Deputy Managing Director

Mr. Manjur Ahmed Deputy Managing Director

Md. Majibur Rahman General Manager Administration Division

Mr. Soud Ahmed General Manager Accounts Division

Muhammad Awal Khan General Manager Planning & Operation Division

Md. Saiful Islam General Manager Recovery Division

Dr. Md. Jalal Uddin General Manager Local Principal Office

Abu Saleh Md. Musa General Manager Barisal Division

Mr. Anwar Ali Khan General Manager Dhaka Division

Md. Firoze Khan General Manager Comilla Division

Mr. Nitai Chand Das General Manager Sylhet Division

Moniara Begum General Manager Mymensingh Division

Kamrul Islam Asad General Manager Faridpur Division

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Md. Moazzam Hossain Bhuiyan General Manager Chittagong Division

Mesbah Uddin Ahmed General Manager Kushtia Division

Mr. Pijush Chandra Bhowal General Manager Khulna Division

3.1.3 Products and Services:

o Letter of Credit (LC)

o Bill purchase/Discount

o Export Credit (Pre Shipment & Post Shipment)

o Remittance (Inward, Outward)

o Collection, Purchase and Sale of Foreign Currency and Travelers Cheques.

o Maintenance of Student education file.

o Guarantees in Foreign Currency.

o Foreign Currency accounts.

o NFCD (Non-Resident Foreign Currency Deposit) A/C.

o RFCD (Resident Foreign Currency Deposit) A/C

o Forward Contracts

o Correspondent Banking Relations.

o Taka Drawing Arrangement

o Dealing Room

o S.W.I.F.T . (Society for Worldwide Interbank Financial Telecommunication).

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3.1.3.1 Import Finance:

Bangladesh Krishi Bank (BKB) deals in all kinds of Documentary Credit operation under different credit Lines/Aid/Loan/Grants/cash etc.

BKB finances the following import sectors of the economy:

All kinds of Capital Machineries for the development of economy giving special emphasis on Agro based industries/Ready made Garments industries and imports substitute industries.

Import of all kinds of industrial Raw Materials for the industries.

Any other improved items and specially items directed by the government.

3.1.3.2 Export Finance:

Bangladesh Krishi Bank (BKB) supports exports of any kind giving special emphasis on the following

Financial assistance to all kinds of export oriented industry and other products specially export of fruits & vegetables

Offers Concessional rate of interest for Export Finance.

Does all activities in exports, such as:

Export bill negotiation /Purchase/Collection.

Helps the export firms for getting export incentive.

Financial support for materializing the export order.

3.1.3.3 Foreign Remittance:

Bangladesh Krishi Bank (BKB) plays an important role in the field of foreign remittances. Most of the BKB branches located at the remote areas of rural Bangladesh. The Bangladeshi people working abroad and their relatives in the country maintain bank accounts with BKB branches. Bank has an arrangement to allow Bangladeshi people working abroad to send their foreign currencies to their relatives at home. Necessary steps have been taken to widen this sector so that the Bank can serve more people and collect more remittances.

3.1.3.4 S.W.I.F.T. (Society for Worldwide Interbank Financial Telecommunication):

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Bangladesh Krishi Bank is now a proud member of SWIFT. It is connected with modern international financial tale communication system. L/C advising/transferring and quick transfers of remittances as well as other financial correspondences have become very easy & speedy with the installation of SWIFT. Bangladesh Krishi Bank's SWIFT BIC IS "BKBABDDH"3.1.3.5 Dealing Room

BKB is actively operate treasury operation i.e. dealing room operation in its International Department, Head Office, Dhaka to transact foreign currency trading in Inter Bank FC market both at home and abroad.

3.1.3.6 Foreign exchanges activities:

BKB extends its service to the travelers by endorsement of cash FC/TC in passports. BKB renders Hajj services to the pilgrims which is 3rd highest in the banking sector. BKB deals in spot and forward sale and purchase of foreign currency in local inter-bank mark.

3.1.4 Role of Bangladesh Krishi bank in Economic Development:

3.1.4.1 Poverty alleviation and Micro-credit Programs/Projects:

Bangladesh Krishi Bank was established under BKB Order`1973 with the objective of strengthening rural economy by extending credit support to agricultural and agro-based sectors. In consideration of the importance of Micro-Credit and with the objective of generating employment as well as encouraging social development BKB has undertaken several Micro-Credit programs of its own and also in collaboration with local and foreign agencies. The programs have been designed to cover all segments of poor population whether skilled or unskilled such as small and marginal farmers, landless laborers, destitute women, disabled, unemployed youth and rural artisans etc.

Considering the needs of the target groups since late seventy`s BKB has been implementing a series of Micro-Credit programs out of which 10 programs have recently been completed and 31 programs are in operation at present. These diversified micro-credit programs are being implemented by BKB to achieve the following objectives:

* To create employment opportunities through income generating activities.

* To empower the rural women to establish their own rights.

* To improve the living standard of the rural people.

* To alleviate poverty of the poor people.

* To make easy access to institutional credit facilities and resources.

* To mobilize rural savings.

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* To make optimum utilization of rural resources.

* To engage inactive human resources of the rural areas in productive/economic activities.

* To engage rural people in development process of the country.

* To eliminate exploitation done by the money lenders.

A Salient feature of BKB`s on going Micro-Credit Programs under poverty alleviation is given below:

3.1.4.1.1 Credit program for the landless and Marginal Farmers:

This program has been launched with BKB`s own fund in 1992-93 financial year through its all branches. Landless and marginal farmers get short term credit under this program. Persons/ Peasants having not more than 1.50 acres of cultivable land and annual income of highest Tk. 25000/- are eligible for getting credit under this program. After formation of groups and obtaining training the group members get credit without any collateral security. But they have to hypothecate the goods and assets created by the loan. In lieu of collateral they have to take responsibility as guarantor for the recovery of loan within the group. The present Interest rate is 10%. 52 equal weekly installments are fixed and the recovery will be taken place accordingly. About 474181beneficiaries have been provided with Tk. 4698.40 million.

3.1.4.1.2 Beef Fattening Joint Program:

This is a bank`s own financed program. Bank launched this program in 1994. The main objective of this program is to fill up the deficiency of animal protein in the country as well as creation of self-employment for poor and unemployed people living in the villages. Under this program a person can get a loan amounting up to Tk.25000/- for 5 calves against guarantee of a bank official / local elite. The rate of interest is 10%. The loan is to be repaid with interest in one installment within one year. About 89025 beneficiaries have been provided with Tk.1481.30 million.

3.1.4.1.3 Swanirvar Credit Program:

Bank has been implementing swanirvar credit program without collateral security since 1979. Employment creation for the landless and marginal farmers, increasing their standard of living, creation of social and ethical values, eradication of illiteracy, providing creation of health and family planning services etc are the objectives of this program. The beneficiaries under the

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program are landless, rural poor & destitute having maximum 0.40 acres of cultivable land and maximum annual income is Tk.20,000/-. 212 branches of 31 districts (regions) are involved in this program. The beneficiaries have to form groups (each Consisting 5 members) and a center (consisting 5 groups). BKB & Swanirvar Bangladesh is operating this program jointly. The credit is collateral free but Group guarantee for each other is needed. Maximum loan amount is TK.15,000/- per beneficiary. It is Short term credit (to be recovered in 52 equal weekly installments within one year). Disbursement of loans to the beneficiaries is made duly recommended by Swanirvar staffs. Swanirvar Bangladesh is responsible for group formation, giving training to the beneficiaries and recovery of loan. Rate of Interest is 16%. (6% Service charge for Swarnivar, 10% Interest for BKB). About 274115 beneficiaries have been provided with Tk.1577.80 million.

3.1.4.1.4 Small Farmers & landless Laborers Development Project (SFDP):

This project is being implemented jointly by BARD & BKB from 1995 through 21 branches under 6 Regions (districts) of Bangladesh Krishi Bank. The objectives of the project are to increase production, employment creation and increase income of the small landless farmers & laborers through formation of small groups, generation of own capital and provision for capital support for undertaking various income generating activities. Under this project Tk. 19.80 million has been disbursed to 2710 beneficiaries on average per year and recovered Tk. 15.80 million per year. Cumulative recovery rate is 97%. The beneficiaries under this program are small farmers having maximum 0.50 acres of cultivable land & landless laborers having 0.51-1.50 acres of cultivable land. Selection of target family, group formation, and supervision of group activities, supervision of loan utilization and all kinds of field works are done by BARD. Opening of group account, sanctioning and disbursement of loan & maintaining savings account etc. are done by BKB. Bank provides credit from its own source after formation 5-10 members group. The loan is collateral free, but assets and goods derived from credit are hypothecated. Lien of group savings & group pressure replace the collateral. Loan is disbursed for any recognized items which is accepted by bank & identified by members of group. Interest rate is 15% of which 10% for BKB, 5% for BARD. Chairman or secretary of the group recovers the loan. Loan is recovered in weekly/fortnightly/monthly installments within maximum 18 months. About 28266 beneficiaries have been provided with Tk.215.20 million.

3.1.4.1.5 South Asia Poverty Alleviation Program:

This program was launched on the basis of Dhaka conference of SAARC countries in 1993. This is a joint venture program with UNDP. But it is banks own financed program. UNDP organizes the beneficiaries, trains them and recommends the loan. The responsibility of credit realization lies with the managers of village organizations. This is an area based credit program. Only

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Kishorganj (a district) sadar upazilla is the command area of this program. The maximum credit limit is Tk. 25000/- per beneficiary. 25 beneficiaries form a group. Rate of interest is 15% (BKB 10% and the manager of village organization 5%).The loan is collateral free and is recovered in weekly installments within one year. About 53723 beneficiaries have been provided with Tk.445.70 million.

3.1.4.1.6 United Nations Capital Development Fund (UNCDF):

This program started in 1983 with the objective of financing rural & cottage industries. Now it is running on revolving fund. This is a joint venture program with BKB, BSCIC & UNCDF. UNCDF provides one third of fund while BKB provides two thirds. BSCIC selects borrower and provides extension services. The program covers 29 districts. BKB provides credit from joint fund and maintains account. Rate of interest is 10% - 14%. This is a collateral free credit. Raw materials, finished goods and capital asset created out of credit are kept as hypothecation against

credit provided to the beneficiaries. About 24837 beneficiaries have been provided with Tk.136.70 million.

3.1.4.1.7 Rural Women Employment Creation Project ADB Loan No 1067 BAN (SF):

This is a joint project started in 1993 for experimenting with the idea of co-participation of government Organizations (GOs) and Non-Government Organizations (NGOs) aiming at employment creation for poor women in the rural areas. Department of women Affairs (DWA), 19 NGO`s in 12 thanas (upa-zilla) and BKB jointly implementing the project. NGOs organizes individuals into groups, train them under the supervision of DWA and recommends for credit funded by ADB. This is also a collateral free credit. Interest rate is 12%. About 67402 beneficiaries have been provided with Tk.154.70 million.

3.1.4.1.8 BKB-NGO Micro Credit Program:

This program is a replication of Rural Women Employment Creation Project (RWECP).NGOs organizes individuals into groups, provides them training and recommends for credit. BKB provides credit from its own fund. This is also a collateral free credit. Interest rate is 12.5%. About 16636 beneficiaries have been provided with Tk. 136.00 million.

3.1.4.1.9 Credit under National Poverty Alleviation Program through Goat Rearing:

These programs have been introduced in 2002 aiming to eradicate poverty through goat rearing. Directorate of livestock provides with extension service while BKB provides credit from its own fund for a period of 4 years term. This is a collateral free credit provided from all branches of BKB. Interest rate is 10%. About 24354 beneficiaries have been provided with Tk. 236.50 million.

3.1.4.1.10 Milching Cow Credit Program for the Women:

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The program launched in the year 1997. The main objectives of the program were proper utilization of the unemployed women increasing milk production and helping the up-lift of the condition of the women folk. Under this program one village of a branch area is selected. One woman from each family of the selected village is eligible to get this credit facility. An applicant gets maximum Tk. 10,000/- to purchase a calf. Interest rate is 8%. The loan is realized within one year in weekly installments. This is a collateral free supervised credit. An officer or field worker of the branch is engaged in supervising the credit under the direct control of the branch manager. Livestock officers help the beneficiaries in treatment and rearing the cow. About 612 beneficiaries have been provided with Tk. 8.20 million.

3.1.4.1.11 Special Micro Credit Program for the Disabled:

These programs have been introduced in 2002 aiming to income generation & development of socio-economic condition through employment creation for the disabled persons. Department of Social Welfare and Disabled Foundation provide extension services. This is a collateral free credit provided from all branches of the bank. Interest rate is 10%. About 530 beneficiaries have been provided with Tk. 5.60 million.

3.1.4.1.12 Monipuri Small Traders Credit Program:

This program have been introduced in 2003 aiming to provide working capital to handloom industry operated by the Monipuri women living in the greater Sylhet areas. A bank official organizes the Monipuri women having handloom and training/education/experience of operation. Eligible women are organized into 5 member groups. This is also a collateral free credit provided from the bank`s own fund. Interest rate is 10%. About 684 beneficiaries have been provided with Tk.21.50 million.

3.1.4.1.13 Special Credit Program for the Rakhains under the district of Cox`s Bazar:

This program has been launched in 2003 aiming to provide working capital credit for producing handloom and cottage Industrial products and marketing. The loan is disbursed to the Rakhain community living in the district of Cox`s Bazar. Bank officials organize Rakhains into 5 member groups. This is a collateral free credit programmer from banks own fund. Interest rate is 10%. About 469 beneficiaries have been provided with Tk. 15.10 million.

3.1.4.1.14 Tree Plantation Programs: In 2002 and 2003 BKB has launched 8 Tree Plantation Programs-viz:

i) All types of tree nursery including herbal,

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ii) Horticulture Development,

iii) Fruit and forest tree plantation,

iv) Bamboo production,

v) Herbal gardening,

vi) Coconut gardening,

vii) Patipata (a plant used in making mat) production,

viii) Cane production.

These programs have been introduced in all branches of the bank to grow more and more trees aiming to eradication of poverty, proper use of fallen land, increase of tree production facilitating herbal treatment and development of environment. Credit under these programs is collateral free up to Tk. 25,000/-. Interest rate is 8%. About 20043 beneficiaries have been provided with Tk. 203.50 million.

3.1.4.1.15 Establishment of Breeding Farm of Black Bengal Goat Program:

This program has been taken to ensure supply of kids of Black Bengal Goats in order to support the national program of poverty alleviation through goat rearing. Under this program a farm comprising 50 she goats is considered as a small farm and a farm comprising 51-200 she goats is considered as a big farm. The loan is medium term. Credit limit is Tk. 30,000/- for a small farm consisting of 10 she goats (with a he- goat). This credit limit is calculated for making up goat-shed, purchasing of she-goats & he-goat and initial feed cost. This limit is proportionate for a small farm having up to 50 numbers of she-goats. For a medium farm credit limit is to be calculated deducting the cost of goat shed. This cost is borne by the entrepreneur. About 304 beneficiaries have been provided with Tk. 14.60 million.

3.1.4.1.16 Community Based Resource Management Project:

This project started in 2003-04 fiscal year. It is a joint venture project of BKB, IFAD and Dept. of LGED of GOB. The project is to be implemented in all of the 10 upa-zillas of Sunamgonj (a district) at 3 phases within 11 years. The project has five components such as: (1) Infra -structure Development, (ii) Development of Fisheries, (iii) Crop and livestock Development, (iv) Grass Roots Institutional Development and (v) Small Credit Bangladesh Krishi Bank deals with ``small credit`` component of the project. LGED organizes the target people into 30 member groups. Bank Provides short and medium term loan. Maximum loan limit is Tk. 14,000/- to each member as short term and Tk. 27,000/- to each member as Medium term. The loan under this project is

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collateral free. Rate of interest is 15%. 1508 credit organization (each credit organization consists of maximum 30 beneficiaries) have been provided with Tk. 190.35 million.

3.1.4.1.17 Poverty Alleviation through Production and Improvement of Sheep:

This is a government directed program which has been launched in the last part of the fiscal year 2004-05. Primarily this is to be implemented throughout the selected 22 upazillas under selected 11 districts of BKB`s jurisdiction. Directorate of livestock provides with extensive services while BKB provides credit from its own fund. Under this program credit amount up to taka 50,000/- is collateral free. Interest rate is 8%. This loan is to be repaid within four years in 6 equal installments including one year grace period. About 360 beneficiaries have been provided with Tk. 3.80 million.

3.2 Rajshahi Krishi Unnayan Bank Ltd:

3.2.1 Establishment:

Rajshahi Krishi Unnayan Bank (RAKUB) was established by the President's Ordinance No. 58 of 1986 with the aim of providing institutional agricultural credit for optimum utilization of agricultural potentials of Rajshahi Division. Taking over the branches and offices along with assets and liabilities of the Bangladesh Krishi Bank within Rajshahi division, the bank started functioning on 15 March 1987.

3.2.1.1 Company Overview:

Rajshahi Krishi Unnayan Bank Ltd. provides agricultural financing services in the Northwest Bangladesh. It finances various agro based projects, such as tea, crop production, rubber plantation, horticulture, poultry and duckery, mixed-farming, black Bengal goat rearing/goat kids production farm/beef fattening, dairy and fish farm, prawn culture, fish fingerlings production/hatchery, animal and fish feed meal production, food processing, agro-based industries, agro-equipment production, salt crushing, cold storage, export processing, import substituting goods production, handicraft and cottage industries, and working capital/cash credit, as well as seed production, processing, and preservation. The company also provides small enterprise credit programs. In addition, it involves in various activities related to socio-economic development and poverty alleviation programs. Further, the company provides deposit accounts, such as saving bank, short term deposit, current deposit, and fixed deposit receipt accounts. Rajshahi Krishi Unnayan Bank Ltd. was founded in 1987 and is based in Rajshahi, Bangladesh. The company has field offices in Rajshahi, Rangpur, Pabna, Bogra, Dinajpur, Chapai Nawabgonj, Naogoan, Natore, Sirajgonj, Joypurhat, Gaibandha, Kurigram, Lalmonirhat, Nilphamari, Panchagarh, and Thakurgaon, Bangladesh.

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3.2.1.2 Organizational Structure:

The head office is stationed at divisional headquarters city of Rajshahi. The branches network of the bank comprises 365 branches including one in Dhaka. Eighteen zonal offices stationed in district headquarters control branches under them. The General Manager's office at Rangpur oversees activities of 12 zones of greater Rangpur, Dinajpur and Bogra districts. There are 18 independent regional audit offices for conducting regular audit in branches and zonal offices.

3.2.1.3 Functions:

As the largest development partner in the northwest region Rajshahi Krishi Unnayan Bank aims at overall development of farmers and all the sectors and sub-sectors of agriculture in this region. Besides, catering to agricultural credit the bank performs ancillary functions as financing agri-business and agro-based industries and poverty alleviation programs.

3.2.1.4 Capital:

Authorized capital of the bank amounts to Tk.7500 million. At present Paid-up capital amounts to Tk.5700 million and reserve Tk.208.50 million as on 25 April 2010.

3.2.1.5 Management:

The Board is vested with the responsibility of formulation of policy in line with attainment of growth in agriculture and economic development of the region through agricultural credit support. The Board of Directors is constituted by seven members, all appointed by the government. Besides, for emergency decisions there is an executive committee constituted of the Chairman of the Board and two other members: the Managing Director and one of the Directors elected by the Board. The Managing Director is the chief executive of the bank.

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3.2.2 Executive Profile of Rajshahi Krishi Unnayan Bank:

3.2.2.1 Board of Directors (RAKUB):

Name Designation

Prof. Dr. M. Shah Nowaz Ali Chairman

Mr. Pradip Kumar Dutta Managing Director

Mr. Abdul Mannan Director

Mr. Khondoker Jahangir Kabir Rana Director

Prof. Dr. Rustom Ali Ahmed Director

Md. Saidur Rahman Director

Md. Aminul Islam Khondokar Secretary

3.2.2.2 Key Executives of (RAKUB)

Name Designation

Mr. Pradip Kumar Dutta Managing Director

Md. Mosharraf Hossain Chowdhury Deputy Managing Director

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S M Shamsul Alam General Manager Divisional Office, Rangpur

Md. Abdul Khaleque Khan General Manager Divisional Office, Rajshahi

Md. Habibur Rahman General Manager Operation Division

Nishith Kumer Saha General Manager Administration Division

Md. Yousuf Ali General Manager ICC, Accts & Recovery

Division

The only training institute of the bank is situated at Rajshahi. There are 3,464 employees of the bank of which 1,525 are officers and 1,939 other staff.

3.2.3 Poverty Alleviation Credit Programs:

3.2.3.1 Zero Poverty Loan Scheme:

The bank has initiated a special group-based micro-credit program entitled "Zero-poverty Loan Scheme" for the extreme poverty stricken 23 upazilas in greater Rangpur district. Poor people in the area pledge labour at lower to landlords during lean season for borrowing money. The program is expected to restrain the tendency and eradicate poverty from the region by providing up to Tk. 3000 collateral-free credit to day-laborers at only six percent interest rate.

3.2.3.2 Marginal & Small Farm System Crop Intensification Project (MSFSCIP): The project aims at increasing productivity in agriculture as well as off-farm activities, helping target group people achieve sustainable development, resist the increasing trend of losing land under cultivation and attain self-dependence.

3.2.3.3 RAKUB Self-help Credit Program (RSCP): The project aims at self-employment generation among landless and marginal farmers through collateral-free credit distribution. The program is a propagation of MSFSCIP model at bank's own initiative.

3.2.3.4 Swanirvar: The term Swanirvar means self-dependence. The bank has introduced the credit program under the auspices of Swanirvar Bangladesh, an NGO to improve socio-economic condition of the helpless rural poor by creating employment opportunities.

3.2.3.5 Semi-intensive black Bengal goat rearing program: Marginal, small & medium farmers, unemployed youth of Rajshahi division are the target group of the program. The program will make contribution to the economy through goat skin export & production of high quality meat for domestic & export markets.

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3.2.3.6 United Nation Capital Development Fund (UNCDF): Under the program, credit facilities are extended to entrepreneurs of cottage industries for creating self- employment opportunities. The program aims at economic development and upliftment of the craftsmen.

3.2.3.7 RAKUB-NGO Linkage Program (RNLP): Under the program RAKUB provides fund to select NGOs for financing micro-credit among landless, marginal & small farmers within Rajshahi division.

3.2.3.8 Pilot Employment Generation Program (PEGP): This is a BSCIC (Bangladesh Small & Cottage Industries Corpn.) assisted program which aims at employment generation among rural poor women and women artisans in selected areas. Maximum credit limit under the program is TK. 6,000 per borrower.

3.2.3.9 Women Entrepreneurship Development program (WEDP): The BSCIC assisted program aims at promoting cottage industries and encouraging women entrepreneurship in villages and suburban areas.

3.2.3.10 Shasya Gudam Reen Prokalpo (Food grain godown credit program): RAKUB implementing since 1988 as support to the sharecroppers, marginal and small farmers having up to 5 acres of land. Small and marginal farmers receive loan against stored crops in go down immediately after harvest. The farmers sell out the produces when they get desired price for their produces and repay the loan.

3.2.3.11 Crop Production: The Bank finances for production of all the summer and winter crops, horticulture & nursery etc. High yielding and high value crops and seeds production is particularly encouraged. Crop sub-sector alone occupies 60% of the lending budget of the Bank.

3.2.3.12 Livestock and Poultry: The Bank extends credit facilities for systematic and commercial livestock farming which includes dairy, beef-fattening, poultry, raising and setting up of hatcheries which in turn is expected to increase production of milk, meet and eggs, the main source of protein. As the marginal and small farmer’s access to mechanized farming is restrained by want of cash and collateral, the bank has a big lending window of draft animals for cultivation of land, transportation of agricultural produces and other farming activities.

3.2.3.13 Irrigation Equipment & Farm Machinery: In today's technology-based farming of high yielding and high-value crops, mechanization of cultivation, irrigation and pest-control is

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indispensable. To cope with the situation financing power tillers, tractors, tube wells, power-pumps, fertilizer and pesticide application devices.

3.2.3.14 Agro-industry & Agri-business: The operational jurisdiction of the Bank is noted for its agricultural potentials. The Bank pays due importance to setting up agro-industries for preservation, processing and marketing of agricultural produces having backward linkage with basic sub-sectors of crop, fishery, livestock and forestation. Manufacturing and marketing of agricultural implements are also encouraged. Agro-industries for import sub situation are specially encouraged by offering moderate terms of financing.

3.3 Bangladesh Shilpa Rin Sangstha (BSRS):

3.3.1 Introduction:

Bangladesh Shilpa Rin Sangstha (BSRS) established on 31 October 1972 by the President's Order No. 128 of 1972 to provide credit facilities and other assistance to industrial concerns and to encourage and broaden the base of investment in Bangladesh. BSRS was vested with the undertakings of the Pakistan Industrial Credit and Investment Corporation Limited (PICIC), Investment Corporation of Pakistan, and National Investment Trust (NIT) located in Bangladesh. Later, on 16 March 1987, the Investment Advisory Centre of Bangladesh (IACB) was merged with BSRS. At the time of establishment, the authorized and paid up capital of BSRS was Tk. 1,000 million and Tk. 62.54 million respectively. The paid up capital was fully subscribed by the government. In subsequent years, both authorized and paid up capital were enhanced several times. On 30 June 2000, the amounts stood at Tk. 2,000 million and Tk. 700 million respectively. Before 1995, the organization procured foreign currency funds in the form of lines of credit channeled by the government from various international and regional lending agencies. At present, all its funds are in local currency only.

Initially, BSRS provided medium and long-term credit facilities in both foreign and local currencies to private sector industrial projects with fixed costs of Tk. 2 million and above. It provided underwriting, bridge financing and debenture financing assistance to public limited companies. It also financed public sector projects without any ceilings and undertook industrial promotional activities, especially in less developed areas. Later, the functional areas of BSRS expanded to cater to the changing financial needs of the economy. It started to provide equity finance, guarantees, deferred payments for machinery imported from abroad under suppliers' credit, guarantee and counter guarantee for loans, debts, credits, performance of contracts and financing arrangements with foreign lending agencies, as well as local banks and financial institutions for industrial concerns.

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As a member of the Dhaka stock exchange, BSRS engages in trading of securities in primary and secondary markets. On 4 May 1997, it started commercial banking operations through a commercial bank branch located at Dhaka. The commercial banking operation is directed towards deposit mobilization, issue of pay order and SDR, collection through a clearing house and sale and purchase of ICB unit certificates, saving certificates and prize bonds. BSRS also works as banker to the public issue of shares and debentures of companies through commercial banks. It floated a closed end Mutual Fund in 1996 that had a paid up capital of Tk. 50 million.

On 30 June 2000, the total cumulative disbursement of loans and advances provided by the Sangstha stood at Tk. 17,853.59 million and was composed of long-term loans (Tk. 17,470.57 million), secured overdrafts (Tk. 0.26 million), bridge/underwriting loans (Tk. 300.66 million), loans under investors' scheme (Tk. 2.45 million), and staff loan (Tk. 79.66 million). On the reference date, it had 195 projects in its long-term loan portfolio with total outstanding loans of

Tk. 17,605 million. Rates of interest charged by BSRS on its different types of loans varied between 11.50% and 16%, while the interest rates offered on deposits varied between 7.75% and 8.50%. The investment portfolio of the organization in business year 1999-2000 included investment in government securities (Tk. 20.07 million), in shares by listing status (Tk. 201.68 million), in debentures (Tk. 58.17 million), and in bonds by maturity (Tk. 20 million). Of its total loan till 1999-2000, Tk. 15,918.84 million or 89.13% has been classified as non-performing loans for which it had to make a total provision of Tk. 2,538.3 million from its profit.

On 30 June 2000, the assets of the Sangstha were valued at Tk. 18,834.46 million. Total off-balance-sheet assets amounted to Tk. 70.97 million. Shareholders equity was Tk. 1,455.65 million comprising paid up capital (Tk. 700 million), statutory reserve (Tk. 8.89 million), and other reserves (Tk. 746.77 million). Cumulative net profit earned by the organization in the 19 years of its operation since inception has been Tk. 461.02 million. It contributed Tk. 155.43 million to the national exchequer in 2000.

The management of BSRS is vested in a 8-member board of directors, including a chairman and a managing director appointed by the government. The managing director is the chief executive officer of the organization. It has 350 employees, including executive officers of different cadres. BSRS has 20 operational departments under 4 divisions at its head office in Dhaka and a commercial branch. It also has 4 branch offices outside Dhaka, one each at Chittagong, Rajshahi, Khulna and Sylhet.

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3.3.2 Executive Profile of Bangladesh Shilpa Rin Sangstha (BSRS):

The BSRS has more than 200 officers and employees at its headquarters and two branches. It started its journey in 1972 with the assets and liabilities of the former Pakistan Industrial Credit and Investment Corporation Ltd, Investment Corporation of Pakistan and National Investment Trust, which were wound up after the independence of Bangladesh.

Board of Directors of Bangladesh Shilpa Rin Sangstha (BSRB):

Name Status with the Bank

Mr. Nazem Ahmed Chowdhury Chairman

MD. Mizanur Rahman Managing Director

Mr. Md. Matiur Rahan Director

Mr. Md. Ziaul Haque Khondker Director

Begum Khurshida Khatoon Director

Razia Begum Director

Mr. Md. Abul Hossain Miah Director

Mr. Abdur Rahim Khan Secretary

3.3.3 Role in Bangladesh Shilpa Rin Sangstha (BSRS) Economic Development

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3.3.3.1 Literacy Programs:

The percentage of literacy in Bangladesh is only 23%. Includes basic literacy, numeracy, and reading. The concept is to spread literacy.

3.3.3.2 Arsenic Programs:

“Arsenic in Bangladesh drinking water is the worst manmade chemical calamity in human history of thousands of people were dying”

By drinking arsenic-contaminated water there has been incidences of lung, liver and bladder cancers. Females exposed to arsenic for long time are exhibiting 60 times higher mortality from respiratory diseases than normal. Skin cancers also appear later in life. In Bangladesh affected people show ghastly crusts on their palms and feet, skin lesions, and cancers.

Presently the shallow tube wells are affected, although in a few cases wells below 300 meters had arsenic above acceptable levels.

MAAWS has been actively advocating for expanding the coverage of safe water. Or should it attempt to manage the likely outcome of arsenic poisoning

Finding & Solution:

Twisting beyond the elastic limits certainly backfires. MAAWS found a middle way to deal with the situation. MAAWS began spearheading testing and inspection of all its existing tube-wells. MAAWS is trying to focus on issues like: • What is the extent and severity of the problem in Earpur, Senbagh & Noakhali? • Why this happened? • How can this be addressed? • How can non-resident Bangladeshi's (NRB's) help?

Raise awareness to the arsenic problem:

These satellite images reflect the widespread effect of Arsenic. The use of water per person ranges from 4Lt in arid areas to 425 Lt. a day in water abundant wealthy regions. With ever increasing demand for pure drinking water, it causes us to look more closely on the amount of pure drinking water we get everyday and the impact of that water on the quality of our lives as it serves our daily needs. Prior to 1970 people of Bangladesh were using surface water for drinking with the independence of Bangladesh in 1971 situation changed.

UN agencies and other agencies started to sink shallow tube wells for drinking water to save the country from water borne diseases. Within three decades as the water layers lowered came the problem of arsenic. Although the arsenic-contamination of groundwater has been declared a national disaster, its seriousness is yet to be fully comprehended. Water samples have indicated that arsenic-contamination is "prominent" in the shallow aquifers. Most people draw their supply

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of water from this source. There is yet another dimension. Damming of the rivers upstream. The bottom line is that water diversion constructions are the worst tampering mechanisms of natural water courses on which rest the beautiful balance of Nature. These mechanisms create imbalanced.

3.3.3.3 Local Area Arsenic Databank:

MAAWS Computer School has a database and listing of people afflicted by Arsenic. We have qualified and trained people with UNIX, SAS, ORACLE and other statistical programs, to handle and develop database as per donor requirement and capable of sharing with any NGOs, CBOs, Donor Agencies, Aid Organizations, Funding institutions etc.

3.3.3.4 Computer Learning Center:

Job level basic to advanced training in office 2000 & advance programs. This program is intended for women so that they can be a capable work force in our district area as well as throughout

Maaws has proved the effect once the community (lawmakers, local leaders, public administration officials, donors, local school teachers, dedicated, volunteers, rickshaw pullers, day laborers, people from all walks of life and such like) works in complete unison. In the education sector we started with the cooperation of such a group pf part-timers school/college-going who contributed their savings and voluntary time to teach.

This is the golden legacy of earpur primary & high school they have a success story to share.

This school though new, compared to those schools established during the British period has contributed to the educational development of not only earpur but also of the adjoining areas those who never dreamt of the possibility of educating themselves ever. Many of them today completed university and are working in the USA, UK, Canada, Australia, Germany, Norway, Sweden, Malaysia, Japan, Korea, Abu Dhabi and elsewhere. In scouting, and games they got the coveted SAARC trophies.

Today we would like to utilize this foundation to lay the starting point for countrywide village-based computer learning movement train the underemployed educated youth of the local areas. Secondly for the new generation provide the head start in computer literacy.

We are desperately looking for alliances that would directly be of help to village children for who, till today, computer experience is a vision. We have requested potential computer manufacturing organizations for equipment, computer professionals for outlining targeted areas of demand, experts to spare their time to give instructions to trainers, donors to give monetary assistance, and teachers to help us lift this project off the grounds.

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Returns to the small initial investment, can be visualized and the infinite and worldwide growth of skilled computer literates and the resultant financial returns received within the shortest period of time.

The advantage that we have is our literacy and understanding of the English language which is a prerequisite for communication with the outside world.

Secondly multinational companies who desire to sponsor or train could utilize this trained manpower for their work. They can get computer trained manpower for their establishment from Bangladesh at a fraction of the cost.

3.3.3.5 Healthcare/HIV/AIDS Awareness:

Health for Villagers:People are living beneath the poverty line, in rural Bangladesh. Where food, clean drinking water, is difficult to procure, the question of health needs is lower on the scale of necessities. So, MAAWS is requesting experts worldwide to return to their villages and during their vacation time treat the poor who cannot afford treatment otherwise. MAAWS has programs where experts can inform them of their vacation schedule and MAAWS will set up as per their desire, in their area of choice open camps to do what they wish to provide. The service they wish to render to the humanity will be organized by MAAWS that is dedicated to the well being of the local people. MAAWS will also arrange programs for these visiting experts and recently as passed out students in Medical colleges. This exchange will enable Bangladesh doctors, nurses, medical students, phlebotomists, Cardiologists, Pediatrics, OBGYN experts Nutritionists, Radiologists, Oncologists, Endocrinologists, X-Ray technicians to be benefited. The ultimate effect will then be creation of jobs and support of health needs. Poverty alleviation then, will have a direct impact. “Health for All” will have real meaning though till today it has remained a slogan only, real people and real needs have not been addressed as yet. MAAWS wants to open out this opportunity to all for the benefit of the common man.

In the project area we have people afflicted with numerous ailments and are without treatment. We have therefore, taken up a two-step process one is preventive the other being curative. In the preventive side we are considering the total informative and also a dissemination process that could reach the grass roots and turn out to be a productive trend in the long run. Therefore, the vital information flow on preventative lines is considered of prime importance. We are trying to reach the educated medical experts who are capable of providing informative help to the rural poor. On the curative side we shall soon go into the establishment of physical facility based on the experiences received from these expatriate resource persons and experts.

Two trends are striking and we are adopting that in our program: the first being, women health because they are forming a substantive number of the total population. Second, AIDS because

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the contamination is likely to cross borders soon. The projection of WHO on AIDS and its numbers in our sub continental region is our case in point.

3.3.3.6 Sewing Project:

Marking, cutting, stitching, quality control & packing:This is a composite project where we are training groups who will be capable to ultimately handle high-end market products. Their training involves from cutting and marking to stitching and production and ultimately packing. They are being trained to meet demands for today's fashion industry. Presently they are a fully capable work force to produce any kind of garment for low-end local markets throughout the country. Last year they earned TK 20,000.

3.3.3.7 Rickshaw Programs:Pay-as-you-earn this program supports money making programs. Rickshaws which are the principal mode of transport are given to the participating members and they pay back on easy daily basis schedule is very easy and before they know they have paid off the loan. We do not charge profit on the distributed rickshaws.

3.3.3.8 Vocational training:Supporting the less fortunate Mechanical, automobile, carpentry, masonry, plumbing & electricity. This composite program is intended to support the construction industry. The trained participants go out initially to acquire and consolidate their skills thereafter they go to other places for work. Maws are trying to get employment for them in other countries of the world where such skills are in demand. Principal idea behind this is for them to earn the hard foreign currency and support the family back home encourage education and save the family from starvation.

The trained work force is capable of working in the international labor market in developing or developed countries. We are in constant touch with ilo to get directions on the labor market and provide retraining in need arises.

3.3.3.9 Handloom: Weaving cloth / mosquito nets / towels for local market.

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3.3.3.10 Micro Credit for Poultry & Livestock: Growing, rearing and marketing: This has been a successful program. Small credits are provided to the participants who utilize these credits and rear birds. They produce and sell all natural 100% organic eggs for local consumption. Maws are trying to export this all natural product to foreign health food markets.

3.3.3.11 Food Distribution: Friday soup kitchen to feed the hungry. This kitchen has been open for almost 70 years.

3.3.3.12 Housing: Building for the seniors & widows is still in preparation and waiting donor funding to materialize it.

3.4 Bangladesh Shilpa Bank (BSB):

3.4.1 Introduction:

Bangladesh Shilpa Bank (BSB) is the state owned Leading Development Financial Institution (DFI) of Bangladesh. 'Shilpa' means industry. BSB provides financial and technical assistance to broaden the private as well as public sector industrial base of the country. It prioritizes, especially, Export Oriented/Export Linkage industrial units, Efficient Import Substitution, Joint Ventures, Commercialization of local technology and promotion of agro-based industry.

3.4.1.1 Establishment and Status of the Bank:

Bangladesh Shilpa Bank (BSB) was established on 31 October, 1972 under the Bangladesh Shilpa Bank Order, 1972 (as amended 1st November, 1992) and owned by the Government. Bangladesh Shilpa Bank has an authorized capital of Tk. 2,000 Million only and paid up capital of Tk. 2000 Million only. Bangladesh Shilpa Bank has 15 branches all over Bangladesh.

3.4.1.2 Nature of Business: Bangladesh Shilpa Bank as the prime development financing institution of the country extends financial assistance both in local and foreign currencies for setting up new industries and rehabilitation of sick industries. Besides, the bank started full-fledged commercial banking function from 1993.

3.4.1.3 Sources of Fund: Paid-up Capital, loan from Government of Bangladesh, loan from Bangladesh Bank (Central Bank), different Loan Giving (Foreign) Agencies, and Customers’ Deposit.

3.4.1.4 Ownership: 100 percent ownership of the Bank belongs to the Government of Bangladesh.

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3.4.1.5 Mission: Accelerating the process of industrialization of the country by providing financial assistance and Equity support.

3.4.1.6 Management: Board of Directors consists of 11 (eleven) members including the Chairman and the Managing.

3.4.1.7 Employees Benefit: Employees benefit as per Provident Fund, Employees Benevolent Fund and Superannuation Fund has been provided adequately.

3.4.2 Executive Profile of Bangladesh Shilpa Bank:

Board of Trustees, (BSB):

Name Status with the Bank

Professor Sirajul Islam President

Professor Sirajul Islam Chief Editor

Professor Sajahan Miah Managing Editor

Justice Kazi Ebadul Hoque Members

Professor Amirul Islam Chowdhury

Members

Professor Najma Siddiqi Members

Professor Mahfuza Khanam Members

Professor Nazrul Islam Members

Dr. AMM Shawkat Ali Members

Professor Ahmed Kamal Members

Mr. Muhammad Abdul Mazid Members

41


Employees of Bangladesh Shilpo Rin Sangstha (BSRS) urged the government not to implement the wrong decision of just departed Caretaker Government (CG) in merging the profit earning BSRS with the Bangladesh Shilpo Bank (BSB).

Reliable sources from BSRS said The New Nation that a vested interest mongering quarter has desperately been engaged to activate the merging process of two organizations despite knowing that BSRS itself stands on farm footing and keeping remarkable contributions to the national economy through financing the country's thrust industry sector.

Being founded in 1972 through the BSRS Act, signed by the father of the Nation, Bangabandhu Sheikh Mujibur Rahman, the organization bears the records of earning expected profit since its beginning.

The present market value of 19 stories BSRS Bhaban on 120 Kathas of land at Karwan Bazar stands at more than Tk. 400 crores, price of 120 Kathas of land at Mirpur Dhaka stands more than Tk. 40 crores, prices of share, debenture and mutual fund bought at Tk. only 73 crores now stands at Tk. 600 crores and outstanding to various organizations stands at Tk. 1500 corers which comes a total of Tk. 2500 corers property of the BSRS.

Depositing huge amount of income tax and dividend to the government exchequer, generating huge number of employment opportunities and having no liability of BSRS to any local and foreign organizations.

Employees are wondered of his power that was able to create influence during the Caretaker Government and still engaged in destroying the organization, founded by the father of the nation even amid the present democratic regime.

42


3.4.3 Activities of Bangladesh Shilpa Bank:

3.4.3.1 Basis of Preparation of Financial Statements:

These financial statements have been prepared under the historical cost convention on a going concern basis in accordance with Bangladesh Accounting Standards; Bank companies Act 1991 and in the format prescribed by the Bangladesh Bank vide BRPD Circular # 03 dated 18 April, 2000 and Circular # 14 dated 25 June, 2003.

3.4.3.2 Consolidation of accounts:

A separate set of records for consolidating the trial balances for the Branch offices and Loan Accounting Department is maintained at the Central Accounts Department, Head Office from which financial statements of the bank are drawn up.

3.4.3.3 Fixed Assets and Depreciation:

Fixed assets other than land are stated at cost less accumulated depreciation. Land is stated at cost.

Depreciation is being charged on fixed assets other than motor vehicles & Computer on reducing balance method. Depreciation on motor vehicles & Computer is being charged on straight-line method.

Building/Premises..............................................2.5%

Furniture & Fixtures........................................10.0%

Electric/Gas Installation..................................20.0%

Typewriters, Ceiling Fans, Office Equipment (including Computer) & SBBL Gun ........................................................................20.0%

Motor Cars, other Vehicles............................20.0%

43


Depreciation at the applicable rates is charged proportionately on additions made during the year from the month of their acquisition. Upon retirement of items of fixed assets the net book values are eliminated from the accounts and the resulting gains or losses, if any, are transferred to Profit and loss Account. Repairs and maintenance costs of fixed asset are charged to Profit and Loss Account when incurred.

3.4.3.4 Revenue Recognition:

i. Interest on unclassified loans and advance are calculated on a daily product basis but charged and accounted for quarterly basis and in some cases on yearly basis.

ii. No interest is charged on loan classified as bad and loss.

iii. Interest is charged on classified loans and advances as per BCD Circular # 34 of 1989, BCD Circular # 20 of 1994, BCD Circular # 12 of 1995, BRPD Circular # 16 of 1998 and BRPD Circular # 9 of 2001 and such interest is not included in income and credited to interest suspense account.

iv. Interest suspense and penal interest, if any, calculated on classified advances is taken as income in the year of receipt of such interest from the defaulting borrowers.

3.4.3.5 Loans and Advances:

i. Loans and advances have been stated at gross value as per requirement of The Bank Companies Act, 1991.

ii. Provision for loans and advances are made on the basis of information furnished by the branches and of instructions contained in Bangladesh Bank. BCD Circular # 12 dated 4 September 1995, BRPD Circular # 16 dated 6 December 1998, BRPD Circular # 9 dated 14 May 2001 and BRPD circular # 5 dated 11 June 2006 stating the following rates:

General provision on unclassified loans and advances-------- 1%

Provision on Special Mentioned Accounts---------------------- 5%

Provision on substandard loans and advances------------------ 20%

Provision on doubtful loans and advances----------------------- 50%

44


Provision on bad/loss loans and advances------------------------ 100%

iii. Loans and advances are written off to the extent that there is no realistic prospect of recovery as per BRPD Circular # 2 dated 13 January, 2003.

3.4.3.6 Foreign Currency Translation:3.4.3.6.1 Foreign Currency Transaction: i. Transactions in foreign currencies are translated into BDT currency at the rate of exchange prevailing on the date of such transactions and resulting gains or losses are credited/charged to Profit & Loss Account. ii. Monetary assets and liabilities in foreign currencies are expressed in taka terms at the rate of exchange ruling on the balance sheet date except other than those in pre-liberation Pakistani currency which have been translated at Tk.1 = Pak Rupee 1.

3.4.3.6.2 Forward foreign exchange contracts valued at forward rates applicable to their respective maturities.

3.4.3.7 Provision for Taxation:Provision for taxation amounting to Tk. 77,148,000 has been made against net profit during the year as per prevailing taxation rule.

3.4.3.8 Pension Plan: With the introduction of BSB Employees Service Regulation 1984, vide the Official Gazette published on 26 December, 1984 by the Finance Division of the Ministry of Finance, the Pension and Death-Cum-Retirement Benefit Scheme, General Provident Fund (GPF) Scheme, etc. have been implemented extending benefits thereof to all full time employees of the Bank who become members of the said schemes. The fund is being managed and administered by a separate trust formed for the purpose.

3.4.3.9 Special Assistance Fund:In accordance with the Industrial Policy 1986, a Special Assistance Fund (SAF) has been created by BSB as the prime DFI of the country to provide concessional loans to projects: a. Based on local innovation and invention of products and processes;

b. Utilizing locally manufactured capital goods; and

c. For production of capital machinery and other non-traditional items.

45


3.4.3.10 Investment: a. Investments have been shown under two broad categories: Government Securities and Other Investments. b. Investments in shares and securities have not been revalued at the end of the financial year. c. The current and long-term investment in securities have been shown at cost price.

3.4.3.11 Deposits and Other Accounts:Deposits and other accounts includes bills payable and have been analyzed in terms of the maturity grouping showing separately other deposits and inter-bank deposits. Unclaimed deposits for 10 years or more held by the Bank have been shown separately.

Chapter-4

Ratio Analysis, Trend Analysis, & Comparative Analysis

46


4. Ratio Analysis, Trend Analysis, & Comparative Analysis:

4.1 Introduction: Banks today are under great pressure to perform-to meet the objectives of their stock holders, employees, depositors, and borrowing customers, while somehow keeping government regulators satisfied that the bank`s policies, loans, and investments are sound. As banking organizations have grown in recent years, more and more of them have been forced to turn to the money and capital markets to raise funds by selling stocks, bonds, and short-term IOUs. In many cases, the growth of local deposits has simply been inadequate to fund the growing needs of customers for loans and new services. Banks entry into the open market to raise funds means that their financial statements are increasingly being scrutinized by investors and by the general public. This development has placed management under great pressure to set and meet bank performance goals.

At the same time, competition for banks traditional loan and deposit customers has increased dramatically. Credit unions, money market mutual funds, insurance companies, brokerage firms, and even chain stores like Sears Roebuck and J.C Penney are fighting for a slice of nearly every credit and deposit market traditionally served by banks. Bankers have been called upon to continually reevaluate their loan and deposit policies, review their plans for expansion and growth, and assess their returns and risk in light of this new competitive environment.

4.2 Determining the Bank`s Long-Range Objectives:

The first step in analyzing any bank`s financial statements is to decide what objectives the bank is or should be seeking. Bank performance must be directed toward specific objectives. A fair evaluation of any bank`s performance should start by evaluating whether it has been able to achieve the objectives its management and stockholders have chosen.

Certainly many banks have their own unique objectives. Some wish to grow faster and achieve some long-range growth objective. Others seem to prefer the, minimizing risk and conveying the image of a sound bank, but with modest rewards for their shareholders.

4.3 Maximizing the Value of the Firm: A Key Objective for Any Bank:

47


While all of the foregoing goals have something to recommend them, increasingly banks are finding that they must pay close attention to the value of their stock. Indeed, the basic principles of financial management, as that science is practiced today, suggest strongly that attempting to maximize a bank`s stock value is the key objective that should have priority over all others. Banks are corporations, with stockholders interested in what happens to the value and yield of their stock. If the stock fails to rise in value commensurate with stockholder expectations, current investors may seek to unload their shares and the bank will have difficulty in raising new capital to support its future growth. Clearly, then, bank management should pursue the objective of maximizing the value of the bank`s stock.

4.4 To Calculate the Ratio Following Formulas are used:

Table-1: Ratio Calculation FormulaRatios Name Formula1.Profiability Ratios

Return on equity capital(ROE) =

Return on asses (ROA) =

Ne interest margin =

Net noninterest margin =

Net bank operating margin

Earning per share of stock(EPS) =

2.Earning Spread

Earnings spread = –

3.Breaking Down Equity Returns for Closer Analysis

Net profit margin (NPM) =

Asset utilization (AU) =

48


Equity Multiplier =

4.Breakdown Analysis of a Banks Return on Assets

Net Interest Margin

Noninterest Margin =

Special transactions affecting its net income =

Return on assets (ROA, or the ability of the bank to generate income form assets) =

5.Operating Efficiency Ratio

Operating efficiency ratio =

RATIO ANALYSIS

4.5 Ratio Analysis of Bangladesh Krishi Bank:

Table-2: Financial Ratio of Bangladesh Krishi Bank (For the Year-2002, 03, 04, 05, 06)

Name of the Ratios Year 2002

Year 2003

Year 2004

Year 2005

Year 2006

Return on Equity Capital 0.1580 0.0999 0.0998 0.1188 0.1064

Return on Assets 0.0243 0.0162 0.0161 0.0193 0.0173

Net Interest Margin -0.0091 -0.0030 -0.0002 -0.0036 -0.0016

49


Net Non-Interest Margin -0.0136 -0.0390 -0.0135 -0.0134 -0.0133

Net Bank Operating Margin -0.0149 -0.0162 -0.0161 -0.0176 -0.0173

Earning Per Share of Stock 1.5366 0.9520 0.7038 0.7683 0.0591

Earning Spread -0.0462 -0.0513 -0.0458 -0.0412 -0.0363

Net Profit Margin 5.1933 3.7490 3.3313 4.3640 11.6319

Asset Utilization 0.0046 0.0043 0.0048 0.0043 0.0015

Equity Multiplier 6.5236 6.1603 6.1995 6.1398 6.1466

Operating Efficiency Ratio 4.1933 4.7492 4.3313 4.7247 4.6613

4.6 Ratio Analysis of Bangladesh Shilpa Rin Sangstha:

Table-3: Financial Ratio of Bangladesh Shilpa Rin Sangstha (For the Year-2005, 06, 07, 08)


Year 2006

Year 2007

Year 2008

Return on Equity Capital 0.0000 0.0360 0.0422 0.0520

Return on Assets 0.0000 0.0191 0.0234 0.0294

Net Interest Margin 0.0255 0.0404 0.0410 0.0481

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Net Non-Interest Margin -0.0093 0.0051 0.0053 0.0062

Net Bank Operating Margin 0.0141 0.0434 0.0435 0.0512

Earning Per Share of Stock 0.0000 0.1226 0.1511 0.1959

Earning Spread -0.0001 -0.0028 -0.0057 -0.0075

Net Profit Margin 0.0000 0.3033 0.3683 0.4086

Asset Utilization 0.0421 0.0630 0.0634 0.0720

Equity Multiplier 2.1857 1.8858 1.8074 1.7668

Operating Efficiency Ratio 0.6656 0.3099 0.3132 0.2892

4.7 Ratio Analysis of Bangladesh Shilpa Bank:


Year 2005

Year 2006

Year 2007

Year 2008

Return on Equity Capital 0.1594 0.1005 0.1252 0.0261 0.0760

Return on Assets 0.0182 0.0161 0.0255 0.0063 0.0212

Net Interest Margin 0.0287 0.0422 0.0412 0.0443 0.0459

51


Net Non-Interest Margin -0.0055 -0.0358 -0.0104 0.0285 -0.0034

Net Bank Operating Margin 0.0219 0.0039 0.0283 0.0284 0.0396

Earning Per Share of Stock 0.1970 0.1132 0.1621 0.0395 0.1242

Earning Spread 0.0230 0.0397 0.0357 0.0382 0.0397

Net Profit Margin 0.5774 0.3405 0.5089 0.1245 0.3235

Asset Utilization 0.0315 0.0474 0.0501 0.0510 0.0659

Equity Multiplier 8.7581 6.2186 4.9093 4.1113 3.5795

Operating Efficiency Ratio 0.3051 0.9170 0.4353 0.4432 0.3973

Table-4: Financial Ratio of Bangladesh Shilpa Bank (For the Year-2004, 05, 06, 07, 08)

Trend Analysis

4.8 Trend Analysis of Bangladesh Krishi Bank:

4.8.1 Return on Equity Capital:

Year Return on Equity Capital

2002 0.1580

2003 0.0999

2004 0.0998

52


2005 0.1188

2006 0.1064

Figure-1: Percentage of Trend Analysis (ROE) of BKB

Return on Equity Capital:

This ratio indicates that to measure the efficiency with which common shareholder’s equity is being employed within the firm. We can see that from the graph of Bangladesh Krishi Bank that ratio was 15 percent in 2002 and next two years fall down at 9 percent and it could recover the ratio in 2005 and 2006 which means in 2002 was the height benefit is received from the investing their capital in the bank and 2006 less benefit was gained from the 2002 in investing the capital.

4.8.2 Return of Asset:

Year Return on Assets

2002 0.0243

2003 0.0162

2004 0.0161

2005 0.0193

2006 0.0173

Figure-2: Percentage of Trend Analysis (ROA) of BKB

Return of Asset:

Return on Asset indicates that to measure the efficiency management are efficiently employed asset within the firm. If we look at the graph we can see that 2002 was the height possible utilization of asset efficiently within the firm that was 2.43 percent and next two years into 1.62 percent. Those years asset utilization efficiency was less than 2002. The asset utilization ratios steadily recover their efficiency in 2005.

4.8.3 Net Interest Margin:

Year Net Interest Margin

53


2002 -0.0091

2003 -0.0030

2004 -0.0002

2005 -0.0036

2006 -0.0016

Figure-3: Percentage of Trend Analysis (NIM) of BKB

Net Interest Margin:

The Net Interest Margin indicates to measure the spread between interest revenue and interest cost that the management is being able to control closely over the bank’s earning assets and pursuit cheapest sources of funding. From the graph we can see that, the net interest margin ratio was low in 2002 that was -.91 percent which is negative and in 2004 was -.02 percent. Comparing 5 years 2002 was the less distance between interest revenue and interest cost and management had less effectiveness over controlling the earning assets and 2004 indicate interest revenue was more than cost and management was gained control over the earning assets.

4.8.4 Net Non Interest Margin:

Year Net Non-Interest Margin

2002 -0.0136

2003 -0.0390

2004 -0.0135

2005 -0.0134

2006 -0.0133

54


Figure-4: Percentage of Trend Analysis Net Non- Interest Margin of BKB

Net Non Interest Margin:

Non interest margin indicates that the measure of the non interest revenues from deposit service charges and other service fees that the bank has been able to collect the amount of non interest cost. From the graph we can see that, bank’s non interest margin is negative which means non-interest cost is outstrip than the non-interest fees.

4.8.5 Net Bank Operating Margin:

Figure-5: Percentage of Trend Analysis Net bank Operating Margin of BKB

Net Bank Operating Margin

Net Operating Margin indicates the measurement efficiency of management that keeps growth of revenues by controlling the arising cost. In Bangladesh Krishi Bank achieved negative ratio from 2002 to 2006. Those year bank’s revenue was lower than operating expenses over the controlling the earning asset. In 2002 net operating margin was lower that means the less difference from the operating revenue than cost that was -0.0149 and this ratio was -0.0176 that means the operating expenses was higher than operating revenue.

4.8.6 Earning Per Share of Stock (EPS):

Year Net Bank Operating Margin

2002 -0.0149

2003 -0.0162

2004 -0.0161

2005 -0.0176

2006 -0.0173

55


Earning Per Share of Stock (EPS):

From the graph we can see that earning per Share of Stock (EPS) ratio of Bangladesh Krishi Bank in 2002 the ratio was 15.37 percent, and year 2003 to 2006 the ratio was decline.

4.8.7 Earnings Spread:

Year Earning Spread

2002 -0.0462

2003 -0.0513

2004 -0.0458

2005 -0.0412

2006 -0.0363

Year Earning Per Share of Stock

2002 1.5366

2003 0.9520

2004 0.7038

2005 0.7683

2006 0.0591

56


Figure-7: Percentage of Trend Analysis Earning Spread of BKB

Earnings Spread:

The earnings spread indicate the effectiveness of the bank’s intermediation function in borrowing and lending money and intensity of competition in the bank’s market. In the graph we can see that Bangladesh Krishi Bank’s Earnings spread is more fluctuating over those years. In the 2006 were less earning spreads rather than other years that means more effective in the bank’s function and increases the competition.

4.8.8 Net Profit Margin:

Figure-8: Percentage of Trend Analysis (NPM) of BKB

Net Profit Margin:

The Net Profit Margin that indicates that degree of management control and direction that increase their earnings and their return to their stockholder by successfully expenses and maximizing revenues. The net profit margin of Bangladesh Krishi Bank in 2004 was low and in 2006 was the height that means 2004 the bank decreased their earnings return to stockholders and in 2006 the bank increased their earnings to the shareholder by maximizing revenues and controlling expenses.

Year Net Profit Margin

2002 5.1933

2003 3.7490

2004 3.3313

2005 4.3640

2006 11.6319

57


4.8.9 Asset Utilization:

Asset Utilization:

Asset Utilization as a measure of asset management efficiency of the bank. From the graph we can see that from 2002 to 2005 the ratio was similar but in 2006 fall down dramatically which means that 2006 asset management utilization was not efficient rather than other previous year.

4.8.10 Equity Multiplier:

Year Asset Utilization

2002 0.0046

2003 0.0043

2004 0.0048

2005 0.0043

2006 0.0015

Year Equity Multiplier

2002 6.5236

2003 6.1603

2004 6.1995

2005 6.1398

2006 6.1466

58


Figure-10: Percentage of Trend Analysis (EM) of BKB

Equity Multiplier:

Equity multiplier indicates that the employment of financial leverage to raise net earnings for the stockholders. For the Bangladesh Krishi Bank the equity multiplier was higher in 2002 and lowest equity multiplier was 2005 that means in 2002, the bank employed more financial leverage for raising net earnings for the stockholders rather than 2005.

4.8.11 Operating Efficiency:

Figure-11: Percentage of Trend Analysis (OER) of BKB

Operating Efficiency:

Operating efficiency indicates that reducing operating expenses and increasing the productivity of their employees through the use of automated equipment and improved employee training. From the graph we can see that 2003, 2005 and 2006 bank reduced operating expenses and increased their productivity by improved their training.

4.9 Trend Analysis of Bangladesh Shilpa Rin Sangstha:


Year Return on Equity Capital

2005 0.0000

2006 0.0360

2007 0.0422

Year Operating Efficiency Ratio

2002 4.1933

2003 4.7492

2004 4.3313

2005 4.7247

2006 4.6613

59


2008 0.0520

Figure-1: Percentage of Trend Analysis (ROE) of BSRS


This ratio indicates that to measure the efficiency with which common shareholder’s equity is being employed within the firm. We can see that from the graph of Bangladesh Shilpa Rin Sangstha that ratio was 0 percent in 2005 and next two years increase at 4 percent and it could recover the ratio 5 percent in 2008 which means in 2008 was the height benefit is received from the investing their capital in the bank and 2005 less benefit was gained from the 2005 in investing the capital.



2005 0.0000

2006 0.0191

2007 0.0234

2008 0.0294

Figure-2: Percentage of Trend Analysis (ROA) of BSRS

Return of Asset:

Return on Asset indicates that to measure the efficiency management are efficiently employed asset within the firm. If we look at the graph we can see that 2005 was the lower possible utilization of asset efficiently within the firm that was 0 percent and next years into 1.9 percent. 2.4 percent in 2007 and 2008 it was 2.95 percent so those years asset utilization efficiency was more than 2005. The asset utilization ratios steadily recover their efficiency in 2008.



2005 0.0255

2006 0.0404

2007 0.0410

60


2008 0.0481

Figure-3: Percentage of Trend Analysis (NIM) of BSRS


The Net Interest Margin indicates to measure the spread between interest revenue and interest cost that the management is being able to control closely over the bank’s earning assets and pursuit cheapest sources of funding. From the graph we can see that, the net interest margin ratio was low in 2005 that was 2.55 percent and in 2008 was 4.8 percent. Comparing 4 years 2005 was the less distance between interest revenue and interest cost and management had less effectiveness over controlling the earning assets and 2008 indicate interest revenue was more than cost and management was gained control over the earning assets.

4.9.4 Net Non Interest Margin


2005 -0.0093

2006 0.0051

2007 0.0053

2008 0.0062

Figure-4: Percentage of Trend Analysis Net Non- interest margin of BSRS


Non interest margin indicates that the measure of the non interest revenues from deposit service charges and other service fees that the bank has been able to collect the amount of non interest cost. From the graph we can see that, bank’s non interest margin is negative which means non-interest cost is outstrip than the non-interest fees. After 2005 bank did recovered to maintain the positive margin which means bank was able to earn non interest fees more than non-interest cost.

61




2005 0.0141

2006 0.0434

2007 0.0435

2008 0.0512

Figure-5: Percentage of Trend Analysis Net bank Operating Margin of BSRS

Net Bank Operating Margin:

Net Operating Margin indicates the measurement efficiency of management that keeps growth of revenues by controlling the arising cost. In Bangladesh Shilpa Rin Sangstha achieved positive ratio from 2005 to 2008. Those year bank’s revenue was higher than operating expenses over the controlling the earning asset. In 2005 net operating margin was lower that means the less difference from the operating revenue than cost that was 0.0142 and this ratio was 0.0512 that means the operating expenses was lower than operating revenue.

4.9.6 Earning Per Share of Stock:


2005 0.0000

2006 0.1226

2007 0.1511

2008 0.1959

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Figure-6: Percentage of Trend Analysis (EPS) of BSRS

Earning Per Share of Stock:

From the graph we can see that earning per Share of Stock (EPS) ratio of Bangladesh Shilpa Rin Sangstha was increasing from the year 2005 to 2008.


Year Earning Spread

2005 -0.0001

2006 -0.0028

2007 -0.0057

2008 -0.0075

Figure-7: Percentage of Trend Analysis Earning Spread of BSRS

Earnings Spread:

The earnings spread indicate the effectiveness of the bank’s intermediation function in borrowing and lending money and intensity of competition in the bank’s market. In the graph we can see that Bangladesh Shilpa Rin Sangstha Earnings spread is more fluctuating over those years. In the 2005 was more earning spreads rather than other years that means that bank was more effective in money borrowing and lending during this year but after that year decreased effectiveness of borrowing and lending.



2005 0.0000

2006 0.3033

2007 0.3683

63


2008 0.4086

Figure-8: Percentage of Trend Analysis (NPM) of BSRS

Net Profit Margin:

The Net Profit Margin that indicates that degree of management control and direction that increase their earnings and their return to their stockholder by successfully expenses and maximizing revenues. The net profit margin of Bangladesh Shilpa Rin Sangstha in 2005 was low and in 2008 was the height that means 2005 the bank decreased their earnings return to stockholders and in 2008 the bank increased their earnings to the shareholder by maximizing revenues and controlling expenses.



2005 0.0421

2006 0.0630

2007 0.0634

2008 0.0720

Figure-9: Percentage of Trend Analysis (AU) of BSRS

Asset Utilization:

Asset Utilization as a measure of asset management efficiency of the bank. From the graph we can see that in 2005 the ratio was 4.21 percent. In 2006 and 2007 the ratio was similar but in 2008 the ratio was increase 7.20 percent which means that 2008 asset management utilization was efficient rather than other previous year.



2005 2.1857

2006 1.8858

64


2007 1.8074

2008 1.7668

Figure-10: Percentage of Trend Analysis (EM) of BSRS

Equity Multiplier:

Equity multiplier indicates that the employment of financial leverage to raise net earnings for the stockholders. For the Bangladesh Shilpa Rin Sangstha the equity multiplier was higher in 2005 and lowest equity multiplier was 2008 that means in 2005, the bank employed more financial leverage for raising net earnings for the stockholders rather than 2008.

4.9.11 Operating Efficiency Ratio:

Figure-11: Percentage of Trend Analysis (OER) of BSRS


Operating efficiency indicates that reducing operating expenses and increasing the productivity of their employees through the use of automated equipment and improved employee training. From the graph we can see that 2005 and 2007 bank reduced operating expenses and increased their productivity by improved their training.

4.10 Trend Analysis of Bangladesh Shilpa Bank:



2005 0.6656

2006 0.3099

2007 0.3132

2008 0.2892

year Return on Equity Capital

2004 0.1594

2005 0.1005

2006 0.1252

2007 0.0261

2008 0.0760

65


Figure-1: Percentage of Trend Analysis (ROE) of BSB


This ratio indicates that to measure the efficiency with which common shareholder’s equity is being employed within the firm. We can see that from the graph of Bangladesh Shilpa Bank that ratio was 15.94 percent in 2004 but next four year the ratio was decrease. In 2007 it fall down at 2.6 percent and it could recover the ratio in 2008 and which means in 2004 was the height benefit is received from the investing their capital in the bank and 2008 less benefit was gained from the 2004 in investing the capital.


Figure-2: Percentage of Trend Analysis (ROA) of BSB

Return of Asset:

Return on Asset indicates that to measure the efficiency management are efficiently employed asset within the firm. If we look at the graph we can see that 2006 was the height possible utilization of asset efficiently within the firm that was 2.55 percent and previous two years 2004 and 2005 the ratio was 1.8 and 1.6 percent. After 2006 asset utilization efficiency was less, but the asset utilization ratios steadily recover their efficiency in 2008.


2004 0.0182

2005 0.0161

2006 0.0255

2007 0.0063

2008 0.0212

66




2004 0.0287

2005 0.0422

2006 0.0412

2007 0.0443

2008 0.0459

Figure-3: Percentage of Trend Analysis (NIM) of BSB


The Net Interest Margin indicates to measure the spread between interest revenue and interest cost that the management is being able to control closely over the bank’s earning assets and pursuit cheapest sources of funding. From the graph we can see that, the net interest margin ratio was low in 2004 that was 2.87 percent and in 2008 was 4.6 percent. Comparing 5 years 2004 was the less distance between interest revenue and interest cost and management had less effectiveness over controlling the earning assets and 2008 indicate interest revenue was more than cost and management was gained control over the earning assets.

4.10.4 Net Non Interest Margin:


2004 -0.0055

2005 -0.0358

67


2006 -0.0104

2007 0.0285

2008 -0.0034

Figure-4: Percentage of Trend Analysis Net Non- interest margin of BSB


Non interest margin indicates that the measure of the non interest revenues from deposit service charges and other service fees that the bank has been able to collect the amount of non interest cost. From the graph we can see that, bank’s non interest margin is negative which means non-interest cost is outstrip than the non-interest fees. After 2006 bank did recovered to maintain the positive margin which means bank was able to earn non interest fees more than non-interest cost, but after one year the bank`s non-interest margin is negative.


Figure-5: Percentage of Trend Analysis Net bank Operating Margin of BSB

Net Bank Operating Margin:

Net Operating Margin indicates the measurement efficiency of management that keeps growth of revenues by controlling the arising cost. In Bangladesh Shilpa Bank achieved positive ratio from 2004 to 2008. Those year bank’s revenue was higher than operating expenses over the controlling the earning asset. In 2005 net operating margin was lower that means the less


2004 0.0219

2005 0.0039

2006 0.0283

2007 0.0284

2008 0.0396

68


difference from the operating revenue than cost that was 0.0039 and this ratio was 0.0396 that means the operating expenses was lower than operating revenue.

4.10.6 Earning Per Share of Stock (EPS):

Figure-6: Percentage of Trend Analysis (EPS) of BSB

Earning Per Share of Stock (EPS):

From the graph we can see that earning per Share of Stock (EPS) ratio of Bangladesh Shilpa Bank in 2004 the ratio was 19.70 percent, and year 2005 it was 11.32 percent. In 2006 the ratio was 16.21 percent, in 2007 the ratio was decrease 3.95 percent and 2008 the ratio was 12.42 percent.


Year Earning Spread

2004 0.0230


2004 0.1970

2005 0.1132

2006 0.1621

2007 0.0395

2008 0.1242

69


2005 0.0397

2006 0.0357

2007 0.0382

2008 0.0397

Figure-7: Percentage of Trend Analysis Earning Spread of BSB

Earnings Spread:

The earnings spread indicate the effectiveness of the bank’s intermediation function in borrowing and lending money and intensity of competition in the bank’s market. In the graph we can see that Bangladesh Shilpa Bank’s Earnings spread is almost similar in 2004 to 2008. In the 2004 was less earning spreads that was .023 and 2005 and 2008 was more earnings spead.


Figure-8: Percentage of Trend Analysis (NPM) of BSB

Net Profit Margin:

The Net Profit Margin that indicates that degree of management control and direction that increase their earnings and their return to their stockholder by successfully expenses and maximizing revenues. The net profit margin of Bangladesh Shilpa Bank in 2007 was low and in 2004 was the height that means 2007 the bank decreased their earnings return to stockholders and in 2004 the bank increased their earnings to the shareholder by maximizing revenues and controlling expenses.



2004 0.5774

2005 0.3405

2006 0.5089

2007 0.1245

2008 0.3235

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2004 0.0315

2005 0.0474

2006 0.0501

2007 0.0510

2008 0.0659

Figure-9: Percentage of Trend Analysis (AU) of BSB

Asset Utilization:

Asset Utilization as a measure of asset management efficiency of the bank. From the graph we can see that in 2004 the ratio 3.15 percent. In 2006 and 2007 the ratio was similar but in 2008 the ratio was increase 6.6 percent which means that 2008 asset management utilization was efficient rather than other previous year.


Figure-10: Percentage of Trend Analysis (EM) of BSB

Equity Multiplier:

Equity multiplier indicates that the employment of financial leverage to raise net earnings for the stockholders. For the Bangladesh Shilpa Bank the equity multiplier was higher in 2008 and lowest equity multiplier was 2008 that means in 2004, the bank employed more financial leverage for raising net earnings for the stockholders rather than 2008.

4.10.11 Operating Efficiency:


2004 8.7581

2005 6.2186

2006 4.9093

2007 4.1113

2008 3.5795

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2004 0.3051

2005 0.9170

2006 0.4353

2007 0.4432

2008 0.3973

Figure-11: Percentage of Trend Analysis (OER) of BSB


Operating efficiency indicates that reducing operating expenses and increasing the productivity of their employees through the use of automated equipment and improved employee training. From the graph we can see that 2005, 2006 and 2007 bank reduced operating expenses and increased their productivity by improved their training.

Comparative Analysis

Table-5: Comparative Analysis of Commercial Bank

4.11 Comparative Analysis of three Specialized Commercial Bank (Bangladesh Krishi Bank, Bangladesh Shilpa Rin Sangstha, & Bangladesh Shilpa Bank) in year 2005 & 2006.

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Year 2005 Year 2006

Bank Name Bank Name

Ratio Name

Bangladesh Krishi Bank

Bangladesh Shilpa Rin Sangstha

Bangladesh Shilpa Bank

Bangladesh Krishi Bank

Bangladesh Shilpa Rin Sangstha

Bangladesh Shilpa Bank

Return on equity Capital (ROE)

0.1188 0 0.1005 0.1064 0.0360 0.1252

Return on Assets (ROA)

0.0193 0 0.0161 0.0173 0.0191 0.0255

Net Interest Margin

-0.0036 0.0255 0.0422 -0.0016 0.0404 0.0412

Net Noninterest Margin

-0.0134 -0.0093 -0.0358 -0.0133 0.0051 -0.0104

Net bank Operating Margin

-0.0176 0.0141 0.0039 -0.0173 0.0435 0.0283

Earning per Share of Stock (EPS)

0.7683 0 0.1132 0.0590 0.1226 0.1621

Earning Spread

-0.0412 -0.0001 0.0397 -0.0363 -0.0028 0.0357

Net Profit Margin (NPM)

4.3640 0 0.3405 11.6318 0.3033 0.5089

Asset Utilization

0.0043 0.0421 0.0474 0.0015 0.0630 0.0501

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(AU)

Equity Multiplier (EM)

6.1398 2.1857 6.2186 6.1466 1.8858 4.9093

Operating Efficiency Ratio

4.7247 0.6656 0.9171 4.6613 0.3099 0.4353

4.11.1 Compare Return on Equity Capital (ROE) Ratio:

Figure-1: Percentage of Comparative Analysis (ROE) of BKB, BSRS, BSB

Analysis: The above graph showing the comparison of Return on Equity Capital (ROE) ratios of Bangladesh Krishi Bank (BKB), Bangladesh Shilpa Rin Sangstha (BSRS), and Bangladesh Shilpa Bank (BSB). Here we got that BKB Return on Equity Capital ratio was decline from the year 2005 to 2006. On the other hand BSRS & BSB’s Return on Equity Capital ratio increased in those years.

4.11.2 Compare Return on Assets (ROA) Ratio:

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Figure-2: Percentage of Comparative Analysis (ROA) of BKB, BSRS, BSB

Analysis: The above graph showing the comparison of Return on assets (ROA) ratios of Bangladesh Krishi Bank (BKB), Bangladesh Shilpa Rin Sangstha (BSRS) and Bangladesh Shilpa Bank (BSB).Here we got that BKB Return on assets ratio was decline from the year 2005 to 2006. On the other hand BSRS & BSB’s Return on assets ratio was increased in those years.

4.11.3 Compare Net Interest Margin Ratio:

Figure-3: Percentage of Comparative Analysis (NIM) of BKB, BSRS, BSB

Analysis: The above graph showing the comparison of Net Interest Margin ratios of Bangladesh Krishi Bank (BKB), Bangladesh Shilpa Rin Sangstha (BSRS) and Bangladesh Shilpa Bank (BSB).Here we can see that BKB Interest Margin ratio was -0.0036 in 2005 and 2006 the ratio

Was -0.0016 which was negative and the ratio was increase from the year 2005 to 2006. On the other hand BSRS Net Interest Margin ratio was increase in those years and its ratio was positive. The Net Interest Margin ratio of BSB was similar in those years.

4.11.4 Compare Net Non-interest Margin Ratio:

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Figure-4: Percentage of Comparative Analysis Net Non-interest Margin of BKB, BSRS, BSB

Analysis: The above graph showing the comparison of Net Non-interest Margin ratios of Bangladesh Krishi Bank (BKB), Bangladesh Shilpa Rin Sangstha (BSRS) and Bangladesh Shilpa Bank (BSB).Here we can see that BKB Net Non-Interest Margin ratio was negative which was similar from the year 2005 to 2006. On the other hand BSRS & BSB Net Non- interest Margin ratio was increase in those years.4.11.5 Compare Net Bank Operating Margin Ratio:

Figure-5: Percentage of Comparative Analysis Net Bank Operating Margin of BKB, BSRS, BSB

Analysis: The above graph showing the comparison of Net Bank Operating Margin ratios of Bangladesh Krishi Bank (BKB), Bangladesh Shilpa Rin Sangstha (BSRS) and Bangladesh Shilpa Bank (BSB).Here we got that BKB Net Bank Operating Margin was negative and the ratio was similar from the year 2005 to 2006. On the other hand BSRS & BSB’s Net Bank Operating ratio was increased in those years.

4.11.6 Compare Earning Per Share of Stock (EPS) Ratio:

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Figure-6: Percentage of Comparative Analysis (EPS) of BKB, BSRS, BSB

Analysis: The above graph showing the comparison of Earning per Share of Stock (EPS) ratios of Bangladesh Krishi Bank (BKB), Bangladesh Shilpa Rin Sangstha (BSRS) and Bangladesh Shilpa Bank (BSB).Here we can see that BKB Earning per Share of Stock (EPS) ratio was decline from the year 2005 to 2006. On the other hand BSRS Earning per Share of stock (EPS) ratio was increase from the year 2005 to 2006. The Earning per share of stock (EPS) ratio of BSB was increase in those years.

4.11.7 Compare Earning Spread Ratio:

Figure-7: Percentage of Comparative Analysis Earning Spread of BKB, BSRS, BSB

Analysis: The above graph showing the comparison of Earning Spread ratios of Bangladesh Krishi Bank (BKB), Bangladesh Shilpa Rin Sangstha (BSRS) and Bangladesh Shilpa Bank (BSB).Here we can see that BKB Earning Spread ratio was negative, and the ratio was increase from the year 2005 to 2006. On the other hand BSRS Earning Spread ratio was decline in those years. The Earning Spread ratio of BSB was increase in those years.

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4.11.8 Compare Net Profit Margin (NPM) Ratio:

Figure-8: Percentage of Comparative Analysis (NPM) of BKB, BSRS, BSB

Analysis: The above graph showing the comparison of Net profit Margin (NPM) ratios of Bangladesh Krishi Bank (BKB), Bangladesh Shilpa Rin Sangstha (BSRS) and Bangladesh Shilpa Bank (BSB).Here we got that BKB, BSRS & BSB Net profit Margin ratio was increase from the year 2005 to 2006.

4.11.9 Compare Asset Utilization Ratio:

Figure-9: Percentage of Comparative Analysis Asset Utilization of BKB, BSRS, BSB

Analysis: The above graph showing the comparison of Asset Utilization (AU) ratios of Bangladesh Krishi Bank (BKB), Bangladesh Shilpa Rin Sangstha (BSRS) and Bangladesh Shilpa Bank (BSB).Here we can see that BKB Asset utilization ratio was decline from the year 2005 to 2006. On the other hand BSRS & BSB’s Asset utilization ratio was increased in those years.

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4.11.10 Compare Equity Multiplier (EM) Ratio:

Figure-10: Percentage of Comparative Analysis Equity Multiplier of BKB, BSRS, BSB

Analysis: The above graph showing the comparison of Equity Multiplier (EM) ratios of Bangladesh Krishi Bank (BKB), Bangladesh Shilpa Rin Sangstha (BSRS) and Bangladesh Shilpa Bank (BSB).Here we can see that BKB Equity Multiplier (EM) ratio was similar from the year 2005 to 2006. On the other hand BSRS & BSB’s Equity Multiplier ratio was decline in those years.

4.11.11 Compare Operating Efficiency Ratio:

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Figure-11: Percentage of Comparative Analysis Operating Efficiency Ratio of BKB, BSRS, BSB

Analysis: The above graph showing the comparison of Operating Efficiency ratios of Bangladesh Krishi Bank (BKB), Bangladesh Shilpa Rin Sangstha (BSRS) and Bangladesh Shilpa Bank (BSB).Here we can see that BKB Operating Efficiency ratio was similar from the year 2005 to 2006. On the other hand BSRS & BSB’s operating Efficiency ratio was decline in those years.

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Chapter-5

Findings of Study

5.1 Findings of Study:I have find out some points by screening the whole study, which is expressed as major findings. I

have analyzed the data sincerely and carefully and have tried to identify appropriate findings.

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Moreover, conversations with the Specialized Commercial Bank of Bangladesh officials were

very significant for these findings.

After overall appraisal of Specialized Commercial Bank of Bangladesh, the major findings are as

follows:

Banks provide credit to landless and poor farmer to develop themselves which actually does not ensure the availability to the farmer.

Specialized Commercial Banks generate more loan able fund from the idle rural and urban savings and invest them for the betterment of our economy.

Banks are providing credit to the landless farmer which increases the risk of default because these poor people don’t have agricultural knowledge and repay the loan with interest.

Interest rate of micro-credit is higher to the poor farmer with the proper knowledge of agriculture especially in the developing areas.

The repayment of loan is started from taking loan that is very difficult to the poor farmer without gaining any king profit from the cultivation of land.

Financing in the industrial sector which is not highly encouraged to develop or established in new industry especially in the developing areas.

There is lack of supervision or monitoring by the bank whether they are utilizing their fund in the industry development or not.

Specialized Commercial Banks are suffering fund availability to ensure the financing to the agricultural sector and industrial sector for the development.

Specialized Commercial Bank also provides some social working activity in the country.

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Chapter-6

Conclusion & Recommendations

6.1 Conclusion:There are a four category specialized bank operating their activities in Bangladesh in developing

the economic condition such as agriculture, industry and rural area development. For the future

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planning and the successful operation in achieving in it’s goal in this current competitive

financial environment in this report can be shown.

Banks always contributes towards the economic development of a country. Specialized

commercialized bank compared that contributing more by investing most of their funds in

fruitful projects leading to increase in production. It is obvious that right thinking of those banks

including establishing a successful network over the country and increasing resources, will be

able to play a considerable role in the portfolio of development financing in the developing

country like ours.

The thesis report on “Operation efficiency and financial performance of Specialized

Commercial Bank of Bangladesh” is prepared with the objective of to find about the financial

performance and Operation efficiency. The report is prepared by analyzing the financial data

from the annual report of the specialized bank for the five year.

In the ratio analysis part I found that Bangladesh Krishi Bank (BKB) successfully employed their asset in 2005 and 2006 and in case of BKB was average rate of capital return was higher rather than Bangladesh Shilpa Rin Sangstha (BSRS) and Bangladesh Shilpa Bank (BSB). If it is said profit earning ability, I will say Bangladesh Shilpa Bank had earned higher profit than other bank during those years.

In the conclusion I would say, by increasing cooperation among specialized bank with other

bank, they can increase their profitability and also play an important role for developing socio-

economic condition and eradicate poverty from the country.

6.2 Recommendations:In order to get deliver quality service, top management should try to modify the services. For the

improvement of the service the following measures should be taken:

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Specialized Commercial Bank should ensure the availability of credit to the actual farmer

without any kind of hassle of the documentation.

Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank should arrange a training

program for the poor farmer or landless farmer how to cultivate crops in proper way

which they may be profitable.

Specialized Commercial Bank should reduce the interest rate especially in the poor

farmer so that it can ensure the profitability of the farmer.

Specialized Commercial Bank should establish a successful network over the country,

and play an important role for developing socio-economic condition in the country.

Bangladesh Shilpa Bank and Bangladesh Shilpa Rin Sangstha should set up new

industries and rehabilitation of sick industries.

Specialized Commercial should develop their monitoring activity.

Bibliography

Books

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1. Peter S. Rose, Commercial Bank Management, Year 2010-11

Publications

1. Annual Report, Bangladesh Krishi Bank, 2002.

2. Annual Report, Bangladesh Krishi Bank 2003.




6. Annual Report, Bangladesh Shilpa Rin Sangstha, 2005.

7. Annual Report, Bangladesh Shilpa Rin Sangstha 2006.

8. Annual Report, Bangladesh Shilpa Rin Sangstha 2007.

9. Annual Report, Bangladesh Shilpa Rin Sangstha 2008

10. Annual Report, Bangladesh Shipa Bank, 2004.

11. Annual Report, Bangladesh Shipa Bank 2005.




Web www.velki.com

http://www.Bangladesh krishi bank.com/, retrieved on, 16/11/2011

http://www.rajshahi krishi unnayan bank.com/ retrieved on 16/11/2011

http://www.bangladesh shilpa rin sangstha.com/ retrieved on 16/11/2011

http://www.bangladesh shilpa bank.com/ retrieved on 16/11/2011

http://www.bangladesg bank.com/ retrieved on 18/11/2011

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