Credit Performance

8/10/2019 Credit Performance

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Introduction

The primary purpose of this report is to get an idea about the operations of Credit

Performance of Janata Bank Limited. Credit Performance plays an important role in the

balance of trade in our economy. In this regard Credit Performance of Bangladesh, Banks

plays an vital role. The word Bank refers to the financial institution, which deals with money

transaction.

This report is an attempt to reflect the position of Credit Performance of Janata Bank Limited

side by side Bangladesh.

Origin of the Report

BBA program is designed with an excellent combination of theoretical and practical aspects.

As the classroom discussion alone cannot make a student perfect in handling the real

business situation, so it is an opportunity for the students to know about real life situation

through this internship program. This internship program provides the students to link up their

theoretical knowledge with practical fields. In this connection, I was assigned to Janata Bank,

Sheraton Hotel Corporate Branch, Credit department for my practical orientation.

I am required to prepare an internship report under the supervision of our honorable teacher

Mahmood Osman Imam on Credit Performance analysis of Janata Bank Limited to conduct

a depth analysis on this subject matter. I have tried my level best to present my experience of

the practical orientation in this report.

Objectives of the report:

Determine the ways of measuring the creditworthiness of potential borrowers.Assessing the performance of different types of Loan products.

Identification of weaknesses and problems regarding Credit management system.

Analyzing Loan disbursement and collection procedure as well as their effectiveness and

efficiency.

Assessing existing Loan innovation system and practices.

Scope of the report

The report intends to cover Janata Bank Limiteds company profile, historical background,

organizational overview, management, capital structure, products and functions regardingsocial responsibilities performed by the bank.

Main focus will be given to Credit performance analysis.

Rationale of the study

Bangladesh is one of the developing country in the world. The economy of the country has a

lot left to be desired and there are lots of scopes for massive improvement. In an economy like


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The secondary data is also collected from annual report, different conceptual matters, internet

and different articles published in different sessions.

Secondary Sources are:

Annual Reports of different years of Janata Bank Limited.

Annual Report of Bangladesh Bank of 2009. Other published documents of Janata Bank Limited.

Respective sectors of foreign department of head office

Internal Reports

Banks Record Books.

Different types of manuals related to banking, its credit policy etc.

1 Organizational Profile

Histor ical Background of the o rganizat ion

Janata Bank Limited is the 2ndlargest state owned commercial bank in Bangladesh.

Immediately after the emergence of Bangladesh in 1971, the erstwhile United Bank Limitedand Union Bank Limited were named as Janata Bank. It was established under the

Bangladesh Bank order 1972. During the privatization process it was incorporated as a public

Limited Company on 21, May 07 vide certificate of incorporation No-C66933(4425)07. The

Bank has taken the over the business of Janata Bank at a purchase consideration of Tk.

2593.90 million as a going concern through a vendor agreement signed between the Ministry

of Finance of the Peoples Republic of Bangladesh and the Board of Directors on behalf of

Janata Bank Limited on 15th November 2007. Janata Bank Limited operates through 851

branches including 4 overseas branches at United Arab Emirates and a subsidiary company

named Janata Exchange Company Srl in Italy. It is linked 1202 foreign correspondents all

over the world.

Objectives of the organization

Mission:

To be recognized as the leading commercial bank in the Bangladesh market providing retail

and corporate banking services and as a trusted and respected partner in the social and

economic development program of our nation.

Vision:

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

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

Services of the organization

Besides normal banking operation, Janata Bank Limited offers special services to a large

number of clients/agencies throughout the country. Under the network of utility service,


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customers of different govt. organizations, corporate bodies, local bodies, educational

institutions, students, etc are continuously getting benefits from the Bank. Janata Bank

Limiteds utility services are:

Bi l ls Col lect ion:

Gas bills of Titas, Bakhrabad and Jalalabad Gas Transmission and Distribution

Companies.

Electricity bills of Dhaka Electricity Supply Authority, Dhaka Electricity Company,

Bangladesh Power Development Board and Rural Electrification Board.

Telephone bills of Telegraph and Telephone Board.

Water/Sewerage bills of Water and Sewerage Authority.

Municipal holding tax of City Corporation/ Municipalities.

A pilot scheme is underway to provide personalized services to our clients.

Payments made on behal f of Govt.

Non- Govt. teachers salaries

Girl Students scholarship/stipend & Primary Student Stipend.

Army pension

Widows, divorcees and destitute Women Allowances

Old-age Allowances

Food procurement Bills

As per decision of the govt. 46 (Forty Six) branches of our bank (40 branches in Dhaka city,

1(one) branch in N.gonj city and 5(five) branches in Chittagong city) are involved to receivethe all utility bills in a same station from January04.

Services Areas

Branches

There are 851 branches of Janata Bank Limited in home and abroad. Among them 443

branches are situated in urban areas including four foreign branches and 408 branches are in

rural areas. And all foreign branches are situated in United Arab Emirates.

DivisionTown Rural zone Total

Dhaka162 82 244

Chittagong100 88 188

Rajshahi80 131 211

Sylhet22 36 58


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5. New Credit Product will start in a large scale by name of BMRE Loan for export project to

expand factory, import machineries, purchase transport among exiting parties.

6. To take the competitive position charge, decrease commission and other facilities will continue.

7. To increase export business monitoring system has made stronger in head office and

respective branches.

8. To increase export business has appointed sufficient manpower, providing special services andrelated different training program of officers has been will be started.

Loans & Credit Department:

Credit decisions are heart of all credit works. Generally branch manager and the credit in-

charge of a branch are held responsible for appraising of a loan proposal. The customer

request for credit limit and the credit officer prepares a credit memo and send it to the head

office, credit division. After taking all the relevant information from the branch the head office

credit division sent the credit memo to the credit committee. Credit committee of JBL is

comprised of Managing Director and other top-level executives, that is, DGMs and EVPs. Ifcredit committee is convinced about the merit of the proposal then it is sent the broad of

directors. The board is final authority to approve or decline a proposal. The whole process

takes a month or more.

Credit Evaluation Principles

Some principles or standards of lending are maintained in approving loans in order to

keep credit risk to a minimum level as well as for successful banking business. The

main principles of lending are given below:

Liquidity:

Liquidity means the availability of bank funds on short notice. The liquidity of an advance

means it repayment on demand on due date or after a short notice. Therefore, the banks must

have to maintain sufficient liquidity to repay its depositors and trade off between the liquidity

and profitability is must.

Safety:

Safety means the assurance of repayment of distributed loans. Bank is in business to make

money but safety should never be sacrificed for profitability, To ensure the safety of loan. The

borrower should be chosen carefully. He should be a person of good character & capacity as

well as bank must have to maintain eligible number of security from borrower.

Profitability:

Banking is a business aiming at earning a good profit. The difference between the interest

received on advances and the interest paid on deposit constitutes a major portion of the bank


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income, Besides, foreign exchange business is also highly remunerative. The bank will not

enter into a transaction unless a fair return from it is assured.

Intent:

Banks sanction loans for productive purpose. No advances will be made by bank for

unproductive purposes though the borrower may be free from all risks.

Security:

The security offered for an advance is an insurance to fall bank upon in cases of need.

Security serves as a safety value for an unexpected emergency. Since risk factors are

involved, security coverage has to be taken before a lending.

National interest:

Banking industry has significant role to play in the economic development of a country. The

bank would lend if the purpose of the advances can contribute more to the overall economic

development of the country.

Pre-disbursement Compliance

When the credit proposal are approved the credit officer must have to be ensured that the

disbursement of the credit facilities must comply with the directions written in the credit policy

and circular made by time to time along with checking all the following terms and conditions.

Steps Involved in Credit Processing

Application for loan:

Applicant applies for the loan in the prescribed form of bank. The purpose of this forms is to

eliminate the unwanted borrowers at the first sight and select those who have the potential toutilize the credit and pay it back in due time.

Getting Credit information:

Then the bank collects credit information about the borrower from the following sources:

1. Personal Investigation

2. Confidential report from other bank/ Head office/Branch/Chamber of commerce

3. CIB report from central bank

Scrutinizing and Investigation:

Bank then starts examination that whether the loan applied for is complying with its lendingpolicy. If comply, than it examines the documents submitted and the credit worthiness. Credit

worthiness analysis, ie. analysis of financial conditions of the loan applicant are very

important. Then bank goes for Lending Risk Analysis (LRA) and spreadsheet analysis, which

are recently introduced by Bangladesh Bank. According to Bangladesh Bank rule, LRA and

SA is must for the loan exceeding Dhaka core.


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If these two analyses reflect favorable condition and documents submitted for the loan

appears to be satisfactory then, bank goes for further action.

Existing process of handling loans:

The process of sanctioning loans is as follows:

The Cs of Good & Bad Loan:

The Branch manager of DBL try to judge the possible client based on some criteria.

These criteria are called the Cs of good and bad loans. These Cs are described below:

Character

The outcome of analyzing the character is to have overall idea about the integrity, experience,

and business sense of the borrower. Two variables; Interaction/interview, and Market

Research are used to analyze the character of the borrower.

1. Interaction/interview: the indicators are

a) Prompt and consistent information supply, information given has not been found false

(Willingness to give information).

b) CIB also reveals business character.

c) Willingness to give owns stake/equity & collateral to cover.

d) Tax payer.

2. Market Research:

a) Information on business is verified.

b) Dealing with supplier and or customer as supplier is also a kind of lender; the payment

character can also be verified.Capital

For identifying the capital invested in the business can be disclosed using the following

indicators.

a) Financial Statements

b) Receivable, Payable, statements to practically assess the business positions. Net worth

through financial statements or from declaration of Assets & Liabilities.

Capacity (Competence)

Capability of the borrower in running the business is highly emphasized in the time ofselecting a good borrower. As the management of the business is the sole authority to run the

business that is use the fund efficiently, effectively and profitably. The indicators help to

identify the capacity of the borrower.

a) Entrepreneurship skills i.e. risk taking attitude shown by equity mobilization.

b) Management competencies both marketing and products detail, ability to take decision.


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Lawyers certificate to the effect that all the legal formalities (Equitable/ Registered

Mortgaged) has been properly created on the land and building in favor of the bank &

bank has acquired the effective title of the property.

Registered power of attorney has been collected form the borrower (contractor)

assigning the work order favoring the JBL and the power of attorney has been

registered with the work order given agency and they have agreed that they will issue

all the cheques favoring JBL.

The legal documents of the vehicle have been obtained.

Collection of the satisfaction certificate in respect of all the documents both legal and

banking from the lawyer.

Entry has been made in the Safe -in and Safe-out register and the documents are

preserved.

After being satisfied all the above terms and conditions the credit in-charge will

disburse the loan amount to the client.

Documentation of the Loan:

Documentation is obtaining such agreement where all the terms and condition and securities

are written and signed by the borrower. It specifies rights and liabilities of both the banker and

the borrower. In documentation each type of advances requires a different set of documents.

It also differs with the nature of securities. The documents should be stamped according to the

stamp Act. There are no hard and fast rules of documentation and it varies from bank to bank.

Generally, the documents are taken in the case of a secured advance by JBL:i. Demand promissory note: Here the borrower promises to pay the loan as and when demand

by bank to repay the loan.

ii. Letter of arrangement.

iii. Letter of continuity.

iv. Letter of hypothecation of goods and capital machinery.

v. Stock report: This report is used for OD and CC. In this report, information about the quality

and quantity of goods hypothecated is furnished.

vi. Memorandum of deposit of title deed of property duly signed by the owners of the propertywith resolution of Board of Directors of the company owning the landed.

vii. Personal guarantee of the owners of the property.

viii. Guarantee of all the directors of the company.

ix. Resolution of the board of directors to borrow fund to execute documents and completes

other formalities


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x. Form no. XVII/XIX for filling charges with the register of joint stock companies under

relevant section.

xi. Letter of Revival

xii. Letter of lien for advance against FDR.

Loans and Credit Facilities:

Credit Facilities and Program

General Credit Line:

v The main focus of Janata Bank Limited Credit Line/Program is financing business, trade and industrialactivities through an effective delivery system.

v Janata Bank Limited offers credit to almost all sectors of commercial activities having productive purpose.

v The loan portfolio of the Bank encompasses a wide range of credit programs covering about 200 items.

v Credit is also offered to 15 (fifteen) thrust sectors, as earmarked by the Government., at a reduced interestrate to develop frontier industries.

v Credit facilities are offered to individuals, businessmen, small and big business houses, traders, manufactures,corporate bodies, etc.

v Loan is provided to the rural people for agricultural production and other off-farm activities.

v Loan pricing system is customer friendly.

v Prime customers enjoy prime rate in lending and other services.

v Quick appreciation, appraisal, decision and disbursement are ensured.

v Credit facilities are extended as per guide-lines of Bangladesh Bank (Central Bank of Bangladesh) andoperational procedures of the Bank.v This rate may change from time to time depending on the level ofcompetition in the financial sector.

Rural Banking Credit Program:

A vast majority of the Bangladeshis live in the rural areas and their main source of income is

agriculture and agro-business. Janata Bank Limited has opened branches in rural areas to

cater to the banking needs of rural people. Apart from accepting deposits from the rich and

moderately well-off villagers, Janata Bank Limited encourages the poor people to make small

savings through different mechanisms.

So far lending in rural areas is concerned, Janata Bank Limited has been financing agricultural

production and poverty alleviation programs since 1977. It also lends to the poor landless so

that they can make a living. The average loan size is about Taka 20,000.00 (around US$

285).

1. Special Agricultural Credit program/ short termcrop production loan

2. Horticulture development (cultivation of banana,betel leaf, pineapple etc.)

3. Fish/ Shrimp production:-


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(a) Fishery loan program

(b) Credit program for fish cultivator selected byDirectorate of Fisheries

(c) Shrimp culture credit program

4. Irrigation and agricultural equipment

Objectives:

v To increase agricultural production and improvement its quality.

v To gear up socio-economic activities among rural people.

v To create employment opportunities among rural people through providing economic support.

v Creating confidence among the beneficiaries on institutional credit and their access to improved productionpractices / activities.

v To build up asset by creating saving habit among the rural population.

v Poverty reduction.

The main features of the major agricultural/ rural credit programmes are narrated

below:

1. Special agricultural credit program / Short term crop production loan programme:

01. Purpose of loan : Sanctioning of loan to farmers for crop production.

02. Area of operation : Unions allocated by Bangladesh Bank under Lead Bank System.

03. Eligibility of loanee : Farmer possessing 16 /2- 250 decimals of cultivable land or share croppers.

04. Sanctioning Authority : Branch Manager is sanctioning loan as per credit norms.

05. Security : Crop hypothecation and personal guarantee of the borrowers.

06. Rate of interest : 8%.

07. Duration of loan : 6 months to 9 months, Maximum 12 months.

08. Mode of disbursement : In cash in a single installment.

09. Repayment of loan : Repayable at a time after harvesting and marketing of crops.

2. Horticulture development loan programme:

01. Purpose of loan : To extend financial help to the farmers who are interested to cultivate betel-leaf,banana, pine apple etc.

02. Area of operation : Allocated unions under Lead Bank System

03. Eligibility of loanee : Genuine farmer.

04. Sanctioning Authority Branch Manager is sanctioning loan as per credit norms.

05. Security : Hypothecation of produced crops and personal guarantee.

06. Rate of interest : 8%.

07. Duration of loan : Maximum 1 /2year from the date of disbursement.

08. Mode of disbursement : Loan is disbursed in cash in a single or more than one installment.

09. Repayment of loan : Repayable in weekly / monthly/ a single installment after crop harvesting and


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marketing

3 (a). Fishery Loan Programme:

01. Purpose of loan

:To increase fish production in pond and to create employment opportunity for pond owners

and lease holders by providing credit for pond re-excavation and fish cultivation.02.Area of

operation :Allocated unions under Lead Bank System.03.Eligibility of loanee :a) Pond owner

b) Lease holder of pond.04.Security :Pond, in case of pond owner and other properties in

case of lease holder are being taken as a registered mortgage.05.Rate of

interest :8%.06.Duration of loan :41/2years07.Mode of disbursement :Loan is disbursed in

installments.08.Repayment of loan :Entire amount of loan with interest is repayable by 4

equal installments. First installment is due for recovery after 18 months from the date of

disbursement.

3. (b) Credit programme for fish cultivator selected by the Directorate of Fisheries:

Fishery resource is an important sector in our economy. It can play a vital role in creating

employment opportunity for reduction of poverty. A memorandum of understanding has been

signed between Directorate of fisheries and Janata Bank Limited. As per memorandum bank

is financing fish cultivators selected by Directorate of Fisheries. Under this programme, no

collateral security is required up to Tk.0.05 million of loan amount.Purpose of the loan & rate

of interest is same as that of fishery loan programme.

3. (c) Shrimp Culture Credit Programme:

01. Purpose of loan

:To encourage the shrimp cultivator to produce more shrimps by utilizing modern production

practices in order to earn more foreign exchange.02.Eligibility of loanee :Individual / Group /

Cooperative society are eligible for loan.03.Security :Hypothecation of produced shrimp.

Collateral security such as land & building are being taken as a registered mortgage.04.Rate

of interest :8%.05.Duration of loan :10 months.06.Mode of disbursement :(a) Loan is

disbursed in 2/3 installments from January to March.

(b) Cash credit (C/C) is disbursed as per usual practice of bank

for the10 (ten) acres of land or above.07.Repayment of loan :(a) Loan is repaid by 4 equalmonthly installments from July to October.

(b) Cash credit is adjustable 3(three) times within 1(one) year.

4. Irrigation & Agricultural Equipment Credit Programme.

01. Purpose of loan : Loan is given for the purchase of irrigation equipments i.e Shallow Tube Well (STW),Low Lift Pump(LLP), Deep Tube Well (DTW) etc & Agriculture equipment i.e Tractor,Power Tiller etc. to increase agricultural production.


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02. Area of operation : Allocated unions under Lead Bank. System.

03. Eligibility of loanee : Owner of at least 0.5 acre of land in case of irrigation equipment loan and genuinefarmer in case of agricultural equipment loan are eligible.

04. Security : a) Hypothecation of equipments purchased by loan money.b) Registered mortgage of land & building which is equivalent to loan amount.

05. Rate of interest : 8%

06. Mode of disbursement : Loan is disbursed to the supplier through Pay-order against bill.

07. Repayment of loan : Entire loan amount with interest is repayable by 11 equal half yearly installments within6(six) years with a grace period of 6(six) months.

Our banks position on Retail Customer Department-3 (RCD-3) / Retail Customer

Department-4 (RCD-4) as on 30-09-2008 is as under :-

No. of Borrowers covered : 5,81,801

No. of Branches involved in Micro-credit : 844

No. of Branches dealing with crop loan : 555

Range of interest rate : 2% to 14%

No. of Programmes Financed : 40

Nos. of Micro-Credit Programes : 29

Micro Enterprise and Special Credit:

The Micro Enterprise & Special Program Division (MESPD) is responsible for implementing of

(i) Micro Credit Programs related with the poverty reduction, (ii) Special credit programs

related with employment generation and (iii) Financing of agro-based industries.

Bank has different micro-credit programs of its own & in collaboration with other

agencies. For successful implementation of these credit programs specially poverty reduction

credit programs it requires close supervision and monitoring. Considering Banks

manpower/field staff it is not always possible to ensure intensive supervision at the grass root

level. To make the micro credit programs time & cost effective bank has initiated linkage

program using intermediaries/collaborating agencies (GOs & NGOs). Collaborating agencies

are responsible for organizing the target groups (conducting survey, formation of groups,

providing training etc.) including supervision and recovery of credit .

The main features of different micro-credit programs are narrated below:-

1. Diversified credit program -1992.

Objectives : For creation of self employment & poverty reduction.

Area of operation : Throughout the country.

Activities &Appraisal

: (a) Initially 45 IGAs. Presently any viable IGAs.(b) Production plan/appraisal is prepared on the basis of activitiesand market rate.


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(c) Loans are determined on the basis of credit norms/ceiling givenby Head Office or present market rate subject to the prior approvalfrom the concerned authority.

Associateagencies

: Banks own program.

Approach : Individual.

Term : ST & MT.

Security : (a) Up to Tk.50,000/-, no collateral is required(b) Personal guarantee in favour of loanee from an acceptableperson.(c) Hypothecation of goods ( If applicable).

Disbursement : Disbursement is made in cash by installments. Purchasereceipts/documents to be kept in respective loan file.

Repayment : Repayable by weekly/fortnightly/monthly installment. Repaymentperiod and mode of repayment is fixed depending on the nature ofactivities & generation of income

Rate of interest : 11%

Delegation : Delegation of business powers as per RCD circular no- 281 dated:29-06-2004(in lacs)

Branch Managers RM AGM DGM GM

Gr-4 Gr-3 Gr-2 Gr-1

0.20 0.30 0.40 0.50 2.00 3.00 4.00 5.00

RelatedCirculars/Letters

: RCD- 215 dt: 10-04-1993 & 281 dt: 29-06-2004

Letter No: cFwe/cwj-wWwewc(mKj A j)/Avwkl/95/4399 Zvs-03-01-95Bs Ges cFwe /eaK-wbqgvPvi/Avwkl/96/7 Zvs-06-01-96 Bs|

2.Small Farmers & Landless Labourers Development Project(SFDP)-1976

Objectives : Employment generation of the poor.

Collaboratingagency

: Bangladesh Academy for Rural Development (BARD),comilla.

Activities : All types of IGAs.

Approach : Group. A group consists of 7-10 members.

Term : ST.

Security : a) Hypothecation of goods.b) Group guarantee.


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c) Lien of group savings.


Disbursement : Disbursement is made in cash or through groups savings account.

Repayment : Loan is repayable in installments (weekly/monthly etc.) It dependson the nature and purpose of loan.

Delegation : (Fig. in Lac.)

Branch RM AGM DGM GM DMD MD

Max.0.80pergroup

2.00 3.00 4.00 5.00 5.00 5.00

RelatedCircular/letter

: Banking plan/work manual Ges c bs Fwe-4/GmGdwWwc Kvtwbt/98 Zvs-16-09-98B

3.Swanirvar Credit Scheme -1978Collaboratingagency

: Swanirvar Bangladesh

Area of operation : : 247 unions of 87 Upazillas. 167 branches are designated.

Major activitiesunder credit :

: Off-farm IGAs..

Approach : : Group. Each group consists of 5 members.

Appraisal : : Amount of loan is determined on the basis of activities &

prevailing market rate. ( Maximum Tk.10,000/- per member).

Security : : a) Hypothecation of goods.b) Group guarantee.c) Lien of Group savings.

Rate of Interest : : 11%

Disbursement : : Disbursement is made in cash.

Repayment : : Loan is repayable with interest by 52 weekly installments.

Delegation : : Concerned Branch Managers sanction loan subject to therecommendation of credit supervisor/unit manager of SwanirvarBangladesh.

Relatedcircular/letter :

: As per work manual of Swanirvar credit program.

4. Co-operative credit for rural poor-1980

Collaborating : BRDB(Bangladesh Rural Development Board).


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agency

Area of operation : Noakhali, Luxmipur & Feni District.

Objectives : Financing to the co-operative members of primary societies (eg. Farmers society, Womens society etc.) under 2-tier co-

operative.

Major activitiesunder credit

: Crop & other different production oriented income generatingactivities.

Proposal : Co-operative members apply for loan to the concerned primarysociety. Primary society consolidates the loan applications andapplies for loan to respective UCCA(Upazilla Central Co-operative Association). UCCA consolidates the society wise loanrequirement and finally the UCCA applies for loan to the bank.

Appraisal : Crop- as per credit norms of SACP & other short term credit- onthe basis of production plan prepared as per market price.

Irrigation & Ag.Implements- on the basis of actual market price.Maximum 80% loan is sanctioned. i.e. minimum down paymentis 20%.

Security : a) Members of managing committee of UCCA are to giveguarantee individually and jointly.b) Lien of Group share/savings.

Disbursement : Disbursement is made amongst the members of the primarysocieties in cash in presence of Upazilla creditcommittee(consists of bank, UCCA & primary societyrepresentative)

Delegation : Regional Head- upto Tk.50.00Lac/UCCA & Area Head- up to Tk.

1.00 crore/UCCA for single instance.

Referencecircular/letter

: Agreement between Janata Bank Limited & BRDB

7. Ghoroa Prokalpa/ Family based micro credit:

Target Group : Rural poor people male or female and should be capable toconduct the activity for which the credit to be applied for.

Area ofoperation

: Unions under SACP(approved by H.O.).

Objectives : (a) Accommodating maximum rural dwellers in production/income generating activities.(b) Making each household a Production Farm. & thereby tomake them economically sustainable.

Eligibility : (a) Permanent inhabitant of the allotted union.(b) Applicant must be capable and keen to conduct the concernedactivity.(c) Head of the family will execute the charge documents and willprovide guarantee on behalf of the loanee members of the family.


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Proposal : (a) Any one can apply for loan from the command area of branch.(b) Loan application to be duly & correctly filled in along with theproduction plan ( in a prescribed form).(c) By conducting survey group pass book to be issued for theeligible family members

Appraisal : (a) Loans are determined on the basis of credit norms/ceilinggiven by Head Office.(b) Production plan/ appraisal is prepared on the basis of activitiesand market rate.

Sanction : Loans are sanctioned for different income generating activities.

Loan size : Maximum TK.40,000/- per family. Loan size depends on thenature of loan and varies from purpose to purpose.

Security : (a) Hypothecation of the goods against which loan has beengiven.

(c) Under this program security has not been given priority. Importance has been given onclose supervision , monitoring and evaluation. Disbursement:Disbursement is made in cash

or kind through single or 2 installments.

In kind, through payment order to supplier. Purchase receipts/ documents to be kept in

respective loan file. Repayment:Repayment by fortnightly/ monthly/ half yearly installment.

Mode of repayment depends on nature and purpose of credit. Documentation:D.P. note and

other charge documents. Delegation:Branch Managers can sanction loan up to maximum

40,000/- per family. Reference letter:Fwe-4/ wewbqvM cwiKbv/ wmB/2000 ZvwiLt

24/07/2000 Bs|Entrepreneurship development Programs

1. Women Entrepreneur Development Credit program.

Target Group : Prospective women entrepreneurs those who are(a) producing/marketing goods by themselves or throughothers.(b) eager to utilize their educational/professional experienceand like to set up new projects or BMRE of existing projectsand need working capital.

Purpose of loan : Dress making, Bed cover, Bed sheet, Pillow cover,Embroidery, Block, Screen Printing, Doll making, Artificial

flower making, Gift item, Small printing industry, Foodsprocessing (Jam, Jelly etc.), Spices processing, Store running,Fast food item, Leather products, Jute products, Bamboo andcane products, Plastic products, Pottery, Service-orientedTele-Phone-Fax-e-mail & computer service, Day-care centre,Nursing home, Diagnostic centre, Clinic set-up and runningetc.

Eligibility of clients : The women entrepreneurs asking for loan should haveminimum literacy. She should be agile, having will power &


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innovation traits. Women who have need based/job specifictraining & skill.

Appraisal : On receipt of proposal, Branch manager makes spotverification and verifies the genuineness and credit need of theentrepreneur.

Sanction/Delegation : Head Office and field level sanction the loan on the basis ofmarket price, P.P and equity of the entrepreneur. Minimumequity/margin is 25%

Security : Personal guarantee of the applicant, Personal guarantee ofthe applicants husband/father or earning members from anydears & near ones, guarantee from any known & highlyacclaimed person of the society/organization to be obtained.

Disbursement : Disbursement is made in cash. But in case of procurement ofmachineries/equipments disbursement is to be made throughpay order to the supplier of goods.

Delegation : Sanction power lies with Head Office and field level.


Repayment : To be repaid in three years on monthly installment basis with agrace period of 3 months. For working capital, C.C. loanprocedure is being followed.


: -

2.Cyber Cafe

Target Group : Trained youth in computer technology.

Area of operation : 10 designated branches of Dhaka city and corporate branches-I& II of Chittagong, Khulna, Rajshahi, sylhet and Barisaldivisional head- quarters.

Objectives : (1) To create employment opportunity for the unemployedtrained youth and expansion of information technology.(2) To purchase computer, server, networking, Internetconnection, Printer, Scanner, CD writer, UPS, Decoration etc.

Eligibility : (a) Applicants must have minimum diploma degree in computerscience or company formed by them.(b) Companies having prior experiences in cyber caf business .(c) Concerned business at project area to be verified before loansanction/disbursement. In regards cyber cafs work stationappraisal of viability to be considered.(d) Age Limit: Minimum-25 yrsMaximum- 65 yrs(e) The applicant who can repay monthly loan installmentexcepting the 1/3 of his monthly income.

Proposal : Loan proposal has to be submitted with detailed production plan.


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Appraisal : On receipt of proposal, Branch manager makes spot verificationand verifies the genuineness & credit need of the applicants.

Sanction : Head Office sanctions the loan for expansion & setting up ofcyber caf (for purchase and installation of Computer, Server,Net working, Internet connection, Printer, Scanner, UPS & costof decoration etc.). Minimum equity/margin is 40%.

Security : (a) Loans up to Tk. 3.00 Lac, no collateral is required and aboveTk. 3.00 Lac collateral is required (1.5 times of loan).(b) In case of no collateral , advance dated cheques (one foreach installment and additional one) are to be taken.(c) Hypothecation of computer and all other equipments(d) In case of no collateral security, 3rdperson guarantee isrequired.

Documentation : D.P note & other charge documents.

Disbursement : Disbursement is to be made in cash by installments. Purchase

voucher/receipts to be kept in respective loan file.

Delegation : Sanction power lies with Head Office

Designation Delegation ofpower withoutcollateral

Delegation ofpower withcollateral

MD 3.00 Lacs 10.00 Lacs

DMD 3.00 Lacs 7.00 Lacs

GM 3.00 Lacs 5.00 Lacs


Repayment : To be repaid in 36 monthly installments, starting next monthfrom disbursement.


: RCD No. 287 dt: 30/06/2005

3.Doctors Loan Scheme:

Target Group : MBBS or its equivalent degree holders registered Doctors likeMedical Practitioners, Eye Specialist, Cardiologists, Surgeons,Dentists etc, any group of doctors or any institution/companyformed by the doctors may apply for availing this loan in thebanks prescribed form.

Area of operation : (a) All branches of divisional head quarters(b) All corporate branches-I & II(c) All main branches of district towns.

Objectives : (a) Inducing health services through all over the country.(b) To create employment opportunity of Doctors .(c) Making Chamber and purchase of required machineries andequipments.


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Eligibility : (a) The aforesaid categorized doctors must possess validapproval or license for general practices from the competentauthority.(b) Those doctors who are not fully engaged may get preferencefor enjoying this new facility.(c) Age Limit: Minimum-25 yrsMaximum- 65 yrs

(d) The doctors who can repay monthly loan installmentexcepting the 1/3 of his monthly income.(e) Experience: 2 yrs.


Appraisal : On receipt of proposal, Branch manager makes spot verificationand verifies the genuineness and credit need of the applicants.

Debt-Equity Ratio : 80:20(Minimum).

Security : (a) In case of no collateral security, advance dated cheques (onefor each installment and additional one) are to be taken.

(b) Guarantee from the person acceptable to bank to beobtained in case of loan without collateral/Original certificate ofdegree(c) Personal guarantee of borrowershusband/wife/parents/mother/father/adult children to beobtained.(c) Hypo. of all furniture & machineries of chamber.(d) Original copy of license of general practitioner to be obtained.(e) In case of group loan, one person will give guarantee foranother.(f) Having been verified certificate/license/guarantee submittedby applicants carefully, these to be obtained.(g) The equipment purchased shall duly be insured covering allrisks.(h) Personal guarantee of borrowers husband/wife/parents/adultchildren to be obtained.(i) Encashable securities equitable to loan or mortgage of landedproperty (1.3 times of loan) to be obtained.

Sanction : Loans are sanctioned on the basis of production plan at fieldlevel and Head Office as per delegation.

Documentation : D.P note and other charge documents.

Disbursement : Disbursement is to be made in cash by installments. Purchasevoucher/receipts to be kept in respective loan file.

Delegation : Designation Delegation of Power

Withoutcollateral

With collateral

MD 5.00 lac Taka 10.00 Lac Taka

DMD 4.00 ,, 8.00 ,,

GM 3.00 ,, 6.00 ,,

DGM 2.00 ,, 4.00 ,,


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loan. For working capital C.C. loan procedure is being followed.


Delegation : Sanction power lies with Head Office.

With Collateral WithoutCollateral

(a) MD : 25.00 LacTaka

5.00 Lac Taka

(b) DMD : 15.00 LacTaka

4.00 Lac Taka

(c) GM (HO/DO) : 10.00 LacTaka

3.00 Lac Taka

(d) DGM(AO/RO/Corp.-1)

: 2.00 Lac Taka -

(e) DGM

(AO/RO/Corp.-1)

: 1.00 Lac Taka -

Major activitiesunder loan

: Handicrafts, Book, Crokeries, All kinds of furniture, Stationaryshop , departmental store or any other income generatingactivities.


: RCD Cir. No.280 dt: 17/06/2004, 07/08 dt. 12.02.08Letter No.GgBGGmwcwW/z` eemvqx Dbqb/2004 ZvwiLt04/08/2004Bs|

Special Credit Program:

1.Seed Development Programme

Target Group : Farmers Seed Company (FSC).

Area of operation : FSC are located in the following 10 districts:Gopalgong, Naogaon, Bhola, Sherepur, Maulvibazar, Dinajpur,Chuadanga, Jhenaidah, Patuakhali and Cox,s bazar.

Objectives : To extend loan to farmers seed company for procurement,processing & marketing quality seeds for the development ofprivate seed sector.

Eligibility : (a) The concerned (FSC) are to be duly registered under thecompanies act,1994 of Bangladesh.(b) The shareholders and directors of such companies must beresiding in the concerned locality.

(c) The loan taking FSC must maintain their fund/depositcompanys account with the financing branch.(d) The concerned (FSC) or its directors/shareholders are notdefaulter loanee of other bank/financial institution.


Appraisal : On receipt of proposal, Branch manager makes spot verificationand verifies the genuineness and credit need of the applicants.


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Sanction : Loans are sanctioned on the basis of production plan at HeadOffice level as per delegation.

Security : (a) The guarantee fund to be provided by GTZ will be treated ascollateral security.(b) Hyp. of crops/goods/assets to be produced/procured with

loan money.(c) The members of the Board of Directors shall provide to thebank a group guarantee stating their joint and individual liabilityto repay the loan.(d) Seeds/goods/assets procured by bank loan and stored bythe company shall duly be insured as per banks clause coveringall risks.

Documentation : (a) List of all share holders with full particulars.(b) Duly attested copy of Memorandum & Articles of Association.(c) Duly attested photographs of all directors.(d) Resolution of the Board of Directors with decision regardingtaking loans as per sanction.

Disbursement : Loan to be disbursed for procurement of different seeds/cerealsas per schedule. Purchase voucher/receipts to be kept inrespective loan file.

Debt-Equity Ratio : 75:25

Delegation : Sanction power lies with Head Office.

(a) DGM : 10.00 Lac Taka

(b) GM : 15.00 Lac Taka

(c) DMD : 20.00 Lac Taka

(d) MD : 25.00 Lac Taka

Repayment : Loan for each crop shall be repaid within 9 months from thedate of disbursement of that item. If any FSC for genuinereasons is not able to repay the loan in time, the branch mayallow a grace period of maximum 3 months.

Major activitiesunder loan

: Credit will be provided for mainly- Wheat, Boro, Aus ,Paddy andother potential crops of the locality.


Collaboratingagency

: Seed Business Promotion Project/GTZ


: As per agreement between Janata Bank Limited & GTZ

2. Loan for Handicapped/disabled people

Target Group : Physically handicapped/disabled people who has the expertiseand intelligence to conduct the economic activity.


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Area of operation : All branches up to union level.

Objectives : (a) To raise the income and living standard of handicappedpeople by self employment.(b) To help build self reliance and to bring them into themainstream of economic activities.

(c) To provide assistance for increasing efficiency at work and intheir own professions.

Proposal : (a) Loan application to be duly & correctly filled in along with theproduction plan ( in a prescribed form).(b) By conducting survey pass book to be issued for the eligiblepeople.

Appraisal : Amount of loan is determined on the basis of activities. Initiallyamount of loan will be maximum TK. 25,000/-. Later amount ofloan will be fixed up to TK. 50,000/- on the basis of the efficiencylevel.

Eligibility : (a) The age of the handicapped borrower should be at least 18

years.(b) The borrower/entrepreneur should be capable and keen toconduct the concerned project/activity. If any individual isphysically handicapped but he has the expertise and intelligenceto conduct the economic activity for which he has applied for inthose cases the borrower/individual will be selected as eligiblefor the credit to conduct the activity through his or herwife/husband/father/ mother/brother/sister.(c) The handicapped individual who have training on theconcerned subject/project from Government/private organization

Documentation : D.P. Note and other charge documents.

Disbursement : Disbursement of credit on installment basis( one or more) as perrequirement and will depend on nature and sector of the creditpolicy.

Repayment : Loan repayment on weekly/fortnightly/monthly/quarterly basiswill depend on nature, sector and income generating kind of thecredit facility.


Major activitiesunder credit

: All income generating activities suitable for disabled people suchas fish cultivation, milking cow, goatery, beef fattening etc.


: RCD Cir. No.- 270 dated: 2002

Agro-based projects.

The agro-based projects (e.g. dairy, poultry, hatchery, fishery, mixed projects, agricultural

processing units, agri.- products storing and marketing etc.) have been considered as thrust

sector.

Financing in this sector following aspects are to be considered:


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(a) Selection of entrepreneurs-

-solvency,

-good will,

-professional and technical experience,

-capable to provide equity and security etc.

(b) Selection of projects-

-cost- effective & viable,

-suitable in respect of communication and infrastructural facilities,

-demand of the produced goods & favourable marketing facilities.

(c) Debt-Equity Ratio- minimum margin 40%(Working Capital), 70:30 -Project loan.( 15% of

total project cost as land value or actual value of land whichever is lower to be adjusted with

the total equity).

(d) Land development, link road development, electricity connection etc. are to be completed

from entrepreneurs own source.

(e) Recommendation from branch and regional office in respect of loan sanction is required.

(f) Loan is to be sanctioned after completing technical and financial analysis of the project by

the Head Office.

(g) Equity is to arrange at a time or phase-wise as decided by H.O.

Security:

i) Project loan: a)1:1-the value of mortgaged property to be equivalent of loan

b) Hypothecation of machinery & equipments (floating assets of the project).Working capital: a) 1:1.5the value of mortgaged property to be equivalent to 1.5 times of

loan..

b) Hypothecation of goods produced & procured.

Delegation :

AGM DGM GM DMD MD

a. Project Loan Public Ltd Co. 250.00

Private Ltd Co. 200.00

Individual 20.00 30.00 50.00 60.00 150.00

b. W/C Loan Public Ltd Co. 30.00 50.00 75.00 200.00

Private Ltd Co. 20.00 30.00 40.00 40.00

Individual 15.00 20.00 30.00 30.00


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Ref: Circular/Letter: Ins. Circular 3401 Dt: 05/03/02

Ins. Circular 3449 dt: 10/08/02

Other Credit Programs:

1. Credit for Employees-2000

Target group : Employees of different Govt/Semi Govt./Autonomousbody/University/College/School/NGOs etc.

Objectives : To meet up the emergency/personal need (e.g. treatment,marriage, travel cost, maternity or for specific activities (e.g. agri.or non agri. purposes etc.) of employees.

Eligibility : (a) The employees of above mentioned organizations exceptingJanata Bank Limited.(b) Preference to be given those who are taking salary from ourbranches.

Appraisal : (a) In case of salary is being disbursed from Janata Bank Limited

branch, 12 months basic salary or maximum TK.1,00,000/-whichever is lower may be sanctioned.(b) If salary is not disbursed from Janata Bank Limited branch, 6months basic salary or maximum TK. 50,000/- whichever islower may be sanctioned.

Sanction : For sanctioning loan following papers to be obtained:(a) Employers certificate.(b) Salary certificate/statement from the concerned organization.(c) Name of nominee (Husband/Wife/Children etc.) to bementioned in the A/C opening form.

Security : (a) Personal guarantee of borrowers husband/wife/parents/adultchildren or any other 3rdparty guarantee to be obtained.

(b) 24 for 24 monthly installments and additional one-total 25advance dated cheques to be obtained.

Rate of interest : 13.50%(Changeable)

Repayment : To be repaid in 2(two) years at equal monthly installment


: RCD Cir. No.- 287 dated:- 30-06-2005

3. Mushroom Cultivation Loan Program:

Objectives : To meet up nutritional requirement of most of the people of the country, Creation of self-employment and reducing of poverty.

Area of operation : Branches involved in diversified credit program of the bank

Eligibility : Trained/Experienced people in mushroom cultivation and will be capable of building room inhome land.

Selection of borrower : Concerned branch of Janata Bank Limited will select borrower.

Loan application form &fee

: Prescribed form for crop loan (except the un useful part). Loan application form to be used per given proforma (RCD Cir.No.293 dt:05-04-2007). No. application fee is required.


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Mushroom varieties : Oyster, Straw, Milky, Button and Shiitake mushroom

Loan limit : Minimum 5000/- and maximum 25,000/-

Loan repayment period : Short term (Maximum 10 months)

Security &Documentation

: (a) No collateral is required. However hypothecation of goods/assets to be produced with lmoney and 3 party guarantee from the person acceptable to bank to be obtained.(b) Usual charge documents to be obtained.

Rate of interest : 8% (Changeable from time to time as per banks interest norms).

Repayment schedule : To be repaid by 8(Eight) equal monthly installments including 2 months grace period.

Sanction : Branch Manager( irrespective of grade) as per RCD Cir.No.293 dt:05-04-2007.

Disbursement period : Throughout the year.

Reference : RCD Cir.No.293 dt:05-04-2007.

New and Special Product :

Financing IT Sector

Financing of Industries Ready Cash

Windows for SMEs

Loan to Travel Agencies

Loan to Diagnostic Centers

A) Financing IT sector :

The importance of Information Technology and the role it can play in the socio-economic

development of a nation cannot be over emphasized. The world has witnessed a phenomenal

growth in IT over the last two decades, and the countries, which made a conscious decision to

take advantage of such growth, have made unprecedented progress. To day we are living in

the Internet world. To hasten the growth of information Technology and to attract young

energetic IT professional Janata Bank Limited has launched a credit scheme titled Financing

Computer Software Development & Data Export. The maximum loan amount is Tk. 10

million, with debt to equity ratio being 80 : 20. The rate of interest is 11%. But anybody with

export market exposure can get the benefit at 7% interest rate plus 1% service charge. The

main feature of this scheme is to set up industrial based IT projects for development of

software for data export and that too on a very soft term. Janata Bank Limited has issued

detailed guidelines for facilitating IT entrepreneurs.

IT Related Field And Experience:

Computer Software Development and data export is a specialized job and requires skill, knack

& innovative traits of an individual.

Vision of Promoters:


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What the promoters want to do with the loan?

If we can know the interests of the sponsors, their technopreneurial abilities and IT related

expertise we may really help the potential clients in developing their enterprises through

positive support.

Eligibility to be Loanee:

The loanee (sponsors) should have a degree in Computer Science / or related subjects like

Electronics Engineering, Electrical Engineering, Telecommunication Engineering, Applied

Physics, etc or proven record of managing IT companies.

Computer literate and sponsors having a Diploma in Computer, young energetic and qualified

sponsors whom the Bank considers fit to take loan.

The sponsors should form a limited company.

Preferences:

Sponsors/companies having prior experiences in the related field will be given priority.

Loan Limit & Debt-Equity Ratio:

This scheme provides maximum of TK.10 million (around US$ 1,44,000). For a loan up to

TK.5 million (around US$ 72,000) debt-equity ratio will be 80: 20 and over TK.5 million (US$

72,000) the ratio will be 70:30.

Repayment Mode & Period:

5(Five) years including 6-12 months grace period (Including construction period). Repayment

of half yearly installment with interest compounding for term loan. Repayment period for

working capital loan and export cash credit is 1(one) year. Interest During Construction Period(IDCP) will be repayable in 3 (three) yearly installments.

Rebate on Interest:

In case of regular repayment, the sponsor company will be given 5% rebate on total interest

charged.

Security:

No collateral security is required. If any loanee willingly shows interest to provide collateral

security, they will be given priority.

Sanctioning Authority:Janata Bank Limited, Head Office, Dhaka.

Submission of Loan Application:

Loan application has to be submitted through any one of Janata Bank Limiteds 118

designated branches using prescribed format available in those branches.


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Besides, sponsors willing to apply loan above TK.10 million ( around US$ 1,44,000) may

apply to our normal window instead of the existing scheme.

Janata Bank Limited has entered into an agreement with American International Investment

(AII) to provide financial plastic card services to Janata Bank Limiteds clients. This product is

a Debit Card called the Ready Cash.

Currently, the Ready Cash system is operating in Dhaka and will soon be expanded to other urban areas ofBangladesh.

Cardholders primary benefits are Safety, Shopping at a wide merchant network, Payment of Utility Bills, flexiblesaving plan and the convenience of not having to carry cash.

As the only micro-processor chip based debit card available in Bangladesh for financial payment, the ReadyCash card is very reliable and secure.

It combines the most desirable aspects of the credit card, together with the advantages of the Debit or ATM card.

It is the first step that most Bangladeshi citizens will take on the path to a cashless economy.

Ready Cash is a debit card as it allows the cardholder to spend no more money than he/she has in his/her Bank

accountunless a credit line has been extended.

It increases the consumption base and allows the cardholder to establish a credit history.

For these and many other reasons, the Ready Cash card is the fastest growing system in Bangladesh.

Windows for Small &Medium Enterprises :

Janata Bank Limited has been financing Small and Medium Enterprises with a view to developing a balanced anddynamic industrial sector having a strong base of SMEs throughout the country.

Besides normal financing special tailor-made programs are undertaken by the Bank.

Under this program a credit line has been extended to MIDAS while another program is under way.

Financing in SME Sector:

From the very inception of Industrial credit financing of Janata Bank (Currently Janata Bank

Limited) SME division has sanctioned term loan in small and medium industries sector in 4535

projects of taka 941.36 crore. Among which taka 548.69 crore has been disbursed against

4310 projects. Outstanding as 31.12.2007 is taka 446.12 crore and recovery of loan is 70%.

Loan to Travel Agencies:

Salient Features :

Eligibility : Annual business turnover should be satisfactory

Loan Sanction : On a case to case basis

Nature of Loan : CC(HYP).

Purpose of Loan : For running travel agency business

Rate of Interest : 15%

Security : Hyp. of recievables/tickets, all office furniture and equipments

Collateral to be

twice the value of the loan


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Mode of repayment : Sale proceeds of tickets.

Duration of the Loan : One year

Loan to Diagnostic Centres :

Salient Features :

Eligibility : Anual business turnover should be good;the diagnostic centre should have been

set up as per Govt. health policy and this must be confirmed by the loanee.

Loan Sanction : On a case to case basis

Nature of Loan : CC(HYP).

Purpose of Loan : For running a diagnostic centre

Rate of Interest : 15%

Margin : 40%

Security : Hyp. of all chemical and medical equipments; Value of collateral

security to be twice that of loan.

Duration of the Loan : One year

Credit Performance Analysis of the Sheraton Branch of JBL:

Types of Loans and Advances provided from the branch:

Rural Credit:

Loan OutstandingBDT 18,13,886.00 ;

Interest Rate13.5%

Term2 years

Renewable after maturation.

Interest income Per Year:Year 2005 2006 2007 2008 2009

Interest Income 2,05,231 2,16,227 1,85,658 2,59,327 2,76,064

Loan General : Provided to FDR holder against to the clients deposit.

Loan OutstandingBDT 1,38,416

Interest rate11.50 %

Term2 Years.


Year 2005 2006 2007 2008 2009

Interest Income 15223 20130 14698 19356 15567

Security Overdraft :

Loan OutstandingBDT 16,10,321

Interest Rate11.50 %

Term1 years



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Year 2005 2006 2007 2008 2009

Interest Income 154871 167243 174589 200310 185916

General House Building loan : Loan OutstandingBDT 1 06, 88,430.

Interest Rate13.00%

Year 2005 2006 2007 2008 2009

Interest Income 13,52,345 12,96,841 1324723 13,97,220 13,89,496

Cash Credit (Hypo) :

Loan Out StandingBDT 30,83,162.

Interest Rate13.00%

Term1 Years Renewable after maturation.

Year 2005 2006 2007 2008 2009

Interest Income 4,32,507 3,93,070 4,00,880 4,11,309 4,76,392

Loan for Staffs:

Staff house Building Loan

Provident fund

Motorcycle Loan

Staff Computer LoanExecutive car Loan

The Loan Recovery Rate:

Year2005 2006 2007 2008 2009

Loan Amount Recovered4374025 4500952 5114200 5308490 4978951

Loan amount to Be recovered5715319 6002111 6294417 6613515 6851883

Recovery Rate0.765316 0.749895 0.812498 0.802673 0.726654

CONCLUSION AND RECOMMENDATION

A banker cannot sleep well with bad debts in his portfolio. The failure of commercial banks

occurs mainly due to bad loans, which occurs due to inefficient management of the loans and

advances portfolio. Therefore any banks must be extremely cautious about its lending portfolio

and credit policy. So far Dhaka Bank Limited has been able to manage its credit portfolio


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skillfully and kept the classified loan at a very lower rate thanks goes to the standard and

stringent credit appraisal policy and practices of the bank.

But all things around us are changing at an accelerating rate. Today is not like yesterday and

tomorrow will be different from today. Given the fast changing, dynamic global economy and

the increasing pressure of globalization, liberalization, consolidation and disintermediation, it is

essential that Dhaka bank limited has a robust credit risk management policies and

procedures that are sensitive to these changes. To improve the risk management culture

further, Dhaka bank limited should adopt some of the industry best practices that are not

practiced currently. These are

Dhaka Ban should have a clear written lending guideline. The lending guideline should

include Industry and Business Segment Focus, Types of loan facilities, Single Borrower and

group limit, Lending caps, Discouraged Business Types, Loan Facility Parameters and Cross

boarder Risk.

It should adopt a credit grading system All facilities should be assigned a risk grade. And the

borrowers risk grades should be clearly stated on credit application.

Approval authority should be delegated to individual executives rather than Executive

Committee/ Board to ensure accountability. This system will not only ensure accountability of

individual executives but also expedite the approval process.

All lending functions should be segregated in the following way

* Credit Approval / Risk Management

* Relationship Management / Marketing* Credit Administration

The segregation of duties will improve the knowledge levels and expertise in each

department

The organization structure should have to be changed to put in place the segregation of the

Marketing/ Relationship Management function from Approval / Risk Management /

Administration function.

The responsibilities of the key persons of the above function must also be clearly specified.

An Early Alert Account system should be introduced to have adequate monitoring,supervision or close attention by management.( An early Alert Account is one that has risk

and potential weaknesses of a material nature)

There should be a Recovery Unit to manage directly accounts with sustained deterioration.

To encourage Recovery Unit incentive program may also introduced.


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It is clear that the Janata Bank Limited Credit Performance department has ensured both

quality and services which helps to improve the overall status of the Bank. For this reason

Janata bank Limited has able to achieve second position in country and top position among

public banks in export sector in 2009. However the branch may have scope to improve in a

few areas. Such as-

01. The number of exporter and importer who operate through this bank is not enough to

achieve the goal. So JBL should offer more facilities to attract their clients.

02. In addition with the present services they should include more services. It is badly needed

to provide more quality services to their clients in order to compete in the market.

03.Credit Performance department should be fully computerized that the exchange process

would be convenient for both the bankers and the clients.

04. Bank should offer more facilities to the customers such as debit card, credit card, ATM

machine etc. to survive in the competition.

05. One of the business strategies is promotion. Successful business depends how they can

promote their products or services to the customers. In this connection to improve the

business status the JBL should introduce more promotional programs.

Lastly it can say that there are a lot of opportunities for increasing Credit Performance in

Bangladesh if stay political stability. The Human Resources are cheapest here which play an

important role in any business. Bangladesh government should take proper steps to maintain

congenial atmosphere for sustainable Credit Performance business in the country.

Credit Performance

Documents

Transcript of Credit Performance