CHAPTER ONE INTRODUCTION OF INTERNSHIP

1.1.

Introduction:

We are the students of the University of Rajshahi, Department of Finance and Banking. According to the rules of Rajshahi University (in BBA) we were sent in some organizations to acquire some practical knowledge that is called internship. As a student of Finance and Banking we are to complete our internship program mainly on Financial organization; Banking sector are given preference here. This time for internship we were divided in some groups, eight students in a group were sent in Rajshahi Krishi Unnayan Bank, Greater Road Kajihata branch to complete our internship. We were given 90 days to complete our internship program which was not enough to get overall practical knowledge on banking sector. But as a student of Finance and Banking we tried hard to get on over all idea on banking sector from RAKUB. We are very much grateful to our honorable teacher, Zubair Ahmed, Assistant General Manager of Greater Road Kajihata Branch of RAKUB, other officials and workers who helped us in many ways during the whole period of our internship program.

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1.2.

What does Internship mean:

Practical training is necessary to achieve complete knowledge about something. Learning of the in and outs of the practical experience engaging on the basis of activities is called internship. In another word, practical training or internship means to acquire knowledge and information investigating organization. Internship is an assigned work performed usually at the end of the BBA course curriculum. The goal of internship is to apply ones theoretical knowledge in practical fields. Thus internship is a pragmatic program of achieving practical experience by engaging oneself in different organizations. From the above discussion, it can be concluded that internship is the way to acquire practical experience through working in the practical field. 1.3. Importance of Internship: An internship provides the student with a greater understanding of career demands and qualifications. It allows the students to understanding the connection between what is studied and how it is applied in the world of work. Practical work increases our real knowledge. At the end of our theoretical study, we are working for practical training. Thus it enhances the student knowledge. Internship program is the way of implementing the theoretical knowledge practically. However, the importance of internship is stated as follows: Practice makes a man perfect-truthfulness of such can be achieved practical training. Internship program helps to increase the quality and effectiveness of the trainer.
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 It mentally prepares for their professions. It acts as guideline during the service period. Perfect conception about business / accounting procedure in various industries and business concern may easily be earned. To innovate new techniques of management. To enact different policies for the over all development of the institutions. To make the skill labor. It facilitates thinking about problem of apply my theoretical knowledge in the field of action. By internship program students can under and limitations, shortages and tractability of their knowledge and thereby can take necessary action for removing these limitation and shortages. Last of all we can say that, one should importance of an internship program.

1.4. Objectives of the study: The objective of internship is to earn practical experience about definite subject. It helps to achieve practical knowledge and experience. The main objective of internship training is to discover answer to

questions through the application of considerable procedures. Main objectives are given below: To know the functions or service to customers. To understand administrative structure of RAKUB.
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 To know in what types of project financing by RAKUB. To understand loan sanctioning procedure along with general banking system of RAKUB. To identified problems faced by both the bank and the clients in loan management. To Put some suggestions on the basis of the findings of internship program to improve the existing situation. To implement the knowledge of practical training in the post service life.

1.5. Scope of the Study: It has been mentioned earlier, the main focus of the study is Performance of Loan Disbursement and Recovery of Rajshahi Krishi Unnayan Bank (RAKUB),with special reference to Greater Road Kajihata Branch, Rajshahi . The report gives an overview of Rajshahi Krishi Unnayan Bank. There is an one elaborate chapter on RAKUBs loan Recovery performance . This study will also present some problems and recommendation to solve those problems of Rajshahi Krishi Unnayan Bank.

1.6. Methods of Data Collection: Methodology is a systematic procedure, which is used to solve a problem easily in a practical area. It covers collection, measuring, analyzing and interpreting of data to lead decision i.e. methodology includes why a study we have been undertaken.

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There are two sources of data one is Primary source of data and another is Secondary source of data. I have used both the sources for collecting data.

1.6.1. Primary data collection Method Primary data was collected from Rajshahi Krishi Unnayan Bank. To prepare a report, I have collected data and information by following way: 1.6.1. a) Questionnaire method To collect information for my practical training at first, I made a questionnaire with the help of my honorable supervisor. After preparing the questionnaire I collected the information and data from the officers, personnel and other concerned people of my targeted bank.

1.6.1. b) Interview Method I have collected the information and data through interview. I have taken interview of the officers, executives and supervisors and they all responded all of questions friendly.

1.6.1. c) Observation Method I was present physically in every department of Rajshahi Krishi Unnayan Bank, Greater Road Kajihata Branch for the purpose my internship training period and observe all the functions. From this observation and with the help of my practical knowledge, I have collected some information and data about the bank.

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1.6.2. Secondary Data Collection Method The only source of secondary data was official record of bank. Others sources of secondary data are as follows: i) ii) iii) Annual reports of RAKUB Periodical Published by RAKUB Various books, entitles, leaflets, compilations etc. regarding general banking functions, special savings scheme, foreign exchange operation and credit policies. iv) My diary maintained while undergoing the practical

orientations. v) vi) vii) Some published and unpublished research report. Books, magazines and papers. Business and technical journals .

viii) Public records and statistics. ix) Documents.

1.7. Limitation of the Study: There is no doubt that practical training is essential to acquire a complete knowledge in related fields. But it can not achieve easily. There are some problems in this activity, which are as: Observation of activities is a difficult task. As secrecy of rules and regulation in accounting is must for every institution, the concerned data & information are not always be presented to others.
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 Another problem is lack of necessary elements and aspects practically becomes difficult. It needs sufficient financial support, but we can not get this support. Time of data collection was not sufficient. The total time period of the orientation was a weeklong working days. It was very short time to complete this internship program properly. So I had to conduct with all functions within short time. As secrecy of accounting is a must for an institution. The concerned data and information are not always mutually presented to evaluate the institution. The given time is not enough for this program becomes. For this reason, this program needs at least three months

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CHAPTER TWO RAJSHAHI KRISHI UNNAYAN BANK

2.1.

Introduction:

The name of the institution is Rajshahi Krishi Unnayan Bank (RAKUB).As the largest development partner in the northwest region Rajshahi Krishi Unnayan Bank aims at overall development of the farmers and all the sectors and sub-sectors of agriculture in this region. Besides catering to agricultural credit, financing agri-business and agrobased industries and poverty alleviation programs the bank performs commercial banking functions. Rajshahi Krishi Unnayan Bank (RAKUB), a state owned financial institution established under the president order no. 58 of 1986 the bank started functioning on March 15, 1987. RAKUB took over the operations under (Bangladesh Krishi Unnayan Bank) BKB within the administrative division of Rajshahi along with its assets and liabilities. To overcome the problems and improve the condition of the poor, RAKUB was established in 1987. RAKUB is playing a vital role both in agricultural and development as well as eradication of poverty. Especially RAKUB is the largest source of agricultural credit in Rajshahi Division. The north-west region comprises of 16 districts of entire Rajshahi and Rangpur administrative division with on area of 34,513 Sq. km. and estimated population of about 28 million. The region is the driest and poorest area with a high population density and low rate urbanization (13%) while property is consented in the country side with 59% of the rural population suffering from various degrees of deprivation.

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2.2.

Historical Background of RAKUB:

Rajshahi Division is considered to be a vital area in respect to country agriculture productivity. This area contributes more than 30% to the food grain production of Bangladesh. In adequate access to credit among other resources is crucial barrier to the farmers of the improve upon their productivity. What is needed is unlimited and sustainable flow of credit to improve them against low productivity. For this reason, Rajshahi Krishi Unnayan Bank was established.

2.2.1. British Period: In the British regime, the people of bangle was included in the Dadon business of indigenous landlord, moneylender etc. As a result, all the belongings of the farmers were sold in the bid and they had to stay with much difficulty. In this circumstances Shar-e-Bangla. A.K. Fazlul Haque established Rin Salishi Board for the sack of farmers. As a result, many farmers who were engaged with the exploitation by the moneylenders and landlords, breathed with peace.

2.2.2. Pakistan Period: In 1947 the Indian sub-continent was freed from the British colonial rule and in the Indian sub-continent originated by the two independent states namely India and Pakistan. Bangladesh was indicated as East Pakistan as a part of Pakistan. In 1952 Pakistan government established Agricultural Development Finance Corporation (ADFC) to disburse loan in agriculture sector.

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Pakistan government realized the importance of agro-loan and agricultural production, established a financial institution named Pakistan Krishi Bank. Pakistan Krishi Bank started its operations from 1958. This two state owned financial institution merged in 1962 and established a new financial institution named Pakistan Agriculture Development Bank (ADBP). This institution provides state facilities to the farmers in many ways.

2.2.3. Bangladesh period: The evolution of Bangladesh made through the Great Liberation War on 16 December in 1971. After independence of Bangladesh Pakistan Krishi Unnayan Bank was renamed as Bangladesh Krishi Unnayan Bank. The presidents ordinance number 27, in 1973, Pakistan Krishi Unnayan Bank renamed Bangladesh Krishi Unnayan Bank. After the evolution of Bangladesh and with the time being, various organizations are working independently and freely. For that reason the consciousness of people is increased. The creation of Water Development Board, Bangladesh Rice Research Institution, Rural Electrification Board, and other necessary institutions are made. Control of flood, rice of new quality and introduction of other high yielding crops and the increasing demand d of its, institutional loan demand of farmers increased. In the earlier time people were not familiar with bank loan or institutional loan, for that reason they lend from their relatives and friends. But now bank offer various types of loan to the farmers and they are somewhat bank

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oriented now. But it becomes very difficult for some limited banks to meet up the multiple demand of loan specially crop loan. Since Bangladesh is an agro-based country; the demand for the loan of Krishi Bank has been increased remarkably. It becomes very difficult for a Dhaka based head office of Krishi Bank to manage agroloan in the remote areas of the country. For this reason, government felt to decentralize the Krishi Bank in the divisional areas and Rajshahi division was the first choice. The Northern areas of Bangladesh were not developed in comparison with other areas of Bangladesh; it is one of the main reasons of establishing RAKUB. Rajshahi Krishi Unnayan Bank was established in 1986 with the ordinance number 58 of the president. RAKUB started its operations from 15 March 1988.

2.2.4 Present Condition: Institutional agricultural credit plays a crucial role in the modernization of agriculture. Adequate flow of credit can remove the financial constraints of the farmers and provide the incentive to adopt new technologies that would otherwise be more slowly accepted. Credit facilities also help the process of commercialization of subsistence agriculture. RAKUB realized this situation and performed their job tremendously. Development of agro-based industries, self-employment, solving unemployment

problems, providing money from expansion of socio-economic activities and provide consultancy are the main objective of establishing RAKUB. After the construction of Jamuna Multipurpose Bridge, this responsibility has been increased tremendously. In the very beginning of RAKUB, the number of branches wasTk. 253 core. Now the number of
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branches is 365. At his outset of bank, the credit balance was Tk 610 crores and now credit balance is Tk.2067.27 core. For the well being of all industries farmers in the northwest region in Bangladesh, RAKUB is continuing relentless efforts and taking more than one hundred and seven loan programs.

2.3.

Economical Impotance of Rajshahi and Rangpur division: Rajshahi and Rangpur division is popularly termed as the granary

of Bangladesh. The area is noted for aromatic and fine rice production which has got a growing demand in export market. Besides the area is noted for fruits and vegetables. More than 50 percent of the country's potato production comes from Rajshahi and Rangpur division. Besides flood-free land the adaphic and agro-climatic condition is suitable for commercial seed production for cereals, potatoes, pulses and a number of vegetable crops. The seed production processing and marketing business have got both domestic demands as well as export potentials. The area is particularly suitable for rearing black Bengal goats noted for highly demandable goatskin and high quality mutton. Once it gets going the mutton of black Bengal goats can harness the world market. The region is also famous for production of high quality beef and milk which have immense potential for value added processing. Rajshahi is still an unexplored area for establishment of poultry hatchery and fish grow-outs and fish processing.

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Rangpur Division was proclaimed as Bangladesh's seventh division on January 25th, 2010, prior to which it was part of the Rajshahi Division. It has been created with greater Rangur and Dinajpur regions. Rangpur division is the northernmost division of Bangladesh. The major cities in the division includes Rangpur, Dinajpur and Saidpur. The city of Saidpur has the only airport in the division. Rajshahi and Rangpur division is characterized by cheap labour force and excellent rail and road communication infrastructure. Two airports in the area take only 30-40 minutes to communicate with the capital city, Dhaka.

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2.4. RAJSHAHI KRISHI UNNAYAN BANK AT A GLANCE:

1. Establishment Date 2. Location of Head office 3. Authorized capital 4. Region of RAKUB

: 15th March 1987. : Kazihata, Grater Road, Rajshahi. : Tk 750 core. : All regions in the Rajshahi and Rangpur division.

5. Area 6. Extent 7. No. Of District 8. Thana 9. Municipalities 10.Unions 11.Total population 12.Total number of families 13.Number of farm families 14.Training institute

: Rajshahi and Rangpur Division. : 34,513 Square kilometer. : 16 : 128 : 57 : 1092 : 35 million : 5.10 million : 3.20 million :1

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2.5.

Objectives of RAKUB: The main goals of RAKUB are as follows: To provide Loan and Advance facilities for all kinds of agricultural and agro- based economic activities keeping in view the needs of small and marginal farmers. To promote cottage and other allied industries in rural and urban areas. To assist farmers in adopting appropriate technologies under the Bank's supervision. To earn a normal profit for meeting the operational expenses, building of reserve and expansion of activities to cover wider geographical area. To extend counseling and advisory services to the borrowers/ entrepreneurs etc. in utilizing Loan and Advance facilities of the Bank. Provide credit facilities for agricultural development of poor farmers. To provide credit facilities for the socio economical development of poor farmers. To save money as deposit (Hajj Saving, Education Saving, Rural Pension Saving and others) for future expenditure or needs. To provide credit facilities for creating self independence. To provide credit facilities for creating small firm as Livestock & Poultry, Fishery, Hatchery. To encourage the small entrepreneurship via providing credit facilities.
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 To increase income and remove poverty of the people of Bangladesh. To supply Agricultural inputs and service to the

entrepreneur. To develop and create employment opportunities.

2.6.

Functions of RAKUB:

As the largest development partner in the Northwest region, RAKUB aims at overall development of farmers and all the sectors and sub-sectors of agriculture in this region. Besides, catering to agricultural Loan and Advance financing, agro-business and agro-based industries and poverty alleviation programs the bank performs ancillary banking functions.

2.7.

Management:

A seven-member Board of Directors is entrusted with the responsibility of policy formulation for promotion of growth in agriculture leading to economic development of the country through agricultural Loan and Advance support. The government appoints all the directors of the board. Also an executive committee constituted by the Chairman and two other directors including the Managing Director is there for taking emergency decisions. The Managing Director is the chief executive of the Bank.

2.8.

Organizational Structure:

The Head Office of the bank is stationed at Rajshahi. The branchnetwork comprises 365 branches including one in Dhaka. One General Manager's office at Rangpur, eighteen zonal offices stationed in district headquarters control branches under them. There are 18 independent regional audit offices under direct control of the head office for conducting regular audit in branches as well as in zonal offices.
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The bank has a training institute located at Rajshahi. Total workforce of 3364 as on 30-04-2011 was composed of 1497 officers and 1867 other staffs. Regional offices stationed in district headquarters control branches under them.

2.9.1 Head Office: The head office of RAKUB is located at 280 km far from capital city Dhaka, North-west divisional city Rajshahi. All operation is control by head office. The Managing Director is assisted by the three following functional divisions. Each headed by a General Manager: Administration and Accounts Division. Operation Division. The three divisions further divided into 12 departments are as follows: 2.9.1. a) Administration and Accounts Department: Personnel Department Common Services Department Central Accounts Department-I Central Accounts Department-II

2.9.1. b)

Operation Division: Branches control Department. Loans and Advances Department-I Loans and Advances Department-II Research and Development Department. Budget and Expenditure Control Department.

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2.9.1. c)

Audit and Recovery Division: Loan Recovery Department-I Loan Recovery Department-II Audit and Inspection Department

A Deputy General Manager is the head of the each division.

2.9.2 Supervision and control: The zonal offices are headed by Deputy General Managers while Regional offices by Assistant General Managers.

2.9.3 Vigilance: The functions of the Audit offices are to keep the branches regular. The Audit offices accomplish auditing of the branches on half-yearly basis Regional Audit offices are directly controlled by the audit and Inspection Department of the head office and by no way influenced by the local Regional on zonal offices.

2.9.4 Training Institute: The only training Institute at Rajshahi Imparts training to the junior and mid-level officers and other staff according to the annual training program designed on such subjects of professional interest as management of Loan and Advance and accounts, Commercial banking, audit and inspection etc

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2.9.5 Branch Network: Table-1 Region wise total branches (Up to May- 2011) Rajshahi Naogaon Natore Chapai Nawabgonj Bogra (North) Bogra (South) Pabna Sirajganj Jaipurhat Rangpur Gaibandha Nilphamari Kurrigram Lalmonirhat Dinajpur (North) Dinajpur (South) Thakurgoan Panchagarh Dhaka L.P.O. (Rajshahi) Total 23 29 20 16 18 17 24 22 15 26 24 20 20 17 17 18 19 18 1 1 365

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Source: Personnel Department of RAKUB.

2.10. Employee summary (up to April-2012):

Designation 1.Managing Directors (MD) 2.Deputy Managing Directors (DMD) 3.General Manager (GM) 4. Deputy General Manager(DGM) 5.Assistant general Manager(AGM) 6.Senior Principal officer(SPO) 7.Principal officer(PO) 8.Senior officer(SO) 9.Officer Total Officer 10.Other Employee Total

Authorized 01 01 03 36 66 147 336 620 900 2110 2126 4236

Exist 01 01 03 21 55 125 225 360 706 1497 1867 3364

Source: Personnel Department of RAKUB.

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2.11. Capital and it sources: RAKUB is a governmental banking institute. So the main sources of Capital are government fund.Details are as follows(up to 30 June-2010)1) Authorized capita 2) Paid up capital 3) Reserve capital 4) Deposit from customers 5) Loan disbursement 6) Recovered loan : Tk.750 core. : Tk.570 core. : Tk.20.85 core. : Tk.2067.27 core. : Tk.1060.12 core. : Tk.992.46 core.

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CHAPTER THREE

INTRODUCTION TO RAKUB GREATER ROAD KAJIHATA BRANCH

2.1. Establishment of Greater Road Kajihata Branch: Greater Road Kajihata Branch, RAKUB started its operation in 20th November 2011. Before this branch Local Principal Office maintained its operation at this location which got license in 1995. Local Principal Office has transferred its operation Nawdapara at present. The bank not only caters the need of agricultural credit, finances agribusiness and agro-based industries and poverty alleviation programs, side by side the bank performs commercial banking functions in its area of interest. The Greater Road Kajihata Branch of RAKUB, Rajshahi performs all traditional banking functions including deposit mobilization and lending.

2.2. Role of RAKUB, Greater Road Kajihata Branch: Rajshahi Krishi Unnayan Bank (RAKUB), Greater Road Kajihata Branch has been playing a vital role for the development of the agriculture in north-west region. Although Greater Road Kajihata Branch of RAKUB is specialized of agriculture loan but the general commercial activities of this bank is very much wide.The main role of Greater Road Kajihata Branch of RAKUB is to develop the agro-based industries, self-

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employment, solving the unemployment problem and supply of money for the expansion of socio-economic activities.

2.3. Activities of RAKUB, Greater Road Kajihata Branch: Banking business is primarily concerned with the activities of deposit collection and loan disbursement. RAKUB is not different from these activities. The main activities of Greater Road Kajihata Branch of RAKUB are as follows: i). Deposit collection and mobilization and ii). Loan disbursement and recovery

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2.4. Employees of Greater Road Kajihata Branch: There are 11 employees at Greater Road Kajihata Branch and their designations are as follows:

Table: No. of Employees of Greater Road Kajihata Branch. Sl. No. 1 Assistant General Manager 2 Senior Principal Officer 1 Loan disbursement, supervision, legal action, loan appraisal to project, industrial loan, recommendation of each credit. 3 4 Senior Officer Officer 4 2 RSCP Different statement, deed preparation and official activities. 5 Cashier 1 Cash transaction Designation No. of employees 1 Overall management Responsibilities

Data Entry Operator

Entrance of Data

Peon

Miscellaneous

Source: Greater Road Kajihata Branch, RAKUB.

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2.5. Organizational Structure of Greater Road Kajihata Branch, RAKUB: Assistant Manager General

Senior Principal Officer

Senior Officer

Officer

Cashier

Data Entry Operator

Peon

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2.6 RAKUB, Greater Road Kajihata Branch at a glance (As on 30 April, 2012) Establishment: 20th November, 2011 Location: Rajshahi City Corporation Number of Wards: 10 Target of Deposit: 5 crore tk (Upto 30 th June, 2012) Achievement of Deposit: 2 crore 61 lakhs 89 thousand tk (upto 30 April, 2012) Target of Loan Disbursement: 4 crore tk (Upto 30th June, 2012) Achievement of Loan Disbursement: 59 lakhs 25 thousand tk (upto 30 April, 2012) Loan recovery: Not yet started (It will started from July, 2012) Number of employees: 11 Contant number of the branch: 0721-810482

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CHAPTER FOUR GENERAL BANKING FUNCTIONS OF RAKUB, GREATER ROAD KAJIHATA BRANCH

3.1. Introduction: RAKUB combines the role of a specialized bank for rural credit and that of a commercial bank. Like commercial bank, it performs functions such as acceptance of deposits, remittance of fund, granting of working capital finance to agricultural processing and trading units. The overall object is to generate employment and increase income of farmers and rural people and faster agricultural development leading to economic development of the country.

3.2. Types of Services: As a largest development partner in the northwest region, Rajshahi Krishi Unnayan Bank aims at overall development of the farmers and all the sectors and sub-sectors of agriculture credit, financing agri-business and agro-base industries and poverty alleviation program. The bank performs commercial banking functions. The bank performs to their customer mainly the following services: i. ii. iii. Loan services Deposit services Commercial services

i.

Loan Services:

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Banks loan portfolio has been classified under the following major heads. a) Short term loan: It is payable within 5-6 months loan period to 1year. These loans are. All kinds of crop loans. Socio-economic development activities. Working capital loan agriculture based industries. b) Medium term loan: It is repayable above 1 year but below 5 years. These types of loans are: Land development Bullocks for cultivator Dairy farm Poultry Raising herds Small irrigation projects Development of agriculture based Industries according to the chart c) Long term loan: All loans repayable above 5 years are called long term loans. These type of loans are: Farm and irrigation machineries Tea garden development Agro-based industries

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 Forestry Infrastructure development.

ii.

Deposit Services:

The different Classes of customers can open different kinds of deposit accounts. All the various deposit accounts have different feathers and phenomenon.

a) Current Account: Current accounts are normally opened for business/organization. No interest is given on this A/C. In RAKUB, initial deposit is Tk. 1000 to open a current account. Here the A/C holders can deposit or withdraw money as many time as they want during the office hours. b) Saving Accounts: Saving accounts are opened for the customer except companies or firm and co-operative society. If the bank is satisfied by observing the registration and constitution of co-operative society then it can open savings A/C. RAKUB gives interest @ 5.00%-7.00%per annum. Minimum initial deposit is Tk. 500 and this amount must maintain always. The depositors can deposit money in their account as many times as they want but in a week, they are allowed to withdraw only Tk. of the balance in the A/C and the highest limit of withdrawal in a week is Tk. 100000. If anybody wants to withdraw more than , i.e. 25% or Tk. 25000 in a week, the customer has to give a written notice 7 days ago to bank.

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c) STD (Short Term Deposit) A/C: STD A/C is opened for company, firm, and Government administrative body like TNO. STD A/C is operated like current A/C. If 7 days ago a written notice is placed to the bank in every withdrawal, then the bank gives interest 4% per annum. d) Deposit Pension Scheme (DPS): In this Savings Scheme a person is given an opportunity to build up savings by contributing monthly installment for getting an attractive fine amount at the end of the specified term. The size of monthly installments is Tk. 100, Tk. 200, Tk. 300, Tk. 400 and Tk. 500, which is to be deposited within 1st week in each month. In this case compound rate of interest is charged. e) RAKUB Double Money Skim (RDMS): RDMS is a special product of this bank. RAKUB has some savings schemes to motivate the people for saving. In this case RDMS is regarded as the special product of this bank. Here in 6.5 years the money will be doubled. Minimum amount of deposit is 50000 tk.

f) RAKUB Daily Profit Account (RDP): Here minimum amount should be 20000 taka. g) RAKUB Triple Money Skim (RTMS): Here in 11 years the money will be tripled. Minimum amount of deposit is 25000 tk.

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3.2.1 The following table shows the various deposits and their interest rates at a glance: Deposit categories Current deposit Saving deposit (City Area) Saving deposit (Urban Area) FDR from 1 months to below 3 months from 3 months to below 6 months from 6 months to below 1 year from 1 year to below 2 years from 2 years to below 3 years DPS STD 7.00% 7.50% 8.00% 8.25% 8.50% 13% 4.00% Interest rate Nil 5.00% 7.00

iii.

Commercial Services:

The bank gives the commercial services by DD, TT, MT and LC etc. For these services they take a fixed interest. This is a source of income. RAKUB gives their customers the facility to remit fund form one place to another. The people who are not customers can also enjoy this facility.

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3.3. Opening an Account: To its customers RAKUB gives opportunity to open an account like other banks. The following things are considered to open an account: I. II. III. Observing whether the application form is properly filled in. Getting a preserving specimen signature of a customer. Taking initial deposit in cash.

Special types of account: Basically a person whose age is 18 years or more can be competent to open an account with the bank. But there are some special types of account holder like joint account, minor account illiterate person account, blind person account, Deaf and dumb account etc. These accounts are opened by following various conditions.

3.3.1. Who cannot open an account? The following parties can never open an account with the bank: I. II. III. The person who is still bankrupt. The person whose mind is unsound. The person who is totally mad.

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3.3.2. Account opening procedure: To open an account, an individual has to carry out the following formalities: Obtain an application form Submit the completed form to the concerned officer Face a brief interview

Sign the specimen signature card

Deposit of money and Get counter-folio of the payment slip

Once these formalities are carried out in appropriate manner, the applicant is issued a checkbook and considered as a valid account holder of the bank.

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3.3.3. In case of joint accounts, the applicant must furnish the following information: i) Name of the parties who will be operated the account and signed checks. ii) At the event of death of either or any of the account holders, how the balance will be paid and to whom the securities (if any) will be delivered. The documentary requirements are almost the same as individual accounts. Account opening form and the special instruction must be signed by all the joint account holders to signify their consent. iii) If the client is a private or public limited company, the company has to give a description about the type of the account and the operation of the account. Specimen signature of the people who are authorized to open and operate the account and the source of their authority.

3.3.4. Account closing procedure: In order to close an account, the account holder has to place written application. After getting application, the bank will deduct service charges at an amount of Tk. 200 and Tk. 300 against savings and current deposit respectively as closing fee from the balance and the rest of the money is given to the customers.

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3.4. General function of cash department: Cash payments: For convenience, the cash payment (cheque honoring) procedure is illustrated by a flowchart as under:

COUNTER
Customer places the check to the ledger officer (LO). The LO receives the check, enters its particulars in a register and issues the customer a token.

The LO now verifies the ledger of the customer. If the customers account position is okay, he passes the check to the second officer (SO).

The SO compares the customers signature given on the check with that on the signature card kept in his custody. If the signature is okay then he makes an entry of the check in another register and cancels it by signing across the check.

Once the check is cancelled that is okay for payment it is brought to the cashier by a peon.

Cashier enters the amount of the check in the cash register and pays the appropriate amount to the customer.

At the end of banking hour, a trail balance is prepared from the registers and all the registers are compared with one another.

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3.4.1. Cash Receipt: Customers deposits are received in this section of bank. Then the amount received is credited to the customers A/C in the ledger book. The formalities that are followed to receive a customers deposit (cash) in the cash receipt section are stated in the following flow chart:-

COUNTER
Customer places this cash and deposit slip before the respective officer at the counter.

After receiving the cash and deposit slip, the officer makes an entry to scroll register book. Then the deposit slip and cash are placed before cashier.

The cashier counts this amount of money first and then makes an entry to another register book. The book is generally called cash book.

Then the cashier passes the cashbook and deposit slip to the second officer.

After verifying the deposit slip, the second officer returns the counter-folio of the deposit slip to the customer and keeps the other position in his custody.

At the end of banking hour, trial balance is prepared from that cash receipt register.

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3.5. Customer services: RAKUB earns a huge amount of money by selling several customer services. The Greater Road Kajihata Branch of RAKUB offers the following customer services:
DD MT Money transfer TT PO Advice Customer services Customers check collection

Same Bank Other Banks Electricity Bills

Customers bills collection

Water Bills Telephone Bills

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3.5.1. The descriptions of these instruments are as under:

i) DD (Demand Draft): DD is the most popular instrument of remitting fund. It is an order to pay money drawn by one branch of a bank upon another branch of the same bank for a particular sum of money which is payable to order on demand. Test number is placed on DD. If the number of issuer bank and reimburse bank becomes the same only then the specified amount of money on DD is paid to the customer. The commission for DD is 10% for any amount of TK. and the minimum commission is TK. 30.

ii) MT (Mail Transfer): MT is another mode of remitting fund and it is same to DD but here the customer is not provided any papers but a receipt. The bank sends the MT papers under its own responsibility to the respective branch. In order to cash MT, the payee must maintain an account with the bank. The commission for MT is 10% for any amount of TK. and the minimum commission is TK. 30.

iii) TT (Telegraphic Transfer): Telegraphic transfer is the quickest method of remitting fund from one place to another. By this procedure, no instrument is sent to the paying branch, message is sent-only over telephone or telex and the paying branch supplies payments after having message. The commission for TT is 10% for any amount of TK. and the minimum commission is TK. 30.

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iv) PO (Payment Order): Payment order is a written document. The PO can be enhanced on that branch from where it is issued. Several supplier organizations use this PO. Here no account is needed to open with the bank. It is issued locally. Generally, the contractors and suppliers use this instrument. The commission for PO is TK.20 for TK.1000, TK.30 for TK.100000, TK.50 for above TK.100000 to below TK.500000, TK.100 for above TK.500000.

v) Advice: It is simply the making of adjustment between debit and credit. Here no cash remittance has done. RAKUB can transact among its various branches with the help of such advice.

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3.6. Accounting system of RAKUB, Greater Road Kajihata Branch:

Transaction

Cash Clearing

Transfer

Voucher Record in register

Posting in ledger

Supplementary sheet preparation Summary preparation

Cash com day book preparation

General ledger posting

Affairs front page Subsidiary ledger posting

Affairs back page

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CHAPTER FIVE LOAN DISBURSEMENT

According to ordinance of RAKUB 1986, it was established in the administrative area of Rajshahi division. It operates banking activities to increase agricultural production, to develop overall economic condition, to develop small and cottage industries, to develop agro-based industries, and to improve socio-economic activities.

4.1. Loan Areas: RAKUB provide loan both agro-based and non-farming sector. There are nine main loan areas of RAKUB; out of nine loan areas it gives preference on the following loan areas. a) 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. b) Fishery: The Bank attaches importance to use scientific method and modern technology in fish cultivation. It extends adequate credit support for excavation and re-excavation of ponds, round the year cultivation of species, which have rapid growth, cultivation of sweet water prawn and

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other fishes. The Bank makes use of expertise of the concerned government agencies for bringing more ponds/water bodies under cultivation and increasing productivity.

c) Livestock & 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 farmers 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. d) 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 indispensable. To cope with the situation financing power tillers, tractors, tube wells, power-pumps, and fertilizer and pesticide application devices. e) 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
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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. f) Poverty alleviation: The poverty-stricken area of north-west Bangladesh is characterized by comparatively lower rate of savings, inadequate capital accumulation and slim employment opportunities. The existing collateral-based banking system is also of little use in respect of extending support to the millions of landless people. To address the problem, the Bank has been financing collateral-free micro-credit for income and employment generation through its poverty alleviation credit programs.

4.2. RAKUB also provides some loan to their customer: These are as: Consumers' Credit (District & Upazila Branches) Service-holders' Credit (District & Upazila Branches) Small Traders' Credit(All Branches)

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4.3. Term Wise loan disbursement: Bank disburse loan in various term wise, such as small, medium and long term. Short Term: Short-term loan is repayable from 5-6 months to 1 year Medium Term: Medium term loan is repayable within 5 years. Long term: Long-term loan is repayable above 5 years. 4.4. Selection of Borrower: Selection of borrower is the important factor in loan disbursement. The following subject matter should be considered in loan disbursement. Citizen of Bangladesh Adult Ability to utilize loan Not defaulter The registrar of Joint Stock Company must register limited company. In case of co-operation society, the registrar of co-operative society must be registered it. Not bankrupt or not unsound minded. When Bank select borrower closely consider the following four P P = Person P = Purpose P = Profitability

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 P = property / security Borrower apply for sanctioning loan by the prescribed form, which is provided by the bank and bank rates predetermined fees, then borrower submit application form along with fees. The rate of loan application form fees of RAKUB is as follows: Amount of Loan TK 1000 to TK 6000 TK 6001 to TK 100000 Above TK 100000 Rate of Application Fee TK 15 3% TK 200 Plus TK 1 for per thousand

Source: Loans and Advances Department-I, RAKUB.

4.5. Interest Rates: Sectors Interest Rate Crops 10.00% Fisheries 12.50%-13.00% Livestock 11.00%-13.00% Agro Industry 12.00% Cash Credit 13.00%-15.00% Poverty alleviation 6.00%-14.00% Firm Machinery 12.00% Source: RAKUB website

4.6. Loan Case Investigation: Loan applicant must submit necessary papers along with loan application. After submitting necessary papers, responsible officer take some step against loan application. Loan officer investigate the information of loan application to go to the spot and evaluate loan application consciously.

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Loan case evaluation officer scrutinize the necessary papers and documents of security and he /she will go to the local land office. 4.7. Forecasting: There are three types of forecasting form of RAKUB. Loan officer write a report about project appraisal. Loan forecasting or loan evaluation is very important. In the time of forecasting, loan officer considered the amount of loan, sources of equipment in case of equipment loan, and the availability of equipment, project viability in case of project loan, suitable use of loan etc. apart from this loan officer attached income and expenditure statement, cash payment and receiving statement with the forecasting report. 4.8. Loan disbursement: On the basis of forecasting statement the responsible officer investigate the actual need of loan. If loan officer satisfied to the loan proposal he / she may sanction loan. Before sanction of loan, making necessary papers correctly is essential. According to condition of loan sanction, loan officer made necessary documents such as: mortgage paper,

hypothecations papers, pledged agreement, SP note etc. Bank disburse loan in various ways, such as: cash, purchase receipt, or installment. In case of installment loan bank investigate the past installment and experience of the borrower.

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4.9. Table-1: Loan disbursement of Greater Road Kajihata Branch of RAKUB from November 20, 2011 to March 31, 2012 Month December,2011 Deposit Collection (TK in lakh.) 68.44 Loan Disbursement (TK in lakh.) No loan had sanctioned previously. From LPO branch two loans had transferred. Cash Credit purpose 3.64 4.00 23.75 27.86

January,2012 February,2012 March,2012

58.65 20.38 114.42

Source: Greater Road Kajihata Branch, RAKUB 4.10. Problems of Loan disbursement: Greater Road Kajihata Branch of RAKUB faced the following problems in disbursing crop loan i. Loans are not sanctioned in proper head and real lone due to political influence ii. iii. iv. v. vi. Lack of proper mortgage against loan. Deficiency of adequate human resource. Lack of real loaner. Insufficient fund of the bank. Loons are not disbursed properly as a result of the dishonesty of the officers. vii. viii. Inflexibility of the government policies in disbursing loan. Wants of sound guarantor.

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CHAPTER SIX LOAN RECOVERY OF RAKUB

When bank or other financial institution currency disburses to another organization or people, then this currency regained from loaner, it is called recovery. Greater Road Kajihata Branch of RAKUB loans disburse to the loanee regained this money. Greater Road Kajihata Branch of RAKUB loan recovered under two bases: 1. Unclassified loan 2. Classified loan

5.1.1. Unclassified loan: When half or more than half of the total loan is repaid within the due dates by the borrower thus that is called unclassified loan.The duration of time in which the loan will be treated as unclassified is less than 12 months from sanctioning loan. 5.1.2. Classified loan: When more than half of the total loan or total is unpaid/due over the due date then that loan is called classified loan. Classified loan is not being repaid on time and has been designated a troubled asset. Classified loans are three types-

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 Substandard loan: A substandard loan is one that is inadequately protected by the current sound worth and paying capacity of the oblige or of the collateral pledged. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardized the liquidation of the debt. A loan will be classified as substandard after a period of 12 months from the due date.

Doubtful loan: A loan where full repayment is questionable and uncertain. Degree of repayment of loans in question range from a complete loss to uncertain loss unless corrective actions are taken. Doubtful loans are usually nonperforming loans on which interest is overdue and full collection of principal is uncertain. A loan will be classified as doubtful after a period of 36 months from the due date. Bad debt: Loans classified as bad debt are considered uncollectible and shall be listed at 100 percent potential loss. A loan will be classified as bad debt after a period of 60 months from the due date.

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5.2. Loan Recovery procedure: The important tasks of branch manager Greater Road Kajihata Branch is to recover the outstanding loans. The main responsibility of branch manager and field supervisor to recover the outstanding loans in Greater Road Kajihata Branch. The branch manager gets sounds planning and makes policy to recover the loan. Thus recoverable all loan are to be timely. The loss recovery procedure is divided into several steps. There as follows: Loan recovery: Greater Road Kajihata Branch makes a schedule to recover the outstanding loan. There are several schedules to pay of difference types of loans. a) Schedule to pay of crops loan are fixed according to Bangladesh bank and rules. b) Different schedule to pay loan for various objectives. c) For project loan, schedule to loan are to be adjusted, when production are start commercially. d) For working capital loan, loan to be paid in due time.

Statement of loan: The statement of loans plays a vital role to make a loan recovery; it is an initial instrument for office and field. Name and address of borrowers are in this statement. This statement is prepared for village and union. This statement is prepared at the beginning of financial year. It mentions that it is helpful for disbursement loan.

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 Various types of notice: There are various types of notice to recovery of loan, which are serially set to the borrower. These are Demand notice, Legal Notice, Special Notice, Field recovery, Loan Recovery camp, Co-operation of UP chairman and Case filing. 5.3. Rules of Recovery: Greater Road Kajihata Branch Loan recovery from loanee is installment system, installment system are as: Weekly Fortnightly Monthly 5.4. Causes of Defaulter: The loanee cannot pay due time in various causes: Natural calamity destroy the crops, for this reason the loanee unable to pay loan in due time. Greater Road Kajihata Branch cannot take proper steps against the loanee for influential man. The loanee cannot use the loan in proper way. The loanee do not pay loan in more time willingly.

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5.4.1Greater Road Kajihata Branch takes some step against Defaulter: When a lone default to pay loan the Greater Road Kajihata Branch takes some step against loanee: First they issued Demand notice to loanee. If the loanee not pay loan, then branch issue legal notice. Again lone failure to pay loan, branch issue special notice. After all loanee default to pay loan then branch case filling against loanee. In this way Greater Road Kajihata Branch recovers loan by court. If any sector continuously goes for losses, branch does not shut down the sector. Greater Road Kajihata Branch again refinances that sector and encourages to the loanee. As it is a new branch which is started its journey from 20th November, 2011 the loan recovery is not started yet. Loan disbursement is running on and loan recovery will be started after June, 2012. 5.5. Problems of loan Recovery: Loanee cannot utilize loan properly, as a result they fail to repay loan. Many people of Bangladesh live in village and they are ignorant to use the loan. Weakness of supervisor for supervising loan. Weakness of taking step against loanee by bank. Political pressure is a common phenomenon in recovery of loan
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CHAPTER SEVEN RECOMMENDATION AND CONCLUSION

6.1. Limitation of the study: Rajshahi Krishi Unnayan bank plays an important role in developing the agricultural sector as well as poverty alleviation and socio-economic development of the Rajshahi and Rangpur Division. The activities of this bank are widely dispersed, but I have time constraint which was prevention to acquire complete and sufficient knowledge about the role of Rajshahi Krishi Unnayan bank. Due to the shortage of time, it is not possible for me to collect the all data about this Bank. But I have tried my best to prepare this report properly and effectively. 6.2. Problems Identification: In common eyes, it would be seemed that the bank has no problems and running well recent years. But being physically presented at the bank during 15-day internship and having discussed the different staffs about farming loan management, I observed the following unavoidable problems. 1. Fund diversion. 2. Political pressure: Due to pressure of local political leader the bank cannot determine proper borrowers for distribution loan.They create always-unnecessary influence in determining borrowers. 3. Shortage of efficient credit personnel. 4. Lack of legal action by the banks against defaulters.
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5. Inadequate training facilities for credit officers and their qualifications. 6. Lack of proper mortgage against loan. 7. Lack of real loanee. 8. Insufficient fund of the bank. 9. Lack of sound guarantor. 10.Sometime the loan-less recovery show their unwillingness to pay the loan in order to have various advantages form the government. 11.If loan disbursement is not in accurate time, borrowers will not be able to use that loan in particular sector, As a result loan recovery will be impossible. 12.The notice are not issued just time, for this reason some time the recovery of loan is disturbed. 13.Lack of proper planning and inefficient-fund management. 14.Lack of proper supervision. 15.Loan is not paid through proper assessment. 6.3. Recommendation: In this study, I have tried to observe various aspects of loan disbursement and recovery system with different analysis of this bank. For survival, a bank should run in the profitable basis. A bank cant make profit due to various problems mentioned before. These aged problems could not be solved overnight. However, I have mentioned some recommendations here to be followed in order to get relief from acute problems. Recommendations are given below: As the student of Finance and Banking, I can say strongly that projects viability depends on only its sound analysis. If analysis of a project is accurate, it will provide profits. So, before disbursement of loan, the bank should be sure that the conducted analysis is accurate.
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 Most of the loans become default loan just after disbursement. Its prime ground is lack of supervision. Here, it is mentionable that supervision means personal contact with the loanee. Most of the loanees are illiterate, if they are well supervised, they must show their responsibility of repaying the loan. So, supervision is a vital factor. The bank should be more needful in recovery of classified and unclassified loan. Deposit mobilizations have to be increased. In Bangladesh, political influence a banks decision about giving loan. To avoid such political pressure, the bank could keep a written loan policy. Training makes a man perfect. The staff could be given training about their respective business at regular basis. In the age of modern technology, the bank should be computerized to ease the accounting process and increase customer services. Loan classification and provision should be revised on the basis of national economic condition. As a specialized bank, RAKUB have to recruit efficient personnel Last but not least, the bank should strictly follow the various programs adopted by RAKUB.

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6.4. Conclusion: A bank is basically a service-oriented institution. It acts in financial inter-mediation process. Banks collect deposits at low rate of interest and lend the collected money at a higher rate of interest to cover it operational expenses and then make profit. In this process, if loans are stuck-up, the entire process gets jeopardized. This branch has not yet produced better performance in recovering those loans given to small borrowers because this branch started its journey from 20th November, 2011 and will start recovery from July, 2012. The branch should take care of this very important aspect of banking for its smooth survival in the coming days.

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