Professional Documents
Culture Documents
Topic
SME LOAN A Case study on Jamuna Bank Limited, Savar Branch, Savar, Dhaka
Chapter-2
Introduction
1.4.2 Limitation:
Although the officials were so busy, they gave me wholehearted cooperation in the time of internship also in preparing this report. It was such a nice experience I have gathered from JBL. But I have faced the following that may be terns as die limitations of the study.
9. The lack of intellectual thought and analytical ability to make it a perfect one. 10. Finally, the length of this internship program (12 Weeks) is not sufficient conduct a detailed study on the subject of research.
Current Account:
Current Account and Saving Account are more of less same. The basic difference between a current account and a savings account is that current account does not calculate any interest.
Fixed Deposit:
JBL offers FDR for different amounts at different interest rates for different period of time. In the receipt holders name and other particulars are kept as secrete documents on the bank.
Credit:
The word Credit is derived from Latin word Credo, which means, I believe. It is usually defined as ones ability to buy with a promise to pay.
Overdraft:
The overdraft is always allowed on a special A/C operated upon cheques. The customers may be allowed a certain limit up to which he can overdraw within a specific period of time.
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Letter of Credit:
Issuing letter of credit is one of the important services for JBL. A letter of credit is a document authorizing by the bank for a specific amount of money. Two types of L/C is provided by JBL
Hire Purchase:
The feature of hire purchase is that borrower pays his remaining amount over a period of 6 month to 2 years & some times more than 2 years.
Lease Finance:
Jamuna bank Ltd. is the first private commercial bank in Bangladesh who introduced lease finance facilities for funding requirement of valued customers & growth of their business.
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Chapter- 3
Overview of Jamuna Bank Limited
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Jamuna Bank Limited is a highly capitalized new generation Bank with an Authorized Capital and Paid-up Capita of Tk. 4000.00 million and Tk.1622.00 million respectively. Currently the Bank has 61(sixty one) branches- 27 branches in Dhaka, 10 branches in Chittagong, 09 branches in Rajshahi, 03 branches in Sylhet, 02 branches in Comilla and 01 in Barisal. Very soon more 03 branches will be opened.
Jamuna Bank Limited is a fast growing private sector bank in Bangladesh. This is a third generation private commercial bank. It has created a new horizon of its own in the banking arena of Bangladesh in terms of service to the customers. The bank has expanded and consolidated its customer base in both of its core businesses and retail banking.
The Bank undertakes all types of banking transactions to support the development of trade and commerce in the country. JBLs services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units.
To provide clientele services in respect of international trade it has established wide correspondent banking relationship with local and foreign banks covering major trade and financial centers at home and abroad.
Jamuna Bank Limited is operating branches on both conventional interest based banking and Islamic Shariah Principle based Banking. The Bank starts Islamic Shariah based banking by opening an Islamic Banking Branch at Nayabazar, Dhaka. The Islamic Banking operations are completely separate from the conventional banking.
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To train and develop all employees and provide them adequate resources so that customers' need be reasonably addressed. To promote organizational effectiveness by openly communicating company plans, policies, practices and procedures to employees in a timely fashion To cultivate a working environment that fosters positive motivation for improved performance
Customer Focus Integrity Teamwork Respect for the Individual Quality Responsible Citizenship
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Legal Form
Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994 with its Head Office at Printers Building (2nd floor), 5 Rajuk Avenue, and Dhaka-1000. 3rd June 2001 3, Dilkusha C/A, Dhaka - 1000, Bangladesh 9555141,Ext.130 Fax: 880-2-9565762 JAMUBDDH jamunabk@bdcom.com www.jamunabankltd.com M/S Howladar Yunus & Co. Chartered Accountants Howladar, Yunus & Co. Chartered Accountants
Date of Commencement : Registered Office Telephone Tele-fax SWIFT Code E-mail Web Page Auditors : : : : : : :
Tax Consultant
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: :
Managing Director (MD) Deputy Managing Director (DMD) Senior Executive Vice President (SEVP) Executive Vice President (EVP) Senior Executive Vice President (SEVP) Senior Executive Vice President (SEVP) Executive Vice President (EVP)
SVP (HRD)
SVP
SVP
VP
VP
SAVP
SAVP
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Account is opened
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The authorized officer scrutinizes the introduction and examines the documents submitted.
After depositing the cash one cheque book & pay-in-slip book is issued.
Issuance of deposit slip and the deposit must be made in cash. No cheque or draft is acceptable to the Bank.
Requirements:
Passport size photo-2 copies Introducers signature in the a/c opening card Nationality certificate The depositor has to maintain a balance of Tk.1000 Interest rate of this account is 5% fixed.
Individual Current Account. Partnership Current Account Proprietorship Current Account Limited Company Current Account
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of 06 years and 10 years respectively. Depositors can take loan up to 90% of their deposit at normal lending rate of interest of the bank. Minimum amount of this scheme is Tk.25,000/-. The rate of interest of DBDS is 12.25% and TBDS is 11.61%. But because of high interest rate, the Bank recently closed this product.
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economic condition, income of the parents at the future time when higher education shall be required. Todays higher education is becoming expired day by day. Parents can get relief and can have peace of mind if they can arrange the necessary fund for higher education for their children. As such, JBL has introduced Education Savings Scheme which offers you an opportunity to build up your cherished fund by monthly deposit of small amount at your affordable capacity or initial lump sum deposit to yield handsome amount on a future date to meet the educational expenses. Under this Scheme you have the different attractive options to avail the future benefit i.e. withdrawal of the total amount accumulated in lump sum or withdrawing monthly benefit to meet educational expense keeping the principal amount intact or to withdraw both principal and accumulated profit monthly for a certain period.
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Textile Spinning, Dyeing / Printing Export Oriented Garments, Sweater. Food & Allied Paper & Paper Products Engineering, Steel Mills Chemical and chemical products etc.
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Wholesale trade Transport Hotels, Restaurants Non Bank Financial Institutions Loan Syndication Project Finance Investment Banking Lease Finance Hire Purchase International Banking Export Finance Import Finance
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JBL International Credit Cards (VISA) allows you flexibility and convenience when you travel internationally. The VISA International card entitles you to exclusive discounts worldwide. Visa Dual (Gold)
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corporate customers. We offer a complete range of Trade Finance services. Our professionals will work with you to develop solutions tailored to meet your requirements, through mobilizing our full range of trade services locally, and drawing on our global resources. We can offer you professional advice on all aspects of International Trade requirements, namely: Issuing, advising and confirming of Documentary Credits. Pre-shipment and post-shipment finance. Negotiation and purchase of Export Bills. Discounting of Bills of Exchange. Collection of Bills. Assist customers to insure all risks. Foreign Currency Dealing etc.
Jamuna Bank Ltd. has a network of branches in Bangladesh and more branches are going to be added to network soon. Remittance services are available at all branches and foreign remittances may be sent to any branch by the remitters favoring their beneficiaries. Remittances are credited to the account of beneficiaries instantly through Electronic Fund Transfer (EFT) mechanism or within shortest possible time. Jamuna Bank Ltd. has correspondent banking relationship with all major banks located in almost all the countries/cities. Expatriate Bangladeshis may send their hard earned foreign currencies through those banks or may contact any renowned banks nearby (where they reside/work) to send their money to their dear ones in Bangladesh. To facilitate sending money in Bangladeshi Taka directly, Jamuna Bank Ltd. has Taka Drawing Arrangement with many banks/exchange companies in different countries. The expatriate Bangladeshi may send their money in BDT through the branches/subsidiaries of Jamuna Bank Ltd.
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Facilitating expansion of the existing businesses To improve the banking habit of self employed persons To diversify bank's lending to Small & Medium Enterprises (SME) which are
considered as less risky and help community developments? It may be noted down that the government is also encouraging investment in SME sector.
3.19.2 Categories of eligible business: i. ii. iii. iv. v. vi. vii. viii. ix. x.
Grocery/departmental/whole sale store Confectionary/bakery (owned by the bakers) Stationary shops Cloth materials & small local garment traders Shoe makers/shops PVC & plastic product traders/small manufacturers Tiles/sanitary items retailers Computer/Photostat/Cyber Caf. Electrical & electronic items retailers Pharmacy
Gift shop/cosmetics shops Restaurant/fast food joints Hardwire shops Glass/ceramic retail outlets Sports kit retailers Photo studio Rod, Cement & C.I. Sheet (Tin) Shop Engineering Workshop Fertilizer & Pesticide shop
2) Branch Manager must verify the amount of possession money actually paid before recommending such proposal.
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Shop owner must run the establishment himself, having at least three years of successful business experience ii) Valid lease deed for a minimum period of 03 years up to 05 years iii) Satisfactory conducted deposit account with JBL for minimum 03 months. iv) To deposit the daily sales proceeds in the account maintained with JBL v) Agree to abide by credit rules & regulations of JBL vi) Furnishing net-worth of the applicant/client. vii) Clean CIB viii) The bank reserves the right to accept or reject any application without assigning any reason whatsoever.
ix) The intending borrower shall apply through the letter head of the business firm or through a plain paper requesting the branch manager for sanction of loan under the Shop Finance Scheme
3.19.6 Security:
i)
ii) A tripartite agreement to be signed in between leaseholder/shop owner/Bank- to the effect that the leaseholder cannot rent out or transfer the leased property without the written consent of the Bank. iii) The lease deed between the landlord and the borrower must be duly executed & the original lease deed should be kept in the Bank as part of document. iv) Lease must contain provisions enabling the landlord to forfeit the lease and enable the bank to enforce a right to sell the possession of the shop to liquidate the default debt (if any). v) Letter of disclaimer by the landlord to facilitate the bank to liquidate the default loan (if any) vi) Equal numbers of post dated cheques covering amount of each loan installment
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3.19.7 Insurance:
All borrowing customers' inventory i.e. Stock-in-trade will be insured against Fire, Rsd & other risks with the Bank's mortgage clause cost of which will be borne by the shop owner/client/borrower.
Is Q-cash Secure?
Yes, Q-Cash is fully secure. Q-Cash cardholders can only carry out transactions on QCash ATMs with Personal Identification Numbers (PIN). The PIN is a unique 4-digit
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number that allows you to access your account. You can change your PIN anytime from ATM machine. In case you have lost your card, transactions cannot be done without the PIN.
asset at the predetermined rates and generally in advance. The payments may be made monthly or quarterly. Jamuna Bank Ltd., the highly capitalized private Commercial Bank in Bangladesh has introduced lease finance to facilitate funding requirement of valued customers & growth of their business houses. Lease Items Vehicles like luxury bus, Mini bus, Taxi cabs cars, Pick-up, CNG three wheeler etc. Factory equipment. Medical equipment Machinery for Agro Based Industry Construction equipment Office equipment Generators, Lift & Elevators for commercial place. Sea or River Transport. Computer for IT Education Center.
3.22 SWIFT:
Jamuna Bank Limited is the member of SWIFT (Society for Worldwide Inter-bank Financial Telecommunication). SWIFT is a member owned co-operative, which provides a fast and accurate communication network for financial transactions such as Letters of
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Credit, Fund transfer etc. By becoming a member of SWIFT, the bank has opened up possibilities for uninterrupted connectivity with over 5,700 user institutions in 150 countries around the world. SWIFT No.: JAMUBDDH
Individuals and institutions not resident in Bangladesh shall also be eligible to purchase the BGTBs, with coupon payment and resale/redemption proceeds transferable abroad in foreign currency subject to fulfillment of conditions as mentioned in the Bangladesh Govt. Treasury Bond Rules-2003.
(ii)
3.23.2Loan facility:
JBL offers loan up to 90% of the present value of the bond/other securities against lien of the above instrument for their customers. Interested Financial
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Institutions/Corporations/Insurance Companies/ Individuals are requested to contact the Bank in the following address
Chapter- 4
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Theoretical Discussion
4.1 Credit:
The word Credit is derived from Latin word Credo, which means, I believe. It is usually defined as ones ability to buy with a promise to pay. From a bankers point of view, credit is the confidence of the lender on the ability and willingness of the borrower to repay the debts at a future date. Banks charge a higher interest for loans than the deposit rate given to customers. The difference in rates is the profit for a bank. 80% of a banks profit comes from the interests. Loans and advances comprise a large portion of banks assets and this is the backbone of a banks structure. The strength of a bank is primarily judged by the soundness of its loans and advances. So, the loan and credit department is a very important department of a bank. Credit policy is very important. If a bank takes very strict credit policy, then the amount of loan will be less. If the credit polity is flexible, then the amount of loan will be much. But strict credit policy leads to lesser bad loans. Sometimes, credit policy cannot prevent customers bad intention of not adjusting loans. This is why; strict credit policy is very necessary for every bank for the safety of their investments.
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The customer/ guarantor should own it. In other words, the assets against which banks allow credits are called Securities. Good and strong securities help a bank to take decision about sanctioning credit. It also minimizes the risk. The type of securities offered may be, Government bonds, share, assignment of book debt or bills receivables, raw material and finished goods, fixed deposit receipts, land, factory building and other movable and immovable assets of the borrower. If a borrower becomes unable to adjust his loan, then bank can recover the loan amount by selling securities. That is why the role of securities is very important in credit system.
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profitability. The enterprise must generate sufficient fund for debt and servicing." A customer to whom credit is to be allowed should be far as possible within the command area. . No sanctioning officer can sanction any credit to any of his near relatives and to any company where his relatives have financial interest.
Capital: Make sure that the individual or the company they are lending has an appropriate level of investment in the company. Collateral: Make sure that there is a second way out of a credit but do not allow that to drive the credit decision. Complacency: Official do not rely on past. They remain alert every time whether any mistake is taking place or not. Carelessness: They believe that documentation, follow up and consistent monitoring is essential to high quality loan portfolio. Communication: They share credit objectives and credit decision making both vertically and laterally within the bank. Contingencies: Make sure that they understand the risk, particularly the downside possibilities and that they structure and price the loan consistently with the understanding. Competition: They do not get swept away by what others are doing
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Strength
It analyzes the inherent of the company, resilience, and brand loyalty, endowment etc.
Weakness
This analyzes the inherent weakness of a company, such as management, supply risk etc.
Opportunity
This analyzes the opportunity, which will be available to a company in a near future, such as tax incentives export credit facilities etc.
Threat
It analyzes the threats, which the company may face such as legal barriers, withdrawals of tax exemption and international law; withdraw of most favorable nation (MFN) and GSP facilities etc.
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However, if the magnitude of the proposal is beyond the delegated business power of the branch they forward it to the Head Office with recommendation for sanction or approval. On receiving the proposal, the Credit Division of Head Office places the proposal in the Head Office Credit Committee. The committee further analyzes proposals critically and if agree in principle they sanction the same as per delegated business power. Again if the merit and magnitude of the proposal is beyond the delegated business power of the Head Office Credit Committee or Managing Director they forward proposal to the Board of the Bank with recommendation for approval. If the proposal is found unviable at the branch level they decline the same from their desk. In the same way, proposals are also declined from the Head Office Credit Committee and from Board if it is not feasible.
Branch Office
Customer Credit Officer
Credit Committee
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4.4.10 Securities:
It is essentia1 that the proposals define clearly the purpose of the facility, the sources of repayment, the agreed repayment schedule, the value of security (land, machinery, security papers, bond, sanchaypatra etc.) and the customer relationships consideration implicit in, the credit division. Where the security is to be accepted as collateral for the facility all documentation relating to the security shall be in the approved from. All approval procedures and required documentation shall be completed and all securities shall be place prior to the disbursement of the facility. For creation of mortgage on the property-JBL requires the following documents: Original sale deed favoring owner of the land Certified copy of the sale deed of the previous owner of the same property. Duplicate Carbon Receipt (DCR) Up to date rent receipt and Municipal Tax Receipt Certified copy of C.S.S A. and R.S. Khatians Up to date Non-Encumbrance Certificate Valuation Certificate Clearance from RAJUK/WORKS MINISTRY
RAJUK approved plan of the building with the approval letter Photograph of the property from three different angles and the owner of the property Site Plan/ Mouza Map Board Resolution for mortgaging property if the same belongs to any Limited Company. The borrower is requested to submit the above-mentioned papers in original for verification by the Bank lawyer and creation on the property intended to mortgage against advance.
4.4.11 Documentation:
A document is a written statement of facts of proof or evidence arising out of particular transaction, which on placement may bind the parties there to answerable and liable to the law for satisfaction of the charge in question. The execution of documents in proper form and according to the requirements of the law is known as documentation. The documentation does establish a legal relationship between the lending bank and the borrower. The terms and conditions of loans and advances, the securities charged and the repayment schedule are recorded in writing. Proper documentation is necessary to safeguard the future interest of the bank. Documents are necessary for the acknowledgement of the debt by the borrower and
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charging of securities to the bank by him. Proper and correct documentation is essential not only for the safety of advance but also necessary for taking legal action against the debtors in case of non-repayment of dues. Depending on the types of loans and advances different documents are required. Such as 4.4.11.1 Documentation of Loan: Demand of Promissory (D.P) Note Letter of partnership (in case of partnership concern) or resolution of the board of Directors (in case of Limited concern) Letter of Agreement Letter of Disbursement. Letter of Pledge (in case of pledge of goods) Letter of Hypothecation (in case of hypothecation of goods) Trust Receipt (in case-of L TR facility) Letter of Lien and Ownership (in case of advance against share) Letter of Lien for Packing Credits (in case of packing credits) Letter of Lien (in case of advance against FOR) Letter of Lien and transfer authority (in case of advance against PSP, SSP etc) Legal documents for mortgage of the property (as drafted by legal advisor)
4.4.11.2 Documentation of Overdraft: Demand of Promissory (D.P) Note Letter of partnership (in case of partnership concern) or resolution of the board of Directors (in case of Limited concern) Letter of Agreement Letter of Continuity Letter of Lien Legal documents for mortgage of the property (as drafted by legal advisor) 4.4.11.3 Documentation of Cash Credit: Demand of Promissory (D.P) Note Letter of partnership (in case of partnership concern) or resolution of the board of Directors (in case of Limited Concern) Letter of Agreement Letter of Continuity Letter of Pledge (in case of pledge of goods) Letter of Hypothecation (in case of hypothecation of goods)
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4.4.11.4 Documentation of Bills Purchased: Demand of Promissory (D.P) Note Letter of partnership or resolution of the board of Directors Letter of Agreement Letter of Hypothecation of Bill All required Documents as mentioned before should be obtained before any loan is disbursed. Disbursed of any credit facility requires approval of the component authority that should ensure before exercising such delegated authority that all the required documentation have been completed. Credit Facilities Extended by JBL Classification of Loan The main functions of a commercial bank are two: 1) to take deposit and 2) to make advance. Making advance is the most important function of a bank. This depends on the profitability of the bank. Moreover, Bank make advance out of the deposits of the public CC Hypo (Cash Credit Hypo) which are payable at demand. A Commercial Bank makes advances to different sectors CC Pledge (Cash Credit Pledge) for different purpose i.e. financing of Trade and Commerce, Export and Import, Overdraft (Secured Overdraft) Industries, Agriculture, Transport, House-Building etc.
Continuous Loan
LTR (Loan Against Trust Receipt) There are various kinds of loan Jamuna Bank Ltd. Demand Loan ABP (BTBL/C) Demand Loan ABP (D/P;L/C)
Term Loan
Hire Purchase Loans (General) Lease Finance Personal loan for women Consumer Credit Scheme
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SME
4.5.1.3 Overdrafts:
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The overdraft is always allowed on a special A/C operated upon cheques. The customers may be allowed a certain limit up to which he can overdraw within a specific period of time. In an overdraft A/C withdrawal and deposit can be made any number of times within the limit and prescribed period. Interested is calculated and charged only on the actual debit balances on daily product basis. Overdrafts are three types 1. Temporary overdraft (TOD) 2. Clean overdraft (COD) 3. Secured overdraft (SOD) 3.1 Temporary overdraft (TOD): Temporary overdraft (TOD) is allowed to honor cheques which is future dated for the valued client without any prior arrangement. This kind of facilities is provided for short time. 3.2 Clean overdraft (COD): Sometimes Overdrafts are allowed with no other security except personal security of borrowers. 3.3 SOD Secured overdraft (SOD); When Overdrafts are allowed against security is known as Secured Overdraft (SOD). Purposes: To businessman for expansion of their business. To contractors and suppliers for carrying on construction works and supply orders. Securities: Lien on fixed/term deposits. Shares/Debentures /Protiraksha Sanchay Patra Insurance Policy. Mortgage on real estates and properties. Interest Rate: 12 % per annum or the interest rate paid to the customers with adding 2.5%.
4.5.2.1 Payment against Document (PAD): Under this arrangement, credit is allowed against documents for import of goods. These kinds of loans are provided after L/C. Eligibility PAD is generally granted to importer for import of goods. Interest Rate: 16 % per annum
4.5.2.2 Internal Bills Purchased (IBP): This kind of arrangements is allowed for purchase of internal bills. Some times Contractors needs money to his liquidity problem. To avoid this kind of situation they want to take loan against their future dated cheque. Eligibility Internal Bills Purchased is usually provided for future dated cheque against some service charge before 21days of the maturity date.
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Interest Rate: 16 % per annum 4.5.2.5 Local/Foreign Documentary Bills Purchased (LDBP/FDBP): Under this arrangement, credit is allowed for exporter for exportable goods. Banks provide all the agency commission. Its payback period is 21 days. Eligibility LDBP/FDBP is generally granted to exporter for exportation of goods. Interest Rate: 16 % per annum
4.5.2.6 Letter of Credit: Issuing letter of credit is one of the important services for JBL. A letter of credit is a document authorizing by the bank for a specific amount of money. Two types of L/C is provided by JBL. Demand Loan ABP (Back To Back L/C) Demand Loan ABP (Deferred Payment; L/C) Eligibility: This facility is given to the exporter/manufacturer/producer. Terms and Conditions: It should stipulate the name of the loan/credit/grant. It should bear the name of the designed bank. Item mentioned in the LCA form must contain with the permissible item. Commission: 0.5% per quarter.
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4.5.3.1 Hire Purchase: The feature of hire purchase is that borrower pays his remaining amount over a period of 6 month to 2 years & some times more than 2 years. For this kind of credit the goods, which has been purchased, registered to the bank as owner. And after end of final payment goods are registered to owner formally. Eligibility Hire purchase facility is allowed to those people who have either fixed source of income or desire to pay it in lump sum. Interest Rate: 16 % per annum
4.5.3.2 Loans (General); When an advance is made in a lump sum repayable either in fixed monthly installment or in lump sum and no subsequent debit is ordinarily allowed except by way in interest and incidental charges etc. This is loans (general). Loan is allowed for a single purpose where the entire amount may be required at a time or in a number of installments within a period of short Spam. After disbursement of the entire loan amount, there will be only repayment made by the borrower. Loan once repaid in full or in part cannot be drawn again by the borrower. Entire amount of the loan A/C in the name of the customer and is paid to him through his SB/CD A/C. Sometimes loan amount are disbursed in cash. This loan is repayable within few months or few years. Securities: 1. Lien on fixed/term deposits. 2. Shares/Debentures/Protiraksha Sanchay Patra 3. Insurance Policy 4. Mortgaze of Real estates and properties 5. Hypothecation of stock/Stock/Machinery. Interest Rate: 16 % per annum
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Jamuna bank Ltd. is the first private commercial bank in Bangladesh who introduced lease finance facilities for funding requirement of valued customers & growth of their business. Lease Items Vehicles like luxury bus, Mini bus, Taxi Cabs Cars, Pick-Up Van Etc. Factory equipments. Medical equipments. Machinery for agro based industry. Construction and office equipment. Sea or river transport and computer for IT education center.
Sectors
Vehicles like luxury bus, Mini bus, Taxi Cabs Cars, Pick-Up Van Etc Factory equipments Medical equipments Construction equipment. Office equipment. Generators, Lift & Elevators for Commercial place Sea or river transport Computer for IT education center Machinery for agro based industry
Maximum Limit: 70% of acquisition cost. Security /Collaterals: The following securities are acceptable. Ownership of leased assets before the period of loan adjustment. Collateral securities in the form of land & building /Fixed Deposits/Other cash collateral /Wage Earners Development Bond having liquidation value covering at least 100% amount of finance.
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Deposit of A category shares, National Savings Certificates, ICB Unit Certificates, assignment of life insurance policies, Bank Guarantee also be allowed as collateral securities. Creation of charge of fixed assets of the existing industrial units requiring BMRE. Creation of charge on the existing vehicle will also be acceptable as securities.
Charges: Bank charges are modest and competitive. Lease Deposit: Before disbursement of lease finance, the lessee shall have to deposit 3 months rentals in advance, which will be adjusted at the end of the lease period. Grace Period: For capital machinery and equipment, maximum grace period of 6 (six) months may be allowed for installation/commercial production. Payment Date: Rental payments shall be made every month and there shall be three payment dates as detailed below. If lease executed Between 1st to 10th........ 5th of subsequent months Between 11th to 20th........ 15th of subsequent months After 20th....................... 25th of subsequent months
Insurance Coverage:
The vehicle /Equipment /Lease asset shall have to be covered by a comprehensive insurance policy throughout the whole lease term at lessees own cost in the name of Jamuna Bank Limited. The premium shall be on account of lessee. Repair and Maintenance of Leased items: The lessee is obliged to maintain the vehicle/Equipment in good working order and is solely responsible for any loss or damage as long as it is in his possession. Repair and maintenance cost for taking care of normal wear and tear and keeping it in good running condition during the lease period shall be the responsibility of lessee.
Transfer price/Lease Renewal Rental: On final adjustment of the lease finance, the lessee may have an option to purchase the equipment at 5% of the lease finance. Besides the above option, the lessee may renew the lease on year-to-year basis or return the equipment to the bank.
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industry in the economy, use of skill & technology in any country small business plays an important role which none of the concerned people dare to undermine though small in size but small business and their entrepreneurs are big with large potentiality. Jamuna Bank limited has also launched this SME policy for small businesses. Bangladesh Bank Provide BRPD Circular No. 07, dated 03.11.04 has given prudential regulatory guidelines for Small Enterprise Financing with the advice to the commercial banks to implement the same. The role of Small and Medium Enterprises is very crucial in the economic development of the country. SME plays the vital role for employment generation, particularly self-employment by making significant contribution of 25% to GDP.. As a part of commitment, JBL may substantially contribute to the socioeconomic development of the country providing financial support to the Small and Medium Enterprise sector. In spite of the importance of the SME, the entrepreneurs in this sector are facing constraints in access to institutional credit particularly from banking institutions. Lack of access to credit is considered as one of the most serious impediments for growth of the SME sector. The main reasons for credit constraints are the complex and cumbersome lending procedures and traditional collateral requirements of the banks. The finance in this sector requires constant, intensive and close supervision and monitoring on the part of the bank. Traditionally the Banks do not usually take interest in this sector since the loan amount is small, absence of acceptable collateral security and cost of supervision. The scope of investment of Bank is gradually going to be limited due to stiff competition and small economy compared to large numbers of Banks. But the SME segment is still almost virgin, untapped and uncovered by institutional finance and as such there is ample scope and good opportunity for investment so as to take the advantage to increase the portfolio providing a viable and vast lending outlet for the bank. Effective rate of return on SME Financing is comparatively higher over the large loan because of lower bargaining strength of the customers. Under SME it is easier to recover banks money by selling/foreclosing the security as the customers have not that much strength and influence to face court case unlike big customers.
It is more comfortable for the bank if the finance to SME is given in the form of term loan. Because in case of term loan, the money is recovered gradually by installments reducing the outstanding and full adjustment within the validity of
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the limit enabling more recycling of banks funds. But the continuous loan is perpetual in nature and never-ending process. If the customer falls into crisis, it is very difficult to recover the loan. As per guidelines of Bangladesh Bank higher provision shall have to be made for SME loans. A general provision @ 2% is to be maintained on the outstanding SME loans, which is 1% for other loans. Unlike others credits, there is 100% refinance facility from Bangladesh Bank at bank rate i.e. presently 5%. However, the facility shall be available only for term loans. And as such, JBL may prefer term loans to continuous loans.
4.5.6.1 Establishment of small Enterprise unit: The concept of managing Core Risk in banking is the segregation and separation of the marketing/sales function from Approval/Risk Management where administration
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functions will be under operations umbrella. With this end in view, a separate risk management capacity to be established in the credit division, of JBL Head Office for the purpose of Small Enterprise finance/business. Small Enterprise Unit shall be headed by a senior level executive at H.O. Bank shall put in place efficient computer based MIS to effectively cater to the needs of small Enterprise financing portfolio. The following chart represents the preferred management structure at Head Office level:
Managing Director
Deputy Managing Director
Head of Credit
4.5.6.2 Definition of Small Enterprise: Small Enterprise (SE) means an entity; ideally not a public limited company does not employ more than 60 persons (if it is a trading concern) and 30 persons (if it is a service concern) and also fulfills the following criteria: a) A service concern with total assests at cost excluding land and building from tk.50, 000 to tk.30.00 lac. b) A trading concern with total assests at cost excluding land and building from tk. 50, 000 to tk.1.00 crore.
4.5.6.3 Customer segment: Initially, Small Enterprise located within the accessible area of JBL branches will be the targeted areas under this program. The entrepreneurs should have an existing profitable business or a viable business plan.
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I. Small Enterprise financing, like other credit facilities must be subject to the Banks risk management process setup for this particular business. The process may include identifying sources of repayment assessing customer ability to repay, expected future cash flows, his/her past dealings with the bank The net worth and information obtained from a Credit Information Bureau (CIB) of Bangladesh Bank. II. At the time of granting facility under various modes of SME, a written declaration shall be obtained from the borrower divulging details of various facilities already obtained from other institutions to ensure that the total exposure in relation to the repayment capacity of the customer does not exceed the reasonable limits as laid down in the approved policies of the bank as well as to help avoid exposure having multiple facilities.
Nationality:
SME firm/company must be Registered and shared owned by Bangladeshis Application must be 100% private owned Principal place of business must be in Bangladesh.
Age limit:
Age range must be between 20years to 60 years.
4.5.6.4 Purposes: Grocery/departmental/whole sale store Confectionary/bakery (owned by the bakers) Stationary shops
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Cloth materials & small local garment traders Shoe makers/shops PVC & plastic product traders/small manufacturers Tiles/sanitary items retailers Computer/Photostat/Cyber Caf. Electrical & electronic items retailers Pharmacy Gift shop/cosmetics shops Restaurant/fast food joints Hardwire shops Glass/ceramic retail outlets Sports kit retailers Photo studio Rod, Cement & C.I. Sheet (Tin) Shop Engineering Workshop Fertilizer & Pesticide shop
Limit on clean facility for tk.2 lac to below tk.10 lac: In order to facilitate growth of smaller loans, banks are free to determine security requirements for loan below tk. 10 lac. The branches of this bank also obtain other common documents/charge documents as at $ 1.2.1; 2.5 and others as applicable. Maximum Exposure: As per Bangladesh Banks Guidelines JBL can take the following maximum exposure in SMEs:
Table3: Maximum Exposure limit
% of classified SME advances to total portfolio of SME advances Below 5% Below 10% Below 15% Up to and above 15% Source :( collected from JBL own branches).
Maximum limit 10 times of the equity 6 times of the equity 4 times of the equity Up to the equity
4.5.6.5 Period of SME Loan: I. For continuous Loan/Bai-Murabaha II. For Term Loan/HPSM
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4.5.6.6 Mode of Repayment: a. For continuous loan credit turnover must be equal to the limit amount in a quarter and full and final adjustment within the validity period b. For term loan, repayment to be made by monthly installment and full and final adjustment within the validity period. 4.5.6.7 Loan Documents: Common documents applicable for Proprietorship/Partnership/Limited Company: * Loan Application from duly signed by the customer. Loan Application form should be accompanied by a Borrowers Basic Fact Sheets Basic Fact Sheet under the seal and signature of the borrower. * A written declaration shall be obtained from the borrower divulging details of Various facilities already obtained from other institutions. * Acceptance of the terms and conditions of Sanction Advice. * Trade License. * Photographs of the proprietor / partners / directors duly attested. * Personal net worth statement of the proprietor / partners / directors. * Copy of TIN Certificate. * Short description of the products of the enterprise. * Project Profile (if new project). * Quotation / Intent / Pro-forma Invoice etc (as applicable) * Marketing / distribution system of the company. * Short profile of the proprietor / partners / directors mentioning their business experience / education etc. * Brief description of the management of the company mentioning their educational professional experiences. * Name and address of the sister/allied concerns. * Group Brochure. * Name and address of present bankers. * A latest liability statement of all the business concerns of the Group with other Bank/Financial Institutions (Mentioning-name of business concern name of bank and branch, nature of facility, limit amount, outstanding, Overdue if any etc.) * Credit information Bureau (CIB) report from Bangladesh Bank.
Wherever practical, insurance policy for 110% of the stock value covering potential with banks mortgage clause in joint of the bank and client.
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Certificate of Registration of amendment of charges over the fixed and floating assets of the company duly issued by RSC in case of repeat loan
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or change in terms and condition of sanction advice regarding loan amount, securities etc. Common documents and charge documents as at SL 2.1: 2.5 and others as applicable. Legal Documents:
All documents formalities pertinent to the mortgage of properties are to be examined/ completed by the Pane Lawyer of the bank along with legal opinion.
To process, appraise and analysis the loan proposal the following formats are enclosed herewith: (i) Loan Application Form (ii) Borrowers Basic fact Sheet (iii) Borrowers Credit rating Sheet (iv) Personal network statement. (v) Declaration of liabilities in the name of sister /allied concerns. (vi) Debit authority (for term loan only) (vii) Profile of the client /proprietor /partners /directors (viii) Short description of the products of the enterprise (ix) Declaration of the Borrower regarding liability (x) Information of the guarantor (xi) Irrevocable letter of authority with regard to post dated cheque (xii) Letter of lien and set off over Deposit Accounts /Margin Deposits (xiii) Personal Guarantee (xiv) DP Note (xv) Letter of continuation (xvi) Letter of Disbursement.
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Under this product, if the loan amount is covered by FDR up to 50% of the loan amount and the customer has regular cash-flow to pay installments and deposit of installments by the customer is followed up the loan is likely to be secured and for experienced customers with good past track record who have successfully repaid loan under Double Loan Scheme at least twice business cash flow has grown accordingly, credit facility up to 03 times of the FDR value may be considered. The following formalities should be followed by the SMEs Double Loan1.1: Customer Segment : Any Small and Medium Size Entrepreneur. 1.2: Mode of Finance : Term Loan 1.3: Purpose : a) Capital Investment b) Working Capital Finance 1.4: Experience : Minimum 02 years with successful track records 1.5: Nationality : Bangladeshi 1.6: Age Limit : Between 25 years to 50 years. 1.7: Loan Size : Tk. 2.00 Lac to tk. 50.00 Lac (Depending on requirement and regular source of cash flow to service the loan installment) 1.8: Security / Collateral (Case to Case basis) : a) Loan of FDR; b) Hypothecation of machineries, equipment, vehicles, inventories; c) Personal Guarantee of the spouse(s); d) Personal Guarantee of the person(s); e) Post dated check for each installment and one undated check for full loan value including full interest; f) Any other security as deemed fit on a case to case basis; 1.9: legal documents 1.10: Rate of Interest/Return 1.11: Loan processing fee 1.12: Penal interest/Compensation 1.13: Maximum period of Loan 1.14: Repayment method 1.15: Disbursement mode : as per documentation checklist. : 16% P.A : 1% of the loan amount : 4% P.A on the overdue amount : 05 years : Installment basis : Shall be disbursed in lump-sum/ at a time.
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In most cases, SMEs do not own adjure immovable property that can be accepted by bankers as collateral for loans. Movable assets that the SME can provide are rarely accepted as principal security for loans. But business is an ongoing process and to survive in the market, working capital is essential. For that in order to boost SME financing JBL a term loan product is designed for SME customers named as Flexible Working Capital Loan. This facility shall be provided to those who have Proven track record Experience Adequate cash flow to repay installment Reputation in respect of fulfilling commitment. The following formalities should be followed by the Flexible Working Capital loan SMEs7.1: Customer Segment : Any Small and Medium Size Entrepreneur. 7.2: Mode of Finance : Term Loan 7.3: Purpose : To meet Flexible Working Capital Requirement. 7.4: Experience : Minimum 02 years with successful track records 7.5: Nationality : Bangladeshi 7.6: Age Limit : Between 25 years to 50 years. 7.7: Loan Size : Tk. 2.00 Lac to tk. 50.00 Lac (Depending on requirement and regular source of cash flow to service the loan installment) 7.8: Security / Collateral (Case to Case basis) : a) Registered mortgaged of property/Assignment of possession; b) Hypothecation of machineries, equipment, vehicles, inventories; c) Personal Guarantee of the spouse(s); d) Personal Guarantee of the person(s); 7.9: legal documents : As per documentation checklist. 7.10: Rate of Interest/Return : 16% P.A 7.11: Loan processing fee : 1% of the loan amount 7.12: Penal interest/Compensation : 4% P.A on the overdue amount 7.13: Maximum period of Loan : 05 years 7.14: Repayment method : By Installment or in lump sump within the loan period. 7.15: Disbursement mode : Shall be disbursed in lump-sump/at a time.
From primitive times, this region is famous for its different herbal medicine products. There are many entrepreneurs in our country who are engaged in herbal tree plantation, producing different herbal products and also exporting a significant quantity in abroad. For that this sector is known as one of the profitable sector in the country. But in most cases, these entrepreneurs are suffering from capital shortage. In compliance with Bangladesh Bank Circular NO-ACSPD (Polio) 36/2004/444-479, JBL give emphasis in this sector and designed a term loan product for SMEs engaged in this sector, named as Loan for Herbal Industry. The following formalities should be followed by the SMEs Loan for Herbal Industry8.1: Customer Segment : Any Small and Medium Size Entrepreneur. 8.2: Mode of Finance : Term Loan 8.3: Purpose : a) Fixed Investment b) Working Capital 8.4: Experience : Minimum 02 years with successful track records 8.5: nationality : Bangladeshi 8.6: Age Limit : Between 25 years to 50 years. 8.7: Loan Size : Tk. 2.00 Lac to tk. 50 Lac 8.8: Security / Collateral (Case to Case basis) : a) Registered mortgage of property; b) Hypothecation of machineries, equipment, vehicles, inventories; c) Personal Guarantee of the spouse(s); d) Personal Guarantee of the person(s); e) Post dated check for each installment and one undated check for full loan value including full interest; f) Any other security as deemed fit on a case to case basis; 8.9: legal documents : As per documentation checklist. 8.10: Rate of Interest/Return : 16% P.A 8.11: Loan processing fee : 1% of the loan amount 8.12: Penal interest/Compensation : 4% P.A on the overdue amount 8.13: Maximum period of Loan : 05 years 8.14: Repayment method : Installment basis 8.15: Disbursement mode : Shall be disbursed in lump-sum/ at a time.
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4.9 Interest Rates along with other conditions charged to different categories of loans according to the policy of Jamuna Bank Ltd.:
Personal Loan:
Rate of Interest: Processing Fee: VAT: Late payment interest: Early settlement: 13%-15% p.a. 1.50% of Loan amount. 15% on Processing fee. 48% p.a. (4% p.m.) on the arrear installment amount or BDT 200 (whichever is higher). i. A fee @ 0.50% on the settlement amount (excluding VAT). ii. Payment of at least 3 (three) equated monthly installments in case of partial settlement. BDT 500.
Car Loan:
Rate of Interest: 16% p.a.
Home loan:
Rate of Interest: 13% p.a.
Lease Finance:
Rate of Interest: Risk Fund: 15% p.a. 1% of lease amount.
Bank Guarantee:
Cash Margin: Commission: 12% 0.40% for 1st Quarter; 0.30% from Next Quarter.
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BDT 500.
In case of Overdue/ Excess, over 2% penal interest to be charged on outstanding loan amount. Margin on L/C & L/G: I. 10% margin, i.e. 5% at the time of opening L/C by keeping lien of FDR / STD accounts of sister concerns and rest 5% in the form of cash during the creation of LTR. II. 10% Cash margin in case of issuing B.G. Commission on L/C & I. 0.30% for 1st Quarter and 0.20% for subsequent L/G: quarters for L/C. II. 0.35% per quarter on guarantee amount in case of Bank Guarantee. Retirement of By creating LTR upto 90% of CFR value if room is available / Documents: in cash. Repayment: a. From sale proceeds / in cash within the validity. b. Return of Original Bank Guarantee.
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the repayment of which is irregular. Banks find out these loans and give special treatment to these loans.
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Taka in million
14 00 12 00 10 00 8 00 6 00 4 00 2 00 0 200 8 2 7 00 Doubtful 20 06 B or loss ad
substandard
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Taka in million 2007 2008 824.21 405.04 89.11 1040.20 865.82 479.44
In 2008 Jamuna bank Limited registered an operating profit of Tk. 1040.20 million as against Tk. 308.83 million of 2007 recording an excellent growth rate of 35.98 percent in the year. After keeping provision against Loans & Advances in line with the instruction of Bangladesh Bank BCD Circular No.20 of 1994 BCD Circular No. 12 of 1995 and BRPD Circular No.16 of 1998,the profit before tax stood at Tk.363.31 million in 2007
against Tk.273.70 million of 2006 registering a growth rate of 32.74 percent. Provision against Tax for the year kept for Tk. 163.49 million and the net profit stood at Tk.199.82 million (Profit after tax & provision).
Bank deals with others asset to earn profit. Deposit is the most important source of bank fund. 90% of banks fund is collected from deposit. Deposit is always been termed as the life-blood of a commercial Bank. In the year 2008, Due to many uncertainties on economic front, significant pressures on economic performance and among others, the adverse impact of devastating flood in JulySeptember and among others, the adverse impact of devastating flood in July-September 2007, declining trend in interest rates, Jamuna Bank Limited was able to increases its customers confidence and mobilized a total deposit of Tk. 14,454.13 million registering a growth of 38, 31 percent over 2004. The total deposit position of the bank was Tk 10,450.16 million in 2004.Efforts are being made for augmentation of low cost deposit in order to accommodate good customer at a competitive price.
Taka in million
Particulars Deposits Deposit Growth rate 2004 1940.12
-
2005 3251.9
67.61%
2006 6614.06
103.39%
2007 10450.16
57.99%
2008 14454.13
38.31%
4.13.1 Deposit:
Deposit chart is given below. (Year 2004-2008)
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Deposit
30000 25000 20000 15000 10000 5000 0 2004 2005 2006 2007 10450 14454 17285 20924
27308
2008
15% 6% 2% 5%
12%
60%
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Table: Loans & Advances Taka in million Year/Particulars Loans & Advances Growth Rate 2004 349.21 N/A 2005 1514.28 333.6% 2006 3239.52 113.93% 2007 6722.8 107.52% 2008 11011.83 63.79%
Advance s
12000 10000 8000 6000 4000 2000 0 2004 2005 2006 Year 2007
Taka in Million
2008
In FY05 after adverse impact of devastation flood and declining trend in interest rate JBL, continued to explore its area of credit and was successful to build up a sizable quantum of credit, which stood at tk.11, 011.83 million as on 31.12.2005, registered an overall increase by 63.80 percent over 2006. The total credit as on 31 st December 2008 was Tk.6, 722.81 million. In compliance to regulatory requirement and to avoid risk of single industry or large loan concentration and to maintain the Banks credit excellence relating to proper risk management, yield exposure, tenor, collateral security proper valuation etc. the credit portfolio of JBL was further diversified. JBLs credit facilities mainly concentrated on Trade Finance, Agriculture and related sector, project finance, wholesale and retail trading, service sector, transport sector ,hospital, small &medium entrepreneurs.
Graph: Investment
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Invesrme nts
2500 2000 1500 1000 500 0 2005 2006 Year 2007
Taka in Million
2008
In December 2008s the investment was Tk.2037.87 million, growth rate 75.12 percent over Tk 1163.70 million of December 2007. The investment portfolio comprises Government Treasury Bills of Tk. 630.00 million, Treasury Bonds of Tk 875.00 million Prize Bonds, primary shares, Zero coupon bonds etc. JBL is one of the perference shareholders of Aftab Automobiles LTD. Amounting Tk.50.00 million. The bank also invested in two shares amounting Tk.2.00million of Central Depository system.
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CREDIT RISK
Financial Risk
Management Risk
Security Risk
Relationship Risk
Leverage
Experience
Liquidity
Succession
Team Work
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Chapter- 5
Analysis and Findings
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BEP =
Activity Ratio: i. Inventory turnover Ratio ii. Debtors/Receivable turnover Ratio iii. Total asset turnover Ratio etc.
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Current Ratio= Current Asset/Current Liabilities Debt-Equity Ratio= Total Liabilities/Total Stockholders Equity Return on Equity= Net income available to common stockholders/Average common stockholders equity Profit per branch Ratio=Net profit after tax/ No. of Branch
0.22928
0.4844
0.78575
19.8932186
21.2148
20.6382
0.24756
0.256788
0.13546
8687829.
8208052.105
4076194.733
Spread Ratio= (Interest Income-Interest expense)/ Wording fund Profit per Employee Ratio=Net profit after tax/ No. of Employee
0.0195044
0.02062737
0.075395
380609.678
348888.120
194722.678
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5.8 Rationale:
Credit Rating Information and Services Limited (CRISL) upgrades long term credit rating of Jamuna Bank Limited (JBL) to A- (pronounced as single A minus ) from BBB+ (pronounced as triple B plus) and reaffirms short term rating to ST-3 based on financials up to FY2008 and other relevant qualitative and quantitative information. The above rating is on the basis of banks good fundamentals such as good financial performance, good asset quality, above average capital adequacy, increase in internal capital generation, diversified product lines etc.
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However, the above fundamentals, to some extent, are constrained by increase in operating cost compared to operating income, high cost of fund, limited delegation, moderate credit risk management, moderate corporate governance, dependence on term deposit etc. Banks rated in this category are adjudged to offer adequate safety for timely repayment of financial obligations. This level of rating indicates a banking entity with an adequate credit profile. Risk factors are more variable and greater in periods of economic stress than those rated in the higher categories. Short term rating indicates good certainty of timely payment. Liquidity factors and company fundamentals are sound. Although ongoing funding needs may enlarge total financing requirements, access to capital markets is good. Risk factors are small. CRISL also placed the bank in Stable Outlook in consideration of its existing fundamentals and steady business growth. Overall financial performance of the bank was good in 2008. Pre-tax profit of JBL rose to Tk.865.82 million in 2008 from Tk.405.04 million in 2007 and net profit after tax increased noticeably to Tk.479.44 million in 2008 from Tk. 89.11 million in 2007. ROAA rose to 2.98% in 2008 from 1.74% in 2007 against the 3.19% of peer average. Similarly, ROAE of JBL significantly increased to 45.36% in 2008 from 25.17% in 2007. The asset quality of the JBL improved in 2008 over last year. Total NPL declined to Tk.598.31 million in 2008 from Tk.840.34 million in 2007. Gross NPL ratio fell considerably to 2.84% in 2008 from 5.06% in 2007. Similarly, the Net NPL ratio declined to 1.11% in 2008 from 1.28% in 2007. Gross NPL coverage ratio rose to 112.88% in 2008 from 98.19% in 2007. Overall capital adequacy of the bank was above average during 2008. Risk Weighted Capital Adequacy Ratio stood at 11.91% in 2008 comprising 10.39% of core capital and 1.52% supplementary capital. Internal rate of capital generation of the bank significantly increased to 26.29% in 2008 compared to 8.79% in 2007. The above increase was due to the substantial increase in profit. Leverage ratio improved to 13.65 times in 2008 from 14.94 times in 2007. Shareholders fund to total asset rose to 6.83% in 2008 from 6.27% in 2007.
Overall operating efficiency of the bank declined in 2008. As growth of operating expense was higher compared to growth of operating income, efficiency ratio rose to 40.64% in 2008 from 37.96% in 2007. Yield per Tk.100 cost fell to Tk.252.28 in 2008 from Tk.345 in 2007 and against peer average of Tk.299.76.
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JAMUNA Bank has insufficiencies of Authorized Dealer Branch in respect of the total foreign business. Bank has only six branches, which have AD licenses. As a result in total foreign exchange business is very small in respect of total market. Per-shipment inspection certificate should obtain from the exporter of back to back L/C. Because it reduce it fraud and forgery in case of import against master export L/C, but all the time this pre-shipment inspection certificate are not wanted by the bank JBL does not promote itself for catering its services to the public or the business organization.
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Chapter- 6
Conclusion and Recommendations
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6.1Recommendations:
In order to get competitive advantage & to deliver quality service, top management should try to modify the services. For the improvement of the service the following measures should be taken: The Jamuna Bank Ltd. should concentrate more on its deposit products and offer more attractive interest rates than those offered by any other bank. For customers convenience, JBL should provide more personnel to deliver faster services to their honorable customer. Development of human resources should be ensured to increase efficiency in work. Ensure proper communication system and maintenance of files & machineries should be modernized. More interest should be paid on deposit account so that customers are convinced to deposit their money in bank. Research & Development wing must be more extensive and rich. Effective strategies must be undertaken against defaulter. Project Management must be practiced in case of investing in the project. Feasibility study of the project, project planning, monitoring and evaluation should be undertaken. JBL must have to follow the management functions (from planning to control) strictly in all of their business activities and also operation the bank. Branches should have a separate section to analyze the financial statement for fining its liquidity, profitability & ownership ratios. In JBL job rotation is fully absent. Job rotation is very important to make the all the employees from every department more efficient. Time consumed at service level should be minimized at optimum level. Evaluate customers needs from their perspective and explain logically the shortcomings. Improve office atmosphere to give customers better feeling. Use of effective MIS.
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Bank should not give loans to aged clients. Specifically, client over 55 years of age (in Bangladesh context) should not be given loan. To deliver quality service top management should try to mitigate the gap between customers expectation & employees perception. The Tax Payers Identification Number (TIN) must be made compulsory for applying for the loan. Though it is a norm to submit TIN number by the client, but in many cases, it is ignored. The credit officials must ensure that this TIN number is submitted by the client before the sanctioning of loan
Bank should ensure that if a borrower dies, there are other capable persons who can take charge of the business and keep the business running without any interruption.
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6.2 Conclusion:
The year 2010 was an extraordinary period for Bangladesh because of the challenges faced from the impact of the sudden fall in the share market. Despite the challenges, the year was another successful year for the banking industry in Bangladesh and the bank has managed quite successfully. The bank ended the year with a steady growth and the market share was retained in all areas of operation. The Jamuna Bank Limited is a strong and effective player in the financial system. It is a solid, forward-looking, modern local bank with a record of sound performance. It is a new generation bank. It is committed to provide high quality financial services/products to contribute to the growth of GDP of the country and the growth of industrialization, boosting up export, creating employment opportunity for the educated youth, raising standard of living of limited income group and overall sustainable socioeconomic development of the country. The bank has a vision to be the best private commercial bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management, etc. It is now one of the top most profitable private commercial bank in the country. The success of the scheme will depend on personal initiatives drive supervision 9 SME practices. Planning for the organization is very strong. Very careful about careful strategic selection. Constant follow up of the credit port folio by the managers. The efficiency of the branch managers, among others, is evaluated on the basis of the extent of success achieved by them in implementing the scheme. So, the scheme is coming into force with immediate effect. The bank is maintaining a well-structured communication from top to bottom level. The work experience in the Jamuna Bank, Foreign Exchange Branch for the period of internship program was very educating. All officers of this branch were cooperative and very friendly in their attitude. Job environment in the Jamuna Bank, Foreign Exchange Branch is excellent. At the same time, the service provided by the officers of this branch is praiseworthy compared to other competitive private and foreign banks.
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As a concluding remark, I would like to say that the bank has been able to attain a leading role with 10 years of success story. But to remain unrivalled among other new generation banks, it has to overcome the new challenges posed by them. They must also emphasize on the domestic scenario more closely and analyze any certain trends and strategies of their competitors. The bank must accept any failures and consider these as a persuasion to pursue future goals instead of looking back on the failures and it must keep looking forward to playing an important role in our economy. As a leading bank of Bangladesh, JBL contributes in the business with promising future. I can hope that JBL can spread their business with increasing various scheme and other utility services.
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References:
Web site of JBL: www.jamunabankbd.com Web site of Bangladesh Bank. Web site of www. google.com Annual reports of Jamuna Bank Limited. Prospectus of Jamuna Bank Limited. A Text Book on Foreign Exchange & Risk Management, Syed Ashraf Ali A Text Book on Bank Management, Bankers Training Handbook.
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Appendices
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APPENDICE-1
Items Total Assets Total CA Fixed Assets-Gross Fixed Assets-Net Inventory Quick Assets
2008-09 2007-08 2006-07 2005-06 2004-05 48730951557 3164662949 3364586725 29569878542 28042365887 9 5 32287661155 2103686101 2504596012 20535634231 18562354654 2 0 681599896 609023043 58564069 524569824 456523654 615781504 313915658 296543558 285620463 265542652 128533532 94422259 117545632 84533426 82455325 3980875046 2627958909 2018742656 1620453238 1200369698
Source: Annual report and Official Records of the Jamuna Bank Ltd. Annual report 2004, 2005, 2006, 2007, 2008.
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(Amount in Taka)
2009 1,621,882,500 3,997,664,705 880,659,405 2008 1,621,882,500 2,444,338,501 392,695,301
48,730,951,55 31,646,629,499 7 42,356,203,56 27,307,936,141 3 32,287,661,15 21,036,861,012 5 14,718,947,86 9,169,471,638 8 76.23% 77.04% 2.20% 923,123,207 710,858,000 465,638,000 11.93% 2.84% 479,437,923 598,309,000 296,285,000 12.49%
34,961,013,26 27,668,329,466 9 13,769,938,28 3,978,300,033 9 16% 16% 1.89% 1,361,492,698 1.51% 666,152,122
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20 21 22
Earning Per Share (2008: Basic EPS, 2007: Adjusted EPS) Net Income Per Share Price Earning Ratio (Times)
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