Section-Five: Off-Farm Activities of RAKUB, PABA Branch: 39: Department of Finance & Banking University of Rajshahi

Section-Five: Off-Farm Activities Of RAKUB, PABA Branch:
5.1
39
Introduction:
Bank plays an important role in Bangladesh economy as financial

intermediaries. The economic policies and program instigated by the
Government plays a vital role in the expansion of the financial
intermediaries. RAKUB has been rendering an important service in the
development of rural economy since its inception. It collects the surplus
income of the people in the form of deposit and it is under taking various
programs to disburse credit among the rural people apart from common
lending activities. Since loan occupies position of the Bank earning, so
the Bank should have to proper recovery of disbursed loan. When a loan
becomes a bad loan, it may threaten the existence of the Bank. So the
Bank must has to achieve its necessary target as much as possible. How
well the Bank is able to disburse loan, recover loan in time, reduce total
loan outstanding and classified loan, are the indicator of loan
performance evaluation.
5.2Objective of the Study:

The specific scope and objectives of the study are as follows:
i)
To find out the total amounts of loan disbursement, loan

recovery and loan outstanding on off-farm activities during
1998-1999 to 2002-2003.
ii)
To observe the relationships among Loan Outstanding,

Loan Disbursement, Loan Recovery, Interest Charges and
Time Period.
iii) To test statistical significance among the above observations.

iv) To give some recommendations.
Department of Finance & Banking
University of Rajshahi.
40
5.3Methodology of the study:

1) Data and Source: Secondary data is taken for the purpose of
this analysis. The data are collected from RAKUB, Paba Branch,
Rajshahi. Data are divided into two groups such as dependent variable
and explanatory variable.
2) Technique of Data Analysis: The collected data are analyzed
graphically and empirically.
Although the main objective is to enrich agricultural activities, the

RAKUB also provides some loans on off-farm activities. RAKUB,
Paba Branch operates these Off-farm loans under the program RSCP and recently introduced and organized SECP program.
5.4.
A Brief on SECP (Small Enterprises Credit Project):
Project Period:
First phase for 5 years starting from January-2002. 2nd phase will start
from 2007 for another 5 years if the 1st phase ends with a success.
Project Area:
During 1st phase the project aims to cover 50 Upazillas of greater
Rajshahi. Bogra &Pabna Districts and during the 2nd phase it will cover
the whole of Rajshahi Division.
Project Objectives:
To alleviate poverty though development of small enterprises by
creating income generating activities of the people.
41
To create additional employment opportunities.

To increase the number of enterprises and expansion of existing
one.
To create and develop woman entrepreneurship.
To create and develop entrepreneur class in the region.
To establish capable and efficient project management.
To provide a positive contribution to the national economy.
Target beneficiaries:
The Target beneficiaries of this project will be the disadvantaged
entrepreneurs who lack access to credit from commercial banks and needs
are higher than that offered by micro credit institutions. The project will
extend technical and financial assistance to the enterprises engaged in ()
Manufacturing and Production, () Trading and () Service providing
activities. The project will be able to develop/finance about 100-150
small enterprises in the first year and about 300-400 in the fifth year in
each Upazilla.
Borrower Selection
a) Eligibility criteria:
Entrepreneur within 18-60 years of age
Goodwill in business and good financial transaction.

42
Good payment.
Honest and socially acceptable person.
Principle/ key person of the enterprise/ business.
Enterprise/ business supported by locally available raw materials.
Enterprise/ business able to create employment opportunities.
Enterprise/ business having scope to generate more income.
b) Ineligibility criteria:
The following person / enterprise/ business will not be eligible to get loan
under this project:
Minor (having age less than 18 years).
Defaulter of RAKUB or any other Banks or lending agencies.
Bankrupt.
Mad. mentally distracted persons.
More than one borrower to a single household.
Tout. Terrorist.
Enterprise/ business developing child labor.
Enterprise which may pollute the environment.
Enterprise detrimental to public interest & social value.
43
Enterprise that's marketability of product is uncertain.

Enterprise where it is difficult to get regular supply of raw
materials.
4 days training to all the borrowers on Entrepreneurs development and
project management to enable them to know About
entrepreneurs
development
activities
for
running
managing their enterprises/ business.

Operation and management of enterprises & business.
About marketing of product & service.
About marketing of accounts.
About utilization & repayment of loan.
c) Skill Development Training (SDT):
Project will provide 4 days training to the interested borrowers (10% of
the total borrowers) to develop Skill in the field of their respective
activities.
Credit Range:
The minimum and maximum loan amount per borrower will be Tk.15,
000/- and Tk.5, 00,000/-. respectively. But average loan size per borrower
should be Tk. 25,000/-, Tk. 30,000/-, Tk. 35,000/-, Tk. 45,000/-, and Tk.
55,000/- respectively in the 1st, 2nd, 3rd, 4th, 5th year of the Project.

44
The credit will be provide on the basis of actual need to meet up

requirement of the borrower for Fixed investment, working capital or the
both.

45
Equity participation:
Equity participation of the borrowers towards total will be as under:
)
Minimum 15% increase of Project cost up to Tk. 1,00,000/-
) Minimum 20% increase of Project cost above Tk. 1,00,000/Collateral Security:

No Collateral Security will be required for loans up to Tk. 50,000/- in the
1st year which will gradually increase up to Tk. 75,000/- in the 4th year.
For Collateral free loan above Tk. 25,000/- the borrower will have to
provide third party guarantee from one responsible and wealthy person
acceptable to the Bank.
Rate of Interest:
Interest will be charged @ 15% per annum on reducing balance basis.
Documentation:
Borrowers to execute/ produce the following documents before taking the
loan:
- Hypothecation Deed for collateral free loans.
- Demand Promissory (DP) Note.
- Third party Guarantee for loans amounting Tk. 25,001/- to Tk. 50,000/- Mortgaged Deed as per Bank's procedure for loans above Tk. 50,000/- Affidavit where necessary.
46
Repayment of Loan:
Repayment frequency will depend on the nature of enterprise to be
financed & its income generation capacity.
The Repayment frequency in case of short-term loan may be weekly,
fortnightly or monthly basis and in cases of term loans may be quarterly,
half-yearly or on annual basis. No payment receipt should be made
without pucca receipt.
Contribution to the GDP growth:

Income & Employment: The project is expected to create about 68,000
new employment. It will help to increase the income of the entrepreneurs
and the employees of the supported enterprises. It is expected that at the
end of the project, the non-farm income of the beneficiaries will increase
by minimum 30%.
Women Development:
The project has a target to boost up the Women entrepreneurship in the
region. Minimum 20% (about 4550) of the total enterprises financed
under this project will be from Women entrepreneur.
Enterprise Development:
It is expected that about 22,700 small enterprises will be supported by
this project during its first phase of five years.
Entrepreneurship Development:

47
It will promote creation of small size entrepreneur class in the region. It

will provide priority assistance to suitable unemployed educated youths
and graduates of micro finance institutions.
Human resources Development:
The project has the target to provide entrepreneurship development
training to about 22,700 borrowers and skillness development training to
about 2300 borrowers. It will also provide basic orientation training to
more than 23000 borrowers and concerned REKAB officers and project
personnel.
Activities to be supported:
The project will not provide any loan for primary agricultural activities
like production of crops (rice, jute, tobacco, sugarcane etc.), but It will
provide loans for non-traditional agricultural products like poultry,
fishery, hatchery, animalhusbandry, nursery etc. and other non-farm
income generating activities.
Priority shall be given to the following economic activities:
Small scale agro-based and agro supporting manufacturing

industries including food processing.
Industries manufacturing agricultural implement and tools.
Small scale repair workshops.
Small scale haulage and transport.

48
Small scale weaving industries carpentry, pottery, or any artisans

producing goods having good market potential based on the local
technology.
Small service sector initiatives, etc.
Under this program RAKUB Paba Branch provides loans on the

following sector at the opening date (28th may, 2003) amounting TK. as
follows:
5.5.
1.Paper shopping Bag
25,000
2.Grocery
15,000
3.Tailoring
15,000
4.Tailoring
15,000
5.Paper shopping Bag
25,000
RSCP (RAKUB Self-Help Credit Program):
RSCP started its credit programs in 1989. But RSCP started its credit
programs at Paba Branch, Rajshahi at July 98. Primarily there were only
29 groups and 331 members. 46 members from 331 members got loan of
TK 2.38 lacks at august 1989.
Objective:
i.
To increase the income through creating self-employment.
ii.
To encourage group fund through small saving of the borrowers.
iii.
To create social awareness.

49
iv.
To motivate the group members in agriculture and other of firm
activities .
v.
To protect the group members to become landless.
Group Formation:
Male and female groups are formed separately comprised of landless,
marginal and small farmers having members 8 to 12 in each group.
Group Development:
The program respective officer of the branch as per group regulation will
open a saving account. Banking period will be six months after initiation
of group saving account for development of the group. Bank's field
worker will give clear-cut idea to the group members about the following
matter: a. The usefulness of group formulation.
b. Say we instead of I.
c. Income generating activities, benefit of saving & proper utilization
of loan.
d. Health & nutrition knowledge, literacy, primary education, human
right, women right, family planning etc.
e. Social power of group rather than individual.

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f. Interest calculation of loan or saving, method of account

maintaining, method of leader selection.
g. Tree plantation.
h. Writing & maintaining of G.P.M. chart.

51
Formation of Group Saving & it's Usage:

There is a saving account for the group & group members will deposit in
this account as per their decided amount. Group members will withdraw
money from this saving account & operate income-generating activities.
Formation & Usage of G.G.F. (Group Guarantee Fund):

Group members have to be deposited cash money at the rate of 4% on the
borrowed amount to the group saving account for G.G.F. in addition to
the existing interest rate. The group members could not withdraw money
from the saving account until fully repayment of borrowed money.
G.G.F's money may be adjusted against bad loan. In special emergency
case this deposited money may be used to repay the borrowed amount
through group meeting decision in which case 80% members will be
presented.
Guarantee of Loan:
No patron Guarantee is required for the loan under this program. Group
members will agree to repay all liability though the existing of a
promissory statement. Hypothecation is applicable on those goods that
are collected through loan.
Procedure of Loan Application:

All members of the groups will be accented to accept regulation
regarding loan application for joint activity or individual activity. Each
borrower has to be executed a particular deed separately in addition to the
group.
a. Each properly filled up loan application has to be submitted.
52
b. Two persons among selected group president, secretary & cashier

will shine on loan application & loan deed statement & that to be
submitted to the Bank.
c. No fee is applicable for the loan application form.
Loan Recommendation & Sanctioning Power:

a. Program respective field officer will recommend for Sanctioning
group & single loan.
b. In case of off-firm investment loan, Branch Manager will sanction
loan for those items for which cases he is allowed to Sanction.
c. Item wise loan amount, repayment period & no. Of installment etc.
are mentioned in annexure-A.
Evaluation of Fitness to Get Loan:

a. Loan applicant has to be permanent resident in that area.
b. Matured citizen of Bangladesh.
c. He/she will not be a borrower of other financial institution or
N.G.O.
d. That group will be qualified for getting loan who properly maintain
GPM chart.
e. In case of first loan 50% members of the group will be qualified for
getting loan. The maintaining members will be qualified after
repayment of 12 weeks installments.

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Preparation of Loan Document:

a. Filling up loan application form properly.
b. Photographs of group representative & other group members duly
attested by respective field officer of the bank.
c. Borrowing related regulation of group meeting.
d. Production/Investment planning.
e. Contract statement of respective group & single member.
f. Joint promissory statement.
Loan Disbursement:
Two representatives out of three selected by group can take loan from the
respective branch in the present of one group member.
Loan Recovery /Repayment Process:

Disbursed loans are recovered weekly installment basis. Borrowed loan
or loan installments have to be repaid in due time.
Interest Rate/ Group Guarantee Fund (G.G.F.) Rate:

a. Interest rate is 12% but it is flexible.
b. Beside regular interest, 4% cash money on outstanding loan has to
be deposited in group guarantee fund.
Overdue Loan & Re-loan:

Properly supervised loan under this program should not be overdue. If the
loan is overdue for national cause & the overdue loan are repaid within 3
months after the maturity or installment is rescheduled, respective group
or person will be qualified for re-loan.
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Rescheduling of Loan:
a. Grace period will be 3 months after the maturity date.
b. If the borrowed of the group die.
c. If the asset under the project is damaged.
d. If the project activities is hampered due to natural causes.
Bad Loan:
As per circular 34 (1989) of Bank Controlling Department of Bangladesh
Bank, defaulter group will be disqualified for getting loan & that group
will be cancelled from the program.
Method of Loan Information or Data Records & Statement

Dispatching:
A. Maintaing of Source Data Register:
Respective branch has to be maintained a " Source Data Register" in
order to recording disbursed loan related information under this program
& amount of group savings permanently.
Group Account Information

Month
Male Group
Female Group
Group/Lonee Information
Total Group
Male Lonee
/Year
Female Lonee
Group
Total Lonee
Group
Group
No. of
No. of
No. of
No. of
No. of
No. of
No. of
No. of
No. of
No. of
No. of
No. of
Group
Member
Group
Member
Group
Member
Group
Member
Group
Member
Group
Member
10
11
12
13

55
Recurring
Lonee
Cumulative
Recoverable
Cumulative
Group
Disbursement
Cumulative
Recovery
Overdue Loan
Outstanding
Loan
balance
Loan
No.
Tk.
Tk.
Tk.
14
15
16
17
No. of
Tk.
Group
Deposit Information
Cumulative Group
Cumulative Group
Saving Balance
Guarantee Fund
18
No. of
Cumulative
Cumulative
Recovery
Recovered
Interest
22
23
Tk.
Group
19
20
21
Classified Loan Information

Sub standard
Doubtful
Bad
Balance
No.
Tk.
No.
Tk.
No.
24
25
26
27
28
Source: RAKUB, Paba Branch, Rajshahi.
Tk.
29
No.
30
Tk.
31
No.
32
Tk.
33
As General banking Register are not sufficient to place the above

mentioned 33 columns. So, Register has to be prepared with rolling sheet.
B. Dispatching of Report on Monthly Basis:

1st & 2nd copy of Monthly Report which is prepared as per Annexure-B
have to be submitted to Zonal/ Regional office within seven days of the
next month & the respective branch reserves the 3rd copy. Than Zonal/
Regional office will send the 1st copy to the Loan & Advance
Department-2 within 10 &days of the month.
Following procedures have to be followed while preparing the report:
a. Report has to be prepared in English medium.
b. In all cases actual amount of money should be written.
c. Information have to be taken from " Source Data Register" to
ensure similarity between Register Statements data.

56
d. Though one group takes loan 2, 3 or 4 times, the no. of group will
be one.
e. Loan Recovery Rate =
f. Over due loan has to be classified in the "Classified loan
information" part of the statement.
Responsibilities & Duties of Bank's Field Worker:

A. Duties of Field Worker(s):
a. To supply loan application from to the qualified & interested group.
b. To help for filling up of loan application from & relevant documents.
c. To receive filled up loan application form.
d. To supervise & verify loan proposal feasibility.
e. To evaluate & recommend or cancel loan proposal.
f. To inspect group regularly in order to ensure that the disbursed
loan will be recovered timely.
B. Duties of Field Worker (In Group Level):
a. To arrange deposit collection, develop group awareness &
formulate new group for qualifying bank loan through present in
group meeting.
b. Human relationship have to develop for eliminate of group
conflict.
c. To monitoring all activities of the group through regular inspection.

57
C. Duties of Selected Representative of Group:

a. To arrange weekly/ fortnightly/ monthly meeting.
b. To maintain group discipline.
c. To encourage for regular saving of the group member.
d. To act as a legal representative of the group.
e. To inform all information of the group to the bank's field worker.
D. Duties of Group Members:
a. To participate in the group decision making activities.
b. To selection group representative.
c. To deposit weekly savings.
d. The group member should not be loan defaulter of any financial
institution.
Duties And Function of Branch Manager:
a. To allocate duties among RSCP's field officers or employees and
supervise their activities.
b. To arrange for supplying loan application form to the interested and
qualified group.
c. To arrange for opening and maintaining deposit account of
interested and qualified group.
d. To sanction recommended loan proposal.
e. To arrange for providing sanctioned loan.
f. To arrange for supervising disbursed loan to ensure proper
utilization.
58
The following table shows the various sectors of Off-farm activities and
their corresponding loan limit under the RSCP:
Table 5.1:
Types of Investment
Ceiling of Loan for
Maximum Repayment
Maximum No.of
Each Investment
Period
Weekly Loan
Repayment
Installment
1
Cycle & Rickshaw repair
2
1700.00
3
24
96
Wheel barrow
2300.00
14
56
Rickshaw
6900.00
12
52
Rickshaw Van
4600.00
12
52
Cart (with bull)
15000.00
36
144
Carpenters
1700.00
24
96
Carpenters (with factory)
13800.00
36
144
Soil Industry
17250.00
36
144
Blacksmith
3500.00
24
96
Tailoring
5200.00
36
144
Plough Making
1200.00
24
96
Loom Industry
5700.00
36
144
R.C.C. Making
17250.00
36
144
Tin Making
5700.00
36
144
Cobbler
6000.00
36
144
Bread Making
14300.00
36
144
Oil Collection
8000.00
36
144
Husking Paddy (Local Method)
6000.00
24
96
Husking Paddy(No. 5)
17250.00
36
44
Fried Rice Making
1200.00
24
96
Husking Dal
5300.00
24
96
Others
11500.00
Reasonable
No.

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Yearly performance of RSCP from the financial year 1998-99 to 2002-03

are as follows:
Table 5.2:
Yearly performance of RSCP
Total
Total
Total
Target
Tk. in lacs.
Yearly
Target
Yearly
Yearly
Year Group Member Creditor Disbursement Disbursement Recovery Recovery Outstanding Interest
1998-99 47
537
306
20
18.47
12
7.22
12.36
0.00
1999-00 77
950
584
40
39.85
30
30.00
30.11
3.01
911
2000-01 71
911
32
35.86
40
38.67
30.04
4.63
2001-02 63
856
830
40
29.61
40
30.79
33.67
4.63
2002-03 62
627
548
30
23.11
32
16.55
41.82
4.40
Figure 5.1
Yearly Performance of RSCP
50
40
30
20
10
0
1998-99
1999-00
2000-01
2001-02
Target
Disbursement
Yearly
Disbursement
Target
Recovery
Yearly
Recovery
Outstanding
Yearly Interest
2002-03
According to table & graph performance of RSCP in the financial year

1998-01 is good. But in 2001-03 performance became bad. The Target of
Loan Disbursements and Loan Recovery were not achieved. More over
loan outstanding high day after day.
If we watch the chart, we will find that there is a mystery in monthly
report of RSCP of Paba Branch. Every target and recoveries are same in
amount. Quarterly performance of RSCP according to the monthly report
is as follows:
Table 5.3:
60
Tk. in lacs.
Quarterly performance of RSCP(according to the monthly report)

Total
Month
July-Sep, 1998
Oct-Dec, 1998
Jan-Mar, 1999
App-June, 1999
July-Sep, 1999
Oct-Dec, 1999
Jan-Mar, 2000
App-June, 2000
July-Sep, 2000
Oct-Dec, 2000
Jan-Mar, 2001
App-June, 2001
July-Sep, 2001
Oct-Dec, 2001
Jan-Mar, 2002
App-June, 2002
July-Sep, 2002
Oct-Dec, 2002
Jan-Mar, 2003
App-May, 2003
Total
Total
Group Member Creditor
30
31
37
47
63
68
74
77
75
75
75
71
69
67
63
63
63
62
62
62
343
353
459
537
811
862
924
950
937
937
937
911
911
891
850
856
647
627
627
627
81
133
238
306
429
534
584
584
656
782
782
911
891
871
836
830
576
548
548
548
Disbursement
Target
5
5
5
5
10
10
10
10
8
8
8
8
10
10
10
10
7.5
7.5
7.5
7.5
Quarterly
Target
Quarterly
Quarterly Quarterly
Disbursement Recovery Recovery Outstanding Interest
4.19
3.65
6.57
4.06
11.67
14.88
9.34
3.96
7.69
12.25
9.51
6.41
6.32
6.69
12.56
4.04
3.26
6.1
3.96
9.79
0.19
1.1
2.37
3.56
6.37
8.35
8.88
6.4
9.43
10.78
9.75
8.71
9.54
6.97
8.908
5.372
4.39
3.94
2.65
5.57
0.19
1.1
2.37
3.56
6.37
8.35
8.88
6.4
9.43
10.78
9.75
8.71
9.54
6.97
8.908
5.372
4.39
3.94
2.65
5.57
4
6.55
10.75
12.36
17.66
26.49
30.57
30.11
28.67
31.67
31.57
30.04
27.5
28.08
33.58
33.67
32.92
35.21
36.79
41.82
0
0
0
1.11
0
0.54
1.5
0.97
1.32
1.4
1.14
0.77
0.76
0.8
1.51
1.56
2.34
0.64
0.29
1.13
But it is absolutely impossible. According to the yearly report quarterly

performance should be set to analyze.

61
Table 5.4:
Revised Quarterly performance of RSCP (According to the yearly report)
(Tk. in lacs.)
Total
Month
Total
Total
Group Member Creditor
Disbursement
Target
Quarterly
Target
Quarterly
Quarterly Quarterly
Disbursement Recovery Recovery Outstanding Interest
July-Sep, 1998
30
343
81
4.19
0.19
Oct-Dec, 1998
31
353
133
3.65
1.1
6.55
Jan-Mar, 1999
37
459
238
6.57
2.37
10.75
App-June, 1999
47
537
306
4.06
3.56
12.36
1.11
July-Sep, 1999
63
811
429
10
11.67
7.5
6.37
17.66
Oct-Dec, 1999
68
862
534
10
14.88
7.5
8.35
26.49
0.54
Jan-Mar, 2000
74
924
584
10
9.34
7.5
8.88
30.57
1.5
App-June, 2000
77
950
584
10
3.96
7.5
6.4
30.11
0.97
July-Sep, 2000
75
937
656
7.69
10
9.43
28.67
1.32
Oct-Dec, 2000
75
937
782
12.25
10
10.78
31.67
1.4
Jan-Mar, 2001
75
937
782
9.51
10
9.75
31.57
1.14
App-June, 2001
71
911
911
6.41
10
8.71
30.04
0.77
July-Sep, 2001
69
911
891
10
6.32
10
9.54
27.5
0.76
Oct-Dec, 2001
67
891
871
10
6.69
10
6.97
28.08
0.8
Jan-Mar, 2002
63
850
836
10
12.56
10
8.908
33.58
1.51
App-June, 2002
63
856
830
10
4.04
10
5.372
33.67
1.56
July-Sep, 2002
63
647
576
7.5
3.26
4.39
32.92
2.34
Oct-Dec, 2002
62
627
548
7.5
6.1
3.94
35.21
0.64
Jan-Mar, 2003
62
627
548
7.5
3.96
2.65
36.79
0.29
App-May, 2003
62
627
548
7.5
9.79
5.57
41.82
1.13

62
Figure 5.2:
Quaterly Outstanding
50
40
30
20
10
0
Quaterly Outstanding
According to table: Recovery and disbursement performance of RSCP in

July-September, 1998 to July-September, 2001 is good because recovery
and disbursement was more or less up to the target. Although from JulySeptember, 1999 amount of loan outstanding increased day by day. And
from October-December, 2001 performance became weaker. But it is not
too much bad. But loan outstanding became high day after day.
If we discuss loan disbursements and loan recovery with target of loan
disbursements and loan recovery then it become clear.

63
Table 5.5:
Disbursement Performance of RSCP, RAKUB Paba Branch
Tk. in lacs.
Disbursement Target (TK

lacks)
Quarterly Disbursement
(TK lacks)
% of achievement
July-Sep, 1998
4.19
83.8
Oct-Dec, 1998
3.65
73.00
Jan-Mar, 1999
6.57
131.57
App-June, 1999
4.06
81.20
Overall 1998-99
20
18.07
92.35
July-Sep, 1999
10
11.67
16.70
Oct-Dec, 1999
10
14.88
148.40
Jan-Mar, 2000
10
9.34
93.4
App-June, 2000
10
3.96
39.6
Overall 1999-00
40
39.42
99.55
July-Sep, 2000
7.69
96.13
Oct-Dec, 2000
12.25
153.13
Jan-Mar, 2001
9.51
118.88
App-June, 2001
6.41
80.13
Overall 2000-01
32
35.86
112.06
July-Sep, 2001
10
6.32
63.20
Oct-Dec, 2001
10
6.69
66.90
Jan-Mar, 2002
10
12.56
125.60
App-June, 2002
10
4.04
40.40
Overall 2001-02
40
29.61
74.03
July-Sep, 2002
7.5
3.26
43.47
Oct-Dec, 2002
7.5
6.1
81.33
Jan-Mar, 2003
7.5
3.96
52.8
App-May, 2003
7.5
9.79
130.53
Overall 2002-03
30
23.11
77.03
Overall 1998-03
162
146.07
90.16
Month

64
Among 20 quarter 8 quarter achieved more than 90% of its target, 12

quarter achieved more than 80% of its target. And overall 3 year achieved
more than 90% o f its target. Overall achievement is 90.16%.
Figure 5.3:
Disbursment Patern
16
14
12
10
8
6
4
2
0
Disbursent Target
Quaterly Disbursment
July- Jan- July- Jan- July- Jan- July- Jan- July- JanSep, Mar, Sep, Mar, Sep, Mar, Sep, Mar, Sep, Mar,
1998 1999 1999 2000 2000 2001 2001 2002 2002 2003

65
Table 5.6:
Recovery Performance of RSCP, RAKUB Paba Branch
(Tk. in lacs.)
Target Recovery (TK
Quarterly Recovery (TK
lacks)
3
3
3
3
12
7.5
7.5
7.5
7.5
30
10
10
10
10
40
10
10
10
10
40
8
8
8
8
32
154
lacks)
0.19
1.1
2.37
3.56
7.22
6.37
8.35
8.88
6.40
30
9.43
10.78
9.75
8.71
38.67
9.54
6.97
8.91
5.37
30.79
4.39
3.94
2.65
5.57
16.55
123.23
Month
July-Sep, 1998
Oct-Dec, 1998
Jan-Mar, 1999
App-June, 1999
Overall 1998-99
July-Sep, 1999
Oct-Dec, 1999
Jan-Mar, 2000
App-June, 2000
Overall 1999-00
July-Sep, 2000
Oct-Dec, 2000
Jan-Mar, 2001
App-June, 2001
Overall 2000-2001
July-Sep, 2001
Oct-Dec, 2001
Jan-Mar, 2002
App-June, 2002
Overall 2001-02
July-Sep, 2002
Oct-Dec, 2002
Jan-Mar, 2003
App-May, 2003
Overall 2002-03
Overall 1998-03
%of Recovery
6.33
36.67
79.00
118.67
60.17
84.93
111.33
118.40
85.33
100
94.3
107.78
97.5
87.1
96.68
95.40
69.7
89.10
53.70
76.98
54.88
49.25
33.13
69.63
51.72
80.02
Among 20 quarter 7 quarter achieved more than 90% of its target, 12

quarter achieved more than 80% of its target. And overall 2 year achieved
more than 90% o f its target. Overall achievement is 80.02%.
Figure 5.4:
Recovery Patern
12
10
8
Target Recovery
Quaterly Recovery
4
2
0
JulySep,
1998
JanMar,
1999
JulySep,
1999
JanMar,
2000
JulySep,
2000
JanMar,
2001
JulySep,
2001

Jan- July- of Rajshahi.
JanUniversity
Mar,
2002
Sep,
2002
Mar,
2003
66
Here one question arises why does loan outstanding becomes larger day
after day. So there must be something wrong. Either this target is shown
here is false or fix up of target is not efficient.
In this position we have to find out a relationship between loan
outstanding, loan disbursement and loan recovery. Again time period and
interest charges have significant effect on loan outstanding.
To identify the pattern of loan outstanding of RSCP in relating to
disbursement, recovery, interest charges and time period we can use this
function.
Y = f (X1, X2, X3, X4)
Where,
Y = Loan Outstanding.
X1 = Loan Disbursement.
X2 = Loan Recovery.
X3 = Interest Charges.
X4 = Time Period.
So functional relationship of the model can be shown as follows.
Y = + 1X1+2X2+3X3+4X4+ui
Where,
= Constant term
1 = Regression coefficient of X1
Tk. in lacs.
67
ui = Error term
Table 5.7:
Quarterly
Time Period
July-Sep, 1998
Oct-Dec, 1998
Jan-Mar, 1999
App-June, 1999
July-Sep, 1999
Oct-Dec, 1999
Jan-Mar, 2000
App-June, 2000
July-Sep, 2000
Oct-Dec, 2000
Jan-Mar, 2001
App-June, 2001
July-Sep, 2001
Oct-Dec, 2001
Jan-Mar, 2002
App-June, 2002
July-Sep, 2002
Oct-Dec, 2002
Jan-Mar, 2003
App-May, 2003
Quarterly
Disbursement
4.19
3.65
6.57
4.06
11.67
14.88
9.34
3.96
7.69
12.25
9.51
6.41
6.32
6.69
12.56
4.04
3.26
6.1
3.96
9.79
Quarterly Recovery Quarterly Interest

0.19
0
1.1
0
2.37
0
3.56
1.11
6.37
0
8.35
0.54
8.88
1.5
6.4
0.97
9.43
1.32
10.78
1.4
9.75
1.14
8.71
0.77
9.54
0.76
6.97
0.8
8.908
1.51
5.372
1.56
4.39
2.34
3.94
0.64
2.65
0.29
5.57
1.13
Outstanding
4
6.55
10.75
12.36
17.66
26.49
30.57
30.11
28.67
31.67
31.57
30.04
27.5
28.08
33.58
33.67
32.92
35.21
36.79
41.82
Regression Result
Intercept
X Variable 1
X Variable 2
X Variable 3
X Variable 4
Coefficients
-1.3778
-0.8428
1.0628
0.7472
-0.0009
Standard Error
0.8552
0.1472
0.1163
0.6077
0.0554
t Stat
-1.6110
-5.7248
9.1342
1.2295
-0.0153
P-value
0.128015
0.0001
0.0000
0.2378
0.9880
Lower 95%
-3.2006
-1.1566
0.8148
-0.5481
-0.1191
Upper 95%
0.4451
-0.5290
1.3109
2.0425
0.1174
ANOVA Table:
Degrees
Regression
Freedom
4
of
Mean
Sum of Square Square
138.9884
34.7471
Sum
of
F-value
22.44645


Residual
Total
15
19
23.219990
162.2084
68
1.548
Regression Statistics:
Multiple R
R Square
Adjusted R Square
Standard Error
Observations
0.925662
0.856851
0.818678
1.244186
20
So the estimated regression equation is

Y = -1.37788 - 0.8428X1 + 1.0628X2 + 0.7472X3 0.0009X4
SE =
(0.882)
(0.1472)
t value = (-1.6110) (-5.7248)
(0.1163)
(0.6077)
(9.1342)
(0.0554)
(1.2295)
(-0.0153)
R2 = 0.86
F- Value = 22.45
Interpretation of Result:
The intercept term (1.37788) indicates that when the value of
independent variables are 0 then the value of independent variables will
be 1.37788 which is meaningless in economic sense.
The value of 1= -0.8428 indicates if 1% change in loan disbursement
then loan outstanding will be changed 0.8428% in the same direction on
average holding other variables remain same.
The value of 2 = 1.0628 indicates if 1% change in loan recovery then
loan outstanding will be changed 1.0628% in the same direction on

69
The value of 3 = 0.7472 indicates if 1% change in interest Charges then

loan outstanding will be changed 0.7472% in the same direction on
The value of 4 = -0.0009 indicates if 1% change in time period then loan
outstanding will be changed 0.009% in the same direction on average
holding other variables remain same.
At 5% level of significance, the critical t-value for 15 degrees of freedom
the t value of (-1.6110), 1 (-5.7248), 3 (1.2295) and 4 (-0.0153) are
not statistically significant because the calculated t-value of these coefficient are less than critical t-value. And the t value of 2 (9.1342)
shows this variable is statistically significant because the calculated tvalue of this co-efficient is higher than critical t-value.
The value of co-efficient of determination (R 2) of 0.86 means that about
86 percent of variation in loan disbursement is explained by deposit and
loan recovery.
At 5% level of significance, the essential f-value for 4 and 15 degree of

freedom (DF) is numerator and denominator, respectively is 3.06. As
computed f-value (22.45) is less than critical f-value (3.06). So the
regression is statistically significant.


Section-Five: Off-Farm Activities of RAKUB, PABA Branch: 39: Department of Finance & Banking University of Rajshahi

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Section-Five: Off-Farm Activities of RAKUB, PABA Branch: 39: Department of Finance & Banking University of Rajshahi

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Section-Five: Off-Farm Activities Of RAKUB, PABA Branch:

Bank plays an important role in Bangladesh economy as financial

5.2Objective of the Study:

To find out the total amounts of loan disbursement, loan

To observe the relationships among Loan Outstanding,

iii) To test statistical significance among the above observations.