Credeit Policy - Al Amin

Credit Policy Of JBL
Letter of Transmittal
Tanvir Ahmad Torophder Lecturer Dept. of Business Administration Leading University, Sylhet. Subject: Submission of the internship report on Credit Policy A case study on Jamuna Bank Ltd. Sylhet Branch. Dear Sir, It is a great pleasure for me that I have the opportunity to submit the internship report on Credit Policy A case study on Jamuna Bank Ltd. Sylhet Branch. The internship program gave me an opportunity to have an exposure to the working environment and on-the-job experience at Loan Department of Jamuna Bank Ltd., Sylhet Branch. I have acquired a good understanding about different characteristics of loan management attributes, which I believe, will help me in the future. The report contains a small amount of internal information. As a result, I would obediently request you to be vigilant about the confidentiality of the report. I have attempted to put the best effort in the preparation of this report, and will welcome any inquiry and suggestion about any views and conceptions disseminated through this report. With best regards,
____________________ Md. Al Amin ID- 1002010521 Department of Business Administration Leading University, Sylhet.
Sylhet Branch, Sylhet
Letter of Acceptance
I am pleased to declare that Md. Al Amin, ID NO-1002010521, student of MBA program of Leading University, Sylhet has performed his internship work at Jamuna Bank Ltd., Sylhet Branch on Credit Policy A case study on Jamuna Bank Ltd. Sylhet Branch. His working is quite satisfactory and I am glad to affirm that the entire internship work has been conducted under my direct and active supervision. Now I am convinced to permit him to defend his internship work before the respective panel of judges. I also certify that the project paper is an original one and has not been submitted elsewhere previously for publication in my form. He is sincere, honest and hard working. I hope that this project work will contribute in his career. I wish him all the success in life.
-------------------------------------Tanvir Ahmad Torophder Lecturer Dept. of Business Administration Leading University, Sylhet.
Student Declaration
I am Md.Al Amin, hereby declare that the presented report of Internship titled Credit Policy of Jamuna Bank is uniquely prepared by me after completion of three months Internship in Jamuna Bank Limited Sylhet Branch. I also confirm that, the report is only prepared to my academic requirement not for any other purpose. It might not be used with the interest of opposite party of the corporation.
Md. Al Amin MBA ID NO. : 1002010521 Major in Finance & Banking
Acknowledgement
At first I express my gratefulness to the greatest creator almighty ALLAH for granting me his blessings in starting and completing the MBA course and preparing this report. I would like to express my heartiest thank to my Internship Supervisor, my honorable teacher Tanvir Ahmad Torophder, Lecturer in Business Administration, Leading University, Sylhet, for his valuable advices and spontaneous encouragement which has increased my attention to prepare successfully my Internship Report on Credit Policy of Jamuna Bank Limited. To say frankly, without his cordial help and direction it would have been impossible to submit today. The all officers and executives of Jamuna Bank Limited, Sylhet Branch, were also so much cordial to me to prepare this report. I extend my gratitude to Chowdhury Reza Shahzaman Mahmud, Senior Assistant Vice President & Branch Manager, Jamuna Bank, Sylhet Branch, for his kind support. I would like to express my profound gratitude to Tapon Battacharjee (EO), Alamgir Jahan (FEO), Ayaz Uddin (FEO) And Md. Shams Uddin (General Officer) for helping me to enrich my knowledge about banking activities as well as Credit Policy. I also like to give my special thanks to all employees of JBL, Sylhet Branch, who helped me a lot with the information and data collection for the improvement of my report. Last, but not the least, I owe the greatest debt to my parents for not only their never-ending affection, love and patience, but also their encouragement and unconditioned support to me in all my decisions. Their guidance helped me to keep my motivations high throughout my studies. Whole-hearted thanks to my Brother for giving me confidence all though the journey of my student life. Without the continual support from my family, there is no way I would be where I am today.
Preface
By the Blessing of Almighty, I have able to complete my Internship Report on Credit Policy A case study on Jamuna Bank Ltd. Sylhet Branch. JBL has started its business at 6th June, 2001 and Sylhet Branch has started its journey in the business field on 31st July, 2002. A highly professional and fully dedicated team is managing Jamuna Bank Limited with long experiences in Baking sectors. It has establishes 68 branches all over Bangladesh in a short period of time which indicates an upward trend of success of Jamuna Bank Ltd. My Reports especially deals with various Products and Services as well as the Loan activities of Jamuna Bank Limited, Sylhet Branch. I have tried to depict the problems of my related issues and give them reliable solutions in this report. Todays world is running very fast and fully service oriented and especially the Business world is going more competitive to sustain their customers because they have to compete with so many rivals now. Financial institutions like banks are directly engaged to upgrade the social economy. Many banks are trying to satisfy their existing and potential customers by providing various types of loan facilities. In this report I have discuss about all the arena of Credit Policy practicing by JBL, Sylhet branch. You will find the practical idea how they conduct their loan operations. You will be experienced with the information about their loan section. Which I have discussed descriptive in this report. I hope my findings and analysis will meet the standard and will serve the desired purpose. There have some strength, weakness, opportunities and threats which are prevailing in JBL. I believe that the bank will get an overall picture from my report to overcome their drawbacks and enhance their opportunities.
Table Of Contents
Pages
Chapter one: Orientation of the Study ...........................7 1.1 Introduction:................................................................7

.................................................................................................................................................7 1.2 Objective of the study:..................................................................................................8 3.5 Types of credit facilities provided by Jamuna Bank Ltd: ..............................................33
Chapter one: Orientation of the Study

1.1 Introduction:
Internship is a system by which we can familiarize ourselves with the practical situation. Moreover, we can bridge up the gap of the theoretical knowledge and practical situation. As an indispensable part of BBA program, I was placed in JBL for completing my internship. I was rotated all the desks of JBL to learn their day-to-day act ivies. Banking Industry is one of the most promising industries of our country. The importance of this sector revealed through its contribution in the economic growth of the country. This sector accelerates economic growth through mobilizing funds from surplus unit to the deficit unit. Banking Industry is moving towards rapid changes due to technological innovation and diversified needs of its customers. Banks deal with the most important factor of the economy i.e. Money. It commonly streams funds from surplus unit to deficit unit and through this it facilitated the efficient allocation of the resources as well as accelerated economic growth. Jamuna Bank is more sensitive about their customer service. On my observation at Sylhet Branch, I have seen they are serving culture oriented banking service. They serve what the customer really expects from them. Surprising matter is that they even help customers to write their cheque, deposit receipt, A/C opening form, pay order, DD that means they just help them from all sides. Online banking system of Jamuna bank is in satisfactory level though Sylhet branch are not getting the full fledged facilities of this technology because their online system is based on V-sat which should be broad band to access swiftly. In this report, I have discussed almost about Credit Department How they do their Credit portfolio measurement, classified loan, how they measure total loan and advance, daily activities, how they treat customers, how they manage their credit policy, and how they coordinate their daily activities. I have analysis credit management (loan and advance).
1.2 Objective of the study:

MBA program is designed to produce banking executives who are capable to handle 21st century banking. So, as a student of this program, we must have to know what is happening in practice. So one may feel difficulty if he does not know what is happening in bank. To eradicate this shortcoming, every student of the program is placed in banks after the completion of theory. The topic of the Internship report is a self-expressive one about its overall objectives. The main objective of the study is to be acquainted with the credit policies of the Jamuna Bank limited. The other related objectives that complement the main objective are as follows: To have an understanding of the overall functioning of a bank. To know the credit products offered by the Jamuna Bank ltd. Analyzing the credit approval process. To know the credit recovery mechanism of the JBL. To analyze the assessment of the risk associated with the extension of the credit to the clients from individual to the large and multidimensional industrial enterprise.
1.3 Scope of the Study:

The presentation of the organizational structure and policy of JBL Bangladesh and investigating the strategies applied by it-- provide the scope of this report. The present study is an attempt to evaluate the Credit policies, credit facilities and credit management style of a banking organization. That is the principles of credit management, credit recovery, and credit portfolio management performed by the banking organization of JBL, Sylhet Branch. For preparing this report, I have worked mostly in credit department. I have spent some time in foreign dept. and General Banking Dept. also.
1.4 Methodology of the Report:

A wide range of literature will reviewed to gather necessary information about the subject matters of this study. These literatures include the texts, profile, annual reports, documentation; different Manuals etc. The data collected for this study was the means of a survey. The survey will be done on the customers and staff of the Bank by personal observation and interview and some data will be collected from the journal and website of Jamuna Bank Ltd. A thorough and insightful observation will be conducted on the various Administrative, Interventional and Marketing philosophies, approaches and practices to collect necessary information. Discussion with the staffs and other related Persons to generate standard information for the study are also a comprising tool and also important instructions from the project supervisor. Collection of primary data: I have collected many of the data and information from my practical experience and queries from the officers while doing my internship at Jamuna Bank Ltd. Information and data regarding products & services, banking operations, organization structure, management personnel and policies were collected from this source. Literature review: A wide range of literature has been reviled to gather necessary information about the subject matters of this study. These literatures include the texts, profile, annual reports, and documentation, different Manuals etc. Observation: A thorough and insightful observation has been conducted on the various Administrative, Interventional and Marketing philosophies, approaches and practices to collect benchmark information. Working involvement: Study and information gathering has been vitally conducted through involvement in work interventions, administration and other activities. Field visits: Visit to the field level activities has generated vital information and enhanced the study greatly.
Discussion:
Discussion with the staffs and other related persons have generated benchmark
information for the study as a comprising tool and enhanced it towards a holistic point of view. I have also received important instructions from my project supervisor. Sylhet Branch, Sylhet 9
1.5 Limitation of the study:

There were some problems while I doing internship. A wholehearted effort was applied to conduct the internship and to bring a reliable and fruitful result. In spite of having the wholehearted effort, there exit some limitations, which acted as a barrier to conduct the program. The limitations were: Sometimes I was assigned to do some jobs without explaining why this work is to be done. This situation has created a lot of problems to understand why a specific function is being performed. Another problem is concerned with data collection. JBL starts from 1999 , so there are shortage of sufficient data for comparing. Moreover, the bank has supplied me the annual report only for one year. Another problem is time constraint. It is not enough time to prepare such a report. Because of bank secrecy they are disagreeing to reveal important information related to credit management. A well-organized paper requires sufficient data. The sources of primary data are not easily available. Articles and books on this subject are not available.
10
1.6 Data analysis and interpretation:

Both qualitative and quantitative analysis will be performed on the findings. The quantitative analyses will be done on the trend of credit portfolio, growth pattern of credit extension facilities of the Jamuna Bank Ltd. Qualitative analyses will be based on the macroeconomics variables and credit policy provided by Bangladesh Bank, the Central bank of our country. Different statistical tools will be used for the analysis of the finding.
11
Chapter Two : An Overview of Jamuna Bank Ltd 2.1 History of JBL:

Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994 with its Head Office at Chini Shilpa Bhaban, 3, Dilkusha C/A, Dhaka-1000. The Bank started its operation from 3rd June 2001. Jamuna Bank Limited is a highly capitalized new generation Bank with an Authorized Capital and Paid-up Capital of Tk.1600.00 million and Tk.390.00 million respectively. Currently the Bank has 19 (nineteen) branches 9 in Dhaka, 1 in Gazipur, 4 in Chittagong , 3 in Sylhet and 2 in Naogaon (including five Rural Branches). The Bank undertakes all types of banking transactions to support the development of trade and commerce of the country. JBL's services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units. Jamuna Bank Ltd., the only Bengali named new generation private commercial was established by a group of winning local entrepreneurs conceiving an idea of creating a model banking institution with different outlook to offer the valued customers, a comprehensive range of financial services and innovative products for sustainable mutual growth and prosperity. The sponsors are reputed personalities in the filed of trade, commerce and industries. The Bank is being managed and operated by a group of highly educated and professional team with diversified experience in finance and banking. The Management of the bank constantly focuses on understanding and anticipating customers needs. The scenario of banking business is changing day by day, so the bank's responsibility is to device strategy and new products to cope with the changing environment. Jamuna Bank Ltd. has already achieved tremendous progress within only two years. The bank has already ranked as one of the quality service providers & is known for its reputation. At present the Bank has real-time centralized Online banking branches (Urban & Rural) throughout the Country having smart IT-Backbone. Besides these traditional delivery points,
12
Credit Policy Of JBL the bank has ATM of its own, sharing with other partner banks & Consortium throughout the Country. The operation hour of the Bank is 9:00 A.M. To 5:00 P.M. from Sunday to Thursday with transaction hour from 9:00 A.M. to 3:00 P.M. The Bank remains closed at Friday and Saturday including government holidays. Jamuna Bank offers different types of Corporate and Personal Banking Services involving all segments of the society within the purview of rules and regulations laid down by the Central Bank and other regulatory authorities. Their corporate slogan is Your Partner for Growth.
2.2 Vision & Mission : Vision of the bank:

To become a leading banking institution and to play a pivotal role in the development of the country.
Mission of the bank:

The Bank is committed to satisfying diverse needs of its customers through an array of products at a competitive price by using appropriate technology and providing timely service so that a sustainable growth, reasonable return and contribution to the development of the country can be ensured with a motivated and professional work-force.
Objectives of the Jamuna Bank Ltd:
To earn and maintain CAMEL Rating 'Strong'. To establish relationship banking and improve service quality through development of Strategic Marketing Plans. To remain one of the best banks in Bangladesh in terms of profitability and assets quality.
13
Credit Policy Of JBL To introduce fully automated systems through integration of information technology. To ensure an adequate rate of return on investment. To keep risk position at an acceptable range (including any off balance sheet risk). To maintain adequate liquidity to meet maturing obligations and commitments. To maintain a healthy growth of business with desired image. To maintain adequate control systems and transparency in procedures. To develop and retain a quality work-force through an effective human Resources Management System. To ensure optimum utilization of all available resources. To pursue an effective system of management by ensuring compliance to ethical norms, transparency and accountability at all levels.
2.3 Corporate Strategies of Jamuna Bank Ltd:

To manage and operate the Bank in the most efficient manner to enhance financial
performance and to control cost of fund.
To strive for customer satisfaction through quality control and delivery of timely services. To identify customers' credit and other banking needs and monitor their perception towards
our performance in meeting those requirements.
To review and update policies, procedures and practices to enhance the ability to extend
better service to customers.
To train and develop all employees and provide them adequate resources so that customers'
needs can be reasonably addressed.
14
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.
To diversify portfolio both in the retail and wholesale market. To increase direct contact with customers in order to cultivate a closer relationship between
the bank and its customers.
2.4 Board of Directors & Sponsors:
Chairman 1. Mr. Sakhawat, Abu Khair Mohammad Vice Chairman 2. Mr. Md. Ismail Hossain Siraji Directors 3. Engr. A. K. M. Mosharraf Hussain 4. Engr. Md. Atiqur Rahman 5. Al-Haj Nur Mohammed ---- (Chairman of Jamuna Bank Foundation.) 6. Mr. Md. Tajul Islam 7. Al-Haj Md. Rezaul Karim Ansari 8. Mr. Md. Belal Hossain 9. Mr. Md. Mahmudul Hoque 10. Mr. Farhad Ahmed Akand 11. Mr. Mr. Kanutosh Majumder 12. Mr. Gazi Golam Murtoza 13. Mr. Mohammad Nurul Alam 14. Mr. Md. Motior Rahman (MD CC)
15
Sponsors 1. Al-Haj M. A. Khayer 2. Mr. Arifur Rahman 3. Mr. Golam Dastagir Gazi (Bir Protik) 4. Mr. Fazlur Rahman 5. Mr. M. N. H. Bulu 6. Mr. Md. Sirajul Islam Varosha 7. Mr. Md. Irshad Karim 8. Mr. Shaheen Mahmud Company Secretary Mr. Md. Anwar Hossain Executive Vice President
16
2.5 Organizational Structure of Jamuna Bank Ltd:
Organizational Structure of JBL
Chairman Managing Director Deputy Managing Director Senior Executive Vice President Senior Vice President Vice President Assistant Vice President First Assistant Vice President Senior Executive officer Executive officer First Executive officer Probationary Officer Officer
17
2.6 JBL Group Profile:
of Incorpor
Name: Date of Incorporation: Assets Head Office: Name of the Chairperson of the board: Products: Number of Branches: Diversification of Products & services: Paid up capital: Profit after tax & provision (2008): Total Loan And Advance Publicly Traded Company: Debit Card: Banking Operation System: Technology Used: Earning per share (2008): E-mail: Fax: Phone:
Jamuna Bank Limited 03 June, 2001 16,863,765,215 at 31st December 2005 Chini Shilpa Bhaban, 3, Dilkusha C/A, Dhaka1000. Mr. Sakhawat, Abu Khair Mohammad All types of Banking Products. 43 Corporate Banking and Consumer Banking, SME Banking. 1, 313.265,200 31,646,629,499 21,036,861,012 Share quoted daily in DSE & CSE Q CASH ATM Card Consumer Banking, Corporate Banking, Treasury, Online Banking. Member of SWIFT, On-line banking, UNIX based Computer System. 38.21 jamunabk@bdcom.com 9565762 9555141, 9570912-16
18
2.7 The Management:

Managing Director Mr. Md. Motior Rahman Deputy Managing Director Mr. M. A. Salam Mr. Md. Alauddin Al-Azad Senior Executive Vice President Mr. M. Shamsul Huq Executive Vice President Mr. Md. Yunus Ali Mr. M. Shamsul Arefin Mr. Md. Abrar Hossain Khan Senior Vice President Mr. Shahedul Alam Khan Ms. Nur-E-Jannat Begum Mr. Md. Balayet Hossain Mr. Mahboob Alam Choudhury Mr. Md. Anwar Hossain Mr. Md. Elias Ali Akanda Vice President Mr. Md. Zashim Uddin Mr. Md. Mofazzal Hossain Mr. Monsur-Uz-Zaman Mr. Md. Belal Hossain Mr. Khandaker Zia Hassan Senior Assistant Vice President Engr. S.M. Anisuzzaman Mr. Md. Kamal Uddin Muhammad Bazlul Huq Mr. Mr. S. M. Jamal Uddin Mr. Md. Monirul Alam Chowdhury Mr. Md. Mokshed Ali Hawlader Syed Shakir Uddin Mohd. Munir Mr. Md. Shahidul Islam Mr. Md. Mostafizur Rahman
Mr. A.K.M. Rashiduzzaman
Mr. Mirza Elias Uddin Ahmed Mr. Md. Habibur Rahman Mr. Md. Zobaidul Islam
Mr. A. K. M. Saifuddin Ahamed Mr. Mahbubul Huq Choudhury Mr. Manzurul Ahasan Chowdhury Mr. Muhammad Ali Ashraf Mr. Md. Nazmul Hossain Mr. Khorshed Ahmed Nayeem
Mr. Mokhlesur Rahman Mr. Ghulam Mustafa Mr. Ahmed Nawaz
Mr. Ashim Kumar Biswas Mr. A. H. M. Monjur Morshed Mr. Mr. Malaik Montasir Reza Mr. Md. Fazle Elahi Chowdhury Mr. Anwar Hakim Mr. Md. Shamsur Rahman Majumder Mr. Md. Harunoor Rashid Mr. Sikder Mohammad Ali Mr. Md. Abdullah
19
Credit Policy Of JBL Mr. Md. Abdus Sattar Md. A.F.M. Quamrul Hassan Mr. Md. Zahurul Islam Khondoker Mr. Md. Shahid Ullah Mr. Sayed Shakir Uddin Md. Munir Mr. Chowdhury Reza Shahzaman Mahmud Assistant Vice President Mr. A.K.M. Shah Alam Mr. Md. Nazrul Islam Md. Mofazzal Mamun Khan Mr. Sudatta Sebak Barua Mr. Md. Nurul Islam Khan Mr. Md. Ayub Ali Mr. Md. Abu Syed Md. Yousuf Mr. Md. Abul Hamid Chowdhury Mr. Md. Mustaq Ahmed Rizvi Mr. Md. Abdul Mannan Mr. Md. Billal Hossain Mr. Sadhan Kumar Chakma Mr. Md. Molla Belayet Hossain Mr. Md. Ariful Ferdous Mr. S. M. Mofizur Rahman Mr. Md. Farukuzzaman Mr. Iqbal Akram Khan Mr. Parvez Ahmed Khan Mr. Mohammad Azam Mr. Md. Yasin Siddiqui Mr. Md. Shah Alam Mr. Borhan Uddin Ahmed
Mr. Md. Raisul Alam Mr. Md. Mizanur Rahman Mr. Md. Masudur Rahman Mr. Md. Hafizul Haque Mr. Abu Rushd Md. Zubair Mr. Md. Mozharul Haque Mr. Md. Jamil Uddin Akhter Mr. S. M. Ashafuddoulah Mr. Md. Mahfuzul Karim Mr. Mohammed Shaharior Islam Mr. Md. Mominul Abedin Mr. Md. Abul Bashar Mazumder Mr. Md. Shahnewaz Sarker Mr. Md. Majibur Rahman Mr. Md. Shahid Ullah Mr. M. A.Wadud
2.8 Commitments to the Clients:

The bank is a customer driven modern banking institution. It is a competence center where quality customer service is both a source of professional pride and a recipe for success. The defined commitments to the clients are: Belief in professionalism Personalized banking service based on mutual trust Continuity of facilities Use of new and latest banking technology in service Building life-long customer banker relationship Responding quickly to customer needs
20
Credit Policy Of JBL Sharing value and belief Tie with customers thinking Highest safety Time saving one point service Mutual growth Financial advice Solving customers problems
1.9 Customer Service and Automation

It is a fully online based bank. Every operation is done by online. It will extend fully automated services with quickness and accuracy. JBL shall use latest banking technology to reinforce internal control, improve the accuracy of records maintained, to facilitated introduction of new products and services, to reduce cost and increases productivity. Bank starts computerized banking operations from day one. There is plan for on-line banking service. The Jamuna bank is cordially committed to increase the online banking activities.
1.10 Creed of JBLs personnel

Service to the nation hard work Flexibility Discipline and obedience Constructive thought Honesty and Fairness Quest for professional excellence Goal orientation Adjustment and assimilation
21
2.11 Corporate goal

Steady return to shareholders equity Deep Commitment to the society Well-being of employees Personalized customer service in good days and in adversity Strong capitalization Competitive pricing of Products and services High standard business ethics Fully automated banking service Making our leading rewarding to the borrowers We shall allocate corporate resources to areas having the greatest growth opportunities and national interest.
2.12 Operational Areas:

Jamuna Banks operational areas encompass: Export and Import handling and financing Commercial Banking Corporate banking Project Finance Syndicate Investment Banking Consumer Credit Scheme Mortgage loan Retail banking Internet and Telephone banking Lease Financing
22
2.13 Business Areas of Jamuna Bank Ltd:

Jamuna Bank Limited consists of some major functional divisions. Those are as follows: A. Corporate Banking Division -------Foreign Trade & Treasury -------Credit Administration (Loan and Advance) B. General Banking Division C. Financial & Admin Division D. Personal Banking Division E. IT division
2.14 SWIFT:
Jamuna Bank Limited has recently become a member of SWIFT (Society for Worldwide Interbank Financial Telecommunication). SWIFT is a member owned co-operative, which provides a fast and accurate communication network for financial transactions such as Letters of 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.
Advantages of SWIFT are as follows:

It is most secured. It is swift. Massage can be received or transmitted faster than any other means. It is accurate. No distortion of message occurs during transmission as it uses digital system. Cost effective. Several terminals can be used to process the messages.
23
Chapter Three: Credit Procedure of Private Commercial Bank 3.1 Definition of Bank:
The name bank is derived from the Italian word banco which means "desk/bench" and used during the Renaissance by Florentine bankers, who used to make their transactions above a desk covered by a green tablecloth. However, there are traces of banking activity even in ancient times. A Bank is a financial institution whose task is to channelize funds from surplus unit to deficit unit in the form of loans and advances to generate sufficient spread for its sustainable existence. According to Crowther, a bank collects money from those who have it to spare or who are saving it out of their incomes, and it lends this money to those who require it. According to Kinley, a bank is an establishment which makes to individuals such advances of money as may be required and safely made, and to which individuals entrust money when not required by them for use. In short, from the above, the term Bank in the modern times refers to an institution having the following features: It deals with money. It accepts deposits and advances loans. It also deals with credit; it has the ability to create credit. i.e., the ability to expand its liabilities as a multiple of its reserves. It is commercial institution; it aims at earning profit. . It is a unique financial institution that creates demand deposits which serve as a medium of exchange and, as a result, the banks manage the payment system of the country.
24
3.2 Objectives of Bank:

The objectives of a bank can be looked at from three different perspectives of the three key parties to the banking activities: the bank owner, the Govt. and the bank client From the bank Owners perspective: Earning Profit: Just like any owner(s) of a commercial institution, a bank owners main objective is to earn profit, which is achieved mainly through monetary exchanges. Rendering Service: Banks provide different types of services to the government and people of the country. Good Will: In order to earn profit through rendering services, banks need to have a lot of good will, may be a bit more than other commercial institutions. Raising Efficiency: To earn maximum profit, banks need to provide efficient service for which they require expert workforce. From the bank Governments perspective: Issue of Notes and Currencies: Since civilizations have moved along from the barter system, it has been the objective of the Government of different countries to provide its economy with a proper exchange media through issuance of notes and currencies through banks, which also take upon the duty of maintaining the system. Capital Formation: The Government wants that bank assist in the macroeconomic objective of capital formation by encouraging people to participate in saving. Capital Investment and Industrialization: The Government as a part of their secondary macroeconomic objective wants the bank to assist in capital investment and industrialization by lending out their accumulated capital. Money Market Control: Government tries to stabilize the money market through banks. Employment: As a part of their primary macroeconomic objectives, they expect banks to provide employment for its people. Advice on Financial Matters: Since banks hire lot of financial expert and advisors, it often seeks advice from banks to help them develop policies.
25
Credit Policy Of JBL From the bank Clients perspective: Deposit: One of the banks main objectives is to accept its clients deposits. Safety: Providing safekeeping of its clients monetary possessions and valuables is another one of banks essential objectives. Advisors and Consultants: Banks provide its clients with advisors and consultants to help them chalk out an appropriate saving plan. Representatives or Trustees: Both the clients and government rely on the bank to act as their representatives and trustees of monetary exchanges activities. Raising Living Standard: Providing interests against their deposits, banks help their client to improve their living standards.
3.3 Commercial Bank and Its Important Function:

Generally, the term Commercial Bank refers to that category of banks that raises funds by collecting deposits from businesses and consumers via checkable deposits, savings deposits, and time (or term) deposits. It makes loans to businesses and consumers. It also buys corporate bonds and government bonds. Its primary liabilities are deposits and primary assets are loans and bonds. Some important among various function of commercial bank are: Accepting Deposit Advances of Loans Credit Creation Agency Functions General Utility Function.
3.4 What is credit?

The word credit is derived from Latin word Credo meaning I Believe. It is usually defined as ones ability to buy with a promise to pay. From the 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.
26
Credit Policy Of JBL People use the credit if they have with financial institutions, businesses, and individuals to obtain loans. And they use the loans to buy goods and services. The credit a person has typically determines how much they will be permitted to borrow, for what purpose, for how long, and at what interest rates. The level of "confidence" lenders have in potential borrowers depends on many factors. A person's income is an indicator of a person's ability to repay, particularly when compared to the amount of debt they already have. The amount of borrowing a person has already done and how well they handled repayment is an indicator of their intention to repay.
3.4.1 Why use credit?

The reasons people borrow are varied and personal. Loans allow you to obtain goods and services today, such as homes and automobiles, and spread the cost over time. This makes these purchases more affordable than they might otherwise be. Most Americans could not afford homes or cars without the ability to borrow. Many people who have built up their savings use loans instead because they consider rebuilding their savings more difficult than repaying the loan. Many people who already have the money to pay for items use credit cards because it is more convenient and safer than using cash or checks. They just pay the full balance when the bill comes.
27
Chapter Four : Credit Policy Of JBL (Sylhet Branch) 3.1 Introduction:

A credit policy is an important wing of any bank. The banks asset is its interests against loans it distributes to its customers. One of the major profits earned by bank is through its credit that it lends to its customers. The JBL is a leading bank in loans and advances, which grants loans to various business and industrial sectors. Although some precautionary policies are taken into account yet, the amounts of defaults are pretty high! Jamuna Bank Ltd. is a new generation bank. It is committed to provide high quality financial services/products to contribute to the growth of G.D.P of the country through stimulating trade and commerce, accelerating the pace of industrialization, boosting up export, creating employment opportunity for the educated youth, poverty alleviation, raising standard of living of limited income group and overall socio-economics development of the country. In achieving the aforesaid objectives of the bank., credit operation is of paramount importance as the greatest of the total revenue of the bank is generated from it, the success of a bank, therefore, depends on how efficiently and judiciously it makes use of its available resources. In other words, prudent & efficient management of its very essential for the success of a bank. The ability to judge the genuineness, character and cried worthiness of borrower is an inseparable prerequisite for quality asset; In order to provide a board guideline for the Credit Operation towards achieving the objectives of the Bank, for efficient and profitable development of its mobilized resources and also
28
Credit Policy Of JBL to administer the credit portfolio in the most efficient way, a clearly defined, well planned, comprehensive and appropriate credit of the bank in necessary. With this end in view, a credit policy of the bank is hereby formulated with provision for revision and refinement from time to time as may be warranted by the change of the circumstances due to the passage of time to suit the requirement of the bank.
3.2 Credit Policy of JBL:

One of the most important ways, a bank can make sure that its loan meet organizational and regulatory standards and they are profitable is to establish a loan policy. Such a policy gives loan management a specific guideline in making individual loans decisions and in shaping the banks overall loan portfolio. In Jamuna Bank limited there is a credit policy which the bank uses in case of providing loan facility to their customer. It has well designed policy for providing different kind of loan which is cover in the credit manual of the bank.
3.3 Credit Principles of JBL:

JBL Credit Policy shall be based on the following principles: Safety Security Expansion and segregation Earning and profitability Quick return Avoidance of high risk Control and monitoring Welfare Integrity and expertise Value creation Social commitment Sylhet Branch, Sylhet 29
Credit Policy Of JBL National interest
JBL strategies are:

a) General: The Bank shall provide suitable credit services and products for the markets it operates. Loans and advances shall normally be financed from customers deposits and not out of short term temporary funds or borrowing from other Banks. Credit will be allowed in manners which will in no way compromise the Banks standards of excellence and to customers who will complement such Standards. All Credit extension must comply with the requirement of Bank Companies ACT-1991 and Bangladesh Banks instructions as may be amended from time to time.
b) Administration: The administration of the loan shall ensure compliance of all laws and regulations at both local and global levels. Proper analysis of credit proposals is complex and requires a high level of analytical ability. To make the overall credit portfolio of the Bank healthy, proper staffing of the credit departments shall be done through placement of qualified officials who have got the right aptitude, formal training in finance, credit risk analysis etc. Lending in areas from where repayment and interest servicing performance deteriorates shall be identified at the early stage and closely monitored in order to avoid loan losses. Customers who show sign of weakness in loan repayment shall be put on a watch-list. Related security against loans shall be monitored and reviewed by a separate unit not connected with the credit approval process on a regular basis in order to assess the collect ability of the loans and effectiveness of the security. At all levels of processing of loans & advances (To be approved by Management/Board), Cases have to be evaluate and recommended through credit committees.
3.4 Types of Credit:
30
Credit Policy Of JBL Bangladesh Banks latest guidelines have subdivided different kinds of lending into 7 sectors for fixation of interest by the Individual Banks on competitive basis reviewing the prevailing market condition and monetary policy of the country.
Loans and advances have primarily been divided into major groups: a) Fixed term Loan: These are the advances made by the Bank with fixed repayment schedules. The term of loan are defined as follows: Short term Medium term Long term : : : Up to 12 months More than 12 and up to 36 months More than 36 months
b) Continuing Credit: These are the advances having no fixed repayment schedule but have an expiry date at which it is renewable on satisfactory performance. Further all categories of loans have been accommodated under the 7 prime sectors as under: i. Agriculture: Credit facilities to the agricultural sector under this category. It subdivided into two major heads: a) Loans to Primary Producers: This sector of apiculture refers to the credit facilities allowed to production units engaged in farming, fishing, forestry or livestock. Loans to processors or traders of agricultural products are to be categorized as agricultural loans. Loans to tea-garden for, production are treated as agricultural loan, but loans to tea-gardens for export should be treated under the category Export Credit similarly medium and loping years loans to tea-garden are categorized as industrial term lending. b) Loans to input dealers/distributor: It refers to the financing allowed to input dealers and (or) distributors in the agricultural sector. Agricultural loans may include short, medium
31
Credit Policy Of JBL and long term as well as continuing credits. As such, it may fall under the head, (Loan General, Cash Credit).
ii. Term Loan for Large & Medium Scale Industry: This category of advance accommodates the medium and long term financing for capital structure formation of new industries or for BMRE of the existing units who are engaged in manufacturing goods and services. Term financing to tea garden may also be included in this category depending on the nature and size. As the financing under this category has repayment schedule it falls under head Loan (General). iii. Term Loan to Small & Cottage Industries: These are the medium. And long term loans allowed to small & cottage industries [Small industries are presently defined as those establishment whose total investment in capital such as land, building, machinery and equipment (excluding taxes and duties) does not exceed 30 million take and investment in machinery and equipment (excluding taxes and duties) does not exceed 10 million take cottage industries also fall within this definition. Bangladesh Bank gives inters subsidy @ 3% to the bank on loans extended under this category. No short term or continuing credits are to be including. Medium & Long term waver credits are also including under this category. Like the Large & medium Scale Industry it is also allowed in the form of Loan (General)/Hire-Purchase/Lease Financing. iv. Working Capital: Loans allowed to the manufacturing units to meet their working capital requirements, irrespective of their size-big, medium or small, fall the category. These are usually continuing credits and as such fall under the head Cash Credit. v. Export Credit: Credit facilities allowed to facilitate export of all items against Letter of Credit and/ confirmed export orders fall under this category. It is accommodated under the heads Export Cash Credit (ECC), Packing Credit (PC), Foreign Documentary Bills Purchased (FDBP), and Local Export Bills Purchased etc. vi. Commercial Lending: Short-term loans and continuing allowed for commercial purposes other than export fall under this category (LIM/LTR/PAD/CC/Loan-Gen, etc.)
32
vii.
Others: Any loan that does not fall in any of the above categories is considered under the category OTHERS which include SOD/ Loan for (1) Transport equipments (2) Construction works including housing (3) Work order finance (4) Personal Loans/ Hire Purchase etc.
3.5 Types of credit facilities provided by Jamuna Bank Ltd:

Jamuna Bank limited, the highly capitalized private commercial bank in Bangladesh has introduced various types of loan facilitates requirement of valued customers and growth of their business houses. Generally it can be classified in to two categories: 1. Funded and 2. Non funded 1. Funded Credit Facilities: Any type of credit facility which involve direct outflow of banks fund on account of the borrower is termed as funded credit facilities may be classified in to four types: Loan i. ii. iii. iv. Cash credit i. ii. Overdrafts i. Secured overdrafts (SOD) Cash Credit (Hypothecation) Cash Credit (Pledge) Demand loan Term loan Project loan House building loan
Bill purchased and discount i. Sylhet Branch, Sylhet Inland bill purchased and discount 33
Credit Policy Of JBL ii. Foreign bill purchased and discount
Against Import Bills (bills under L/C i.e. BLC ) Against Imported Merchandise(LIM) Against Trust Receipts (LTR) 2. Non-Funded Credit Facilities: Though these types of credit facilities are primarily nonfunded in nature but at times it may turn in to funded facilities. As such, liabilities against this type of credit facilities as termed as Contingent Liability. The facilities are: Letter of credit Bid Bond Performance bond Advance payment guarantee Foreign counter guarantee. The process of creating charge over the assets is called perfection of security. Charging a security means making it available as a cover for a credit. Not only security has to be good but also the method of charging should be legal and perfects. There are different types of charge created on securities considering types of assets, nature of credit and the degree of control over the debtors properly required by the banker. The common ways of charging securities are as follows. Lien Pledge Hypothecation Mortgage Assignment St-off From whom documents to be obtained: Document to be obtained from the following: i. ii. etc. iii. Sylhet Branch, Sylhet Owner of the property 34 Borrower Holder of the instrument such as FRD, BSP, ICB unit
3.6 Types of Loans and Advances:

1) Term Loan: a) Loan (General): Short term, Medium term & Long term Loans to individual/firm/ industries for a specific purpose but for a definite period and generally repayable by instilments fall under this head. These types of lending are generally repayable by instilments fall under the categories (1) Large & Medium Scale Industry and (2) Small & Cottage Industry. Very often term financing for (i) Agriculture & (ii) Other lending are also included here. House building loan (General & Staff): This kind of loans is two types- Residential and commercial. Purpose of the loan: Construction of residential house Completion of under construction house Purchase of Flat/Apartment Construction of commercial complex for sale of space/shop/flat. Construction of multistoried building/apartment for sale of flats. Construction of commercial complex for rental purpose. Projected Size of building for applying for loan is up to six storied for residential and ten storied for commercial purpose. Proposed site of the house/project must be well communicated by puce road of minimum 12 feet. c) Lease Financing:
35
Credit Policy Of JBL Lease means a contractual relationship between the owner of the asset and its user for a specified period against mutually agreed upon rent. The owner is called the lesser and the user is called the Lessee. 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: 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 ITS Education Center. Vehicles like luxury bus, Mini bus; Taxi cabs cars, Pick-up, CNG. 2) Time Loan: This is one time financial accommodation for short period maximum 12 months to meet some specific purpose. The loan adjustable within the validity and not renewable and no transaction is allowed. 3) Continuous Loan: a) Cash Credit: Borrower selection is very much important for this type of product. It is an arrangement between the customer and the banker, where the customer is allowed to borrow a certain limit. This is an arrangement where the customer doesnt need to withdraw the entire amount at a time. The borrower can draw money whenever required. Interest is not charged on the whole amount available but on the amount withdrawn. Two types of cash credit are: cash credit pledge and cash credit hypothecation. In both cases the insurance must be 10% above the limit. For example, if we have goods of Tk two lac (200000) then he insured amount should be two lac twenty thousand (220000).
36
Credit Policy Of JBL i) Cash Credit (Pledge): Customer can receive Cash Credit Pledge rather than taking cash Credit fully.The possession of the goods belongs to the bank and the ownership of the goods belongs to the client (who in this case is mostly the importer). This happens when an importer imports goods taking loan from the bank and when the goods arrive at the port cannot make payment to the bank. Therefore, the bank and the client makes an arrangement that the possession of the goods would be under the bank and al payment received after selling of the goods would be deposited to the bank against the loan borrowed by the client. The goods stored in the storeroom under lock and key is by supervision of the bank. ii) Cash Credit (Hypothecation): In case of cash credit hypothecation the possession of goods is not under the bank. Unlike the cash credit pledge, the possession of goods is under the client. This type of advance is not encouraged and takes place on a very rare occasion based on the bank / client relation, provided that the bank has immense confidence in the client. This type of loan is normally accompanied with mortgage of immovable properties. b) Over Draft: Overdraft is in general allowed on a current a/c operated upon by cheque. There is no limit to the number of times a client can make deposit or withdraw from an O/D account. Interest is charged based not on the total amount allowed for overdraft but on the actual amount that has been withdrawn. Three types of overdraft are very popular: i) Temporary Overdraft (TOD): This is allowed only to valued customers to honor their important cheque without any prior arrangement. ii) Clean Overdraft (COD): When overdraft is allowed with no other security except the personal security of the borrowers, such overdraft is called clean overdraft. iii) Secured Overdraft (SOD):
37
Credit Policy Of JBL Secured overdrafts are allowed against securities. This is generally given to contractors or suppliers to carry on their construction works and supply order and to business personals to carry on their trades and business.
- SOD (General): These are advances allowed to individual/firms against financial obligation (i.e. lien on FDR/PSP/BSP/ Insurance Policy/ Share etc). This may not be a continuous Credit. - SOD (OTHERS): Advances allowed against assignment of work order for execution of contractual work falls under this head. This advance is generally allowed for a definite period and specific purpose i.e. it is not a continuous credit. It falls under the category SOD OTHERS.
4) SME Loan: SME Loan is special financing facility for small and medium sized trading, manufacturing and service industries spread in the surrounding areas of our Branches and SME Centers across the country. The product offers term loan/lease finance/hire purchase facilities for the purpose of working capital finance, fixed assets purchase or lease or expansion of business premises under equal monthly installment loan facility or structuraral repayment method. As per ACSPD Circular-08 dated 26/05/2008, Small and Medium Enterprise (SME) is defined as under: SME Enterprise: Classification Trading/ Service Sector Manufacturing Sector Medium Enterprise: Classification Trading/ Service Sector Fixed Asset (Excluding Land & Building) BDT-50,00,000.00 to BDT-10,00,00,000.00 Maximum Number of Employees 50 Fixed Asset (Excluding Land & Building) BDT-50,000.00 to BDT-50,00,000.00 BDT-50,000.00 to BDT-1,50,00,000.00 Maximum Number of Employees 25 50
38
Credit Policy Of JBL Manufacturing Sector BDT-1,50,00,000.00 to BDT-20,00,00,000.00 150
SME Loan is four types: a. Capital Loan b. Deposit Top up Loan c. Capital Machinery Loan d. Women Entrepreneur Loan a) Capital Loan: Most of the Small Enterprise (SE) customers suffer from capital Shortage. Business is raising concern and to survive in the market, capital is essential for further expansion. In most Small Entrepreneurs do not own adequate immovable property that can be accepted by basis collateral for Loans. Movable assets that the SE can provide are rarely accepted as principal security for loans. To overcome this problem, Jamuna Bank Ltd. has come forward with a new product for SE customers named as Capital Loan. Under this Product, if the customer has regular cash-flow to pay installments, then further security shall not be insisted other than the hypothecated stock and items financed and personal guarantee of the customer as well as third party guarantor(s). Loan amount BDT-5.00 Lac to BDT-10.00 Lac. b) Deposit Top up Loan: Most of the Small Enterprise (SE) customers suffer from capital Shortage. But capital is essential for further expansion of business. In general, the Small Entrepreneurs do not own adequate immovable property and at the same time movable assets that SE can provide are rarely accepted as principal security for loans. To overcome this problem, Jamuna Bank Ltd. has come forward with a new product for SE customers under which loan amount shall be given on the basis of certain percentage of FDR amount named as Deposit Top up Loan. Under this Product, if the loan amount is covered by FDR up to 30% of the loan amount and the customer has regular cash-flow to pay loan installments, then further security shall not be insisted Sylhet Branch, Sylhet 39
Credit Policy Of JBL other than the hypothecated stock and items financed and personal guarantee of the customer as well as third party guarantor(s). For repeat as well as experienced others banks good customer, this security clause may be relaxed and we may take FDR amount up to 25% of the loan amount. Loan amount BDT-5.00 Lac to BDT-50.00 Lac. c) Capital Machinery Loan: Business is an on going process and to survive in the market, new machinery & vehicle with new technology is essential. To overcome this problem, Jamuna Bank Ltd. has come forward with a new product for SE customers named as Capital Machinery Loan. Under this product, if the customer is able to provide at least 20% of machinery in the form of FDR and has regular cash-flow to pay loan installments, then further security may not be insisted other than personal guarantee of the customer as well as third party guarantor(s). d) Women Entrepreneur Loan: Most of the Women Entrepreneurs suffer from capital Shortage. But capital is essential for business expansion. Most of the bankers do not show their interest for financing in Women Entrepreneurs business concern. To overcome this problem, Jamuna Bank Ltd. has come forward with a new product for WE customers named as Women Entrepreneur Loan. Under this Product, if the Women Entrepreneurs has regular cash-flow to pay installments, further security shall not be insisted other than the hypothecated stock and items financed and personal guarantee of the customer as well as third party guarantor(s). Loan amount BDT-5.00 Lac to BDT10.00 Lac. 5) Retail Banking: a. Consumer Credit Scheme b. Auto Loan c. Salary Loan d. Any purpose Loan a) Consumer Credit Scheme (CCS): Personal Loan
40
Credit Policy Of JBL This is the type of loan available to customers then they want to make use of the sum of purchase households items like refrigerator, air conditions, computer etc. this is a special type of credit scheme of the JBL. In order to get this CCS, me customer has to have his own contribution into buying the good of amount 20% and the bank would provide the rest 80%. The loan amount is provided by the bank at an interest rate of 148%, where 14% is the amount of interest, 4% being the service charge and the rest 2% is the provision for risk. This loan amount is repayable on installment basis in a period of 12-24 months.
3.7 Procedure of Loan Classification:

The loan classification procedure for all types of loan is governed by the guidelines contained in BCD Circular no 34 issued by Bangladesh Bank, in 1989 and subsequently revised partially through BRPD Circular no 16, issued in 1999. After that there was another BRPD Circular (No. 16 dated may 14, 2001) circulated that brings some changes in case of continuous & demand loans. 1) General Principles: a) Responsibility Each Schedule Bank expects BKB. RAKUB. and BSB. b) Inspection: the department of banking Inspection and agricultural Credit Inspection department, Bangladesh Bank inspect the classification, interest suspense and provisioning carried out by the banks. c) Branch level action: Classification, interest suspense calculations and provisioning calculations should be done so that the results are available at both the head quarters and the branch level on a loan-by-loan basis. 2) Types of classified loan (C.L.): a) C.L.-1: Summary of classified loan b) C.L.-2: Cash Credit (SOD) c) C.L.-3: Demand loan d) C.L.-4: Term loan up to 5 years e) C.C.L.-5: Agricultural / Micro credit
41
Categories of loans and Advances of bank: a. Un-classified: The repayment of loans and advances are regular. b. Special Mention Account: Early warning mechanism to look at accounts with potential problems on focused manner. c. Sub- standard: The repayment of loan and advances are irregular but reasonable prospect of improvement. d. Doubtful debt: It is unlikely to be repaid but special collection efforts may result in partial recovery. e. Bad/ loss: There is little chance of recovery of loans and advances. 3) Type of Classified loans: a. Continuous loan: The loan, which has no particular repayment schedule, but contains date of expiry, credit limit is called continuous loan. e.g. CC, OD etc. Basis of classification: Irregular: Next day after the date of expiry, if not adjusted/ renewed at expiry date. Substandard: Un recovery for more than 3 months but less than 6 months. Doubtful: Un recovery for more than 6 months but less than 12 months. Bad/loss: Un recovery for more than 12 months. b. Demand Loan: The loans which is payable only after demand of bank. Moreover, if any contingent on other liabilities that is turned into forced loan (not sanction as regular loan earlier) is be treated as demand loan. e.g. Forced LIM, PAD, FBP, IBP etc. Basis of classification:
42
Credit Policy Of JBL Substandard: Un recovery for more than 3 months but less than 6 months. Doubtful: Un recovery for more than 6 months but less than 12 months. Bad/loss: Un recovery for more than 12 months. c. Fixed Term Loan: The loan, which is repayable within a particular period of fane as per repayment schedule, will be termed as fixed term loan.
Basis of classification: If any installment is left un recovered within the scheduled date, the amount falling due on account of un recovered installment will be classified as Overdue Installment. 1. Fixed Term Loan which is repayable within a maximum period of 5 years: Substandard: Overdue installment equals or exceeds the amount repayable within 6 months. Doubtful: Overdue installment equals or exceeds the amount repayable within 12 months. Bad/loss: Overdue installment equals or exceeds the amount repayable within 18 months. 2. Fixed Term Loan which is repayable within after 5 years. Substandard: Overdue installment equals or exceeds the amount repayable within 12 months. Doubtful: Overdue installment equals or exceeds the amount repayable within 18 months. Bad/loss: Overdue installment equals or exceeds the amount repayable within 24 months. If the fixed term loan is repayable in monthly installment then the amount of recoverable installment will be equal to the sum of 6 installments (monthly). Similarly, in case of quarterly repayable installment total amount repayable within 6 months will be equal to the amount of the total of 2 quarterly installments.
d. Short term agricultural and Micro-credit: Short-term credit will include credit extended to Agricultural sector and it is repayable within a period not exceeding 12 months. The short-term micro-credit will be that which Sylhet Branch, Sylhet 43
Credit Policy Of JBL will not exceed an amount of Tk. 10,000.00 and will be repayable within a period not exceeding 12 months. Irregular: If not recovered within the scheduled date as per contract of the credit. Substandard: After exceeding 12 months as irregular credit. Doubtful: After exceeding 36 months as irregular credit. Bad/loss: Overdue installment equals or exceeds the amount repayable within 60 months. Provision of classified Loan: Substandard: This classification contains accounts where irregularities have occurred but where such irregularities are considered to be either technicalities or temporary in nature. The main criterion for a sub standard advance is that despite these technical or temporary irregularities no loss is expected to arise. These accounts will require close supervision by management to ensure that the situation does not deteriorate further. A Provision -@ 20% of the base is required for in this classification.
Doubtful debt: This Classification contains debt where doubt exists over the full recoverability of the principal and interest. Although a loss is anticipated it is not possible at this state to quantify the exact extent of that loss. A Provision -@ 50% of the base is required for in this classification.
Bad/Loss: There facilities are considered to be un collectible or worthless even after all security has been exhausted and shall be provided for @ 100% of the base.
3.8 Processing of Credit Proposals:

Credit proposals shall be prepared in the approved format of the Bank Enclosing / furnishing documents / papers / information: 1. Pre-sanction Inspection Report containing KYC
44
Credit Policy Of JBL 2. Request for credit limit of customers 3. Project Profile/ Profile of Business 4. Copy of Trade License duly attested 5. Copy of TIN Certificate 6. Certified copy of Memorandum and Articles of Association, Certificate of Incorporation, Certificate of Commencement of Business, Resolution of Board of Director, Partnership Deed (where applicable) 7. Personal Net Worth Statement of the Owner/Director/Partner in Banks format 8. Valuation Certificate in Banks format along with photograph of collateral security with detail particulars on the back duly authenticated by the Branch Manager 9. Three years Balance Sheet and profit and Loss A/C 10. CIB Enquiry Form duly filled in 11. Credit Report from other Bank 12. Stock Report duly verified 13. Statement of A/C (CD/SB/CC) for the last 12 months. 14. Declaration of the customer of the name of sister/allied concerns and liabilities with other Banks, if any and an undertaking to the effect that they have no liability beyond those declared. 15. In Case of L/C proposal, detailed performance of L/C during the last year. 16. Whether the applicant is Shareholder/Director of Jamuna Bank Limited as per definition of Banking Companies Act. 17. Financial Analysis to be prepared by the Branch Manager based on the financial performance of the company and should show trends in sales in sales/profitability, liquidity, leverage etc. 18. Justification/ consideration for the facility.
3.9 Approval Authority:

The Banks existing policy is to centralize the delegated power to be vested to Committees. This policy is adopted with the view to minimize the risk by screening the proposal at the approval stage. The sharing of knowledge and experience for taking decisions enables the management to avoid the unnecessary risk. The following guidelines are to be applied in the approval/sanctioning of Loans. Sylhet Branch, Sylhet 45
The credit approval authority must be delegated in writing from the MD and Board (as appropriate) and records of all delegation to be retained in CRM. Before approving any facility the authority must be ensured that the borrowers CIB report as obtained is updated and clean. Delegated approval authorities should be reviewed annually by MD/CEO/Board. The credit approval function should be separated from the marketing/relationship management (RM) function. Approvals must be evidenced in writing, or by electronic signature. Approval records must be kept on file with the Credit Applications. All credit risks must be authorized by Committee within the authority limit delegated to them by the MD/CEO/Board. The pooling or combining of authority limits should not be permitted. Credit approval should be centralized within the CRM function. Regional credit centers may be established; however, all large loans must be approved by the Head of Credit and Risk Management or Managing Director/CEO/Board or delegated Head Office Credit Executives. The aggregate exposure to any borrower or borrowing group must be used to determine the approval authority required. Any credit proposal that does not comply with Lending Guidelines, regardless of amount, should be referred to Head Office for Approval. MD/Head Office Credit Committee / Head of Credit Risk Management must approve and monitor any cross-border exposure risk. Any breaches of lending authority should be reported to MD/CEO, Head of Internal Control, and Head of CRM. It is essential that executives/members of the Committee charged with approving loans have relevant training and experience to carry out their responsibilities effectively
3.10 Credit Approval Authority of Jamuna Bank Limited (JBL):

3.10.1 Credit approval Authority of JBL:
46
Credit Policy Of JBL Credit decisions are heart of all credit works. Generally branch manager and the credit in-charge of a branch are held responsible for appraising of a loan proposal. The customer request for credit limit and the credit officer prepares a credit memo and send it to the head office, credit division. After taking all the relevant information from the branch the head office credit division sent the credit memo to the credit committee. Credit committee of JBL is comprised of Managing Director and other top-level executives, that is, DMDs and EVPs. If credit committee is convinced about the merit of the proposal then it is sent the broad of directors. The board is final authority to approve or decline a proposal. The whole process takes a month or more. In JBL broad meeting occurs once in every week.
3.10.2 Credit Evaluation Principles Some principles or standards of lending are maintained in approving loans in order to keep credit risk to a minimum level as well as for successful banking business. The main principles of lending are given below: Liquidity:
Liquidity means the availability of bank funds on short notice. The liquidity of an advance means it repayment on demand on due date or after a short notice. Therefore, the banks must have to maintain sufficient liquidity to repay its depositors and trade off between the liquidity and profitability is must.
Safety:
Safety means the assurance of repayment of distributed loans. Bank is in business to make money but safety should never be sacrificed for profitability, to ensure the safety of loan. The borrower should be chosen carefully. He should be a person of good character & capacity as well as bank must have to maintain eligible number of security from borrower. Profitability:
47
Credit Policy Of JBL Banking is a business aiming at earning a good profit. The difference between the interest received on advances and the interest paid on deposit constitutes a major portion of the bank income, besides, foreign exchange business is also highly remunerative. The bank will not enter into a transaction unless a fair return from it is assured. Security:
The security offered for an advance is an insurance to fall bank upon incases of need. Security serves as a safety value for an unexpected emergency. Since risk factors are involved, security coverage has to be taken before a lending.
3.11 Pre-disbursement Compliance

When the credit proposal are approved the credit officer must have to be ensured that the disbursement of the credit facilities must comply with the directions written in the credit policy and circular made by time to time along with checking all the following terms and conditions. The officer of Loan Administration must collect the acceptance of the customers of the terms and conditions on the duplicate copy of the sanctioned advice. They will thoroughly examine and ensure that the subject credit facility does not contradict to any law, rules and regulation of the country, Bangladesh Bank and Deed of the Mortgage and power of the Attorney to be drafted and executed under the Supervision of the Banks Legal Advisor. Lawyers certificate to the effect that all the legal formalities (Equitable/ Registered Mortgaged) has been properly created on the land and building in favor of the bank & bank has acquired the effective title of the property. Registered power of attorney has been collected form the borrower (contractor) assigning the work order favoring the JBL and the power of attorney has been registered with the work order given agency and they have agreed that they will issue all the cheques favoring JBL. The legal documents of the vehicle have been obtained. Collection of the satisfaction certificate in respect of all the documents both legal and banking from the lawyer.
48
Credit Policy Of JBL Entry has been made in the Safe -in and Safe-out register and the documents are preserved. After being satisfied all the above terms and conditions the credit in-charge will disburse the loan amount to the client.
3.12 Documentation of the Loan:

Documentation is obtaining such agreement where all the terms and condition and securities are written and signed by the borrower. It specifies rights and liabilities of both the banker and the borrower. In documentation each type of advances requires a different set of documents. It also differs with the nature of securities. The documents should be stamped according to the stamp Act. There are no hard and fast rules of documentation and it varies from bank to bank. Generally, the documents are taken in the case of a secured advance by JBL: i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. Demand promissory note: Here the borrower promises to pay the loan as and when demand by bank to repay the loan. Letter of arrangement. Letter of continuity. Letter of hypothecation of goods and capital machinery. Stock report: This report is used for OD and CC. In this report, information about the quality and quantity of goods hypothecated is furnished. Memorandum of deposit of title deed of property duly signed by the owners of the property with resolution of Board of Directors of the company owning the landed. Personal guarantee of the owners of the property. Guarantee of all the directors of the company. Resolution of the board of directors to borrow fund to execute documents and completes other formalities Letter of Revival. Letter of lien for advance against FDR.
3.13 Security:
49
Credit Policy Of JBL Security accepted against facilities shall be properly valued and shall be affected in accordance with the laws of the country in which the security in held. An appropriate margin of security will be taken to reflect such factors as the disposal cost or potential price movements of the underlying assets. Professional surveyors duly checked by the bank officials should do the valuation of the real asset.
The following securities are acceptable: Ownership of lease assets i.e. the lease assets will remain in the name of the bank; in addition the following collaterals are acceptable to the bank. Collateral securities in the form the land and building, fixed deposits, other cash collateral, wage earners development bond having liquidation value covering at least covering 100% of the amount of finance. Deposits of listed A category share, national saving certificates, ICB unit certificates, assignment of life insurance policies; bank or insurance guarantee will also be acceptable as collateral securities. Creation of charge of the fixed assets of the existing industrial unit requiring BMRE.
3.14 Credit Administration:

The principal elements of Bank credit administration are as follows: a. Credit approval b. Credit files maintenance c. Change documents maintenance
a) Credit Approval:
The primary factor determining the quality of the Banks credit portfolio is the ability of each borrower to honors, on a timely basis, all credit commitments made to the Bank. The authorized
50
Credit Policy Of JBL credit personnel prior to credit approval must accurately determine this. The credit approval process shall be governed by the Bank Credit policy framework; It can be summarized under the following heads:
Credit Evaluation Principal:

To have the optimum return from the deployed funds generated by the different kinds of lending, more emphasis shall be given on refund of loans and advances out of funds generated by the borrowers from their business activities (cash flow) instead of realization of money by disposing of the securities held must be adhered to at every level of approval. The lending risk analysis tools containing of both the business risk and security risk and security risk provides overall rating of risk in a particular loan under the following leading process: Asses risk of failure to repay. Decide whether to accept or reject a loan proposal. Set price and terms. Obtain sanctioning document disburse loan. Monitor performance and ensure repayment/recovery. The most pertinent and prime of the process is assessment of risk failure to repay which deals with the overall lending risk combining risk and the security risk in a matrix derive out of, Six segments of the business risk: i. ii. iii. iv. v. vi. i. ii. Supply risk Sales risk Performance risk Resilience risk Management competence risk Management integrity risk and Security control risk Security covers risk.
Two segments are security risk:
51
Credit Risk Evaluation:

The importance of a detailed and complete credit risk assessment for each facility. And customer relationship cannot be over emphasized. The steps that should be followed in carrying out such an assessment are out in the Bank credit manual and facilities must be supported by a complete analysis of the proposed credit. A comprehensive and accurate appraisal of the risk in every credit exposure of the Bank is mandatory. No proposal can be put up for approval unless there has been a complete written analysis. It is the absolute responsibility of the proposing officer to ensure that all necessary documentations are collected before the proposal is sent sanction officer.
Credit files maintenance:

The Credit file on each facility shall contain all information necessary to facilitate ready monitoring of that facility. It should contain a through history of the customer relationship to; help credit officers track any problems assist a newly assigned credit officer in understanding the customer and make the lending process transparent. The maintenance of credit files shall be disciplined to force the lending officer to obtain all relevant documents and encourage him to consider all relevant information when analyzing customer risk. Complete credit files prevent loan losses resulting from imperfect security documentation. Primary items in credit files include:
Section (A)
Credit application, Credit approval notes/analysis. The analysis should contain information about the borrower, credit purpose, credit repayment sources, details of collateral security with valuation and guarantees; it should-also contain an assessment of the competence and quality of the borrowers management, the general economic and competitive environment of the borrowers industry and any other pertinent factors, which may affect the borrowers ability to repay the facility.
Section (B):
Evidence of credit approval and data upon which approval was granted together with any comments, if appropriate, copy of letter and loan agreement, a check list along with copies of all
52
Credit Policy Of JBL legal and banking documents obtained/to be obtained.
Section (C):
Details and 6 monthly-updated information of all related facilities to the same customer group (group liabilities information).
Section (D):
All supporting data such as financial statements and analysis thereof, reference investigation result, CIB report and notes of all discussions with the borrower and other relevant parties with paper clipping.
Section (E):
Correspondences, call reports, site visit report, stock report etc. Each credit file shall be maintained in a secured location and access restricted to authorized personal. Copies of the information may be kept where regular access is required.
Charge documents maintenance:

a) All legal and banking documentation and register of security shall be maintained, at the Branch, separately from the credit file in a location of utmost security. Such documentation may include: All charge documents as prescribed by the Bank and local laws for the relevant credit facility Signed credit agreement Signed guarantees or other evidence of credit security or collateral agreement.
b) All legal & Banking documentation i.e. charge documents shall be kept in fire proof safe under dual custody of Branch Manager or his designated alternate and another officer. A register of charge/security documents shall be maintained under the supervision of Branch Manager. c) A check list of charge documents should be maintained in credit file under section-B.
3.15 Credit Monitoring and Review of JBL
53
Credit Policy Of JBL 3.15.1 Credit Monitoring and Review: It is the last step in credit policy and procedure framework of JBL. Credit monitoring and review is very important, because it ensures proper utilities and repayment of bank fund. Credit monitoring and review feature of JBL is concerned was assessing the quality of different type of loan. Periodic review and follow up should, inter-alias aims at ensuring: That conduct (Turnover, regularity of repayment etc) of the borrowing accounts during the period under review has been satisfactory or as expected. The account is not having excess over limit The terms and condition of the sanctioned letter are strictly followed. The value of the collateral security is adequate. There is not any unfavorable situation in market, economy and political conditions, which may endanger the reliability of the borrower account. The analysis of the borrowers business performance and comparison of the projected and actual to find any deviations. Apparent profitability from the loans.
3.16 Credit Recovery:

Advances granted in any form are repayable either on demand or on the expiry of the validity period, or through agreed installments. When repayment is not forth coming in accordance with the repayment terms, recovery efforts should be launched. When the repayment pattern of the advance is such that continuance of the facility is not worthwhile or while the advance allowed on installments has been defaulted or the advance allowed confronts with the following circumstance advance should be recalled: Borrower or the Guarantor dies. Borrower or the guarantor has become insolvent. Borrowing Company has been liquidated. Partnership has been dissolved.
54
Credit Policy Of JBL Borrower does not come forward to renew the documents much before the expiry of the period of Limitation. Turn over in the account has not hopefully improved. Value of the security has been deteriorated. The borrower does not comply with the legitimate request of die bank to complete all observable formalities. Financial position of the borrower has deteriorated alarmingly which is beyond restoration. The party resorts to heavy over trading/ speculation. The party commits fraud of any sort. Policy of the bank has under gone change in relation to certain types of advances. Bangladesh Bank has imposed restriction on certain type of advance and desires its adjustment. For the recovery of the advances, branch should take the under mentioned steps: Make formal demand for repayment in writing. Put pressure on the borrower by utilizing the most effective and meaningful media, which can exert adequate influence on the borrower. Intimate the borrower about banks ultimate resorting to file suit in the event of nonrepayment. Advice the guarantor if any to adjust the advance or have it adjusted by the principal debtor. If the borrower and his guarantor (if any) comes forward and proposes repayment arrangement and the same is considered to be an acceptable proposal, the branch should seek controlling / H-O decision in this regard and act in accordance with the instruction. When the borrower does not adjust the account, legal notice, under the approval of the controlling office/ H-O, should be served upon the borrower and the guarantor, through banks legal adviser. It should be mentioned in the notice that if the outing is not adjusted within the reasonable specific time (Which shall be mentioned) suit shall be field for the recovery of the advance.
55
Credit Policy Of JBL When advance to be recovered was allowed against pledge of goods, after giving notice in the aforesaid manner, arrangement shall be made to sell the goods through auction subject to the approval of the competent Authority. When the security obtained against the advance, does not cover the outstanding, attempts must be made to secure the advance. If it is not possible and the borrower does not repay, change of recovery must be ascertained and legal action, subject of the approval of the competent Authority shall be taken. If an advance account of the deceased borrower (individual or proprietary concern) remains unadjusted, for the regularization/ recovery the following actions shall be taken: No further withdrawal shall be allowed. If the borrowers legal heirs approaches for the continuance of the facility, the proposal together with legal opinion shall be referred to the competent authority. In case the authority approves the proposal, the debit balance of the deceased account shall be transferred to a new account in the name of his heirs or successors along with securities held in the account. In modern Banking constant supervision, follow up, meaningful liaison etc. with the borrower and guarantor is much efficacious in respect or recovery of advance. When persuasion, request, notice, goes in vain, legal action as last resort, shall be taken, subject the approval of the competent authority.
If not Recovery:
Firstly, JBL Bank contact with Borrower and Guarantors and trying to recover. If not recovered Than Bank sent to legal notice issued for borrower. Otherwise not response- than JBL do claim of court Bank can do claim 2 ways in Money laundering court: Sylhet Branch, Sylhet Money Suit 56
Credit Policy Of JBL client A/C. Civil Suit.
Jamuna Bank follows Money Suit System. After that not recovered than Bank write-off
Write-off:
When all the avenues of recovery of a debt stands exhausted, or had to be abandoned for genuine reasons, the question of writing off a debt arises. Branches to approach Head Office for such writing off, reasonably establishing that no other avenue is left to recover the dues.
Chapter Four: Performance Analysis 4.1 Classified Loans (Last 5 Years):

Table-A: Classified Loans of this branch: Year 2007 2008 2009 2010 2011 Substandard 529 438 99 58 41 Doubtful 6210 5461 212 163 130 Bad/Loss 811 501 416 333 290 Fig-000 Total Amount 7550 6400 727 554 461
From analyzing the received data we see that the amount of classified loans is decreasing continuously year to year. A classified loan is decrease then bank position is well. Because Loans & Advances is an asset for bank. Bank always want to know classified loans are decrease.
57
Classified Loans
8000 7000 6000 5000 4000 3000 2000 1000 0
7550 6400
Amount (Fig-000")
727
554
461
2007
2008
2009 Year
2010
2011
Graph-1: Amount of classified Loans
4.2 Percentage of classified Loans:
Table-B: Fig-000
Year
2007 2008 2009 2010 2011
(%) of CL
4.68% 4.52% 2.57% 0.36% 0.32%
From analyzing the received data we see that, In 2009 the percentage of classified loan is lowest 0.32% & highest in 2005 4.68%. So, we are overall justified we see that year to year JBL classified loans (%) is decrease. It is good for Jamuna Bank Ltd.
58

Percentage of Classified Loans
0.36% 0.32% 2.57% 4.52% 4.68%
2007 2008 2009 2010 2011
Graph: 2
4.3 Short Term & Mid Term Loans:

Jamuna Bank Limited have short term & mid term loans. They have no Long term loans. So, in the below we analysis short term & mid term loans:
Table-C: Year 2007 2008 2009 2010 2011 Short Term 112453 137302 117938 145501 128624 Mid Term 3856 4583 10321 13698 15331 Fig- 000 Total 116309 141885 128259 159199 143955
From analyzing the received data we see that, The JBL, mainly disburse short term loan. Sylhet Branch is much more reluctant on short term loan. We see the amount of short term loan is highest in the year 2008 when the amount was TK14.55 crore and lowest is 2005 11.24 crore. But in 2009 (July) total loan is 12.86 crore then we can say, after finish 2009 is more expand its
59
Credit Policy Of JBL business than previous years. And Mid term loan is highest in the year when amount will 2009. Because until July 2009 mid term loan is 1.53 crore than after finish this year defiantly its raising its business others years.
Amount of Short & Mid Term Loan
160000 145501 137302 140000 128624 117938 112453 120000 100000 80000 60000 40000 20000 0 2007 2008 2009 2010 2011
10321 13698 3856 4583 Year
Amount (fig-000")
Short Term Mid Term
Graph-3: Short Term & Mid Term loan
4.4 Total Loans & Advances (up to 5 years):

Table-D: Fig-000
Year 2007 2008 2009 2010 2011 Cash Credit 143550 118443 111705 131736 107664 CC CCS Loans under (Gen.) SME 1521 1033 1489 1408 825 7347 527 6232 1416 623 4856 OD 14231 18859 6233 13765 19544 SME PLW Lease Loan Fin. 265 467 2089 6908 9852 422 393 60 31 453 Shop Total Fin. Amount Scheme 250 161272 376 141888 128262 159202 143957
From analyzing the received data we see that, Total loans & advances of this branch was satisfactory all of the year. In 2007 Total Loan & advances some decrease but after that year to year it is increased. And we see in 2009 (July) total loan & advance are good. So we can say, confidently after finish this year loan & advance position is increase previous years.
15331
60
Total Loans & advance (5 Years)

200000 Amount 150000 100000 50000 0 2007 2008 2009 Year 2010 2011
161272 141888 128262 159202 143957
Graph-4: Total Loans & Advances
4.5 Interest Rates of Loans & Advances of JBL (Table-E)

SL NO. 1. 2. 3. 4. 5. 6. 7. 8. 9. Type of Landings Agricultural Loan Term Loan to Large & Medium Scale Industry Working Capital to Large & Medium Scale Industry Export Trade/Commercial Financing Housing Loan Consumer Credit, Credit Card and Retail Portfolio (Consumer Loan) Credit to Non Bank Financial Institution Overdraft against a) FDR issued by JBL b) Schemes deposit of JBL c) FDR/other Deposit instruments issued by other Banks 10. Others
15.50% 15.50% 2.50% 14% 16% 13% 13% 13% 7% 13% 13%
Interest Rate 13.00% (Maximum) 13.00% (Maximum) 13.00% (Maximum) 7.00% (Fixed) 13.00% (Maximum) 13.00% (Maximum) 16.00% (Mid Rate) 14.00% (Mid Rate)
2.50% above rate of FDR 15.50% (Mid Rate) 15.50% (Mid Rate)
Agricultural Loan 15.50% (Mid Rate) Teram Loan Working Capital Export Trade Financing House Loan CC Loan Credit to NBFI Overdraft against (FDR) Scheme deposit Others
61
Graph-5: Interest Rate of loan & advance
4.6Total A/C of Loans and Advances:

Table- F: Last 5 Years total Loans & Advance A/C.
Year
2007 2008 2009 2010 2011
Total A/C
90 131 75 98 114
From analyzing the received data we see that in 2009 Total Loan & Advance A/C: 75 below then other years. And 2008 Total Loans & Advances A/C: 131 are high.
62
Total Loan & Advance A/C (5 Years)

140 120 100 80 60 40 20 0 A/C
90 75 131 114 98
2005
2006
2007 Year
2008
2009
Graph-6: Loan & Advance A/C
4.7 Recovery Statement of classified Loan:

Table-G: Year 2005 2006 2007 2008 2009 Continuous Loan 19.20 16.11 17.38 8.76 4.2 Term Loan 3.41 2.31 1.13 0.41 0.39 TK: Core Total Recovery 22.61 18.42 18.51 9.17 4.59
Actually recovery rate good or bad is depending on how much Bank provides loans in total year.
63
Total Recovery Of Classified Loans

25 20
Amount
15 10 5 0 2005 2006 2007 2008 2009

Year
Continous Loan Term Loan Total recovery
4.8 Total Deposit Last 5 Years:

Table-H: Deposit (5 Years) Fig-000 Year 2005 2006 2007 2008 2009 Total 30,70,97,512 36,30,37,475 31,12,52,225 40,61,57,486 42,13,17,884
From analyzing the data we can see, the amount of deposit has been increase year to year accept 2007. In 2005 the total deposit was 30.70 crore, but 2009 (July) highest 42.13 crore. So there is a positive increasing trend of the total deposit. It is good sign for JBL, Sylhet Branch.
64
Total Deposit 500000000

Amount
400000000
36,30,37,475
200000000 100000000 0
2005
30,70,97,512
2006
2007
31,12,52,225
2008
40,61,57,486
2009
Year
Graph-8:
Chapter Five: SWOT Analysis of JBL

SWOT analysis, is a strategic planning tool to evaluate he Strengths, Weaknesses, Opportunities and Threats involved in a project or in a business venture. It involves specifying the objective of the project or business venture and identifying the internal and external factors that are favorable and unfavorable to achieve the objectives. The aim of the SWOT analysis is to identify the key internal and external factors that are important to achieve the objectives.
STRENGTH:
Strong and qualified credit policy maker. Qualified and skilled credit employees.
42,13,17,884
300000000
65
Credit Policy Of JBL Local Demand oriented Credit policy. They are quickly providing loan service. They have well reputation i.e. people are interested to take loan for them. Introducing some new project for medium & small entrepreneur. Credit employees are well-trained. Good corporate image in banking sector. Committed to the corporate target as well as personal target. Informal and Fair relationship with customers. It has good relation with other commercial banks including Bangladesh Bank. Availability of all types of modem banking facilities, especially Credit (Loan & Advances).
WEAKNESS:
They are providing only short term & mid term loans. They are not providing long term loans. Because of insufficient branches JBL is unable to make loan according to customer expectation. Though they are quick providing loan but they are not quick enough to fulfill customer expectation. Other banks provide various loan facilities which are not available in JBL. JBL this branch not sanctioning big amount of loan for businessmen. But other banks give this facility.
OPPOURTUNITIES:
They are taking small amount of interest in loan. Simply people can get loan. They can provide long term loan.
66
Credit Policy Of JBL The JBL should plan credit policies to provide loan facilities to the underprivileged group of people. The branch should diversify its credit facilities in terms of credit product. Recurred skilled person. for credit section.
THREATS:
Existing Govt. may change the previous Govt.s policy it also hamper the operation. Numbers of private bank are increasing with various loan policies. If people arent satisfied about bank performance level. If bank loss their goodwill then people not believe weather to take loan or not. Some other banks providing various credit facilities which may be hamper current credit policies of JBL. JBL this branch not sanctioning big amount of loan for businessmen. But other banks give this facility. Its a threat for JBL.
Chapter Six: Major Findings and Recommendation Regarding Credit Management

The vision of the Jamuna Bank Limited is to be the one institute in the arena of banking services. For the achievement of such an emphatic and comprehensive goal the bank should design credit policies that will encompass credit products for each and every stratum of the society. The policies must be competitive and customer friendly and also is technologically well equipped. The following matters are find and also have some recommendation in this regard: Day by day people aware about the online banking and also they fell important about online
transaction which increases the demand of credit card. Although Jamuna Bank provides this service to their customer but for getting this card client must be deposited security more than as how much he/she want. This makes the customer dissatisfy on bank. So security should not deposited for credit card holder it should be give to their valued client those who are maintain high transaction. Sylhet Branch, Sylhet 67
Credit Policy Of JBL The process of loan proceeds takes more than a month which some times makes the
borrower helpless to get the loan on due time. So the credit sanction authority should take some steps to reduce the time of loan procedure. Bank should more focus on agricultural and industrial credit and discourage consumer Bank should make proper and exhaustive documentation before disbursement and to ensure To safeguard Bank's interest over the entire period of the advance, Bank should give durable finance. proper supervision, monitoring and follow up of each credit. emphasis on a comprehensive view of the capital, capacity, integrity of the borrower, adequacy, nature of security, compliance with all legal formalities, and completion of all documentation and finally a constant watch on the account. In reducing magnitude of classified loans, the system of credit appraisal needs to be According to the Bangladesh Bank guideline the spread between the FDR rate and loan rate All commercial bank are giving high FDR interest rate for yearly 9% but those who are strengthened through developing comprehensive borrower rating system. should not more than 3%. But the bank some times charge more than that spread rate for loan. take loan for investment they have to pay above 4% from FDR interest rate ultimately it affected to general people it should be consider by Bangladesh Bank. The head office should not centrally control all the decision; branch should have some The authority of the Branch does not provide much opportunity to the intern student to power to take decision. work in the credit section, but which is important for student to learn about the credit. So the authority should provide the opportunity to work in the credit section. The banks main obstacles are regulatory burdens, new government regulations, increasing competition from non-traditional financial institution. So, the bank should consider these factors and take some pro-active steps to handle any sort of unexpected situation. The management should implement job rotation system in the bank. This is the system in which every officer is capable to work in every desk. This system can build up Total Quality Management (TQM).
68
Chapter Eight: Conclusion

The slogan of the JBL is Your Partner for Growth. Their slogan says that they are in the business for increasing the financial ability of the customer. During my Internship, I have just tried to pull out the information needed to understand about the credit management of JBL. Observe all the report I exerted my efforts to design the report in way that the report requires the least level of technical knowledge for the understanding the main contents. The management of the JBL has set up a credit principle that takes care of the convenience of the customer. The bank always plan for the most modem credit facilities for the customer. While planning for the introduction of a credit product the management gives emphasis on the following aspects of the credit product: a) Utility of the product. b) Socioeconomic necessity of the product. c) Convenience of the application procedure. d) Securities for the loan facilities. e) Loan processing phases
69
All these considerations regarding the extension or sanction of the credit facilities laid the foundation stone for the tremendous success in the arena of the banking business. In addition to these successes I noticed some lacking in the credit policies. These are as follows: 1. No clear guideline for syndicated or long term loan. 2. No indication or guideline for extending credit facility for the agriculture sector. Jamuna Bank is performing to the direction of the attainment of the overall organizational goal of the JBL. Loan portfolio of the branch is very fluctuating. The credit portfolio of the branch is not diversified with respect to the loan product of the bank. From my study I can say finally, this report carrying overall credit management of JBL. Where I found some merit and demerits of JBL. At the last I can ensure JBL make a good field provide Loans and Advances for the various entrepreneurs.
References:
1) Cooper, Donald R. and Schindler, Pamela S. (1999, 6th ed.), Business Research Methods, Tata McGraw-Hill Publishing Company Limited, New Delhi, India. 2) Credit Manual, Jamuna bank Limited, 2007. 3) Credit Policy Guldelines, Jamuna Bank Limited, 4) December 07, 2005. 5) Annual Reports of JBL, (2010-11). 6) Bank Management & Financial Services, sixth edition (McGraw-Hill International Edition).
Websites:
www.jamunabankbd.com http://www.investopedia.com
70
Abbreviation:
Abbreviations used throughout the report are as follows: JBL LC SWIFT TIN CC SME SOD CIB CRG CRMC Jamuna Bank Limited Letter of Credit Society for Worldwide Inter-bank Financial Telecommunication Tax Identification Number Cash Credit Small & Medium Enterprise Financing Secured Overdraft Credit information Bureau Credit Risk Grading Credit Risk Management Committee
71
CRMD CAS ACSPD CAMEL:-
Credit Risk Management Department Credit Authorization Scheme Agricultural Credit and Special Programs Department
C - Capital adequacy A - Asset quality M - Management quality E - Earnings L - Liquidity S - Sensitivity to Market Risk
72

Credeit Policy - Al Amin

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Credeit Policy - Al Amin

Uploaded by

Copyright:

Available Formats

Credit Policy Of JBL

Sylhet Branch, Sylhet

Credit Policy Of JBL

Sylhet Branch, Sylhet

Credit Policy Of JBL

Md. Al Amin MBA ID NO. : 1002010521 Major in Finance & Banking

Sylhet Branch, Sylhet

Credit Policy Of JBL

Sylhet Branch, Sylhet

Credit Policy Of JBL

Sylhet Branch, Sylhet

Credit Policy Of JBL

Chapter one: Orientation of the Study ...........................7 1.1 Introduction:................................................................7

Sylhet Branch, Sylhet

Credit Policy Of JBL

Chapter one: Orientation of the Study

Sylhet Branch, Sylhet

Credit Policy Of JBL

1.2 Objective of the study:

1.3 Scope of the Study:

Sylhet Branch, Sylhet

Credit Policy Of JBL

1.4 Methodology of the Report:

Credit Policy Of JBL

1.5 Limitation of the study:

Sylhet Branch, Sylhet

Credit Policy Of JBL

1.6 Data analysis and interpretation:

Sylhet Branch, Sylhet

Credit Policy Of JBL

Chapter Two : An Overview of Jamuna Bank Ltd 2.1 History of JBL:

Sylhet Branch, Sylhet

2.2 Vision & Mission : Vision of the bank:

Mission of the bank:

Objectives of the Jamuna Bank Ltd:

Sylhet Branch, Sylhet

2.3 Corporate Strategies of Jamuna Bank Ltd:

Sylhet Branch, Sylhet

Credit Policy Of JBL

To promote organizational effectiveness by openly communicating company plans,

To cultivate a working environment that fosters positive motivation for improved

2.4 Board of Directors & Sponsors:

Sylhet Branch, Sylhet

Credit Policy Of JBL

Sylhet Branch, Sylhet

Credit Policy Of JBL

2.5 Organizational Structure of Jamuna Bank Ltd:

Organizational Structure of JBL

Sylhet Branch, Sylhet

Credit Policy Of JBL

2.6 JBL Group Profile:

Sylhet Branch, Sylhet

Credit Policy Of JBL

2.7 The Management:

Mr. A.K.M. Rashiduzzaman

Mr. Mokhlesur Rahman Mr. Ghulam Mustafa Mr. Ahmed Nawaz

Sylhet Branch, Sylhet

2.8 Commitments to the Clients:

Sylhet Branch, Sylhet

1.9 Customer Service and Automation

1.10 Creed of JBLs personnel

Sylhet Branch, Sylhet