an internship report on jamuna

8/11/2019 An Internship Report On jamuna

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Table of contents

Chapter- 1.................................................................................................................................................................8Introduction..............................................................................................................................................................8

1.1 Prelude...........................................................................................................................................................81.2 Origin of the Report....................................................................................................................................8

1.3 Literature review....................................................................................................................................91. O!"ective# of the $tud%......................................................................................................................9

1.&Methodologyof the $tud%...............................................................................................................9

1.6 Scope of the Study..................................................................................................................1'

1.(. Li)itationof the $tud%............................................................................................................1'Chapter- 2..............................................................................................................................................................122.' Overview of *a)una +an, Ltd.......................................................................................................................12

2.1 Location.......................................................................................................................................................122.2 i#torical !ac,ground of the co)pan%....................................................................................................12

2.3 $trategie# of *a)una +an, Ltd............................................................................................................132. O!"ective# of *a)una +an, Ltd.......................................................................................................1

2.& Offer# of *a)una +an, Ltd..........................................................................................................12. Product# / $ervice#0........................................................................................................................................1

Chapter-3................................................................................................................................................................193.' Credit Operation of *a)una +an, Ltd..........................................................................................................19

3.1 Credit acilitie# of *a)una +an, Ltd..........................................................................................................19

3.2 Lending Criteria......................................................................................................................................2'3.3 Credit Operating $%#te)......................................................................................................................213. Credit Ri#, ##e##)ent.......................................................................................................................2

3.&. $ector i#e 4i#!ur#)ent of Loan# in *a)una +an, Ltd.0............................................. .......... ...23.(. 4i#!ur#)ent of Loan nd 5et Intere#t Inco)e fro) Loan of *+L for the la#t five %ear#.6in7illion..............................................................................................................................................2&

3.8. ow *a)una !an, recover their Loan...........................................................................................................2&Recover% Pattern# of Loan / dvance#0..........................................................................................................2

%pe# of loan of *a)una +an, Li)ited0...................................................................................................297i##ion $tate)ent of the Credit 4epart)ent0.......................................................................................................31Credit Principle#0...................................................................................................................................................32

Proce##ing of Credit pproval0.............................................................................................................................33unction of Credit Ri#, :rading0..................................................................................................................3

Co)putation of Credit Ri#, :rading....................................................................................................3

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Chapter- 1

Introduction

1.1 Prelude

e can #i)pl% #a% that +an, i# financial organi;ation that deal# with )one%. +ut it i# the

preci#e )o#t definition a!out !an,. In )odern age it i# i)po##i!le to thin, a countr%

without !an,. +an,# pla% diver#ified role in an econo)%. he )o#t i)portant ta#, that

i# done !% a !an, i# !uilding of capital. hat i# the ,e% factor of the develop)ent

of an econo)%. n Indu#triali;ed nation giving guarantee> different t%pe# of

certificate> e=perti#e advice to !u#ine## people. +an,# al#o help to e#ta!li#h good faith

a)ong !u#ine##per#on#.

*a)una +an, Li)ited 6*+L i# a +an,ing Co)pan% regi#tered under the Co)panie# ct>

199 with it# ead Office at Chini $hilpa +ha!an> 3 4il,u#ha C?> 4ha,a-1'''. he

+an, #tarted it# operation fro) 3rd *une 2''1.*a)una +an, Ltd. i# a third generation !an, in +anglade#h. It i# pla%ing an i)portant role

to develop the !u#ine## #ector. he growth of thi# !an, i# ver% good. It# )otto i# to

provide a pro)pt and @uic, #ervice to the client#. *a)una +an, Ltd. ha# i)ple)ented well

#tructured online !an,ing #%#te)# that )a,e it ea#ier to provide pro)pt #ervice# to the

cu#to)er.

hi# #tud% ha# !een prepared in the light of practical a# well a# theoretical ,nowledge. l#o

it i# prepared under the guidance and #upervi#ion of the core teacher. 4uring the

intern#hip progra) I have got a good idea a!out the !an, and that i# depicted in the report.

1.2 Origin of the Report.

hi# report i# under the intern#hip progra) which i# )andator% for all 7+

#tudent# of 7I$ depart)ent. In thi# intern#hip progra)> I wa# attached to do )%

intern#hip to credit depart)ent# of *a)una +an, Li)ited> > Chi#tia 7ar,et +ranch>

:auchia> 5ew)ar,et> 4ha,a .+oth the acade)ic and the organi;ational #upervi#or

a##igned )e on thi# pro"ect. he report i# on ACredit Operation of Jamuna Bank

LimitedB.

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1.3 Literature review

he profit of a co))ercial !an, depend# pri)aril% on the utili;ation of it# fund.nd the )a,ing of loan and advance i# alwa%# profita!le to a !an,. # the !an, )o!ili;e#

#aving# fro) the general people in the for) of depo#it> the )o#t i)portant ta#, of it i# to

di#!ur#e the #aid depo#it a# loan or advance to the )a## people for the develop)ent of

co))ercial> indu#trial> who are in need of fund for inve#t)ent.

great !ul, of pro!le) loan# and their ever deepen thru#t on +an, credit ha#

!rought a gloo)% #ituation in the co#t of fund. Loan 4efault culture ha# #tarted in

+anglade#h )ainl% after the nationali;ation of !an,#. owever> it wa# enhanced !% the

availa!ilit% of huge a)ount of credit in the na)e of developing private and indu#trial

#ector. Indu#tr% #et-up wa# #hown a# #ic, indu#tr% to get additional loan and relieve fro)intere#t.

*a)una +an, Ltd. wa# e#ta!li#hed to provide ter) loan and other financial

a##i#tance to accelerate the pace of develop)ent to #)all indu#tr% of +anglade#h> i# al#o

prone to #uch di#appointing feature# of pro!le) loan#. he report )ainl% focu#e# on the

credit operating #%#te)> their credit policie# and procedure# of loan #upervi#ion and

recover%> e#peciall% their cla##ified loan#.

1.4 Objectives of the Study

Primary obecti!e" Pri)ar% o!"ective i# to learn the real world e=perience !ecau#e I

have gathered theoretical ,nowledge for 7+ cour#e and tr% to )atch real world

e=perience with the theoretical ,nowledge.

Secondary becti!e"

o o ac@uire the ,nowledge a!out the credit #%#te) of *a)una +an, Ltd.

o o ,now a!out the organi;ational fra)ewor, of the *a)una +an, Ltd.

o o highlight an overview of *a)una +an, Ltd. during 2'11-2'12o o find out the $O 7i= of the *a)una +an, Ltd.

o o find out the Productivit%> / rend po#ition of *+L during 2''8-2'12.

o o enhance the reco))endation to re)ove the pro!le)# of *a)una +an, Ltd.

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1.$Methodologyof the Study

hi# report i# the reflection of three )onth# intern#hip progra) at the *a)una +an,

Li)ited at Chi#tia )ar,et !ranch. hi# #tud% covered !% !oth the pri)ar% a# well

a# the #econdar% for) of data wa# u#ed to prepare the report. . o prepare thi#intern#hip report I have collected data and infor)ation !oth fro) pri)ar% and

#econdar% #ource#. I had o!#erved the operation# and wor,ed with the officer# at

the #a)e ti)e. I had interviewed the *+L official# for getting )ore infor)ation.

or the anal%#i# part> data have !een collected fro) different #tate)ent# and

the annual report of the !an,.

S ou rce% of &n f ormati on

he data collection )ethod of #tud% con#i#t# of !oth of pri)ar% and

#econdar% #ource#. +ut )a"orit% of the infor)ation wa# collected fro) #econdar%

#ource#.

Primary %ource%"

ace to face conver#ation with the officer.

4irect o!#ervation#.

ace to face conver#ation with the client.

'he %econdary %ource% of information are (i!en be)o*" nnul report of the *a)una +an, Li)ited during 2'11-2'12.

Outlet# of +anglade#h In#titute of +an, 7anage)ent.

e!#ite of the *a)una +an, Li)ited.

4ifferent pu!lication# of the *a)una +an, Li)ited.

heoretical !oo,# relating !an,ing #ector.

1.6 Scope of the Study

he report co))ence# with the outline of the organi;ation in focu#> pre#enting the

)i##ion and vi#ion> individual depart)ent "o! re#pon#i!ilitie#> Credit Ri#, nal%#i# related

i##ue# are di#cu##ed in detail along with their re#ult# and po##i!ilitie#. In thi# report i# all

the a#pect of credit ri#, anal%#i# ha# !een di#cu##ed detailed !% tho#e the )anage)ent can

ta,e deci#ion# regarding )odif%ing their plan# for granting loan# and can #trengthen the

relation#hip with the !u#ine## environ)ent a# well a# with the #ta,eholder# and client#.

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1.7. Liitationof the Study

hree )onth# i# not enough to ,now a!out co))ercial !an,ing operation through I

have !een received )a=i)u) a##i#tance fro) the ever% individual of the *+L ongi

+ranch. 4efinitel%> I could not produce an out#tanding report for the ti)e li)itation#. 4ue

to the ti)e li)it> the #cope and di)en#ion of the #tud% ha# !een curtailed.

he er) paper i# li,el% to have following

li)itation#0

$ince the ideal #i;e of data could not !e ta,en> #ugge#ted operating proce## )a%

not !e u#eful without appropriate )odification#.

4ue to #hortage of ti)e> the accurac% of infor)ation )a% not have !een

co)pletel% perfect.

he Operating Proce## i# a theoretical #ugge#tion. Onl% a practical application of

thi# )a% "u#tif% it# effectivene## that could not !e done due to ti)e li)itation.

Lac, of co)prehen#ion of the re#pondent# wa# the )a"or pro!le) that created)an% confu#ion# regarding verification of conceptual @ue#tion.

Confidentialit% of data wa# another i)portant !arrier that wa# faced duringthe conduct of thi# #tud%. ver% organi;ation ha# their own #ecrec% that i# notrevealed to other#. hile collecting data on *+L> per#onnel did not di#clo#e enoughinfor)ation for the #a,e of confidentialit% of the organi;ation.

Ru#h hour# and !u#ine## wa# another rea#on that act# a# an o!#tacle while gathering

data.

Observing and analyzing the broad performances of a Bank and one of its

Branches, moreover when it is an AD branch, are not an easy job by this short

durationof time only threemonths!"

#owever, omitting this,the report will help us understandthe $reditOperation

departmentsof the bank"

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Chapter- 2

2.! Overview of "auna #an$ Ltd

*a)una +an, Li)ited 6*+L provide# co))ercial !an,ing #ervice# in

the +anglade#h. he !an, pri)aril% engage# in corporate !an,ing> trade finance> pro"ect

finance> retail !an,ing> #)all enterpri#e finance> con#u)er finance> and #%ndication.

It# range of #ervice offering# include ca#h )anage)ent #ervice#> pa%)ent# and clearing#>

#afe depo#it loc,er #ervice#> e)plo%ee !enefit#> collection #ervice#> trea#ur% #ervice#> a##et

)anage)ent> #ervice# and $I for foreign trade. *a)una +an, ha# an inve#t)ent of

39' )illion ta,a in it# !u#ine##.

2.1 Location

he Regi#tered office / corporate ead Office at Chini $hilpa +ha!an> 3 4il,u#ha C?>

4ha,a-1'''. It# !ranche# are #ituated at all the )a"or citie# of the countr% e=cept '9

which are #ituated at rural area. he nu)!er of !an, !ranche# #tood at 83.

2.2 %i&torica' (ac$ground of the copany

*a)una +an, Li)ited 6*+L i# a +an,ing Co)pan% regi#tered under the

Co)panie# ct> 199 with it# ead Office at Chini $hilpa +ha!an> 3> 4il,u#ha C?>4ha,a-1'''. he +an, #tarted it# operation fro) 3rd *une 2''1.

*a)una +an, Li)ited i# a highl% capitali;ed new generation +an, with an

uthori;ed Capital and Paid-up Capital of ,.1'''' )illion and ,.88 )illion

re#pectivel%. he Paid- up Capital ha# !een rai#ed to 8' )illion and the total e@uit% of

the !an, #tand# at 832& )illion a# on 4ece)!er 31> 2'12. he +an, underta,e# all t%pe#

of !an,ing tran#action# to #upport the develop)ent of trade and co))erce of the countr%.

*+LD# #ervice# are al#o availa!le for the entrepreneur# to #et up new venture# and +7R

of indu#trial unit#. *a)una +an, Ltd. the onl% +engali na)ed new generation private

co))ercial !an, wa# e#ta!li#hed !% a group of winning local entrepreneur# conceivingan idea of creating a )odel !an,ing in#titution with different outloo, to offer the valued

cu#to)er#> a co)prehen#ive range of financial #ervice# and innovative product# for

#u#taina!le )utual growth and pro#perit%. he #pon#or# are reputed per#onalitie# in the

filed of trade> co))erce and indu#trie#.

he +an, i# !eing )anaged and operated !% a group of highl% educated and

profe##ional tea) with diver#ified e=perience in finance and !an,ing. he 7anage)ent

of the !an, con#tantl% focu#e# on under#tanding and anticipating cu#to)er# need#. he

#cenario of !an,ing !u#ine## i# changing da% !% da%> #o the !an,D# re#pon#i!ilit% i# to

device #trateg% and new product# to cope with the changing environ)ent. *a)una +an,

Ltd. ha# alread% achieved tre)endou# progre## within onl% twelve %ear#. he !an, ha#

alread% ran,ed at top of the @ualit% #ervice provider# / i# ,nown for it# reputation.*a)una

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+an, Ltd. offer# different t%pe# of Corporate and Per#onal +an,ing $ervice#

involving all #eg)ent# of the #ociet% within the purview of rule# and regulation# laid

down !% the Central +an, and other regulator% authoritie#. # per the provi#ion# of

+anglade#h +an, licen#e> the +an, ha# offered initiall% it# #hare# to pu!lic !% Pre

E IPO and #u!#e@uentl% #old #hare# to the pu!lic through IPO in the %ear 2''. he

#hare# of the +an, are li#ted with !oth 4ha,a $toc, =change Ltd. / Chittagong $toc,

=change Ltd.

Our

Vision:

o !eco)e a leading !an,ing in#titution !% pla%ing a #ignificant role in the develop)ent

of the countr%.

Our mission:he !an, i# co))itted to #ati#f% diver#e need of it# cu#to)er# through an arra% of product#

at a co)petitive price !% u#ing appropriate technolog% and providing ti)el% #ervice #o

that a #u#taina!le growth> rea#ona!le return and contri!ution to the develop)ent of the

countr% can !e en#ure with a )otivated and profe##ional wor,force.

2.3 Strategie& of "auna #an$ Ltd.

inancing e#ta!li#h)ent of #)all unit# of indu#trie# and !u#ine## and facilitate their

growth $)all +alance $heet #i;e co)po#ed of @ualit% a##et#.

o )anage and operate the +an, in the )o#t efficient )anner to enhance

financial perfor)ance and to control co#t of fund

o #trive for cu#to)er #ati#faction through @ualit% control and deliver% of

ti)el% #ervice#

o identif% cu#to)er#D credit and other !an,ing need# and )onitor their

perception toward# our perfor)ance in )eeting tho#e re@uire)ent#.

o review and update policie#> procedure# and practice# to enhance the a!ilit%

to e=tend !etter #ervice to cu#to)er#.

o train and develop all e)plo%ee# and provide the) ade@uate re#ource# #o

that cu#to)er#D need# can !e rea#ona!l% addre##ed. o pro)ote organi;ational effectivene## !% openl% co))unicating co)pan%

plan#>policie#> practice# and procedure# to e)plo%ee# in a ti)el% fa#hion

o cultivate a wor,ing environ)ent that fo#ter# po#itive )otivation for

i)proved perfor)ance

o diver#if% portfolio !oth in the retail and whole#ale )ar,et

o increa#e direct contact with cu#to)er# in order to cultivate a clo#er

relation#hip !etween the !an, and it# cu#to)er#.

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2.4 Objectives of Jamuna Bank Ltd.

o earn and )aintain C7L Rating D$trongD

o e#ta!li#h relation#hip !an,ing and i)prove #ervice @ualit% through develop)ent

of $trategic 7ar,eting Plan#.

o re)ain one of the !e#t !an,# in +anglade#h in ter)# of profita!ilit% and a##et#@ualit%.

o introduce full% auto)ated #%#te)# through integration of infor)ation technolog%.

o en#ure an ade@uate rate of return on inve#t)ent.

o ,eep ri#, po#ition at an accepta!le range 6including an% off !alance #heet ri#,.

o )aintain ade@uate li@uidit% to )eet )aturing o!ligation# and co))it)ent#.

o pur#ue an effective #%#te) of )anage)ent !% en#uring co)pliance to

ethical nor)#> tran#parenc% and accounta!ilit% at all level#.

#.$ Offer% of Jamuna Bank Ltd.

er) loan# e#peciall% to develop #)all #cale enterpri#e# and al#o attach

#pecial i)portance to technical and advi#or% #upport in order to ena!ling the)

to run their enterpri#e# #ucce##full%.

ull-fledged co))ercial !an,ing #ervice# including collection of depo#it>

#hort- ter) trade finance> wor,ing capital finance in proce##ing and

)anufacturing unit# and financing and facilitating international trade.

echnical #upport to $)all $cale Indu#trie# 6$$I# in order to ena!le the) to

run their enterpri#e# #ucce##full%.

7icro Credit to the ur!an poor through lin,age with 5:O# with a

view to facilitating their acce## to the for)al financial )ar,et for the

)o!ili;ation of re#ource# i# another diver#ification of our #ervice#.

In order to perfor) the a!ove ta#,#> *a)una +an, Ltd. wor,# clo#el%

with it# client#> the regulator% authoritie#> the #hareholder# 6:O+> !an,# and

other financial in#titution#.

Branch ,et*ork

great deal of inve#t)ent for developing the ph%#ical re#ource# !a#e of the +an, ha#

!een )ade. *a)una +an, Ltd. ha# it# pre#ence in all the )a"or indu#trial and co))ercial

center# of +anglade#h in order to cater to the need of indu#tr% and trade. > there are 83

convenientl% located !ranche# throughout +anglade#h till now. he !an, ha# alread%

#igned an agree)ent with Placid 5F Corporation> G$ for o!taining foreign currenc%

re)ittance#. he !an, i# e=pected> to #ign agree)ent with ele 7one% ran#fer> London>

GF 7one% :ra) International> and 7inneapoli#> G$ in near future to en#ure flow of

inward re)ittance. $o)e agree)ent with co)panie# located in $audi ra!ia and going to

!e finali;ed #hortl%.

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-uman e%ource%

he +an,D# ongoing #ucce## #pea,# to the e=cellence off it# tea). *a)una +an, Ltd. ha# a

well-diver#ified pool of hu)an re#ource#> which i# co)po#ed of people with high

acade)ic !ac,ground. l#o> there i# a po#itive de)ographic characteri#tic-)o#t e)plo%ee#

are co)parativel% %oung in age %et rich in e=perience#> hi an increa#ingl% co)petitive)ar,et for highl% #,illed #taff> *a)una +an, Ltd. focu#ing on providing a

#ti)ulating corporate environ)ent and an attractive co)pen#ation pac,age. t the end

2'11 the total e)plo%ee #trength wa# 9&2.

&' Support

he +oard> attache# great i)portance to ac@ui#ition and u#e of appropriate

Infor)ation echnolog% in the +an,. +oth indow# and G5IH !a#ed Local rea

5etwor, 6L5 ha# !een in#talled in the ead Office and different +ranche#. he +an,

had it# own +an,ing $oftware developed in 1991> and #ince then thi# #oftware i# u#ed for

perfor)ing nor)al !an,ing tran#action#. +e#ide#> $I i# !eing u#ed in the 4+ranche# the ead Office of the +an, trade finance related operation#. Reuter# 3'''=tra

i# !eing u#ed at the ead Office for offering the !e#t e=change rate# to the +an,D#

cu#to)er#.

Board of /irector%

he re#pon#i!ilit% of )a,ing policie# and operational guideline# i# ve#ted with the +oard

of 4irector#. he :overn)ent hold# 1'' owner#hip of the !an, and the :overn)ent of

+anglade#h appoint# all the director#D of the +oard. he +oard con#i#t# of 13 )e)!er#

who are repotted !u#ine## e=ecutive# and leading indu#triali#t# of the countr%.

ana(ement

he 7anaging 4irector i# the Chief =ecutive of the +an, who i# an e=.-officio )e)!er

of the +oard. our :eneral 7anager# acting under hi) and nine 4ivi#ional ead#

are perfor)ing dail% operational activitie# of the +an,. he 7anager# of the +ranche#

!eing re#pon#i!le functionall% to the ead# of depart)ent of the ead Office and report

direct to the 7anaging 4irector.

*+L i# )anaged !% highl% profe##ional people. he pre#ent 7anaging 4irector of

the !an, i# a forward-loo,ing #enior !an,er having decade# of e=perience and )ulti

di#cipline ,nowledge to hi# credit !oth at ho)e and a!road. e i# #upport !% an educated

and #,ill# profe##ional tea) with diver#ified e=perience in finance and !an,ing. *+

ha# alread% achieved tre)endou# progre## within a #hort period of it# operation.

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2.6 )roduct& * Service&+Product# of *a)una +an, Ltd. can !e divided into two part#. he% are a##et product and

lia!ilit% product. :enerall% lia!ilit% product )ean# depo#it# of )an% ,ind# that are pa%a!le

to partie#. On the other hand> a##et product# are the product# which client# are lia!le to pa%

to !an,. 4ifferent t%pe# of underta,ing !% the !an, to the client# or on !ehalf of the client#

are al#o a t%pe of lia!ilit% to !an,. On the other hand a different t%pe of pro)i#e# )a,e#

!% the client# to !an, i# con#idered a# !an,


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Ass e t P r o d u c ts

Funded: unded )ean# tho#e t%pe product# in which !an, directl% fund. hi# t%pe of

product i# provided again#t )ortgage> guarantee previou# perfor)ance#. or e=a)ple0

Overdraft> er) Loan> i)e Loan> Con#u)er credit> Car Loan> Profe##ional Loan and

$)all +u#ine## Loan. he#e will !e de#cri!ed on credit part later on.

Non Funded:5on funded )ean# when the !an, provide# thi# t%pe of #ervice !an, need

not provide i))ediate fund. It i# a high inco)e #ource for the !an,. +ut the !an, ha# to

provide high care when provide #uch t%pe of #ervice# to the client#. he#e t%pe# of

product# are LC> +an, :uarantee. 4i#cu##ion on LC i# later on oreign =change part.

C o r po r a t e a n ! i ng

he )otto of *a)una +an, Ltd. Corporate +an,ing #ervice# i# to provide a

per#onali;ed #olution# to our cu#to)er#. he +an, di#tingui#he# and identifie# corporate

cu#to)er#D need and de#ign# tailored #olution# accordingl%.

*a)una +an, Ltd. offer# a co)plete range of advi#or%> financing and operational #ervice#

to it# corporate client group# co)!ining trade> trea#ur%> inve#t)ent and tran#actional

!an,ing activitie# in one pac,age. hether it i# pro"ect finance> ter) loan> i)port or

e=port deal> a wor,ing capital re@uire)ent or a forward cover for a foreign currenc%

tran#action> our Corporate +an,ing 7anager# will offer %ou the accurate #olution. Our

corporate +an,ing #peciali#t# will render high cla## #ervice for #peed% approval# and

efficient proce##ing to #ati#f% cu#to)er need#.

Corporate +an,ing !u#ine## envelop# a !road range of !u#ine##e# and indu#trie#. Jou can

leverage on our ,now-how in the following #ector# )ainl%0

gro proce##ing indu#tr% Indu#tr% 6I)port $u!#titute ? =port oriented

e=tile $pinning>

4%eing Printing

=port Oriented :ar)ent#> $weater.

ood / llied

Paper / Paper Product#

ngineering> $teel 7ill#

Che)ical and che)ical product# etc.

eleco))unication#.

Infor)ation echnolog%

Real #tate / Con#truction

hole#ale trade

ran#port

otel#> Re#taurant#

5on +an, inancial In#titution#

Loan $%ndication

Pro"ect inance

Inve#t)ent +an,ing

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Chapter-3

3.! Credit Operation of "auna #an$ Ltd

Loan# and advance# are the heart of a##et of all co))ercial !an,#. ll over the world>

+an,# tr% i))en#el% to )a,e #uch a loan portfolio which help# )a=i)i;e revenue at a

)ini)u) ri#,. *a)una +an, continued to e=tend it# credit facilit% !% offering different

cu#to)i;ed loan product# to !u#ine## entitie# and individual#.

.1 !redit "acilities of Jamuna Bank Ltd.

he )ain focu# of *a)una +an, Ltd. Credit Line?Progra) i# financing !u#ine##> trade

and indu#trial activitie# through an effective deliver% #%#te).

o *a)una +an, Ltd. offer# credit to al)o#t all #ector# of co))ercial activitie# havingproductive purpo#e.

o he loan portfolio of the +an, enco)pa##e# a wide range of credit progra)#.

o Credit i# al#o offered to )a"or thru#t #ector#> a# ear)ar,ed !% the govt.> at a

reduced intere#t rate to develop frontier indu#trie#.

o Credit facilitie# are offered to individual# including hou#ewive#> !u#ine##)en> #)all and

!ig !u#ine## hou#e#> trader#> )anufacture#> corporate !odie#> etc.

o Loan i# provided to the rural people for agricultural production and other off-far) activitie#.

o Loan pricing #%#te) i# cu#to)er friendl%.

o Pri)e cu#to)er# en"o% pri)e rate in lending and other #ervice#.

o uic, appreciation> apprai#al> deci#ion and di#!ur#e)ent are en#ured.o Credit facilitie# are e=tended a# per guideline# of +anglade#h +an, 6Central +an, of

+anglade#h and operational procedure# of the +an,.

L oa n s & A d v a n ce s

*a)una +an, Ltd. e)pha#i# on credit @ualit% and cu#to)erD# #ervice# %ielded the de#ired

growth in profit> capital a##et# and #hareholder#D value. +ut to get the loan# and advance

the inve#tor# ha# to follow #o)e ter)# and condition which fall# under the polic% and

practice of the !an, in#truction !oo,let.

" n d u s t r i al C r e d it

*a)una +an,D# #ervice# are directed toward# the entrepreneur# in the #)all indu#trie#

#ector. #)all indu#tr%> a# per Indu#trial polic% 1999 approved !% the Ca!inet> ha# !een

defined a# an indu#trial underta,ing who#e total fi=ed inve#t)ent i# le## than ,.1''

)illion.

he indu#trial loan reflected a #ignificant growth of 22.&9 over the previou# %ear. otal

out#tanding indu#trial loan# including gri-!a#ed indu#tr%> R7:> e=tile> $hip

+uilding> $hip +rea,ing / Other 7anufacturing Indu#tr% #tood a,a13&9.29 crore at the

end of 2'12.

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14/37

C o mm e r c ia ) C r e d it

hi# +an, al#o #upport# develop)ent of trade> !u#ine## and other co))ercial activitie# in

the countr%. It cover# the full range of #ervice# to the e=porter# and i)porter# e=tending

variou# facilitie# #uch a# ca#h credit> e=port ca#h credit> pac,ing credit> #hort ter) loan#>

local and foreign !ill# purcha#e facilitie#. t the end of 2'12 total out#tandingco))ercial loan# #tood at a,a 2193.92 crore including ran#port> $torage> rade $ervice

/ Co))ercial Real #tate financing.

M ic r o C r e d it

Jamuna Bank Ltd. launched a 7icro Credit $che)e in 199. 7icro Credit $che)e

provide# for the poor for generation of e)plo%)ent and inco)e on a #u#taina!le !a#i#

particularl% in ur!an and #u!ur!an area#. he +an, follow# three #%#te)# of credit

deliver%. he#e are0

1. Lending to the 5:O# who on-lend to their )e)!er#. t pre#ent there are 1& #uch

5:O#.2. Lending direct to the target# group# or ulti)ate !orrower# under the +an,D# own

)anage)ent.

3. Lending direct to the )e)!er-!orrower# and 5:O# providing non financial #ervice# li,e

group for)ation and )onitoring and #upervi#ion on e=change for a #upervi#ion fee.

3.2 Lending Criteria

1. ntrepreneur

ntrepreneur?pro)oter ha# to !e creditworth% and co)petent enough to run the

propo#ed indu#tr%.#. :iabi)ity of the proect

he pro"ect #hould !e via!le fro) organi;ational> technical> co))ercial> financial and

econo)ic point# of view.

I. Technical Viability

- he pro"ect #hould !e technicall% #ound and environ)ent-friendl%.

- echnolog% tran#fer in ca#e of !orrowed ,now-how ought to !e en#ured.

- +uilding #hould !e well planned and well con#tructed.

II. Commercial viability

- 7ar,et pro#pect and potential for the product ha# to !e full% a##ured at co)petitive

price#.

- 7ar,eting channel for the product #hould !e acce##i!le to the entrepreneur.

III. Financial Viability

- here #hould !e rea#ona!le de!t e@uit% ratio a# deter)ined !% the +an, on individual ca#e

!a#i#.

- 4e!t #ervice coverage ratio #hould !e at lea#t 2.& ti)e# at the opti)u) level of

production.

- IRR #hould prefera!l% !e not le## than 2' .

IV. Economic Viability

he pro"ect #hould en#ure !enefit to the national econo)% and create

#ufficient e)plo%)ent opportunit% and !e environ)ent friendl%.

Page 13of 37


15/37

3.3 Credit Operating Sy&te

'( Pro%pecti!e Borro*er

7o#t !an, loan# to individual# ari#e fro) a direct re@ue#t fro) a cu#to)er who

approache# a )e)!er of the !an,D# #taff and a#,# to fill out a loan application. In the

*a)una +an, Ltd. +an,> !u#ine## loan re@ue#t often ari#e fro) the contact# the !an,D#loan officer# and #ale# repre#entative# )a,e a# the% #olicit new account# fro) fir)#

operating in the !an,D# )ar,et area. $o)eti)e# loan officer# will call on the #a)e

co)pan% for )onth# !efore the cu#to)er finall% agree# to give the !an, a tr% !% filling out

a loan application.

)( C)ient>% &nter!ie*

hen a cu#to)er decide# to re@ue#t a loan> an interview with a loan officer u#uall%

follow# right wa%#> giving the cu#to)er the opportunit% to e=plain hi# or her credit need#.

hat interview i# particularl% i)portant !ecau#e it provide# an opportunit% for the !an,D#

loan officer to a##e## the cu#to)erD# character and #incerit% of purpo#e. If the cu#to)er

appear# to lac, #incerit% in ac,nowledging the need to adhere to the ter)# of a loan> thi#

)u#t !e recorded a# a #trong factor weighing again#t approval of the loan re@ue#t.

*( C)ient>% e?ue%t *ith @&S

he !orrower i# providing with an in#truction paper> which help hi) or her to prepare

the loan propo#al properl%. Infor)ation on loan propo#al #hould !e furni#hed in pre#cri!ed

ir#t Infor)ation $heet 6I$ in triplicate properl% t%ped in each page# ? #et #hould !e

dul% #ealed and #igned !% the applicant6#? #pon#or6#.

+( &nformation Sheet

Co)plete infor)ation #hould !e furni#hed in re#pect of each ite) #upported !%

docu)entar% evidence#> wherever nece##ar%> to avoid further reference? dela%? re"ection of

the application. he !an, re#erve# the right to re"ect the application forthwith if the

application given in the for) i# inco)plete and not full% docu)ented in all re#pect#.

Infor)ation )a% !e provided in additional #heet# of paper#> if re@uired. owever en#ure all

the page# and anne=ure are #igned under official #eal. l#o en#ure that all the fact#?

evidence# have !een enclo#ed properl% including the fea#i!ilit% report#? detailed #tud%report# on loan propo#al.

- he client are re@uired to depo#it with the application the pro"ect e=a)ination fee

and al#o apportion of the e@uit% at the following rate either !% che@ue or pa% order

or de)and draft drown in favor of *a)una +an, Ltd. and pa%a!le in an%

#cheduled +an,# within the countr%.

- 7e)orandu) and rticle# of ##ociation together with the certificate of

regi#tration?incorporation co))ence)ent of !u#ine## of the co)pan% dul% certified

!% an aging director of the co)pan% #hould !e #u!)itted.

- Certificate# fro) the #urve%or for deter)ining the price of land of the pro"ect?price of

ad"acent land #old during la#t three %ear# #hould !e #u!)itted. l#o to !e #u!

!)itted are #ite? )ou;a )ap.

Page 1+of 37


16/37

- 7achiner% la%out plan> price @uotation of three #upplier# together with illu#trated

!rochure# and literature# #hould !e #u!)itted for !oth i)port and local )achiner%.

- Con#ent letter fro) Power 4evelop)ent +oard? Rural 4evelop)ent +oard? :a#

uthorit%? Pollution Control +oard #hould !e #u!)itted whatever re@uired.

-

$oil e#t? ater e#t report 6if [email protected] 5ationalit% certificate along with atte#ted pa##port #i;e photograph# of the

director#?partner#? proprietor #hould !e #u!)itted.

- 4eclaration of a##et and lia!ilit% of the propo#ed director#? partner#? proprietor.

4eclaration of pa%)ent of inco)e ta= #hould !e #u!)itted.

,( Ju%tification of @aci)ity e?ue%ted

Co)pared to other financial in#titution#D u#ual two )onth# average proce##ing ti)e for it#

)ediu) and large loan progra)> the proce##ing ti)e for #)all indu#tr% loan# re)ain# well

!elow the a!ove proce##ing ti)e !ecau#e of it# le##er detailed #tudied a# well a# the !an,

con#ider# that #)all entrepreneur# loo, for their #ource# of credit at their ti)e of need.

-he proce##ing?approval ti)e for #)all indu#tr% loan i# not )ore then two )onth#fro) the date of receiving co)plete application fro).

- pplication in pre#cri!e for) of received in triplicate> dul% filled in> and #ealed and

#igned !% the #pon#oring director# along with their atte#ted photograph# dul% affi=ed

in the #pace provided for.

- 4raft la%out plan of the propo#ed !uilding and the e#ti)ated for con#triction co#t i#

o!tained.

- In ca#e of pro"ect to !e located in an% +$CIC indu#trial e#tate> +$CIC latter of

con#ent particular# of the land> cop% of lea#e deed i# o!tained.

- or location of indu#tr% in other area#> per)i##ion ? no- o!"ection for #etting up the

#)all indu#tr% i# o!tained fro) the appropriate authoritie#.

- Gtilit% agenc%D# letter of con#ent of providing nece##ar% utilit% #ervice# to the unit to

!e o!tained.

- 4etailed credit report of the #pon#or#? pro"ect i# prepared i.e. the +an, #hould carr%

out detailed credit inve#tigation of the pro)oter#.

- entative li#t of )achiner% ? wor, with detailed #pecification #hould !e o!tained

#upported !% 3 price @uotation.

- he individual pro"ect apprai#al report for #)all #cale and cottage indu#tr% )a% not !e

ver% ela!orate and e=hau#ted. owever it cover# the *a)una +an, Ltd. area of pro"ect

via!ilit%.

- *oin report fro) the +an, and the !orrower i# prepared for infor)al #ector.

Page 1$of 37


17/37

-( 4na)y%i% aAPropo%a)%

*7G5 +5F L4. wa# e#ta!li#hed to provide ter) loan and other financial

a##i#tance including all ,ind# of !an,ing facilitie# to accelerate the pace of

develop)ent to #)all indu#tr%. he financial a##i#tance include# #hort ter) wor,ing

capital loan> )ediu) and long ter) finance to via!le new- #)all #cale indu#tr% 6$$Ipro"ect# and +7R of $$I pro"ect# which fulfill the !an,# criteria of via!ilit% and

accepta!ilit%. Pro"ect apprai#al? anal%#i# in the !an,ing #ector i# needed for the

following rea#on#0

- o "u#tif% the #oundne## of an inve#t)ent.

- o en#ure repa%)ent of !an, finance.

- o achieve organi;ational goal#.

he entrepreneur# of #)all indu#tr%? pro"ect re@uiring financial a##i#tance fro) *a)una

+an, Ltd. need to fulfill the following criteria0

Credit atin(%

# per +anglade#h +an,# )andator% re@uire)ent vide +RP4 circular 5o. ' dated

*ul% '& 2'' Credit Rating of *a)una +an, Li)ited wa# done !% the Credit Rating genc%

of +anglade#h Li)ited 6CR+ on the audited +alance $heet a# on 31.12.2'13

CR+ ha# #u!)itted their report a# under0

Credit atin( eport 2'1

Credit rating agenc% of +anglade#h Li)ited 6CR+ Gpgrade# the rating of

*a)una +an, Li)ited to 3 fro) -1 and reaffir)# #hort ter) rating to $-2. he

a!ove rating ha# !een done in con#ideration of +an,# vi#i!le i)prove)ent in

funda)ental# #uch a# capital ade@uac%> li@uidit% po#ition> profita!ilit%> introduction of

real ti)e online !an,ing etc. owever> the a!ove rating i# )oderated> to #o)e e=tent>!% li)ited )ar,et #hare> increa#e in 5PL> high co#t of fund> )oderate corporate

governance> dependenc% on tea) depo#it etc.

inancial in#titution# rated in thi# categor% are ad"udged to offer ade@uate #afet%

to ti)el% repa%)ent of financial o!ligation. hi# level of rating indicate# a corporate

entit% with an ade@uate credit profile. Ri#, factor# are )ore varia!le and greater in

period of econo)ic #tre## than tho#e rated in the higher categorie#. he #hort ter) rating

indicate# good certain of ti)el% pa%)ent. Li@uidit% factor# and co)pan% funda)ental#

are #ound. lthough ongoing funding need# )a% enlarge total financing re@uire)ent#>

acce## to capital )ar,et# i# good. Ri#, factor# are #)all.

Page 16of 37


18/37

3., Credit Ri&$ &&e&&ent

thorough credit ri#, a##e##)ent #hould !e conducted prior to the granting of loan#>

and at lea#t thereafter for all facilitie#. he re#ult# of thi# a##e##)ent #hould !e pre#ented

in a Credit pplication that originate# fro) the Relation#hip 7anager 6R7> and i#

reco))ended !% +ranch Credit Co))ittee 6+CC. he R7 #hould !e the owner of thecu#to)er relation#hip> and )u#t !e held re#pon#i!le to en#ure the accurac% for the entire

credit application #u!)itted for approval. R7# )u#t !e fa)iliar with the !an,D# Lending

:uideline# and #hould conduct due diligence on new !orrower#> principle# and

guarantor#. Credit pplication# #hould #u))arie# the re#ult# of the R7# ri#,

a##e##)ent and include> a# a )ini)u)> the following detail#0

o )ount and t%pe of loan6# propo#ed.

o Purpo#e of loan#>

o Loan $tructure 6enor> Covenant#> Repa%)ent# $chedule> Intere#t

o $ecurit% rrange)ent#

.#. Sector $ise %isbursment of Loans in JamunaBank Ltd.&

$l. 5o. $ectoral $tructere of Lending Out#tanding a#

on 31.12.2'13

# of otal Loan#

/ dvance#

1 griculture nd gro-!a#ed Indu#tr% 1'.8 1.9

2 R7: 3&'.(( .39

3 e=tile 1&.1' 2.8

$hip +uilding '.'' '.''

& $hip +rea,ing 1.1 '.(

Other 7anufacturing Indu#tr% 1.1 '.(

( $7 $ector 98(.(' 18.''

8 Con#truction 313.13 &.('

9 Power> :a# 12.&2 '.23

1' ran#port> $torage and Co))unication 1.&& 3.'3

11 rade $ervice 189.2 3'.(8

12 Co))ercial real e#tate financing 83.2( 1.&213 Re#idential real e#tate financing 8&.8& 1.&

1 Con#u)er Credit 1'9.&8 2.''

1& Capital 7ar,et 8(.&8 1.'

1 Credit Card 12.9' '.2

1( 5on-!an, financial in#titution# 21.9 '.39

18 +an, cceptance 6 i.e. L4+P> 4+P ((.28 13.98

19 Other# 188.' 3.3

'ota) Loan% 8 4d!ance% $+.70 100.00

Page 17of 37


19/37

* (-( C o m pa r a ti v e % e c o ve ry % a te o. L oa n s

In !an,ing environ)ent no reward can !e e=pected without ri#,. Con#idering the

pre#ent non-perfor)ing loan po#ition of the countr%> *a)una +an, Ltd. i# ver% )uch

cautiou# a!out it# inve#t)ent. ver% loan propo#al i# placed under careful #crutin% !efore

approval. Internal udit tea) and Recover% tea) e=erci#e clo#e )onitoring on ever% loan

tran#action. ll out effort# were )ade to i)prove the recover% rate and control of non-

perfor)ing loan# and advance#.

3.7. /i%bur%ment of Loan 4nd ,et &ntere%t &ncome from Loan of JBL for the )a%t fi!e

year%.


20/37

'ecovery Patterns of Loan ( )dvances&

:enerall% *a)una !an, #anction# loan# and advance# to ever% #ector of an econo)%.

+efore going into detail# of recover% perfor)ance> we have to !e fa)iliar with #o)eter)# u#ed in recover% perfor)ance0

4i#!ur#e)ent0 highe#t out#tanding !alance on an% date during the reporting

period )inu# out#tanding !alance at the end of the preceding period.

4e)and for recover%0 overdue at the end of the reporting period plu# recover%

during the reporting period.

Recover%0 highe#t out#tanding !alance on an% date during the reporting period

)inu# out#tanding !alance at the end of the recover% period.

Out#tanding0 Out#tanding figure# in the ledger at the end of the reporting period. Overdue0 4e)and for recover% )inu# recover%.

eco!ery Performance of Jamuna Bank Ltd. of Se!era) ear%.

6, in )illion#

Particular 2'11 2'12 2'13

'ota) di%bur%ement 21'3 3228( 9(3

/emand for reco!ery 28391 2(3 &33eco!ery 2>321 3>93& &1>3'1

O!erdue '9 (8'8 3332

eco!ery a% a percenta(e of /@ 8& 81 93

O!erdue a% a percenta(e of /@ 1& 19 (

$ource0 nnual Report 2'13

Pr o#l em s i n Loan % eco v er y

hough *a)una !an, i# perfor)ing !etter in )anaging loan and advance#> #till

12.39 of total loan and advance# are cla##ified. here are a lot of rea#on# for which

the loan recover% of the !an, i# #till now defective. In )o#t ca#e#> pro!le)# )a% !e

rai#ed fro) #anctioning procedure# of loan> inve#tigation of the pro"ect> and

inve#tigation of the loan# etc. that i#> the pro!le) in loan recover% prove# the outco)e#

of the default proce## in loan di#!ur#e)ent. he )ain rea#on# of poor loan recover% are

categori;ed in four !road t%pe# a# follow0

A( Pro#lems created #y economic environment

he following pro!le)# ari#e fro) the effect of econo)ic

environ)ent0

Page 19of 37


21/37


22/37

/. Other (enera) cau%e% of poor )oan reco!ery"

part fro) the #pecific rea#on# creating pro!le)# to recoup loan> there e=i#t# #o)e other

general cau#e# which have a great i)pact on creating the pro!le)# which are faced !% the

*a)una +an, under #tud% in the loan recover% proce##. he#e are0

1. arl% #anction and di#!ur#e)ent of loan to the !orrower# without

proper in#pection of the pro"ect !% the !an, on account of pre##ure fro)

lo!!%ing group.

#. Lac, evaluation of technical and econo)ic fea#i!ilit% of the progra).

3. 4ela% in di#!ur#e)ent of credit.

+. $o)eti)e credit i# not allowed to actual entrepreneur# #o)eti)e.

$. Lac, of proper #upervi#ion.

6. Illiterac% of !orrower#.7. 5egative attitude of !orrower# to repa% the loan.

. 4eterioration of the value #%#te) of the !orrower#.

9. 7one% !orrower# u#e their loan-)one% other than #pecified pro"ect> i.e.> if

the loan i# #anctioned for indu#trial purpo#eM the% u#e the )one% in hou#e

!uilding or purcha#e of land for their own purpo#e.

10. $o)eti)e# !orrower# inve#t their )one% out#ide the countr%. 7an% !orrower#

tran#fer loan )one% to a!road where the% depo#ited thi# )one% in their own

account or #pent #o)e other purpo#e.11. $o)eti)e# local !orrower# are found to !e #o )uch co)pelled to grant the)

loan without proper #tud% due to #o)e une=pected rea#on#. $ince the#e

!orrower# are capa!le of getting loan !% e=erci#ing their influence> the% can

al#o e#cape the repa%)ent lia!ilit%.

1#. Pro!le)# re#pon#i!le for non-i)ple)entation and dela%ed i)ple)entation

of pro"ect for which the entrepreneur# of the pro"ect cannot repa% the loan.

he cau#e# of failure )a% !e0

ailure to a#certain the econo)ic availa!ilit% of the pro"ect#

i)e lag !etween approval and #anctioning of the pro"ect# I)port of )achiner% and raw )aterial# !oth are the pro!le)#

of paucit% of foreign e=change and procedure# of licen#ing.

ll of the#e rea#on# di#cu##ed a!ove are general rea#on# for pro!le)# loan recover% of

*a)una +an,. +e#ide# the#e> there are #o)e #pecific rea#on# for loan recover%

pro!le)# faced continuou#l% !% *a)una +an,. he% are a#0

Loan# are given under fictitiou# na)e# and enterpri#e

Loan# are given in #o)e ca#e# without #ufficient #ecuritie#

Page #1of 37


23/37

pproval of the loan# in e=ce## of the !ranch )anager all the lending activitie# have !een

!rought under the following )a"or head#0

Loan 7ediu) ter) / Long ter) loan# allowed to individual?fir)?indu#trie#

for a #pecific purpo#e !ut for a definite period and generall% repa%a!le !% in#tall)ent# fall

under thi# head. hi# t%pe of lending i# )ainl% allowed to acco))odate financing

under the categorie# 6i Large / 7ediu) $cale Indu#tr% and 6ii $)all / Cottage

Indu#tr%. Ker% often ter) financing for 6i griculture / 6ii Other# are al#o included here.

-ou%e Bui)din( Loan which i# inclu#ive of the

Page ##of 37


24/37

repa%)ent of Principal a# well a# intere#t for ad"u#t)ent of the loan within a #pecified

period.

Lea%e @inancin(" Lea#e inancing i# one of the )o#t convenient #ource# of ac@uiring

capital )achiner% and e@uip)ent where!% a client i# given the opportunit% to have an

e=clu#ive right to u#e an a##et u#uall% for an agreed period of ti)e again#t pa%)ent ofrent. It i# a ter) financing repa%a!le !% in#tall)ent.

'ime Loan" hi# i# one ti)e financial acco))odation for #hort period )a=i)u) 12

)onth# to )eet #o)e #pecific purpo#e. he loan i# ad"u#ta!le within the validit% and not

renewa!le and no tran#action i# allowed.

Con%umer% Credit Scheme" It i# a #pecial credit #che)e of the +an, to finance purcha#e

of con#u)er#D dura!le to the fi=ed inco)e group to rai#e their #tandard of living. he

loan# are allowed on #oft ter)# again#t per#onal guarantee and depo#it of #pecified

percentage of e@uit% !% the cu#to)er#. he loan i# repa%a!le !% )onthl% in#tall)ent

within a fi=ed period. SO/


25/37

port Ca%h Credit


26/37

clear idea a!out the ne=t #tep of the credit depart)ent that i# what deci#ion the% will ta,e

further. I a) focu#ing thi# i)portant factor of the credit depart)ent that Credit Ri#,

nal%#i# of *a)una +an, Li)ited that i# de#cri!ed !roadl% in the later part of the report.

Credit )rincip'e&+

In order to )a=i)i;e the #ta,eholder#< value !% e#ta!li#hing *+L a# funda)entall%

#ound financial in#titution> there are ten credit principle#> which #hould alwa%# :uide %our

!ehavior in our lending deci#ion0

i. he +an, #hall provide #uita!le credit #ervice# and product# for the )ar,et in whichit operate#. Product innovation #hall !e a continuou# proce##.

ii. Loan# and advance# #hall nor)all% !e financed fro) cu#to)er# depo#it and not out

of te)porar% fund or !orrowing fro) )one% )ar,et.

iii. Credit facilitie# #hall !e allowed in a )anner #o that credit e=pan#ion goe# on

en#uring @ualit% i.e. no co)pro)i#e with the +an,

+anglade#h +an, :uideline# and other applica!le law#> rule#

and regulation#.

v. he conduct of the loan portfolio #hould contri!ute> within defined ri#, li)itation>

to the achieve)ent of profita!le growth and #uperior return on the +an, which can )a,e !e#t

u#e of the facilit% thu# helping )a=i)i;e our profit a# well a# econo)ic growth of

the countr%. o en#ure achieve)ent of thi# o!"ective lending deci#ion #hall !e !a#ed

)ainl% on the !orrower proper #taffing #hall !e )ade through place)ent of @ualified official# having

appropriate !ac,ground> who have got the right aptitude> for)al training in Credit Ri#,

nal%#i#> +an,


27/37

ive n#ure independent credit participation in the credit proce##

$i= +ehave ethicall% in all credit activitie#

$even +e proactive in identif%ing> )anaging and co))unicating credit ri#,

ight +e diligent in en#uring that credit e=po#ure# and activitie# co)pl% with *+L

5ine Opti)i;e ri#, and rewarden +uild and )aintain a diver#ified Credit portfolio

)roce&&ing of Credit pprova'+Credit i%k ;radin( Sy%tem therefore> ari#e# fro) the +an, individual and other +an,# or financial in#titution#.

Credit ri#, )anage)ent need# to !e a ro!u#t proce## that ena!le# +an,# to

proactivel% )anage loan portfolio in order to )ini)i;e lo##e# and earn# an accepta!le

level of return for $hareholder#. Central to thi# i# a co)prehen#ive I #%#te)> which

#hould have a!ilit% to capture all ,e% cu#to)er data> ri#, )anage)ent and tran#action

infor)ation. *a)una +an, Ltd. alread% ha# real ti)e on-line +an,ing #%#te) which

ena!le# to capture all ,e% cu#to)er data. :iven the fa#t changing d%na)ic glo!al

econo)% and the increa#ing pre##ure of glo!ali;ation> li!erali;ation> con#olidation and

di#-inter)ediation> it i# e##ential that +an,# have ro!u#t Credit ri#, )anage)ent police#and procedure# that are #en#itive and re#pon#ive to the#e change#. t the po#t-#anction

#tage> the !an, can decide a!out the depth of the review or renewal> fre@uenc% of

review> periodicit% of the grading> and other precaution# to !e ta,en. $ince the two credit

ri#, )odel# are pre#entl% in vogue> the :overning +oard of +anglade#h In#titute of +an,

7anage)ent 6+I+7 under the chair)an#hip of the :overnor> +anglade#h +an, decided

that an integrated Credit Ri#, :rading 7odel !e developed incorporating the #ignificant

feature# of the a!ove )entioned )odel# with a view to render a need !a#ed #i)plified and

u#er friendl% )odel for application !% the +an,# and financial in#titution# in proce##ing

credit deci#ion# and evaluating the )agnitude of ri#, involved therein.

unction of Credit Ri&$ rading+

ell-)anaged credit ri#, grading #%#te)# pro)ote !an, #afet% and #oundne## !%

facilitating infor)ed deci#ion-)a,ing. :rading #%#te)# )ea#ure credit ri#, and

differentiate individual credit# and group# of credit# !% the ri#, the% po#e. hi# allow#

!an, )anage)ent and e=a)iner# to )onitor change# and trend# in ri#, level#. he

proce## al#o allow# !an, )anage)ent to )anage ri#, to opti)i;e return#.

D%e of Credit i%k ;radin(

Page #6of 37


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% he Credit Ri#, :rading )atri= allow# application of unifor) #tandard# to credit#

to en#ure a co))on #tandardi;ed approach to a##e## the @ualit% of individual

o!ligor> credit portfolio of a unit> line of !u#ine##> the !ranch or the +an, a# a

whole.

% # evident> the CR: output# would !e relevant for individual credit#election> wherein either a !orrower or a particular e=po#ure?facilit% i# rated.

he other deci#ion# would !e related to pricing 6credit-#pread and #pecific

feature# of the credit facilit%. he#e would largel% con#titute o!ligor level anal%#i#.

% Ri#, grading would al#o !e relevant for #urveillance and )onitoring> internal 7I$

and a##e##ing the aggregate ri#, profile of a +an,. It i# al#o relevant for portfolio

level anal%#i#.

,umber 8 Short ,ame of ;radin( D%ed in the C;

he propo#ed CR: #cale con#i#t# of 8 categorie# with $hort na)e# and 5u)!er#

are provided a# follow#0

;4/&,; S-O' ,4 ,DB

Superior $GP 1

;ood :4 2

4cceptab)e CCP 3

ar(ina)AEatch)i%t 7:?L

Specia) ention $7 &

Sub %tandard $$ /oubtfu) 4 (

Bad 8 Lo%% +L 8

Characteri%tic% of different (rade%

clear definition of the different categorie# of Credit Ri#, :rading i# given a#

follow#0

% Superior which are full% #ecured i.e. full% ca#h covered.

o Credit facilitie# full% covered !% govern)ent guarantee.

o Credit facilitie# full% covered !% the guarantee of a top tier international+an,.

% ;ood #trong )ar,et #hare.

o Ker% good )anage)ent #,ill / e=perti#e.

o ll #ecurit% docu)entation #hould !e in place.

o Credit facilitie# full% covered !% the guarantee of a top tier local +an,.

o ggregate $core of 8& or greater !a#ed on the Ri#, :rade $core $heet

Page #7of 37


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% 4cceptab)e


30/37

/ Lo##.

o +anglade#h +an, criteria for dou!tful credit #hall appl%. n ggregate $core

of 3&- !a#ed on the Ri#, :rade $core $heet.

% Bad 8 Lo%%

and the anticipated lo## #hould have !een provided for.

o hi# cla##ification reflect# that it i# not practical or de#ira!le to defer

writing

off thi# !a#icall% valuele## a##et even though partial recover% )a% !e

affected in the future. +anglade#h +an, guideline# for ti)el% write off of !ad

loan# )u#t !e adhered to. Legal procedure#?#uit initiated.

o +anglade#h +an, criteria for !ad / lo## credit #hall appl%.

o n ggregate $core of le## than 3& !a#ed on the Ri#, :rade $core $heet.

!om*utation of !redit 'isk +radin,

$o far I have di#cu##ed a!out the theoretical part of the Credit Ri#, grading. I have

,nown in which grade what are the characteri#tic# of the co)pan% a# well a# client# we have to follow #o)e #tep# and get a #tati#tical

para)eter of the ri#,. here are #i= #tep# to co)pute credit ri#, grading. ho#e are given

and de#cri!ed !elow0

Step 1" &dentify a)) the Principa) i%k Component%

Credit ri#, for counterpart% ari#e# fro) an aggregation of the following0

a inancial Ri#,

! +u#ine##?Indu#tr% Ri#,

c 7anage)ent Ri#,

d $ecurit% Ri#,e Relation#hip Ri#,

ach of the a!ove )entioned ,e% ri#, area# re@uire !e evaluating and aggregating to

arrive at an overall ri#, grading )ea#ure.

a !a)uation of @inancia) i%k" Ri#, that counterpartie# will fail to )eet o!ligation

due to financial di#tre##. hi# t%picall% entail# anal%#i# of financial# i.e.

anal%#i# of leverage> li@uidit%> profita!ilit% / intere#t coverage ratio#. o conclude>

thi# capitali;e# on the ri#, of high leverage> poor li@uidit%> low profita!ilit% /

in#ufficient ca#h flow.

! !a)uation of Bu%ine%%A&ndu%try i%k" Ri#, that adver#e indu#tr% #ituation or

unfavora!le !u#ine## condition will i)pact !orrower#< capacit% to )eet o!ligation.

Page #9of 37


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he evaluation of thi# categor% of ri#, loo,# at para)eter# #uch a# !u#ine## outloo,>

#i;e of !u#ine##> indu#tr% growth> )ar,et co)petition / !arrier# to entr%?e=it. o

conclude> thi# capitali;e# on the ri#, of failure due to low )ar,et #hare / poor

indu#tr% growth.

c !a)uation of ana(ement i%k" Ri#, that counterpartie# )a% default a# a re#ultof poor )anagerial a!ilit% including e=perience of the )anage)ent> it# #ucce##ion

plan and tea) wor,.

d !a)uation of Security i%k" Ri#, that the !an, )ight !e e=po#ed due to poor

@ualit% or #trength of the #ecurit% in ca#e of default. hi# )a% entail #trength of

#ecurit% / collateral> location of collateral and #upport.

e !a)uation of e)ation%hip i%k" he#e ri#, area# cover evaluation of li)it#

utili;ation> account perfor)ance> condition#?covenant# co)pliance !% the !orrower

and depo#it relation#hip.

Step #" 4))ocate *ei(ht% to Principa) i%k Component%

&rincipal 'isk$omponents( )eight(*inancial 'isk &'

Business+ndustry'isk 18

-anagement'isk 12.ecurity'isk /01

'elationship'isk /01

According to the importance of risk profile, the following weightings are

proposed for corresponding principal risks"

Step 3" %tab)i%h the Gey Parameter%

Principa) i%k Component% Gey Parameter%

a inancial Ri#, Leverage> Li@uidit%> Profita!ilit% / Coverage ratio

! +u#ine## ? Indu#trial Ri#, $i;e of +u#ine##> ge of +u#ine##> +u#ine## Outloo,>

Indu#tr% :rowth> Co)petition / +arrier# to +u#ine##

c 7anage)ent Ri#, =perience> $ucce##ion / ea) or,

d $ecurit% Ri#, $ecurit% Coverage> Collateral Coverage and $upport

e Relation#hip Ri#, ccount Conduct >Gtili;ation of Li)it> Co)pliance of

covenant#?condition# / Per#onal 4epo#it

Page 30of 37


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Step +" 4%%i(n *ei(ht% to each of the key parameter%Principa) i%k Component% 2ey Parameters Eei(ht%

1. @inancia) i%k HHHHHH. HHHHHHHHHHHHHH

Leverage.

Li@uidit%.

Profita!ilit%.

Coverage.

$0B

1&

1&

1&

&

#. Bu%ine%% A &ndu%tria) ri%kHH HHHHHHHHHHHHHH

$i;e of the !u#ine##

ge of the !u#ine##

+u#ine## Outloo,

Indu#tr% growth..

7ar,et co)petition

ntr% ? =it +arrier#...

1B

&

33

3

2

2

3. ana(ement i%kHHHH... HHHHHHHHHHHHHH

=perience..

$ucce##ion...

ea) or,.

1#B

&

3

+. Security i%kHHHHHHH HHHHHHHHHHHHHH

$ecurit% coverage

Collateral coverage.

$upport

10B

2

$. e)ation%hip i%kHHHHH HHHHHHHHHHHHHH

ccount conduct

Gtili;ation of li)it..

Co)pliance of covenant#

Per#onal depo#it..

10B

&

2

2

1

Step $" &nput data to arri!e at the %core on the key parameter%

fter the ri#, identification / weighting a##ign)ent proce## 6a# )entioned a!ove> the

ne=t #tep# will !e to input actual para)eter in the #core #heet to arrive at the #core#

corre#ponding to the actual para)eter#. hi# )anual al#o provide# a well progra))ed

7$ =cel !a#ed credit ri#, #coring #heet to arrive at a total #core on each !orrower. he

e=cel progra) re@uire# inputting data accuratel% in particular cell# for input and will

auto)aticall% calculate the ri#, grade for a particular !orrower !a#ed on the total #core

o!tained. he following #tep# are to !e followed while u#ing the 7$ =cel progra).a Open the 7$ HL file na)ed> C;ISCOIS-'

Page 31of 37


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! he entire HL #heet na)ed> C; i# protected e=cept the particular cell# to

input data.

c Input data accuratel% in the cell# which are BO// / are colored

LLOE.

C h a p t er 3 +

@indin(% and 4na)y%i%

+ (' F ina nc ial A n alysi s :

'ab)e,o. 1

JearPaid up

Capital

Re#erved

und#4epo#it# dvance#

Gn-

Cla##ified

Loan#

Cla##ified

Loan#

1 2 3 &

2''8 1313 8( 2(3'( 21'3 298 29

2''9 122 23&9 23& 3228( (9 &

2'1' 223' 1(8 '(3 9(3 (18 &3

2'11 38 333 ('&'8 &11 8' 2(

2'12 88 383( (923 &88( 81 18

vg. 2'.2 29('.8 &'93. 2911 22. 9(.8

$413&9. 13(2.13 21211.8 1&&.81 22.18 &3.93

CK &1.11 .19 3(.82 3.2( 3.33 ((.9&

7a=.88 1(8 (923 &11 81 18

7in1313 8( 2(3'( 21'3 298 29

6$ource0 nnual Report of *a)una +an, Ltd. during 2'13-2'18

inancial perfor)ance of *a)una +an, Ltd. 4uring 2'13-2'1. 6,. In i))ion=

Page 3#of 37


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S4O/ na'y&i&

S/R5/% 4575SS

o Stable Source of Funds

o Largest Portfolio Among PCBs

o Strong Liquidity Position

o Low Cost Fund

o Satisfactory Protability

o Marginal Capital Adequacy

o Lac of Strong !nitiati"e to #$plore

!n"estment %pportunity &'roug'(esearc' And Maretingo !& ) #*Baning Status +ose ,ot

Matc' -it' %t'er Bans

O))OR/8I/9 /%R5/S

o Scope of -'ole Sale Baning wit'

,BF!so !ncreasing Awareness of Baning

Systemo Credit Card Business

o !ncreased Competition !n &'e

Maret For .uality Assetso Supply /ap %f Foreign Currency

o %"erall Liquidity Crisis !n Money

Maret

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Recoendation

hough *a)una +an, Li)ited trie# to give the !e#t cu#to)er #upport> the% have #o)e la,e

and lin,age co)pare to other !an, of the #a)e generation. he reco))endation# for thi#report are*

Q he authorit% #hould recruit )ore e)plo%ee# to #erve the cu#to)er#. he can recruit

e=perienced e)plo%ee a# well a# fre#h graduate.

Q he !an, #hould introduce )ore product# !a#ed on the )ar,et de)and.

Q he !an, #hould reduce their )ini)u) !alance to attract )ore cu#to)er#.

Q he #alar% of the wor,er need to !e ri#e> a# a re#ult e=perienced people fro) other !an,

will !e attract to "oin *a)una +an, Li)ited.

Q *a)una +an, Li)ited #hould offer international credit card> !ecau#e in )odern world

the u#e of increa#ing paper currencie# i# decrea#ing.

Q +e#ide #ocial wor, the !an, have to !e )ore #eriou# to get !etter po#ition in C7Lretting.

Q he !an, can open )ore !ranche# to reach to )ore cu#to)er#.

Q he !an, can open !ranche# or foreign !ooth !ecau#e )an% people #end )one% fro)

a!road ever% %ear to +anglade#h.

Q he !an, #hould finance to the con#u)er good#> !ecau#e )an% people in the countr%

want# to !u% con#u)er good# fro) !an, loan.

Q he )ar,eting depart)ent of the !an, #hould )ore efficient to reach at the hart of the

cu#to)er.

Q or the #ucce## of an% organi;ation> e)plo%ee #ati#faction i# one of he )o#t i)portant

factor and *+L authorit% have to loo, a!out it.

Q he !an, #hould !e )ore profit concern a# well a# too, part to the econo)ic#develop)ent of the countr%.

Q he depart)ent# of the !an, #hould )ore efficient to )a,e profit !% #ati#f%ing

cu#to)er#.

Q he !an, #hould u#e printed in#tru)ent# li,e che@ue> pa% order# etc.

Q +eing a clear tran#parent the !an, can provide the !e#t #upport to the cu#to)er a# earn

profit.

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Conc'u&ion

# an organi;ation the *a)una +an, Li)ited ha# earned the reputation of top !an,ing

operation in +anglade#h. he organi;ation i# )uch )ore #tructured co)pared to an% other

!an, operating local or foreign in +anglade#h. It i# relentle## in pur#uit of !u#ine##

innovation and i)prove)ent. It ha# a reputation a# a partner of con#u)er growth.

ith a !ul, of @ualified and e=perienced hu)an re#ource> *a)una +an, Li)ited can e=ploit

an% opportunit% in the !an,ing #ector. It i# pioneer in introducing )an% new product# and

#ervice# in the !an,ing #ector of the countr%. 7oreover> in the overall *!an,ing #ector> it i#un)atched with an% other !an,# !ecau#e of it# wide #pread !ranch networ,ing thought the

countr%.

hi# report trie# to figure out )o#t of the indicator# of pro!le)# and #trength# of *a)una

+an, Li)ited a# a valid pretender in the co)petitive !an,ing #ector of +anglade#h. #evere

cut throat co)petition i# going on currentl% in thi# #ector and that )ar,etforeca#ting> proactive activitie# underta,en !% *a)una +an, Li)ited and #o)e #ugge#tion to

get rid of the predica)ent# that e=i#t.

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Referenceo nnual Report of *a)una !an, ltd 2'13

o www.*a)una!an,!d.co)

an internship report on jamuna

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