general banking in ific

8/10/2019 General Banking In IFIC

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Chapter One

1


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1.1 Historical Background Of IFIC Bank Ltd.

International Finance Investment and Commerce Bank Limited (IFIC Bank) is banking company incorporated in the Peoples Rep blic o! Bangladesh "ith limited

liability# It "as set p at the instance o! the $overnment in 1%&' as a oint vent re

bet"een the $overnment o! Bangladesh and sponsors in the private sector "ith the

ob ective o! "orking as a !inance c company "ithin the co ntry and setting p oint

vent re banks !inancial instit tions aboard# In 1%*+ "hen the $overnment allo"ed

banks in the private sector, IFIC "as converted into a ! ll !ledged commercial bank#

-he $overnment o! the Peoples Rep blic o! Bangladesh no" holds +.#&/0 o! theshare capital o! the Bank# -he $overnment o! the Peoples Rep blic o! Bangladesh

no" holds +.#&/0 o! the share capital o! the Bank# irectors and 2ponsors having

vast e3perience in the !ield o! trade and commerce o"n 11#4.0 o! the share capital

and the rest is held by the general p blic#

1.2 Mission Of IFIC Bank Ltd.

-he mission o! IFIC Bank L- # is to provide service to o r clients "ith the help o! a

skilled and dedicated "ork!orce "hose creative talents, innovative actions and

competitive edge make o r position ni5 e in giving 5 ality service to all instit tions

and individ als that "e care !or#

6e are committed to the "el!are and economic prosperity o! the people and the

comm nity, !or "e drive !rom them o r inspiration and drive !or on"ard progress to prosperity# 6e "ant to be the leader among banks in Bangladesh and make o r

indelible mark as an active partner in regional banking operating beyond the national

bo ndary#

In an intensely competitive and comple3 !inancial and b siness environment, "e

partic larly !oc s on gro"th and pro!itability o! all concerned#

.


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1.3 IFIC Bank At A lance

+

7ey Points Partic lars

8ame o! the Bank International Finance In!est"ent # Co""erce

Bank Ltd.

9ead o!!ices haka

ate o! incorporation : ne .4,1%*+

Branch '% omestics ; 4

managing director#

-otal =anpo"er 1%%&

>arning Per 2hare 4+#+.?(-7)

-otal


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1.$ %oint &entures A'road

Bank of Maldives Limited

IFIC is the !irst among the banks in the private sector to have operations abroad# In

1%*+, the Bank set p a oint vent re bank in =aldives kno"n as Bank o! =aldives

Limited (B=L) at the re5 est o! the $overnment o! the Rep blic o! =aldives# -his is

the only national bank in that co ntry having branches thro gho t that co ntry# IFIC

Bank managed the a!!airs o! B=L !rom 1%*+ to 1%%.# IFIC Bank sold its shares in 1%%.

to the $overnment o! the Rep blic o! =aldives and handed over the =anagement o!

B=L to =aldives $overnment#

NIB Bank Ltd., Pakistan

IFIC Bank had t"o branches in Pakistan, one in 7arachi and the other in Lahore#

7arachi Branch "as opened on .'th


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Nepal Bangladesh Finance & Leasing Limited (NB Finance):

8epal Bangladesh Finance ; Leasing Co# Ltd# (s bse5 ently renamed as 8epal

Bangladesh Finance ; Leasing Ltd#), another oint vent re leasing company bet"een

IFIC Bank Ltd# and 8epali 8ationals, started its operation on 3change LLC ( I>), a oint vent re bet"een IFIC Bank Limited

and man nationals, "as established in 1%*/ to !acilitate remittance by Bangladeshi

"age earners in man# IFIC Bank holds ./0 shares, and the balance &/0 is held by the

mani sponsors# -he e3change company has a net"ork o! 1@ branches covering all the

ma or cities to"ns o! man# -he operations o! the branches are ! lly comp teriAed

having online system# -he a!!airs and b siness o! the company is r n and managed by

the Bank nder a =anagement Contract#

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1.( Board Of )irectors

Dnlike other banks in the private sector, Board o! irectors o! the Bank is a ni5 e

combination o! both private and $overnment sector e3perience# C rrently it consists

o! 1+ directories# ! them >ight represent the sponsors and general p blic and !o r

senior o!!icials in the rank and stat s o! :oint 2ecretary


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1.* +rogress ,eport Of IFIC Bank Ltd.

Progress report o! IFIC Bank Ltd# For the !ive years is given belo"#

P


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1.- Capital And ,eser!es

IFIC Bank has been consistently maintaining the Capital and

=anaging irector# -his !acilitates rapid decisions# -here is an


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Committee comprising member o! the 2enior >3ec tives headed by C> and =anaging

irector to look into all operational ! nctions and Risk =anagement o! the Bank#

1.1 Infor"ation A'out 4he 5"plo6ee Of IFIC Bank Ltd7Banani Branch89

IFIC Bank Limited o! Banani Road Branch is one o! the Pro!itable Branch o! IFIC Bank

Ltd# I2 located at &+ 1 (1 st !loor), Banani Road, haka# It started its o rney at the year

1%*%, +1st ctober# =anpo"er Position o! IFIC Bank, Banani, Road, Branch

%.L No. $atego! emplo ee N'm e!

1 Eice President ; =anager 1

. First


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Chapter 4:o

1@


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2.1 Introduction of the stud6

ereg lation o! interest rates, rising competition !rom bank and non bank competitors

and contin ing development o! innovative "ays to provide !inancial services are all

contrib ting to a gro"ing interest in eval ating bank per!ormance vario s gro ps o!

individ als are partic larly interested in eval ating bank per!ormance# First, bank

shareholders are directly a!!ected by bank per!ormance# Investors take advantages o!

bank in!ormation to develop e3ceptions concerning ! t re per!ormance that can be sedto price common shares appraise# 2econd, bank management traditionally is eval ated

on the basis o! ho" "ell the bank per!orms relative to previo s years and compared "ith

similar banks# 9ence, employees salaries and promotions are !re5 ently tied to the

per!ormance o! the bank# Bankers also need to be in!ormed the condition o! other banks

"ith "hich they have dealing# -hird, reg lators concerned abo t the sa!ety and

so ndness o! the banking system and the preservation o! p blic con!idence, monitor

banks sing onsite e3aminations and comp ter oriented Gearly alarming systemH to keeptrack on bank per!ormance# Forth, and last, the b siness comm nity and p blic sho ld

be concerned abo t their banks per!ormance to the e3tent that their economic prosperity

is linked to the s ccess or !ail re o! their bank#

2.2 Background of the stud6

International Finance Investment and Commerce Bank Limited (IFIC Bank) is a banking company incorporated in the People s Rep blic o! Bangladesh "ith limited

liability# It "as set p at the instance o! the $overnment in 1%&' as a oint vent re

bet"een the $overnment o! Bangladesh and sponsors in the private sector "ith the

ob ective o! "orking as a !inance company "ithin the co ntry and setting p oint

vent re banks !inancial instit tions abroad# -he $overnment held 4% per cent shares

and the rest /1 per cent "ere held by the sponsors and general p blic# In 1%*+ "hen the

$overnment allo"ed banks in the private sector, IFIC "as converted into a ! ll?!ledgedcommercial bank# -he $overnment o! the Peoples Rep blic o! Bangladesh no" holds

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+/0 o! the share capital o! the Bank# Leading ind strialists o! the co ntry having vast

e3perience in the !ield o! trade and commerce o"n +40 o! the share capital and the rest

is held by the general p blic#

.#+ O';ecti!e of the stud6

Bank operates its activities not only to earn pro!it, b t also to serve its clients in

accordance "ith their needs and demands#

ene!al *ectives:

-he general ob ective o! the st dy is to have a $eneral >val ation o! the per!ormance

o! IFIC Bank Ltd#

%pecific *ectives:

In line o! the general ob ective o! the speci!ic ob ectives o! the st dy are as !ollo"s

-o present an overvie" o! IFIC Bank Limited#-o revie" the management system o! the bank#

-o gather comprehensive kno"ledge o! the loan and advance#

-o identi!y the !actor contrib ting to the attractive and operative

per!ormance o! the local branches o! the bank#

-o identi!y the sectors the bank is giving loan and advance#

-o !ind o t strength and "eakness o! the organiAation#

1.


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2.$ cope Of 4he tud6

< bank has di!!erent prod cts, di!!erent services and di!!erent c stomers# i!!erent

departments o! a bank per!orm di!!erent activities#

9o"ever, this st dy is done on the basis o! per!orming three?month internship

program by the researcher in the IFIC Bank Ltd# 2o, this st dy says only ab t the loan

and advance o! IFIC Bank Ltd# Besides this as IFIC Bank Ltd# Is a large Bank and it

!acilities vario s prod cts and services, this st dy covers loans and advances o! IFIC

Bank Ltd#


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Primary Data:

-he primary so rces o! data are as !ollo"s

In!ormal conversation "ith the bankers#

Practical "ork e3pos re !rom the di!!erent desks o! the three departments

o! the branch#

Face?to?!ace conversation "ith the respective o!!icers and sta!!s o! the

banks#

Secondary Data:

-he secondary so rces o! data and in!ormation are

Eario s books, articles, compilations etc# regarding general banking

! nctions, !oreign e3change operations and credit policies#


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2hort time is another ma or problem !or a so nd internship report# -o

prepare a report on some iss es takes m ch time b t in practice "e are

given a short time#

Finally, the lack o! the depth o! my kno"ledge and the analytical capacity!or "riting s ch report is also a shortcoming o! this st dy#

1/


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Chapter 4hree

1'


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3.1 Introduction

-his is the s rvival nit o! a bank beca se nite and nless the s ccess o! this section

is a 5 estion to every bank# I! this section is not properly "orking, the bank it sel!

may become bankr pt# -his is important beca se this is the earning nite o! the bank#

Banks are accepting deposit !rom the depositors in condition o! providing interest to

them as "ell as sa!e keeping their deposits# 8o" the 5 estion may grad ally arise

ho" the bank "ill provide interest to the clients and the simple ans"er is advance# 6e

o!ten se loans and advances as an alternative to one another# B t academically this

concept is incorrect#


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3.2 46pes of Ad!ance


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Instr ment 9JP -9>C> #

/@0 margin re5 ires opening a CC acco nt# (varies)

peration o! cash credit is same as that o! overdra!t the p rpose o! cash

credit is to meet "orking capital needs o! traders, !armers, andind strialist#

It is granted only the !irst class parties#

It is charged against a property "here neither the o"nership nor the

possession is passed to the bank#

Cash Credit P%edge #CC P&E D'E$:

-he nat re, operational "ork, and characteristics o! CC? PL> $> in assame as CC K 9JP #

CC#PL> $> in di!!erent !rom CC?9JP only !rom the sec rities or

b siness goods against the loan amo nt#

It is charged against properties "here the o"nership may remain to the

borro"er b t the possession is passed to the bank#

Instr ment K Pledge eed#

Cash Credit 9JP -9>C $>), IFIC Bank Ltd#,Banani Road

Branch

=onth o! istrib tion


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verdra!t are those dra"ing, "hich are allo"ed by the bank in e3cess o!

the balance in the c rrent acco nt p to a speci!ied amo nt !or de!inite

period as arranged !or#

$enerally it is given to the b siness to increase their b siness activities#Ds ally provide against F R, P22, i#e# !inancial obligation or any primary

sec rities# -he interest charge !rom the date o! !irst "ithdra"#

Interest is calc lated and charged only on the act al debit balance on daily

prod ct basis#

Balance o! acco nt are !l ct ates

-he interest rate o! 2 is +0 above o! F R interest rate i! the F R is in

o r Bank#I! the F R is in other bank then the interest rate is 14#/@0

3.$ 4er" Loan

IFIC Bank gives in the !ollo"ing -erm Loan

Ind stries Loan

thers loan

2ta!! 9o se B ilding Loan (29BL)

2t !! loan against Provident F nd(2LPF)

Loan against P22

9o se B ilding Loan

Cons mers Credit 2cheme

!ndustries &oan:

It is a term loan# It is given !or three (+) years at e5 al installment# $rass period is

allo"ed o! this types o! loan# $rass period is the period that re5 ire to earn visible

ret rns#

Others %oan:

.1


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Loan provider !or other p rpose "hich is prod ctive and less risk rather ind strial

sector are treated as others loan#

-he terms and condition o! these types o! loan are as ind stry loan#

Staff House (ui%ding &oan #SH(&$:

1.@ times o! B


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3.( "all 5nterprise Financing9

IFIC Bank gives in the !ollo"ing important sectors o! 2mall >nterprise

>asy Commercial loan

Retailers loan

-ransport loan

Commercial ho se b ilding loan

Possession right loan

Contractors loan

Letter o! g arantee

Loan against imported merchandise (LI=)

Loan against tr st receipt (L-R)

Bidders loan

Pro ect loan

Easy Commercia% %oan:

Individ al, b siness enterprises (other than p blic limited company) engaged in any

b siness to meet b siness re5 irement# ; C2>

B# Face val e "o ld mean the original amo nt !or the

loan is ma3im m 1.(t"elve) months# .0 is to be charged as a penal interest on

overd e amo nt (i! any)# -aka /@@ ? to be realiAed be!ore disb rsement as processing

!ee#

.+


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)etai%er*s %oan:

Individ al Proprietorship !irm engaged in retail b siness# -hey need this type o! loan

to meet "orking capital capital !inance re5 irement# nterprises ( ther than P blic Limited Company) engaged in

transport b siness# -hey need ! nd to P rchase o! Road 6ater -ransport !or

commercial se#


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Possession right %oan:

Proprietorship concern having no collateral sec rity to o!!er other than possession

right o! shop can apply !or this loan to meet p the need o! Fi3ed 6orking capital

c stomer o! the respective branch having shop b siness place in the command area

having at least .(t"o) years e3perience in their line o! b siness have the eligibility !or

applying this loan#


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respective branch having b siness place in the command area "ith at least .(t"o)

years e3perience on their line o! b siness have the eligibility !or application# -he

margin is depending pon Banker?C stomer relationship#

,or-ing capita% %oan:

B siness >nterprise (other than P blic Limited Company) engaged in man !act ring

trading b siness can apply !or this to meet "orking capital re5 irement# Firms or

companies incorporated in Bangladesh, c stomer o! respective branch having shop or

b siness place is in the command area "ith at least .(t"o) years e3perience on their

line o! b siness# e3isting man !act ring services nit# Firms companies

incorporated in Bangladesh# -he !irm company sho ld have b siness acco nt "ith the

branch# -he !irm company sho ld generate s !!icient cash !lo" !rom operation !rom

"hich !irms can make the repayment o! the loan#

Penal interest is additional .0 per ann m charged on the overd e amo nt# -he tenor

o! the loan is ma3im m / years incl ding grace period# -he length o! grace period is

to be determining on the ! nd generation o! the pro ect#

@#1@0 on loan amo nt (=inim m -k#.@@@ ?) to be realiAe disb rsement o! loan# @#./

on loan amo nt s b ect to minim m o! -k#/@@@#@@ to be realiAe be!ore disb rsement

o! loan#

.'


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IFIC Bank Ltd# Introd ced Cons mer Credit 2cheme !or its c stomer d ring 1%%% d ly

approved by the Board o! irectors o! the bank in their ./1 st meeting held on ntertainment p rpose loan

Loan !or intangible loan

thers#

-he p rpose o! this section is to provide direct loan g idelines to the branches !or providing

cons mer !inancing nder cons mer Finance 2cheme# $ idelines nder the pr dential

Reg lation and irection o! Bangladesh bank have been !orm lated# -hese g idelines "ill

assist the branches as to ho" the CCs loan port?!olio sho ld be managed# -he committee

st died e3isting prod cts available in the market# Considering the market demand and

investment opport nities in Cons mer Financing 2ector, the committee has !orm lated the

!ollo"ing & prod cts !or o r bank to be la nched nder Cons mer Financing 2cheme

>asy loan ( 2ec red personal loan)

Cons mer d rable loan

NPar a ( >d cation loan)

N-hikana ( 9o se b ilding loan)


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Ltd# Repayment "ill be made in l mp s m "ithin e3piry or as per acceptable terms

and interest to be serviced as and "hen d e#

Consumer Dura+%e %oan:

-his applicant !or this loan are employee o! $ovt# semi

$ovt# Corporation a tonomo s bodies, employee o! rep ted m ltinational corporation

and large local corporate, employees o! rep ted niversity college school, employees

o! rep ted 8$ s


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Parua #Education %oan$

IFIC Bank o!!ers >d cation Loan that can make a st dent s dream comes tr e# IFIC

Bank !irmly believes that e3pense !or ed cation is an investment !or ! t re# nly

ed cation can ! l!ill the dreams o! an individ al as "ell as a nation# IFIC Bank is

providing ma3im m -k# *#@@ lac to be repayable in 1. to 4* monthly Installments#

+arua 75ducation Loan8

,epa6"ent chedule

Loan

A"ount

Interest

,ate

Monthl6 install"ent

$

"onths

3*

"onths

2$

"onths

12

"onths

-k# 1@@,@@@ ?

or m ltiple

M1'#/@0-k#

.,*'1 ?

-k#

+,/4. ?

-k#

4,%.. ?

-k#

%,@%% ?

.%


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Thi-ana #House (ui%ding %oan$

9ome is an address, a shelter !or entire li!e, and this is "hat one leaves behind !or the

!amily# < ho se is the single biggest investment that yo "ill make in yo r li!etime#

-o o"n a home !rom savings takes a long time and ! ll payment at a time is di!!ic lt

too# on t "ait yo r entire li!e saving# -r st s, take a 9ome loan !rom IFIC and

realiAe yo r dreams no"# IFIC Bank is providing ma3im m -k#&/#@@ lac to be

repayable in 1. to 1*@ monthly installments#

4hikana 7Ho"e Loan8 ,epa6"ent chedule

Loan

A"ountInterest ,ate

Monthl6 install"ent 74k.8

1( 6ears 1$ 6ears 13 6ears 12 6earss

-k#1,@@,@@@ ?

or = ltiple

M 1/#@@0

p#a#

1,4@1 ? 1,4.% ? 1,4'. ? 1,/@+ ?

11 6ears 1 6ears 6ears 6earss

1,//+ ? 1,'1/ ? 1,'%4 ? 1,&%' ?

- 6ears * 6ears ( 6ears $ 6earss

1,%+. ? .,11& ? .,+*1 ? .,&*/ ?

3 6ears 2 6ears 1 6ears

+,4'% ? 4,*/1 ? %,@.% ?

+@


31/71

ny Purpose &oan

-his applicant !or this loan are employee o! $ovt# semi

$ovt# Corporation a tonomo s bodies, employee o! rep ted m ltinational corporation

and large local corporate, employees o! rep ted niversity college school, employees

o! rep ted 8$ s ngineer I- pro!essional

=anagement Cons ltant or any other pro!essional, sometimes yo st need that little

bit e3tra money !or "hatever reasonO on t make yo rsel! "orry abo t it# Come to s

at IFIC Bank and tr st that "e ll help yo to realiAe yo r dreams#

IFIC Bank is providing =a3im m -k# 1@#@@ lac to repayable in 1. to 4* monthly

instalment# ick Processing ; Least Formalities#

+1


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IFIC +esha;ee Loan ,epa6"ent chedule

Loan

A"ount

Interest

,ate

Monthl6 install"ent

$

"onths

3*

"onths

2$

"onths12 "onths

-k# 1@@,@@@ ?

or m ltiple

M1'#/@0-k#

.,*'1 ?

-k#

+,/4. ?

-k#

4,%.. ?-k# %,@%% ?

uto &oan

"ning a car means !reedom o! convenience !or moving o t, a!!ords p nct ality,

shelter !rom rain and heat d ring traveling and above all g arantees the m ch needed

sa!ety# "ning a car is a dream o! many people# -o materialiAe yo r dream, no" "e

have < to Loan "ith more !le3ible, a!!ordable and convenient package option#

IFIC Bank is providing ma3im m -k# .@ lac to be repayable in 1. to '@ monthly

installments#

Auto Loan ,epa6"ent chedule

Loan

A"ount

Interest

,ate

Monthl6 install"ent 74


33/71

Festiva% %oan:

>3tended to meet e3penses o! ma or religio s !estival like >id, P a, Chiristmas and

B dda P rnima#

Cons mer Financing o! IFIC Bank (.@@&?.@@%)

J>


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Credit port!olio o! the bank "as nder as on +1#1.#.@@%

+articular A"ount +ercent

1#


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Chapter Four

+/


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$.1 uidelines For Bank For i!ing Loan9

-his g ideline incl des ob ective 5 antitative parameters !or the eligibility o! the

borro"ers and determining the ma3im m permission limit per borro"er#

F ndamentally, credit policies and proced res can never s !!icient capt re all the

comple3ities o! the prod ct# -here!ore, the !ollo"ing credit principles are the ltimate

re!erences points !or making 2> !inancing decisions


37/71

For obtaining a loan advance the party m st make an application in

standard !orm in "riting to the branch "here he maintains his

operative acco nt#

party based on the !ollo"ing so rces o! in!ormation

Personal investigation

Con!idential s pports !rom

ther banks,

Chamber o! commerce

CIB !rom Bangladesh bank as the earnable

-reading acco nt P C, B 2,= < i! any and other doc ments

s bmitted by the party#

-he average balance and the present maintained in the

acco nt#

-he nat re o! operation d ring the last si3 months and the

date o! opening acco nt#

2tep?+ Preparation o! limit proposal

-he branch, may prepare limit proposal a!ter being ! lly satis!ied "ith

the !ollo"ing points

-he !inancial position o! the party#

P rpose !or "hich advance is re5 ired#

8at re o! sec rities o!!ered#

-he payment arrangement#

2tep?4 Rene"al proposal#

2tep?/


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Receive the limit section advice#

2tep?' isb rsement o! loan#

2tep?& loan monitoring and administration#

$.3 +rudential ,egulation9

R>$DLs#

In case o! limited companies, g arantees o! all directors other than nominee directors

shall be obtained# In case o! proprietorship concern, spo ses g arantee other than the

personal g arantee o! the o"ners may be taken#

R>$DL


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-he minim m and ma3im m e3pos re o! the bank on a single 2> shall remain "ithin

the range o! -k#/@ lac respectively s b ect to the !ollo"ing

$DL$DL


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R>$DL


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lectricity)?anyone2alary certi!icate -rade License#

41


42/71

-#I#8# 8 mber#

Copy o! o!!er letter recogniAed college niversity !or st dying abroad#

For local private niversity =edical college s bmission o! evidence

related to admission and cost# CIB report on the borro"s as re5 ired#

In the case o! sole proprietorship !irm

ne copy passport siAe photograph

Copy o! trade license#

Personal net "orth statement

9ypothecation o! stock#Personal g arantee o! a b siness having at the same area or any person

acceptable to the bank#

R>$DL


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1# Banks shall, as a matter, obtain a copy o! !inancial statements d ly edited

by a practicing Chartered $DLs and !or

the same p rpose !or "hich they "ere ac5 ired obtained# Banks sho ld develop and

implement an appropriate system !or monitoring the tiliAation o! the loans#

R>$DL in "hich any o! its director,

shareholder, employer or their immediate !amily members is holding /0

or more o! the share capital o! the 2>#

.# -9R D$9 -9> I82-RDC-I 8 F Reg lation?1. o! Pr dential

$ ideline !or 2mall enterprise !inancing banks are barred to take any

e3pos re on a small enterprise in "hich any o! its director, shareholder,

employer or their immediate !amily members are holding hare capital o!

/0 or more# 9o"ever, this restriction !or the shareholder has been

"ithdra"n and hence!orth, the "ord Nshareholder sho ld be considered as

omitted#

4+


44/71

R>$DL


45/71

be provided !or immediately in their books o! acco nts by the banks on 5 arterly

basis#

4/


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0erification (y The uditors:

-he e3ternal a ditors as a part o! their a dits o! banks shall veri!y that all

re5 irements o! Reg lation?1. !or assets have been compiled "ith# Bangladesh bank

shall also check ade5 acy o! provisioning d ring their on?site inspection#

$.$ ,e=uired ecurities9

-he bank re5 ires some sec rities that are comp lsory !or getting loan and thesec rities are

Personal g arantee o! a b sinessman having b siness at the same area or

any person acceptable to the bank#

Personal g arantee o! spo se parents#

9ypothecation o! vehicles# -he vehicles to be registered "ith

BR-< BI6-< =ercantile ; =arine dept "ith Bank mortgage cla se#

Comprehensive ins rance in the oint name o! the Bank ; borro"er#

Legal mortgage o! land ; b ilding "ithin City Corporation and or

= nicipal area pre!erably 1 st party#

Registered Po"er o!


47/71

ne che5 e covering resid al amo nt o! loan d ly signed by the

borro"er#

=emorand m deposit o! che5 es#

3change dra"n by L C

opening branch#

Lien on e3port L C contract#


48/71

ne post dated blank che5 e d ly signed by the individ al or

proprietor#

=emorand m o! eposit o! Che5 e#

Letter o! hypothecation o! vehicles#Letter o! a thority to deposit debit the acco nt#

=emorand m o! deposit o! title deed#

eed o! mortgage registered "ith 2 b?Register#

Letter o! g arantee#

Registration o! vehicle "ith bank mortgage cla se#

Comprehensive Ins rance coverage "ith bank mortgage cla se#

Registration o! charges "ith R:2C nder relevant section#

Pledge o! Financial obligation "here applicable#

ne che5 e covering resid al amo nt o! loan d ly signed by the

borro"er#

Personal g arantee o! the irectors in case o! Private Limited

Company#

Personal g arantee o! all the partners#

Letter o! lien "here applicable#

Letter o! hypothecation o! stock#

Ins rance policy#

ne bank che5 e dated mat rity date o! loan signed by the borro"er#

8otariAed Po"er o! attorney to sell the possession Right as per

possession right deed o! agreement e3ec ted bet"een lessor and lessee#


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Lien Con!irmation !rom iss ing branch in case o! F R iss ed by o r

bank#

Lien con!irmation !rom iss ing a thority d ly a thenticated by the

9ead o!!ice o! the iss ing bank in case o! F R iss ed by other bank#List o! the latest irectors o! the company#

8 C !rom component a thority !or creation o! legal mortgage in !avor

o! the bank (i! re5 ired)#

Letter o! partnership in prescribed !orm o! Bank#

< thority to debit acco nt#

$.* Credit appro!al authorit69

-he a thority to sanction or approval loans shall be delegated to 2enior >3ec tives by

the managing board based on the >3ec tives kno"ledge and e3perience# 3ec tive and not to commit to ens re

acco ntability in the approval process# -he !ollo"ing sho ld apply in the approval or

sanctioning o! loan

1# Credit approval a thority shall be delegated in "riting !rom the =; Board, ackno"ledged by recipients and records o! all delegation

retained in CR=#

.# elegated approval a thority shall be revie"ed by Board or =

!rom time to time#

+# -he approval ! nction shall be separate !rom the marketing or

relationship management ! nction#

4# -he role o! credit shall be restricted to only revie" o! proposal#/#


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%#


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r e3perienced Relationship =anagers ; their team can respond to and anticipate

yo r needs and give yo competitive b siness advantages# Prod cts and services !or

commercial and b siness c stomers incl de 6orking Capital Finance, Pro ect

Finance, -erm Finance, -rade Finance, Lease Finance, 2yndication Loan etc#

/1


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$. 4he integrit6 and relia'ilit6 of the 'orro:er9

It "ill be clear !rom the above st dy that advance, to be sa!e, sho ld be granted to a

reliable and honest borro"er, "ho has the capacity ton cond ct, his b siness# -he

st dy o! a borro"er involves the st dy o! three NCs o! the party#

Character

Character denotes integrity o! the borro"er he sho ld "illingness to repay themoney borro"ed# -his is the greatest single asset any individ al can have and

is the !irst !actor to be eval ated# < person "ho is really honest "ill rarely

change "hatever be the testing !actors#

-o kno" abo t the borro"er, the banker sho ld proceed on the !ollo"ing

lines

1# 6ho the borro"er is and, "hat is his !amily backgro ndO.# Is his dealing "ith other b sinessmen honestO

+#


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1# 6hat is his b siness and "hen did he start itO

.# 9as he recently shi!ted to a ne" line o! b sinessO

+# 9as the re5 ired kno"ledge to carry on the b sinessO

4# Is he "ell established in the b siness "hat is the "orking res lt or

is he still making e3periments to make his b siness steady#


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$. Credit Infor"ation Bureau9

-he CIB has been in operation !or several years# -he need !or s ch an

rganiAation had been disc ssed !or several years and the $overnment incl ded this in

the Financial 2ector Re!orm Pro ect# -he central bank established a separate nit

headed by a $eneral =anager tasked to develop the CIB# -he F2RP "orked "ith the

CIB to develop the reporting !ormats, comp ter programs, and hard"are to s pport

CIBs operations# -he CIB is operated by the central bank, as a reg lar part o! the

bank# 8o separate organiAation "as established and so the CIB does not have separatecorporate identi!y# It is sta!!ed "ith reg lar employees o! the central bank "ho "ork in

the CIB on rotation o! their assignments# -here are c rrently over 4@ persons "orking

o! the CIB# -hese are dra"n !rom the statistics, comp ter and general cadres#


55/71

database is more di!!ic lt as there are di!!erences in spelling and some room !or

mistakes in the matching process o! =r# Q "ith =r# J# CIB has no" s ccess! lly b ilt

p this database and generally it "orks "ell# -here is also di!!ic lty !rom s bmitted

lists o! directors and o"ners, as there is not al"ays an e3act correspondence "ith

CIBs records# 9o"ever, there is great e3perience b ilt p in resolving these problems

altho gh sometimes it takes time to do so# -he data collection process is no" "ell

organiAed and the banks are e3perienced in the collection and s bmission o! data on

borro"ers#

//


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$.1 Landing ,ate9

8ame o! the Bank IFIC Bank Limited

2tatement o! Revised rates o! interest

(Per ann m percentage)

>!!ective date @1#@4#.@@*

Lending Rate (=id?rate)

1# 3ports @@

'# Commercial Lending 14#&/

9o sing Loan 14#&/ ; 1'#/@

*# Cons mer credit 2cheme 1/,1/#/@ ;1'#/@

%# Credit card .

1@# Lending to non?Banking Financial Instit tions(8BFs) 14#&/

11# thers 14#&/

/'


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Chapter Fi!e

/&


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(.1 ,isk Manage"ent9

Risk management is the identi!ication, assessment, and prioritiAation o! risks (de!ined

in I2 +1@@@ as the e!!ect o! ncertainty on ob ectives, "hether positive or negative)

!ollo"ed by coordinated and economical application o! reso rces to minimiAe,

monitor, and control the probability and or impact o! n!ort nate events or to

ma3imiAe the realiAation o! opport nities# Risks can come !rom ncertainty in

!inancial markets, pro ect !ail res, legal liabilities, credit risk, accidents, nat ral

ca ses and disasters as "ell as deliberate attacks !rom an adversary# 2everal risk

management standards have been developed incl ding the Pro ect =anagement

Instit te, the 8ational Instit te o! 2cience and -echnology, act arial societies, and

I2 standards# =ethods, de!initions and goals vary "idely according to "hether the

risk management method is in the conte3t o! pro ect management, sec rity,

engineering, ind strial processes, !inancial port!olios, act arial assessments, or p blic

health and sa!ety#

-he strategies to manage risk incl de trans!erring the risk to another party, avoiding

the risk, red cing the negative e!!ect o! the risk, and accepting some or all o! the

conse5 ences o! a partic lar risk#

Certain aspects o! many o! the risk management standards have come nder criticism

!or having no meas rable improvement on risk even tho gh the con!idence in

estimates and decisions increase#

(.2 Main +rinciples9

-he assessment o! risk is one o! the ma or tasks o! banks and other !inancial

instit tions# =ain risk !actors can a!!ect IFIC# -he policy o! the Board o! irectors is

to constantly monitor and manage the vario s risks that IFIC !aces in its b siness# For

these p rposes the Bank operates a centraliAed Risk =anagement ivision#

/*


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(.3 Main +rinciples9

-he banks operates Risk =anagement departments that responsible !or processing

risk management data !or reporting to the Boar, management, analysts and other

stakeholders, as "ell as ann al reports and !inancial statements# -he Risk

=anagement departments increased their cooperation s bstantially !or ens ring

ni!ication in processes, risk meas rements and methodology# Dni!orm processes

enhance the scalability and increase transparency and manageability and thereby aid

senior management in their decision making#

(.$ Credit ,isk Manage"ent9

6hile !inancial instit tions have !aced di!!ic lties over the years !or a m ltit de o!

reasons, the ma or ca se o! serio s banking problems contin es to be directly related

to la3 credit standards !or borro"ers and co nterparties, poor port!olio risk

management, or a lack o! attention to changes in economic or other circ mstances that

can lead to a deterioration in the credit standing o! a bank s co nterparties# -his

e3perience is common in both $?1@ and non?$?1@ co ntries# Credit risk is most

simply de!ined as the potential that a bank borro"er or co nterparty "ill !ail to meet

its obligations in accordance "ith agreed terms# -he goal o! credit risk management is

to ma3imise a bank s risk?ad sted rate o! ret rn by maintaining credit risk e3pos re

"ithin acceptable parameters# Banks need to manage the credit risk inherent in the

entire port!olio as "ell as the risk in individ al credits or transactions# Banks sho ld

also consider the relationships bet"een credit risk and other risks# -he e!!ective

management o! credit risk is a critical component o! a comprehensive approach to risk

management and essential to the long?term s ccess o! any banking organiAation# For

most banks, loans are the largest and most obvio s so rce o! credit risk ho"ever,

other so rces o! credit risk e3ist thro gho t the activities o! a bank, incl ding in the

banking book and in the trading book, and both on and o!! the balance sheet# Banks

/%


60/71

are increasingly !acing credit risk (or co nterparty risk) in vario s !inancial

instr ments other than loans, incl ding acceptances, interbank transactions, trade

!inancing, !oreign e3change transactions, !inancial ! t res, s"aps, bonds, e5 ities,

options, and in the e3tension o! commitments and g arantees, and the settlement o!

transactions# 2ince e3pos re to credit risk contin es to be the leading so rce o!

problems in banks "orld?"ide, banks and their s pervisors sho ld be able to dra"

se! l lessons !rom past e3periences# Banks sho ld no" have a keen a"areness o! the

need to identi!y, meas re, monitor and control credit risk as "ell as to determine that

they hold ade5 ate capital against these risks and that they are ade5 ately

compensated !or risks inc rred# -he Basel Committee is iss ing this doc ment in

order to enco rage banking s pervisors globally to promote so nd practices !or

managing credit risk#


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(.( Lending ,isk Anal6sis 7L,A8

LR< is the combination o! analysis o! vario s types o! risks that may occ r "hile a

loan have sanctioned# -his is an analysis o! the meas rement o! per!ormance o! a

company or individ als# 6hen a loan has been provided by the bank then all types o!

risks have to calc late# -his is not easy to e3press all the pros and corns o! LR< are

not possible in this report# Be!ore sanctioning a loan it is necessary to analyAe the

LR)I> ,I < A>AL? I

B siness risk

Ind stry risk? 2 pply Risk ; 2ales Risk

Company risk?

1) Company K Per!ormance Risk ; Reliance Risk

.) =anagement Risk? =gt# Competence Risk ; =gt# integrity =gt#

Competence Risk

+) 2ec rity Risk? sec rity Control Risk ; 2ec rity Cover Risk

'1


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Chapter i@

'.


63/71

*.1 trength of the organi/ation9

< "ide range o! b siness, ind stries ; sector constit te the banks

advance port!olio# =a or sectors they have e3tended credit incl ded

te3tile and readymade garments, edible oil, telecom, media ; technology

shipping, steel ; engineering, energy chemical etc# IFIC Bank developed

smooth relationship "ith their clients and corporate b siness holders#

In case o! services o!!ered by all private banks in o r co ntry, IFIC Bank

Ltd, has maintained high 5 ality#

2ince the govt# has imposed some ne" r les regarding private banking

operation, IFIC Bank Ltd# easily cope p the given r les#

3perience and competing "ork!orce "ho have e3pertise kno"ledge

abo t the bank#

2ome loyal c stomer "ho al"ays bring in ne" c stomers#

=anagement consists o! kno"ledge and a thoritative personnel#

Rep tation o! the management#

Interaction o! the employees "ith the top management#

*.2 eakness of the IFIC Bank9

Problems "ith $eneral Banking

1# -o open an acco nt some times people have given incomplete in!ormation

"hich "ill become a very ac te "hen any disp te arises#

.# Beca se o! good relationship sometime branch manager a thenticated theacco nt "ith introd cer#

'+


64/71

+# 2ometimes title o! the acco nt holder di!!ers#

Problems "ith Cash

1# Beca se o! navailability o! notes and coins they cant give the proper

services to the potential c stomers#

.# Big parties or !or big amo nt parties "o ldnt tk# 1@@ notes b t the

Bangladesh Bank iss es mi3 notes#

Problems "ith no gh employees !or the co nter sector#

*.3 Opportunit6 of the IFIC Bank9

Favorable in this climate by the commercial banking sector in o r

co ntries to comparison other b siness, high ! nding cost !or lending is

great opport nity !or the bank#


65/71

*.$ 4hreat of the IFIC 'ank9

Recovery Loan

-his is a vital thereat !or IFIC Bank Limited beca se the !inancial market strength o!

o r co ntry is not so strong#


66/71

Chapter e!en

''


67/71

-.1 Findings9

Pro ect loan re5 ires testing o! !easibility o! pro ect and dging the

marketability o! the prod ct# It re5 ires in! sion o! kno"ledge o! both the

!ields?marketing and banking# B t the bank has hardly any person "ith this

kind o! ability#

< vigoro s and comprehensive orientation and training program sho ld be

la nched to enhance the employees skill beca se sometime they !ail toin!orm the c stomer abo t loan re5 irements "itho t vie"ing companys

book#

9ope! lly the management decided to provide ! lly comp teriAed services

that "ill booster services o! the bank#

Fe" o!!ers o! the bank are competent# >ven thro gh many o! them simply

kno" the "orking proced re o! "hat they are doing b t dont kno" the

philosophy behind doing those and some are ine!!icient to serve thec stomer#

'&


68/71

-.2 ,eco""endation9

-he st dy "as limited to some speci!ic variables ass ming other variables are

insigni!icant to selection the borro"ers# =oreover, in the organiAation part the area o!

activities o! IFIC Bank Ltd# speci!ically loans and advance division is highlighted# For

the vie"point o! above the !ollo"ing can be recommended

-he r les and reg lation that a borro"er m st !ollo" is very di!!ic lt and

sometimes impossible# 2o, the bank sho ld proced re easy and

nderstandable to attract the potential c stomer#

In the selection proced re, the ne" entreprene r sho ld be enco raged in

getting loans and those "ho have the records o! reg lar repayment may be

given pre!erence#

Revie" the borro"ers !inancial position periodically to meas re the risk

implication !rom the beginning to ! ll repayment o! loan#

8ot to emphasiAe on e3perience o! the borro"ers as the key !actor in

providing loan !acilities#

IFIC Bank Ltd# Can !ollo" the modern banking approach called NDnit

Banking# Dnits banking make the r les and reg lation !or their banking

area and applicants are easily ! l!illing banks re5 irement

IFIC Bank sho ld red ce interest rate !or given c stomer and small

enterprise loan#

IFIC Bank sho ld red ce interest on overd e amo nt, "hich depends on

the category o! loan#

Loan processing o! 10, "hich is very high, sho ld be red ced#

=a3im m loan limit siAe o! the bank sho ld increase#


69/71

-he Bank takes Ltd# 8eeds to advertise thro gh vario s media abo t

types o! loan o!!ers and other prod cts#

'%


70/71

-.3 Conclusion9

Form the learning and e3perience point o! vie" I can say that I really en oyed my

internship period in IFIC Bank Ltd#


71/71

Bi'liograph6

1# P blished

general banking in ific

Documents