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Part- One
Introduction
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1.1. Background of the Study
It has become indispensable for every person to have some thought on the bank and banking course
of action. As our educational system predominantly text based, inclusion of practical orientation
program is an exception to the norm. From practical knowledge, we will be able to know real life
situations and start a career with some practical experience. Bachelor of Business Administration
BBA! is a professional course. "he course is designed with an excellent combination of practical and
theoretical aspects. After completing BBA, certain times are preserved for internship. As a student of
BBA with the re#uirement of my course I was assigned to $ational %redit and %ommerce Bank
limited $%%B&!, 'irpur Branch for my internship. In such state of affairs the present aiming at
analy(ing the experience of practical orientation related to an appraisal of $%% Bank &imited and my
report topic has been selected as )&oan *isbursement + ecovery -ystem of $%%B&.
Banking constitutes an important segment of the financial infrastructure of any company. /enerally,
banking means deposit mobili(ation and development of those deposits into advances or investments
in different sectors. It means bank collect deposit at lowest possible interest rate and provides loan at
highest interest rate. Between the two interests is the profit for bank and known as -pread. "here are
two types of banking that was commercial banking and another is investment banking. %ommercial
banks raise their fund by collecting deposits from individuals and business that provides as loan to
customer at high interest to maximi(e profit. $%% bank is one of the most popular and profitable
commercial bank in Bangladesh.
Basically, this report is highlighted on overview of $%% Bank &td, -tructure, Analysis, 0resent
status, xperience, ecommendation and conclusion.
1.2. Significance
"his internship report is an important partial re#uirement of four years BBA graduation program. "his
is because knowledge and learning become perfect when it is associated with theory and practice. By
this internship program students can establish contacts and networking. %ontacts may help to get a
2ob in practical life. "hat is, student can train and prepare themselves for the 2ob market. A poor
country like Bangladesh has an overwhelming number of unemployed educated graduates. As they
have no internship experience they have not been able to gain normal professional experience of
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establish networking system, which is important in getting a 2ob. "herefore, it is obvious that the
significance of internship is clearly 2ustified as the crucial re#uirement of four years BBA graduation.
1.3. Scope of the Report
As I was assigned to the $ational %redit + %ommerce Bank &td, 'irpur Branch, there is enough
scope of the study. "he report covers the topic )&oan *isbursement + ecovery -ystem of $%%
Bank &td.4 "o conduct a study, &oan *isbursement + ecovery of $%% bank, I have gathered
valuable information from $%% Bank, 'irpur Branch and its wealthy library I have also got some
information from website of $%% Bank.
"his report is only done for gathering information about loan sanctioning procedure and recovery
system as well as the performance of sanctioning loan and recovery position while ignoring any other
department of the bank.
1.4. Objectives of the Study
1.4.1. Genera objective
"he prime ob2ective of this report is to analy(e the !"oan #isburse$ent % Recovery Syste$ of
&ationa 'redit % 'o$$erce Bank "td.((
1.5.3. Specific objectives
"he study was conducted to achieve the following secondary ob2ectives6
"o know the lending procedure of $%% Bank &imited.
"o know the trend of loan and advances over the year.
"o know the sector wise loan and advances.
"o know the recovery performance.
"o know the ability to utili(e the deposit as loan and advances.
"o compare the loan disbursement and recovery performance with -outheast bank +
'ercantile Bank &imited. "o make some recommendations for the successful &oan disbursement and recovery system
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1.). *ethodoogy of the study
'ethods followed to perform a 2ob or conducting activities to complete a task is called methodology.
In conducting this study the following methodology was adopted in collecting data + information,
preparation of reports etc. "he methodology of report is given below8
1.).1. +ype of Research
In this report we will describe the &oan *isbursement + ecovery process of $ational %redit +
%ommerce Bank &td, by "ime series analysis, atio Analysis and %omparative Analysis etc. -o,
according to the base of ob2ective this research is called descriptive research.
1.9.3. #ata coection
0rimary sources
-econdary sources
1.5.2.1. Primary sources of data include the following:
0ractical deskwork.
Informal discussion with the clients and officers of the bank.
1.5.2.2. Secondary sources of data including the following:
Annual report of $%% Bank limited 3::; to 3:1:!.
Annual report of -outheast Bank limited 3::
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1.).3.1. #ata coection procedure and instru$ents
For the )"oan #isburse$ent % Recovery Syste$ of &ationa 'redit % 'o$$erce Bank "td4 I
mainly used -econdary data. Besides this I also collect some information by taking expert opinion
from the officers and direct observation while I doing the internship program at the bank.
1.5.3.2. Collection of Secondary ata
In order to collect the secondary data different related printed materials like $%% Bank Annual
eport, monthly statement of the bank, $%% bank website, bankers training guide has been used.
'oreover, various library sources and textbooks also have been used as secondary sources of
collecting early mentioned data and information.
1.5.! ata "nalysis # re$orting
After collecting all the data, they will be coded and data will be processed, &oan disbursement +
recovery analysis, graphically represented using '- xcel and '- >ord.
1.,. "i$itations of the study
"here are some limitations of the report and therefore it may lack some crucial data. In preparing the
report I faced some problems, which are as follows8
"he main constrain of the study was insufficiency of information, which was
re#uired for the study. "here are various information the bank employee cant
provide due to security and other corporate obligations.
*ue to time limitation many of the aspects could not be discussed in the present
report. &earning all the functions within 2ust
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Page ;
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Part-%2
"n O&er&iew of 'CC (an) *td.
2.1. 'o$pany -rofie
Page ?
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&a$e &ationa 'redit % 'o$$erce Bank "td.
ear of /stabish$ent 0t as Started as an invest$ent co$pany in 1) and
converted to a fuy fedged private co$$ercia bank in 1
*ay 13.
'orporate Office 56 *otijhee '786 #haka51999.
8uthori:e 'apita 2)99 $iion
-aid ;
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2.3. #irection % *anage$ent
A 376member board of directors, including the chairman and a vice6chairman oversees the affairs of
the bank. "he managing director is its chief executive. "he functions of branches are carried out under
direction and surveillance of /eneral 'anager and his *eputy. In 3::1, the bank had 7@ branches
and 9:3 employees. But now it has about @1 branches with about 3::: employees. "he registered
head office of the bank is at *haka. "he bank conducts traditional commercial banking functions as
well as foreign exchange business and provision of other financial services.
2.4. 'orporate *ission
"o mobili(e financial resources from within and abroad to contribute in agricultures, industry +
socio6economic development of the country and to play a catalytic role in the formation of capital
market. It also includes the following8
Anticipating business solutions re#uired by all our customers everywhere and innovatively
supplying them beyond expectation.
-etting industry benchmarks of world class standard in delivering customer value through our
comprehensive product range, customer service and all our activities
Building an exciting team6based working environment that will attract, develop and retain
employees of exceptional ability who help celebrate the success of our business, of our
customers and of national development
'aintaining the highest ethical standards and a community responsibility worthy of a leading
corporate citi(en
%ontinuously improving productivity and profitability, and thereby enhancing shareholders
value
2.). 'orporate =ision
"o become the Bank of choice in serving the $ation as a progressive and -ocially esponsible
financial institution by bringing credit + commerce together for profit and sustainable growth.
2.,. Business Objectives
'ake sound investments.
'eet capital ade#uacy re#uirement at all the time.
nsure
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nsure a satisfied work force.
Focus on fee6based income.
Adopt an appropriate management technology.
Install a scientific 'I- to monitor Banks activities.
2.. 'orporate 'uture
$%% Bank is one of the most disciplined Banks with a distinctive corporate culture. In this bank, it
believes in shared meaning, shared understanding and shared sense making. "he people of bank can
see and understand events, activities, ob2ects and situation in a distinctive way. "hey mould their
manners and eti#uette, character individually to suit the purpose of the Bank and the needs of the
customers who are of paramount importance to them. "he people in the Bank see themselves as a
tight knit teamDfamily that believes in working together for growth. "he corporate culture they belong
has not been imposedE it has rather been achieved through their corporate culture.
2.. 'apita Structures
"he bank has a strong capital base. Its authori(ed capital is ". 39::.:: million while its paid up
capital is "k. 59:1.39 million. "he share price of the bank is par value "k.1::.::. to meet the overall
re#uirement the bank borrow from Bangladesh Bank and other banks and financial institutions. -o far
the bank has been able to meet its capital ade#uacy re#uirement successfully.
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2.. Organi:ationa Structure >?igure@ 2.1A
2.19. ?inancia ighights of &''B" fro$ ?299, to ?2919 >?igure@ 2.2A
Page 11
'hair$an
=ice 'hair$an
#eputy *anaging #irector
/Cecutive =ice -resident
Senior /Cecutive =ice -resident
Senior =ice -resident
*anaging #irector
Board of #irector
-rincipa Officer
Senior -rincipa Officer
8ssistant =ice -resident
Senior 8ssistant =ice -resident
=ice -resident
Senior Officer
Officer
Dunior Officer
8ssistant Officer
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Source: "nnual +e$ort of 'CC (an) *td. ,2%%-2%1%
+he deposit $iC of 2919 is appended in the chart beo@
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Source: /onthly Statement of e$osit ,2%1%
0igure- 2.3: e$osit /i of 'CC(*
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Part- hree
heoretical (ac)ground
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• Secured Overdraft5SO# >?OA@ Advance is granted to a client against financial obligations
that is deposited in the bank. A client can get up to @:C loan of the total deposited value.
• Secured Overdraft5SO# >GA@ /ranted against the work order of government departments,
corporations autonomous bodies and reported multinational private organi(ation. "o arrive at
logical decision, the clients managerial capability, e#uity strength, nature of scheduled work
is to be 2udged.
• 'ash 'redit5'' >ypothecationA@ "he mortgage of movable property for securing loan is
called hypothecation. Gypothecation is a legal transaction whereby goods are made available
to the lending banker as security for a debt without transferring either the property in the
goods or either possessing.
• 'ash 'redit5'' >-edgeA@ "ransfer of possession in the 2udicial sense of essential in the
valid pledge. In case of pledge, the bank ac#uire the possession of the goods or a right to hold
goods until the repayment for credit with a special right to sell after due notice to the
borrower in the event of non6repayment.
• "oan against 0$ported *erchandise >"0*A@ Advances allowed for retirement of shipping
documents and release of goods imported through &D% taking effective control over the goods
by pledge fall under this type of advance. >hen the importer failed to pay the amount
payable to the exporter against import &D%, then $%%B& gives loan against imported
merchandise to the importer.
• "oan against +rust Receipt >"+RA@ "rust eceipt is a document which creates the bankers
lien over the goods and practically amounts to hypothecation of the proceeds of sale in
discharge of the lien. &oans against "rust eceipt to the clients are allowed when the
documents covering an import shipment are given without payment. Gowever, prior
permission of Gead Hffice must be obtained for such advances.
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• "oca #ocu$entary Bi -urchase >"#B-A@ 0ayment made against documents representing
sell of goods to local export oriented industries, which are deemed as exports, and which are
dominated in local currencyDforeign currency falls under this head.
• 0nand Bi -urchase >0B-A@ 0ayment made through purchase of inland billsDche#ues to meet
urgent re#uirement of the customer falls under this type of investment facility.
• ?oreign Bi -urchase >?B-A@ 0ayment that is made to customer through 0urchase of
Foreign %urrency %he#uesD*rafts is known as Foreign Bill 0urchase.
• Eorking capita oan@ &oans allowed to the manufacturing unit to meet their working
capital re#uirement, irrespective of their si(e.
• ouse Repairing7Renovation "oan@ "his loan is offered for renovation and moderni(ation
of the houseDbuildingDflat. "he genuine residential owners can avail this kind of loan.
• &'' Bank =isa 'redit 'ard8 $%% Bank has launched its isa %redit %ard -ervice on
August 33, 3::9 and offering three types of cards which are isa %lassic, isa /old &ocal!
and isa *ual %urrency %ard /lobally and locally!. -ince then were able to reach 9:::
cards, both corporate and general.
+he characteristics of credit card are as foos@
• &on5perfor$ing "oan@ A non6performing loan is a loan that is in default or close to being in
default. 'any loans become non6performing after being in default for 7 months, but this can
depend on the contract terms.
Page 1;
&owest interest rate in the country 3C per month!
*ual %urrency isa %redit %ard
Hne supplementary card free of cost for lifetime -pouse only!
"reasure point facilities including foreign part
-hortest process for *ual %urrency card, only 35 hours
oaming 'obile 0hone bill payment facilities
=se of additional 153 A"'s Booth and ;:: 0H- of *utch6Bangla Bank
http://en.wikipedia.org/wiki/Loanhttp://en.wikipedia.org/wiki/Default_(finance)http://en.wikipedia.org/wiki/Contracthttp://en.wikipedia.org/wiki/Loanhttp://en.wikipedia.org/wiki/Default_(finance)http://en.wikipedia.org/wiki/Contract
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Part- 0our
*oan isursement
#
+eco&ery System
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4.1. Genera procedure of sanctioning oan
"he following procedure is applicable for giving advance to the customer. "hese are8
a! 0artys application
b! Filling form6A
c! %ollecting %IB report from Bangladesh Bank
d! 0rocessing loan proposal
e! 0ro2ect appraisal
f! Gead office approval
g! -anction letter
h! *ocumentation
i! *isbursement
8. -arty(s appication
At first borrower has to submit an application to the respective branch for loan, where heDshe has to
clearly specify the reason for loan. After receiving the application from the borrower Bank officer
verifies all the information carefully. Ge also checks the account maintained by the borrower with the
Bank. If the official becomes satisfied then he gives form6A prescribed application form of Bank! to
the prospective borrower.
B. ?iing ?or$ 58
After satisfying with partys application the applicant need to fill Form6A. It is the prescribed form
provides by the respective branch that contains information of the borrower. It contains6 $ame with
its factory location, Hfficial address and telephone number, details of past and present business, its
achievement and failures, type of loan needed etc.
'. 'oecting '0B Report fro$ Bangadesh Bank
After receiving the application for advance, $%% Bank sends a letter to Bangladesh Bank for
obtaining a report from there. "his report is called %IB %redit Information Bureau! report. $%%
Bank generally seeks this report from the head office for all kinds of Investment. "he purpose of this
report is to being informed that whether the borrower has taken loan from any other BankE if Jyes
then whether the party has any overdue amount or not.
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#. -rocessing oan -roposa
After receiving %IB report from Bangladesh Bank, then respective branch prepare an Investment
proposal, which contains terms and conditions of Investment for approval of Gead Hffice. *ocuments
those are necessary for sending Investment proposal are &oan application, photograph of the borrower
duly attested, personal information of borrower, %IB report, legal opinion, trade license, stock report,
net worth calculation of business + individual, working capital assessment, financial statement, -'
information and %/. $%% Bank prepares the proposal in a specific form that contains following
relevant information6
• Borrower,
• capital structure,
• Address,
• Account opening date,
• Introduced by type of business,
• 0articulars of previous sanctions,
• -ecurity existing and proposed!,
• %omponents on the conduct of the account,
• *etails of deposit,
• &iabilities with other Banks,
• %IB report,
• ated capacity of the pro2ect item wise!,
• 0roductionDpurchase during the period,
• -ales during the period,
• arning received for the period.
'redit Risk Grading >'RGA Syste$
%redit isk /rading %/! system is an important tool of %' to understand dimensions of risk in
credit transactions. Aggregation of grading across the borrowers, activities and line of business
reflects the #uality of credit. Bangladesh Bank introduced an integrated %/ model which is simple
and user friendly and hence, followed by all financial institutions. =sually there includes five steps
for %/. "his are
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-tep618 Identify all the principal risk components
-tep638 *istribute weight to risk components
-tep678 Identify the key parameters of principal risk
-tep658 Assigning weight to key parameters
-tep698 Input data to arrive at score.
1. 0dentify a the principa risk co$ponents
At the first step all the principal risk such as financial risk, business risk, management risk, security
risk and relationship risk are identified. "hese principal risks cover all possible uncertainty that may
occur.
2. #istribute eight to risk co$ponents
In this step, weight is distributed to the risk components. isk factors have to be evaluated and
weighted on the basis of updated + reliable data and complete ob2ectivity.
-rincipa risk co$ponents Eeight
?inancia risk 9:C
Business risk 1@C
*anage$ent risk 13C
Security risk 1:C
Reationship risk 1:C
Source: 'CC (an) raining 4uide
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3. 0dentify the key para$eters of principa risk
In this step, key parameters of principal risk are identified. "he parameters are shown on table below8
Risk co$ponents Fey para$eters
?inancia risk &everage, li#uidity, profitability,+ coverage ratio
Business risk -i(e + age of business, business outlook, industry growth,
competition + barriers to business
*anage$ent risk xperience, -uccession + team work
Security risk -ecurity coverage, collateral coverage + support
Reationship risk Account conduct, utili(ation of limit, compliance of
covenants + personal deposit
Source: 'CC (an) raining 4uide
4. 8ssigning eight to key para$eters
After identifying key parameters, weight is given to each parameter of principal risk components. In
this case, high weight is given to the risky parameters. For examples, in financial risk greater weight
is assign to leverage, li#uidity + profitability ratio and lower weight to coverage ratio.
). 0nput data to arrive at score
Finally, data is put on xcel based %/ matrix for getting the score.&u$ber Grading Short Score
1 Superior -=0 Fully cash secured, secured by govt.
guaranteeDinternational bank guarantee
3 Good /* @9K
7 8cceptabe A%%0" ?96@5
5 *argina7Eatch ist '/D>& ;96?5
9 Specia *ention -' 996;5
; Substandard -- 59695
? #oubtfu *F 79655
@ Bad7"oss B& L79 Source: 'CC (an) raining 4uide
'RG Syste$ Revie
%/ system should be reviewed by the respective loan officer regularly. Fre#uencies of review of
%/ are mentioned belowE
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Risk grading Frequency (at least)
Superior Annually
Good Annually
Acceptable Annually
Marginal/Watch
list
Half yearly
Special Mention Quarterly
Substandard Quarterly
Doubtul Quarterly
!ad/"oss Quarterly
Source: 'CC (an) raining 4uide
/ary Earning Signas >/ESA
>- indicate risks or potential weaknesses of an exposure re#uiring monitoring, supervision or closeattention by management. If these weaknesses are left uncorrected, they may result in deterioration of
repayment prospects of banks assets in future. $o delay should be made in referring >- accounts
or any problem accounts to the %' department for their early involvement and assistance in
recovery.
>- has two risk symptoms. "his are
a. *argina7Eatch ist8 >hen loan is overdue for ;: days or more and fre#uent drop insecurity values then it fall in this category.
b. Specia *ention8 >hen loan is overdue for
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"o 2ustify the soundness of an investment.
"o ensure repayment of Bank finance.
+echniues of -roject 8ppraisa
An appraisal is a systematic exercise to establish that the proposed pro2ect is a viable preposition.
Appraising officer checks the various information submitted by the promoter in first information
sheet, application for Investment and Investment proposal.
$%% Bank considers the following aspects in appraising a proposal.
"echnical viability
%ommercial viability
Financial viability
conomic viability
"he Gead Hffice GH! mainly checks the technical, commercial and financial viability of the pro2ect.
For others GH is dependent on branchs information. But when the investment si(e is big, then the
GH verifies the authenticity of information physically.
?. ead Office 8pprova
>hen Gead office receive appraisal from the branch then, Gead Hffice again appraises the pro2ect. If
it seems to be a viable one, the GH sends it to the Board of *irectors for the approval of the
Investment. "he Board of *irectors BH*! considers the proposal and takes decision whether toapprove the Investment or not. If the BH* approves the Investment, the GH sends the approval to the
concerned branch.
"he respective officer of Gead Hffice appraises the pro2ect by preparing a summary named )"op
-heet4 or )xecutive -ummary4 and then he sends it to the Gead Hffice %redit *ivision for the
approval of the &oan. "he Gead Hffice %redit *ivision considers the proposal and takes decision
whether to approve the Investment or not. If the committee approves the InvestmentE the GH sends
the approval to the concerned branch.
G. Sanction "etter
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After getting the approval of the GH the branch issues sanction letter to the borrower. A sanction
letter contains8
$ame of borrower,
Facility allowed,
0urpose,
ate of interest,
0eriod of the Investment and mode of ad2ustment,
-ecurity and Hther terms and condition.
. #ocu$entation
If the borrower accepts the sanction letter, the *ocumentation starts. *ocumentation is a written
statement of fact evidencing certain transactions covering the legal aspects duly signed by the
authori(ed persons having the legal status. "he most common documents used by the $%% Bank for
sanctioning different kinds of Investment are8
Moint 0romissory $ote,
&etter of Arrangement,
&etter of *isbursement,
&etter of Installment,
&etter of %ontinuity,
"rust eceipt,
%ounter /uarantee,
-tock eport,
&etter of &ien,
-tatus eport,
&etter of Gypothecation,
&etter of /uarantee
*ocuments elating to 'ortgage.
0. #isburse$ent
After sanction and completion of all formalities the respective officer disburses the loan. "he officer
writes che#ue and provides it to the borrower. For this borrower has to open an account thorough
which heDshe can withdraw the money.
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4.2. Recovery -rocedures
It is the duty of the Bank to recover the landed fund within the stipulated time and if the borrower
fails to repay the money within the pointed period Bank will declare him as a defaulter and recover
the fund by selling the securities given by the borrower or by free(ing his account or make a suit
against him.
4.2.1. Strategies for recovery
ecovery of loan can be made in the following 7 methods.
1! 0ersuasive
3! oluntarily
7! &egally
1A -ersuasive recovery
If the borrower didnt paid the due amount of loan in time then the first step of bank is private
communication with him. It creates a mental pressure on borrower to repay the loan amount. In this
case bank can provide some advice to the borrower for repaying the loan.
2A =ountariy recovery
In this method, some steps are followed for recovering loan. "his are6
Building "ask Force
Arranging seminar
&oan rescheduling policy
>aiver of interest rate
3A "ega recovery
If the above procedures fail to keep an account regular and the borrower does not pay the
installments, then bank take necessary legal action against the borrower. In this case Bank sues in
!8rtha Rin 8daat "a52993H that plays a vital role for collecting the loan.
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ecovery procedure of $%% Bank follows four procedural steps to recover the lending amount,
which is 2oint effort of Bank, society and legal institutions, which are shown below8
4.3. 'redit 8naysis@ Ehat $akes a Good oanI
%redit analysis is the analysis of financial statement of business customers for the purpose of lending.
It is conducted to determine whether the customer is creditworthy and whether the customer has
sufficient cash flows and backup assets to repay the loan. "he following ma2or issues should examine
in credit analysis8
Is the borrower creditworthyN
>hether purpose of the loan is consistent with banks credit policy and government
regulationsN
>hether customerDor his business have the ability to generate enough cash repay the
loan.
>hether sufficient security has been offered. -o that in the event of default banks
fund can be recovered.
Fixing amount of loan, terms and conditions, documentations, etc. meet the needs of
the borrower and to protect the interest of the bank.
4.4. 0s the borroer 'reditorthyI
Page 3;
+eminder to the Court
Creating Social Pressure for the Payment of loans
and advances
ecution of legal rules y the hel$ of court
Pro&iding legal notice
0ig-!.1: +eco&ery Procedure
Sources: 'CC (an) raining 4uide
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8A 'haracter@
6"o determine whether the borrower has a responsible attitude towards borrowed funds and
whether he will have every effort to repay what is owed.
6esponsibility, truthfulness, serious purpose, and serious intention to repay loans make up
the characters of the borrower.
BA 'apacity@
6>hether customer re#uesting loan has the authority to re#uest loan and have the legal
standing to sign loan agreement and documents.
'A /cono$ic 'ondition7 8ssets@
6>hether borrower has sufficient assets to repay the loan.
6Hther loans and liabilities of the borrower.
#A 'redit history7'redit habit@
5>hether loans borrowed by the customers previously + how those earlier loans were
handled.
5>hether there is any loan default earlier.
5>hether legal action has ever been taken against him for recovery of default loan.
/A 'redit Rating@
6%redit atings of the borrower by credit rating agencies
?A -urpose of the oan@
6%ustomer must have a well6defined purpose for re#uesting the loan.
6"he purpose of the loan must be consistent with the banks existing credit policy.
6"he purpose of the loan also should have consistent with government regulations.
4.). #iscouraged Sectors of 0nvest$ent
$%% Bank discourages some sectors to invest because these areas are more risky. Investment in
following sectors is discouraged by $%% Bank.
• "annery Finance.
• 'ilitary e#uipmentD>eapons Finance.
• &ending to Golding %ompanies.
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• GB6 residential who has no other business with the Bank.
• Gighly &everaged transactions.
• &ogging, 'ineral xtractionD'ining, or other activity that is thically of nvironmentally
-ensitive.
• &ending to companies listed on %IB black list or known defaulters.
• Finance of -peculative Investment.
• -hare &ending.
• "aking an #uity -take in borrowers.
• Bridge Investments relying on e#uityDdebt issuance as a source of repayment.
4.,. -rincipes of Sound "ending
8. Safety
J-afety first should be guiding principle of a banker. $%% Bank exercises the lending function only
when it is safe and the risk factor is ade#uately mitigated and covered. -afety depends upon8
• "he repaying capacity and willingness of the borrower is to repay the advance.
• "he security offered by the borrower.
B. "iuidity"he liability of a Bank is repayable of demand or at a short notice. -o the Bank has to maintain its
li#uidity at a sufficient level. Investment on building, plant, machinery, land etc. cannot be recovered
#uickly, so it is less li#uid.
'. -rofitabiity
0rofitability is the pre condition for investment. ach individual and organi(ation invests to get some
positive output. 0rofit is needed to pay interest to depositors, depreciation, and maintenance, declare
dividend to share holders, provide or reserve against bad and doubtful debts etc. -o $%% Bank also
disburses advances when they see positive return from investment.
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#. Security
-ecurity is first condition for sound lending. "o ensure safety of advances, Banks takes different types
of securities like '"*, -anchay patra, land, work order etc. Banker should ensure that the securities
are ade#uate, marketable and free from encumbrances before disburse the loan.
4.. "oan *onitoring
&oan monitoring is important to know whether the loan is disbursed correctly or not. If the
monitoring authority thinks that the loan is risky then they want to recover the loan as early as
possible. It includes a reporting system and communication arrangement between the borrower and
the lending institution. "he following steps are followed by respective officer.
egular communication with the defaulter customers and guarantors physically over
telephone.
egular checking the balance of -BD%*D-"* accounts of the borrower.
Issuance of appreciation or greeting letter to the regular customers.
Issuance of letter to customers immediately after dishonor of che#ue.
Issuance of legal notice to the defaulter customers and guarantors prior to classification of the
loans.
0eriodical visit with the customers to maintain relationship and supervision of supplied
articles.
&egal action to be taken after failings all possible efforts to recover the banks due.
4.. anding of &on5-erfor$ing "oans
If a borrower cannot repay installment or interest on a loan after it has become due then it is called
default loan or non6performing loan. It is known as non6performing because the loan cant )perform4
or generate income for the bank.
4.. 0$pications
"he implication of non6performing loans are not only depriving of interest but also stoppage of
creating new loans for blockage of the fund and erosion of banks profitability, li#uidity and solvency,
which might sometimes lead towards collapse of a bank. -o, it is become essential for policy makers
of a bank to study the loan default scenario on a routine basis for estimating classified loan, making
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appropriate provisioning, adopting effective recovery strategy and thus ensuring soundness and
efficiency of the bank.
4.19. 'assification % provisioning of non5perfor$ing oans
%lassify loan under various head such as, unclassified, sub6standard, doubtful or badDloss through
verification of borrowers repayment is needed to know the status of loan. It is essential to determine
the financial health and efficiency of a bank. In order to get rid of default loans, Bangladesh Bank
introduced a circular B%* circular no. 75! on 1
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4.11. "ending and invest$ent -roducts
$ational %redit and %ommerce Bank &imited is a new generation Bank. It is committed to provide
high #uality financial services products to contribute in /*0 of the country through stimulating trade
and commerce, accelerating the pace of industriali(ation, boosting up export, creating employment
opportunity for the educated youth, poverty alleviation, raising standard of living of limited income
group and overall sustainable socio6economic development of the country.
&ike other business activity Banks are profit oriented and profit is the central point on which the
entire business activity rotates. A Bank invests its funds in many ways to earn income. "he bulk of its
income is derived from investment. -ince ma2or part of Banks income is derived from credit and
since the money credited by Bank is customers fund, Banks should follow a cautious policy and
sound lending principles in the matter of lending.
"he word credit derived from &atin word )%*H4 means Believe or faith. >e can say, it stands for
trust + relationship between banker and customers. ach + every bank has got their own credit
policy which generally formulated on the basis of prevailing countries socio economic condition,
political + other aspects from time to time and as per guidelines of %entral bank. $%% Bank also
comply their credit policy as per B0* circular no. 1? dated on :?.1:.3::7.
A Bank invests its funds in many ways to earn income. "he bulk of its income is derived from loan.
In 3:1:, total advance stood at "k. ;7,37:.15 million against "k. 9:,7@? million in 3::
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Business
&ease financing
Gousing &oan scheme
• 8gricutura % 8gro based ventures
Agriculture is the mainstay of Bangladesh economy being ma2or contributor to the /*0. $%% bank
keen to contribute towards the growth of economy in financing the agro based firm, specially poultry,
fishery + hatchery. Financing also provided to export oriented shrimp culture and fish processing
industries. As the sector is being looked after ade#uately by financial institutions and nationali(ed
commercial bank still $%% bank provides a small amount of loan to this sector.
• 'onsu$er ?inancing
$%% bank keeping in mind the economic development helps the fixed income group in fulfilling their
demand to upgrade the standard of living. %onsumer financing scheme covers8
6Gome appliances
6Furniture + fixture
6Air conditioner, Fax machine
6'otor %ycleD%ar etc.
• Rea estate % civi construction
In our society a reasonable number of smallDbig businessmen are related to the real estate and civil
construction. $%% bank provides loan to this sector carefully only on selective basis.
• 0ndustry
Industry loan basically covers the following area.
6 >orking capital financing
6 %apital financing in the form of term loansE and
6 Financing of small + cottage industries.
"he term loan financing for establishment of new industries is a speciali(ed banking function. Bank
follow a selective approach for term loan financing to small scale industries and export oriented or
import substitute industries which will en2oy high degree of national economic priority. "he bank for
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financing in this sector would prefer syndication with other banks to keep a balanced portfolio.
$%%B& set aside a large amount of money from budgetary allocation to finance in industry loan. In
every year, bank provides the highest percentage of loan to this sector. In 3:1:, it sanctions 59.5:C
loan to this sector.
• Business
A large section of our business community consists of small + medium business owners who are
conducting their business with their own resources without availing much support from financial
institutions. -uch businessmen are generally sincere, honest and hard working but are often short of
working capital not to mention the capital finance for expansion. $%% banks ma2or concentration
shall be under this sector under following categories8
6 -mall Business &oan
6 Festival -mall Business &oan
6 arnest 'oney Financing -cheme
6 Financing of service concerns
6 Financing of trading concerns
6 Financing of manufacturing concerns
• "ease financing
$%% bank to keep its contribution to the growth of national /*0, accelerate the total economicdevelopment by infusing the fund in productive sector in more efficient and effective wayE diversify
its portfolio and satisfy the customers needs would go for lease finance for8
5 -etting up of small and cottage industriesDpro2ects
6 "ransports both road + marine!
6 'edical e#uipmentsD &ab e#uipmentD O6ay machine etc.
6 %onstruction e#uipment
6 Hther fixed assets of productive + service oriented ventures
• ousing oan sche$e
%onstruction of buildings is not progressing as expected because of scarcity of housing loans. 'any
people can purchase flat or construct house if they are facilitated with the sanction of institutional
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loan. >ith a view to creating financial capability of the prospective clients in purchasing flats D hoses
and in constructing houses and with the ob2ective of exploring a profitable investment area )$%%
Bank Gousing &oan4 scheme has been introduced. "he purposes of this scheme are8
6 "o motivate service holders, businessmen + professionals who have the capability to repay
the loan for purchase of flatsDhousesDconstruct buildings and thereby improve their life style.
6 "o increase profitability of the bank by interest income.
6 "o strengthen the banks lending base.
6 "o contribute towards improvement of socio economic condition etc.
• +rade % 'o$$erce
"his broad category encompasses large business houses dealing with imported consumer items,
medium and small import business houses trading in similar lines and finally, shopkeepers,distributors, whole sellers scattered throughout the country.
4.13. "ending -roducts >on the basis of ti$eA
$%% Bank is one of the esteemed Banking Institutions in Bangladesh. It has been serving the people
proudly with its different products since 1
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2A +er$ "oan
a! 0ro2ect &oan
b! "ransport &oan
c! Gouse Building &oan
d! &ease Finance
e! &oan under -yndication
3A #e$and "oan
a! &oan /eneral
b! *emand &oan against -hip6breaking &A-!
c! 0ayment against *ocuments 0A*!
d! &oan against imported merchandise &I'!
e! &oan against "rust eceipt &"!
f! Forced &oan
g! 0acking %redit
h! -ecured overdraft against %ash Incentive
i! Foreign *ocumentary Bill 0urchased F*B0!
2! &ocal *ocumentary Bill 0urchased &*B0!
k! Inland Bill 0urchased IB0!
l! Foreign Bill 0urchased FB0!
4A "oan under S*/
a! -mall Business &oan
b! %onsumer Finance &oan
c! &ease Finance
d! 0ersonal &oan
e! Gouse epairing + enovation &oan
f! >orking %apital &oan
g! Festival Business &oan
h! Festival 0ersonal &oan
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i! %ar &oan -cheme
)A 8gro 'redit
a! Agro6based Industrial %redit
b! %rop &oan
,A Specia 'redit -roduct
a! %redit %ard
b! arnest 'oney Financing -cheme
c! $%% Bank Gousing &oan -cheme
d! Hverseas mployment &oan -cheme
A "oan -roducts for Eage5/arners
a! &and 'ortgage &oan
b! -pecial Gouse Building &oan
c! Advance Against emittance
d! >age arners ehabilitation &oan
1A 'ontinuous oan
• Secured Overdraft5SO# >?OA
&oan repayment period is maximum 1 year. If client canJt repay the loan in this stated period then it is
again renewed for 1 year more. "he interest rate is determined by the instrument rate plus three 7C!
percent. It can be issue against, *0-, F*E etc. Interest rate is 19C to 1?C.
• Secured Overdraft5SO# >GA
*isbursement is made after completion of documentation formalities, besides usual charge,
documents like a notari(ed irrevocable power of attorney to collect the bills from the concerned
authority and a letter from the concerned authority confirming direct payment to the bank is also
obtained. "he work is strictly monitored to review the progress at each interval. Interest rate is 1;C to
1?C.
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• 'ash 'redit5'' >ypothecationA
"he banker has only e#uitable charge on stocks, which practically means nothing. -ince the goods
always remain in the physical possession of the borrower, there is much risk to the bank. -o, it is
granted to parties of undoubted means with highest integrity. "he Interest rate of this loan is 17C.
&oan repayment period is maximum 1 year.
• 'ash 'redit5'' >-edgeA
Interest rate of this loan is 17C. $ow $%% bank stops this loan because it needs extra warehouse that
2A +er$ oan
• ouse Buiding "oan
"his loan is provided against 1::C cash collateral, besidesE the land + building are also mortgaged
with the bank. Interest rate is 17C p.a. overdue installment of this loan is obliged to pay very shortly.
"he loan is under =nclassified &oan. "he range of house building loan is ; lac 5: lac.
• "ease ?inance
"his type of financing are usually provided to transportation sector. $ow a day this &ease Financing
is one of the popular financing pro2ects. "he Interest ate of interest is 19C61;C. "his loan is
providing for 7 9 years and maximum amount is tk.19 lac.
3A #e$and oan
• "oan >GeneraA
$%%B& considers the loans, which are sanctioned for more than one year as loan g!. =nder this
facility, an enterprise is financed from the starting to its finishing, i.e. from installment to its
production. $%%B& offers this facility only to big firms. "he rate is 17C.
• "oan against 0$ported *erchandise >"0*A
"he importer will bear all the expenses i.e. the warehouse charge, insurance fees, etc. and the
ownership of the goods is retaining to the bank. "his is also a temporary advance connected with
import, which is known as post import finance. Interest rate is 1;C.
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• "oan against +rust Receipt >"+RA
"rust eceipt is fully paid off. "his is also a temporary investment connected with import and knows
as post6import finance and falls under the category P%ommercial &endingP. Interest rate is 1;C.
• "oan #ocu$entary Bi -urchase >"#B-A
"he bill of exchange is held as the primary security. "he client submits the usually bill and the bank
discounts it. "his temporarily liability is ad2ustable from the proceeds off the bill. Interest rate is 1;C.
• 0nand Bi -urchase >0B-A
"his temporary investment is ad2ustable from the proceeds of billsDche#ues purchased for collection.
It falls under the category P%ommercial &anding4.
• ?oreign Bi -urchase >?B-A
"his temporary investment is ad2ustable from the proceeds of the che#ueDdraft.
4A "oan under S*/
•'onsu$er 'redit Sche$e
"his scheme is aimed to attract consumers from the middle and upper middle class population with
limited income. "he borrower should have saving or current deposit account with the bank. 'inimum
39C of the purchase cost of the product is to be deposited be the borrower with the bank is e#uity
before the disbursement of the loan. "he rest ?9C is to be kept as cash collateral F*, -hanchay
0atra etc.! with the bank.
"he purchased items are hypothecated with the bank. "he disbursement of the loan is effected by
debiting loan general! account to the opened in the same of the borrower. &oan amount is disbursed
through aDc payee pay orderDdemand draft directly to the seller after submission of the indent, deposit
of client e#uity and completion of documentation formalities. "he interest rate is 17C61;C.
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• Eorking capita oan
&oans allowed to the manufacturing unit to meet their working capital re#uirement, irrespective of
their si(e big, medium or large fall under the category. "he range of working capital loan is tk.1 lac to
tk.9 lac and the interest rate is 1;C.
• ouse Repairing7Renovation "oan
"his loan is offered for renovation and moderni(ation of the houseDbuildingDflat. "he genuine
residential owners can avail this kind of loan. "he range of loan amount is tk.1 lac to tk.9 lac. &oan
can be repaid by monthly e#ual installments including interst within maximum 9 years. "he Interest
rate of Gouse epairingD enovation loan is 1;C.
• S$a Business "oan
"his loan is offered to the small and promising entrepreneurs to meet their capital re#uirement and
enable them to operate and expand the business purposely. It is apporved against collateral and
estimation of the revenue generation of the pro2ect for which the loan is sanctioned. "he range of this
type of loan is one to five lac taka. "he interest rate of -mall business loan is 1;C.
• S*/ "oan for Eo$en
$%% Bank provides a new type of -' &oan for >omen named Hpora2ita. It encourages the women
to start new venture. It provides loan at the rate of 1:C, which is lowest rate among all other types of
loan.
• -ersona "oan
"his loan is provided to salaried persons in various organi(ations to meet any emergency cash needs.
Interest rate is 19C p.a. and maximum credit ceiling is "k.1, ::,:::.
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Part- 0i&e
"nalysis
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).1 +i$e series anaysis
).1.1. ear ise "oan and 8dvances
0ig-5.1.1: 6ear wise loan and ad&ances ,in million
Sources: "nnual +e$ort ,2%%-2%1%
Qear wise loan and advances of $%% Bank increasing year by year. In 3::; the total loan and
advances was ". 35,;?:.7; million. It was increased to "k. ;7,37:.15 million. "hat means loan and
advances increased more than 3.9 times from 3::; to 3:1:. From the graph it is seen that average
growth rate per year for loan + advances is 71.35C.
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).1.2. ear ise 'ontinuous oan
e
0ig-5.1.2: Continuous *oan ,in million
Sources: "nnual +e$ort ,2%%-2%1%
"he above figure depicted by time series analysis it can be seen that year wise continuous loan is
increasing respectively year by year. In 3::; continuous loan was "k.
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).1.3. ear ise +er$ oan
0ig-5.1.3: erm *oan ,in million
Sources: "nnual +e$ort ,2%%-2%1%
"he graph depicted above shows that the term loan was in increasing mode from the 3::; 63:1:.
>ithin 9 years 3::963:1:! the term loan amount was double in 3:1: as much as the amount in
3::;.-o from the above graph it can be said that average growth rate per year of term loan was
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).1.4. #e$and "oan
0ig-5.1.!: emand *oan ,). in million
Sources: "nnual +e$ort ,2%%-2%1%
From the graph it can be seen that *emand loan is increasing in mode. In 3::; the demand loan was
"k. ?5@
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).1.). S*/ "oan
0igure-5.1.5: S/ loan ,). in million
Sources: "nnual +e$ort ,2%%-2%1%
"he $%% Bank does not interest to provide loan in -' sector. From the graph we can see that in
3::; the -' loan was only "k. 1;7.@@ 'illion which is too much lower than continuous, "erm loan
and demand loan. In 3:1: it was increased to "k. 35
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).1.,. Sector ise #istribution of "oan and advances
0igure-5.1.: sector wise ad&ances
Sources: "nnual +e$ort 2%1%
From the figure it can easily be said that $%% provides more loan in industry sector in 3:1: it was
5:.@?C of total loan and advances, which is productive sector. But in agriculture sector they
discourage to sanction loan because they think this sector is risky, in 3:1: it was :.@7C. In Business
sector it was 1?.5@C
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).1.. ear ise invest$ent
0igure-5.1.7: year wise in&estment ,). in million
Sources: "nnual +e$ort 2%1%
In 3::; the investment mad by the bank was "k. 7993.:@ million. It was increasing mode + was
triple in 3:1: than to 3::; resulted the figure was "k.7993.:@ million to "k. 1:
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).1.. 0nvest$ent portfoio
0igure-5.1.8: In&estment Portfolio in 2%1%
Sources: "nnual +e$ort ,2%1%
In 3:1: investment made in /overnment "reasury Bonds sector was
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see, the disbursement of loan gradually increase year by year. In 3::; the loan amount was too low
because of economic recession.
0igure-5.1.9: 6earwise disursement # +eco&ery of 'CC(*.
Sources: "nnual +e$ort ,2%%-2%1%
From the graph we can see that loan and advance increases gradually year by year. "he recovery
amount also increases year by year from 3::; 3:1:.From the graph it is found that, the
disbursement amount is maximum in 3:1: and minimum in 3::;.Hn the other hand the recovery
amount is maximum in 3:1: + minimum in 3::; as well.
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).1.19. Recovery in -ercent
$%% Bank &td. set a target for recovery the loan that is about
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0igure-5.1.11: 6earwise Credit to e$osit of 'CC(*. Sources: "nnual +e$ort ,2%%-2%1%
"he above figure shows that the credit to deposit increases year by year from 3::; to 3:1:. -o, it can
be said that the bank efficiently collect their deposit and convert the deposit into the loan + advances
resulted a positive trend.
).1.12. &on -erfor$ing "oan 8naysis
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A loan is nonperforming when payments of interest and principal are past due by
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%redit to *eposit atio measures the portion of *eposit is in the form of loan and advances. "he
greater the ratio the better for the organi(ation.
0igure-5.2.1:- Credit to e$osit +atio ,). in million
Source: "nnual +e$ort ,2%%-2%1%
From the figure it can be said that the collection of deposit in increasing year by year that form into
loan + advances increasing year by year subse#uently. -o, the credit to deposit ratio therefore
increasing with a continuous form indicates that the bank can successfully utili(e its deposit collected
from the people by the lowest interest rate into in the form of loan and advances which is main source
of Banks income. It is seen that the ratio is greater in 3::? which was
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).2.2. 0nvest$ent to #eposit Ratio
Investment deposit ratio measures the portion of deposit used for investment in loan products. "he
more the ratio the more the bank is using its deposit as investment.
0igure-5.2.2:- In&estment to e$osit +atio
Source: "nnual +e$ort ,2%%-2%1%
From the above graph it is seen that "he Investment deposit ratio of $%% Bank is increasing at a
fluctuating rate. By considering the above graph it can be said that the bank is capable to utili(e its
deposit into investment that indicates a good sign for the bank.
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).3. 'o$parative 8naysis
K Southeast Bank "i$ited >S/B"A
K *ercantie Bank "i$ited >*B"A
In our country local private commercial bank play an effective role in the countrys banking sector.
Southeast Bank "i$ited is well recogni(ed private commercial bank in Bangladesh. "his bank is
modern in their nature and activity. &ike other banks these bank is much concern about their credit
policy and follows Bangladesh Banks credit grading policies and rules in case of credit management.
Hn the other hand, *ercantie Bank "i$ited is well recogni(ed private commercial bank in
Bangladesh. "his bank is modern in their nature and activity. &ike other banks this bank is much
concern about their credit policy and follows Bangladesh Banks credit grading policies and rules in
case of credit management.
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'o$pare ith S/B" % *B"
-articuars &''B" S/B" *B"
-articuars 2919 299 2919 299 2919 299
+ota #eposits ,6,1.24 )3699.14 1962.) ,6,,.9) )6,2.14 )6933.4
+ota "oans %
8dvances
,36239.14 )963., 24)2.,2 4.) ,,63.9 462).))
+ota 0nvest$ent 1969.1 6,1.)3 132.,) 213)9.23 1963.29 6,,4.2
'assified "oans 1642).2 1429.) 262,4.2 26329.31 11.1 12)2.9)
'assified "oans
-ercentage >+ota
"oans % 8dvancesA
2.2J 2.4J 4.2,J 3.3J 1.J 2.)J
-rovision kept
against 'assified
"oans
42.9 29.22 1,2.) 1139.4 ,1.)2 ,2.9
'redit #eposit
Ratio
3.94J 3.4J ).2J 9.1J .J 3.22J
Return on 8sset
>RO8A
2.4J 2.,1J 2.2,J 1.,,J 1.,4J 1.22J
'apita 8deuacy
Ratio
19.1J 13.))J 11.2)J 11.2J .13J 19.4J
&u$ber of
Branches
,) , ), ,) )3
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Source@ 8nnua Report 2995 2919 >&'' Bank6 Southeast Bank % *ercantie BankA
?ig@ ).3.1@ 5 'o$parison beteen &''B"6 S/B" % *B" >29952919A
?ro$ the vie point of tota deposit
In the comparative analysis among $ational %redit + %ommerce Bank &imited, -outheast
Bank &imited and 'ercantile Bank &imited, it has been seen that, both the year 3::< and
3:1:, $%%B& deposits are lower than -B& + 'B&. By considering the number of
branches, the average deposit for $%%B& was "k. @3
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?ig@ ).3.2@ 5 'o$parison beteen &''B"6 S/B" % *B" >29952919A
?ro$ the vie point of +ota "oan % 8dvances
"he graph depicted above compares the loan and advances among $%%B&, -B& and 'B&
from 3::< to 3:1:. It is seen that the amount of loan and advances for $%%B& was less than
the -B& both in 3::< and 3:1:.Hn the other hand, the disbursement of loan for $%%B& is
comparatively greater than the 'B& in 3::< but lower in 3:1:.GoweverE the average loan
disbursed by $%% bank in 3::< + 3:1: was ;7?.@3 million + @::.7@ million respectively.
Hn the other hand, -B& disbursed about 1:1
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?ig@ ).3.3@ 5 'o$parison beteen &''B"6 S/B" % *B" >29952919A
?ro$ the vie point of +ota 0nvest$ent
"he graph pointed out above, it is seen that total investment of $%%B& was greater than the
'B& but lower than the -B& both in 3::< + 3:1:. Gowever, the investment of $%%B&
was increasing mode and -B& was decreasing mode compared to 3::< to 3:1:.%onsidering
the number of branches the average investment of $%%B& was 15@.?< million in 3::< +
17
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?ig@ ).3.4@ 5 'o$parison beteen &''B"6 S/B" % *B" >29952919A
?ro$ the vie point of 'redit to #eposit Ratio
In the comparative analysis among $ational %redit + %ommerce Bank &imited, -outheast
Bank &imited and 'ercantile Bank &imited, it has been seen that, both the year 3::< and
3:1:, $%%B&s credit to deposit ratios are greater than -B& + 'B&. In 3::
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?ig@ ).3.)@ 5 'o$parison beteen &''B"6 S/B" % *B" >29952919A
?ro$ the vie point of 'apita 8deuacy Ratio
"he graph depicted above compares the capital ade#uacy ratios among $%%B&, -B& and
'B& from 3::< to 3:1:. It is seen that the capital ade#uacy ratios for $%%B& was 17.99C
in 3::< + 1:.
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?ig@ ).3.,@ 5 'o$parison beteen &''B"6 S/B" % *B" >29952919A
?ro$ the vie point of +ota 'assified "oan % 8dvances
"he graph pointed out above, it is seen that total classified loans and advances of $%%B&
were greater than the 'B& but lower than the -B& both in 3::< + 3:1:. By considering
the number of branches, the average classified loans and advances of $%%B& was "k. 31.@9
million in 3::< + "k. 1@.:5 million in 3:1:.Hn the other hand, the average classified loans
and advances for -B& in 3::< + 3:1: was 91.;; million + 91.@3 million and 'B& was
"k. 37.;3 million+ "k. [email protected]? million in 3::< + 3:1: respectively. -o, the average classified
loans and advances of $%%B& + 'B& were decreasing but -Bs average classified loans
and advances was increasing resulted average growth rate for $%%B&, 'B&, -B& was 6
1?.55C!, :.7:@C! + 633.;9C! respectively indicates $%%B& limited was in better
position.
Page ;3
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?ig@ ).3.@5 'o$parison beteen &''B"6 S/B" % *B" >29952919A
?ro$ the vie point of 'assified "oan -ercentage
In the comparative analysis among $ational %redit + %ommerce Bank &imited, -outheast
Bank &imited and 'ercantile Bank &imited, it has been seen that, both the year 3::< and
3:1:, $%%B&s classified loan in percentage was greater than 'B& but lower than 'B&. In3::
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Part- Si
0indings Conclusion and
+ecommendation
Page ;5
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,.1 *ajor ?indings
$%% bank is in the midst of an intense competitive environment of financing industry. Bank and non6
bank solution to finance businesses are being introduced regularly. From the report i get some
positive and negative findings about $ational %redit and %ommerce Bank &td. "he findings are
necessary for bank to take corrective measure. -o we disclose the findings below8
Qear wise loan and advances of $%% Bank increasing year by year. "he &oan and advances
increased more than 3.9 times from 3::; to 3:1: results the average growth rate per year is
71.35C.
%ontinuous &oan, "erm &oan, *emand &oan and -' &oan are increasing year by year. "he
average growth rate is 3:C but in the -' sector they have lowest investment.
In industry sector in 3:1:, 5:.@?C of total loan and advances was provided in industry sector.
But in the agriculture sector they discourage to sanction loan because they think this sector is
risky. "herefore, in 3:1: it was only :.@7C of total loan + advances.
In 3::; the investment made by the bank was "k. 7,993.:@ million which was triple in 3:1:
and the figure was "k. 1:,
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"he average deposit growth rate considering the number of branches for $%% bank is 7.?5C,
-Bs growth rate is 11.55C and 'B&s growth rate is ;.3;C indicates $%%B& doesnt
collect their deposit as efficient as other two banks.
"he disbursement of loan + advances for $%%B& is lower than the both -B& and
'B&.Gowever, the average growth rate of disbursement of loan for $%%B& is comparatively
higher than the both bank indicates $%%B& limited is in better position.
"he total investment of $%%B& shows lower average growth rate 6;.9@C! compared to
-B& 67.;?C! + higher than to 'B& 6?.?7C!.
$%% banks credit to deposit ratio was decreasing mode
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profitability. $%% bank brokerage house is concentrating to establish new workstations in order to
facilitate investor of remote places.
"he bank has been able to create a multi component loan portfolio. Gowever non6performing loan are
a real challenge to the sound credit management. *efault is increasing for lack of monitoring. "he
bank is trying to increase its loan #uality by accelerating its recovery policy. "he bank can
concentrate on the loan sector where default risk is low and its investments are profitable. "he loan
procedure has been made more calculative, logical to keep the credit sound.
Page ;?
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).3. Reco$$endations
Banking sector is now a more competitive. ach bank wants to capture maximum market share and to
become a market leader. &ike others $%% Bank also wants to be market leader. I think they have
capability to be market leader. "he private commercial banks that are currently operating in
Bangladesh offering different products but there are few basic differences among them in terms of
structure and performance. "hus, the competitions among them increase day by day. -o, based on
findings it can be recommended to progress in future, $%% bank should adopt some policy which
will help the bank to capture a larger market share. "he recommendations can be disclose below8
From the graph of -' loan, it is found that they provide less amount of loan than any other
sector of loan. But this sector, they should give more emphasi(ed to encourage their
entrepreneur.
In our country more than ?:C people are surviving by producing and selling agricultural
products. But $%% Bank does not provide enough loans to this sector that we found in
)sector wise disbursement of &oan graph4. In 3:1: they provide loan :.@7C of total loan and
advances in this sector. But they should give more concentration in this sector for developing
our economy.
"he customer should be analy(ed properly. It can be done by collecting information from
%redit Information Bureau or past behavior of the customer so that their recovery rate
increases.
0roper and effective monitoring system should be developed in order to minimi(e the amount
of non6performing loan.
%redit to deposit ratio of $%% Bank shows that their ability to provide loan is strong. "his
ratio, in 3:1:, was
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Bibiography@
• *r. 'i(anur ahman 3::@!, &'' Bank +raining Guide
• &awrence, M /itman 3::7!, ;Princi$le of /anagerial 0inance
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8nneCure
?inancia ighights of &''B" fro$ ?2994 to ?299
Page ?:
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Sources@ 8nnua Report >299,529919A
Page ?1
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