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DECLARATION

I do hereby declare that the internship report entitled to “Operational Commercial Bank: A Case study on Jamuna Bank Limited’, embodies the result of my own basic works, persuade under the supervision of _ MD. Hafijul Islam, Course Instructor & Lecturer, BBA Program, Northern College Bangladesh

I further reaffirm that the information reported in the report is original one and it is my own basic work.

____________________________MOHAMMAD FARUK KHANBBA 2nd BatchID no. B02412Northern College Bangladesh

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CERTIFICATE OF SUPERVISOR

This is to certify that MOHAMMAD FARUK KHAN, student of BBA, session 2003-2004, bearing ID No. B02412 under Faculty of Business Administration, Northern College Bangladesh (Under National University), has completed the internship report on “Operational Commercial Bank: A Case study on Jamuna Bank Limited, Dhaka.

I recommend the report for evaluation.

I wish him every success in life.

_______________________MD. Hafijul IslamCourse Instructor & LecturerBBA ProgramNorthern College Bangladesh(Under National University)1/2A, Asad Avenue, Mohammadpur,Dhaka - 1207

PREFACE

Practice makes a man perfect and practical knowledge is essential in order to introducing with the practical life. Theoretical knowledge has no impact without with the combination of practical knowledge. From this orientation institution, as parts of its academic curriculum sends its BBA final year students to various business concerns with a view to allowing students to get opportunity to acquire practical and professional knowledge. As a partial fulfillment of BBA in Marketing the writer of this report was

also assigned the task of preparing the term paper, the topic was to “Operational Commercial Bank: A Case study on Jamuna Bank Limited” The report has been prepared after careful observation of the all components of general banking, annual reports of the bank, official’s direct speech and on the basis of other research material such as journal, magazines etc.

ACKNOWLEDGEMENT

All praise is to the One to whom all dignity, honor and glory are due, the unique with perfect attributes, who begets not, nor is He begotten. He has not equaled, but He is almighty, omnipotent for preparing fruitfully this internship reports.

I would like to extend my sincere gratitude to my course instructor Md. Hafijul Islam, Faculty of Business Administration, Northern College Bangladesh for his valuable advises and cooperation. I expressed my heartily and utmost gratitude and greatest indebtedness to M. A. WALID, Coordinator & Lecturer, BBA Program, Northern College Bangladesh. He has kept vigilance of all stages of my effort and has gone through all the written works with great patience.

I am also grateful to MD. NAZRUL Sir, Assistant Manager of Gulshan Branch of JBL, Mrs. Tasnuva Islam, Mrs. Rebeka Haque, Md. Ashfaque-ullah, Md. Shafiul Alam, Md. Malay, Md. AREFIN, and all other Officials of JBL (Gulshan Branch) for their relentless efforts in carrying out my study. They providing me necessary information and extended of their hands to me. I can humbly tell that without their meticulous care, valuable suggestions and instructions it would not have been possible for me to complete the term paper.

I would like to express thanks to my friends & fellow Rocky, ArafaT, and all of my well-wishers for supporting me to do best in such an academic work.

I lack the space here to acknowledge all of the other individuals whose special efforts went into this paper. I offer intend my sincere thanks, and the finished report that they helped guide to completion.

I, of course, have same full responsibility for errors or fact or emphasis.

ACRONYMS

AOF = Account Opening FormATDP = Account Transfer Deposit ProgramBB = Bangladesh BankBCD = Bearer Certificates of DepositBLC = Bills under Letter of CreditBTB = Back to BackCC = Cash CreditCC (Hypo) = Cash Credit Hypothecation

CC (Pledge) = Cash Credit PledgeCD = Current Deposit AccountCIB= Credit Information BureauCIBTA =Credit Inter Branch Transfer AccountCRISL= Credit Rating Information and Services Limited.CRR = Cash Reserve RequirementCRR = Credit Risk RatingCCS = Consumer Credit SchemeDBDS = Double balance Deposit SchemeDD = Demand DraftDl = Demand LoanEDF = Export Development FundERF = Exporters Retention QuotaFBL = Foreign Bill LodgedFC = Foreign CurrencyFDBP = Foreign Document Bills PurchasedFDR = Fixed Deposit ReceiptFEX = Foreign ExchangeGBD = General Banking DivisionGOB = Government of BangladeshHO = Head OfficeIBCA = Inter Branch Collecting AccountIBTA = Inter Branch Transfer AccountIBDA =IBC = Inter Branch CollectionIRC = Import Registration CertificateI S A/C =Interest Suspense AccountJBL= Jamuna Bank LimitedLBC = Local Branch CollectionLDBP = Local Document Bills PurchasedLIM = Loan against Import MerchandiseLRA = Lending Risk AnalysisLTR = Letter of trust ReceiptMPPS = Monthly Profit Paying SchemeMSS = Monthly Savings SchemeMD = Managing DirectorsNFCD = Non- Residential Foreign Currency DepositOBC = Others Branch CollectionPO = Payment OrderRFCD = Residential Foreign Currency DepositSB = Savings AccountSD = Sundry DepositSOD = Secured OverdraftSTD = Short Term DepositEXIM = Export Import

ABSTRACT

Internship program is an integral part to fulfillment of BBA Degree of National University. This program is actually a juncture of academic and professional life dealings.

Banking constitutes an important segment of the financial infrastructure of any country. Generally, Banking means deposit mobilization and deployment of those deposits into advances or investments in different sectors.

For completion of my internship I was placed in Jamuna Bank Limited, Gulshan Branch, Dhaka. After twelve weeks practical orientation to all of the departments and completion of the internship in this branch I was finally prepared this report. I devoted my utmost effort and attention to learn the banker’s functions in practice in dealing with Foreign Exchange Business and clients.

I have rendered my all knowledge and efforts to present this report on “Operational Commercial Bank: A Case study on Jamuna Bank Limited’’ at Gulshan Branch. In his report an attempt has been made to highlight the general banking system of Jamuna Bank Limited. I have incorporate a brief overview of the organizations history, functions, business philosophy, departmentation, ownership pattern, foreign correspondents, overseas banking operations and many other concerned departments. The attempt will also give the reader a brief knowledge about the officials, service divisions and departments of the branch.

The report will reflects the critical Operational Commercial Bank followed by the Jamuna Bank’s officials while employing services to the clients from the opening of an account and others banking operation systems. The Gulshan Branch of Jamuna Bank Limited is marching in a very aggressive way with its well-organized and systematic procedure from its very inception. Despite of well operation it also lacks some grease in motivating and attracting the clients and also in expedition of the working hands of the department.

Chapter 1: INTRODUCTION

1.1 Prelude

1.2 Statement of the problem

1.3 Background of the study

1.4 Rationale of the study

1.5 Scope of the study

1.6 Objectives of the study

1.7 Plans for Study

1.8 Limitations of the study

1.1 Prelude:

Theoretical knowledge doesn’t highlight the reality as clearly as practical knowledge. Theoretical knowledge is guideline, but practical knowledge is experience oriented. Practical knowledge is must for the completeness of theoretical knowledge. So both are necessary as a BBA student we have gathered enough theoretical knowledge and techniques. Now it is needed to compliance with this knowledge with in practical orientation.

1.2 Statement of the Problem:

Now a day’s commercial bank is considered as the transfusing power of overall economy of any modern country. With the increased need of time banks plays a vital role in case of overall development of the civilization. The main task of any commercial bank is to provide day to day services to its valued customer. This system includes account opening, cash receipt and payment, completing the clearing procedure, appraisal and sanctioning of various types of loans, completing the foreign exchange relating activities and maintenance of banks accounts. Due to the increased demand of modern times, general banking activities are going to rapid changes, and make a complicated situation. It is the time to give more concentration on general banking system.

1.3 Background of the Study:

Knowledge and learning becomes perfect when it is associated with theory and practice. Theoretical knowledge gets its perfection with practical application. After the completion of the 8 semester courses I was placed in Jamuna Bank Limited, Gulshan Branch for eight weeks in order to complete a short internship program for getting practical knowledge. This is an orientation to the entire banking department and finally a study on a particular arena of “Operational Commercial Bank: A Case study on Jamuna Bank Limited”. While working with both of my supervisors in which I can make a detail research and present my understanding about that operational area in this report. This internship program brings me closer to the practices in banking and helps to develop a little understanding about the detailed mechanism of the Overall Banking System of Jamuna Bank Limited.This practical orientation is also a positive development in professional arena. Recognizing the importance of practical experience, Department of has introduced a twelve-week practical exposure as a part of the curriculum of Bachelor in Business Administration in Marketing. In this state I have worked to reflect my entire efforts at analyzing the experience of practical orientation related to overall banking activities of the JBL

1.4 Rationale of the Study:

Well- educated, dedicated, skilled and enterprising workforce is the sine-qua-non for the progress and development of a service oriented industry like Bank. From very first emergence and inception of modern civilization, Bank plays a pivotal role in case of overall financial and socioeconomic development of any modern country. The economic development of our country mainly depend upon the efficiency of the banking results is so far as, whether the bankers have been able to read the economic situation properly and are successful in selecting the promising industrial sectors seeking import and export assistance to grow. With the rapid changes of time mans are readily depend on banking services in case of handling cash, transferring cash, and also financing in various industrial and business projects. So it is very much needed to develop the general banking practices in order to provide better day to day banking services to the valued customers. Because as a service oriented industry a bank should believe that customers is all and the king. Customers favoring to a bank by providing the opportunity to the bank to serving him. The government of our country and the central bank i.e., the Bangladesh Bank has decided to extend considerable help in every respect of general banking to concerned people. Like other nationalized and non-nationalized commercial banks the Jamuna Bank limited serves the nation by providing various modern banking services and products. So as an Internee I thought of having special knowledge on this field of increased importance.

1.5 Scope of the Study:

The field of my study was the “Operational Commercial Bank: A Case study on Jamuna Bank Limited,” 32, Mohakhali C/A Dhaka-1212. For conducting this study an overall knowledge on total banking system was necessary because the various departments of banking are linked with each other due to some partial proceedings. The study covers a period of 5 (Five) financial and operational years from 2001 to 2005. The scope of the organizational part covers the organizational structure, background, objective, function, and departmentation and business performance of Jamuna Bank Limited as a whole.

The main part covers the operational scenario of Overall Banking System of Jamuna Bank Limited. This refers that how the bank helps the customers in opening account, deposit of cash, withdrawal of cash, appraisal of loan and project proposal, accounting systems of the bank, clearing system, using of banking software and hardware, mechanism of vault system, opening and payments of various type of letter of credit, exporting and importing the goods, how it remits the money to the foreign clients, what are its performances in the previous years etc. all are on the project part of the report.

1.6 Objectives of the Study:

In this paper an attempt has been made to study the Overall Banking System, find out the problems and recommend some possible measures to solve them. The prime objective of this report is to identify, evaluate and analyze the pros and cons of the Overall Banking

System to convey the knowledge to the concerned people or to the unknown fellows. The main objectives of the study are as follows:

← To know and outline the concept of General Banking. ← To describe the total procedure of Overall Banking System. ← To analyze the performance of Jamuna Bank Limited in case of day to day operation. ← To find out and analyze the major problems by JBL in case of Overall Banking Practices. ← To recommend some possible measures to overcome the problems.

1.7 Plan of the Study:

Since it has stated earlier that the major objectives of the present study are to know the Overall Banking System of Jamuna bank limited. To do so, the whole study has been divided into the following chapters:

Chapter-1: Introductory issues.

Chapter-2: It deals with various methodological issues and concepts used in the report.

Chapter-3: It focuses the banking scenario of Bangladesh.

Chapter-4: It deals with corporate profile of Jamuna Bank Limited.

Chapter-5: It deals with analytical findings of the study such as account opening and schemes, cash payments and receipts, remittances, loans and advances, clearing and foreign trade and foreign exchange etc.

Chapter-6: This chapter focus upon on the problems faced by the bank and also some possible recommendation to solve the problems.In fine the report has been come to an end by dint of reference section which includes bibliography, appendix etc.

1.8 Limitation of the Study:

Despite all out co-ordination from the bank officials, researcher faced some limitation. The notable some of these are as under:

1. Learning all the banking functions within just twelve weeks was really tough. 2. Another limitation of this report is Bank’s policy of not disclosing some data and information for obvious reason, which could be very much useful. 3. The Bank authority was very busy, so they could not give me enough time for discussion about various problems. 4. In case of performance analysis secondary data are used. 5. Only four years accounting data are considered for financial analysis

6. This study completely depended on official records and annual reports, which may not actual one for the research purpose. 7. To prepare an analytical report need financial assistance. The financial assistance provided by the department is insufficient. 8. In perspective of lack sufficient money, various types of analysis did not become possible. 9. Another problem is that communication gap. The department should be conducted with the company at least one month ago. 10. The knowledge of the researcher was also a problem here. Because the researcher was not familiar with practical knowledge in this regard before.

Finally, this is the researcher first experience on job, so there may arise some faults in this report though the researcher have tried his level best to over come the problem.

Chapter 2: Methodology of the Study

2.1 Prelude

2.2 Introduction

2.3 Sources of data

2.4 Methodology of data collection

2.5 Analysis of data

2.6 Terms and concepts used in the study

2.1 Prelude

Methodology is an essential part of any research-based study because this will highlight the preparation of the report and methods used in case making the report. It designed in a way so that it is correspondent to achieve the objectives of the study. It includes designing samples, sources of data used, collection procedure of data, techniques of analysis of data etc.

2.2 Introduction

The study covers a period of 5 (Five) financial and operational years from 2001 to 2005. The main sources of data used in the study are Annual Reports, Annual Accounts and Official Records of Jamuna Bank Limited. Head Office Officials and Mohakhali Branch Officials of JBL extended their hands of cooperation in supplying relevant data and information. Moreover, published literatures of journals, Bangladesh Banks Booklets, Books and Government publication were used for preparing the report.

2.3 Sources of Data

In preparing this report, both primary and secondary sources of information have been used.

Primary Sources of Data

When data are collected through direct searching in the field then it is called primary source of data. Primary Sources are:

← Asking the respective officers ← Direct communication with the clients ← Exposure on different desk of the bank ← File study.

Secondary Sources of Data

The secondary data are collected from Internet, different article published in the journals and magazines. Secondary sources are:

← Relevant books, Newspaper, Journals etc. ← Annual Reports of Jamuna Bank Ltd. ← Periodicals published by the Bangladesh Bank ← Different seminar papers on overall banking practices.

2.4 Methods of Data Collection:

In conducting the study the data have been used were collected by using two methods. The methods are as follows:

Observation Method

Observation method may be defined as the systematic watching of facts and events occurring in the field of study. The researcher has observed all the activities of general banking services. Through this method, he has collected some data about general banking services.

Interview Method

Interview is a face to face situation where one person (the interviewer), asks a person being interviewed (the respondent), questions to obtain answer pertinent to research problems. To get the real information and data about general banking services, researcher asked some respondents and clients directly.

2.5 Analysis of Data

The study covers the selected period of five years i.e. 2001-2005. Net profit, Total deposit, Total advances, Total investment, Reserve fund, employee & branch performance etc. were selected to measure the performance. In this study the main analytical tool is Overall Banking System. All the necessary data are taken and analyzed in a systematic manner.

2.6 Terms and concepts used in the study

Average:An average is single value, which is considered as the most representative or typical value for a given set of data.

Bad debts:Bad debts are considered as fixed expenses being it is generally treated as administrative expenses, which are fixed in future.

Banks:Banks are considered as service producing industry and standard norms for industrial enterprises are used in some cases to compare ratios.

Banker:In this study banker means as it is defined by English Bill Of Exchange Act 1882 i.e. “Banker inched a body of person whether incorporated or not who carry on the business of banking”.

Borrower:In this study a borrower is a person who enjoys credit facilities from the bank in order to start or organize an enterprise especially one involving financial risk.

Burden:The different between non-interest /profit expense and non-interest/profit income is defined as the Burden.

Capital structure:Capital structure refers to the permanent financing of the company represented by owned capita and loan/debt capital.

Consumers Credit Scheme (CCS):Consumer Credit is a relatively new field of collateral-free finance of the Bank. People with limited income can avail credit to buy household goods including car computer and other consumer durables.

Crossed Check:Those which can only be paid to banker for crediting the proceeds to the accounts of its payee are called Crossed Check.

Current assets:Current assets include cash in hand and with bank, investment and other assets.

Current liabilities:Current liabilities include deposits and other accounts (other than fixed deposits and deposit pension scheme) bills payable and other liabilities.

Customer:In this study customer means “A person who has some sort of an account either deposit or current account or some similar relation with a bank and from this it follows that any person or corporation may become a customer by opening deposit or current account or by accepting an once on current or loan account or even by accepting a deposit receipt in acknowledgement of money left with the banker.

Equity:Equity includes paid up capital quasi-equity, reserve fund and other reserves.

Foreign Exchange:Foreign Exchange means foreign currency and it includes any instrument drawn, accepted, made or issued under clause (13), Article 16 of the Bangladesh Bank Order, 1972. All deposits, credits and balances payable in any foreign currency and draft, travelers check, letter of credit and bill of exchange expressed or drawn in Bangladeshi currency but payable in any foreign currencies.

Gross profit:Gross profit is the result of the relationship between prices sales volume and costs.

Hire Purchase:To purchase some things, the Bank gives loan to client at 15% interest. The client has to pay the principle and interest as a installment basis for a fixed period. Security is needed here. The goods must have insurance by Insurance Company.

Lease Finance:This has been designed to assist and encourage the genuine and capable entrepreneurs and professionals for acquiring capital machinery, medical equipment, computers and other items, which may help them to be economically self-reliant. Terms and conditions of this credit have been made easier than before in order to help the potential entrepreneurs to acquire equipment of production and services and repay the liability gradually from earnings on the basis of “Pay as you earn”.

Letter of Credit:The contract between the importer and the exporter is given a legal shape by the banker (authorized dealer) who undertakes to make the payment for the imports on behalf of the importer.

Net Worth:

Net worth is the wealth of the shareholders at book value. It is the difference between total assets and total liabilities.

Payment against Document (PAD):The bank pays the money to the foreign company against Foreign L/C on behaves of his client. The client pays this amount and interest later to bank.

Pledge:In a pledge the customer delivers the possession of the securities to the banker and the banker holds the possession of securities until the debt is discharged.

Ratio:Ratio is a fraction whose number is the antecedent and denominator the consequent. It may also be defined as the relationship or proportion those one-amount bears to another, the first number being numerator and the later denominator.

Small Loan Scheme:This scheme has been evolved especially for small shopkeepers who need credit facility for their business and cannot provide tangible securities. The present maximum range of loan is Tk.2.00 Lac.

Spread:The difference between total interest/profit earned and totals interest/profit paid. It plays a major role in determining the profitability of a bank.

Total income:Total income is considered as total income after provision for bad and doubtful debts.

Working capital:Working capital refers to the net working capital i.e. (current assets – current liabilities).

Chapter 3: Banking Scenario of Bangladesh

3.1 Prelude

3.2 Introduction

3.3 Types of Bank

3.4 Nationalized commercial Banks

3.5 Specialized Banks

3.6 Private commercial banks

3.1 Prelude

Bangladesh is a country which attains Independence in the very recent time. The country is also a developing country. Like other developing country, the financial and economical infrastructure of the country is not in sound and strong position. But in the recent time this scene is going to past. Due to relentless struggle of Bangladesh Bank and some other well-organized Commercial Bank the overall scenario is going to rapid changes.

3.2 Introduction

After Liberation, the banks operating in Bangladesh (except those incorporated abroad) were nationalized. These banks were merged and grouped into six commercial banks. Of the six commercial banks, Pubali Bank Ltd. and Uttara Bank Ltd. were subsequently transferred to the private sector with effect from January 1985. The two Govt. owned specialized banks were renamed as Bangladesh Krishi Bank and Bangladesh Shilpa Bank. In March 1987 Bangladesh Krishi Bank was bifurcated and another specialized bank emerged as Rajshahi Krishi Unnayan Bank (RAKUB) for Rajshahi Division. Bank of Small Industries and Commerce Bangladesh Ltd. (BASIC) started its operation as a private bank from September 1988. Later on, BASIC was brought under direct control of the Government and was reckoned to as a specialized bank with effect from June 1993. From July 1995, again the BASIC was categorized as a private bank. In 1997, Government decided to treat the bank as a specialized bank again. So in this study the Basic has been treated as a specialized bank. ANZ Grindlays Bank was merged with Standard Chartered Bank during the Quarter (January-March, 2003). Al-Baraka Bank Ltd an Islamic private commercial bank was renamed as the Oriental Bank Ltd. The branches of foreign banks operating in Bangladesh are being treated as foreign private banks. All such banks operating in Bangladesh with different paid-up capital and reserves having a minimum of an aggregate value of Tk.50 Lacs and conducting their affairs to the satisfaction of Bangladesh Bank have been declared as scheduled banks in terms of section 37(2) of Bangladesh Bank Order 1972. In terms of section 13 of Bank Company Act, 1991, the minimum aggregate value was Tk.200 millions. According to the latest Government Gazette notification (dated the 28th July 1999) the above mentioned value has been fixed at Tk.400 millions.

3.3 Types of Bank

Bank is that kind of organization, which function is lending and borrowing. There are two kinds of banks.

Central Bank:

Like other sovereign country of the world, Bangladesh also has a Central Bank named Bangladesh Bank. It was established with a view to performing those works usually done by the central banks spreading across the world. One of the major functions of the Bangladesh Bank is to maintain the international monetary relations in the form of receiving foreign aid, grants, donations and management and investment of Foreign Exchange Reserve in the foreign countries. The emergence of Bangladesh Bank in 1971

after a bloody freedom that claimed millions of people necessitated the birth of Bangladesh Bank as the symbol of economic freedom and sovereignty. As a result in the 31st October 1972, a bank ordinance was introduced by dint of “President Order 127”. Under this ordinance the Government acquired all assets and liabilities of the former Dhaka Regional Office the “State Bank of Pakistan” and declared the Bangladesh Bank as the Central Bank effective from 16th December 1971. It works for the government and implements the government financial policies. The main function of the Bangladesh Bank is (a) Money Circulation, (b) Banking Function. Other functions of Central Bank is- to control financial organizations like commercial banks, insurance company etc. controlling lone, clearing house, control the value of money, bank of the commercial banks, collecting income tax, representing of the governments work observe the development of banking system etc.

Commercial Bank:

Which Bank borrowing from people and invest for many business, that’s called Commercial Bank. Their main function is borrowing and lending. Commercial Banks has some specific functions these are medium of exchange, build up capital, creating bill of exchange, helping international business etc. There are 52 Commercial Banks are survived in Bangladesh, just now. There are some local Commercial Banks and some are Foreign Commercial Banks Following are some name of local Commercial Banks.

Nationalized Commercial Banks:Agrani BankJanata BankRupali BankSonali Bank

Specialized Banks:

Bangladesh Krishi Bank (BKB)Bangladesh Shilpa Bank (BSB)Bangladesh Shilpa Rin Sangsthga (BSRS)Bank of Small Industries and Commerce Bangladesh Ltd. (BASIC)Rajshahi Krishi Unnayan Bank (RAKUB)

Private commercial banks:

Foreign Banks:Bank Al-Falah LtdCiti Bank N.ACommercial Bank of Ceylon Ltd.Habib Bank Ltd.National bank of PakistanStandard Chartered BankState Bank of India

The Hongkong & Shanghai Banking Corporation Ltd. (HSBC)Woori Bank

Local Banks (Incorporated in Bangladesh excluding Islamic Banks):

Arab Bangladesh Bank Ltd. (Joint Collaboration)Bangladesh Commerce Bank Ltd. (BCB)Bank Asia Ltd.BRAC Bank Ltd.Dhaka Bank Ltd.Dutch Bangla Bank Ltd. (DBBL) (Joint Collaboration)Eastern Bank Ltd. (EBL)Export Import Bank Ltd. (EXIM)International Finance Investment and Commerce bank Ltd. (IFIC)Jamuna Bank Ltd. (JBL)Mercantile Bank Ltd.(MBL)Mutual Trust Bank Ltd. (MTBL)National Bank Ltd. (NBL)National Credit and Commerce Bank Ltd. (NCC)One Bank Ltd.Premier Bank Ltd.Prime Bank Ltd.Pubali Bank Ltd.Southeast Bank Ltd.Standard Bank Ltd.The City Bank Ltd.The First Security Bank Ltd.The Trust Bank Ltd.United Commercial Bank Ltd. (UCBL)Uttara Bank Ltd.

Islamic Banks:

Al-Arafah Islami Bank Ltd.Islami Bank Bangladesh Ltd. (IBBL)Social Investment Bank ltd. (SIBL)Shahjalal Islamic Bank Ltd.The Oriental Bank Ltd.

Chapter 4: Corporate profile of Jamuna Bank Ltd.

4.1 Prelude

4.2 Introduction

4.3 Key factors of JBL

4.4 Operational performance of JBL

4.5 Management Team of JBL

4.6 Organizational Hierarchy of JBL

4.7 List and address of Branches

4.8 JBL at a Glance

4.1 Prelude

Jamuna Bank Limited is highly capitalized well-organized and well-equipped third generation modern bank. The Bank has established with some clear vision beside of the prime objectives of earning profit. The corporate profile will introduce us about the overall corporate goals and objectives of the bank.

4.2 Introduction

Jamuna Bank Limited is a Banking Company registered under the Companies Act, 1994 with its Head Office at Printers Building (2nd & 8th Floor), 5, Rajuk Avenue, Dhaka –1000. The Bank started its operation from 3rd June 2001.

Jamuna Bank Limited is a highly capitalized new generation bank with an Authorized capital and Paid – up capital of Tk. 1600 million and 429 million respectively. By June 2005 the Paid –up capital will be doubled. Currently the Bank has 23 branches: 10 in Dhaka, 4 in Chittagong, 3 in Sylhet, 2 in Noagaon, 1 in Munshigonj, 1 in Bogra, 1 in Gazipur (including 5 rural branches). More branches are planned to be opened soon.

JBL undertakes all types of banking operations to support the development of trade and commerce of the country. JBL’s services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units.

Jamuna Bank Limited the only Bengali named new generation private commercial Bank was established by a group of winning local entrepreneurs conceiving an idea of creating a model banking institution with different outlook to offer the valued customers, a comprehensive range of financial services and innovative products for sustainable mutual growth and prosperity. The sponsors are reputed personalities in the fields of trade, commerce and industries. The Bank is being managed and operated by a group of highly educated and professional team with diversified experience in finance and banking. The management team is headed by Mr. M Nazrul Islam is the person of the country having experience in working as Managing Director/ Chief Executive Officer in different banks and financial concerns. The Management of the bank constantly focuses on understanding and anticipating customer needs. The scenario of banking is changing day by day, so the bank’s responsibility is to diverse strategy and products to cope with the

changing environment. Jamuna Bank Limited. Has already achieved tremendous progress within only five years. The bank has already top out as a quality service provider and is known for its operation. Jamuna Bank Limited offers different types of Corporate and Personal Banking Services involving all segments of the society within the purview of rules and regulations laid down by the Central Bank and other regulatory authorities.

4.3 Key Factors of JBL

Sponsors and Management:

The sponsors of Jamuna Bank Limited are leading entrepreneurs of the country having stakes in different segments of the national economy. The managing Director of the Bank is a forward-looking senior banker having decades of experience and multi-disciplinary knowledge to his credit. A team of experienced banking professionals is efficiently managing the Bank.

Corporate Slogan:

Vision:

“To become a leading banking institution and to play a pivotal role in the development of the country”.

Mission Statement:

“The Bank is committed to satisfying diverse needs of its customers through an array of products at a competitive price by using appropriate technology and providing timely service so that a sustainable growth, reasonable return and contribution to the development to the country can be ensured with a motivated and a professional work-force”.

Objectives:

← To earn and maintain CAMEL rating ‘strong’. ← To establish relationship banking and improve service quality through development of Strategic Marketing Plan. ← To remain one of the best banks in Bangladesh in terms of profitability and asset quality. ← To introduce fully automated systems through integration of information technology. ← To ensure an adequate rate of return on investment. ← To keep risk position at an acceptable range (including any off balance sheet risk). ← To maintain adequate liquidity to meet maturing obligations and commitments. ← To maintain a healthy growth of business with desired image. ← To maintain adequate control system and transparency in procedures.

← To develop and retain a quality work force through an effective Human Resource Management System. ← To ensure optimum utilization of all available resources. ← To pursue an effective system of management by ensuring compliance to ethical norms, transparency and accountability at all levels.

Strategic Business Plan and Strategies:

The ‘Strategic Business Plan’ covering the period up to December 2005 has been formulated. The document visualizes addition of at least 5 (five)-retail outlets, substantial improvements in deposits, advances, profit, profitability and productivity. Moreover, the ‘Three Year Strategic Business Plan’ covering the year 2007 is in progress.

← To rise up capital up to Tk.1000.00 million by 2005. ← To manage and operate the bank in the most efficient manner to enhance financial performance and to control cost of fund. ← To strive for customer satisfaction through quality control and delivery of timely services. ← To identify customer’s credit and other banking needs and monitor their perception towards our performance in meeting those requirements. ← To review and update policies, procedures and practices to enhance the ability to extend better service to customers. ← To train and develop all employees and provide them adequate resources so that customer’s ‘Need’ can be reasonably addressed. ← To promote organizational effectiveness by openly communicating plans, policies, practices and procedures to all employees in a timely fashion. ← To cultivate a working environment that fosters positive motivation for improved performance.

Corporate Governance:

The organizational structure and corporate governance of Jamuna Bank Limited Reflect the determination to establish sustain and increase its strength for a strong base as a customer oriented bank with a transparent management.

Organizations are open system that needs careful management. Jamuna Bank Limited always pursues the principles of openness, disclosure and compliance to regulatory authorities, transparency in performance, integrity in dealings, ethics in banking and accountability to the shareholders in corporate governance. Jamuna Bank Limited pledge bound to keep it free from the clutches of loan defaults culture. All our units are the center of excellence. Our underlying commitment to professionalism and a single-minded devotion to service to our customers characterizes our style in all operations. We involve with the changing needs of our customers. And the process always goes on. The organizational structure and corporate governance of Jamuna Bank Limited Reflect the determination to establish sustain and increase its strength for a strong base as a customer oriented bank with a transparent management.

The bank ensures orderly relation between clearly defined functions of the Board of Directors (BOD) and the Management. Their role remains sharply bifurcated. The Board formulates policies and frames of operation. The management implements them and acts within norms. The Management enjoys full independence in managing the banking industry, especially its credit portfolio without any undue influence from outside. It, however, functions are reutilized, efficient, suitable and dynamic way o foster progress, promote general welfare to the society and infuse its people to serve the nation. In Corporate Governance, we strictly comply with the requirements of Companies Act- 1994, Banking Companies Act-1991, Rules and Regulations of Bangladesh Bank and other Regulatory Authorities.

Correspondent Relationship:

Jamuna Bank Limited. Established correspondent relationship with most leading international banks in 105 countries through 316 correspondents to cover all-important financial sector of the world. JBL endeavors to increase its network of correspondent relationship with the most international banks and financial institutions to cater for the expanded needs of its customers globally. Drawing arrangements with the overseas exchange houses has already been established to bring home remittances into the country through the banking channel.

Products and Services:

The Bank has an array of tailor made financial products and services. Such, products are Monthly Savings Schemes, Consumer Credit Scheme, Lease Finance, Personal Loan For Women, Shop Finance Scheme etc. JBL also introduced Q-cash ATM cards for its valued customers giving 24 hours banking services through Debit Cards. JBL offers the following services to its valued customer:

← Retail Banking ← Deposit Schemes ← Remittance and Collection ← Import and Export handling and Financing ← Loan Syndication ← Project Finance ← Investment Banking ← Lease Finance ← Hire Purchase ← Personal Loan for Woman ← 24-hours Banking: Q-Cash ATM facility ← Islamic Banking ← Corporate Banking ← Consumer Credit Scheme ← International Banking

Online Banking:

Banking sector has become very competitive and to provide more satisfaction and advantages to the customers at a very low cost, On-line banking system is the solution. The BOD and Management of Jamuna Bank Limited. Always aware about this fact and have eagerness for providing world class banking facilities to its valued customers. With this view a group of talented IT Professionals under the excellent leadership of the Managing Director started the journey to reach the ultimate goal. JBL started its expedition at the middle of May 2004 for implementation of real time On-line banking system and within a very few month and hard working of the team the Bank reached the successful implementation of its On-line computerized project, which was possible due to the dedication by all the members of JBL computer team. Taking future visions for improvements of the projects and minimizes the cost from the very beginning JBL established centralized integrated On-line system among all of its branches. Flora Bank On-line Banking software, switching software, Servers, ATM, data storage system and other hardware simultaneously set up, to acquire a fully equipped data center at Bank’s Computer Division, Head Office. To get maximum speed for operating the On-line system, JBL contracted Square Informatics Limited. And Metronet BD. Ltd. Square Informatics Limited. Provides information/data through satellite and Metronet provides information/data via optical fiber. The Disaster Recovery System (DRS) has been established. Transfer of data from old system to On-line system started in phases and all the then existing branches were brought under the new centralized system within a short span of time. All branches were added in JBL’s On-line network at Chittagong, Gazipur and Dhaka from the very first day of operation. The customer of JBL can now enjoy the world class banking service locally at a very reasonable cost through the fully automated On-line banking system. JBL is the only 3rd Generation Bank, which operate ON-LINE BANKING SERVICE.

The key features of JBL online banking are:

- Centralized Database. – Internet banking interface -Platform independent. – ATM interface. -Real time any branch banking. – Corporate MIS facility.

Delivery channels of JBL online banking are:

- Branch Network. – Tele-Banking Network. - ATM Network. – SMS Banking Network. -POS (point of sales) Network. – Internet banking Network.

The bank is offering Q-Cash ATM for ensuring 24 hours banking servies. Our customer can transact round the clock through 45 ATMs and more than five hundred point of sales located at Dhaka, chittagong, Sylhet and Khulna.

Features of Q-Cash ATM are:

-24 hour banking service. –Account transfer. -Cash withdrawal. –Utility bill payment. -Balance inquiry.

Features of Q-cash point of sales are: - Retail purchase. –Balance inquiry.

Islamic Banking Branch:

In the year 2004, Jamuna Bank Limited opened another Islamic banking branch at Jubilee Road, Chittagong on November 27,2005. The already existing Naya Bazar Islamic Banking branch started its operation from October 25, 2003, the total Islamic banking branches stands at 02 (two). JBL’s Shariah Council consists of 06 (Six) members, among the m 02 (two) are Khatib, 01 (one) is Ex-Economic Advisor, 01 (One) is Vice Chancellor, Islamic University, 01 (One) is Principal and other one is Eminent Banker. During the year 2004, the Shariah Council of JBL conducted 03 meetings to discuss all aspects of Islamic Branches operation.

Risk Management:

Bangladesh bank as a regulatory body advised all banks to implement an effective risk management system focusing on five core risks such as:

← Asset Liability management ← Credit Risk Management ← Foreign Exchange Risk Management ← Internal Control and Compliance ← Prevention of Money Laundering

These risks are termed as an integral part of business and such risk management and monitoring of loan portfolio was always treated with the highest priority in JBL. The Bank is always trying to establish superior monitoring of its credit risks and returns, in maturity mismatch between asset and liabilities has always been reviewed in the ALCO meeting to maintain acceptable risk. The Bank’s credit policy guideline and procedures as continuously reviewed and upgraded by the well established Internal Credit Committee. The Bank also maintain an effective system of Internal Control, establishing systems and procedures to scrutinize the transactions, encompassing key back up procedures and commissioning of proper governance structure, risks and returns are evaluated with a goal of producing sustainable revenue, reducing earnings volatility and increasing shareholder’s value. JBL is always aware of classification of advances, which now stands at a negligible 0.46%.

Human Resource Management:

Jamuna Bank Limited recognizes the importance of employee participation in the maintenance of standards and general well being of the organization. Success of Bank

depends on its employee working together as a team for the interest of the banks. JBL’s banking strategy is to provide excellent service to its customer through a highly motivated and engaged people. The management believes in having a strong and vivacious workforce to take the bank towards the path of shining progress. JBL draws from the best available training programs and facilities both international and domestic to meets its training and training environment needs and globally benchmarked skills and capabilities. JBL’s human resources policy and practices are designed to secure the goodwill, motivation, commitment, and contribution of all employees to achieve mission and objectives of the bank. The bank has established and well recognized policy of encouraging employee involvement through communications and consultation on a wide range of uses. Wherever possible, employees are invited to participate in multidisciplinary quality and process improvement activities. The Bank has already allocated a space to establish a well-organized Training Institute, where internal and external trainers will conduct Bank’s in-house training program and such programs will be designed to continuously upgrade itself within the latest development in the banking as well as information technology. JBL always have the view of hiring the best people Both from local and foreign banks and to recruit talents through competitive exams, and implementing programs to develop and retain high quality human resources. JBL has well thought plaices for the welfare of its employees, like Provident Fund, Gratuity Fund, Superannuating Fund, Car Loan, House Building Loan etc. JBL’s human resource management policy is to identify the right combination of skills, knowledge, behavior and values and divert them from the welfare of the Bank, themselves ands the country as whole.

Target Market for Loans and Advances:

← Agro-processing Industry ← Textile Spinning, Dyeing and Printing ← Export Oriented Readymade Garments ← Food and Allied ← Paper and Paper Products ← Engineering and Steel ← Computer Software and IT/Data Export ← Export Oriented Gem, Jewelry ← Export Oriented Finished Leather goods ← Export Oriented Jute Products ← Pharmaceuticals ← Export Oriented Syringe/ Needle ← Export Oriented Artificial Flower ← Construction ← Financial Institution ← Telecommunication ← Construction Materials ← Cosmetics and Toiletries ← Urban Housing ← Small and Cottage Industries

← Micro Enterprise ← Infrastructure ← Liquefied Petroleum Gas (LPG) ← Compressed Natural Gas (CNG) ← Small and Medium Enterprises (SME)

Future Thrust:

The Bank has started the process of formulating a long term Strategic Plan so as to maintain the momentum of overall growth and strong performance in its core business. To meet the changing need of the customers, JBL has planned to expand its network with the following arenas by providing Electronic Banking Products:

← Full Duplex On-line Banking System. ← SMS Banking. ← Tele Banking. ← Internet Banking. ← 24-hours banking: Q-Cash ATM. ← Opening of new branches. ← Expansion of business network at home and abroad. ← Introduction of new Liability/ Asset Products. ← Full Real Time On-line banking. ← Dealing Room Services for Corporate Customers and high net worth Individuals.

4.4 Operational Performance of JBL

The overall success of any financial concerns depends upon its profitability, solvency, liquidity and some other financial criteria. Like other banks JBL also tries to maintain adequate liquidity, to earn adequate profit and maintain overall solvency.

A. Profit:

Against 273.70 million of 2004 registering a growth rate of 32.74%. Provision against Tax for the year kept for Tk. 163.63 million and the net profit stood at Tk. 199.82 million (Profit after Tax & Provision).

B. Capital Structure:

Jamuna Bank Limited commenced its operation on June 03, 2001 with an authorized capital of Tk. 1600.00 million of 16.00 million ordinary shares of Tk. 100 each and the bank started operation with a sound capital base of Tk. 390.00 million. In 2004 the paid-up capital of the bank stood at Tk. 429.00 million of 4.29 million ordinary shares of Tk. 100 each.C. Capital Adequacy Ratios:In accordance with the set criteria of Bangladesh Bank, the bank adopted BIS risk adjusted capital standards to measure the capital adequacy. As per the provision of

Bangladesh Bank’s Capital Adequacy Circular BRPD 08 dated 7th September 2002, all the commercial banks must maintain at least 9% of its risk-weighted assets as Capital. Jamuna Bank Limited was able not only to maintain the required capital, but also been able to maintain a much higher Capital Adequacy than required. The Capital Adequacy Ratio stood at 10.17% as at 31st December 2005 as against 11.54% of 2004 reflects substantial increment in operating assets in 2005.

The quantum and break-up of capital of the bank are as follows:|Particulars |2005 |2004 ||Tier I Capital |807.14 |607.32 ||Paid- up Capital |429.00 |429.00 ||Statutory Reserve |149.67 |77.01 ||Retained Earnings |228.47 |101.31 ||Proposed Bonus Share |- |- ||Tier II Capital |109.32 |67.33 ||1% Provision against Unclassified Loans |108.99 |67.00 ||Exchange Equalization Fund |0.33 |0.33 ||Total Capital (Tier I+ Tier II) |916.46 |674.65 |

From the above table it reveals that Jamuna Bank Limited was able to increase its capital by 34.55% from Tk. 451.37 million to Tk. 607.32 million and supplementary capital by 106.53% from 32.60 million to Tk. 67.33 and total capital by 39.40% from Tk. 483.97 million to Tk. 674.65 million.

C. Treasury Operations:

The Treasury Operation in the money market both in Local Currency and Foreign Currency as well as the activities as a Primary Dealer (PD), Treasury Division continued its active participation and also a significant growth in the year 2004. In 2003 JBL, the only Bank of 3rd Generation Banks was selected as PD by Bangladesh Bank for secondary trading of Govt. Securities owing to its excellent performance in the Money Market. Through the activities Treasury Division, JBL hasbeen earning a satisfactory fee-based income. The Dealing Room of JBL is well furnished and equipped with latest equipment like Voice Recorder, Reuter3000Xtra, CDBL electronic system etc. The activities of FEX and money Market have been centralized with complete segregation of Front & Back Office activities. The Asset and Liability Committee (ALCO) of the Bank monitors the activities intensively, through its weekly meetings.

D. Deposit & Deposit Mix:

The deposit position of the bank was Tk. 10,450.16 million in 2004.Efforts are being made for augmentation of low cost deposit in order to accommodate good customers at a competitive price. JBL always focused on low and no cost deposits, which will help the growth of the bank.

(Figure in Million)| |As on |As on | |Changes in % ||Type of Deposit |31.12.2005 |31.12.2004 |Changes |Over the Year ||Current A/C & Others |1543.06 |905.89 |+637.17 |70.34 ||Bills Payable |109.29 |78.48 |+30.81 |39.26 ||Savings Deposit |749.52 |614.96 |+134.56 |21.88 ||Fixed Deposit |10899.42 |8023.26 |+2,876.16 |35.84 ||Short Term Deposit |384.03 |238.79 |+145.24 |60.82 ||Scheme Deposit |731.07 |581.39 |+149.68 |25.75 ||Foreign Currency Deposit |37.74 |7.39 |+30.35 |410.69 ||Total Deposit |14,454.13 |10,450.16 |+4,003.97 |38.31 |

E. Loans & Advances:

In Fiscal Year 2005 a devastating flood anddeclining trend in interest rate JBL,continued to explore its area of credit wassuccessful to build up an aggregate quantum ofcredit, which stood at Tk. 11011.83 million,registered an overall increase by 63.80% over 2004.In Fiscal Year 2005 a devastating flood anddeclining trend in interest rate JBL, continued toexplore its area of credit was successful tobuild up an aggregate quantum of credit,which stood at Tk. 11011.83 million, registeredan overall increase by 63.80% over 2004.

In Fiscal Year 2004 a devastating flood and declining trend in interest rate JBL, continued to explore its area of credit was successful to build up an aggregate quantum of credit, which stood at Tk. 6,772.81 million, registered an overall increase by 107.52% over 2003. The total credit on 2003 was 3239.52 million. After maintaining regulatory requirement and to avoid risk of single industry or large loan concentration and remains with the bank’s credit norms relating to proper risk management, yield exposure, tenor, collateral security, proper valuation etc. the credit portfolio of JBL was further diversified. Moreover owing to the social commitments JBL launched personal loan for

women and shop finance scheme to help the small business in the country. In order to increase the credit portfolio JBL has also taken initiatives to increase the capital in line with the directives of Bangladesh Bank. JBL’s credit facilities include project finance activities, syndication of financing for large projects, capacity additions in the manufacturing sector and structured finance to develop infrastructure of the country.

F. Investment:The Investment portfolio of the Bank as on 2005 stood at Tk. 2037.84 million, growth rate 75.12% over Tk. 1163.70 million of December 2004. The Investment portfolio comprises Govt. Treasury Bills of Tk. 630.00 million, Treasury Bonds of Tk. 875.00 million, Prize Bonds, Primary Shares, Zero Coupon Bonds etc. JBL is one of the preference shareholders of Aftab Automobiles Ltd. Amounting Tk. 50.00 million. The Bank also invested in two shares amounting Tk. 2.00 million of Central Depository System (CDBL). The majority portions of the investment contributed mainly towards fulfillment of Statutory Liquidity Reserve (SLR) of the Bank and were mostly in the form of Govt. Treasury Bills & Bonds.

G. Import:

I. Export:

4.5 Management Team of JBL

4.6 Organizational Hierarchy of JBL

| |

4.7 LIST & ADDRESS OF BRANCHES

|01. Mohakhali Branch |9. Mohadevpur Branch ||Ismail Mansion |Mohadevpur, Naogaon. ||32, Mohakhali C/A, Dhaka. |PABX: (07426) 75137 ||PABX: 9887269,9889273-4 | ||02. Sonargaon Road Branch |10. Naogaon Branch ||1/G, Free School Street |247, Sadar Road ||Sonargaon Road, |Naogaon. ||Karwan Bazar, Dhaka. |PABX: (0741) 61840 |

|PABX:9670655 | ||03. Moulvi Bazar Branch |11. Khatungonj Branch ||Mustaquim Mansion |1575, Patharghata ||77/3, Moulvi Bazar, Dhaka. |Kotwali, Chittagong. ||PABX:7315025, 7315026 |PABX: (031) 625454 ||04. Goala Bazar Branch |12. Konabari Branch ||New Plaza, Goala Bazar |Plot-A, 140-141, BSCIC ||Osmani Nagar, Balagonj, Sylhet. |Konabari, Gazipur. ||PABX: (08222)87352-3 |PABX: 9297182-3 ||05. Agrabadh Branch |13. Bhatiyari Branch ||Jahan Building |Newaz Market, Bhatiyari Uttar ||76-77, Agrabad C/A |Sitakunda, Chittagong. ||Chittagong |PABX: (031) 752187 ||PABX: (031)727727 | ||06. Dilkusha Branch |14. Foreign Exchnge Branch ||33, Dilkusha C/A |2, DIT Avenue (Ext) ||Dhaka-1000. |Motijheel C/A, Dhaka. ||PABX: 9565608 |PABX: 9554474 ||07. Beani Bazar Branch |15. Jubilee Road Branch ||Fatehpur, Beani Bazar, Sylhet. |(Islami Banking Branch) ||PABX: (08223)88022 |57, Jubilee Road || |Kotwali, Chittagong. || |PABX: (031) 616266 |

|08. Sylhet Branch |16. Bogra Branch ||Sahir Plaza, Zinda Bazar |Kabi Nazrul Islam Street ||Kotwali, Sylhet, |Borogola, Bogra. ||PABX: (0821) 725409 | ||17. Shantinagar Branch |21. GausiaMarket Branch ||41/B, Chamelibagh |393-B, Chistia Market ||Shantinagar, Dhaka. |Dhaka-1205. ||PABX: 8355179 | ||18. Gulshan Branch |22. Narayangonj Branch ||Land view Comm Complex |Chasara, Narayangonj. ||28, Gulshan North C/A | ||Gulshan-2, dhaka. | ||PABX. 8852540 | ||19. Dhanmondi Branch |23. Baligaon Branch ||House # 17, Road # 6 |Tongibari, Munshigonj. ||Dhanmondi R/A, Dhaka. | ||PABX: 8613920 | ||20. Naya Bazar Branch |24. Hilli Branch (Proposed) ||(Islami Banking Branch) | ||10/3, North South Road, | ||Malitola, Dhaka. | ||PABX: 9553977 | |

4.8 JBL at a Glance

(In Million Tk)|Sl. No |Particulars |2001 |2002 |2003 |2004 |2005 ||1 |Authorized Capital |1600.00 |1600.00 |1600.00 |1600.00 |1600.00 ||2 |Paid up Capital |390.00 |390.00 |390.00 |429.00 |429.00 ||3 |Total Capital |390.70 |405.56 |483.97 |674.65 |916.46 ||4 |Capital Surplus / (Deficit) |-- |255.35 |204.30 |148.506 |115.54 ||5 |Total Assets |4210.16 |5290.59 |9766.78 |13491.52 |16863.76 ||6 |Total Deposit |3795.11 |4766.89 |6614.05 |10264.52 |14454.13 ||7 |Total Loans & Advances |333.45 |1514.28 |3239.51 |6722.80 |11011.83 ||8 |Total Contingent Liabilities |145.93 |891.541 |1772.76 |2903.95 |5445.68 ||9 |Profit after Tax & Provision |-- |.22 |61.14 |155.95 |199.82 ||10 |Classified Loans |-- |-- |.63 |2.82 |51.05 ||11 |Provision against Classified Loans |-- |-- |.63 |1.04 |10.2 ||12 |Interest Earning Assets |-- |4946.40 |8951.22 |12559.22 |15551.75 ||13 |Non- Interest Earning Assets |-- |344.19 |815.56 |932.29 |1312.01 ||14 |Income from Investment |2.58 |15.47 |27.37 |80.43 |126.30 |

(In Percentage)|15 |Credit Deposit Ratio | |31.77 |48.98 |65.50 | ||16 |% of Classified Loans |-- |-- |0.02 |0.04 |.46 ||17 |Cost of Deposit |-- |9.05 |8.94 |7.84 |8.79 ||18 |Return on Assets (ROA) |-- |0.29 |1.14 |1.16 |1.18 ||19 |Earning Per Share (EPS) |-- |0.06 |14.25 |36.35 |46.58 ||20 |Net Income Per Share |-- |0.06 |15.68 |36.35 |46.58 |

|21 |Price Earning Ratio |N/A |N/A |N/A |N/A |N/A ||22 |Return on Investment (ROI) |2.35 |4.68 |2.93 |6.91 |6.20 |

Chapter 5: Findings of the study

5.1 Prelude

5.2 Introduction

5.3 Components of general banking

5.4 Account and Schemes

5.5 Receipt and Payment of cash

5.6 Remittances

5.7 Clearing

5.8 Loans and Advances

5.9 Credit administration and monitoring

5.10 Foreign trade and exchange

5.1 Prelude

General banking is the most important function of any banking concern and it is known as the heart of any banking concern. It is also known as the day-to-day banking, retail banking, and general banking etc. The overall success of any banking concern largely depends upon the successful performing of the general banking. The general banking procedure includes opening of various accounts and schemes, receipt and payment of cash, remittances, clearing, issuance of loans and advances, credit administration and monitoring and foreign trade and exchange etc.

5.2 Introduction

General Banking means general activities of a bank. It is the most important and preliminary work of a bank. All other activities like investment and foreign exchange are rolled through the general banking. The general banking system of JBL is very dynamic and errorless. The executives and officers are very friendly and supportive to their work. Although JBL (Mohakhali Branch) is a new branch but their general banking activities are excellent. All the clients are satisfied with their services. They expand their services to reach new customer year by year. In their effort to improve their customer facility they

provide different facilities and offered numerous types of general banking facility. They are trying to improve themselves in every year in relation with the other branch of JBL their net profit has increased. So we can say that they are doing with target which leads them to a higher net profit.

5.3 Components of General Banking

The JBL (Mohakhali Branch) offers various types of general banking components. They are very essential tools for the bank to serve the customers. To attract new customers the bank has to launch new components or re-furnished their existing products.Their components of general banking are as follows:

A. Account and Schemes B. Receipt and Payment of cash C. Remittances D. Clearing E. Loans and Advances F. Foreign trade G. Credit administration and monitoring

5.4 Account and Schemes

Account opening is the first and preliminary work for a bank. Opening of an account binds the Customer and Banker into a contractual relationship. It is the most important and preliminary work for a bank. Account Opening is very important task for any kind of banking activities. Customer relationship establishes through opening an account. Generally who are receiving bank service we may call them as a customer. But bank considers them as customers who have an account with them.

Procedure of Opening of an Account:

Banker’s his to maintain some common principles and procedures for open all most all deposit accounts. Major information is essential for identification of the account holders individually so that banker can discharge his obligations to every one correctly and to the extent due. Following are the formalities a customer must maintain in case of opening of an account:Minimum age of 18 yearsApplication in the prescribed formFurnishing Photographs of the applicant and attested by the introducer (2 copies)Introduction by an account holderRecording of specimen signature in the specimen signature cardMention nominee in the prescribed formFurnishing Photograph of the nominee (1 copies)

Description of Deposit Accounts:

There are several types of deposit accounts. Each account has different characteristics and every account has some specific purpose to serve. According to their uniqueness they are described as follows:

Savings Account:

It is the general account of the JBL (Gulshan Branch) individual or more than two persons can open a savings account on JBL. The rules and regulations that must need to fulfill to open a savings account are as follows:Applicant has to be a Bangladeshi citizen.Two-passport size furnished photographs attested by the introducer.Accounts may be opened in the name of illiterate persons after completion of necessary formalities but withdrawals from such accounts should be allowed only on personal appearance.A suitable introduction is required for opening the account.Not more than one account should be allowed to open by one person in his/her name at any branch of the bank but this will not prevent a parents/guardians for opening more than one account for their children’s who are minors.Each account will be given a separate account number which should be quoted while making withdrawal or deposit in the account or any correspondence.Depositors may deposit money in his/her account as often as he/she likes.Banks may accept checks, drafts, payment order, dividend warrants etc. on behalf of the account holder for collection.Initial deposit for opening an account is Tk.5000 and the account may be closed where the balance falls bellow Tk.500. However, Manager has the discretion to authorize opening account below Tk.5000.A depositor may withdraw money from his/her account twice in a week.Depositor may withdraw his/her deposit money up to 25% without notice but for withdrawals more than 25%, 7 (seven) days notice is required. In the event of contravention of the rule, the depositor’s will not be given any interest in this account for that month.If a depositor presently withdraws more than twice a week or a sum exceeding 25% of the balance in his/her account without notice, the bank realize service charge in its discretion. This will be in additional to forfeiture of interest provided for above.If a depositor like to close his/her account, service charge of Tk.250 will be deducted from the account.The officers and authorize persons are issuing check book, deposit slips and statement of account to the holder of savings. The officer justifies the information that is submitted by the account holder for opening of the account. The officer process account-opening formalities.

Current Deposit Account:

JBL is one of the newly established well-reputed third generation private commercial bank in Bangladesh. It operates very diverse current account operation. They serve various types of customers, like current account for private limited company, current

account for public limited company, current account for partnership business, etc. All these accounts are following the under noted rules and regulations of JBL. Rules and regulation for current deposit accounts are as follows:

Current deposit accounts are opened with sums of TK. 5000 in the names of the parties known to the bank or properly introduced.It is understood that the at credit will not any time be allowed to below 1000, A minimum charge of Tk.100 per year is made on all small operative accounts and on those 3 accounts in which the number of the transaction is out of proportion to the balance of deposit.All deposit to current account made by local constituent should be accompanied by pay-in-slip and the depositor should satisfy themselves that the depositor are verified by the received and date stamp of the bank and the initials of the bank’s officials.The bank collects local check, pay order, demand draft, etc. on clearing free of cost and all other collection items at charges to be ascertained on application.A charge of Tk.100 will be made on all accounts closed within 6 (six) months of their opening.More than 2 (Two) applicant can open the account.Account holders can deposit the money at any numbers of items.There is no restriction of how many times and the amount of money is withdrawn.For a private or public limited company various types of legal documents might be articles of association, memorandum of association, trade license etc.To be certified by an introducer who has a current account with the bank.The account holders have to provide the company seal when it is necessary.In case of clubs, societies, schools, colleges certified copies of bye-laws and regulations must be submitted to the banker.In case of partnership firm attested photocopy of Partnership Deed must be submitted to the banker.In case of trust, club up-to-date list of the Members of the Trustee Board.

Foreign Currency Account:

The JBL (Mohakhali Branch) also operate Foreign Currency Account for Bangladeshi Wage Earners or for Foreign Nationals/Company/Firms etc. to send their valued earned foreign currency into the country. The rules and procedures for opening of the Foreign Currency Account are as follows:

Foreign Currency Account (For Bangladeshi Wage Earners):

Two (2) copies of passport size furnished photograph attested by the introducer and one (1) copy photograph of nominee attested by the applicant.Attested photocopy of the first 7 (seven) pages of the valid passport.Attested photocopy of employment contract/ appointment letter/ work permit.If account intended to be opened from abroad Bangladesh Embassy or High Commission shall attest all original papers except the photograph of the nominee which to be attested by the account holder him/herself.

Foreign Currency Account (For Foreign Nationals/Company/Firms):

The required papers and documents are as follows:Two (2) copies of passport size furnished photographs of the account holder which should be attested by the introducer.Copies of relevant pages of the passport duly attested by dealing officer for individual and operators of the account holders.Copy of set-vice contract / appointment letter / work permit, if any for the individual.Copies of registration in Bangladesh with Board of Investment (BOI)/ Bangladesh bank foreign joint venture firm.Copies of memorandum of association, articles of association, bye-laws, joint venture agreement for Joint Venture Company.In case of partnership firm, copy of the partnership deed which should be dully attested by the authorized officer.

Short Term Deposit Account (STD):

JBL also offers Short Term Deposit to its valued customers. Short Term Deposit is a deposit account where the payment of interest is paid on month basis. This items include the deposits for a period ranging from 7 (seven) days to 89 (eighty-nine) days. These types of liabilities are payable on special notice or after a specified period other than the fixed deposits. Some of these types of deposits are of the nature of time deposits. The rate of interest on STD account is 4.5% per annum. There are some rules and regulations that must be maintained by the STD account holder. If the STD account holder wants to withdraw the money from the account they have to inform the bank before, otherwise the account holder may not get the interest in full amount.

|Particulars |Approved Revised Rate ||Short Term Deposit (STD) |6.50% ||Savings Deposit : Rural / Urban |7.00% ||Savings Deposit : Non-Chequing & No withdrawal for 6 (six)|7.50% ||months | ||Savings Deposit : Non-Chequing & No withdrawal for 1 (one)|8.00% ||year | |

Schemes:

Schemes are the most important sources of enhancing banks deposit. Mainly bank is the lender of money, which is deposited by various types of depositor. These schemes are different in nature and types and also in interest rates. These deposits give the customers to deposit the idle money in profit earning schemes and also provide the security. Jamuna Bank limited as third generation modern and technology based modern commercial bank offers various types of customer’s friendly deposit schemes to its

valued customers. These schemes are highly profit earning to the depositors and also unique in security. The schemes are outlined below:

Fixed Deposit Receipt (FDR):

JBL offers various types of FDR to its client’s. Their maturity may be 1 (One) months, 2 (Two) months, 3 (Three) months, 6 (Six) months, 12 (Twelve) months, etc. In JBL customers can open FDR in individually or jointly for any amount for a fixed period. For opening of FDR no introducing are required. Only one copy of passport size photograph of the account holder and another copy of the nominee is needed. Customers can get the interest after the maturity period of the FDR. H/She can also encash the FDR before the maturity of the period. In this case he will not enjoy the regular interest rate on the FDR. The rates of interest are presented in the following table:

|Particulars |Approved Revised Rate ||FDR for 1(one) month and above |10.50% ||FDR for 3 (three) month and above |12.25% ||FDR for 6(six) month and above |12.50% ||FDR for 12(twelve) month and above |12.50% |

Monthly Savings Scheme (MSS):

JBL has proudly offered Monthly Savings Scheme to its valued customers. There is a special typed form for opening a Monthly Savings Scheme. The duration of this scheme is 5 years. One passport size photograph of the account holder and another copy of the nominee are needed to open this account. There are various types of MSS that is offered by the JBL. The variation depends on the amount and the time of maturity of the MSS. The monthly installment of Tk. is 500 to 10000 may be deposited every month during the entire period of the scheme. The depositor will be paid a specific amount on the expiry period as per the following table:

|Period |Installment |Payable at the End ||5 (Five) Years |500 |36,738 ||5 (Five) Years |1000 |73,475 ||5 (Five) Years |5000 |3,67,375 ||5 (Five) Years |10000 |7,34,750 |

In this scheme depositor may open one or more account of different installment in the same branch. Loan may be extended to the depositor up to 80% of the deposit amount. The depositor may encash the MSS before the expiry of the maturity of the MSS period In this case the depositor will not enjoy the full amount of interest.

Double Balance Deposit Scheme (DBDS)

Jamuna Bank Limited also offers its valued depositors to enjoying the DDBS. Under this scheme the depositor may deposit any amount multiplied by 10,000 for 7 (Seven) years. The deposited amount will be double with its principals and interest after the expiration of the aforesaid period. It is one of the most popular schemes offered by the Bank.

Monthly Profit Paying Scheme (MPPS)

MPPS is a scheme, which provides the opportunity to the valued depositor to enjoying a specified amount against the deposit a fixed amount for a certain period. If any person make deposit Tk.1, 00,000 for 1 (one) year, he/she will get Tk.900 per month for every year. This is the most benefiting scheme for retired official or middle class family. Any person can deposit any amount more than Tk.1, 00,000 at any time for the period more than one year.

5.5 Receipt and Payment of cash

Among the services provided by the bank, cash receipt and payment is the most vital and physical function. Generally customer comes to bank to withdraw the money from their account and deposit his savings in their accounts.

Cash Deposit

Money deposited in cash by the constituents at the cash counter of the bank excluding that of government transaction is known as Bank Receipt (Cash). Different types of forms are used for cash deposits for different types of accounts. Particulars of some forms are furnished below:Current or Savings account pay in slipApplication for fixed deposit receiptCredit voucherDraft or mail transfer application formT.T. Pay order application form Call deposit application formDemand loan pays in slip.

A. The depositor will fill up the appropriate form properly. The concerned officer working at the general banking counter will initial the form relating to the new account. B. Receiving the cash and voucher at the cash counter; the cash officer will count cash correctly. Then the voucher will be branded “Cash Received” seal. Then the assistant cash officer willing the denomination of the notes and coins in the backside of the voucher. After tat assistant officer will sign the voucher. C. The cash officer will check up the voucher and entered the amount in the cash receipt register and put the scroll number. Then the officer will sign the voucher and send to the computer department. D. The officer computer department will entry the transaction into the computer and put the Posted seal and a tracer number on the voucher. E. At the end of the transaction the cash officer will total the cash receipt book and the total figure should be tally with scroll maintained by the officer whose scroll will also be

totaled. The physical cash received at the counter must be equal to the total figure of the scroll.

Cash Payments

Banks payment includes all kinds of payments excluding those of treasury section. Extreme precautions must be taken at all levels through, which instruments like Cheque, drafts, etc, are disposed of. All the instruments received at the general banking counter will be preliminary checked by the dealing officer who will enter the instruments in the respective ledger. In case of Cheque the following particulars will be scrutinized:

• Date (Whether post dated or anti dated) • Amount in word and figure • Crossed or Open • Bearer or Order • Style of signature as available in the ledger • Prohibitory order or stop payment of checks.

The Cash officer will follow the following procedures at the time of payments of checks/other instruments over the cash counter:

• The client will submit the instruments in the computer department first. The computer officer and Cheque passing authorized officer will verify the instrument and posted the instruments. Then it will be send to the cash counter. • After getting the instrument the cash officer will verify the instruments and if necessary the cash officer can told the clients to sign in the backside of the instruments. • Cash officer will record the denomination of notes and coins on the backside of the instruments. • The officer will enter the check in the cash payments register where the denomination of notes and coins will also be recorded. • The cash officer will give the amount to the clients at the cash counter and told the clients to count it immediately and if needed any quarry. • All checks, drafts, debit vouchers etc. must be branded with “Cash Paid” stamp with the current date. • After payment the cash department for the purpose of clean cash book will send the vouchers. • The head of the cash department is responsible for all debit vouchers being branded with the cash Paid date stamp immediately they are paid and the manager must supervise him/her in this matter as any laxity is extremely dangerous.

Late Payments

In case of any late payments instruments must be debited in the ledge and passed in the usual manner. It will be entered in the cash paid sheet in the above manner and cash book under authentication of the manager and the cash officer. It must also be noted with late mark under initial of the manager with date.

Finally all cash receipts and payments will be taken into account to calculate the cash balance of the branch we may take an example to clarify this. But this is to notify that, at the end of the day of the bank the amount of the cash book and the amount of the computer should be equal. Because, currently the whole banking are monitoring centrally.

5.6 Remittances:

Due to the rapid expansion and complication of business world and increasing competition business activities are now in broader scope. For this financial transaction also goes in boundless arena. In this case Bank is the only concern which helps the business world to complete these complicated transactions.

Commercial banks in Bangladesh offer the facility of transferring funds, from one place to another, to their customers as well as to the general public. Such transfer of funds can be effected either through Demand Draft of Telegraphic Transfer or Mail Transfer. The aforesaid methods of remitting money from one place to another within the country are known as Remittance. While, it is for outside Bangladesh the same is called foreign remittance. The advantage of this facility is the quick transfer of money with minimum cost and also the risk of physical transportation of cost is criminated. Remittances are sent to one place from another place through D.D, P.O, and T.T etc.

Demand Draft

Demand draft is a written order of one branch upon another branch of the same bank, to pay a certain some of money to or to the order of a specified person. Drafts are not issued payable to bearer. In practice drafts are not to be drawn between branches within the same city. Drafts drawn by one branch of bank on another payable to order where any draft that is an order to pay money drawn by one on a bank upon another office to the same bank for a sum of money payable to order on demand, purports to be endorsed by or on behalf of the payee, the bank is discharged by payment in due course. From the above provisions as to Crossing, Endorsement, Collection and Payment in due course are the same as for checks:

Issue of Demand Draft

• The customer is asked to complete filling in a form, which is treated as an application as well as voucher. The application form should be checked carefully. • Commission charge are calculated and inserted in the case provided in the form. • The voucher had given to the customer to deposit the cash with the cashier. • The cashier receives the cash and delivers the voucher to remittance, department against initial in his book. • Draft is prepared and entered in drafts issued register. • Branch wise serial number is given on the draft besides the oriented number putting on oblique between. The amount of the draft protects graphed.

• The draft number is written on the voucher. • Draft block and the voucher along with the register are sent to officer in charge for checking and signatures. He signs the draft and voucher and initials the counterfoil of the draft and the register. Then the draft and the voucher are sent to the Manager / second officer for second signature. • The draft is crossed if customers desires and delivered to him against his acknowledgement on the voucher. • If a Cheque tenders the amount, the drawer to the Cheque and the purchaser of the draft should be the same person, i.e. the signature on the Cheque and on the application form must tally. • A memorandum is issued to the stoner if the desires. • The Cheque is sent for passing and cancellation. • After the Cheque is passed similar, procedure as explained above is adopted for issuing draft. • Telegraphic intimation under test is sent to the drawee much for drafts of Tk. 50,000/- and over in or as per the existing of the bank.

Issue of Duplicate Demand Draft

• On receipt an application form the purchaser of the draft its loss and issue of duplicate one, the signature of the applicant is verified from the original application. • The drawee branch is informed of the loss of draft and requested to exercise caution by letter or telegram as desired by applicant. The telegram charges if incurred is recovered form he. • On receipt of confirmation from the drawee branch that the draft is still outstanding in their books and that caution being exercised by them, a duplicate draft is issued to the purchaser after obtaining an indemnity Bond. • A note to this effect is made on the original form and the draft issue registers. • Drawee branch is advised of issue of the duplicate draft.

Cancellation of Demand Draft:

The purchase may request to cancel the draft purchased by him and ask for refund of money. For cancellation is draft the following points should be kept in mind:

• One receipt of application along with the demand draft for its cancellation the signature of the application is verified from the original application form and the geniuses of the demand draft is examined. • Before the draft is cancelled it is ascertained that no duplicate draft has been issued. • If the date of issue of the draft is much earlier, consent of the payee in writing should be obtained. • If the draft is in favor of a company, semi-government official, consent of the payee in writing is essential. • The signatures of officers on the draft should be crossed but in no case torn, and the draft is marked “cancelled”. The note in respect of cancellation should be made in the draft issued register and on the application.

• The cancelled draft should be attached to debit voucher along the request letter of the purchaser. • The drawee branch may be advised about the cancellation of the draft. • If the draft is in favor of a company, semi-government official, consent of the payee in writing is essential. • The signature of officers on the draft should be crossed but in no case torn, and the draft be marked “cancelled”. The note in respect of cancellation should be made in the draft issued register and on the application. • The cancelled draft should be attached to debit voucher along the request letter of the purchaser. • The drawee branch may be advised about the cancellation of the draft.

Revalidation of Demand Draft

A draft like Cheque becomes stale after lapse of six months from the date of issue. The purchaser of the draft may approach the issuing branch to revalidate the draft to make it payable again.The draft should be reminded and there must be no alteration in the draft.The purchaser must give a letter in writing requesting for the revalidation of the draft. An officer should duly verify his signature on the letter.All particulars of the draft should be compared from the draft issued register. Before the draft is revalidated it is ascertained that no duplicate draft has been issued, a note about revalidation of the letter particular draft be made in the register.A Rubber stamp being “Revalidated on --------------- should be affixed on the draft Linder the signatures if two authorized official.The drawee branch should be intimated about the revalidated of the draft. A note to this effect in the remarks column against the relative entry in the draft payable register should be made at the drawee branch.

Payment of Demand Draft

Record of loss: On receipt of information from the drawee branch about the loss of any draft, caution is noted in red in the remarks column of the register if the draft is not yet paid. The drawee branch is informed accordingly.

Record of Duplicate Draft: On receipt of information from the issuing branch in respect of cancellation of draft, note to this effect is made in the register.

Record of Collection: On receipt of information from the issuing branch in respect of cancellation of draft, note to this effect is made in the register.

Record of Revalidation: On receipt of information from the issuing branch in respect of cancellation of draft, note to this effect is made in the register.

Payment of Open Draft

When a demand draft is presented for cash payment it should be examined that the draft is not crossed and it is drawn on your branch and the same was not issued more than six months curlier. It also examined that intimation is received about the DD. Lost; cancelled or duplicate issued.Proper identification of the payee is required. If the payee is the customer of the branch his signature can be verified from the S.S. card. In other cases, a person acceptable asks identification from a customer of our bank or to the draft and the signature is verified by an offer.The date, amount in words and figures and signatures on the draft is checked.If the draft is tested, test should be verified.Payment date is noted in the register.Draft together with the register is sent to the officer in charge for cancellation and after.Cancellation the draft sent to cash department for payment.

Payment of Crossed Draft

Under N.I. Act crossed draft cannot be paid in cash, except to a banker, who collects the same for credit to his customer’s account. Such DD s should be credited to payee’s account in the drawee branch or should presented either in clearing/transfer delivery by a bank or cash payment with a name of request where there is no clearing House. The paying banker in such cash should examine the discharge of the collecting banker and payment be made on being fully satisfied.

In case of any irregularity in the draft an advice letter is sent obtain the confirmation of the issuing branch. After receiving the instrument, tile IBCA lodgment is done by the branch.Accounting Treatment (Sale of Demand Draft)

Cash / Party A/C -------------------------- Dr.HO A/C Drawn on branch --------------- Cr.Income A/C Commission ---------------- Cr.After giving entries an IBCA is prepared.An IBCA implies the following entries:HO A/C issuing branch ------------------- Dr.Drawn on branch -------------------------- Cr.

The IBCA is dispatched to drawn on branch.

After receiving an IBCAIssuing Branch A/C ------------- Dr.Bill payable (DD) A/C --------- Cr.

When payment is madeBill payable (DD) --------------- Dr.Customer A/C ------------------- Cr.

Payment is made from the suspense account if the IBCA is not reached, but the instrument has been presented.Suspense A/C -------------- Dr.Customer A/C ------------- Cr.

To adjust the payment:Issuing Bank A/C ----------------- Dr.Suspense A/C --------------------- Cr.

Telegraphic Transfer

TT is affected by tile bank through tested message attested by secret check signal, on receipt of which tile paying officer pay the amount to the payee in cash through a telegraphic payment order or credit his account, as the case may be. Both parties must have account in Jamuna Bank Limited, as money is transferred.

Recording Procedure of Outgoing TT

Deposit of money by the customer along with application form.In receipt of money a cost memo is given to the customer.Tested telex message is prepared, when TT serial number, notifying party name is mentioned.The telex department confirms transmission of the message.Necessary entry is given to TT outgoing register.

Accounting Treatment:Cash / Customer A/C -------------------- Dr.HO A/C ------------------------------------ Cr.Charges and Commission:Tk.50/= is taken as posted charge and the commission is 15% of the total amount.

Recording Procedure for Incoming TT.After receiving the telex, it is authenticated by tested.The TT In-Concern branch’s register verifies TT serial number.Voucher is released in this respect.

Payment Order (PO):

The PO is used for making a remittance to the local creditors.The procedures for selling a PO are as follows:Deposit money by the customer along with application form.Give necessary entry in the Bills Payable register where Payee’ name, address, date, PO no: amount is mentioned.Prepared the instrument.After scrutinized and approved the instrument by authority, it is delivered to customer.Signature of customer is taken on the counterpart and register customer’s signature part.

A. Issuing of a PO:Customer can purchase PO in different modes:By Cash:Cash A/C ------------------------- Dr.Bills payable (PO) A/C -------- Cr.Income A/C Comm. On PO --- Cr.

By Account:Customer A/C --------------- Dr.Bills payable (PO) A/C ---- Cr.Income A/C Comm. on PO – Cr.

By Transfer:HO A/C / other department’s client ---------- Dr.Bills Payable (PO) A/C ------------------------ Cr.Income A/C Comm. On PO ------------------- Cr.

B. Settlement of a PO:PO is to submit by collecting bank through clearinghouse, the issuing bank gives payment.

Entry:Bills Payable A/C -------------- Dr.Balance with B.B -------------- Cr.

C. Cancellation of A PO:Customer must submit a letter of instruction in this and also return the given instrument.Entry:Bills Payable (PO) A/C ---------------------- Dr.Customer A/C --------------------------------- Cr.

D. Commission Charged In Amounts:|Amount in Taka |Rate of Commission in Taka ||Up to 10,000/- |15/= + 2.25 ||10,001/= to 1,00,000 |25/= + 3.75 ||1,00,001/= to 5,00,000/- |40/= + 6.00 ||5,00,001/= To Above |50/= + 7.50 |

E. Issue of Duplicate SDR:An application from the purchaser, notifying loss of SDR, stating date and circumstances of he loss of the instruments is required.The signature of the purchaser, on the application is verified from the signature on the original application form.

Caution noted, in Red ink, as “Caution Noted Receipt Lost” should be marked in the relative register.A confirmatory letter from the beneficiary stating that the beneficiary’s has no claim on it.After completion of the above formalities a duplicate may be issued having cross-references on the duplicate SDR and counterfoil of the original SDR.A note should be made in the register or on the relative counterfoil. The letter received from the purchaser and the payee should be field with the original application-cum voucher is required for issue of Duplicate SDR.

Payment and Collections of Checks:

In the banking sector bill of exchange in one of the important instruments. A Bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay on demand or at a fixed determinable future time a certain sum of money only to or to the order of a certain person or to the bearer of the instrument. But cheque is the most important instrument in the bill exchange. A cheque is a bill of exchange drawn on a specific banker and not expressed to be payable otherwise than on demand. There are two types of cheque in the bank. Such as doing through computer. So the clean cash of the cash department and the supplementary of the computer must be equal.

Essential elements/requisites of a check

It must be in writingIt must contain an order to pay on demand or at fixed or determinable future.The order be an unconditional oneThe drawee must itThe drawee must be certainThe sum payable must be certainThe instrument must contain an order to pay a certain sumThe payee must be certain.

Payments of Open Check

An open cheque may either be bearer or order. Where the cheque payable to order purports to be indorsed by or on behalf of the payee the drawee is discharged by payment in due course. Where cheque is originally expressed to be payable to bearer the drawee is discharged by payment in due course to the bearer thereof; not withstanding any endorsement whether in full or in blank appearing thereon and not withstanding that such endorsement purports to restricts or exclude future negotiation.

Payments of Crossed Check

Where a check is crossed generally the banker on whom it is drawn shall not pay it otherwise than to a banker.

Where a check is crossed specially the banker on whom it is drawn shall not pay it otherwise than to the banker to whom it is crossed or his agent for collection.

Where a check is crossed specially to more than one banker except when crossed to an agent for the purpose of collection the banker on whom it is drawn shall refuse payment thereof.Where the banker on whom a crossed cheque is drawn has paid the sum in due course the banker paying the cheque and the drawer thereof respectively be entitled to the same rights and be placed in the same position in all respects as they would respectively be entitled to and placed in if amount of the check had been paid to and received by the owner thereof.

Collection Check:

There is no legal obligation on a banker to collects checks drawn on other banks for a customer. But as a practice the collection of Checks and bills on behalf of the customer has become one of important function of a bank. A banker collecting a cheque for a customer has no better title than that of his customer a cheque belonging to another person can he held liable for conversion.

A banker who has in faith and without negligence received payment for a customer of a cheque crossed generally or specially to himself shall not in case the title of the cheque proves defective incur any liability to the true owner of the Cheque by reason only of having received such payments. Thus the statutory protection given to the collecting banker can be claimed only for crossed checks.

5.7 Clearing

Clearing is one of the most magical parts of modern banking. Now a days, the banking activities is boundless. Most of the banks are linked with other banks due to inter bank transactions. Clearing is the only process by whish these transactions are settled.

Clearing House is a centralized and computerized system for settling indebtedness between its member banks. Clearing House enables the member banks to offset claims against one another for checks and orders paid into banks other than those upon which they were drawn.

Nature of clearing house:

Clearing House Process:

Every bank has an officer of clearinghouse who is work with Bangladesh Bank clearing house. Actually most of major client deposit their account in different kinds of bank checks. Clearing officer examines all the checks and deposit slip very carefully and then he received the cheque. After that the clearing officer posts all the checks in computer

software which is recognized through Bangladesh Bank (namely NIKASH) computer department. Then clearing officer seal all the checks in advance date after that the officer endorsement all the checks and sign all the checks. All the checks are posted in the computer by branch wise, then officer print all the document and staple all the checks by branch wise, this is called schedule of clearing house. It is a very difficult job to staple all the checks, because some time’s the checks are huge in quantity, it may be 250 to 400, this is very vital job because every cheque must have to be staple very carefully, it means cheque amount and the print sheet amount and cheque branch must have to be same. If the checks staple in wrong direction, the cheque may be return from another bank, that’s why JBL not to be able to credited party account. Then the clearing house officer copying the entire document in two floppy disks as per Bangladesh Bank requirement.

All of the procedure the clearing officer goes to the Bangladesh bank clearing house before 10 am in the morning. There the clearing officer check all the bank’s cheque and the he put all the checks in bank wise, like as this another bank’s delivered there checks in JBL desk. Then the officers of JBL have to calculate all the checks by using calculator machine Staple pin remover, and then he divided all the checks as JBL branch wise.

After all of these procedure the clearing in charge wait for the Bangladesh Bank sheet as the final document. Then he create the vouchers, If the amount is Going favor of JBL the voucher will be as follows:

Debit: Balance With Bangladesh Bank Tk-25, 00,000

(Twenty Five Lac only)

Credit: Clearing Adjustment Account Tk-25, 00,000

(Twenty Five Lac only)

If the total amount is going to Disfavor against the vouchers will be as follows:[Debit: Clearing Adjustment Account Tk-25, 00,000(Twenty Five Lac only)

Credit: Balance with Bangladesh Bank Tk-25, 00,000

(Twenty Five Lac only)

In this condition it means when disfavor realized against Jamuna Bank Limited then Jamuna Bank limited have to balance the difference money with Bangladesh Bank.

Process of Favor:

|Outward |Chq |Amount |Bank’s Name |Inward |Chq |Amount |

| |5 |5,000 |Agrani Bank | |5 |5,000 || |5 |5,000 |Al Baraka Bank Bangladesh Ltd | |5 |5,000 || |5 |5,000 |Al arafah Islami Bank Limited | |5 |5,000 || |5 |5,000 |Arab Bangladesh Bank Limited | |5 |5,000 || |5 |5,000 |Bangladesh Bank | |5 |5,000 || |5 |5,000 |Bangladesh Commerce Bank | |5 |5,000 || |5 |5,000 |Bangladesh Krishi Bank | |5 |5,000 || |5 |5,000 |Bangladesh Shilpo Bank | |5 |5,000 || |5 |5,000 |Bank Asia Limited | | |5,000 || |5 |5,000 |Brac Bank Limited | |5 |5,000 || |5 |5,000 |Citi N.A Bank Limited | |5 |5,000 || |5 |5,000 |Cradit Agricole Indosuez | |5 |5,000 || |5 |5,000 |Dhaka Bank Limited | |5 |5,000 || |5 |5,000 |Dutch Bangla Bank Limited | |5 |5,000 || |5 |5,000 |Eastern Bank Limited | |5 |5,000 || |5 |5,000 |First Security Bank Limited | | |5,000 || |5 |5,000 |Habib Bank Limited | | |5,000 || |5 |5,000 |HSBC Limited | |5 |5,000 || |5 |5,000 |IFIC Bank Limited | |5 |5,000 || |5 |5,000 |Islami Bank Bangladesh Limited | |5 |5,000 || |5 |5,000 |Jamuna Bank Limited | |5 |5,000 || |5 |5,000 |Janata Bank | |5 |5,000 || |5 |5,000 |Marcentile Bank | |5 |5,000 |

| |5 |5,000 |Mutual Trust Bank Limited | |5 |5,000 || |5 |5,000 |National Bank Limited | |5 |5,000 || |5 |5,000 |National Bank of Pkistan | |5 |5,000 || |5 |5,000 |NCCBL | |5 |5,000 || |5 |5,000 |One Bank Limited | |5 |5,000 || |5 |5,000 |Prime Bank Limited | |5 |5,000 || |5 |5,000 |Pubali Bank Limited | |5 |5,000 || |5 |5,000 |RAKUB | |5 |5,000 || |5 |5,000 |Rupali Bank Limited | |5 |5,000 || |5 |5,000 |Samabay Bank Limited | |5 |5,000 || |5 |5,000 |Sahajalal Bank limited | |5 |5,000 || |5 |5,000 |Shamil Bank of Bahrain | |5 |5,000 || |5 |5,000 |SIBL | |5 |5,000 || |5 |5,000 |Sonali Bank | |5 |5,000 || |5 |5,000 |South East Bank Limited | |5 |5,000 || |5 |5,000 |Shilpo Rin Sangstha | | |5,000 || |5 |5,000 |Standard Bank Limited | |5 |5,000 || |5 |5,000 |Standard Chartered | |5 |5,000 || |5 |5,000 |Standard Chartered | |5 |5,000 || |5 |5,000 |State Bank of India | |5 |5,000 || |5 |5,000 |The City Bank Limited | |5 |5,000 || |5 |5,000 |The Premier Bank Limited | |5 |5,000 || |5 |5,000 |The Trust Bank Limited | |5 |5,000 |

| |5 |5,000 |UCBL | |5 |5,000 || |5 |5,000 |Uttara Bank Limited | |5 |5,000 || |5 |5,000 |Worri Bank | |5 |5,000 ||TOTAL |250 |2,50,000 | | | 220 |2,30,000 |

In this condition Jamuna Bank Out word checks was 250 and total amount was TK- 25,00,000 and Jamuna Bank In ward checks was 230 and total amount was TK- 2,30,000. So this could be the favor for Jamuna Bank.

Process of Disfavor:

|Outword |Chq |Amount |Bank’s Name |In word |Chq |Amount || |5 |5,000 |Agrani Bank | |5 |5,000 || |5 |5,000 |Al Baraka Bank Bangladesh Ltd | |5 |5,000 || |5 |5,000 |Al arafah Islami Bank Limited | |5 |5,000 || |5 |5,000 |Arab Bangladesh Bank Limited | |5 |5,000 || |5 |5,000 |Bangladesh Bank | |5 |5,000 || |5 |5,000 |Bangladesh Commerce Bank | |5 |5,000 || | |5,000 |Bangladesh Krishi Bank | |5 |5,000 || |5 |5,000 |Bangladesh Shilpo Bank | |5 |5,000 || |5 |5,000 |Bank Asia Limited | |5 |5,000 || |5 |5,000 |Brac Bank Limited | |5 |5,000 || |5 |5,000 |Citi Bank N.A Limited | |5 |5,000 || |5 |5,000 |Cradit Agricole Indosuez | |5 |5,000 || |5 |5,000 |Dhaka Bank Limited | |5 |5,000 || |5 |5,000 |Dutch Bangla Bank Limited | |5 |5,000 |

| |5 |5,000 |Eastern Bank Limited | |5 |5,000 || |5 |5,000 |First Security Bank Limited | |5 |5,000 || |5 |5,000 |Habib Bank Limited | |5 |5,000 || |5 |5,000 |HSBC Limited | |5 |5,000 || |5 |5,000 |IFIC Bank Limited | |5 |5,000 || |5 |5,000 |Islami Bank Bangladesh Limited | |5 |5,000 || | |5,000 |Jamuna Bank Limited | |5 |5,000 || |5 |5,000 |Janata Bank | |5 |5,000 || |5 |5,000 |Marcentile Bank | |5 |5,000 || |5 |5,000 |Mutual Trust Bank Limited | |5 |5,000 || |5 |5,000 |National Bank Limited | |5 |5,000 || | |5,000 |National Bank of Pakistan | |5 |5,000 || |5 |5,000 |NCC Bank Limited | |5 |5,000 || |5 |5,000 |One Bank Limited | |5 |5,000 || |5 |5,000 |Prime Bank Limited | |5 |5,000 || |5 |5,000 |Pubali Bank Limited | |5 |5,000 || |5 |5,000 |RAKUB | |5 |5,000 || |5 |5,000 |Rupali Bank Limited | |5 |5,000 || |5 |5,000 |Samabay Bank Limited | |5 |5,000 || | |5,000 |Sahajalal Bank limited | |5 |5,000 || |5 |5,000 |Shamil Bank of Bahrain | |5 |5,000 || |5 |5,000 |SIBL | |5 |5,000 || |5 |5,000 |Sonali Bank | |5 |5,000 |

| |5 |5,000 |South East Bank Limited | |5 |5,000 ||***** |5 |5,000 |Shilpo Rin Sangstha | |5 |5,000 || |5 |5,000 |Standard Bank Limited | |5 |5,000 || | |5,000 |Standard Chartered Grindlays | |5 |5,000 || |5 |5,000 |Standard Chartered | |5 |5,000 || |5 |5,000 |State Bank of India | |5 |5,000 || |5 |5,000 |The City Bank Limited | |5 |5,000 || |5 |5,000 |The Premier Bank Limited | |5 |5,000 || |5 |5,000 |The Trust Bank Limited | |5 |5,000 || |5 |5,000 |UCBL | |5 |5,000 || |5 |5,000 |Uttara Bank Limited | |5 |5,000 || |5 |5,000 |Worri Bank | |5 |5,000 ||TOTAL |225 |2,25,000 | | | 250 |25,00,000 |

In this situation Jamuna Bank’s out ward checks was 250 and amount was Tk-2, 50,000. And Jamuna Bank In ward checks was 225 and total amount was TK- 2,25,000. So this could be the disfavor for Jamuna Bank. After all of these processing the officer creates some vouchers of their branches and finally he creates the IBDA (Inter Branch Debit Advice). The vouchers are as given below:

Debit: JBL General Ledger Mohakhali Branch *****

Tk- *****Debit: JBL General Ledger Dhanmondi Branch *****

Tk *****

Debit: JBL General Ledger Nayabazar Branch *****

Tk- *****Debit: JBL General Ledger Shantinagar Branch *****TK. *****

After all of these processing the clearing officer go back to his branch and registered another branches checks with the IBDA in the register book. In time to time the other branches Clark come to the principal branch and collect their checks.

Return Clearing House:

Return clearinghouse is called the counter part of first clearinghouse. After first clearinghouse some of the in ward checks may be out ward and some of the out word checks may be in ward. This type of exchange is called return cheque.

Reason for the Return Checks:

MemorandumJamuna Bank LimitedBranch Date: ________Cheque(s) No……………… for Taka …………………Is/are returned un-paid for reason(s) no …………………………………… Not arrange forEffects not cleared may be present again.Exceeds arrangement.Full neither covers nor received.Payment stopped by drawer.--------------------- Payee’s endorsement irregular requires bank’s confirmation.--------------------- Payees endorsement irregular, Illegible, / required.Drawer signature differs/ required. Alteration in Date/ figures/words require drawer’s full signature.Cheque is post dated/ out of date / mutilated.Amount in word and figure differs.Crossed cheque must be presented through a Bank.Clearing stamps required.Addition to bank discharge should be authenticated.Cheque crossed “Account Payee only”.

Loans and Advances

Commercial banks collects money from one group of people as deposits and distribute them within the other group of customers as loans and advances and it is the most important function of commercial bank. By this way the bank earns profit.

As a private commercial Bank JBL has some inherent commitment to the society. It provides loans and advances to the customer, which can gear up the economy actively. Commercial and Industrial loans to business concerns to finance their day-to-day activities, to finance their longer term needs and for other business purposes. The maturity of these range from 1 (One) year to 10 (Ten) years or longer. JBL has been extending credit facilities to the potential, productive and sector as per Bangladesh Bank

instructions. Good loans are profit-earning asset to the Bank. A big portion of opening income is generated from sound lending.

Bank cannot lend its fund fully. As per Banking Company Act 1991 every banking company has to maintain a specified minimum (presently 16%) of the total of its demand and time liabilities in form of cash and approved securities with Bangladesh Bank. So, Jamuna Bank Limited has to carefully invest in loan/advances to get maximum performance from the investment. At present the performance of loans/advance of Jamuna Bank Limited (Foreign Exchange Branch) are as follows:

Classification of Loans and Advances:

The loans and advances are divided into the following segments:

Loans and Advance

|Cash Credit |Cash Credit |Secured |Loans |Bank ||(Hypo) |(Pledge) |Overdraft | |Guarantee |

Cash Credit:Cash credit and continuing credit are the form of credit schemes that are short-terms renewable loans with a special credit time. The interest rate is calculated on a daily limit basis. As credit activities, the cash credit facility is given on security like the collateral.Check the accounts to find out the money are needed or not.Stock (primary or preliminary security)Stock as a form of collateralLand as a form of collateralThere are two types of cash credit. They are as follows:Cash credit (Hypothecation)Cash credit (Pledge)

1. Cash credit (Hypothecation):

The short-term advance is given on the basis of hypothecation of good basically these loans are given to improve the financial condition of the business. The letter of hypothecation is created against the goods in favor of the bank and the borrower binds himself to give possession is handed over the charge is converted into pledge. This type of facility is generally given to the reputed borrowers of undoubted integrity.

a. Validity, Rate of Interest, Mode of Repayment of Cash Credit (Hypo):

As the cash credit (Hypo) is a short-loan the validation period also is within a year. However this limit can also be renewable. The rate of interest is usually from 13% to

15% per annum, varying from credit to credit, with quarterly rest subject to change time to time. From daily sales proceeds once in every 45 days and finally within the validity.

b. Security against Cash Credit (Hypo) Allocation:

Primary:Hypothecation of stocks at borrower shop/store both existing and future duty insured under banksCollateral:Registered mortgaged land, with the value assessed by the bank.Personal guarantee:Personal guarantee of owners of the landed property offered as collateral security.Charge documents:Deposit Promissory Note, Letter of Agreement, Letter of Disbursement, Letter of Hypothecation, Letter of Continuity, Letter of Guarantee, Memorandum of Deposits of the title deed.

Cash credit (Pledge) :

Under this agreement, cash credit is sanctioned against pledge of goods or raw materials. By singing the letter of pledge, the borrower surrenders the physical possession of the goods under the banks effective control as security for bank dues. The ownership of goods remains with the borrower. The pledge creates an implied LIEN in favor of the bank on the underlying merchandise. In the event of the failure but the borrower to honor his/her commitment, the bank can sell the goods for the purpose of recovering the credit. No collateral security is normally asked for grant of such credits.

a. Security against cash credit (Pledge) allocation:

The security is as same as the hypothecation except no hypothecation of goods is necessary and list of stock is very much necessary with its value added to it.

In case of charge documents CC (Pledge) needs Letter of Pledge instead of Letter of Hypothecation. This kind of loan is not practiced frequently as it has much risk than others. Because here the goods that are taken as security is kept under banks control. So bank has a liability here.

C. Secured Overdraft (SOD):A loan facility on a customer with a current account at the bank permitting him/her to overdrawn up to a certain agreed limit for an agreed period. The terms of loans are normally that it is repayable on demand or at the expiration date of the agreement. This credit facility thus allows a customer to overdraw to a certain agreed limit for a certain period.There are two types of secured overdraft. They are as follows:Secured Overdraft (Bid Bond).Secured Overdraft SOD (G)

1. Secured Overdraft (Bid Bond)

Secured overdraft is given against the security of financial documents. These documents include FDR, DPS, and Bonds etc. This overdraft applicable for any individual or trading concerns. There is no necessity of collateral in SOD (BB). There are two securities in SOD (BB).

Primary: Letter of LIEN and authority for advance against FDR/Bonds.Charge documents: Promissory Note, Letter of Arrangement, Letter of disbursement, Letter of Lien against security, Letter of continuity, Letter of Guarantee and Merchandise of Deposit of the title deed.

2. Secured Overdraft (General):These sort of secured overdrafts are mainly given against the work orders. Disbursement is made only after assertion of genuineness of the work order and after completion of all formalities. Drawing shall be allowed only against the valid supply. Registered irrevocable general power of attorney to be accepted by the borrower in favor.Of the bank for direct collection of cheque and bills to be issued by the work-awarding agency against the supply of work order. The department officially issued a letter of acceptance to issue all checks bills etc. against the concerned supply/work order in favor of National Bank Limited.

Mode of Payment SOD (G):A fixed amount is deducted from each running deal towards reduction of limit proportionately and finally is adjusted within the validity.

Security against SOD (G):1. Primary: LIEN of the work order or supply order.2. Collateral: Registered mortgage of land or immovable property. The bank can also give loan against various types of accounts like MSS, FDR. Etc.Charge documents: Promissory Note, Letter of Arrangement, Letter of disbursement, Letter of Lien against the security, Letter of Continuity, Letter of Guarantee and Memorandum of Deposit of the title deed.

D. Term Loan:Jamuna Bank limited is advancing both short and medium term credit to the commercial sector on the basis of their capital structure, constitution and liquidity consideration. Interest rate is 12% for SSI and 13% for MSI. It is given against land and building along with machinery, personal guarantee of Directors and hypothecation of raw materials.

Credit Administration and Monitoring:

Credit Administration is process or managerial tool which is followed by the bank in case of sanctioning a loan amount to its customers for appraising the project feasibility, future returns, repaying capacity of the customer and some other financial aspect of the

proposed project. It is an important aspect of sanctioning a loan because the banks earning largely depend upon this.

Credit Administration:

The principal elements of Bank Credit administration are as follows:

Credit File Maintenance:

Credit file should contain a history of the customer to

← Help credit officer track any problem ← Assist a newly assigned credit officer in understanding the customer ← Make the lending process transparent.

Facility Evidence Maintenance

Complete credit files help prevent loan loss resulting from imperfect security documentation. This file contains:

← Credit application ← Credit approval notes/analysis ← Information about borrower, credit purpose, repayment sources ← Collateral security with guarantees ← Quality of the borrower’s management. ← Economic and competitive factors. ← Borrower’s ability to repay. ← Confidential report given by other banks to the borrower. ← Copy of sanction letter and loan agreement. ← Checklist of all legal documents. ← If possible 6 months updated information of all related facilities. ← Financial statements and analysis. ← Credit investigation results. ← CIB and other Bank reports and notes with borrower. ← Credit file shall be maintained in a secured location and access restricted to authorized personal. ← Facility Evidence Maintenance (Charge Documents).

Credit Monitoring and Review:

The Branch Manager to monitor the overall profile and risk aspect of the credit portfolio in accordance with the criteria set down in the Bank credit policy. The responsibility of the Manager to ensure at all times that the credit portfolio meets the standard set forth by the Bank. Periodic Review and follow-up should ensure as:Turnover, repayments etc of the borrowing accounts during the period have been satisfactory.

Borrower’s business is being satisfactory.Earning of the account is cost effective.

Classifying of Loans and Advances:

The classifications of credit are risk of the transaction repayment record, conduct of the account, financial capacity and record of the borrower, supporting information and documentation and degree of conformity to bank policies. The responsibility for review and classification of credit starts at Branch level with the Branch Manager and second officer and Credit officer and finally the Head office Credit Division. The following features are present should be classified.

Past due interest or other receivable payment for 6 months or more as prescribed by Bangladesh bank.Past due principal repayment for 6 months as prescribed by Bangladesh Bank.Signification charge in the environment lending to a weakening of tile credit.Diversion of funds to uses other what the facility was approved for.Incorrect information supplied by the borrower.Bankruptcy of the borrower.Unfavorable Bank/Trade reports of the borrower.Any information, which forebodes a future problem or affects borrowers credit worthiness.Weakening in Bank’s position as a credit due to any reason whatsoever.Significant decrease in the value of collateral securities.5.9.3 Rating of the classification:This classification contains accounts where irregularities have occurred but where such irregularities are considered to be either technicalities or temporary in nature. These accounts will require close supervision by Management to ensure that the situation does not deteriorate further.

Provision @15% of the base is required for debt in this classification is the outstanding balance less interest kept in interest suspense accounts less the value of eligible securities. Classification may be as follows:

Doubtful Debts:

This classification contains debts where doubt exists over the full recoverability of the principal interest. Although a less in anticipated it is not possible at this state to quantify the exact extent of that loss. Management is required to purpose such debts with the utmost resolution to either avoid or minimize the Bank’s losses. Provision @ 50% of the base is required for debts in this classification.

Bad Debts:

These facilities as considered to be uncollectible or worthless even after all security has been exhausted and shall be provided for @ 100% of the base. It is the responsibility of

the branch Manager, Second Officer, Credit Officer to timely identify and to try take necessary steps to avoid classification of any facility. Once loan is classified, the Branch Manager must work with the credit officer to develop an action plan for restoring the facility to facility to acceptable credit standards and to lessen the chances of a worsening condition lending to a loss.

Principles of Sound Lending:In order to secure a balance between liquidity, profitability and security, JBL follows the under noted principles of sound lending:

Liquidity: It means that while lending adequate care has to be taken so that the liquidity is not compromised. That’s why JBL chooses such securities which posses’ sufficient liquidity.

Safety: JBL exercises lending function only when it’s safe and that the rise factor is adequately mitigated and covered. Safety depends on the security offered by the borrower and the he repaying capacity and willingness of the debtor to repay loan with interest.Diversity: To minimize risk. JBL invests its funds in different sectors all over the country.

Yield: JBL is a private sector commercial bank so it considers sufficient yield as well as return on financing project:Productivity Purpose: Lending operations must be on productive purpose.

National Interest: JBL considers national aspect of any project while financing in the project. It takes utmost care so that the project cannot be detrimental to the society as well as to the nation.

Selection of a Borrower:

Selection of a borrower is a vital step for lending. Due to the asymmetric information and moral hazards, banks have to suffer a lot due to the classified loans and advances, which weakens the financial soundness of the bank. If the selection of borrower is correct, as borrower’s character, capital and capacity or of reliability, resourceful and , responsibility, the bank can easily get return from the lending. Moreover, monitoring made easier for the banker. Jamuna Bank follows the given procedures:

A. Studying the past track recordAfter getting an application for any loan, the credit officer studies the pas record of the applicant. The study includes the following:Account balances and past transactionsCredit report from other banksInformation of the industry by studying market feasibilityFinancial statement of the concern

B. Report from Credit Information Bureau of Bangladesh bank (CIB):

This report is provided by CIB of Bangladesh Bank, which contains all types of information related to the borrower. This report is needed for only when the amount of loan is more than Tk.10 Lac.C. Borrower AnalysisBorrower Analysis is done from the angle of 3C (Character, Capital, Capacity) or 3R(Reliability, Resourcefulness, Responsibility). the human skill, conceptual skill and operational skill is qualitatively analyzed.

D. Business AnalysisBusiness Analysis is done from two angles, which are terms and conditions and collateral securities.

Credit Evaluation Principles:

According to the Credit Evaluation Principles must need for every level of approval. The lending risk analysis tool containing analysis of both the business and security risk provides overall ratings of risk in a particular loan under the following process:Assess risk of failure to repayDecide whether to accept or reject a loan proposalSet price and termsobtain sanctioning documents and ensure repayment or recoveryMonitor performance and ensure repayment or recovery

Lending Risk Analysis (LRA):The most pertinent and prime part of the process is assessment of risk is the L.R.A. In this part work is done through to analyze the business risk and security risk in a matrix derived out of six segments of the business. The types of risk are as follows

Supply riskSales riskPerformance riskResilience riskManagement competence riskManagement Integrity riskSecurity control riskSecurity cover risk

The lending risk analysis provides 4 (Four) kinds of lending risk decision marks. They are as follows:

1. Good 2. Acceptable 3.Marginal 4.Poor

Bank shall not approve any lending having an overall risk as marginal and poor.Credit Risk Evaluation Assessment:It is important that to evaluate the risk of any credit. Evaluation or assessment criteria formed by the bank credit manual and in its Head Office Circulars all proposals of credit

facilities must be supported by a responsibility of the proposing office to ensure that all necessary proposal documentation are collected before the facility request is sent to the sanctioning office.

Lending Authority:All approval of credit facilities must be conveyed under dual signature. Ideally both the signatories must have the required lending authority .Two lending officer of the required lending authority are not available, one of the signatory must have the lending authority. The Jamuna Bank Limited Lending authority or authorized person or officers re as follows:1. Managing Director 2. Deputy Managing Director 3. Executive Vice President4. Senior Vice President 5. Senior Assistant Vice President 6. Vice President7. Assistant Vice President

Responsibilities for Credit Policy, Procedure, Approval and Review to the Various Levels of Groups:A. Board of Directors (BOD):The Directors have the responsibilities regarding the credit as follows:Policies, Procedures are established for approving and reviewing credits.Delegating authority to approve and reviewApproving credit fir which authority is not delegatedApprove of extension of credit that is contrary to Banks written credit policies.B. Executive Committee:Responsibilities of the executive committee for approving the loan are as follows:Approving credit facilities delegated by the BoardSupervise and implementation of the Board decisionsReviewing the each extension of credit approval by the Head Office credit committee or Managing DirectorKeeping the Board of Directors information

C. Policy Committee:Establish the lending policy.Making policies and procedures for reviewing and analyzing the extensions of credit and loan portfolios.

D. Head Office Credit Committee:The Head Office Credit Committee has the following rights and responsibility regarding sanctioning the loan:Review, analyze and approve of credit in accordance with the authority, which is established by the BOD.Evaluate the quality of lending staff in the Bank and to take proper steps to improve.To proceeds the credit proposal to the executive committee or BOD, when this committee cannot delegate.Make ensure that the credit application (Forms, Analysis, Statements and other papers have been obtained in accordance to order).

Confirm that the procedure is consistent with loan policy and also maintain the Bangladesh Bank guidelines.

E. Branch Credit Committee:This Committee is to be headed by the Branch Manager and other member to be selected by the manager as well as the consultation with Head Office. Responsibilities of this Committee are as follows:

First responsibility to the Manager for each lending.Know their borrower fully.Comply with the applicable instructions, manuals, circulars, and other rules of t the Bank as well as Bangladesh bank.Credit proposals submitted to Head Office, Credit Division for establishing the policies and procedures.Review and analyze the history of antecedent of the management personnel, their financial condition with comparative statement, latest balance Sheet, Income Statement, Operating Result and Supplementary facts and Personal Net Worth Statement of the proprietor, partners and also the directors.Comply with necessary and customary internal and external control and safeguard.Justification/Consideration for Tile facility.Take review and monitoring action of the credit.Continuously reviewed the all credit facilities by the branch manager with the other members of the committee.Continuously verification for reviews the project and find out the facts and make a report, which to submit to the Head Office

Documentation for Lending:General Documentation required for different kinds of advances are as follows:

A. Loan:D.P NoteLetter of Partnership (incase of partnership concerns or resolution of the BOD of the company in case of limited companies.)Letter of ContinuityLetter of lien (in case of advance against FDR)Letter of lien and ownership/ share transfer form (in case of advance against shares.)Letter of lien and transfer authority (in case of advance against PSP, BSP)Legal documents for mortgage of property as draft by legal adviser.

B. Cash Credit:D.P NoteLetter of partnership (in case of partnership firm) or resolution of BOD in case of Limited Company.Letter of arrangementLetter of continuityLetter of pledge/ agreement of pledge in case of cash credit pledge

Letter of hypothecation in case of cash credit (hypo)Legal documents for mortgage of property as draft by legal adviser

C. Bills Purchased:

D.P NoteLetter of partnership (in case of partnership firm) or resolution of BOD in case of Limited Company.Letter of arrangementLetter of hypothecation of bill.Letter of acceptance, where it calls for acceptance by drawer.All the required documents should be obtained before any advance is disbursed. Authorized officer of the branch ensure and then approve all the documents before exercising such authority that all the documentation has been completed.

Consumer Credit Scheme (CCS):In case of Consumer Credit Scheme the following papers and documents are necessary to issuing the loan:The applicant must be any of the following group personnel:Govt. EmployeeCorporate Service HolderBankers, Company or Service in any financial institutionDefense PersonsTeacher of University or College or SchoolPrivate Service HolderAny Professional (Doctor, Lawyers. Engineer, Journalist etc)The Customer can enjoy the following consumer goods under the Consumer Credit Scheme:Computer, Motor Car, Television, Home Theatre, Air Conditioner, Washing Machine, Home Furniture, Telephone and Other Home Appliances.

Accounting Treatment for Credits and Loans: For Consumer Credit SchemeLoan A/C--------------------------------------Dr.Party A/C------------------------------------- Dr.25% Down Payment (Down Payment is always changeable)2% Fund Risk1% Service ChargeThe all above charges is to be debited to the party A/C.Bills Payable A/C--------------------------- Cr.Income A/c 2% fund risk------------------ Cr.Income A/c 1% service charge------------Cr.Stamp Charge------------------------------- Cr.

Installment Repayment for Every MonthParty A/C-----------------------------------Dr.

(Installment Size)Loan A/C-----------------------------------Cr.

Other Credits or Loans (SOD, CC, House Building etc.)

For First Disbursement:Loan A/C---------------------------------------Dr.Party A/C---------------------------------------Dr.Bills payable A/C-----------------------------Cr.(Down Payment, 2% risk fund, 1% service charge, stamp charge alls are included)

Installment Repayment for Every Month:Party A/C-----------------------------------Dr.(Installment Size)Loan A/C-----------------------------------Cr.

Bills PurchaseL Party A/C-----------------------------------Dr.(Installment Size)Loan A/C-----------------------------------Cr.

When in Foreign Currency Transaction (FC)FC PGL or S/D----------------------------Dr.Loans and Interest A/C-------------------Cr.

When loans settle by interestExchange Gain-----------------------------Cr.(When loans settle by exchange rate)

5.10 Freign Trade and foreign Exchange:

Foreign trade refers to trade between the residents of two different countries. Each country functions as a sovereign state with its set of regulations and currency.

Foreign Exchange means the currency of other country. Firms and organization requires foreign exchange to purchase goods and services from abroad or for purposes of investment or speculation. Bank is the only concern, which have the legal right to handle foreign trade and foreign exchange. Foreign Exchange is a process, which is, converted one national currency into another and transferred from one country to the other countries. Foreign Exchange is the rate of exchange in both countries currency. Foreign Exchange is that section of economic science, which deals with the means and method by which right to wealth in one countries currency are converted into rights to wealth in terms of another country’s currency. It involved the investigation of the method by which the currency of one country is exchanged for that of another, the causes which rented such exchange necessary the forms which exchange may take and the ratio or equivalent values at which such exchanges are effected.

The difference in the national of the exporter and importer presents certain peculiar problems in the conduct of International trade and settlement of the transaction arising here form, such important problems are:

← Different countries have different monetary units. ← Restrictions imposed by countries on import and export of goods ← Restrictions imposed by nations on payment from and into their countries ← Difference in legal practice in different countries ← Foreign Exchange means foreign currency

Functions of Foreign Exchange

The Bank acts as a media for the system of foreign exchange policy. For this reason, the employee who is related of the bank to foreign exchange, especially foreign business should have the knowledge of these following functions:Rate of ExchangeHow the rate of exchange worksForward and spot rateMethods of quoting exchange ratePremium and discount rateRisk of rate of exchangeCauses of fluctuations of rate of exchangeExchange controlConvertibilityExchange positionIntervention on moneyForeign exchange transactionForeign Exchange tradingExport and import letter of creditNon-commercial letter of tradeFinancing of foreign tradeNature and function of foreign exchange marketRules and regulation used in foreign tradeExchange arithmetic

Letter of Credit (L/C):

Meaning

A letter of credit is an instrument used by a bank to its customer placing at the letters disposal such agreed sums in foreign currency is stipulated. A letter of credit is a letter from one banker to another authorizing the payment of a specified sum to the person named in the letter on certain specified conditions. Commercially, letters of credit are widely used in the international import and export trade as means of payment. In an export contract, the exporter may require the foreign importer to open a letter of credit at

the importer’s local bank for the amount of the goods. This will state that it is to be negotiable at a bank in the exporter’s country in favor of the exporter; often the exporter (who is called the beneficiary of the credit) will give the name of the negotiating bank.

Forms of Letter of Credit

A letter of credit may be of two forms. These are as follows:

Revocable Letter of Credit:

If any letter of credit can be amendment or change of any clause or cancelled by consent of the exporter and importer is known as revocable letter of credit. A revocable letter of credit can be amended or canceled by the issuing bank at time without prior notice to the beneficiary.

Irrevocable Letter of Credit:

If any letter of credit can not be changed or amended without the consent of the importer and exporter is known as irrevocable letter of credit. Irrevocable letter of credit constitutes a firm undertaking a high degree of assurance that he will pay to his goods or services provide he complies with terms of the credit.

Types of Letter of Credit:

Letter of credit is classified into various types according to the method of settlement employed. All credits must clearly indicate in major categories:Sight payment credit (b) Deferred payment credit (c) Negotiating credit (d) Revolving credit (e)Transferable credit

Parties to a Letter of Credit:

A letter of credit is issued by a bank at the request of an importer in favor of an exporter from whom he has contracted to purchase some commodity or commodities. The importer the exporter and the issuing bank that is involved in various capacities and at stages to play an important role in the total operation of the credit.The Opening BankThe Advising BankThe buyer and the BeneficiaryThe Paying BankThe Negotiating BankThe Confirming Bank

Components of a Letter of Credit:

Bank normally issued letter of credit on firms, which clearly indicates the banks name and extent of the banks obligations under the credit. The contents of the L/C of different banks may be different. In general L/C contains the following information:

Name of the Buyer: Who is also known as the accounted since it is for his A/C that the credit has been opened.

Name of the Seller: Who is also known as the beneficiary of the credit.

Moment of the Credit: Who should be the value of the merchandise plus any shipping charge intent to be paid the credit.

Trade Terms: Such as F.O.B and C.I.F

Tenor: Tenor of the draft, which is normally dependent upon the requirements of the buyer.

Expiration Date: Which is specified the latest date documents may be presented. In this manner or by including additionally a latest shipping date, the buyer may exercise control over the time of shipment.

Documents Required: Which will normally include commercial invoice, consular or customer invoice, insurance policies as certificates, if the source is to be effected by the beneficiary and original bills of loading.

General Description of the Merchandise: Which briefly and in a general manner duly describes the merchandise covered by the letter of credit.

Procedures of Opening Letter of Credit:

The importer after receiving the performed invoice from the exporter, by applying for the issue of a documentary credit, the importer request to his bank to make a promise of payment to the supplier. Obviously, the bank will only agree to this request if it can rely on reimbursement by the applicant. As a rule accepted as the sole security for the credit particularly if they are not the shorts of commodity that can be traded on an organized market. The applicant must therefore have adequate funds in the bank A/C or a credit line sufficient to cover the required amount.

Banks deals in documents and not in goods. The client must have a current account with the bank. Once the bank has issued the credit its obligation to pay its conditional on the presentation of the stipulated documents within the prescribed time limit. The applicant cannot prevent a bank from honoring the documents on the grounds that the beneficiary has not delivered the goods on redder reissues as contracted.The importer submits the following documents before opening of the L/C:Tax Identification Number (TIN)Valid Trade License

Import Registration Certificate

The Bank will supply the following documents before opening of the L/C:LCA formApplication and Agreement FormIMP FormNecessary charge documents for documentationThe above documents/papers must be duly signed and filled in by the party according to the instruction of the banker.

Documentary Letter of Credit (Export/Import Documentation):

Documentary Letter of Credit is such kinds of commercial letter which a bank issue on behalf of foreign seller (exporter) according to the direction of the purchasers (importers). The documents shown under are known as export document from the importer’s side. These are as follows:Bill of exchangeBill f ladingAirway bill/ railway receiptCommercial invoiceInsurance policyCertificate of originPacking listBill of entryThe exporter submits the following documents/papers to the negotiating bank:Bill of Exchange/draftBill of ladingAirway bill/ railway receiptCommercial invoiceInsurance policyCertificate of originPacking listWeightiest and measurement listOthers etc.

Payments against Documents (PAD)

Banks deals in documents and in goods. If the shipping documents the L/C is in order than the L/C opening bank must have to payment to the foreign bank within 3 (three) days or 72 hours according as Uniform Customs and Practice for Documentary Credit (UCPDC) 500 of revision of ICC. If the shipping documents have any discrepancy, then the L/C opening bank informed to the negotiating bank within 7 (seven) days. Otherwise, the shipping documents have not discrepancy. If the importer has not adequate funds in the banks A/C then the bank payment to the foreign bank against the shipping documents.

Calculation:

Draft Amount Tk…………….Less: Margin Tk……………. ----------------------Net Amount Tk……………..Add: Interest Tk…………….. ________________Total PAD Amount TK……………..L/C operation of Jamuna Bank Limited

Now a days Jamuna Bank Limited is one of the leading and most successful banking enterprises in the country. It play a great role in the economy of the country. By export-import business the bank play a great role to the economy of Bangladesh.

Foreign trade plays a vital role in the economic advancement process of a nation. So the trend of country’s foreign trade, i.e., import and export is of a great concern to the government of a country. Fluctuation in the parameters of foreign trade immediately brings about some impact on the total economy. As such the nature, trend and the volume of foreign trade are required to keep peace with the national economic needs and objectives. There may be some areas where emphasis is to be given while there may be others which deserve restrictions or discouragement. Moreover the items of import and export value and volume of the same, the corresponding time period, source of funds for payment and receipt, all these factors are to be considered very carefully for making necessary adjustment to match with the national economic policies as well as achieve balanced economic growth through the inter policy and inter co-ordination.

Before opening L/C in favor of the exporter the entitlement of the importer to be registered with Bangladesh Bank. For this purpose the importer is to apply through L/C authorization from LCA form. This is a set of quintuplicate and the authorized dealer will issue LCA form to the individual importer at their request. After filled up and signed by the appropriate column of the LCA form, the importer will submit it to authorized dealer who interns forward the same to Bangladesh Bank for registration where fund is purchased from Bangladesh Bank. After registration Bangladesh Bank forward the 1st and 2nd copy of LCA form to the authorized dealer, 3rd and 4th copy to CCI&E and keep the 5th copy as their office copy. 1st copy of LCA is known as exchange control copy against which authorized dealer can open L/C at the request of the importer. 2nd copy is known as custom purpose copy which will be handed over to the importer who will clear the goods from the port of its arrival through this custom purpose copy of LCA along with other shipping documents. The importer will come to Mohakhali Branch of Jamuna Bank Limited with request to open L/C along with the following documents/papers:

L/C application and agreement for with adhesive stamp of Tk.50.Indent/performed invioce/contract-3 copies.Insurance cover note with premium paid receipt.IMP form one set duly signed by the importer.Any other documents if necessary.

Authorize dealer will scrutinize the documents and open the L/C in favor of the exporter by converting the Bangladeshi Taka. Into foreign currency at the existing B>C selling rate of exchange. Care must be taken so that the limit of Bangladeshi Taka is not exceeding any way. The foreign currency value of the L/C must correspond the equivalent amount of Bangladeshi Taka if LCA registered with Bangladesh Bank.

The authorized officer of the authorize dealer will check the L/C carefully and signed the same jointly and forward the 1st and 2nd copy to their foreign correspondent situated at the nearest place of the exporter. This Bank is known as Advising Bank. On receipt of the L/C the Advising Bank after verification of the duplicate copy at their end.

After getting the L/C the exporter prepares the goods and ship the same as per instructions of the L/C and obtain a Bill of Lading from the shipping authority. The exporter will prepare Bill of Exchange, Invoice and other documents as specified in the L/C and submits the same along with the original copy of L/C to his Bank within the time mentioned in the L/C. The Bank with whom the exporters submits the documents is known as Negotiating Bank at this negotiates the document i.e., makes payment to the exporter.

The negotiating Bank will scrutinize the documents with terms and conditions of the L/C very carefully. If every thing is in order wise completed the Bank will make payment of the amount of L/C to exporter in their local currency by debiting to their own account. Subsequently the negotiating Bank will claim the L/C with Head Office of L/C opening bank maintained foreign currency amount.

This is known as Reimbursing Bank. Reimbursing Bank will make payment to the negotiating bank by debit to L/C opening Bank’s Head Office A/C. Simultaneously the negotiating bank will forwarded all the documents submitted by the exporter to the L/C opening bank as per instruction of the L/C. the date of forwarding letter of negotiating bank should be date of negotiation of documents.

On receipt of the shipping documents from the negotiating bank, the negotiating bank, L/C opening bank will carefully scrutinize the documents with terms and conditions of the relative L/C. If there is no discrepancy, the documents will be lodged. Lodgment of documents means the entry of the particulars of the documents in registers and preparation of vouchers by converting the foreign currency amount into Bangladeshi Taka as the exchange rate prevailing on that date. This amount due to the importer. The importer will asked to the delivery documents by making payment of the bill amount excluding the margin deposited at the time of opening L/C. Payment of bill amount and to take delivery of documents by the importers is known as Retirement of Imports Bill.

Flow Chart of Import MechanismImport

Export

Lodgment of Import Bill:

The documentary letter of credit constitutes of the important methods of financing trade. Because of the placement of the phenomenal growth in world trade and commodity wise diversification of trade its importance had significantly increased.

On receipt of the documents from the negotiating bank, the L/C opening ban will make entry the particulars of the documents into Inward Foreign Bill Register and prepare the voucher by converting the foreign currency into Bangladeshi Taka. This stage is known as lodgment of import bills. The full sets of documents, which are submitted by the export to his bank as per terms and conditions of the L/C are known as shipping documents. The L/C opening bank may receive these documents from his foreign correspondent bank in two ways:Documents on collections basisNegotiated documents

Procedure of Lodgment

After scrutinizing, if it is found in order the officer concerned will brand a rubber stamp “Checked and Found Correct” which will be followed by his initial. Amount in foreign currency to be converted into Bangladeshi Taka with the exchange rate prevailing on the date of lodgment. Particulars of documents to be entered in the “Inward Foreign Bill Register.”

Preparation of Voucher: The following vouchers are to be prepared:

Lodgment Voucher:Dr. PAD/Draft amount +Negotiation Commission (if any)Cr. Reimbursing bank A/C

Liability VoucherLiability Voucher to be reserved which was originated at the time of opening L/CDr. Bankers Liability on L/C (Cash)Cr. Customers Liability on L/C (Cash)

Documents of Remittance:On receipt of the copy of the lodgment voucher from the bank, the importer will deposit the required amount and take delivery of the shipping documents. This stage is known as Remittance of import bills. Before retirement of import bills, the L/C opening bank will calculate the charge, which are to be realized from the importer. On the last working day of the month returns of bills of lodged during the month through IMP from to be sent Foreign Exchange Department, Bangladesh Bank.

Accounting Treatment for Remittance Vouchers:Dr. Opener A/CDr. Sundry Deposit A/C (Margin on L/C)

Cr. PAD/Draft Amount (Any other charge vouchers if necessary.)

Scrutiny of the Documents:

The L/C opening bank being received the documents from the negotiating bank will scrutinize the documents with the respective L/C terms and conditions.Forwarding schedule of negotiating bankWhether there is any transactionWhether these instructions can be complied withWhether the negotiating commission realized

A. Bill f Exchange (Draft):Whether it is drawn in orderWhether the amount draft corresponds with the L/C amountDraft amount should be equal or less than the L/C amountWhether the date of the draft within the date as per LC etc.

B. Bill of Lading:Whether the bill is cleanWhether the date of B/L is within the date of shipment as per L/CWhether the freight is prepared or not as per L/C termsWhether the part of shipment and part of destination are similar as per L/CWhether the full sets of B/L dispatched by negotiating banWhether the title of B/L belongs to L/C opening bankC. Commercial Invoice:Whether the full particulars of goods have been incorporatedWhether the amount of invoice corresponds with the amount of bill of exchange as per the L/C termsWhether IRC No. LCA No. have been incorporatedWhether the beneficiary signs it

D. Other Documents:Whether all other documents are prepared as per L/C.

After scrutinizing, the official concerned may found the following:Documents are in order i.e., no discrepancyMinor discrepancy- Acceptable to the importerMajor discrepancy – May be acceptable to the regulations or those are irrevocable.

Certification of Invoice:

Invoice to be certified as follows because the custom authority will impose custom duty on the certified amount:

|Certified that Invoice amount |

|US$---------------------------------------------------------- is correct || ||For Jamuna Bank Limited ||Mohakhali Branch, 32, Mohakhali Branch, Dhaka. Authorized Officer (P.A No.) |

|Endorsement of Bill of Exchange || ||Receive Payment ||For Jamuna Bank Limited ||Mohakhali Branch, 32, Mohakhali Branch, Dhaka. Authorized Officer (P.A No.) |

|Endorsed Bill of Lading ||“Please deliver to the order of’ ||(Name of the Importer) || ||Authorized Officer (P.A No.) Authorized Officer (P.A No.) || |

Loan against Import Merchandise (LIM) Form:

Import finance plays a vital role in countries foreign trade and business. Import of goods and services are needed not only for export production but also to supply domestic industry with the necessary inputs, which are not locally available at uneconomic cost and are needed for expansion and development. Loan Against Import Merchandise (LIM) is a facility provided by the bank to the importers who are in shortage of funds to retire the import bills and thus to clear the goods from the Port Authority. In other words it may be referred as an advance against import merchandise. LIM Account is opened due to the Importers request or by force.

LIM Account on Importers request.

After lodgment of the documents, the importers concerned to be intimated for early retirement of the documents by paying outstanding bill amount including other charge. If the importer is not in a position to retire the bill out of his own sources of funds at that moment may request the bank to clear the goods creating LIM Account. On receipt of the

importer request the official of the import bill section will prepare an office note by calculating the total landing cost of the consignment. To ascertain the landing cost the following points to be considered:

1) Bill Amount i.e., Invoice Amount Tk--------------------------2) Customs Duty % Tk. -------------------------3). Value Added Tax % Tk. -------------------------4). C & F Agents bill (Approx) Tk. -------------------------5). Miscellaneous (Approx) Tk. -------------------------

Total Landing cost of the goods = Tk. -------------------------Less: Margin retained at the time of opening of L/C Tk-------------------------Less: Further margin to be realized from the importer Tk. ------------------------Banks Liability will be Tk. ------------------------

Efforts should be taken so that at least 20% to 30% margin of the landing cost may realize from the importer. Realization of margin will depend on the banker’s customer relationship and also on the marketability of the goods.

The following charge documents have to be executing by the importer:DP Note (Demand Promissory Note)Letter of ArrangementLetter of DisbursementLetter of PledgeAny other documents if necessary

The branch manager is not empowered to sanction the LIM A/C in favor of the importers for clearance of the goods without obtaining the approval from Head Office. On getting approval from the Head Office on the note the branch will send the documents to the port city branch by endorsing the Bill of Lading in favor of them with certification of invoice for clearance the goods through importers nominated as well as Banks approved C & F agent. In the forwarding letter, clear instruction to be given for dispatching the goods either by train or by truck duly insured branch managers will have to take prior approval from International Division, Head Office to create LIM Account in favor of importers. Before sending the documents to the port city branch and under taking on prescribed form with adhesive stamp of Tk.80 /- (Flexible) regarding the stipulated period sanctioned to the importer to be obtained.

The following recording entries and vouchers are generally to passed in the set of retirement vouchers on the same day at the branch:

Dr. Customer A/CDr. LIM A/CCr. CIBTA/ Payment Order A/CCr. Payment against Documents A/C

The particulars of LIM A /C must be entered and vouchers to be posted in the LIM register. After clearance, the goods should be started either in Banks godown or in importers godown under banks lock and key and the particulars of goods to be entered in the space provide din the LIM register.At the same time issuance of goods stored at the banks godown and other miscellaneous charges in connection with the LIM A/C will be paid by debit to pays LIM A/C under advice to the importer.

Forced LIM Account:

After immediate lodgment of documents the branch incumbent and concerned dealings officials shall vigorously pursue importers for retirements of bills. PAD should not remain outstanding for more than 30 (thirty) days or within the date of arrival of ship which ever is earlier the branch should sent the document for clearance the goods. Other formalities the connection with the forced LIM A/C will be the same as in the case of LIM A/C created on importers request.

No further L/C’s of the party for whom the bank was forced to the clean consignment and party failed to take delivery of the goods within the time specified below under the Head Office disposal of LIM stocks should be opened without prior approval from Hear Office even if the same is within the discrepancy power of Branch Manager.

Chapter 6: Problems and Recommendations

6.1 Prelude

6.2 Problems faced by JBL

6.3 Recommendations

6.4 Conclusion

6.1 Prelude

Once upon a time the human civilization needs were limited but due to the increased demand of time and with the rapid expansion economic activities mans need are diversified in unlimited spheres. With this realization as a service oriented concerns bank scopes of performance are diversified. With this diversification Banks tries to provide better service to its customers and clients. In this case banks facing some problems in which some are traditional and some are new. As a new generation bank Jamuna Bank limited is also facing some problems. But its not all and final. The authority is hardly trying to solve the problems.

6.2 Problems Faced By the Bank

Jamuna Bank limited as a new generation commercial bank has facing a lot of problems in compare with the other banks. These problems are related to operation of daily banking activities, opening new branches, Bangladesh Banks rules and regulations, customer services, customer behavior, maintenance of liquid assets, lack of experienced personnel etc. The problems faced by the bank are recorded as follows:The first problem is related to increasing market competition. As a new bank JBL has facing some problems in case of compete with some well-set banks.As a new bank JBL facing the lack of experienced personnel which create some problem in case of offering better service to the customers and clients.The overall high cost of capital is a barring to its market expansion and due to this the operational expenses are increased.High cost of setting the latest technology based services is an obstacle to its rapid expansion.All customers are not concerned about the latest technology based services and all are not readily interested to accept the technology-based services.High cost of technology based services is an obstacles. Due to this customer are not interested to take these services.Incase of online banking low speed of network is a problem and it consumes valuable time of the busy customers.Due to BB order among every five branch one branch should be open in the rural area. But these branches are always not able to produce the expected return to the bank.Overall political unrest is an indispensable problem to the bank to provide regular service to its customers.In case sanctioning loan always it is not possible to study the proposal due lack of time and experienced manpower.JBL uses Flora Bank (Online Banking Software) which is not comprehensive software for modern banking.Due to increased competition JBL has to facing increasing promotional and advertising cost and it is an obstacle to rapid expansion to reaching the large people at a time.In case of appointment of personnel the disguised pressure of owner group creates some unavoidable problem.Due to tremendous financial strength of Multinational Bank JBL has facing to some problem.Insufficient salary of junior officer is an obstacle to provide better services.

6.3 Some Recommendations to overcome the problems:

As a new generation commercial bank yet JBL facing to some serious problems but it is also true that these problems may be turn into opportunity if the authority takes some initiatives. The initiatives may be as follows:

The working condition should be improved. Employees must be provided with adequate working equipment in order to provide better customer service.JBL should recruit experienced personnel from other banks and financial institutions in order to provide better and efficient banking services and ensuring growth.

Multipurpose new schemes should be introduced to attract the clients and to enhance the deposit.In case of sanctioning loan and advances the documents should be properly check and appraised in order to ensure repayment of the loan amount.Ensure the security / collateral has been assessed correctly and the security is maintained properly.Ensure that the disbursements are made as per procedure and terms of sanction.Ensure collection of periodical reports, returns and information about the borrower and the activities of projects financed.The competing banks performance should be carefully monitor regularly.New branches should be opened in the economically promising area.Attractive incentive packages should be provided to the exporter.Political and organizational pressure should be eliminated in case of sanctioning loan.Account opening process should be made easy to attract the customer.New and modern banking equipment should be arranged for providing better services.Flora Bank, the online banking software should be regularly updated.Bankers Customer relation should be closer and regular communication with the customer should be maintained.Bank should regularly review and update the present marketing strategy.Banks own training institute should be established.

6.4 Conclusion

From the very of civilization of time Banking activities is a critical job and the present days banking business is very competitive and complex. Banking sector, as a service sector of Bangladesh continues to contribution to a great deal in the economy of Bangladesh.

Jamuna Bank Limited is the Third generation most modern commercial bank which has passed four years in operation and now enjoying the fifth year of operation. In this age of competition, every bank is passing the operational functions in hard competition. Yet it a newborn bank though it is pt affect4ed by this danger. JBL is marching in an aggressive way to reach the all levels of clients and customers, which ensure certain, and mentioning position in the market.

This report is being done on the subject of “Operational Commercial Bank: A Case study on Jamuna Bank Limited, on Gulshan Branch.” From the survey and observation of the study I try to gain some practical experience on critical general banking system. From the observation of the study I have gain some practical knowledge on account opening, cash receipt and payment, sanctioning of loan and advances, foreign trade and foreign exchange mechanism, local and foreign remittances, complex clearing process etc. I think this experience will set me in the advantageous position in future.

Bibliography

1. Al-Quran

2. Annual Reports of JBL during 2002-2005

3. www.jamunabankbd.com

4. www.bangladeshbank-bd.org

4. Published booklets and hand bills of JBL

5. Shekhar, K.C, (2000) “Banking Theory and Practice” 18th edition, Vikash publishing house, New Delhi, 2000

9. Bangladesh Bank Bulletin, Vol.- (((((, Number 4, Oct- Dec, 2004

Appendix-1

5 (Five) Years Financial Performance of Jamuna Bank Limited

(In Million Tk)|Sl. No |Particulars |2001 |2002 |2003 |2004 |2005 ||1 |Authorized Capital |1600.00 |1600.00 |1600.00 |1600.00 |1600.00 ||2 |Paid up Capital |390.00 |390.00 |390.00 |429.00 |429.00 ||3 |Total Capital |390.70 |405.56 |483.97 |674.65 |916.46 ||4 |Capital Surplus / (Deficit) |-- |255.35 |204.30 |148.506 |115.54 ||5 |Total Assets |4210.16 |5290.59 |9766.78 |13491.52 |16863.76 ||6 |Total Deposit |3795.11 |4766.89 |6614.05 |10264.52 |14454.13 ||7 |Total Loans & Advances |333.45 |1514.28 |3239.51 |6722.80 |11011.83 ||8 |Total Contingent Liabilities |145.93 |891.541 |1772.76 |2903.95 |5445.68 ||9 |Profit after Tax & Provision |-- |.22 |61.14 |155.95 |199.82 ||10 |Classified Loans |-- |-- |.63 |2.82 |51.05 ||11 |Provision against Classified Loans |-- |-- |.63 |1.04 |10.2 ||12 |Interest Earning Assets |-- |4946.40 |8951.22 |12559.22 |15551.75 |

|13 |Non- Interest Earning Assets |-- |344.19 |815.56 |932.29 |1312.01 ||14 |Income from Investment |2.58 |15.47 |27.37 |80.43 |126.30 |

(In Percentage)|15 |Credit Deposit Ratio | |31.77 |48.98 |65.50 | ||16 |% of Classified Loans |-- |-- |0.02 |0.04 |.46 ||17 |Cost of Deposit |-- |9.05 |8.94 |7.84 |8.79 ||18 |Return on Assets (ROA) |-- |0.29 |1.14 |1.16 |1.18 ||19 |Earning Per Share (EPS) |-- |0.06 |14.25 |36.35 |46.58 ||20 |Net Income Per Share |-- |0.06 |15.68 |36.35 |46.58 ||21 |Price Earning Ratio |N/A |N/A |N/A |N/A |N/A ||22 |Return on Investment (ROI) |2.35 |4.68 |2.93 |6.91 |6.20 |

Appendix-2

BALANCE SHEETAs at December 31, 2005

|PROPERTY AND ASSETS |2005 (Tk) |2004 (Tk) ||Cash |81,13,16,032 |38,78,35,741 ||In Hand (Including Foreign Currency) |152,207,097 |113,798,477 ||Balance with B.B and its agent Banks |659,108,935 |274,037,264 ||(Including Foreign Currency) | | ||Balance with other Banks and Financial Institution |2,442,781,141 |3,043,025,156 ||In Bangladesh |2,371,218,673 |2,929,629,737 ||Outside Bangladesh |71,562,468 |113,395,419 ||Money at call and on short notice |60,000,000 |1,632,000,000 |

|Investments |2,037,835,354 |1,163,703,654 ||Government |1,505,698,800 |950,302,500 ||Others |532,136,554 |213,401,154 ||Loans and Advances |11,011,834,555 |6,722,804,334 ||Loans, Cash Credit, Overdrafts, etc. |9,304,777,235 |5,405,427,302 ||Bills purchased and discounted |1,707,057,320 |1,317,377,032 ||Fixed assets including premises, furniture and fixtures |106,464,136 |97,988,266 ||Other assets |393,533,997 |444,166,685 ||Non-Banking assets | |-------- || |16,863,765,215 |13,491,523,836 ||TOTAL ASSETS | | || | | |

|LIABILITIES & CAPITAL |2005 (Tk) |2004 (Tk) ||Liabilities: | | ||Borrowing from B.B, Other Banks, Financial Institutions and Agents |867,800,000 |2,048,500,000 ||Deposits and other accounts: |14,454,129,315 |10,450,160,991 ||Current A/C and Other A/C |1,543,069,330 |905,888,757 ||Bills Payable |109,286,849 |78,479,501 ||Savings Bank Deposits |749,516,507 |614,956,477 ||Fixed Deposits |10,899,416,811 |802,32,57,967 ||Bearer Certificates of Deposits |…… |----- ||Short Term Deposits (STD) |384,028,052 |238,793,721 ||Deposit Under Special Scheme |731,073,005 |581,391,394 |

|Foreign Currency Deposit |37,738,761 |7,393,174 ||Other Liabilities |734,695,291 |385,542,317 ||Total Liabilities |16,056,624,606 |12,884,203,308 ||Capital / Shareholders Equity | | ||Paid up Capital: |429,000,000 |429,000,000 ||(42,90,000 Ordinary Shares of Tk.100 each) | | ||Proposed Bonus Share |- |- ||Statutory Reserve |149,672,451 |77,010,603 ||Surplus in Profit and Loss A/C |228,468,158 |101,309,925 ||Total Shareholders Equity |807,140,609 |607,320,528 ||TOTAL LIABILITIES & Shareholders Equity |16,863,765,215 |13,491,523,836 || | | |

Appendix-3

PROFIT AND LOSS ACCOUNTFor the Year Ended 31, December 2005

|Particulars |2005 (Tk) |2004 (Tk) ||Interest Income |1374379710 |1004359239 ||Interest paid on Deposits and Borrowings etc. |1045462115 |726064552 ||Net Interest Income |328917595 |27,82,94,687 ||Invest Income |126303992 |804,39,298 ||Commission, Exchange and Brokerage |211337861 |133,703,617 ||Other Operating Income |38249889 |200,36,441 ||Total Operating Income |704809337 |51,24,74,043 |

|Salary and Allowance |110139273 |94493095 ||Rent, Taxes, Insurance, Electricity etc. |32883242 |26775150 ||Legal Expenses |354101 |2,72,257 ||Postage, Stamps, Telecommunication etc. |20035922 |9452847 ||Stationery, Printings, Advertisements etc. |16238084 |1,14,59,595 ||Directors Fees and Other Expenses |2098485 |21,74,953 ||Auditors Fees |60000 |60,000 ||Managing Directors Salary & Allowance |3297581 |41,97,096 ||Depreciation, Repairs & Maintenance |17492129 |1,39,19,940 ||Other Expenses |82269758 |40837161 ||Total Operating Expenses |284868575 |203642094 ||Profit Before Provision |419940762 |30,88,31,949 ||Provision for Loans and Advances |56631523 |3,51,27,923 ||Total Profit Before Taxes |363309239 |273,704,026 ||Provision for Taxation for the Year |163489158 |11,77,51,036 ||Net Profit after Taxation |199820081 |15,59,52,990 ||Retained surplus brought forward from prev year |101309925 |97,740 ||Retained Surplus Before Appropriation |301130006 |15,60,50,730 ||Appropriation: | | ||Statutory Reserve (20% on pre tax profit) |72661848 |5,47,40,805 ||Proposed Dividends as Bonus Share | - |9,94,50,000 ||Retained Surplus |228468158 |18,59,925 ||Earning Per share (EPS) / Adjusted EPS of 2003 |46.58 |36.35 |

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In 2005 Jamuna Bank Limited registered an operating profit of Tk. 419.94 million as against Tk. 308.83 million of 2004 recording a excellent growth rate of 35.98% in the year. After Keeping provision against Loans & Advances in line with the instructions of Bangladesh Bank Circulars BCD Circular No. 34of 1989, BCD Circular No.20 of 1994, BCD Circular No.12 of 1995 and BRDP Circular No. 16 of 1998, the profit before tax stood at Tk363.31 million in 2005.

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Deposit is always been termed as the life-blood of a commercial bank. In the year 2005, due to many uncertainties on economic front, significant pressures on economic performance and among others, the adverse impact of devastating flood in July-September 2004, declining trend in interest rates and despite a devastating flood, Jamuna Bank Limited was able to increase its customer’s confidence and mobilized a total deposit of Tk. 14,454.13 million in 2004.

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“YOUR PARTNER FOR GROWTH”.

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The total business handled by the bank during 2005 was Tk. 7923.90 million compared to Tk.3801.21 million in the preceding year registering a growth of Tk.108.46%. The Bank was able to open substantial amount of Import Letter of Credits in 2004. The main items were Industrial Raw Materials, Machinery, Consumer Goods, Fabrics, Accessories,etc.

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The total export business handled by the bank stood at tk.6521.80 million in the year 2005 which was Tk. 4790.80 million in the year 2004 showing a growth 36.13%. Readymade Garments (RMG) is the highest foreign exchange earner of the bank and for the country.

Chairman

Mr. Fazlur Rahman

Vice Chairman

Mr. Shaheen Mahmud

DirectorsAl-Haj M.A Khayer Engr. Md. Atiqur RahmanMr. Arifur Rahma Golam Dastagir Gazi, Bir ProtikAl-Haj Md. Rezaul Karim Ansari Md. Tajul IslamA.K.M Shawkat Al-Haj Md. Rezaul KarimMd. Belal Hossain Md. Sirajul Islam VaroshaMd. Mahmudul Hoque Mr. Md. Irshad KarimMr. Farhad Ahmed Akand Mr. Anindya Majumder

Managing Director

Mr. M. Nazrul Islam

Company SecretaryKazi Friduddin ahmed, FCA

Deputy Managing DirectorMr. Md. Motior Rahman

AuditorsM/S G Kibria & CoChartered Accountants

Managing Director

Deputy Managing Director

Senior Executive Vice President

Executive Vice President

Senior Vice President

Vice President

Senior Assistant Vice President

Assistant Vice President

Junior Assistant Vice President

Senior Executive Officer

Executive Officer

Officer (General)

1st Clearing House

Return Clearing House

Importer Applicant

Advising Bank

Issuing Bank

Corresponding Bank

Reimbursing Bank

Negotiating Bank

Exporter/Beneficiary