ncc report shahin.doc

8/21/2019 ncc report shahin.doc

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Part- One

Introduction

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1.1. Background of the Study

It has become indispensable for every person to have some thought on the bank and banking course

of action. As our educational system predominantly text based, inclusion of practical orientation

program is an exception to the norm. From practical knowledge, we will be able to know real life

situations and start a career with some practical experience. Bachelor of Business Administration

BBA! is a professional course. "he course is designed with an excellent combination of practical and

theoretical aspects. After completing BBA, certain times are preserved for internship. As a student of

BBA with the re#uirement of my course I was assigned to $ational %redit and %ommerce Bank

limited $%%B&!, 'irpur Branch for my internship. In such state of affairs the present aiming at

analy(ing the experience of practical orientation related to an appraisal of $%% Bank &imited and my

report topic has been selected as )&oan *isbursement + ecovery -ystem of $%%B&.

Banking constitutes an important segment of the financial infrastructure of any company. /enerally,

banking means deposit mobili(ation and development of those deposits into advances or investments

in different sectors. It means bank collect deposit at lowest possible interest rate and provides loan at

highest interest rate. Between the two interests is the profit for bank and known as -pread. "here are

two types of banking that was commercial banking and another is investment banking. %ommercial

banks raise their fund by collecting deposits from individuals and business that provides as loan to

customer at high interest to maximi(e profit. $%% bank is one of the most popular and profitable

commercial bank in Bangladesh.

Basically, this report is highlighted on overview of $%% Bank &td, -tructure, Analysis, 0resent

status, xperience, ecommendation and conclusion.

1.2. Significance

"his internship report is an important partial re#uirement of four years BBA graduation program. "his

is because knowledge and learning become perfect when it is associated with theory and practice. By

this internship program students can establish contacts and networking. %ontacts may help to get a

2ob in practical life. "hat is, student can train and prepare themselves for the 2ob market. A poor

country like Bangladesh has an overwhelming number of unemployed educated graduates. As they

have no internship experience they have not been able to gain normal professional experience of

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establish networking system, which is important in getting a 2ob. "herefore, it is obvious that the

significance of internship is clearly 2ustified as the crucial re#uirement of four years BBA graduation.

1.3. Scope of the Report

As I was assigned to the $ational %redit + %ommerce Bank &td, 'irpur Branch, there is enough

scope of the study. "he report covers the topic )&oan *isbursement + ecovery -ystem of $%%

Bank &td.4 "o conduct a study, &oan *isbursement + ecovery of $%% bank, I have gathered

valuable information from $%% Bank, 'irpur Branch and its wealthy library I have also got some

information from website of $%% Bank.

"his report is only done for gathering information about loan sanctioning procedure and recovery

system as well as the performance of sanctioning loan and recovery position while ignoring any other

department of the bank.

1.4. Objectives of the Study

1.4.1. Genera objective

"he prime ob2ective of this report is to analy(e the !"oan #isburse$ent % Recovery Syste$ of

&ationa 'redit % 'o$$erce Bank "td.((

1.5.3. Specific objectives

"he study was conducted to achieve the following secondary ob2ectives6

"o know the lending procedure of $%% Bank &imited.

"o know the trend of loan and advances over the year.

"o know the sector wise loan and advances.

"o know the recovery performance.

"o know the ability to utili(e the deposit as loan and advances.

"o compare the loan disbursement and recovery performance with -outheast bank +

'ercantile Bank &imited. "o make some recommendations for the successful &oan disbursement and recovery system

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1.). *ethodoogy of the study

'ethods followed to perform a 2ob or conducting activities to complete a task is called methodology.

In conducting this study the following methodology was adopted in collecting data + information,

preparation of reports etc. "he methodology of report is given below8

1.).1. +ype of Research

In this report we will describe the &oan *isbursement + ecovery process of $ational %redit +

%ommerce Bank &td, by "ime series analysis, atio Analysis and %omparative Analysis etc. -o,

according to the base of ob2ective this research is called descriptive research.

1.9.3. #ata coection

0rimary sources

-econdary sources

1.5.2.1. Primary sources of data include the following:

0ractical deskwork.

Informal discussion with the clients and officers of the bank.

1.5.2.2. Secondary sources of data including the following:

Annual report of $%% Bank limited 3::; to 3:1:!.

Annual report of -outheast Bank limited 3::


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1.).3.1. #ata coection procedure and instru$ents

For the )"oan #isburse$ent % Recovery Syste$ of &ationa 'redit % 'o$$erce Bank "td4 I

mainly used -econdary data. Besides this I also collect some information by taking expert opinion

from the officers and direct observation while I doing the internship program at the bank.

1.5.3.2. Collection of Secondary ata

In order to collect the secondary data different related printed materials like $%% Bank Annual

eport, monthly statement of the bank, $%% bank website, bankers training guide has been used.

'oreover, various library sources and textbooks also have been used as secondary sources of

collecting early mentioned data and information.

1.5.! ata "nalysis # re$orting

After collecting all the data, they will be coded and data will be processed, &oan disbursement +

recovery analysis, graphically represented using '- xcel and '- >ord.

1.,. "i$itations of the study

"here are some limitations of the report and therefore it may lack some crucial data. In preparing the

report I faced some problems, which are as follows8

"he main constrain of the study was insufficiency of information, which was

re#uired for the study. "here are various information the bank employee cant

provide due to security and other corporate obligations.

*ue to time limitation many of the aspects could not be discussed in the present

report. &earning all the functions within 2ust


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Part-%2

"n O&er&iew of 'CC (an) *td.

2.1. 'o$pany -rofie

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&a$e &ationa 'redit % 'o$$erce Bank "td.

ear of /stabish$ent 0t as Started as an invest$ent co$pany in 1) and

converted to a fuy fedged private co$$ercia bank in 1

*ay 13.

'orporate Office 56 *otijhee '786 #haka51999.

8uthori:e 'apita 2)99 $iion

-aid ;


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2.3. #irection % *anage$ent

A 376member board of directors, including the chairman and a vice6chairman oversees the affairs of

the bank. "he managing director is its chief executive. "he functions of branches are carried out under

direction and surveillance of /eneral 'anager and his *eputy. In 3::1, the bank had 7@ branches

and 9:3 employees. But now it has about @1 branches with about 3::: employees. "he registered

head office of the bank is at *haka. "he bank conducts traditional commercial banking functions as

well as foreign exchange business and provision of other financial services.

2.4. 'orporate *ission

"o mobili(e financial resources from within and abroad to contribute in agricultures, industry +

socio6economic development of the country and to play a catalytic role in the formation of capital

market. It also includes the following8

Anticipating business solutions re#uired by all our customers everywhere and innovatively

supplying them beyond expectation.

-etting industry benchmarks of world class standard in delivering customer value through our

comprehensive product range, customer service and all our activities

Building an exciting team6based working environment that will attract, develop and retain

employees of exceptional ability who help celebrate the success of our business, of our

customers and of national development

'aintaining the highest ethical standards and a community responsibility worthy of a leading

corporate citi(en

%ontinuously improving productivity and profitability, and thereby enhancing shareholders

value

2.). 'orporate =ision

"o become the Bank of choice in serving the $ation as a progressive and -ocially esponsible

financial institution by bringing credit + commerce together for profit and sustainable growth.

2.,. Business Objectives

'ake sound investments.

'eet capital ade#uacy re#uirement at all the time.

nsure


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nsure a satisfied work force.

Focus on fee6based income.

Adopt an appropriate management technology.

Install a scientific 'I- to monitor Banks activities.

2.. 'orporate 'uture

$%% Bank is one of the most disciplined Banks with a distinctive corporate culture. In this bank, it

believes in shared meaning, shared understanding and shared sense making. "he people of bank can

see and understand events, activities, ob2ects and situation in a distinctive way. "hey mould their

manners and eti#uette, character individually to suit the purpose of the Bank and the needs of the

customers who are of paramount importance to them. "he people in the Bank see themselves as a

tight knit teamDfamily that believes in working together for growth. "he corporate culture they belong

has not been imposedE it has rather been achieved through their corporate culture.

2.. 'apita Structures

"he bank has a strong capital base. Its authori(ed capital is ". 39::.:: million while its paid up

capital is "k. 59:1.39 million. "he share price of the bank is par value "k.1::.::. to meet the overall

re#uirement the bank borrow from Bangladesh Bank and other banks and financial institutions. -o far

the bank has been able to meet its capital ade#uacy re#uirement successfully.

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2.. Organi:ationa Structure >?igure@ 2.1A

2.19. ?inancia ighights of &''B" fro$ ?299, to ?2919 >?igure@ 2.2A

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'hair$an

=ice 'hair$an

#eputy *anaging #irector

/Cecutive =ice -resident

Senior /Cecutive =ice -resident

Senior =ice -resident

*anaging #irector

Board of #irector

-rincipa Officer

Senior -rincipa Officer

8ssistant =ice -resident

Senior 8ssistant =ice -resident

=ice -resident

Senior Officer

Officer

Dunior Officer

8ssistant Officer


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Source: "nnual +e$ort of 'CC (an) *td. ,2%%-2%1%

+he deposit $iC of 2919 is appended in the chart beo@

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Source: /onthly Statement of e$osit ,2%1%

0igure- 2.3: e$osit /i of 'CC(*

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Part- hree

heoretical (ac)ground

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• Secured Overdraft5SO# >?OA@ Advance is granted to a client against financial obligations

that is deposited in the bank. A client can get up to @:C loan of the total deposited value.

• Secured Overdraft5SO# >GA@ /ranted against the work order of government departments,

corporations autonomous bodies and reported multinational private organi(ation. "o arrive at

logical decision, the clients managerial capability, e#uity strength, nature of scheduled work

is to be 2udged.

• 'ash 'redit5'' >ypothecationA@ "he mortgage of movable property for securing loan is

called hypothecation. Gypothecation is a legal transaction whereby goods are made available

to the lending banker as security for a debt without transferring either the property in the

goods or either possessing.

• 'ash 'redit5'' >-edgeA@ "ransfer of possession in the 2udicial sense of essential in the

valid pledge. In case of pledge, the bank ac#uire the possession of the goods or a right to hold

goods until the repayment for credit with a special right to sell after due notice to the

borrower in the event of non6repayment.

• "oan against 0$ported *erchandise >"0*A@ Advances allowed for retirement of shipping

documents and release of goods imported through &D% taking effective control over the goods

by pledge fall under this type of advance. >hen the importer failed to pay the amount

payable to the exporter against import &D%, then $%%B& gives loan against imported

merchandise to the importer.

• "oan against +rust Receipt >"+RA@ "rust eceipt is a document which creates the bankers

lien over the goods and practically amounts to hypothecation of the proceeds of sale in

discharge of the lien. &oans against "rust eceipt to the clients are allowed when the

documents covering an import shipment are given without payment. Gowever, prior

permission of Gead Hffice must be obtained for such advances.

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• "oca #ocu$entary Bi -urchase >"#B-A@ 0ayment made against documents representing

sell of goods to local export oriented industries, which are deemed as exports, and which are

dominated in local currencyDforeign currency falls under this head.

• 0nand Bi -urchase >0B-A@ 0ayment made through purchase of inland billsDche#ues to meet

urgent re#uirement of the customer falls under this type of investment facility.

• ?oreign Bi -urchase >?B-A@ 0ayment that is made to customer through 0urchase of

Foreign %urrency %he#uesD*rafts is known as Foreign Bill 0urchase.

• Eorking capita oan@ &oans allowed to the manufacturing unit to meet their working

capital re#uirement, irrespective of their si(e.

• ouse Repairing7Renovation "oan@ "his loan is offered for renovation and moderni(ation

of the houseDbuildingDflat. "he genuine residential owners can avail this kind of loan.

• &'' Bank =isa 'redit 'ard8 $%% Bank has launched its isa %redit %ard -ervice on

August 33, 3::9 and offering three types of cards which are isa %lassic, isa /old &ocal!

and isa *ual %urrency %ard /lobally and locally!. -ince then were able to reach 9:::

cards, both corporate and general.

+he characteristics of credit card are as foos@

• &on5perfor$ing "oan@ A non6performing loan is a loan that is in default or close to being in

default. 'any loans become non6performing after being in default for 7 months, but this can

depend on the contract terms.

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&owest interest rate in the country 3C per month!

*ual %urrency isa %redit %ard

Hne supplementary card free of cost for lifetime -pouse only!

"reasure point facilities including foreign part

-hortest process for *ual %urrency card, only 35 hours

oaming 'obile 0hone bill payment facilities

=se of additional 153 A"'s Booth and ;:: 0H- of *utch6Bangla Bank

http://en.wikipedia.org/wiki/Loanhttp://en.wikipedia.org/wiki/Default_(finance)http://en.wikipedia.org/wiki/Contracthttp://en.wikipedia.org/wiki/Loanhttp://en.wikipedia.org/wiki/Default_(finance)http://en.wikipedia.org/wiki/Contract


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Part- 0our

*oan isursement

#

+eco&ery System

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4.1. Genera procedure of sanctioning oan

"he following procedure is applicable for giving advance to the customer. "hese are8

a! 0artys application

b! Filling form6A

c! %ollecting %IB report from Bangladesh Bank

d! 0rocessing loan proposal

e! 0ro2ect appraisal

f! Gead office approval

g! -anction letter

h! *ocumentation

i! *isbursement

8. -arty(s appication

At first borrower has to submit an application to the respective branch for loan, where heDshe has to

clearly specify the reason for loan. After receiving the application from the borrower Bank officer

verifies all the information carefully. Ge also checks the account maintained by the borrower with the

Bank. If the official becomes satisfied then he gives form6A prescribed application form of Bank! to

the prospective borrower.

B. ?iing ?or$ 58

After satisfying with partys application the applicant need to fill Form6A. It is the prescribed form

provides by the respective branch that contains information of the borrower. It contains6 $ame with

its factory location, Hfficial address and telephone number, details of past and present business, its

achievement and failures, type of loan needed etc.

'. 'oecting '0B Report fro$ Bangadesh Bank

After receiving the application for advance, $%% Bank sends a letter to Bangladesh Bank for

obtaining a report from there. "his report is called %IB %redit Information Bureau! report. $%%

Bank generally seeks this report from the head office for all kinds of Investment. "he purpose of this

report is to being informed that whether the borrower has taken loan from any other BankE if Jyes

then whether the party has any overdue amount or not.

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#. -rocessing oan -roposa

After receiving %IB report from Bangladesh Bank, then respective branch prepare an Investment

proposal, which contains terms and conditions of Investment for approval of Gead Hffice. *ocuments

those are necessary for sending Investment proposal are &oan application, photograph of the borrower

duly attested, personal information of borrower, %IB report, legal opinion, trade license, stock report,

net worth calculation of business + individual, working capital assessment, financial statement, -'

information and %/. $%% Bank prepares the proposal in a specific form that contains following

relevant information6

• Borrower,

• capital structure,

• Address,

• Account opening date,

• Introduced by type of business,

• 0articulars of previous sanctions,

• -ecurity existing and proposed!,

• %omponents on the conduct of the account,

• *etails of deposit,

• &iabilities with other Banks,

• %IB report,

• ated capacity of the pro2ect item wise!,

• 0roductionDpurchase during the period,

• -ales during the period,

• arning received for the period.

'redit Risk Grading >'RGA Syste$

%redit isk /rading %/! system is an important tool of %' to understand dimensions of risk in

credit transactions. Aggregation of grading across the borrowers, activities and line of business

reflects the #uality of credit. Bangladesh Bank introduced an integrated %/ model which is simple

and user friendly and hence, followed by all financial institutions. =sually there includes five steps

for %/. "his are

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-tep618 Identify all the principal risk components

-tep638 *istribute weight to risk components

-tep678 Identify the key parameters of principal risk

-tep658 Assigning weight to key parameters

-tep698 Input data to arrive at score.

1. 0dentify a the principa risk co$ponents

At the first step all the principal risk such as financial risk, business risk, management risk, security

risk and relationship risk are identified. "hese principal risks cover all possible uncertainty that may

occur.

2. #istribute eight to risk co$ponents

In this step, weight is distributed to the risk components. isk factors have to be evaluated and

weighted on the basis of updated + reliable data and complete ob2ectivity.

-rincipa risk co$ponents Eeight

?inancia risk 9:C

Business risk 1@C

*anage$ent risk 13C

Security risk 1:C

Reationship risk 1:C

Source: 'CC (an) raining 4uide

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3. 0dentify the key para$eters of principa risk

In this step, key parameters of principal risk are identified. "he parameters are shown on table below8

Risk co$ponents Fey para$eters

?inancia risk &everage, li#uidity, profitability,+ coverage ratio

Business risk -i(e + age of business, business outlook, industry growth,

competition + barriers to business

*anage$ent risk xperience, -uccession + team work

Security risk -ecurity coverage, collateral coverage + support

Reationship risk Account conduct, utili(ation of limit, compliance of

covenants + personal deposit


4. 8ssigning eight to key para$eters

After identifying key parameters, weight is given to each parameter of principal risk components. In

this case, high weight is given to the risky parameters. For examples, in financial risk greater weight

is assign to leverage, li#uidity + profitability ratio and lower weight to coverage ratio.

). 0nput data to arrive at score

Finally, data is put on xcel based %/ matrix for getting the score.&u$ber Grading Short Score

1 Superior -=0 Fully cash secured, secured by govt.

guaranteeDinternational bank guarantee

3 Good /* @9K

7 8cceptabe A%%0" ?96@5

5 *argina7Eatch ist '/D>& ;96?5

9 Specia *ention -' 996;5

; Substandard -- 59695

? #oubtfu *F 79655

@ Bad7"oss B& L79 Source: 'CC (an) raining 4uide

'RG Syste$ Revie

%/ system should be reviewed by the respective loan officer regularly. Fre#uencies of review of

%/ are mentioned belowE

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Risk grading Frequency (at least)

Superior Annually

Good Annually

Acceptable Annually

Marginal/Watch

list

Half yearly

Special Mention Quarterly

Substandard Quarterly

Doubtul Quarterly

!ad/"oss Quarterly


/ary Earning Signas >/ESA

>- indicate risks or potential weaknesses of an exposure re#uiring monitoring, supervision or closeattention by management. If these weaknesses are left uncorrected, they may result in deterioration of

repayment prospects of banks assets in future. $o delay should be made in referring >- accounts

or any problem accounts to the %' department for their early involvement and assistance in

recovery.

>- has two risk symptoms. "his are

a. *argina7Eatch ist8 >hen loan is overdue for ;: days or more and fre#uent drop insecurity values then it fall in this category.

b. Specia *ention8 >hen loan is overdue for


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"o 2ustify the soundness of an investment.

"o ensure repayment of Bank finance.

+echniues of -roject 8ppraisa

An appraisal is a systematic exercise to establish that the proposed pro2ect is a viable preposition.

Appraising officer checks the various information submitted by the promoter in first information

sheet, application for Investment and Investment proposal.

$%% Bank considers the following aspects in appraising a proposal.

"echnical viability

%ommercial viability

Financial viability

conomic viability

"he Gead Hffice GH! mainly checks the technical, commercial and financial viability of the pro2ect.

For others GH is dependent on branchs information. But when the investment si(e is big, then the

GH verifies the authenticity of information physically.

?. ead Office 8pprova

>hen Gead office receive appraisal from the branch then, Gead Hffice again appraises the pro2ect. If

it seems to be a viable one, the GH sends it to the Board of *irectors for the approval of the

Investment. "he Board of *irectors BH*! considers the proposal and takes decision whether toapprove the Investment or not. If the BH* approves the Investment, the GH sends the approval to the

concerned branch.

"he respective officer of Gead Hffice appraises the pro2ect by preparing a summary named )"op

-heet4 or )xecutive -ummary4 and then he sends it to the Gead Hffice %redit *ivision for the

approval of the &oan. "he Gead Hffice %redit *ivision considers the proposal and takes decision

whether to approve the Investment or not. If the committee approves the InvestmentE the GH sends

the approval to the concerned branch.

G. Sanction "etter

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After getting the approval of the GH the branch issues sanction letter to the borrower. A sanction

letter contains8

$ame of borrower,

Facility allowed,

0urpose,

ate of interest,

0eriod of the Investment and mode of ad2ustment,

-ecurity and Hther terms and condition.

. #ocu$entation

If the borrower accepts the sanction letter, the *ocumentation starts. *ocumentation is a written

statement of fact evidencing certain transactions covering the legal aspects duly signed by the

authori(ed persons having the legal status. "he most common documents used by the $%% Bank for

sanctioning different kinds of Investment are8

Moint 0romissory $ote,

&etter of Arrangement,

&etter of *isbursement,

&etter of Installment,

&etter of %ontinuity,

"rust eceipt,

%ounter /uarantee,

-tock eport,

&etter of &ien,

-tatus eport,

&etter of Gypothecation,

&etter of /uarantee

*ocuments elating to 'ortgage.

0. #isburse$ent

After sanction and completion of all formalities the respective officer disburses the loan. "he officer

writes che#ue and provides it to the borrower. For this borrower has to open an account thorough

which heDshe can withdraw the money.

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4.2. Recovery -rocedures

It is the duty of the Bank to recover the landed fund within the stipulated time and if the borrower

fails to repay the money within the pointed period Bank will declare him as a defaulter and recover

the fund by selling the securities given by the borrower or by free(ing his account or make a suit

against him.

4.2.1. Strategies for recovery

ecovery of loan can be made in the following 7 methods.

1! 0ersuasive

3! oluntarily

7! &egally

1A -ersuasive recovery

If the borrower didnt paid the due amount of loan in time then the first step of bank is private

communication with him. It creates a mental pressure on borrower to repay the loan amount. In this

case bank can provide some advice to the borrower for repaying the loan.

2A =ountariy recovery

In this method, some steps are followed for recovering loan. "his are6

Building "ask Force

Arranging seminar

&oan rescheduling policy

>aiver of interest rate

3A "ega recovery

If the above procedures fail to keep an account regular and the borrower does not pay the

installments, then bank take necessary legal action against the borrower. In this case Bank sues in

!8rtha Rin 8daat "a52993H that plays a vital role for collecting the loan.

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ecovery procedure of $%% Bank follows four procedural steps to recover the lending amount,

which is 2oint effort of Bank, society and legal institutions, which are shown below8

4.3. 'redit 8naysis@ Ehat $akes a Good oanI

%redit analysis is the analysis of financial statement of business customers for the purpose of lending.

It is conducted to determine whether the customer is creditworthy and whether the customer has

sufficient cash flows and backup assets to repay the loan. "he following ma2or issues should examine

in credit analysis8

Is the borrower creditworthyN

>hether purpose of the loan is consistent with banks credit policy and government

regulationsN

>hether customerDor his business have the ability to generate enough cash repay the

loan.

>hether sufficient security has been offered. -o that in the event of default banks

fund can be recovered.

Fixing amount of loan, terms and conditions, documentations, etc. meet the needs of

the borrower and to protect the interest of the bank.

4.4. 0s the borroer 'reditorthyI

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+eminder to the Court

Creating Social Pressure for the Payment of loans

and advances

ecution of legal rules y the hel$ of court

Pro&iding legal notice

0ig-!.1: +eco&ery Procedure

Sources: 'CC (an) raining 4uide


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8A 'haracter@

6"o determine whether the borrower has a responsible attitude towards borrowed funds and

whether he will have every effort to repay what is owed.

6esponsibility, truthfulness, serious purpose, and serious intention to repay loans make up

the characters of the borrower.

BA 'apacity@

6>hether customer re#uesting loan has the authority to re#uest loan and have the legal

standing to sign loan agreement and documents.

'A /cono$ic 'ondition7 8ssets@

6>hether borrower has sufficient assets to repay the loan.

6Hther loans and liabilities of the borrower.

#A 'redit history7'redit habit@

5>hether loans borrowed by the customers previously + how those earlier loans were

handled.

5>hether there is any loan default earlier.

5>hether legal action has ever been taken against him for recovery of default loan.

/A 'redit Rating@

6%redit atings of the borrower by credit rating agencies

?A -urpose of the oan@

6%ustomer must have a well6defined purpose for re#uesting the loan.

6"he purpose of the loan must be consistent with the banks existing credit policy.

6"he purpose of the loan also should have consistent with government regulations.

4.). #iscouraged Sectors of 0nvest$ent

$%% Bank discourages some sectors to invest because these areas are more risky. Investment in

following sectors is discouraged by $%% Bank.

• "annery Finance.

• 'ilitary e#uipmentD>eapons Finance.

• &ending to Golding %ompanies.

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• GB6 residential who has no other business with the Bank.

• Gighly &everaged transactions.

• &ogging, 'ineral xtractionD'ining, or other activity that is thically of nvironmentally

-ensitive.

• &ending to companies listed on %IB black list or known defaulters.

• Finance of -peculative Investment.

• -hare &ending.

• "aking an #uity -take in borrowers.

• Bridge Investments relying on e#uityDdebt issuance as a source of repayment.

4.,. -rincipes of Sound "ending

8. Safety

J-afety first should be guiding principle of a banker. $%% Bank exercises the lending function only

when it is safe and the risk factor is ade#uately mitigated and covered. -afety depends upon8

• "he repaying capacity and willingness of the borrower is to repay the advance.

• "he security offered by the borrower.

B. "iuidity"he liability of a Bank is repayable of demand or at a short notice. -o the Bank has to maintain its

li#uidity at a sufficient level. Investment on building, plant, machinery, land etc. cannot be recovered

#uickly, so it is less li#uid.

'. -rofitabiity

0rofitability is the pre condition for investment. ach individual and organi(ation invests to get some

positive output. 0rofit is needed to pay interest to depositors, depreciation, and maintenance, declare

dividend to share holders, provide or reserve against bad and doubtful debts etc. -o $%% Bank also

disburses advances when they see positive return from investment.

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#. Security

-ecurity is first condition for sound lending. "o ensure safety of advances, Banks takes different types

of securities like '"*, -anchay patra, land, work order etc. Banker should ensure that the securities

are ade#uate, marketable and free from encumbrances before disburse the loan.

4.. "oan *onitoring

&oan monitoring is important to know whether the loan is disbursed correctly or not. If the

monitoring authority thinks that the loan is risky then they want to recover the loan as early as

possible. It includes a reporting system and communication arrangement between the borrower and

the lending institution. "he following steps are followed by respective officer.

egular communication with the defaulter customers and guarantors physically over

telephone.

egular checking the balance of -BD%*D-"* accounts of the borrower.

Issuance of appreciation or greeting letter to the regular customers.

Issuance of letter to customers immediately after dishonor of che#ue.

Issuance of legal notice to the defaulter customers and guarantors prior to classification of the

loans.

0eriodical visit with the customers to maintain relationship and supervision of supplied

articles.

&egal action to be taken after failings all possible efforts to recover the banks due.

4.. anding of &on5-erfor$ing "oans

If a borrower cannot repay installment or interest on a loan after it has become due then it is called

default loan or non6performing loan. It is known as non6performing because the loan cant )perform4

or generate income for the bank.

4.. 0$pications

"he implication of non6performing loans are not only depriving of interest but also stoppage of

creating new loans for blockage of the fund and erosion of banks profitability, li#uidity and solvency,

which might sometimes lead towards collapse of a bank. -o, it is become essential for policy makers

of a bank to study the loan default scenario on a routine basis for estimating classified loan, making

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appropriate provisioning, adopting effective recovery strategy and thus ensuring soundness and

efficiency of the bank.

4.19. 'assification % provisioning of non5perfor$ing oans

%lassify loan under various head such as, unclassified, sub6standard, doubtful or badDloss through

verification of borrowers repayment is needed to know the status of loan. It is essential to determine

the financial health and efficiency of a bank. In order to get rid of default loans, Bangladesh Bank

introduced a circular B%* circular no. 75! on 1


31/72

4.11. "ending and invest$ent -roducts

$ational %redit and %ommerce Bank &imited is a new generation Bank. It is committed to provide

high #uality financial services products to contribute in /*0 of the country through stimulating trade

and commerce, accelerating the pace of industriali(ation, boosting up export, creating employment

opportunity for the educated youth, poverty alleviation, raising standard of living of limited income

group and overall sustainable socio6economic development of the country.

&ike other business activity Banks are profit oriented and profit is the central point on which the

entire business activity rotates. A Bank invests its funds in many ways to earn income. "he bulk of its

income is derived from investment. -ince ma2or part of Banks income is derived from credit and

since the money credited by Bank is customers fund, Banks should follow a cautious policy and

sound lending principles in the matter of lending.

"he word credit derived from &atin word )%*H4 means Believe or faith. >e can say, it stands for

trust + relationship between banker and customers. ach + every bank has got their own credit

policy which generally formulated on the basis of prevailing countries socio economic condition,

political + other aspects from time to time and as per guidelines of %entral bank. $%% Bank also

comply their credit policy as per B0* circular no. 1? dated on :?.1:.3::7.

A Bank invests its funds in many ways to earn income. "he bulk of its income is derived from loan.

In 3:1:, total advance stood at "k. ;7,37:.15 million against "k. 9:,7@? million in 3::


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Business

&ease financing

Gousing &oan scheme

• 8gricutura % 8gro based ventures

Agriculture is the mainstay of Bangladesh economy being ma2or contributor to the /*0. $%% bank

keen to contribute towards the growth of economy in financing the agro based firm, specially poultry,

fishery + hatchery. Financing also provided to export oriented shrimp culture and fish processing

industries. As the sector is being looked after ade#uately by financial institutions and nationali(ed

commercial bank still $%% bank provides a small amount of loan to this sector.

• 'onsu$er ?inancing

$%% bank keeping in mind the economic development helps the fixed income group in fulfilling their

demand to upgrade the standard of living. %onsumer financing scheme covers8

6Gome appliances

6Furniture + fixture

6Air conditioner, Fax machine

6'otor %ycleD%ar etc.

• Rea estate % civi construction

In our society a reasonable number of smallDbig businessmen are related to the real estate and civil

construction. $%% bank provides loan to this sector carefully only on selective basis.

• 0ndustry

Industry loan basically covers the following area.

6 >orking capital financing

6 %apital financing in the form of term loansE and

6 Financing of small + cottage industries.

"he term loan financing for establishment of new industries is a speciali(ed banking function. Bank

follow a selective approach for term loan financing to small scale industries and export oriented or

import substitute industries which will en2oy high degree of national economic priority. "he bank for

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financing in this sector would prefer syndication with other banks to keep a balanced portfolio.

$%%B& set aside a large amount of money from budgetary allocation to finance in industry loan. In

every year, bank provides the highest percentage of loan to this sector. In 3:1:, it sanctions 59.5:C

loan to this sector.

• Business

A large section of our business community consists of small + medium business owners who are

conducting their business with their own resources without availing much support from financial

institutions. -uch businessmen are generally sincere, honest and hard working but are often short of

working capital not to mention the capital finance for expansion. $%% banks ma2or concentration

shall be under this sector under following categories8

6 -mall Business &oan

6 Festival -mall Business &oan

6 arnest 'oney Financing -cheme

6 Financing of service concerns

6 Financing of trading concerns

6 Financing of manufacturing concerns

• "ease financing

$%% bank to keep its contribution to the growth of national /*0, accelerate the total economicdevelopment by infusing the fund in productive sector in more efficient and effective wayE diversify

its portfolio and satisfy the customers needs would go for lease finance for8

5 -etting up of small and cottage industriesDpro2ects

6 "ransports both road + marine!

6 'edical e#uipmentsD &ab e#uipmentD O6ay machine etc.

6 %onstruction e#uipment

6 Hther fixed assets of productive + service oriented ventures

• ousing oan sche$e

%onstruction of buildings is not progressing as expected because of scarcity of housing loans. 'any

people can purchase flat or construct house if they are facilitated with the sanction of institutional

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loan. >ith a view to creating financial capability of the prospective clients in purchasing flats D hoses

and in constructing houses and with the ob2ective of exploring a profitable investment area )$%%

Bank Gousing &oan4 scheme has been introduced. "he purposes of this scheme are8

6 "o motivate service holders, businessmen + professionals who have the capability to repay

the loan for purchase of flatsDhousesDconstruct buildings and thereby improve their life style.

6 "o increase profitability of the bank by interest income.

6 "o strengthen the banks lending base.

6 "o contribute towards improvement of socio economic condition etc.

• +rade % 'o$$erce

"his broad category encompasses large business houses dealing with imported consumer items,

medium and small import business houses trading in similar lines and finally, shopkeepers,distributors, whole sellers scattered throughout the country.

4.13. "ending -roducts >on the basis of ti$eA

$%% Bank is one of the esteemed Banking Institutions in Bangladesh. It has been serving the people

proudly with its different products since 1


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2A +er$ "oan

a! 0ro2ect &oan

b! "ransport &oan

c! Gouse Building &oan

d! &ease Finance

e! &oan under -yndication

3A #e$and "oan

a! &oan /eneral

b! *emand &oan against -hip6breaking &A-!

c! 0ayment against *ocuments 0A*!

d! &oan against imported merchandise &I'!

e! &oan against "rust eceipt &"!

f! Forced &oan

g! 0acking %redit

h! -ecured overdraft against %ash Incentive

i! Foreign *ocumentary Bill 0urchased F*B0!

2! &ocal *ocumentary Bill 0urchased &*B0!

k! Inland Bill 0urchased IB0!

l! Foreign Bill 0urchased FB0!

4A "oan under S*/

a! -mall Business &oan

b! %onsumer Finance &oan

c! &ease Finance

d! 0ersonal &oan

e! Gouse epairing + enovation &oan

f! >orking %apital &oan

g! Festival Business &oan

h! Festival 0ersonal &oan

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i! %ar &oan -cheme

)A 8gro 'redit

a! Agro6based Industrial %redit

b! %rop &oan

,A Specia 'redit -roduct

a! %redit %ard

b! arnest 'oney Financing -cheme

c! $%% Bank Gousing &oan -cheme

d! Hverseas mployment &oan -cheme

A "oan -roducts for Eage5/arners

a! &and 'ortgage &oan

b! -pecial Gouse Building &oan

c! Advance Against emittance

d! >age arners ehabilitation &oan

1A 'ontinuous oan

• Secured Overdraft5SO# >?OA

&oan repayment period is maximum 1 year. If client canJt repay the loan in this stated period then it is

again renewed for 1 year more. "he interest rate is determined by the instrument rate plus three 7C!

percent. It can be issue against, *0-, F*E etc. Interest rate is 19C to 1?C.

• Secured Overdraft5SO# >GA

*isbursement is made after completion of documentation formalities, besides usual charge,

documents like a notari(ed irrevocable power of attorney to collect the bills from the concerned

authority and a letter from the concerned authority confirming direct payment to the bank is also

obtained. "he work is strictly monitored to review the progress at each interval. Interest rate is 1;C to

1?C.

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• 'ash 'redit5'' >ypothecationA

"he banker has only e#uitable charge on stocks, which practically means nothing. -ince the goods

always remain in the physical possession of the borrower, there is much risk to the bank. -o, it is

granted to parties of undoubted means with highest integrity. "he Interest rate of this loan is 17C.

&oan repayment period is maximum 1 year.

• 'ash 'redit5'' >-edgeA

Interest rate of this loan is 17C. $ow $%% bank stops this loan because it needs extra warehouse that

2A +er$ oan

• ouse Buiding "oan

"his loan is provided against 1::C cash collateral, besidesE the land + building are also mortgaged

with the bank. Interest rate is 17C p.a. overdue installment of this loan is obliged to pay very shortly.

"he loan is under =nclassified &oan. "he range of house building loan is ; lac 5: lac.

• "ease ?inance

"his type of financing are usually provided to transportation sector. $ow a day this &ease Financing

is one of the popular financing pro2ects. "he Interest ate of interest is 19C61;C. "his loan is

providing for 7 9 years and maximum amount is tk.19 lac.

3A #e$and oan

• "oan >GeneraA

$%%B& considers the loans, which are sanctioned for more than one year as loan g!. =nder this

facility, an enterprise is financed from the starting to its finishing, i.e. from installment to its

production. $%%B& offers this facility only to big firms. "he rate is 17C.

• "oan against 0$ported *erchandise >"0*A

"he importer will bear all the expenses i.e. the warehouse charge, insurance fees, etc. and the

ownership of the goods is retaining to the bank. "his is also a temporary advance connected with

import, which is known as post import finance. Interest rate is 1;C.

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• "oan against +rust Receipt >"+RA

"rust eceipt is fully paid off. "his is also a temporary investment connected with import and knows

as post6import finance and falls under the category P%ommercial &endingP. Interest rate is 1;C.

• "oan #ocu$entary Bi -urchase >"#B-A

"he bill of exchange is held as the primary security. "he client submits the usually bill and the bank

discounts it. "his temporarily liability is ad2ustable from the proceeds off the bill. Interest rate is 1;C.

• 0nand Bi -urchase >0B-A

"his temporary investment is ad2ustable from the proceeds of billsDche#ues purchased for collection.

It falls under the category P%ommercial &anding4.

• ?oreign Bi -urchase >?B-A

"his temporary investment is ad2ustable from the proceeds of the che#ueDdraft.

4A "oan under S*/

•'onsu$er 'redit Sche$e

"his scheme is aimed to attract consumers from the middle and upper middle class population with

limited income. "he borrower should have saving or current deposit account with the bank. 'inimum

39C of the purchase cost of the product is to be deposited be the borrower with the bank is e#uity

before the disbursement of the loan. "he rest ?9C is to be kept as cash collateral F*, -hanchay

0atra etc.! with the bank.

"he purchased items are hypothecated with the bank. "he disbursement of the loan is effected by

debiting loan general! account to the opened in the same of the borrower. &oan amount is disbursed

through aDc payee pay orderDdemand draft directly to the seller after submission of the indent, deposit

of client e#uity and completion of documentation formalities. "he interest rate is 17C61;C.

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• Eorking capita oan

&oans allowed to the manufacturing unit to meet their working capital re#uirement, irrespective of

their si(e big, medium or large fall under the category. "he range of working capital loan is tk.1 lac to

tk.9 lac and the interest rate is 1;C.

• ouse Repairing7Renovation "oan

"his loan is offered for renovation and moderni(ation of the houseDbuildingDflat. "he genuine

residential owners can avail this kind of loan. "he range of loan amount is tk.1 lac to tk.9 lac. &oan

can be repaid by monthly e#ual installments including interst within maximum 9 years. "he Interest

rate of Gouse epairingD enovation loan is 1;C.

• S$a Business "oan

"his loan is offered to the small and promising entrepreneurs to meet their capital re#uirement and

enable them to operate and expand the business purposely. It is apporved against collateral and

estimation of the revenue generation of the pro2ect for which the loan is sanctioned. "he range of this

type of loan is one to five lac taka. "he interest rate of -mall business loan is 1;C.

• S*/ "oan for Eo$en

$%% Bank provides a new type of -' &oan for >omen named Hpora2ita. It encourages the women

to start new venture. It provides loan at the rate of 1:C, which is lowest rate among all other types of

loan.

• -ersona "oan

"his loan is provided to salaried persons in various organi(ations to meet any emergency cash needs.

Interest rate is 19C p.a. and maximum credit ceiling is "k.1, ::,:::.

Page 7


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Part- 0i&e

"nalysis

Page 5:


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).1 +i$e series anaysis

).1.1. ear ise "oan and 8dvances

0ig-5.1.1: 6ear wise loan and ad&ances ,in million

Sources: "nnual +e$ort ,2%%-2%1%

Qear wise loan and advances of $%% Bank increasing year by year. In 3::; the total loan and

advances was ". 35,;?:.7; million. It was increased to "k. ;7,37:.15 million. "hat means loan and

advances increased more than 3.9 times from 3::; to 3:1:. From the graph it is seen that average

growth rate per year for loan + advances is 71.35C.

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).1.2. ear ise 'ontinuous oan

e

0ig-5.1.2: Continuous *oan ,in million


"he above figure depicted by time series analysis it can be seen that year wise continuous loan is

increasing respectively year by year. In 3::; continuous loan was "k.


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).1.3. ear ise +er$ oan

0ig-5.1.3: erm *oan ,in million


"he graph depicted above shows that the term loan was in increasing mode from the 3::; 63:1:.

>ithin 9 years 3::963:1:! the term loan amount was double in 3:1: as much as the amount in

3::;.-o from the above graph it can be said that average growth rate per year of term loan was

[email protected];C.

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).1.4. #e$and "oan

0ig-5.1.!: emand *oan ,). in million


From the graph it can be seen that *emand loan is increasing in mode. In 3::; the demand loan was

"k. ?5@


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).1.). S*/ "oan

0igure-5.1.5: S/ loan ,). in million


"he $%% Bank does not interest to provide loan in -' sector. From the graph we can see that in

3::; the -' loan was only "k. 1;7.@@ 'illion which is too much lower than continuous, "erm loan

and demand loan. In 3:1: it was increased to "k. 35


46/72

).1.,. Sector ise #istribution of "oan and advances

0igure-5.1.: sector wise ad&ances

Sources: "nnual +e$ort 2%1%

From the figure it can easily be said that $%% provides more loan in industry sector in 3:1: it was

5:.@?C of total loan and advances, which is productive sector. But in agriculture sector they

discourage to sanction loan because they think this sector is risky, in 3:1: it was :.@7C. In Business

sector it was 1?.5@C

Page 5;


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).1.. ear ise invest$ent

0igure-5.1.7: year wise in&estment ,). in million

Sources: "nnual +e$ort 2%1%

In 3::; the investment mad by the bank was "k. 7993.:@ million. It was increasing mode + was

triple in 3:1: than to 3::; resulted the figure was "k.7993.:@ million to "k. 1:


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).1.. 0nvest$ent portfoio

0igure-5.1.8: In&estment Portfolio in 2%1%

Sources: "nnual +e$ort ,2%1%

In 3:1: investment made in /overnment "reasury Bonds sector was


49/72

see, the disbursement of loan gradually increase year by year. In 3::; the loan amount was too low

because of economic recession.

0igure-5.1.9: 6earwise disursement # +eco&ery of 'CC(*.


From the graph we can see that loan and advance increases gradually year by year. "he recovery

amount also increases year by year from 3::; 3:1:.From the graph it is found that, the

disbursement amount is maximum in 3:1: and minimum in 3::;.Hn the other hand the recovery

amount is maximum in 3:1: + minimum in 3::; as well.

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).1.19. Recovery in -ercent

$%% Bank &td. set a target for recovery the loan that is about


51/72

0igure-5.1.11: 6earwise Credit to e$osit of 'CC(*. Sources: "nnual +e$ort ,2%%-2%1%

"he above figure shows that the credit to deposit increases year by year from 3::; to 3:1:. -o, it can

be said that the bank efficiently collect their deposit and convert the deposit into the loan + advances

resulted a positive trend.

).1.12. &on -erfor$ing "oan 8naysis

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A loan is nonperforming when payments of interest and principal are past due by


53/72

%redit to *eposit atio measures the portion of *eposit is in the form of loan and advances. "he

greater the ratio the better for the organi(ation.

0igure-5.2.1:- Credit to e$osit +atio ,). in million

Source: "nnual +e$ort ,2%%-2%1%

From the figure it can be said that the collection of deposit in increasing year by year that form into

loan + advances increasing year by year subse#uently. -o, the credit to deposit ratio therefore

increasing with a continuous form indicates that the bank can successfully utili(e its deposit collected

from the people by the lowest interest rate into in the form of loan and advances which is main source

of Banks income. It is seen that the ratio is greater in 3::? which was


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).2.2. 0nvest$ent to #eposit Ratio

Investment deposit ratio measures the portion of deposit used for investment in loan products. "he

more the ratio the more the bank is using its deposit as investment.

0igure-5.2.2:- In&estment to e$osit +atio

Source: "nnual +e$ort ,2%%-2%1%

From the above graph it is seen that "he Investment deposit ratio of $%% Bank is increasing at a

fluctuating rate. By considering the above graph it can be said that the bank is capable to utili(e its

deposit into investment that indicates a good sign for the bank.

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).3. 'o$parative 8naysis

K Southeast Bank "i$ited >S/B"A

K *ercantie Bank "i$ited >*B"A

In our country local private commercial bank play an effective role in the countrys banking sector.

Southeast Bank "i$ited is well recogni(ed private commercial bank in Bangladesh. "his bank is

modern in their nature and activity. &ike other banks these bank is much concern about their credit

policy and follows Bangladesh Banks credit grading policies and rules in case of credit management.

Hn the other hand, *ercantie Bank "i$ited is well recogni(ed private commercial bank in

Bangladesh. "his bank is modern in their nature and activity. &ike other banks this bank is much

concern about their credit policy and follows Bangladesh Banks credit grading policies and rules in

case of credit management.

Page 99


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'o$pare ith S/B" % *B"

-articuars &''B" S/B" *B"

-articuars 2919 299 2919 299 2919 299

+ota #eposits ,6,1.24 )3699.14 1962.) ,6,,.9) )6,2.14 )6933.4

+ota "oans %

8dvances

,36239.14 )963., 24)2.,2 4.) ,,63.9 462).))

+ota 0nvest$ent 1969.1 6,1.)3 132.,) 213)9.23 1963.29 6,,4.2

'assified "oans 1642).2 1429.) 262,4.2 26329.31 11.1 12)2.9)

'assified "oans

-ercentage >+ota

"oans % 8dvancesA

2.2J 2.4J 4.2,J 3.3J 1.J 2.)J

-rovision kept

against 'assified

"oans

42.9 29.22 1,2.) 1139.4 ,1.)2 ,2.9

'redit #eposit

Ratio

3.94J 3.4J ).2J 9.1J .J 3.22J

Return on 8sset

>RO8A

2.4J 2.,1J 2.2,J 1.,,J 1.,4J 1.22J

'apita 8deuacy

Ratio

19.1J 13.))J 11.2)J 11.2J .13J 19.4J

&u$ber of

Branches

,) , ), ,) )3

Page 9;


57/72

Source@ 8nnua Report 2995 2919 >&'' Bank6 Southeast Bank % *ercantie BankA

?ig@ ).3.1@ 5 'o$parison beteen &''B"6 S/B" % *B" >29952919A

?ro$ the vie point of tota deposit

In the comparative analysis among $ational %redit + %ommerce Bank &imited, -outheast

Bank &imited and 'ercantile Bank &imited, it has been seen that, both the year 3::< and

3:1:, $%%B& deposits are lower than -B& + 'B&. By considering the number of

branches, the average deposit for $%%B& was "k. @3


58/72


?ro$ the vie point of +ota "oan % 8dvances

"he graph depicted above compares the loan and advances among $%%B&, -B& and 'B&

from 3::< to 3:1:. It is seen that the amount of loan and advances for $%%B& was less than

the -B& both in 3::< and 3:1:.Hn the other hand, the disbursement of loan for $%%B& is

comparatively greater than the 'B& in 3::< but lower in 3:1:.GoweverE the average loan

disbursed by $%% bank in 3::< + 3:1: was ;7?.@3 million + @::.7@ million respectively.

Hn the other hand, -B& disbursed about 1:1


59/72


?ro$ the vie point of +ota 0nvest$ent

"he graph pointed out above, it is seen that total investment of $%%B& was greater than the

'B& but lower than the -B& both in 3::< + 3:1:. Gowever, the investment of $%%B&

was increasing mode and -B& was decreasing mode compared to 3::< to 3:1:.%onsidering

the number of branches the average investment of $%%B& was 15@.?< million in 3::< +

17


60/72


?ro$ the vie point of 'redit to #eposit Ratio



3:1:, $%%B&s credit to deposit ratios are greater than -B& + 'B&. In 3::


61/72

?ig@ ).3.)@ 5 'o$parison beteen &''B"6 S/B" % *B" >29952919A

?ro$ the vie point of 'apita 8deuacy Ratio

"he graph depicted above compares the capital ade#uacy ratios among $%%B&, -B& and

'B& from 3::< to 3:1:. It is seen that the capital ade#uacy ratios for $%%B& was 17.99C

in 3::< + 1:.


62/72

?ig@ ).3.,@ 5 'o$parison beteen &''B"6 S/B" % *B" >29952919A

?ro$ the vie point of +ota 'assified "oan % 8dvances

"he graph pointed out above, it is seen that total classified loans and advances of $%%B&

were greater than the 'B& but lower than the -B& both in 3::< + 3:1:. By considering

the number of branches, the average classified loans and advances of $%%B& was "k. 31.@9

million in 3::< + "k. 1@.:5 million in 3:1:.Hn the other hand, the average classified loans

and advances for -B& in 3::< + 3:1: was 91.;; million + 91.@3 million and 'B& was

"k. 37.;3 million+ "k. [email protected]? million in 3::< + 3:1: respectively. -o, the average classified

loans and advances of $%%B& + 'B& were decreasing but -Bs average classified loans

and advances was increasing resulted average growth rate for $%%B&, 'B&, -B& was 6

1?.55C!, :.7:@C! + 633.;9C! respectively indicates $%%B& limited was in better

position.

Page ;3


63/72

?ig@ ).3.@5 'o$parison beteen &''B"6 S/B" % *B" >29952919A

?ro$ the vie point of 'assified "oan -ercentage



3:1:, $%%B&s classified loan in percentage was greater than 'B& but lower than 'B&. In3::


64/72

Part- Si

0indings Conclusion and

+ecommendation

Page ;5


65/72

,.1 *ajor ?indings

$%% bank is in the midst of an intense competitive environment of financing industry. Bank and non6

bank solution to finance businesses are being introduced regularly. From the report i get some

positive and negative findings about $ational %redit and %ommerce Bank &td. "he findings are

necessary for bank to take corrective measure. -o we disclose the findings below8

Qear wise loan and advances of $%% Bank increasing year by year. "he &oan and advances

increased more than 3.9 times from 3::; to 3:1: results the average growth rate per year is

71.35C.

%ontinuous &oan, "erm &oan, *emand &oan and -' &oan are increasing year by year. "he

average growth rate is 3:C but in the -' sector they have lowest investment.

In industry sector in 3:1:, 5:.@?C of total loan and advances was provided in industry sector.

But in the agriculture sector they discourage to sanction loan because they think this sector is

risky. "herefore, in 3:1: it was only :.@7C of total loan + advances.

In 3::; the investment made by the bank was "k. 7,993.:@ million which was triple in 3:1:

and the figure was "k. 1:,


66/72

"he average deposit growth rate considering the number of branches for $%% bank is 7.?5C,

-Bs growth rate is 11.55C and 'B&s growth rate is ;.3;C indicates $%%B& doesnt

collect their deposit as efficient as other two banks.

"he disbursement of loan + advances for $%%B& is lower than the both -B& and

'B&.Gowever, the average growth rate of disbursement of loan for $%%B& is comparatively

higher than the both bank indicates $%%B& limited is in better position.

"he total investment of $%%B& shows lower average growth rate 6;.9@C! compared to

-B& 67.;?C! + higher than to 'B& 6?.?7C!.

$%% banks credit to deposit ratio was decreasing mode


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profitability. $%% bank brokerage house is concentrating to establish new workstations in order to

facilitate investor of remote places.

"he bank has been able to create a multi component loan portfolio. Gowever non6performing loan are

a real challenge to the sound credit management. *efault is increasing for lack of monitoring. "he

bank is trying to increase its loan #uality by accelerating its recovery policy. "he bank can

concentrate on the loan sector where default risk is low and its investments are profitable. "he loan

procedure has been made more calculative, logical to keep the credit sound.

Page ;?


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).3. Reco$$endations

Banking sector is now a more competitive. ach bank wants to capture maximum market share and to

become a market leader. &ike others $%% Bank also wants to be market leader. I think they have

capability to be market leader. "he private commercial banks that are currently operating in

Bangladesh offering different products but there are few basic differences among them in terms of

structure and performance. "hus, the competitions among them increase day by day. -o, based on

findings it can be recommended to progress in future, $%% bank should adopt some policy which

will help the bank to capture a larger market share. "he recommendations can be disclose below8

From the graph of -' loan, it is found that they provide less amount of loan than any other

sector of loan. But this sector, they should give more emphasi(ed to encourage their

entrepreneur.

In our country more than ?:C people are surviving by producing and selling agricultural

products. But $%% Bank does not provide enough loans to this sector that we found in

)sector wise disbursement of &oan graph4. In 3:1: they provide loan :.@7C of total loan and

advances in this sector. But they should give more concentration in this sector for developing

our economy.

"he customer should be analy(ed properly. It can be done by collecting information from

%redit Information Bureau or past behavior of the customer so that their recovery rate

increases.

0roper and effective monitoring system should be developed in order to minimi(e the amount

of non6performing loan.

%redit to deposit ratio of $%% Bank shows that their ability to provide loan is strong. "his

ratio, in 3:1:, was


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Bibiography@

• *r. 'i(anur ahman 3::@!, &'' Bank +raining Guide

• &awrence, M /itman 3::7!, ;Princi$le of /anagerial 0inance


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8nneCure

?inancia ighights of &''B" fro$ ?2994 to ?299

Page ?:


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Sources@ 8nnua Report >299,529919A

Page ?1


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ncc report shahin.doc

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