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Internship Report

on
Loans and Advances of Pubali Bank Limited
Nawabpur Branch Dhaka.

By
Sonjoy Kumar Ghosh
MBA Program 2004 (6th Batch)
Roll No. 327 (Sl No. 222)
Stream: Strategic & International Management

Supervisor
Mrs.Rubina Maleque
Associate Professor
Department of Management Studies
Faculty of Business Studies
University of Dhaka

Department of Management Studies


University of Dhaka.
Dhaka-1000.

February 15, 2007.

Dated:15 February,2007
1

To
Mrs.Rubina Maleque
The Internship Supervisor
MBA Program
Department of Management Studies
University of Dhaka

Subject: Solicitation for Acceptance of the Internship


Report

Dear Sir/Madam,
I have the pleasure to submit an elaborate internship
report, one of the most important requirements for the
MBA program. I was assigned to work at Pubali Bank
Limited-Nawabpur Branch, where I have observed closely
& studied different practical aspects of the banking
institution. I would like to say has been a great
experienced for me to work in Pubali Bank Limited, which
enlarges

my

practical

knowledge

about

banking

operations.

I have given my utmost effort to reflect experience, skill


and knowledge, which I acquired at the time of orientation
in Bank through this report. All of my efforts will be
successful if the report can serve its purpose.
2

Thanking You.
Sincerely Yours
.
Sonjoy Kumar Ghosh
MBA Program (Major in SIM)
Roll No. 327, Serial no.222
Department of Management Studies
Faculty of Business Studies
University of Dhaka

Acknowledgement

First of all I would like to thank Almighty God because I


have completed my study in due time. Then I also give
thanks to my honorable Supervisor, Mrs.Rubina Maleque,
for providing me the necessary direction to do the study on
the topic. I also grateful to Mr. Shym Sundar Banik,
Manager of Pubali Bank Limited Nawabpur Branch,I also
greatful to Partho Protim Acharzo,Senior Officer of Pubali
Bank Limited, Nawabpur Branch, and the other officials
of Pubali Bank Limited, Nawabpur Branch, for their cooperation in completing my internship and by providing
important information and different materials.

Sonjoy Kumar Ghosh


MBA Program (Major in SIM)
Roll No. 327
Serial No.222
Faculty of Business Studies
Department of Management Studies
University of Dhaka.

Declaration

I Sonjoy Kumar Ghosh, hereby declared that the presented


report of internship named Internship report on Loans and
Advances of Pubali Bank Limited is prepared by me after

successfully completion of 3 months work in Pubali Bank


Limited, Nawabpur Branch, Dhaka.

I also conform that the report is only prepared to meet my


academic requirement not for any other purpose. It will not
act anything that will hamper Banks confidentiality and
interests. It might not be use with the interest of opposite
bodies of Pubali Bank Limited.

Sonjoy Kumar Ghosh

Experience In Pubali Bank Limited As An Intern


One of the modern concepts of economics is financial development. All over
the world the financial development has started with the commercial Banking
system and the diffusion or scriptural money through the economy. At the
very initial stages of financial development of any country, commercial banks
play a major role providing financial services to the economy. Banking studies
are divided into two categories, they are Theoretical & practical. Coordination of theory and practical subjects in the field of Banking studies gets
due importance at this moment when the whole are taking preparation to enter
into a new Millennium. But in spite of this, we find a gap existing between
Theory & practical knowledge. To minimize this gap between Theory &
practices, MBA program of Dhaka University has introduced practical
orientation in different Banks. It is believed that it brings the students
concerned with this program closer to practical area of Financial Institution
and projection of knowledge.

To fulfill this objective, I have prepared an Internships Report on "Loans &


Advances of Pubali Bank Limited, Nawabpur Branch. During this period, I
have gathered various types of banking knowledge from banking experts of
respective Bank and tried to apply my academic knowledge as well as
personal competence to the best. I have also tried my best to cover all the
significant dimension of the topic assigned.

I along with other 10 students go to the Pubali Bank Limited head office
situated at Motijheeel

and reported to the Senior Officer of Pubali Bank

Limited. The Pubali Bank Limited authority cordially received us.

Then each of us was sent to the different branches of Pubali Bank Limited on
10th Octobor, 2006. I was placed in Pubali Bank Limited Nawabpur Branch
for field study from 10th Octobor 06 to 10th January 2007. I reported to Mr.
Shym Sundar Banik, Managing Director of the said Branch and briefed
something about his branch and promised me to give any kind of information
needed. Then I have started to observe the activities held on that branch and I
have found the following major functions:

1. General Banking
Various types of deposit A/C, Transfer, Works of Cash Section, Subsidiary
Register Day Book, Clean Cash, General Ledger, Remittance (P/O, DD, MT,
TT) Bills Department, Clearing House, Pubali Bank Limited General A/C etc.

2. Loans and Advances


General Advances, Industrial loan, rural & micro credit etc.

Concerned officers of the branch showed and discuss with me about General
Banking.
Concerned officers of the Investment Section of the Branch showed the
various files and discussed with me how to provide Loan to the Prospective
sector of the country.

Executive Summary
One of the vital parts of MBA program is internship program. At
the end academic course work one need to compete the internship
to gain practical knowledge

to have

an experience of

implementation of acquired theoretical knowledge. However, at


the end of my MBA course work I was placed in Pubali Bank
Limited at Nawabpur Branch, the largest commercial bank of the
country. During my internship period I have studied almost all the
section of the branch. General banking sector, Loans and advance
Section etc. At the end of my three months internship, I have
gained a thorough knowledge about all of those.

Pubali Bank started its journey as the largest public commercial


bank with a great hope and aspiration. But now it is a private Bank.
Still this bank controls a significant portion of all banking
transactions. With the up gradation of technology the bank is also
trying to keep pace.

This report intends to give a comprehensive view of the bank. It


consists of seven parts. First part consists of introduction and
background of the study. Second part consists of a brief history of

Banking . Third part consists of Organizational overview of Pubali


Bank Limited. Forth part deals with general banking. Fifth part
involves loans and advances. Sixth part involves papers to be
submitted to get a loan and finally seventh part consists conclusion
and recommendation.

Table of Contents
Particulars
Page No.

Letter of transmittal
Acknowledgement
Declaration
Experience as an Intern
Executive Summary

Chapter I: Introduction of the Report

1.1. Background of the study


1.2. Justification of the report
1.3. Schedule of internship
1.4. Objective of the study
1.5. Methodology of the study
1.6. The flow chart of the study
1.7. Sources of data
6
9

1-6

2
2
3
4
4
5

1.8Limitation of the study


Chapter II: A Brief History of Banking

2.1. Introduction
2.2. Evolution of the World Bank
2.3. Emergence of Modern Banking
2.4. Bank Development in Bangladesh

Chapter III: Overview of Pubali Bank Limited

Limited
Limited
Limited

3.1. History of Pubali Bank Limited


3.2. Performance of Pubali Bank Limited
3.3. Organizational structure of Pubali Bank
17
3.4. Managerial Hierarchy of Pubali Bank
18
3.5. Corporate Branches of Pubali Bank
19
3.6. Highlights

Chapter IV: General Banking Services of Pubali Bank Limited

4.1. Account Opening


4.2. Types of Deposit Account
4.3. Operation of Cheques
31
4.4. Transfer of Account
4.5. Dormant Account
4.6. In-operative Account
4.7. Closing of an Account
4.8. Bank Remittance(DD/MT/TT&PO)
33
10

6
7-10

8
8
9
9

11-24

12
13

20

25-46

26
28

32
32
33
33

4.9. Suspense and Sundry Deposit Account


39
4.10.
Establishment
4.11.
Dispatch Section
4.12.
Local Short Credit
4.13.Short Credit
4.14.Demand Draft Received for Collect
4.15
Transfer
Scroll
43
4.16

Clearing

House

43
4.17

Clear

Cash

Book

General

Ledger

44
4.18

The

45
Chapter V: Loans and Advances

5.1. Introduction
5.2. Classification of General Advances
5.3. Credit Policy of Pubali Bank Limited
5.4. Interest Rate Policy
5.5. Total Credit Line
5.6. Restrictions
5.7. Principles of General Advances
5.8. Industrial Credit Department

Chapter VI: Papers to be Submitted to Get a Loan

Firms)

6.1. For Fresh/New Proposal


6.2. For Renewal/ Enhancement Proposal
6.3. Application for Advances(For Individuals&
73
11

47-69

48
52
58
58
59
60
60
67

70-88

71
72

39
39
41
42

6.4. Credit Proposal & Approval Form

79

89-96

Chapter VII: Conclusion

7.1. Problem Findings


7.2. Policy Guidelines/Recommendations
7.3. Concluding Remarks

Bibliography

12

90
92
95

CHAPTER-1

INTRODUCTION OF THE REPORT

13

CHAPTER-1
INTRODUCTION OF THE REPORT

1.1 Background of the study


In the age of globalization, the importance of banking sector is beyond
description. Banking sector is going ahead with the improvement new
technological innovation. Introduction of modern technology has made
banking sector user friendly and more competitive. The banks of Bangladesh
are not lag behind. The banks of Bangladesh are keeping pace. To survive in
the financial market and to play significant role both technological
implementation and skill manpower are accessory in which Department of
Management Studies of D.U. is playing a significant role. By providing skilled
manpower, Department of Management Studies ahs given the banking sector a
momentum. And the internship program has made the effective. By studying
at the University of Dhaka, one gains an extensive theoretical knowledge and
the internship program makes that knowledge effective. Theoretical
knowledge has a great value but without having theoretical knowledge it
might be vain. In this regard, the internship program is fulfilling the lacking of
practical knowledge of the graduates of Department of Management Studies.
After completing the internship program the graduates become more effective
in that particular field.

1.2 Justification of the Report


Due to market economy the competition among nationalized, foreign and
private commercial banks and the expectation of the customers become
rapidly growing concerning the banking operation & how customer service
becomes more attractive. Reciprocating the sentiment, commercial banks are
trying to elevate their traditional service to a better standard, to meet the
challenging needs. Side by side, these banks have now concentrated their
attention towards diversification of their products for better performance of

14

their existence. Under the above circumstances, it has become necessary for
Pubali Bank, a leading commercial bank, to focus its' attention towards the
improvement of the customer service through its' multi-purposeful activities.
That is why it is quite justified to make an in-depth study about its operation
and evaluate service provided by this bank and scope for its' improvement.
This is the exploratory study that evaluates the functions of Pubali Bank. The
study may help formulating policy regarding the ideas relating to the feelings
of the customers & bankers. Now it is hoped that it may have some
significance to Pubali Bank and those who want to develop Pubali Bank.

Since financial area is my preferred area to build up my career, this study will
vehemently help me to go forward and improve my career path.

1.3 Schedule of Internship


On the very first day at the Pubali Bank, I was welcomed by the Managing
Director of Nawabpur Branch, Mr. Shym Sundar Banik. I was assigned for
practical orientation at Nawabpur Branch of Pubali Bank. During my practical
orientation, I was guided by Mr. Shajhan Mahmood, SPO, of the branch. He
gave me some direction in choosing, schedule or orientation at various
departments of the branch; I started with General Banking Department. The
schedule, although not water-tight has given below:

Date of Orientation (2006)

Departments

10 Octobor 06- 25November 06

General Banking

26November06-10 January 07

Loans & Advances

15

1.4 Objective of the Study:


 Application of theoretical knowledge in the practical field.
 Understand the real management situation and try to suggest for
improving existing problems.
 To analyze the financing system of the Bank to find out if the Bank has
any field to improve upon and to have greater contribution towards
country's economy.
 To examine the profitability and productivity of the Bank.
 To acquire knowledge about the every day banking operation of Pubali
Bank.

1.5 Methodology of the Study


While conducting the study, sources were explored for primary information
and data. But hardly any updated data could be found. In the absence of
updated information or data dependence on secondary data has been
inevitable. However, whenever possible primary data has been used. Data
were also collected by interviewing the responsible officers and from some
documents & statements printed by the Pubali Bank. Pubali Bank also helped
me in collecting data providing books and Banks annual report.

16

1.6 The flow chart of the Study

PLANNING

DESIGNING THE LAY


OUT

THE APPROACH
QUESTIONNAIRE
DEVELOMENT

-THE LITERATURE

COMMUNICATING

REVIEW
-THEORIETICAL
CONSIDERATION

METHODOLOGY

SECONDARY SOURCES
PRIMARY SOURCES

a) Annual report
a) Official records of Pubali Bank

b) Working papers

b) Face to face conversation

c) Office files
d) Selected Books
e) Printed forms

COLLECTING INFORMATION

ANALYZING
PREPARING THE REPORT

SUBMISSION OF THE
REPORT

17

1.7 Sources of Data


The following sources have been used for the purpose of gathering and
collecting data as required.
Primary Data
a) Official records of Pubali Bank
b) Face to face conversion

Secondary Data
a) Annual report
b) Working papers
c) Office files
d) Selected Books
e) Printed forms

1.8 Limitation of the study


Although I have obtained wholehearted Co-operation from employee of Pubali
Bank Nawabpur Branch, they were extremely busy. So they were not able to
give much time as they and I would like. Besides, total duration of internship
is not sufficient to give me more than a superficial idea of the functioning of
the various departments I was rotated through. On they way of my study, I
have faced the following problems which may be termed as the
limitation/short coming of the study. These are as follows:
a) The main constraint of the study was insufficiency information, which
is required for the study.
b) Since the Bank personnel are very busy with their activities, as a result
they failed to co-operate with me to complete this report.
c) The major limitation of the study was shorter time period. For an
analytical purpose, adequate time is required. But I was not given
adequate time to prepare such as in-depth study.
d) Such a study was carried out by me for the first time. So, in-experience
is one of the main factors that constituted the limitation of the study.

18

CHAPTER-2

A BRIEF HISTORY OF BANKING

19

CHAPTER-2
A BRIEF HISTORY OF BANKING

2.1. Introduction:

A bank is one, who in the ordinary course of his business receives money,

which he repays by honoring cheques of persons from whom or on whose


account he receives it. Banks deal mainly with money and credit. They
purchase and sell money and credit.

2.2. Evolution of the Word Bank:

Etymology deals with the roots and origin of the word bank. According to
some writers the word bank derived from the word BANCO, BANCUS,
BANQUE, and BANC, all of which mean bench upon which the early bankers
used to display their coins and transact business in the market place.

According to the some other writers the word bank has been derived from
the German word BANKE which means a joint stock fund. Banking in the
ancient times was largely confined to money changing and money lending.

20

2.3. Emergence of Modern Banking:

In middle Europe the bankers of Lombardy were very famous. They planted
the seed of modern banking in England. Among those prominent bankers we
can named one who were famous not only in banking but also in political
history in Europe. These Lombardy people were very much disturbed in 13s
by internecine work that was followed by plunder by Kaiser Frederick two.
Lombardy people in large number as a result started migrating to more settled
countries such as England, French, and Belgium.

2.4. Bank Development in Bangladesh:

During Mughal period, indigenous banking flourished. The Subarna bank the
bullion trading community used to do banking in the then Bengal. At the
British time banking in the form of agency house, exchanging house started to
flourish in kolkata., especially in the wake of the swadeshi movement.
In 1947 after the separation of Bengal, bank business faced a severe disaster as
non-Muslim bankers migrated to India. In order to rebuild the bank business
State bank of Pakistan was established as a central bank of Pakistan in 1948.
In 1971 Bangladesh became independent. After liberation Bangladesh bank
was automated with the asset and liabilities of former State bank of
Pakistan. There were several banks before independence of Bangladesh as
follows:

(1) The national bank of Pakistan


(2) The bank of Vowalpur ltd.
(3) The premier bank ltd.
(4) The Habib bank ltd.
(5) The commerce bank ltd.
(6) The united bank ltd.
(7) The union bank ltd.
(8) The Muslim commercial bank ltd.

21

(9) The standard bank ltd.


(10) The Australasia bank ltd.
(11) The eastern mercantile bank ltd.
(12) The eastern banking corporation ltd.

Bangladesh Bank nationalization Order promulgated on 26 March in 1972.


After the liberation war the above 1st three banks were converted to The
Sonali Bank, The 2nd two banks were converted to The Agrani Bank, the
next two banks were converted to The Janata Bank, the next three banks
were converted to The Rupali Bank, the next one bank was converted to The
Pubali Bank and the last bank was converted to The Uttara Bank.

22

CHAPTER-3

ORGANIZATIONAL OVERVIEW OF
PUBALI BANK LIMITED

23

CHAPTER-3
ORGANIZATIONAL OVERVIEW OF PUBALI BANK LIMITED

3.1 History Of Pubali Bank LImited

Welcome
PUBALI BANK LIMITED
is the largest
Commercial Bank in
Private Sector in
Bangladesh. It provides
mass banking services
to the customers
through its branch
network all over the
country. This Bank has
been playing a vital
role in socio-economic,
industrial and
agricultural
development as well as
in the overall economic
development of the
country since its
inception through
savings mobilization
and investment of
funds. During the last 5
years the growth rate
of bank's earnings is
more than 25% on
average.

Head Office

The Bank was initially emerged in the Banking scenario of the then
East Pakistan as Eastern Mercantile Bank Limited at the initiative
of some Bangalee enterpreneurs in the year 1959 under Bank
Companies Act 1913 . After independence of Bangladesh in 1972
this Bank was nationalised as per policy of the Government and
renamed as Pubali Bank. Subsequently due to changed
circumstances this Bank was denationalized in the year 1983 as a
private bank and renamed as Pubali Bank Limited. The Government
of the People's Republic of Bangladesh handed over all assets and

24

liabilities of the Pubali Bank to the Pubali Bank Limited. Since then
Pubali Bank Limited has been rendering all sorts of Commercial
Banking services as the largest bank in private sector through its
branch network all over the country.

3.2 Performance of Pubali Bank Limited:

Share Capital:
The authorized capital and Paid up Capital of the Bank stood at Tk.5000.00
million and Tk.400.00 million respectively in 2005. Out of total 7591
Shareholders, 4 nationalized institutions including the Govt.of the People's
Republic of Bangladesh held shares of Tk. 11.72 million. The remaining
shares of Tk.388.28 million were held by various institutions and individuals.

Statutory and Other Reserves:


During the previous year the statutory reserve and other reserve of the bank
stood at Tk.2107.76 million, out of which statutory reserve was Tk.1250.12
million, other reserve was Tk.857.64 million. During the year under review
the total reserve stood at Tk,2481.21 million at the end of the year due to
increase of general reserve by Tk.573.45 million from current year's profit.

Deposits:
The total deposit at the end of the previous year was Tk.
39789.70million.During the year under review the amount stood at Tk.
44443.03 million which was 11.69% higher than the position of the Previous
year.

Borrowing from other Banks:


The borrowing from other Bank, for the business purpose, was Tk.320.20
million as on 31.12.2005.Such borrowing during the previous year was
Tk.131.62 million.

25

Foreign Exchange Business:

Earning from call Loan:


Due to active participation in the inter Bank money market ,total earning from
call loan during the year amounted to Tk.429.28 million which was high by
Tk. 142.83 million over the amount of previous year.
a) Import business
During the year the bank handled import business worth Tk. 26033.80 million.
During the
previous year ,the amount was Tk. 18024.30 million.

b) Export business:
The Bank handled export business worth Tk. 15271.10 million during the
year as against Tk.13670.50million in the previous year.

c) Inward Foreign Remittance:


Non resident Bangladeshis sent foreign exchange equivalent to Tk. 14860.30
million during the year ,which was Tk. 11753.00 million during the previous
year.

Investments:
Total investment of the Bank was Tk. 5742.12 million during the previous
year. The sectors of investments were mainly Govt. Bonds , Treasury Bills,
Approved Debenures,Shares and Debentures of Private institutions.

Advances:
The total advances of the Bank during the previous year amounted to Tk.
27542.33 million which was Tk. 32639.68 million during the current year.
The Bank made advances mainly in sectors such as commercial loan, import
and export business, term loan to large and medium scale industries, house
building loan, consumer's credit loan.

26

Position of Profit and Loss:

The total income and total expenditure of the Bank during the year were
Tk.4435.90 million And Tk. 3063.27 million respectively resulting in a profit
of Tk. 1372.63 million before making provision for bad and doubtful debts
and income tax.

Branch Expansion and Modernization:


During the year under review 23 branches were shifted to new premises in
more suitable places and 19 branches were refurnished and modernized.

Information Technology and Automation:

For providing quick customer service all the 350 branches of the bank
have been computerized including branches situated at the remote areas
like Sandwip,Mehidigonj etc. As a result , quick and better customer's
service is being possible with less manpower .Bank started to develop an
improved Multi user client server Architecture System Software called
Pubali Integrated Banking System(PIBS) enabling to provide one stop
service to its clients. The Bank entered in internet world through
introduction of its web-site www.pubalibangla .com as a result , the name
of pubali Bank ltd. included in world Electronic Database. To meet the
demand of time Pubali Bank Ltd. has entered into ATM World.

Man- power& Training


This year, the numbers of officers and employees of the Bank stood at 5088,
sixty eight on different subjects were organized at the Banks Training
Institute and 1740 officials of different levels participated training besides
these, Bank utilized the training services rendered by other training
institutions.
In August 2005 a one- day National Workshop was held at Dhaka which was
attended by all the 350 branch Managers, 16 Regional managers and senior
executives of Head Office of the Bank. On the occasion, 18 Branch Managers
were awarded for their outstanding performance.
Audit& Inspection
Banks Audit Term audited 233 branches & offices during the year under
review while inspection of all the 350 branches was conducted by Banks
Inspection Team.

27

Meeting of the Board of Directors& its Committees


During the year 2005, 39 meetings of the Board of Directors were held. Policy
decisions on different issues were taken in these meeting.
Appointment of Auditors
M/s. Ahmed & Co., Chartered Accountants, M/s.Syful Alam & Co. Chartered
Accounts and M/s.K.M.Alam Khaleque & Co., Chartered Accounts were
appointed Auditors of the bank for 2005 in the 22nd Annual General Meeting.
But due to dissolution of M/.K>M.Alam Khaleque & co., the other 2(two)
Chartered Account firms audited the statement of accounts with Due
permission of Bangladesh Bank and Securities exchange Commission.
Conclusion
The Board of Directors expresses its gratitude to all Clients, Shareholders and
Partners for extending support and co-operation in the activities of the Bank
during the 2005.the Board of Directors thanks Government of the Peoples
Republic of Bangladesh and Bangladesh bank for their co-operation and
guidance.
The Directors also wish to place on record the sincere appreciation and thanks
for the sincere and dedicated services and co-operation extended by the
officers and employees towards overall performance of the Bank during the
year under review.

28

3.3 Organizational Structure of Pubali bank limited:

Designation in ascending order


Sl. No.

Designation

1.

Managing Director

2.

Deputy Managing Director

3.

Senior Executive Vice President

4.

Executive Vice President

5.

Senior Vice President

6.

Vice President

7.

Senior Assistant Vice President

8.

Assistant Vice President

9.

First Assistant Vice President

10.

Senior Executive Officer

11.

Executive Officer

12.

Principal Officer

13.

Senior Officer
Management Trainee

14.

Officer

15.

Junior Officer

16.

Assistant Officer
Trainee Assistant

29

3.4 Managerial Hierarchy of Pubali Bank Ltd:

Chairman
Board of Directors

Top Management

Executive Committee
Managing Director

Additional Managing Director


Deputy Managing Director
Senior Executive Vice President

Executive Level
Management

Executive Vice President


Senior Vice President
Vice President
Senior Assistant Vice President
Assistant Vice President

First Assistant Vice President

Mid Level
Management

Senior Executive Officer


Executive Officer
Principal Officer

Senior Officer

Junior Level
Management

Management Trainee Officer


Junior Officer

30

3.5 Corporate Branches Of Pubali Bank Limited

CORPORATE BRANCHES INFORMATION


Branch
Name
Agrabad

Police
Phone /
Station
Telex
99, Agrabad
Doublemooring 880 31
Comm. Area
716388,
Dist. - Chittagong
716409
633116
Bangladesh
PBAGB BJ
B. B. Avenue 65, B.B. Avenue
Motijheel
880 2
9550600 880
Dhaka-1000
Bangladesh
2 9555406
632236
PUBBA BJ
C.D.A
C.D.A. Building
Doublemooring 880 31
P.O. - GPO
611381,
Chittagong
634710
Dist. - Chittagong
633117
Bangladesh
PBCDA BJ
Dhaka
8, D.I.T. Extension Motijheel
880 2
Road
Stadium
9555565
Lal Bhaban
632389
Dhaka-1000
PBLDS BJ
Bangladesh
Motijheel
880 2
Foreign
24, Motijheel
9561858 880
Exchange Comm. Area
2 9550952
Dhaka-1000
632411
Bangladesh
PUBFE BJ
880 2
Karwan Bazar Jalalabad Bhaban Tejgaon
8114080
22, Karwan Bazar
Dhaka-1215
632322
Bangladesh
PBLKR BJ
Mohakhali

Postal Addresss

Gulshan

99, Mohakhali
Comm. Area
Dhaka-1212
Bangladesh

31

880 2
8811044
632287
PBMKH BJ

Motijheel

Principal

Sena Kallyan
Bhaban
195, Motijheel
Comm. Area
Dhaka-1000
Bangladesh
26, Dilkusha
Commercial Area
Dhaka-1000
Bangladesh

Motijheel

Motijheel

880 2
9551071 880
2
9550635/110
671431
PBMJL BJ
880 2
9557323 880
2 9552449
880 2
9557323
671528
PBLLO BJ

3.6 HIGHLIGHTS

Particulars
Authorised capital
Paid up Capital
Reserve fund and
other Reserve
Deposits
Advances
Investments
Import Business
Export Business
Bridge Finance
Total Income
Total Expenditure
Pre-Tax Profit
Net Profit
Total Assets
Fixed Assets
OTHER
INFORMATIONS
No. of Employees
No. of Shareholders
No. of Branches
Earning per
Ordinary
Share(Taka)

As at 31st December(in million taka)


2001
2002
2003
2004
2005
5000.00 5000.00 5000.00 5000.00 5000.00
200.00
200.00
200.00
200.00
400.00
1338.29 1740.80 1931.76 2107.76 2481.21
32291.00
23583.00
4165.80
12573.00
11228.00
8.40
3660.20
2488.70
626.50
407.20
39068.30
565.60

33730.10
26189.50
4400.80
10500.00
10214.00
8.30
3823.50
2575.70
724.00
398.20
41895.90
591.30

35852.60
26282.69
4938.86
12141.30
11648.20
7.90
3569.30
2704.10
345.20
189.80
43502.25
582.60

39789.71
27542.33
5742.12
18024.30
13670.50
7.80
3455.32
2830.41
244.90
134.70
46593.28
545.40

44443.03
32639.68
5536.84
26033.80
15721.10
7.29
4435.90
3063.27
1042.63
573.45
52671.44
546.48

5050
6601
349
203.61

4987
6563
350
199.11

4983
6506
350
94.92

4797
6562
350
67.65

5088
7591
350
143.36

Source-Annual Report of Pubali Bank Limited 2005.

32

Source- Annual Report of Pubali Bank Limited 2005.

33

Source- Annual Report of Pubali Bank Limited 2005.

34

Source- Annual Report of Pubali Bank Limited 2005.

35

Source- Annual Report of Pubali Bank Limited 2005.

36

CHAPTER-4

GENERAL BANKING SERVICES OF


PUBALI BANK LIMITED

37

CHAPTER-4
GENERAL BANKING
4.1

Account Opening:

4.1.1

The procedures followed for Opening an Account

 Account Opening Form: At first you have to fill up a form given by


the respective bank where you are going to open an account. This form
contains some information such as: a) Name of the Branch.
b) Date.
c) Title of the Account.
d) Special instruction.
e) Name of Account folder.
f) Occupation.
g) Address.
h) Description of initial Deposit.
i) Verification of the introducer.
 Specimen Signature: Specimen Signature is very important to identify
the drawer. This signature is kept in a special card along with drawer's
name. This card contains: a) Title of Accounts.
b) Specimen Signature of the guarantor of the Account.
c) Allotment of Account number.
 Pay in slip: It contains filling up of all the particulars of Account and
Cash tendered for deposit. Voucher marked new Account.
 Cheque requisition Slip: It contains: a) Verification of Signature.
b) Entry made in cheque issue register.

38

 Ledger: Ledger contains:


a) Entry of Account particulars from account opening form in the ledger.
b) Position of the voucher and cheque requisition slip.
c) Supervision of this posting by officer in charge
 Issue of Pass Book
 Filling up the Account opening form in the appropriate file under
custody.
4.1.2 Partnership Firm
 The consent of all partners.
 Partnership Deed.
 Mandate contains:
i.

The name of the person who will authorize to operate the


Account.

ii.

The extent of authority given to such persons.

iii.

Personal Account and a Firm's Account.

iv.

Creation of mortgage.

v.

The retirement of partner.

vi.

The death of partner.

vii.

The insolvency/insanity of a partner

4.1.3 A Joint Stock Company


For opening a company account some documents are needed which are given
below:
o Certificate of Incorporation in original along with a true copy.
o Copy of Memorandum & Articles of Association certified up to date.
o Certificate of Commencement of Business original along with a true
copy.

39

This is not required when


i.
The company is private limited company.
ii.

The Company is registered before the first day of April


1914 & invites the public to subscribe shares.

4.2

iii.

The company is limited by Guarantee

Balance Sheet and profit and loss statement.

The Board Resolution

Mandate

Types of Deposit A/C:

Deposit forms the life-blood of a commercial bank. If can't carry on its


business only with as own capital. It accepts deposits from the customers on
one side and lends it to other borrowers/ customers. By this way it earns some
margin of interest, which is one of the most important remunerative sides of its
business. In short we can say, bank is an intermediary, which mobilizes funds
from surplus economy to deficit economy. Banks deposits can broadly be
classified into the following categories:Demand deposit- These are repayable whenever the customer asks.
Time deposit- These are repayable after the expiry of period agreed at the time
of opening the deposit account. In a Bank, the following types of accounts are
opened: Current Account.
 Savings Bank Account.
 Fixed Deposit Account.
 Call Deposit Account.
 Deposit Pension Scheme.
 Special Deposit Pension Scheme.

40

Current Account
It is purely a demand deposit account. There is no restriction on withdrawing
money from this account. As many withdrawals are allowed the customers. It
is suitable when funds are to be collected and money is to be paid away at
frequent interval.
Current Account is most suitable for private individuals, traders, merchants,
importers and exporters, mill and factory owners, limited company's etc.
For opening of a current Account minimum deposit of Tk. 1000/- is required
along with introductory reference, No interest is given the Current Account
deposited money.
Savings Bank Account
This deposit is primary for small-scale savers. The main object of this account
is promotion of thrift. Hence there is restriction on withdrawals in a month.
Heavy withdrawals are permitted only against prior notice.
 Minimum amount of Tk. 200.00 is required as initial deposit.
 Frequent withdrawal is not encouraged.
 Normally withdrawal not allowed more than 1/4th of the balance with
maximum of Tk. 1000/- in a week.
 7 days notice is required for withdrawal of large amount.
 The rate of interest is 6.50% against S.B Account.

Fixed Deposit Account


It is popularly known as "Time Deposit". Because these deposits are not
repayable on demand but they are withdrawable subject to a period of notice.
The prospective fixed deposit holder is expected to till up an application from,
prescribed for the purpose, stating the amount and the period of deposit. The
application itself contains the rules and regulations of the deposit including the
space for specimen signature.
 Payment made on expiry of agreed period.

41

 Payment demanded before expiry of agreed date then Penalty is


charged.
 Introducer is not needed.
 Copies of Party and 2 copies of Nominees photograph is needed.
 Loan is sanctioned against FDR.
Interest Rate
Rate of Interest is varies on the period of maturity date.
Duration
From 3 months and above but less than 6 months
From 6 months and above but less than 9 months
From 1 years and above but less than 2 year
From 2 years and above but less than 3 year

Rate of Interest
7.5%
8%
8.5%
9%

Short Term Deposit Account


Short Term Deposit Account is same as Current Account. Here money is kept
for a very short time. A notice is needed prior withdrawal of money.
6% interest is given for the actual period.

Notice Period is varies from 7 days to 30 days.

Call Deposit Account


Mainly opened by organization calling tender in which (the suppliers,
contractors etc.) deposit requisite amount of carnets money favoring the
organization-calling tenders. It is termed as Call Deposit since organization,
which opens these accounts, may call withdrawal of the deposited account any
time after the expiry of the tender period. No interest is allowed.
Deposit Pension Scheme
A depositor can open any Deposit Pension Account for deposit of Tk. 200/-,
Tk. 300, Tk. 500/- in each month. And for this the depositor will have to
deposit the specified amount of money by the 8th day of each month either in
cash or in cheque. The depositor of this account can select more than one
nominee for claiming the deposited money after his death.
A depositor can withdraw the total amount of deposit (Principal + Interest) at
a time after a specific period of 10 or 20 years and for this he will be entitled
to get Tk. 26344/- for 10 years & Tk. 1,32,920/- for 20 years, after deposit of
Tk. 100/- per month.

42

4.3

Operation of Cheques:

A cheque is an unconditional order in writing; Drawn on a specified Banker


signed by the drawer requiring the Banker to any on demand a certain sum in
money to or to the order of specified person or to the bearer and which does
not order any act to be done in addition to the payment of money. Thus a
cheque involves Three Parties:

Drawer

Drawee (The Banker)

Payer (To whom cheque is to be paid)

The following Procedure in passing a cheque is observed:


 The cheque receiving clerk scrutinizing the cheque as to date
amounts and signature and hand over the presenter with token
number which will also written at the back side of the cheque and
pass to the ledger keeper after giving a seal.
 The cheque will again be scrutinized by the ledger keeper who
satisfies himself as to the order of the cheque and the amount that
does not exceed the credit balance.
 The ledger keeper then debited the amount from respective account
in the ledger book and will pass to the authorized officer who
satisfies himself by verifying signature of the account holder very
carefully to protect any kind of fraudulence and then pass it to the
cash officer for payment.
 The presenter presents his token in the counter and cashier makes
payment receiving the token after verifying the token given by the
receiving clerk and will demand a signature to verify with the
previous one.

The procedure discussed earlier is fully manual system which is totally absent
Nawabpur Branch. Because, the cash payment & receipt system are fully

43

computerized which faster the whole customer service. And as a result, now-a
day they are not maintaining their previous system and not keeping any ledger
book.
4.3.1 Stopped Cheques
The stopped cheques register will be kept by the manager or the
accountant.

Immediately on receipt of a letter or telegram to stop payment of a


cheque, the time of its receipt should be noted thereon under the
initial of the manager or the account.

The ledger keeper concerned and he passing officials should be


informed immediately and particulars of the cheques register under
authentication or the manger or accountant. The time of receipts of
the recording of the stopped cheques register being noted on the
letter also under the initials of the clerk and the manager or
accountant.

4.4 Transfer of Accounts:


When an account is transferred from one office to another, the account
opening form etc. signed at the time of opening account and any forms or
documents signed subsequently which are necessary for its proper conduct at
the time of transfer, must be forwarded under cover of form, to the office to
which card (s) and standing instruction if any, no exchange should be charged
on such transfer. Attention is invited in this connection.
As far as possible, the fullest, information regarding the character, means
standing of the constituents and the way to the account has been conducted
must be given to the receiving office.
4.5

Dormant A/C:
All Current accounts which have not been operated upon for six
months should be marked in Red ink "CARE-DORMANT
ACCOUNT- FIRST WITHDRAWAL TO BE REFERRED TO
THE MANAGER". The ledger should be scrutinized for this
purpose by a number of the supervising staff in March, June,
September & December each year.

44

All savings accounts which have not been operated upon for
one year should also be marked in Red ink.

4.6

In-operative A/C:
No withdrawal what so ever should be permitted on as in-operative
account without the specific permission of the manager who will
satisfy himself beyond doubt that the withdrawal in order.

Annually on the 29th June, the balances of all accounts, which have
lying in in-operative current account for ten years, should be
transferred to the unclaimed deposit A/C.

The account opening forms, specimen signature cards, either or


survivorship forms and all other documents relating to the inoperative accounts transferred to the unclaimed deposit account
must be kept separately in the strong room in the personal custody
of the Manger.

4.7

Closing of an Account:

A banker can close the account of his customer or justices the stoppage of the
operation of the Account under following considerable circumstances: -

4.8

Notice given by the customer himself

Death of customer

Customer's insanity and insolvency

Order of the court.

Bank Remittance (DD/MT/TT & PO):

One of the most important aspects of the Commercial Banks is rending


services to its customers. Among different services render by a Commercial
Banks to its customer remittance facilities are very well known and popular to
the customers. The word "Remittance" means sending of money from one
place to another branch within the country. There are two types of Remittance:
Inward & Outward.

45

The Commercial Banks Remittance facilities to its customer is to enable them


to avoid risk arising out of theft or loss in carrying cash money from one place
to another or making payment to some one in another places. Banks take the
risk and ensure payment to the beneficiary in exchange of a little bit benefit
known as Exchange or Commission.
Considering the Urgency and nature of transaction, the mode of Bank
remittance may be categorized as:  Demand Draft (DO)
 Mail Transfer (MT)
 Telegraphic Transfer (TT)
 Payment Order (PO)
The following register books are to be maintained for remittance concern:
 DD. MT. TT Advice Register
 DD Payment register Day Book
 TT Payment Register Book
 Ex-Advice Payment Register Book
4.8.1 Demand Draft:
Demand Draft is an instruction payable on demand. It is negotiable instrument
issued by the branch Bank containing an order to another branch of the same
Bank to pay a certain sum of money to a certain person or order on demand.
This instrument can be purchased by a customer from a particular Bank branch
for himself or for beneficiary and can handed over to the purchaser for
delivery to the beneficiary. The payee or beneficiary will claim the proceeds
of the instrument by producing the same to the concerned paying branch.
Demand Draft may be paid in cash to the payee on proper identification or the
proceeds may be credited to his account. Banks issue drafts for a nominal
commission. The commission depends upon the amount to be transmitted. The
purchaser of the draft needs not to be a customer or account holder of the
Bank. Draft can be crossed also.

46

Issuance of Demand Draft


While issuing demand Draft, an official must be confirmed about the existence
of the Bran where the DD is to be issued or drawn as asked for by the
applicant. Application on Banks prescribed form (F-117) for DD be obtained
from the applicant duly filled and signed by then. Thereafter, Applicant will be
asked to deposit the amount or DD and exchange Commission commuted
correctly at the prescribed rate. On receipt of cash voucher will be passed and
scrolled by the officers. DD will be issued and recorder to the DD issues
register filling the appropriate columns. Test number (if required) is affixed on
both DD and Advice as per instruction.
It is mentionable here that DD application is treated as Credit Voucher or SBG
A/C (IBT A/C) and reported to HO, Recon, Division showing credit entry
against contra Branch (paying Branch). For any amount of DD issued, a
relative DD Advice and sent to paying branch where the Advice converted
into Voucher.
The minimum exchange of demand drafts or Bank Drafts is Tk. 17/(including VAT Tk. 2/-) for the amount of Tk. 1 to Tk. 9000. After that that
exchange is charged Tk. 1.5 for each Tk. 1000/-.
Procedure of Payment
Proceeds of Demand Draft is received by the paying bank as and when it
responds the relative advise on the receipt of DD Advises from different
branches, the paying banker will verity the genuineness of the Advice by way
of verifying the number and signature. Beside this, Drafts payable can be
made without the Advice of issuing Bank and on that time the payment is
called Acceptance Payment. Total amount of advice will be debited to SBG
A/C and credited to Drafts payable A/C on production of Demand Draft by the
beneficiary payment will be made by Debit to the account credited earlier. If
the payment is to be made before receipt of the Advice, DD is paid being
recorded in Ex-Advice Register by Debiting the Drafts Payable Ex-Advice
A/C (DD paid without Advice). On receipt of the Advice, it will be entered
into DD/MT Advice Received Register or Draft Payable Register and the
amount will be credited to Drafts Payable A/C. DD paid without Advice as the
case may be.

47

Before making payment of the DD, the branch will ascertain the genuiness of
its issuance as well as the genuiness of the payee. Open Drafts may be paid on
proper identification of the payee and crossed Drafts can never be paid in cash
over the counter.
Cancellation of Draft
In some cases, the purchaser of the bank draft may ask the issuing branch to
return the amount of DD stating its non-requirement. In these cases, the
issuing Branch will obtain written application from the purchaser whose
signature must be tallied with the signature obtained earlier. An amount Tk.
25/- be recovered from the purchaser as cancellation charges and will be
Credited to the Commission A/C the purchaser will acknowledge receipt of
the proceeds writing the words received payment by cancellation and will
sign. On revenue stamp to be affixed on the revenue of the Draft. In this case,
payment is made by Debit to PBG A/C and a relative cancellation advice is
sent to the Issuing Branch.

4.8.2 Mail Transfer


The facility of transforming money by Mail is available to customers having
some sort of an account with the Bank. The remitter deposits the amount to be
transferred with small commission with the remitting Branch. It is an Advice
issued by a Branch to another Branch for crediting the specified amount to the
account of the payee maintained with them. It is a non-negotiable instrument
and generally is not handed over to the customer rather sent through Post
Office to the concerned Branch for credit to the respective amount. In some
cases, proceeds of MT. may be paid to the beneficiary by issuing Payment
Order (PO) if he maintains no account with that branch.
In such cases, Full Address of the beneficiary requires to be mentioned by the
applicant. On that time, MT itself treated Advice as well as credit voucher also
of the paying branch, no separable advice is issued by the issuing branch. On
receipt of the MT genuineness is determined by means of verification of
signature and test number (if any payment is made by debit to issuing branch
through PBG A/C and reported to Head Office for reconciliation.

48

Remittance or money by Mail Transfer is relatively cheaper, quite safer and


convenient. Mail Transfer is affected not only for remittances within the
country but also for international remittances. MT for local transfer (say,
within the area of Dhaka) a special MT register book is maintained as in the
case like DD. MT normally issued from branch to branch of the same Bank.
An extra document is needed for Mail Charge.
Normally the Mail is given Tk. 25/- for the amount Tk. 50,000/- and above.
Below 50,000/- there is no any Mail Charge. The commission charged for MT
is given below
Tk 1 up to Tk. 49,000/-

Tk. 15/-

Tl. 50,000/- and above

Tk. 40/-

Specimen Receipt (MT/TT)

Date: ......................
Payees Name: ................................................................
Branch Name: ...............................................................
Amount: ................................... Exchange...................
Commission: ........................ Postal Charge: ...............

4.8.3 Telegraphic Transfer


Telegraphic transfers are affected by telegram, telephone, or telex as desired
by the remitter. Transfer of founds by telegraphic transfer is the most rapid
and convenient but expensive method. For this, telegraphic need to be
available in all the areas. In this case, the issuing branch sends a message
telegraphically to credit the specified amount to the beneficiary through his
A/C maintained with them or by issuing TT, PO, if A/C is not maintained by
the beneficiary, Telegraphy message may be codes but must be tested. Paying
branch will decode the TT being satisfied on the contents will make payment
by debit to issuing branch entering the TT into TT Register and preparing a
credit voucher for credit to the payees A/C. But, for big amount of TT or in
case of any doubt, confirmation must be obtained before making payment.

49

4.8.4 Payment Order


Bank's payment order is an instrument which contains an order for payment to
the paid to effect local payment whether on behalf of the Bank or its
constituents. In the beginning stage, PO was issued only to effect local
payments of Bank own obligations. But, at present, it is also issued to the
customers which they can purchase to deposit as security money or earnests
money. The Bank's payment orders are in the form of receipts and issued by
joint signature of two officials. It ensures payment to the payee as the money
deposited by the purchaser of O is kept in the Bank's own A/C named
"Payment Order A/C". Payment of this instrument to be made from the branch
it has been issued. It is not transferable and, therefore, it can only be paid to:

The payee on identification.

The payee's Banker, who should certify that the amount would
be credited to payee's A/C.

A person holding the letter of authority from the payee whose


signature must be authenticated by the payee.

The purchaser by cancellation provided the original PO is


surrendered by him to the Bank.

Duplicate PO
As Bank's Payment Order is not transferable, Duplicate thereof is issued to the
purchaser without obtaining letter of indemnity provided they confirm in
writing that the originals have been lost and that these will be returned to the
Bank whenever traced.
Duplicate DD
In some cases, it may be happened that the DD is lost and reported to the
concerned Branches. In this case, issuing Branch will communicate with the
paying Branch and will obtain confirmation regarding non-payment of the DD
& Payment Branch will exercise cautions against payment of DD including
caution marking on the respective DD advice with the words "Care Reported
Lost" issuing Branch will then issue a duplicate DD on obtaining of indemnity
bond from the Applicant signed by two persons known to the Bank s sureties.
In such case, duplicate DD be marked with the words:
"DUPLICATE IN LIEU OF ORIGINAL NO ......."

50

Insurance of duplicate DD be noted against the entry of original one.


4.9 Suspense and Sundry Deposit A/C:
Under Bank's regulations not more than two suspense
accounts shall be kept at any branch. The only accounts of
this nature allowed are, therefore, suspense account for debit
items and suspense account for credit items, the former being
a general ledger account and the latter a current account.

4.10 Establishment:
Maintenance of salary Register & Preparation of salary voucher & returns,
Provident Fund, Pension Found Rules, Medical Facilities, Leave Rules
Records, Income Tax, T. A rules, Group Insurance. Beside this, the total
branch information Targeting Profit, Achieved Profit, Total Outstanding loans
and Advances etc. maintained here.

4.11 Dispatch Section:


Dispatch section is fully controlled by the Establishment Department. Any
kind of letter DD, TT, MT, Cheque and Telex also are transferred and received
through this section, There are two types of letter they continuously received.
They are:
a) Inward (Registered/ Unregistered) letters
b) Outward (Registered/ Unregistered) letters
At first recording is required whether it is Inward or Outward Registered/
Unregistered letters. Then, letters are disbursed to their respective destination.
Inward letters are firstly segmented according to their different sections and
after that an entry is given to the Inward Register book. For local letters which
area is not far from the branch are delivered through Messengers. In such
cases, firstly the entry is to be made in Dispatch register Book and then a Peon

51

Book is to be maintained which contains only Dispatch No... and Receiver's


Address. For this, the Messenger will get Tk. 20/- as convince.
A special Register Book is to be maintained for TT, MT, DD, P/O and for
Cheque another book is reserved. Stamp, Envelope which is kept under cash
officer and in a small box can be inspected at any time. to meet the expense of
Stamp and envelope a Dr. Voucher is needed for withdrawal money from the
Branch Account. For registered letters, Vouchers are to be recorded here as
document.
Books Maintained
 Local Dispatch Khata (including Peon Book).
 Register Dispatch Khata (For Registered Letters).
 Ordinary Register Khata (For Unregistered Letters).
 Inward Register Books.
 Special Register Books for DD, MT, TT etc. and for Cheque
respectively.
4.12 Local Short Credit (LSC)
If a cheque or bill comes to Pubali Bank from another branch of Pubali Bank
or other than Pubali Bank outside the Clearing Area, then Pubali Bank
Collects that Check from that Pubali Bank or through nearest Pubali Bank of
that Bank. The collecting Pubali Bank collects by the process of LSC from
other Bank and sends a TRA (Transfer Responding advice) to the payee Bank.
For example, if a customer of Pubali Bank Dilkusha Corporate Branch, Dhaka,
deposits a cheque of Rupali Bank Ltd., Pabna then the procedure done by the
collecting Pubali Bank is as follows:
a) The cheque is first deposited through a received seal with the help of a
slip.
b) The collecting bank gives a crossing with "Pubali Bank Dilkusha
Corporate Branch". It indicates that the mentioned Bank is the
collecting Bank.

52

c) Entry for outward Clearing register is given with clearing seal and
giving the cheque a "S" (subsidiary) seal.
d) The cheque is then registered in SC register and a SC number is given.
e) Endorsement is given like "Payee's A/C will be credited on realization.
The agent of collecting branch will do as follows:
i)

Entry has to be given to LSC register along with number.

ii)

Then the instrument is sent to clearing for collection. For this case,
the accounting procedure is

Clearing A/C of Payee

Dr.

Clearing Adjusting A/C


iii)

Cr.

If the instrument is honored, then

Clearing A/C of Payee

Dr.

Pubali Bank General A/C

Cr.

If any payment is dishonored then the Payee Branch sends a non-payment


Advice to the Collecting Branch.

4.13 Short Credit


Customers deposit (cheque, drafts etc.) for collection along with deposit slip.
Instruments within the range of clearing are collected through Local clearing
House but for outside the clearing house ranges are collected through SC. For
example, customer of Pubali Bank Dilkusha Corporate Branch, Dhaka,
deposits a cheque of Pubali Bank, Pabna Branch. For this purpose, the
collecting Bank Pubali bank Dilkusha Corporate Branch, Dhaka will do as
follows:
i)

The cheque is first deposited through a Received seal with the help
of a slip.

ii)

The collecting Bank gives a crossing with "Pubali Bank Dilkusha


Corporate Branch". It indicates that the mentioned Bank is the
collecting Bank.

53

iii)

Entry for forward Clearing Register is given with Clearing seal


and giving the cheque a "S" (subsidiary) seal.

iv)

The cheque is then registered in SC Register and a SC number is


given.

v)

Endorsement is given like "Payee's A/C will be credited on


realization".

Accounting procedure after SC collection:


Pubali Bank General A/C

Dr.

Customers A/C
Customer A/C

4.14

Cr.
Dr.

Commission A/C

Cr.

P & T A/C

Cr.

Demand Drafts received for Collect:

a) All the Inward Demand Drafts will be received by the Managers or


Accountant and examine by him to ensure that there is no unreasonable
gap between the dates of purchased receipt at branch. Cases of delay
will be reported to the Head Office & a copy to the Regional Office of
the purchase office. These will be numbered with D.D.R numbers,
promptly acknowledge, entered individually in the Demand Draft
received for realization register, without passing any entries.
b) Clearing cheque and cheque on the branches will be paid or returned
unpaid the same day. Other Demand Drafts entered in the register will
be presented or payment to the drawee through the cash department.
c) On realization the proceeds together with the overdue interest, if any
Demand Draft will be credited to the purchasing offices in the Pubali
Bank General Account sending Transfer Responding, Advises (TRA)

54

and reported to Head Office on schedule. Unpaid DDR's will be


returned to the purchasing offices along with the objection Memo.

4.15

Transfer Scroll:

a) The Bank transfer scroll the object of which is to balance the transfer
vouchers before the Clean Cash Book is posted will be written up by a
clerk. The clerk responsible for presentation of the vouchers will enter
in the transfer sheet simultaneously ant the supervising official passing
the transfer vouchers will authenticate the entries.
b) All cheques and transfer vouchers will be entered in the transfer scroll
sheet and numbered with their scroll number under initials of the scroll
writer. All transfer vouchers, including those which are not
individually entered in the transfer scroll/sheet, will be branded with
the paid or received date stamp.

4.16 Clearing House


As a cheque payment order or bill come from a Bank within the range of local
Clearing House then it is sent for collection through Clearing House. The
Cheque may be crossed or not, if a customer of Pubali Bank deposits a cheque
of another Bank which is within clearing, then Pubali Bank will Credit his
Account and collect it (cheque). Though the amount is credited in the
customers account but will not get the money until the cheque is honored.
Collection procedure for clearing:
i)

The cheque is first deposited through a received seal with the help
of a slip.

ii)

The collecting Bank gives a crossing with "Pubali Bank Dilkusha


Corporate Branch". It indicates that the Mentioned Bank is the
Collecting Bank.

55

iii)

Then an entry has to be given in the Outward Clearing Register


along Clearing and an "S" (subsidiary) Seal.

iv)

After that, the cheque has to be sent to Pubali Bank Local Office
along with other cheques (if any). These sorts of vouchers are
prepared for this purpose.

If the cheque is drawn on other branch of Pubali Bank within the same
Clearing area then it needs be collected through inward Clearing House of
Pubali Bank itself.

If the cheque is or other than Pubali Bank then the Cheque has to be sent to the
Bangladesh Bank Main Clearing House through Pubali Bank Local Office
clearing house.

4.17 Clear Cash Book


The clean cash book which is the abstract of cash day's transactions classified
under the general ledger headings, will be compiled from the totals of the
various books subsidiary to the clean cash book including the day books in
which the relative vouchers have been entered in details under authentication
and will be cheeked there form by unauthorized official.
Clean Cash Book is written to:
 Test the arithmetical accuracy of one day transaction.
 Consolidate one try transaction.
 Help position in the general ledger.
 Test the closing cash balance of the branch.
Procedure:
 The clean cash book writer must see before taking the total in the clean
cash book from the subsidiary books/ day books that the books duly
checked and authenticated by the authorized officials.

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 The clean cash book will be checked daily from the subsidiary
registers/ day books by an authorized supervising official who will
agree the entries under each head the respective registers/ day books.
 Bach morning the Manger will scrutinize the whole of the previous
day's vouchers.
 After the daily balance all vouchers should be collected by the clean
cash book writer and handed over to a supervising official who will
lick them up overnight, under protection from Fire, together with all
current records.
4.18

The General Ledger:

The Accounts to be kept in Branches General Ledgers are as under:


 Pubali Bank General Account
 Fixed Deposit Account
 Short Term Deposit Account
 Fixed Deposit Interest Account
 Savings Bank Account
 Call Deposit Account
 Current Account
 Pay Order Account
 Drafts Payable Account
 Drafts Payable Ex-advice Account
 Demand Loan Account
 Cash Credit Account
 Foreign Bill Purchase & Negotiable Account
 Bill for Collection Account
 Force Loan Against Back to Back L/C Account
 Advance Against Merchandise Account

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 Discount Account
 Interest Account
 Exchange Account
 Commission Account
 Charges Account
 Profit & Loss Account
 Stationery Account
Observation:
Performance of General banking of this Branch is good. This is one of the
profitable branch or Pubali Bank. Customer service is good. Cash section is
fully computerized and free from Y2K problem and as a result money
transaction occurs very quickly.

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CHAPTER-5

LOANS AND ADVANCES

59

CHAPTER-5
LOANS AND ADVANCES

5.1 Introduction:
Pubali Bank Limited, being one of the largest Commercial Bank, had some
prejudice to finance directly on priority basis to Agriculture, Industry and
Commerce sector for strengthening the economic base of the country. Pubali
Bank Limited plays the key role to oil the Economic Wheel of the Country.
Beside this, Pubali Bank has been maintaining all Government Policies its
Pioneer position in extending loans to Government Bodies, sector corporations
and private enterprises. The Bank gave predominance to the Govt. policy of
financing men or small means with enterprising spirit of investment and
provided finance as easy terms and a logical rate or interest as was during the
last few years.
Pubali Bank Limited continued to extend its lending operation in the
productive and priority sectors both public and private covering agriculture,
industry, trade and commerce.
The granting of advances is one of the most important functions of a Bank and
the test of a Bank's strength depends considerably on the quality of its
advances and the proportion they bear to the total deposit. Although receipt
from Exchange, Commission and Bank's Charges contribute a fair amount of
the profits of Commercial Bank, its earnings are chiefly derived from interest
charged on loans and discounts. A wise and prudent in regard to Advances is,
therefore, considered an important sector inspiring confidence in the
depositors and customers of a Bank. Following are the basic principles or
sound lending which each banker follows when considering an advance
proposal.
Safety
The first guiding principles of a Banker should be "Safety First", so far as his
advances are considered, because the very existence of a Bank depends of the
Safety of its outstanding which should never, therefore, he sacrificed to the

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profit earning capacity of its advances. Consequently, to maintain a Banking


concern in sound condition, it is very essential that the safety of its advances
to customers should be above suspicion. Extreme care should be taken that the
fund rent out are not subject to any risk or being lost. The Banker is to ensure
in the best possible manner that the money advanced by him goes to the right
type of borrower and is utilized in such way that it will not only be safe at the
time of lending but will remain so throughout, and after a useful purpose in the
trade or industry where it is employed, is repaid with interest.
Liquidity
Bank's can invest in two types of terms viz. Long term and Short term. Banks
feel very risky in long-term investment. So, they normally invest in Short term
investment to maintain the liquidity of the Bank. The Liquidity of an Advance
means its repayment on demand or on due date or after a short notice. The
loan must stand fair chances or repayment according to the requirement
achieve. It is almost important that Bank loan must be repaid as they become
due otherwise; the liquidity position of the Bank is endangered. The major
cause of Bank's failure has been had liquidity. The period of the advance and
the case with which it will be repaid are very important. Even in the case of
fully secured advances if it is feared from the very beginning that the advances
would only he recovered by selling the securities it is not considered a good
advances. It must, therefore, always ensure that the advance will be repaid
from resources other that the securities pledged.
The basic problem in advance Viz. Graduate Reeducation and eventual
repayment is the crux of the while matter. A Banker would be failing in his
duty to safeguard the interest of his depositors and the shareholders if his
credit policy does not take full cognizance of this problem and not provide a
method for gradual repayment and final recovery of the money advance.
Profitability
Equally important is the principle of profitability in Bank advances. Like other
Commercial institutions, Banks must make profit where there is no profit
banks do not invest. Firstly, they have to pay interest on the Deposits received

61

by them. They have to incur expenses on establishment stationery etc. They


have to make provision for depreciation of their fixed assets and also for any
possible bad or doubtful debts. After meeting all these items of expenditure,
which enter the running cost or Bank, a reasonable profit must be made. The
landing rate of Bank is based on all these considerations. It is sometimes
possible that a particular transaction may not appear profitable in itself, but
there may be some ancillary business available, such as deposit from the
borrower other concerns or his foreign exchange business, which may highly
remunerative. In this way, the transaction may on the whole be profitable for
Bank.
Purpose
Another significant principle which is to be kept in view when advancing is
the Purpose. The purpose for which lending is made should he productive as to
ensure definite source or repayment. Banks discourage advances for Harding
Stocks or for Speculative activities.
There are obvious risks involved therein apart from the antisocial nature of
such transactions. The Banker must closely scrutinize the purpose for which
the money is required and ensure as far as he can, that the borrower applies the
money borrowed for a particular purpose accordingly. Purpose has assumed a
special significant in the present-day concept or Banking.
Diversification of Risks
The security consciousness of a Banker and the integrity of the Borrower are
not adequate factors to keep the Banker on safe side. What is more important
is the diversification of Risk. This means, he should not lend a major portion
of his loan able funds to any single Borrower or to an Industry or to one
particular Region. In fact, the entire Banking business is one of taking
calculated risks and a successful banker is an expert in assessing such risks.
He is keen on spreading the risks involved in lending over a large number of
Borrowers, over a large number of Industries and Areas, and over different
types of securities; the advances must not be in one particular Industry. Too
many eggs should not be placed in one basket, because any adversity faced by

62

that particular Industry will have serious effect on the Bank. Slump does not
normally affect all Industries and business simultaneously.
Security
Whenever a money lender lends money he must be consider carefully the
changes of his being repaid by the Borrower and is therefore not normally
content to rely on the obligation or the Borrower alone but wants some
tangible security from which he can obtain repayment in case the Borrower is
unable to meet his obligations. Without taking such security the business of
money lending would be too speculative. The Banker also making advances
and loans naturally wants to secure him by some reliable security. Security is
considered as insurance or a caution to fall back upon in case of emergency.
Bankers may realize it and reimburse themselves if the well calculated and
certain source of repayment unexpectedly fails. It is, however, incorrect to
consider an advance proposal from the point of view of security alone. An
advance is granted by a good banker on its own merits, that is to say with due
regard to its safety, capacity liquidity purpose etc. and after looking in to the
character, capacity and capital or the Borrower and not only because the
security is good.
Sources of Repayment
A sound credit is one where timely repayment is assured. So, before giving
financial accommodation, a Banker should consider the source from which
repayment is promised. In some instances, debentures, which are to be
redeemed in few month times or a lire policy, which is to mature in near
future, may be offered as security. Advances against such security give no
trouble.
Sometimes customers may apply for loans for additional Working Capital for
their business and undertake to repay out of the profits over a period. In such
cases, the Rate at which the customer can reasonably hope to repay should be
ascertained. An examination of the audited accounts may guide the Banker in
knowing the repayment capacity of the customer.

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Suitability

Even when an Advance satisfies all the aforesaid principles it may still not be
suitable. The Advance may be encountered to National interest. These
Principles may have to be amended to a certain extent. Suitability of Advance
from National viewpoint has therefore come to be regarded as a basic principle
of Lending.
The Integrity & Reliability of the Borrower
The last and the most fundamental principle of lending are the integrity and
reliability of the borrower. To avoid bad debt, it is the basic factor before any
loan proposal can be considered. The success of any business depends upon
the ability of the Banker to study borrowers. The study of a borrower involves
the study of the five C's of the Party. This five C's refer to Parties:
 Character
 Capacity
 Capital
 Conduct &
 Capability
Instead of five C's some authors mention the five R's. This five R's indicates
Parties:
 Reliability
 Responsibility
 Resources
 Respectability &
 Return
5.2

Classification of General Advances:

Bank is service as well as profit oriented organization. So, making of loans


and advances have always been prominent and profitable function of a bank.
Sanctioning Credit to customers and others out of the funds at its disposal is

64

one of the Principle services of a modern Bank. Advances made in Pubali


Bank in different natures, such as, Cash Credits (CC), Overdrafts, Small 1loans, Demand Loans, Bills purchased & discounted, House building Loans
and Staff Loans etc. Pubali Bank deals with the money from the depositors
repayable on demand. So, it can't afford to lend their funds for long periods.
5.2.1 Cash Credit (CC):
A cash credit is an arrangement by which the customer is allowed to borrow
money up to a certain limit. This is a parliament arrangement and the customer
need not draw the sanctioned amount at once, but draw the amount as and
when required. He can put back any surplus amount, which he may find with
him. Thus, Cash Credit is an active and continuous process in which Deposits
and Withdrawals going on frequently. Interest is charged only for the amount
withdrawn and not for the whole amount charged. It is operated in the same
way s a current account on which an Overdraft has been sanction. Cash Credit
accounts are, however, maintained in a separate ledger. Primary securities
under consideration in case of Case Credit are goods, produce and
merchandise. This is the most favorite of borrowing by large commercial and
industrial concerns. On account of the advantage that a customer need not
borrow at once. He can either draw or repay, in whole amount or in part, the
amount advanced at any time to suit his convenience. Cash Credits are of two
Types, such as:
Hypothecation
In case of "Hypothecation", possession of goods not transferred to the Bank &
therefore such all advances can thus only be granted to a person in whose
integrity the Banker has full confidence and Cash Credit in the form of
"Hypothecation" is normally accompanied with Mortgage of Immovable
Properties.
Cash Credit is the favorite mode of Borrowing by traders, Industrialists,
Agriculturists etc. for meeting their working capital requirements. This type of
facility is always against Pledge of goods, produce and merchandise. In a
manufacturing company, whose stocks of raw materials and manufactured
goods constantly fluctuated, it is difficult for the bank to control such charges;
so "Hypothecation" facilities are allowed to them. The same is true of the

65

small traders and small industrialists who can't offer their stocks for Pledge but
can only hypothecate the stock in their shop. In this case, Ownership and
Possession of the goods remain with the borrower although by virtue of the
"Hypothecation" agreement. The Bank can take Possession of the goods if the
Borrower defaults.

Pledge
In case of "Pledge" the possession of the goods is delivered to the Creditor i.e.
Banker. It is therefore, regarded as the most secured type of Advance. Cash
Credit in its truest sense is against pledge of goods. It is a separate ledger. In
addition, Goods Ledger, Go-down Register, Go-down Key register, Go-down
Index Card etc. are also maintained. Deliveries of goods are made on the
strength of delivery order issued by the Banks and goods are received through
goods Challans deposited Borrower. The person who transfers the goods is
called Pledger (Party) and to whom it is transferred is called the Pledge (The
Banker).
Duties of the Banker (Pledge)
 The Pledge is bound to take that much care of the goods pledged which
an ordinary prudent man would take of his own goods under similar
circumstances.
 The Pledge must make use of the goods pledged according to the
agreement is entitled to terminate the contract and claim damages, if
any.
 The Pledge must deliver the goods to the Pledge on repayment of the
debt. It is duty of the Pledge to deliver the goods according to the
direction of the Pledge.
 The Pledge must deliver to the Pledge any increase or profit which
may have occurred from the goods bailed for example, dividend on
shares.
 The Pledge is responsible to the Pledge for any loss, destruction or
deterioration of the goods is not returned at the proper time.

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5.2.2 Overdraft
In case of Advance sanctions by way of overdrafts, the customer is sanctioned
a limit up to which he can overdraw his current account within a stipulated
period. This is a fluctuating account here in the balance some times may be in
credit and sometimes in debit and overdrawn amount must always remain
within the sanction limit. From the customer point of views, this arrangement
is advantageous, as he is required to pay interest on the amount actually used
by him.
Overdraft facilities are generally Granted to Businessmen for expansion their
business against securities of stock in trade, Shares, Debentures, Government
Promissory notes, fixed Deposit, Life Insurance Policies, Gold and Gold
ornaments etc. In some cases, where the overdraft is allowed with no other
security except the personal security of the borrower.
5.2.3 Small Loans
It refers to the lending allowed to small traders, collage industries, small-scale
industries and self-employed persons. The maximum ceiling for this loan is at
present Tk. 5000/- for small traders and self employed persons. Tk. 2,00,000/for cottage industries and small-scale industries, such loans are generally
production/ development oriented rather than security oriented & this is the
way of emphasis in these cases is on the purpose of the advance as well as
skill regulation and capacity of the Borrower. The security requirements are
substituted are substituted the end-use and frequent supervision of the credit.
5.2.4 Demand Loan
This is the fixed type of lending in its original form. The entire amount is paid
to the debtor at on time, either in cash or by transfer to his current or savings
bank account. No subsequent debit is ordinarily allowed except by way of
interest, incidental charges, insurance premium, expenses incurred for the
protection of the security etc. A separate ledger is used for the maintenance of
this account and as no subsequent withdrawal is allowed, no cheque is issued
into this account. The following types of demand loan:
 Secured Demand Loan against Stock Exchange, Paper Securities,
Goods, Produce and Merchandise.

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 Staff Demand loan.

5.2.5 Staff Loan


Pubali Bank provides advances to the staffs for buying Motorcycles and
bicycles, for wedding their sons or daughter etc. It is called Staff Loan. Bank
provides this advance of this sector under installments. At the end of each
amount, when the staffs withdrawn there salary, Bank takes Tk. 525/- of the
salary from the concerned staffs in any advances.

5.2.6 House Building Loan


House Building Finance Corporation (HBFC) is the main institution to meet
the requirement in the field but Pubali Bank also supplement to this sector
Advances for construction of residential houses against real states as primary
securities as allowed by Banks up to Tk. 500 lacks per party (including cost of
land) minus any loan taken from HBFC for these purpose. Pubali Bank may
grant advances for construction of commercial Building also against Teal
states. The rate of interest for all such loans is 16% per annum and Maximum
repayment period is 12 years. In such cases, parties have to pay down payment
of 30% of the total amount and rest of the amount should be repaid within 2
years.
5.2.7 Purchase and Discount of Bills
Purchase and discount of Bills is also a special form of advances. Pubali bank
normally purchase demand Bills of exchange that are called drafts
accompanied by documents or title to such as Bill of lading, Railway of Truck
receipt. The purchase of bills of exchange drawn at an issuance i.e. for a
certain period maturing on a future date and not payable on demand or sight is
termed as discounting a Bill and the charge recovered by Bank for this is
called "Discount". This is not very common in our country and is normally
limited with the discount of Foreign Bills; inland Bills are rarely discounted of
an organized Bill market.

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5.2.8 Mid term Loans


Pubali Bank or Commercial Banks because of their Capital structure
constitution and liquidity consideration are advancing for short term on
Principle. But Modern Banks have stated lending a safe proportion of their
demand and time liabilities for fairly long periods to House Building.
Industrial Agricultural, Transport and many other sectors. Such loans are
repayable by installments over a number of years ranging from 2 to 12
(Agricultural Loans ranging from 6 to 15 months), so far as, nature and
conduct are concerned those loans and time to be fixed from advancing with
minor variations as though limits are not withdraws by a time and these are
allowed to be payable on installments or phases but no subsequent debit
transactions are allowed to the Borrowers in the account beyond the
disbursement of sanctioned limit.
5.2.9 Consumer Credit
Technological improvement around the whole world is increasing day by day.
But, the per capita income restricted the consumer from enjoying such
improvement. In Bangladesh most of the people are standing below the
minimum standard of living. As a result, they can't always do whatever they
like or they can't buy whatever they want. For Example if we see the
Television or computer market, we will find a huge expense behind this. On
the other hand, it is very hard to live without Television now-a day. To solve
this problem, various Commercial Banks offering various types of loans to the
consumer so that they can enjoy these innovation and fixed a very easy
installment process to repay that money. Pubali Bank also offering loan calling
Consumer Credit Scheme in various types of goods like Television Mobile
Phone etc. 14% interest is allowed in this scheme.
5.2.10 Transport Loan
Advances are allowed against Hypothecation of power driven vehicles (PDV)
including water crafts for genuine transport business to sufficient credit parties
at 30% margin and suitable guarantee from persons of sufficient and standing
where considered necessary mortgage of urban immovable property registered
equitable are also to be obtained by way of additional securities or in suitable
case. In case of acceptance of mortgage, the minimum may be reduced up to

69

10 percent. These loans should be repayable within maximum period of two


years, which is subject to renewal with approval from Head Office. There are,
however, restriction of Bangladesh about extending discredit facilities existing
capacity and capital assets that is running Buses, Cars, and all other taps of
vehicles or Launches. Advances are allowed only for creating additional
capacity such as acquisition of new Buses, Trucks, Coasters, and Taxies etc.
5.3 Credit Policy of Pubali Bank Limited:
The credit policy pursed by Bangladesh Bank is to be aimed at ensuring
development of scare Bank resources in the best possible manner for
increasing Production, employment and Real income within its objectives.
Both selective and qualitative credit can't were adapted to the socio-economic
priorities, distributive and justice need for containing money supply within a
safe limit.
Pubali Bank takes the policies, which help the development of several sectors
of the country under general credit division and for achieving the proposed
goals of the principles of Agricultural, Economical, Industrial and
Trade.Following the guide lines of Bangladesh Bank, this is the credit policy
of Pubali Bank.

This policy is changeable. If Bangladesh Bank resists

providing credit in any sector Pubali Bank does not provide any credit in those
sectors.
5.4

Interest Rate Policy:

Bank takes the policy of the rate of interest only for encouraging the rural
savings or investment. If the rate of interest is low, the velocity of money will
be increased.

5.4.1 Bank Rate


Bank rate is decreased from 8 percent to 7.5 percent by Bangladesh bank and
which the Governing Body of Pubali Bank approves also.

70

5.4.2 Savings Rate


In order to increase the savings, Pubali Bank offered 7.75 percent against
savings deposit.

5.4.3 FDR against Loan:


Keeping margin 10 percent of face value, bank provide loan against 90 percent
of residual FDR. Rate of interest is now 8.5 percent. It is a kind of short-term
loan for 12 months.

5.4.4 Staff Loan


Bank provides this loan according to the grade of the staffs for their housing,
buying motor cycle and bicycle, children's education and marriage ceremony
etc. Its rate of interest is 6.5%.

5.4.5 Shares Against


Bank provides loan against shares which 50 percent of previous 6 months to
the customers. It's rate of interest in 16 percent and not more than 12 months.
5.5

Total Credit Line:

There are various types of loans in the credit under General Advance Division
excluding public sector.
 Chemical Industry: It includes the soap, on and chemical factory.
 Rice, flour and oil mills: To install action of machine and working
capital.
 Steel and engineering concern including re-rolling mills.
 Hides and skins: Here it sanction and processing.
 House Building Loan: Generally it is known as second mortgage loan.
Additional money was supplied after the loan given near House
Building Finance Corporation.
 Jute Loan: Cash Credit and segregate both are sanctioned to the private
jute industry.

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 Spinning Mills: Here also Cash Credit and segregate loan are
sanctioned as working capital.
 Small Loan: All types are working capital below two lacs in any
trading concern.
 Credit to Textile Mills.
5.6

Restrictions:

General Advances are restricted in the following sectors:


 Frog leg
 Leather of Deer
 Leather of Snake
 Hemp
 Wine
 Opium
 Elfish etc.

5.7

Principles of General Advance:

The principles of general advances management policy of any Banking


institution is needed to be very systematic. It needs to have certain accepted
standards and flexibility so that the policy can change in different realities and
situations. Beside this, L.C. Mathur says that "An ideal advance is one which
is granted to a reliable customer for an approved purpose in which that
customer has adequate experience, safe in the knowledge that the money will
be used to advantages and repayment will be made within a reasonable period
from trading receipts or known maturities due or on about given date".
The accepted standards relate to Safety, Liquidity and Profitability of the
Advance where as the dynamic factors relate to aspects such as the nature and
extend or risk. Head Office issues General Principles about the conduct of
advance. In all types of Business dealings, officers and employees must be
guided by the Principles or honesty, integrity and safeguard the interest of the

72

depositors and shareholders of the Bank. They should strictly adhere to the
Banking laws Rules and Regulations of the govt. of Bangladesh, the
instruction issued by Bangladesh Bank Head Office from time to time that
affects business practice of the bank. However, the key to safe, liquid, health
and profitable credit operation depends in the quality of judgment used by the
officers making lending decisions. The principles are described below
precisely:

5.7.1 Credit Investigation


Before sanctioning any credit to the Borrower the concern Branch of that Bank
firstly investigate about the Borrower, Project, acceptability, market situation
etc. Various types of investigation are discussed below:

Purpose:
Purpose should be the primary guiding principle, which is kept in view. The
purpose for which lending is made should be productive as to ensure definite
source of repayment. Banks discourage advances for Harding stocks or for
speculative activities. There are obvious risks involved there in a part from the
antisocial nature or such transaction. Banker must closely scrutinize the
purpose for the borrower applies a particular purpose accordingly. Purpose has
assumed a special significance in the present day concept of Banking.

Selection of the Borrower:


A Banker would select Borrower/ Entrepreneurs who would take loan from
the Bank for their Business purpose or industry purpose. A prudent Banker
should always notice background, Character, Capital, Capacity and Purpose of
the Borrowers/Entrepreneurs. An entrepreneur who does not live at the
commanding area and what is has social status. The Banker should consider
this decide to pay loan to the Entrepreneurs.

Verification of the Primary Securities:


Whenever a moneylender lends money he must consider carefully the changes
of his being repaid by the Borrower and is therefore not normally content to

73

rely on the obligation of the borrower above but wants some tangible security
from which he can obtain repayment, in case the borrower is unable to meet
his obligations. The Banker also, making advances and loans, naturally wants
to secure himself by some reliable security. Security is considered as an
insurance to fail back upon in case or emergency. Bankers may realize it and
reimburse themselves if the well calculated and most certain source or
repayment unexpectedly fails. An advance is granted near a good Banker on
its own Merits, that s to say with due regard to its Safety, Liquidity purpose
etc. and looking after into the character, capacity of the borrower and not
because the security is good.
In the case of advances against Hypothecation or stock, stock statement is to
be or twice a month as per terms of sanction. The certificate at the foot of the
state should be signed by an Authorized person to operate the Account. These
statements are to be carefully verified to see the turnover of stock, the price of
the Goods, Quality of goods etc. The price must be made market price or
invoice price whichever is lower. A copy of the statement is kept at the Branch
and the other one is sent to Head Office/regional Office.

Verification of the Cultural Security


Collateral Security is a security, which is Immovable from one Place to
another. A Branch Manger always should notice the verification of the
collateral securities that Bank sanctioned to the Borrower. A Manger should
verify:
 Location
 Possession
 Situation
 Present market Value
 Force sale value of the security as if the Bank can sale the security
when the borrower fail to repay.

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5.7.2 Requirements of Loan Proposal


Following items are required to prepare a Loan proposal:
 Loan Application (4 copies).
 Photograph and Educational Certificates (4 copies).
 Required Papers as per ownership of the firm.
 Scheduled of Mortgage Properties and relevant Papers.
 Nationality Certificate & Trade license.
 No objection letter from his superior (if he is n Govt. Employee).
 Declaration of Tangible/intangible Assets/liability.
 Actual deed of Land/building as Collateral Security.
 No objection letter from Environmental Department.
 Permission letter from local Authority in establishment of the Project.
 Current year tax Payment Receipt of Union council.
 Thorn less certificate of 12 years from Sub-Register Office.
 In case of BUSIC, actual allotment and possession letter is needed
from BISIC.
 Documental evidence on behalf income and Testimony of Tax
payment.
 No objection letter from the Govt. or any other Authority about the
Land mortgaged to the Bank as security of credit which is sanctioned
by the Same Authority.
 In the case of Company Attested copies of Memorandum of Articles,
Articles of Association, Certificate of Incorporation, Commencement
of Business.
 Audited Profit & Loss Account of last three years of his any running
business.
 Declaration about the source of equity of his own.
 Sight plan of the project and root plan of the proposed loan.

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 Feasibility study/ Viability study of the project from different aspect


such as Technical, Management, Socio-Economical, Economical
aspect.
 Tender sheet (including Catalogue, Detail specification) need to be
submitted through local Intender.
 Permission letter from PDB/REB/GAS/Electricity authority (if
needed).
5.7.3 Sanction of Loan
When a Branch Manager writes a letter to accepting all terms and conditions
of loan, it is called loan sanction. The conditions which are included in the
loan sanctions these are given bellow:
a) Limit.
b) Primary Securities.
c) Collateral Securities.
d) The Rate of Interest
e) Expiry date.
f) Repayment.
g) Documentation.
h) Others Condition.
5.7.4 Charge Creating with Joint Stock Company
The following terms and conditions are included in the charge creation with a
Joint Stock Company:
 Simple Mortgage Deed
 Form 'L'
 Floating Charge
 Personal Guarantee
 List of Machineries
 Letter of Continuity

76

 Board Resolution
 Articles or Association & Memorandum or Association
5.7.5 Disbursement of Loan
Loan disbursement has to be made after completion documentation and
observance of the sanctioning terms against rising of equity by sponsors as
laid down. Disbursement against import is to be made through an opening or
Irrevocable L.C favoring the foreign supplier on execution or contract.
Disbursement against local Machinery and Building construction is to be made
to the supplier of Equipment's through Inland L/C. Each Phase of loan
Disbursement to be supervised by Bank official so that Borrower is given
scope of diversion funds to anywhere tends to purpose other than the project
and the phase of implementation of the project to be effectively supervised and
borrowers persuaded for completion or Project in time. There are mainly three
most important factors in the loan disbursement, such as:
 Completion of Documentation.
 Verification of Stocks.
 All Important Documentation
5.7.6 Supervision
Supervision is very important in the aspect of Loan /Sanctioning and
Disbursing process. Because, if the Bank failed to identify the real borrower ,
Bank will incur the total loss. In this context, Branch Manger will exercise his
commonsense and proper case in handling advances by them or any other
appropriate authority. This has to realize by the Manger that he is the corner
stone of the Bank and the overall success of Bank depends to large extent
upon him. His total work represents himself to the local public and the
Management as a successful or unsuccessful Branch Manager. Only he can
control Advances judiciously to save the Bank fro-falling Losses. The entire
necessary document has been duly failed in stamped and correctly executed by
the borrower. He has to alert about the following things:

77

 A proper authority covering operation and conferring power to


overdraw is held in respect of accounts of permeated upon by persons
other than the borrowers themselves.
 It should be seen by him that the Advance does not contravene and law
directed by Bangladesh bank or the lending policy of the Bank.
 Security is correctly valued and is easily salable.
 Proper storage and custody are made.
 Stipulated margin is maintained.
 Adequate Insurance, where necessary has been taken.
 There is quick turnover of stocks.
 Operations of customers account.
 The Balance of the account remains very near or goes beyond the
drawing limit or there is no good turnover.
 The Balance is stagnant.
 Cheque drawn by the party is returned for storage of fund.
 Post-date cheques are issued by the Party.
 Cheques drawn by the Party are frequently countermanded financial
position.
5.7.7 Recovery
Advance is such kind of arrangement that its clients are repayable this either
on demand at the expiry of fixed period or as per repayment schedule agreed
upon while granting the facilities. If a loan is repayable on installment is not
repaid on due date. Overdraft and Credit are legally repayable on Demand,
although the Bank seldom exercises the right but in certain customers. In the
case, when loan is repayable in installment, entire loan usually becomes
immediately recoverable of at the option of the Bank.
Banks generally feel Risky their advances under the following cases:
I)

If the death occurs either of the Borrower or of the


Guarantor.

78

II)

If the Borrower is reported to have committed as act of


insolvency or has filed and application for his insolvency.

III)

Dissolution the Partnership.

IV)

Liquidation the Borrowing Company.

V)

Failure to renew the documents sufficient before the expire


of the limitation.

VI)

If there any serious deterioration in the financial position of


the Party.

VII)

If the Borrower failed to maintain the stipulated margin.

VIII) Change the Bank policy of lending.


IX)

The policy of the selective credit control by Bangladesh


Bank.

X)

5.8

Detection of any other undesirable feature in the Account.

Industrial Credit Department (ICD):

Industrial credit department are advanced three types of credit they are:
 Pubali Bank Industrial Credit Scheme (Project)
 Pubali Bank Industrial Credit Scheme (Working Capital)
 Pubali Bank Industrial Credit Scheme (Agro. Based)
5.8.1 Preparation of Loan Proposal
To get Advances or loans from Banks, it is not very easy way to acquire. It
demands some preparation from the Borrower. Because, which the amount is
sanctioning by the banks is not of its own. The public deposits this amount, so
it is very risky for Bank to lend this to the Borrower. If the Bank fails to
recovery that money then it should be paid from its own fund. As a result,
Banks fixed a systematic way to minimize this lending risk and try to proper
use of the money. Proposal requires:
 Loan Application.
 Required Paper as per Ownership of the Industry.

79

 Schedule of Mortgage Properties and Relevant Papers.


 Market reputation.
 Other Bank opinion about the previous money Lending.
 Feasibility Study.
 Lending Risk Analysis.
 Financial spread sheet analysis.
 Credit scoring.
 Forwarding.
 Valuation of Certificate.
 Trade License & CIB Report.
 Commercial Invoice.
 Certificate of Origin.
 Memorandum of Association & Articles or Association.
 No objection Certificate from Local Authority and from Ministry of
Environment.
 C.S, R.S & S/A of Land.
 Mutation Certificate.
 Affidavit and Personal Guarantee.


General Irrevocable Power of Attorney.

Loan Sanction, Disbursement and Recovery Procedure almost same as


General Advances.
Working Capital Management involves the financial and Management of the
Current assets of the Firm/industry. A Firms/industries ability to properly
manage Current assets and the associated liability obligations may be
determine how well it is able to survive in the short run, When a Firm/industry
is unable to meet its current assets (payment of labor, raw materials etc.) then
the Firm/Industry to the Bank for Working Capital. After proper investigation,
Bank sanctions Working Capital for that Firm.

80

Since 1973-74 Pubali Bank started to disburse in Agricultural Credit Program.


The lion share of the disbursed credit goes for crop; the credit is being
disbursed in a limited scale for the income group under various programs.

Interest Rate Policy


The interest rate on Loan and advances has been rescheduled according to the
following table effective from 1 August approved in the 877th board meeting
of Director held on 13 July 2006 and all other interest rates which were
effective before will be deemed invalid.
Nature of deposit/loans & advances

Rescheduled
interest rate
(effective from 0108-06)

1. Savings Deposit

7.75%

2. Short Term Deposit

6%

3. From 3 months and above but less than 6 months


From 6 months and above but less than 9 months
From 1 years and above but less than 2 year
From 2 years and above but less than 3 year
4. DPS

7.5%
8%
8.5%
9%
10%

5.Loans more than 3 years


a) 5 Year Term

11%

b) 10 Year Term

12%

c)No loan is given again share.


d)Demand loan @12%
e)Loan against provident fund @10%
f)Loan against own contribution in provident fund
@12@
g)HBL-House building loan@ 15%

81

CHAPTER-6

PAPERS TO BE SUBMITTED TO GET


A LOAN

82

CHAPTER-6
PAPERS TO BE SUBMITTED TO GET A LOAN
6.1

FOR FRESH / NEW PROPOSAL


(PAPERS TO BE SUBMITTED/ ENCLOSED)

BY BANK:
01. FORWARDING
02. FL-60 (in prescribed form)
03. FL-56: HYPOTHECATION OF STOCKS
04. ACCOUNT STATEMENT ( OF PREVIOUS ONE YEAR )
05. DECLARATION OF LIABILITY FROM THE BANK
06. PHYSICAL VERIFICATION REPORT
07. VALUATION CERTIFICATE
08. OTHER BANKS OPINION
09. CERTIFICATE OF OBTAINING OF PARTICULARS
10. CIB FORM (in prescribed form)

BY THE BORROWER:
01.

APPLICATION OF THE BORROWER

02.

FL-59 (in prescribed form)

03.

HYPO OF STOCKS FROM THE BORROWER

04.

PROFIT-LOSS & BALANCE SHEET STATEMENT

05.

LIABILITY DECLARATION IN THE BORROWERS PAD

06.

PERSONAL NET WORTH (in prescribed form)

07.

CONSENT LETTER OF CO-SHARER ( IF ANY )

08.

PHOTOGRAPHS

PHOTOCOPY:
01. SHOP RENT RECIEPT / COPY AGREEMENT
02. RENT RECEIPT OF THE LAND
03. INCOME TAX CERTIFICATE
04. MUNICIPAL TAX RECIEPT ( IF IN THE MUNICIPAL AREA)
05. TRADE LICENSE
06. PHOTOCOPY OF TITLE DEED, BIA-DEED, MUTATION PARCHA (WITH DCR)
07. LEGAL OPINION FROM BLA
08. COPY OF NON-ENCUMBENT CERTIFICATE
09. COPY OF SATISFACTION CERTIFICATE FROM THE BLA

83

6.2

FOR RENEWAL/ ENHANCEMENT PROPOSAL


(PAPERS TO BE SUBMITTED/ ENCLOSED)

BY BANK:
01. FORWARDING
02. FL-60 (in prescribed form)
03. FL-56: HYPOTHECATION OF STOCKS
04. ACCOUNT STATEMENT ( OF PREVIOUS ONE YEAR )
05. DECLARATION OF LIABILITY FROM THE BANK
06. PHYSICAL VERIFICATION REPORT
07. VALUATION CERTIFICATE
08. CERTIFICATE OF OBTAINING OF PARTICULARS
09. CIB FORM (in prescribed form)

BY THE BORROWER:
09. APPLICATION OF THE BORROWER
10. FL-59 (in prescribed form)
11. HYPO OF STOCKS FROM THE BORROWER
12. PROFIT-LOSS & BALANCE SHEET STATEMENT
13. LIABILITY DECLARATION IN THE BORROWERS PAD
14. PERSONAL NET WORTH (in prescribed form)
15. CONSENT LETTER OF CO-SHARER ( IF ANY )
16. PHOTOGRAPHS

PHOTOCOPY:
01. SHOP RENT RECIEPT / COPY AGREEMENT
02. RENT RECEIPT OF THE LAND
03. INCOME TAX CERTIFICATE
04. MUNICIPAL TAX RECIEPT ( IF IN THE MUNICIPAL AREA)
05. TRADE LICENSE
06. PHOTOCOPY OF TITLE DEED, BIA-DEED, MUTATION PARCHA (WITH DCR)
07. LEGAL OPINION FROM BLA
08. COPY OF ENCUMBENT CERTIFICATE
09. COPY OF SATISFACTION CERTIFICATE FROM THE BLA
10. COPY OF PREVIOUS SANCTION LETTER

84

PUBALI BANK LIMITED


6.3

APPLICATION FOR ADVANCES


(FOR INDIVIDUALS AND FIRMS)

Sl. No. .....................................


........................................ Copy
Date .......................................

Photo

The Assistant General Manager


Pubali Bank Limited
Nawabpur Road Branch
Dhaka

Dear Sir,
I / We request you to kindly grant / renew / enhance / extend me / us an
advance in the form of Cash Credit / Overdraft / Demand Loan / Bank
Guarantee
amounting
to
Tk.
.........................
(Taka
.........................................................) on usual terms and conditions. I / We
state the following particulars and bind myself / ourselves to furnish you with
any other information & comply with required formalities which you may at
any time require:-

:-

1. (a) Name of the applicant / firm


(in block letter)
(b) Fathers name & age of the applicant
(in case of individual)

:-

(c) Name, age and official status of


husband if the applicant is a lady

:-

2. (a) Business address with phone no.


if any.

:-

(b) Present residential address

:-

3. Name / style of the A/c. and Number


with date of opening with the Branch.

:-

4. Nature of the applicant (individual/


proprietorship/ partnership firm)

:-

85

5. Permanent address with fathers /


husbands name of individual/
proprietor / partners.

:-

Name and Fathers / husbands name

Details of assets held with value


Comprising of
Value

a) Mr. ....................................................
S/o. ...................................................
Address: ...........................................
.........................................................

i)
ii)
iii)
iv)

Less Liabilities

Net Worth

Tk.
...........................
.
Tk.
...........................
.
Tk.
...........................
.

Contd. ..................... P/2

Page No. 2

b) Mr. ....................................................
S/o. ...................................................
Address: ...........................................
.........................................................

i)
ii)
iii)
iv)

Less Liabilities
Net Worth

c) Mr. ....................................................
S/o. ...................................................
Address: ...........................................
.........................................................

Tk.
............................
Tk.
............................
Tk.
............................

i)
ii)
iii)
iv)
Tk.
.........................
...

86

Less Liabilities

Net Worth

6. Nature of Business
(Whole Seller/ Retailer/
Manufacturer)

:-

7. Capital (own investment)

:-

8. Borrowing powers (in case of


partnership firm).

:-

9. a) Name & address of other bankers &


borrowing, if any, from them with
full particulars of Credit facility
b) Name and address of the previous
Bankers, if any

:-

10. G.I.R. No. / T.I.N. No.

:-

:-

11. Trade licence No.


12. How long in the particular business or
industry
13. Purpose for which the facility is required

::-

14. Items of manufacture or trade

:-

15. Amount of facility required

:-

16. Mode of repayment

:-

87

Tk.
.........................
...
Tk.
.........................
...

a) Copy of partnership deed


(to be attached)
b) Copy of decision taken for the
proposed loan / advance duly
signed by all the partners (to be
attached).

Contd. ..................... P/2

Page No. 3
17. Nature of security offered
a) Description of stocks to be pledged /
hypothecated

:-

b) Full description of immovables


offered for mortgage with location,
Area & nature of construction &
Present market value/ estimated
forced sale value

:-

c) Name & Fathers/ husbands name


of the owner of property proposed to
be mortgaged.

:-

d) Relationship of the owner of the


property with the borrower

:-

18. Property of the firm

Details
a) Movable

:-

b) Immovable

19. a) Name of the guarantor(s) if any

:-

b) Fathers name

:-

c) Present occupation

:-

d) Present Address

:-

e) Permanent address

:-

20. Present financial position of guarantor

:-

List of Assets
Comprising of

i)
ii)

88

Value
Tk.
.................
..........
Tk.
.................
..........

Value
of
Asset

iii)
iv)
Tk.
............
............
..
Less liabilities with
other guarantees

Net worth

21. Liabilities of sister concerns (if any)

22. Present liabilities in different accounts

Contd. ..................... P/3

Page No. 4
22. i) Net worth as per last years balance
sheet dated ............... or statement of
affairs dated .............. (to be enclosed)

:-

ii) Last years total purchase/ productions

:-

iii) Last years total sales

:-

iv) Last years total gross/ net profit/ loss

:-

24. Others relevant particulars, if any

:-

25. Declaration :

89

Tk.
............
............
..
Tk.
............
............
..

a) with our bank

b) with other bank

a) with our bank

b) with other bank

I/

We

........................................................................

...............................................................
...............................................

P.S.

permanent
/

Thana

S.o./

W.o.

resident

of

..........................

Dist

.......................... by occupation .................................................................. by


faith ......................................................... at Present carrying on business of
....................................................................................
partnership

basis

under

the

on

name

proprietorship/
and

style

................................................................................................
................................................................
............................................................................

at
P.S./

Thana

................................................... Dist ......................................... do hereby


solemnly on oath declare and affirm as follows:-

1. That I/ We have not taken any loan or enjoyed any facility in my/ our
personal name or in the name of my/ our proprietorship/ partnership firm
from any other branch of Pubali Bank Ltd. or any other Commercial Bank
save and except as stated under 9 (a) & (b) above.

2. That the statement made above is true and nothing has been concealed and
if at any time it transpires that I/ We have suppressed fact regarding
availing of a loan facilities from the bank, I/We shall be criminally liable.

Date: ..................................
.............................................

SIGNATURE

(Price of each set in quadruplicate is Tk.35/- only


for individual & Tk.100/- for firms).

90

N.B. : Original and Duplicate to be forwarded to H.O. by branch through


Regional Office
with proposal. Triplicate to be kept with the branch while the 4th copy

is for applicant.

F.L.-60
(REVISED)
PUBALI BANK LIMITED
(CREDIT PROPOSAL AND APPROVAL FORM)
6.4

NAWABPUR ROAD BRANCH, DHAKA

Branch
Ref.
................................................................................................
Regional
Office
Ref.
..................................................................................

01. Customers Name

02. Account :
No.
03. Date of a/c
opened
:
04. Date of
first
sanction
:

05. Address with phone no.


:
Present Address

Permanent
Address

Factory/ Business

No. Date
......................
..............
No. Date
......................
..............

91

06. Legal Status

: Individual/ Proprietorship/ Partnership/


Private Limited Company/Public Limited Company

07.
Date
of
Establishment/
Incorporation
............................................................................................................
G.I.R./
TIN
No.........................................................................................................................
..........................
08. Name of the Proprietor/ Partners/ Directors:
Age
Share
Position
Personal
Name & Residential address with
holding in
Net
%
Worth
Fathers/ Husbands name & Phone
(details
No.
attached)
Tk.
Tk.
Tk.

09. Capital structure :


a) For Limited Companies:
Authorised Capital
Paid-up Capital
Total Capital Funds (Net worth)
b) For Individuals, Proprietorship & Partnership:
Investment in Business (Net worth)

:
:
:

Tk.
Tk.
Tk.

Tk.

Contd.-.........................Page no.-2

PAGE NO. -2
10. (a) Nature and details of Business/ Products:

(b) Market/ Place of business/ Areas of main operation:

(c) Sales:

92

Actual Sales

Sales
Products

2003

2004

Tk.

Tk.

2005
Tk.

Estimat
ed
Sales
2006
Tk.

Total Sales
11.

Date of application
by the
customer
...............................
(Amount in Taka)
Existing Limit
Proposed Limit
Amount of
Date of
Limit
Limit
Expiry
Outstandi approa recommLimit
expiry
ng
ched
ended
for

(a) PRESENT PROPOSAL


(Fresh/ Renewal/ Enhancement)

Nature of facilities

Cash
Credit
(Pledge)
Cash Credit (Hypo)
Overdraft
Loans
LIM
LATR
Packing Credit
Export
Bill
Purchased
(F.B.P.)
Inland
Bill
Purchased
(I.B.P.)
L/C (Sight)
L/C (Usance)
Back to Back L/C
Bank Guarantee
Others (Specify)
TOTAL
Enclose: Indent/ Proforma Invoice where applicable. For L/C, LIM & LATR
proposal, amount of Duty, VAT etc. Landed cost & approximate market price
to be mentioned.

93

Contd.-.........................Page no.-3

PAGE NO. -3
11. (b) Credit facilities granted to subsidiary/ affiliates/ associates/ sister
companies with extent of interest of the applicant borrower:
Name of the Borrower
Nature of Limit Outstandin Expiry Security/
facilities
g
collatera
ls

Extent
of share
holding

11. (c) Details of other business of the applicant not included in 11(b)
above:
Name of the Business/ Firm
Nature of
Extent of
Investment in
Business
share holding
the Business
(in Taka)

11. (d) Total Facilities (Limit) in favour of the group:


Existing
Cash
Contingent

12.

:Tk.
:Tk.
.
Tk.
.

Particulars of the proposed limit:


(a) Purpose of the Limit:

12. (b) Securities


Value
(i) Details of Primary Securities

94

( in Taka)
Proposed
Total
(Fresh/ Enhancement)
:Tk.
:Tk.
:Tk.
:Tk.
.
.
Tk.
Tk.
.
.

(ii) Details of Collaterals (As per valuation certificte in details attached


herewith)

Total Value of Collaterals Tk. .................................... Force Sale Value


Tk. .................................
12. (c) Repayment arrangement:

Contd.-.........................Page no.-4

PAGE NO. 4
13. (a) Account performance:
( for the period from ................................... to ............................... )
(in Taka)
Nature of Account
Debit
Credit
Balance
Summation
Summation
Maximum
Minimum
Deposit Accounts
C/C (Pledge)
C/C (Hypo)
Loans
Overdrafts
Margin Deposits
LIM/ LATR/ PAD*
Total L/Cs opened (Foreign)
Total L/C opened (Local)
Total Guarantee issued

Nos.
Nos.
Nos.

Total Foreign Bills purchased


Total Inland Bills purchased
(*Detailed statement should be attached)
13. (b) Account Profitability: (For the same period as above)
Nature of Account
Interest
Commission
Deposit Account
Margin Account
Cash Credit
Loans

95

Tk.
Tk.
Tk.
Tk.
Tk.

Other revenue

Total

Overdrafts
Export Bills
Import L/Cs
Local L/Cs/ Gtee
Collection/ Remitt.
Others (Specify)
TOTAL
14. History of Relationship with the Customer:
(How and when the relationship started?/ State if the repayment/
adjustment have been regular etc.)

Contd.-.........................Page no.5

PAGE NO. 5
15. Bank/ Trade checking/ CIB report (Brief Synopsis).

16. Opinion on Customers Management:


(Education, Training background and past experience of key Management
Personnel to be mentioned.)

17. Other Bankers, Extent of relationship, facilities available, outstanding


etc.:
Name of the Bank
Name of the
Nature of Validity Securit Outstand- Status of
y Value
ing
account
& Branch
Customer
facility
(Whethe
r
classifie
d or
regular)

96

18. Industry Condition:


(How others in the same business/ industry are doing,
name of 2/3 Leading Companies)

19. Competitive position of the Customer:


(Pricing/ Marketing/ Special Advantage and any other)

20. Any adverse comments from Last Inspection/ Audit Report. (Our
Bank & Bangladesh Bank)

21. Future Business Projection:

22. If there is any Guarantor, details of Guarantors Background, Net


worth and Liabilities with the
Bank.

Contd.-.........................Page no.6

PAGE NO. 6
23.(a) Comments on the financial statements for the last 3 (three) years:
(State whether audited or unaudited)
Name of the Audit Firm if a/cs are audited:
SALES/ PROFITABILITY:

Audited/
Unaudited
2003

Audited/
Unaudited
2004

Audited/
Unaudited
2005

Sales
Cost of Goods Sold*

Tk.
Tk.

Tk.
Tk.

Tk.
Tk.

97

GROSS PROFIT
Selling General, Admin,
Financial Expense & Depreciation
OPERATING PROFIT/ LOSS
Add Other Income
Less: Other Expenses
Net Profit/ Loss before Income Tax

Tk.

Tk.

Tk.

Tk.
Tk.
Tk.
Tk.
Tk.

Tk.
Tk.
Tk.
Tk.
Tk.

Tk.
Tk.
Tk.
Tk.
Tk.

Income Tax

Tk.

Tk.

Tk.

NET PROFIT/ LOSS after Income Tk.


Tax

Tk.

Tk.

Tk.
Tk.

Tk.
Tk.

INVENTORY/ RECEIVABLES:
Inventory/ stock in trade
Receivables

Tk.
Tk.

EQUITY:
Assets
Tk.
Tk.
Tk.
Liabilities
Tk.
Tk.
Tk.
Equity (= Assets minus Liabilities)
Tk.
Tk.
Tk.
* For trading Firms Cost of Goods sold to be ascertained as under:Costs of goods sold = Opening stocks + Purchase + Carriage inward/ Freight Closing stock
CASH FLOW:
Net Profit
Depreciation + Write offs
Accounts Payable Incr./ (Decr.)
**
Receivables (Incr.) / Decr.
***
Inventory (Incr.) / Decr.
****
Other (Uses) / Sources
NET OPERATING CASH FLOW

2004

2005

Tk.
Tk.
Tk.

Tk.
Tk.
Tk.

Tk.

Tk.

Tk.

Tk.

Tk.
Tk.

Tk.
Tk.
.

** If the Current years figure is higher than previous years figure then the
difference amount is increase in cash flow & vice versa.
*** If the Current years figure is higher than previous years figure then the
difference amount is decrease in cash flow & vice versa.
**** If the Current years figure is higher than previous years figure then the
difference amount is decrease in cash flow & vice versa.
Contd.-.........................Page no.7

PAGE NO. 7

98

23. (b) Important Ratios:

2003
Current Assets
Current Liabilities

i) Current Ratio

ii) Quick Ratio

: Current Assets Inventory


Current Liabilities

iii) Leverage

: Liability

2004

2005

Equity
iv) Inventory Turn
over in days

: 365 X Inventory
Cost of Goods Sold

v)
Receivables
Turn
: 365 X Receivables
over in days
Sales

vi) Total Assets


Turn over

: Net Sales
Total Assets

vii) Gross Profit to


Sales

: Gross Profit X 100


Sales

viii) Net Profit to


Sales

: Net Profit X 100


Sales
ix)
Selling,
Selling General &
general,
Admn. Expenses X 100
& Admn.
Sales
:
Expenses
to
sales
(%)
x)
Return
on
Equity
: Net Profit X 100
(%)
Equity

Please enclose Balance sheet, Trading/ Manufacturing & Profit and Loss
Account of the applicant firm/ company for the last three years.
24. Details of Fixed Assets with valuation:
(For Limited Companies search be made with Registrar of
Joint Stock Companies to Ascertain any encumbrances)
Value
Date / Year
Description
Written down as
Acquired
Market
per Balance Sheet

99

Encumbran
ce if any

25. Any special consideration/ significant information about the customer/


transaction:

Contd.-.........................Page no.8

PAGE NO. 8
26.

(a)
(b)
(c)
(d)

(e)
(f)
(g)

All procedures in respect of opening of account have been


complied with
All necessary documents establishing the borrowers legal entity
have been obtained
Existing Securities/ Banking documentations and collaterals with
their valuation have been checked and they are in order
Documents establishing that proposed advance is within
authorisation and borrowing powers of the applicant have been
obtained.
All assets offered as security/ collateral have been verified to be
free from all encumbrances.
Security documents as prescribed have been obtained/ will be
obtained alongwith complete set of borrowing documents
The borrower is a director/ shareholder of our Bank, if yes, the
extent of share holding (value Tk. ...................................... )

27. RECOMMENDATION OF BRANCH MANAGER:

AUTHORISED OFFICER

MANAGER

Name:

Name:

100

YES / NO
YES / NO
YES / NO
YES / NO
YES / NO
YES / NO
YES / NO

Designation:

Designation:

(Separate sheets may be attached to give detailed


information for any column)

28.RECOMMENDATION OF REGIONAL OFFICE:

AUTHORISED OFFICER

REGIONAL MANAGER

Name:

Name:

Designation:

Designation:

101

CHAPTER-7

CONCLUSION

102

CHAPTER-7
Conclusion

7.1. Problems Findings:


There are several problems which I practically observe of PBL as follows:
1. Lack of Segmentation:
The Bank has no segmentation to handle different type of
customers. They are equally treating of all the customers to provide
service. But high status clients seek on extra honor from Bank or
institution.

2. Lack of Up to Date Decoration:


The Branch is not decorated with ultra modern facility and not so
nice to look at. Their furnitures and relevant materials are not so
high standard.

3. Work Environment is not so suitable:


The work environment is noisy and full of crowd sometimes. It is
bad for any financial organization and also bad for security. There
is no siting arrangement of good no of people.

4. Hard Rules & Regulation to Open A/C:


The procedures to open an account are full of hard & fast rules and
regulations (as per Bangladesh Bank). But compare to other Bank
prime bank is not as flexible as they are doing to open A/C or
attract customers.

5. Root level Clients are deprived From Deposit:


Many root level customers come and back to pavilion with a
frustration. So they are neglected and deprived to get banking
service.

103

6. Lack of Sufficient Computers & Technology:


Computers are carrying need of any organization in the age of
technology. But the branch has only 4 computers to use by almost
27 employees. This is very few to run the task through computer.
Lack of good software and format PO, DD are manually prepared in
the branch.

7. Non-quality Photocopy Machine:


The branch has only one photocopy machine which is sometimes in
clinical death. The output of this machine is not ensuring the
quality of original documents. So it is an image problem of the
Bank.

8. Un Smart Peon, Messenger, Security & Tea Bay:


It is a matter of great regret that the peon staffs of the branch are
lazy, whimsical, and above all illiterate to behave and work with
someone.

9. Customer Objectives:
Many customers complain to me to improve and first the service as
well as behavior of the staff as it is a private bank.. Customers
require especially quick, accurate service and good behavior from
bankers.

10. Lack of Good Cooperation:


Every organization has this type of problem. But it should be
minimized to faster the service as it is the financial institution and
one depends to another to complete a process fully.
11. Some Sort of Ego:
Some employees of this branch feel always some sort of ego that
they are something different. But this is not a symbol of good sign.
Ego drive is harmful for team work specially.

12. Lengthy Procedures & Process:


The scheduled activities of the bank like A/C opening A/C closing
and issuing of solvency certificates are delay sometimes due to lack
of proper initiates. This tendency is bad for banking good service.

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CSS maturity and closing require 3 days, which is an image of


Govt. Bank.

13. Low Interest Rate Cannot Attract Customers:


Compare to many others Banks prime Bank offer low interest rate
to depositors. So they are not interested to keep there money in
low rate of interest. The PBL management is only hunting to ward
low cost and no cost deposit.

14. Customers Complains:


Customers all complains are related with lengthiness and time
consuming of tasks. The small depositor like CSS A/C holder claim
to receive money instantly. But it is not possible for slow and lack
of cordial interruption of the management.

7.2. Policy Guidelines / Recommendations:


On the basis of theoretical analysis and practical experience of 3 months
internship program. I may suggest the following issues:
1. Provide Up To Date Technology:
The branch should be more technologically rich than present time.
Then all manual tasks will be converted into computerized system

2. Information Cell Establishment:


Each and every branch should establish an information cell with
one/two dump smart executives who will be able to provide all sort
of information regarding banking and respective branch. In my
question Almost 200 responded are agreed with my proposal.

3. Provide Nice Decoration:


Now a days private Bank is an image building and most nice
environment organization. So the decoration should be unique and
better than our competitors.

4. Handling Customers Well:


I think the staffs of the branch should be trained up how to handle
different type of customers. The training should not limit only GB,
Credit, And Foreign exchange etc.

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5. Behavior Modification of the Employees:


Very few employees behavior should be modified enough to
maintain positive attitude toward banks. They should always think
it is a private bank and fully service oriented organization.
Customer is the king / Queen they should remember it almost
every time in office or out side the office.

6. Maintain Service Quality:


We believe in quality not quantity. Quality is an important
phenomenon of service organization always quality should achieve
the pick of standard. If quality of service is good then 50% problem
will be automatically reduced.

7. Offer Competitive Interest Rate:


PBL should offer high competitive interest rate to attract depositor
to increase the liquidity. Then it will able to deal with call money
business in the age of fluting rate of exchange.

8. Site Selection of Branch:


Management should carefully consider the location to set up a new
branch. Because it is a question-which is vital to deal business?
Answer is location, location and location.

9. Deposit Mobilization:
Prime Bank has to increase their deposit mobilization growth. Also
AB bank has to take necessary action to maintain and improve their
deposit mobilization growth rate.

10. Operating Income:


For the maximizing the operating income, prime bank should try to
take necessary action to increased the operating income.
11. Reduce Expenditure:
Very essential to reduce the expenditure of the prime bank. Prime
bank expenditure is very high other than two banks.
12. Remove Slow Rate of profit:

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Prime bank profit is increased previous year but grow rate is low.
So take necessary steps to increase the profit.
13. Foreign Trade:
Foreign trade increase is the essential for the prime bank. The
maximum amount of total earning comes from foreign trade.
14. Performance Increase:
Prime Bank should increase their performance by engaging efficient
decision maker in the managerial level.
15. New Planning:
All commercial banks including both nationalized and private should
introduce
operational

performance
efficiency

planning
or

system

purpose

for

the

increasing
following

their
other

recommendation:

It should utilize properly idle money, because idle money is


one of the major problems of banking sector.

Proper standard should be set by the movement for


comparative performance measurement.

Proper decision should be taken for banking sector which


should not be changed rapidly.

Proper training should be given in order to create efficient


personnel.

World Banks prescription for banking reform programmed


should bee analysis before implementing.

16. Proper Autonomy:


Private Banks should be give proper autonomy and be kept free
from political and other sorts of intervention. Though, autonomy
does not mean lack of monitoring by the authority, yet it has
advantages of being quick and flexible in implementing different
plans and programs.

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7.3. CONCLUDING REMARKS:

From the detail discussions above I can easily conclude that In spite of all
problems Pubali Bank Ltd. is the fastest growing private commercial bank in
the country. The bank is already at the top slot in terms of quality service to
the customers and value addition for the shareholders because, despite difficult
circumstances, the Bank closed the year of 2005 with a number of
achievements. The Bank also made satisfactory progress in all areas of
business operation up to June 2006. The Bank further expanded and
consolidated its customer base in both of its core businesses and General
Banking Services.

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7.4

Bibliography

1. Annual Report, Pubali Bank Ltd, 2004


2. Annual Report, Pubali Bank Ltd, 2005
3. Different Instructions Circular,Issued by Pubali Bank Head Office.
4. Website: www.pubali-bangla.com

Advices & Suggestions are given by the following persons:


 Mr. Shym Sundar Banik,Managing Director of Pubali
BankLimited,Nawabpur Branch
 Mr. Shajhan Mahmood, Principal Officer, Pubali Bank
Limited,Nawabpur Branch
 Mr. Partha Pratim Acharja, Senior Officer, Pubali
BankLimited,Nawabpur Branch

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