Académique Documents
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1 Definition of Internship
Internship is a process to achieve practical knowledge about some theoretical lesson.
Its most important aspect is to acquire knowledge about the real position. As a
practical subject, Management needs some practical knowledge. Marketing of
Business studies includes an internship programs for its Bachelor of Business
Administration (BBA) programs.
According to Polin Efro (1977). “Social Research is such a scientific effort which
tries to discover new information through some rational and organized system, which
tries to examine the reliability of former information, and which tries to make to new
theories, systems and conceptions to understand and Explain a human attitude”.
Practical work is achieved to fulfill our knowledge. In practical work, we can realize
some problems and possible determinants of their solution.
2.2 Objectives of Internship
Primary objectives of internship are to provide some practical knowledge, which will
increase the practical experience with theoretical knowledge managerial efficiency. It
helps to achieve real knowledge, perfect investigation, above discussion of known and
unknown matter, techniques and experience.
However, we can mention the objectives program of internship in the following ways:
To show the guideline for searching various necessary information to solve
the organizational problems.
To add new information with established ways.
To identify problems and recommends to solve them.
To realize what kinds off organization can contribute to the economic
development of a country.
To determine entire actual situation of the organization.
Another important objective of practical training is to implement the
knowledge of practical training in the practical life.
To prepare pragmatic report about entire management of organization.
To make comprehensive solutions of problems to increase the diversification
and modification of marketing.
To show about the profitability, liquidity and solvency.
To investigate the techniques those are used in decision-making.
To show about the conditions of the Bank and its goodwill to the public.
To identify managerial problems and eradicate those.
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2.3 Importance of Internship
Goods and services are produced for the purpose of using in daily life. Similarly,
Theoretical knowledge is acquired for the purpose of applying in the practical life.
The propensity of application of theoretical knowledge in practical life successfully
internship program is absolutely necessary because theoretical knowledge will be
fruitful if it can be applied in the practical life. When we can implement the
theoretical knowledge practically, we can say the knowledge is successful; otherwise
the achieved knowledge is valueless. Internship program is the way of implementing
the theoretical knowledge practically.
However, the importance of internship may be described in the following ways:
As internship program is the practical implementation of the theoretical
knowledge, it helps to increase the quality and effectiveness of the trainer.
We can only know the problems of an organization in directly through
theoretical knowledge, but we can know the nature of the problems, problems
of the various departments, methods of solving the problems through the
practical training. So it is very important to identify the problems and
eradicate the problems.
The trend of all activities is an organization becomes growing through
practical training.
To Innovate new technique of management.
To realize the present condition of the institution.
To make policy for development of the organization.
It mentally prepares for their professions.
Internship program acts as a bridge between theoretical knowledge and
managerial practice.
Internship acts as a guideline during the service period.
By internship program students can understand limitations, shortages and
practicability of their knowledge and thereby can take necessary action for
removing these limitation and shortages.
2.4 Statement of the Problem
NCC Bank is playing a remarkable role for the economic and social development of
Bangladesh. NCC Bank at Rajshahi Branch is also playing such type of role. The
activities of this bank are widely diversified. But I have got only 60 working days for
my internship program. These sixty working days programs are not sufficient to
acquire complete knowledge about overall activities of the bank. So, it may have
some sort of problems in deed besides there may have a big problem in collecting
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primary and secondary data. It is not abnormal that I may have problem of
knowledge. Moreover, it might be said that data have reliable and valid as much as
possible. So, I tried my best to prepare my report according to the information
available to me.
2.5 Rationale of the Study
The present study is a pioneering attempt in the field of overall activities of NCC
Bank Ltd. It is true that, financial performance is really important for realizing
original financial position of a bank. In general uses the term fund frequently is used
to include (i) cash (ii) liquid assets (iii) current assets (iv) working capital (v) total
resources.
Again, According to other fund constitutes the prime importance in starting and
operating any business enterprise is the raising and management of funds financial
decisions are those which concern the flow of funds from various sources and use of
such funds.
Efficient management of finance ensures best use of resources to earn profit. Bank
finance management is the key to short to intermediate term decision-making in
today’s dynamic and volatile banking environment.
This study is taken to enlighten the basic inherent problems of the bank which need a
in- depth analysis for the survival of the bank in the situation of its chronics financial
problems, such as lack of expected loan recovery, huge outstanding loan, large
amount of classified loan and excess overdue loan etc. For continued the present
condition of this branch it is now essential to verity its efficiency or lack. As student
of BBA (in Marketing) I have considered all these matter and planned this study.
2.6 Objectives of the Study
Anything can’t run without any objectives. There are so many objectives of each
function. It is not exception of my study. I have selected the topics “Loan
Disbursement & Recovery System of NCC Bank limited”. This study has many
objectives. The main objectives of this study are as follows:
To know about the functions of NCC Bank Ltd.
To analysis the loan disbursement system of NCC Bank Ltd.
To analysis the loan recovery position.
To analysis the outstanding loan and overdue loan.
To analysis deposit structure.
To analysis the target and recovery of classified and unclassified loan of the
three years.
To analysis the financial management efficiency.
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To find out the existing problems to loss and find out the causes of loss.
To analysis the sector wise loan disbursement of the last three year.
To measure the overall financial performance of NCC Bank Ltd.
To give suggestions for improving its financial performance.
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3.1 Introduction
Data collection through census or survey can be used for many purposes. The present
study is concerned with the analysis of overall banking system of NCC Bank Ltd. The
approach adopted is basically analytical and interpretation in nature considering the
objectives of the study and review of literature. It is also decided to employ
quantitative descriptive method of analysis and investigations of the empirical data
related to the analysis of financial performance problem of NCC Bank Ltd.
3.2 Sources and Nature of Data
In order to performance this internship report, I can use various methods to collect
and present data. Mainly I used two types of data for this purpose-
1. Primary data
2. Secondary data
1. Primary Data
Generally the following methods are used in collection of primary data:
a. Direct interviewing.
b. Personal Communication.
c. Questionnaire method
a. Direct Interviewing
Before starting the task of practical training I prepare a questionnaire to collect data. I
collect data from the managers and officers of the NCC Bank Limited at Rajshahi
Branch,
b. Personal Communication
I gathered data through personal distribution from the officers and lower level
employees.
c. Questionnaire Method At first I made a questionnaire as the direction of my
supervisor about the NCC Bank Limited. Thus, I collected other concern questions
from information sector and arranged then in that questionnaire.
2. Secondary Data
I have collected secondary data from the various sources such:
a. Annual report of NCC Bank limited
b. Monthly performance report
c. Personnel development of NCC Bank Ltd at Rajshahi branch
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d. Central accounts department of NCC Bank limited
e. Various types of official documents etc.
3.3 Data Collection and Limitation
For the purpose of data collection, personal interview approach has been used. This
method relates to the collection of information directly from the respondents. So, in
this method, the respondents (bankers) were directly contacted and the desired
information was collected using a pre-designed questionnaire. The purpose of putting
each question was explained to them.
Some of the bankers have hesitated to give answer of some questions belonging to
questionnaire.
3.4 Data Processing
Data Processing is a key factor for conduction a research and to write a report. Data
processing procedure consist three parts. These are:
a) Editing: After the collection of data day by day, I carefully checked each
schedule of questionnaire. The data were edited rigorously to make correction of any
existing inconsistencies in data and to minimize non-sampling error of the study. I
make edition in order to have a complete, consistent, accurate and homogenous data.
b) Coding: The recorded data were coded in sheets according to a
comprehensive code plan. I tried my best to minimize possible bias due to coding of
open question.
c) Computerization: Edited and coded data were next processed in a
computer. At first, I tried to entry each data in the worksheet. Entire computerization
of data has performed by a computer package named SPSS for windows version 11.5,
the most convenient program for data analysis for social science. Microsoft Excel and
Microsoft word are also used for completing the research. To analyze the data, all the
qualitative variables were transferred by suitable numeric values.
3.5 Techniques of Data Analysis
Under this study, the collected data are analyzed. To analyze the collected data, a
person has to follow and apply some techniques. Accordingly, I have used some
important techniques for analyzing the collected data so that I can get faithful result
from my study. The techniques that I have applied in data analyses are as follows:
Table
Charts
Graph
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4.1 Profile of the Bank
National Credit and Commerce Bank Ltd. popularly known as NCC Bank Ltd., bears
a unique history of its own. The organization started its journey in the financial sector
of the country as an investment company named National Credit Limited back in
1985. The aim of the company was to mobilize resources from within and invest them
in such way so as to develop country's Industrial and Trade Sector and playing a
catalyst role in the formation of capital market as well. Its membership with the
browse helped the company to a great extent in this regard. The company operated up
to 1992 with 16 branches and thereafter with the permission of the Central Bank
converted in to a fully fledged private commercial Bank in 1993 with paid up capital
of Tk.39.00 crore to serve the nation from a broader platform. At present the bank is
operating with 74 Branches with online facility across the country.
Since its inception NCC Bank Ltd. has acquired commendable reputation by
providing sincere personalized service to its customers in a technology based
environment.
The Bank has set up a new standard in financing in the Industrial, Trade and Foreign
exchange business. Its various deposit & credit products have also attracted the
clients-both corporate and individuals who feel comfort in doing business with the
Bank.
4.2Activities of NCCBL
The world economy is going through various crises arising from insurgent activities at
various parts of the globe. The turbulence also affected Bangladesh Economy
adversely as well. Taka has been devalued. The political unrest caused devastation to
the industrial and service sectors. The business community as a whole, apprehending
imminent doom, tried to negotiate for a compromise among the various concerned
parties. The bank earned a modestly satisfactory result during the year 2008, which
contributed in continuing its steady growth in respect of all major indicators, namely
Deposit, Advance, Profit, etc. During the year NCCBL has concentrated its focus to a
number of income increasing sectors such as SME Financing, Inward Foreign
Remittance, etc. Also it has put efforts to bring discipline in administering Bank’s
Asset through various measures. As a whole, the outcome of these efforts was very
positive and encouraging indeed.
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with the timely measures taken by the Management under guidance of the Board, it
was possible to sustain steady growth through maintaining asset quality. The Bank
has separate Credit Administration Department, Recovery Department and also a
Task Force for continuous monitoring of difficult loans and advances of the Bank and
to propose ways of recovery of Bank’s dues.
This process will continue in upcoming years also. Further, the Bank will pay
attention to manage liability also so as to build up a strong deposit base to satisfy
investment need of the market.
Over the last few years remittance business contributed remarkably in increasing fee
based income of the Bank. In order to motivate and inspire the Bangladeshis residing
abroad to send their hard earned money through legal Banking channel, NCCBL has
taken a number of steps like making remittance arrangements with different money
exchange companies all over the world, participating in fairs and meetings with
remitters and exchange companies, etc. which brought result beyond expectation.
It is a matter of pride that the Bank has been awarded various trophies from exchange
companies like MoneyGram for its initiatives in motivating people in this part of the
world to avail of the opportunity of sending money through these enterprises.
The bank started FRPP, a jointly funded project by DFID in partnership with
Bangladesh Bank under the grant facility called Remittances and Payments Challenge
Fund (RPCF) where Thangamara Mohila Sobuj Shangha (TMSS), an NGO working
for empowering the womenfolk of the country is a partner. Under this project the
Bank is using not less than 250 outlets of TMSS to deliver remittance to the
beneficiaries where it has no Branch. NCCBL plans to continue this project even after
expiry of the RPCF, if proved feasible.
The Bank has put due emphasis on grooming up its workforce in a technology based
working atmosphere for some time. Also to cater the needs of the customers, very
recently NCCBL started full-fledged real time On Line Banking System with
implementation of Flora Banking UBS Software and introduced Debit Card in the
brand name of “MPower Card”. The bank also introduced a foreign remittance
payment card in the brand name of “MBridge Card”.
Of late financing in SMEs has been proven to be very beneficial for banking sector.
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Banks have paid special focus to this sector to expand scopes of extending credit
facilities to enhance sustainable profit. SME has been found to be a very potential
avenue of financing, since it is believed that small and medium entrepreneurs are very
hard working and sincere in paying back Bank’s money. Banks are optimistic that
investing in this sector would not entail huge volume of default loan like conventional
or cooperate financing.
4.3 VISION
The vision of the bank is to become the bank of choice in the communities they serve.
The bank accomplishes this by offering to their customers the financial services which
are expected by their customers while providing a return to their owners. In
accomplishing this mission, the bank has now been free from all the natures of a
problem bank though full filling all the conditions set by the central bank. They
proudly say “NCCBL is profit making and problem free”.
4.4 MISSION
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The Board has appointed the management, which is responsible for the welfare of the
Banks directors. Some members of the Board have formed the Executive Committee.
Which organizes a meeting in every week to deal with the minor issues such as
promotion of cadre change of a confirmed employee. Conversely at least one meeting
of the Board is held in every month to deal with major issues such as modification of
the existing policy or major policy reforms.
Name Designation
Yakub Ali Chairman
Md. Harunur Rashid Vice Chairman
Mohammed Nurul Amin Managing Director & CEO
S.M. Abu Mohsin Chairman, Executive Committee of the Board
Principal M. Wazhiullah Bhuiyan Chairman, Audit Committee of the Board
Mr. Tofazzal Hossain Director
Mr.Abdus Salam Director
Mr. A.S.M. Main Uddin Monem Director
Nurul Islam Director
Mr. K.Z. Mahmud Director
Mr. Md. Shahjahan Director
Mr. Md. Mohamad Ali Director
Mr. Fakrul Anwar Director
Md. Abdul Awal Director
Masuda Begum Director
Amjadul Ferdous Chowdhury Director
Mahbubul Alam Tara Director
Ainul Kabir Director
Mostafizur Rahman Director
Alhaj Md. Nurun Newaz Director
Md. Humayun Kabir Director
Din M. Rana Director
Md. Abul Bashar Director
Director Khairul Alam Chaklader Director
Md. Moinuddin Director
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Managing Director (MD)
Officer Grade- I
Officer Grade- II
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Successful companies today are fully aware that they need to be able to rely on the
services of a bank that can handle international trade with a good hand. Ever since its
conversion into a full-fledge bank in 1993, NCC Bank has been an accomplished
“Trade Finance” bank. With a highly professional team experienced and competent
professionals we are able to provide a wide range of services to companies engaged in
international trade.
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Agricultural Financing
Import and Export Financing
Remittance Products:
Special Interest rate on Savings and Term Deposits
Wage Earners Welfare Deposit Pension Scheme
Loans for Real Estate (Land purchase and House
construction/renovation)
Advance against Regular Remittance
4.12 DEPOSIT
The total deposit of the bank is Tk. 53900.15million as on December 31, 2009. The
Bank has introduced several welfare oriented deposit schemes to encourage and
mobiles savings that have gained popularity among the public.
Deposit Structure
Year Take (In millions)
2002 16,062.35
2003 15,153.90
2004 16069.23
2005 21478.22
2006 28147.34
2007 34901.77
2008 46904.66
2009 53900.15
Deposit of the bank at the end of the year 2008 was Tk 53900.15 million, which is
more than deposit of 2008. From 2000 to 2002 the bank had a rising position but in
2003 it has decrease. It had happened for increase competition in banking sector
where the customers are going to the other banks.
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60000
50000
40000
30000 Amount
20000
10000
0
2002 2003 2004 2005 2006 2007 2008 2009
But after 2004 bank’s deposit are Increases tremendously. This is happen because
increasing confidence of customer to NCCBL inspires people to make more and more
deposited to NCCBL.
4.13 ADVANCE
The Bank followed its own credit policy within the guidelines of Bangladesh Bank.
The Credit portfolio of the Bank is well diversified and broad based covering various
sectors of the economy in addition to traditional financing of domestic and
international trade. The Bank extended credit facilities under consumer, hire purchase
and lease financing schemes as well as loan syndication arrangement with other
Banks and Financial Institutions. The Bank also extended financial assistance to small
scale industries and industrial loans to a number of projects for employment
generation so as to fulfill the socio economic objectives of the Government. During
the year Bank has introduced some new collateral free credit products under small
loans unit and feasible loan scheme for the first time in banking history.
Advance Table (2002- 2008)
Year Taka (In millions)
2002 13,147.72
2003 12,850.85
2004 15,211.15
2005 20533.13
2006 24678.36
2007 32687.75
2008 46322.69
2009 50387.68
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Credit of the bank at the end of the year 2009 was TK. 50387.68million, which is
more than 8.77 % of the preceding year. Credit investments of bank are increases as
increases in the deposit amount. The credit position is shown in the following graph.
60000
50000
40000
30000 Amount
20000
10000
0
2002 2003 2004 2005 2006 2007 2008 2009
OPRATIONAL RESULT
The operational Profit of the bank during 2009 was Tk. 3137.70 million as against
Tk. 2363.49 million in 2008 recording an appreciable growth of 32.75 percent which
was possible due to prudent lending and efficient management of funds. The net profit
thus stood at Tk. 1719.50 million.
NETWORK OF BRANCHES
The bank has planned to expand its business network to reach large section of the
potential clients living in remote areas. The total number f branches were 74 th as on
22th November, 2010.
DIVIDEND
In the line of proposed appropriation of profit, the Board of Directors has been
pleased to recommend 47% bonus share and 1R:2 right issues for its valued
shareholders for the year 2009.
NCC BANK AT PRESENT
In the 2009 the Bank could increase its profit and consolidate its position in all areas
of operations. The Bank followed cautious but prudent policy during the year in a
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unpredictable economical and political situation. The profit figure at the end of the
year stood at Tk 53900.15 million, an increase of 16.33% over the previous year’s
profit figure of Tk 46332.69 million of 2009 and reserve fund went up-to Tk 3749.64
million registering 30.94% growth over last year’s position of Tk 2863.62 million.
1800
1600
1400
1200
1000 2008
800 2009
600
400
200
0
profit Paid up capital Reserve fund
Like clothes, shops, bakeshops, food shops, NCC Bank is not a debt shop. The term
being used by many to call the present say banks. It is now being called a modern
bank that undertakes all its operations at an international standard.
The bank has been able to attain a commendable CAMEL rating and its performance
has been outstanding in terms of profitability for the year ended 2002.
Listed in both the Dhaka and Chittagong Bourses since 1993 with an IPO that raised
the paid up capital of the bank to Tk.39.00 Crore, the current price level of its share
and turn in trading is evidence of its high rating among investors.
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5.1 Management of NCC Bank
The twelve members of the Board of Directors are responsible for the strategic
planning and overall policy guidelines of the Bank. Further, there is an Executive
Committee of the Board to dispose of urgent business proposals. Besides, there is an
Audit Committee in the Board to oversee compliance of major regulatory and
operational issues. The CEO and Managing Director, Deputy Managing Director and
Head of Divisions are responsible for achieving business goals and overseeing the
day-to-day operation. The CEO and Managing Director are assisted by a Senior
Management Group consisting of Deputy Managing Director and Head of Divisions
who supervise operation of various Divisions centrally and co-ordinates operation of
branches. A Management Committee headed by the CEO and Managing Director
manages key issues. This facilitates rapid decisions.
There is an Asset Liability Committee comprising member of the Senior Executives
headed by CEO and Managing Director to look into all operational functions and Risk
Management of the Bank.
5.2 District Wise Branch Distribution
The branches of the Bank cover all the important trading and commercial centres in
Bangladesh. As date, it has 65 branches within Bangladesh. All the branches are
equipped with computers in addition to modern facilities, logistics and professionally
competent manpower. NCC Bank Ltd. is in the process of opening six more branches
at important locations in the country.
5.3 Head Office of NCC Bank Ltd.
Head Office NCC Bank Ltd.
Address
7-8 Motijheel
Dhaka.
Telephone
----------------------------------------
Telex
-----------------------------------------------
Fax
Swift
----------------------------------
Website
www.nccbankbd.com
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5.4 At a Glance of NCC Bank Ltd. in Bangladesh
Sl. Description 2005 2004 2003 2002
Taka Taka Taka Taka
1 Authorized capital 500 500.00 500.00 500.00
2 Paid up capital 492 406.39 406.39 406.39
3 Tier-I capital 1232 1186.93 1115.02 1050.63
4 Tier-11 capital 442 421.87 421.87 321.87
5 Total capital 1674 1608.80 1536.89 1372.50
6 Total Deposit 21387 20774.49 19799.33 19131.85
7 Total Loans & 22331 21280.88 20450.90 20596.58
Advances
8 Investment 3570 2666.29 2406.27 4239.88
9 Total Asset 29800 28575.83 27101.27 28885.90
10 Import Business 13235 24810.12 25412.20 19407.20
11 Export Business 15325 29513.90 27557.30 21718.90
12 Remittance 2440 4297.79 3344.00 3344.25
13 Guarantee Business 544 550.56 2206.43 2098.54
14 Total Income 2873 2687.02 2543.83 2163.63
15 Total Expenditure 2021 1986.77 1921.75 1986.92
16 Operating profit 852 700.25 622.08 304.71
17 Credit Deposit Ratio 104.41 102.44% 103.29% 107.66%
18 Return on Asset 0.29% 0.25% 0.24% 0.27%
19 Return on Equity 6.85% 5.92% 5.63% 7.35%
An Over View of NCC Bank Ltd. at Rajshahi Branch
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Asstt. Officer
19
General Banking
Advance Banking
Foreign Exchange
Ancillary Services
Introduction
Banking is a business. This is run on the confidence and trust of people. This
confidence enjoyed by banks and enables the bank to mobilize funds from various
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sources. The word credit derived from Latin word “CREDO” means I believe. If we
analyze this theme it stands for trust & relationship between banker and customers.
One of the most important ways a bank or other lending institution can make sure its
loans meets regulatory standards and are profitable is to establish a written loan
policy. Such a policy gives loan officers and managements specific guidelines in
making individual loan decisions and in shaping the overall loan portfolio (Rose et.al.
1995). Each and every bank has got their own credit policy which generally
formulated on the basis of prevailing countries socio-economic conditions, political
and other related aspects from time to time and as per guideline of central bank. NCC
Bank Limited have formulated their own credit policy indicating the areas of lending
complied by Bangladesh Bank guidelines. The main features of credit policy of NCC
Bank Ltd. have focus on the following areas:
i. Trade and Commerce
ii. Industry
iii. Lease Financing
iv. Consumer Financing
v. Small & Medium Enterprise (SME) Financing
vi. Agriculture & Agro-based Ventures
vii. Housing Loan Scheme
viii. Real Estate & Civil Construction
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4.1.1 Trade & commerce
This broad category encompasses large business houses dealing with imported
consumer items, medium and small import business houses trading in similar item and
finally, shop keepers, distributors, whole sellers, retailers and small manufacturers
scattered across the country.
While allowing facilities under the segment of trade & commerce, bank shall ensure
that mere increase in the volume of business portfolio and relevant income generated
from it is not the prime consideration as it involves payment in costly foreign
exchange in case of foreign trade. Therefore, trading in non-essential items shall be
discouraged for the greater interest of the country.
4.1.2 Industry
The domain of industry financing of NCC Bank Ltd. basically comprises of:
Capital financing in the form of term loan
Working capital financing; &
Financing of small cottage industries.
Financing for establishment of new industries or reinvestment to existing industries is
a specialized function of the bank. NCCBL’s policy would be a selective approach to
term loan financing to small scale industries and export oriented or import substitute
industries which enjoy high degree of national economic priority. In case of financing
in this sector bank would prefer syndication with other banks to keep a balanced
portfolio.
The core of NCCBL’s lending activities shall be the working capital financing to
large and medium scale industries as well as small scale industries. Track record of
operational performance of the industries, credit worthiness of the entrepreneur, and
reasonable security coverage shall form the basis of lending policies. Working capital
financing to newly set up industries will also be considered on careful examination of
validity, cash flow prospects, and entrepreneurial competence.
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4.1.4 Consumer financing
In order to help the fixed income group in fulfilling their demand to upgrade the
standard of living NCCBL has launched some consumer credit scheme such as:
i. Personal Loan Scheme
ii. Festival Personal Loan Scheme
iii. Education Loan Scheme
iv. Household appliance
v. Furniture & fixture
vi. Air conditioner
vii. Fax machine & cellular phone
viii. Motor cycle/car
ix. Other equipments
Adapted from: Bangladesh Bank ACSPD circular no.8 of the year 2008.
A large section of our business community consists of small and medium business
owners who are conducting there business with own resources without availing much
1
Value of fixed assets are calculated excluding value of land and building.
23
support from financial institutions. Banks major concentration shall be under this
sector under the following categories:
i. Small Business Loan
ii. Festival Small Business Loan
iii. Earnest Money Financing Scheme
iv. Financing of Service Concern
v. Financing of Trading Concern
vi. Financing of Manufacturing Concern
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d) Small Business Loan
e) Consumer Finance Scheme
f) Lease Finance
g) Personal Loan
25
(Percent per year)
26
b) Festival Small Business
Loan
c) House Repairing Loan
d) Personal loan
e) Consumer Finance
Scheme
Source: Adapted from Head Office Instructional Circular of NCCBL (May’ 2009).
i. Safety
ii. Liquidity
iii. Profitability
iv. Purpose
v. Security
vi. Dispersal/ Spread, and
vii. National interest
4.4.1 Safety
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Safety first should be guiding principle of a banker. So far as his advances are
concerned, because the very existence of a bank depends on the safety of its
outstanding, which should never be sacrificed to the profit earnings capacity of its
advances. This has led people to believe that a bank never advance any loan unless it
is fully secured. To maintain a banking concern in sound condition, it is very
essential that the safety of its advances to customers should be its first principle. The
repayment capacity of a borrower depends on the borrowers a) capacity to pay and b)
willingness to pay.
4.4.2 Liquidity
Liquidity is the availability of bank funds on short notice. It is not enough that the
money will come back, it is also necessary that it must come back on demand or in
accordance with agreed terms of repayment. The borrower must be in a position to
repay within a reasonable time after a demand for repayment is made; otherwise, the
liquidity position of the bank is endangered.
4.4.3 Profitability
Commercial bank has to distribute its resources in a manner hat they meet the twin
requirements of liquidity and profitability. A banker has; therefore, to see that major
portion of the assets owned by it are not only liquid but also aim at earning a good
profit. The working funds of a bank are collected mainly by means of deposits from
the public and interest has to be paid on these deposits.
4.4.4 Purpose
A banker would not through away money for any purpose of which the borrower
wants. The purpose should be productive so that the money not only remains safe but
also provides a definite source of repayment. The banker should study the purpose
for which the loan is required and the resources from which the borrower is expected
to repay. If the funds borrower is employed for unproductive purposes like marriage
ceremony, pleasure trip, repayment of old debts etc., or speculative activities, the
repayment in the normal course will become uncertain. Bankers also discourage
advances for a hoarding of stocks.
4.4.5 Security
It is the practice of banks not to lend money without any security. The security
offered for an advance is insurance or a cushion to fall back upon in case of need. A
banker would not normally like to recover the advance from the safe of the security.
They would prefer an advance to come back from the normal source. Security serves
as a safety value for an unexpected emergency. Security may be of i) Primary security
and ii) Collateral security.
4.4.6 Dispersal/Spread
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The advances should be as much broad-based as possible and must be in keeping
with the deposit structure. The advance must not be in one particular direction or to
one particular industry; because any adversity faced by that particular industry will
have serious repercussions on the bank. Again advance must not be granted in one
area alone. There should be spread of advances against different securities, industries
as well as areas. Thus, by a diversification of the advance a banker will be able to
spread his risks and considerably improve the safety of advance.
4.4.7 National interest
Banking industry has significant role to play in the economic development of a
country. The banker would lend if the purpose of the advance is for overall national
development plans necessitating flow of credit to propriety sector in the larger
national interest.
29
LENDING PROCESS
5.2 Stages of Lending
Most loans to individuals are arise from a direct request from customer who
approaches a member of the lender’s staff and asks to fill out a loan application. A
well thought out lending process is a significant safe guard of depositor’s money as
well as business of the bank (Rose, et.at. 2005). This chapter aims at discussing the
scrutiny, approval, disbursement, monitoring, follow-up and supervision process of
credit of NCC Bank Limited.
a) Managerial aspects
i) Managerial ability
ii) Honesty and integrity.
iii) Managerial succession.
b) Technical aspects
i) Whether the technology is outdated or modern to handle by the firm.
ii) Cross-check of the pricing as stipulated in the indent/pro-forma invoice.
iii) Check the productivity of the proposed plant and machinery matching with
the firm’s goal.
30
c) Financial aspects
i) Company’s operating performance and future earnings prospects.
ii) Current financial condition and factors likely to affect in the near future.
iii) Demand-supply gap keeping in view the other similar existing industries
and the industries which are in the offing.
iv) Net worth of the sponsor directors/entrepreneurs/proprietors.
v) Credit Risk Analysis.
31
Steps of Documentation. There is a saying that bank deal with documents, not with
merchandize. Therefore, proper and accurate documentation is utmost necessary to
ensure banks interest. Flaw less documentation ensure proper title and rights to the
security offered to the bank by the borrower. Documentation involves;
a) Preparation of deed.
b) Legal opinion.
c) Executants and execution.
d) Witnessing.
e) Stamping of documents as per Stamp Act-1999.
f) Registration as per Registration Act-1920, and
g) Safe keeping/ preservation of documents.
Securitization. Direct securities like Fixed Deposit Receipt (FDR), other Term
Deposit Receipt, of Deposit Pension Scheme (DPS) etc., standing in the name of the
borrower himself and those standing in the name of 3rd party should be liened duly
discharged. In case of Collateral Security, Registered mortgage should be created as
per Bank’s Panel Lawyers opinion taking all the chain documents. Such as:
a) Original deed
b) Bia deed
c) C.S., S.A., R.S., Parcha
d) Non-encumbrance certificate
e) Up-to-date rent receipt, etc.
32
Creation of charge with RJSC. In case of accommodation against hypothecation of
moveable property (machinery, stock, etc.) of limited company, charge (on the assets
acquired/ to be acquired) must be created with the Registrar of Joint Stock Company
(RJSC) with in 21 days from the date of documentation and the certificate thereof
must be maintained with the charge documents.
5.2.3 Post disbursement stage
At the post disbursement stage the following points must be examined by the branch
in-charge and credit officer in order to keep the lending portfolio sound:
5.3 Realization
Realization of loan, in whatever form it may be disbursed, is of prime importance.
Because bank lends out of deposit of people. As such, to get scarce deposit and
maintain confidence of the people, it is moral responsibility and prime duty of
manager to realize loan. It is of no doubt that effective and subjective supervision
and control pave the ground wide for realization of loan. A manager gifted with the
quality of subtlety and diligence should remain alert on following points:
33
PORTFOLIO OF NCCBL RAJSHAHI BRANCH
7.2 Deposit Mix of the Branch
Deposit of the branch stood at Tk.4197.00 lac at the end of the year 2009. Term
deposit (FDR, MDP, EITD, SDS) consists the largest portion of the deposit mix of the
branch and Short Term Deposit consists the smallest share of total deposit of the
deposit mix of the branch (Table 7.1). Total deposit consists of 15 percent cost free
deposits and 85 percent cost bearing deposits, respective
Table 7.1 Distribution of deposits by category (Fig. in lac)
34
Cost Free
Deposit
15%
Cost Bearing
Deposit
85%
2005 141.94 -
35
Deposit Trend of deposit over time
6000
y = 892.39x - 526.73
5000
Deposit (Tk. in lac)
4197.06
4000
3000
2493.41
2366.73
2000
1553.06
1000
0 141.94
2005 2006 2007 2008 2009 Year
36
Consumer Finance Scheme 1 1.00 0.04
Source: Adapted from Daily Statement of Affairs and Module Wise Customer Lager Balance as
on 31 December 2009 of NCCBL, Rajshahi Br.
2005 6.00 -
37
Advance (Tk.) Linear (Advance (Tk.))
3000
y = 549.78x - 832.56
2500 2458
Loans & Advances (Tk. in lac)
2000
1500
1000
889.79
500 434.13
295.99
0 6
2005 2006 2007 2008 2009
-500
Year
Chart 7.3 Growth of loans and advances over time.
2005 -7.14 -
38
Source: Survey (2010).
80
y = 17.094x - 32.578
70
60 63.25
Profit (Tk. in lac)
50
40
30 31.21
20
10
5.15
0 1.05
-10 2005 -7.14 2006 2007 2008 2009
-20
Year
Chart 7.4 Growth of profit over time
SS 16.58 0.67
DF 18.05 0.73
39
BL 30.93 1.26
Source: Adapted from all loan customer wise balance statement, NCC Bank Ltd., Rajshahi
Branch
as on 31 December 2009.
Classified
3%
Unclassified
97%
40
(Amount in lac)
41
UC 24.80 36.18
SMA 3.85 5.61
SS 12.77 18.64
DF 15.02 21.92
BL 12.09 17.64
Total 68.53 100.00
Source: Adapted from all loan customer wise balance statement, NCC Bank Ltd., Rajshahi
Branch as on 31 December 2009.
42
avail the facility. It was found from table 7.11 that at the end of the year 2009 the
branch’s PLS outstanding stands for Tk.3.71 lac only, among which 67.69 percent
was standard and generating income for the branch. While 15.67 percent was marked
as SMA, 13.34 percent was market as SS, and 3.30 percent was marked as BL,
respectively.
43
Table 7.11 Classification of FSBLS
(Amount in lac)
44
Total Operating Cost
Cost Income Ratio: Total Operating Income
Non−Interest Income
Burden Coverage Ratio: Non−Interest Expense
Operating Income
Per Employee Income: Number of Employees
Operating Expense
Per Employee Expense: Number of Employees
45
d) yield of advances 14.84
3. Credit Deposit Ratio 34:66
4. Spread {2(d)-1(d)} 4.52
5.Income
a) Net Interest Income 311
b) Exchange gain
c) Commission & fees Income 49
d) Total Income 360
e) Ratio of Non-Interest Income to Total Income 27.22
f) Interest income Kept in suspense A/C 7.42%
6. Expense
a) Net Interest Expense 249
b) Salary & Allowances 46
c) Others 30
d) Total Expense 325
e) % Empolyees Expense to Total Expense 14.15%
7. Opwerating Profit/(Loss)-(5d-6d) 35
8. Cost Income Ratio (Operating Income) 155.10%
9.Burden Coverage Ratio 61:39
10. Return on Assets (ROA) 0.0079
11. Efficiency Ratio
i. Per Emplyee Deposit 311
ii. Per Employee Deposit 159
iii. Per EmployeeClassified Loan 5
iv. Per Employee interest Income 19
v. Per Employee Non Interest Income 3
vi. Per Employee Income 23
vii Per Employee Expense 20
.
viii Per Employee Salary & Allowances Expenses 3
46
.
ix. Profit/(Loss) per Employee 2
Executives & Officers 13
Support Staff 3
Total: 16
Source: survey (2009).
7.9 SWOT Analysis for the Branch
SWOT analysis was done to identify the factors affecting profitability of our
branch business.
Strength.
Congenial working environment of the branch.
Quality manpower who wants to serve customer well.
Branch situated in a prime location of the city.
Online facility
Weakness.
Imbalanced rank and profile of staffs in the branch; Manager is a Sr.
Vice President and Deputy Manager is only Senior Officer.
In adequate training facility to improve managerial skills
No any branch clearing facility
Inadequate manpower in cash, general banking, and advances
department.
At least an ATM booth is required adjacent to branch.
Opportunity.
Trade finance business.
Increase small savings.
Lease finance to professionals-doctor, finance to small and cottage
industry.
Threat.
Latest technology adoption- ATM, Alert Banking, Phone Banking- by
competitors.
Small segment of large-scale business concern in the city.
47
Risky SME financing due to borrowers easy access to NGO loan, which
may lead to over finance and reduce borrowers credit worthiness.
CIB report is not available to trace out NGO’s loan made to borrower.
Customer preference to deposit to FDR which increase cost of fund.
Intense competition among competing banks to grab business, which may
lead to unsecured financing.
SUMMARY
National Credit and Commerce Bank Ltd. bears a unique history of its own. The
organization started its journey in the financial sector of the country as an investment
company back in 1985. . The company operated upto 1992 with 16 branches and
thereafter with the permission of the Central Bank converted into a full fledged
private commercial Bank in 1993 with paid up capital of Tk.39.00 crore to serve the
nation from a broader platform. At present the bank is operating with 65 Branches
with online facility across the country.
The bank has started FRPP, a jointly funded project by DFID in partnership with
Bangladesh Bank under the grant facility called Remittances and Payments Challenge
Fund (RPCF) where Thangamara Mohila Sobuj Shangha (TMSS), an NGO working
for empowering the womenfolk of the country is a partner. Under this project the
Bank is using not less than 250 outlets of TMSS to deliver remittance to the
beneficiaries where it has no Branch.
48
The bank is always aware of its social responsibility and consciously put its efforts
to discharge this responsibility. For effective discharge of CSR, NCC Bank
Foundation was established a few years back. Under the banner of this foundation, the
bank has continued its social works.
Mission of the bank is to mobilize financial resources from within and abroad to
contribute to Agricultures, Industry & Socio-economic development of the country
and to pay a catalytic role in the-formation-of-capital-market. And vision of the bank
is to become the Bank of choice in serving the Nation as a progressive and Socially
Responsible financial institution by bringing credit & commerce together for profit
and sustainable growth.
The present study of conducted to attain a broad objective of analyzing credit policy
of NCC Bank Ltd. and to evaluate efficiency and effectiveness of credit operations
of Rajshahi Branch of NCC Bank Limited. The study further attempt to attain the
following objectives in order to reach its broad objective.
i. to study the credit policy of NCC Bank Limited;
ii. to study the credit risk grading system of NCC Bank Limited;
iii. to analyze credit portfolio of NCCBL Rajshahi Branch;
iv. to analyze key performance indicators of the Branch;
v. to analyze Branch’s strengths & weakness; and
vi. to suggest some policy recommendations.
The present study was conducted based on secondary date generated mostly by the
automated banking software-Flora Bank UBS- of the bank. The researcher himself
collected the data from different published and unpublished material of NCCBL
financial documents. Published document is the annual report of the bank, while
unpublished sources of secondary data are different monthly statements, quarterly
statements, deposit and loan ledgers, Daily Statement of Affairs, Income Statement,
Expenditure Statement, and annual closing statements of the branch under study.
Each and every bank has got its own credit policy which generally formulated on the
basis of prevailing countries socio-economic conditions, political and other related
aspects from time to time and as per guideline of central bank. NCC Bank Limited
have formulated own credit policy indicating the areas of lending complied by
Bangladesh Bank guideline. The main features of credit policy of NCC Bank Ltd.
have focus on the following areas:
i. Trade and Commerce
ii. Industry
iii. Lease Financing
iv. Consumer Financing
v. Small & Medium Enterprise (SME) Financing
49
vi. Agriculture & Agro-based Ventures
vii. Housing Loan Scheme and
viii. Real Estate & Civil Construction
Pricing of loan depends on the cost of rising loanable funds and the operating costs of
running the lending institutions. As consequences of regulatory compliance and
global economic crises NCC Bank re-fixed its interest rates at a lower rate in the
second quarter of the year 2009. Now the banks interest rates ranges from 13 percent
to 17 percent per year.
Most loans to individuals are arise from a direct request from customer who
approaches a member of the lender’s staff and asks to fill out a loan application. A
well thought out lending process is a significant safe guard of depositor’s money as
well as business of the bank (Rose, et.at. 2005). Lending process involves three
stages: such as
i. Pre-sanction
ii. Post-sanction/pre-disbursement and
iii. Post disbursement
Pre-sanctions stage involves justification of the prospective borrower’s credit
worthiness. Pre-disbursement stage involves securitization of the loans with adequate
primary and collateral security. While post-disbursement stage involves monitoring
and realization of the lending money. The Credit Risk Grading matrix allows
application of uniform standards to credits to ensure a common standardized approach
to assess the quality of individual obligor, credit portfolio of a unit, line of business,
the branch or the Bank as a whole.
Risk grading would also be relevant for surveillance and monitoring, internal MIS and
assessing the aggregate risk profile of a Bank. It is also relevant for portfolio level
analysis. Credit risk for counter party arises from an aggregation of the following:
i. Financial Risk
ii. Business/Industry Risk
iii. Management Risk
iv. Security Risk
v. Relationship Risk
Each of the above mentioned key risk areas require be evaluating and aggregating to
arrive at an overall risk grading measure.
NCC Bank Ltd. Rajshahi Branch commenced its journey on 25th October 2005. Since
inception the branch was trying to serve for the greater interest of all its stakeholders
and of the society. There are one executive, Sr. Vice President & Manager, and eleven
officers employed in the branch.
50
Deposit of the branch stood at Tk.4197.00 lac at the end of the year 2009. Total
deposit consists of 15 percent cost free deposits and 85 percent cost bearing deposits,
respectively. And the growth rate of deposit was 77.39 percent over the last year’s
deposit.
In the year ended 2009, lending assets of the Branch reached at Tk.2458.00 lac. Cash
Credit (Hypo) was Tk.1179.00 lac and SOD was Tk1123.00 lac, respectively. Which
were 47.97 percent and 45.69 percent of the total loans and advances of the branch,
respectively. It was found that Cash Credit (Hypo) and Secured Over Draft consisted
the largest portion of the lending assets. Where as Consumer Finance Scheme
consisted the smallest share of the loans and advances portfolio of the branch. And in
the year ended 2009 total loans and advances was Tk.2458.00 lac, which shows
179.24 percent growth of the portfolio over the last year’s loans and advances.
The Branch made highest profit of Tk. 63.25 lac in the year 2009 with a growth rate
of 102.66 percent over the last year, where as profit was lowest at the end of the year
2006. Trend of growth of profit of the branch was increasing upward over the years
of operation.
Is was found in the study that Tk.69.99 lac out of total loans and advances of
Tk.2458.00 lac was classified adversely under different category of loans and
advances accounts. The ratio of classified loan amount was 03 percent of total loans
and advances in the year ended 2009. Therefore, 97 percent of the lending was fallen
in the category of unclassified or standard category of assets of the branch.
In case of qualitative evaluation of individual lending products it was found that CC
(H) and SOD were the highest performing products of the Branch. And SBLS was the
worst performing product of the branch in terms of income generation and
classification status. It was found in the study that at the end of the year 2009 the
branch’s SBLS outstanding stands for Tk.68.53 lac only, among which 36.18 percent
was standard and generating income for the branch and 5.61 percent was marked as
SMA, 18.64 percent was market as SS, 21.92 percent was marked as DF, and 17.64
percent was marked as BL, respectively. It was observed that most of the SBLS loan
accounts are non-performing in the branch.
RECOMMENDATION
On the basis of the finding of the study it was evident that NCCBL Rajshahi Branch
was operating profitably and generating employment opportunity to the people of
Bangladesh. But the bank still has scope to improve its operating efficiency to
generate more income. The policy makers should, therefore, take necessary measures
according to the findings of the study; some policy recommendations may be
advanced which are likely to be useful for policy formulation:
51
(a) A balance in the hierocracy of employees of the branch should be maintained.
That is huge gap between Manager and Deputy Manager and different section in
charge should be eliminated.
(b) More employment training and development program should be taken by
controlling authority to ensure employee competence in order to cope with the
changing financial markets.
(c) ATM network and any branch clearing facility should be introduced.
(d) Some service charge free deposit accounts should be developed. Such as salary
account for corporate houses, student’s savings account, retired peoples savings
account, savings accounts for farmers and so on. and
(e) Loan sanctioning process should be more quickly.
CONCLUSION
There are many banks in Bangladesh. Every bank has the same target to earn profit.
To earn profit bank needs to accept several policies so that it can provide more
satisfaction to its customers than the competitors. For this perspective bank strengthen
its marketing activities. As a result, all banks are not tantamount, and accordingly
Bangladesh Bank as the watchdog of the money market grading the banks. However
the discipline of the banking sector is now outstanding. This is the only sector, where
the technologies cope very fast. The officials are trying hard to provide their best for
the betterment of the bank and also for the society. The NCC bank has successfully
made a positive contribution to the economy of Bangladesh with in very short period.
NCCBL is offering special deposit schemes with higher benefit, which is a crying
need for long-term position in the financial market Because of the existence of many
banks in the financial market, deposit has spread over So, it is necessary to hold some
permanent customer by offering special deposit schemes otherwise in future amount
of deposit may come down To strengthen the future prospect of branch, it is
emergence to collect more deposit.
From the practical implementation of the customer dealing the whole period of any
practical orientation in NCC Bank Limited, Rajshahi branch, I have reached fain and
concrete contusion in a very confident way. I believe that my realization will be in
harmony with most of the banking thinkers. Success in banking business largely
depends on effective and efficient loan services. the more income from the credit
operation the more will be profit of the bank . Foreign trade operation and general
banking both section of the bank played a significant role in the overall business
where the potential customers are always there.
52
It can be easily said that NCC Bank is a progressive Commercial Bank in private
sector it creates new opportunities for its clients as well as give customerized services
and maintains harmonious banker-client relationship. It contributes towards formation
of national capital, growth of savings & investment in trade, commerce & industrial
sectors. If they follow recommendation and take necessary action accordingly I think
the bank will develop quickly and will come in top position in banking sector.
REFERENCE
53
www.bangladesh-bank.com
www.google.com
www.seribd.com
www.roc.gov.bd
www.nccbank-bd.com
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55
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