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Performance Evaluation of Overall Banking System

System-A
Practical Study on Janata Bank Limited

Submitted to:
Md. Ariful Hoque
Internship Supervisor
Department of Marketing
Jahangirnagar University

Submitted by:
Shahfaraj Hasan Hridoy
Id: 2230, Exam Roll: 110169, Reg No: 30118
BBA 2nd Batch, Session: 2010-11
Department of Marketing
Jahangirnagar University

Course Code: MKT 498


Submission Date: December 15, 2014

Letter of Transmittal
December 15, 2014
Md. Ariful Hoque
Intern Supervisor,
Department of Marketing,
Jahangirnagar University.

Subject: Submitting the report on Performance Evaluation of Overall Banking System of


Janata Bank Limited.

Dear Sir,
I am submitting a well-structured and comprehensive survey report on Performance Evaluation
of Overall Banking System of Janata Bank Limited in due time. Despite many constraints like
scope and access to information, I have tried to create something satisfactory.
I have tried to follow your guideline in every aspects of preparing this report. I have concentrated
on the most relevant and logical areas to make this report coherent as well as practical.
I hope this report will entice your kind appreciation.

Sincerely,

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___________________
Shahfaraj Hasan Hridoy
Id: 2230; Exam Roll: 110169; Reg: 30118
2nd Batch, BBA
Session-2010-11
Department of Marketing
Jahangirnagar University

Approval Certificate
This is to certify that Shahfaraj Hasan Hridoy, Id:2230; Exam Roll:110169 is a regular student
of Bachelor of Business Administration under the Department of Marketing, Jahangirnagar
University. He has successfully completed his internship at Janata Bank Ltd, Farashganj
Branch, Dhaka and he has prepared his internship report under my supervision. His assigned
Internship topic is Performance Evaluation of Overall Banking System of Janata Bank
Limited. He is permitted to submit the internship report for presentation.
I wish him every success in life and expect a great future.

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.
Md. Ariful Hoque
Lecturer
Department of Marketing
Jahangirnagar University

Acknowledgement
I wish to thank the immeasurable grace and profound kindness of Almighty Allah, the supreme
authority of the universe. From the first inception to the final completion of this report, the
success of this study rests not on me alone but on the contributions of many persons who have
inspired, influence and guided my work.
The Internship period was really an interesting session and attending a session like this provided
me a sort of job experience with a vast store of knowledge about banking sector and its activities.
At first I would like to convey our deep gratitude to my honorable Intern Supervisor, Md. Ariful
Hoque for giving me the opportunity to present my Internship Report on Performance
Evaluation of Overall Banking System of Janata Bank Limited. Without giving me courage
and continuous support, it was quite impossible for me to carry out the preparations and
proceedings of this report.
The officials of Janata Bank, Farashganj Branch also helped me in providing vital information
regarding the concept of the various departments and the process followed in the respective
departments. They shared their views & guided me to prepare this report. While preparing, I have

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received cordial and sincere assistance from the officials.

INTRODUCTION

10

SIGNIFICANCE OF THE STUDY

11

RATIONALE OF THE STUDY

11

OBJECTIVES OF THE REPORT

12

SPECIFIC OBJECTIVES:

12

METHODOLOGY OF THE STUDY

12

PRIMARY DATA
SECONDARY DATA

12
12

ANALYSIS TECHNIQUES

13

LIMITATIONS

13

LITERATURE REVIEW

14

BACKGROUND OF JANATA BANK LIMITED

16

PROFILE OF THE JBL AT A GLANCE

17

ORGANIZATIONS MISSION, VISION AND VALUES

18

MISSION:
VISION:
VALUES:

18
18
18

STRATEGIC OBJECTIVES OF JBL

19

PRODUCTS AND SERVICES OF JBL

20

MANAGEMENT OF JANATA BANK LTD:

23

HUMAN RESOURCES OF JBL

23

SUSTAINABLE BANKING OF JBL

25

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Table of Content

KEY MILESTONE OF JBL

28

FIVE YEARS KEY FINANCIAL INFORMATION

29

GENERAL BANKING OF JBL

31

ACCOUNT OPENING SECTION


DEPOSIT SECTION
CASH SECTION
REMITTANCE SECTION
BILLS AND CLEARING SECTION
ACCOUNTS SECTION
DISPATCH SECTION

31
35
39
41
44
44
45

CREDIT MANAGEMENT OF JBL

45

CREDIT POLICY OF JBL


OBJECTIVES OF CREDIT POLICY
CREDIT GRANTING PROCESS OF JBL
CREDIT PRODUCTS OF JBL
FEATURE AND BENEFITS OF LOANS PROVIDED BY JBL
VARIOUS FORMS OF JBL CREDIT
INTEREST RATE OF DIFFERENT LOAN OF JBL
CREDIT RISK MANAGEMENT OF JBL

45
46
46
50
52
53
54
54

FOREIGN EXCHANGE OPERATIONS OF JBL

55

IMPORT
EXPORT
FOREIGN REMITTANCE

55
58
60

FINANCIAL PERFORMANCE ANALYSIS USING CAMEL MODEL:

61

1. C (CAPITAL ADEQUACY):
2. A (ASSET QUALITY):
3. M (MANAGEMENT EFFICIENCY):
4. E (EARNING QUALITY):

61
62
62
63

25
25
26
27
27

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ECONOMIC CONTRIBUTION:
FINANCIAL INCLUSION:
ENVIRONMENTAL CONTRIBUTION:
SOCIAL CONTRIBUTION:
HUMAN RIGHTS:

TESTING THE FINANCIAL SOUNDNESS OF JANATA BANK LTD. USING Z-SCORE MODEL:

65

SWOT ANALYSIS OF JANATA BANK LIMITED

67

FINDINGS

69

RECOMMENDATIONS

70

CONCLUSION

71

REFERENCES

72

64

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5. L (LIQUIDITY):

List of Table

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Table 1-Profile of JBL............................................................................................................... 17


Table 2-Products & Services of JBL.......................................................................................... 20
Table 3-Environmental Contribution ......................................................................................... 26
Table 4-Social contribution ....................................................................................................... 27
Table 5-Five years key financial information............................................................................. 30
Table 6-Fixed Deposit Interest Rate .......................................................................................... 37
Table 7-Monthly Savings Schemes............................................................................................ 38
Table 8-Medical Deposit Scheme.............................................................................................. 39
Table 9-Credit Risk Grading Scale ............................................................................................ 48
Table 10-Interest Rate of Different Loans ................................................................................. 54
Table 11-Foreign Exchange Performance.................................................................................. 60
Table 12-Capital Adequacy Ratio.............................................................................................. 61
Table 13-Advances to Assets Ratio ........................................................................................... 62
Table 14-Gross Non-Performing Assets to Gross Advances Ratio ............................................. 62
Table 15-Total Advances to Total Deposits............................................................................... 62
Table 16-Net Profit per Employee............................................................................................. 63
Table 17-Operating Income as a % of Working Funds............................................................... 63
Table 18-Net profit Margin Ratio .............................................................................................. 64
Table 19-Earnings Per Share ..................................................................................................... 64
Table 20-Liquid Assets/ Total Assets ........................................................................................ 64
Table 21-Net Working Capital to Total Assets Ratio of JBL ..................................................... 65
Table 22-Retained Earnings to Total Assets Ratio of JBL ......................................................... 65
Table 23-EBIT to Total Assets Ratio of JBL ............................................................................. 66
Table 24-Market Value of Equity to Total liabilities Ratio of JBL............................................. 66
Table 25-Net Sales to Total Assets Ratio of JBL ....................................................................... 66
Table 26-Z-score of JBL ........................................................................................................... 66

Executive Summary
Janata Bank Limited offers to explore the world of progressive Banking in Bangladesh. It is a state
owned commercial bank and is catering the need of the mass business people. It was
corporatized on 15th November 2007. Janata Bank was born with a new concept of purposeful
banking sub serving the growing and diversified financial needs of planned economic
development of the country.
JANATA Bank Limited (JBL) is the second largest public commercial bank among the
others public bank in Bangladesh. The Bank has set up a new standard in financing in the
Industrial, Trade, Agriculture 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. Realizing the growing significance of marketing in
banking sector to exist successfully in todays competitive banking industry, JBL
practices its marketing strategies seriously and adopt proper elements of marketing mix.
It targets the customer segments analyzing their financial need and offer highly
customized products and services to the target customers. JBL offer a reach portfolio of bank
products including deposit
products, loan and advance products, remittance
products, cards, international business products, and other services.
To find out Performance Evaluation of Overall Banking System of Janata Bank Limited I
made this report. I try to highlight every activities of different departments (General Banking,
Credit Management, and Foreign Exchange Operations).
The first part of this report is about the introduction and how I prepared this report.
The Second part of the report is overview of Janata Bank Limited, Organizational profile,
Departments.
The Third part of my report is about overall banking system of Janata Bank Limited.
The fourth part of this report shows the financial performance analysis using CAMEL Model and
Z-Score Model.

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The final part of this report SWOT Analysis, some Recommendations according to the findings.

Introduction

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10

Well- educated, dedicated, skilled and enterprising workforce is the sine-qua-non for the progress
and development of a service oriented industry like Bank. Banks also play an integral role in
society, affecting not only spending by individual consumers, but also the growth of entire
industries. The operations of banks are known as one of the most important economic activity
in the world. Any activity which requires investments and financial resources undoubtedly requires
the involvement of banks and financial institutions (Haghighat and Nasiri, 2003). Thus, banks have
the central role in the economy (Fethi & Pasioura, 2010). From very first emergence and
inception of modern civilization, Bank plays a pivotal role in case of overall financial and
socioeconomic development of any modern country. By the scope of its functions, banks are the
key to economic growth of any economy (Rashid, 2010). The economic development of our
country mainly depend upon the efficiency of the banking results is so far as, whether the
bankers have been able to read the economic situation properly and are successful in selecting the
promising industrial sectors seeking import and export assistance to grow. With the rapid
changes of time mans are readily depend on banking services in case of handling cash,
transferring cash, and also financing in various industrial and business projects. Banks have
control over a large part of the supply of money in circulation. Through their influence over the
volume of bank money, they can influence in the nature and character of production in any country
(Brigham & Houston, 2011).A service oriented industry a bank should believe that customers is
all and the king. The government of our country and the central bank i.e., the Bangladesh Bank
has decided to extend considerable help in every respect of general banking to concerned people.
Like other nationalized and non-nationalized commercial banks the Janata Bank limited serves
the nation by providing various modern banking services and products. So as an Internee I
thought of having special knowledge on this field of increased importance.

Significance of the Study


The major importance of this study is to provide information about the procedures of transaction
made in the bank, handling the customers. It gives the opportunity to be familiar with the real
world with the knowledge of overall banking system. It will be useful in identifying the problems
and the process of solving them. It helps to use the theoretical knowledge in the practical field, it
helps to build the communication skills of student with customer, and it provides the
opportunity to know the real world.

Rationale of the Study

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11

Over the last few years the banking world has been undergoing a lot of changes due to
deregulation, technological innovations, globalization etc. With the rapid growing
competition (due to free market economy) among nationalized, foreign and private
commercial banks as to how the banks operates its banking operation and how customer service
can be made more attractive, the expectation of the customers has immensely increased.
Reciprocating the sentiment, commercial/private banks are trying to elevate their traditional
banking service to a better standard, to meet the challenging needs and demands. Side by side
these banks have now concentrated their attention towards diversification of their products for
better performances and existence.
Banking sector in Bangladesh specially nationalized bank is facing challenges from different angles.
The recent shocks in the banking sector have exposed the vulnerability of the seemingly
resilient financial systems in the country. Almost all commercial banks in Bangladesh today
are under great pressure to meet the interests of their stockholders, employees, depositors,
borrowers and customers. As the numbers of investors in Dhaka Stock Exchange (DSE) are
increasing day by day, a huge numbers of investors of share markets are showing their interest
to purchase and sell the share of different commercial banks. But somehow, they are
frustrated as the shares of different commercial banks are not showing better performance yet.
Therefore, evaluation of banks' financial performance is important for all parties like depositors,
bank manager, stockholders, creditors, regulators and educationalist. By considering the above
fact, I have taken my internship topic titled Performance Evaluation of Overall Banking
System of Janata Bank Limited.
The study may help formulating policy regarding the ideas relating to the feelings of the
customers and bankers. Furthermore, Janata Bank Ltd. executives who are actually executing the
policies undertaken by the top management will have a chance to communicate their feelings
and will have the feedback about their dealing with the customers.

Objectives of the Report


The main objectives of the study will be to provide an overview of the Performance Evaluation
of Overall Banking System of Janata Bank Limited. However, the objective behind this study
is something broader. Objectives of the study are summarized in the following manner.

Specific Objectives:
To give an overview of the Janata Bank Ltd.
To make a bridge between the theories and practical procedures of the banks day to day
operations.
To analyze the performance of the branch as well as Janata Bank Ltd as a whole.
To give an idea about financial performance and its measurement techniques.
To analyze the financial performance of JBL by using the CAMEL model and Z score analysis.
To find out the extent of similarities and dissimilarities in the course of action followed by
Janata Bank Limited.
To assess the strength and weakness.
To find out problems and suggesting recommendations for further improvement.

Methodology of the Study


Data is value collected through record keeping or pooling, observation, or measuring. It
includes texts and Numbers, Figures and Map, Photographs and Picture. The nature of the report
is Qualitative and Quantitative Research and the source is primary and secondary. A
systematic and scientific methodology always helps in collecting the qualitative and
quantitative data. We must consult with various people, booklets, news, newspaper and other
source to gain correct data. This report is maintained on the basis of primary as well as secondary
sources.

Primary data
Primary source of data are known as the data which are collected through observation and
direct contact. They are not derived from any other sources. The primary data are the
information collected during the internship period by the observation and involvement. Most of
the primary data are collected through the following sources:
Personal involvements in the daily activities of bank.
Observations of the bank and its environment.

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The secondary data is one which has already been collected by a source other than present
investigator. Secondary data include both raw data and published summaries. Documentary

12

Secondary data

secondary data include written material such as; books, journal articles, newspapers as well as
administrative and public records. These types of data are collected through following ways:

Annual report of Janata Bank Limited.


Broacher of Janata Bank Limited.
Websites.
Office files and documents.
Periodicals Published by Bangladesh Bank.
Different books and newspapers.
Review of the related past records.

Analysis Techniques
This report is descriptive in nature which briefly reveals major banking practice arena such as
general banking activities, credit management, and foreign exchange operations of Janata Bank
Limited. For financial performance analysis, CAMEL Model and Multivariate Discriminate
Analysis (MDA) is used, which was developed by Prof. Altman is known as Z score model. For
the analysis and interpretation of data some tools like MS-Word, MS- Excel were used.

Limitations

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13

To prepare a report on the topic like this in a short duration is not easy task. From the beginning
to end, the study has been conducted with the intention of making it as a complete and truthful
one. In preparing this report some problems and limitations have encountered which are as
follows:
The main constraint of the study was insufficiency of information, which was required for
the study. There are various information the bank employee cannot provide due to
security and other corporate obligations.
As the data, in most cases, are not in organized way, the bank failed to provide all
information.
Due to time limitation, many of the aspects could not be discussed in the present report.
Since the bank personnel were very busy, they could not pay enough time.
Lack of opportunity to access to internal data.
I had to base on secondary data for preparing this report.
Legal action related information was not available.
Lack of in-depth knowledge and analytical ability for writing such report.

Literature Review
According to Varshney and Sarkar (1971) on his book named Banking Law and Practice the
nationalized banks have not been conferred with this privilege of acting as agent of the reserve
bank. The nationalized banks has established for the following purposes, paying, receiving,
collecting and remitting money, bullion and securities on behalf of any government, undertaking
and transacting any other business entrusted by the reserve bank from time to time.
L.R Chowdhury (2010) on his book named A Text Book on Banking describe the main
objectives of nationalization of banks was to ensure that the banking systems serves a much
wider section of the community by dispensing credit to the poorest and weaker sections of the
society and Also to remove the regional disparities and help in development of backward areas
and serve better the needs of development of the economy in conformity with national policy and
objectives formulated by the government. Evaluation of bank performance is very important for
Bankers due to the need to protect the banking operations against continuous risks are due to
gambling-incentives related to capital market (Hays et al, 2009).
According to American Bank Association Principles of Banking have direct applicability to a
broad range of banking positions - from a Customer Service Representative to a Consumer
Lending Manager. Topics covered include: structure and operation of banks as profit-making
enterprises, Evolution of the banking system, including laws, regulations and regulators,
Operations of banks from managing assets to managing liabilities, Deposit products, services,
and account opening requirements, Checks as negotiable instruments, check processing, and
other payment systems, Electronic banking services and trends, Lending, including loan types
and the lending process . (Principal of Banking, 10ed)
Kannandasan (2007) he has made an attempt to have an insight into the examination of
financial health of a watch company in India. To evaluate the financial conditions and
performance of a company, this study used the Z-Score model, and finally, it was concluded that
the financial health of the company was good and financial viability is also healthy.
According to Debnath (2003) The primarily functions of nationalized banks are the deposit
takers and lenders to trade and commerce. Nationalized banks accept deposits withdraw able on
demand by cheques or draft etc. they also extend credit to the borrowers in various forms and
conduct foreign exchange business. In addition, they provide various ancillary services to the
clients. However, nowa-days these banks are also engaged in long, medium and short-term
industrial lending, agriculture financing including financing in multifarious developmental
activities.

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Barr et al. (2002 p.19) states that CAMEL rating has become a concise and indispensable
tool for examiners and regulators. This rating ensures a banks healthy conditions by

14

Gupta and Kaur (2008) conducted the study with the main objective to assess the
performance of Indian Private Sector Banks on the basis of Camel Model and gave rating to top
five and bottom five banks. They ranked 20 old and 10 new private sector banks on the basis of
CAMEL model. They considered the financial data for the period of five years i.e., from 2003-07.

reviewing different aspects of a bank based on variety of information sources such as


financial statement, funding sources, macroeconomic data, budget and cash flow.

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15

According to The Banking and Financial Institution Act, 1991 "Banking Company" means any
company transacting the business of banking in Bangladesh, and includes all new banks and
special banks; Explanation. - Any company which is mainly engaged in the manufacture of
goods or carries on any trade and which accepts deposits of money from the public merely for the
purpose of financing its business as such manufacturer or trader shall not be deemed to transact
the business of banking within the meaning of this clause. "Banking" means the accepting, for the
purpose of lending or investment, of deposits of money from the public, repayable on demand or
otherwise, and withdraw able by cheque, draft, order or otherwise; bills of exchange, promissory
notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates,
participation term certificates, term finance certificates.

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Janata Bank Limited is the 2nd largest state owned commercial bank in Bangladesh.
Immediately after the liberation of Bangladesh in 1971, the erstwhile United Bank Limited
and Union Bank Limited were renamed as Janata Bank. The established of Janata Bank was
happened under the Bangladesh Bank order 1972. It was incorporated as a public Limited
Company on 21, May 2007 vide certificate of incorporation No-C66933 (4425)07 in the early
era of privatization. The Bank has taken over the business of Janata Bank at a purchase
consideration of Tk. 2593.90 million as a going concern through a vendor agreement signed
between the Ministry of Finance of the Peoples Republic of Bangladesh and the Board of
Directors on behalf of Janata Bank Limited on 15th November 2007. Janata Bank Limited,
one of the state owned commercial banks in Bangladesh, has an authorized capital of Tk.
20000 million (approx. US$ 250 million), paid up capital of Tk. 19140.00 million, reserve of
Tk.17976.20 million. The Bank has a total asset of Tk. 586082.98 million as on 31st
December 2013. Janata Bank Limited operates through 897 branches including 4 overseas
branches at United Arab Emirates. It is linked with 1239 foreign correspondents all over the
world. The Bank employees more than 15(fifteen) thousand persons. The Board of Directors
is composed of 13 (Thirteen) members headed by a Chairman. The Directors are representatives
from both public and private sectors. The Bank is headed by the Chief Executive Officer &
Managing Director, who is a reputed banker. The corporate head office is located at Dhaka with 10
(ten) Divisions comprising of 44 Departments.
A mid adverse geopolitical economic situation, the management of Janata Bank with its
pragmatic business policies has tackled the situation efficiently and fruitfully. In view of
creation of employment opportunities Janata Bank Limited has been proved to be the best
employment provider in the banking sector. In continuity of this trend, 665 Executive Officers
were appointed in the year 2013. A total of 3,371 officers and staffs were appointed
in 2011 and 2012. At present, the number of total employees of the bank stands at 15,485.
The bank had to spend a considerable amount of money on account of salaries, allowances
and other incidental expenses for such a large number of employees. Yet, in this year Janata
Bank has strengthened its position further in the banking sector. At the end of 2013, the total
assets of the bank stood at BDT 586,083 million which was BDT 511,129 million in the
previous year. Net profit of the bank stood at BDT 9,551.39 million in the year 2013 as
against BDT 15,280.34 million net losses in the previous year. The deficit of capital of bank
was BDT 20,117 million in the year 2012 which has transformed into a surplus of BDT 908
million in the year 2013. As a result capital adequacy ratio rose from 3.70% to 10.27%.
As a player of money market JBL is also playing its due role. So, earning profit is not its sole
consideration, rather contributing significantly to the national economy ultimately increasing
shareholders wealth are its prime objectives. Apart from this, JBLs efforts were relentless
and uncompromising in establishing JBL as a high profile bank. JBLs endeavor to establish
good governance and best practices for credible and sustainable development was incessant
in conducting banking business. Among the state owned commercial banks, Janata Bank
Limited has been able to earn the highest chunk of operating profit during the year 2013.

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Background of Janata Bank Limited

Profile of the JBL at a glance


Table 1-Profile of JBL

Tax Identification No. :


Vat Registration No. :
Chairman of the Board of Directors :
CEO & Managing Director :
Chief Financial Officer (CFO) :
Company Secretary :
Domestic Network
Number of Branch :
No. of Urban Branch :
No. of Rural Branch :
Number of Divisional office :
Number of Area Office :
Number of AD Branch :
Overseas Network
Number of Branch :
Location of Branches :
Subsidiaries
Janata Capital and Investment Ltd :
Janata Exchange Company srl. :
Number of Correspondence :
Number of Employees :
Number of Exchange House :
Corporate Rating Status
Entity Rating (2012) :
Telex :
Phone PABX :
Fax :
E-mail :
Website :
Swift Code :

BDT 20,000 Million


BDT 19,140 Million
BDT 100
100% Share owned by Government of the
Peoples Republic of Bangladesh
001-200-2732
9011050160
Professor Dr. Abul Barkat
Mr. S M Aminur Rahman
Mr. Md. Nurul Alam FCMA, ACA
Mr. Md. Mosaddake-Ul-Alam
893
450
443
10
47
57
04
Abudhabi, Dubai, Al-Ain and Sarjah. UAE.
Dhaka
Italy
1239
15485
68
A+ in the long run, AR-2 in the short run As
Government owned Bank : AAA in the long
run and AR-1 in the short run.
675840JBDBJ, 671288 JBHOBJ
9560000, 9566020, 9556245-49.
88-02-9564644, 9560869
md@janatabank-bd.com
www. janatabank-bd.com
JANB BD DH

17

Legal Status :
Date of Incorporation :
Date of Commencement of Business :
Banking license obtained from Bangladesh
Bank :
Authorized Capital :
Paid up Capital :
Face value per share :
Shareholding Pattern:

Janata Bank Limited


Janata Bhaban,
110,Motijheel C/A,Dhaka-1000,Bangladesh
Public Limited Company
21 May 2007
21 May 2007
31 May 2007

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Name of Company:
Registered Office :

Organizations Mission, Vision and Values


Mission:
Janata Bank Limited will be an effective commercial bank by maintaining a stable growth strategy,
delivering high quality financial products, providing excellent customer service through an
experienced management
anagement team and ensuring good corporate governance in every step of banking
network.

Vision:
To become the effective largest commercial bank in Bangladesh to support socio
socio-economic
development of the country and to be a leading bank in south Asia.

Values:

Professionalism

Growth

Diversity

Values
Dignity

Accountability

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18

Integrity

Strategic Objectives of JBL

JBLs Strengths
Nationwide networks, 893 branches
Foreign network, 4 branches and
1239 foreign correspondence
State-owned image
Goodwill
Received globally recognized wards
Strong deposit base
No capital shortfall
No provision shortfall
Skill manpower
Experienced higher level management
Newly recruited talents
Friendly board of directors

JBLs Brand
Quality and responsive staff
Efficient service
High and sustained growth (deposit advance,
import, export, foreign remittance noninterest
income and recovery)
Good quality loan
Low classified loan
Timely recovery
Business diversification
Attract low cost deposit
Participate in capital market
Improve agricultural loan (Disbursement,
recovery etc.)
High impact of CSR
Aesthetic infrastructure

Sense of belonging (ownership)


Improve service mentality
Human touch with clients
Proactive, team spirit
Managerial efficiency (GIS of good
customer / borrowers; meeting each within 1
km radius)
Strong cash recovery
Strategic thinking
More agricultural loan
Broadening of deposit base; reaching all
Automation, on-line banking
Need based training
More remittance
Discipline, chain of command
Hygienic bank premises
Avoid intermediary between management
and clients
No hidden cost
Avoid insurance engineering
Demand estimation of CC loan
Proper security valuation
Manager willing to take risk
Borrowers preference
Disposal through ADR
Synthesis of mass banking and elite
banking
Avoid loan sanctioning bureaucracy
Innovative thinking
Free from corruption
Aware gender sensitivity

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Concern
Commitment
Competence

JBLs Need

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JBL Have

Products and Services of JBL


JBL render both corporate and retail banking services with a strong focus on socio-economic
development of the country. The bank typically provides short term working capital loan and
limited long term credit exposure. Moreover, JBL offers micro enterprise and special credit as
well as rural banking. Under corporate banking services JBL provides trade finance, project
finance, syndicate finance. On the other hand, consumer loan, deposit scheme, remittance
facilities are provided through retail banking. In 2013, JBL launched its own innovation to
remittance payment system at all branches which facilitate Deposit/withdrawal from any branch in
this system.
2.0 Loans & Advances
2.1 Agriculture Loan Programs
a. All kinds of Crops Loan, Loan for Cultivation
of Sugarcane (mill area), Fisheries & Shrimp,
Purchase of Cow/ Buffalo, Livestock, Duck/
Chicken, Cultivation of Banana, Betel Leaf.
b. Loan for Shrimp Culture Development
c. Loan for Irrigation and Agricultural
Equipment
d. Loan for Salt Production Plant
e. Dal, Spices, Oil Seeds & mase
2.2 Poverty Alleviation Program
a. Diversified Credit Program
b. Small Farmers & Landless Laborers
c. Development Project(SFDP)
d. Swanirvar Credit Scheme
e. Self Employment Project for Trained
Unemployed Youth
f. Self employment Scheme
g. NGO Linkage -Lending Through NGOs
h. Ghoroa Prokalpa/ Family Based Micro Credit
i. Micro Credit Scheme
j. MSFSCIP
2.3 Specialized Loan Program
a. Grain Storage Credit
b. Credit for Flower Plantation & Garden
c. BGSDP
d. Credit Program for Goat Rearing
e. Credit for Forestry/Horticulture Nursery
f. Hybrid Milking Cow Rearing (HYV-Milk
Cow)
g. Credit Program for Fish Cultivation h. Fish
Cultivator/Entrepreneur
i. Loan for Handicapped/Disabled People
j. ATDP
k. Credit Program for floating Fish Cage
Culture

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1.0 Deposits
1.1 Current & Call Deposits
a. Current Deposit
b. Call Deposit
c. Deposit in Foreign Currency
d. Resident Foreign Currency Deposit e.
Deposits in F.C (WES)
f. Convertible taka A/C (D)
1.2 Savings Bank Deposits
a. Savings Bank Deposit
b. Savings Deposit from Foreign Remittance c.
SB General
d. Q-Cash Deposit
e. Non-Res F.C Deposit
f. School Banking Deposit
1.3 Monthly Scheme Deposits
a. Deposit Pension Scheme
b. JB Savings Pension Scheme
c. Janata Bank Deposit Scheme
d. Medical Deposit Scheme
e. Education Deposit Scheme
f. Ghore Ghore Sanchay
g. JB Monthly Savings Scheme
h. JB Special Deposit Scheme
i. JB Monthly Amanat Prokalpa
1.4 Term Deposits
a. Fixed Deposit
b. JB Double Benefit Scheme
c. JB Monthly Benefit Scheme
d. Retirement Savings Scheme
e. JBL Retirement Savings Scheme f.
Continuous Benefit Account
1.5 Special Notice Deposit
a. Special Notice Deposit
b. Convertible Taka A/C(SND)

20

Table 2-Products & Services of JBL

21

2.10 Working Capital


a.
Credit
Program
for
Agro-based
Industry/Project
b. Working Capital for Husking Mill
c. Credit program for Preservation of Potatoes in
Cold Storage
d. Other Working Capital
e. Credit Program for Jute Industries
2.11 Export Financing
a. ECC (HYPO & PLEDGE)
b. PACKING CREDIT
c. Other Export Finance
d. LTR(FC)
e. ECC for Export Oriented Project
f. BMRE for Export Oriented Project
g. Loan General
h. Cash Credit (Hypo & Pledge)
i. Demand Loan (BBLC)
j. Advance Against Cash Subsidy
k. PAD (EDF)
l. PAD (GMT)
2.12 Import Financing
a. PAD (Cash)
b. LIM
c. LTR
d. Demand Loan (L.C)
2.13 Trade Financing
a. Transport
b. Brick Field
c. Work Order
d. BADC/BRTC
e. Loan on FDR/Third Party FDR
f. Loan on FDR of OTHER BANK
g. National Investment Bond, ICB Unit,
Insurance Policy, Share, Debenture
h. Loan Against Wage Earners Bond
i. Food Ministry
j. Service Oriented Ind.
k. Loan Against DPS
l. Loan Against SPS
m. Loan Against JBDS
n. Loan Against EDS
o. Loan Against MDS
p. Loan Against CBA -FDR
q. Credit Program for Urban Commercial
Housing
r. Credit Program for Urban Residential House
Building

Page

2.4 Rural Credit


a. Rural Transportation
b. Loan for Land Mortgage
2.5 Term Loan for Large and Medium Credit
Programs
a. Dairy, Poultry, Fisheries, Hatchery
b. Agro based, Industry/Project Loan
c. Syndication Loan
2.6 Other Loans & Advances
a. Loan for Cold Storage
b. Large & Medium Term Loan
c. Leasing Company
2.7 Loans for Thrust Sectors
a. Computer Software & Information
Technology
b. Electronics
c. Artificial Flower Production
d. Export Oriented Frozen Foods
e. Flower Cultivation
f. Gift Items
g. Export Oriented Leather Products
h. Export Oriented Jute Goods
i. Jewellery & Diamond Cutting & Polishing
j. Oil & Gas Industries
k. Cultivation of Sericulture
l. Stuffed Toys
m. Textile Industries(Except Readymade
Garments)
n. Infrastructural Industries (except housing
sector)
2.8 Export Oriented Industry
Term/Project Financing
a. Agro-products & Agro processing Product
b. Light Engineering Products
c. Shoes & Leather Product
d. Pharmaceuticals Product
e. Software & ICT Product
f. Home Textile
g. Shipyard loan
h. Toiletries product
2.9 Micro & Cottage industries loan
a. Dairy/Goru Mota Taza Koron/ Poutry/ Semiintensive Shrimp Culture/Fish Culture
b. Other micro & Cottage Industries Loan
c. Credit for loom (Tat)

22

d. Payment of Widows, Divorcees and Destitute


Women Allowances
e. Payment of Old-age/ Disabled Allowances
f. Food procurement Bills
g. Issuance of Television License
4.3 Q-Cash (ATM) Services
a. Cash withdrawal
b. Balance inquiry
c. Mini statement of accounts
d. point of sale (POS)
4.4 Others
a. Locker Service
b. JB remittance payment system(Deposit/
withdrawal from any branch)
c. SMS banking
d. Sale of Lottery Ticket
e. Sale of Prize Bond
f. Sale of Wage Earner Bond (W.E.B)
g. Sale of Sanchay Patra (S.P)
5.0 Customer Care
a. Help Desk
b. Inquiry Desk
c. Counseling
d. Information Desk
6.0 Web based Spot cash
a. Speedy Remittance Cell
b. Western Union
c. IME
d. Placid N.K. Corporation
e. X-Press Money
f. NBL Quick-Pay
g. Prabhu Group Inc
h. Trans Fast Remtt
i. Ria Financial Service
j. Marchentrade
k. EZ Remittance
l. Samba Financial Group
m. Money Gram
6.1 Internet Banking
a. Accounts Details Information
b. Customer Statement
c. Cheque Status

Page

s. Credit Program for Jute Business


t. Commercial Loan for USA aided project
u. Loan to Diagnostic Centers
v. Loan to Travel Agencies
w. Credit Program for House Repair
2.14 Other Credit Program
a. Consumer Credit Scheme
b. Cyber Cafe
c. Service Holders Loan
d. Doctor's Loan Scheme
e. Women Entrepreneur Development Credit
Program
f. Special Credit Program for Women
Entrepreneurs
g. Small Business Development Loan Scheme
3.0 Financial Services
3.1 Inland Remittance
a. Demand Draft (DD)
b. Telephonic Transfer (TT )
c. Mail Transfer (MT )
3.2 Foreign Remittance
a. Online Speedy Remittance
b. Maintaining NRT Account
c. Foreign M.T.
d. Foreign Remittance
e. Foreign Demand Draft
3.3 Other Financial Services
a. Pay Order
b. Pay Slip
c. Security Deposit Receipt (SDR)
4.0 Other Services
4.1 Utility Services
a. Gas Bills Collection
b. Electricity Bills Collection
c. Telephone Bills Collection
d. Water/Sewerage Bills Collection
e. Municipal Holding Tax Collection
f. Port Bill Collection
g. Land Rent Collection
h. Embarkation Fee Collection
4.2 Welfare Services
a. Payment of Non- Govt. Teachers Salaries
b. Payment of Girl Students Scholarship/
Stipend /Upbitti & Primary Student Stipend
c. Payment of Army pension/Civil Pension

Management of Janata Bank Ltd:


The Board of Directors is the top of Management, which is constituted in terms of the
Bangladesh Banks Nationalization Order 1972. Management hierarchy of Janata Bank Ltd. is
given blow:
Board of Directors (BOD)

Managing Director (MD)

Deputy Managing Director (DMD)

General Manager (GM)

Deputy General Manager (DGM)

Assistant General Manager (AGM)

Senior Principal Officer (SPO)

Principal Officer (PO)

Senior Officer

Officer
Figure: Management Hierarchy

Page

As Human Resource Development is one of the key competencies to enable individuals in any
organizations to perform current and future jobs through planned learning activities, JBL has
integrated the use of training and development efforts to improve quality and capability of
executives. This is materialized through a well-designed Human Resource Management and
development program. The Board of Directors of the bank underlines the need for improving
the skill and capability of human resource to ensure maximum quality output from minimum
resources.
As an employer, JBL ensures equal opportunities for both male and female employees. JBL is
strictly following female quota in recruiting manpower. As a result the number of female
employees is increasing significantly.

23

Human Resources of JBL

CEO& Managing Director


Deputy Managing Director
General Manager
Deputy General Manager
Assistant General Manager
First Assistant General Manager
Senior Executive Officer
Executive Officer
Assistant Executive Officer
Assistant Executive Officer (Teller)
Assistant Officer Grade-1
Assistant Officer Grade-2
Support Staff Category-1
Support Staff Category-2
Total

Male

2013
Female

Total

1
5
21
110
256
575
927
3046
3166
2198
479
439
108
263
13968

0
0
2
4
31
88
198
534
362
212
13
17
0
5
1517

1
5
23
114
287
663
1125
3580
3528
2410
492
456
108
269
15485

Page

Category

24

The following table exhibits the comparative number of male and female employees by
category in the year 2013:

Sustainable Banking of JBL


Bank sustainability means building a successful business today and delivering value over the
long term. Sustainability is is a long term journey. Along the way, organizations need to set
goals, measure performance, and integrate a sustainable strategy into their core planning. A
sustainable economy should combine long term profitability with ethical behavior, social
justice, and environmental care. This means that when companies or organizations consider
sustainability and integrate it into how to operate; they must consider four key areas of their
performance and impacts: Economic, Environmental, Social and Human Rights.
According to GRIs(Global Reporting Initiative) Sustainability Reporting Framework, JBL is
reporting on sustainable banking system that enables it to measure, understand and
communicate this information. JBLs mission is to make:
Sustainable long term financial performance
Sustainable and responsible financial services
Strongly contribute in socioeconomic development
To create good governance, regulation and stakeholder engagement
To help in building green environment
A positive and consistent employee experience

Economic contribution:
Creating wealth for the communities in which JBL operate
JBLs performance in import and export was satisfactory. Total import and export business
handled during 2013 were BDT 176,671 million and BDT 153,252 million respectively. The import
business reduced by 6.16 percent over the previous year because Bangladesh achieved self
sufficiency in food grains. JBLs guarantee business in 2013 was BDT 12,581.5 million. In 2013,
the amount of foreign remittance sent by Bangladeshi workers from abroad through JBL was BDT
103,982 million. JBL has been playing significant role in strengthening the economic base of
the country. The percentage of JBLs foreign remittance to National Foreign Remittance is
9.61%.

Page

Access to finance by the poor and vulnerable groups is a prerequisite for poverty reduction and
social cohesion. This has to become an integral part of our efforts to promote inclusive growth.
JBL is dedicated to serve financial services at an affordable cost to the vast sections of the
disadvantaged and low-income groups. The various financial services include credits, savings,
insurance and payments as well as remittance facilities. The objective of financial inclusion is to
extend the scope of activities of the organized financial system to include people with low
incomes within its ambit. JBLs policies aim at increasing the income and employment
opportunities on the one hand and on the other; it tries to finance programmes which are capable of
making the growth more inclusive.

25

Financial inclusion:

In year 2013 No. of deposit A/Cs is 6,425,804 in 2013, where in 2012 it was 6,246,858
Total deposits in 2013 are BDT 478,535.57 million where in 2012 it was BDT 409,767.01
million.
No. of Loans and Advances A/Cs was 742,655 in 2012 where in 2013 it is 759,835
Total Advance in 2013 is BDT 285,747.65 million where in 2012 it was BDT 305,339.57
million.
No. of Branches was 888 in 2012 where in 2013 it is 897.
The amount of agricultural loans disbursed in 2013 is BDT 12,694.30 million and No. of
beneficiaries is 433,838.
1,873,630 A/Cs has been opened with 10 taka in 2013 to help farmers to avail
opportunities of doing their works smoothly.
In retail customer department-3 (RCD-3)/retail customer department-4 (RCD-4), under
agriculture and rural credit program no. of Borrowers covered 5,46,369 and BDT
17,652.67 million disbursed, No. of borrowers receiving crop loan is 325,908; No. of
borrowers in Micro-Credit Programs is 2410 and loan disbursed BDT 53.5 million.

Environmental contribution:
As a part of green banking, JBL is providing support to the activities that are not harmful to the
environment. It has established a separate green banking unit and various measures have been
adopted to ensure green banking. Among others, green financing, creating awareness among
employees for efficient use of water, electricity and paper, giving preference to preservation
of ecosystem while financing commercial projects and reuse of equipments are the some
initiatives for turning JBL as a green bank. Initiative for green banking is the key to shaping future.
JBL works together with central bank namely Bangladesh Bank is effectively working to sustain
and keep our planet green.
Promoting Sustainable Green Finance

No. of Projects

Funds Disbursed up
to 2013 (BDT in millions )

Amount financed in plants having ETP

806.38

Amount financed to solar


panel/renewable energy plants

31

2.39

Amount financed to bio fertilizer/ bio gas


plants
Amount financed to HHK project

21

1.67

771.08

Amount financed to other green


projects (zigzag bricks, vermy compost)
Total sustainable green finance

66

100.90

26

128

1682.42

Page

Table 3-Environmental Contribution

Social contribution:
Building a sustainable society
As one of the leading state-owned commercial banks in Bangladesh, JBL with its 897
branches and 15,485 employees have also realized its responsibilities to the society and are
contributing to the amelioration of the social life of the destitute people, infra-structure,
environment etc. There is no doubt, that through our day-to-day business operations JBL is adding
values to the society and the economy. Ultimate goal of CSR activities of JBL is Building a
Sustainable Society. The budget for performing CSR activities is provided from the profit earned
by the bank each year. Since its inception, the break-down of the budgets devoted to the
philanthropic initiatives up to 2013 are as follows:
Table 4-Social contribution

Year

Budget( BDT in millions)

Utilization of Fund(BDT in millions )

2009

30.00

17.07

2010

70.00

61.28

2011

100.00

68.80

2012

150.00

113.38

2013

310.00

292.28

In 2013 JBL rendered BDT 79.53 million to financially deprived meritorious and those who
have great inclination to be benefited with education and research. JBL also contributed in
Health care (BDT 38.06 million); Poverty Reduction and Rehabilitation (BDT 94.38 million);
Natural calamity (BDT 2.39 million); Preservation of History; Culture, Tradition and Sports
(BDT 39.76 million); Environment Protection, Expansion of Information Technology (BDT 20.31
million); Invention (BDT 7.85 million). Besides JBL also disbursed interest free loans to the
marginal agriculturists and the poor from the clutch of loan (BDT 10.00 million).

Page

JBL is committed to upholding the principles of the Constitution of the Peoples Republic of
Bangladesh, the associated Bill of Rights and labor legislation in our national operations.
JBLs values and the code of ethics are an extension of this commitment. An internally
developed appraisal system has been implemented for all other financial product types within
CIB. JBL distributes Right to know information instruction circular in line with the Right
to Information Act-2009 introduced by the government of Bangladesh in order to ensure
free flow of information and peoples right to know information. In order to protect customer
interest complaints boxes have been installed in all branches and offices of JBL. If any
complain of customer is found steps are immediately taken to address the complaints with
due consideration. A complaint cell has already been setup. JBL has also adopted the concept

27

Human rights:

of Help desk and already setup help desk in all its 897 branches. In addition another Help
Desk of the same nature has been set up in the 8th floor of the head office to handle
remittance related complains. As per regularity directives, citizen charters have been pegged
against the wall at the entrance of Head Office as well as in all other branches too. Customers
may ensure their access to necessary facilities through it.
Development of human resources and decent works
Development of human resources is one of the prerequisite of JBL for attaining the targets.
To do so, JBL recruited 665 officers in 2013 which is 3.12 times higher than in 2012 (213
persons). JBTI conducted 30 training courses directly and another 84 courses conducted through
other training institutes. JBL has 2 female GM, 4 DGM, 31 AGM, 88 FAGM, 198 SEO, 534
SO, and 362 AEO. Total 2,790 officers have been trained for development in IT and On-line.

Page

1972: Commencement of banking operation.


1976: Inaugurate 1st overseas branch in UAE.
1990: Launching 1st computer in JBL.
1999: 1st cash dividend paid.
2000: Deposit crossed BDT 100,000 million.
2001-2005, 2011: JBL awarded the bank of the year in Bangladesh by London based
financial times group.
2002: Incorporation Janata Exchange Company Srl, Italy.
2002: Inaugurate Janata Bank Software (JB Soft)
2002: Incorporate of ATM service.
2003: JBL crossed BDT 100,000 million of loans & advances.
2004: Received Asian Banking Award on financing program for Women Entrepreneurship from
Asian Bankers Association (ABA) & Bank Marketing Association of the Philippines (BMAP)
2005: Received Asian Banking Awards on credit scheme for handicapped people from Asian
Bankers Association (ABA) & Bank Marketing Association of the Philippines (BMAP)
2006-2009: Received World Best Bank Award from New York based financial magazine global
finance.
2007: Incorporation and commencement of business as JBL.
2008: Commencement of NRB branch.
2009: Launching of speedy remittance service, Issuance of 1st bonus share in JBL.
2010: Incorporation & commencement of Janata Capital & Investment Ltd.
2010: Launching of BACH operation.
2011-2012: Received ICMAB Best Corporate Award from Institute of Cost and Management
Accountants of Bangladesh (ICMAB).
2011: Launching of JBL CIB online system.

28

Key Milestone of JBL

2011: Launching BEFTN & EFT operation.


2011: Inauguration of online banking.
2011: Landmark of BDT 100,000 million of foreign remittance.
2011-2013: JBL achieved highest operating profit among SCBs.
2012: JBL at the top in CSR activities among the SCBs.
2012: Landmark of BDT 400,000 million deposit.
2012-2013: JBL Rewarded Wholesale Banking Awards &Retail Banking Awards& Bank of
the year Award by Asian Banking and Finance (CMG) Singapore.
2013: Full automation of JBL branches.
2012-2013: JBL Received Performance Excellence Award from Citi Bank N.A.
2013: Inauguration of online deposit, payment & remittance system.
2013: Enhancement of paid up capital to BDT 19,140 million
2013: Issuance of highest right share in JBL history.
2013: JBL achieved highest net profit among the SCBs & PCBs.

20000.00
19140.00
17976.20

20000.00
11000.00
6476.66

37116.20

17476.66

34069.20

20390.32

14924.74

Total Assets
Current liabilities
Long-term liabilities
Interest income
Investment income
Non-interest income
Total Income
Net profit after tax
Import
Export
Foreign Remittance
ROA
ROE
ROI
Net profit per
employee
Efficiency ratio
Debt-equity
ratio(times)

586082.98
275,583.75
273,483.04
36,189.68
13,736.50
5,145.67
55,071.85
9551.39
176671.00
153252.00
103982.00
1.81%
30.09%
9.39%
0.62

511129.41
219,102.72
274,821.01
34,239.12
7811.43
7465.08
49,515.63
(15280.34)
188284.00
156525.00
100089.00
(2.51%)
(49.74%)
8.01%
(1.01)

446111.42
199,259.27
212,782.95
26,266.12
6,109.43
8259.58
40635.53
4444.91
197285.00
153758.00
72285.00
1.99%
16.32%
7.72%
0.30

345234.00
167,016.15
157,827.53
19,027.54
6,956.05
4630.33
30613.92
4907.97
183744.00
118515.00
52640.00
2.27%
27.80%
4.89%
0.38

294727.00
153,319.69
126,482.57
14,867.96
5,602.31
3603.03
24074.10
2804.25
118525.00
88653.00
56190.00
1.92%
23.38%
4.13%
0.21

15.86%
13.13

15.11%
24.09

17.54%
10.62

21.61%
14.05

21.26%
16.49

Page

Authorized capital
Paid-up capital
Reserve fund and
Surplus
Total Shareholders
Equity

(BDT in millions unless stated


otherwise)
20000.00
20000.00
20000.00
8125.00
5000.00
5000.00
25944.20
15390.32
9924.74

29

Five years key financial information

Gross profit ratio


Net profit ratio
EPS
Dividend:
Cash
Bonus
Current ratio
Capital Adequacy
ratio
Statutory liquidity ratio

44.43%
23.90%
86.31

56.39%
38.66%
138.91

57.74%
13.70%
43.46

68.17%
21.83%
98.16

71.52%
15.81%
73.37

10
1.04
10.27%

1.02
3.70%

10
1.06
10.20%

10
2875
1.03
9.19%

10
0.98
13.81%

44.39%

33.24%

33.47%

27.72%

40.84%

Number of Shares
Number of Branches
Number of Employees

191.40
897
15485

110
888
15071

81.25
873
15020

50
861
12826

50
851
13122

Page

30

Table 5-Five years key financial information

General Banking of JBL


General banking is the starting point of all the banking operations. It is the department, which
provides day-to-day services to the customers. Every day it receives deposits from the customers
and meets their demand for cash by honoring cheques. It opens new accounts, remit funds, issue
bank drafts and pay orders etc. Because bank is a financial organization, so as a part of service
organization this department should satisfy to their client with the best services. Since bank is
confined to provide the service every day, general banking is also known as retail banking.
The following sections are performing under this department of JBL:
1. Account Opening Section
2. Deposit Section
3. Cash Section
4. Remittance Section
5. Bills and Clearing Section
6. Accounts Section
7. Dispatch Section.

Account Opening Section


The relationship between banker and customers begins with the opening of an account by the
customer. Opening accounts binds the banker and customers into contractual relationship. But
selection of customer for opening an account is very crucial for a bank. In fact, fraud and forgery
for all kinds start by opening an account. So, bank should take extreme caution in this section.

Page

The following documents duly completed shall be obtained from the customer at the time of
opening different types of accounts as applicable:
a) Individual/ joint:
Account opening form as applicable duly filled in.
Present and permanent address
Occupation and specimen Signature
Two photographs duly attested by introducer.
Nominee Form (if nomination given by the account holder).
Introducer name, address and account number
Initial deposit that varies depending on the type of account
National certificate and passport
b) Proprietorship Firm:
Account Opening Form.
Specimen Signature Card.
Copy of Trade License
Two photographs duly attested by introducer.
Proprietorship Rubber Stamp against all signatures of the proprietor.
Tax certificate.

31

Documents needed for opening an account:

32
Page

c) Partnership Concern:
Account Opening Form.
Specimen Signature Card.
Copy of Trade License
Two photographs of each partner duly attested by introducer.
Partnership Rubber Stamp against all signatures of partners operating the
accounts.
Partnership letter.
Partnership deed.
d) Private Limited Company:
Account Opening Form.
Specimen Signature Card.
Copy of Trade License.
Copy of Memorandum and Articles of Association duly attested by the Managing
Director/ Chairman of the Co.
Certificate of Incorporation.
List of Director as per return of Joint Stock Company with signature.
Resolution of the Board for opening account with the bank.
Photographs of each of the authorized signatories.
e) Public Limited Company:
Account Opening Form.
Copy of Memorandum and Articles of Association.
Certificate of commencement of business.
List of Directors as per returns of Joint Stock Company with their signature.
Resolution of the Board for opening account with the Bank.
Certification of incorporation. Specimen Signature Card.
Copy of Trade License.
Photograph of Directors and account operators other than Director.
Certified
f) Clubs/ Association/ Society etc. (Non-Trading Concerns):
Account opening Form for current account or SB accounts.
Specimen Signature Card.
Certified copy of Bye laws/ constitution of the organization.
List of the Executives of Managing Committee with their signature and present
and permanent address.
Resolution of the Committee for opening account with the bank.
2 Photographs of each operator of the account.
g) Corporation/ Autonomous Bodies/ Govt. Organization:
Account Opening Form as applicable.
Specimen Signature Card.
Copy of the Act or Ordinance Showing authority to open account.
Letter from the authorized persons in absence of the Board.
Account Of Constituted Attorney
Account Opening Form (As applicable)

Specimen Signature Card


Power of Attorney
Account Opening Regulations & Precautions

Page

f) Nominee:
It is mandatory field to fill up. Behind the nominee picture nominee sign is a must and should be
attested by the account holder as well. After the death of the account holder only the nominee can
claim the account possession. But yet if the account holder has no one to allow as nominee or if
not willing to mention any one, then an application regarding this matter must be addressed to the

33

a) Know your customer:


The objective of knowing a customer is to have a fair idea about the identity, financial resources,
and general information about the customer at the time when the relationship is being established.
A banker must have proper following information about the customer.
b) Account name:
Enter complete name as mentioned in original National ID card/ valid passport/ genuine driving
license of other valid business documents. Regarding this field highest caution must be measured
because in editing an accounts information all other fields can be edited/ rectified but not
account name. So all photocopies of documents should be accepted only after verifying the
original copies. Now-a-days, all of Bangladesh nationalities are available with a National voter
ID card. So in terms of personal accounts, account name as well as parents name have to be
according to that National ID card.
But for company/ business/ corporate account, proper business documents such as valid/ renewed
trade license, TIN, VAT registration thus like documents are cross checked for naming of the
account.
Nature of business/ profession: - if the customer is of salaried class, employer name have to be
entered. If the customer is a businessman/ trader/ sole proprietor, the business name should be
entered. For example Rock Star restaurant etc. customers title/ position and full address of the
business/ employer should also be entered. Address with P. O. BOX in not acceptable. Similarly
remarks like private service, business are not acceptable. Rather have to specify what type of
company/ business the customer is associated with. For example, Manager lighting palace
c) Address:
Enter the complete business/ residential address. Within the brackets you may also provide
prominent addresses/ identifiable landmarks for ease of physically locating the address. Once an
address has been entered the authority should send an account confirmation letter to confirm the
accuracy of the address. This letter is in fact a formal approach to verify the address only, yet it
mentions the account number and a formal recognition as a valued client.
d) Contact numbers:
Have to enter landline (if any) numbers of residence / office; personal cell number, fax number
and e-mail address (if available). The band authority may verify these numbers by giving the
customers a courtesy call or by sending him an associate e-mail.
e) Other/secondary/mailing address:
Some customer may volunteer their parents or siblings addresses as second home address or
a mailing address other than a permanent address.

manager. In such circumstances if successors claim the possession of the account after the death
of the account holder, sum bellow 15000 can be allocated against commissioner certificate and
sum above 15,000 will be honored only against succession certificate from the court.
g) Specimen signature card:
This card contains a photograph of the account holder on the top left. Specimen signature of the
account holder will be on the right side of a box and on the left, the banker will sign along with a
seal the two signatures are accepted. The banker should cross block the two specimen signature
as well.
If the account holder cannot provide a signature his/her thumb mark will do. But it should
mention whether the thumb mark is of right hand (RHT) or left (LHT). In this regard any bearer
check will never be allowed and only the account holder will be allowed to make check
transaction by providing thumb nark in front of the band officer.
h) Special instructions :
Clear-cut special instruction is a must part to fill up. The bank could be instructed to honor a
check signed by a single signatory even against a joint account; in that case the special
instruction would be like either or survivor. However, if any special instruction has not been
obtained from customer, the customer has to be asked for it and the specified column must be
cancelled by drawing a line. It is to note that this column must not be left blank in any
circumstances.
i) Safety measure in account opening:
If someone is willing to do any fraud, he /she will start with account opening. So the banker will
have to be in peak of caution in verifying all the data and document during opening of account.
This is to keep in mind that against any future forgery at least this account opening procedure
must gain a clean chart as well as the banker himself.
Special types of Account
A contractual relationship is created between the Banker and customer by opening an account.
Basically a person whose age is 18 years or more can be competent to open an account with the
bank. But there is some special types of account holder specified below:

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b) Married women
A married woman is competent to enter into a valid contract. The Banker may therefore open an
account in the name of a married woman. In case of a debt taken by the married woman her
husband shall not be liable. But if the wife works as an agent of his husband, then the husband
has to be liable for his wife's debt. While granting loan to a married woman the Banker should

34

a) Minor
According to the law of Bangladesh, a person who has not competed 18 years of age is a minor.
A minor is not capable of entering into a valid contract. A minor cannot open any account or
operates it until he completes 21 years. The bank records the date of birth of the minor while
opening an account. A Banker should be very careful in dealing with a minor. If an overdraft or
advance is granted to a minor even by mistake or unintentionally, the Banker has no legal remedy
to recover the amount from the minor.

therefore examine her owns assets and ensures that the assets are sufficient to cover the amount
of loan.
c) Illiterate person
Illiterate person cannot sign their names and hence the Banker takes their thumb impression as a
substitute for signature and also a copy of their recent photograph. An approved witness should
attest the application form and the photograph.
d) Blind person
A blind person can open account and the procedure would be the same as illiterate persons. In
both cases the terms and conditions of opening account should have to be read infant of them and
if they agree with it only them the account can be opened.
e) Deaf and Dumb
Deaf and Dumb can open account but the respective Banker should have to become careful about
the background and character of the person.
f) Mad and Lunatic
Mad and Lunatic person cannot open a Bank Account.
Closing of Bank Account
The relationship between a Banker and his customer is a contractual one and may be terminated
by either of them by giving notice of his intention to the other person. The rights and obligation
of a Banker in this regard is as follows:
If a customer directs the Banker to close his account.
On receipt of the notice of the death of a customer
If a Banker receives a notice regarding the insanity of his customer.
On receipt of a Garnishee order from the court.
If the central bank wants to close any one's account.
If the account did not transected for a long time.

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The function of the deposit section is very important. It is fully computerized. The Officer of the
deposit section maintains account number of all the customers of the bank. They are used
different code number for different account. By this section a depositor can know what is the
present position of his/her account. The officer makes three types of transactions such as cash,
clearing and transfer. This section perform the following task
Post all kind of transaction.
Provide on demand report.
Cheque maintenance.
Preparation of day transaction position.
Preparation of closing monthly transaction.
A customer of JBL can open different types of accounts through this department such as:
a) Current Deposit (CD) Account.
b) Saving Bank (SB) Account.

35

Deposit Section

c)
d)
e)
f)
g)
h)
i)

Short Term Deposit (STD) Account.


Fixed Deposit Receipt (FDR) Account.
Janata Bank Deposit Scheme (JBDS)
Janata Bank Monthly Saving Scheme (JBMSS)
Education Deposit Scheme (EDS)
Medical Deposit Scheme (MDS)
Deposit Pension Scheme (DPS)

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c) Short Term Deposit (STD):


Deposits under this category is withdraw able at a minimum of 7 (seven) days notice.
Withdrawal from the account shall be allowed on the following manner:
If cheque book is issued, withdrawal by cheque shall be allowed against 7 (seven) days
notice.

36

a) Current Deposit (CD) Account:


Current Deposit account is an account, which is generally opened by business people for their
convenience. A current account is a running and active account, which may be operated upon any
number of times during a working day.
Characteristics:
There is no restriction on the number & amount withdrawals.
It does not allow any interest on this account
Opening Amount/ Initial Deposit Tk. 500
Service Charge (yearly) Tk. 100
Minimum Balance Requirement Tk. 5000
Current a/c may be individual, joint / partnership or can be formed any name. It provides the
following facilities:
Overdraft facility.
Other facilities like collection of checks transfer of money, rendering agency and general
utility services.
b) Savings Bank (SB) Account:
This deposit is intended primarily for small-scale savers. The main object of this account is
promotion of thrift. Savings account is meant for those who want to save a certain amount of
their income and earn interest on that for future needs. All features are more or less like that of
CD a/c except for some restriction that is imposed by the bank. Number of withdrawals over a
period of time is limited. The withdrawing amount is not to exceed 25% of the total balance. This
A/C mainly opens a person name.
Characteristics:
Initial deposit requires opening a savings account is TK.500.
Minimum balance of TK. 500 should maintain in this account.
Interest rate is5.5%
One cannot withdraw money not more than two times in a week.
To withdraw more than Tk20000 seven days notice is required.
Service charge is not fixed.

If no cheque book against the account is issued with drawl may be allowed as per written
instruction of the client either by pay order/Demand Draft or through transfer to his /her
current account with the branch.
If any account is operated like Current Account, the customer shall be advised to open a
Current Account instead of short term Account. Minimum balance requirement as fixed
by Head Office from time to time shall be in force.
d) Fixed deposit receipt (FDR) account:
Fixed Deposit shall be opened a fixed period, which is specific at the time of making deposit,
varying from 3 months to 3 years & payable at a fixed date of maturity. At a time the same
person is allowed to open more than one FD A/C in his own name. Every FD Account is treated
as a separate contract.
Characteristics:
Amount of taka fixed
Time fixed
Rate of interest fixed
Photo & introduction not require
Single transaction A/C
Security A/C
Nominee facility
Renewal facility
Not transferable
Payment may be cash or collection
Not negotiable

Fixed Deposit Interest RateDuration

Rate

1/2 month duration[at least tk 10 crore]

9.50

From 3 month to 6 month

10.50

From 6 month to 1 year

11.00

From 1 year to 2 year

11.50

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e) Janata Bank Deposit Scheme (JBDS):


Special advantage with this scheme is that after the scheduled period the client can withdraw the
full amount or can draw pension on monthly basis. Besides the client can open account in his
name in any branch.
Procedure for operation of Janata Bank Deposit Scheme (JBDS):
The applicant should be of minimum 18 years age and Bangladeshi national.
The account holder can appoint one or more nominees.
On the death of the account holder his / her nominee can withdraw the whole amount of
money.

37

Table 6-Fixed Deposit Interest Rate

The account holder can change or cancel his nominee through a written notice.
On the death of the account holder, the nominees will be entitled to withdraw the deposit
according to the instruction of the account holder.
The account becomes inoperable on the death of the account holder.
The account under this scheme should be opened within the 10th day of any month against
deposit of the first installment in cash.
Monthly installment: TK.500, 1000,2000,5000,10000,20000
Tenure:
10 Years.
The monthly installment must be paid by the 10th day of every month.
In case of delay a fine @TK. 2 per day of defaulted installment will be charged and the fine must
be paid with the installment.
Total Amount=Principal amount + Interest + Bonus amount

f) Janata Bank Monthly Savings Scheme (JBMSS):


This is now very much popular to all classes of clients. Any person having Bangladesh and age
limit above 18 can open this scheme.

Period
For 2 years
For 4 years
For 6 years

Interest rate
10%
9%
8.5%

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Monthly installment may be TK500, 1000, 2000, 5000,10000,20000,25000. Installment must be


deposited within first 10 days of month.
g) Education Deposit Scheme (EDS):
Client can nominate their children and open not more than three accounts. Procedure for
operation of Education Saving Scheme:
The applicant should be of minimum 18 years age and Bangladeshi national. Monthly
installment: TK.500, 1000, 2000,3000,4000,5000 and so on.
The monthly installment must be paid by the 10th day of every month.
In case of delay a fine @ TK. 2 per day of defaulted installment will be charged and the
fine must be paid with the installment.
The account under this scheme should be opened within the 10th day of any month against
deposit of the first installment in cash.
Features of the Education Deposit Scheme (EDS) account:
It may be 4 years, 6 years,8 years& 10years.
Installments are TK.1000, 2000,3000,4000&5000
18 years age, being of sound mind, and a Bangladeshi national.

38

Table 7-Monthly Savings Schemes

The money will be paid out on maturity according to the table above, but Tax / Levy/
Excise and other charges as applicable will be adjusted from the amount.
h) Medical Deposit Scheme (MDS):
The applicants / depositors should be of minimum 18 years age, being of sound mind, and a
Bangladeshi national. The deposit under SBDS will be affected after expiry of each period as per
the chart provided below:
Monthly Installment Quantum
(MIQ) TK.
500
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000

Money at the end of 5 years


period. TK.
38225
75425
149900
224350
298799
373249
447700
522149
596599
671089
745898

Table 8-Medical Deposit Scheme

The money will be paid out on maturity according to the table above, but Tax / Levy/ Excise and
other charges as applicable will be adjusted from the amount.
i) Deposit pension scheme:
Deposit pension scheme is familiar now-a-days. Main features of this scheme are as follows:
Only Bangladeshi who are above 18 can open this scheme
Duration of this scheme is 10 to 20 years
Installment must be paid within first 10 days of month
Interest rate is 15%

Cash Section
Cash department is the most vital and sensitive organ of the branch as it deals with all kinds of
cash transactions. Cash section is directly related to the customer.
The following activities performed in this section:

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The cash receipts procedure, summarized below:  Pay-in-slip or credit voucher are given to the
cash counter for depositing cash.  Cash deposit section checks the title if account, its number,
amount in words and figures in the pay-in-slip or credit voucher.  Cash receiving officer after
receiving the cash giving records/denomination of the currency on the back of the voucher shall
enter the particulars of the voucher in the cash receiving book under progressive serial number &

39

Cash Receipt Section

puts his signature putting the date stamp both on counter foil & pay-in-slip voucher. Then he will
pass it on to the officer- in-charge of cash section for his signature along with the register.
The officer will then detach pay-in-slip from the counter foil and return it to the receiving
officer along with the register.
The officer sends the pay-in-slip/ credit voucher to the deposit section in case of payingslips and credit vouchers to the respective section to which it relates.
Cashier and cash-in-charge puts signature on the book at time of closing cash.
Cash Payment Section
Generally, Cheques, D.D, T.T, M.T and Pay Order etc. are received from customer and
institutions. The formalities are given below:
The instrument is checked for any discrepancy, posting and cancellation.
Specimen signature of cancellation officer should be available.
Cash is counted and the denominations of notes are written on the reverse of the
instrument.
Cash is paid to the bearer of the instrument.
Particulars of the instruments are entered in paying cash book.
Paid instruments are kept with the paying officer.
Posting and Cancellation of Cheque
At the time of posting of cheques, the cheque is examined carefully. Attention on the following
more aspects are given:
Whether the account had desired amount of money or not.
Prefectures of serial number of the cheques.
After careful examination, the drawing amount of cheque was entered in the ledger.
Cheque Dishonored by a Banker

Page

40

If a cheque is dishonored the Banker return it to the depositor. The statutory duty of a bank is to
honor his customer's but it is dishonored in the following circumstances:
If the amount mentioned in the cheque is greater than that of deposit.
If the cheque is past dated or a stole cheque.
If the cheque contains an apparent material alteration, which is not properly mentioned by
the drawer.
If the signature of the drawer is a forged one or does not tally with his specimen
signature.
On receipts of reliable information about the death of the customer.
If a debtor commits an act of insolvency as defined in the insolvency law.
If the cheque is not submitted during the banking hour.
If the Banker comes to know about the defective title of the party.

Remittance Section
Remittances of funds are one of the most importance aspects of commercial banks in rendering
services to its customers. Among various services rendered by a commercial bank to its
customers, remittance facilities are very well known and popular. In general there are two types
of bank remittance. They are:
1. Inward Remittance
2. Out ward Remittance
The main instruments used by Branch for remittance of funds are:
a) Pay Order (PO)
b) Demand Draft (DD)
c) Telegraphic Transfer (TT)
d) Mail Transfer (MT)

Debit.
Credit.
Credit.

By account:
Customer's A/C
Bills payable (PO) A/C
Income on commission A/C

Debit.
Credit.
Credit.

By transfer:
JBL General/ other Dept Clients A/C
Bills payable (PO) A/C
Income on commission A/C

Debit.
Credit.
Credit.

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By cash:
Cash A/C
Bills payable (PO) A/C
Income on commission A/C

41

a) Pay Order (PO):


The pay order is a document which instructs a bank to pay a certain sum to a third party. Such
orders are normally acknowledged by the bank which provides a guarantee that the payment will
be made. Only the branch of the bank that has issued will make the payment of pay order.
The procedures for issuing a Pay Order are as follows:
Deposit money by the customer along with application form.
The deposit may be cheque or cash.
Commission is charged by the issuing branch.
Give necessary entry in the bills payable (Pay Order) register where payee's name, date,
PO no, etc is mentioned.
Preparing the instrument.
After it has been scrutinized & approved by higher authority, the instrument is delivered
to customer.
Signature of customer is taken on the counterpart.
Accounting Entries for PO

Settlement of a PO:
When PO submitted by collecting bank through clearing house, the issuing bank gives payment.
Bills payable (PO) A/C
Debit.
JBL General A/C
Credit.
Cancellation of a Pay Order:
If a buyer wants to cancel it, he should submit a letter of instrument in this regard and also return
the instrument.
Bills payable (PO)
Debit.
Customer A/C
Credit.
b) Demand Draft (DD)
Demand draft is a negotiable instrument issued by a particular branch of a bank containing an
order to another branch of the same bank to pay a fixed sum of money to a purchased by for
himself or order on demand.
This instrument can be purchased by for himself or for beneficiary and can be handed over to the
purchaser. The delivery to the beneficiary bank issues drafts for a nominal commission. The
commission depends upon the amount to be transmitted. Janata Bank charges the commission on
D.D minimum charge is Tk. 15.
The procedures for issuing a DD are as follows:
DD application from filled in and money deposited by the customer.
Necessary entries are given to a register name DD OUT- concern (drawn on) branch. A
number, which is taken from this register, is known as "Controlling number".
An "Account payee only" crossed instrument given.
Payment is made by ordered branch.
Before payment the branch confirmed with sent advice and checks the test code.
Commission is charged.
Accounting Entries for DD
Cash/Customer's A/C
Debit.
JBL General A/C (Drawn on Branch)
Credit.
Income on commission A/C
Credit.
After giving these entries an Inter-Bank Credit Advice (IBCA) is prepared which contains the
controlling number, depicting that the branch is credited to whom it is issued. An IBCA implies
the following entries:

DD Cancellation:
To cancel an issued DD, the client has to submit an application. Issuing branch then sends an
Inter Branch Debit Advice (IBDA) to the drawn branch against previously issued IBCA. After
that the following entries are given:
JBL A/C drawn on branch
Debit.
Customer's A/C
Credit.

42

Debit.
Credit.

Page

JBL General A/C Issuing Branch


Drawn on Branch

c) Telegraphic Transfer (TT)


Telegraphic Transfer is quicker than a transfer of amount by DD. TT is the most rapid and
convening but expensive method. Telephone, Telex, Fax is different mode of TT. If an applicant
wants to remit the amount urgently to the payee is another city or district he/she may request the
Banker to send it by TT. The branch generally recovers from the telex charge in additional to
usual service charges.
Procedures for Issuing of TT:
Application by customer along with money given.
In receipt of money a cash memo is given to the customer containing TT serial number
(Customer informs this number to the awaiting party in the other branch.)
Tested message is prepared, where TT serial no and the name of the concern party to
whom the money will be credited is mentioned.
Commission is charged.
Accounting Entries for TT
Cash A/C Customer's A/C
Debit.
JBL General A/C (Corporate Branch)
Credit.
Procedures for the incoming TT:
After receiving the message, it is authenticated by test.
TT Serial number is verified by the "TT in-Concern branch" register.
Accounting Entries
JBL General A/C (Corporate Branch)
Debit.
Customer's A/C
Credit.

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43

d) Mail Transfer (MT)


When a customer requests the bank to transfer his money from this bank to any other bank or the
branch of the same other bank, the first he has to do is to fill an application form. Then one
branch request to another branch to pay specified amount of money to the specified payee though
Mail.

Bills and Clearing Section


"The process by which cheques exchanged between the collecting and paying bank and the
ensuring financial settlement is called clearing"
Clearing department deals with the cheques, drafts and other instrument and its collection and
payment process. Clearing are two types. They are:1. Inward Bills for Collection (IBC)
2. Outward Bills for Collection (OBC)
1. Inward Bills for Collection (IBC)
When a particular branch receive instrument, which are on themselves and sent by other member
bank for collection is treated as IBC. This branch is known as paying branch.
2. Outward Bills for Collection (OBC)
When a particular branch receives instrument drawn on the other bank within the clearing zone
and sends those instrument for collection through the clearing arrangement is considered as OBC
for the particular branch. This branch is knows as collecting branch. There are two types of OBC:
OBC with different branches of the same bank
OBC with different branches of other banks
Precaution at the time of cheques receiving for Clearing
Name of the account holder same in the cheque and deposit slip.
Amount in the cheque and deposit slip must be same in words and in figure.
Date in cheque may be on or before (but not more than six months back) clearing house
date.
Bank and Branch name of the cheque, its number and date in the Deposit slip.
Cheque must be signed.
Signature for confirmation of date, amount in words / in figure cutting and mutilation of
cheque.
Cheque should be crossed (not for bearer cheque).
Account number in the deposit slip must be clear.

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Accounts department is very important department of general banking. There are many
transactions are made in very day in back. Here the transactions are recording properly. If there is
any fault made then the account section may check it and do action against it. To avoid these
mishaps the bank provides accounts department; whose function is to check the mistakes in
passing vouchers or wrong entries or fraud or forgery. If any discrepancy regarding transaction
arises the department report to concerned department.
Accounts Department does following works:
Packing of the correct vouchers according to the debit voucher and the credit voucher.
Recording the transactions in the cashbook.
Recording the transactions in general and subsidiary ledger.

44

Accounts Section

Preparing the daily position of the branch comprising of deposit and cash.
Preparing the daily Statement of Affairs showing all the assets and liability of the branch
as per General Ledger and Subsidiary Ledger separately.
Making payment of all the expenses of the branch.
Preparing the monthly salary statements for the employees.
Recording inters branch fund transfer and providing accounting treatment in this regard.
Make charges for different types of duties.
Checking of Transaction List.
Recording of the vouchers in the Voucher Register.

Dispatch Section
Dispatch division mainly operates the limitation of dispatching the intimidation letter to the client;
Inter Bank credit advice (IBCA), Inter Bank Debit Advice (IBDA), Outward Bill for Collection
(OBC) to other banks for internal transaction with the bank.
The officer engaged in the dispatch division maintains two types of register books to keep entries
of those documents particulars.
These two types of books are:
a. Inward mail
b. Outward mail
Outward mails are of two types:
a. Local courier
b. Overseas courier
When the officer receives papers from outside the branch, it is required to give a dispatch no. on
the paper. The officer put number on that paper and on the basis of nature of document he takes
decision how it has to be dispatched. Sometimes he gives to documents by hand to other party.
At the beginning of the month, he withdraws money from bank by issuing a debit voucher to
make the payment of dispatching bills. He writes all the expansion of dispatching in the register
and payment. At the end of the month, he calculates his total expenses; he refunds it to the banks
by creating a credit voucher.

Credit Management of JBL

Page

Policy entails projected course of action. JBL has its own policy granting credit. Although credit
is always a matter of judgment applying common sense in the light of one experiences. A sound
credit policy includes among other things safety of fund invested vis--vis profitability of the
bank. Encouraging maximum number of small loan is better than concentration in a particular
type of advances which ensures sufficient liquidity with least insolence of bad debts.

45

Credit policy of JBL

Objectives of credit policy


There are some objectives of credit policy. These are as followsProvide guidance for giving loan.
Prompt response to the customer need.
Shorten the procedures of giving loan.
Reduce the volume of work form top level management.
Delegation of authority of work from top level of management.
To check and balance the operational activities.

Credit Granting Process of JBL


Although the Board of Directors holds the sole right of credit sanctioning, the power is delegated
to CEO & MD. The credit sanctioning authority is also delegated to various lower level of the
management line to strike a balance between adequate control and flexibility in credit operations
to ensure full transparency and accountability at all levels. Even a manager of a small branch has
the credit sanctioning authority. But there is a well-defined, clear and sound credit granting
process applicable for all sanctioning authority. The process includes:
1. Selection of borrower;
2. Credit appraisal;
3. Credit assessment;
4. Credit risk grading;
5. Credit approval & sanctioning;
6. Credit disbursement;
7. Credit monitoring.

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2. Credit Appraisal
Borrowers Credit Worthiness Analysis by JBL following 6 Cs:
The question that must be dealt with before any other whether or not the customer can service the
loan that is pay out the loan when due with a comfortable margin of error. This usually involves a
detailed study of six aspects of the loan application: character, capacity, cash, collateral,
conditions and control. All must be satisfied for the loan to be a good one from the lenders (JBL)
point of view.
Cash: The borrower should have the ability to generate enough cash flow to repay the
loan. This cash flow can be generating from sales or income from the sales of liquidation
of assets or funds raised through debt or equity securities.
Character: The loan officer must be convinced that the customer has a well-defined
purpose for requesting credit and a serious intention to pay. Responsibility, truthfulness,

46

1. Selection of Borrower
For selecting the borrower security should not the only thing to be relied upon. So responsibilities
of the bankers to investigate the client from different view point i.e. the strength and weakness of
the client so that the client will be able to repay the bank loan as repayment schedule with profit.

clean past record, true purpose and honest intention to repay the loan make up what a loan
officer calls character.
Capacity: The customer requesting credit must have the authority to request such and the
legal standing to sign a binding loan agreement.
Collateral: The borrower must possess adequate net worth or enough quality assets to
provide adequate support for the loan. The value of the collateral security must cover the
loan exposure.
Conditions: The recent trend of borrowers line of work or industry must be taken into
considerations by the lender.
Control: The lender should be careful about whether changes in law and regulations
could adversely affect the borrower and whether loan request meets the Banks and
regulatory authorities standards for loan quality.

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4. Credit Risk Grading


A Credit Risk Grading (CRG) deploys a number/ Alphabet/ Symbol as a primary summary
indicator of risk associated with a credit exposure. Credit Risk Grading (CRG) is the basic
module for developing a credit Risk Management System.

47

3. Credit Assessment
A thorough credit and risk assessment should be conducted prior to the granting of loans, and at
least annually thereafter for all facilities. The results of this assessment should be presented in a
credit application that originates from the Relationship Manager, and is recommended by Branch
Credit Committee (BCC). The RM should be the owner of the customer relationship, and must be
held responsible to ensure the accuracy of the entire credit application submitted for approval.
RMs must be familiar with the banks Lending Guidelines and should conduct due diligence on
new borrowers, principals and guarantors.
Credit Applications should summarize the results of the RMs risk assessment and include as a
minimum, the following details:
Amount and type of loan(s) proposed
Purpose of loans
Loan structure (Tenor, Covenants, Repayment Schedule, Interest)
Security arrangements
In addition, the following risk areas are analyzed:
Borrower analysis
Industry analysis
Supplier/ Buyer analysis
Historical financial analysis
Projected financial performance
Account conduct
Adherence to lending guidelines
Mitigating factors
Loan structure
Security

Well managed credit risk grading systems will promote bank safety and soundness by facilitating
informed decision making. Grading systems will measure credit risk and differentiate individual
credits and groups of credits by the risk they pose. All banks should adopt a credit risk grading
system. All facilities should be assigned in risk grade. Where risk deterioration is noted, the risk
Grade aligned to the borrower and its facilities should be immediately changed. Borrower risk
Grades should be clearly stated on credit Application.
The proposed CRG scale consists of 8 categories with short names and numbers are provided as
followsNumber
1
2
3
4
5
6
7
8

Grading
Superior
Good
Acceptable
Marginal/watch list
Special mention
Sub standard
Doubtful
Bad and loss

Table 9-Credit Risk Grading Scale

Short name
SUP
GD
ACCPT
MG/WL
SM
SS
DF
BL

Range of Score
100
85+
75-85
65-75
55-65
55-55
35-55
<35

5. Credit approval & sanctioning


The respective officer of Head Office appraises the project by preparing a summary named Top
Sheet or Executive Summary. Then he sends it to the Head Office Credit Committee (HOCC)
for the approval of the loan. The Head Office Credit Committee (HOCC) considers the proposal
and takes decision whether to approve the loan or not. If the loan is approved by the HOCC, the
HO sends the approval to the concerned branch with some conditions. These are like:
Drawing will not exceed the amount of bill receivables.
The turnover in the account during the tenure of the limit should not be less than four
times of the credit limit.
All other terms and conditions, as per policy and practice of the bank for such advance to
safeguard the bankers interest shall also be applicable for this sanction also.
Branch shall not exceed the sanctioned limit.
Required charge documents with duly stamped should be obtained.
Drawing shall be allowed only after completion of mortgage formalities and other
security arrangement.
After getting the approval from the HO, the branch issues the sanction letter to the borrower. The
borrower receives the letter and returns a copy of this letter duly signed by him as a token of
having understood and acceptance of the terms and conditions above.

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48

Diagrammatically the whole loan approval and sanctioning process is given below:

Request for credit from the client to a branch


Credit application from filled up by the customer & collection of
document
Scrutinizing the document
Analyzing the information
Sanctioning the credit
Preparing the proposal
The proposal; goes to the head office through other necessary steps
Information the client, loan disbursement, supervision and
monitoring

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After verifying all the documents the branch disburses the loan to the borrower. A loan
repayment schedule is also prepared by the bank and given to the borrower.
7. Credit monitoring
Monitoring is a process of taking case of loan cases starts from the selection of the borrower and
remains live throughout
ut the life of a loan. To minimize credit losses, monitoring procedures and
systems should be in places that provide an early indication of the deteriorating financial health
of a borrower. At a minimum, systems should be in place to report the following eexceptions to
relevant executives in CRM and RM team:
Past due principal or interest payments, past due trade bills, account excesses, and breach
of loan covenants;

49

6. Credit disbursement

Loan terms and conditions are monitored, financial statements are received on a regular
basis, and any covenant breaches or exceptions are referred to CRM and the RM team for
timely follow-up.
Timely corrective action is taken to address findings of any internal, external or regulator
inspection/audit.

Credit Products of JBL


JBL has been offering a wide range of credit products to meet the financial needs of its customers.
Grossly the products are two types: funded credit and non-funded credit.

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Cash Credit (Hypothecation)


This type of advance is made against the hypothecated possession and ownership of goods or
assets. In Hypothecation, the real possession remains to the borrower. Loan disbursement and
loan repayment occurs several times for a given amount of money for a given period of time.
Cash Credit (Pledge)
When any advance is made against the pledge of goods or assets then it is known as Cash Credit
(Pledge). The possession and ownership passes to the Bank. Bank takes the control of the assets
or goods. Loan disbursement and loan repayment occurs several times for a given amount of
money for a given period of time.
SOD (Secured Over Draft)

50

Funded credit facilities


1) Term loan
If any loan is extended over a period exceeding one year, it is called Term Loan. These loans
are usually made to large well established business enterprise for Capital financing, such as
setting up of industry, balancing modernization of existing plant/merchandise of industries,
purchase of equipment etc. Covering the repayment period beyond one year.
Mid term loan: the tenure of mid term loan is greater than 1 year up to 3 years.
Long term loan: long term loan is allowed for 5 years.
2) Overdraft
In this case the customer is allowed on the basis of prior arrangements to overdraw his Current
Account by drawing cheques for amounts exceeding the balance up to an agreed limit within
certain period of time not exceeding one year, against acceptable securities. These facilities are
granted after the credit standing; financial ability and status of the customer as well as the
purpose have been favorably established.
3) Working Capital
CCS (Consumer Credit scheme)
Consumer credit scheme is a major program of JBL in CCS the Bank engages and agent who
works on behalf of the Bank. This agent performs all the words prior to the sanction of the CCS.
They do the inspection and made all the documents necessary for CCS. For this purpose they get
commission.

Advances allowed to individual/firms against financial obligation (i.e. lien of FDR/PSP/BSP/


Insurance policy/Share etc.). This may or may not be a continuous Credit.
LIM (Loan against Imported Merchandise)
Advances allowed for retirement of shopping documents and reendow goods imported through
L/C trading effective control over the goods by pledge in god owns under Banks lock & key fall
under this type fall under this type of advance.
LTR (Loan against Trust Receipt)
Advance allowed for retirement of shopping documents and release of good imported through
L/C false under this head. The goods are handed over to the importer under trust with the
arrangement that sale proceeds should be deposited to liquidate the advances within given period.
ECC (Export Cash Credit)
Financial accommodation allowed to a customer for exports of goods falls under this head and is
categorized as Export Credit. The advances must be liquidated out of export proceeds within
180 days.
PC (Packing Credit)
Advance allowed to a customer against specific L/C or Firm contract for processing/packing of
goods to be exported falls under this head and is categorized as Packing Credit.

3. Bank guarantee

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2. Back-to-Back L/C
Back-to-Back L/C is one type of L/C, which is opened against lien on a valid export L/C. It is
opened for inland & abroad as well. Bank will supply the following papers/documents for
opening a Back-to-Back L/C.
L/C application form
LCA form
IMP form
Charge document papers
The above papers must be completed, filled & signed by the party thereto. The party will submit
the entire filled document along with application in printed form of the designated Bank which is
also an agreement between application & the Bank.

51

Non-funded credit facilities


1. Letter of credit (L/C)
It is the most important and commonly used in connection with foreign trade. Letter of Credit is
an undertaking by a banker of the importer to the exporter, to the effect that the amount of the
L/C will be duly paid. The banker on behalf of the importer issues the L/C in favor of L/C will be
duly paid. The banker on behalf of the importer issues the L/C in favor of the exporter
(beneficiary) and forwards the same to the exporter to the effect that the bill drawn by him shall
be duly accepted and paid. It creates confidence in the mind of the exporter so far as payment of
the bill is concerned. It is also facilitate the exporter to get the benefit of discounting the bill
before the date lf maturity.

A Bank guarantee is a written irrevocable obligation by the Bank to pay an agreed sum of money
to the beneficiary in the event of default by a third party in fulfilling their obligations under the
terms of the Bank Guarantee. Bank Guarantee is not a financing instruments but merely a
guarantee.

Feature and Benefits of loans provided by JBL


A. Overdraft (OD)
This is a demand credit facility to meet day to day operational requirements.
Features and Benefits:
OD against cash collateral
OD under earnest money scheme
OD against hypothecation of stock of goods in trade
Tenure of OD is one year
Fees & Charges: 13% p.a. at monthly / quarterly rests subject to change(s) that may be made
by the Bank from time to time.
B. Packing Credit
We provide pre - shipment finance in the form of Export Packing Credit (PC) to assist cash flows
for manufacturing or packing goods for export from Bangladesh.
Features and Benefits
Easy documentation
It is a revolving limit for one year but renewable.
Fees & Charges
Application Form for request for loan facility Taka 250/-.
2% on approved loan amount.
We are realizing only interest (i.e. 7% p.a. at quarterly rest or as fixed by Head Office
from time to time) from PC account.
Half yearly Service Charge:
Taka 1,000/- on each account for urban clients
Taka 500/- on each account for rural clients
C. Working Capital Finance
This is a loan facility designed to meet day to day operation of business concerns and
manufacturing companies.

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D. Loan against Trust Receipt


We provide post shipment finance i.e. LTR to manage immediate liquidity of importers.

52

Features and Benefits


Easy Documentation.
Any branch banking facilities.
Fast Processing.
Fees & Charges : 13% p.a. at quarterly rests subject to change(s) that may be made by the
Bank from time to time

Features and Benefits


Easy Documentation.
Fast Processing
Allow an importer to take possession of the goods for resale.
Increase the present cash flow of the exporter to improve the financial condition and
strengthen the financial ability.
Global loan limit exposure for the client
Online banking facilities for repayment
Fees and charges
Application Form for request for loan facility Taka 250/-.
2% on approved loan amount.
13% p.a. at quarterly rests subject to change(s) that may be made by the Bank from time
to time.
Half yearly Service Charge: - Taka 1,000/- on each account for urban clients - Taka 500/on each account for rural clients
Requirements
Application received from the customer for LTR facility.
Photograph of signatory to be attested by Chairman of the company.
Copy of valid trade license
Official seal with designation
Tax Certificate
KYC Form
Transaction Profile

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Bank credit is an important catalyst for bringing about economic development in a country.
Without adequate finance, there can be no growth or maintenance of a stable economy JBL,
being one of the specialized banks of the government of Bangladesh, has some prejudice to
finance directly on priority basis to agriculture, small industry and commerce sector for
strengthening the economic base of the country. Hence, it is very clear that, Janata Bank plays an
important role to move the economic wheel of the country. There are different types of loans
provided by the bank as follow:
1. Consumer loan
2. Letter of Credit
3. Micro credit
4. Small Industry / Enterprise loan
5. Medium Industry / Enterprise loan
6. Large Industry loan
7. Trade loan
8. Packing Credit
9. Real estate loan
10. Other Demand I Forced Loan

53

Various forms of JBL Credit

11. Loan against documentary bills accepted by the banks


12. Lease financing  Import financing (LIM, PAD etc).
Though these types of credit facilities basic bank playing a vital role for the economic growth of
Bangladesh.

Besides the above, credit facilities given by the banks can be classified in the following way:
a. On the basis of term
i. Short term
ii. Mid term
iii. Long term
iv. Working capital
b. Sector wise classification
i. Private
ii. Public
iii. Commercial and industrial
iv. House building etc

Interest Rate of Different Loan of JBL

C.C(Pledge)

16%

Not Compulsory

C.C(Hypothecation)

16%

Do

Over Draft (O.D)

15%

Bank Deposit

Real estate (Resident)

12%

Documents of Assets

15.5%

Do

PALLI RIN:
a)Palli porivohon
b)Jomi bondhoki rin

10%
13%

Personal Guarantee

Service loan

16%

Check of monthly

Consumer credit

15.50%

Personal Guarantee

Doctors loan

15.50%

Do

Cyber caf loan

15.50%

Do

Prothibondhi loan

10%

Do

General loan

10%

Do

Real estate(Commercial)

Table 10-Interest Rate of Different Loans

54

Collateral
Required

Page

The interest rates of various types of loans are as follows:


Types Of Loans &
Interest
Advances
Rate

Credit Risk Management of JBL


Credit risk is simply defined as the potential that a bank borrower or counterparty will fail to
meet its obligations in accordance with agreed terms. However, credit risk could steam from both
on-balance sheet and off-balance sheet activities. It may arise from either an inability or an
unwillingness to perform in the pre-committed contracted manner. Credit risk comes from a
bank's dealing with individuals, corporate, banks and financial institutions or a sovereign. The
assessment of credit risk involves evaluating both the probability of default by the borrower and
the exposure or financial impact on the bank in the event of default. Credit risk occupies the
lions share of banks total risk. So credit risk management is a crucial issue of risk management
and an essential to the long-term success of any banking organization.
JBLs goal of credit risk management is to maximize its risk-adjusted rate of return by
maintaining credit risk exposure within acceptable parameter. So, JBLs management has
adopted appropriate policy, procedures and methods to manage the credit risk inherent in the
entire portfolio as well as the risk in individual credits or transactions. The bank also considers
the relationship between credit risk and other risks.

Foreign Exchange Operations of JBL


Foreign exchange department of Janata Bank Limited is one of the most important departments
among all departments. This department handles various types of activities. Among these main
three are as follows:

Import

Page

i. At first, the importer must obtain an Import Registration Certificate (IRC) from the CCI &
E submitting the following papers:
 Up to date Trade License.
 Nationality and Asset Certificate.
 Income Tax Certificate.
 In case of company, Memorandum & Articles of Association and Certificate of
Incorporation.

55

Import means purchase of goods or services from abroad. Normally, consumers, firms and
Government organizations import foreign goods or services to meet their various necessities.
Main import items are food item, edible oil, fertilizer, petroleum, machineries, chemicals, raw
materials of industry, cement clinkers etc. So, in brief, we can say that import is the flow of
goods and services purchased by local agent staying in the country from the foreign agent staying
abroad.
Import procedure:
Authorized Dealer, banks is always committed to facilitate import of different foods into
Bangladesh from the foreign countries. Import Section, which is under the Foreign Exchange
Department of a bank, is assigned to perform this job. And to serve its parties demand to import
goods, it always maintains required formalities that are collectively termed as Import
Procedure.

 Bank

Solvency Certificate, etc.


 Required amount of registration fee

Page

Opening Letter of Credit (L/C):


In global business environment, buyers and sellers are often unknown to each other. So seller
always seek guarantee of payment for his exported goods. In this situation bank plays an
important role. Bank gives export guarantee that it will pay for the goods on behalf of the buyer.
This guarantee is called Letter of Credit or LC. Thus the contract between importer and
exporter is given a legal shape by the banker by its Letter of Credit.

56

ii. Then the importer has to contact with the seller outside the country to obtain the Proforma
Invoice. Usually an indenture, local agent of the seller or foreign agent of the buyer makes
this communication. Beside these other sources are:
 Trade fair.
 Chamber of Commerce.
 Foreign Missions in Bangladesh.
 Journals, etc.
iii. When the importer accepts the Proforma Invoice, he/she makes a purchase contract with the
exporter detailing the terms and conditions of the import.
iv. After making the purchase contract, importer settles the means of payment with the seller.
An import procedure differs with different means of payment. The possible means are Cash
in Advance, Open Account, Collection Method and Documentary Letter of Credit. In most
cases, the Documentary Letter of Credit in our country makes import payment. Purchase
Contract contains which payment procedure has to be applied.
Payment Modes:
Cash in advance: Importer pays full, partial or progressive payment by a foreign DD, MT
or TT. After receiving payment, exporter will send the goods and the transport receipt to the
importer. Importer will take delivery of the goods from the transport company.
Open Account: Exporter ships the goods and sends transport receipt to the importer.
Importer will take delivery of the goods and makes payment by foreign DD, MT, or TT at
some specified date.
Collection Method: Collection methods are either clean collection or documentary
collection. Again, Documentary Collection may be Document against Payment (D/P) or
Document against Acceptance (D/A). The collection procedure is that the exporter ships the
goods and draws a draft/ bill on the buyer. The exporter submits the draft/bill (only or with
documents) to the remitting bank for collection and the bank acknowledges this. Then the
remitting bank sends the draft/bill (with or without documents) and a collection instruction
letter to the collecting bank. Acting as an agent of the remitting bank, the collecting bank
notifies the importer upon receipt of the draft. The title of goods is released to the importer
upon full payment or acceptance of the draft/bill.
Letter of credit: Letter of credit is the well-accepted and most commonly used means of
payment. It is an undertaking for payment by the issuing bank to the beneficiary, upon
submission of some stipulated documents and fulfilling the terms and conditions mentioned
in the letter of credit.

57
Page

Procedure of opening the Letter of Credit (L/C):


The importer after receiving the proforma invoices from the exporter, by applying for the issue of
documentary credit, the importer requests his/her bank to make a promise of payment to the
supplier. Obviously, the bank will only agree to this request if it can rely on reimbursement by
the applicant. As a rule accepted as the sole security for the credit particularly if they are not the
shorts of commodity that can be traded on an organized market, such an agreement would
involve the bank in excessive risk outside its specialized field. The applicant must therefore have
adequate fund in the bank account or a credit line sufficient to cover the required amount. Banks
deals with documents and not goods. Once the bank has issued the credit its obligation to pay is
conditional on the presentation of the stipulated documents within the prescribed time limit. The
applicant cannot prevent a bank from honoring the documents on the grounds that the beneficiary
has not delivered goods.
The importer submits the following documents with the application for opening the L/C:
Tax Identification Number (TIN)
Valid trade license
Import registration certificate (IRC)
The bank will supply the following documents before opening the L/C:
LCA form
IMP form
Necessary charger documents for documentation
The above documents/papers must be completed duly signed and filled by the parties according
to the instruction of the concern banker.
L/C Application Form (L/CAF):
L/C Application Form is a sort of an agreement between customer and bank on the basis of
which letter of credit is opened. Bank provides a printed form for opening of L/C to the importer.
A special adhesive stamp of value Tk.200 is affixed on the form in accordance with Stamp Act
currently in force. While opening, the stamps are cancelled. Usually the importer expresses his
decision to open the L/C quoting the amount of margin in percentage. Usually the importer gives
the following information
Full name and address of the importer
Full name and address of the beneficiary
Draft amount
Availability of the credit by sight payment/ acceptance/ negotiation/ deferred payment
Time bar within which the documents should be presented
Sales type (CIF/FOB/C&F)
Brief specification of commodities, price, quantity, indent no. etc.
Country of origin
Bangladesh Bank registration no.
Import License/LCAF no.
IRC no.
Account no.
Documents no.
Insurance Cover Note/Policy no., date, amount
Name and address of Insurance Company

Whether the partial shipment is allowed or not


Whether the transshipment is allowed or not
Last date of shipment
Last date of negotiation
Other terms and conditions (if any)
Whether the confirmation of the credit is requested by the beneficiary or not.
The L/C application must be completed/filled in properly and signed by the authorized
person of the importer before it is submitted to the issuing bank.

Export

Page

Formalities of Export Procedure:


There are a number of formalities, which an exporter has to fulfill before and after shipment of
goods. These formalities or procedures are enumerated in brief as follows:
Obtaining Export Registration Certificate ERC: No exporter is allowed to export any
commodity for export from Bangladesh unless he is registered with Chief Controller of
Imports and Exports (CCI & E) and holds valid Export Registration Certificate (ERC).
After applying to the CCI&E in the prescribed from along with the necessary papers,
concerned offices of the Chief Controller of Imports and Exports issues ERC. Once
registered, exporters are to make renewal of ERC every year.
Securing the order: After getting ERC, the exporter may proceed to secure the export
order. He can do this by contracting the buyers directly through correspondence.
Obtaining EXP: After having the registration, the exporter applies to Janata Bank
Limited with the trade license, ERC and the Certificate from the concerned Government
Organization to get EXP. If the bank is satisfied, an EXP is issued to the exporter.
Signing of the contract: After communicating with buyer the exporter has to get
contracted for exporting exportable items from Bangladesh detailing commodity,
quantity, price, shipment, insurance and mark, inspection, arbitration etc.
Receiving the Letter of Credit: After getting contract for sale, exporter should ask the
buyer for Letter of Credit clearly stating terms and conditions of export and payment.
Procuring the materials: After making the deal and on having the L/C opened in his
favor, the next step for the exporter is to set about the task of procuring or manufacturing
the contracted merchandise.

58

Janata Bank Limited exports a large quantity of goods and services to many countries.
Readymade textile garments (both knitted and woven), Jute, Jute-made products, frozen shrimps,
tea, hide and skin, vegetables are the main goods that Bangladeshi exporters exports to foreign
countries. Garments sector is the largest sector that exports the lion share of the countrys export.
Bangladesh exports most of its readymade garments products to U.S.A and European
Community (EC) countries. Bangladesh exports about 40% of its readymade garments products
to U.S.A. Most of the exporters who export through Janata Bank Limited foreign exchange
Branch are readymade garment exporters. They open export L/Cs here to export their goods,
which they open against the import L/Cs opened by their foreign importers.

59
Page

Endorsement on EXP: Before the exporter with the customs or postal authorities lodges
the export forms, they should get all the copies endorsed by Janata Bank Limited. Before
shipment, exporter submits EXP. form with commercial invoice. Then Janata Banks
respective officers check it properly, if satisfied, certificate the EXP. Without EXP
exporter cannot make shipment. The customer must declare all export goods on the EXP
issued by the authorized dealers.
Disposal of Export Procedure:
Original: Customs authority reports first copy of EXP to Bangladesh Bank after
shipment of the goods.
Duplicate: Negotiating bank reports the Duplicate to Bangladesh Bank in or after
negotiation date but not later than 14 days from the date of shipment.
Triplicate: On realization of export proceeds the same bank to the same authority reports
Triplicate.
Quadruplicate: Finally, the negotiating bank as their office copy retains Quadruplicate.
Shipment of goods: Exporter makes shipment according to the terms and condition of
L/C.
Presentation of Export Documents for Negotiation:
After shipment, exporter submits the following documents to Janata bank Limited for negotiation.
Bill of Exchange or Draft
Bill of Lading
Invoice
Insurance Policy/Certificate
Certificate of origin
Inspection Certificate
Consular Invoice
Packing List
Quality Control Certificate
G.S.P. certificate
Photo
Examination of Document:
Banks deal with documents only, not with commodity. As the negotiating bank is giving the
value before repatriation of the export proceeds it is advisable to scrutinize and examine each and
every document with great care whether any discrepancy(s) is observed in the documents. The
bankers are to ascertain that the documents are strictly as per the terms of L/C Before negotiation
of the export bill. Bank officers assigned for examining the export documents may use a checklist
for their convenience.
Negotiation of Export documents:
Negotiation stands for payment of value to the exporter against the documents stipulated in the
L\C. If documents are in order, Janata Bank Limited purchases (negotiates) the same on the basis
of banker- customer relationship. This is known as Foreign Documentary Bill Purchase
(FDBP).If the bank is not satisfied with the documents submitted to Janata Bank Limited and
gives the exporter reasonable time to remove the discrepancies or sends the documents to L/C
opening bank for collection. This is known as Foreign Documentary Bill for Collection (FDBC).

Settlement of Local Bills:


The settlement of local bills is done in the following ways:
The customer submits the L/C to Janata Bank Limited along with the documents to
negotiate.
Janata Bank Limited officials scrutinize the documents to ensure the conformity with the
terms and conditions.
The documents are then forwarded to the L/C opening bank.
The L/C issuing banks gives the acceptance and forwards an acceptance letter.
Payment is given to the customer on either by collection basis or by purchasing the
document.

Foreign Remittance
Foreign Remittance means transfer of foreign exchange from one country to another country
through banking or authorized channel.
The major function of commercial Banks is mobilization of fund. Other than this, banks provide
ancillary services to its clients. Clients need to remit money from one place to another for their
business or other purposes. Banks fulfill this need of customers by means of remittance service.
Money can be remitted domestically or internationally, which known as local remittance and
foreign remittance. . The person who is the sender of the remittance is remitter or remitor. There
are two types of foreign remittance, which are as below:
Inward Foreign Remittance:
Inward remittance covers purchase of foreign currency in the form of foreign T.T., D.D,
T.C. and bills etc. sent from abroad favoring a beneficiary in Bangladesh. Purchase of
foreign exchange is to be reported to Exchange control Department of Bangladesh bank
on Form-C.
Outward Foreign Remittance:
Outward remittance covers sales of foreign currency through issuing foreign T.T. Drafts,
Travelers Check etc. as well as sell of foreign exchange under L/C and against import
bills retired. Sale of foreign exchange is reported to Exchange control Department of
Bangladesh Bank on form T/M.

Foreign Exchange Performance of JBL from 2009-2013


BDT in Crore

Import

Export

Remittance

2009
2010
2011
2012
2013

11852
18374
19728
18828
17667

8865
11851
15375
15652
15325

5619
5264
7228
10009
10398

Source: Annual Report of JBL, 2013.

Page

Year

60

Table 11-Foreign Exchange Performance

Financial Performance Analysis Using CAMEL Model:


CAMEL is basically ratio based model for evaluating the performance of banks. It is a
management tool that measures capital adequacy, assets quality, and efficiency of management,
quality of earnings and liquidity of financial institutions. The Banks use various ratios for
measuring the financial performance which tells us the true financial position of the bank. In the
present study, CAMEL Model has been applied for the same purpose. Various ratios calculated
under the Model help in identifying the strengths/weaknesses of banks and suggesting
improvement in its future working. In the present study, following financial ratios under CAMEL
Model have been used for the analysis of Financial Performance:
C
A

Capital
Adequacy
Asset Quality

Management Efficiency

Earning Quality

Liquidity

i) Capital Adequacy Ratio


ii) Advances to Assets Ratio
iii) Gross NPAs to Gross Advances
iv) Total advances to Total Deposits
(Credit Deposit Ratio)
v) Net Profit per Employee
vi) Operating Income as a % of Working
Funds
vii) Net Profit Margin ratio
viii) Earnings Per Share
ix) Liquid Assets/Total Assets

1. C (Capital Adequacy):
The capital adequacy reflects the overall financial condition of a bank and also the ability of the
management to meet the need for additional capital. The ratios which are used under capital
adequacy are following:
i) Capital Adequacy Ratio:
It is the arrived at by dividing the sum of Tier I and Tier II capital (Capital Fund of the Bank) by
risk weighted assets as per the given formula. Tier I capital includes equity capital and free
reserves. Tier II capital comprises subordinated debt of 5-7 Year tenure. The higher the CAR, the
stronger the bank. Capital adequacy Ratio = (Capital fund of the bank) / (Risk weighted
assets)*100
Year
Capital adequacy
ratio

2013
10.27%

2012
3.70%

2011
10.20%

2010
9.19%

2009
13.81%

Page

Interpretation:
The minimum capital requirement in Bangladesh is 10% of total risk weighted asset. Here, the
capital adequacy ratio is the highest in 2009 (13.81%) and lowest in 2012 (3.70%) compared to
other years. In 2013 it is greater than the minimum capital requirement, so, the bank is in a good
position.

61

Table 12-Capital Adequacy Ratio

ii) Advances to Assets Ratio:


This is the ratio of total advances to total Assets. Total advances also include receivables. The
value of total assets excludes the revaluation of all the assets.
Year
2013
2012
2011
2010
2009
48.76%
59.74%
57.79%
65.39%
56.45%
Advances to Assets
Ratio
Table 13-Advances to Assets Ratio

Interpretation:
Among the different years, the advances to assets ratio is the highest position in 2010 (65.39%)
and in the lowest position in 2013 (48.76%) compared to other years. The bank should look to
give more advances to its customer because the ratio in 2013 is lower.

2. A (Asset Quality):
The prime motto behind measuring the asset quality is to ascertain the component of
nonperforming assets as a percentage of the total advances.
iii) Gross Non-Performing Assets to Gross Advances Ratio:
The Non-Performing Loans (NPLs) Ratio is the most important indicator to identify the problem
inherent in asset quality. The bank should maintain a significant low ratio of NPLs to total assets.
Standard norm is 5% maximum.
Year
2013
2012
2011
2010
2009
11.12%
17.42%
5.83%
5.24%
8.44%
Gross Nonperforming assets to
Gross advances ratio
Table 14-Gross Non-Performing Assets to Gross Advances Ratio

Interpretation:
From the above table, it was seen that the non-performing loan ratio is the highest in 2012
(17.42%) and is the second highest in 2013 (11.12%). It is not a good sign for the bank, so, the
bank should give loan after proper evaluation of the loan proposal so that it is productive.

3. M (Management Efficiency):
It involves a subjective analysis for measuring the efficiency of the management; this research
uses ratios like, advances to deposits and net profit per employee.
iv) Total Advances to Total Deposits:
This ratio measures the efficiency of the management in converting the deposits available with
the bank (excluding other funds like equity capital, etc.) into advances as shown in the following
table:
Year
2013
2012
2011
2010
2009
59.71%
74.52%
71.28%
78.77%
67.58%
Total advances to
Total deposits Ratio

Page

62

Table 15-Total Advances to Total Deposits

Interpretation:
Among the different years, the total advances to total deposits ratio is the lowest position in 2013
(59.71%) compared to other years. Therefore, bank should convert more deposits into advances
to generate more income.
v) Net Profit per Employee:
This measure the efficiency of the employee at the branch level. It also gives valuable input to
assess the real strength of a banks branch network. It is arrived at by dividing the net profit
earned by the bank by total number of employees. The higher the ratio, the higher the efficiency
of management.
Year
2013
2012
2011
2010
2009
0.62
(1.01)
0.30
0.38
0.21
Net Profit per
employee (Millions
Tk.)
Table 16-Net Profit per Employee

Interpretation:
From the above table, it was seen that net profit per employee was the maximum in 2013 (0.62
million) where as a negative figure (loss) in 2012. It is a good sign that the bank reached in
highest position in 2013 compared to other years.

4. E (Earning Quality):
This parameter gains importance in the light of the argument that much of a banks income is
earned through non core activities like investments, treasury operation, and corporate advisory
services and so on. In this section we try to assess the quality of income generated by core
activity- income from lending operations. The ratios which are used under earning quality are
following:
vi) Operating Income as a % of Working Funds:
This is arrived at by dividing the operating profit by average working funds. Working funds are
the daily average of the total assets during the year. Which indicate how much operating income
is generated from Average working funds. The higher ratio indicates good performance of the
bank.
Year
2013
2012
2011
2010
2009
2.24%
3.04%
3.97%
1.88%
3.05%
Operating income as
a % of working
funds
Table 17-Operating Income as a % of Working Funds

Interpretation:
From the above table, it was seen that the ratio is the highest in 2011 (3.97%) but it was reduced
to 2.24% in 2013. Therefore, the bank should concentrate on it.

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Net Margin or Net Profit Margin Ratio refers to a measure of profitability. Higher Net Profit
Margin Ratio indicates the comparative higher profitability of the Bank.
Year
2013
2012
2011
2010
2009
23.90%
38.66%
13.70%
21.83%
15.81%
Net Profit Margin
Ratio

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vii) Net profit Margin Ratio:

Table 18-Net profit Margin Ratio

Interpretation:
The net profit margin ratio is the second highest position in 2013 (23.90%) compared to other
years. So, the bank should maintain this or improve this than other years to keep its function
smoothly.
viii) Earnings Per Share:
EPS serves as an indicator of a company's profitability and has been shown in the following table:
Year
2013
2012
2011
2010
2009
86.31
(138.91)
43.46
98.16
73.37
EPS (Tk.)
Table 19-Earnings Per Share

Interpretation:
Among the different years, EPS is the highest in 2010 (98.16) and is the lowest position in 2012
(-138.91) compared to other years. In 2013, EPS is the second highest position achieved, its not
a bad at all.

5. L (Liquidity):
Liquidity is one of the important parameters through which the performance of a Bank is
assessed. This parameter of CAMEL Model assesses the ability of a Bank to pay its short term
liabilities towards its deposit holders in a particular span of time. It can be measured with the
help of the following ratio:
ix) Liquid Assets/ Total Assets:
Liquid assets include cash in hand, balance with other banks (both in Bangladesh and abroad),
and money at call and short notice. The ratio is arrived by dividing liquid assets by total assets.
Year
2013
2012
2011
2010
2009
8.2%
10.012%
11.56%
7.93%
8.89%
Liquidity Ratio
Table 20-Liquid Assets/ Total Assets

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64

Interpretation:
From the above table, it was seen that the ratio is the highest in 2012 compared to other years. In
2013, it is the second lowest figure indicated that banks liquid assets are lower.

Testing the Financial Soundness of Janata Bank Ltd. using Z-score Model:
For the purpose of the financial soundness testing, I have used Prof. Altmans Z-score model.
The specified variable used is explained in Table- A and the interpretation of Z score value is
presented in Table -B. To study the financial health of the company, the different (five) ratio used
in Altmans Z-score approach.
Table: A
Financial Ratio
Coefficient of the Ratio
(Recommended by Prof. Altman)
Net working capital to total assets (X1)
1.2
Retained earnings to total assets (X2)
1.4
EBIT to total assets (X3)
3.3
Market value of equity to total liabilities (X4)
0.6
Net sales to total assets (X5)
0.99
Z-score = 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 0.99X5
Table: B
Score
Above 3.00
2.00-2.99
1.8-2.00

Interpretation
The company is financially safe
The company is on alert to exercise the caution
There are chances that the company could go bankrupt in
the next two years
The companys financial position is Embarrassing

Below 1.8

Results:
Table 21-Net Working Capital to Total Assets Ratio of JBL

Year
Net Working
Capital to Total
Assets Ratio

2013
1.73%

2012
1.61%

2011
2.81%

2010
0.90%

2009
0.69%

Interpretation:
Net working capital to total assets ratio of Janata Bank Limited is presented in Table-1. It is
concluded that among the different years studied, the Bank showed highest earnings in the year
2011(2.81%). However, there is a progressive improvement in the Net working capital to total
assets ratio from 2011 to 2013. It indicated that the Bank is in a good position from meeting its
current obligations.

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Year
2013
2012
2011
2010
2009
1.29%
(2.99%)
0.60%
0.96%
0.56%
Retained Earnings
to Total Assets Ratio
Interpretation:
The retained earnings to total assets ratio of Janata Bank Limited is depicted in Table -2. As
observed from in Table-2, among the different years studied, the Bank showed highest earnings
to assets ratio in the year 2013 (1.29%). However, there is a lowest ratio in 2012 (- 2.99%)
compared to other years. Therefore, it is seen that the bank is in a good position in 2013.

65

Table 22-Retained Earnings to Total Assets Ratio of JBL

Table 23-EBIT to Total Assets Ratio of JBL

Year
EBIT to Total
Assets Ratio

2013
1.81%

2012
(2.51%)

2011
1.99%

2010
2.27%

2009
1.92%

Interpretation:
The return on total assets of the Janata Bank Limited is depicted in Table-3. Among different
years, 2010 sustained the highest return on total assets ratio (2.27%) followed by 2011 (1.99%),
2009 (1.92%), 2013 (1.81%) and in the lowest position in 2012 (-2.51%). This indicated that the
operational efficiency in 2013 is satisfactory but it is lower compared to other years except in
2012.
Table 24-Market Value of Equity to Total liabilities Ratio of JBL

Year
Market Value of
Equity to Total
liabilities Ratio (times)

2013
13.13

2012
24.09

2011
10.62

2010
14.05

2009
16.49

Interpretation:
The equity-debt ratio of Janata Bank Limited is depicted in Table-4. Among the study period, the
year 2012 recorded the highest equity-debt ratio (24.09%) compared to others. In 2013, the ratio
is 13.13%.
Table 25-Net Sales to Total Assets Ratio of JBL

Year
Net Sales to Total
Assets Ratio

2013
6.82%

2012
6.84%

2011
7.27%

2010
6.51%

2009
6.02%

Interpretation:
The total assets turnover of the Janata Bank Limited is depicted in Table-5. It is observed that the
year 2011 showed the highest total asset turnover ratio (7.27%). This implies that the year 2011
generated sales of 7.27 for every Tk. of investment in fixed.
Table 26-Z-score of JBL

Year
Z-score

2013
24.55

2012
10.76

2011
24.42

2010
24.86

2009
23.86

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66

Interpretation:
The Z score values of the Janata Bank Limited during the study period under review have
been depicted in the Table-6. It is understood from the table that during the years 2009-13 the
Bank showed the score much above the suggested value of financial health. It is also understood
that the financial health of the Janata Bank Limited in the future years is expected to be sound
enough to maintain liquidity because currently the score is more enough than the Prof. Altmans
highest recommended score above 3. Since, all of the years (2009-2013) Z score is above 3, it
indicated that the bank is financially safe.

SWOT Analysis of Janata Bank Limited


A SWOT analysis (alternatively SWOT matrix) is a structured planning method used to evaluate
the strengths, weaknesses, opportunities, and threats involved in a project or in a business venture.
A SWOT analysis can be carried out for a product, place, industry or person. It involves
specifying the objective of the business venture or project and identifying the internal and
external factors that are favorable and unfavorable to achieve that objective. The technique is
credited to Humphrey (2005), who led a convention at the Stanford Research Institute (now SRI
International) in the 1960s and 1970s using data from Fortune 500 companies. The degree to
which the internal environment of the firm matches with the external environment is expressed
by the concept of strategic fit.
Strength
Janata Bank Limited is managed by highly professional people.
The management of the bank constantly focuses on the understanding and anticipating
customers needs and solution thereof.
The top management officials of Janata Bank Limited have years of banking experience,
skill, and expertise will continue to contribute towards further expansion of the bank.
Janata Bank Limited has already achieved a high growth rate accompanied by an
impressive profit growth rate in recent year.
The working environment is very friendly, interactive and informal. And, there are no
hidden barriers or boundaries while communicate between the superior and the
employees. This corporate culture provides as a great motivation factor among the
employees.
Janata Bank has the reputation of being the provider of good quality services too its,
potential customers.
It always focuses on low and no cost deposits which will the growth of the bank.
The bank always eagerness to introduce new deposit scheme and has already introduced
highly lucrative and attractive deposit scheme to encourage and The bank credit facilities
mainly concentrated on trade finance, Agriculture related sector, project finance, whole
and retail trading etc.
The Bank introduced on line branch banking.

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Lack of experience employees in junior level of management.


The bank failed to provide a strong quality-recruitment policy in the lower and some mid
level position. As a result the services of the bank seem to be Deus in the present days.
The poor service quality has become a major problem for the bank. The quality of the
service at Janata Bank is not higher than others Bank.
The Bank does not observe social commitment strongly.
Most of the branches are not well decorated.
Lack of training for improving the quality of the employees in this bank.

67

Weakness:

Opportunity:
In order to marinating the internal control system, Janata Bank has to expand its credit
policy guidelines and procedures for continuous monitoring and upgrading of daily
banking activities.
Opportunity in retail banking lies in the fact that the countrys increased population is
gradually learning to adopt consumer finance. The bulk of our population is middle class.
Different types of retail lending products have great appeal to this class. So a wide variety
of retail lending products has a very large and easily pregnable market.
There are many banks in our country. In this competitive environment Janata Bank must
expand its product line to enhance its sustainable competitive advantage. In that product
line, they can introduce the own ATM to compete with the local and the foreign bank.
They can introduce credit card and debit card system for their potential customer.
Janata bank can increase its network with most international banks.

Threats:

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68

All sustain multinational banks and upcoming foreign, private banks posses enormous
threats to Janata Bank Limited. If that happens the intensity of competition will rise
further and banks will have to develop strategies to compete against an on slough of
foreign the banks.
The default risks and delinquent of all terms of loan have to be minimizing in order to
sustain in the financial market. Because this risk leads the organization towards to
bankrupt. Janata Bank has to remain vigilant about this problem so that proactive
strategies are taken to minimize this problem if not elimination.
The low compensation package of the employees from mid-level to lower level position
threats the employee motivation. As a result, good quality employees leave the
organization and it effects the organization as a whole.

Following the practical work experiences in the General Banking Department of Farashgonj
Branch of Janata Bank Ltd, some discrepancies and irregularities have been observed by me
and on the basis of the observation some recommendatiolns have been made to improve the
prevailing situation in the branch. The observations are as follows:

Findings
Some customers do not understand account opening form.
Some customers are not interested or not able to write D.D., Check, pay order voucher.
In the present market situation, where the competition among all nationalized and private
commercial banks are very intense and high, the management of Janata Bank limited is
failing to find out its major weaknesses.
The major weakness of Janata Bank Limited is its unattractive salary package. The salary
package that Janata Bank Limited offers to the employees is relatively poor comparing to
other competing banks in the market.
Janata Bank Limiteds banking strategy is not arranged in such way that provides
excellent service to its customers and employees.
Janata Bank Limited fails to recruit expert and skilled person because of this low salary
structure.
There are some congested branches where modern technical equipment such as computer
and manpower are not sufficient. As a result banking activities are not done properly.
Janata Bank limited doesnt give their attention on advertisement. As a competition
market it is too much important for any organization to increasing their advertisements
procedure.
Janata Bank Limited has limited workforce. As a result most of the employees are under
huge workload and have to work extra hours though no overtime facility is provided to
them. So the cause of serious employees dissatisfaction and result in employee turnover.

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69

Janata Bank Limited not able to provide A.T.M service to its customers completely &
properly.

Recommendations
Trying to make those people understand who do not know how to open a bank
account.
Janata Bank Limiteds human resources management policy has to identify the right
combination of skills, knowledge, behavior and values and utilize them for the
welfare of the bank.
If they are established strong networking system with their branches then it can easily
transfer data within short time.
The Janata bank has to provide more service products to the customers
If they cancel the introducer system then they can collect more deposit through new
account and it also satisfied the customer.
To make the process easy and quick the whole system should be computerized and
take modern communication media for example e-mail, fax, Internet should be used.
Its has to adopt the most recent technologies to improve the quality of service.
A group well-trained and expert work force is dedicated to render the best service to
the customers.
Its working environment has to excellent for its employees and customers.
The management has to introduce the overtime facility or better compensation
package for the employees who work hard extra hours after their office time.
The management of Janata Bank Limited has to give their attention to take necessary
steps to improve salary structure.
The management of Janata Bank Limited must be identified the weakness point to
have in competition in banking sector.

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70

More ATM booth should be introduced in near to every customer place.


JBL should built separate loan recovery division if it happen then their classified loan
amount will reduce.

Conclusion

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71

An efficient operation of banking sector enables the smooth financial resources intermediation of
an economy. Economic growth is contributed greatly by the efficiency of banking sector in
resources generation and its proper allocation. The smooth and efficient operation of banking
sector also helps to reduce risk of failure of an economy. Therefore, the performance of banking
sector is always been a source of interest for researchers to judge the economic condition of a
country. From this view point, the study is done on the analysis of banking activities and
financial performance of Janata Bank Ltd. JBL plays an important role in the banking sector as
well as in our economy. It plays a great role in collecting scattered deposit, loan settlement and
international trade etc. At present there is no such organization in the world that is free from
problem and challenges. Every concern has to strive and struggle a lot to be more profitable and
to go more competitive edge. The study showed that the bank is financially safe and its capital
adequacy ratio is also good. The great limitation is that the bank has more non-performing assets.
The bank is not computerized in all departments, no aggressive promotional activities, and has no
separate training institute for their employees. Another important limitation is that the incentive
system of the bank is poor compared to private bank. When Janata Bank Limited is able to
overcome this type of problem then it would be more structured compared to any other bank
operating local or foreign in Bangladesh. The current situation of Janata bank Limited is
satisfactory. But in the age of competition, if the bank does not provide extra ordinary that means
superior services then it will be difficult to continue banking because everybody wants to
maintain quality. For the future planning and the successful operation in its prime goal in this
current competitive environment, this report can provide a good guideline & continuous success
and healthy business portfolio of Janata Bank Limited. The importance of this study stems from
the importance of the Bangladeshi commercial banking sector which has a huge share in the
Bangladeshi economy. In addition, this study is anticipated to make contributions in two folds:
first, contributions to the management in the field of banking; secondly, contributions to the
academic field. The expected contributions of this study to the management in the field of
banking can be said to be that: this study may help decision makers to pay more attention on the
major banking activities that may help in increasing the financial performance positions. In
addition, the financial information of this study will help the management of the Janata Bank Ltd.
in setting up plans and financial strategies. The expected contributions of this study to the
academic fields can be said to be that: from an academic point of view, this study provides a new
perspective in evaluating the financial performance of a leading Bangladeshi commercial banks
as well as the finding of this study can be added to the present literature and it can help
researchers in their future studies.

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