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Submission: 2016
Letter of Transmittal
To
Tanzina Hossain
Assistant Professor
Dear madam,
With due respect I would like to state that I have completed the internship program with
Jamuna bank. It is a pleasure for me to be able to present my internship report on Loans
and Advances Management Activities of Jamuna Bank Limited : A Study on Progoti
Shoroni Branch . I express my gratitude to you for your continuous support that made me
possible to complete the report. I remember that you inspired me a lot to complete this report.
I would like to express my heartiest gratitude to you for your full hearted inspiration,
instructions and valuable advices.
Thank you for accepting the report. I am glad to submit the report to you.
Yours Sincerely,
----------------------
I was assigned to complete my internship in the Progoti Shoroni branch of Jamuna Bank Ltd.
During my internship I tried to understand the idea of the banking practices in Bangladesh.
Internship for a period of 12 weeks is not at all enough to grab all the features of a bank but I
tried my best to make myself enriched. I do hereby declare that the report on Loans and
Advances Management Activities of Jamuna Bank Limited: A Study on Progoti Shoroni
Branch is prepared by me. The report is a genuine one. This report has not submitted
anywhere for any degree or diploma ever before.
----------------------
This is to certify that Mehedi Islam Sohan bearing ID no 152-14-596, student of MBA
Program, Daffodil International University, has completed the internship report under my
supervision. He has worked with Jamuna Bank Limited as an internee and completed the
report entitled Loans and Advances Management Activities of Jamuna Bank Limited :
A Study on Progoti Shoroni Branch as a partial requirement for obtaining MBA Degree.
He has completed the report by himself. He has been permitted to submit the report.
Mehedi Islam Sohan bears a strong moral character and a very pleasing respon sibility. It has
indeed been a great pleasure working with her. I wish her all success in life.
------------------------------
TanzinaHossain
Assistant Professor & Supervisor
Department of Business Administration
Faculty of Business & Economics
Daffodil International University
Acknowledgement
It is a pleasure for me to present the internship report on Loans and Advances Management
Activities of Jamuna Bank Limited: A Study on Progoti Shoroni Branch The report is
prepared solely for the purpose of completion of the MBA under the University of
development Alternative.
The report is prepared on the basis of the facts available for general use. I have gone through
the functions of the bank practically in a Jamuna Bank Ltd Progoti Shoroni branch. I also
studied annual reports for the year 2013, 2014 & 2015. With due apology I would like to
mention that the analysis & comment made in the report is absolutely my personal view. In
any case the report should not be considered as an official report of Jamuna Bank Ltd.
I express my gratitude to the authority of the Jamuna Bank Ltd. for allowing me to conduct
my internship with them. I would like to thank the officials of Progoti Shoroni branch for
extending warm cooperation in every respect. I would like to express my sincere gratitude to
the Manager, Progoti Shoroni branch.
I am indeed grateful to our respected course coordinator Mr. Mehedi Islam Sohan, MBA
program & my supervisor Ms. Tanzina Hossain (Asst. Professor) for their continuous support.
Executive Summary
Jamuna Bank Ltd. is a third generation bank in Bangladesh. It is playing an important role to
develop the business sector. Jamuna banks made more profit than the major publicly traded
supermarket companies added together.
In chapter one, Describe about my internship project because it is the introductory part of my
report. In this part, And to explain the reason why I have undertaken the project and what
results I would expect from my study. Discuss about the importance of my study and from
which sources collected the data.
In chapter Two, Given Jamuna Bank historical background, nature of business because it the
Organizational part of my report. Discuss about the mission, vision, rule and regulation,
strategies of JBL.
In Chapter Three, I try to give a clear idea about Loan and Advance management in details. I
discuss about Different Types of Credit Facilities, Interest Rates of Loans & Advances,
Securities against Advances, and Classification of Loans and advances Sector
In Chapter Four, I discuss about the Loan and advances management procedure of JBL. From
this part, try to get an idea about the Loan processing steps of JBL in details. Discuss on this
part Wise payment of Loans, Loan recovery management on JBL, Problems in Loan
Recovery, and Overall Procedure for Sanctioning Loan.
In chapter five, I use trend analysis, ratio analysis to describe the Loan and performance
analysis of JBL. Here, all sorts of analysis have been executed, in order to analyze how
efficient, liquid, secure and desirable the bank is in terms of its finance.
At the end of the report, I include some Findings and Recommendation; I provide findings
and conclusion on overall consumer Loan and advances management of Jamuna Bank Ltd.
and evaluating performance of my study.
Table of Content
Recommendation
Conclusion
Bibliography
We can simply say that Bank is financial organization that deals with money. But it is the
precise most definition about bank. In modern age it is impossible to think a country without
bank. Banks play diversified role in an economy. The most important task that is done by a
bank is building of capital. That is the key factor of the development of an economy.
Industrialized nations build their industrial sector with the help of banking sector. The
growth of the economy also depends on the performance of the banking sector. Banks secure
money of the society. Government takes various monetary policies. These policies are
implemented with the help of banking sector. It is impossible to do foreign trade with the help
of bank. Banks provide services that help the business sector a lot to carry on the business.
For example giving guaranty, different types of certificate, and expertise advice to business
people. Banks also help to establish good faith among businesspersons. Bangladesh is a
developing country. The growth of her apparel sector is mentionable. Banks can play a strong
role to take the apparel sector into a stable position. The preset economic status of
Bangladesh demands immediate development of financial institutions. The key to success in
such demanding marketing situation is how automated the service is on a continuous real
time
Jamuna Bank Ltd. is a third generation bank in Bangladesh. It is playing an important role to
develop the business sector. The growth of this bank is very good. Its motto is to provide a
prompt and quick service to the clients. Jamuna Bank Ltd. has implemented well structured
online banking systems that make it easier to provide prompt services to the customer. The
report has been prepared in the light of practical as well as theoretical knowledge. Also it is
prepared under the guidance and supervision of the core teacher. During the internship
program I have got a good idea about the bank and that is depicted in the report.
To have idea regarding various types of Loan and Advances of Jamuna Bank Limited.
To identify the loan sanction procedure in different sectors in last some years.
To identify the credit approval, their securities and monitoring process of Jamuna
Bank Limited
To know the loan and advances activities of Jamuna Bank Ltd. at progoti shoroni
branch.
To identify the recovery rates of the loans in different sectors in last some years and
have a comparison among them.
To identify the problems regarding loan and advances and give some
recommendations for improving the effectiveness and efficiency of Loan and
Advances services.
The scope of the study includes the organizational structure, background and objective,
functional, departmental and business performance of Jamuna bank Limited as a whole and
the main part covers loan and advance of Jamuna bank Limited. As I have worked Load
section of Jamuna bank Limited , Progoti shoroni Branch, the topic of my internship is
Loans and Advances Management Activities of Jamuna Bank Limited : A Study on Progoti
Shoroni Branch. This report is only done for gathering information about Loan and Advance
management and performance of JBL (Jamuna Bank Limited) by focusing on the
performance and management of Loan activities alongside Loans and advances of JBL while
ignoring any other department of the bank.
The study is the report identifies Jamuna Bank Limited, progoti shoroni branch loan and
advantage. Inform about different type of loan and client problem recovery system. It helps to
understand how they deal with taken loan clients alongside the way of managing loan and
advance management. Loan section is a powerful sector of banking system having more
advances. The successful loan strategy will always have the management of these advances at
its heart. So, to improve a strong management policy should be followed. And it is important
for whole banking system activities.
Limitations
Like any other study the limitations of the study is not out of questions. But the following
factors seem to me the main points of weakness of this study:
Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act,
1994 with its Head Office at Chini Shilpa Bhaban, 3, Dilkusha C/A, Dhaka-1000. The Bank
started its operation from 3rd June 2001. The Bank undertakes all types of banking
transactions to support the development of trade and commerce of the country. JBL's services
are also available for the entrepreneurs to set up new ventures and BMRE of industrial units.
Jamuna Bank Ltd., the only Bengali named new generation private commercial bank was
established by a group of winning local entrepreneurs conceiving an idea of creating a model
banking institution with different outlook to offer the valued customers, a comprehensive
range of financial services and innovative products for sustainable mutual growth and
prosperity. The sponsors are reputed personalities in the field of trade, commerce and
industries.
The Bank is being managed and operated by a group of highly educated and professional
team with diversified experience in finance and banking. The Management of the bank
constantly focuses on understanding and anticipating customers' needs. The scenario of
banking business is changing day by day, so the bank's responsibility is to device strategy and
new products to cope with the changing environment. Jamuna Bank Ltd. has already
achieved tremendous progress within only eight years. The bank has already ranked as one of
top quality service providers & is known for its reputation.
At present the Bank has real-time centralized Online banking branches (Urban & Rural)
throughout the Country having smart IT-Backbone. Besides these traditional delivery points,
the bank has ATM of its own, sharing with other partner banks & Consortium throughout the
Country.
To manage and operate the Bank in the most efficient manner to enhance financial
performance and to control cost of fund
To strive for customer satisfaction through quality control and delivery of timely
services
To identify customers' credit and other banking needs and monitor their perception
towards our performance in meeting those requirements.
To review and update policies, procedures and practices to enhance the ability to
extend better service to customers.
To train and develop all employees and provide them adequate resources so that
customer needs can be reasonably addressed.
To diversify portfolio both in the retail and wholesale market
To increase direct contact with customers in order to cultivate a closer relationship
between the bank and its customers.
Registered Office
Chini Shilpa Bhaban
C-42780 (2139)/2001
External Audior(s)
Chartered Accountants
Legal Advisor
Senior Advocate
Total Branches: 52
SME/ AgriCenters: 1
Allied Concern
Subsidiary Company
Branch Information
Number of employees
Board of Directors
The Board of Directors consists of 15 members elected from the sponsors of the Bank.
The Board of Directors is the apex body of the Bank.
Chairman
Vice Chairman
Managing Director
Company Secretary
Chief Adviser
Tax Advisor
Auditors
Corporate Culture
Employees of JBL share certain common values, which helps to create a JBL Culture
In a loan, the borrower initially receives or borrows an amount of money, called the principal,
from the lender, and is obligated to pay back or repay an equal amount of money to the lender
at a later time.
This section lends the fund what the bank mobilizes through its various deposit accounts.
This is the second function of banks two generic function deposit mobilization and credit
creation. The major part of banks income is derived from credit and since the banks credit is
customers fund, bank takes extreme caution in lending.
To have a clear idea about the credit management of JBL the following points are essential:
JBL Credit Policy contains the views of total macro-economic development of the country.
As a whole by way of providing financial support to the trade, commerce and industry
throughout its credit operation JBL goes to every possible corners of the society. They are
financing large and medium scale business house and industry. At the same time they also
take cares entrepreneur through its operation of lease finance and some micro credit, small
loan scheme etc. The bank has come up with a scheme where women will be given financial
support for their self-employment and development.
Delegated powers are expected to be exercised by the authorized executives sensibly keeping
the banks interest in mind. In exercising the power so delegated authorized executives shall
also have credit restriction, tools and regulations as governed by Banking Company Act,
Bangladesh Bank, and other usual credit norms.
However, the following guidelines are laid down before the executives of JBL for exercising
the delegated power.
The borrower must be a man of integrity and must enjoy good reputation in the
market.
The borrower must have the capacity and capability for utilizing credit .properly and
profitably.
The enterprise of the borrower must be viable and profitable i.e. proposal of the borrower
must be evaluated properly and carefully so as to ascertain its profitability. The enterprise
must generate sufficient fund for debt and servicing.
Character: Make sure that the individual or company they are lending has outstanding
integrity.
Capacity: Make sure that the individual or the company they are lending has the capability
of repaying the loan.
Condition: Understanding the business and economic conditions that whether it will change
after the loan is made.
Capital: Make sure that the individual or the company they are lending has an appropriate
level of investment in the company.
Collateral: Make sure that there is a second way out of a credit but do not allow that to
drive the credit decision.
Complacency: Official do not rely on past. They remain alert every time whether any
mistake is taking place or not.
Communication: They share credit objectives and credit decision making both vertically
and laterally within the bank.
Contingencies: Make sure that they understand the risk, particularly the downside
possibilities and that they structure and price the loan consistently with the understanding.
Competition: They do not get swept away by what others are doing
JBL is a unique characteristic in its loan management to make sure that there will be no bad
loan in its-loan portfolio, JBL established a loan monitoring and supervision cell headed by a
First Assistant Vice President. He along with other official frequently visits customer
premises or business whether loan amount, which is taken is used properly or not. Sometimes
customer need more fund or ether types of facilities to run business profitably, then the
monitoring authority takes necessary steps to meet customers need
There are some common regulations governed by Banking Company Act, 1991 Bangladesh
Bank and the law of the State which has to be followed strictly at the time of screening a
credit proposal. In addition credit proposals are appraised critically by JBL credit officials
from various angles to judge the feasibility of proposal.
The customer at the branch of the bank place credit proposals. When a customer comes with
accredit proposal, the credit department officials of the branch make an open discussion with
the customer on different issues of the proposal to judge worthiness of the proposal and
customer. If the proposal seems worthwhile in all aspect then the proposal is placed before
credit committee of the bank. After threadbare discussion, if the committee agrees in
principle the proposal is sanctioned as per the delegated business power of the branch.
However, if the magnitude of the proposal is beyond the delegated business power of the
branch they forward it to the Head Office with recommendation for sanction or approval.
On receiving the proposal, the Credit Division of Head Office places the proposal in the Head
Office Credit Committee. The committee further analyzes proposals critically and if agree in
principle they sanction the same as per delegated business power. Again if the merit and
magnitude of the proposal is beyond the delegated business power of the Head Office Credit
Committee or Managing Director they forward proposal to the Board of the Bank with
recommendation for approval.
If the proposal is found unviable at the branch level they decline the same from their desk. In
the same way, proposals are also declined from the Head Office Credit Committee and from
Board if it is not feasible.
Securities
It is essential that the proposals define clearly the purpose of the facility, the sources of
repayment, the agreed repayment schedule, the value of security (land, machinery, security
papers, bond, etc.) and the customer relationships consideration implicit in, the credit
division. Where the security is to be accepted as collateral for the facility all documentation
relating to the security shall be in the approved from.
All approval procedures and required documentation shall be completed and all securities
shall be place prior to the disbursement of the facility.
The borrower is requested to submit the above-mentioned papers in original for verification
by the Bank lawyer and creation on the property intended to mortgage against advance.
Classification of Loans and advances
When loans become irregular in repayment, these loans are called classified loans.
Classification of loans is the process of identifying those loan accounts and giving special
attention to those loans by separating those loan accounts. Classification of loans also
measures the level of risk associated with it. Every banks give loans and advances. But not all
the loans are repaid by the borrower in specific time. There are some loans, the repayment of
which is irregular. Banks find out these loans and give special treatment to these loans.
Doubtful: Unlikely to be repaid but special collection efforts may result in partial recovery of
the loan amount.
The main focus of Jamuna Bank Limited is financing business, trade and industrial activities
through an effective delivery system.
Jamuna Bank Ltd. offers Loans to almost all sectors of commercial activities having
productive purpose.
The loan portfolio of the Bank encompasses a wide range of credit programs.
Credit facilities are offered to individuals including housewives, businessmen, small
and big business houses, traders, manufactures, corporate bodies, etc.
Loan is provided to the rural people for agricultural production and other off farm
activities.
Loan pricing system is customer friendly.
Prime customers enjoy prime rate in lending and other services.
Quick appreciation, appraisal, decision and disbursement are ensured.
Credit facilities are extended as per guidelines of Bangladesh (Central Bank of
Bangladesh) and operational procedures of the Bank.
Entrepreneur has to be creditworthy and competent enough to run the proposed industry. The
project should be viable from organizational technical, commercial, financial and economic
points of view.
Technical Viability
Commercial viability
Market prospect and potential for the product has to be fully assured at competitive
prices.
Marketing channel for the product should be accessible to the entrepreneur.
Financial Viability
There should be reasonable debt equity ratio as determined by the Bank on case basis.
Debt service coverage ratio should be at least 2.5 times at the optimum of production.
IRR should preferably be not less than 20%
Economic Viability
Some principles or standards of lending are maintained in approving loans in order to keep
credit risk to a minimum level as well as for successful banking business. The main principles
of lending are given below:
Liquidity
Liquidity means the availability of bank funds on short notice. The liquidity of an advance
means it repayment on demand on due date or after a short notice. Therefore, the banks must
have to maintain sufficient liquidity to repay its depositors and trade off between the liquidity
and profitability is must.
Safety
Safety means the assurance of repayment of distributed loans. Bank is in business to make
money but safety should never be sacrificed for profitability, to ensure the safety of loan. The
borrower should be chosen carefully. He should be a person of good character & capacity as
well as bank must have to maintain eligible number of security from borrower.
Profitability
Banking is a business aiming at earning a good profit. The difference between the interest
received on advances and the interest paid on deposit constitutes a major portion of the bank
income, besides, foreign exchange business is also highly remunerative. The bank will not
enter into a transaction unless a fair return from it is assured.
Intent
Banks sanction loans productive purpose. No advances will be made by bank for
unproductive purposes though the borrower may be free from all risks.
Security
The security offered for an advance is an insurance to fall bank upon in cases of need.
Security serves as a safety value for an unexpected emergency. Since risk factors are
involved, security coverage has to be taken before a lending.
National interest
Banking industry has significant role to play in the economic development of a country. The
bank would lend if the purpose of the advances can contribute more to the overall economic
development of the country.
Credit The word "Credit" is derived from the Latin word Credo or Krado meaning I believe.
It is usually defined as one's ability to buy to a promise to pay. From the Banker's point of
view Credit is the confidence of the lender on the ability and willingness of the borrower to
repay the debt as per schedule of repayment. A bank provides loan to a company, with a fixed
maturity and often featuring amortization of principal. If this loan is in the form of a line of
credit, the funds are drawn down shortly after the agreement is signed. Otherwise, the
borrower usually uses the funds from the loan soon after they become available.
Depending on the various nature of financing, all the lending activities have been brought
under the following major heads:
Loan (General)
Short term, Medium term & Long term loans allowed to individual/firm/industries for a
specific purpose but for a definite period and generally repayable by installments fall under
this head. This type of lending is mainly allowed to accommodate financing under the
categories
Loans allowed to our Bank employees for purchase/construction of house shall be known as
Staff Loan (HBL-STAFF).
Other Loans to Staff
Loans allowed to employees other than for House Building shall be grouped under head
-Staff Loan (Gen).
Hire Purchase
Hire-Purchase is a type of installment credit under which the Hire Purchaser agrees to take
the goods on hire at a stated rental, which is inclusive of the repayment of Principal as well as
interest for adjustment of the loan within a specified period.
Lease Financing
Lease Financing is one of the most convenient sources of acquiring capital machinery and
equipment whereby a client is given the opportunity to have an exclusive right to use an asset
usually for an agreed period of time against payment of rent. It is a term financing repayable
by installment.
Time Loan
This is one time financial accommodation for short period maximum 12 months to meet some
specific purpose. The loan is adjustable within the validity and not renewable and no
transaction is allowed.
It is a special credit scheme of the Bank to finance purchase of consumers' durable to the
fixed income group to raise their standard of living. The loans are allowed on soft terms
against personal guarantee and deposit of specified percentage of equity by the customers.
The loan is repayable by monthly installment within a fixed period.
SOD (General)
SOD (Others)
Advances allowed against assignment of work order for execution of contractual works falls
under this head. This advance is generally allowed for a definite period and specific purpose
i.e. it is not a continuous credit. It falls under the category "Others".
SOD (Export)
Advance allowed for purchasing foreign currency for payment against L/Cs (Back to Back)
where the exports do not materialize before the date of import payment. This is also an
advance for temporary period which is known as export finance and falls under the category
"Commercial Lending".
PAD
Payment made by the Bank against lodgment of shipping documents of goods imported
through L/C falls under this head. It is an interim advance connected with import and is
generally liquidated against payments usually made by the party for retirement of the
documents for release of imported goods from the customs authority. It falls under the
category "Commercial Lending".
LlM
Advances allowed for retirement of shipping documents and release of goods imported
through L/C taking effective control over the goods by pledge in go downs under Bank's lock
& key fall under this type of advance. This is also a temporary advance connected with
import which is known as post-import finance and falls under the category "Commercial
Lending".
LTR
Advance allowed for retirement of shipping documents and release of goods imported
through LC falls 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 a
given period. This is also a temporary advance connected with import and known as post
import finance and falls under the category "Commercial Lending".
IBP
Payment made through purchase of inland bills/cheques to meet urgent requirement of the
customer falls under this type of credit facility. This temporary advance is adjustable from the
proceeds of bills/cheques purchased for collection. It falls under the category "Commercial
Lending".
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.
Generally JBL receives different types of securities against different types of credit facilities
from which some of are as follows:
When Jamuna Bank sanctions loans and advances to its customers, they clearly state the
repayment pattern in the loan agreement. But some credit holders do not pay their credit in
due period. The nationalized and private sector commercial banks have to face this sort of
problems. This situation is also found in Jamuna Bank. To overcome the problem of overdue
loan, the bank has taken particular loan recovery programs. Recovery Programs taken by
Jamuna Bank Limited:
Establishing credit supervision and monitoring cell in the bank.
Re-structuring the loan sanctioning and distributing policy of the bank.
Sanctioning loans and advances against sufficient securities as best as possible.
Giving more powers to the branch manager in credit management decision making
process.
Offering a package of incentives to the sound borrowers.
Giving more emphasis on short term loans and advances.
Imposing restrictions on loans and advances for sick industries.
Taking legal actions quickly against unsound borrowers as best as possible within the
period specified by the law of limitations.
Though Jamuna bank is performing better in managing loan and advances, still 12.39% of
total loan and advances are classified. There are a lot of reasons for which the loan recovery
of the bank is still now defective. In most cases, problems may be raised from sanctioning
procedures of loan, investigation of the project, and investigation of the loans etc. that is, the
problem in loan recovery proves the outcomes of the default process in loan disbursement.
The main reasons of poor loan recovery are categorized in four broad types as follow:
External pressure: Jamuna Bank has also faced many problems in the loan recovery
process as a part of continuous pressure from various interested groups.
Legal problems: Existing rules and regulations are insufficient to cover the legal
aspects of loan recovery. As a result, defaulters can get release easily from all charges
against them.
Instability of Govt. policy: Frequent changes in government policies in regard to
recovery of loan.
Lack of analysis of business risk: Before lending, Sometime Jamuna Bank fails to
properly analyze the business risk of the borrowers and the bank cannot forecast
whether the business will succeed or fail. If it fails to run well, the loan becomes
classified.
Lack of proper valuation of security or mortgage property: In some cases, bank fails
to determine the value of security against the loan. As a result, if the loan becomes
classified, the bank cannot recover its loan through the sale of mortgage.
The following procedure need to be followed for giving advances to the customer. These are:
Partys application
Filling form-A
Collecting CIB report from Bangladesh Bank
Processing loan proposal
Project appraisal
Head office approval
Sanction letter
Documentation
Disbursement
Partys application
At first borrower had to submit an application to the respective branch for loan, where he has
to clearly specify the reason for loan. After receiving the application form the borrower Bank
officer verifies all the information carefully. He also checks the account maintains by the
borrower with the Bank. If the official becomes satisfied then he gives form-X (prescribed
application form of Bank) to the prospective borrower.
Filling Form -X
After satisfying with partys application the applicant need to fill Form-X. It is the prescribed
form provides by the respective branch that contains information of the borrower. It contains-
Name with its factory location, Official address and telephone number, details of past and
present business, its achievement and failures, type of loan needed etc
After receiving the application for advance, Jamuna Bank sends a letter to Bangladesh Bank
for obtaining a report from there. This report is called CIB (Credit Information Bureau)
report. Jamuna Bank generally seeks this report from the head office for all kinds of
investment. The purpose of this report is to being informed that whether the borrower has
taken loan from any other Bank.
Necessary Documents
While advancing money, banks create a lot of documents, which are required to be signed by
the borrowers before the disbursement of the loan. Of them some are technically called
charge documents. Necessary steps and documents:
Project Appraisal
It is the pre-investment analysis. Project appraisal in the Banking sector is important for the
following reasons:
When Head office receive appraisal from the branch then, Head Office again appraises the
project. If it seems to be a viable one, the HO sends it to the Board of Directors for the
approval of the Investment. The Board of Directors (BOD) considers the proposal and takes
decision whether to approve the Investment or not. If the BOD approves the investment, the
HO sends the approval to the concerned branch.
The respective officer of Head Office appraises the project by preparing a summary named
Top Sheet or Executive Summary and then he sends it to the Head Office Credit Division
for the approval of the Loan. The Head Office Credit Division considers the proposal and
takes decision whether to approve the Investment or not. If the committee approves the
investment; the HO sends the approval to the concerned branch.
Sanction Letter
After getting the approval of the HO the branch issues sanction letter to the borrower. A
sanction letter contains:
Name of borrower,
Facility allowed,
Purpose,
Rate of interest,
Period of the Investment and mode of adjustment,
Security and Other terms and condition.
Documentation
If the borrower accepts the sanction letter, the Documentation starts. Documentation is a
written statement of fact evidencing certain transactions covering the legal aspects duly
signed by the authorized persons having the legal status. The most common documents used
by the Jamuna Bank for sanctioning different kinds of Investment are:
Joint Promissory Note,
Letter of Arrangement,
Letter of Disbursement,
Letter of Installment,
Letter of Continuity,
Trust Receipt,
Counter Guarantee,
Stock Report,
Letter of Lien,
Status Report,
Letter of Hypothecation,
Letter of Guarantee
Documents Relating to Mortgage.
Disbursement
After sanction and completion of all formalities the respective officer disburses the loan. The
officer writes cheque and provides it to the borrower. For this borrower has to open an
account through which he/she can withdraw the money.
Strategies for Recovery: Recovery of loan can be made in the following three methods:
From previous 5 year annual report I have analyzed some important data which is related to
credit activities of JBL. The analyzed information is shown below by creating different chart
graphs etc.
(Tk. In million where applicable)
70000
60000
50000
40000
Total Deposit
30000 Year
20000
10000
0
2011 2012 2013 2014 2015
Here we see that total loans & advances of JBL are increasing 20011 2014. This is because
of their attractive and flexible loan packages. But in 2015 their total loans and advances is
decreased by 3.14% compare to 2014. The main reason of decreasing loans and advances, the
competitive bank come up with a new loan policy which is more attractive than our loan
policy.
21%
From the figure it can easily be said that JBL provides more loan in Trade service sector. In
2015 it provided 30.78% of total loan and advances to Trade service sector. But in agriculture
sector they discourage to sanction loan because they think this sector is risky, in 2015 JBL
provide loan in agriculture sector only 1.64%. In SME sector it was 18%.
Division Percentage
Dhaka Division 64.78%
Chittagong Division 18.39%
Sylhet Division 1.25%
Rajshahi division 11.59%
Rajshahi division 1.03%
Khulna Division 2.67%
Barishal Division 0.29%
Chart: Location wise loans & Advances
Dhaka Division
0% Chittagong Division
12% 1%3%
1% Sylhet Division
Rajshahi division
18%
Rajshahi division
65%
Khulna Division
Barishal Division
In above chart we see that JBL provide huge amount of loans and advances in Dhaka
division. They provide 64.78% loans and advices in Dhaka division. JBL also provide their
loans and advances 18.39% in Chittagong division and 11.59% in Rajshahi division. And the
others division they provide fewer percentage of loans and advances.
Credit/deposit Ratio
82.00%
80.00%
78.00%
76.00%
74.00%
72.00%
70.00%
68.00%
66.00%
64.00%
62.00%
2011
2012
2013
2014
2015
From the figure it can be said that the credit to deposit ratio of JBL is fluctuating year by
year. The main reason of fluctuating credit to deposit ratio was JBL unable to utilize their
credit. Here we see that year by year JBL total deposit are increasing but credit are not that
much increased. As a result we see that in 2015 JBL credit to deposit ratio was 68.93%. This
is decreased by 14.15% compare to 2014.
2.00%
1.00%
0.50%
0.00%
1 2 3 4 5
Return on Asset basically measures that how much profit a bank can generate by utilize their
assets. Here the more utilization of assets can create more profit which will be better for a
bank. Here in this scenario we can see that Jamuna Bankis utilizing their assets proper way in
2011-2012. After that in 2014-2015 it is decreasing. After in 2014 to till 2015 they are unable
to generate higher profits because of not utilizing their assets in a proper way.
6000
4000
Net interest Income
2000
0
2011 2012 2013 2014 2015
-2000
-4000
-6000
From 2011-2012 the net interest income was negative and after that in 2013-2015 it was
increasing. Net interest income mainly generates by providing loan & security to the
customer. The condition of net interest income of JBL is in a good position and there have
positive trend up to 2015. Here we see that JBL gradually increase their Net Interest Income.
SWOT Analysis
Organizational identity.
Service level.
Operational efficiency.
Technology.
Employee efficiency etc. along with many other issues.
Strengths Weaknesses
Top management Dependent on fixed deposits
Corporate culture Moderate risk management system
Various Products and Services Absence of strong marketing
Strong employee bonding
activities
Efficient Performance Not enough innovative products
Strong financial position Discouraging small entrepreneurs
Opportunities Threats
Country wide network Similar products are offered by others
Introducing more branches Default Loans
Introducing special corporate scheme Industrial Downturn
Real time online banking Increased competition in the market
Creation of brand image
Strengths
Top Management
The Jamuna Bank Limited is operated by a very efficient management group. The top
management officials have all worked in reputed banks and their years of banking
experience, skill, and expertise will continue to contribute towards further expansion of the
bank. So, the top management of the bank is the major strength for JBL.
Corporate Culture
JBL has an interactive corporate culture. The working environment of JBL 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 works as a great motivation
factor among the employees of the bank.
JBL offers various types of products and services to their clients. So those, Customers can
choose the right products that will fulfill their needs.
JBL employees are one of the major assets of the company. The employees of JBL have a
strong sense of commitment towards organization and also feel proud and a sense of
belonging towards JBL. The strong organizational culture of JBL is the main reason behind
its strength
Efficient Performance
It has been seen from customers opinion that JBL provides hassle-free customer services to
its client comparing to other financial institutions of Bangladesh. Personalized approach to
the needs of customers is its motto.
Strong Financial Position
It has been seen that the net profit has been gradually rising over the years. Furthermore, JBL
is not just sitting on its previous years success, but also taking initiatives to improve. One of
the employees has said,
Weakness
JBL risk management system is not that much secured. They need to develop their risk
grading system.
JBL currently don't have any strong marketing activities through mass media e.g. Television.
TV ads play vital role in awareness building. JBL has no such TV ad campaign. Although
they do a lot of CSR activities compared to other banks.
In order to be more competitive in the market, JBL should come up with more new attractive
and innovative products. This is one of the weaknesses that JBL is currently passing through
but plans to get rid of by 2015.
JBL provides clean Import Loan to most of its solvent clients. But they usually do not want to
finance small entrepreneurs whose financial standing is not clean to them.
Opportunities
There are many important places in Bangladesh, where customers are eagerly waiting for
doing banking transactions. But no existence of banks is in those places. Although JBL
already has 65 branches to provide services to its customers, it must also open more branches
in those places where people needs banking facilities.
JBL can introduce special corporate schemes for the corporate customers or officers who
have an income level higher from the service holders. At the same time, they can introduce
schemes or loans for various service holders. And the schemes should be separate according
to the professions, such as engineers, lawyers, doctors etc.
Today online banking is the best way to earn profit for the bank. So JBL have to earn more
profit by developing online banking system.
As we know that brand creates value. So JBL need to develop their brand image by
developing their products and services.
Threats
Default Loans
Industrial Downturn
Bangladesh is economically and political unstable country. Flood, draught, cyclone, and
newly added terrorism have become an identity of our country. Along with inflation,
unemployment also creates industry wide recession. These caused downward pressure on the
capital demand for investment.
In banking sector day by day competition are increased and lots of new bank are coming into
the competition. So it is big threat for JBL.
Chapter 6: Findings
Recommendations and
Conclusions
Findings
While working at JBL Progoti shoroni branch, I have attained a newer kind of experience.
After collecting and analysis data I have got some problem of the JBL. These problems
completely from my personal viewpoint, which is given below:
2. From the clients view introducer is one of the problems to open an account. It is
general problem to all commercial bank.
3. They face troubles with those clients who have not any knowledge in banking
transactions and banking rules.
5. As the deposit is heart of running the banking activities JAMUNA Bank Deposit
growth not good. Because JAMUNA Bank deposit rate is low other than
commercial bank such as Dhaka Bank, Prime bank Mercantile Bank, HSBC Bank,
Bank Asia etc.
7. Clients generally complain that rate of interest for various type of credit is quite
high. In many cases productivity from loaned investment is inadequate that
borrower become incapable in repaying loan.
8. JBL provide huge amount of loans and advances in Dhaka division. They provide
64.78% loans and advices in Dhaka division. JBL also provide their loans and
advances 18.39% in Chittagong division and 11.59% in Rajshahi division. And the
others division they provide fewer percentage of loans and advances.
9. JBL provides more loan in Trade service sector that is be major problem on
distraction loan and advertences
Recommendation
Some necessary steps are recommended bellow on the basis of collected data, observation,
expert staffs opinion and my knowledge and judgments. For the probable solutions of the
identified problems ensure better process to JAMUNA Bank in future.
1. In the face of competitive and customer dominated scenario JBL must come up
with innovative products to meet up the demand of time. Such as study loan,
medical loan, debit card, dual currency credit card etc.
3. JAMUNA Bank should develop effective online banking system to compete with
other commercial banks.
4. Job description should be clarified and proper training facilities should ensure to
improve the performance of bottom line management.
5. JAMUNA Bank should give more attention to advertisement for creating more
attraction among its customers, which is helpful to collect more deposits and
increase investments scope. Thats why bank should give emphasis on
advertisement in various media live TV, News Paper, Internet and Billboard.
6. JBL should be take strong policy to recovery small business loan section is
threatened.
7. A complain box for the customer, each and every complaint form the customer has
been received and find out the problems and therefore try to eliminate the
problems of the customer as soon as possible.
8. JBL should be changing amount of loans and advances in Dhaka division and rise
on the others division changing amount of loans and advances.
9. Should be focus on other sector like Agriculture And Agro-based Industry, RMG,
Construction, small and cottage industries, SME, Bank Acceptance
Conclusion
There are a number of Private Commercial Banks, Nationalized Commercial Banks and
foreign Banks operating their activities in Bangladesh. The JAMUNA Bank Ltd. is one of
them. For the future planning and the successful operation for achieving its prime goal in this
current competitive environment this report can be helpful guideline.
To compete in the environment of advancing technology and faster communication the JBL
should depend more heavily on the quality service and information technology. No doubt
about it that JBL achieve superior position in our banking industry but to cope with customer
JBL should think how to make it services proactive. To compete with other banks operation
in Bangladesh, JBL should introduce easier way for faster processing of credit analysis. As a
leading bank of Bangladesh, JBL contributes in the business with promising future. I can
hope that JBL can spread their business with increasing various scheme and other utility
services
Bibliography
Websites
www.jamunabankbd.com
www.bangladesh bank.org
Annual Reports