CHAPTER-01

INTRODUCTION

1.1 Origin of the Report After completion of 2 semesters in the MBM program of BIBM Two months Practical orientation in bank is essential as it is one f the core course of 3rd semester. So the preparation and submission of this report is partial requirement for the completion of the MBM degree. This report is outcome of the two month long prac tical orientation program conducted in Jamuna Bank Limited, one of the reputed p rivate commercial banks of the country .While working in the bank the operation carried out by the bank were observed and understood. 1.2 Objectives of the Report This report is prepared primarily to fulfill the partial requirement of the cour se Practical Orientation in Bank of MBM degree conducted by BIBM. The secondary objectives of this report are: To have exposure to the overall banking operation and other function of Jamuna B ank Limited. To have a clear understanding of the business operation of Jamuna Bank Limited. To discuss the services offered by Jamuna Bank Limited. To identify the major strength and weakness of Jamuna Bank Limited in respect to other banks. To recommend ways and means to solve the problems related to banking operation o f Jamuna Bank Limited. 1.3 Methodology This report is based mainly on observations that I experienced during the intern ship period. Data required for this report were collected from the annual report of Jamuna bank. Apart from these, helpful information was collected from online resources. To analyze the performance of Jamuna bank limited different statisti cal and financial tools such as ratio analysis, growth analysis were done. 1.4 Limitation Although the officials were very busy, they gave me wholehearted cooperation in the time of practical orientation also in preparing this report. But I have face d the following limitations during the orientation: During the banking period the officials were very busy with their task. So, they cannot give me sufficient time, as I required. Some officers were absent & some were on their job training when I was carrying on my internship. Due to maintain banking confidentiality they avoid some of my questions. So it w as quite difficult for me to get in-depth knowledge about some of my task.

 Time constraint is another limitation. Sufficient books, publications and figures were not available. If this limitation were not been there, the report would have been more useful.

CHAPTER-02

OVERVIEW OF THE BANK

2.1 Background Information of Jamuna Bank Limited Jamuna Bank Limited is one of the leading private commercial banks in Bangladesh that has achieved tremendous popularity and credibility among the people for it s products & services. It is a public limited company and its shares are traded in Dhaka and Chittagong stock exchange. The bank undertakes all types of banking transaction to support the development of trade and commerce in the country. JB Ls service is also available for the entrepreneurs to set up new ventures and ind ustrial units. To provide clientele services in respect of international trade it has establish ed wide, corresponded Banking relationship with local and foreign banks covering major trade and financial interest home and abroad. 2.2 Historical Background of JBL Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Ac t, 1994 with its Head Office at Chini Shilpa Bhaban, 3, Dilkusha C/A, Dhaka-1000. The Bank started its operation from 3rd June 2001. Jamuna Bank Limited is a highly capitalized new generation Bank with an Authoriz ed Capital and Paid-up Capital of Tk.1600.00 million and Tk.390.00 million respe ctively. The Paid-up Capital has been raised to 429.00 million and the total eq uity of the bank stands at 725.00 million as on June 30, 2005. Currently the Ba nk has 35 (Thirty Five) branches 17+ in Dhaka, 6 in Chittagong, 2 in Gazipur, 3 in Sylhet, 1 in Bogra, 2 in Naogaon, 1 in Munshigang, 1 in Shirajganj, 1 in Ra jshahi and 1 in Narayanganj (including Nine Rural Branches). 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 personal ities in the filed of trade, commerce and industries. The Bank is being managed and operated by a group of highly educated and profess ional team with diversified experience in finance and banking. The Management o f the bank constantly focuses on understanding and anticipating customers needs. The scenario of banking business is changing day by day, so the bank s responsi bility is to device strategy and new products to cope with the changing environm ent. Jamuna Bank Ltd. has already achieved tremendous progress within only Seven years. The bank has already ranked at top of the quality service providers & is known for its reputation. Jamuna Bank offers different types of Corporate and Personal Banking Services in volving all segments of the society within the purview of rules and regulations laid down by the Central Bank and other regulatory authorities. The operation hour of the Bank is 9:00 A.M. To 5:00 P.M. from Sunday to Thursday with transaction hour from 9:00 A.M. to 3:00 P.M. The Bank remains closed at Fr iday and Saturday including government holidays. 2.3 Corporate Slogan of JBL Your Partner For Growth 2.4 Vision of JBL To become a leading banking institution and to play a pivotal role in the develop ment of the country. 2.5 Mission of JBL The Bank is committed to satisfying diverse needs of its customers through an ar ray of products at a competitive price by using appropriate technology and provi ding timely service so that a sustainable growth, reasonable return and contribu tion to the development of the country can be ensured with a motivated and profe ssional workforce. 2.6 Objectives of JBL To earn and maintain CAMEL Rating Strong. To establish relationship banking and improve service quality through developme nt of strategies marketing plans. To remain one of the best banks in Bangladesh in terms of Profitability and asse ts quality. To introduce fully automated system through integration of Information Technolog y. To ensure an adequate rate of return on investment To keep risk position at an acceptable range (including an y of balance sheet ri sk) To maintain adequate liquidity to meet maturing obligation and commitments. To maintain a healthy growth of business with desired image To maintain adequate control systems and transparency in procedure To develop and retain a quality work force through an effective Human Resources Management System To ensure optimum utilization of all available resources To pursue an effective system of management by ensuring compliance to clinical n orms, transparency and accountability 2.7 Strategies of JBL 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 time ly services. To identify customers credit and other banking needs and monitor their perceptio n towards our performance in meeting those requirement. review and update policies, procedures and practices to enhance the ability to e xtend better services to customers. train and develop all employees and provide adequate resources so that customer needs car, be responsibly addressed. promote organizational effectiveness by openly communicating company plans, poli cies, practices and procedures to all employees in a timely fashion

cultivate a working environment that fosters positive motivation for or improved performance diversify portfolio both in the retail and wholesale market increase direct contract with customers in order to cultivate a closer relation ship between the bank and its customers.

2.8 Organogram of JBL

2.9 Corporate Governance Board Of Directors The Board of Directors consists of 13 members elected from the sponsors. The Boa rd of Dirc-7 supreme body of the Bank. Executive Committee All routine matters beyond the delegated powers of management are decided upon b y or routed through the Executive Committee, subject to ratification by the Boar d of Directors. Audit Committee In line with the guidelines of Bangladesh Bank, a three-member Audit Committee o f the Board of Directors been formed to assists the Board in matters related to Audit and Internal Control System of the Bank. Board of Directors Chairman 1. Mr. Md. Tajul Islam Vice Chairman 2. Mr. Kanutosh Majumder Director 3. Engr. A. K. M. Mosharraf Hussain 4. Engr. Md. Atiqur Rahman 5. Al-Haj Nur Mohammed ----- Chairman of Jamuna Bank Foundation. 6. Mr. Sakhawat, Abu Khair Mohammad 7. Al-Haj Md. Rezaul Karim Ansari 8. Mr. Md. Belal Hossain 9. Mr. Md. Mahmudul Hoque 10. Mr. Farhad Ahmed Akand 11. Mr. Md. Ismail Hossain Siraji 12. Mr. Gazi Golam Murtoza 13. Mr. Mohammad Nurul Alam 14. Mr. Md. Motior Rahman (MD CC) Sponsors 1. 2. 3. 4. 5. 6. 7. 8. Al-Haj M. A. Khayer Mr. Arifur Rahman Mr. Golam Dastagir Gazi (Bir Protik) Mr. Fazlur Rahman Mr. M. N. H. Bulu Mr. Md. Sirajul Islam Varosha Mr. Md. Irshad Karim Mr. Shaheen Mahmud

Company Secretary Mr. Md. Anwar Hossain Executive Vice President Auditors M/s. Howladar Yunus & Co. Chartered Accountants

CHAPTER-03

PRODUCTS AND SERVICES OF THE BANK

3.1 Products & Services The products and services can be classifying in two ways & those are: The deposit products & services The lending products & services Deposit products & services Lending/Investment products & services Corporate Banking Hire Purchase Personal Banking Lease Finance Online Banking Personal loan for woman Monthly Savings Scheme Project Finance Monthly Benefit Scheme Loan syndication Double/Triple Benefit Scheme Consumer Credit Marriage Scheme Import and Export Handling Financing Education Scheme Lakhpati Deposit Scheme Q-Cash ATM

3.2 Corporate Banking The motto of JBL s Corporate Banking services is to provide personalized solutio ns to their customers. The Bank distinguishes and identifies corporate customers need and designs tailored solutions accordingly. Jamuna Bank Ltd. Drives a complete range of advisory, financing and operational combining trade, treasury, investment and services to its corporate client group s, coin transactional banking activities in one package. Whether it is a project finance, term loan, import or export deal, a working capital requirement or a f orward cover for a foreign currency transition, there Corporate Banking Managers will offer accurate solution, their corporate Banking specialists will render h igh class service for speedy approvals and efficient processing to satisfy custo mer needs. Corporate Banking business envelops a broad range of businesses and industries. Every one can leverage on our know-how in the following sectors mainly: Agro processing industry Industry (Import Substitute / Export oriented) Textile Spinning, Dyeing / Printing Export Oriented Garments, Sweater. Food & Allied Paper & Paper Products Engineering, Steel Mills Chemical and chemical products etc. Telecommunications. Information Technology Real Estate & Construction Wholesale trade Transport Hotels, Restaurants Non Bank Financial Institutions Loan Syndication Protect Finance Investment Banking Lease Finance Hire Purchase International Banking Export Finance. Import Finance

3.3 Personal Banking Personal Banking of Jamuna Bank offers wide-ranging products and services matchi ng the requirement of every customer. Transactional accounts, savings schemes or loan facilities from Jamuna Bank Ltd. make available to all a unique mixture of easy and consummate service quality. They make every endeavor to ensure their clients satisfaction. Their cooperativ e & friendly professionals working in the branches will make your visit and enjo yable experience. JBL offers the following key Personal Banking Services: -Current Deposit Account -Savings Deposit Account -Short Term Deposit Account -Fixed Deposit Account Attractive and competitive interest rate Types of Deposits Interest Rates 1 STD (Short Term Deposit) 7.00% 2 Savings Deposit: Urban/Rural 7.50% 3 Savings Deposit: Non Chequing & No withdrawal for 6(six) months 7.50% 4 Savings Deposit: Non Chequing & No withdrawal for 1(one) year & above 8.00% 5 FDR for 1(One) month and above 10.50% 6 FDR for 3(Three) months and above 12.25% 7 FDR for 6(Six) months and above 12.50% 8 FDR for 1(one) year and above 12.50% 3.4 Online Banking Jamuna Bank Limited has introduced real-time any branch banking on April 05, 200 5. Now, customers can withdraw and deposit money from any of its 35 branches loc ated at Dhaka, Chittagong, Sylhet, Gazipur, Bogra, Naogaon, Narayanganj, Dinajpu r, Kushtia, Rajshahi, Bashurhat, Sirajganj and Munshigonj. Our valued customers can also enjoy 24 hours banking service through ATM card from any of Q-cash ATM s located at Dhaka, Chittagong, Khulna, Sylhet and Bogra. All the existing customers of Jamuna Bank Limited will enjoy this service by def ault. Key features: Centralized Database Platform Independent Real time any branch banking Internet Banking Interface ATM Interface Corporate MIS facility Delivery Channels: Branch Network ATM Network POS (Point of Sales) Network Internet Banking Network 3.5 Monthly Savings Scheme (MSS) Savings is the best friend in ones bad days. Small savings can build up a prosper ous future. Savings can meet up any emergencies. JBL has introduced Monthly Savi ngs Scheme (MSS) that allows one to save on a monthly basis and get a handsome r eturn upon maturity. If anyone want to build up a significant savings to carry o ut cherished dream, JBL MSS is the right solution. Savings Plan and Benefit:

Tenor Monthly Deposit Maturity value 3-years Tk.500/Tk.21,130/Tk.1000/Tk.42,260/Tk.1500/Tk.63,390/Tk.2000/Tk.84,520/Tk.3000/Tk.1,26,780/Tk.5000/Tk.2,11,300/Tk.10000/Tk.4,22,600/5-years Tk.500/Tk.39,990/Tk.1000/Tk.80,000/Tk.1500/Tk.1,20,000/Tk.2000/Tk.1,60,000/Tk.3000/Tk.2,40,000/Tk.5000/Tk.4,00,000/Tk.10000/8,00,000/10-years Tk.500/Tk.1,10,500/Tk.1000/Tk.2,21,000/Tk.1500/Tk.3,31,500/Tk.2000/Tk,4,42,000/Tk.3000/Tk.6,63,000/Tk.5000/Tk.11,05,000/Tk.10000/Tk.22,10,000/-

Eligibility: MSS account can be opened at any Branch of JBL. For opening a MSS account, maintenance a savings account with JBL is required. Facility: The concerned customer can avail loan facility upto 80% of the deposited amount. One can deposit the monthly installment at any branch of JBL and the same throug h on-line banking. Monthly installment can be automatically collected from ones savings account main tained with JBL. Customer can choose any day of the month as installment date. Terms & Conditions: Bank reserves the right to close the scheme if customers fail to deposit 3-conse cutive installments. If the Scheme is closed within 6-months, customer will get the deposited amount only and no interest/profit will be paid for the Scheme. If it is closed after 6 -months, customers will get the deposited amount alongwith the interest at the n ormal savings rate upto the time of closure. Duties and taxes on the deposit, if any, are payable by the customers as per gov ernment rules. The above figures are indicative only and subject to change from time to time. Money Laundering Prevention Act shall be exercised as per rules of Bangladesh Ba nk. No loan facility will be allowed from any other Bank(s)/Financial Institution ag ainst the deposited amount except JBL. 3.6 Monthly Benefit Scheme (MBS) Jamuna Bank Limited has introduced Monthly Benefit Scheme (MBS) for the prudent persons having ready cash and desiring to have fixed income on monthly basis out of it without taking risk of loss and without encashing the principal amount. T his scheme offers highest return with zero risk. One can plan his monthly expend iture with the certain monthly income under the scheme. Deposit Plan and Benefit:

Tenor Monthly benefit/profit against deposit of Tk.1.00 (one) lac 5-years Tk.1020/3-years Tk.1000/1-year Tk.875/6-months Tk.850/Note: Government tax and other charges, if any, are included with the above bene fit/figure. How to apply: One has to open an account with any branch of JBL. The above noted monthly benef it will be deposited in this account in each month. Eligibility: Any person having age of above 18-years can participate in this scheme t hrough opening a savings or current account with any branch of JBL Customer must be Bangladeshi Nationals/Citizen. Persons below 18-years of old may open this account with his/her legal guardian

Characteristics: Minimum deposit : Tk.1 (one) lac Maximum deposit : Any amount multiple of Tk.1 ( one) lac After opening the account, the profit element will be deposited in that account Upon maturity the term may be renewed for the next tenure. Overdraft facility: The concerned customer can avail loan facility upto 80% of the initial deposit. Terms & Conditions: Bank reserves the right to change the rate of profit during the tenure o f deposit. No loan facility will be allowed from any other Bank(s)/Financial Instit ution against the deposited amount except JBL. The initial deposited amount and term shall not be changed before maturi ty. If the Scheme is closed within 6-months, customer will get the deposited amount only and no interest/profit will be paid for the Scheme. If it is closed after 6-months, customers will get the deposited amount alongwith the interest at the normal savings rate upto the time of closure. Duties and taxes on the deposit, if any, are payable by the customers as per government rules. Money Laundering Prevention Act shall be exercised as per rules of Bangl adesh Bank.

3.7 Double/Triple Growth Deposit Scheme For people who have cash flow at this moment and want to get it doubled/tripled quickly JBL has introduced Double/Triple Growth Deposit Scheme that offers one to make double/triple his money within 6(six) years and 9.5 (nine and a half) ye ars respectively resulting a high rate of interest. Deposit Period Maturity value Fixed amount 6-years Double amount Fixed amount 9.5-years Triple amount Eligibility: Any person having age of above 18-years can participate in this scheme t hrough opening a savings or current account with any branch of JBL Customer must be Bangladeshi Nationals/Citizen. Persons below 18-years of old may open this account with his/her

legal guardian Characteristics: Minimum deposit : Tk.1(one) lac Maximum deposit : Any amount multiple of Tk.1(one) lac How to apply: One has to open an account with any branch of JBL having deposit of the above fi gure. Overdraft facility: The concerned customer can avail loan facility upto 80% of the deposited amount.

Terms & Conditions: Bank reserves the right to change the rate of profit during the tenure o f deposit. No loan facility will be allowed from any other Bank(s)/Financial Instit ution against the deposited amount except JBL. The initial deposited amount shall not be changed before maturity. If the Scheme is closed within 6-months, customer will get the deposited amount only and no interest/profit will be paid for the Scheme. If it is closed after 6-months, customers will get the deposited amount alongwith the interest at the normal savings rate upto the time of closure. Duties and taxes on the deposit, if any, are payable by the customers as per government rules. Money Laundering Prevention Act shall be exercised as per rules of Bangladesh Bank. 3.8 Lakhpati Deposit Scheme To become a lakhpati is a dream to most of the people of Bangladesh specially to the lower and lower middle class income group. We experiences our expectations and wants are enormous in nature in our small span of life. To meet our deposit and wants we need right plan. Keeping the above in mind JBL has introduced Lakhopati Scheme which has flexibilit y in report of maturity and monthly installment as per affordable capacity.

Savings Plan and Benefit: Tenor Monthly Deposit Maturity value 3- years Tk.2395/Tk.1.00 lac 4- years Tk.1695/Tk.1.00 lac 5- years Tk.1275/Tk.1.00 lac 6- years Tk.995/Tk.1.00 lac 7- years Tk.800/Tk.1.00 lac 10- years Tk.460/Tk.1.00 lac Terms & Conditions: Bank reserves the right to close the scheme if customers fail to deposit 3-consecutive installments. If the Scheme is closed within 6-months, customer will get the deposited amount only and no interest/profit will be paid for the Scheme. If it is closed after 6-months, customers will get the deposited amount alongwith the interest at the normal savings rate upto the time of closure. Duties and taxes are payable by the customers as per government rules. The above figures are indicative only and subject to change from time to time. Money Laundering Prevention Act shall be exercised as per rules of Bang

ladesh Bank. 3.9 Project Finance Project loan is considered as long term investment of the bank. If the period is helpful to improve the economy and has a wide market then the bank thinks about giving project loan. To give this kind of loan the bank observes the willingnes s of the customer, his capacity and his ability to run the project. Having obtai ned this kind of information the bank makes a credit report about the customers l oan proposal. Interest rate on loan varies from project Ratio of investment of c ustomer and bank varies from customer to customer and the customers relationship with the bank. 3.10 Loan syndication Bank cannot invest more then 15% of its paid up capital on one individual. When the loan amount exceeds 15% of its paid up capital then the bank share the loan with other bank for giving one individual and this is call loan syndicate. 3.11 Consumer Credit Consumer credit scheme is relatively new field of micro-credit activities. Peopl e with limited income can avail of this credit facility to buy any household eff ects including car, computer and other consumer durable. It is a special credit scheme and the customers allow the loan on soft terms against personal guarantee and deposit of specified percentage of equity. The loan is repayable by monthly installment within a fixed period. 3.12 import Financing It is the most important method of import -financing International trade take pl ace between sellers and buyers located in different countries. The parties to a trade transaction are not always known to each other. Even if they are known to each other the seller may not have full confidence in the carried worthiness of the buyer or the buyer may not like to pay before he actually receives the goods . In letter of credit the bankers credit worthiness is substituted for the credi t worthiness of the importer. Under a bank- cards letter of credit, the issuing bank gives a written undertaking on behalf of the buyer that the bank will honor the obligation of payment or expectance as the case may be on presentation of s tipulated documents. As the request of the importers bank issue the letter of cr edit at a merging by the govt. instruction. JBL does not generally issue the let ter of credit less then 50% margin. JBL follow the margin prescribed by the gove rnment strictly. 3.13 Export Financing The Exporter needs finances at various stages, some at pre-shipment stage and th e other at the post shipment stage.

Chapter: 04

GENERAL BANKING DEPARTMENT

4.0 INTRODUCTION General banking creates a vital link between customer and bank. Its really crucia l department for the progression of the bank. It is the introductory department of the Bank to its customer. The Jamuna Bank Dilkusha Branch has the required se ction of general Banking. Every day it receives deposits from customer and meet their demands for cash by honoring instruments. General Banking department is th at department which is mostly exposed to the maximum number of bank customer. Ja muna Bank Dilkusha Branch has full-fledged arrangements for providing general ba nking facilities and has the major following section:

4.1 ACCOUNT OPENING In banking, deposits are given by the customer and received by the banker throug h the account. Similarly payment are made by the banker and received by or to th e order of the customer on the strength of this account. So the account is a wel l-devised system agreed upon by the banker and the customer within the limits of low. Legally speaking, an account is nothing but a contract between two parties , namely the banker and the customer. Hence, relationship between a customer and banker is contractual involving under certain rights and obligations on each of them. 4.1.1 Opening of an account Banks allow the customers to open different types of account such as CD, SB, STD , FDR etc. banker-customer relationships are established through the opening of an account by the customers in the bank. So, it is the gateway to a bank. Any pe rson of sound mind having crossed 18 (eighteen) years of age is entitle to open an account. General for all types of accounts:

1) Account opening form must be properly filled in. 2) Authorized specimen signature card must be properly signed in. 3) Account should have proper instruction, introducer should have an accoun t with JBL; introducer signature must be verified by an officer of JBL under ful l signature. 4) Initial deposit should preferably be as per minimum requirement of JBL. 5) Each authorized signatory should fill in the CIF details separately. 6) Passport size color photograph (one copy of each signatory and two copie s of nominee must be obtained-duly attested by the introducer or signatories and by the applicant for nominees). 7) Letter of thanks should be given to the account holder to be mailed unde r registered post with A/D of courier. 8) On obtaining all documentation and formalities of the applicant, cheque books are to be issued upon request of the applicant. 9) Special instruction (if any) should be given in accurate place. In case of company account, special instruction is to be provided as per the Article of association and the Memorandum of Association of the Company. 10) Photocopy of passport of the authorized signatory should be obtained in case the account is NOT a company account. 11) Registration No. & Date, VAT Registration No. & Date should be clearly s pecified for company and Birth date for individual whenever required in the CIF. 12) Thana and/or Upozilla Code must be clearly specified in the specified o f the applicant and/or the authorized signatory of the account to be opened. 13) Transaction profile of the account must be duly filled in and signed by the authorized signatories of the account to be opened. 14) Nominee declaration form must be duly filled in and signed accordingly f or all nominees as specified in the account opening form for account opened othe r than company account. CIF should be duly filled in and signed by the Nominee f or all Nominees specified in the account opening form. 15) Other necessary documentations & formalities to be obtained/observed as specified by the bank from time to time. 4.1.2. Current account: Business people for their convenience generally open a current account. This acc ount facilitates to deposit and withdrawn money at any time. Usually no banks al low any interest against this account. People prefer to deposit money on current account mainly for the following reason.... a. Overdraft Facility. b. Other facilities like collection of cheque transfer of money and renderi ng agency and general utility services. General characteristics: a) CD accounts are unproductive in nature as banks loanable fund is concern ed. Sufficient fund has to be kept in liquid form, as current deposits are deman d liability. b) This huge portion of this fund becomes none performing. For this reason banks do not pay any interest to CD account holders. c) There is no restriction on the number and the amount of withdraws from a current account. d) Service charge and incidental charge are recovered from the depositors s ince the bank make payment and collect the bills, drafts, cheques, for any numbe r of times daily. e) Businessman and companies are the main customers of these products. f) The banks through current accounts grant the loans and advances.

Initial deposit:

It requires a minimum "amount of Tk. 15,00/-" to open a current account in the l ocal office but under special cases it could be to Tk. 1,000/-. Here we can see some essential requirement for different type of CD A/C. Individual CD A/C: Introducer who is having CD A/C with the same branch, SB A/C holder cannot be th e introducer of a CD A/C. Signature card with three-specimen signature. Full address. Account must be opened only in cash. Two Copy Color passport size Photographs attested by the introducer. Sole proprietorship: Introducer (current account holder) Two copy Color Passport size Photographs. Account agreement form. Trade license. Rubber stamp impression. Specimen Signature Card. Partner ship firm: Introducer (current account holder) Registered partnership deed. Partner ship resolution signed by all the partners to open account with the JBL indicating the type of accounts and mode of operation. Photograph attested by the other partners. Specimen Signature Card. Club Society & Association: Registration Certificate. Copy of the rules and constitutions. Authentic copy of the resolution of Management Committee/Executive committee for account opening with JBL and operation of account duly certified by the Chairma n/Secretary. List of the Executive committee. 2 passport size photographs attested by the introducer. Specimen signature card. Account agreement form. Public/ private limited company a. Introducer. b. Certificate true copy of the memorandum and articles of association of t he company. c. Certificate true copy of the resolution of the board of directors. d. Certificate list containing names and signatures of the directors. e. Certificate of commencement of business (public limited). f. Certificate of Incorporation-duly certified by the Register of Joint Sto ck Companies and Firms. g. Acts/ Ordinance resolution circulars. h. FORM XII and Schedule X-duly certified by the Register of Joint Stock Co mpanies and Firms. i. Specimen signature card. j. Passport Size photographs attested by introducer. Incase of Non-Government School/College/University/Madrasha/Muktab a. Certified copy of Registration certificate; b. Certificate true copy of the resolution of the Management Committee/ gov erning Body authorizing opening and operation of account. c. Certificate list containing names and signatures of the Management Commi ttee/ governing Body authorizing opening and operation of account.

4.1.3. SHORT TERM DEPOSIT ACCOUNT: The deposit held in STD A/C are payable on short notice for 7 days of 30 days. T he interest rate of STD is 7%. Different big organization and other Govt. depart ments maintain STD A/C. General characteristics: a. customers deposit money for a short period of time, b. STD account can be treated as semi-term deposits. c. STD should be kept at least seven days to get interest. d. the interest offered for STD is less than that of savings deposit. e. Volume of STD A/C is generally high. f. Frequent withdrawal is discouraged and requires prior notice. Requirements: a. Account opening agreement form is used for SD A/C. b. Specimen signature Card. c. The approval of the manager. 4.1.4. SAVINGS BANK ACCOUNT (SB): This type of deposit is intended for primarily small-scale saver. it caries an i nterest rate of 7.5%. A depositor is allowed to withdraw up to 25% of the balanc e per week. Incase of 25% of the balance withdrawal in a week 7 or 10 days notic e to be given to the bank. Savings account may be opened either individually or jointly. General Characteristics: As per BB instruction 90% of SB deposits are treated as time liability and 10% o f it s as demand liability. a. Interest is paid on this account. JBL offers a reasonable rate of intere st for SB A/C. b. Generally, banks require a 7-day prior notice of the total amount of on or more withdrawals on any date exceeds 25% of the balance of the account unless is given. c. But in JBL there is no restriction about drawing money form savings acco unt. Any time Account Holders may draw money of any amount for that month. d. Generally householders, individuals and other small scale savers are the clients of this account. e. Interest will be counted on the minimum balance from the date 1-6 of a m onth. f. JBL gives no interest if the balance is below Tk. 1000. g. No service charge as it is an interest bearing account. h. Balance must not go below Tk. 10, 00.00 (Taka one Thousand) for any day. i. No more than two withdrawals can be done in a single week of the month. Week starts from sunday and ends on Thursday. Any withdrawal transaction even cl earing, ATM and /or Credit Card auto debit instructions will not be considered a s a withdrawal transaction. 4.1.5. CLOSING OF AN ACCOUNT A customer may close out his/her account at any time by submitting an applicatio n to the branch. The customer should be asked to draw the final cheque for the a mount standing to the credit of his account less the amount of closing and othe r incidental charges and surrender the unused leaves of the chequebook. Incase o f joint account all the joint account holders should signed in the application f or closing the account. On receipt of the application the following steps are ta ken: a. b. The signature of the account is verified. The number unused leaves of the cheque book shall be noted thereon.

c. d. e. .

The manager will approve the application. Incidental charge should be debited the account. The account holder is advised to draw the remaining balance from the a/c

4.2. CLEARING AND COLLECTION SECTIO N Collection of cheques, drafts etc on behalf of its customers is one of the basic function of commercial bank. The department, which performs this function, is known as clearing department. Clearing stands mutual settlement of claims made in between member banks at an agree time and pace in respect of instruments draw n on each other. The negotiable instrument act, lays down that the drawer or holder of a cheque o r draft may cross the instrument generally or specially. It further lays down th e crossed cheque can only be paid to banker. The act further provides protection to a banker who collects a cheque, or draft for someone other than the true own er of the instrument, if the banker fulfills the following conditions: That he collects the instrument for a customer. That the instrument be crossed. That the banker acts in good faith and without negligence. 4.2.1. TYPES OF CHEQUES COLLECTED BY CLEARING DEPARTMENT: 01. Transfer Cheque: Transfer cheques are those cheques which are colleted and paid by the same branc h of Jamuna Bank. Local Bills Collection Cheques (LBC): Local bills collection cheques are those cheques which are collected and paid by two different branches of a bank situated in the same city. Outward Bills Collection Cheques (OBC): OBC cheques are those cheques, which are collected and paid by two different bra nches of same or different bank situated in the outstation. Clearing Cheques: When the payee or endorsee (whoever deposits cheque for collection) and the draw er of a cheque maintain accounts with different banks, the collecting bank can r eceive the amounts of cheques from the paying banker is any of the following man ners: It can send its representative with the cheque to each of the following banks an d collect cash. This procedure is wasteful of time and incubersome and risky. Frequent transportation of the currency, but it has all the other disadvantages of the first. Besides, it may result in lying up The bank can maintain account w ith the paying banks (practically of the local banks), deposit cheques with the drawee banks for credit to its account. The method avoids the risk of considerab le sums of the money most of the local banks. The most efficient method of collecting and paying such cheques is that in which these cheques are exchanged by representatives of the various banks, who meet a fixed place at fixed hours and make the settlement through controlling banks. T he banks, so joining, from themselves into a member of clearing house and the fixe d meeting place is called a clearing house. 4.2.2. The Clearing House Where inter-bank receivables and obligations are settled. A particular house/pla ce under the control and supervision of the central bank of the country, where r

epresentatives of the member banks / scheduled banks/ assembles/meet together fo r settlement of their respective banks receivables and payables. It sits on all working days. In our country clearing house is organized by the Bangladesh Bank (state bank of Bangladesh) at the different big cities. Common procedure for all kind of cheques etc: 1. Receiving and scrutinizing the cheques and other deposit instruments, an d the pay-in-slip at the counter. 2. Affixing the stamps. 3. Scrutiny receipt by the authorized officer. 4. Returning the counterfoil to the depositor. 5. Separation of the instrument from the paying-in-slip. 6. Sending the instrument, schedule, clearing house-book along with IBDA to the Local office through messenger Scrutiny of the pay-in-slip (Deposit-slip) & cheques: 1) On both the counter-foil and the deposit-slip, the following should be c hecked a. Date of deposit b. Account number. c. Title of the account. d. The cheques number, amount and the drawee banks name. e. Total amount in words and figure. 2) The depositors name should be given on the larger portion of the pay-inslip. 3) Customer should use separate deposit slip for transfer, LBC, & clearing cheques etc. 4) The instrument is checked for any apparent discrepancy and is compare wi th the particulars noted in the pay-in-slip and its counter foil. 5) In case an order instrument is being deposited in second payees account g uarantee may be obtained from the second payee and is attached to the pay-in-sli p. 6) In case the payees name on the crossed instruments may be accepted but on ly from customers well known to the bank and after obtaining an indemnity. 7) The amount noted should be the same as the amount of the instrument and the amount in words and figure should be same. 4.2.3. Types of Clearing Outward Clearing:When a particular branch receives instrument drawn on the other bank within the clearing zone and those instruments for collection through the clearing arrangem ent is considered as outward clearing for that particular branch. Inward Clearing:When a particular branch receives instruments which drawn on themselves and sent by the other member bank for collection are treated as inward clearing. Process Flow Chart: ward) Receipt of the instrument from messenger Scrutiny of the instrument & tallying the amount of the schedule & that of the i nstrument. Clearing (In

Entry into Inward Clearing Register Sending the instrument to respective department for posting preparation of single credit voucher & IBCA of honored cheques / instruments Preparation of reason memo if any dishonor cheque/instruments Hand-over the IBCA & dishonor instruments if any to messenger. Filling the schedules and statements in the respective files Process Flow Chart: Clearing (Outward) Receipt of the instruments with the paying-in-slip Scrutiny of the instruments & paying-in-slip & affixing Received Seal Affixing Special Crossing Endorsement & clearing Seal on the back of the instrum ent. Return of the counterfoil to the depositor with seal signature. Entry into the Outward Register. Separation of the instrument from the paying-in-slip. Classification of the instrument first bank wise & then branch wise. Preparation of schedule branch wise & bank wise & signed. Preparation of clearing house book & signed by the officer. Tally the total of clearing house-book with the total amount shown in the cleari ng register. Preparation of the debit Voucher (IBDA) by debiting Local Branch. Sending the instrument, schedule, clearing house-book along with IBDA to the Loc al office through messenger.

Filling/Recording all office copies. Releasing the credit vouchers to respective dept. for posting. Preparation of Debit Voucher if any instrument returned dishonor.

4.3. Inland Remittance 4.3.1. Definition To facilitate the need of customers, commercial banks transfer funds fro m one place to another, through Demand Draft or Telegraphic Transfer. These meth ods of remitting money from one place to another within the country is known as Inland Remittance. 1) 2) 3) 4) Advantages: Convenience. Speed. Minimum Cost. Least Risk.

4.3.2. Instruments of Inland Remittance The most widely used instruments of inland remittance are : 1) 2) 3) Demand Draft (DD) Telegraphic Transfer(TT) Pay Order (PO)

1. Demand Draft (DD) Definition: A Demand draft is an unconditional order of the bankers from one branch to anothe r to pay the same person or order the amount mentioned therein on demand. Issuance: 1) Filling of DD Application Form. (This form is treated as an application as well as a voucher) 2) Commission to calculated as per BB rate and written on the space provide d on the form. ( @ 15%, Min. Tk. 25/-) 3) Total amount due must be paid by the customer at the cash receive counte r, after receiving the cashier will issue a voucher for the DD issue department. 4) The Draft is prepared and entered in the draft issue register. The draft number is then written on the application form and the amount is protectographe d on the face of the draft. 5) The vouchers along with the instrument and register, are then sent to th e department-In-Charge for checking and signature. 6) Then all the documents are sent to the Branch-In-Charge for second signa ture. 7) After all signatures are complete, the draft is given to the customer an d his/her signature must be taken on the counter foil. 8) Preparing Advice: An IBCA (for Demand Draft only) must be prepared, stat ing the details of the issued draft and must be sent to Drawee Branch on the same

day. Encashment : 1) When a draft is prepared for payment, the following things must be check ed scrupulously : a. DD is issued by JBL. b. DD is drawn on owner branch. c. Amount in word and figure agree. d. DD issue date is not more than six month earlier. 2) 3) 4) Verify the signature on the Draft, verify the test number if any. Then the Draft is sent to the Department-In-Charge for cancellation. After cancellation, payment is made to the customer.

2. Telegraphic Transfer (TT) Definition: A Telegraphic Transfer is a method of remittance, which is effected by the banke r through a coded telegram attested by secret check signal, on receipt of which, the paying office pay the amount to the payee by crediting his account. Issuance: 1) Filling of TT Application Form. (This form is treated as an application as well as a voucher) 2) Commission to calculated as per BB rate and written on the space provide d on the form. (@ 15%, Min. Tk. 25/-) 3) Telex charge to be taken from customer as Tk. 60/- per minute. 4) Total amount due must be paid by the customer at the cash receive counte r, after receiving the cashier will issue an IDT voucher for the TT issue depart ment. 5) A cost memo must be prepared by the TT issuing department, which shall c ontain the amount of TT, name of beneficiary, commission amount. The memo must b e duly signed by the officer, and given to the customer. 6) Then authorized officer only should test the TT correctly. 7) Then pass the TT message through Telex, or in case of urgency may be con veyed through telephone. 8) Prepare an Advice Note and should be sent through mail on the same day. Encashment: 1) After receiving the TT, verify the test number. 2) The details of the TT message must be recorded in the TT payable registe r. 3) The beneficiary should be informed on the arrival of TT. Issues to remember: 1) That we have a branch in the place on which TT will be issued and the said branch has Test arrangement with the issuing branch. 2) Incase payment of issuing TT is tendered by cheque, and then the drawer of the cheque and the purchaser should be same person. As such the signature on the cheque and on the application should be same. The cheque should in favor of Jamuna Bank. 3. Pay Order (PO) Definition: A pay order is a written order, issued by a branch of bank, to pay certain sum o f money to a specific person or a bank. It may be said as to be a bankers cheque as it is issued by a bank and, payable by itself. Issuance: 1) The application form must be filled up properly. 2) The amount due must be paid by the customer at the cash receive counter , after receiving the cashier will issue a voucher for the PO issue department. 3) The Pay Order is prepared and entered in the PO issue register. The PO n umber is then written on the application form and the amount is protectographed on the face of the PO.

4) The vouchers along with the instrument and register, are then sent to th e Department-In-Charge for checking and signature. 5) Then all the documents are sent to the Branch-In-Charge for second signa ture. 6) After all signatures are complete, the Pay Order draft is given to the c ustomer and his/her signature must be taken on the counter foil. Encashment 1) When a Pay Order is presented for payment, The following things must be checked scrupulously : 2) Pay Order issue register must be updated by marking that PO as paid. 3) Then the PO is sent to the Department-In-Charge for cancellation. Issues to remember : 1) A PO is transferable. As it is bankers cheque payable to order, the benef iciary may transfer it, y giving proper discharge on its back. It is a quasi-nego tiable instrument. 2) Before making payment the signatures of the issuing officers should be v erified and the date of payment should mark in the register. 3) If the purchaser requests for cancellation of the PO after its issue, th en a written request must be obtained and verifying his/her signature on the let ter, the PO may be cancelled and, it must be marked on the PO issue register as such. 4) A PO becomes stale after six monthsof its issue, it may revalidated if t endered by the purchaser. 4.3.3. Duplicate Instruments Demand Draft 1) Customer must submit an application regarding the loss of a DD and reque st for issuing a duplicate 2) The drawee branch must be informed of the loss of the DD, and requested to exercise caution. 3) On receipt of confirmation from the drawee branch that the draft is stil l outstanding, the customer can issue a duplicate DD to the customer after obtai ning an indemnity bond. 4) The DD is issued marked Duplicate in red ink, without altering the printed number and repeating the original number. 5) A note to this effect is to be made on the original application form and in the DD issue register. 6) The drawee branch is to be advised for issue of the duplicate DD. Pay Order 1) To issue a duplicate PO in lieu of the original, the purchaser should gi ve a letter to the effect that the original PO has not been delivered to payee o r if delivered, it has been lost from his/her possession and that the original o ne shall be surrendered to the bank if found. 2) After completion of the above formality, a duplicate PO may be issued ha ving cross reference on the duplicate PO and counter foil of the original PO. 3) A note is to be made on the PO register. The letter received from the pu rchaser, is to be filed with the original application-cum-voucher.

Chapter: 05 Credit Management

5.1 Loans and Advances 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 mobi lization and credit creation. The major part of banks income is derived from cre dit and since the banks credit is customers fund, bank takes extreme caution in l ending. 5.2 Sanctioning Loans and Advance To have a clear idea about the credit management of JBL the following points are essential. a. Credit policy of the Bank b. Credit Sanctioning Authority of JBL and c. Processing and Screening of credit proposal 5.3 Credit Policy of the Bank JBL Credit Policy contains of total macro-economic development of the country. A s a whole by way of providing financial support to the trade, commerce and indus try. Throughout its credit operation JBL goes to every possible corners of the s ociety. They are financing large and medium scale business house and industry. A t the same time they also take care 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 get financial support for their self employment and de velopment. 5.4 Credit Sanctioning Authority of JBL Delegated power is expected to be exercised by the authorized executives sensibl y keeping the banks interest in mind. In exercising the power so delegated author ized executives also have some credit restriction, tools and regulations as gove rned by Banking Company Act, Bangladesh Bank, and other usual credit norms. How ever, the following guidelines are laid down before the executives of JBL exerci sing the delegated power: The borrower must be a man of integrity and must enjoy good reputation in the ma rket. The borrower must have the capacity and capability for utilizing credit. Properl y and profitably. The enterprise of the borrower must be viable and profitable i.e. proposal of (l ie borrower must be evaluated properly and carefully so as to ascertain its prof itability. The enterprise must generate sufficient fund for debt and servicing." A customer to whom credit is to be allowed should be far as possible within the command area. . No sanctioning officer can sanction any credit to any of his near relatives and to any company where his relatives have financial interest. 5.5 Tools for Appraisal Credit The 10 Cs of Good and Bad Loan In addition to the formal credit appraisal, the credit an official of JBL tries to judge the possible client based on some criteria. These criteria are called t he C s of good and bad loan. These are described below: 1. Character: Make sure that the individual or company they are lending has outstanding integrity. 2. Capacity: Make sure that the individual or company they are lending has the capability of repaying the loan. 3 Condition: Understanding the business and economic conditions that wheth er it will change after the loan is made. 4. Capital: Make sure that die individual or the company they are lending has in appropriate level of investment in the company. 5. Collateral: Make sure that there is a second way out of a credit but do not allow that to drive the credit decision. 6. Complacency: Official do not rely on past. They remain alert every time whether any mistake is taking place or not. 7 Carelessness: They believe that documentation, follow up and consistent monitoring is essential to high quality loan portfolio. 8. Communication: They share credit objectives and credit decision making both v ertically and laterally within the bank.

9. Contingencies: Make sure that they understand the risk; particularly the downside possibilities and those they structure and price the loan consistently with the understanding. 10. Competition: They do not get swept away by what others are doing. 5.6 SWOT Analysis It is a technique used by the credit officers to evaluate credit proposal submit ted by the company especially by the production concern. Here, S stands for Strength W stand s for Weakness 0 stands for Opportunity T stands for Threat Strength It analyze the inherent of the company, resilience, and brand loyalty, endowment etc. Weakness This analyzes the inherent weakness of a company, such as managem ent, supply risk etc. Opportunity This analyzes the opportunity, which will be available to a company in a near fu ture, such as tax incentives export credit facilities etc. Threat It analyzes the threats, which the company may face such as legal barriers withd rawals of tax exemption and international law, withdraw of most favorable nation (MFN) and GSP facilities etc. 5.7 Credit Monitoring and supervision Cell JBL is a unique characteristic in its loan management to make sure that there wi ll be no bad loan in its-loan portfolio; JBL established a loan monitoring and s upervision cell headed by a First Assistant Vice President. He along with other official frequently visits customer premises or business whether loan amount, wh ich is taken, is used properly or not. Sometimes customer need more fund or ethe r types of facilities to run business profitably, then the monitoring authority takes necessary steps to meet customers need. 5.8 Processing and screening of Credit Proposal There are some common regulations governed by Banking Company Act, 1991 Banglade sh 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 criti cally by JBL credit officials from various angle to judge the feasibility of pro posal. The customer at the branch of the bank place credit proposals. When a customer c omes with a credit proposal, the credit department officials of the branch make an open discussion with the customer on different issues of the proposal to judg e worthiness of title proposal and customer. If the proposal scenes worthwhile i n all aspect then the proposal is placed before credit committee of the bank. Af ter threadbare discussion, if the committee agrees in principle of 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, sanction of approval. On receiving rile proposal, the Credit Division of Head Office places the propos al in the Head Credit Committee. The committee further analyzes proposals critic ally 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 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 C

redit Committee and from Board if it is not feasible. 5.9 Securities It is essential that the proposals define clearly the purpose of. the sources of repayment. The agreed repayment schedule, the value of security (land, machiner y security papers, bond, sanchay patra etc.) and the customer relationships cons ideration implicit in the credit division. Where the security is to be accepted as collateral for the facility all document ation relating to the security shall be in the approved from. All approval procedures and required documentation shall be completed and all se curities shall be place prior to the disbursement of the facility. For creation of mortgage on the property requires the following documents: Original sale deed favoring owner of the land. Certified copy of the sale deed of the previous owner of the same property. Duplicate Carbon Receipt (DCR) Up to date rent receipt and Municipal Tax Receipt Certified copy of C.S.S A. and R.S. Khatians Up to date Non-Encumbrance Certificate Valuation Certificate Clearance from RAJUK/WORKS MINISTRY RAJUK approved plan of the building with the approval letter Photograph of the property from three different angles and the over of the prope rty Site Plan/ Mouza Map Board Resolution for mortgaged property if the same belongs to any limited compa ny. The borrower is requested to submit the above-mentioned papers in original for V erification by the Bar-in lawyer and creation on the property intended to mortga ge against advance.

5.10 Documentation A document is a written statement of facts of proof or evidence arising out of p articular transaction, which on placement may bind the parties there to answerab le and liable to the law for satisfaction of the charge in question. The execution of documents in proper from and according to the requirements of t he law is known as documentation. The documentation does establish a legal relat ionship between the lending bank and the borrower. The terms and conditions of l oans and advances, the securities charged and the repayment schedule are recorde d in writing Proper documentation is necessary to safeguard the future interest of the bank. Documents are necessary for the acknowledgement of the debt by the borrower and charging of securities to the bank by him. Proper and correct documentation is e ssential not only for the safety of advance but also necessary for taking legal action against the debtors in case of non-repayment of dues. Depending on the ty pes of loans and advances different documents are required. Such as 5.10.1 Documentation of Loan 1 Demand of Promissory (DP) Note 2 Letter of partnership (in case of partnership concern) or resolution of the board of Directors (in case of Limited concern) 3 Letter of Agreement 4 Letter of Disbursement. 5 Letter of Pledge (in case of pledge of goods) 6 Letter of Hypothecation (in case of hypothecation of goods) 7 Trust Receipt (in case of LTR facility) 8 Letter of Lien and Ownership (in case of advance against share) 9 Letter of lien for packing credits (in case of packing credits) 10 Letter of lien (in case of advance against FDR)

11 Letter of Lien and transfer authority (in case of advance against PSP, S SP etc. 12 Legal documents for mortgage of the property (as drafted by legal adviso r) 5.10.2 Documentation of Overdraft 1 Demand of Promissory (DP) Note 2 Letter of partnership (in case of partnership concern) or resolution of the board of Directors (in case of Limited concern) 3 Letter of Agreement 4 Letter of Continuity 5 Letter of Lien and Ownership (in case of advance against share) 6 Letter of Lien (in case of advance against FOR) 7 Letter of Lien and transfer authority (in case of advance against PSP, S SP etc, 8 Legal documents for mortgage of the property (as drafted by legal adviso r) 5.10.3 Documentation of Cash Credit 1. Demand of Promissory (D.P) Note. 2. Letter of partnership (incase of partnership concern) or resolution of t he board of Directors (in case of Limited Concern. 3. Letter of Agreement 4. Letter of Continuity 5. Letter of Pledge (in case of pledge of goods) 6. Letter of Hypothecation (in case of hypothecation of goods) 7. Letter of Lien and Ownership (in case of advance against share) 8. Letter of Lien (in case of advance against (FDR) 9. Letter of Lien and transfer authority (in case of advance against PSP, S SP etc, 10. Legal documents for mortgage of the property (as drafted by legal adviso r) 5.10.4. Documentation of Bills Purchased 1. Demand of Promissory (D.P) Note. 2. Letter of partnership ( in case of partnership concern) or resolution of the board of Directors (in case of Limited Concern) 3. Letter of Agreement 4. Letter of Hypothecation of Bill All required Documents as mentioned before should be obtained before any loan is disbursed. Disbursed of any credit facility requires approval of the component authority that should ensure before exercising such delegated authority that all the required documentation have been completed. 5.11 Credit Facilities Extended by JBL The main functions of a commercial bank are two: 1) to take deposit and 2) to ma ke advance. Making advance is the most important function of a bank. Moreover, B ank make advance out of the deposits to the public which are payable on demand. A Commercial Bank makes advances to different sectors for different purpose i.e. financing of trade and commerce, Export and import, industries Agriculture, Tra nsport, House-Building etc.

5.12 Classification of loan

5.12.1 CC Hypo (Cash Credit Hypothecation)

Cash Credit allowed against hypothecation of an asset is known as Cash Credit (H ypo) in cash of hypothecation the borrower retains the ownership possession of g oods on which charge of lending bank is created. For Cash Credit (Hypo) Bankers takes following precautions: The banker carefully verifies the stocks of the hypothecated assets and their ma rket price Obtains periodical statement of stock duly signed by the borrower Ensure stocks are duly insured against fire, burglary with bank clause. Obtains sufficient collateral securities. Identify that whether the goods are ready saleable and whether they have good d emand in the market Ensure the borrowers trustworthiness. 5.12.2 CC Pledge (Cash Credit Pledge) Cash Credit allowed against pledge of goods is shown as Cash Credit (Pledge). Fo r Cash Credit (Pledge) the borrower pledges his goods to the banker as a securit y against the credit facility. The ownership of pledge goods remains with the pl edger but the possession of the good is within the bank. The bank exercises his control over good obtaining the lock and key of store house. Banks appointed gua rds to take care of those goods round the clock. The banks delivered the pledged goods to the party by turns against payment. For Cash Credit Pledge following points are taken into consideration before allo wing. Whether the quality of goods is ascertained. Whether the goods are easily saleable and those goods must have good demand in t he market. The quality of goods is ensured. The goods cannot be perishable and will not det eriorate in quality as a result for short and long duration. The borrower has the absolute title of goods. The prices of the goods have to steady and are not subject to violent change. Goods should be stored in the presence of a responsible bank office. Ensure that stocks are duly insured against fire, burglary. Stocks must be invocated regularly by responsible bank office. The locks of the store are scaled and keys are kept in the bank. 5.12.3 Overdraft The overdraft is always allowed on a special A/C operated upon cheques. The cust omers may be allowed a certain limit up to which he can overdraw within a specif ic period of time. In an overdraft A/C withdrawal and deposit can be made any nu mber of times within the limit and prescribed period. Interested is calculated a nd charged only on the actual debit balances on daily product basis. Overdraft are three types 1. Temporary overdraft (TOD) 2. Clean overdraft (COD) 3. Secured overdraft (SOD) 1. Temporary overdraft (TOD) Temporary overdraft (TOD) is allowed to honor cheques which is future dated for the valued client. Without any prior arrangement. This kind of facilities is pr ovided for short time. 2. Clean overdraft (COD) Sometimes Overdrafts are allowed with no other security except personal security of borrowers. 3. SOD Secured overdraft (SOD) When Overdrafts are allowed against security is known as secured overdraft (SOD) Purposes To businessman for expansion of their business. To contractors and suppliers for carrying construction works and supply orders. Securities Lien on fixed/term deposits. Shares/Debentures/Protiraksha Sanchay Patra

 Insurance Policy. Mortgage on real estates and properties. Interest Rate: 15 % per annum 5.12.4 Loans (General) When an advance is made in a lump sum repayable either in fixed monthly installm ent or in lump sum and no subsequent debit is ordinarily allowed except by way i n interest and incidental charges etc. This is loans (general). Loan is allowed for a single purpose where the entire amount may be required at a time or in a n umber of installments within a period of short Spam. After disbursement of the e ntire loan amount, there will be only repayment made by the borrower. Loan once repaid in full or in part cannot be drawn again by the borrower. Entire amount o f the loan A/C in the name of the customer and is paid to hen through his SB/CD A/C. Sometimes loan amount are disbursed in cash. This loan is repayable within few months or few years. Securities: 1. Lien on fixed/term deposits. 2. Shares/Debentures/Protiraksha Sanchay Patra. 3. Insurance Policy 4. Mortgage of Real estates and properties 5. Hypothecation of stock/Stock/Machinery. Interest Rate: 16 % per annum 5.12.5 Lease Finance Jamuna bank Ltd. introduced lease finance facilities for funding requirement of valued customers & growth of their business. Lease Items Vehicles like luxury bus, Mini bus, Taxi Cabs Cars, Pick-Up Van Etc. Factory equipment. Medical equipments. Machinery for agro based industry. Construction and office equipment. Sea or river transport and computer for IT education center. Maximum Limit: 70% of acquisition Cost, Security /Collaterals. The following securities are acceptable. Ownership of leased assets before the period of loan adjustment. Collateral securities in the form of land & building/Fixed Deposits/other cash c ollateral /Wage Earners Development Bond having liquidation value covering at le ast 100% amount of finance. Deposit of A category shares, National Savings Certificates, ICB Unit Certificat es, assignment of life insurance policies, Bank Guarantee also be allowed as col lateral securities. Bank charges are modest and competitive. Lease Deposit Before disbursement of lease finance, the lessee shall have to deposit 3 months rentals in advance, which will be adjusted at the end of the lease period. Grace Period For capital machinery and equipment, maximum grace period of 6 (six) months may he allowed for installation/commercial production. Insurance Coverage The vehicle /Equipment /Lease asset shall have to be covered by a comprehensive insurance policy throughout the whole lease term at lessee s own cost in the nam e of Jamuna Bank Limited. The premium shall be on account of lessee. Repair and Maintenance of Leased items The lessee is obliged to maintain the vehicle/Equipment in good working order an d is solely responsible for any loss or damage as long as it is in his possessio n. Repair and maintenance cost for taking care of normal wear and tear and keepi ng it in good running condition during the lease. Transfer price/Lease Renewal Rental

On final adjustment of the lease finance, the lessee may have an option to purch ase the equipment at 5% of the lease finance. Besides the above option, tile les see may renew the lease on year-to-year basis or return, the equipment to the ba nk. 5.6.6 Personal Loan for Woman This is one of the new events in Bangladesh in credit sector. Woman who are inte rested and has the ability to pay it back in time those can get this kind facili ty To encourage the woman JBL provide loan with low interest. Eligibility: The borrower must be the following profession. Service holder of Government Organization Service holder of Semi-Government Organization Service holder of Multinational Organization Service holder of Bank and Insurance Company Shop owner/has small business. Interest Rate : 15.5% per annum 5.6.7 Consumer Credit Scheme Consumer credit is recently new field of micro credit activities; people who hav e limited income can avail of this credit facility to buy any household effects including car, computer, household and other commercial durables. JBL plays a vi tal role in extending the consumer credit. Eligibility: The borrower must be the employee of the following organization. Government Organization Semi- Government Organization Multinational Organization Bank and insurance Company Reputed Commercial Organization Professionals Nature: Mid term Micro Credit Interest Rate: 16 % per annum Terms And Conditions Client will procure the specified articles from the dealer/agent /shop acceptabl e by the Bank. All of the papers /cash memo etc. related to the procurement of the goods will b e in the name of bank ensuring ownership of the goods. The ownership will be tra nsferred in the name of the client after full adjustment of Banks due. The clients will have to bear all the expenses of license, registration and insu rance etc. The clients will have to bear the cost of repair and maintenance of the acquire articles.

Chapter: 07 FOREIGN EXCHANGE DEPARTMENT

7. FOREIGN EXCHANGE DEPART MENT: According to Foreign Exchange Regulation Act, 1947, as adapted in Bangladesh, "F oreign Exchange means foreign currency and includes all deposits, credit and bal ances payable in foreign currency as well as all foreign currency instruments, s uch as, Drafts, Travelers Cheques, Bills of Exchange, and Promissory Notes payab le in any foreign country. Anything that conveys a right to wealth in another co untry is Foreign Exchange. 7.1Authorized Dealers: Bangladesh Bank does not deal directly with the members of the public; the trans

actions are done by Authorized Dealers in accordance with the guidelines given b y Bangladesh Bank. In terms of Foreign Exchange Regulation Act, 1947, who are au thorized to deal in foreign exchange by Bangladesh bank, the selected branches o f the bank can transact such businesses. They are known as "Authorized Dealers". Main branch is one of the Authorized Dealer branches of JBL. 7.2Functions of Foreign Exchange: Foreign exchange department perform the functions under three sections: Import. Export. Foreign Remittance. 7.2.1 Import Section The function of Import section deals with the following segments: Letter of Credit (L/C) Payment against Document (PAD) Payment against Trust Receipt (LTR) Letter of Credit (L/C) A Letter of Credit (L/C) is a written instrument for payment of international tr ade. On the request of the customer (Importer) a bank (Issuing Bank) will issue a L/C in which it obligates itself to pay the seller (Exporter) against presenta tion of a draft and certain documents. Those documents are evidences of shipment and include all of the terms and conditions stipulated in the L/C. If the condi tions of the credit do not require for presentation of specified documents, it i s called Clean Credit. On the contrary, if the presentation of specified documen ts is obligatory, the credit is called a Documentary Credit. Types of Letter of Credit (L/C) Jamuna Bank Ltd., Dilkusha Branch deals with two types of L/C. These are 1. Sight L/C- payment should be made just after receiving the documents. 2. Deferred L/C.-the beneficiary allows the importer time to pay for the do cuments. Parties of a Letter of Credit (L/C) The following parties are involved to a letter of credit, namely Obligatory Parties are Importer/ Buyer/ Applicant Opening Bank/ Issuing bank Advising Bank/ Notifying Bank Exporter/ Seller/ Beneficiary Optional Parties (In case of need) are Negotiating Bank Confirming Bank Paying/ Reimbursing bank Opening L/C:

Steps-1: Customers Application for opening of L/C with indent/ Proforma invoice, Steps-2: Proposal preparation: Scrutiny of papers submitted by the Importer (List of papers) Credit Appraisal Review/ Assessment outstanding

Risk Assessment of L/C Recommendation of L/C Steps-3: Sanction of proposal-Term & Conditions. Steps-4: Fill up the forms/ Formats supplied by Bank ,LCAF- Letters of credit Au thorization forms (Licensing if required LCA- Letter of credit Application form. IRC: Import Registration Certificate (valid) IMP- Form IMP (Application for permission under section 4/5 of the Foreign Excha nge Regulation Act, 1947 to purchase Foreign Exchange for payment of imports) L/C Advice. Reimbursement Authority. Step-5: Scrutiny of LCAF, LCA, IMP, L/C Advice Copy. Step-6: Realization of margin, commission, postage, charges register entry, numb ering, passing of vouchers. Steps-7: Transmission of L/C: By Air mail / By Cable/ By Telex/ Teletransmission / SWIFT Step-8: Opening of L/C file (Marking/ Preserving) Steps-9: Amendment of L/C (if required) Steps-10: Extra precaution (Including Fund for import) Flow Chart: Parties Involved in L/C, Operation & Settlement Mechanism

o Documents Required for Opening an L/C: By the importer: 1. Valid Import Registration Certificate (IRC) 2. IRC Renewal challan copy 3. Parties application in letterhead for issuance of L/C 4. Signed L/C application form with requisite stamp 5. Indent / Proforma Invoice/ Purchase order 6. Insurance cover note with money receipt (covering proper risk) 7. Valid membership certificate from trade organization (chamber of commerc e) 8. Tax-payers-Index-Number (TIN)

9. 10.

L/C Authorization form signed by the Importer Four set of IMP form duly signed by die Importer. Payment against Document (PAD):

PAD procedure is started by the issuing bank after getting all necessary documen ts from the exporter as evidence of exporting goods. Documents required for PAD is mentioned below: Bill of Exchange Commercial Invoice Bill of lading Certificate of origin Packing list Weight list On receipt of the documents the bank will enter the same in the inward receive r egister branded with rubberstamp showing the date of receipt.

Loan against Trust Receipt (LTR):

There may be situation where shortage of collateral in an independently controll ed field warehouse is impractical. An importer may require the goods for further processing or for displaying the merchandise in order to make the final sale. I n such cases, a financing institution that has a great degree of trust in the im porter may be willing to release the negotiable bill of lading and thereby also the goods to the importer against the signing of trust receipt. After the import er has made his final sale and received the proceeds, he can pay the financing i nstitution that he received as advance. 7.2.2Export Section This section negotiates the export documents and collects and purchases the expo rt bill. There are two types of credit facilities allowed by the bank to the exp orter in relation to export credit: Pre-Shipment Finance Post-Shipment Finance Export finance arises from trade between two traders trading in two different co untries. A brief idea of the both category is given below: Function of Export Section of JBL: Back to Back L/C Foreign Documentary Bill for Collection (FDBC) Foreign Documentary Bill for Purchase (FDBP) Back-to-back L/C

It is nothing but a secondary letters of credit opened by the advising bank in f avor of a domestic foreign supplier on behalf of the beneficiary or original for eign L/C, as the original letter of credit of bank by import letter, it is calle d Back to Back Letter of Credit. The second L/C is opened on the strength of the original / master L/C for a smaller amount i.e. maximum 75% is kept under Lien and 10% under packing credit.

Back-to-Back L/C (Foreign)

When the Back-to-Back L/C is opened in a foreign country supplier it is called B ack-to-Back Foreign. It is generally payable within 120 days at sight. o Back-to-Back L/C (Local)

When the Back-to-Back L/C is opened local purchase of materials, it is called Ba ck to Back Local. It is generally payable within 90 days at sight. o o Procedure for Back-to-Back L/C Exporter should make application for back-to-back. Export L/C or Matter L/C is under line. Opening of a back to back L/C Payment under back-to-back L/C

Deferred payment is made in case of back-to-back L/C as 60-90-120-180 days of ma turity period. Payment will be given after realizing export proceeds from the L/ C issuing bank abroad. Export Mechanism: A person desirous to export should make application to obtain ERC (Export Regist ration Certificate) from CCL & E. Then the person should step into a bank along with ERC to obtain EXP from the bank. He must submit: Trade license ERC Certificate from the concerned Government Organization. After satisfaction of the proposal and of the documents, banker will issue EXP t o the exporter. Now exporter will be getting shipping and other documents from t he shipment procedure. The documents are usually those mentioned in the import c hapter. Exporter should submit all these documents along with a letter of identi ty to his bank for negotiation. Export documents: Following are the major export documents: Commercial Invoice. Bill of Lading (B/L). Exp. Form. Bill of Exchange. L/C copy. Packing list. Certificate of origin. Quality control certificate. Foreign Documentary Bill for Collection (FDBC): Exporter can collect the bill through negotiating bank on the basis of collectio n. Exporter in this case, will submit all the documents to the negotiating bank for collection of bill from importer. The exporter will get money only when the issuing bank gives payment. In this connection bank will scrutinize all the docu ments as per terms and conditions mentioned in L/C. Foreign Documentary Bill for Purchase (FDBP): When exporter sale all the export documents to the negotiating bank is known as FDBP. In this case, the exporter will submit all the documents to the bank. 7.2.3 Foreign Remittance Foreign remittance section is an integral part of Foreign Exchange Department. A nd this section deals with incoming and outgoing foreign currencies. Therefore o

n the basis of its function, foreign remittance is divided into two types. These are: 1. Outward Foreign Remittance and 2. Inward Foreign Remittance Outward Foreign Remittances: Remittances issued by JBL, Main Branch to foreign correspondents to fulfill its customers needs are considered to be the Outward Foreign Remittances. It comprise s the followings: FDD Issued FTT Issued TC Issued Sale of foreign currencies. o Foreign Demand Draft (FDD) Issued: People have to send money to abroad for various purposes. JBL issues most of the FDD for the purpose of payment of the application fees to the foreign universit ies. For the issuance of FDD, FORM T/M has to be filled-in duly. This form con tains: The purpose of travel, Name of the country where the applicant will go Name of the air or shipping company, Passport number Date and place of issue of the passport are given. This form has to be duly signed by the applicant. In case of application fee, th e applicant has to mention the name of the university in whose favor the FDD is issued. JBL charges TK. 400 for each FDD. Inward Foreign Remittance: Normally, Inward Foreign Remittance comprises of all incoming foreign currencies . Remittances issued by the correspondent banks situated in the foreign countrie s and thereby drawn on JBL, Main branch are considered to be its Inward Foreign Remittances. Followings are the Inward Foreign Remittances of JBL, Main branch. a. FDD Payable b. TC Payable. c. Purchase of foreign currencies.

CHAPTER- 08

FINANCIAL PERFORMANCE OF JBL

8.1 PROFIT In 2007 Jamuna Bank Limited posted an operating profit of Tk.824.21 million as a gainst Tk.701.32 million in 2006 with a spectacular growth of 17.52 percent over the preceding year. After having made necessary provisions for loans and advanc es in accordance with the instructions of Bangladesh Bank Net Income Before Tax (NIBT) stood at Tk. 405.04 million in the year under review against Tk.499.97 mi llion in the preceding year. An amount of Tk. 315.93 million has been kept as pr ovision for payment of Tax. Thus Net Income after tax and provision stood at Tk. 89.11 million in 2007 which was Tk. 253.40 million in 2006.

8.2 CAPITAL STRUCTURE Jamuna Bank Limited has a conviction of maintaining a strong capital base in car rying on operation on June 03, 2001 with a paid-up capital of Tk.390.00 million divided into 3.90 million ordinary share of Tk.100 each. The authorized capital of the Bank is Tk.1600 million and in the year it increased and stood at tk 4000 million divided into 40 million ordinary shares of Tk.100 each. The Bank s paid -up capital as at 31st December 2007 stood at Tk.1225.71 million. Tk 429 million was raised through initial public issue of 4.29 million ordinary shares of Tk 1 00 each with a premium Tk 20 each while Tk.214.50 million was raised by issue of Bonus Shares in the ratio of 1:4, i.e. one bonus shares on the holding of 8.58 million ordinary shares as on 31.12.2005, out of profit up-to the year2005 and Tk 153.21 Million was raised by issue of bonus share in the ratio of 1:7 in the year 2006 Thus, as on 31st December 2007, the total shareholder s equity and reserve stoo d at Tk.1656.49 million. So total capital as at 31 December stood at Tk 1872.72 million 8.3 CAPITAL ADEQUACY RATIO The Bank adopted BIS risk adjusted capital standards to measure the capital adeq uacy in line with the criteria set by Bangladesh Bank. According to the instruct ions contained in Bangladesh Bank s BRPD Circular No.05 dated may14 2007, relati ng to Capital Adequacy every commercial bank operating in the country is require d to maintain at minimum 10 percent of its risk-weighted assets as capital. Jamu na Bank Limited could maintain Capital Adequacy ratio of 12.42 percent as at 31. 12.2007 which was higher than the required Capital Adequacy Ratio. The amount of capital with break-up is given below: "Fig in BDT Million" Particulars 2007 2006 Tier I Capital 1651.58 1562.47 Paid up Capital 1225.71 1072.50 Non-repayable Share Premium Account 85.80 Statutory Reserve 330.68 249.67

85.80

Retained Earnings 9.39 154.50 Proposed Bonus Share Tier II capital 221.14 139.35 1 % Provision against Unclassified Loans Exchange Equalization Fund .33 0.33 Total Capital (Tier I +Tier 11) 1872.72 1701.82

220.81 139.02

From the above it reveals that Jamuna Bank Limited was able to increase its core capital from Tk. 1562.47 million to Tk. 1651.58 million and supplementary capit al from Tk. 139.35 million to Tk. 221.14 million and total capital from Tk. 1701 .82 million to Tk. 1872.72 million. 8.4 TREASURY OPERATIONS The Bank made its mark in Treasury operation. In money market the Bank played ac tive role in local and foreign currency. Besides, it carried on operation as Pri mary Dealer. Having participated in local currency and foreign currency market a nd taken part in secondary trading of Govt. securities the Bank made significant growth. It would not be out of place to mention that Jamuna Bank Limited was th e only third generation bank, which was selected as Primary Dealer by Bangladesh Bank owing to its excellent performance in money market. Treasury operation has been identified as one of the best sources for earning by the Bank through effe ctive participation. JBL s dealing room is well equipped with modern and updated equipments like voic e recorder, reuter 3000xtra, CJBL electronic system etc. The activities of FX an d local money market have been synchronized with complete segregation of activit ies of front and back offices. Intensive monitoring is ensured by the Bank s Ass et Liability Management Committee (ALCO) which sits in regular meetings to revie w the asset liability position and interest rates and takes important decisions thereon. In the year 2007-2008 there was a bit volatility in the local money market somet ime in March-April but this market was more or less stable with a little fluctua tions in interest rate during most of the time of the year. On the contrary, FX market was to a great extent volatile in 2007 having pressure on Taka against do llar. But JBLs professionally skilled human resources were quite tactful in handl ing operations and could reap the benefits of local money market and FX market w ith significant growth. They were prudent enough to maintain the regulatory requ irements of CRR and SLR of the Bank. 8.5. DEPOSITS AND DEPOSIT MIX In commercial banks operation starts with mobilization of resources i.e. tapping of deposits and then the said resources are deployed as loans, advances and inv estments for the purpose of maximizing wealth which have dominance in commercial bank s operations. That is why; there is a common saying that deposit is the li feblood of a bank. In keeping with this axiom JBL attaches utmost importance to the deposit mobilization campaign and to the optimal deposit mix for minimizing COF as far as practicable. A stiff competition persisted in the market as to dep osit mobilization and there was a pressure on interest rate. Besides, instabilit y in political atmosphere was adversely affecting business, which stood as a hin drance to the smooth operation of banks including deposit mobilization. Despite all these unfavorable factors JBL was able to instill confidence in customers as to its commitments to the depositors and borrowing customers and thereby could mobilize a total deposit of Tk.20924.02

million in 2007 against that ofTk.17284.81 million in the preceding year showing an increase of Tk.3639.21 million being 21.05 percent. Endeavor is underway for augmenting low cost deposit by accommodating good customers at competitive pric e. For healthy growth of business JBL puts emphasis on no cost and low cost depo sit all the time. A number of savings schemes are in place for mobilizing long t erm deposits which can be planned to be invested in term loans in-the area lease

finance, project finance and consortium finance with a view to having better yi elds. JBL s such move will motivate the people to have good savings habit, as we ll. The comparative position of deposit mix of the Bank as on 31.12.2006 and 31. 12.2005 is depicted below: Types of Deposit As on 31.12.2007 Changes in & over the year Current A/C & other 2625.67 2088.47 537.20 Bills Payable 354.44 169.80 184.64 108.74 Savings Deposit 1407.32 1084.01 323.31 29.83 Short term Deposit 833.81 636.87 194.94 Fixed Deposit 13125.13 11804.01 Scheme Deposits 2525.08 1470.29 1054.79 71.74 Foreign Currency Deposit 52.57 31.36 Total Deposits 20924.02 17284.81

8.6 LOANS & ADVANCES Though there was an unfavorable business environment due to political turmoil th roughout the year JBL was in constant efforts to explore different areas of cred it operation and could raise the credit portfolios to Tk.16617.45 million in 2007 with an increase of Tk.3820.82 million (29.86%) over that of the preced ing year. The total credit as on 31.12.06 was Tk.12796.63 million. In order to e nsure compliance with regulatory requirements for avoiding risk of exposure to single borrower, concentration on large loans, to bring in excellence in credit operation in relation to risk management, yield, exposure, tenure, collaterals, security valuation etc. JBL strived for further diversification of credit portfo lios. Its credit facilities were concentrated on Trade Finance, Agriculture and relate d sector, project finance, wholesale and retail trade, transport sector, hospita l & diagnostic centers and syndicate financing for big projects, capacity additi ons to the manufacturing sector and structured financing for developing infrastructure of the country. Initiatives are underway for helping small and medium entrepreneurs in the ventures for which, JBL are developing SME credit products and strategies. JBL has also increased lending activities to small consumers thr ough Consumer Credit Scheme.

8.7 RISK MANAGEMENT As a regulatory body Bangladesh Bank wants all banks to take effective measures for implementation of risk management in banking operations covering the major r isks in asset-liability management, credit risk management, Foreign Exchange Ris k Management, Internal Control & Compliance and Money Laundering Prevention. As these risks are integral parts of banking business JBL has put highest priority on management of such risks with intense monitoring of credit portfolios. We bel ieve these will improve our operational and financial performance along with mee ting the regulatory requirements. The Bank is in constant efforts to establish s uperior monitoring of credit risks and returns. For bringing in harmonious match ing between assets and liabilities ALCO reviews these on a regular basis for kee ping risk in this area to an acceptable level. The Bank s credit policy guidelin es and procedures are continuously reviewed and upgraded by its internal committ ees. The Bank also pursues an effective internal control system by establishing systems and procedures for scrutinizing the transactions periodically, encompass ing key back-up supports and commissioning regular contingency plans. Through es tablishment of proper governance structure risk and returns are evaluated with a view to producing sustainable revenues, reducing volatility in earnings and enh

As on 31.12.2006 25.72 30.92 1321.12 11.19 21.21 67.62 3639.21 21.05

Changes

ancing value to shareholders. Maintenance of quality of assets is always the key issue to the JBL Management. Continuous efforts are made to maintain earning as sets at the highest possible level so as to maximize profits and minimize cost o f operation. 8.8 INVESTMENT The investment portfolio of the Bank as on 31.12.2007 rose to Tk.5390.03 million from Tk.2552.67 million as on 31.12.06 registering an increase of Tk.2837.36 mi llion being 111.15 percent. The investment portfolio was blended with Government treasury bills amounting to Tk.2410.51 million, Treasury Bonds of Tk.2935.54 mi llion, investment in primary shares and Zero Coupon Bonds of Tk 43.61million.. I ts investment was made in acquisition of Preference Shares of (5.00-2.50) 2.50 m illion of Aftab Automobiles Limited. Besides, Tk.2.00 million has been invested in acquisition of two shares of Central Depository Bangladesh Limited (CDBL). Th e Bank s major portion of investment is in Govt. Treasury Bills and Bonds for th e purpose of fulfilling Statutory Liquidity Requirement.

8.9 IMPORT BUSINESS The total import business handled by the Bank in 2007 was Tk.22191.84 million co mpared to Tk. Tk.15457.80 million in the preceding year registering a rise of Tk .6734.18 million being 43.57 percent. A sizeable L/C s were also opened by the B ank in the year under review. The import items included industrial raw materials , machinery, consumer goods, fabrics, accessories etc.

8.10 EXPORT BUSINESS The Bank handled export business worth Tk 13990.33 million port. In 2006 total export business handled by the Bank was Thus there was an increase of Tk.2406.69 million in export the Bank, being 20.78 percent over the preceding year. The s Ready made Garments.

RATIO ANALYSIS: 1. Liquidity Ratio JBL is concerned about the liquidity because a common precursor to financial dis tress and bankruptcy is low or declining liquidity, thus because these ratios ar e viewed as good leading indicators of cash flow problem. Liquidity ratios measu re the ability of the firm to meet its short term obligations as they come due. It refers to the solvency of the firms overall financial position. 1.1 Current Ratio Current Ratio = Current Assets = 17559700613 es Current Liabilities 16035531198 = 1.10 tim

Current ratio 1.10 of Jamuna Bank Limited (JBL) means the Banks current asset is 1.10 times current liabilities. The ability of JBL to meet its short term obliga

in the year under re Tk.11583.64 million. business handled by major export item wa

tions is fairly high as long as the banks are operated based on the law of large number: all deposits are not paid on the same period and some new deposits come to enhance cash flows. Of course, without knowing about the industry average or competitors ratio as benchmark, it is hard to tell about the actual liquidity of the Bank. For details, calculations of both current assets and current liabilities are giv en below: Current Assets Cash 1379174865 Balance with other banks and financial institutions 1877145119 Money at call on short notice 120000000 Government Investment: Prize bonds 371700 Treasury Bills up to 364 days 2322803613 2323175313 Maturity Groupings of Loans and Advances Payable on Demand 360933476 Not more than three months 3457399144 More than 3 months but not more than 1year 8041872696 11860205 316 Total Current Assets 17559700613 Current Liabilities Borrowings from Bangladesh Banks, others banks, financial institutions and agent s 2298932000 Maturity Grouping of Deposit and other Accounts Repayable on Demand 3159333378 Repayable within 1 month 318224082 Over 1 month but within 6 months 4489221031 Over 6 months but within 1 year 5191704702 Other Liabilities Provision for taxation 571230114 Provision for incentive bonus 0 Accrued profit on investment 6839694 Accrued interest on bills and bond 46197 Total Current Liabilities 16035531198

13158483193

578116005

2. Activity Ratio: Activity ratios measure the speed with which various accounts are converted into revenue or cash - inflows or outflows. We calculate this ratio, as the measures of liquidity are inadequate with regard to current accounts because differences in the composition of a banks current asset and current liabilities can signific antly affect its true liquidity. So it is important to look beyond measures of o verall liquidity and to assess the activity (liquidity) of specific current acco unts. 2.1 Asset Turnover or Degree of Asset Utilization: Asset Turnover = Net Revenue = 1328604922 es Total Assets 26405404056 = 0.05 tim

JBLs management could turn its asset into revenue .05 times during 2007. JBL has .05 times efficiency with which the Bank uses its assets to generate revenues, a nd thus the Bank has 50% degree of asset utilization. Without knowing about the industry average or competitors ratio as benchmark, it is hard to tell about the actual position of the Bank in this respect.

3. Debt Ratio: We are concerned with debt ratio because the debt position of a firm indicates t he amount of other peoples money being used to generate profits. Particularly we are interested with long-term debts, as these commit the bank to a stream of pay ments over the long run. Because creditors claims must be satisfied before the ea rnings can be distributed to shareholders, we are paying close attention to the banks ability to repay debts. 3.1 Debt to Asset: Debt to Asset = Total Debt = 24748914018 = 94 % Total Asset 26405404056 The Bank finances 94 % of total assets by the other peoples money being used to g enerate profits. Without knowing about the banking industry average or competito rs ratio as benchmark, it is hard to tell about the actual position of the Bank i n this respect. 3.2 Time Interest Earned (TIE) Ratio: Time Interest Earned = EBIT = Interest Expense 2179434182 1774389203 = 1.23 times

The times interest earned ratio, sometimes called the interest coverage ratio, s ays that JBL has 1.23 times ability to make contractual interest payments. The h igher its value, the better able the Bank is to fulfill its interest obligations . 4. Profitability Ratio: We are interested in calculating the profitability ratios as they enable us to e valuate the Banks profits with respect to a given level of revenue, a certain lev el of assets, or the owners investment. 4.1 Net Interest Margin: Net Interest Margin = Interest Income - Interest Expense Total Asset = 2230265913-1774389203 = 455876710 = 1.73% 26405404056 26405404056 The spread between interest income and interest expense is 1.73 % of the total a ssets. 4.2 Profit Margin: Profit Margin = Net Profit after Taxation = 89110861 = 6.71% Net Revenue 1328604922 JBL has 6.71 % of each sales dollar remaining after all cost and expenses, inclu ding interest, taxes, and preferred stock dividends have been deducted. 4.3 Return on Asset: Return on Asset = Net Profit after Taxation = 0.34% Total Assets 26405404056 = 89110861

JBL generated 0.34% of total available assets as profit. This is very low. The h igher is the companys return on total assets, the better is it. 4.4 Return on Equity: Return on Equity = Net Profit after Taxation = 5.38% Total Equity 1656490038 = 89110861

JBL could earn 5.38% return on the common stockholders investment in the Bank. Ge nerally, the higher this return is, the better off are the owners.

4.5 Earning Earning per = Tk. No.

per Share (EPS): Share = Net Profit after Taxation = 17.91 of Shares Outstanding 4975481

89110861

JBL earned Tk. 17.91 during the period on behalf of each outstanding share of co mmon stock of the bank. 4.6 Payout Ratio: Payout Ratio = Cash Dividend o Net Profit after Taxation = 7463221.5 89110861 = 8 % rati

JBL provided common stock holders with 8% of its net profit after tax as cash di vidend. 5. Market Ratio: This ratio will enable us to get insight into how well investors in the market p lace feel that the bank is dong in terms of risk and return. Here we consider tw o popular market ratios, one that focus on earnings and another that considers b ook value. 5.1 Price/Earning Ratio: Price/Earning Ratio = Market Price per Share = 2 Earnings per Share 17.91 224.32 = Tk. 12.5

We use this ratio to assess the owners appraisal of share value. Investors are wi lling to pay Tk. 12.52 for each taka of the banks earnings. 5.2 Market/Book Ratio: Market/Book Ratio = Market Price per Share = es Book Value per Share 332.93 224.32 = 0.67 tim

The market/book (M/B) ratio will enable us to assess how investors view the firms performance. Market price of JBLs shares is 0.67 times book-strict accounting-va lue.

CHAPTER- 09

RECOMMENDATION & CONCLUSION

9.1Problems Identification During practical orientation in Jamuna Bank Limited Dilkusha Branch the followin g problems are observed. Human resource of any organization is considered as a valuable asset. But human resources, in the branch, are not equipped with adequate banking knowledge. Majo rity of the human resources were lack of sufficient knowledge regarding money, b anking finance and accounting. Without proper knowledge in these subjects, effic iency cannot be optimized. Bank can arrange training program on these subjects. There is shortage of computer in general banking section. Sometimes the shortage of computer makes some unfortunate situation in that section. Flora on-line banking software is used by JBL and this is quite difficult to use for the employee as the employees are not well trained. Since a number of new banks are coming to existence with their extended customer service pattern in a completely competitive manner. Customer-services must be m ade dynamic and prompt. Now a days, people especially business people have very little time to waste. So the bank should make its service prompt so that people need not give more time in the banking activities 9.2 Recommendation Now a day s on-line banking is not a very uncommon service specially private com mercial bank. JBL provides on-line banking service but they take source charge f or it, if the customers do not use his/her mother branch. To encourage customers to use On-line banking facility this service charge should not be taken from th e customers. Though JBL is now using very popular software i.e. Flora bank on-line sof tware but the use of it is quite difficult for the employee. (according to the s tatement of some employee of JBL who has the experience to use more than one ban king software). So proper training should be provided to the bankers regarding e asy operating of this software. JBL are not taking their clearing cheque for otherThey are using IBC/OBC s ystems to take that kind of clearing cheque. Customer service of bank has a greater impact on its customer. To provide smarte r customer service they need a call center department that is very popular now a day. Foreign exchange operations of other banks are more dynamic and less time consum ing. JBL should take some initiative to compete with those banks. In our country financial problem is a great constraint in foreign trade. JBL is very conservative for post-shipment finance. If it stays in liberal position the exporters can easily over-come their financial constraint.

BIBLIOGRAPHY

Annual Report 2007. Jamuna Bank Ltd. Credit Risk Grading Manual, Bangladesh Bank, 2005 Credit Policy Guidelines, Jamuna Bank Ltd. 2005. Website of Jamuna Bank Ltd. (www.jamunabankbd.com)