Académique Documents
Professionnel Documents
Culture Documents
Each of the above areas is critically analyzed in order to determine the efficiency of Bank Asia Limited, CDA Avenue Branch.
1.4 Methodology:
A method involves a process or technique in which various stages or steps collecting data/information are explained and the analytical techniques are defined. The report is composed of both primary and secondary data or sources. Primary Data: Primary data have been collected by informal interview with the officers. Some information regarding my report objects has been collected through discussion with different executives of the Bank. Secondary Data: Secondary data means data those are already available i.e. they refer to the data, which have already been collected and analyzed by someone else.
I used the following sources of secondary data. i. ii. iii. Credit Manual of the Bank. Annual Reports of the Bank. Different Documents of the Bank.
The members of board of directors sponsor the paid up capital of the Bank. The Bank is managed by experienced officers committed to provide highly efficient personalized and quality services. There is no conventional system of Clark guard &peon in the Bank. The security aspect is locked & managed through private security agency. The Bank has a good number of professional managers to manage competitive & complex situation efficiently & effectively. They follow the formal relationship among the different level of the management.
Board of Directors
The first Board of Directors of the Bank was constituted with 13 Directors. According to Article 128 of the Articles of Association of the Bank, four Directors of the Bank will retire in this Annual General Meeting. They all have expressed their desire for reelection, being eligible for the same. Since the Bank has floated its share, for public subscription, two Directors will be elected from the public shareholders
EXECUTIVE OFFICER
SENIOR OFFICER
OFFICER
BANKING OFFICER
TELLER
B G e n e r a l B a n k in g
n k in g C
e r v ic e s F o r e ig n E x c h a n g e
A C A R C C u a s h S
r e d it / v a n c e O v e r d r a O L a l f t v e o a n C
I m r d r a f t R it E
p o x p o
r t r t c e
c c o u n t s e m it t a n c e
c u r e d T e r m
e m
it t a n
le a r in g e r S e r v ic e
e S
r s o n t a f f L T F M D o n a n L D P A
r e d
s t o m
L o a n R B P
e y + + G B D e P n e r a l
L o
Recently Bank Asia offers its second IPO of 20 Crore and for this amount of share the initial application was for Tk- 1100 crore which indicates that the Bank has got a brand image in the market and has got the faith of the customer. Such response from the investor provides the bank more confidence over its operation and helps to take forward looking decision.
The Board of directors of the Bank comprises of 13 members, out of which 11 members are from the Sponsor group and 2 members ere elected by the public shareholders. According to Article 128 of the Articles of Association of the bank, Directors Mr. Rumee A Hossain, Mr. Nafees Khundker, Mr.Md.Anwar Hussain and Mrs. Sabrina Chowdhury will retire in this Annual general Meeting. The Board of directors sets the strategy, provides guidelines for management of the Bank, approves the annual business plan and regularly reviews management performance, ensuring that regulatory guidelines are honored at all times. The Board is keen to make sure that all employees at all levels are well informed about the policy guidelines of the Board and become involved in all new initiatives taken to feel proud of their institution. In particular, the bank takes serious view of any violation of regulatory guidelines by any employee at any level.
Name Mr.M.Syeduzzaman Mr.A.Rouf Chowdhury Mr.Arifur Rahman Sinha Dr.Md.Shafiuddin Chowdhury Mr.Mohd.Safwan Chowdhury Mr.Md.Sirajul Haque Mr.Jahir Uddin Mr. Rumee A.Hossain Ms.SohanaRouf Chowdhury
Mr.Faisal Samad Mr.M.Shamsul Alam Lt.Col.(Retd.)Fariduddin Ahmed Mr.Syed Anisul Huq Mr.Aminul Islam
To assist in bringing high quality service to our customers and to participate in the growth and expansion of our national economy. To set high standards of integrity and bring total satisfaction to our clients, shareholders and employees. To become the most sought after bank in the country, rendering technology driven innovative services by our dedicated team of professionals.
2.6 VISION
Bank Asias vision is to have poverty free Bangladesh in course of a generation in the new millennium, reflecting the national dream. Our vision is to build a society where human dignity and human rights receive the highest consideration along with reduction of poverty.
3.0
CONSUMER
FINANCING-
AN
OVERVIEW
OF
POLICY
'Consumer financing' means any financing allowed to individuals for meeting their personal, family or household needs. The facilities categorized as Consumer Financing are given as under: (i) Credit Cards forms of clean lending with a maximum limit of Tk. 500,000/- to a single borrower. Supplementary credit cards shall be considered part of the principal borrower for this purpose. The bank shall secure the limits exceeding Tk. 500,000/- appropriately. Corporate Card will not fall under this category and shall be regulated by exiting guideline/regulations for lending. (ii) Auto Loans (Secured by way of hypothecation /charge on vehicle). (iii)Housing Finance (secured by mortgage on the property. e.g. house/flat/land). (iv)Consumer Durables Loans for purchasing various consumer items for personal use or use in the family. (v) Loans for Professionals only for professionals like doctors, engineers, architects, IT professionals, and management consultants. (vi)Unsecured Personal Loans for payment/ purchase of goods service and expenses.
3.1
MINIMUM
REQUIREMENTS
FOR
CONSUMER
FINANCING.
Apart from the specific regulations given under each mode of financing separately, general requirements laid down here should also be followed while undertaking consumer financing. It may be noted that these are the minimum requirements and should not in any way be construed to restrict the role of the management processes through establishing comprehensive credit risk management systems appropriate to their type, scope, sophistication and scale of operations. The Board of Directors of the bank establishes policies, procedures and practices to define risks, stipulate responsibilities, specify security requirements, design internal controls and then ensure strict compliance with them. For consumer financing, the bank shall implement/follow the guidelines given below:
1.
Bank shall establish separate Risk Management capacity for the purpose of consumer financing, which will be suitably staffed by personnel having sufficient expertise and experience in the field of consumer finance/business.
2.
The bank shall prepare Comprehensive Consumer Credit Policy duly approved by the Board of Directors, which shall interlaid cover loan administration, including documentation, disbursement and appropriate monitoring mechanism. The policy shall explicitly specify the functions, responsibilities and various staff positions, powers/authority relating to approval/sanction of consumer finance facility.
3. For every type of consumer finance activity, the bank shall develop a specific Product Program Guide (PPG). The program shall include the objective/quantitative parameters for the eligibility of the borrower and determining the maximum permissible limit per borrower. The PPG will also indicate the maximum permissible exposure bank will take against each product.
4. Bank shall put in place an efficient computer based MIS for the purpose of consumer
finance, which should be able to effectively cater to the needs of consumer financing portfolio and should be flexible enough to generate necessary information reports used by the management for effective monitoring of the bank's exposure in the area. The MIS is expected to generate the following periodical reports: Delinquency reports (for 30, 60, 90 180 & 360 days and above) on monthly basis. Reports interrelating delinquencies with various type of customers of various attributes of the customers to enable the management to take important policy decisions and make appropriate modifications in the lending program. Quarterly product wise profit and loss account duly adjusted with the provision on account of classified accounts. 3. The bank shall develop comprehensive recovery procedures for the delinquent consumer loans. The recovery procedures may vary from product to product. However, distinct and objective triggers should be prescribed for taking preplanned enforcement/recovery measures.
4.
The bank shall impart sufficient training on an ongoing basis to their capability building regarding the various aspects of consumer finance.
The bank shall prepare standardized set of borrowing and recourse documents (duly cleared by panel legal counsels) for each type of consumer financing.
3.2 Operations:
1. Consumer financing, like other credit facilities, must be subject to the Bank's risk
management process setup for this particular business. The process may include, identifying source of repayment and assessing customer's ability to repay, his/her past dealings with the bank, the net worth and information obtained from a Credit Information Bureau approved by Bangladesh Bank. 2. At the time of granting facility under various modes of consumer financing, bank shall obtain a written declaration from the borrower divulging details of various facilities already obtained from other institutions. The bank should carefully study the details given in the statement and allow fresh finance/limit only after ensuring that the total exposure in relation to the repayment capacity of the customer does not exceed the reasonable limits as laid down in the approved policies of the bank. The declaration will also help bank to avoid exposure against a person having multiple facilities from different institutions on the strength of an individual source of repayment. 3. Internal audit and control function of the bank, apart from other things, should be designed and strengthened so that it can efficiently undertake an objective review of
the consumer finance portfolio to assess various risks and possible weaknesses. The internal audit should also assess the adequacy of the internal control and ensure that the required policies and standards are developed and practiced. Internal audit should also comment on the steps taken by the management to rectify the weaknesses pointed out by them in their previous reports for reducing the level of risk. 4. The bank shall ensure that its accounting and computer systems are well equipped to avoid charging of mark-up. For this purpose it should be ensured that the mark-up charged on the outstanding amount is kept separate from the principal. 5. The bank shall ensure that any repayment made by the borrower is accounted for before applying mark-up on the outstanding amount.
3.3 Disclosure/Ethics:
The bank shall clearly disclose all the important terms & conditions. Fees, charges and penalties, which are internal including interest rate, pre-payment penalties and the conditions under which that apply. For ease of reference and guidance of its customers, bank shall publish brochures regarding frequently asked questions.
The consumer finance facilities extended by banks to their directors, major shareholders, employees and family members of these persons shall be at arms length basis and on normal terms and conditions applicable for other customers of the banks. The Banks shall ensure that the appraisal standards are not compromised in such cases and market rates are used for these persons.
PERCENTAGE OF CLASSIFIED CONSUMER FINANCE TO TOTAL CONSUMER FINANCING a) Below 5% b) 6% - 10% c) 11% - 15% d) 15% and over
MAXIMUM LIMIT 10 times of the equity 6 times of the equity 4 times of the equity Equal to equity
Method of classification for the above purpose shall be in accordance with the classification requirement as prescribed under Prudential Regulation
3.4.3 REGULATION 3
TOTAL FINANCING FACILITIES TO BE COMMENSURATE WITH THE INCOME
While extending financing facilities to their customer, the banks would ensure that the total installment of the loans extended by the financial institutions is commensurate with the take home income/disposable income and repayment capacity of the borrower. This measure would be in addition to banks' usual evaluations of each proposal concerning credit worthiness of the borrowers that the banks' portfolio under consumer finance fulfills the prudential norms and instructions issued by the Central Bank and does not impair the soundness and safety of the bank itself.
AND
PROVISIONING
FOR
their Consumer Finance portfolio (irrespective of all consumer banking products) and provisioning there-against.
2.
non-performing credit portfolio shall be made for risk assessment and, where considered necessary, any account including the performing account will be classified, and the category of classification determined on the basis of time based criteria shall be further downgraded. Such evaluation shall be carried out on the basis of credit worthiness of the borrower, its cash flow, operation of the account, adequacy of the security, inclusive of its realizable value and documentation covering the advances.
3.
maintain a general reserve at least equivalent to 3% of their consumer finance portfolio to protect them from the risks associated with the economic cyclical nature of this business.
Banks shall review, at least on a quarterly basis, the collectibles of their loans /
advances portfolio and shall properly document the evaluations so made. Shortfall in provisioning, if any, determined, as a result of quarterly assessment shall be provided for immediately in their books of accounts by the banks on quarterly basis.
3.4.6 REGULATION 6 TRANSFER FACILITIES FROM ONE ANOTHER TO AVOID CLASSIFICATION CATEGORY TO
The bank shall not transfer any loan or facility to be classified from one category of consumer finance to another to avoid classification.
While considering proposals for any exposure, banks should give due weight age to the credit report relating to the borrower and his group obtained from a Credit Information Bureau (CIB) of Bangladesh Bank. The condition of obtaining CIB report will be governed by rules & regulations as prescribed by Bangladesh Bank from time to time.
3.4.9 REGULATION 9
Banks shall provide the credit card holders with the statements of account at monthly intervals, unless there has been no transaction of any outstanding balance on the account since last statement.
3.4.10REGULATION 10
Banks shall be liable for all transactions not authorized by the credit card holders after they have been properly served with a notice that the card has been lost/stolen. However, the bank's liability shall be limited to those amounts wrongly charged to the credit card holder's account. In order to mitigate the risks in this respect, the banks are encouraged to take insurance cover against wrongly charged amounts, frauds, etc.
3.4.11 REGULATION 11
In case the cardholders make partial payment, the banks should take into account the partial payment before charging service fee/mark-up amount on the outstanding/billed
amount so that the possibility of charging excess amount of mark-up could be avoided.
3.4.12 REGULATION 12
Due date for payment must be specifically mentioned on the accounts statement. If fine/penalty is agric to be charged in case the payment is not made by the due date, a clear mention of the same should be given in the agreement.
In case of foreign currency cards, cards can be issued subject to repayment is made against respective foreign currency account or against lien of foreign currency quota allocated to Bangladeshi nationals by Bangladesh Bank from time to time.
3.4.15 REGULATION 15
The maximum tenure of the auto loan finance shall not exceed five-year.
3.4.16 REGULATION 16
The banks shall not allow auto loan (including insurance) exceeding TK. 5 million per individual under this head. For the purpose of this regulation, auto facility to the dependent members of an individual shall also be treated as part of the exposure of that individual. While allowing auto loans, the banks shall ensure that the minimum down payment does not fall below 10% of the value of vehicle.
3.4.17 REGULATION 17
In addition to any other security arrangement on the discretion of the banks, the vehicles financed by the banks shall be properly secured by way of hypothecation.
3.4.18 REGULATION 18
The banks shall ensure that the vehicle remains properly insured (comprehensive) at all times during the tenure of the loan.
3.4.19 REGULATION 19
The clause of repossession in case of default should be clearly stated in the loan agreement. At least 15 days before enforcing repossession, banks shall send a legal notice to the borrower through courier service of registered mail against proper acknowledgment. The repossession expenses charged to the borrower should not be more than actual incurred by the bank. However, the maximum amount of repossession charges shall be listed in the schedule of charges provided to customer. The banks shall
develop an appropriate procedure for repossession of the vehicles and shall ensure that procedure is strictly in accordance with law.
3.4.20 REGULATION - 20
A detailed repayment schedule should be provided to the borrower at the outset. Where alterations become imminent because of late payment or prepayment and the installment amount or period changes significantly, the revised schedule should be provided to the borrower at earliest convenience of the bank but not later than 15 days of the change. Further even in case of insignificant changes, upon the request of the customer, the bank shall provide him revised repayment schedule free of cost.
3.4.21 REGULATION 21 The banks desirous of financing the purchase of used cars shall prepare uniform guidelines for determining value of the used vehicles. However, in no case the bank shall finance the cars older than five year.
3.4.22 REGULATION 22
The banks should ensure that a good number of authorized auto dealers are placed at their panel to eliminate the caches of collusion of other unethical practices.
3.4.24 REGULATION 24
Commercial banks shall ensure that at no time their total exposure under house financing exceeds 10% of their net consumer advances.
3.4.25 REGULATION 25
Banks are free to extend mortgage loans for housing, for a period not exceeding twenty year. Banks should be mindful of adequate asset liability matching.
3.4.26 REGULATION 26
The house financed by the banks shall be mortgaged in bank's favor by way of registered mortgage with registered Power of Attorney.
3.4.27 REGULATION 27
Banks shall either engage professional staff or arrange sufficient training for their concerned officials evaluate the property, assess the genuineness and integrity of the title documents, etc.
3.4.28 REGULATION 28
The bank's management should put in place a mechanism to monitor conditions in the real estate market (or other product market) to ensure that its policies are aligned to current market conditions.
3.4.29 REGULATION 29
Banks must develop floating rate products for extending housing finance, thereby managing interest rate risk to avoid its adverse effects. Banks also must develop inhouse system to stress test their housing portfolio against adverse movements in interest rates as also maturity mismatches.
REGULATIONS FOR PERSONAL LOANS LOANS FOR THE PURCHASE OF DURABLES 3.4.30 REGULATION 30
INCLUDING CONSUMER
Limits per person for such loans will be Tk.3 lakh with out any securities. However, banks may lend higher amounts provided the loans are secured appropriately. But, in no case, the loan amount will be allowed to exceed Tk.10 lakh. The loan secured against liquid securities shall however, be exempt from this limit.
3.4.31 REGULATION 31
In cases, where the loan has been extended to purchase some durable goods/item, the same will be hypothecated with the bank besides other securities, which the bank may require on its own.
3.4.32 REGULATION 32
The maximum tenure of the loan shall not exceed 5 year.
Besides, Know Your Customer (KYC) and Money Laundering guidelines should be adhered to at all times. Credit Applications should include, as a minimum, the following details: Amount and type of loan(s) proposed. Purpose of loans. Loan Structure (Tenor, Covenants, Repayment Schedule, Interest) Security (if any) Budget Plan.
To illustrate the process of marketing a loan at the front end till disbursement at the Credit Administration Department, please refer to sample process workflow chart.
1.5.1.
Lending Authority is delegated to individual credit analysts and credit manager or senior credit executives by the Head of Consumer Credit. Records of such authority are retained with Head of Consumer Credit. Copies of all Delegated Lending Authority (DLA) are also retained by Credit Administrations Department. Initially the powers will be with Head of Consumer Credit only. Primary steps for selection of borrower:
: Market
Prime responsibility: Checking & Cross checking the Cash flow, Cash flow, Cash flow Gathering the information Verification of net-worth Validation of financial statement
g. Constitution Some other important matters: Whether the firm is registered or not Borrowing powers Worth of the client in the business and as well as partners Purpose of the advance consistent with the company object Existing borrowing Verification of prior charges
Risk Management Credit application Collection and Forwarding to Credit Risk management
Credit Administration
Documentation
No
Application Meets basic PPG criteria? Application declined and returned to customer
Yes
Sales officer/Manager recommends the loan and sends to credit
Credit Approved?
No
yes
Application sent to Credit Administration Unit
Documents in order?
No
Loan disbursed and application and charge documents lodged in safe custody
Minimum age (years): Maximum age (years): Auto Loan : Minimum Income
Monthly surplus income (after meeting all expenses) shall be at least Tk. 15,000/=. Auto Loan : Loan Size (including all costs) For New Cars: Maximum Tk. 2.0 million. For Reconditioned Cars: Maximum Tk. 1.0 million. May be revised time to time by the management. Auto Loan : Loan to Price Ratio Loan amount cannot exceed 80% of the vehicle price in case of new cars and 70% in case of reconditioned cars. Auto Loan : Security/ Collateral a) Hypothecation over the car (lien mark- Hire Purchase raised in the BRTA and blue-book of the car). b) First party comprehensive insurance of the car (Policy must be renewed every year and copy of the policy must be submitted to the bank)
advance. e) Personal Guarantee of spouse/parents and an individual having minimum solvency/income not less than that of the borrower supported by income proof. Auto Loan : Legal Documents a) Duly filled in Car Loan Application Form Terms and conditions signed b) Demand Promissory Note c) Letter of Set-Off d) Irrevocable Letter of Authority to repossess the vehicle e) Ownership transfer form signed by customer f) Letter of Offer with full terms and conditions stated therein and duly accepted. Auto Loan :Interest Rate To be prescribed time to time by the management. At present being @ 14% p.a. with quarterly rest. Auto Loan : Loan Processing Fee @ 0.5% on sanctioned amount, minimum Tk. 5,000/= to be realized at the time of disbursement.
Auto Loan : Maximum Term of Loan For New Cars: For Reconditioned Cares: 60 months 36 months
Auto Loan : Repayment Method Equal Monthly Installments Auto Loan : Disbursement Mode After loan approval vendor will receive a facility confirmation letter. On the basis of that vehicle will be registered with a lien marked on it. After registration, vendor will be paid the total value of the vehicle in the form of Pay Order. Customer should pay the down-payment/total value prior to issuance of facility confirmation letter. Auto Loan : Disbursement pre-condition Comprehensive Insurance coverage and Registration Document must be in place before giving the Pay Order.
Auto Loan : Debt Burden Ratio (DBR %) Monthly Installment size will be maximum 33% of Monthly Net Income.
Auto Loan : Verification of Personal Details and Quotation Details of an applicant to be verified by a banks officer/ third party (engaged by bank) before an approval is accorded. Letter from employer with details of employment and salary Borrower and Guarantors (if any) details (addresses both present and permanent, all telephone numbers of residence, office & mobile no.) Personal net-worth statement Car quotation Referee details Bank statement (minimum 6 months)
Auto Loan : Substantiation of Income Proper substantiation of income will be mandatory. All or any of the following original / true copy of original (accepted only after seeing the originals) documents are accepted for the purpose: Last Tax Return
Bank Statements for minimum last 6 months Personal Net-Worth Statement Any other document that may stand as a proof of income
Auto Loan: Residential History The customer must have permanent residency in his own/ spouses/ parents house within the command area/ City of the bank/ branch. Auto Loan : Maximum exposure under this product 20% of banks equity. Auto Loan : Others Cars to be financed must be unregistered in Bangladesh. Loan size will not be below Tk. 0.3 million. Maintenance cost to be borne by the borrower.
size local corporate, Government officials, Officials working in reputed NGOs (Non Government Organizations), international aid agencies & UN bodies, any tax paying businessmen of repute, any employed / self-employed tax-paying individual having a reliable source of income. Consumer Durables Loan : Purpose Consumer durables for personal/ family use. Items like Television, Refrigerator, Air Conditioner, Audio-Video Equipments, Washing Machine, Personal Computers, other household furniture/ appliances etc. Consumer Durables Loan : Nationality Bangladeshi only Consumer Durables Loan : Age Minimum age (years) Maximum age (years) maturity Consumer Durables Loan : Minimum Service / length of business
- For salaried individual, minimum total service length of 3 years;
: :
25 65 years at loan
- Govt Employees must be confirmed on job; - For self employed individual, a business record of minimum 4 years.
Consumer Durables Loan : Minimum Income Monthly surplus income (after meeting expenses) shall be at least two times of the installment amount.
Consumer Durables Loan : Loan Size Minimum Maximum : : Tk. 50,000/= Tk. 300,000/=
Consumer Durables Loan : Loan to Price Ratio Financing maximum 80% of the cost of the item is allowed. Consumer Durables Loan : Security/ Collateral Hypothecation over purchased assets. Comprehensive insurance over assets (Policy must be renewed every year and copy of the policy must be submitted to the bank) Post dated cheques for each 6 monthly installment One undated cheque for full loan value including full interest to be taken in advance.
Letter of Offer with full terms and conditions stated therein and duly
accepted . Consumer Durables Loan : Interest Rate To be prescribed time to time by the management. At present being @ 14% p.a. with quarterly rest. Consumer Durables Loan: Processing Fee/ Service Charge @ 1% on sanctioned amount, minimum Tk. 1,000/= to be realized at the time of disbursement. Consumer Durables Loan :Tenor Minimum 6 months Maximum 36 months
Consumer Durables Loan : Repayment Method Equal Monthly Installments Consumer Durables Loan : Disbursement Mode Payment to be made by issuing Pay Order in favor of vendors or by crediting customers Savings/ Current account with our bank. Consumer Durables Loan : Debt Burden Ratio (DBR %) Monthly Installment size will be maximum 33% of Monthly Net Income. Consumer Durables Loan :Verification of Personal Details and Quotation Details of an applicant to be verified by banks officer / a third party (nominated by bank) before an approval is accorded. Letter from employer with details of employment and salary Borrower and Guarantors (if any) details (addresses both present and permanent, all telephone numbers of residence, office & mobile no.) Personal net-worth statement Quotation of the item to be purchased Referee details Bank statement
Proper substantiation of income will be mandatory. All or any of the following original / true copy of original documents are accepted for the purpose: Last Tax Return Bank Statements for minimum last 6 months Personal Net-Worth Statement
Consumer Durables Loan : Maximum exposure under this product 40% of banks equity.
Professional Loans : Customer Segment Any Bangladeshi in the following professions as self employed or salaried people: Doctors or medical professionals Engineers Architects IT professionals Management Consultants
Professional Loans :Purpose For purchase of items to support professional needs of above customer segment (e.g. purchase of X-ray machine, Dental chair, medical beds, ultra- sonogram machine, engineering/ mechanical tools, purchase of office equipments/ accessories, etc.) Professional Loans: Nationality Bangladeshi only Professional Loans : Age Minimum age (years) Maximum age (years) : : 25 65 years at loan maturity
Professional Loans : Minimum Service / length of business For salaried individual, must be confirmed employees of a relevant firm For self employed individual, a business record of minimum 2 years
Professional Loans : Minimum Income Monthly surplus income (after meeting expenses) shall be at least two times of the installment amount.
Professional Loans : Loan to Price Ratio Financing 80% of the cost of the item is allowed. Professional Loans : Security/ Collateral Hypothecation over purchased assets. Comprehensive insurance over assets (Policy must be renewed every year and copy of the policy must be submitted to the bank)
One undated cheque for full loan value including full interest to be taken in advance.
Personal Guarantee of spouse/parents and an individual having minimum solvency/income not less than that of the borrower supported by income proof.
Professional Loans : Legal Documents Duly filled in Loan Application Form Terms and conditions signed Demand Promissory Note Letter of Set-Off Irrevocable Letter of Authority to repossess the purchased item Letter of Offer with full terms and conditions stated therein and duly accepted. Professional Loans: Interest Rate To be prescribed time to time by the management. At present being @ 14% p.a. with quarterly rest. Professional Loans : Loan Processing Fee @ 1% on sanctioned amount, minimum Tk. 1,000/= to be realized at the time of disbursement.
Professional Loans: Repayment Method Equal Monthly Installments Professional Loans :Disbursement Mode Payment to be made by issuing Pay Order in favor of vendors by crediting customers Savings/ Current account with our bank. Professional Loans : Debt Burden Ratio (DBR %) Monthly Installment size will be maximum 33% of Monthly Net Income. Professional Loans : Verification of Personal Details and Quotation Details of an applicant to be verified by a banks officer/ third party (nominated by bank) before an approval is accorded. Letter from employer with details of employment and salary
Borrower and Guarantors (if any) details (addresses both present and permanent, all telephone numbers of residence, office & mobile no.)
Personal net-worth statement Quotation of the item to be purchased Referee details Bank statement
Professional Loans : Substantiation of Income Proper substantiation of income will be mandatory. All or any of the following original / true copy of original (accepted only after seeing the originals) documents are accepted for the purpose: Last Tax Return
Bank Statements for minimum last 6 months Personal Net-Worth Statement Any other document that may stand as a proof of income
Professional product
Loans
Maximum
exposure
under
this
Unsecured Personal Loan : Customer Segment Employees of reputed MNCs, large local corporate, commercial banks, UN bodies, reputed NGOs, Government Employees, etc.
Unsecured Personal Loan: Purpose Miscellaneous personal financial requirements. The customer has to declare the purpose of the loan but submission of supporting document is not mandatory. Purposes may be as follows: Marriages in the family Advance rental payments Hospitalization or other emergency medical needs Education (Technical/ Professional) in the family
Unsecured Personal Loan : Age Minimum age: Maximum age: 25 years 65 years at loan maturity
Unsecured Personal Loan : Minimum Service Must be confirmed employees with end-service benefit options. Unsecured Personal Loan : Minimum Income Monthly surplus income (after meeting expenses) shall be at least two times of the installment amount.
Unsecured Personal Loan : Loan Size Minimum Maximum : : Tk. 25,000/= Tk. 200,000/=
Unsecured Personal Loan : Security/ Legal Documents Letter of Introduction from the employer Letter of undertaking for salary and Terminal Benefits assignment Complete Loan Document Personal Guarantee of Spouse/Parents Third party personal guarantee acceptable to bank
Bank Statement (minimum 6 months) Personal Net-Worth Statement Post dated cheques equivalent to 6 monthly installment
Unsecured Personal Loan : Interest Rate To be prescribed time to time by the management. At present being @ 14% p.a. with quarterly rest.
Unsecured Personal Loan : Loan Processing Fee @ 1% of loan amount, minimum Tk. 1,000/= to be realized at the time of disbursement. Unsecured Personal Loan : Tenor Minimum 12 months Maximum 36 months
Unsecured Personal Loan : Repayment Method Equal Monthly Installments Unsecured Personal Loan : Disbursement Mode By crediting to customers Savings/ Current account
Unsecured Personal Loan : Debt Burden Ratio (DBR %) Monthly Installment size will be maximum 33% of Monthly Net Income.
Unsecured Personal Loan : Substantiation of Income Following as appropriate: Salary Certificate / Salary Slip Bank Statements Income Tax returns of last period
Unsecured Personal Loan : Residential History The customer must have permanent residency in his own house/ spouses house/ parents house within the command area of the bank/ branch.
Unsecured Personal Loan: Maximum exposure under this product 20% of banks equity.
House Finance : Purpose For purchase of flat, house, construction of new house, extension of existing house etc. within the command area of the bank/ branch. House Finance : Nationality Bangladeshi only House Finance : Age Limit Minimum age: Maximum age: 25 years 65 years at loan maturity
House Finance: Minimum Income Monthly surplus income (after meeting expenses) shall be at least two times of the installment amount. House Finance : Loan Size Minimum Maximum : : Tk. 300,000/= Tk. 3,000,000/=
House Finance: Loan to Price Ratio Financing up to maximum 50% of cost. House Finance : Security/ Collateral/ Legal Documents
Registered mortgage of project land with building/ flat thereon Registered irrevocable power of attorney empowering the bank to sell mortgaged properties Complete standard Loan Document Personal Guarantee of Spouse/Parents
Personal Net-Worth Statement Post dated cheques equivalent to 6 monthly installment One undated blank cheque (for future default covering)
House Finance: Interest Rate Two years Treasury Bills Rate + 7%, minimum @ 13% p.a. on quarterly rests. House Finance: Tenor Maximum 10 years including grace period House Finance: Repayment Method Equal Monthly Installments House Finance: Disbursement Mode By crediting to customers Savings/ Current account House Finance: Grace Period
Upon assessment of case to case basis but not more than 12 months House Finance: Debt Burden Ratio (DBR %) Monthly Installment size will be maximum 33% of Net Monthly Income.
House Finance: Loan Processing Fee @ 0.5% of loan amount or minimum Tk. 5,000/= to be realized at the time of disbursement.
House Finance: Verification of Personal Details Banks officer/ nominated agency will verify the addresses both present and permanent, cases. After the verification is done, the officer/ agency will submit a report on their findings in the prescribed form. The report will be kept attached to the borrowers loan file. all telephone numbers of borrower, guarantor, referee, employment/occupational details, invoice, etc. This will be a physical verification in all
House Finance: Substantiation of Income Following as appropriate: - Salary Certificate / Salary Slip - Bank Statements - Income Tax returns of last period - Any other document that may stand as a proof of income
House Finance: Maximum exposure under this product 20% of Banks equity.
Credit Card: Target Market Salaried & Self-employed. Credit Card: Nationality Bangladeshi only. Credit Card: Age For Primary card For Supplementary card 21 years to 60 years 18 years to 60 years
Credit Card: Interest Free Period Minimum 15 days Maximum 45 days Credit Card: Interest Accrual On daily average balance Credit Card: Interest Application Monthly from transaction date Credit Card: Validity Period 1 year Credit Card: Renewal Cards will be automatically renewed unless revoked by the bank or requested by the customer. Last 12 months Currently not 30+ DPD Never became 60+ DPD
Credit Card: Determination of Income Salaried: Gross Monthly Income (GMI) is defined as the total income of an applicant including overtime and other allowances received on a regular basis before any deductions/loan installments as reflected in the salary certificate or payslips or the bank statements.
Where free accommodation is provided by the employer, up to 25% of the salary and allowances as mentioned in the salary certificate may be added to arrive at G
Self-employed: GMI is defined as the average monthly income of an applicant after deduction of all business expenses. GMI is determined on the basis of Income Tax Return (IT 88) and/or Bank Statement(s). a. Income Tax Return (IT 88) shows gross yearly income (before deduction), which is divided by twelve to arrive at GMI.
b. Personal (or company account statement in case of sole proprietorship) and/or company bank statements are considered as supporting income documents. Bank statement is analyzed to calculate average monthly credit (both frequency & volume) and average monthly balance. In calculating GMI, maximum 50% of average monthly credit can be taken into consideration. Depending on the nature, frequency and size of business and cash flow, credit
c. Analysts will use their discretion to decide on the appropriate discounted percentage to be taken to calculate GMI. As a general rule, the average monthly balance should cover at least 30% (minimum repayment option being 5%) of the approved credit limit. For calculating GMI from company bank statement, the appropriate discounted percentage will be applied first and then the applicants share of the business (ownership share %). Credit Card: Debt Burden Ratio Defined as the amount of monthly loan repayments of an individual as
declared in the application or identified in the bank statements taken as a percentage of the gross income. For applicants provided with accommodation by employer/having own house, up to 25% of gross income may be added to gross income while calculating the DB ratio. In cases where DB ratio exceeds prescribed norms, spousal income may
be added to enable recalculate DB ratio provided this income is substantiated and the proof of relationship is given. Credit Card: Documentation Documents usually sought from the applicants are: Salary certificate: Signed by Manager
Accounts/HR/Admin/Finance/Personnel or equivalent on official letterhead). In case of Govt. Employees copy of Pay Bill acknowledged by Treasury.
Pay Slip: Latest months (not more than three months old) pay-slip stating companys name.
Bank Statement: Latest (no more than two months old) six months bank statement is required.
Income Tax Return: Latest (not more than two years old) IT 88 acknowledged by ITO. Trade License: Owners name should be clearly stated. Memorandum of Association: Ownership share should be mentioned. Rent Agreement: Should be on govt. revenue stamp paper. Passport Copy: In Bangladesh, we do not have any national ID or social
security number. Alternatively, as a proof of customers identity, passport photocopies will be sought. However, it is not a mandatory requirement considering the fact that a sizeable portion of our target customer does not have a passport. Authentication: The application receiving person (Sales/Branch) will
verify all copies of documents against original and mark O/S (original seen) with his/her name and signature on it.
Credit Card: Maximum exposure under this product 40% of Banks equity.
5.1 PROBLEMS
The loan-processing time is lengthy, which is not good for borrower. Most of the time spent for correspondence between Head Office and branch. There Human resource management are not that much efficient to do the work. Their lacking of knowledge and they are not that much well organized.
6.1 RECOMMENDATION
It is highly recommended to improve and diversify in accordance with the customers need and expectations to more than loyal in the long run business.
Different Programs should be taken to educate the clients regarding different aspects of Consumer credit policy. Leaflets including all basis information written both in easy English and Bengali can be used when a customer comes for loan. Bank should be more innovative and diversified in its services There procedure are very lengthy. So in my suggestion they can change or can short their credit approval. So that customer can feel easy to fill up these. Human resource is another sector for the branch to be developed urgently. Human resources, in this branch, are not equipped with adequate banking knowledge. Majority of the human resources are lack of basic knowledge regarding money, banking finance and accounting. Without proper knowledge in these subjects, efficiency cannot be optimized.
7.1 CONCLUSION
It was great pleasure for me to do my internship program in an esteemed organization like Bank Asia Ltd. Though my practical exposure in Bank Asia Ltd. CDA Avenue for just twelve weeks, it provides me a wide range of scope to observe the factions of bank
through the cordial assistance of its members. I had the scope to focus on consumer credit policy. After completion the whole project it can be realized that Bank Asia is in a competitive position in this viable environment. Working as an intern in the Bank Asia, I got practical experiences of the demands of consumer credit and also the banks effort to meet them. The bank should maintain a well-structured communication from upper level to lower level. Each official should be valued and treated as a part of the bank and they must have the privilege to devote themselves for the betterment of services of the bank.
This is a company, which has so far shown good performance and holds the strongest position in the banking market. Overall, the bank must make a positive attempt to be more outward looking in their goals and aware of what is happening. I hope, in spite of my all limitations, this experience of sharing works with such working environment will help me a lot in professional life. This has a remarkable impact on the economic growth of our country and financial support of individuals.