CHAPTER1.1 1.

I : INTRODUCTION Origin of the Study Objectives of the Study 1.2.1 Broad Objectives 1.2.2 Specific Objectives

Page 2 2 2 2 2 2 3 3 3 4

1.3 1.4

Methodology of the Study Sources of Data & Information 1.4.1 Secondary Sources 1.4.2 Primary Sources

1.5 1.6

Scope & Significance of the Study. Limitations of the Study.

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1.1 Origin of the study: This Internship Report is prepared as a partial fulfillment of the requirement of BBA program. The study paper based on Overall Banking Activities of Jamuna Bank Limited. To fulfill the report properly I have discussed industry analysis, competitive analysis, and overview and performance analysis of Jamuna Bank Limited. In Jamuna Bank Limited, I was assigned in the Origination Department. My internal supervisor was M. Shakhawat H. Bhuiyan, Joint Director, Bangladesh Bank.

1.2 Objectives of the Study: 1.2.1 Broad Objectives:

To understand the basic approaches of banking operation in Bangladesh.

1.2.2

Specific Objectives:

Understanding Banking environment. Understanding the Banking activities. Understanding the Cheque Clearing. Understanding the Accounts opining procedures. Understanding the Import. Understanding the Export.

1.3 Methodology of the Study: The study is a result of the discussion with my supervisor. Analyze Different type of Ratios. Following a report sample. Prepare comparative Analysis. Different statistical tools are used.

1.4 Sources of Data & Information: In conducting the study, data and information have been collected from different sources. All these data were collected from the secondary sources and very few from primary sources. The sources of data include the following:

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1.4.1 Secondary Sources: Different statements of bank. Annual report of Jamuna Bank Limited. Consultation of related books and publications. Vouchers, leaflets, loan files, of the bank. Files, balance sheet and various documents of Jamuna Bank Limited.

1.4.2 Primary Sources: Personal observation. Discussion with banks officers. Desk work in different section/division.

1.5 Scope & Significance of the Study: Scope of the study is quite clear. Since Origination Department is dealing with all types of loan & deposit activities in the bank, studying these core themes, Opportunities are there to learn other aspects of SME matters. Concept of General Banking and its impact in overall economy of Bangladesh Importance of Banking in context of Bangladesh

Small entrepreneurs of rural urban spectrum are enjoying the Jamuna Bank Limited loan facility without the presence of bank at rural area. Virtual banking concept through SME banking.

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1.6 Limitations of the Study: The study has suffered from a number of barriers Data from Jamuna Bank Limited is highly confidential for the outside people and I had no authority to use the core banking software. Main limitation was, I was assigned in the deposit origination site but I need information about loan origination department. So I have faced some problem to collect information & to use the information. Time is also a big constraint for my research. I have to submit a broader deal in a shorter form of outcome. I had to go under my day-to-day job responsibility that I was supposed to do so. So I could get few more time to spend in collecting data for preparing my internship report.

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CHAPTER- II : ORGANIZATIONAL OVERVIEW 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 Historical Background of Jamuna Bank Ltd Goals And Objectives Of Jamuna Bank Limited Vision And Mission Board of Directors Management Team Branches of Jamuna Bank Ltd Branch Structure List of Branches of Jamuna Bank Limited List of Divisions of Jamuna Bank Limited

6- 12 6 6 7 8 9 10 11 12 13

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2. 1 Background Of Jamuna Bank Limited:

. Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994 with its Head Office at Chini Shilpa Bhaban, 3, Dilkusha C/A, Dhaka-1000. The Bank started its operation from 3rd June 2001. The Bank undertakes all types of banking transactions to support the development of trade and commerce of the country. JBL's services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units. Jamuna Bank Ltd., the only Bengali named new generation private commercial bank was established by a group of winning local entrepreneurs conceiving an idea of creating a model banking institution with different outlook to offer the valued customers, a comprehensive range of financial services and innovative products for sustainable mutual growth and prosperity. The sponsors are reputed personalities in the field of trade, commerce and industries. The Bank is being managed and operated by a group of highly educated and professional team with diversified experience in finance and banking. The Management of the bank constantly focuses on understanding and anticipating customers' needs. The scenario of banking business is changing day by day, so the bank's responsibility is to device strategy and new products to cope with the changing environment. Jamuna Bank Ltd. has already achieved tremendous progress within only eight years. The bank has already ranked as one of top quality service providers & is known for its reputation. At present the Bank has real-time centralized Online banking branches (Urban & Rural) throughout the Country having smart IT-Backbone. Besides these traditional delivery points, the bank has ATM of its own, sharing with other partner banks & Consortium throughout the Country.

2. 2 Goals And Objectives Of Jamuna Bank Limited:

The goal of Jamuna Bank Limited, is to be the number one private commercial bank in Bangladesh and the objectives are to be the best performing bank with world class services.

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2. 3 Vision And Mission:

To become a leading banking institution and to play a pivotal role in the development of the country. The Bank is committed to satisfying diverse needs of its customers through an array of products at a competitive price by using appropriate technology and providing timely service so that a sustainable growth, reasonable return and contribution to the development of the country can be ensured with a motivated and professional workforce.

cutting-edge technology, a dynamic workforce and a wide array of financial products and services. The Vision of Jamuna Bank Limited is based on a philosophy known as JBL. We envision Jamuna Bank Limited to be: One of the Best Performing Banks in Bangladesh The Bank of Choice A Truly World-class Bank

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2. 4 Board Of Directors:
The Board of Directors consists of 15 members elected from the sponsors of the Bank. The Board of Directors is the apex body of the Bank.

Chairman Vice Chairman

Directors & Sponsors

Managing Director Company Secretary Chief Adviser

Tax Advisor

Auditors

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2. 5 Organizational Structure:
Sponsor & Shareholders Shareholders Board of Directors Company Secretary Managing Director

Executive Committee

Policy Committee

Chief Adviser

Deputy Managing Director

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2. 6 Organogram Of Jamuna Bank Limited:

The organogram of Jamuna Bank Limited is given below with a flowchart

Senior Executive Vice President Shareholders Executive Vice President Shareholders Senior Vice President Shareholders Vice President Shareholders Senior Assistant Vice President Shareholders Assistant Vice President Shareholders First Assistant Vice President Shareholders Junior Assistant Vice President Shareholders Senior Officer Shareholders Officer Shareholders Junior Officer Shareholders Assistant Officer Shareholders

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2. 7 Branch Structure:
The branch structure of Jamuna Bank Limited Motijheel Foreign Exchange 0018 branches is given below by a flowchart Vice President & Manager of the Branch

First Asst. Vice President & Deputy Manager of the branch

General Banking Department

Credit Department

Clearing & NRB Department

Cash Department

The Jamuna Bank LTD, Motijheel Foreign Exchange -0018 is consisted of four departments with eight efficient employees including the Branch manager and deputy manager. There is a Vice President for managing the branch activities; there is a First assistant Vice President who organizes the credit department, there are some senior officers, officer and junior officers in the branch.

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2.8 List of Branches of Jamuna Bank Limited

1 Mohakhali Branch 2 Sonargaon Road Branch 3 Moulvi Bazar Branch 4 Goala Bazar Branch 5 Agrabad Branch 6 Dilkusha Branch 7 Beani Bazar Branch 8 Sylhet Branch 9 Shantinagar Branch 10 Gulshan Branch 11 Motijheel Foreign Exchange 12 Nayabazar IB Branch 13 Naogaon Branch 14 Mohadevpur Branch 15 Khatungonj Branch 16 Konabari Branch 17 17 Bhatiary Branch 18 Foreign Exchange Branch 1 9 Chistia Market Branch 20 Jubilee Road IB Branch 21 Bogra Branch 22 Baligaon Bazar Branch 23 Narayangonj Branch 24 Dhanmondi Branch

25 Rajshahi Branch 26 Bashurhat Branch 28 Bahaddarhat Branch 29 Sirajgonj Branch 30 Banani Branch 31 Mawna Branch 32 Ashulia Branch 33 Dinajpur Branch 34 Kushtia Branch 35 Kadamtoli Branch 36 Aganagar Branch 37 Uttara Branch 38 Comilla Branch 39 Azadi Bazar Branch 40 Laksam Branch 41 Anderkilla Branch 42 Mirpur Branch 43 Malibagh Branch 44 Madaripur SME Agri Branch 45 Thakurgaon Branch 46 Barisal Branch 47 Rangpur Branch 48 Feni Branch 49 Savar Branch 50 Gazipur Chowrasta Branch

51 Chapainawabgonj SME Agri Branch 52 Rayerbag Branch 53 Munshigonj SME Agri Branch 54 Nasirabad Branch 55 Kazipur SME Agri Branch 56 Jurain SME Agri Branch 57 Shetabgonj Branch 58 Sherpur SME Agri Branch 59 Jessore Branch 60 Islampur Branch 61 Ring Road Branch 62 Mymensingh Branch 63 Rupshi Branch 64 Pabna Branch 65 Tongi Branch 66 Dewanhat Branch 67 Progati Sarani Branch 68 Moulvi Bazar SME Agri Branch 69 Sherpur Branch 70 Natore Branch 71 Ashugonj Branch 72 Tongi Bari Branch 73 Barura Branch 74 Chittagong Zone Office

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2.9 List of Divisions of Jamuna Bank Limited

1 Treasury Division 2 International Division 3 Credit Division 4 MD's Secretariat 5 Credit Administration Division 6 PR & Brand Communication Department 7 Anti Money Laundering Division 8 Card Division 9 Chairman's Secretariat 10 Board Division 11 Human Resources Division 12 Banking Operation Division 13 Inventory Management & Maintenance Department 14 ICT Division 15 ICC Division

16 Corporate Division 17 General & Common Services Division 18 Share Division 19 Financial Administration Division 20 JB Training Institute 21 SME Division 22 Retail Banking Division 23 Risk Management Division 24 Islamic Banking Division 25 MD's Office 26 Research & Development Wing 27 Offshore Banking Unit 28 Capital Market Operation Division 29 Marketing & Development Department 30 Merchant Banking Division 31 Law & Recovery Division 32 Monitoring and Vigilance Division

Credit Rating of Jamuna Bank Limited Current Rating Long Term AA3 Short Term ST-2 Date of Rating 03.05.2012 Previous Rating Long Term A-1 Short Term ST-2 Date of Rating 13.04.2011

Credit Rating Agency of Bangladesh Limited (CRAB) upgrades the rating of Jamuna Bank Limited to AA3 from A-1 and reaffirms short term rating ST-2.

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Chapter: 3 || General Banking Products and Services 3.1 General Banking 3.2 Account Opening 3.3 3.3.1 Regular Saving Account Products 3.3.2 Fixed Deposit Account 3.3.3 Current Account Rules of Opening an Account 3.4 3.4.1 In The Name of Individual 3.4.2 In Joint Name 3.4.3 Proprietorship 3.4.4 Partnership 3.4.5 Limited Company 3.4.6 Societies, Clubs And Associations 3.4.7 Non-Government Organization (NGO) DD /Pay Order/TT 3.5 3.5.1 Demand Draft 3.5.2 Pay Order 3.5.3 Telegraphic Transfer 3.5.4 Cash Department 3.5.5 Deposit Cash In Customers Account Make Payments from Customers Account 3.6 Types of Cheque 3.7 3.7.1 Open Cheques 3.7.2 Crossed Cheque Clearing And Transfer Department 3.8 3.8.1 Inward Clearing 3.8.2 Outward Clearing 3.8.3 Outward Money Transfer Flow Chart IBC/OBC 3.9 3.9.1 OBC Collection Process 3.9.2 IBC Collection Process Credit Department 3.10 3.10.1 Loan Disburse Process 3.10.2 Credit Related Term

15 15 15 15 17 17 17 18 18 18 18 19 19 19 19 20 20 20 21 21 21 22 22 22 23 24 25 26 27 27 27 28

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3.1 Products and Services: The Products and services Of Jamuna Bank Limited Motijheel Foreign Exchange 0018 Branch can be described by the departments of a commercial banks branch. These departments are: General Banking Cash department Clearing department Foreign Exchange department Credit Department Accounts department

3.2 General Banking: The general banking consists of account opening, front desk management etc. now these parts are described below:

3.3 Account Opening This department is responsible for the opening and closing of accounts. In consideration of Jamuna Bank Limited, opening and/or continuing to maintain any account, the Account Holder/Depositor or Investor would be bound by the terms and conditions written on the account opening form. The first part establishes the preference regarding the type of account to be maintained. The Jamuna Bank Limited has various choices offered in this regard are:

3.3.1 Regular Saving Account Products: Mutual Trust Bank has verities of saving account products. These regular saving account products are described below:

Jamuna Bank Limited Inspire Jamuna Bank Limited Inspire provides a range of enhanced services, while letting you enjoy unique benefits of getting return on your deposit monthly instead of traditional half yearly. With extra access and convenience of banking, enjoy the full convenience of a savings account and access your savings anytime.

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Jamuna Bank Limited Ruby Jamuna Bank Limited Ruby enables todays independent women to enjoy hasslefree banking services. Besides the core Jamuna Bank Limited banking advantage, Jamuna Bank Limited Ruby, an exclusive savings account for women, is packed with special benefits for our women customers. Enjoy your present and plan for the future, with this rewarding savings account.

Jamuna Bank Limited Junior Jamuna Bank Limited Junior is one kind of savings account for fewer than 18 students. This account will be maintained through guardian. Under this account they can enjoy free account maintenance, free internet banking as well as free debit card.

Jamuna Bank Limited Graduate We understand that starting college or university can be both exciting and challenging. That's why Jamuna Bank Limited Graduate, a contemporary savings account, is packed with everything you need to meet all your banking needs, offering monthly income while helping you save for future financial emergencies.

Jamuna Bank Limited Senior Jamuna Bank Limited Senior has been designed keeping in mind the fact that a senior citizen's banking requirements are wholly different and deserve special attention. We like to empower our senior citizens, so that they can carry out their dayto-day banking transactions independently, and with dignity and confidence. Now the true pleasure of seniority is in your grip.

Brick By Brick Brick By Brick is a savings account. We know Drops of water make an ocean. Your habit of regular savings will provide you comfort in the future. Brick by Brick is a unique monthly savings plan which builds up over the years and provides a lump sum amount at maturity.

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Jamuna Bank Limited Education Plan We know how important it is to plan for your child's financial security. Jamuna Bank Limited has the solution to help you do that while showing the virtue of saving, in your child. Jamuna Bank Limited Junior is a savings account for minors that offer the opportunity to save for today and the future. 3.3.2 Fixed Deposit Account Fixed Deposit Account refers where the amount of the account will be fixed for a certain period of time. There are some other kinds of fixed accounts like:

Monthly Benefit Plan This plan offers you to generate monthly income out of your deposit. It has been designed to help and assist conscious savers from all strata of the society

Jamuna Bank Limited Double Saver Jamuna Bank Limited Double Saver is a fixed deposit scheme where the deposit doubles in 6 (six) years.

3.3.3 Current Account In this kind of account a customer can deposit his money and can write one or more check to withdraw their money. For doing this notice is not required. He can deposit it whenever he/ she want to and also can withdraw it whenever he/ she want to.

3.4 Rules of Opening an Account There are some factors that should be considered in case of opening a bank account. These factors are described as below:

3.4.1 In The Name of Individual The client has to fill up an account opening form. Terms and conditions are printed on the back of the form. The form contains the declaration clause, special instructions etc. two copies of passport size photograph duly attested by the introducer are affixed with the form.

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3.4.2 In Joint Name In this type, the formality is same as individual account, but in the special instruction clause, either or survivor or former or survivor clause is marked.

3.4.3 Proprietorship In addition the customer has to submit the valid Trade License and Tax Paying Identification Number (TIN) along with the application. 3.4.4 Partnership In case of partnership account, the bank asks for, A copy of the partnership agreement (Partnership Deed) A letter signed by all the partners containing the following particulars. The name and addresses of all partners The nature of the firms business The name of the partner authorized to operate the account in the name of the firm, including the authority to draw, endorse and accepting the bills and mortgage and sell the properties belonging to the firm.

3.4.5 Limited Company On having the desire to open an account from a limited company, an Jamuna Bank Limited Officer asks for the following documents: Registration Certificate from the Registrar of Joint Stock of Companies Certificate of Incorporation Certificate of Commencement of Business Memorandum of Association Articles of Association Copies of Annual Accounts Copies of the Boards resolution, which contains a) The name of the persons who have been authorized to operate the bank account on behalf of the company. b) The name of the persons who are authorized to execute documents with the bank on companys behalf.

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3.4.6 Societies, Clubs And Associations In case of these sorts of accounts Jamuna Bank Limited requires the following documents: Registration Certificate under the Societies Registration Act, 1962 Copies of Memorandum, Articles of Association Resolution of the Managing Committee. Power of Attorney to Borrow

3.4.7 Non-Government Organization (NGO) The account opening procedure is same but in exception is that the Registration Certificate from the Social Welfare Department of Government must be enclosed with the application.

3.5 DD /Pay Order/TT 3.5.1 Demand Draft A method used by individuals to make transfer payments from one bank account to another. Demand drafts are marketed as a relatively secure method for cashing checks. The major difference between demand drafts and normal checks is that demand drafts do not require a signature in order to be cashed.

3.5.2 Pay Order A Pay Order, similar to a banker's chaeque is also payable locally, the only difference is that in case of a pay order, the bank is directing the payee bank to pay the amount mentioned on the pay order to the person/organization so mentioned or his order, i.e. any other person/organization.

Both pay orders and demand drafts are used by individuals to make transfer payments from one bank account to another. The main difference between the two is that while a demand draft is a written order directing the payment to be made to a third party outside your city, a pay order is drawn for the third party within your city.

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3.5.3 Telegraphic Transfer TT means Telegraphic Transfer, an electronic method of transferring funds. Telegraphic Transfers are also known as Telex Transfers. A banking term commonly called "T/T," meaning a cable message from one bank to another in order to affect the transfer of money. Telegraphic Transfers are usually fairly expensive, due to the fast nature of the transaction.

3.5.4 Cash Department The cash department is the most important department of a commercial bank. It receives cash from customers and then deposits it into the accounts of the customers and maintained their balances. The officers in this department are called teller this department involves in two activates:1. Deposit cash in customers account 2. Make payments from customers account 3. Day end cash balancing 3.5.5 Deposit Cash In Customers Account When the customer want to deposit amount in his account at opening of account or after that then he has to fill a deposit slip that shows the amount and the account in which the cash will be deposited. Then teller will receive amount and credit the customers account that shows increase in customers bank account. Cash may be deposited either by deposit Slips for SB/ CD/ CC accounts or by other credit voucher like single credit voucher, pay order/ Draft/ T.T. application forms. Branches shall ensure the following: I. Cash receiving officer shall check the deposit slip/ credit voucher/ application form as to its title of account, number and amount in words and figures. II. The cash currency notes shall be counted physically /by cash counting machine as per denominations of the currency notes on the back of the voucher /deposit slip. The officer will enter the particulars in the cash Receiving Register and sign on the related deposit slip/voucher and affix "Cash Received" Stamp with date. He/she shall write the amount in words and figures in red ink across the deposit slip/voucher/ application form in token of receipt of the money. He /She shall send the register along with the deposit 20 | P a g e

slip/voucher for signing on the same and authenticating the receipt in the register by the in-charge of the department. III. The officer in-charge shall retain the original of deposit Slip and other vouchers and send them to respective desk for postings/actions. The duplicate voucher (counter foil) shall be handed over to the depositor/client. IV. At the close of business the cash receiving officer shall add all the entries in the register and if agreed with the actual cash received by him, shall hand over the register for checking by officer-in-charge. V. Receiving Cash officer will hand over the cash to the entire cash in-charge duly checked by him. 3.6 Make Payments from Customers Account When the customer draws a cheque on the bank to pay a certain amount then teller will debit the customers account that shows reduction in his account balance.

3.7 Types of Cheque There are two main types of cheques that are A) Open Cheques B) Crossed Cheques

3.7.1 Open Cheques Open Cheques are those cheques, which are paid across the counter of the bank. Open cheques may be I) Bearer Cheques II) Order Cheques.

I) Bearer Cheque If the drawer orders the bank to pay a stated sum of money to the bearer, it is called a bearer cheque. Any person who lawfully possesses a bearer cheque is entitled to receive payment of that cheque. II) Order Cheque The amount of this cheque is payable to the person whose name is written on the face of the cheque. The amount is paid at counter after identification of that person.

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3.7.2 Crossed Cheque The amount of this cheque is not paid at counter. The amount of this cheque is transferred to the persons account whose name is specified on the cheque. Two parallel transverse lines are drawn across the face of the cheque.

3.8 Clearing And Transfer Department Every bank performs the function of paying and collecting. The cheque drawn on other bank by the customers of the bank is collected by the bank for or without charging fee is called clearing. The bank through the clearing house (Bangladesh Bank) performs the function of clearing. Clearing is facilitated by Bangladesh Bank Clearing house. Clearing is a faster and convenient cheque processing method that customers deposit to bank. It is inter banking debit and credit transfer process among the banks which are under control of Bangladesh Bank Clearing house. Clearing Department plays a vital role in General Banking. This department receives cheques, DD, P.O. etc from depositors attached with a deposit slip.

There are two types of Clearing I) Inward Clearing II) Outward Clearing

3.8.1 Inward Clearing Inward clearing means the cheques received by the bank from other banks. These Inward clearing - cheques are the cheques drawn by the bank/branch customers on their account in favor of other parties. On receipt of the inward clearing, the cheques are posted to the various accounts on which they are drawn - meaning the accounts of the cheque issuer or drawer with the bank is debited to the account and the payment is made to the bank presenting the cheque. The procedure of inward clearing is: I. Principal Branch/Main Branch shall receive cheques etc drawn on Mutual Trust Bank Limited branches from the Clearing House. On receipt of the cheque etc. they shall segregate the same branch-wise and issue IBDA on branches against total amount of cheque etc. and shall arrange delivery of the IBDA together with the cheques etc. within Clearing House time schedule. 22 | P a g e

II. Branches shall send the cheques dishonored by them supported by IBDA issued on Principal Branch/Main Branch, within Clearing House time schedule for enabling Principal branch/ Main Branch to return these instruments in the 2nd Clearing House (Return House).

3.8.2 Outward Clearing Outward clearing means the cheques sent for collection. When a particular branch receives instruments drawn on the other bank within the clearing zone and sends those instruments for collection through the clearing arrangement is considered as Outward Clearing for that particular branch. This branch is known as collecting branch. In other words, inward clearing is for our branch and outward clearing is for other banks or branches. When we receive inward clearing we have to debit our customer account and when we receive outward clearing we have to send it to relevant bank for payment and we credit the amount to Customer Account. All cheques, demand drafts and other credit instruments tendered for the credit of customers account will be delivered by the depositor at the clearing counter. Any deposits received by post will also be sent over to the clearing counter. The counter officer shall at the time of receipt examine such deposits carefully to ensure that: 1. The name of the account is very clearly written on the Deposit slips. 2. The particulars of deposits such as cheque numbers, figures with in words, date, names of bank etc. are properly entered on the deposit slip. 3. The depositor has signed the Deposit Slip. 4. On item deposited payees discharge and the chain of endorsement, are in order. I. All cheques and other instruments will be crossed immediately on receipt with the banks special crossing stamp. Items intended/selected for the next days clearinghouse will be branded with the bank's clearing stamp with date. If the deposits are made at a time when it is too late for these to be presented to drawee banks the same days the stamp "Too late for todays clearing" will be affixed on the counter foil. II. Scan all the cheques and send them to principal branch clearing Section. III. Principal branch accumulate the images of all branches clearing cheques and send it to Bangladesh bank clearing House 23 | P a g e

IV. Bank also prepare, another summery sheet (Validation Sheet) from computer which contain the total a number of cheques etc. delivered to different banks in the Clearing House. V. All clearing item will be passed through the bank's Principal branch/Main Branch's Account with Bangladesh Bank. VI. Entries to be passed by Principal branch/ Main Branch and corresponding branch finally credited it to Customers account and then it is matured for draw. VII. In case of return of cheques unpaid in the Clearing House, Local Office /Main Branch shall issue IBDA on the branch which lodged the cheques in clearing to reconcile the accounts. VIII. All IBDAs originated in connection with Clearing House shall invariably be responded on the same day and under no circumstances shall be kept pending.

3.8.3 Outward Money Transfer Flow Chart

Finally the amount is matured and qualified for draw

Verify Clients Submitted Cheque and receive it for clearing Credit the Amount to Client Account and debit from Branch GL

Bangladesh Bank credit its Account and Debit from corresponding Banks Account of which cheque Client has submitted

Credit the same amount to Branch GL and Debit from Principal branch GL

Principal Branch credited same amount to their GL and Debit from Bangladesh Bank

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Clearing House In Bangladesh Bank, there is a very large room, which contains fifty (50) or more tables for each bank that is called the clearing house.In clearing house section,usually the authorized officials attends all the cheques for collection in their bank drawn on other banks and settle down their transaction by the arrangement of clearing house,Usually two houses sit for settlements which are as follows.

Nature of Clearing House 1st Clearing House Return Clearing House or High value house

First House Generally all the collection cheques are collected from other banks drawn on Jamuna Bank Limited in this first clearing house. First house sit at 10 AM and return house sits at 5 PM.

Same day house or High Value House Only the branches of member banks located in Motijheel Foreign Exchange area and the cheques value which is equal or above TK500000/= enjoy the same day clearing facility. The same day house starts at 10AM and its 11.00 AM.

3.9 IBC/OBC: By OBC, we mean that those cheques drawn on other banks which are not within the same clearing house. Officer gives OBC seal on this type of cheques and later sends a letter to the manager of the branch of the some bank located in the branch on which cheque has been drawn. After collection of that bill branch advises the concerned branch in which cheques has been presented to credit the customer account through Inter Branch Credit Advice (IBCA). In absence of the branch of the same bank, officer sends letter to manager of the bank on which the cheques is drawn. That bank will send pay order in the name of the branch. This is the procedure of OBC mechanism. Actually OBC comes from the

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outside banks branch, or inter branches. Suppose AGRANI Bank, Jatrabari Branch sent a Cheque, which no: 012536, Tk. 5,00,000/- to Jamuna Bank Limited against AGRANI Bank Motijheel Foreign Exchange Corp. Branch. So this cheque could be an OBC. Now what Jamuna Bank Limited has to do? Jamuna Bank Limited tries to collect this cheque through Bangladesh Bank Clearing House, and credited clients account.

3.9.1 OBC Collection Process: Create a Voucher against OBC: S/D A/C OBC Tk. 5,00,000/-

.10% Cut off as Commission on OBC Tk. 500 15% Cut off as Vat on Others Tk. 75

Tk. 20/- Cut off as Postage Recovery Tk. 20 Total Tk. 595/-

Transfer I. Transfer Book shall be maintained for entering transfer cheques/vouchers. II. Serial number shall be allotted both on the debit and credit side of the book, which shall be required for recording the daily transactions. The same serial number shall be noted on the voucher entered in the book including their contra credit and debit voucher and or a set of credit or debit vouchers of a transaction. III. Entries in the debit and credit column of the book shall be directly made from the respective debit and credit vouchers. At the end of the banking hours the total of the debit and credit shall be arrived at and tallied with the computer figure in Transfer Head. IV. Transfer Stamp is affixed on the face of voucher; Vouchers are released from Transfer book. It is balanced and signed by the writer and Book is checked and signed by the authorized officer. V. In a computerized system scroll is done by the computer system. But branch shall maintain the Transfer Book manually as a safe guard against easy detection of mistakes and issuing vouchers if any.

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3.9.2 IBC Collection Process 3.10 Credit Department The credit department of a bank is the basic element in its organization. It is true that in the past many banks have been able to do without credit departments and that at the present time there are not a few of them - chiefly the smaller and less advanced types of institution - which have no credit departments, or only very rudimentary organizations of the sort. These, however, usually accept the work of credit departments operated by their correspondents. The true work of a bank credit department is done whenever any loan is made. It may be that the work of credit analysis is incidentally performed by the president or a vice-president of the bank or by some other assigned officer who happens to have charge of the work of lending, The Credit Departments mission is to help sell the companys products and services to all qualified customers while providing the best possible credit and collection services that we can. Credit department main workings areas area as follows: Offer/inform to Customers about different loan product To know details about Customer business Credit proposal preparation Provide checklist and relevant form Verify all required document Place for approval with all supporting documents After Approval disburse the amount to respective account

3.10.1 Loan Disburse Process Before issuing any kind of loan we need to the following task 1. To know details about customer Business 2. Credit proposal preparation 3. Provide checklist and relevant form 4. Place for approval with all supporting documents 5. After Approval disburse the amount to respective account

For getting loan clients need to submit the following documents and concerned credit officer will verify. 27 | P a g e

*Loan application form *Applicants National ID/Driving License/Passport copy *Photographs of applicants (studio photo) *Salary certificate for salaried person *Guarantor *Bank Statement *Others Branch liability *Others Bank Liability *Photocopy of Utility Bill documents * Trade license * Personal and business account statement for last one year * Applicants TIN certificate * Copies of all existing loans sanction letter and repayment history for last one year *Rental deed for rental income and ownership deed of rented property *Apartment allotment letter/Deed of agreement/property ownership deed *other all property related documents copy All documents are not necessary for all schemes

After physical verification of clients Business and property as well as all the documents concerned credit officer prepare check list, LDCL(Loan documentary Check list) and fill up CIB form and will send it to Bangladesh Bank CIB department through Head office. After getting no obligation bank can sanction loan to the client.

3.10.2 Credit Related Term Primary Security Primary security means specific assets against which loan granted. In the case of term loan for factory building in this regards "Land' is primary security. Further in the case of working capital loan, "stock and book debts" is considered as primary security and if any additional security provides other than "primary Security" it is called collateral security

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Collateral Security Specific asset (such as land or building) pledged as a secondary (and subordinate) security by a borrower or guarantor. The principal security is usually the borrower's personal guaranty, or the cash flow of a business. Except for highly creditworthy customers (who can get loans against only their signatures) lenders always demand a collateral if the primary security is not considered to be reliable or sufficient enough to recover the loan in case of a default. A lien is created when the collateral is registered in the public records office, giving the registered lender priority over other lenders on the same asset or property. Lenders have the legal right to seize and sell collateral if the borrower cannot pay back the loan as agreed. Sometimes the asset being financed (such as accounts receivable, inventory, and machinery) is itself used as collateral; in home mortgages the property being bought serves as collateral. See also collateral value and cross collateral clause.

CIB (Credit Information Bureau) A Credit Information Bureau is an organization that collects and collates credit data on borrowers from its member financial institutions. The financial data is then aggregated in system and the resulting information (in the form of credit reports) is made available on request to contributing member financial institutions for the purposes of credit assessment, credit scoring and credit risk management. The major purpose of this database is to enable the financial institutions to know the credit history of their prospective customers thus enabling them to make a more prudent decision.CIB form is Bangladesh Banks necessary prerequisite to make any loan .To create a disciplined environment for borrowing, the automated CIB service provides credit related information for prospective and existing borrowers. With this improved and efficient system, risk management will be more effective. Banks and financial institutions may furnish credit information to CIB database 24 by 7 around the year; and they can access credit reports from CIB online.

LDCL (Loan Documentary Check list) Checklist is very much essential for making any loan, By this checklist bank can forecast the loan risk. Checklist to be used in connection with loans (both commercial and consumer) to ensure the proper notices and disclosures are given and procedures are followed. One set is used by the lender as a checklist when doing loans; the other 29 | P a g e

set is used by the compliance officer when reviewing the loans for compliance. In addition to the loan approval disclosure documents that will need to be signed by you after you complete your loan application and receive your preliminary loan approval, my staff will require copies of the following documents to formally approve your mortgage for closing.

Pledging Offering assets to a lender is collateral for a loan. Though the asset will be pledged to the lender, it still owned by the borrower unless he/she defaults on the loan.

Hypothecation A contract by which property is hypothecated; a right which a creditor has in or to the property of his debtor, in virtue of which he may cause it to be sold and the price appropriated in payment of his debt. This is a right in the thing. Arrangement where the grantee (Creditor) has the possession and right to sell, but not the title

Credit Risk Grading (CRG) CRG Credit Risk Grading is most important for issue for sanctioning any kind of loan. Here bank classify their client overall status according some parameter and set score. In our bank we classify our clients status in eight different classes. Number 1 2 3 4 5 6 7 8 Grading Superior Good Acceptable Marginal/Watchlist Special Mention Substandard Doubtful Bad/Los Score Fully Cash secured, secured by government 85+ 75-84 65-74 55-64 45-54 35-44 <35

If a clients Credit Risk grading goes to acceptable/Good/superior class then we may submit the clients proposal for loan approval.

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3.11 Foreign Exchange Department Foreign exchange is an important department of Mutual Trust Bank Limited, which deals with import, export and foreign remittances. Foreign Exchange is an International Department of the Bank. It facilitates international trade through its various modes of services. It bridges between importers and exporters. This department mainly deals in foreign currency, thats why it is called foreign exchange department. This department is playing an important role in enhancing export earnings, which aids economic growth and in turn it helps for the economic development. On the other hand, it also helps to meet those goods and service, which are most demandable and not adequate in our country. Though, this department is not currently active in Jamuna Bank Limited Motijheel Foreign Exchange 0018 Branch.

3.11.1 Parts Of Exchange Departments

Import

Export

Remittance

3.11.2 The Documentary Letter Of Credit Letter of credit is a credit contract where the Opening/Issuing Bank is committed to place an agreed amount of money at the beneficiarys disposal under some agreed conditions.

Forms Of Documentary Credit 1. Revocable Credit: A revocable credit is one where the issuing bank is at liberty to revoke, which it is can cancel the credit at any time. According to UCPDC (Uniform Customs for Practice of Documentary Credit), a revocable credit may be amended or canceled by the issuing bank at any time and without prior notice to the beneficiary before shipment of consignment against the L/C. 31 | P a g e

2. Irrevocable Credit: An irrevocable L/C is one, which cannot be revoked or amended by the bank with the concurrence of the interested party. 3.11.3 Some Important Terms Of Letter Of Credit Amendment of credit: Sometimes the importer may require amendment to be made in the L/C, but this amendment must be made within the consent pf exporter, otherwise amendment will have no validity.

Adding Confirmation: Sometimes the importer may not rely on the L/C issuing bank. Exporter requires the L/C to be confirmed by another bank situated in his country. Then on request of issuing bank, any bank in exporters country gives guarantee about the payment. This is called confirming bank. By adding such confirmation, confirming banks undertakes the liability to honor the bill of exchange of exporter. Validity and Expiry of Credit: All L/C must mention the expiry date of L/C with in which the documents for payment /acceptance must be presented. This must exceed the date of issuance of the bill of lading or other shipping documents, during which presentation of documents for payment/acceptance must be made.

FOB (Free On Board): Under FOB basis, the exporter quotes the price covering all his expenses until the goods duty packed are delivered on board, the carrying vessel named and arranged by the buyer with the freight and the insurance being paid by the buyer. The importer bears any cost incurred and all risks from the time the goods are placed on board inclusive of those arising out of the ships failure on berth.

Cost and Freight (C & F): In this case the exporter quotes the FOB price plus insurance cost. The responsibilities of carrying out all formalities for shipment of the goods developed upon the seller.

CIF (Cost, Insurance and Freight): Under CIF, the exporter quotes C&F price plus the insurance cost. The responsibility of carrying out all formalities for shipment of the goods develop upon the seller.

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FAS (Free Alongside Ship): Under FAS, the seller quotes the price covering all his charges until such time as goods are loaded on Train at the specified railway station. The buyer is responsible for all charges from the time he takes delivery of all goods from the exporters yard.

EX-Factory: The seller quotes the price of the goods ex-factory on the date agrees. The importer is responsible for all further necessary arrangements and charges.

3.11.4 PARTIES TO LETTER OF CREDIT 1. Importer (Buyer)/Applicant 2. The issuing Bank (Opening Bank) 3. The Advising Bank/Notifying Bank 4. Exporter/seller 5. Confirming Bank 6. Negotiating Bank 7. The paying/Accepting/Remitting Bank

Applicant: The person who request the bank (opening bank) to issue letter of credit. As per instructing and on behalf of the applicant bank opens L/C in line with the terms and conditions of the seller contract between the buyer and the seller.

Opening Bank/Issuing Bank: The bank which open/issue letter of credit on behalf of the applicant/importer. Issuing banks obligation is to make payment against presentation of documents drown strictly as per terms of the L/C.

Advising/Notifying Bank: The bank through which the L/C is advised/forward to the beneficiary (exporter). The responsibility of the advising bank is to communicate the L/C to the beneficiary after checking the authenticity of the credit. It acts as an agent of the issuing bank without having any engagement on their part.

Beneficiary: Beneficiary of the L/C is the party in whose favor the letter of credit is issued. Usually they are the seller or exporter.

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beneficiary when presented complying credit terms. If the negotiations of documents are not restricted to a particular bank in the L/C, normally negotiating is the banker of the beneficiary.

Reimbursing / Paying Bank: The bank nominated in the letter of credit by the issuing bank to make payments stipulated in the document, complying with reimbursing bank.

Beneficiary

1. Contract

Applicant

SELLER

BUYER
2. Doc. Credit Application 4. Advise of Doc. Credit 3. Documentary Credit

ADVISING BANK

ISSUING BANK

Figure: The Documentary Credit Cycle

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The Plan of Payments By Means Of the Letter Of Credit The description of process 1. The contract is concluded between the importer and exporter. 2. The importer addresses in serving bank with the request to let out irrevocable the letter of credit (to open the letter of credit) according to condition to the contract and transfers the sum of a covering under the letter of credit. 3. The bank of the buyer opens the required letter of credit and the bankcorrespondent asks to notify the supplier on opening the letter of credit. 4. Straight Bank (the bank-correspondent of the bank-emitter) informs the supplier on opening of the letter of credit. 5. The exporter organizes transportation of the goods by means of the conclusion of the agreement with the transport or insurance company and receives the transport invoice or insurance policy.

The exporter gives, according to the contract, the following documents: Proforma Invoice, Commercial Invoice, Bill of loading, Insurance policy, Packing sheet/list, Certificate of quality, Others.

And other documents straitening to bank for payment under the documents. It is supposed, that all documents correspond to conditions of the letter of credit. In this case we proceed from the assumption, that straitening and executing bank is the same.

6. The executing bank checks all the documents on conformity to the letter of credit and if not it is found out of any divergences are found out; executing bank can work with one of the following ways: * To send the documents for collection to Bank-Emitter,

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* To pay the documents after reception from the exporter of the letter of guarantee, * To pay the documents after reception of consent with divergences from the Bank-Emitter. Jamuna Bank Limited 7. Executing Bank sends the documents to the bank-emitter according to the conditions, stipulated by the letter of credit. 8. Executing bank sends the requirement about a covering (with the invoice of the addressee under the letter of credit) to confirming bank. 9. The Bank-Emitter notifies the buyer on arrival of the documents. 10. The importer receives from the bank-emitter the documents. 11. The importer gives the invoice of the transport company for reception of the goods. 12. After reception if the goods from the transport.

Modes of Sales of Goods

1. Cash in advance: Risk is minimum. The proforma invoice is issued. 2. Open Account: Goods are sent first and payment is made afterwards. There are no intermediaries. Proforma invoice is used here as well. 3. Documentary Collection: Same as an open account but the use of bank as an intermediary. Here the risk is zero. Here the bank acts like an agent. 4. Documentary Credit: L/C Here modes 1, 2 and 3 are built on good faith and relationship, but mode 4 comes with a third party guarantor.

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3.11.5 Back-To-Back L/C: Back-to-back L/C means one credit backs another. It is new credit in favor of another beneficiary. Sometimes beneficiary seller of a credit himself is unable to supply goods specified in the L/C and required to purchase from another supplier by opening second credit. Besides, the formalities and requirements for (L/C opening) the following formalities and documents are also required for opening back-to-back L/C 1. Master L/C 2. Valid bonded wear house licenses 3. Quota allocation for quota items 4. ERC in addition to IRC 5. Indemnity/Undertaking 6. No objection from previous banker 7. Factory inspection certificate 8. BGMEA Membership

RM activities implemented in Jamuna Bank Limited, Motijheel Foreign Exchange 0018 Branch

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CHAPTER- IV : Loans & Advances 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 Difference between loans and advances CSR activities of Jamuna Bank Limited Key Financial Indicators Product & Service of Jamuna Bank Ltd Description of Different Loan product Target Market for Loans & Advances CREDIT CATEGORIES Organization structure for credit operation PREPARATION/PROCESSING PROPOSALS 4.10 4.11 CREDIT MONITORING Some important customer OF

39-51 39 39 40 41 42 45 48 49 CREDIT 50

51 52

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4.1 Difference between loans and advances Both are balance sheet items. LOAN: Loan is an amount given for a specified period and is recoverable with a particular interest rate.

ADVANCES: advance mean it is given for a temporary basis to meet out cause (say) purchases, travel expenses etc, Interest is not charged on this advance amount.

4.2 CSR activities of Jamuna Bank Limited

Jamuna Bank Foundation (JBF), a non-profit subsidiary of Jamuna Bank Limited, has established with a view to playing important role in the field of Corporate Social Responsibilities for the cause of destitute/unprivileged segment of the society and for socio-economic development of the country. The following onerous task of fulfilling commitment to the society is commendably undertaken by Jamuna Bank Foundation since its inception:

(1) Scholarship for the unprivileged & disabled but meritorious students, (2) Blood donation by the employees of Jamuna Bank Limited, (3) Free eye camps, (4) Relief for the disaster affected people, (5) Distribution of blankets among the cold prone destitute, (6) Sewing machine training centers for assisting unprivileged women of the society, (7) Launching anti-drug movement by arranging seminar, rally, publishing stickers and established an anti-drug care center (now at Rokeya smarani, Mirpur, Dhaka), (8) Old Home for the neglected old aged persons, (9) Arranging Art competition for the children, (10) Holding seminar on Holy Ramadan & Qirat competition, (11) Model Village at Thakurgoan, (12) Donation of Tk.50.00 lac to the Muktijuddho Jadughor, (13) Medical Team at Biswa Ejtema (Tongi), (14) Solar Village at Kishoregonj, (15) Vocational Training Center at Rayerbazar, Dhaka, (16) Free Primary School for the slum dwellers at Rayerbazar, Dhaka, (17) Financial assistance every month Tk. 25000/- to Mr. Binod Bihari Chowdhury, a valiant freedom fighter who fought against British rule and who was a Co-fighter of Shaheed

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Masterda Surja Sen. The assistance will continue for rest of the time of his life, (18) Financial Assistance of two martyred Army Officers in BDR Carnage at Peelkhana, Dhaka and one Army Personnel killed in Helicopter crash at Ghatail, Tangail, (19) Mobile Medical Team, (20) Relief for natural disaster affected Peoples, (21) Jamuna Bank Madrasa at Rayerbazar, Dhaka, (22) Tree Plantation Program, (23) Financial support to poor people for treatment, (24) Cleft Lip/Cleft Palate Operation (Countrywide) and (25) many other activities.

4.3 Key Financial Indicators Tk. In million Particulars Deposit Loans & Advances Import Export Guarantee Remittance % NPLs 2011 70508.05 56611.79 55907.00 57929.40 5687.20 3360.03 2.86 2010 60673.56 49430.50 61034.50 41860.40 6620.00 1594.11 1.83 1066.38 6350.02 2.92 2009 42356.20 32287.66 46685.00 21407.00 2908.50 2657.64 2.2 923.12 3997.66 5.67 2008 27307.94 21036.86 30311.71 18617.43 2648.40 3165.00 2.84 476.43 2444.34 3.62 2007 20924.02 16617.45 22191.84 13990.33 2032.50 2506.00 5.06 89.11 1872.72 0.73

Profit after 1330.20 tax Total Capital 7552.79 EPS (in Tk.) 3.65

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4.4 PRODUCT AND SERVICE OF JAMUNA BANK LTD

JBL is a full-service Bank with a diverse array of comprehensive range of carefully tailored financial services and customer-friendly uncomplicated banking products geared to meet the needs of all customer segments. JBLs corporate culture is to look for Professional excellence, new ideas & new methods to encourage creativity, to provide best possible customer services. Products & Services of JBL can be broadly classified as follows: Products & Services of JBL

Deposit Products: Saving Account (SB) Current Account (CD) Short Term Deposit (STD) Fixed Deposit Receipt (FDR) Special Deposit Schemes Lakhpati Deposit Scheme Millionaire Deposit Scheme Kotipati Deposit Scheme Double Growth Deposit Scheme Triple Growth Deposit Scheme Monthly Benefit Scheme Monthly Savings Scheme Marriage Deposit Scheme Education Savings Scheme

Loan / Investment Products: General Loan Facility SME Credit Scheme Retail Credit Products Project Financing Working Capital Financing Agriculture Loan Consumer Credit Lease Financing Hire Purchase SME Loan House Building Loan Personal Loan For Women Loan Against Share & Securities Import Financing Export Financing Syndication Loan

Other Services / Electronic Products: International Trade Finance Trading of Govt. Treasury Bond & Other Govt. Securities Corporate Banking Remittance and collection Tele Banking SMS Banking Internet Banking 24 hours banking: Q-Cash ATM Facility

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Some Special Terms & Conditions for all the Schemes Bank reserves the right to close the scheme if customers fail to deposit 3consecutive 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 6months, customers will get the deposited amount along with the interest at the normal savings rate up to the time of closure. Duties and taxes on the deposit, if any, 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 Bangladesh Bank. 4.5 DESCRIPTION OF DIFFERENT LOAN PRODUCTS

Depending on the various nature of financing, all the lending activities have been brought under the following major heads: a) Loan (General) Short term, Medium term & long term loans allowed to individual/ firm/ industries for a specific purpose but for a definite period and generally repayable by installments by under this head. This type of lending are financing under the categories. Large & medium scale industry Small & cottage industry Agriculture

b)

House building Loan (General) This type of loan is allowed to individual or enterprise for construction of house, like residential and commercial basis. The installment is made by monthly with in a specific period.

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c) House building loan (staff) Employee of the Jamuna Bank Limited can be take loan under this category for purchase or construction of house. d) Cash Credit (Hypo) Advance allowed to individual or Firm for trading as well as wholesale purpose or to industries to meet up the working capital requirements against hypothecation of goods as Jamuna Bank Limited security fall under this type of lending. It is a continuous credit. It is allowed Linder the categories. Commercial lending - when the customer is other than a industry. Working capital when the customer is an industry. e) Cash Credit (Pledge) Financial accommodation to both individual and firm for trading as well as for wholesale or to industries as working capital against pledge of goods as Jamuna security fall under this category. It is continuous credit. f) Hire Purchase It is installment credit under which the Hire Purchase agrees to take the goods oil hire at a stated rental, which is inclusive of the repayment of principal as well as interest inclusive of the re payment of principal as well as rent for adjustment of the loan within a specified period. g) Lease Financing Lease means a contractual relationship between the owner of the asset and its user for a specified period against mutually agreed upon rent. The owner is called the Lesser and the user is called the Lessee. Lease finance is one of the most convenient sources of financing of assets via machinery, equipment vehicle, etc. The user of the assets i.e. Lessee is benefited through tax advantages, conserving working capital and preserving debt capacity. Moreover, Lease is an off-balance sheet item i.e. lease amount is not shown in the balance sheet of the lessee and does not affect borrowing capacity. Leasing enables the lessee to avail the services of a plant or equipment without making the investment or incurring debt obligation. The Lessee can use the asset by paying a series of periodic amounts called "lease payment" or "lease rentals" to the owner of the asset at the 43 | P a g e

predetermined rates and generally in advance. The payments may be made monthly or quarterly. Jamuna Bank Ltd., the highly capitalized private Commercial Bank in Bangladesh has introduced lease finance to facilitate funding requirement of valued customers & growth of their business houses. h) Consumer Credit Scheme (CCS) It is a special credit scheme of the bank finance purchase Of Consumer's durable to the fixed income group (like middle class, lower class, and can be upper class) to raise their living standard. This loan allowed on soft terms against personal guarantee and deposit of specified percentage of equity by the customer .The loan is repayable by monthly installment within a fixed period. i) SOD (General) Advances allowed to the individual or firm against their financial obligation, customer take SOD under lien oil FDR, PSP BSP, Insurance Policy or Share. Lien must be made by specific bank margin. This may or may not be a continuous credit. j) SOD (Others) Advanced allowed against of work order for execution of contractual works. It is generally allowed for a definite period and specific purpose. It is not a continuous credit. k) LIM This is temporary advance connected with import, which is known as post import finance, it is Commercial Lending. Advances allowed for retirement of shipping documents and release of goods by pledge in warehouse under bank's lock and key. l) LTR Under this type of' credit tile goods are handed over to the importer in trust with the arrangement that sale proceeds should be deposited to liquidate tile credits within a given period. m) Export Cash credit (ECC) A Customer allowed for exports of goods that can apply for export cash credit. Tile credit must be liquidated out of export proceeds within 180 days. n) Packing Credit (PC) It is also "Export Credit". The condition is as on the ECC. Credit against specific L/C for processing or packing of goods to be exported. 44 | P a g e

o) FDBP Payment made to a party through purchase of a foreign documentary bills falls under this head. This temporary advance is adjustable from the proceeds of the negotiable shipping/ export documents. It falls tinder the category Export Credit". p) LDBP Payment made to a party through purchase of foreign documentary bills under this head. This temporary liability is adjustable from proceeds of the bill. q) Time Loan This is one time financial accommodation for short period maximum 12 months to meet some specific purpose. The loan is adjustable within the validity and not renewable and no transaction is allowed.

4.6 TARGET MARKET FOR LOANS & ADVANCES

Agro Processing Industry Textile Spinning, Weaving, Knitting and Dyeing & Printing Industry Export Oriented Garments, Sweater and Garments Accessories Food & Allied Industry Paper & Paper Products Engineering, Steel Mills, Chemical, Pharmaceuticals, etc. Telecommunications Computer Software and Information Technology Manufacturing of artificial flowers Electronics Infrastructure Oil & Gas Liquefied Petroleum Gas (LPG) Compressed Natural Gas (CNG) Ceramics Small &Medium Enterprises (SME)

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4.7 CREDIT CATEGORIES As initiated by Bangladesh Bank vide BCD Circular No. 33 dated 16-11-89 different kinds of lending were subdivided into 11 categories i.e. 01-01-90 which was subsequently reduced to 9 vide BCD Circular No. 23 dated 09-10-93 and again to 7 sectors vide BCD Circular No.8 dated 25.04.94 for fixation of rates of interest by the individual banks on competitive basis depending on the cost of Funds, prevailing market condition and monetary trend of the country. Loan and advances have primarily been divided into two major groups: a) Fixed term loan: These are the advances made by the Bank with fixed repayment schedules. The term of loan are defined as follows: Short term Medium term Long Term : : : Up to 12 months More than 12 and up to 36 months More than 36 months

b) Continuing credits: These are the advances having no fixed repayment schedule, but have an expiry date at which it is renewable on satisfactory performance. Further all categories of loans are accommodated under the 7 sectors as under: I. Agriculture

Credit facilities to the agricultural sector falls under this category. It is subdivided into two major heads: a) Loans to primary producers: This sector of agricultural financing refers to the credit facilities allowed to production units engaged in farming, fishing, forestry or livestock. Loans to processors or traders of agricultural products are not to be categories as agricultural loans. Loans to tea gardens for production are treated as agricultural loan, but loans to tea gardens for export should be treated under the category "Export Credit". Similarly medium and long-term loans to tea 46 | P a g e

gardens are categorized as industrial term lending.

b)

Loans to input dealers/distributors: It refers to the financing allowed to input dealers and (or) distributors in the agricultural sectors. Agricultural loans may include short, medium and long fixed term loans as well as continuing credits. As such, it may fall under the head "Loan (Gen)/Hire-Purchase/Lease Financing".

II.

Term Loan for Large & Medium Scale Industry

(Large Industry is defined to include all industrial enterprises whose total fixed cost / replacement cost excluding land and factory building is over Tk. 100 million. Medium Industry is defined to include all industrial enterprises whose total fixed cost/ replacement cost excluding value of land and factory building is between Tk.15 million to Tk. 100 million.) This category of advances accommodate the medium and long term financing for acquiring capital machinery of new Industries or for BMRE of the existing units who are engaged in manufacturing goods and services. Term financing to tea gardens may also be included in this category depending on the nature and size. As the financing under this category have fixed repayment schedule it falls under the head "Loan (Gen)/Hire-Purchase/Lease Financing".

III.

Term Loans to Small & Cottage Industries

(Small Industry will mean enterprises whose total fixed cost / replacement cost excluding land and factory building is not more than 15 million.) No short term or continuing credits are to be included in this category. Medium & Long term credits are also included under this category. Like the Large & Medium Scale Industry it is also allowed in the form of "Loan (Gen)/Hire Purchase/Lease Financing". IV. Working Capital Loans allowed to the manufacturing units to meet their working capital requirements, irrespective of their size - big, medium or small, fall under the category. These are usually continuing credits and as such fall under the head "Cash Credit"

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V. Export Credit Credit facilities allowed to facilitate export of all items against Letter of Credit and/or confirmed export orders fall under this category. It is accommodated under the heads "Export Cash Credit (ECC)", Packing Credit (PC), Foreign Documentary Bills Purchased (FDBP), Local Export Bills Purchased etc. However, bills discounted / purchased against supply of goods and services to companies / industries which are located in the country and not involved in export / deemed export shall not fall under export credit. VI. Commercial Lending Short term loans and continuing credits allowed for commercial purposes other than exports fall under this category. It includes import financing, financing for internal trade, service establishment, etc. No medium and long term loans are accommodated here. This category of advances are allowed in the form of (I) Loan against imported merchandise (LlM), (ii) Loan against trust receipt (LTR), (iii) Payment against import documents (PAD), (iv) Secured Overdrafts (SOD), (v) Cash Credit (CC), (vi) Loan (Gen), etc. for commercial purposes. VII. Others Any loan that does not fall in any of the above categories is considered under the category "Others". It includes loan to (I) transport equipments, (ii) construction works including housing (commercial/residential), (iii) work order finance, (iv) personal loans, etc. VIII. SME Financing: Bangladesh Bank vide BRPD Circular No. 07 dated 03.11.2004 has given prudential regulatory guidelines for Small Enterprise Financing.

The role of Small and Medium Enterprise is very crucial in the economic development of the county. Jamuna Bank Limited has separate SME Financing Scheme duly approved by the Board. There are several products, modalities and loan ceiling for SME financing. SME Cell within Corporate Division handles SME loans.

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4.8 ORGANIZATIONAL STRUCTURE FOR CREDIT OPERATION Head Office Board

EC

MD

DMD

Corporate Division

Credit Division

Credit Administration Division

Internal Audit

General Credit Deptt.

SME Deptt.

Trade Finance Deptt.

Leasing Deptt.

Syndication & Structured Finance Deptt.

CRM Deptt.

Recovery and Legal Deptt.

Branch Head of Branch

Credit Marketing Team

Credit approval Team

Credit administration Team

Credit Recovery Team 49 | P a g e

4.9 PREPARATION/PROCESSING OF CREDIT PROPOSALS Credit Proposals shall be prepared in the approved format of the Bank enclosing/furnishing documents/papers/information: 1. Pre-sanction Inspection Report containing KYC 2. Request for Credit limit of customers Project Profile/Profile of Business 3. Copy of Trade License duly attested 4. Copy of TIN Certificate 5. Certified copy of Memorandum and Articles of Association, Certificate of Incorporation, Certificate of Commencement of Business, Resolution of Board of Director, Partnership Deed (where applicable) 6. Personal Net worth Statement of the Owner/Director/Partner/Proprietor in Bank's format 7.Valuation Certificate in Bank's format along with photograph of collateral security with detail particulars on the back duly authenticated by the Branch Manager 8. Three (3) years Balance Sheet and Profit and Loss A/C 9. CIB Enquiry Form duly filled in 10. Credit Risk Grading for credit facilities irrespective of amount other than consumer loan and SME loan covered under consumer and SME guidelines. 11. Stock Report duly verified 12. Credit Report from other Banks 13. Indent/Preformed Invoice/ Quotation (where applicable) 14. Price Verification Report (where applicable) 15. Statement of A/C (CD/SB/CC) for the last twelve (12) months. In case the customer maintaining account with other Bank. Statement of Account for the last twelve (12) months of the concerned Bank should be furnished. 16. In case of renewed/enhancement of credit facility Statement of A/C showing Debit Turnover, Credit Turnover, highest drawing, lowest drawing, total income earned, detailed position of existing liabilities of the customer i.e. Date of sanction, Date of Expiry, Present outstanding, Remarks, if any. 50 | P a g e

17. Declaration of the customer of the name of sister/allied concerns and liabilities with other Banks, if any, and an undertaking to the effect that they have no liability beyond those declared 18. In case of L/C proposal, detailed performance of L/C during the last year i.e. No.. and date of L/C opened, commodity, L/C value, Date of creation of PAD, date of retirement, mode of retirement etc. 19. In case of BTB L/C proposal 20. Detailed list of machinery, production capacity, working capital (BTB L/C) assessment, existing export L/C in hand mentioning date of shipment, detailed position of outstanding BTB L/C/Accepted Bills, progress of production and expected date of shipment, statement of outstanding FDBP/IDBP, if any, Quota Position, Inspection Report, Copy of valid Bonded Ware House License, Customs Clearance of dispute, if any. 21. Whether the applicant is Shareholder/Director of Jamuna Bank Limited as per definition of Banking Companies Act. 22. Justification/consideration for the facility.

4.10 CREDIT MONITORING a) Computer generated list of Exceptional Advance to be obtained from the Branches on daily basis which shall be examined at CRM and any major exception be brought to the knowledge of Senior Management. b) Credit Administration Unit, Head Office shall bring the list of documentation shortfall/deficiencies to the knowledge of Senior Management at regular basis and corrective measures shall be taken. c) Credit turnover in cash credit and overdraft accounts, past dues, collateral shortfall, covenant Branch shall be reviewed on a regular basis. d) Recurring transactions are not allowed for one time transaction/limit.

e) f)

Credit limit expiry date diary shall be maintained and followed-up. Use of Loan money shall be monitored through analysis of financial statements.

g)

Financial statements of the customers shall be obtained on a regular basis and changes in the financial condition shall be monitored. 51 | P a g e

h)

Borrowers shall be communicated ahead of time as and when installments are due.

i)

Non-payment and late payment of installment shall be communicated to the Senior Management.

j)

CIB Report from Bangladesh Bank is obtained and reviewed on a periodic basis.

k)

Progress against work order/contract financed by the Bank is periodically reviewed.

l)

Timely renewal of limit shall be ensured informing Branches two months ahead of expiry dates.

4.11 Some important customers: 1. Windy apparel Ltd. 2. Knit horizon Ltd. 3. Darda knitwear Ltd. 4. Epyllion Ltd. 5. Dress up Ltd. 6. Mirabella dress Ltd. 7. Tuba garments Ltd. 8. Tuba fashion Ltd. 9. Tuba textile Ltd. 10. Jamuna knitting & dyeing Ltd. 11. Imperial saweater Ltd. 12. Biswas synthetic Ltd. 13. Symtex Ltd. 14. Mrs industrial Ltd.

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CHAPTER- V : Findings And Recommendation 5.1 SWOT Analysis 5.1.1 Strength 5.1.2 Weakness 5.1.3 Opportunity 5.1.4 Threats 5.2 The Overall Findings of Jamuna Bank Limited 54 54 54 55 56 56

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5.1 SWOT Analysis SWOT analysis is the detailed study of an organizations exposure and potential in perspective of its strength, weakness, opportunity and threat. This facilitates the organization to make their existing line of performance and also foresee the future to improve their performance in comparison to their competitors. As though this tool, an organization can also study its current position, it can also be considered as an important tool for making changes in the strategic management of the organization.

5.1.1 Strengths:

Jamuna Bank Limited has already established a favorable reputation in the banking industry of the country. It is one of the leading private sector commercial banks in Bangladesh. The bank has already shown a tremendous growth in the profits and deposits sector.

Jamuna Bank Limited has provided its banking service with a top leadership and management position. Jamuna Bank Limited has already achieved a high growth rate accompanied by an impressive profit growth rate in 2011. The number of deposits and the loans and advances are also increasing rapidly.

Jamuna Bank Limited has an interactive corporate culture. The working environment is very friendly, interactive and informal. And, there are no hidden barriers or boundaries while communicate between the superior and the employees. This corporate culture provides as a great motivation factor among the employees.

Jamuna Bank Limited has the reputation of being the provider of good quality services to its potential customers.

5.1.2 Weaknesses:

The main important thing is that the bank has no clear mission statement and strategic plan. The bank doesnt have any long-term strategies of whether it wants to focus on retail banking or become a corporate bank. The path of the 54 | P a g e

future should be determined now with a strong feasible strategic plan. The bank failed to provide a strong quality-recruitment policy in the lower and some mid level position. As a result the services of the bank seem to be Deus in the present days. __ The poor service quality has become a major problem for the bank. The quality of the service at Jamuna Bank Limited is higher than the Dhaka Bank, NCC BANK or Dutch Bangla Bank etc. But the bank has to compete with the Multinational Bank located here. Some of the job in Jamuna Bank Limited has no growth or advancement path. So lack of motivation exists in persons filling those positions. This is a weakness of Mutual Trust that it is having a group of unsatisfied employees. __ In terms of promotional sector, Jamuna Bank Limited has to more emphasize on that. They have to follow aggressive marketing campaign. __ The default risks of all term loans have to be minimized in order to sustain in the financial market. Because of default risk the organization may become bankrupt. Jamuna Bank Limited has to remain vigilant about this problem so that proactive strategies are taken to minimize this problem if not eliminate.

5.1.3 Opportunities:

In order to reduce the business risk, Jamuna Bank Limited has to expand their business portfolio. The management can consider options of starting merchant banking or diversify into leasing and insurance sector.

The activity in the secondary financial market has direct impact on the primary financial market. Banks operate in the primary financial market. Investment in the secondary market governs the national economic activity. Activity in the national economy controls the business of the bank.

Opportunity in retail banking lies in the fact that the countrys increased population is gradually learning to adopt consumer finance. The bulk of our population is middle class. Different types of retail lending products have great appeal to this class. So a wide variety of retail lending products has a very large and easily pregnable market. 55 | P a g e

A large number of private banks coming into the market in the recent time. In this competitive environment Jamuna Bank Limited must expand its product line to enhance its sustainable competitive advantage. In that product line, they can introduce the ATM to compete with the local and the foreign bank. They can introduce credit card and debit card system for their potential customer.

In addition of those things, Jamuna Bank Limited can introduce special corporate scheme for the corporate customer or officer who have an income level higher from the service holder. At the same time, they can introduce scheme or loan for various service holders. And the scheme should be separate according to the professions, such as engineers, lawyers, doctors.

5.1.4 Threats:

All sustaining multinational banks and upcoming foreign and private banks pose significant threats to Jamuna Bank Limited. If that happens the intensity of competition will rise further and banks will have to develop strategies to compete against these local and foreign banks.

Other commercial banks are offering higher salary that may create problem for Jamuna Bank Limited to retain their experienced

5.2 The Overall Findings of Jamuna Bank Limited From the above observations it was found that most of customers liked the policy of the bank regarding reduced bank charges. Moreover, the clients are also satisfied with the banks policy on no hidden charge, trustworthy banker-customer relationship and dependable credit counseling. The customers also opine that Jamuna Bank provides privacy of credit information. But very Poor performance was observed regarding collateral security free lending and widest branch network for credit operation. However most of the customers (73%) give favorable opinion regarding credit management of Jamuna Bank Limited.

So there is more opportunity for growth and development by increasing branch network and utilizing resources. If the bank considers both the positive and negative view of the customers regarding Credit management and emphasize those with great importance the bank will be able to attract more customers. 56 | P a g e

CHAPTER- VII : Conclusion & Recommendations 6.1 6.2 Recommendations Conclusion

58-59 58 59

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6.1 RECOMMENDATION There are some recommendations for Jamuna Bank Limited that has to be mentioned as below: Should use advanced software in clearing Train up the employees to work more efficiently Increase the number of employees The branch must start money exchange facilities Bank should offer more products and services Expand the number of branches not only in urban area but also in rural area The branch should come up with more marketing, CRM activities. The branch should come up with some effective CSR activities.

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6.2 Conclusion Todays service industry is getting more competitive, the banking service is no exception. In the context of banking great importance is needed to ensure more customer satisfaction. Therefore, from this study Jamuna Bank Limited can obtain the indications on which of the issues they have to put more emphasis on to hold the greater customer adaptation in terms of credit management. Jamuna Bank Limited made good progress in this segment. This bank follows all the credit & risk management guidelines of Bangladesh Bank issued from time to time. Being a compliance Bank it maintains recovery management up to the maximum possible extent. As a result, classified loans have been reduced significantly.

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BIBLIOGRAPHY 1. Jamuna Bank Limited Annual Report-2011. 2. Credit Policy & Guidelines of Jamuna Bank Limited 3. Web-site of Jamuna Bank: www.Jamunabankbd.com 4. Website: www.wikipedia.com

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