Professional Documents
Culture Documents
on
Loans and Advances of Pubali Bank Limited
Nawabpur Branch Dhaka.
By
Sonjoy Kumar Ghosh
MBA Program 2004 (6th Batch)
Roll No. 327 (Sl No. 222)
Stream: Strategic & International Management
Supervisor
Mrs.Rubina Maleque
Associate Professor
Department of Management Studies
Faculty of Business Studies
University of Dhaka
Dated:15 February,2007
1
To
Mrs.Rubina Maleque
The Internship Supervisor
MBA Program
Department of Management Studies
University of Dhaka
Dear Sir/Madam,
I have the pleasure to submit an elaborate internship
report, one of the most important requirements for the
MBA program. I was assigned to work at Pubali Bank
Limited-Nawabpur Branch, where I have observed closely
& studied different practical aspects of the banking
institution. I would like to say has been a great
experienced for me to work in Pubali Bank Limited, which
enlarges
my
practical
knowledge
about
banking
operations.
Thanking You.
Sincerely Yours
.
Sonjoy Kumar Ghosh
MBA Program (Major in SIM)
Roll No. 327, Serial no.222
Department of Management Studies
Faculty of Business Studies
University of Dhaka
Acknowledgement
Declaration
I along with other 10 students go to the Pubali Bank Limited head office
situated at Motijheeel
Then each of us was sent to the different branches of Pubali Bank Limited on
10th Octobor, 2006. I was placed in Pubali Bank Limited Nawabpur Branch
for field study from 10th Octobor 06 to 10th January 2007. I reported to Mr.
Shym Sundar Banik, Managing Director of the said Branch and briefed
something about his branch and promised me to give any kind of information
needed. Then I have started to observe the activities held on that branch and I
have found the following major functions:
1. General Banking
Various types of deposit A/C, Transfer, Works of Cash Section, Subsidiary
Register Day Book, Clean Cash, General Ledger, Remittance (P/O, DD, MT,
TT) Bills Department, Clearing House, Pubali Bank Limited General A/C etc.
Concerned officers of the branch showed and discuss with me about General
Banking.
Concerned officers of the Investment Section of the Branch showed the
various files and discussed with me how to provide Loan to the Prospective
sector of the country.
Executive Summary
One of the vital parts of MBA program is internship program. At
the end academic course work one need to compete the internship
to gain practical knowledge
to have
an experience of
Table of Contents
Particulars
Page No.
Letter of transmittal
Acknowledgement
Declaration
Experience as an Intern
Executive Summary
1-6
2
2
3
4
4
5
2.1. Introduction
2.2. Evolution of the World Bank
2.3. Emergence of Modern Banking
2.4. Bank Development in Bangladesh
Limited
Limited
Limited
6
7-10
8
8
9
9
11-24
12
13
20
25-46
26
28
32
32
33
33
Clearing
House
43
4.17
Clear
Cash
Book
General
Ledger
44
4.18
The
45
Chapter V: Loans and Advances
5.1. Introduction
5.2. Classification of General Advances
5.3. Credit Policy of Pubali Bank Limited
5.4. Interest Rate Policy
5.5. Total Credit Line
5.6. Restrictions
5.7. Principles of General Advances
5.8. Industrial Credit Department
Firms)
47-69
48
52
58
58
59
60
60
67
70-88
71
72
39
39
41
42
79
89-96
Bibliography
12
90
92
95
CHAPTER-1
13
CHAPTER-1
INTRODUCTION OF THE REPORT
14
their existence. Under the above circumstances, it has become necessary for
Pubali Bank, a leading commercial bank, to focus its' attention towards the
improvement of the customer service through its' multi-purposeful activities.
That is why it is quite justified to make an in-depth study about its operation
and evaluate service provided by this bank and scope for its' improvement.
This is the exploratory study that evaluates the functions of Pubali Bank. The
study may help formulating policy regarding the ideas relating to the feelings
of the customers & bankers. Now it is hoped that it may have some
significance to Pubali Bank and those who want to develop Pubali Bank.
Since financial area is my preferred area to build up my career, this study will
vehemently help me to go forward and improve my career path.
Departments
General Banking
26November06-10 January 07
15
16
PLANNING
THE APPROACH
QUESTIONNAIRE
DEVELOMENT
-THE LITERATURE
COMMUNICATING
REVIEW
-THEORIETICAL
CONSIDERATION
METHODOLOGY
SECONDARY SOURCES
PRIMARY SOURCES
a) Annual report
a) Official records of Pubali Bank
b) Working papers
c) Office files
d) Selected Books
e) Printed forms
COLLECTING INFORMATION
ANALYZING
PREPARING THE REPORT
SUBMISSION OF THE
REPORT
17
Secondary Data
a) Annual report
b) Working papers
c) Office files
d) Selected Books
e) Printed forms
18
CHAPTER-2
19
CHAPTER-2
A BRIEF HISTORY OF BANKING
2.1. Introduction:
A bank is one, who in the ordinary course of his business receives money,
Etymology deals with the roots and origin of the word bank. According to
some writers the word bank derived from the word BANCO, BANCUS,
BANQUE, and BANC, all of which mean bench upon which the early bankers
used to display their coins and transact business in the market place.
According to the some other writers the word bank has been derived from
the German word BANKE which means a joint stock fund. Banking in the
ancient times was largely confined to money changing and money lending.
20
In middle Europe the bankers of Lombardy were very famous. They planted
the seed of modern banking in England. Among those prominent bankers we
can named one who were famous not only in banking but also in political
history in Europe. These Lombardy people were very much disturbed in 13s
by internecine work that was followed by plunder by Kaiser Frederick two.
Lombardy people in large number as a result started migrating to more settled
countries such as England, French, and Belgium.
During Mughal period, indigenous banking flourished. The Subarna bank the
bullion trading community used to do banking in the then Bengal. At the
British time banking in the form of agency house, exchanging house started to
flourish in kolkata., especially in the wake of the swadeshi movement.
In 1947 after the separation of Bengal, bank business faced a severe disaster as
non-Muslim bankers migrated to India. In order to rebuild the bank business
State bank of Pakistan was established as a central bank of Pakistan in 1948.
In 1971 Bangladesh became independent. After liberation Bangladesh bank
was automated with the asset and liabilities of former State bank of
Pakistan. There were several banks before independence of Bangladesh as
follows:
21
22
CHAPTER-3
ORGANIZATIONAL OVERVIEW OF
PUBALI BANK LIMITED
23
CHAPTER-3
ORGANIZATIONAL OVERVIEW OF PUBALI BANK LIMITED
Welcome
PUBALI BANK LIMITED
is the largest
Commercial Bank in
Private Sector in
Bangladesh. It provides
mass banking services
to the customers
through its branch
network all over the
country. This Bank has
been playing a vital
role in socio-economic,
industrial and
agricultural
development as well as
in the overall economic
development of the
country since its
inception through
savings mobilization
and investment of
funds. During the last 5
years the growth rate
of bank's earnings is
more than 25% on
average.
Head Office
The Bank was initially emerged in the Banking scenario of the then
East Pakistan as Eastern Mercantile Bank Limited at the initiative
of some Bangalee enterpreneurs in the year 1959 under Bank
Companies Act 1913 . After independence of Bangladesh in 1972
this Bank was nationalised as per policy of the Government and
renamed as Pubali Bank. Subsequently due to changed
circumstances this Bank was denationalized in the year 1983 as a
private bank and renamed as Pubali Bank Limited. The Government
of the People's Republic of Bangladesh handed over all assets and
24
liabilities of the Pubali Bank to the Pubali Bank Limited. Since then
Pubali Bank Limited has been rendering all sorts of Commercial
Banking services as the largest bank in private sector through its
branch network all over the country.
Share Capital:
The authorized capital and Paid up Capital of the Bank stood at Tk.5000.00
million and Tk.400.00 million respectively in 2005. Out of total 7591
Shareholders, 4 nationalized institutions including the Govt.of the People's
Republic of Bangladesh held shares of Tk. 11.72 million. The remaining
shares of Tk.388.28 million were held by various institutions and individuals.
Deposits:
The total deposit at the end of the previous year was Tk.
39789.70million.During the year under review the amount stood at Tk.
44443.03 million which was 11.69% higher than the position of the Previous
year.
25
b) Export business:
The Bank handled export business worth Tk. 15271.10 million during the
year as against Tk.13670.50million in the previous year.
Investments:
Total investment of the Bank was Tk. 5742.12 million during the previous
year. The sectors of investments were mainly Govt. Bonds , Treasury Bills,
Approved Debenures,Shares and Debentures of Private institutions.
Advances:
The total advances of the Bank during the previous year amounted to Tk.
27542.33 million which was Tk. 32639.68 million during the current year.
The Bank made advances mainly in sectors such as commercial loan, import
and export business, term loan to large and medium scale industries, house
building loan, consumer's credit loan.
26
The total income and total expenditure of the Bank during the year were
Tk.4435.90 million And Tk. 3063.27 million respectively resulting in a profit
of Tk. 1372.63 million before making provision for bad and doubtful debts
and income tax.
For providing quick customer service all the 350 branches of the bank
have been computerized including branches situated at the remote areas
like Sandwip,Mehidigonj etc. As a result , quick and better customer's
service is being possible with less manpower .Bank started to develop an
improved Multi user client server Architecture System Software called
Pubali Integrated Banking System(PIBS) enabling to provide one stop
service to its clients. The Bank entered in internet world through
introduction of its web-site www.pubalibangla .com as a result , the name
of pubali Bank ltd. included in world Electronic Database. To meet the
demand of time Pubali Bank Ltd. has entered into ATM World.
27
28
Designation
1.
Managing Director
2.
3.
4.
5.
6.
Vice President
7.
8.
9.
10.
11.
Executive Officer
12.
Principal Officer
13.
Senior Officer
Management Trainee
14.
Officer
15.
Junior Officer
16.
Assistant Officer
Trainee Assistant
29
Chairman
Board of Directors
Top Management
Executive Committee
Managing Director
Executive Level
Management
Mid Level
Management
Senior Officer
Junior Level
Management
30
Police
Phone /
Station
Telex
99, Agrabad
Doublemooring 880 31
Comm. Area
716388,
Dist. - Chittagong
716409
633116
Bangladesh
PBAGB BJ
B. B. Avenue 65, B.B. Avenue
Motijheel
880 2
9550600 880
Dhaka-1000
Bangladesh
2 9555406
632236
PUBBA BJ
C.D.A
C.D.A. Building
Doublemooring 880 31
P.O. - GPO
611381,
Chittagong
634710
Dist. - Chittagong
633117
Bangladesh
PBCDA BJ
Dhaka
8, D.I.T. Extension Motijheel
880 2
Road
Stadium
9555565
Lal Bhaban
632389
Dhaka-1000
PBLDS BJ
Bangladesh
Motijheel
880 2
Foreign
24, Motijheel
9561858 880
Exchange Comm. Area
2 9550952
Dhaka-1000
632411
Bangladesh
PUBFE BJ
880 2
Karwan Bazar Jalalabad Bhaban Tejgaon
8114080
22, Karwan Bazar
Dhaka-1215
632322
Bangladesh
PBLKR BJ
Mohakhali
Postal Addresss
Gulshan
99, Mohakhali
Comm. Area
Dhaka-1212
Bangladesh
31
880 2
8811044
632287
PBMKH BJ
Motijheel
Principal
Sena Kallyan
Bhaban
195, Motijheel
Comm. Area
Dhaka-1000
Bangladesh
26, Dilkusha
Commercial Area
Dhaka-1000
Bangladesh
Motijheel
Motijheel
880 2
9551071 880
2
9550635/110
671431
PBMJL BJ
880 2
9557323 880
2 9552449
880 2
9557323
671528
PBLLO BJ
3.6 HIGHLIGHTS
Particulars
Authorised capital
Paid up Capital
Reserve fund and
other Reserve
Deposits
Advances
Investments
Import Business
Export Business
Bridge Finance
Total Income
Total Expenditure
Pre-Tax Profit
Net Profit
Total Assets
Fixed Assets
OTHER
INFORMATIONS
No. of Employees
No. of Shareholders
No. of Branches
Earning per
Ordinary
Share(Taka)
33730.10
26189.50
4400.80
10500.00
10214.00
8.30
3823.50
2575.70
724.00
398.20
41895.90
591.30
35852.60
26282.69
4938.86
12141.30
11648.20
7.90
3569.30
2704.10
345.20
189.80
43502.25
582.60
39789.71
27542.33
5742.12
18024.30
13670.50
7.80
3455.32
2830.41
244.90
134.70
46593.28
545.40
44443.03
32639.68
5536.84
26033.80
15721.10
7.29
4435.90
3063.27
1042.63
573.45
52671.44
546.48
5050
6601
349
203.61
4987
6563
350
199.11
4983
6506
350
94.92
4797
6562
350
67.65
5088
7591
350
143.36
32
33
34
35
36
CHAPTER-4
37
CHAPTER-4
GENERAL BANKING
4.1
Account Opening:
4.1.1
38
ii.
iii.
iv.
Creation of mortgage.
v.
vi.
vii.
39
4.2
iii.
Mandate
40
Current Account
It is purely a demand deposit account. There is no restriction on withdrawing
money from this account. As many withdrawals are allowed the customers. It
is suitable when funds are to be collected and money is to be paid away at
frequent interval.
Current Account is most suitable for private individuals, traders, merchants,
importers and exporters, mill and factory owners, limited company's etc.
For opening of a current Account minimum deposit of Tk. 1000/- is required
along with introductory reference, No interest is given the Current Account
deposited money.
Savings Bank Account
This deposit is primary for small-scale savers. The main object of this account
is promotion of thrift. Hence there is restriction on withdrawals in a month.
Heavy withdrawals are permitted only against prior notice.
Minimum amount of Tk. 200.00 is required as initial deposit.
Frequent withdrawal is not encouraged.
Normally withdrawal not allowed more than 1/4th of the balance with
maximum of Tk. 1000/- in a week.
7 days notice is required for withdrawal of large amount.
The rate of interest is 6.50% against S.B Account.
41
Rate of Interest
7.5%
8%
8.5%
9%
42
4.3
Operation of Cheques:
Drawer
The procedure discussed earlier is fully manual system which is totally absent
Nawabpur Branch. Because, the cash payment & receipt system are fully
43
computerized which faster the whole customer service. And as a result, now-a
day they are not maintaining their previous system and not keeping any ledger
book.
4.3.1 Stopped Cheques
The stopped cheques register will be kept by the manager or the
accountant.
Dormant A/C:
All Current accounts which have not been operated upon for six
months should be marked in Red ink "CARE-DORMANT
ACCOUNT- FIRST WITHDRAWAL TO BE REFERRED TO
THE MANAGER". The ledger should be scrutinized for this
purpose by a number of the supervising staff in March, June,
September & December each year.
44
All savings accounts which have not been operated upon for
one year should also be marked in Red ink.
4.6
In-operative A/C:
No withdrawal what so ever should be permitted on as in-operative
account without the specific permission of the manager who will
satisfy himself beyond doubt that the withdrawal in order.
Annually on the 29th June, the balances of all accounts, which have
lying in in-operative current account for ten years, should be
transferred to the unclaimed deposit A/C.
4.7
Closing of an Account:
A banker can close the account of his customer or justices the stoppage of the
operation of the Account under following considerable circumstances: -
4.8
Death of customer
45
46
47
Before making payment of the DD, the branch will ascertain the genuiness of
its issuance as well as the genuiness of the payee. Open Drafts may be paid on
proper identification of the payee and crossed Drafts can never be paid in cash
over the counter.
Cancellation of Draft
In some cases, the purchaser of the bank draft may ask the issuing branch to
return the amount of DD stating its non-requirement. In these cases, the
issuing Branch will obtain written application from the purchaser whose
signature must be tallied with the signature obtained earlier. An amount Tk.
25/- be recovered from the purchaser as cancellation charges and will be
Credited to the Commission A/C the purchaser will acknowledge receipt of
the proceeds writing the words received payment by cancellation and will
sign. On revenue stamp to be affixed on the revenue of the Draft. In this case,
payment is made by Debit to PBG A/C and a relative cancellation advice is
sent to the Issuing Branch.
48
Tk. 15/-
Tk. 40/-
Date: ......................
Payees Name: ................................................................
Branch Name: ...............................................................
Amount: ................................... Exchange...................
Commission: ........................ Postal Charge: ...............
49
The payee's Banker, who should certify that the amount would
be credited to payee's A/C.
Duplicate PO
As Bank's Payment Order is not transferable, Duplicate thereof is issued to the
purchaser without obtaining letter of indemnity provided they confirm in
writing that the originals have been lost and that these will be returned to the
Bank whenever traced.
Duplicate DD
In some cases, it may be happened that the DD is lost and reported to the
concerned Branches. In this case, issuing Branch will communicate with the
paying Branch and will obtain confirmation regarding non-payment of the DD
& Payment Branch will exercise cautions against payment of DD including
caution marking on the respective DD advice with the words "Care Reported
Lost" issuing Branch will then issue a duplicate DD on obtaining of indemnity
bond from the Applicant signed by two persons known to the Bank s sureties.
In such case, duplicate DD be marked with the words:
"DUPLICATE IN LIEU OF ORIGINAL NO ......."
50
4.10 Establishment:
Maintenance of salary Register & Preparation of salary voucher & returns,
Provident Fund, Pension Found Rules, Medical Facilities, Leave Rules
Records, Income Tax, T. A rules, Group Insurance. Beside this, the total
branch information Targeting Profit, Achieved Profit, Total Outstanding loans
and Advances etc. maintained here.
51
52
c) Entry for outward Clearing register is given with clearing seal and
giving the cheque a "S" (subsidiary) seal.
d) The cheque is then registered in SC register and a SC number is given.
e) Endorsement is given like "Payee's A/C will be credited on realization.
The agent of collecting branch will do as follows:
i)
ii)
Then the instrument is sent to clearing for collection. For this case,
the accounting procedure is
Dr.
Cr.
Dr.
Cr.
The cheque is first deposited through a Received seal with the help
of a slip.
ii)
53
iii)
iv)
v)
Dr.
Customers A/C
Customer A/C
4.14
Cr.
Dr.
Commission A/C
Cr.
P & T A/C
Cr.
54
4.15
Transfer Scroll:
a) The Bank transfer scroll the object of which is to balance the transfer
vouchers before the Clean Cash Book is posted will be written up by a
clerk. The clerk responsible for presentation of the vouchers will enter
in the transfer sheet simultaneously ant the supervising official passing
the transfer vouchers will authenticate the entries.
b) All cheques and transfer vouchers will be entered in the transfer scroll
sheet and numbered with their scroll number under initials of the scroll
writer. All transfer vouchers, including those which are not
individually entered in the transfer scroll/sheet, will be branded with
the paid or received date stamp.
The cheque is first deposited through a received seal with the help
of a slip.
ii)
55
iii)
iv)
After that, the cheque has to be sent to Pubali Bank Local Office
along with other cheques (if any). These sorts of vouchers are
prepared for this purpose.
If the cheque is drawn on other branch of Pubali Bank within the same
Clearing area then it needs be collected through inward Clearing House of
Pubali Bank itself.
If the cheque is or other than Pubali Bank then the Cheque has to be sent to the
Bangladesh Bank Main Clearing House through Pubali Bank Local Office
clearing house.
56
The clean cash book will be checked daily from the subsidiary
registers/ day books by an authorized supervising official who will
agree the entries under each head the respective registers/ day books.
Bach morning the Manger will scrutinize the whole of the previous
day's vouchers.
After the daily balance all vouchers should be collected by the clean
cash book writer and handed over to a supervising official who will
lick them up overnight, under protection from Fire, together with all
current records.
4.18
57
Discount Account
Interest Account
Exchange Account
Commission Account
Charges Account
Profit & Loss Account
Stationery Account
Observation:
Performance of General banking of this Branch is good. This is one of the
profitable branch or Pubali Bank. Customer service is good. Cash section is
fully computerized and free from Y2K problem and as a result money
transaction occurs very quickly.
58
CHAPTER-5
59
CHAPTER-5
LOANS AND ADVANCES
5.1 Introduction:
Pubali Bank Limited, being one of the largest Commercial Bank, had some
prejudice to finance directly on priority basis to Agriculture, Industry and
Commerce sector for strengthening the economic base of the country. Pubali
Bank Limited plays the key role to oil the Economic Wheel of the Country.
Beside this, Pubali Bank has been maintaining all Government Policies its
Pioneer position in extending loans to Government Bodies, sector corporations
and private enterprises. The Bank gave predominance to the Govt. policy of
financing men or small means with enterprising spirit of investment and
provided finance as easy terms and a logical rate or interest as was during the
last few years.
Pubali Bank Limited continued to extend its lending operation in the
productive and priority sectors both public and private covering agriculture,
industry, trade and commerce.
The granting of advances is one of the most important functions of a Bank and
the test of a Bank's strength depends considerably on the quality of its
advances and the proportion they bear to the total deposit. Although receipt
from Exchange, Commission and Bank's Charges contribute a fair amount of
the profits of Commercial Bank, its earnings are chiefly derived from interest
charged on loans and discounts. A wise and prudent in regard to Advances is,
therefore, considered an important sector inspiring confidence in the
depositors and customers of a Bank. Following are the basic principles or
sound lending which each banker follows when considering an advance
proposal.
Safety
The first guiding principles of a Banker should be "Safety First", so far as his
advances are considered, because the very existence of a Bank depends of the
Safety of its outstanding which should never, therefore, he sacrificed to the
60
61
62
that particular Industry will have serious effect on the Bank. Slump does not
normally affect all Industries and business simultaneously.
Security
Whenever a money lender lends money he must be consider carefully the
changes of his being repaid by the Borrower and is therefore not normally
content to rely on the obligation or the Borrower alone but wants some
tangible security from which he can obtain repayment in case the Borrower is
unable to meet his obligations. Without taking such security the business of
money lending would be too speculative. The Banker also making advances
and loans naturally wants to secure him by some reliable security. Security is
considered as insurance or a caution to fall back upon in case of emergency.
Bankers may realize it and reimburse themselves if the well calculated and
certain source of repayment unexpectedly fails. It is, however, incorrect to
consider an advance proposal from the point of view of security alone. An
advance is granted by a good banker on its own merits, that is to say with due
regard to its safety, capacity liquidity purpose etc. and after looking in to the
character, capacity and capital or the Borrower and not only because the
security is good.
Sources of Repayment
A sound credit is one where timely repayment is assured. So, before giving
financial accommodation, a Banker should consider the source from which
repayment is promised. In some instances, debentures, which are to be
redeemed in few month times or a lire policy, which is to mature in near
future, may be offered as security. Advances against such security give no
trouble.
Sometimes customers may apply for loans for additional Working Capital for
their business and undertake to repay out of the profits over a period. In such
cases, the Rate at which the customer can reasonably hope to repay should be
ascertained. An examination of the audited accounts may guide the Banker in
knowing the repayment capacity of the customer.
63
Suitability
Even when an Advance satisfies all the aforesaid principles it may still not be
suitable. The Advance may be encountered to National interest. These
Principles may have to be amended to a certain extent. Suitability of Advance
from National viewpoint has therefore come to be regarded as a basic principle
of Lending.
The Integrity & Reliability of the Borrower
The last and the most fundamental principle of lending are the integrity and
reliability of the borrower. To avoid bad debt, it is the basic factor before any
loan proposal can be considered. The success of any business depends upon
the ability of the Banker to study borrowers. The study of a borrower involves
the study of the five C's of the Party. This five C's refer to Parties:
Character
Capacity
Capital
Conduct &
Capability
Instead of five C's some authors mention the five R's. This five R's indicates
Parties:
Reliability
Responsibility
Resources
Respectability &
Return
5.2
64
65
small traders and small industrialists who can't offer their stocks for Pledge but
can only hypothecate the stock in their shop. In this case, Ownership and
Possession of the goods remain with the borrower although by virtue of the
"Hypothecation" agreement. The Bank can take Possession of the goods if the
Borrower defaults.
Pledge
In case of "Pledge" the possession of the goods is delivered to the Creditor i.e.
Banker. It is therefore, regarded as the most secured type of Advance. Cash
Credit in its truest sense is against pledge of goods. It is a separate ledger. In
addition, Goods Ledger, Go-down Register, Go-down Key register, Go-down
Index Card etc. are also maintained. Deliveries of goods are made on the
strength of delivery order issued by the Banks and goods are received through
goods Challans deposited Borrower. The person who transfers the goods is
called Pledger (Party) and to whom it is transferred is called the Pledge (The
Banker).
Duties of the Banker (Pledge)
The Pledge is bound to take that much care of the goods pledged which
an ordinary prudent man would take of his own goods under similar
circumstances.
The Pledge must make use of the goods pledged according to the
agreement is entitled to terminate the contract and claim damages, if
any.
The Pledge must deliver the goods to the Pledge on repayment of the
debt. It is duty of the Pledge to deliver the goods according to the
direction of the Pledge.
The Pledge must deliver to the Pledge any increase or profit which
may have occurred from the goods bailed for example, dividend on
shares.
The Pledge is responsible to the Pledge for any loss, destruction or
deterioration of the goods is not returned at the proper time.
66
5.2.2 Overdraft
In case of Advance sanctions by way of overdrafts, the customer is sanctioned
a limit up to which he can overdraw his current account within a stipulated
period. This is a fluctuating account here in the balance some times may be in
credit and sometimes in debit and overdrawn amount must always remain
within the sanction limit. From the customer point of views, this arrangement
is advantageous, as he is required to pay interest on the amount actually used
by him.
Overdraft facilities are generally Granted to Businessmen for expansion their
business against securities of stock in trade, Shares, Debentures, Government
Promissory notes, fixed Deposit, Life Insurance Policies, Gold and Gold
ornaments etc. In some cases, where the overdraft is allowed with no other
security except the personal security of the borrower.
5.2.3 Small Loans
It refers to the lending allowed to small traders, collage industries, small-scale
industries and self-employed persons. The maximum ceiling for this loan is at
present Tk. 5000/- for small traders and self employed persons. Tk. 2,00,000/for cottage industries and small-scale industries, such loans are generally
production/ development oriented rather than security oriented & this is the
way of emphasis in these cases is on the purpose of the advance as well as
skill regulation and capacity of the Borrower. The security requirements are
substituted are substituted the end-use and frequent supervision of the credit.
5.2.4 Demand Loan
This is the fixed type of lending in its original form. The entire amount is paid
to the debtor at on time, either in cash or by transfer to his current or savings
bank account. No subsequent debit is ordinarily allowed except by way of
interest, incidental charges, insurance premium, expenses incurred for the
protection of the security etc. A separate ledger is used for the maintenance of
this account and as no subsequent withdrawal is allowed, no cheque is issued
into this account. The following types of demand loan:
Secured Demand Loan against Stock Exchange, Paper Securities,
Goods, Produce and Merchandise.
67
68
69
providing credit in any sector Pubali Bank does not provide any credit in those
sectors.
5.4
Bank takes the policy of the rate of interest only for encouraging the rural
savings or investment. If the rate of interest is low, the velocity of money will
be increased.
70
There are various types of loans in the credit under General Advance Division
excluding public sector.
Chemical Industry: It includes the soap, on and chemical factory.
Rice, flour and oil mills: To install action of machine and working
capital.
Steel and engineering concern including re-rolling mills.
Hides and skins: Here it sanction and processing.
House Building Loan: Generally it is known as second mortgage loan.
Additional money was supplied after the loan given near House
Building Finance Corporation.
Jute Loan: Cash Credit and segregate both are sanctioned to the private
jute industry.
71
Spinning Mills: Here also Cash Credit and segregate loan are
sanctioned as working capital.
Small Loan: All types are working capital below two lacs in any
trading concern.
Credit to Textile Mills.
5.6
Restrictions:
5.7
72
depositors and shareholders of the Bank. They should strictly adhere to the
Banking laws Rules and Regulations of the govt. of Bangladesh, the
instruction issued by Bangladesh Bank Head Office from time to time that
affects business practice of the bank. However, the key to safe, liquid, health
and profitable credit operation depends in the quality of judgment used by the
officers making lending decisions. The principles are described below
precisely:
Purpose:
Purpose should be the primary guiding principle, which is kept in view. The
purpose for which lending is made should be productive as to ensure definite
source of repayment. Banks discourage advances for Harding stocks or for
speculative activities. There are obvious risks involved there in a part from the
antisocial nature or such transaction. Banker must closely scrutinize the
purpose for the borrower applies a particular purpose accordingly. Purpose has
assumed a special significance in the present day concept of Banking.
73
rely on the obligation of the borrower above but wants some tangible security
from which he can obtain repayment, in case the borrower is unable to meet
his obligations. The Banker also, making advances and loans, naturally wants
to secure himself by some reliable security. Security is considered as an
insurance to fail back upon in case or emergency. Bankers may realize it and
reimburse themselves if the well calculated and most certain source or
repayment unexpectedly fails. An advance is granted near a good Banker on
its own Merits, that s to say with due regard to its Safety, Liquidity purpose
etc. and looking after into the character, capacity of the borrower and not
because the security is good.
In the case of advances against Hypothecation or stock, stock statement is to
be or twice a month as per terms of sanction. The certificate at the foot of the
state should be signed by an Authorized person to operate the Account. These
statements are to be carefully verified to see the turnover of stock, the price of
the Goods, Quality of goods etc. The price must be made market price or
invoice price whichever is lower. A copy of the statement is kept at the Branch
and the other one is sent to Head Office/regional Office.
74
75
76
Board Resolution
Articles or Association & Memorandum or Association
5.7.5 Disbursement of Loan
Loan disbursement has to be made after completion documentation and
observance of the sanctioning terms against rising of equity by sponsors as
laid down. Disbursement against import is to be made through an opening or
Irrevocable L.C favoring the foreign supplier on execution or contract.
Disbursement against local Machinery and Building construction is to be made
to the supplier of Equipment's through Inland L/C. Each Phase of loan
Disbursement to be supervised by Bank official so that Borrower is given
scope of diversion funds to anywhere tends to purpose other than the project
and the phase of implementation of the project to be effectively supervised and
borrowers persuaded for completion or Project in time. There are mainly three
most important factors in the loan disbursement, such as:
Completion of Documentation.
Verification of Stocks.
All Important Documentation
5.7.6 Supervision
Supervision is very important in the aspect of Loan /Sanctioning and
Disbursing process. Because, if the Bank failed to identify the real borrower ,
Bank will incur the total loss. In this context, Branch Manger will exercise his
commonsense and proper case in handling advances by them or any other
appropriate authority. This has to realize by the Manger that he is the corner
stone of the Bank and the overall success of Bank depends to large extent
upon him. His total work represents himself to the local public and the
Management as a successful or unsuccessful Branch Manager. Only he can
control Advances judiciously to save the Bank fro-falling Losses. The entire
necessary document has been duly failed in stamped and correctly executed by
the borrower. He has to alert about the following things:
77
78
II)
III)
IV)
V)
VI)
VII)
X)
5.8
Industrial credit department are advanced three types of credit they are:
Pubali Bank Industrial Credit Scheme (Project)
Pubali Bank Industrial Credit Scheme (Working Capital)
Pubali Bank Industrial Credit Scheme (Agro. Based)
5.8.1 Preparation of Loan Proposal
To get Advances or loans from Banks, it is not very easy way to acquire. It
demands some preparation from the Borrower. Because, which the amount is
sanctioning by the banks is not of its own. The public deposits this amount, so
it is very risky for Bank to lend this to the Borrower. If the Bank fails to
recovery that money then it should be paid from its own fund. As a result,
Banks fixed a systematic way to minimize this lending risk and try to proper
use of the money. Proposal requires:
Loan Application.
Required Paper as per Ownership of the Industry.
79
80
Rescheduled
interest rate
(effective from 0108-06)
1. Savings Deposit
7.75%
6%
7.5%
8%
8.5%
9%
10%
11%
b) 10 Year Term
12%
81
CHAPTER-6
82
CHAPTER-6
PAPERS TO BE SUBMITTED TO GET A LOAN
6.1
BY BANK:
01. FORWARDING
02. FL-60 (in prescribed form)
03. FL-56: HYPOTHECATION OF STOCKS
04. ACCOUNT STATEMENT ( OF PREVIOUS ONE YEAR )
05. DECLARATION OF LIABILITY FROM THE BANK
06. PHYSICAL VERIFICATION REPORT
07. VALUATION CERTIFICATE
08. OTHER BANKS OPINION
09. CERTIFICATE OF OBTAINING OF PARTICULARS
10. CIB FORM (in prescribed form)
BY THE BORROWER:
01.
02.
03.
04.
05.
06.
07.
08.
PHOTOGRAPHS
PHOTOCOPY:
01. SHOP RENT RECIEPT / COPY AGREEMENT
02. RENT RECEIPT OF THE LAND
03. INCOME TAX CERTIFICATE
04. MUNICIPAL TAX RECIEPT ( IF IN THE MUNICIPAL AREA)
05. TRADE LICENSE
06. PHOTOCOPY OF TITLE DEED, BIA-DEED, MUTATION PARCHA (WITH DCR)
07. LEGAL OPINION FROM BLA
08. COPY OF NON-ENCUMBENT CERTIFICATE
09. COPY OF SATISFACTION CERTIFICATE FROM THE BLA
83
6.2
BY BANK:
01. FORWARDING
02. FL-60 (in prescribed form)
03. FL-56: HYPOTHECATION OF STOCKS
04. ACCOUNT STATEMENT ( OF PREVIOUS ONE YEAR )
05. DECLARATION OF LIABILITY FROM THE BANK
06. PHYSICAL VERIFICATION REPORT
07. VALUATION CERTIFICATE
08. CERTIFICATE OF OBTAINING OF PARTICULARS
09. CIB FORM (in prescribed form)
BY THE BORROWER:
09. APPLICATION OF THE BORROWER
10. FL-59 (in prescribed form)
11. HYPO OF STOCKS FROM THE BORROWER
12. PROFIT-LOSS & BALANCE SHEET STATEMENT
13. LIABILITY DECLARATION IN THE BORROWERS PAD
14. PERSONAL NET WORTH (in prescribed form)
15. CONSENT LETTER OF CO-SHARER ( IF ANY )
16. PHOTOGRAPHS
PHOTOCOPY:
01. SHOP RENT RECIEPT / COPY AGREEMENT
02. RENT RECEIPT OF THE LAND
03. INCOME TAX CERTIFICATE
04. MUNICIPAL TAX RECIEPT ( IF IN THE MUNICIPAL AREA)
05. TRADE LICENSE
06. PHOTOCOPY OF TITLE DEED, BIA-DEED, MUTATION PARCHA (WITH DCR)
07. LEGAL OPINION FROM BLA
08. COPY OF ENCUMBENT CERTIFICATE
09. COPY OF SATISFACTION CERTIFICATE FROM THE BLA
10. COPY OF PREVIOUS SANCTION LETTER
84
Photo
Dear Sir,
I / We request you to kindly grant / renew / enhance / extend me / us an
advance in the form of Cash Credit / Overdraft / Demand Loan / Bank
Guarantee
amounting
to
Tk.
.........................
(Taka
.........................................................) on usual terms and conditions. I / We
state the following particulars and bind myself / ourselves to furnish you with
any other information & comply with required formalities which you may at
any time require:-
:-
:-
:-
:-
:-
:-
:-
85
:-
a) Mr. ....................................................
S/o. ...................................................
Address: ...........................................
.........................................................
i)
ii)
iii)
iv)
Less Liabilities
Net Worth
Tk.
...........................
.
Tk.
...........................
.
Tk.
...........................
.
Page No. 2
b) Mr. ....................................................
S/o. ...................................................
Address: ...........................................
.........................................................
i)
ii)
iii)
iv)
Less Liabilities
Net Worth
c) Mr. ....................................................
S/o. ...................................................
Address: ...........................................
.........................................................
Tk.
............................
Tk.
............................
Tk.
............................
i)
ii)
iii)
iv)
Tk.
.........................
...
86
Less Liabilities
Net Worth
6. Nature of Business
(Whole Seller/ Retailer/
Manufacturer)
:-
:-
:-
:-
:-
:-
::-
:-
:-
:-
87
Tk.
.........................
...
Tk.
.........................
...
Page No. 3
17. Nature of security offered
a) Description of stocks to be pledged /
hypothecated
:-
:-
:-
:-
Details
a) Movable
:-
b) Immovable
:-
b) Fathers name
:-
c) Present occupation
:-
d) Present Address
:-
e) Permanent address
:-
:-
List of Assets
Comprising of
i)
ii)
88
Value
Tk.
.................
..........
Tk.
.................
..........
Value
of
Asset
iii)
iv)
Tk.
............
............
..
Less liabilities with
other guarantees
Net worth
Page No. 4
22. i) Net worth as per last years balance
sheet dated ............... or statement of
affairs dated .............. (to be enclosed)
:-
:-
:-
:-
:-
25. Declaration :
89
Tk.
............
............
..
Tk.
............
............
..
I/
We
........................................................................
...............................................................
...............................................
P.S.
permanent
/
Thana
S.o./
W.o.
resident
of
..........................
Dist
basis
under
the
on
name
proprietorship/
and
style
................................................................................................
................................................................
............................................................................
at
P.S./
Thana
1. That I/ We have not taken any loan or enjoyed any facility in my/ our
personal name or in the name of my/ our proprietorship/ partnership firm
from any other branch of Pubali Bank Ltd. or any other Commercial Bank
save and except as stated under 9 (a) & (b) above.
2. That the statement made above is true and nothing has been concealed and
if at any time it transpires that I/ We have suppressed fact regarding
availing of a loan facilities from the bank, I/We shall be criminally liable.
Date: ..................................
.............................................
SIGNATURE
90
is for applicant.
F.L.-60
(REVISED)
PUBALI BANK LIMITED
(CREDIT PROPOSAL AND APPROVAL FORM)
6.4
Branch
Ref.
................................................................................................
Regional
Office
Ref.
..................................................................................
02. Account :
No.
03. Date of a/c
opened
:
04. Date of
first
sanction
:
Permanent
Address
Factory/ Business
No. Date
......................
..............
No. Date
......................
..............
91
07.
Date
of
Establishment/
Incorporation
............................................................................................................
G.I.R./
TIN
No.........................................................................................................................
..........................
08. Name of the Proprietor/ Partners/ Directors:
Age
Share
Position
Personal
Name & Residential address with
holding in
Net
%
Worth
Fathers/ Husbands name & Phone
(details
No.
attached)
Tk.
Tk.
Tk.
:
:
:
Tk.
Tk.
Tk.
Tk.
Contd.-.........................Page no.-2
PAGE NO. -2
10. (a) Nature and details of Business/ Products:
(c) Sales:
92
Actual Sales
Sales
Products
2003
2004
Tk.
Tk.
2005
Tk.
Estimat
ed
Sales
2006
Tk.
Total Sales
11.
Date of application
by the
customer
...............................
(Amount in Taka)
Existing Limit
Proposed Limit
Amount of
Date of
Limit
Limit
Expiry
Outstandi approa recommLimit
expiry
ng
ched
ended
for
Nature of facilities
Cash
Credit
(Pledge)
Cash Credit (Hypo)
Overdraft
Loans
LIM
LATR
Packing Credit
Export
Bill
Purchased
(F.B.P.)
Inland
Bill
Purchased
(I.B.P.)
L/C (Sight)
L/C (Usance)
Back to Back L/C
Bank Guarantee
Others (Specify)
TOTAL
Enclose: Indent/ Proforma Invoice where applicable. For L/C, LIM & LATR
proposal, amount of Duty, VAT etc. Landed cost & approximate market price
to be mentioned.
93
Contd.-.........................Page no.-3
PAGE NO. -3
11. (b) Credit facilities granted to subsidiary/ affiliates/ associates/ sister
companies with extent of interest of the applicant borrower:
Name of the Borrower
Nature of Limit Outstandin Expiry Security/
facilities
g
collatera
ls
Extent
of share
holding
11. (c) Details of other business of the applicant not included in 11(b)
above:
Name of the Business/ Firm
Nature of
Extent of
Investment in
Business
share holding
the Business
(in Taka)
12.
:Tk.
:Tk.
.
Tk.
.
94
( in Taka)
Proposed
Total
(Fresh/ Enhancement)
:Tk.
:Tk.
:Tk.
:Tk.
.
.
Tk.
Tk.
.
.
Contd.-.........................Page no.-4
PAGE NO. 4
13. (a) Account performance:
( for the period from ................................... to ............................... )
(in Taka)
Nature of Account
Debit
Credit
Balance
Summation
Summation
Maximum
Minimum
Deposit Accounts
C/C (Pledge)
C/C (Hypo)
Loans
Overdrafts
Margin Deposits
LIM/ LATR/ PAD*
Total L/Cs opened (Foreign)
Total L/C opened (Local)
Total Guarantee issued
Nos.
Nos.
Nos.
95
Tk.
Tk.
Tk.
Tk.
Tk.
Other revenue
Total
Overdrafts
Export Bills
Import L/Cs
Local L/Cs/ Gtee
Collection/ Remitt.
Others (Specify)
TOTAL
14. History of Relationship with the Customer:
(How and when the relationship started?/ State if the repayment/
adjustment have been regular etc.)
Contd.-.........................Page no.5
PAGE NO. 5
15. Bank/ Trade checking/ CIB report (Brief Synopsis).
96
20. Any adverse comments from Last Inspection/ Audit Report. (Our
Bank & Bangladesh Bank)
Contd.-.........................Page no.6
PAGE NO. 6
23.(a) Comments on the financial statements for the last 3 (three) years:
(State whether audited or unaudited)
Name of the Audit Firm if a/cs are audited:
SALES/ PROFITABILITY:
Audited/
Unaudited
2003
Audited/
Unaudited
2004
Audited/
Unaudited
2005
Sales
Cost of Goods Sold*
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
97
GROSS PROFIT
Selling General, Admin,
Financial Expense & Depreciation
OPERATING PROFIT/ LOSS
Add Other Income
Less: Other Expenses
Net Profit/ Loss before Income Tax
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Income Tax
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
INVENTORY/ RECEIVABLES:
Inventory/ stock in trade
Receivables
Tk.
Tk.
EQUITY:
Assets
Tk.
Tk.
Tk.
Liabilities
Tk.
Tk.
Tk.
Equity (= Assets minus Liabilities)
Tk.
Tk.
Tk.
* For trading Firms Cost of Goods sold to be ascertained as under:Costs of goods sold = Opening stocks + Purchase + Carriage inward/ Freight Closing stock
CASH FLOW:
Net Profit
Depreciation + Write offs
Accounts Payable Incr./ (Decr.)
**
Receivables (Incr.) / Decr.
***
Inventory (Incr.) / Decr.
****
Other (Uses) / Sources
NET OPERATING CASH FLOW
2004
2005
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
Tk.
.
** If the Current years figure is higher than previous years figure then the
difference amount is increase in cash flow & vice versa.
*** If the Current years figure is higher than previous years figure then the
difference amount is decrease in cash flow & vice versa.
**** If the Current years figure is higher than previous years figure then the
difference amount is decrease in cash flow & vice versa.
Contd.-.........................Page no.7
PAGE NO. 7
98
2003
Current Assets
Current Liabilities
i) Current Ratio
iii) Leverage
: Liability
2004
2005
Equity
iv) Inventory Turn
over in days
: 365 X Inventory
Cost of Goods Sold
v)
Receivables
Turn
: 365 X Receivables
over in days
Sales
: Net Sales
Total Assets
Please enclose Balance sheet, Trading/ Manufacturing & Profit and Loss
Account of the applicant firm/ company for the last three years.
24. Details of Fixed Assets with valuation:
(For Limited Companies search be made with Registrar of
Joint Stock Companies to Ascertain any encumbrances)
Value
Date / Year
Description
Written down as
Acquired
Market
per Balance Sheet
99
Encumbran
ce if any
Contd.-.........................Page no.8
PAGE NO. 8
26.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
AUTHORISED OFFICER
MANAGER
Name:
Name:
100
YES / NO
YES / NO
YES / NO
YES / NO
YES / NO
YES / NO
YES / NO
Designation:
Designation:
AUTHORISED OFFICER
REGIONAL MANAGER
Name:
Name:
Designation:
Designation:
101
CHAPTER-7
CONCLUSION
102
CHAPTER-7
Conclusion
103
9. Customer Objectives:
Many customers complain to me to improve and first the service as
well as behavior of the staff as it is a private bank.. Customers
require especially quick, accurate service and good behavior from
bankers.
104
105
9. Deposit Mobilization:
Prime Bank has to increase their deposit mobilization growth. Also
AB bank has to take necessary action to maintain and improve their
deposit mobilization growth rate.
106
Prime bank profit is increased previous year but grow rate is low.
So take necessary steps to increase the profit.
13. Foreign Trade:
Foreign trade increase is the essential for the prime bank. The
maximum amount of total earning comes from foreign trade.
14. Performance Increase:
Prime Bank should increase their performance by engaging efficient
decision maker in the managerial level.
15. New Planning:
All commercial banks including both nationalized and private should
introduce
operational
performance
efficiency
planning
or
system
purpose
for
the
increasing
following
their
other
recommendation:
107
From the detail discussions above I can easily conclude that In spite of all
problems Pubali Bank Ltd. is the fastest growing private commercial bank in
the country. The bank is already at the top slot in terms of quality service to
the customers and value addition for the shareholders because, despite difficult
circumstances, the Bank closed the year of 2005 with a number of
achievements. The Bank also made satisfactory progress in all areas of
business operation up to June 2006. The Bank further expanded and
consolidated its customer base in both of its core businesses and General
Banking Services.
108
7.4
Bibliography
109