Chapter- 6

INTRODUCTION

Introduction:
6.1- Introductory Note 6.2- Objectives of the study 6.3- Methodology of the study 6.4- Scope of the study 6.5- Limitation of the study

INTRODUCTORY NOTE
6.1 Introduction:
We make things simple for you is the corporate statement of EBL & through our innovative & need based product & service solutions we demonstrate our pledge to make things simple for the customer. Now the world is very much competitive, so everybody has to be expert in both practical knowledge & theoretical knowledge. As international Islamic University Chittagong aims to build future magnate with the theoretical knowledge as well as practical knowledge of economic filed of our country, to make the OCP & its report is a significant aspect in the direction of accomplishing the god. It is a systematic process for gathering, recoding & analyzing of data about the topic that a student goes to learn on the program. The aim of preparing the OCP report is to connect practical knowledge with the critical aspects. Being a student of MBA with major finance & Banking studies. During my report preparing period, I have tried my best to use the opportunity to enrich my knowledge on banking system. My findings were mostly related to consumer credit in EBL, as I have been working under this department. Beside this, I come across many others findings which are reflected through this OCP report. Learning is an endless process. There are a number of avenues to learn & cash avenue has its own effectiveness. The aim of this OCP report preparing program is to link practical knowledge with theoretical knowledge. In this competitive banking Industry everybody has to be expert in both practical & theoretical knowledge to survive in the competitive business world. During our work I have faced various obstacles by the grace of almighty Allah & by the help of some related percent I have overcome some problems successfully.

6.2 Objective Of The Study:

Without any specific objective no mission could be a successful one. In the some way, without setting any objective a study can not be completed. Before starting my work, I too have set some objectives. My objectives were:

Primary Objective:
To made a study to gather practical knowledge about consumer credit & its dealings & make its performance clear to others:

Secondary Objectives:
To know about the products of EBL. To know about the consumer loan processing at EBL To know the satisfaction level about different products of EBL. To be familiarized with different components& instruments used in consumer loan assessment. To identify the problems of EBL related to different products To provide recommendations to overcome the problems, if any.

6.3 Methodology Of The Study:

The data needed for conducting the study has been collected from the primary sources as well as secondary sources. In collecting the necessary data, care has been taken so that all the variables that may in some way can not affect the objectives of the study. The information that I used in this study is collected from the following sources:

Primary Data Sources:

Personal interview with the employee. Practical desk work. Face to face conversation with the client.

Secondary data sources:

Bulletin published by the bank. Annual statements of the bank. Previous research books & journals. Different books about banking. Websites. The collected data are properly scrutinized & for analyzing the data different techniques likes charts, diagrams the have been used.

6.4 Scope At The Study :

The focus of this report will be our various functional area of EBL in Bangladesh, attempts have been made particularly of the performance in each & specific emphasis has been on the Consumer loan processing in EBL.

6.5 Limitation of the study

Like every other studies, I too faced some constraints during my OCP report preparing period which otherwise would have enabled me in making my study more appropriate & logical. The limitations were some sides, the bank as well as myself. The followings were some of the short comings, I came across: a) The allocated time was not enough for getting a sound knowledge of the study.

b)

Bank is a busy enterprise, there is a rush of customer through out the day & the employees were mostly busy in dealing with the customer. As such they did not have much time to share the details:

c)

The data & information related with the topic were easily available but the sinnier employees of the bank they are very busy with their official responsibility. As a result, they did not give much more training to the junior employees.

d) e) f) g)

Lack of more practical & contemporary data was another shortcomings. The data required for sufficient analysis for report writing could not be collected due to excessive workload. Some of the officer of the bank did not co-operate heartily. Last but not the least, the report would have more better & practical as I too have short comings with my knowledge & capacity.

Chapter- 7

Company Overview

7.1 7.2 7.3 7.4 7.5

7.6

EBL Launches Priority Banking All of the liability products of EBL Mission Vision Corporate Social Responsibility
Eastern Bank Ltd Jubliee Road Branch at a glance

7.7

Different Card Facilities of EBL

Company Overview
7.1 EBL Launches Priority Banking:
Welcome to EBL priority banking where your priority is ours. EBL Priority Banking is an exclusive banking source offered to our most valued clients like you, to help customers achieve financials aspirations. We are dedicated in providing a comprehensive range of banking services to help customers enhance their wealth and enjoy full of privileges. Our tailor made personalized financial sources & dedicated relationship managers help release customers from the hassles of financial management & enhance their wealth with ease.

EBL Launches Priority Banking:

As our preferred customer one deserves the best. Our aim is to provide with the best life style privileges which include:

Convenience On Pricing:

Discount on borrowing rates. Higher ATM with drawl limit. No minimum Balance fee. Unlimited (terms) cash withdrawal & deposit. Access to lockers at late hours. Number of waivers in Bank account services. Free 24 hours Internet Banking. A priority credit card with a financial package to rival any other provider.

7.2 All Of The Liability Products Of EBL:

All of the liability product of EBL as follows: EBL Interesting A/C: A saving A/C where interest is calculated on daily basis & credited to the account on monthly basis. Interest Rate: Interest Rate is 5%. Minimum Deposit: Minimum Deposit amount is Tk.50,000. Interest calculation: Interest calculation is done on monthly basis of the customers average balance & credited it to the customers account in every month. EBL High Performance Savings Account: Daily interest bearing product with unlimited cash with drawl facility. Interest Rate: Interest rate is 5.5% Minimum Deposit: Minimum Deposit is Tk. 20,000/Interest Calculation: Interest is given half- yearly & yearly, in twice is given twice a year & credited it to the customers account. EBL Savings A/C: It is also a interest bearing product with limited cash with drawl facility. Minimum Deposit: Minimum deposit amount is Tk. 15,000. Interest rate: Interest rate is 6%. Interest Calculation: Interest is given in the a/c in every year. EBL Repeat: Monthly interest payable fixed deposit drawl me with 1-3 year tenure Interest Rate: 1 year 2 year 3 year 8.5% 9.5% 9.5%

Interest calculation: Interest is given if1 year deposit is broken within 6 month then the customer with get savings interest rate. 2 years deposit is broken after 6 months, then the customer will get the savings interest rate. 3 years deposit is broken after 6 months then the customer will get savings interest rate.

Tax Deduction: 10% Tax will be deducted from the interest getting amount. Minimum Deposit of this a/c is Tk. 1,00,000/EBL Fixed Deposit: It is a fixed deposit scheme of 1 year with renewal process. Interest Rate: Interest Rate is 8% Interest Calculation: Interest is given when the scheme is matured. If any one broke the fixed deposit within 3 months Then he/ she will not get any interest.

If any one broken the deposit within 6 months then the interest will be given to the savings rate. Minimum Deposit: Minimum deposit of this scheme is Tk. 50,000/-

EBL has launched A New Banking Facility For Non- Resident Bangladesh The Product Is EBL MATRIBHUMI
EBL Shonchoy: EBL SHONCHOY is a daily interest bearing & monthly interest paying taka savings account for global Bangladeshis. The account is helping NRBS saving the hard earned money in local currency for a secured future. Eligibility: Any non Resident Bangladeshi is eligible to open EBL SHONCHOY savings account. He/ She should have legal residence & work permit. Income to be confirmed by employer & in case of self employment, nature of business to be mentioned. 18 years of age.

Minimum Initial Deposit: Tk. 1,000 during opening but at least BDT 5,000 must be credited to the account within 60 days of opening through remittance, also the account will be closed. Rate of Interest & Calculation: Rate of interest @ 5% p.a. accrued daily & paid monthly basis, Interest will be calculated on daily balance of the account. If EOD balance of the account falls below Tk. 10,000/- no interest will be paid for the day. Individual/ Joint Applicant: The account can be opened jointly subject to the Non- Resident being the sales operator or joint by the non resident & resident. Identification Documentation: Regular identification documents along with attested passport photocopy & attested photocopy of the valid work permit/ employment visa.

10

Debit Card: Local currency debit card will be issued for the a/c operator. Internet Banking: Internet banking facility available for 24 7 banking access for easy monitoring of the account. Utility Bill Payment: Payment of utility bill through internet banking facility. Fees & Charges: Half yearly ledger free BDT 250. Debit card issuance & renewal fee BDT 100. EBL PARIBAR EBL PARIBAR is a daily interest bearing & monthly interest paying savings account for the families of Non-Resident Bangladeshis. The account is for helping the global Bangladeshi to maintain their family expenses locally. Eligibility: The account will be on the beneficiarys name. Any beneficiaries who are 18 years of age & receive money from abroad are eligible to open this account. The sender (Non Resident Bangladeshi National) should have legal resident/ work permit. Minimum Initial Deposit: BDT 5,000/Rate of Interest & Calculation: Rate of interest @ 5% p.a., accured daily & paid monthly basis, interest will be calculated on daily balance of the account. If EOD balance of the account falls below Tk.10,000/- no interest will be paid for that day. Individual / Joint Applicant: The beneficiary can open account individually.

11

Identification Documents: Regular identification documents of the beneficiary along with the following of the sender (Non- Resident Bangladeshi National) Attested passport photocopy & attested photocopy of the valid work permit/ employment visa. Debit Card: Local currency debit card will be issued for the account operator.

Internet Banking: Internets Banking facility available for 24 7 banking access for easy monitoring of the account. Utility Bill Payment: Payment of utility bill through Internet banking facility. Fees & Charges: Half yearly ledger for BDT 250. Debit Card issuance fee & renewal be BDT 200. EBL Global EBL Global is an FCY current which can be opened in VSD/GBP/Euro/yen without restriction on transaction frequency. The account can be operated by the mandate by the a/c holder. Account fund remains in foreign currency & is feely remittable in abroad & encash in Bangladesh in Local currency. Key Features: Deposit can be made in foreign currency only (cash, TC or drafts or transfer from other FCY account and during temporary visit to Bangladesh by a/c holders, subject to proper declaration). Cash withdraw facility from the account is in local currency in Bangladesh. Payments may be made freely abroad from these foreign currency accounts to the extent of balance lying there in. Global USA Debit Card against account balance is issued can be used any where in the world, local expenses to be set held in FCY.

12

Fund can be used to make investment in wage Earners Development Bond/ NFCD Term deposit. Account balance is freely remittable.

Eligibility: Bangladesh Nationals residing abroad. People of Bangladeshi Origin. Foreign Firms registered abroad operating in Bangladesh. Foreign missions their expatriate employees. In case of individual accounts age 18 years.

Minimum Initial Deposit: USD 500 or equivalent GBD/EVRO/YEW Minimum.

Individual/ Joint Applicant: Customer can open joint account with another Non-Resident Bangladeshi (Preferably Close relatives). Debit Card: Global Visa Debit Card, which can be used at Visa Location worldwide, will be issued for individual account holders. Card will be available from June 2009. Internet Banking: Internet Banking facility available for 24 7 banking access for easy monitoring of the account. Utility Bill Payment: Payment of utility bill through interest banking facility.

FEES & Charges: No ledger fee. Minimum balance fee USD 10 half yearly if balance falls blow USD 500.

13

No document activation charges. Global debit card annual charges USD 10 Card replacement for USD 10 PIN replacement for USD 10 Closing of account fee USD 10 EBL NFCD

EBL NFCD (Non resident foreign currency deposit). Account is an interest bearing time deposit account for Non- resident Bangladeshi which can be opened with foreign exchange for a period of 01/03/12 months. Key Features: The accounts are in the nature of term deposit maturity after one month, 3 months, six months & one year. The accounts can be maintained in US Dollar, Pound sterling Euro or Japanese yen. Account may be opened against remittances in after conductible currencies after conversing of those. Eligibility: Any person (individual) willing to open EBL NFCD, must have FCY account (EBL global) with EBL. Category A: All non- resident Bangladeshi nationals and persons of Bangladeshi origin including these having dual nationality and originally residing abroad can open interest bearing time deposit accounts named EBL NFCD as per Bangladesh Banks guidelines as an foreign exchange transactions. Category B:

14

Bangladeshi nationals saving with embassies/ High commissions of Bangladesh in foreign customers are also the officers/ staff of the govt./ working in Govt. department and employees of govt. body posted abroad or deputed with International & regional agencies like IMF, World Bank, IDB, ADB etc during their assignments abroad may open such accounts crew members of the Bangladeshi shipping companies are not entitled to open such accounts, but shipping staff posted abroad can open such accounts. Internet Rate: Competitive Internet Rates to be provided,please contact with nearest EBL AD Branches for details. Fees & Charges: No Account related fee. Premature encashment fee USD 10.

7.3 Mission: The Mission of Eastern Bank Limited is We will deliver service excellence to all our customers, both internal & external. We will ensure to maximize shareholders value. We will constantly challenge our system, procedures & trainings to maintain a cohesive & professional team in order to achieve service excellence. 7.4 Vision: To become the bank of choice by transforming the way we do business & developing a truly unique financial institution a truly unique financial growth & financial performance & be the most recognizable brand in financial services in Bangladesh. 7.5 Corporate Social Responsibility: There are some corporate social responsibility of Eastern Bank Limited. These are as follows:

15

EBL introduced a stipend program jointly with Dhaka University. Alumni Association (DUAA) for the student of Dhaka University titled Inspiration. One meritorious student from each academic year of all 56 departments of Dhaka University shall get the one time stipend from EBL. The selection committee is headed by DU Vice chancellor and DUAA is the co- ordination partner in the program. This is the first CSR program of EBL & even first of this kind in Bangladesh where all departments & all academic years were covered under one financial grant program.

EBL has denoted a generous scheme of BDT 25 Lacs for flood victims & BDT 50 Lacs for cyclone Sidr hit people of the country. EBL also denoted a considerable sum of money for publishing Mohan Ekushey Subarnogoyanty Grontho. Written on our rich heritage of language movement & culture in predominance.

7.6 Eastern Bank Limited, Jubliee Road Branch at a glance: Introducing Eastern Bank Limited Official Name Legal Form Location Bank Type Business Type Number of Branch Head Office in Bangladesh Cable Web Address Swift Code : Eastern Bank Limited : Public Limited Company : 935, Nur Ahmed Sarak, Jubilee Road, Chittagong : Local Commercial Bank : Commercial Banking : 38 : Dhaka : East Bank : www.ebl.com.bd : EBLDBDDH

7.7 Different Card Products of EBL:

16

EBL Simple Credit Card: The main theme is one life, one card. EBL simple credit card is a complete credit card solution. This VISA branded card comes in gold and classic versions with both local & dual currency facility. Other than regular card features, EBL simple credit card with zero renewal fee, triple insurance benefit, free cheque book & balance transfer options.

Life style Card: The main theme is reload the fun of life! A VISA learned local currency prepaid card that can be used at any VISA POS OR ATM Countrywide. A very popular product among the student segment. Cool Card: The main theme of this card is Live life-Fashionably This is a VISA Election Debit Card for the student banking accounts. Hajj Card: This is a VISA prepaid card valid only in Saudi Arabia. This card helps one from the hassles of carrying foreign currency during Hajj. Debit Card: Fast & Smart Forget cheque book, forget queering at the bank. With EBL debit card your money is available to your 24 hour. Usable at any VISA POS & ATM.

17

Chapter- 8

Different Functional Department of EBL

8.1 8.2 8.3 8.4 8.5

Consumer Banking Corporate Banking SME Banking Credit Risk Department Trade Service Operations

18

Different Functional Department of EBL

8.1 Consumer Banking: In line with goal congruence & over all strategy EBL Consumer Banking contributed to put thrust on deposit mobilization at reasonable rate. Expanding consumer loan is under century surveillance due to 5 percent provisioning slap. Despite having the in encased provisioning requirement imposed by central bank, EBL opted to adopt a conservative loan growth strategy for consumer banking instead of putting a stop. As the consumer loan portfolio reaches to a reasonable size few years down the road, the import of incremental provisioning will be offset by the income the portfolio will generate. As the major provider of funds within the bank consumer did & will continue to support asset growth of exported & SME business. Channel distribution: With opening of 3 new branches of Raozan, Sirazudullah Road & in Banasri, Dhaka. During the year 2009, EBL has made banking services move accessible to customers. These branches have already started operation are expecting high CNB business in 2010, especially the branch at Raozan, Chittagong due to its strategic location, is expected to attract a handsome amount of FC remittance & deposit. Also the other two branches are well positioned in terms of business prospect. NRB Remittance Business: It is launched in the later half in 2005 EBL Non-resident Business (NRB) unit under consumer Banking has passed another successful year 2007 with inward remittance of USB 131.84 million equivalents to BDT 9040.64 million. This unit has built up a network up 16 exchange houses based mainly in middle east & united kingdoms active efforts are under way to spread it to other strategic continues including Saudi Arabia. With prompt & efficient service provided to the foreign Remitter, this unit has already achieved a remarkable level of customer satisfaction manifested by their enhance remittance flow. This success is highly

19

sensitive consumer segments & is equipped with modern technology to improve these NRB SERVICES. Successful FX business somewhat depends on success of this unit. 8.2 Corporate Banking: EBL Corporate Banking comprising of eight relationship units, two specialized unit Cash Management Unit and Structured Financed Unit supported by two product unit Project finance unit and CRCP (Customer Relationship & Corporate Product) Unit in Dhaka and Chittagong, continued to contribute major share both in Loans & Advance book (measuring around 80 percent of the total loans as on December 31, 2007) as well as fee based income. It also occupies a considerable portion of EBL deposit book with 37 percent as on year end 2007. While corporate relationships and project finance units provide comprehensive financial products including trade finance, working capital, project finance etc., Cash Management Units are assigned to attract low cost deposit by providing transactional value to the customers. Corporate Banking Focus: During the year 2007, the thrust of Corporate Banking was to diversify its portfolio by entering into new avenues thus putting its risk management appetite into different parcel of the business segment. Emphasis was also given to grasp Emerging Business Market and potential Future Corporate clients. Accordingly a relationship unit was assigned for this special objective. Apart from traditional RMG, Steel, Pharmaceuticals, Textiles, Ship Breaking & Trading sector which enhanced its foot print into Packaging (other than garments), Food, Power, Agri-business (poultry) etc. To enhance service an Internet bankingCorporate module with short listed functionalities has been launched in 2007. Cash Management Unit (CMU): Cash Management Unit has been putting all effort to attract low cost deposit by providing transactional value to the customers. Cheque writing software EBL Cheque Pro was introduced in 2007 to facilitate customers in preparing & printing cheques automatically at their office. CMUs, achievement during the year also includes setting up Utility Bill Collection Center at Narayangonj, direct listing (share sales proceed) collection solution for Power Grid Company of Bangladesh, developing value added product for Hajj remittances service and providing collection & payment solution for Govt. & Semi govt. organization.

20

Structured Finance Unit (SFU): Structured Finance Unit pursued its relentless efforts to become best product structuring syndication finance unit by doing syndications, equity participations, JV projects, bond issuance, agency arrangements and providing package solution to its customer.

21

Following are some of the mention worthy deals made by SFU: SFU achieved its milestone by building financial ties with German based financial institution DEG. Under this deal, first of its kind at EBL, EBL is directly syndicating a project as an Arranger and Agent with offshore fund arrangement. It concluded syndication arrangement of USD 7.5 million and BDT 210 million funds for setting up the expansion plant of Esquire Knit Composite Mills Ltd. As trustee of world's first micro credit securitization of BRAC, the world's largest private NGO financed by RSA Capital, Citigroup, FMO and KfW and denominated in BDT, EBL managed disbursement of USD 15 million during the year. For the first time at EBL, a syndication fund arrangement was made with equity product i.e. preference share to finance a Power Plant of Meghna Group with capacity of generating 25 MW electricity. The syndication deal amounting BDT 700 million (as medium term loan) is already oversubscribed and under process of completion. Under the Private-Public Partnership (PPP) deal, EBL has extended USD 4.57 million (BDT 319.88 million equivalent) loan to three largest

22

NGOs namely BRAC, ASA & TMSS for the Agribusiness Development project under the financing structure of Asian Development Bank (ADB) to EBL through Ministry of Finance, Government of Bangladesh (GOB). Provided as arranger and agent a syndication facility of BDT 775 million with mix of fund from World Bank (under IPFF scheme), Long Term Loan and Preference Share arrangement for setting up a 22 MW Power Plant by Regent Power Ltd., a concern of Habib Group. Provided as arranger and agent a syndication facility of BDT 300 million with Long Term Loan product for setting up a 100000 MT capacity steel re-rolling Plant by Magnum Steel Mills Ltd. With association of global financial institution like ADB, World Bank & IFC - trust and confidence on EBL will be increased further which will also enhance the image of this country 8.3 SME Banking: SMEs are indispensable partners in national economy and social development. their ' major contribution is towards creation of new enterprise, employment generation and poverty alleviation. Accordingly, EBL has given special focus on SME- Banking since its launch in June, 2006. Year 2007 was the year of spiraling the entire SME Banking Business Unit like Process, Policy, Product development, Capacity planning and ultimately triggering the focus on the growth of the business taking all the risk factors into consideration. Banking division has segmented into full fledged business operations expanding their distribution and 1 (one) channels (which was 16 in 2007) and introduced 2 (two) asset products

deposit product especially for the SME Customers. Numerical data indicating the performance in different area can give a gist of SME activities in 2007. Total loans and advance reported an amazing growth of 54 percent whereas deposit of SME grew by 121 percent in 2007 over those of 2006. SME was not only growing in the book size but also maintained good wealth of the portfolio and significantly reduced the non performing asset burden. NPA ,has come down to 8.30 percent in 2007 from 17.84 percent in 2006. Our correct selection of borrower, strong monitoring and business strategy was the main strength

23

to reduce the NPA rate by 53.47 percent. SME Banking division, is preparing to deploy Electronic Loan Processing System to make loan processing easier and faster. An area of innovative products is going to be launched to accommodate the SME Customers' financial needs with least possible paper requirement from customers. Ease of payment method, expansion of distribution channel to give better access to the business community, conducting national seminar to grow awareness to the society on the prospect of this segment are few of the future initiatives we are taking as we did in 2007. The unit is ready to explore the potentials of the SME Industry in 2008 and beyond and hopefully EBL will be the leading organization in the country to offer the best outfit to the most potential segment in the country. EBL always believes and keep its rhythm with the global indication that SME is the fuel of the country's economy.

8.4 Credit Risk Management: Comprehensive risk management is a core competence of Eastern Bank Ltd. We take a prudent and conservative approach to risk that is fully aligned with our long-term strategy. The risk framework combines centralized policy setting with broad oversight supported by risk execution and monitoring. It provides management with the ability to oversee the bank's large and highly diversified portfolio effectively and efficiently. EBL's risk management systems are designed to identify and analyze risks at an early stage, to set and monitor prudent limits, and to learn and evolve continuously to help us to face a volatile and rapidlychanging risk environment. In this way, EBL's risk management adds value for the company's shareholders. Over the past few years, Eastern Bank Limited has improved its credit risk management processes by establishing a credit risk management policy, credit underwriting standards, and credit risk rating methodology. It also established a Credit Risk Management Division, which is independent from relationship management units, to ensure proper controls on its lending. This unit was established to oversee, manage and control credit risk and is charged with maintaining the level of the Bank's risk exposure in line with its overall policy. The main responsibilities of Credit Risk Management Unit are mentioned below:

24

To ensure approval of quality credits upon full compliance of all regulatory matters and local laws.

To ensure credit approvals within the approval authority at different level, as delegated by the Board of Directors as per guideline of Bangladesh Bank.

To manage all the risks, associated with credit at credit approval and monitoring level. To maintain acceptable books of assets by doing periodical portfolio review and take corrective measures for removal of any identified credit weaknesses. To keep close watch to market movement and changes and take timely decision to initiate different credit strategy. To facilitate smooth credit operation through Credit Administration Department. To manage individual problem credits and monitor the distressed assets portfolio within EBL's risk parameters. There are some risk which related credit Risk Market Risk: Market risk is the risk that arises from volatilities in interest rates, exchange rates, and the prices of instruments in the money and capital markets, which may affect the financial performance of the Bank.

Interest Rate Risk: The level of interest rates is a major factor that determines the Bank's interest income from assets and interest expenses on liabilities. The Bank is exposed to an interest rate risk arising from the fact that the assets and liabilities are subject to different interest rate repricing periods or contractual maturities, or when movements of interest rates on assets and liabilities

25

are inconsistent, thus impacting on the Bank's net interest income. The Bank has set up the Asset and Liability Committee (ALCO) to be responsible for establishing guidelines for the management of assets and liabilities, ALCO is also responsible for monitoring and maintaining interest rate risks at an acceptable level with minimal fluctuations through interest rate sensitivity analyses. These guidelines are in accordance with the policy guidelines issued by Bangladesh Bank from time to time. Foreign Exchange Rate Risk: Foreign exchange rate risk arises when the Bank is involved in foreign currency transactions, which may result in deficits or surpluses in the Bank's foreign currency position. These transactions include, for instance, foreign currency exchange, investments, loans, borrowings and contractual commitments, etc. They may incur gains or losses on exchanges as a result of movements in exchange rates. In general, the Bank's policy is to match foreign currency assets and liabilities following strictly the overnight limit of open position issued by the central bank. The Treasury Division manages and controls day-to-day trading activities under the supervision of ALCO which in turn ensures that the level of assumed risks, as per the various designated measures, is maintained within the approved level. Liquidity Risk: Liquidity risk is the risk that the Bank may not be able to meet cash flow obligations within a stipulated timeframe. The purpose of the Bank's liquidity risk management is to maintain suitable and sufficient funds to meet present and future liquidity obligations while utilizing the funds appropriately to take advantage of market opportunities as they arise. The Bank has several sources of liquidity and manages its liquidity mainly through domestic money and capital markets including repurchase markets. The Bank seeks to minimize its liquidity costs in line with the market situation by closely managing the liquidity position on a daily basis and restricting the holding of cash held above an appropriate level at any given time. As part of liquidity management, the Bank adheres to its funding plan, and exercises due care in using medium-term borrowings. Capital Adequacy Risk: Capital adequacy risk is a risk where the Bank does not have sufficient capital reserves to do the business or to absorb unexpected losses arising from credit, market and operational risks.

26

The principal objective of the Bank's capital management policy is to ensure that the Bank maintains an adequate level of capital to support growth strategies and meets regulatory requirements and market expectations. Commercial banks in Bangladesh will be required to comply with the Bank for International Settlements Basel II Accord by 2009, which will result in changes to capital adequacy requirements. The Basel II Accord will affect the risk weightings of different types of assets including provisioning for market and operational risks. This in turn will have a direct effect on the Bank's capital adequacy ratio. Bangladesh Bank is in the process of establishing detailed methodologies and procedures to suit the domestic market.

Operational Risk: Operational risk is the risk of potential losses from a breakdown in internal processes and systems, deficiencies in people and management or operational failure arising from external events. The objective of the operational risk management framework is to ensure that the Bank has in place appropriate policies, work processes and procedures. This requires gathering information pertaining to operational risks so as to avoid operational failures and minimize relevant losses; while enabling the Bank to quickly respond to and pursue new business opportunities with appropriate risk controls and monitoring. The Bank's operational risk management policy embraces the concepts of risk identification, risk assessment, risk monitoring, and risk mitigation and control. The primary responsibility for managing this risk rests with each operating unit, through the adoption of proper internal control measures in the operating environment. Business Continuity & Disaster Recovery Plan: A comprehensive Business Continuity Plan (BCP) of Eastern Bank Limited is underway. Our BCP, at present revolves in securing business and financial information from any disaster through Disaster Recovery (DR) System. This system is tested to ensure functional and effective disaster recovery capability. EBL has DR site at Uttara about 20 kilometers away from its production site. It is equipped with identical Servers, storage system and other equipments similar to production. It has the 1Gbps fiber optic link for data transmission. Mirror View software for Asynchronous Replication is installed for replication data from live

27

server to DR server. It is minimizing the risk of losing the banks customer data, eliminates any singly point of failure and matches the service standard of those of the peers.

Prevention of Money Laundering: According to BB guideline, banks and financial institutions should view money laundering prevention as a part of their reputation and operational risk management, as it has adverse impact on national economy, security and social values. Eastern Bank Ltd. formed its own Anti Money Laundering (AML) manual as per BB guideline. The Chief Anti Money Laundering Compliance Officer (CAMLCO) of Head Office is primarily responsible for executing bank wide AML operation supported by his/her followers at each branch. In the process of AML, the Bank starts with Customer Due Diligence (KYC profile) to collect customer details, risk categorization of different accounts etc. For high risk graded accounts the transaction profile is up dated annually. The senior management is involved exclusively, to deal with high risk customers. Besides this, to augment the AML capacity, every Sales and Service Manager (SSM) initiate a year end AML assessment at each branch level with the support of AMLCO. Besides, EBL ensures training on Money Laundering Prevention Act and other Bangladesh Bank's related Circulars to all staff of the bank as a part of building awareness on Money Laundering Risk. In the reporting framework of EBL, every AMLCO submit his finding to SSM arid also to CAMLCO, if required. CAMLCO eventually reports to the CEO of the Bank and Bangladesh Bank regarding AML associated matters. 8.5 Trade Services Operations: EBL Trade Services (TS) Team has been continuously raising the service and operational efficiency to new heights including introduction of new products to meet customer's requirement. Working with trade module support of robust software Flex-Cube integrated with SWIFT, the Trade Service team has been continuously developing the process and efficiency to meet customer's need with higher level of satisfaction. In automated trade payments TS reached the highest efficiency level in 2007. The largest USD Clearing Bank in New York, JP Morgan Chase NA reported 100% of EBL trade payments in July 2007 were processed Straight Through (STP) without any operator intervention. In subsequent months the efficiency level has also been close to highest level. This is a feat which is rarely achieved by any other peer banks be it local or foreign. EBL has active correspondent relationship with

28

most of the major global banks supporting trade transactions. Furthermore, EBL has been getting effective support from International Finance Corporation (IFC) under their Global Trade Finance Program (GTFP) and Asian Development Bank (ADB) under their Trade Finance Facilitation Program (TFFP). EBL has been enjoying regular guarantee and credit lines to support EBL's trade finance transactions under these programs.

29

Chapter- 9

Consumer Credit of EBL & the is Findings & Analysis

9.1

Home Loan

9.2 Customers Survey result about consumer credit 9.3 Swot Analysis

30

Consumer Credit of EBL & the is Findings & Analysis

9.1 EBL Home Loan:

Category A : Salaried Executives as per our POL (Priority Organization List) & COL (Corporate Organization List) & MNCs as well as eligible govt. employees and eligible employees of middle to large corporate bodies. Contractual Employees of Supranational Organizations, international development organizations & Donor agencies e.g. WHO, FAO, UNDP, CARE etc. subject to eligibility criteria in borrower's eligibility Category B : Self Employed Professionals including Landlords and businessmen.

Definition of Categories

Loan Amount

Minimum Maximum

: Tk. 500,000/: Tk. 1,0000,000/- (or 50 times of gross monthly income, whichever is lower, And DBR must be supportive with income and EMI as per our income assessment policy.

Secured and all others- 13.00% Interest Rate (Interest rates can be changed by management from time to time based on Market situation)

Fee loan)

: 1.25% of the loan amount +VAT. (0% for EBL permanent employee and for Take over : For new applicants : Customer will have to Tk. 15k in his/her CASA account at the time of application for property valuation and legal vetting which has been done by 3rd party enlisted co & law firm. Customer has to open CASA account in this regard in case he/she doesnt have any with EBL. Out of Tk. 15k at actual amount will be deducted as valuation & legal vetting charges. The rest amount will be adjusted with the processing fees of 1.25% of loan amount. At actual valuation and legal vetting costs will not be refunded if the application is declined. : All relevant stamp charges will be on borrowers account and will be debited from the account at the time of disbursement.

Property Valuation and deposit Vetting Fees Processing Fee

Stamp Charges

31

Length of Service/ Business/Practice of Applicant

Salaried Persons

Minimum 3 years of experience with 6 month permanent Employment with present employer. Minimum 3 years of involvement in business. Minimum 3years of practice in the profession.

Businessmen Professionals

: :

Age of Applicant

22-57 years old Loans must end before the borrowers age reaching 65.

Income Level of Applicant

Salaried Persons Businessmen Self-employed Professionals

: Minimum Tk. 25,000/- per month. : Minimum Tk. 50,000/- per month : Minimum Tk. 40,000/- per month

Joint Applicant

Joint application is mandatory for all Mortgage loans. However, single loan application can be catered through Level-2 authority. Principal applicant has to be the main income holder and he/she may or may not be the property owner. Joint applicant may or may not be the property owner or supplementary/additional income holder. Spouse and immediate family members (father, mother, son, daughter, brother & sister). Total Income of Principal and Joint applicant should be minimum 25,000/for Category A; 50,000/- for Category B. Same eligibility criteria and security and income verification will apply for Joint applicant in case his/her income is considered to derive loan eligibility.

Tenor Repayment Auto Debit Early Repayment

: 3 to 20 years : System will auto debit installment from customers CASA ACCOUNT. : Early full and final settlement is allowed.

Early Repayment Fee : A charge for early full and final settlement is flat 1.5% + VAT of the outstanding loan amount.

32

Identification and Income Documents.

Category A (Salaried Executives) National ID Letter of Introduction (LOI) strictly as per EBL's format. Offer letter or Release letter from previous employer to prove 3 yrs service experience (if applicant's employment period in present service is less than 3 yrs) Salary Slip/Certificate showing all deductions-latest 3 months Bank Statement for the last 12 months " Declaration of other assets (if any) Evidence of other income (if any) Latest TIN Certificate/IT Return Acknowledgement Copy-only from main income holder & property owner Category B (Businessman/ S elf Employed / Others) Businessman National ID Statement of Business details Latest IT Return Acknowledgement Copy with IT-1 OB form copy Latest Profit & Loss account and balance sheet of the business for businessmen Trade License as proof of business age/Memorandum of Association Company Statement for latest 12 months and self Bank Statement for latest 12 months Declaration of other assets (if any) Evidence of other income (if any) Latest schedule X. Form 117 in case latest schedule X is not available to substantiate share transfer Certificate of Incorporation Registered partnership deed from RJF for partnership concern -Self Employed National ID Certificate of professional degree and certificate of membership from professional body - for self employed professionals Bank Statement for latest 12 months Declaration of other assets (if any) Evidence of other income (if any) -Landlord National ID Title deed of rented premises/property Valid rental deed with tenants Latest 12 months banks statements in applicant's name Utility bill in the name of applicant for rented property

33

Property Documents

Apartment Purchase - on private land Ownership deed of the property (photocopy) Via deed for 25 years Development agreement (joint venture) with the land owner (if any) Registered Power of attorney Recent Survey Report (math parcha duly attested) Mutation parcha with mutation proposal sheet. Duplicate carbon receipt with mutation order sheet. CS. SA. RS porcha (PS. BS. RS. Porcha applicable only for Chittagong) Up to date "Non encumbrance certificate" for 12 years Up to date Land tax Receipt (if any) Up to date Holding tax receipt. Approved plan/Layout plan and approval letter by Rajuk/Authoruty. Deed of agreement/Allotment letter. Such other documents as required by the Banks appointed Lawyer. Apartment Purchase - on government /leased land Lease Deed/Ownership deed of land Via deed for 25 years Development agreement (joint venture) with the land owner (if any) Registered Power of attorney deed. POA acceptance letter from concerned Govt. Authority. Mutation letter from the relevant Govt. Office Duplicate carbon receipt (DCR) with mutation order Sheet. Up to date "Non encumbrance certificate" for 12 years Up to date Land tax Receipt. Up to date Holding tax receipt. Permission from Lessor to mortgagee Approved plan/Layout plan and approval letter by Rajuk/ Concerned Authority Deed of agreement / Allotment letter. House Construction/ Extension/ Renovation - on private land Ownership/lease deed of land - original Via deed for 25 years Recent Survey Report (math parcha duly attested) Mutation parcha CS, SA & RS Parcha Up to date "Non encumbrance certificate" for 12 years Up to date Land tax Receipt Approved plan/Layout plan and approval letter by Rajuk/Authority Proof of Property Insurance House Construction/ Extension/ Renovation -on government/leased land Ownership/lease deed of land - original Via deed for 25 years Mutation letter from the relevant Govt. Office Up to date Land tax Receipt Permission from Lessor to mortgagee Approved plan/Layout plan and approval letter by Rajuk/Authority Proof of Property Insurance

34

Installment failure charge

Penal interest of 3% p.a. on the dues amount.

LTV-Loan to Value ratio (Loan value/ mortgaged property price)

Area House Construction / Renovation/ Extension Apartment Purchase

Cat A 80% 80%

Cat B 80% 80%

Value of apartment = Purchase price + registration. Value in case of construction : land value of customer owned property in case of construction or renovation. CONDITION Loan amount cannot be greater than forced sales value of the property to be financed.

Property Valuation and vetting cost

Has to be borne by the applicant at actual

Top-ups

Customer can avail more than 1 loan but not crossing maximum ceiling from EBL if income and DBR supports, However, this can be catered after 6 months of first loan for A category clients and after 12 months for B-Category clients. EBL employees can top-up their existing house building loan scheme availed under HR policy.

Insurance

Property to be insured prior to disbursement. Fire, earthquake risk will be covered as mandatory and flood damage risk will be covered for flood prone areas only.

100% cash-backed loans parameters

Waiver for 100% cash-covered loans work/business experience. Fixed telephone requirement location of customer/property property type Income assessment However, the following requirements to be met. Loan tenor to be met as per PPG criteria Minimum & Maximum age at the time of underwriting : 18 and 60 years respectively.

35

9.2 Customers Survey result about consumer credit

I have conducted a survey on 20 consumers regarding many aspects of consumes products and the survey findings are as follows: The survey report is done by the help of likert scale. The likert scales designs is as follows:

Strongly Satisfied

Satisfied

No Comments

Dissatisfied

Strongly dissatisfied

1. The first question was Are you satisfied with EBL consumer Credit?. In response to
that question 15% replied that they are strongly satisfied, 50% replied that they are satisfied, 10% replied that they no comments, 20% replied that they dissatisfied & 5% replied that they are strongly dissatisfied. The mean value of this question is 3.5 . It indicates that customers are close to the satisfied . 2.The second question was Is the loan process lengthy or short? It means as you happy with the loan Processing system? 50% replied that they are strongly satisfied, 25% replied that they are satisfied, 15% replied that they no comments, 5% replied that they dissatisfied & 5% replied that they are strongly dissatisfied. The mean value of this question is 2.45.It indicates that customers are dissatisfied with the loan processing of EBL.

3.

The Third question was Do you think that interest rate is flexible Comparing with other banks consumer credit? 25% replied that they are strongly satisfied, 15% replied that they are satisfied, 25% replied that they no comments, 25% replied that they dissatisfied & 10% replied that they are strongly dissatisfied. The mean value of this question is2.25. It indicates that customer dont want to comment about the consumer credit comparing with other banks consumer loan.

4.

The fourth question was Are you happy the with installment system of home loan? 10% replied that they are strongly satisfied, 15% replied that they are satisfied, 25% replied that they no comments, 25% replied that they dissatisfied & 25% replied that

36

they are strongly dissatisfied. The mean value of this question is 1.75.It indicates that installment procedure of home loan is nearer to dissatisfied from taking customers opinion. 5. The fifth question was Are you happy with the installment system of car loan & Jibon Dhara loan? 35% replied that they are strongly satisfied, 15% replied that they are satisfied, 15% replied that they no comments, 15% replied that they dissatisfied & 20% replied that they are strongly dissatisfied. The mean value of this question is 4.10. It indicates that customer is more than satisfied about the installment procedure of car & jibondhara loan. 6. The sixth question was Are you happy with the various types of loan facilities of EBL which is not existing in other commercial bank such as parse loan, Edu line etc? 40% replied that they are strongly satisfied, 30% replied that they are satisfied, 15% replied that they no comments, 10% replied that they dissatisfied & 5% replied that they are strongly dissatisfied. The mean value of this question is 4.5. It indicates that customer is more than satisfied about the parse & edu loan which is not existing in other commercial banks. 7. The seventh question was Do you think that in case of personal loan amount is enough for any kind of business segment of personal use? 20% replied that they are strongly satisfied, 15% replied that they are satisfied, 10% replied that they no comments, 30% replied that they dissatisfied & 25% replied that they are strongly dissatisfied. The mean value of this question is 2.75.It indicates that customer is more than dissatisfied & close to no comments level about the loan amount which is given to the business segment. 8. The eight question was Are you happy with the bankers dealings with the client? 45% replied that they are strongly satisfied, 35% replied that they are satisfied, 5% replied that they no comments, 10% replied that they dissatisfied & 5% replied that they are strongly dissatisfied. The mean value of this question is 5.It indicates that customer is strongly satisfied about dealing procedure in which way banker dealing with their client. 9. The ninth question was Do you think that is there any training needed for the employees development or it is satisfactory? 35% replied that they are strongly satisfied, 40% replied that they are satisfied, 15% replied that they no comments, 5%

37

replied that they dissatisfied & 5% replied that they are strongly dissatisfied. The mean value of this question is 4.85.It indicates that customer is more than satisfied about the efficiency & skill ness of the employee of the bank.

10.

The tenth question was Is there any behavioral development needed for the employees where they are dealing with the customer? 40% replied that they are strongly satisfied, 20% replied that they are satisfied, 15% replied that they no comments, 15% replied that they dissatisfied & 10% replied that they are strongly dissatisfied. The mean value of this question is 3.5.It indicates that customer is close to satisfied & more than no comments criteria about the behavioral development of Ebl employee.

11.

The eleventh question was Are you happy with different types of loan of EBL & their repayment tenure? 35% replied that they are strongly satisfied, 15% replied that they are satisfied, 25% replied that they no comments, 15% replied that they dissatisfied & 10% replied that they are strongly dissatisfied. The mean value of this question is 3.10.It indicates that customer is more than no comment criteria & close to satisfied level about the different types of loan & repayment tenor of Ebl.

12.

The twelfth question was Do you face any kind of hassles before loan disbursement or it is satisfactory? 3% replied that they are strongly satisfied, 7% replied that they are satisfied, 8% replied that they no comments, 9% replied that they dissatisfied & 7% replied that they are strongly dissatisfied. The mean value of this question is 4.25.It indicates that customer is more than satisfied about the loan disbursement procedure of Ebl.

38

9.3 SWOT ANALYSIS

STRENGTH: Adequate investment for running business smoothly Wide image Availability of all types of modem banking facilities- ATM CARD, SWIFT, CONSUMER SCHEMES etc.

Rated as A grade bank in CAMEL rating. Strong and qualified policy maker. Introducing some new customer service operation.

WEAKNESS Lack of motivation of employees Heavy depending on head office for decision making Absence of teamwork Lack of training program

OPPORTUNITIES: Can set up separate ATM both in some major points. Can lunch some new consumer scheme. Can set up educational institutions, hospital to create the social image. Can diversify the investment.

THREATS: Customers awareness about pricing and services Existing GOVT. may change the previous GOVT. s policy it also hamper the operation. Unhealthy & illegal competition Overall economic condition of the country as well as the world. Changing rules and regulation of Bangladesh Bank.

39

Chapter- 10

Findings, Recommendations & Conclusion

10.1 Findings 10.2 Recommendations 10.3 Conclusion

40

Chapter Five
10.1 Findings
The findings of my study are as follows: The first positive findings is customer is overall satisfied about the of EBL. The one of the negative findings is customers are dissatisfied about the loan processing duration of EBL,because it takes too long time.As a customers demand in that criteria. EBLs consumer loans interest rate is flexible comparing with other banks consumer loan-in this question customer dont want to comment about the competitive interest rate. The another positive findings is customers are strongly satisfied about home loans installment system of EBL. The next positive findings is customers are more than satisfied about the installment system of car loan & jibandhara loan. Customers are more than satisfied about the parse loan & Edu loan which is not existing in other banks commercial loans. The another negative findings is about the amount of business segment loan customers are dissatisfied & close to no comments level . The another positive findings is customers are strongly satisfied about the bankers attitude when they are dealing with their client. The next positive findings is customers are more than satisfied about the efficiency & skill ness of the bank employee. The customers are near about the satisfied level about the behavioral development of the EBLS employee. It is one of the positive findings. result,EBL can not able to fulfill consumer credit

41

Customers are close to satisfied & more than no comments level about the different types of loan & their repayment tenure of EBL. It is another positive findings. The another positive findings is customers are more than satisfied abut the loan disbursement procedure of EBL. The another positive findings is customers are close to satisfied level about the interest rate of home loan . The last positive findings is customers are more than satisfied about the home loan system which is very much comfortable for the service holder.

42

10.2 Recommendations

BANK HAS TO TAKE PROPER STEP Bank has to take proper step to give flexible interest for the businessmen. Bank has to create long terms installment system for the business segment loan. Bank has to take proper step for making the loan procedure short and effective. Bank has to give sufficient amount for the business segment loan. Bank has to give proper training to the employee for their behavioral development. Bank has to create different types of loan facilities & lengthy repayment tenure.

43

10.3 Conclusion The total experience of preparing Internship report was amazing. This internship report helps me a lot to gain experience about working environment. It was a journey of professional life. It helped me in preparing myself for the next step of my life. The duration of preparing internship report was the bridge connecting the Professional life& Corporate culture. It helped me in preparing myself for the next step of my life. The employees of Eastern Bank Limited were very friendly & co-operative which made my learning very- easy. The banking business is very vast business. So, I choose Consumer Credit Department though it was one of the most important departments to learn about. In this learning process I have come accross many difficulties. The term consumer credit is used in a broader sense. Consumer Credit assume different forms depending on how its owners the banks, corporation & individuals want to preserve it, put into use or transfer it to third parties. Queer the last few decades there have taken dramatic transformations in the release of Consumer credit &foreign exchange & financing of foreign trade. In the mean time the banking community innovative as they are, has spawned a long range of money morbid & consumer credit products.

44

Bibliography

Annual publications of EBL. Collected from different published source. Web site collections.

45