Bank Asia Ltd.

Background of the Bank Bank Asia Limited is a scheduled Bank under private sector established under the ambit of bank Company Act, 1991 and incorporated as a Public Limited Company under Companies Act, 199 on !eptember "#, 1999. $he Bank started commercial banking operations effective from %ovember "&, 1999. 'uring this short span of time the Bank had been successful to position itself as a progressive and dynamic financial institution in the country. $he Bank had been (idely acclaimed by the business community, from small entrepreneur to large traders and industrial conglomerates, including the top rated corporate borro(ers for for(ard)looking business outlook and innovative financing solutions. $hus (ithin this very short period of time it has been able to create an image for itself and has earned significant reputation in the country*s banking sector. Presently it has t(enty t(o branches in operation. Bank Asia Limited is one of the fe( banks permitted by the Bangladesh bank in the late 9+s, the other banks permitted earlier are ,ercantile Bank Limited, !tandard Bank Limited, -ne Bank Limited, ./0, Bank Limited, Premier Bank Limited, ,utual $rust Bank Limited, 1irst !ecurity Bank Limited, $he $rust Bank Limited, 2amuna Bank Limited, B3AC Bank Limited, and !hah4alal 0slami Bank Limited. $hese banks are kno(n as the third generation banks and are fortunate to remain immune from the bad loan culture. 5o(ever, the performance of these banks are not the same, the Bank Asia Limited remained as one of the top performers among them. $he Company Philosophy 6 71or A Better $omorro(8 has been preciously the essence of the legend of bank*s success. Bank Asia Limited has been licensed by the 9overnment of Bangladesh as a !cheduled Bank in the private sector in pursuance of the policy of liberali:ation of banking and financial services and facilities in Bangladesh. 0n vie( of the above, the Bank (ithin a period of less than & years of its operation achieved a remarkable success and met up capital ade;uacy re;uirement of Bangladesh bank.

Criteria for the eligibility of a loan? $he 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 ;uality of its advances and the proportion they bear to the total deposit Although receipt from .=change, 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 (ise and prudent in regard to Advances is, therefore, considered an important sector inspiring confidence in the depositors and customers of a Bank. 1ollo(ing are the basic principles or sound lending (hich a banker follo(s (hen considering an advance proposal. Li;uidity> Li;uidity means the availability of Bank funds on short notice. $he li;uidity of an advance means it repayment on demand on due date or after a short notice. $herefore, the banks must have to maintain sufficient li;uidity to repay its depositors and trade off bet(een the li;uidity and profitability is must. !afety> !afety means the assurance of repayment of distributed loans. Bank is in business to make money but safety should never be sacrificed for profitability, to ensure the safety of loan. $he borro(er should be chosen carefully. 5e should be a person of good character ? capacity as (ell as bank must have to maintain eligible number of security from borro(er. Profitability> Banking is a business aiming at earning a good profit. $he difference bet(een the interest received on advances and the interest paid on deposit constitutes a ma4or portion of the bank income, besides, foreign e=change business is also highly remunerative. $he bank (ill not enter into a transaction unless a fair return from it is assured. 0ntent> Banks sanction loans for productive purpose. %o advances (ill be made by bank for unproductive purposes though the borro(er may be free from all risks. !ecurity>

$he security offered for an advance is an insurance to fall bank upon in cases of need. !ecurity serves as a safety value for an une=pected emergency. !ince risk factors are involved, security coverage has to be taken before a lending. Bank Asia Ltd. does not accept second liens, second mortgages etc as primary security for lending. 0n case of corporate financing, ma=imum emphasis is given on company*s Pro4ected Cash 1lo( !tatement based on realistic assumptions and past track record. !ources of 3epayment> A sound credit is one (here timely repayment is assured. !o, before giving financial accommodation, a Banker should consider the source from (hich repayment is promised. 0n some instances, debentures (hich are to be redeemed in little month time or a lire policy (hich is to mature in near future may be offered as security. Advances against such security give no trouble. !ometimes customers may apply for loans for additional @orking Capital for their business and undertake to repay out of the profits over a period. 0n such cases, the 3ate at (hich the customer can reasonably hope to repay should be ascertained. An e=amination of the audited accounts may guide the Banker in kno(ing the repayment capacity of the customer. !uitability> .ven (hen an Advance satisfies all the aforesaid principles it may still not be suitable. $he Advance may run counter to %ational interest. $hese Principles may have to be relocated to a certain e=tent. !o, as to fit the overall %ational 'evelopment plans the bank is necessitating no( of credit to priority sectors in the larger %ational 0nterest. !uitability or Advance from %ational vie( point has therefore come to be regarded as a basic principle of Lending. $he 0ntegrity ? 3eliability of the Borro(er> $he last and the most fundamental principle of lending are the integrity and reliability of the borro(er. $o avoid bad debt, it is the basic factor before any loan proposal can be considered. $he success of any business depends upon the ability of the Banker to study borro(ers. $he study of a borro(er involves the study of the five C<s of the Party. $his five C<s refer to Parties> A Character

A A A A

Capacity Capital Conduct ? Capability

0nstead of five C<s, some authors mention the five 3<s. $his five 3<s indicates parties*> A A A A A 3eliability 3esponsibility 3esources 3espectability ? 3eturn

Is collateral required to acquire a loan? $here are various types of loans that Bank Asia Ltd. provides to customers and they have different re;uirement of collaterals. $hese loans are briefly described belo(>

Continuous Credit: $his type of credit has not any particular repayment schedule but there is fi=ed e=piry date ? credit limit. .=ample> -verdraft B-'C and !ecured -verdraft B!-'C.

Demand Loan> A loan that becomes payable as soon as the bank asks to repay it is a 'emand Loan. Any Loan forcefully created is a demand loan. .=ample> Payment Against 'ocuments BPA'C and Loan Against $rust 3eceipt BL$3C.

Term Loan> All those loans (hich are repayable follo(ing fi=ed repayment schedule.

Short-Term Agricultural and Micro-Credit> Any loan created (ithin the scope of Bangladesh Bank*s scheduled short term credits.

Continuous loan: $(o types of continuous loan are>

Continuous Loan
a) Over Draft (OD)

b) Secured Overdraft (SOD)

Auto Loan:

$his product (ill allo( car financing to the customer segment. Dnder this scheme, the vehicle is hypothecated to the bank only. 0n addition to this registration re;uirement, on a case to case basis, bank may also secure the loan partially by the commonly acceptable form of cashE;uasi cash securities available in the market. $his !cheme is only for the person under the follo(ing ability> 1or salaried individual, minimum total service length of F yearsG 9ovt. .mployees must be confirmed on 4obG 1or self employed individual, a business record of minimum 1H,+++EI. Cor orate Credit: years.

,onthly surplus income Bafter meeting all e=pensesC shall be at least $k.

Corporate 1inance is the broad term given to different facilities that large companies, governments, or other big institutions need in order to meet their long term and short) term financial re;uirement. Bank Asia*s business is focused to a considerable e=tent on the corporate clients by maintaining the relationship and e=tending financial assistance based on a deep understanding on the clients business environments, financial needs and internal strategies for gro(th. Consumer Durable Loans: A personal loan scheme that supports purchase of various consumer durables such as $elevision, 3efrigerator, Air Conditioner, Audio)Jideo .;uipments, @ashing ,achine, Personal Computers, other household furnitureE appliances etc. Dnder this scheme, the item purchased to be hypothecated to the bank. 0n addition, on a case to case basis, bank may also secure the loan partially by the commonly acceptable form of cashE ;uasi cash securities available in the market.

Loans for !rofessionals: A personal loan scheme meant for professionals only Bdoctors, engineers, architects, 0$ professionals, management consultants etc.C to support their small scale purchase of different e;uipment, tools and small machineries for installation at their business sites E offices. Dnder this scheme, the item purchased to be hypothecated to the bank. 0n addition, on a case to case basis, bank may also secure the loan partially by the commonly acceptable form of cashE ;uasi cash securities available in the market. 0n addition, (e believe, this particular product is of an inherently safe nature because the target customers are the established doctors, engineers or highly ;ualified other professionals of the society.

"nsecured !ersonal Loans: Dnsecured Personal Loan BDPLC is a terminating facility offered by Bank*s 3etail Banking 'ivision to individual salaried persons living in the cities E to(ns (here the Bank has its operations. 0t is a clean or unsecured loan in the sense that only security in

this type of loan product is> aC Letter of 0ntroduction from employerG andEor bC $ransfer of monthly salary and assignment of $erminal BenefitsG andEor cC Personal 9uarantee taken from specific section of people. #ther Ty es of Loans: Short-term loan: $he tenor of this loan is less than one year. Mid Term loan: $he tenor of this loan is bet(een one to five years. $his type of loan is most preferred by both bank and the borro(er. $his loan is comprises (ith consumer credit, Agro credit, ,icro Credit etc. and at present this loan is less than 1K of total advance in Principal -ffice Branch. Long Term Loan: $he tenor of this loan is more than five years. 5ere the fund is locked up for a long period and hence risk e=posure is higher than other term loans. At present total term loan in P-B is around 1K of total advances. Beside these there are some other funded facilities as follo(s> L$3 BLoan against $rust 3eceiptC L0, BLoan against 0mported ,erchandiseC Loan against packing credit BPCC Beside these funded facilities, means those loan for (hich bank already channeled this fund, there are some non funded arrangement for (hich bank don*t lock its fund immediately but (ill make it in future time. 'o you re;uire a business plan to ac;uire a loanL Mes, to ac;uire a loan for a business one must provide the bank (ith a business plan. Along (ith that there are other re;uirements> Letter of Credit BLECC>

0t*s an undertaking of issuing bank on behalf of the importer favoring the e=porter to pay a certain some of money under certain terms and conditions. Bank 9uarantee> $he guarantee of the bank on behalf of this customer is to make payment to the beneficiary if the client fails to make payment. Acceptance> $his is undertaken by the bank (hich is used to pay a bill dra(n on the bank on behalf of its client on maturity. 5o( many years of track record is re;uiredL 1or a ne( startup to ac;uire a loan they must have at least one to F years of business track record depending upon the type of business. 0f the business is riskier among its industry then it (ill re;uire more track record than its peers and vice versa. 5o( much money is disbursed per loanL Bangladesh bank restricts ma=imum lending to any single obligor or a group of companies up to FHK of the total capital of the bank. But the bank can e=tend funded facilities to any single obligor or a group of companies to the e=tent of 1HK of the total capital of the bank. $he total capital is determined in accordance (ith section 1F of the Banking Companies Act 1991. Bank Asia accomplices (ith the ceiling set by Bangladesh Bank. !chemes> Liability Products Along (ith 1i=ed 'eposits, !avings Bank 'eposits and Current Account 'eposits, !hort $erm 'eposit Accounts the Bank has different customer friendly liability products. $he liability products are> aC bC cC 'eposit Pension !cheme Plus B'P! NC 'ouble Benefit Plus B'B NC $riple Benefit Plus B$BNC

dC eC fC

,onthly Benefit Plus B,B NC Bank Asia !anchay Plus BBA!P NC 1i=ed 'eposits B1, ", F, O ? 1" monthsC.

Asset Products Cor orate $an%ing $erm Loan -verdraft 'emand Loan $ime Loan Packaging Credit Letter of Credit Loan Against $rust 3eceipts Loan !yndication ? !tructured 1inance $rade 1inance @orking Capital 1inance Bill 'iscounting Letter of 9uarantee

Small and Medium &nter rise 'SM&( Term Loan !ubidha ) Dnsecured $rading

!ondhi ) !ecured $rading !risti 6 Dnsecured ,anufacturing !ombridhi 6 !ecured ,anufacturing !ofol 6 Dnsecured !ervice !heba 6 !ecured !ervice

#)er Draft !omadhan 6 !ecured

S ecial !roducts Dtshob 6 !easonal Business !ubarno 6 @omen .ntrepreneur

Consumer *inancing Auto Loan Consumer 'urable Loan Dnsecured Personal Loan 5ouse 1inance Loan for Professional !enior Citi:en !upport

Ser)ice !roducts A$, !ervices

3emittance !ervices Locker !ervice -nline Banking 0nternet Banking Phone Banking ,obile Banking !@01$

Along (ith these products and services Bank Asia Ltd. also offers $reasury ? 1oreign .=change !ervices, 0slamic Banking and Brokerage -peration. 0nterest rate> Consumer Durable Loan Auto Loan 'Car Loan( "nsecured !ersonal Loan Loan *or !rofessional /ouse *inance Secured #)erdraft 'S#D( #)erdraft '#D( Cash Incenti)e LD$! Condition (pay off period, time period): +,+.+,+,+.+0+0121+1-

$he payoff period of a loan depends upon the terms and conditions of the loan. A loan can be repaid before the maturity period, as well as the maturity can be extended by renegotiating the loan contract. Penalty ? 3ecovery> $he last but a very important step is the recovery of the loan disbursed. $he borro(er may repay the (hole amount at once or part by part depending on the type of the loan. 0f the investment is in a seasonal inventory, the payments may come at the end of the season. 0n a longer)term inventory and receivables financing, the repayments (ould be made from profit margins or from

refinancing and in parts. 0f it is a Pro4ect loan, the repayment comes from the sale of resource and also usually in installments. $he sale of the security is actually not the ultimate solution if the credit is classified as bad. But in some cases, the bank has to take that last refuge and recover its investment. $he bank follo(s these procedures as per the ,oney Loan Court Act "++F, (hich is enacted from ,ay 1, "++F.