Professional Documents
Culture Documents
Introduction
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1.2. Significance
This internship report is an important partial requirement of four years BBA graduation program. This
is because knowledge and learning become perfect when it is associated with theory and practice. By
this internship program students can establish contacts and networking. Contacts may help to get a
job in practical life. That is, student can train and prepare themselves for the job market. A poor
country like Bangladesh has an overwhelming number of unemployed educated graduates. As they
have no internship experience they have not been able to gain normal professional experience of
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establish networking system, which is important in getting a job. Therefore, it is obvious that the
significance of internship is clearly justified as the crucial requirement of four years BBA graduation.
1.3. Scope of the Report
As I was assigned to the National Credit & Commerce Bank Ltd, Mirpur Branch, there is enough
scope of the study. The report covers the topic Loan Disbursement & Recovery System of NCC
Bank Ltd. To conduct a study, Loan Disbursement & Recovery of NCC bank, I have gathered
valuable information from NCC Bank, Mirpur Branch and its wealthy library I have also got some
information from website of NCC Bank.
This report is only done for gathering information about loan sanctioning procedure and recovery
system as well as the performance of sanctioning loan and recovery position while ignoring any other
department of the bank.
1.4. Objectives of the Study
1.4.1.
General objective
The prime objective of this report is to analyze the Loan Disbursement & Recovery System of
National Credit & Commerce Bank Ltd.
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Type of Research
In this report we will describe the Loan Disbursement & Recovery process of National Credit &
Commerce Bank Ltd, by Time series analysis, Ratio Analysis and Comparative Analysis etc. So,
according to the base of objective this research is called descriptive research.
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Part-02
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Name
Year of Establishment
Corporate Office
Authorize Capital
Paid Up Capital
Type of Company
Scope Of Business
May 1993.
7-8, Motijheel C/A, Dhaka-1000.
2500 million
4501.25 million
Public limited
Banking, capital market operations.
2.2. Background
National Credit and Commerce Bank Ltd. started its journey in the financial sector of the country as
an investment company back in 1985. The aim of the company was to mobilize resources from within
and invest them in such way so as to develop country's Industrial and Trade Sector and playing a
catalyst role in the formation of capital market as well. The company operated up to 1992 with 16
branches and thereafter with the permission of the Central Bank converted into a fully fledged private
commercial Bank in 1993 with paid up capital of Tk. 39 core. Since its inception NCC Bank Ltd. has
acquired commendable reputation by providing sincere personalized service to its customers in a
technology based environment. The initial authorized capital of the Bank was Tk. 75.00 crore and,
paidup capital Tk. 39 core at the time of conversion which is now raised, to Tk. 4501.25 million
paidup and Tk.2500 million authorized capital.
The Bank has set up a new standard in financing in the Industrial, Trade and Foreign exchange
business. Its various deposit & credit products have also attracted the clients-both corporate and
individuals who feel comfort in doing business with the Bank. In recent years the bank has given
much importance on financing small businesses through SME loan to reach its credit offering to wide
range of customer.
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Chairman
Vice Chairman
Board of Director
Managing Director
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Part- Three
Theoretical Background
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Secured Overdraft-SOD (G): Granted against the work order of government departments,
corporations autonomous bodies and reported multinational private organization. To arrive at
logical decision, the clients managerial capability, equity strength, nature of scheduled work
is to be judged.
Cash Credit-CC (Hypothecation): The mortgage of movable property for securing loan is
called hypothecation. Hypothecation is a legal transaction whereby goods are made available
to the lending banker as security for a debt without transferring either the property in the
goods or either possessing.
Cash Credit-CC (Pledge): Transfer of possession in the judicial sense of essential in the
valid pledge. In case of pledge, the bank acquire the possession of the goods or a right to hold
goods until the repayment for credit with a special right to sell after due notice to the
borrower in the event of non-repayment.
Loan against Imported Merchandise (LIM): Advances allowed for retirement of shipping
documents and release of goods imported through L/C taking effective control over the goods
by pledge fall under this type of advance. When the importer failed to pay the amount
payable to the exporter against import L/C, then NCCBL gives loan against imported
merchandise to the importer.
Loan against Trust Receipt (LTR): Trust Receipt is a document which creates the bankers
lien over the goods and practically amounts to hypothecation of the proceeds of sale in
discharge of the lien. Loans against Trust Receipt to the clients are allowed when the
documents covering an import shipment are given without payment. However, prior
permission of Head Office must be obtained for such advances.
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Local Documentary Bill Purchase (LDBP): Payment made against documents representing
sell of goods to local export oriented industries, which are deemed as exports, and which are
dominated in local currency/foreign currency falls under this head.
Inland Bill Purchase (IBP): Payment made through purchase of inland bills/cheques to meet
urgent requirement of the customer falls under this type of investment facility.
Foreign Bill Purchase (FBP): Payment that is made to customer through Purchase of
Foreign Currency Cheques/Drafts is known as Foreign Bill Purchase.
Working capital loan: Loans allowed to the manufacturing unit to meet their working
capital requirement, irrespective of their size.
House Repairing/Renovation Loan: This loan is offered for renovation and modernization
of the house/building/flat. The genuine residential owners can avail this kind of loan.
NCC Bank Visa Credit Card: NCC Bank has launched its Visa Credit Card Service on
August 22, 2005 and offering three types of cards which are Visa Classic, Visa Gold (Local)
and Visa Dual Currency Card (Globally and locally). Since then were able to reach 5000
cards, both corporate and general.
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Part- Four
Loan Disbursement
&
Recovery System
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Disbursement
A. Partys application
At first borrower has to submit an application to the respective branch for loan, where he/she has to
clearly specify the reason for loan. After receiving the application from the borrower Bank officer
verifies all the information carefully. He also checks the account maintained by the borrower with the
Bank. If the official becomes satisfied then he gives form-A (prescribed application form of Bank) to
the prospective borrower.
B. Filling Form -A
After satisfying with partys application the applicant need to fill Form-A. It is the prescribed form
provides by the respective branch that contains information of the borrower. It contains- Name with
its factory location, Official address and telephone number, details of past and present business, its
achievement and failures, type of loan needed etc.
C. Collecting CIB Report from Bangladesh Bank
After receiving the application for advance, NCC Bank sends a letter to Bangladesh Bank for
obtaining a report from there. This report is called CIB (Credit Information Bureau) report. NCC
Bank generally seeks this report from the head office for all kinds of Investment. The purpose of this
report is to being informed that whether the borrower has taken loan from any other Bank; if yes
then whether the party has any overdue amount or not.
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Borrower,
capital structure,
Address,
Details of deposit,
CIB report,
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Weight
Financial risk
50%
Business risk
18%
Management risk
12%
Security risk
10%
Relationship risk
10%
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Key parameters
Financial risk
Business risk
Management risk
Security risk
Relationship risk
Grading
Superior
Short
SUP
Score
Fully cash
GD
ACCPT
MG/WL
SM
SS
2
3
4
5
6
Good
Acceptable
Marginal/Watch list
Special Mention
Substandard
7
8
Doubtful
DF
35-44
Bad/Loss
BL
<35
Source: NCC Bank Training Guide
secured,
secured
by
govt.
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Risk grading
Superior
Good
Acceptable
Marginal/Watch
list
Special Mention Quarterly
Substandard
Quarterly
Doubtful
Quarterly
Bad/Loss
Quarterly
Source: NCC Bank Training Guide
Early Warning Signals (EWS)
EWS indicate risks or potential weaknesses of an exposure requiring monitoring, supervision or close
attention by management. If these weaknesses are left uncorrected, they may result in deterioration of
repayment prospects of banks assets in future. No delay should be made in referring EWS accounts
or any problem accounts to the CRM department for their early involvement and assistance in
recovery.
EWS has two risk symptoms. This are
a. Marginal/Watch list: When loan is overdue for 60 days or more and frequent drop in
security values then it fall in this category.
b. Special Mention: When loan is overdue for 90 days or more and major deficiency prevails
in document then it fall under this category.
E. Project Appraisal
It is the pre-investment analysis. Project appraisal in the Banking sector is important for the following
reasons:
To achieve organizational goals.
To recommend if the project is not designed properly.
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Technical viability
Commercial viability
Financial viability
Economic viability
The Head Office (HO) mainly checks the technical, commercial and financial viability of the project.
For others HO is dependent on branchs information. But when the investment size is big, then the
HO verifies the authenticity of information physically.
F. Head Office Approval
When Head office receive appraisal from the branch then, Head Office again appraises the project. If
it seems to be a viable one, the HO sends it to the Board of Directors for the approval of the
Investment. The Board of Directors (BOD) considers the proposal and takes decision whether to
approve the Investment or not. If the BOD approves the Investment, the HO sends the approval to the
concerned branch.
The respective officer of Head Office appraises the project by preparing a summary named Top
Sheet or Executive Summary and then he sends it to the Head Office Credit Division for the
approval of the Loan. The Head Office Credit Division considers the proposal and takes decision
whether to approve the Investment or not. If the committee approves the Investment; the HO sends
the approval to the concerned branch.
G. Sanction Letter
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After getting the approval of the HO the branch issues sanction letter to the borrower. A sanction
letter contains:
Name of borrower,
Facility allowed,
Purpose,
Rate of interest,
Period of the Investment and mode of adjustment,
Security and Other terms and condition.
H. Documentation
If the borrower accepts the sanction letter, the Documentation starts. Documentation is a written
statement of fact evidencing certain transactions covering the legal aspects duly signed by the
authorized persons having the legal status. The most common documents used by the NCC Bank for
sanctioning different kinds of Investment are:
Joint Promissory Note,
Letter of Arrangement,
Letter of Disbursement,
Letter of Installment,
Letter of Continuity,
Trust Receipt,
Counter Guarantee,
Stock Report,
Letter of Lien,
Status Report,
Letter of Hypothecation,
Letter of Guarantee
Documents Relating to Mortgage.
I. Disbursement
After sanction and completion of all formalities the respective officer disburses the loan. The officer
writes cheque and provides it to the borrower. For this borrower has to open an account thorough
which he/she can withdraw the money.
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3) Legal recovery
If the above procedures fail to keep an account regular and the borrower does not pay the
installments, then bank take necessary legal action against the borrower. In this case Bank sues in
Artha Rin Adalat Law-2003 that plays a vital role for collecting the loan.
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Recovery procedure of NCC Bank follows four procedural steps to recover the lending amount,
which is joint effort of Bank, society and legal institutions, which are shown below:
and advances
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A) Character:
-To determine whether the borrower has a responsible attitude towards borrowed funds and
whether he will have every effort to repay what is owed.
-Responsibility, truthfulness, serious purpose, and serious intention to repay loans make up
the characters of the borrower.
B) Capacity:
-Whether customer requesting loan has the authority to request loan and have the legal
standing to sign loan agreement and documents.
C) Economic Condition/ Assets:
-Whether borrower has sufficient assets to repay the loan.
-Other loans and liabilities of the borrower.
D) Credit history/Credit habit:
-Whether loans borrowed by the customers previously & how those earlier loans were
handled.
-Whether there is any loan default earlier.
-Whether legal action has ever been taken against him for recovery of default loan.
E) Credit Rating:
-Credit Ratings of the borrower by credit rating agencies
F) Purpose of the loan:
-Customer must have a well-defined purpose for requesting the loan.
-The purpose of the loan must be consistent with the banks existing credit policy.
-The purpose of the loan also should have consistent with government regulations.
Tannery Finance.
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Share Lending.
The repaying capacity and willingness of the borrower is to repay the advance.
B. Liquidity
The liability of a Bank is repayable of demand or at a short notice. So the Bank has to maintain its
liquidity at a sufficient level. Investment on building, plant, machinery, land etc. cannot be recovered
quickly, so it is less liquid.
C. Profitability
Profitability is the pre condition for investment. Each individual and organization invests to get some
positive output. Profit is needed to pay interest to depositors, depreciation, and maintenance, declare
dividend to share holders, provide or reserve against bad and doubtful debts etc. So NCC Bank also
disburses advances when they see positive return from investment.
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D. Security
Security is first condition for sound lending. To ensure safety of advances, Banks takes different types
of securities like MTDR, Sanchay patra, land, work order etc. Banker should ensure that the securities
are adequate, marketable and free from encumbrances before disburse the loan.
4.9. Implications
The implication of non-performing loans are not only depriving of interest but also stoppage of
creating new loans for blockage of the fund and erosion of banks profitability, liquidity and solvency,
which might sometimes lead towards collapse of a bank. So, it is become essential for policy makers
of a bank to study the loan default scenario on a routine basis for estimating classified loan, making
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appropriate provisioning, adopting effective recovery strategy and thus ensuring soundness and
efficiency of the bank.
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Business
Lease financing
Housing Loan scheme
Agriculture is the mainstay of Bangladesh economy being major contributor to the GDP. NCC bank
keen to contribute towards the growth of economy in financing the agro based firm, specially poultry,
fishery & hatchery. Financing also provided to export oriented shrimp culture and fish processing
industries. As the sector is being looked after adequately by financial institutions and nationalized
commercial bank still NCC bank provides a small amount of loan to this sector.
Consumer Financing
NCC bank keeping in mind the economic development helps the fixed income group in fulfilling their
demand to upgrade the standard of living. Consumer financing scheme covers:
-Home appliances
-Furniture & fixture
-Air conditioner, Fax machine
-Motor Cycle/Car etc.
In our society a reasonable number of small/big businessmen are related to the real estate and civil
construction. NCC bank provides loan to this sector carefully only on selective basis.
Industry
The term loan financing for establishment of new industries is a specialized banking function. Bank
follow a selective approach for term loan financing to small scale industries and export oriented or
import substitute industries which will enjoy high degree of national economic priority. The bank for
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financing in this sector would prefer syndication with other banks to keep a balanced portfolio.
NCCBL set aside a large amount of money from budgetary allocation to finance in industry loan. In
every year, bank provides the highest percentage of loan to this sector. In 2010, it sanctions 45.40%
loan to this sector.
Business
A large section of our business community consists of small & medium business owners who are
conducting their business with their own resources without availing much support from financial
institutions. Such businessmen are generally sincere, honest and hard working but are often short of
working capital not to mention the capital finance for expansion. NCC banks major concentration
shall be under this sector under following categories:
- Small Business Loan
- Festival Small Business Loan
- Earnest Money Financing Scheme
- Financing of service concerns
- Financing of trading concerns
- Financing of manufacturing concerns
Lease financing
NCC bank to keep its contribution to the growth of national GDP, accelerate the total economic
development by infusing the fund in productive sector in more efficient and effective way; diversify
its portfolio and satisfy the customers needs would go for lease finance for:
- Setting up of small and cottage industries/projects
- Transports (both road & marine)
- Medical equipments/ Lab equipment/ X-Ray machine etc.
- Construction equipment
- Other fixed assets of productive & service oriented ventures
Construction of buildings is not progressing as expected because of scarcity of housing loans. Many
people can purchase flat or construct house if they are facilitated with the sanction of institutional
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loan. With a view to creating financial capability of the prospective clients in purchasing flats / hoses
and in constructing houses and with the objective of exploring a profitable investment area NCC
Bank Housing Loan scheme has been introduced. The purposes of this scheme are:
To motivate service holders, businessmen & professionals who have the capability to repay
the loan for purchase of flats/houses/construct buildings and thereby improve their life style.
This broad category encompasses large business houses dealing with imported consumer items,
medium and small import business houses trading in similar lines and finally, shopkeepers,
distributors, whole sellers scattered throughout the country.
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2) Term Loan
a) Project Loan
b) Transport Loan
c) House Building Loan
d) Lease Finance
e) Loan under Syndication
3) Demand Loan
a) Loan General
b) Demand Loan against Ship-breaking (LAS)
c) Payment against Documents (PAD)
d) Loan against imported merchandise (LIM)
e) Loan against Trust Receipt ( LTR)
f) Forced Loan
g) Packing Credit
h) Secured overdraft against Cash Incentive
i)
j)
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i)
5) Agro Credit
a) Agro-based Industrial Credit
b) Crop Loan
6) Special Credit Product
a) Credit Card
b) Earnest Money Financing Scheme
c) NCC Bank Housing Loan Scheme
d) Overseas Employment Loan Scheme
7) Loan Products for Wage-Earners
a) Land Mortgage Loan
b) Special House Building Loan
c) Advance Against Remittance
d) Wage Earners Rehabilitation Loan
1) Continuous loan
Loan repayment period is maximum 1 year. If client cant repay the loan in this stated period then it is
again renewed for 1 year more. The interest rate is determined by the instrument rate plus three (3%)
percent. It can be issue against, DPS, FDR; etc. Interest rate is 15% to 17%.
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The banker has only equitable charge on stocks, which practically means nothing. Since the goods
always remain in the physical possession of the borrower, there is much risk to the bank. So, it is
granted to parties of undoubted means with highest integrity. The Interest rate of this loan is 13%.
Loan repayment period is maximum 1 year.
Interest rate of this loan is 13%. Now NCC bank stops this loan because it needs extra warehouse that
2) Term loan
This loan is provided against 100% cash collateral, besides; the land & building are also mortgaged
with the bank. Interest rate is 13% p.a. overdue installment of this loan is obliged to pay very shortly.
The loan is under Unclassified Loan. The range of house building loan is 6 lac 40 lac.
Lease Finance
This type of financing are usually provided to transportation sector. Now a day this Lease Financing
is one of the popular financing projects. The Interest Rate of interest is 15%-16%. This loan is
providing for 3 5 years and maximum amount is tk.15 lac.
3) Demand loan
Loan (General)
NCCBL considers the loans, which are sanctioned for more than one year as loan (g). Under this
facility, an enterprise is financed from the starting to its finishing, i.e. from installment to its
production. NCCBL offers this facility only to big firms. The rate is 13%.
The importer will bear all the expenses i.e. the warehouse charge, insurance fees, etc. and the
ownership of the goods is retaining to the bank. This is also a temporary advance connected with
import, which is known as post import finance. Interest rate is 16%.
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Trust Receipt is fully paid off. This is also a temporary investment connected with import and knows
as post-import finance and falls under the category "Commercial Lending". Interest rate is 16%.
The bill of exchange is held as the primary security. The client submits the usually bill and the bank
discounts it. This temporarily liability is adjustable from the proceeds off the bill. Interest rate is 16%.
This temporary investment is adjustable from the proceeds of bills/cheques purchased for collection.
It falls under the category "Commercial Landing.
This scheme is aimed to attract consumers from the middle and upper middle class population with
limited income. The borrower should have saving or current deposit account with the bank. Minimum
25% of the purchase cost of the product is to be deposited be the borrower with the bank is equity
before the disbursement of the loan. The rest 75% is to be kept as cash collateral (FDR, Shanchay
Patra etc.) with the bank.
The purchased items are hypothecated with the bank. The disbursement of the loan is effected by
debiting loan (general) account to the opened in the same of the borrower. Loan amount is disbursed
through a/c payee pay order/demand draft directly to the seller after submission of the indent, deposit
of client equity and completion of documentation formalities. The interest rate is 13%-16%.
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Loans allowed to the manufacturing unit to meet their working capital requirement, irrespective of
their size big, medium or large fall under the category. The range of working capital loan is tk.1 lac to
tk.5 lac and the interest rate is 16%.
This loan is offered for renovation and modernization of the house/building/flat. The genuine
residential owners can avail this kind of loan. The range of loan amount is tk.1 lac to tk.5 lac. Loan
can be repaid by monthly equal installments including interst within maximum 5 years. The Interest
rate of House Repairing/ Renovation loan is 16%.
This loan is offered to the small and promising entrepreneurs to meet their capital requirement and
enable them to operate and expand the business purposely. It is apporved against collateral and
estimation of the revenue generation of the project for which the loan is sanctioned. The range of this
type of loan is one to five lac taka. The interest rate of Small business loan is 16%.
NCC Bank provides a new type of SME Loan for Women named Oporajita. It encourages the women
to start new venture. It provides loan at the rate of 10%, which is lowest rate among all other types of
loan.
Personal Loan
This loan is provided to salaried persons in various organizations to meet any emergency cash needs.
Interest rate is 15% p.a. and maximum credit ceiling is Tk.1, 00,000.
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Part- Five
Analysis
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Tk in million
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see, the disbursement of loan gradually increase year by year. In 2006 the loan amount was too low
because of economic recession.
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Disbursement (million)
Recovery
Recovery
2006
2007
2008
2009
2010
24678.36
32687.75
46332.69
50387.68
63230.14
23466.1
31334.44
44430.11
48967.11
61804.86
percent
95.05%
95.83%
95.86%
97.16%
97.73%
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A loan is nonperforming when payments of interest and principal are past due by 90 days or more, or
at least 90 days of interest payments have been capitalized, refinanced or delayed by agreement, or
payments are less than 90 days overdue, but there are other good reasons to doubt that payments will
be made in full. (IMF)
Year
2006
2007
2008
2009
2010
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Credit to Deposit Ratio measures the portion of Deposit is in the form of loan and advances. The
greater the ratio the better for the organization.
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NCCBL
Particulars
Loans
MBL
2010
2009
2010
2009
67,961.24
53,900.14
107,729.58
96,669.05
75,629.14 58,033.47
& 63,230.14
50,387.68
92452.62
77497.57
66,377.70 48,295.55
Total Deposits
Total
SEBL
2010
2009
Advances
Total Investment
10,980.81
9,671.53
18327.65
21350.23
10,937.20 9,664.72
Classified Loans
1,425.28
1420.57
2,264.28
2,320.31
1187.81
1252.05
2.84%
4.26%
3.73%
1.78%
2.59%
720.22
1862.75
1130.74
617.52
629.70
Deposit 93.04%
93.48%
85.82%
80.17%
87.77%
83.22%
Asset 2.84%
2.61%
2.26%
1.66%
1.64%
1.22%
13.55%
11.25%
11.72%
9.13%
10.48%
65
76
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65
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Classified
Loans 2.27%
Percentage
(Total
Classified
Loans
Credit
Ratio
Return
on
(ROA)
Capital
Adequacy 10.91%
Ratio
Number
of 79
Branches
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Source: Annual Report 2009- 2010 (NCC Bank, Southeast Bank & Mercantile Bank)
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Part- Six
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NCC bank is in the midst of an intense competitive environment of financing industry. Bank and nonbank solution to finance businesses are being introduced regularly. From the report i get some
positive and negative findings about National Credit and Commerce Bank Ltd. The findings are
necessary for bank to take corrective measure. So we disclose the findings below:
Year wise loan and advances of NCC Bank increasing year by year. The Loan and advances
increased more than 2.5 times from 2006 to 2010 results the average growth rate per year is
31.24%.
Continuous Loan, Term Loan, Demand Loan and SME Loan are increasing year by year. The
average growth rate is 20% but in the SME sector they have lowest investment.
In industry sector in 2010, 40.87% of total loan and advances was provided in industry sector.
But in the agriculture sector they discourage to sanction loan because they think this sector is
risky. Therefore, in 2010 it was only 0.83% of total loan & advances.
In 2006 the investment made by the bank was Tk. 3,552.08 million which was triple in 2010
and the figure was Tk. 10,980.81 million. The average growth rate is 41.82% per year.
Government Treasury Bonds is a non-risky sector to investment so they invested their
92.18% of total loan & advances in that sector in 2010.
Recovery is increasing year by year. In 2010 the total advances was Tk 63,230.14 million and
recovery amount was Tk 61804.86 million, which was 97.73% of total advances.
Non-performing loan is decreasing. The Banks non-performing loan, in 2010, was 2.27%, in
2006 which was 4.95%. So it is a good sign for the Bank.
Credit to deposit ratio is increasing year by year. It was increased from 87.68% in 2006 to
93.04% in 2010.
Investment to deposit ratio is also increasing year by year. It was increased from 12.62% in
2006 to 16.16% in 2010.
Capital adequacy ratio for NCC Bank is satisfactory and it is increasing year by year, it was
increased from 9.78 in 2006 to 10.91 in 2010.
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The average deposit growth rate considering the number of branches for NCC bank is 3.74%,
SEBs growth rate is 11.44% and MBLs growth rate is 6.26% indicates NCCBL doesnt
collect their deposit as efficient as other two banks.
The disbursement of loan & advances for NCCBL is lower than the both SEBL and
MBL.However, the average growth rate of disbursement of loan for NCCBL is comparatively
higher than the both bank indicates NCCBL limited is in better position.
The total investment of NCCBL shows lower average growth rate (-6.58%) compared to
SEBL (-3.67%) & higher than to MBL (-7.73%).
NCC banks credit to deposit ratio was decreasing mode (93.04%) where SEBL (85.82%) &
MBL (87.77%) shows increasing mode. However, NCCBL was more efficient to recover
their loans than to SEBL & MBL.
The decreasing capital adequacy ratios for all banks indicate the capacity of both banks in
terms of meeting the liabilities and other risk such as credit risk, operational risk etc.
decreased in 2010 than to in 2009.
NCCBL & MBL classified loan in percentage were decreasing mode where SEBL shows
increasing mode. However, NCCBL was in better position than other two banks.
5.2. Conclusions
NCC bank is in the midst of an intense competitive environment of financing industry. Bank and nonbank solution to finance businesses are being introduced regularly. So to gain a major share in the
market, NCC bank might increase its customer base through effective solution to their investment and
financing. Product diversification might help the bank to keep pace with the competitive world.
The bank is currently doing average. By analyzing its performance it is observed that a potential
growth might be accelerated through effective implications of competitive strategies. Being an old
generation bank it has an advantage compared to newly established bank in the form of wide range of
activities. However strategy implication needs to be as fast as possible to grab the early mover
advantage. The bank through years has been able to spread operation in mass banking rather than
concentrating in niches. It can hedge poor performance of one sector by some other sector for its wide
range of offering. Capital market operation has become a great potential for the bank to increase its
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profitability. NCC bank brokerage house is concentrating to establish new workstations in order to
facilitate investor of remote places.
The bank has been able to create a multi component loan portfolio. However non-performing loan are
a real challenge to the sound credit management. Default is increasing for lack of monitoring. The
bank is trying to increase its loan quality by accelerating its recovery policy. The bank can
concentrate on the loan sector where default risk is low and its investments are profitable. The loan
procedure has been made more calculative, logical to keep the credit sound.
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5.3. Recommendations
Banking sector is now a more competitive. Each bank wants to capture maximum market share and to
become a market leader. Like others NCC Bank also wants to be market leader. I think they have
capability to be market leader. The private commercial banks that are currently operating in
Bangladesh offering different products but there are few basic differences among them in terms of
structure and performance. Thus, the competitions among them increase day by day. So, based on
findings it can be recommended to progress in future, NCC bank should adopt some policy which
will help the bank to capture a larger market share. The recommendations can be disclose below:
From the graph of SME loan, it is found that they provide less amount of loan than any other
sector of loan. But this sector, they should give more emphasized to encourage their
entrepreneur.
In our country more than 70% people are surviving by producing and selling agricultural
products. But NCC Bank does not provide enough loans to this sector that we found in
sector wise disbursement of Loan graph. In 2010 they provide loan 0.83% of total loan and
advances in this sector. But they should give more concentration in this sector for developing
our economy.
The customer should be analyzed properly. It can be done by collecting information from
Credit Information Bureau or past behavior of the customer so that their recovery rate
increases.
Proper and effective monitoring system should be developed in order to minimize the amount
of non-performing loan.
Credit to deposit ratio of NCC Bank shows that their ability to provide loan is strong. This
ratio, in 2010, was 93.04%. So, they should collect more deposit to making more loans.
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Bibliography:
Bedi, H.L. Practical Banking Advances UBS Publishers Distributions Ltd. New Delhi.
Chowdhury, L.R., A Text Book on Foreign Exchange Fair Corporation, Dhaka, 2000
Frederic S. Miskhin, The Economics of Money Banking & Financial Market Sixth Edition,
2003, Boston
Prospectors:
NCC Bank Ltd., Annual report 2006-2010, NCC Bank Ltd, Dhaka, BD.
Websites:
www.nccbank-bd.com
www.bangladesh-bank.org.bd
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Annexure
Financial Highlights of NCCBL from FY2004 to FY2008
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