PREFACE

Whatever we have learnt from formal classes in different academic

years is mainly book based concept and theoretical knowledge. But along
with theoretical knowledge, practical experience is essential. The learner's
foundation of knowledge becomes more solid through direct practice and
training. In other words, effective combinations of theoretical knowledge
with practical experience are the key to success of a student. From the
view point of this necessity,

Department of Accounting

& Information systems, University of Rajshahi has included

a two months internship program into syllabus of MBA. It is a
requirement of academic curriculum of MBA degree. Under this program
students of MBA are sending to different banking organization to acquire
practical knowledge and experience. At the end of the program every
student has to prepare a report on the basis of his/her acquired practical
experience.
As a student of MBA

Department of Accounting &

Information systems, University of Rajshahi, I was assigned

to RAKUB, Godagari Branch, Rajshahi to complete the two months
internship program. I am very much happy to get a chance like this. It
was indeed a great favor of almighty Allah to have the scope of being a
student of faculties like them.
Md.Faruque Sarker
MBA (Examination) 2009
Class Roll: 05027102
Exam. Roll: 05027102
Registration No: 0566
Session: 2004-05

Department of Accounting & Information

Systems.

ACKNOWLEDGEMENT

I am grateful to a number of individuals for their kind advice,

directions, suggestions and co-operation, which have enabled me to have
practical internship program in RAKUB, Godagari Branch and ultimately
to prepare this report.
At first, I would like to express my deepest respect and thanks to my
respected teacher Dr.Mohammad Main Uddin, Professor, Department of
Accounting

& Information systems for his day-to-day

monitoring, supervision and maximum assistance for the last fifteen days.
I am also indebted to all individuals of RAKUB,Godagari Branch for
their guidance.
My gratitude and special thanks are due to all of my teachers for their
cordial guidance and helps in different ways.

Md.Faruque Sarker
MBA(Examination)2009
Class Roll:05027102
Registration No:0566
Session:2004-05

Department of Accounting & Information

Systems.

ACCEPTANCE LETTER
This is to certify that the internship report entitled Analysis
of Loan Disbursement & Recovery Problem of RAKUB.A Study
on Godagari Branch prepared by Md.Faruque Sarker student of
MBA, Department of Accounting & Information Systems, University
of Rajshahi; Class Roll No-05027102, is his own achievement.
I also certify that I have gone through the report and found it
satisfactory for submission in partial fulfillment of the requirements for
the degree of Master of Business Administration (MBA) in Accounting &
Information Systems.
I wish every success in his life.

.Supervisor

(Dr.Mohammad Main Uddin)

Professor
Department of Accounting & Information Systems
University of Rajshahi
Rajshahi-6205.

CHAPTER-1
INTRODUCTION TO RAKUB

1.1 Preamble:
Bangladesh is an agricultural country of having 80% of total
populations directly or indirectly dependent on firm business, livestock,
fisheries, small cottage industry, etc. In spite of gradual decline, Agriculture
sector of Bangladesh is the largest contributor of Gross Domestic Product
(GDP) and it is almost 21.91%. About 76.61% of the population of the
country live in rural areas and depend on agriculture for their livelihood. As
most of the cultivators follow traditional method of cultivation, it is no
longer possible for them to support the increasing needs of the population of
Bangladesh.
In Bangladesh the principal agricultural inputs are land and labor and
alternative employment opportunities for agricultural workers are very
limited. In addition agricultural sector of Bangladesh is the principal source
of labors, capital and raw materials for the industrial sector of the economy.
But agricultural goods export contributes only 14% of the total export
earning of Bangladesh. Whereas newly emerged Ready-Made Garments
(RMG) contribute as much as 77% of the total export earnings. But
agriculture still remains the largest employing sector (62.3% of the total
workforce).
The salient features of agrarian economy of Bangladesh reinstate that
agriculture sector should be considered as prime sector for sustainable
economic development of Bangladesh. In the rural areas, most of the land
holders are marginal who have less than one hectare of arable land, though
the largest part of operated area is occupied by the medium and large land
holders, their financial conditions are not satisfactory. In fact, consumption
expenditure of largest part of them is higher than their real income.

To modernize agriculture as well as to increase its productivity, the

use of various inputs such as HY seeds, balanced does of fertilizers,
pesticides, irrigation, drainage, etc. is indispensable. To punches inputs the
majority of farmers needs additional funds. In most cases, the poor farmers
depend on loans from Mahajans or moneylenders at an exorbitant rate of
interest. The indigenous moneylenders and other landlords supplied credit to
produce crops and for other purposes to the farmers and many farmers lost
their belongings due to inability to repay their debt. They took Dadan
from moneylender and when they would repay the money with interest, they
would become landless day by day.
Since the Government of Bangladesh has put much emphasis on
agricultural sector, as a result, different financial institutions have started
giving agricultural credit to the farmers. Among the institutional sources the
NCBs, BRDB, BSBL, Grameen Bank, BRAC, Proshika, ASA etc. are
increasing farm productivity as well as increasing business work. For the
continuation Government established Bangladesh Krishi Unnayan Bank
(RAKUB) as a state-owned specialized Bank by the presidents order no. 58
of 1986.

1.2 Management of RAKUB:

A seven-member Board of Directors is entrusted with the
responsibility of policy formulation for promotion of growth in agriculture
leading to economic development of the country through agricultural credit
support. All the directors of the board are appointed by the government.
Also an executive committee constituted by the Chairman and two other
directors including the Managing Director is there for taking emergency
decisions. The Managing Director is the chief executive of the Bank.

1.3 RAKUB At a Glance:

Serial No
01.
02.
03.
04.
05.
06.
07.

Chapter Head
Name of organization
Establishment
Location of head office

Particulars
RAKUB.
15th march 1987
Kajihata, Greater Road,

Authorized capital
Paid up capital
Reserved capital

Rajshahi
Tk 1800 million
Tk 1800 million
Tk 208.50 million.
(30th June,2010)
Total area of Rajshahi &

Area

Rangpur Division. (34.513

Square Km)
1092
60
123
16
452

08.
09.
10.
11.
12.

Unions Districts
Municipals
Upazillas
Districts
SACP (Special

13.
14.
15.
16.

Credit Program
Non. SACP
640
Total populations
3.5 crore
Total family
51 Lakhs
Farmer Family
32 Lakhs
Source: Official Records of RAKUB. Table-1

Agriculture

1.4 Scope of the Study:

The scopes of the studies are as follows To observe different credit program of RAKUB.
To know the problems of RAKUB in credit program.
To analyze and interpret the crops loan program of RAKUB.
To measure the operating performances of different credit.

To give suggestion for better performance of

RAKUB.

1.5 Objectives of the Study:

1) To provide a better and up to date record of the performance of
the Bank
2) To identify the key factors that contributes to the banks profits
or losses.
3) To help management make better decision.
4) To keep the present findings of the study in a way that can be
used as a reference for future research.

1.6 Limitations of the Study:

We know that practical training is essential to acquire a complete
knowledge. But it is not achieved easily. There are some problems in these
activities. These are as follows:
1.

Observation of activities is a difficult task.

2.

As secrecy of accounting is a must for an Institution, the

concerned data and information are not always mutually
presented to evaluate the institution.

3.

Another problem is lack of necessary elements and aspects. As

a result practically training becomes difficult.

4.

Internship training needs sufficient financial support. But we

cannot get this support.

5.

It needs enough time but we cannot get enough time.

Therefore, we can say that as a result our thinking remains simply

bookish and knowledge incomplete to the end
Program.

CHAPTER-2
METHODOLOGY
2.1 Meaning of Methodology
We can easily say that methodology is a way to systematically solve
the research problem. Broadly saying that methodology is the undertaking
and rules of organization of a philosophical system of inquired procedure.
The identifying the relevant sources of data and application of appropriate
data collection method and the using of proper statistical test and techniques
for analyzing the collected data etc. are concerning methodology of the
study
2.2 Sample Selection:
For the purpose of the study on specific topic, necessary data can be
generated through sample survey or census survey. Sample is a small unit of
population that acts as a representative of the population. Research findings
derived from sample survey may not represent the accurate results. But
census survey is not possible in all conditions due to lack of time, funds,
other facilities etc. For my study, I have selected a sample unit and it is
Godagari branch of RAKUB.

10

2. 3 Choice of the Period:

I have selected a period of starting from 2007-08 to 2009-10 as the
period of my study.
2.4 Methods of data collection
There are many process and techniques of data collection. We know
data collection is the primary task of any study. Basically, there are two
methods of data collection. That is, mainly we have two types of data. These
are:
A. Primary Data,
B. Secondary Data.
2.5 Primary Data:
The primary data are those, which are fresh and authentic and thus
happen to be original in character. We know there are several methods of
collecting primary data. The main methods are:
i). Observation method,
ii). Personal communication,
iii). Questionnaires,
iv). Schedules and
v). Other methods.
In our study, we emphasize on the following three methods:
i). Observation method,
ii). Personal communication,
iii). Questionnaire method.

11

2.6 Observation method:

It is the most commonly used method. In such a way, we all observe
things around us specially our related field. In my study, I have visited some
department of RAKUB, Godagari branch for observed and collected data.
2.7 Personal communication:
It is another important method of collecting primary data. It is very
effective method. I have gathered data through personal discussion with the
officers of different level of employees of the RAKUB,Godagari branch.
They provide information about banking operations. Other information have
been collected by personal discussion with the coordination of accounts
officers, management information division etc. of RAKUB, Godagari
branch.
2.8 Questionnaire method:
It is an important and effective method of data collection. I have
collected some important data through questionnaire. At first, I make
questionnaire as the direction of my supervisor. That is, firstly I have
selected what is required to carry out my study and how to measure the
variables and thereafter have prepared questionnaires and collected
information.
2.9 Secondary Data:
Secondary data means data that are already available i.e. they refer to
the data, which have already been collected and analyzed by someone else.
We know there are many sources of secondary data. It may be published or
unpublished the published data are available in:
a. Various publications of central, state and local governments,
b. Various publications of foreign governments,
c. Technical trade journals,

12

d. Books, magazines and newspapers,

e. Public records and statistics historical documents and other
sources of published information.
The sources of unpublished data are many; they may be found in
diaries, letters, unpublished biographic and autobiographies and also may be
available with scholars and research workers, trade associations labor
bureaus and other public/private individuals and organizations.
In our study, we have mainly gathered the secondary data from the
following sources:
1. Audited annual report of RAKUB,
2. Circular letters and journals,
3. Published papers on loans and advances of RAKUB,
4. Published papers on loan recovery of RAKUB,
5. Other published and historical documents of RAKUB,
6. Website of RAKUB.
2.10 Preparation of Questionnaires:
We have prepared a questionnaire for the collection of data and other
official information. Two set of questionnaires have been preferred
containing several questions. Some questions are for Manager and other
officer and staff. These questionnaires have been furnished at the last
portion of this report.

13

2.11 Tools and Techniques:

For the analysis of the collected data from the RAKUB, very simple
statistical and econometric tools are applied in the report. The applied
statistical tools are mean value, standard deviation, variance, coefficient of
variation, coefficient of correlation and regression to draw the findings and
conclusion.
Tools:
1) Mean value,
2) Standard deviation,
3) Variance Analysis,
4) Coefficient of variation,
5) Correlation and Regression,
6) Time series analysis,
7) Tables representation,
8) Graphical representation through bar diagram.
2.12 Selection of the respondents:
During our internship program, we have two sets of questionnaire,
one for Officers and other Employers. In that time, we have to select the
respondents. These are Managers and other Officer of Godagari Branch, of
RAKUB.

14

CHAPTER-3
GENERAL BANKING ACTIVITIES
3.1 Opening an Account at Godagari Branch of RAKUB:
Though RAKUB is a specialized Banking institution, it provides
commercial Banking facilities. As a commercial function, it provides
opportunity for the customer to open account with the Bank. Opening
account is an agreement between the customer and the Banker.
The general procedure to open an account with RAKUB is given
below:
Obtaining proposal from a prospective customer.
Supplying the prescribed from of this Branch to opening account.
Obtaining the form properly filled up.
Interviewing the applicant.
Having introduction.
Collecting at least three-specimen signature in the signature card
supplied by the Bank.
Providing deposit book and obtaining initial deposit.
Having accounts number.
Providing cheque book in order to with draw deposited amount
from current and saving account.
In case of a joint account of individuals special instruction should be
required. The name of the person who will operate upon the account and
sign cheques.
At the event of death of either or any of the accounts holders how the
balance will be paid and to whom the securities will be devolved. The
documentary requirements are almost a like the individual accounts.

15

Account opening form and the special instruction must be signed by all the
joint account holders to signify their consent.
If the client is a private or public limited company then the company
has to give a special instruction about the type of the account and the
operation the account. Specimen signature of the person who are authorized
to open and operate the account and the sources of their authority. Their
source of authority is a must.
Memorandum and articles of association of the company.
Power of authoring or
Resolution of board of directors.
Before opening an account with RAKUB, the Banker should
observe the following general precautions:
Observing whether the application form is properly filled up.
Getting and preserving specimen signature of a client.
Getting introduction
Taking initial deposit in cash.
The Banker should verify some important documents like
memorandum of association, article of association, registration certificate
incorporation, and trade licensee etc.
3.2 Different Types of Accounts:
The different types of clients mentioned above can open different
types of deposit accounts. These deposit accounts have different features and
phenomenon. The deposits that are taken by the Godagari Branch can be
classified into two heads demand deposits and time deposits.

16

 Demand Deposit:
This account is normally opened for businessman or business
organization No interest is given on it. The initial deposit of RAKUB, in this
account is Tk. 1000 and balance must be maintained at least at this amount.
In this case, the account holder can with draw or deposit his or her money at
his or her wish within the Office hour.
Saving Account:
This account is opened for the individual customer without the
companies or firms or Co-Operative society. The minimum initial deposit of
savings account is Tk 100 and this amount must always be maintained.
Short Term Deposit Account:
This account is opened for Companies, Firms, Governments or the
Administrative Bodies like the TNO, WDP etc. This account is operated like
the current account.
Time Deposit:
Time deposit is not repayable on demand. This is repayable after the
expiration of a certain period. Time deposits are classified into three deeds
namely DPS, RPS and FDR.
Deposit pension Scheme (DPS):
It is one kind of program circulated by the government. In this
savings scheme, a person receives the opportunity to build up savings by
contributing monthly installments to get an attractive fixed amount at the
end of specified period. The sizes of the monthly installments are Tk. 100,
Tk. 200, Tk. 300, Tk. 400 Which is to be deposited within the first week of
each month In this case, and compound rate of interest is charged. But this

17

DPS has not been operating in RAKUB rather the old accounts have been
continuing.
RAKUB Person Savings Scheme (RPS)
RAKUB has some savings schemes to motivate the people for
savings. In this case RPS is regarded as the special product of this Bank. The
RPS is same as DPS. But the terms of savings of RPS are 5 years and 10
years. Interest is credited to the accounts of the depositors in June every
year.
Fixed Deposit Receipt (FDR):
It is a deposit scheme where a receipt is issued for the full amount
which is payable after a specified period of time against deposits of certain
amount. It any depositor wishes to withdraw his or her money maturity, he
or she is allowed to do so but in this case interest will be given according to
the prescribe rate for that term. This instrument is also accepted as primary
security or collateral security against any advance or loan subject of the
Bank.

3.3Closing an Account:
To close account, an account holder has to place written application.
After having application the service charge is deducted by the Bank at an
amount of Tk. 25 against savings and current deposits respectively as
closing fees from the balance and the rest of the amount is given to the
customer.

18

3.4 Remittance:
RAKUB, Godagari Branch gives their customers the facility to remit
funds from one place to another. The people who are not customers can also
enjoy this facility. The instruments, which are used to remit funds, are DD,
MT, TT, PO and Advice.
3.5 Demand Draft (DD):
DD is the most popular instrument for remitting fund. It is an order to
pay money drawn by one Branch of a Banker upon another Branch of the
same Bank for a particular sum of money which is payable to order on
demand. Test number is placed on DD, If the test no. Of issuing Banks and
reimburses Bank becomes the same, only then the specified amount of
money on DD is paid to the customer. The Bank commission is Tk. 1.5 per
Tk. 1000 and the liability is totally born by the customer.
3.6 Mail Transfer (MT):
MT is another mode, of remitting funds and it is same as DD but here
the customer is not provided any papers except a receipt. The Bank sends
the MT papers under its own responsibility to the respective Branch. In
order to encase MT, the payee must maintain account with the Bank. There
The Bank commission is Tk. 1.5 per Tk. 10,000 and the postal charge is
Tk.10.
3.7 Telegraphic Transfer (TT):
It is the specialist method of remitting fund from one place to another.
In this procedure no instrument is sent over telephone on telex, the paying
Banker only message is sent over telephone or telex, and the paying Branch
makes payment after getting message. But due to lack in technology; this
Bank cannot operate TT.

19

3.8 Payment Order (PO):

It is a written document, This PO can be in cashed on that Branch
from where it is issued, several supplier organizations use this PO and here
no A/C is needed to open with there Bank. It is issued locally.
Transact among its various Branches with the help of such Advice.

3.9 Accounting Procedure:

The main objectives of maintaining the accounting procedure of
RAKUB, Godagari Branch is to achieve in following goals: To record the
day-to-day transaction. To reflect the financial position periodically.

3.10 Objectives of RAKUB:

The main objective of RAKUB is to provide credit facilities for
agricultural development and the socio economical development of poor
farmers of its Banking Region. As the largest development partner in the
north-west region, RAKUB aims at overall development of farmers and all
the sectors and sub sectors of agriculture in this region. Besides catering to
agricultural credit financing, agro business and poverty alleviation programs
the bank performs ancillary banking functions. Others objectives are as
follows:
1. To develop the agro- based industries.
2. To provide poverty alleviation.
3. To modernize the agriculture.
4. To developed the social state of villagers.
5. To create self-employment opportunity.
6. To provide general banking service.

20

3.11 Role of RAKUB:

Rajshahi Krishi Unnayan Bank Godagari Branch has been playing a
vital role for the development of the agriculture in north-west region.
Although Godagari Branch of RAKUB is specialized of agriculture loan but
the general commercial activities of this bank is very much wide.
The main role of Godagari Branch of RAKUB is to develop the agrobased industries, self-employment, solving the unemployment problem and
supply of money for the expansion of socio-economic activities. Its
responsibilities have been increased after the construction of Bangobondhu
Bridge over the Jamuna River which is connected North-west region with
the eastern region of the country. On account of economic development of
the farmers of the north-west region of the country Godagari Branch of
RAKUB is continuing is restless efforts with more than 107 loan programs.
3.12 Godagari Branch of RAKUB:
Rajshahi Krishi Unnayan Bank, Godagari Branch, was put in
operation in December27, 1979 at Godagari Municipal Area. This branch is
recognized as an ideal branch of RAKUB at Dying Para Bustand Godagari ..
The office building is situated at Godagari Bazar bus stand.

21

3.13 Activities of Godagari Branch of RAKUB:

The people of the north-west region are very poor. Their main
occupation is agriculture and they can not use modern technology in
cultivation, for the lack of capital and new invented idea for agricultural
development. For these reasons their income and saving are low. That is
why, the rate of investment is low. To overcome these problems RAKUB
has taken some steps to alleviate the poverty of the north-west region.
Godagari branch of RAKUB determines as its commercial activities and
targets giving priority on all the sub-sectors and helpful sectors of
agriculture. The main activities of Godagari Branch are as follows:
1. Deposit collection and mobilization.
2. Loan disbursement and recovery.
23.14 EMPLOYEES of Godagari Branch, RAKUB:
09 personnels are employed in Godagari Branch. Their designation is
given below:
Employees and Designation of Godagari Branch of RAKUB
S.L. No.
01.

Designation
Manager (Principal Officer)

No. of Personnel
1

02.

Second Officer

03.

Junior Officer

04.

Data operator

05.

Peon

06.

Cashier

07.

Supervisor

08.

Security Guard

09.
Total Employees
09
Source: Official Records of RAKUB, Godagari Branch, Rajshahi

22

3.15 Godagari Branch of RAKUB at a Glance:

The following table summarized Godagari branch of RAKUB:
Table-

Serial No
01.
02.

Chapter Head
Establishment
Location

03.
04.
05.
06.
08.
09.
10.
11.
12.
13.
14.
15.
16.

Requirement
27 December,1979
Godagari
Municipal

Area
Number of union

Area
476 Square Km
Five Union &

One

Number of village
Borrowers
No. of village market
Major crops

Municipality
415
1454
15
Potato, Mango,

Rice,

Jute, Pulse
No. of employees
09
Total Population
40,000
Authorized Capital
Reserve Capital
Deposit Balance
718.45 Lakhs
Net Profit
3.565 Lakhs
Loan Disbursement
3.55 crores
Source: Official Records of RAKUB, Godagari

Branch, Rajshahi

23

CHAPTER-4
CREDIT MANAGEMENT OF RAKUB
4.1 Main Credit Portfolio of RAKUB:
a) Food crops

Paddy, wheat, potato, sugarcane, master

seed, sunflower seed, Ginger, Onion,
Water motor, Winter/Summer vegetables,

b) Cash crops
c) Processing and Marketing
d)

Agro-based

Banana, Mango etc.

Jute, cotton, Tobacco, Betel leaf etc.
Small and cottage industries, Marketing

capital etc.
industries Rice has king mills, flour mills, dall mills,

projects

fruit processing industries, Light earning

e) Commercial loan

work shops, Ice plants etc.

Loan against fertilizer and pesticide, cash
credit loan for agro-products and small

f) Live stock

enterprise etc.
Draft animals, dairy, poultry, Goatery,

g) Transport

Beef fettering etc.

Rickshaw-van, Rickshaw, Bullock cart,

h) Farm machineries

Country, boat etc.

Power
tiller,
tractor

and

other

machineries.
i) Micro credit
RSCP, SECP.
j) Special agricultural activities. Fishery, Orchard, Nursery etc.
k) Others
Loan against fixed deposits
Source: Official Record of RAKUB

24

4.2 Terms of Loan:

Banks loans and advances may be short term, medium term or long term
according to period which is required based on gestation period and surplus
income to be generated out of an investment. Based on the idea RAKUB has
classified its loan as follows:
I.

Short term loan- Short term loan is the loan, which is fully repaid
within 18 months. Short term loans are for crop rising, production and
marketing and to be repaid within a maximum period of 18 months.

II. Medium term loan- Medium term loan is the loan, which is fully
repaid above 18 months to less than 60 months. Medium term loans
are for land development, minor irrigation facilities, dairy, poultry
and project having maturity period over 18 months but not exceeding
60 months or 5 years.
III. Long term loan- Long term loan is the loan, which is fully repaid
more than 60 month or five years. Long term loans having gestation
over number of years-tea, rubber plantation, agro-industries are
called-up over five years.

4.3 Eligibility of Applicants of Loans/Advances:

To be eligible loans/advances from the bank, applicants must with the
following basic requirementi.

Be a citizen of Bangladesh.

ii.

An adult.

iii.

Creditworthy having repayment capacity and good reputation about

financial dealings.

25

iv.

No defaulter of the Bank nor a defaulter of other banks/DFIs unless

otherwise relaxed by competent authority.

v.

In case a limited company, registered with the Registrar, joint Stock

Company and rising of a loan/advance authorized by the Board of
Director of the Bangladesh.

vi.

In case of Co-operatives, registered with the Registrar, Co-operative

Societies, and Bangladesh.

vii.

In case of body corporate equipped with manpower to carry-out the

scheme/project efficiently for which loan/advance is required.

viii.
ix.

Not an insolvent person; and

Not lunatic/idiot.

4.4 Sanctioning and Disbursement procedure:

At first client/customer will deals with the manager. Manager will
asked different types of question for primary evaluation. If the manager
seems, the purpose of the loan is consist with the loan policy and bank will
be able to earn, then manager advise to collect prescribe loan Application
form. Some purpose of loan, the bank consider as a project. In that case the
sanction and disbursement procedure will be different. In general the
following procedures are to be follow.

26

1. Collection of a Loan Application.

A nominal loan application fee is to be deposited except application
from small farmers in advance in cash along with loan application as shown:
Amount of loan

Rate of application fee

Small farmers up to Tk. 6000

NIL

Tk. 6001 to Tk. 7500

Tk.7501 to Tk.100000
Above Tk. 100000

Tk.15
Tk. 2 for every Tk.1000
Tk. 200 plus Tk.1 for every Tk.
1000 or fraction thereof in excess of

Tk.100000.
Source: Official Records of RAKUB, Godagari Branch, Rajshahi
The Loan application form should be properly filled up. And
following documents/papers will be attached with loan Application.
1. 2 Copies of photographs.
2.Nationality certificate certified by Union Parishad Chairman.
3. Signature of UP Chairman, 2 UP Members / 2 prestigious persons
having A/C in the Bank in loan application form.
4. Affidavit Form.
5. DP note.
6. Document of Land.
7. DCR (Duplicate Carbon copy).
8. Mutation Copy.
9. Most recent rent payment receipt.
10. Tax Payment receipt from Union Council.
11. Electricity bill payment receipt.
12. Relevant document about reasonable security against loan.
The loan supervisor collects information in time and examines the subject
mater of the appraisal. All loan applications, except crop loan are to be

27

investigated on-the-spot with a view to assets the applicants legitimate

credit need, feasibility of the scheme, capability and creditworthiness, ability
to carry-out the project and debt-servicing capacity etc. After examination, if
the loan supervisor satisfies, he recommends sanctioning loan to the
Manager. Considering the above manager will be determine the appropriate
amount of loan.
In addition bank carefully processed some special types of applicants
before sanction of loan
1. Deaf dumb and applicant.
2. Physically handicapped.
3. Government servants.
4. Co-operative Societies.

4.5 Security Title:

Bank takes reasonable security against the loan. Banks Charter provides
that for the purpose of securing loans and advances and open cash credit the
acceptable securities are:

1)

Stocks, fund and securities in which a trustee is authorized to

invest money by any law for the time being in force.

2)

Debentures or other securities for money issued under the

authority of any law or under the authority of the Government.

3)

Goods or the documents of title thereto which are deposited

with or assigned to.

4)

Debentures or companies with limited liability, subject to such

directions as may be issued by Bangladesh Bank.

5)

Shares of companies with limited liability, subject to such

directions as may be issued by Bangladesh Bank.

28

6)

Goods, including tea crops and raw jute or finished jute

products, which are hypothecated to the bank as security.

7)

Accepted bills of exchange and promissory notes endorsed by

the payees.

8)

Guarantee of the Government.

9)

On the security of a project.

10)

Accepting pledge, mortgage, hypothecation and assignment to

the bank of any kind or movable and immovable property.

11)

Unconditional bank guarantee of a scheduled bank.

The details of properties offered as security for loan are indicated in the
loan application. Relevant documents-title deeds, rent receipts record of
rights relating to security properties are also attached with the loan
application.

4.6 Interest on Loans/Advances:

Bank charges different interest rate on loan for different activities
within the limits set by Bangladesh Bank Godagari Branch calculate the
interest on loans/advanced as daily produce basis. In fixing rate of interest
for loans and advances factors like1. Cost of fund.
2. Cost of loan administration.
3. Service and risk factors and.
4. Margins are taken into consideration.

29

The bank use its rate of interest on loan is as follows:

Agricultural loan

8%-10%

Others agro loan

Others Non-Agro
loan
Agro-based
industry
Poverty alleviation
program
Working capital
RAKUB Selfemployment

Cottage industry

10%

12%

Export credit

7%

12%

Opposing loan

10%

10%

Small Business

15%

6%
10%-14%
12%

Others special
programmers

10%-12%

Small tea garden

11%

RAKUB NGOs Loan

12%

program

program
Source: Official Records of RAKUB , Godagari Branch, Rajshahi

30

Time schedule of data transformation to other office:

Data in the prescribed format as detailed are to be made available to
the designated unit as shown below:
Frequency

Branch to

Region to

Branch to

Branch to Head

status

Region

Head

Bangladesh

Office

7 of the

Office
10th of the

Bank
7 of the

10th of the

following

following

following

following month

month
10th July,

month
20th of the

month
7th of the

10th of the

October,

following

following

following month

January and

month

month

April
15th July

25th of the

7th of the

15th of the

and January

following

following

following month

month
25th of the

month
7th of the

15th of the

following

following

following month

Monthly

Quarterly

Bi-annually

Annual

th

th

15 July

th

month
month
Source: Official Records of RAKUB , Godagari Branch, Rajshahi

31

4.7 Types Of Loan:

There are mainly two types of loan.
1.Unclassified Loan (UC)
and
2. Classified loan (CL).
a. Unclassified Loan (UC):
When half or more than half of the total loan is repaid within the due
dates by the borrowers then that is called unclassified loan. The duration of
time in which the loan will be treated as unclassified is less than 12 months
from sanctioning loan.
b. Classified Loan (CL):
When more than half of the total loan or total is unpaid/due over the
due date then that loan is called classified loan. Classified loans can be sub
standard, Doubtful and Bad. The criteria of this classification of classified
loans are as follows:
1. For short-term loan:
Short term loan are classified by RAKUB, Godagari Branchi) Crop loan and micro credit:
a) Age of over due, 12 months-irregular.
b) Age of over due 13-36 months-substandard
c) Age of due 36-60 months-doubtful.
d) Age of over due: Above 60 months Band.
ii) Case credit and working capital:
a) From 6 months but less than 9 months-substandard.
b) From 9 months but less than 12 months-doubtful.
c) From 12 months above-bad.

32

iii) Demand Loan:

a) From 6 months but less than 9 months-substandard.
b) From 9 months but less than 12 months-doubtful.
c) From 12 months above-bad.
2. Mid-term loan (Up to 5 years):
a) From 0 months but less than 6 months-substandard.
b) From 6 months but less than 12 months-doubtful.
c) From 12 months but less than 18 months-bad.
3. Long-term loan (Above 5 years):
a) From 0 months but less than 12 months-substandard.
b) From 12 months but less than 18 months-doubtful.
c) From 18 months but less than 24 months-bad.

4.8 Loan Recovery procedure:

The important tasks of a Bank to recover the out standing loans. The
main responsibility of branch manager and field supervisor to recover the
outstanding loans in Godagari Branch. The branch manager has taken sound
plan and policy to recover the outstanding loan. Thus recoverable all loan
are to be timely. The loan recovery procedure includes several steps. There
are two types of loan recovery method. One is field level recovery and the
other is officer level recovery. Loan supervisor collects loan in field level
and office supervisor collects loan in office. In case of field level recovery,
the voucher has to be prepared in that day or next day. But in case of office
level recovery, the voucher has to be prepared in that day. Godagari Branch
of RAKUB recovers the Loan from borrower installment basis, installment
system are as follows:
Weekly
Fortnightly

33

 Monthly
Godagari Branch makes a schedule to recover the outstanding loan. There
are several schedules to pay of difference types of loans. These are as
follows:
Schedule to pay of crops loan are fixed according to Bangladesh
Bank rules.
Different schedule to pay loan for various objectives.
For project loan, schedule to loan are to be adjusted, when
production are start commercially.
For working capital loan, loan to be paid in due time.

4.9 Various Types of Notice:

The bank issues various types of notice to the borrower to recovery of
loan immediately, which are serially set to the borrower. These are Demand
notice, Legal Notice, Special Notice, Field recovery, Loan Recovery camp,
Co-operation of UP chairman and Case filing.
1. Issue of demand Notice: Demand notice is issue before on month
being due of out standing loan or installment. It is sent to the
borrower.
2. Legal notice: If the borrower does not repay their respective loans
and interest after maturity being received the demand notice under
registered with acknowledgement by post to the borrowers the bank
should send lower notice to him.

34

3. Special notice: Beside the above to notice a special notice signature

by DC, TNO is sent to the respective borrower to keep mental
pressure on him for repaying the loan.
4. Field recovery: Loan officer recover the recovered loan through I.O.
receipt by visiting the spot and source of the borrower.
5. Personal Communication: If the borrower fails to repay his loan
installment, the loan officer communicates with the respected persons
of that area to give mental pressure to the borrower so that he repays
his respective loan.
6. Loan Recovery Camp: RAKUB, Godagari Branch camp in various
areas for the recovery of his loan, in this Issue, the manager and other
officer were present in the camp and communicated with borrowers.
They gave them moral persuasion and tried to encourage them, so
that they could repay their loan.
7. Case filing: When legal action for recovering loan becomes failed, a
case in filed against the borrowers. The case is generally filed in the
following ways:
i) Unwilling to repay loan although he is financially solvent.
ii) Every effort of loan recovery becomes failure.
iii) Date mental to the interest of bank loan.
8. Exemption of Interest: Loan recovery with the help of interest
exemption the loan amount which becomes more than double in
principle and interest and which in not possible to recover with the
help of legal action them those loan can be recovered by exempting
interest. By this way bad loan can be recovered.

35

CHAPTER- 5
ANALYSIS OF CROP LOAN DISBURSEMENT:
Crops credit is an small amount of money allocated among the
farmers as loans to run their activities of farming their crops. RAKUB has
given special emphasis on crop loan. Crop sector is an important sector of
our agro based economy. Development of our economy depends much on
crops. Every year we have to import huge quantity of crops which required a
large amount of foreign currency. This is impacting negatively on the
balance of position of our country. It we can ensure food security we can
save huge amount of foreign currency. So for our economic development it
should be given topmost priority. The total amount of crops loan disbursed
by RAKUB amounts to about 35% to 40% of the total loan disbursed and it
is about 30% to 35% of total loan disbursed by RAKUB, Godagari Branch.
One may avail crop loan for purpose like:
a) For purchasing raw materials
b) For improving crops
c) For repaying loans availed previously on crops.

36

5.1 Total Loan Disbursement (TLD) and Total Crop Loan

Disbursement (TCLD) Table:

Year
2007-08
2008-09
2009-10

TLD (TK.)

TCLD (TK.)

5842000
10896000
21800000

2065000
1469000
2669000

% of Loan of
TCLD Compare to TLD
35.00
13.50
12.20

From the above Table and Graph it is clear that the amount of
disbursement loan in various sectors increasing over the years. And
simultaneously the amount of disbursement loan in the crop sector also
increases over the years. But the ratio between the TCLD and TLD is
decreasing gradually. That is, the total loan disbursement of this Branch has
increased dramatically over the years while the crop loan disbursement
increases but in a decreasing rate. If we look at the Table then we observe
that the percentage of total crop loan disbursement compare to total loan
disbursement is decreasing over the years. This also means that people are
not interested in crop cultivation by taking bank loan. This may be for

37

various reasons such as high interest rate or corruption in the loan

disbursement process. The loanee may have to spend a large amount of
money to get the loan due time.

The trend tine of total crop loan disbursement shows that the line is
downward to the right. This indicates that as the time increases per unit
(year) the percentage of crop loan disbursement decreases. This is not a
satisfactory performance of this Branch.

38

5.2 Sub-category of Crop Loan Disbursement:

5.2.1 Loan given to Boro:
Loan
Year

Amount(TK.)
Given to Boro

Total Crop Loan

(TCL)

% of Loan of
Boro compare to
TCL

2007-08

30000

2065000

1.50

2008-09

42000

1469000

2.90

2009-10

25000

2669000

1.00

39

From the above Table and Graph we observe that the total crop loan amount
is very high but the loan provided to a sub-sector Boro is very low. The
percentage of loan provided to Boro loanees is insignificant to the total crop
loan.

Farmers should be encouraged to cultivate Boro forming a co-

operative society. This will help them to get more loans. Moreover rice is
our staple food, so the cultivation of paddy should be increased providing
loan at a confessional rate.

40

5.2.2 Analysis of loan given to Banana:

Year

Loan
Amount(TK.)
given to banana

Total Crop
Loan (TCL)

% of Loan of
Banana compare to
TCL

2007-08

2015000

2065000

97.50

2008-09

419000

1469000

28.50

2009-10

502000

2669000

19.00

From the above Table and Graph it is observed that the total amount of crop
loan disbursement is almost increases over the years but the amount of loan
provided to Banana decreases over the years. In the first year (2007-08) the
amount of total crop loan was equal to the amount of total crop loan
disbursement and it decreasing gradually over the years. This indicates that
people are not interested in cultivation of Banana.

41

% of Loan to Banana in each of the Three Year

From the above Pie Chart it is clear that the amount of loan given for
Banana is gradually decreases over the years.

42

5.2.3 Analysis of Loan given to Potato:

Year

Loan

Total Crop Loan (TCL)

Amount(TK.)

% of Loan of
Potato compare
to TCL

2007-08

20000

2065000

1.00

2008-09

1007000

1469000

68.50

2009-10

2167000

2669000

81.00

From the above Table and Graph it is seen that the amount of loan given to
the Potato is gradually increases over the years. The total crop loan
disbursement by the Branch is also increases as the time goes up. In the first
fiscal year (2007-08) loan provided to Potato was only 1% of the total crop
loan and subsequently in the year (2009-10) it becomes 81% of the total
crop loan disbursement.

43

From the above Trend Line we observe that the rate is increasing and
upward to the right.

This indicates that the number of Potato framers

increasing over the years. This also indicates that people are interested in
cultivation of Potato because it may be a profitable sector.

44

5.2.4 Analysis of Total Number of Crop Loanee Compared to Total

Number of Loanee:

In the above Graph it can be seen that the total number of loanees
remains almost constant over the years. But we observe that the total amount
of loan (Figure-1) is increasing over the years. This means that the loanees
take much amount of money than the previous years. And this is also can be
said that the number of Crop loanees remains almost constant over the years.
The total amount of Crop Loan paid to the loanees increases slightly over
the years. There is not found a great change in the Crop Loan disbursement
that is it remains almost same.

45

This Graph shows the different categories of Crop Loan borrowers

who get loans and advances from the Godagari Branch, RAKUB at different
period of time. From the Graph it is clear that the number of Potato loan
borrower increases over the years whereas the number of Banana loan
borrower decreases over the years. And it is also found that the number of
Boro loanee also decreases over the years

46

5.3 The trend analysis of total loan disbursed and Total loan
recovery: (amount in Million Taka)

% of Recovery

Financial

Loan

year

disbursed

2007-08

89

58.42

65.6

2008-09

96

108.96

98

178

81.65

Total recovery

2009-10
218
Source: Official Record of RAKUB.

47

48

5.4 The trend analysis of loan recovery target and Total loan
recovery. (Amount in TK million)
Financial Year

Recovery Target

Total recovery

% of

2007-08

89

32.24

achievement
36.22

2008-09

90

41.19

45.26

2009-10

200

110

55

Source: Official Record of RAKU.

49

Table shows that the highest loan recovery target was TK 8000
million in 2006-07 and lowest recovery target was TK 3500 million in 199900. The highest amount of loan recovery was TK 8513.10 million in 200607 and lowest amount of loan recovery was TK 2555.54 million in 1998- 99.

50

5.5 The Trend analysis of the recovery of classified loan: (amount in

million Tk).

Financial Year

Recovery target

Total Recovery

% of total

of classified loan

of classified loan

recovery

2007-2008

42

17.78

42.33

2008-2009

22.83

14

61.32

2009-2010

36

30

83.33

From the above table & graph it is clear that the recovery of classified loan
is lower than the target in each of the three year. At the same time it is
impressive that the percentage of recovery is gradually increasing.

51

CHAPTER-6
FINDINGS, RECOMMENDATION AND CONCLUSION
6.1 Findings of The study:
Problems:
Lack of capital: From RAKUB publication we see that the banks
authorized capital is only Tk 1800 million. Which is very much insufficient
it vast area and a large no. Branches.
Lack of deposits: Deposits is a main sources of fund for the smooth
functioning of the bank But we see that the rate of deposit collection is very
much insignificant compared to other banks. There is a big gap between
targeted deposits and actually collected deposits.
Lower rate of loan Recovery:

One of the major problems of

RAKUB is its lower rate of loan recovery we see from our study that there
is a wide gap between loan disbursement and loan recovery.
Fixation of unrealistic target: We see from our study that there is
wide gap between target deposit target disbursement target recovery and
actual deposit actual disbursement and actual recovery. This indicates the
inefficiency of the manpower of the bank .
6.2 Diminishing percentage of recovery of classified loan:
Recovery of classified loan is decreasing which is creating a big
problem. for the bank.
Ineffective field workers:
Field workers always fail to estimate the actual situation due to their
inefficiency RAKUB is incurring huge amount of losses every years.

52

6.3 Poor communication systems and backdated banking systems.:

Lack of advertisement facilities:
It is very much unfortunate that though RAKUB has some
exceptional and extra ordinary lending packages the common people cant
know it due to lack of publicity.
Faulty procedure of granting loan:
The formalities & procedure for obtaining loan is very much difficult
for farmers to achieve it. The collate rate required is also beyond the
capacity of farmers.
Prospects:
Amount of deposits is increasing:
The amount of deposit has increase to the 60.43 million in 2009 -10
from Tk. 32.24 in 2007-08.
Amount of Loan disbursed and loan recovery in creasing:
We see from our study that amount of loan disbursed and loan
recovery is increasing.
Increasing the recovery of classified and unclassified loans:
If we observe we will see form table that the recovery of classified
loan has increased.
Increasing the efficiency of RAKUB personnel:
By arranging various training, seminar and symposium efficiency of
manpower of RAKUB is increasing.
Establishment of monitoring and control:
Our study revels that a proper monitoring and controlling system has
been introduced.

53

Lower rate of interest on loan.

RECOMMENDATIONS:
RAKUB should try to increase its capital base. as earring capacity
depends a lot on it.
RAKUB should reform its deposits instrument so that it could collect
maximum possible amounts of deposits.
To minimize no. of default loan it should increasing the efficiency of
its human resource as well as recovery department.
Management information system should be introduced to ensure
transparency.
It should introduce modern credit rating systems.
It need government help to increase its capital and keep it away from
political intervene.

Loan sanction and recovery procedure should be monitored more

closely.

It should try to curtail its unnecessary expenditure to reduce losses.

Proper coordination system should be strengthened as due to the lack
of coordination many loans remain unpaid.

54

The bank should increase it efforts to recover its classified loan.

Bank should arrange proper training to improve the efficiency of its

man power.
The bank should try to increasing the quality of all of its services.
Public awareness has to be increase for the greater interest of the bank
and the country as well.
To increase its earnings it can concentrate on other activities like
investment in stock market or it can work as investment banker.

55

CONCLUSION:
From the above study we see that though RAKUB was established to
facilitate the agricultural activities of the country now the bank is afflicted
with different types of problems. the bank is incurring losses over years. The
bank lacks modern technology efficient employees proper loan sanction
procedures proper coordination sufficient capital to smoothly run its
activities. In spite of all of these lickings still it has great potentiality to earn
profit by facilitating countries agricultural sector. It is also true that the bank
alone cant get it free from obstacles. It needs govt. Sympathy and steps toe
run on right tracks.
Through our present study we have identified some problems and
prospects and also have advanced some recommendations. We firmly
believe if the bank follows our suggestions and recommendations it cane get
rid of its problems.

56

BIBLIOGRAPHY
Ali, Rostam,(1986) Bank Fund Management, Miti & Diti Prakashani,
Dhaka.
Khan,Azizul Rahman, (1999)Bank management, Dhaka.
Gupta, SP & MP Gupta,(1996) Business Statistics, New Delhi: Sultan
Chand & Sons.
Kothari, CR,(1988) Research Methodology, Wishwa Prakason New Delhi.
Robinson Roland L,(1962) The management of Bank Fund, New york, Mc
Graw hill Inc.
Saha, Abhinaya Chandra, (1987)Principles of Business Finance, Hasan
Book House, Dhaka.

57

Questionnaire

01. What is the name of your institution?

02. Oraganigational structure and decision making authority.
03. Background of RAKUB.
04. What are the objectives of RAKUB?
05. Where is the head office situated?
06. What are the rates of interest of deposit?
07. What are the major items of loan disbursement?
08. What is the rate of interest in different types of loan?
09. What are the features of the loanee?
10. Documentation and security against loan.
11. Name of the branch.
12. Year of the establishment.
13. Number of manpower.
14. At a glance of the branch.
15. Employee chart.
16. What are the major activities of the branch?
17. Organization chart of the branch.
18. Sector wise loan disbursement target and achievement given
during last four years.
19. Procedure of disbursement.
20. What are the problems of loan disbursement?
21. What are the policies of loan recovery?
22. Explain the recovery policy followed by the bank.
23. How the project appraisal is done before giving loan ?
58

24. How the supervision is made after giving loan?

25. How do you fixed up the installment of the loan?
26. How to overcome the disbursement and recovery problems?
27. Sector wise recovery target and achievement given during last
four years.
28. Terms and conditions for various types of loan.
29. Causes of defaulter.
30. Causes of low recovery.
31. Steps taken for high recovery.
32. Which sector has highest recovery?
33. What incentives are given for early payment of advances?

59