AN INTERNSHIP REPORT ON

“CREDIT MANAGEMENT”
OF JANATA BANK LIMITED: A
STUDY ON SARULIA CORPORATE
BRANCH, DHAKA

1
AN INTERNSHIP REPORT ON “CREDIT MANAGEMENT” OF JANATA
BANK LIMITED: A STUDY ON SARULIA CORPORATE BRANCH,
DHAKA

SUBMITTED TO:
Md. Mohiuddin

Professor

Department of Management

Faculty of Business Studies

Jagannath University

SUBMITTED BY:
Md. Jilany Patwary

ID: B120202070

Batch: 9th

Department of Management Studies

Faculty of Business Studies

Jagannath University

Date of Submission: February 18, 2018

2
 LETTER OF TRANSMITTAL

February 18, 2018

Md. Mohiuddin

Professor

Department of Management

Faculty of Business Studies

Jagannath University

Sub: Submission of Internship Report on Credit Management of Janata Bank Limited:

Sir,

It is a matter of pleasure for me to submit the internship report on “Credit Management of

Janata Bank Limited” which is a fundamental requirement for the completion of my BBA
program. This report is based on practical experiences and learning at Sarulia corporate branch
of Janata Bank Limited during the time of my internship within the bank. The report is
completed with sincerity and honesty. All the available data and information have been included
in the working to make it reliable, realistic and informative as much as possible. The experiences
and learning that I have gained during the internship in Janata Bank Limited will certainly be
helpful and beneficial in the next phases of my life.

I hope that you will find the report relevant and precise. I will be available for any further
clarification of the information presented in the report.

Yours truly

Md. Jilany Patwary

Roll no: B120202070
BBA 9th batch
Department of Management
Jagannath University

3
 PREFACE

In real life situations, there are much more differences between theoretical knowledge and
practical job field. An internship program is therefore designed to enable learners to enrich their
academic knowledge through developing their practical skills and expertise by doing an
internship in a business organization.

In my internship at Sarulia corporate branch of Janata Bank Limited, I have learnt many aspects
of banking services specially the credit management procedure of this bank. This opportunity to
work in the bank is in fact a great pleasure for me. The report which I have been working on for
many weeks is based on all my experiences and learning from the bank. I have tried my best to
prepare this report in a manner so that it can be succinct and representative to my assigned topic
“credit management”.

I have given much more emphasis on this report in with a view to making a successful one. But
there may be some mistakes for which I seek kind apologies from the honorable supervisor and
other readers. However, I may fix any problem if they help me in this regard.

4
 ACKNOWLEDGEMENT

For the completion of this report, I have sought help from many individuals, books, journals,
web sites and other reliable sources of data. Again in every phase of my preparing the report, my
honorable supervisor has given me continuous supports, guidance and directions. This report is
in fact largely indebted to my supervisor, the authors of intellectual properties and specially the
staff members of Janata Bank Ltd. for their excellent support and cooperation.

At first, I would like to express my heartiest gratitude to the almighty Allah for giving me the
strength and perseverance to finish this report within limited time.

I would also like to acknowledge the assistance of my internship supervisor, Md. Mohiuddin,
Professor, Department of Management, Jagannath University for providing me all guidance and
support that I needed. His continuous guidelines, unique cooperation, pragmatic suggestions and
inspirations of creating a successful report enabled me to overcome all the problems during the
course of my internship program for preparing this report.

In writing this report, I have drawn materials from a variety of sources. I am greatly indebted to
those think tanks whose intellectual properties have contributed to the completion of my report. I
would also like to thank all the staff members of Janata Bank Limited at Sarulia corporate
branch for their comments and assistances.

Yours truly

Md. Jilany Patwary

Roll no: B120202070
BBA 9th batch
Department of Management
Jagannath University

5
 DECLARATION

I am, Md. Jilany Patwary, declaring that this report titled “Credit Management of Janata Bank
Limited” has been prepared based on my internship for eight weeks (45 days) in above
mentioned organization with due integrity and confidentiality. Findings and recommendations
are made here from my sheer observation. In addition, I have taken necessary assistance and
filtered contents of my report regularly from my supervisor.

However, I would also like to declare that I am responsible for any major or minor mistakes if I
have ever committed here. I seek your kind generosity in this regard.

-----------------------------------------

Md. Jilany Patwary

Roll No: B120202070

BBA 9th batch

Department of Management

Jagannath University

6
 EXECUTIVE SUMMARY

Janata Bank Limited is the largest state bank of Bangladesh. This bank came into being in 1972
and it follows all the rules and regulation of bank company act and Bangladesh Bank guidelines.
Today it has 872 branches. Most of the branches are operating in rural areas for proving banking
facilities to general people while some other branches are operating in urban areas. The corporate
functions of Janata bank include a wide range of commercial and governmental activities. Its
core clients are individuals, firms, multinational corporations, government and other domestic
and foreign business organizations.

Janata Bank Limited provides a wide area of services to the customers. The common banking
activities include collecting funds from people through deposit accounts, provides credit facilities
both to corporate bodies and individual, finances major government projects , serves as client on
behalf of the central bank, engages in capital market operations, performs remittance services
and operates Islamic banking windows.

Among all the functions, credit management procedure is focused in this report. The bank
collects funds from people at lower interest rates and provides loans to individuals and business
firms at higher interest rates. Proper execution of credit policies leads to the financial gains for
the bank. Again the bank also generates revenues from several investments. But credit
investments are the prime sources of income for the bank. In managing credit investments, Janata
bank has to be cautious regarding every perspective. Before granting loans, the bank measures
risk components associated with the loans. After loan money is disbursed, the bank’s main task
is to ensure recovery of loan money with expected interest thereon. Here the credit management
procedure of Janata bank limited has been analyzed with a view to making a clear idea about
credit management policy of Janata Bank Limited and its implementation through different
process and mechanism.

To manage credit, customer credit limit is maintained along with adequate collateral. The credit
risk managing authority of the bank is responsible for monitoring, controlling and reviewing
credit investments. The bank continuously reviews, monitors and analyzes credit portfolios in
order to minimize potential losses and to ensure expected payoff on credit investments. To deal
with classified loans, the bank maintains specialized monitoring and controlling systems for
those classified credit borrowers.

7
This internship report has been prepared based on the credit management procedure of Janata
Bank Limited at Sarulia Corporate branch. This branch is located at Demra in Dhaka. Here it has
been found that this branch maintains all the rules, regulations and guidelines of Head office of
Janata Bank Limited as well as Bangladesh Bank. To provide an exact idea of credit
management policy, the report mainly focuses on credit policies of the bank, their
implementation, major credit risks faced by the bank and credit recovery procedures.

The prime objective of this study is therefore to provide an in depth analysis of credit
management system of the bank. The first part of this report includes an introduction,
methodology of the study and the corporate profile of Janata Bank Limited. The next part mainly
deals with the findings and analysis of existing credit management procedure along with
appropriate recommendations for better credit management.

8
 TABLE OF CONTENTS

Chapter Chapter Name Contents Page no

No
13-14
1.1 PREAMBLE OF THE STUDY

14-15
1.2 RATIONALE OF THE STUDY

01 INTRODUCTION 15-16
1.3 OBJECTIVES OF THE STUDY

16
1.4 SCOPE OF THE STUDY

17
1.5 LIMITATIONS OF THE STUDY

19
2.1 CREDIT DEFINATION

19-20
2.2 TYPES OF CREDIT

21
2.3 UNDERSTANDING CREDIT RISKS

02 LITERATURE 21
REVIEW 2.4 CREDIT MANAGEMENT

2.5 IMPORTANCE OF CREDIT 22

MANAGEMENT
22
2.6 PROCESS OF CREDIT
MANAGEMENT

23-24
2.7 BANGLADESH BANK
GUIDELINES FOR CREDIT
MANAGEMENT

9
 26

3.1 RESEARCH TYPE

26-28
3.2 TYPES OF DATA

03 METHODOLOGY 29
3.3 MAJOR VARIABLES INFLUNCING
SUCCESSFUL CREDIT
MANAGEMENT

30
3.4 DATA ANALYSIS AND
PRESENTATION

30
3.5 TOOLS AND TECHNIQUES

32
1.1 INTRODUCTION

32
1.2 GOALS AND VISIONS

32
1.3 MANAGEMENT

ORGANIZATIONAL 33
04 PFOFILE OF JANATA 1.4 CORPORATE PROFILE
BANK LTD.
34-35
1.5 ORGANIZATION

36
1.6 CORPORATE BUSINESS
FUNCTION

37
1.7 SOURCES AND USES OF FUNDS

38
1.8 DIGITALIZATION ERA OF JBL

10
 40
5.1 DATA ANALYSIS AND
INTERPRETATION

40-51
ALALYSIS AND 5.2 QUESTIONNAIRE ANALYSIS ON
FINDINGS CREDIT MANAGEMENT OF JANATA
BANK LTD.

05 52
5.3 MAJOR FINDINGS OF THE STUDY

54
6.1 RECOMMENDATIONS
06 RECOMMRNDATIONS
AND CONCLUSION 55
6.2 CONCLUSION

56
7.1 REFERENCES
07
BIBLIOGRAPHY 57-58
7.2APPENDIX

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 CHAPTER 01
INTRODUCTION

12
1.1 PREAMBLE OF THE STUDY

The economy of any country is shaped by financial and nonfinancial organizations .In fact,
financial organizations lead to construct the main foundation of national economy .This is
because they are concerned with profit making through value creation .They provide
employment opportunities to the unemployed, raise government funds through tax payment
and gain profit through satisfying social needs and demands. However, financial
organizations may be broadly divided into banking and nonbanking organizations.
Nonbanking organizations include major production oriented firms concerned with
consumer goods and services, agricultural necessities and technological aspects.

However, banking industry plays the most precious role to the development and progress of
national economy. Bangladesh is a developing country and her economy is progressing
rapidly day by day. In the socio economic context of Bangladesh, the role of banks is ever
dominating. Banks have already created millions of job facilities for educated population in
this country. They are also creating more and more new employment opportunities along
with providing banking and additional financial and social services to the society. Again
banks are big sources of revenue for Bangladesh government.

There are almost 64 banks in Bangladesh according to central bank reports. Among them 51
banks are scheduled commercial bank, 7 banks are state owned bank and the rest 6 banks are
nonscheduled banks. All commercial banks are registered with Bangladesh Bank and they
are mainly public and private banks. Among the private banks, 9 banks are following Islamic
banking system while the rest other banks follow normal banking activities. However, there
are four major state owned banks in Bangladesh. They are Janata Bank Limited, Sonali Bank
Limited, Agrani Bank Limited and Rupali Bank Limited. Here Rupali Bank Limited is now
acting as a public private partnership (PPP) where 50 percent ownership is owned by the
government and another 50 percent ownership is owned by shareholders. The role of all the
public banks is exclusively important for the socio-economic development of Bangladesh.
The reason is that their primary goal is to ensure the welfare of the people and the state. Here
profit making is the second goal unlike the private banks. They all act as the monetary bodies
on behalf of the government.

13
Janata Bank Limited is the state owned enterprise in the banking industry of the country. It
also acts as the corporate body of the central bank and the government. It has almost 872
branches across the globe. Janata Bank Limited is providing several banking, social and other
additional services tom the common people, corporate bodies, central bank and Bangladesh
government. Its prime goal is to ensure and secure welfare of the general people and
government along with adequate and expected return on investment.

1.2 RATIONALE OF THE STUDY

Janata Bank Limited is the state owned bank in Bangladesh. The bank started as an
independent entity from 1972 under Bangladesh Bank nationalization order. Since the launch
of Janata Bank, the entity has been acting as the most popular and leading bank in our
country. It always focuses on public interests on the peak. In order to keep pace with the
advancing banking industry and to provide excellent service, the bank has already
transformed almost all of its branches into digitalized ones through computer and internet
enabled technology.

With the help of digital technology, Janata Bank limited is now providing many facilities to
its customers. The bank has now several ATM booths across different parts of the country. It
also provides online and mobile banking facilities in addition to any branch banking. In a
word, all of its activities are related to financial, social and additional services. So the bank
has a vast impact on every aspect of our economy. This bank has also created more than
twenty two thousand jobs and is now looking forward to generate more and more
employment facilities through increasing number of branches, making investment in
financial and economic sectors, agricultural sectors and all other spheres of national
economy.

As a commercial bank, Janata Bank Limited performs several functions. These functions
mainly include consumer credit, international trade, SME finance, government treasury
function, loan Syndication, foreign exchange dealing, remittance, customer relationship
management, human resource management et-cetera. However, “Credit Management” is one
of the most important functions among the above described.

14
In fact, a successful “Credit Management” operation is a must for the survival and
flourishing of Janata Bank Limited. The bank provides several types of loans and advances to
its individual and corporate customers. The return of these credits with expected interest in
time is precious to ensure expected rate of return on original investment. Therefore, Janata
Bank Limited has to be very cautious to deal with any credit or advance applications. The
bank usually uses several tools and techniques to deal with those credit applications, their
acceptance and possibility of risk and return associated with them. In a brief, credit
management affects the bank’s ability to finance, make profit and incur loss and its liquidity
status. Therefore this study mainly deals with the credit management functions of Janata
Bank Limited and focuses on the several activities of credit management procedure, its
existing problems and the recommendations for improvement of current problems to become
more efficient, competitive and professional.

1.3OBJECTIVES OF THE STUDY

The objectives of this study can be subdivided into two broad categories. These may include

 1.4.1 Broad Objective

 1.4.2 Specific Objectives

1.3.1 Broad Objective:

The broad objective of the study is to get an exact idea of “Credit Management”
mechanism of Janata Bank Limited.

1.3.2 Specific Objectives:

The report is prepared to meet the following specific objectives. These are mentioned
below,

15
  To appraise the consistency of Janata Bank Limited to its policies and
procedures in processing loans applications.

 To evaluate the bank’s ability for creation of credit investments and collection of
its loans and advances in due date along with expected payoff.

 To determine customers’ views and assessment regarding the bank’s policy in

relation to its loan and advances provisions.

 To assess the credit quality of Janata Bank Limited against the established credit
standards and policies of Bangladesh Bank for managing credit.

 To find out problems and make appropriate suggestions for successful and
efficient “Credit Management” of Janata Bank Limited.

All these are the specific objectives of this report based on ‘Credit Management” of Janata Bank
Limited. Proper clarification of these broad objective and specific objectives of the study will
lead to make actual understanding of credit management operations of Janata Bank limited.

1.4 SCOPE OF THE STUDY

The entire report is mainly focused on credit management system of Janata Bank Limited. The
report on credit management of this bank has been prepared by using all available information,
experience, knowledge .The focal points in the report include credit management procedure,
credit documentation, types of loans and advances, principles of issuing loans, recovery process
of loans, investigation procedure before issuing loans and credit, needed legal documents
against applied loans and central bank’s guidelines followed by Janata Bank Limited along with
minimum liquidity to be maintained before issuing loans and advances. In fact, the prime
purpose of the study is to define the procedure of credit management of JBL.

16
1.5 LIMITATIONS OF THE STUDY

This report is not free from limitation. It has the following limitations which may include

 Inadequacy of Data: The main limitation of this report is the lack of

sufficient information. Full and in details information could not be collected
due to the bank’s corporate obligations and restrictions.
 Resource limitation: Resources include physical resources, financial
resources and other resources. This report lacks such resources.
 Data Inaccuracy: Data are collected both from primary sources and
secondary sources. So there may be incorrect information in the sources of
data that have been used to prepare this report.
 Limited Time: Moreover, this short period of internship is not enough to
understand all the credit functions of Janata Bank Limited in details.
 Lack of Cooperation: Many personnel of the bank are always busy with their
own tasks. So they can’t make enough cooperation to get access to all the
processes of the bank. This has also limited the report.

17
 CHAPTER 02
LITERATURE REVIEW

18
2.1 CREDIT DEFINATION

Credit can be defined as the money that is made available in the term of borrowing and lending.
The most common form of credit is a loan that is granted to one party by another party in term of
full repayment of the original loan money with appropriate interest in the future fixed date. Here
the party who receives the credit may be an individual, a corporate business entity or the
government. On the other hand the party who issues the credit may include a bank or any
financial organization.

In fact the word credit is derived from the Latin word “Credo” which means “I believe”.
However the term credit in business world is more specific and exact. Here credit means the
finance that is made available by one party (i.e. lender, seller, and owner) to another party
(borrower, buyer) with the obligation to full repayment of principal amount including interest.

Credit can also be defined as the borrowing capacity of an entity which can be an individual or a
business firm. Credit is an agreement in which the borrower receives some financial value now
and willing to repay it in a particular future date with interest.

(Sullivan, Authur, Steven M. Sheffrin, 2003), (Finlay, 2009)

2.2 TYPES OF CREDIT

Almost all banks and other financial firms provide several types of credits on the basis of
different criterions. However the following types of credit facilities are available in the current
financial and business contexts. (Longemann, 2012) , (Signoriello, Vincent J., 1991)

Credits Based On Nature

Credits Based on Term / Duration

Credits Based On Purposes

Graph 01: types of credit

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2.2.1 Credits Based On Nature.

All credits can be classified on three broad categories on the basis of their nature. They may
include

2.2.1.1 Loan: Loan is the most common form of proving credit to the customer. Here a bank
transfers all the credit or loan money to the credit account of the customers who are granted
credit facilities by the bank. This form of credit is secured against permanent property of the
borrower. The borrower must pay off the loan with interest at the end of the credit contract.

2.2.1.2 Cash Credit: In cash credit, the loan money is provided to the current credit account (CC
A/C) of the customer by bank. The borrower can pay off the loan through several installments.
Here the credit is protected against the current property or goods of the borrower.

2.2.1.3 Bank Overdraft: Banks often provide facilities to the customers to withdraw money above
their credited balance in their accounts. This ability to draw more money than the actual balance
from any account is known as bank overdrafts. Here the customers pay off only the overdrawn
money along with interest thereon.

2.2.2 Credits Based on Term / Duration

Credits can again be classified into three areas according to their duration. These may include
2.2.2.1 Short-Term Credit: Short term credit facilities are granted for one year or less than one
year. Here interest rate is usually low. Cash credit, bank overdraft are examples of short term
loans.

2.2.2.2 Mid-Term Credit: Banks often grant credit facilities for 1-5 years to their customers. These
credit facilities are known as mid-term credit. Here the rate of interest is usually higher.

2.2.2.3. Long-term Credit: Long term loans are provided to customers for more than five years.
These credit facilities are provided to the customers for construction, business investments, and
land and equipment purchases and for other purposes. These credit facilities are secured against
permanent properties of the borrowers.

2.2.3 Credits Based On Purposes

2.2.3.1 Commercial Credit: Credit facilities that are provided to the corporate entities for the
purposes of flourishing trade and commerce can be defined as commercial credits. These credits
are provided by banks and financial firms to business oriented organizations. Here credits
account higher amount with higher periods and interest.

2.2.3.2 Non-commercial Credit: Non-commercial credit facilities are provided to individuals for
the purpose of ensuring finance to purchase land, apartment and building, educate children and
other social purposes. Here the rate of interest is usually not high.

20
2.3 UNDERSTANDING CREDIT RISKS

A credit risk normally occurs with the failure of a borrower to meet the agreed obligations of
loan repayment in a specific date. That means credit risks arise when a borrower of credit is not
able to repay the loan money with interest in due date. According to Bangladesh Bank, credit
risks are the negative effects on the financial results and capital of a bank due to a borrower’s
default on its obligations to the bank.

Credit risk can also be defined as the risk that a borrower or receiver party may fail to meet an
agreed obligation. These credit risks have severe consequences on the financial performance of
any bank, financial institutions or the lender party. If any credit default occurs by the borrowers,
it will lead to weak financial result on behalf of the lender. Therefore the credit granting
authority of any bank or other financial body must be careful regarding credit granting
procedure. They must assess credit risks by evaluating the probability of credit default on behalf
of the borrower, obligator or receiver and its subsequent impact on the credit granting institution
in the event of the default. (Berger, Allen N. and Gregory F. Udell, 1990)

2.4 CREDIT MANAGEMENT

Credit management serves as a mechanism for a bank or any financial firm to remain financially
solvent as well as stable. In fact, credit management refers to the process of dealing with all
types of credit facilities and advances in effective and efficient ways that can ensure on time
return on principal money from borrowers along with expected credit. Credit management is
usually concerned with identifying, measuring, aggregation, monitoring and controlling of a
bank’s credit facilities (i.e. loans, cash credit, overdrafts) to the customers in order to avoid and
handle credit risks and to ensure safety return of loan money with interest in due date. This
process starts with assessing actual credit worthiness of the customers and ends with closure of
credit transaction of the bank with its customers. If a firm wants to ensure smooth and
continuous as well as efficient operations of its business activities, it must ensure a time tested
excellent successful credit management authority who will lead the firm credit investments into
more promising sectors that can yield maximum payoffs for the bank or the firm. An excellent
and competent credit management seeks not only to protect the vendors from possible losses and
uncertainties but also to secure the borrowers from creating more debt obligations that may not
be met in due time or date. The prime goal of credit management is to make a safe return on
invested credit money including interest that can lead to a more capable and financially solvent
as well as smooth operations on behalf of the vendors and investors. (Cornett, Marcia
Millonand and Saunders, Anthony, 2006), (Damondaran, 1997)

21
2.5 IMPORTANCE OF CREDIT MANAGEMENT:

Most of the risks of a bank or lending firm occur from credit facilities provided to the customers.
So a firm must be cautious possible credit risks from different credit investments. In fact, banks
usually maintain credit management divisions to deal with the potential risks and gain from
credit investment. An effective and proactive credit management procedure can lead to increase
value creation, value preservation and value optimization of any firm of bank. Again a successful
credit management can ensure confidence of the credit investment in risky sectors. Furthermore a
well-functioning credit management can predict any potential loss in any risky investment that
may occur in some near future and can take required actions to avoid any financial negative
impact from those risky credit investments. In a brief, the credit management function of any
bank or lending firm is concerned with credit investment and safety return on these investments
with expected payoff.

2.6 PROCESS OF CREDIT MANAGEMENT

The credit management process of any financial institution or a bank can be depicted easily and
clearly by using the following diagram. (Smithson, 2003)

1.Credit
processing/appra
isal

2.Credit
8.Managing credit
approval/sanction
problems/recovery

7.Monitoring the
credit portfolio 3.Credit documentation

6.Monitoring and
control of individual 4.Credit
credits administration

5.Disbursement

22
 Graph 02: Credit Management process

2.7 BANGLADESH BANK GUIDELINES FOR CREDIT MANAGEMENT

Bangladesh Bank is the central bank of the country. As a central bank, it serves as the mentor for
all the commercial and specialized banks. To ensure a proper, dynamic and progressing
economy, Bangladesh Bank provides several guidelines for commercial banks to make them
capable to remain financially solvent and competitive in the market. Credit is one of the most
important functions of commercial banks. This function is considered as the main source of
income of commercial banks. But it is also seemed as the most risky investment scope for any
bank. Because any default in credit repayment by borrowers may lead to severe negative impact
on the financial performance on behalf of the bank. To protect commercial and other banks from
such risks and uncertainties, Bangladesh bank has already publishes “Credit Risk Management
Guidelines for Banks” for all scheduled banks in Bangladesh. Under section 45 of Bank
Company Act 1991, Bangladesh Bank has issued these guidelines to identify and analyze
potential credit risks and to take quick and effective responses to their impact on the bank’s
financial performance.

Bangladesh Bank guidelines for credit risk management include several sections and issues. A
brief introduction of these credit risk managing guidelines is explained here.

2.7.1 Framework for Credit Management

A credit management framework represents a specific set of guidelines that need to be maintained by
banks or any financial firm to secure their credit investments and ensure expected payoff thereon. A
typical credit management framework includes broad oversight of the credit, senior management views
regarding proposed credit sanctions, system and procedure to identify, accept and measure credit risks and
to monitor and control of credit to secure investment.

2.7.2 Credit Administration

The credit administration of any firm or bank is mainly concerned with control of credit for the
purpose of closure of credit investment or renewal of credit policy. A successful credit
administration must ensure effective and efficient credit administration operations along with
documents monitoring, contractual requirements and provisions of collateral. This credit
administration system also needs to ensure the accuracy and timeliness of information provided
to senior management about credit investment. Again a bank or lending firm should design the
credit administration in a way that can enable the bank to monitor quality of credit portfolio on a
daily basis and guide the bank to take any precautions if there is a sign of any potential risk or
loss. In fact, a credit administration is based upon the activities that include documentation of
credit, disbursement of credit money, credit monitoring, maintenance of collateral and security

23
documents, credit repayment and renewal policies. In a short, a better credit administration can
lead to better credit investment outputs.

2.7.3 Measuring Credit Risks

Bangladesh bank guidelines for credit risks management has focused on defining various types
of risks arising from credit investment. According to these guidelines credits risks may be
classified into two broad categories. Clarification of those risks will lead to a better credit
management for the banks. However, these two categories of credit risks include business risks
and financial risks.

2.7.3.1 Business risks from credit may include

 Industry characteristics
 Competitive positions
 Management

2.7.3.2 Financial risks on the other hand may consists of

 Capital structure
 Financial positions
 Profitability
 Present and future cash flow
 Interest rate risks
 Inflation risks

According to Bangladesh Bank guidelines for credit risk management, a clear identification and
proper handling of these risks can ensure a better credit management for banks.

2.7.4 Monitoring and Controlling Credit Risks

A comprehensive credit monitoring and controlling system must be tailored. This system will
provide regular update on credit investment in different sectors. It will also help credit
sanctioning authority to decide regarding credit closure or renewal policies. Again regular
monitoring and controlling of credit transaction and investments will help managers to take
precautions actions it there arises any potential threat of credit default.

In conclusion, this literature review on credit management is in fact a theoretical framework.

Several books, journals, websites and other sources of data are used to develop and make a clear
concept of credit management and its different functions.

24
 CHAPTER 03
METHODOLOGY

25
3.1 RESEARCH TYPE

There are mainly two types of researches. These include qualitative research and quantitative
research. Qualitative research is the one that defines research objectives and findings in
elaborative forms and in details. On the opposite, quantitative research is that one which defines
objectives and results of the study through empirical assessments using numerical measurement
and analysis approaches. Both types of researches are very much useful and important in
defining problems and possible solutions. However, this study is basically a qualitative
research type. But several mathematical and analytical figures are used for the purpose of
making this theoretical study a successful one.

3.2. TYPES OF DATA

Data can be classified into two broad categories. They include mainly,

3.2.1 Primary Data

3.2.2. Secondary Data

3.2.1 Primary Data

Primary data are data that are collected for the first time and they are not available to external
users. Primary data in an organization are collected and presented for use by the internal
authority. Here, primary data are collected from the internal sources of the bank. These are not
easily available outside the firm. These primary data are collected from internal financial record,
organizational culture, observation of office meeting of employees and conducting interviews
regarding several phenomenon as well as contacting personnel and customers.

3.2.1.1 Sources of Primary data

The primary data that are used in this report are collected from the following sources,

3.2.1.1.1 Internal Records

3.2.1.1.2 Survey

3.2.1.1.3 Observation

26
 3.2.1.1.4 Interview

3.2.1.1.1 Internal Records: Several annual and semi-annual internal records, documents and
particulars of Janata Bank Limited have been used to prepare this internship report. These record
include register books of credit , internal credit databases, audit reports on credit performance
rating and other credit related accounting and financial records. It is important to say that these
records are not available to external uses. In a nutshell, these internal records serve as one of the
core sources of primary data in completion of this report.

3.2.1.1.2 Survey: Another important source of primary data in this report is sample survey. A
sample survey is simply a survey that is conducted over the expected correspondence to get a
proper idea about a thing or an object. The conducted survey for this report consists of the
following elements,

3.2.1.1.2.1 Population size: Population represents the total

number of elements under a survey. The population size of this report stands for 550. Among the
total population, 523 are the credit borrowers and the remaining 27 are the employees of the
Sarulia Corporate branch of Janata Bank limited.

3.2.1.1.2.2 Sample size: Sample represents a representative

portion of the total population. This study is based on the 20 sample that have been taken from
the whole population of 550. Among the total sample, 5 are employees and 15 are outside credit
borrowers. This sample represents 3.63 percent of the population and is seemed to be a good
representative of the population.

3.2.1.1.2.3 Sampling method: To make the study precise and

accurate, random sampling is applied. In random sampling, samples are selected randomly and
each element of the population has an equal chance to be selected. In most of the cases, a random
sampling procedure serves the best purpose of a study.

3.2.1.1.2.4 Pattern of questionnaire: Both open ended and

closed ended questionnaire have been used to make this report. Again questions are prepared in
a manner so that particular correspondent can easily understand that questions and provide
accurate answers.

27
 3.2.1.1.2.5 Time and Place of Survey: The survey has been
conducted for two - three days during the office hour over the employees and credit borrowers.
The background of the survey is the Sarulia Corporate branch of Janata Bank Limited. This
branch is located at Demra in Dhaka.

3.2.1.1.3 Observation: As a means of collecting primary, observation plays an important role. It

is in fact a system of collecting data about any object or thing by viewing and watching events
that are happening in the field. Here, the researchers do not talk with others but drew a
conclusion regarding a specific issue through only watching. To develop this report, observation
has been taken into consideration.

3.2.1.1.4 Interview: Only some credit borrowers and office staffs have been interviewed to get
some sort of primary data regarding credit management procedure of Janata Bank Limited. Here,
the interview has been in fact a form of oral interview and communication.

3.2.2 Secondary Data

Secondary data, on the contrary to primary data, can be defined all those data and information
that are already published and available for open use. Secondary data usually refer to edited and
already published data in several books, magazines, company’s special supplement, several web
sites, annual financial reports. Secondary data are easy to obtain and they are less expensive.

3.2.2.1. Sources of Secondary Data: These secondary sources of data may include

 Annual Reports of Janata Bank Limited of the year 2015, 2016 and 2017.

 The basic information about Janata Bank Limited has been taken from its
website.

 Papers & journals about the central bank CMS (Credit Management
System) requirements.

 Credit management guideline books and journals of Janata Bank Limited.

 Several websites, blogs and web journals.

28
3.3 MAJOR VARIABLES INFLUNCING SUCCESSFUL CREDIT MANAGEMENT

Independent Variables Dependent Variable

Moderate Interest rate

Fast Credit Service

Fair Credit Granting Policy

Clear and Precise terms and

Conditions of Credit

Credit Incentives to Successful Credit Management

Specialized Area

Proper Maintenance of
Credit Policies

Pre-Warning Before Taking

Legal Actions

Regular Monitoring on
Clients

Exact Valuation of Property

Offered as Collateral

Better Digital Favorable Periodic

Credit Policies Meeting Credit Facilities Repayment Schedule
Customers’ Needs

Graph 03: Variables influencing successful credit management

29
3.4 DATA ANALYSIS AND PRESENTATION

Data analysis refers to editing, transforming, cleaning and extracting the core information related
to the topic of the study. The aim of data analysis is to highlight the useful information, modeling
information and supporting decision making. Here, relevant primary and secondary data are
collected from several sources and they have been analyzed, edited and present in a way so that
the report can meet its core objectives.

3.5 TOOLS AND TECHNIQUES

For data analysis and presentation, several statistical techniques like trend analysis, ratio analysis
and other statistical tools (i.e. probability approach, random sampling) have been used. MS
office and MS Excel are also used as common tools to prepare this report.

30
 CHAPTER 04
ORGANIZATIONAL PROFILE OF
JANATA BANKL LIMITED

31
1.1 INTRODUCTION

Janata Bank Ltd. is the leading state owned enterprise in the baking industry in Bangladesh.
Being a state owned entity, it is performing many socio-economic schemes along with acting as a
corporate agent of Bangladesh Bank Ltd. The bank started as an independent entity from 1972
under Bangladesh Bank nationalization order.

Being state owned enterprise, JBL is performing economic, social and many other activities
covering the whole economy. It has created many opportunities for employment, proving loans
in several sectors with distinctive purposes and is cooperating with government and non –
government banking and financial firms and organizations.

1.2 GOALS AND VISIONS

To ensure all types of banking services to the hand of people is the primary goal of JBL. Again it
also runs several socio-economic programs and projects to make a better Bangladesh as per the
government guidance. Being the largest bank in Bangladesh, JBL always tries to do excellence in
its services for all activities. Along with providing banking services, the bank thrives to be a
professionally managed entity to ensure expected return on Stakeholder investment. The ultimate
vision of JBL is to be a global and local leader in providing excellence service with maximum
return.

1.3 MANAGEMENT

In JBL, the board of directors acts as the supreme body of the organization. Here, they are
responsible for major policy making and implementation and to manage, operate and execute all
the affairs of the bank. Janata Bank Limited is governed by a Board of Directors consisting of 11
(Eleven) members. The Bank is headed by the Managing Director & CEO, who is a well-known
Banker and a reputed professional. The corporate head quarter of the bank is located at
Motijheel, the main commercial center of the capital Dhaka, Bangladesh. Typically the board of
directors consists of a chairman and other directors appointed by the government. People who
are thought to be expert in the field of banking and finance in the view of the government are
appointed as the board of directors. This board also includes a managing director, a government
appointed executive acting the chief executive of the bank. He/She is responsible for executing
all the guidelines and policies as per the board of directors.

32
1.4 CORPORATE PROFILE

Name of the Company : Janata Bank Limited

Chairman : Shaikh Md. Wahid-uz-Zaman

CEO and Managing Director : Mr. Md. Abdus Salam Azad

Deputy Managing Director : Mohammad Fakrul Alam

Legal Status : Public Limited Company

Genesis : Emerged as Nationalized Commercial Bank in 1972, following

the Bangladesh Bank (Nationalization) Order No. 1972(PO
No.26 of 1972)

Date of Incorporation : 03 June, 2007

Date of Vendor’s Agreement : 15 November, 2007

Registered Office : 35-42, 44 Motijheel Commercial Area, Dhaka, Bangladesh

Authorized Capital : Taka 6000.00 Crore

Paid-up Capital : Taka 3830.00 Crore

Number of Employee : 22,446

Number of Branches : 872

Phone-PABX : 9550426-31, 33, 34, 9552924

FAX : 88-02-9561410, 9552007

SWIFT : BSONBDDH

Website : www.Janatabank.com.bd

Source: Wikipedia, February 12, 2018

33
1.5 ORGANIZATION

The head office of the bank comprises of 41 divisions along with 59 departments. The D.G.M is
the head of each division while each department is run and headed by A.G.M. Different branches
are run and administered by branch managers.

In each district, there is a principal office of the bank acted as the corporate body of the head
office. The principal office controls and monitors all the functions of regional units which are
located at the upzilla level of that district. The regional heads exercise authority and control over
several branches as well as they are responsible for informing the principal office regarding the
development activities of the branches.

To illustrate the organizational hierarchy of Janata Bank Limited, an Organizational chart of this
bank is given. This chart can easily illustrate the several management levels of this bank in a
short and clear way.

ORGANIZATIONAL CHART OF JANATA BANK LIMITED

34
 Board of directors

Managing director and CEO

Internal audit (other direct
report )
Deputy manging
director

Head of
credit risk Head of Head of corporate /
management recovery commercial banking

Credit
executives Corporate banking
executive

Credit Credit
approval administrative
Relationship manager
(consumer finance)

Credit manager Manager credit admin

(consumer finance ) ( consumer finance)
Relationship
manager team

*Disbursement
*Custodian team
Credit analyst team *Monitoring Business / product
*Compliance development

Graph 04: Janata Bank Limited’s organogram

35
1.6 CORPORATE BUSINESS FUNCTION

Janata bank ltd performs many commercial banking services and programs as per guidelines.
Among them, the core business function of Janata bank ltd can be depicted as follows,

*Commercial Banking *Foreign Exchange

*Consumer Credit Dealing
*Money Market
*International Trade *Rural and Micro Credit
Operation
*SME Finance *NGO Linkage Loan
*Capital Market
operation *Government Treasury *Investment
Function
*Project Financing *Trade Invetment
*Loan Syndication
*Remittance

Graph 05: Corporate business functions of Janata Bank Ltd. (JBL)

36
1.7 SOURCES AND USES OF FUNDS

The main sources of funds of Janata bank ltd and their uses are illustrated through a diagram.
This will better represents these functions easily and exactly.

• Authorized Capital
• Issues Capital
• Subscribed Capital
• Called up Capital
• Paid Up Capital
Sources Of • Reserves and Funds
Funds • Deposits and Other
Accounts
• Borrowings From Central
Bank
• Loan From Other Banks
and Firms

• Cash On Hand
• Balances Of Current
Accounts With Other
Banks
• Call Loan
Uses Of Funds • Short Loan
• Purchase of Govt.
Shares ,
Securities,Bonds
• Loans and Advances
• Bills Discounting and
Other Bills

37
 Graph 06: Sources and uses of funds of SBL

1.8 DIGITALIZATION ERA OF JBL

In order to keep pace with the dynamic trade and commerce and advanced financial world , JBL
has already entered into modern digitalizes banking services for the clients .This attribute has
boost up the bank’s ability to provide 24 hour service along with excellence in its performance.
Digitalization of JBL includes

Computarised Branches: Almost all the braches of JBL are equipped with modern computers
and networking system that facilitate the bank to provide quick and excellent services to the
customers. Several softwares and other systems are applied in branches to ensure enhanced
services.

Remittance: JBL uses several softwares to execute its remittance functions properly.
"Remittance Management System" (RMS+), is one of the bank’s most useful software that
enables the bank to pay foreign remittance instantly over the counter. Almost all branches of JBL
use this software. This software provides confirmation message or text to the beneficiary via
network to his /her phone.

Automated Taller Machine (ATM): Currently JBL provides ATM services through many of its
ATM booths across the country. Janata Bank's ATM cardholders enjoy the access to the ATMs
and POS of Dutch Bangla Bank Ltd. and Brac Bank Ltd. Janata Bank has recently launched
Credit Card AS well as Q-Cash

SMS and Online Banking: Many branches of JBL are now capable of and providing online
banking facilities like Online Any Branch Banking ( ABB ).Again the bank also provides SMS
banking services to the clients.

38
 CHAPTER 05:
ANALYSIS AND FINDINGS

39
5.1 DATA ANALYSIS AND INTERPRETATION

After collection of data, they have been analyzed to meet the core purposes of the study. Here
data analysis have been done through the following ways in order to extract the core information
from primary and secondary data sources

5.2 QUESTIONNAIRE ANALYSIS ON CREDIT MANAGEMENT OF

JANATA BANK LTD.
5.2.1. Responses about the bank’s moderate interest rate.

Moderate interest rate

50%

40%

30%

20%

10%

0%
Strongly Agree Neutral Disagree Strongly
agree disagree

Graph 07: Interest rate responses of JBL

Explanation: From the bar diagram, it is clear that almost 60% respondents have a negative view
about the rate of interest on different loans. They consider the interest rate is not moderate rather it is
high. This is because they consider that as a state owned bank, Janata Bank Ltd. should not charge interest
as high as other private commercial banks. On the other hand, only 40% respondents have agreed that the
existing interest rate is moderate and acceptable. They consider that the bank needs to maintain such
interest rate so that it can remain financially solvent and make expected revenue along with providing
credit facilities to the customers at easy terms. So the majority of the respondents do not agree with the
present rate of interest in different loans and advances and they expect a lower rate of interest on loans
than the existing rate.

40
5.2.2. Responses about the bank’s fast credit service for the customers.

Table: Fast Credit Service

Serial No Fast Credit Service No of respondent Percentage

1 Strongly agree 12 60%

2 Agree 02 10 %
3
Neutral 02 10%
4
Disagree 02 10%
5
Strongly disagree 02 10%

Total =20 = 1oo%

Graph 08: Responses about fast credit services of JBL

Explanation: The table shows that 70% respondents prefer the credit service of the bank
while 10% respondents remained neutral to this point. The majority of the respondents
consider that the bank provides credit services promptly like private commercial banks and it
always emphasizes on customers’ needs. In the contrary only 20% respondents consider that
the bank should render its credit facilities in a faster way. They think that the bank is not well
efficient in providing loans and credits as quickly as their demands. Again the bureaucratic
procedure also hampers the fast credit service of this bank according to the views of the
credit borrowers. In conclusion regarding this above statement, the bank has a positive aspect
regarding providing fast credit services to the credit borrowers though many customers are
still not satisfied with this status quo.

41
5.2.3 Responses regarding enough pre-warnings by the bank before taking legal actions.

Enough pre-warnings before taking legal actions

40%

35%

30%

25%

20%

15%

10%

5%

0%
1 2 3 4 5

Graph 09: Responses of JBL’s pre-warnings before taking legal actions

Explanation: The bar diagram shows that 40% respondents have a positive view that the
bank provides enough pre-warnings before taking legal actions. The reason for this is that the
bank is very keen to make recovery of its credit money from the borrowers and therefore, it
gives several pre-warnings to the clients for repayment of loan money before going for legal
actions. On the other hand, 50% respondents have a negative view on the same issue while
10% respondents remained neutral. The pre-warnings given to the clients may not be
adequate before taking legal actions against the loan defaulters. Again this procedure is slow.
As a result the bank can’t meet the satisfaction of majority customers in this perspective. So
the bank has lacking in the above particular area.

42
5.2.4. Outcomes from respondents about the bank’s fairness in granting credit applications.

Fairness for granting credit

Strongly agree Agree Neutral Disagree Strongly disagree

5%

20%

50%
5%

20%

Graph 10: Responses of fairness for granting credit

Explanation: When customers are asked about fairness of the bank’ credit granting procedure,
05% respondents remained silent while 70% respondents have a positive notion about the
fairness of the bank’s credit approval procedure. The bank’s ability to evaluate the credit
application properly and its honesty in granting credit applications may be the reasons for such
high positive views for the bank by the customers. But a significant portion of the respondents
have an antagonistic opinion regarding the same feature of the bank. That means 25%
respondents fear that the bank is not fair to grant loan application. This is because they think the
bank is biased in granting credit applications. In the conclusion, it can be said that the bank credit
granting system remains favorable to the most clients.

43
5.2.5. Responses regarding the bank’s efficient and satisfactorily valuation of property as
collateral.

Table: Valuation of Property as Collateral

Serial No Valuation of Property as No-of Percentage

Collateral respondent

1 Strongly agree 03 15%

2 Agree 02 10 %

3 Neutral 0 0%

4 Disagree 11 55%

5 Strongly disagree 04 20%

Total = 20 = 1oo%

Graph 11: Responses of proper valuation of property as collateral

Explanation: It is clear from the table that only 25% respondent agree on the above statement.
In the opposite side, 75% respondents do not agree that the valuation of property as collateral of
this bank is efficient and satisfactorily. The bank evaluates property value offered as collateral
on the basis of current market price of any particular collateral property. Then 20 percent of
market value is deducted from the current value of the property and only 50 percent value of this
collateral is counted against any loan. This calculation of valuation of property offered as
collateral is given as follows,

{
Valuation of property offered as collateral = (Market price - 20% of market price) ÷ 2 }
Therefore the bank has a negative view in this aspect according to the sample survey as the credit
borrowers do not get enough money as loan against their property offered as collateral.

44
5.2.6. Respondents’ outcomes about the bank’s clear and precise credit terms and
conditions.

Precise credit tems and conditions

Strongly agree Agree Neutral Disagree Strongly disagree

10%
10%

5%

60%
15%

Graph 12: Responses about precise credit terms and conditions

Explanation: The pie diagram shows that 75% respondents prefer the terms and conditions
of credit service as precise and clear while 05% respondents remained neutral to this point.
Most of the credit borrowers can easily understand the terms and conditions of credit before
they take loans as well as they have a good experience in this issue. This leads to favorable
position on behalf of the bank in this area. In the contrary only 20% respondents consider
that the bank should make its credit terms and conditions much clear and easily
understandable. So the bank has a positive aspect regarding clear and precise credit terms and
conditions as per sample survey to this branch.

45
5.2.7. Opinions of respondents regarding the bank’s credit incentives to specialized
areas.

Credit incentives in specialized areas

50%
40%
30%
20%
10%
0%
Strongly
Agree
agree Neutral
Disagree
Strongly
disagree

Graph 13: Responses for credit incentives in specialized areas

Explanation: The bar diagram shows that only 30% respondents agree on that the bank
provides credit incentives in specialized areas. In the contrary, 70% respondents consider that
the bank does not ensure credit incentives in specialized areas and sectors. There are several
guidelines in the credit management policy of the bank in which it is clearly mentioned that
credit incentives will be encouraged and ensured for credit applications in specialized areas
( i.e women entrepreneurship, investments in rural areas). But it is not sure whether the bank
maintains this provision of credit policy as majority of the credit borrowers have not a good
experience with this aspect from the bank. As a result, the bank has a negative aspect
regarding providing credit incentives in specialized areas to its clients.

46
5.2.8. Responses about the bank’s maintenance its credit policies properly.

Proper maintenance of credit policy

Strongly agree Agree Neutral Disagree Strongly disagree

0%

15%

40%
50%

35%
10%

Graph 14: Responses regarding proper maintenance of credit policy

Explanation: From the pie chart, it is clear that almost 50% respondents have a positive view about
the maintenance of credit policy. They consider the bank maintains its credit policy properly as they have
found the bank’s credit maintenance procedure is fair and trust worthy. They also think that the bank has
accountability and commitment to this point which leads to customer satisfaction. On the other hand,
another 50% respondents have the opposite view. They consider the bank often violates its credit policies
as they have a negative experience with this bank. So the bank has both same positive and negative aspect
on this issue. This is a point where the customers and credit borrowers have opposite equal responses
regarding this particular topic.

47
5.2.9. Respondents’ views about the bank’s credit policy meeting customer needs.

Credit policy meeting customers' needs

40%

35%

30%

25%

20%

15%

10%

5%

0%
Strongly agree Agree Neutral Disagree Strongly
disagree

Graph 15: Responses for credit policy meeting customer’s needs

Explanation: When customers are asked whether the credit policy of the bank can meet their
credit needs, they provide different answers. 45% respondents agree that the credit policy of
the bank still efficient to meet their needs. They believe that the bank’s credit policies are
well diversified, flexible and dynamic to meet customized needs of the credit clients. But
55% respondents have the opposite attitude regarding the above statement. They believe that
the bank should make quick amendment of its credit policies in order to be much more
competitive and competent in the challenging business environment through meeting specific
credit demands of the clients. Therefore, the bank has still not met most customers’ needs on
providing credit facilities.

48
5.2.10. Responses about better digital credit facilities of the bank for customers.

Table: Digital Credit Facilities

Serial No Digital Credit Facilities No of respondent Percentage

1 50%
Strongly agree 10

2 20 %
Agree 04

3 10%
Neutral 02

4 15%
Disagree 03

5 05%
Strongly disagree 01

Total =20 = 1oo%

Graph 16: Responses about digital credit facilities

Explanation: Here the study has found that almost 70% respondents are satisfies with digital credit
facilities of the bank while 10 %respondents are neutral. The bank provides online credit services, SMS
credit transfer and any branch banking for credit borrowers. These digital and automated credit services
boost up the bank position to the customers and clients. As a result, most of the credit borrowers are well
satisfied with the digital services of the bank. On the other hand, only 20% respondents are not satisfied
with the digital credit facilities of the bank. They argue that the digital credit service of the bank still
needs to be faster and more improved. So here, the bank has strong positive position about digital credit
service according to the above table.

49
5.2.11. Respondents’ opinions regarding the bank’s customized design of periodic credit
repayment schedule.

Customized credit repayment schedule

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%
Strongly agree Agree Neutral Disagree Strongly
disagree

Graph 17: Responses regarding customized credit repayment schedule

Explanation: From the table, we can easily see that only 30% respondents agree that the bank’s
periodic repayment schedule for credit is based on clients’ business or financial conditions. But
70% respondents do not support the statement. In most of the cases, the bank does not consider
the current financial conditions of the credit borrowers or the position of their business for design
of periodic credit repayment schedule. The bank again in many situations does not provide
enough time to the customers for repayment of loan money. So, the clients think that the bank
does not consider their financial conditions while designing periodic repayment schedule. As a
result, the bank has a weak position in this perspective.

50
5.2.12. Responses on the bank’s regular monitoring on credit clients.

Regular monitoring on credit clients

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%
Strongly agree Agree Neutral Disagree Strongly disagree

Graph 18: Responses about regular monitoring on credit clients

Explanation: The above chart exhibits that 40% respondents agree on the issue that the bank
conducts regular monitoring on credit clients while 10% respondents have no say. On the
contrary, 50% respondents disagree with the above statement. This means that majority of the
respondents do not agree with the above statement. They argue that the regular monitoring on
credit clients will lead to a better relation between the bank and clients.

51
5.3 MAJOR FINDINGS OF THE STUDY

Through the collection and interpretation of both primary data and secondary data, the findings
of the study can de centralized as follows,

 Most of the customers have an antagonistic opinion regarding the current interest rate on
different credit schemes. According to them, the interest rate of the bank is pretty high.

 Again, many customers have adverse opinion regarding the issue that the bank’s credit
policy is not much more flexible to meet customers’ needs.

 The bank is not efficient in valuation of properties offered as collateral to the bank
against borrowings.

 The bank is not efficient in valuation of properties offered as collateral to the bank
against borrowings.

 Though there is explicit guideline in the bank’s credit policy to ensure credit incentives
for investments in specialized sectors, the bank does not offer such facilities to the
customers up to the mark.

 Another crucial finding is that the bank is not much more interested on conducting
regular monitoring to the credit clients.

 This branch of Janata bank ltd. has another limitation in the issue that it does not design
the periodic repayment credit schedule based on clients’ business and financial
conditions.

 Furthermore, the credit granting procedure is not as quick as to the demand of the
customers in this branch.

 The bank’s fairness for granting credit is not up to the mark. Many customers have a
suspicion regarding this particular issue of the bank.

 The bank’s credit motoring and control systems still are not efficient.

52
 CHAPTER: 06
RECOMMENDATIONS
AND CONCLUSION

53
6.1 RECOMMENDATIONS:
On the basis of findings and conclusions of the study, the following recommendations may be
appropriate for the bank to improve its credit management and to become more competent in the
competitive markets. Again these recommendations can also be incorporated to the bank’s credit
policies to make them attractive and more efficient.

 The credit policies of the bank should address the needs of the customers promptly in order
to become more competitive in the banking sector and to meet the bank’s mission and
vision.

 The interest rate of the bank needs to be redesigned through considering bank’s
requirement and customers’ expectation.

 The bank’s credit policy making process needs to be decentralized to ensure flexibility for
meeting the demands of the current and potential customers which will help the bank to
maintain its dominance in the markets over the competitors

 The periodic repayment schedule of the bank must be designed by considering the
operations of credit clients’ business and their financial conditions.

 The procedure of credit sanction of the bank should be made quicker by reducing
bureaucratic barriers and organizational levels as competitors are very quick to this issue.
People do not like to wait for weeks to get a loan which is covered by their properties as
collateral.

 Strict monitoring and control are must for the credit management department to avoid any
default loan. The bank staff should visit credit borrowers on a regular basis and report the
current loan position of the bank to the higher authority periodically.

 The credit granting procedure should be kept fair through accountability and transparency
of the credit management authority which will lead to enhanced goodwill of the bank in the
market among the existing and potential customers.

 The bank should give focus on maintaining classified loan to the lowest level by taking
precautions and by ensuring early recovery in order to remain financially solvent and
reduce loss

 Many credit borrowers have complaints on the bank’s valuation system for properties
offered as collateral. Therefore, the policy for valuation of property offered as collateral

54
 needs to be redesigned in a way that can ensure customers satisfactions as well as more
revenue for the bank.

6.2 CONCLUSION

Janata Bank Limited is the largest and leading commercial bank in Bangladesh. It performs
several functions for the flourishment of the socio-economic conditions of the state and to ensure
a promising return on investments for the shareholders. However, it is mainly concerned with
economic welfare of the general people. Profit maximization is the secondary goal of this bank.

Credit management can be defined as one of the most crucial tasks of the bank. In fact, most of
the income originates from credit investment of this bank. Therefore, credit management always
remains as challenging functions of the bank as it is the prime source of revenue for the bank.

By providing credit service to all class of people, the bank plays an important role for the
enrichment and development of our economy. In fact, Janata Bank Ltd. is much more different
than other banks. It has huge deposits along with vast credit service. It finances government
projects, provides general banking services to common people and in many cases it works for
Central Bank.

To cope up with the changing and competitive market, the bank has established sound credit
management procedure to cover credit loss and to remain financially solvent through recovery of
credit money properly. Despite several financial scam in recent years, the bank is still operates as
one of the largest financial institution in the economic landscape of Bangladesh.

In conclusion, it is clear that the credit management procedure of Janata bank Limited is
complex, dynamic as well as challenging. In fact, the bank always focuses on continuous
improvement of its credit policy and procedure so that it can compete in the market with
maximum return on investment and can remain financially solvent entity through proving
excellent service to the customers.

55
 Chapter 07

Bibliography
7.1 REFERENCES:
1. Berger, Allen N. and Gregory F. Udell. (1990). Collateral, loan quality and bank risk. Journal
of Monetary Economics .

2. Cornett, Marcia Millonand and Saunders, Anthony. (2006). Financial Institutions 3.

Management: A Risk Management Approach. New York: McGraw-Hill.

3. Damondaran, A. (1997). Corporate Financial Risk Management. New York: Oxford

University Press.

4. Finlay, S. (2009). Consumer Credit Fundamentals. New York: Palgrave Macmillan.

5. Longemann. (2012). The Development of Consumer Credit in Global Perspective: Business,

Regulation and Culture. New York: Palgrave Macmillan.

6. Signoriello, Vincent J. (1991). Commercial Loan Practices and Operations.

7. Smithson, C. (2003). Credit Portfolio Management. Canada: Jhon Wiley and Sons, Inc.

8. Sullivan, Authur, Steven M. Sheffrin. (2003). Economics: Principles in action. New Jersey:
Pearson Prentice Hall.

Reports:
1. Annual Reports for the year 2017, 2016 and 2015 of Janata Bank Limited

2. Bangladesh Bank annual report on “Guidelines for Credit Risk Management”

Websites:
1. http ://www.Janatabank.com.bd [ Accessed on 18 January, 2018 ].

2. http://www.wikipedia. businesscredit.com [ Accessed on 12 February, 2018 ].

56
 7.2 APPENDIX

7.2.1 Survey questionnaire

A QUESTIONNAIRE ON “CREDIT MANAGEMENT” OF JANATA BANK LIMITED

Dear Respondent,

As a part of academic research, I, a student of Jagannath University, am conducting a survey on “Credit

Management” of Janata Bank Limited. I need your kind support to fill this questionnaire for my research.
Responses to this questionnaire will be used to prepare the “Analysis and Findings” part of an internship
report. I ensure that your personal details will be held confidential and your participation is expected. For
any further contact, you can communicate with me at jilany.patwary070@gmail.com. Thank you for your
cooperation.

Gender: □ Male □ Female Age: ……………

Years of experience with the bank: …………… Date: ………………………

Please select one of the options from the list below,

SL Statements Options
no.

Strongly Agree Neutral Disagree Strongly

agree disagree
01 This branch of Janata Bank Ltd. is fast in credit service to the customers.
1 2 3 4 5

02 The bank provides loan money to credit borrowers in time.

1 2 3 4 5
03 The bank is fair in granting loan applications.
1 2 3 4 5
04 The terms and conditions of loan of the bank are clear and easily
understandable. 1 2 3 4 5

05 The bank provides credit incentives in specialized areas.

1 2 3 4 5

06 The bank maintains its credit policies properly.

1 2 3 4 5
07 The interest rate of the bank is moderate.
1 2 3 4 5
08 The bank provides pre-warning to the customers before taking legal action for

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 classified loans 1 2 3 4 5

09 The bank maintains lien documents properly and returns them to credit
borrowers in time. 1 2 3 4 5

10 The bank is keen to provide credit service to the customers on easy terms
1 2 3 4 5
11 The credit service of Janata bank limited is better than many public and private
banks. 1 2 3 4 5

12 The bank usually monitors the use of loan money by the customers in different
investments. 1 2 3 4 5

13 The bank provides guidelines to the credit borrowers in any need in any time.
1 2 3 4 5
14 The bank encourages credit for applicants in specialized sectors.
1 2 3 4 5
15 Digitalization era of the bank has increased its credit facilities to a great extent.
1 2 3 4 5
16 The bank authority conducts field study before granting loans to borrowers.
1 2 3 4 5
17 The bank’s credit operations are efficient and satisfactorily both for customers
and the bank itself. 1 2 3 4 5

18. Give some suggestions regarding how the bank can improve its credit management
procedure.

…………………………………………………………………………………………..

Signature of the respondent

………………………………………

7.2.2. Acronyms

JBL= Janata Bank Limited

CR= Credit Risk

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