Internship Report of Jamuna Bank About Loans & Advance
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Transcript of Internship Report of Jamuna Bank About Loans & Advance
CHAPTER- I : INTRODUCTION Page1.1
1.2
1.3
1.4
1.5
1.6
Origin of the Study
Objectives of the Study
1.2.1 Broad Objectives
1.2.2 Specific Objectives
Methodology of the Study
Sources of Data & Information
1.4.1 Secondary Sources
1.4.2 Primary Sources
Scope & Significance of the Study.
Limitations of the Study.
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1.1 Origin of the study:
This Internship Report is prepared as a partial fulfillment of the requirement of BBA
program. The study paper based on “Overall Banking Activities of Jamuna Bank
Limited”. To fulfill the report properly I have discussed industry analysis, competitive
analysis, and overview and performance analysis of Jamuna Bank Limited. In Jamuna
Bank Limited, I was assigned in the Origination Department. My internal supervisor
was M. Shakhawat H. Bhuiyan, Joint Director, Bangladesh Bank.
1.2 Objectives of the Study:
1.2.1 Broad Objectives:
To understand the basic approaches of banking operation in Bangladesh.
1.2.2 Specific Objectives:
Understanding Banking environment.
Understanding the Banking activities.
Understanding the Cheque Clearing.
Understanding the Accounts opining procedures.
Understanding the Import.
Understanding the Export.
1.3 Methodology of the Study:
The study is a result of the discussion with my supervisor.
Analyze Different type of Ratios.
Following a report sample.
Prepare comparative Analysis.
Different statistical tools are used.
1.4 Sources of Data & Information:
In conducting the study, data and information have been collected from different
sources. All these data were collected from the secondary sources and very few from
primary sources. The sources of data include the following:
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1.4.1 Secondary Sources:
Different statements of bank.
Annual report of Jamuna Bank Limited.
Consultation of related books and publications.
Vouchers, leaflets, loan files, of the bank.
Files, balance sheet and various documents of Jamuna Bank Limited.
1.4.2 Primary Sources:
Personal observation.
Discussion with bank’s officers.
Desk work in different section/division.
1.5 Scope & Significance of the Study:
Scope of the study is quite clear. Since Origination Department is dealing with all
types of loan & deposit activities in the bank, studying these core themes,
Opportunities are there to learn other aspects of SME matters.
Concept of General Banking and its impact in overall economy of Bangladesh
Importance of Banking in context of Bangladesh
Small entrepreneurs of rural –urban spectrum are enjoying the Jamuna Bank Limited
loan facility without the presence of bank at rural area.
Virtual banking concept through SME banking.
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1.6 Limitations of the Study:
The study has suffered from a number of barriers
Data from Jamuna Bank Limited is highly confidential for the outside people
and I had no authority to use the core banking software.
Main limitation was, I was assigned in the deposit origination site but I need
information about loan origination department. So I have faced some problem
to collect information & to use the information.
Time is also a big constraint for my research. I have to submit a broader deal
in a shorter form of outcome.
I had to go under my day-to-day job responsibility that I was supposed to do
so. So I could get few more time to spend in collecting data for preparing my
internship report.
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CHAPTER- II : ORGANIZATIONAL OVERVIEW 6- 12
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
Historical Background of Jamuna Bank Ltd
Goals And Objectives Of Jamuna Bank Limited
Vision And Mission
Board of Directors
Management Team
Branches of Jamuna Bank Ltd
Branch Structure
List of Branches of Jamuna Bank Limited
List of Divisions of Jamuna Bank Limited
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13
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2. 1 Background Of Jamuna Bank Limited:
. Jamuna Bank Limited (JBL) is a Banking Company registered under the
Companies Act, 1994 with its Head Office at Chini Shilpa Bhaban, 3, Dilkusha C/A,
Dhaka-1000. The Bank started its operation from 3rd June 2001. The Bank undertakes
all types of banking transactions to support the development of trade and commerce
of the country. JBL's services are also available for the entrepreneurs to set up new
ventures and BMRE of industrial units. Jamuna Bank Ltd., the only Bengali named
new generation private commercial bank was established by a group of winning local
entrepreneurs conceiving an idea of creating a model banking institution with
different outlook to offer the valued customers, a comprehensive range of financial
services and innovative products for sustainable mutual growth and prosperity. The
sponsors are reputed personalities in the field of trade, commerce and industries.
The Bank is being managed and operated by a group of highly educated and
professional team with diversified experience in finance and banking. The
Management of the bank constantly focuses on understanding and anticipating
customers' needs. The scenario of banking business is changing day by day, so the
bank's responsibility is to device strategy and new products to cope with the changing
environment. Jamuna Bank Ltd. has already achieved tremendous progress within
only eight years. The bank has already ranked as one of top quality service providers
& is known for its reputation.
At present the Bank has real-time centralized Online banking branches (Urban &
Rural) throughout the Country having smart IT-Backbone. Besides these traditional
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delivery points, the bank has ATM of its own, sharing with other partner banks &
Consortium throughout the Country.
2. 2 Goals And Objectives Of Jamuna Bank Limited:
The goal of Jamuna Bank Limited, is to be the number one private commercial bank
in Bangladesh and the objectives are to be the best performing bank with world class
services.
2. 3 Vision And Mission:
To become a leading banking institution and to play a pivotal role in the development
of the country.
The Bank is committed to satisfying diverse needs of its customers through an array
of products at a competitive price by using appropriate technology and providing
timely service so that a sustainable growth, reasonable return and contribution to the
development of the country can be ensured with a motivated and professional work-
force.
cutting-edge technology, a dynamic workforce and a wide array of financial products
and services.
The Vision of “Jamuna Bank Limited” is based on a philosophy known as JBL. We
envision Jamuna Bank Limited to be:
One of the Best Performing Banks in Bangladesh
The Bank of Choice
A Truly World-class Bank
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2. 4 Board Of Directors:
The Board of Directors consists of 15 members elected from the sponsors of the
Bank. The Board of Directors is the apex body of the Bank.
Chairman
Vice Chairman
Directors & Sponsors
Managing Director
Company Secretary
Chief Adviser
Tax Advisor
Auditors
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2. 5 Organizational Structure:
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Sponsor & Shareholders
Board of Directors
Managing Director
Executive Committee
Policy Committee
Chief Adviser
Company Secretary
Deputy Managing Director
2. 6 Organogram Of Jamuna Bank Limited:
The organogram of Jamuna Bank Limited is given below with a flowchart
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Assistant OfficerShareholders
Junior OfficerShareholders
OfficerShareholders
Senior OfficerShareholders
Junior Assistant Vice PresidentShareholders
First Assistant Vice PresidentShareholders
Assistant Vice PresidentShareholders
Senior Assistant Vice PresidentShareholders
Vice PresidentShareholders
Senior Vice PresidentShareholders
Executive Vice PresidentShareholders
Senior Executive Vice PresidentShareholders
2. 7 Branch Structure:
The branch structure of Jamuna Bank Limited Motijheel Foreign Exchange– 0018
branches is given below by a flowchart
The Jamuna Bank LTD, Motijheel Foreign Exchange -0018 is consisted of four
departments with eight efficient employees including the Branch manager and deputy
manager. There is a Vice President for managing the branch activities; there is a First
assistant Vice President who organizes the credit department, there are some senior
officers, officer and junior officers in the branch.
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Vice President &
Manager of the Branch
First Asst. Vice President & Deputy Manager of the
branch
Credit Department
General Banking Department
Clearing & NRB
Department
Cash Department
1 Mohakhali Branch2 Sonargaon Road Branch3 Moulvi Bazar Branch4 Goala Bazar Branch5 Agrabad Branch6 Dilkusha Branch7 Beani Bazar Branch8 Sylhet Branch9 Shantinagar Branch10 Gulshan Branch11 Motijheel Foreign
Exchange12 Nayabazar IB Branch13 Naogaon Branch14 Mohadevpur Branch15 Khatungonj Branch16 Konabari Branch
17 17 Bhatiary Branch 18 Foreign Exchange Branch
1 9Chistia Market Branch20 Jubilee Road IB Branch21 Bogra Branch22 Baligaon Bazar Branch23 Narayangonj Branch
24 Dhanmondi Branch
25 Rajshahi Branch26 Bashurhat Branch28 Bahaddarhat Branch29 Sirajgonj Branch30 Banani Branch31 Mawna Branch32 Ashulia Branch33 Dinajpur Branch34 Kushtia Branch
35 Kadamtoli Branch 36 Aganagar Branch
37 Uttara Branch38 Comilla Branch39 Azadi Bazar Branch40 Laksam Branch41 Anderkilla Branch42 Mirpur Branch43 Malibagh Branch44 Madaripur SME Agri
Branch45 Thakurgaon Branch46 Barisal Branch47 Rangpur Branch
48 Feni Branch 49 Savar Branch 50 Gazipur Chowrasta Branch
51 Chapainawabgonj SME Agri Branch52 Rayerbag Branch53 Munshigonj SME Agri
Branch 54 Nasirabad Branch
55 Kazipur SME Agri Branch56 Jurain SME Agri Branch57 Shetabgonj Branch58 Sherpur SME Agri Branch59 Jessore Branch60 Islampur Branch61 Ring Road Branch
62 Mymensingh Branch63 Rupshi Branch64 Pabna Branch65 Tongi Branch66 Dewanhat Branch67 Progati Sarani Branch68 Moulvi Bazar SME Agri
Branch69 Sherpur Branch70 Natore Branch71 Ashugonj Branch72 Tongi Bari Branch73 Barura Branch
74 Chittagong Zone Office
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2.8 List of Branches of Jamuna Bank Limited
2.9 List of Divisions of Jamuna Bank Limited
1 Treasury Division
2 International Division
3 Credit Division
4 MD's Secretariat
5 Credit Administration Division
6 PR & Brand Communication
Department
7 Anti Money Laundering Division
8 Card Division
9 Chairman's Secretariat
10 Board Division
11 Human Resources Division
12 Banking Operation Division
13 Inventory Management
& Maintenance Department
14 ICT Division
15 ICC Division
16 Corporate Division
17 General & Common Services Division
18 Share Division
19 Financial Administration Division
20 JB Training Institute
21 SME Division
22 Retail Banking Division
23 Risk Management Division
24 Islamic Banking Division
25 MD's Office
26 Research & Development Wing
27 Offshore Banking Unit
28 Capital Market Operation Division
29 Marketing & Development Department
30 Merchant Banking Division
31 Law & Recovery Division
32 Monitoring and Vigilance Division
Credit Rating of Jamuna Bank Limited
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Credit Rating Agency of Bangladesh Limited (CRAB) upgrades the rating of Jamuna Bank Limited
to AA3 from A-1 and reaffirms short term rating ST-2.
Chapter: 3 || General Banking3.1 Products and Services 153.2 General Banking 153.3 Account Opening 15
3.3.1 Regular Saving Account Products 153.3.2 Fixed Deposit Account 173.3.3 Current Account 17
3.4 Rules of Opening an Account3.4.1 In The Name of Individual 173.4.2 In Joint Name 183.4.3 Proprietorship 183.4.4 Partnership 183.4.5 Limited Company 183.4.6 Societies, Clubs And Associations 193.4.7 Non-Government Organization (NGO) 19
3.5 DD /Pay Order/TT3.5.1 Demand Draft 193.5.2 Pay Order 193.5.3 Telegraphic Transfer 203.5.4 Cash Department 203.5.5 Deposit Cash In Customer’s Account 20
3.6 Make Payments from Customer’s Account 213.7 Types of Cheque 21
3.7.1 Open Cheques 213.7.2 Crossed Cheque 22
3.8 Clearing And Transfer Department 223.8.1 Inward Clearing 223.8.2 Outward Clearing 233.8.3 Outward Money Transfer Flow Chart 24
3.9 IBC/OBC 25
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Current Rating Previous RatingLong TermAA3
Long TermA-1
Short TermST-2
Short TermST-2
Date of Rating03.05.2012
Date of Rating13.04.2011
3.9.1 OBC Collection Process 263.9.2 IBC Collection Process 27
3.10 Credit Department 273.10.1 Loan Disburse Process 273.10.2 Credit Related Term 28
3.1 Products and Services:
The Products and services Of Jamuna Bank Limited Motijheel Foreign Exchange –
0018 Branch can be described by the departments of a commercial banks branch.
These departments are:
General Banking
Cash department
Clearing department
Foreign Exchange department
Credit Department
Accounts department
3.2 General Banking:
The general banking consists of account opening, front desk management etc. now
these parts are described below:
3.3 Account Opening
This department is responsible for the opening and closing of accounts. In
consideration of Jamuna Bank Limited, opening and/or continuing to maintain any
account, the Account Holder/Depositor or Investor would be bound by the terms and
conditions written on the account opening form.
The first part establishes the preference regarding the type of account to be
maintained. The Jamuna Bank Limited has various choices offered in this regard are:
3.3.1 Regular Saving Account Products:
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Mutual Trust Bank has verities of saving account products. These regular saving
account products are described below:
Jamuna Bank Limited Inspire
Jamuna Bank Limited Inspire provides a range of enhanced services, while letting
you enjoy unique benefits of getting return on your deposit monthly instead of
traditional half yearly. With extra access and convenience of banking, enjoy the full
convenience of a savings account and access your savings anytime.
Jamuna Bank Limited Ruby
Jamuna Bank Limited Ruby enables today’s independent women to enjoy hassle-
free banking services. Besides the core Jamuna Bank Limited banking advantage,
Jamuna Bank Limited Ruby, an exclusive savings account for women, is packed with
special benefits for our women customers. Enjoy your present and plan for the future,
with this rewarding savings account.
Jamuna Bank Limited Junior
Jamuna Bank Limited Junior is one kind of savings account for fewer than 18
students. This account will be maintained through guardian. Under this account they
can enjoy free account maintenance, free internet banking as well as free debit card.
Jamuna Bank Limited Graduate
We understand that starting college or university can be both exciting and
challenging. That's why Jamuna Bank Limited Graduate, a contemporary savings
account, is packed with everything you need to meet all your banking needs, offering
monthly income while helping you save for future financial emergencies.
Jamuna Bank Limited Senior
Jamuna Bank Limited Senior has been designed keeping in mind the fact that a
senior citizen's banking requirements are wholly different and deserve special
attention. We like to empower our senior citizens, so that they can carry out their day-
to-day banking transactions independently, and with dignity and confidence. Now the
true pleasure of seniority is in your grip.
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Brick By Brick
Brick By Brick is a savings account. We know Drops of water make an ocean. Your
habit of regular savings will provide you comfort in the future. Brick by Brick is a
unique monthly savings plan which builds up over the years and provides a lump sum
amount at maturity.
Jamuna Bank Limited Education Plan
We know how important it is to plan for your child's financial security. Jamuna Bank
Limited has the solution to help you do that while showing the virtue of saving, in
your child. Jamuna Bank Limited Junior is a savings account for minors that offer the
opportunity to save for today and the future.
3.3.2 Fixed Deposit Account
Fixed Deposit Account refers where the amount of the account will be fixed for a
certain period of time. There are some other kinds of fixed accounts like:
Monthly Benefit Plan
This plan offers you to generate monthly income out of your deposit. It has been
designed to help and assist conscious savers from all strata of the society
Jamuna Bank Limited Double Saver
Jamuna Bank Limited Double Saver is a fixed deposit scheme where the deposit
doubles in 6 (six) years.
3.3.3 Current Account
In this kind of account a customer can deposit his money and can write one or more
check to withdraw their money. For doing this notice is not required. He can deposit it
whenever he/ she want to and also can withdraw it whenever he/ she want to.
3.4 Rules of Opening an Account
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There are some factors that should be considered in case of opening a bank account.
These factors are described as below:
3.4.1 In The Name of Individual
The client has to fill up an account opening form. Terms and conditions are printed on
the back of the form. The form contains the declaration clause, special instructions
etc. two copies of passport size photograph duly attested by the introducer are affixed
with the form.
3.4.2 In Joint Name
In this type, the formality is same as individual account, but in the special instruction
clause, either or ‘survivor’ or ‘former or survivor’ clause is marked.
3.4.3 Proprietorship
In addition the customer has to submit the valid Trade License and Tax Paying
Identification Number (TIN) along with the application.
3.4.4 Partnership
In case of partnership account, the bank asks for,
A copy of the partnership agreement (Partnership Deed)
A letter signed by all the partners containing the following particulars.
The name and addresses of all partners
The nature of the firm’s business
The name of the partner authorized to operate the account in the name of the firm,
including the authority to draw, endorse and accepting the bills and mortgage and
sell the properties belonging to the firm.
3.4.5 Limited Company
On having the desire to open an account from a limited company, an Jamuna
Bank Limited Officer asks for the following documents:
Registration Certificate from the Registrar of Joint Stock of Companies
Certificate of Incorporation
Certificate of Commencement of Business
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Memorandum of Association
Articles of Association
Copies of Annual Accounts
Copies of the Board’s resolution, which contains
a) The name of the persons who have been authorized to operate the bank account
on behalf of the company.
b) The name of the persons who are authorized to execute documents with the bank
on company’s behalf.
3.4.6 Societies, Clubs And Associations
In case of these sorts of accounts Jamuna Bank Limited requires the following
documents:
Registration Certificate under the Societies Registration Act, 1962
Copies of Memorandum, Articles of Association
Resolution of the Managing Committee.
Power of Attorney to Borrow
3.4.7 Non-Government Organization (NGO)
The account opening procedure is same but in exception is that the Registration
Certificate from the Social Welfare Department of Government must be enclosed with
the application.
3.5 DD /Pay Order/TT
3.5.1 Demand Draft
A method used by individuals to make transfer payments from one bank account to
another. Demand drafts are marketed as a relatively secure method for cashing
checks. The major difference between demand drafts and normal checks is that
demand drafts do not require a signature in order to be cashed.
3.5.2 Pay Order
A Pay Order, similar to a banker's chaeque is also payable locally, the only difference
is that in case of a pay order, the bank is directing the payee bank to pay the amount
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mentioned on the pay order to the person/organization so mentioned or his order, i.e.
any other person/organization.
Both pay orders and demand drafts are used by individuals to make transfer payments
from one bank account to another. The main difference between the two is that while
a demand draft is a written order directing the payment to be made to a third party
outside your city, a pay order is drawn for the third party within your city.
3.5.3 Telegraphic Transfer
TT means Telegraphic Transfer, an electronic method of transferring funds.
Telegraphic Transfers are also known as Telex Transfers. A banking term commonly
called "T/T," meaning a cable message from one bank to another in order to affect the
transfer of money. Telegraphic Transfers are usually fairly expensive, due to the fast
nature of the transaction.
3.5.4 Cash Department
The cash department is the most important department of a commercial bank. It
receives cash from customers and then deposits it into the accounts of the customers
and maintained their balances. The officers in this department are called teller this
department involves in two activates:-
1. Deposit cash in customer’s account
2. Make payments from customer’s account
3. Day end cash balancing
3.5.5 Deposit Cash In Customer’s Account
When the customer want to deposit amount in his account at opening of account or
after that then he has to fill a deposit slip that shows the amount and the account in
which the cash will be deposited. Then teller will receive amount and credit the
customer’s account that shows increase in customer’s bank account.
Cash may be deposited either by deposit Slips for SB/ CD/ CC accounts or by other
credit voucher like single credit voucher, pay order/ Draft/ T.T. application forms.
Branches shall ensure the following:
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I. Cash receiving officer shall check the deposit slip/ credit voucher/ application
form as to its title of account, number and amount in words and figures.
II. The cash currency notes shall be counted physically /by cash counting
machine as per denominations of the currency notes on the back of the
voucher /deposit slip. The officer will enter the particulars in the cash
Receiving Register and sign on the related deposit slip/voucher and affix
"Cash Received" Stamp with date. He/she shall write the amount in words and
figures in red ink across the deposit slip/voucher/ application form in token of
receipt of the money. He /She shall send the register along with the deposit
slip/voucher for signing on the same and authenticating the receipt in the
register by the in-charge of the department.
III. The officer in-charge shall retain the original of deposit Slip and other
vouchers and send them to respective desk for postings/actions. The duplicate
voucher (counter foil) shall be handed over to the depositor/client.
IV. At the close of business the cash receiving officer shall add all the entries in
the register and if agreed with the actual cash received by him, shall hand over
the register for checking by officer-in-charge.
V. Receiving Cash officer will hand over the cash to the entire cash in-charge
duly checked by him.
3.6 Make Payments from Customer’s Account
When the customer draws a cheque on the bank to pay a certain amount then teller
will debit the customer’s account that shows reduction in his account balance.
3.7 Types of Cheque
There are two main types of cheques that are
A) Open Cheques
B) Crossed Cheques
3.7.1 Open Cheques
Open Cheques are those cheques, which are paid across the counter of the bank. Open
cheques may be
I) Bearer Cheques
II) Order Cheques.
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I) Bearer Cheque
If the drawer orders the bank to pay a stated sum of money to the bearer, it is called a
bearer cheque. Any person who lawfully possesses a bearer cheque is entitled to
receive payment of that cheque.
II) Order Cheque
The amount of this cheque is payable to the person whose name is written on the face
of the cheque. The amount is paid at counter after identification of that person.
3.7.2 Crossed Cheque
The amount of this cheque is not paid at counter. The amount of this cheque is
transferred to the person’s account whose name is specified on the cheque. Two
parallel transverse lines are drawn across the face of the cheque.
3.8 Clearing And Transfer Department
Every bank performs the function of paying and collecting. The cheque drawn on
other bank by the customers of the bank is collected by the bank for or without
charging fee is called clearing. The bank through the clearing house (Bangladesh
Bank) performs the function of clearing. Clearing is facilitated by Bangladesh Bank
Clearing house. Clearing is a faster and convenient cheque processing method that
customers deposit to bank. It is inter banking debit and credit transfer process among
the banks which are under control of Bangladesh Bank Clearing house. Clearing
Department plays a vital role in General Banking. This department receives cheques,
DD, P.O. etc from depositors attached with a deposit slip.
There are two types of Clearing
I) Inward Clearing
II) Outward Clearing
3.8.1 Inward Clearing
Inward clearing means the cheques received by the bank from other banks. These -
Inward clearing - cheques are the cheques drawn by the bank/branch customers on
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their account in favor of other parties. On receipt of the inward clearing, the cheques
are posted to the various accounts on which they are drawn - meaning the accounts of
the cheque issuer or drawer with the bank is debited to the account and the payment is
made to the bank presenting the cheque. The procedure of inward clearing is:
I. Principal Branch/Main Branch shall receive cheques etc drawn on Mutual
Trust Bank Limited branches from the Clearing House. On receipt of the
cheque etc. they shall segregate the same branch-wise and issue IBDA on
branches against total amount of cheque etc. and shall arrange delivery of the
IBDA together with the cheques etc. within Clearing House time schedule.
II. Branches shall send the cheques dishonored by them supported by IBDA
issued on Principal Branch/Main Branch, within Clearing House time schedule
for enabling Principal branch/ Main Branch to return these instruments in the
2nd Clearing House (Return House).
3.8.2 Outward Clearing
Outward clearing means the cheques sent for collection. When a particular branch
receives instruments drawn on the other bank within the clearing zone and sends those
instruments for collection through the clearing arrangement is considered as Outward
Clearing for that particular branch. This branch is known as collecting branch.
In other words, inward clearing is for our branch and outward clearing is for other
banks or branches. When we receive inward clearing we have to debit
our customer account and when we receive outward clearing we have to send it to
relevant bank for payment and we credit the amount to Customer Account.
All cheques, demand drafts and other credit instruments tendered for the credit of
customers account will be delivered by the depositor at the clearing counter. Any
deposits received by post will also be sent over to the clearing counter. The counter
officer shall at the time of receipt examine such deposits carefully to ensure that:
1. The name of the account is very clearly written on the Deposit slips.
2. The particulars of deposits such as cheque numbers, figures with in words, date,
names of bank etc. are properly entered on the deposit slip.
3. The depositor has signed the Deposit Slip.
4. On item deposited payees discharge and the chain of endorsement, are in order.
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I. All cheques and other instruments will be crossed immediately on receipt with
the banks special crossing stamp. Items intended/selected for the next day’s
clearinghouse will be branded with the bank's clearing stamp with date. If the
deposits are made at a time when it is too late for these to be presented to
drawee banks the same days the stamp "Too late for todays clearing" will be
affixed on the counter foil.
II. Scan all the cheques and send them to principal branch clearing Section.
III. Principal branch accumulate the images of all branches clearing cheques and
send it to Bangladesh bank clearing House
IV. Bank also prepare, another summery sheet (Validation Sheet) from computer
which contain the total a number of cheques etc. delivered to different banks
in the Clearing House.
V. All clearing item will be passed through the bank's Principal branch/Main
Branch's Account with Bangladesh Bank.
VI. Entries to be passed by Principal branch/ Main Branch and corresponding
branch finally credited it to Customers account and then it is matured for draw.
VII. In case of return of cheques unpaid in the Clearing House, Local Office /Main
Branch shall issue IBDA on the branch which lodged the cheques in clearing
to reconcile the accounts.
VIII. All IBDAs originated in connection with Clearing House shall invariably be
responded on the same day and under no circumstances shall be kept pending.
3.8.3 Outward Money Transfer Flow Chart
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Verify Clients Submitted Cheque and receive it for clearing
Credit the Amount to Client Account and debit from Branch GL
Credit the same amount to Branch GL and Debit from Principal branch GL
Principal Branch credited same amount to their GL and Debit from Bangladesh Bank
Bangladesh Bank credit its Account and Debit from corresponding Bank’s Account of which cheque Client has submitted
Finally the amount is matured and qualified for draw
Clearing House
In Bangladesh Bank, there is a very large room, which contains fifty (50) or more
tables for each bank that is called the clearing house.In clearing house section,usually
the authorized officials attends all the cheques for collection in their bank drawn on
other banks and settle down their transaction by the arrangement of clearing
house,Usually two houses sit for settlements which are as follows.
Nature of Clearing House
1st Clearing House
Return Clearing House or High value house
First House
Generally all the collection cheques are collected from other banks drawn on Jamuna
Bank Limited in this first clearing house. First house sit at 10 AM and return house
sits at 5 PM.
Same day house or High Value House
Only the branches of member banks located in Motijheel Foreign Exchange area and
the cheques value which is equal or above TK500000/= enjoy the same day clearing
facility. The same day house starts at 10AM and its 11.00 AM.
3.9 IBC/OBC:
By OBC, we mean that those cheques drawn on other banks which are not within the
same clearing house. Officer gives OBC seal on this type of cheques and later sends a
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letter to the manager of the branch of the some bank located in the branch on which
cheque has been drawn. After collection of that bill branch advises the concerned
branch in which cheques has been presented to credit the customer account through
Inter Branch Credit Advice (IBCA).
In absence of the branch of the same bank, officer sends letter to manager of the bank
on which the cheques is drawn. That bank will send pay order in the name of the
branch. This is the procedure of OBC mechanism. Actually OBC comes from the
outside bank’s branch, or inter branches. Suppose AGRANI Bank, Jatrabari Branch
sent a Cheque, which no: 012536, Tk. 5,00,000/- to Jamuna Bank Limited
against AGRANI Bank Motijheel Foreign Exchange Corp. Branch. So this cheque
could be an OBC. Now what Jamuna Bank Limited has to do? Jamuna Bank Limited
tries to collect this cheque through Bangladesh Bank Clearing House, and credited
clients account.
3.9.1 OBC Collection Process:
Create a Voucher against OBC: S/D A/C OBC Tk. 5,00,000/-
.10% Cut off as Commission on OBC Tk. 500
15% Cut off as Vat on Others Tk. 75
Tk. 20/- Cut off as Postage Recovery Tk. 20
Total Tk. 595/-
Transfer
I. Transfer Book shall be maintained for entering transfer cheques/vouchers.
II. Serial number shall be allotted both on the debit and credit side of the book,
which shall be required for recording the daily transactions. The same serial
number shall be noted on the voucher entered in the book including their contra
credit and debit voucher and or a set of credit or debit vouchers of a transaction.
III. Entries in the debit and credit column of the book shall be directly made from
the respective debit and credit vouchers. At the end of the banking hours the
total of the debit and credit shall be arrived at and tallied with the computer
figure in Transfer Head.
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IV. Transfer Stamp is affixed on the face of voucher; Vouchers are released from
Transfer book. It is balanced and signed by the writer and Book is checked and
signed by the authorized officer.
V. In a computerized system scroll is done by the computer system. But branch
shall maintain the Transfer Book manually as a safe guard against easy
detection of mistakes and issuing vouchers if any.
3.9.2 IBC Collection Process
3.10 Credit Department
The credit department of a bank is the basic element in its organization. It is true that
in the past many banks have been able to do without credit departments and that at the
present time there are not a few of them - chiefly the smaller and less advanced types
of institution - which have no credit departments, or only very rudimentary
organizations of the sort. These, however, usually accept the work of credit
departments operated by their correspondents. The true work of a bank credit
department is done whenever any loan is made. It may be that the work of credit
analysis is incidentally performed by the president or a vice-president of the bank or
by some other assigned officer who happens to have charge of the work of lending,
The Credit Departments mission is to help sell the company’s products and services to
all qualified customers while providing the best possible credit and collection services
that we can.
Credit department main workings areas area as follows:
Offer/inform to Customers about different loan product
To know details about Customer business
Credit proposal preparation
Provide checklist and relevant form
Verify all required document
Place for approval with all supporting documents
After Approval disburse the amount to respective account
3.10.1 Loan Disburse Process
Before issuing any kind of loan we need to the following task
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1. To know details about customer Business
2. Credit proposal preparation
3. Provide checklist and relevant form
4. Place for approval with all supporting documents
5. After Approval disburse the amount to respective account
For getting loan clients need to submit the following documents and concerned credit
officer will verify.
*Loan application form
*Applicant’s National ID/Driving License/Passport copy
*Photographs of applicants (studio photo)
*Salary certificate for salaried person
*Guarantor
*Bank Statement
*Others Branch liability
*Others Bank Liability
*Photocopy of Utility Bill documents
* Trade license
* Personal and business account statement for last one year
* Applicant’s TIN certificate
* Copies of all existing loans’ sanction letter and repayment history for last one year
*Rental deed for rental income and ownership deed of rented property
*Apartment allotment letter/Deed of agreement/property ownership deed
*other all property related documents’ copy
All documents are not necessary for all schemes
After physical verification of clients Business and property as well as all the
documents concerned credit officer prepare check list, LDCL(Loan documentary
Check list) and fill up CIB form and will send it to Bangladesh Bank CIB department
through Head office. After getting no obligation bank can sanction loan to the client.
3.10.2 Credit Related Term
Primary Security
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Primary security means specific assets against which loan granted. In the case of term
loan for factory building in this regards "Land' is primary security. Further in the case
of working capital loan, "stock and book debts" is considered as primary security and
if any additional security provides other than "primary Security" it is called collateral
security
Collateral Security
Specific asset (such as land or building) pledged as a secondary (and subordinate)
security by a borrower or guarantor. The principal security is usually the borrower's
personal guaranty, or the cash flow of a business. Except for highly creditworthy
customers (who can get loans against only their signatures) lenders always demand a
collateral if the primary security is not considered to be reliable or sufficient enough
to recover the loan in case of a default. A lien is created when the collateral is
registered in the public records office, giving the registered lender priority over other
lenders on the same asset or property. Lenders have the legal right to seize and sell
collateral if the borrower cannot pay back the loan as agreed. Sometimes the asset
being financed (such as accounts receivable, inventory, and machinery) is itself used
as collateral; in home mortgages the property being bought serves as collateral. See
also collateral value and cross collateral clause.
CIB (Credit Information Bureau)
A Credit Information Bureau is an organization that collects and collates credit data
on borrowers from its member financial institutions. The financial data is then
aggregated in system and the resulting information (in the form of credit reports) is
made available on request to contributing member financial institutions for the
purposes of credit assessment, credit scoring and credit risk management. The major
purpose of this database is to enable the financial institutions to know the credit
history of their prospective customers thus enabling them to make a more prudent
decision.CIB form is Bangladesh Bank’s necessary prerequisite to make any loan .To
create a disciplined environment for borrowing, the automated CIB service provides
credit related information for prospective and existing borrowers. With this improved
and efficient system, risk management will be more effective. Banks and financial
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institutions may furnish credit information to CIB database 24 by 7 around the year;
and they can access credit reports from CIB online.
LDCL (Loan Documentary Check list)
Checklist is very much essential for making any loan, By this checklist bank can
forecast the loan risk. Checklist to be used in connection with loans (both commercial
and consumer) to ensure the proper notices and disclosures are given and procedures
are followed. One set is used by the lender as a checklist when doing loans; the other
set is used by the compliance officer when reviewing the loans for compliance. In
addition to the loan approval disclosure documents that will need to be signed by you
after you complete your loan application and receive your preliminary loan approval,
my staff will require copies of the following documents to formally approve your
mortgage for closing.
Pledging
Offering assets to a lender is collateral for a loan. Though the asset will be pledged to
the lender, it still owned by the borrower unless he/she defaults on the loan.
Hypothecation
A contract by which property is hypothecated; a right which a creditor has in or to the
property of his debtor, in virtue of which he may cause it to be sold and the price
appropriated in payment of his debt. This is a right in the thing. Arrangement where
the grantee (Creditor) has the possession and right to sell, but not the title
Credit Risk Grading (CRG)
CRG Credit Risk Grading is most important for issue for sanctioning any kind of
loan. Here bank classify their client overall status according some parameter and set
score. In our bank we classify our clients’ status in eight different classes.
Number Grading Score1 Superior Fully Cash secured, secured by government2 Good 85+3 Acceptable 75-844 Marginal/Watchlist 65-745 Special Mention 55-646 Substandard 45-54
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7 Doubtful 35-448 Bad/Los <35
If a clients Credit Risk grading goes to acceptable/Good/superior class then we may
submit the client’s proposal for loan approval.
3.11 Foreign Exchange Department
Foreign exchange is an important department of Mutual Trust Bank Limited,
which deals with import, export and foreign remittances. Foreign Exchange is an
International Department of the Bank. It facilitates international trade through its
various modes of services. It bridges between importers and exporters. This
department mainly deals in foreign currency, that’s why it is called foreign
exchange department.
This department is playing an important role in enhancing export earnings, which
aids economic growth and in turn it helps for the economic development. On the
other hand, it also helps to meet those goods and service, which are most
demandable and not adequate in our country.
Though, this department is not currently active in Jamuna Bank Limited
Motijheel Foreign Exchange – 0018 Branch.
3.11.1 Parts Of Exchange Departments
Import Export Remittance
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3.11.2 The Documentary Letter Of Credit
Letter of credit is a credit contract where the Opening/Issuing Bank is committed to
place an agreed amount of money at the beneficiary’s disposal under some agreed
conditions.
Forms Of Documentary Credit
1. Revocable Credit: A revocable credit is one where the issuing bank is at liberty to
revoke, which it is can cancel the credit at any time. According to UCPDC (Uniform
Customs for Practice of Documentary Credit), a revocable credit may be amended or
canceled by the issuing bank at any time and without prior notice to the beneficiary
before shipment of consignment against the L/C.
2. Irrevocable Credit: An irrevocable L/C is one, which cannot be revoked or
amended by the bank with the concurrence of the interested party.
3.11.3 Some Important Terms Of Letter Of Credit
Amendment of credit: Sometimes the importer may require amendment to be made
in the L/C, but this amendment must be made within the consent pf exporter,
otherwise amendment will have no validity.
Adding Confirmation: Sometimes the importer may not rely on the L/C issuing
bank. Exporter requires the L/C to be confirmed by another bank situated in his
country. Then on request of issuing bank, any bank in exporter’s country gives
guarantee about the payment. This is called confirming bank. By adding such
confirmation, confirming banks undertakes the liability to honor the bill of exchange
of exporter.
Validity and Expiry of Credit: All L/C must mention the expiry date of L/C with in
which the documents for payment /acceptance must be presented. This must exceed
the date of issuance of the bill of lading or other shipping documents, during which
presentation of documents for payment/acceptance must be made.
FOB (Free On Board): Under FOB basis, the exporter quotes the price covering all
his expenses until the goods duty packed are delivered “on board”, the carrying vessel
named and arranged by the buyer with the freight and the insurance being paid by the
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buyer. The importer bears any cost incurred and all risks from the time the goods are
placed on board inclusive of those arising out of the ship’s failure on berth.
Cost and Freight (C & F): In this case the exporter quotes the FOB price plus
insurance cost. The responsibilities of carrying out all formalities for shipment of the
goods developed upon the seller.
CIF (Cost, Insurance and Freight): Under CIF, the exporter quotes C&F price plus
the insurance cost. The responsibility of carrying out all formalities for shipment of
the goods develop upon the seller.
FAS (Free Alongside Ship): Under FAS, the seller quotes the price covering all his
charges until such time as goods are loaded on Train at the specified railway station.
The buyer is responsible for all charges from the time he takes delivery of all goods
from the exporter’s yard.
EX-Factory: The seller quotes the price of the goods ex-factory on the date agrees.
The importer is responsible for all further necessary arrangements and charges.
3.11.4 PARTIES TO LETTER OF CREDIT
1. Importer (Buyer)/Applicant
2. The issuing Bank (Opening Bank)
3. The Advising Bank/Notifying Bank
4. Exporter/seller
5. Confirming Bank
6. Negotiating Bank
7. The paying/Accepting/Remitting Bank
Applicant: The person who request the bank (opening bank) to issue letter of credit.
As per instructing and on behalf of the applicant bank opens L/C in line with the
terms and conditions of the seller contract between the buyer and the seller.
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Opening Bank/Issuing Bank: The bank which open/issue letter of credit on behalf of
the applicant/importer. Issuing bank’s obligation is to make payment against
presentation of documents drown strictly as per terms of the L/C.
Advising/Notifying Bank: The bank through which the L/C is advised/forward to the
beneficiary (exporter). The responsibility of the advising bank is to communicate the
L/C to the beneficiary after checking the authenticity of the credit. It acts as an agent
of the issuing bank without having any engagement on their part.
Beneficiary: Beneficiary of the L/C is the party in whose favor the letter of credit is
issued. Usually they are the seller or exporter.
beneficiary when presented complying credit terms. If the negotiations of documents
are not restricted to a particular bank in the L/C, normally negotiating is the banker of
the beneficiary.
Reimbursing / Paying Bank: The bank nominated in the letter of credit by the
issuing bank to make payments stipulated in the document, complying with
reimbursing bank.
Beneficiary 1. Contract Applicant
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SELLER BUYER
ISSUING BANKADVISING BANK
4. Advise of Doc. Credit
3. Documentary Credit
Figure: The Documentary Credit Cycle
The Plan of Payments By Means Of the Letter Of Credit
The description of process
1. The contract is concluded between the importer and exporter.
2. The importer addresses in serving bank with the request to let out irrevocable
the letter of credit (to open the letter of credit) according to condition to the
contract and transfers the sum of a covering under the letter of credit.
3. The bank of the buyer opens the required letter of credit and the bank-
correspondent asks to notify the supplier on opening the letter of credit.
4. Straight Bank (the bank-correspondent of the bank-emitter) informs the
supplier on opening of the letter of credit.
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2. Doc. Credit Application
5. The exporter organizes transportation of the goods by means of the conclusion
of the agreement with the transport or insurance company and receives the
transport invoice or insurance policy.
The exporter gives, according to the contract, the following documents:
Proforma Invoice,
Commercial Invoice,
Bill of loading,
Insurance policy,
Packing sheet/list,
Certificate of quality,
Others.
And other documents straitening to bank for payment under the documents. It is
supposed, that all documents correspond to conditions of the letter of credit. In this
case we proceed from the assumption, that straitening and executing bank is the same.
6. The executing bank checks all the documents on conformity to the letter of
credit and if not it is found out of any divergences are found out; executing
bank can work with one of the following ways:
* To send the documents for collection to Bank-Emitter,
* To pay the documents after reception from the exporter of the letter of
guarantee,
* To pay the documents after reception of consent with divergences from the
Bank-Emitter.
Jamuna Bank Limited
7. Executing Bank sends the documents to the bank-emitter according to the
conditions, stipulated by the letter of credit.
8. Executing bank sends the requirement about a covering (with the invoice of
the addressee under the letter of credit) to confirming bank.
9. The Bank-Emitter notifies the buyer on arrival of the documents.
10. The importer receives from the bank-emitter the documents.
11. The importer gives the invoice of the transport company for reception of
the goods.
12. After reception if the goods from the transport.
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Modes of Sales of Goods
1. Cash in advance: Risk is minimum. The proforma invoice is issued.
2. Open Account: Goods are sent first and payment is made afterwards. There
are no intermediaries. Proforma invoice is used here as well.
3. Documentary Collection: Same as an open account but the use of bank as an
intermediary. Here the risk is zero. Here the bank acts like an agent.
4. Documentary Credit: L/C
Here modes 1, 2 and 3 are built on good faith and relationship, but mode 4 comes
with a third party guarantor.
3.11.5 Back-To-Back L/C:
Back-to-back L/C means one credit backs another. It is new credit in favor of another
beneficiary. Sometimes beneficiary seller of a credit himself is unable to supply goods
specified in the L/C and required to purchase from another supplier by opening
second credit. Besides, the formalities and requirements for (L/C opening) the
following formalities and documents are also required for opening back-to-back L/C
1. Master L/C
2. Valid bonded wear house licenses
3. Quota allocation for quota items
4. ERC in addition to IRC
5. Indemnity/Undertaking
6. No objection from previous banker
7. Factory inspection certificate
8. BGMEA Membership
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RM activities implemented in Jamuna Bank Limited, Motijheel Foreign Exchange–
0018 Branch
CHAPTER- IV : Loans & Advances 39-51
4.1 Difference between loans and advances 39
4.2 CSR activities of Jamuna Bank Limited 39
4.3 Key Financial Indicators 40
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4.4 Product & Service of Jamuna Bank Ltd 41
4.5 Description of Different Loan product 42
4.6 Target Market for Loans & Advances 45
4.7 CREDIT CATEGORIES 48
4.8 Organization structure for credit operation 49
4.9 PREPARATION/PROCESSING OF CREDIT
PROPOSALS
50
4.10 CREDIT MONITORING 51
4.11 Some important customer 52
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4.1 Difference between loans and advances
Both are balance sheet items.
LOAN: Loan is an amount given for a specified period and is recoverable with a
particular interest rate.
ADVANCES: advance mean it is given for a temporary basis to meet out cause (say)
purchases, travel expenses etc, Interest is not charged on this advance amount.
4.2 CSR activities of Jamuna Bank Limited
Jamuna Bank Foundation (JBF), a non-profit subsidiary of Jamuna Bank Limited,
has established with a view to playing important role in the field of Corporate Social
Responsibilities for the cause of destitute/unprivileged segment of the society and for
socio-economic development of the country. The following onerous task of fulfilling
commitment to the society is commendably undertaken by Jamuna Bank Foundation
since its inception:
(1) Scholarship for the unprivileged & disabled but meritorious students, (2) Blood
donation by the employees of Jamuna Bank Limited, (3) Free eye camps, (4) Relief
for the disaster affected people, (5) Distribution of blankets among the cold prone
destitute, (6) Sewing machine training centers for assisting unprivileged women of the
society, (7) Launching anti-drug movement by arranging seminar, rally, publishing
stickers and established an anti-drug care center (now at Rokeya smarani, Mirpur,
Dhaka), (8) Old Home for the neglected old aged persons, (9) Arranging Art
competition for the children, (10) Holding seminar on Holy Ramadan & Qirat
competition, (11) Model Village at Thakurgoan, (12) Donation of Tk.50.00 lac to the
Muktijuddho Jadughor, (13) Medical Team at Biswa Ejtema (Tongi), (14) Solar
Village at Kishoregonj, (15) Vocational Training Center at Rayerbazar, Dhaka, (16)
Free Primary School for the slum dwellers at Rayerbazar, Dhaka, (17) Financial
assistance every month Tk. 25000/- to Mr. Binod Bihari Chowdhury, a valiant
freedom fighter who fought against British rule and who was a Co-fighter of Shaheed
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Masterda Surja Sen. The assistance will continue for rest of the time of his life, (18)
Financial Assistance of two martyred Army Officers in BDR Carnage at Peelkhana,
Dhaka and one Army Personnel killed in Helicopter crash at Ghatail, Tangail, (19)
Mobile Medical Team, (20) Relief for natural disaster affected Peoples, (21) Jamuna
Bank Madrasa at Rayerbazar, Dhaka, (22) Tree Plantation Program, (23) Financial
support to poor people for treatment, (24) Cleft Lip/Cleft Palate Operation (Country-
wide) and (25) many other activities.
4.3 Key Financial Indicators
Tk. In million
Particulars 2011 2010 2009 2008 2007
Deposit 70508.05 60673.56 42356.20 27307.94 20924.02
Loans & Advances
56611.79 49430.50 32287.66 21036.86 16617.45
Import 55907.00 61034.50 46685.00 30311.71 22191.84
Export 57929.40 41860.40 21407.00 18617.43 13990.33
Guarantee 5687.20 6620.00 2908.50 2648.40 2032.50
Remittance 3360.03 1594.11 2657.64 3165.00 2506.00
% NPLs 2.86 1.83 2.2 2.84 5.06
Profit after tax
1330.20 1066.38 923.12 476.43 89.11
Total Capital 7552.79 6350.02 3997.66 2444.34 1872.72
EPS (in Tk.) 3.65 2.92 5.67 3.62 0.73
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4.4 PRODUCT AND SERVICE OF JAMUNA BANK LTD
JBL is a full-service Bank with a diverse array of comprehensive range of carefully
tailored financial services and customer-friendly uncomplicated banking products
geared to meet the needs of all customer segments. JBL’s corporate culture is to look
for Professional excellence, new ideas & new methods to encourage creativity, to
provide best possible customer services. Products & Services of JBL can be broadly
classified as follows:
Products & Services of JBL
Deposit Products: Saving Account (SB) Current Account (CD) Short Term Deposit
(STD) Fixed Deposit Receipt
(FDR) Special Deposit
Schemes Lakhpati Deposit
Scheme Millionaire Deposit
Scheme Kotipati Deposit
Scheme Double Growth Deposit
Scheme Triple Growth Deposit
Scheme Monthly Benefit
Scheme Monthly Savings
Scheme Marriage Deposit
Scheme Education Savings
Scheme
Loan / Investment Products: General Loan Facility SME Credit SchemeRetail Credit Products
Project Financing Working Capital
Financing Agriculture Loan Consumer Credit Lease Financing Hire Purchase SME Loan House Building Loan Personal Loan For
Women Loan Against Share &
Securities Import Financing Export Financing Syndication Loan
Other Services / Electronic Products: International
Trade Finance Trading of Govt.
Treasury Bond & Other Govt. Securities
Corporate Banking
Remittance and collection
Tele Banking SMS Banking Internet Banking 24 hours banking:
Q-Cash ATM Facility
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Some Special Terms & Conditions for all the Schemes
Bank reserves the right to close the scheme if customers fail to deposit 3-
consecutive installments.
If the Scheme is closed within 6-months, customer will get the deposited amount
only and no interest/profit will be paid for the Scheme. If it is closed after 6-
months, customers will get the deposited amount along with the interest at the
normal savings rate up to the time of closure.
Duties and taxes on the deposit, if any, are payable by the customers as per
government rules.
The above figures are indicative only and subject to change from time to time.
Money Laundering Prevention Act shall be exercised as per rules of Bangladesh
Bank.
4.5 DESCRIPTION OF DIFFERENT LOAN PRODUCTS
Depending on the various nature of financing, all the lending activities have been
brought under the following major heads:
a) Loan (General)
Short term, Medium term & long term loans allowed to individual/ firm/ industries for
a specific purpose but for a definite period and generally repayable by installments by
under this head. This type of lending are financing under the categories.
Large & medium scale industry
Small & cottage industry
Agriculture
b) House building Loan (General)
This type of loan is allowed to individual or enterprise for construction of house,
like residential and commercial basis. The installment is made by monthly with in
a specific period.
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c) House building loan (staff)
Employee of the Jamuna Bank Limited can be take loan under this category for
purchase or construction of house.
d) Cash Credit (Hypo)
Advance allowed to individual or Firm for trading as well as wholesale purpose or
to industries to meet up the working capital requirements against hypothecation of
goods as Jamuna Bank Limited security fall under this type of lending. It is a
continuous credit. It is allowed Linder the categories.
Commercial lending - when the customer is other than a industry.
Working capital when the customer is an industry.
e) Cash Credit (Pledge)
Financial accommodation to both individual and firm for trading as well as for
wholesale or to industries as working capital against pledge of goods as Jamuna
security fall under this category. It is continuous credit.
f) Hire Purchase
It is installment credit under which the Hire Purchase agrees to take the goods oil
hire at a stated rental, which is inclusive of the repayment of principal as well as
interest inclusive of the re payment of principal as well as rent for adjustment of
the loan within a specified period.
g) Lease Financing
Lease means a contractual relationship between the owner of the asset and its user
for a specified period against mutually agreed upon rent. The owner is called the
Lesser and the user is called the Lessee. Lease finance is one of the most
convenient sources of financing of assets via machinery, equipment vehicle, etc.
The user of the assets i.e. Lessee is benefited through tax advantages, conserving
working capital and preserving debt capacity. Moreover, Lease is an off-balance
sheet item i.e. lease amount is not shown in the balance sheet of the lessee and
does not affect borrowing capacity. Leasing enables the lessee to avail the services
of a plant or equipment without making the investment or incurring debt
obligation. The Lessee can use the asset by paying a series of periodic amounts
called "lease payment" or "lease rentals" to the owner of the asset at the
predetermined rates and generally in advance. The payments may be made
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monthly or quarterly. Jamuna Bank Ltd., the highly capitalized private
Commercial Bank in Bangladesh has introduced lease finance to facilitate funding
requirement of valued customers & growth of their business houses.
h) Consumer Credit Scheme (CCS)
It is a special credit scheme of the bank finance purchase Of Consumer's durable
to the fixed income group (like middle class, lower class, and can be upper class)
to raise their living standard. This loan allowed on soft terms against personal
guarantee and deposit of specified percentage of equity by the customer .The loan
is repayable by monthly installment within a fixed period.
i) SOD (General)
Advances allowed to the individual or firm against their financial obligation,
customer take SOD under lien oil FDR, PSP BSP, Insurance Policy or Share. Lien
must be made by specific bank margin. This may or may not be a continuous
credit.
j) SOD (Others)
Advanced allowed against of work order for execution of contractual works. It is
generally allowed for a definite period and specific purpose. It is not a continuous
credit.
k) LIM
This is temporary advance connected with import, which is known as post import
finance, it is “Commercial Lending”. Advances allowed for retirement of shipping
documents and release of goods by pledge in warehouse under bank's lock and
key.
l) LTR
Under this type of' credit tile goods are handed over to the importer in trust with
the arrangement that sale proceeds should be deposited to liquidate tile credits
within a given period.
m) Export Cash credit (ECC)
A Customer allowed for exports of goods that can apply for export cash credit.
Tile credit must be liquidated out of export proceeds within 180 days.
n) Packing Credit (PC)
It is also "Export Credit". The condition is as on the ECC. Credit against specific
L/C for processing or packing of goods to be exported.
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o) FDBP
Payment made to a party through purchase of a foreign documentary bills falls
under this head. This temporary advance is adjustable from the proceeds of the
negotiable shipping/ export documents. It falls tinder the category Export Credit".
p) LDBP
Payment made to a party through purchase of foreign documentary bills under this
head. This temporary liability is adjustable from proceeds of the bill.
q) Time Loan
This is one time financial accommodation for short period maximum 12 months to
meet some specific purpose. The loan is adjustable within the validity and not
renewable and no transaction is allowed.
4.6 TARGET MARKET FOR LOANS & ADVANCES
Agro Processing Industry
Textile Spinning, Weaving, Knitting and Dyeing & Printing Industry
Export Oriented Garments, Sweater and Garments Accessories
Food & Allied Industry
Paper & Paper Products
Engineering, Steel Mills, Chemical, Pharmaceuticals, etc.
Telecommunications
Computer Software and Information Technology
Manufacturing of artificial flowers
Electronics
Infrastructure
Oil & Gas
Liquefied Petroleum Gas (LPG)
Compressed Natural Gas (CNG)
Ceramics
Small &Medium Enterprises (SME)
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4.7 CREDIT CATEGORIES
As initiated by Bangladesh Bank vide BCD Circular No. 33 dated 16-11-89 different
kinds of lending were subdivided into 11 categories i.e. 01-01-90 which was
subsequently reduced to 9 vide BCD Circular No. 23 dated 09-10-93 and again to 7
sectors vide BCD Circular No.8 dated 25.04.94 for fixation of rates of interest by the
individual banks on competitive basis depending on the cost of Funds, prevailing
market condition and monetary trend of the country.
Loan and advances have primarily been divided into two major groups:
a) Fixed term loan: These are the advances made by the Bank with fixed
repayment schedules. The term of loan are defined as follows:
Short term : Up to 12 months
Medium term : More than 12 and up to 36 months
Long Term : More than 36 months
b) Continuing credits: These are the advances having no fixed repayment
schedule, but have an expiry date at which it is renewable on satisfactory
performance.
Further all categories of loans are accommodated under the 7 sectors as under:
I. Agriculture
Credit facilities to the agricultural sector falls under this category. It is subdivided
into two major heads:
a) Loans to primary producers: This sector of agricultural financing refers to the
credit facilities allowed to production units engaged in farming, fishing,
forestry or livestock.
Loans to processors or traders of agricultural products are not to be categories
as agricultural loans. Loans to tea gardens for production are treated as
agricultural loan, but loans to tea gardens for export should be treated under
the category "Export Credit". Similarly medium and long-term loans to tea
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gardens are categorized as industrial term lending.
b) Loans to input dealers/distributors: It refers to the financing allowed to input
dealers and (or) distributors in the agricultural sectors. Agricultural loans may
include short, medium and long fixed term loans as well as continuing credits.
As such, it may fall under the head "Loan (Gen)/Hire-Purchase/Lease
Financing".
II. Term Loan for Large & Medium Scale Industry
(“Large Industry” is defined to include all industrial enterprises whose total fixed
cost / replacement cost excluding land and factory building is over Tk. 100 million.
Medium Industry is defined to include all industrial enterprises whose total fixed
cost/ replacement cost excluding value of land and factory building is between
Tk.15 million to Tk. 100 million.) This category of advances accommodate the
medium and long term financing for acquiring capital machinery of new Industries
or for BMRE of the existing units who are engaged in manufacturing goods and
services. Term financing to tea gardens may also be included in this category
depending on the nature and size. As the financing under this category have fixed
repayment schedule it falls under the head "Loan (Gen)/Hire-Purchase/Lease
Financing".
III. Term Loans to Small & Cottage Industries
(“Small Industry” will mean enterprises whose total fixed cost / replacement cost
excluding land and factory building is not more than 15 million.) No short term or
continuing credits are to be included in this category. Medium & Long term
credits are also included under this category. Like the Large & Medium Scale
Industry it is also allowed in the form of "Loan (Gen)/Hire Purchase/Lease
Financing".
IV. Working Capital
Loans allowed to the manufacturing units to meet their working capital
requirements, irrespective of their size - big, medium or small, fall under the
category. These are usually continuing credits and as such fall under the head
"Cash Credit"
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V. Export Credit
Credit facilities allowed to facilitate export of all items against Letter of Credit
and/or confirmed export orders fall under this category. It is accommodated
under the heads "Export Cash Credit (ECC)", Packing Credit (PC), Foreign
Documentary Bills Purchased (FDBP), Local Export Bills Purchased etc.
However, bills discounted / purchased against supply of goods and services to
companies / industries which are located in the country and not involved in
export / deemed export shall not fall under export credit.
VI. Commercial Lending
Short term loans and continuing credits allowed for commercial purposes other
than exports fall under this category. It includes import financing, financing for
internal trade, service establishment, etc. No medium and long term loans are
accommodated here. This category of advances are allowed in the form of (I)
Loan against imported merchandise (LlM), (ii) Loan against trust receipt (LTR),
(iii) Payment against import documents (PAD), (iv) Secured Overdrafts (SOD),
(v) Cash Credit (CC), (vi) Loan (Gen), etc. for commercial purposes.
VII. Others
Any loan that does not fall in any of the above categories is considered under the
category "Others". It includes loan to (I) transport equipments, (ii) construction
works including housing (commercial/residential), (iii) work order finance, (iv)
personal loans, etc.
VIII. SME Financing:
Bangladesh Bank vide BRPD Circular No. 07 dated 03.11.2004 has given
prudential regulatory guidelines for Small Enterprise Financing.
The role of Small and Medium Enterprise is very crucial in the economic
development of the county. Jamuna Bank Limited has separate SME Financing
Scheme duly approved by the Board. There are several products, modalities and loan
ceiling for SME financing. SME Cell within Corporate Division handles SME loans.
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4.8 ORGANIZATIONAL STRUCTURE FOR CREDIT OPERATION
Head Office
Corporate Division
Credit Division
Credit Administration
Division
Internal Audit
General CreditDeptt.
SMEDeptt.
Trade Finance Deptt.
LeasingDeptt.
Syndication & Structured
Finance Deptt.
CRM Deptt.
Recovery and Legal Deptt.
Branch
Head of Branch
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Board
EC
MD
DMD
Credit Marketing Team
Credit approval Team
Credit administration Team
Credit Recovery Team
4.9 PREPARATION/PROCESSING OF CREDIT PROPOSALS
Credit Proposals shall be prepared in the approved format of the Bank
enclosing/furnishing documents/papers/information:
1. Pre-sanction Inspection Report containing KYC
2. Request for Credit limit of customers Project Profile/Profile of Business
3. Copy of Trade License duly attested
4. Copy of TIN Certificate
5. Certified copy of Memorandum and Articles of Association, Certificate of
Incorporation, Certificate of Commencement of Business, Resolution of
Board of Director, Partnership Deed (where applicable)
6. Personal Net worth Statement of the Owner/Director/Partner/Proprietor in
Bank's format
7. Valuation Certificate in Bank's format along with photograph of collateral
security with detail particulars on the back duly authenticated by the Branch
Manager
8. Three (3) years Balance Sheet and Profit and Loss A/C
9. CIB Enquiry Form duly filled in
10. Credit Risk Grading for credit facilities irrespective of amount other than
consumer loan and SME loan covered under consumer and SME guidelines.
11. Stock Report duly verified
12. Credit Report from other Banks
13. Indent/Preformed Invoice/ Quotation (where applicable)
14. Price Verification Report (where applicable)
15. Statement of A/C (CD/SB/CC) for the last twelve (12) months. In case the
customer maintaining account with other Bank. Statement of Account for the
last twelve (12) months of the concerned Bank should be furnished.
16. In case of renewed/enhancement of credit facility Statement of A/C showing
Debit Turnover, Credit Turnover, highest drawing, lowest drawing, total
income earned, detailed position of existing liabilities of the customer i.e. Date
of sanction, Date of Expiry, Present outstanding, Remarks, if any.
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17. Declaration of the customer of the name of sister/allied concerns and liabilities
with other Banks, if any, and an undertaking to the effect that they have no
liability beyond those declared
18. In case of L/C proposal, detailed performance of L/C during the last year i.e.
No.. and date of L/C opened, commodity, L/C value, Date of creation of PAD,
date of retirement, mode of retirement etc.
19. In case of BTB L/C proposal -
20. Detailed list of machinery, production capacity, working capital (BTB L/C)
assessment, existing export L/C in hand mentioning date of shipment, detailed
position of outstanding BTB L/C/Accepted Bills, progress of production and
expected date of shipment, statement of outstanding FDBP/IDBP, if any,
Quota Position, Inspection Report, Copy of valid Bonded Ware House
License, Customs Clearance of dispute, if any.
21. Whether the applicant is Shareholder/Director of Jamuna Bank Limited as per
definition of Banking Companies Act.
22. Justification/consideration for the facility.
4.10 CREDIT MONITORING
a) Computer generated list of Exceptional Advance to be obtained from the
Branches on daily basis which shall be examined at CRM and any major
exception be brought to the knowledge of Senior Management.
b) Credit Administration Unit, Head Office shall bring the list of documentation
shortfall/deficiencies to the knowledge of Senior Management at regular basis
and corrective measures shall be taken.
c) Credit turnover in cash credit and overdraft accounts, past dues, collateral
shortfall, covenant Branch shall be reviewed on a regular basis.
d) Recurring transactions are not allowed for one time transaction/limit.
e) Credit limit expiry date diary shall be maintained and followed-up.
f) Use of Loan money shall be monitored through analysis of financial
statements.
g) Financial statements of the customers shall be obtained on a regular basis and
changes in the financial condition shall be monitored.
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h) Borrowers shall be communicated ahead of time as and when installments are
due.
i) Non-payment and late payment of installment shall be communicated to the
Senior Management.
j) CIB Report from Bangladesh Bank is obtained and reviewed on a periodic
basis.
k) Progress against work order/contract financed by the Bank is periodically
reviewed.
l) Timely renewal of limit shall be ensured informing Branches two months
ahead of expiry dates.
4.11 Some important customers:
1. Windy apparel Ltd.
2. Knit horizon Ltd.
3. Darda knitwear Ltd.
4. Epyllion Ltd.
5. Dress up Ltd.
6. Mirabella dress Ltd.
7. Tuba garments Ltd.
8. Tuba fashion Ltd.
9. Tuba textile Ltd.
10. Jamuna knitting & dyeing Ltd.
11. Imperial saweater Ltd.
12. Biswas synthetic Ltd.
13. Symtex Ltd.
14. Mrs industrial Ltd.
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CHAPTER- V : Findings And Recommendation
5.1 SWOT Analysis
5.1.1 Strength
5.1.2 Weakness
5.1.3 Opportunity
5.1.4 Threats
54
54
54
55
56
5.2 The Overall Findings of Jamuna Bank Limited 56
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5.1 SWOT Analysis
SWOT analysis is the detailed study of an organization’s exposure and potential in
perspective of its strength, weakness, opportunity and threat. This facilitates the
organization to make their existing line of performance and also foresee the future to
improve their performance in comparison to their competitors. As though this tool, an
organization can also study its current position, it can also be considered as an
important tool for making changes in the strategic management of the organization.
5.1.1 Strengths:
— Jamuna Bank Limited has already established a favorable reputation in the
banking industry of the country. It is one of the leading private sector
commercial banks in Bangladesh. The bank has already shown a tremendous
growth in the profits and deposits sector.
— Jamuna Bank Limited has provided its banking service with a top leadership
and management position.
— Jamuna Bank Limited has already achieved a high growth rate accompanied
by an impressive profit growth rate in 2011. The number of deposits and the
loans and advances are also increasing rapidly.
— Jamuna Bank Limited has an interactive corporate culture. The working
environment is very friendly, interactive and informal. And, there are no hidden
barriers or boundaries while communicate between the superior and the
employees. This corporate culture provides as a great motivation factor among
the employees.
— Jamuna Bank Limited has the reputation of being the provider of good quality
services to its potential customers.
5.1.2 Weaknesses:
— The main important thing is that the bank has no clear mission statement and
strategic plan. The bank doesn’t have any long-term strategies of whether it
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wants to focus on retail banking or become a corporate bank. The path of the
future should be determined now with a strong feasible strategic plan.
— The bank failed to provide a strong quality-recruitment policy in the lower and
some mid level position. As a result the services of the bank seem to be Deus
in the present days.
__ The poor service quality has become a major problem for the bank. The
quality of the service at Jamuna Bank Limited is higher than the Dhaka Bank,
NCC BANK or Dutch Bangla Bank etc. But the bank has to compete with the
Multinational Bank located here.
— Some of the job in Jamuna Bank Limited has no growth or advancement path.
So lack of motivation exists in persons filling those positions. This is a
weakness of Mutual Trust that it is having a group of unsatisfied employees.
__ In terms of promotional sector, Jamuna Bank Limited has to more emphasize
on that. They have to follow aggressive marketing campaign.
__ The default risks of all term loans have to be minimized in order to sustain in
the financial market. Because of default risk the organization may become
bankrupt. Jamuna Bank Limited has to remain vigilant about this problem so
that proactive strategies are taken to minimize this problem if not eliminate.
5.1.3 Opportunities:
_ In order to reduce the business risk, Jamuna Bank Limited has to expand their
business portfolio. The management can consider options of starting merchant
banking or diversify into leasing and insurance sector.
— The activity in the secondary financial market has direct impact on the primary
financial market. Banks operate in the primary financial market. Investment in
the secondary market governs the national economic activity. Activity in the
national economy controls the business of the bank.
— Opportunity in retail banking lies in the fact that the country’s increased
population is gradually learning to adopt consumer finance. The bulk of our
population is middle class. Different types of retail lending products have great
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appeal to this class. So a wide variety of retail lending products has a very large
and easily pregnable market.
— A large number of private banks coming into the market in the recent time. In
this competitive environment Jamuna Bank Limited must expand its product
line to enhance its sustainable competitive advantage. In that product line, they
can introduce the ATM to compete with the local and the foreign bank. They
can introduce credit card and debit card system for their potential customer.
— In addition of those things, Jamuna Bank Limited can introduce special
corporate scheme for the corporate customer or officer who have an income
level higher from the service holder. At the same time, they can introduce
scheme or loan for various service holders. And the scheme should be separate
according to the professions, such as engineers, lawyers, doctors.
5.1.4 Threats:
— All sustaining multinational banks and upcoming foreign and private banks
pose significant threats to Jamuna Bank Limited. If that happens the intensity
of competition will rise further and banks will have to develop strategies to
compete against these local and foreign banks.
Other commercial banks are offering higher salary that may create problem for Jamuna Bank Limited to retain their experienced
5.2 The Overall Findings of Jamuna Bank Limited
From the above observations it was found that most of customers liked the policy of
the bank regarding reduced bank charges. Moreover, the clients are also satisfied with
the bank’s policy on no hidden charge, trustworthy banker-customer relationship and
dependable credit counseling. The customers also opine that Jamuna Bank provides
privacy of credit information. But very Poor performance was observed regarding
collateral security free lending and widest branch network for credit operation.
However most of the customers (73%) give favorable opinion regarding credit
management of Jamuna Bank Limited.
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So there is more opportunity for growth and development by increasing branch
network and utilizing resources. If the bank considers both the positive and negative
view of the customers regarding Credit management and emphasize those with great
importance the bank will be able to attract more customers.
CHAPTER- VII : Conclusion & Recommendations 58-59
6.1 Recommendations 58
6.2 Conclusion 59
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6.1 RECOMMENDATION
There are some recommendations for Jamuna Bank Limited that has to be mentioned
as below:
Should use advanced software in clearing
Train up the employees to work more efficiently
Increase the number of employees
The branch must start money exchange facilities
Bank should offer more products and services
Expand the number of branches not only in urban area but also in rural area
The branch should come up with more marketing, CRM activities.
The branch should come up with some effective CSR activities.
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6.2 Conclusion
Today’s service industry is getting more competitive, the banking service is no
exception. In the context of banking great importance is needed to ensure more
customer satisfaction. Therefore, from this study Jamuna Bank Limited can obtain the
indications on which of the issues they have to put more emphasis on to hold the
greater customer adaptation in terms of credit management.
Jamuna Bank Limited made good progress in this segment. This bank follows all the
credit & risk management guidelines of Bangladesh Bank issued from time to time.
Being a compliance Bank it maintains recovery management up to the maximum
possible extent. As a result, classified loans have been reduced significantly.
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BIBLIOGRAPHY
1. Jamuna Bank Limited Annual Report-2011.
2. Credit Policy & Guidelines of Jamuna Bank Limited
3. Web-site of Jamuna Bank: www.Jamunabankbd.com
4. Website: www.wikipedia.com
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