1

Chapter
one

Introduction
 2

Introduction

The internship program of BBA is a partial requirement to take test of real life challenge conducted by the
intern. It is the important part of BBA program. This program is three month duration. During this period I
have worked closely with the employee of Uttara Branch. This report presents the outcomes of the study
during the internship- Janata Bank Limited. I was assigned to topic “Practice of Retail
Loan&AdvanceofJanata Bank Limited.

Internship Report prepared as a requirement for the completion of the BBA program of the Independent
university, Bangladesh. The primary goal of internship is to provide an on the job exposure to the student
and an opportunity for translation of theoretical conceptions in real life situation. Students are placed in
enterprises, organizations, financial institutions, research institutions as well as development projects. The
program covers a period of 8-12 weeks of organizational attachment.

After the completion of Four-year academic BBA program I, Md.Enamul Hoque, student of Independent
University, Bangladesh was placed in Janata Bank Bangladesh Limited for the Internship Program. As a
requirement for the completion of the program I need to submit a report, which includes “Retail Loan&
Advance of Janata Bank Ltd”.

1.1 Background of the study

It is very important to have a practical application of the knowledge acquired from any academic course of
the study, because only a lot of theoretical knowledge will become fruitless if it is not applied in the
practical life. So we need proper application of our knowledge to get some benefit from our theoretical
knowledge to make it fruitful. Such an application can be possible through internship.
The internship program exercise a significant importance as it enables a student to familiar with the
practical business activities. The student work closing with the people of an organization and learn about the
function of that organization. This program enables a student to develop his analytical skill and scholastic
aptitude.
As part of the internship program of bachelor of Business Administration course requirement, I was
assigned for doing my internship in Janata bank Ltd for the period of three months. During my internship
period in the Janata Bank Ltd. To Branch, I worked under Credit,Remittance, Deposit, and loan and
advance department. I worked under the supervision of principal & executive officer and assistant officer,
for their assistance and guidance in completing this report.

1.2 Origin of the Report

Credit is the central function, as it is known as the heart of financial institutions like Banks. Because
through effective and efficient credit practice, overall risk of the institutions can be alleviated. As so, each
banking institutions follows the policies and rules of CRM provided by Bangladesh Bank. Bangladesh Bank
introduced new accounting policies with respect to loan classification, provisioning and interest suspense in
1989 with a view to attaining international standards over a period of time. As a result, all the financial and
non-financial institutions are involved in credit practice and concentrating more to provide better service
with maintaining a better credit policy to uphold its own financial growth.
Bachelor of Business Administration (BBA) program requires usually a three months attachment with an
organization followed by a report assigned by the supervisor in the organization and endorsed by the faculty
 3

advisor. As a mandatory requirement, opportunity of doing the internship was derived from the organization
‘JanataBank Limited.’ During the period of 10 weeks in Credit segment of CRM Division (assigned from
the organization), the organizational works and other relevant works and facts of the division was worthy
learning for me. With the help of my organizational supervisor, it was able to gather understanding on
assessing the creditworthiness of the borrowers through different issues, terms and policies. Consequently,
the topic for internship report “Retail Loan& Advance: JBL” has been chosen by me and approved by my
Academic Supervisor to prepare. This report includes the learning of the Credit division that was
experienced during internship period and also other relevant functional works on Credit.

1.3 Objective of the report

This report emphasizes the importance of Retail loan & Advance of banking in the context of Credit Risk
Management of the commercial banks in Bangladesh along with the conditions of Janata bank Limited. A
huge work has been performed for preparing this report. The objectives behind this research paper are
pointed below:

Broad Objectives
The broad objective of this report is to figure out the situation of banking sector along with credit policies
governed by the CRM division of various commercial banks of Bangladesh like Janata bank Limited. In this
report, to measure performance in lending of the commercial banks is another objective of the report.

Specific Objectives
Other specific objectives have also been determined for this report:
Other specific objectives have also been determined for this report:
 To point out the opportunities of credit financing.
 To have a brief understanding on the CRM policies and procedures.
 To get an idea on the overall performance of The JBL.
 To figure out The JBL’s position in the banking industry in SME context.

1.4 Scope of the Report

The report focuses mainly the potentials of Credit practice deriving from the efficient Credit Risk
Management. Besides the areas that the report is been prepared are-
 Credit risk appraisal system under BB policies for credit risk management.
 Credit risk management of the JBL
 Credit contribution in the economy.
Each area mentioned above is related to the topic variable- Credit Analysis and Credit Risk Management.
Statistical data and the analysis have been included that focuses on the topic. Lastly, all the areas and parts
of the report have been critically analyzed to fulfill the objective of the report.

1.5 Literature Review

For financial institutions, there is a wealth of both theoretical and empirical literature that establishes the
importance of economic stability for financial sector development; the preeminence of competitive market
forces to establish interest rates and allocate credit; the critical role of supporting infrastructure (regulatory,
 4

supervisory, legal, accounting, and auditing systems); and the need for well-governed and well-managed
financial institutions.
main focuses are on the nature of the intermediations process, the unique features of intermediaries and
instruments and the trends in the development of new instruments in financial risk management. The
principal focus of this project has been on how well banks and other financial firms perform in serving their
customers and in providing acceptable returns to their owners.
In present, Credit sector of commercial banks are grabbing the interest of all economists, scholars, as well as
general people. Its rapid growth and increased contribution to the GDP of the economy motivated the
financial and non-financial institutions to provide better credit services. But though there are some obstacles
of credit financing like high risk as low capitalization, insufficient assets, inability of meeting collateral
requirements etc. of the borrowers, an efficient Credit Risk Management can drive the institutions to
provide financing to needy community.
Therefore, this report is prepared to work out that an efficient CRM can sustain the credit financing through
the better services provided by the commercial banks in Bangladesh.
 5

Chapter
Two

Organizational Part
Janata bank Limited
 6

2.1. Background of Janata Bank Limited

Janata Bank Limited, one of the state owned commercial banks in Bangladesh, has an authorized capital of
Tk. 20000 million (approx. US$ 283.33 million), paid up capital of Tk. 11000.00 million. Immediately after
the emergence of Bangladesh in 1971, the erstwhile United Bank Limited and Union Bank Limited were
renamed as Janata Bank. On 15th November, 2007 the bank has been corporative and renamed as Janata
Bank Limited. Janata Bank operates through 881 braches including 4 overseas branches at United Arab
Emirates. The Bank employs more than 15020 persons.

The Board of Directors is composed of 13 (Thirteen) members headed by a Chairman. The Directors are
representatives from both public and private sectors.

The Bank is headed by the Chief Executive Officer & Managing Director, who is a reputed banker. The
corporate head office is located at Dhaka with 10 (ten) Divisions comprising of 38 (thirty eight)
Departments.

2.2. Vision

To become the effective largest commercial bank in Bangladesh to support socio- economic development of
the country and to be a leading bank in South Asia.

2.3. Mission
Janata Bank Limited will be an effective commercial bank by maintaining a stable growth strategy,
delivering high quality financial products, providing excellent customer service through an experienced
management team and ensuring good corporate governance in every step of banking network. The mission
of the bank is to actively participate in the socio- economic development of the nation by operating a
commercially sound banking organization, providing credit to viable borrowers, efficiently delivered and
competitively priced, simultaneously protecting depositor’s funds and providing a satisfactory return on
equity to the owners.
2.4. Objective
The objectives for which the bank is established are as follows
 To carry on, transact, undertake and conduct the business of banking in all branches.
 To receive, borrow or to raise money on deposit, loan or otherwise upon such terms as the company
may approve. To provide for safe-deposit vaults and the safe custody of valuables of all kinds.
 To carry on business as financiers, promoters, capitalists, financial and monitory agents,
concessionaires and brokers, dealing in exchange, securities and all kinds of mercantile banking etc.
The Bank divides its operation mainly three parts:- General Banking, Foreign Exchange and Loan &
Advances.
General Banking: General Banking is the starting point of all the banking operating. General Banking department aids in
taking deposits and simultaneously provides some ancillaries services. It provides those customers who come frequently
and those customers who come one time in banking for enjoying ancillary services. In some General Banking activities,
there is no relation between banker and customers who will take only one service form bank. Bank in confined to provide
the service everyday general banking is also known as retail banking.
 7

General Banking consists of the many sections in the branch. These are:

General Banking

Account Opening
Section

Local Remittance
Section

Bills and Clearing

Section

Cash Section

Dispatch Section

Foreign Exchange: Every sovereign country in the world has a currency, which is a legal tender in its
territory, and this currency cannot be used as money outside its boundaries. So when ever a country buys or
sells goods and services from across its boundaries, the resident of the two countries have to exchange
currencies.
 Feature of Foreign Exchange Markets-
Global Markets, 24 Hours Market, No Geographical Location etc.
 Foreign Exchange Rates and products-
TT, Bills of collection rates, OD transfer rate, TDY, Spot, Tom, Fwd etc.
Loans and advance:
Loans and advances are started at gross amount. Provision and interest suspense against loans and advances
are shown separately as liability. Interest income is accounted for on accrual basis until the loans and
advances are defined as Special Mention Account (SMC) or classified as per Bangladesh Bank guidelines.
Provision for loans advances are given below-
General provision on: consumer Financing (House financing (2%), Loan to Professional (2%), and other
than (5%), all other credit, small and medium Enterprise (provision rate-1%), short term Agriculture
(provision rate-2%) etc.
Specific provision on: Substandard loans and advances (provision rate-20%), doubtful loans and advances
(provision rate-50%), Bad/Loss loans and advances (provision rate-100%)

2.5. International Award

Recently The Bank has been recognized internationally and domestically for its good performance.
 Janata Bank Limited achieved remarkable progress in the year 2010.
 International Award -"World's Best Bank Award-2009 in Bangladesh
 International Award -"World's Best Bank Award-2008 in Bangladesh
 International Award -"World's Best Bank Award-2007 in Bangladesh
 8

 International Award -"World's Best Bank Award-2006 in Bangladesh

2.6. Business Prospects

 Surplus Capital Adequacy after IPO subscription
 Business expansion in capital market,Gradual expansion of branch network and Progressive
automation of the branches
 Expansion of ATM and Credit Card

2.7. Internet Banking

Internet Banking NRB: Internet Banking of Janata Bank Limited provides the following facilities:
 Current/Savings/STD account status
 FDR account status
 Advance account status
 Loan account status
 Allow user to change their PIN code/password

Internet Banking General

Future facilities of Janata Bank Limited
 L/C Opening Request

 A/C Opening Request

 Internet A/C Opening Request

 Cheque Book Issue Request

 Standing Instructions and Others

2.8. FIG: Core Values of Janata Bank Limited

Profession
alism

Growth Diversify
JBL

Accountab
Dignity
ility

Integrity

2.9. Presentation of the programs of JBL

Some programs have in Janata Bank Uttara Model town. Some points are given below-
-Social corporate responsibility
 9

-Loan
-Advance
-Foreign trade
-Scheme
-Savings bound (JBL also provides different types of bounds)
-Remittance (tow types)
 Local Remittance
 Foreign Remittance etc.
Corporate Social responsibility: Janata Bank is aware of the responsibilities of corporate citizenship it is
their responsibility to improve the living standard of poor people, health care, Sports, education etc. That
system has no other banks.
Loans and Advances:

Total Loans and Advances of the Bank stood at tK166359 million as of 2009 as compared to TK 144678
million in 2008 , registering a growth rate of 14.86%. The bank attached due importance to sectoral needs in
sanctioning loans and advances during 2009 and credit facilities were extended mainly to productive
priority sectors.

Advances

180000
160000
140000
120000
100000
Advances
80000
60000
40000
20000
0
2005 2006 2007 2008 2009

Foreign Trade: In the pace of resurfacing the economy from world financial crisis , import and export
financing business was impressive in this year. During the year , the bank achieved export credit growth of
3.78%. While import credit growth reduced by 8.40% . Import remained confined mainly to consumers
goods, capital machineries and industrial raw matarials . Major export items were readymade garments,
shrimps, tea and non-traditional ones.
(Taka in Million)

Particulars 2010 2009 2008 2007 2006

Import 118515 118525 129413 84065 128809

Export 183744 88653 85418 71855 70897
Deposit Schemes
Savings Deposit(Intt: o5%), Short Term Deposit(Intt: 3.50%), Term Deposit(Intt: o5.00%),Janata Bank
Limited Sanchaya (Savings) Pension(Intt: o9.00),Current Deposit(Intt: o5%) , Fixed Deposit(Intt: 15%) ,
 10

Foreign Currency Deposit(Intt: o6%.00) , Monthly Savings Scheme(Intt: o7.oo%) , Monthly Profit Based
Savings Scheme(Intt: 07.50%) .

Remittance:

Foreign Remittance

Foreign Remittance means transfer of Foreign exchange from one country to another country through
banking or authorized channel. (Taka in Million)
Year Janata Bank Ltd Growth (%) National Growth (%)

2009 56190 22.35 738773 19.85

2008 45924 24.83 616442 36.41
2007 36788 25.70 451890 17.78
2006 29267 10.14 383665 28.83

Local Remittance: Local Remittance means transfer of money from one Place to another place in own
country through banking or authorized channel.
2.10. International Banking
Janata Bank Limited has already established a worldwide network and relationship in international Banking
through its 4 (four) overseas branches and 1198 foreign correspondents. The Bank has earned an excellent
business reputation in handling and funding international trade particularly in boosting export & import of
the count
2.11. New/ Special Products
 Financing IT Sector
 Financing of Industries
 Ready Cash
 Windows for SMEs
 Loan to Travel Agencies
 Loan to Diagnostic Centers
 NRB Escrow Account
 NRB Gift Cheque
2.12. Financial Highlights
Five years comparative Financial and Operational performance
(Taka in Million)
Particulars 2006 2007 2008 2009 2010
AuthorizedCapital 8,000 8,000 8,000 2,000 20,000

Paid up Capital 2,594 2,594 2,594 5,000 5,000

Reserve Fund 1,727 3,224 4,183 8,860 10,224
Deposits 182,947 198,636 221,336 246,175 286,567
 11

Advance 138,493 121,200 144,678 166,359 225,732

Investment 24,785 55,862 57,824 52,533 57,514
Revenue 16,272 18,522 20,922 24,074 30,614
Cost 12,059 13,559 13,919 15,496 18,577
Operating Profit 4,213 4,963 7,003 8,578 12,037
Provision for Loans / 10,707 11,698 9,051 8,748 8,975
Assets
Net Profit - 1,681 3,145 2,982 4,907
Export 70,897 71,855 85,418 88,653 118,515
Import 128,809 84,065 129,413 118,525 183,744
Total Number of 14,772 13,860 13,379 13,122 12826
Employees
No. of Foreign 1,198 1,198 1,202 1,208 1,215
Correspondent
No. of Branches 848 848 849 851 861
(Including 4
Overseas Br.)

997324
763164

722916

618321 611765

(Taka in Million)

2006 2007 2008 2009 2010

Fig: Grapicaly show the Financial Performance (2006to 2010)

Comment: Since, the Financial highlight of Janata Bank Limited is higher in 2010 it indicates the bank is
able to meet its better performance. Therefore, it can be said that the financial position of the bank is
satisfactory.
 12

Chapter
Three

Report part
 13

Retail loan
&
Advance
Janata Bank Limited

31
 14

Practice of Loan & Advance

Practice of Credit
According to the different product and services the bank has to provide to their customer, Loans & Advance
has the major impact in respect of both bank and also for their customer. The making of loan and advance is
always profitable for the bank. As banks assemble savings from the general people in the form of deposit,
the most important task is to disburse the said deposit as loans and advance to the mass people for the
development of commercial, industrial and the people who are in need of fund for investment. Like other
financial institution, the main purpose of the commercial bank is to make profit. Because loans and advance
is the main asset of the bank, from where the bank has their interest income, which is the main source of
income for the financial institution like bank. Mutual Trust Bank also knows the debt financing is cheaper
than equity financing. So, in this way the bank helps to build up the industrial infrastructure of the country
by giving them opportunity of being financed by using the debt capital. Loans & advance also helps to pull
up the operating and financial leverage. But to get the loans and advance the investors has to follow some
terms and condition which falls under the policy and practice of the bank instruction booklet.
3.1.1 Policy & Practice
1. Aggregate loans and advances shall not exceed times the Banks net worth or 65% of customers deposit
whichever is lower (excluding loans and advance covered by specific counter -finance arrangements).
2. Within the aggregate limit of loans and advances as mentioned in (1) above 50% of lending will be small
industry sector in accordance with prescribed norms of the government and the central bank in terms of the
banks objectives with 50% to the commercial sector. No term loans will be approved for the commercial
sector. Exceptions will be rare and will require approval of the Executive Committee.
3. All lending will be adequately secured with acceptable security and margin requirement as lay down by
the Head office credit committee.
4. The bank shall not incur any uncovered foreign exchange risk (currency exposure) in the lending of
funds.
5. The bank shall not incur any risk of exposure in respect of unmatched rates of Interest of funding of
loans and advances beyond 15% of outstanding loans and Advances.

6. End- use of working capital facilities will be closely monitored to ensure lending used for the purpose for
which they were advanced.
7. Country risk in loans and advances will be accurately identified and shall be within the country limits if
any approved for the bank. The same treatment will be given to country risk arising out of contingent
liabilities relating to Letters of credit and letters of guarantee.
 15

Credit
Products

Retail Corporate SME

1. JBL Home 1. Term 1.MTBKrishi.

Loan. 2.MTBMousumi.5
Finance.
3. MTB Small
2. JTB Auto 2. Working Business.
Loan. Capital Finance. 4.MTB Green
3. JBL Personal 3. Trade Finance Energy Loan
Loan. 4. Syndication
4. JBL Home & Structured
Equity Loan. Finance.
5. Offshore
Banking

Figure 3 – 1: Credit product

3.2 Credit Facilities:

JBL is providing different attractive credit facilities to the different class in society. As credit is the heart of
a bank JBL has felt to develop its credit facilities to the various class of society on their extreme need

3.2.1 Retail Products:

Under the retail banking arena of JBL, the organization is providing some awesome Loan products as
financial facilities. The products are:
3.2.1.1 JBL Home Loan:
Home Loan Scheme has been introduced to facilitate people to fulfill their dream of a home of their
own. It has been designed o help people to get home loans on easy terms and without any hassle.
Planning to own a home is one of life’s most rewarding challenges. Whether it is purchasing a new
house or a new apartment, JBL has a wide range of home loan options that can be customized to
customer’s specific need. An experienced, dedicated team of experts and a complete loan package is in
place, to meet all customers’ housing finance needs. JBL Home Loan helps the customers to fulfill
their dream.
 16

Features:

Aggregation of co-applicant’s income

Competitive interest rates
Quick and simple processing and approval time
Loan for apartment under construction
Partial or early settlement options available

Eligibility:
Any financially able person
Age: minimum 21 and maximum 65 years at loan maturity
For 100% cash covered loan: Age- minimum 18 and maximum 70 years at loan maturity
Minimum Income Range:

Salaried person Tk. 25,000

Self employed Tk. 30,000
Businessperson/Land lord/Land lady Tk. 40,000
Experience

Salaried person : 3 years

Self employed : 3 years
Businessperson : 3 years
Loan Takeover Plan:
An exclusive offer for other bank’s credit worthy customers who can transfer their Home Loan outstanding
to MTB with both preferential interest rate and waiver of processing fees.

Eligibility:
Minimum 12 months loan EMI repayment history with existing bank
Property location and other eligibility criteria of general loan are applicable

Benefits of Takeover Plan:

1% reduced rate from regular interest rate
Additional loan amount facility over takeover amount
No processing fee for takeover loan amount
No processing fee for additional loan amount
Required documents:
Loan application
Applicant’s National ID/Driving License/Passport copy
Photographs of applicants (studio photo)
Salary certificate for salaried person
Trade license for businessperson
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
 17

Apartment allotment letter/Deed of agreement/property ownership deed

Other all property related documents’ copy
3.2.1.2 JBL Auto Loan:
A person has desire to own a car to enhance his/her standard of living. JBL has come to help those people
who have kind of dream. JBL offer lucrative interest rates that would pleasantly surprise its customers.
MTB Auto Loans are built for utmost speed and competence. JBL Auto Loan is available for financing both
new and reconditioned cars.
Features:

Loan amounts from Tk. 3,00,000 to Tk. 20,00,000

Financing up to 80% of vehicle price
Flexible repayment of 12 - 60 months
No hidden charges
Competitive interest rate
Easy documentation and quick processing
Option for early settlement

Eligibility:

Age: minimum 21 and maximum 60 years at the end of loan maturity

Experience: Salaried executive total - 2 years
Business person/self employed - 2 years
Monthly income: Minimum Tk. 30,000

Loan Amount EMI schedule

12 24 36 48 60
3,00,000 27,007 14,475 10,327 8,274 7,059
4,00,000 36,010 19,300 13,769 11,032 9,412
6,50,000 58,515 31,363 22,374 17,926 15,294
7,50,000 67,517 36,188 25,816 20,684 17,647
10,00,000 90,023 48,250 34,421 27,578 23,529
15,00,000 1,35,034 72,375 51,632 41,367 35,293
20,00,000 1,80,046 96,499 68,842 55,156 47,057
 18

3.2.1.3 JBL Personal Loan:

MTBL has providing Personal Loan to its customers to fulfill their little needs with extreme emergency.
Craving to buy a new laptop? Thinking of a wonderful holiday? Need financial assistance for child’s higher
education? Want to purchase home appliances? Require marriage-related expenses? A JBL Personal Loan is
one-stop-solution for all financial needs to fulfill any of desires like above examples. JBL Personal Loan is
simple, convenient and quick.
Features:
Any purpose personal loan for salaried executives, business persons, land lord/ land lady and self
employed individuals

Loan amounts from Tk. 50,000 to Tk. 10,00,000

Flexible repayment option of 12 - 60 months
No hidden charges
Competitive interest rate
Easy documentation and quick processing
Option for early settlement

Eligibility:
Age minimum 21 and maximum 60 years at loan maturity
Experience:
Salaried person : 1 year with 6 months permanent employment status
Self employed : 1 year of practice in the profession
Businessperson : 2 years of involvement in the same nature of business
Minimum monthly income:
Salaried executive Tk. 15,000
Self employed Tk. 30,000
Businessperson/Land lord/Land lady Tk. 40,000
Loan Balance transfer or Take over:
Customers enjoying EMI based personal loan with other banks may enjoy the facility of Loan Balance
Transfer.

Eligibility:
Minimum 6 loan EMI repayment with existing bank
Minimum takeover loan amount is Tk. 200,000 and maximum Tk. 9,50,000

Benefits of Takeover Plan:

No processing fee for loan takeover or balance transfer
Interest rate will be 1% less than ongoing rate
Approved loan amount may be higher than the takeover loan amount
3.2.1.4 JBL Home Equity Loan:
MTB Home Equity loan provides a packaged financial assistance to individuals for fulfillment of their
dream home. It’s time to get customers’ coveted home by JBL Home Equity Loan.
 19

Features:
Loan for house construction, extension, renovation, face upliftment, finishing work
Loan amounts from BDT 5,00,000 to BDT 1,00,00,000
Loan tenor from 3 to 25 years
Loan amount up to 80% of the property value
Financing at different stages of construction work
Partial disbursement facility of approved loan
Aggregation of co-applicant’s income
Competitive interest rates
Quick and simple processing and approval time
Partial or early settlement options available

Eligibility:
Any financially able person
Age: minimum 21 to maximum 65 years at loan maturity
For 100% cash covered loan: Age - minimum 18 to maximum 70 years at loan maturity
Minimum Income Range:
Salaried person Tk 25,000
Self employedTk 30,000
Businessperson/Land lord/Land lady Tk 40,000

Experience
Salaried person : 3 years
Self employed : 3 years
Businessperson : 3 years

Loan Takeover Plan:

An exclusive offer for other bank’s credit worthy customers who can now transfer their Home Loan
outstanding to MTB with both preferential interest rate and waiver on processing fees.

Eligibility:
Minimum 12 months loan EMI repayment history with existing bank
Property location and other eligibility criteria of general loan are applicable

Benefits of Takeover Plan:

1% reduced rate from regular interest rate
Additional loan amount facility over takeover amount
No processing fee for takeover loan amount
No processing fee for additional loan amount
Required documents:
Loan application
Applicant’s National ID/Driving License/Passport copy
Photographs of applicants (Studio photo)
Salary certificate for salaried person
Trade license for businessperson
 20

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
Deed of agreement/property
 21

Chapter
Four

A General View of Loan Procedure

 22

There is no hard and fast procedure of managing credit, yet is should follow the instructions of the
Bangladesh Bank, Central Bank of Bangladesh and the Circular of Head Office from time to tome. The first
step of credit proceedings is the request for credit from the clients. Then scrutinizing and collection of
information from primary (CIB) and secondary sources take place. Credit appraisal and evaluation is the
most important part of credit management. On the basis of evaluation approval is given by the higher-
authority with certain conditions to be fulfilled. Sanction of credit is done by the sanctioning officer, who
has the authority to sanction the Credits. After fulfilling the conditions the credit is disbursed. Credit
monitoring and reviewing start from the time of disbursement. In case of fault of repayment bank has some
distinct rules of legal action to fix the problem

Request from the Client

Scrutinizing & Collection of Information

Credit Apprising & Presentation of Credit Proposal for Approval

Approval of Credit

Sanction of Credit Mentioning Terms and Condition

Disbursement of Credit

Credit Administration

Credit Monitoring and Classification of Accounts

Taking Precaution/ Legal Action against Delinquent Clients

Figure: 4-1 Loan product

4.1 Requests from the Client

Bank provides credit facilities to the people who are credit worthy to the bank. Credit worthiness depends
on the credibility, financial capability, and feasibility of the project and management ability of the credits to
earn profits. When bank is satisfied with all these then the client is provided with the requested credit. At
this point it should be mentioned that the client has to go through an interview where his credit potentiality
is justified through critical observation. When credit officer is satisfied with the customer he is asked to
submit an application and to fill up a form with specific details.
 23

4.1.1Credit Application:

Completeness of information can best be obtained by requesting the applicant to fill out a comprehensive
application. Psychological attitudes toward the seriousness of credit obligations are improved when the
application is rather formal and complete.
When the customer fills in the application, it is well for the interviewer to look over the form and to provide
supplemental information, which will assure completion of the blanks not filled in, or which probes more
deeply into the questionable areas. It is well to provide space on the form for the recording of more
information after the customer has left. Points in favor of having the applicant fill out the form is that fewer
skilled credit personnel are necessary and that more customers can be accommodated in the same space.
4.1.2 Submission of Application:

The borrower are provided with an instruction paper, which help him or her to prepare the loan proposal
properly
 Information for loan application should be furnished in prescribed First Information Sheet (FIS) in
triplicate in each page / set should be duly sealed and signed by the applicant(s)/ sponsor(s).
 Complete information should be furnished in respect of each item supported by documentary evidences,
wherever necessary, to avoid further reference / delay/ rejection of the application.
 The Bank reserves the right to reject the application forthwith if the information given in the form is
incomplete and not fully documented in all respects.
 Information may provide in additional sheet of papers, if required .How ever also ensure that all the fact
/ evidences has been enclosed properly including three feasibility reports/detailed study reports on loan
proposal.

The client are required to deposit with the application the project examination fee and also apportion of the
equity at the following rate either by cheque or pay order or demand draft drown in favor of Mutual Trust
and payable in any scheduled Banks within the country.
 Memorandum and Articles of Association together with the certificate of registration /incorporation
commencement of business of the company duly certified by the managing director of the company
should be submitted.
 No objection certification from the appropriate authorities for setting up the project on land wherever
required should be submitted. Title deed of land, together with non-encumbrance certificate from the
District Register or Sub- Register should be submitted.
 Certificates from the surveyor for determining the price of land of the project /price of adjacent land
sold during last three years should be submitted. Also to be submitted are site/ mouza map.
 Machinery layout plan, price quotation of three suppliers together with illustrated brochures and
literatures should be submitted for both import and local machinery.
 Consent letter from Power Development Board / Rural Development Board/ Gas Authority / Pollution
Control Board should be submitted whatever required.
 Soil Test / Water Test report (if required).
 Nationality certificate along with attested passport size photographs of the directors/ partners /
proprietor should be submitted.
 Declaration of asset and liability of the proposed directors / partners/ proprietor.
 24

 Declaration of payment of income tax should be submitted.

 Letter of prime banker of the company/ firm/ person should be issued with a copy to the Mutual Trust
Bank as per given annexure.
 Give reason for seeking additional loan for expansion/ balancing/ repayment/ of the existing unit. Also
provide information relating to existing line of products, rated/ actual/annual production capacity for the
past operation years, sales performance and financial position of the company.

4.2 Scrutinizing and Collection of information

This is one of the most important parts of the loan procedure to collect information of clients to verify
giving loan to them. Generally this portion is done by collecting CIB report from Bangladesh Bank.
However information are gathered in two ways:
a. Direct Inquiry:

Direct inquiry is one of the common methods of obtaining information to verify facts presented on the
application of during the interview of an applicant for an initial credit transaction. A careful distinction is
made between obtaining credit information directly form sources having such facts and between buying
somewhat similar credit data in the form of prepared reports from the credit reporting bureaus and agencies.
b. In-file ledger fact:

In-file ledger facts are one of the most important sources of information available to credit committee
whether to accept or reject a larger amount of credit from an established credit customer. From the in-file
records, credit analysts have at their disposal the experience of the concern with the customer. They know
the customer's payment habits, the complaints registered, and the collection efforts, if needed to keep the
customer in line with the established terms.
4.3 Credit Apprising & Presentation of Credit Proposal for Approval
When credit officer is satisfied with his credit worthiness, financial capability, management ability and
feasibility of the project through credit appraisal of clients in a prescribed form, he can hope for credit from
the bank. Credit appraisal is done through 'credit appraisal form'. Ratio analysis is give importance in case
of project finance. But most of the medium quality loans are given on the basis of financial capability of
repaying and credit worthiness of the client. Lending risk analysis is done in a prescribed form in case of
large amount of loan, above 50 Lac.
Credit officer prepares a credit proposal along with the prescribed 'Credit Proposal Form'. Credit officer
measures the risk associated with the credit facility. No credit proposal can be put for approval unless there
has been a complete written analysis. It is absolute responsibility of the Proposing Officer to ensure that all
necessary proposal documentation have been collected before the facility request is sent to the Sanctioning
Officer.

4.4 Approval of Credit

4.4.1 Branch credit committee:
It is to be headed by the Branch Manager, other members to be selected by the manager in consultation with
Head Office
4.4.2 Head Office credit committee:
Head office credit in accordance with authority established and delegated by the Board of Directors.
 25

 Reviewing, analyzing and approving extension of credit in accordance with authority established and
delegated by the Board of Directors.
 Evaluate the quality of tending staff in the bank & take appropriate steps to improve upon.
 Recommending credit proposal to the Executive Committee/Board of Directors which are beyond the
delegated authority.
 Ensuring, that all elements of Credit application i.e. Forms, Analysis of statements and other papers
have been obtained and are in order.
Confirming that the transaction is consistent with existing loan policy and Bangladesh Bank guidelines & if
not the Committee may prepare a recommendation form an exception to or change in policy for
consideration by the Executive Committee/Board of Directors
4.4.3 Executive committee:
Approving credit facilities as delegated by the Board of Directors.Supervising the implementation of the
directives of the Board of Directors.Reviewing of each extension of credit approval by the Head Office
Credit Committee/Managing Director. Keeping Board of Directors informed covering all these aspect.

4.4.4 Board of Directors:

After establishing overall policies and procedures for approving and reviewing credits, delegating authority
approves and review credits. Approving credit for which authority is not delegated. Approving all
extensions of credit which are contrary to bank's written credit policies.
Most important step of providing credit facility is the sanctioning of credit. Because sanctioning authority is
responsible for any discrepancy. In this step all the documentation is completed and the customer is sent an
advising letter for the credit facility along with all the terms and conditions.
Norms maintained in sanctioning of credits are described below
 Credit will be sanctioned and disbursed strictly in terms of the approved Credit Operational Manual of
the Bank and Head Office Circulars issued from time to time.
 All norms informed through the Circulars of Credit Division in particular and all other relevant circulars
in general, which are to be followed meticulously while exercising power.
 Credits will be subject of Bangladesh Bank restriction.
 The party to whom credit will be allowed should be as far as possible within the command area i.e. Area
of operation of the Branch. Deviations, if any are to be explicitly explained in the proposal.
 No Sanctioning Officer can sanction any credit to any of his/her near relations and to any firm/company
where his relations have financial interest. Such cases should be sent to the Head Office.
 All Sanctioning Officers maintain a Sanctioned Register for recording serially all the credits sanctioned
by him. Sanctioning officer will accountable for non-recovery due to his injudicious decision.
 All approval of credit facilities must be conveyed under dual signature. Ideally both the signatories must
have the required lending authority. If however, two lending officers of the required lending are not
available, one of the signatories must have the required authority.

4.6 Disbursement of Credit

Disbursement of credits presupposes observance of all norms and procedures, which are conveyed through
different Circulars of Head Office, issued from time to time.
The disbursement procedures or timing of disbursement depend on the client or the progress of work of the
construction. The disbursement can be made two or three stage or more depending on the above conditions.
 26

 Mode of Repayment:

The loan shall be adjusted by monthly installment basis. The repayment will start from months of the date
of first disbursement ( it may charge according to the terms and conditions of the agreement.

 Collateral:

The land and the construction on the land are normally given as collateral. It no changes-
Charge documents to be obtained:
a) DP note
b) Letter of disbursement
c) Letter of Installment
d) Letter of guarantee
e) Letter of undertaking
f) Latter of agreement
g) Irrevocable general power of attorney
h) Memorandum of deposit of title deed
4.6 Credit Administration and File Maintenance

The credit file for each facility shall contain all information necessary to facilitate ready monitoring of that
facility. It should contain a through history of the customer relationship to help credit officer': track any
problems, assist a newly assigned credit officer in understanding the customer and make the lending process
transparent. Primary items in Credit File include: A popular disbursement procedure is essential for
implementing a project, small or big, within the essential time or cost. However the constant monitoring of
the projects on the one hand and timely mobilizing the equity on the other hand cannot be under estimated
for efficient implementation of a project. The following factors are taken into account.
 After machinery contract is finalized the bank will open irrevocable letter of credit on behalf of the
borrower in the joint name of the bank and the borrower.
 Disbursement of the foreign currency loan is made automatically as soon as irrevocable letter of
credit for import of machinery is established and the foreign supplier makes shipment of
machinery.
 The local currency loans are to be made available to the project after satisfactory and full utilization
of equity by the borrowers by creating by required physical facilities (tangible asset) for the project.
 The sponsor has to request for release of local currency loan to the bank supported to the paper like
progress report, statement of account, documents.
 The local currency loan of the bank to be disbursed in one or more installment according to the
nature of the project.
 The borrower must use the loan for the purpose for which the advance is extended.
 The borrower shall apply the proceeds of the loan exclusively to finance the cost of the goods and
services required to carry out the project. Foreign currency shall be disbursed only for goods and
services that have neither been paid for in Bangladeshi currency not were produced in.
 If the completion of the project or its successful operation is hindered or delayed because the fund s
available are inadequate to ensure its completion. It should be the responsibility of the borrower to
 27

make prompt arrangements in accordance with financial plan approved by the bank to provide the
necessary fund.
 Credit application and Credit approval notes/analysis. Evidence of credit approval and data upon
which approval was granted together with any comments, if appropriate.
 Copy of sanction and loan agreement. A checklist along with copies of all legal & banking
documents obtained / to be obtained. Details and 6 monthly updated information of all related
facilities to the name customer group,
 All supporting data such as financial statements and analysis, references, credit investigation results,
CIB & other Bank reports and notes of all discussions with the borrower and other relevant parties
with paper clipping.
 Correspondences call reports, site visit reports, stock report etc. each credit file shall be maintained
in a secured location and where access restricted to authorized personnel's only. Copies of the
information may be kept where regular access is required.

4.7 Credit Monitoring and Reviewing

It is the responsibility of the Manager to monitor the over all profile and risk aspect of the credit
portfolio in accordance with the criteria set down in the Bank Credit Policy. Such monitoring shall be
evidenced from the comments of the Manager in monthly Call/Visit Report and be kept in the Credit
File with a copy to the Head Office.
This Review shall be formally performed at intervals prescribed by Head Office but it is the
responsibility of the Manger to ensure at all times that the credit portfolio meets the standard set forth by
the Bank.

4.7.1 Factor Analyzed in the Loan Mentoring

Credit policy of the Mutual Trust Bank Limited has set forth the guideline that must be followed in
the time of loan review. After getting the review of the loan portfolio from the branch level the
assigned officer of the head office credit department state stated the analyzing and preparing the
report. The following factors are taken into consideration at the time of monitoring the loan and
advance.
 The account has not excess over limit
 The terms and condition of the sanction letter are strictly followed
 The value of the collateral security of the loan is adequate
 There is not any unfavorable situation in market, economy and political conditions, which may
endanger the reliability of the borrower account
 The analysis of the borrower’s business performance and comparison of the projected and
actual to find any deviations.

4.8 Steps against Delinquent Clients

When a problem loan is detected the responsible loan officer takes the corrective action and tries to
minimize the loan losses by allowing different facilities to the client. The steps are followed by the Mutual
Trust Bank to manage the clients are:
 28

4.8.1 Persuasion:

This is to step practice at Mutual Trust Bank to manage the problem loan. This step involves:
 Open discussion with the borrower
 Discussion with third party to find out the underlying reasons.
 Issuing the “1st Reminder” letter of inform the due date and due installments.
 If the party does not respond issuing the “2nd Reminder” and then “3rd Reminder” letter.

4.8.2 Negotiation:

If the percussion failed, the loan officer negotiated a plan of action with the borrower to save both the bank
and the borrower from possible loss. This calls for certain sacrificing on the part of the bank and borrower
in their mutual interest. The plan of action in JanataBank consists of the following:
 Revise the loan agreement
 Concession of interest (If the client is difficult to manage)
 Reschedule of the loan and giving installment facility to repay the overdue amount beside the
regular installment.

4.8.3 Litigation:

If the client failed to repay the loan even after rescheduling the loan, Mutual trust bank goes for the taking
the legal action against the delinquent client to recover the loan. The branch manager sent a letter to the
head office credit department informing the borrower’s reluctance to repay the loan. Following measure is
taken:
 Filing case against the client
 Assigning the loan officer for assisting the lawyer.

The Branches will submit a monthly statement of the credits allowed under the discretionary powers of the
Manager to the Head Office irrespective whether the same are outstanding or not on the date of return.
The responsibility for review and classification of credit facilities starts at Branch level. The frequency of
the supervision and monitoring depends on the classification of credits
 29

Chapter
five
Credit Risk Management
 30

The Credit Risk Management Division is vital for the efficient functioning of JBL. It critically scrutinizes
the credit proposals from risk weighted point of view before sanctioning approvals ensuring a high quality
credit portfolio. The goal of credit risk management is to maximize a bank's risk-adjusted rate of return by
maintaining credit risk exposure within acceptable parameters. Banks need to manage the credit risk
inherent in the entire portfolio as well as the risk in individual credits or transactions.

Credit Risk:

Credit risk is the possibility of failure of a borrower to meet agreed obligation. With the present days de-
regulation and globalization, the bank’s range of activities has increased. Expansion of the bank’s lending
operations, covering a risk areas and therefore to work out robust credit risk management policy.

At JBL, credit risk may arise in the following forms –

 Default Risk
 Exposure Risk
 Recovery Risk
 Counter Party Risk
 Related Party Risk
 Legal Risk
 Political Risk

To mitigate credit risks, following measures are in place at JBL:

(a) Mission, Vision and objectives

(b) Credit principles
(c) General policy guidelines in conformity with BB guidelines and industry best practices.
(d) Rigorous credit process
(e) Sector wise lending caps
(f) Lending policy and strategy to different areas
(g) Collecting CIB of BB.
(h) Critical assessment of repayment capacity in pre-investment analysis stage
(i) Credit Risk Grading of the client
(j) Provision for Insurance coverage
(k) Taking Collaterals
(l) Annual credit review
(m) Vigorous monitoring follow up
(n) Periodic review of market situation and industry exposure

Credit Principles:

In managing credit risk effectively JBL:-

 Maintains a judicious ratio between Loan and Deposit
 Pursues a credit that aims at credit expansion by maintaining credit quality
 31

 Does not compromise with standards of excellence

 Ensures that all credit extensions comply with regulatory norms, prevailing laws, rules and
regulations
 Extends credit facilities in such a manner that each extension become rewarding and ensures
superior return on capital
 Extends credit facility upon adequate pre-investment analysis and repayment capacity of the client
 Avoids credit concentration through rational diversification of credit
 Avoid name lending. Credit is allowed on business consideration, after ascertaining viability, credit
requirement, and quality of advance, security offered, cash flows and risk level
Credit risk management is processed through various steps but mainly it is performed in four key parts.
These are -

Figure 4-2:
Credit Risk
Credit Credit Credit Credit
Analysis Disbursement Monitoring Recovery

Management Process (4 key Parts)

These parts are performed through different steps starting from the collection obligors’ data to disbursement
throughout various calculations, and then monitoring transaction through creating loan classification and
provisioning and at last process of recovery. An important part of credit risk management is to measure it.
This requires a credit assessment of loan applicants. The bank employ credit analyst who review the
financial information of a corporation applying for loans and evaluate their creditworthiness. The evaluation
should indicate the possibility of that a firm meet its loan payment so that the bank can decide whether to
grant the loan. A brief description of Credit Risk Management from BB context is the main subject matter
of this section.

5.1 Credit Analysis

The term credit analysis is used to describe any process for assessing the credit quality of the borrower or
obligor. While the term can encompass credit scoring, it is more commonly used to refer to processes that
entail human judgment. One or more people, called credit analysts, will review information about the
counterparty. This might include its balance sheet, income statement, recent trends in its industry, the
current economic environment, etc. They may also assess the exact nature of an obligation. For example,
secured debt generally has higher credit quality than subordinated debt of the same issuer. Based upon this
analysis, the credit analysts assign the borrower (or the specific obligation) a credit rating, which can be
used for making credit decisions.
 32

When a customer requests for a loan, bank officers analyse all available information to determine whether
the loan meets the bank’s risk-return objectives. Credit analysis is essentially default risk analysis in which
a loan officer attempts to evaluate a borrower’s ability and willingness to repay. In accordance with BB
guidelines here are steps briefly discussed -

5.1.1 Lending Guidelines:

In credit analysis part, at first the loan officers/ risk managers have to judge the collected information
through credit application from the RM (relationship manager) according to lending guidelines i.e. the credit
policies of the banks. These policies should include the following:
 Industry and business segment focus - where a clear identification of the business/industry should be
provided so that it constitutes the majority of the bank’s loan portfolio.

 Types of loan facilities – a clear identification of the types of loan that should be permitted.

 Single Borrower/Group Limits/Syndication - details of the bank’s Single Borrower/Group limits

should be included as per Bangladesh Bank guidelines.

 Lending Caps - Banks should establish a specific industry sector exposure cap to avoid over
concentration in any one industry sector.

 Discouraged Business Types - Banks should outline industries or lending activities that are
discouraged. For example, as a minimum, the following should be discouraged

o Military Equipment/Weapons Finance

o Highly Leveraged Transactions

o Finance of Speculative Investments

o Logging, Mineral Extraction/Mining, or other activity that is ethically or environmentally

sensitive

o Lending to companies listed on CIB black list or known defaulters

o Counterparties in countries subject to UN sanctions

o Share Lending

o Taking an Equity Stake in Borrowers

o Lending to Holding Companies

o Bridge Loans relying on equity/debt issuance as a source of repayment.

 Loan Facility Parameters - facility parameters (e.g., maximum size, maximum tenor, and covenant
and security requirements) should be clearly stated.

 Cross Border Risk - Borrowers of a particular country may be unable or unwilling to fulfill principle
and/or interest obligations. It is distinguished from ordinary credit risk because the difficulty arises
from a political event, such as suspension of external payments, synonymous with political
 33

&sovereign risk and Third world debt crisis. For example, export documents negotiated for countries
like Nigeria.

5.1.2 Credit Assessment:

In Credit risk assessment, RMs originate all the assessment results in the form of Credit Application prior to
the granting of loans, and at least annually thereafter for all facilities which is approved by the CRM. The
RM is held the owner of the customer relationship, and responsible to ensure the accuracy of the entire
credit application submitted for approval. RMs must be familiar with the bank’s Lending Guidelines and
should conduct due diligence on new borrowers, principals, and guarantors. All banks should have
established Know Your Customer (KYC) and Money Laundering guidelines which should be adhered to at
all times.
Credit Applications should summaries the results of the RMs risk assessment and include, as a minimum,
the following details:

o Amount and type of loan(s) proposed.

o Purpose of loans.
o Loan Structure (Tenor, Covenants, Repayment Schedule, Interest).
o Security Arrangements.

In addition, following risk areas are also addressed-

o Borrower Analysis - The majority shareholders, management team and group or affiliate companies
should be assessed.
o Industry Analysis - Any issues regarding the borrower’s position in the industry, overall industry
concerns or competitive forces should be addressed and the strengths and weaknesses of the borrower
relative to its competition should be identified.
o Supplier/Buyer Analysis - Any customer or supplier concentration should be addressed, as these could
have a significant impact on the future viability of the borrower.
o Historical Financial Analysis - An analysis of a minimum of 3 years historical financial statements of
the borrower should be presented. The analysis should address the quality and sustainability of earnings,
cash flow and the strength of the borrower’s balance sheet. Specifically, cash flow, leverage and
profitability must be analyzed.
o Projected Financial Performance - A projection of the borrower’s future financial performance should
be provided for the term facilities (tenor > 1 year), indicating an analysis of the sufficiency of cash flow
to service debt repayments, insufficient projected cash flow for repaying debts will not be granted.

o Account Conduct - For existing borrowers, the historic performance in meeting repayment obligations
(trade payments, cheques, interest and principal payments, etc) should be assessed.
o Adherence to Lending Guidelines - Credit Applications should clearly state whether or not the proposed
application is in compliance with the bank’s Lending Guidelines which should be approved by the
Bank’s Head of Credit or Managing Director/CEO.
o Mitigating Factors - Mitigating factors for risks identification in the credit assessment should be
identified. Possible risks include, but are not limited to: margin sustainability and/or volatility, high debt
load (leverage/gearing), overstocking or debtor issues; rapid growth, acquisition or expansion; new
 34

business line/product expansion; management changes or succession issues; customer or supplier

concentrations; and lack of transparency or industry issues.
o Loan Structure - The amounts and tenors of financing proposed should be justified based on the
projected repayment ability and loan purpose. Excessive tenor or amount relative to business needs
increases the risk of fund diversion and may adversely impact the borrower’s repayment ability.
o Security - A current valuation of collateral should be obtained and the quality and priority of security
being proposed should be assessed. Loans should not be granted based solely on security. Adequacy and
the extent of the insurance coverage should be assessed.
o Name Lending - Credit proposals should not be unduly influenced by an over reliance on the sponsoring
principal’s reputation, reported independent means, or their perceived willingness to inject funds into
various business enterprises in case of need.
These situations should be treated with great caution. Rather, credit proposals and the granting of loans
should be based on sound fundamentals, supported by a thorough financial and risk analysis.

5.1.3 Risk Grading:

Risk grading is a key measurement of a Bank’s asset quality and as such, it is essential that grading is a
robust process. All facilities should be assigned a risk grade. Where deterioration in risk is noted, the Risk
Grade assigned to a borrower and its facilities should be immediately changed. Borrower Risk Grades
should be clearly stated on Credit Applications.
Credit risk grading is an important tool for credit risk management as it helps the Banks & financial
institutions to understand various dimensions of risk involved in different credit transactions. The
aggregation of such grading across the borrowers, activities and the lines of business can provide better
assessment of the quality of credit portfolio of a bank or a branch. The credit risk grading system is vital to
take decisions both at the pre-sanction stage as well as post-sanction stage.
 At the pre-sanction stage, credit grading helps the sanctioning authority to decide whether to lend or
not to lend, what should be the loan price, what should be the extent of exposure, what should be the
appropriate credit facility, what are the various facilities, what are the various risk mitigation tools to
put a cap on the risk level.

 At the post-sanction stage, the bank can decide about the depth of the review or renewal, frequency
of review, periodicity of the grading, and other precautions to be taken.

In this risk grading tool, credit applicant’s aggregate risk factors are graded after grading and scoring each
risk factors. Here is a table of risk grading and how the risk grading is

Grading Short Name Number

Superior SUP 1
Good GD 2
Acceptable ACCPT 3
Marginal/Watch list MG/WL 4
 35

Special Mention SM 5
Sub standard SS 6
Doubtful DF 7
Bad & Loss BL 8

Table 4-5: Scores of different risk grades

The more conservative risk grade (higher) should be applied if there is a difference between the personal
judgment and the Risk Grade Scorecard results. It is recognized that the banks may have more or less Risk
Grades; however, monitoring standards and account management must be appropriate according to the
assigned Risk Grade, the definitions of the risk grades are given in the appendix-B.

5.2 Credit Disbursement

Credit disbursement occurs after assessing all the formal documents like credit application, other business
documents of the borrower, financial sheets, CIB report, CRG score sheet etc. According to BB guidelines
the disbursement procedures take place in the following ways-
 Security documents are prepared in accordance with approval terms and are legally enforceable.
Standard loan facility documentation that has been reviewed by legal counsel should be used in all
cases. Exceptions should be referred to legal counsel for advice based on authorization from an
appropriate executive in CRM.

 Disbursements under loan facilities are only be made when all security documentation is in place.
CIB report should reflect/include the name of all the lenders with facility, limit & outstanding. All
formalities regarding large loans & loans to Directors should be guided by Bangladesh Bank
circulars & related section of Banking Companies Act. A sample documentation and disbursement
checklist is attached, which banks may wish to use to control disbursements.

After disbursement procedure the approval procedures take place. The approval process must reinforce the
segregation of Relationship Management/Marketing from the approving authority. The responsibility for
preparing the Credit Application should rest with the RM within the corporate/commercial banking
department. Credit Applications should be recommended for approval by the RM team and forwarded to the
approval team within CRM and approved by individual executives. Banks may wish to establish various
thresholds, above which, the recommendation of the Head of Corporate/Commercial Banking is required
prior to onward recommendation to CRM for approval. In addition, banks may wish to establish regional
credit centers within the approval team to handle routine approvals. Executives in head office CRM should
approve all large loans.

5.3 Credit Monitoring:

To minimize credit losses, monitoring procedures and systems should be in place that provides an early
indication of the deteriorating financial health of a borrower. At a minimum, systems should be in place to
report the following exceptions to relevant executives in CRM and RM team:
 36

 Past due principal or interest payments, past due trade bills, account excesses, and breach of loan
covenants;
 Loan terms and conditions are monitored, financial statements are received on a regular basis, and
any covenant breaches or exceptions are referred to CRM and the RM team for timely follow-up.
 Timely corrective action is taken to address findings of any internal, external or regulator
inspection/audit.
 All borrower relationships/loan facilities are reviewed and approved through the submission of a
Credit Application at least annually.

Computer systems must be able to produce the above information for central/head office as well as local
review. Where automated systems are not available, a manual process should have the capability to produce
accurate exception reports. Exceptions should be followed up on and corrective action taken in a timely
manner before the account deteriorates further. The exception covers the area of Loan Classification and
Provisioning and the Early Alert Accounts if the account deteriorates.
5.3.1 Loan Classification & Provisioning
In order to strengthen credit discipline and bring classification and provisioning regulation in line with
international standard, Bangladesh Bank issued a master circular on loan classification and provisioning
through BRPD circular no 5 dated June 5, 2006. The revised policy covers an independent assessment of
each loan on the basis of objective criteria and qualitative factors which is appended below:

Loan Criteria Loan Classification Loan Classification Requirement

Overdue If not repaid/renewed within the fixed
expiry date for repayment from the
following day of the expiry date.
SMA If remains overdue for 90days or more.
Continuous/
Interest Suspense Interest accrued on Special Mention
Demand
Account Account (SMA) will be credited to Interest
loan/term
Suspense Account.
loan
Sub-Standard If it is overdue ≥ 6 months but > 9 months.
Doubtful If it is overdue for ≥ 9 months but > 12
months.
Bad/Loss If it is overdue for ≥ 12 months.
Defaulted Installment If not repaid within due date.
Sub-Standard If the amount of Default installment is due
Fixed term ≥ 6 months installment.
loans (within Doubtful If the amount of installment is due ≥ 12
5 years) months.
Bad/Loss If the amount of installment is due ≥ 18
months.
Fixed term Sub-Standard If the amount of Default installment is due
loans (more ≥ 12 months installment.
than 5 years) Doubtful If the amount is due within 18 months.
 37

Bad/Loss If the amount is due within 24 months.

Irregular If not repaired within due date.
Short term
Sub-Standard If the irregular status continues after 12
Agriculture
months.
and Micro-
Doubtful If the status continues for 36 months.
credit
Bad/Loss If the status continues for 60 months.

Table 4-6: Loan classification based on Qualitative factors & Objective criteria

5.3.2 Early Alert Accounts

As a part of ongoing monitoring process, an account may be found to have some weakness, which clearly
indicates the symptom of non-repayment of loan. This type of account should be reported in the Early Alert
Account. The loan accounts excluding micro credit/scheme loan which have potential risk in deteriorating
the quality of the assets and may cause nonpayment of the loans & advances and those loan accounts which
require special care as well as monitoring in order to maintain the quality of the assets, will have to be
reported in the Early Alert Account.
The potential risk may be arisen from the following area:
 Industry concern.
 Ownership/Management concerns.
 Balance sheet weaknesses.
 Cash Flow Weaknesses.
 Poor Account Conduct.
 Expired Limit/Pending Documents.

Therefore, all the credit officers will carefully and constantly monitor all the corporate (Business) clients
who are enjoying credit facility from our bank and while monitoring, if any account is found to be showing
weaknesses which may result in the non-performing of the loan, then immediately treat the account as Early
Alert and accordingly report the same to the Head Office. How and when the account will be treated as
Early Alert is briefly explained in the appendix-C.

5.4 Credit Recovery

The Recovery Unit (RU) of CRM should directly manage accounts with sustained deterioration (a Risk
Rating of Sub Standard (6) or worse). Banks may wish to transfer EXIT accounts graded 4-5 to the RU for
efficient exit based on recommendation of CRM and Corporate Banking. Whenever an account is handed
over from Relationship Management to RU, a Handover/Downgrade Checklist should be completed. The
RU’s primary functions are:

 Determine Account Action Plan/Recovery Strategy.

 Pursue all options to maximize recovery, including placing customers into receivership or
liquidation as appropriate.
 Ensure adequate and timely loan loss provisions are made based on actual and expected losses.
 Regular review of grade 6 or worse accounts.
 38

In RU, the RM experiences the Non-Performing loans. In such cases, assessment of NPLs are executed
though following steps-
 NPLs account management- through assigning an account manager who is responsible for
coordinating and administering for action plan/recovery of the account.
 Account transfer procedures
 NPLs monitoring
 NPLs provisioning and write off.

The management of problem loans (NPLs) must be a dynamic process, and the associated strategy together
with the adequacy of provisions must be regularly reviewed. A process should be established to share the
lessons learned from the experience of credit losses in order to update the lending guidelines.
 39

Chapter- Six

Research Part
 40

6.1 Statement of the Problem

Description the cause of poor&Lake Customer services about Credit Banking department, Loan on interest
and find out the solution of this problem.

6.2 Methodology
6.2.1 Population size
The population size of this study has been consisted of the borrower and employee of Janata Bank Ltd. My
target population is all customer of JBL. The stratified probability sampling approach has been selected for
this study. For collection of primary data survey was conducted in February2013-April 2013.

6.2.2 Sample Frame

The sample frame of this study consists of the clients of Janata Bank Ltd. A total of 40 respondents was
considered .The stratified provability sampling approach was selected for this study.

6.2.3 Duration-90 days

6.3 Analysis of Data

For analysis of data used SSPS & Microsoft Excel in the personal computer. To entry data coding option
was used at the initial stage. The measure of correlation, hypothesis testing, co-efficient, index numbers, and
regression analysis were applied in the analysis of data. In addition, basic statistical techniques of different
measures of central tendency were also used in analyzing data.

6.3.1 Types of Data

In this report, both types of data have been used for analysis-

 Qualitative data
 Quantitative data

Qualitative data as like the issues, risks of SMEs and practices of CRM and oppositely, statistical data of
different issues and findings of analysis as quantitative data has been used in this report.
6.4 Sources and Collection of Data
The data of this study were collected through questionnaire interview conducted in Janata bank-Uttara
model town corporatebranch,Dhaka.For the secondary sources different articles , research publications, and
internet has also been reviewed.

Both primary & secondary information used for this study:

 41

 Primary source

Primary sources are the materials upon which other researchers are performed or it can be said the sources
where raw data can be collected. Here, data have been collected through personal observation the employee
& client attitude, behavior and activity during internship program in General banking segment of Uttara
Model town Branch in The JBL. Most of the information was collected from the survey & other senior
employees by recording their answers through face to face interview.

 Secondary source
Secondary source interprets and analyzes primary sources. These sources are one or more steps removed
from the event. Secondary sources may have pictures, quotes or graphics of primary sources in them. Some
types of secondary sources include: textbooks, magazines, articles, histories, criticisms, encyclopedias
etc. From secondary following sources were used to collect necessary data:

1) Credit Banking Policy Manual of the Banks.

2) General Banking Instruction Manual of the Banks.
3) Circulars, letters and memos issued by the Banks and regulatory organization i.e. Bangladesh
Bank and Govt.
4) Prudential Guidelines on Credit Risk Management issued by Bangladesh Bank.
5) Annual report of JBL.
6) Annual report of Bangladesh Bank.
7) News papers and journals from websites.

6.5 Budget
Project duration= 90 days
Name Taka
Transportation Cost 900/-
Phone Bill 500/-
Printing Cost 1500/-
Snacks 800/-
Total Expenditure 3700
Table-7: Budgeting for report
6.6 Work Plan

To conduct the report I took 3 months and my work plan is given below:

Week Tasks
1 Week Hypothesis and Questionnaire Development
3 Weeks Survey and Personal Interview
3 Weeks Secondary Data collection

2 Weeks Data analysis and decision making

3 Weeks Report preparation and Submission
Table-8: Work plan of my report
 42

6.7 Limitation of the study

The present study was not out of limitations. But as an internee it was a great opportunity for me to know
the banking activities in Bangladesh - especially of JanataBank. Some constraints are appended bellow:

 Lack of Information or Data: Adequate and in-depth well-organized information is not available for
access. Though the officials tried to assist, sometimes their working pressure couldn't give me
proper assistance what I needed. There is some information which need special permission from top
level is not always achievable.

 Time Constraint: It is something like impossible to cover the entire Loan and Advance Performance
and performance phenomena exploiting a three month time period while an employee or an officer is
awarded with one or two year probationary period to do his or her particular job.
 Secrecy of Information: Some of the information needed to explore the current marker scenario of
the company was not disclosed.
 Comparison Status: I have had opportunity to compare the General Banking system of the JBL with
that of other contemporary and common size banks. But there was no proper credit banking
information in other bank. So it is difficult to compare every subject of general banking.

 Lack of Experience: Though I have prepared many reports before, I had no experience of internship.
So inexperience is one of the main constraints of the study.

Procedure:
For conducting this study personnel were randomly selected from the total personnel. There are four tests in
research. They are follows:
1. Z test
2. T test

In the data analysis I have utilized liker scale, which is consisted of strongly disagree, disagree, neither
agree nor disagree, agree and strongly agree.
Z test is followed in the analysis. Because we know that if there are being more than 30 of sample size, Z
test is accepted. Although in data analysis there are have more than 30 that means 40 of sample size, Z test
is utilized.
Results:
In the measure therewere 40 respondents as sample size of the final size of the study. The findings of the
study are presented graphically and in table from, as well in mathematical analysis in the following parts of
this report.
The responder’s gender:

The total sample size is 40. Out of that 65% of respondents are male and 35% of respondents are female. In
following represented graphically:
 43

Chart-2: Gender of responders

The responder’s age:

Out of total respondents divided into four groups, there are (i) 20-30 years, (ii) 30-40 years (iii) 40-50 years
and (iv) more than 50 years. In blowing give graphically presentation of respondents’ age group.

25

20

15
Series 3
10 Series 2
Series 1
5

0
20-30 30-40 40-50 More than
50

Graph-7: responder’s age

 44

6.8 HYPOTHESIS TO BE TESTED

For fulfilling the objectives some related hypothesis have been developed for this study:

1. H1: Accuracy of banking records has positive effect on customer satisfaction.

2. H1: The distinctive loan ofInterestrate of JBL draws the attention of customers.

3. H1: The Competitive loan of interest rate meets customer satisfaction.

4. H1: Loan on interestJBL is lower than other competitive Bank

5. H1: Retail Credit System of JBL can develop customer business

6. H1: Credit Committee Of JBLUttara branch is skillful& helpful

7. H1: The employees of JBL always keen to help customers.

8. H1: Staff of Credit section provide trustworthy customers service.

9. H1: Credit system of JBL is effective part on customer satisfaction.

10. H1: Commitment to the customers is the effective method of JBL to attentioncustomers

HYPOTHESIS TESTING

H1 H2 H3 H4 H5 H6 H7 H8 H9 H10
1= Strongly 2 2 16 7 3 5 1 2 4 3
disagree
2= Disagree 5 6 15 10 6 3 3 2 3 5
3= Neither 1 2 1 2 3 2 0 1 5 3
agree nor
disagree
4= Agree 14 13 5 8 12 13 16 14 18 17
5= Strongly 18 17 3 15 16 17 20 21 10 12
Agree
Total 161 157 84 138 152 154 171 180 147 150
Average 4.02 3.92 2.1 3.45 3.8 3.85 4.27 4.5 3.67 3.75
Standard 1.20 1.24 1.29 1.51 1.324 1.387 0.985 1.054 1.227 1.23
Deviation
Z-Cal Value 8 7.47 -1.66 4.13 6.19 6.16 11.35 10.78 6.18 6.41

Table-9: Summary of the Respondents towards hypothesis

 45

01. H1: Accuracy of banking records has positive effect on customer satisfaction.

H0: Accuracy of banking records has negative effect on customer satisfaction.

HO: μ = 2.5

HA: μ > 2.5

N = 40

Here = 4.02
σ = 1.20

Z cal= ( – μ)/ (σ/√n) = 8

At 5% level of significance, the value of Z-Distribution table is: Z0.05 = 1.645

Since Z cal>Z tab, the null hypothesis is not acceptable. So at 5% level of significance, it can be said that
Accuracy of banking records has positive effect on customer satisfaction.

strong
H1 disagree
5% disagree
neither
13%
strong agree nor
agree disagree
46% 0%

agree
36%

Fig-1: Respondents’ view towards accuracy of banking records has positive effect on customer satisfaction

02. H1 The distinctive product and services of JBL draw the attention of customers.
H0: The distinctive product and services of JBLdosen’t draw the attention of customers.

HO: μ = 2.5

HA: μ > 2.5

N = 40
 46

Here = 3.92
σ = 1.24
Z cal= ( – μ)/ (σ/√n) = 7.47

At 5% level of significance, the value of Z-Distribution table is: Z0.05 = 1.645

Since Z cal<Z tab, the null hypothesis is acceptable. So at 5% level of significance, it can be said that the
distinctive product and services of JBL draw the attention of customers.

strong
H2 disagree disagree neither
6% 3% agree nor
disagree
6%
strong
agree
50% agree
35%

Fig-2: Respondents’ view the distinctive product and services of MTB draw the attention of customers.

03. H1: The Competitive interest rate meets customer satisfaction.

H0: The Competitive interest rate does not meet customer satisfaction.

HO: μ = 2.5

HA: μ >2.5

N = 40
 47

Here = 2.1
σ = 1.29

Z cal= ( – μ)/ (σ/√n) = -1.67

At 5% level of significance, the value of Z-Distribution table is : Z0.05 = 1.645

Since Z cal>Z tab, the null hypothesis is not acceptable. So at 5% level of significance, it can be said that
Customers can transact cash quickly.

strong
agree H3
agree 7%
neither 12% strong
agree nor disagree
disagree 40%
4%

disagree
37%

Fig-3: The Competitive interest rate does not meet customer satisfaction.

04 H1: Credit system of JBL is easier then other competitive Bank

Ho: Credit system of JBL is not easier then other competitive Bank

HO: μ = 2.5
HA: μ > 2.5
N = 40

Here = 3.45
σ = 1.51

Z cal= ( – μ)/ (σ/√n) = 4.13

 48

At 5% level of significance, the value of Z-Distribution table is : Z0.05 = 1.645

Since Z cal< Z tab, the null hypothesis is acceptable. So at 5% level of significance, it can be said that the
Competitive interest rate meets customer satisfaction.

strong
H4 disagree
strong
16%
agree
36%

disagree
24%
agree
19% neither
agree nor
disagree
5%

Fig-4 Credit system of MTBL is easier then other competitive Bank

05. H1: Retail Credit System of JBL can develop customer business

Ho: Retail Credit System of JBLcan not develop customer business

.
HO: μ = 2.5
HA: μ > 2.5
N = 40

Here = 3.8
σ = 1.324

Z cal= (X – μ)/ (σ/√n) = 6.19

At 5% level of significance, the value of Z-Distribution table is : Z0.05 = 1.645

Since Z cal< Z tab, the null hypothesis is acceptable. So at 5% level of significance, it can be said that The
convenient ATM location of JBL represents the attention of customers.
 49

strong
H 5 disagree
strong 9% disagree
agree 15%
40%
neither
agree nor
disagree
8%
agree
30%

Fig-5: Respondents’ view the convenient Retail Credit System of MTBL can develop customer business

6. H1: Credit Committee Of JBLUttara branch is skillful& helpful

Ho: Credit Committee of JBL Uttara branch is not skillful& helpful

HO: μ = 2.5

HA: μ > 2.5

N = 40

Here = 3.85
σ = 1.387

Z cal= (X – μ)/ (σ/√n) = 6.16

At 5% level of significance, the value of Z-Distribution table is: Z0.05 = 1.645

Since Z cal< Z tab, the null hypothesis is acceptable. So at 5% level of significance, it can be said that the
employees of JBL always keen to help customers.
 50

strong
H 6 disagree
8% disagree
strong 8% neither
agree agree nor
44% disagree
6%
agree
34%

Fig-6: Respondents’ view the employees of JBL Credit Committee Of MTBL Tongi branch is skillfull&
helpful

7. H1: The employees of JBL always keen to help customers.

H0: The employee of JBL does not always keen to help customers.

HO: μ = 2.5

HA: μ > 2.5

N = 40

Here X = 4.27
σ = 0.985

Z cal= (X – μ)/ (σ/√n) = 11.35

At 5% level of significance, the value of Z-Distribution table is : Z0.05 = 1.645

Since Z cal>Z tab, the null hypothesis is not acceptable. So at 5% level of significance, it can be said that staff
of Cash section provide trustworthy customers service.
 51

strong neither disagree

H 7 disagree agree nor 7%
4% disagree
0%
strong
agree
49% agree
40%

Fig-7: Respondents staff of The employees of JBL always keen to help customers.

8. H1: Staff of Credit section provide trustworthy customers service.

H0: Staff of Creditsection does not provide trustworthy customers service

HO: μ = 2.5

HA: μ > 2.5

N = 4o

Here X=4.5
σ = 1.054

Z cal= (X – μ)/ (σ/√n) = 10.78

At 5% level of significance, the value of Z-Distribution table is: Z0.05 = 1.645

Since Z cal>Z tab, the null hypothesis is not acceptable. So at 5% level of significance, it can be said that
faster remittance service is efficient method of JBL customer’s satisfaction.
 52

strong
H 8 disagree disagree neither
5% agree nor
5%
disagree
4%
strong
agree
agree
52%
34%

Fig-8: Respondents’ view towards Staff of Credit section provide trustworthy customers service

9. H1: Credit system of JBL is effective part on customer satisfaction.

H0: Credit system of JBL is not effective part on customer satisfaction.

HO: μ = 2.5

HA: μ > 2.5

N = 40

Here X= 3.675
σ = 1.227

Z cal= (X – μ)/ (σ/√n) = 6.18

At 5% level of significance, the value of Z-Distribution table is: Z0.05 = 1.645
Since Z cal>Z tab, the null hypothesis is not acceptable. So at 5% level of significance, it can be said that
online banking of MTB is effective part on customer satisfaction.
strong
strong H 9 disagree
agree 10% disagree
25% 8%
neither
agree nor
disagree
12%
agree
45%
 53

Fig-9: Respondents’ view towards Credit system of JBL is effective part on customer satisfaction

10. H1: Commitment to the customers is the effective method of JBL to attention customers.

H0: Commitment to the customers is not the effective method of JBL to attention customers.

HO: μ = 2.50

HA: μ > 2.50

N = 40

Here X = 3.75
σ = 1.235

Z cal= (X– μ)/ (σ/√n) = 6.41

At 5% level of significance, the value of Z-Distribution table is: Z0.05 = 1.645

Since Z cal>Z tab, the null hypothesis is not acceptable. So at 5% level of significance, it can be said that
commitment to the customers is the effective method of JBL to attention customers.

strong
strong
H10 disagree
agree 9% disagree
30% 13%
neither
agree nor
disagree
8%
agree
43%

Fig-10: Respondents’ view towards commitment to the customers is the effective method of JBL to
attention customers.
 54

In my research part I have also done Regressions by SPSS. In my research are given bellow.

Interpretation:
We would like to say our variable is
Dependable:
Loan on interest rate

In dependable:

1. Customer satisfaction
2. Credit system.

Regression:

Regression is the measure of average relationship between two or more variable in terms of original units
of data.

Expected mean and standard deviation:

Descriptive Statistics

Std.
Mean Deviation N
Loanon interest
3.1250 .88252 40
rate
customer
3.9313 .63546 40
satisfaction
credit system 3.9500 .71830 40

In my linear regression loan on interest rate is low and credit system is high. standard deviation measure the
variability of individual variables. Standard deviation is low in customer satisfaction. So customer
satisfaction is less risky with more expected mean. So customer satisfaction is acceptable.
 55

Covariance and correlation:

Correlations

Loanoni customer
nterestrat satisfactio credit
e n system
Pearson Loanoninterestrate 1.000 -.045 .069
Correlation Customersatisfacti
-.045 1.000 .292
on
Creditsystem .069 .292 1.000
Sig. (1-tailed) Loanoninterestrate . .391 .337
customer
.391 . .034
satisfaction
credit system .337 .034 .
N Loanoninterestrate 40 40 40
customer
40 40 40
satisfaction
credit system 40 40 40

Coefficient Correlations (a)

customer
Mode credit satisfactio
l system n
1 Correlation credit system 1.000 -.292
s customer
-.292 1.000
satisfaction
Covariance credit system .044 -.015
customer
-.015 .056
satisfaction

a Dependent Variable: loanoninterestrate

Covariance and correlation measure how to variables are randomly related. It measures the positive or
negative related to other variable. In these case loan on interest and credit system are positive correlation
each other but customer satisfaction is negative correlation with loan on interest rate and credit system. In
the same way model 1 customer satisfaction is negative correlation compare with credit system. Covariance
is also a positive relation with credit system and negative relation with customer satisfaction.

Multiple R

Multiple regressions is the model that define, relation between dependable variable (y) and one or more in
in dependable variable (x). When regression occurs in one variable, it is called simple regression and when
it occurs more than two (2) it is called multiple regressions.
R square:
 56

A statistical measure that represents the percentage of a fund or security's movements that can be explained
by movements in a benchmark index.
R2 is simply the square of the sample correlation coefficient between the outcomes and their predicted
values, between the outcomes and the values of the single regressions being used for prediction.

Model Summary(b)

Std. Error
Adjusted of the
R R Square R Square Estimate Change Statistics
Mode R Square F Sig. F R Square F
l Change Change df1 df2 Change Change Change df1 df2
1 .097(a) .009 -.044 .90181 .009 .175 2 37 .840

a Predictors: (Constant), credit system, customer satisfaction

b Dependent Variable: loanon interest rate

ANOVA(b)

Mode Sum of Mean

l Squares df Square F Sig.
1 Regressio
.284 2 .142 .175 .840(a)
n
Residual 30.091 37 .813
Total 30.375 39

a Predictors: (Constant), credit system, customersatisfaction

b Dependent Variable: loanoninterstate

An ANOVA is an analysis of the variation present in an experiment. It is the test of hypothesis that the
variation in an experiment is no greater than that due to normal variance of individuals characteristics and
error in their measurement. The test in ANOVA are based on the F- ratio, thevariation due to experimental
error. The hypothesis is reject if the F-ratio is significally large enough that that the possibility of it
equaling1.0 is smaller than somepre- assigned criteria such as .05.

So in my hypothesis is smaller and it is .175. So it is acceptable.

Multiple regressions:

Multiple R 0.097

R Square 0.009
 57

Multiple R: Our regressions result is very near from the 1. So there is a very higher positive correlation
between dependable and in dependable variable.
R square: R2 value is .009 It almost near 0. So there is a less possibilities correlation coefficient between
the outcomes and their predicted values.

Coefficient:

This model define is a statistics model its main purpose is the prediction of future outcomes on the basis of
other related information. An R2 near 1.0 indicates that a regression line fits the data well, while an R2
closer to 0 indicates a regression line does not fit the data very well.

Coefficients X Variable 1 credit system= 1.00

X Variable2 customer satisfaction= -.292

Coefficient: In these regression changes credit system is 1.00 and customer satisfaction is-.292 against one
(1) unit of loan on interest rate. This data does not fit very well. Because R2 is very close to the 0.

Coefficients(a)

Stand
M Unstanda ardize 95% Collinea
o rdized d Confidence Corre rity
d Coefficie Coeffi Interval for lation Statistic
el nts cients t Sig. B s s
Lowe
r Tole Std.
Std. Be Boun Upper Zero- Pa ranc VI Erro
B Error ta d Bound order Partial rt e F B r
1 (Consta
3.081 1.063 2.899 .006 .927 5.234
nt)
custome
- - -
r - .9 1.09
-.099 .238 .07 -.417 .679 -.580 .382 .04 .06
satisfact .068 15 3
1 5 8
ion
credit .08 .06 .08 .9 1.09
.110 .210 .522 .605 -.316 .536 .086
system 9 9 5 15 3

a Dependent Variable: loanoninterestrate

Beta. Beta is a systematic risk. It cannot be divert. It always measure the total market risk. Total market risk
is one(1). In this regressions customer satisfaction beta is -.071. It means less possibilities to profit against
less risk. On other other hand Credit system beta is .081. It is close one. It is ideally absolute possibilities to
profit with actual risk.
 58

Findings

Findings according to the respondents’ opinion toward hypothesis:

1. At 35% of respondents agree; 45% of respondents are Strongly Aggree and 12.5% of respondents
are disagreed that accuracy of banking records has positive effect on customer satisfaction.
2. At 2.4% of respondents disagree; 5% of respondents are neither disagree nor agreed that the
distinctive product and services of JBL draw the attention of customers.
3. At 40% of respondents strongly dis agree and 37.5% of respondents are disagree and 7.5% of
respondents are strongly agreed that competitive interest rste cannot customer satisfaction.
4. At 20% of respondents agree and 37.5% of respondents are strongly agree and 25% of respondents
are disagree that credit system of JBL is not easier then other bank .
5. At 30% of respondents agree and 40% of respondents are strongly agreed and 7.5% of respondents
are neither disagree nor agreed that the Credit system of JBL can develop customer service.
6. At 30% of respondents agree and 40% of respondents are strongly agreed and 7.5% of respondents
are neither disagree nor agreed that Credit Committee JBL Is skill & helpful .
7. At 35% of respondents agree and 52.5% of respondents are strongly agreed and .04% of respondents
are neither disagree nor agreed that Staff of JBL always keen to customer help.
8. At 45% of respondents agree and 25% of respondents are disagreed and 12.5% of respondents are
neither disagree nor agreed that staff credit committee give trustworthy service

9. At 45% of respondents agree and 12.5% of respondents are disagreed and 25% of respondents are
strongly agreed that Credit system of JBL is effective part on customer satisfaction.
10. At 42.5% of respondents agree and 30% of respondents are strongly agreed and 7.5% of respondents
are neither disagree nor agreed that commitment to the customers is the effective method of JBL to
attention customers.
 59

7.2 Recommendation

Although every hypothesis have accept alternative hypothesis, some of customer do not agree. So based on
my experience, I would like to put my some recommendations:

1. Janata Bank should be increasing their Credit Monitoring speed.

2. Should be design for summarize the financials and necessary information of the clients
3. Janatacan be flexible their interest rate.
4. Janata Bank should be easier the Credit system then other competitive Bank.

5. The Credit system of JBLmaybe more helpful for develop their Customer business
6. The employee of Credit committee of JBL Try to develop their system

7. Credit committeecan try keen to customer service

8. Credit department service can be faster with honesty.
9. Credit service can be efficient

10. Sufficient Workforce & allocate a standard Risk Assessment time

8.1. Conclusion
As an organization Janata Bank Limited has earned the reputation of top banking operation in Bangladesh.
The organization is much more structured compared to any other public commercial bank in Bangladesh. It
is relentless in pursuit of business innovation and improvement. It has a reputation as a partner of consumer
growth.
With a bulk of qualified and experienced human resource, Janata Bank Limited can exploit any opportunity
in the banking sector. It is pioneer in introducing many new products and services in the banking sector of
the country. Moreover, in the overall-banking sector, it is unmatched with any other banks because of its
wide spread branch networking thought the country.

The current situation of Janata bank Limited is satisfactory. But in the age of competition if the bank does
not provide extra ordinary that means superior services than it will be difficult to continue banking because
every body wants to maintain quality. In general banking portion Janata Bank Limited has some problem.
On the other hand in Ratios – liquidity, efficiency and leverage ratio of Janata Bank Limited is satisfactory
which indicates better position of Janata Bank Limited. But profitability ratio of the bank is not satisfactory
so Janata Bank Limited should take necessary steps to beat the overall problem as early as possible. And
when Janata Bank Limited is able to overcome this type of problem then it would be more structured
compared to any other bank operating local or foreign in Bangladesh.
 60

9.1. Bibliography
1. Annual report 2010, Janata Bank Limited, Dhaka,

2. www.Janatabank.com

3. BB policy Guidelines for GB.

4. JBL’s internal documents of GB.

5. www.reportinternee.com

6. Working Report of Credit Policy with CRM guideline

Appendix
BB-Bangladesh Bank

CRM-Credit Risk Management

SMA - Special Mention Account

NPL - Non Performing Loan

FSS - Financial Spread Sheet

KYC - Know Your Customer

CIB - Credit Information Bureau

GB- General Banking

CRG - Credit Risk Grading

RM - Risk Manager/ Relationship Manager

SME - Small & Medium Enterprise

JBL-Janata Bank Ltd

CRGM- Credit Risk Grading Manual

EAS - Early Alert System

SS- Substandard

DF- Doubtful Loan

BL- Bad Loan

 61

QUESTIONNAIRES FOR CUSTOMER OF JANATA BANK LIMITED, UTTARA MODEL TOWN

CORPORATE BRANCH

Sir,
I‘m Md.Enamul Hoque, a student of BBA (Major in Finance and minor in accounting) from Independent
University, Bangladesh (IUB). I am conducting a report on topic, “Retail Loan &Advance of Janata Bank
Ltd.” For my BBA 499 Practicum course. I need your valuable opinion. Let me assure you that all the
information provided by you will be used only for academic purpose and kept under strict secrecy.
Customer Information

Name:

Gender: □ Male □ Female

Ag: □ 20 – 25 Years □ 26 – 45 Years □ More than 45 Years

Occupation: □ Service holder □ Student □ Businessman □ Housewife

□ Others…………........................

i. Accuracy of banking records has positive effect on customer satisfaction.

Strongly Disagree Neither agree Agree Strongly

Disagree nor disagree Agree

2----- 5------ 1----- 14------ 18------

ii. The distinctive product and services of JBL draw the attention of customers.

Strongly Disagree Neither agree Agree Strongly

Disagree nor disagree Agree
2----- 6------ 2----- 13------ 17------

iii. The Competitive interest rate meets customer satisfaction.

Strongly Disagree Neither agree Agree Strongly

Disagree nor disagree Agree

16----- 15------ 1----- 5------ 3------

 62

iv Credit system of JBL is easier then other competitive Bank

Strongly Disagree Neither agree Agree Strongly
Disagree nor disagree Agree

6----- 10------ 2----- 8------ 14------

V Retail Credit System of JBL can develop customer business

Strongly Disagree Neither agree Agree Strongly
Disagree nor disagree Agree

3----- 6------ 3----- 12------ 16------

Vi Credit Committee Of JBLUttara branch is skillfull& helpful

Strongly Disagree Neither agree Agree Strongly
Disagree nor disagree Agree

5----- 3------ 2----- 13------ 17------

Vii The employees of JBL always keen to help customers.

Strongly Disagree Neither agree Agree Strongly
Disagree nor disagree Agree

1----- 3------ 0----- 16------ 20------

Viii Staff of Credit section provide trustworthy customers service

Strongly Disagree Neither agree Agree Strongly
Disagree nor disagree Agree

2----- 2------ 1----- 14------ 21------

Ix Credit system of JBL is effective part on customer satisfaction.

Strongly Disagree Neither agree Agree Strongly

Disagree nor disagree Agree

4----- 3------ 5----- 18------ 10------

X Commitment to the customers is the effective method of JBL to attention customers

 63

Strongly Disagree Neither agree Agree Strongly

Disagree nor disagree Agree

3----- 5------ 3----- 17------ 12------

iv. Do you have any recommendation about the way of develop our Credit System?

…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………
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Thank You