Introduction
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As it
maintains the pace with the competitive banking business world, its activities culture,
philosophy and style leads as a banker to be knowledge of my working life.
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Secondary Sources:
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Chapter Two
2.1 Introduction
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The overall performance of the external sector witnessed a moderate growth during
FY10. Despite spillover effects of the turbulent external economic conditions as well as
the global liquidity crunch, adequate inflow of foreign exchange through export and
remittance channels kept the foreign exchange market stable. Besides, the bumper
production in rice sector together with sluggish external demand for RMG have lowered
import of rice, fabrics, cotton, yarn etc.. In addition to that slowdown of new investment
also lowered input demand, which all together are responsible for the lower demand for
foreign exchange and helped Taka-Dollar exchange rate almost stable. Double-digit
growth rate of remittances and moderate export receipts helped increase gross foreign
exchange reserve by USD 1.3 billion (or 21.5 percent) to USD 7.5 billion at the end of
FY09 which increased further and stood at 10.8 billion at the end of June 2010 with a
remarkable growth of 43.9 percent compared to FY09. However, Taka depreciated
against US Dollar by a mild 0.6 percent during the FY10.
percent) in FY10 to USD 21388.0 million. Import of spices sugar, pulses (all sorts),
pharmaceutical products, edible oil, wheat, plastic and rubber & articles thereof, capital
machinery, raw cotton, tanning & dying extracts, clinker induced to increase overall
import. On the other hand, there is significant fall in import payments for rice (68.6
percent) because of bumper production, import restriction from India and increased price
in International market. Decreased import payments is showed for fertiliser (24.9
percent), oil seeds (18.2 percent), yarn (9.3 percent), crude petroleum (8.4 percent),
textile & articles thereof (5.4 percent), iron, steel & other base metal (3.3 percent).
Imports (c&f) as a percentage of GDP decreased by 1.4 percentage points from 25.2
percent in FY09 to 23.8 percent in FY10
The trade deficit widened by 9.4 percent in FY10 owing to the relatively larger expansion
in import payment compared to the increase in export earnings. Therefore, a higher
increase in imports than export somewhat widened the trade deficit from USD 4710.0
million in FY09 to USD 5152.0 million in FY10. The deficit on the services account,
however, narrowed down to
USD 1237.0 million in FY10 from USD 1616.0 million in the previous year. On the
contrary, the deficit on the income accounts rose slightly to USD 1487.0 million in FY10
from USD 1484.0 million in FY09. Current transfers increased substantially from USD
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10226.0 million in FY09 to USD 11610.0 million in FY10, thanks to a hefty 13.4 percent
rise in workers remittances. The net outcome of all these developments widened
substantially the current account surplus from USD 2416.0 million in FY09 to USD
3734.0 million in FY10. Current account balance as a percentage of GDP stood at 3.7 in
FY10 against 2.8 in FY09.
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Chapter Three
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Registered address
Legal status
Date of incorporation
Bangladesh.
Public limited
21 may, 2007.
Paid up capital
Website
Swift code
2593 million
www/janatabankltd.-bd.com
JANB BD DH
Fax
Pabx ; 9560000
Janata Bank Limited is one of the largest nationalized banks in Bangladesh. The bank has
13 area offices and 29 regional offices all over the country. Computerized branches of the
bank are 346. Total numbers of branches are 872 including one Local office. Bank has 4
overseas Branches it is linked with 1202 foreign correspondents all over the world.
Overseas branches are:
1. Abu Dhabi
2. Sharjah
3. Dubai 4. Al-Ain
Chairman
Managing Director(CEO)
General Manager
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First
Assistant
General
Manager
Senior Executive Officer
Executive Officer
Assistant
Executive
Officer
7. STD Account
8. Multi Currency Account
9. Foreign Currency Deposit Account
10. Non Resident Taka Account
11. NFCD (Non Resident Foreign Currency Deposit Account)
12. NITA (Non Resident Investors Taka Account)
B) Loan Products:
1. Consumers Credit Schemes:
a.
b.
Doctors Loan
c.
Travel Loan
d.
Car Loan
e.
f.
g.
Education Loan
h.
Marriage Loan
i.
Hospitalization Loan
2. Lease Finance
3. Hire Purchase
4. Small and Medium Enterprise Credit Scheme
5. Loan Against Shares and Securities
6. House Building Financing Scheme
7. Financing Scheme for Contractors
8. Computer Software Financing Scheme
9. Working Capital Financing
10. Industrial Financing
4. Transferring money from one place to another; and from one branch to
another branch of the bank.
5. Standing guarantee on behalf of its customers, for making payments for
purchase of goods, machinery, vehicles etc.
6. Collecting and supplying business information;
7. Issuing demand drafts and pay orders; and,
8. Providing reports on the credit worthiness of customers.
Strengths
1. Strong corporate identity
According to the customers, Janata Bank Limited is the leading provider of financial
services identity worldwide. With its strong corporate image and identity, it has better
positioned itself in the minds of the customers. This image has helped Janata Bank
Limited grab the personal banking sector of Bangladesh very rapidly.
2. Strong employee bonding and belongings
Janata Bank Limited employees are one of the major assets of the company. The
employees of Janata Bank Limited have a strong sense of commitment towards
organization and also feel proud and a sense of belonging towards Janata Bank Limited.
The strong organizational culture of Janata Bank Limited is the main reason behind its
strength.
3. Efficient Performance
It has been seen from customers opinion that Janata Bank Limited provides hassle-free
customer services to its client comparing to other financial institutions of Bangladesh.
Personalized approach to the needs of customers is its motto.
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Weaknesses
1. High charges of L/C
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Presently Janata Bank Limited charges same rates for all types of import L/C. But for
import L/C of exports-oriented industry, Janata Bank Limited should reduce the charge of
L/C. As a result, exporter will be benefited and the country will earn more foreign
exchange. The commission often even rises up to 30%.
Opportunities
1. Distinct operating procedures
Repayment capacity as assessed by Janata Bank Limited of individual client helps to
decide how much one can borrow. As the whole lending process is based on a client's
repayment capacity, the recovery rate of Janata Bank Limited is close to 100%. This
provides Janata Bank Limited financial stability & gears up Janata Bank Limited to be
remaining in the business for the long run.
Bank Limited has employed experienced managers to facilitate its operation. These
managers have already triggered the business for Janata Bank Limited as being new in
the market.
4. Huge Population
Bangladesh is a developing country to satisfy the needs of the huge population, a large
amount of investment is required. On the other hand, building EPZ areas and some Govt.
policies easing foreign investment in our country made it attractive to the foreigners to
invest in our country. So, Janata Bank Limited has a large opportunity here.
6. Bigger Market
Although the GDP per head decreased a bit in 2010 from 2009, there is a huge untapped
market that requires loans and intends to deposit also.
3.9.4 Threats
1. Upcoming Banks/Branches
The upcoming private, local, & multinational banks posses serious threats to the existing
banking network of Janata Bank Limited it is expected that in the next few years more
commercial banks will emerge. If that happens the intensity of competition will rise
further and banks will have to develop strategies to compete against and win the battle of
banks.
2. Similar products are offered by other banks
Now-a-days different foreign and private banks are also offering similar type of products
with an almost similar profit margin. So, if all competitors fight with the same weapon,
the natural result is declining profit.
3. Default Loans
The problem of non-performing loans or default loans is very minimum or insignificant.
However, this problem may rise in the future thus; Default Loans The problem of non19 | P a g e
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Chapter Four
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Through my jobs at Janata bank limited, I have had gathered some rules of regulations of
L/C. As I am a newly appointed employee that is why I did not have to deal with the
customers that much but there were a lot of responsibilities that I had. Such as:
Putting seals
Taking signatures
Doing the similar things for BTB (Back-to-Back) LCs and Local LCs
Learned how to receive mail and send out mail via courier
Counting vouchers
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Chapter Five
5.1 Introduction
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Foreign exchange is the means and methods by which rights to wealth in a countrys
currency are converted into rights to wealth in another countrys currency. In banks when
we talk of foreign exchange, we refer to the general mechanism by which a bank converts
currency of one country into that of another. Foreign Exchange Department (FED) is the
international department Bangladesh Bank issues license to scheduled banks to deal with
foreign exchange. These banks are known as Authorized Dealers.
If the branch is
authorized dealer in foreign exchange market, it can remit foreign exchange from local
country to foreign countries. So the bank is an authorized dealer.
5.2 Import
To import, a person should be competent to be an importer. According to Import and
Export Control Act, 1950, the Office Of Chief Controller Of Import and Export provides
the registration (IRC) to the importer. In an international business environment, buyers
and sellers are generally unknown to each other. So seller of goods always seeks security
for the payment of his exported goods. Bank gives export guarantee that it will pay for
the goods on behalf of the buyer if the buyer does not pay. This guarantee is called Letter
of Credit. Thus the contract between importer and exporter is given a legal shape by the
banker by Letter of Credit.
Advance against a Trust Receipt obtained from the Customers are allowed to only
first class tested parties when the documents covering an import shipment or other
goods pledged to the Bank as security are given without payment. However, for
such advances prior permission/sanction from Head Office must be obtained,
The customer holds the goods or their sale-proceeds in trust for the Bank, till such
time, the loan allowed against the Trust Receipts is fully paid off.
The Trust Receipt is a document that creates the Banker's lien on the goods and
practically amounts to hypothecation of the proceeds of sale in discharge of the
lien.
5.7 Export
The goods and services sold by Bangladesh to foreign households, businessmen and
Government are called export. The export trade of the country is regulated by the Imports
and Exports (control) Act, 1950. There are a number of formalities, which an exporter has
to fulfill before and after shipment of goods. The exports from Bangladesh are subject to
export trade control exercised by the Ministry Of Commerce through Chief Controller of
Imports and Exports (CCI & E). No exporter is allowed to export any commodity
permissible for export from Bangladesh unless he is registered with CCI & E and holds
valid Export Registration Certificate (ERC). The ERC is required to be renewed every
year, The ERC number is to be incorporated on EXP forms and other documents
connected with exports. The formalities and procedure are enumerated as follows:
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Realization of proceeds: This is the period when the issuing bank has
realized the payment.
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It negotiates the bills and other shipping documents in Favor of the exporter. That is, it
collects the proceeds of the export-bill from the drawer and credits the exporter's account
for the same. Collection proceed from the export bill is deposited in the bank's NOSTRO
account in the importer's country. Sometimes the bank purchases the bills at discount and
waits till maturity of the bill. When the bill matures, bank presents it to the drawer to encash it.
In our country, Export and Import operation of bank is very much related with one
another because of use of Back to Back and maturity of payment for Back-to-Back L/C
is set in such that it can be paid out of export proceeds.
Date of shipment
Expiry date and place
4. Applicant/ for order of/ On Account.
5. Beneficiary/ Favoring
6. Amount
7. Availability of Credit
8. Partial shipment/ Transshipment
9. Payment condition /Draft Sight
10. Category.
11. Description of goods:
Item
Total Qty
Unit price
12. B/L Clause
13. Reimbursement clause.
14. UCPDC Clause
15. Net FOB value.
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possible as directors the most powerful persons and bank management must give
priority towards the decision of the directors. This phenomenon is very common
in the bank which hampers the spontaneous procedure of credit appraisal.
7. Bangladesh Bank monitors all the policies of all the private and nationalized
banks of the country. According to the Bangladesh Banks strategy, all banks must
possess the standard policies which are designed by the central bank. Janata Bank
Ltd. also possesses a standard credit proposal form. In that form all necessary
information are required to fill up. But in practice credit officers do not fill up the
proposal form properly. Most of the cases, they use assumption rather than exact
figure. This practice might end up with bad or classified one.
8. A standard policy starts from the customers direct application for the loan in the
branch office. But its a common phenomenon that most of the customers directly
contact with Head office and Head office choose the branch offices to disburse the
loan. It hampers the normal procedure. Branches always stay under pressure when
they get order for disbursement from Head office. When branches get order from
the head office, then appraisal system loses its formal track. So Head office
should not send any order to the branch office without prior appraisal.
9. Every bank has its own budget and plan regarding loan portfolio. This loan
portfolio must be diversified so that bank could diversify its risk. A proper and
preplanned portfolio can eliminate the risk of huge classified loan or bad loans as
this aspect is very much sensitive toward many external and internal factors. The
bank under study i.e. Janata Bank Ltd. does not have any proper guide line where
to invest; moreover they do not do any future plan to maintain a well structured
portfolio to decrease the possibility of classified loan. This type of practice is
working as an obstacle in smooth credit disbursement as well as in credit
appraisal system.
10. Most of the loans that JBL distributes are as cash credit hypothecation and JBL
emphasizes less on demand loan.
11. JBL distribute loans without sufficient security in some cases. This is violation of
the Bangladesh bank order.
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12. In many cases bank face this problem because banks credit officer fails to value
collateral property. Proper valuation means collateral will exactly cover the risk of
bad loan. Officials must do it with due care.
13. The recovery performance of JBL is not in a satisfactory level at all and the
position of those in that respect deteriorated heavily during last two phases. The
recovery performance in agriculture is worse than in other sectors. On the other
hand, as private sector banks distribute more loans on short term basis and
relatively better than public sector. But if we compare it from the efficiency point,
then it is clear that they are not still efficient in credit management as they are
unable to recover half of their distributed loan in different sectors.
14. During first phase 15.71% of the total loan of JBL became classified and this
classified loan came down to 23% in the second phase.
15. JB does not keep enough provisions against classified loans and advances.
16. Private sector banks are relatively efficient in processing and executing legal
actions against defaulters for their nonpayment of loans and advances in due time
that of public sector bank.
17. The credit management of JBL are not fully conformity with the guidelines
prescribed in the bank companies Act 1991 and International Accounting
Standerd-45(IAS-45)
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Chapter Six
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6.1 Conclusion
I have tried my best about the different aspects of Banking in Janata Bank Ltd. For my
report, I have selected Janata bank. JBL plays an important role in the banking sector as
well as in our economy. The success of a bank depends largely on the efficient credit
management. A successful credit management is not only need for a banks own
performance but also it is needed for the smooth development of an economy. In any
strategy of economic development, therefore, it is essential to emphasize the evaluation
of a sound and well integrated credit management system from the view point of both
resources mobilization and efficient allocation of funds. In conclusion it can be suggested
a number of recommendations in order to overcome the problems and how to remove the
causes of problem in credit management.
6.2 Recommendation
Since this an exploratory research, hence the recommendation given are not decisions
rather they are only suggestions to improve the default rate. The recommendations are
made on the basis of survey findings.
1. Central Bank should take proper actions for ensuring equivalent distribution of loans
and advances.
2. Lending policies in our country should be geared to growth potential rather than being
determined by the pre-existing collateral.
3. Changes in lending policies will not suffice the purposes unless it is followed by a
change in the attitude and out look of both the borrowers and the bankers.
4. Improvement of credit management depends on the development of relevant, adequate,
proper and reliable data base at the public sector banks as well as private sector banks in
Bangladesh.
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5. For developing a reliable credit management system for the commercial banks
specially Janata Bank, it should require to introduce as improved information system
within bank as well as among the borrowers. Because ultimately it is what a borrower
does with money that should guide the credit plan, the borrowers also have to know
exactly where they are going, what their opportunities and how fast they can move.
6. The security must be valued properly by the independent valuers and constantly
watched so that the value of mortgage property becomes sufficient to recover the default
loan.
7. Publishing the names of defaulter as well as good and regular payers in various dailies
and granting various sorts of facilities to good borrowers will create a moral persuasion
on the borrowers. This may decrease the number of defaulters and the volume of large
outstanding loan amounts as well.
8. Pressure from outsider and influence extorted by borrowers are also a great
impediment in the smooth functioning of loan recovery process. The role of government
in this case is the most important factor required to solve these sorts of problem.
9. More and more competent personnel must be recruited to reduce the weakness of
credit management. Competent executives will ensure the reduction of wrong appraisal
and evaluation of projects.
10. Prompt legal actions be taken against willful loan defaulters
11. The new entrepreneurs should be encouraged in disturbing loans and those who have
the records of regular payment, should be given preference.
12. Steps should be taken so that guarantors cannot avoid their responsibility.
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13. It is observed that the defaulters generally get various sorts of exemptions as declared
by the government from time to time. Government must not show any kind of mercy to
the defaulters in any way which may encourage the default culture. This type of action
may discourse the borrowers to become willful defaulters.
14. The existing huge amount of classified loans demand for special and corrective
attention for example:
Additional security.
15. The attempt to encourage banks to require borrowers comply with banking laws and
regulations and clear up industrial properties prior to granting a loan.
16. JBL should follow some straight ward mechanical procedures in assessing the risk of
a borrower.
17. The formulation of a sound credit policy in the possibility of default loans
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References
1. Annual Report of Janata Bank Ltd, 2009-2010
2.
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