Analysis Credit Department of Jamuna Bank Limited

Analysis Credit Department of Jamuna Bank Limited

Jamuna Bank Ltd. is a third generation bank in Bangladesh. It provides commercial banking services in the Bangladesh. It is playing an important role to develop the business sector. The growth of this bank is very good. Its motto is to provide a prompt and quick service to the clients. Jamuna Bank Ltd. has implemented well structured online banking systems that make it easier to provide prompt services to the customer. The bank primarily engages in corporate banking, trade finance, project finance, retail banking, small enterprise finance, consumer finance, and syndication. Its range of service offerings include cash management services, payments and clearings, safe deposit locker services, employee benefits, collection services, treasury services, asset management, services and SWIFT for foreign trade.

History

Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994 with its Head Office at Chini Shilpa Bhaban, 3, Dilkusha C/A, Dhaka-1000. The Bank started its operation from 3^rd June 2001.

Jamuna Bank Limited is a highly capitalized new generation Bank with an Authorized Capital and Paid-up Capital of Tk.10000 million and Tk.4488 million respectively. The Paid-up capital has been raised to 840 million and the total equity of the bank stands at 8325 million as on December 31, 2012.

JBL undertakes all types of banking transactions to support the development of trade and commerce of the country. JBL’s services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units. Jamuna Bank Ltd. the only Bengali named new generation private commercial bank was established by a group of winning local entrepreneurs conceiving an idea of creating a model banking institution with different outlook to offer the valued customers, a comprehensive range of financial services and innovative products for sustainable mutual growth and prosperity. The sponsors are reputed personalities in the filed of trade, commerce and industries. The Bank is being managed and operated by a group of highly educated and professional team with diversified experience in finance and banking. The Management of the bank constantly focuses on understanding and anticipating customers’ needs. The scenario of banking business is changing day by day, so the bank’s responsibility is to device strategy and new products to cope with the changing environment. Jamuna Bank Ltd. has already achieved tremendous progress within only twelve years. The bank has already ranked at top of the quality service providers & is known for its reputation.

Jamuna Bank Ltd. offers different types of Corporate and Personal Banking Services involving all segments of the society within the purview of rules and regulations laid down by the Central Bank and other regulatory authorities. As per the provisions of Bangladesh Bank license, the Bank has offered initially its shares to public by Pre – IPO and subsequently sold shares to the public through IPO in the year 2004. The shares of the Bank are listed with both Dhaka Stock Exchange Ltd. & Chittagong Stock Exchange Ltd.

Mission and Vision

Mission

The bank is committed to satisfy diverse need of its customers through an array of products at a competitive price by using appropriate technology and providing timely service so that a sustainable growth, reasonable return and contribution to the development of the country can be ensure with a motivated and professional workforce.

Vision

To become a leading banking institution by playing a significant role in the development of the country

Objectives of JBL

• To establish relationship banking and improve service quality through development of Strategic Marketing Plans.
• To remain one of the best banks in Bangladesh in terms of profitability and assets quality.
• To ensure an adequate rate of return on investment.
• To keep risk position at an acceptable range (including any off balance sheet risk).
• To maintain adequate liquidity to meet maturing obligations and commitments.
• To pursue an effective system of management by ensuring compliance to ethical norms, transparency and accountability at all levels.

Core Values

• Place customer interest and satisfaction as first priority and provide customized banking products and services.
• Value addition to the stakeholders through attaining excellence in banking operation.
• Contribute significantly for the betterment of society.
• Ensure higher degree of motivation and dignified working environment for our human capital and respect optimal work-life balance.
• Committed to protect the environment and go green.
• Employees of JBL share certain common values, which helps to create a JBL culture
• The client comes first.
• Search for professional excellence.
• Quick decision‐
• Flexibility and prompt response.

Product/Service Offerings

The Bank has a collection of mode that prepared financial products and services. Such products are based on Monthly Savings Schemes, Consumer Credit Schemes, Lease Finance and Personal Loan for Women and Shop Finance Scheme etc. Jamuna Bank Ltd, also familiar with Q-cash ATM cards for its valued customers providing 24 hours banking services through Debit Cards.JBL offers the following services to valued customer. The Bank is providing different types of services. Some of them are mentioned in below:

• Deposit Schemes
• Remittance and Collection
• Import and Export handling and Finance
• Loan Syndication
• Project Finance
• Investment Banking
• Lease Finance
• Hire purchase
• Personal Loan for Woman
• 24-hours Banking: Q-Cash ATM facility
• Islamic Banking
• Corporate Banking
• Consumer Credit Scheme
• International Banking

Portfolio Management Service

Since inception, we have achieved an unparalleled reputation as a leading Merchant Banker through providing portfolio management services by maintaining a high level of professional expertise and integrity in client relationships. Keeping customer preferences as an investor in mind, Jamuna Bank Ltd. has designed Investors’ Discretionary Account (IDA) and Bank’s Discretionary Account (BDA). In these accounts the customers may enjoy loan facilities at a ratio 1:1 for investments in private placement, IPO, and secondary market operations.

JBL Special Banking Services:

Special Banking services of Jamuna Bank are considering the Personal services. The bank is offering wide ranging products and services. These services and products are matching with the customer’s requirements.

Transactions of accounts, savings schemes or loan facilities from Jamuna Bank Ltd make available for every customer in a unique and uniform mixture of easy and expert service superiority.

JBL offers the Special Banking Services like Current Deposit Account, Savings Deposit Account, Short Term Deposit Account, and Fixed Deposit Accounts. It also offers attractive rates on various deposit schemes.

JBL Corporate Banking Services

Jamuna Bank Ltd. offers a complete range of advisory, financing and operational services to its corporate client groups combining trade, treasury, investment and transactional banking activities in one package. The corporate Banking specialists will render high class service for speedy approvals and efficient processing to satisfy customer needs.

Corporate Banking business envelops a broad range of businesses and industries. You can leverage on the know-how in the following sectors mainly:

• Agro processing industry
• Industry (Import Substitute / Export oriented)
• Textile, Spinning, Dyeing/Printing
• Export Oriented Garments, Sweater.
• Engineering, Steel Mills
• Chemical and chemical products etc.
• Wholesale trade
• Transport · Hotels, Restaurants
• Non Bank Financial Institutions
• Loan Syndication
• Export Finance
• Import Finance

Online Banking

Jamuna Bank Limited has introduced real-time any branch banking on December 31, 2010. Now, customers can withdraw and deposit money from any of its 65 branches located at Dhaka, Chittagong, Sylhet, Gazipur, Bogra, Naogaon, Narayanganj, Dinajpur, Kushtia,Rajshahi, Bashurhat, Sirajganj and Munshigonj. The valued customers can also enjoy 24 hours banking service through ATM card from any of Q-cash ATMs located at Dhaka, Chittagong, Khulna, Sylhet and Bogra.

Types of Deposit account

There are several types of deposit accounts. Each account has different characteristics and every account has some specific purpose to serve.JBL offers the following key Personal Banking Services. According to their uniqueness they are described as follows:

Savings Account:

It is the general account of the JBL (Mirpur Branch) individual or more than two persons can open a savings account on JBL. The officers and authorize persons are issuing cheque book, deposit slips and statement of account to the holder of savings. The officer justifies the information that is submitted by the account holder for opening of the account. The officers of the bank process account-opening formalities.

Current Deposit Account:

JBL is one of the newly established well-reputed third generation private commercial bank in Bangladesh. It operates very diverse current account operation. They serve various types of customers, like current account for private limited company, current account for public limited company, current account for partnership business, etc.

Foreign Currency Account:

The JBL also operate Foreign Currency Account for Bangladeshi Wage Earners or for Foreign Nationals/Company/Firms etc. to send their valued earned foreign currency into the country.

Short Term Deposit Account (STD):

JBL also offers Short Term Deposit to its valued customers. Short Term Deposit is a deposit account where the payment of interest is paid on month basis. These items include the deposits for a period ranging from 7 (seven) days to 89 (eighty-nine) days. These types of liabilities are payable on special notice or after a specified period other than the fixed deposits. Some of these types of deposits are of the nature of time deposits. The rate of interest on STD account is 4.5% per annum. There are some rules and regulations that must be maintained by the STD account holder. If the STD account holder wants to withdraw the money from the account they have to inform the bank before, otherwise the account holder may not get the interest in full amount

Schemes:

Schemes are the most important sources of enhancing banks deposit. Mainly bank is the lender of money, which is deposited by various types of depositor. These schemes are different in nature and types and also in interest rates. These deposits give the customers to deposit the idle money in profit earning schemes and also provide the security. Jamuna Bank limited as third profit earning to the depositors and generation modern and technology based modern commercial bank offers various types of customer’s friendly deposit schemes to its valued customers. These schemes are highly also unique in security.

Marriage Deposit Scheme

Marriage of children, especially daughter is a matter of great concern to the parents. Marriage of children involves expense of considerable amount. Prudent parents make effort for gradual building of fund as per their capacity to meet the matrimonial expense of their children specially daughters. Parents get relief and can have peace of mind if they can arrange the necessary fund for marriage of their children.

Types of loan of what are offered by Jamuna Bank Limited

• Loan (General)
• House Building Loan (General
• House Building Loan (Staff)
• Other Loans to Staff
• Cash Credit (Hypo.)
• Cash Credit (Pledge)
• Corporate Social Responsibilities of the Jamuna Bank Limited
• Hire Purchase
• Lease Financing
• Time Loan
• Cons SOD (General)
• SOD (Others)
• SOD (Export)
• PAD
• LlM
• LTR
• IBP
• Export Cash Credit (ECC)
• Packing Credit (PC)
• F D B P
• IDBP
• F B P

Objectives of the Project

The first objective of writing this report is to fulfill the partial requirement of the BBA degree.

General Objective

The general objective of this report is to fulfill the requirement of internship report.

Specific objectives

• To acquire practical experience in different banking services of Jamuna Bank Limited.
• To gather knowledge about the transactions of different departments of the bank.
• To know about the Credit products and the way of disbursement.
• To inform the banking credit facilities to the mass people.
• To give some recommendations regarding the credit division.

Methodology

The report is descriptive in nature. To prepare a report gathering data is very important. The information was collected from both primary and secondary sources of data. Regarding the information required was collected within the organization from the Corporate Division of Jamuna Bank Limited

Primary data

• Practical desk work.
• Face to face conversation with the respective officers and clients.
• Questionnaire survey of Bank clients and employees.

Secondary data

• Study on Annual Reports of Jamuna Bank Limited.
• Online data from JBL website.
• Published unpublished or personally collected data from bank officers.

Credit Department of Jamuna Bank Limited

Bank’s basic work is to create a channel through depositing money from the surplus unit and provide funding to borrowers. Thus the necessity of credit department in bank occurs. The credit department is a very important department of a bank. The money mobilized from ultimate surplus units are allocated through this department to the ultimate deficit unit (borrower). The success of this department keeps a great influence over the profit of a bank. Failure of this department may lead the bank to huge losses or even to bankruptcy. Jamuna bank’s credit department also tries to do their job perfectly.

Credit Policy of JBL

Lending is one of the most important function of commercial bank, every bank should have own credit policy. The credit policy of JBL has been formulated on the basis of the following objectives:

• Outlines the steps to take to collect from past-due or late-paying customers and how to eliminate bad debt.
• Provides guidelines to legally collect money that is due to your company from slow or nonpaying customers and from bad checks
• To ensure that all customers are treated fairly when making credit decisions

In JBL most of the credit officers are familiar with their written credit policy or lending guidelines but few of them not know about credit policy. So they have got only some oral instruction from the senior management or in charge of credit. If all the Credit officers of JBL thoroughly know and understand their credit policy it will be very helpful for them to do their job more efficiently.

Credit Principles

In the feature, credit principles include the general guidelines of providing credit by branch manager or credit officer. In Jamuna Bank Limited they follow the following guideline while giving loan and advance to the client.

• Credit advancement shall focus on the development and enhancement of customer relationship.
• All credit extension must comply with the requirements of Bank’s Memorandum and Article of Association, Banking Company’s Act, Bangladesh Bank’s instructions, other rules and regulation as amended from time to time.
• Loans and advances shall normally be financed from customer’s deposit and not out of temporary funds or borrowing from other banks.
• The bank shall provide suitable credit services for the markets in which it operates. It should be provided to those customers who can make best use of them.
• The conduct and administration of the loan portfolio should contribute with in defined risk limitation for achievement of profitable growth and superior return on bank capital.
• Interest rate of various lending categories will depend on the level of risk and types of security offered

Credit Facilities of Jamuna Bank Limited

The main focus of Jamuna Bank Limited is financing business, trade and industrial activities through an effective delivery system.

• Jamuna Bank Ltd. offers credit to almost all sectors of commercial activities having productive purpose.
• The loan portfolio of the Bank encompasses a wide range of credit programs.
• Credit facilities are offered to individuals including housewives, businessmen, small and big business houses, traders, manufactures, corporate bodies, etc.
• Loan is provided to the rural people for agricultural production and other off-farm activities.
• Loan pricing system is customer friendly.
• Prime customers enjoy prime rate in lending and other services.
• Quick appreciation, appraisal, decision and disbursement are ensured.
• Credit facilities are extended as per guidelines of Bangladesh (Central Bank of Bangladesh) and operational procedures of the Bank.

Lending Criteria of JBL

Entrepreneur has to be creditworthy and competent enough to run the proposed industry. The project should be viable from organizational technical, commercial, financial and economic points of view.

Technical Viability

• The project should be technically sound and environment-friendly.
• Technology transfer in case of borrowed know-how ought to be ensured.
• Building should be well planned and well constructed.

Commercial viability

• Market prospect and potential for the product has to be fully assured at competitive prices.
• Marketing channel for the product should be accessible to the entrepreneur.

Financial Viability

• There should be reasonable debt equity ratio as determined by the Bank on individual case basis.
• Debt service coverage ratio should be at least 2.5 times at the optimum level of production.
• IRR should preferably be not less than 20%

Economic Viability

The project should ensure benefit to the national economy and create sufficient employment opportunity and be environment friendly.

Credit Evaluation Principles

Some principles or standards of lending are maintained in approving loans in order to keep credit risk to a minimum level as well as for successful banking business. The main principles of lending are given below:

Liquidity:

Liquidity means the availability of bank funds on short notice. The liquidity of an advance means it repayment on demand on due date or after a short notice. Therefore, the banks must have to maintain sufficient liquidity to repay its depositors and trade off between the liquidity and profitability is must.

Safety:

Safety means the assurance of repayment of distributed loans. Bank is in business to make money but safety should never be sacrificed for profitability, To ensure the safety of loan. The borrower should be chosen carefully. He should be a person of good character & capacity as well as bank must have to maintain eligible number of security from borrower.

Profitability:

Banking is a business aiming at earning a good profit. The difference between the interest received on advances and the interest paid on deposit constitutes a major portion of the bank income, besides, foreign exchange business is also highly remunerative. The bank will not enter into a transaction unless a fair return from it is assured.

Intent:

Banks sanction loans for productive purpose. No advances will be made by bank for unproductive purposes though the borrower may be free from all risks.

Security:

The security offered for an advance is an insurance to fall bank upon in cases of need. Security serves as a safety value for an unexpected emergency. Since risk factors are involved, security coverage has to be taken before a lending.

National interest:

Banking industry has significant role to play in the economic development of a country. The bank would lend if the purpose of the advances can contribute more to the overall economic development of the country

Different Types of Credit Facilities

Credit The word “Credit” is derived from the Latin word Credo or Krado meaning I believe. It is usually defined as one’s ability to buy to a promise to pay. From the Banker’s point of view Credit is the confidence of the lender on the ability and willingness of the borrower to repay the debt as per schedule of repayment.

A bank provides loan to a company, with a fixed maturity and often featuring amortization of principal. If this loan is in the form of a line of credit, the funds are drawn down shortly after the agreement is signed. Otherwise, the borrower usually uses the funds from the loan soon after they become available.

Types of loan of Jamuna Bank Limited:

Depending on the various nature of financing, all the lending activities have been brought under the following major heads:

Loan (General)

Short term, Medium term & Long term loans allowed to individual/firm/industries for a specific purpose but for a definite period and generally repayable by installments fall under this head. This type of lending is mainly allowed to accommodate financing under the categories

• Large & Medium Scale Industry and
• Small & Cottage Industry.
• Very often term financing for (i) Agriculture & (ii) Others are also included here.

House Building Loan (General)

Loans allowed to individual/enterprises for construction of house (residential or commercial) fall under this type of advance. The amount is repayable by monthly installment within a specified period. Such advances are known as Loan (HBLGEN).

House Building Loan (Staff)

Loans allowed to our Bank employees for purchase/construction of house shall be known as Staff Loan (HBL-STAFF).

Other Loans to Staff

Loans allowed to employees other than for House Building shall be grouped under head – Staff Loan (Gen).

Cash Credit (Hypo.)

Advances allowed to individual/firm for trading as well as wholesale purpose or to industries to meet up the working capital requirements against hypothecation of goods as primary security fall under this type of lending. It is a continuous credit. It is allowed under the categories

• “Commercial Lending” when the customer is other than a industry and
• “Working Capital” when the customer is an industry.

Cash Credit (Pledge)

Financial accommodations to individual/firms for trading as well as for whole-sale or to industries as working capital against pledge of goods as primary security fall under this head of advance. It is also a continuous credit and like the above allowed under the categories

• “Commercial Lending” and
• Working Capital”.

Hire Purchase

Hire-Purchase is a type of installment credit under which the Hire-Purchaser agrees to take the goods on hire at a stated rental, which is inclusive of the repayment of Principal as well as interest for adjustment of the loan within a specified period.

Lease Financing

Lease Financing is one of the most convenient sources of acquiring capital machinery and equipment whereby a client is given the opportunity to have an exclusive right to use an asset usually for an agreed period of time against payment of rent. It is a term financing repayable by installment.

Time Loan

This is one time financial accommodation for short period maximum 12 months to meet some specific purpose. The loan is adjustable within the validity and not renewable and no transaction is allowed.3.2.7.10

Consumers Credit Scheme

It is a special credit scheme of the Bank to finance purchase of consumers’ durable to the fixed income group to raise their standard of living. The loans are allowed on soft terms against personal guarantee and deposit of specified percentage of equity by the customers. The loan is repayable by monthly installment within a fixed period.

How Jamuna bank recover their Loan

When Jamuna Bank sanctions loans and advances to its customers, they clearly state the repayment pattern in the loan agreement. But some credit holders do not pay their credit in due period. The nationalized and private sector commercial banks have to face this sort of problems. This situation is also found in Jamuna Bank. To overcome the problem of overdue loan, the bank has taken particular loan recovery programs.

Recovery Programs taken by Jamuna Bank Limited:

• Establishing credit supervision and monitoring cell in the bank
• Re-structuring the loan sanctioning and distributing policy of the bank
• Sanctioning loans and advances against sufficient securities as best as possible
• Giving more powers to the branch manager in credit management decision making process
• Offering a package of incentives to the sound borrowers
• Giving more emphasis on short term loans and advances
• Imposing restrictions on loans and advances for sick industries
• Taking legal actions quickly against unsound borrowers as best as possible within the period specified by the law of limitations.

Problems in Loan Recovery

Though Jamuna bank is performing better in managing loan and advances, still 12.39% of total loan and advances are classified. There are a lot of reasons for which the loan recovery of the bank is still now defective. In most cases, problems may be raised from sanctioning procedures of loan, investigation of the project, and investigation of the loans etc. that is, the problem in loan recovery proves the outcomes of the default process in loan disbursement.

The main reasons of poor loan recovery are categorized in four broad types as follow:

Problems created by economic environment

The following problems arise from the effect of economic environment:

• Changing in the management pattern: Changing of management patterns may delay the recovery of mature loan.
• Changing in industrial patterns: The banks sometimes sanction loan to the losing concern for further improvement of the respective sector, but in most cases, they fail to achieve progress.
• Operation of open market economy: In our country mainly industries become sick and also close their business on account of emerging of open market economy. The cost of production is high and the quality of goods is not of required of standard. As a result, they become the losing concerns and the amount of bad loan increases.
• Rapid expansion of business: There are many companies which expand their business rapidly, but the expansion is for short time. In the long run, the amount of classified loan increases.

Problems created by government:

The following problems are arisen by the government:

• External pressure: Jamuna Bank has also faced many problems in the loan recovery process as a part of continuous pressure from various interested groups.
• Legal problems: Existing rules and regulations are insufficient to cover the legal aspects of loan recovery. As a result, defaulters can get release easily from all charges against them.
• Instability of Govt. policy: Frequent changes in government policies in regard to recovery of loan.

Problems created by the bank:

The following problems are created by the banks:

• Lack of analysis of business risk: Before lending, Sometime Jamuna Bank fails to properly analyze the business risk of the borrowers and the bank cannot forecast whether the business will succeed or fail. If it fails to run well, the loan becomes classified.
• Lack of proper valuation of security or mortgage property: In some cases, bank fails to determine the value of security against the loan. As a result, if the loan becomes classified, the bank cannot recover its loan through the sale of mortgage.

Computation of Credit Risk Grading

To measure the actual risk associated with the loan that is going to be paid by the bank to the particular client, we have to follow some steps and get a statistical parameter of the risk. There are five steps follow the JBL to compute credit risk grading. Those are given and described below:

Identify all the Principal Risk Components

Credit risk for counterparty arises from an aggregation of the following:

• Financial Risk
• Business/Industry Risk
• Management Risk
• Security Risk
• Relationship Risk

Each of the above mentioned key risk areas require be evaluating and aggregating to arrive at an overall risk grading measure.

Evaluation of Financial Risk

Risk that counterparties will fail to meet obligation due to financial distress. This typically entails analysis of financials i.e. analysis of leverage, liquidity, profitability & interest coverage ratios. To conclude, this capitalizes on the risk of high leverage, poor liquidity, low profitability & insufficient cash flow.

Evaluation of Business/Industry Risk

Risk that adverse industry situation or unfavorable business condition will impact borrowers’ capacity to meet obligation. The evaluation of this category of risk looks at parameters such as business outlook, size of business, industry growth, market competition & barriers to entry/exit. To conclude, this capitalizes on the risk of failure due to low market share & poor industry growth.

Evaluation of Management Risk

Risk that counterparties may default as a result of poor managerial ability including experience of the management, its succession plan and team work.

Evaluation of Security Risk

Risk that the bank might be exposed due to poor quality or strength of the security in case of default. This may entail strength of security & collateral, location of collateral and support.

Evaluation of Relationship Risk

These risk areas cover evaluation of limits utilization, account performance, conditions/covenants compliance by the borrower and deposit relationship.

Project Analysis and Findings

SWOT Analysis

SWOT analysis refers to analysis of strengths, weaknesses, opportunities and threats of an organization. This facilitates the organization to make its future performance improved in comparison to its competitors. An organization can also study its current position through SWOT analysis. For all of these, SWOT analysis is considered as an important tool for making changes in the strategic management of an organization.

Through direct observation and discussion with the JBL officials I am able to point out some major strength and weaknesses as well as some threats and opportunities regarding the various issues of the Bank such as –

• Organizational identity
• Service level
• Operational efficiency
• Technology
• Employee efficiency etc. along with many other issues.

Strengths

• Top management
• Corporate culture
• Various Products and Services
• Strong employee bonding
• Efficient Performance
• Strong financial position

Opportunities

• Country wide network
• Introducing more branches
• Introducing special corporate scheme
• Real time online banking
• Creation of brand image

Weaknesses

• Dependent on fixed deposits
• Moderate risk management system
• Absence of strong marketing activities
• Not enough innovative products
• Discouraging small entrepreneurs

Threats

• Similar products are offered by others
• Default Loans
• Industrial Downturn
• Increased competition in the market

Strengths

Top Management

The Jamuna Bank Limited is operated by a very efficient management group. The top management officials have all worked in reputed banks and their years of banking experience, skill, and expertise will continue to contribute towards further expansion of the bank. So, the top management of the bank is the major strength for JBL.

Corporate Culture

JBL has an interactive corporate culture. The working environment of JBL is very friendly, interactive and informal. And, there are no hidden barriers or boundaries while communicate between the superior and the employees. This corporate culture works as a great motivation factor among the employees of the bank.

Various Products and Services

JBL offers various types of products and services to their clients. So those, Customers can choose the right products that will fulfill their needs.

Strong employee bonding and belongings

JBL employees are one of the major assets of the company. The employees of JBL have a strong sense of commitment towards organization and also feel proud and a sense of belonging towards JBL. The strong organizational culture of JBL is the main reason behind its strength

Efficient Performance

It has been seen from customers’ opinion that JBL 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.

Strong Financial Position

It has been seen that the net profit has been gradually rising over the years. Furthermore, JBL is not just sitting on its previous year’s success, but also taking initiatives to improve. One of the employees has said,

Weakness

Dependent on fixed deposits

Jamuna Bank heavily dependents on fixed deposit. The bank have to pay large amount of interest for the just because of highly depend on fixed deposit.

Moderate risk management system

JBL risk management system is not that much secured. They need to develop their risk grading system.

Absence of strong marketing activities

JBL currently don’t have any strong marketing activities through mass media e.g. Television. TV ads playn vital role in awareness building. JBL has no such TV ad campaign. Although they do a lot of CSR activities compared to other banks.

Not enough innovative products

In order to be more competitive in the market, JBL should come up with more new attractive and innovative products. This is one of the weaknesses that JBL is currently passing through but plans to get rid of by 2010.

Discouraging small entrepreneurs

JBL provides clean Import Loan to most of its solvent clients. But they usually do not want to finance small entrepreneurs whose financial standing is not clean to them.

Opportunities

Country wide network

The ultimate goal of JBL is to expand its operations to whole Bangladesh. Nurturing this type of vision & mission & to act as required, will not only increase JBL’s profitability but also will secure its existence in the log run.

Introducing more branches

There are many important places in Bangladesh, where customers are eagerly waiting for doing banking transactions. But no existence of banks is in those places. Although JBL already has 65 branches to provide services to its customers, it must also open more branches in those places where people needs banking facilities.

Introducing special corporate scheme

JBL can introduce special corporate schemes for the corporate customers or officers who have an income level higher from the service holders. At the same time, they can introduce schemes or loans for various service holders. And the schemes should be separate according to the professions, such as engineers, lawyers, doctors etc.

Real time online banking

Today online banking is the best way to earn profit for the bank. So JBL have to earn more profit by developing online banking system.

Creation of brand image

As we know that brand creates value. So JBL need to develop their brand image by developing their products and services.

Threats

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.

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; JBL has to remain vigilant about this problem so that proactive strategies are taken to minimize this problem.

Industrial Downturn

Bangladesh is economically and political unstable country. Flood, draught, cyclone, and newly added terrorism have become an identity of our country. Along with inflation, unemployment also creates industry wide recession. These caused downward pressure on the capital demand for investment.

Increased competition in the market

In banking sector day by day competition are increased and lots of new bank are coming into the competition. So it is big threat for JBL.

Recommendation and Conclusion

Recommendation

As we all know JBL is one of the well known banks in our country. From my little knowledge it’s quite hard to give recommendation to such a well established bank. Still from my learning and observation, I am giving following recommendation to follow:

• JBL need to more concentrate on loan and advance services. And they need to offer attractive packages to promote their loan and advance product.
• Maximum amount of loan is provided to the long-term industrial sectors. They intentionally ignore the agriculture sector because of riskiness and safety issues. But for the overall economic development of the country they should diversify their loans in agriculture sector.
• JBL has only 62 branches all over the country. Since day by day their demand is increasing so it is quite hard to provide full range services with those branches. So they need to put more attention toward the expansion of branch network as well as ATM Booths.
• For improving the recovery position and reducing huge over due loans, first action needed to attract political support and urge upon the govt. and political parties to take necessary steps for repayment of defaulted loans within a limit.
• New credit culture needs to be developed in place of default culture. Efforts to be taken as soon as possible to safeguard the interest of banking sector.
• Real value of business can come from making regular visits to the customer’s place of business rather than holding all meetings in the Bank.
• JBL earn 68.87% profit from Dhaka City. So JBL need to spread their all over the Bangladesh.

Conclusion

Jamuna Bank Ltd. is a commercial bank launched its operation in 2001. It has already developed goodwill among its clientele by offering its excellent services by different divisions. This success has resulted from the dedication, commitment and dynamic leadership among its management over the periods. The working atmosphere of the Jamuna Bank Limited is very simulating.

During the short span of time of its operation, the bank has been successfully to the position itself as a progressive and dynamic financial institution in the country.

Credit policy is a very convenient banking tool for the business world. The value of this service is immense. It has gathered such a position in the banking sector that people at developed and also developing counties are very much depended on this service. In Bangladesh credit facilities or loans started to become very attractive in recent periods. But still lots improvements in services and facilities have to be made in this department.

Credit Division of Jamuna Bank has a very qualified and dedicated group of officers and staffs who are always trying to provide the best service to the clients. They always monitor the credit in different sectors and their position. Before providing the loan they analyze whether the loan will be profitable and whether the client is good enough to repay the loan within the given period of time.

The main competitive advantage JBL is enjoying that it has online banking where as other local commercial bank can not yet achieve that advantage. But all the commercial banks are now trying to achieve this. In this bank the employees are highly motivated by their remunerations and other benefits. Here, all the employees are very much cooperative with their customers, colleagues and simply visitors.