Credit Analysis and Loans Disbursement Process of Jamuna Bank Limited

EXECUTIVE SUMMSRY

Bangladesh is a developing country. And its economy is expanding. For that reason banking sector is also grow up very rapidly. The Banking Industry in Bangladesh is more than 100 years old. The first commercial Bank was ANZ Grind lays Bank, which opened in 1905.Today necessity of Bank as a financial institution is undeniable. Conventional Banks operates their businesses on interest basis. But interest is not allowed in our religion Islam. Keeping this problem in mind Organization of Islamic Conference (OIC) has introduced the concept of interest free Banking. This interest free Banking system will be operated on the basis of profit-loss sharing system. Jamuna Bank Limited is one of these kinds in our country. The depositors of JBL, clients/investors operate the whole process on the basis of partnership and share profit or loss among them.

Jamuna Bank Ltd. (JBL) is a solid, forward-looking, modern local Bank with a record of sound performance. The effort that JBL makes in order to portray the bank as a Brand image is very strong and successful. The general image of Jamuna Bank is that it is “Trustworthy, Efficient, Helpful and Committed”.

 “Credit Analysis and Disbursement Process of Jamuna Bank Limited”, Savar Branch, Savar”, is my assign project. So, I worked in the Credit division, Accounts division, General Banking Division and side by side I learn other Banking operation.

 This report covers five chapters. First chapter is the introduction part. Second chapter is company overview, History, and Objective of the organization, Vision, Mission, Values, Corporate Profile, Organizational structure, Hierarchy Branch, network, Products and services. Third chapter covers the main topic Credit analysis and disbursement process and Theoretical discussion. Chapter four covers SWOT analysis, Survey analysis, Analysis and Findings & chapter five covers Recommendation and Conclusion and also this report includes references and Appendices.

 Lending is the core function of JBL. For a bank, good loans or credit or advances are most profitable assets. The largest portion of operating income is derived from lending. A commercial bank usually wins over its competitors only on the quality and quantity of lending. It is therefore, indispensable for a bank to have a well thought policy for executing its lending operation. This report represents JBL Credit Appling System. JBL has passed a long way since it is providing services. Already it has earned a strong positioned in the field of SME Credit Scheme. To continue to hold the position and be perfect in this sector it will have to keep more and more attention to the customer retention and development of this sector.

 So, finally I will say that this to prepare internship report on Credit Appling System of JBL concept has enlarged my theoretical knowledge of Bachelor of Business Administration in to some practical knowledge and made my BBA education more complete and applied.

 Background of the study

Knowledge and learning become perfect when it is associated with theory and practice. Theoretical knowledge gets its perfection with practical application. As our educational system predominantly text based, inclusion practical orientation program, as an academic component is as exception to the norm. As the parties; educational institution and the organization substantially benefit from such a program, it seems a “win-win situation”. It establishes contracts and networking contracts. Contracts may help to get a job. That is, students can train and prepare themselves for the job market. A poor country like Bangladesh has an overwhelming number of unemployed education graduates. As they have no internship experience they have not been able to gain normal professional experience or establish networking system, which is important in getting a job, so practical orientation is a positive development in professional area. Recognizing the importance of practical experience, School of Management and Business Administration has introduced a three months practical exposure as a part of the curriculum of Bachelor Business Administration program. In such state of affairs the present aiming at analyzing the experience of practical orientation related to various aspects of banking activities in the Jamuna Bank Limited, Savar Branch, Savar, Dhaka.

 Problem Statement

Economy of Bangladesh is in the group of world’s most underdeveloped economics. One of the reasons may be its underdeveloped Banking system. Modern Banking system plays a vital role for a nation’s economic development. Over the last few years the Banking world has been undergoing a lot of change due to deregulation, technological innovations, globalization etc. These changes also made revolutionary changes of a country’s economy. Present world is changing rapidly to face the challenge of competitive free market economy. It is well recognized that there is an urgent need for better-qualified management and better-trained staff in the dynamic global financial market.

In this regards, Jamuna Bank Limited is a scheduled commercial bank. Through financial intermediation the bank seeds avenues for employment of its funds where there is profit as well as where risk is the minimum and the cost of administering loans is low.

 (a)      There is profit: It means that JBL considers the prospective as well as profitable sectors for the employment of its funds which will ultimately bring profit for the organization.

 (b)     Risk is the minimum and the cost of administering loans is low: It means that JBL goes for the prediction of risk as well as the cost of administering loan in case of investment decision.

 While profit motivation remains the prime consideration for viable operation and growth of the bank, the bank would also respond adequately to the socio-economic objectives formulated by the government from time to time for accelerating pace of economic development of the country.

 The goal of the bank is to build up a balanced portfolio mix. The focus is on an effective and responsive financial intermediation will thus vest on one hand on channeling funds to a set of clientele having proven track record and on the other hand on socially and economically desirable activities for which finance is sought.

 This investment options shall be chosen through skillful and prudent evaluation by the bank officials of feasibility of the proposed ventures including measures to minimize risk factors. The entrepreneurs themselves would provide or hire managerial; skills, technology for production, marketing and servicing thereby diminishing the risk of investment.

 Objectives of the study

This report is prepared primarily to fulfill the Bachelor of Business Administration (BBA) degree requirement in BBA program of the faculty school of business studies, Stamford University Bangladesh There are two types of Objective of the study.

 General Objectives

 The general objective of the report is to know about the management system of Jamuna Bank Limited as a private commercial bank, its formation, and its functional, operational, and financial aspects.

 To know the background of the organization is another objective. To enhance the knowledge of the readers about banking and finance is also a disguise objective of the report.

 To make a comparative analysis of SME credit scheme.

 To discuss the services offered by Jamuna Bank Limited.

 To assess and evaluate the growth trends of Jamuna Bank Limited.

 To evaluate the profitability of Jamuna Bank Limited.

 To identify the major strength and weakness of Jamuna Bank Limited in respect

 Project Objectives

 Therefore the objectives behind conducting this study are as follows:

 To fulfill the requirement of the Internship Program.

 To gain in-depth knowledge of standard banking services of JBL.

 To present an overview of Jamuna Bank LTD.

 To appraise deposit mobilization activities of Jamuna Bank LTD. (To appraise credit activities of Jamuna Bank LTD. (To measure customer satisfaction level of Jamuna Bank LTD).

 To assess the expectation & satisfaction levels of Jamuna customers about JBL.

 To determine the most important attributes of service quality about Credit Application and Disbursement Process of JBL.

Scope and limitations of the study

Scope

The scope of the organizational part covers the organizational structure, background, objective, function and department and business performance of JBL as a whole. The main part covers the operational scenario of customer service about Credit & SME, of Savar branch, Savar. This refers that how the bank satisfying customers, help the customers by providing different categories of SME loans considering the existing market.

 Limitations of the Study

 Although the officials were so busy, they gave me wholehearted cooperation in the time of internship also in preparing this report. It was such a nice experience I have gathered from JBL. But I have faced the following that may be terns as die limitations of the study.

 Lack of records

 Sufficient books, publications and figures were not available. If this limitation were not been there, the report would have been more useful. In doing the report I have faced some limitations what I can’t ignore. Some of those limitations are:

 Bankers don’t want to disclose all the information I need.

 Although the officers of the Jamuna Bank Limited have been very helpful, they didn’t have enough time to provide, as they are very busy with their assigned works. So, in some cases, observation was needed.

 Due to lack of experience, there may have been faults in the report through maximum efforts have been given to avoid any kind of mistake.

 Large-scale research was not possible due to time constraints.

 The research was conducted only within the SME customers of Savar Branch, Savar.

 Relevant data and document collection were difficult due to the organization confidentiality.

 Another limitation was that the data gathered could not be verified for accuracy.

 The lack of intellectual thought and analytical ability to make it a perfect one.

 Finally, the length of this internship program (12 Weeks) is not sufficient conduct a detailed study on the subject of research.

Theoretical Discussion

 Historical Background of JBL

Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994 with its Head Office at Printers Building (2^nd floor), 5 Rajuk Avenue, and 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. 4000.00 million and Tk.1622.00 million respectively. Currently the Bank has 71(seventy one) branches.

 Jamuna Bank Limited is a fast growing private sector bank in Bangladesh. This is a third generation private commercial bank. It has created a new horizon of its own in the banking arena of Bangladesh in terms of service to the customers. The bank has expanded and consolidated its customer base in both of its core businesses and retail banking.

 The Bank undertakes all types of banking transactions to support the development of trade and commerce in the country. JBL’s services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units.

To provide clientele services in respect of international trade it has established wide correspondent banking relationship with local and foreign banks covering major trade and financial centers at home and abroad.

Jamuna Bank Limited is operating branches on both conventional interest based banking and Islamic Shariah Principle based Banking. The Bank starts Islamic Shariah based banking by opening an Islamic Banking Branch at Nayabazar, Dhaka. The Islamic Banking operations are completely separate from the conventional banking.

 Objectives of the JBL

 To earn and maintain CAMELS Rating Strong.

 To establish relationship banking and improve service quality through development of strategies marketing plans.

 To remain one of the best banks in Bangladesh in terms of Profitability and assets quality.

 To introduce fully automated system through integration of Information Technology.

 To ensure an adequate rate of return on investment

 To keep risk position at an acceptable range (including any of balance sheet risk)

 To maintain adequate liquidity to meet maturing obligation and commitments

 To maintain a healthy growth of business with desired image

 To maintain adequate control systems and transparency in procedure

 To develop and retain a quality work force through an effective Human Resources Management System

 To ensure optimum utilization of all available resources

 To pursue an effective system of management by ensuring compliance to clinical norms, transparency and accountability

 Strategies of JBL

 To raise capital up to Tk. 4000.00 million by 2010.

 To manage and operate the Bank in the most efficient manner to enhance financial performance and to control cost of fund

 To strive for customer satisfaction through quality control and delivery of timely services

 To identify customers’ credit and other banking needs and monitor their perception towards our performance in meeting those requirements.

 To review and update policies, procedures and practices to enhance the ability to extend better service to customers.

 To train and develop all employees and provide them adequate resources so that customers’ need be reasonably addressed.

 To promote organizational effectiveness by openly communicating company plans, policies, practices and procedures to employees in a timely fashion

 To cultivate a working environment that fosters positive motivation for improved performance

Vision of JBL

To become a leading banking institution and to play a pivotal role in the development of the country and service so that sustainable growths, reasonable return and contribution to the development of the country can be ensured with motivated and professional work-force. Jamuna Bank’s aim is to satisfy customers with high quality service that reflects the global image as the premier international bank, to become a leading banking institution and to play a pivotal role in the development of the country.

Mission of JBL

The bank committed to satisfying diverse needs of its customers through an array of products at a competitive price by using appropriate technology and providing timely service so that a sustainable growth, reasonable return and contribution to the development of the country can be ensured with a motivated and professional work-force.

Values of JBL

The value of Jamuna bank Ltd. “Your Partner for growth”.

 Customer Focus

 Integrity

 Teamwork

 Respect for the Individual

 Quality

 Responsible Citizenship

 Corporate Profile

Brief Profile of Jamuna Bank Limited

Hierarchy of JBL

The hierarchy of Jamuna bank limited is given below:

Division of General Banking

a)      Accounts Opening

b)      Consumer Saving Scheme

c)      Cash Department

d)     Sanchayapatra.

Account Opening

Banker’s his to maintain some common principles and procedures for open all most all deposit accounts. Major information is essential for identification of the account holders individually so that banker can discharge his obligations to everyone correctly and to the extent due. Following are the formalities a customer must maintain in case of opening of an account:

• Minimum age of 18 years
• Application in the prescribed form
• Furnishing Photographs of the applicant and attested by the introducer (2 copies)
• Introduction by an account holder
• Recording of specimen signature in the specimen signature card
• Mention nominee in the prescribed form
• Furnishing Photograph of the nominee (1 copies)

 Savings Account

 Savings Account is that type of account where people deposit their money with a tendency to save. A certain percentage of interest is given against the deposit. People can withdraw money twice a week from this account. There are two type of savings account-

1. Individual Savings Account.
2. Joint Savings Account.

Requirements:

  Passport size photo-2 copies

  Introducer’s signature in the a/c opening card

  Nationality certificate

  The depositor has to maintain a balance of Tk.1000

  Interest rate of this account is 5% fixed.

Current Account

 Current Account and Savings Account are more of less same. The basic difference between a current account and a savings account is that current account does not calculate any interest. The current accounts are usually entrepreneurs, business organization, and companies’ etc.

 There are several types of current account available at the JBL

 Individual Current Account.

  Partnership Current Account

  Proprietorship Current Account

  Limited Company Current Account

  Account of Societies Clubs etc.

Consumer Savings Scheme

  Short Term Deposit

 Short-term deposit account can be opened with Tk 5,000 as balance. This account is operated and maintained like a current account. The rate of interest on this type of a/c is 5.00% and withdrawals from this type of a/c require a notice of seven days.

 Fixed Deposit

JBL offers FDR for different amounts at different interest rates for different period of time. In the receipt holders’ name and other particulars are kept as secrete documents on the bank. In the documents the name of nominee is also incorporated. If any holder of the receipt wishes to en-cash receipt before the maturity the bank usually do not pay the interest. But JBL, as goodwill pays a lump-sum amount of interest to the FDR holder. The rate of interest offered by JBL as follows:

Interest rate on FDR-

(Source: According to Jamuna Bank Ltd, Savar Branch, Savar)

In special case for known person can make FDR only one month @ 12%

Monthly Savings Scheme (MSS)

 The most popular product of Jamuna Bank Limited is JBL Monthly Savings Scheme (MSS). JBL has given highest interest in this scheme. But considering the future liability Bank’s Authority decided to reduce the interest rate.

 Double/ Triple Benefit Scheme (DBDS/TBDS)

Double/Triple Benefit Scheme is another popular product of JBL. These are high yielding deposit schemes in which depositor’s money will be double and triple at the end of 06 years and 10 years respectively. Depositors can take loan up to 90% of their deposit at normal lending rate of interest of the bank. Minimum amount of this scheme is Tk.25, 000/-. The rate of interest of DBDS is 12.25% and TBDS is 11.61%. But because of high interest rate, the Bank recently closed this product.

 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, no matter whether they survive or not till the marriage occasion.

It can be a great help to the parents if there is any scope of deposit of a modest amount as per their financial capacity, which grows very fast at high rate of interest yielding a sizeable amount on maturity. With this end in view JBL has introduced Marriage Deposit Scheme, which offers you an opportunity to build up your cherished fund by monthly deposit of small amount at your affordable capacity.

 Education Savings Scheme

 Education is a basic need of every citizen. Every parent wants to impart proper education to their children. Education is the pre-requisite for socio-economic development of the country. As yet, there is no arrangement of free education to the citizens from the government level. As such, there should be pre-arrangement of fund to ensure higher education of the children. Otherwise higher education may be hindered due to change of economic condition, income of the parents at the future time when higher education shall be required. Today’s higher education is becoming expired day by day. Parents can get relief and can have peace of mind if they can arrange the necessary fund for higher education for their children. As such, JBL has introduced ‘Education Savings Scheme’ which offers you an opportunity to build up your cherished fund by monthly deposit of small amount at your affordable capacity or initial lump sum deposit to yield handsome amount on a future date to meet the educational expenses. Under this Scheme you have the different attractive options to avail the future benefit i.e. withdrawal of the total amount accumulated in lump sum or withdrawing monthly benefit to meet educational expense keeping the principal amount intact or to withdraw both principal and accumulated profit monthly for a certain period.

 Lakhpati Deposit Scheme

To become a lakhpati is a dream to most of the people of Bangladesh especially to the lower and lower middle class income group. They experience their expectations and wants are enormous in nature in our small span of life. To meet our deposit and wants we need right plan. Keeping the above in mind JBL has introduced “Lakhopati Scheme” which has flexibility in report of maturity and monthly installment as per affordable capacity.

Corporate Banking

The motto of JBL’s Corporate Banking services is to provide personalized solutions to our customers. The Bank distinguishes and identifies corporate customers’ need and designs tailored solutions accordingly.

 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. Whether it is project finance, term loan, import or export deal, a working capital requirement or a forward cover for a foreign currency transaction, our Corporate Banking Managers will offer you the accurate solution. Our 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 our know-how in the following sectors mainly:

 Agro processing industry

 Industry (Import Substitute / Export oriented)

• Textile Spinning, Dyeing / Printing
• Export Oriented Garments, Sweater.
• Food & Allied
• Paper & Paper Products
• Engineering, Steel Mills
• Chemical and chemical products etc.

 Telecommunications.

 Information Technology

 Real Estate & Construction ·

 Wholesale trade

 Transport · Hotels, Restaurants ·

 Non Bank Financial Institutions

 Loan Syndication ·

 Project Finance · Investment Banking

 Lease Finance · Hire Purchase · International Banking ·

 Personal Banking Division

Personal Banking Division (PBD) introduces to the customers with a variety of products. Our PBD continuously meets the challenges of developing new products and services to match the specific requirements of customers.

 Personal Banking Division (PBD) issues both VISA Debit Cards and VISA Credit Cards. VISA is the renowned Card brand in the earth. Jamuna Bank Limited is a principal member of VISA Worldwide. Remittance Cell is another successful wing of the Personal Banking Division. Our product range includes:

Visa Debit Cards

It is the easiest and the most secured way of utilizing your money for 24/7 retail purchases as well as cash withdrawal.

 Visa Credit Cards

The JBL Credit Card gives you a fast, convenient and reliable way to pay, 24 hours a day, wherever you are in the world.

     a) Visa Classic

     b) Visa Gold

 International Credit Cards

JBL International Credit Cards (VISA) allows flexibility and convenience when travel internationally. The VISA International card entitles to exclusive discounts worldwide. Visa Dual (Gold)

 JBL Remittance Cell

“Remit Fast” is the motto of JBL Remittance Cell. It provides the best & faster services to its customers and connects the world through the renowned money exchange agencies. Such as Placid Nk Corporation, Moneygram Payment System Inc., Raffles Exchange Ltd.UK, Euro Bangla Money Transfer (UK) Ltd., Money link, UK, Home link Remit (UK) Ltd., Rumana Money Services. Customers can avail improved pricing on remittance.

 Bank Transfer

Instant Cash/Spot Cash

 To offer customers a greater banking convenience, we have introduced many modern banking facilities and some are under developments that include:

With our large ATM network including non-branch ATM across the country you have the privilege of round the clock withdrawal and other account services at your convenience. Customer can enjoy higher ATM withdrawal limit each day. No fees on retail purchase and can use our Credit Cards at thousands of retail outlets around the world. There will be no commission charge on the endorsement of foreign currency for self and spouse.

Our customer service agents are available on 365 days to offer assistance for you. Just connects to our agents and satisfy your banking needs anytime of a day or any query that you might have.

International Trade Finance

International Trade forms the major business activity undertaken by Jamuna Bank Ltd. The Bank with its worldwide correspondent network and close relationships with key financial institutions provides an extensive trade services network to handle your transactions efficiently. Our key branches in Dhaka, Chittagong, Sylhet and Naogaon are staffed by personnel experienced in International Trade Finance. These offices are the focal point for processing import and Export transactions for both small and large corporate customers. We offer a complete range of Trade Finance services. Our professionals will work with you to develop solutions tailored to meet your requirements, through mobilizing our full range of trade services locally, and drawing on our global resources. We can offer you professional advice on all aspects of International Trade requirements, namely:

Issuing, advising and confirming of Documentary Credits.

• Pre-shipment and post-shipment finance.
• Negotiation and purchase of Export Bills.
• Discounting of Bills of Exchange.
• Collection of Bills. Assist customers to insure all risks.
• Foreign Currency Dealing etc.

List of Foreign Correspondents

To provide International Trade related services we have established Correspondent Banking relationship with 336 locations of 106 world reputed Banks in more than 100 countries. Few Banks name are following

Our main Correspondent Banks are

  Citi Bank N.A.

  Standard Chartered.

  American Express Bank.

  Bank of New York.

  Bank of Nova Scotia.

  Duetche Bank.

  Dresdner Bank AG.

  Habib American Bank.

  Habib Bank AG Zurich.

  Bayerische Hypo Vareins Bank.

  Mashreq Bank PSC.

  Nordea Bank AB.

  Royal Bank of Canada.

  UBS AG, Union De Banques Arabes ET.

  Wachovia Bank NA.

  Forties Bank S.A/NV.

  Svenska Handlesbanken.

  Bank of Ceylon.

  Banca Toscana.

  ABN Amro Bank.

  Commonwealth Bank of Australia.

  Danske Bank A/S. Absa Bank Ltd.

  Agricultural Bank of Chaina.

  Banca Intesa SPA.

  Banca Italo Albanese.

  Banca Popolare Commercio E Industria SPA.

  Bank Austria Credittanstal A.

  Bank Commonwealth.

  Bank Madiri (Europe).

  Bank of Cyprus.

  ICICI Bank Canada.

   Industrial and Commercial Bank of China

   ING Bank NV, Islamic Bank of Yemen and for Finance & Investment,

   Korea Exchange Bank.

 Foreign Remittance

Jamuna Bank Ltd. has a network of branches in Bangladesh and more branches are going to be added to network soon. Remittance services are available at all branches and foreign remittances may be sent to any branch by the remitters favoring their beneficiaries.  Remittances are credited to the account of beneficiaries instantly through Electronic Fund Transfer (EFT) mechanism or within shortest possible time. Jamuna Bank Ltd. has correspondent banking relationship with all major banks located in almost all the countries/cities. Expatriate Bangladeshis may send their hard earned foreign currencies through those banks or may contact any renowned banks nearby (where they reside/work) to send their money to their dear ones in Bangladesh. To facilitate sending money in Bangladeshi Taka directly, Jamuna Bank Ltd. has Taka Drawing Arrangement with many banks/exchange companies in different countries. The expatriate Bangladeshis may send their money in BDT through the branches/subsidiaries of Jamuna Bank Ltd.

Credit Facilities

  The main focus of Jamuna Bank Ltd. Credit Line/Program 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 is also offered to major thrust sectors, as earmarked by the govt., at a reduced interest rate to develop frontier industries.

  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 Bank (Central Bank of Bangladesh) and operational procedures of the Bank.

Shop Finance Scheme

 Objectives

  To enable the small business community to run the business smoothly

  Facilitating  expansion of the existing businesses

  To improve the banking habit of self employed persons

  To diversify bank’s lending to Small & Medium Enterprises (SME) which are considered as less risky and help community developments? It may be noted down that the government is also encouraging investment in SME sector.

 Categories of eligible business:

1. Grocery/departmental/whole sale store
2. Confectionary/bakery (owned by the bakers)
3. Stationary shops
4. Cloth materials & small local garment traders
5. Shoe makers/shops
6. PVC & plastic product traders/small manufacturers
7. Tiles/sanitary items retailers
8. Computer/Photostat/Cyber Café.
9. Electrical & electronic items retailers
10. Pharmacy
11. Gift shop/cosmetics shops
12. Restaurant/fast food joints
13. Hardwire shops
14. Glass/ceramic retail outlets
15. Sports kit retailers
16. Photo studio
17. Rod, Cement & C.I. Sheet (Tin) Shop
18. Engineering Workshop
19. Fertilizer & Pesticide shop

 Maximum Loan Amount

1) Up to a maximum of 10.00 lac in single case or 60% of possession value (distress value to be considered) whichever is lower. However, loan size will depend on creditworthiness of the borrower and the decision of the sanctioning authority.

2) Branch Manager must verify the amount of possession money actually paid before recommending such proposal.

 Tenure of the loan limit

Minimum 01 year – Maximum 03 years from the date of disbursement of the loan.

Eligibility criteria

The applicant must fulfill the following criteria to be eligible for loans and advances under the scheme:

  Shop owner must run the establishment himself, having at least three years of successful business experience

  Valid lease deed for a minimum period of 03 years up to 05 years

  Satisfactory conducted deposit account with JBL for minimum 03 months.

  To deposit the daily sales proceeds in the account maintained with JBL

  Agree to abide by credit rules & regulations of JBL

  Furnishing net-worth of the applicant/client.

  Clean CIB

  The bank reserves the right to accept or reject any application without assigning any reason whatsoever.

  The intending borrower shall apply through the letter head of the business firm or through a plain paper requesting the branch manager for sanction of loan under the Shop Finance Scheme

Security

  Simple deposit of valid lease deed of agreement of the shop.

  A tripartite agreement to be signed in between leaseholder/shop owner/Bank- to the effect that the leaseholder cannot rent out or transfer the leased property without the written consent of the Bank.v  The lease deed between the landlord and the borrower must be duly executed & the original lease deed should be kept in the Bank as part of document.

  Lease must contain provisions enabling the landlord to forfeit the lease and enable the bank to enforce a right to sell the possession of the shop to liquidate the default debt (if any).

  Letter of disclaimer by the landlord to facilitate the bank to liquidate the default loan (if any)

  Equal numbers of post dated cheques covering amount of each loan installment

 Insurance

All borrowing customers’ inventory i.e. Stock-in-trade will be insured against Fire, Rsd & other risks with the Bank’s mortgage clause cost of which will be borne by the shop owner/client/borrower.

 Repayment Schedule

Repayment schedule should be as under:

• In case of 01 year, 10 monthly installments for the loan limit up to Tk. 3.00 lac with 02 month grace period from the date of disbursement.
• ii) In case of 02 year, 22 monthly installments for the loan limit up to Tk.6.00 lac with 02 month grace period from the date of disbursement.
• iii) In case of 03 year, 34 monthly installments for the loan limit above Tk.6.00 lac with 02 month grace   period from the date of disbursement.

Q-Cash Round The Clock Banking

Jamuna Bank Q-Cash ATM Card enables to withdraw cash and do a variety of banking transactions 24 hours a day. Q-Cash ATMs are conveniently located covering major shopping centers, business and residential areas in major cities. The network will expand to cover the whole country within a short span of time.

Jamuna Bank Q-Cash ATM card can:

  Cash withdrawal Round The Clock from any Q-Cash logo marked ATM booths.

  POS transaction (shopping malls, restaurants, jewellaries etc)

  Enjoy overdraft facilities on the card (if approved)

  Utility Bill Payment facilities

  Cash transaction facilities for selective branches nationwide

  ATM service available in Dhaka and Chittagong Withdrawal allowed from ATM’s of Jamuna Bank Ltd., AB Bank, The City Bank, Janata Bank, IFIC Bank, Mercantile Bank, Pubali Bank, Eastern Bank Ltd, Dutch Bangla Bank Ltd, respectively

  And more to come Is Q-Cash

Lease Finance

Lease means a contractual relationship between the owner of the asset and its user for a specified period against mutually agreed upon rent. The owner is called the Lessor and the user is called the Lessee.

Lease finance is one of the most convenient source of financing of assets viz machinery, equipment vehicle, etc. The user of the assets i.e. Lessee is benefited through tax advantages, conserving working capital and preserving debt capacity. Moreover, Lease is an off-balance sheet item i.e. lease amount is not shown in the balance sheet of the lessee and does not affect borrowing capacity.

Leasing enables the lessee to avail the services of a plant or equipment without making the investment or incurring debt obligation. The Lessee can use the asset by paying a series of periodic amounts called “lease payment” or “lease rentals” to the owner of the asset at the predetermined rates and generally in advance. The payments may be made monthly or quarterly. Jamuna Bank Ltd., the highly capitalized private Commercial Bank in Bangladesh has introduced lease finance to facilitate funding requirement of valued customers & growth of their business houses.

 Lease Items

  Vehicles like luxury bus, Mini bus, Taxi cabs cars, Pick-up, CNG three wheeler     etc.

  Factory equipment.

  Medical equipment

  Machinery for Agro Based Industry

  Construction equipment

  Office equipment

  Generators, Lift & Elevators for commercial place.

  Sea or River Transport.

  Computer for IT Education Center.

 SWIFT

Jamuna Bank Limited is the member of SWIFT (Society for Worldwide Inter-bank Financial Telecommunication). SWIFT is a member owned co-operative, which provides a fast and accurate communication network for financial transactions such as Letters of Credit, Fund transfer etc. By becoming a member of SWIFT, the bank has opened up possibilities for uninterrupted connectivity with over 5,700 user institutions in 150 countries around the world.

SWIFT No.: JAMUBDDH

Trading of Government Treasury bond & Other Govt. Securities

Jamuna Bank Limited has been nominated as a Primary Dealer by the Bangladesh Bank for trading 5 years & 10 Years Treasury Bonds and other Government Securities

Eligibility criteria

(i)  Individuals and institutions resident in Bangladesh, including provident funds, pension funds, bank and corporate bodies shall be eligible to purchase the BGTBs.

 (ii) Individuals and institutions not resident in Bangladesh shall also be eligible to purchase   the BGTBs, with coupon payment and resale/redemption proceeds transferable abroad in foreign currency subject to fulfillment of conditions as mentioned in the Bangladesh Govt. Treasury Bond Rules-2003.

 Loan facility

JBL offers loan up to 90% of the present value of the bond/other securities against lien of the above instrument for their customers. Interested Financial Institutions/Corporations/Insurance Companies/ Individuals are requested to contact the Bank various branch.

 Credit

The word “Credit” is derived from Latin word “Credo”, which means, “I believe”. It is usually defined as one’s ability to buy with a promise to pay. From a banker’s point of view, credit is the confidence of the lender on the ability and willingness of the borrower to repay the debts at a future date.

Banks charge a higher interest for loans than the deposit rate given to customers. The difference in rates is the profit for a bank. 80% of a banks profit comes from the interests. Loans and advances comprise a large portion of banks assets and this is the backbone of a bank’s structure. The strength of a bank is primarily judged by the soundness of its loans and advances. So, the loan and credit department is a very important department of a bank. Credit policy is very important. If a bank takes very strict credit policy, then the amount of loan will be less. If the credit policy is flexible, then the amount of loan will be much. But strict credit policy leads to lesser bad loans. Sometimes, credit policy cannot prevent customer’s bad intention of not adjusting loans. This is why; strict credit policy is very necessary for every bank for the safety of their investments.

 The importance of Securities in Credit

Securities play a vital role in sanctioning credit. Security means things deposited as a guarantee of the undertaking or loan to be forfeited in case of failure to repay the same. The customer/ guarantor should own it. In other words, the assets against which banks allow credits are called Securities. Good and strong securities help a bank to take decision about sanctioning credit. It also minimizes the risk. The type of securities offered may be, Government bonds, share, assignment of book debt or bills receivables, raw material and finished goods, fixed deposit receipts, land, factory building and other movable and immovable assets of the borrower. If a borrower becomes unable to adjust his loan, then bank can recover the loan amount by selling securities. That is why the role of securities is very important in credit system.

Present status of JBL

JBL has the authorized capital of the Bank is Tk. 5000.00 million of 1,60,00,000 ordinary shares of Tk. 100 each and the paid up capital of the Bank is Tk. 1601.70 million divided into 4,290,000 ordinary shares of Tk. 100 each fully paid-up in cash.

 Credit Policy

 Loans and Advances

 This section lends the fund what the bank mobilizes through its various deposit accounts. This is the second function of banks two generic function –deposit mobilization and credit creation. The major part of banks income is derived from credit and since the banks credit is customer’s fund, bank takes extreme caution in lending.

Sanctioning Loans and Advance

To have a clear idea about the credit management of JBL the following points are essential:

a. Credit Policy of the Bank

b. Credit Sanctioning Authority of JBL and

c. Processing and Screening of Credit Proposal

 Credit Policy of the Bank

 JBL Credit Policy contains the views of total macro-economic development of the country. As a whole by way of providing financial support to the trade, commerce and industry throughout its credit operation JBL goes to every possible corners of the society. They are financing large and medium scale business house and industry. At the same time they also take cares entrepreneur through its operation of lease finance and some micro credit, small loan scheme etc. The bank has come up with a scheme where women will be given financial support for their self-employment and development.

 Credit Sanctioning Authority of JBL

 Delegated powers are expected to be exercised by the authorized executives sensibly keeping the bank’s interest in mind. In exercising the power so delegated authorized executives shall also have credit restriction, tools and regulations as governed by Banking Company Act, Bangladesh Bank, and other usual credit norms.

However, the following guidelines are laid down before the executives of JBL for exercising the delegated power­.

  The borrower must be a man of integrity and must enjoy good reputation in the market.

  The borrower must have the capacity and capability for utilizing credit .properly and profitably. ­

  The enterprise of the borrower must be viable and profitable i.e. proposal of the borrower must be evaluated properly and carefully so as to ascertain its profitability. The enterprise must generate sufficient fund for debt and servicing.”

  A customer to whom credit is to be allowed should be far as possible within the command area.   .

  No sanctioning officer can sanction any credit to any of his near relatives and to any company where his relatives have financial interest.

  Tools for Appraisal Credit

The 10 C’s of Good and Bad Loan- In addition to the formal credit appraisal, the credit an official of JBL tries to judge the possible client based on some criteria. These criteria are called the C’s of good and bad loan. These are described below:

  Character: Make sure that the individual or company they are lending has outstanding integrity.

  Capacity: Make sure that the individual or the company they are lending has the capability of repaying the loan.

  Condition: Understanding the business and economic conditions that whether it will change after the loan is made.

  Capital: Make sure that the individual or the company they are lending has an appropriate level of investment in the company.

  Collateral: Make sure that there is a second way out of a credit but do not allow that to drive the credit decision.

  Complacency: Official do not rely on past. They remain alert every time whether any mistake is taking place or not.

  Carelessness: They believe that documentation, follow up and consistent monitoring is essential to high quality loan portfolio.

  Communication: They share credit objectives and credit decision making both vertically and laterally within the bank.

  Contingencies: Make sure that they understand the risk, particularly the downside possibilities and that they structure and price the loan consistently with the understanding.

  Competition: They do not get swept away by what others are doing

Credit Risk Grading (CRG)

Credit Risk Grading is a. financial tool to analyze the risk associate in a loan proposal. According to Bangladesh Banks order every bank has to conduct CRG for every loan amounting. JBL is frequent user of this technique.    ­

 Credit Monitoring and Supervision Cell

JBL is a unique characteristic in its loan management to make sure that there will ‘be no bad loan in its-loan portfolio, JBL established a loan monitoring and supervision cell headed by a First Assistant Vice President. He along with other official frequently visits “customer premises or business whether loan amount, which is taken is used properly or not. Sometimes customer need more fund or ether types of facilities to run business profitably, then the monitoring authority takes necessary steps to meet customer’s need

 Processing and Screening of Credit Proposal

 There are some common regulations governed by Banking Company Act, 1991 Bangladesh Bank and the law of the State which has to be followed strictly at the time of screening a credit proposal. In addition credit proposals are appraised critically by JBL credit officials from various angles to judge the feasibility of proposal.

 The customer at the branch of the bank place credit proposals. When a customer comes with accredit proposal, the credit department officials of the branch make an open discussion with the customer on different issues of the proposal to judge worthiness of the proposal and customer. If the proposal seems worthwhile in all aspect then the proposal is placed before credit committee of the bank. After threadbare discussion, if the committee agrees in principle the proposal is sanctioned as per the delegated business power of the branch.

 However, if the magnitude of the proposal is beyond the delegated business power of the branch they forward it to the Head Office with recommendation for sanction or approval.

 On receiving the proposal, the Credit Division of Head Office places the proposal in the Head Office Credit Committee. The committee further analyzes proposals critically and if agree in principle they sanction the same as per delegated business power. Again if the merit and magnitude of the proposal is beyond the delegated business power of the Head Office Credit Committee or Managing Director they forward proposal to the Board of the Bank with recommendation for approval.

If the proposal is found unviable at the branch level they decline the same from their desk. In the same way, proposals are also declined from the Head Office Credit Committee and from Board if it is not feasible.

 Processing and Screening of Credit Proposal

 Securities

It is essential that the proposals define clearly the purpose of the facility, the sources of repayment, the agreed repayment schedule, the value of security (land, machinery, security papers, bond, sanchaypatra etc.) and the customer relationships consideration implicit in, the credit division. Where the security is to be accepted as collateral for the facility all documentation relating to the security shall be in the approved from.

 All approval procedures and required documentation shall be completed and all securities shall be place prior to the disbursement of the facility.

For creation of mortgage on the property-JBL requires the following documents:

  Original sale deed favoring owner of the land

  Certified copy of the sale deed of the previous owner of the same property.

  Duplicate Carbon Receipt (DCR)

  Up to date rent receipt and Municipal Tax Receipt

  Certified copy of C.S.S A. and R.S. Khatians

  Up to date Non-Encumbrance Certificate

  Valuation Certificate

  Clearance from RAJUK/WORKS MINISTRY

  RAJUK approved plan of the building with the approval letter.

  Photograph of the property from three different angles and the owner of the property

  Site Plan/ Mouza Map

  Board Resolution for mortgaging property if the same belongs to any Limited Company.

The borrower is requested to submit the above-mentioned papers in original for verification by the Bank lawyer and creation on the property intended to mortgage against advance.

 Documentation

 A document is a written statement of facts of proof or evidence arising out of particular transaction, which on placement may bind the parties there to answerable and liable to the law for satisfaction of the charge in question.

 The execution of documents in proper form and according to the requirements of the law is known as documentation. The documentation does establish a legal relationship between the lending bank and the borrower. The terms and conditions of loans and advances, the securities charged and the repayment schedule are recorded in writing. Proper documentation is necessary to safeguard the future interest of the bank.

 Documents are necessary for the acknowledgement of the debt by the borrower and charging of securities to the bank by him. Proper and correct documentation is essential not only for the safety of advance but also necessary for taking legal action against the debtors in case of non-repayment of dues. Depending on the types of loans and advances different documents are required. Such as­

 Documentation of Loan

  Demand of Promissory (D.P) Note

  Letter of partnership (in case of partnership concern) or resolution of the board of Directors (in case of Limited concern)

  Letter of Agreement

  Letter of Disbursement.

  Letter of Pledge (in case of pledge of goods)

  Letter of Hypothecation (in case of hypothecation of goods)

  Trust Receipt (in case-of L TR facility)

  Letter of Lien and “Ownership” (in case of advance against share)

  Letter of Lien for Packing Credits (in case of packing credits)

  Letter of Lien (in case of advance against FOR)

  Letter of Lien and transfer authority

  Legal documents for mortgage of the property

 Documentation of Overdraft

   Demand of Promissory (D.P) Note

  Letter of partnership (in case of partnership concern) or resolution of the board of Directors (in case of Limited concern).

  Letter of Agreement

  Letter of Continuity

  Letter of Lien

  Legal documents for mortgage of the property (as drafted by legal advisor)

 Documentation of Cash Credit

   Demand of Promissory (D.P) Note

  Letter of partnership (in case of partnership concern) or resolution of the board of Directors (in case of Limited Concern)

  Letter of Agreement

  Letter of Continuity

  Letter of Pledge (in case of pledge of goods)

  Letter of Hypothecation (in case of hypothecation of goods)

Documentation of Bills Purchased

   Demand of Promissory (D.P) Note

  Letter of partnership or resolution of the board of Directors

  Letter of Agreement

  Letter of Hypothecation of Bill

All required Documents as mentioned before should be obtained before any loan is disbursed. Disbursed of any credit facility requires approval of the component authority that should ensure before exercising such delegated authority that all the required documentation have been completed.

Credit Facilities Extended by JBL

The main functions of a commercial bank are two: 1) to take deposit and 2) to make advance. Making advance is the most important function of a bank. This depends on the profitability of the bank. Moreover, Bank make advance out of the deposits of the public which are payable at demand. A Commercial Bank makes advances to different sectors for different purpose i.e. financing of Trade and Commerce, Export and Import, Industries, Agriculture, Transport, House-Building etc.
  Continuous Loan of Jamuna Bank Lid

CC Hypo (Cash Credit Hypothecation)

 Cash Credit allowed against hypothecation of an asset is known as Cash Credit (Hypo). In case of hypothecation; the borrower retains the ownership and possession of goods on which charge of lending bank is created.

 For Cash Credit (Hypo) Bankers takes following precautions:

  The banker carefully verifies the stocks of the hypothecated assets and their market price

  Obtains periodical statement of stock duly signed by the borrower

  Ensure that stocks are duly insured against fire with bank clause.

  Obtains sufficient collateral securities.

  Identify that whether the goods are ready saleable and whether they have good demand in the market.

Ensure the borrowers trustworthiness.

CC Pledge (Cash Credit Pledge)

Cash Credit allowed against pledge of goods is known as Cash Credit (Pledge). For Cash Credit (Pledge) the borrower pledges his goods to the banker as a security against the credit facility. The ownership of pledge goods remains with the pledged. The bank remains the effective control of the pledged goods. Pledged goods can be stored in the custody of borrower but under lock and key of the bank. Banks appointed guards are taken care of those goods round the clock. The banks delivered the pledged gods to the party by turns against payment.

For Cash Credit Pledge following points are taken into consideration before allowing.

  Whether the quality of goods is ascertained.

 Whether the goods are easily saleable and those goods must have good demand in the market.

 The quality of goods is ensured. The goods cannot be perishable and will not deteriorate in quality as a result for short and long duration.

 The borrower has the absolute title of goods.

 The prices of the goods have to steady and are not subject to violent change.

 Goods should be stored in the presence of a responsible bank office.

 Ensure that stocks are duly insured against fire, burglary, with bank clause.

 Stocks must be inspected regularly by responsible bank office.

 The locks of the store are sealed and keys are kept in the bank.

Overdrafts

The overdraft is always allowed on a special A/C operated upon cheques. The customers may be allowed a certain limit up to which he can overdraw within a specific period of time. In an overdraft A/C withdrawal and deposit can be made any number of times within the limit and prescribed period. Interested is calculated and charged only on the actual debit balances on daily product basis. Overdrafts are three types –

1. Temporary overdraft (TOD)
2. Clean overdraft (COD)
3. Secured overdraft (SOD)

Temporary overdraft (TOD)

Temporary overdraft (TOD) is allowed to honor cheques which is future dated for the valued client without any prior arrangement. This kind of facilities is provided for short time.

Clean overdraft (COD)

Sometimes Overdrafts are allowed with no other security except personal security of borrowers.

Secured overdraft (SOD)

When Overdrafts are allowed against security is known as Secured Overdraft (SOD).

Purposes:

  To businessman for expansion of their business.

  To contractors and suppliers for carrying on construction works and supply orders.

Securities

  Lien on fixed/term deposits.

  Shares/Debentures /Protiraksha Sanchay Patra

  Insurance Policy.

  Mortgage on real estates and properties.

Interest Rate: 12 % per annum or the interest rate paid to the customers with adding 2.5%.

Forces/Demand Loan of Jamuna Bank Ltd

 Payment against Document (PAD)

Under this arrangement, credit is allowed against documents for import of goods. These kinds of loans are provided after L/C.

 Eligibility 

 PAD is generally granted to importer for import of goods.

 Interest Rate: 13 % per annum

Internal Bills Purchased (IBP)

This kind of arrangements is allowed for purchase of internal bills. Sometimes Contractors needs money to his liquidity problem. To avoid this kind of situation they want to take loan against their future dated cheque.

Eligibility

Internal Bills Purchased is usually provided for future dated cheque against some service charge before 21days of the maturity date.

 Interest Rate: 13 % per annum.

Loan against Imported Merchandise (LIM)

 This is as similar as CC Pledge. But these loans are provided to the selected customers with internal contract.

 Eligibility

 This loan is only for the old and some special customers.

Interest Rate: 13 % per annum

 Loan against Trust Receipt (LTR)

Under this arrangement, credit is allowed against trust receipt and the exportable goods remain in the custody of exporter but he is required to execute a stamped export trust receipt in favor of the bank. Where the declaration is made that he holds purchased with financial assistance of the bank in trust for the bank.

Eligibility

LTR is generally granted to exporter for exportation of goods.

Interest Rate: 12 %-13 % per annum

Local/Foreign Documentary Bills Purchased (LDBP/FDBP)

 Under this arrangement, credit is allowed for exporter for exportable goods. Banks provide all the agency commission. It’s payback period is 21 days.

 Eligibility

  LDBP/FDBP is generally granted to exporter for exportation of goods.

 Interest Rate: 13 % per annum

Letter of Credit

Issuing letter of credit is one of the important services for JBL. A letter of credit is a document authorizing by the bank for a specific amount of money. Two types of L/C is provided by JBL.

  Demand Loan ABP (Back To Back L/C)

  Demand Loan ABP (Deferred Payment; L/C)

Eligibility

 This facility is given to the exporter/manufacturer/producer.

 Terms and Conditions

   It should stipulate the name of the loan/credit/grant.

  It should bear the name of the designed bank.

  Item mentioned in the LCA form must contain with the permissible item.

 Commission: 0.5% per quarter.

Terms Loan of Jamuna Bank Ltd

 Hire Purchase

The feature of hire purchase is that borrower pays his remaining amount over a period of 6 month to 2 years & some times more than 2 years. For this kind of credit the goods, which has been purchased, registered to the bank as owner. And after end of final payment goods are registered to owner formally.

Eligibility

Hire purchase facility is allowed to those people who have either fixed source of income or desire to pay it in lump sum.

Interest Rate:  15 % per annum

 Loans (General)

When an advance is made in a lump sum repayable either in fixed monthly installment or in lump sum and no subsequent debit is ordinarily allowed except by way in interest and incidental charges etc. This is loans (general).

Loan is allowed for a single purpose where the entire amount may be required at a time or in a number of installments within a period of short Spam. After disbursement of the entire loan amount, there will be only repayment made by the borrower. Loan once repaid in full or in part cannot be drawn again by the borrower. Entire amount of the loan A/C in the name of the customer and is paid to him through his SB/CD A/C. Sometimes loan amount are disbursed in cash.

This loan is repayable within few months or few years.

Securities

1. Lien on fixed/term deposits.
2. Shares/Debentures/Protiraksha Sanchay Patra
3. Insurance Policy
4. Mortgage of Real estates and properties
5. Hypothecation of stock/Stock/Machinery.

Interest Rate: 16 % per annum

 Lease Finance

Jamuna bank Ltd. is the first private commercial bank in Bangladesh who introduced lease finance facilities for funding requirement of valued customers & growth of their business.

Lease Items

• Vehicles like luxury bus, Mini bus, Taxi Cabs Cars, Pick-Up Van Etc.
• Factory equipments.
• Medical equipments.
• Machinery for agro based industry.
• Construction and office equipment.
• Sea or river transport and computer for IT education center.

Table 2: Lease Period by Items

 Maximum Limit: 70% of acquisition cost.

Security /Collaterals

The following securities are acceptable.

  Ownership of leased assets before the period of loan adjustment.

  Collateral securities in the form of land & building /Fixed Deposits/Other cash collateral /Wage Earners Development Bond having liquidation value covering at least 100% amount of finance.

  Deposit of A category shares, National Savings Certificates, ICB Unit Certificates, assignment of life insurance policies, Bank Guarantee also be allowed as collateral securities.

  Creation of charge of fixed assets of the existing industrial units requiring BMRE. Creation of charge on the existing vehicle will also be acceptable as securities.

 Charges

Bank charges are modest and competitive.

 Lease Deposit

Before disbursement of lease finance, the lessee shall have to deposit 3 months rentals in advance, which will be adjusted at the end of the lease period.

Grace Period

For capital machinery and equipment, maximum grace period of 6 (six) months may be allowed for installation/commercial production.

 Payment Date

Rental payments shall be made every month and there shall be three payment dates as detailed below.

If lease executed

• “Between” 1^st to 10^th………..   5th of subsequent months
• “Between” 11^th to 20^th………. 15th of subsequent months
• After 20^th…………………………. 25^th of subsequent months

Insurance Coverage

The vehicle /Equipment /Lease asset shall have to be covered by a comprehensive insurance policy throughout the whole lease term at lessee’s own cost in the name of Jamuna Bank Limited. The premium shall be on account of lessee.

 Repair and Maintenance of Leased items

 The lessee is obliged to maintain the vehicle/Equipment in good working order and is solely responsible for any loss or damage as long as it is in his possession. Repair and maintenance cost for taking care of normal wear and tear and keeping it in good running condition during the lease period shall be the responsibility of lessee.

 Transfer price/Lease Renewal Rental

On final adjustment of the lease finance, the lessee may have an option to purchase the equipment at 5% of the lease finance. Besides the above option, the lessee may renew the lease on year-to-year basis or return the equipment to the bank.

 Personal Loan for Women

 This is one of the new events in Bangladesh in credit sector. Woman who are interested and has the ability to pay it back in time those can get this kind of facility. To encourage the women JBL provide loan with low interest.

 Eligibility

 The borrower must be the following profession.

   Service holder of Government Organization

  Service holder of Semi- Government Organization

  Service holder of Multinational Organization

  Service holder of Bank and Insurance Company

  Shop owner/has small business.

Interest Rate: 9 % per annum

 Consumer Credit Scheme

 Consumer credit is recently new field of micro credit activities; people who have limited income can avail of this credit facility to buy any household effects including car, computer, household and other commercial durables. JBL plays a vital role in extending the consumer credit.

 Eligibility

 The borrower must be the employee of the following organization.

  Government Organization

  Semi- Government Organization

  Multinational Organization

  Bank and Insurance Company

  Reputed Commercial Organization

  Professionals

Interest Rate: 11 % per annum

 SME of JBL

Small businesses play a significant role in the socio economic development of a country. Irrespective of the systems of the economy, growth stage of the country, place of industry in the economy, use of skill & technology in any country small business plays an important role which none of the concerned people dare to undermine though small in size but small business and their entrepreneurs are big with large potentiality. Jamuna Bank limited has also launched this SME policy for small businesses.

   Bangladesh Bank Provide BRPD Circular No. 07, dated 03.11.04 has given prudential regulatory guidelines for Small Enterprise Financing with the advice to the commercial banks to implement the same.

  The role of Small and Medium Enterprises is very crucial in the economic development of the country. SME plays the vital role for employment generation, particularly self-employment by making significant contribution of 25% to GDP.. As a part of commitment, JBL may substantially contribute to the socio-economic development of the country providing financial support to the Small and Medium Enterprise sector

  In spite of the importance of the SME, the entrepreneurs in this sector are facing constraints in access to institutional credit particularly from banking institutions. Lack of access to credit is considered as one of the most serious impediments for growth of the SME sector. The main reasons for credit constraints are the complex and cumbersome lending procedures and traditional collateral requirements of the banks. The finance in this sector requires constant, intensive and close supervision and monitoring on the part of the bank. Traditionally the Banks do not usually take interest in this sector since the loan amount is small, absence of acceptable collateral security and cost of supervision.

  The scope of investment of Bank is gradually going to be limited due to stiff competition and small economy compared to large numbers of Banks. But the SME segment is still almost virgin, untapped and uncovered by institutional finance and as such there is ample scope and good opportunity for investment so as to take the advantage to increase the portfolio providing a viable and vast lending outlet for the bank.

  Effective rate of return on SME Financing is comparatively higher over the large loan because of lower bargaining strength of the customers.

  Under SME it is easier to recover bank’s money by selling/foreclosing the security as the customers have not that much strength and influence to face court case unlike big customers.

  It is more comfortable for the bank if the finance to SME is given in the form of term loan. Because in case of term loan, the money is recovered gradually by installments reducing the outstanding and full adjustment within the validity of the limit enabling more recycling of bank’s funds. But the continuous loan is perpetual in nature and never-ending process. If the customer falls into crisis, it is very difficult to recover the loan.

  As per guidelines of Bangladesh Bank higher provision shall have to be made for SME loans. A general provision @ 2% is to be maintained on the outstanding SME loans, which is 1% for other loans.

  Unlike others credits, there is 100% refinance facility from Bangladesh Bank at bank rate i.e. presently 5%. However, the facility shall be available only for term loans. And as such, JBL may prefer term loans to continuous loans.

 SME Credit Scheme

In view of the above and in the light of guidelines of Bangladesh Bank, the bank authority has approved Small Enterprise Financing Scheme as under:

1.              I.      It is a segment of business loan which is directly different from personal/retail credit e.g. consumers credit, auto loan and other personal/retail loan products.
2.           II.      If the loan amount is covered by FDR up to 50% of the loan and the customer has regular cash-flow to pay installments, then further security shall not be insisted

1.        III.      For other than Hypothecation of stock or items financed and personal guarantee of the customer. This is because of the fact that on paying loan installments, the outstanding loan amount is gradually reduced and the value of the FDR.

1.        IV.      For experienced tested customers with good past track record who have a repaid loan under Double loan scheme twice as per sanction terms and business growth is satisfactory.
2.           V.      For good repayment, incentive may be allowed to the customers @5%of interest charged as rebate.
3.        VI.      Loan processing procedures under SME should be made simple easier.
4.     VII.      Scoring system shall also be introduced for selection of the customers.
5.  VIII.      This shall be a supervised credit scheme where the security shall be decided on case-to-case basis considering the merits of the proposal and the risk factor.

Establishment of small Enterprise unit

The concept of managing Core Risk in banking is the segregation and separation of the marketing/sales function from Approval/Risk Management where administration functions will be under operations umbrella. With this end in view, a separate risk management capacity to be established in the credit division, of JBL Head Office for the purpose of Small Enterprise finance/business. Small Enterprise Unit shall be headed by a senior level executive at H.O. Bank shall put in place efficient computer based MIS to effectively cater to the needs of small Enterprise financing portfolio. The following chart represents the preferred management structure at Head Office level:

Definition of Small Enterprise

Small Enterprise (SE) means an entity; ideally not a public limited company does not employ more than 60 persons (if it is a trading concern) and 30 persons (if it is a service concern) and also fulfills the following criteria:

 a)      A service concern with total assets at cost excluding land and building from tk.50, 000 to tk.30.00 lac.

b)      A trading concern with total assets at cost excluding land and building from tk. 50, 000 to tk.1.00 crore.

 Customer segment

 Initially, Small Enterprise located within the accessible area of JBL branches will be the targeted areas under this program. The entrepreneurs should have an existing profitable business or a viable business plan.

             I.      Small Enterprise financing, like other credit facilities must be subject to the Bank’s risk management process setup for this particular business. The process  may include

   identifying sources of repayment

  assessing customer ability to repay,

  expected future cash flows,

  his/her past dealings with the bank

  The net worth and information obtained from a Credit Information Bureau (CIB) of Bangladesh Bank.

1.           II.      At the time of granting facility under various modes of SME, a written declaration shall be obtained from the borrower divulging details of various facilities already obtained from other institutions to ensure that the total exposure in relation to the repayment capacity of the customer does not exceed the reasonable limits as laid down in the approved policies of the bank as well as to help avoid exposure having multiple facilities.

 Nationality

 SME firm/company must be

  Registered and shared owned by Bangladeshis

  Application must be 100%  private owned

  Principal place of business must be in Bangladesh.

Age limit

Age range must be between 20years to 60 years.

Purposes

  Grocery/departmental/whole sale store

  Confectionary/bakery (owned by the bakers)

  Stationary shops

  Cloth materials & small local garment traders

  Shoe makers/shops

  PVC & plastic product traders/small manufacturers

  Tiles/sanitary items retailers

  Computer/Photostat/Cyber Café.

  Electrical & electronic items retailers

  Pharmacy

  Gift shop/cosmetics shops

  Restaurant/fast food joints

  Hardwire shops

  Glass/ceramic retail outlets

  Sports kit retailers

  Photo studio

  Rod, Cement & C.I. Sheet (Tin) Shop

  Engineering Workshop

  Fertilizer & Pesticide shop

Limit on clean facility for tk.2 lac to below tk.10 lac

In order to facilitate growth of smaller loans, banks are free to determine security requirements for loan below tk. 10 lac. The branches of this bank also obtain other common documents/charge documents as at $ 1.2.1; 2.5 and others as applicable.

Maximum Exposure

As per Bangladesh Bank’s Guidelines JBL can take the following maximum exposure in SME’s:

Table3: Maximum Exposure limit

Source 🙁 collected from JBL own branches).

Period of SME Loan

1.              I.      For continuous Loan/Bai-Murabaha      : 1(one) year
2.           II.      For Term Loan/HPSM                           : Maximum up to 5 (years).

Mode of Repayment

1. For continuous loan credit turnover must be equal to the limit amount in a quarter and full and final adjustment within the validity period
2. For term loan, repayment to be made by monthly installment and full and final adjustment within the validity period.

 Loan Documents

Common documents applicable for Proprietorship/Partnership/Limited Company:

• Loan Application from duly signed by the customer. Loan Application form should be accompanied by a ‘Borrower’s Basic Fact Sheet’s Basic Fact Sheet’ under the seal and signature of the borrower.
• A written declaration shall be obtained from the borrower divulging details of

            Various facilities already obtained from other institutions.

• Acceptance of the terms and conditions of Sanction Advice.
• Trade License.
• Photographs of the proprietor / partners / directors duly attested.
• Personal net worth statement of the proprietor / partners / directors.
• Copy of TIN Certificate.
• Short description of the products of the enterprise.
• Project Profile (if new project).
• Quotation / Intent / Pro-forma Invoice etc (as applicable)
• Marketing / distribution system of the company.
• Short profile of the proprietor / partners / directors mentioning their business experience / education etc.
• Brief description of the management of the company mentioning their educational professional experiences.
• Name and address of the sister/allied concerns.
• Group Brochure.
• Name and address of present bankers.
• A latest liability statement of all the business concerns of the Group with other Bank/Financial Institutions (Mentioning-name of business concern name of bank and branch, nature of facility, limit amount, outstanding, Overdue if any etc.)

• Credit information Bureau (CIB) report from Bangladesh Bank.

• Wherever practical, insurance policy for 110% of the stock value covering potential with bank’s mortgage clause in joint of the bank and client.

Natures of SME Business of Jamuna Bank Ltd

 Proprietorship Firm

Copy of financial statements for last 03 years for analysis and record is required. However, financial statements singed by the borrower will suffice where the exposure is fully secured by liquid assets.

Common documents and charge documents as at SL. 2.1:2.5 and other as applicable.

Partnership Firm

a) Copy of Registered Partnership Deed duly certified as true copy or a partnership Deed on non-judicial stamp of Tk. 150 denomination duly notarized.

b) Copy of financial statements for last 03 years for analysis and record. However, financial statements singed by the borrower will suffice where the exposure is fully secured by liquid assets.

Common documents and charge documents as at SL 2.1:2.5 and others as applicable.

Limited Company

  Copy of Memorandum & articles of Association of the company including Certificate of Incorporation duly certified by Registrar Joint Stock Companies (RJSC) and attested by the Managing Director accompanied by an up-to-date list of Directors.

  Copy of Board Resolution of the company for availing credit facilities and authorizing Managing Director/Chairman/Director for execution of documents and operation of the accounts.

  An Undertaking not to change the management of the company and the memorandum and articles of the company without prior permission of the bank.

  An Undertaking not to change the management of the company and the memorandum and articles of the company without prior permission of the bank.

  Copy of financial statements for last 03 years for analysis and record. However, financial statements singed by the borrower will suffice where the exposure is fully secured by liquid assets.

  Certificate of Registration of charges over the fixed and floating assets of the company duly issued by RJSC.

 Certificate of Registration of amendment of charges over the fixed and floating assets of the company duly issued by RSC in case of repeat loan or change in terms and condition of sanction advice regarding loan amount, securities etc.

Common documents and charge documents as at SL 2.1: 2.5 and others as applicable.

 Legal Documents

 All documents formalities pertinent to the mortgage of properties are to be examined/ completed by the Pane Lawyer of the bank along with legal opinion.

 Minimum conditions for taking exposure

1. It is recognized that a large number of enterprises other than limited companies (i.e. sole

proprietorship /partnership firms etc) may not have proper books of accounts including balance sheet, profit & loss account and they may not be able to prepare current and future cash flows due to lack of sophistication and expertise.

2. It is expected that in such cases, banks shall assist the borrowers in obtaining/developing such books of accounts as per forms/formats prescribed by each bank and no SE shall be declined access to credit merely on this ground.
3. Bank shall not approve and /or provide any exposure (including renewal, enhancement and rescheduling) until and unless the prescribed loan Application Form is accompanied by a Borrower’s Basic Fact Sheet under the seal and signature of the borrower.

Timing of creating provision

Bank /Branches shall review, at least on a quarterly basis, the collectibles of their loans /advances portfolio and shall properly document the evaluations so made. Shortfall in provisioning if any, determined, as a result of quarterly assessment shall be provided for immediately in their books of accounts by the branch /concerned Department of Head   Office on quarterly basis.

Verification by the auditors

The external auditors as a part of their audits of banks shall verify that all requirements of regulation -12 for classification and provisioning for assets have been complied with. Bangladesh Bank shall also cheek adequacy of provisioning during on –site inspections.

Necessary formats for SME Loan

To process, appraise and analysis the loan proposal the following formats are enclosed herewith:

(i)                 Loan Application Form

(ii)               Borrower’s Basic fact Sheet

(iii)             Borrower’s Credit rating Sheet

(iv)             Personal network statement.

(v)               Declaration of liabilities in the name of sister /allied concerns.

(vi)             Debit authority (for term loan only)

(vii)           Profile of the client /proprietor /partners /directors

(viii)         Short description of the products of the enterprise

(ix)             Declaration of the  Borrower regarding liability

(x)               Information  of the guarantor

(xi)             Irrevocable letter of authority  with regard to post dated cheque

(xii)           Letter of lien  and set –off over Deposit Accounts /Margin Deposits

(xiii)         Personal  Guarantee

(xiv)         DP Note

(xv)           Letter of continuation

(xvi)         Letter of Disbursement.

Categories/ Types of SME Credit Scheme

 Considering the existing market demand, profitability for the Bank and to diversify the risk portfolio of the Bank, the board of directors of JBL in its 50^th meeting held on 08.01.06 approved revised SME credit policy in line with the guidelines of Bangladesh Bank and also approved the following SME products for launching in JBL.

 Double Loan (Double Amount of Loan FDR Value)

 In most cases, the SME owners do not own adequate immovable property that can be accepted by bankers as collateral for loans. Movable assets that the SME can provide are rarely accepted as principal security for loans. So to boost SME financing a term loan is launched under which loan amount shall be double of FDR value. This facility shall be provided to those who have

  Proven track record

  Experience

  Adequate cash flow to repay installment

  Reputation in respect of fulfilling commitment.

Under this product, if the loan amount is covered by FDR up to 50% of the loan amount and the customer has regular cash-flow to pay installments and deposit of installments by the customer is followed up the loan is likely to be secured and for experienced customers with good past track record who have successfully repaid loan under Double Loan Scheme at least twice business cash flow has grown accordingly, credit facility up to 03 times of the FDR value may be considered.

 The following formalities should be followed by the SME’s Double Loan-

Customer Segment         :  Any Small and Medium Size Entrepreneur.

Mode of Finance            :  Term Loan

 Purpose                           :  Capital Investment b) Working Capital Finance

 Experience                      : Minimum 02 years with successful track records

 Nationality                      : Bangladeshi

 Age Limit                        : Between 25 years to 50 years.

Loan Size                        : Tk. 2.00 Lac to tk. 50.00 Lac (Depending on  requirement and regular source of cash flow to service the loan installment)

Security / Collateral (Case to Case basis)     :

a)      Loan of FDR;

b)      Hypothecation of machineries, equipment, vehicles, inventories;

c)      Personal Guarantee of the spouse(s);

d)     Personal Guarantee of the person(s);

e)      Post dated check for each installment and one undated check  for full loan value including full interest;

f)       Any other security as deemed fit on a case to case basis;

 legal documents                          : as per documentation checklist.

Rate of Interest/Return           : 16% P.A

 Loan processing fee                 : 1% of the loan amount

 Penal interest/Compensation  : 4% P.A on the overdue amount

Maximum period of Loan       : 05 years

Repayment method                  : Installment basis

 Disbursement mode                 : Shall be disbursed in lump-sum/ at a time.

 Loan for Purchase of Business space/possession right

 It is very comfortable and convenient if SME’s can run the business from own office shop. A permanent place of business can serve rental expense and other hassles as well as can enhance credit worthiness of the enterprise in the market. But a mare dream to SME for want of fund at his disposal to purchase a business space/possession right. Because now-a-days it is too costly in the part of SME to materialize this dream from his own source(s). Thus to recover this problem and to help the SME to own a business/possession right JBL can offer/initiated a loan product titled “Loan for Purchase of business space/possession right”

The following formalities should be followed by the SME- Loan for Purchase of business space/possession right.

  Customer Segment        : Any Small and Medium Size Entrepreneur.

Mode of Finance            : Term Loan

Purpose                           : Purchase of business space/possession right.

Experience                      : Minimum 02 years with successful track records

 Nationality                      : Bangladeshi

 Age Limit                        : Between 25 years to 50 years.

 Loan Size                        : Tk. 2.00 Lac to tk. 50.00 Lac (Depending on   requirement and regular source of cash flow to service the loan installment)

 Security / Collateral (Case to Case basis)     :

a)      Ownership of the space/possession right purchased in the bank’s name;

b)      30% of the purchase value in the form of FDR duly likened & discharged;

c)       Hypothecation of machineries, equipment, vehicles, inventories;

d)     Personal Guarantee of the spouse(s);

e)      Personal Guarantee of the person(s);

f)       Post dated check for each installment and one undated check  for loan value including full interest;

g)      Any other security as deemed fit on a case to case basis;

 legal documents                                      : As per documentation checklist.

 Rate of Interest/Return                       : 16% P.A

 Loan processing fee                             : 1% of the loan amount

Penal interest/Compensation              : 4% P.A on the overdue amount

: Maximum period of Loan                   : 05 years

 Repayment method                              : By monthly rental/Installment basis

 Disbursement Mode                             : Direct to the seller.

 Festival Credit

Bangladesh is land of multiple religions with multiple culture & various festivals. A portion of our entrepreneurs make their products targeting different festival like Eid, Bengali New Year, Durga Puja, Christmas ect.for producing bulk quantity with shortest period of time, they face fund crisis. As such, they borrow money from moneylenders at exorbitant interest rate. To overcome this problem JBL has come forward with a new product for SME customers named as “Festival Credit”.

The following formalities should be followed by the SME- Loan for Purchase of business space/possession right.

Customer Segment                    :  Any Small and Medium Size Entrepreneur.

 Mode of Finance                        : Term Loan (For Conventional Branches of JBL)

 Purpose                                       : Purchase of Inventory.

: Experience                                  : Minimum 02 years with successful track records

 Nationality                                  : Bangladeshi

Age Limit                                    : Between 25 years to 50 years.

Loan Size                                    : tk. 2.00 Lac to tk. 50.00 Lac (Depending on                                                        requirement and regular source of cash flow to service the loan installment)

Security / Collateral (Case to Case basis)     :

a)      Registered mortgage with power of authority;

b)      Hypothecation of machineries, equipment, vehicles, inventories;

c)      Personal Guarantee of the spouse(s);

d)     Personal Guarantee of the person(s);

e)      Post dated check for each installment and one undated check  for loan value including full interest;

f)       Any other security as deemed fit on a case to case basis;

 legal documents                                      :  As per documentation checklist.

 Rate of Interest/Return                       :  16% P.A

 Loan processing fee                             : 1% of the loan amount

 Penal interest/Compensation              : 4% P.A on the overdue amount

 Maximum period of Loan                   : 06 (six) months

 Repayment method                              : By monthly Installment or in lump sum within the loan period after the festival. In case of term loan installment may be realized as under:

a)      Interest/profit will be recovered in each month

b)      Principal will be realized with the last installment.

 Disbursement Mode                              : One time.

Shop/Office Renovation Loan

Now-a-days, Office/Commercial space renovation with most modern interior & exterior decoration is essential to attract customers. But attractive interior & exterior design of a shop/office is too costly to afford by SME’s. To overcome this problem, JBL has come forward with a new product for SME customers named as “Shop/Office Renovation Loan”. The Shop/Office should preferably be owned/possession right purchased by the customers or minimum 10 years valid Lease Agreement with the owner.

 The following formalities should be followed by the SME’s Shop/Office Renovation Loan –

 Customer Segment                     : Any Small and Medium Size Entrepreneur.

Mode of Finance                        : Term Loan (For Conventional Branches of JBL)

 Purpose                                       : Shop/Office Renovation

Experience                                  : Minimum 02 years with successful track records

 Nationality                                  : Bangladeshi

 Age Limit                                    : Between 25 years to 50 years.

 Loan Size                                    : tk. 2.00 Lac to tk. 50.00 Lac (Depending on                                                        requirement and regular source of cash flow to service the loan installment)

Security / Collateral (Case to Case basis)     :

a)      Registered mortgaged of property/Assignment of possession right;

b)      Lien of FDR duly discharged covering at least 25% of the Loan amount;

c)      Hypothecation of machineries, equipment, vehicles, inventories;

 d)     Personal Guarantee of the spouse(s);

e)      Personal Guarantee of the person(s);

f)       Post dated check for each installment and one undated check  for full loan value including full interest;

g)      Any other security as deemed fit on a case to case basis;

 legal documents                                      :  as per documentation checklist.

 Rate of Interest/Return                       :  16% P.A

 Loan processing fee                             : 1% of the loan amount

 Penal interest/Compensation              : 4% P.A on the overdue amount

 Maximum period of Loan                   : 05 years

 Repayment method                              : Installment basis

 Disbursement mode                             : One time.

 Loan Purchasing Capital Machinery &Vehicle

Most of the SME customers suffer from not being able to expand further the business due to lack of capital. But, business is an ongoing process and to survive the market BMRE of the project and procurement of vehicle is essential.

Under this product, if the customer is able to provide 30% of the cost of machinery in the form of FDR and has regular cash flow to pay loan installments, then further security may not be insisted other then hypothecated stock and personal guarantee of the customer.

The following formalities should be followed by the SME’s Loan Purchasing Capital Machinery and Vehicle SME’s-

 Customer Segment         : Any Small and Medium Size Entrepreneur.

 Mode of Finance            : Term Loan/Lease Finance (For Conventional Branches of JBL)

Purpose                          : Loan Purchasing Capital Machinery and Vehicle

 Experience                      : Minimum 02 years with successful track records

Nationality                      : Bangladeshi

Age Limit                        : Between 25 years to 50 years.

 Loan Size                        : tk. 2.00 Lac to tk. 50.00 Lac (Depending on

Requirement and regular source of cash flow to service the loan installment)

 Security / Collateral (Case to Case basis)     :

a)      Registered mortgaged of property/Assignment of possession

b)      Ownership of the machinery/Vehicle purchased in the name of JBL

c)      Lien of FDR duly discharged covering at least 30% of the Loan amount;

d)     Hypothecation of machineries, equipment, vehicles, inventories;

e)      Personal Guarantee of the spouse(s);

f)       Personal Guarantee of the person(s);

g)      Post dated check for each installment and one undated check  for full loan value including full interest;

 legal documents                                      :  as per documentation checklist.

Rate of Interest/Return                       :  16% P.A

 Loan processing fee                             : 1% of the loan amount

Penal interest/Compensation              : 4% P.A on the overdue amount

Maximum period of Loan                  : 05 years

 Repayment method                              : Installment basis

 Disbursement mode                             : One time.

 Working Capital/Trade Finance

 Most of SME’s suffer from working capital shortage. Business is an ongoing process and to survive in the market, working capital is an essential. . To overcome this problem, JBL has come forward with a new product for SME customers named as “Working Capital/Trade Finance”.

The following formalities should be followed by the Working Capital/Trade Finance SME’s-

 Customer Segment         :  Any Small and Medium Size Entrepreneur.

 Mode of Finance            : Term/Time Loan (For Conventional Branch of JBL), HPSM/Bai-muajjl (For Islami Branches of JBL)

 Purpose                           : To meet Working Capital Requirement.

 Experience                     : Minimum 02 years with successful track records

Nationality                      : Bangladeshi

 Loan Size                        : tk. 2.00 Lac to tk. 50.00 Lac

 Security / Collateral (Case to Case basis)     :

a)      Registered mortgaged of property/Assignment of possession;

b)       Ownership of the machinery/Vehicle purchased in the name of JBL;

c)      Lien of FDR duly discharged covering at least 30% of the Loan amount;

d)     Hypothecation of machineries, equipment, vehicles, inventories;

e)      Personal Guarantee of the spouse(s);

f)       Personal Guarantee of the person(s);

  legal documents                                      :  as per documentation checklist.

 Rate of Interest/Return                       :  16% P.A

 Loan processing fee                             : 1% of the loan amount

 Penal interest/Compensation              : 4% P.A on the overdue amount

Maximum period of Loan                   : 05 years

Repayment method                               : Sales proceeds to be deposited in the concerned account.

 Disbursement mode                             : By Installment or in lump sum within the

 loan period. In case of term loan installment may be realized as under:

c)      Interest/profit will be recovered in each month

d)     Principal will be realized with the last installment.

 Flexible Working Capital Loan

 In most cases, SME’s do not own adjure immovable property that can be accepted by bankers as collateral for loans. Movable assets that the SME can provide are rarely accepted as principal security for loans. But business is an ongoing process and to survive in the market, working capital is essential. For that in order to boost SME financing JBL a term loan product is designed for SME customers named as “Flexible Working Capital Loan”.

   This facility shall be provided to those who have

  Proven track record

  Experience

  Adequate cash flow to repay installment

  Reputation in respect of fulfilling commitment.

 The following formalities should be followed by the Flexible Working Capital loan SME’s-

 Customer Segment               :  Any Small and Medium Size Entrepreneur.

 Mode of Finance                  :  Term Loan

 Purpose                                : To meet Flexible Working Capital Requirement.

 Experience                           : Minimum 02 years with successful track records

Nationality                           : Bangladeshi

 Age Limit                            : Between 25 years to 50 years.

 Loan Size                            : Tk. 2.00 Lac to tk. 50.00 Lac (Depending on

requirement and regular source of cash flow to service the loan installment)

 Security / Collateral (Case to Case basis)     :

a)      Registered mortgaged of property/Assignment of possession;

b)      Hypothecation of machineries, equipment, vehicles, inventories;

c)      Personal Guarantee of the spouse(s);

d)     Personal Guarantee of the person(s);

 legal documents                                      :  As per documentation checklist.

 Rate of Interest/Return                       :  16% P.A

 Loan processing fee                             : 1% of the loan amount

 Penal interest/Compensation              : 4% P.A on the overdue amount

 Maximum period of Loan                   : 05 years

 Repayment method                              : By Installment or in lump sum within the loan period.

 Disbursement mode                             : Shall be disbursed in lump-sum/at a time.

 Loan for Herbal Industry

 From primitive times, this region is famous for its different herbal medicine products. There are many entrepreneurs in our country who are engaged in herbal tree plantation, producing different herbal products and also exporting a significant quantity in abroad.

 For that this sector is known as one of the profitable sector in the country. But in most cases, these entrepreneurs are suffering from capital shortage.

 In compliance with Bangladesh Bank Circular NO-ACSPD (Polio) 36/2004/444-479, JBL give emphasis in this sector and designed a term loanproduct for SME’s engaged in this sector, named as “Loan for Herbal Industry”.

 The following formalities should be followed by the SME’s Loan for Herbal Industry-

Customer Segment                     :  Any Small and Medium Size Entrepreneur.

 Mode of Finance                        :  Term Loan

 Purpose                                       :  a) Fixed Investment

               b) Working Capital

 Experience                                  : Minimum 02 years with successful track records

 nationality                                   : Bangladeshi

Age Limit                                    : Between 25 years to 50 years.

 Loan Size                                    : Tk. 2.00 Lac to tk. 50 Lac

Security / Collateral (Case to Case basis)     :

a)      Registered mortgage of property;

b)      Hypothecation of machineries, equipment, vehicles, inventories;

c)      Personal Guarantee of the spouse(s);

d)     Personal Guarantee of the person(s);

e)      Post dated check for each installment and one undated check  for full loan value including full interest;

f)       Any other security as deemed fit on a case to case basis;

 legal documents                                      :  As per documentation checklist.

 Rate of Interest/Return                       :  16% P.A

 Loan processing fee                             : 1% of the loan amount

 Penal interest/Compensation  : 4% P.A on the overdue amount

 Maximum period of Loan                   : 05 years

 Repayment method                              : Installment basis

Disbursement mode                             : Shall be disbursed in lump-sum/ at a time.

 Loan for Women Enterprises

50% populations of our country are women. Gradually women are coming out of homes. They are now working in different work places very successfully undertaking different innovative/creative ventures.

With a view to provide financial support to the women entrepreneur JBL has prepared a loan product titled as “Loan for Women Entrepreneur” under its SME scheme.

Objectives of Loan for women

• The Bank shall get wide publicity with proper launching of the product backed by advertisement at regular intervals.
• Create diversified client based.
• Increase spread of the loan portfolio.
• In hence the scope of deposit mobilization.

Eligibility

• Women entrepreneur having a financially viable productive venture.
• Creative/innovative venture shall be given preference

The following formalities should be followed by the SME’s Loan for Women Enterprises-

 Customer Segment                     :  Any Small and Medium Size Entrepreneur.

Mode of Finance                        :  Term Loan

 Purpose                                       : a) Fixed Investment b) Working Capital

Experience                                  : Minimum 02 years with successful track records

 nationality                                   : Bangladeshi

 Age Limit                                    : Between 25 years to 50 years.

 Loan Size                                    : tk. 2.00 Lac to tk. 50.00 Lac

 Security / Collateral (Case to Case basis)     :

a)      Registered mortgage of property/assignment of possession right;

b)      Hypothecation of machineries, equipment, vehicles, inventories;

c)      Personal Guarantee of the spouse(s);

d)           Personal Guarantee of the person(s);

legal documents                          :  As per documentation checklist.

Rate of Interest/Return           :  09% P.A

Loan processing fee                 : 1% of the loan amount

Penal interest/Compensation  : 4% P.A on the overdue amount

Maximum period of Loan                   : 05 years

 Repayment method                  : Installment basis

Disbursement mode                 : Shall be disbursed in lump-sum/ at a time.

Interest Rates along with other conditions charged to different categories of loans according to the policy of Jamuna Bank Ltd.

Personal Loan

 Car Loan

Home loan

Lease Finance

 Corporate Loan (CCH)

 Bank Guarantee

LC/LG/ OD/ STL

 Long Term Receipt (LTR)

 Classification of Loans and advances

 When loans become irregular in repayment, these loans are called classified loans. Classification of loans is the process of identifying those loan accounts and giving special attention to those loans by separating those loan accounts. Classification of loans also measures the level of risk associated with it. Every banks give loans and advances. But not all the loans are repaid by the borrower in specific time. There are some loans, the repayment of which is irregular. Banks find out these loans and give special treatment to these loans.

Classification of loans is of two types

    a) Classified Loans: Loans, the repayment of which is irregular.

      b) Unclassified Loans: Loans, the repayment of which is regular.

 Classified loans are of three types again

a)      Substandard: Repayment is irregular, but it can be improved.

b)      Doubtful: Unlikely to be repaid but special collection efforts may result in partial recovery of the loan amount.

c)      Bad or Loss: No chance is left for recovery of loan.

 Credit Risk of Jamuna Bank Limited

 Basically 5 factors influencing the firm’s credit risk grading. These are

1. 1.           Financial risk
2. 2.           Business risk
3. 3.           Management risk
4. 4.           Security risk
5. 5.           Relationship risk

Financial Risk

Financial risk is the risk which is related to firm’s financial structure. Ratio analysis is one of the factors of evaluating financial risk.

 Business Risk

 Business risk considers the firms type of business. That means the firms dominating power over the sector in what its operation is conducted.

 Management Risk

 Management risk measures the efficiency of firms management is efficient or not for running the business.

 Security Risk

 Every bank wants to gibe loan on a security basis. They want to see their loan secured. Banks evaluate the firm on the basis of their capacity of refund loan & interests.

Relationship Risk

In this case bank evaluates the relationship with client, whether the clients maintain their accounts in the particular bank (loan giver bank) or not.

Principal Risk Components                                  Weight

• Financial Risk                                                     50%
• Business/Industry Risk                           18%
• Management Risk                                               12%
• Security Risk                                                       10%
• Relationship Risk                                                10%

 Credit Risk Grading Score Sheet

 Business Risk score sheet

Management Risk Score Sheet

RESEARCH METHODOLOGY

Methodology of the Report

Methodology includes direct observation, face-to-face discussion with employees of different departments, study of files, circulars etc. and practical work. This study includes both quantitative and qualitative data. However, this report is basically qualitative in nature. In all the cases depending on the requirements data have been collected from different sources.

Both the primary and the secondary form of information were used to prepare this report. The details of these sources are highlighted below:

Sources of Data

This report is based on both primary & secondary source of information. For theoretical development of this research paper the data has been collected from the various sources like different publications, library sources, books, articles, etc.

The primary sources are

For collecting primary data, we had to ask the respective officer(s). Others are like-

• Exposure on credit division of the bank. (FEO & EO of the Bank)
• Official documents and File study.

The secondary sources are

• Annual Report 2008, 2009, 2010 of Jamuna Bank Ltd.
• Visit the JBL website “ www.jamunabankbd.com ”
• Periodicals published by the Bangladesh Bank;
• Different publications regarding banking functions, operation, and transactions policies.

Break Even Analysis

 Break-Even Analysis is commonly known as the Cost-Volume-Profit (CVP) analysis. Break-even analysis shows the relationship between cost and revenue with respect to profit. By showing the break-even point, this analysis says the minimum level of output or sales that is required to equate the cost. Moreover, break-even analysis provides a clear idea about the required volume of sales to earn a target profit. Thus break-even analysis helps the decision criteria.

 Sensitivity Analysis

 Sensitivity analysis provides the picture of relative changes in overall profitability due to change in any variable. Usually changes (increase) in material and other variable cost or changes (decrease) in selling price are being taken into consideration for making sensitivity analysis.

Ratio Analysis

Ratio analysis is the analysis and interpretation of data given in the financial statement such as: Balance Sheet, Income statement etc. Ratio is the quantitative expression of relationship between two accounting figures. Ratio analysis gives a clear picture about the strength and weakness of a firm, its historical performance and current financial

ANALYSIS & FINDINGS

Break Even Analysis

 Break-Even Analysis is commonly known as the Cost-Volume-Profit (CVP) analysis. Break-even analysis shows the relationship between cost and revenue with respect to profit. By showing the break-even point, this analysis says the minimum level of output or sales that is required to equate the cost. Moreover, break-even analysis provides a clear idea about the required volume of sales to earn a target profit. Thus break-even analysis helps the decision criteria.

 Sensitivity Analysis

 Sensitivity analysis provides the picture of relative changes in overall profitability due to change in any variable. Usually changes (increase) in material and other variable cost or changes (decrease) in selling price are being taken into consideration for making sensitivity analysis.

Ratio Analysis

Ratio analysis is the analysis and interpretation of data given in the financial statement such as: Balance Sheet, Income statement etc. Ratio is the quantitative expression of relationship between two accounting figures. Ratio analysis gives a clear picture about the strength and weakness of a firm, its historical performance and current financial condition. The common ratios that are being used in the analysis are:

Here is some of ratio that indicates financial condition of jamuna Bank Ltd.

 Findings of Jamuna Bank Limited

 While working at Savar Branch, Savar, I have attained a newer kind of experience. After collecting and analysis data I have got some problem of the JBL. These problems completely from my personal viewpoint, which is given below:

  From the clients view introducer is one of the problems to open an account. It is general problem to all commercial bank.

 They face troubles with those clients who have not any knowledge in banking transactions and banking rules.

 As the deposit is heart of running the banking activities JAMUNA Bank Deposit growth not good. Because JAMUNA Bank deposit rate is low other than commercial bank such as Dhaka Bank, Prime bank Mercantile Bank, HSBC Bank, Bank Asia etc.

 JBL has not recruited competent people to filling its lower and mid level position they recruit only once a year. This is really tough to recruit high skilled employees.

 Lack of proper training arrangement of employees.

 As a result of technological change such as use of new software There are few staffs who have lacking in computer knowledge are not efficient enough to finish every task immediately so before utilizing new technology proper training should be arrange.

 Clients generally complain that rate of interest for various type of credit is quite high. In many cases productivity from loaned investment is inadequate that borrower become incapable in repaying loan.

 one problem is that bank always follows the policy of risk averse in the world today all the organization are moving in approach of risk taking. As a result it is facing some problems and also facing competition from other bank

 The recovery of capital in small business loan section is threatened.

 JAMUNA Bank has insufficiencies of Authorized Dealer Branch in respect of the total foreign business. Bank has only six branches, which have AD licenses. As a result in total foreign exchange business is very small in respect of total market.

 Per-shipment inspection certificate should obtain from the exporter of back to back L/C. Because it reduce it fraud and forgery in case of import against master export L/C, but all the time this pre-shipment inspection certificate are not wanted by the bank

 JBL does not promote itself for catering its services to the public or the business organization.

SWOT Analysis

After analyzing the functions and performance of Jamuna Bank Limited, we find out some strengths and some problem of the bank. And from this point we can do a SWOT analysis of Jamuna Bank Limited.

SWOT analysis means –

• S — Strengths
• W — Weakness
• O — Opportunity
• T — Threats

 Strength of JBL

During my working period I find-out some strength of Jamuna Bank Limited especially in Savar Branch. These are –

  Computer based banking

  Efficiency and effectiveness of the employees.

  Loyal customers

  Formal training program for new employee

  Formal and Informal training program for existing employee

  On-line Banking through a smart software like FLORA.

 Weaknesses of JBL

In the working period of Jamuna Bank Limited I personally find some lacking in the branch banking. These lacking are not a major one but management needs to improve those area. Areas where the bank needs to improve are as follows:

  Insufficient presence of modern communication equipment.

  Lack of development program for existing employee.

  Lack of fair entrepreneur class.

  Branch office is not well decorated like Head office.

  Lack of promotional activities.

 Opportunity of JBL

 When we observe the overall banking function of JBL we can see the opportunity of the Jamuna Bank Limited. These are –

   JBL has software like FLORA. So they can provide more quality service to the clients

  By increasing the number of branches in the rural area JBL can provide more service to the rural people as well as the urban people

  Corporate Social Responsibility of Jamuna Bank Limited like – scholarship program for poor students; makes goodwill for the bank.

  Customer responsiveness

  Its up-to-date training program makes the employee more effective.

  Because of on-line banking it can serve the quicker service to the clients.

  Banking sector is a most raising institution in this competitive world.

  Threats of JBL

By analyzing the functions of JBL we find out some sort of threats of the bank. These threats are not very major issue but bank need to observe these problem.

   To compete with the other commercial bank in Bangladesh; JBL need to improve their service quality

  Incumbent competitors

  New entry of competitors

  Need to increase the number of efficient employee

  Lack of promotional activities for the clients

  JBL is not well known in the rural area as well as the urban area

  This sector is much more challenging rather than other sectors.

RECOMMENDATION & CONCLUSION

 Recommendations:

In order to get competitive advantage & to deliver quality service, top management should try to modify the services. For the improvement of the service the following measures should be taken:

   The Jamuna Bank Ltd. should concentrate more on its deposit products and offer more attractive interest rates than those offered by any other bank.

  For customer’s convenience, JBL should provide more personnel to deliver faster services to their honorable customer.

  Development of human resources should be ensured to increase efficiency in work.

  Ensure proper communication system and maintenance of files & machineries should be modernized.

  More interest should be paid on deposit account so that customers are convinced to deposit their money in bank.

  Research & Development wing must be more extensive and rich.

  Effective strategies must be undertaken against defaulter.

  ‘Project Management’ must be practiced in case of investing in the project. Feasibility study of the project, project planning, monitoring and evaluation should be undertaken.

  JBL must have to follow the management functions (from planning to control) strictly in all of their business activities and also operation the bank.

  Branches should have a separate section to analyze the financial statement for fining its liquidity, profitability & ownership ratios.

  In JBL job rotation is fully absent. Job rotation is very important to make the all the employees from every department more efficient.

  Time consumed at service level should be minimized at optimum level.

  Evaluate customer’s needs from their perspective and explain logically the shortcomings.

  Improve office atmosphere to give customers better feeling.

  Use of effective MIS.

  Bank should not give loans to aged clients. Specifically, client over 55 years of age (in Bangladesh context) should not be given loan.

  To deliver quality service top management should try to mitigate the gap between customer’s expectation & employee’s perception.

  The Tax Payer’s Identification Number (TIN) must be made compulsory for applying for the loan. Though it is a norm to submit TIN number by the client, but in many cases, it is ignored. The credit officials must ensure that this TIN number is submitted by the client before the sanctioning of loan

  Bank should ensure that if a borrower dies, there are other capable persons who can take charge of the business and keep the business running without any interruption.

Conclusion

The year 2010 was an extraordinary period for Bangladesh because of the challenges faced from the impact of the sudden fall in the share market. Despite the challenges, the year was another successful year for the banking industry in Bangladesh and the bank has managed quite successfully. The bank ended the year with a steady growth and the market share was retained in all areas of operation.

 The Jamuna Bank Limited is a strong and effective player in the financial system. It is a solid, forward-looking, modern local bank with a record of sound performance. It is a new generation bank. It is committed to provide high quality financial services/products to contribute to the growth of GDP of the country and the growth of industrialization, boosting up export, creating employment opportunity for the educated youth, raising standard of living of limited income group and overall sustainable socioeconomic development of the country.

The bank has a vision to be the best private commercial bank in Bangladesh in terms of efficiency, capital adequacy, asset quality, sound management, etc. It is now one of the top most profitable private commercial bank in the country.

The success of the scheme will depend on

• personal initiatives
• drive
• supervision
• 9 SME practices.
• Planning for the organization is very strong.
•  Very careful about careful strategic selection.
• Constant follow up of the credit port folio by the managers.

The efficiency of the branch managers, among others, is evaluated on the basis of the extent of success achieved by them in implementing the scheme. So, the scheme is coming into force with immediate effect.

As a concluding remark, I would like to say that the bank has been able to attain a leading role with 10 years of success story. But to remain unrivalled among other new generation banks, it has to overcome the new challenges posed by them. They must also emphasize on the domestic scenario more closely and analyze any certain trends and strategies of their competitors. The bank must accept any failures and consider these as a persuasion to pursue future goals instead of looking back on the failures and it must keep looking forward to playing an important role in our economy.

As a leading bank of Bangladesh, JBL contributes in the business with promising future. I can hope that JBL can spread their business with increasing various scheme and other utility services.

REFERENCE

  A Text Book on Bank Management,

  Annual reports of Jamuna Bank Limited. (2010,2009,2008)

  An A Text Book on Foreign Exchange & Risk Management, Syed Ashraf Ali

  Banker’s Training Handbook. ( 5^th Edition )

  Prospectus of Jamuna Bank Limited.

  Web site of Bangladesh Bank.

  Web site of www. google.com