Policies and Practices of Credit Management

Introduction

The purpose of this study is to find and analyze the Credit facilities (its outstanding, recovery, classified loans etc), approval and monitoring process of Premier Bank Limited through applying the prevalent policies and process, Local office. It will also include the performance of credit facilities in recent years. Find out different credit facilities that Premier Bank is providing for their customers. Also to give an idea about the securities behind the loan facilities and issuing different bank guarantees.

Background of the Study:

As per the requirement for the BBA degree of the School of Business studies, Comilla University, this internship report has been prepared by me, Md. Alamgir Hossan, student of BBA (Management Studies), 1st batch. After the completion of 38 courses in 8 semesters and attending the comprehensive exam, I joined as an officer in The Premier Bank for fulfilling the Internship program. I was supervised by the faculty lecturer Md. Sayeedul-Al-Amin. I commenced internship from May 02, 2012 and completed the attachment on August 02, 2012.

Broad Objective:

The primary objective of the study is to meet the partial requirements to fulfill the BBA degree from Comilla University under Management Studies Department and to enhance the practical knowledge about the specific area of the Banking sector of Bangladesh.

Specific Objectives:

1. To attain knowledge about banking organization of Bangladesh
2. To have better idea about role of banking the sector of Bangladesh
3. To find out the major problems relating to the management of banking
4. To acquire in depth knowledge about the general marketing strategy, promotional activities and credit management of banking in Bangladesh
5. To identify the Strengths, weaknesses, opportunities and threats of credit management of banking in Bangladesh especially The Premier Bank Limited.
6. To observe and analyze the performance of some institutions and make a comparisons between Private and Public Banking credit management Systems in the Country.

Methodology:

In conducting the study I have followed an exploratory approach. In collecting and analyzing data I have followed a deductive approach. I have presented my findings in both theoretical and graphical way by making a comparison with the policies and practices of credit management of The Premier bank limited and other private bank in Bangladesh. Analyzing the total issue, on the basis of theoretical and informative method which I have got my internship period from the bank and other related sources.

Using Data:

In order to prepare the report more meaningful and presentable, I have used the two sources of data and information widely. The sources are—

The Primary Sources:

Collecting information through Questionnaire based Survey from some respective officials and Staffs of The Premier Bank limited.

Collecting information from the clients through Questionnaire and also face to face conversation,

Informal conversation as well as a direct interview has done with all other relating authority to The Premier Bank Limited.

The Secondary Sources:

Annual reports and other materials of The Premier Bank Limited.

Various Publications of Bangladesh Bank, Finance and others related sources.

Different columns of Newspapers, Magazines and Journals regarding the issues.

The internet was also used as a theoretical source of information.

The official website of The Premier Bank Limited.

Targeted Findings:

My target is to be find out the —-

1. Prevailing Policies and Practices of Credit Management of the Premier Bank Limited
2. Identify the strengths and weaknesses of these policies which are practicing in The Premier Bank Limited and also give suggestions for improving its services and how to develop their promotional activities.
3. Finding out the Prevailing Problems of credit management policies which are practicing in The Premier Bank Limited.
4. Observing the Quality of credit service and the Acceptability of this sector.

Structure of the Report: My report is based on following structure-

Limitations of the Report:

In preparing this report, different branches of Bank were visited and both formal and informal interview has taken within a short period of time. Besides this I have conducted a Questionnaire based survey to know the officials, Clients, Staffs, and the Society Peoples’ view on the banking system, prevailing policies and some other basic issues about the Banking in Bangladesh but the number of interviewee is not enough to make a better conclusion on it. Other hands we have at least 47 or more banking organization but it is not possible for me to collect information from all the banks. Moreover, as information related to this sector was not available in a structured form, the main constraint is preparing the report is considered to be the search of information.

Moreover, as information related to this sector was not available in a structured form, the main constraint is preparing the report is considered to be the search of information.

Economic development is the pre-condition for any kind of development of a country. To sustain such kind of development the contribution of different financial organization is important. Now-a-days Banking sector is the rising sector in-case of economic development. Bank has played a vital role in the context of industrialization. The present condition of banking in Bangladesh is not economic favor because of political unrest and nepotism etc. To develop the industrial sectors financial assistance is important. Without financial assistance no industrial organization can establish. So the banking organization should come forward to assisting different manufacturing and non manufacturing organization to develop the industrial sector. Economic history shows that development has started everywhere with the banking system and its contribution towards financial development of a country is the highest in the initial stage. Schumpeter (1933) regarded the banking system as one of the two main agents (other being entrepreneurship) in the whole process of development. Keynes also emphasized the role of banking services in the process of economic development of a country, while he was addressing the House of Lords regarding International and 10 Monetary System (quoted in Sharma 1985). Moreover Alexander Gerashchenko (1962) in his popularly known “Gerschenkron’s Hypothesis” explained the banking system as the key role player at certain stage of the industrialization process.

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 changes due to deregulation, technological innovations, globalization etc. These changes in the banking system also brought revolutionary changes in 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. Bangladesh is no exceptions of this trend. Banking Sector in Bangladesh is facing challenges from different angles though its prospect is bright in the future.

 History of Banking:

Bangladesh inherited its banking structure from the British regime and had 49 banks and other financial institutions before the Partition of India in 1947. The Dhaka Bank established in 1806 was the first commercial bank in the Bangladesh region of British India. Bengal Bank, the first British-Patronized modern bank established in India in 1784, had opened its two branches in 1873 in Sirajganj and Chittagong of Bangladesh region. Later in 1862, the Bengal Bank Purchased the Dhaka Bank and opened its first branch in Dhaka in the same year by reconstituting and merging the Dhaka Bank. Thereafter, another branch of Bengal Bank was opened in Chandpur in 1900. A number of other branches of Bengal Bank were opened in this region and some branches had been closed in Course of time. There were six other branches of Bengal Bank in operation in the territory of Bangladesh until the Partition of British-India in 1947 and these branches were at Chittagong (1906), Mymensing (1922), Rangpur (1923), Chandpur (1924), and Narayanganj (1926). Following the emergence of Pakistan in 1947, State Bank of Pakistan, the Central Bank of the country, came into being in July 1948. Later, the National bank of Pakistan, a strong commercial bank was set up in 1949. In all, 36 scheduled commercial banks were in operation in the whole Pakistan until 1971. Pakistanis owned most of these banks and only three of them namely, National Bank of Pakistan, Habib Bank Ltd. and the Australasia Bank Ltd, had one branch of each in East Pakistan in 1949. During 1950-58, there other Pakistani-owned banks, Premier Bank Ltd., Bank of Bhowalpur Ltd. and Muslim Commercial Bank, had opened their branch in East Pakistan. Four Pakistan-owned banks, the United Bank Ltd., Union Bank Ltd., Standard Bank Ltd. and the commerce Bank Ltd. Conducted banking business in the Province during 1959-1965.But all of them Had their headquarters in west Pakistan. East Pakistan had only two banks Owned by local business groups white headquarters in Dhaka. These were the Eastern Mercantile Bank Ltd. (Presently Pubali Bank Ltd.) and Eastern Banking Corporation Ltd. (Presently Uttara Bank Ltd.) established in 1959 and 1965 respectively. In the beginning of 1971, there were 1130 branches of 12 banks in operation in East Pakistan. The foundation of independent banking system in Bangladesh was laid through the establishment of the Bangladesh Bank in 1972 by the Presidential Order No. 127of 1972 (which took effect on 16^th December, 1971). Through the Order, the eastern branch of the former State Bank of Pakistan at Dhaka was renamed as the Bangladesh Bank as a full-fledged office of the central bank of Bangladesh and the entire undertaking of the State Bank of Pakistan in, and in relation to Bangladesh has been delivered to the Bank.

Bangladesh Bank has been entrusted whit all of the traditional central banking functions including the sole responsibilities of issuing currency, Keeping the reserves, formulating and managing the monetary and credit policy, regulating the banking system, stabilizing domestic and external monetary value, preserving the par value of Bangladesh Taka, fostering economic growth and development and the development of the country’s market.

The Bangladesh Banks (Nationalization) Order enacted in 1972 nationalized all banks except foreign ones. Six nationalized banks were formed through merging the existing banks of the period.

The rate of growth and development of banking sector in the country was extremely slow until 1983 when the government allowed to establish private banks and started denationalization process: initially, the Uttara Bank in the same year and thereafter, the Pubali Bank, and the Rupali Bank in 1986. Growth pattern of banks during the period is 1973-1983.

 History of Private Banks in Bangladesh

There were no domestic private commercial banks in Bangladesh until 1982; When the Arab-Bangladesh Bank Ltd. commenced private commercial banking in the country. Five more commercial banks came up in 1983 and initiated a moderate growth in banking financial institutions. Despite slow growth in number of individual banks, there had been a relatively higher growth of branches of nationalized commercial banks (NCBs) during

1973-83. there number had increased from 1512 in 1973-74 to4603 in 1982-83.

Financial sector reforms to strengthen the regulatory and supervisory framework for banks made headway in 2006 although at a slower than expected pace. Overall health of the banking system showed improvement since 2002 as the gross Non-performing Loans (NPL) declined from 28 percent to 14 percent while net NPL (less Provision) reduced to 8 percent from 21 percent. This led significant improvement in the profitability ratios. Although the Private Commercial Banks (PCB) NPL ratio registered a record low of 6 percent, the four Nationalized Commercial Banks (NCB) position are still weak and showed very high NPL at 25 percent. The NCBs have large capital shortfalls with a risk-

• Rationalization of prudential norms for loan classification and provisioning,

• Policy for rescheduling of loans,

• designing and enforcing an “integrated credit risk grading manual”,

• Credit rating of the banks, and

• Revisions to the make-up of Tier-2 capital.

Besides, recent decision of the Government to corporative the remaining three NCBs along with the initiative to sale the Rupali Bank are bound to usher in changes in the banking sector competitiveness aspect. Bangladesh Bank has also taken up the task of implementing the Basel II capital accord. Further, the recent enactment of the Micro-credit Regulatory Authority Act (MRAA) for the regulation of the Micro Finance Institutions (MFI) has been a major development in the year 2006. Since 1998 CAMEL rating of banks gradually improved and in 2006 Bangladesh Bank updated this rating model by incorporating the market risk and the new Model is known as CAMEL

Modern banks play an important part in promoting economic development of a country. Banks provide necessary funds for executing various programs underway in the process of economic development. They collect savings of large masses of people scattered throughout the country, which in the absence of banks would have remained idle and unproductive. These scattered amounts are collected, pooled together and made available to commerce and industry for meeting the requirements. Economy of Bangladesh is in the group of world’s most underdeveloped economics. One of the reasons may be its underdeveloped banking system. Government as well as different international organizations have also identified that underdeveloped banking system causes some obstacles to the process of economic development. So they have highly recommended for 12 reforming financial sector. Since, 1990, Bangladesh government has taken a lot of financial sector reform measurements for making financial sector as well as banking sector more transparent formulation and implementation of these reform activities has also been participated by different international organization like world Bank, IMF etc.

Current structure of banking in Bangladesh:

Bangladesh Bank (BB) has been working as the central bank since the country’s independence. Its prime jobs include issuing of currency, maintaining foreign exchange reserve and providing transaction facilities of all public monetary matters. BB is also responsible for planning the government’s monetary policy and implementing it thereby. The BB has a governing body comprising of nine members with the Governor as its chief. Apart from the head office in Dhaka, it has nine more branches, of which two in Dhaka and one each in Chittagong, Rajshahi, Khulna, Bogra, Sylhet, Rangpur and Barisal. Following is the country’s banking system as on 30^th June, 2012

 Nationalized Commercial Banks (NCBs)

 Local Private Commercial Banks (PCBs)

 Foreign Banks

 Development Banks

 Other

 World Economy:

Before healing up the wounds of 2007-2009, the world experienced the second wave of the financial turmoil in 2011; another sovereign debt crisis from Eurozone hit the global economy. Tormenting woes of credit crunch have shaken the developed countries with threats of economic recession. Fears of further meltdown also loomed over the US economy. High unemployment, shaken consumer & business confidence and financial sector fragility put the US economy under great pressure. The down-grading of US credit rating by standard and poor, the crisis in the Eurozone and disappointing German growth figures has increased uncertainty in the economies all over the world. Amidst the fragility and acute uncertainty, the world economy registered a 2.8 percent growth in 2011 from 4.0 percent in 2010. I n developed countries economic growth slowed considerably to 1.3 percent in 2011 down from 2.7 percent in 2010. Growth of developing countries and economies in transition slowed notably to a pace of 5.9 percent in the second half of the year. Throughout the year 2011, the US economy remained extremely vulnerable to external shocks, The European sovereign debt crisis was the biggest threat. The US has a fair amount f tread business with Europe.

Bangladesh Economy:

In the recent years, Bangladesh Economy has increasingly integrated with the global economy rising risks in the area of foreign trade, remittances, foreign aid, Foreign Direct Investment (FDI) etc. However the banking sector of the economy is mostly separated from international financial markets and does not offer sophisticated products. Bangladesh economy was not critically affected by the recent global meltdown and financial crisis much due to the well regulated norms for the exposure in the international market, but there was a lagged impact especially on foreign trade business, aid and inward remittance causing a mild decline in growth in 2011. The economy of the country in 2011 witnessed soaring inflation, hefty bank borrowings by Government, crash in capital market, rise in Government subsidies, fall in private sector credit flow, depreciation of Taka against Dollar, high import growth except capital machineries and raw materials, low foreign aid disbursement and recent account balance deficit, and these are unlikely to be solved very quickly.

 Overview of the Premier Bank Limited:

On behalf of the Board of Directors, I have the pleasure to president the Annual Report 2011 of the Bank. Together I am including such Financial Statements as Balance Sheet, Cash Flow Statement, Profit & Loss Account and Auditors’ Report as December, 31, 2011. I am presenting a brief review of operations for the last year, as well as of the present economic scenario of our country in the background of global situation. The Premier Bank Limited is incorporated in Bangladesh as banking company on June, 1999 under Companies Act.1994. Bangladesh Bank, the central bank of Bangladesh, issued banking license on June 17, 1999 under Banking Companies Act.1991. The Head Office of the Premier Bank Limited is located at Bannani; one of the fast growing commercial and business areas of Dhaka city. Bangladesh economy has been experiencing a rapid growth since the ’90s. Industrial and agricultural development, international trade, inflow of expatriate Bangladeshi workers’ remittance, local and foreign investments in construction, communication, power, food processing and service enterprises ushered in an era of economic activities. Urbanization and lifestyle changes concurrent with the economic development created a demand for banking products and services to support the new initiatives as well as to channelize consumer investments in a profitable manner. A group of highly acclaimed businessmen of the country grouped together to responded to this need and established Premier Bank Limited in the year 1999. The Bank was incorporated as a public limited company under the Companies Act. 1994. The Bank started its commercial operation on Oct. 26, 1999 with an authorized capital of Tk. 1,000 million and paid up capital of Tk. 222 million. The paid up capital of the Bank stood at Tk. 3818.61 million as on December 31, 2011. The total equity (capital and reserves) of the Bank as on December 31, 2011 stood at Tk. 7291.19 million. The Bank has 64 branches and a wide network of correspondents all over the world. The Bank has plans to open more branches in the current fiscal year to expand the network. The Bank has a total number of 52 branches, 12 SME Service Centers and 1 Central Processing Centre as of March 2011. Plans open more by the end of 2011 to expand its network. The Bank offers the full range of banking and investment services for personal and corporate customers, backed by the latest technology and a team of highly motivated officers and staff. The Bank has launched Online Banking services (i-Banking), joined a countrywide shared ATM network and has introduced a co-branded credit card. A process is also underway to provide e-business facility to the bank’s clientele through Online and Home banking solutions.

Premier Bank Limited Comilla Branch started on 29^st Decenmber, 2009. The First Branch Manager Back was Mr. Kazi Abdul Wadud. It was originally situated in Comilla at Mogultoli which was very visible to people entering Comilla and also it had a lot of potential customers surrounding that area. Any other information about history was unobtainable as all the employees have changed since then. Premier Bank Ltd. is the preferred choice in banking for friendly and personalized services, cutting edge technology, tailored solutions for business needs, global reach in trade and commerce and high yield on investments.

 Organizational Overview of PBL, Comilla branch:

Premier Bank Limited Comilla Branch started on 29^th December, 2009. The First Branch Manager Back was Mr. Kazi Abdul Wadud FAVP & Manager. It was originally situated Mogultuli, Comilla which was very visible to people entering Comilla and also it had a lot of potential customers surrounding that area. Any other information about history was unobtainable as all the employees have changed since then. Premier Bank Ltd. is the preferred choice in banking for friendly and personalized services, cutting edge technology, tailored solutions for business needs, global reach in trade and commerce and high yield on investments. The present situation of The Premier Bank, Comilla Branch is better than time. The currently Manager Mr. Muhammad Muhibur Rahman khan, FAVP & Manager tried heart and soul to maximize the profit as well as wealth. Other officers are also very much cordial to provide customer service and branch development.

 Vision of the Premier Bank Limited:

The bank has clear vision towards its ultimate destiny-to be the best amongst the top financial institutions.

 Mission of the Premier Bank Limited:

The mission of the bank is-

• To be most caring and customer friendly provider of financial service, creating opportunities for more people in more places.
• To ensure stability and sound growth whilst enhancing the value of shareholders investments.
• To aggressively adopt technology at all levels of operations and to improve efficiency and reduce cost per transaction.
• To ensure a high level of transparency and ethical standards in all business transected by the bank.
• To provide congenial atmosphere which will attract competent work force who will be proud and eager to work for the bank.
• To be socially responsible and strive to uplift the equality of the life by making effective contribution for social development. 

 Values of Premier Bank:

• Service first
• Easier banking
• Better relationship
• Assured confidentiality
• Good corporate governance
• Corporate citizenships

  Visions for 2012

They expect higher growth of business in 2012. The growth will presumably generate from the diversified corporate sector, personal banking, money market operations, structured financing, Visa debit and pre paid card, ATM network and Export oriented initiatives. New innovative products like Capital Market, Bundled Savings Account, and Refurbished Home Loan etc. have been introduced to increase profitability. Another vision is to balance credit with deposit. Credit will be reduced below 80% of total deposit.

 Strategies Objectives of PBL:

• Their objectives are to conduct transparent and high quality business operation based on market mechanism within the legal and social framework.

• Their greatest concerns are to provide their customers continually efficient, innovative and high quality products with excellent delivery system and slogan with “Service First”

• Their motto is to generate profit with qualitative business as a sustainable ever-growing organization and enhance fair returns to the shareholders.

• Establish PBL as one of the top five successful Private Commercial Banks by 2012.

• Be committed to the community as a corporate citizen and contribute towards the progress of the nation.

• Build a strong deposit base.

• Introduce new products & services and upgrade existing products & services at comparatively low cost in order to assure quick respond to the changing demands in the market.

• Promote the well being of the employees and raise their morale.

• Strengthen corporate identity and values.

• Fulfillment of their responsibility to the government by paying taxes and abiding by other rules.

• Bring the entire system under a very advanced IT platform.

• Socialize and present the bank to the community as a corporate partner.

• Encouraging and motivating the new entrepreneurs to establish industries and business in line with development of national economy.

• Enhancing savings tendency of the people by offering attractive and lucrative new savings scheme.

• Financing the foreign trade of the country both Export and Import.

• Enhancing the mobilization of savings both from urban and rural area.

The prime objective of PBL is to deliver a quality that demonstrates a true reflection of their vision-Excellence in Banking. Improve the quality of lone and services, and diversify the sources of revenue.

1. Focus on Current, Savings & Short Term Deposit Accounts to reverse the ratio (26:74) with Fixed Deposit Receipt.
2. Take immediate action required to reverse the rise of Cost of Fund.
3. Increase fee based income: increase volume & fee of Letter of Credit & Guarantee, increase export and exchange earnings.
4. Reduce operating cost as minimum as possible.
5. Encouraging green banking.
6. Premier Bank is committed to their corporate responsibility toward the community. They allocate 2% of their tax profit for CSR practices each year. They have also taken numerous initiatives towards social welfare and community development. They also donated-
7. The Premier Bank Limited has distributed gifts-items among the Hajj pilgrim at Ashokona Hajj camp.
8. Premier Bank is proud to patronize “Premier Bank Award” to Bangladesh National Women Cricket Team.
9. Opening Ceremony of “Premier Bank Bangladesh Championship League 2011-2012 was held at Bangabandhu National Stadium, Dhaka.
10.  A Qawaly Concert was title sponsored by The Premier Bank Limited to celebrate glorious 400 years of Dhaka the Capital of Bangladesh.
11. The Premier Bank Limited s proud to sponsor the prime gate of the International Trade fair 2011.
12. Premier Bank organized a welcome program for the Business Community in Narayanganj.
13. Premier Bank organized “Meet the HAAB Members” On the Holy Hajj 2011.
14. A Workshop on “ACU Transaction and Activities” held at Premier Bank Training Institute.
15. The Premier Bank has financed in textile industry.
16. The Premier Bank extended a donation to the distressed spouse of a martyred army officer of the tragedy at BDR Headqurrters at Peelkhana, Dhaka.
17. The Premier Bank Limited Came forward to sponsor “ Koren Cup Golf Tournament-2011”
18. The Premier Bank Limited has arranged “Premier Bank Bangladesh Championship League 2011-2012.
19. The Premier Bank Has supported for the treatment of the hard-up people.
20. The Premier Bank has contributed for construction and renovation of Mosque and Madrasha.
21. The Premier Bank Limited rewarding the Bangladesh Women Cricket Team.

Corporate Information:

Name of the Company:  The Premier Bank Limited

Background: The Premier Bank Limited is incorporated in Bangladesh as banking company on June 10, 1999 under Companies Act.1994. Bangladesh Bank, the central bank of Bangladesh, issued banking license on June 17, 1999 under Banking Companies Act.1991. The Head Office of The Premier Bank Limited is located at Banani, one of the fast growing commercial and business areas of Dhaka city.

Corporate Information:

Authorized Capital : BDT 6000.00 Million
Paid up Capital : BDT 2242.30 Million

Registered Name of the Company: The Premier Bank Limited

Legal Form
A scheduled Commercial Bank incorporated on June 10, 1999 as Public Limited Company under companies act, 1994 and Bank companies act, 1991.

Registered Office
Iqbal Centre (4th Floor), 42 Kemal Ataturk Avenue
Banani, Dhaka- 1213, Bangladesh
Tel: 9887581-4, Fax: 8815393, 9889153

Form Telephone: +880- 2- 9887581-84-8811417

Telephone: +880-2-8845393

SWIFT Code: PRMRBDDH

Stock Code: PREMIERBAN

Category: Commercial

Type: Private

Origin: Local

E-Mail: info@premierbankltd.com

Web Page: www.premierbankltd.com

Managing Director:  K. A. M. Majedur Rahman

From February 01, 2012

Incorporation Certificate: C- 37922 (2222)/99, dated June 10, 1999

Commencement of Business Certificate: Ref. no. 16370, dated June 17, 1999

Bangladesh Bank Approval Certificate: BRPD (P) 744 (72)/99- 1638, dated June 17, 1999.

Bangladesh Bank Approval Certificate: BRPD (P) 744 (72)/99- 1638, dated June 17, 1999.

VAT Registration: 5101027082, dated July 31, 2000.

TIN Certificate: 140-201-0820, LTU, Dhaka, dated October 17, 2000

Auditors
Howladar Yunus & Co.
Chartered Accountants
67, Dilkusha Commercial Area (2nd Floor)
Dhaka-1000, Bangladesh

Corporate Website: www.premierbankltd.com
Legal Advisor

M/S Rokanuddin Mahmud & Associates, Walsow Tower
21-23 Kazi Nazrul Islam Avenue, Dhaka.

Departments of Premier Bank Limited:

Premier Bank maintains the jobs in a proper and organized considering their interrelationship that are allocated in a particular department to control the system effectively. Different departments of PBL are as follows:

Human Resources Division:

Premier Bank Limited recognizes that a productive and motivated work force is a prerequisite to leadership with its customers, its shareholders and in the market it serves. Premier bank treats every employee with dignity and respect in a supportive environment of trust and openness where people of different backgrounds can reach their full potential.

The bank’s human resources policy emphasize on providing job satisfaction, growth opportunities, and due recognition of superior performance. A good working environment reflects and promotes a high level of loyalty and commitment from the employees. Realizing this Premier Bank limited has placed the utmost importance on continuous development of its human resources, identify the strength and weakness of the employee to assess the individual training needs, they are sent for training for self-development. To orient, enhance the banking knowledge of the employees Premier Bank Training Institute (PBTI) organizes both in-house and external training.

The major responsibilities of HR are as follows:

• Employee recruitment

• Posting

• Transfer

• Increment

• Established yearly performance bonus

• Provident fund

• Confirmation

• Training

• Travel policy

• Telephone policy

Personal banking Division:

The personal banking division deals with the consumer credit schemes such as the personal loan, car loan, education loan, tax loan, personal secured loan that are tailored to meet the demand of individual customers. The manager of PBL credit who approves and administers shall the activities heads this division. The approval officer mainly rejects or approves the credit requests. After being checked by the approval officer, the credit requests go to the processing officer for further processing of the application.

Treasury Division:

Their main job is to take decisions regarding purchase and sell of foreign Currency. The purpose of Treasury’s operations is to utilize the funds effectively and arrange funds at a lowest possible rate of interest, through maintaining effective relationship with other banks and following the Government rules and foreign exchange regulations

 Information Technology Division:

This department gives the software and hardware supports to different departments of the bank. As Premier Bank is engaged in online banking, the role of IT is very crucial for the bank. This department is the most active department of PBL where employees always stand by to solve any problems in the system. The managers and executives of IT division work continuously to develop the total IT system of PBL so that it can be operated with ease, accuracy, and speed. Since its journey as commercial Bank in 1999 Premier Bank Limited has been laying great emphasis on the use of improved technology. It has gone to online operation system since 2003. The main software that PBL uses are:

• Flex cube

• PB cube

• SWIFT Manager

• Premier Bank Server

• Nikash

• UNIX

• Western Union

• Premier Bank Foreign Trade

Credit Division:

The borrowing capacity provided to an individual by the banking system, in the form of credit or a loan. The total bank credit the individual has is the sum of the borrowing capacity each lender bank provides to the individual. Credit Policy Committee is composed of the managing director, the general manager, the Chief Risk Officer and the assistant general manager responsible for credits. Committee meets every other week, evaluates the banks overall lending portfolio and determines principles and policies regarding portfolio management.

Operation Division:

This is an integral and vital part of the bank. The services department ensures smooth operation and functioning within and between all the departments of PBL. It also provides continuous support to the core banking activities of PBL. The Manager of Services heads the department who formulates and manages various critical issues of the services function of PBL. He is followed by a group of executives who are the heads of various subsidiary divisions that operate within the services department. The Services Department is considered as the backbone of all other departments.

Finance & Accounts Division:

This is considered as the most powerful department of PBL. It keeps tracks of each and every transaction made within PBL Bangladesh. It is headed by Manager of FCD who ensures that all the transactions are made according to rules and regulation of PBL group. Violation of such rules can bring serious consequences for the lawbreaker. The functions of FCD are briefly discussed below along with an organ gram of the department

Audit & Risk Management Division:

The Risk Management Division is responsible for measuring risks that the Bank might face in the course of its operations, developing corporate risk management policies and ensuring that risks remain within the limits in which the Bank prefers to bear such risks in line with its own strategic targets and risk appetite. The primary goal of risk management is to provide capital to businesses in line with their risks (economic capital), maximize risk-adjusted return and increase the added value.

The risk management function consists of Market Risk, Credit Risk and Operational Risk Management Units. Bank Risk Committee, Asset-Liability Committee (ALCO), Credit Policy Committee, and Operational Risk Management Committee are the other risk management bodies.

During the 3^rd quarter of the year 2009 the Management of the Bank has set up a Separate Risk Management Unit (RMU) in line with Bangladeshi Bank directives. The RMU functions under direct supervision of the Managing Director, who is assigned by the Deputy Managing Director (Risk Management). The Risk Management Unit supervises and monitors independently and consistently the management of following Main Risks:

1. Credit Risk

2. Asset- Liability Risk

3. Foreign Exchange Risk

4. Internal Control & Compliance

5. Anti Money Laundering

6. Information and Communication Technology

7. Balance Sheet Risk

8. Operational Risk

9. Market Risk

10. Liquidity Risk

11. Reputational Risk

12. Insurance Risk

13. Sustainability Risk

The main purpose for establishing the RMU is to prevent the Bank from taking too much risk and build up a Capital Adequacy, which is more risk sensitive. The RMU tends to take necessary measures and find out strategy against financial crisis, unusual market condition, and different investment vulnerabilities.

 Organizational Structure of Premier Bank Ltd

There are four different wings to consist the organizational structure of PBL. They are:

• Board Directors

• Executive Committee

• Audit Committee

• Management Committee

 Organizational Hierarchy:

 Products of the Premier Bank Limited:

Fixed Deposit (FDR)Our Fixed Deposit (FDR) is meant for those investors who want to deposit a lump sum of money for a fixed time period; say for a minimum period of 30 days to 1 year and above, thereby earning a higher rate of interest in return. The prevailing rates of interest are shown below:

Current Account (CD)

Our Current Account is probably the most useful Bank Account you will ever have for daily transaction. It is a non-interest bearing cheque account. It will save you the hassle of carrying around cash every month.

Savings Account (SB)

We offer competitive interest rate (6.00% P.a) on our Savings Account. In addition, all account holders will get VISA Debit Card and ATM facility for 24 hour banking convenience.

Premier Genius Account

Intellect and perseverance will lead you to success and saving will guide you to an enriched future. Premier Bank Genius Account offers easy and modern banking facilities to the students who are up to 25 years old. Wherever your possibility may lie, be it in the country or abroad, Premier Bank will always be beside you as you build your future. Genius Account offers you highest profit (7.00% p.a) on monthly minimum balance and payable on every six months. It also offers discount on VISA Debit Card and other attractive facilities.

Premier 50+ Account

If you are above fifty years of age, you will appreciate our unique Premier 50+ Account with a number of extra benefits such as higher rate of interest (5.75% P.a) on daily closing balance, priority service and no service charge. The Account is exclusively developed for the senior citizens of the country.

Double Benefit Scheme

Under this scheme, any deposit becomes double after 6 years. It accepts deposit in multiples of Tk. 10,000. A specially designed instrument shall be issued for the deposit under this scheme in the same manner as issued in case of Fixed Deposit. The instrument is not transferable and renewable. In case of premature encashment after 3 months, benefits may be allowed on the deposit amount at prevailing savings rate. Loan facility may be allowed up to 80% of deposit against lien/pledge on such instrument at bank’s prescribed rates.

Monthly Income Scheme

Your savings are precious! Let your investment generate a regular monthly income for you. Deposit a certain amount at the opening and earn monthly profit till the tenure completes. You will get back principal amount on maturity.

Monthly Savings Scheme

A regular savings pays off when you really need it. Save small amount in your account each month and let your savings grow with time through our Monthly Savings Scheme.

Education Savings Scheme

Do not compromise with the future of your children. Why not start saving from now to meet the educational expense of your children in future? This scheme has been designed to secure future educational expenses of your children.

Personal Loan

 Our Personal Loan is any purpose loan for you. The purpose could be anything valid from buying household appliances to emergency medical needs. Some of these could be: Purchase of Electronic goods, House/Office Renovation, Marriages in the family, Advance Rent Payments, Travel Expenses and Payment of Taxes etc. This product is best suited for salaried executives who are working as confirmed employees in established organizations.

Consumer Credit Scheme

We have introduced Consumer Credit Scheme to extend credit facilities to limited and fixed income group to improve their standard of living. The loan is repayable in easy equal monthly installments (EMI) stretching from 12 to 60 installments.

Housing Loan

Realizing the importance of having one’s own place to live, we have introduced Housing Loan at a competitive interest rate. We provide this loan for both residential and commercial purposes.

Doctors’ Loan

This scheme is designed to financially assist registered Doctors & Medical Practitioners for availing up to 100% finance for Medical Equipment. Motor Car, Ambulance etc. Loan for rental advance for Chamber, Office Decoration are also available under this loan scheme. Registered Doctors & Medical Practitioners, Eye Specialists, Heart Specialists, Child Specialists, Surgeon, Dentist are eligible for this loan. Also Hospitals, Clinics and Diagnostic Centers owned & operated by the registered Doctors may apply for this loan.

Small & Medium Entrepreneur (SME) Finance

Bangladesh, as a developing country, has been trying for its overall economic growth. The development of small and medium enterprises would be the key element in this regard. Recognizing this fact, we have strongly started to finance SMEs. Our SME products are- Project Finance, Working Capital Finance, Lease Finance/Hire Purchase, Work Order Finance, etc.

Women Entrepreneur Finance (WEF)

Women Entrepreneurs Finance is an asset product offered to women entrepreneurs to expand their businesses. As the name implies, this scheme is exclusively tailored for women in businesses to give them extra edge and success viz a viz to meet their financial freedom through their innovative entrepreneurship. This is more than a loan, a financing solution for their businesses.

Student Credit Programmed

We are proud to introduce a credit scheme which is being first of its kind whereby the meritorious students in the country shall enjoy credit facility in each month to defray educational expenses. The loan is to be disbursed in a lump sum amount or as monthly installments basis where necessary. Parents/guardian may apply along with estimate of education expense in a prescribed form to any branches of the Bank duly recommended by the Head of the Department or Head of the Education Institution.

Lease Finance / Hire Purchase

We offer Lease Finance/Hire Purchase to facilitate your funding requirement for the procurement of assets in order to grow your business. Meet up financial need without out flowing own fund. You can acquire the lease assets keeping your capital intact. Thus, leasing helps to build up your fund raising capacity. Premier Bank offers Lease Finance for Capital Machinery, Medical Equipment/Office Equipment, Heavy Construction Equipment, Lifts, Elevators, Power Generators, Air Conditioners, Machinery for Agro based Industry etc.

 Services of PBL:

Premier Bank Visa Credit Card

Our VISA International Credit Card is accepted globally and VISA Local Credit Card is accepted at more than 3500 outlets across the country. You will get free credit facility up to 45 days without any interest. You can draw cash up to 50% of the credit limit of local Visa Card. You can also pay only 5% of your billing amount every month. You may apply for supplementary Cards for any person over 18 years of age. If you lose your card, you just inform the Premier Bank Card Division without any delay and you will be protected against misuse of the Card. Rates and other facilities are highly competitive in the market.

You can rely on The Premier Bank VISA Credit Card and practical support 24 hours a day worldwide. Leaving you free to enjoy shopping, traveling and much more.

Islamic Banking System:

Islamic Banking system has now-a-days become a reality all over the world. It is widely accepted and liked not only by the Muslims but also Non Muslims. The Premier Bank Limited has launched Islamic Banking Operation through its two (2) branches:
In order to ensure smooth operation of Islamic Banking and proper guideline, the Bank has a Shariah Council consisting of renowned Scholars, Alem, Faqih, Lawyer, Islamic Banker and Philosopher. You can get Islamic Banking Services from any Branches of the Bank through “Islamic Banking Help Desk” as exist at every conventional Branch.
Investment Schemes of Islamic Banking Different Investment Schemes of our Islamic Banking Operation may be categorized under three basic parts. They are as follows:

Islamic Banking Operation

Islamic Banking system has now-a-days becomes a reality all over the world. It is widely accepted and liked not only by the Muslims but also Non Muslims. The Premier Bank Limited has launched Islamic Banking Operation through its two (2) branches:

1. Islamic Banking Branch, Mohakhali, Dhaka.
2. Islamic Banking Branch, Laldighirpar, Sylhet.

In order to ensure smooth operation of Islamic Banking and proper guideline, the Bank has a Shariah Council consisting of renowned Scholars, Alem, Faqih, Lawyer, Islamic Banker and Philosopher. You can get Islamic Banking Services from any Branches of the Bank through “Islamic Banking Help Desk” as exist at every conventional Branch.

Deposit Products of Islamic Banking 
    • Al-Wadiah Current Account
• Mudaraba Savings Account (MSA)
• Mudaraba Term Deposit Receipt (MTDR)
• Mudaraba Special Notice Deposit Account (MSNDA)
• Mudaraba Premier 50+ Account
• Mudaraba Premier Genius Account
• Mudaraba Monthly Savings Scheme (MMSS)
• Mudaraba Monthly Income Scheme (MMIS)
• Mudaraba Education Savings Scheme (MESS)
• Mudaraba Special Deposit Scheme (MSDS)
• Mudaraba Double Benefit Scheme (MDBS)
• Mudaraba Hajj Saving Scheme (MHSS)

 Note: The benefit amount from these deposit products can vary depending on the overall Profit/Loss and the weightage.

Investment Schemes of Islamic Banking Different Investment Schemes of our Islamic Banking Operation may be categorized under three basic parts. They are as follows:

• Buying-Selling Mode
(a) Bai Murabaha (Sale in cash or differently),
(b) Bai Muajjal (Sale under deferred payment),
(c) Bai Salam (Advance Purchase),
(d) Bai Istisna (Progressive Financing)

• Sharing Mode
(a) Murabaha (Sharing),
(b) Musharaka (Partnership)

• Leasing or Ijara
(a) Leasing where the leaser (Bank) retains ownership of the assets and the lessee (client) possesses the right to use the assets on payment of specified rent over a period.
(b) Hire-purchase under Shirkat Al-Mielk: Under this system, the bank finances to purchase the machineries, equipments, consumers’ durables etc. under a joint ownership agreement subject to ownership ratio as per equity.

Following Investment products are conducted under the Islamic Banking System:

• Consumer Investment Scheme

• Housing Investment/Apartment Finance
• Doctors’ Investment Scheme
• Rural Investment Scheme
• SME Investment
• Women Entrepreneur Investment Scheme
• Lease Finance
• Project Finance

• Student’s Investment Scheme

 Others Product of PBL:

Evening Banking Service:

A unique service of The Premier Bank Limited for receiving cash and documents beyond transaction hours till 8 o’ clock in the evening. This service is attractive for those like shopkeepers who accumulate cash as sales proceeds in the afternoon when counters of Bank Branches usually remain closed. The service is available at selective branches of our Bank.

Remittance  Service:

Our Remittance Payment procedure is very safe, simple and fast. The Bank has signed a good number of long term deals with a group of well-connected remittance partners across the globe such as MoneyGram, Dolex and Xpress Money Services etc. We have developed our own remittance distribution software “DRUTI”. In addition to our 58 branches, we have agreement with GrameenPhone (1,40,000 outlets), Jagarani Chakra Foundation (250 outlets) and General Post Office – GPO (10,000 outlets) to use their mobile technology and wide distribution outlets around the country to easily distribute inward remittance. With a view to channeling the homebound foreign remittances from Bangladeshi expatriates, the Bank has decided to open 100% owned subsidiary Exchange Company of Premier Bank in Italy, Libya, Malaysia, Singapore, Spain and UK subject to approval from Regulatory Authorities of the respective Countries. Permission from UK has already been received and the rest are underway.

SME Service Centre :

In order to facilitate the investors of Small and Medium Enterprise, Premier bank has opened several SME Service Centres at different locations – Banani SME Centre – Plot No. 76/A (1st Floor), Road No. 11, Banani, Dhaka. Bangla Bazar SME Centre – 42, Bangla Bazar, Ward No. 73, Sutrapur, Shadarghat, Dhaka. Kawran Bazar SME Centre – Progoti RPR Centre, 20-21, Kawran Bazar, Dhaka. Tel; 8189404. Mohammadpur SME Centre – 1/4, Block E, Shat Masjit Road, Mohammadpur Bus Stand, Ward No. 46, Dhaka. Tel: 9101929. Malibagh SME Centre – 98, Shiddeswari Circular Road, 1st Floor, Mouchak More, Malibagh, Dhaka.

About the Premier TC

“Premier TC” is prepaid foreign currency card denominated in US dollar available over the counter of the branches that makes your foreign trip totally hassle-free and convenient. You can load this prepaid card with foreign currency in Bangladesh which gives you a 24-hour access to your money. With “Premier TC” you can attend to your business, enjoy the delightful tourist spots, dine out, and take in the breathtaking landscape and exotic culture of the country without worrying about money changers and converting your traveler’s cheques into local currency.

SMS Banking Service :

Check your Bank Account Balance, while you are stuck in traffic. Stop Cheque Payment from the airport. Request for your Account Statement while watching TV. Check Last Three Transactions of your account at the restaurant. All these and more are possible through our SMS Banking Service.
VISA card:

This card can be used to withdraw cash in the local currency from over 1 million VISA ATMs and shop at over27 million merchant establishments accepting VISA Flag cards from the country they are traveling to. The card is sold from Premier Bank branches and Card Division.

Premier Bank Debit Card

We are offering Premier VISA Debit Card Service as well as own Automated Teller Machine (ATM) facility to electronically debit money from your account. In addition to our own ATM Booth, you can also use Premier VISA Debit Card in other Bank ATM where VISA Card is accepted.

About us:

The Premier Bank Limited is a Corporate Member of Dhaka Stock Exchange (DSE) & Chittagong Stock Exchange (CSE) under Membership # 236 and respectively # 143. The Bank has started its Brokerage operation on 01 December 2009. We have already opened near about 950. BO accounts (Beneficiary Owners Account) in our Brokerage House. The operation is going on with full satisfaction of the clients. We will also turn into a Subsidiary Company within a very short time. The name of the subsidiary company will be “Premier Bank Securities Ltd”.

International Services:

Advance Payment Bonds for infrastructure projects in Bangladesh, participating in tenders The International Division is looking after Correspondent Banking Relationships, Treasury Back Office and International Trade Settlement. In order to smooth global operation of international business we have correspondent banking relationship with 430 foreign banks around the globe and maintain 19 Nostro accounts in 9 currencies to service our customers. Bank is providing the facility of Letters of Credit, handling of Import Bills, issue of Shipping Guarantees, acceptance of Bills, financing of Imports. Advising of Export Letters of Credit, Confirmation of Letters of Credit, Assistance in preparation of Export documents, Negotiation of Letters of Credit, Handling Export bills on Collections, Purchase/Discount of Export bills, Pre-shipment facilities are extended for both domestic and foreign trade. The requirement of letters of guarantee, Bid Bonds, Performance Bondsor any other need basis, could be channeled through us for speedy delivery at competitive tariffs.

Call Center:

We have setup our own “Call Center” at Head Office under the direct supervision of the Managing Director. If you have any queries, suggestion or complain, you can talk to our Call Canter during business hour. You will also find complain/suggestion box at our every branches for your valuable input. Our Call Center is open from Sunday to Thursday to accept your call in working hours from 10:00 a.m. to 6:00 p.m. except on Saturday from 10:00 p.m. to 3:00 p.m. Dialing numbers are: 02-9887581-4.

My internship at Premier Bank Limited started on May 2, 2012 and it ended on August 2, 2012. During these 3 months I was assigned at the Comilla Branch. I had a lot of fun, but more importantly I finally understood working by actually being there. This practical orientation is necessary for the development and preparation of a person in the job world. The things that I have learned at Premier Bank are:

• Meaning of responsibility

• Necessity of commitment

• Punctuality and regularity is very important

• Ability to interact with different sorts of peop

Premier Bank has a prepared internship program for internees. Although it is rarely followed, it served as a guide for me. I was rotated across all 4 different departments in the past 3 months.

The Nature of the jobs and my Specific Responsibilities

The first week I was in the Front desk of the bank then next week I have at cash department. Banks don’t usually put interns in this department but I was lucky to see firsthand what happens behind the counter. I did not have much responsibility in that department as I was not to mess with their hectic and hasty transactions, but they eventually did give me some work. My responsibilities in this department were just to assist them in any small way possible. I learned the following from this department

• Counting money in various ways
• Use the counting machine
• Use the photocopy machine
• Counting the vouchers
•  Checking the individual EOD (End of day Journal report) of each cashier
•  Learn about Flex cube – the software used to verify all forms of deposits and withdrawals.
•  Learned to become freer among the other employees
•  Learned about the Money Laundering Act

Although these activities were small, they helped me understand the nature of the work.

Then I was assigned to GB (General Banking). I spent the next 5 weeks here. It was very arduous, but very fruitful. I was under Mr. Md. Muhibur Rahman Khan (FAVP), who was very intellectually intriguing.

I had a wide variety of responsibilities at GB:

• Bringing out the cheque books for the customers, verifying them, receiving them from the courier.
• Writing and later on printing pay orders
• Sometimes I did the FD (Fixed Deposits) and DPS (Deposit Pension Scheme), but it was under strict supervision.
• Counting the voucher of GB
• Finding the FD, DPS and old account opening forms
• Opening account for new customers and aiding them in the process
• Opening FD and DPS for new customers
• Putting 5 different types of seals for clearing
• Numbering shares and putting seals on them during IPOs
• Checking the EOD
• Preparing the bill for the branch’s expenditure for that day
• Inputting information onto the PB Cube.
• Making solvency certificates
• Typing other documents given by my in charge
• Keeping things in order and at arm’s length

The work was really hard at GB. I also had to hear a lot of complaints from the customers. At first I was demoralized. But later on I learned how to deal with it.

I was in the Credit Department for the next 2 weeks. Although much work was not assigned to me, I did assist this department in whatever way possible.

• I had to rearrange all the customer files

• Help out when the audit came

• Checking and filling up CIB forms

• Printing, typing and photocopying

• Printing Cover Letters, letters etc

• Picking up the phone, calling up customers for missing information

• Preparing T&M (Travel and Miscellaneous) for Bangladesh Bank

• Taking necessary papers from customers such as taking photocopy of National ID card, Passport, Trade License etc

• Photocopying was a major activity in this department

• Learned how to receive mail and send out mail via courier

• Learning the basics of these software – Flex cube Corporate, Western Union, PB Cube, Premier Bank Foreign trade (for other remittances)

• Counting vouchers

 Observation

It was very interesting working at Premier Bank. The people there are really nice and talented. The things that I have noticed and observed are:

• Work is never left pending for the next day unless it is absolutely necessary

• The work process could be made faster with better computers and operating systems.

• A good job performance is rarely praised, hence lacking motivation of the employees

• There is always a rush of customers so there is no standard on what the employees do throughout the day. The work activities of an employee is set, but what to do when varies along the day

• The work activities are always set and divided for each of the employees. This is the way it should be, but when I saw it firsthand it was remarkable. Each and every employee has a certain set of responsibilities. He/she carries out those responsibilities throughout the day. It is also easy to assign duties that way. Even though this is the case, I often saw other staff members helping each other out.

 Introduction

The loan and credit department is a very important department of a bank. The money mobilized from ultimate surplus units are allocated through this department to the ultimate deficit unit (borrower).the success of this department keeps a great influence over the profit of a bank. Failure of this department may lead the bank to huge losses or even to bankruptcy. Loan and credit department receive application from client in a prescribed application form supplied by the Premier Bank Limited, Comilla branch.

The Bank implemented the system of credit risk assessment and lending procedures by stricter separation of responsibilities between risk assessment, lending decisions and monitoring functions to improve the quality and soundness of loan portfolio. The Bank recorded a 6% growth in advances with a total loans and advances portfolio of BDT 49774.91 million at the end of December 2011 compared to BDT 46400.57 million at the end of December 2010.

As of 31 December 2011, Most of the Bank’s loan portfolio was regular while only a few of the total portfolio was non- performing as compared to 2010. Bank made required provision as of 31 December against performing and non- performing loans as per rate and classification norm provided by Bangladesh Bank. The volume of non- performing loans stood at BDT 3374.33 million in 2011 from 2010.

 Credit Rating Report

Premier Bank Limited was rated by Credit Rating Agency of Bangladesh (CRAB) on the basis of audited financial statements as on December 31, 2012. The Summary of the Ratings is as follows

Commercial Banks rated A1 in the long term are strong banks backed up by good financials and timely payments of financial commitments. ST-2 in the short term for commercial bank characterizes commendable position in terms of liquidity, internal fund generation and timely repayments

 Functions of the Credit Department

Lending money is one of the main functions of a commercial bank. In the lending process, selection of borrower is the most crucial and vital job for a banker. Before a customer enjoys credit facilities it is important that the applicant should qualify for five Cs. The five Cs are:

• Character – Intention to pay back the loan

• Capacity – Borrower’s competence in terms of utilizing the fund profitably and generate income

• Capital –Financial strength to cover the risk

• Conditions – General business condition between two parties

• Collateral – Implies additional securities

In addition, objectives of the credit department are managing credit exposure of the bank, maintaining credit risk, compliance of Central Bank Ltd, recovering or collecting dues of retail loans or advances. At present credit division performs following activities:

• Credit Approval Process:

• Corporate Credit

• Retail Credit

• Collection and Monitoring Activity:

• Recovery

• Risk management

The activities of this department include managing the financial books of the bank, checking all entries of the book are according to standards, preparing daily reports for Bangladesh Bank, revenue appropriation and calculations, setting the internal pricing rates etc.

Loan is an asset to any financial institution. That is why it is very much necessary to ensure that a loan does not become bad. The first step in ensuring that is to ask for proper documentation of the loan applicant. A default loan might be very hard to recover due to lack of proper charge documents. This is where the asset operation department of the bank comes into action. Asset operation department of the bank acts as a last frontier to mitigate all loan related risks before disbursement of a loan.

The functions of asset operation department can be broadly categorized under two heads. The first one is the disbursement and monitoring of loans. In this case the department disburses loans after obtaining clean CIB reports of the clients, checking all documents and collecting securities after proper lien and charges creation after terms of approval. This department also periodically review conditions of past due loans, limit, expiry and document deficiency.

The next operation of the department is to act as custodian and compliance of the charge documents and prepare various MIS reports for the central bank and other audit authorities.

 Overall Credit Policy of PBL

Lending being the most important function of commercial bank, every bank should have own credit policy. Credit policy generally aims at (a) creating healthy loan assets to ensure goods interest earning for the bank (b) ensuring ultimate safety through judicious selection of based on its salability.

Selection of based on its salability.

The credit policy of Premier Bank Limited has been formulated of the plan of “ALL NEW LOANS TO BE GOOD LOANS”, The plan was formed on the basis of the following objectives:

• To maximize the profit of the bank by making sound lending

• To deliver credit to viable borrowing at a reasonable cost

• To provide satisfactory return on investment

• To assist the social and economic development of the country

• To deliver general banking services to the public and credit to viable borrowers at a reasonable cost.

 Know Your Customer:

The success of a bank and the consistency of its profits depend on the efficiency and safety with which it makes use of its resources- Capital and deposits by lending those resources to various types of borrowers.

Selection of customer is important; therefore the first criterion should be “Know Your Customer”.

The major factor in successful lending is ability to judge the Character and Credit-worthiness of the borrower.

i)           Credit worthiness can be judged on certain general principles, which we should follow in the decision making : –

a)      The integrity of the borrower: – He should be a respectable and honorable man who can be relied on to keep his promises.

b)      The ability to repay the advance: – This ability will depend on his financial resources, which is meant not only his income but also the property or capital that he possess or will possess.

c)      The purpose for which the advance is required: – The bank should ensure that the purpose of the loan is such as to make the advance suitable as a matter of banking business.

d)     The source of repayment of the advance: – We should ensure that the product which the borrower has been manufacturing/dealing with has a good demand in the market.

e)      The period for which the advance is required: – An advance to a manufacturer to enable him to buy raw materials to fulfill a profitable short-term contract is an advance of temporary character promising sound banking business.

ii)         Past dealing with the customer may give us a lead to the customers’ character and trustworthiness, and personal knowledge of the man may confirm any opinion the branch may have formed from the working of an existing account.

The branch will also consider the customers’ local standing, the influence he may be able to exert (e.g. by introducing new customers), and whether he has been a good friend to the bank in the past.

Traders or industrialists who require advances for purpose of their business usually have some assets. When advancing to trading customers, therefore, the branch should ask for Balance Sheet and Statements of Income & Expenditure for the previous 2/3 years so that the branch can form an opinion of the value of the customers’ assets and liabilities, and may obtain a true perspective of the trend of the customers’/ borrowers’ affairs.

While meeting an existing / potential customer the officer of the branch must check whether the person with whom he will be dealing with i.e. proprietors/partners/directors are extravagant in personal life style? Living beyond his means? And resort to irregular behavior leading to evasive answers?  To enable him form an opinion of their relationship with us. While considering the business of an individual / entity the branch will value each asset on a forced sale basis.

iii)       The bank will not grant loans for purely speculative purposes.

iv)       A business having negative net-worth should not be granted any credit facility if are not covered by cash/quasi cash securities with adequate margin.

v)   Always refer to Account opening form at the initial stage of your dealings with the customers to establish the identity of the borrower.

vi)       If the customer is a Public figure the account will be considered a High Risk Account.

vii)     When opening accounts, the concerned officer must assess the risk that the accounts could be used for “money laundering” and must classify the accounts as either High Risk or Low Risk.

viii)   Please get yourself acquainted with, ‘ANTI MONEY LAUNDERING PROCESSES’- prepared by Focus Group on Prevention Money Laundering.

(Reference: MANAGING CORE RISKS IN BANKING GUIDANCE NOTES ON PREVENTION OF MONEY LAUNDERING – prepared by Focus Group for Bangladesh Bank.).

We must establish to our satisfaction that we are dealing with a real person (natural, corporate or legal) and must verify the identity of persons who are authorized to operate any bank or investment, or transact business for the customer.

We suggest an officer of this bank while meeting / discussing with a customer will prepare a file note of the contents of discussion for future reference which may disclose changes of address, telephone number and so on for incorporation/substitution in the AOF and other records.

 Customer Segmentation

Management of credit by segment wise approach is considered effective in the sense that an officer who requires managing in one particular segment gains experience by handling same type of borrowers. And in the course of handling he can expand his experience towards managing and administrating an increased number of accounts with accuracy and confidence.

But an officer having number of accounts in various segments, with size and complexity will be constraint to give equitable attention to his job and judgment.

More over the segment market approach will create a sense of competition amongst the team members of different segments, which will effectively work towards achieving our annual target for deposit and advance, and a better credit administrative function.

The customer segmentation will be as under: –

a)      Personal segment

b)      Foreign government segment

c)      Public sector segment

d)     Multinational segment

e)      Local corporate segment

f)       Others i.e. who does not fall in the above segments

The basic job of our Account officer/Business relationship officer/manager is to manage his risk asset portfolio which, in short, includes appraisal, preparation of sanction advice, documentation, regular follow up, review of the account including restructuring/rescheduling, preparation of periodical return, recovery process et

 Discouraged Business Types

The Bank will not grant any facilities to the following Business Types:

i)        Bridge Loans relying on equity / debt issuance as a source of repayment;

ii)       Counter parties in countries subject to UN sanctions;

iii)     Finance of speculative investments;

iv)     Finance of Military Equipment/Weapons;

v)       Highly leveraged Transactions;

vi)     Lending to Holding Companies;

vii)   Lending to slow moving items;

viii) Logging, Mineral Extraction/Mining, or other activity that is Ethically or Environmentally Sensitive;

ix)     Lending to companies listed by CIB (Central Bank i.e. Bangladesh Bank’s Credit Information Bureau) as defaulters or known defaulters / habitual defaulters;

x)       Highly perishable goods stored in godown;

xi)     Share lending;

xii)   Taking an Equity stake in Borrowers

We should not grant facilities where our security position is inferior to that of any other financial institution and that: –

a)      Assets pledged / Hypothecated as security should be properly insured.

b)      Valuation of property taken as security should be conducted prior to granting of loan by a recognized independent valuation firm.

 Cross Border Risk

Risk associated with cross border lending. Borrowers of a particular country may be unable or unwillingly to fulfill principle and / or interest obligations. Distinguished from ordinary credit risk because the difficulty arises from a political event, such as: –

a)      Suspension of external payments.

b)      Synonymous with Political & sovereign risk.

c)      Third world debt crisis, for example, export documents negotiated for countries like Nigeria.

Exceptions can only be granted by the Board.

Lending Strategy Statement& Risk Asset Management

As general guideline companies forming our targets should have the following criteria

a)      Our targets should normally be the top companies and business firms of Bangladesh with a good track record.

b)      Included in the track record will be annual net worth increase over the past three years.

c)      We should look for a debt / worth relation of 2:1 to maximum 3:1.

d)      A minimum current ratio 1:1.

Exceptions:

Borrowing covered at least by 100% of credit balance i.e. Fixed Deposit / Saving Bank balance/ margin etc. in the name of the borrower or guarantor.

e)      The borrowers’ integrity and market report must be beyond any question.

f)       Satisfactory CIB /bank report required.

g)      Proprietor / partners /directors must have experience in business.

h)      Where audited accounts are not available actual financials in proper Statements of Income & Expenditure and Balance Sheet form for three years of which the latest one must not be older than three months from the date of submission of proposal should be made available to the bank.

i)        Minimum after tax profit/ sales margin 5%.

j)        Annual sales growth must not be less than 10%.

k)      Minimum annual Net profit from each customer Tk. 2.00 Lac with minimum ROA 3%.

 Types of Facilities:

Funds based and Non fund based products available with

Amount: up to maximum two/ three times net worth of borrower.

Repayment:   a)   Maximum tenure in case of Term Loan 3-8 years;

b)   Cash credit / overdraft-12 months;

c)   LIM- maximum-120 days;

d)   LTR- maximum-120 days;

e)   L/C- validity-120 days maximum;

f)   L/G- validity maximum 12 months. Margin will as per Bank-Customer relationship.

Pricing: As per Bangladesh Bank and our Pricing.

Security: Primary security plus collateral security to be provided for full value of facility with adequate margin.

Insurance: In joint names for full value of security plus 10% against FIRE, RSD, Burglary, Earth quake, flood, cyclone, Tempest. (Exemption will be considered on case-to-case basis).

Covenants and Conditions: Only those commodities, which are essential consumer items and basic raw materials of the industries having good marketability in short supply, should be financed. Duty, sales tax and other landing charges to be borne by the borrowers’ own sources.

Proforma for Personal Wealth Statement:

a)      Name of Borrower with address

Name of Proprietor/partner     :

/director with address

b)      Name of the owner of the assets  :

(If assets are owned by more than one

Person, please state separately ownership)

Description of Assets belonging to proprietor /partner/director:

c)      Which of the above assets are encumbered with whom and for what value?

 d)     Connection of proprietor /partner/director with any other business concerns. Provide names of such concerns and percentage of ownership / shar

Risk Asset Management (RAM):

Purpose: Effective Risk Asset planning and administration.

Objective: Containment of credit losses. Improve profitability of the Bank.

Definition of ‘Risk Asset’: Risk assets for the purpose of RAM include contingent liabilities such as letters of credit and guarantees also. These contingent liabilities must be treated from a credit approval point of view as having the same credit exposure as funds based assets.

Steps in RAM Process:

a)      Planning : 

i)        Target market criteria – to define desired customer base.

Note:  Strategy as to desired customer base; consider risk inherent in each market; criteria to     define characteristics of an acceptable customer. Understanding of each market-which one shows prospects of growth/ profitability ?

ii)      Terms of Acceptance of Risk Assets – to define terms of our products (to target customers).

Note:   Define terms for our products/services to be offered, to produce desired profitability at acceptable risk. Ancillary business?

Care!   Higher earning prospect cannot justify a bad loan.

b)     Initiation :

i)       Client / Prospect Check Vs Criteria.

ii)      Evaluation of his needs (know his business and his environment)

Note:   Bear in mind funds availability; Plan your call. Perhaps you could use visit for a pre‑sanction inspection. Do Call Memo. Account Plan.

iii)    Negotiation: ‑ Terms ‑ Bear in mind customer situation; also the agreed terms of acceptance for the target market.

iv)    Approval: Compliance with internal credit approval procedure.

Note:   Facility application package i.e., Credit Memo with full background/financial information, analysis of historical trend, prospects, anticipated profitability vis-à-vis funds based, non‑funds and/or exchange business expected. Any exceptions must be listed for approval by appropriate authorit

c)      Documentation & Disbursement:

Identify particular documents required for each facility and arrange completion. Enlist outside legal assistance where necessary. e.g. when drawing up special consortium / term loan agreements et

Appraise value of security offered vis-à-vis Bank’s needs.

N.B.: –

i)           Go through the various items of documentation requiring to be certified in the credit Memo and ensure full completion.

ii)         Do notdisburse until all required documentation is correctly completed. Any exception to this rule must be referred to sanctioning authority.

d)     Administration :

Administration is a continuous process. Effective administration requires a constant and systematic review of the account and client activity.

i)           Close monitoring of account.

ii)         Keep abreast with client, his current activity, and expansion/diversification plans etc.

iii)       Adherence to security requirements.

iv)       Updating documentation, as required.

N.B.: –

i)           Be alert to identify any deterioration in the credit.

ii)         Look for warning signals for early corrective action.

iii)       Consider down grading, the aim being to highlight risk areas and the need for closer monitoring and control.

iv)       Plan remedial action in consultation with controlling authority.

v)         Remedial Management; work‑out; restructure of debt.

A detailed procedure regarding Credit discipline may be based on the following line

(i)          a) Request for application for facilities in banks printed form;

b) Examine the nature of facility required;

c) Acknowledge if it merits consideration /reject if the business does not suit us/meets our credit policy requirement / Bangladesh Bank credit restriction.

(ii)        a) Refer to the liquidity position while considering the facility;

b) Consider high yielding, short term, and self-liquidating advances with ancillary business/compensating deposit;

c) Prefer quality advances;

d) Obtain/prepare credit report on the customer/update the report at least quarterly basis (Banks’ opinion/CIB reports).

(iii)      Ensure/request for further documents/papers if a qualitative analysis for accepting the risks is necessar

(iv)      Ensure that the borrowing power is in ord

(v)        Examine Memorandum / Articles of Association with particular reference to borrowing      powe

(vi)      a) Obtain and examine the security documents.

b)   Obtain Board resolution, create charge including floating charge on assets hypothecated, book debt and mortgage created in favor of the bank. Assess directors’ worth and obtain their personal guarantees.

c)     Prepare /obtain legal / registered mortgage of the documents/ record in the mortgage register.

d) Diarize the review date of Credit Memo-1/2/3 months earlier from the due date.

e)     Complete security documentation in all respects/ enter in the security register (safe in) and ledger detailing the security lodged in the safe custody.

f)   Insurance of the property –Fire, RSD, Burglary, natural calamities.

(vii)    a) Prepare Credit Proposal detailing the terms /obtain approval/ ratification.

b) Prepare facility record sheet, which will evidence historical as well as current facilities of the borrowers.

c) Call on the customers / prepare call reports /future action program /keep in file.

(viii)  If risk is acceptable send the customer an offer / sanction letter in duplicate detailing the terms and conditions under which the sanction has been made and obtain the duplicate letter in agreement of the customer duly signed by him. Verify signature and keep the copy in safe custody after obtaining a duplicate for the file. The following points / terms should be kept in mind while preparing the offer / sanction letter: –

Purpose; Repayment term/tenure/review date; Primary security; Collateral security/ examination of documents by banks lawyer/law charges; Marketability of the security; Valuation of the security; Inventory control/stock report/insurance/ frequent inspection; Rate of interest/commission/quarterly rests; Balance Sheet -Trading Account, Profit & Loss Account/ Cash budget/ Cash flow   Statement etc.

a)       Check  on  a  regular  basis main aspects of the cash budget and monitor the flow of cash   particularly for repayment daily /weekly/ fortnightly/ annually/ bimonthly/         quarterly/ installments;

b) Ensure that purpose of the facility is properly utilized, no diversification;

c) Diarize expiry of insurance policy cover/ record details of the insurance in the insurance register;

d) Ensure fortnightly / monthly stock statements/ find out the drawing power / record the value of the stock/ book debts in the stock register;

e) Inspect stocks periodically –preferably jointly by selective officers;

f) Follow Bangladesh Bank regulations.

(ix)  a) Pledge of goods – counting /stacking / recording – ensure method is strictly followed if

The quality of goods is dependent on long storage;

b) Obtain letter of disclaimer from the godown owner.

c)  Undertake periodical stock inspection. Bring irregularity to the notice of the concerned account / credit officer / manager immediately

d) Display signboard inside and outside the warehouse inscribing under “Lien / pledge to The Premier Bank Limited”.

e) Engage approved C & F agents for clearing and storage of the goods.

(x) Arrange credit file / segmentation.

(xi) Follow-up audit / inspection comments

A regular monitoring of the account is imperative to avoid any irregularity that might creep in during the course of the facility. It is also their duty to check the periodical statements pertaining their accounts to ensure correct reporting with brief necessary comments /remarks, and for timely submission to the reporting authorities.

Last but not the least we require to examine that an account has not become time barred under the law of limitation.

Restrictions on Loans & Advances

Our Bank will not make or commit any facilities to an entity or a number of entities under the ownership of one customer, which exceeds 50% (Fund based 25% & Non fund based 25%) of the capital fund of the bank without obtaining Bangladesh Bank approval.

Similarly our Bank will not make or commit any unsecured and/ or secured facilities to the own Bank Director(s) or his /their dependants exceeding 50% of the shares hold by any Directors subject to a maximum amount of Taka One million without the approval of the Bank’s Board of Directors and Bangladesh Bank.

Clearance of Bangladesh Bank, Credit Information Bureau (CIB) is required for granting Credit facility of any amount in order to ascertain that the prospective borrower has no classified loan with other Bank(s).

Our Bank will not grant any facility to a customer having default loans outstanding with another bank.

Our Bank will not grant Loans/Advances against security of its own shares.

Our Bank will not grant advances to a minor or a company where a minor is holding the majority share.

Our Bank will not make loans against second mortgage of properties whose value is equal and secured by 1^st mortgage.

Our Bank will not make advances / loans to enable the borrower to speculate in shares and debenture and / or commodities for hoarding purposes.

Our Bank will not make advances against properties in locations where we do not have a branch.

Our Bank will not grant loans against accommodation bills.

Our Bank will not issue a guarantee of any type whose expiry is beyond three years without having 100% margin.

 Policy for Taking over Loan from other Bank

During normal course of Banking, we take over loans from other Banks. While taking over loans may be necessary and rewarding in a competitive environment, we have to be very cautious that the loan which we are going to take over is a good and remunerative one.

The following policy guidelines shall be followed for taking over loans:

a) We shall not take over any loan, which is running overdue with their existing Bank.

b) We shall not take over any loan which has been rescheduled in any Bank.

c)  We shall not take over any loan of a company/firm/individual who has classified liability in its name or in the name of its sister/allied concern(s) with any Bank.

d) We shall not take over the loan of any sector which has vulnerable future and whose market may face difficulty due to anticipated change of international as well as domestic policy.

e) While processing credit proposals which involves taking over of loans from other Banks, we must collect a copy of the latest sanction letter, copies of statement of accounts, and review the existing terms and conditions.

f) Generally, we shall not give credit facilities at terms and conditions which are inferior to those of their existing lender. Any exception shall be fully justified in the credit proposals.

g) We should encourage the customers to repay the liabilities with their existing Bankers from their own resources, obtain release of securities/collateral etc and then borrow from our Bank by pledging the necessary securities/collateral.

h) Where we have to take over securities/collaterals from Banks and repay the liabilities of the customers by creating loans in our Books, we must, after due sanction of the limits, follow the under noted procedure:

i)          The customer shall write a letter addressed to their existing Banker giving clear instructions to deliver all the documents relating to mortgaged property and other securities to the authorized representative of The Premier Bank Limited on adjustment of their liabilities. A copy of the letter shall be endorsed to us.

ii)  The Branch, which is going to take over the loan, will write a letter to the existing Banker of the customer to confirm the outstanding liability position of the customer with them and the particulars of the mortgage/securities held with them. The Branch will also ask for the consent of the existing Banker of the customer to deliver the property documents and other securities to us relating to the loans to the authorized representative of our Bank upon adjustment of liabilities. Existing Bank shall also execute redemption deed for the mortgaged property as per draft approved by our lawyer.

iii)  On getting consent in writing from the existing Banker of the customer, our Branch must obtain all charge documents from the customers along with authority to us to create loan for the amount and issue Pay Order within the sanctioned limit for adjustment of the liability of the customer.

iv) If our Bank decides to take over contingent liabilities of the customer, the Branch may issue Guarantee to the existing banker covering the contingent liabilities. The form of the Guarantee must be approved from Head Office.

Counter Guarantee must be obtained from the customer (backed by Board’s Resolution where necessary) for timely settlement of the contingent liabilities. Post-dated cheque(s) shall be obtained from the customer.

The customer shall pay commission to the Bank for the Bank Guarantee(s) to be issued by us for taking over non-funded liability.

v) The customer must undertake in writing to the effect that he/she shall arrange redemption of the mortgaged property with his existing Banker immediately after adjustment of the liability with his/her existing Banker by us and arrange with the Bank for handing over original title deeds and other chain of documents/papers relating to the property as well as other security and documents to the authorized representative of The Premier Bank Limited for creation of Mortgage/Charges in favor of our Bank.

vi) The Branch must obtain Note of Satisfaction of Charges from the existing Banker and file for Registration of First Charges with the Registrar of Joint Stock Companies and Firms. All relevant forms regarding creation of charges (RJSC Form No. XVIII, etc) should be completed and got signed by the borrower before creating any loan.

vii) All charge documents including Memorandum of Deposit of Title Deeds to be obtained duly signed by the customer /mortgagor before issuance of Pay Order/Bank Guarantee. Registered Mortgage must be completed immediately on receipt of original Title Deeds from the existing Banker of the customer.

viii)  An undertaking to be obtained from the customer(s) on Non-judicial Stamp to the effect that they will adjust liabilities from their own sources on demand to The Premier Bank Limited if their existing Banker does not redeem mortgages/release securities. The draft of the undertaking shall be vetted by our Lawyer.

ix) Prior to creation any loan and payment to the existing bank, the customer shall give photocopy of all mortgaged deeds and sign in advance the proposed Registered Mortgage Deed keeping the date in blank, which may be registered later on getting original documents from existing banker and also NOC from RAJUK, if necessary. Application for NOC from RAJUK or any other authorities required for creating Registered Mortgage should be obtained before creation of loan.

x) Only after Registered Mortgage is created and all legal and banking documentation (charge documents) are obtained, the Branch will allow the borrower to avail the remaining facilities.

 Policy of Financing to Ready Made Garments Industries (RMG)

It may be mentioned that following types of financing are made to export oriented garment / textile industries:

b) Capital financing (Term Loan) for import of machinery.

c) Back to Back L/C facility.

d) Packing Credit facility and

e) Negotiation/purchase of export bills.

Financing to export oriented Garments industries is lucrative and remunerative to the Bank in the following considerations:

i)         Major finance is in the form of BTB L/C which is non-funded.

ii)        Bank earns from export oriented RMG finance in different form:

a)      L/C commission;

b)      Acceptance commission;

c)      Exchange Gain;

d)     Interest and other miscellaneous income.

iii)        It is self-liquidating from export proceeds.

iv)     Once a Garment client inducted it become a captive client for future & continuous Back to Back L/C, Export and other allied business.

v)         It is Bulk Credit.

vi)       It continues throughout the year and not seasonal.

vii)     Moreover, it contributes to the national economy in generation of Foreign Exchange as well as Employment.

Side by side, financing to Garments sector is associated with considerable risk, which are as follows:

i)     Export failure with resultant stock-lot is a common phenomenon in this sector for various reasons. Once stock-lot is created, Bank’s finance of large amount get stuck-up. Exporters are not in a position to repay Bank’s dues from their own source until the export of stock-lot is made.

ii)     The exporters generally cannot provide adequate collateral security compared to the quantum of credit facilities exposing the Bank to risk.

iii)    It is Buyers’ market. Very often, buyers refuse payment of export bills on flimsy ground and bargain for exorbitant discount, causing shortfall in adjustment of Bank’s dues.

iv)       Global Economic and Political conditions usually affect the RMG Sector to a great extent. Knit Garments enjoy cash subsidy from the Government, timely release of which by the Government is also very essential. However, recent Government move is to withdraw this facility.

In view of the above advantages as well as the risk factors the Bank should be very selective in allowing finance in the sector.

For safety of Bank’s finance in Garments sector, the following points are to be taken in view:

i)    We should avoid Project / Capital Finance in RMG & give preference for working capital financing to self financed projects. However, our existing factories shall be allowed to import additional machinery for balancing / expansion purpose.

ii)      We should induct only those clients who have minimum 5 years experience in this line & has and excellent proven track record.

iii)     The credit limit should be consistent with the production capacity & performance of the factory.

iv)     Back to Back L/Cs should be opened after examining the Credit report, reputation and past performance of the buyers as well as of the export L/C opening Banks.

v)      There should be sufficient time gap between arrival of fabrics, accessories and validity of export L/C for completing production of RMG to ensue export shipment in time to avoid stock-lot. Minimum 60 days gap is preferable.

vi)   Effective follow-up, supervision and monitoring at the respective Branch should be made. At least once a month the factory should be visited to evaluate performance & a report be submitted.

vii)     Adequate collateral securities should be insisted against Garments finance. Additionally 2.50% to be deducted from each export bills to build up FDRs which should be held under lien as security. The deduction to be made up to 20% of limits sanctioned /outstanding whichever is higher.

viii)   Pre-shipment Export Credit Guarantee from Sadharan Bima Corporation shall be a general condition for Garments financing. For any deviation from this condition waiver shall be obtained from EC/Board.

ix)       Fire and RSD Insurance Policy shall be obtained on the book value of Plant & Machinery and while on the raw materials, work-in-process and finished goods on it should be obtained on stock declaration basis.

In order to make close & effective monitoring & supervision, it may be a good idea to have a separate Garments Cell. The proposed Cell shall function from Credit Division, Head Office and supervised by an SEO / FAVP.

Job description of Garments Cell shall be as under:

i)     Receive proposals from the Branches for credit facilities to the Export Oriented Garments industries for processing the same for sanction.

ii)     Examine / scrutinize the papers / documents submitted by the Branches along with the Credit proposals. They will specially verify the Bond License, Lease Agreement of factory premises of the Garments unit. Fire and other Insurance Policy covering Machinery and stocks.

iii)   Critically appraise the proposals to assess viability of the project in consideration of Technical, Marketing, Financial, management and Economical / Social aspects etc.

iv)   Visit / inspect the factory premises of the Garments unit applying for credit facilities for physical verification of the machinery and other equipments, floor space, location of the factory etc.

v)    Ascertain the production capacity and working capital requirement of the unit to justify Branch recommendation for the facilities. Find out actual exports made by the company during the last 3 years.

vi)     Inspect /verify the proposed collateral securities and assess its value. Collect Photographs of the security / collateral.

vii)     Ascertain and assess past track records, experience, market reputation, credit worthiness and Net worth of the customer.

viii)   Supervise and monitor the production of the unit to ensure timely shipment / export of garments by the Exporters so as to avoid any stock-lot. In this respect they will also verify the registers maintained at the factories for recording actual daily production.

ix)       Review the outstanding Accepted Bills to ensure settlement / payment of the bills on maturity by the Branch.

x)         Review Quota position of the Exporters.

xi)       Check if segregation of stock imported for each factory is possible from the stock of other garment industries owned by the same person /group.

xii)     Evaluate the overall performance of the Customer for further financing decision (enhancement / curtailment of limit) by the Bank.

xiii)   Inspect the stock-lot from time to time and advised & guide the Exporters for earliest export of the same towards adjustment of the forced loans created there against.

xiv)   Prepare and submit Management Reports on Bank’s finance to Garments sector to the Board / Executive Committee from time to time.

xv)     Maintain relationship with BGMEA and Export Promotion Bureau to review the Industry trend, Market position and other information. They will obtain Industry Information, Market Information and policies of the Government which are likely to influence the industry.

xvi)   Garments Cell shall work under the administrative control of the In-charge, Credit Division, Head Office, Dhaka.

xvii) The following checklist must be prepared by the RMG cell for each RMG Industry financed / to be financed by our Bank:

Check List for the 100% Export Oriented Garment Industry:

i)           Account Opening Stage :

a)      Trade License;

b)      Memorandum of Association;

c)      Articles of Association;

d)     Certificate of Incorporation;

e)      Resolution of the Board of Directors.

ii)         Admissibility for Export Business :

a)      Trade License (Renewed);

b)      Export License (Renewed);

c)      IRC (Renewed);

d)     Bonded Warehouse License (Renewed);

e)      Tax Holiday Approval from NBR;

(If expiry may be noted for information)

f)       BGMEA Membership (Renewed);

g)      Fire Protection License from Civil Defense Authority (Renewed);

h)      Fire Insurance of Factory stipulating the bank as Beneficiary (Renewed)

Insurance policies should be obtained for Fire, RSD & Flood for the Machinery (Written down Value) and for the Stock covering the BTB Limit on declaration basis.

i)        TIN (updated);

j)        EPB Registration (Renewed);

k)      Textile Directorate / BOI Registration;

l)        Confirmation of No Customs Demand (Verification of Pass Book to ascertain that there are no entries of Imported Goods which have not been exported in 2 years).

m)    PDB / DESA / DESCO / REB sanction of electricity load.

n)      Lease Agreement Validity if the Factory is on leasehold property.

iii)   Functional / Financial Review :

a)      List of Machinery (Category-wise);

b)      Type of Export (Woven /Knit / etc);

c)      Items of Export (Shirt, Jacket, Denim, etc);

d)     Production Capacity as per Machinery;

e)      Export during the last 3 (three) years including current year;

f)       Projected exports during the next year (12 months);

g)      Production Booking Schedule in the Factory;

[No booking shall be beyond 6 (six) months]

h)      Resume of the Proprietors / Directors regarding their background and experience (in new case);

i)        Net worth Statements of the Proprietor / Directors in the prescribed format;

j)        Others Banks liability & performance if the party is migrating from other banks;

k)      Updated Financial Statements (preferably for 3 years);

l)        Number of workers & employees;

m)    Number of Vehicles;

n)      Monthly Expenses of Factory :

i)           Salary                             :

ii)         Wages                             :

iii)       Electricity/Water/Gas     :

iv)       Rent                                :

v)         Directors Remuneration           :

vi)       C & F Agents Bills       :  Quota position & verification of Allocation Letter;

p)      Position of Stock-lot if any:

i)        Stock-lot should be listed on the basis of Cut Fabrics, Uncut Fabrics or Finished garment. Arrangement for export shall be reviewed.

ii)         If the Stock-lot related to goods already exported but proceeds not realized then following points shall be reviewed:

•  If the consignments released by the buyer then review the steps taken for realization of proceeds.
•  If the goods not released by the buyer then review the arrangement to protect the consignment at the foreign port at bonded warehouse and arrangement to resell the goods.
•  It must be reviewed whether goods were exported under Freight Forwarder Cargo Receipts. If so, actual Bill of Lading should be checked whether it is drawn to the order of the Negotiating Bank.
•  It is mandatory to inform Bangladesh Bank & National Board of Revenue (NBR) regarding failure of export & stock-lot.
•  Accepted Bills against stock-lot must be paid on maturity date by creating forced loan. But this shall require post-facto approval from Head Office and Bangladesh Bank.

q)      In case garments units inducted from other banks, NOC shall be obtained from their previous Banks within 6 (six) months.

r)       Name of the Major Buyers.

s)       Name of the Officer of The Premier Bank who will maintain relationship with the Customer :

 Policy of Small & Medium Enterprise (SME) Scheme

Background:

Bangladesh is a high densely populated and one of the poorest countries of the world. Per capita income of our country is $ 385 (app). Job opportunity is very scanty. Unemployment rate is approximately 45% and population below poverty line is 36%. So, it is a prime issue for the nation to generate income through creation of job opportunity & employment. It is not easy to create job opportunity at large scale. As a financial institution, we can increase self-employment through financial support.

There are many small and medium entrepreneurs in our country who have innovative ideas, spirit and potentiality to do something productive for local consumers as well as export abroad. They can generate income and contribute to the GDP. They may also provide employment to other people. Development and growth of Small and Medium Enterprises is playing a vital role in the National Development. Such type of entrepreneurs cannot go a long way for want of financial support because they have no access to institutional credit facilities, as they cannot provide collateral security as demanded for such credit facility.

The entrepreneurs who have no scope to avail any credit facility from formal financial institutions they are bound to take credit facility for maintaining their entrepreneurship from non-formal institutions/individuals with high rate to continue their effort.

The Premier Bank Limited is committed to play positive role in the socio-economic development of the country. So, we can introduce Small & Medium Enterprise (SME) Credit Scheme to contribute our effort in the socio-economic development of our country.

Credit Scheme for Small and medium Enterprises is very popular in most of the developed and developing countries of the world. If we look at south East Asia, China, Taiwan, Hong Kong, South Korea etc, we will find that small and medium businesses are the real engine of growth in those countries. 50% of United States exports are created by companies with 19 (nineteen) or fewer employees. The global economy of the 21^st century will be dominated by Small and Medium sized players.

A good number of banking and non-financial institutions in our country are successfully operating this Scheme.

The Major features of the Policy of SME Credit Scheme will be as follows:

a)      Objectives of the Scheme:

i)          To provide credit facilities to the small and medium size entrepreneurs located in Urban & Sub-urban areas and easily accessible by our Branches.

ii)        To flow credit for creation of employment and generation of income on a sustainable basis through development of small & medium enterprises.

iii)      To assist potential entrepreneurs to improve their living standard.

iv)      To reduce dependence on money lenders.

v)        To make self-reliant small and medium enterprises.

vi)      To develop savings habit and making social contact with banking facilities.

vii)    To inspire for undertaking small projects for creation employment through income generating activities.

viii)  To participate in the socio-economic development of the country.

b)     Concepts: Small & Medium Business Enterprise refers to those enterprise:-

i)          Where goods are produced, recycled, repaired or traded in traditional way;

ii)        Where total bank investment is limited between Tk 1.00 Lac to Tk 75.00 Lac;

iii)      Where 20 or less workers are engaged on wages or commission basis;

iv)      The net fixed assets (excluding land and buildings) of borrowers may not exceed equivalent of US $ 250,000.00 (Tk 150.00 Lac app.).

c)      Target Group :

Initially, Small & Medium Size Entrepreneurs located within the vicinity of our branches will be the target area under this program. The Entrepreneurs should have an existing profitable business or a viable business plan.

d)     Eligibility for Credit Facilities:

The following criteria have to be met by the applicant to qualify for a loan from The Premier Bank Limited under its SME Credit Scheme:

i)          The entrepreneurs must be literate i.e. capable of reading & writing.

ii)        The entrepreneurs should be skilled in managing his / her business and has experience of successfully managing the business for at least 5 (five) years at the same location. If they have moved their business location before 5 (five) years, satisfactory reason must be available.

iii)      The age of the entrepreneurs must be between 20 years to 55 years.

iv)      If the applicant is an individual, the Borrower must be a national or permanent resident of Bangladesh. If the Borrower is a company / firm or other business entity it must be registered in Bangladesh and majority shares owned by Bangladeshi’s.

v)        The applicant must be 100% privately owned, controlled and operated.

vi)      The applicant’s principal place of business must be in Bangladesh.

vii)    If acceptable collateral security cannot be provided, the borrower should arrange for 2 (two) acceptable personal guarantees. The type of guarantors depends on size of the loan and business. In accepting a person as guarantor his social standing, income and asset shall be considered. Any default borrower or unreliable person shall not be accepted as guarantor. However, guarantor will be determined on a case to case basis. The decision whether collateral will be required or not shall rest with the Bank.

viii)  If the applicant is a member of any social organization / association, he should arrange a corporate guarantee of the association / organization through formal regulation (if any).

ix)      The applicant should arrange to execute a tripartite agreement with the Bank and any third person who is financially related with him directly (if any).

x)        The project shall be financially viable and socially desirable.

xi)      The Sponsor / applicant shall have reputation in the society.

xii)    There should be some innovation / creativity in the project.

xiii)  Proper utilization and timely repayment of previous loan will be considered as a proven track record of the applicant for renewal & enhancement of credit facility.

e)      Restricted Business:

i)          Production, Marketing, Trading of alcoholic, narcotic and other intoxicating drug or liquor.

ii)        Production and Trading of any item banded by the Government.

iii)      Any activity not permissible by the law of the land.

f)       Loan Ceiling:        for urban area

i)          Minimum Tk. 1.00 Lac.

ii)        Maximum Tk. 75.00 Lac.

g)      Purpose:

i)          Working capital;

ii)        Capital Machinery;

iii)      Delivery Van / Transport for business purpose;

iv)      Refurnishing office / Business premises.

h)     Mode of Finance:

i)          Cash Credit;

ii)        Hire purchase / Lease Finance;

iii)      Term Loan.

i)        Loan Renewal:

Successive loans depend on track record of previous loan. Usually, repayment behavior and expansion of business by the borrower are the main considerations for renewal and enhancement of the loan amount.

j)       Interest Rate:

8% p.a (flat). True rate will be charged with monthly rest.

As per loan period the following interest to be imputed in computer at the time of opening a SME loan account for the interest rate of 8% flat :

k)     Supervision Charge: 1% on loan amount will be realized at the time of disbursement.

l)        Risk Fund: 1% on loan amount will be realized at the time of disbursement.

m)   Securities :

It is a supervisory credit scheme. Tangible security in the form of mortgage may not be available in all the cases. Security will be stipulated on a case to case basis inter-alia as under (one or several of the following) :

i)          Registered mortgage of land & building.

ii)        Equitable mortgage / Assignment of possession right.

iii)      Assignment of Contracts and / or Trade Receivables not older than 90 days.

iv)      Hypothecation of machineries, equipment, vehicles, stock-in-trade, raw materials, work-in-process and finished goods.

v)        Personal Guarantee from person(s) acceptable to the Bank.

vi)      If the applicant is a member of any social organization / association, he should arrange a corporate guarantee of the association / organization through formal resolution.

vii)    Tripartite agreement with Bank and any third person who is financially related with the applicant directly.

viii)  Post-dated checks covering all installments / total dues.

ix)      Lien on deposits / saving certificates / financial obligations.

x)        Any other securities deemed suitable by the Bank depending on the situation like Insurance Guarantee, Corporate Guarantee, Assignment of Contract, Security Money etc.

xi)      Guarantee of USAID for 50% of the exposure or any other authority acceptable to the Bank Management (subject to availability).

n)     Period of Loan :

i)          In case of continuous Loan   :           01 (one) year,

ii)        In case of Term Loan             :           Maximum 05 (five) years.

•      Mode of Repayment:

i)          In case of continuous loan credit turnover in the account must be equal to the limit in a quarter and full adjustment within the validity period.

ii)        In case of term loan, the loan should be repaid by monthly installments through post-dated cheques.

p)     Rebate: 1% of the loan amount will be waived for the Customer who repays the loan regularly.

q)     Loan Monitoring and Review:

This is a supervising credit scheme. The success of the scheme depends on the extensive and intensive post disbursement supervision, follow-up & monitoring. It must be ensured that the loan fund is not diverted, the sponsors are very serious to the operation of the project, quality is updated and marketing effort is effective. Regular repayment must be ensured.

Visit to the establishment must be done at least once in a month & findings of the visit must be recorded in writing. The visit should be done for strengthening the spirit & loyalty of the customers.

A signboard shall be displayed at the shop / factory with writing “Financed by The Premier Bank Limited” with Bank’s logo.

r)      Recovery System:

i)         If any borrower fails to adjust the loan within validity period or to repay his monthly installment then the responsible loan-monitoring officer of the concerned branch will arrange for adjustment of the overdue installments from the borrower’s savings account if there is adequate balance. The officer shall regularly follow-up for recovery and takes necessary measure for recovery.

ii)       If any borrower fails to repay his consecutive 2 (two) monthly installments, then loan monitoring officer will investigate into the actual causes of default and report to the Branch Manager with a copy to Head Office, Credit Division for further action and advice for recovery / regularization of the loan.

s)       Other conditions:

i)        The Borrower shall maintain a non-withdrawal savings account with the concerned branch where he shall make compulsory monthly deposit. The branch will fixed the monthly savings amount by mutual understanding with the customer. The customer can withdraw 25% of year end balance amount from this account by withdrawal slip in each business year.

ii)      The borrower must not change the nature of business and place of business without prior permission of the Bank.

iii)    The Bank reserves the right to alter / amend the terms & conditions of this policy wholly or partly at its discretion.

t)       Processing of credit proposal under the scheme:

Initially, SME Cell, Head Office shall process the credit proposals under the scheme and Head Office Credit Committee shall approve the same. As per desire of the customer the sanction advice will be sent to the concerned branches for documentation and disbursement   

 Policy of Doctors’ Loan Scheme

Introduction:

We hope that providing loan under easy terms & conditions will certainly have an important / positive effect on our medical services and will enhance the opportunity for our doctors to establish themselves as well as to contribute to make our medical services modern enough compared to other countries. This will also enable us to establish Banking Relationship with the Doctors’ Community who are rich & resourceful. We can get good deposits and also develop profitable lending relationship with the Doctor’ community.

Purpose of Loan:

Purpose of this loan is to create opportunity for self-employment of the registered MBBS /FCPS / Post Graduate doctors, medical Practitioners by financing them for the following purposes:-

i)          Up-to 100% Lease Finance for acquiring Medical Equipment.

ii)        Up-to 100% Lease Finance for Motor Cars / Ambulances.

iii)      Term Loan for rental advance / decoration & furnishing of chambers.

iv)      Loan for purchasing of Apartment / Chamber up-to 50% of the cost.

Target Group:

Registered Doctors such as MBBS, FCPS & Post Graduates, Surgeon and Dentist, Eye Specialists, Heart Specialists, Child Specialists as well as Hospitals, Clinics, Diagnostic Centers owned & operated by registered Doctors.

Terms & Conditions:

The loan amount would be based on the needs / requirements of the borrower on case to case basis. Borrower can avail one or more of the following:

i)         Lease finance for medical equipments.

ii)       Lease finance for motor vehicles / ambulances.

iii)     Term loan for renting / decorating & furnishing chambers.

iv)     Personal Loan under Consumer Credit Scheme.

v)       Loan for purchasing apartment / medical chamber.

 Lease may be allowed up-to 100% o