Professional Documents
Culture Documents
Chapter 1: Introduction
1.1 Back ground of the study
Banking Industry is one of the most promising industries of our country. The importance
of the sector revealed through its contribution in the economic growth of the country.
This sector accelerates economic growth through mobilizing funds from surplus unit to
the deficit unit. Banking Industry is moving towards rapid changes due to technological
innovation and diversified needs of its customers.
Banks deal with the most important factor of the economy i.e. Money. It flows funds
from surplus unit to deficit unit and through this it facilitated the efficient allocation of
the resources as well as accelerated economic growth. This sector is moving towards new
dimension as it is changing fast due to competition, deregulation, financial, reforms.
As the pace of globalization competition in banking sector is increasing very fast. Banks
are becoming more customers oriented and offer High tech customized products to its
target market to hold the market .Our central bank always keep monitoring banks
performances. Individual banks also need to assess their own performance to satisfy the
parties those are related to its growth.
For Shareholders.
For depositor.
For Bangladesh Bank.
For its own Assessment to view the future growth and profited.
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work assignment, which enables the student to have realistic exposure to
organizational conditions. My supervisor Mrs. Syeda Shaharbanu Shahbazi
Ahmed Lecturer, BRAC Business School BRAC University authorized me to prepare
the report.
The organization part of the report focuses upon the organizational structure and the
financial services offered by PBL. The study also concentrates upon the actual lending
activities of the company, its exposure to the various sectors and its performance.
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The project part of the report basically focuses on the Credit policy of Prime Bank Ltd. I
have also tried to focus the different types of credit facilities, documentation and the
procedure of the loan.
• Personal observation
• Interview of managers and employees of the different (General Banking,
Credit and Foreign Exchange) departments of the bank
• Desk work in different section/division
The total internship program is based on the credit scheme practice of Prime
Bank Limited. This report was written through extensive and meaningful group
discussions with the concerned persons of the Prime Bank Limited. The report is
Descriptive in nature. Data used in this report have been collected from both primary and
secondary sources. The study is a result of the discussion with my academic supervisor.
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The report is not free from limitations. Finally I want to talk about my limitations
that I had to face during the completion of the report. On the way of preparing of this
report, I have faced following problems that may be termed as the limitation of the
study.
• Time is the major obstacle here. I get only three months to cover a vast
area like credit operation of a bank; much information was overlooked
• Employees especially the credit division remains too busy. It is tough to
have a break from their tight schedule, even though they are willing to
provide time
• Limited service hour
• Secrecy or confidentiality is a crucial matter in this organization. As an
intern it was not possible to reach those secret topics
• It was difficult to find out the gap between rules and regulations and real
life practice. So, I went under a huge stress to find out those matters
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So far as a full phased commercial bank, Prime Bank Ltd. is being managed by a
team of professional team with dedication and long experience in banking sector.
Prime Bank Ltd. constantly focuses on understanding and predicting customer
needs and tends to be very customer oriented. As the banking scenario undergoes
changes so is the bank and it repositions itself in the changed market condition to
adapt even after the ever changeable field.
The Bank offers almost all kinds of Commercial Corporate and Personal Banking
services covering all segments of society within the framework of Banking
Company Act and rules and regulations laid down by our central bank.
Diversification of products and services include Corporate Banking, Retail
Banking and Consumer Banking right from industry to Telecommunication,
RMG, FMCG and so on.
It has already made significant progress within a very short period of its
existence. The bank has been graded as a top class bank in the country through
internationally accepted CAMEL rating. The bank has already occupied an
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enviable position among its competitors after achieving success in all areas of
business operations so far.
Prime Bank Ltd. has consistently turned over good returns on Assets and Capital.
Until the year 2007, the bank has achieved an operating profit of Tk. 3257
million and its capital funds stood at Tk 6382 million. Out of this, Tk. 2659.21
million represents reserves and retained earnings and Tk. 2275 million consists
of paid up capital by shareholders. Even after the business environment and
default culture, quantum of classified loan in the bank is very insignificant and
stood at less than 1.35%. The bank’s current capital adequacy ratio of 11.50% is
in the market.
Since the opening of the Bank, it has attached more importance in technology
integration. To retain competitive edge, investment in technology is always a top
agenda and under constant focus. Keeping the network within a reasonable limit,
its strategy is to serve the customers through capacity building across multi
delivery channels. Prime Bank is better placed and poised to take its customers
through fast changing times and enable them compete more effectively and
efficiently. The Bank’s past performance gives an indication of the proper
development and implication of its strength.
Finally, Prime Bank Ltd. has already made significant progress within a very
short period of its existence. The bank has been graded as a top class bank in the
country through internationally accepted CAMEL (Capital, Asset, Management,
Earnings and Liquidity) rating. The bank has already occupied an enviable
position among its competitors after achieving success in all areas of business
operation.
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To be the best Private Commercial Bank in Bangladesh in terms of efficiency, capital
adequacy, asset quality, sound management and profitability having strong liquidity.
1. Date of
Brief Profile of Prime Bank Limited
Incorporation
: 12th February, 1995
2. Date of Inauguration of Operation : 17th April, 1995
3. Name of the Chairperson of the board : Mr. Ajam J Chowdhury
4. Name of the Managing director : Mr. M. Ehsanul Haque
5. Number of Branches : 71
6. Number of Employees : 1400
7. Publicly Traded Company : Share quoted daily in DSE & CSE
8. Credit Card : Member of Master Card
9. Banking Operation System : Both Conventional and Islamic
Banking System.
10. Technology Used : Member of SWIFT
On line Banking
UNIX based Computer System
11. Head Office : Adamjee Court Annex II, 119-120
Motijheel C/A, Dhaka-1000.
Phone: 9567265 (PABX)
Telex: 642459 PRIME BJ
671543 PBL MJ BJ
Fax: 88-02-9567230/9560977
E-mail:
primebank@bangla.net
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Web Site: www.prime-bank.com
SWIFT: PRBLBDDH
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Chairperson
Top Management
Board of Directors
Executive Committee
Managing Director
Principle Officer
Senior Officer
Assistant Officer
Trainee Assistant
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Barisal Zone
Khulna Zone
Barisal
Khulna
Jessore
Figure 1: Branch Network of PBL
2.6 A Brief of Prime Bank Limited, Satmasjid Road Branch
Among the Seventy one Branches of Prime Bank, Satmasjid Road Branch is one of the
Source: Branch Control D
most reputed and respected Branches in all aspects. From the very beginning, this branch
is contributing a lot to the bank. A brief of Prime Bank Limited, Satmasjid Road Branch
is given below:
Manager: Md. Ehsan Habib, Senior Vice President
Manager (Operation): Md. Kamrul Islam, Assistant Vice President
Credit in Charge: Md. Nehal Hossain, Senior Executive Vice President
Foreign Exchange in Charge: Md. Nehal Hossain, Senior Executive Vice President
General Banking in Charge: Mr. Shaheen Alam Chowdhury
Total number of employees: 24
Prime Bank Satmasjid Road Branch has three main departments, which are -
• General Banking Department
• Credit Department
• Foreign Exchange Department
Consumer Finance
There are branches and finance centers under this division with a qualitative workforce of
employees. Some of the services provided by this division are unsecured personal loans,
credit cards, and vehicle related lease etc.
Personal Banking
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There are branches with highly qualified workforce provide various kinds of loans,
various types of accounts, cheques, card money etc.
Islamic Banking
Prime Bank Ltd. works under the correspondence with Bangladesh Bank regarding
operation of Islamic Banking Branches through a Subsidiary.
Corporate Banking
Prime Bank Limited provides a wide range of services to institutional clients,
commercial, merchant and central banks; brokers and dealers; insurance companies;
funds and managers, and others. It provides relationship managers who are close to their
customers and speak local language. This wide network of corporate banking facilities
includes transaction, introduction, problem solving and renders advice and guidelines on
local trading condition.
Cash Management
Prime Bank recognizes the importance of cash management to corporate and financial
institutional customers, and offers a comprehensive range of services and liquidity
management.
Treasury
Treasury operations had been consideration as an important avenue for income
generation purpose. The treasury division publishes daily and weekly currency
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newsletters, which provide analysis of currency trends and related issues. Prime Bank is
one of the first local banks in Bangladesh to integrate treasury dealings of local money
market and foreign currency under one Treasury umbrella. Prime Bank's Dealing Room
is connected with Automated Reuters Terminal facility, thus enabling the bank to provide
forward/future facilities to its corporate clients at a very competitive rate.
Electronic Banking
Electronic Banking provides various types of support through a wide range of operating
systems, sweeping transactions accession with the provisions of reporting features or
other special functions.
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Swift
Prime Bank Limited has become member of SWIFT (Society for Worldwide Inter-bank
Financial Telecommunication) in 1999. SWIFT is a member-owned co-operative system,
which provides a fast and accurate communication network for financial transactions
such as Letters of Credit, Fund Transfer etc. By becoming a member of SWIFT, the bank
has opened up possibilities for uninterrupted connectivity with over 5,700 user
institutions in 150 countries around the world.
Deposit Products
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Under this scheme Minimum size of the monthly installment is Tk.500.00 and multiples
of Tk.1000.00. Maximum installment size shall be 25000.00 for five year period. Lump
sum amount shall be paid after maturity or monthly pension shall be paid for the next 5
years according to size of deposit.
• Current Account
Current Account is a non interest bearing checkable deposit (Demand Deposit) which
allows the owner of the bank accounts to write checks to third parties.
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• Savings account
Savings Account is an interest bearing checkable deposit (Negotiable order of
withdrawal) which allows the owner of the bank accounts to write checks to third parties.
• Fixed term
These are the loans made by the Bank with fixed repayment schedules. Fixed tern loans
are categorized into three based upon its tenure which is defined as follows:
• Continuing Loans
These are the loans having no fixed repayment schedule, but have an expiry date at which
it is renewable on satisfactory performance of the customer. Furthermore, all categories
of loans are accommodated under the following prime sectors:
i. Agriculture: Credit facilities to the customers of doing agro business falls under
this category.
ii. Term Loan to Large & Medium Scale Industry: This category of advances
accommodate the medium and long term financing for capital formation of new
Industries or for an existing units who are engaged in manufacturing of goods and
services.
iii. Term Loans to Small & Cottage Industries: These are the medium and long term
loans allowed to small & cottage manufacturing industries. No short term or
continuous credits will be included in this category.
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iv. Working Capital: Loans allowed to the manufacturing units to meet their working
capital requirements, irrespective of their size - big, medium or small, fall under
this category. These are usually continuous credits and as such fall under the head
"Cash Credit"
v. Export Credit: Credit facilities allowed to facilitate export of all items against
Letter of Credit and/or confirmed export orders fall under this category. It is
accommodated under the heads "Export Cash Credit (ECC)", Packing Credit
(PC), Foreign Documentary Bill Purchased (FDBP) etc.
vi. Commercial Lending: Short term Loans and continuous credits allowed for
commercial purposes other than exports fall under this category. It includes
import financing for local trade, service establishment etc. No medium and long
term loans are accommodated here. This category of advance is allowed in the
form of (i) Loan against Imported Merchandise (LIM), (ii) Loan against Trust
Receipt (LTR), (iii) Payment against Documents (PAD), (iv) Secured Overdraft
(SOD), (v) Cash Credit etc. for commercial purposes.
• Loan (General)
Short, Medium & Long term loans allowed to individual/firm/industries for a specific
purpose but for a definite period and generally repayable by installments fall under this
type. These are mainly allowed to accommodate financing under the categories (I) Large
& Medium Scale Industry and (ii) Small & Cottage Industry.
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Loans allowed to individual/enterprises for construction of house for commercial
purpose only fall under this type. The amount is repayable by monthly/quarterly
installments within a specified period.
• Home Loan
Loans allowed to individuals for purchase of apartment or construction of house for
residential purpose fall under this type. The amount is repayable by monthly installments
within a specified period.
• Lease Financing
Lease Financing is one of the most convenient sources of acquiring capital machinery
and equipment whereby a customer is given the opportunity to have an exclusive right to
use an asset usually for an agreed period of time against payment of rental.
• SOD (General)
SOD (General) is allowed to individuals/firms for miscellaneous purpose. This is a
continuous loan having usual maturity period of 1 (one) year and renewable for further,
periods at maturity.
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• SOD (Export)
Advance allowed for purchasing foreign currency for payment of Back to Back (BTB)
L/C liability where the exports do not materialize before due the date of import payment.
This is an advance for temporary period and categorized "Export Finance".
• PAD
Payment made by the Bank against lodgment of shipping documents of goods imported
through L/C falls under this type. It is an interim advance connected with import and is
generally liquidated against payments usually made by the customer for retirement of the
documents towards release of imported consignment from the customs authority.
• LIM
This is funded credit facility allowed for retirement of shipping documents and release of
goods imported through L/C taking effective control over the goods by pledge in go
downs under Bank's lock & key. This is a temporary advance connected with import
which is known as post-import finance and falls under the category "Commercial
Lending".
• LTR
Advance allowed for retirement of shipping documents and release of goods imported
through L/C falls under this type. The goods are handed over to the importer on trust with
the arrangement that sale proceeds will be deposited to liquidate the loan account within
the specific time.
• ECC
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Funded credit facility allowed to a customer for export of goods falls under this type and
is categorized as "Export Cash Credit". The advances must be liquidated out of export
proceeds within 180 days.
• FBP
Payment made to a customer through Purchase or Foreign Currency Cheques/Drafts falls
under this type. This temporary advance is adjustable from the proceeds of the
cheque/draft.
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2.9 Performance
From the very beginning of its journey, PBL is growing immensely. Its capital base is as
solid as its profit is high. Not only these two, is almost every aspect of this bank very
strong in the context of our country. The following table will give a clear idea about the
strength of PBL and its continuous growth.
Performance at a glance
Taka in Million
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Particulars 2003 2004 2005 2006 2007
Income Statement
Interest Income 2159 2641 3446 5199 7170
Interest Expense 1408 1616 2271 3698 5267
Net Interest Income 751 1025 1175 1500 1903
Non-interest Income 841 946 1232 1732 2913
Non-interest Expense 591 824 886 1101 1559
Net Non-interest Income 250 121 346 631 1354
Profit before provision and tax 1001 1146 1520 2131 3257
Provision for loans and assets 232 82 320 390 910
Profit after provision before tax 770 1064 1201 1741 2347
Tax including deferred tax 394 452 633 689 946
Profit after tax 375 612 568 1052 1401
Balance Sheet
Authorized Capital 1000 1000 4000 4000 4000
Paid-up Capital 700 1000 1400 1750 2275
Total Shareholder's equity 1732 2240 2808 3860 5273
Deposits 20483 28069 36022 54724 70512
Long-term liabilities 7052 7371 11406 16877 15267
Loans and advances 16492 23220 31916 45010 57683
Investments 2750 3084 3940 7844 12698
Property, Plant and Equipment 256 322 372 412 660
Earning Assets 19335 27131 36727 55458 72798
Net current assets 583 (1299) 31 5286 1338
Total assets 24249 32362 41506 60899 79588
Current ratio 0.96 1.06 1.00 0.88 0.97
Debt equity ratio 8% 7% 7% 7% 7%
Other Business
Import 25441 36747 40303 52639 70617
Export 16490 19502 28882 41801 51316
Remittance 3063 2140 3688 15050 15905
Guarantee Business 4248 4085 5303 5386 7033
Inland letter of credit 3729 4267 5405 10174 11943
Capital Measures
Total risk weighted assets 16455 23050 31890 44324 55485
Core capital (Tier-I) 1782 2240 2808 3860 5273
Supplementary capital (Tier-II) 176 236 369 549 1109
Total Capital 1958 2476 3177 4409 6382
Tier-I capital ratio 10.83 9.72 8.80 8.71 9.50
Tier-II capital ratio 1.07% 1.02 1.16 1.24 2.00
Total capital ratio 11.90% 10.74 9.96 9.95 11.50
Credit Quality
Non performing loans (NPLs) 326.53 352.73 308.21 367.15 777
% of NPLs to total loans and advances 1.98% 1.52% 0.96% 0.82% 1.35%
Provision for unclassified loans 171.73% 231.73 364.80 544.80 895
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Balance
Running a lending business is like riding a bicycle .It gets very unpleasant if you lose
your balance. In the case of lending, the balance that must be maintained is between
productivity (building loan volume at a reasonable cost to the bank) and quality (ensuring
that the loans get paid back as agreed). There are practical cost limits on how much
investigation, analysis, documentation, and follow-up can be devoted to any particular
loan. A loan with poor credit quality, however, imposes a different kind of cost on the
bank. Loan losses are a cost. Loans that do not pay interest are a cost. The compensation
of officers working on problem loans is a cost. Fees paid to attorneys to collect problem
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loans or resolve litigation are a cost (not to mention payment of settlements or
judgments).The bank that gets its credit process right finds the correct balance that puts
good loans on the books at reasonable cost without incurring later the disproportionate
costs caused by low credit quality.
Social Policy
Taking social policy into account when making lending decisions is simply responsible
behavior that promotes stability and prosperity and credit considerations tend to come
together. A bank will not want to make loans for purposes or to customers detrimental to
the interests of its home country. A bank should not make loans to individual or
companies whose business is illegal.
A bank should not engage in any transaction unless full and candid disclosure of the
transaction and the circumstances that surround it could be made to all relevant
regulatory agencies, including tax, foreign exchange control, banking, and securities law
regulators.
Nor should it take any actions that its officers and directors would be ashamed to see
described in the newspaper of the community concerned.
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Exception to this policy should be very limited and restricted primarily to loans to
consumers or business secured by pledged bank deposits or pledged marketable securities
as the primary source of repayment. Loans to be businesses anticipating repayment from
refinancing should be made only when the lender reasonably anticipates that if the
refinancing did not take place, the loan would eventually be repaid from the proceeds of
the cash flow of the business or from liquidation of collateral with particularly large
safety margins to cover the loan.
Banks prefer to finance normal consumer needs and productive business. While banks do
make loans (generally secured by a pledge of securities with an appropriate safety
margin) to purchase marketable securities, they should be very cautious about financing
especially aggressive stock market investment, speculation in commodities, or
speculation in foreign exchange or other futures.
Years of experience in many countries have taught us that the sharp increases in value in
speculative booms (in stocks, real estate, and other assets) are always followed by sharp
declines in value.
Strategy
The loans a bank makes should be guided and constrained by its overall corporate
strategy. Banks are better able to protect the interests of their stakeholders –customers,
employees, shareholders, and communities where banks operate –if their credit portfolio
is widely distributed among different places and different industries, rather than
Concentrated with a few. This diversification reduces the volatility of loan losses and
makes for a higher quality earnings stream that reduces the cost of capital.
Accountability
Someone who recommends a credit is fully responsible for that credit decision even
though the final authority to approve that credit rests elsewhere. Each officer signing a
credit memorandum should do so only if he or she fully supports the applications
recommended. Recommendations for action on individual credits or credit products in
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both the commercial and consumer areas should be accurate, clear, concise, candid and
complete does not mean that it will contain a compilation of all the relevant raw data.
Rather, the person preparing the recommendation should sift through the data and confine
the write up to the important items of information. Material risks should be identified, as
should the purpose of the credit.
Executive officers and directors of the bank sometimes refer business opportunities to
account officers. These references must be subject to normal underwriting standards and
normal approval processes to ensure that the credit extension is prudent.
Post approval review, credit examinations, and audits are important aspects of ensuring
that the right things are done.
Administering / Monitoring
Proper analysis of credit proposals is a complex job and requires a high level of analytical
ability and common sense. To ensure proper evaluation of credit proposals, monitoring of
the end uses and recovery of the Bank's dues, proper staffing of the Credit Departments
shall be done through placement of qualified officials with right aptitude, formal training
in finance, credit risk analysis, bank credit procedures as well as experience.
Where the quality of a credit deteriorates it shall be identified at an early state and closely
monitored in order to avoid loan losses.
Loans/facilities, and where appropriate, related security, shall be monitored and reviewed
by a separate unit not connected with the credit approval process on a regular basis in
order to assess the prospect of recovering the principal and interest on due dates and
quality and effectiveness of the security. This unit will report to the Managing Director or
his one designated executive by him.
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3.2 Credit
The word ‘Credit’ is derived from the Latin word ‘Credo’ which means ‘I believe’
and is usually defined as the ability to buy with a promise to pay. It consists of actual
transfer of goods and services in exchange for a promise to pay in future. It is simply
the opposite of debt. Diversification of banking service has accelerated the use of
credit to expand their business.
In achieving the aforesaid objectives of the Bank, Credit Operation of the Bank is of
paramount importance as the greatest share of total revenue of the bank is generated
from it, maximum risk is centered in it and even the very existence of bank depends
on prudent management of its credit portfolio. The failure of a commercial Bank is
usually associated with the problem in credit port-folio and is less often the result of
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shrinkage in the value of other assets, As such, credit port-folio not only features
dominant in the assets structure of the Bank, it is critically important to the success of
the Bank also.
1. Loans and advances shall normally be financed from customers’ deposits and
not out of temporary funds or borrowing from other banks.
2. Credit will be allowed in manner which will no way compromise the Bank’s
standards of excellence and to customers who will complement such standards.
4. Interest on various lending categories will depend on the level of risk and type
of security offered. It should be borne in mind that rate of interest is the
reflection of risk in the transaction. The higher the risk, the higher is the
interest rate.
5. Interest may be reviewed at least once in 6 month and more often when
appropriate. Fixed interest rate should be discouraged. Preferably all rates
should vary with cost of funds fluctuation based on a spread for profit.
6. Effective yield can be enhanced to the extent the borrowers are required to
maintain deposits to support borrowing activities. Yield should be further
improved by commitment fee and Service charges where possible. All pricing
of loans should however have relevance with the market condition and be
approved by the Executive Committee/ managing Director.
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7. Where repayment and Interest servicing performance of a credit deteriorates it
shall be identified at and early state and closely monitored in order to avoid
loan losses.
8. It is recognized that there will be exceptions to the stated policy which can be
justified. However, these should be approved by the Executive Committee or
by the Board and the circumstances must be fully documented in the credit
file.
9. The aggregate of all cash facilities shall not exceed 80% of customer deposits.
It is further governed by the statutory and liquidity reserve requirement of
Bangladesh Bank.
10. Aggregate Long Term facilities shall not exceed 20% of the total credit
portfolio. Facilities shall not be allowed for a period exceeding 5(five) year.
Any exceptions will require the approval of the Board of Directors.
11. Credit facilities in aggregate extended to any one customer group shall not
normally exceed 15% of the Capital Fund or TK 16.50 (Sixteen crore and 50
lac) crore whichever is lower. However, Board of Directors may relax this
limit in deserving cases. All proposals submitted to Head Office will also be
required to indicate the extent of the Bank’s global exposure to that customer
group.
12. Aggregate Bank advance to corporate or individual customers (i.e. other than
government or parasitical organizations) which are not secured by collateral
and are allowed on the strength of customer’s personal integrity and financial
standing or the corporate customer’s balance sheet, with or without
hypothecation stock shall not exceed 30% of the total credit port folio.
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13. For the unsecured credit facilities extended to a business dominated by one or
two individuals, the Bank shall insist on taking life insurance Policies by the
principals which is sufficient to repay the Loan in the event of death or injury
of any one key individual. The policy to be assigned to the Bank and the
premium to be paid by the customer through the bank under suitable
arrangement.
14. Sector – wise allocation of Credit shall be made annually with the approval of
Executive Committee/ Board of Directors. This shall be reviewed from time to
time.
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Lending
Term Loan (Project Loan) 13.00%
Other commercial 13.00%
Urban Housing 13.00%
Small & Cottage Ind. 16.00%
Other Special Scheme 16.00%
Consumers Credit Scheme 16.00%
Lease Financing 14.00%
SOD against Financial Obligation 16.00%
SOD against Share 16.00%
SOD against FDR of Prime Bank
And above rate 3.50%
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Credit Facility
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Funded Business
A funded credit facility that a bank offers to a customer result in actual disbursement
of cash to the customer or to any designated supplier of the customer.
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Eligibility
The criteria to become eligible for availing the facility under the scheme are given
below:
Entitlement
Eligibility borrower can avail the facility to purchase more than one article but the
amount of total loan shall not exceed the maximum limit fixed by Head office from
time to time. Further loan may be allowed to the same borrower if 50% of the
previous loan is recovered from him but the same shall not exceed the maximum
limit. Amount of bank’s investment will be fixed in such a manner that the monthly
deduction from borrower salary / income against payment of bank’s dues shall not
normally exceed 50% of his net income. Exceptional cases may be considered if the
bank is satisfied about the repayment capacity if the client.
Client’s Equity
Prescribed margin as fixed by Head Office from time to time on the total value of the
articles shall have to be deposited with the bank by the client as equity before
disbursement of loan.
Mode of Disbursement
Client will procure the specified articles from dealer / agent / shops acceptable to
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Bank. All papers / Cash memos etc. related to the procurement of the goods will be in
the name of bank ensuring ownership of the goods. Wherever applicable, the
ownership shall be transferred of the client after full adjustment of Bank’s dues. The
client shall have to bear all the expenses of license, Registration, Insurance etc. of the
articles wherever necessary. The insurance will be with the Bank mortgage clause.
The premiums shall be paid by the borrower by debt to his account. The client shall
have to bear the cost of Repair & maintenance of the acquired articles.
Mode of Recovery
Dues shall be recoverable in equal monthly installments. The monthly installment
shall be payable by the 8th of every month, but the first installment shall be payable by
the 5th of the subsequent month of disbursement. In other way, deduction from the
monthly salary of the client wherever applicable, by his employer. In this regard the
concerned employee shall authorize irrevocably his employer to deduct the said
amount from his monthly salary. The client can only revoke this authority with the
concurrence of the bank.
Retail Loan
Objective:
Other forms of Loan which are not categorized under CCS Loan fall under Retail
Loan.
Car Loan
There are minimum criteria to get the loan. If the applicant is a service holder then the
applicant’s monthly income must be at least Tk.20000 and if the applicant is a business
man then the income must be at least TK.40000. The age limit of the borrower must be
between 25-60 years. The down payment of the loan must be 10%. Car Loan only
sanctioned for the cars manufactured in Japan. The car for which the loan will be
sanctioned must not be older than 2004 model Japanese Car. Bank generally does not
invest for the car exceeding 20 laces. Exceptional cases may be considered if the bank
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is satisfied about the repayment capacity of the client as well as client’s social status.
The loan is sanctioned for six years at a maximum.
Doctor’s Loan
As part of the global phenomenon medical profession is changing fast. With ever
changing environment, ground breaking products and equipments are coming to the
market. Keeping that in mind and with a vision to support and promote medical
service PBL has introduced Doctor’s Loan. The applicant at least minimum graduate
in Allopathic medical science/ Dentistry. If the applicant doctor is employed then the
monthly income of the borrower must be at least Tk.10000. In case of self employed
(Doctor Practicing independently having chamber or clinics), the applicant’s monthly
income must be at least Tk.25000. The age limit of the borrower must be between 25-
65 year (at the time of repayment). If the eligible borrower is a general practicing
Doctor then according to bank’s policy the loan limit is up to Tk. 5 lac. If the eligible
borrower is a post graduate Doctor (Specialist) then according to bank’s policy the
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loan limit is up to Tk. 10 lac. Down payment is 10%. The maximum Loan Period is
five years.
Marriage Loan
Prime Bank’s marriage loan enables people to organize and celebrate the marriage in
style. Any self employed or service holder can be benefited under this loan scheme.
The maximum loan limit sanctioned for this purpose is Tk.300000. The eligible
applicant’s monthly income must be between Tk.10000-Tk. 25000. Besides, the age
limit of the borrower must be between 25-65 year (at the time of repayment). The
maximum Loan Period is three years.
Travel Loan
When planning an overseas vacation or making a trip to chosen exotic location,
financing may be an issue. This loan is to facilitate for those who loves to travel. For
travel purpose, any self employed or service holder can apply for this loan scheme. In
case of businessman the applicant must have at least five years of successful track
record. The eligible applicant’s monthly income must be between Tk.10000-Tk.
25000. The age limit of the borrower must be between 25-65 year (at the time of
Repayment). The maximum loan limit sanctioned for this purpose is Tk.200000.
Maximum Loan Period is three years.
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applicant is a service holder then the applicant’s monthly income must be minimum
Tk.10000 and if the applicant is self-employed then the applicant’s monthly income
must be Tk.25000 at a minimum. But if the applicant has own house in Dhaka then
the minimum monthly income would be Tk.15000. In case of service, the minimum
employment period is one year. The age limit of the borrower must be between 21-60
year (at the time of repayment). Maximum Loan Period is four years. Down payment
is 10%.
Hospitalization Loan
For better treatment any self employed or service holder can apply under this loan
scheme if the minimum employment period is one year. In case of service holder then
the applicant’s monthly income must be minimum Tk.12000 and if the applicant is
self-employed then the applicant’s monthly income must be Tk.25000 at a minimum
(Living in rental). If the applicant is self-employed and lives in own house then the
applicant’s monthly income must be Tk.15000 at a minimum. In case of
Government/Semi Government employee the minimum monthly income must be
Tk.10000. The age limit of the borrower must be between 25-65 year (at the time of
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repayment). The maximum loan limit sanctioned for this purpose is Tk.500000.
Maximum Loan Period is two year.
Home Loan
Prime Bank offers an easy-to-avail home loan with convenient repayment options.
With maximum limit on loan amount, the applicant have unlimited options of making
their choice. Any self employed or service holder can be benefited under this loan
scheme if the minimum employment period is one year. To be eligible the applicant
should have a bank account in any bank with in Bangladesh and should have
satisfactory transaction. If the eligible applicant is a bank holder of PBL then he will
get eight times higher of his/her take total take home salary per month at a maximum.
If the applicant has maintaining account in different bank then he will get 6 times
higher of his/her total take home salary at maximum. The maximum loan limit
sanctioned for this purpose is Tk.300000. The age limit of the borrower must be
between 21-65 year (at the time of repayment). Maximum Loan Period is three year.
Education Loan
For higher education parents of a student can apply for the loan. Here, the applicant
would be the guardian having income and the beneficiary would be the children of that
applicant. If the applicant is a service holder then the applicant’s monthly income must be
minimum Tk.12000 and if the applicant is self-employed then the applicant’s monthly
income must be Tk.25000 at a minimum. To be eligible the applicant should have a bank
account in any bank with in Bangladesh and should have satisfactory transaction. The age
limit of the applicant must be between 25-60 year (at the time of repayment). Maximum
loan sanctioned for this purpose is 5 lac. Maximum loan period is 4 year.
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minimum Tk.10000-12000. In case of service, the service holder must have a
permanent job. The age limit of the borrower must be between 25-65 year. (at the
time of repayment). Maximum loan sanctioned for this purpose is 3 lac. Only this
loan is sanctioned in cash. Maximum loan period is 3 year.
Client’s Equity
Prescribed margin as fixed by Head Office from time to time on the total value of the
articles shall have to be deposited with the bank by the client as equity before
disbursement of loan.
Arranged Overdrafts
In this case the customer is allowed on the basis of prior arrangements overdraw his
current account by drawing checks for amounts exceeding the balance up to an agreed
limit within certain period of time not exceeding one year. These facilities are
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granting after the credit standing, financial ability and status of the customer as well
as the purpose have been established.
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Advance against Export Bills Purchased/Discounted
Discount
Banks allow advances to the clients by discounting bill of Exchange / pro. Note which
matures after a fixed tenor. In this method, the bank calculates and realizes the interest at
a prefixed rate and credit the amount after deducting the interest from the amount of
instrument.
Purchase of bill
Banks also make advances by purchasing bills, instead of discounting, which are
accompanied by documents of title of goods such as bill of lading or railway receipts
etc. In this case the bank becomes the purchaser / owner of such bill which are treated
as security for the advance. This is allowed primarily relying on the credit worthiness
of the client.
Non-Funded Business
Non funded credit facility to a customer refers to a bank’s commitment to a third
party on behalf of the customer. The commitment itself constitutes facility but does
not involve cash outflow from the bank. The bank’s commitment essentially states
that in the event of occurrence / non occurrence of a particular event, within a
particular date, due to a particular reason or reasons, a specific sum of money shall be
paid by the bank to the third party upon claim in a particular manner. Though these
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types of facilities are primarily none funded in nature but at times it may turn into
funded facility. As such liabilities against these types of credit facilities are termed as
‘contingent liability’ and do not affect the balance sheet of the bank at the time of
commitment but contain the possibility. The non funded facilities are:
Letter of Credit
A banker’s documentary credit is an instrument or letter issued by a bank on behalf of
and for the account of the buyer of the merchandise. By this instrument the bank
undertakes that the bill(s) of exchange of the beneficiary (the seller of the
merchandise) drawn on the buyer, or on the issuing bank, or on another bank
designated in the instrument, strictly according to the conditions stipulated in the
instrument, will be duly honored by acceptance and /or payment depending upon the
issuance of the bill(s) of exchange in question.
Guarantee
In banking, it is an irrevocable obligation of a bank to pay a certain sum of money in
the event of non-performance of a contract by a third party. The basis of guarantee is
always a contractual relationship between principal debtor (account holder) and
creditor (beneficiary), which is either a contract that has been definitely concluded or
a relationship in its pre-contracted as is the case with the tender guarantee. This
relationship is referred to as the principal or underlying relationship or contract. The
contract of guarantee is independent of this underlying relationship.
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Documentation
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payable on demand) as well as breaches of warranties covenants in the bank’ s
agreements.
Legal documents are legal papers provided by the client certifying the legal
status of the borrower, borrowing power, title to goods and property; legal
deeds and power of attorney related to creation of charge on securities.
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• Documentation
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Charge Documents
b) Borrowing Resolutions
This is a certified copy of a resolution adopted by the Board of Directors of a
corporate body authorizing designated officers to borrow and pledge, hypothecate,
mortgage, etc. the assets of the corporate body for the purpose of securing the loan/
advance granted to them in accordance with the borrowing power laid down in the
Memorandum and Articles of Association of the organization.
c) Letter of hypothecation
The borrowers agree to Hypothecate to the bank goods and merchandise or any other
securities in consideration of credit facilities granted to them. They give the Bank the
right to sell the securities without notice to them and adjust their outstanding and
other expenses from the sale proceeds.
d) Power of Attorney
This document authorities the bank to sign or endorse documents on behalf of the
party executing the power. If it is given by a corporate body it must be accompanied
by a corresponding copy of a resolution of the board of Directors authorizing the
execution.
e) Letter of Arrangement
The borrowers confirms the execution of charge / other documents and also
acknowledges the bank’s right to cancel the credit lines allowed at anytime with or
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without notice and promises to repay on demand all outstanding including interest and
other charges.
f) Letter of Revival
This letter refers to and constitutes as an integral part of the loan documentation
executed by the borrowers including the promissory notes. The letter is obtained in
order to preclude any question of law of limitation.
g) Trust Receipt
Two different types of trust receipts will be in use to cover the following area of
credit lines:
Letter of trust receipt (For Release of shipping Documents)
This is executed by the borrowers to release shipping documents for taking delivery
of merchandise which is hypothecated to the bank. The Borrowers agree to take
delivery of merchandise as the Bank’s agents and acknowledges that the ban remains
owner of the goods and they will be holding the goods on behalf of the bank, as
Trustees until complete repayment of the debts to the bank.
Letter of Trust Receipt (For Pre-shipment Financing)
This is executed by the borrowers for availing pre-shipment finance by creating lien
on the original letter of credit. The borrower also undertakes that the credit facilities
will be utilized to purchase / process the merchandise for shipment as per terms of the
credit.
h) Counter Guarantee
In consideration of the bank issuing guarantees / indemnities from time to time, the
borrower agrees to keep the bank indemnified from all liabilities, costs and legal
actions that may arise from the guarantee.
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Because there are so many transactions and the amounts are relatively small in each case,
the amount of time that can be spent on an individual decision is limited. For many types
of consumer lending, it has been found that a limited number of key items of information
allow the development of a credit score that can be instrumental in approving or declining
individual credit applications.
Most applications can be quickly approved or declined on the basis of the score and a
normal credit bureau report, with the judgment of experienced credit officers coming into
play in a relatively limited number of cases. Statistical analysis of the portfolio allows
good prediction from these credit scores on delinquency and loss rates. Sometimes it is
possible to supplement historic experience by running pilot tests on new products or new
scoring methods.
Special care is required to ensure full compliance with consumer protection and
nondiscrimination rules. As with business loans, the character of the borrower is of prime
importance. A bank should not make loans to individuals in the face of evidence that
integrity is lacking.
Many consumer loans are collateralized by a security interest in a house, a car, or other
personal property. Sensible consumer lending requires taking into account the value of
the collateral compared with the value of the loan and also the likely volatility of the
value of the collateral. For example, the value of a house is affected by changes in
interest rates and the economy of the area where the house is located as well as the
physical characteristics of the house itself. The percent of cost advanced against the
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collateral is important for another reason. The more the borrower’s own money is at
stake; the less likely the borrower is to walk away from an obligation.
One of the important distinctions in consumer lending concerns the business that comes
to the bank directly through the branch system or other means, often from existing
customers, and the business that comes in an indirect manner, often through people who
are brokers or dealers. In the case of the indirect business, attention needs to be given to
the incentives of brokers or dealers, since they may know more about the personal
characteristics of the consumer than the loan officer does. Sometimes recourse to the
broker or dealer can be obtained, but more often, the bank must depend on the
sophistication of its scoring system to compensate for the fact that the interest of the
person referring the loan is to get the sale made rather than to ensure that the bank makes
a good loan. The bank is safer, particularly as to possible fraud, if it has direct contact
with the borrower.
It is inevitable that with a large volume of loans, some borrowers will fail to pay as
agreed. A good collection process is, therefore, especially important. A good collection
process identifies problems early, sometimes aided by statistical performance scoring on
the behavior of individual loan, and acts promptly to get in touch with delinquent
borrowers to arrange for prompt payment or debt relief for those who need it. Technology
such as computerized telephone and record-keeping systems can be especially helpful.
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It is very important for a bank to proper utilize its cash flow that the financial institution
takes from its clients in the form of deposits. The bank takes the money in the form of
long term-deposits, short term deposits, double benefit deposit and other scheme. Since
bank has no investment of its own the profitability of the bank depends on loan sanction. .
While recommending advances, Managers should always bear in mind the fact that the
forced sale value of the security offered to secure an advance will be sufficient to cover
the outstanding. Now a days Bank industries become very competitive. Every bank offers
flexible loan rate for the loan takers. Generally the loan PBL offers to its clients is
divided into two categories: Retail Loan and CCS loan (Consumer Credit Scheme).
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If the officer is satisfied with the client and his/her ability to repay the loan then the
client’s proposal has taken to the branch credit committee for approval. In this stage the
client is required to submit latest one year bank statement, presence of two guarantors,
Balance sheet attested by Charter Accountant in case of business loan, service certificate
etc. Even though the applicant does not maintain any financial statement, to get the
loan they must fulfill the criteria. The applicants also have to show the value of his/her
own fixed/variable asset. After all the documentation if the branch Manager and thereof
higher authority is satisfied then he asked the loan division to process the loan request.
Based on the investigation Officer’s report, report of CIB and his own
discussions with the applicants, the dealing officer will prepare credit report covering on
the Constitution of the firm, the prospective borrower's net worth which should be
calculated by taking into account his assets and liabilities . In case of proprietorship firms
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which do not systematically maintain books of accounts, enquiries should me made with
his bankers, if necessary. The reports also consider the companies the applicant’s past
dealings with the Bank, if any.
If there is nothing found like if the borrower does not have any existing loan or has name
in default list etc. If the report found satisfactory then the loan officer send
recommendation letter for approval loan to the Head Office. The recommendation letter
contains loan detail, customer’s particulars, guarantor’s particular’s, customer’s bank A/C
performance that means customer’s debit turnover, credit turnover record. The letter also
includes customer’s liability position, monthly cash flow statement and ration analysis.
Managers will be personally responsible for ensuring that credit reports submitted to
Head Office are the result of thorough and proper enquiries. It will, therefore, be essential
for the Managers to obtain independent confirmation of all the information collected and
submitted by their officials and they are not to rely solely on the information of their
dealing Officers when advancing Bank’s money. After getting the recommendation letter
the Retail Division of Head Office also verify the loan applicant and documentation. If
the found everything fulfill their criteria then they send the approval for sanction of loan
favoring the client. Reports will be furnished to the Head Office on all borrowers
and co-obligates. Opinions will normally be typed in duplicate. One copy will be
forwarded to the Head Office and one copy should be retained by the Manager. If the
party reported on is also having dealings with our other branches, copies of the relative
opinion sheets, should also be sent to the concerned branches of the Bank.
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case of mode of disbursement the office may ask the loan division to issue a pay order or
transfer to the loan A/C etc. The sanction letter then must be communicated by the loan
applicant in a separate sanction advice and such terms and conditions must be accepted
duly signed by the party in the duplicate copy of the sanction letter. With the acceptation
of sanction letter the clients agree to obtain the documents and securities as per indication
given in enclosed certificate of documentation in and additional document(s), if required
as per opinion of the bank’s panel lawyer to protect bank’s interest. Next, the loan
division of the branch send a copy of ‘Certificate of Documentation’ along with a copy of
‘Legal opinion plus Law year’s Satisfaction Certificate’ immediately to Credit
Administration Unit on completion of documentation and other formalities seeking
approval for disbursement of the facility. The loan division can only disburse after
obtaining the disbursement authorization from Credit Administrative Unit, Head Office.
Before disbursement, a declaration to be obtained from the customer to the effect that no
Director/ Sponsor of Prime Bank Ltd. or any of his family Member/Dependent has got
any direct or indirect interest in his business. An undertaking to be obtained from the
customer to the effect that he has no liabilities with any other bank(s) in his name or in
the name of his/her blood relative concern excepting the liabilities if any declared in the
loan application. After all these formalities the loan is ready to disburse. Client will
procure the specified articles from dealer / agent / shops acceptable to bank.
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Insurance etc. of the articles wherever necessary. The insurance will be with the Bank
mortgage clause. The premiums shall be paid by the borrower by debt to his account.
The client shall have to bear the cost of Repair & maintenance of the acquired
articles.
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c) Through deduction from the monthly salary of the client wherever
applicable, by his employer. In this regard the concerned employee shall
authorize irrevocably his employer to deduct the said amount from his
monthly salary. The client can only revoke this authority with the
concurrence of the bank.
If the customer fails to repay three monthly installments, bank reserves the right to
cancel or call back the entire outstanding loan liability of the concerned account
irrespective of the validity of the account and bank can also take initiative for legal
action under Artha Rin Adalot Ain Act-2003.
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Appraisal
Interviewing the client’s
CIB
Preparing the credit proposal
Landed property valuation
Pre-disbursement
Issuing Sanction letter
Acceptance from the client
Completion of all documentation formalities
as per Head Office.
Disbursement
Loan Input
Voucher
Monitoring
Ensure adjustment as per repayment
Communicate with the clients.
Physical visit.
Obtain various reports regarding client’s
business.
Repayment
Installment realizes from the clients.
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3.15 Security
Security accepted against credit facilities shall be properly valued and shall be effected in
accordance with the laws of the country in which the security is held. An appropriate
margin of security will be taken to reflect such factors as the disposal costs or potential
price movements of the underlying assets.
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Security
Collateral Securities
Guarantee
Margin
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Collateral Securities
The tangible securities pledged / assigned by the borrower to the bank and
additionally held by the bank to secure a loan are called Collateral Securities. In case
of advances against pledge / hypothecation of goods, bank may insist on immovable
properties as collateral. A good collateral security must be-tangible, transferable /
negotiable, easily marketable, price stability, and durability (not perishable), ascertain
ability of market value.
Guarantee
At times when the personal security of the borrower is not considered sufficient or
when the risk involved is a border line case and the borrower is not in a position to
offer sufficient collateral to the loan, the bank may ask for a guarantee of a third party
whose financial ability and credit standing is acceptable to the bank. A guarantee is an
undertaking given to the bank by a third party, called the guarantor to be answerable
to the bank for the debt of the borrower upon his default in repayment of the loan. It
should be remembered that such security for the loan depends on the continued
solvency of the guarantor. To safeguard the bank’s interest a continuing guarantee in
the bank’s standard form should be obtained.
Margin
The difference between the market value / asset valued of the goods, merchandise and
produces pledged / hypothecated to secure a loan / advances and the amount of the
loan / advance (normally the drawing power) is known as MARGIN. The margin to
be retained for each type of loan / advances will be in accordance with instructions
issued from time to time by Bangladesh bank / Head office of the bank. In case where
minimum margin is specified, the percentage may be increased according to market
conditions, salability / durability / storage capacity and inspection facility of the
goods.
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Position of classified loans and advances and other assets should be placed before the
Board of directors of the bank.
The following are the broad definitions of the classified categories: however
instruction issued by Bangladesh bank / Head Office of the bank regarding basis of
loan classification and provisioning should be followed:
Classified
Loans
LOSS
SUBSTANDARD DOUBTFUL
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Substandard
A well defined weakness is present in loans f this category, which could affect the
ability of the borrower to repay. This is clearly a troubled situation, for one reason or
another, which requires immediate and intensive effort to correct and reduce the
possibility of loss.
Doubtful
A serious doubt must exist that full repayment will not be forthcoming but the exact
amount of the loss cannot be ascertained at the time of classification.
Loss
Advances, or portions of advances, which are determined to be uncollectible, based
on presently known factors.
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Now the question arises that how effectively they can do it. They must have to take care
that the loan they are giving to the clients. Some questions must arise when Prime Bank
Ltd. gives loan to clients.
To get the answer of these questions and maintain the credit activities properly there is no
alternative of Credit Risk Analysis. Analyzing the risk associated with the loan gives a
clear idea about the quality of the loan.
Credit Analysis
Credit analysis is concerned with two things: judging the creditworthiness of the credit
taker and designing an appropriate structure for the credit.
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repay. There are not unrelated, since many people’s willingness to pay is a function to
how much it hurts.
The first step in analysis is to understand the environment in which the company
operates. Political, economic, technological and sociological trends can all have an
impact on the borrower’s business. After understanding this broader environment, the
loan officer must then understand the borrower’s industry, including such issues as
relative bargaining power between purchasers and suppliers, barriers to entry, substitute
products, and cyclicality. The availability of multiple sources of supply and the
company’s Labor relations are very important factors. The impact of international factors
such as changes in foreign exchange rates must not be neglected. Regulatory, legal, and
other factors must also be taken into account.
Company with a profit margin that is narrowing every year is a company that may
eventually have difficulty. In conducting financial analysis a spread of at least three (and
preferably five) years of financial statements is required. The account officer should
consider quality of earnings, that is the conservatism or aggressiveness of the borrower’s
accounting practices and the volatility of revenues and expenses. Trends and comparisons
with similar companies are very important. Unusual accounting practices should be
disclosed in the credit memorandum.
Structure. The loan should be structured appropriately for its purpose of repayment If a
company is borrowing to finance accounts receivable that are payable in 30 days, the loan
should generally be paid on receipt of the receivables. If the loan is for building a new
plant, the source of repayment may be the added revenues or expense savings by that
plant over a period of years, and accordingly, a loan of 5 or even 10 years may be
appropriate.
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When extending credit for more than a year, it is generally advisable to have the credit
paid in periodic installments spread more or less equally over the life of the loan, rather
than in a single repayment at the end. Loan officers however need to be a cautious in
evaluating collateral because it may decline in value and there may be difficulties in
liquidating it. Loan officers need to be especially cautious regarding collateral that is
likely to decline in value at the same time that a borrower’s cash flow is also declining.
For example, a loan to a shipping company secured by ships suffers from the problem
that if the shipping industry does badly, the borrower’s cash flow will suffer. At the same
time, the price at which ships can be sold will decline.
Sometimes a loan is made on the strength of the guarantee of the owner of the borrowing
entity or some other party with an interest in the success of the borrower. Guarantees
strength a lenders position and should be taken wherever possible and collateralized
wherever possible. However, loan officers need to be realistic about the fact that
guarantors often resist paying when the day of reckoning comes.
Not least important in considering the structure of a credit is the price: what payment the
bank gets in return for the liquidity it provides and the risk it takes. Banking is a
competitive business, but it is also business that offers significant value.
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Accordingly, at first I was assigned to work in credit division (CD) department then in
General banking (GB) department. I worked for CD for eight weeks then I moved to
General banking Division for the rest. The work experience gave me a good idea of the
overall banking system of Bangladesh and taught me the professionalism at work place.
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some criteria by which a bank can accept or reject the application for sanction the
loan/advance proposal. The job description of this department is broadly discussed later
part. My specific job responsibilities are given below:
Stamping
To get the legal facility in future bank must stamped the entire legal document like Letter
of hypothecation, Letter of guarantee etc. As an intern my duty was to stamp those
documents.
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Sanction advice is two copied. One copy is signed by the client which is kept by the
bank, another copy is given to the client. Office note is one copy. It is kept to the bank.
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in that sense Prime Bank’s own direct sales executive act as their introducer For personal
account valid personal identification document is required. For organization relevant
document is required. Like -for business organization trade license is required. To open a
savings account a person/persons must be adult and mentally sound. For Organizations
and institutions one or more authorized person from that organization will handle the
account. Person(s) will be selected by that respective organization/institution. My job was
to monitor the fulfillment of those conditions. After fulfill the required procedure if at
least two authorized officer satisfied and signed then an account is opened. An account
number and customer id is given.
Account close
For account close at first the client has to fill up an application form requesting to close
the account. After verification and authorization the account will be closed. The client
must surrender the cheque book at that time. My task was to help the clients to go
through the whole process.
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by the client. Then if it is Prime Bank cheque then I use Transfer seal and if it is clearing
cheque then I use received for collection seal on the client’s copy. Then at last the officer
sign on the client’s copy. Then I send the cheques to the clearing officer.
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the pay order by the P.A (Power Of Attorney) holders. For issuing pay order I have to
maintain a register When the Pay order is received by the client then he or she has to sign
in the particular area.
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Sorting and Distribution
When the cards came then I sorted them out. The pin code paper is sent with the card.
The card holder name and card number is written on the pin code paper. I match that and
attach them with a pin and sorted them out alphabetically. It means that whose name
starts with ‘A’ I keep them in the A box, whose name starts with ‘M’, I keep them on the
M box. It is done because of finding out the card easily and least possible time. When the
clients come and ask for his/her card then I ask his/her name. If the client’s name is Talha
Mahmud, then I would go for the T box and search the card. I have to maintain a register.
After getting the card I would ask the client’s address that is written on the pin code
paper. If it is matched with the pin code paper, then I distributes the card to the client
after taking his/her signature on the register where the client’s account number is written.
Before giving the card I would also match the account number of the client. Because
same name clients can remain.
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Chapter 5: Comparison
5.1 Comparison with Other Bank
8000
7054
7000
5547 5761
6000
4958
5000 4816
4211 4159 4020
3997 3933
Crore Taka 4000 Deposits 2008
2940 3140 3170
2910 Advances 2008
3000
2000
1000
0
DBL SEB PBL DBBL EXIM MBL EBL
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Deposit Advance GAP-2008 of Different Banks (source Manager’s conference 2008)
DBL 956
SEB 731
DBL 1293
DBBL 1271
EXIM 139
MBL 793
EBL 260
EBL 260
MBL 793
EXIM 139
DBBL 1271
PBL 1293
SEB 731
DBL 956
CRORE TAKA
DBL 205
SEB 294
EXIM 205
PBL 351
EBL 190
MBL 157
DBBL 151
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Profit 2008
400
351
350
294
300
250
205 205
190
200
Crore T aka 157 151
150
100
50
0
DBL SEB EXIM PBL EBL MBL DBBL
DBL 4950
EXIM 6140
PBL 7062
MBL 4038
EBL 3782
SEB 3847
DBBL 3567
Import 2008
8000 7062
7000 6140
6000
4950
5000 4038
3782 3847 3567
Crore T aka 4000
3000
2000
1000
0
EXIM PBL MBL EBL SEB DBBL DBL
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Export 2008 Of Different Banks (Source Manager’s conference 2008)
EXIM 5579
DBL 3108
DBBL 3406
MBL 3267
PBL 5132
SEB 2877
EBL 3357
Export 2008
6000 5579
5132
5000
2000
1000
0
EXIM DBL DBBL MBL PBL SEB EBL
DBBL 3406
DBL 3108
EBL 3322
EXIM 5579
MBL 3267
PBL 5132
SEB 2877
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6000 5579
5132
5000
4000 3406
3108 3322 3267
2877
Rate(%) 3000
2000
1000
0
DBBL DBL EBL EXIM MBL PBL SEB
DBBL 3406
DBL 3108
EXIM 5579
MBL 3267
PBL 5132
SEB 2877
6000 5579
5132
5000
2000
1000
0
DBBL DBL EXIM MBL PBL SEB
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Weakness
Opportunities
o People are interested in getting personal loan with lower interest rate.
o New branches will be opened in different part of Bangladesh.
o New employees (fresh graduates and experienced) are recruited every year.
o Personal loan market is the most happening market in banking sector.
o In this competitive environment BBL must expand its product line to enhance its
sustainable competitive advantage.
Threats
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o The contemporary banks of PBL such as Dhaka bank, Eastern Bank and Dutch
bangla Bank are its major rivals.
Recommendations
As I have gone through some departments, I have come up with some points, which can
improve the efficiency as well as quality of the work. The points are as below;
Setting proper planning for each and every work as well as for the whole
department.
Increase the remuneration package for the employee.
Reduce the service charge for account and other service charge.
Designing jobs on priority basis.
Assigning necessary manpower for every job.
Proper Credit Planning and Management.
Borrower Selection carefully.
Follow Five Cs in Borrower Selection.
Appropriate Financial Analysis of Borrower’s Business.
Monitor the loan sanction process carefully.
Proper maintenance of files and necessary files and documents on daily basis.
Proper managerial observation and cooperation.
Avoiding duplication through accuracy and efficiency.
Developing motivational program and training program.
Ensure that every one working in Software knows it properly and giving them
personal ID.
And most of all change of managerial attitude and view point.
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Conclusion
This report is an effort to reflect a clear idea about the strategies, activities and
difference performances of Prime Bank Ltd. regarding its commercial activities with a
special reference to Credit management or Business. The researcher was assigned it in
the Satmasjid Road Branch of Prime Bank Limited (PBL) as an intern. I present this
report on the basis of the knowledge and experience gained during the internship
period of twelve weeks. Throughout the report my objective is to seek and find out
the main reasons of this prosperity / success of Prime Bank Limited. Lending is a
heart of a commercial Bank. It has two types of loans and advances. Both of
them are profitable assets for a bank to competitive in the market. But the
condition is that loan or advances must have the quality and quantity. It is
therefore, indispensable for a Bank to have a well thought policy for executive to
perform its lending operation. This report contains the overall policy and various
stages of Credit Operation and Credit Management.
To identify the success of any organization it is required to give keen sight in each
section of the work place. In any Bank there are three sectors these are general
banking, credit section and foreign exchange. Of them the most important sector is
credit and the main task is credit operation and credit management. The global
success or failure of the Bank as a whole depends on it. Also with this general
banking has got special importance, because without sufficient deposits no bank will
be able to sanction the credit facility to its various clients and earning profits. General
banking consists of customer services and deposits collection and credit section
consists of utilizing this huge amount of deposits properly. Credit section has gone
several frequent steps. Theses are: Credit Planning, Borrower Selection, Financial
Analysis of Borrower’s Business, Scoring, Sanction of Credit, Monitoring,
Classification, and Provision. With other things the main important part of credit
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operation is borrower selection. There are five important factors to select the
borrower. These are known ad five Cs. These are Capital, Character, Collateral,
Capacity, and condition of the borrower. The financial viability of the customer has
got significant importance. That’s why different techniques are used to justify the
borrower’s financial position.
Prime Bank is an emerging bank. The bank has only completed a decade of banking
services. At the initial stage of business, every institution has to go through the
difficult path of survival. To achieve the confidence of the customers, the bank must
execute some improvements in its marketing and operational areas – Prime Bank Ltd
should try to win customers faith by providing them efficient and dependable
services, credit facility and updating with user friendly modern technologies. The
bank should redesign all sorts of banking procedures to be more user-friendly,
attractive and impressive.
Prime Bank limited started with a vision to be the most efficient financial
intermediary in the country and it believes that the day is not far off when it will reach
its desired goal. Prime Bank Limited looks forward to a new horizon with a
distinctive mission to become a highly competitive modern and transparent institution
comparable to any of its kind at home and abroad.
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Bibliography
1.Ahmed Nasiruddin. (1989), Banking And Finance Compendium: 1st edn. Standard
Printing and Packages: Dhaka
3. Karajewski, Lee, J. & Ritzman, Larry, P... (2005), Operations Management: Process
and Value Chain. 7th edn. Pearson Education Inc.: India
4. Wheelen, Thomas, L. & Hunger, J., David.(1995), Strategic Management and Business
Policy. 5th edn. Addison-Wesley Publishing Company Inc: United States of America
5. Credit Rating Information and Services Limited. Retrieved August 5, 2008, from
CRISL Official Web site: http://www.crislbd.org/
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