Professional Documents
Culture Documents
Assignment On
Evaluation of performance of specialized banks in Bangladesh
Assignment No. 1 Course Name: Principles and Practice of Banking Course Code: MBA 509/MBM 505
Submitted To
Nazir Ahmed Khan
Course Instructor
Submitted By
Enayet Ullah Majumder ID- 2010-1-90-004 Mohammad Omor Khaiam ID: 2010-1-90-002 Joyanta Sarker ID: 2010-2-90-006 Rais-Ur-Rubbi ID: 2010-2-90-010
Table of Contents
Sl No. Particulars 1 2 3 4 5 6 7 Executive Summary Basic Bank Limited Bangladesh Krishi Bank Rajshahi Krishi Unnayan Bank Bangladesh Development Bank Limited Evaluation of Performance of Specilized Banks in Bangladesh Bibliography Page No. 1 2-12 12-21 22-24 25-34 35 36
EXECUTIVE SUMMARY
The banking sector is considered to be an important source of financing for most businesses. The common assumption, which underpins much of the financial performance research and discussion, is that increasing financial performance will lead to improved functions and activities of the organizations. The subject of financial performance and research into its measurement is well advanced within finance and management fields. It can be argued that there are three principal factors to improve financial performance for financial institutions; the institution size, its asset management, and the operational efficiency. To date, there has been little published studies to explore the impact of these factors on the financial performance, especially the commercial banks. The performance of the state-owned banks has been under the scanner of various stakeholders since long. Government interference in the day-to-day management and loan disbursement, corruption of bank officials and highhandedness of the trade unions had reached their peaks in the seventies and eighties, leading to a decline in the financial health of these institutions. The situation had become so bad that more than 40 per cent of the total outstanding loans of the public sector banks were classified as non-performing. The state of affairs with the state-owned specialized banks was even worse. Nearly 70 to 80 per cent of the loans that they had extended to a new class of entrepreneurs in the eighties turned bad. The Bangladesh Shilpa Bank and the Bangladesh Shilpa Rin Sangstha, the two development financing institutions (DFIs), had to suspend new financing because of fund shortage. These two DFIs have now been merged into a single entity, known as the Bangladesh Development Bank Limited (BDBL). In most cases, the so-called entrepreneurs managed loans from the stateowned commercial banks and DFIs either through bribing the bank officials or using their political connections. Even the leaders of trade unions in these financial institutions having their allegiance to the parties in power could manage long-term loans for others and influence management decisions on transfers and promotions of officials and employees of the public sector banks.
BASIC Bank Limited (Bangladesh Small Industries and Commerce Bank Limited) registered under the Companies Act 1913 on the 2nd of August, 1988, started its operations from the 21st of January ,1989. It is governed by the Banking Companies Act 1991. The Bank was established as the policy makers of the country felt the urgency for a bank in the private sector for financing small scale Industries (SSIs). At the outset, the Bank started as a joint venture enterprise of the BCC Foundation with 70 percent shares and the Government of Bangladesh (GOB) with the remaining 30 percent shares. The BCC Foundation being nonfunctional following the closure of the BCCI, the Government of Bangladesh took over 100 percent ownership of the bank on 4 th June 1992. Thus the Bank is state-owned. However, the Bank is not nationalized; it operates like a private bank as before.
BASIC Bank Limited is unique in its objectives. It is a blend of development and commercial banks. The Memorandum and Articles of Association of the Bank stipulate that 50 percent of loanable funds shall be invested in small and cottage industries sector. Capital Position Authorized capital Tk. 2000 million Paid up capital Tk. 1455.30 million Total Reserve and Surplus up to Tk. 2468.61 million 31.12.2009 The Bank is required to transfer 20 percent of its net profit before Tax to Capital Fund as per the Banking Companies Act 1991. Functions The Bank Offers: a. Term loans to industries especially to small-scale enterprises. b. Full-fledged commercial banking service including collection of deposit, short term trade finance, working capital finance in processing and manufacturing units and financing and facilitating international trade. c. Technical support to Small Scale Industries (SSls) in order to enable them to run their enterprises successfully. d. Micro credit to the urban poor through linkage with Non- Government Organizations (NGOs) with a view to facilitating their access to the formal financial market for the mobilization of resources.
In order to perform the above tasks, BASIC Bank works closely with its clients, the regulatory authorities, the shareholders (GOB), banks and other financial institutions.
CORPORATE STRATEGY Financing establishment of small units of industries and business and facilitate their growth Small Balance Sheet size composed of quality assets.
Steady and sustainable growth. Investment in a cautious way. Adoption of new banking technology. To employ funds for profitable purposes in various fields with special emphasis on small scale industries. To undertake project promotion on identify profitable areas of investment. To search for newer avenues for investment and develop new products to suit such needs. To establish linkage with other institutions which are engaged in financing micro enterprises. To cooperate and collaborate with institutions entrusted with the responsibility of promoting and aiding SSI sector.
Organizational Structure To achieve its organizational goals, the Bank conducts its operations in accordance with the major policy guidelines laid down by the Board of Directors, the highest policy making body. The day to day operation of the Bank is looked after by the management. A. BOARD OF DIRECTORS As stated earlier the Government holds 100 percent ownership of the Bank. All the Directors of the Board are appointed by the Government of Bangladesh. The secretary of the Ministry of Industries is the Chairman of the Bank. Other Directors of the Bank are senior Government and central Bank executives. The Managing Director is an ex-officio member of the Board of Directors. There are at present 7 Directors including the Managing Director. B. MANAGEMENT The management is headed by the Managing Director. He is assisted by the General Managers
and Departmental Heads in the Head Office. BASIC Bank is different in respect of hierarchical structure from other banks in that it is much more vertically integrated as far as reporting to the Chief Executive is concerned. The Branch Managers of the Bank report direct to the Managing Director and, for functional purposes, to the Heads of Departments. Consequently, quick decision making in disposal of cases is ensured.
YEAR From the Balance Sheet Authorized Capital Paid-up Capital Reserve and Surplus Shareholders' Equity Fixed Assets Total Assets Deposits Long- term Debt Loans and Advances Placement & Investment From the Income Statement Gross Income Gross Expenditure Profit before Tax Profit after Tax Tax Paid (Cumulative) Others Import Business Export Business Financial Ratios Capital Adequacy Ratio Capital Fund to Deposit Liabilities Liquid Assets to Deposit Liabilities Loan to Deposit Liabilities Earning Assets to Deposit Liabilities After Tax Return on Average Assets Net Profit to Gross Income Interest Magin Cover After Tax Return on Equity SMI/SSI Loan and Micro Credit to Total Loan
2009
2008
2007
2006
2005
(Million Taka) 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 1455.30 1309.77 1247.40 945.00 810.00 916.14 135.78 2468.65 1681.39 1349.17 1294.00 232.65 45699.5 6 34501.6 9 2875.16 29261.5 3 12244.9 1 228.36 46,651.5 3 38,368.2 3 1708.4 27,269.1 3 196.11 154.52
29,417.0 27,136.3 9 7 24,084.6 22,325.5 5 8 830.06 937.51 19,000.0 15,339.3 0 5 10,236.8 8,212.23 2 (Million Taka)
5162.30 5,060.29 3,549.51 2870.32 2,228.21 3593.96 3,526.18 2,741.37 1,858.69 1,599.77 1568.34 1534.11 648.85 549.95 808.14 1,011.62 282.96 554.14 628.44 285.49
4225.37 3,538.09 2,790.98 2,245.16 1,777.70 27,359.7 21,266.5 7 7 22,270.8 16,794.9 19887.7 7 6 33976.6 13.48 11.37 24.67 84.81 116.44 1.41 12.57 135.79 18.79 56.93 12.02 7.81 47.70 71.07 114.69 1.30 10.87 137.08 19.68 59.32 12.91 9.23 49.10 69.69 109.70 .83 7.97 176.80 11.70 56.73 (Million Taka) 17,804.2 14,094.9 7 6 15,463.7 11,097.2 4 3 (Percentage) 11.98 10.34 40.42 78.89 112.99 1.94 19.31 211.72 27.82 53.43 11.66 10.36 58.01 69.74 114.56 1.23 12.81 214.56 17.75 67.00
32 776
31 735
30 721
28 651
27 601
Balance Sheet (Million Taka) 2003 Property and Assets Cash Balance with other banks and financial Institutions Money at call and short notice Investment Government Others 1831.31 2198.95 4486.54 3241.86 5271.30 5598.82 6239.23 52.10 54.00 54.00 29.00 32.00 89.00 99.49 1883.41 2252.96 4540.55 3270.86 5303.30 5687.82 6338.72 Loans and advances Loans ,cash credit, overdrafts etc. Bills discounted and Purchased 8633.71 648.48 9282.19 Fixed Assets Other Assets Grand Total 73.48 307.33 11293.2 13759.0 17075.5 20047.9 24344.7 27226.4 5 5 9 2 3 8 706.88 1580.29 1924.40 2215.42 2924.39 2035.05 12000.1 15339.3 18999.9 22263.3 27269.1 29261.5 4 5 9 4 2 3 101.40 201.18 135.78 289.91 154.52 498.74 196.10 579.14 228.36 859.83 232.65 964.32 741.36 1035.30 1134.50 1522.87 2125.01 2641.00 2424.89 2378.50 3765.55 4126.27 4191.36 6937.53 8485.18 5906.17 2004 2005 2006 2007 2008 2009
100.00
80.00 1570.00
108.0
Capital and Liabilities Liabilities Borrowings from other banking companies, agents etc. Bills Payable Deposit and other Accounts Current Accounts and contingency accounts etc. Saving Bank deposits Fixed deposits 1398.11 1651.35 1890.61 2370.44 2867.19 2544.51 2504.61 690.95 839.61 937.51 830.06 1385.81 1708.40 2875.15
92.94
148.89
179.75
239.25
290.75
328.49
341.50
581.69
724.80
793.43 1007.79
886.30
955.50 1165.84
11173.6 15509.1 22325.5 23845.3 31657.2 38039.7 34160.1 0 7 8 9 1 3 8 Other Liabilities Total Liabilities 1609.05 1596.50 2147.13 2263.37 2843.53 3592.29 4007.50 13566.5 17945.2 25410.2 27178.0 36177.3 43668.9 41384.3 4 9 3 7 0 3 6
Capital/ Shareholders' equity Paid up Capital Statutory Reserve Other Reserves Surplus in Profit and Loss Account Total Shareholders' equity Total capital and liabilities 450.00 450.00 40.00 319.28 675.00 555.44 40.00 220.82 810.00 681.13 40.00 195.00 945.00 1247.40 1309.77 1455.30 883.45 1045.08 1295.26 1559.65 40.00 129.47 40.00 370.54 40.00 304.51 365.55 543.44
1249.28 1491.26 1726.13 1052.92 2596.58 2982.59 3923.95 14766.3 19436.5 27136.3 28230.9 38773.9 46651.5 45308.3 2 6 7 9 0 3 1
Comparative Balance Sheet (In percent) 03/02 Property and Assets Cash Balance with other banks and financial Institutions Money at call and short notice Investment Government Others (10.81 ) 1.55 39.65 58.32 9.58 9.58 34.23 39.53 1.57 65.51 24.28 (8.18) 22.30 12.12 6.21 (30.39 ) (92.70 ) 11.43 11.78 11.44 04/03 05/04 06/05 07/06 08/07 09/08
19.62 101.54
Loans and advances Loans ,cash credit, overdrafts etc. Bills discounted and Purchased 28.40 14.44 27.09 Fixed Assets Other Assets Total Assets Capital and Liabilities 16.65 43.48 33.91 18.50 (3.41) 16.65 (4.17) 13.42 30.80 21.43 32.00 22.48 16.45 31.96 11.83 (30.41 ) 7.30 1.87 12.15
9.01 123.56 21.77 29.28 38.00 31.63 27.83 23.86 33.91 13.80 44.10 72.03 39.62 8.29
85.46 (34.54)
20.47 (2.87)
Liabilities Borrowings from other banking companies, agents etc. Bills Payable Deposit and other Accounts Current Accounts and contingency accounts etc. Saving Bank deposits Fixed deposits 11.30 (12.14) 13.37 40.42 33.18 Other Liabilities Total Liabilities Capital/ Shareholders' equity Paid up Capital Statutory Reserve Other Reserves Total Shareholders' equity Total capital and liabilities Common size Balance Sheet (In percent) 2003 Property and Assets Cash Balance with other banks and financial Institutions Money at call and short notice Investment Government Others Loans and advances Loans ,cash credit, overdrafts etc. Bills discounted and Purchased Fixed Assets Other Assets Total Assets 55.96 58.47 58.10 50.70 51.70 52.18 58.47 5.16 0.58 1.27 4.39 0.50 2.08 3.64 0.52 1.04 5.82 0.50 1.07 5.71 1.50 1.49 6.26 0.48 1.64 4.39 0.50 2.08 61.11 62.86 61.74 56.51 57.41 58.44 62.86 5.02 5.33 4.18 5.33 5.48 5.66 502 1611 0.68 0.35 2004 2005 2006 2007 2008 2009 28.98 50.00 16.31 50.00 23.43 19.37 31.63 20.00 16.66 22.63 29.70 0.00 0 (11.69 (39) ) 15.75 4.03 5.00 23.93 11.11 20.41 51.28 34.00 13.99 17.96 1029.1 6 22.94 13.00 18.11 24.60 41.23 38.80 (0.78) 32.28 14.49 25.37 9.47 27.01 49.89 5.16 43.95 6.80 34.49 5.41 41.60 6.95 (11.25 (1.56) ) 7.80 23.78 20.16 26.33 22.01 11.72 (10.19 ) 11.55 16.07 2.13 21.52 60.20 11.66 11.46 20.73 33.10 23.27 12.98 68.29 3.96
52.26 (26.11)
20.70 (5.23)
20.31 (2.87)
16.10 19.37 15.21 19.37 17.89 18.18 0.68 0.35 0.41 0.28 5.79 0.20 0.41 0.28 3.40 0.08 3.17 0.19
12.40 11.31 16.53 11.31 13.59 11.99 12.40 12.75 11.59 16.73 11.59 13.67 12.18 12.75
Capital and Liabilities Liabilities Borrowings from other banking companies, agents etc. Bills Payable Deposit and other Accounts Current Accounts and contingency accounts etc. Saving Bank deposits Fixed deposits Other Liabilities Total Liabilities Capital/ Shareholders' equity Paid up Capital Statutory Reserve Other Reserves Surplus in Profit and Loss Account Total Shareholders' equity Total capital and liabilities Achievements 7.77 8.12 2.30 2.97 3.04 3.04 3.47 2.86 0.21 1.14 7.67 2.98 2.51 0.15 0.72 6.36 3.21 2.69 0.10 0.33 6.69 2.80 2.77 0.08 0.65 6.39 3.05 3.05 0.27 2.16 8.46 12.22 3.91 9.74 3.94 8.50 3.73 6.97 2.92 7.92 2.44 5.82 2.18 9.47 3.94 5.19 0.96 4.68 0.63 4.32 0.77 3.45 0.66 3.82 0.80 3.91 0.75 4.68 0.63
59.86 62.26 66.80 71.72 77.12 79.09 62.26 76.00 75.67 79.03 82.72 87.48 87.09 75.67 10.05 10.90 8.21 7.91 7.85 8.22 10.90 92.22 91.87 92.33 93.64 93.30 93.60 91.87
1.34 0.027
The performance of BASIC Bank Limited has been satisfactory since its inception in respect of all the measurement parameters. The total assets of the Bank increased to Taka 45,308.31 million at the end 2009 from Taka 46,651.53 million in the previous year registering a decrease by 2.87 percent. Total deposit of the Bank at the end of 2009 stood at Taka 34,501.70 million (75.50% of Total liabilities) compared to Taka 38,368.23 million (82.24% of Total liabilities) in 2008. Total amount of deposit declined by 10.07%. Loans and advances stood at Taka 27,269.13 million as on December 31, 2008 against Taka 22,263.35 million at the end of 2007, recording a growth rate of 22.48 percent compared to 23.86 percent in the previous year. All out efforts were made to improve the recovery rate and control non-performing loans and advances. Although the recovery rate of project loans remained stable in the neighborhood of 96 percent the proportion of non-performing loans to total loans increased to 3.25 percent in 2008 from 3.70 percent in 2007. Emphasis on the maintenance
of quality of assets remained the centerpiece of the Bank's business strategy. Year 2008 was a period of high growth in loans and advances with 22.48 percent increase compared to 23.86 percent increase in 2007. Growth of industrial finance was moderate and loans to small and medium industries was 23.91 percent of total loans and advances. The industrial loan of Tk. 17226.40 million was distributed among 13 sectors. Textile sector registered the highest concentration being 36.24 percent of industrial loans and 23.59 percent of total loans. Textile sector is followed by: food & allied industries - 13.73 percent of industrial loans and 8.94 percent of total loans, chemical & allied industries - 12.97 percent of industrial loans and 8.44 percent of total loans and engineering - 11.44 percent of industrial loans and 7.45 percent of total loans. Activities a. Industrial Credit Year Million Taka 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2735.50 3769.00 2735.50 6252.00 7691.20 9987.50 12243.56 13901.40 17226.40 17816.54 BASIC Bank's services are directed towards the entrepreneurs in the small industries sector. A small industry, as per Industrial policy 1999 approved by the Cabinet, has been defined as an industrial undertaking whose total fixed investment is less than Tk.100 million. The industrial loan reflected a significant growth of 23.91 percent over the previous year. Total outstanding industrial loans including term and working capital stood at Taka 17,226.40 million at the end of 2008 compared to Taka 13,901.40 million of 2007. Total outstanding term loan stood at Taka 6,206.75 million as on December 31, 2008 compared to Taka 5,055.58 million in 2007 reflecting a growth of 22.77 percent. The outstanding working capital finance extended to industrial units stood at Taka 11,784.08 million at the end of the reporting period compared to Taka 9,525.98 million in 2007. Growth rate here was 23.70 percent. BASIC Bank's services are specially directed towards promotion and development of small industries. Its exposure to small and medium industries sector accounted for 56.52 percent of the total loans and advances. During the year total of 87 projects were sanctioned term loan. Out of which 26 were new and the rest were under BMRE of the existing projects. As on 31 December 2008, 801 projects were in the portfolio of the bank. The textile sector including garments being one of the major contributors to national economy dominated the loan portfolio of the Bank. Other sectors financed include engineering; food and allied industries; chemicals, pharmaceuticals and allied industries; paper, board, printing and packaging; glass; ceramic; and other non-metallic goods and jute products. Recovery rate of project loan was 90.81 percent. The Bank also supports development of trade, business and other commercial activities in the country. It covers the full range of services to the exporters and importers extending various facilities such as cash credit, export cash credit, packing credit, short term loans, local and foreign bills purchase facilities. As on December 31, 2009 total outstanding commercial loans stood
b. Commercial Credit
at Taka 10,877.17 million compared to Taka 9,278.26 million in 2008. c. Micro Credit Year Million Taka 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 120.40 183.50 104.00 186.20 284.10 338.30 359.24 680.13 764.46 1072.05 BASIC Bank launched a Micro Credit Scheme in 1994. Micro Credit Scheme provides for the poor for generation of employment and income on a sustainable basis particularly in urban and suburban areas. The Bank follows three systems of credit delivery. These are: 1. Lending to the NGOs who on-lend to their members. At present there are 15 such NGOs. 2.Lending direct to the targets groups or ultimate borrowers under the Banks own management. 3. Lending direct to the member-borrowers and NGOs providing nonfinancial services like group formation and monitoring and supervision on exchange for a supervision fee. At the end of 2009, total amount of Taka 1072.05 million remained outstanding as against Taka 680.13 million in 2007. Recovery rate during this period remained at a satisfactory level of 98.00 percent. The bank achieved substantial growth in export in 2009 and the performance of the bank in import business was also satisfactory. The Bank handled total export business of Taka 19887.70 million and import business of Taka 33976.60 million in 2009. The export and import business decreased by (10.70) percent and grew by 24.18 percent respectively. Major items of exports were garments, jute products, textile, leather etc. Items of import included mainly industrial raw materials, garments accessories, capital machinery, food items and other essential commodities. The Bank became a proud member of SWIFT (Society for Worldwide Interbank Financial Telecommunication) that would pave the way to achieving uninterrupted communication related to banking for international trade. business and fund transfer.
Outstanding at year end d. Foreign Trade Million Taka Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Import Finance 7948.40 7542.80 8645.00 8930.50 12508.00 11097.23 Export Finance 5557.00 5957.90 5557.60 6523.00 7908.00 4094.96
Outstanding at year end e. Other Activities The Bank provides services for remittance, underwriting, guarantee, public offering of shares etc. The bank also provides funds to investment and leasing companies. The Bank has recently created a venture capital fund for equity support to innovative but risky projects.
Lending Criteria 1. Entrepreneur Entrepreneur / promoter has to be creditworthy and competent enough to run the proposed industry. 2. Viability of the project The project should be viable from organizational, technical, commercial, financial and economic points of view. Technical Viability
The project should be technically sound and environment-friendly. Technology transfer in case of borrowed know-how ought to be ensured. Building should be well planned and well constructed. Market prospect and potential for the product has to be fully assured at competitive prices. Marketing channel for the product should be accessible to the entrepreneur. There should be reasonable debt equity ratio as determined by the Bank on individual case basis. Debt service coverage ratio should be at least 2.5 times at the optimum level of production. IRR should preferably be not less than 20 percent.
Commercial Viability
Financial Viability
Economic Viability The project should ensure benefit to the national economy and create sufficient employment opportunity and be environment friendly. Performance Indicators 2005 At Year End Total Loans and Advances Total Investment Total Assets Total Deposits Long-term Debt Total Shareholder's Equity Financial Ratios Capital Adequacy Ratio * Capital fund to deposit Liabilities 11.66 10.47 11.98 10.34 12.91 9.23 2006 2007 2008 2009 (Million Taka) 15339.3 19000.0 22263.3 27269.1 29262.0 5 0 5 3 0 4540.55 8212.23 13560.9 15659.0 12244.9 2 3 1
27136.3 29417.0 38773.9 46651.5 45308.0 7 9 1 3 0 22325.5 24084.6 31947.9 38368.2 34700.0 8 5 8 3 0 937.51 830.06 1385.81 1708.4 2875.16 (Percentage) 12.02 7.81 13.48 11.37 1726.14 2239.00 2596.58 2982.60 3923.95
Liquid Assets to Total Deposit Loan to total Deposit Earning Assets to Total Deposit After tax return on Average Assets Net Profit to Gross Income Interest Margin Cover Return on Equity (after tax) Industrial Loans including Micro Enterprises to Total Loans Non performing Loans to Total Loans Per Employee Deposit Advance Profit Earnings Analysis Total Income Total Operating Expense Profit before Tax Income Tax
50.56 69.74 114.56 1.23 12.81 214.56 17.75 67.00 4.55 37.15 25.52 1.45
40.42 78.89 112.99 1.94 19.31 211.72 27.82 53.43 3.70 37.00 29.18 1.55
49.10 69.69 109.70 .83 7.97 176.80 11.70 56.73 3.25 44.31 30.87 1.51
47.70 71.07 114.69 1.30 10.87 137.08 19.68 59.32 4.59 52.20 37.10 2.08
24.67 84.81 116.44 1.41 12.57 135.79 18.79 56.93 4.83 44.46 37.70 2.02
(Million Taka)
(Million Taka) 2228.21 2870.32 3549.51 5060.29 5162.30 1599.77 1858.69 2458.41 3526.35 3593.96 628.44 1011.62 1091.10 1533.94 1568.34 342.94 457.48 808.14 984.08 919.49
Net Profit after Tax 285.49 554.14 282.96 549.86 648.85 *Based on risk-weighted assets. The Bank has been calculating the ratio since 1996. Credit Rating BASIC Bank Limited Credit Rating Report (Entity Rating) Year 2009 2008 Long Term AA AA-1 Short Term ST-1 ST-1
Credit Rating Information and Services Limited (CRISL) has upgraded its rating and assigned AA (double A) for long term and ST-1 for short term for the year 2009. Banks rated AA in the long term are adjudged to be of high quality, offer higher safety and have high credit quality. This level of rating indicates a corporate entity with a sound credit profile and without significant problems. Risks are modest and may vary slightly from time to time because of economic conditions. Banks rated ST-1 in the short term are considered as the highest certainty of timely payment. Short-term liquidity including internal fund generation is very strong and access to alternative sources of funds is outstanding. Safety is almost like risk free Government short-term obligations.
SUPREME SEEDS PADMA GROUP P.H.P GROUP T.K. GROUP ISPAHANI GROUP SA GROUP K.D.S GROUP CITY GROUP S. ALAM GROUP MEGHNA GROUP M. M. AGA LTD NAVANA GROUP (NAVANA FURNITURE)
Credit Programs BKB finances the following 7(seven) priority sectors, namely: Crop Fisheries Live Stock Farm and Irrigation Equipment Agro based Industrial Project SME Continuous Loan (Working Capital and Cash Credit) Micro Credit (Small Loan) International Banking Bangladesh Krishi Bank (BKB) has been engaged in Foreign Exchange Business since 1980. It deals in all kinds of export, import, remittance and other sorts of foreign exchange business. BKB has got 200 major correspondent banks globally and maintain sufficient number of Nostro accounts in various foreign currencies with different leading banks in important business centers of the world. BKB has taken a massive foreign exchange programmes to increase business. Import of capital machinery and raw materials for agro-processing industries and export of agricultural products, foreign remittance & all sorts of foreign exchange transactions and services are being provided by BKB.
Products and Services: Letter of Credit (LC) Bill purchase/Discount Export Credit (Pre Shipment & Post Shipment) Remittance (Inward, Outward) Collection, Purchase and Sale of Foreign Currency and Travelers Cheques. Maintenance of Student education file Guarantees in Foreign Currency. Foreign Currency accounts. NFCD (Non-Resident Foreign Currency Deposit) A/C. RFCD (Resident Foreign Currency Deposit) A/C. Forward Contracts. Correspondent Banking Relations. Taka Drawing Arrangement. Dealing Room. S.W.I.F.T. (Society for Worldwide Interbank Financial Telecommunication).
To create employment opportunities through income generating activities. To empower the rural women to establish their own rights. To improve the living standard of the rural people. To alleviate poverty of the poor people. To make easy access to institutional credit facilities and resources. To mobilize rural savings. To make optimum utilization of rural resources. To engage inactive human resources of the rural areas in productive/economic activities. To engage rural people in development process of the country. To eliminate exploitation done by the money lenders.
A Salient feature of BKB`s on going Micro-Credit Programs under poverty alleviation is given below:
Credit program for the landless and Marginal Farmers:
This program has been launched with BKB`s own fund in 1992-93 financial year through its all branches. Landless and marginal farmers get short term credit under this program. Persons/ Peasants having not more than 1.50 acres of cultivable land and annual income of highest Tk 25000/- are eligible for getting credit under this program. After formation of groups and obtaining training the group members get credit without any collateral security. But they have to hypothecate the goods and assets created by the loan. In lieu of collateral they have to take responsibility as guarantor for the recovery of loan within the group. The present Interest rate is 10%. 52 equal weekly installments are fixed and the recovery will be taken place accordingly. About 474181beneficiaries have been provided with Tk. 4698.40 million since its inception (upto 30 September,2008).
program a person can get a loan amounting upto Tk.25000/- for 5 calves against guarantee of a bank official / local elite. The rate of interest is 10%. The loan is to be repaid with interest in one installment within one year. About 89025 beneficiaries have been provided with Tk.1481.30 million since its inception (upto 30 September,2008).
Kishorganj ( a district) sadar upazilla is the command area of this program. The maximum credit limit is Tk. 25000/- per beneficiary. 25 beneficiaries form a group. Rate of interest is 15% (BKB 10% and the manager of village organization 5%).The loan is collateral free and is recovered in weekly installments within one year. About 53723 beneficiaries have been provided with Tk.445.70 million since its inception (upto 30 September, 2008).
one year in weekly installments. This is a collateral free supervised credit. An officer or field worker of the branch is engaged in supervising the credit under the direct control of the branch manager. Livestock officers help the beneficiaries in treatment and rearing the cow. About 612 beneficiaries have been provided with Tk. 8.20 million since its inception (upto 30 September 2008).
Special Credit Program for the Rakhains under the district of Cox`s Bazar:
This program has been launched in 2003 aiming to provide working capital credit for producing handloom and cottage Industrial products and marketing. The loan is disbursed to the Rakhain community living in the district of Cox`s Bazar. Bank officials organizes Rakhains into 5 member groups. This is a collateral free credit programme from banks own fund. Interest rate is 10% . About 469 beneficiaries have been provided with Tk. 15.10 million since its inception (upto 30 September 2008).
Tree Plantation Programs: In 2002 and 2003 BKB has launched 8 Tree Plantation Programs-viz:
All types of tree nursery including herbal Horticulture Development Fruit and forest tree plantation Bamboo production Herbal gardening Coconut gardening Patipata (a plant used in making mat) production Cane production
These programs have been introduced in all branches of the bank to grow more and more trees aiming to eradication of poverty, proper use of fallen land, increase of tree production facilitating herbal treatment and development of environment. Credit under these programs is collateral free upto Tk. 25,000/-. Interest rate is 8%. About 20043 beneficiaries have been provided with Tk 203.50 million since its inception (upto 30 September 2008).
This program has been taken to ensure supply of kids of Black Bengal Goats in order to support the national program of poverty alleviation through goat rearing. Under this program a farm comprising 50 she goats is considered as a small farm and a farm comprising 51-200 she goats is considered as a big farm. The loan is medium term. Credit limit is Tk. 30,000/- for a small farm consisting of 10 she goats ( with a he- goat). This credit limit is calculated for making up goatshed, purchasing of she-goats & he-goat and initial feed cost. This limit is proportionated for a small farm having upto 50 number of she-goats. For a medium farm credit limit is to be calculated deducting the cost of goat shed. This cost is borne by the entrepreneur. About 304 beneficiaries have been provided with Tk 14.60 million since its inception (upto 30 September 2008).
International Banking
Bangladesh Krishi Bank (BKB) has been engaged in Foreign Exchange Business since 1980. It deals in all kinds of export, import, remittance and other sorts of foreign exchange business. BKB has got 200 major correspondent banks globally and maintain sufficient number of Nostro accounts in various foreign currencies with different leading banks in important business centers of the world. BKB has taken a massive foreign exchange programmes to increase business. Import of capital machinery and raw materials for agro-processing industries and export of agricultural products, foreign remittance & all sorts of foreign exchange transactions and services are being provided by BKB.
Letter of Credit (LC) Bill purchase/Discount Export Credit (Pre Shipment & Post Shipment)
Remittance (Inward, Outward) Collection, Purchase and Sale of Foreign Currency and Travelers Cheques. Maintenance of Student education file Guarantees in Foreign Currency. Foreign Currency accounts. NFCD (Non-Resident Foreign Currency Deposit) A/C. RFCD (Resident Foreign Currency Deposit) A/C. Forward Contracts. Correspondent Banking Relations. Taka Drawing Arrangement. Dealing Room. S.W.I.F.T. (Society for Worldwide Interbank Financial Telecommunication).
Crop production, Livestock & Poultry, Farm machinery, Fishery, Agro-industries and agribusiness, Continuous credit, Poverty Alleviation and more. Functions As the largest development partner in the northwest region Rajshahi Krishi Unnayan Bank aims at overall development of farmers and all the sectors and sub-sectors of agriculture in this region. Besides, catering to agricultural credit the bank performs ancillary functions as financing agri-business and agro-based industries and poverty alleviation programs. RAKUB: Progress in Brief (Amount in Million Taka)
Operational 1989-1990 1994-1995 Indicators Authorized Capital Paid up Capital Reserve Deposit Balance Demand Deposit Term Deposit Advances Loan Disbursement Loan Recovery Target Total Asset Total Income Total Expenditure Profit-(Loss) Manpower Officer Other Staff Branches 1500.00 160.00 154.60 994.50 185.35 809.15 9114.23 480.88 1120.00 653.10 3250.00 1500.00 980.00 208.40 2889.25 946.97 1942.28 19992000 20002001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 1500.00 1080.00 208.40 1500.00 1080.00 208.40 1500.00 1500.00 208.40 1500.00 1500.00 208.50 1800.00 1800.00 208.50
9505.07 12574.77 13460.18 14705.91 16424.63 18326.6521427.83.00 24712.90 1924.58 2100.00 1788.26 5350.00 3661.32 4075.20 3500.00 4200.00 3881.39 4238.21 3500.00 4200.00 4790.70 4700.00 4736.70 4700.00 5744.34 5250.00 5429.80 5000.00 6767.30 7000.00 6260.20 6000.00 8697.00 8500.00 6829.30 7000.00 8879.00 8000.00 7470.00 7500.00
9756.10 17496.00 19868.85 21186.80 24014.28 26680.64 27989.12 926.00 564.60 851.20 527.05 714.24 688.12 782.16 690.80 2004.80 1177.70 21.40 3737 1675 2062 301 503.13 23.92 3716 1674 2042 331 560.89 153.35 3686 1653 2033 349 573.38 114.74 3650 1649 2001 349 733.90 48.26 3577 1607 1970 349
30385.05 33915.45 592.42 1736.00 958.80 (366.38) 3524 1570 1954 352 2157.00 (421.00) 3446 1514 1932 357
193.00 (1480.97) 3638 3750 1165 1525 2473 2225 280 298
Background
authority to recovery its dues as arrears of land revenue by certificate I accordance with the provisions of the public Debt Recovery Act, 1913. Nevertheless, they are perpetually suffering from its inability to collect loan One reason is, as with all Government owned financial institutions (possible exception is Bank on Small Industries & Commerce Bank Ltd.), inefficiency & corruption. It is widely alleged that at field level credit is liven in exchange of what is known in the parlance as "arrangement cost'
It goes without saying that when one has to pay money for a loan he begins with the
also seriously undermined the credit cultural in the agricultural sector. As a result of poor credit management both the banks have to depend monthly on refinance from Bangladesh Bank- and, to a lesser extent through recycling of fund collected from file borrowers.
Liquidity constraints of BKB & RAKUB enacted from poor recovery and high overdue
schedule with the Bangladesh Bank. Bangladesh Bank has recently streamlined the refinance processes to introduce some element of discipline with regard to refinance & repayment.
Name :
Legal Status : Date of incorporation : Banking Licence obtained : Vendors Agreement Signed : Formal Inauguration : Registered Office : Authorized Capital : Paid Up Capital : Reserve (As on 01.01.2010) : Total Assets (As on 01.01.2010): Total Human Resource : Number of Zonal Office : Number of Branch Office : Membership : Web Site :
Bangladesh Development Bank, a state-owned commercial Bank (formed through merger of Bangladesh Shilpa Bank & Bangladesh Shilpa Rin Sangstha) Public Limited Company November 16, 2009 November 19, 2009 issued by Bangladesh Bank December 31, 2009 between the Government and Board of Directors of BDBL nominated by the Government. January 03, 2010 BDBL Bhaban, 8, Rajuk Avenue, Dhaka-1000 Tk.10000 million Tk. 4000 million Tk. 2270 million Tk. 16747 million 781 3 17 Dhaka Stock Exchange & Chittagong Stock Exchange Ltd. www.bdbl.com.bd
VISION To emerge as the countrys prime Financial Institution for supporting private sector industrial and other projects of great significance to the countrys economic development. Also be active participant in commercial banking by introducing new lines of product and providing excellent services to the customers.
MISSION
To be competitive with other Banks and Financial Institutions in rendering services ; To contribute to the countrys socio-economic development by identifying new and profitable areas for investment ; To mobilise deposit for productive investment ; To expand branch network in commercially and geographically important places ; To employ quality human resources and enhance their capability through motivation and right type of training at home and abroad. To delegate maximum authority ensuring proper accountability ; To maintain continuous improvement and up-gradation in business policies and procedures ; To adopt and adapt to new technology ; To maximize profit by strong, efficient and prudent financial performance ; and To introduce new product lines according to market needs.
VALUES Customer focus Social Responsibility Provide smart, efficient, transparent and courteous services. Practise corporate social responsibility.
STRATEGIC PRIORITIES
o
Invest in Eco friendly industries that help mitigate environmental degradation by lending more for renewable energy, and effluent treatment plants and other projects that employ energy efficient low-emission technologies including agro-based industries, small power projects, ICT, transport and infrastructure projects.
Select and invest industrial projects where locational advantages like local availability of raw materials, good infrastructural facilities (road communication, transport facilities, etc.) and utilities (power, gas, water, etc.) shall be available.
Limit project loan to Tk. 15 crore maximum and Tk.2 crore minimum (for large projects). Arrange and participate in syndicated loan for projects above Tk. 15 crore. Identify prospective and potential entrepreneurs and investors/ clients and motivate, guide and help them select profitable industrial venture for investment. Regularly publish financial disclosures.
Undertake from time to time SWOT (Strength, Weakness, Opportunity and Threats) analysis for reviewing banks market position.
iii
In case of Project Land acquired by the Govt. acquired project land : (a) (b) (c) (d) (e) (f) (g) (h) Copy of the relevant Requisition Order; Copy of the Acquisition; Allotment letter in favour of the company; Possession Delivery Certificate; Original registered deed of transfer; NOC from Govt. for mortgage the land in favour of BDBL; Evidence of payment of the purchase price; & Site plan.
iv. In case of Project Land located at BSCIC area/Industrial Estate &/or Govt. allotted plot : (a) Original allotment letter; (b) Possession delivery certificate; (c) NOC to create mortgage in fovour of BDBL; (d) Original registered lease deed; (e) Evidence of payment of purchase price; & (f) Site plan; v. In case of rented premises: (a) (b) (c) vi. Lease Agreement by the borrower with land-lord; Tax payment receipt in the name of land-lord; & Approved Building plan by the appropriate authority.
A.
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) B. (1) (2) (3) (4) (5) (6)
For Limited Liability Companies DP note (double) accompanied by DP note Revival letters (Form I & II) and delivery letter; Credit Agreement; Agreement of hypothecation; Memorandum of Deposit of Title deeds; Resolution/Authority to execute documents; Specimen signatures of executants of documents on the Banks standard cards; Letter of Guarantee; Affidavit/Undertaking as per sanction letter; Personal Guarantee of all directors; Share transfer form (Blank)-117 duly signed by the directors/Share holders; 100% Share Certificate; Auditors Certificate in favour of paid-up capital & Necessary papers as per sanction letters.
For Proprietorship :
Single D.P Note; D.P Note Delivery Letter; Revival Letter Form-III; Specimen Signature Card; Personal Guarantee; Acceptance letter;
(7) Registered Mortgage & registered Irrevocable Power of Attorney along with all necessary documents/papers i.e. Bia Deed, Bia-Khatian, CS, SA, RS parcha, Mutation, DCR, up to date Rent receipt, Non-Encumbrance certificate from District Registrar; (8) Affidavit for Declaration furnished by the borrowers/Land owners that the Mortgage Properties are free from encumbrance-from first class Magistrate; (9) TIN Certificate & Trade License; Photograph of sponsors; Undertaking as per Sanction letter; Agreement of hypothecation; & Documentation fee, necessary stamps as per Banks rules.
Single D.P Note; D.P Note Delivery Letter; Revival Letter Form-III; Specimen Signature Card; Personal Guarantee; Acceptance letter; (7) Registered Mortgage & registered Irrevocable Power of Attorney along with all necessary documents/papers i.e. Bia Deed, Bia-Khatian, CS, SA, RS parcha, Mutation, DCR, up to date Rent receipt, Non-Encumbrance certificate from District Registrar; (8) Affidavit for Declaration furnished by the borrowers/Land owners that the Mortgage Properties are free from encumbrance-from first class Magistrate; TIN Certificate & Trade License; Photograph of sponsors; Undertaking as per Sanction letter; Agreement of hypothecation; & Documentation fee, necessary stamps as per Banks rules. Credit Agreement; Partnership Agreement; Memorandum of Association & Articles of Association; Resolution; & Agreement of Hypothecation along with list of machinery. vii. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) For Additional Loan & BMR& E Loan Letter of acceptance; Board resolution of the company for documentation; Memorandum of Association & Article of Association; Auditors Certificate in respect of paid up Capital; 100% Share Certificate; Memorandum of deposit of title deeds/Agreement of Hypothecation with Charge filling form- form-17; Deed of continuation and Acknowledgement; Photographs of each director (two copy); Particulars of Directors (from RJSC); Return of allotment of Shares (from RJSC); DP Note; DP. Note delivery letter; Revival letter form I & II;
(n) (o) (p) (q) (r) (a) (b) (c) (d) (e) (f) (g) (h) (i)
Credit Agreement; Specimen signature of executants of document on the Banks standard Cards; Personal Guarantee of all directors; Share transfer form of Directors/Share-holders form-117 (Blank); & Affidavit/undertaking as per Sanction letter.
viii .In Case of Management Change : Letter of acceptance; Board resolution of the company for documentation; Memorandum of Association & Article of Association; Auditors Certificate in respect of paid up Capital; 100% Share Certificate; Share transfer form - form-17 (Blank); Deed of continuation and Acknowledgement; Photographs of each director (two copy); Particulars of Directors (from Registrar of Joint Stock Companies, RJSC); (j) Return of allotment of Shares (from RJSC); (k) DP Note; (l) DP. Note delivery letter; (m)Revival letter form I & II; (n) Credit Agreement; (o) Specimen signature of executants of document on the Banks standard Cards; (p) Personal Guarantee of all directors; (q) Share transfer form of Directors/Share-holders form-117 (Blank); (r) Affidavit/undertaking as per Sanction letter; (s) Summery of share capital; (t) Certified copy of share transfer of new inducted director with share transfer formform-117 (duly stamped); (u) Affidavit/undertaking as per sanction letter; & (v) Company resolution for outgoing director and appointment of new director. viii. in case of change in Board of Directors of the Company/Ownership:
(a) Letter of acceptance; (b) Board resolution of the company for documentation; (c) Memorandum of Association & Article of Association; (d) Auditors Certificate in respect of paid up Capital; (e) Share Certificate; (f) Deed of continuation and Acknowledgement; (g) Photographs of each director (two copy); (h) Particulars of Directors (from RJSC); (i) Return of allotment of Shares (from RJSC); (j) DP Note; (k) DP Note delivery letter; (l) Revival letter form I & II; (m)Credit Agreement; (n) Specimen Signature of executants of document on the Banks standard cards; (o) Personal Guarantee of all directors; (p) Share transfer form of Directors/Share-holders form-117 (Blank); (q) Affidavit/undertaking as per Sanction letter;
(r) Certified copy of Summery of share capital from RJSC; (s) Certified copy of share transfer of newly inducted director with share transfer formform-117 (duly stamped); (t) Affidavit/undertaking as per sanction letter; & (u) Companys resolution for out going director and appointment of new director. ix. In case of change of Project Land : (a) (b) (c) (d) x. Acceptance letter of sanction letter with Companys Board resolution; Undertaking as per sanction letter; Charge filling fee- form-18; & All papers/deeds as per para 1(h-m).
In case of Rephasement/Rescheduling of Loan Account : (1) (2) Acceptance letter of the company/partnership/proprietor with Board Resolution; & Documentation fee TK. 5000/= with VAT.
2. Besides papers and documents to be submitted are subject to verification, examination & vetting by the banks lawer so as to ascertain whether they are in order to protect banks interest.
N.B. The above formalities are subject to amendment, modification and/or change at the discretion of the Bank Management. Further the documents/papers required for documentation purpose as delineated above may vary to some extent depending on the merit of the cases.
BANGLADESH DEVELOPMENT BANK LTD. BALANCE SHEET AS ON JUNE 30, 2010 Particulars
PROPERTY AND ASSETS Provisional 30-06-2010 Notes (Taka)
Cash in hand Cash with Bangladesh Bank & Sonali Bank (Including foreign currencies) Balance with other Banks & Financial Institution Money at call & Short notice Investments Loans & Advances Premises and Fixed Assets Other Assets Total Property & Assets LIABILITIES AND CAPITAL Liabilites Borrowings from other Banks & Agents Deposit & other Accounts Current Deposit Bills Payable Savings Bank Deposit Fixed Deposits Other Deposits Deposit at Call Other Liabilites Total Liabilites Capital/Shareholders'equity Paid-up Capital Quasi equity Statutory Reserve Reserve Fund & Other Reserves Profit & Loss Account Total Shareholders'equity Total Liabilites & Shareholders'equity Off Balance Sheet Item
01 02 03 04 05 06 07 08
09 10 11
12
2,841,728,710.02 1,482,036,348.46 140,085,859.98 11,522,724.64 372,758,470.40 714,707,328.01 242,961,965.43 5,998,921,984.42 10,322,687,042.90 4,000,000,000.00 134,744,560.47 921,909,335.71 1,465,689,305.41 33,355,333.98 6,555,698,535.57 16,878,385,578.47 0.00 723,603,581.00
13 14 15 16
31
SENIOR OFFICER
PRINCIPAL OFFICER
BANGLADESH DEVELOPMENT BANK LTD. PROFIT AND LOSS ACCOUNT FOR THE HALF YEA R
Ended on June 30, 2010 30 June, 2010 (Taka) 378,895,663.37 (51,931,813.89) 326,963,849.48 109,988,898.75 12,990,347.37 47,872,505.02 170,851,751.14 497,815,600.62 206,194,018.08 8,172,577.98 613,335.50 861,424.38 11,000.00 2,388,362.00 1,052,320.00 20,491,826.87 36,939,058.79 276,723,923.60 221,091,677.02 80,000,000.00 0.00 80,000,000.00 141,091,677.02 61,913,892.49 203,005,569.51 203,005,569.51 86,000,000.00 40,600,000.00 0.00 0.00 76,405,569.51 0.00 Provisional % of Income/Expenditure (Taka) 61.95 (12.71) 53.46 17.98 2.12 7.83 27.93 81.39 50.46 2.00 0.15 0.21 0.00 0.58 0.26 5.01 9.04 67.72 36.15 0.00 0.00 0.00 36.15 10.12 33.19 33.19 0.00 0.00 0.00 0.00 0.00 0.00 33.19
Particulars Interest Income Interest Paid on Deposits, Borrowings etc Net Interest Income Income From Investments Commission, Exchange & Brokerage Other operating income Total Other Income Total Operating Income Salaries and Allowances Rent, Taxes, Insurance, Lighting etc. Legal Expense/Law Charges Postage,Telegram , Telephone & Stamps Auditors' Fees Stationery,Printing & Advertisement etc. Director's Fees Depreciation & Repairs to Fixed Assets Other Expenditure Total Operating Expenditure Profit/(Loss) Before Provision Provision for Loans & Advances Other Provison Total Provision Total Profit/(Loss) after Provision Prior years' adjustments Total Net Profit/(Loss) Net Profit/(Loss) after adjustments but before provision for taxation Provision for Income Tax Appropriations: Statiutory Reserve Dividend to Government Retained Earnings transfered to BS Gerenal Reserve Profit/(Loss) Transfer to Balance Sheet
SENIOR OFFICER
Notes
17 21 18 19 20
22 23 24 25 26 27 28 29 30
PRINCIPAL OFFICER
Conclusion
Except one specialized banks, all are commonly used to utilize their loanable fund into trading business and consequently they have been suffering the pressure of huge non-performing loan. But the picture of BASIC Bank is completely different from all other banks. BASIC Bank Ltd. has commenced its functioning with a view to invest at least 50% of its loanable fund in small scale industries. Although it failed to achieve this target initially, but the recent years show that it has acheived the target gradually. The specialized banks in Bangladesh are suffering from sluggish disbursement of loans, lack Of supervision over financing projects, poor rate of recovery of loans, inefficiency, Poor governance, lack of proper accountability & corruptions. The banks, therefore should remove the problems and banks are required frequent infusion of funds by the government, Bangladesh Bank, Donor & other Sources.
Bibliography
1. 2. 3. 4. 5.
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