1

INTERNSHIP REPORT

ON

LOANS & ADVANCE MANAGEMENT OF NATIONAL BANK

MURADPUR BRANCH, CHITTAGONG

Submitted To Submitted By
Dr. Jahangir Alam Md.Sayed Karim

Professor Id: 14303018

Department of Finance Department of Finance

University of Chittagong University of Chittagong

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Letter of Transmittal
September , 2019

Jahangir Alam

Professor.

Department of Finance

Faculty of Business Administration

University of Chittagong.

Subject: Submission of Internship report on loans and advance management of National bank ltd.

Dear Sir,

This is indeed a great pleasure to have the opportunity to submit my internship report on the experience
gained during my one and half month internship period at National Bank Ltd. I have prepared this report
in accordance with the instructions given by you. I expect this report to be informative.

Working in National Bank Ltd was an inspiring and learning experience for me. I hope this knowledge will
facilitate me a lot in my future career endeavors. In spite of the various difficulties faced in preparing the
report, I have given utmost care to be as thorough as possible. With my limited knowledge, I have tried
my best to make the report worthwhile.

I sincerely hope that this report meets your approval and demonstrate my ability to present internship
reports. I would be glad to explain you with any clarification if required.

Sincerely Yours

Md. Sayed Karim

ID: 14303018
Session: 2013-2014
Department of finance
Faculty of Business Administration
University of Chittagong.
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Certificate of Approval

This is to certify that Md. Sayed Karim, ID. 14303018 has prepared his internship report titled “Loans and
Advance management of National Bank Limited (Muradpur branch), Chittagong” under my supervision
and guidance. I do hereby approve the style and contents of this internship report. This is for the partial
fulfillment of his four years BBA program, major in Finance from University of Chittagong.

I wish his every success in life.

Dr. Jahangir Alam

Professor

Department of finance
Faculty of Business Administration
University of Chittagong
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ACKNOWLEDGEMENT

At the beginning I am very much grateful to the Almighty Allah for giving me the strength to complete the
report properly. Without blessings of my Almighty, it would never be possible for me to complete both
internship period and this internship report successfully.

A special thanks and gratitude goes to my Internship’s supervisor PROFESSOR DR. JAHANGIR ALAM.
Without his valuable supervision and direction, it would not have been possible to complete this report.

Then I would like to express my heartfelt gratitude to the National Bank Limited, Muradpur branch for
giving me a chance to complete my internship program at their branch, for allowing me to gather
information and helping me every possible way in preparing the internship report. My endless thanks to
EMRAN MAHMOOD, SAVP & Head of Branch. I worked with MS. MIFTAHUL JANNAT, SPO, (loan and
advance department) and MR. MURIDUL ALAM, FEO. BIBI HAZERA, FEO. SHARMIN SULTANA, JO.
(General banking department) Muradpur Branch. Besides them, all the colleagues of the branch had been
very helpful and they made my internship period more enjoyable and eventful one. It really makes student
capable of doing official tasks before entering the corporate world.
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EXECUTIVE SUMMARY

An internship program is very crucial & essential for acquiring experience through learning and extending
the scope of Knowledge. I have done my internship program in National Bank Limited.

This internship report is aimed at providing a comprehensive picture to the areas of loans and advances
management of National Bank Limited. The report has been divided into different parts. These are:
Introduction, Overview of National Bank Limited (NBL), Internship role and experience, Loans & Advances,
Analysis, Findings, Recommendation, and References & Bibliography. National Bank Limited is one of the
largest commercial Bank of Bangladesh. The main objective of the Bank is to provide all of banking services
at the doorsteps of the people. The Bank also participates in various social and development programs
and takes part in implementation of various policies and promises made by the Government and
Bangladesh Bank.

National Bank Limited plays a pioneering role in handling loans and advances transactions. This Bank tries
to provide higher quality services in case of sanctioning the loans and advances. The information of the
report has collected from secondary sources like books, published reports, annual report 2017 and
website of the National Bank Limited. It includes source of existing/published data, such as Operational
manual, official website, Banking journals, Research papers and financial statement. After analyzing data,
it was found that customers have chosen National Bank Limited for its goodwill as private commercial
bank. But the loan sanctioning procedure is time consuming. That’s why bank is losing its valuable
customers in loan and advance department. Therefore, National Bank Limited should give more effort to
make well establish market in the context of Bangladesh and be more flexible to disburse loan & advance.

I also mention the findings of my report and describe the recommendation to overcome the limitation.

I have taken all the reasonable care to ensure the accuracy and quality to make the report standard. And
I believe that it has included all the necessary information to be relevant.
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TABLE OF CONTENT
CHAPTERS PARTICULARS PAGE NO

Letter of Transmittal

Approval Certificate

Acknowledgement

Executive Summary

Chapter -1 INTRODUCTION

1.1 Introduction 8

1.2 Background of the study 9

1.3 Scope of the Study 9

1.4 Objectives of the study 9

1.5 Methodology of the study 9

1.6 Limitation of the study 10

1.7 Background of NBL 11

1.8 Management hierarchy of Muradpur branch 12

of NBL
Chapter-2 INTERNSHIP ROLE AND EXPERIENCE

2.1 Accounts Department 13

2.2 Customer service department 13

2.3 Cash Department 16

2.4 Clearing department 17

2.5 Loan and advance Department 18

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2.6 Critical observations 19

2.7 Rational of the Study 20

Chapter-3 LOANS AND ADVANCE MANAGEMENT

3.1 Loans & Advances (Credit) 21

3.2 Loans & Advance Policy guideline 21

3.3 Loans & Advance risk assessment 22

3.4 Credit risk grading 24

3.5 Loan & advance approval process 26

3.6 Basis of loans and advances 29

3.7 Risk management of loans & advances 30

3.8 loan & advance recovery 32

3.9.1 ANALYSIS OF LOAN AND ADVANCE 33

3.9.2. Findings 36

Chapter-4 SOWT ANALYSIS

4.1 Strengths 4.2 weakness’ 38

4.3 Opportunities 4.4 Threats
Chapter-5 Recommendations and conclusion

5.1 Recommendations 40

5.2 Conclusion, 5.3 Reference & Bibliography 41

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CHAPTER – ONE

1.1 Introduction

Banking sector of the world contributed in the present global economy. To establish a strong banking
sector, it is required to have good study in banking operations. Today’s Economic policy is concerned to
obtain the optimum economic condition in a country’s economy. Banking sector and banking activity are
playing a vital and important role to achieve that optimum goal of the economy. The successful running
of banking business depends upon effective banks. As a commercial bank NBL has a huge responsibility to
ensure efficient and effective banking operation all over the Bangladesh in a sound manner with the other
banks as a competitor.

Banking sector is indispensable in a modern age and modern society. It always plays a vital role to the
economic development of the country. In modern age of science and technology the banking sector all
over the world has been undergoing a lot of change due to deregulation, technological invention and
globalization. But Bangladesh banking sector is lagging to keep pace with the other countries it adapts the
changes. Basically banks take deposit from the customers against some interest payment and lend the
money to the borrowers with a different interest rate and time period. To ensure the safety of the
depositor’s fund there are various types of credit facility. Also bank must hold adequate fund to meet the
daily needs of the clients.

Loan and advance management a branch of accountancy, and is a function that falls under the label of
“Credit and Collection’ or ‘Accounts Receivable’ as a department in many companies and institutions.
They will usually deal with the credit vetting of customers, the resolution of any invoice queries or
disputes, allocations of payments or cash application, internal fund movements, reconciliations and also
maintaining positive working relationships with customer during the debt collection or credit review and
approval process.

The Importance of Credit Management. One of the most, if not the most, important activities in your
company is credit management. Loan and advance management the process to ensure that customers
will pay for the products delivered or the services rendered.
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1.2 Background of the Study

The internship program is mandatory requirement for the students who are graduating from the Faculty
of Business Administration under the program Bachelor of Business Administration of Chittagong
University.
Internship program is designed to put them in a challenging environment of the relevant field, where the
students get sample opportunity to apply their theoretical knowledge into practical applications. During the
internship training, students have the opportunity to adopt themselves into the particular environment of
the organization. It provides a unique opportunity to see the reality of business during student life, which
enables them to building confidence and working knowledge in advance of the start of their career.

1.3 Scope of the Study

National bank is one of the top private commercial banks in Bangladesh containing 205 branches over the
country. The scope of the study is limited to the Muradpur branch only. The report includes general banking,
credit operation, foreign exchange related operation, and others ancillary services rendered and the
performance of the branch as well as the bank.

1.4 Objectives of the Study

Broad Objective
 The main objective is to gain practical knowledge about commercial banking practices.

Secondary/Specific Objectives:
 To know general banking practices (daily activities and services) offered by National Bank
Limited.
 To know loans and advances, loan sanctioning process, loan operations management
and the problems related to loans and advances operations of National Bank Limited.
 To make some recommendations to solve the problems / remedial measures of the
development of National Bank Ltd.

1.5 Methodology of the Study

Information is a critical element of any research, on which the outcome depends. To complete this report,
the information was collected from primary and secondary data source.

The study inputs were collected from two sources:

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(a) Primary Sources:

1. Most of the information was acquired by discussing with the officers working in the Muradpur
Branch, National bank limited.
2. For information relating to customer relationship level, interviews and discussion sessions were
conducted with related departments of the bank to gather basic information related to the
products and a market overview from National Bank’s perspective.
3. Observation and work experience with different divisional in-charges and suggestions of many
executives of the bank.
(b) Secondary Sources:
1. Annual Reports 2017 and financial statement 2018 of National Bank Memos & circulars
various books, articles, compilations etc. Of the branch.
2. The organization booklets of charges and fees, application forms and suggestions from the
customer’s feedback from customer relation unit.
3. Different circulars sent by Head office of National Bank.
4. Daily diary (containing my activities of practical orientation in) maintained by me,
5. Various publications on bank, Newspapers and magazines regarding market and customer
views on NBL, seminar papers and so on.
6. Bangladesh Bank and National Bank websites.

1.6 Limitations of the Study

The study is conducted with an objective to make a thorough study of loans & advances management that
have been availed many facilities and faced some obstacles during my study. These obstacles may be
termed as limitation of the study. These limitations are as follows:

 Learning all the banking function within one month was really difficult (limitation of time)
 The information acquired for the study was not adequate.
 Most of the time NBL’s employee was very busy. So they can’t provide enough time to get
information for preparing this report.
 Confidential documents or objects to the firm were not available to access.
 As the internship is the first practical experience, it is not possible to know everything about the
bank.
 National Bank Limited did not give me any kind of monetary support for this internship program.
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1.7 Background of NBL

National Bank Limited is known for its successful past, superb present, imminent future and under
handling ventures and exercises. National Bank was born as the first hundred percent Bangladeshi owned
Bank in the private sector. From the very inception, it was the firm determination of National Bank limited
playing a vital role in the national economy. To keep pace with time and harmony with national and
international economic activities and for rendering all modern services.
The emergence of National Bank Limited in the private sector was an important event in the Banking
area of Bangladesh. When the nation was in the grip of severe recession, the government took the
farsighted decision to allow the private sector to revive the economy of the country. Several dynamic
entrepreneurs came forward for establishing a bank with a motto to revitalize the economy of the
country.
The than president of the people Republic of Bangladesh justice Ahsanuddin Chowdhury
inaugurated the bank formally on March 28, 1983 , but the first branch at 48 Dilkusha commercial area ,
Dhaka started commercial operation on March 23, 1983. The 2nd branch was opened on 11th May 1983 at
khatungonj, Chittagong.
At present, NBL has been carrying on business through its 205 branches & Agri Branches spread
all over the country. It has drawing arrangements with 415 correspondents in 75 countries of the world,
as well as with 37 overseas Exchange Companies located in 13 countries. NBL was the first domestic bank
to establish agency arrangements with the world famous Western Union in order to facilitate quick and
safe remittance of the valuable foreign exchanges earned by the expatriate Bangladeshi nationals.
NBL was also the first among domestic banks to introduce international Master Card in
Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power Card. The Bank has in its
use the latest information technology services of SWIFT and REUTERS. NBL has been continuing its small
credit program for disbursement of collateral free agricultural loans among the poor farmers of Barindra
area in Rajshahi district for improving their livelihood. NBL focused on all key areas covering capital
adequacy, maintaining good asset quality, sound management, satisfactory earnings, and liquidity.
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1.8 Organization Hierarchy of Muradpur Branch

Any organization is operated by maintaining the principle of hierarchy to maintain the operation of the
organization. This will ensure the easy execution of the operation by the employees of the organization.
The Muradpur Branch of National bank Limited has the following hierarchy

Assistant Vice
President Trainee Assistant
Assistant officer
officer
(Branch Manager)

Principal officer
(Operational First executive Suffort Staffs(peons)
Manager) officer

Senior executive Executive officer

officer

Figure # Organization structure of Muradpur branch

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CHAPTER-TWO

I have completed my internship program in National Bank Limited, Muradpur branch. I got the
opportunity to work in different department of the branch. I found myself very lucky to associate with
one of the renowned banks in Bangladesh. Throughout my internship program, I was assigned under
EMRAN MAHMOOD, SAVP & Head of Branch. I worked with MS. MIFTAHUL JANNAT, SPO, (loan and
advance department) and MR. MURIDUL ALAM, FEO, (General banking department) Muradpur Branch.
It was a very pleasant and educative experience for me. I learned a lot of new things about corporate
life. Most importantly, I have learned how to perform banking activities on time responsively. This
practical experience is crucial for the preparation for oneself before entering into corporate world.

2.1 Accounts Department:

As an intern, at first I was assigned in the accounts department. There, I was given some responsibilities
which are given below:

Account opening: I was given the task to open the accounts of different customers. Firstly, I checked
that whether the customer brought the necessary documents for opening the account. There are some
necessary documents which are mandatory for opening an account in a bank. They are: National ID card,
2 copy passport size photo of the account opener, 1 copy of passport size photo of the nominee of that
account. The customer also need an introducer who has already an account in the bank. Then the
introducer and customer will sign the 2 copies of photo of the customer. Then customer and the nominee
need to sign the photo of the nominee. In case of opening the accounts which are related to business like
CD (Current Deposit) account, the customer need to bring “Trade License”, “TIN (Tax Identification
Number) Certificate. If all the documents prove to be correct, then I completed the forms and passed it
to my supervisor.

Correction of account opening form:

Sometime customers make error in filling account opening form. Correction of uncompleted form which
was detected by the internal audits. Like there were some forms which were filling up without putting
account number, title number, nature of the organization the clients work in. Some forms were kept
without proper address, TIN papers, National ID card number. My job was to complete those form.
Filling up Know Your Customer (KYC) form for personal and corporate risk rating. My job was to find out
risk level and risk rating of personal and corporate by considering TP form for the purpose of measuring
of overall risk assessment

2.2 Customer service department:

1. Providing information about products:

I provided product related information to the customers.

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National bank Products & Services

Deposits Product

 Saving Deposit
 Current Deposit
 Term Deposit
 Foreign Currency Deposit
 Monthly Saving Scheme
 Monthly Income Scheme
 Double Benefit Scheme
 Millionaire Income Scheme
 Schooling banking
 Krisok banking
 Shadinota Scheme

NBL has different deposit schemes all around its branches in Bangladesh. Except that two common
types of deposit items Saving Deposit and Current Deposit, they have 6 distinctive deposit items.

Brief Explanation on Deposit

1. Term Deposit
Under this Term deposit there are two deposit schemes available.
 Special Notice Deposit and Fixed Deposit
Special Notice Deposit
It is a special account based on the savings of any account holder. They offer different interest
toward their customers, minimum maintenance charge on this deposit scheme is half yearly BDT
500.

Fixed Deposit
The bank need not maintain cash reserves against these deposits and therefore, the bank offers higher of
interest on such deposits. In the case of FDR, it is clearly mention that when this amount will be
withdrawed account holder receive principle amount plus interest. FDR slip contains name of account
holder, deposited amount, and interest rate, and time of maturity. Duration of FRD is maximum 1year and
auto-renewal also maximum interest rate 12.50%.
Monthly Income Scheme (MIS)
MIS A/C the period of this deposit will be 3 years, deposit amount Tk. 1,00,000 and also multiple up to
any amount that will be acceptable under the scheme. The depositor must maintain a savings A/C with
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any branch of NBL. Interest rate of this deposit scheme about 10.00% without TIN certificate and with
TIN (Tax Identification Certificate) 15.00%

Double Benefit Scheme (DBS)

DBS A/C the period of this deposit will be 6 years or it could be extended, but this account could be open
from Tk. 50,000 up to any acceptable amount, this account opened either singly or jointly but it has
some other terms and conditions.

Millionaire Deposit Scheme (MDS)

MDS A/C the period of this deposit divided into 3 years, duration 5 years, 7years and 10 years. According
to the deposit duration there are 3types of installments Tk.12, 450 (5years), Tk.7, 870 (7years) and Tk.4,
550 (10years) but the maturity or terminal value will be same as others Tk.10, 00,000

Credit Products
 Overdraft
 Lease Financing
 House Building
 SME & Women Entrepreneurs Financing
 Retail & Consumer Credit Scheme
 Trade Finance
 Micro credit Agri Financing
 Financing RMG

1. Security Overdraft: Short form Security Overdraft is SOD, there are two types of SOD one is
General (it against V.O, capital or working capital) and another one is Export (payment of
acceptance bills at receipt of export proceeds). Others conditions are applicable to all the
account holders, like FDR A/C holders get 11.00%to12.00% interest and NMS A/C holders get
15.00% interest in SOD.

2. Cash Credit: this type of loan allocated upon their customer needs (such loans are given on
shop stock, home purpose etc.) maximum 10 lac and interest also higher about 18.00%.

3. Any Purpose Loan: Interest rate 18.00% and limitation on such loan about 2lac (it is actually
based on the branch manager designation and fixed by the head office) in NBL head office it’s
up to 5lac.

4. Consumer Durable Loan: Maximum 1 lac limitation and its given to the customers who wants
to buy Tele Vision, refrigerator etc.
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5. Education Loan: Maximum 5lac and it is only available for FDR A/C holders.

6. Professional Loan: All different professional account holders can have such loan not
7. SME Loan: NBL Small Business Loan, Festival Small Business Loan, NBL Weavers Loan, NBL
Nari Jagoron Loan
8. Retail Loan: Any Purpose Loan, Consumer Durable Loan, Education Loan
Cards Products

 Credit Card
 Debit Card
 Visa Card
 Master card

2. Calling customers:

I did phone calls for collecting necessary photographs photocopy of National ID cards or any other
requires. Sometimes I made phone calls to the customers who did not collect their cheque books after
passing 2-3 months. When they come in bank to receive cheque book, I distribute the desired cheque
books by asking them their name, account number and then verify them. I used to do cheque book entries
on register books and then keep the cheque books at safe place serially.

2.3 Cash Department:

In cash department, I was given the responsibility to check whether the customer has filled up the check
accordingly. Then I matched the customer’s sign given in the cheque with the sign that is stored in the
bank’s computer. I also checked whether it is “Order cheque” or “Cross Cheque”. If it was an order cheque,
then the bank will give the money to the specific person. The person’s name will be in the cheque. If it
was a cross cheque, then the bank will give the money to none and will transfer the money to a specific
account. No one has the power to cash that cheque. After that, if all the requirements are fulfilled, then I
passed the cheques to my supervisor. Then, the officers are assigned in the cash department would give
the money to the customers.
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2.4 Clearing department:

Clearing is a management by which a bank can collect customers fund from one bank to another through
clearing house. Cheque, Pay Order (P.O), Demand Draft (D.D.) Collection of amount of other banks on
behalf of its customer are a basic function of a Clearing Department.
There are two kinds of Clearing

Outward clearing:
The A/c holders of our Branch deposit other Bank’s instrument in their A/c for collection. We collect it
through Outward Clearing and credit the proceeds in their A/c.

Inward Clearing:

The A/c Holder of our Branch gives our Branch’s instrument to their party who is not our A/c holder as
payment. The party deposits the following instruments in their A/c for Collection through clearing house.
We receive those instruments from Clearing house and make payment on behalf of our A/c holder.

There are two type of clearing house:

1. Normal clearing house (low value) 2. Same day clearing house (high value).

• Precaution at the time of cheque receiving for Clearing, Collection of LBC, OBC & Transfer:

1. Name of the account holder same in the cheque & deposit slip.

2. Date in cheque may be on or before (but not more than six months back) clearing house date.

3. Cheque must be signed.

4. Signature for confirmation of date, amount in words / in figure Cutting & Mutilation of cheque.

5. Cheque should be crossed (not for bearer cheque).

6. Account number in the deposit slip must be clear.

7. Depositor’s signature in the deposit slip.

The tasks I performed in this department are given below:

1.Checking cheque holder name, name of bank, name of branch, amount of money in figure and amount
weather similar or not.

2. Scanning cheque for authorization.

3. Cheque setting according to date and storing in file.

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2.5 Loan and advance Department:

Loan plays an important role in earning profit for a bank. If a person wants to take loan from a bank, he
needs to submit some necessary documents which are: trade license, TIN certificate, bank statement,
bank solvency certificate, property valuation certificate, stock report, national ID card etc. I was given the
responsibility to check the necessary documents & to observe the process of sanctioning loans and
advance.
My duties were in this department:
 Filling form of loan application.
 Writing various document enclosed loan application.

 Directly interaction with borrower and loan officers to know their demand of loan, their
relationship with bank, their loan payment management, loan approving process and
recovery process.

If all the documents are ok, then I passed it to my supervisor. Almost 25 days i interned in loan and advance
department.

Others activity: Sometime I was given the record of the daily transactions such as deposit, cash in hand,
Bills payables (Pay-orders, Demand Draft), Remittances etcetera in a register book to observe and
submit them to my supervisor at the ending time of office hours. In the Muradpur branch of National
Bank, all the transaction of transfers is recorded in computer and then they are checked whether the
Debit and Credit side are same or not. I was given the task to do that. I used to record the transfer
transactions and checked whether the both side are same or not.

I recorded salaries of all officers and employees to the register of salary in the month of June, 2019, for
the first time.
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2.6 Critical observations:

During the period of my internship program, I collected and studied various information on various
aspect of NBL. On the basis of these information my critical observations of Muradpur branch of NBL are
given below:

(i) Customers are forbidden from all types of retail banking products and services which are
available and easily accessible in all the major branches of NBL.
(ii) Few SME, RETAIL banking in this branch and no foreign exchange department and LC
facilities.
(iii) Limited human recourses that create workload upon employees and making the
customers as painful heavy pylon.
(iv) Offered different schemes are not properly designed that would attract the new
customers; especially there is no such scheme that encourage to the student or young
people to open any bank account.
(v) Mostly they are detached from the marketing and promotional activity which is their
biggest disadvantage that could be harder to sustain their business in highly competitive
market.
(vi) From the observation of various deposit account I find that the amount as well as the
number of accounts is increasing day by day.

(vii) Salary is not better than others banks and structure of salary improperly constructed.
(viii) We can see the performance of monthly savings scheme is very good than other deposit
accounts. Other accounts like savings & short term deposit accounts are also appreciated.
(ix) The loan provided by the Muradpur branch is significantly increasing from last six months
but the rate of increase is not sufficient. The authority should give more concern to
increase the bank loan.
(x) Customers think that the bank should provide online services, establish more ATM
booths, reduce the processing time of application regarding various types of accounts,
increase the money limit on credit card, reduce service charge etc.
(xi) Customers suggest that the bank should give more emphasize on these matters like
provide education loan, micro credit loans, reduce the amount of securities against loans,
the rate of interest should decrease etc.
(xii) The document study on deposit & loan account also shows that the customers of
Muradpur branch of NBL is satisfied with the bank services but they want some
improvement in the sectors of retail banking. If NBL can improve its service level than the
bank can earn more profit & more customers’ satisfaction as new innovative products
(already tested in other markets) can be brought to Bangladesh.
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2.7 Rational of the study

Sound loan and advance management is the pre-condition for a commercial bank to achieve its goals and
profitability. A banks performance depends on its efficient loan and advance management. Banks allowed
loan and advances to borrower at an interest rate which is the most common and major income source
for the banks. So it proper loan and advance management is a critical issues of a bank. A banks loan and
advance management consist a number of efficient staff, a sound guideline of managing credit,
documentation, borrower & others stakeholders. Banks generally provide short term to medium term
loan to the borrower. And most of the loan amount starts from 10 lac to cores. Maximum loans are
business loan, SME loan and there also personal loan & home loan for the customers provided by
Muradpur branch of NBL. I choose the loan and advance management of Muradpur branch of NBL as my
critical study in the following chapter to give the answer of following question:

1. What are the credits products of Muradpur branch of NBL offer to customers?
2. Which products are the most popular among all?
3. What are the borrower types and their relationship with bank?
4. What are demand of loans and their loan payment management?
5. What are the procedure of loan approving process and risk assessment and risk grading?
6. Which are the problems faces in times of disbursement & recovery of credit?
7. How they manage and monitor the total procedure?
8. What is the current situation of non-performing loan?
9. What is the current investment and analysis of types of loan of the Muradpur branch of NBL?
10. What is the current interest income of Muradpur branch of NBL?
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CHAPTER – THREE

3.1 Loans & Advances (credit)

In banking terminology, credit refers to the loans and advances made by the bank to its customers or
borrowers. Bank credit is a credit by which a person who has given the required security to a bank has
liberty to draw to a certain extent agreed upon. It is an arrangement for deferred payment of a loan or
purchase. Credit means a provision of, or commitment to provide, funds or substitutes for funds, to a
borrower, including off-balance sheet transactions, customers’ lines of credit, overdrafts, bills purchased
and discounted, and finance leases.

3.2 Loans & Advance policy guideline

Following are the loans & advances policy guidelines of national bank:

1. Credit principles
2. Loan & advance disbursement policy
3. Credit Portfolio mix
4. Products and services of NBL

Credit principles

Some specific credit principles of NBL:

 Credit shall focus on the development and advancement of customer relationship.

 All credit extension must comply with the requirements of Banking Company’s Act, Bangladesh
Bank’s instructions, other rules and regulation as amended from time to time.
 Loans and advance shall normally be financed from customer’s deposit and not out of temporary
funds or borrowing from other banks.
 It should be to those customers who can make the best use of them.
 Evaluate borrower's nature for reliability and keenness to pay
 Evaluate borrower's loan settlement capability.
 Develop action plans for the likelihood of non-payment.
 Extension of credit in satisfactorily controllable risk areas.
 Be proactive in recognizing, administering and conveying credit risk.
 Try to achieve an acceptable equilibrium between risk and reward.
 Construct and sustain a diversified credit portfolio
Principles of loans & advance disbursement

NBL follows the following seven principles in case of loan & advance disbursement activity:

1. Safety
2. Security.
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3. Liquidity.
4. Adequate yield.
5. Diversity.
6. Productive purpose.
7. National interest.

3.3 Loans & Advance Risk Assessment

Before extension of loans, a comprehensive credit risk appraisal is done and annual reviews are made.
A credit memorandum (CM) is prepared by the Relationship Manager (RM) which includes the findings
of such assessment. The RM used to be the owner of the customer relationship and he / she is held
responsible for complying with all the policies and guidelines of Bangladesh bank, bank laws, NBL
policies and guidelines etc.
Two ways to assess credit risk:
(i) Call report
(ii) Credit Memorandum

Call report
At the time inception of a relationship, the relationship manager tries to gather more and more
information about the client. He / she sometimes visit the business premises to get an idea about the
financial and operational condition of the prospective client. The market reputation, competitive position
etc. are also duly assessed. Branch manager along with the relationship manager is also connected in this
process. These initial visits or enquiries are referred to as 'calls'. Based on the findings of such calls, RM
and the branch manager send a call report to the Head of Marketing, Head of Credit and Managing
Director for initial review. The call report contains some basic information about the client such as:
I. Client's background
II. Business
III. Market share
IV. Reliability
V. Credit exposure
VI. Existing banking relationships
VII. Credit requirements
VIII. Pricing of the proposed credit facility
Credit Memorandum (CM)
If the Head Office conveys positive sign for a call report, then only the branch RM goes for preparing a
CM. The preparation of CM includes the in-depth analysis of credit risk factors, critical assessment of the
client in the light of credit policy guidelines of the bank. Then it is sent to the Head of Marketing to enclose
the necessary recommendations and to commence the credit approval process. The CM has to be
accompanied with all the required legal documents and the financial information of the prospective client.
The CM generally contains the followings:
(a) A specific control number and base number for each client.
 23

(b) The credit risk grading score.

(c) The authorization for the approval process.
(d) The description of the proposed facility.
(e) Rationale behind the loan extension.
(f) Financial information of the client mainly the income statements for the past years,
earnings forecasts in normal and adverse conditions.
(g) Forecasted earnings from the relationship to be established.
(h) Lending agreement.
(i) Compliance of the policies and guidelines of Bangladesh Bank and NBL.
The CM also contains the assessment of the following areas:
 Borrower analysis
The majority shareholders, management team and group or affiliate companies are assessed. Any issues
regarding lack of management depth, complicated ownership structures or intergroup transactions are
addressed, and risks mitigated.
 Industry Analysis
The key risk factors of the borrower’s industry are assessed. Any issues regarding the borrower’s position
in the industry, overall industry concerns or competitive forces are addressed and the strengths and
weaknesses of the borrower relative to its competition are identified.
 Supplier/Buyer Analysis
Any customer or supplier concentration is addressed, as these could have a significant impact on the
future viability of the borrower.
 Historical Financial Analysis

An analysis of a minimum of 3 year historical financial statements of the borrower is presented. Where
reliance is placed on a corporate guarantor, guarantor financial statements are also analyzed. The analysis
addresses the quality and sustainability of earnings, cash flow and the strength of the borrower’s balance
sheet. Specifically, cash flow, leverage and profitability are analyzed.
 Projected Financial Performance
Where term facilities (tenor > 1 year) are being proposed, a projection of the borrower’s future financial
performance is provided, indicating an analysis of the sufficiency of cash flow to service debt
repayments. Loans are not granted if projected cash flow is insufficient to repay debts.
 Account Conduct

For existing borrowers, the historic performances in meeting repayment obligations (trade payments,
cheques, interest and principal payments, etc.) are assessed.
 Adherence to Lending Guidelines

Credit Applications should clearly state whether or not the proposed application is in compliance with the
bank’s Lending Guidelines. The Bank’s Head of Credit or Managing Director/CEO approve Credit
Memorandum that does not adhere to the bank’s Lending Guidelines.
 Mitigating Factors
 24

Mitigating factors for risks identified in the credit assessment are identified. Possible risks include, but are
not limited to: margin sustainability and/or volatility, high debt load (leverage/gearing), overstocking or
debtor issues; rapid growth, acquisition or expansion; new business line/product expansion; management
changes or succession issues; customer or supplier concentrations; and lack of transparency or industry
issues.
 Loan Structure

The amounts and tenors of financing proposed are justified based on the projected repayment ability and
loan purpose. Excessive tenor or amount relative to business needs increases the risk of fund diversion
and may adversely impact the borrower’s repayment ability.
 Security
A current valuation of collateral is obtained and the quality and priority of security being proposed are
assessed. Loans are not granted based solely on security. Adequacy and the extent of the insurance
coverage are also assessed.

3.4 Credit Risk Grading

Credit Risk Grading is an important tool for giving loans & advances as it helps a Bank to understand
various dimensions of risk involved in different credit transactions. According to Bangladesh Bank
guidelines, all Banks should adopt a credit risk grading management. The credit risk grading
management is vital to take decisions both at the pre-sanction stage as well as post-sanction stage. At
the pre-sanction stage, credit grading helps the sanctioning authority to decide whether to lend or not
to lend, what should be the pricing for a particular exposure, what should be the extent of exposure,
what should be the appropriate credit facility and the various risk mitigation tools. At the post-sanction
stage, the bank can decide about the depth of the review or renewal, frequency of review, periodicity of
the grading, and other precautions to be taken. The Credit Risk Grading (CRG) is a collective definition
based on the pre-specified scale and reflects the underlying credit-risk for a given exposure.
NBL applies the following credit risk grading matrix as provided by Bangladesh Bank guidelines:

Risk Rating Grade Definition

Superior – Low Risk Facilities are fully secured by cash deposits, government bonds or
a counter guarantee from a top tier international bank. All
1
security documentation should be in place

Good – Satisfactory Risk The repayment capacity of the borrower is strong. The borrower
should have excellent liquidity and low leverage. The company
2
should demonstrate consistently strong earnings and cash flow
and have an unblemished track record. All security
documentation should be in place. Aggregate Score of 95 or
greater based on the Risk Grade Scorecard.
 25

Acceptable – Fair Risk Adequate financial condition though may not be able to sustain
any major or continued setbacks. These borrowers are not as
3
strong as Grade 2 borrowers, but should still demonstrate
consistent earnings, cash flow and have a good track record. A
borrower should not be graded better than 3 if realistic audited
financial statements are not received. These assets would
normally be secured by acceptable collateral (1st charge over
stocks / debtors / equipment / property). Borrowers should have
adequate liquidity, cash flow and earnings. An Aggregate Score of
75-94 based on the Risk Grade Scorecard
Marginal - Watch list Grade 4 assets warrant greater attention due to conditions
affecting the borrower, the industry or the economic
4
environment. These borrowers have an above average risk due to
strained liquidity, higher than normal leverage, thin cash flow
and/or inconsistent earnings. Facilities should be downgraded to
4 if the borrower incurs a loss, loan payments routinely fall past
due, account conduct is poor, or other untoward factors are
present. An Aggregate Score of 65-74 based on the Risk Grade
Scorecard.
Special Mention Grade 5 assets have potential weaknesses that deserve
management’s close attention. Facilities should be downgraded
5
to 5 if sustained deterioration in financial
Substandard Financial condition is weak and capacity or inclination to repay is
in doubt. Loans should be downgraded to 6 if loan payments
6
remain past due for 60-90 days, if the customer intends to create
a lender group for debt restructuring purposes, the operation has
ceased trading or any indication suggesting the winding up or
closure of the borrower is discovered. An Aggregate Score of 45-
54 based on the Risk Grade Scorecard.
Doubtful and Bad Full repayment of principal and interest is unlikely and the
possibility of loss is extremely high. However, due to specifically
(nonperforming) 7
identifiable pending factors, such as litigation, liquidation
procedures or capital injection, the asset is not yet classified as
Loss. Assets should be downgraded to 7 if loan payments remain
past due in excess of 90 days, and interest income should be taken
into suspense (nonaccrual). Loan loss provisions must be raised
against the estimated unrealizable amount of all facilities. The
adequacy of provisions must be reviewed at least quarterly on all
non-performing loans, and the bank should pursue legal options
to enforce security to obtain repayment or negotiate an
appropriate loan rescheduling. In all cases, the requirements of
Bangladesh Bank in CIB reporting, loan rescheduling and
provisioning must be followed. An Aggregate Score of 35-44
based on the Risk Grade Scorecard
Loss (nonperforming) Assets graded 8 are long outstanding with no progress in
obtaining repayment (in excess of 180 days past due) or in the late
8
stages of wind up/liquidation. The prospect of recovery is poor
 26

and legal options have been pursued. The proceeds expected

from the liquidation or realization of security may be awaited. The
continuance of the loan as a bankable asset is not warranted, and
the anticipated loss should have been provided for. Bangladesh
Bank guidelines for timely write off of bad loans must be adhered
to. An Aggregate Score of 35 or less based on the Risk Grade
Scorecard

3.5 Loans & advance approval process

In approval process the Bank segregates its relationship Management / Marketing from the approving
authority. The existing approval authorities are Head of Branch (wherever applicable) and Head Office
Credit Committee, Executive Committee of Directors and Board of Directors. The Bank Management/
Board of Directors of the Bank is actively considering for the Individual Delegation Power to the Senior
Level Executives at Head Office instead of Head Office Credit Committee for effective credit risk
management.
No credit facility may be approved unless a satisfactory presentation package has been prepared. Prior to
securing the requisite approval, the authority ensures due diligence that:
 The Bank is in possession of all credit information required to properly evaluate the risk being
undertaken.
 A detailed credit analysis has been completed, to include a written analysis of the financial
condition of the borrower.
 The proposed extension of credit fully meets the standard of purpose, quality etc.
 The Board of Investment Registration, permission for all regulatory bodies, clean CIB reports etc.
are obtained.

All the facilities offered by the branch must be approved from the Head of Credit Committee. A
flow chart of approval process of loan is given below:
 27

Flow Chart of Approval process

BRANCH MARKETING TEAM

(EXECUTIVES
bbggbbb & OFFICERS)

HEAD OF BRANCH BOARD OF DIRECTORS

(APPROVAL/DECLINE) (APPROVAL/DECLINE)

BEYOND CAPACITY
RECOMMENDED TO
BEYOND CAPACITY
RECOMMENDED TO

HEAD OF
CORPORATE/COMMERCIAL

EXECUTIVE COMMITTEE OF
DIRECTORS
(APPROVAL/DECLINE)
FORWARDED TO

(APPROVAL/DECLINE)
BEYOND CAPACITY
HEAD OF CREDIT
RECOMMENDED TO
(APPROVAL/ DECLINE)

BEYOND CAPACITY MD
RECOMMENDED TO
BRANCH MARKETING TEAM (APPROVAL/DECLINE)
(EXECUTIVES & OFFICERS)

DMD BEYOND CAPACITY

RECOMMENDED TO
(APPROVAL/DECLINE)
 28

Appeal Process

Any declined credit may be represented to the next higher authority for reassessment/approval. However,
there should be no appeal process beyond the President & Managing Director.
Time requirement

At Branch level: Branch Authority must take decision within maximum of 1-3 days at Head Office level:
The Head Office Credit Committee/EC/Board should take decision within maximum of:
 3-5 days for simple type of facility.
 7-15 days for Project Loan.
 15-30 days for loans under Syndication.
Sanction letter – on approval, the sanction letter to be issued within 1-2 days’ time. In case of large loan,
it must be reported to Bangladesh Bank. In case of other specific loans like Director’s loan, prior approval
from Bangladesh Bank to be obtained as per the requirements/ guidelines of Bangladesh Bank.
Sanction Advice

After the facility has been approved, the credit officers of the branch prepare a sanction advice which is
addressed to the client. It is a kind of formal letter addressed to the client that provides information
regarding the amount of the loan, its purpose, tenor, interest, security details, insurance coverage and
other specific and general conditions applicable to the client.
A sanction advice contains the following information:
a. Address of the client
b. Subject
c. Facility type
d. Review / repayment date
e. Security details
f. Insurance coverage
g. Specific conditions
h. General conditions
i. Other conditions and covenants
A sanction advice is accompanied with the necessary legal documents. These documents may include:
a. Demand promissory note
b. Letter of agreement
c. Letter of continuity
d. Letter of revival
e. Letter of disbursement
f. Letter of hypothecation with supplementary documents
g. Registered deed of mortgage
h. Letter of guarantee
i. Registered power of attorney etc.
 29

3.6 Basis of Loans and advances

I. Lien

II. Mortgage

LIEN

Lien is permitted against the Following

 DPS= Deposit Pension Scheme
 FDR= Fixed Deposit Receipt
 PSE= Protirakha Sanchoy Patra
Lien (VALUE) must be higher than the value of Loans. 80% of Lien documents (VALUE) is permitted for the
Loans & Advances. The position of Lien Documents must be under the hand of Bank. Here, Interest Rate
of Loans: 14%
Mortgage

 Land
 Building
 Shop
Mortgage value must be higher than the value of Loans. 50% of Mortgage Documents (value) is permitted
for the Loans & Advances. The position of Mortgage Documents need not to be under the hand of Bank
only legal papers are necessary to be under the hand of Bank. Here, Interest Rate of Loans: 13%.
To get Loans & Advance for the individual client against DPS (Deposit Pension Scheme), FDR (Fixed Deposit
Receipt), MBDR (Monthly Benefit Deposit Receipt), DBDR (Double Benefit Deposit Receipt), PSP
(Protirakha Sanchoy Patra) etc in favor 3rd party the papers followings are needed.
To get Loans & Advance for the individual client against DPS (Deposit Pension Scheme), FDR (Fixed Deposit
Receipt), MBDR (Monthly Benefit Deposit Receipt), DBDR (Double Benefit Deposit Receipt), PSP
(Protirakha Sanchoy Patra) etc in favor 3rd party the papers followings are needed
I. Letter of Agreement
II. Letter of Authority
III. Demand Promissory Note
IV. Balance Confirmation Slip
V. Letter of Lien and authority for advances of third party’s against Fixed Deposits/ Call Deposits/
Special Deposits or Margin Deposits
VI. Letter of Continuity
VII. Memorandum of Deposit of Securities
 30

3.7 Risk management of loans & advances

The credit risk management process of NBL has the function of consistent monitoring of the transactions
within approved limits and recovering the bank's dues in time.
The credit risk management process of NBL includes the following operations:
 Loan Administration
 Credit Monitoring

Loan Administration

The main responsibilities performed by the loan administration department are as follows:

(a) To ensure that all security documentation complies with the terms of approval and is enforceable.
(b) To monitor insurance coverage to ensure appropriate coverage is in place over assets pledged as
collateral, and is properly assigned to the bank.
(c) To control loan disbursements only after all terms and conditions of approval have been met,
and all security documentation is in place.
(d) To maintain control over all security documentation.
(e) To monitor borrower’s compliance with covenants and agreed terms and conditions, and
general monitoring of account conduct/performance.
Documentation: Credit administration department ensures the following in connection with
documentation:

o All approvals and documents are in place.

o Documents are prepared in accordance with the approved terms and conditions and are legally
enforceable
o Vetting of required documents is done.
o Protection of the bank's security interest.
o Any exception from the standard loan facility is duly authorized from the Head of Credit.
Disbursement: The loan administration department performs the following responsibilities in connection
with the disbursement to ensure that:

 All standard security and charge documents are in place.

 Documentation check list has been prepared.
 Credit administration department has duly authorized the disbursement.
 Disbursement authorization form is documented as an evidence of document.
 A proper back up of all the documents is maintained in the computer management.
 Incomplete documentation has received temporary waiver from the authority.
 Pricing of the facility is appropriate.
 All disbursements / drawings are in the form of approved credit facility.
 Excess over limit are allowed under pre-fact approval.
 A clean updated CIB report is obtained before disbursement.
 The lending cap of the bank is duly maintained.
 31

Credit Monitoring

To minimize credit losses, monitoring procedures and managements are in place that provides an early
indication of the deteriorating financial health of a borrower. Credit monitoring process at NBL tries to
monitor the following:
 Past due principal or interest payments, past due trade bills, account excesses, and breach of loan
covenants
 Loan terms and conditions are monitored, financial statements are received on a regular basis,
and any covenant breaches or exceptions are referred to CRM and the RM team for timely follow-
up.
 Timely corrective action is taken to address findings of any internal, external or regulator
inspection/audit.
Branch Monitoring

Credit monitoring activities in the branch performs the following responsibility:

 Monitor transactions in accounts to ensure turnover and utilization of limits.
 Thoroughly review all past dues, collateral short fall, covenant breach and other irregularities.
 Rectify all audit objections and follow their suggestions.
 Periodic client calls and review by branch head.
 Formal periodic review of all relationships.
 Factory visit / stock inspection and progress of work against work / implementation of projects
are to be recorded and reviewed.
 Borrower to be communicated about past dues, overdue installments, expiry of insurance,
guarantee, limits etc.
 Early alert reports are prepared within 7 days of identification of weakness in the business and
financial weakness of the client and sent to Head Office Loan Administration.
 32

3.8 Loans & advances recovery

The loan & advance division performs the following recovery related functions:

o Directly managing accounts with sustained deterioration (a risk rating of sub-standard or worse)
o Determining work out plan / Recovery strategy.
o Pursuing all avenues to maximize recovery, including placing customers into receivership or
liquidation as appropriate.
o Ensuring adequate and timely loan loss provisions are made based on actual and expected
losses.
o Keeping top management appraised of grade 6 or worse accounts.
o
National Bank Ltd follows some recovery steps:

Days Past Due (DPD) Collection Action

1-14 Letter, Follow up & Persuasion over phone
(Annexure V)
15-29 1st Reminder letter & Sl. No. 1 follows
30-44 2nd reminder letter + Single visit
45-59 3rd reminder letter (Annexure VI) Group visit by
team member
Follow up over phone
Letters to Guarantor, Employer, Reference all above
effort follows
Warning on legal action by next 15 days
60-89 Call up loan (Annexure VII)
Final Reminder & Serve legal notice
legal proceedings begin
Repossession starts
Telephone calls/Legal proceedings continue
Collection effort continues by officer & agent Letter
to different banks/Association
 33

3.9.1 ANALYSIS OF LOANS & ADVANCES MURADPUR BRANCH, CHITTAGONG

Loan Products and services of NBl of Muradpur branch.

i. General purpose
Secured Overdraft (SOD) ii. 100% cash covered
iii. 12 months period

Overdraft (OD) i. General purpose

ii. 12 months period

Time loan i. Against security or collateral

ii. To finance inventory/ receivables/ 12
months
Term loan i. Against fixed assets
ii. Over 12 months
iii. Maximum 7 years
Letter of Guarantee i. For contractual obligations

Big client of Muradpur Branch for loans & advances

Client Name TK limit

Muradpur Iron Mart 5 crore
Monsur & Brothers 2.5 crore
Altaz Marketing Company 1.10 crore
Al. Emran & Brothers 1.10 crore
Altaz trading 1 crore
A.R. Trading 6 crore
Daridro Mukthi 1 lac
Source: From principal officer, Muradpur branch

Muradpur branch, Chittagong, of NBL earns higher income from Mansur & brothers, Altaz trading, & Altaz
marketing company.
The sanction power of branch manager for loans & advances up to tk 100,000. All the loans & advances
are sanctioned from head office.
 34

Glance of loans, classified loans, recovery, total deposits, & profit of Muradpur branch (2013-2018 aug)

Year Total deposits Total loans & Recovery Classified Profit (TK)
(TK) advances (TK) amount loans
( TK) (TK)
2013 81,87,00,000 19,71,71,000 1,93,000 26,97,000 3,67,00,000
2014 9,51,1000 13,31,00,000 2,69,000 26,97,000 3,20,00,000
2015 99,66,00,000 11,73,00,000 2,7,00,000 1,38,21,000 3,3,00,000
2016 102,000,000 13,60,00,000 15,00,000 2,68,00,000 1,47,00,000
2017 119,11,00,000 7,58,00,000 1,32,42,000 1,38,00,000 1,47,00,000
2018 (Jan- 132,34,00,000 8,16,00,000 58000 1,36,00,000 99,00,000
Aug)
Source: Financial highlight of Muradpur branch (2013-2018)

GLANCE OF
DEPOSITS,LOANS,RECOVERY,PROFIT,CLASSIFIED LOANS

1323400000
Deposits Loans & Advances recovery classified loan profit
1191100000
996600000
818700000
197171000

136000000
133100000

117300000

102000000
95110000

81600000
75800000
36700000

32000000

26800000
14700000

14700000
13821000

13800000

13600000
13242000

9900000
3300000
2697000

2697000

2700000

1500000
269000
193000

58000

2013 2014 2015 2016 2017 2018

From above table & graph it is concluded that Muradpur branch collected more deposits at last six years.
In 2014 it was fall down. After next year the rate of deposit is higher than previous year. The amount of
 35

recovery of Muradpur branch was very narrow. The amount of disbursement loan was decreased at last
six years. Every year classified loan was a big amount than recovery amount. The earing profit of the
branch was slightly well.
Product portfolio mix of Muradour branch in 2018 (Jan- Aug)

Products Loans & advances(TK)

Continuous loan 4,89,60,000 60%
Secured over draft 7,60,000 0.93%
SME loan 24,00,000 2.94%
Agri loan 20,00,000 2.46%
Any purpose 1,22,90,000 15.06%
Daridro mukthi 4,00,000 .49%
Novo udhog 3,90,000 .47%
House building 91,80,000 11.25%
Car loan 8,70,000 1.07%
Credit card 3,00,000 .37%
Woman Entrepreneur 40,50,000 4.96%
Total 8,16,00,000 100%
Source: Financial highlight of Muradpur branch

Muradpur branch disbursed highest amount of loan in continuous loan sector (60%). SME (2.94), Agri
(2.46), any purpose (15.06), woman entrepreneur (4.96%) are also significant sector for disbursement of
loan of Muradpur branch, Chittagong.
Product portfolio mix of Muradour branch in 2018 (Jan- Aug)

CAR CREDIT CARD PRODUCT PORTFOLIO MIX

HOUSE
2% 0% WOMAN
11%
5%
CUSTOMER LOAN
NOVO UDHUG
0% SOD
SME
DARIDRO MUKTI
1% AGRI
OTHERS
SME DARIDRO MUKTI
3%
NOVO UDHUG

OTHERS AGRI CONTINUOUS HOUSE

15% SOD
2% 60% CAR
1%
 36

Loans & Advances to total assets ratio of Muradpur Branch:

Year Credit (TK) Total Assets (TK) (Credit/Total assets )

*100
2013 19,71,71,000 97,21,82,000 20.28%
2014 13,13,00,000 100,10,20,000 13.17%
2015 11,73,00,000 98,50,05,000 11.91%
2016 13,60,00,000 105,47,16,000 12.90%
2017 7,58,00,000 122,15,10,000 6.21%
2018 ( Jan- Aug) 8,16,00,000 136,10,30,000 5.995%
Source: From Senior executive officer, Muradpur Branch

From Above table, the asses of credit exposure of Muradpur branch to total assets was 20.28% in 2013.
But from the year 2014 it was fall down to 13.17%. This rate was also decreased to 11.91%, 12.90%, 6.21%,
and 5.995% in 2014, 2015, 2016, 2017, and 2018 respectively.

3.9.2 Findings and data interpretation:

From the aforesaid study a number of findings can be disclosed. In this chapter major findings are being
stated and in the immediate next section all the possible solutions of negative findings will be
recommended.
The amount of deposit and loans & advances have been increasing notably from 2013 to 2017. But the
growth rate of loans & advances is so much than the growth rate of deposit. In 2017, NBL disbursed higher
loan (28.93%) in medium enterprise sector than other sectors. In 2017, NBL disbursed only 1.41% loan in
agriculture sector which is too lower. But agriculture sector is the crucial sector for our economy. Limited
authority of branch manager in case of sanctioning loans (up to one lac). Loans and advances are not
widely disbursed. The credit risk management of National Bank Limited is quite commendable. Systematic
and timely monitoring and appropriate documentation are tried to be maintained. Credit quality depends
on close follow-up and monitoring of loans. The follow-up and monitoring of loans is strong here.

Others findings:

 There is a visible shortage in work force of General Banking department. Consequently,

the workload is extremely high compared to other branches, as this is the Corporate
Branch. This also leads to accumulation of work that the employees must complete within
the deadline.
 37

 NBL provides wide ranging facilities to its employees to develop their skills and knowledge
about the entire banking management. However, with the existing workforce shortage,
an employee is sent to training without any replacement. This increases the work
pressures for other employees and lads to customer disappointment due to delay of work.

 Sometimes due to poor internet server, employees cannot tell the customers their
required amount of balance in their account. This also leads to customer dissatisfaction.
 There is lack of promotional strategies undertaken by NBL. This causes substantial
unfamiliarity of the bank among the rural people. It may hinder its long term strategies in
terms of reaching large number of customers.
 38

Chapter – 4

SWOT Analysis
The bank’s strength and competitive capabilities can be shown by the SWOT analysis. The SWOT
analysis is grounded in the basic principle that strategy making efforts must aim at producing a
good fit between a company’s resource capability and its external situation. The SWOT analysis is
as follows:

4.1 Strengths:

 The banks have provided services successfully and have achieved goodwill in all over the
country.
 National bank has sponsors from various section of Bangladesh. The most successful
entrepreneurs from various sections started this company. As a result, there was a
combination of different thoughts and skills in the management of the bank, which is very
much essential for success in today’s competitive market.
 Bank has a very competent and experienced top Management.
 Branches: National bank is operating their business all over the country with branches. It
has strengthened the distribution of the bank’s services.

4.2 Weaknesses:
 The bank does not have any formal promotional activity. They do not give any sort of
advertisement or do not have any marketing activity. They do not even too many bill
boards.
 No foreign exchange department is available in this branch.
 A few SME loan is provided.
 No marriage loan (CONSUMER loan), Transportation loan (CAR loan) is provided from this
branch.
 The remuneration of the officers of National bank is lower compared to other banks. Even
the internship students are paid nothing. This is way high skilled human resources are
discouraged to join here.
 The decision making of the bank is too many centralized. No decision is made without the
authorization of the head office.
 39

4.3Opportunities:

 National bank is operating corporate banking. In our country there is a huge opportunity of
consumer banking. So National bank can reposition their branding and introduce consumer
banking with corporate banking.
 Motor parts business is the highest investment sector of the Muradpur branch.
 The banking sector of the country is becoming modernized in the country. People like to draw
money anytime from anywhere. So ATM card is getting popularized in the country. National bank
can introduce ATM management in their bank.
 The intention of the people has been changing. They now want to save more. They also want
some benefit on their saving. So National bank can introduce more products and schemes.
 Set up more correspondent relationship and branch network in potential areas.
 Foreign Exchange Business can be increased to a great extent.
 Financing the most prospective garments sector in Bangladesh.
 Financing poor stated industries which could have bright prospects.
 Emergence of E-banking will open more scope for NBL to reach the clients desire level of
satisfaction not only in Bangladesh but also global arena.

4.4 Threats

 In Bangladesh, after economic reform, more private bank has started their operation in the
country. They are coming with different types of attracting products. This has increased the
completion among the banks.
 The value of local currency is decreasing. So investment in banking is decreasing. Moreover,
the inflation is increasing in the country. So people want to save money but in many cases they
cannot. As a result, the banks are getting less deposit.
 There is a tendency of the people of the country to become bankrupt. Few days ago Sonali
bank, Janata bank, Basic bank, primer bank, etc. have a great suffering. This is discouraging
banks to make new investment.
 40

Chapter-5

Recommendations:
Banking is a service –oriented marketing, the business profit depends on its service quality. That is why
the authority always should be aware about their service.

Some recommendations regarding bank’s betterment are described below. The recommendations
given below are not decisions; rather they are only suggestions to improve the performance in order to
fulfill the customer satisfaction so that clients give more preference to National Bank Limited. The
recommendations are made on the basis of findings and analysis and these are:

1. Muradpur branch should take necessary steps to increase its deposit amount and open a foreign
exchange department.
2. Muradpur branch can increase profitability by providing more loan in SME and Retail sectors. So
it should be increased. NBL should increase the disbursement of loan and advance in agriculture
sector
3. The bank should adopt a credit grading management. All facilities should be assigned a risk grade.
And the borrowers’ risk grades should be clearly stated on credit application
4. The responsibilities of the key persons of the above function must also be clearly specified
5. Bank should make proper and exhaustive documentation before disbursement and to ensure
proper supervision, monitoring and follow up of each credit.
6. Selection of borrower shall be made as per rules and procedures of the advances and after making
proper assessment of business establishment, respectability, creditability, actual requirement of
fund repayment capacity etc.
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5.1 Conclusion:

Banking sector of Bangladesh consists of several nationalized and private banks. They are doing their
activities and highly contribute to the national economy. Among them NBL Bank Limited also makes
significant contribution to the economy. They are performing their activities, as a result not only the
bank but also the economy is benefited. The bank is performing general banking, Loan-advance, foreign
exchange activities etc. As a result, they are mobilizing the money and do well for the economy.
Although they have some limitations in their services, they are doing tremendous job for the economy.
If they can reduce their limitation and introduce new ideas, they can do better in the banking sector of
Bangladesh.
A banker cannot sleep well with bad debts in his portfolio. The failure of commercial banks occurs
mainly due to bad loans, which occurs due to inefficient management of the loans and advances portfolio.
Therefore, any banks must be extremely cautious about its lending portfolio and credit policy. So far
National Bank Limited has been able to manage its credit portfolio skillfully and kept the classified loan at
a very lower rate.
From the discussion in this report, it has become clear that loans & advances management is a complex
and ongoing process and therefore financial institutions must take a serious approach in addressing these
issues. They have to be up to date in complying with all the required procedures and must employ
competent people who have the ability to deal with these complex matters.

5.2 References & bibliography:

1) Annual Report 2017

2) Credit Risk Grading Manual.
3) www.nblbd.com
4) NBL’s retail banking service prospectus.
5) Credit Policy and risk management guide of National Bank Ltd.
6) Articles published on Credit Department information of NBL.
7) Theory & Practice of Banking, Bangladesh Institute of Bank Management (BIBM)
8) Circulars published by Bangladesh Bank.
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