An Internship Report

On
Analysis of Loans and Advances of

Agrani Bank Limited

Prepared Under the Supervision of

Faria Akter
Lecturer
School of Business Studies
Southeast University

Prepared by
Tahmina Zahan
ID : 2014010000117
School of Business Studies
Southeast University

Date of Submission: 26 – 12- 2018

 Letter of Transmittal

26 December, 2018

Faria Akter

Lecturer

School of Business Studies

Southeast University

Subject : Submission of Internship Report on “Analysis of Loans and Advances of Agrani

Bank Ltd”

Dear Madam,

I am truly pleased to submit my Internship Report. As per your instructions, I have

successfully completed my internship report, focusing on the loans and advances of Financial
Institution, Agrani Bank Limited.

I have followed your guidelines and have included ideas that you shared during our
discussions. During the period of my internship, I have come to learn a lot about different
aspects of the banking industry, particularly of the loans disbursement of Agrani Bank
Limited. I tried my best to incorporate all the information that I have collected during the
internship period. I wish the report would fulfill your expectation and standard. I am
extremely grateful to you for your valuable supervision, tireless effort and continuous
attention in preparing this report.

I, sincerely hope that you will be satisfied with this report. If you have any query, I will
be pleased to answer that. I hope and pray that you would be gracious enough to accord
approval to this report.

Sincerely yours,

Tahmina Zahan
ID: 2014010000117
School of Business Studies

Southeast University

Southeast University (i)

 Acknowledgement

At first I would like to express my gratitude to Almighty Allah who has given me opportunity
to go through the total process of internship and to write a report in this regard. Then I would
like to thank my respected supervisor Faria Akter, Lecturer of Southeast University
Department of Business Administration, for her direction, knowledgeable guidance and
support helped me a lot in writing this report and preparation of the report. I would also like
to express my gratitude to all the employees of Agrani Bank limited for being friendly and
cooperative .I am very much grateful to the Md. Mahabub Monzur Alam, branch manager of
Agrani Bank Limited. I would like to extend my gratitude to Md. Imran Hossain Employee of
bank for giving me his valuable time sharing about Loans and Advances. Without all this
support, I would not have supposed to be published this report and I thanked them again from
the bottom of my heart. I tried my level best to make this report accurate and informative.

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 Executive Summary

The report is originated in result of my internship, which I have done, as a requirement of

BBA program. This report is done based on my three months internship in Agrani Bank
Limited. This report is on the basis of loans and advances in Agrani Bank Limited. Through
this report the reader will be able to know about the current condition of the loans and
advances of Agrani Bank Limited. The report also describes the different types of loans they
offer to their customer and the different types of treatment done to the different types of
default loans.
Agrani Bank is a largest commercial bank in Bangladesh. To serve the nation Agrani bank
performs some activities for their clients like: loans and advances. Agrani Bank collects
deposit from public and provide it’s to other business or individual as loans. Bank pays
interest to deposit holder and take interest from borrowers. Agrani bank measure all risk
components before sanctioning a loan. When all the formalities completed then respective
officer disburses the loans. After disburse the loans it is duty of bank to recover the disbursed
loans. This report is based on actual information and working procedure practiced in Agrani
Bank Limited.

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 Declaration

I, Tahmina Zahan, hereby declare that the report of internship Program titled “Analysis of
Loans and Advances of Agrani Bank Limited” is uniquely prepared by me after the
completion of three months work at BAF Branch, Dhaka of Agrani Bank Limited.

I confirm that, the report is only prepared for my academic requirement not for otherwise
purpose. I have incorporated the true information in my report with the highest level of
accuracy and enthusiasm. I also assure that this report is not submitted anywhere of
Bangladesh before me.

Tahmina Zahan
ID: 2014010000117
School of Business Studies
Southeast University

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 Letter of Acceptance

This is to certify that Tahmina Zahan. ID: 2014010000117 has prepared this internship report
entitle “Analysis of Loans and Advances of Agrani Bank Limited on BAF branch’’. Major in
Accounting from Southeast University has completed the internship report successfully under
my supervision.

She has done her job according to my supervision and guidance. She has tried her best to do
this successfully. I think this program will help her in the future to build up her career. I wish
her success and prosperity.

Faria Akter
Lecturer
School of Business Studies
Southeast University

Southeast University (v)

 Table of Contents

Contents Page
No
Chapter One : Introduction of The Report

1.0 Introduction 2
1.1 Background of The Study 3
1.2 Objectives of The Report 3
1.3 Scope of The Report 4
1.4 Methodology of The Report 4-5
1.5 Limitations of The Report 5
Chapter Two : An Overview of Agrani Bank Limited

2.0 Introduction of Agrani Bank Limited 7

2.1 Historical Background 7
2.2 Mission 8
2.3 Vision 8
2.4 Strategies Objectives of Agrani Bank Limited 8-9

2.5 SWOT Analysis of Agrani Bank Limited 9-11

2.6 Products and Services 11
2.7 Interest Rate 12
Chapter Three : Theoretical Discussion about Loans
and Advances
3.0 Introduction 14
3.1 Definition of Loan 14
3.2 Definition of Advance 14
3.3 Types of Loans and Advances 15-16
3.4 Loans and Advances Products 17-18
3.5 Difference Between Government Bank and Private Bank 18-19

Chapter Four : Analysis of Loans And Advances of

Agrani Bank Limited
4.0 Total Loan Sanction 21-22
4.1 Sector wise Loans 23-24
4.2 Industrial Credit 25-29
4.3 Agricultural And Fishery Loans 30-31
4.4 House Loans 31-32
4.5 SME Financing 32-34
4.6 Interest on Loans And Advances 34-35

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4.7 Non-performing Loans of Agrani Bank Limited 35-36
4.8 Sanction Procedure of the loans 37-40
Chapter Five : Findings , Recommendations and
Conclusion
5.0 Findings 42-44
5.1 Recommendations 45-46
5.2 Conclusion 47
References 48
Joining Letter of Agrani Bank Limited (Scan Copy )

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 Chapter One : Introduction of The Report

1.0 Introduction

1.1 Background of the Study.

1.2 Objectives of the Report.

1.3 Scope of the Report.

1.4 Methodology of the Report.

1.5 Limitations of the Report.

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1.0 Introduction:

This report shows an analysis of loans and advances of Agrani Bank Limited. Agrani Bank
Limited is fast growing public bank. This bank has been operating in the bank industry since
1972 and belongs to the first generation of public banks to be incorporated since the
independence of Bangladesh. From its establishment it is engaged in a desirable position
among its competitors after achieving success in all area of business operation. Agrani Bank
is a financial institution which plays a fundamental role in forecasting the economic and
social condition of a country. A Bank can manipulate the money supply through lending and
investment. Banks collect deposit at the lowest possible cost and provide loans and advances
at higher cost. The difference between these is the profit for the Bank. Agrani Bank Limited
lend money to the people who require it for various purposes. Lending of funds to traders,
businessmen and industrial enterprises is one of the important activities of commercial banks.
The major part of the deposits received by banks is lent out, and a large part of their income
is earned from interest on such lending. Loans and advances granted by Agrani Bank Limited
is highly beneficial to individuals, firms, companies and industrial concerns. The growth and
diversification of business activities are effected to a large extent through bank financing.
Considering the capital structure, constitution and liquidity requirement, Agrani bank Limited
allows short-term loans. Mid-term loans are sanctioned for the period more than one year and
up to five years. Agrani Bank limited provides long term advances for house loan, industrial
loan, Agricultural loan, Transport loan and many other sectors. Such loans are repayable by
installments over a number of years ranging from 2 to 12 (Agricultural loans ranging from 6
to 15 months), as far as, nature and conduct are concerned. Small loans refers to the lending
allowed to small traders; cottage industries, small- scale industries and self-employed
persons. The maximum ceiling for this loans is at present is tk.5000.00 for small traders and
self-employed persons, tk.2, 00,000.00 for cottage industries and small-scale industries.
Staffs of Agrani Bank are provided with ‘Staff Loans” for buying motorcycles and bicycles,
computer for wedding of their sons or daughter etc. Bank provides this advances facility
under installment system. The amount of loans is recovered from their monthly salary.

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1.1 Background of the Study:

Internship program is a mandatory for acquiring BBA degree. It has become essential for
every person to have some idea on the bank and banking procedure. As our educational
system predominantly text based, inclusion of practical orientation program is an exception to
the norm. From practical knowledge, we will be able to know real life situations and start a
career with some practical experience. After completing BBA, certain times are preserved for
internship. As a student of BBA, internship is an academic requirement. For internship every
student is required to work in a selected institution to enhance ones practical knowledge and
experiences. For the requirement of my course I was assigned to Agrani Bank Limited for my
internship. In this situation I have completed my internship report on “ Loans and Advances
of Agrani Bank Limited.’’ Basically, this report is highlighted on loans and advances
Structure, Analysis, Present status, Performance of ABL, findings and achievements, Own
Experience, Recommendations and Conclusion. I have tried my best to show my personal
observation and knowledge in this report.

1.2 Objectives of the Report:

The report has two objectives :

a) General Objective
b) Specific Objective

a) General Objective:
 The main objective of the study is to analyze the Loans and Advances of Agrani Bank
Limited, BAF Branch.

b) Specific Objectives:
 To describe loans sanctioning process of Agrani Bank Limited.
 To analyze loans operations system of the Agrani Bank Limited.
 To identify the problems related to loans and advances operations of Agrani Bank
Limited.
 To make some recommendations to solve the problems.

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1.3 Scope of the Report:

The research is mainly focused on “Loans and advances of Agrani Bank Limited”. This
report has prepared to gain a clear view of the liquidity management of the Agrani Bank
Limited. While preparing the report I had a great opportunity to have real life knowledge
about the overall banking procedure. I had to go to each and every department to collect the
necessary data for my report using of all my whole experience I try to include all of the
criteria of the liquidity management. I focus on what are the liquid assets, what is the
liquidity, what is the liquidity management, the Bangladesh Bank’s requirement on liquidity
management for all the commercials banks. I also try to show how The Agrani Bank Limited
handles all the liquidity requires activities, how to manage fund in urgent situations and how
to use access money in profitable sectors. Purpose of the report would be to focus on how
The Agrani Bank Limited maintains liquidity requirements and fulfills the central bank’s
requirements on liquidity management of the commercial banks. And finally I draw the
conclusion on the liquidity management of The Agrani Bank Limited.

1.4 Methodology of the Report:

Methodology refers to the essential part of the study and the process of collecting information
and arranging it in terms of the relevant issues of the study. It is designed in away so that it
correspondent to achieve the objectives of the study. This study has prepared on the basis of
my practical experience on the day-to-day banking activities and under the close supervision
of my internal guide teacher.
The information and data for this report will be collected from secondary sources.
Secondary sources:
A secondary source is a document or recording that relates or discusses information
originally presented elsewhere. Secondary sources involve generalization, analysis,
Synthesis, interpretation, or evaluation of the original information. I had collected data from
secondary source.
The Secondary Sources of data and information are-

 Annual report of Agrani Bank Limited.

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  Different manuals and publications of Agrani Bank Limited.
 Different manuals and publications of Bangladesh Bank.
 Unpublished data (daily, monthly and yearly statements, ledgers) received from
Different section.
 Different text books.
 Official web site of Agrani Bank Limited.

Data Collection process:

Mainly, the purpose of data collection is to obtain information to keep on record, to make
decisions about important issues, to pass information on to others. I’ve collected by different
processes. From working in this organization, I’ve got the facility to go through maximum of
the record file related to the liquidity issue. So many important data were being collected
from there. Some other data I’ve collected from the website. Analyzing all the annual reports
from 2013 to 2017, I tried to identify all the elements of liquidity and prepared the report.

1.5 Limitations of the Report:

Though I have given utmost effort to prepare this paper but there are some limitations of the
study. Such are as follows-

1) The main constrain of the study was insufficiency of information, which was required for
the study. There are various information the bank employee can’t provide due to security and
other corporate obligations.
2) Since a very few the bank personals have accounting based knowledge, many of official
can’t provide a good briefing to me.
3) Due to time limitation many of the aspects could not be discussed in the present Report.
Learning all the functions within just 90 days is really tough.
4) Another problem is that creates a lot of confusions regarding verification of data in case of
interview from more than one person.
5) Since the bank personnel were very busy, they could not provide enough time to me. Lack
of opportunity to visit more than one branch.

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Chapter Two : An Overview of Agrani Bank Limited

2.0 Introduction of Agrani Bank Limited

2.1 Historical Background

2.2 Mission of Agrani Bank Limited

2.3 Vision of Agrani Bank Limited

2.4 Strategies Objectives of Agrani Bank Limited

2.5 SWOT Analysis of Agrani Bank Limited

2.6 Products and Services

2.7 Interest Rate

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2.0 Introduction of Agrani Bank Limited:

Agrani Bank Limited, a state owned leading commercial bank with 950 outlets strategically
located in almost all the commercial areas throughout Bangladesh, overseas Exchange
Houses and hundreds of overseas Correspondents, came into being as a Public Limited
Company on May 17, 2007 with a view to take over the business, assets, liabilities, rights
and obligations of the Agrani Bank which emerged as a nationalized commercial bank in
1972 immediately after the emergence of Bangladesh as an independent state. Agrani Bank
Limited started functioning as a going concern basis through a Vendors Agreement signed
between the ministry of finance, Government of the People's Republic of Bangladesh on
behalf of the former Agrani Bank and the Board of Directors of Agrani Bank Limited on
November 15, 2007 with retrospective effect from 01 July, 2007.

Agrani Bank Limited is governed by a Board of Directors consisting of 10 members headed

by a Chairman. The Bank is headed by the Managing Director & Chief Executive Officer;
Managing Director is assisted by Deputy Managing Directors and General Managers. The
bank has 11 Circle offices, 34 Divisions in head office, 52 zonal offices and 950 branches
including 34 corporate and 42 AD (authorized dealer) branches.

2.1 Historical Background:

Soon after independence of the country Agrani Bank emerged as the largest and leading
nationalized commercial bank. Agrani bank, in pursuance of Bangladesh banks
(nationalization) order 1972 (President Order No-26 of 1972) came into being in 1971 taking
over the assets and liabilities of the east while Habib bank ltd. And commerce bank ltd.
functioning in the then east Pakistan. The bank started operation with 249 branches with its
head office in Dhaka. In principle, it changed its motto from class banking to mass banking.
As there had been poor banking structure and it failed to build sound banking infrastructure
by local entrepreneurs before independence and the newly born independent country was
down with enormous economic problem, the new govt. Agrani Bank being one of the largest
nationalized commercial bank must shoulder the responsibility of expanding its network in
rural area . Presently bank has its 561 branches out of total 950 branches located in rural areas
implementing as many as 29 programs targeting rural people. During my internship at Agrani

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Bank Ltd, I was placed in the Principal Branch under Head office of ABL. I enjoyed my total
working with the young, skilled & professional employees and earn my knowledge regarding
financial and non-financial performance of Agrani Bank ltd. Bangladesh.

2.2 Mission of Agrani Bank Limited:

To become the best leading state owned commercial bank of Bangladesh operating at
international level of efficiency, quality, sound management customer service and strong
liquidity.
 Quality financial services adopting the latest technology.
 Fast and efficient customer service.
 Maintaining high standard of business ethics.
 Balanced growth.
 Steady & competitive return on shareholders' equity.
 Innovative banking at a competitive price.
 Attract and retain quality human resources.
 Extending competitive compensation packages to the employees.
 Firm commitment to the growth of national economy.
 Involving more in Micro and SME financing.

2.3 Vision of Agrani Bank Limited:

To become the best leading state owned commercial bank of Bangladesh operating at
international level of efficiency, quality, sound management, customer service and strong
liquidity.

2.4 Strategies Objectives of Agrani Bank Limited:

 Gaining competitive advantage by lowering overall cost compared to that of

competitors.
 Winning at least 6.50 percent share of deposits and 5.50 percent share of loans and
advances of Bangladesh market.
 Overtaking competitors by proving quality customer service.

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  Achieving technological leadership among the peer group.
 Strengthening the Bank’s brand recognition.
 Contributing towards the economic well-being of the country by focusing particularly
on SME and agricultural Sectors.
 Strengthening research capability for innovative products.

2.5 SWOT Analysis of Agrani Bank Limited:

A SWOT analysis of a bank formally evaluates the financial institution’s strengths,

weaknesses, opportunities and threats. This analysis used the organization to make their
existing line of performance also foresee the future to improve their performance in
comparison to their competitors. By SWOT Analysis, an organization can also observe their
current position. It can also be considered as an important tool for making changes in the
strategic management of the organization. As a financial organization, Agrani Bank Limited
has some strengths, weakness, opportunities and threats, to identify the strengths, weakness
opportunities and treats a tool is used by me that is SWOT analysis. So if we consider Agrani
Bank as a business firm and analyze its strength, weakness, opportunity and threat the
scenario will be as follows:

Strength:

 Agrani bank is a state owned bank

 So it has a wide image
 Good banker-customer relationship
 Lending rate is relatively competitive
 Cooperation with each other
 Satisfied customers
 Energetic as well as smart team work
 Empowered Work force
 Strong Financial Position
 Good Management
 Young enthusiastic workforce
 Strong corporate identity
 Service charges are comparatively reasonable

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 Weakness:
 Lack of proper motivation, training and job rotation
 Everything depends on Head office
 Lack of experienced employees in junior level management
 Lack of own ATM services
 Tendency to leave the bank in quest of flexible environment
 Lack of proficient manpower in some department
 Limited advertising and publicity of bank’s products and activities
 Absence of strong marketing activities
 Office environment is not good as private bank environment
 High charges of L/C
 As Agrani is a public bank so there is an absence of IT applications

Opportunity:
 Growth of sales volume
 High demand of credit
 Change in political environment
 Launching own ATM card services
 Expansion of banking services into other different services
 Expansion branches of online
 Experienced Managers

Threats:
 Upcoming Banks / Branches.
 Some commercial and foreign banks
 Different services of FCB’S (Phone Banking/Home Banking)
 Similar products are offered by other banks
 Default Loans
 Financial Crisis
 Existing card services of Standard Chartered Bank or other private Bank
 Daily basis interest on deposit offered by HSBC
 Government has been controlling industrial credit

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  Recession of global economy

2.6 Products and Services:

1) Loans and Advances

 Continuous Loan
 Term Loan
 Rural and Agro Credit
 Small and Medium Enterprise Loan
 Import Finance
 Export Finance

2) Deposit

 Taka Account
 Foreign Currency Account

3) Treasury

 Money Market
 Foreign Exchange Market

4) Letter of Credit

5) Letter of Guarantee

6) Other Foreign Exchange Service

7) Cash Service

8) Fund Transfer

9) Value Added Service

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2.7 Interest Rate:

Loan sector Interest Rate

Poverty Alleviation Loan 9%

Crop Loan 9%

Fishery Loan 9%

SME & Micro Credit 9%

Export Finance 7%

Import Finance 9%

Commercial Home Loan 9%

Commercial Loan 9%

Demand Loan 9%

General Home Loan 9%

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 Chapter Three: Theoretical Discussion About
Loans and Advances

3.0 Introduction

3.1 Definition of Loan

3.2 Definition of Advance

3.3 Types of Loans and Advances

3.4 Loans and Advances Products

3.5 Difference between Government Bank

And Private Bank

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3.0 Introduction:
A loan is the lending of money by one or more individuals, organizations, or other entities to
other individuals, organizations etc. A loan entails the reallocation of the subject asset(s) for a
period of time, between the lender and the borrower. The loan is generally provided at a cost,
referred to as interest on the debt, which provides an incentive for the lender to engage in the
loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which
can also place the borrower under additional restrictions known as loan covenants. Although
this article focuses on monetary loans, in practice any material object might be lent. Bank
offer lot of loan side in the real life and business life, such as auto loan consumer loan, rural
loan easy loan, pension saving scheme, education loan, diagnostic loan, defaults. Acting as a
provider of loans is one of the principal tasks for financial institutions. For other institutions,
issuing of debt contracts such as bonds is a typical source of funding.

3.1 Definition of Loan:

A Loan is a debt evidenced by a note which specifies, among other things, the principal
amount, interest rate, and date of repayment. A Loan entails the reallocation of the subject
asset(s) for a period of time, between the lender and the borrower.

In a Loan, the borrower initially receives or borrows an amount of money, called the
principal, from the lender, and is obligated to pay back or repay an equal amount of money to
the lender at a later time. Typically, the money is paid back in regular installments, or partial
repayments; in an annuity, each installment is the same amount. And Interest is charged on
the loan at agreed rate and intervals of payment.

3.2 Definition of Advance:

Advances are the source of finance, which is provided by the banks to the companies to meet
the short-term financial requirement. It is a credit facility which should be repaid within one
year as per the terms, conditions and norms issued by Bangladesh Bank for lending and also
by the schemes of the concerned bank. 

So we can say that Advance is a ‘credit facility’ granted by the bank. Banks grant advances
largely for short-term purposes, such as purchase of goods traded in and meeting other short-

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term trading liabilities. There is a sense of debt in loan, whereas an advance is a facility being
availed of by the borrower.

3.3 Types of Loans and Advances:

Lending money is one of the primary functions of the bank. Lending of funds to individuals,
traders, businessmen and industrial enterprises, is one of the important activities of
commercial banks. Interest earns on these loans and advances are the major source of income
of the banks.
Various types of loans and advances given by banks: such as, Cash Credit, Overdrafts, Small-
loans, Demand loans, Bills purchased and discounted, Home building loans and staff loans
etc. Banks lend money in various forms for various purposes which are given below:

1) Cash Credit :

Cash Credit is a type of advances wherein a banker permits his customer to borrow money up
to a particular limit by a bond of credit with one or more securities. The advantage associated
with this system is that a customer can withdraw money as and when required. The bank will
charge interest only on the actual amount withdrawn by the customer. Many industrial
concerns and business houses borrow money in this form.

2) Over draft:

An overdraft is an arrangement by which the customer is allowed to overdraw his account. It

is granted against some collateral securities. The facility to overdraw is allowed through
current account only. Interest is charged on the exact amount of overdrawn subject to the
payment of minimum amount by way of interest. Overdraft facilities are generally granted
businessmen for expansion their business against securities of stock in trade, shares,
debentures, government promissory notes, fixed deposit, life insurance policies, gold and
gold ornaments etc.

3) Small Loans:

Small Loans provided to small businesses for various purposes by a lender. These loans may

have less restrictive requirements, enabling the small business to secure the funds.
A small business loans may provide other incentives for the borrower, which could minimize
expenses for the business. It refers to the lending allowed to small traders, cottage industries,

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small-scale industries and self-employed persons. The maximum ceiling for this loans is at
present TK. 5000/- for small traders and self-employed persons. TK. 2, 00,000/- for cottage
industries and small-scale industries.

4) Demand Loans:

A demand loan is a loan which is repayable on demand by the bank. In other words it is
repayable at short- notice. The entire amount of demand loan is disbursed at one time and the
borrower has to pay interest on it. The borrower can repay the loan either in lump sum
(onetime) or as agreed with the bank .For example, if it is so agreed the amount of loan may
be repaid in suitable installments. Such loans are normally granted by banks against security.
The security may include materials or goods in stock, shares of companies or any other asset.
Demand loans are raised normally for working capital purpose like purchase of raw materials,
making payment of short-term liabilities.

5) Staff Loans:

Bank provides advances to the staff for buying motor-cycles and motor-cars, for wedding
their sons or daughters etc. It is called staff loans. Bank provides this advance at a little or no
interest. This benefit is generally calculated as the interest on the loans at a prescribed rate,
minus any interest actually paid on the loan within the year or 30 days after year-end.

6) Home Loans:

A home loan also known as a “Mortgage’’ is a sum of money provided by a lender , such as
a bank , to an individual or couple for the purpose of purchasing a property . The home Loan
is a loan taken by a borrower from the bank issued against the property/security intended to
be bought on the part by the borrower giving the banker a conditional ownership over the
property i.e. if the borrower is failed to pay back the loan, the banker can retrieve the lent
money by selling the property.

7) Crop Loans:

Crop loan is a short term advance that is given to the farmers and agriculturists by banks and
co-operative societies. The loan amount can be used to purchase improved seeds, fertilizers,
machinery etc. The crop loans are provided as agriculture is a priority sector. The government
often steps in with low interest loans and other subsidies that help farmers turn a profit.

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3.4 Loans and Advances Products:

a) Term Loans

 Export Cash Credit

 Industrial Credit
 Housing Loan
 Consumer Credit
 Loans for Overseas Employment
 Weavers’ Credit

b) Continuous Loans

 Cash Credit
 Cash Credit
 Secured Overdraft

c) Rural & Agro Credit

 Crop Loans
 Fishery Loans
 Animal Husbandry Loans
 Agri Machinery Loans
 Rural Transport Loans
 Swanirvar Loans
 Poverty Alleviation Loans

d) Export Finance

 Export Cash Credit

 Packing Credit
 Local / Foreign Bills Purchased
 Loans against Export Development Fund

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e) Import Finance

 Loans against Imported Merchandise

 Loans against Trust Receipt
 Payment against Document

f) Small and Medium Enterprise Loan

 Service Sector Loans

 Trading Sector Loans
 Manufacturing Sector Loans

3.6 Difference between Government Bank and Private

Bank:

1. A government bank is formed by taking a bank and its assets into the public ownership.
The national government of the country holds the ownership of nationalized banks. In
nationalized banks the government controls the bank. This could refer to taking control of the
public shares, change in management and new corporate strategy. This is a common practice
in the countries of the west, where it is used as an emergency method to help the banks
during rough times.

2. Public sector banks are established since long, while private sector banks emerged a few
decades ago, and so the customer base of public sector banks is greater than the private ones.

3. Private sector banks are owned by the private lenders. The private banks are also managed
and controlled by private promoters and these promoters are free to operate according to the
market forces.

4. Public Sector Banks are the banks; whose maximum shareholding is with the government.
On the other hand, Private Sector Banks are the one whose maximum shareholding is with
individuals and institutions.

5. Government is where majority of the stake in the shareholders that more than fifty percent
of the stake is held by them.

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6. Private Banks majority of the stake owned by private shareholders.

7. Fees and services of private banks have made names by providing better service.
However, they charge for extra services they provided by them. On the other hand,
government banks fees and services are less such as on balance maintenance. A lot of
government banks are still picking up in the services.

Southeast University ( 19 )
 Chapter Four: Analysis of Loans and Advances of
Agrani Bank Limited

4.0 Total Loans Sanction

4.1 Sector wise Loans

4.2 Industrial Credit

4.2.1 Major Industrial Loans Sectors

4.2.2 Performance of Industry Sector: 2013 to 2017

4.2.3 Textile and Readymade Garment Industry Loans

4.2.4 Jute Industry Loans

4.3 Agricultural and Fishery Loans

4.4 House Loans

4.5 SME Financing

4.6 Interest on Loans and Advances

4.7 Non-performing Loans of Agrani Bank

Limited

4.8 Sanction Procedure of the loans

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4.0 Total Loans Sanction:

Loans Sanction process is the process by which the lender decides whether an applicant is
creditworthy and should receive a loan. Even when your loan is approved, it will be approved
based on certain loans conditions or loans contingencies.

The total sanctions of Loans and Advances of Agrani Bank from financial year 2013 to 2017
are given below:
Table No 1 : Total Loans Sanction

Y22222

A 22223
(

Data Source: Agrani Bank Annual Report

Graphical Presentation

Total Loans Sanction

35000

30000

25000

20000

15000

10000

5000

0
2013 2014 2015 2016 2017

Figure 1 : Total Loans Sanction

Southeast University ( 21 )
Analysis:
In the above figure we see that the total loans sanction of Agrani Bank from 2013 to 2017 is
increasing trend that indicates better performance in providing loans and advances during this
time.
Since 2013 to 2014 loans sanction is increased. In 2013, the total loans sanction amount is
20,296.54 crore taka for the next year in 2014 the total loans sanction is 23,508.57 crore taka
which enhance by 3212.03 crore taka with 15.82% growth to compare with the previous year.
In the same way in 2015 to 2017 loans sanction is also increased at 971.61, 2106.93 and
5324.75 crore taka by the total amount of 24,480.18, 26,587.11 and 31,911.86 crore taka with
4.13 %, 8.60% and 20.02 % from 2015 to 2017 growth.

Southeast University ( 22 )
4.1 Sector wise Loans:

5 years of sector wise loans is given below:

Table No 2 : Sector wise loans

Sector-wise Loans 2017 2016 2015 2014 2013

Agriculture and Fishery 1,480.17 1,331.02 1,187.47 1,063.21 972.07

Jute and Jute Goods 970.11 960.17 980.00 854.75 758.19

Transport, Storage & 375.86 370.72 345.66 95.66 174.27

Communication

Ship Breaking 97.54 147.78 119.35 95.77 115.72

Textile and Readymade Garments 3,102.67 2,604.25 2,035.92 1,573.13 1,947.77

Food and Allied Industry 471.21 471.41 280.00 618.00 550.84

Construction and Engineering 1,087.84 552.22 106.91 236.68 175.75

Pharmaceuticals and Chemicals 143.82 214.77 151.79 176.50 345.41

Leather 451.74 399.31 383.87 386.71 380.86

Power & Energy 819.41 748.68 904.68 931.40 1,119.90

Professional and Services 202.89 102.49 160.51 284.34 236.95

Housing Service 946.04 816.47 335.82 527.02 638.20

Wholesale/Retail Trading 7,610.03 3,728.69 2,730.01 3,736.00 2,833.58

Personal Loan (staff loan and 4,821.95 3,995.74 2,908.47 2,598.60 2,128.84
other personal loan

others 9,330.58 10,143.39 11,849.72 10,330.80 7,918.19

Total 31,911.86 26,587.11 24,480.18 23,508.57 20,296.54

( Taka in Crore )

Graphical Presentation (Sector wise Loans : 2017 to 2013)

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 Sector wise Loans
14,000.00

12,000.00

10,000.00

8,000.00

6,000.00
2017
2016
4,000.00 2015
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Figure 2 : Sector wise Loans

Analysis:
In the above figure and graph we see that the percentage of loans in the Agriculture and
Fishery, Jute and Jute Goods, Transport& Communication, Textile and Readymade
Garments, Construction and Engineering , Leather ,Power & Energy ,Professional and
Services, Housing Service, Wholesale/Retail Trading, Personal Loan (staff loan and other
personal loan is an increasing from 2016 to 2017. But Ship Breaking, Food and Allied
Industry, Pharmaceuticals and Chemicals has decreased.

4.2 Industrial Credit:

Southeast University ( 24 )
Agrani Bank Limited as one of the state-owned commercial banks plays important role in
industrial credit for the overall development of the country. Long term loans for setting up
new industrial units Agrani Bank Ltd provide loans in different industrial sector. Like cottage
industries, small medium large scale industries and also to self-employed person with a view
to creating employment opportunities, development of resources, and increasing GDP and
overall industrial development of the country.

5 Years of Industrial Credit is given below:

Table No 3 : Industrial Credit

Year 2013 2014 2015 2016 2017

Amounts 6243.50 7,166.64 6780.41 8,464.87 9,608.77

(Taka in Crore)

Data Source: Agrani Bank Annual Report

Graphical Presentation:

Industrial Credit
12000

10000

8000

6000

4000

2000

0
2013 2014 2015 2016 2017

Figure 3 : Industrial Credit

Analysis:

Southeast University ( 25 )
In the above figure we see that the total industrial credit of Agrani Bank from 2013 to 2017 is
increasing trend that indicates better performance in providing loans and advances during this
time but after 2014, in 2015 the amount of industrial credit has decreased. In 2013 the total
industrial credit 6243.50 crore taka. In between 2013 to 2014 the growth of industrial credit is
14.79% which enhanced by 923.14 crore taka. After the next fiscal year 2015 industrial credit
has decreased 386.23 crore taka by 5.39 %. In 2016 and 2017 industrial credit is increased
again at 1684.46 and 1143.9 crore taka by the total amount of 8,464.87 and 9,608.77 crore
taka with 24.84% and 13.51% from 2016 to 2017 growth.

4.2.1 Major Industrial Loan Sectors:

Agrani Bank Limited sanctioned loans in different sectors, the important ones of which
are as follows:
Table No 4 : Major Industrial Loans Sectors
Textiles (Spinning, Weaving, Dyeing, Education
Knitting, Finishing)
Export-Oriented Garments Industry Poverty Alleviation
Dairy and Poultry Small and Cottage Industries
Leasing Power Plant
Land Developer Plastic and Rubber
Fisheries Cement
Bread and Biscuit Ceramic
Rice and Flour Mills Paper and Board Mills
Ice Mills Tanneries
Forest and Allied Printing and Packaging
Pharmaceuticals Engineering
Transportation Electrical and Electronics
Bricks Computer
Hotel Food and Allied
Chemicals Filling Station
Hospitals and Clinics Glass and Glass ware
Telecommunication Commercial Building and Shopping Mall

4.2.2 Performance of Industry Sector : 2013 to 2017:

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Performance of Industry sector among 2013 to 2017 is as follows:

Table No 5 : Performance of Industry Sector

Loans Sanctioned Loans Disbursed

Year Outstanding
Number Amount Number Amount
(Taka in (Taka in
Crore) Crore)
2013 2,716 7,482.00 2,646 6,243.50 5,709.41
2014 1081 11,798.46 1081 7,166.64 6,545.47
2015 1157 7821.78 1151 6780.41 7106.96
2016 900 8,683.49 896 8,464.87 7,566.88
2017 834 11,019.16 791 9,608.77 8,747.87

Loans Disbursement of Industrial Sector of Agrani Bank from 2013 to 2017 according to
various sectors wise is given below:

4.2.3 Textile and Readymade Garment Industry Loans:

Bangladesh is the second largest textile and Ready Made Garments exporter in the world.
About 81% of its export earnings are coming from RMG. Textile and Apparel sector’s
contribution to Bangladesh GDP is around 20%. Every textile business in need of financing
would prefer a bank term loans. Textile and Readymade Garment Industry exporters will get
loans facility at a maximum rate of 9% from the scheduled banks under a Bangladesh Bank
which has been introduced for promoting the textile and garment industry sector.

5 Years of Textile and Readymade Garment Industry Loans is given below :

Table No 6 Textile and Ready Made Garments Industry Loans

Year 2013 2014 2015 2016 2017

Amounts 1,947.77 1,573.13 2,035.92 2,604.25 3,102.67

(Taka in Crore)

Southeast University ( 27 )
 Graphical Presentation:

Textile and Readymade Garment Industry Loans

3,500.00

3,000.00

2,500.00

2,000.00

1,500.00

1,000.00

500.00

0.00
2013 2014 2015 2016 2017

Figure 4 : Textile and Readymade Garment Industry Loans

Analysis:
In the above figure we see that the Loans Disbursement on Textile Industrial Credit of Agrani
Bank is increasing from 2015 to 2017 but after 2013, in 2014 the amount of industrial credit
has decreased. In between 2013 to 2014 the growth of is 19.23% which decreased by 374.64
crore taka. After 2015 to 2017 Textile and Readymade Garment Industry Loan is increased
462.79, 568.33 and 498.42 crore taka by 29.42%, 27.92% and 19.14% growth.

4.2.4 Jute Industry Loans:

Jute is the main cash-crop of Bangladesh. Jute traders, exporters and both the public and
private jute mills will get loan facility at a maximum rate of 9% from the scheduled
banks under a Bangladesh Bank refinancing scheme of Tk200 crore, which has been
introduced for promoting the jute sector.

5 Years of Jute Industry loans is given below:

Table No 7 : Jute Industry Loans

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 Year 2013 2014 2015 2016 2017

Amounts 758.19 854.75 980.00 960.17 970.11

(Taka in Crore)

Data Source: Agrani Bank Annual Report

Graphical Presentation:

Jute Industry Loans

1200

1000

800

600

400

200

0
2013 2014 2015 2016 2017

Figure 5 : Jute Industry Loans

Analysis:
From the table and graph we see that the Loans Disbursement on Jute Industry is increasing
and decreasing. From 2013 to 2015 it’s increase and then in 2016 it’s decrease and in 2017 it
is in increasing trend. In among 2013 to 2015 the growth of jute industry loans is 12.74% and
14.65% which is enhance by 96.56 and 125.25 crore taka. After the next fiscal year 2016 the
Jute Industry loans is decreased 2.02% which is decreased by 19.83 crore taka. But 2017 the
Jute Industry loans is increased 9.94 crore taka by 1.03% growth.

4.3 Agricultural and Fishery Loans:

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Agriculture is one of the priority sectors of the Governments in which the Bank has been
financing since 1977 with broad objective of integrating rural people with the mainstream
development activities and tap the unutilized sources in order to boost growth in agriculture
including livestock, fishery and other off farm activities. With the augmented agricultural
output, create employment opportunities generate income of the rural people, Agrani Bank
Ltd. intensified its efforts to extend credit facilities to all sections of rural population under
various rural credit schemes, program and project peddtdaining agricultural and off forming
activities. Interest rate: 9%
5 Years of Agricultural and Fishery Loans is given below :

Table No 8 : Agricultural and Fishery Loans

Year 2013 2014 2015 2016 2017

Amounts 972.07 1,063.21 1,187.47 1,331.02 1,480.17

(Taka in Crore)

Data Sources: Agrani Bank Annual Report

Graphical Presentation:

Agricultural And fishery Loans

1600

1400

1200

1000

800

600

400

200

0
2013 2014 2015 2016 2017

Figure 6 : Agricultural and Fishery Loans

Analysis:

Southeast University ( 30 )
From the table and graph we see that the agriculture and fishery loans of Agrani Bank from
2013 to 2017 is increasing trend that indicates better performance in providing loans and
advances during this time. In 2013, the agriculture and fishery loans amount is 972.07 crore
taka, for the next year in 2014 the total agriculture and fishery loans is 1,063.21 crore taka
which enhance by 91.14 crore taka with 9.38% growth. In the same way in 2015 to 2017 the
agriculture and fishery loans is also increased at 124.26, 143.55 and 149.15 crore taka by the
total amount of 1,187.47, 1,331.02 and 1,480.17 crore taka with 11.68%, 12.09% and 11.21%
from 2015 to 2017 growth.

4.4 House Loans:

Loans allowed to individual/enterprises for construction of house (residential or commercial)
fall under this type of advances. The amount is repayable by monthly installment within a
specified period. Such advances are known as Loans.
It has 9% interest rate.

5 Years of House loan is given below :

Table No 9 : House Loans
Year 2013 2014 2015 2016 2017

Amounts 638.20 527.02 335.82 816.47 946.04

(Taka in Crore)

Data Sources: Agrani Bank Annual Report

Graphical Presentation:

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 House Loans
1000

900

800

700

600

500

400

300

200

100

0
2013 2014 2015 2016 2017

Figure 7 : House Loans

Analysis:

In the above figure we see that the Loans Disbursement on House loans of Agrani Bank from
2013 to 2015 is continuously decreasing. But from 2015 to 2017 is increasing trend that
indicates better performance in providing loans and advances during this time. In 2013 to
2015 the decrease of house loan is 17.42% and 37.28% which decreased by 111.18 and 191.2
crore taka. After the next year 2016 and 2017 the house loan is increased 480.65 and 129.57
crore taka by 143.13% and 13.69% growth.

4.5 SME Financing:

Agrani Bank Limited has formulated a set of regulations and guidelines on SME Financing
complying with the Bangladesh Bank’s instruction. At present, Micro Industry/Enterprise and
Cottage Industry/Enterprise are also included in SME Financing. Our government has taken it
as a thrust sector and given more emphasis on it.
5 years of SME Financing is given below :

Table No 10 : SME Financing

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 Loans Loans
Year Outstanding Disbursed
(BDT in (BDT in
millions) millions)

Number Amount Number Amount

(Taka in Crore) (Taka in Crore)

2013 15,081 1,403.00 38,042 6,140.00

2014 19,539 1,957.00 80,302 5,430.00
2015 19,950 2,191.00 86,192 4,650.00
2016 22,522 2,620.49 88,857 4,418.51
2017 34,315 3,298.19 93,804 5,656.16
Data Source: Agrani Bank Annual Report

Graphical Presentation:

SME Financing
7,000.00

6,000.00

5,000.00

4,000.00

3,000.00

2,000.00

1,000.00

0.00
2013 2014 2015 2016 2017
Fig
ure 8 : SME Financing

Analysis:

Southeast University ( 33 )
From the table and graph we see that the SME financing is increasing and decreasing. From
2013 to 2016 it’s decreasing and then in 2017 it’s increasing. In 2013 to 2016 SEM financing
is decreased 11.56%, 14.36% and 4.98% which decreased 710, 780 and 231.49 crore taka. In
2017 the SEM financing is increased 28.01% growth which enhanced by 1237.65 crore taka.

4.6 Interest on Loans and Advances:

Interest rate is the amount charged, expressed as a percentage of principal, by a lender to a
borrower for the use of assets. Interest rates are typically noted on an annual basis, known as
the annual percentage rate.

5 Years of Interest on Loans and Advances is given below:

Table No 11 : Interest on Loans and Advances

Year 2013 2014 2015 2016 2017

Amount 2394.73 2339.48 2363.53 2144.61 2253.05

(Taka in Crore)

Data Source: Agrani Bank Annual Report

Geographical Presentation:

Interest on Loans and Advances

2450

2400

2350

2300

2250

2200

2150

2100

2050

2000
2013 2014 2015 2016 2017

Figure 9 : Interest on Loans and Advances

Analysis:

Southeast University ( 34 )
Here loans and advances from 2013 to 2014 is decreasing. Then in 2015 it is increasing
lightly, in 2016 it is also decreasing and in 2017 it is increasing movement. In between 2013
and 2014 the Interest on Loans and Advances is 2.38% which decreased by 55.25 crore taka.
In 2015 the Interest on Loans and Advances is increased 24.05 crore taka by 1.02% growth.
But After the next year 2016 the rate is again decreased 218.92 crore taka by 9.26%. After the
next fiscal year 2017 the Interest on Loans and Advances is increased again 108.44 crore taka
by 5.06% growth.

4.7 Non-performing Loans:

When banks lend out money, they do so with the hope that their borrowers will make their
payments as scheduled. But that doesn't always happen. Sometimes borrowers run out of
money or fall into situations where they can't repay their debt, and that's how non-performing
loans become a problem for so many banks.

“A non-performing loan (NPL) is the sum of borrowed money upon which the debtor has not
made his scheduled payments for at least 90 days. A non-performing loan is either in default
or close to being in default. Once a loan is non-performing, the odds that it will be repaid in
full are considered to be substantially lower.”

Table No 12 : Non-performing loans

Year Total Loans Percentage of NPL Non-performing
to total loans Loans
(Taka in Crore) (Taka in Crore)
2013 20,297 17.93% 3580
2014 23,509 16.96% 3966
2015 24,480 18.96% 4640
2016 26,587 25.59% 6804
2017 31,912 17.45% 5570
Data Source: Agrani Bank Annual Report

Geographical Presentation:

Southeast University ( 35 )
 Non- Performing Loans
8000

7000

6000

5000

4000

3000

2000

1000

0
2013 2014 2015 2016 2017

Figure 10 : Non-performing Loans

Analysis:

In the above figure we see that, In 2013 the total non- performing loans stood at 3580 crore
taka or 17.93% of 20,297 crore taka. In 2014 the total non-performing loans stood 3966 crore
taka or 16.96% of 23,509 crore taka. In 2015 the total non- performing loans stood 4640
crore taka or 18.96% of 24,480 crore taka. In 2016 the total non-performing loans stood 6804
crore taka or 25.59% of 26,587 crore taka. In 2017 the total non-performing loans stood 5570
crore taka or 17.45% of 31,912 crore taka.

So, we can see that the total non-performing loans of Agrani Bank Limited from 2013 to
2016 is increasing trend. This is very clear to see, Non- performing loans of the bank
continuously increased. It is very risk for the bank. In among 2013 to 2016 the non-
performing loans is increased 10.78%, 16.99% and 46.64% which is increased by 386, 674,
and 2164 crore taka. In 2017 the non- performing loans is decreased 18.14% which is
decreased 1234 crore taka.

Southeast University ( 36 )
4.8 Sanction Procedure of the Loans:

When a borrower approaches to ABL for a loan, he or she is required to fulfill the following
criteria: He or she has to be a client of the bank. He or she needs to apply properly &
describing the purpose of the loan amount needed and his or her capacity of repayment.

Getting Loan Collecting Evaluating Evaluating

Proposal Information project/client Primary

About Project Branch Level

About Client
Evaluation

Sanctioning & Division

Supervision Disbursing
Documentation
of the Loan Loan
of Loan

Recovery of the

Zonal Office Branch

Level Level

Usual Legal

4.8.1 Getting Loan Proposal:

Bank provides loan facilities to the people who are credit worthy to the bank. Credit
worthiness depends on the credibility, financial capability, and feasibility of the project and
management ability of the clients to earn profits. When bank is satisfied with all these then
the client is provided with the requested loan. At this point it should be mentioned that the
client has to go through an interview where his loan potentiality is justified through critical
observation. When loan officer is satisfied with the customer he is asked to submit an
application and to fill up a form with specific details.

Southeast University ( 37 )
4.8.2 Evaluating project/ client:

When Credit officer is satisfied with his credit worthiness, financial capability, management
ability and feasibility of the project through credit appraisal of clients in a prescribed form,
he/she can hope for credit from the bank. Credit appraisal is done through „credit appraisal
form‟. Ratio analysis is give importance in case of project finance. But most of the medium
quality loans are given on the basis of financial capability of repaying and credit worthiness
of the client. Lending risk analysis is done in a prescribed form in case of large amount of
loan, above 50 lac. Credit officer prepares a credit proposal along with the prescribed „Credit
Proposal From‟. Credit officer measures the risk associated with the credit facility. No credit
proposal can be put for approval unless there has been a complete written analysis. It is
absolute responsibility of the proposing officer to ensure that all necessary proposal
documentation have been collected before the facility request is sent to the sanctioning
officer.

4.8.3 Evaluating Primary Security:

The primary function of the modern bank is to make advance against various types of
securities whether moveable or immoveable. To bind the charge of those securities, banks
create some documents to protect the safe guard of bank interest or bank money. The
documentation varies depending upon the types of securities being accepted & nature of
charge being created. Document should execute and stamped according to the law.

4.8.4 Division:
Branch Level:

It is to be headed by the Branch Manager, other members to be selected by the manager in

consultation with head office.

Zonal Office Level:

Zonal office credit in accordance with authority established and delegated by the Board of
Directors.
 Reviewing, analyzing and approving extension of credit in accordance with authority
established and delegated by the Board of Directors.

Southeast University ( 38 )
  Evaluate the quality of tending staff in the bank and take appropriate steps to improve
upon.
 Recommending credit proposal to the executive Committee/Board of Directors which
are beyond the delegated authority.
 Ensuring, that all elements of credit application i.e. Forms. Analysis of statements and
other papers have been obtained and are in order

4.8.5 Disbursing Loans:

Process flow for loans disbursement:

Documentation Other Bank’s Lien Lien Confirmation on SD Preparation of

Check Confirmation (For Down Payment (For purchase order (For
Secured Loans) Auto Loan) Auto Loan)

Charge collection Lien Confirmation Documentation Entry in FINACLE

voucher checking before
sanction

Sanction and Loan Activation Disbursement Voucher Posting

Repayment schedule Voucher
setup

PO Voucher (for Transaction Report:

Auto Loan/ Now Voucher Printing
Loan and Corporate)

Southeast University ( 39 )
4.8.6 Recovery of the loans:

When a problem loan is detected the responsible loan officer takes the corrective action and tries to
minimize the loan losses by allowing different facilities to the client. The steps are followed by the
Agrani Bank to manage the clients are:

1. Open discussion with the borrower

2. Follow Bangladesh Bank recovery policy.

3. Discussion with third party to find out the underlying reasons

4. Issuing the “1st Reminder” letter to inform the due date and due installments

5. If the party does not respond issuing the “2nd Reminder” and the “3rd Reminder”

Letter.

6. Revise the loan agreement

7. Concession of interest

Chapter Five : Findings, Recommendations

and Conclusion

5.0 Findings
5.1 Recommendations
5.2 Conclusion

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5.0 Findings:

Every bank has its own credit procedure. Bank under study possesses a standard credit
procedure. As the objective of my study is to make a comment on the loans and advances
management of Agrani Bank Ltd, I try my best to collect data for the study and find out the
reality. Based on the data generated during my study period I will sum up my findings here
and I think this will help me to achieve my objectives.

 As we observed the chart of total loans Sanction of Agrani Bank Limited it is found
that the Sanction of the bank continuously increasing. It signifies that the bank tries to
extend credit facilities to the various sector of the economy.

 Agrani Bank Ltd. has a significant role in long term project financing in both
Agriculture and industrial sectors. Again ABL. has a deep concern for rural farmers.

 From the study of Sector wise Loans by chart it is found that the percentage of loans
in the Agriculture and Fishery, Jute and Jute Goods, Transport& Communication,
Textile and Readymade Garments, Construction and Engineering, Leather, Power &

Southeast University ( 41 )
 Energy, Professional and Services, Housing Service, Wholesale/Retail Trading,
Personal Loan (staff loan and other personal loan is an increasing from 2016 to 2017.
So it goes upward time to time. But Ship Breaking, Food and Allied Industry,
Pharmaceuticals and Chemicals has decreased. So it goes to downward time to time.

 From the study of Industrial Credit from the chart from 2013 to 2017 it is found that
the performance of Agrani Bank Limited is instable in this case. The performance of
Industrial Credit was increased in 2013 and 2014 which was 923.14 crore taka which is
upward by 14.79% . But in 2015 the performance of Industrial credit was lowest which
was 386.23 crore taka which is downward by 5.39 % in comparison of previous year.
After that the Industrial Credit was increased in 2016 to 2017 again which was
1684.46 and 1143.9 crore taka which was upward by 24.84% and 13.51%.

 The graph of textile and Ready Made Garments from 2013 to 2017 shows the
performance was lowest in 2014 which was 374.64 crore taka and in 2017 the
performance was in highest level which was 498.42 crore taka.

 From the study of Jute Industry Loans by chart it is found that the Jute Industry Loans
are not stable at all as it goes upward and downward time to time. As the Jute Industry
Loan is observed from 2013 to 2017 it is found that the performance was highest in
2015 which was 125.25 crore taka and the performance was lowest in 2013 which
was 96.56 crore taka.

 As we observed the chart of the agriculture and fishery loan of ABL it is found that
the disbursement of the bank continuously increasing.

 From the study of house Loans by chart it is found that the house Loans are not stable
at all as it goes upward and downward time to time. The graph of house loan of 2013
to 2015 shows that the performance of Agrani Bank Limited is decreasing. But after
2016 to 2017 it is increasing.

Southeast University ( 42 )
  As the Interest on Loan and Advance is observed from the chart from 2013 to 2017 it is found
that the performance was highest in 2013 which was 2394.73 crore taka and the performance
was lowest in 2016 which was 2144.61 crore taka.

 Now-a-days it is a hard task to manage Non-performing in banking arena. NPL is the

asset that performs no income for the bank. On the other hand a provision is to be kept
from income that hampers on capital of the bank. In 2013 to 2016 the Non-
performing loans of Agrani bank limited is increasing .so, it's hampers the performing
loans .If loans become NPLs then banks have loss of fund to give loans in accordance
their commitment. Customers need to pay extra. So loans may be defaulted.

 The Bank has no segmentation to handle different type of customers. They are equally
treating of all the customers to provide service. But high status clients seek on extra
honor from Bank or institution.

 Maximum amount of loan is provided to the long-term industrial sectors. They

intentionally ignore the Ship Breaking, Transport, Storage & Communication, Food
and Allied Industry etc. sector because of riskiness and safety issues. But for the
overall economic development of the country they should diversify their loans in
different sectors.

 Various types of loans and advances given by banks: such as, Cash Credit, Overdrafts,
Small-loans, Demand loans, Bills purchased and discounted, Home building loans and
staff loans etc.

 Before lending, Sometime Agrani Bank fails to properly analyze the business risk of
the borrowers and the bank cannot forecast whether the business will succeed or fail.
If it fails to run well, the loans becomes classified.

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5.1 Recommendations:

 The bank should diversify its loans more to finance small entrepreneurs for better
growth of the country.

 The bank can provide student loans, doctors loans etc., this may encourage the
students to come forward to do something for the economy. And also increase the
amount of personal loans and consumer loans.

 The procedure of loans sanctioning should be automated to make sanctioning of loans

less time consuming and reducing the risk of losing documents of disbursed loans.

 Strong promotional activities should be increased to motivate its present potential

loans related clients. More loans can be granted for new entrepreneurs, new
businessman and new companies etc. which ultimately reduce “class banking”

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  The law and order should be easier for the bank to liquidate the collateral, so that the
borrower can be able to pay the debt easily.

 Maximum number of the loan is provided in the long-term industrial loans. Bank’s
clients are also limited. So, they can’t serve the economy of the country that much.
So, they should diversify their loans more in agriculture, forestry, fishing and new
industries etc. for better economic growth of the country.

 Installment period and installment time duration should be increased so that the
borrower can utilize their debt facility properly for profit maximization.

 In case of some mortgage problem such as acquisition, proprietorship and problem of

asset, the bank should try to avoid this type of loans sanction.

 The bank should try to increase its recovery amount since loans amount each year has
been increased. The bank should induce quality client and select best project for risk
free rate of interest.

 The bank should update its loans and advances strategy in sustainable and
appropriately enough to survive in the market.

 The bank should provide more loans of small scale in different sectors though it will
decrease the profit a little. But it will be very safe.

 In a competitive financial market, the bank should innovate it’s products & services
need to be focused more on customer’s needs.

 Increase the ATM booth.

 Bank should be increased the amount of Q cash withdrawn from the booth.

Southeast University ( 45 )
 5.2 Conclusion:

Agrani Bank Limited, the largest & leading commercial Bank of the country. By providing
the several type of loans of the Bank is playing the vital role for the development of the
Bangladesh economy. Loans and advances granted by Agrani Bank Ltd are highly beneficial
for firms, individuals, companies and industrial concerns. It provides their service in the
every class of people. The branch of the Agrani Bank Limited in all over the country, so
people can get their service easily. Loans and Advances comprise the most important asset as
well as the primary sources of earning of the bank. Agrani Bank has a very qualified and
dedicated group of officers and staffs who are always trying to provide the best service to the
clients. They always monitor the credit in different sectors and their position. Before
providing the loans they analyze whether the loans will be profitable and whether the client is
good enough to repay the loans within the given period of time. Credit department diversified
their loans in different sectors classified by them. The bank does not provide more loans in
the small & cottage industry. The reason is that the return from this sector is not so good and
also the sector is very uncertain. The bank provides most of the credit facility in term loans
mainly in long-term loans. Return from short-term loan is very good and also proves to be
very safe to finance.

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 References:

 Annual Report of Agrani Bank Limited.2013

 Annual Report of Agrani Bank Limited.2014
 Annual Report of Agrani Bank Limited.2015
 Annual Report of Agrani Bank Limited.2016
 Annual Report of Agrani Bank Limited.2017
 Bank Statistics. Bangladesh Bank.
 Loan Review Policy. Agrani Bank Recovery Department.
 Credit Risk Management policy of Agrani Bank ltd.
 www.agranibank.org.
 Corporate Finance (Seventh Edition) Principal of Finance, Ross
Westerfield Jaffe,

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