Chapter-1: Introduction: An Analysis of Loans & Advances Activities of Pubali Bank LTD

An analysis of Loans & Advances activities of Pubali Bank Ltd.
Chapter-1: Introduction
1.1 : Introduction:
The financial institution are playing important role in the economics of our country.
Millions of small & large depositor & investor are investing their fund in Pubali Bank
Limited. The performance of the Pubali Bank Limited is very perform for future
development of our industry. If they perform well, the growth of various industries will
increase day by day. It is important to analyzing the performances of our Banking sector.
I have collected the information of this Bank from Internet, Annual Report-2007, 2008,
2009, 2010, Branch Manager conference book, their manual books, share department etc.
After collecting the information I have tried to calculate them mathematically. So that it
may show the rising sector of our economy. I have also used financial tools, graphs,
computer software etc. The rising status and in future what economic should be played
by the bank in our corporate economy. The emerging and week industry will be
identified and it will help the make decision for an investor in the financial implement
corporate governance. PBL has ensured basic four columns of good Governance i.e. 1)
Accountability, 2)Transparency, 3) Predictability & 4)Balancing the extreme through
utilization of available resources and day to day decision making in conformity with
instructions of regulatory bodies.
It is sure that the arrangement is very good but it has some limitation because the world
economic change as well as internal policy, nature, environment situation may create a
little harm in the economy.
Banks are also closed watched because of their power to create money in the form of
easily spendable deposits by making loans and investment. Changing in the volume of
money created by banks appears to be closely correlated with economic conditions
especially the growth of jobs and the presence of absence of inflation.
Md. Mazidur Rahman, ID-M093520, Batch-33-I, IIUC, Dhaka Campus 1|Page

Financial institution perform the essential economic function of channeling funds from
people who have saved surplus funds by spending less than their income to people who
have a shortage of funds because they wish to spend more than their income.
Commercial banks raise fund primarily by issuing check able deposits (deposits on
which checks can be written) savings deposit (deposit's that are payable on demand but
lower interest). Then they use these funds to make commercial, consumer’s and
mortgage loans and to buy Government securities and bond.
1.2 : Background of the study:
The purpose of this report is to get an idea about the ''A Analysis of Loans & Advances
activities of a commercial Bank: A case study on Pubali Bank Limited'' This report is an
attempt to reflect the position of PBL in banking industry procedures, policies and
activities with emphasis on over all banking system and focusing on lending process, a
section helps in foreign trade, a section that collects deposits. This study more or less
relates with all the sanction but give much emphasis on the products of PBL.
The dissertation program which is necessary to complete the MBA program exercise a
significant importance as it, enables a students to familiar with the practical business
activities. The student work closing with the people of an organization and learn about
the function of that organization. This program enables a student to develop his
analytical skill and scholastic attitude.
1.3 : Objective of the study:
There are some certain objectives behind preparing this report. The primary and basic
objective is to fulfill the course requirement and then find our similarities between
academic knowledge and practical field. And other objectives are as follows:-

1. To achieve concept regarding practical business.

2. To under stand the over all activities of Pubali Bank Limited.
3. To be familiar with the rules & regulation approval of loans & advance
procedures.
4. To recognize and analyze the terms that are related to extension of the loans.
5. To identify the sector share PBL provide the credit facility like- Trading business,
import business, export business, garments, jute, Cotton yarn, Shoes, Flour
goods, consumer Loans i.e. micro credit programs that are the primary parameter
of our county economic cycle.
6. To know about the implementation of the loan procedures and how the loan will
be disbursed.
7. To analyze the financing systems of the bank and find out whether the bank need
any improvement to be done and make grater contribution towards the country's
economy.
1.4 : Scope of the study:
The study encompass the credit facilities credit policy and PBL participation in the
economy through its credit facilities etc. That is the PBL's credit facilities and policy,
customer selection and their business security requirement, procedure of Loans &
Advance, sources of fund and investment portfolio.
1.5 : Methodology of the study:
Different types of date and information are required to meet the goal of this report. Those
date and information were collected of this two sources. These are
1. Primary data
2. Secondary data

i: Primary source of data:
a. Personal observation
b. Face to face conversation of the officers
c. Face to face conversation of client
ii: Secondary source of data
a. File study
b. Internet
c. Annual report of PBL
d. Statement balance sheet & overview
e. Various books, articles, requiring general function and different publication regarding
banking function credit policies etc.
1.6 : Limitation of the study:
Banking sector is very sensitive and competitive by its nature. So, data of this report is
not available and the interview might not disclose accurate facts and figures about credit
policies. However I faced the following problems during the study.
1. In our country office expected employees are always busy in their official work.
So, they are not so interest to help such types of research work.
2. Insufficiency of valuable data and information from the top management.
3. Lack of proper books, journals etc.
4. Lack of time and resources
5. Some other internal problems
6. Clients are busy and not always helpful.

Chapter-2 : Organizational Profile of Pubali Bank Ltd.
2.1: Background of the Pubali Bank Limited:
The bank was incorporated in the year 1959 under the name and style of The Eastern
Mercantile Bank Limited under Companies Act 1913. After liberation of the country in
1971, the Bank was nationalized as per policy of the Government of the People’s of
Republic as Bangladesh Bank (Nationalization) Order 1972 (PO No- 26 of 19722) and
was renamed as Pubali Bank. Subsequently, the Bank was denationalized in the year
1983 and was again incorporated in Bangladesh under the name and style of Pubali Bank
Limited in that year. The Government of the People’s Republic of Bangladesh
transferred the entire ownership of the undertaking of Pubali Bank to Pubali Bank
Limited, which took over the same as a going concern.
2.2: Milestones of Pubali Bank Limited:
1959 - Established as a limited company and style of The Eastern

Mercantile Bank Limited under companies Act- 1913.
1959 - First branch open in Teribazar in Chittagong
1971 - The Bank was nationalized as per Bangladesh Bank order-1972
(President Order No.-26 of 1972) as a Pubali Bank.
1983 - The bank was denationalized and was again incorporated in
Bangladesh under the name and style of Pubali Bank Limited
2006 - Securities Trading Division (STD) of Pubali Bank Limited started
operations from January'2006 under the brokerage license from
the securities & Exchange Commission.
2009 - We pass 50 glorious years successfully.
2010- It was the first year of Islami Banking operation in PBL
2011- 401th Branch open the bank
2011- 250 Branch is now online.

2.3: Capital
Authorized capital and paid – up capital of the Bank stood at Tk.1,000.00 crore and
Tk.496.86 crore respectively in 2010
2.4 : Aims:
* To match: Corporate objectives, with ownership and accountability.

* To increase our value by releasing each individual's true potentials.
Corporate Objectives:
 Growth
 Value additional
 CSR
 Quality Standard
2.5 : Mission:
To become most remarkable and admirable private commercial bank in the country. To
get recognition as a dynamic, innovative and customer service oriented bank. To keep
momentum of continuous & steady growth with maximum transparency and to diversify
products and resources. To expedite continuous
2.6: Vision:
To hold the position of best private commercial bank in Bangladesh with adherence to
meticulous compliance of rules and regulations and strong commitment to Corporate
Social Responsibility.
2.7: Management of Hierarchy:
The thirteen member of the Board of Directors are responsible for the strategies planning
and overall policy guideline of the Bank.
The Management structure of PBL from higher level to lower level is given below:
Figure No.1: Management structure of Pubali Bank Limited

Chairman
Vice- Chairman
Directors
Managing Director & CEO
Additional Managing Director
Deputy Managing Director
General Manager
Deputy General Manager
Assistant General Manager
Senior Principal Officer
Principal Officer
Senior Officer
Officer
Junior Officer
Sr. Cashier- Cum Clerk
Cashier- Cum Clerk
Source: PBL -Manager Conference Report-2010
2.8: Source of Fund :
Fund means a sum of money on which some enterprise is funded or financially supported
a supply or source of money, money available to an organization for a project etc.

DEPOSIT MIX
DEPOSIT TREND (Taka in Million)

Advnce Trend (Taka in Million)
Profit Trend (Taka in Million)

Source of fund:
A)
I. Paid-up capital
II. Statutory Reserve (The amount transferred to this reserve as per section 24 of
Banking companies Act- 1991 @ 20% of current year’s annual profit before tax)
III.General Reserve
IV. Retained Earnings / Undistributed profit
V. Other Reserve
VI. Any other secret reserve like provision against classified and unclassified
investment.
b)
I. Savings bank deposits
II. Current Accountability Short Notice Deposits
III.DPS/PPS/PSP/SSP
IV. Monthly profit based deposit
V. Duigun Snchay Prakalpa
VI. FDR (For 3,6,12,24,36 Months)
c)
I. Borrowing from other bank
II. Bills payable
III.Sunday deposit/Margin
Md. Mazidur Rahman, ID-M093520, Batch-33-I, IIUC, Dhaka Campus 10 |

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IV. Contingency Deposit
2.9 :Use of Fund:
Bank's fund can be invested after maintaining following liquidity:

a) The required Cash Reserve Ratio (CRR) on the Bank's time and demand liabilities at
the rate of 6% has been calculated and maintained with Bangladesh Bank in current
account.
b)19% SLR including CRR on the same liabilities in also maintained in the one of
treasury bills and companies Act-1991 with section-33 and BRPD circular No. 11 & 12
dated 20, August-2005 and MPD circular No 4 & 5 dated 01.12.2010.
So,
Total demand & time liabilities =92370 million
SLR Kept = 19424

SLR KEPT
Liquidity = X 100
Total demand & time liabilities
= (19424 / 92370) X 100
= 21.03 %
So, Pubali Bank has adequate liquidity.
2.10 : Investment
After maintaining CRR/ SLR, investment may be made subject to compliance of

following restrictions imposed by B.B. (section-27 of the Bank Company Act-1991):
Restrictions of investment:
a) Against security of its own share.
b) Without security or only against personal guarantee of Director’s to:
i) Its director
ii) Family members of its director
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iii) In any company where the director or member of its director's family is director,
proprietor, Guarantor/ partner/ control of the company having voting right of
20% of more.
c) Without approval the majority director excluding the director concern.
d) Without prior written approval of B.B.
e) Even by BB to any client / group of the amount of investment exceeds 100% equity of
concerned Bank.
f) Without prior approval of BB to any director if the amount of investment exceeds
Tk.50.00 Lac (both direct & indirect investment) and Tk.10.00 Lac (real investment)
g) Total amount of investment (direct & indirect) excluding BB L/C, bills & cash
security to its directors must not exceed 10% of investable fund (BCD circular letter No.
15 dated 18.07.95)
Moreover, any Bank can't invest in share / debenture exceeding 10% its liabilities.
2.11 : CAR (Capital Adequacy Ratio) of PBL- Focus Basel-II
Basel- II: a prescription / formula given by central bank expressing the capital adequacy
of a bank is called Basel-II
As per Basel-II the minimum capital requirement (MCR) of a bank is 10% total risk
weighted asset (TRWA) or Tk.400 crore which is higher.
2010 2009 (crore)
Total asset including of balance sheet items 15619 12607
Total risk weightier asset 13461 7388
Required capital 10% of TRWA 1346 739
Actual capital maintained (Tier-I & Tier-II) 1512 1007
Total capital surplus 166 268
Since Tk.1512 crore 10% TRWA or Tk.400 crore

So the bank had adequate capital.
Core capital (Tier-I) 20010 (crore)

Paid up capital Tk. 497
Statutory reserve Tk.415
Return earning Tk.234

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Total Tier-I Tk.1146
Supplementary capital (Tier-II)
General provision on UN-classified loan (1%) Tk.1.26

Assets revaluation reserve Tk.144
Ex. equalization account Tk.3
General provision for off balance sheet exposures Tk.25
Revaluation of investment (HFT) Tk. 0.01
Revaluation of investment (HTM) Tk.0.04
Revaluation reserve for equity instruments upto 10% Rk.68
Total Tier-II Tk.366.05
Total Capital (Tk.1146+ Tk.366) = Tk. 1512 crore
Chapter-3: Literature Review

3.1: Difference between Loans & Advances
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Sl No. Loans Advance

1
2 Long term credit Short term credit
3 Installment Basis Non-installment Basis
4 More than 1(one) year maturity period 1(one) year maturity period
5 Example- Term Loan, HBL-GEN, CLS, SOD against the FDR/ PPS/PSP/
LATR, PC, LF, HP, PAD,IBP, FBP, PC, DPS/SSP/ Work Order, CC
Staff Loan (Car), HBL - Staff (Hypo.), CC(Pledged)
3.2: Assets & Liabilities of Banks
Figure No.2: Assets & Liabilities position as on 31.12.2010

Asset Liabilities
1 Cash 1. Borrowing from other banks, 3288185
financial institution and agents
1.1 In hand 2420921 2 Deposits & other accounts
1.2 Balance with B.B. 7816129 2.1 Current deposit & other a/c 16594357
2 Balance with other BFIs 2.2 Bills payable 2492007
& NBFIs
2.1 Inside Bangladesh 697769 2.3 Savings bank deposits 33709388
2.2 Outside Bangladesh 186497 2.4 Term deposits 42560731
3 Money at Call on short 119487 2.5 Other Deposits 3494016
notice
4 Investment 3 Other liabilities 11944100
4.1 Government 10807104 Total Liabilities 114082784
4.2 Others 5709284
5 Loans & Advance 4 Total Shareholders' Equity
5.1 Loans, CC, OD etc 88094724 4.1 Paid up capital 4968600
5.2 Bills purchased & 1011483 4.2 Statutory capital 4148732
discounted
6 Fixed assets including 3330314 4.3 Retained earnings 2340892

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premises, furniture and

fixtures
7 Other assets 8268564 4.4 Other reserve 2921644
8 Non-banking assets 375
Total Assets 128462652 Total Liabilities & Shareholders 128462652
Equity
Source: PBL -Annual Report-2010
3.3. Risk Management

The risk of PBL is defined as the possibility of losses, financial or otherwise. The risk
management of the Bank covers 6 (six) core risk areas of banking i.e.
1. Credit Risk Management
2. Foreign Exchange Risk Management
3. Asset Liability Management
4. Prevention of Money Laundering
5. Internal Control & Compliance
6. Information Technology Risk Management
1. Credit Risk Management:

Credit risk is one of the major risk faced by the Bank. This can be described as potential
loss arising from the failure of a counter party to perform as per contractual agreement
with the Bank. The failure may result from unwillingness of the counter party or decline
in his / her financial condition. Therefore, Bank's credit risk management activities have
been designed to address all these issues. The Bank has segregated duties if the Officers /
Executives involved in credit related activities. Credit approval, administration,
monitoring and recovery functions have been segregated. For this purpose, three separate
divisions have been formed. These are credit division, credit administration, monitoring
& recovery division and law division. Credit division is entrusted with the duties of
maintaining asset quality, assessing risk in lending to a particular customer, sanctioning
credit, formulating policy / strategy for lending operation. etc.
A through assessment is done before sanction of any credit facility at credit division. The
risk assessment includes borrower risk analysis, financial analysis, industry analysis,
historical performance of the customer, security of the proposed credit facility etc. All

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credit proposals have been placed in credit committee for sanction or make decline.
Managing Director is the Chairman of credit committee. Loans having big exposures are
placed before the Board of Directors of the Bank for sanction.
In determining single borrower / large loan limit, the instructions of Bangladesh Bank
are strictly followed. Internal audit is conducted on periodical interval to ensure
compliance of Bank's and Regulatory polices. Loans are classified as per B.B.
Guidelines.
2. Foreign Exchange risk management
Foreign Exchange risk management is defined as the potential charge in earnings arising
due to charge in market prices. The Foreign Exchange risk of the Bank is minimal as all
the transactions are carried out on behalf of the customers against underlying Foreign
Exchange transactions.
Treasury Division independently conducts the transactions and the back of treasury is
responsibility for verification of the deals and passing of their entries in the books of
account. A;; Foreign Exchange transactions are revalued at market to market as
determined by BB at the end of month, All nostro accounts ate reconciled on monthly
basis and outstanding entry beyond 30 day is reviewed by the management for its
settlement.
3. Asset liabilities management
The Asset liability committee (ALCON) of the Bank monitors market risk and liquidity
risks of the Bank. The market risk is defined as potential change in earnings due to
change in rate of interest, foreign exchange rates which are not of trading nature. ALCO
reviews liquidity requirement of the Bank, the maturity of assets and liabilities, deposit
and lending, pricing strategy and the liquidity contingency plan.
4. Prevention of money Laundering

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Money Laundering risk is defined as the loss of reputation and expenses incurred as
penalty for being negligent in prevention of money Laundering . For mitigating the risk,
the Bank has a designated chief compliance officer at Head Office and compliance
officers at branches, who independently review the transaction of the account to verify
suspicious transactions. Manuals for prevention of money Laundering have been
established and transaction profile has been introduced. Training has been continuously
given to all the category of officers and executives for developing awareness and skill for
identifying suspicious activities.
5. Internal Control and Compliance
Operational loss may arise from error and fraud due to lack of internal control and
compliance. Management of the Bank maintains internal control and compliance through
audit division and human resources division. Audit division controls operational
procedure of the Bank and undertakes periodical and special audit of the branches and
departments of Head Office for review of the operation and inadequate systems or from
external events. Audit committee of the Board subsequently reviews report of the
internal control and compliance.
6. Information Technology Risk Management

For security awareness of computer / information assets of the bank, ITC Policy of the
bank duly approved by the Board, has been printed and sent to all branches for
compliance. Banking data of all the Online Branches are being stored and controlled
centrally at the Data Center (DC) established at ID Division.
3.4: What is Bank
Banking is a time honored discipline and introduced in 2000 B.S.. The world bank has
been originated from an Italian word or a Latin word '' BANQUEE''.
A bank is a financial institution / intermediary that accepts deposits and channels those
deposits into lending activities either directly or through capital markets. A bank
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connects customer will capital deficits to customer with capital surplus. We can say an
organization usually a corporation, chartered by a state or federal government which
does most or all of all of the following receives demand deposits and time deposits,
honors instruction drawn on them an pays interest on them, discounts notes, makes loans
and invests insecurities, collects checks, drafts and notes, certifies depositor's checks and
issues Drafts.
3.4:1: What is Commercial Bank
A commercial bank is a financial intermediary which collects credit from lenders in the
form of deposits and lends in the form of loans. A commercial bank holds deposits for
individuals businesses in the form of checking and savings accounts and certificates of
deposit of varying maturities while a commercial bank issues loans in the form of
personal and business loans as well as mortgages. The term commercial bank came about
as a way to distinguish from an ''Investment Bank'' The primary difference between a
commercial bank and its counter part is that a commercial bank earns revenue by issuing
primary loans from pool of deposits while an investment bank brings debt and equity
offerings to market for commercial bank a portfolio of other securities to generate
proprietary income.
3.5: Banks working in Bangladesh
Table:-2:
Types Number Bank Name
Public Limited 4 Agrani Bank, Sonali Bank, Janata Bank, Rupali Bank
Bank
Private Limited 30 Pubali Bank, Islami Bank Bangladesh Limited, First
Bank Security Islami Bank, Prime Bank, Exim Bank,
Southeast Bank, Dhaka Bank, Priemier Bank, National
Bank, Mutual Trust Bank, Social Islami Bank, Standard
Bank,Trust Bank, Dutch-Bangla Bank, City Bank, Brac

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Bank,Al-Arafah Islami Bank, IFIC, AB Bank, Shahjalal

Islami Bank, Exim Bank, Bangladesh Commerce Bank,
Eastern Bank, NCC bank, Jamuna Bank, UCB, ICB
Islami Bank, Mercantile Bank
Foreign Bank 9 Standard Chartered, Citi-NA Bank, Bank Al- Falah
Special Bank 5 Bangladesh Krishi Bank, RAKUB, Bangladesh
Development Bank, BASIC Bank, Probashi Kallan Bank
Specialised 3 Answer-VDP Bank, Karmasansthan Bank, Grameen
Financial Bank
institution
Co-operative 1 Samabai (Co-operative) Bank
Bank
52
Source: Class Sheet (Teacher- Md. Hanif Miah, Joint Director of B.B.)
Banking System:
1. Unit Banking System
2. Branch Banking System.( British Banking System)
Sonali Bank is the largest among the nationalized commercial banks while Pubali Bank
is leading in Private ones, Among the foreign banks standard Chartered Bank has
become the largest in the country.
Banking financial institution of Bangladesh

BFIs
Schedule Bank Non- Schedule Bank

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Foreign Bank Local Bank
Special Bank Commercial Bank
Public Ltd. Bank Private Ltd. Bank
3.6: Central Bank of Bangladesh & its function:
The name of central bank of Bangladesh is Bangladesh Bank since the country's
independence B.B. was established on 16th December-1971 as per B.B. Order 1972
(Present order-127).
There are 9 branches of B.B.
1. Motijheel
2. Shadarghat
3. Chittagonj
4. Rajshahi
5. Khulna
6. Bogra
7. Sylhet
8. Rangpur
9. Barishal
Function B.B.

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a) Core/ primary function:
i) Issuing currency / notes
ii) Formulated monetary policy
iii) Supervising BFIs & NBFIs
iv) Performing treasury functions
v) Preserving & maintaining the reserves of GOVT.
b) Supplementary / secondary function:
i) Working as the banker of Government
ii) Working as the banker of other BFIs & NBFIs
iii) Working as the banker the fiscal asset of the government
iv) Working as the banker the lender of the last resort of BFIs
v) Maintaining of per value home currency.
3.7: Function of the Commercial Bank & its function:
There are two type of function

1. Principal function
2. Secondary function
1. Principal function: Primary / principal function of a commercial Bank are three type
a. Acceptance of Deposit
b. Lending
c. Investment
a. Acceptance of Deposit: An important function of commercial Bank is to attract deposit

from the people. Those people who have cash account and want their safely. They
deposit that amount of banks. Commercial banks acceptance deposits every class and
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source and take responsibility to repay the deposit in the same currency whenever they
are demanded by depositors
b. Lending: Another function of commercial Bank is to make loans and advance out of
deposit receive in various drom Bank apply the accumulated public deposits to
productiove uses by way of loans and advances, over draft and cash credit against
approved securities
c. Investment: Now a days a commercial Banks are also involved in Investment.

Generally investment means long term and medium term investments.
2. Secondary of Ancillary function:

Secondary or ancillary function of commercial Bank are two types:
a. Agency Services:
i) Commection and payment of cheque
ii) Standing Instruction
iii) Acting as corespondence
iv) Collecting of bills- Electricity, gas, WASA, Telephone etc.
v) Purchase and sales of stocks / share act as a banker to issuer
b. Miscellaneous or General Services:

i) Safe custody.
ii) Locker
iii) Remittance facilitates- DD, TT, MT and PO
iv) Advisory services
v) Providing credit reports
vi) Opeining L/C
vii) Demand in foreign Exchange / travers cheque only authorized dealser
Branch.
viii) Completed service of Foreign Trade
ix) Other service:- Debit Card, Credit Card, Online Banking, SMS banking,
Internet Banking.

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Beside these activities commercial bank may perform further tasks all its activities are
guided by its authority for the betterment of the company or for society.
Chapter-4: Analysis & Findings
4.1: Loans & advance Activities of Pubali Bank Limited
In line with National economic development the bank made advances mainly as
commercial loan, import & export business, term loan to large and medium scale
industries, House building loan, working capital loan, consumer’s credit (Household Car,
Flat Purchase), and syndication loans etc.
The total advance of the bank as on 31 December'2010 stood at Tk.89106.2 million

showing an increase of Tk.14902.88 million @ 20.08% growth.
The bank has formulated its policy to give priority to small and medium business while
financing large scale enterprise through consortium of Banks. Major sectors in which the

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bank extended credit included trade and commerce, garments, industry, large and
medium scale industries and construction.
Advance: Benefits start right from the first month of opening account under the scheme
and continue up to five years when the depositors will get refund of his deposit.
4.2: Various kinds of Advance:

Advances can be various types 2010 2009 (million)
1. Loans,cash credit and overdrafts 88098.72 73622.67
2. Bills discounts and purchase 1011.48 580.60
89106.20 74203.33
Table-3 : Bills purchased and discounted:
2010 % 2009 %
Inside in Loans against accepted Bill 849.63 0.95% 433 0.58%
Banglades Loans against DD Purchased -
h
Inside in Loans against accepted Bill 161.77 0.18% 147.58 0.20%
Banglades Loans against DD Purchased 1011.48 1.13% 580.66 0.78%
h
Source: Annual Report-2010
Table-4 :Loans and Advance

Fig. ''million''
2010 Per cent of 2010 2009 Per cent 2009

Loans 24963.52 28.02% 23056.87 31.07%
CC 16987.31 19.06% 13527.09 18.23%
OD 12498.68 14.02% 10639.41 14.34%
CLS 9701.15 10.88% 6605.9 8.90%
PAD 1317.07 1.48% 1621.05 2.18%
LATR 17026.19 19.11% 14316.93 19.24%
Lease Finance 2592 2.91% 2677.57 3.61%
L/ Merchandise 15.16 0.02% 28.38 0.04%
Packing credit loan 414.91 0.47% 262.15 0.35%
Agriculture Credit 4.45 0.01% 4.24 0.01%

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Margin Finance 435.98 0.49% 189.18 0.25%

SME Finance 928.39 1.04% - -
NR C.S. 3.22 0.03% - -
Others 1206.67 1.35% 693.89 0.94%
88094.72 98.87% 73622.67 99.22%
Percentage of Classified Loans:

Classification of loans and advances including bills purchase and discounted
2010 % 2009 %
Unclassifie Standard 84192.10 94.49% 6966.21
d (UC) SMA 1047.60 1.17% 265.19
Classified Sub standard 114.20 0.13% 185.61
Loan (CL) Doubt full (DF) 67.79 0.08% 122.81
Bad/ Loss 1636.35 1.83% 1888.98
Staff Loan 2047.94 2.30% 2074.6
Total 89106.2 100.00% 2074.6
Total CL = 1818.34
Total Loan = 89106.2
Classified Loan 1818.34
Percentage of Classified Loan = X 100 = X 100 = 2.04%
Total Loan 89106.20
4.3: % of Classified Loan
Classification of loans and advances including bills purchase and discounted
2010 % 2009 %
Unclassifie Standard 84192.10 94.49% 6966.21
d (UC) SMA 1047.60 1.17% 265.19
Classified Sub standard 114.20 0.13% 185.61
Loan (CL) Doubt full (DF) 67.79 0.08% 122.81
Bad/ Loss 1636.35 1.83% 1888.98
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Staff Loan 2047.94 2.30% 2074.6

Total 89106.2 100.00% 2074.6
Total CL = 1818.34
Total Loan = 89106.2
Classified Loan 1818.34
% of Classified Loan = X 100 = X 100 = 2.04%
Total Loan 89106.20
According to the circular of BB, PBL,s Loan are
1. Continuous Loan
2. Time Loans
3. Term Loans
Continuous loans is this loan account is which transaction may be made within certain
limit and have an expiry date (1 year) for the full adjustment will be treated as
continuous loan. Continuous loans may be:
i) SOD(Secured Overdrafts)- Can be allowed against on FDR/ other bank FDR

ii) Cash credit (Hypothecation)
iii) Cash Credit (Pledged)
4.4: Initial selection of the borrower :
for loan on the basis of following issues:

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1. Customer's information: Name of the customer and their address, nature of the
business and its legal status (Individual / partnership/ Public Ltd Com./ Private
Ltd. Com./ Other),Client Voter ID,
2. Experience of the client in proposed business and existing business (if any). In
case of new entrepreneur / entrants, management capacity/ skill, personal net
worth status and capital base along with past track record of the client is looked
into.
3. PBL brief background of the customer KYC (Know your customer): Branch will
know their customers. They will corroborate customer information with personal
interview, factory / office, visits and financial date analysis and its performance
on the basis of application submitted for credit in bank's prescribed format (FL-
59, Personal net worth of the proprietor / partner / guarantor)
4. Clients length of relation with the bank
5. Length of relationship between the clients & borrowers
6. Details of the proposed facility: Clients investment and validity etc.
7. Nature of securities (primary/ collateral/ others) and its value.
8. Credit report the borrower (i.e. to be obtain CIB report and confidential opinion
from the local financial institutions)
9. Cash flow analysis to establish repayment capability (FL-60)
10. Analysis of CRG (Credit Risk Grading)
11. Bank's credit policy guidelines.
4.5Qualitative and Quantitative Tools for Borrower Selection:
 CRG: CRG (Credit Risk Grading) is one of the most powerful tools for
lending risk analysis. It measures both qualitative and quantitative aspects
for borrower selection and indicates whether die borrower is sound tor
financing or not. It has 20 risk parameters under 5 risk components. Finally
it indicates the level of the borrower among 8 grading levels-Superior,
Good, Acceptable, Marginal/ Watch List, Special Mention, Substandard,
Doubtful, and Bad & Loss.
 CIB Report: CIB <n Credit Information bureau Report is the.
mandatory one for lending credit to the clients. Bangladesh Bank provides
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this report in which the details credit position of the client in any financial
organization in Bangladesh is mentioned. Now Bangladesh Bank is
providing Online CIB report. According to the CTB report of Bangladesh
Bank the status arc as 5 types of status: Unclassified (Standard), Specially
Mentioned Account (SMA), Substandard (SS), Doubtful (DF), and Bad &
Loss (BL). The last three status SS, DP, and BF is considered as defaulter
and client's having any one of these three statuses should not be considered
for lending.
4.6: Preparation of the loan proposal / documentation of CC (Hypo.):
Before sanction of the loan PBL,s high authority required the following documents from
the applicant firms:
1. Certificate of incorporation memorandum and article of association (if any)

2. Board resolution for application credit facility and authorized persons to sign
necessary documents (if any)
3. Up dated Trade License enlistment certificate, VAT registration and TIN
certificate.
4. Bank statement, liability statements and photocopy of sanction letters (if any).
5. Stock report, list of machinery installed, statement of fixed asset quotation (if
any).
6. Balance sheet, Income Statement.
7. CIB undertaking with loan application form.

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8. NEC of the proposed property.

9. Nature of security offered and its value along with the suitably, marketability and
ownership title to checked Schedule of the property.
10. Certificate copy of Title Deed, 2/3 Bia- Deed, Mutation parcha & CS, SA, RS
parcha for opinion of Bank's panel lawyer.
11. Organizational structure and ownership position.
If the loan is sanctioned then:

1. The branch inform the client by sanction advice.
2. The propose property mortgage through S.R. Office help of Bank panel lawyer
name of the branch bank name.
3. NEC (with the bank) submitted by the client.
4. Certificate copy of Mortgage Deed & Power of Attorney (with the bank) along
with receipt dully charged, Original Title deed, Bia- deed , NEC, Rent receipt.
5. Satisfaction certificate submitted the client by help of Bank's panel lawyer.
6. Then sign the other documentation i.e.
I) Balance confirmation.
ii) DP Note ( Single / joint )
iii)Letter of arrangement
iv) Letter of authority
v) Letter of continuity
vi) Letter of Trust receipt.
vii) Stock Delivery.
viii) Letter of undertaking (as per sanction letter)
ix) Letter of Hypothecation
x) Personal guarantee of the owner(s) of the property.
xi) Memorandum of deposit of Title Deeds
xii) Special power of Attorney authorizing bank to take possession of
the goods for sale in case of need.
xiii) Registered mortgaged of the property constructed to be constructed by the
owner of the land where applicable.
xiv) Registered irrevocable power of attorney to sell the mortgaged property in
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case of default where applicable.
Preparation of the loan proposal / documentation of SOD (Secured Over draft):
1.Application for a loan and mention the FDR Block.
2.Certificate of incorporation memorandum and article of association (if any)
2.Board resolution for application credit facility and authorized persons to sign necessary
documents (if any)
3.Up dated Trade License enlistment certificate, VAT registration and TIN certificate.
4. Bank statement, liability statements and photocopy of sanction letters (if any).
5.Stock report, list of machinery installed, statement of fixed asset quotation (if any).
6.Balance sheet, Income Statement.
7.CIB undertaking with loan application form. (Above 5 lac & other bank FDR)
8. Proprietorship declaration.
9. FDR Block which is lien for loan.
Initial selection of the borrower for CLS Loan:
1.Customer's information: Name of the customer and their address, nature of the business
and its legal status (Individual / partnership/ Public Ltd Com./ Private Ltd. Com./ Other)
2. Experience of the client in proposed business and existing business
interview, factory / office, visits and financial date analysis and its performance on the
basis of application submitted for credit in bank's prescribed format (FL-59, Personal net
worth of the proprietor / partner / guarantor)
4.Clients length of relation with the bank.
5. Credit report the borrower (i.e. to be obtain CIB report and confidential opinion from
the local financial institutions)
7. Equipment of the purchase value
8. Bank's credit policy guidelines

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Preparation of the loan proposal / documentation of CLS:
1. Client Voter ID, Up dated Trade License enlistment certificate, VAT registration and
TIN certificate.
2.Bank statement, liability statements and photocopy of sanction letters (if any).
5.CIB undertaking with loan application form.
6.Organizational structure and ownership position.
1.The branch inform the client by sanction advice.

2. Payment of the loan amount through PO/DD of the Vandors
i) DP Note ( Single / joint )
ii)Letter of arrangement
iii) Letter of authority
iv) Letter of continuity
v) Letter of Trust receipt.
vi) Letter of undertaking (as per sanction letter)
x)Personal guarantee of the owner(s) of the property.
xi)Memorandum of deposit of Title Deeds
xii) Special power of Attorney authorizing bank to take possession of the goods
for sale in case of need.
xiii) Registered irrevocable power of attorney to sell the mortgaged property in
case of default where applicable.
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xiv) Registration of BRTA (if purchase car/ vehicle) & blue book, Road permit
xv) Insurance Cover note submitted by the borrower
Initial selection of the borrower for SME:
and its legal status (Individual / partnership/ Public Ltd Com./ Private Ltd. Com./
Other),Client Voter ID,

1.Client Voter ID,Up dated Trade License enlistment certificate, VAT registration and
TIN certificate.
6.Organizational structure and ownership position.
7. 1/2 Guarantor of the loan.
8. Guarantors information
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2. 36/48 Checks (equal of installments amount)
3. 1 Undated check.( If default the borrower, then use this check)
x)Personal guarantee of the owner
xii) Insurance Cover note submitted by the borrower
Initial selection of the borrower for Lease Finance:
Lease financing is one of the most convenient sources of acquiring capital machinery and
equipment whereby a client is gives the opportunity to have an exclusive right to use an
asset usually for an agreed period of time against payment installment.
and its legal status (Individual / partnership/ Public Ltd Com./ Private Ltd. Com./
Other),Client Voter ID.
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1.Client Voter ID,Up dated Trade License enlistment certificate, VAT registration and
TIN certificate.
6.Proforma Invoice of the Machinery.
7.Value of the Machinery
8.L/C copy (if other country)

2. 36/48 Checks (equal of installments amount)
3. 1 Undated check.( If default the borrower, then use this check)
vii)Personal guarantee of the owner
viii) Insurance Cover note submitted by the borrower
ix) Lease Agreement
x) Undertaking for Lease Finance

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xi) Certificate of Lease Execution.
LATR (Loan against Trust Receipt)
LATR is advance allowed for retirement of shipping document and release of goods
imported through L/C the goods are handed over the importer under trust receipt with the
agreement that sale proceeds should be deposited with the bank liquidate the advances
within a given period. This is also a temporary advance with import and known as pre
import finance and falls under the category of 'Commercial Lending''.
Initial selection:
First class party (importers) of outstanding creditability unquestionable integrity and as a

matter of absolute necessity.
Excess drawing over the sanction limit is strictly prohibited and the manager must be
absolutely sure that the clients will deposits the sale proceeds towards payment of the
bank I dues within the stipulated period.
Documentation:
I) Documents pertaining to opening of related L/C

II) Shipping documents
III) High capacity of go down of the client.
If the loan is sanctioned:

Then sign the other documentation i.e.
I) Balance confirmation.
ii) DP Note ( Single / joint )
iii)Letter of arrangement
iv) Letter of authority
v) Letter of continuity
vi) Letter of Trust receipt.
vii) Stock Delivery.
viii) Letter of undertaking (as per sanction letter)

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ix) Letter of Hypothecation

x)Personal guarantee of the owner(s) of the property.
xii) Documents to be obtained as per constitution of the firm.
Credit Rating for Debt Instrument

Grade Definition
AAA (Triple A) Highest Safety
AA1/AA2/AA3 (Double A) High Safety
A1/A2/A3 (Single A) Adequate Safety
BBB1/ BBB2/ BBB3 Reasonable Safety
(Triple B)
BB1/ BB2/ BB3 (Bauble B) Feadequate Safety
B1/B2/B3 (Double B) Risk Prone
C1/C2/C3 (Single C) Substantial Risk
D Default
4.7 Limitations:
Inflexibility; Ever time a loan is required; it is to be negotiated with the banker. To

avoid it, borrower may borrow m in excess of the exact requirement to provide for any
contingency.
Banks have no control over the use of funds borrowed by the customer.
Though the loan is fixed period, but in practice they roll over, they are renewed
frequently.
Loan documentation is more comprehensive as compared to cash credit system.
Profit rate is high and many people cannot take it from bank.
So profit rate should be reduced and then many people will be able to take it from bank.
4.8: Findings:
1. Lack of effectiveness & efficiency of Management leave

2. accountability of Management level is not so good
3. Salary structure is not standard is current market perspective
4. Incentive & performance bonus is comparatively lower then other bank

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5. Modern facility is not available in Training institute

6. The library of PBL Training Institute is not sufficient
7. PBL given short term training to go employee, which is not sufficient
8. Training program is not sufficient for performing works
9. In time promotion are not given to the employees for which they are not satisfy
10. Account opening procedure is lengthy & complex as per banking rules
11. Advertising & promotional activities of PBL are poor then other Bank
12. Computer & other technical Machineries are not sufficient
13. Employees frequently transfers from one branch to another, Which showing
unsatisfied in the employee
14. Communication gape exists between officers & Executive leave
15. Customer service is not up to the mark
16. There is no unique & simple format for making investment proposal like other
bank
17. Lack of experienced employees
18. Contribution is social welfare is poor then other bank
19. Lack of modern customer service.
20. Lack of ATM service.
21. Conservative attitude for investment for the lasts three years.
22. Mention may be made here in this connection as a second generation bank PBL
behind from its competitor. But now a day the management is trying better for the
better improvement of PBL with the direct support of the Employee.

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Chapter- 5: Recommendation & Conclusion
5.1: Recommendation:
In order to get competitive advantage and to deliver quality service, top level
management should try to modify the service. In accordance with the above findings, I
have some recommendations which are given below:
1. Improve effectiveness & efficiency of Management level.

2. Accountability should be improve in all officers and executive level.
3. Salary structure should be revised in accordance with current market.
4. Incentive & performance Bonus must be increase for inspiring employee.
5. Promotions should be given to the employees in time.
6.PBL should focus on their promotional Business.
7. They should focus on the marketing aspects to let customers know about their
products and offerings and more promotion should be given to attract new customer.
8. Account opening procedure should be clear & simple.
9.ATM service should be available of the branch.

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10. Customer service should be improved.

11.The investment procedure should be easy & immediate.
12.Service charge should be minimize for the better service of the bank.
13. The bank should ensure fare & quality recruitment process to promote the overall
performance of the Bank.
14. Communication gape with officers & executives should be reduce.
15. PBL should be introduce unique & easy investment format for loan purpose.
16. PBL should train up their branch personnel about all sort of information regarding
SWIFT services.
17. Bank should reduce their administrative cost by reducing unnecessary expenses.
18. Ensure proper communication system and maintains of files and machines like
phone, computer, Internet connection etc.
5.2: Conclusion:
After the above discussion I would like to say that three months / four months is not
enough time for getting sufficient knowledge about commercial Bank i.e. Pubali Bank
Limited but I have tried to enrich my knowledge as much as possible. Which would
necessarily beneficial to develop my career positively.
There are a number of nationalized, private and foreign banks operating their Business in
Bangladesh. Pubali Bank Limited is one of the leading Bank. It has introduced a new
dimension in the filed of innovation and benevolent banking in our country. The bank
has successfully made a positive contribution to the national economy of Bangladesh
with in very short period of time. Its profit is gradually increasing and plays a great role
in collecting national income economic development, agricultural and rural development,
and poverty alleviation industrial development and export import infrastructural
development, financing ventures, social development, scattered deposit and loan
settlement.

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Not only these areas bank is also involved in the promotion of arts, culture and science.
It is needles to say that financing of these areas by this bank is changing human lives,
upgrading standard of living and enhancing peoples cultural standard. This bank also
promotes and develops entrepreneurs who the backbones of industry and economy. Tof
grater growth and healthy economic position, it should introduce new and attractive long
term credit Schemes especially for new investor's schemes for poverty alleviation.
Identification of potential entrepreneurs extending credit to them and providing them

with advisory and counseling serve is now a days native function of this bank. PBL meet
the growing credit need of the people by creating money. To direct employment, the
bank also help employment of thousands of people by financing trade, import, industry,
rural development and projects with site etc. It encourages people to transact with them
resulting in the speed of banking habit. This in done by both extending branch network
to the door step of the people and making available required service export of the above
mentioned areas. This bank is also involved in financing a lot of business. In fact, Pubali
Bank Limited extend their helping hands to practically all the sphere of human life.
Bibliography:
Books:
1. Eiteman David K. , Stonehill Arthur I. , Moffett. Michael H. , (2010) ‘‘Multinational
Business Finance’’ 11th Edition, Person Education, Boston, USA.
2. Fabozzi Frank J. , Modigliani Franco, Jones Frank J. , Ferri Michael G. (2010),
‘‘Foudation of Finance Markets and Institution’’ 3rd Edition, Pearson Education

(Singapore), PTC. Ltd, Indian Branch, Delhi, India.
3. Gitman L.J. (2009) ‘Managerial Finance’ 14th Edition McGraw- Hill, New-York, USA
4.Ross Stephen A. , Westerfield Randolph A, Jaff Jeffery (2010), ‘ Corporate Finance’’
9th Edition, McGraw- Hill, New-York, USA.
Internet Resources:
1 www.pubalibangla.com.
2. www.bangladeshbank.org.bd

Page
3.www.bangladesh-bank.org
Prospectur & Reports:
1. Annual Report of Pubali Bank Limited- 2008,2009,2010

2. Abbual Managers Conference- 2010

Page

Chapter-1: Introduction: An Analysis of Loans & Advances Activities of Pubali Bank LTD

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An analysis of Loans & Advances activities of Pubali Bank Ltd.

Md. Mazidur Rahman, ID-M093520, Batch-33-I, IIUC, Dhaka Campus 1|Page

1.2 : Background of the study:

1.3 : Objective of the study:

Md. Mazidur Rahman, ID-M093520, Batch-33-I, IIUC, Dhaka Campus 2|Page

1. To achieve concept regarding practical business.

1.4 : Scope of the study:

1.5 : Methodology of the study:

Md. Mazidur Rahman, ID-M093520, Batch-33-I, IIUC, Dhaka Campus 3|Page

i: Primary source of data:

b. Face to face conversation of the officers

c. Face to face conversation of client

ii: Secondary source of data

c. Annual report of PBL

d. Statement balance sheet & overview

1.6 : Limitation of the study:

Md. Mazidur Rahman, ID-M093520, Batch-33-I, IIUC, Dhaka Campus 4|Page

Chapter-2 : Organizational Profile of Pubali Bank Ltd.

2.1: Background of the Pubali Bank Limited:

2.2: Milestones of Pubali Bank Limited:

1959 - Established as a limited company and style of The Eastern

Md. Mazidur Rahman, ID-M093520, Batch-33-I, IIUC, Dhaka Campus 5|Page

* To match: Corporate objectives, with ownership and accountability.

2.7: Management of Hierarchy:

Figure No.1: Management structure of Pubali Bank Limited

Managing Director & CEO

Additional Managing Director

Deputy Managing Director

Deputy General Manager

Assistant General Manager

Senior Principal Officer

Sr. Cashier- Cum Clerk

Cashier- Cum Clerk

Source: PBL -Manager Conference Report-2010

2.8: Source of Fund :

Md. Mazidur Rahman, ID-M093520, Batch-33-I, IIUC, Dhaka Campus 7|Page

DEPOSIT TREND (Taka in Million)

Md. Mazidur Rahman, ID-M093520, Batch-33-I, IIUC, Dhaka Campus 8|Page

Advnce Trend (Taka in Million)

Profit Trend (Taka in Million)

Md. Mazidur Rahman, ID-M093520, Batch-33-I, IIUC, Dhaka Campus 9|Page

Md. Mazidur Rahman, ID-M093520, Batch-33-I, IIUC, Dhaka Campus 10 |

IV. Contingency Deposit

2.9 :Use of Fund:

Bank's fund can be invested after maintaining following liquidity:

SLR Kept = 19424

After maintaining CRR/ SLR, investment may be made subject to compliance of

2.11 : CAR (Capital Adequacy Ratio) of PBL- Focus Basel-II

Since Tk.1512 crore 10% TRWA or Tk.400 crore

Core capital (Tier-I) 20010 (crore)

Md. Mazidur Rahman, ID-M093520, Batch-33-I, IIUC, Dhaka Campus 12 |

Total Tier-I Tk.1146

Supplementary capital (Tier-II)

General provision on UN-classified loan (1%) Tk.1.26

Total Capital (Tk.1146+ Tk.366) = Tk. 1512 crore

Chapter-3: Literature Review

Sl No. Loans Advance

3.2: Assets & Liabilities of Banks

Figure No.2: Assets & Liabilities position as on 31.12.2010

Md. Mazidur Rahman, ID-M093520, Batch-33-I, IIUC, Dhaka Campus 14 |

premises, furniture and

Source: PBL -Annual Report-2010

3.3. Risk Management