Professional Documents
Culture Documents
Internship Report
on
“General Banking Activities & Credit Management of
Dutch-Bangla Bank Limited”
(A Study on Elephant Road Branch)
Submitted to,
James Bakul Sarkar
Assistant Professor
School of Business
Submitted By:
Name : Md. Shahid Hossain
ID : 111-112-005
Department : BBA in AIS
Date of Submission:
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Letter of Transmittal
November 0, 2015
To
Mr. James Bakul Sarkar
Assistant Professor
School Of Business
United International University
House # 80, Road # 8/A, MirzaGolam Hafiz Road,
Dhanmondi, Dhaka-1209, Bangladesh.
It would be pleasure for me if this report can serve its purpose and I will be available to
explain any of your queries if you feel necessary.
Thank you.
Sincerely your
----------------------------------
Md. Shahid Hossain
ID: 114-112-005
BBA in AIS
School of Business And economics
United International University
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Student’s Declaration
I hereby declare that the report entitled “Report on the “General Banking Service & Credit
Management of Dutch-Bangla Bank Limited”, Elephant Road Branch is submitted as the
partial fulfillment of the degree of Bachelor of Business Administration of United
International University of Bangladesh.
It is my original work and is not submitted for the award of any other degree, diploma, and
fellowship and that the work has not been published in any journal or magazine.
…………………
Md. Shahid Hossain
ID No.: 114 112 005
Program: BBA in AIS
United International University (UIU)
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Supervisor’s Certification
It is my pleasure to certify that Md. Shahid Hossain, ID.114 112 005, student of Business
Administration of United International University (UIU) has successfully completed the BBA
in AIS Internship program entitled “Report on the “General Banking Activities & Credit
Policy of Dutch-Bangla Bank Limited”, Elephant Road Branch”. He has completed this work
under my supervision and prepared this report according to direction and guidance.
As far I know he tried his best to conduct this successfully. I think this will help him in the
future to build up his career.
I wish his every success in life.
_____________________
Mr. James Bakul Sarkar
Assistant Professor
School Of Business
United International University
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Certificate
This is to certify that Md. Shahid Hossain, ID No.: 114 112 005, BBA in AIS, student of
United International University (UIU), Dhaka has been completed the Internship program in
our branch from 01.11.2015 to 01.01.2016. During the Internship period, she has acquired the
knowledge of “General Banking Activities of Dutch-Bangla Bank Limited” of our Branch.
……………………
Mr. Md. Abu Rashid
Branch Manager
Dutch-Bangla Bank Limited,
Elephant Road Branch.
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Table of Content
Chapter One: Introduction 10-13
1.1 Introduction 10
1.2 The Internship 10
1.3 Origin of the Report 11
1.4 Objectives of the study 11
1.4.1 Primary Objective 11
1.4.2 Secondary Objective 12
1.4.3 Business Objectives of DBBL 12
1.5 Methodology Of The Study
1.5.1 Primary Source
1.5.2 Secondary Source 13
1.6 Scope Of The Study
1.7 Limitation of The Study
1.8 Coverage of The study
1.9 Rational of The Study
1.10 Organizational Perspective
Chapter Two: Background of The Study 15-22
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3.10 Corporate Social Responsibility Of Dbbl 33
3.11 Social work 34
3.12 Dutch-Bangla Bank Research Center 34
Chapter Four: Credit Management of Dutch-Bangla Bank Ltd. 38-40
4.1 Definition of Credit: 38
4.2 Factors Related with Credit 38
4.3 Credit flow of DBBL 39
4.4 Types of loans and advances offered by DBBL 40
4.4.1 Corporate Credit Scheme 41
4.4.2 Retail Credit Scheme
4.5 Lending Policies Of Dutch-Bangla Bank Ltd
4.6 Lending Procedure of Dutch-Bangla Bank Ltd
4.7 General Procedure for Loans and Advances
Chapter Five: Risks Associated With Credit
5.1 Risk
5.2 Risks in Banking Business
5.2.1 Business Risk
5.2.2 Management risk:
5.2.3 Security Risk:
5.3 Risk Management Process
5.4 Risk Management
5.5 Lending Risk Analysis (LRA)
5.6 Credit Assessment And Selection Of Borrower
Chapter Six: Recommendation & Conclusion
6.1 Findings Of The Study
6.2 Recommendation
6.3 Conclusion
6.4 Bibliography
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EXECUTIVE SUMMARY
This paper has attempted to highlight on an evaluation of General Banking Services and
Credit Management of Dutch-Bangla Bank Limited in the context of Dutch-Bangla Bank
Limited, elephant road branch. Dutch-Bangla Bank Limited is among the leading commercial
banks of the country. The first part of the report discusses the general services offered in the
bank and the whole process it goes through to serve its customers in a well-disciplined
manner. I have given my best effort to include all the necessary points in order to give a clear
understanding about the General Banking.
Lending is one of the principal functions of the bank. Sound lending practice therefore, is
very important for profitability and success of a bank. For the sake of sound lending, it is
necessary to develop a sound policy and modern credit management techniques to ensure that
loans/ advances are safe and the money will come back within the time set for repayment. For
this purpose, proper and prior analysis of credit proposals is required to assess the risk. Credit
risk grading is one of the basics for risk management and control, as it is the risk factor
inherent in every bank businesses and as the quality of credit is essential for sound banking
and its reputation. For the effective application of CRG, expertise and willingness as well as
motivation of the bankers are needed. And to do that strong criterion must be followed as
such in DBBL. This report should be able to give a clear idea about how and what steps a
bank has to go through in order to sanction a loan/credit to a company.
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CHAPTER- ONE
INTRODUCTION
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1.1 INTRODUCTION
Generally the word “Bank” we can easily understand that the financial institution dealing
with money. But there are different types of banks like Central Banks, Commercial Banks,
Savings Banks, Investment Banks, Industrial Banks, and Co-operative Banks etc. But when
we use the term “Bank” without any prefix, or restriction, it refers to the ‘Commercial banks.
Commercial banks are the primary contributors to the economy of a country. So we can say
Commercial banks are a profit-making institution that collects the deposits from the surplus
unit of the society and then lend the deposits collected to the deficit unit of the society. So the
people of the society and the government are very much dependent on the commercial banks
as the financial intermediary. As banks are profit-earning concern they collect deposit at the
lowest possible cost and provide loans and advances at higher. The differences between two
are the profit for them.
Economic history shows that development has started everywhere with the banking system
and its contribution towards financial development of a country is the highest in the initial
stage. Modern banks play an important part in promoting economic development of a
country. Bank provides necessary funds for executing various programs in the process of
economic development. They collect savings from large masses of people scattered
throughout the country, which in the absence of banks would have remained ideal and
unproductive. These scattered amounts are collected, pooled together, and made available to
commerce and industry for meeting the financial requirements.
Bank plays a vital role in the economy by providing means of payment and in mobilizing
resources. Bank is the most important financial institution in the economy. The economic
development of a country depends on the development of banking sector. Today’s modern
banks are not only providing traditional banking but also expanding the many financial
services. Banking sector is expanding its hand in different events every day. As the demand
for better services increases day by day, they are coming with different innovative ideas and
products.
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1.2 THE INTERNSHIP
We the students of Bachelor of Business Administration (BBA IN AIS) in Accounting
Information Systems (AIS) study the subject’s related to business. The school of business at
home and abroad to familiarize each student as they move comfortably in the business
environment but only the theoretical study in the classroom is not enough rather a practical
experience and the only means of practical experience is internship program. University helps
its students by providing placement of internship.
In the business environment, at home and abroad there are lots of financial institution,
businesses, firms, and industries, which provide this facility towards us. If we could not get
this facility of internship then a wide gaps will take place between our study and experience, I
think this is a valuable part of study for us. We the students of business do this usually for
three months. In our country, there are many banks particularly the esteemed private banks,
and elite business firms provide this. In this respect, I have done my internship in Dutch-
Bangla Bank Limited, the one of the most renowned Bank in Bangladesh. I am thankful to
the bank for giving me the internship opportunity.
The objective of the study is to gather practical knowledge on banking system and operation.
This internship gives us a chance to co-ordinate with the theoretical knowledge and the
practical experience and to evaluate the Foreign exchange banking practices in Bangladesh-
A case study of Dutch-Bangla Bank Ltd. and also the performance of general banking this
Bank. The following are of objectives for internship in bank:
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1.4.1 Primary Objective
The primary objective of the study is to complete the partial requirement of the awarding of
the BBA in AIS degree from the school of business & economics, United International
University. The objective is to prepare & submit a report on the topic of “General Banking
Services and Credit Management of Dutch-Bangla Bank Limited." The primary purpose
of this report is to get an idea about the general banking practices on the banking sector of
Bangladesh.
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Relevant file study as provided by the officers concerned.
Time and Duration: The time of my internship has started from November 01, 2015
and I was appointed for or three months’ internship program. There was also a
placement of different departments within the time. There I had to work in credit &
general banking department desks as a routine work. It was difficult to collect the
information relevant my report, because the people of this Bank was so busy with
their duty that they cannot be able to give me much time. Here I try to cover the
activities and rules and regulation related to my report.
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It was very different to collect the information from various personnel for the job
constrain.
Bank policy was not disclosing some data and information for obvious reasons.
Due to time limitation many of the aspects could not be discussed in the present
report.
Since the bank personnel where very busy, they could provide me little time.
Another significant problem faced during the preparation of this report was the
contradictory explanation of a single subject by different employee.
Because of the limitation of information some assumption was made. So there may be
some personal mistakes in the report.
The time 2 months out of 3 months only, which is in sufficient to know all activities
of the branch are prepare the report.
The insufficiency of information was not adequately available. Moreover, the sources
were hazardous and in-discipline. Therefore the providence of insufficient
information came out as a constraint.
Long internship was not able to provide us with adequate time to impose more
databases sophistic to the formulation of this report.
During the internship, in many part of our enquiry, our performance was hindered by
some sort of inexperience of some of the personnel of the bank due to lack of
orientation to the procedure of such internees.
There was no remuneration for our internship that demoralizes our motivation to keep
consistency in our extensive study.
Sometimes we had to face unexpected conduct on the part of some of the personnel
that was supposed to be a little bit more cordial.
The study was limited only to the Dutch-Bangla Bank Ltd.
Another Problem was time constraints. The duration of my work was only three
months. But this time is not enough for a complete and fruitful study.
Getting financial information is very hard job.
The Bank was a busy one having heavy rush of people, whom officers need to deal
with. So allocation of time for an internet is very much tough for the officers of the
bank.
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Although there are a lot of limitations, I have tried to put my best effort as far as
possible to prepare the report.
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Netherlands specialized in financing of private enterprises in Asia, Africa, Latin America and
Eastern Europe. Under a technical assistant grant from the FMO, ABN-AMRO Bank of the
Netherlands provided technical assistance to Dutch-Bangla Bank Ltd.
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CHAPTER- TWO
BACKGROUND OF THE HISTORY
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2.1 HISTORY OF BANK
A bank is a financial institution licensed by a government. Its primary activities include
providing financial services to customers while enriching its investors. Many financial
activities were allowed over time. The level of government regulation of the banking industry
varies widely, with countries such as Iceland, having relatively light regulation of the banking
sector, and countries such as China having a wide variety regulations but no systematic
process that can be followed typical of a communist system. The name bank derives from the
Italian word banco “desk/bench”, used during the Renaissance by Jewish Florentine bankers,
who used to make their transactions above a desk covered by a green tablecloth. However,
there are traces of banking activity even in ancient times.
In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders
would set up their stalls in the middle of enclosed courtyards called macella on a long bench
called a bancu, from which the words banco and bank are derived. As a moneychanger, the
merchant at the bancu did not so much invest money as merely convert the foreign currency
into the only legal tender in Rome—that of the Imperial Mint. The earliest evidence of
money-changing activity is depicted on a silver drachm coin from ancient Hellenic colony
Trapezus on the Black Sea, modern Trabzon, and c. 350–325 BC, presented in the British
Museum in London. The coin shows a banker’s table (trapeza) laden with coins, a pun on the
name of the city.
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rename the various banks. Foreign-owned banks were permitted to continue doing business in
Bangladesh.
The insurance business was also nationalized and became a source of potential investment
funds. Cooperative credit systems and postal savings offices handled service to small
individual and rural accounts. The new banking system succeeded in establishing reasonably
efficient procedures for managing credit and foreign exchange. The primary function of the
credit system throughout the 1970s was to finance trade and the public sector, which together
absorbed 75 percent of total advances. The government’s encouragement during the late
1970s and early 1980s of agricultural development and private industry brought changes in
lending strategies. Managed by the Bangladesh Krishi Bank, a specialized agricultural
banking institution, lending to farmers and fishermen dramatically expanded. The number of
rural bank branches doubled between 1977 and 1985, to more than 3,330. Denationalization
and private industrial growth led the Bangladesh Bank and the World Bank to focus their
lending on the emerging private manufacturing sector. Scheduled bank advances to private
agriculture, as a percentage of sects oral GDP, rose from 2 percent in FY 1979 to 11 percent
in FY 1987, while advances to private manufacturing rose from 13 percent to 53 percent. The
transformation of finance priorities has brought with it problems in administration. No sound
project-appraisal system was in place to identify viable borrowers and projects.
Lending institutions did not have adequate autonomy to choose borrowers and projects and
were often instructed by the political authorities. In addition, the incentive system for the
banks stressed disbursements rather than recoveries, and the accounting and debt collection
systems were inadequate to deal with the problems of loan recovery. It became more
common for borrowers to default on loans than to repay them; the lending system was simply
disbursing grant assistance to private individuals who qualified for loans more for political
than for economic reasons. The rate of recovery on agricultural loans was only 27 percent in
FY 1986, and the rate on industrial loans was even worse. As a result of this poor showing,
major donors applied pressure to induce the government and banks to take firmer action to
strengthen internal bank management and credit discipline. As a consequence, recovery rates
began to improve in 1987. The National Commission on Money, Credit, and Banking
recommended broad structural changes in Bangladesh’s system of financial intermediation
early in 1987, many of which were built into a three-year compensatory financing facility
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signed by Bangladesh with the IMF in February 1987. One major exception to the
management problems of Bangladeshi banks was the Grameen Bank, begun as a government
project in 1976 and established in 1983 as an independent bank. In the late 1980s, the bank
continued to provide financial resources to the poor on reasonable terms and to generate
productive self-employment without external assistance. Its customers were landless persons
who took small loans for all types of economic activities, including housing. About 70
percent of the borrowers were women, who were otherwise not much represented in
institutional finance. Collective rural enterprises also could borrow from the Grameen Bank
for investments in tube wells, rice and oil mills, and power looms and for leasing land for
joint cultivation. The average loan by the Grameen Bank in the mid-1980s was around Tk
2,000 (US$65), and the maximum was just Tk18, 000 (for construction of a tin-roof house).
Repayment terms were 4 percent for rural housing and 8.5 percent for normal lending
operations.
The Grameen Bank extended collateral-free loans to 200,000 landless people in its first 10
years. Most of its customers had never dealt with formal lending institutions before. The most
remarkable accomplishment was the phenomenal recovery rate; amid the prevailing pattern
of bad debts throughout the Bangladeshi banking system, only 4 percent of Grameen Bank
loans were overdue. The bank had from the outset applied a specialized system of intensive
credit supervision that set it apart from others. Its success, though still on a rather small scale,
provided hope that it could continue to grow and that it could be replicated or adapted to
other development-related priorities. The Grameen Bank was expanding rapidly, planning to
have 500 branches throughout the country by the late 1980s. Beginning in late 1985, the
government pursued a tight monetary policy aimed at limiting the growth of domestic private
credit and government borrowing from the banking system. The policy was largely successful
in reducing the growth of the money supply and total domestic credit. Net credit to the
government actually declined in FY 1986. The problem of credit recovery remained a threat
to monetary stability, responsible for serious resource misallocation and harsh inequities.
Although the government had begun effective measures to improve financial discipline, the
draconian contraction of credit availability contained the risk of inadvertently discouraging
new economic activity. Foreign exchange reserves at the end of FY 1986 were US$476
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million, equivalent to slightly more than 2 months worth of imports. This represented a 20-
percent increase of reserves over the previous year, largely the result of higher remittances by
Bangladeshi workers abroad. The country also reduced imports by about 10 percent to
US$2.4 billion. Because of Bangladesh’s status as a least developed country receiving
concession loans, private creditors accounted for only about 6 percent of outstanding public
debt. The external public debt was US$6.4 billion, and annual debt service payments were
US$467 million at the end of FY 1986.
As a result, their balance sheet remained in good shape, he said. But as CRR rate was
increased at that particular time, banks had to keep their deposited money with the central
bank on mandatory basis, he stated. He said that the result had been as it was predicted.
According to the analysts, the central bank has to take responsible decisions for getting rid of
this situation occurred in the banking sector. Otherwise they are anticipating that the crisis in
the banking sector will have a negative impact on the overall economy.
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traditional banking system. Those projects were implemented, but had to face time and run
over due to procedural delay in getting access to credit facilities, among others, this might be
a good reason for thinking about a bank where the entrepreneurs will have easy access to
modern banking services. Mr. Ahmed has had a close relationship with FMO, the
Netherlands Development Finance Company since 1983. He opened a dialogue with FMO
regarding the banking project in 1989. Mr. Groosman , a brilliant officer of FMO visited
Bangladesh and wrote to Mr. F. J. Smit, Deputy Managing Director of FMO about Mr.
Ahmed’s proposal. FMO sent fact finding terms that initially responded negatively and
commented that is little scope in Bangladesh to float a banking business. But Mr. Ahmed
don’t give up, rather he started exploring more vigorously. At last Mr. E. H. J. Groot of small
scale department of FMO in his letter dated December 07, 1992 responded positively
indicating, “Small Enterprises Department of FMO is in a position to finance intermediary
bank” and accordingly asked for a business plan. In the year 1995, Bangladesh Bank in their
letter no. DBOD (D) 200/59-7999/95 dt. 23/07/1995 issued consent for establishing the bank.
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financial participate in all segments of the economy, Industry, trade & Commerce,
Agriculture, and Service Sector etc.
2.7 SLOGAN
The Corporate Slogan of DBBL is - “Your Trusted Partner”. Dutch Bangla Bank Ltd as the
name implies, is not a new type of bank in some countries on the global, but is the first of its
kind in Bangladesh. It believes in togetherness with its customers, in its march on the road to
growth and progress with services. They focus on trust customer to bank. To achieve the
desired goal, it has intention to pursuit of excellence at all stages with a climate of continuous
improvement. Because it believes, the line of excellence is never ending. It also believes that
its strategic plan and business networking will strengthen its competitive edge over in rapidly
changing competitive environment. Its personalized quality services to the customers with the
trend of constant improvement might be cornerstone to achieve its operational success.
The DBBL’s corporate philosophy is to build its non-funded face and commission income
stream, thus reducing its reliance on interest income alone. By providing a one window
service to its customers- the Bank is committed to being a sophisticated, prominent and
professional institution. During the first five years Dutch Bangla Bank’s strategy was focused
on continuing in provident of internal procedures and operating structures, to have a greater
control on the quality of its business and to provide better management direction.
DBBL’s focus is to provide one counter service to its clients’ covering:
Commercial Banking (Deposit Accounts)
Customer banking (Retail Banking)
o Traveler Cheques
o Foreign and Inland Remittance
Financial Services
Corporate banking
Asset and liability management
Liquidity and capital Resources Management
Information Technology
Human Resource
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CHAPTER-THREE
GENERAL BANKING SERVICE OF DBBL
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3.1 ABOUT THE DBBL ELEPHANT ROAD BRANCH
Dutch-Bangla Elephant Road Branch is located at 118/3,Dr. Kudrat-E-Khuda Road, Elephant
Road, Dhaka-1205. General banking is the starting point of all the banking operations.
General banking is the front-side banking service department. It provides those customers
who come frequently and those customers who come one time in banking for enjoying
ancillary services. In some general banking activities, there is no relation between banker and
customers who will take only one service from bank. Every day it receives deposits from the
customers and meet s their demand for cash by honoring cheques. It opens new accounts,
remit funds, issues bank drafts and pay orders etc. Since bank is confined to provide the
services every day. General banking is also known as ‘retail banking’. On the other hand,
there are some customers with who bank are doing its business frequently
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3.3 GENERAL BANKING ACTIVITIES
General banking is the starting point of all the banking operations. It is the department, which
provides day-to-day services to the customers. Every day it receives deposits from the
customers and meets their demand for cash by honoring cheques. It opens new accounts,
close accounts, reactive accounts, and counsels for the new depository accounts. It also remits
funds, transfers funds by pay order and easy pay. Since bank is confined to provide the
services everyday general banking is also known as “retail banking.”
Account opening section
Remittances (Local and Foreign)
Card, sms alert section
Bills and clearing section
FDR & Pay-Order (PO)
Cash Division
Other activities
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against such deposit. There are two facilities for the person who opens a current account.
They are:
Overdraft facility
Collection of check transfer of money rendering agency, general utility service.
A person can open a current account or any entity the entry can be a partnership firm, Ltd,
company, proprietorship firm, association, clubs etc. for opening a current a/c of the above,
the requirements and steps, which are followed by this branch are the following
For a person:
There is an individual application from for opening personal current account. The person,
who wants to open this type of a/c, is said to fulfill the following requirements:
Name, father’s/husband’s name
Occupation
Mandate in writing
Declaration of nominee( Nominee should be first blood)
Letter of introduction
Introducer
Specimen signature
Two copies of passport size photographs
Initial deposit of Tk 1000.
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For Partnership/Proprietorship Company:
To open a current a/c on the name of any partnership or proprietorship company, the
following documents are required:
Filled up application from stating about the name and address of the firm.
Partnership deed.
Trade license.
Introducer Signature both form and 2 passport size photo.
Two copies of photograph.
Endorsement of an a/c holder on the same branch.
Undertaking / declaration about the partnership is taken by the bank in a write paper
( for proprietorship firm)
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The necessary steps for opening a saving a/c.
Names and Addresses of the party.
Occupation.
Copy of utility bills most recent
Father’s / Husband’s name
Mandate in writing.
Declaration of nominee (Nominee should be first blood).
Letter of introduction.
Power of attorney.
Specimen signature.
Two copies of passport size photograph.
Initial deposit of Tk 500.
In this, the deposit supplied with the pass and checkbook for depositing and
withdrawal purpose of money for which the banker maintain saving bank a/c opening
register.
Excel Account:
DBBL offers another type of account called Excel account. This account is applicable only
for students. This account has given the opportunity for the student with minimum charges tk
only 230 per year. The branch Code of Elephant road is 171 and the excel account code is
105. In other types of account like Savings, Current these accounts the yearly charges is high
but in this excel account or student account has given more facility to the customers. But one
disadvantage in this account that is no cheque book will be given to the customer’s .The
account procedure all are same but here, the student Id must be shown to the officer.
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Nominee must be first blood.
Applicant also submit a copy of utility bill that means Electricity bill or Gas bill or
Water bill for mention the present address.
If UIU student the utility bill copy is not needed.
Power A/C:
The Power account also name is called salary account .The person who are involved with
service they can open salary or power account. Elephant Road Branch they are linked up with
different organization to open a power account. They are also linked up with UIU. The code
of power account is 103.
Requirement for opening Power A/C
Applicant’s two copies of passport size photographs from individual are taken.
Employee’s DBBL ID card copy
Applicants must submit their citizenship certificates: valid passport or NID copy or
S.S.C registration card.
Forwarding letter must be needed.
Introducer’s signature and accounts number and A/C name – verified by legal officer.
Nominee name, NID card, signature and photograph one copy.
Nominee must be first blood.
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order of specified person Payment is made from ordered branch. Generally remit fund outside
the clearinghouse area of issuing branch. Payee can also be the purchaser. Bank confirm
through checking the ‘Test Code’ Bank charge a commission and telex charge for it. Drafts
are not issued payable to bearer in practice drafts are not to be drawn between branches
within the same city. Draft drawn by one branch of bank on another payable to order where
any draft is an order to pay money drawn by one on a bank upon another office of the same
bank for a sum of money payable to order on demand, purports to be endorsed by or on
behalf of the payee, the bank is discharged by payment in due t course.
Cancellation of a DD
If the holder of the instrument wants to cancel it, he should submit a request letter in this
regard. Issuing branch then sends an I.B.D.A. to the drawn on branch against the I.B.C.A.,
which was sent previously.
Duplicate DD
When DD is lost a duplicate instrument is given subject to fulfillment of the following
requirements: Tk. 50.00 indemnity bond issued from the court. After losing the instrument,
holder should immediately inform it to the bank that puts “stop payment” mark on the
register.
Mail Transfer
Issuing branch requests another branch to pay specified money to the specific payee on
demand by Telegraph /Telephone. Payment is made from ordered branch. TT can be remit
anywhere in the country. Bank charge a commission plus telephone charge. However this
service is available only for a limited number of customers. Where the remitter desires the
banker to remit the funds to the payee instead of purchasing a draft himself, the banker does it
through a Mail Transfer Advice. The transfer is so called as the advice is dispatched to the
paying office by ordinary mail. The payee must have an account with the paying office as the
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amount remitted in such a manner, is meant for credit to the payee’s account and not for cash
payment.
Telegraphic Transfer
TT is affected by tile bank through tested telex message attested by secret check Signal on
receipt of which tile paying officer pay the amount to the payee in cash through a telegraphic
payment order or credit his account, as the case may be.
DBBL follows the following procedures:
i) The customer deposits money with DBBL to be sent.
ii) The customer obtains a cash memo containing TT serial number.
iii) TT serial number, notifying part name is mentioned in the telex message.
iv) The Telex Department confirms transmission of the telex.
Transfer of account
In this section the Account holder can transfer his/her account from one branch to another
branch. For this transfer of account he / she must apply to the manager of the branch where
he is maintaining his account. Then the manager sends a request to the manager of the branch
where the account holder wants to transfer to his account. With his request, he sends original
copy of account opening application and specimen’s signature sheet and the photocopy of
application for transferring the account with the balance remained in the account.
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CD account cheque book contains 20 and 50 leaf, while SB account cheque book
has 10 leafs. Bank maintains a separate register in this regard.
Requisition slip is provided to the customer in cheque book to issue new cheque
book.
A new cheque book should be delivered only to the account holder. Otherwise,
authorization letter is needed from client for delivery to other person.
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The cheque requisition slip duly filled in by the customer shall be forwarded to
cheque posting Terminal to ascertain :
The average balance maintained by the customer.
Whether previous cheque leaves are properly consumed.
Cheques are not frequently returned for insufficient funds in the account.
Payment of Cheque is not frequently stopped.
The manner in which the account is operated.
The account is not dormant.
If any of the defects is noticed by posting officer, he/ she shall make remark on the
requisition slip and forward it to Cancellation Officer who will decide whether cheque book
should be issued to the customer.
In cases, where the account is found in order and the party is known, the cancellation
officer shall verify the signature on the slip and send it back to cheque book issuing
officer for issuance of the same.
In case of a Dormant Account, the party shall call on the Manager personally for
identification purpose. The Manager on being satisfied about the confides of the
applicant shall allow issuance of cheque book.
In case of slightest difference in signature or suspicion aroused about the confides of
the person presenting the cheque requisition slip, proper inquiries shall be made by
contacting the account holder. The officer must be satisfied before finally issuing the
cheque book.
In case where requisition slip extracted from a previous cheque book is not presented,
every possible care shall be exercised to establish the confides of the case, particularly
when address of a constituent has been recently changed and/ or a simultaneous
request to change the address is made.
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Crediting interest
Crediting interest implies that so for interest accrued is attached with the principal amount. In
practice of DBBL
a. FDR interest is credited at the maturity date.
b. For SB account the crediting season is six-month period.
c. Interest of STD is credited after each year.
Tax
Whatever the amount of interest is accrued 10% tax is debited from the account at the time of
crediting interest.
Clearing:
As far as safety is concerned, customers get crossed cheque for the transaction.As we know
crossed cheque cannot be encased from the counter; rather it has to be collected through
banking channel i.e. clearing. For example, a client of DBBL Bank received" a cheque of
another bank, which is located within the clearing range; deposit the cheque in his account at
DBBL Bank. Now DBBL Bank will credit his account and collected it. Though the amount is
credited in the customer's account but he will not get the money until he cheque is honored.
Types of Clearing
Outward Clearing
Outward clearing means when a particular branch receives instrument drawn on the other
bank within the clearing zone and those instruments for collection through the clearing
arrangement is considered as outward clearing for that particular branch.
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Inward Clearing:
When a particular branch receives instruments which on them and sent by other member bank
for collections are treated as inward clearing.
Clearing house
Clearing House is a place in the Central Bank where different banks come to settle their
interrelated liabilities. Clearing House System The mechanism of working at a Clearing
House in general is as follows:
Every Rank of the locality, which is a member of (he clearinghouse, prepares Bank-
wish list of cheques after receive from customers and drawn on different Banks of the
locality.
An officer, in charge of clearinghouse, goes to the clearinghouse in the morning with
the cheques and their list. He delivers the cheques to the officials of the respective
banks. Similarly, he also receives the cheques drawn on his Bank from the officials of
the other banks.
The official of each bank computerizes the final balance, payable or receivable by his
Bank alter taking into account the various amount of receipt and payment.
The official return of their respective Dank to meet again in the afternoon to return
any dishonored instruments to the officials of the respective Banks.
The final settlement is effective by the supervisor of the clearinghouse by debiting or
crediting, as the case may be, the accounts of the respective Banks as maintained with
the clearinghouse.
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open his/her account for different time periods, which may be for three months, six months,
one year, two years and three years. Pay Order gives the payee the right to claim payment
from the issuing bank. Payment is made from issuing branch only. Generally remit fund
within the clearinghouse area of issuing branch. Bank charges only commission for this.
However party must have an account with the bank, so that whenever the fund refund they
(party) can collect it. But for the student and the pay order for job purpose of any applicant,
account with the bank is not mandatory.
Pay-Order (PO)
Pay Order gives the payee the right to claim payment from the issuing bank. Payment is made
from issuing branch only. Generally remit fund within the clearinghouse area of issuing
branch. Bank charges only commission for this. However party must have an account with
the bank, so that whenever the fund refund they (party) can collect it. But for the student and
the pay order for job purpose of any applicant, account with the bank is not mandatory
The PO is used for making a remittance to the local creditors. The procedures for selling a PO
are as follows:
Deposit money by the customer along with application form.
Give necessary entry in the Bills Payable register where Payee' name, address, date,
PO No. amount is mentioned.
Prepared the instrument.
After scrutinized and approved the instrument by authority, it is delivered to
customer.
Signature of customer is taken on the counterpart and register customer's signature
part.
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Requirement for opening FDR
Applicant’s one copy of passport size photographs from individual is taken.
Applicant’s NID copy.
Nominee name, NID card, signature and photograph one copy.
Nominee must be first blood.
Lost of FDR:
If the instrument is lost from the possession of the holder, the holder is asked to fulfill the
following requirements:
Party should inform it to the bank immediately;
Furnish an Indemnity Bond;
On fulfilling the above requirements, a duplicate FDR is then issued to the
customer by the bank.
Renewal of FDR:
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FDR is automatically renewed within seven days after the date of its maturity if
the holder does not come to en-cash the instrument.
Renewal will be for the previously agreed maturity period.
Cash Receipts
When the client deposited amount in the bank, the cash officer follow the following common
precautions:
Check and count the received cash
Make sure the amount in words and numbers in the deposit slip are same
Check account title and account number
Cash Payment
When the client press the cash cheque then the cash officer follow the following common
precautions:
The date of the cheque is not crossed the six month
Post dated cheque
Taka in words and and figure are same
Balance in the account is available
Signature is matched with the card signature or account.
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Dutch-Bangla Bank Limited now using locality developed Branch Banking software in
almost all its branches. But with a view to provide world class banking facilities to its
customer, DBBL has undertook upon an ambitious program by investing Tk.250.00 million
for acquiring a state-of-the-art total automation project which DBBL claimed to said as
“Truly On Line Banking”. The decision of acquiring the automation program has been based
on the Bank’s own core competence in its IT division, reinforced with the site visit of bank’s
highest management of similar installations of different banks in India and Sri Lanka.
DBBL choose “ORACLE FLEXCUBE” from “i-flex solution”, a world leader in
technology solutions for the financial services industry, which will enable DBBL to render a
fully automated real time any-where any-branch banking services, covering 24 hours a day
and 365 days a year. As part of the on-line banking program, internet banking, DBBL Nexus
Debit Card, DBBL Maestro/ cirrus Debit Card and DBBl Credit card will also be launched
shortly and all preparations regarding this are in final stage.
To fulfill this decision, DBBL has set-up a most modern and largest state of the art data
centre and have assembled a core group of competent IT professionals and other persons.
These persons have undergone a two-month extensive training course in Bangalore and
Mumbai, India on FLEXCUBE. The Data Centre will also have an on-line Diaster Recovery
site (DRS), the first of its kind in the country, to safe-guard the customers’ interest and to
have an effective disaster management system in place. This will help maintain and preserve
all necessary data at a separate and more-safe custody. The scrutiny of DBBL’s computer
system stands on four (4) layers, which are at application, in networking, in database and in
the operating systems.
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Deposit
Loan Against Trust
Savings Scheme Visa Card
Receipt
Exporter's FC Deposit Payment against Internet
(FBPAR) document Banking
DBBL Bochore Dergun Mobile
Packing Credit
Scheme (BDS) Banking
DBBL Deposit Plus
Lease Finance CSR
Scheme
DBBL Children
Education Savings SME SMS Banking
Scheme (CHESS)
DBBL Pension Benefit
Consumer Credit SWIFT
Scheme (PBS)
DBBL Pension plus
Bill Purchase Locker Facility
Scheme
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DBBL maintains its own network and automation
without the involvement/assistance of any third
party companies. Access to ATM services fee is
BDT 230 annually for DBBL clients. Partner
banks are charged a subsidized Tk. 10, although
the end price for the customer may be higher due
to the extra charges levied by the partner bank. On the digital day (10/10/10), the DBBL
inaugurated its (digital) 1000th ATM at the factory premises of the GlaxoSmithKline,
Chittagong.(as on 24 March 2012 it has more than 2000 ATM and 200 FT).Now the Total
ATM Booth is over 3400 which is higher than others bank.
Debit Cards
DBBL’s card issuing portfolio is enriched with both debit and credit cards of various card
brands. DBBL is pioneer in issuing debit cards in Bangladesh. The first debit card of the
country, the Nexus debit card was issued on August 14, 2004. Since then DBBL has been the
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market leader with the largest debit card base. DBBL issues both EMV compliant multi-
application enabled smart card and traditional magnetic stripe PIN-protected debit cards. The
MV debit card consisted of Dynamic Data Authentication (DDA) chip and Multos operating
system. It ensures additional software level security for chips.
DBBL-NEXUS Instant Debit Card
DBBL-NEXUS VISA Electron card
DBBL-NEXUS Maestro card
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Issuance Fee (1st Year): USD 17.25 (Including VAT)
Annual Fee (2nd Year Onwards): USD 17.25 (Including VAT)
Master Card Debit
DBBL issues EMV chip enabled debit cards of MasterCard known as “MasterCard Debit”
cards. This card can be issued for both local and international use. This card consists of both
EMV chip and Magnetic stripe for wider acceptance. If the terminal supports EMV, chip
transaction takes place. If the terminal does not support EMV, transaction will be completed
using the magnetic stripe of the card. However, customer will be protected for any dispute if
the mag stripe of the card gets compromised and any fraud transaction happen with the
counterfeit card. This card can be issued for any MasterCard accepting POS terminal or
ATM, and can be used for e-commerce transactions as well.
Issuance Fee (1st Year): BDT 575 (Including VAT)
Annual Fee (2nd Year Onwards): BDT 575 (Including VAT)
Credit Cards
DBBL has been issuing Visa EMV credit cards since November 2008 and MasterCard EMV
credit cards since April, 2010. Although DBBL’s entrance in credit card services was
delayed, it made a difference in the market by issuing the most secure EMV credit cards from
the first day. The EMV credit cards consist of Dynamic Data Authentication (DDA) chip and
Multos operating system. It ensures additional software level security for chips. Due to
security, other card-issuing banks in Bangladesh usually block customers’ International
transactions and require the customer to make prior phone calls to the card-issuing bank to
open international transactions in their card. When a customer returns to Bangladesh, he/she
has to call the bank to block their cards’ international transactions. Sometimes card-issuing
banks replace the customer’s card when the customer visits high risk countries such as
Malaysia, Thailand etc. But with DBBL’s EMV enabled chip cards there is no such hassle as
international transactions are always open and the customer is fully secured. In addition to
providing security DBBL also charges the lowest Interest rate in the market on purchase
transaction and has a maximum of 50 days interest free (grace) period. There is also no cash
withdrawal fee in the DBBL ATM network.
VISA Classic International Credit Card.
VISA Gold Local Credit Card.
MasterCard Classic Local Credit Card.
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MasterCard Titanium Card (the Premium brand)
MasterCard Credit Card
DBBL issues EMV enabled MasterCard credit cards to its customers. All cards have DDA
chip with Maltose application, which protect them from any alternation of card data and
ensures secure
Transactions worldwide on any MasterCard accepted POS terminals and ATMs. This card
has both chip and magnetic stripe so acceptability is not restricted to any type of terminals.
DBBL issues both standard and gold cards with local and international acceptability.
Customers have the option to select as per their requirements.
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Virtual Card
Students pursuing higher education and/or scholarships abroad are often required to pay the
fees and charges online using a credit card. Students are also required to take various
examinations such as IELTS, TOEFL, GMAT, GRE - all of which require them to register
online for paying fees and charges with a credit card. Most students and their guardians
however are not eligible to have a credit card from a bank and thus do not have one. To help
them, DBBL introduced Virtual Card for the first time in Bangladesh in 2011. This is not a
plastic card - it is a piece of paper inside a closed envelop which carries valid card number,
expiry date’ and CVV/CVC which can be used for some specific internet merchants related to
educational / certifications authorities. The virtual card is distributed from DBBL branches
and the value is fixed as per the requirement of the students. The DBBL Virtual Card has
become very popular amongst students.
Internet payment
On 3 June 2010, Dutch Bangla Bank Ltd. announced to allow internet payments system.
Using their Internet Payment Gateway merchants will be able to charge their customers' Visa,
Masters, DBBL Nexus and Maestro cards. Any Visa/MasterCard cardholder (local or
overseas) can use their cards to pay at a number of e-Merchants against their purchase of
goods. They can also pay DESCO electricity bills. DBBL is working with airlines, railways,
utility companies, educational institutions, and stock exchanges for facilitating purchase of
tickets, payment of bills/fees and IPO subscription through the Internet Payment Gateway.
DBBL is also working to make an interface with PayPal.
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School/Institute and GPA 4.50 for others remote area students (without 4th subjects) out of
GPA 5.00 scale for all groups.
Facility
Scholarship Duration: 2 years (Renewable)
Monthly Scholarship: Tk. 2000/-.
Annul grant for reading materials: Tk. 2500/-.
Annual grant for clothing: Tk. 1000/-.
The bank donates mainly towards social awareness programs, medical and educational fields.
Notably DBBL also maintains the largest scholarship program in Bangladesh whereby
college/university education tuition and expenses are fully paid for unconditionally by the
bank. In 2007, the bank won the Bangladesh Business Awards for being the 'Best Financial
Institution' mainly for its commitment to technology and community service. In 2007 alone,
DBBL donated BDT 220 million towards social causes.
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scholars and researchers. It will also award scholarship to researchers and scholars at home
and abroad.
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CHAPTER-FOUR
CREDIT MANAGEMENT OF DUTCH-BANGLA
BANK LTD
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4.1 DEFINITION OF CREDIT
The word credit comes from the Latin word "Credo" meaning "I believe". It is a lender's trust in a
person's/ firm's/ or company's ability or potential ability and intention to repay. In other words,
credit is the ability to command goods or services of another in return for promise to pay such
goods or services at some specified time in the future. For a Bank, it is the main source of
profit and on the other hand, the wrong use of credit would bring disaster not only for the bank
but also for the economy as a whole.
The objective of the credit management is to maximize the performing asset and the
minimization of the non-performing asset as well as ensuring the optimal point of loan and
advance and their efficient management. Credit management is a dynamic field where a certain
standard of long-range planning is needed to allocate the fund in diverse field and to minimize
the risk and maximizing the return on the invested fund.
Continuous supervision, monitoring and follow-up are highly required for ensuring the timely
repayment and minimizing the default. Actually the credit portfolio is not only constituted the
banks asset structure but also a vital factor of the bank's success. The overall success in credit
management depends on the banks credit policy, portfolio of credit, monitoring, supervision
and follow-up of the loan and advance.
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3.3 CREDIT FLOW OF DBBL
Credit Risk Management is basic to risk management and controlling, as it is the major risk
factor in most bank business. Therefore, a bank should assess the degree of risk associated with
each loan and its profitability. In this connection prior assessment of and follow up on a loan
transaction constitute essential ingredients of the credit risk control process. An in-depth
analysis of the borrower financial conditions, expected usage of funds, ability to repay,
willingness to repay and sources of repayment all together constitute step one in the risk control
processes. Continuous supervision, monitoring and follow-up are highly required for ensuring
the timely repayment and minimizing the default. Actually the credit portfolio is not only
constituted the banks asset structure but also a vital factor of the bank's success. The overall
success in credit management depends on the banks credit policy, portfolio of credit,
monitoring, supervision and follow-up of the loan and advance.
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corporate credit scheme:
Cash Credit
Over Draft
Secured Over draft
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A statement of quality standards applicable to all loans.
A statement of the preferred upper limit for total loans outstanding (i.e. the
maximum ratio to total loans to total assets allowed.)
A description of the Bank's principal trade area, from which most loans should come.
A discussion of the preferred procedures for detecting, analyzing and working out
problem loan situations.
A written loan policy statement carries a number of advantages for the bank adopting it. It
communicates to employees working in the loan department what procedures they must
follow and what their responsibilities are. It helps the Bank moves forward a loan portfolio that
can successfully blend multiple objectives such as promoting the bank's profitability,
controlling its exposure and satisfying regulatory requirements.
Step-1
A loan procedure starts with a loan application from a client who must have an account with
the Bank. At first it starts from the branch level. Branch receives application from client for a
loan facility. In the application client mention what type of credit facility he/she wants from
the bank including his/her personal information and business information. Branch Manager
or the Officer-in-charge of the credit department conducts the initial interview with the
customer.
Step-2
After receiving the loan application from the client, the bank sends a letter to Credit
Information Bureau of Bangladesh Bank for obtaining a credit inquiry report of the
customer from there. This report is called C1B (Credit Information Bureau) report. This
report is usually collected the credit information of customer. The purpose of this report is to
be informed that whether or not the borrower has taken loans and advances from any other
banks and if so, what is the status of those loans and advances i.e. whether those loans are
classified or not.
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Step-3
If Bangladesh Bank sends positive CIB report on that particular borrower and if the Bank
thinks that the prospective borrower will be a good one, then the bank will scrutinize the
documents. Required documents are:
In case of corporate client, financial documents of the company for the last three to
five years. If the company is a new one, projected financial data for the same
duration is required.
Personal net worth of the borrower(s).
In this stage, the bank will require whether the documents are properly filled up and
duly signed. Credit in charge of the relevant branch is responsible enquire about the
ins and outs of the customer's business through discussing with him/them.
Step-4
Bank officials of the credit department will inspect the project for which the loan is applied.
Project existence, its distance from the bank originating the loan, monitoring cost and
possibilities are examined.
Step-5
Any loan proposal needs to be evaluated on the basis of financial information provided by
theloan applicant. Financial spread sheet analysis which consists of a series of quantitative
techniques is employed to analyze the risks associated with a particular loan and to judge the
financial soundness and worthiness of the borrower. Besides lending risk analysis is also
undertaken by the bank to measure the borrower's ability to pay considering various risks
associated the loan. These quantitative techniques supported with qualitative judgment are the
most important and integral part of the credit approval process used by DBBL. This is the credit
analysis phase.
Step-6
Obtain legal opinion on the collateral provided by the applicant, whether those are properly
submitted- regular and up to date or else those documents will be asked to regularize by the
applicant.
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Step-7
The branch starts processing the loan at this stage. Based on the analyses (credit analysis)
done by the branch, the branch prepares a loan proposal. The proposal contains following
important and relevant information:
Step-8
If the proposal meets DBBL's lending criteria and is within the manager's discretionary
power, the credit line is approved. The manager and the sponsoring officer sign the credit
line proposal and issue a sanction letter to the client. If the value of the credit line is above the
branch manager's limit then it is send to head office or zonal office for final approval with
detailed information regarding the client (s), credit analysis and security papers.
Step-9
Head office processes the credit proposal and afterwards puts forward an office notice if the
loan is within the discretionary power of the head office credit committee or board
memorandum if the loan requires approval from the board of directors.
Step-l0
If the zonal office, credit committee of the head office or the board as the case may be
approves the credit line, an approval letter is sent to the branch. The branch then issues a
sanction letter to the borrower with a duplicate copy. The duplicate copy duly signed by the
borrower is returned to the branch of the bank.
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Step-11
After issuing the sanction advice, the bank will collect necessary charge documents.
Charge documents vary on the basis of types of facility, types of collateral.
Step-12
Finally loan is disbursed by the branch through a loan account in the name of the borrower
and monitoring of the loan starts formally.
In which sector, private or public, trading or industrial, the loan will be given; The loan will be
short term or long term. A manager will do the possible efforts to minimize the risk of the
Bank.
4.7 GENERAL PROCEDURE FOR LOANS AND ADVANCES
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4.7.1 First information sheet (FIS)
First information sheet (FIS) is the prescribed from provided by the respective branch that
contains basic information of the borrower. It contains following particulars.
1. Name of the concern with its factory location, office address and Tel no.
2. Name of the main sponsors with their educational qualification.
3. Business experience of the sponsors, details of past and present business, its
achievement and failures, name of ill the concerns wherein the sponsors have
involvement.
4. Income tax registration no. With the amount of tax paid for the last three years.
5. Details of unencumbered assets (movable & immovable) personally owned by the
sponsors.
6. Details of liabilities with other banks and financial institutions including securities
held there against.
7. Purpose of loan sought from DBBL.
8. Estimated cost of the project & means of finance.
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Character: The loan officer must be convinced that the customer has a well defined
purpose for requesting credit and a serious intention to pay. Responsibility,
truthfulness, clean past record, true purpose and honest intention to repay the loan
make up what a loan officer calls character.
Capacity: The customer requesting credit must have the authority to request such and
the legal standing to sign a binding loan agreement.
Cash: The borrower should have the ability to generate enough cash flow to repay the
loan. This cash flow can be generated from sales or income from the sales or income,
from the sale of liquidation of assets or funds raised through debt or equity securities.
Collateral: The borrower must possess adequate net worth or enough quality assets
to provide adequate support for the loan. The value of the collateral security must
cover the loan exposure.
Conditions: The recent trend of borrower's line of work or industry must be taken into
considerations by the lender.
Control: The lender should be careful about whether changes in law and regulations
could adversely affect the borrower and whether loan request meets the Bank's and
regulatory authorities' standards for loan quality.
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project is feasible then he will prepare a Proposal. Bank prepares the proposal in a specific
from called credit proposal. Significance the proposal branch sends it to head office for
approval.
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4.7.7 Risk Grading
All Banks should adopt a credit risk grading system. The system should define the risk profile
of borrower's to ensure that account management, structure and pricing are commensurate with
the risk involved. Risk grading is a key measurement of a Bank's asset quality, and as such, it is
essential that grading is a robust process. All facilities should be assigned a risk grade. Where
deterioration in risk is noted, the Risk Grade assigned to a borrower and its facilities should be
immediately changed. Borrower Risk Grades should be clearly stated on Credit Applications.
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Drawing shall be allowed only after completion of mortgage formalities and
other security arrangement.
Fig:
Loan
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borrower to protect him against willful defaults. Moreover, when money is lent against some
security of some assets, the document must be executed in order to give the banker a legal
and binding charge against those assets. Documents contain the precise terms of granting
loans and they serve as important evidence in the law courts if the circumstances so desire.
That is why all approval procedure and proper documentation shall be completed before the
disbursement of the facilities. The documents for loans and advances can be classified into
two categories, namely Charge documents & Security documents.
4.7.12 Disbursement
After verifying all the documents the branch disburses the loan to the borrower. A loan
repayment schedule is also prepared by the bank and given to the borrower.
4.7.13 Follow-up
After the disbursement of the loan bank officials time to time monitor the loan by physical
observation of the activities of the party. It is done in the following manner.
Constant supervision
Working capital assessment
Stock report analysis.
3. Doubtful Debt: Unlikely to be repaid but special collection efforts may result in partial
recovery.
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deteriorating financial health of a borrower. At a minimum, systems should be in place to
report the following exceptions to relevant executives in CRM and RM team:
Past due principal or interest payments, past due trade bills, account excesses, and
breach of loan covenants;
Loan terms and conditions are monitored, financial statements are received on
a regular basis, and any covenant breaches or exceptions are referred to CRM
and the RM team for timely follow-up.
Timely corrective action is taken to address findings of any internal, external
or regulator inspection/audit.
All borrower relationships/loan facilities are reviewed and approved through
the submission of a Credit Application at least annually. Two possible
solutions to minimize the credit loss:
At the time of sanctioning loan, along with all other terms and conditions repayment period
and installment is fixed. Recovery of loan starts just after the maturity of grace period. But
more exhaustive appraisal of the loan proposal in the pre-sanction stage is not the guarantee
to recover the loan money with interest unless a built in system of supervision & follow up
is applied and proper treatment is given as and when problem arises. The RU's primary
functions are:
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Pursue all options to maximize recovery, including placing customers into
receivership or liquidation as appropriate.
Ensure adequate and timely loan loss provisions arc made based on actual and
expected losses.
Regular review of grade 9 or worse accounts.
The loan classification procedure for all types of loan is governed by the guidelines
contained in BRPD Circular no 16 dated 06.12.98 issued by Bangladesh Bank and
subsequently revised partially through BRPD Circular no 9 and 10 dated 14.05.2000,
According to this circular if any borrower fails to repay his amount or installment within the
following time period then it will fall under the following classification status.
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CHAPTER- FIVE
RISKS ASSOCIATED WITH CREDIT
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5.1 RISK
• Risk is the probability that the realized return would be different from the
anticipated/expected return on investment.
• Risk is a measure of likelihood of a bad financial outcome.
• All other things being equal risk will be avoided.
• All other things are however not equal and that a reduction in risk is accompanied by a
reduction in expected return.
• The uncertainties associated with risk elements impact the net cash flow of any
business or investment. Under the impact of uncertainties, variations in net cash flow
take place. This could be favorable or un-favorable. The un-favorable impact is 'RISK' of
the business.
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changes in market size, increased competition, changes in regulations, losing of a single
large customer etc.
B. Company Risk: Each and every company holds a position within an industry. This
position is very much competitive. Due to weakness in the company's position in its
industry, a company may fail and the risk of failure is called company position risk. It
depends on company performance.
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procedures that arc sensitive and responsive to these changes. The purpose of this document is
to provide directional guidelines that will improve the risk management culture, establish
minimum standards for segregation of duties and responsibilities, and assist in the ongoing
improvement of our Bank's performances. Credit risk management is of utmost importance,
and as such, policies and procedures should be endorsed and strictly enforced.
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5.6 CREDIT ASSESSMENT AND SELECTION OF BORROWER
Credit assessment helps the banker to ensure selection of right type of loan
proposals/projects/ventures/enterprise and right type of borrower. For selecting the borrower
security should not the only thing to be relied upon. So responsibilities of the bankers to
investigate the client from different view point i.e. the strength and weakness of the client so
that the client will be able to repay the bank loan as repayment schedule with profit.
Credit risk assessment should be conducted prior to the granting of loans, and at least annually
thereafter for all facilities. The result of this assessment should be presented in a credit
application that originates from the Relationship Manager (RM), and is approved by Credit
Risk Management (CRM). Credit applications should summaries the results of the RMs risk
assessment and include, as a minimum, the following details:
Industry Analysis: The key risk factors of the borrower's industry should be assessed.
Any issues regarding the borrower's position in the industry, overall industry concerns
or competitive forces should be addressed and the strengths and weakness of the
borrower relative to its competition should be identified.
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Historical Financial Analysis: An analysis of a minimum of 3 years historical
financial statements of the borrower should be presented. Where reliance is placed on
a corporate guarantor, guarantor financial statements should also be analyzed. The
analysis should address the quality and sustainability of earnings, cash flow and the
strength of the borrower's balance sheet. Specifically, cash flow, leverage and
profitability must be analyzed.
Projected Financial Performance: Where term facilities (tenor > 1 year) are being
proposed, a projection of the borrower's future financial performance should be
provided, indicating an analysis of the sufficiency of cash flow to service debt
repayments. Loans should not be granted if projected cash flow is insufficient to repay
debts.
Mitigating Factors: Mitigating factors for risks in the credit assessment should be
identified. Possible risks include, but are not limited to: margin sustainability and/ or
volatility, high debt load (leverage/gearing), overstocking or debtor issues; rapid
growth, acquisition or succession issues; customer or supplier concentrations; and
lack of transparency or industry issues.
Loan Structure: The amounts and tenors of financing proposed should be justified
based on the perfected repayment ability and loan purpose. Excessive tenor or amount
relative to business needs increases the risk of fund diversion and may adversely
impact the borrower's repayment ability.
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Security: A current valuation of collateral should be obtained and the quality and
priority of security being proposed should be assessed. Loans should not be granted
based solely on security. Adequacy and the extent of the insurance coverage should be
assessed.
Name Lending: Credit proposals should not be unduly influenced by an over reliance
on the sponsoring principal's reputation, reported independent means, or their
perceive willingness to inject funds into various business enterprises in case of need.
These situations should be discouraged and treated with great caution. Rather, credit
proposals and the granting of loans should be based on sound fundamentals,
supported by a thorough financial and risk analysis. Facilities will only be provided
after analysis of the risks associated with the counter parties. There are numerous risks
attached to every transaction/relationship but there is a need for certain fundamental
risk aspects to be considered for every relationship. Certain of these risks have been
identified which will be required to be commented upon on a mandatory basis.
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CHAPTER- SIX
RECOMMENDATION & CONCLUSION
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6.1 FINDINGS OF THE STUDY
During internship, I have experienced lots of things that is helpful for me to fulfill the
report .I found many things on general banking activities of Elephant Road Branch which
plays an important role on general banking sector. Basically I involved with Accounts
Opening Section, Card section, and clearing cheque section. I did completed the accounts
form by listening the customer information then I go to the second manager for the
authorized signature .In spite of being part of account opening section I have worked when
the customer want to modify their information then the document need to attested with a
form .For example, A customer wants to change him /her mobile number so he /she have to
fill the application form to change the mobile number .After entry to the computer these
document are to be attested with the form. So all activities of during internship which is
given below:
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In Account, section where customer gets the overall impression about banking services
so as a Banker it’s very much important to ensure the quality services and this way
also goodwill and brand image ensured.
Services are the heart for business by providing better services within limited time
frame the customer gain loyalty towards DBBL.
It’s better to introduce a simple A/C opening form for all type of A/C and also
important to find out simple way of required documentation submission.
It’s time to go with innovative way signature verification taking so much time and in
case of not matching one would not be able to get money so introduce the SSN or
finger print scan concept that easily identify the client and it would be helpful to run
service smoothly.
Introduction of an Innovative Deposit product with a Suitable name gain advantage to
bring people in Banking.
Deposit Product for specific target group such as for Executives, Teaching
Professional, lawyer, Doctor, Garments Worker etc. with specialization feature need to
introduce to bring them into DBBL arena.
DBL on the basis different services and charges
When a person open, closing a saving, and current account A/C a, he/she need to
deposit a minimum balance. If clients want, open and closing a saving and current A/C
in DBBL, it maintain lower amount that belongs to a positive sign.
DBBL maintenance charge on saving A/C is lower in compare to others banks.
Every banks FDR interest rate is more or less flat because it is set by the central bank.
DBBL ATM (credit card) charge low that is a progressive decision to attract new
clients even first year it does not take any charge.
Bank Follow the overall credit assessment and risk grading process according to
Bangladesh Bank maximum time.
Loan and the advances are vital to finance the projects. An appropriate credit
distribution system and monitoring will ultimately lead to the profit maximizing of
banks. It is evident from that the size of DBBL loans and advances are increasing over
the years. It indicates mire earning for the bank.It shows a positive growth rate.
DBBL has a positive growth rate in Net profit.
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6.2 RECOMMENDATION
During the internship, I found that the bank provides all the conventional banking services.
Now, I would like to present my observations and give my opinion to improve the banking
service of DBBL.
The bank should appoint sufficient manpower to get works done in due time so
that it can possible for officers to do their works in an organized way and
Customer also get proper query from Bank.
Their employee is not expert so the customer dissatisfaction is arising day by day.
Information flow is a big issue now a days because one positive information may
be profitable for banking business so whatever client or not Banker should
provide the correct information that help client to invest in a bank. To avoid
excessive query it’s time to introduce call center for DBBL which provide 24
hour service to clients.
While the other banks are launching “Consumer Credit Scheme” DBBL Bank is
failing to launch this kind of scheme. The management can undertake such sort of
schemes and earn profit.
The bank should provide total investment money at once to the clients so that they
can exploit money properly.
DBBL should provides facilities to the internees through monthly allowance,
proper placement and practical operations as well as job certainly to those who
have shown better performance in doing their particulars. Because this internship
program may act as promotional program.
To fulfill the vision of “mass banking” this bank should grants investment
portfolio to new entrepreneurs, young businessman and also to new small
companies
In Account section where customer gets the overall impression about banking
services so as a Banker it’s very much important to ensure the quality services and
this way also goodwill and brand image ensured.
Their ATM booth network should be improved otherwise customer can easily
switch to another bank.
Services are the heart for business by providing better services within limited time
frame the customer gain loyalty towards DBBL.
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It’s time to go with innovative way signature verification taking so much time and
in case of not matching one would not be able to get money so introduce the SSN
or finger print scan concept that easily identify the client and it would be helpful
to run service smoothly.
Introduction of an Innovative Deposit product with a Suitable name gain
advantage to bring people in Banking.
Flexibility is very important in case of non-payment of deposit for one month;
Give a chance to client for fill it up in the next month that’s way client gain
positive impression to Bank. Some requirement relax for your client purpose but
must be ensure that this relax is not cause a big affect to Bank.
ATM services should be improved. If the bad service continue than the client will
be de-motivated to deposit in DBBL.
The business target should be in a measurable level. 150 new accounts per week
are a reasonable target for the employee but 400 new account opening target is
creating extra pressure.
DBBL money transfer procedure should be improved by including easy terms and
condition.
DBBL all time exercise their CSR but it need to develop more. Such as In case of
Non-Monetary Service DBBL need to introduce a Service Corner for Aged
people, it may create positive impression towards Bank and also need to introduce
a particular day for Women for getting quick service.
Some rule is followed in case of minimum balance of opening and closing
account but it not properly handled for new customer who discourse the new
customer in opening and closing an account in the bank. So, I think management
should be more emphasis behind this.
Charge and fees of DBBL comparatively low than other banks. My suggestion is
to keep up this charges and fees only for sustain the competitive banking business.
Deposit Product for specific target group such as for Executives, Teaching
Professional, lawyer, Doctor, Garments Worker etc with specialization feature
need to introduce to bring them into DBBL arena.
The Bank can organize more training program and workshop to make the
employees more efficient in their sector.
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The Bank has to establish a strong “Credit Manual”.
The Bank has to go through back ground investigation of all parties.
All the loan documentations have to done honestly.
All the document verifications have to done before loan sanction.
The Bank has to construct a long term strong investment policy.
The Loan and Advance section has to make strong and the employees have to be
devoted to the Bank.
The Bank has to give emphasis the SME loan section.
The Bank should introduce more loan section.
6.3 CONCLUSION
In this competitive world banking sector has trenched its wings wide enough to cover any
kind of financial services anywhere in this world. The major task of the Banks is to survive in
the competitive environment by managing its assets and liabilities in an efficient way.
This report concentrated on the Delivery and Management of General Banking Services of
Dutch-Bangla Bank Limited through survey identified some indicating and valuable
information relating to their finance that could make banking procedure more efficient and
also with the help of my recommendation, the bank’s financial portfolio could be improved
rather than now. Every time Bank is helping the economy of Bangladesh by remitting of the
funds both local and foreign. With the current performance of the Dutch-Bangla Bank and
with the little improvement in managing their financial area, certainly DBBL would be the
highest profitable private bank in Bangladesh in the near future. In the last decade there has
been a revolution in the communication media through the introduction of internet and other
forms of secure dial-up media. This had an immense impact on all the sectors of the industry
specially the banking sector. The number of banks is increasing day by day because the
demand of the customer for the banking service is high .as a result there is a highly
competitive situation in the banking sector and people have many option increase of taking
banking services .As a central bank of Bangladesh The Bangladesh Bank always adopting
measures for putting banking institution on right track and also monitors the activities of
these banks to prevent from doing illegal activities.
Banks always contribute towards the economic development of a country. Compared with
other Banks DBBL is contributing more by investing most of its funds in fruitful projects
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leading to increase in production of the country. Dutch-Bangla Bank Limited is a socially
responsible bank in the country. The bank maintains a regular donation program to all over
the country. Dutch-bangla bank foundation is the official name of the donation program.
As a student of Marketing I have to know all things related to banking. This report helps me
to know about the banking service as well as General Banking Related Activity. I think this
experience will also help me to develop my career.
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6.6 BIBLIOGRAPHY
I. For Referencing of Website,
1. DBBL Official Page(http://www.dutchbanglabank.com/)
2. DBBL Newsroom(http://newsroom.dutchbanglabank.com/newsroom/?cat=12)
3. DBBL Financial-statement (http://www.dutchbanglabank.com/investor-
relations/financial-statements.html)
4. Bangladesh Bank(https://www.bb.org.bd/)
5. CIB Regulation Guideline
(https://www.bb.org.bd/aboutus/regulationguideline/guidelist.php)
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