Chapter: 01

Impact of Capital Structure on Bank’s

Corporate Performance: A study on Jamuna
Bank Ltd. (Mirpur Branch)

1.1 Statement of the Problem

Capital structure means the arrangement of capital from different sources which is the amount of
debt and equity employed by a firm to fund its operations and finance its assets. And also capital
structure refers to the proportions or combinations of equity share capital, preference share
capital, debentures, long-term loans, retained earnings and other long-term sources of funds in
the total amount of capital which a firm should raise to run its business. Debt and equity capital
are used to fund a business’s operations, capital expenditures, acquisitions, and other investment.

Capital structure decisions are among the most important and crucial decisions for any business
because of their effect on the performance of firms. The purpose of this report will be investigate
the impact of capital structure on financial performance of selected commercial bank, Jamuna
Bank Ltd. Bangladesh. The organization will be benefited by knowing how debt and equity
impact on profit in the organization. And also identify some recommendation for manager to
manage the debt and equity for the profit maximization of the bank. Researcher will be benefited
by using this paper on the base of some clear information about Capital Structure.

1.2 Objectives of the Study

The main objective of the study will be:

 To give an overview about the Capital Structure of Jamuna Bank Ltd.

 To explore the Capital Structure policy of Jamuna Bank Ltd.
 To investigate the impact of Capital Structure on financial performance.
 To make some recommendations to improve the current situation
1.3 Scope of the Study
The study will be conducted in Jamuna Bank Ltd. (Mirpur Branch). It basically focuses on the
impact of Capital Structure which describe the debt and equity structure, and it’s impact on the
profit of the bank.

1.4 Methodological aspects of the Study

1.4.1 Sample Size

The study will be conducted on secondary data. Sample size for the study will be 5 years data
from 2014 to 2018. The convenient sampling technique will be used to choose the sample size.

1.4.2 Sources of Data

Primary Source
 Personal Interview
 Discussion with employees.
Secondary Source
 Annual Report of the bank
 Official Website
 Necessary Journal’s, Articles, Books, Newspaper

1.4.3 Data Collection Procedure

Primary data will be collected by personal interview and discussion with employees of Jamuna
Bank Ltd. about the topic.
Secondary data will be also collected from annual report of Jamuna Bank Ltd., Official Website,
Necessary Journals, Articles, Books and Newspapers.

1.4.4 Data Analyzing Procedure

I will be used various statistical tools to analyze the data for conducting the paper such as SPSS-
23 version.
1.5 Limitations of the Study
The major limitations of the study will be:
 Due to shortage of time, it will be very complicated to verify the truthfulness of the
collected data.
 For the crisis of fund, it will be very complicated to collect specific data.
 I will use most of secondary data, but enough data are not available in secondary data
source.
 Inexperience of author
 Sometimes bank employees are not willing to provide data to maintain secrecy
 Some data’s are very confidential, so I will unable to collect some data

1.6 Timeframe and cost budget of the study

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 Chapter: 02
Organizational Overview
2.1 Historical Background of Jamuna Bank Ltd
Jamuna Bank Limited is a commercial bank in Bangladesh registered under the Companies Act
1994. It was established on June 3, 2001. Jamuna Bank had 132 branches as of March, 2019 . Its
head office is located at Hadi Mansion, 2, Dilkusha C/A, Dhaka-1000, Bangladesh. Jamuna Bank
Ltd is a 3rd generation private commercial bank, was established by a group of local
entrepreneurs. The bank, aside from conventional, also provides Islamic banking through
designated branches. The Bank has real-time online banking branches (of both urban and rural
areas) network to provide online banking.
There are total 123 branches of Jamuna Bank Limited situated in 41 districts in Bangladesh. You
may browse the branches by districts or pick your nearby branch directly from the list below.
Following table of all Jamuna Bank branches will help you to have any particular branch address
with location, telephone number, routing number, SWIFT code and other related information.
Clicking any district names will provide you another list of branches in that particular district
and so on any branch names will show you total branch information directly. They have arranged
the list by district names.

Branches by Districts

Barisal Mymensingh
Brahmanbaria Madaripur
Bhola Naogaon
Bogra Narayanganj
Chandpur Narsingdi
Chapai Nawabganj Natore
Chittagong Netrokona
Chuadanga Nilphamari
Comilla Noakhali
Cox's Bazar Pabna
Dhaka Rajshahi
Dinajpur Rangpur
Faridpur Satkhira
Feni Sherpur
Gazipur Sirajganj
Gopalganj Sylhet
Khulna Tangail
Kushtia Jessore
Lakshmipur Jamalpur
Moulvibazar Thakurgaon
Munshiganj

There are total 165 ATM booths of Jamuna Bank Limited situated in 33 districts in Bangladesh.
You may browse the atms by districts or pick your nearby booth directly.
Jamuna Bank Limited provides various types of loans or credits for their different types of
clients for helping to make their life easy and simple.

The operation hour of the Bank is 10:00 A.M. To 6:00 P.M. from Sunday to Thursday with
transaction hour from 10:00 A.M. to 4:00 P.M. The Bank remains closed on Friday, Saturday
and government holidays. To provide clientele services in respect of International Trade it has
established wide correspondent banking relationship with local and foreign banks covering major
trade and financial center at home and abroad.
2.2 Corporate Information

Head Information
Bank Name Jamuna Bank Limited
Status Active
Date Established 3rd June 2001
Regulator Bangladesh Bank
Bank Charter Class Commercial Bank
Ownership Type Public Limited
Total assets / Authorized Capital Tk.10,000 million
Number of Branches 132 branches
Head Office Hadi Mansion, 2 Dilkusha C/ADhaka-1000, Bangladesh.
Logo

Chairman Engr. Md. Atikur Rahman

Corporate Slogan
“Your Partner for growth”

Number of employees 1980 to 2500

Website https://jamunabankbd.com/front/index
Wikipedia https://en.wikipedia.org/wiki/Jamuna_Bank
Customer Complient +88 02 9570912
Basic Functions Transaction Accounts, Fixed Deposit Receipts, Deposit
Schemes, Auto Loans, Any Purpose loan, Salary Loan,
Doctor Loan, Education Loan, Overseas Job Loan, Credit
Card, Debit Card, Corporate Banking, Islamic Banking
Activities, SME Banking, International Banking, NRB
Banking, Locker Services, Online Banking, Student File
Etc.
 ATM Card

2.3 Vision, Mission, Goals and Objective

 Vision
Jamuna bank wants to become a leading banking institution and to play a significant role in the
development of the country.

 Mission
The Bank is committed for satisfying diverse needs of its customers through an array of products
at a competitive price by using appropriate technology and providing timely service so that a
sustainable growth, reasonable return and contribution to the development of the country can be
ensured with a motivated and professional work-force.
 Objectives
 To earn and maintain CAMEL Rating 'Strong.'
 To establish relationship banking and improve service quality through development of
Strategic Marketing Plans. 
 To remain one of the best banks in Bangladesh in terms of profitability and assets quality.

 To introduce fully automated systems through integration of information technology.
 To ensure an adequate rate of return on investment
 To keep risk position at an acceptable range (including any off balance sheet risk).
 To maintain adequate control systems and transparency in procedures.
 To develop and retain a quality work force through an effective human Resources
Management System.
 To ensure optimum utilization of all available resources.
 To pursue an effective system of management by ensuring compliance to ethical norms,
transparency and accountability at all levels.
2.4 Organogram
2.5 Branch Hierarchy
VP
(Manager)

AVP
(Operation Manager)

AVP FAVP FAVP AVP

(General Banking (Foreign Exchange (Credit in (Cash in
in charge) in charge) charge) charge)

FEO FAVP SEO

SEO
AO SEO EO
AO SEO EO AO
AO MT
Officer First Officer SME (Officer) Off

2.6 Major Products and Services

 Deposit products
 Transactional Accounts
 Current Deposit Account
 Short Notice Deposit Account
 Saving Bank Account
 Special Saving Bank Account
 Resident Foreign Currency Deposit Account
 Fixed Deposit Receipts
 Deposit Schemes
 Lakhpoti Deposit Scheme
 Millionar Deposit Scheme
 Kotipoti Deposit Scheme
 Double Growth Deposit Scheme
  Triple Growth Deposit Scheme
 Monthly Savings Scheme
 Monthly Benefit Scheme
 Pension Deposit Scheme
 Marriage Deposit Scheme
 Educational Scheme
 Mudaraba Hajj Saving

 Documantation Formalities

 Loan Products
 Auto Loan
 Any Purpose Loan
 Personal Loan
 Salary Loan
 Doctors Loan
 Education Loan
 Overseas Job Loan

Some major products and services of Jamuna Bank Ltd is describing below from all the products
and services of that bank.
Deposit Products
Current Deposit Account

Current Deposit Account is meant for facilitating day to day transactions of different business
entities, non profit organizations, Government, Semi Government, Autonomous bodies, Sector
corporations and different other organizations/ institutions, club, societies, Trust etc. Opening of
the account requires a minimum deposit of BDT5000. However, there is no minimum balance
requirements and also no ledger fee. Only a half yearly service charge of Tk.500 and
Government Excise Duty etc. are applicable. Current Deposit Account facilitates:

 Free MICR cheque facility.

 Unlimited deposit and withdrawal.
 Free online facilities across the branches.
 Cash management facilities under the prior arrangement.
 Automated clearing facility.
 Electric fund transfer without cheque.
 SMS Banking facility.
  Internet Banking facility.
 Real Time Gross Settlement (RTGS) facility

Necessary Documents to open Current Account:

 Passport size photograph for each account holder and nominee(s)

 Proof of identification such as national/Voter's ID, Passport or Driving License
 Tax Identification No (TIN)
 Trade License
 An introduction

Saving Bank Account

Savings Bank Deposit Account is meant for individual savers. The account bears an attractive
interest on fulfillment of conditions. Opening of the account requires a minimum deposit of
BDT2000 for urban area and BDT500 for rural area. The same deposit needs to be maintained as
minimum balance for receiving interest. Yearly service charge is applicable as per Bangladesh
Bank's rules.

Savings Bank Deposit Account facilitates:

 MICR cheque facility.

 Debit Card with wider ATM/ POS access.
 Limited number and amount of monthly withdrawal allows receipt of interest accrued
payable on a half yearly basis.
 Free online facilities across the branches.
 Automated clearing facility.
 Electric fund transfer without cheque.
 SMS Banking facility.
 Internet Banking facility.
 Real Time Gross Settlement (RTGS) facility

Necessary Documents to open Savings Account:

 Two copies of passport size photographs of account holder

 One copy of passport size photograph of the nominee
 A valid identification proof like passport/ National ID /Driving Licence of each
signatory.
 An introduction

However, JBL has customized Savings Account for:

  Housewives offering Grihini Savings Account.
 Student Savings Account.
 Senior Citizen Savings Account.

Lakhpati Deposit Scheme

Payable Amt. Monthly

Tenor Rate
at the maturity Installment
1 Year 7.00% 8,100
2 Years 7.00% 3,900
3 Years 7.00% 2,520
Tk. 1.00 Lac
4 Years 7.00% 1,820
5 Years 7.00% 1,400
6 Years 7.00% 1,130

Millionaire Deposit Scheme

Payable Amt. Revised Monthly

Tenor
at the maturity Rate Installment
3 Years 7.00% 25,200
4 Years 7.00% 18,200
5 Years 7.00% 14,000
6 Years 7.00% 11,300
7 Years 7.00% 9,270
Tk. 10.00 Lac
8 Years 7.00% 7,810
10 Years 7.00% 5,780
12 Years 7.00% 4,455
15 Years 7.00% 3,160
18 Years 7.00% 2,325

Kotipoti Deposit Scheme

Payable Amt.at the Monthly

Tenor Rate
maturity Installment
 7.00
3 Years 252,000
%
7.00
4 Years 182,000
%
7.00
5 Years 140,000
%
7.00
6 Years 113,000
%
7.00
7 Years 92,700
%
7.00
8 Years Tk. 1.00 Crore 78,100
%
10 7.00
57,800
Years %
12 7.00
44,550
Years %
15 7.00
31,600
Years %
18 7.00
23,250
Years %
20 7.00
19,200
Years %

Double Growth Deposit Scheme

Tenor Fixed Deposit Amount Interest Rate

10 Years Tk.1000.00 or its multiple 6.96%

Monthly Saving Scheme

Tenor Instalment Rate (7.00%)

  500            19,965
1,000            39,930
  1,500            59,895
2,000           79,860
3 Years 3,000          119,790
5,000          199,650
 
10,000          399,300
 
  
Tenor Instalment Rate (7.00%)
  500            35,796
1,000            71,593
  1,500          107,389
2,000           143,186
5 Years 3,000          214,779
5,000          357,965
 

  10,000          715,929

 

Loan Products
Any purpose loan

Purpose:

 For construction & renovation of residential house/building and purchase of

Flat/Apartment & any lawful purpose.

Nationality & Age Limit:

 Bangladeshi by birth.
 Minimum age 25 years / Maximum age 55 years.
 Loan tenor shall not exceed 60 years of age.

Minimum Income:

 Net Income should be at least Tk. 40,000/- per month. (To be substantiated by evidence)

Loan Size:

  Minimum 2.00 Lac and Maximum Tk. 50.00 Lac.

Maximum Term of Loan:

 10 years.

Loan to price:

 Regulated by Bangladesh Bank from time to time.

Rate of Interest:

 As determined by the bank from to time.

Security/ Collateral:

 The loan shall be secured by 200% tangible asset or 100% financial asset.
 In suitable cases security condition may be relaxed.
 Hypothecation/ Lien / Registration / Mortgage of any other asset, acceptable to the bank,
as feasible depending on the type of asset.
 Personal guarantee of the applicant & applicant’s spouse.
 Third party guarantor shall be equal to or creditworthy than the principal applicant.

Personal Loan

Purpose:

 Any lawful purpose.

Nationality & Age Limit:

 Bangladeshi by birth.
 Minimum age 25 years / Maximum age 57 years.
 But loan tenor shall not exceed 62 years of age.

Minimum Income:

 Net Income should be at least Tk. 40,000/- per month. (To be substantiated by evidence)

Loan Size:

 Minimum 2.00 lac and Maximum Tk. 20.00 Lac.

Maximum Term of Loan:

 5 years

Rate of Interest:

 As determined by the bank from to time.

Security/ Collateral:

 The loan above Tk. 8.00 Lac shall be secured by 200% tangible asset or 100% financial
asset.
  Hypothecation/ Lien/Registration / Mortgage of Offered/Procured/Purchased/Any other
asset, acceptable to the bank, as feasible depending on the type of asset.
 In suitable cases security condition may be relaxed.

Salary Loan

Purpose:

 Any lawful purpose.

Nationality & Age Limit:

 Bangladeshi by birth.
 Minimum age 21 years / Maximum age 55 years.
 But loan tenor shall not exceed 60 years of age.

Minimum Income:

 Net Income should be at least Tk. 15,000/- per month.

Rate of Interest:

 As determined by the bank from to time.

Maximum Term of Loan:

 5 year

Loan Size:

 Minimum 1.00 lac and Maximum Tk. 8.00 lac Or 12 times of gross salary, which ever is
lower.

Security/ Collateral:

 Lien on Salary and service benefit of the customers and consent to pay to JBL on demand
to adjust the loan from his employer on JBL standard format.
 Personal guarantee of the applicant & applicant’s spouse.
 Third party guarantor shall be equal to or more creditworthy than the Principal applicant.

2.7 Operational Procedures of Jamuna Bank Ltd. (Mirpur Branch)

Organization structure:
The Jamuna Bank Limited has demonstrated and definite management structure like all other
banks. The typically hierarchical arrangement of lines of authority, communications, rights and
duties of an organization. Organizational structure determines how the roles, power and
responsibilities are assigned, controlled, and coordinated, and how information flows the
different levels of management.

Strategic Marketing Plans:

 Remain one of the best banks in Bangladesh in terms of profitability and assets quality.
 Introduce fully automated systems through integration of information technology.
 Ensure an adequate rate of return on investment.
 Keep risk position at an acceptable range (including any off balance sheet risk).
 Maintain adequate liquidity to meet maturing obligations and commitments.
 Maintain a healthy growth of business with desired image.
 Maintain adequate control systems and transparency in procedure.
 Develop and retain a quality work-force through an effective human Resources
Management System.
 Ensure optimum utilization of all available resources.
 Pursue an effective system of management by ensuring compliance to ethical norms,
transparency and accountability at all levels.
Strategies
 To manage and corporate the Bank in the most efficient manner to enhance financial
performance and control cost of fund.
 To strive for General banking activities through quality control and delivery of timely
services.
 To identify customers‟ credit and other banking needs and monitor their perception
towards our performance in meeting those requirements.
 To review and update policies, procedures and practices to enhance the ability to extend
better services to customers.
 To train and develop all employees and provide them adequate resources so that
customers can be reasonably addressed.
 To promote organizational effectiveness by openly communicating company plans,
policies, practices and procedures to employees in a timely fashion.
 To cultivate a working environment that fosters positive motivation for improved
performance.
 To diversify portfolio both in the retail and wholesale market.
 To increase direct contact with customers in order to cultivate a closer relationship
between the bank and its customers.

Corporate Culture of JBL

Employees of JBL share certain common valu es, which help to create a JBL culture,

 The client comes first.

 Search for professional excellence.
 Openness of new ideas and new methods to encourage creativity.
 Flexibility and promote response.
 A sense of professional ethics.