interneship report.doc

8/13/2019 Interneship Report.doc

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Follow the red coloredinstructions.

Imterneship Report On:

Evaluation of Asset Liabilitymanagement

OfNational Bank Limited


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Term Paper On: It is not term paper National Bank Limited

(This Internship Report Is Submitted For the Partial Fulfillment of the Degree

of Master of Bank Management

Prepared By

Name: Kazi Md.Zillur RahamanStudent Id: 397

Registration no: 333Batch: 19th

rogram: MBM

Supervised By

Ru!am "ho#dhur$%ssistant ro&essor 'ecturer

(ni)ersit$ o& Science * +echnolog$ "hittagong


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!"e#uti$e summar% Introdu#tion or Ba#kground ,&&ecti)e credit ris- management is there&ore )ital to ensure that a an-ing institution/scredit acti)ities are conducted in a !rudent manner and the ris- o& !otential an- &ailuresreduced. So0 a!!ro!riate !olicies0 !rocedures and s$stems should e im!lemented at each&inancial institution &or identi&$ing0 measuring0 monitoring and controlling credit ris-

e&&ecti)el$.B' 2 o# come $our NB' ecome B'4445 &ollo#s a centralized a!!roach ine6tending its credit. Relationshi! Managers 2RM5 rings in ne# customers and !re!arescredit !ro!osals &or them. +he !ro!osal !ac-age is then sent to the "redit Ris-Management 2"RM5 de!artment anal$zes the ris- mitigating &actors and sends the

!ro!osal #ith recommendation to the credit a!!ro)ing authorit$. "redit a!!ro)ingauthorit$ a!!ro)es the !ro!osal or denies it and sends the same to "RM again. NB' has a#ritten credit !olic$ manual. It &ull$ com!lies #ith Bangladesh Ban- uidelines. NB'does not e6tend credit to a usiness0 i& it does not understand the usiness. +he !rocess o&credit assessment is also guided $ the central an- directi)es. % thorough credit and ris-assessment is conducted !rior to the granting o& loans0 and at least annuall$ therea&ter &or

all &acilities. +he loan structure is matched #ith the cash con)ersion c$cle o& the usinessand a!!ro!riate securit$ is ta-en as collateral. In short0 credits are not e6tended rel$ing on 8ust the orro#er/s or s!onsoring units re!utation in ha-a Ban- 'imited. 2 on/t co!$other/s re!ort !lease5+hough all these ste!s are ta-en &or managing credit ris-0 it is not enough. ue to thes$stem0 &ailure can occur. %s Ban- deals #ith the de!ositors mone$0 it must ha)e somesa&et$ !recaution #hen gi)ing loan. +o !re)ent such &ailure international accords li-eBasel I0 Basel II are &ormulated. Bangladesh Ban- instructed all the Ban-s o& Bangladeshto ado!t Basel II &rom 7. +hough it has not een made &ull$ acti)ated $et and thesim!ler a!!roach to measuring ca!ital #as ta-en $ the Bangladesh Ban-0 still it/s a igchallenge &or all the Ban-s. Regulator$ authorities are there&ore ma-ing e&&orts to design

a!!ro!riate strategies that #ould ena le the an-ing sector &or smooth transition to BaselII.;+he Ne# %ccord; com!rises o& three !illars. illar I sets out the minimum ca!italre


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To identify the implementation, supervision, monitoring and repayment practice interview

with the employee and e)tensive study of the e)isting file was and practical case

observation was done.

1.# !ource of data:

To perform the study data sources are to be identified and collected, the data are toclassified, analyzed, interpreted and presented in a systematic.

i$ %rimary !ources& # ace to face conversation with the official staff. # *ractical desk work #/imple "epth interview technique was used by asking number open ended questions

to collect the information. # 0elevant file study as provide by the concerned officer.

ii$ !econdary !ources: # +nnual 0eport ' 1223, 1224 and 1225( $ational !ank %imited ' you have provide

latest data 1225 is too old( # 6redit 0isk anual '1223(, $ational !ank.

1.' (imitation of the study:

The present study was not out of limitations. !ut it was a great opportunity for me to know

the banking activities of !angladesh specially $ational !ank %imited. The study carried

on has the following limitations: The main constraint of the study is inadequate access to information, which has

hampered the scope of the analysis required for the study. /ome problems create confusions regarding verification of data. The time is insufficient to know all activities. t was very difficult to collect the information from various personnel for their job

constraint. +s some of the fields of banking are still not covered by our courses, there was

difficulty in understanding some activities. !ecause of the limitation of information, some assumption was made. /o there may

be some personal mistake in the report.

)Check you fon ty"e* si+e and "aragra"h scale. ,t should bethe same throughout the re"ort$


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Cha"ter - /

Background of banking

/.1 0efinition of bank:

The 7ews in 7erusalem introduced a kind of banking in the form of money lending before

the birth of 6hrist. The word 8!ank9 was probably derived from the word 8bench9 as during

ancient time 7ews used to do money lending business sitting on long benches.

irst modern banking was introduced in 445 in /tockholm as 8/avings *is !ank9 which

opened up a new era of banking activities throughout the ;uropean ainland.

n the /outh +sian region, early banking system was introduced by the +fghan traders

popularly known as -abuliwallas. uslim businessmen from -abul, +fghanistan came to

ndia and started money lending business in e)change of interest sometime in < 1 +.".

They were known as 8-abuliwallas

+ bank is a financial institution whose primary activity is to act as a payment agent for

customers and to borrow and lend money. t is an institution for receiving, keeping, and

lending money.

!anks have influenced economies and politics for centuries. =istorically, the primarypurpose of a bank was to provide loans to trading companies. !anks provided funds to

allow businesses to purchase inventory, and collected those funds back with interest

when the goods were sold. or centuries, the banking industry only dealt with businesses,

not consumers. !anking services have e)panded to include services directed at

individuals, and risk in these much smaller transactions are pooled.

The name bank derives from the talian word banco >desk?bench@, used during the

0enaissance by lorentines bankers, who used to make their transactions above a desk

covered by a green tablecloth.A1B

=owever, there are traces of banking activity even inancient times. n fact, the word traces its origins back to the +ncient 0oman ;mpire,

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. +s 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 0omeCthat of the

mperial int. A


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),t is just co"y and "asted job. hy don2t youwrite by yourself and "ut reference$

/.1.1 (aw of banking:!anking law is based on a contractual analysis of the relationship between the bank and

the customer . The definition of bank is given above, and the definition of customer is any

person for whom the bank agrees to conduct an account.

The law implies rights and obligations into this relationship as follows:. The bank account balance is the financial position between the bank and the

customer, when the account is in credit, the bank owes the balance to the customer, when

the account is overdrawn, the customer owes the balance to the bank.1. The bank engages to pay the customer9s cheques up to the amount standing to the

credit of the customer9s account, plus any agreed overdraft limit.desk?bench@, used during the

0enaissance by lorentines bankers, who used to make their transactions above a desk

covered by a green tablecloth. A1B =owever, there are traces of banking activity even in

ancient times.

1.< !eginning !anking operation in !angladesh :


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+fter independence of !angladesh the government of !angladesh was formally to

change the administration of the territory now constitute !angladesh. The government

promulgated a law called !angladesh bank order FE 'acting president order no 1 of

FE (. !y this order the state bank of *akistan was declared to be deemed as

!angladesh bank and officers, branches and assets of said state bank was declared to

be deemed as officers, branches of !angladesh bank. Gn the date there e)isted D

scheduled banks with about


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Cha"ter - 7

4ackground of 8ational 4ank (td.


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National Bank Limited %imited has its prosperous past, glorious present, prospective future and

under processing projects and activities. ;stablished as the first private sector bank fully owned by !angladeshientrepreneurs, $!% has been flourishing as the largest private sector !ank with the passage of time after facingmany stress and strain. The members of the board of directors are creative businessmen and leading industrialistsof the country. To keep pace with time and in harmony with national and international economic activities and forrendering all modern services, $!%, as a financial institution, automated all its branches with computer networks inaccordance with the competitive commercial demand of time. oreover, considering its forth coming future, theinfrastructure of the !ank has been rearranging. The e)pectation of all class businessmen, entrepreneurs andgeneral public is much more to $!%. +t present we have D3 branches under our branch network. n addition, oureffective and diversified approach to seize the market opportunities is going on as continuous process to

accommodate new customers by developing and e)panding rural, / ; financing and offshore banking facilities.Ie have opened 2 branches and 3 / ;?+gri branches during 12 2.

The emergence of National Bank Limited in the private sector was an important event in the

!anking arena of !angladesh. Ihen the nation was in the grip of severe recession, the government took thefarsighted decision to allow the private sector to revive the economy of the country. /everal dynamic entrepreneurscame forward for establishing a bank with a motto to revitalize the economy of the country.

National Bank Limited was born as the first hundred percent !angladeshi owned !ank in theprivate sector. rom the very inception, it was the firm determination of National Bank Limited to

play a vital role in the national economy. Ie are determined to bring back the long forgotten taste of bankingservices and flavors. Ie want to serve each one promptly and with a sense of dedication and dignity.

The then *resident of the *eopleJs 0epublic of !angladesh 7ustice +hsanuddin 6howdhury inaugurated the bankformally on arch 15, F5< but the first branch at D5, "ilkusha 6ommercial +rea, "haka started commercialoperation on arch 1


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million in 12 2 compared to Tk. 3,F


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,6!anding the an-/s area o& in)estment $ ta-ing !art in s$ndicated large loan&inancing.

Increase &inances to small and medium ,nter!rise 2SM,5 sector includingagriculture and agro ased industries. +hus ma-ing due contri ution to thenational econom$.

(!holding the image o& the an- at home and a road $ !ursuing d$namic andtime ene&iting acti)ities.

,nsuring maintenance o& ca!ital ade


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#uality

NB' o&&ers hassle &ree etter ser)ice timel$. NB' uild u!


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Einance and accounts di)ision

Einancial institution i)ision

%udit and Ris- Management i)ision

E(isting Branc&es

Cn 3 march 19>3 NB' #as &irst stared at il-usha Branch. %t the age o& 19 $ears it hasesta lished a total o& 7A ranches o)er the countr$ and made a smooth net#or- inside thecountr$ as #ell as throughout the #orld. +he num er o& ranches as territor$D #ise ismentioned in the &ollo#ing ta le:

Name of t&e Area Number of Branc&esha-a A=

"hittagong HARa8shahi 1

Khulna 3S$lhet ATotal )*+

Personal banking service:

'eposit Account:

"urrent %ccount 2" 5 Short term de!osit % " 2S+ 5D rate o& interest A.A?D=? Sa)ing % " 2S 5D rate o& interest =? Ei6ed de!osit Recei!t 2E R5

,o$ to open an Account

Eirst interact #ith the client and understand his her interest to o!en an % "0address0 !ro&ession0 social status0 and also his re&eree.

Must ha)e logical e6!lanation to o!en the % " "urrent !hotogra!h.

Asked for some papers:

+a6 identi&ication notes 2+IN5 hotoco!$ o& !ass!ort +rade license Introduce mar- on the &orm0 &rom an$ em!lo$ee o& NB' ,m!lo$ment certi&icate.


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If oint A-":

eclarationD #ho #ill #ithdra# mone$4 Notice &rom clientD i& client #ant to #ithdra# more then J o& their de!osits or

more than A thousand0 notice must gi)e e&ore 1 #ee- o& #ithdra#al I& it is a com!an$/s % " then M% is must a&ter &ul&illment o& all re


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/ules of .'/:

Normall$ a&ter maturit$ and &ollo#ing necessar$ rules holder o& E R can#ithdra# total mone$ #ith interest rate.

But i& the holder #ant to #ithdra# his mone$ e&ore maturit$ then he does not getan$ interest0 ut #ithdra# de!osited mone$.

In case o& !remature E R no !enalt$0 no IR in 3 or = months E R. But in case o& 1 or H months an- cut u! = months. %&ter that i& an$ sla then

according to this he gets IR. (!on interest rate 1 ? income ta6 must cut u!. +here are some rules incase o& e6cise dut$ 2 $earl$ charged5

NBL mont&ly saving sc&eme 3N! 5:

It is an attracta le sa)ings !ro8ect &or limited income grou!0 national Ban- 'imited got $ears. +he return is as &ollo#s:

In taka

!ont&lyinstallment

/eturn after 0years 14++2

/eturn after 8years 14982

/eturn after ;years 148+2

A 0= 7 370>9= 7 0>H9

1 H10 AA 7A0791 10H10=97

> 0A1 10A10A>3 0>3039H

3 10 307=A 0 7037H H0 A0 91

H 1.=A0 30 301== A0==07>>

A 0 =0 7H 307>09A7 70A7091H

1 H.1 0AH9 70 >0H>A 1H01=097


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NBL deposit sc&eme 3N' 5:+he scheme #ill e titled as N S. +he !eriod o& de!osit #ill e 3 $ears. "redit &acilitiesu! to > ? are allo#ed against lien on alance o& N S % "0 at 1A? rate o& interest o&


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NB' is one o& the &irst &e# Bangladesh an-s to o tain mem ershi! o& s#i&t 2Societ$ &or#orld interD an- telecommunication5. S IE+ is a mem ers o#ned coo!erati)e #hich a&irst and accurate communication net#or- &or &inancial transaction such as 'etter o&credit0 &und trans&er etc. $ eing a mem er o& S IE+0 the an- has o!ened u!

!ossi ilities &or uninterru!ted connecti)it$ #ith o)er A7 user institution in 1Acountries all o)er the #orld.

Bills and "learing department

+he ills and clearing de!artments !er&orms their duties &or collection !ur!ose. +his !ur!ose ha!!ens through t#o #a$s:

T&roug& clearing &ouse:

,)er$ mem er an- o& the clearing house !re!ares a an- #ish list o& che


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"hittagong and s$lhet to !ermits its )alued cutomers to car$ out transaction &rom an$ ranch. "ash #ithdra#al or de!osit or an$ t$!e o& !ersonal an-ing. +ransaction can e !er&ormed using the an$ Branch Ban-ing Ser)ice. %ll transactions under an$ BranchBan-ing are a solutel$ &ree o& charge.

T&e follo$ing services are available under any branc& Banking:

"as& $it&dra$al from one>s Account from any Branc& of t&e bank4 "as& and c&eck deposit into one>s Account from any branc& of t&e bank4

National bank "redit card:

NB' !ro)ide oth credit card and de it card asicall$ this de!artment deals #ith creditcards0 and no# da$s onl$ the Master "ard/. But NB' recentl$ is starting the o!eration o&LIS% !o#er "ard as a e it "ard. Master card is using as an alternati)e o& cash. In thereal #orld cash carr$ing is not sa&e al#a$s that/s #h$ credit card is )er$ !o!ular themodern #orld and also in Bangladesh. eo!le can dra# cash &rom the %+M #ith out an$in)ol)ement o& human0 $ credit card one can u$ an$thing &rom the sho!.

NB' has t#o t$!e o& Master cards:Sil)er and gold0 oth has local and international range.

Interest rate is ? &or oth local and international.

Application and proposal preparing to open a card:

%!!lication recei)e &rom a !art$ Leri&$ the securities2E R0 Sa)ing "erti&icate0 " or S % " Eor e6!orter line #ill e his E." % " and !a$ment o& card #ill e through (S . Send the certi&icate to the to! management. I& a!!ro)ed $ the management the card #ill !unched and deli)er a&ter 1 da$ to the

client.

'ebit card 3?isa po$er card5:

NB' !o#er card issued to a card holder to a)ail o& ser)ices and to !urchase or to dra#cash $ !ro!erl$ !resenting the same at the noti&ied mem er ,sta lishment Ban- %+M.+hree t$!es o& !o#er card is a)aila leD

'ocal card International card uel card.

Prominent feature of t&e NBL po$er "ard:

NB' !o#er card can e used &or !urchased at merchants #here LIS% "ards are

acce!ted trough electronic !oint o& sales terminals 4


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NB' !o#er card can e used &or #ithdra#ing cash &rom automated tellermachines 2%+M5.

ersonal identi&ication num er 2 IN5 necessar$ &or #ithdra#al o& cash #ill e !ro)ided $ the an-

Eor local card there is no insurance &ee &or the 1 st $ear and nd $ear onl$ ta-a #ill e charged.

+o get a NB' o#er "ard "ustomer has to su mit onl$ t#o co!$ o& his her recent !hotogra!h and the +IN 2+a6 Identi&ication Num er5.

ecured Overdraft

/esc&eduling TermLoan : Dbet$een ma(imum )82 of overdue installment or )+2 of outstanding6 $&ic& islo$er pain in cas& t&en ) st resc&eduling considered4 Bet$een ma(imum 0+2 of overdue installment or 9+2 ofoutstanding6 $&ic& is lo$er pain in cas& t&en 9 nd resc&eduling considered4

= bet$een ma(imum 8+2 of overdue installment or 0+2 of outstanding 6 $&ic& is

lo$er pain in cas& t&en 0 rd resc&eduling considered 4

/esc&eduling of in case of demand and continuous loan>s resc&eduling rate of do$n demand and paymentvary in order to loan amount4

"ontinuous loan:Overdue loan amount rate of do$n payment

One corer taka )82

One @five corer taka )+2

.ive corer and above 82

Loans and Advanced:

'oans and ad)ance is a ma8or earning source o& a an-. NB' is also )er$ care&ul to !ro)ide loan0 normall$ NB' sanction loan to indi)iduals0 small medium or largeindustries. %ctuall$ loans gi)e o& the an-/s de!osit0 against )alua le securit$.

NBL follo$ing some general rules- principle to provide loan to itsclient4


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+he an- should !ro)ide suita le credit ser)ices and !roducts &or the mar-etsin #hich it o!erates.

'oans and ad)ances shall normall$ the &inanced &rom customers de!osits andnot out o& the share0 tem!orar$ &unds or orro#ings &rom other Ban-s.

"redit #ill e allo#ed in manners #hich #ill in no #a$ com!romise the an-/s standards o& e6cellence and to customers #ho #ill com!lement suchstandards.

%ll credit e6tension must com!l$ #ith the re ? o& customer de!osits.

It is &urther go)erned $ the statutor$ and li


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&n Introdu#tion to 'i uidit% &nd &sset)liabilit% Management

Li uidity !anagement'i


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o# o&ten decisions a out li


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mar-et an MEI is &orced to ad8ust the interest rate on de!osits u!#ard to remaincom!etiti)e0 ut its earning assets are concentrated in longterm0 &i6edDrate loans0 andin)estments. Einancial !er&ormance #ill eim!aired ecause the institution cannot ad8ust its income earned on loans u!#ard as &astas the cost o& &unds is increasing. Interest rate ris- to some degree is una)oida le0 ut it ismanagea le.

44444444

Interest rate ris- ma$ increase in the &ollo#ing scenarios: hen longerDterm &i6edDrate loans and in)estments are &unded #ith de!osits that are

shortDterm and can e re!riced


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Ris- is a science &iction short stor$ $ Isaac %simo)0 &irst !u lished in the Ma$ 19AA

issue o& %stounding Science Eiction0 and re!rinted in the collections +he Rest o& the

Ro ots 219=H5 and +he "om!lete Ro ot 219> 5.


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Bangladesh Ban- has directed all commercial an- to use 'R% techni


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+his ris- re&ers to the ris- that the com!an$/s !osition is so #ea- that it #ill e una le

to re!a$ the loan e)en under Ea)or a le e6ternal condition. er&ormance ris- assessed

$ S C+ 2Strength0 ea-ness0 C!!ortunit$ and +hreat5 anal$sis0 +rend anal$sis0

"ash &lo# &orecast anal$sis and credit re!ort anal$sis 2i.e. "IB re!ot &rom Bangladesh

Ban-5.

"redit /isk !anagement


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securit$ ris- is su di)ided into t#o ma8or heads i.e. securit$ control ris- and securit$

co)er ris-.


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b4 "redit administration

c4 "redit monitoring

d4 "redit reco)ers

Policy guidelinesa4 Lending guidelines: +he lending guidelines include the &ollo#ing:

Industr$ and Business Segment Eocus +$!es o& loan &acilities Single orro#ers grou! limits s$ndication 'ending ca!s iscouraged usiness t$!es

As a minimum6 t&e follo$ings are discouraged: Militar$ e


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Securit$ arrangement %n$ other ris- or issue Ris- triggers and action !lanDcondition !rudent0 etc.

Ris- is graded as !er 'ending Ris- %nal$sis 2'R%50 Bangladesh Ban-/s uidelines o&

classi&ication o& loans and ad)ances.)4 c4 Approval Aut&ority:

%!!ro)al authorit$ ma$ e as the &ollo#ing: "redit a!!ro)al authorit$ has een delegated to Branch Manager0 "redit

"ommittee $ the M Board elegated a!!ro)al authorities shall e re)ie#ed annuall$ $ M Board.

!'- Board: %!!ro)als must e e)idenced in #riting. %!!ro)al records must e -e!t on &ile

#ith credit a!!lication +he aggregate e6!osure to an$ orro#er or orro#ing grou! must e used to

determine the a!!ro)al authorit$ re


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a4 Approval process: +he &ollo#ing diagram illustrates an e6am!le o& the a!!ro)al

!rocess:

b4 "redit administration : +he credit administration &unction is critical in ensuring

that !ro!er documentation and a!!ro)als are in !lace !rior to the dis ursement o& loan

&acilities.

c4 "redit monitoring : +o minimized credit losses0 monitoring !rocedures and

s$stems should e in !lace that !ro)ides an earl$ indication o& the deteriorating

&inancial health o& orro#er.

d4 "redit recovery: +he reco)er$ unit o& ranch should directl$ manage accounts

#ith sustained deterioration 2a ris- rating o& su Dstandard or #orse5. +he !rimar$

&unctions o& reco)er$ unit are:


C etermine account action !lan reco)er$ strateg$

C ursue all o!tions to ma6imize reco)er$0 including !lacing customers into

recei)ershi! or li


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+he im!ortance o& credit ris- management &or an-ing is tremendous. Ban-s and other

&inancial institutions are o&ten &aced #ith ris-s that are mostl$ o& &inancial nature.

+hese institutions must alance ris-s as #ell as returns. Eor a an- to ha)e a large

consumer ase0 it must o&&er loan !roducts that are reasona le enough. o#e)er0 i& the

interest rates in loan !roducts are too lo#0 the an- #ill su&&er &rom losses. In terms o&

e


34/49

"redit ris- management &or an-ing is a )er$ use&ul s$stem0 es!eciall$ i& the ris-s are

in line #ith the sur)i)al o& an-s in the usiness #orld.


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-no# !recisel$ ho# much and under #hat conditions he or she ma$ commit the

an-/s &unds. +hese authorities should e a!!ro)ed0 at least annuall$0 $ #ritten

resolution o& the oard o& directors and -e!t current at all times.

04 Types of credit e(tension: Cne o& the most su stances !arts o& a loan is a

delineation o& #hich t$!es o& loans are acce!ta le and #hich t$!e are not



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Inde tedness means the amount orro#ed $ the !eo!le &rom )arious sources

&or in)estment in the )arious &ields. Rural inde tedness is the amount orro#ed $ the

agriculturists &rom )arious sources. +his amount is to e used &or the im!ro)ement in

agriculture0 &or the !urchase o& im!ro)ed agricultural im!lements0 etter seeds0

&ertilizers0 etc. But the amount0 thus orro#ed0 is not generall$ used &or the !ur!ose

&or #hich it is orro#ed. +he &unds are utilized &or un!roducti)e !ur!oses such as

orthodo60 customs hea)$ e6!enditure on ceremonial acti)ities0 #eddings0 &esti)als0etc.

B$ ur an inde tedness is meant the amount orro#ed $ the industrialists0

traders and other usiness communit$. +heir usiness needs are met to some e6tent

$ the commercial an-s and go)ernment agencies0 ut0 &or incurring nonD!roducti)e

e6!enditure0 the$ ha)e to resort to orro#ing &rom the mone$Dlenders. "ontrar$ to the

inde tedness0 the amount orro#ed is generall$ utilized &or the use in the res!ecti)e

esta lishments.

+he commercial an-s in the district generall$ charge interest &rom 7 !ercent to 13 !er cent0 according to the amount ad)anced and securit$ o&&ered. +he an-s

ad)ance loans on the !ledge o& goods mo)a le or immo)a le. +he mo)a le goods are

-e!t in the custod$ o& the an-s. +he a)erage lending rate in the "entral "oDo!erati)e

Einancial Institutions ranges in et#een = to > !er cent0 de!ending u!on the nature and

!ur!ose o& loans. +he coDo!erati)e societies ad)ance loans at the rate o& interest

ranging &rom T to > T !ercent. 'oans ad)anced0 under the State %id to Industries

%ct0 193A0 carr$ interest &rom T to = T !ercent.

+he inde tedness mone$Dlenders charge interest )ar$ing &rom 1 to A

!ercent. +he loans ad)anced $ the unregistered mone$Dlenders carr$ much higher

rate o& interest0 usuall$ ranging &rom = to 1 !ercent0 !er annum. +he indigenous

an-ers are either going out to the !icture or the$ are tr$ing to &all in line #ith the

modern an-ing institutions. +here is hardl$ an$ case #here usur$ is noticed these

da$s.

+he interest is sometimes calculated in -ind0 too0 in rural areas. It is done onl$

in case #here loan is ad)ance in -ind. Such interest )aries &rom A to A !ercent on

the loan ad)ance in -ind0 i.e.0 is one


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agenc$ #here the modern an-ing has not de)elo!ed. +he illiterate and conser)ati)e

!eo!le0 #ho ha)e not een &ull$ ac


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un8a State to the e6tent o& Rs la-hs in the case o& a !u lic limited com!an$ or a

registered coDo!erati)e societ$ and 1 la-hs in other case0 at a rate o& interest o& 3

!ercent a o)e the an- rate0 #ith a minimum o& 9 !ercent !er annum. +his amount is

re!a$a le in 1 $ears. +he loans are ad)anced on the securit$ o& land0 uilding0 !lant

and machiner$0 $ #a$ o& &irst registered mortgage0 #ith a margin o& H !ercent o& the

net assessed )alue. In case o& o)ernment guarantee0 the margin is reduced to A

!ercent. O 2ii5 +he Khadi and Lillage Industries "ommission. It caters to the &inancialneeds o& the -hadi and )illage industries &or shortDterm loans. O 2iii5 @oint Stoc-

Ban-s O and 2i)5 "oDo!erati)e an-s.

Einancial assistance is also rendered $ the State e!artment o& Industries

under the State %id to Industries %ct0 193A0 &or setting u! ne# industrial units and &or

e6!ansion modernization o& e6isting units. +he o)ernment also ad)ances loans to

the agriculturists o& agricultural !ur!ose such as !urchase o& &ertilizers0 seeds0 cattle0

tractors0 agricultural im!lements0 etc

84< oint= tock Banks +he an-s registered under the Indian "om!anies %ct0 19130 come under this

head. Crganized on modern lines o& 8ointDstoc- com!anies #ith limited lia ilit$0 the

8ointDstoc- an-s are usuall$ re&erred to as commercial an-s.

+he modern an-ing institutions in the countr$ had a )er$ che5 and II 21939DHA5 rought acceleration !rogress. uring the thirties also

there #as a an-ing crises. +he !assage o& the Ban-ing "om!anies %ct0 19H90 in the

an-ing legislation in India. +his %ct #as amended &rom time to time.

In the urdas!ur istrict0 in the eginning0 there #as at urdas!ur a ranch o&

the oa a Ban- 'td.0 ut it had a )er$ short li&e. +herea&ter0 a ranch o& the eo!le/s

Ban- o& Northern India 'td. #as o!ened. +hough &ro a sometime it had a good

usiness0 $et it also #ent into li


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+his section details &undamental credit ris- management !olicies that are

recommended &or ado!tion $ all an-s in Bangladesh. +he guidelines contained

herein outline general !rinci!les that are designed to go)ern the im!lementation o&

more detailed lending !rocedures and ris- grading s$stems #ithin indi)idual an-s

8484) Types of loan facilities:

National Ban- has een o&&ering #ide range o& credit &acilities as under:

N%M, (R CS,

"ash credit2 $!o * ledge5 Business ca!ital or-ing ca!ital.

SC 2 eneral5 %gainst E.C or- Crder su!!l$ order.

SC 2 ,6!ort 5 a$ment o& acce!ted ills at maturit$ e&ore recei!t o&

e6!ort !roceeds.

'oan 2 en. 5 %c


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Retail consumer 2 ""S 5 1 ?

%gro credit A?

or- su!!l$ order 2 contractual &inance 5 A?

Cthers A?

+otal 1 ?

8484


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A.A.H.A Rate o& interest "ommission:

Rate o& interest #ill e charged as !er declared rate o& the an-. ricing #ill e

asicall$ ris- ased. igher !rice #ill e considered &or ris-ier orro#er ecause o&

higher ris- in)ol)ed. 2I.e. lo#er score o tain $ an o ligor as !er "R score sheet is

called a ris-$ client5. Similarl$ lo#er !rices #ill e considered &or !rime clients on the

asis o& their lo# ris-. 2'o# ris- grade client means #here an o ligor o tained higher

aggregate score as !er "R score sheet or 1 ? cash co)ered or go)t. international

to! an- guarantee5.

8484 Be diligent in ensuring that credit e6!osures and acti)ities including !rocessing &unction

com!l$ing #ith NB' re


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Lolume o& ris- in relation to the ris- ta-ing ca!acit$ o& the an- or com!an$concern.

ro&ita ilit$ o& the !ersonal to the an- or com!an$ concerned. "redit ris- grading. Gield &rom the &acilit$. Mar-et as!ect. +otal glo al e6!ansion o& the orro#er. "IB status.

/atio Analysis:

Einancial ratios are constructed $ &orming ratios o& accounting data contained in the

an-s re!orts o& income 2i.c alance sheet5. Ratio anal$sis is a !art o& &inancial

anal$sis. % ratio anal$sis is de&ined as the indicated


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the an-s to generate returns. It indicates net income !er ta-a o& total assets o#ned

during the !eriod. +he RC% o& the an-s are as &ollo#s:

RC% A = 7

NB' . .A H. 9

SIB' 1. A .1A 3.7A

IBB' 1.9 . A 3. A

74940 /ate of return on E uity 3/OE5:

+he rate o& return on e.H=

IBB' >.1A >.= >. H

740 Asset DtiliFation /atio:

+he asset utilization ratio re!resents the a ilit$ o& management to em!lo$ assets

e&&ecti)el$ to generate re)enues. Ban- assets &all into one o& &our general categories.

'oans in)estment securities non interest cash and due &rom an-s and other assets.

+he assets utilization ratios are:

%ssets (tilization A = 7 NB' 9. H3.AA 3 .1A

SIB' =.7A 1=.33 7. =

IBB' 1 .9 1 .7H 17. >

74< /isk ratio Analysis:

It is )er$ im!ortant &or an- to measure its ris- associated #ith its o!eration. ithout

identi&$ing ris- no an- can success in &uture rather it #ill &ace li


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and mar-et ris-. +here&ore it is )er$ im!ortant measure ris- and ta-es necessar$ ste!s

against it.

74. A A.= 1H.31

SIB' H=. A 31. > HA.A3

IBB' A .9A .1A H .=3

748 Li uidity /atio:

'i


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indicates higher ris- or it #ill lose its re!utation. +here&ore an-s ha)e to maintain an

o!timal cash ratios o& the an- are A to 7

"ash Ratio A = 7

NB' H.A H.9= H.17

SIB' 3H.1A 1>.37 1A.9

IBB' 19 . H .11

Performance at a glance:

,ig&lig&ts on t&e overall activities of t&e Bank

Taka in !illion

Particulars un=+; un=+*

%uthorized "a!ital 0HA . 0HA .

aid u! "a!ital 10>7 .7 10 >. 1

Reser)e Eund 307= .A= 0=HA. 3

,


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? o& "lassi&ied 'oan * %d)ance A.91? 7.1 ?

%d)ance e!osit Ratio >3.37? 7 .37?

"ost o& Eund =.H ? =.AH?

Return on %ssets 2RC%5 =. A? H. H?

2%mount in +a-a5

,arnings !er Share 2, S5 D%nnualized 113.>H 1 .H7

Boo- Lalue !er Share 3 .>1 31>.9H

Mar-et Lalue !er Share 9>A.A >A1.A

rice ,arning Ratio 2+imes5 >.== >.31

2In num er5

Num er o& Eoreign "orres!ondents H A 39A

Num er o& Shareholders 1H0 1 110=33

Num er o& ,m!lo$ees 0=3 0 77

Num er o& Branches 1 1 9

"onclusion G /ecommendation for t&e NBL:

It is also )er$ di&&icult &or me to gi)e an$ recommendation #ith m$ little #or-ing

e6!erience ut I ha)e tried as m$ est to gi)e est recommendation a o)e

shortcomings 2its ma$ e its not s#eet a le &or NB'5 2don/t use I0 ,. (se indirect

s!eech5 NB' should gi)e more &reedom to their ranches &or ta-ing decisions and

their head o&&ice should ta-e decision more


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NB'0 management should ta-e decision more

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