thesis on credit risk management of bangladeshi bank

8/11/2019 Thesis on Credit Risk Management of Bangladeshi Bank

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Credit Risk Management ofCommercial Banks in Bangladesh

Credit Risk Management of

Commercial Banks in

Bangladesh


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1.0 Background of the thesis


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Today's business world is becoming very much comle! day by day. "ithout

su#cient ractical e!erience business becomes di#cult and in some cases

imossible. The whole world is moving because of business relation. Business lays

a very imortant role in develoing economy of a country. $o% in the business world%

ractical e!erience is regarded as a medium through which we can gain an

ac&uaintance with the real world. Through this Thesis an individual can e!ect to

command a good knowledge and understanding on the various methods of Credit

Risk Management erformed by Banks namelyJamuna Bank Ltd. , Brac Bank

Ltd. , Mercantile Bank Ltd., Prime Bank Ltd. and National Bank Ltd. Both

ublic and rivate (nancial information was used in rearation of this Thesis . The

information are then comared with each other from between banks and between

years ersective. The recovery rocess of these banks are also emhasi)ed. This

Thesis is reared only and solely for academic urose. * have collected all the

necessary and relevant data from various rimary% secondary and tertiary sources.

+fter weeks of long hard labor% it has become ossible for me to make this Thesis

comrehensive and factual. The information are beyond doubt con(dential and

strict verbal node inferred that no one can use its comonents in full or artial for

any business cometition urose. * would like to give thanks to everyone who has

heled and encouraged me in the rocess of rearing this reort.

1.1 Introduction to Risk

,rom a general oint of view Riskis the quantifable likelihood o loss or less-than-

expected returns. ,rom a much broader oint of view Riskis the potential o losing

something o value, weighed against the potential to gain something o value.

Values (such asphysical health, social status, emotional well being or fnancial

wealth can be gained or lost when taking risk resulting rom a given action, activity

and!or inaction, oreseen or unoreseen. "isk can also be defned as the intentional

interaction with uncertainty. "isk perceptionis the sub#ective #udgment people

make about the severity o a risk, and may vary person to person. $ny human

endeavor carries some risk, but some are much riskier than others.

Riskcan be de(ned in a variety of ways. -owever we de(ne risk as a characteristicof reality or risks as threatening agents% the essential feature here is uncertainty."ithout uncertainty there is no risk% only clear danger. et us then see some of themost common de(nitions.
http://en.wikipedia.org/wiki/Physical_healthhttp://en.wikipedia.org/wiki/Social_statushttp://en.wikipedia.org/wiki/Uncertaintyhttp://en.wikipedia.org/wiki/Risk_perceptionhttp://en.wikipedia.org/wiki/Physical_healthhttp://en.wikipedia.org/wiki/Social_statushttp://en.wikipedia.org/wiki/Uncertaintyhttp://en.wikipedia.org/wiki/Risk_perception


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Basic denitions of risk from dierent perspectie

1. Risk is an uncertain event or condition that% if it occurs% has an e/ect on atleast one roect2 obective. 3This de(nition% using roect terminology% is

easily made universal by removing references to roects4.5. The robability of something haening multilied by the resulting cost or

bene(t if it does. 3This concet is more roerly known as the '6!ectation7alue' or 'Risk ,actor' and is used to comare levels of risk4

8. The robability or threat of &uanti(able damage% inury% liability% loss% or anyother negative occurrence that is caused by e!ternal or internalvulnerabilities% and that may be avoided through reemtive action.

9. In !inance"The robability that an actual return on an investment will belower than the e!ected return. ,inancial riskcan be divided into thefollowing categories: basis risk% caital risk% sovereign risk% default

risk% delivery risk% economic risk% e!change rate risk% interest raterisk% li&uidity risk% oerations risk% ayment system risk% oliticalrisk% re(nancing risk% reinvestment risk% counterarty risk and underwritingrisk.

. In !ood industr#"The ossibility that due to a certain ha)ard in food therewill be an negative e/ect to a certain magnitude.

;. Insurance"+ situation where the robability of a variable 3such as burningdown of a building4 is known but when a mode of occurrence or the actualvalue of the occurrence 3whether the (re will occur at a articular roerty4is not. + risk is not an uncertainty 3where neither the robability nor themode of occurrence is known4% a eril 3cause of loss4% or a ha)ard 3somethingthat makes the occurrence of a eril more likely or more severe4.


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current debt. *nvestors are comensated for assuming credit risk by way of interest

ayments from the borrower or issuer of a debt obligation. Credit risk is closely tied

to the otential return of an investment% the most notable being that the yields on

bonds correlate strongly to their erceived credit risk.

The higher the erceived credit risk% the higher the rate of interest that investorswill demand for lending their caital. Credit risks are calculated based on the

borrowers' overall ability to reay. This calculation includes the borrowers' collateral

assets% revenue=generating ability and ta!ing authority 3such as for government and

municial bonds4.

1.5Bank and its Bangladeshi perspectie

Bankis an establishmentauthori)edby a governmentto

accet deosits% ayinterest% clear checks% make loans% actas

an intermediaryin (nancial transactions% and rovideother (nancial servicesto

its customers.

ike any other country in the world following the +nglo=+merican banking system

there are mainly two tyes of Banks in our country. Commercial Banks and a Central

Bank.

&ommercial 'anksare mainly concerned with managing withdrawals and deosits

as well as sulying short=term loans to individuals and small businesses.

Consumers rimarily use these banks for basic checking and savings accounts%

certi(cates of deosit and sometimes for home mortgages. *nvestment banks focus

on roviding services such as underwriting and cororate reorgani)ation toinstitutional clients.

+ central 'ank% resere 'ank% or monetar# authorit#is an institution that

manages a state'scurrency% money suly% and interest rates. Central banks also

usually oversee the commercial banking systemof their resective countries.

1.5.1 Bangladeshi &ommercial Banks

State Owned Commercial Banks :

$tate=owned are functioning as nationalist. -ere is the list =

1. +grani Bank

5. $onali Bank

8. Ruali Bank

9. anata Bank
http://www.businessdictionary.com/definition/establishment.htmlhttp://www.businessdictionary.com/definition/authorization.htmlhttp://www.businessdictionary.com/definition/government.htmlhttp://www.businessdictionary.com/definition/deposit.htmlhttp://www.businessdictionary.com/definition/pay.htmlhttp://www.businessdictionary.com/definition/interest.htmlhttp://www.businessdictionary.com/definition/check.htmlhttp://www.businessdictionary.com/definition/loan.htmlhttp://www.businessdictionary.com/definition/act.htmlhttp://www.businessdictionary.com/definition/intermediary.htmlhttp://www.businessdictionary.com/definition/financial-transaction.htmlhttp://www.businessdictionary.com/definition/provide.htmlhttp://www.businessdictionary.com/definition/financial-services.htmlhttp://www.businessdictionary.com/definition/customer.htmlhttp://en.wikipedia.org/wiki/State_(polity)http://en.wikipedia.org/wiki/Currencyhttp://en.wikipedia.org/wiki/Money_supplyhttp://en.wikipedia.org/wiki/Interest_ratehttp://en.wikipedia.org/wiki/Commercial_bankhttp://www.businessdictionary.com/definition/establishment.htmlhttp://www.businessdictionary.com/definition/authorization.htmlhttp://www.businessdictionary.com/definition/government.htmlhttp://www.businessdictionary.com/definition/deposit.htmlhttp://www.businessdictionary.com/definition/pay.htmlhttp://www.businessdictionary.com/definition/interest.htmlhttp://www.businessdictionary.com/definition/check.htmlhttp://www.businessdictionary.com/definition/loan.htmlhttp://www.businessdictionary.com/definition/act.htmlhttp://www.businessdictionary.com/definition/intermediary.htmlhttp://www.businessdictionary.com/definition/financial-transaction.htmlhttp://www.businessdictionary.com/definition/provide.htmlhttp://www.businessdictionary.com/definition/financial-services.htmlhttp://www.businessdictionary.com/definition/customer.htmlhttp://en.wikipedia.org/wiki/State_(polity)http://en.wikipedia.org/wiki/Currencyhttp://en.wikipedia.org/wiki/Money_supplyhttp://en.wikipedia.org/wiki/Interest_ratehttp://en.wikipedia.org/wiki/Commercial_bank


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Private Commercial Banks :

@rivate banks are the highest growth sector due to the dismal erformances ofgovernment banks .They tend to o/er better service and roducts. -ere is the list =

1. +B Bank imited

5. Bangladesh Commerce Bank imited

8. Bank +sia imited

9. BR+C Bank imited

. haka Bank imited

;. utch Bangla Bank imited

ational Bank imited

1CC Bank imited

1?.>RB Bank imited

1D.>RB Commercial Bank imited

50.>RB Elobal Bank td

51.Fne Bank imited

55.@rime Bank imited

58.@ubali Bank imited

59.$outh Bangla +griculture and Commerce Bank td

5.$outheast Bank imited

5;.$tandard Bank imited


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5ational Bank of @akistan


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(.).) &redit Risk Management Need

Credit risk refers to the robability of loss due to a borrowerIs failure to make

ayments on any tye of debt. Credit risk management% meanwhile% is the ractice

of mitigating those losses by understanding the ade&uacy of both a bankIs caital

and loan loss reserves at any given time J a rocess that has long been a challenge

for (nancial institutions.

The global (nancial crisis J and the credit crunch that followed J ut credit risk

management into the regulatory sotlight. +s a result% regulators began to demand

more transarency. They wanted to know that a bank has thorough knowledge of

customers and their associated credit risk. "hile the B+$6 ** regulation was

already in lace since 5010 and now the new Basel *** regulations will create an

even bigger regulatory burden for banks.

To comly with the more stringent regulatory re&uirements and absorb the higher

caital costs for credit risk% many banks are overhauling their aroaches to credit

risk. But banks who view this as strictly a comliance e!ercise are being short=

sighted. Better credit risk management also resents an oortunity to greatly

imrove overall erformance and secure a cometitive advantage.

Elobally% more than 0K of total risk elements in Banks and ,inancial *nstitution 3,*4

s are credit risk alone. Thus managing credit risk for e#cient management of a ,*

has gradually become the most crucial task. Credit risk management encomasses

identi(cation% measurement% matching mitigations% monitoring and control of the

credit risk e!osures.Credit Risk Managements for ublic and rivate commercial banks are suggested

by Bangladesh Bank by a number of BR@ circulars and @olicy Euidelines. $ome

BR@ circulars are mandatory to be followed by any and every banks whereas there

are suggestion under the head Managing Core risks of Banking ,inancial *nstitutions

or as such.

Credit risk management encomasses identi(cation% measurement% matchingmitigations% monitoring and control of the credit risk e!osures to ensure that:

314The individuals who take or manage risks clearly understand it

354 The organi)ationIs Risk e!osure is within the limits established by Board of

irectors with resect to sector% grou and countryIs revailing situation


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384 Risk taking ecisions are in line with the business strategy and obectives set by

BF

394 The e!ected ayo/s comensate the risks taken

34 Risk taking decisions are e!licit and clear

3;4 $u#cient caital as a bu/er is available to take risk

Credit risk management needs to be a robust rocess that enables ,*s to roactively

manage facility ortfolios in order to minimi)e losses and earn an accetable level

of return for shareholders. Central to this is a comrehensive *T system% which

should have the ability to cature all key customer data% risk management and

transaction information including trade L ,ore!. Eiven the fast changing% dynamic

global economy and the increasing ressure of globali)ation% liberali)ation% and

consolidation it is essential that ,*s have robust credit risk management olicies and

rocedures that are sensitive and resonsive to these changes.

(.* +'ectie of the report

The general obective of this reort is to understand the credit risk managementolicy% and also to know% how bank manages the credit risk% assess their otentialityand limitations% and try to minimi)e the risk of overall credit activities.

*t also has the following obectives:To introduce the Banks td.% their origins% functions and oerations.To describe the credit ractice of these Banks td.To describe the oeration of credit risk management division 3CRM4 ofthese Banks td.

To introduce the credit risk management olicy of these Banks td.To describe the credit rules and regulation recommended byBangladesh Bank% which these Banks td. must follow as a commercialbank of the country.To have an overview on credit risk grading 3CRE4 and lending riskanalysis 3R+4 of these Banks td.To describe the delegation and loan sanction rocedures and also toshow the strategic osition and the key resonsibilities andaccountability of the resective sanctioning authorities of these Bankstd.To have a brief overview on small and medium enterrise 3$M64lending.

To develo an accurate ro(le of borrowerIs behavior relative to theirlending re&uirement.To assess the borrowerIs knowledge% oinions about various creditolicies% rocedures and regulations to determine the borrowerIssatisfaction.To (nd out the bottlenecks and also recommend on the (ndings andalso to reach at the conclusion.


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(.- $cope of this hesis

@rivate commercial banks were subect to this Thesis because most $tate owned

commercial banks are reluctant to disclose their (nancial information to me and

those who reviously tried to obtain those information. This thesis characteristically

describes% comares and analy)e the credit risk management olicies of banksnamely amuna Bank td. % Brac Bank td. % Mercantile Bank td.% @rime Bank td.

and >ational Bank td. The thesis aims at the investigation %identi(cation and

usti(cation of their credit risk olicy management in line with the Bangladesh Bank

Credit Risk Management Industry Best Practicesand also in terms of the

B+$6 = ** and these banks' internal strategic stances.

(./ Methodolog# of this hesis

Methodolog#is the systematic% theoretical analysis of the methods alied to a

(eld of study. *t comrises the theoretical analysis of the body of methods andrinciles associated with a branch of knowledge. Tyically% it encomasses

concets such as aradigm% theoretical model% hases and &uantitative or

&ualitative techni&ues. Three tyes of Methodologies are available namely 314

6!loratory research 354,ield Research and 384 aboratory Research .

,or the urose of this thesis only 6!loratory research methodology and ,ield

research methodology were used. There was no roceedings taken under the

aboratory research methodology. The rocessing of the information were made

both on descritiveemirical and analytical standoint.

6!loratory research methodologies are the media to analy)e an emirical set of

information which can lead to obective and uni&ue outcome. ,or the urose of this

Thesis% this methodology was used to measure the e#ciency and validation of the

Credit risk management olicy and its maintenance in these banks. "here (eld

research methodology rovided me with the actual and e!eriential information to

rocess further.

Both rimary and secondary information have been used to reare this thesis.

$econdary information were collected from the +nnual Reorts of these banks and

also from various articles ublished by these banks and also from Bangladesh

banks' analysis of those annuals reorts. + number of ournals ublished by

Bangladesh Bank and di/erent (nancial analysts were considered in rearation ofthe thesis.

@rimary data has been collected through verbal commutation with the bank

emloyees and rimary record they rovided me taken the con(dentiality issue as

granted.


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$tandard editing and coding rocedures have been utili)ed. $imle calculation and

tabulation have also been done throughout the Thesis.

(.0 Methods of 1ata collection

@rimary data are measurements observed and recorded as art of an original study.

"hen the data re&uired for a articular study can be found neither in the internally

audited records of the enterrise% nor in ublished sources% may it become

necessary to collect original data. Most of the @rimary data were collected from the

Bank 6mloyees by using *nterview method. Gnstructured schedules were sent to

them through email to (ll out and send desired soft coy of the source documents.

The &uestions in the schedules were oen ended and unstructured.

$econdary *nformation are collected from *nternet such as the website of these

banks % Bangladesh Bank website% Ministry of ,inance website% C@'s website and

many more. $ome -ardcoies of +nnual reorts of these banks were collected from

bank emloyees.

(.2 Literature Reie3

Bangladesh inherited its banking system from the British colonial regime. Therewere 99 banks and (nancial institutions working in erstwhile @akistan before theartition of *ndo=@ak sub=continent in 1D9


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and rocesses of the banks and their a#liates create a great imact in the Aow of

the (nancial resources. -owever% various economic uncertainties% international

markets% or (nancial constraints can cause the (nancial status to be unstable. +side

from the (nancial de(ciencies% the other causes of the (nancial constraints are the

lack of con(dence among the (nancial market to rovide e!ternal hel for the

needed consumers% lack of caability to gather the information of the consumers%and the lack of ush to have an aggressive debt collecting.

Credit risk grading is an imortant tool for credit risk management as it hels the

Banks L (nancial institutions to understand various dimensions of risk involved in

di/erent credit transactions. The aggregation of such grading across the borrowers%

activities and the lines of business can rovide better assessment of the &uality of

credit ortfolio of a bank . The credit risk grading system is vital to take decisions

both at the re=sanction stage as well as ost=sanction stage.

*n order to make the banks in Bangladesh more shock absorbent as well as to coe

with international best ractice for risk management and% a sound and robustbanking industry% Bangladesh Bank has taken measures to imlement B+$6 ** from

anuary 5015.

B+$6 Committee on Banking $uervision ublished a more comrehensive new

ackage on caital ade&uacy re&uirement known as B+$6 ** for strengthening the

caital ade&uacy% imroving suervisory system to assess the ade&uacy of caital

based on a thorough review of risks% reinforce risk management system and market

disciline with the ultimate obective of having strong caital base that are

commensurate with risk ro(le of the Bank comrising credit risk% market risk and

oerational risk that can ensure long term stability and solvency of banking

comany and banking sector as a whole.

+ >ational $teering Committee comrising senior o#cials from banking industry%

Bangladesh Bank and Chartered +ccountant ,irms has been constituted.

,urthermore% a Coordination Committee and a Basel ** imlementation Cell have

been established. *n the meantime% Bangladesh Bank has done two studies one is

self=audit on Basel core rinciles for e/ective Bank suervision and the second one

is &uantitative imact study in order to assess readiness of the banks for

imlementation of Basel **.

*n line with Bangladesh Bank re&uirement% the Bank has already formed a Basel **

*mlementation Gnit to ensure smooth and timely imlementation of Basel **

+ccord. Caacity building measures are underway so that the Bank is fully reared

to adot the +ccord in 5015.

(.4 Limitation of this hesis


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$ince this Thesis is concerned with the comarison of credit deartment of Banks

only . Fther rublic and ublic commercial banks as well as the *slamic commercial

banks' credit management cannot be comrehensibly inferred from this Thesis. + lot

of information could not obtained because the banks were not interested to disclose

their information% olicy% and data to maintain their secrecy and cometitive

advantages. * had to deend on the websites of the resective banks for most of the

information . There are certain limitations regarding the studies that are

summari)ed below:

e(ciencies in data re&uired for the study. Many information were hidden

away and was not e!ressed verbally to me.

,ield ractice varies with the standard ractice that also created roblem.

Bangladesh Banks guidelines are sometimes misinterreted and some of its

suggestions are not followed in the credit management for business strategy

There was a roblem of time management % many information were not

rovided timely and * also had little time to collect all the information.

The emloyees in several of these Bank imited are so much busy in their

resonsible (elds they could hardly rovide any substantial time to

communicate with them.

The total thesis like 5&redit Risk Management of &ommercial Banks6is

vast and not ossible to reare in a week% month or even years. $o it is the

hard task to rove all the information on that necessary segment which might

make this Thesis more resourceful and e!cetional. * couldnIt reare the

reort as the best of my caability because much information could not

gathered for the recourses of con(dentially. uring the Banking hour there

were many customers who has to be served time o/ered er customer was

not ade&uate to ask about their satisfactory and dissatisfactory level in

connection with scheme related transactions which might have heled to

focus in more detail.

+ll of the information for a seci(c bank was gathered from only one branch

of the bank ltd. as at least 8 of them had no Management *nformation $ystem

deartment at those articular branch so information were collected in an

unstructured and unconventional way.


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*n case of erformance analysis secondary data are used.

Maor art of this reort is based on the face to face interviews% whichconsists of view and oinion of those eole. *n some cases some of them

were not able to rovide concrete facts or (gures. *n these cases as wellsome assumtion had to be made.


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).7 List of Banks in this hesis

314 amuna Bank td. %

354 Brac Bank td. %

384 Mercantile Bank td. %

394 @rime Bank td. and

34 >ational Bank td.

).( Jamuna Bank Ltd "


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Head Ofce % Chini $hila Bhaban% 08% ilkusha C+% haka=1000

e! : www.amunabankbd.com

amuna Bank td. 3B4 is a Banking Comany registered under the Bank Comanies

+ct% 1DD1 and incororated as a @ublic Comany limited by $hares under the

Comanies +ct% 1DD9 in Bangladesh. The Bank started its operation from *rd

June )77(as a scheduled Bank.

B came into being as a highly caitali)ed new generation Bank started its

oerations with an 8uthori9ed &apital and Paid:up &apital of k.)-)-.77

million and k.(*(*.77 million respectiel#.

Being a 8rd generation Bank of Bangladesh% it focuses on

Remaining with time

Managing change

eveloing human caital

Creating true customerIs value

The Bank rovides all tyes of suort to trade% commerce% industry and overall

business of the country. B's (nances are also available for the entrereneurs to set

u romising new ventures and BMR6 of e!isting industrial units. amuna Bank td.%

the only Bengali named 8rd generation rivate commercial bank% was established

by a grou of local entrereneurs who are well reuted in the (eld of trade%

commerce% industry and business of the country.


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The Bank o/ers both conventional and *slamic banking through designated

branches. The Bank is being managed and oerated by a grou of highly educated

and rofessional team with diversi(ed e!erience in (nance and banking.

The Management of the bank constantly focuses on understanding and anticiating

customers' needs. $ince the need of customers is changing day by day with the

changes of time% the bank endeavors its best to device strategies and introduce

new roducts to coe with the change. amuna Bank td. has already achieved

tremendous rogress within its ast 10 years of oeration. The bank has already

built u reutation as one of &uality service roviders of the country.

+t resent the Bank has real=time Fnline banking branches 3of both Grban and Ruralareas4 network throughout the country having smart *T=backbone. Besides

traditional delivery oints% the bank has +TMs of its own% sharing with other artner

banks and consortium throughout the country.

The oeration hour of the Bank is 10:00 +.M. To ;:00 @.M. from $unday to Thursday

with transaction hour from 10:00 +.M. to 9:00 @.M. The Bank remains closed on

,riday% $aturday and government holidays.

The motto of amuna Bank imited reAects the indomitable commitment and

conviction of the bank to ensure sustainable growth and advancement of our

customers. *ts greatest success is to ful(ll all the banking needs of eole from

di/erent sheres of the society and business of di/erent segments of the economy

of the country by o/ering diversi(ed roducts and suerior services. *t believes in

the comanionshi with its customers comrising eole of di/erent classes and

business house of di/erent segments in its never ending ourney of continuous

develoment and rogress. +s its customers endeavor to accomlish higher

roserity% B also strives to be the referred artner for their ascending growth.


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amuna Bank imited has slendid signi(cance behind its name. The name

de(nitely originates from the great river% NThe amunaO which does not only

reresent one of our greatest resources% but also reminds us about glorious culture

and heritage of the country. ike the mighty river amuna% amuna Bank reresents

@ersistence% Transarency and @roserity at one handP and Resilience% 6nthusiasm%

7astness and ,lourishing +ttitude on the other hand. The way the Ereat River

amuna incessantly and selAessly Aows ahead holding all the resources within it%

shaing and building u our lives and changing the course of our destinationP

amuna Bank imited also continues to enrich eolesI lives with its multi=urose%

countless bene(cial roducts and service which will change their destination

towards a better future.

).(.( ;ision of Jamuna Bank

To become a leading banking institution and to lay a signi(cant role in the

develoment of the country.

).(.) Mission of Jamuna Bank

The Bank is committed for satisfying diverse needs of its customers through an

array of roducts at a cometitive rice by using aroriate technology and

roviding timely service so that a sustainable growth% reasonable return and

contribution to the develoment of the country can be ensured with a motivated

and rofessional work=force.

).(.* $trategic Priorit# of Jamuna Bank

To manage and oerate the Bank in the most e#cient manner to enhance(nancial erformance and to control cost of fund.

To strive for customer satisfaction through &uality control and delivery oftimely services.

To identify customers' credit and other banking needs and monitor theirercetion towards our erformance in meeting those re&uirements.

To review and udate olicies% rocedures and ractices to enhance theability to e!tend better service to customers.

To train and develo all emloyees and rovide them ade&uate resources sothat customers' needs can be reasonably addressed.


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To romote organi)ational e/ectiveness by oenly communicating comanylans% olicies% ractices and rocedures to emloyees in a timely fashion.

To cultivate a working environment that fosters ositive motivation forimroved erformance

To diversify ortfolio both in the retail and wholesale market

To increase direct contact with customers in order to cultivate a closerrelationshi between the bank and its customers.

).(.- +'ecties of Jamuna Bank

To earn and maintain C+M6 Rating '$trong' To establish relationshi banking and imrove service &uality through

develoment of $trategic Marketing @lans.

To remain one of the best banks in Bangladesh in terms of ro(tability and

assets &uality.

To introduce fully automated systems through integration of informationtechnology.

To ensure an ade&uate rate of return on investment.

To kee risk osition at an accetable range 3including any o/ balance sheetrisk4.

To maintain ade&uate li&uidity to meet maturing obligations andcommitments.

To maintain a healthy growth of business with desired image.

To maintain ade&uate control systems and transarency in rocedures.

To develo and retain a &uality work=force through an e/ective humanResources Management $ystem.

To ensure otimum utili)ation of all available resources.

To ursue an e/ective system of management by ensuring comliance toethical norms% transarency and accountability at all levels.

).(./ ;alues of Jamuna Bank

Customer ,ocus *ntegrity

Quality

Teamwork

Resect for the individual


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-armony

,airness

Courtesy

Commitment Resectable Citi)enshi

Business 6thics

Gni&ue Culture

).(.0 1epartments of Jamuna Bank

Credit Risk management ivision

*slamic Banking ivision

+nti money aundering ivision

*nformation and Communication Technology ivision

*nternal Control and Comliance ivision

Car and +C ivision

,inancial +dministration ivision

$hare ivisionMonitoring ivision

Eeneral and Common $ervices ivision

Caital Market Feration ivision

$M6 ivision

Risk Management ivision

aw L Recovery ivision

Banking Feration ivision

Credit +dministration ivision

-uman Resources ivision

@R and Brand Communication ivision

Cororation Banking ivision


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+gricultural oan Gnit

>RB Banking and ,oreign Remittance ivision

*nternational ivision

Treasury ivisionTrade ,inance @rocessing Center

Retail Banking ivision

F/shore Banking Gnit

Marketing and eveloment ivision

).(.2 Num'er of Branches of Jamuna Bank

B% which started its oeration at ilkusha Branch on 5001% was the maor rivate

commercial Bank in Bangladesh oerating throughout the country as well as the

age of the Bank is 11 years. uring this eriod it has established total ?8 branches

over the country and made a smooth network inside the country as well as

throughout the world. The number of increasing branches as year wise is mentioned

in the table.


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).(.2 Num'er of >mplo#ees of Jamuna Bank


23/145



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).) Brac Bank Ltd.

Head Ofce % 1% Eulshan +venue% Eulshan 1% haka 1515

e! : htt:www.bracbank.com

BR+C Bank imited% one of the third generation of commercial banks started itsourney on uly 09%

5001. *t is an a#liate of BR+C 3Bangladesh Rural +dvancement Committee4% one ofthe world's

largest non=governmental develoment organi)ations founded by $ir ,a)le -asan+bed in 1D


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1%?00 remittance delivery oints and ?%80; human resources. *n addition to smallbusiness lending%

BR+C Bank has fast growing remittance% savings mobili)ation and consumer lendingbusinesses

BR+C Bank intends to set standards as the market leader in Bangladesh. The Bankwants to

demonstrate that a locally owned institution can rovide e#cient% friendly andModern full= service

banking on a ro(table basis. The Bank roduces earnings and ay out dividendsthat can suort the

activities of BR+C% the Bank's maor shareholder. eveloment and overtyalleviation on a

countrywide basis needs mass roduction% mass consumtion and mass (nancing.The goal of BR+C

Bank is to rovide mass (nancing to enable mass roduction and massconsumtion% and thereby

contribute to the develoment of Bangladesh.

).).( ;ision of Brac Bank

Building ro(table and socially resonsible (nancial institution focused on Marketand Business with Erowth otential% thereby assisting BR+C and stakeholders tobuild a ust% enlightened% healthy democratic and overty free BangladeshO.

).).) Mission of Brac Bank

Continuous low=cost deosit Erowth with controlled growth in retail assets.

Cororate +ssets to be funded through self=liability mobili)ation. Erowth in+ssets through syndications and investment in faster growing sectors.

Continuous endeavor to increase non=funded income

Hee our debt charges at 5K to maintain a steady ro(table growth

+chieve e#cient synergies between the bankIs branches% $M6 unit o#ces and


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BR+C (eld o#ces for delivery of remittance and BankIs other roducts andservices

Manage various lines of business in a full controlled environment with nocomromise on service &uality

Hee a divers% far Aung team fully controlled environment with no comromiseon service &uality

Hee a diverse% far Aung team fully motivated and driven towardsmateriali)ing the bankIs vision into reality$ustainable Erowth in small and Medium enterrise 3$M64 sector.

).(.* ;alues of Brac Bank

).(.- ?uman Resource of Brac Bank"

+t resent% there are total ?%80; emloyees at BR+C Bank imited. BR+C Bank

imited has a vertical organi)ational structure with total 1 designations at themanagement hierarchy. The management of BR+C Bank imited is consisted ofBoard of irectors% 6!ecutives and F#cers L $taves. The To management makesall the maor decisions at BR+C Bank imited. The Board of directors being at thehighest level lays an imortant role on the olicy formulation. The 6!ecutives andF#cers are directly concerned with the day=to=day oeration of bank.

).(./ &R8B Rating of Brac Bank"

7alue the fact that one is a member of the BR+C family

Creating an honest% oen and enabling environment

-ave a strong customer focus and build relationshis based on integrity% sueriorservice and mutual bene(t

$trive for ro(t L sound growth

"ork as team to serve the best interest of our owners

Relentless in ursuit of business innovation and imrovement

7alue and resect eole and make decisions based on merit

Base recognition and reward on erformance

Resonsible% trustworthy and law=abiding in all that we do.


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Credit Rating +gency of Bangladesh 3CR+B4 imited has retained ++8 rating inong Term and $T=5 rating in the $hort Term of BR+C Bank imited in view of theerformance of the Bank for year 5010. The ++8 rating refers that BR+C Bank td.has very strong caacity to meet bank's (nancial commitments. The Bank di/ersfrom the highest=rated Commercial Banks only to a small degree. ++8 is udged tobe of very high &uality and is subect to very low credit risk. The $TJ5 rating in the

short term refers that the Bank has strong caacity for timely reayment. Thisrating also refers that the Bank is characteri)ed with commendable osition interms of li&uidity% internal fund generation% and access to alternative sources offunds.

).(./ Mo'ili9ation of !unds in Brac Bank"

The main sources of fund for BR+C Bank imited are:

+. eosit: eosit is the mainstay of the Bank's sources of funds. ,ollowing usualractices%

the Bank collects deosit through:

3i4 Current eosit

3ii4 $avings eosit

3iii4 Term eosit

B. Borrowing : +art from deosit% BR+C Bank imited receives funds from other

Banks%

,inancial *nstitutions and +gents as borrowing which are in Bangladesh and alsooutside of

Bangladesh. *n 5011% BR+C Bank imited only receives funds as demand termborrowing

from

3i4 Bangladesh Bank.

3ii4 Gttara Bank imited.

Beside this% in revious years the Bank borrowed from other Banks% ,inancial*nstitutions and

+gents as demand term borrowing% short term deosit borrowing and (!ed deositborrowing


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in Bangladesh. The Bank also received funds as demand term borrowing 3non=interest

bearing4 from di/erent outside bank i.e. $tandard Chartered Bank JG$+% The Bankof >ova

$cotia= Canada% Citibank >+=G$+%*C*C*=*ndia% $tandard Chartered Bank=GH% -yo7ereins

Bank Eermany% -$BC=G$+%-$BC=GH% -$BC=+G$% -$BC=@akistan etc.

).* Mercantile Bank Ltd.

Head Ofce % ;1% ilkusha Commercial +rea% haka=1000

e! : www.mblbd.com

Mercantile Bank imited emerged as a new commercial bank to rovide e#cientbanking service and to contribute socio=economic develoment of the country. Thebank commenced its oeration on une 5% 1DDD. The Bank rovides a broad range of(nancial services to its customers and cororate clients. The board of directorsconsists of eminent ersonalities from the realm of commerce and industries of thecountry. The renowned 80 industrialists established this Bank. Mercantile Bankimited is a rivate commercial bank with -ead F#ce at ;1% ilkusha C+% haka%Bangladesh% with a total of branches all over Bangladesh% including its three$M6 Hrishi branches. ,rom its incetion Mercantile Bank had introduced a widerange of banking services for the eole of all classes. *t has introduced the retailbanking% online banking and also the $M$ Banking to reach the banking services at

every door stes. The bank mobili)ed deosits of BT ?.80 billion and the loansand advances of BT 9?.80 billion at the end of 5015. To contribute in the caitalmarket of the country the bank has launched the oeration of mercantile bankbrokerage house ltd. The bank has achieved Ncerti(cate of meritO from the *C+B.MB has also been awarded as N$onar Manush $heba +wardO by the Refugeeand migratory movementIs research unit 3RMMRG4.
http://www.mblbd.com/http://www.mblbd.com/


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).*.( ;ision of Mercantile Bank

"ould make (nest cororate citi)en

).*.) Mission of Mercantile Bank"ill become most caring% focused for e&uitable growth based on diversi(eddeloyment of resources and nevertheless would remain healthy and gainfullyro(table bank

).*.* +'ecties of Mercantile Bank

to increase shareholders' value

to achieve economic value addition

to be market leader in roduct innovation

to be one of the to three (nancial institutions in Bangladesh in terms of e#ciency

to be one of the to (ve (nancial institutions in Bangladesh in terms of marketshare in all signi(cant market segments we serve

Fbective of Mercantile bank is mainly the strategic obectives not the oeratingobectives

).*.- &ore ;alues of Mercantile Bank

1. Customer delight

Customer satisfaction ervades all our activities. "e areciate that CustomerIs satisfactiois critical for our success.

5. *nnovation

$urring innovation for reinforcement of our business. Frigination and materiali)ation ofchange management for attainment of erfection and we believe change is always constan

8. 6thical 7alues

"e continue to be resonsible% ethical% sincere and transarent in our thoughts and actions

9. Caring for -uman Resources

Reali)ation of latent otentialities of emloyees% resecting individual worth and dignity toensure smooth career rogression as well as welfare orientation in -uman Resourcesmanagement olicy and ractices.

. Commitment


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"e always kee high on the agenda our commitment towards valued deositors as theirtrustworthy custodian and to maintain the same sirit for all other stakeholders.

;. $ocially Resonsible

Constant endeavor to act and resond in a socially resonsible manner keeing in mindsociety and our country.To care for our environment.


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background. +lthough it is not ossible at this stage to undertake RL activitiessimilar to those of the banks in the develoed countries% mercantile bank hasestablished a core research and lanning division comrising skilled ersons fromthe very incetion of the bank

?uman Resources 1iision"

The emloyees are Mercantile Bank's most valuable resource. -aving cometentand rofessional emloyees is becoming increasingly imortant in today'scometitive world% and MB has a signi(cant cometitive advantage in this resectmany of its emloyees have worked here since the BCC* area and therefore havevast e!erience in their resective (elds. +lso the new emloyees are recruited withsound academic background and given roer training after recruitment to groomu for their resonsibilities. They lan to inculcate a high erformance culture wherethe emloyees will work with fun and ride.

raining and 1eelopment:

The main function of this division is to reare the emloyee of the bank ascometent and &uality workforce. The function of this division is s follows:

+rrange training and orientation rogram for the fresh trainee o#cers.

@rovide seci(c training rogram for the emloyee to make them morerofessional.

8udit and &ompliance 1iision"The main function of this division is to rovide legal assistance to the branches andto ensure strict adherence of rules and olicies by all concerned o#cials of the bankthrough routine and surrise insection and audit. The functions of this division areas follows:

*mlement rescheduling rocess of stuck=u loan to the branches forobtaining reayment schedule through strong ersuasion and serve (nalnotice etc. as the condition re&uired.

Monitor the individual cases with resect to their securities% value of

securities% and (nally review of ossibility of recovery of bank's stuck=uclassi(ed loan.

*nvestigate susicious or irregular matters being directed by highermanagement +lso conduct such in&uiry being re&uested by a/ected branch=in=charges.

Time to time follow=u of stuck=u advances of branches and kee thebranches under constant ressure.

*nsect all branches' oerations at least once in a year.


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Carry out surrise audit as felt necessary.

&redit 1iision"

The rimary obective of this division is to evaluate the credit worthiness and debtayment caability of resent loan customers and loan alicants. *t is also

resonsible for keeing track of the credit ortfolio by obtaining regular informationfrom the branches. *t sets rices for credits and ensures a/ecting it at the branches.This deartment also monitors the various loan accounts of the branches andreares various statements for Bangladesh Bank. The credit risk managementdeartment is assisted by the credit administration deartment% which is mainlyconcerned with the ost=aroval functions of the division. The asects that arecritically tracked and monitored by credit administration are:

Credit e!iry

@ast dues

6!cess over limit

ocument de(ciency

Reorting

Credit +dministration is involved in basically 5 broad functions:

1. Loan Monitoring:

The imortant asects of this art are:

,ollow aroval terms

@roer loan disbursement

Monitor interest ayments and rincial reayment Balance with general ledger

). 1ocumentation"

The imortant functions of this art are:

ook at sanction terms and ,ill u loan documentation checklist%

6nsure @roer loan documentation and Fbtain client sign o/

,iling with the Registered oint $tock Cororation 3 R$C4

Registered mortgage deed e!ecution

Marketing diision"

The main function of this division is to build relationshi with the otentialcustomers and strengthen the relationshi with the e!isting customer. The functionserformed by this division are as follows:


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To inform and e!lain the otential customer about the facilities rovided bythe bank.

To search for new area of business and collect information about the otentialsector.

To reare strategy for getting cometitive advantage.

To rovide information to other division about the resent market scenario. To kee close contact with the e!isting clients.

&entral accounts diision"

,inance and +ccounts division task is to:

Maintain daily li&uidity ositions% treasury bills% call money% debentures%lacement of funds etc. Monthly=accrued interest calculation of all interests bearing accounts% inter=

branch calculation for head o#ce% and amorti)ation of all (!ed and otherassets.

@rearation of statement of accounts and ro(t and loss account for thebank.

"eekly deosit and advance analysis and Cost of fund analysis.

Maintenance of accounts% rearation of annual reort of the bank%maintenance of rovident fund accounts% maintenance of income ande!enditure osting% maintenance of salaries and wages of the emloyees etc.

,ul(lling reorting re&uirements of Bangladesh Bank.

International 1iision:

*nternational division is resonsible for assisting the authori)ed branches to deal inforeign trades% that is% imort and e!ort businesses on account of the customers ofthe bank by giving aroval for transactions and controlling them at various stages.*t deals with all corresondents of foreign banks having arrangement with the bank.6very year new agents are added. The larger the number of corresondents and the

wider the coverage area% the richer will be the international connections of thebank.

The functions erformed by this division are as follows:

Corresondent banking relationshi

$uervision of foreign e!change transaction of other units


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Monitoring on comliance of Bangladesh Bank regulations

$uervise sale urchase of foreign currencies

Reconciliation of >ostro +ccounts 3*talian word for account of our money%held by us4

Information technolog# diision:

@reviously% Mercantile Bank had a very low level of automation. There was hardlyany @C in the whole Bank before 5001. But when the new management took over in5001% they gave huge emhasis on comuteri)ing the bank's oerations. +fter 5years% almost all the oerations in the bank are now automated. The bank is alsoshifting to a new *T latform% which aims at maintaining% oerating andstrengthening the technology base of the bank to enable error free roduction ofinformation that ensures ongoing e#ciency and ro(tability of oeration% + worldclass banking software called ,le! Cube has been installed which will centrali)eoerations and rovide online banking% internet banking% automated teller machine%

telehone banking% oint of sale disenser% credit card facility etc. last >ovember% 0introduced new software called @C Bank 5000.

+t resent% the *T deartment serves the following functions:

eveloment of software's for bank's oeration according to need%their maintenance and urchase of new software.

Maintenance of comuter hardware and ugrading the @Cs wheneverre&uired.

Training of the sta/ so that they can erform roerly in the automated

environment @rearing training materials.

Troubleshooting with the new software.

).- Prime Bank Ltd.


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Head Ofce : 8damee &ourt 8nne@ BuildingA), ((=A()7, Motiheel&8, 1hakaA(777

e! " https"333.prime'ank.com.'d

@rime Bank imited is fast growing rivate bank. This Bank is already at the to slot

in teams of &uality service to the customers% and at the value addition to the

shareholder. @rime Bank td has been oerating in this industry since 1DD and

belongs to the second generation of rivate banks to be incororated since the

indeendence of Bangladesh @rime Bank td. has already made signi(cant rogress

within a very short eriod of its e!istence. The bank has already occuied an

enviable osition among its cometitors after achieving success in all area of

business oeration. The bank o/ers all kind of Commercial cororate and @ersonal

banking service covering all segment of society within the framework of Banking

Comany +ct% rules and regulation laid down by our central bank. @rime Bank td. is

determined to e!lore the di/erent ways to accommodate with the needs of its

clients. Fne of these ways includes ,oreign 6!change Feration and transactions

which o/er customers a medium of doing business globally with minimum risk

associated.

Basic &orporate Information

!e'ruar# /, (==/"Memorandum and +rticles of +ssociation by the sonsors.

!e'ruar# (), (==/"*ncororation of the Bank and Certi(cate of Commencement

of Business.

!e'ruar# )7, (==/"icense issued by Bangladesh Bank.

Noem'er (/, (==="isted in Chittagong $tock 6!change imited 3C$64.

March (-, )777"ividend declared in the th +EM 3,irst after the *@F4.

March )2, )777"isted in haka $toke 6!change imited 3$64.

March )=, )777"Trading of $hared in $6 and C$6.

March )=, )77("Registered as Merchant Banker with $ecurities and 6!change

Commission 3$6C4.


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8pril (2, )77/",ormal launching of the Bank L Commencement of the business

from the Motiheel Branch.

June *7, )77/"+greement with Temenos for Core banking software T59.

8ugust )=, )77/"*nitial @ublic F/ering 3*@F4.

1ecem'er ((, )772"icense issued from Bangladesh Bank as @rimary ealer.

March )=, )774"Registered as deository articiant of CB.

June (/, )774"Trading of share started in emat form in $tock 6!changes

).-.( ;ision of Prime Bank

To be the best @rivate Commercial Bank in Bangladesh in terms of e#ciency% caital

ade&uacy% asset &uality% sound management L ro(tability having strong li&uidity.

).-.) Mission of Prime Bank

3a4 To build @rime Bank td. in to an e#cient% market driven% customer focused

institution with good cororate governance structure.

3b4 Continuous imrovement in business olicies% rocedure L e#ciency through

integration of technology at all levels.

).-.* +'ecties of Prime Bank

To have a strong customer focus L to build a relationshi based on integrity

suerior

services L mutual bene(t.

To work as a team to serve the best interest of the grou. To work for continuous business innovations L imrovements.

To value L resect eole L make decisions based on merits.

To rovide recognition L rewards on erformance.

To have sustained growth% imroved L wide sectrum of roducts L service.


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).-.- &ore ;alues &orporate Philosoph# of Prime Bank

!or +ur &ustomer "

To rovide the most courteous and e#cient service in every asect of itsbusiness. To be innovative in the develoment of new banking roductsand services.

!or our >mplo#ees

By romoting their well=being through attractive remuneration and fringebene(ts.

By romoting good sta/ morale through roer sta/ training and

develoment% and rovision of oortunities for career develoment.

!or our $hareholders

By forging ahead and consolidating its osition as a stable and rogressive(nancial institution.

By generating ro(ts and fair return on their investment.

!or our &ommunit#

By assuming our role as a socially resonsible cororate citi)en in atangible manner By adhering closely to national olicies and obectivesthereby contributing towards the rogress of the nation.

By uholding ethical values and best ractices.

Constantly seeking to imrove erformance by aligning our goals withstakeholders e!ectations because we value them.


38/145


).-./ Basic Management 8ctiities and 1iisions of Prime Bank

-ighly skilled rofessionals having long e!erience in banking are managing @rime

Bank td. They constantly focus in understanding L anticiating customer needs L

oerate according to it to survive in the changing market condition. >ow we wouldlook in to each of the four basic management activities @lanning% Frgani)ing%

Controlling and eading that the bank ractices% in order to stay on to of its

cometitors.

P"#$$I$%:

The overall lanning aroach in @rime Bank is to=down. Management of @rime

Bank td. can be categori)ed in to two broader teams% one is the To Management

team and other one is the Mid evel Management team. The To=Management team

usually comrises of the Board of irectorIs where the BankIs Chairman heads the

meetings. ong terms goals are usually been discussed in these high ro(le

meetings% where the bank owners decides everything. ,or e!amle% what should be

the targeted ro(t for the ne!t (scal year. uring their regular meeting each month

the directors tries to review the feedback from decisions given earlier. Changes are

made if needed and new issues are also discussed. The Mid evel Management

team on the other hand deals with short term goals. They are here to see whether

the short terms goals are in line with the long=term targets. Moreover% they alsorovide solutions to everyday challenges that can come u all the time. Most of the

emloyees in the mid level are usually head of individual branches and is entitled to

with resonsibility to see the smooth oeration of the branch.

OR%#$I&I$%:

The term organi)ing for Bank indicates the way through which the day to day

activities of the bank are carried out for smooth oeration. @rime Banks follows two

aroaches for organi)ing its business% one the Branch Based +roach and the

other is the eartment Based +roach. *n the Branched Based +roach% each

individual branch is treated as the searate identity and is head by a branch

manager. The branch manager is liable to the to management for the erformance

of that articular branch. Before the starting of a facial year and from than onward%


39/145


it is the duty of the branch manager to see that targets are being met. Eiven below

is an organ gram of an individual branch for better understanding.

!ig ).( " +rgani9ational hierarch# of an ideal Branch

The eartment Based +roach is similar to that of the branch based aroach%

where each deartment oerates as a searate unit but sometimes collaborates in

order oerates more e#ciently or to solve a common roblem. $uch dearts are

also treated as a searates entity but are much more seciali)ed in on articular

area of business unlike a branch% which has to be involve a multile tasks. 6!amles

of few other departmentsat @rime Bank td are as given below:

314 -uman resource eartment.

354 ,inancial and +dministration eartment.

384 Monitoring and *nsection eartment.

394 Marketing.

34 @ersonal and Relation eartment.

3;4 Merchant Banking.

3


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3104 Eeneral service ivision.

3114 Comuter and *nformation Technology ivision.

3154 Credit +dministration ivision.

3184 Cororate +/airs ivision.

3194 Card ivision.

)./ National Bank Ltd.

Head Ofce : (4 ,1ilkusha &ommercial 8rea, 1hakaA(777,

e! " http"333.n'l'd.com

>ational Bank imited has its roserous ast% glorious resent% rosective future

and under rocessing roects and activities. 6stablished as the (rst rivate sector

Bank fully owned by Bangladeshi entrereneurs% >B has been Aourishing as the

largest rivate sector Bank with the assage of time after facing many stress and

strain. The member of the board of directors is creative businessman and leadingindustrialist of the country. To kee ace with time and in harmony with national and

international economic activities and for rendering all modern services% >B% as a

(nancial institution automated all its branches with comuter network in

accordance with the cometitive commercial demand of time. Moreover%

considering its forth=coming future the infrastructure of the Bank has been

rearranging. The e!ectation of all class businessman% entrereneurs and general

ublic is much more to >B. Heeing the target in mind >B has taken rearation

to oen new branches within the year 5019. The e!ectation of all classbusinessman% entrereneurs and general ublic is much more to >B.

>ational Bank imited was born as the (rst hundred ercent Bangladeshi owned

Bank in the rivate sector. ,rom the very incetion it is the (rm determination of

>ational Bank imited to lay a vital role in the national economy. *t is determined


41/145


to bring back the long forgotten taste of banking services and Aavors. *t wants to

serve each one romtly and with a sense of dedication and dignity.

The emergence of >ational Bank imited in the rivate sector is an imortant event

in the Banking arena of Bangladesh. "hen the nation was in the gri of severerecession% Eovt. took the farsighted decision to allow in the rivate sector to revive

the economy of the country. $everal dynamic entrereneurs came forward for

establishing a bank with a motto to revitali)e the economy of the country.

The then @resident of the @eole's Reublic of Bangladesh ustice +hsanuddin

Chowdhury inaugurated the bank formally on March 5?% 1D?8 but the (rst branch at

9?% ilkusha Commercial +rea% haka started commercial oeration on March 58%

1D?8. The 5nd Branch was oened on 11th May 1D?8 at Hhatungon% Chittagong.

+t resent% >B has been carrying on business through its 1B has been continuing its small credit rogram for disbursement of

collateral free agricultural loans among the oor farmers of Barindra area in Rashahi

district for imroving their livelihood.

>B focused on all key areas covering caital ade&uacy% maintaining good asset

&uality% sound management% satisfactory earning and li&uidity. +s a conse&uence% it

was ossible to a record growth of 1


42/145


105%9B @ublic $chool L College at Moghba)ar where resent enrolment is

1190. Besides awarding scholarshi to the meritorious children of the emloyees%

the bank has also e!tended (nancial suort for their education. *t also rovided

(nancial assistance to the +siatic $ociety of Bangladesh at the time of their

ublication of Banglaedia and observance of 900 years of haka City.

The Transarency and accountability of a (nancial institution are reAected in its

+nnual Reort containing its Balance $heet and @ro(t L oss +ccount. *n recognition

of this% >B was awarded Crest in 1DDD and 5000% and Certi(cate of +reciation in

5001 by the *nstitute of Chartered +ccountants of Bangladesh.

The bank has a strong team of highly &uali(ed and e!erienced rofessionals%

together with an e#cient Board of irectors who lay a vital role in formulating and

imlementing olicies.

)./.( ;ision of National Bank

6nsuring highest standard of clientele services through best alication of latest

information technology% making due contribution to the national economy and


43/145


establishing ourselves (rmly at home and abroad as a front ranking bank of the

country are our cherished vision.

)./.) Mission of National Bank

6/orts for e!ansion of our activities at home and abroad by adding new

dimensions to our banking services are being continued unabated. +longside% we

are also utting highest riority in ensuring transarency% account ability% imroved

clientele service as well as to our commitment to serve the society through which

we want to get closer and closer to the eole of all strata. "inning an everlasting

seat in the hearts of the eole as a caring comanion in ulifting the national

economic standard through continuous u=gradation and diversi(cation of our

clientele services in line with national and international re&uirements is the desiredgoal we want to reach.

)./.* +'ecties of National Bank

+longside u gradation and diversi(cation of banking service to rovide

ma!imum satisfaction to the resected clients% nourishing saving habit

among the general eole by o/ering them attractive savings oriented

roducts% thereby assisting economic develoment.

To build u a dee=rooted and harmonies banker=customer relationshi by

disensing romted imroved services to the clients.

To make best use of the hard=earned investment of our valued shareholders.

$imultaneously% lay our due art in develoing a vibrant caital market by

ensuring more e/ective articiation of the Bank in the share market.

To make best use of latest technologies for giving the clients a taste of

modern banking so as to encourage them to continue and feel roud of

banking with >B.

To resond to the need of the time by articiating in syndicated large loans

(nancing% thereby e!anding the area of investment of the Bank.


44/145


To gain con(dence of all &uarters involved in the economic develoment of

the country through ursuance of a olicy of continuous adustment and

coordination of the BankIs e!ternal trade rogrammers with the dynamism

inherent in the international trade and ayments system.

'()(* Product Sc+eme

)./.-.( &urrent 1eposit"

>ational Bank imited o/ers customers current deosit facility for day=to=day

business transaction without any restriction.

Benets C&ondition 8ppl#D

Minimum balance Tk.5000.

Minimum maintenance charge yearly Tk. ?00.

>o hidden costs.

$tanding *nstruction +rrangement are available for oerating account.

6asy access to our other facilities.

o open an 8ccount

5 coies of recent hotograh of account holder.

T*> certi(cate.>ominee's @hotograh.

7alid hotocoy of 7oter * Card.

)./.-.) ?ome Loan"

>B o/ers home loan facility for urchasing Aats or construction of house .


45/145



,inancing amount e!tends u to B o/ers consumer credit facility for retail customers.

!inancing items

6lectronics consumer roducts.

Comuter or Comuter accessories.


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)././.* rade !inance

>B rovides comrehensive banking services to all. tyes of commercial concerns

such as in the industrial sector for e!ort=imort urose as working caital%

acking credit% trade (nance% *ssuance of *mort Cs% +dvising and con(rming

6!ort Cs. = Bonds and Euarantees .


ow interest rate 18.00K=19.0K.

Minimum rocessing time.

ow service charges.

)././.- $aings 1eposit

>ational Bank imited o/ers customers a basal free and low charges savings

account through the branches all over Bangladesh.

BenetsC&ondition 8ppl#D

*nterest rate of ;.00K on average monthly balance.

Minimum balance Tk.1000.

Maintenance charge yearly Tk. 900.

>o hidden costs.

o +pen an 8ccount


>ominee's @hotograh.


)./././ &urrent 1eposit


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>ational Bank imited o/ers customers current deosit facility for day=to=day

business transaction without any restriction.


Minimum balance Tk.5000.Minimum maintenance charge yearly Tk. ?00.

>o hidden costs.

$tanding *nstruction +rrangement are available for oerating account.

6asy access to our other facilities.

o open an 8ccount


T*> certi(cate.



*.4.= R!& 1eposit"

>ational Bank imited gives oortunity to maintain foreign currency account

through it's +uthori)ed ealer Branches. Bangladesh nationals residing abroad or

,oreign nationals residing abroad or Bangladesh and foreign (rms oerating in

Bangladesh or abroad or ,oreign missions and their e!atriate emloyees.


>o initial deosit is re&uired to oen the account.

*nterest will be o/ered 1.


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o open an 8ccount



@assort Coy.

* of residence in abroad.

)./././ N!& 1eposit

>ational Bank imited gives oortunity to maintain foreign currency account

through it's +uthori)ed ealer Branches. +ll non=resident Bangladeshi nationals and

ersons of Bangladesh origin including those having dual nationality and ordinarily

residing abroad may maintain interest bearing >,C +ccount.


>,C +ccount can be oened for Fne month% Three months% $i! months and Fne

ear through G$ ollar% @ound $tarling% aanese en and 6uro.

The initial minimum amount of S1000 or 00 @ound $tarling or e&uivalent other

designated currency.

)././.0 Monthl# $aings

>ational Bank imited o/ers monthly savings scheme for its retail customers.


Monthly amount can be 00 and multile of it.

@remature encashment is available for urgent need.


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oan facility can be available u to ?0K against >M$ account balance.

$tanding instruction facility can be available to auto transfer installment to >M$

account.

o open an 8ccount

1 coy of your recent hotograh.


)././.2 $hort erm 1eposit

>ational Bank imited o/ers interest on customer's short term savings and gives

facility to withdraw money any time.


Minimum balance Tk. 5000.

Minimum maintenance charge yearly Tk. ?00.

$tanding *nstruction +rrangement are available for oerating account

)././.4 !i@ed 1eposit

>ational Bank imited o/ers (!ed term savings that will scale u your savings

amount with the time.



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+ny amount can be deosited.

@remature encashment facility is available.

Fverdraft facility available against term receit.

o open an 8ccount

1 coy of recent hotograh of account holder.


)././.4 +erdraft

>B o/ers overdraft facility for cororate customers for day=to =day businessoerations .


ow charges in overdraft account maintenance.

,acility is available against deosit receit or mortgage roerty.

ow interest rate 18=1;K.

o open an 8ccount

*ntroductory current account .

Fthers necessary documents as er loan re&uirement

)././.= %estern Enion

oining with the world's largest money transfer service "estern Gnion% >B

has introduced Bangladesh to the faster track of money remittance. >ow

money transfer between Bangladesh and any other art of the globe is safer

and faster than ever before. This simle transfer system %being on line

eliminates the comle! rocess and makes it easy and convenient for both

the sender and the receiver. Through >B = "estern Gnion Money Transfer


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$ervice% your money will reach its destination within a few minutes.

)././.(7 &redit &ard"

Credit card is the newest concet in our country. *n our country Credit card was (rst

introduced by the >ational bank ltd. master card is a name of oular credit card

band and it

is worldwide acceted credit card. Credit card is safe% instant and universal money.

>ational bank ltd issued two tyes of credit card% which is as follows:=

Local credit card" A

ocal credit card is two tyes% such as Ngold cardO and Nsilver cardO.

Eold card limit is 9000 taka to 100000 taka

$ilver card limit is 10000 taka to 9000 taka

ReFuirement for local credit card"A

,R.$T account oan

Ta! identi(cation number

Two coy assort si)e hoto

International credit card"A

*t has also two tyes% such as gold card and silver card.

,or international urose gold card limit is 5000 us dollar to 9000 us dollar.

,or international urose silver card limit is 1000us dollar to 5000us dollar.

ReFuirement for international credit card"A


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@ass ort hotocoy 3(rst (ve ages4

Two coy assort si)e hoto.

T*> number

,R% $T% $B account lien

Through its Credit Card. >ational Bank imited has not only initiated a new

scheme but also brought a new life style concet in Bangladesh. >ow the

dangers and the worries of carrying cash money are memories of the ast.

Credit Card.

)././.(( NBL 8M $erices"

+TM means automated teller machine. >B +TM card give oortunity to their

customer that they can withdraw their money at any time% any days even holidays.

By using +TM subscriber can give various utility bill such as telehone% gas%

electricity bills etc. actually +TM card is a debit card. >ational Bank imited has

introduced +TM service to its Customers. The card will enable to save our valued

customers from any kind of redicament in emergency situation and time

consuming formalities. >B +TM Card will give our distinguished Clients the

oortunity to withdraw cash at any time% even in holidays% 59 hours a day% and o need of any account of >B branch. +lication form

available at any >B branch and card center. >o annual fee for the (rst year.

Renewal fee tk 500.00 only. ocal card limit 1000at minimum or its multile.

*nternational card limit=G$S 00.00 at minimum. Re(ll through any >B branch.

rawing cash from >B +TMs free of charge L from +TMs under Q=Cash network=Tk

10.00 er transaction from other +TM=Tk 100.00. oading fee for international card

will be charged U1K of the loaded amount. Cash withdraw fee 3abroad4 5K of the

cash drawn amount or G$ S.5.00% whichever is higher. +cceted at all 7*$+ @F$

merchants. Cash withdrawal at all +TM booths bearing 7*$+ and Q=Cash logo.

3 6!cet -$BC Bangladesh4. Gtility bill ayment. *t is a reaid card. >o need of any

account of >B branch. +lication form available at any >B branch and card

center. >o annual fee for the (rst year. Renewal fee Tk 500.00 only. ocal card limit

1000at minimum or its multile. *nternational card limit=G$S 00.00 at minimum.

Re(ll through any >B branch.

)././.(* &urrent account C&1D"

Current account is that tyeIs account where deositor can withdraw his deosited

money at any time there is no restriction. Current account can be divided into

following such as:=

*ndividual current account

@rorietorshi current

@artnershi

imited Comanies

Trustees clubs association and di/erent tyes of institution etc.


54/145


).0 $%+ anal#sis of the NBL

).0.( $trengths

>B rovides its customers e!cellent and consistent &uality in every

service. *t is of highest riority that customer is totally satis(ed.

>B draws its strength from the adatability and dynamism it ossesses. *t

has &uickly adated to world class standard in terms banking services. >B has also

adated state of the art technology to connect with world for better communication

to integrate facilities.

+ll the level of the management are solely directed to maintain a culture

for the betterment of the &uality of the service and develoment a cororate brand

image in the market through organi)ation wide team aroach and oen

communication system.

>B utili)es state of the art technology to ensure consistent &uality and oeThe roof of that can

be found in one of its branches% $cotia that is e&uied with Reuters and $"*,T. +ll

facilities will be introduced

in every branch vary shortly.

Fn of the key=contributing factors behind the sources of >B are its

emloyees who are highly trained and most cometent in their own (eld. >B

rovides their emloyees training both in= house and out side ob.

>B is free from deendence from the ever=disrutive owner suly of our

ublic sources. The re&uired ower is enervated by the comany through enervator

fed on diesel. "ater enervation at resent is also done by dee tube wells on siteand is abundant in &uality.

>B rovides its workforce an e!cellent lace to work in. total comle! has

been centrally conditioned. The interior decoration was done e!&uisitely with the


55/145


choice of soothing colors and blend of artistic that is comarable to any

multinational bank.

>B rovides the western union money transfer service for these

customers are easily getting the foreign money.

>B also rovide ower card service facility. ,irst year Bank is not roviding

any service charge for the ower card.

).0.) %eaknesses"

>B has very limited human resources comared to its (nancial activities.

There are not many eole to erform most of the tasks. +s a result many of the

emloyees are burdened with e!tra workloads and works late hours without any

overtime facilities. This might cause high emloyee turnover that will rove to be

too costly to avoid.

,ew of the >BIs roducts o/ered to its clients like N@ersonal credit 3@C4O

are lying idle due to roer marketing initiative from the management. These

roducts call easily be made available in attractive way to increase its client base as

well as its deosit status.

).0.* +pportunities

Eovernment of Bangladesh has rendered its full suort to the banking

sector for a sound (nancial status of the country% as it is becoming one of the vital

sources of emloyment in the country now. $uch government concern will facilitate

and suort the long term vision for >B.

6mergence of e=banking will oen more scoe for >B to reach the clients

not only in Bangladesh but also in global arena. *t is also facilitate wide area

network in between the buyer and the oulation units of >B to smooth oeration

to meet the desired need with least deviation.

).0.- hreats


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*.( +erie3 of &redit Risk Management"*.( +erie3 of &redit Risk Management"

The word credit comes from the atin NcredoO means N* believeO. *t is a lenderIs

trust in a ersonIs(rmIscomanyIs ability or otential ability to command goods orservices of another in return for romise to ay such goods or services of another in

return for romise to ay such goods or services at some seci(ed time in the

future. The making of loans and advances has always been rominent ro(table

function of the banks. $anctioning credit to customers out of the funds at its

disosal is one of the rincial services of a modern Bank.

+s a (nancial intermediary the rimary obective of a bank is to collect deositsfrom the surlus units 3who have surlus fund4 and utili)e the same by lending the

de(cit units 3whose re&uires funds4. Bank is the roer medium of those arties to

utili)e the caital roerly. Bank guild the surlus arties where to invest. Bank

collect deosits from surlus arties in return bank give them some ercent of

bene(ts that are gained out of the di/erent loan or credit e!tended to the

borrowers. Bank takes residual ortion of bene(t from the credits.

+s Bank deals with the money collected from the deositors reayable on demand.

$o% it cannot a/ord to lock u it fund for long or uncertain eriods. Conse&uently%

Bank must safeguards its deosits through e/ective management of all ossible

risks associated with its credits.


58/145


Fne of the most signi(cant risks of a bank is e!osed to is% what is generally termed

as ,Credit Risk-% which is the rimary risk in the banking system. $ince the largest

slice of income generated by a bank and a maor ercentage of assets is subect to

this risk% it is obvious that rudent management of this risk is fundamental to the

sustainability of a bank. Management of Credit Risks needs to be a robust rocess

that enables the Banks to roactively manage the credit ortfolio in order to

minimi)e losses and earns an accetable level of return for the $hareholders.

Risk is inherent in all asects of commercial oeration. -owever for Banks Credit

risk is the fundamental to the sustainability of a bank. Thus Credit Risk is an

essential factor that needs to be managed.

Credit Risk

Credit risk is the ossibility that a borrower will fail to meet its obligation in

accordance with agreed terms. Credit risk% therefore% arises from the BankIs

dealings with or lending to cororate% individual and other Banks or (nancial

institutions.

To revent e!cessive Aow of credit and roer use of it% banks re&uire taking on the

aroriate credit araisal rocedure to imose (nancial disciline on borrowers.

The rocedure that organi)e% control and motivate the borrowers will called credit

management.

$ome e(nitions related with Credit Risk are &uoted below:

NThe concet of high &uality loan cannot e!ist in the absence of obective

credit standards.O

- R( .aggart Mur/+y.

N+sset &uality is the most imortant fundamental dimension of bank analysis. +sset

&uality ultimately drives everything% including margins% caital ade&uacy%


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underlying ro(tability% investment sentiment and valuations.O J Roy Ramos% -ead

of Banking +nalysis% Eoldman $achs% -ong Hong.

*n Banks and ,inancial *nstitutions% Credit Risk is considered as an essential factor

that needs to be managed. Credit Risk is the ossibility that a borrower or counter

arty will fail to meet its obligations in accordance with the agreed terms. CreditRisk% therefore% arises from the BankIs dealings with or lending to cororate%

individuals and other Banks or ,inancial *nstitutions. Credit Risk Management needs

to be a robust rocess that enables Banks to roactively manage loan ortfolios in

order to minimi)e losses and earn an accetable level of return for shareholders.

Mercantile Bank td. is committed to rovide high &uality services to its constituents

through di/erent (nancial roducts and ro(table utili)ation of fund and contribute

to the growth of E@ of the country by (nancing trade and commerce% heling

industriali)ation% boosting e!ort% creating emloyment oortunities for the

educated youth and encouraging micro=credit leading to overty alleviation and

imroving the &uality of life of the eole and thereby contributing to the overallsocio=economic develoment of the country. "ith a view to achieving the aforesaid

obectives of the bank% Credit oeration is of aramount imortance as the greatest

thesis on credit risk management of bangladeshi bank

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