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Loan Disbursement and Recovery System of Janata Bank Limited Submitted by WWW.ASSIGNMENTPOINT.COM An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd. 2 www.AssignmentPoint.com INTRODUCTION Here I have presented the origins, orientation topic, purpose, scope, limitations, methodology of the study, and objective of the study, the data collection method and background ofthe study while creating this report. OBJECTIVES OF THE REPORT The objectives of the study are as follows:-
- To study the loans disbursement & recovery system of Janata Bank Ltd.
- To identify problems related to various loans & advance products of JBL.
- To explain how the bank sanction loan to clients.
- To illustrate the loan recovery system of Janata Bank Ltd.
- To make some recommendations on the basis of the problems. An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd. 3 www.AssignmentPoint.com SCOPE OF THE STUDY This report has been prepared through extensive discussion with bank employees and with the clients. While preparing this report, I had a great opportunity to have an in depth knowledge of all the loans & advance by the Janata Bank limited. It also helped me to acquire a fast hand
perspective of a leading bank in Bangladesh. LIMITATIONS To prepare a report on the achieved practical experience in a short duration is not an easy task. In preparing this report, some problems & limitations have encountered, which are as follows:
- Large scale analysis was not possible due to constraints & restrictions posted by the banking authority.
- This report is limited only to the Loans & Advance Department, it does not cover the general banking part of Janata Bank Ltd.
- In many cases, up to date information was not published.
- In some cases, access to relevant papers & documents were strictly prohibited.
- In some other cases, access was denied to procedural matters conducted directly by the top management in the operations of loans & advance department. METHODOLOGY OF THE STUDY Approach: From educational background, every one learned different methodology in research process. Therefore, in this study, in the organization synopsis part information is presented in a Descriptive manner. Both the primary as well as the secondary form of information was used to prepare the report. The details of these sources are highlighted below: Target population: The target Population is the Officers of Corporate Branch, Janata Bank Ltd. An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd. 4 www.AssignmentPoint.com Primary Source: The data is used for first time or not used before is called primary data. Primary data collected from the people by their views, opinion, comment etc.The primary data are collected by interviewing employees, managers by the process assigned by Janata Bank Ltd. observing various organizational procedures, structures. Primary data were mostly derived from the discussion with the employees & through surveys on customers of the organization.
word banque which means a bench. They are of the opinion that the medieval European bankers (i.e. money changers and money lenders) transacted their banking activities on the benches in market place. This money changing and money lending business is known as ‘’Banking business’’.Banks have to compete with local financial institution as well as foreign financial institution in the market place, banks has to develop appropriate financial structure and should periodically review and compare their performance with its competitor to build a sound banking institution. Banks are financial intermediary institutions. The core is to mobilize the financial surplus of saver in the form of deposits & allocate these savings to the credit worthy borrowers An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd. 6 www.AssignmentPoint.com of different sector of economy in the form of loans & advances. The advance of the intermediary functions between the savers & investors would certainly in the lower level of savings & investment & thus lower the economic growth. That development of the financial intermediaries & instrument (both in case of deposit & advance) will lead to the development of the economy of a country. BANKING IN BANGLADESH Economy of Bangladesh is in the group of word’s most underdeveloped economics. One of the reasons may be its underdeveloped banking system. Modern banking system has been plays a vital role for a nations economic development. Over the last few years the banking world has been undergoing a lot of change due to deregulation, technological innovations, globalization etc. These changes also made revolutionary changes of a country’s economy. It is well recognized that there is an urgent need for better qualified management & better-trained staff in the dynamic global financial market. Bangladesh is no excepting in that trend. Banking sector in Bangladesh is facing challenges from different angles though its prospect is bright in the future. Banks are the mainstay of the financial system of a country of a country like Bangladesh.
Because of close relationship between economic and financial development, the banking system An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd. 7 www.AssignmentPoint.com must be robust, resilient and sound for efficient inter-mediation of financial recourses. For this required sound and prudential financial regulations. Although our banking sector is so strong and healthy, the role played by it in our economy is remarkable. Banking sector of Bangladesh exhibited a resilience performance in spite of comparative economic sluggishness. It has been playing a vital in the economy by providing credit for performing economic activities and at the sometime conglomerate the surplus capital from general public through different types of depository incentives. But for the sound lending management, appropriate strategies and well planned are required. In the recent year, Government has taken initiatives to reform in financial sector, such as maintaining discipline in banking sector, steps for prevention of money laundering, loan write-off policy and effective measures to gain accountability and transparency in banking sector. These timely steps have made the banking operations more transparent, acceptable and modern. As a result, the image of banking sector has been elevated. An OVERVIEW OF THE BANK JANATA Bank Limited welcomes to all to explore the world of progressive Banking in Bangladesh. It is a state owned commercial bank and is catering the need of the mass business people. Immediately after the independence of Bangladesh in 1971, the erstwhile United Bank Limited and Union Bank Limited were nationalized and renamed as Janata Bank. It was corporazed on 15th November 2007. Janata Bank was born with a new concept of purposeful banking sub serving the growing and diversified financial needs of planned economic development of the country. The noble intention behind starting of this Bank was to bring about a qualitative change in the sphere of banking and financial management. Janata Bank is playing a
products. HISTORICAL STARTING An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd. 9 www.AssignmentPoint.com Janata Bank Limited (JB) is the second largest commercial bank in terms of net worth with 850 branches and fully owned by Government of Bangladesh. The mission of the bank is to actively participate in the socio-economic development of the nation by operating a commercially sound banking organization. Immediately after the independence of Bangladesh in 1971, the erstwhile United Bank Limited and Union Bank Limited were nationalized and renamed as Janata Bank. Janata Bank is a state owned commercial bank which was incorporated as a Public Limited Company on 21 May 2007 as per Companies Act 1994 and took over the business of the then Janata Bank with all of its assets, liabilities, right, power, privilege and obligation on a going concern basis through a vendor agreement signed between the Peoples Republic of Bangladesh and Janata Bank Limited on 15 November 2007 with a retrospective effect from 1 July 2007. All of its operational activities are governed by the Bank Companies Act 1991. The Bank provides all kinds of commercial banking services to its customers including accepting deposits, extending loan & advances, discounting & purchasing bills, remittance, money transfer, foreign exchange transaction, guarantee, commitments etc. The principal activities of its subsidiary are to carry on the remittance of hard-earned foreign currency to Bangladesh. Janata Bank Ltd. has a plan to switch over to a multi disciplinary financial institution by conducting Merchant Banking business and Islamic Banking. The authorized capital of the bank at present remained at Tk. 20000 million (approx. US$ 283.33 million). Paid up capital: Tk. 5000.00 million. OBJECTIVE OF THE BANK F 0 B 7To earn customer satisfaction through diversified banking activities and introduction of innovative banking.
F 0 B 7To improve the customer services in recent times by introducing a number of IT-based reform measures. F 0 B 7To remain one of the best banks in Bangladesh in terms of profitability and Assets Quality. F 0 B 7To ensure an adequate rate of return on investment. F 0 B 7To maintain adequate liquidity to meet maturing obligations and commitments. F 0 B 7To maintain a healthy growth of business with desired image. F 0 B 7To maintain adequate control systems and transparency in procedures. An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd. 10 www.AssignmentPoint.com F 0 B 7To ensure optimum utilization of all available resources. VALUES OF THE BANK F 0 B 7To have a strong customer focus arid build relationship based on integrity, superior service and mutual benefit. F 0 B 7To work as a team to serve the best interests of the group. F 0 B 7To work for business innovation and improvements. F 0 B 7To value and respect the people and make decision based on the merit. F 0 B 7To provide recognition and reward on performance. F 0 B 7To be responsible, trustworthy and law-abiding in every sphere. F 0 B 7To become the base bank in respect of service, profitability and strength. F 0 B 7Provide greatest return to the shareholders by achieving sound profitable growth. PRESENT SITUATION OF JANATA BANK LTD. Authorized Capital: The authorized capital of the bank at present remained at Tk. 20000 million (approx. US$ 283.33 million). Paid up capital: Tk. 5000.00 million. Reserve fund & other fund: Reserve fund Tk.10823.01 million and retained surplus Tk.
million. Foreign Exchange Business: During 2011, the Bank handled Export and Import Business to the tune of tk.88653 million and tk. 118525 million respectively. Treasury: through effective fund management, the Bank could earn tk. 18134 million during the year 2011 through dealing broom operation. An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd. 12 www.AssignmentPoint.com Capital Market Operation: The Bank has a separate Brokerage House established with a view to facilitating the investors to operate in capital market in a hassle free atmosphere. Its success inspired the Bank to open new work station at Uttara and Dhanmondi in 2011, & Dilkusha. Operational Result: The operational profit of the Bank during 2011was 13860million. Dividend: In the line of proposed appropriation of profit, the Board of Directors has been pleased to recommended 30% Bonus Share (Stock Dividend) for its valued shareholders for the year 2011 and for consideration of approval shareholder Number of Branches: 864 branch and total number of employees 15705. MISSION OF THE BANK F 0 B 7To mobilize resources from within to the development and growth of the country. F 0 B 7To play a catalyst role in the formation of capital market. F 0 B 7Anticipating business solutions required by all our customers everywhere and innovatively supplying them beyond expectation. F 0 B 7Setting industry benchmarks of world class standard in delivering customer value through our comprehensive product range, customer service and all our activities. F 0 B 7Maintaining the highest ethical standards and a community responsibility worthy of a leading corporate citizen An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd.
www.AssignmentPoint.com F 0 B 7Continuously improving productivity and profitability and thereby enhancing shareholder value. Information about the Administration of JB Ltd. Office Automation Technology, computer, internet these thins brings a new generation of banking service to the customer. Eight to ten years ago customers cannot think about that they can withdraw or deposit money from their account at least within one hour. But now it takes only at best five minutes for withdraw their money. This is the simple example what technology brings to banking sector. In before bankers has to maintain huge ledger book for their daily or any sorts of banking record. But now they can do it by on click and by strike of few buttons. They have web page (www.janatabank-bd.com). Customer can get detail information from the web page. JB Ltd also has credit card and ATM machine now a days. Audit Inspection Recovery Distribution: Head Office Audit and Inspection Division comprising sufficiently experienced and skilled manpower carried out internal audit and inspection work on regular basis. In 2002, all the branches of the Bank were audited at least once. Surprise inspections were also undertaken in many branches. Bangladesh Bank audit teams also conducted comprehensive and foreign exchange related inspections on the affairs of many branches during the year under report. Human Resource Division: In the Janata Bank, this department deals with the employees as the core resources of the organization. This department mainly emphasize on the recruitment, selection of the employees. They are also motivating the employee to work efficiently and effectively. An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd. 14 www.AssignmentPoint.com
This department prints all security documents of Bank & looks after of this security items. ORGANIZATIONAL STRUCTURE OF JANATA BANK LTD. There are 13 members of Board of Directors manages Janata Bank Limited. For efficient operation of the bank the Board of directors forms an Executive Committee of 19 members. Besides, a management Committee looks after the affairs of the bank. The Bank maintains transparency in its entire works. All decisions of the management come through discussions in appropriate forum and required follow-ups are also made to see their effectiveness. Here are the management team given in a chart and he hierarchy of the JBL is given in next page- An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd. 16 www.AssignmentPoint.com
Fig: Management Team of JBL
Board of Directors Deputy Managing Director Executive Vice President Senior Executive Vice President Senior Vice President Additional Managing Director Managing Director Senior Executive officer First Assistant Vice President Assistant Vice President Senior Assistant Vice President
Vice President Executive Officer Principal Officers Senior Officers Officer An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd. 17 www.AssignmentPoint.com Fig: The Hierarchy of Janata bank Ltd. ORGANIZATIONAL HIERARCHY OF CORPORATE BRANCH: Deputy General Manager Assistant General Manager First Assistant General Manager Senior Executive Officer Executive Officer Assistant Executive Officer Assistant Officer Support staff (cat: 1) Support staff (cat: 2) An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd. 18 www.AssignmentPoint.com CORPORATE MISSION Janata Bank Ltd creates new opportunities for its clients. It gives customized services & maintains harmonies banker client relationship. To mobilize financial resources from within &
Deposit Service Fi Fixed Deposit Scheme Special Savings Scheme Special Deposit Scheme Monthly Income Scheme Monthly Savings Scheme Education Saving Scheme Loan Scheme Loan General Terms Loan Transport Loan Project Loan Loan against Imported Merchandise Loan against Trust Receipt Loan Against Packing Credits Loan Against House Building Housing Loan Scheme House Repairing Loan Scheme Consumers Finance Scheme Festival Small Business Loan Scheme Festival Personal Loan Scheme Small Business Loan Scheme Personal Loan Scheme Cash Credit Security Overdraft Payment against Document Others Remittance, Money Gram, T.T, D.D An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd.
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LOANS AND ADVANCES
In common parlance the loan “document” means any written record which serves as an evidence in respect of a transaction and be described as anything obtained for recording a transaction. Documentation may be described as the process or technique of obtaining the relevant documents. A banker must obtain proper documents executed from the borrower to protect himself against willful defaults. Moreover, when money is lent against security of some assets, the documents must be got executed in order to give to the banker a legal and binding charge against those assets. Documents contain the precise terms of granting loans and advance and they serve as important evidence in law counts if the circumstance so require. It is, therefore, absolutely necessary for a banker to obtain proper documents from the borrower while granting a loan or advance to him. In banking system, loan interest is calculated in daily basis. Janata bank is one of the leading largest commercial banks in our country. It has been playing a vital role in our economy flourishing industrial sector by providing financial support. Following the guidelines of Bangladesh Bank, credit facilities have been extended to productive and priority sectors. In consideration of the importance of rural sector on overall economy of the country Janata Bank has been involved in Rural Financing through the vast branch network spread all over the country. The main objectives of the rural credit policy and programs of the bank have been designed to cover all segments of rural population whether skilled or unskilled such as farmers, landless, laborers, women, unemployment educated and vocational trained youths, weavers, and other rural dwellers and artisan. A good number of micro credit programs have been launched for poverty reduction sponsored by the bank on its own and in collaboration with local and foreign agencies. Emphasize has been given on entrepreneurship development and Gender Equality in the credit programs. Besides, the bank has also given emphasis on agro-based
F 0 B 7Secured over draft against cash incentives F 0 B 7Foreign documentary bills purchased (FDBP) F 0 B 7Local documentary bills purchased (LDBP) F 0 B 7Festival business loan
- Term Loan F 0 B 7Project loan F 0 B 7Transport loan F 0 B 7House building loan F 0 B 7Small business loan F 0 B 7Consumer finance loan F 0 B 7Lease finance An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd. 23 www.AssignmentPoint.com F 0 B 7Personal loan
Table of Loan classification: LOAN TYPE UNCLASSIFIE D (MONTH) SUBSTANDAR D (MONTH) DOUBTFUL (MONTH) BAD (MONTH)
Continues Loan Demand Loan Expiry up to 5 month 6 to 8 month 9 to 11 month 12 month + Term Loan Up to 5 years 0 to 5 month 6 to 11 month 12 to 17 month 18 month + Term Loan more then 5 years 0 to 11 month 12 to 17 month 18 to 23 month 24 month + Micro Credit 0 to 11 month 12 to 13 month 36 to 59 moth 60 month+ Source: Documents from Head Office Current interest rates: Types of deposit Rate of interest offered (%) Savings Urban 05. Rural 06. Savings Deposit from Foreign Rmtt. 06. Short Term Deposit 03. An analysis of Loan Disbursement & Recovery System of Janata Bank Ltd. 24 www.AssignmentPoint.com Term Deposits: 3 months & above but < 6 months 07 6 months & above but < 1 year 07. 1 year & above but < 2 year 07. 2 year & above but < 3 year 08.
