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Chapter-One INTRODUCTION

1.1 Prelude
Internship is an assigned work performed usually by the students of BBA at the end as partial fulfillment of the requirements for the degree of BBA in the Dept. of Business Administration of the University of Information Technology !ciences. The aim of internship is to apply one"s theoretical knowledge in practical fields. As a student of #arketing. $e are interested to complete our internship program at financial institutions. And for this purpose I was sent to %a&shahi 'rishi Unnayan Bank (%A'UB)* %egional +entral Branch* %a&shahi. The program is completely supervised by our respected teacher !hamima ,asrin* Department of Business Administration University of Information Technology !ciences* (UIT!). The program started from -.th /anuary 0.12 and continued up to 03th April 0.12. After &oining the branch* I was first introduced with Ayesha Parvin* A4# 5.D.%* %a&shahi 'rishi Unnayan Bank (%A'UB)* %egional +entral Branch. 6ater on* he introduces me with other officers of the branch who accept me cordially. They were very helpful in collecting information and helped me as much as possible. This was the first practical e7perience of mine* so that I have en&oyed it very much. The cordial help of manager and officers make it more en&oyable. !ince I have completed a course on Bank management* I have some theoretical knowledge about different activities of bank. And practical e7periences of bank activities enrich my knowledge through getting real view. The report is prepared from the knowledge which I have had from theoretical learning and practical e7perience which I have got from the internship program. Though I have got a conception about overall banking functions but in this report I have focused on loan management of %A'UB* %egional +entral Branch* %a&shahi.

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1.2 Obje tive !" the study


The main ob&ective of the study is to e7amine the loan management of %A'UB* %egional +entral Branch* %a&shahi for the period of 0..381. to 0.1081- to achieve the ob&ective9 the study seeks to reali:e the following9 1. To assess the activities of %A'UB* how it contributes in agricultural development of %a&shahi. 0. To assess the loan management system during the period 0..381. to 0.1081-. -. To assess the loan disbursement condition of %egional +entral Branch for the period 0..381. to 0.1081-. 2. To determine various sources of loan able fund. ;. To know the security evaluation system before providing loan to the customer. <. To e7amine the loan monitoring system of the bank. =. To know the different services provided by the bank to its customers. >. To know how they deal with problem loan. 3. To know the criteria of classifying loan. 1.. To know the competitive position of the bank in the area with different financial institutions providing agricultural credit.

1.# $ !pe !" the study


?valuation of loan management is one of the most important parts for evaluating any commercial or speciali:ed bank. 6oan management mainly comprises of loan disbursement policy* at the same time it deals with classification of loan and balancing liquidity and profitability position of the bank. The study is emphasi:ed on whether the bank providing loan considering all required aspect and recovering loan in timely manner and what initiative they are taking in respect of problem loan. That is how profitably the bank is operating with keeping loan management at optimum level.

1.% &eth!d!l!'y !" the study


#ethodology can be termed as underlying principles and rules of organi:ation or the philosophical systems that work at the back drop of any study. To fulfill an internship program and prepare a complete report we
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need organi:ational data. The data was collected from the %a&shahi 'rishi Unnayan Bank during the internship period. To make the report more meaningful and presentable two sources of data and information have been used widely those are@ 1. Arimary sources of information 0. !econdary sources of information Above mentioned sources are described below9 1. Pri(ary s!ur es) Arimary data are measurements observed and recorded as part of an original study. Arimary sources are the sources from where information is collected from %a&shahi 'rishi Unnayan Bank. The ways through which I have collected information in my internship program are described below9 a. *uesti!nnaire (eth!d) Buestionnaire method is one of the most usual systems used in collecting data or information. Buestionnaire is two types such as open ended questionnaire and close ended questionnaire. I have prepared an open ended a questionnaire under the supervision of my respected supervisor about different functions and mainly loan management of %egional +entral Branch* %a&shahi of %A'UB. The manager and specially the second officer of the branch answer most of my questions. The questionnaire is given at the end of the report. b. Observati!n (eth!d) According to o7ford dictionary the observation means Cthe act of watching something carefully for a period of time specially to learn somethingD. I went to the %A'UB %egional +entral Branch* %a&shahi and observed the different activities of officers and the different problems and requirements of customers through which I have collected some information. But one true thing is that I could not ask question to the officer in all the time when I cannot understand* the reason is that in my branch the month of loan management is going on* so most of the officer stay busy in most of the time. . Intervie+ (eth!d) The interview is face to face interpersonal discussion in which one person asks pertinent question to a person
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called respondent about a selected topic or area. I have collected some information through asking the officers. 2. $e !ndary s!ur es) $hen an investigator uses the data which has already been collected by others* such sources or data are called secondary sources or data. I have collected some secondary information which is already published by the bank authority. I have collected secondary information from the following sources9 a. !tatement of affairs of the branch b. Documents supplied by branch . Different articles d. #aga:ines and papers e. Bank"s website ". %ules and regulations provided by agricultural credit department of Bangladesh bank. '. Annual report of the bank from 0..=8.> to 0..381.. h. !ome statistical graphs and charts of the bank. Analysis !" ,uesti!nnaire) There are different techniques of analy:ing questionnaire. I have asked different questionnaire about the functions of %A'UB* activities of %egional +entral Branch* %a&shahi and specially their credit policy* loan management initiatives taken to improve etc. I have analy:ed this information giving special emphasis on loan disbursement policy.

1.- The si'ni"i an e !" the study


,ow8a8days the banks are playing a vital role in the economic development of any country. The %A'UB is a speciali:ed bank which is established with a view to developing the agricultural condition of the northern region of our country. The success of any bank depends upon how properly they are utili:ing their funds. %A'UB is 6oan money to the people related to agriculture and contributing a lot in agricultural development of our country. The bank should provide loan after e7amining some important aspects and should recover cent percents of its loan. I have chosen the topic loan management for the reason to analy:e what problems are related behind the scene.
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1.. /i(itati!ns !" data !lle ti!n


,othing is out of limitation. !o my report also has some limitations. Eor these reasons* I cannot prepare it properly. The common culture of Bangladesh is that some government officers are not interested to do more than their assigned work. The ma&or problem I have faced at the time of data collection because the manager and officers are busy and do not get enough time to discuss frankly. The ma&or limitations are given below9 1. I have been sent to %A'UB* %egional +entral Branch* %a&shahi for only three months which is not sufficient to understand different activities of the bank. 0. In my branch the month of disbursement is going on* so the officers are always remain busy. -. The reports is basically prepared on published income statement* Balance sheet* information about loan and advances but for preparing report more details information are required. 2. !ince we are student so we have no in depth knowledge about preparing report. ;. The bank"s accounting period is from /uly to /une* so now the officers are busy in making arrangements for preparing financial statement. <. !ome officers are too much conservative* they are not interested to discuss about any matter. =. In some cases* officers are not interested to disclose information because of secrecy. >. To prepare report minimum four to five years information is required* but the branch has no computer* all records are kept manually. !o the officers are not interested to provide information other than recent year. 3. To complete internship program a lot of money is required but we do not get necessary money. 1.. Information collection through observation method is possible when one"s have complete knowledge about the work* but I have no
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clear knowledge about different activities* so the effort to collect information through observation is go in vain. This is the first internship program and report preparation of my life* so for the limitation of my knowledge I cannot prepare it more effectively.

Chapter- T+!
AN O01R0I12 O3 RA4U5
2.1 Intr!du ti!n
%a&shahi 'rishi Unnayan Bank (%A'UB) is a state8 owned Bank in Bangladesh with regional approach. The bank emerged as a government"s plan of intensive care to agriculture of %a&shahi division providing livelihood to ;; million people of the area. The region is less developed compared to other parts* yet full of potentials in agriculture. %a&shahi division characteri:ed by its surplus food grain production is popularly called the Cgranary of the countryD. Besides catering to agricultural credit* %A'UB* as it is acronym renders deposit banking service through all the -<2 branches. The headquarters of the bank is stationed at %a&shahi city* some 0=. kilometer to the north of Dhaka.

2.2 6ist!ri al ba 7'r!und !" RA4U5


Bangladesh is agriculture based country from the very beginning. #ost of the people are depended on agriculture. Erom British period till today* farmers of this country are dominated by different quarters of the society. In village level farmers take loan from different money lenders at high interest which is totally unreasonable. To save the farmers from village money lenders* British 4ovt. took step under special program in order to disburse the agricultural loan to the farmers in 13.;. 6ater on* in 13-0 India8British 4ovt. took a step for the socio8 economic development of the small and marginal farmers* which was implemented through providing agricultural loan to them. In 13;0 the 4overnment of Aakistan established a financial institution named CAgricultural Development Einance +orporationD (ADE+) in order to disburse loan in agricultural sector. Eeeling the importance of
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agricultural production and agricultural loan the Aakistani 4ovt. established another bank namely CAakistan 'rishi BankD in 13;=.

In 13=1 Bangladesh has been emerged as an independent country through a historic war of nine months. After the liberation of Bangladesh the 4overnment renamed the Aakistan 'rishi Bank as Bangladesh 'rishi Bank (B'B) in 13=- according to the Aresidential order 0=. As Bangladesh is an agro8based country* the demand for the agricultural loan of 'rishi Bank is in increasing trend. To manage agricultural loan it becomes very difficult for Dhaka based head office of 'rishi Bank to serve the remote areas of the country. Eor this reason the government takes the decision to decentrali:e the 'rishi Bank in the divisional areas. The people of the northern areas of Bangladesh are lagging behind in all respects than the other parts of the country. %a&shahi 'rishi Unnayan Bank (%A'UB) was established by the president"s ordinance no ;> of 13>< with the aim of providing institutional agricultural credit for optimum utili:ation of agricultural potentials of %a&shahi division. Taking over the branches and offices along with assets and liabilities of the Bangladesh 'rishi Bank within in the %a&shahi division* the bank started functioning on 1; #arch 13>=.

2.# Obje tive !" RA4U5


The main ob&ects of %A'UB are as follows9 a) To provide credit facilities for all kinds of agricultural and agro8 based economic activities keeping in view the needs of small and marginal farmers. b) To earn a normal profit for meeting the operational e7penses* building of reserve and e7pansion of activities to cover wider geographical area. c) To e7tend counseling and advisory services to the borrowersF entrepreneurs etc. in utili:ing credit facilities of the bank.

2.% 3un ti!ns !" RA4U5


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As the largest development partner in the northwest region %a&shahi 'rishi Unnayan Bank (%A'UB) aims at overall development of farmers and all the sectors and sub8sectors of agriculture in this region. Besides* catering to agricultural credit the bank performs ancillary functions as financing agri8business and agro8based industries and poverty alleviation programs.

2.- &ana'e(ent
The board is vested with the responsibility of formulation of policy in line with attainment of growth in agriculture and economic development of the region through agricultural credit support. The board of directors is constituted by seven members* all appointed by the government. Besides* for emergency decisions there is an e7ecutive committee constituted of the chairman of the board and two other members9 the managing director and one of the directors elected by the board. The managing director is the chief e7ecutive of the bank.

2.. Capital and its s!ur es


%A'UB is a governmental banking institute. !o the main sources of capital are government fund* as on -. /une 0.1- the details about capital are as follows8 1) Authori:ed capital 9 Tk. =;.. million 0) Aaid up capital 9 Tk. ;=.. million -) %eserve capital 9 Tk. 0.>.23 million

2.8 Or'ani9ati!nal stru ture


The 5ead Gffice of the bank is stationed at %a&shahi. The branch8network comprises -<2 branches including one in Dhaka. It has also eighteen :onal and regional offices. The bank has a training institute located at %a&shahi. Total workforce of -21. as on -18.-80.1- was composed of 1;01 officers and 1>>3 other staffs. %egional offices stationed in district headquarters control branches under them. There are independent regional
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audit offices for conducting regular audit in branches as well as in regional and :onal offices.

OR:ANI;ATIONA/ $TRUCTUR1
Board of Directors !ecretariat #anaging Director Aublic %elation !ecretariat of #.D.

4eneral #anager Adm. AF+.

4eneral #anager Gperating

4eneral #anager Audit %ecovery

4eneral !ervice Dept.

%esource evelopment Dept

6oan %ecovery Dept81.

+entral Account Dept81

Budget

+ost +ontrol Dept.

6oan %ecovery Dep80.

+entral Account Dept80

Branch control Dept.

6oan %ecovery Dept80


%egional Audit office8 1>

Aersonnel #anagement Dept.

6oan Advance Dept80

Training institute

6oan Advance Dept81

6AG

Dhaka Branch

Honal Gffice %a&shahi

%egional Gffice ,augoan

%egional Gffice ,awabgong

%egional Gffice ,atore

Honal Gffice Aabna

%egional Gffice !ira&gan& %egional Gffice ,atore Honal Gffice Aabna %egional Gffice !ira&gan&

%egional Gffice %angpur


%egional Gffice Thakurgoan

Branch 1> Branch 01 Branch 1-

Branch 00

Branch 1-

Branch 1=

Branch 13

Branch 13 Branch 12 Branch 1; Branch 10

%egional Gffice Branch Branch Branch Branch Ahanchogor University 1< of Information 1= 1< Technology 1; %egional Gffice Dina&pur Honal Gffice Dina&pur
%egional Gffice 6almonirhat

Branch & Branch Sciences 1= 1> %egional Gffice ,ilfamary %egional Gffice 'urigram

Branch 1= %egional Gffice 4aibanda

2.< Or'ani9ati!nal set up


The affairs of business of the bank are managed through three functional tiers9 The 5ead Gffices The HonalF %egional offices The Branches 6ead !""i e) The head office of %A'UB is stationed at 0>. km far from capital city Dhaka* at ,orth8west divisional city %a&shahi. All operation is controlled by head office. The managing Director is assisted by the three following functional divisions. ?ach headed by a 4eneral #anager9 Administration and Accounts Division. Gperation Division. Audit and %ecovery Division The three divisions further divided into 1= departments are as follows9 a= Ad(inistrati!n Divisi!n) Aersonnel Department +ommon !ervices Department +omputer Department Budget and e7penditure control Department Training Institute 5uman resource Department b= Operati!n Divisi!n) Branches control Department.
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6oans and Advances Department8I 6oans and Advances Department8II %esearch and Development Department. = Audit A !unts and Re !very Divisi!n9 6oan %ecovery Department8I 6oan %ecovery Department8II Audit and Inspection Department +entral Account Department81 +entral Account Department80 6aw Department ?ngineering* Arocurement #aintenance Department %egion wise branches of %A'UB are given through table at ne7t page. Table819 %egion wise total branches (Up to -. /une* 0.1-) !6. ,o. HoneF%egion ,o. of Branches .1. %a&shahi 02 .0. ,aogaon 0> .-. ,atore 0. .2. %a&shahi 1< .;. Bogra (,orth) 0. .<. Bogra (!outh) 12 .=. Aabna 02 .>. /aipurhat 1; .3. %angpur 0< 1.. 4aibandha 02 11. ,ilphamari 0. 10. 'urrigram 01 1-. 6almonirhat 1= 12. Dina&pur (,orth) 1= 1;. Dina&pur (!outh) 1> 1=. Thakurgoan 1> 1>. Aanchagarh 1> 13. Dhaka 1 0.. 6.A.G (%a&shahi ) 1
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2.> 5ran h net+!r7

01

!ira&gon&

00 Total -<2 $ource9 Aersonnel department of %A'UB

2.1? 1(pl!yee su((ery


Table809 ?mployee summary of %A'UB (Up to /une -.* 0.1-) Desi'nati!n Auth!ri9e 1@istin' 0a ant

d
1.#anaging Director (#D) 0.Deputy #anaging Director (D#D) -.4eneral #anager (4#) 2. Deputy 4eneral #anager(D4#) ;.Assistant 4eneral #anager(A4#) <.!enior Arincipal officer(!AG) =.Arincipal officer(AG) >.!enior officer(!G) 3.Gfficer Total Gfficer 1..Gther ?mployee Total .1 .1 .-< << 12= --< <0. 3.. 211? 010< %2#. .1 8 .0> ;> 1-> 0=1 033 =01-21 1>>3 #%1? 8 .1 8 > > 3 <; -01 1== -<> 0-= <2.

!ource9 Aersonnel department of %A'UB

2.11 Trainin' institute


The only training Institute at %a&shahi Imparts training to the &unior and mid8level officers and other staff according to the annual training
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program designed on such sub&ects of professional interest as management of credit and accounts* +ommercial banking* audit and inspection etc.

2.12 ?""i e aut!(ati!n


A 6ocal Area ,etwork (6A,) connects all computers in departments at head office. Internet connections in the head office as well as field offices have facilitated e7change of information through e8mail. The bank has its own website www.rakub.org.bd to represent it to the cyber world. +omputeri:ed branch banking has been introduced on e7perimental basis in two branches of the bank. ,ecessary steps have been taken to set up a complete computer department at head office. The bank has been giving much importance to training courses for enhancing computer skill of officers and other staff.

2.1# Audit and inspe ti!n


Internal audit and inspection plays an important role in establishing transparency and accountability of the bankIs accounting system. Besides there are commercial audit* Bangladesh Bank inspection and e7ternal audit for detecting and checking repetition of irregularities frauds and forgeries* if any* in different levels. The government appointed #Fs Hoha Haman 'abir %ashid +ompany* +hartered Accountants and #Fs 'han $ahab !hafiq %ahman +ompany* +hartered Accountants for conducting audit for the financial year 0.1.8 0.11. The audit report submitted by them on 1-8.180.10 was sent to the ministry of finance on 138.080.10 after approval of the Board of Directors.

2.1% $pe ial redit pr!'ra(s


%A'UB has taken some special programs which are mentioned below9 1. 0. -. 2. ;. +onsumers" credit scheme +redit for small holding tea plantation Aotato seeds production Intensive mai:e cultivation pro&ect The production of import substitute agri8crops

2.1- P!verty alleviati!n redit pr!'ra(s


The bank has been disbursing micro8credit for poverty alleviation in the 1< northwestern districts since inception. Besides* the bank finances short term collateral free credit under select individual or group based programs for income generating activities among poor and
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unemployed youth in compliance with government policy. The bank has financed Tk. 0>3..- million as against of Tk. -2. million annual disbursement target in 11 poverty alleviation credit programs in the year 0..>8.3. Eollowing are the bank"s poverty alleviation credit program9 1. %A'UB self8help credit program(%!+A) 0. #arginal small farm system crop intensification pro&ect -. !wanirvar credit program 2. !hogorip (Eood grain godown credit program ;. U, +apital development fund credit program <. $omen entrepreneurship development program =. Ailot employment generation program >. !emi8intensive goat rearing program 3. #edicinal plantsForchard nursery 1.. +redit program for the disable persons 3!rei'n aided pr!je t) %A'UB takes some pro&ect with the help of foreign aid* those are mentioned below9 1. $(all 1nterprise Devel!p(ent Credit Pr!je t A$1CP=) !mall enterprise development credit pro&ect (!?+A) has been lunched under ,orwegian assistance to promote new small enterprises and streamline e7isting ones in ;1 upa:ilas of greater %a&shahi * Bogra* Aabna and 'urigram districts. 2. N!rth 2est Cr!p Diversi"i ati!n Pr!je t ANCDP=) The bank has undertaken a pro&ect named ,orth8$est crop diversification pro&ect under financial assistance of Asian development bank. The pro&ect is under implementation by the department of Agricultural ?7tension under ministry of Agriculture in <1 upa:ilas of 1< districts of %a&shahi division

2.1. 6i'hli'hts !" !verall a tivities !" RA4U5


Table8-9 5ighlights of overall activities as on -.th /une 0.1!6. ,o 1 0 2 ; < = 14 Aarticulars Aaid up capital ( Gn -18.-80.1-) Total capital !urplus capital(Deficit) Total assets Total deposit Total loan and advances Total contingent liability University of Information Technology & Sciences Taka ;=.*..*..*... (21*32*=>*.;<) 0<.*-2*<>*0.< -=<;*.<*-0*;;. 1;->*3=*;;*03> 0=11*0.*>.*2=0 =.*<;*<2*>><

> 3 1. 11 10 112 1; 1< 1= 1> 13 0. 01

6oan deposit ratio %atio of classified loan against total loan advances ArofitF(loss) after ta7 Amount of classified loan Arovision for classified loan Arovision for surplusFdeficit +ost of fund Interest earning assets ,onperforming assets %eturn on investment(%GI) %eturn on assets (%GA) Interest on investment Income per share Income price ratio

19..;= 19..-2 (<2*.>*<;*<1>) 3--*-;*>3*... 1><*0-*00*... >3*;=*3-*... >.-.J 0;=2*0<*.0*3>113.*>.*03*;<= 1=*2.*;2; 13=*2=*1>*12=

!ource9 www.rakub.org.bd

2.18 RA4U5 Perspe tive plan


This is the ninth year of the %A'UB perspective plan. BankIs operational activities tracked the directives of the perspective plan throughout the year. Gn the backdrop of negative impact upon overall income and profit earning of the bank due to reduced interest rates of deposit and advance the bank took precautionary measures of counter balancing the shortfall by enhancing disbursement of new loans and rescheduling of classified loans and raising income from commercial banking activities. In addition* measures were taken to curtail e7penditure on controllable items. The bank plans to undertake a midterm evaluation on the %A'UB perspective plan as per demand of the changed scenario.
Table-%) 1sti(ated in !(e under perspe tive plan AIn (illi!n Ta7a= !ources of income 0..381. 0.1.811 >2. 10. 0.11810 30. 1-. 0.1081- Average Amount J 1... >2. 2> 12. 10. =

Interest on unclassified loan =<. Interest on fresh loan 11. %ecovery from classified loan By ad&usting deferred0.. income By rescheduling -. 15

00. -.

0-. 2.

0;. ;.

0-. 2.

10

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Interest income on deposit 1-. Income from loan0<. provisioning Interest on staff loan 2. +ommercial income 1. #iscellaneous -. Total income 1;=.

12. 03. 2. 1. -. 1=0.

12. -1. ;. 1. ;. 1>>.

1;. --. ;. 0. ;. 0.2.

12. 0>. 2. 1. -. 1=-.

> 1< 1 0 1..

!ource9 www.rakub.org.bd

2.1< RA4U5 at a :lan e 9 AUp t! #?th BuneC 2?1#= .1) .0) .-) .2) .;) ?stablishment Authori:ed +apital Aaid up +apital %eserve Area of %A'UB9 a. Area b. !pread c. District d. Upa:illa e. Union i) !A+A ii) ,on8 !A+A f. Total Aopulations g. Total ,o. of Eamily h. Agricultural Eamily .<) Total Branch i) #unicipal ii) Union .=) Total manpower
16

9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9

1; #arch* 13>=. Tk. =;..... (in million) Tk. ;=..... (in million) Tk. 0.>.2 (in million) %a&shahi Division -2*;1- !quare.'.#. 1< 10; 1.30 3.> 1>2 about -.;. cores ;1 lakhs. -0 lakhs. -<2 <2 -.. -21.

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i) Gfficers ii) $orkforce .>) Honal F%egional office .3) %egional Audit office 1.) %egional officer 11) Honal officer 12) $ebsite

9 1;01 9 1>>3 9 1> 9 1> 9 19 ; 9 +++.ra7ub.!r'.bd

Chapter- Three
O01R0I12 O3 RA4U5C Re'i!nal Central 5ran hC Rajshahi
#.1 Intr!du ti!n) %a&shahi 'rishi Unnayan Bank* %egional +entral Branch* %a&shahi starts its operation in 00 Eebruary 13;=. This branch is recogni:ed as an ideal branch of %A'UB in %a&shahi district. #.2 /! ati!n) %a&shahi 'rishi Unnayan Bank* %egional +entral Branch* %a&shahi #.# 1(pl!yee !" RA4U5C Re'i!nal Central 5ran h) There are 10 people as employee in %egional +entral Branch. Their designation is given in below9 (ne7t page) 1(pl!yees and Desi'nati!n !" RA4U5C Re'i!nal Central 5ran h. $./. N!.
17

Desi'nati!n

N!. !" Pers!nnel

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1. 0. -. 2. ;. <. =. >. 3.

#anager (Arincipal Gfficer) !econd Gfficer /unior officer Data operator Aeon +ashier !upervisor !ecurity 4uard Total ?mployees

1 1 1 1 1 1 10

#.% 3un ti!ns !" Re'i!nal Central 5ran hC Rajshahi


6ike other banks %egional +entral Branch does the following activities9 I. %eceive deposit from customers II. Aayment to customers according to payment order given through check by customers. III. Disbursements of loan policy of the given loan. IK. 4iving advice to the client of the bank K. Transfer money from one place to another place.

#.- $ervi es 'iven t!


Rajshahi.

ust!(ers by Re'i!nal Central 5ran hC

Different deposit related services provided by the bank are mentioned below9 A= Dep!sit $ervi e) 1) +urrent Deposit Account 0) !avings Deposit Account -) Term Deposit Account a) !hort Term Deposit Account (!TD)
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b) Deposit Aension !cheme (DA!) c) %A'UB Deposit Aension !cheme (%DA!) d) Ei7ed Deposit Account 5= C!((er ial $ervi e) 1) Demand Draft (DD) 0) #ail Transfer (#T) -) TelephoneF Telegraphic Transfer (TT) 2) Aayment Grder (AG) +) /!an $ervi e) 1) !hort Term 6oan 0) #edium Term 6oan -) 6ong Term 6oan The above services of %A'UB"s %egional +entral Branch are discussed in following pages respectively9 A. Dep!sit $ervi es) The following - types of accounts are available at %egional +entral Branch. 1. Current A !unt) Erom this type of account any amount of money is deposited and drawn at any time in the office hours. There is no interest on current account. Bank over draft is sanctioned based on it. This account is opened with minimum deposit of Tk.1.... 2. $avin's A !unt) !avings account opened for the individual customers e7cept companies* firm and +o8operative society. #oney is withdrawn two times a week and deposited at any time in the office hours. If an account holder draws money from account heFshe will not get interest for that month. To open an account bank requires Tk.0.. only. 2. Ter( dep!sits) a. $h!rt Ter( Dep!sit A !unt A$TDA=9 !hort Term Deposit Accounts are opened for company* business firms and government demonstrative body. This account is operated like current account. b. Dep!sit Pensi!n $ he(e ADP$=)
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It is one kind of deposit program circulated by government. In this savings scheme a person receives the opportunity to build up saving by contributing monthly installment to get an attractive fi7ed amount at the end of a specific period. The si:e of monthly installments is Tk. 1..* Tk. 0..* Tk. -..* Tk. 2..* Tk. ;..* or which is to be deposited within the first week of each month. In this case compound rate of interest is charged . RA4U5 Pensi!n $ he(e ARP$=) %A'UB has some savings schemes to motivate the people for savings. In this case %A! is regarded as the special product of this bank. The %A! is same as DA!. But terms of savings of %A! are ; years and 1. years. d. RA4U5 :ra(een Pensi!n $ he(e AR:P$=) It is for the grameen poor people to motivate them increase in savings. It is same as DA! %A!. e. 3i@ed Dep!sit A !unt A3D=) Ei7ed deposits are taken for the following terms9 Erom one month to below three months. Above three months to below si7 months. Above si7 months to below one year. Above one year to below three years. Above three years. Table819 The rate of interest in deposit accounts !6. ,o Types of Accounts Interest rate 1 +urrent Account ,o interest 0 !avings Account =J Ei7ed Account =J to >.;J 2 !hort Term Deposit(!TD) 2J ; %A'UB Aension !cheme(%A!) 10J < Deposit Aension !cheme(DA!) 1;J = %A'UB 4rameen Aension !cheme (%4A!) <J !ource9 #anager* %egional +entral Branch* %A'UB. 5= C!((er ial "un ti!ns !" RA4U5D$ Chapi Na+b'!nj The following types of commercial service are available in %A'UB"s %egional +entral Branch9
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1. De(and Dra"t ADD=) DD is the most popular instrument of remitting fund. It is an order to pay money drawn by one branch Aayable to another branch on demand. DD is issued in against at Tk.0. commission up to Tk.1.... $hen the limit e7ceed commission amount increased in a certain rate. 2. &ail Trans"er A&T=) This branch transfer money another branch of this bank in another place in against of commission money of this security paper has to be transferred to an account of another branch. 5ere the bank commission is minimum Tk.-. and the postal charge is Tk.;.. #. Tele'raphi Trans"er ATT=) It is the quickest method of remitting fund from one place to another. In this procedure no instrument is sent to the paying branch. Gnly message is sent over telephone or tele7 and the paying branch makes payment after getting message. Due to lack of technology this branch cannot operate TT.

%. Pay(ent Order APO=) It is a written document. This AG can be encased on that branch from where it is issued. !everal supplier organi:ations use this AG and here no account is needed to open with bank. It is issued locally. Table809 +ommission charged on commercial service

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!ource9 #anager* %egional +entral Branch* %A'UB. !ervice Demand Draft Telegraphic Transfer Aayment Grder Up to Tk.1... Up to Tk.1*..*... Gver Tk.1*..*... Up to Tk.;*..*...and over #ail Transfer +ancellation +harge of DD* #T* TT* AG Up to Tk.;.. Gver Tk.;.. +harge Tk. Tk.0.LKAT Tk.-.LKAT Tk.0.LKAT Tk.-.LKAT Tk.;.LKAT Tk.1..LKAT #inimum Tk.-.L Aostal cost(Tk.;.)LKAT Tk.0;LKAT Tk.;.LKAT

C= /!an servi es) Banks loan portfolio has been classified under the following heads9 1= $h!rt Ter( /!an A$T/)9 6oan period is 1 year. 2= &ediu( Ter( /!an A&T/)9 6oan period is above 1 year to ; years. #= /!n' Ter( /!an A/T/=) 6oan period is more than ; years.

#.. $e t!rs in +hi h RA4U5 e@tend redit


%a&shahi 'rishi Unnayan Bank* %egional +entral Branch* %a&shahi e7tends credit in sectors and sub sectors* which are as follows9 (ne7t page) !6 ,o. 1 0 ,ame of the Description of pro&ect item Aro&ect Tea industries !eeding production* Tea garden development* Tea marketing. %ubber plantation %ubber garden development* %ubber production and marketing.

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pro&ect 2 ; < = > 3 1. 11 Aoultry Aoultry boiler farms* Aoultry hatchery* Aoultry feed and allied pro&ect.

#i7ed farming Dairy live stock and Eishery based horticulture crops9 Agriculture based poultry dairy and fishery pro&ect. Black Bengal Black Bengal goats* !heep +attle farming for goat quality meat production* and #eat processing production and #arketing. Dairy farming #ilk production* #ilk collection and processing. Agro based +ommercially profitable sweet water fish and industries !hrimp feed production* Ice plant* Ice8cream factory and so on. Agro8 ?ngineering work shop for Agro8equipment* equipment %epairing agro equipment and #arketing. production +old storage +old storage for potato preservation* !peciali:ed mini8cold storage for fruits* Kegetables and Eish preservation. ?7port Eish free:ing plant* Eish dehydration plant* processing 6eather processing and manufacturing 6eather products. Animal and Aoultry and Eish feed meal production* +attle* fish feed meal 4oat* and 6amb feed meal production. production

#.8 Interest rate !n l!an


Bank determines the interest rate differently for different sector. +onsidering interest rate on deposit* administrative cost* bank rate* interest rate at others bank and financial institutions* competitive money market etc* the banks use its rate of interest on loan. Table8-9 %ate of interest in different sectors.
!6 ,o 1 0 23 5eads of loan %ate of interest +rops loan 1.J Eisheries 1.J University of Information Technology & Sciences

2 ; < = > 3 1. 11

?7port credit $orking capital +ommercial purpose Agro8based industries +ottage industries !?+A Aoverty alleviation 6ive stock Irrigation equipment and firm machinery

3J 11J81-J 1-J 10J 1.J 10J 1.J810J 1.J 1.J

!ource9 %egional +entral Branch* %A'UB.

-.> Grgani:ational structure of %egional +entral Branch* %a&shahi


The organi:ational structure of %egional +entral Branch is shown below through diagram9
Manager (SPO) University of Information Technology & Sciences 24

supervisor

Officer

Data Entry Operator

Casher

Peon

Security guard

#.> 1(pl!yee su((ery

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Table829 ?mployee summery of %egional +entral Branch* %A'UB !6 ,o 1 0 2 ; < = > Designation #anager( !enior Arincipal Gfficer) !econd Gfficer ( !enior Gfficer) Gfficer !upervisor Data ?ntry Gperator +ashier Aeon !ecurity 4uard Total Authori:ed ?7isting Kacant 1 0 0 1 0 1 1 0 10 !ource9 %egional +entral Branch* %A'UB. . 0 0 1 1 1 1 1 1. . . . . 1 . . 1 0

#.1? 5!!7s (aintained by Re'i!nal Central 5ran hC RA4U5


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The main ob&ectives of maintaining the books of %A'UB* %egional +entral Branch* %A'UB are to achieve the following goals. 1. to record day8to8day transaction 0. To reflect the financial position periodically -. To supply necessary information for monitoring the bank activities In that purposes cash transaction and other transaction is recorded in the books of accounts under the double entry system. In this bank* generally two types of books are used. A. C!ntr!l 5!!7s) It represents the immediate accounting picture of the bank at any time and it includes8 1) +ash !croll Book 0) +lean +ash Book -) 4eneral 6edger Abstract 2) !upplementary ledger Book 5. $ubsidiary 5!!7s) !ubsidiary Books are used to e7plain the total particulars in 4eneral ledger and it includes8 1) !aving account ledger 0) Ei7ed deposit ledger -) Income ledger 2) ?7penses ledger ;) The general ledger of %A'UB*

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#.11 A !untin' pr! edure !" Re'i!nal Central 5ran hC RA4U5


The procedure followed in %egional +entral Branch is presented through diagram9
Transaction

Cash

C earing !oucher "ecord in "egister Posting in edger Supp ementary sheet preparation Summary preparation

Transfer

Cash cum day book preparation $enera edger posting #ffairs frond page Subsidiary edger posting #ffairs back page

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Chapter- 3!ur
/OAN $ANCTIONIN:
%.1 De"initi!n !" l!an
A loan may be defined as money lent at interest or on profit. It is nothing but temporarily parting with one"s resources in order to augment the purchasing power of the receiver of such facility with a promise to return the same with interest or profit or otherwise as mutually agreed upon. It is a type of debt. 6ike all instruments* a loan entails the redistribution of financial assets over time* between the lender and the borrower. In banking arena* many types of financial facilities are e7tended to the clients with the e7pectation of getting the same returned along with interest. CThe provided Aurchasing AowerD can be termed as loan* credit or advances. These three terms have similarities as well as some differences. According to the Dictionary of Banking Einance loans can be defined as* Cthe 6oan of a sum of money by a lender to a borrower to be repaid with a certain amount of interestD. Timothy $ 'och defined loan as* Cformal agreement between a bank and a borrower to provide a fi7ed amount of credit for a specified periodD. $e can say* if a bank gives its resources temporarily under certain conditions and for a specific duration* it will be called loan.

%.2 Classi"i ati!n !" l!an


A= Classi"i ati!n based !n se urity) (1) Unse ured l!ans9 Banks provides loan without any type of collateral to the reliable persons or institutions as clients having profound goodwill* e7cellent track records or sometimes to the very poor clients. (0) Partly se ured l!an9 If the amount of loan is not fully secured* rather partial amount of collateral is provided to cover the loan sanctioned* it is called partially secured loan.
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(-) 3ully se ured l!an9 !ecured loan means any which is guaranteed by the borrower giving valuable property as security. If the loan is given by taking the security of the amount e7ceeding the amount of security is provided to cover the loan sanctioned or &ust equal to the amount of loan* it is called Cfully secured loan.D B= Classi"i ati!n based !n ter() According to the classification by term or periodicity* loans can be of three types9 (1) $h!rt-ter( l!ans9 This loan is sanctioned for less than one year. !hort8 term loans can be of two types9 (a) 6oans provided fir immediate use and payable on demand and (b) 6oans payable on short notice. (0) &ediu(-ter( l!an9 Usually* loans with the maturity of 1 to ; years are called mid8term loans. 5owever* commercial banks give mid8term loans of maturity of 18- years. (-) /!n'-ter( l!an9 6oans with the maturity of more than ; years are called long8term loans. C= Classi"i ati!n based !n user) 1. Individual l!an) a) C!nsu(er l!an9 Banks provide loans for durable goods and appliances and commodities like loans for Eree:e* TK* +omputer* +ar* Eurniture etc. b) 6!usin' /!an9 This includes loans to the fi7ed or low8income people for housing purposes. This loan is usually intermediate term andFor long term. c) 1du ati!n and !ther l!an) !ome of the bank also provide loan to the people of the society in order to meet their educational and other needs after being sure about the repayment.

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2. Industry l!an) a) 2!r7in' apital l!an9 This type of loan is given to the business or industry to provide capital required for purchasing raw materials* paying wages and fuel e7penses etc. (b) 3i@ed apital l!an9 5uge amount of capital is required for procurement and replacement of machinery and equipments for the industrial organi:ations.

#. /!an "!r business pers!n) (a) 2!r7in' apital l!an9 Eor maintaining day to day operations* business persons need a great deal of working capital. By providing working capital loans* banks help to solve the working capital necessity of the business persons. (b) 1@p!rt-i(p!rt l!an9 Banks also help in e7port8import firms by issuing 6F+* bill of e7change* discounting* direct loan etc. %. /!an "!r "ar(er) (a) Cr!p l!an9 Eor buying seeds* cows and fertili:ers* farmers need money. They borrow the money from the bank in order to meet the e7penses required. (b) N!n- r!p l!an9 Earmers also need money for poultry* fisheries* agro8 business* agro8processing and other purposes. In this case* commercial banks provide small and medium loans to farmers. E 3ar(in' e,uip(ent l!an9 To purchase farming equipments* banks also provide loans to farmers. Earming equipments may include power tiller* tractors* machinery for irrigation etc.
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D= Other "!r(s) 1= Overdra"ts) The over drafts is a kind of loan always allowed on a current account operated upon by cheques. The customer may be sanctioned a certain limit upon which he can overdraw his current account within a stipulated period. Interest is calculated and charged only on the actual debit balance on daily product basis. 0= Cash redit) +ash credit is the favorite mode of borrowing by traders* industrialists* agriculturists etc. for meeting their working capital requirement because it is an elastic form of borrowing. This type of facility is always provided against pledge of goods* produces and merchandise which remain under the possession of bank with effective control but ownership remains with the borrower.

%.# /!an handlin' dia'ra(


The steps which are followed in handling loan disbursement and loan recovery are presented through diagram to the ne7t page9

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4etting 6oan Aroposal from the client

+ollecting information

?valuating proposal

?valuating by agent

Branch level evaluation !anctioning and documentation of loan Disbursing loan !upervision of the loan %ecovery of the loan

Decision

5ead office level

Branch level

Usual recovery

6egal recovery

$!ur e) %egional +entral Branch* %A'UB

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%.% /!an san ti!n pr! edure


Based on information available in the appraisal report* credit report* legitimate credit needs of the farmerFclient* the loan proposal should be carefully analy:ed by the sanctioning authority. Before sanctioning loan* it is essential to make pragmatic analysis of status of applicant* credit worthiness* liabilities* pro&ect viability from technical* financial* economic* marketing and management point of view. As soon as the security is finali:ed and the sanctioning authority is satisfied* then the authority should proceed for sanction of loan.

%.- 3eature !" b!rr!+er


Borrower selection is an important factor in disbursement of loan. The mentioned factors are required to be considered in selecting a borrower9 1. Borrower must be Bangladeshi. 0. Borrower must be matured. -. Borrower must have the ability to use loan in productive way and the ability to repay the loan and should have sound transaction record. 2. Borrower must not be loan defaulter. ;. Borrower must be registered with /oint !tock +ompany* if it is limited company.

%.. &eth!d !" l!an san ti!nin' and appli ati!n "!r()
6oan application should be written in a specific form of the bank it must be submitted by the loan in the bank. Karious kinds of loan application forms are as follows9 Description Amount of loan ,o of Eorm no Arice Aer in Tk. necessary +opy Tk. +opy a) +rops loan Up to ;... 1 6.E.< 0. b) +rops loan ;..1 to 1.*... 1 6.E.< 2. c) +rops loan 1...1 to above 1 6.E.< <. d) Any loan beyond Up to 1.*... 1 6.E.1 >. special e) Any loan beyond Above 1.*... N 6.E.0 <. f) Aro&ect loan 8 0 6.E.2 >. g) $orking capital Up to 1.*..*... 0 6.E.> 0;. loan h) $orking capital Above 1.*..*... 0 6.E.> ;..
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loan At that time of submitting loan application the loan applicant should give fee at various rate. The various types of loan application fee is given below8 Up to <*... ,o need <*..1 to =*;.. 1;... =*;.. to 1*..*... 0... Tk. Aer thousand 1*..*... to above 0.. and 1 Tk. Aer thousand $!ur e) %A'UB* %a&shahi Branch* %a&shahi .

%.8 D! u(entati!n !" l!an


+redit activity is a risky function for a bank. Eor a successful credit activity a bank should collect necessary documents from the borrowers. $ith these documents a bank can take legal action against the borrower in case of default. Both borrower and lender must sign every document. Thus the proper documentation gives the bank a right to save its interest. The following documents are commonly used for approving a loan or other types of businesses with the same nature9 1. Griginal loan agreement. 0. Eilled up the loan application form. -. Einancial statements of the borrower. 2. +redit analysis report. ;. Aroofs of certificates and documents of the collateral. <. The name and signature of the authori:ed personFattorney of the borrower. =. A copy of the resolution of the board of directors of the borrowing company. >. The copy of partnership deed and the statement of the assets in case of partnership business. 3. The surety from the authori:ed person of the company. 1..Einancial statements of the person or the company providing surety in favor of the potential borrower. 11.The copies of the written communication and e7changes of information between the bank and the borrower. 10.#ortgage and trust agreement. 1-.+ertificate of earnest money given on assets.
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12.+opy of national identity card.

%.< $e urity a'ainst l!an


!ecurity is obtained as a line of last defense to fall back upon. It is meant to be an insurance against emergency. By taking security* bank acquires a claim upon the assets of the borrower if repayment is not made as planned. !ecurities taken against a loan are stated below9 1. Aersonal surety 0. Immovable property -. Aledge 2. #arketable securities ;. Document of title of goods <. +ertificate of fi7ed deposits =. Insurance policies >. Gthers like gold and valuable documents.

%.> 1li'ibility !" appli ant


To be eligible for loans from the bank* applicants meet the following basic requirement9 a) Be a citi:en of Bangladesh b) An adult c) !hould have repayment capacity and good reputation about financial dealings d) ,ot defaulter of bank loan e) In case of corporate body equipped with manpower to carry out the scheme efficiently for which loan is required. f) ,ot insolvent person g) ,ot lunatic.

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Chapter- 3ive
/OAN &ANA:1&1NT
-.1 Intr!du ti!n
The strong base of %A'UB* %egional +entral Branch* %a&shahi is totally dependent on sound investment because interest on loan is the main source of income. That is why qualitative loan management is much emphasi:ed here as well as it leads to increase in total income of the bank. The bank authority sanction loan in compliance with the rules and regulations determined by the highest decision making authority of the bank.

-.2 Disburse(ent !" l!an p!li y


Before releasing the sanctioned loan* all terms and conditions as laid down in the sanction letter are to be fully complied with. To that effect* the following basic requirements need to consider9 a) Terms and conditions that affect loan* whether all are complied with need to e7amine. b) !pecific documents as specified in the sanction letter must be completed. c) Kerification of encumbrances of security properties. 1. ,on8encumbrances certificate. 0. ?7ecution of halapnama. d) +reation of charge on the collateral security9 In case of limited company* the charges on the company assets should be limited e) $ithin 01 days from the date of creation of charge* by registered post to the register* /oint !tock +ompany. f) Insurance for9 1. !ecurity properties* as applicable. 0. Assets creates or to be created out of a loan fund or with two equity. -. !tock of goods pledged with the bank as collateral shall be taken with appropriate risk cover. g) Any other stipulations as per sanction letter.

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-.# 0ari!us l!an pr!'ra( !" RA4U5


Agriculture and agriculturists are the facts of activities of %A'UB. The economic condition of the farmers is very dependent on the performance of agriculture. +onsidering these facts* %A'UB has given to priority to all the subsection and associated sectors of agriculture for achievement of desired business goal. 5owever* a brief description of 6oan programs of %A'UB is given below9 A= Cash redit) A cash credit is an arrangement by which a banker allows his customer to borrow money up to a certain limit. This is a permanent arrangement and need not to draw the full amount sanctioned at once but draw the amount as when that is required. Thus* cash credit is an active and running account to which deposit and withdrawal may be e7ercised frequently. Interest is charged only for the amount withdrawn. +ash credit arrangement is usually made against security of commodity hypothecated or pledged with the bank. !ometimes the bank provides the cash credit facility against personal security too. ,ormally* cash credit is allowed for one year. 5= Over dra"t) Gverdraft is an arrangement between a banker and his customer by which the letter is allowed to withdraw over and above his credit balance in the current account up to an agreed limit. This is only a temporary accommodation usually granted against securities. The borrower is permitted to draw and repay any number of times. The total amount overdrawn does not e7ceed the agreed limit. The interest is charged only for the amount over drawn and not the whole amount sanctioned. Gverdraft facilities are generally granted to business against securities of stock in trade* debenture etc. 4enerally* overdraft is three types9 1) Temporary overdraft 0) +lean overdraft -) !ecured overdraft C= Cr!p l!an) The bank finance all the summer crop* winter crops and nursery etc. 5igh yielding and high value crops and seeds production is particularly encouraged. +rop sub sector alone occupies about <.J of the 6oan budget the bank.
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D= 3ishery) The Bank attaches importance to use scientific method and modern technology in fish cultivation. It e7tends adequate credit support for e7cavation and re8e7cavation of ponds* round the year cultivation of species* which have rapid growth* cultivation of sweet water prawn and other fishes. The Bank makes use of e7pertise of the concerned government agencies for bringing more pondsFwater bodies under cultivation and increasing productivity. 1= /ive st! 7) The bank e7tends credit facilities or systematic and commercial live stock farming* which includes dairy* beef* fattening poultry raising and setting up of hatcheries* which in turn is e7pected to increase production of milk* meat and eggs* the main sources of portion. As the marginal and small farmers" access to mechani:e farming is restrained by want of cash and collateral the bank has big 6oan window of draft animals for cultivation of land has big 6oan window of draft animals for cultivation of land transportation of agriculture produces and other farming activities. 3= Irri'ati!n e,uip(ent and "ir( (a hinery) Today technology based farming for high yielding and high volume of crops* mechani:ation of cultivation* irrigation and pest control is indispensable* to cope with the situation and pest control is indispensable. To cope with the situation %A'UB financing for power tillers* tractors* tube wells* power machineries are being treated as an important associated sector of 6oan. := A'r!- based industries) The operational &urisdiction of the bank is noted for its agricultural potentials. This is noted for its agricultural potentials. The bank pay due importance to setup agro industries for preservation* processing and marketing of agricultural products having backward linkage with basic sub sectors of crop* fishery* live stock and forestation* manufacturing and marketing of agricultural implements are also encouraged. Agro industries for import substitution are specially encouraged by offering moderate terms of financing. 6= P!verty alleviati!n)
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The poverty strikes ,orth $est Bangladesh is characteri:ed by comparatively lower rate of saving* inadequate capital accumulation and poor employment opportunities. The e7isting collateral based banking system is also of little use in respect of e7tending support to the millions of landless people. To address the problem the bank has been financing collateral free micro8credit for income and employment generation through its poverty alleviation credit program. %A'UB also gives some loan on cottage industry. $e know* the industry* which is built8up in a cottage or house* is a cottage industry. The role of cottage industries is very importance to improve the economics of Bangladesh. Usually* the main promoters of cottage industries in our country are small farmer* landless and poor people. They can build a cottage industry with own capital and some 6oan capital of %A'UB.

-.% /!an supervisi!n and (!nit!rin'


Under its charter* the bank is required* as far as possible* to ensure that a loan is spent on the purpose for which it is made and if this requirement is not complied with by the borrower* the bank may require taking necessary measures9 1. Arimary responsibility of the manager is to supervise and monitor the cash loanFworking capital loan pro&ect and term loan stage by stage* ensure pro&ect constriction work* acquiring kind items and pro&ect goods as per approved arrangement specified in the sanction letter. 0. Bank finance pro&ect should be inspected by the regional manager and manager periodically* to assess physical conditions of the pro&ects facilities and the level of the pro&ect"s capacity utili:ation. -. +ash loans can be misused for unproductive process. Therefore special attention must be given on borrowers past antecedents. In case of releasing cash loans and when the borrower drawing a substantial amount at that time the authority must supervise with special attention. 2. The manager should employ a pro&ect supervision officer (A!G) after documentation and releasing the first loan installment with the assignment of overall pro&ect supervision the duties. The A!G should inspect the pro&ect site and observe the pro&ect development work and inform the progress to the manager through progress report periodically. ;. After inspection* the managerFauthori:ed officer should countersign the borrower"s acknowledgement receipt under his signature and seal.
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Gnly after such counter8signature in the borrower"s acknowledgment receipt* supplier"s bill can be processed for payment.

;.; 6oan disbursement scenario of %egional +entral Branch* %A'UB


The last five years loan management of %a&shahi Branch* %A'UB are shown below through table9 (ne7t page) Einancial year 0..>8.3 0..381. 0.1.811 0.11810 0.10816oan disbursement target -20.21 -1..=0 2>..23 -12.1> 22..0> (Amount in lakh Taka) Total loan Achievement achievement %ate -0;.3. 0<>..3 03>.0. 03..0. -=-..= 3;.1=J ><.0>J <0..<J 30.-<J >2.=-J

!ource9 %egional +entral Branch* %A'UB . O Achievement rate P 1.. C!((ent) Erom the above table it is evident that the loan management target is reduced in the year 0..381. from 0..>8.3. After that the target is increased in the year 0.1.811 and again decreased in the year 0.11810 and increased in the year 0.1081-. Gn the other hand total achievement is reduced in the year 0..381. from 0..>8.3. After that the achievement is increased in the year 0.1.811 and again decreased in the year 0.11810 and increased in the year 0.1081-. The highest rate is found in the financial year 0..>8.3(3;.1=J) and the lowest rate at 0.1.811(<0..3J). The last five years loan disbursement positions of %egional +entral Branch* %A'UB are shown below through bar char.
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A= /!an (ana'e(ent!" 2??<-2??> %A'UB* %egional +entral Branch pro&ected a 6oan target of Tk.-2021... for the financial year 0..>80..3. During the year loan disbursement was Tk.-0;3.... which was 3;.1=J of the target. During the year the following seven sectors were given preference in disbursing loan9 1. +rops 0. Eishery -. 6ive stock 2. Agro8based industries ;. +ontinuous F cash credit <. Aoverty alleviation The loan management for the financial year of 0..>80..3 is shown in ne7t table9 (Amount in lakh Taka) 0..>80..3 Items +rops Eishery 6ive stock Agro8based industries +ontinuous loan Aoverty alleviation Gthers
42

6oan disbursement target 1;3.-2 1;... 1.-. 1.;. -<..; 0.-0 10<.30

Total loan achievement 1;2.;< 1;... 1.2= -... 2<.>= 0.0; >0.;.

Achievement rate 3=J 1..J 11-J 13.J 1-.J 3=J <;J

University of Information Technology & Sciences

Total

-20.21 -0;.3. !ource9 %egional +entral Branch* %A'UB

3;.1=J

O Achievement rate P 1.. C!((ent) Erom the above table it is evident that the highest loan disbursement target was in crops sector (Tk1;3-2...).The highest disbursement is made in crops sector (Tk1;2;<...). The highest achievement rate is found in the Agro8based industries (13.J) and the lowest achievement rare is found at others (<;J). The loan management of %egional +entral Branch* %A'UB during the year 0..>80..3 is shown below through bar chart9
2?? /!an disburse(e nt tar'et T!tal l!an a hieve(ent A hie ve(ent rateAF=

1<?

1.?

1%?

12?

Eigure9 !ector wise loan disbursement of 0..<80..=.


1??

<?

.?

%?

2?

? Cr!ps 3ishery /ive st! 7 A'r!-base d industrie s C !ntinu!us l!an P!ve rty alleviati!n O thers

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Eigure9 !ector wise loan management of 0..>80..3 5= /!an disburse(ent !" 2??>-2??1? %A'UB* %egional +entral Branch pro&ected a 6oan target of Tk.-1.=0... for the financial year 0..380.1.. During the year loan disbursement was Tk.0<>.3... which was ><.0>J of the target. During the year the following seven sectors were given preference in disbursing loan9 1. +rops 0. 6ive stock -. +ontinuous 2. Aoverty alleviation ;. Gthers The loan management for the financial year of 0..380.1. is shown in ne7t table9 (Amount in lakh Taka) 0..380.1. Items 6oan disbursement target 1<2.0< =... 1>.3> -<.2. >2..> -1..=0 Total loan achievement 1-1.21 <... 1>.<. -<.2. =;.<> 0<>..3 Achievement rate >.J >3J 3>J 1..J 3.J ><.0>J

+rops 6ive stock +ontinuous loan Aoverty alleviation Gthers Total


44

University of Information Technology & Sciences

!ource9 %egional +entral Branch* %A'UB O Achievement rate P 1.. C!((ent) Erom the above table it is evident that the highest loan disbursement target was in crops sector (Tk1<20<...).The highest achievement is made in crops sector (Tk1-121...). The highest achievement rate is found in the Aoverty alleviation sector (1..J) and the lowest achievement rare is found at crops sector (>.J). The loan management of %egional +entral Branch* %A'UB* %A'UB during the year 0..381. is shown below through bar chart9

1<?

1.?

/!an disburse(e nt tar'et T!tal l!an a hieve (ent A hieve(ent rateAF=

1%?

12?

1??

<?

.?

%?

2?

? Cr!ps /ive st! 7 C!ntinu!us l!an P!ve rty alleviati!n O thers

University of Information Technology & Sciences 45

Eigure9 !ector wise loan management of 0..380.1.. C= /!an disburse(ent !" 2?1?-2?11 %A'UB* %egional +entral Branch pro&ected a 6oan target of Tk.2>.23... for the financial year 0.1.80.11. During the year loan management was Tk.03>0.... which was <0..<J of the target. During the year the following seven sectors were given preference in disbursing loan9 1. +rops 0. Eishery -. 6ive stock 2. Irrigation equipment and farm machinery ;. +ontinuous <. Aoverty alleviation =. Gthers The loan management for the financial year of 0.1.811 is shown in ne7t table9 (Amount in lakh Taka) 0.1.80.11 Items 6oan Total loan Achievement disbursement achievement rate target +rops 0>0.30 1=;.>3 <0.1=J Eishery 2-.=. -.;. >.J 6ive stock 2..3 2..3 1..J Irrigation equipment and 1.-2 1.0= 3;J farm machinery +ontinuous loan 1;..; 12... 3-J
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Aoverty alleviation Gthers Total

;.32 10=.2;

-.>< 3;.;3

<;J =;J

2>..23 23>.0. <0..<J !ource9 %egional +entral Branch* %A'UB

O Achievement rate P 1.. C!((ent) Erom the above table it is evident that the highest loan management target was in crops sector (Tk0>030...).The highest achievement is made in crops sector (Tk1=;>3...). The highest achievement rate is found in the live stock sector (1..J) and the lowest achievement rare is found at crops sector (<0.1=J). The loan management of %egional +entral Branch* %A'UB during the year 0.1.811 is shown below through bar chart9
#??
/!an disburse (e nt tar'e t T!tal l!an a hie ve (e nt A hie ve (e nt rate AF=

2-?

2??

1-?

1??

-?

?
r! ps 7 al le vi at i! n 3i sh O th er s er y hi ne ry st! C l! !n ti n u! us P! v an

/i ve

"a r(

Ir ri 'a ti! n

47

e, ui p(

University of Information Technology & Sciences

en ta

nd

er ty

D= /!an (ana'e(ent!" 2?11-2?12 %A'UB* %egional +entral Branch pro&ected a 6oan target of Tk.-121>... for the financial year 0.1180.10. During the year loan management was Tk.03.0.... which was 30.-<J of the target. During the year the following eight sectors were given preference in disbursing loan9 1. +rops 0. Eishery -. 6ive stock 2. Irrigation equipment and farm machinery ;. Agro8based industries <. +ontinuous =. Aoverty alleviation >. Gthers

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The loan management for the financial year of 0.1180.10 is shown in ne7t table9 (Amount in lakh Taka) 0.1180.10 Items 6oan disbursement target +rops 1=>.>0 Eishery 0.;. 6ive stock 1..1. Irrigation equipment and 3.-. farm machinery Agro8based industries 0.0. +ontinuous loan 02.=1 Aoverty alleviation -..; Gthers Total >-.;. -12.1> Total loan achievement 1;>.11 0.;. 3.-0 3.0. 0... 0=.0; 0.;1 =3.-03..0. Achievement rate >>.20J 1..J 30.0.J 3>J 3.J 11..0;J >0..-J 3;J 30.-<J

!ource9 %egional +entral Branch* %A'UB O Achievement rate P 1.. C!((ent) Erom the above table it is evident that the highest loan management target was in crops sector (Tk1=>>0...). The highest achievement is made in crops sector (Tk1;>11...). The highest achievement rate is found in the +ontinuous loan sector (11..0;J) and the lowest achievement rare is found at +rop sector (>>.20J).

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The loan management of %egional +entral Branch* %A'UB during the year 0.1180.10 is shown below through bar chart9
2?? 1<? 1.? 1%? 12? 1?? <? .? %? 2? ?
r! ps y 7 3i sh er es !n tin u! us l! an P! ve rt y al le vi at i! n st! in du st ri hi ne ry C th er O s ( a ( -b as ed A 'r ! C

/!an disburse (e nt tar'e t T!tal l!an a hie ve (e nt A hie ve (e nt rate AF=

/i ve nd "a r

Eigure9 !ector wise loan management of 0.1180.10.

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Ir r

i' at i! n

e, ui p( en ta

1= /!an (ana'e(ent!" 2?12-2?1# %A'UB* %egional +entral Branch pro&ected a 6oan target of Tk.22.0>... for the financial year 0.1080.1-. During the year loan management was Tk.--=.;... which was >2.=-J of the target. During the year the following eight sectors were given preference in disbursing loan9 1. +rops 0. Eishery -. 6ive stock 2. Agro8based industries ;. +ontinuous <. !#? =. Aoverty alleviation >. Gthers

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The loan management for the financial year of 0.1080.1- is shown in ne7t table9 (Amount in lakh Taka) 0.1080.1-(up to /une) Items 6oan Total loan disbursement achievement target 1<>..1 1;1.-> 0.;; 0.;; ;.;0 2.>0 <.0. ;... 1.3... >;.;; 10... >... ;... 1-0... 22..0> 2.-; 111.20 -=-..= Achievement rate 3..1.J 1..J 30.03J >..;<J ==.;.J <-.2.J ><.=.J >-.<<J >2.=-J

+rops Eishery 6ive stock Agro8based industries +ontinuous loan !#? Aoverty alleviation Gthers Total

!ource9 %egional +entral Branch* %A'UB O Achievement rate P 1.. C!((ent) Erom the above table it is evident that the highest loan management target was in crops sector (Tk1<>.1...).The highest achievement is made in crops sector (Tk1;1->...).The highest achievement rate is found in the Eishery sector (1..J) and the lowest achievement rare is found at !#? sector (<-.2.J).

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The loan management of %egional +entral Branch* %A'UB during the year 0.1080.1- is shown below through bar chart9

1<? /!an disburse (e nt tar'e t T!tal l!an a hie ve (e nt A hie ve (e nt rate AF=

1.?

1%?

12?

1??

<?

.?

%?

2?

?
r! ps y 7 1 3i sh er $& !n tin u! us l! an al le vi at i! n in du st rie s C st! th er O s

/i ve

-b as ed

Eigure9 !ector wise loan management of 0.1080.1-.

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'r !

P! ve

rt y

Chapter- $i@

/!an Re !very
..1 Intr!du ti!n) $hen a bank or other financial institutions distribute a loan to other organi:ation or people* then after regaining from loan it is called loan recovery* %A'UB* %a&shahi Brach* Distributed loan to loan and recovers this money. %A'UB* %egional +entral Branch* classifies loan in two categories9 a. Unclassified loan* and b. +lassified loan. a. Un lassi"ied l!an) $hen half or more than half of the total loan is repaid within the due dates by the borrowers then that is called unclassified loan. The duration of time in which the loan will be treated as unclassified is less than 10 months from sanctioning loan. b. Classi"ied l!an) $hen more than half of the total loan or total is unpaid F due over the due date then that loan is called classified loan. +lassified loans can be sub standard* Doubtful and bad. The criteria of these classification of classified loans are as follows9 1. 3!r sh!rt ter( l!an) !hort term loan are classified by %A'UB* %egional +entral Branch in three categories8 i= Cr!p l!an and (i r! /!an and Advan e) Age of over 10 months (due)9 Irregular. Age of over 1-8-< months (due)9 !ubstandard Age of over -<8<. months (due)9 Doubtful. Age above <. months9 Bad.
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ii= Cash /!an and Advan e-and +!r7in' apital Erom < months but less than 3 months8 !ubstandard. Erom 3 mouths but less than 10 months8Doubtful. 10 mouths or above8 Bad. iii= De(and /!an Erom < months but less than 3 months8 !ubstandard. Erom 3 months but less than 10 months8 Doubtful. Above 10 months8Bad. 2. &ediu( l!an AUp t! - years=) Erom . month but less than < months8!ubstandard. Erom < months but less than 10 months8 Doubtful. Erom 10 months but less than 1> months 8 Bad. #. /!n' ter( l!an AAb!ve - years= Erom . month but less than 10 months8!ubstandard. Erom 10 months but less than 1> mounts8Doubtful. Erom 1> months but less than 02 months8Bad. ..2 Pr! edure !" l!an re !very) The main responsibility of bank manager and loan officer is to recovery the outstanding loan in %A'UB* %egional +entral Branch. Two8 recovery procedures are8
a) Usual procedure. b) 6egal procedure.

a= 1. 0.

Usual pr! edure) The usual loan recovery procedure is divided into several steps. They are as follows9 Issue of demand notice9 Demand notice is issue before on month being due of outstanding loan or installment. It is sent to the borrower. 6egal notice9 It the borrower does not repay their respective loans and interest after maturity being received the demeaned notice under registered with acknowledgement by post to the borrowers the bank should send lower notice to him. !pecial notice9 Beside the above to notice a special notice signature by D+* T,G is sent to the respective borrower to keep mental pressure on him for repaying the loan.
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-.

55

2. ;.

Eield recovery9 6oan officer recover the recovered loan through I.G. receipt by visiting the spot and source of the borrower. Aersonal +ommunication9 If the borrower fails to repay his loan installment* the loan officer communicates with the respected persons of that area to give mental pressure to the borrower so that he repays his respective loan. 6oan %ecovery +amp9 %A'UB* %egional +entral Branch made camp in various areas for the recovery of his loan* in this issue* the manager and other officer were present in the camp and communicated with borrowers. They gave them moral persuasion and tried to encourage them* so that they could repay their loan.

<.

b=

/e'al pr! edure) $hen legal action for recovering loan becomes failed a case in filed against the borrowers. The case is generally filed in the following ways9 i. ii. Unwilling to repay loan although he is financially solvent. ?very effort of loan recovery becomes failure.

..# Rules !" Re !very) %egional +entral Branch* %A'UB loan recovery from loan in installment system is as follows9 i) $eekly ii) Eortnightly iii) #onthly. ..% Causes !" de"aulter) The loan cannot loan payment in due time in various causes9 i) ,atural calamity destroy the crops* for this reason the loan unable to pay loan in due time. ii) %A'UB* %egional +entral Branch cant takes proper steps against the loan for influential man. iii) The loan cant use the loan in proper way. iv) The loan does not pay loan in more time.
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v) ..i=

6ack of loan supervision.

Causes !" l!+ re !very)

Ne'ative attitudes !" the l! al elites t! repay l!an- In most of the cases* the influential persons due to their political and social power are not interested to repay the loan. Because of their political influence* loan officers cannot take any effective measure for loan recovery from them. !ometimes* loan received by them for a specific purpose is also diverted to other purposes. ii= Da(a'e !" r!ps due t! "l!!d- !ometimes* the farmers have some valid reasons for non8repayment of loan in spites of their willingness of repayment of loan. In the case of crop failure due to natural disaster like flood* drought* etc.* it becomes really difficult for the farmers to repay loan in time. iii= Unpr!du tive use !" l!an- The time involved in processing loan is such that the farmers usually receive loan at the end of the specific crop season even after harvesting of the crop. Eor that matter* 6oan and Advance does not help in increasing production rather it is actually spent for non8farm e7penses. iv= $h!rta'e !" l!an pers!nnel- The branch has shortage of manpower to evaluate loan and advance worthiness of the borrowers* identification of real borrowers* and supervision and recovery of loan. v= /a 7 !" le'al a ti!n by the ban7s a'ainst de"aulters- ,either the Bank #anager nor the supervisors have any authority and power to take effective measures or administrative action against defaulters. Eor that reason* the defaulters do not bother for requests of loan repayment by them. #oreover* legal action against defaulters has rarely been taken. vi= C!rrupti!n !" the ban7 e(pl!yees- In some cases* the bank officers take bribe from the defaulters and avoid responsibilities of reali:ation of loan from the borrowers. vii= Inability !" the "ar(ers t! repay l!an- Earmers need loan not only for agricultural production but also for consumption for their survival* particularly by marginal farmers. This sometimes compel them to divert agricultural loan to consumption and other unproductive purposes which ultimately lead to their low repayment capacity. viii= G5ena(iD l!an re eived parti ularly by U.P. hair(anH&e(ber!ometimes the rural influential* particularly Union Aarishad +hairman
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i@=

@=

@i=

...

and #embers receive QBenami" loan. It happens particularly due to shortage of loan personnel who have to disburse 6oan and Advance in a short notice and do not have enough time to identify genuine borrowers. A essibility t! alternative /!an and Advan e instituti!ns- There is a number of financial institutions* which are working independently. !o non8repayment of loan to one institution does not affect in receiving loan from another institution. 1valuati!n !" ban7er e""i ien y- The performance of bank personnel is &udged on the basis of amount deposited by him* not on the amount of loan recovered. Eurther* there is practically no incentive for him to increase recovery amount. Inade,uate trainin' "a ilities "!r /!an and Advan e !""i ers and their ,uali"i ati!ns- The persons involved in agricultural 6oan and Advance operations in rural bank branches have poor educational background with inadequate training. Banking training program has hardly anything regarding agricultural loan and advance operation* which affects loan recovery performance of the Banks. /!an Re !very s enari! Re'i!nal Central 5ran hC RA4U5)

a= /ast "!ur years /!an Re !very. AA(!unt in /a7h Ta7a= Re !very rate 3inan ial year Tar'et A hieve(ent 0..380.1. 0.1.80.11 0.1180.10 0.1080.1;3.;= 1.2.-= 1=;J 3..0> 1.>.=< 10..2<J 1.0.;. 1-2.>3 1-1.<.J 1-;... 1;..>> 110J !ource9 %a&shahi Brach of %A'UB I %ecovery rate P 1.. C!((ent) It is evident from the above table that 0..380.1. to 0.1080.16oan %ecovery Target and achievement are increased by amount gradually. But its Achievement performance is fluctuated. 5ighest Achievement in 0..380.1. financial year which is 1=;J and lowest in 0.1080.1- 6oan financial year which is 110J .
b= /!an Re !very "!r 0..380.1. 6oan %ecovery target was T' ;3.;=6akh and 6oan recovery achievement was T' 1.2.-= 6akh (1=; percent of target) #a&or items wise loan recovery position .18.=80..3 to -.8.<80.1. Items Achievement (Amount in Aercentage of Total University of Information Technology & Sciences 58

+rops +ontinuous loans Aoverty Alleviation Eishery 6ive stock Irrigation equipment and farm machinery ..<; ..<0 Agro8based industries 1..;> 1..1Gthers 1.2.-= 1.. Total !ource9 Re'i!nal Central 5ran hC RA4U5

6akh T') 0>.;0 =.= 2;.<> ..0> 1;.;3 ..-=

achievement (J) 0=.-0 =.-> 2-.=< ..0< 12.3..-;

C!((ent) Erom the above table it is shown that Aoverty alleviation loans is the highest achievement amount of T' 2;.<> lakh which is 2-.=<J of the total achievement and fishery is the lowest achievement which is ..0<J of the total achievement. Gthers recovery items is not considered here.
Pie dia'ra( Presentati!n !" l!an Re !very 2??>-2?1? "inan ial year A$e t!r +ise=

10.58 0.65 0.37 15.59 28.52

Crops Continuous loans Poverty Alleviation Fishery

0.28 7.7

Live sto ! "rri#ation e$uip%ent an& 'ar% %a hinery A#ro()ase& in&ustries *thers

45.68

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= /!an Re !very "!r 2?1?-2?11 6oan recovery target was T' 3..0> 6akh and Achievement was 1.>.=< 6akh (10..2< percent of the target) #a&or items wise position of 6oan %ecovery .18.=80.1. to -.8<.0.11 Achievement (Amount in Aercentage of Total Items 6akh T') achievement (J) +rops ->.20 -;.-0 +ontinuous loans -.<> -.-> Aoverty Alleviation -1.11 0>.<. Eishery 1.-< 1.0; 6ive stock 10.3= 11.30 Irrigation equipment and 0.2; 0.0; farm machinery Agro8based industries 0.-2 0.1; Gthers 1<.21;.1. Total 1.>.=< !ource9 Re'i!nal Central 5ran hC RA4U5 C!((ent) Erom the above table it is shown that +rop loans recovery is the highest achievement amount of T' ->.20 6akh which -;.;0J of total achievement and Eishery is the lowest achievement* which is 1.0;J of the total achievement. Gthers recovery items is not consider here Pie dia'ra( Presentati!n !" l!an Re !very 2?1?-2?11 "inan ial year A$e t!r +ise=
Crops 16.43 2.34 2.45 38.42 Continuous loans Poverty Alleviation Fishery 12.97 Live sto ! "rri#ation e$uip%ent an& 'ar% %a hinery A#ro()ase& in&ustries *thers

1.36

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31.11

d= /!an Re !very "!r 2?11-2?12

6oan recovery target was T' 1.0.;. 6akh and Achievement was 1-2.>3 6akh (1-1.<. percent of the target)
#a&or items wise position of 6oan %ecovery .18.=80.11 to -.8<.0.10 Achievement (Amount in Aercentage of Total Items 6akh T') achievement (J) 2;.32 -2 +rops 1=.01 1+ontinuous loans 1> 1Aoverty Alleviation ..2> ..-< Eishery 0;..1> 6ive stock 8 8 Irrigation equipment and

farm machinery 0.-0 1.0= Agro8based industries 0;.31 13.0. Gthers 1-2.>3 1.. Total !ource9 Regional Central Branch, RAKUB
C!((ent) Erom the above table it is shown that +rops loans recovery is the highest achievement amount of T' 2;.32 lakh* which is -2J of total the achievement* and Eishery is the lowest achievement which is ..-<J of the total achievement and there is no target and achievement in the irrigation equipment and firm machinery sector. Gther recovery items is not consider here.

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Pie dia'ra( Presentati!n !" l!an Re !very 2?11-2?12 "inan ial year A$e t!r +ise=

Crops 25.91 45.94 2.32 0 25.03 Poverty Alleviation Fishery Live sto ! "rri#ation e$uip%ent an& 'ar% %a hinery A#ro()ase& in&ustries *thers Continuous loans

0.48 18 17.21

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e= /!an Re !very "!r 2?12-2?1#

6oan recovery target was T' 1-; 6akh and Achievement was 1;..>> 6akh (110 percent of the target)
#a&or items wise position of 6oan %ecovery .18.=80..2 to -.8<.0..; Achievement (Amount in Aercentage of Total Items 6akh T') achievement (J) 21.-< 0=.21 +rops -;.-1 0-.2. +ontinuous loans 13.2> 1Aoverty Alleviation 8 8 Eishery -0.>< 01.=> 6ive stock -.-0.0. Irrigation equipment

and farm machinery 0.20 1.<. Agro8based industries 1<.10 1..<> Gthers 1;..>> Total !ource9 Regional Central Branch, RAKUB
C!((ent) Erom the above table it is shown that +rops loans recovery is the highest achievement amount of T' 21.-< 6akh* which 0=.21J of total achievement and Agro based industry is the lowest achievement* which is 1.<.J of the total achievement* and there is no target and achievement in the Eishery sector. Gthers recovery items are not consider here. Pie dia'ra( Presentati!n !" l!an re !ver 2?12-2?1# "inan ial year A$e t!r +ise=
Crops

2.42 3.33

16.12 41.36
Continuous loans Poverty Alleviation

32.86 0 19.48 35.31

Fishery Live sto ! "rri#ation e$uip%ent an& 'ar% %a hinery

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Chapter- $even
3INDIN:$ AND R1CO&&1NDATION$
8.1 3indin's
%a&shahi 'rishi Unnayan Bank has been established for agricultural development as well as to serve the farmer of north8west region of the country. The bank reached record high loan disbursement and played a positive role in the financial development of the country. During my internship program at %A'UB* %egional +entral Branch closely observed all banking activities of this branch and my study is concentrated on loan management. %A'UB* %egional +entral Branch playing a vital role in agricultural development to the surrounding area of %egional +entral Branch. During the days of internship I have observed some drawbacks which are creating trouble in achieving its ob&ectives* those are mentioned below9 1. !hortage of efficient credit personnel. 0. Inadequate training facilities for credit personnel. -. The lengthy loan disbursement process creates drawback in getting loan in time. 2. 6ack of proper planning and efficient fund management. ;. 6oan is not paid through proper assessment. <. Insufficient fund of the bank creates problem in loan disbursement policy. =. 6ack of proper security against loan. >. !ector wise loan disbursement scenario is much fluctuated. 3. 6ack of proper supervision and monitoring. 1..The political and frequent government interference in the operation of agricultural credit policy is one of the main causes of poor recovery of agricultural loans. 11. In the institutional credit delivery system credit is provided for crop production but do not meet the credit requirement for
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other purposes for which the farmers have to go to the money lenders to borrow at e7orbitant rate of interest. 10. The farmers do not get a fair and reasonable price for their production. The term of trade between agricultural and manufactured goods always goes against the agriculturist* particularly the price of the agricultural commodities remain very low during harvest season. !o it"s difficult for farmers to repay loan from incremental income. 1-. The agricultural credit institutions disburse credit to the farmer mainly against the security of their land. But in the real sense of the term land cannot be used as appropriate security as it is not possible to reali:e the loans and interest from land which is not easily saleable. 12. #a&or share of the institutional credit is taken by the wealthy influential rural elites by e7ercising their social and political power and influences. 1;. !ometimes the dishonesty of officer leads to inappropriate 6oan. 1<.The notice is not issued to the borrower in &ust time* for that reason* recovery is hampered. 1=. All the transitions are recorded manually* so information is not organi:ed which creates problem in decision making. 1>. Eund diversion i.e. taking loan for one purpose and using it in another purpose.

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8.2 Re !((endati!ns
Based on the findings of the study* the following recommendations are feasible9 1. The rural financing activity of %A'UB by increasing credit deployment needs to be increased. 0. Diversified sectors are to be identified and financed. -. $here the short term loans constituted most of the loan portfolio* the medium and long term loans should be provided more and more for true rural development. 2. !ince crop and draft animal sectors both constituted two8 thirds of the total loan portfolio* emphasis should be given to other sectors equally in financing. ;. In disbursing loan* the economic position of the borrower should be kept in view. <. Borrower should be provided with small si:ed loans for better results. =. ?ducated borrower should be preferred in loan sanctioning. >. In providing loan* land mortgaged security should be preferred for best results. 3. Timely and direct delivery of loan to the borrower must be ensured for better result. 1.. Adequate amount of loan to the borrower should be provided to minimi:e diversion although it does not necessarily effect good repayment. 11. !mall si:ed loans should be disbursed to the small landholders obviously in time and directly for best result. 10. !hort8term credit should be provided to the borrowers having small si:ed land holdings. 1-. !maller si:ed loans are not being provided adequately for which these should be considered accordingly. 12. #onitoring and supervision of agricultural loans means the mechanism or process through which %A'UB can ensure the disbursement of credit to the genuine borrowers. 1;. The bank branch must take responsibility for its loans. It needs to develop systematic and continuing relationship with its loan.
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8.# C!n lusi!n


%a&shahi 'rishi Unnayan Bank should look forward. They have to change and reform in keeping with the current and emerging requirement. They will do well to take lesson from the best practices of micro credit operation* and customi:e these for their credit operation in line with international best practices. They should make good loans and e7plore new avenues for investment. !mall loans have vast potential in this regard. 6essons from micro credit institutions strongly indicate that %A'UB need to reform their 6oan strategy* increase small loan portfolio* utili:e the potential of credit officers* establish accountability for enforce compliance. This branch has yet produces any better performance in disbarment those loans given to borrowers. The ma&or cause behind this low recovery is poor implementation of credit policy of the bank. %A'UB as well as the %egional +entral Branch should take effective measures as recommended in disbursing loans which will lead to earn profit and help in smooth survival in the coming day.

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Appendi@
R131R1NC1$
1. +howdhury* 6 %. A Te7t book on banker"s advances* (0nd ed.80..0)* Dhaka9 Eair corporation. 0. +howdhury* Gmar* (0..-) CBank"s non performing loans8 some lessions for bank 6oan.D Journal of institute of bankers, Bangladesh Kol8;.* ,o80 Dec80..-* Ap8 1>-813-. -. 'han* Dr. A %* Bank #anagement9 A fund emphasis* (1st ed.80..>)* Dhaka9 %uby Aublications. 2. 'han* Dr #a&ibur %ahman* (13>3) CAgricultural credit in Bangladesh9 some issues and considerations in policy planning.D Krishi Bank Paraikrama, Kol.83 1.* /une8 Dec.813>3* pp8=.8>2. ;. %a&shahi 'rishi Unnayan Bank* Annual report (0.1180.10) <. %a&shahi 'rishi Unnayan Bank* "egiona Centra %ranch* !tatement of affairs (0..>80.10s). =. %A'UB"s web site9 http9FF +++.ra7ub.!r'.bd

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*uesti!nnaire *uesti!ns ab!ut the ban7


1. $hat are the historical backgrounds of %A'UBR 0. $hat is the vision of the bankR -. $hat is the mission of the bankR 2. $hat are the main ob&ectives of the bankR ;. 5ow many branches are under %A'UBR <. $hat the amount is of authori:ed* paid up and reserve capital of %A'UBR =. $hat is the main function of the bankR >. 5ow many employees are involved with %A'UBR 3. $hat is the accounting period of the bankR

*uesti!ns ab!ut the bran h and its "un ti!ns


1..$hen has the branch been establishedR 11.$hat is the organi:ational structure of this branchR 10.5ow many employees are of your branchR 1-.5ow many unions and villages are under your branchR 12.$hat are the different rates of interest of different accountR
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1;.$hat is the minimum deposit of different accountsR

*uesti!ns ab!ut l!an disburse(ent p!li y


1<.$hat are the main purposes to provide loanR 1=.$hat are the different rates of interestR 1>.$hat are the different terms and conditions of loanR 13.$hat documents do you &udge in sanctioning loanR 0..$hat types of securities are accepted by the bankR 01.$hat type of person can be grantorR 00.$hat are the ma&or heads of loan disbursement policyR 0-.$hat are the programs under poverty alleviationR 02.5ow do you evaluate feasibility before sanctioning loanR 0;.Is loan disbursement higher or lower than target* whyR 0<.5ow do you fi7 up installmentR

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:/O$$ARJ K A55R10IATION
%A'UB UIT! ADE+ B'B 6A, %!+A ,+DA !TD DA! %DA! DD #T TT AG !TDA DA! %A! %4A! EDA #T DD TT AG !T6 #T6 6T6 !AG A!G %a&shahi 'rishi Unnayan Bank University of Information Technology !ciences Agricultural Development Einance corporation Bangladesh 'rishi Bank 6ocal Area ,etwork %A'UB !elf8help +redit Arogram ,orth $est +rop Diversification Aro&ect !hort Term Deposit Account Deposit Aension !cheme %A'UB Deposit Aension !cheme Demand Draft #ail Transfer TelephoneF Telegraphic Transfer Aayment Grder !hort Term Deposit Account Deposit Aension !cheme %A'UB Aension !cheme %A'UB 4rameen Aension !cheme Ei7ed Deposit Account #ail Transfer Demand Draft Telegraphic Transfer Aayment Grder !hort Term 6oan #edium Term 6oan 6ong Term 6oan #anage Aro&ect !upervision Gfficer

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5I5/IO:RAP6J
1. 0. -. 2. ;. <. =. >. Annual report of %A'UB 8 0..>80..3 to 0.1080.1-. '.c. !hekhar* 8Banking theory and practice. 'GT5A%I8+% 8%esearch methodology. $ # 5 /AI# # 6 %A5#A,* 8 6oan #anagement8A #acro level Analysis. #anagerial ?ffectiveness9 A +ase !tudy of Bangladesh 'rishi Unnan Bank. 8EA5#IDA +5G$D5U%S 6oan ledger of %A'UB* %a&shahi Branch . www.wikipedia.com $eb !ite of %A'UB8 www.rakub.org.bd

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