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 Accounting. I am interested to complete internship program at financial institutions. And for this purpose I was sent to #a$shahi %rishi Unnayan Bank &#A%UB'( )ocal *rinciple +ffice( #a$shahi. The program is completely supervised by our respected teacher Monaj Ash( Department of Business Administration UIT!( #a$shahi ,ampus. .After $oining the branch( I was first introduced with -anager( )ocal *rinciple +ffice( #a$shahi %rishi Unnayan Bank &#A%UB'. )ater 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 e.perience 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 e.periences 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 e.perience 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 disbursement policy of #A%UB( )ocal *rinciple +ffice( #a$shahi.

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1.2 Object !e o" the stud#

The main ob$ective of the study is to e.amine the loan disbursement policy of #A%UB( )ocal *rinciple +ffice( #a$shahi for the period of /001230 to /03/234 to achieve the ob$ective5 the study seeks to reali6e the following5 3. To assess the activities of #A%UB( how it contributes in agricultural development of #a$shahi division. /. To assess the loan management system during the period /03/234. 4. To assess the loan disbursement condition of )ocal *rinciple +ffice for the period /001230 to /03/234. 7. To determine various sources of loan able fund. 8. To know the security evaluation system before providing loan to the customer. 9. To e.amine 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. 1. To know the criteria of classifying loan. 30. To know the competitive position of the bank in the area with different financial institutions providing agricultural credit. /001230 to

1.$ %cope o" the stud#

<valuation of =eneral Banking is one of the most important parts for evaluating any commercial or speciali6ed bank.. The study is emphasi6ed on whether the bank providing bank considering all required

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aspect in timely manner and what initiative they are taking in respect of problem.

1.& Methodolo'# o" the stud#

-ethodology can be termed as underlying principles and rules of organi6ation or the philosophical systems that work at the back drop of any study. To fulfill an internship program and prepare a complete report we need organi6ational data. The data was collected from the #a$shahi %rishi Unnayan Bank during the internship period. To make the report more meaningful and presentable two sources of data and information have been used widely those are> 3. *rimary sources of information /. !econdary sources of information Above mentioned sources are described below5 1. Pr (ar# sources) *rimary data are measurements observed and recorded as part of an original study. *rimary sources are the sources from where information is collected from #a$shahi %rishi Unnayan Bank. The ways through which I have collected information in my internship program are described below5 a. *uest onna re (ethod) ?uestionnaire method is one of the most usual systems used in collecting data or information. ?uestionnaire 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 disbursement policy of )ocal *rinciple +ffice( #a$shahi of #A%UB. The manager and specially the
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second officer of the branch answer most of my questions. The questionnaire is given at the end of the report. b. Obser!at on (ethod) According to o.ford dictionary the observation means @the act of watching something carefully for a period of time specially to learn somethingA. I went to the #A%UB )ocal *rinciple +ffice( #a$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 general banking is going on( so most of the officer stay busy in most of the time. c. Inter! e+ (ethod) The interview is face to face interpersonal discussion in which one person asks pertinent question to a person called respondent about a selected topic or area. I have collected some information through asking the officers. 2. %econdar# sources) Bhen 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 sources5

a. !tatement of affairs of the branch b. Documents supplied by branch c. Different articles

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d. -aga6ines and papers e. Bank"s website ". #ules and regulations provided by agricultural credit department of Bangladesh bank. '. Annual report of the bank from /001230 to /03/234. h. !ome statistical graphs and charts of the bank. Anal#s s o" ,uest onna re) There are different techniques of analy6ing questionnaire. I have asked different questionnaire about the functions of #A%UB( activities of )ocal *rinciple +ffice( #a$shahi and specially their credit policy( loan disbursement policy initiatives taken to improve etc. I have analy6ed this information giving special emphasis on loan disbursement policy.

1.- The s 'n " cance o" the stud#

Cow2a2days the banks are playing a vital role in the economic development of any country. The #A%UB is a speciali6ed 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 utili6ing their funds. #A%UB is )oan money to the people related to agriculture and contributing a lot in agricultural development of our country. The bank should provide loan after e.amining some important aspects and should recover cent percents of its loan. I have chosen the topic loan disbursement policy for the reason to analy6e what problems are related behind the scene.

1.. / ( tat ons o" data collect on

Cothing is out of limitation. !o my report also has some limitations. Dor these reasons( I cannot prepare it properly. The common
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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 below5 3. I have been sent to #A%UB( )ocal *rinciple +ffice(( #a$shahi for only three months which is not sufficient to understand different activities of the bank. /. In my branch the month of disbursement is going on( so the officers are always remain busy. 4. 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. 7. !ince we are student so we have no in depth knowledge about preparing report. 8. The bank"s accounting period is from Euly to Eune( so now the officers are busy in making arrangements for preparing financial statement. 9. !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.

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1. To complete internship program a lot of money is required but we do not get necessary money. 30. Information collection through observation method is possible when one"s have complete knowledge about the work( but I have no 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.

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Chapter- T+o
AN O12R1I23 O4 RA5U6
2.1 Introduct on
#a$shahi %rishi Unnayan Bank &#A%UB' is a state2 owned Bank in Bangladesh with regional approach. The bank emerged as a government"s plan of intensive care to agriculture of #a$shahi division providing livelihood to 48 million people of the area. The region is less developed compared to other parts( yet full of potentials in agriculture. #a$shahi division characteri6ed by its surplus food grain production is popularly called the @granary of the countryA. Besides catering to agricultural credit( #A%UB( as it is acronym renders deposit banking service through all the 497 branches. The headquarters of the bank is stationed at #a$shahi city( some /:0 kilometer to the north of Dhaka.

2.2 7 stor cal bac8'round o" RA5U6

Bangladesh is agriculture based country from the very beginning. -ost of the people are depended on agriculture. Drom 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 =ovt. took step under special program in order to disburse the agricultural loan to the farmers in 3108. )ater on( in 314/ India2British =ovt. took a step for the socio2 economic development of the small and marginal farmers( which was implemented through providing agricultural loan to them.
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In 318/ the =overnment of *akistan established a financial institution named @Agricultural Development Dinance ,orporationA &ADD,' in order to disburse loan in agricultural sector. Deeling the importance of agricultural production and agricultural loan the *akistani =ovt. established another bank namely @*akistan %rishi BankA in 318:. In 31:3 Bangladesh has been emerged as an independent country through a historic war of nine months. After the liberation of Bangladesh the =overnment renamed the *akistan %rishi Bank as Bangladesh %rishi Bank &B%B' in 31:4 according to the *residential order /:. As Bangladesh is an agro2based 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. Dor this reason the government takes the decision to decentrali6e 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$shahi %rishi Unnayan Bank &#A%UB' was established by the president"s ordinance no 8; of 31;9 with the aim of providing institutional agricultural credit for optimum utili6ation of agricultural potentials of #a$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 38 -arch 31;:.

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2.$ Object !e o" RA5U6

The main ob$ects of #A%UB are as follows5 a' To provide credit facilities for all kinds of agricultural and agro2 based economic activities keeping in view the needs of small and marginal farmers. b' To earn a normal profit for meeting the operational e.penses( building of reserve and e.pansion of activities to cover wider geographical area. c' To e.tend counseling and advisory services to the borrowersF entrepreneurs etc. in utili6ing credit facilities of the bank.

2.& 4unct ons o" RA5U6

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 sub2sectors of agriculture in this region. Besides( catering to agricultural credit the bank performs ancillary functions as financing agri2business and agro2based industries and poverty alleviation programs.

2.- Mana'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 e.ecutive committee
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constituted of the chairman of the board and two other members5 the managing director and one of the directors elected by the board. The managing director is the chief e.ecutive of the bank.

2.. Cap tal and ts sources

#A%UB is a governmental banking institute. !o the main sources of capital are government fund( as on 40 Eune /034 the details 5 Tk. :800 million 5 Tk. 8:00 million 5 Tk. /0;.71 million about capital are as follows2 3' Authori6ed capital /' *aid up capital 4' #eserve capital

2.0 Or'an <at onal structure

The Gead +ffice of the bank is stationed at #a$shahi. The branch2network comprises 497 branches including one in Dhaka. It has also eighteen 6onal and regional offices. The bank has a training institute located at #a$shahi. Total workforce of 4730 as on 432042/034 was composed of 38/3 officers and 3;;1 other staffs. #egional offices stationed in district headquarters control branches under them. There are independent regional audit offices for conducting regular audit in branches as well as in regional and 6onal offices.

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OR=ANI>ATIONA/ %TRUCTUR2
Board of Directors !ecretariat -anaging Director *ublic #elation !ecretariat of -.D.

=eneral -anager Adm. AF,.

=eneral -anager +perating

=eneral -anager Audit #ecovery

=eneral !ervice Dept.

#esource evelopment Dept

)oan #ecovery Dept23.

,entral Account Dept23

Budget ,ost ,ontrol Dept.

)oan #ecovery Dep2/.

,entral Account Dept2/

Branch control Dept.

)oan #ecovery Dept2/

#egional Audit office2 3;

*ersonnel -anagement Dept.

)oan Advance Dept2/

Training institute

)oan Advance Dept23

)*+

Dhaka Branch

Honal +ffice #a$shahi

#egional +ffice Caugoan

#egional +ffice Cawabgong

#egional +ffice Catore

Honal +ffice *abna

#egional +ffice !ira$gan$ #egional +ffice Catore Honal +ffice *abna #egional +ffice !ira$gan$

#egional +ffice #angpur

#egional +ffice Thakurgoan

Branch 3; Branch /3 Branch 34

Branch //

Branch 34

Branch 3:

Branch 31

Branch 31 Branch 37 Branch 38 Branch 3/

#egional +ffice *hanchogor

Branch 39

Branch 3:

Branch 39

Branch 38

Branch 3:

Branch 3; #egional +ffice %urigram

Branch 3: #egional +ffice =aibanda

University of

#egional +ffice Information Dina$pur

#egional Honal #egional +ffice +ffice +ffice )almonirhat Technology & Sciences Dina$pur Cilfamary

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2.9 Or'an <at onal set up

The affairs of business of the bank are managed through three functional tiers5 The Gead +ffices The HonalF #egional offices The Branches 7ead o"" ce) The head office of #A%UB is stationed at /;0 km far from capital city Dhaka( at Corth2west 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 =eneral -anager5 Administration and Accounts Division. +peration Division. Audit and #ecovery Division The three divisions further divided into 3: departments are as follows5 a? Ad( n strat on D ! s on) *ersonnel Department ,ommon !ervices Department ,omputer Department Budget and e.penditure control Department
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 Training Institute Guman resource Department b? Operat on D ! s on) Branches control Department. )oans and Advances Department2I )oans and Advances Department2II #esearch and Development Department. c? Aud t Accounts and Reco!er# D ! s on5 )oan #ecovery Department2I )oan #ecovery Department2II Audit and Inspection Department ,entral Account Department23 ,entral Account Department2/ )aw Department <ngineering( *rocurement -aintenance Department

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2.: 6ranch net+or8

#egion wise branches of #A%UB are given through table at ne.t page. Table235 #egion wise total branches &Up to 40 Eune( /034' !). Co. 03. 0/. 04. 07. 08. 09. 0:. 0;. 01. 30. 33. 3/. 34. 37. 38. 3:. 3;. 31. /0. /3 HoneF#egion #a$shahi Caogaon Catore ,hapai Cawabgon$ Bogra &Corth' Bogra &!outh' *abna Eaipurhat #angpur =aibandha Cilphamari %urrigram )almonirhat Dina$pur &Corth' Dina$pur &!outh' Thakurgoan *anchagarh Dhaka ).*.+ &#a$shahi' !ira$gon$ Total Co. of Branches /7 /; /0 39 /0 37 /7 38 /9 /7 /0 /3 3: 3: 3; 3; 3; 3 3 // 497

%ource5 *ersonnel department of #A%UB

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2.1; 2(plo#ee su((er#

Table2/5 <mployee summary of #A%UB &Up to Eune 40( /034' Des 'nat on 3.-anaging Director &-D' Author <ed 03 2@ st n' 03 2 04 /; 8; 34; /:3 /11 :/4 1-21 3;;1 $&1; 2 ; ; 1 98 4/3 3:: -9: /4: 92. 1acant 2 03

/.Deputy -anaging Director &D-D' 03 4.=eneral -anager &=-' 7. Deputy =eneral -anager&D=-' 04 49

8.Assistant =eneral -anager&A=-' 99 9.!enior *rincipal officer&!*+' :.*rincipal officer&*+' ;.!enior officer&!+' 1.+fficer Total +fficer 30.+ther <mployee Total 37: 449 9/0 100 211; /3/9 &2$.

!ource5 *ersonnel department of #A%UB

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2.11 Tra n n' nst tute

The only training Institute at #a$shahi Imparts training to the $unior and mid2level officers and other staff according to the annual training program designed on such sub$ects of professional interest as management of credit and accounts( ,ommercial banking( audit and inspection etc.

2.12 ;"" ce auto(at on

A )ocal Area Cetwork &)AC' connects all computers in departments at head office. Internet connections in the head office as well as field offices have facilitated e.change of information through e2mail. The bank has its own website www.rakub.org.bd to represent it to the cyber world. ,omputeri6ed branch banking has been introduced on e.perimental basis in two branches of the bank. Cecessary 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$ Aud t and nspect on

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 e.ternal audit for detecting and checking repetition of irregularities frauds and forgeries( if any( in different levels.
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The government appointed -Fs Hoha Haman %abir #ashid ,hartered Accountants and -Fs %han Bahab !hafiq #ahman

,ompany( ,ompany(

,hartered Accountants for conducting audit for the financial year /0302 /033. The audit report submitted by them on 342032/03/ was sent to the ministry of finance on 3120/2/03/ after approval of the Board of Directors.

2.1& %pec al cred t pro'ra(s

#A%UB has taken some special programs which are mentioned below5 3. /. 4. 7. 8. ,onsumers" credit scheme ,redit for small holding tea plantation *otato seeds production Intensive mai6e cultivation pro$ect The production of import substitute agri2crops

2.1- Po!ert# alle! at on cred t pro'ra(s

The bank has been disbursing micro2credit for poverty alleviation in the 39 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 unemployed youth in compliance with government policy. The bank has financed Tk. /;1.04 million as against of Tk. 470 million annual disbursement target in 33 poverty alleviation credit programs in the year /00;201. Dollowing are the bank"s poverty alleviation credit program5 3. #A%UB self2help credit program&#!,*' /. -arginal small farm system crop intensification pro$ect 4. !wanirvar credit program 7. !hogorip &Dood grain godown credit program 8. UC ,apital development fund credit program 9. Bomen entrepreneurship development program :. *ilot employment generation program ;. !emi2intensive goat rearing program 1. -edicinal plantsForchard nursery 30. ,redit program for the disable persons 33.Hero poverty loan scheme
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4ore 'n a ded project) #A%UB takes some pro$ect with the help of foreign aid( those are mentioned below5 1. %(all 2nterpr se De!elop(ent Cred t Project A%2CP?) !mall enterprise development credit pro$ect &!<,*' has been lunched under Corwegian assistance to promote new small enterprises and streamline e.isting ones in 83 upa6ilas of greater #a$shahi( Bogra( *abna and %urigram districts. 2. North 3est Crop D !ers " cat on Project ANCDP?) The bank has undertaken a pro$ect named Corth2Best crop diversification pro$ect under financial assistance of Asian development bank. The pro$ect is under implementation by the department of Agricultural <.tension under ministry of Agriculture in 93 upa6ilas of 39 districts of #a$shahi division

2.1. 7 'hl 'hts o" o!erall act ! t es o" RA5U6

Table245 Gighlights of overall activities as on 40th Eune /034
!). Co 3 / 4 7 8 9 : ; 1 30 33 3/ 34 37 38 39 3: 3; 31 *articulars *aid up capital & +n 432042/03/' Total capital !urplus capital&Deficit' Total assets Total deposit Total loan and advances Total contingent liability )oan deposit ratio #atio of classified loan against total loan advances *rofitF&loss' after ta. Amount of classified loan *rovision for classified loan *rovision for surplusFdeficit ,ost of fund Interest earning assets Conperforming assets #eturn on investment&#+I' #eturn on assets &#+A' Interest on investment Taka 8:0(00(00(000 &73(17(:;(089' /90(47(9;(/09 4:98(09(4/(880 384;(1:(88(/1; /:33(/0(;0(7:/ :0(98(97(;;9 350.8: 350.47 &97(0;(98(93;' 144(48(;1(000 3;9(/4(//(000 ;1(8:(14(000 ;.40J /8:7(/9(0/(1;4 3310(;0(/1(89: 3:(70(878 31:(7:(3;(37: 1:

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/0 /3

Income per share Income price ratio

!ource5 www.rakub.org.bd

2.10 RA5U6 Perspect !e 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. +n 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 e.penditure 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-&) 2st (ated nco(e under perspect !e plan AIn ( ll on Ta8a? !ources of income /00;201 /001230 ;70 3/0 /030233 1/0 340 /03323/ Average Amount J 3000 ;70 7; 370 3/0 :

Interest on unclassified loan :90 Interest on fresh loan 330 #ecovery from classified loan By ad$usting deferred/00 income By rescheduling 40 Interest income on deposit 340 Income from loan/90 provisioning Interest on staff loan 70 ,ommercial income 30 -iscellaneous 40

//0 40 370 /10 70 30 40

/40 70 370 430 80 30 80

/80 80 380 440 80 /0 80

/40 70 370 /;0 70 30 40

34 / ; 39 4 3 / 2;

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Total income

38:0

3:/0

3;;0

/070

3:40

300

!ource5 www.rakub.org.bd

2.19 RA5U6 at a =lance 5 AUp to $;th BuneC 2;1$? 03' 0/' 04' 07' 08' <stablishment Authori6ed ,apital *aid up ,apital #eserve Area of #A%UB5 a. Area b. !pread c. District d. Upa6illa e. Union i' !A,* ii' Con2 !A,* f. Total *opulations g. Total Co. of Damily h. Agricultural Damily 09' Total Branch i' -unicipal ii' Union 0:' Total manpower i' +fficers ii' Borkforce 0;' Honal F#egional office 01' #egional Audit office 30' #egional officer 33' Honal officer 37' Bebsite 5 5 5 5 38 -arch( 31;:. Tk. :800.00 &in million' Tk. 8:00.00 &in million' Tk. /0;.7 &in million'

5 #a$shahi Division 5 47(834 !quare.%.-. 5 39 5 3/8 5 301/ 5 10; 5 3;7 5 about 4.80 cores 5 83 lakhs. 5 4/ lakhs. 5 497 5 97 5 400 5 4730 5 38/3 5 3;;1 5 3; 5 3; 5 34 5 8 5 +++.ra8ub.or'.bd

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Chapter- Three
OVERVIEW OF RAKUB,Local Principle Office, RAJSHAHI
$.1 Introduct on) #a$shahi %rishi Unnayan Bank( )ocal *rinciple +ffice(( #a$shahi starts its operation in // Debruary 3113. This branch is recogni6ed as an ideal branch of #A%UB in #a$shahi District. . $.2 /ocat on) #a$shahi %rishi Unnayan Bank( )ocal *rinciple +ffice( #ahshahi.

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$.$ 2(plo#ee o" RA5U6C /ocal Pr nc ple O"" ceCC Rajshah ) There are /0 people as employee in )ocal *rinciple +ffice(. Their designation is given in below5 &ne.t page' 2(plo#ees and Des 'nat on o" RA5U6C /ocal Pr nc ple O"" ceCC Rajshah %./. No. Des 'nat on 3. /. 4. 7. 8. 9. :. ;. 1. -anager &*rincipal +fficer' !econd +fficer Eunior officer Data operator *eon ,ashier !upervisor !ecurity =uard Total <mployees No. o" Personnel 3 3 4 / 3 / 1 3 /0

$.& 4unct ons o"/ocal Pr nc ple O"" ceC

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)ike other banks )ocal *rinciple +ffice( does the following activities5 I. II. #eceive deposit from customers *ayment to customers according to payment order given through check by customers. III. IK. K. Disbursements of loan policy of the given loan. =iving advice to the client of the bank Transfer money from one place to another place.

$.- %er! ces ' !en to custo(ers b# /ocal Pr nc ple O"" ceC
Different deposit related services provided by the bank are mentioned below5 A? Depos t %er! ce) 3' ,urrent Deposit Account /' !avings Deposit Account 4' Term Deposit Account a' !hort Term Deposit Account &!TD' b' Deposit *ension !cheme &D*!' c' #A%UB Deposit *ension !cheme &#D*!' d' Di.ed Deposit Account 6? Co((erc al %er! ce) 3' Demand Draft &DD' /' -ail Transfer &-T' 4' TelephoneF Telegraphic Transfer &TT' 7' *ayment +rder &*+'
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,' /oan %er! ce) 3' !hort Term )oan /' -edium Term )oan 4' )ong Term )oan The above services of #A%UB"s )ocal *rinciple +ffice are discussed in following pages respectively5 A. Depos t %er! ces) The following 4 types of accounts are available at )ocal *rinciple +ffice( #a$shahi. 1. Current Account) Drom 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.3000. 2. %a! n's Account) !avings account opened for the individual customers e.cept companies( firm and ,o2operative 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./00 only.

$. Ter( depos ts)

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a. %hort Ter( Depos t Account A%TDA?5 !hort Term Deposit Accounts are opened for company( business firms and government demonstrative body. This account is operated like current account. b. Depos t Pens on %che(e ADP%?) 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 fi.ed amount at the end of a specific period. The si6e of monthly installments is Tk. 300( Tk. /00( Tk. 400( Tk. 700( Tk. 800( or which is to be deposited within the first week of each month. In this case compound rate of interest is charged. c. RA5U6 Pens on %che(e ARP%?) #A%UB has some savings schemes to motivate the people for savings. In this case #*! is regarded as the special product of this bank. The #*! is same as D*!. But terms of savings of #*! are 8 years and 30 years. d. RA5U6 =ra(een Pens on %che(e AR=P%?) It is for the grameen poor people to motivate them increase in savings. It is same as D*! #*!.

e. 4 @ed Depos t Account A4D?) Di.ed deposits are taken for the following terms5 Drom one month to below three months Above three months to below si. months Above si. months to below one year Above one year to below three years Above three years
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Table235 The rate of interest in deposit accounts !). Co 3 / 4 7 8 9 : Types of Accounts ,urrent Account !avings Account Di.ed Account !hort Term Deposit&!TD' #A%UB *ension !cheme&#*!' Deposit *ension !cheme&D*!' #A%UB =rameen *ension !cheme &#=*!' !ource5 -anager( )ocal *rinciple +ffice( #A%UB. 6? Co((erc al "unct ons o" RA5U6D% /ocal Pr nc ple O"" ceC) The following types of commercial service are available in #A%UB"s )ocal *rinciple +ffice(5 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 *ayable to another branch on demand. DD is issued in against at Tk./0 commission up to Tk.3000. Bhen the limit e.ceed commission amount increased in a certain rate. 2. Ma l Trans"er AMT?) 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. Gere the bank commission is minimum Tk.40 and the postal charge is Tk.80.
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Interest rate Co interest :J :J to ;.8J 7J 3/J 38J 9J

$. Tele'raph c 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. +nly message is sent over telephone or tele. and the paying branch makes payment after getting message. Due to lack of technology this branch cannot operate TT. &. Pa#(ent Order APO?) It is a written document. This *+ can be encased on that branch from where it is issued. !everal supplier organi6ations use this *+ and here no account is needed to open with bank. It is issued locally.

Table2/5 ,ommission charged on commercial service

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!ource5 -anager( )ocal *rinciple +ffice(( #A%UB. !ervice Demand Draft Telegraphic Transfer *ayment +rder Up to Tk.3000 Up to Tk.3(00(000 +ver Tk.3(00(000 Up to Tk.8(00(000and over -ail Transfer ,ancellation ,harge of DD( -T( TT( *+ Up to Tk.800 +ver Tk.800 Tk./8LKAT Tk.80LKAT Tk./0LKAT Tk.40LKAT Tk.80LKAT Tk.300LKAT -inimum Tk.40L *ostal cost&Tk.80'LKAT ,harge Tk. Tk./0LKAT Tk.40LKAT

C? /oan ser! ces) Banks loan portfolio has been classified under the following heads5 1? %hort Ter( /oan A%T/'5 )oan period is 3 year. 2? Med u( Ter( /oan AMT/'5 )oan period is above 3 year to 8 years. $? /on' Ter( /oan A/T/?) )oan period is more than 8 years.

$.. %ectors n +h ch RA5U6 e@tend cred t

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#a$shahi %rishi Unnayan Bank( )ocal *rinciple +ffice(( #a$shahi e.tends credit in sectors and sub sectors( which are as follows5 &ne.t page' !) Co. 3 / 4 7 8 9 : ; 1 30 33 Came of the Description of pro$ect item *ro$ect Tea industries !eeding production( Tea garden development( Tea marketing. #ubber plantation pro$ect *oultry #ubber garden development( #ubber production and marketing. *oultry boiler farms( *oultry hatchery( *oultry feed and allied pro$ect.

-i.ed farming Dairy live stock and Dishery based horticulture crops5 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( Ice2cream factory and so on. Agro2 <ngineering work shop for Agro2equipment( equipment #epairing agro equipment and -arketing. production ,old storage ,old storage for potato preservation( !peciali6ed mini2cold storage for fruits( Kegetables and Dish preservation. <.port Dish free6ing plant( Dish dehydration plant( processing )eather processing and manufacturing )eather products. Animal and *oultry and Dish feed meal production( ,attle( fish feed meal =oat( and )amb feed meal production. production

$.0 Interest rate on loan

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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. Table245 #ate of interest in different sectors.
!) Co 3 / 4 7 8 9 : ; 1 30 33 Geads of loan ,rops loan Disheries <.port credit Borking capital ,ommercial purpose Agro2based industries ,ottage industries !<,* *overty alleviation )ive stock Irrigation equipment and firm machinery #ate of interest 30J 30J 1J 33J234J 34J 3/J 30J 3/J 30J23/J 30J 30J

!ource5 -anager( )ocal *rinciple +ffice(( #A%UB.

$.9 Or'an <at onal structure o" /ocal Pr nc ple O"" ceC
The organi6ational structure of )ocal *rinciple +ffice is shown below through diagram5

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-anager &!*+'

!econd +ffice &!enior +fficer'

+fficer

!upervisor

Data <ntry +perator

,ashier

eeeeeee *eon

!ecurity guard ppeon

$.: 2(plo#ee su((er#

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Table275 <mployee summery of )ocal *rinciple +ffice( !) Co 3 / 4 7 8 9 : ; Designation -anager& !enior *rincipal +fficer' !econd +fficer & !enior +fficer' +fficer !upervisor Data <ntry +perator ,ashier *eon !ecurity =uard Total Authori6ed <.isting Kacant 3 / / 3 / 3 3 / 3/ 0 / / 3 3 3 3 3 30 0 0 0 0 3 0 0 3 /

!ource5 -anager( )ocal *rinciple +ffice(( #A%UB.

$.1; 6oo8s (a nta ned b# /ocal Pr nc ple O"" ceC

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The main ob$ectives of maintaining the books of #A%UB( )ocal *rinciple +ffice(( #a$shahi are to achieve the following goals. 3. to record day2to2day transaction

/. To reflect the financial position periodically 4. 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. Control 6oo8s) It represents the immediate accounting picture of the bank at any time and it includes2 3' ,ash !croll Book /' ,lean ,ash Book 4' =eneral )edger Abstract 7' !upplementary ledger Book 6. %ubs d ar# 6oo8s) !ubsidiary Books are used to e.plain the total particulars in =eneral ledger and it includes2 3' !aving account ledger /' Di.ed deposit ledger 4' Income ledger 7' <.penses ledger 8' The general ledger of #A%UB(

$.11 Account n' procedure o" /ocal Pr nc ple O"" ceC

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The procedure followed in Binodpu rBranch ( is presented through diagram5

Transaction

,ash

,learing Koucher #ecord in #egister *osting in ledger !upplementary sheet preparation !ummary preparation

Transfer

,ash cum day book preparation =eneral ledger posting Affairs frond page !ubsidiary ledger posting Affairs back page

Chapter- 4our
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=2N2RA/ 6AN5IN= 4UNCTION% O4 RA5U6

&.1 Introduct on
#A%UB combines the role of a speciali6ed bank for rural credit and that of a commercial bank. )ike commercial bank( it performs functions such as acceptance of deposits( remittance of fund( granting of working capital finance to agricultural processing and trading units. The over all ob$ect is to generate employment and increase income of farmers and rural people and faster agricultural development leading to economic development of the country.

&.2 T#pes o" %er! ces

As a largest development partner in the northwest region( #a$shahi %rishi Unnayan Bank aims at overall development of the farmers and all the sectors and sub2sectors of agriculture credit( financing agri2business and agro2base industries and poverty alleviation program. The bank performs commercial banking functions. The bank performs to their customer mainly the following services5 i. ii. iii. )oan services Deposit services ,ommercial services

. /oan %er! ces) Bank"s loan portfolio has been classified under the following ma$or heads. a. %hort ter( loan) It is payable within 3; months loan period and 9 months grace period. These loans are. All kinds of crop loans !ocio2economic development activities Borking capital loan agriculture based industries.

b. Med u( ter( loan)

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It is repayable within above 3; months but below 8 years. These types of loans are5 )and development Bullocks for cultivator *isiciculture Dairy farm *oultry #aising herds !mall irrigation pro$ects Development of agriculture based Industries according to the chart c. /on' ter( loan) All loans repayable above 8 years are called long term loans are5 Darm and irrigation machineries Tea garden development Agro2based industries Dorestry( pisiculture and allied Infrastructural development. . Depos t %er! ces) The different ,lasses of customers can open different kinds of deposit accounts. All the various deposit accounts have different feathers and phenomenon. a. Current account) ,urrent account are normally opened for businessmen and organi6ation in #a$shahi %rishi Unnayan Bank initial deposit way Tk. 3000 and balance must the account holders can deposit or amount. Co interest is given on this account. Gere the account holder can deposit or without money. b. %a! n's account) !avings account is depended for the customers( and co2operative society. -inimum initial deposit is Tk. /00 and this amount must we maintain always. #a$shahi %rishi Unnayan Bank gives interest :J per annum on this account. c. %hort Ter( Depos t A%TD?)
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!TD accounts are opened for ,ompany( Dirm( =ovt. administrative body likes( TC+( BD* etc. This !TD AF, is operated like current account. If : days written notice is placed to the bank is every withdrawal( then the bank gives interest 7J per annum. d. Depos t pens on sche(e ADP%?) It is one kind of deposit program circulated by the government. In this savings scheme a person receives the opportunity to build up saving by contributing monthly installments to get an attractive fi.ed amount at the end of specified period. The si6e of the monthly installments is Tk. 300( Tk. /00( Tk. 400( Tk. 700 and Tk. 800 which is too be deposited within the first week of each month. In this case compound rate of interest is charged. But this D*! has not been operating in #a$shahi %rshi Unnayan Bank rather the old accounts have been continuing. e. Rajshah 5r sh Unna#an 6an8 person sche(e ARP%?) #A%UB has some savings schemes to motivate the people for saving. In this case #*! is regarded as the special product of this bank. The #*! is same as D*!. But terms of savings #*! are 8 years and 30 years. The rates of interest on 8 years and 30 years terms are 30J and 3/J respectively. Interest is credited to the accounts of the depositors in Eune every year. The opening of #*! is closed but the old accounts have been continuing. . Co((erc al %er! ces) The bank gives the commercial services by DD. TT.-T. and ), etc. Dor these services they take a fi.ed interest. This is a source of income. #A%UB gives their customers the facility to remit fund form one place to another. The people who are not customers can also en$oy this facility.

Table-9) Interest Rates o" D ""erent Accounts are ' !en n the "ollo+ n'
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Depos t cate'or es ,urrent deposit !aving deposit DD# 4 month period 9 month period 3 year period / years period D*! #*! 8 years period 30 years period T.*.! -icro savings scheme !TD #=*!

Interest rate Cil :J :J :./8J :.80J ;.8J 38J 30J 3/J ;.8J ;.8J 7J 9J

%ource) RA5U6C /ocal Pr nc ple O"" ce

&.$ Account Open n' Procedure

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To open an account( an individual has to carry out the following formalities5

+btain an application form

!ubmit the completed form to the concerned officer

Dace a brief interview

!ign the specimen signature card

Deposit of money and

=et counter2folio of the payment slip

+nce these formalities are carried out in appropriate manner( the applicant is issued a check book and considered as a valid account holder of the bank. In case of $oint accounts( the applicant must furnish the following information5 i' Came of the parties who will be operated the account and signed checks. ii' At the event of death of either or any of the account holders( how the balance will be paid and to whom the securities &if any' will be delivered. The documentary requirements are almost the same as individual accounts. Account opening form and the special instruction must be signed by all the $oint account holders to signify their consent.
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If the client is a private or public limited company( the company has to give a description about the type of the account and the operation of the account. !pecimen signature of the people who are authori6ed to open and operate the account and the source of their authority.

&.& Account Clos n' Procedure

In order to close an account( the account holder has to place written application. After getting application( the bank will deduct service charges at an amount of Tk. 38 and Tk. /8 against savings and current deposit respectively as closing fee from the balance and the rest of the money is given to the customers.

&.- =eneral 4unct on o" Cash Depart(ent

Cash pa#(ents) Dor convenience( the cash payment &cheque honouring' procedure is illustrated by a flowchart as under5 COUNT2R
,ustomer places the check to the ledger officer &)+'. The )+ receives the check( enters its particulars in a register and issues the customer a token. The )+ now verifies the ledger of the customer. If the customer"s account position is okay( he passes the check to the second officer &!+'. The !+ compares the customer"s signature given on the check with that on the signature card kept in his custody. If the signature is okay then he makes an entry of the check in another register and cancels it by signing across the check.

+nce the check is cancelled that is okay for payment it is brought to the cashier by a peon.

,ashier enters the amount of the check in the cash register and pays the appropriate amount to the customer.

Cash Rece pt)

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,ustomer"s deposits are received in this section of bank. Then the amount received is credited to the customer"s AF, in the ledger book. The formalities that are followed to receive a customer"s deposit &cash' in the cash receipt section are stated in the following flow chart52 COUNT2R ,ustomer places this cash and deposit slip before the respective officer at the counter.

After receiving the cash and deposit slip( the officer makes an entry to scroll register book. Then the deposit slip and cash are placed before cashier. The cashier counts this amount of money first and then makes an entry to another register book. The book is generally called cash book. Then the cashier passes the cashbook and deposit slip to the second officer.

After verifying the deposit slip( the second officer returns the counter2folio of the deposit slip to the customer and keeps the other position in his custody.

At the end of banking hour( trial balance is prepared from that cash receipt register.

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&.. Che,ue
A ,heque is a bill of e.change which is drawn upon a specified bank and payable on demand. ,heque are of two types5 ? Open Che,ue) +pen ,heque is those that are paid across the customers. In case of open cheque( the paying banker is discharged by making payment induce cruise. ? %pec alECross n' Che,ue) If consists of the name of a banker across the face of a cheque with or without the word @not negotiableA. F Antedated Che,ue) A cheque( which bears a date earlier to the date on which the cheque is drawn( is called an antedated cheque. M %tate Che,ue5 A cheque becomes @!tateA after e.piration of 9 months from its maturity date. M Post dated che,ue5 A post2dated cheque is one( which bears a date subsequent to the one on which it is drawn.

&.0 Che,ue Clear n' Procedure throu'h Clear n' 7ouse

A clearing house is an institution of credit where reciprocal liabilities of local banks are counter2balanced against each other. ,learing houses provide mechanism for clearing transactions among banks. It involves offsetting reciprocal claims against each bank and setting such balances of differences remains outstanding. ,learing is usually done twice a day> the first session at 1.40 a.m. and the second session at /.40 p.m. At the first session( officerFclerk delivers checks and claims. At the second session( clearing members confirm each other"s payment or nonpayment. The members of clearinghouse maintain accounts with the Bangladesh Bank( through which the amount payable or receivable is usually settled. In Bangladesh( the clearing house is supervised by the Bangladesh Bank where there is no branch of Bangladesh Bank( the !onali Bank works there as clearing agent for setting inter2banking transactions.

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Chapter- 4 !e
/OAN %ANCTIONIN=
-.1 De" n t on o" loan
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. )ike 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 e.tended to the clients with the e.pectation of getting the same returned along with interest. @The provided *urchasing *owerA can be termed as loan( credit or advances. These three terms have similarities as well as some differences. According to the Dictionary of Banking Dinance loans can be defined as( @the )oan of a sum of money by a lender to a borrower to be repaid with a certain amount of interestA. Timothy B %och defined loan as( @formal agreement between a bank and a borrower to provide a fi.ed amount of credit for a specified periodA. Be can say( if a bank gives its resources temporarily under certain conditions and for a specific duration( it will be called loan.

-.2 Class " cat on o" loan

A? Class " cat on based on secur t#) &3? Unsecured loans5 Banks provides loan without any type of collateral to the reliable persons or institutions as clients having profound goodwill( e.cellent track records or sometimes to the very poor clients. &/' Partl# secured loan5 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. &4' 4ull# secured loan5 !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 e.ceeding the amount of security is provided to
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cover the loan sanctioned or $ust equal to the amount of loan( it is called @fully secured loan.A B? Class " cat on based on ter() According to the classification by term or periodicity( loans can be of three types5 &3' %hort-ter( loans5 This loan is sanctioned for less than one year. !hort2 term loans can be of two types5 &a' )oans provided fir immediate use and payable on demand and &b' )oans payable on short notice. &/' Med u(-ter( loan5 Usually( loans with the maturity of 3 to 8 years are called mid2term loans. Gowever( commercial banks give mid2term loans of maturity of 324 years. &4' /on'-ter( loan5 )oans with the maturity of more than 8 years are called long2term loans. C? Class " cat on based on user) 1. Ind ! dual loan) a' Consu(er loan5 Banks provide loans for durable goods and appliances and commodities like loans for Dree6e( TK( ,omputer( ,ar( Durniture etc. b' 7ous n' /oan5 This includes loans to the fi.ed or low2income people for housing purposes. This loan is usually intermediate term andFor long term. c? 2ducat on and other loan) !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. 2. Industr# loan) a' 3or8 n' cap tal loan5 This type of loan is given to the business or industry to provide capital required for purchasing raw materials( paying wages and fuel e.penses etc. &b' 4 @ed cap tal loan5 Guge amount of capital is required for procurement and replacement of machinery and equipments for the industrial organi6ations. $. /oan "or bus ness person) &a' 3or8 n' cap tal loan5 Dor 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' 2@port- (port loan5 Banks also help in e.port2import firms by issuing )F,( bill of e.change( discounting( direct loan etc.
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&. /oan "or "ar(er) &a' Crop loan5 Dor buying seeds( cows and fertili6ers( farmers need money. They borrow the money from the bank in order to meet the e.penses required. &b' Non-crop loan5 Darmers also need money for poultry( fisheries( agro2 business( agro2processing and other purposes. In this case( commercial banks provide small and medium loans to farmers. &c' 4ar( n' e,u p(ent loan5 To purchase farming equipments( banks also provide loans to farmers. Darming equipments may include power tiller( tractors( machinery for irrigation etc. D? Other "or(s) 3? O!erdra"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. /? Cash cred t) ,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.

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-.$ /oan handl n' d a'ra(

The steps which are followed in handling loan disbursement and loan recovery are presented through diagram to the ne.t page5
=etting )oan *roposal 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

Gead office level

Branch level

Usual recovery

)egal recovery

%ource) Mana'erC /ocal Pr nc ple O"" ceC RA5U6.

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-.& /oan sanct on procedure

Based on information available in the appraisal report( credit report( legitimate credit needs of the farmerFclient( the loan proposal should be carefully analy6ed 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 finali6ed and the sanctioning authority is satisfied( then the authority should proceed for sanction of loan.

-.- 4eature o" borro+er

Borrower selection is an important factor in disbursement of loan. The mentioned factors are required to be considered in selecting a borrower5 3. Borrower must be Bangladeshi. /. Borrower must be matured. 4. Borrower must have the ability to use loan in productive way and the ability to repay the loan and should have sound transaction record. 7. Borrower must not be loan defaulter. 8. Borrower must be registered with Eoint !tock ,ompany( if it is limited company. 9. Dor co2operative society( it must be registered. :. Borrower must not have any mental disorder.

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-.. Method o" loan sanct on n' and appl cat on "or()
)oan 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 follows5 Description Amount of loan Co of Dorm no in Tk. necessary ,opy Up to 8000 8003 to 30(000 30003 to above 3 3 3 3 N / / ).D.9 ).D.9 ).D.9 ).D.3 ).D./ ).D.7 ).D.; ).D.; *rice *er ,opy Tk. /0 70 90 ;0 90 ;0 /80 800

a' ,rops loan b' ,rops loan c' ,rops loan

d' Any loan beyond Up to 30(000 special e' Any loan beyond f' *ro$ect loan Above 30(000 2

g' Borking capital Up to 30(00(000 loan

h' Borking capital Above 30(00(000 / 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 below2 Up to 9(000 9(003 to :(800 :(800 to 3(00(000 3(00(000 to above Co need 38.00 /.00 Tk. *er thousand /00 and 3 Tk. *er thousand

%ource) #A%UB( )ocal *rinciple +ffice(( #a$shahi.

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-.0 Docu(entat on o" loan

,redit activity is a risky function for a bank. Dor a successful credit activity a bank should collect necessary documents from the borrowers. Bith 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 nature5 3. +riginal loan agreement. /. Dilled up the loan application form. 4. Dinancial statements of the borrower. 7. ,redit analysis report. 8. *roofs of certificates and documents of the collateral. 9. The name and signature of the authori6ed 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. 1. The surety from the authori6ed person of the company. 30.Dinancial statements of the person or the company providing surety in favor of the potential borrower. 33.The copies of the written communication and e.changes of information between the bank and the borrower. 3/.-ortgage and trust agreement. 34.,ertificate of earnest money given on assets. 37.,opy of national identity card.
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-.9 %ecur t# a'a nst loan

!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 below5 3. *ersonal surety /. Immovable property 4. *ledge 7. -arketable securities 8. Document of title of goods 9. ,ertificate of fi.ed deposits :. Insurance policies ;. +thers like gold and valuable documents.

-.: 2l ' b l t# o" appl cant

To be eligible for loans from the bank( applicants meet the following basic requirement5 a' Be a citi6en of Bangladesh b' An adult c' !hould have repayment capacity and good reputation about financial dealings d' Cot 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' Cot insolvent person g' Cot lunatic.

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Chapter- % @
/OAN MANA=2M2NT
..1 Introduct on
The strong base of #A%UB( )ocal *rinciple +ffice(( #a$shahi is totally dependent on sound investment because interest on loan is the main source of income. That is why qualitative loan disbursement policy is much emphasi6ed 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 D sburse(ent o" loan pol c#

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 consider5 a' Terms and conditions that affect loan( whether all are complied with need to e.amine. b' !pecific documents as specified in the sanction letter must be completed. c' Kerification of encumbrances of security properties. 3. /. Con2encumbrances certificate. <.ecution of halapnama.

d' ,reation of charge on the collateral security5 In case of limited company( the charges on the company assets should be limited
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e' Bithin /3 days from the date of creation of charge( by registered post to the register( Eoint !tock ,ompany. f' Insurance for5 3. !ecurity properties( as applicable. /. 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.

..$ 1ar ous loan pro'ra( o" RA5U6

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. Gowever( a brief description of )oan programs of #A%UB is given below5 A? Cash cred t) 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 e.ercised 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. Cormally( cash credit is allowed for one year. 6? O!er dra"t) +verdraft 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 e.ceed the agreed limit. The interest is charged only for the amount over drawn and not the whole amount sanctioned. +verdraft facilities are generally granted to business against securities of stock in trade( debenture etc. =enerally( overdraft is three types5 3' Temporary overdraft /' ,lean overdraft 4' !ecured overdraft
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C? Crop loan) The bank finance all the summer crop( winter crops and nursery etc. Gigh yielding and high value crops and seeds production is particularly encouraged. ,rop sub sector alone occupies about 90J of the )oan budget the bank. D? 4 sher#) The Bank attaches importance to use scientific method and modern technology in fish cultivation. It e.tends adequate credit support for e.cavation and re2e.cavation 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 e.pertise of the concerned government agencies for bringing more pondsFwater bodies under cultivation and increasing productivity. 2? / !e stoc8) The bank e.tends 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 e.pected to increase production of milk( meat and eggs( the main sources of portion. As the marginal and small farmers" access to mechani6e farming is restrained by want of cash and collateral the bank has big )oan window of draft animals for cultivation of land has big )oan window of draft animals for cultivation of land transportation of agriculture produces and other farming activities. 4? Irr 'at on e,u p(ent and " r( (ach ner#) Today technology based farming for high yielding and high volume of crops( mechani6ation 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 )oan.
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=? A'ro- based ndustr es) 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. 7? Po!ert# alle! at on) The poverty strikes Corth Best Bangladesh is characteri6ed by comparatively lower rate of saving( inadequate capital accumulation and poor employment opportunities. The e.isting collateral based banking system is also of little use in respect of e.tending support to the millions of landless people. To address the problem the bank has been financing collateral free micro2credit for income and employment generation through its poverty alleviation credit program. #A%UB also gives some loan on cottage industry. Be know( the industry( which is built2up in a cottage or house( is a cottage industry. The role of cottage industries is very importance to improve the economic 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 )oan capital of #A%UB.

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..& /oan super! s on and (on tor n'

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 measures5 3. *rimary 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$ect goods as per approved arrangement specified in the sanction letter. /. Bank finance pro$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 utili6ation. 4. ,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. 7. The manager should employ a pro$ect supervision officer &*!+' after documentation and releasing the first loan installment with the assignment of overall pro$ect supervision the duties. The *!+ should inspect the pro$ect site and observe the pro$ect development work and inform the progress to the manager through progress report periodically. 8. After inspection( the managerFauthori6ed officer should countersign the borrower"s acknowledgement receipt under his signature and seal. +nly after such counter2signature in the borrower"s acknowledgment receipt( supplier"s bill can be processed for payment. The branch should complete the verification of goods supplied by the supplier.

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Chapter- %e!en
4INDIN=% AND R2COMM2NDATION%
0.1 4 nd n's
#a$shahi %rishi Unnayan Bank has been established for agricultural development as well as to serve the farmer of north2west region of the country. The bank reached record high loan disbursement and played a positive role in the financial development of the country. During my internship program at #A%UB( )ocal *rinciple +ffice( I closely observed all banking activities of this branch and my study is concentrated on loan management. #A%UB( )ocal *rinciple +ffice( playing a vital role in agricultural development to the surrounding area of )ocal *rinciple +ffice(. During the days of internship I have observed some drawbacks which are creating trouble in achieving its ob$ectives( those are mentioned below5 3. !hortage of efficient credit personnel. /. Inadequate training facilities for credit personnel. 4. The lengthy loan disbursement process creates drawback in getting loan in time. 7. )ack of proper planning and efficient fund management. 8. )oan is not paid through proper assessment. 9. Insufficient fund of the bank creates problem in loan disbursement policy. :. )ack of proper security against loan. ;. !ector wise loan disbursement scenario is much fluctuated.
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1. )ack of proper supervision and monitoring. 30.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. 33. In the institutional credit delivery system credit is provided for crop production but do not meet the credit requirement for other purposes for which the farmers have to go to the money lenders to borrow at e.orbitant rate of interest. 3/. 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. 34. 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 reali6e the loans and interest from land which is not easily saleable. 37. -a$or share of the institutional credit is taken by the wealthy influential rural elites by e.ercising their social and political power and influences. 38. !ometimes the dishonesty of officer leads to inappropriate )oan.

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0.2 Reco((endat ons

Based on the findings of the study( the following recommendations are feasible5 3. The rural financing activity of #A%UB by increasing credit deployment needs to be increased. /. Diversified sectors are to be identified and financed. 4. Bhere 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. 7. !ince crop and draft animal sectors both constituted two2 thirds of the total loan portfolio( emphasis should be given to other sectors equally in financing. 8. In disbursing loan( the economic position of the borrower should be kept in view. 9. Borrower should be provided with small si6ed loans for better results. :. <ducated borrower should be preferred in loan sanctioning. ;. In providing loan( land mortgaged security should be preferred for best results. 1. Timely and direct delivery of loan to the borrower must be ensured for better result. 30. Adequate amount of loan to the borrower should be provided to minimi6e diversion although it does not necessarily effect good repayment.
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33. !mall si6ed loans should be disbursed to the small landholders obviously in time and directly for best result. 3/. !hort2term credit should be provided to the borrowers having small si6ed land holdings. 34. !maller si6ed loans are not being provided adequately for which these should be considered accordingly. 37. -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. 38. The bank branch must take responsibility for its loans. It needs to develop systematic and continuing relationship with its loan. 39. Training program for credit personnel is required to arrange which will lead to better result. 3:. In this competitive market banks need to computeri6e for better information processing.

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0.$ Conclus on
#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 customi6e these for their credit operation in line with international best practices. They should make good loans and e.plore new avenues for investment. !mall loans have vast potential in this regard. )essons from micro credit institutions strongly indicate that #A%UB need to reform their )oan strategy( increase small loan portfolio( utili6e 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 )ocal *rinciple +ffice 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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Chapter- 2 'ht

Append @
R242R2NC2%
3. ,howdhury( ) #. A Te.t book on banker"s advances( &/nd ed.2/00/'( Dhaka5 Dair corporation. /. ,howdhury( +mar( &/004' @Bank"s non performing loans2 some lessions for bank )oan.A Journal of institute of bankers, Bangladesh Kol280( Co2/ Dec2/004( *p2 3;42314. 4. %han( Dr. A #( Bank -anagement5 A fund emphasis( &3st ed.2/00;'( Dhaka5 #uby *ublications. 7. %han( Dr -a$ibur #ahman( &31;1' @Agricultural credit in Bangladesh5 some issues and considerations in policy planning.A Krishi Bank Paraikrama, Kol.21 30( Eune2 Dec.231;1( pp2:02;7.

8. #a$shahi %rishi Unnayan Bank( Annual report &/0332/03/'

9. #a$shahi %rishi Unnayan Bank( )ocal *rinciple +ffice(( !tatement of affairs &/00;2/03/s'. :. #A%UB"s web site5 http5FF +++.ra8ub.or'.bd

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*uest onna re *uest ons about the ban8

3. Bhat are the historical backgrounds of #A%UBO /. Bhat is the vision of the bankO 4. Bhat is the mission of the bankO 7. Bhat are the main ob$ectives of the bankO 8. Gow many branches are under #A%UBO 9. Bhat the amount is of authori6ed( paid up and reserve capital of #A%UBO :. Bhat is the main function of the bankO ;. Gow many employees are involved with #A%UBO 1. Bhat is the accounting period of the bankO

*uest ons about the branch and ts "unct ons

30.Bhen has the branch been establishedO 33.Bhat is the organi6ational structure of this branchO 3/.Gow many employees are of your branchO 34.Gow many unions and villages are under your branchO 37.Bhat are the different rates of interest of different accountO 38.Bhat is the minimum deposit of different accountsO
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*uest ons about loan d sburse(ent pol c#

39.Bhat are the main purposes to provide loanO 3:.Bhat are the different rates of interestO 3;.Bhat are the different terms and conditions of loanO 31.Bhat documents do you $udge in sanctioning loanO /0.Bhat types of securities are accepted by the bankO /3.Bhat type of person can be grantorO //.Bhat are the ma$or heads of loan disbursement policyO /4.Bhat are the programs under poverty alleviationO /7.Gow do you evaluate feasibility before sanctioning loanO /8.Is loan disbursement higher or lower than target( whyO /9.Gow do you fi. up installmentO

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GLOSSARY & ABBREVIATION

#A%UB UIT! ADD, B%B )AC #!,* C,D* !TD D*! #D*! DD -T TT *+ !TDA D*! #*! #=*! DDA -T DD TT *+ !T) -T) )T) !*+ *!+ #a$shahi %rishi Unnayan Bank University of Information Technology !ciences

Agricultural Development Dinance corporation Bangladesh %rishi Bank )ocal Area Cetwork #A%UB !elf2help ,redit *rogram Corth Best ,rop Diversification *ro$ect !hort Term Deposit Account Deposit *ension !cheme #A%UB Deposit *ension !cheme Demand Draft -ail Transfer TelephoneF Telegraphic Transfer *ayment +rder !hort Term Deposit Account Deposit *ension !cheme #A%UB *ension !cheme #A%UB =rameen *ension !cheme Di.ed Deposit Account -ail Transfer Demand Draft Telegraphic Transfer *ayment +rder !hort Term )oan -edium Term )oan )ong Term )oan -anage *ro$ect !upervision +fficer

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BIBLIOGRAPHY
3. Annual report of #A%UB 2 /00;2/001 to /03/2/034. /. %.c. !hekhar( 2Banking theory and practice. 4. %+TGA#I2,# 2#esearch methodology. 7. B - G EAI- ) #AG-AC( 2 )oan Disbursement *olicy 2A

-acro level Analysis. 8. -anagerial <ffectiveness5 A ,ase !tudy of Bangladesh %rishi Unnan Bank. 2DAG-IDA ,G+BDGU#P 9. )oan ledger of #A%UB( )ocal *rinciple +ffice( #a$shahi. :. www.wikipedia.com ;. Beb !ite of #A%UB2 www.rakub.org.bd

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