1.

Background of the banking Sector in Bangladesh

A. Introduction
After independence of Bangladesh the banking sector was restructured
as a fall out of war liberation. Banking grew primarily in the public
sector with a view to reconstruction of the war-torn economy. With
gradual liberalization in subsequent years, it was increasing felt that
banks should be allowed in the private sector, for development
process. In the 1980s for the first time a number of banks in the
private sector were allowed. Subsequently in the mid 90s some more
banks in private sector commenced operations. In 1999, 3 rd generation
of private sector banks was given permission to operate. Finally in
2001 4th generation of private banks commenced operation.
Now we are standing in the dawn of the new millennium in a
progressively emerging scenario of economic liberation dominated by
WTO regime where the private sector in the engine of economic
growth. The challenges of globalization particularly in service sector
have

become

quality

service,

quick

service,

reliable

service,

dependable service etc. As part of the service sector, bank must

belong to be producing qualitative service within shortest possible time
for its immediate success.
As knowledge has become cutting edge business professionals of
the

new

millennium

would

require

multidimensional

&

multidisciplinary knowledge, training and expertise to be able to

discharge their professionally competitive responsibilities adequately
and effectively. The business community must therefore act proactively
in devising relevant strategies to meet those emerging challenges
completely and utilize the opportunities beneficially for greater
business professional and public interest. Besides, the first ministerial
meeting of the WTO held in Singapore in December, 1996 identified
accountancy as the most important service sector for promoting
transborder flow of funds. Good financial reports promote investor

confidence, facilitate the flow of investment funds, and thereby

encourage economic development.
With keeping these views in the mind the department of Marketing
launched an Internship Program for out going business graduates for
the duration of 3 months to expose themselves with more practical
oriented and to enhance the students exposures to the rural world
business environment. In order to accomplish the practical training as
part of Internship Program I attached with Bangladesh Shilpa Bank
(BSB).

B. Banking Environment in Bangladesh:

Bangladesh is a developing country in the region of South Asia
having 130 million of people against which only 52 banks are operated
in the economy which are as below:
1.

Nationalized Commercial Bank

2.

Private Commercial Bank

31

3.

Foreign Commercial Bank

11

4.

Specialized Bank

5.

Development Financial Institution

4
2

The growth of industrial sector is an infant situation because as lacking

adequate funds and financial management system. Therefore, funds
and fund management was the main problem for rapid growth of the
industry. Now banks take this responsibility in different manner.
C. Mission of Bank:
Every bank has a mission and vision as to establish them as the
number of one bank in Bangladesh and their employees feel proud for
that. It is possible by providing services to their valued customers
efficiently & effectively. Since, the banks are not engaged in producing
goods like as manufacturing concern that they would sell; their main

product is service. The bank that is able to provide multi-natural

service to the customer efficiently, the bank will undoubtly raise
overnight. Quality of service is the main reason as to why people will
come to our bank instead of other banks? Every bank provides services
and facilities but the bank who should different than others in terms of
service and efficiency. Therefore in the present borderless economy
and era of globalization bank should be committed to do something
extra than others.
Faster service
Efficient Manpower
Giving Quick/Spot decision
Honesty/Sincerity
Moral human being
Reliable Manpower.

D. Principal Activities of the bank:

The principal activities carriers out by the bank are providing all
kind of commercial banking activities/services to its customers through
its branches in Bangladesh. Since inception the bank has been
rendering high quality services in different areas of banking and able to
win

confidence

of

the

public

through

excellence

of

services,

professional competence and employment of the art technology.

2. Background of the Study:

a. Introduction:
Bangladesh Shilpa Bank (BSB) as the prime Development
Financing Institution (DFI) of the country extends financial assistance
both the local and foreign currencies for setting up new industries
BMRE of existing industries rehabilitation of sick industries.
The bank has five divisions and twenty one departments in its
head office located in Dhaka at Motijheel named BSB Building.
Besides, there are three zonal offices in different divisions namely
Chittagong, Rajshahi & Khulna.
Among twenty-one departments Loan Operation Department
(LOD) is most important because sanctioning and analyzing loan
proposal is executed in this department and then the function of all
other departments starts gradually. If this department can select
proper and suitable project, recovery of loan amount along with
interest become easy and secure and therefore, industrial growth and
sustainability also become fruitful. So, total BSB and managers should
concentrate their more effort attentively in this department.

b. Organizational Attachment:
The department of Marketing selected the host organization for
the students. The department after consultation

with the top

management of the host organization sends the interns to the

organization for 3 months practical training under the guidance of the
faculty Advisor. Following all these rules I am deputed in Bangladesh
Shilpa Bank for accomplishing the said program. In this bank, the

training department of Bangladesh Shilpa Bank (BSB) scheduled an

internship program covering almost all activities of BSB. I worked
according to scheduled and prepared the report.

c. Problem statement
Bangladesh

Shilpa

Bank

(BSB)

is

being

functioning

to

accelerating to industrialization in the country by providing equity loan

to various sectors. The main objective is to create employment
opportunity, infrastructural development, upgrading living standard
and social welfare through industrial long term financing. In the
process of loan sanctioning, strictly BSB order 1972 is being followed
and research has been made to improve and upgrade the processing
consideration with changed free market, improved technological edge.
This process is lengthy, have some weakness. So, a research to
improve and update loan sanction and recovery process should be
conducted. Beside while assessing proposed project social contribution,
GDP (Gross Domestic Product) Contribution should be considered. On
the other hand, there should keep provision to have proper and
sufficient collateral against loan sanctioned which is specified but in
practice it is not strictly followed and maintained. Why it is not being
followed and to what extant it is being followed should be under
examination and research.
d. Objective of the study:
1.

To get an idea about the history of BSB and nature of operation

and function of loan operation department.

2.

To be familiar with the current loan sanction procedure of

Bangladesh Shilpa Bank.

3.

To enrich personal skills and knowledge.

4.

To implement personal theoretical knowledge to improve loan

sanction procedure in practice.

5.

To form some essential guidelines for BSB and sanctioning

procedure.

6.

To have some recommendation for improving the sanctioning,

monitoring and recovery loan.

7.

To determine the limitations of the operation of BSB.

8.

To

evaluate

the

trend

growth

rate

and

acceleration

of

industrialization.
9.

To mis-match of the practical knowledge with theoretical

knowledge.
10.

To expose ourselves to the service sector which is more

challenging profession.

e. Rationality of the Study

About 60% projects on an average financed by BSB become sick
or cannot go a long way successfully. Remaining 40% projects are
contributing for its own sustainability. If this study can increase the
portion of successful project operation, this will be a great help and
success for BSB as well as industrialization and social welfare. Besides,
no research has been executed in this ground recently. This research
will cost a small amount, since it is a theoretical development research.
This research obviously will contribute to enrich and update the project
appraisal manual and BSB order 1972. It may provide helpful in other
specialized Banks and DFC of Bangladesh.
f. Methodology of the Study:
I have worked as per scheduled program for internship that
includes different department of BSB. For preparation of Internship
report I have chosen Loan Sanction procedure of BSB. I have
prepared this report after collecting information and gathering practical
experience on performing work in the bank. The major steps that I
followed are:

Oral discussion with department heads and clerks.

Function analysis of department.

Assessment of samples, like

a)

Appraisal report
6

b)

BSB order 1972

c)

Manual

d)

Annual Report

e)

Organizational Charts.

Institutional Overview
(i) Establishment
Bangladesh Shilpa Bank (BSB) once a leading developed financial
institution (DFC) established in October 31, 1972.
(ii) Organization
Head Office

Dhaka

Division

Department

21

Zonal Office

Branch Office

15

Personnel

794

(iii) Capital Structure

Authorized Capital
Paid up Capital

: Tk. 2,000 million

: Tk. 1,320 million

(iv) Sources of fund

The sources of Banks fund are the Government, Bangladesh
Bank,

Commercial

Banks,

Local/Overseas

Financial

Institutions,

Customer deposits and suppliers credit.

(v) Ownership
At least 51% of the Authorized capital of BSB be subscribed by
the Govt. and remaining 49% by Bangladesh nationals of by local or
foreign financial institutions. Presently, 100% ownership of the bank
belongs to the Government.

(vi) Mission
Accelerating the process of industrialization of the country by
providing financial assistance and equity support.
(vii) Management
The overall policy formulation and the general direction of Banks
operation are vested in a Board of Directors appointed by the
Government. This Board of Directors consists of 9 (nine) members
including the Chairman and the Managing Director. Non-Government
shareholders subscribing to the capital of the bank shall eventually
elect 4 directors from amongst themselves. The managing Director is
the chief executive of the bank. The General Managers assist the
Managing Director in conducting the overall banking business.
(viii) Functions
BSB extends term loan facilities in local and foreign currencies to
industrial projects (both new & BMRE) in the private and public sectors.
Besides, the Bank also performs the following activities.

Provides working capital loans to industrial projects.

Provides equity support in the form of underwriting and bridge

finance to public limited companies.

Issues guarantees on behalf of borrowers for repayment of

loan.

Extends commercial banking services along with deposit

mobilization.

Purchase and sells shares/securities for BSB and on behalf of

customers as member of Dhaka Stock Exchange (DSE) Ltd. and
Chittagong Stock Exchange (CSE) Ltd. for capital market
developments; and

Conducts project promotional activities along with preparation

of various subsectoral study reports.

Provides working capital loans to industrial projects.

BSB: At a Glance

2000-2001

2001-2002

2002-2003

2003-2004

(no. of projects)
Loan Applications received

13

31

31

51

New

18

21

BMRE

Additional

Total

21

27

10

11

14

47

52

27

17

Entered into Loan Portfolio

Liquidated Loan Liabilities

32

21

31

22

532

513

461

308

Term Loan Sanctioned:

Working capital Loan Sanctioned

Term Loan Disbursed
Started Commercial Operation
Rephrased/Rescheduled

Total Loan Portfolio

(Million taka)
Term Loan Sanctioned

293

189

1418

989

Term Loan Disbursed

134

84

170

297

1400

1198

1316

1124

Loan Recovered

10

Working Capital Loan Sanctioned

30

19

Working Capital Loan Disbursed

15

28

574

1833

507

149

Rephrased/Rescheduled

(ix) Operational Activities of the Bank

Bangladesh Shilpa Bank being the prime development financing
institution continued its efforts in FY 2003-04 to make an effective
contribution towards expansion of industrialization process of the
country. By mobilizing local resources, the bank emphasized on long
term lending to the viable, comparatively advantageous, export
oriented, forward and backward linked, agro-based, local technology
and raw material based projects.
Top priority has been given for realization of its loan towards
augmenting and recycling of the investable funds and maintaining
satisfactory loan portfolio for increasing profitability. Besides, in FY
2003-04 the bank has introduced one-stop service in its commercial
banking operation for better and modern customer service.
(x) Profit and Loss:
The bank made a net profit (after adjustment) of Tk. 42.109
million during FY 2003-04 as against Tk. 78.95 million after adjustment
in the previous year.
(xi) Deposit mobilization:
During FY 2003-04, the bank tried to meet its fund requirement
from various sources for lending and investment. The bank emphasized
more on deposit mobilization during the period total deposit was Tk.
540 million on June 30, 2004.
(xii) Loan Application received:
During the period under review, the bank accepted 51 new loan
proposals after proper scrutiny.
(xiii) Sanction of Term Loan:

11

The bank continued sanctioning of term loans during FY 2003-04.

This year local currency loan of Tk. 1418 million was sanctioned to 21
projects of the total sanctioned amount Tk. 1236 million was for 18
new projects and an additional loan of Tk. 182 million was for 3 on
going Projects including 2 for BMRE purposes.

12

Table-1
Sanction of Term Loan
Million Taka
Nature of
the
Project

2002-2003

2003-2004

Number
of
Projects

Local
Currency

Foreign
Currency

Total

Number
Local
of
Currency
Projects

Foreign
Currency

Total

New
Projects

18

1236

1236

21

687

687

Existing
Projects
(BMRE)

102

102

03

166

166

Additional
Loans

80

80

03

136

136

Total

21

1418

1418

27

989

989

(xiv) Commitment and distribution of Term Loan

During FY 2003-04, the bank made commitment of Tk. 116
million in local currency to 4 projects. During the period, the bank
disbursed term loans of Tk. 170 million in local currency to 11 projects
as against disbursement of Tk. 84 million to 8 projects in the previous
year.

Table-2
Commitment and Disbursement of Term Loans
Million Taka
Commitment/

2002-2003

Disbursement Number
of
Projects

2003-2004

Local
Foreign
Currency Currency

Total Number
Local
Foreign
of
Currency Currency
Projects

Total

Commitment

164

164

116

116

Disbursement

84

84

11

170

170

13

(xv) Sanction & Disbursement of working capital

During FY 2003-04 the bank sanctioned working capital loans of
Tk. 30 million to 3 projects and disbursed Tk. 9 million to 4 projects.
The Bank sanctioned Tk. 4 million to 1 projects and disbursed Tk. 1
million to 2 projects in the last year.
(xvi) Other Investment
During FY 2003-04 the bank invested Tk. 6.44 million to purchase
shares from the primary and secondary markets and the bank earned
an amount of Tk. 5.82 million as capital gain, dividend and commission
from share trading.
(xvii) Project implementation
Table-3
Stages of implementation of projects
Position of Projects Under Implementation

2002-2003

2003-2004

Number of Projects

Number of Projects

Started Commercial Operation

04

Under Construction

06

Documentation Completed

15

Awaiting Documentation

23

22

(xviii). Sector-wise Loan Outstanding Position (major sectors)

12%

5%

7%

9%
3%

5%
2%

48%

Textile

Jute

Others

Service

Chem ical

Metal

Leather

Paper

Loan portfolio

14

Table-4
Sector-wise position of Banks Loan portfolio as on 30/ 06/2004
Sectors

No. of Projects

Amount of Total
Loan (million taka)

Food and Allied Products

58

1335

Jute and Allied Products

674

Cotton, Woolen and Synthetic Textiles

87

8148

Paper, Paper Products and Printing

15

591

Tanner and Leather Products

333

Non-Metallic Mineral Products

130

Forest and Wooden Products

Rubber and Rubber Products

Basic Metal Products

Metal Products

14

304

Electrical and Machinery and Goods

354

Machinery and Sphere Parts

13

190

Transport equipment

12

86

Chemical and pharmaceuticals

26

812

Petro Chemical Products

10

407

Service Industries

28

422

Miscellaneous

13

198

Total BSB Projects

304

13997

308

13998

Total BSCIC Sponsored Projects

Grand Total

15

(xix) Recovery of Loans

Table-5
Category of Loans

Amount Recovered (million Tk.)

2002-2003

2003-2004

989

915

Bridge Loan

Staff Loan

34

35

Administered Loan

137

105

1161

1056

Working Capital Loans

23

27

Others(Debentures/Shares/Loans
against FDR)

132

41

Sub-Total

155

68

Grand Total (A+B)

1316

1124

A. Long Term Loans:

Long Term Projects Loans

Sub-Total
B. Short Term Loans

(xx) Legal Actions taken for Recovery of Loans:

The Money Loan Court Act 2003 has been enacted in the year
2003 with effect from May 01, 2003 in order to streamline the process
of realization of loans and advances by the banks and financial
institutions. Provisions have been made in this Act for realization of the
banks dues by selling of properties held as security without filing suits
before the court.
Table-6
2002-2003
Position of projects Under
Litigation

Number of
Projects

2003-2004
Number
Projects

of

Legal Notice Issued

28

126

Filling of Suit

15

205

Cases Settled Outside the Court

31

06

16

Auction

10

02

A Short brief on departments of BSB

Bangladesh Shilpa Bank encompasses various departments and zonal
offices to discharge its activities. To perform efficiently and effectively
BSB in its board meeting has determined the schedule activities of
various departments and zonal offices and they supposed to perform
the task accordingly and the respective employee have to report
according to organizational hierarchy.
Activities of some important departments are enumerated below:
a. Loan Operation Department (LOD)
1.

To give advice to the entrepreneur about industrial investment, to

give loan form and to appraise the proposed project from various
aspects-management

&

organizational

appraisal,

technical

appraisal, market appraisal, economic appraisal and financial

appraisal.
2.

To present the loan proposal to the loan sanction committee to

overhaul the proposal and to take recommendation from them.

3.

To take clearance from privatization board for the proposed

project, if necessary.

4.

Loan sanction letter send to subsequent departments to take

necessary action to implement the project.

5.

Re-evaluate the project on the basis of up dated information.

b. Project Implementation Department (PID)

1.

Taking action to implement the project after sanctioning of loan for

the project.

2.

Taking action to approve the layout plan for the project.

3.

Site change for the project, co-ordination of board of directors of

the project and product mix.

17

4.

To take action and monitor the step-by-step expenditure of project

against loan money according to the schedule of loan.

5. To ensure acquisition of entrepreneur equity and its effective

utilization.
c. Documentation and machineries procurement department
(D&MPD)
1.

To prepare list of equipment/machinery and approval of it to

incorporate in the tender.

2.

To assist the promoters to invite tender and other formalities.

3.

To overhaul the documents related to machinery and accumulate

information regarding to suppliers.

4.

To analyze and collate the tender price, quality of machinery

among the bidders and taking approval from the authority.

5.

To make the rules and procedure of machinery procurement and

coordinate the activities of branch and zonal offices.

d. Recovery department (RD)

1.

To maintain nexus with loanee at all time to accelerate the loan

recovery procedure.

2.

If required, recovery department consider the additional loan or

BMRE for its loan portfolio project and by taking asset from the
loan operation department it takes steps to materialize the
endeavor.

3.

To reschedule the unpaid loan and implement it accordingly.

4.

To monitor the progress of project, its triumph according to

schedule and instantaneously notify it to the concerned authority.

5.

To maintain association with other department to make the rules &

procedure about project implementation rehabilitation etc.

e. Project Rehabilitation Department (PRD)

18

1.

If this department or any branch or zonal offices primarily select a

project become sock, PID investigates the project and find out the
reason of sickness and formed rehabilitation committee to
invigorate the project.

2.

When there is no scope to rehabilitate a project, send it to law

department to take further steps.

3.

To diagnosis the sick project, prepare schedule and implement it

accordingly and to some extent ensure proper management after
rehabilitation.

4.

To analyze and compare the production, marketing and recovery of

the rehabilitated project and take appropriate action accordingly.

f. Loan Accounting department (LAD)

1.

To maintain BSB financed project short or long term loan account

(classified and unclassified).

2.

To schedule or reschedule the loan according to the policy of loan

operation

department,

recovery

department,

rehabilitation

department and any other branch or zonal offices.

3.

To disseminate the information about project loan account to BSB

authority any other department or zonal offices.

4.

To keep the statistics of loan recovery and send it to various

departments of the bank to make decision.

5.

To prepare monthly or quarterly balance sheet and convey it to

various departments.

g. Law Department(LD)
1.

Issuing legal notice to the loan defaulters to take legal action

against them.

2.

In compliance of bank ordinance to file suit against loan defaulters

in various courts and resolve them.

19

3.

To take case of the filed suit/litigation sued by the bank and to file
suit in high court and Supreme Court for the defaulted project.

4.

To defense the litigation filed by the loanees through advocates

and take steps to resolve it rapidly.

5.

To invite auction to sale assets after receiving decree from the

court and maintain elation with the court and coordinate the
activities.

h. Dhaka Commercial Branch (DCB)

1.

To operate all sorts of general banking operations according to

banking convention, rules and Bangladesh Shilpa Bank ordinance.

2.

To frame the deposit collection procedure, attract deposit and

maintain the deposit account.

3.

To identify the apt sectors for investment, ensure profitable

investment and coordinate with advance department and central
accounts department.

4.

To provide loan and advance against long-term deposit, recover

and adjust between them.

5.

To purchase and sale of prize bond and saving certificate.

20

21

Loan Sanction Procedure

1. Introduction
First of all, a client who wants to have a loan asks for an
application

form,

which

is

known

as

Bangladesh

Standard

Questionnaire Form (BSQF). He has to pay one eighth of one percent

cash money 1/8th of 1% of the total loan amount with the filled form.
The person is required to submit necessary papers and documents by
the bank the information generally consist of

Name of the product

Name & designation of the entrepreneur

Types of Project

Types of Products

Location of the Project

Amount of the Project

Copy of memorandum, articles of association and other papers

relating to legality of the projects.

Site, production process flow diagram etc.

When all the required papers and documents are submitted

along with the fee Tk. 1000 plus 1/8 th of 1% of total loan amount, the
proposal is then under consideration of judging the project viability.

22

2. Loan Application form of BSB

BANGLADESH SHILPA BANK
Head Office, Dhaka
LOAN APPLICATION FORM SETTING UP OF A NEW INDUSTRIAL UNIT

SECTION-A
Project, Promoters, Corporate Set-up and Management
1. Proposed Project:
Name of the Project:
Location of the Project:
Lines of the Production:
Amount of loan applied : (a) F/C (b) L/C
2. Promoter(s) Applicant(s):
(a) Particulars of the promoters
Address (es)
Name (s)
Father Name
Spouse Name

..

..

..

Name and address of

bankers
..
..
..

(b) Particulars of the persons closely related with the promoters i.e.
father, mother, spouse, son (s), daughter (s) and sister (s)
Name &
relationship
with the
promoters

Address (es)

Name
&
address of their
existing trading
business

23

Position of loan
liability if any of
the
said
business

(c) Please give particulars of assets and liabilities of the

promoters/directors as per the attached FORM-A
(d) Please sent a letter (s) addressed to your banker (s) as per the
attached FORM-A and enclose a copy thereof with this application.

3.

CORPORATE SET-UP (CONSTRUCTION):

Please specify if your concern is/would be a private limited

company, public limited company or co-operative society or
partnership firm
If limited-liability company (please tick)
(a)

Private

(b)

Public

(c)

Already incorporated or not

(d)

If already incorporated

(e)

Directors

Date.... Place

Name (s) father Name (s) Address(es)

Share-holding
existing/proposed

..

..

..

..

..

..

..

..

..

..

(f)

A copy of the memorandum and

Articles of Association: enclosed

(g)

A copy of the certificate of incorporate

Ration: enclosed

Co-operative society:
(a)
Name

of

the

president..(Address)

24

(b) Name of the secretary..(Address)

(c) A copy of the constitution of the society,
By laws and certificate of registration

Partnership firm
(a) Name of the partner

Address

Extent of interest

(b) A copy of the registered partnership deed duty certified by the

managing partner as up to date may pleased be enclosed.
(c) Names, address, qualification a past experience of promoters
(d) Please furnish bio-data describing briefly the qualification as well as
the business and industrial experience of the promoters specifying
their name(s) as par the attached form.

4. Management
Please mention that following particulars of the promoters who will
manage the affairs and operation of the project
Names(s)

Position in the company/society

Held

To be held

..

..

..

..

..

..

25

5. Have the proposed directors any interest in trading and/or industrial

enterprise? If so please specify the extent of interest and address (es)
of the enterprise (es) and enclose the audited balance sheet (s) &
profit & loss accounts/statement of affairs of such enterprise (s) for the
last three years on the basis statement of which their performance can
be judged.

6. (a) did you apply to any other financing institution and/or the
Ministry/Agency for financial assistance or permission to set up this
project or any other project.
If so, please state the status thereof.
(b) Please furnish three declarations as shown n form duly filled in and
signed by each directors/sponsor.
SECTION-B
PARTICULARS OF PROJECT
7. Proposed Products:
(a)
(b)
(c)
(d)
Product
Quantity
Annual rated capacity Value (value of sales)
(In case any feasibility study for the project has already been made, a
copy thereof may .. Please be enclosed with this application)

8. Foreign collaboration, if any:

Please mention the arrangement, if any, for the foreign collaboration
with the foreign company approval there of etc. indicating the type of
collaboration (technical, marketing, financial etc) and extent of their
participation and submitting inter law the following:
(a) Back ground and reputation of the collaboration
(b) Area and filed of their business activities
(c) Their latest audited balance sheet and profit & loss accounts.

26

9. Project land:
I. Please specify if the following will be available at the project site
(please tick)
(a) Water
(b) Power
(c) Gas
(d) Communication Facilities
(e) Free hold
(f) Lease hold
II. If lease hold, please furnish a copy of the lease deed (if already
executed).
III. Area:
IV.
Price
of
land:
Paid:Taka..as
on.
To
be
paid:
Paid:Taka..as
on.
V.
Development
of
land:
Cost
incurred:
Taka
upto.
Cost
to
be
incurred:
Taka.
10. BUILDING AND CIVIL WORKS
Please show the estimated area and cost of building (existing and
additional separately) for factory, godowns and other buildings, if any,
required for the project as per the following proforma, to gather with
the cost of internal road boundary walls, tanks, drains, system, jetty
etc.
Types of
Specificatio
building/Civi
n of
l works
Construction

Area in sft

Rate/sft

Estimated
Cost

11. Plant and Machinery:

Please give a complete list of the machinery and cost of the machinery
(imported and local separately) together with the competitive price
quotation, indicating, among other thing, of the machinery, and the
illustrate, brochures etc. from at least two suppliers of machinery.
12. ERECTION AND INSTALLATION:
Please state the arrangement (s) already made/to be made for erection
and installation of machinery.

27

13. UTILITIES:
Please furnish information about the following of your project:
(a) Power: a) Connected load required and source of supply
b) Letter of consent, if already obtained from appropriate
Authority, may please be enclosed with this
application
(b) Fuel:
14. RAW MATERIAL
Please indicate the annual requirement of raw material at 100 0
capacity utilization (on the basis of the shift of 8 hour per day) as per
the following proforma:
(a) Imported:
Name of
Items

Specificatio
n

Quantity of
100%
capacity

Total C&F
Price

Landed cost
factory site
at

Specificatio
n

Only at
100%
capacity

Total C&F
Price

Landed cost
factory site
at

(b) Local:
Name of
Items

15. PERSONNEL:
Please furnish information about the personnel of your project as per
the following proforma:
(a) Managerial & Technical Units
Name of
post

No (s)

Salary/Mont
h

Other fringebenefits if any per

month

Total/
annual

(b) ADMINISTRATIVE SALES

Name of
post

No (s)

Salary/Mont
h

(C) Labour:
Skilled
Un-skilled

28

Other fringebenefits if any per

month

Total/
annual

(d) Please mention the name of director/officers who will be

responsible for supervising the administrative and technical aspects,
both at the implementation and production stage. Mention the
qualification and experience of each of them.

16. COST OF THE PROJECT & MEANS OF FINANCE:

Please give the detail of the project cost as per the following proforma:
Tk. in 000)
Local

Foreign

Total

a.

Land

..

b.

Land development

..

c.

Building

..

d.

Other civil work

..

e.

Imported machinery
and equipment

..

f.

Local machinery and

equipment

..

g.

Custom duty

..

h.

Internal freight

..

i.

Erection
Installation

and

..

29

j.
k.
l.
m.

Furniture and fixture

Vehicle

Preliminary
and
Startup expenses

Contingencies

TOTAL

Net working capital

Total Cost of the

Project

..

..

..

..

..

..

..

17. MEANS OF FINANCE:

(A) Please state as to how the cost of project is proposed to be met as
per the following proforma:
Local

Foreign

(Taka in 000)
Total

(a) Equity capital:

Sponsors contribution

. .

Public Issue

. .

Others

. .

(b) Loan from BSB

(c) Other specify (if any)

. .
. .
Total: . .

(B) Please indicate the name(s) of commercial Bank(s) who would

extend your short-term loan for working capital purpose against
hypothecation/ pledge of stocks. Preliminary arrangement made, if
any, in the regard may please be mentioned.
18. Please give your own estimated profitability of your project
indicating underlying assumptions of profitability estimated as per
following table:Capacity utilization
Year1
a) Sales/revenue
b) Cost of goods
sold
I.
Raw materials and spears
II.
Power fuel and water
III.
Direct labor
IV.
Rent, tax, and insurance
V.
Rent and maintenance
30

Year2

Year3

VI.

Depreciation
Total

31

(c) Gross Profit (A-B):

(D) General Administrative and overhead expense:
Salaries and remuneration of Directories
(administrative and sales personals)
Stationary and Printing
Postage, telephone, telegram, electricity and telex
Traveling and conveyance
Selling expense, including advertisement and sales promotion
Depreciation of office assets
Amortization of preliminary expenses
Amortization of interest during construction
Miscellaneous expenses
TOTAL
E. Financial expense (interest on loan)
F. Total general administrative and financial overhead (D+E)
G. Net operating profit before tax (C-F)
H. MARKETING AND SELLING ARRANGEMENTS

19. Please indicate as to who are the major producer and consumer of
the proposed product(s) and the proposed selling arrangements
(through agents, wholesaler or retailer) for your products (s).
20. Please specify the proposed selling price of the proposed products
(s) and state the prevailing price (s) of the similar local products (s) if
any.
21. If the products (s)
(Part or all) is proposed to be exported, please indicate the quantity
and the country to which the products (s) will be exported and state
the FOB price of each of the products (s).
22. If the project presents particular aspect which are not covered by
this questi0onnaire or are covered inadequately, such aspects which
have a material bearing on the facility of the project may please be
indicated.

32

CERTIFICATE
I/We hereby certify the correctness of the figures/date/information and
documents furnished here in/here with. I/We also undertake to furnish
further particulars as may be required by the bank.

Signature of applicant
Place:.
Dated:..

33

Project Appraisal Procedure of BSB

A committee, known as Project Appraisal Committee consisting
of engineer and other technical experts, financial analysts and
economists has been responsible for appraisal of a particular project.
The engineer appraises the technical aspects, the financial analysts
evaluate the financial aspects and the economists appraise the
commercial aspects of the projects. The project appraisal committee
prepares project appraisal report after evaluating these aspects. The
said committee is under the Loan operation Department of the BSB.
A committee consisting of all assistant general manager of BSB
scrutinizes this report. The general manager of the loan operation
department is the head of the committee. Then the report is placed
before the board of directors of BSB for final approval

Steps in Project Appraisal

There are several steps involve in project appraisal. The steps
are as follows:
a) Issuance of loan application form:
The starting point of project appraisal is the receipt of loan
application form from the sponsors in the banks standard questionnaire
form known as BSQF. The sponsors are required to submit full dressed
feasibility report at the time of submission of loan proposal to the BSB.
The sponsor can get their feasibility report prepared by any firms
at their own cost. They can also prepare the feasibility report by
themselves. The sponsors are required to submit the application form
dully filled in along with other papers and documents and also pay the
required project deposit. In terms of the present policy, sponsors are
required to pay project deposit of 10% of the project cost as part of
their equity during the various stages of sanctioning loans. The project
deposit is taken to ensure timely mobilization of sponsors equity in the
project.

34

b) Receipts of filled in Bank Standard Questionnaire Form (BSQF):

The concerned section (called the receiving cell) scrutinizes the
filled-in-BSQF together with the required papers and are found in order,
the loan proposal is considered as fully documented and accepted for
further processing. Contents of BSQF are given below:
c) Information Contained in the Loan Application Form:
To obtain funds from BSB every projects sponsoring agency has
to submit loan application to the BSB in the prescribed Loan
Application Form known as banks standard questionnaire form
(BSQF). Any potential entrepreneur seeking financial assistance from
BSB can obtain the application form along with the detailed guidelines
in exchange of prescribed fee of taka 1000 only.
d) Parts of BSQF form
The BSQF is divided into the following six main parts viz.
1.

Part-A: Containing information relating to project, promoters,

corporate set-up and management.

2.

Part-B: Containing information about the technical details of the

project.
3.

Part-C: Containing data relating to the cost of the project and

means of finance.
4.

Part-D: Containing information relating to the market and selling

arrangement of the product (s).

5.

Part-D: Containing general information.

7.

Sub form: Form-1, Form-2, Form-3 and Form-4.

35

Part-A
This part prescribes the entrepreneur to provide information
about
i.

The project name, location site of the project, line of production

and amount of loan applied in terms of local and foreign
currency.

ii.

the personal details of the promoters and their closely related

persons i.e. father, mother and spouse etc. Their name, address,
qualification, expertise etc. are required.

iii.

the type of the company either It is/would be private, public,

partnership or co-operative society.

iv.

In case of limited company, if it is already incorporated then the

date, place of incorporation, directors particulars, portion of
shareholding, a copy of memorandum, articles of association and
incorporation certificate is required.

v.

In case of co-operative society, the name and address of the

president and secretary, a copy of societys institution, By-laws
and certificate of registration needs to be mentioned. In case of
partnership, the name address, share of interest, copy of
registered partnership deed is required].

vi.

The management of the proposed company. The name, position

of the personal, if they have other business then three years
audited balance sheet, profit and loss statement need to be
enclosed. If they applied to any other financial institution for this
project or any other project that also need to be stated.

36

Part-B
This part requires technical information relating to the project are
as follows:
i.

Proposed

product,

quality,

capacity,

sales

value,

detail

arrangements of foreign collaboration if any.

ii.

Infrastructural facilities (water, gas, power, communication etc.),

holding type (free-hold/lease-hold) of the project land, area, price
of the land, (paid, to be paid) and development cost of that land,
area, cost, type of building and other civil works.

iii.

Complete list of machinery (imported, local) together with

competitive

prices

quotations,

annual

raw

materials

requirements (imported, local).

iv.

Personal requirement (managerial), technical, administrative,

sales), labor (skilled, unskilled) and the name, experience,
qualifications of the personal who will supervise the project both
at implementation and production stages are required.

Part-C
The part requires financial information, which are as follows:
i.

The cost of the project means of finance and profitability

estimation of the projects.

ii.

Detail cost information like land, land development, building and

civil works, machinery and equipment, custom duty, insurance,
freight, erection and installation, furniture and fixture, vehicles,
preliminary and start-up expense, contingencies and net working
capital are required.

iii.

Equity capital (own contribution, public issue, other), loan from

BSB, others in terms local and foreign currency along with the
name of commercial bank (s), if any contact with them for shortterm loan.

37

iv.

Estimated

capacity,

sales,

cost

of

goods,

gross

profit,

administrative expense, financial expenses and net profit at least

for three years.
Part-D
This requires information elated to marketing and selling
arrangement such as:
i.

Producer/supplier of the raw material, target consumer and the

marketing channel.

ii.

Proposed selling price and prevailing market price of the product.

iii.

If the product is particularly or fully proposed to be exported,

information about the quantity of the product, name of the
imported countries along with the FOB price of the products are
required.

Part-E
This part containing general information which are not covered by this
questionnaire but have a material impact on the feasibility of the
project like estimate of foreign exchange earning/savings, any other
advantage of national importance, declaration by the sponsor.

Sub-Forms
FORM-1: Declaration of assets and liabilities of promoters/directors.
FORM-2: Form of a letter to be addressed to the banker (s) of the
applicant.
FORM-3: Bio data of promoters/directors in case of partnership
business.
FORM-4: Three types of Affidavits for the sponsor/directors.

38

Processing of Loan Proposal:

On receipt of the fully documented loan proposal, it is forwarded

to the appraisal section for processing in keeping with the project
appraisal manual, policy directors of the Government and other
directives of the board of directors of BSB received from time to time.
The project appraisal is carried out by a professional team comprising
an Engineer, an Economist and a financial analyst under the guidance
of the senior officials of the BSB. The appraisal of the loan proposal
covers technical, market, and financial, economic and managerial
aspects.

Different Aspect of Project Appraisal

Every organization has some special rules, regulation and
procedures that strictly follow for any types of dealings. A project is a
proposal for an investment to create expansion and/or develops certain
facilities in order to increase the productions of goods and/or services
in a community during a certain period of time. Project appraisal is
needed to be satisfied about the overall viability of a project to be
financed. An objective assessment of the viability of a project is
required to be scrutinized by BSB from various point of view. This is
known as project appraisal.
The aim of project appraisal is to examine the need of the
project, judge whether the project is likely to meet this need and fulfill
requirement in respect of BSB. It is an important basis of decision-

39

making because project appraisal gives a clear idea about whole

aspect short-term lending. It is not usually necessary to make
extensive study of the customers future potential. Examination of
general credit worthiness of a customer and his current financial
position is adequate.
Although there is no fixed or standardized approach for project
appraisal nevertheless numerous and diverse elements can come into
the process of appraisal. It is difficult to appraise of a certain project
sufficiently however should cover as much as possible. BSB tries to
follow some set of scrutinize factors for their evaluation procedure. As
a result, they are able to overcome some problem and unnecessary
time consuming.
In practice, project appraisal covers five different aspect of a project,
viz.
Management and organization aspect
Technical aspect
Marketing aspect
Financial aspect
Social & Economical aspect

Management and organization aspects:

An assessment of the initiation is respect of their integrity,
experience and capabilities to implement and run a new project is of
prime important factor extending credit facilities to them. There is no
standard set of rules to identify the borrowers or promoters for new
industrial establishment. It is to be done by direct and indirect
investigation. The borrowers experience and capabilities can be
assessed in terms of his educational background, special qualifications,
practical business experience, and receptiveness to new ideas, the
general reputation and adaptability to new and changing situation. To

40

some extent it is necessary and depends on the type of the project and
the background of promoters. The competence of the manager and
technical executives are likely to be in charge of the project. But if such
a project is sought to be promoted by a new and inexperienced
promoters, al the aspects such as the competence and previous
experience of the promoter, their collaboration arrangement, the
technical and managerial backing has already line up, their financial
resource etc may have to be thoroughly scrutinized.
What organization is needed to bring the project to the operating
stage and what organization will be needed thereafter? In the
operating phase, one of the most common questions is the extent to
which

responsibility

and

authority

should

be

centralized

or

decentralized. The answer depends on the scale of operation, its

geographical dispersion, the degree of specialization of personnel and
the number of persons to whom responsibility can be delegated. The
following factors are considered here.
Credit investigation:
Credit investigation is most important for loan procedure. The following
objects are intended to realize through the credit investigation.

Identification of applicants who are interested to get loan for

industrial establishment.

Determination of their ability and willingness to abide by their

agreement with the bank.

Evaluation or their capability regarding education, experience,

and financial worthiness.

Justify their objectives and management capabilities to run the

business.

Evaluation honesty, integrity and past records in respect of

transaction with the other banks and financial institutions.

41

Appraisal of management and organization of a project cannot

be done without proper justification and undertakings of a
methodological credit investigation.

Sources of information:
particular information is necessary to evaluate the credit worthiness of
a specific project. There are several methods like written requests,
telephone conversation, informal meeting, physical verification and
past records. Which may be jointly or uniquely adopted to obtain the
required information. The usual sources of information can be broadly
categorized into internal and external

Internal sources: Details of past borrowings/equity support

such as amount, date of sanction, amount repaid, amount
outstanding and overdue, together with comments on aspects
like replacement etc.

External sources: Credit information bureau report, interview

with the applicants, financial statements, deed and statutory
documents, investigation of business properties, register of
joint stock companies and government publications.

Liquidity position of the applicants:

The credit investigation must satisfy that the applicants are financially
capable of undertaking a project of the contemplated size. This calls
for determination of the sources and extent of funds that the
applicants are capable of mobilizing and also the extent they are ready
to invest. The liquid funds necessary for day-to-day business activities
and procure fixed assets in the project may be mobilized by the
applicants from one or more convenient sources.
Capacity measurement of the applicants:
The most important prerequisite that the bank expects the applicants
to posses is the capability to manage and supervise. Its presence
blooms a project and its absence dooms the same. The following
factory may consider in this respect:
42

Investigation how successful the applicants are in their present

trade and profession.

Judge whether they are financially and managerially competent

to undertake and implement the project.

Analysis of the past operations, opinion of the commercial

bankers, independent opinion from outside sources etc.

Past repayment performance of existing loans.

Technical aspects:
The technical aspects encompasses whether the project is sound
with regard to every engineering and technological consideration. In a
developing

country

like

Bangladesh

where

there

is

hardly

an

indigenous technological base to support the industrialization process

the industrial undertakings have to be conceived on the basis of know
or borrowed technology until such time as the development of local
technology is sufficient. Then evaluate the cost of these resources in
monetary tem to determine the capital cost of the project and also its
operating cost after implementation. While evaluating the capital
outlay and physical facilities, the engineer will have to determine the
production cycle and also the time schedule for implementation of the
project. In the case of a project involving technical collaboration or
borrowed technology, the project engineer has to examine various
facets of technology and its adoption to the local condition including
technology transfer and financial and economic implications of such
transfer of technology. The technical studies and cost analysis provided
the basis both for he initial estimates of the profitability of an
investment during the initial stages and for the final decision to
implement the project. A development bank may need to consult or
contact specialized engineering services from outside for specialized
matters, particulars relating to projects to be based on complex
technology. This point is of great practical significance while dealing
with a project in which the country has no previous experience. In such

43

a situation, particularly in the case of project involving large capital

outlay, it is advisable to find out best advisors from outside. Any defect
in the project design and formulation will eventually affect the
enterprise adversely. The following factors should be considered.

Preliminary
materials,

investigation:

skill

manpower

Products
and

and

technology

services,
required

raw
for

manufacture the product and services and testing analytical

report.

Selection of production process: Choice of alternative and

selection criteria, wastage in manufacturing process, byproducts and their recovery, disposal of wastes and effluence
and environment pollution control.

Productivity and site selection: Technical factors, cost

factors of production, marketing factors, administrative and
housing factors and transportation factors.

Lay out of plan: Site selection for building, plant and

machinery and supplementary installments, estimation and
evaluation of cost.

Work schedule and evaluation of utilities and supplies:

raw materials, stores and spares, technical know-how, transfer
of technology, power, fuel water, steam, labor and transporting.

Marketing appraisal:
An industrial project is to bring in some goods or services for a
community. The market includes the whole environment in which the
enterprise is to live and to which it must adapt itself. Market analysis is
the first screening stage in the project appraisal, at which projects that
cannot accept satisfactory market acceptance shall be rejected. For
appropriate marketing objective, it is necessary to look at depth into
the macro/micro demand/supply situation for specific products in the
market, existing and expected competition in local and foreign
markets, the market share etc. while appraising industrial projects, the

44

bank is required to analysis these factors and to bring out the objective
in quantitative terms.

Product identification: Considerable factors are nature of

demand, types of demand, size and composition of present
demand.

Consumer

markets:

Administrative

regions,

geographic

regions, climate, and city-size, rural-district cut-size.

Social status: Income (level, dynamics, distribution), age, sex,

occupation, education, family size, religion, income elasticity of
demand, prices and availability of complementary goods,
nationality, social class, culture etc.

Personality and behavior: Life style, leadership, ambition,

conservatism,

buying

motive,

loyalty,

extroversion

and

introversion service sensitivity and promotional sensitivity.

Number and types of industrial users: Size of the project,

ownership, and age of equipment, regional concentration,
vertical vs. horizontal markets and technological progress.

Market accessibility: Tariffs and fees, non-tariff barriers like

quality standards, health medical and safety requirements,
package standards, import quotas, customs regulations and
political and administrative barriers and trading habit.

Supply analysis: Past and present output, determine the

projects position in the market and thus expected, domestic
producers present and projected capabilities, new projects
being under construction, present and projected export volume,
foreign manufacturer capacities marketing strategies and
development plants and government policies.

Financial appraisal:
Financial appraisal is important for the assessment of an
organization. The main purpose of financial appraisal is to assess of the

45

proposed project is viable in term of its operation in the future years

and its financial soundness. The financial analyst should have a clear
idea about assessment procedure and aware to the achievement from
the financial appraisal. The financial appraisal is preferred for the
following:

Fund requirement: Fund is important for the organization. To

bring the project into existence and the probable sources from
which the required funds will be mobilized. The following are
the usual sources of funds viz. equity capital, paid-up share
capital, reserves and surplus, retained earnings, other sources,
loans from directors, friends, relatives, associates, loan capital,
long-term borrowings etc.

Revenue generation: Financial analyst also assess about

prospect revenue generation. Projects of adequate revenue
generation by the project when it goes into operation and the
likely position of the concern with regard to its actual cash
generation and its probable impact upon the financial condition.

Cost of the project: The cost of a project represents all

capital expenditure to be incurred for acquisition of its fixed
assets plus the net contribution of long-term resources in the
proposed current assets. In other words, the fixed cost of the
project plus the net working capital requirement to run the
project will comprise its total cost. The analysts should assess
various costs relating to the fixed assets. The fixed cost of a
project is the aggregate of cost of land, building construction,
plant, machinery and equipments etc. working capital is
necessary for investment in current assets like stocks of raw
materials, goods-in-process, finished goods, stores and spares,
debtors etc. working capital requirement depending on the
nature of the project, which should be followed during
appraisal.

46

Financial Statement Analysis: There are various approaches

for financial analyses. The ratio analysis is one of the most
important tools for financial statement analysis. Four basic
categories of ratios are as follows:
Liquidity ratios
Leverage ratios
Profitability ratios
Management efficiency ratios

Cost of the production: This process involves preparation of

some sort of expenses budgets for the relevant years for which
sales have been calculated. All the expenses can be broadly
divided into the following three categories:
Cost of goods sold
General and administrative and selling expenses, and
Financial expenses

47

Socio-Economic appraisal:
In socio-economic appraisal, the project is evaluated from the social
point of view and the economic cash flow is constructed on the basis of
true or real prices commonly known as accounting or shadow prices.
Economic analysis of a project aims at determining whether the project
is viable with overall national and sect oral objectives and whether the
investment proposed is the best means of achieving the intended
objectives or not. It involves a systematic analysis evaluation of a
range of options for achieving a stated set of objectives. Allocations of
resources to sector or specific purposes reduce the resources available
for other sectors and purposes. Therefore, it is essential that the
allocation of investment resources

be efficient among sectors.

Economic appraisal is the primary means of determining whether a

proposed investment is worthwhile or not.
A. Quantifiable factors:
Economic appraisal should cover both quantifiable and nonquantifiable factors. The quantifiable factors include the following:
Economic rate of return (ERR)
Domestic resources cost
Contribution to gross domestic product and
Employment generation etc.
Economic rate of return (ERR): Economic rate of return measures
the potential earning power of the social resources used in the project
and thus helps the assessment of investment proposal. It is worked out
at which the present value of cost becomes equal to the present value
of benefits.
Decision criteria; after working out the ERR; it should be
compared with the accounting rate of interest (ARI). The ARI is nothing
but the opportunity cost of capital, which is supposed to maximize the
use and productivity of invested resources in the country. The board
48

decision is that, if other things being equal, the project thats ERR is
less than the ARI should ordinarily be ejected unless other nonquantifiable benefits are adequate or the project can be qualitatively
justified. Determining the opportunity cost of capital for a society is
difficult, but economists generally consider it to be between and 7%
and 15% in most developing countries. The planning commission of
Bangladesh has estimated the ARR at 15 percent.
Domestic resources cost: An industrial project will whether be
import substitute or export oriented or combination of both in nature.
In a developing country, development of industrial project, normally
involves substantial amount of scarce foreign exchange. On the basis
of more absolute amount of saving and or earning of foreign exchange
of an investment proposal, the optimal allocation of scarce resources of
both domestic and external may not be achieved. The implicit foreign
exchange. In other words, it indicates the domestic resource cost
involved for foreign exchange to be earned by a project.
Contribution to gross domestic product (GDP): Contribution to
GDP of a project is estimated from sales value and inter-firm
transactions. Data regarding sales value is taken from the calculation
of sales estimate of the financial appraisal. Sales value of fourth the
year is taken. Similarly, data relating to inter-firm transaction of fourth
year is collected from the calculation sheet of cost of goods sold and
general administration and selling expensed of the financial appraisal.
Detailed calculation of contribution to GDP of a project may be worked
out as per the following format:
Sales (fourth year)
Less:

XXX

Inter firm transaction (fourth year)

xx

Raw and packing materials

xx

Stores and spares

xx

Water, power and fuel

xx

Repair and maintenance

xx

49

Rent, tax and insurance

xx

Postage, telephone, faxes etc.

xx

Stationery and printing

xx

Traveling and conveyance

xx

Advertisement

xx

Miscellaneous

xxx

XXX
XXX

Contribution to GDP (A-B)

Employment generation: The number of full-time jobs measured

in man-years expected to be created both during construction and
during operation of the project should be estimated separately. If data
are available, these estimates should be related regional, sect oral and
national levels of unemployment and under employment. Where
possible, the degree of labor intensiveness (the number of workers
employed per unit of investment) of the project should also be
estimated.
B. Non-quantifiable/Intangible/Externalities:
The non-quantifiable factors refer both the following:

To effects that are known to arise but which cannot be measured

in physical terms and

To effects, which cannot be valued. Difficulties problems often are

date problem.

50

Documents to be submitted after sanction of loan:

Bangladesh Shilpa Bank
Head Office, Dhaka
DOCUMENTS PAPERS TO BE SUBMITTED AFTER

SANCTION OF LOAN
1.

Water/soil test report (if required).

2.

Final layout plan of the factory and other buildings with details
structural drawings, cost estimates, etc.

3.

Final layout plans of the machinery.

4.

Copies of guarantee from the supplier for satisfactory performance

of machinery.

5.

Copy of agreement with the supplier of machinery for providing

erection engineers/technicians (if required).

6.

Final price quotations both for imported/local machinery.

7.

In addition to the supervision and monitoring of the project by the

banks officials, professional experts will be deputed by the Bank
for a particular period of time. The sponsors shall submit an
undertaking to the effect that the salaries & allowances for the
deputed professional will be borne by them.

8.

When land/land with structures thereon are required to be

mortgaged with bank, the sponsoring companies/firms are to
submit the following papers according to its status.
(a) Private Land (Primary/Additional/Collateral/Security)
Title deed in respect of the land;
Mutated Khatian of parcha;
Up-to-date rent receipt;

Bia-deed, Bia-Khatians etc. in respect of the project land for

chain of professional for the last 12 years;
Approved site plan showing location and boundaries;

51

 Blue prints; and

Mutation certificate.
(b) Rajuk, KDA, CDA & BSCIC Land
Allotment Letter;
Possession Delivery certificates;
No objection certificate to create mortgage in favor of the bank;
Lease deed duly registered;
Evidence of payment of purchase price; and
Site plans.
(c) Project land acquired by Govt., Govt. Khash land allowed to
Company
Acquision Order;
Requisition Order;
Letter of Allotment;
Possession Delivery Certificates;
No objection Certificate to create mortgage in favor of the
bank.
Lease deed duly registered; and
Evidence of payment of purchase price.
9.

The sponsoring companies are also required to submit the

following papers/documents
Private/Public Limited Company:
(a) Certified copy of Memorandum & Articles of Association.
(b) Certified copy of Incorporation/commencement of business of the
company.
(c) Certified copy of the return of allotment of shares, if any;
(d) Certified copy of summary of share capital;
(e) Certified copy of share transfer deed, if any

52

(f)

Permission from the controller of Capital Issues for raising paid-up

capital
Where applicable.
(g) Auditors certificates regarding the paid-up capital of the company;
(h) 100% share certificates of the directors along with blank share
transfer instruments; and
(i)

Any other papers/documents as may be necessary based on the

terms and conditions of sanction of loans.

10. NOC from Rajuk/Municipal Authorities for setting up the project

on land within their area.
11. NOC from BSCIC authority for project to be set-up at BSCIC
Industrial Estate;
12. NOC from BPDB/DESA/BPS/TGT & DC.
13. NOC from Department Environment Pollution Control where
applicable;
14. NOC from the Director, Drug Administration (for pharmaceutical
project only).

53

1. Limiting factors
As I have already mentioned that the loan operation department
is that vital most departments in this loaning procedure. So if this
department can efficiently, the project is supposed to run successfully
and the loaning amount is supposed to be recovered. But for this
smooth recovery, many other things need to be modified in time of
loan sanctioning. As per my concern, as I observed there are some
limitation in loan operation department.

BSQF questionnaire form this is a lengthy form and if a client

comes for loan this questioner form filling become hard for him and
takes a lot of time. The banks standard questionnaire form is of 16
pages. So this form should be modified and easy for the person filling
it.

Duration of time for preparing appraisal report after submitting

and managing all the documents and papers the loan operation
department takes almost three months and in some cases, it cross
three months and takes 5 or 6 months. The problem is that within this
time period, project which was viable for that time. Become obsolete
getting loan and starting business. Particularly mentionable is the
computer software business or computer accessories business. In this
business new products are launched in the market within a short
period of time, in some cases in one month two or three new products
enter the market. In such case this long run procedure kills the viability
of the project.

Lack of proper updated technology, this is the age of information

technology (IT) all the activities are electronised and computerized.

54

Computer or other electronic devices works very quickly then the

manual

procedure.

Bangladesh

Shilpa

Bank

specially

the

loan

operation department has only one computer to make the whole

process done which could be mentioned as a limiting in the process of
loan operation.

Lack of skilled and professional expertise, to judge a project

accurately technicians experienced in the particular field should be

there. There are some engineers to judge technical viability but is not
sufficient for varieties of proposed project.

Political violence, it is a crucial limiting factor. Since the bank is

100% government owned, the government body or the political

pressure some time make the department to grant the loan to the
project which is not viable and feasible. This creates a lot of problem to
recover the loan and the loan deemed to be bad.

Recruitment, young persons can work with young power, skill and

inspiration. New generation is being developing themselves with latest

technology, education and world of challenge. So new recruitment
should be a part of continuous development but in this bank since 10
years no recruitment has been done to gather fresh generation.

Training, all the employees should be upgraded with latest

technological development with the changing edge. So in this span of

time so as to face any difficulty in analyzing new and critical project
and judge their viability. But a low tradition of launching training to the
employee though there is a training department.

55

2. Recommendations

Since loan operation department is the crucial and most important

department because if this department passes any loan, the
activity of all other department starts. So this department should
be made out of political violence, because all other control
objectives can be implemented and monitored in front of political
telephone calls surrenders every rule and policy. If this department
could be made separate in performing its job, give this department
in private sector, and is paid as per its performance, a good result
may come out and the rate of sickness of projects will go down.

The loan operation department should be made fully computerized

and each of the engineers should have a personal computer to do
their job promptly and make decision accurately.

Some more technicians and expert engineer should be there to

judge project viability accurately.

Fresh and young generation employee should be appointed in this

department who are familiar with the latest technology and
literacy.

A regular training program should be launched for each employee

from the training department so that the employees keep
themselves updated with any change occurred in the field of
innovation, technology and edge.

56

A proper and prompts co-ordination and cooperation environment

should be launched so that they work as a team and make the
appraisal report promptly to prevent the project to be obsolete.

The BSQF from should be more concise and easy for the client to
fill it up. A sample of questionnaire is given to the annexure.

3. Conclusion

I believe and hope that this report will offer a number of benefits
to improve and update the loan sanction procedure for its smooth
operation

and

will

cooperate

in

redesigning

the

system

and

atmosphere of the department. If a small portion of sickness of the

projects is reduced it would be a great benefit to the bark as well as to
the whole nation. I put here some recommendations, if they make a
look on the recommendations it would help in selecting appropriate,
socially contributable and more employment opportunity creatable
projects in true sense. If this report can improve the existing condition
of sanctioning procedure, and is implemented, my little initiatives will
get a breathed satisfaction.

BIBLIOGRAPHY

Loan classification manual

BSB Order

57

Manuals

Annual Reports

Projects Prasanna Chandra

Financial Management- P K Jain & M Y Khan

Oral Discussions

Table and contents:

Name of the topic
no:

page

Background of the banking sector in Bangladesh

1
Background of the study

Institutional overview

A short brief on departments of BSB

14
Loan sanction procedure

18

Project appraisal procedure of BSB

29
Steps in project appraisal

29

Processing of loan proposal

33

Different aspects of project appraisal

34
Documents to be submitted after sanction of loan
45

58

Limiting factors

47

Recommendations

49

Conclusion

51

Bibliography

51

59