Credit Management of Standard Chartered Bank

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Credit Management of Standard Chartered Bank

Company Profile

Name of the Organization : Standard Chartered Bank Bangladesh

Year of Establishment : 1948 (Chittagong)

Country Chief Executive Officer : Jim McCabe

Head Office : Gulshan

Logo:

Nature of the organization : Multinational Company with subsidiary group in Bangladesh.

Local Time : GMT + 7 Hours

Currency Name : Taka (BDT)

Population : 161.3 million (UN, 2008)

Number of Branches : 25

Number of ATM’s : 50

Technology : Offers full online banking from branch tobranch and also from Dhaka to Chittagong.

Service Coverage & Customers : Serves individual and corporate customer within Dhaka & Chittagong.

2.2 Background of the Bank

Background

The Standard Chartered Group was formed in 1969 through a merger of two banks: The Standard Bank of British South Africa founded in 1863 and the Chartered Bank of India, Australia and China, founded in 1853. Both companies were keen to capitalize on the huge expansion of trade and to earn the handsome profits to be made from financing the movement of goods from Europe to the East and to Africa.

The Chartered Bank: The details about the Chartered Bank include:

• Founded by James Wilson following the grant of a Royal Charter by Queen Victoria in 1853.
• Chartered opened its first branches in Mumbai (Bombay), Calcutta and Shanghai in 1858, followed by Hong Kong and Singapore in 1859.
• Traditional business was in cotton from Mumbai (Bombay), indigo and tea from Calcutta, rice in Burma, sugar from Java, tobacco from Sumatra, hemp in Manila and silk from Yokohama.
• Played a major role in the development of trade with the East which followed the opening of the Suez Canal in 1869 and the extension of the telegraph to China in 1871.
• In 1957 Chartered Bank bought the Eastern Bank together with the Ionian Bank’s Cyprus Branches. This established a presence in the Gulf.

The Standard Bank: The details about the Standard Bank include:

• Founded in the Cape Province of South Africa in 1862 by John Paterson. Commenced business in Port Elizabeth, South Africa, in January 1863.
• Was prominent in financing the development of the diamond fields of Kimberley from 1867 and later extended its network further north to the new town of Johannesburg when gold was discovered there in 1885.
• Expanded in Southern, Central and Eastern Africa and by 1953 had 600 offices.
• In 1965, it merged with the Bank of West Africa expanding its operations into Cameroon, Gambia, Ghana, Nigeria and Sierra Leone.

In 1969, the decision was made by Chartered and by Standard to undergo a friendly merger. All was going well until 1986, when a hostile takeover bid was made for the Group by Lloyds Bank of the United Kingdom. When the bid was defeated,

Standard Chartered entered a period of change. Provisions had to be made against third world debt exposure and loans to corporations and entrepreneurs who could not meet their commitments. Standard Chartered began a series of divestments notably in the United States and South Africa, and also entered into a number of asset sales.

From the early 1990s, Standard Chartered has focused on developing its strong franchises in Asia, the Middle East and Africa using its operations in the United Kingdom and North America to provide customers with a bridge between these markets. Secondly, it would focus on consumer, corporate and institutional banking and on the provision of treasury services – areas in which the Group had particular strength and expertise.

In the new millennium SCB acquired Grindlays Bank from the ANZ Group and the Chase Consumer Banking operations in Hong Kong in 2000.2005 and 2006 were historic years for as several milestones with a number of strategic alliances and acquisitions that is expected to extend SCB’s customer or geographic reach and broaden their product range at the same time.

The bank rejuvenated its 150-year-old logo in 2003 by bringing in colors of green and blue. The logo shows the letters ‘S’ in blue and ‘C’ in green, twisted and curled with one another. The logo of the bank depicts the merger of two banks.

Standard Chartered today: Today Standard Chartered is the world’s leading emerging markets bank employing 30,000 people in over 500 offices in more than 50 countries primarily in countries in the Asia Pacific Region, South Asia, the Middle East, Africa and the Americas. The new millennium has brought with it two of the largest acquisitions in the history of the bank with the purchase of Grind lays Bank from the ANZ Group and the acquisition of the Chase Consumer Banking operations in Hong Kong in 2000. These acquisitions demonstrate Standard Chartered firm committed to the emerging markets, where we have a strong and established presence and where we see our future growth.

2.3 Company Vision

At Standard Chartered Bank, we draw our inspiration from the distant. Our vision is to assure a standard that makes every banking transaction a pleasurable experience. Our endeavor is to offer you supreme service through accuracy, reliability, timely delivery, cutting edge technology and tailored solution for business needs, global reach in trade and commerce and high yield on your investments. Our people, products and processes are aligned to meet the demand of our discerning customers. Our goal is to achieve a distinct foresight. Our prime objective is to deliver a quality that demonstrates a true reflection of our vision – Excellence in Banking.

2.4 Company Mission

To be the premier financial institution in the country providing high quality products and services backed by latest technology and a team of highly motivated personnel to deliver Excellence in Banking.

2.5 Values

Standard Chartered also operates according to certain key business values. These are –

· The highest personal standards of integrity at all levels

· Commitment to truth and fair dealing

· Hands-on management at all levels

· Commitment to quality and competence

· A minimum of bureaucracy

· Fast decisions and implementation

· Putting the team’s interests ahead of the individual’s

· The appropriate delegation of authority with accountability

· A commitment to complying with the spirit and letter of all laws and regulations wherever we conduct our business.

SCB reputation is founded on adherence to these principles and values. All section taken by a member of the SCB Group or staff member on behalf of a Group company should confirm to the principles and values. Additionally they have code of conduct for staff in all operations.

2.6 Goal

SCB people, products and processes are aligned to meet the demand of its discerning customers. Its goal is to achieve a distinction like the luminaries in the sky. Its prime objective is to deliver a quality that demonstrates a true reflection of its vision – Excellence in Banking.

2.7 Strategic Objectives

· To conduct transparent and high quality business operation within the legal and social framework.

· To provide customers continually efficient, innovative and high quality products with excellent delivery system.

· To generate profit with qualitative business as a sustainable ever-growing organization.

· We are committed to our community as a corporate citizen and contributing towards the progress of the nation as our corporate social responsibility.

· Our employees are our backbone. We promote their well being through attractive compensation package, promoting staff morale through training, development and career planning.

· We strive for fulfillment of our responsibility to the government through paying entire range of taxes and duties and abiding the other rules.

· We are cautious about environment & climatic change and dutiful to make our world a green and clean soul.

2.8 The main Objective of Standard Chartered Bank

Through an international network linked by advanced technology, including a rapidly growing e-commerce capability, SCB provides a comprehensive range of financial services, personal financial services, commercial banking, corporate, investment banking and markets, private banking and other activities.

2.9 Principles of Standard Chartered Bank

The Standard Chartered Group is committed to five core business principles. These are –

· Outstanding customer service

· Effective and efficient operations

· Strong capital and liquidity

· Prudent lending policy

· Strict expense discipline

2.10. Organogram

Figure 1: Organogram

CEO : Chief Executive Officer

HOCB : Head of Consumer Banking

HOWB : Head of wholesale Banking

HOHR : Head of Human Resource

HOFA : Head of Finance & Administration

CIO : Chief Information Officer

HOCA : Head of Corporate Affairs

Remarks: All Departmental Heads indirectly report to country CEO, and directly report to regional head

2.11. Branch Location & Banking Hour

2.12. Management Structure of Standard Chartered Bank

2.12.1 Board of Directors

2.12.2 Board of Members

Source: Standard Chartered Bank website (www.standardchartered.com/bd)

2.13. Physical Evidence

The environment in which the reference and information service are delivered that performance and communication of the service,

The appearance of building, landscaping, vehicles, interior furnishing, equipment, staff members, signs, printed materials, and other than visible cues all provide tangible evidence of the banks service quality. Standard Chartered Bank manages its physical evidence very carefully, as it can have a profound impact on customers’ impression.

They have:

• Well decorated office space
• Prayer time & space
• Necessary furniture & electric equipment
• Seating arrangement for customers
• Car parking facility
• Printed materials
• Skilled manpower etc.

2.14. Process:

• Standard Chartered Bank creates and delivers product elements based on customer requirement.
• They design and implementation by effective process.
• Standard Chartered Bank designs its process in such a way that lead to fast, dynamic and very effective service delivery and result in satisfied customers.
• As the process of the bank is very well designed, it helps a lot to the front line staffs to do their jobs well, resulting in high productivity and decrease likelihood of service failure.
• In the bank most of the directions comes from head office but there are different culture in different branch based on location but everywhere a specific process is highly maintained.

2.15. Capital Structure

The capital structure of Standard Chartered Bank is quite strong. Its authorized capital is Tk 6,000 million and paid up capital is Tk 2,128 million. Market price per share is tk 780.

(Amount in million)

Source: Annual Report Standard Chartered Bank (Year 2005-2009)

Fig: 2(c) – Authorized & paid up capital

From the graph it is seen that in 2005 and 2006 the authorized capital was tk 2,650 million and from 2007 it is tk 6,000 million. Their paid up capital is also increasing year by year. In 2005 it was tk 1,228 million and in 2009 it stood at tk 2,128 million.

2.16. Products and Services of Standard Chartered Bank

Source: Annual Report of Standard Chartered Bank (Year 2009)

Fig: – 2 (d) Products and Services of Standard Chartered Bank

2.17. Different Departments:

Figure: 2(e) – Different Departments

2.18. Department of Gulshan Branch

General Banking (GB) Department:

Some of the day-to-day activities of this department are the following.

1 Account Opening

2 Issuance of Cheque

3 Receiving Cheques for Clearing, Transport, and Dispatch

4 Issuance of PO (Pay Order), DD (Demand Draft), etc.

5 Opening and Maintaining of FDR and other Scheme Deposits

6 Fund Transfer

7 Closing and Transfer of Accounts

8 Maintaining the Locker of the Bank

9 Outward Clearing of IBC and OBC

10 Maintaining On-line Voucher

11 Utility bill, Rent of building and work of accounts department was done by GB because they don’t have any separate accounts department.

Cash Department:

This department is responsible for cash payment and receipt. The employees in this department are also liable for computer posting, passing cheques, and accuracy of posting, balancing on-line accounts, etc.

Credit Department:

This department is responsible for the following jobs:

1 Prepare the application form to provide loan

2 Preparing CIB Statements

3 Preparing Credit Proposal and Statement

4 Administration of Retail Credit

Foreign Exchange Department

1. L/ C opening.
2. Verification o L/C application
3. Sanction the application
4. Advising L/C
5. Export trade financing
6. Remittance

Marketing and Customer Care Department

Searching for new customer, answer the inquiry about the product to the customer. They also look whether customer all documents are given or not.

2.19 Credit Rating Report

Standard Chartered Bank was rated by Credit Rating Agency of Bangladesh (CRAB) on the basis of financial audited Statement, as on December 31 .2009.The Summary of rating is presented below:

Commercial banks rated A1 in the long term are adjudged to be to be strong banks, characterized by good financials, healthy and sustainable franchises and a first rate operating environment. This level of rating indicates strong capacity for timely payment of financial commitments with low likeliness of being adversely affected by foreseeable events.

Commercial banks rated ST-2 in the short term are considered to have strong capacity for timely repayment. Banks rated in this category are characterized with commendable position in terms of liquidity, internal fund generation, and access to alternative sources of funds is outstanding.

Theoretical Aspects

Credit: Credit is a contractual Agreement, in which a borrower receives something of value now, with the agreement to repay the lender at some date in the future.

Pay Order: A pay order is a draft issued by one another or on its branch. The purchase of a draft makes to the seller in local currency at the domestic center while the paying after presentation of the draft by the beneficiary pays the beneficiary. There is also risk of loss of the draft in transit.

Demand Draft: The person intending to remit the money through a pay order has to deposit the money to be remitted with the commission which the banker charges for its services. The amount of commission depended on the amount to be remitted .On issue of the pay –order the remitter does not remit a party to the instrument 1) drawer branch 2) drawee branch 3) payee. This is treated as the current liability of the bank as banker on the presentation of the instrument should pay the money.

Telegraphic transfer: Telex transfer is another widely used mode for remittance of funds. In case of telex transfer the message for transfer of funds is communicated through tested telex. SCB generally recovers from the telex charges in addition to the usual service charge. Now a day’s Standard Chartered are not covering this service.

Secured Overdraft-SOD (FO): Advance is granted to a client against financial obligations that is deposited in the bank. A client can get up to 90% loan of the total deposited value.

Secured Overdraft-SOD (G): Granted against the work order of government departments, corporation’s autonomous bodies and reported multinational private organization.To arrive at logical decision, the client’s managerial capability, equity strength, nature of scheduled work is to be judged.

Cash Credit-CC (Hypothecation): The mortgage of movable property for securing loan is called hypothecation. Hypothecation is a legal transaction whereby goods are made available to the lending banker as security for a debt without transferring either the property in the goods or either possessing.

Cash Credit-CC (Pledge): Transfer of possession in the judicial sense of essential in the valid pledge. In case of pledge, the bank acquire the possession of the goods or a right to hold goods until the repayment for credit with a special right to sell after due notice to the borrower in the event of non-repayment.

Lim: It stands for loan against important merchandise. It’s one kind of post import finances allowed for very shorter period, usually 30 to 60 days or 30 to 90 days.

LTR: This is an arrangement under which credit is allowed against trust receipts. Imported or exportable goods remain in the custody of the importer of exporter. But he is to execute a stamped trust receipt in favor of the bank wherein a declaration is made that the goods imported or bought with the bank’s financial assistance are held by him in trust for the bank. As soon as goods are sold, generally the importer or exporter is required to deposit the sale proceeds there of the bank.

PAD:It stands for payment against documents. By opening letter of credit on behalf of the importer in favor of the seller banks undertake to make payment to the seller subject to shipments of goods and submission of shipping documents in strict compliance with L/C terms, giving title of goods to the buyer. After shipment and having document in hand, the bank asks the importer to retire the import bills immediately that the bank undertakes. Thus liability under the L/C is converted to bank’s advance. It is a practice to allow the importer to retire the documents until ship carrying the goods arrives. If the importer retires the bill the transaction ends.

Primary security: There are the securities taken by the ownership of the items for which banks provides the facility.

Collateral security: Collateral securities refer to the securities deposited by the third party to secure the advance for the borrower in narrow sense. In wider sense, it denotes any type of security on which the bank has a personal right of action on the debtor in respect of the advances.

Sub-standard Advances: This classification contains accounts where irregularities have occurred but where such irregularities are considered to be either “technical” or “temporary” in nature. The main criteria for a sub-standard advance are that despite these “technical” or temporary irregularities no loss is expected to arise.

These accounts will require close supervision by the management to ensure that the situation does not deteriorate further.

Provision @ 15% of the base is required for debt in this classification where the base is the outstanding balance less interest kept in Interest Suspense Account less the value of eligible securities.

Doubtful Debt: This classification contains debts where doubt exists the full recoverability of the principal and/or interest. Although a loss is anticipated it is not possible at this state to quantify the exact extent of that loss. Management is required to handle such debts with the utmost caution to either avoid or minimize the Bank’s losses. Provision @ 50% of the base is required for debts in this classification.

Bad-Debts: These facilities are considered to be uncorrectable shall be made a provision @ 100% of the base.

Special Mention: In addition to the above classification rating, there should be another category which is not classified but where special attention is necessary to keep the account out of classification. This category will be known as Special Mention. Facilities required special monitoring are to be flagged or put on a watch list.

About Credit

4.1 Credit

The word credit comes from the Latin word “Credo” meaning “I believe”. It is a lender’s trust in a person’s or firms or company’s ability or potential ability and intention to repay. Credit is a contractual Agreement, in which a borrower receives something of value now, with the agreement to repay the lender at some date in the future. One of the basic functions of the bank is deposit extraction and credit extension. Managing credit operations is the crying need for any bank.

The objective of the credit management is to maximize the performing asset and the minimization of the non-performing asset as well as ensuring the optimal point of loans and advances and their efficient management.

4.2 Factors Related with Credit

· Risk

· Time

· Interest Rate

· Security or Collateral

· Operating Expense

· Legal Considerations

· Inflation

· Finance Charge

4.3 Importance of Credit

Credit plays a vital role in national economy in the following ways-

I. It provides working capital for industrialization

II. It helps to create employment opportunities

III. Credit controls almost all kinds of production activities of the country

IV. It brings social equity

V. Cash generation occurs for its successful performance

VI. Business cycle can run well only by the help of lending system

VII. Economic stabilization

VIII. Raise standard of living.

4.4 Credit Management

Credit management is a dynamic field where a certain standard of long-range planning is needed to allocate the fund in diverse field and to minimize the risk and maximizing the return on the invested fund. Continuous supervision, monitoring and follow-up are highly required for ensuring the timely repayment and minimizing the default. Actually the credit portfolio is not only constituted the bank’s asset structure but also a vital factor of the bank’s success. The overall success in credit management depends on the banks credit policy, portfolio of credit, monitoring, supervision and follow-up of the loan and advance. Therefore, while analyzing the credit management of SCB, it is required to analyze its credit policy, credit procedure and quality of credit portfolio.

4.5 Credit Policy of SCB

One of the most important ways, a bank can make sure that its loans meet organizational and regulatory standards and they are profitable. It is important to establish a loan policy. Such a policy gives loan management a specific guideline in making individual loans decisions and in shaping the bank’s overall loan portfolio. In Standard Chartered Bank there is perhaps a credit policy but there is no credit written policy.

4.6 Credit Principles

In the feature, credit principles include the general guidelines of providing credit by branch manager or credit officer. In Standard Chartered Bank they follow the following guideline while giving loan and advance to the client.

1. Credit advancement shall focus on the development and enhancement of customer relationship. All credit extension must comply with the requirements of Bank’s Memorandum and Article of Association, Banking Company’s Act, Bangladesh Bank’s instructions, other rules and regulation as amended from time to time.
2. Loans and advances shall normally be financed from customer’s deposit and not out of temporary funds or borrowing from other banks.
3. The bank shall provide suitable credit services for the markets in which it operates.
4. It should be provided to those customers who can make best use of them.
5. The conduct and administration of the loan portfolio should contribute within defined risk limitation for achievement of profitable growth and superior return on bank capital. Interest rates of various lending categories will depend on the level of risk and types of security offered.

4.7 Principles of Sound Lending

It should be clearly understood that the criteria/principles are not inflexible laws & are given as guidelines for protecting credit. In a practical competitive world, risks are defined, accepted and credit is often granted even though a proposal does not strictly with some of the criteria described below:

The basic lending criteria can be considered as eight main headings, as follows:

§ Principle of Safety

§ Principle of Liquidity

§ Principle of Purpose

§ Character and ability of the borrower

§ Principle of Security

§ Principle of profitability

§ Source of repayment

§ Principle of National Interest

Each of the headings will now be discussed further in the following paragraph:

Principle of Safety

The first lending Principle of sound lending is safety. The very existence of a bank depends upon the safety of its advances. Safety should not be sacrificed for profitability. So utmost care should be exercised to ensure that the funds go to the right type of borrower, are utilized in such a way that they remain safe and the repayment comes in the normal course.

Principle of Liquidity

Liquidity means the availability of Bank funds on short notice. The liquidity of an advance means it repayment on demand on due date or after a short notice. Therefore, the banks must have to maintain sufficient liquidity to repay its depositors and trade off between the liquidity and profitability is must.

Principle of Purpose

The bank should not lend money for any purposes for which a borrower may be free from all risks but if the funds borrower are employed for unproductive. Purpose like marriage ceremony, pleasure trip etc or speculative activities, the repayment in the normal course will become uncertain. Banks therefore discourage advances from boarding stocks and refuse advances for speculative activities.

Character and ability of the borrower:

The primary responsibility of the leading banker is “know your customer and his business”. While considering the character and ability of a borrower, the following point must be kept in mind.

§ Do know your customer already?

§ Was he respectively introduced?

§ If he was previously customer of another bank, why has he come to United Commercial Bank Ltd. Try to see previous bank statement?

§ Have you made the account opening inquiries required by the bank?

§ What are the business its ownership?

§ What is the customer’s background and financial track record?

§ Customer’s honesty & integrity and personal stability?

§ How has the customer managed his financial circumstances in the past?

The branch manger should have the answer of the above queries and should be to judge his ability to use the credit facilities to his advantage. Advance should be granted only to those borrowers in whom the branch manager has full confidence. Integrity of the borrower and his ability to conduct business are of paramount importance and take precedence over the value of securities offered.

Principle of Security

The security offered by a borrower for an advance is insurance to the banker. It serves as the safety value for an unforeseen emergency. So another principle of sound lending is the security of lending. The security accepted by a banker to cover a bank advance must be adequate, readily marketable, easy to handle and free from any encumbrance.

Principle of Profitability

Banking is essentially a business, which aims at earning of a good profit. The working funds of a bank are collected mainly by means of deposit from the public and interest has to be paid on those deposits. Banks have also to meet their establishment charges and other expenses. Interest earned by a bank on its advance is the main source of its income. The different between the interest received on advances and the interest paid on deposits constitute a major portion of the banker’s income. Besides foreign exchange business is also highly remunerative. The bank will not enter into a transaction unless a fair return form it is assured.

Source of Repayment

After the branch manager has ensured that the credit will be a profitable propositioning for the bank, he should then turn his attention to the cash flow situation of the borrower. The bank’s credit can be classified into three main categories, as follows:

• A very short-term advance will be liquidated by funds received in the very near future, such as advances against foreign or local bills or bridge functioning where evidence of credit sanction from another financial institution is available.
• Provision for current assets; this type facility is needed for trading and /or manufacturing activities.
• Long term loans, generally over 5 years; example of such facilities as investment in plant and machinery, a farm or a shop, generally, a long term is repaid out profits generated by the business.

Principle of National Interest

The development of banking has reached a stage where a banker is required to identify his business with national policies. Banking Industry has significant role to play in the economic development of a country. So, the savings of the people which are mobilized by banks must be distributed to those sectors which require development in the country’s Planning Program.

4.8 Global Credit Portfolio Limit of SCB

The features which deals with how much total deposits would be used as lending the proportion of long term lending, customer exposure, country exposure, proportion of unsecured facility etc. the most notable ones are:

The aggregate of all cash facility will not be more than the 80% of the customers deposit

Long term loan must not exceed 20% of the total loan portfolio. Facilities are not allowed for a period of more than 5 (Five) years. Credit facilities to any one customer group shall not normally exceed 15% of the capital fund or TK. 100 crores.

4.9 Type of Credit Activities: Credit may be classified with reference to elements of time, nature of financing and provision base.

Classification on the basis of time: On the basis of elements of time, bank credit classified as:

Continuous loan:

These are the advances having no fixed repayment schedule but have a date at which it is renewable on satisfactory performance of the clients. Continuous loan mainly includes “Cash credit both hypothecation and pledge” and “Overdraft”.

Demand loan:

In opening letter of credit (L/C), the clients have to provide the full L/C amount in foreign exchange to the bank. To purchase this foreign exchange, bank extends demand loan to the clients at stipulated margin. No specific repayment date is fixed. However, as soon as the L/C documents arrive, the bank requests the clients to adjust their loan and to retire the L/C documents. Demand loans mainly include “Payment against Documents,” “Loan against imported merchandise (LIM)” and “Later of Trust Receipt”.

Term loan:

These are the advances made by the bank with a fixed repayment schedule. Terms loans mainly include “Consumer credit scheme”, “Lease finance”,” Hire purchase”, and “Staff loan”. The term loans are defined as follows:

• Short term loan: Up to 12 months.

• Medium term loan: More than 12 months & up to 36 months

• Long term loan: More than 36 months.

Classification on characteristics of financing of Standard Chartered Bank (SCB):

Short Term Agricultural Loan and Micro Credit

These loans are short term credits enlisted by Agricultural Credit division of Bangladesh Bank in its ‘annual loan program’. Loans disbursed in agricultural sector for a period not more than 12 months are also included in this category. Short term micro credits are the credits not exceeding BDT 25,000/- (taka twenty five thousand) only and repayable within twelve months.

Application Based Categories of Loan

Based on the purpose of the loan, loans are classified as follows:

Corporate Loan

Any loan exceeding 1, 00, 00,000 BDT and issued for business and trade purposes is defined as corporate loan. Such loans mainly serve the purpose of initials for the establishment of industry or large scale factory.

SME (Small & Medium Enterprise) Loans

This type of loan is disbursed for business purposes but the amount loaned does not exceed 1, 00, 00,000 BDT. The amount loaned here serves the purpose of potential (partial) working capital for small and medium business ventures.

Retail Loan

Retail loans are given for personal usage rather than for business purposes. It includes auto loan, personal loan, vacation loan, and home loan.

Personal Loan (Consumer Credit Scheme):

The objectives of this loan are to provide essential household durable to the fixed income group (Service Holders) and other eligible borrowers. Car loan, loan for house renovation, vacation loan, marriage loan and loan for household equipment well as entertainment products are governed by personal loan program. Personal loan is given under personal guarantee of the borrower and another third parson known to the borrower. There is also a processing fee of 1% taken at the time of disbursement of the loan.

Who can apply?

a) Salaried Individuals (salary must taken by Bank).

b) Professionals (minimum one year Bank transaction script from any Bank).

Age Limit:

Minimum Age of the Applicant: 21 Years

Maximum Age of the Applicant: 57 Years

Requirements: For Different professions people Bank gives different conditions.

Loan Size*:

Minimum : BDT 25,000.00

Maximum : BDT 10, 00.000.00

Interest Rate*:

15.00 % -19.00 %per annum

Other Terms & Conditions:

Minimum Gross Family Income: BDT 14,500.00

Auto Loan

Who can apply?

a) Salaried Individuals (salary must taken by Bank).

b) Professionals (minimum one year Bank transaction script from any Bank).

Loan Size:

-Minimum Loan Amount : BDT 5, 00,000.00

-Maximum Loan Amount : Up to 50% of Auto price.

Interest Rate:

15.00 % per annum (Conditions Apply)

Age Limit:

-Minimum Age of the Applicant: 21 Years.

-Maximum Age of the Applicant: 57 Years.

Other Terms & Conditions:

Gross Income: Minimum: BDT 50,000.00

Loan Facility for –

-Brand New or Re-Conditioned Vehicle, not older than 6 Years.

-Vehicle should be for personal use only.

Home Loan

Home Loan is a term loan facility to purchase your desired home/flat.

Who Can Apply?

a) Salaried Individuals

b) Professionals

c) Business Persons (Requirements are same for all product & customer)

Loans are available to Bangladeshi nationals:

-Minimum age of eligibility : 21 years

-Maximum age of eligibility : 65 years

-Verified gross family income : BDT 40,000

Loan Size:

-Minimum : BDT 15, 00,000*

-Maximum : BDT 200, 00,000*

*conditions apply

Tenure:

Maximum : 15 Years

Interest Rate:

Depending on the size and tenure, Dhaka Bank Home Loan interest rates vary from 12% to 13.50%

Security: Registered Mortgage of the House/Apartment

Govt. Charges: As per Government Specification.

4.10 Business Credit Facilities under SME

· OD WO (Overdraft Work Order)

· OD PO (Overdraft Pay Order)

· SOD (Secured Overdraft)

· OD SME (Overdraft SME)

OD WO (Overdraft Work Order)

SCB, OD WO is a credit against assignment of receivables (under the awarded work) and lien / mortgage of collateral. It’s for contractors / suppliers and can be availed on one off basis for financing the working capital requirement in business against specific work order or the same under a revolving line with renewal option.

Charges:

• Interest rate: Small – [Men: 13% – 17%; Women: 10%] & Medium – 13%.
• Overdue interest: 3%.
• Processing fee: 1.00%.
• VAT: 15% of processing fee.

OD PO (Overdraft Pay Order)

SCB, OD PO is a renewable credit against lien / mortgage of collateral(s). It’s for contractors / suppliers as well and can be availed at a pre determined margin for meeting the obligation of pledging pay order(s) with the work order awarding authority as earnest money / security deposit.

Charges:

• Interest rate: Small – [Men: 13% – 17%; Women: 10%], Medium – 13%
• Overdue interest: 3%
• Processing fee: 0.50% to 1.00%
• VAT: 15% of processing fee.

SOD (Secured Overdraft)

SCB, SOD facility is provided against different types of FDRs, ICB Unit Certificate, Life Insurance policy, etc. It is renewable and can be availed on a continuous basis to support the day-to-day operations and / or sudden escalation of financial requirement in a business.

Charges:

• Interest rate: 3% above the deposit interest rate.
• Overdue interest: 3%
• Processing fee: Nil
• VAT: Nil.

OD SME (Overdraft SME)

SCB, OD SME is also a credit against hypothecation of stocks insured (covering all risks) under Bank’s mortgage clause and lien / mortgage of collateral(s). It’s renewable and can be availed on a continuous basis to support the day-to-day operations and finance growth of a business.

Charges:

• Interest rate: Small – [Male: 13% – 17%; Female: 10%] & Medium – 13%
• Overd