Brief Overview On Jamuna Bank Limited

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1.1 Origin of the Report

After completion
of 4 years in the BBA program of the faculty of business studies, department of management
studies, University of Dhaka, three months organizational
attachment is must. So the preparation and submission of this report is
partial requirement for the completion of the
Bachelor of Business Administration
report is outcome of the three month long internship program conducted in
Jamuna Bank Limited, one of the reputed private commercial banks of the country
.While working in the bank the
standard operating procedures carried out by the bank
the standard operating procedures carried out by
the bank were observed and

1.2 Objectives of the Report

This report is prepared
primarily to fulfill the Bachelor of Business Administration (BBA) degree
requirement in BBA program of the faculty of business studies, department of
management studies, University of Dhaka.

Re secondary objectives of this
report are:

  • To have exposure to
    the credit operation and other function of Jamuna Bank Limited.
  • To have a clear understanding of the business
    operation of Jamuna Bank Limited.
  • To discuss the services offered by Jamuna Bank Limitcd.
  • To assess and evaluate the growth trends of Jamuna Bank Limited.
  • To
    evaluate the profitability of Jamuna Bank Limited.
  • To identify the major
    strength and weakness of Jamuna Bank Limited in
    respect to other banks.
  • To
    recommend ways and means to solve problems regarding banking of
    Jamuna Bank Limited.

1.3 Methodology

This report is
based mainly on observations that I experienced during the internship
period. Data
required for this report were collected from the annual report of Jamuna bank.
Apart from these, helpful information was collected from online resources. To
analyze the
performance of Jamina bank limited different statistical and financial
tools such as ratio analysis, growth
analysis were done.
1.4 Limitation
Although the
officials were so busy, they gave me wholehearted cooperation in the
time of
internship also in preparing this report. It was such a nice experience I have
gathered from
JBL. But I have faced the following that may be terns as die limitations
of the study.

remuneration was provided

first obstacle was that they would not provide any remuneration even TAJDA for
doing internship in JBL.

Lack of records

Sufficient books,
publications and figures were not available. If this limitation were
not been there, the report would have
been more useful.

1.5 Background
Information of Jamuna Bank Limited

Jamuna Bank Limited is one of the leading private
commercial banks in Bangladesh
that has achieved tremendous popularity and credibility among the people
for its
& services. It is a public limited company and its shares are traded in
and Chittagong stock exchange. The
bank undertakes all types of banking transaction

to support the
development of trade and commerce in the country. JBLs service is also
available for the entrepreneurs to set up new ventures and BMM
-,, of
industrial units.

To provide clientele services in
respect of international trade it has established wide,
corresponded Banking relationship with local and foreign banks covering
major trade
and financial interest home and abroad.
1.6 Historical Background of JBL
Jamuna Bank
Limited (JBL) is a Banking Company registered under the Companies
Act 1994 with
its Head Office at Printers Building, 5 Rajuk avenue Dhaka-1000. The
bank started its operation from 3rd
June 2001. Jamuna Bank Limited (Jf31,) is a highly capitalized new generation Bank with an Authorized
capital and paid-up capital of Taka 1600.00 million and Tk 390.00 million, Paid
up capital of the Bank raised to Tk.429 million as of December, 2005 and the
number of branches raised to 29.Thc
gives special emphasis on export, import, trade finance SME finance Retail
and finance to woman Entrepreneurs.
1.7 Corporate Slogan of JBL
Your Partner For Growth
of JBL
To become a
leading banking institution and to play a pivotal role
­ inthe
of the
1.9 Mission of JBL

The Bank is committed to satisfying diverse needs of its
customers through an array
of products at a competitive price by using appropriate technology and
timely service so that a
sustainable growth, reasonable return and contribution to the development of the country can be ensured with a
motivated and professional work­

1.10 Objectives of JBL

earn and maintain CAMEL Rating Strong.
To establish relationship banking and improve service
quality through
of strategies marketing plans.
remain one of the best banks in Bangladesh in terms of Profitability and
quality .
To introduce fully automated system through integration of
ensure an adequate rate of return on investment
To keep risk position at an acceptable range (including an
y of balance sheet
maintain adequate liquidity to meet maturing obligation and commitments.
maintain a healthy growth of business with desired image
maintain adequate control systems and transparency in procedure
To develop and retain a quality work force through an
effective Human
Management System
ensure optimum utilization of all available resources
To pursue an effective system of management by
ensuring compliance to
norms, transparency and accountability

1.11 Strategies of JBL

To manage and operate the Bank in the most efficient
manner to enhance
performance and to control cost of fund.
To strive for customer satisfaction through quality
control and delivery of
To identify customers credit and other banking needs and
monitor their
towards our performance in meeting those requirement.
review and update policies, procedures and
practices to enhance the ability
to extend better services to customers.

To train and develop all employees and provide adequate
resources so that
needs car, be responsibly addressed.

To promote organizational effectiveness by openly
communicating company
policies, practices and procedures to all employees in a timely fashion

To cultivate a working environment that fosters positive
motivation for or

diversify portfolio both in the retail and wholesale market

To increase direct contract with customers in order to
cultivate a closer
between the bank and its customers.

1.12 Organogram of JBL 

1.13.1 Corporate Governance

Board Of Directors

Board of Directors consists of 13 members elected from the sponsors. The Board
of Dirc-7
supreme body of the Bank.

Executive Committee

All routine matters beyond the delegated powers of
management are decided upon by or routed through the “Executive
Committee, subject to
ratification by the Board of Directors.

Audit Committee

In line with the guidelines of
Bangladesh Bank, a three-member Audit Committee of the Board of Directors been
formed to assists the Board in matters related to Audit and Internal Control
System of the Bank.


AI-Haj Nur Mohammed

Vice Chairman

Mr. Md. Sirajul Islam Varosha


Al-haj M. A. Khayer

Engr. A. K. M. Mosharraf Hussain
Mr. Arifur Rahman

Mr. Golam Dastagir Gazi, Bir Protik Mr. Fazlur Rahman

Mr. Md.Tajul Islam

Mr. Md. Mahmuclul Hoque Mr. Md. Irshad Karim

Mr. Shaheen Mahmud

Mr. Mohammad Nurul Alam

Sponsor Directors Engr.

Md. Atiqur Rahman

Al-haj Md. Rezaul Karim Ansari Mr.

Md. Belal Hossain

Mr. Sakhawat Abu Khair

Mohammad Mr. M.N.H. Bulu

Mr. Farhad Ahmed Akand

Mr. Md. Ismail Hossain Siraji

Mr. Gazi Golam Murtoza

 Mr. Kanutosh Majumder

Shariah Council

Professor Dr. Mustafizur Rahman Mawlana
Mufti Ruhul Amin Mawlana Abdur Razzak

Professor Mowlana

Md.Salahuddin Mr. M
Azizul Huq


Mr. Mohammed Lakiotullah

Additional Managing Director

Md. Motior Rahman

Company Secretary

 Mr. Md. Anwar Hossain


M/s. G. Ki b ria & Co. Chartered Accountants




Experienced top management.

• Limited market share.

• Satisfactory capital base.

• Exposure to large loan‑

•   Low infection in loan

• Excessive dependency on term deposits.


• Weak fund management.

•   Prospective IT infrastructure.

•   High cost of fund.

•   Islamic Branch funds are not ring fenced.



Regulatory environment

•   Increased competition in the market for

favoring private sector

quality assets.


• Supply gap of foreign

• Credit card.

• Over all liquidity crises in money

•   Small and medium  



Products and Services of Jamuna Bank Limited

The products and services can be
classifying in two ways & those arc.
deposit products & services
lending products & services

Deposits products & services

Corporate Banking

Hi-her Purchase

Personal Banking

Lease Finance

Online Banking

Personal loan for woman

Monthly Savings Scheme

Project Finance

i Monthly Benefit

i Loan Syndication

Double/Triple Benefit Scheme

Consumer Credit

Marriage Scheme

Import and Export. Handling

Education Scheme

Lakhpati Deposit Scheme

Q-Cash ATM

2.1 Corporate Banking
The motto of
JBL’s Corporate Bankin
g services is to provide personalized
to their
customers. The Bank distinguishes and identifies corporate customers’ need and
designs tailored solutions accordingly.

Bank Ltd. Driers a complete range of advisory, financing and operational
combining trade, treasury, investment and services
to its corporate client groups coin transactional banking activities in one
package. Whether it is a project finance, term loan, import or export deal, a
working capital requirement or a forward cover for a
foreign currency transition, there Corporate Banking Managers will offer you the accurate solution, their corporate Banking specialists will render
high class service
for speedy approvals and efficient processing to
satisfy customer needs.

Banking business envelops a broad range of businesses and industries.
Every one can leverage on our
know-how in the following sectors mainly:
processing industry
(Import Substitute / Export oriented)
Spinning, Dyeing / Printing
Oriented Garments, Sweater.
& Allied
& Paper Products
Steel Mills
and chemical products etc.
Estate & Construction
• Hotels, Restaurants
Bank Financial Institutions
Finance • Investment Banking
Finance • Hire Purchase • International Banking
 Import Finance
2.2 Personal Banking
Personal Banking
of Jamuna Bank offers wide-ranging products and services
matching the
requirement of every customer. Transactional accounts, savings
schemes or loan
facilities from Jamuna Bank Ltd. make available to all a unique
mixture of easy and consummate
service quality.
They make every
endeavor to ensure their clients’ satisfaction. Their cooperative &
professionals working in the branches will make your visit and enjoyable
2.3 Online Banking
Jamuna Bank
Limited has introduced real-time any branch banking on
April 05,
Now, customers can withdraw and deposit money from any of its 30 branches
at Dhaka, Chittagong, Sylhet, Gazipur, Bogra, Naogaon, Narayanganj and Munshigonj.
Their valued customers can also enjoy 24 hours banking service
through ATM card
from any of Q-cash ATMs located at Dhaka, Chittagong, Khulna,
Sylhet and
Bogra. All the existing customers of Jamuna Bank Limited will enjoy this
service by default.
2.4 Monthly Savings Scheme (MSS)
Savings is the best friend
in bad days. Small savings can build up a prosperous future. Savings can meet
up any emergences. JBL has introduced Monthly Savings Scheme (MSS) that allows
saving on a monthly basis and getting a handsome return upon maturity. If
anyone wants to build up a significant savings to carry out you’re cherished
Dream, JBL MSS is the right solution.
2.5 Monthly Benefit Scheme (MBS)
Jamuna Bank
Limited has introduced Monthly Benefit Scheme (MBS) for the prudent
persons having
ready cash and desiring to have fixed income on monthly basis out of
it without taking risk of loss and
without enchasing the principal amount. This scheme offers highest return with
zero risk. Everyone can plan your monthly expenditure with the certain monthly
income under the scheme.

2.6 Double/Triple
Growth Deposit Scheme

For people who have cash flow at this
moment and want to get it doubled/tripled quickly JBL has introduced
Double/Triple Growth Deposit Scheme that offers to make double/triple money
within 6(six) years and 9.5 (nine and a half) years respectively resulting a
high rate of interest.

2.7 Marriage Deposit

Marriage of children, especially
daughter is a matter of great concern to the parents. Marriage of children
involves expense of considerable amount. Prudent parents make
effort for gradual building  of fund as per their capacity to meet the
expense of their
children specially daughters. Parents get relief and can have peace of
mind if they can arrange the necessary fund for
marriage of their children, no matter
whether they survive or not till
the marriage occasion.
It can be a great
help to the parents if there is any scope of deposit of a modest
mount as per
their financial capacity, which groves very fast at high rate of interest
yielding a sizeable
amount on maturity.
With this end in
view JBL has introduced Marriage Deposit Scheme, which offers you
an opportunity to build – up your
cherished – fund by monthly deposit of serial, amount at your
affordable capacity.
Education Savings Scheme
Education is a basic need of every
citizen. Every parent wants to impart proper education to their children.
Education is the pre-requisite for socio-economic development of the country.
As yet, there is no arrangement of free education to the
citizens from the government level. As such, there
should be pre-arrangement of fund
to ensure higher educations
the children. Otherwise higher education may be hindered due to change of
economic condition, income of the parents at the future time when higher
education shall be required. Today’s higher education is becoming expired day
by day. Parents can get relief and can have peace of mind if they can arrange
the necessary fund for higher education of their children. As such, JBI, has
‘Education Savings Scheme’ which offers you an opportunity to
build up your cherished fund’ by monthly deposit of small amount it at your
affordable capacity or initial lump sum deposit to yield handsome amount on a
future date to meet the educational expenses. Under this Scheme you have the
different attractive options to
avail the
future benefit i.e. withdrawal of the total amount accumulated in lump
or withdrawing monthly benefit to meet educational expense keeping
die principal amount intact or to withdraw both principal and accumulated
profit monthly for a certain period.
2.9 Lakhpati Deposit Scheme
To become a lakhpati is a dream to
most of the people of Bangladesh specially to the lower and lower middle class
income group. They experiences their expectations and
wants are enormous in nature in our small span of life. To meet our
deposit and wants
we need right plan. Keeping the above in mind JBL has
introduced “Lakhopati Scheme” which has flexibility report of
maturity and monthly installment as per
affordable capacity.
2.10 Q-Cash Round The Clock Banking
Jamuna Bank Q-Cash ATIM Card enables
the costumers to withdraw- cash
variety of
banking transactions 24 hours a day. Q-Cash ATMs are conveniently
covering major shopping centers, business and residential areas in Dhaka and c
hittagong. ATMs in Sylhet, Khulria and other
cities will soon start be introduced.
The network will expand to cover
the whole country within a short span of time.
With customers Jamuna Bank Q-Cash ATM
card they can:

Cash withdrawal Round The Clock from any Q-Cash logo
marked ATM

transaction (shopping malls, restaurants, Jewell Aries etc)

overdraft facilities on the card (if approved)

Bill Payment facilities

transaction facilities for selective branches nationwide

ATM service available in Dhaka and Chittagong Withdrawal
allowed from
ATM’s of Jamuna Bank Ltd., AB Bank, The City Bank, Janata Bank, IFIC Bank, Mercantile Bank, Pubali Bank,
Eastern Bank Ltd. respectively

more to come Is Q-Cash

2.11 Hire Purchase
Hire purchase is
a type of installment Credit wider which the Hire  purchase agrees
to take goods on
hire at a stated rate which is inclusive of the repayment of principle
as well as interest for adjustment of
the loan within a specified period.
2.12 Lease Finance
Lease means a
contractual relationship between the owner
of the asset and its utter-
specified period against mutually agreed upon rent. The owner is called the
and the user is
called the Lessee.
Lease finance is
one of the most convenient source of financing of assets viz
machinery, equipment vehicle, etc.
The user of the assets i.e. Lessee is benefited through tax advantages, conserving working capital and preserving debt
Moreover, Lease is an
off-balance sheet item 1.e lease amount is not shown in the
sheet of the lessee and does not affect borrowing capacity.
Leasing enables
the lessee to avail the services of a plant or equipment without
making the
investment or incurring debt obligation. The Lessee car, use the asset by
paying a series
of periodic amounts called “lease payment” or “lease
rentals” to the
owner of the asset at the predetermined rates and
generally in advance. The payments
may be made monthly or quarterly.
Jamuna Bark Ltd., the highly
capitalized private Commercial 1 Bank in Bangladesh has
introduced lease finance to facilitate funding requirement of valued
customers &
growth of their business houses.

2.13 Personal loan for


To make financially sound
and solvent surd self dependent the women.

Three categories of women are under
this loan-

Self Employed Women

Working Women

House Wife

2.14 Project Finance
Project loan is considered as long term investment of the
bank. If the period is helpful to improve the economy and has a wide market
then the bank thinks about giving project loan. To give this kind of lona the
bank observes the willingness of the customer, his capacity and his ability to
run the project. Having obtained this kind of information the bank makes a
credit report about the customers loan proposal. Interest rate on loan varies
from project Ratio of investment of customer and bank varies from customer to
customer and the customer’s relationship with the bank.
2.15 Loan syndication
Bank cannot invest more then 15% of its paid up capital on
one individual. When the loan amount exceeds 15% of its paid up capital then
the bank share the loan with other bank for giving one individual and this is
call loan syndicate.
2.16 Consumer Credit
Consumer credit scheme is relatively new field of micro-credit
activities. People with limited income can avail of this credit facility to buy
any household effects including car, computer and other consumer durable. It is
a special credit scheme and the customers allow the loan on soft terms against
personal guarantee and deposit of specified percentage of equity. The loan is
repayable by monthly installment within a fixed period.
2.17 Import and Export handling and
2.17.1 import Financing
Is the most
important method of import -financing International trade take place
between sellers
and buyers located in different countries. The parties to a trade
transaction are
not always known to each other. Even if they are known to each other
the seller may
not have full confidence in the carried worthiness of the buyer or the
buyer may not like to pay before he
actually receives the goods. In letter of credit the bankers credit worthiness is substituted for the credit worthiness of
the importer.
Under a bank- cards
letter of credit, the issuing bank gives a written undertaking on
behalf of the buyer that the bank will honor the
obligation of payment or expectance
the case may be on presentation of stipulated documents. As the request of the
importers bank issue the letter of credit at a
merging by the govt. instruction. Bail:
does not generally issue the letter of credit less then 50% margin. JBL
follow the
margin prescribed by the government strictly.
2.17.2 Export Financing
The Exporter needs finances at
various stages, some at pre-shipment stage and the other at the post shipment




In 2006 Jamuna Bank Limited posted an operating profit of Tk.701.32 million as against Tk.419.94 million in
2005 with a
spectacular growth of
67.00 percent over the preceding
After having made necessary provisions for loans and advances in accordance
with the instructions of Bangladesh
Net Income Before Tax (NIBT) stood at Tk.499.97
million in the year under review against Tk.363.31 million in the preceding year registering a growth of 37.62
percent. An
amount of Tk. 246.57
million has been kept as provision for
payment of Tax. Thus Net Income
after tax and provision
stood at Tk.253.40
million in 2006 which was Tk.199.82
million in 2005.

Jamuna Bank
Limited has a conviction of maintaining a strong capital base in carrying on
opereat operation on June 03,2001 with a paid-up capital of Tk.390.00 million
divided into 3.90 million o
of Tk.100 each. The authorized capital of the Bank
is Tk.1600 million divided into 16.00 million
of Tk.100 each. The Bank’s
paid-up capital as at 31st December 2006 stood at Tk.1072.50 million.Tk was
raised through initial public issue of 4.29 million ordinary shares of TkA 00
each with a premiu-
each while Tk.214.50 million was raised by issue of
Bonus Shares in the ratio of 1:4, i.e. one bonus _s-
holding of 8.58
million ordinary shares as on 31.12.2005, for every 4 shares out of profits
upto the
Thus, as on 31st December 2006, the total shareholder’s equity and
reserve stood at Tk.1701.82 mil!”


The Bank
adopted BIS risk adjusted capital standards to measure the capital adequacy in
line with
set by
Bangladesh Bank. According to the instructions contained in Bangladesh Bank’s
BRPD Circ dated September 07, 2002 relating to Capital Adequacy every
commercial bank operating in the required to maintain at minimum 9 percent of
its risk-weighted assets as capital. Jamuna Bank Li-maintain Capital Adequacy ratio of 14.79 percent as at 31.12.2006 which
was higher than the requ Adequacy Ratio. The amount of capital with break-up is
given below :

“Fig in BDT Million”




Tier I Capital



Paid up Capital



Non-repayable Share
Premium Account


Statutory Reserve



Retained Earnings



Proposed Bonus Share

Tier II capital



1 % Provision
against Unclassified Loans



Equalization Fund



Total Capital (Tier
I +Tier 11)



From the above
it reveals that Jamuna Bank Limited was able to increase its core capital by
93.58 percent from
Tk.807.14 million to Tk. 562.47 million and
supplementary capital by 27.47 percent from Tk.1 09.32 million to
Tk. 39.35 million and total capital
by 85.69 percent from Tk.916.46 million to Tk.1 701.82 million.
The Bank made
its mark in Treasury operation. In money market the Bank played active role in
local and foreign
currency. Besides, it carried on operation as Primary
Dealer. Having participated in local currency and foreign
currency market and taken part in
secondary trading of Govt. securities the Bank made significant growth. It would not be out of place to mention that Jamuna
Bank Limited was the only third generation bank, which was selected as Primary
Dealer by Bangladesh Bank owing to its excellent performance in money market.
operation has been
identified as one of the best sources for earning by the Bank through effective
JBL’s dealing
room is well equipped with modern and updated equipments like voice recorder,
reuter 3000xtra,
CDBL electronic system etc. The activities of FX and
local money market have been synchronized with
complete segregation of
activities of front and back offices. Intensive monitoring is ensured by the
Bank’s Asset
Liability Management Committee (ALCO) which sits in regular meetings to
review the asset liability position
and interest rates and takes important decisions thereon.
In the year 2006 there was a bit
volatility in the local money market sometime in March-April but this market
.vas more or less stable with a little fluctuations in interest rate during
most of the time of the year. On the contrary, FX market was to a great extent
volatile in 2006 having pressure on Taka against dollar. But our
professionally skilled human resources were quite
tactful in handling operations and could reap the benefits of
local money market and FX market with significant
growth. They were prudent enough to maintain the
regulatory requirements
of CRR and SLR of the Bank.


In commercial
banks operation starts with mobilization of resources i.e. tapping of deposits
and then the said
resources are deployed as
loans, advances and investments for the purpose of maximizing wealth which
deposits have dominance in commercial bank’s operations. That is why, there is
a common saying that deposit is the lifeblood of a bank. In keeping with this
axiom JBL attaches
utmost importance to the deposit mobilization campaign and to the optimal deposit mix
for minimizing COF as far as practicable. A stiff
competition persisted in the market as to deposit
mobilization and there was a pressure on interest rate.
3esides, instability in political atmosphere was
adversely affecting business, which stood as a hindrance to the
operation of banks including deposit mobilization. Despite all these
unfavorable factors JBL was able to instill confidence in customers as to its
commitments to the depositors and borrowing customers and 
thereby could mobilize a total
deposit ofTk.17284.81 million in 2006 against that ofTk.14454.13 million in the
preceding year showing an increase of Tk.2830.68 million being 19.58 percent.
Endeavor is underway for augmenting low cost deposit by accommodating good
customers at competitive price. For healthy growth of
business JBL puts emphasis on no cost and low cost deposit all the time.
A number of savings schemes are in
place for mobilizing long term
deposits which can be planned to be invested in term loans in-the area lease
finance, project finance and consortium finance
with a view to having better yields. JBL’s such move will
motivate the
people to have good savings habit, as well. The comparative position of deposit
mix of the Bank as on 31.12.2006 and 31.12.2005 is depicted below:

Types of Deposit

As on 31.12.2006

As on 31.12.2005






Bills Payable





Savings Deposit





Short term Deposit





Fixed Deposit





Scheme Deposits





Foreign Currency





Total Deposits





Though there was
an unfavorable business environment due
to political turmoil throughout the year JBL was in constant
efforts to explore different areas of credit operation and could raise the credit portfolios to
Tk.12796.63 million in 2006 with an increase of Tk.1784.80 million (16.21%)
over that of the preceding year. The total credit as on 31.12.05 was
Tk.11011.83 million. In order to ensure compliance with regulatory requirements for avoiding risk of exposure to

single borrower, concentration on
large loans, to bring in
excellence in
credit operation in relation to risk management,
yield, exposure,
tenure, collaterals, security valuation etc. JBL
strived for further diversification of credit portfolios. Its credit facilities
were concentrated on Trade
Finance, Agriculture and related sector, project finance,
wholesale and retail trade, transport sector, hospital &
diagnostic centers and syndicate financing for
big projects, capacity additions to the manufacturing sector and
structured financing for developing infrastructure
of the country. Initiatives are underway for helping small
and medium
entrepreneurs in the ventures for which, in JBL, we are developing SME credit
products and
strategies. JBL has also
increased lending activities to small consumers through Consumer Credit Scheme.


As a regulatory body Bangladesh Bank
wants all banks to take effective measures for implementation of risk
management in banking operations covering the
major risks in asset-liability management, credit risk management,
Foreign Exchange Risk Management, Internal Control
& Compliance and Money Laundering Prevention. As these risks are integral
parts of banking business JBL has put highest priority on management of such
risks with intense monitoring of credit portfolios. We believe these will
improve our operational and financial performance along with meeting the
regulatory requirements. The Bank is in constant efforts to establish superior
monitoring of credit risks and returns. For bringing in harmonious matching
between assets and liabilities ALCO reviews these on a regular
basis for keeping risk in this area to an
acceptable level. The Bank’s credit policy guidelines and procedures are
continuously reviewed and upgraded by its
internal committees. The Bank also pursues an effective internal control
system by establishing systems and procedures for
scrutinizing the transactions periodically, encompassing key
back-up supports and commissioning regular contingency
plans. Through establishment of proper governance
structure risk and
returns are evaluated with a view to producing sustainable revenues, reducing
volatility in
earnings and enhancing value
to shareholders. Maintenance of quality of assets is always the key issue to
the JBL
Management. Continuous
efforts are made to maintain earning assets at the highest possible level so as
to maximize
profits and minimize cost of operation.


The investment
portfolio of the Bank as on
31.12.2006 rose to Tk.2552.67 million from Tk.2037.84
million as on 31.12.05 registering an
increase of Tk.514.83 million being
25.26 percent. The
portfolio was blended with Government treasury
bills amounting to Tk.345.88 million,
Treasury Bonds of Tk.1939.78
million, investment in primary shares and
Zero Coupon Bonds. Its
investment was made in acquisition of Preference Shares of (5.00-2.50) 2.50 million of Aftab Automobiles
Limited. Besides, Tk.2.00 million has been invested in acquisition of two
shares of Central Depository Bangladesh Limited (CDBL). The Bank’s major
portion of investment is in Govt. Treasury Bills and Bonds for the purpose of fulfilling Statutory Liquidity


The total import
business handled by the Bank in
2006 was Tk.15457.80 million compared to
million in the preceding year registering
a rise of Tk.4305.80 million being 27.20 percent. A sizeable
L/C’s were also opened by the Bank in the year
under review. The import items included
industrial raw materials, machinery, consumer goods, fabrics,
accessories etc.


The Bank handled
export business worth TO 1583.70
million in the year under report. In 2005 total export business handled by the Bank was Tk.6521.80
Thus there was an increase of Tk.5061.90 million in export
business handled by the Bank, being 77.62 percent over the preceding year. The
major export item was Ready made Garments.
Credit Management

4.0 Loans and Advances

This section lends the
fund what the bank mobilizes through its various deposit accounts This is the
second function of banks two generic function -deposit mobilization and credit
creation. The major
part of banks income is derived from credit and
since the banks credit is customer’s fund, bank takes extreme caution in

4.1 Sanctioning Loans
and Advance

To have a clear idea about the credit
management of JBL the following points are essential.

a. Credit
policy of the Bank
b. Credit
Sanctioning Authority of JBL and
c. Processing
and Screening of credit proposal

4.1.1 Credit Policy of
the Bank

JBL Credit
Policy contains of total macro-economic development of the 
country. as a whole by way of providing financial support to
the trade, commerce and industry. Throughout its credit operation JBL goes to
every possible corners of the society. They are financing large and medium
scale business house and industry. At the same time they also take care
entrepreneur through its operation of lease finance and some micro credit, small loan scheme etc. The bank has came up with a
where women will be 91-verL financial support for their self
employment and development.
4.1.2 Credit Sanctioning Authority of
Delegated powers
are expected to
be exercised by the authorized executives sensibly
keeping the bank’s interest in mind. In exercising
the power so
delegated authorized executives shah also
have credit restriction, tools and regulations .as governed by
Company Act, Bangladesh Bank, and other usual credit norms .  However,
the following guidelines are laid down before the executives of JBI. for
the delegated power
borrower must be a man of integrity and must enjoy good reputation in the
The borrower must have the capacity and capability for
utilizing credit. Properly
and profitably.
enterprise of the borrower must be viable and profitable i.e. proposal of (lie borrower must be evaluated properly and carefully
so as to ascertain its
The enterprise must generate sufficient fund for debt and
customer to whom credit is to be allowed should be far as possible
within the command area. .
No sanctioning officer can sanction any credit to any of
his near relatives and to
any company where his relatives have financial interest. Tools for Appraisal Credit

The 10 C’s of Good and
Bad Loan

In addition to the formal credit
appraisal, the credit an official of JBL tries to judge
the possible client based on some criteria. These criteria are called
the C’s of good and
bad loan. These are described below:

1. Character: Make sure that
the individual or company they are lending has
outstanding integrity.

2. Capacity: Make sure that
the individual or company they are lending has the capability of repaying the

3. Condition: Understanding the
business and economic conditions that whether it will change after the loan is

4. Capital: Make sure that
die individual or the company they are lending has in
level of investment in the company.

5. Make sure that there is a second way out of a
credit but do not allow that to drive the
credit decision.

6. Complacency: Official do not
rely on past. They remain alert every time whether
any mistake is taking place or not.

7. Carelessness: They believe that
documentation, follow up and consistent
monitoring are essential to high quality loan

8. They share credit objectives and
credit decision making both vertically and
laterally within the bank.

9. Contingencies: Make sure that
they understand the risk, particularly the downside possibilities and that they
structure and price the loan consistently with the

10. They do not get swept away by what
others are doing.

Risk Analysis (LRA)

Lending Risk Analysis is a financial
tool to analyze the risk associate in a loan proposal. According to Bangladesh
Banks order every bank has to conduct LRA. For every loan amounting Tk. I Core
and above. JBL is frequent user of this technique. SWOT Analysis

is a technique used by the credit officers to evaluate credit proposal
submitted by
the company
especially by the production concern. Here,

S stands for Strength

W stand’s for Weakness

0 stands for Opportunity

T stands for Threat

It analyze the inherent
of the company, resilience, and brand loyalty, endowment etc. Weakness This
analyzes the inherent weakness of a company, such as management, supply risk


This analyzes the
opportunity, which will be available to a company in a near future, such as tax
incentives export credit facilities etc.


It analyzes the threats,
which the company may face such as legal barriers withdrawals of tax exemption
and international law, withdraw of most favorable nation (MFN) and GSP
facilities etc. Credit Monitoring
and supervision Cell

JBL is a
unique characteristic in its loan management to make sure that there will be no
bad loan in its-loan portfolio, JBL established a loan monitoring and
supervision cell headed by an First Assistant Vice President. He along with
other official frequently visit customer premises or business whether loan
amount, which is taken is used properly or not. Sometimes customer need more
fund or ether types of facilities to run business profitably, then the
monitoring authority takes necessary steps to meet customer’s need.

Text Box: Step I: Identify all the Principal Risk Components

The following step-wise
activities outline the detail process for arriving at credit risk grading.
Credit risk
for counterparty arises from an aggregation of the following: Financial Risk
  • Business/Industry Risk
  • Management Risk
  • Security Risk
  • Relationship Risk
of the above mentioned key risk areas require to be evaluated and aggregated to
arrive at an
overall risk grading measure.
Evaluation of Financial Risk:

Risk that counter
parties will fail to meet obligation due to financial distress. This typically

analysis of financials i.e. analysis of leverage, liquidity, profitability
& interest coverage ratios. To
conclude, this capitalizes on the risk of high
leverage, poor liquidity, low profitability &
insufficient cash flow.

Evaluation of Business/Industry Risk:
that adverse industry situation or unfavorable business condition will impact
capacity to meet obligation. The evaluation;
of this category of risk looks at parameters such as
outlook, size of business, industry growth, market competition & barriers
to entry/exit.
To conclude, this capitalizes on the risk of
failure due to low market share & poor industry

c) Evaluation of Management

that counter parties may default as a result of poor managerial ability
including experience
of the management, its succession plans and
d) Evaluation of Security Risk:
that the bank might be exposed due ‘:o poor quality or strength of the security
in case of
default. This may entail strength of security & collateral,
location of collateral and support.
e) Evaluation of Relationship Risk:
These risk areas cover evaluation of
limits utilization, account performance, conditions/covenants
compliance by the borrower and deposit

Rounded Rectangle: Personal DepositsRounded Rectangle: Compliance of Covenants/ConditionRounded Rectangle: Utilization of LimitRounded Rectangle: Account ConductRounded Rectangle: SupportRounded Rectangle: Collateral CoverageRounded Rectangle: Security CoverageRounded Rectangle: SuccessionRounded Rectangle: ExperienceRounded Rectangle: Team WorkRounded Rectangle: Barriers to BusinessRounded Rectangle: Market CompetitionRounded Rectangle: Industry GrowthRounded Rectangle: Business OutloodRounded Rectangle: Age of BusinessRounded Rectangle: Size of BusinessRounded Rectangle: CoverageRounded Rectangle: ProfitabilityRounded Rectangle: LiquidityRounded Rectangle: LeverageRounded Rectangle: Security RiskRounded Rectangle: Relationship RiskRounded Rectangle: Management RiskRounded Rectangle: Financial riskRounded Rectangle: Business/Industry RiskRounded Rectangle: CREDIT RISKText Box: Step IIAllocate weight ages to principal Risk Components

According to the importance of risk profile, the
following weitght ages are proposed for corresponding principal risks.

Principal Risk Components Weight:

  • Financial
    Risk 50%
  • Business/Industry
    Risk 18%
  • Management
    Risk   12%
  • Security
    Risk 10%
  • Relationship
    Risk 10%

Text Box: Step IIIEstablish the key parameters

Risk Components:   Key

  • Business/Industry Risk Size of Business, Age of
    Business, Business


  • Security Risk Security Coverage,
    Collateral Coverage and Support.
  • Relationship Risk Account Conduct,
    Utilization of limit, compliance
  • Text Box: Step IIIEstablish the key parameters

    Risk components:   Key
    parameters:   Weight:

    • –Leverage 15%

    -Liquidity 15%

    -Profitability 15%

    • -Size of Business 5%

    -Age of Business 3%

    -Business Outlook 3%

    -Industry growth 3%

    – Market Competition 2%

    • -Experience 5%

    -Succession 4%

    -Team Work 3%

    • Security Risk 10%

    -Security coverage 4%

    -Collateral coverage 4%

    • Relationship Risk 10%

    -Utilization of limit 2%

    -Compliance of covenants/condition 2%

    -Personal deposit 1%

    Text Box: Step VInput data to arrive at the score on the key parameters.

    After the risk identification
    & weightage as
    process (as mentioned above), the next steps will
    be to
    input actual parameter in the score sheet to arrive at the scores corresponding
    to the actual

    manual also provides a
    well-programmed MS Excel
    based credit risk scoring sheet to arrive at a total score on each borrower.
    The excel program requires inputting data accurately in particular cells
    input and will automatically calculate the risk grade for a particular borrower
    based on the total
    score obtained. The following steps are to be
    followed while using the MS Excel program.

    a)   Open the MS XL file

    b)   The entire XL sheet named, CRG is protected except the
    particular cells to input data.

    c)   Input data accurately in
    the cells which are
    are colored YELLOW.

    Some input cells contain DROP
    for some criteria corresponding to the Key Parameters.
    Click to the input cell and select the appropriate parameters from the
    shown below.

    No experience


    More than 10 gears in the related line of
    5-10 years in the related line of
    1-5 gears in the related line of business


    All the cells provided for input must be filled in order to arrive
    at accurate risk grade,


    Text Box: Step VIArrive at the Credit Risk Grading based on total score obtained.

    We have also enclosed the MS Excel file named, CRG_Score_Sheet in CD ROM for use.
    following is the proposed Credit Risk Grade matrix based on the total score
    obtained by an


    Risk Grading

    Short Name





    0 100% cash covered

    n Government guarantee

    n International Bank guarantees










    Marginal/Watch list




    Special Mention












    Bad & Loss



    4.1.3 Processing and
    screening of Credit Proposal

    There are
    some common regulations governed by Banking Company Act, 1991 Bangladesh Bank
    and the law of the State, which has to be followed strictly at the time of
    screening a credit proposal. In addition. Credit proposals are appraised
    critically by JBL credit officials from various angle to judge the feasibility
    of proposal.

    The customer at the branch
    of the bank place credit proposals. When a customer comes with accredit
    proposal , the credit department officials of the branch make an open
    discussion with the customer on different issues of the proposal to judge.

    of  tile proposal and customer.
    if the proposal scenes worthwhile in all  aspect then the proposal is placed before
    credit committee of the bank. After
    threadbare discussion, if the committee
    agrees in principle the proposal is sanctioned
    as per the delegated business power of the branch.

    if the magnitude of the proposal is beyond the delegated business power of the
    branch they forward it to
    the Head Office with, sanction of approval.

    On receiving rile
    proposal, the Credit Division of Head Office places the proposal in the
    Head Credit
    Committee. The committee further analyzes proposals critically and if agree in
    principle they sanction the same as per delegated business power.
    . Again if the merit and magnitude of
    the proposal is beyond the delegated business power of the Head Office Credit
    Committee or Managing Director forward proposal to the Board of the Bank with
    recommendation for approval.
    If the proposal is found unviable at
    the branch level they decline the same from their desk. In the same way,
    proposals are also declined from the Head Office Credit Committee and from
    Board if it is not feasible. 

    4A.3A Securities

    It is essential
    that the proposals define clearly the
    purpose of. the
    of repayment. the agreed repayment schedule. the value of security
    (land, machinery security papers,
    bond, sanchay patra etc.) and the customer
    relationships consideration implicit In, The credit division.
    Where the
    security is to be accepted as collateral for the facility all documentation
    relating to the security shall be in
    the approved from.
    All approval
    procedures and required documentation shall be completed and ail
    securities shall be place prior to
    the disbursement of the facility.

    For creation of
    mortgage on the property-A3L requires die following documents:

    sale deed favoring owner of the land.

    copy of the sale deed of the previous owner of the same property.

    Carson Receipt (DCR)

    to date rent receipt and Municipal Tax Receipt

    copy of C.S.S A. and R.S. Khatians

    to date Non-Encumbrance Certificate

    · Valuation Certificate


    approved plan of the building with the approval letter

    of the property from three different angles and the over of the property

    Plan/ Mouza Map

    Board Resolution for mortgaging property if the same
    belongs to any limited company.

    The borrower is requested to submit
    the above-mentioned papers in
    original for Verification by the
    Bar-1n lawyer and creation on  the
    property intended to mortgage against advance.
    4.2 Documentation
    A document is a written statement of facts of proof. or
    evidence arising out of particular transaction, which on placement may bind the
    parties there to answerable and liable to the law for satisfaction of the
    charge in question.
    The execution of
    documents in proper from and according to the requirements of the law is known
    as documentation. The documentation does establish a legal relationship between
    the lending bank and the borrower. The terms and conditions of loans and advances,
    the securities charged and the repayment schedule are recorded in writing
    Proper documentation is necessary to safeguard the future interest of the bank.
    Documents are necessary for the
    acknowledgement of the debt by the borrower and charging of securities to the
    bank by him. Proper and correct documentation is essential not only for the
    safety of advance but also necessary for taking legal action against the
    debtors in case of non-repayment of dues. Depending on the types of loans and
    advances different documents are required. Such as

    4.2.1 Documentation of Loan

      Demand of
    Promissory (DP) Note
    of partnership (in case of partnership concern) or resolution of the board of
    Directors (in case of Limited concern)
      Letter of
      Letter of Disbursement.
      Letter of Pledge
    (in case of pledge of goods)
      Letter of
    Hypothecation (in case of hypothecation of goods)
    Receipt (in case –of LTR facility)
    of Lien and Ownership (in case of advance against share)
    of lien for packing credits (in case of packing credits)

    of lien (in case of advance against FOR)

    of Lien and transfer authority (in case of advance against PSP, SSP etc.

    documents for mortgage of the property (as drafted by legal advisor)

    Documentation of Overdraft

    of Promissory (DP) Note
    of partnership (in case of partnership concern) or resolution of the board of
    Directors (in case of Limited concern)
    of Agreement
    of Continuity
    of Lien and Ownership (in case of advance against share)
    of Lien (in case of advance against FOR)
    of Lien and transfer authority (in case of advance against PSP, SSP etc,
    documents for mortgage of the property (as drafted by legal advisor)
    4.2.3 Documentation of Cash Credit

    of Promissory (D.P) Note.

    of partnership (incase of partnership concern) or resolution of the board of
    Directors (in case of Limited Concern.

    of Agreement

    of Continuity

    of Pledge (in case of pledge of goods)

    of Hypothecation (in case of hypothecation of goods)

    of Lien and Ownership (in case of advance against share)

    of Lien (in case of advance against (FDR)

    of Lien and transfer authority (in case of advance against PSP, SSP etc,

    documents for mortgage of the property (as drafted by legal advisor)
    4.2.4. Documentation of Bills

    of Promissory (D.P) Note.

    of partnership ( in case of partnership concern) or resolution of the board of
    Directors (in case of Limited Concern)

    of Agreement

    of Hypothecation of Bill

    All required Documents as mentioned
    before should be obtained before any loan is disbursed. Disbursed of any credit
    facility requires approval of the component authority that should ensure before
    exercising such delegated authority that all the required documentation have
    been completed.
    4.3 Credit Facilities Extended by JBL
    The man functions of a
    commercial bank are tow:1) to take deposit and 2) to make advance. Making
    advance is the most important function of a bank. The is expends the
    profitability of the bank. Moreover, Bank make advance out of the deposits to
    the public which are payable at demand. A Commercial Bank makes advances to
    different sectors for different purpose i.e. financing of trade and commerce,
    Export and import, industries Agriculture, Transport, House-Building etc.
    44 Classification of loan

    4.4.1 CC Hypo (Cash Credit Hypothecation)

    Cash Credit allowed
    against hypothecation of an asset is known as Cash Credit

    (Hypo) of goods on which charge of lending
    bank is created.

    For Cash Credit (Hypo) Bankers takes
    following precaution:
    banker carefully verifies the stocks of the hypothecated assets and their
    market price
    dial docks are duly insured against fire, burglary with bank clause
    sufficient collateral securities.
    Identify that whether the goods are ready saleable and
    whether they have
    demand in the market.
    Ensure the borrowers trustworthiness.
    4.4.2 CC Pledge (Cash Credit Pledge)

    credit allowed pledge Of goods is known as Cash credit
    (Pledge). For
    Cash Credit (Pledge) the borrower pledges his goods to the bankers as a
    against the credit facility. The ownership of pledge goods remains with
    the pledged.
    The bank remains the effective control of the pledged goods. Pledged
    goods can be stored in the
    custody of borrower but under lock and key of the
    bank. Banks
    appointed guards are take care of those goods round the clock. The banks
    the pledged
    gods to the party by turns against payment.

    For Cash Credit Pledge
    following points arc taken into consideration before allowing.

    the quality of goods is ascertained.
    the goods are easily saleable and those goods must have good demand in the
    quality of goods is ensured. The goods cannot be perishable and will not
    deteriorate in quality as a result for short and long duration.
    4.4.1 CC Hypo (Cash Credit
    Cash Credit allowed against
    hypothecation of an asset is known as Cash Credit (Hypo)
    In cash of hypothecation
    die borrower retains the ownership possession
    of goods on which charge
    of lending bank is created.
    For Cash Credit
    (Hypo) Bankers takes following precautions:
    The banker
    carefully verifies the stocks of the hypothecated assets and their market price
    periodical statement of stock duly signed by the borrower
    Ensure Mai stocks
    are duly insured against fire, burglary with bank clause.
    sufficient collateral securities.
    Identify that
    whether the goods are ready saleable and whether they have good  demand in the market
    Ensure the
    borrowers trustworthiness.

    4.4.2 CC
    Pledge (Cash Credit Pledge)

    Cash Credit
    allowed against pledge of goods is mown as Cash Credit (Pledge) For
    Cash Credit
    (Pledge) the borrower pledges his goods to the banker as a security
    against the credit facility. The
    ownership of pledge goods remains with the pledged. The bank remains
    the effective control of borrower but under lock and key of the bank. stored in the custody of borrower but under lock
    and key of the bank. Banks
    guards are take care of those goods round the clock. The banks delivered
    pledged gods to the party by turns against payment.

    For Cash Credit Pledge following
    points are taken into consideration before allowing.

    the quality of goods is ascertained.
    the goods are easily saleable and those goods must have good demand in the
    quality of goods is ensured. The goods cannot be perishable and will not
    deteriorate in quality as a result for short and long duration.
    borrower has the absolute title of goods.
    The prices of the goods have to steady and are not
    subject to violent change.
     Goods should be stored in the presence
    of a responsible bank office.

    that stocks are duly insured against fire, burglary, with bank clause.

    must be invocated regularly by responsible bank office.

    locks of the store are scaled and keys are kept in the bank.

    4.4.3 Overdraft
    The overdraft is
    always a
    llowed on a special A/C operated upon cheques. The customers may be
    allowed a certain limit up to which he can overdraw within a
    specific period of time. In an
    overdraft A/C withdrawal and deposit can be made any number of times within the limit and prescribed period. Interested is
    calculated and
    charged only on the actual debit balances on daily
    product basis.

    are three types

    Temporary overdraft (TOD)

    Clean overdraft (COD)

    Secured overdraft (SOD) Temporary overdraft (TOD)

    overdraft (TOD) is allowed to honor cheques which is future dated for the
    valued client .
      without any prior
    arrangement. This kind of facilities is provided for
    short time. Clean
    overdraft (COD)

    Sometimes Overdrafts are allowed with no other security
    except personal security of borrowers. SOD Secured
    overdraft (SOD)

    Overdrafts are allowed against security is known as secured overdraft (SOD)

    businessman for expansion of their business.
    To contractors and suppliers for carrying construction
    works and supply orders.
    on fixed/term deposits.

    Sanchay Patra


    on real estates and properties.

    15 % per annum

    against Document (PAD)


    PAD is generally granted to importer
    for import of goods.
    16 % per annum

    4.5.2Internal Bills
    Purchased (IBP)

    This kind of
    arrangements is allowed for purchase of internal bills. Some times
    Contractors need
    money to his liquidity problem. To avoid thus kind of situation they
    want to take loan against their
    future dated cheque.


    Bills Purchased is usually provided for future dated cheque against some
    service charge before 21 days of the maturity date.

    4.5.3 Loan against Imported
    Merchandise (LIM)

    This is as similar as CC Pledge. But
    these loans are provided to the selected customers with internal contract.


    This loans only fur old and some
    special customers.

    4.5.3Loan against Trust Received (LTR)

    Under this arrangement, credit is allowed against trust
    receipt and the exportable
    goods remain in the custody of exporter but he is
    required to execute a stamped export
    trust receipt in favor of the bank.
    Where the declaration is made that he holds Purchased with financial assistance
    of the bank lit trust for the ‘bank.


    LTR is generally granted to exporter
    for exportation of goods.
    16 % per annum.
    4.5.4 Local/Foreign Documentary Bills
    Purchased (LDBP/FDBP)
    Under this arrangement, credit is
    allowed for exporter for o
    r exportable goods. Banks provide all the
    agency commission. Its pay back period is 21 days.


    LDBP/FDBP is generally granted to
    exporter for exportation of goods.
    16 % per annum

    4.5.5 Letter of Credit

    Issuing letter of credit is one of
    the important services for JBL. A letter of credit is a
    document authorizing by the bank for a specific amount of money. Two
    types of L/C
    is provided by JBL.

    Demand Loan Loan ABP Mack T o Back L/C) Demand
    Loan ABP (Deferred Payment, L/C)

    This facility is given to the
    exporter/manufacturer /producer

    should stipulate the name of the loan/credit/grant.

    should bear the name of the designed bank.

    mentioned in the LCA form must contain with the permissible item.

    4.6.1 Hire Purchase
    The feature of hire purchase is that
    borrower pays his remaining amount over a period
    of 6 month to 2 years & some times more then 2 years. For this kind
    of credit tic
    goods, which has been
    purchased, registered to the bank- as owner. And after end of
    payment goods are registered
    to owner formally.

    purchase facility is allowed to [hose people who have either fixed source
    income or desire to pay it in lump stun.

    16 % per annum

    4.6.2 Loans (General)

    When an advance
    is made in a lump sum repayable either in fixed monthly
    installment or in
    lump sum and no subsequent debit is ordinarily allowed except by
    way in interest and
    incidental charges etc. This is loans (general). Loan is allowed for a single
    purpose where the entire amount may be required at a
    time or in a number of installments
    within a period of short Spam. After disbursement
    of the entire loan
    amount, there will be only repayment made by the borrower. Loan once repaid in
    full or in part cannot be drawn again by the borrower. Entire amount of the loan A/C in the name of the customer and is paid
    to hen through his SB/CD A/C.
    Sometimes loan amount are disbursed in

    This loan is repayable within few
    months or few years.


    on fixed/term deposits.

    Sanchay Patra.

    3. Insurance

    4. Moftgaze of Real estates and

    5. Hypothecation of stock/Stock/Machinery.
    16 % per annum
    4.6.3 Lease Finance
    Jamuna bank Ltd.
    is the first private commercial bank
    , in Bangladesh who introduced lease finance facilities for funding
    requirement of valued customers & growth of their business.

    Lease Items

    like luxury bus, Mini bus, Taxi Cabs Cars, Pick-Up Van Etc.
    for agro based industry.
    and office equipment.
    or river transport and computer for IT education center.

    Period By Items


    Period Up to Years

    Vehicles like luxury
    bus, Mini bus, Taxi Cabs Cars, Pick-Up

    Van Etc


    Factory equipments


    Medical equipments


    Construction equipment.


    Office equipment.



    Sea or river transport


    Computer for IT education center


    Machinery for agro based industry


    Maximum Limit:
    70% of acquisition Cost,

    Security /Collaterals.

    The following securities are

    of leased assets before the period of loan adjustment.

    Collateral securities in the form of land &
    building/Fixed Deposits/other
    cash collateral /Wage Earners Development Bond having liquidation value
    covering at least 100% amount of finance.

    Deposit Of A category shares, National Savings
    Certificates, ICB Unit
    assignment of life insurance policies, Bank Guarantee also be allowed as
    collateral securities.

    of charge of axed assets of file existing industrial units requiring BMRE.
    Creation of charge on the existing vehicle will also be acceptable as


    Bank charges are modest and

    Lease Deposit

    Before disbursement of
    lease finance, the lessee shall have to deposit 3 months rentals in advance,
    which will be adjusted at the end of the lease period.

    Grace Period

    For capital
    machinery and equipment, maximum grace period of 6 (six) months may
    he allowed for
    installation/commercial production.

    Rental payments shall be made
    every month and there shall be three payment dates as detailed below.

    If Lease executed.

    Between 1st
    to 10
    th ………5th of subsequent months
    Between I la
    th……15th of
    subsequent months
    After 20th ………………25th
    of subsequent months.

    Insurance Coverage

    The vehicle
    /Equipment /Lease asset shall have to be covered by
    a comprehensive insurance policy
    throughout the whole lease term at lessee’s own cost in the name of
    Jamuna Bank Limited. The premium
    shall be on account of lessee.
    Repair and Maintenance of Leased items
    The lessee is
    obliged to maintain the vehicle/Equipment in good working order and is
    solely responsible for any loss or
    damage as long as it is in his possession. Repair and maintenance
    cost for taking care of normal wear and tear and keeping it in good
    running condition during the lease, pen-0d shall’ be the
    responsibility of lessee.

    Transfer price/Lease Renewal Rental

    On final adjustment of the lease finance,
    the lessee may have an option to purchase the

    equipment at 5% of the lease finance. Besides the above option, tile lessee may
    renew the lease on year-to-year basis or return, the equipment to the

    4.6.4 Personal Loan for Woman

    This is one of the new events in
    Bangladesh in credit sector. Woman who are
    and has the ability to pay it back in time those can get this kind facility
    encourage the woman JBL provide loan with low interest.
    The borrower must be the following
    • Service
      holder of Government Organization
    • Service
      holder of Semi-Government Organization
    • Service
      holder of Multinational Organization
    • Service
      holder of Bank and Insurance Company
    • Shop
      owner/has small business.
    Interest Rate: 15.5% per annum

    4.6.5 Consumer Credit

    Consumer credit
    is recently new field of micro credit activities; people who have limited
    income can avail of this credit facility to buy any household effects including
    car, computer, household
    and other commercial durables. JBL plays a vital role in extending the consumer
    The borrower must be the employee of
    the following organization.
    • Government
    • Semi- Government Organization
    • Multinational Organization
    • Bank and insurance Company
    • Reputed Commercial
    • Professionals
    Mid term Micro Credit
    16 % per annum
    Terms And Conditions
    • Client
      will procure the specified articles from the dealer/agent /shop
      acceptable by the Bank.
    • All of the papers /cash memo
      etc. related to the procurement of the goods will be in the name of bank
      ensuring ownership of the goods. The ownership will be transferred in the
      name of the client after full adjustment of Banks due.
    • The clients will have to bear
      all the expenses of license, registration and insurance etc.
    • The clients
      will have to bear the cost of repair and maintenance of the acquire

    CHAPTER -05
    Credit risk
    grading is an important tool for credit Risk management as if helps the Banks
    & financial
    institutions to understand various dimensions of Risk
    moved in different credit (transactions. The
    aggregation of such grading
    across the borrowers, activities and the lines of business can provide hello
    assessment of the quality of credit portfolio of a bank or a branch
    The credit risk grading system is vital
    to take decisions both al the
    pre-sanctum stage as well
    as post-sanction stage.
    At the
    pre-sanction stage, credit grading helps the sanctioning authority to decide
    whether to lend or not
    to lend, what should be the loan price. what should be the
    extent of exposure, what should be the
    appropriate credit facility. what are
    the various facilities, what ;are the various facilities, what are the various
    risk mitigation tools to put a cap on the risk level.

    At the post-sanction
    the bank can decide about the depth of the review or enewal,
    frequency of review, periodicity or the grading and other precautions to be

    review, periodicity of the mid other precautions to be taken

    considered the significance of credit risk )
    ,lading, it becomes
    imperative for the banking system to carefully develop a credit risk grading
    model which meets the objective outlined above.

    lending Risk Analysis (LRA) mammal introduced in 1993 by the Bangladesh Bank
    has been in practice for mandatory use by the Banks & financial
    institutions for loan size of BDT 1.00 core and
    above. However, file LRA manual suffers from a lot of subjectivity,
    sometimes creating confusion to the lending Bankers in terms of selection of
    credit proposals on the basis of risk exposure
    . Meanwhile, in 2003 end Bangladesh Bank provided
    guidelines for credit risk grade scorecard for risk assessment of credit

    the two-credit risk models are presently in vogue. The
    Governing; Board
    of Bangladesh institute of
    Batik Management (13113M) under (he chairmanship of
    the Governor, 13;mf; ladcsh Bank decided (hat an
    integrated Credit Risk Grading;
    Model be developed incorporating file significant features of the above
    mentioned models
    with a view to render a need based simplified and user friendly model for
    by the Banks and financial institutions in processing credit decisions
    and evaluating the magnitude of risk
    involved therein.

    Bank expects all commercial franks to have a well-defined credit risk
    which delivers accurate and timely risk grading. This manual describes
    file elements of an effective
    internal process for grading credit risk. It also
    provides a comprehensive but generic discussion of the
    objectives and
    general characteristics of effective credit risk grading system In practice a
    banks credit
    risk grading system should reflect the complexity of its lending
    activities and the complexity of risk


    Credit Risk Grading (CRG) is a collective definition based on the pre-specified
    scale and reflects the underlying credit-risk for a given exposure.

    A Credit Risk Grading deploys a number/ alphabet/ symbol
    as a primary summary indicator of
    risks associated with a credit exposure.

    Risk grading is the basic module for developing for developing a credit risk
    management system.


    Well-managed credit risk grading systems promote bank
    safety and soundness by facilitating informed decision-making. Grading systems
    measure credit risk and differentiate individual credits and groups of credits
    by the risk they pose. This allows bank management and examiners to monitor
    changes and trends in risk levels. The process also allows bank management to
    manage risk to optimize returns.
    credit risk grading matrix allows application of uniform standards to credits
    to ensure a common standardized approach to assess the quality of individual
    obligor, credit portfolio of aunt, line of business, the branch of the Bank as
    a whole.
    evident, the CRG outputs would be relevant for individual credit selection,
    wherein ether a borrower or a particular exposure/facility is rated. The other
    decisions would be relative to pricing (credit-spread) and specific feathers of
    the credit facility. These would largely constitute obligor level analysis.
    grading would also be relevant for surveillance and monitoring, internal MIS
    and assessing the aggregate risk profile of a Bank. It is also relevant for
    portfolio level analysis.


    proposed CRG scale consists of 8 categories with Short names and numbers are
    prow\vided as follows:

























    & Loss



    A clear definition of the different
    categories of credit risk grading is given as follows
    • Superior- (SUP)-1
    • Credit
      facilities, which are fully secured i.e. fully cash covered.
    • Credit
      facilities fully covered by government guarantee
    • Credit
      facilities fully covered by the guarantee of a top tier international Bank
    Good – (GD)-2

    repayment capacity of the borrower

    borrower has excellent liquidity and low

    company demonstrates consistently strong earnings and cash flow.

    has well established, strong market share.

    good management skill &, expertise.

    security documentation should be in place.

    facilities fully covered by N, the guarantee of a top tier local

    o  Aggregate Score of 85 or greater
    basest oil the Risk Grade Score Sheet

    Acceptable – (ACC19) – 3

    ·   These borrowers
    arc not as strong as COOD Grade borrowers, hug still demonstrate
    Consistent earnings, cash flow and
    have a good back record.

    ·   Borrowers have adequate liquidity,
    cash flow and earnings.

    ·   Credit in this
    grade would normally be secured by acceptable collateral ( its charge over
    inventory / receivables / equipment /

    ·   Acceptable management

    ·   Acceptable parcel/sister company guarantee

    ·   Aggregate Score of 75-84 based oil
    the Risk Grade Score Sheet

    This grade warrants greater attention due to conditions
    affecting; the borrower. 111c
    inclusion, or the economic environment.

    These borrowers have an above average risk due to
    strained liquidity, higher than normal l
    everage, thin cash flow and/or
    inconsistent canings.
    Weaker business credit &’ early warning; signals of
    emerging business credit detected.
    borrower incurs a loss
    repayments routinely fall past due
    conduct is poor, or other untoward factors arc present.
    requires attention
    Score of 65-74 based oil the Risk Grade Score Sheet
    Special Mention – (SM) – 5
    This grade has potential weaknesses that deserve
    management’s ‘s close attention. If  left
    these weaknesses may result in a deterioration of the repayment prospects of
    the borrower.
    Severe management problems exist
    Facilities should be downgraded to this grade if
    sustained deterioration in financial
    condition is noted (consecutive losses,
    negative net worth, excessive Leverage.
    Aggregate Score of 55-64 based oil the Risk Grade Score sheet.

    Substandard – (SS) – 6

    Financial condition is 
    weak and capacity or inclination to repay is in doubt.
    weaknesses jeopardize the full settlement of loans.
    Bank criteria for sub-standard credit shall apply.
    Aggregate Score of 45-55 oil the Risk grade Score Sheet
    Doubtful – (DF) – 7
    Full repayment of principal and interest is unlikely and
    Hic possibility of loss is extremely
    However, due to specifically identifiable pending
    factors. Such as litigation, liquidation procedure or capital injection, the
    asset is not yet classified as Bad & loss.
    Bank criteria for doubtful credit shall apply.
    Aggregate Score of  less than 35-44 based
    on the  Risk grade score sheet
    Bad & Loss – (13L) – 8
    Credit of this grade has long outstanding wills no
    progress in obtaining  repayment or on
    the verge of wind up/liquidation,
    of recovery is poor and options have been pursued.
    Proceeds expected from the liquidation or realization of
    security may be awaited. The
    continuance of the loan as a bankable asset is riot
    warranted, and the anticipated loss
    should have been provided for.
    This classification reflects that it is not
    practical or desirable to defer writing off this basically
    valueless asset
    even though partial recovery  may be
    affected in the future, Bangladesh Bank guidelines for timely write off of bad
    loans must be adhered to. Legal
    procedures /suit initiated.
    Aggregate Score of less than 35 based on the Risk Grade Score Sheet.

    CHAPTER- 06

    The Recovery
    Department should directly manage accounts with sustained dc1crioralion (a risk
    of Sub Standard (6) or worse). Hanks may wish to transfer EXIT accounts graded
    4-5 to the
    RU for efficient exit based on recommendation of CRM and Corporate
    Banking. Whenever an
    account is handed over from Relationship
    Management to RU, a Handover/1Downgrade Checklist
    (Annexure – 9) should be completed
    Down Grading
    process should be done nomadically and should not be postponed unit the annual
    review process,

    The RU’s primary
    functions arc:

    Account Action Plan/Recovery Strategy
    Pursue all options to maximize/c recover, including
    placing customers into receivership or
    liquidation as appropriate.

    Ensure adequate and timely loan loss provisions arc made
    based on actual and expected

    review of grade 6 or worse  accounts.

    of classified loans and special mention

    and related works writing off’ B/L loans with the approval of the Board

    The management of
    problem loans (NPLs) must be a dynamic process, and the associated strategy together with the
    adequacy of provisions muss be regularly reviewed. A process should he
    to share the
    lessons learned from f1w experience of credit losses in order to update the
    lending guidelines.
    7.1 Problems
    During internship
    period in Jamuna Bank Limited Dilkusha Branch tile following problems are observed.

    Human resource of any organization is considered as a
    valuable asset. But
    human resources, in the branch, are not equipped with
    adequate banking
    knowledge. Majority of the human resources have lack of
    basic knowledge
    regarding money, banking finance and accounting. Without
    proper knowledge
    in these subjects, efficiency cannot be optimized. Bank can
    arrange training
    on these subjects.

    There is shortage of computer in general banking section.
    Sometimes the
    of computer makes some unfortunate event in that section.

    Flora On-line banking 
    software is used by JBL and this is quite difficult to use
    for the employee as the employees are
    not well trained.

    This bank does not have any plan to enter into the Credit
    Card Market. It is well
    versed that tomorrow’s payment will be consisted of only
    plastic money (Credit
    Card). A large part of business transaction will be done
    by credit card III near
    future. In western world, more than 50% of transactions
    are in credit card this
    bank does not prepare from now on, it
    cannot compete in the future market. So,
    the branch should give special attention to the introduction
    of Credit Card

    Since a number of new banks are coming to existence with
    their extended
    customer service pattern in a completely competitive
    manner. Customer-
    services must be made dynamic and prompt. Now a days,
    people especially business people have very little time to waste. So the bank
    should make its
    prompt so that people need not give more time in the banking activities


    a day’s on-line banking is not a very uncommon service 1,01-ally
    private commercial bank. JBI, provide
    On-line banking service but they take source
    charge for it, if the customers do not use his/her mother branch. To
    customers to use On-line
    banking facility this service charge should not be
    taken charge from the

    Though JBL using very popular software i.e. Flora bank
    on–line software but
    the use of it is quite difficult for the employee.
    (According to the statement of
    some employee of JBL who has the
    experience to use more then one banking

    JBL are not taking their clearing cheque for other- They are using IBC/OBC systems to take that kind of
    clearing cheque.

    JBI, not providing the credit cards in market which now a
    days one of the
    important part of banking. So for it they are loosing too many customers.

    Customer service of bank has a greater impact on its
    customer. To provide
    smarter customer service they need a call center
    department is very
    now a day.

    Foreign exchange operations of other banks are more dynamic
    and less time
    JBL should take some initiative to compete with those banks.

    In our country financial problem is a great constraint in
    foreign trade. JBL Is
    very conservative for post-shipment finance. 11′ it stays
    in liberal position the
    can easily over-come their financial constraint.


    • Annual Report 2006., Jamuna Bank
      Ltd. 2007.
    • Credit Risk Grading Manual,
      Bangladesh Bank, 2005

    Credit Policy
    Guidelines, Jamuna Bank Ltd. 2005.