General Banking Operation of Jmuna Bank Limited
This report not only explores Jamuna Bank’s activities as one of the leading non-government companies, but also highlights the operation system & the role of Jamuna Bank Limited in the financial sectors of Bangladesh.
Jamuna Bank Limited is a private commercial Bank which is one of the most popular bank in Bangladesh. The Bank started its operation from 3rd June, 2001, during this report it could improve its image in the society as a commercial Bank. Now it has 43 branches in Bangladesh. All branches are situated in the highly demanded areas.
As a new Bank, Jamuna Bank Limited has been competing with other private banks where all the banks are adopting different incentive programs to attract the customers. Accordingly, JBL is offering different type of deposit scheme bearing highest rate of return. Lakhpoti Deposit Scheme, Monthly Benefit Scheme, Monthly Saving Scheme, Marriage Deposit Scheme, Double Growth Deposit Scheme, Education Saving Scheme, and Millionaire Deposit Scheme are the most popular offers that are completely new innovation in the banking sector and widely accepted by the clients.
With crumble down of the world economy caused by nine eleven attack. It is observed that the competition becomes intensive in the globalization process. Our country has also participated in the race for its existence. Therefore, it becomes obvious for us to increase the field industrialization. Jamuna Bank Limited is playing a vital role in developing industry of the country and putting the national economy competitive with world economy. Developing country like Bangladesh urges a huge amount of investment both in the private and public sectors. Jamuna Bank Limited has been providing a lot of assistance regarding this investment process through its Investment and Foreign Exchange Department.
Commercial banks in Bangladesh economy are facing increased competition for their business in coming days, like any other emerging market economies. Their business is no longer remaining easy as they were earlier. The real change in the banking business has started to come with the government’s decision to allow the business in the private sector in the middle of the eighty’s. This report is an effort to reflect a clear idea about the strategies, activities, and performance of Jamuna Bank Ltd. regarding general banking activities.
The General Banking department is the vital part for financial institution. It is linked with all other department. So it is very important to have an effective and sound management System in banking business. Bank is an important and the most appropriate institution for the necessity of the use of money and the protection of the money. As a BBA student, financial institutions are the most appropriate field to gather the experience and among the financial institutions, Bank is the most prominent place.
All over the world the dimension of banking has been altering rapidly due to deregulation, technological modernism and globalization. Now bank must complete the market place both with local institution as well as foreign ones. To survive in this competitive banking world banks entail to develop appropriate financial structure, enlarge professionalism in the sense of developing appropriate manpower structure and expertise and experience.
1.2 Objective of the Report
The objectives help in explaining the broad objectives are as follows:
· To give an overview on Jamuna Bank Ltd. and its services, · Focusing on the brief description of general banking, · To know deeply about general banking procedure, · To examine bank’s performance in general banking activities, · To know how they minimize general banking risks, · To focus on some other activities of general banking, · To specify some findings on given topic, and · To reveal some recommendations for better performance in general banking
The methodology of this report is very different from conventional reports. Have emphasized on the practical observation though this report has to need some primary and secondary data. Nevertheless, eventually almost the entire report consists of my practical observation.
1.3.1 Source of Data Collection
While preparing the report, I have taken information from the following sources:
1. Personal Interview – Face-to-face conversation and in depth interview with the respective officers of the branch.
2. Personal observation – Observing the procedure of banking activities followed by each department.
3. Practical work exposures on different areas of the branch.
4. Informal conversation with the clients or customers.
5. Relevant documents related to the study as provided by the officers. Observation of banking activities.
6. Overflowing Conversation with the in-charge of general banking department of Jamuna Bank Ltd, Dhanmondi Branch.
7. Working with my own experience while internship program.
· Annual report (2007) of the bank,
· Periodicals published by Bangladesh Bank,
· Different publications regarding banking functions
· Websites and Newsletters are also used as major sources.
· Daily diary (containing my activities of practical orientation in Jamuna Bank Ltd.) maintained by me,
· Various publications on Bank,
· Website of Bangladesh Bank, and
· Different circulars issued by Head Office and Bangladesh Bank
Some of the limitations faced in preparing this report are:
· It was very difficult to collect the information from various personnel for their job constraint.
· Bank secrecy posed a major problem since discloser of some information’s been restricted
· The officers at the General Banking Department are very much busy with their daily activities. They are interested to help me but have no time to do that. This is the main limitation of the study and the customers are also seem to busy.
· Sufficient records, publications, facts & figures are not available. These constrains narrowed the scope of real analysis.
· There were some difficulties in understanding some activities due to not being relevant to the theoretical knowledge.
· Due to confidentiality the Bank’s policy restricts disclosing some data.
· The study of such a short course of time is not free from limitation. So time limitation is the main point of limitation.
· The data relevant for the analysis report writing sometimes could not be collected due to excessive year-ending workload at the branch.
· During the month of January in the branch, there was excessive year-ending workload, which sometimes acts as a barrier on the way of my effort.
2.1 Introduction of Jamuna Bank Ltd
Bank is a financial institution. The economy is mostly dependent on the bank since the bank facilitates the economic and financial transactions. Jamuna bank limited is a fast growing private sector bank and the bank is already has set a slot in terms of quality services to the customers and value addition for the shareholders. The bank made satisfactory progress in all areas of business operation in 2010.
Jamuna Bank Ltd. is one of the few banks permitted by the Bangladesh in the early 90’s. These banks are known as the second-generation banks and fortunate to remain immune from the bad loan culture. Jamuna Bank Limited was designed to provide commercial and investment banking services to all types of customer ranging from small entrepreneur to big business firms. Besides investment in trade and commerce, the bank participates in the socioeconomic development through the participation in priority sectors like agriculture, industry, housing and self-employment. Jamuna Bank Limited wants to establish, maintain, and conduct all types of banking, investments and businesses in Bangladesh and abroad with superior service quality and performance.
2.2 History of JBL
Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994 with its Head Office at Printers Building (2nd & 8th Floor), 5, Rajuk Avenue, Dhaka-1000. The Bank started its operation from 3rd June 2001. Jamuna Bank Limited is a highly capitalized new generation Bank with an Authorized Capital and Paid-up Capital of Tk.1600.00 million and Tk.390.00 million respectively. The Paid-up Capital has been raised to 429.00 million and the total equity of the bank stands at 725.00 million as on June 30, 2005. Currently the Bank has 41 (Forty One ) branches 16 in Dhaka, 8 in Chittagong, 2 in Gazipur, 3 in Sylhet, 1 in Bogra, 2 in Naogaon, 1 in Munshigang, 1 in Shirajganj, 1 in Rajshahi, 1 in Narayanganj, 1 in Kushtia, 1 in Dinajpur, 1 in Noakhali, 2 in Comilla (including 10 Rural Branches).
The Bank undertakes all types of banking transactions to support the development of trade and commerce of the country. JBL’s services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units.
Jamuna Bank Ltd., the only Bengali named new generation private commercial bank was established by a group of winning local entrepreneurs conceiving an idea of creating a model banking institution with different outlook to offer the valued customers, a comprehensive range of financial services and innovative products for sustainable mutual growth and prosperity. The sponsors are reputed personalities in the filed of trade, commerce and industries.
The Bank is being managed and operated by a group of highly educated and professional team with diversified experience in finance and banking. The Management of the bank constantly focuses on understanding and anticipating customers needs. The scenario of banking business is changing day by day, so the bank’s responsibility is to device strategy and new products to cope with the changing environment. Jamuna Bank Ltd. has already achieved tremendous progress within only two years. The bank has already ranked as one of the quality service providers & is known for its reputation.
Jamuna Bank offers different types of Corporate and Personal Banking Services involving all segments of the society within the purview of rules and regulations laid down by the Central Bank and other regulatory authorities.
Jamuna Bank has launched its Online Banking services on April 05, 2005
2.3 Objective of JBL
Objectives represent the results expected from pursuing certain strategies. Objective should be quantitative, measurable, realistic, understandable, challenging, hierarchical, obtainable and congruent among organizational units. Jamuna Bank has established their objectives to achieve their strategic and financial targets to have strong competitive advantage in the banking sector. The objectives for which JBL is established are –
- To earn and maintain CAMEL rating strong,
- To establish relationship banking,
- To remain one of the best bank in Bangladesh,
- To introduce fully automated banking system,
- To ensure adequate rate of return on investment,
- To keep risk position at an acceptable rate,
- To maintain adequate liquidity,
- To maintain healthy growth of business with desired image,
- To control the system & ensure the transparency,
- Proper utilization of resources
2.4 Vision of JBL
Its Vision is to become a leading banking institution and to play a pivotal role in the development of the country.
2.5 Mission of JBL
The bank is committed to satisfying diverse needs of customers through an array of products at a competitive price by using appropriate technology and providing 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-force.
2.6 Ethics & Social Responsibilities of JBL
An organization cannot move along. Organization needs people to generate its activities & people needs organization to get some kind of services. Southeast bank is an organization that is concerned to maximize its profit along with maintaining some kind of social responsibilities. It is fully devoted to fulfill the needs for its customers’ satisfaction as well as it is involved socio-economic development activities.
2.7 Strategies of JBL
The Strategies of JBL are –
· To manage and operate the Bank in the most efficient manner to enhance financial performance and to control cost of fund. · To strive for customer satisfaction through quality control and delivery of timely services. · To identify customers’ credit and other banking needs and monitor their perception towards our performance in meeting those requirements. · To review and update policies, procedures and practices to enhance the ability to extend better service to customers. · To train and develop all employees and provide them adequate resources so that customers’ needs can be reasonably addressed. · To promote organizational effectiveness by openly communicating company plans, policies, practices and procedures to employees in a timely fashion. · To cultivate a working environment that fosters positive motivation for improved performance. · To diversify portfolio both in the retail and wholesale market. · To increase direct contact with customers in order to cultivate a closer relationship between the bank and its customers.
2.8 Capital and Branches
Jamuna Bank Limited is a highly capitalized new generation Bank with an Authorized Capital and Paid-up Capital of Tk.1600.00 million and Tk.390.00 million respectively. The Paid-up Capital has been raised to 1225.71 million and the authorized capital has been enhanced to tk.4000.00 million as on December 2007. Currently the Bank has 43(Forty three) branches 18 in Dhaka, 2 in Gazipur, 8 in Chittagong, 3 in Sylhet, 1 in Bogra, 2 in Naogaon, 1 in Munshigang and 1 in Narayanganj, 1 in Rajshahi, 1 in Basurhat, 1 in Noakhali, 1 in Shirajgonj, 1 in Dinajpur and 1 in Kushtia ,1 in comilla (including nine Rural and 2 Islamic Banking Branches) 4 branches will be opened at commercially important locations during the year 2010.
To provide clientele services in respect of international trade it has established wide correspondent banking relationship with local and foreign banks covering major trade and financial centers at home and abroad.
2.9 Growth of Jamuna Bank
Jamuna Bank Ltd., the only Bengali named new generation private commercial bank was established by a group of winning local entrepreneurs conceiving an idea of creating a model banking institution with different outlook to offer the valued customers, a comprehensive range of financial services and innovative products for sustainable mutual growth and prosperity. The bank has already ranked as one of the quality service providers & is known for its reputation.
2.10 Corporate Slogan
“YOUR PARTNER FOR GROWTH”
2.11 Management Style of JBL
Now the companies face the challenge of the new economy, the global challenge, the challenge of meeting stockholder’s needs and the high performance work system challenge. JBL is aware of these challenges to meet its mission and goals.
Directed by the mission to provide prompt and efficient services to clients, JBL has successfully celebrated its eighth year of operation. It is managed by a team of professionals having long experience in the banking industry. While the Board sets the management objectives and policies, the management is instrumental in providing the inputs and implementing the strategies set by the Board.
2.12 Hierarchy of JBL
|Managing Director (MD)|
|Deputy Managing Director (DMD)|
|Senior Executive Vice President (SEVP)|
|Executive Vice President (EVP)|
|Senior Vice President (SVP)|
|Vice President (VP)|
|Senior Assistant Vice President (SAVP)|
|Assistant Vice President (AVP)|
|Senior Principal Officer (SPO)|
Figure1: Hierarchy of Jamuna Bank Ltd
2.13 Products & Services of JBL
Figure: Products and services of Jamuna Bank limited
2.13.1 New Product & Services
The bank has its concentration for new product and services development for satisfying its customer and increasing its customer base. The bank firmly believes that technology based product and services will play significant role in the performance of the bank as people are getting more conscious about their service quality. They prefer now faster service with least cost. For delivering faster service, the bank has introduced diversified technical ways that are stated below –
2.13.1 .1 Online Banking
Jamuna Bank Limited has introduced real-time any branch banking on April 05, 2005. Now, customers can withdraw and deposit money from any of its 23 branches located at Dhaka, Chittagong, Sylhet, Gazipur, Bogra, Naogaon, Narayanganj and Munshigonj. Our 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.
- Centralized Database
- Platform Independent
- Real time any branch banking
- Internet Banking Interface
- ATM Interface
- Corporate MIS facility
- Branch Network
- ATM Network
- POS (Point of Sales) Network
2.13.1 .2 Corporate Banking
The motto of JBL’s Corporate Banking services is to provide personalized solutions to their customers. The Bank distinguishes and identifies corporate customers’ need anddesigns tailored solutions accordingly.
Jamuna Bank Ltd. offers a complete range of advisory, financing and operational services to its corporate client groups combining trade, treasury, investment and transactional banking activities in one package. Whether it is project finance, term loan, import or export deal, a working capital requirement or a forward cover for a foreign currency transaction, their 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.
Corporate Banking business envelops a broad range of businesses and industries. You can leverage on their know-how in the following sectors mainly:
- Agro processing industry
- Industry (Import Substitute / Export oriented)
– Textile Spinning, Dyeing / Printing
– Export Oriented Garments, Sweater
– Food & Allied
– Paper & Paper Products
– Engineering, Steel Mills
– Chemical and chemical products etc.
- Information Technology
- Real Estate & Construction
- Wholesale trade
- Transport, Hotels, Restaurants
- Non Bank Financial Institutions
- Loan Syndication
- Project Finance, Investment Banking
- Lease Finance, Hire Purchase, International Banking
- Export Finance
- Import Finance
126.96.36.199 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 you a unique mixture of easy and consummate service quality.
They make every endeavor to ensure their clients’ satisfaction. Their cooperative & friendly professionals working in the branches will make your visit an enjoyable experience.
188.8.131.52 International Trade Finance
International Trade forms the major business activity undertaken by Jamuna Bank Ltd. The Bank with its worldwide correspondent network and close relationships with key financial institutions provides an extensive trade services network to handle your transactions efficiently. Personnel experienced in International Trade Finance staff their key branches in Dhaka, Chittagong, Sylhet and Naogaon. These offices are the focal point for processing import and Export transactions for both small and large corporate customers. We offer a complete range of Trade Finance services. Their professionals will work with you to develop solutions tailored to meet your requirements, through mobilizing their full range of trade services locally, and drawing on their global resources. We can offer you professional advice on all aspects of International Trade requirements, namely:
- Issuing, advising and confirming of Documentary Credits.
- Pre-shipment and post-shipment finance.
- Negotiation and purchase of Export Bills.
- Discounting of Bills of Exchange.
- Collection of Bills. Assist customers to insure all risks.
- Foreign Currency Dealing etc.
184.108.40.206 List of Foreign Correspondents
To provide International Trade related services we have established Correspondent Banking relationship with 336 locations of 106 world reputed Banks in more than 100 countries.
Their main Correspondent Banks are –
Citi Bank N.A., Standard Chartered, American Express Bank, Bank of New York, Bank of Nova Scotia, Duetche Bank, Dresdner Bank AG, Habib American Bank, Habib Bank AG Zurich, Bayerische Hypo Vareins Bank, Mashreq Bank PSC, Nordea Bank AB, Royal Bank of Canada, UBS AG, Union De Banques Arabes ET, Francaises, Wachovia Bank NA, Forties Bank S.A/NV, Svenska Handlesbanken, Bank of Ceylon, Banca Toscana, ABN Amro Bank, Commonwealth Bank of Australia, Danske Bank A/S. Absa Bank Ltd., Agricultural Bank of Chaina, Banca Intesa SPA, Banca Italo Albanese, Banca Popolare Commercio E Industria SPA, Bank Austria Credittanstal AG, Bank Commonwealth, Bank Madiri (Europe), Bank of Cyprus, Bank of Bahrain and Kuwait, Bank of Jordan Ltd., Bank Sadarat Iran, Blue Nile Bank, Commercial Bank of Kuwait, Commercial Bank of Qatar Ltd., Development Bank of the Philippines, Dexia Bank SA, EON Bank Berhad, First International Merchant Bank PLC., Foreign Trade Bank of North Korea, Foreign Trade Bank of Vietnam, Hiroshima bank, HVB, Hungary RT, ICICI Bank Canada. Industrial and Commercial Bank of China, ING Bank NV, Islamic Bank of Yemen and for Finance & Investment, Korea Exchange Bank, National Commercial Bank, Shinhan Bank, State Bank of India (Canada) UFJ Bank Ltd., United Bank of India, Bank of Bhutan, Allied Bank Philippines.
2.13.1 .6 Foreign Remittance
Jamuna Bank Ltd. has a network of 19 branches in Bangladesh and 4 more branches are going to be added to network soon.
Remittance services are available at all branches and foreign remittances may be sent to any branch by the remitters favoring their beneficiaries.
Remittances are credited to the account of beneficiaries instantly through Electronic Fund Transfer (EFT) mechanism or within shortest possible time.
Jamuna Bank Ltd. has correspondent banking relationship with all major banks located in almost all the countries/cities. Expatriate Bangladeshis may send their hard earned foreign currencies through those banks or may contact any renowned banks nearby ( where they reside/work) to send their money to their dear ones in Bangladesh.
To facilitate sending money in Bangladeshi Taka directly, Jamuna Bank Ltd. has Taka Drawing Arrangement with many banks/exchange companies in different countries. The expatriate Bangladeshis may send their money in BDT through the branches/subsidiaries of Jamuna Bank Ltd
2.13.1 .7 Credit Facilities
The main focus of Jamuna Bank Ltd. Credit Line/Program is financing business, trade and industrial activities through an effective delivery system.
Jamuna Bank Ltd. offers credit to almost all sectors of commercial activities having productive purpose.
The loan portfolio of the Bank encompasses a wide range of credit programs.
Credit is also offered to major thrust sectors, as earmarked by the govt., at a reduced interest rate to develop frontier industries.
Credit facilities are offered to individuals including housewives, businessmen, small and big business houses, traders, manufactures, corporate bodies, etc.
Loan is provided to the rural people for agricultural production and other off-farm activities.
Loan pricing system is customer friendly.
Jamuna customers enjoy Jamuna rate in lending and other services.
Quick appreciation, appraisal, decision and disbursement are ensured.
Credit facilities are extended as per guidelines of Bangladesh Bank (Central Bank of Bangladesh) and operational procedures of the Bank.
2.13.1 .8 Interest Rates of Loans & Advances
2.13.1 .9 Shop Finance Scheme
1. To enable the small business community to run the business smoothly
2. Facilitating expansion of the existing businesses
3. To improve the banking habit of self employed persons
4. Noted down that the government is also encouraging investment in SME sector.
Categories of eligible business
1) Grocery/departmental/whole sale store
2) Confectionary/bakery (owned by the bakers)
3) Stationary shops
4) Cloth materials & small local garment traders
5) Shoe makers/shops
6) PVC & plastic product traders/small manufacturers
7) Tiles/sanitary items retailers
8) Computer/Photostat/Cyber Cafe
9) Electrical & electronic items retailers
11) Gift shop/cosmetics shops
12) Restaurant/fast food joints
13) Hardwire shops
14) Glass/ceramic retail outlets
15) Sports kit retailers
16) Photo studio
17) Rod, Cement & C.I. Sheet (Tin) Shop
18) Engineering Workshop
19) Fertilizer & Pesticide shop
Maximum Loan Amount
1) Up to a maximum of 10.00 lac in single case or 60% of possession value (distress value to be considered) whichever is lower. However, loan size will depend on creditworthiness of the borrower and the decision of the sanctioning authority.
2) Branch Manager must verify the amount of possession money actually paid before recommending such proposal.
Tenure of the loan limit
Minimum 01 year – Maximum 03 years from the date of disbursement of the loan
The applicant must fulfill the following criteria to be eligible for loans and advances under the scheme:
i. Shop owner must run the establishment himself, having at least three years of successful business experience
ii. Valid lease deed for a minimum period of 03 years up to 05 years
iii. Satisfactory conducted deposit account with JBL for minimum 03 months.
iv. To deposit the daily sales proceeds in the account maintained with JBL
v. Agree to abide by credit rules & regulations of JBL
vi. Furnishing net-worth of the applicant/client.
vii. Clean CIB
viii. The bank reserves the right to accept or reject any application without assigning any reason whatsoever.
ix. The intending borrower loanee shall apply through the letter head of the business firm or through a plain paper requesting the branch manager for sanction of loan under the Shop Finance Scheme.
i. Simple deposit of valid lease deed of agreement of the shop.
ii. A tripartite agreement to be signed in between leaseholder/shop owner/Bank- to the effect that the leaseholder cannot rent out or transfer the leased property without the written consent of the Bank.
iii. The lease deed between the landlord and the borrower must be duly executed & the original lease deed should be kept in the Bank as part of document.
iv. Lease must contain provisions enabling the landlord to forfeit the lease and enable the bank to enforce a right to sell the possession of the shop to liquidate the default debt (if any).
v. Letter of disclaimer by the landlord to facilitate the bank to liquidate the default loan (if any)
vi. Equal numbers of post dated cheques covering amount of each loan installment
All borrowing customers inventory i.e. Stock-in-trade will be insured against Fire, Rsd & other risks with the Bank mortgage clause cost of which will be borne by the shop owner/client/borrower.
Repayment schedule should be as under:
i. In case of 01 year, 10 monthly installments for the loan limit up to Tk. 3.00 lac with 02 month grace period from the date of disbursement
ii. In case of 02 year, 22 monthly installments for the loan limit up to Tk.6.00 lac with 02 month grace period from the date of disbursement
iii. In case of 03 year, 34 monthly installments for the loan limit above Tk.6.00 lac with 02 month grace period from the date of disbursement
2.13.1 .10 Q-Cash Round The Clock Banking
Jamuna Bank Q-Cash ATM Card enables you to withdraw cash and do a variety of banking transactions 24 hours a day. Q-Cash ATMs are conveniently located covering major shopping centers, business and residential areas in Dhaka and Chittagong. ATMs in Sylhet, Khulna and other cities will soon start be introduced. The network will expand to cover the whole country within a short span of time.
With a Jamuna Bank Q-Cash ATM card one can:
i. Cash withdrawal Round The Clock from any Q-Cash logo marked ATM booths.
ii. POS transaction (shopping malls, restaurants, jewellaries etc)
iii. Enjoy overdraft facilities on the card (if approved)
iv. Utility Bill Payment facilities
v. Cash transaction facilities for selective branches nationwide
vi. ATM service available in Dhaka and Chittagong Withdrawal allowed from ATM’s of Jamuna Bank Ltd., AB Bank, The City Bank, Jamuna Bank, IFIC Bank, Mercantile Bank, Pubali Bank, Eastern Bank Ltd. respectively
Jamuna Bank Limited has installed its first Q-cash ATM at Dhanmondi Branch, Dhaka.
Jamuna Bank is going to issue VISA card soon.
In line with the issuance of Q-cash products JBL is going to introduce VISA card very soon.
2.13.1 .11 Lease Finance
Lease means a contractual relationship between the owner of the asset and its user for a specified period against mutually agreed upon rent. The owner is called the lesser and the user is called the Lessee.
Lease finance is one of the most convenient sources of financing of assets via machinery, equipment vehicle, etc.
The user of the assets i.e. Lessee is benefited through tax advantages, conserving working capital and preserving debt capacity. Moreover, Lease is an off-balance sheet item i.e. lease amount is not shown in the balance 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 can 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 Bank Ltd., the highly capitalized private Commercial Bank in Bangladesh has introduced lease finance to facilitate funding requirement of valued customers & growth of their business houses
· Vehicles like luxury bus, Mini bus, Taxi cabs cars, Pick-up, CNG three-wheeler etc.
· Factory equipment.
· Medical equipment
· Machinery for Agro Based Industry
· Construction equipment
· Office equipment
· Generators, Lift & Elevators for commercial place.
· Sea or River Transport.
· Computer for IT Education Center
2.13.1 .12 SWIFT
Jamuna Bank Limited is the member of SWIFT (Society for Worldwide Inter-bank Financial Telecommunication). SWIFT is a member owned co-operative, which provides a fast and accurate communication network for financial transactions such as Letters of Credit, Fund transfer etc. By becoming a member of SWIFT, the bank has opened up possibilities for uninterrupted connectivity with over 5,700 user institutions in 150 countries around the world
2.13.1 .13 Trading of Government Treasury Bond & Other Govt. Securities
The Bangladesh Bank for trading 5 years & 10 Years Treasury Bonds and other Government Securities have nominated Jamuna Bank Limited as a Primary Dealer.
1. Eligibility criteria:
Individuals and institutions resident in Bangladesh, including provident funds, pension funds, bank and corporate bodies shall be eligible to purchase the BGTBs.
Individuals and institutions not resident in Bangladesh shall also be eligible to purchase the BGTBs, with coupon payment and resale/redemption proceeds transferable abroad in foreign currency subject to fulfillment of conditions as mentioned in the Bangladesh Govt. Treasury Bond Rules-2003.
2. Loan facility:
JBL offers loan up to 95% of the present value of the bond/other securities against lien of the above instrument for their customers.
2.14 Risk Management
The risk management of Jamuna Bank Limited evolves identification, measurement, monitoring and controlling risk to ensure that:
- The Bank’s risk exposure is within the limits established by Board of Directors.
- The Bank’s risk taking decisions are in line with the business strategy and objectives set by board of Directors of the bank as well as Bangladesh Bank guidelines.
- The bank’s risk taking decisions are explicit and clear.
- Sufficient capital as buffer is available to take risk.
2.14 .1 Market Risk
Jamuna Bank Limited is exposed to market risk in variety of ways. Market risk exposure is mainly explicit in portfolio of Bangladesh Government Treasury Bonds held under HFT(held for trading) conversely, Market risk is implicit such as interest rate risk due to mismatch of loans and Foreign Exchange Risk due to maturity mismatch of foreign currency positions. The portfolios are being revalued at an interval at current market price of marketing to market basis. Beside, the portfolios have been synchronized and line with Bangladesh Bank guidelines of risk based Capital Adequacy for interest rat risk and foreign exchange risk.
2.14 .2 Interest Rate Risk
Interest Rate Risk arises when there is a mismatch between positions. The bank’s landing, funding and investment activities give arise to Interest Rate Risk. The Bank Assess Interest Rate Risk in earning perspective which is traditional approach to Interest Rate Risk assessment and obtained by measuring the change in the Net Interest income(nll) on Net Interest Margin (NIM) i.e. the different between total interest income and total interest expanses.
2.14 .3 Foreign Exchange Risk
The Bank also exposed to Interest Rate Risk, which arises from the maturity mismatching of foreign currency position. It also includes settlement risk. The total holding position is being revalued on market on monthly basis.
2.15 Operation Strategy
Presently the bank is using ‘Flora Bank’, a branch banking software developed by Leads Corporation developed on MSSQL Server on Windows platform. The Head Office and the branches use the software for bookkeeping, automatic interest calculation, daily transaction listing and audit trails, auto maturity and auto renewal of FDR, automatic integration of customers’ ledger and General Ledger, printing of General Ledger position including balance of subsidiaries, monthly income and expenditure position etc. The bank has joined the shared ATM Network Bangladesh offered by ETN along with eight other member banks. This service is presently available in Dhaka, Chittagong and Sylhet. JBL is member of SWIFT. It has also installed Router System at the Head Office to have live access to information from international money market for dealing in Foreign Exchange. But from the viewpoint of ideal requirement for modern bank, competing with international banks, the IT facilities of JBL need further improvement.
2.16 Financial Performance of JBL
Financial Performance of this Bank were growth continuously, those are shown in below:
In 2008 Jamuna bank limited posted an operating profit of tk.824.21 million as against tk.701.32 million in 2007 with a growth of 17.52 percent over the preceding year. After having made necessary provisions for loans and advances tk.419.16 million in accordance with the instructions of Bangladesh bank net income before tax (NIBT) stood at tk.405.04 million in the rear under review against tk.499.97 million in the preceding rear. An amount of tk.315.93 million has been kept as provision for payment of tax. Thus Net income after tax and provision stood at tk.89.11 million in 2009 which was tk.953.40 million in 201
Figure: Profit in year 2009 to 2010
2.16.2 Import Business
The total import business handled by the bank in 2009 was tk. 22191.84 million compared to tk.15457.66 million in the preceding year registering a rise of tk. 6734.18 million being 43.57 percent. A sizeable L/C was also opened by the bank in the year under review. The import items included individual raw materials machinery, consumer goods, fabrics, accessories etc.
Figure: Foreign Exchange Business – Import
2.16.3 Export Business
The bank handled export business worth tk. 13990.33 million in the year under report in 2009 export business handled by the bank was tk. 11583.64 million. Thus there was an increase of tk. 2406.69 million in export business handled by the bank, being 20.78 percent over the preceding year. The major export item was ready made garments.2.18
Figure: 2-4, Foreign Exchange Business – Export
2.17Performance Analysis of JBL
Seven years at a glance (Figure in million – where applicable)
|2||Paid up Capital||1225.71||1072.50||429.00||429.00||390.00||390.00||390.00|
|4||Tier I Capital||1651.58||1562.47||807.14||607.32||451.37||390.22||390.00|
|5||Tier II Capital||221.14||139.36||109.32||67.33||32.60||15.34||0.18|
|14||Profit before tax||405.04||499.97||363.31||273.70||110.97||0.37||–|
|15||Profit after tax||89.11||253.40||199.82||155.95||61.14||0.22||–|
|19||Number of branches||35.00||29.00||23||19||15||8||3|
|20||Number of employees||861||631||525||447||314||253||115|
|21||Number of correspondents||715||643||390||333||250||152||92|
|22||Income from investment||474.48||255.66||126.30||80.44||27.37||15.48||2.58|
|23||Earning per share taka||8.04||31.94||46.58||36.35||14.25||0.06||–|
|24||Net assets per shara taka||135.14||145.68||188.14||141.57||115.74||100.06||100.00|
Source: Annual Report of JBL, 2009
The general banking department does the most important and basic works of the bank. All other departments are linked with this department. It also plays a vital role in deposit mobilization of the branch. Actually general banking is called the mother of banking. However, PBL provides different types of accounts, locker facilities and special types of savings scheme under general banking.
3.2 Account Opening Section
The relationship between banker and customer begins with the opening of an account by the customer. Selection of customer for opening an account is very crucial for a bank. In fact, fraud and forgery of all kinds start by opening account. So, the Jamuna Bank Limited takes highest caution in this regard. However, PBL opens the following accounts for its customers:
· Current account (CD A/C) · Savings account (SB A/C) · Shot term deposit (STD A/C) · Fixed deposit account (FDR A/C)
A brief on this Accounts are given below:
3.2.1 Current Account
Current account is purely a demand deposit account. Basically it can be open for the purpose of business. There is no restriction on withdrawing money from this account. It is suitable when funds are to be collected and money is to be paid away at frequent interval. It is the most suitable for private individuals, traders, merchants, importers and exporters, mills and factory owners, limited companies etc. For opening a current account minimum deposit tk. 5,000/- is required along with introductory reference. No interest is given on the current account deposit money.
The following points are important–
1. A current account is a running and active account. There is no restriction on the number and the amount of withdrawals from a current account.
2. The banker is under an obligation to repay these deposits on demand, so they are called demand liabilities of a banker.
3. The primary objective of current account is to save customers such as businessmen, join stock companies, public authorities, etc. from risk of handling a lot of cash money.
4. The bank does not pay interest on current deposits while on the other hand, some bank charge for incidental charges on such accounts.
5. The bank provides overdraft facilities also in certain cases.
6. The account holder can withdraw the deposited money from his account with the cheque, which will be issued to the against his account number.
7. The cancellation fee for current account is tk. 100.
8. An account holder can withdraw and deposit money in his account in several times in a week.
There are several types of current account which are stated below:
Current Deposit Account for Individual/Joint Account.
Current Deposit Account for Private firm (Proprietorship concern).
Current Deposit Account for Private firm (Partnership concern).
Current Deposit Account for Limited Company.
Current Deposit Account for the account of Societies, Clubs, etc.
· Current Deposit Account for Private firm (Proprietorship concern)
1) A/C opening form.
2) Introducer of CD A/C holder in this bank.
3) Signature form/card.
4) If it is used for the purpose for business, it must require trade license.
5) Photocopy of character certificate or photocopy of passport.
6) Two-copy passport size photo & Declaration certificate.
· CD for partnership A/C
1. Partnership deed
2. List of partners with their address
3. Copy of trade license
4. Photographs of signatories
5. Separate nomination form duly signed by the nominee & the account holders and photograph of the nominee duly signed by the account holders
· CD for Private & Public Limited Company A/C
1. Trade license
2. Photograph of the director
3. Certified copy of the memorandum and articles of association
4. Certificate of incorporation
5. List of directors as per return of joint stock Company with signature
6. Resolution for opening account with the bank
7. Signature of the introducer
8. TIN certificate
9. Certificate of commencement
· CD for Association/Club/Charity A/C
1. Two copies of photograph of the person(s) who will operate the account.
2. Certified copy of memorandum and articles of association
3. Certified copy of bye laws and regulations
4. Certified copy of resolution for opening and operation of the account
5. Photograph of signatories
6. Up-to-date list of office bearers/ government body/managing committee
3.2.2 Savings Account
Savings account is allowed for all people. Anyone can run this account for his personal or business purposes. To open this account depositor have to give at least Tk.5000 at the time of opening. The main objective of this account is to promote lower income people to save their portion of their income for their f