History of the Banking Industry & Performance of Mutual Trust Bank Ltd
CHAPTER-1
History of the Banking Industry in Bangladesh
The banking system at independence consisted of two branch offices of the former State Bank of Pakistan and seventeen large commercial banks, two of which were controlled by Bangladeshi interests and three by foreigners other than West Pakistanis. There were fourteen smaller commercial banks. Virtually all banking services were concentrated in urban areas. The newly independent government immediately designated the Dhaka branch of the State Bank of Pakistan as the central bank and renamed it the Bangladesh Bank. The bank was responsible for regulating currency, controlling credit and monetary policy, and administering exchange control and the official foreign exchange reserves. The Bangladesh government initially nationalized the entire domestic banking system and proceeded to reorganize and rename the various banks. Foreign-owned banks were permitted to continue doing business in Bangladesh. The new banking system succeeded in establishing reasonably efficient procedures for managing credit and foreign exchange.
Banking Industry Milestones
Current Structure of Banking Industry
Banks in Bangladesh can be classified into the following categories:
Industry Condition in Bangladesh
Depending upon the relationship with and the degree of control of the Bangladesh Bank banks in Bangladesh are divided into scheduled and non-scheduled banks. Scheduled banks are enlisted by the Bangladesh Bank under the provisions of section 37 of the Bangladesh Bank Order 1972. They are promise bound to obey central bank instructions, rules and regulations especially, those relating to required capital and provisions, statutory liquidity reserves, audited returns etc. Through scheduling, banks gain special status and enjoy some special facilities from the central bank such as re-discounting, participation in the money market, membership of the clearing house and deposit insurance scheme. Non-scheduled banks do not enjoy such privilege. The list of non-scheduled banks in Bangladesh includes the Eden Bank, Saidpur Commercial Bank, Comilla Co-operative Bank, Dinajpur Industrial Bank, Rajshahi Bank, Shankar Bank, Faridpur Banking Corporation and Madaripur Commercial Bank.
After taking over the management of American Express Bank by Standard Chartered Bank in the year 2007, a total of 48 scheduled commercial banks including eight foreign banks have been operating business in Bangladesh through 6383 branches. Out of total business 56.5% handled by private commercial banks (PCBs) and rest 43.5% dealt by nationalized commercial banks (NCBs).
Deposit in banking system in 2007 stood at Tk 1426 billion, registering 15% growth. Total assets increased by 14%, of which 8.2% in NCBs and 21.2% in PCBs. Total loans and advances during the year was Tk 1047 billion against total assets of Tk 1725.5 billion. The cash balance in hand was Tk 15.5 billion including the deposit with Bangladesh Bank (BB) of Tk 86.3 billion. The total liability deposit of banking sector in 2005 was Tk 1725.5 billion including Tk 92.7 billion capitals and reserve. The total operations of every bank were assessed according to five fixed criteria. These criteria are capital adequacy, asset quality, management efficiency, earning capacity and liquidity (CAMEL).
Capital Adequacy:
For the safety and protection of depositor’s benefit, capital adequacy must be maintained at 9%. It is also the coverage of financial debacles like loan loss, share market loss, foreign currency dealing loss, interest rate fluctuation loss and the protection for off balance sheet affairs hit. During the year 2007 the banking sector of Bangladesh has been able to keep an average 8.7% capital adequacy against the minimum requirement of 9%.
Asset Quality:
A total of 60.7% assets of banking sector were used as loans and advances. But the high rate of classification has enhanced vulnerability of assets. In 2007, the classified loan of NCBs was 14.6% against the asset, which was 5.6% for PCBs, 0.9% for foreign banks and 26.6% for specialized banks. A good number of banks have not been able to keep required provision against the classified loan risk from the profit during the year.
Management Efficiency:
Management is the key to the development and expansion of a bank. Management efficiency judged on the basis of the ratio of total expenditure to income, operational expenses and total expenses, per head employee income & expenditure and interest rate spread. The average expenditure-income ratio during the year 2007 was 102%, which is a painful scenario for our banking management.
Earning Capacity:
Strong earning and high profitability is the good sign of a bank’s present and future strength. Any loss can be compensated from the profit of a bank. Earnings calculated on the basis of return on asset (ROA), return on equity (ROE) and nil interest margin (NIM) ratios.
Liquidity:
The banks have to keep 16% SLR against their deposit with central bank, of which 4% average in the form of CRR. The central bank—Bangladesh Bank (BB) keeps CRR in current account and rest of SLR in cash and government securities. Islamic banks have to keep 10% SLR and specialized banks are given exemption of keeping the SLR but they have to keep 4% CRR.
CAMEL Rating:
Analyzing the overall operational activities of all commercial and specialized banks; central bank, the regulatory authority of country’s banking sector has ranked 6 ‘A-class’, 27 ‘B-class’, 8 ‘C-class’, 5 ‘D-class’ and 2 ‘E-class’ banks (24 Feb,2008), which was completed recently.
| Strong or A-Class Banks | Satisfactory or
B-Class Banks |
Fair or C-Class Banks | Marginal or D-Class Banks | Unsatisfactory or E-Class Banks |
| 1. Prime Bank Ltd.
2. Commercial Bank of Ceylon 3. Citi Bank N.A. 4. State Bank of India 5.Shahjalal Islami Bank Ltd.6.Standard Chartered |
01. Eastern Bank Ltd.
02. Premier Bank Ltd. 03. The Trust Bank Ltd. 04. BRAC Bank Ltd. 05. Southeast Bank Ltd. 06. Mutual Trust Bank Ltd Ltd. 07. One Bank Ltd. 08. RAKUB. 09. . Habib Bank Ltd. 10. Woori Bank 11. Bank Alfalah Ltd. 12. National Bank of Pakistan 13 Mutual trust bank Ltd. Ltd. Ltd. 14. Dutch-Bangla Bank Ltd. 15. Bank Asia Ltd. 16. Mutual Trust Bank Ltd. 17. Mercantile Bank Ltd. 18. Jamuna Bank Ltd. 19. Mutual trust bank Ltd. 20. BASIC Bank Ltd. 21. Standard Bank Ltd.22. HSBC23.Islami Bank Bangladesh Ltd. 24. Pubali Bank Ltd. 25. Uttara Bank Ltd. 26.. National Bank Ltd. 27. The City Bank Ltd. |
1. UCBL
2..Bangladesh Shilpa rin sangstha 3. Al-Arafah Islami Bank Ltd. 4.. IFIC Bank Ltd. 5.. A B Bank Ltd. 6. First Security Bank Ltd. 7.Agrani Bank, 8.Rupali Bank, |
01.Bangladesh Krishi Bank,
02.Bangladesh Shilpa Bank 3.Bangladesh krishi unnyan bank04.Janata Bank, 05.Sonali Bank,
|
1.The Oriental Bank.
2.Bangladesh Commerce Bank |
Central bank, the regulatory authority of country’s banking sector has rated the positions of different banks based on the performances of December–2007. The serial has been prepared on the basis of credit and asset management performance as well as local banks first then foreign banks.
Laws that directly regulate the banking system of Bangladesh are: Bangladesh Bank Order 1972; Bank Company Act, 1991; Bangladesh Bank (Nationalization) Order 1972; Companies Act 1913 and 1994; Deposit Insurance Order 1984; Bankruptcy Act 1997; Insolvency Act 1920; Financial Court Act 1990; Foreign Exchange (Regulation) Act 1986; Financial Institutions Act 1993; Financial Institutions Rules 1994; and Co-operative Societies Ordinance 1984.
Laws that indirectly influence the banking system and for which references are made in the Banking Company Act 1991 are: Code of Civil Procedure 1898; Code of Criminal Procedure 1898; Evidence Act 1872; General Clauses Act 1897; Limitations Act 1908; Negotiable Instruments Act 1881; Penal Code 1860; Trust Act 1882; Transfer of Property Act; and Bangladesh Chartered Accountant Order 1973.
List of Scheduled Banks in Bangladesh
| Types of Bank | Number |
| Central Bank | 1 |
| Nationalized Commercial Banks | 4 |
| Specialized Banks | 5 |
| Private Commercial Banks | 30 |
| Foreign Banks | 9 |
| Total | 49 |
CHAPTR-2
Overview of Mutual Trust Bank Ltd
Background
Bangladesh economy has been experiencing a rapid growth since the ‘90s. Industrial and agricultural development, international trade, inflow of expatriate Bangladeshi workers’ remittance, local and foreign investments in construction, communication, power, food processing and service enterprises ushered in an era of economic activities. Urbanization and lifestyle changes concurrent with the economic development created a demand for banking products and services to support the new initiatives as well as to make channel consumer investments in a profitable manner. A group of highly acclaimed businessmen of the country grouped together to respond to this need and established Mutual trust bank Limited in September 29, 1999.
The Company was incorporated on September 29, 1999 under the Companies Act 1994 as a public limited company by shares for carrying out all kinds of banking activities with Authorized Capital of Tk. 38, 00,000,000 divided into 38,000,000 ordinary shares of Tk.100 each. The Company was also issued Certificate for Commencement of Business on the same day and was granted license on October 05, 1999 by Bangladesh Bank under the Banking Companies Act 1991 and started its banking operation on October 24, 1999.
Operations and Activities of MTBL
Company started its banking operation and entitled to carry out the following types of banking business:
(i) All types of Commercial Banking Activities including Money Market operations.
(ii) Investment in Merchant Banking Activities.
(iii) Investment in Company Activities.
(iv) Financiers, Promoters, Capitalists etc.
(v) Financial Intermediary Services.
(vii) Any related Financial Services.
The Company (Bank) operates through its Head Office at Dhaka and 36 branches and 5 SME Service Centers. The Company/Bank carries out international business through a Global Network of Foreign Correspondent Banks.
The Registered Office of the Bank is:
68, Dilkusha C/A, Dhaka 0140
Phone: 717 0138, 717 0139, 717 Fax: 880-2-956 9762,
SWIFT-MTBL BD DH
Telex: 632173 MTBL HO BJ
E-mail: MTBL@bangla.net
The Company (Bank) operates through its Head Office at Dhaka and 36 branches and 5 SME Service Centers. The Company/Bank carries out international business through a Global Network of Foreign Correspondent Banks.
In its effort to provide Excellence in banking services, the Bank has launched fully automated Phone Banking service, joined a countrywide shared ATM network and has introduced a co-branded credit card. A process is also underway to provide e-business facility to the bank’s clientele through Online and Home Banking solutions
The profile of Mutual Trust Bank Ltd.
q Bank’s Name: Mutual Trust Bank Limited
q Established: 05 October, 1999 in Dhaka
q Industry: Banking
q Type: Private
q First Capital: Tk. 10 million
q Present Capital: Tk. 2450 million
q Total reserve: Tk. 2518.1 million
q Number of employee: 2270
q Number of branch: 41
q Product and service of MTBL:
Ø Consumer Credit Scheme
Ø Special Deposit Scheme
Ø Monthly Savings Scheme
Ø Credit Card
· Visa
· Master Card
Ø MTBL ATM Service
Ø Western Union Money Transfer
Ø MTBL housing loan
q Head office: 68, Dilkusha commercial area. Dhaka.-1000
q Slogan : You can bank on us
q SWIFT (Society for Worldwide Inter-bank Financial Telecommunication): MTBL BD DH
q Telephone : 717 0138, 717 0139, 717 0140
q Fax : 880-2-956 9762
q Logo:
q Telex : 632173 MTBL HO BJ
q E-mail : MTBL@bangla.net
q Web Page: http://www.mutualtrustbank.com/
The Mission
We aspire to be the most admired financial institution in the country, recognized as a dynamic, innovative and client focused company that offers an array of products and services in the search for excellence and to create an impressive economic value.
The Vision
To be the bank of 1st choice by creating exceptional value for our clients, investors and employees.
The Values
- Customer Focus
- Integrity
- Teamwork
- Respect for the individual
- Quality
- Responsible Citizenship
MTBL’s Objectives
q By using of latest version of technology to serve the customer as quickly and better way.
q By better relationship between the bank and the customer to take participation in the growing economic society.
q By using of better equity to certain the highest profit and provide it to the customer.
q To hold the bank’s performance and continue it.
q By effective banking we can make strong position in the competition banking market.
MTBL’s products and services
Deposit Schemes of MTBL:
Mutual trust bank Limited offers mainly various types of deposit schemes, those are:
Mutual trust bank Ltd. Offer following types of deposit account:
a. Consumer Banking Products.
b. Customize products
MTBL Consumer Banking Products are:
» Brick by Brick Savings Scheme
» Monthly Benefit Plan
» Save Everyday Plan
» Children Education Plan
» Consumer Credit Scheme
» Best Investment Plan
Customized Products are:
» MTBL Unique Savings Plan
» MTBL Triple Saver Plan
» MTBL Millionaire Plan
» MTBL Double Saver Plan
MTBL Consumer Banking Products in details:
# Brick by Brick Savings Scheme:
Brick by Brick is a unique monthly savings plan which builds up over the years and provides a lump sum amount at maturity. The savings periods are 5, 8 and 10 years. Monthly instalments are Tk. 500/=, 1,000/=, 2,000/=, 5,000/= and thereafter in multiples of Tk. 500. You will have to open an account in the bank from which a standing instruction will be given to transfer the monthly deposit in the scheme’s account and you must ensure that your account has sufficient balance within the 10th of each month.
This plan is so flexible that at maturity you can earn a handsome amount depending on the size of installment amount of savings and tenure.
Rules & Regulation
v You have to open an account in the bank from which a standing instruction will be given to transfer the monthly deposit in the scheme’s account and you must ensure that your account has sufficient balance within the 20th of each month.
v If the 20th of the month is a holiday, you should deposit that amount by the next working day. If you can not deposit the amount before the due time, the bank holds the penalty Tk. 25 per month.
v Unable to pay 3 consecutive installments will end up with a closing account.
v The maturity value is an indicative figure. Tax/Excise Duty will be deducted as per govt. rules. Depositor enjoys 90% Loan Advantage on his deposited amount but the minimum balance must be Tk. 25000/-.
Monthly schemes or deposits:
| Monthly deposit | After 05 Years | After 08 Years | After 10 Years |
| 500/- | 41,500/- | 81,500/- | 1,17,500/- |
| 1000/- | 83,000/- | 1,63,000/- | 2,35,000/- |
| 2000/- | 1,66,000/- | 3,26,000/- | 4,70,000/- |
| 5000/- | 4,15,000/- | 8,15,000/- | 11,75,000/- |
# MTBL Monthly Benefit Plan:
This plan offers you to generate monthly income out of your deposit. It has been designed to help and assist conscious savers from all strata of the society. The minimum deposit is Tk. 50,000/= or in multiples thereof. There is no upper limit and this plan is for a 3 (three) & 5 (five) years term that cannot be changed subsequently.You will require opening a savings/current account. Monthly income will be credited to your account.
Rules & Regulations
v Any Bangladeshi resident can open this account individually and jointly and the maturity term of the scheme is 3 and 5 years.
v If the depositor withdraws the money before maturity then the interest will be given according to the rate of savings account.
v If the scheme holder dies then the nominee will receive the money with the proper interest.
A few examples of deposit and income are given below:
| Deposit Amount | Income Amount
(for 3 year plan |
Income Amount
(for 5 year plan) |
| Tk. 50,000/= | Tk. 487.50/= | Tk. 500/= |
| Tk. 1,00,000/= | Tk. 975/= | Tk. 1000/= |
# Saves Everyday Plan:
The primary advantage of this plan is that you are absolutely free to choose your own time for depositing money into this account. You can deposit daily, weekly or monthly. The choice is yours, but the transactions will have to be within the Bank’s transaction hour.
This is a 5 year plan and you will be required to open the account with an initial deposit of Tk. 2500/= only. MTBL offers very attractive interest rate which is accrued in this account on a daily basis.
# MTBL Education Plan
This plan allows parents to save the money for 4/7/9/12 years which helps their children’s education. The parent can deposit any amount of money at any day of the month. The interest rate is very lucrative and the Bank offers substantially more than the prevailing savings rate.
Rules & Regulation
v Any Bangladeshi resident can open this account individually and jointly.
v The parents can open the account on behalf of the minor and in this case they have to maintain the appropriate rules.
v If the 20th of the month is a holiday, you should deposit that amount by the next working day.
v Unable to pay 3 consecutive installments will end up with a closing account.
v If the scheme holder dies then the nominee will receive the money with the proper interest.
Monthly schemes or deposits:
| Monthly Deposit | After 04 years | After 07 years | After 09 years | After 12 years |
| 1000/- | 62,200/- | 1,33,500/- | 1,97,500/- | 3,28,500/- |
| 2000/- | 1,24,400/- | 2,67,000/- | 3,95,000/- | 6,57,000/- |
| 3000/- | 1,86,600/- | 4,00,500/- | 5,92,500/- | 9,85,500/- |
| 4000/- | 2,48,800/- | 5,34,000/- | 7,90,000/- | 13,14,000/- |
#Consumer Credit Scheme:
In order to make a significant contribution in the living standards of the people of medium and low income category, MTBL has introduced a scheme called “Consumer Credit Scheme”. With a view to materialize the dreams of those who are unable to make one time investment from their own savings, one can now afford to buy necessary household equipments and thus improve the standard of living. All sorts of household durables e g. Television, Refrigerators, Computers, Air Conditioners, Video Cameras, Washing/ Drying Machines and Furniture’s are allowed under this scheme. One can buy Motorcycle too under this programme.
# MTBL Best Investment plan:
Best Investment Plan offers two separate and convenient term deposit periods for 4 years and 6 years respectively. Best Invest Plan is available in units worth Tk.50,000/- each. You will invest Tk.10,000/- as down payment for purchasing 1 (one) unit and the Bank will provide loan for Tk.40,000/-. The customer also has the option to buy units in multiples of Tk. 50,000/- but maximum up to Tk. 1, 00, 00,000/- (one crore).
This is a unique high return plan catering to all income groups.
MTBL Customized Banking Products in details:
01. MTBL Double Saver Plan
02. MTBL Triple Saver Plan
03. MTBL Millionaire Plan
04. MTBL Unique Savings Plan
MTBL’s Double Saver Plan
MTBL Double Saver Plan offers you a one time savings scheme, which will provide you double the amount of your deposit after seven (7) years. You will receive a handsome amount at maturity.
If you are an individual or if your institution is an NGO or an Educational institution or a Trust or Society or any other institution, you may invest your savings in this scheme with a minimum deposit of Tk. 10,000/- for seven (7) years with no limit for maximum amount. At maturity you will get double of your deposited amount along with a gift item.
If the depositor withdraws the deposited amount before one year and also before maturity then the depositor is not entitled to receive any interest other than the principle amount, where as the withdrawal time exceeds one year but before the maturity then the depositor receive the amount at 6.25% interest rate.
MTBL Triple Saver Plan
MTBL Triple Saver Plan offers you a one time savings scheme, which will provide you three times of your deposit after eleven (11) years. You will receive a big amount at maturity.
If you are an individual or if your institution is an NGO or an Educational institution or a Trust or Society or any other institution, you may invest your savings in this scheme with a minimum deposit of Tk. 10,000/- for eleven (11) years with no limit for maximum amount. At maturity you will get three times of your deposited amount along with a gift item.
If the depositor withdraws the deposited amount before one year and also before maturity then the depositor is not entitled to receive any interest other than the principle amount, where as the withdrawal time exceeds one year but before the maturity then the depositor receive the amount at 6.25% interest rate.
MTBL Millionaire Plan
A depositor will deposit a certain amount of money per month for a certain period of time and after getting the maturity the depositor is entitled to receive 1 million taka. For example,
| Monthly deposit | Period or time | After maturity |
| 9,865/- | 6 | 10,00,000/- |
| 6,560/- | 8 | 10,00,000/- |
| 4,380/- | 10 | 10,00,000/- |
| 3,180/- | 12 | 10,00,000/- |
| 2,050/- | 15 | 10,00,000/- |
| 1,045/- | 20 | 10,00,000/- |
MTBL Unique Savings Plan
Unique Savings Plan offers you to deposit any amount of your choice but not less than Tk. 500/- for 3/4/5 years. This is a high income plan with withdrawal facilities. The Withdrawal facility will help you at the time of any emergency. You can withdraw 50% of the deposited balance for once a month. After maturity period the Bank cut tax and excise duty as per government rules.The depositor can found loan from 90% deposit amount but the minimum balance should have Tk. 25000/-
Personal Banking
Following Personal Banking Products are available with:
a. Current Account
b. Saving Account
c. Short Term Deposit Account
d. Fixed Deposit Account.
#Current Account
A Current Account is an account, which is generally used for business purpose. Clients enjoy maximum flexibility with this account. This account offers the following services:
ü Minimum balance fee 1500
ü Any number of transactions a day
ü Any branch banking facility (this facility is available with any type of account)
ü Phone banking (available only with few branches)
ü Statement of account at any desired time
ü The current account Interest Rate is 0.00%,
ü Account can be: Individual Account, joint Account, Proprietor Ship Account, Limited Company Account
Nature of Current Accounts (CD)
»Here the account holder withdraws money at any time without giving any notification and interest is not given for the deposited amount in current account.
» Current account can be open by any individual or joint or any name of proprietorship business, private limited company or public limited company, association clubs, society’s
trusts etc. Usually businessmen open the account.
» Mutual trust bank Ltd. Takes service charge Tk 500/- half yearly on each account irrespective of balance.
» Account closing charge Tk. 500/-
» Keep the minimum balance of Tk. 1500/-
# Savings Account
Savings account is a type of account, which offers the client a certain rate of interest. This rate of interest is subject to some constraints. These constraints are:
Account can be used for only transaction purposes and not for business purposes. Clients can draw a maximum number of two cheques per week; exceeding this number will forfeit the interest for the month. If withdrawing amount is more than one fourth of the total deposit then the client undergo a loss of profit for that specific month. Services that offered to this account are almost similar to that of current account. The savings accounts/deposits Interest Rate is 6.25% for general, 6.50% for wage earners
Nature of Savings Bank Deposit Account (SB)
» To maintain smooth and certain life in future savings account is very suitable for middle class group.
» The attributes of savings account are: 1000/-is the minimum amount of initial deposit.
» Clint cannot withdraw the money more then twice a week,
» The profit rate is 6.25% against savings money.
» SB deposit attracts interest.
» Client is not at large to withdraw deposit without prior notice.
» Interest is suspended if withdrawal rule is broken.
» Withdrawal rule is consisted of number of withdrawal per week/ month and percentage of balance.
»Account closing charge is Tk. 100/-
» No charge up to average balance of Tk.5000/-
»Mutual trust bank Ltd. Takes service charge Tk 200/- half yearly on each account incase of average balance more than Tk.5000/-.
#Short Term Deposit Account
The purpose of this account is clear from its very name. Short Term Deposit Account is a mixture of flexibility and a return on deposit like savings account. This type of account holder enjoys the privilege of both the current and savings account. The interest rate available to this type of account holder is lower than that of the savings account. The short term deposits Interest Rate is 7.0%
Nature/Attributes of Short Term Deposit Account (STD)
» It’s a certain period deposited system, which is not repayable before the maturity date of the fixed period. Mutual Trusty Bank offers higher rates of profit on such deposits.
» Usually customers are allowed to open this account for a certain period and the rate of profit in accordance’s with the terms of the deposits. The features of MTBL as follows
» By nature this deposit is not featured with issuance of cheque book.
» Depositor requires serve 7 days prior notice to transfer fund to his checking deposit account.
» STD account allows interest on daily product basis.
» Mutual trust bank Ltd. Takes service charge Tk 500/- half yearly on each account irrespective of balance.
» Account closing charge Tk. 500/-
» 7.00% profit rate against STD
» No restriction over withdrawal of money
» Tk. 5000/- is the minimum balance.
#Fixed Deposit Account
Fixed deposit is one, which is repayable after the expiry of a predetermined period fixed `by him. Any one in any time open fixed deposit account to deposit any amount.Its time period is 1,3,6,12,24 and above 24 month, this product is very much popular in banking arena for surplus spending unit. . Hence, it is a popularly known as ‘Time Deposit’ or ‘Time Liabilities”. This deposit is one way trafficking system i.e. deposit is received for once for specific period and refunded with up to date interest on maturity. These deposits are not repayable on demand but they are withdraw able subject to a period of notice Premature encashment may resultant loss of interest If the depositor wanted to Brock up his or her deposit account before maturity date and before one year that moment he or she could not found any kind of interest, if its time period should have one year but before maturity date that moment depositor could found in interest rat like as savings account .e.g. 6.25%. After maturity period the Bank cut tax and excise duty. The depositor can found loan from 90% deposit amount
Different types of loans provided by MTBL
These are loans which have a specific term for repayment as specified in the loan agreement. Example: Loan (General), Housing Loan, Car Loan, small Business Loan, Personal Loan, House Building Loan etc.
Loan (General)
In case of loan general, the banker advances a lump sum for a certain period at an agreed rate of interest. The entire amount is paid on an occasion either in cash or by credit in his/her current account which he/she can draw at any time. The interest is charged for the full amount sanctioned whether he/she withdraws the money from his/her account or not. The loan may be repaid in monthly installments or at the expiry of a certain period.
Housing Loan
A large amount of money needed to construct a house or purchase an apartment. It is not possible to of all people to construct a house by only own income sources. Especially this problem largely faces by middle level and fixed income people. To solve this problem, MTBL’s offer Housing Loan with easy repayment condition and less interest rate.
Detail information of Housing Loan:
Purpose of Loan:
a) To help service holders, self-employed persons, businessmen, professionals and also those who have the capability to repay loan for purchase of flats/house/construct buildings and thereby improve their quality of life.
b) To contribute to the reduction of acute housing problems of the country.
c) To help the prospective clients get housing loans on easy terms and without any hardies.
d) To strengthen MTBL.
e) To contribute towards improvement of socio economic condition of the society.
Housing Loan Product of Mutual Trust Bank Limited:
a) Flat purchase
b) Own Construction
c) House Extension
d) Readymade house purchase
Target Group:
People of all sections of the society who are desirous of purchasing flats/house/constructing buildings/flats on land owned through registered purchase/lease from the government/any other government approved authority and who have the capacity to repay the loans within the validity period of the loan out of the income generated by the flats/house and also their other sources of income, may be the ideal customers.
Designated Branches:
a) Gulsan Branch.
b) Dhanmondi Branch.
c) Mirpur Branch.
d) Uttara Branch.
e)
Maximum size of loan:
Loan for amount exceeding Tk.5.00 lac to the maximum of Tk.50.00 lac may be considered under the Housing Loan Scheme.
Debt: Equity
a) For purchasing flats/houses:
i. For loan up to Tk.20.00 lac debt equity ratio will be 75:25.
ii. For loan above Tk.20.00 lac debt equity ratio will be 70:30.
b) For construction on own land:
Minimum 10% cash involvement excluding value of land.
Repayment period:
The loan is to be repaid by monthly equal installments including interest within the period ranging from 5 years to 15 years (including grace period) on the size of loan, income generation from the flats/houses and other sources of income of the customers.
Grace period:
a) For purchase of flat(s) the client may enjoy maximum 6 months grace period from the date of availing of the loan depending on the merit of the case. Repayment will start from the 7th month of availing of the loan and entire loan will be adjusted the validity period.
b) For construction of building the client may enjoy maximum 12 months grace period from the date of availing of the loan within which construction is to be completed. Repayment will be adjusted within the validity period.
Interest and Other Charge:
a) Interest: 13% p.a. (to be charged annually) subject to change with market situation.
b) No processing fee will be charged.
c) Documentation charge: @ 1% of loan amount to be realized on acceptance of loan.
d) Interest will be charged on monthly reducing balances after realization of monthly installments.
e) 5% rebate will be allowed on total amount of interest charged at the time of f8inal adjustment of an account wherein no break chain in repayment of installment will occur.
Security:
a) Registered mortgage of land and building/flat(s) with proportionate land.
b) Personal guarantee of person(s) acceptable to the bank (where
c) Applicable).
Necessary Document for Housing Loan:
The following papers are to be submitted while applying for loan:
For Employed-
i. Employment certificate/contract paper.
ii. Pay slip for last 3 months (showing all deduction).
iii. Bio-Data (income-earner).
iv. Bank statement for the last 12 months.
v. If applicant has any other income, proof of that may be given (e.g. Rental agreement).
vi. TIN Certificate.
vii. Letter of Consent from the guarantor (if required).
For Self Employed-
i. Statement of business, detail such as product/clients etc.
ii. Income Tax assessment orders/returns for 3 years.
iii. Audited Profit & loss Account and Balance Sheet for last 3 years.
iv. Self-assessed Profit & loss Account for last 3 years (for Proprietorship Firm).
v. Bank Statement of self and business for last 1 year.
vi. Bio-Data.
vii. If applicant has any other income, proof of that may be given (e.g. Rental agreement).
viii. TIN Certificate.
ix. Letter of Consent from the guarantor (if required)
For Private Land-
i. Ownership deed (original).
ii. Baya deed (original/certified/photocopy).
iii. Recent Survey Report (i.e. Math parcha duly attested).
iv. CS/RSSA Parcha.
v. Mutation ParchaKhatian.
vi. Up to date “Non-Encumbrance Certificate” for 13 years.
vii. Approved plan and approval letter of Rajuk Authority.
viii. Detailed estimate of the cost of construction prepared by a qualified Engineer/Architect at current market rates.
ix. Photograph of the project.
For Leasehold Land-
i. Ownership deed/Lease deed.
ii. Baya deed (original/certified/photocopy).
iii. Mutation Letter from relevant govt. office.
iv. Up to date Land Tax Receipt.
v. Permission from the lessor to mortgage (if required).
vi. Approved plan and approval letter of Rajuk Authority.
vii. Detailed estimate of the cost of construction prepared by a qualified Engineer/Architect at current market rates.
viii. Photograph of the project.
Other Document for Flat purchase:
i. Deed of agreement
ii. Money Receipts
iii. Builder’s Letter
iv. Reg. Sale Deed
Important aspects:
a) Title to the land and building must be clean.
b) Construction of the building must be made strictly in accordance with the plan approved by the appropriate authority.
c) Cost estimation must be prepared by a qualified engineer (civil/architect which shall be verified by the bank’s Engineer.
d) The borrower(s) shall allow the bank officials to inspect the flat(s)/house(s)/building at any time.
e) The borrower(s) shall immediately inform bank if he/she/her/their guarantor(s) changes address or profession.
f) The borrower will not sell, gift or transfer the possession/ownership of the flat(s)/house(s) before full adjustment of the loan or without prior permission from the bank.
g) The borrowers will give a declaration that he/she/they have/has not availed and will not avail of any credit facility from any bank/financial institution against mortgage or otherwise of the property related to the loan.
h) Repayment of loan shall be made on equated monthly installment (EMI) basis.
i) The loan will be governed according to the rules and procedures of MTBL.
Procedures of sanction of loan: On receipt of application along with all required papers/documents, the branch Manager will verify the genuineness of the information of the application by deputing an inspecting official of the bank. He will also ensure genuineness of the same by applying his best prudence. If all the papers are found all right and genuine and he is fully satisfied about the genuineness of the applicant, the application will be processed. Complete proposal will be prepared in duplicate, all necessary papers/documents including up to date satisfactory CIB report must be collected before disbursement of loan. If the application merits consideration, original proposal will be sent by the designated branch with recommendation of the Branch Manager to Housing Loan Unit Head office for sanction.
Disbursement of Loan:
a) On receipt of sanction letter, branch will complete full documentation as per the terms and conditions of the sanction letter and on the basis of other usual terms and conditions under the supervision of bank’s legal adviser. On completion of documentation a certificate of completion of documentation shall be sent by the branch to the Housing Loan Unit Head Office. Before completion of full documentation branch must not disburse the loan.
Usual Charge documents:
- D.P. Note along with Revival letter.
- Letter of Continuity.
- Letter of arrangement
- Letter of disbursement
- Letter of guarantee as applicable
- Letter of Undertaking.
- Any other charge documents as per sanction advice.
Usual mortgage documents:
- Memorandum of deposit of Title Deed.
- Deed of Mortgage (where applicable).
- Irrevocable General Power of Attorney (to be notarized).
Other formalities:
- All documentation formalities must be completed in consultation with the legal department of Head Office.
- Letter of authority to debit the account with incidental and other charges.
- Copy of up to date rent receipt, municipal holding tax receipt, parcha, khatians, mutation, title deed, baya deed, NEC and all other necessary papers/documents must be obtained before sending the proposal.
- Original Title deed and relevant documents/papers to be obtained before disbursement of loan.
b) On Completion of full documentation, branch shall ensure utilization of the clients’ equity portion. For purchasing flat(s)/house(s) sold and against registration of the flat(s) in the name of the client SRO token of the registration shall be delivered to the bank officials who will remain present at the time of registration. Before issuance of pay order the borrower shall create mortgage of the property against which the loan has been sanctioned. For disbursement of loan for construction of house, subject to completion of full documentation including mortgage, disbursement of loan shall be made in phases. Client’s equity in every stage of construction based on approved estimated cost shall be ensured by the branch, where after loan portion to be disbursed. In the above manner loan will be disbursed in 4 equal installments for completion of construction on obtainment of field report including photographs.
c) The loan will be disbursed in the form of “Term Loan” separate ledger shall be used for this purpose.
Loan administration and follow up:
The loan will be administered by the in-charge of Housing Loan Unit to be setup in the Head Office. For an effective administration and follow up, two officers shall be given exclusive responsibility. The branch will have proper end use supervision of the loan and regular repayment. If any loan installment is defaulted, the branch manager must immediately contact the borrower personally or by letter/over phone for regularization of the loan. If the borrower fails to pay any two installments, the matter shall immediately be brought to the notice of the guarantor (if any) by letter/personal contact/over phone for realization of all arrear installments. In the event of the failure of the borrower to pay three installment consecutively. The matter must be brought to the notice of the in-charge of Housing Loan Unit, Head Office.
Car Loan:
Car Loan
For car loan borrower has to apply for the loan in prescribed bank application form. In the application form borrower must mention which vehicle he wants to buy and what’s the quantity. Borrower also has to provide detail price list of the vehicle, insurance paper for each vehicle, possible repayment planning of the loan; list of collateral, list of hypothecation of securities and other necessary papers depends on clients and number of vehicles. After getting all necessary papers and field inspection branch makes a proposal for the loan and sends it to the head office. Head Officers then again checks the necessary papers and do the field inspection. After inspection if Head Office thinks that for sanction of the loan they need more papers and securities, borrower has to provide those papers. Branches usually do not have any authority to sanction any amount of loan amount branch only disburse the amount and do the regular monitoring whether the vehicle is purchased, is they quotation match with the real one, vehicle is in the route and more importantly borrower is repaying the installment regularly.
Detail Information of Car Loan:
Name and address of the borrower & company
Nature of limit- Loan (Transport)
Purpose of the Loan- To procure vehicle for industrial or local transport.
Amount of the limit- the loan amount
Margin- 50% cash against each vehicle
Debt-Equity ratio- 50:50 (Bank cash 50% and Party cash 50%)
Validity- No of months (Calculated by the bank how many months it will take to repay the loan against each vehicle) from the date of disbursement against each vehicle.
Rate of interest- 16% p.a. at quarterly rest, subject to change according to market situation.
Mode of disbursement- The loan to be preferably disbursed after getting of vehicle. If advance payment is considered as sine-qua-non the payment to be made direct to respective seller through payment order after realizing party’s full equity with instruction to deliver the vehicle to the bank’s representative. All other costs insurance premium, route permit etc. to be borne by the borrower. Sale receipt to be issued in the name of bank account party.
Mode of repayment- From daily bus fare proceeds & minimum of certain amount of money against each vehicle & balance if any lump sump amount within validity. Repayment starts from the second months from the date of disbursement of loan against each vehicle.
Security-
Usually bank prefers pledge of FDR (or any other financial obligation that the party has in the bank) against each vehicle (Minimum Tk.1.00 lac) and also additional FDR for certain amount of money.
Hypothecation of vehicles duly registered in the name of the bank (1st party) and the borrower under supervision of bank official duly complying all the formalities of registration with motor vehicle department with comprehensive insurance cover in the name of bank and borrower at borrower’s cost.
If the client default payment of two consecutive installments, the loan will be recalled with up to date interest immediately duly notifying.
The bank official will inspect the vehicle at every month interval to see that the vehicles are on route.
Excess over limit is strictly prohibited even after accrual of quarterly interest.
Balance confirmation must be obtained regularly on the 30th June and 30th December of each calendar year.
Before disbursement borrower has to sign in the sanction letter of the Head Office to declare that he is accepting the term and condition.
Bank has right to cancel, alter, amend the terms and condition.
The borrower must avail the loan two months from the date of communication for sanction; otherwise the loan will be cancelled.
Necessary Documents for Car Loan:
CIB (Customer Information Beauro) response form.
Party’s application
CIB inquiry form 1, 2 and 3.
D.P. Note
Letter of arrangement
Letter of disbursement
Letter of authority
Letter of hypothecation
Letter of lien
Small Business Loan Scheme:
Small businessman take place large portion in our country. More of them are honest, energetic and hardy. In the absence of sufficient capital more of them cannot manage their business properly. They have not sufficient asset to make a security against loan, as a result they are failure to take a loan from bank or other financial assistance institution. If a loan give to them with easy terms and condition then this energetic small businessman not only manage and increase their business properly but also they take important role in development of our country. To meet up this purpose, MTBL start Small Business Loan scheme.
Detail Information about Small business Loan scheme:
Small Business Loan Scheme are available for the following person:
o Applicant must have the small business experience for at least 5 years with small capital.
o Applicant takes loan from a branch of MTBL only, if the applicant is the current account holder of this branch of MTBL.
o The applicant business must be profitable.
Amount of loan: Under this scheme any person or any institution takes loan for maximum Tk.5.00 lac for proper management or for expansion of business.
Interest and Other Charge:
§ -Interest: 16% annually.
§ -Application Fee: Tk.500.
Mode of Repayment:
The loan amount with interest must be repaid within 3 to 5 years by equal monthly installment.
Repayment period of loan are started at second month of loan taken.
By monthly equal installment repayment of the installment will start from the 2nd month of availing of the loan. Monthly installment has to be deposited by 10th of each following month. If any three installments are not paid, penal interest at the rate of 1% per month will be charge on defaulted amount of loan.
Security:
Hypothecation of Stock of the shop.
Simple deposit of original title deed of the ownership of the shop or possession deed/agreement or lease deed of agreement with personal guarantee of the landlord in case of rented premises.
Equal number of post dated cheque in which each covering all installments in advance.
Personal guarantee on Guarantee bond of Tk.150/- Non-Judicial stamp of Guarantor.
Any other security acceptable by the bank.
Undertaking from the borrower to pay monthly installment regularly in time in bank’s prescribed form.
Letter of authority to debit the account’s of the borrower with incidental and other bank charges to be obtained from the borrower.
Failure of the borrower to deposit monthly installment within 10th day of the following month will be treated as default.
During the period of loan entire dues with full interest shall have to be paid by the borrower.
Monthly stock report duly filled in by the borrower and signed by an officer of the branch after physical verification to be obtained.
The borrower will neither sell nor transfer the ownership of the business/shop until bank’s dues are fully paid and without prior written permission from the bank.
The borrower will allow the bank official to inspect the shop/business at any time.
The borrower will inform the bank immediately of any change in his/her/their address (including business address) or of the guarantor or his/her/their profession.
The bank reserve the right to recall the loan wholly or partially or cancel at any time without assigning any reason whatsoever.
All the terms and conditions of the advance should be informed to the party and acceptance in writing to abide by the terms and conditions to be obtained from the borrower.
Declaration: Following declaration must be made by the applicant of the loan-
i. The information made in the application form of loan is true.
ii. I have not taken any loan for such purpose from any other bank or financial institution.
iii. I have gone through the “Small Business Loan” Scheme regulation of MTBL and agree to abide by the rules.
iv. I shall spend the loan amount for the purpose for which loa