Overall Banking System of NCC Bank Limited

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“Overall Banking System of NCC Bank Limited”.


A Bank is an economic institution whose main aim is to earn profit through exchange of money & credit instruments. It is a service oriented as well as profits oriented organization. To perform those two functions simultaneously, the Bank divides its operation mainly in three parts- General Banking, Loan & Advances and Foreign Exchange. Bank also invests their money into different financial security and also in different types of project to diversify the risk and getting more profit.

The banking sector of Bangladesh is passing through a tremendous reform under the economic deregulation and opening up the economy. Currently this sector is becoming extremely competitive with the arrival of multinational banks as well as emerging and technological infrastructure, effective credit management, higher performance level and most customer satisfaction.

National Credit and Commerce Bank Ltd. is one of the leading private commercial Banks having a spread network of more branches across Bangladesh and plans to open few more branches to cover the important commercial areas in Bangladesh. Have completed internship in the Elephant Road Branch of National Credit and Commerce Bank Ltd. During internship period found here a good job environment and also got a lot of cooperation from every department and every person. It is a great task to prepare a report on a big branch and at this moment feel very happy to complete this. Found that National Credit and Commerce Bank Ltd. gained success very early because they have a very strong backup to provide financial as well as administrative support. Within a very short time this bank has become very much popular. They gained success from the very beginning of their operation and were capable enough to hold the success year after year.


NCCBL- National Credit and Commerce Bank Limited

FDR- Fixed Deposit Received

SSS- Special Saving Deposit

CC- Cash Credit

A/C- Account

PO- Pay Order

L/C- Letter of Credit

SOD- Security Over Draft

VAT- Value Ad dated Tax

TIN- Tax Identification Number

CD- Current Account

SV- Savings Account

ATM- Automated Teller Machine

1.1 Introduction

Financial Institutions have historically have been distinguished by the types of services they provide. In recent years Financial Institutions have diversified their services by creating new subsidiaries that perform additional services or by merging with other types of financial institutions. The result has been the creation of financial conglomerates, composed of various units offering specialized services. Diversification also offers benefits to financial institutions.

National credit and commerce Bank Limited was incorporated in Bangladesh as a banking company. worked in the account opening desk, clearing and loan department of NCCBL. This gives the opportunity to know more on different aspects of the company. So, prepare internship report on overall banking system of NCCBL.


Every work is done to gain some particular objectives. Internship program also contains certain important objectives. They are given below

1. To understand the Banking business in Bangladesh. How Banking transactions Take place.

2. To observe the authorities, tasks & responsibilities of the bankers.

3. The rules and regulations of private commercial Banks

3. To know the background of the NCCBL

4. To know the Overall Banking system of NCCBL

5. To understand the Financial and Accounting techniques of NCCBL. In fact this is the prime objective and I have chosen this as the topic of my report.

6. To have the idea about the communication between the Branch office and Head office.

7. To better understand about the foreign exchange activities.

8. To learn the Banking Laws.

9. To appraise the total achievements and success of NCCBL

1.3 Methodology of the study

This report is prepared by two sources:-

1. Primary Sources.

2. Secondary Sources.

Primary Sources: Basically this type of Sources included interviews with the bankers of NCC Bank Ltd.

Secondary Sources: Secondary data were collected in the following ways:

  • Data gathered within the organization itself.
  • Data gathered from Texts
  • Internet sources.
  • General reports
  • Annual reports
  • Official documents
  • Credit manual and foreign exchange manual of the bank.

1.4 Scope of the study

In spite of limitation also got some facility to complete my internship report. The employees those who held a responsible post in the entire department helped me a lot. They gave me all essential data and conversation with . The university internship supervisor also helped me a lot. The gave a guidelines how to prepare report more attractive and perfect. This bank has given the opportunity to observe the banking environment for the first time indeed. got an opportunity to gather experience by working in the different departments of the branch under the supervision of different departmental heads.

1.5 Limitations

In brief, The faced following limitations during the time of preparing this report. Since was an intern NCCBL, was not allowed to stay in all the departments for a long period. That is why it was really a big difficulty for me to prepare art internship report.

As per Bank compliance, as an intern was unable to obtain indispensable experiences of different departments.


Overview of the Bank

2.1 Banking Sector in Bangladesh

Definition of Bank:

Whoever, being an individual firm, company or corporation generally a deal in the business of money and credit is called a bank. Banker means a person transacting the business of accepting for the purpose of lending or investment of deposit of money from the public repayable on demand or otherwise and withdrawal by cheques, drafts or otherwise. The purpose of banking is to ensure transfer of money from surplus unit to deficit units. Banks in all countries work as the repository of money. The general public deposit money in the bank for safe custody as well as to earn interest on it.

Entrepreneurs try to obtain money from the banks as project loan for long?term investment. They also obtain working capital from the bank to run their business smoothly. Banking sector these owe a great deal to the deposit holders on the one hand and the entrepreneurs on the other. They are expected to play the role of friend, philosopher and guide for the deposit holders and as wells entrepreneurs.

Since liberation, Bangladesh passed through fragile phases of development in the Banking sector. Some banks were nationalized in the post liberation period to save the institutions and the interest of the depositors. Those handing the banking sector have borne the burden of putting banks on reliable footings. Despite all that was done, some elements of irregularities appeared. With the assertion of the role of the Central Bank, Bangladesh Bank, started adopting measures for putting banking institutions on right track. Yet the performance of public sector management of banks left some negative effects in the money market in particular and the economy in general. The agility among the borrowers manipulates the banking sector as a whole. In effect, a default culture among other effects appeared on the scene.

The opening of private and foreign participants to the banking sector was intended to obtain desirable results from banking. The authorization of private bank was designed to create competition among the banks and competition in the form of efficiency within and the productivity in enterprises funded by banks. Unfortunately, for the people at large banking sector is yet to obtain the credit for efficiency, curability and growth.

The clever, among the user of banking services, have influenced the management of bands, for obtaining short term and long-term loans. They sometimes showed inflated equity to get money for investment in business and industry. Few diverted their loan money to purposes different from the loan proposal, and invested in non?profitable units have failed to repay their loans to the banks. For this reason new entrepreneurs are not getting capital while defaulting entrepreneurs have started obtaining either relief in the form of rescheduling of the repayment program of additional invest able money for diversified units.

2.1.1 Banking in Bangladesh Perspective

Banking is the backbone of national economy; all sorts of economic and financial activities revolve round the axis of the bank. As the industry produces goods and commodities, so does the bank creates and controls money?market and promotes formation of capital. From this point of view, banking?a technical profession can be termed as industry. Services to its customers are the products of banking industry besides being a pivotal factor in promoting capital formation in the country. As all economic and fiscal activities revolve round this important “Industry’, the role of banking can hardly be over emphasized.

Circumstances being such, it becomes imperative to find out the role of banks now playing in the country and analyze its operational aspects so as to ascertain the importance of this delicate financial sector and its over all impact on our national economy. To ascertain the role of banks and to analyze its operational aspects and its overall impacts on our national economy a through study as to its distribution, expansion and contribution is essential to comprehend its past, present and future bearings for the growth and development of the banking sector of the country. In the global context, the role of banks is far?reaching and more penetrating in the economic and fiscal discipline, trade, commerce, industry, export and import all carried through the bank. Banks are the only media through which international trade and commerce are being carried out and entire credit transactions, both national and international.

2.2 National Credit and Commerce Bank Ltd.


National Credit And Commerce Bank Limited (NCCBL) is a banking company registered under the company Act 1994 as a private commercial Bank. Before launching baking transactions it was established as an investment company at 25thNovember 1985 in the Name of National Credit Limited. It is converted into a scheduled bank because of many restrictions in both collection and disbursement of fund while it was an investment company. During conversion period all types of transaction were closed for about 14 months from ?22nd April 1992. After obtaining permission from the Government of the People’s Republic of Bangladesh and Bangladesh Bank, the erstwhile National Credit Limited, an investment company, was converted into a full fledged Commercial Bank started its Banking operation on the 17th May, 1993 with 16 branches in the name and style of National Credit And Commerce Bank Limited. Now it has 53 branches all over Bangladesh.

2.3 Objectives of the Bank

  • Achieve value and respect of the customers and maintain harmonious banker- customer relationship.
  • Strive for good profit and sound growth
  • Contribute towards the formation of national capital.
  • Achieve and sustain in the domestic leading market position in both customer and corporate banking sector.
  • To become the most efficient bank in terms of technology application.

2.4 Vision of the Bank

· To build a sustainable

  • Respectable financial institution
  • To be a leading Commercial Bank
  • With a social focus, assisting in the economic development of the country.

2.5 Mission of the Bank

? To mobilize resources from within to the development and growth of the country.

? To play a catalyst role in the formation of capital market.

? Anticipating business solutions required by all our customers every where and innovatively supplying them beyond expectation.

? Setting industry benchmarks of world class standard in delivering customer value through our comprehensive product range, customer service and all our activities.

? Maintaining the highest ethical standards and a community responsibility worthy of a leading corporate citizen.

? Continuously improving productivity and profitability and thereby enhancing value.

2.6 Management Hierarchy

2.7 Structure of the Organization

Toafzzal Hossain Chairman

A.S.M. Main Uddin Monem Vice Chairman,

Board of Directors

Md. Nurul Amin Managing Director

Mr.S.M. Shamsul Alam Deputy Managing Director

Mr. Golam Hafiz Ahmed Deputy Managing Director

Mr.A.K. Md. Siddique Head of Ctg. Area Office

Mr. Mohabbat Khan Head of Internal Control


Mr.T.M. Faruque Chowdury Head of Human Resource

Mr. Tarikul Alam Secretary to the Board

Mr. Matiur Rahman Chief Anti Money laundering

Compliance Officer

& Head of Credit

Mr. Ihsanul Aziz Head of International Division

& Remittance Service

Mr. Tapan Kantisarkar Head of Cards & I. T.

Mr. Asim Kumar Shaha Head of Treasury

Mr. Md. Abdul Bari Sarkar Financial Admin Division

Mr.S.I.M. Baquer Share Division

2.8 Present Status of the Bank (NCCBL)


As part of its goal of maximizing profit by rendering personalized services to the customers, making good advance improving quality of assets and above all recovering Bank’s money from defaulters, the Bank has continued its efforts during 2005 with fruitful results which reflects in the operational result as enclosed with this report.

However, operational profit stood at Tk.1018.34 million during 2005 against Tk. 720.49 million of 2004 recording an increase of 41.33% over the period.


The authorized capital of the Bank stood at Tk. 2500.00 million in 2005 while with the issuance of Rights Share, paid?up capital increased a d stood at Tk. 975.04 million in 2005.

The reserve fund has also increased to Tk. 562.74 million during thee year recording an increase of 32.34% over the previous year’s figure of Tk. 425.22 million.


Bank’s deposit as at 31st December 2005 stood at Tk. 21,478.22 million with an increase of 33.66% over last year’s figure of Tk. 16,069.23 million. The chart below shows the growth of deposit for last 05 years.


Bank’s credit policy has been reviewed and revised during the year 2005 to make the same need?oriented and also to comply with Bangladesh Bank directives conveyed through guidelines for Core Risks Management and Prudential Guidelines for Consumer Finance. As a result, Bank’s credit activities could be made more organized. With the support of various non conventional products like Small Loan Scheme, Housing Loan Scheme, Festival Loan, etc. Bank’s lending base could be expanded further which contributed to the profitability during the year. Banks SME lending and credit facilities extended to maize producers of country’s northern area’s farmers also received good response and acclamation in the financial sector.

During the year total advance of the Bank stood at Tk. 20,533.13 million with an increase of 34.98% over the last year’s figure of Tk. 15,211.15 million and Advance Deposits ratio being 0.96: 1 in 2005.


Banks investment in Government approved Securities, Treasury Bills etc. during the year stood at Tk 3,010.45 million as against Tk. 4,385.23 million of the previous year.


The Bank put due care to its Foreign Exchange Business which is one of the major sources of income and contributes notably towards its profitability. Under the purview of Bank’s Credit Policy and Government Policy, the Bank tries to cater the needs of Exporters and Importers of the country. With the expertise of the concerned officers at the Head office and Branches, Bankers business in this sector recorded notable development during 2005.

The amount of export and import business handled by the Bank in 2005 was Tk 7,776.30 million & Tk16, 296.30 million respectively as against Tk 5,771.65 million & Tk. 13,274.08 million in 2004.


Credit Administration Department has been strengthened further by assigning competent and expert officers to monitor/supervise both pre and post sanction activities. To make the Department an independent, one In charge has also been assigned. The department is now engaged in ensuring proper documentation of Loans/Advances and timely recovery of the same. Recovery Department is also laying its expected role in realizing Bank’s dues from defaulting borrowers.

Chapter 3

Types of Account


Account Opening

3.1 Information of General Banking

Deposits are the foundation upon which banks thrive and grow. They are unique items on a bank’s balance sheet that distinguishes it from other types of business firms. The ability of a Bank’s management and staff to attract checking and savings accounts from businesses and customers is an important measure of the bank’s acceptance by the public. Deposit provides most of the raw material for bank loans and thus represents the ultimate source of bank profits and growth. Deposits generate cash reserves, and it is out of the excess cash reserves a bank holds that new loans are created.

3.2 NCCBL Products & Services:

· Time Deposit Scheme

· Monthly Savings Scheme

· Deposit Insurance Scheme

· Inward & Outward Remittances

· Traveler’s Cheques

· Import Finance

· Export Finance

· One stop Service

· Working Capital Finance

· Loan Syndication

· Underwriting and Bridge Financing

· Trade Finance

· Industrial Finance

· Foreign Currency Deposit A/C

· NFCD (Non Resident Foreign Currency Deposit Account) Consumer Credit.

3.3 Types of Deposits offered by the Bank:

Today, Bank offers different types of Deposits. The number and range of deposit services offered by banks is impressive. They are: CURRENT DEPOSIT ACCOUNT, SAVING DEPOSIT ACCOUNT, TERM DEPOSIT, and FIXED DEPOSIT, SPECIAL SAVING SCHEME.


Amount Deposited under this account gives the facility of withdrawal from the amount without any restrictions and within the funds available on credit. Ordinary no interest is paid on the amount deposited in this account.


These are interest bearing deposit accounts. The drawing are restricted in respect of both the amount of withdrawal and frequency thereof so that the payment and of interest and does not become non?compensating for the banker. Interests are paid half yearly on the amount deposited. These accounts are suitable for individual person.


Deposits are also accepted by the bank against acknowledgement in the form of receipts for the specified amount and fixed periods. In Term Deposit Interest rate depends on period of deposit. The longer the period the higher is the rate of interest on them. The receipts are not negotiable and not transferable. Sometimes encashment of a receipt before maturity is allowed upon surrender of interest.


Fixed deposit accounts are repayable after the expiry of the predetermined period fixed by the customer. The period of the FDR ranges from three months to one year. Longer the period, the rate of’ interest is higher. Amount of FDR is payable once a time. If the client does not withdraw the amount and give’ further instructions for renewal within one month from the date of maturity, then the FDR account would get renewed for a further three months and the rate of interest would L prevailing rote for fixed deposit.

Rate of Interest on Deposit offered by the Bank

Types of Deposit Rate of Interest (0/0 per annum)
•FDR for 1 months 8.00
•FDR for 3 months 11.50
•FDR 6 months 11.75
•FDR for 12 months 12.00
•Short Term Deposit 6.00
•Savings Bank Deposit 7.00
•Special Saving Scheme 12.00


There are some customer’s oriented services in the field of general banking. There are different types of customer services. Like Cash, Account Opening and Closing, Remittance and Clearing. These are described below.


In cash section Banks provide service to the customer or client by providing cash or receiving cash against proper document and identification.


Bankers have to follow some rules for opening an account. The bankers must keep some records and particulars of each Account holder. The particulars are essential for identification for the account holder.


For all types of Accounts some Common particulars are needed. These are as follows:

· Proper Identification

· Recent Photographs

· Passport Photocopy/ Nationality certificate

· Transaction Profile

· Introducer


Some other necessary additional particulars are also needed for some Accounts. They are as follows

CD ? Proprietorship –Trade License, VAT, TIN is required.

CD ? Partnership. Partnership deed and Trade License

CD ? Joint Account The deed (This types of account is always discouraged by the Bank)

CD – Limited Company ? Trade license, Memorandum of association, Up to date director list. (For private and public Limited Com.)


Each bank has its own printed forms supplied by the head office to its branches to distribute them for applying an account. Different types of forms are provided for different types of accounts and for different forms of business. It means different application process is applicable for different ownership system of the business. For example, Proprietorship, Partnership, Company limited by shares private or public.

Who can open Account?

Any one can open an account with the banker, if he is not incapable of entering into a valid contract and the bank is satisfied of his bonfires and is willing to enter into the necessary business relations with them. A minor is not capable of opening an Account under the prevalent rules and regulations.

Withdrawal of Deposit

The deposits accepted by the banker is withdraw able checks or by remittance or by transfers under written instructions of the customers.

Issue of Cheque Book

The account holder should make a written request for issuing a check book for the first time. After finishing the first check book there is a printed format inside of a cheque book which presented to the banker for next check book. While issuing a check book the account number is noted. Immediately after the issue of check book, its serial number is noted on the check book issued register and in online branch the number must be posted.


For closing an account, client must give a written application including why he want to close the account and give a charge for closing the account.

3.5 Clearing Section

Clearing stands for mutual settlement of claims made in among member banks at an agreed time and place in respect of instruments drawn of each other.

Clearing House is an arrangement under which member banks agree to meet, through their representatives, at the appointed time and place to deliver instruments drawn on the other and in exchange to receive instruments drawn from them.

The nit amount payable or receivable as the case may be, is settled through an account kept with the controlling bank (Bangladesh Bank / Sonali Bank).

Clearing (outward) Process:

First tire Collecting Branch

Second tire Principal Branch / Local Office.

Third tire Clearing House (Bangladesh Bank / Sonali Bank).



When a particular branch receives instruments drawn on the other bank within the clearing zone and sends those instruments for collection through the clearing arrangement is considered as Outward Clearing for that particular branch. This branch is known as collecting branch.


Clearing returns (inward) consists of those instruments which were presented by us to other banks for payment but have been returned and unpaid by them due to specified reason through the clearing house.

Procedures of Outward Clearing:


The instrument is deposited duly entered in the pay?in?slip or voucher.

The instrument is checked for any apparent discrepancy and is compared with the particular noted in the pay?in?slip.

In case an order instrument is being deposited in second payee’s account guarantee is obtained from the second payee and is attached to the pay?in­ slip.

In case the payee’s name on the specially crossed instrument differs slightly that of the depositor, the instrument may be accepted but only from customers well-known to the bank and after obtaining an indemnity which is attached to the pay?in?slip.

* Stamping:

* Special Crossing: on the instrument

* Clearing Stamp: Both on instrument & pay?in?slip.

* Endorsement: Back of the instrument.

Dully signed and return of counterfoil to the customer,

The particulars of the instrument and voucher are entered in the Outward Clearing Register / Computer.

The Register is balanced; the vouchers are separated from the instruments.

Prepare voucher: Dr. Suspense A/ C Clearing adjustment.

Cr. All pay?in?slips/Vouchers.

Voucher to be passed on the following working day.

Sorting of instruments bank?branch wise and accordingly prepares submission schedules.

Prepare House page according to main schedules.

Tallied house page with Outward Clearing Register.

The house page with instrument sent to Principal / Local Office / Main branch (2nd tire).

In the following working day prepared voucher (SL No. 9) is to be passed. if any return and unpaid instrument is received from principal branch, in addition to above voucher the following voucher will be passed.

Dr. Party A / C

Cr. Suspense A/ C Clearing adjustment.

When Advice is received from Principal / Local Office, the following Voucher is to be passed.

Dr. Head Office A / C

Cr. Suspense A/ C Clearing adjustment.




Received house pages with instruments from the branches.

Recorded the amount in a Register from house page.

The instruments with schedules are rearranged bank?branch wise and prepare main schedules for each bank.

Prepare house page.

The instruments with schedules, house page and the house book are sent to the clearing house through bank representative.


The instruments are delivered to the respective banks.

Proceeding of Inward Clearing


The instruments are drawn on our bank are received from other banks in the clearing house.

The amount and number of instruments received are entered in the house book from the main schedule of respective banks.

The amount of instruments delivered, received and the differences are written on a figure slip provided in the clearing house.

Second tire: Principal Branch / Local Office / Main Branch

  • The instruments with schedules are arranged branch wise.
  • The amount of each schedule received is entered in the house pages of the respective branches.
  • The respective house pages are totaled and check the amount amounts of instrument received from all banks.
  • The instruments are sent to respective branches with the slip showing total amount and number of instruments.
  • The instrument sent to the branches concerned for clearance and Advice are collected from them for honored cheques.

Third tire: Paying Branch

  • Particulars of the instruments are compared with the schedule.
  • The instruments are sent to the respective departments for honoring them.
  • For the total value of honored cheques pass the following vouchers: Dr. Party A/C (already debited by instruments)
  • Cr. Head Office A/C
  • Dishonored cheques if any with reason memo and Credit Advice sent to Principal Br.

3.7 Foreign Remittance:

These remittance services are provided for exchanging foreign currency. Those services are as follows:

Foreign Remittance

1. Foreign Demand Draft

2. Traveler’s Cheque

3. Money Gram

4. Habib Quarter

5. Dhaka Janata

Foreign Demand Draft:

NCCBL accepts the charges for TOFEL, SAT, GMAT etc through FDD. For that client has to open a student file to issue FDD maintaining the rule of BB. Before issuance of FDD, bank will ask the client to fill up the TM form, which contains the following particulars:

  • Name of the student
  • Address of the student
  • Amount of FDD in foreign currency
  • Purpose of remittance
  • Address of the institution to which the FDD will be favored
  • Country receiving payment
  • Passport no of the student with date of issue
  • Signature of the student

.Traveler’s Check:

Traveler’s cheques are issued by banks to avoid the risk of loss or inconvenience in having to carry large amount of cash while traveling. The salient features of T.C. are:

• The buyers of T.C. need not to be a client of NCCBL.

• The buyer has to deposit money with the branch of NCCBL equivalent to the amount of the T.C. he wants to buy.

• Each T.C. is signed by the buyer at place marked “when countersigned below with this signature”, before the NCCBL officer

• T.C. is issued in single name. It is not issued in joint names or name of clubs, societies or companies.

• There is no expiry period for the T.C.

Accounting entry:

• Accounting treatment for the issuance of T.C. is as follows:

Cash or customer’s A/C Dr.

Issuing bank’s A/C Cr.

Money Gram:

It is the new concept of transferring foreign remittance to Bangladesh. One person residing in the abroad can remit his money through the process of money gram. There are more that 22,000 money gram agents in over 100 countries are linked worldwide. Only NCCBL is authorized to do this kind of business. This kind of business is permitted by BB because of foreign remittance is coming to our country. For such transaction client doesn’t have to maintain any account in NCCBL. They will only take Tk. 0.07/$ as a commission.

There are some features of Money Gram:

• Faster: When a person transfers money through money gram service his money gets there fast, usually in 10 minutes or less. Other services often take day or even weeks.

• Convenient: There are more than 22,000 money gram agents over 100 countries. Therefore, a person can easily transfer his fund.

• Secured: People use the money gram service thousands of time a day all over the world. It is a trusted guaranteed and reliable thoroughly personal way to transfer money.

• Easy: Just one simple form and computerized money transfer network will speed a person’s funds to destination throughout the world quickly.

Money Gram processing:

* Sender will go to money gram agent to transfer his/her money to any country (suppose Bangladesh)

* Sender gets receipt and notifies recipients of the transaction reference number.

* Recipients go to the money gram agent (NCCBL) in Bangladesh, fill the “Receive form” to request funds and shows proper identification.

* Receiving agents contract the money gram transaction center (Head office on NCCBL) to obtain authorization to pay recipient.

* Eventually receiver will get the money


The prime asset of any financial Institution consists of its loans and Advances and other investments. These assets are created primarily out of funds received from the depositors, loans and some other liabilities. The depositors as well as the investors in the institution are interested in real / realistic value of the assets of the institution as often, contradiction is unfolded between written value and realistic value of the assets. The creditors are interested as they want to know the dept of risk on their deposits, while the equity holders desire to be acquainted with viability of their source of income. The management of the institution as well as their supervising authority i.e. The Central Bank evaluates the assets of the institution keeping in view the aforesaid aspects. This evaluation at stipulated intervals is called “Classification of Advances”.

What is Classification of Advances?

It is in fact placing all loans and advances under pre?determined different Heads/Classes basing on the depth of risk each and every loan has been exposed to and to bring discipline in financial sector so far risk elements are concerned credit portfolio of banks. Bangladesh Bank, by issuing a circular, has introduced the self classification system on some norms, with effect from 31.12.1987.

At present Loans and advances are classified under three heads according to degree of risk element involves ????????? 1 # SUB?STANDERD 2# DOUBTFUL 3# BAD/LOSS.

Good loans are classified as “UN? CLASSIFIED” loans. Naturally, depth of risk is more in Doubtful or Bad Loans than unclassified ones so far realization/ serving is concerned.

Creation of classification

Formally loans used to be classified by Bangladesh Bank on qualitative aspects only. Under the revised system status of loans are determined on the basis of following five criterions:

Overdue Criteria

Required ?payment in required period i.e. analysis of payment position of the loan within stipulated period.

Legal action i.e. analysis of possibility to realize a loan by legal action.

Limit overdrawn Criteria.

Qualitative Judgments.

Different Types of Bank Credit and features

May be short or long term

Sanctioned for a fixed period of time.

May be a demand loan repayable on demand.

Entire sum is debited to loan account of party and credited in this current or savings account for withdrawal as per need of Loanee.

Where disbursable in installments, amount of each installment is released as above.

No cheque book is issued.

No subsequence debit excepting for charging interest or incidental charges.

Amount repayable either in lump sum or in installments.

Interest is charged on debit balance at quarterly rests.

Small Loan Scheme

There are three types of Small Loan.

1. Personal Loan (only for salaried person.) There are some obligations of salaried person. The person should be the employee of Government, Corporation, autonomous, Multinational Company and any well reported organization.

2. Small Business Loan

House repairing and Renovation Scheme.


Personal Loan:

Guarantee of Salaries disbursement authority.

Spouse Guarantee.

Post dated cheque.

Small business loan:

Guarantee of Land lord.


Agreement Deed

Somity Certificate.

Up to date Trade License.

Stock Report and five years experience.

House Repairing

Photo ?Three dimension and /Equitable mortgage.


Customers having current account are accommodated by overdraft facility against security.

Permission is given to overview current account up to sanctioned limit.

IT is continuous revolving credit & the borrower may operate any number of times within sectioned limit up to validity period of the limit.

Two types of Overdrafts are allowed SOD (FO) & SOD(General).


SOD (FO) is allowed by making lien (duly discharge) on financial obligations (FO) like FDR,

Other Term Deposit, SDS, PSP, BSP, WEDB etc.

SOD (General): SOD (General) is allowed against assignment of bills of a particular work order/supply order and obtaining adequate acceptable collateral securities. Its interest is charged on debit balance of daily products. And it’s a short term credit arrangement & renewable.

Chapter 4

The Internship Position and Responsibilities

4.1The Internship Position and Responsibilities

The worked mainly of the General banking Section. Sometimes the worked in the foreign exchange, money gram, Loan and advances department and cash counter. Mainly general banking section the worked account opening, deals with the clients about to open a new account, Forms of Deposit. Actually in our country the bank deposits take three different forms.

  • Current or Demand Deposit.
  • Saving Deposit
  • Fixed Deposit

Fill up the Form

The person desiring to open a current account with the bank has to make application in the prescribed form. This form must be properly filled up and signed by the applicants.

Deposit Book

Wit a view to facilitate the receipt of credit items paid in by a customer, the bank will provide him /her pay-in- slip either loose or in book forms. The customer has to fill up the pay in slip at the time of depositing the money with the bank. The cashier with his/her initials and stamps will return the counterfoil to the customer on the receipt of the money.


To facilitate withdrawals and payments to third parties by the customer, the bank will also provide a chequebook to the customer. But it is noted that to get a chequebook, the customer has to dully fill up the cheque requisition slip to the banker.

Some days I was worked in Loan and advanced department. Mainly loan and advanced department worked deals with client about the loan conditions of the NCCBL.

Chapter 5

Loans & Advance

5.1 Loans and Advance

In common parlance the loan “document” means any written record which serves as an evidence in respect of a transaction and be described as anything obtained for recording a transaction.

Documentation may be described as the process or technique of obtaining the relevant documents. A banker must obtain proper documents executed from the borrower to protect himself against willful defaults. Moreover, when money is lent against security of some assets, the documents must be got executed in order to give to the banker a legal and binding charge against those assets. Documents contain the precise terms of granting loans and advance and they serve as important evidence in law counts if the circumstance so require. It is, therefore, absolutely necessary for a banker to obtain proper documents from the borrower while granting a loan or advance to him. In banking system, loan interest is calculated in daily basis.

Types of loan: Generally we find two types of loan


  • Continuous Loan
  • Term Loan

Continuous loan:

Within a fixed amount and fixed period of time, one can receive and deposit money several time.

NCCBL provide different types of continuous loan:

Secured Over Draft-financial obligation

Secured over Draft- general

Cash credit- hypothecation

Cash credit- pledge

Secured over Draft- financial obligation:

Bank will give loan against any type of instruments such as FDR, SSS etc. It is not mandatory that the deposited instrument must be issued from the issuing bank. Borrower may not have any instrument in any bank then s/he can use third party for issuing the loan. If third party gives permission of taking loan by depositing his/her instrument only then bank will sanction loan. If the instrument is issued from another bank, loan issuing bank will send a Letter for seeking permission for lien that as security. When bank gets positive replay, loan issuing bank will sanction loan. Client must have a SB/CD a/c in the bank.

Credit ceiling:

Bank will sanction loan depending on the reliability of the client. But maximum amount is 80% to 90% of the instrument.

Interest rate: 3% above from the instrument rate. Interest will be charged on quarterly outstanding.

Payment period: The loan is to be repaid within a specific period of time.

Security: Any type of instrument such as FDR, SSS, SDS etc.

Procedure for application:

Fill up the application with required documents

Two passport size photographs duly attested by an officer of the branch.

Discretionary power:

The issuing branch can sanction this type of loan.

Disbursement of loan:

Against FDR in borrower’s name:

D.P notes

Letter of continuity

FDR duly discharged by holder on revenue stamp under the words “Received payment” on the back of the FDR

Agreement for pledge of securities

Security delivery letter

Revival letter

Letter of authority to appropriate the proceeds of pledged FDR.

Letter of authority to debit borrower’s account for incidental changes

Letter of acceptance of the terms of the loan.

In case the pledged FDRs stand in the third party’s name:

Double party D.P. note

D.P. note delivery letter

Letter of continuity

Agreement for pledge of securities

Security delivery letter

FDR duly discharged by holder on revenue stamp under the words “Received payment” on the back of the FDR

Letter of authority to appropriate the proceeds of pledged FDR

Letter of guarantee

Revival letter-1&2

Letter of authority to debit borrower’s account for incidental changes

Letter of acceptance of the terms of the loan.

Informal proposal format sanctioned by department in charge: Proposal for sanction of an SOD (FO) limit for “proposed amount” against lien an “any instrument” for total “amount of that instrument” a/c borrower’s name. The above named borrower has approached us to sanction an SOD (FO) limit for Tk. “proposed amount” against lien an “any instrument” for total Tk. “amount of that instrument”. It is mentioned that the party has been maintaining a SB a/c with us bearing no-”a/c number”.

The detail of the proposal is as follows:

• Name & present and permanent address of the borrower

• Nature of advance

• Amount of limit

• Margin

• Rate of interest

• Validity

• Details of security

Name of Nature & Date of Date of R.O.I Issuing Face
the no of sec issue maturity advice value

• All formalities including marking of lien have been completed.

• Place for approval.

Secured over Draft- general:

Bank will sanction loan against work order. Borrower can request bank guarantee for the amount which is financed by them. Client must have a CD A/C in the bank.

Credit selling: Bank will sanction loan depending on the reliability of the client, but maximum amount is 20% to 30% of the total work order.

Interest rate: For SOD (G) client has to pay 12.5 to 15% interest.

Payment period: Suppose one party get a work order of Tk. 1, 00, 00,000 and receive their payment part by part. They borrow Tk. 20, 00,000 from bank as loan. From the first payment Tk. 20, 00,000 banks will take Tk. 5, 00,000 and return Tk. 15, 00,000 to the client. By this way bank will receive the repayment of loan.


Work order will be kept as primary security Collaterals such as building; land etc will be kept as secondary security

5.2 Procedure for application:

Fill up the application with required documents

Two passport size photographs duly attested by an officer of the branch.

Discretionary power: The head office can sanction this type of loan.

Disbursement of loan: D.P. note Letter of continuity Agreement for hypothecation of supply bills General irrevocable power of attorney for collection of bills, security deposit etc. Properly executed by the borrower and registered in the District Registrar/Sub Registrar’s office should be lodged with the department concerned who award the contract! Paying authorities and their written confirmation obtained to the effect that all payment against the bills, security deposits etc. on account of the party concerned will be made direct to the bank for credit to party’s account through account payee check drawn in favor of the bank’s a/c. A letter of undertaking from the borrower to the effect that they will not receive the proceeds of the bills/security deposit etc. directly from the paying agencies concerned and in case any check/payments come is their possession the same will be placed to the bank fort with.

Supply bills to be accompanied by:

Inspection note duly signed by the authorized official of the paying authority Consigner’s receipt for the goods supplied duly signed by their authorized official Letter of authority to debit borrower’s account for incidental changes Letter of acceptance of the terms of the loan.

Cash credit-hypothecation:

This type of loan is issued for business person. Bank will issue loan against the products of the shop. Party has the possession of those products but bank has the control over those products.

Requirement of the clients

Party has to submit monthly report of their product Product should be insured the prospective borrower must have a CD A/C with the branch of the bank from where s/he wants to avail the loan Bank procedure: Bank will collect all required information from CAB (Credit information Bureau)

Credit ceiling: Loan amount depends on the total product of the shop. Bank will sanction a marginal amount among the product. Suppose one party has a shop with Tk. 40, 0000 then bank may sanction 50% margin amount means Tk. 2, 00,000. Interest: Interest may vary from 12.5% to 15% and it will be charged on quarterly outstanding. Security: Bank kept collateral as building, land. Disbursement of loan: D.P. note Letter of arrangement Letter of disbursement

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.

Guarantee bond on Tk. 150/- non-judicial stamp as per our approved format from the guarantor acceptable to the bank.

Acceptance of the terms and conditions of the loan.

Letter of authority to debit the account with incidental and other changes

  • Up to date trade license
  • Mortgage deed
  • Mortgage property
  • Biya deed

Cash credit-pledge:

In CC-pledge both control and possession are under bank. Part by part party will repay the loan and receive/ release their products.

Requirement of the clients:

Party has to submit monthly report of their product

Product should be insured

The prospective borrower must have a CD A/C with the branch of the bank from where s/he wants to avail the loan.

Bank procedure:

Bank will collect all required information from CAB (Credit Information Bureau)

Credit ceiling:

Loan amount depends on the total product of the shop. Bank will sanction a marginal amount among the product. Suppose one party has a shop with Tk. 4, 00,000 then bank may sanction 50% margin amount means Tk. 2, 00,000.


Interest may vary from 12.5% to 15% and it will be charged on quarterly outstanding.


Bank kept collateral as building, land. Disbursement of loan:

D.P. note

Letter of arrangement

Letter of disbursement

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.

Guarantee bond on Tk. 150/- non-judicial stamp as per our approved format from the guarantor acceptable to the bank.

Acceptance of the terms and conditions of the loan.

Letter of authority to debit the account with incidental and other chang