Credit policy & practice of banking sector in bangladesh

An Analysis on Credit Policy & Practice of Banking Sector in Bangladesh

1.1. Background I am the student of Bachelor of Business Administration (B.B.A), I study the subject's related to major in Accounting, Management, Finance, Marketing, Mathematics and little about other subjects. The schools of business at home and abroad try to familiarize each student as they move comfortably in the business environment. But only the theoretical study in the class room is not enough rather a research oriented experience.

In the business environment at home & abroad there are lots of financial institution, business firms, and industries which provide this facility towards us. If we could not get this facility of collecting data and information it would not be possible to complete this study. I think this is an extremely valuable asset for us.

We the students of business do this usually for a certain period of time. In our country there are many banks such as Specialized Banks, State Owned Banks, Private Banks Incorporated by Bangladesh, Private Banks (Foreign), Private Banks (Islamic). In this respect I have done my research and make a thesis report on 48 several types of Banks of Bangladesh.

1.2 Rationale for Choosing Topic Credit Policy and Practice is most important division in the banking sector. Almost maximum works are done by the bank with this topic. Without Credit Policy and Practice cannot think and also have not much work. Most of the Banking activities are related credit. Now every banks give importance to their customers. So banks like to fulfill customers’ wishes, aspiration, and demand of their personal life. In our study all of Banks in Bangladesh are offering very distinguish and attracted financial product to their customer and all are the credit related even in normal financial activities they provide

opportunity of credit. Some commercial banks provide loan any purpose to the customer can fulfill their any aspiration.

Customers like to enjoy personal auto loan to accommodate the transportation needs.

Consequently, Auto Loan got substantial momentum in the market. Most of the banks are focusing this product for increasing core lending base of the bank. This product will be a one of most vital lending products for retail lending.

By observing all of banking activities that, “Credit Policy and Practice” can be right choice if one provide all of possible and logical information about All of Banks in Bangladesh. In my studies I have tried to collect financial information from maximum number of Banks.

Finally I have given very logical and necessary information and make this report a resourced report of data. That is why it is definitely a right choice of topic.

1.3 Objectives: There are some objectives for making this report which are as follows: •

To analysis the Credit Policy and Practice in Bangladesh by all Banks.

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To study the function of the Credit Policy and Practice by all of Banks in Bangladesh.

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To identify the problems in Credit Policy and Practice of all Banks.

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To recommend suggestions for the successful Credit Policy and Practice by all Banks.

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To compare the different group of banks with each other.

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To identify the growth rate of different type of banks.

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To have a clear idea about the Credit Policy and Practice.

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To relevant rules, regulations, theories and practices for banking.

1.4 Limitations of the Report The sources of the report are collected from different Banks’ website and annual report and also from Scheduled Banks Statistics (October to December 2008).

Every task has some limitations. I faced some usual constraints during the research period. Though I have given utmost effort to prepare this report but there are some limitations of the study. These are as follows•

Collecting Information

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Communication

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Busy working Environment

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Secrecy of Information

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Different Format Data

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Technological Problem

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Financial Data Complexity

All of Limitations are discussed below: Collecting information Most of the information I have collected from Bangladesh Bank and annual report of all banks. I collected “Scheduled Bank Statistics” from Bangladesh Bank department of printing and publications. They have some rules and regulations to collect this book that is why it was hassle for me. I also collected all of annual report’s soft copy from Dhaka Stock Exchange library but they do not have sufficient collections of annual report in year 2008. They had a few annual reports and rest of annual reports I have collected from Bangladesh Bank’s library it was very tuff for me.

Communication I faced some communication problem because maximum of data I collected from Motijheel area but this area is too much busy area. On the other hand I did it for the first

time and never I made any report by collecting huge data like this report. For this I had to suffer to communicate in particular place to go particular person or library.

Busy working environment Though I did not go any single bank or branch to collect data directly but I went this related office to collect hard copy or soft copy data but in Bangladesh Bank and Dhaka Stock Exchange officials are too busy and always did not provide actual support due to their busyness.

Secrecy of Information The published data that is which data are published data by the bank this are available in annual report and own web address but some confidential data never they publish and it was a problem for collecting proper and necessary data.

Different Format Data All data are same but publish different format and for this different format data it made complex to compare each other or making report.

Technological Problem Today technology is so much updated similarly in banking sector in our country it is also updated in very rare case I find out that some of banks have no updated website and have no sufficient data. For this time in some cases I had to collect all data from annual report and from Schedule Banks Statistics even though profile of the bank.

Financial Data Complexity To make a financial analyzing report it really need a person who have enough idea about finance and accounting and also about economics but I am not good enough to gather and identify to make this type of report. That is why it was really hard for me but finally I have done it.

1.5 Scope of The report The report covers the functions of different things of banking related activities but all over it was about Credit Policy and Practice. For this report I have studied on all Banks of

Bangladesh who invest and provide credit in different sectors. Not only it shows the providing credit but it also shows the recovery rate and system. There Policy Practice and Credit limitations etc. It is also present a brief scenario of all bank of Bangladesh.

1.6 Research Methodology This study aims at analyzing the Credit Policy and Practice in all banks of Bangladesh. The study has attempted to provide an overall scenario of all banks in Bangladesh, with special focus on investment mechanism. Where clearly clarify their financial product, distribution and recover. Their showed the loan what are given to the customer in different situation and sectors.

It was not possible to collect data by discussing with different personnel because here I worked with a lot of Banks but it is not possible to discuss a lot of person. That is why it had no personnel involvement from banking department who usually supply data in short report. That is why most of the information from the secondary sources about Banks has been collected through different sources. Different write-up of policy makers regarding this topic helps me in gathering information for this report.

Some other Important Sources Are: •

Annual report of Business Banks

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Periodicals published by the Bangladesh Bank;

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Different publications regarding banking functions, foreign exchange operation, export-import policies and investment; and

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Bank’s Website.

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Scheduled Banks Statistics

1.7Categories of Banks National Commercial Banks (NCB) 1. Agrani Bank Limited 2. Janata Bank Limited 3. Rupali Bank Limited 4. Sonali Banki Limited

Specialized Banks (SB) 1. Bangladesh Krishi Bank 2. Bangladesh Shilpo Bank 3. Rajshahi Krishi Unnayan Bank 4. Bank of Small Industries and Commerce Bangladesh Limited 5. Bangladesh Shilpo Rin Sangstha Foreign Commercial Banks (FCB) 1. Standard Chartered Bank 2. State Bank of India 3. Habib Bank Limited 4. Citi Bank Limited N.A 5. Commercial Bank of Ceylon Limited 6. National Bank of Pakistan 7. Woori Bank 8. The Hong Kong & Shanghai Banking Corporation Limited 9. Bank Al-Falah Limited Private Commercial Banks (PCB) 1. AB Bank Limited 2. National Bank Limited 3. The City Bank Limited 4. International Finance Investment and Commerce Bank Limited 5. United Commercial Bank Limited 6. Pubali Bank Limited 7. Uttara Bank Limited 8. Eastern Bank Limited 9. National Credit and Commerce Bank Limited 10. Prime Bank Limited 11. Southeast Bank Limited 12. Dhaka Bank Limited 13. Dutch Bangla Bank Limited 14. Mercantile Bank Limited 15. Standard Bank Limited

16. One Bank Limited 17. Bangladesh Commerce Bank Limited 18. Mutual Trust Bank Limited 19. Premier Bank Limited 20. The First Security Bank Limited 21. Bank Asia Limited 22. Trust Bank Limited 23. Jamuna Bank Limited 24. BRAC Bank Limited Islamic Banks (IB) 1. Islami Bank Bangladesh Limited 2. ICB Islamic Bank Limited 3. Al-Arafah Islami Bank Limited 4. Social Investment Bank Limited 5. EXIM Bank Limited 6. Shahjalal Islamic Bank Limited 2.1 Private Commercial Banks 2.1.1

Premier Bank Limited

Background The Premier Bank Limited (PBL) is banking company registered under the Companies Act, 1994 with its Head Office at Iqbal Kalam Ataturk Avenue, Banani, Dhaka. The Bank started its operation from 26th October 1999.

The Premier Bank Limited is a highly capitalized new generation Bank with an Authorized Capital and paid-up Capital of Tk. 2000.00 million and Tk. 845.00 million respectively. At present, the bank has 26 Branches 12 in Dhaka, 3 in Chittagong, 1 in Sylhet, 1 Narayangaonj, 1 in Meghnaghat (Narayangonj), 1 In Brahmanbaria, 1 in Barisal, 1 in Keshorjong, 1 in Tongi, 2 in Gazipur, 1 in Khulna, 1 in Moulavibazar, The Premier Bank Limited (PBL) undertakes all types of banking transactions to support the development of trade and commerce in the country. PBL’s services are also available

for the entrepreneurs to set up new ventures and BMRE of industrial units. The bank gives special emphasis on Export, Import, Trade Finance, SME Finance, Retail Credit and Finance to women Entrepreneurs. 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.

2.1.2

National Bank Limited

Background National Bank Limited is one of the leading private commercial bank having a spread network of 112 branches across Bangladesh and plans to open few more branches to cover the important commercial areas in Dhaka, Chittagong, Sylhet and other areas in 2009. National Bank Limited has been licensed by the Government of Bangladesh as a Scheduled commercial bank in the private sector in pursuance of the policy of liberalization of banking and financial services and facilities in Bangladesh. In view of the above, the Bank within a period of 25 years of its operation achieved a remarkable success and met up capital adequacy requirement of Bangladesh Bank.

National Bank has been operating in Bangladesh since 1985. In 1997, the bank introduced automated branch banking system to increase efficiency and improve customer service. The bank is one of the leading banks which introduced first Credit Card in Bangladesh. Our technology has been upgraded to manage the growth of the bank and meet the demands of our customers. ATMs now allow customers to retrieve 24x7 hours cash withdrawals.

National Bank Limited is a customer oriented financial institution. It remains dedicated to meet up with the ever growing expectations of the customer because at National Bank, customer is always at the center.

History and Heritage National Bank Limited has its prosperous past, glorious present, prospective future and under processing projects and activities. Established as the first private sector bank fully owned by Bangladeshi entrepreneurs, NBL has been flourishing as the largest private sector Bank with the passage of time after facing many stress and strain. The members of the board of directors are creative businessmen and leading industrialists of the country.

To keep pace with time and in harmony with national and international economic activities and for rendering all modern services, NBL, as a financial institution, automated all its branches with computer networks in accordance with the competitive commercial demand of time. Moreover, considering its forth-coming future, the infrastructure of the Bank has been rearranging. The expectation of all class businessmen, entrepreneurs and general public is much more to NBL. Keeping the target in mind, NBL has taken preparations to open 15 new branches and 5 SME centers by the year 2009. In addition, we are further expanding our presence through developing and expanding the SME financing, Any Branch Banking and Off-shore Banking facilities.

The then President of the People's Republic of Bangladesh Justice Ahsanuddin Chowdhury inaugurated the bank formally on March 28, 1983 but the first branch at 48, Dilkusha Commercial Area, Dhaka started commercial operation on March 23, 1983. The 2nd Branch was opened on 11th May 1983 at Khatungonj, Chittagong.

NBL was also the first among domestic banks to introduce international Master Card in Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power Card.

The Bank has in its use the latest information technology services of SWIFT and REUTERS. NBL has been continuing its small credit programmes for disbursement of collateral free agricultural loans among the poor farmers of Barindra area in Rajshahi district for improving their livelihood.

The Bank earned a profit before tax of Tk. 2,828.80 million for 2008, a growth of Tk. 793.70 million or 39 percent, over the normalized profit before tax for 2007.The Bank's profit after tax and provision for 2008, at Tk. 1,517.40 million reflected an even stronger growth of 22.51 percent or Tk. 1,238.10 million, over the normalized profit after tax for 2007. In 2008, the bank’s revenue was Tk. 8,893.10 million, which was up by Tk. 1,710.50 million or 23.81 percent. The bank's total loans and advances portfolio was Tk.49, 665.10 million at the end of December 2008, compared to Tk.36,475.70 million at the end of December 2007. The deposit base of the bank registered a growth of 25.51 percent in the reporting year over the last year and stood at Tk. 60,195.20 million in December 2008..

Being a regular tax payer, we have made a direct contribution to Government Exchequer of Tk. 761.70 million in the calendar year 2008 against Tk. 449.70 million in the previous year, registering a staggering growth of 69.38 percent.

National Bank, has now acquired strength and expertise to support the banking needs of the foreign investors. NBL stepped into a new arena of business and opened its Off Shore Banking Unit at Mohakhali to serve the wage earners and the foreign investors better than before.

2.1.3

IFIC Bank Limited

International Finance Investment and Commerce Bank Limited (IFIC Bank) is a banking company incorporated in the People's Republic of Bangladesh with limited liability. It was set up at the instance of the Government in 1976 as a joint venture between the Government of Bangladesh and sponsors in the private sector with the objective of working as a finance company within the country and setting up joint venture banks/financial institutions abroad. The Government held 49 per cent shares and the rest 51 per cent were held by the sponsors and general public. In 1983 when the Government allowed banks in the private sector, IFIC was converted into a full-fledged commercial bank. The Government of the People’s Republic of Bangladesh now holds 35% of the share capital of the Bank. Leading industrialists of the country having vast experience in the field of trade and commerce own 34% of the share capital and the rest is held by the general public.

The primary objectives of IFIC was to carry on banking business abroad through subsidiaries, affiliates and branches, investment and financial activities in the country.

In 1983, the Government took the decision to allow establishment of banks in the private sector. In pursuance of this decision, private sector sponsors of IFIC decided to approach the character of IFIC from that of a finance company and merchant bank to that of a full fledged commercial bank. At that time, IFIC Bank got permission to start the Banking as a private commercial bank. The investment company has transformed into banking company in 13 June, 1983 and it starts its activities from 24 June, 1983 through Motijheel Branch, Dhaka (24/06/83). And its 2nd and 3rd Branch is Narayanganj Branch, Narayanganj (25/11/1983) and Khatunganj Branch, Chittagong (23/12/1983).

2.1.4

Southeast Bank Limited

SEBL Profile Southeast Bank Limited is a scheduled commercial bank in the private sector established under the ambit of Bank Company Act, 1991 and incorporated as a Public Limited Company under Companies Act, 1994 on March 12, 1995. The Bank started commercial banking operations on May 25, 1995. During this short span of time the Bank has succeeded in positioning itself as a progressive and dynamic financial institution in the country. The bank has been widely acclaimed by the business community, from small entrepreneurs to large traders and industrial conglomerates, including the top-rated corporate borrowers, for its forward - looking business outlook and innovative financial solutions. Thus within this very short period of time it has been able to create an image and earn significant reputation in the country's banking sector as a Bank with Vision.

Presently, it has 46 branches. Southeast Bank Limited has been licensed by the Government of Bangladesh as a Scheduled commercial bank in the private sector in pursuance of the policy of liberalization of banking and financial services and facilities in Bangladesh. In view of the above, the Bank, within a period of 14 years of its operation, achieved remarkable success fully meeting capital adequacy requirement of Bangladesh Bank. As evident from the financial statements for the last 10 years, it has been growing rapidly as one of the leaders of the new generation banks in the private sector in term of business and profitability.

2.1.5

Jamuna Bank Limited

Background Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994 with its Head Office at Chini Shilpa Bhaban, 3, Dilkusha C/A, 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 of Tk. 4,000.00 million and Paid-up Capital of Tk.1,313.26 million. The total capital/equity of the bank stands at Tk. 2,444.33 million as on December 31, 2008.

Currently the Bank has 44 (Forty Four ) branches-16 in Dhaka City, 8 in Chittagotang, 4 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 and 2 in Comilla.

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 Eight years. The bank has already ranked as one of top quality service providers & is known for its reputation.

At present the Bank has real-time centralized Online banking branches (Urban & Rural) throughout the Country having smart IT-Backbone. Besides these traditional delivery point, the bank has ATM of its own, sharing with other parner banks & Consortium throughout the Country.

The operation hour of the Bank is 9:00 A.M. To 5:00 P.M. from Sunday to Thursday with transactions hour from 9:00 A.M. to 3:00 P.M. The Bank remains closed at Friday and Saturday including government holidays.

2.1.6

Prime Bank

The Prime Bank Limited being Banking Company has been registered under the Companies Act 1994 with its Registered Office at 119-120 Motijheel C/A, Dhaka-1000.

The Bank operates as a Scheduled Bank under a Banking license issued by Bangladesh Bank, the Central Bank of the country.

In the backdrop of economic liberalization and financial sector reforms, a group of highly successful local entrepreneurs conceived an idea of floating a commercial bank with different outlook. For them, it was competence, excellence and consistent delivery of reliable service with superior value products. Accordingly, Prime Bank Ltd. was created and commencement of business started on 17th April 1995. The sponsors are reputed personalities in the field of trade and commerce and their stake ranges from shipping to textile and finance to energy etc.

Prime Bank Ltd. has already made significant progress within a very short period of its existence. The bank has been graded as a top class bank in the country through internationally accepted CAMEL rating. The bank has already occupied an enviable position among its competitors after achieving success in all areas of business operation.

Prime Bank Ltd. offers all kinds of Commercial Corporate and Personal Banking services covering all segments of society within the framework of Banking Company Act and rules and regulations laid down by our central bank. Diversification of products and services include Corporate Banking, Retail Banking and Consumer Banking right from industry to agriculture, and real state to software.

The bank has consistently turned over good returns on Assets and Capital. During the year 2007, the bank has posted an operating profit of Tk. 3257 million and its capital funds stood at Tk 6382 million. Out of this, Tk. 2275 million consists of paid up capital by shareholders and Tk. 2659.21 million represents reserves and retained earnings. The bank’s current capital adequacy ratio of 11.50% is in the market. In spite of complex business environment and default culture, quantum of classified loan in the bank is very insignificant and stood at less than 1.35%.

Prime Bank Ltd., since its beginning has attached more importance in technology integration. In order to retain competitive edge, investment in technology is always a top agenda and under constant focus. Keeping the network within a reasonable limit, our strategy is to serve the customers through capacity building across multi delivery channels. Our past performance gives an indication of our strength. We are better placed and poised to take our customers through fast changing times and enable them compete more effectively in the market they operate.

2.1.7

Eastern Bank

Eastern Bank Limited (EBL) is one of the modern, fully online and technologically superior private commercial Banks in Bangladesh. Eastern Bank markets a wide range of depository, loan & card products. These products include different types of Savings & Current Accounts, Personal Loans, Auto Loan, Debit Card, Pre-paid Cards, Internet Banking, Treasury, Syndication, Corporate Banking and SME Banking services through a network of branches & centers countrywide. Eastern Bank has its presence in major cities/towns of the country including Dhaka, Chittagong, Sylhet, Khulna and Rajshahi.

Tracing its origin back to 1992, EBL is serving the individual and corporate clientele alike with remarkable success offering innovative banking services since then.

2.1.8

Mutual Trust Bank Ltd.

The Company was incorporated on September 29, 1999 under the Companies Act 1994 as a public company limited 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. As envisaged in the Memorandum of Association and as licensed by Bangladesh Bank under the provisions of the Banking Companies Act 1991, the Company started its banking operation and entitled to carry out the following types of banking business: a. All types of commercial banking activities including Money Market operations. b. Investment in Merchant Banking activities. c. Investment in Company activities. d. Financiers, Promoters, Capitalists etc. e. Financial Intermediary Services.

The Company (Bank) operates through its Head Office at Dhaka and 37 branches and 5 SME Service Centers. The Company/Bank carries out international business through a Global Network of Foreign Correspondent Banks.

Mr. Samson H. Chowdhury, a recognized entrepreneur of the country, is the Chairman of Mutual Trust Bank. This prolific business magnate with variegated experience is a Senior Cambridge and he participated in the Management Training Course jointly conducted by the University of Dhaka and the Harvard University. He has been an icon in the country's pharmaceutical industry for long. He is the Chairman of the reputed conglomerate Square. Furthermore, he is the Chairman of Central Depository Ltd and Shabazpur Tea Estate as well as life member of Transparency International, Bangladesh Chapter and its former Chairman.

2.1.9 United Commercial Bank Limited Sponsored by some dynamic and reputed entrepreneurs and eminent industrialists of the country and also participated by the Government, UCB started its operation in mid 1983 and has since been able to establish one of the largest networks of 85 branches as on 23.07.2009 among the first generation banks in the private sector.

With its firm commitment to the economic development of the country, the Bank has already made a distinct mark in the realm of Private Sector Banking through personalised service, innovative practices, dynamic approach and efficient Management. The Bank, aiming to play a leading role in the economic activities of the country, is firmly engaged in the development of trade, commerce and industry thorough a creative credit policy.

2.1.10

Bank Asia Limited

Bank Asia Limited is a scheduled commercial bank in the private sector established under the Banking Company Act 1991 and incorporated in Bangladesh as a public limited company under the Companies Act 1994 to carry out banking business in Bangladesh.

2.1.11 Mercantile Bank Limited Mercantile Bank Limited was established in June 2, 1999 as a private commercial bank and started its operation. The then Prime minister Sheikh Hasina inaugurated the bank.

The renowned 30 industrialists establish this bank with everybody’s consent Mr. Abdul

Jalil elected as the chairman. Mercantile Bank Limited is a private commercial bank with Head Office at 61, Dilkusha C/A, Dhaka, Bangladesh started operation on 2 nd June 1999.

The Bank has 41 branches spread all over the country and introducing some braches.

With assets of TK. 13078.93 million, the bank has diversified activities in retail banking, corporate banking and international trade.

Credit-Mercantile Bank is playing an important role while giving loan for the small and medium enterprises. In the terms of credit mercantile bank has introduced new schemes mostly for the business people in Bangladesh. Different categories of loan been provided to the businessman. The total amount of loan been provided was 26842.14 million BDT till 2006 its main investing projects are business, garments, micro credit, construction and others. Consumer Credit Scheme: Mercantile Bank has been providing loan to medium and low-income peoples. This policy has gained a great popularity among consumers.

2.1.12 Dhaka Bank Limited 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 channelize consumer investments in a profitable manner. A group of highly acclaimed businessmen of the country grouped together to responded to this need and established Dhaka Bank Limited in the year 1995.

The Bank was incorporated as a public limited company under the Companies Act. 1994.

The Bank started its commercial operation on July 05, 1995 with an authorized capital of Tk. 1,000 million and paid up capital of Tk. 100 million. The paid up capital of the Bank stood at Tk 1,934,252,875 as on June 30, 2008. The total equity (capital and reserves) of the Bank as on June 30, 2008 stood at Tk 3,424,609,016.

The Bank has 44 branches, 2 SME Service Centers, 1 Business Center, 2 Offshore Banking Units across the country and a wide network of correspondents all over the world. The Bank has plans to open more branches in the current fiscal year to expand the network.

The Bank offers the full range of banking and investment services for personal and corporate customers, backed by the latest technology and a team of highly motivated officers and staff.

In our effort to provide Excellence in banking services, the Bank has launched Online Banking service, joined a countrywide shared ATM network and has introduced a cobranded credit card. A process is also underway to provide e-business facility to the bank's clientele through Online and Home banking solutions.

Dhaka Bank Ltd. is the preferred choice in banking for friendly and personalized services, cutting edge technology, tailored solutions for business needs, global reach in trade and commerce and high yield on investments.

2.1.13

BRAC Bank Limited

BRAC Bank Limited, with institutional shareholdings by BRAC, International Finance Corporation (IFC) and Shorecap International, has been the fastest growing Bank from 2004 to 2007. The Bank operates under a "double bottom line" agenda where profit and social responsibility go hand in hand as it strives towards a poverty-free, enlightened Bangladesh.

A fully operational Commercial Bank, BRAC Bank focuses on pursuing unexplored market niches in the Small and Medium Enterprise Business, which hitherto has remained largely untapped within the country. In the last six years of operation, the Bank has disbursed over BDT 7500 crore in loans to nearly 200,000 small and medium entrepreneurs. The management of the Bank believes that this sector of the economy can contribute the most to the rapid generation of employment in Bangladesh. Since inception in July 2001, the Bank's footprint has grown to 56 branches, 30 SME Service Centers, 427 SME unit offices and 112 ATM sites across the country, and the customer base has expanded to 465,000 deposit and 187,000 advance accounts till December 2008. In the years ahead

BRAC Bank expects to introduce many more services and products as well as add a wider network of SME unit offices, Retail Branches and ATMs across the country.

BRAC, a national, private organization, started as an almost entirely donor funded, smallscale relief and rehabilitaton project initiated by Fazle Hasan Abed to help the country overcome the devastation and trauma of the Liberation War and focused on resettling refugees returning from India. Today, BRAC has emerged as an independent, virtually self-financed paradigm in sustainable human development. It is one of the largest Southern development organizations employing 97,192 people, with 61% women, and working with the twin objectives of poverty alleviation and empowerment of the poor.

2.1.14 Uttara Bank Limited Uttara Bank-one of the largest and oldest private-sector commercial bank in Bangladesh, with years of experience. Adaptation of modern technology both in terms of equipment and banking practice ensures efficient service to clients. 207 branches at home and 600 affiliates worldwide create efficient networking and reach capability. Uttara is a bank that serves both clients and country.

UBL is one of the largest private banks in Bangladesh.

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It operates through 207 fully computerized branches ensuring best possible and fastest services to its valued clients.

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Total number of employees nearly 3,562.

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The Board of Directors consists of 13 members.

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The bank is headed by the Managing Director who is the Chief Executive Officer.

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The Head Office is located at Bank’s own 18-storied building at Motijheel, the commercial center of the capital, Dhaka.

2.1.15 AB Bank Limited Background of AB Bank Limited AB Bank Limited, the first private sector bank was incorporated in Bangladesh on 31st December 1981 as Arab Bangladesh Bank Limited and started its operation with effect from April 12, 1982.

AB Bank is known as one of leading bank of the country since its commencement 27 years ago. It continues to remain updated with the latest products and services, considering consumer and client perspectives. AB Bank has thus been able to keep their consumer’s and client’s trust while upholding their reliability, across time.

During the last 27 years, AB Bank Limited has opened 74 Branches in different Business Centers of the country, one foreign Branch in Mumbai, India and also established a wholly owned Subsidiary Finance Company in Hong Kong in the name of AB International Finance Limited. To facilitate cross border trade and payment related services, the Bank has correspondent relationship with over 220 international banks of repute across 58 countries of the World.

In spite of adverse market conditions, AB Bank Limited which turned 27 this year, concluded the 2008 financial year with good results. The Bank’s consolidated profit after taxes amounted to Taka 230 cr which is 21% higher than that of 2007. The asset base of AB grew by 32% from 2007 to stand at over Tk 8,400 cr as at the end of 2008.

The Bank showed strong growth in loans and deposits. Deposit of the Bank rose by Tk. 1518 cr ie., 28.45% while the diversified Loan Portfolio grew by over 30% during the year and recorded a Tk 1579 cr increase. Foreign Trade Business handled was Tk 9,898 cr indicating a growth of over 40% in 2008.

The Bank maintained its sound credit rating in 2008 to that of the previous year. The Credit Rating Agency of Bangladesh Limited (CRAB) awarded the Bank an A1 rating in the long term and ST-2 rating in the short Term.

AB Bank believes in modernization. The bank took a conscious decision to rejuvenate its past identity – an identity that the bank carried as Arab Bangladesh Bank Limited for twenty five long years. As a result of this decision, the bank chose to rename itself as AB Bank Limited and the Bangladesh Bank put its affirmative stamp on November 14, 2007.

The Bank decided to change its traditional color and logo to bring about a fresh approach in the financial world; an approach, which like its new logo is based on bonding, and trust. The bank has developed its logo considering the contemporary time. The new logo represents our cultural “Sheetal pati” as it reflects the bonding with its clientele and fulfilling their every need. Thus the new spirit of AB is “Bonding”. The Logo of the bank is

primarily “red”, as red represents velocity of speed and purity. Our new logo innovates, bonding of affiliates that generate changes considering its customer demand. AB Bank launched the new Logo on its 25th Anniversary year.

AB Bank commits to nation to take a lead in the Banking sector through not only its strong financial position, but also through innovation of products and services. It also ensures creating higher value for its respected customers and shareholders. The bank has focused to bring services at the doorstep of its customers, and to bring millions into banking channels those who are outside the mainstream banking arena. Innovative products and services were introduced in the field of Small and Medium Enterprise (SME) credit, Women’s Entrepreneur, Consumer Loans, Debit and Credit Cards (Local & International), ATMs, Internet and SMS Banking, Remittance Services, Treasury Products and Services, Structured Finance for Corporate, strengthening and expanding its Islamic Banking activities, Investment Banking, specialized products and services for NRBs, Priority Banking, and Customer Care. The Bank has successfully completed its automation project in mid 2008. It envisages enabling customers to get banking services within the comfort of their homes and offices.

AB Bank has continuously invests into its biggest asset, the human resource to drive forward with its mission “to be the best performing bank in the country.” The bank has introduced Dress Code for its employees. Male employees wear designed ties and females wear Sharee or Salwar Kamiz, all the dresses are consisted with the unique AB Bank logo.

AB is recognized as the people’s choice, catering to the satisfaction of its cliental. Their satisfaction is AB’s success.

2.1.16 City Bank Limited The City Bank Limited started its business in 1983 (march 27) with an authorized capital of Taka 20 crore and paid up capital 3.8 crore. The bank has now authorized capital of Taka 175 crore and paid up capital 72 crore with Taka 132 crore as reserves totaling Taka 204 crore as paid Up capital and reserves.

The City Bank Limited is manned by 1829 personnel with 83 branches including 22 AD branches all over the country.

2.1.17 Pubali Bank Limited PUBALI BANK LIMITED is the largest Commercial Bank in Private Sector in Bangladesh. It provides mass banking services to the customers through its branch network all over the country. This Bank has been playing a vital role in socio-economic, industrial and agricultural development as well as in the overall economic development of the country since its inception through savings mobilization and investment of funds. During the last 5 years the growth rate of bank's earnings is more than 25% on average.

History of the Pubali Bank Limited The Bank was initially emerged in the Banking scenario of the then East Pakistan as Eastern Mercantile Bank Limited at the initiative of some Bangladeshi entrepreneurs in the year 1959 under Bank Companies Act 1913. After independence of Bangladesh in 1972 this Bank was nationalised as per policy of the Government and renamed as Pubali Bank. Subsequently due to changed circumstances this Bank was denationalised in the year 1983 as a private bank and renamed as Pubali Bank Limited. The Government of the People's Republic of Bangladesh handed over all assets and liabilities of the then Pubali Bank to the Pubali Bank Limited. Since then Pubali Bank Limited has been rendering all sorts of Commercial Banking services as the largest bank in private sector through its branch network all over the country.

2.1.18 NCC Bank Limited Background National Credit and Commerce Bank Ltd. bears a unique history of its own. The organization started its journey in the financial sector of the country as an investment company back in 1985. The aim of the company was to mobilize resources from within and invest them in such way so as to develop country's Industrial and Trade Sector and playing a catalyst role in the formation of capital market as well. Its membership with the browse helped the company to a great extent in this regard. The company operated upto 1992 with 16 branches and thereafter with the permission of the Central Bank converted

in to a fully fledged private commercial Bank in 1993 with paid up capital of Tk. 39.00 corore to serve the nation from a broader platform.

Since its inception NCC Bank Ltd. has acquired commendable reputation by providing sincere personalized service to its customers in a technology based environment.

The Bank has set up a new standard in financing in the Industrial, Trade and Foreign exchange business. Its various deposit & credit products have also attracted the clientsboth corporate and individuals who feel comfort in doing business with the Bank.

2.1.19 Standard Bank Limited Background Standard Bank Limited (SBL) was incorporated as a Public Limited Company on May 11, 1999 under the Companies Act, 1994 and the Bank achieved satisfactory progress from its commercial operations on June 03, 1999. SBL has introduced several new products on credit and deposit schemes. It also goes for Corporate and Retail Banking etc. The Bank also participated in fund Syndication with other Banks. Through all these myriad activities SBL has created a positive impact in the Market.

2.1.20

Dutch-Bangla Bank Limited

Dutch-Bangla Bank Limited (DBBL) is Bangladesh's most innovative and technologically advanced bank. DBBL stands to give the most innovative and affordable banking products to Bangladesh. Amongst banks, DBBL is the largest donor in to social causes in Bangladesh. It stands as one of the largest private donors involved in improving the country. DBBL is proud to be associated with helping Bangladesh as well as being a leader in the country's banking sector 2.1.21 Bangladesh Commerce Bank Limited Bangladesh Commerce Bank Ltd. (BCBL) was established by reorganizing former Bangladesh Commerce and Investment Ltd. (BCIL). BCIL was set up on 27th January 1986 as a non-banking financial initiation with an authorized and paid-up capital of Tk. 300.00 million and Tk. 50.00 million respectively. BCIL started functioning as an investment company and continued its business till April 1992. Consequent upon its liquidity crisis, Bangladesh Bank suspended its business in April 1992. As a result the investors suffered a lot and the employees of the company became Jobless. They launched a movement for

reopening the Company in some form or other. Ultimately to safeguard the interest of the depositors, employees and the general public, the Government of Bangladesh intervened and The Parliament passed Act No. I2 Of 1997 for the establishment of Bangladesh Commerce Bank Ltd. on the ashes of the former BCIL. Subsequently on 0802-98 as per clause 7(7) of Act 12 of 1997 constituting Bangladesh Commerce Bank Ltd. the government constituted a 10-member Board of Directors with Professor Abdul Mannan Choudhury as its Chairman to organize and transform BCIL In to BCBL and administer the affairs of the Bank in accordance with the Act. Bangladesh Commerce Bank Ltd. was incorporated on 01-06-98 as a public limited company under the Companies Act. 2.1.22 First Security Bank Limited First Security Islami Bank Limited ( FSIB) was incorporated in Bangladesh on 29 August 1999 as a banking company under Companies Act 1994 to carry on banking business. It obtained permission from Bangladesh Bank on 22 September 1999 to commence its business. The Bank carries banking activities through its THIRTY FOUR (34) branches in the country. The commercial banking activities of the bank encompass a wide range of services including accepting deposits, making loans, discounting bills, conducting money transfer and foreign exchange transactions, and performing other related services such as safe keeping, collections and issuing guarantees, acceptances and letter of credit.

2.1.23 Trust Bank Limited Our pledge and our promise is simple To understand what you need and deliver it in a way that makes sense to you and your business.

The Trust bank (TTB) was incorporated on 3rd October 1996 and commenced business on 14th October 1996 to provide universal banking services to its valued customers.

Operating for a decade, TTB has undergone a lot of strategic transformations to become more competitive in its chosen markets.

The Trust Bank is highly dedicated to serving and assisting its customers, with domestic and foreign-related activities, in their roles as exporters, importers, manufacturers, intermediaries, investors or private individuals. By means of its close working relationship

with its principal foreign and local shareholders/partners, the bank provides a bridge between Europe and Ghana.

Locally, the bank also draws upon its dedicated team of local product specialists supported by the recognized Knowledge and expertise of the Fortis group in the area of Corporate Banking, Private Banking, Correspondent Banking, Merchant Banking and Financial Markets.

The majority of TTB’s customer value is provided by Small & Medium size Enterprises, the corporate segment, the Middle-class Individual as well as a selected group of institutions (bank and non-bank). Since they provide the core of our activities, TTB concentrates its managerial efforts and available financial means on growing and expanding these core businesses.

2.2 Islamic Banks 2.2.1 Islami Bank Bangladesh Limited Profile of Islami Bank Bangladesh Limited (IBBL) Islami Bank Bangladesh Limited (IBBL) is the first Islamic bank in the “South East Asia”. It is a multinational joint venture public limited company engaged in banking business based on Islamic Shari’ah having largest branch network among the private sector banks in Bangladesh. The bank has been listed with Dhaka Stock Exchange Limited in 1985, and Chittagong Stock Exchange Limited in1996.

Islami bank Bangladesh limited has 8 Zones and 169 branches. It has a plan to open more 25 branches subject to obtaining license from Bangladesh Bank. It has also plan to open foreign branches of which two in Middle East within the shortest possible time.

IBBL as an Islamic Bank In August 1974, Bangladesh signed the Charter of Islamic Development Bank and committed itself to reorganize it economic and financial system as per Islamic Shariah.

In November 1980, a delegation of IDB visited Bangladesh and showed keen interest to participate in establishing a joint venture Islamic Bank in the private sector. Two professional bodies Islamic research Bureaus (IERB) and Bangladesh Islamic Banker’s Association (BIBA) made significant contribution towards introduction of Islamic Banking in the country.

At last, the long drawn struggle to establish and Islamic bank in Bangladesh became a reality and Islamic bank Bangladesh was established in March 1983, in which 23 Bangladeshi National, 4 Bangladeshi institutions and 1 banks, financial institutions and Governments bodies of the middle East and Europe including IDB and two eminent personalities of the kingdoms of Saudi Arabia joined hands to make the dream into a reality. Later, other three Islamic Banks were established in the country 2.2.2 ICB Islamic Bank Limited The Bank has been incorporated on April, 1987 as a public limited company under the Companies Act, 1913 to undertake and carry out all kinds of banking, financial and business activities, transactions and operations in strict compliance with the principles of Islamic Law (Shariah) relating to business activities in particular avoiding usury in credit and sales transactions and any practice which amounts to usury.

Certificate for

commencement of business has been issued to the bank on April, 30, 1987. The Bank has been authorized by the Bangladesh Bank to carry on the banking business in Bangladesh with effect from May 4, 1987. However, actual banking operations commenced on May 20, 1987.

2.2.3 Al-Arafah Islami Bank Limited AIBL at a Glance Islam provides us a complete lifestyle. Main objective of Islamic lifestyle is to be successful both in our mortal and immortal life. Therefore in every aspect of our life we should follow the doctrine of Al-Qur'an and lifestyle of Hazrat Muhammad (Sm.) for our supreme success. Al-Arafah Islami Bank started its journey in 1995 with the said principles in mind and to introduce a modern banking system based on Al-Qur’an and Sunnah.

A group of established, dedicated and pious personalities of Bangladesh are the architects and directors of the Bank. Among them a noted Islamic scholar, economist, writer and ex-bureaucrat of Bangladesh government Mr. A.Z.M Shamsul Alam is the founder chairman of the bank. His progressive leadership and continuous inspiration provided a boost for the bank in getting a foothold in the financial market of Bangladesh A group of 13 dedicated and noted Islamic personalities of Bangladesh are the member of Board of Directors of the bank. They are also noted for their business acumen. AlArafah Islami Bank Ltd. has 53 braches and a total of 1080 employees (upto December 2008). Its authorized capital is Taka 2500 millions and the paid-up capital is Taka 1153.18 millions.

AIBL Profile With the objective of achieving success here & hereafter by pursuing the way directed by Allah and the path shown by His Rasul (SM), Al Arafah Islami Bank Ltd was established (registered) as a private limited company on 18 June 1995. The inaugural ceremony took place on 27 September 1995. The authorized capital of the Bank is Tk.2500.00 million and the paid up capital is Tk. 1153.18 million as on 31.12.2007. Renowned Islamic Scholars and pious businessmen of the country are the sponsors of the Bank. 100% of paid up capital is being owned by indigenous shareholders.

The equity of the bank stood at Tk. 2037.50 million as on 31 December 2007, the manpower was 1033 and the number of shareholders was 12013. It has achieved a continuous profit and declared a good dividend over the years. High quality customer service through the integration of modern technology and new products is the tool of the bank to achieve success. The bank has a diverse array of carefully tailored products and services to satisfy customer needs.

The Bank is committed to contribute significantly to the national economy. It has made a positive contribution towards the socio economic development of the country with 47 branches of which 17 is AD throughout the country.

2.2.4 Social Investment Bank Limited Background The formal corporate sector, this Bank would, among others, offer the most up-to date banking services through opening of various types of deposit and investment accounts,

financing trade, providing letters of guarantee, opening letters of credit, collection of bills effecting domestic and international transfer, leasing of equipment and consumer durables, hire purchase and installment sale for capital goods, investment in low-cost housing and management of real estates, participatory investment in various industrial, agricultural , transport, educational and health projects and so on.

2.2.5 EXIM Bank Limited EXIM Bank Limited was established in 1999 under the leadership of Late Mr. Shahjahan Kabir, founder chairman who had a long dream of floating a commercial bank which would contribute to the socio-economic development of our country. He had a long experience as a good banker. A group of highly qualified and successful entrepreneurs joined their hands with the founder chairman to materialize his dream. In deed, all of them proved themselves in their respective business as most successful star with their endeavor, intelligence, hard working and talent entrepreneurship. Among them, Mr. Nazrul Islam Mazumder became the honorable chairman after the demise of the honorable founder chairman.

This bank starts functioning from 3rd August, 1999 with Mr. Alamgir Kabir, FCA as the advisor and Mr. Mohammad Lakiotullah as the Managing Director. Both of them have long experience in the financial sector of our country. By their pragmatic decision and management directives in the operational activities, this bank has earned a secured and distinctive position in the banking industry in terms of performance, growth, and excellent management. The authorized capital and paid up capital of the bank are Tk. 1000.00 million and Tk 313.87 million respectively.

The bank has migrated all of its conventional banking operation into Shariah based Islami banking since July/2004.

2.2.6 Shahjalal Islami Bank Limited Shahjalal Islami Bank Limited (SJIBL) commenced its commercial operation in accordance with principle of Islamic Shariah on the 10th May 2001 under the Bank Companies Act, 1991. During last eight years SJIBL has diversified its service coverage by opening new branches at different strategically important locations across the country offering various

service products both investment & deposit. Islamic Banking, in essence, is not only INTEREST-FREE banking business, it carries deal wise business product thereby generating real income and thus boosting GDP of the economy. Board of Directors enjoys high credential in the business arena of the country, Management Team is strong and supportive equipped with excellent professional knowledge under leadership of a veteran Banker Mr. Muhammad Ali. 2.3 Foreign Commercial Banks 2.3.1 Standard Chartered Bank Background Welcome to Priority Banking - your personalized wealth management program at Standard Chartered Bank. It is our endeavour to be the Right Partner in all your personal and business ventures. That's why Priority Banking has been tailored to offer you the highest level of service, appropriate to your unique requirements and status.

With over 150 years of experience, Standard Chartered Priority Banking helps meet the wealth management needs of you, your family and your business by offering objective and well researched financial solutions. We have the energy and commitment, the competence and experience to understand your needs and aspirations and help you realize your financial goals today and in the future.

The Priority Banking program revolves around five main cornerstones of service Personal, Professional, Profitable, Private and Privileged.

2.3.2 National Bank of Pakistan Background National Bank of Pakistan is the largest commercial bank operating in Pakistan . Its balance sheet size surpasses that of any of the other banks functioning locally. It has redefined its role and has moved from a public sector organisation into a modern commercial bank. The Bank's services are available to individuals, corporate entities and government. While it continues to act as trustee of public funds and as the agent to the State Bank of Pakistan (in places where SBP does not have a presence) it has diversified its business portfolio and is today a major lead player in the debt equity market,

corporate investment banking, retail and consumer banking, agricultural financing, treasury services and is showing growing interest in promoting and developing the country's small and medium enterprises and at the same time fulfilling its social responsibilities, as a corporate citizen.

2.3.3 The Hongkong and Shanghai Banking Corporation (HSBC) Ltd General Background •

Opened first Bangladesh branch in December 1996

•

Network of 11 offices

•

802 employees as of 23 April 2009

•

Key business areas: Personal Financial Services Commercial banking Corporate and institutional banking

HSBC’s operations in Bangladesh In Bangladesh, the HSBC Group’s history dates back to 1996 when The Hongkong and Shanghai Banking Corporation (HSBC) Ltd opened its first branch. Today, the HSBC Group offers a comprehensive range of financial services in Bangladesh including commercial banking, consumer banking, payments and cash management, trade services, treasury, and custody and clearing.

NRB Services The HSBC Group is one of the world's largest banking and financial services organisations and comprises over 8,500 offices in 86 countries and territories, serving over 100 million customers worldwide.

HSBC Select HSBC is pleased to offer you HSBC Select - a customised banking proposition offering exclusive privileges and unrivalled personal attention.

Import Services: At our counter, an assortment of import products and services awaits your consideration. Our relationship managers team up with the trade and supply chain professionals in chalking out the solution suitable to your business.

Export Services With over 8,500 offices in 86 countries and territories, you can be rest assured that an HSBC office is close to you, wherever you are exporting to.

2.3.4 Commercial Bank of Ceylon Limited Background Each and every one of you will agree, the maintenance of an ethical culture is of utmost importance to any institution because it will at least make one pause to think before knowingly doing something wrong. An ethical culture is even more important to a Bank because the success or failure of one is largely dependant on the maintenance of public confidence and having an ethical culture will encourage the staff to do what is perceived as right. It will also act as a deterrent towards doing wrong. In order to make that task easier it has been decided to adopt a “Code of Ethics for Officers of Commercial Bank.�

It must be appreciated, as much as we need to display our technical superiority and efficiency, it’s even more important to base our day to day decisions on sound ethical principles. We also need to always remember that what we do is not only being keenly watched by our own subordinates, but also by the other stakeholders and the society at large.

While requesting all staff members to strictly abide by its requirements, I make a special appeal to all the senior staff, to always set high ethical standards, which the others would feel obliged to follow. I trust the contents of the Code would help our staff, to develop and maintain a high ethical culture.

2.3.5 Habib Bank Limited Background of the Bank Habib bank limited is a banking company incorporated in Pakistan having, its head office at Habib office at Habib Bank Plaza. Karachi, Pakistan and carrying on banking business in Bangladesh since 1976 with the branches at Dhaka Chitagong and sylehet after obtaining necessary permission from the regulatory authorities. The principal activities of the Bank are to provide all kinds of commercial services to its customers.

2.3.6 State Bank of India Legal Status and Nature of the Bank:

The State Bank of India was incorporated in India under State Bank of India Act 1955.

Slate Bank of India has been operating in Bangladesh since May 05, 1975. It has two branches one in Dhaka and another in Chitagong. The principal activities carried out by the bank include all kinds of commercial banking activities / services to its customers through its branches and electronic delivery channels in Bangladesh.

2.3.7 Woori Bank Legal Status and Nature of the Bank Woori Bank (Previously known as Hanil Bank & Hanvit Bank) was incorporated ii 1899 in the Republic of Korea. I Hanil Bank, Dhaka Branch has commenced its operation as a schedule

Bank from 21M September

1996. Hanil

Bank become Hanvit

Bank

following a merger between Commercial Bank of Korea and Hanil Bank on 01 January 1999. As an inevitable consequence of the ongoing reconstruction process in (he economy of South Korea, Hanvil Bank turned into Woori Bank which has taken over me operations of "Kyunnam Bank" on October 07, 2002. Woori Bank, Dhaka Branch is located a( Gulshan-J, Dhaka. The principal activities of the bank are; lo provide all kinds of commercial banking services to its customers authorized by Bangladesh Bank and Offshore Banking operations.

2.3.8 Citibank, N.A Bangladesh Background Citibank, N.A Bangladesh Branch (the bank) connected banking operations in Dhaka.

Bangladesh from 21 June 1995 after obtaining license from Bangladesh Bank dated 26 January 1995. Citigroup Inc. (formed from the merger of Citicorp Inc and Travelers Group Inc. on 8 October 1998) a holding company under the law of United States of America.

Nature of Business The unit is engaged in offshore banking under a license granted by Bangladesh Bank. The unit provides offshore banking in Dhaka, Chitagong and Adamzee EPZ customers.

2.4 National Commercial Banks 2.4.1

Agrani Bank Limited

A Brief Overview of Agrani Bank Limited Agrani Bank Limited, a leading commercial bank with 867 outlets strategically located in almost all the commercial areas throughout Bangladesh, overseas Exchange Houses and hundreds of overseas Correspondents, came into being in 1972 immediately after the emergence of Bangladesh as an independent state. It started functioning as nationalised commercial bank taking over assets and liabilities of the erst while Habib Bank ltd and commerce Bank ltd. functioning in the East Pakistan.

It has been corporatised on 15th November.2007 and emerged as Agrani Bank Limited(ABL) taking over assets, liability and goodwill of Agrani Bank.

Agrani Bank Limited is governed by a Board of Directors consisting of 11(eleven) members headed by a chairman. The Bank is headed by the Managing director & Chief Executive Officer; Managing director is assisted by Deputy Managing Director and General Managers. The bank has 7 Circle offices, 30 Divisions in head office, 52 zonal offices and 867 branches including 10 corporate and 40 AD( authorized dealer) branches.

The corporate and AD branches are authorized to deal in Foreign exchange business.

2.4.2

Janata Bank Limited

Janata Bank Limited, one of the state owned commercial banks in Bangladesh, has an authorized capital of Tk. 8000 million (approx. US$ 116.96 million), paid up capital of Tk. 2593.90 million, reserve of Tk.4182.52 million and retained surplus Tk. 2285.94 million.

The Bank has a total asset of Tk. 267157.30 million as on 31st December 2008.

Immediately after the emergence of Bangladesh in 1971, the erstwhile United Bank Limited and Union Bank Limited were renamed as Janata Bank. On 15th November, 2007 the bank has been corporatised and renamed as Janata Bank Limited.

Janata Bank Limited operates through 849 branches including 4 overseas branches at United Arab Emirates. It is linked with 1202 foreign correspondents all over the world.

The Bank employs more than 13(Thirteen) thousand persons.

The mission of the bank is to actively participate in the socio- economic development of the nation by operating a commercially sound banking organization, providing credit to

viable borrowers, efficiently delivered and competitively priced, simultaneously protecting depositors funds and providing a satisfactory return on equity to the owners.

The Board of Directors is composed of 11 (eleven) members headed by a Chairman. The Directors are representatives from both public and private sectors. The Bank is headed by the Chief Executive Officer & Managing Director, who is a reputed banker. The corporate head office is located at Dhaka with 10 (ten) Divisions comprizing of 37 (thirty seven) Departments.

2.4.3

Sonali Bank Limited

Background Sonali Bank Limited, the largest & leading commercial bank of the country, came into being in 1972 immediately after the emergence of Bangladesh as an independent state. A fully state-owned enterprise, the bank has been discharging its nation-building responsibilities by undertaking government entrusted different socio-economic schemes as well as money market activities of its own volition, covering all spheres of the economy. Sonali Bank Limited singularly enjoys the prestige of being the agent of the Central Bank of Bangladesh in such places where the guardian of the money market has chosen not to act by itself.

Sonali Bank Limited is governed by a Board of Directors consisting of 9(nine) members headed by a Chairman. The Bank is headed by the Chief Executive Officer & Managing Director, who is a well-known Banker and a reputed professional. The head office of the bank along with its corporate structure is located at Motijheel, Dhaka, the main commercial center of the capital.

2.5 Specialized Banks 2.5.1

Bangladesh Krishi Bank

The major occupation of the people of Bangladesh is "Krishi". Krishi is a Bengali word which means "Agriculture". About 85% of the population depends directly or indirectly on agriculture which contributes a significant portion to GDP. Bangladesh Krishi Bank (BKB) has been established under the Bangladesh Krishi Bank order 1973 (President's Order No 27 of 1973). BKB is Banking Company under the Banking Company Act-1991. Its Head Office is located at Krishi Bank Bhaban,83-85 Motijheel Commercial Area, Dhaka-1000, Bangladesh.

The primary objective of BKB is to provide credit facilities to the farmers for the development of agriculture and entrepreneurs engaged in development of agro-based and cottage industries.

The Bank is guided in accordance with the policies and principles of the Government of the Peoples Republic of Bangladesh. BKB has an authorized capital of Tk. 15,000 Million (Taka Fifteen thousand Million) only and paid up capital of Tk. 9000 Million (Taka Nine thousand Million) only which is fully paid by the government. The Bank started commercial functioning since 1977 to generate more loanable fund from the idle rural and urban savings and invest them for the betterment of our economy.

The Bank operates its function through its 952 branches (except Rajshahi Division) of which 822 are rural and 130 are urban. It has 15 foreign exchange (Authorized dealer) branches. In the field level the Bank has 8 Divisional,21 Chief Regional and 30 Regional offices for close supervision of the branch activities. For smooth operation, s a part of internal control and compliance system, the bank has also 56 field level audit offices of which 5 at Divisional and 51 at Regional levels. In the Head Office the Bank has 4 Divisions headed by General Managers and 28 Departments including Local Principal Office and Training Institute headed by Deputy General Managers. The existing strength of Bank's manpower is 10275 against the approved strength of 13680 as on 31 March, 2009.

2.5.2 Bangladesh Shilpa Rin Sangstha Background

Bangladesh Shilpa Rin Sangstha (BSRS) was established on October 31, 1972 under the Bangladesh Shilpa Rin Sangstha Order, 1972 (President's Order No. 128 of 1972) to provide credit facilities and other assistance to industrial concerns and to encourage and broaden the base of investment in Bangladesh. BSRS extends medium and long-term credit facilities to industrial projects mainly in the private sector.

Besides, it provides underwriting finance/bridge finance/debenture loans to Public Limited Companies. BSRS provides underwriting commitment to issuers of stocks and debentures. BSRS also floats and manages mutual fund thereby providing impetus to the capital market. It also regularly undertakes transaction in the Dhaka Stock Exchange.

BSRS has two commercial banking branches.

2.5.3 Bank of Small Industries and Commerce Bangladesh Limited Background BASIC Bank Limited (Bangladesh Small Industries and Commerce Bank Limited) registered under the Companies Act 1913 on the 2nd of August, 1988, started its operations from the 21st of January, 1989. It is governed by the Banking Companies Act 1991. The Bank was established as the policy makers of the country felt the urgency for a bank in the private sector for financing small scale Industries (SSIs). At the outset, the Bank started as a joint venture enterprise of the BCC Foundation with 70 percent shares and the Government of Bangladesh (GOB) with the remaining 30 percent shares. The BCC Foundation being nonfunctional following the closure of the BCCI, the Government of Bangladesh took over 100 percent ownership of the bank on 4th June 1992. Thus the Bank is state-owned. However, the Bank is not nationalized; it operates like a private bank as before.

BASIC Bank Limited is unique in its objectives. It is a blend of development and commercial banks. The Memorandum and Articles of Association of the Bank stipulate that 50 percent of loanable funds shall be invested in small and cottage industries sector.

2.5.4

Rajshahi Krishi Unnayan Bank Establishment

Rajshahi Krishi Unnayan Bank (RAKUB) was established by the President's Ordinance No. 58 of 1986 with the aim of providing institutional agricultural credit for optimum utilization of agricultural potentials of Rajshahi Division. Taking over all the 253 branches and other offices along with assets and liabilities of the Bangladesh Krishi Bank within Rajshahi Division, RAKUB started functioning on 15 March 1987.

Functions As the largest development partner in the northwest region Rajshahi Krishi Unnayan Bank aims at overall development of the farmers and all the sectors and sub-sectors of agriculture in this region. Besides catering to agricultural credit, financing agri-business and agro-based industries, activities related to socio-economic development and poverty alleviation programs, the bank performs most commercial banking functions.

Capital At the time of establishment authorized capital of the bank amounted to Tk. 1,500.00 million which was increased by Tk. 300.00 million during the financial year 2005-2006 to Tk. 1800.00 million. Paid up capital of the bank amounted to Tk. 1800.00 million and reserve Tk 208 50 million on 30 June 2006.

3. Credit Risk Management Credit risk is most simply defined as the potential that a bank borrower or counterparty will fail to meet its obligations in accordance with agreed terms. The goal of credit risk management is to maximize a bank's risk-adjusted rate of return by maintaining credit risk exposure within acceptable parameters. Banks need to manage the credit risk inherent in the entire portfolio as well as the risk in individual credits or transactions.

Banks should also consider the relationships between credit risk and other risks. The effective management of credit risk is a critical component of a comprehensive approach to risk management and essential to the long-term success of any banking organization.

For most banks, loans are the largest and most obvious source of credit risk; however, other sources of credit risk exist throughout the activities of a bank, including in the banking book and in the trading book, and both on and off the balance sheet. Banks are increasingly facing credit risk (or counterparty risk) in various financial instruments other

than loans, including acceptances, interbank transactions, trade financing, foreign exchange transactions, financial futures, swaps, bonds, equities, options, and in the extension of commitments and guarantees, and the settlement of transactions.

While financial institutions have faced difficulties over the years for a multitude of reasons, the major cause of serious banking problems continues to be directly related to lax credit standards for borrowers and counterparties, poor portfolio risk management, or a lack of attention to changes in economic or other circumstances that can lead to a deterioration in the credit of a bank's counterparties. This experience is common in both G-10 and non-G-10 countries.

3.1 Significance Credit risk management has always been important, but the events of 2008 in the global banking system have highlighted how dangerous it can be to fail to manage credit risk.

This is not only the domain of banks, as corporations have credit exposures throughout their businesses as well. Vendors, suppliers, customers and services firms can all be sources of commercial relationships that create credit risk.

3.2 Function Solutions for credit risk management, whether using technology or personnel, all have the initial goal of real-time measurement of credit exposures. Exposures mean the amount of actual money that can be lost if a counterparty to a transaction or business contract fails to pay. Risk professionals in this function must be able to know at all times the total value of a corporation's exposure as well as where it is concentrated in terms of counterparties. The likelihood of a default, and the potential timing of a default, will depend on factors unique to the counterparty as well as market considerations. As soon as there is a clear understanding of credit exposures, the risks can then be managed using a variety of tools.

3.3 Types There are market, technology and negotiated solutions for the management of credit risk. Market solutions include the use of credit default swaps, whereby derivatives are purchased that pay if a specific counterparty fails to. Information technology products

can be used to track and monitor credit pricing and ratings in the marketplace and to alert risk professionals of changes in their status. Standard & Poor's and Moody's are good examples of firms that provide information technology solutions in the credit risk arena. Negotiated solutions, such as netting, involves specific contractual arrangements that are put in place to lower credit risk. Netting does this by causing the net amount of cash to be settled between two parties rather than the aggregate amount to be paid.

3.4 Considerations Regardless of the type of credit risk management utilized, the most important component is the human one. Experienced credit professionals need to be involved in using the tools so that the information they provide is priced correctly and interpreted properly. The vast amount of information available is best screened by personnel who understand credit risk.

3.5 Benefits The most obvious benefit to good credit risk management is the prevention of a major, or even disastrous loss or series of losses. A more subtle benefit is that the kind of data produced by a well-functioning credit risk team can be used to make better pricing decisions and better investment decisions at the corporate level.

Bangladesh is a developing country. Without developing banking sectors, business sector is not in a possible position to progress rapidly. Interest free banking is not a mere concept now, it is in reality. In Bangladesh have a lot of Banks there have state owned Banks, Private Banks and also have Specialized Banks. In our country a lot of commercial banks have been operating with great confidence. After study on all Banks it shows that maximum numbers of private banks are performing well. Private Banks that are incorporated in Bangladesh they are doing well where as foreign private Banks are not performing well. In many cases this study finds foreign private Banks have no activities in rural area of Bangladesh. If they consider of cover area by the bank in this situation state owned Banks are totally ahead from rest of Banks. All types of Banks provide credit but state owned banks sale credit to all sectors. Private Banks provide credit to industrial sector, SME and in some other sectors but they do not provide much credit to

agricultural sectors. Foreign private Banks do not provide any amount to agricultural sector. Private Banks have a good recovery rate on credit. State Owned Banks provide loan to all sectors but their recovery rate is not in satisfactory level. Specialized Banks provide maximum credit to agricultural sector. In conclusion as developing country there have a good credit policy and practices. Where maximum number of Banks have good credit recovery rate and also have a lot of client to sale credit. In this study and by observing all of information of all banks, it is necessary to involve all Banks to all sector of our economy. Because still now many of Banks have no activates in many sectors. If they successfully involve and government provide proper support, that can make a revolution in our Banking sector and also in our country’s economy.

4.0 Credit Policy of all Banks in Bangladesh Maximum of Commercial Bank are committed to provide high quality services to its constituents through different financial products and profitable utilization of fund and contribute to the growth of GDP of the country by financing trade and commerce, helping industrialization, boosting export, creating employment opportunities for the educated youth and encouraging micro-credit leading to poverty alleviation and improving the quality of life of the people and thereby contributing to the overall socioeconomic development of the country.

With a view to achieving the aforesaid objectives of all banks, Credit operation is of paramount importance as the greatest share of the total revenue of commercial banks are generated from it. The success of a bank, therefore, depends on how efficiently and judiciously it makes use of its available resources. In other words, prudent and efficient management of its credit portfolio is very essential for the success of a bank. The Credit Policy of any banking institution is a combination of certain accepted, time tested standards and other dynamic factors dictated by the realities of changing situations in different market places.

In formulating a credit judgment and making QUALITY Credit Decision, the lending officer must be equipped with all information needed to evaluate a borrower’s character, management competence, capacity, ability to provide collaterals and external conditions which may affect his ability in meeting financial obligations.

4.1 The Credit Policy has been divided into the following categories: a) Policy Guidelines. b) Organizational Structure and Responsibilities. c) Procedural Guidelines.

Policy Guidelines The Credit Policy guidelines of commercial banks describes details fundamental credit risk management policies, outlines general principles that are designed to govern the implementation of more detailed lending procedures and credit risk analysis/risk grading system.

Lending Principles For sound lending inter-alia the following points should be kept in view: 1. Purpose 2. Safety 3. Source of repayment 4. Security & Liquidity 5. Profitability 6. Supervision & Diversity 7. National/Social interest 8. Viii

Bangladesh Bank guidelines

It should be remembered that selection of the appropriate borrowers, proper follow-up and end-use supervision through constant follow-up and monitoring are the cornerstone for timely recovery. These guidelines will be updated annually. Before selecting a customer / client and subsequent recommendation for financing, the Credit Officer / Relationship Manager must observe the following basics of lending:

4.2 Industry and Business Segment Focus As a general practice of Commercial Banks definitely concentrates its business in Trade Finance / Export – Import business and all types of Commercial Loan, Industrial / Project Finance / Syndication and structured Finance / SME Financing and other specialized programs except otherwise restricted by the Government or indicated as unethical and banned items.

Commercial Banks gives emphasis to diversify its business portfolio commensurate with economic and business trend, life cycle of the products, demand supply gap, social and national obligation etc. Commercial Banks policies for financing in different major sectors.

Commercial Banks policies are to handle the specialized business sectors / segments by setting up separate units. In view of this, Banks have already set up the following units •

Syndication and Structured Finance

•

Project Finance

•

Garments Sector

•

SME

•

Specialized Schemes such as Consumer Credit Scheme, Doctor’s Credit Scheme, Woman Entrepreneurs Development Project, Personal Loan Scheme, Small Loan Scheme, Lease Finance Scheme, Earnest Money Financing Scheme, Employees House Building Scheme, Car Loan, HBL (General) / Mortgage Loan, ATM, VISA Credit Card, EEF, etc.

The Policies for the above specialized segments / sectors have been / to be circulated to all concerns from time to time.

4.3 Discouraged business types (Not All Banks) Commercial Banks will discourage lending to following areas of business 

Military Equipment/Weapons Finance & Tobacco sector



Companies listed on CIB black list or known defaulters



Highly Leveraged Transactions & Finance of Speculative Investments



Logging, Mineral Extraction/Mining or other activity that is Ethically or Environmentally Sensitive



Counterparties in countries subject to UN sanctions.



Share Lending (Not more than 60% of share value of last 6 (six) months market average or maximum 35 lac whichever is lower or as per guidelines of Bangladesh Bank)



Taking an Equity Stake in Borrowers (except under Islamic Banking Operation)



Bridge Loans relying on equity/debt issuance as a source of repayment.



Lending to Holding Companies.

5.0 Lending Risk Analysis (LRA): Modern Technique of Credit Appraisal The Financial Sector Reform Project (FSRP) has designed the LRA package, which provides a systematic procedure for analyzing and quantifying the potential credit risk. Bangladesh Bank has directed all commercial bank to use LRA technique for evaluating credit proposal amounting to Tk. 10 million and above. The objective of LRA is to assess the credit risk in quantifiable manner and then find out ways & means to cover the risk.

However, some commercial banks employ LRA technique as a credit appraisal tool for evaluating credit proposals amounting to Tk. 5 million and above. Broadly LRA package divides the credit risk into two categories, namely 1. Business risk 2. Security risk.

A detail interpretation of these risks and the procedure for evaluating the credit as follows 5.1.1 Business risk: It refers to the risk that the business falls to generate sufficient cash flow to repay the loan. Business risk is subdivided into two categories.

5.1.2 Industry risk.

The risk that the company fails to repay for the external reason. It is subdivide into supplies risk and sales risk.

5.1.3 Supplies risk:

It indicates that the business suffers from external disruption to the supply of imputes.

Components of supplies risk are as raw material, Labor, power, machinery, equipment, factory premises etc. Supply risk is assessed by a cost breakdown of the inputs and then assessing the risk of disruption of supplies of each item.

5.1.4 Sales risk: This refers to the risk that the business suffers from external disruption of sales. Sales may be disrupted by changes to market size, increasing in competition, change in the regulation or due to the loss of single large customer. Sales risk is determined by analyzing production or marketing system, industry situation, Government policy, and competitor profile and companies strategies.

5.1.5 Company risk: This refers to the risk that the company fails for internal reasons. Company risk is subdivided into company position risk and Management risks.

5.1.6 Company position risk: Within an industry each and every company holds a position. This position is very competitive. Due to the weakness in the company's position in the industry, a company is the risk for failure. That means, company position risk is the risk of failure due to weakness in the company’s position in the industry. It is subdivided into performance risk and resilience risk.

5.1.7 Performance risk: This risk refers to the risk that the company’s position is so weak that it will be unable to repay the loan even under Favor able external condition. Performance risk assessed by SWOT (Strength, Weakness, Opportunity and Threat) analysis, Trend analysis, Cash flow forecast analysis and credit report analysis (i.e. CIB repot from Bangladesh Bank).

5.1.7 Resilience risk: Resilience means to recover early injury, This refers to risk that the company falls due to resilience to unexpected external conditions. The resilience of a company depends on its

leverage, liquidity and strength of connection of its owner or directors. The resilience risk is determined by analyzing different financial ratio, flexibility of production process, shareholders willingness to support the company if need arise and political and private affiliation of owners and key personnel.

5.1.8 Management risk: The management risk refers to the risk that the company fails due to management not exploiting effectively the company’s position. Management risk is subdivided into management competence risk and integrity risk.

5.1.9 Management competence risk: This refers to the risk that falls because the management is incompetent. The competence of management depends upon their ability to manage the company's business efficiently and effectively. The assessment of management competence depends on management ability and management team work. Management ability is determined by analyzing the ability of owner or board of the members first and then key personnel for finance and operation. Management team work is determined by analyzing management structure and its strength and weakness.

5.1.10 Management integrity risk: This refers to the risk that the company fails to repay the loan amount due to lack of management integrity. Management integrity is a combination of honesty and dependability. Management integrity risk is determined by assessing management honesty, which requires evaluating the reliability of information supplied and then management dependability.

5.2 Security risk: This sort of risk is associated with the realized value of the security, which may not cover the exposure of loan. Exposure means principal plus outstanding interest. The security risk is subdivided into two major heads i.e. security control risk and security cover risk.

5.2.1 Security control risk:

This risk refers to the risk that the bank falls to realize the security because of bank's control over the security offered by the borrower i.e. incomplete documents. The risk of failure to realize the security depends on the difficulty in obtaining favorable judgment and taking possession of security. For analyzing the security control risk the credit office is required to verify documentation to ensure security protection, documentation completeness, documentation integrity and proper insurance policy. He/she also conducts site visit to verify security existence. Assessment of security control risk requires analyzing the possibility of obtaining favorable judgment and analyzing the case with which the bank could take the possession and liquidate the securities.

5.2.2 Security covers risk: This refers to the risk that the realized value of security is less than exposure. Security cover risk depends on speed of realization and liquidation value. For analyzing security cover risk, the official requires assessing the power of the customer to prolong the legal process and to analyze the market demand for the security For assessment of security control risk, the officials times the time that would require to liquidate the security and assess the risk and estimates the security value at liquidation and assess the risk.

Before completing the LRA form, the relationship manager collects data specially industry specific from published sources and company specific data that not usually published., by personally visiting the company. After collecting the necessary data he/ she prepares financial spreadsheet. This spreadsheet provides a quick method of assessing business trend & efficiency and helps to assess the borrower ability to pay the loan Obligation.

Financial spreadsheet includes balance sheet, income statement, cash flow statement and ratios for the purpose of financial statement analysis.

Through analyzing data and collected information, the concerned official completes the LRA form and all scores are transferred to the scoring matrix to find the overall risk of lending. The overall matrix provides four kinds of lending risk for decision making viz. (I) Good (ii) Acceptable (iii) Marginal and (iv) Poor. The bank does not provide any credit request having an overall risk as “marginal" and “Poor" without justification. All credit application rated "Poor" shall require the approval of the Board of Directors regardless of

purpose tenor or amount. Therefore bank can minimize the dangers regarding the bad loan and advances through using the LRA. Table-1: Deposits Distributed By Types of Accounts Type of

NCB

SB

FCB

PCB

IB

Accounts Oct-2008

49.84%

49.93%

51.26%

50.54%

50.34%

Dec-2008

50.16%

50.07% 48.74% 49.46% 49.66% Source: Schedule Bank Statistics (October-December 2008)

51.26

51.5 51

50.54

50.5 50

49.84

50.16

49.93

50.07

49.74

50.34 49.76

49.66

49.5 49 48.5 NCB

SB

FCB Oct:2008

PCB

IB

Dec:2008

Fig-01 This graph shows that, the type of account in which type account are belong in individual types of Bank. Here clearly distributed are 5 types of group banks that are National Commercial Banks, Specialized Banks, Foreign Banks, Private Banks (Incorporated in Bangladesh), Private Banks (Islamic). Here almost all of banks are belonging near about same type of account in different types of Bank except Private Banks (Foreign) which have AS account is greater than all other banks.

Table-2: Deposits Distributed By Urban and Rural Area (Oct-2008) Type of

NCB

SB

FCB

PCB

IB

Accounts Urban

78.26%

67.24%

100%

91.07%

91.87%

Rural

21.74%

32.76%

00%

08.93%

08.13%

Source: Schedule Bank Statistics (October-December 2008)

Fig -02 In this graph deposit distributed by urban and rural area on the basis of account, here we see the specialized banks who keep same performance both in urban and rural area this specialized Bank’s performance is better in urban area than rural area. On the other hand National Commercial Bank also a good performance in both urban and rural area. In case of Private Banks the scenario is quite different because private who are foreign they cannot perform minimum level in rural are a few Banks have a minimum level performance but not much.

Table-3: Deposits Distributed By Urban and Rural Area (Dec-2008) Type of NCB SB FCB PCB Area Urban Rural

77.57% 22.43%

IB

66.35% 100% 91.94% 92.20% 33.65% 00% 08.06% 07.80% Source: Schedule Bank Statistics (October-December 2008)

Fig -03 This graph shows the deposits distributed by Urban and rural area on the based on account here we see the same scenario of previous one actually National Commercial banks and specialized banks is the maximum performer of this situation. In addition private banks are performing only in urban are still they cannot reach to rural area.

Table-4: Distributed Deposit by Sector Type of Accounts Current Account Fixed Deposits Pension Scheme

NCB 45.16% 15.68% 17.89%

SB 3.28% 5.76% 5.42%

FCB 7.90% 6.46% 1.01%

PCB 36.43% 61.22% 50.56%

IB 7.23% 10.88% 25.02%

Deposit Source: Schedule Bank Statistics (October-December 2008)

Current

Fixed Deposits

Pension Schem Deposits 61.22 50.56

45.16 36.43

25.02 15.6817.89 7.9 6.46

3.28 5.76 5.42 NCB

SB

10.88 7.23

1.01

FCB

PCB

IB

Fig -04 This graph shows that, distribution of deposit by sector in which sector deposit are distributed in which portion. Here actually discussed about Current, Fixed Deposits, and Pension Scheme Deposits. In this graph it is clear that the private bank’s performance are very higher than other bank and then have better performance of state owned banks.

But in case of current account state owned banks are greater than private banks. On the other hand Islamic bank that have also have an average performance may be for Islamic beliefs of Bangladeshi people Table-5: Advance Classified By Securities in Merchandising Type

NCB

SB

FCB)

PCB

IB

Total

Merchandising Export

25.62

4.15%

.25%

46.54%

23.44%

100%

Commodities Import

16.52%

.90%

1.95%

65.50%

15.13%

100%

Commodities Source: Schedule Bank Statistics (October-December 2008)

70

65.5

60 46.54

50 40 30

25.62

23.44 16.52

20

15.13

10

4.15

0.9

0

0.25

Export SB Commodities

NCB

1.95

FCBImpoty Commodities PCB

IB

Fig -05 This graph shows that the Advance classified by securities by merchandising on the basis of export commodities and import commodities. Here the private banks (Incorporated in Bangladesh) are performing without any competition with other group of Banks.

Table-6: Advance Classified By Securities Type Merchandising Real Estate

NCB

SB

FCB

PCB

IB

Total

19.46%

54.88%

.20%

16.01%

9.45%

100%

33% 20.38%

45.90% 6.38%

2.49% 6.31%

12.80% 52.64%

5.81% 14.29%

100% 100%

With Financial Obligations Size of Account Economic Purpose Source: Schedule Bank Statistics (October-December 2008)

Fig -06 This graph shows that advance classified by securities on the basis of real estate with financial obligations, size of account and economic purpose, Here the specialized banks are ahead about the real estate with financial obligations and also in size of account. But private banks dominant in economic purpose.

Table-7: Advanced Classified by Areas Type of Area Urban Rural

NCB SB FCB PCB IB Total 19.70% 3.50% 6.81% 55.02% 14.97% 100% 29.31% 43.41% 0 21.86% 5.42% 100% Source: Schedule Bank Statistics (October-December 2008)

Fig -07 This graph shows that advance classified by area here the urban area and rural area it is very common scenario in this graph the private bank who are corporate in Bangladesh that performing well in urban are and quite different situation in National Commercial banks banks and specialized bank they perform well in rural area but main different is the state owned banks have sometimes equal performance both in urban and rural area where as private banks (Foreign) have only performance in urban area they have no activities in rural area.

Table-8: Advanced Classified by Rates of Interest Particulars Agriculture, Fisheries and

NCB 30.89%

SB 57.43%

FCB 0.42%

PCB 8.38%

IB 2.88%

Total 100%

Forestry Industry

22.71%

5.59%

4.31%

51.34%

16.05%

100%

Source: Schedule Bank Statistics (October-December 2008)

Agriculture, Fisheries and Forestry

Indsutry

57.43 51.34

30.89 22.71 16.05 5.59

NCB

SB

0.42

4.31

8.38 2.88

FCB

PCB

IB

Fig -08 This graph shows the distribution of advance classified one basis of interest rate interest rate is very important issue for banking sector. In this graph National Commercial banks and specialized banks have the maximum portion in the sector of Agriculture, Fisheries and Forestry but private banks are in the sector of industry.

Table – 09: Advances Classified by Major Economics Purpose Particulars Working

NCB 10.13%

SB 02.44%

FCB 10.15%

PCB 56.53%

IB 20.75%

Total 100%

Capital Financing Source: Schedule Bank Statistics (October-December 2008)

Fig -09 This pie chart shows that advanced classified by major economic purpose the portion of sales how much sales of individual group banks. In this situation this pie chart are clearly present Private Banks (Incorporated in Bangladesh) are sale highest 56.53% again the second highest sale of private banks but who are practicing Islamic banking they sale 20.75% and state owned banks also sale 10.13 %.

Table – 10: Disbursement of Agricultural Credit Program (Last 05 years) Type Amount

NCB 21.29%

SB FCB PCB IB Total 63.50% --15.21% --100% Source: Schedule Bank Statistics (October-December 2008)

FCB 0%

PCB 15%

IB 0%

SB 64%

Fig -10

NCB 21%

This pie chart shows the distribution of agricultural credit usually all bank do not practice agricultural credit. Actually the specialized Banks that have the maximum percentage of agricultural credit that is 63.50%. On the other hand state owned banks and private (Incorporated in Bangladesh) have near about same portion of total credit but foreign banks and Islamic banks have no credit in this sector.

Table – 11: Recovery of Agricultural Credit Disbursement (Last 05 years) Type Percentage

NCB 30.03%

SB 54.75%

FCB ---

PCB 15.22%

IB ---

Total 100%

Amount Source: Schedule Bank Statistics (October-December 2008) Islamic Banks 0% Foreign Banks 0%

Private Banks 15%

State Owned Banks 30%

Specialized Banks 55%

Fig-11 This pie chart shows the recovery rate of agricultural credit disbursement. Here it is clear that foreign bank and Islamic bank have no credit in agricultural sector that is why no possibility to recover the credit have. But specialized banks have the maximum rate of recover which is more than 50% and then state owned banks more than 30% and also private banks 15.22%.

Table-12: Advanced Classified by Construction purpose

Type NCB Construction 24.20%

SB 2.17%

FCB 1.20%

PCB 59.11%

IB 13.32%

Total 100%

Fig-12 This pie chart shows that the construction purpose credit and normally it can be seen that private banks have the big contribution on constructions it is 60% but state owned hanks and Islamic bank also have 24.20% and 13.22%.

Table-13: All Types of Advances Classified by Banks NCB SB FCB Type Percentage

23.78%

7.44%

7.36%

PCB

IB

Total

61.42%

16.67%

100%

Amount Source: Schedule Bank Statistics (October-December 2008)

Fig-13 This pie chart shows that all types of advanced classified on the basis of percentage amount here the highest percentage amount for private banks which is more than 61%.

Growth Rate has been calculated by taking data from all of mentioned bank’s Annual Report of 2008.

Growth Rate =

Banks

Growth Rates

NCB

-17.45

SB

0.68

FCB

0.17

PCB

0.95

IB

0.995

Source: Schedule Bank Statistics (October-December 2008)

Fig-14 The above graph showing that the state bank’s growth rate is lower than other types of bank.

8.1 Findings Bangladesh is a developing country. Without developing banking sectors, business sector is not in a possible position to progress rapidly. Interest free banking is not a mere concept now, it is in reality. In Bangladesh have a lot of Banks there have state owned Banks, Private Banks and also have Specialized Banks. In our country a lot of commercial banks have been operating with great confidence. After study on all Banks it shows that maximum numbers of private banks are performing well. Private Banks that are incorporated in Bangladesh they are doing well where as foreign private Banks are not performing well. In many cases this study finds foreign private Banks have no activities in rural area of Bangladesh. If the consider of cover area by the bank in this situation state owned Banks are totally ahead from rest of Banks. All types of Banks provide credit but state owned banks sale credit to all sectors. Private Banks provide credit to industrial sector, SME and in some other sectors but they do not provide much credit to agricultural sectors. Foreign private Banks do not provide any amount to agricultural sector. Private Banks have a good recovery rate on credit. National Comercial Banks provide loan to all sectors but their recovery rate is not in satisfactory level. Specialized Banks provide maximum credit to agricultural sector.

8.2 Conclusion & Recommendation

In conclusion as developing country there have a good credit policy and practices. Where maximum number of Banks have good credit recovery rate and also have a lot of client to sale credit. In this study and by observing all of information of all banks, it is necessary to involve all Banks to all sector of our economy. Because still now many of Banks have no activates in many sectors. If they successfully involve and government provide proper support, that can make a revolution in our Banking sector and also in our country’s economy. So my recommendation is that, government should provide proper guideline and flexible law to enhance the activities of banking sector of Bangladesh.