Credit Policy & Practice of Banking Institutions in Bangladesh 1.1. Background I am the student of Bachelor of Business Administration (B.B.A) of Stamford University Bangladesh, I study the subject's related to major in Accounting, Management, Finance, Marketing, Mathematics and little about other subjects. 1.2 Rationale for Choosing Topic Credit Policy and Practice is most important division in the banking sector. 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:
Overview of Banking industries in Bangladesh 1
To reveal rules, regulations, theories and practices of credit in Bangladesh. To study function of the Credit Policy and Practice by all of Banks in Bangladesh. To compare different group of banks with each other. To identify the growth rate of different type of banks.
To identify problems in Credit Policy and Practice of all Banks.
To recommend suggestions for the successful Credit Policy and Practice by all Banks. To analysis the Credit Policy and Practice in Bangladesh by all Banks.
1.4 Limitations of the Report The sources of the information 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 Communication Busy working Environment of the offices Secrecy of Information Different Format Data Technological Problem 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
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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. For this I had to suffer to communicate in particular place to go particular person or library. So the communication was difficult which have hampered my purpose to some extent. Busy working environment of the offices 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
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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 all Banks of Bangladesh who invest and provide credit in different sectors and 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 banks, concept, analysis and problems. 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
•
Periodicals published by the Bangladesh Bank;
•
Different publications regarding banking functions, foreign exchange operation, exportimport policies and investment; and
•
Bank’s Website.
•
Scheduled Banks Statistics
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2.1 Private Banks (Incorporated in Bangladesh) 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 5
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
2.2 Private Banks (Islamic Banks) 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 2.3 Private Banks (Foreign Banks) 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 6
8. The Hong Kong & Shanghai Banking Corporation Limited 9. Bank Al-Falah Limited
2.4 State Owned Banks 1. Agrani Bank Limited 2. Janata Bank Limited 3. Rupali Bank Limited 4. Sonali Banki Limited
2.5 Specialized Banks 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
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3.0 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 socio-economic 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. 8
3.1 The Credit Policy has been divided into the following categories: a) Policy Guidelines. b) Organizational Structure and Responsibilities. c) Procedural Guidelines.
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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: 3.2 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
ď ś Syndication and Structured Finance ď ś Project Finance 10
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.
3.3 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.
4. 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. 11
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 standing of a bank's counterparties. This experience is common in both G-10 and non-G-10 countries. 4.1 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. 4.2 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.
4.3 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. 12
4.4 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. 4.5 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.
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: 13
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 companies 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:
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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. 3.2.1 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: 15
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 over all 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.
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6.1 Private Banks (Incorporated in Bangladesh)
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6.1.1 AB Bank Loan Syndication
Syndication or club financing is a growing concept in Banking Arena of Bangladesh. Syndicated finance diversifies the risk of one bank on a single borrower and increases the quality of loan through consensus or cumulative judgment and monitoring of different banks / financial institutions.
AB Bank, the first bank in the private sector also took initiative to adapt to this growing concept.
In 1997, AB Bank for the first time arranged a club financing with Dhaka Bank Ltd to raise Tk. 6700 lac - out of which ABBL financed Tk. 5700 Lac and Dhaka bank financed Tk. 1000 Lac.
In 1999, AB Bank arranged its second syndicated credit facility with IPDC to raise Tk 3563 Lac.
Since then AB Bank did not look back. Since 1997 to 2007 (till date), AB Bank has raised total Tk. 25989.56 Lac as Lead Arranger. The following banks from time to time have been our partners in these syndications: Dhaka Bank, IPDC, EXIM Bank, Bank Asia, Oriental Bank, NCC Bank, The City Bank, Trust Bank, Bank Asia.
AB Bank has also participated in different syndications arranged by other Banks, out of which till date 6 (six) syndication has successfully been completed. AB Bank exposure in these completed syndications was Tk. 4700 Lac.
At the moment AB has participation in 19 (nineteen) syndicated facilities. AB Bank’s exposure in the ongoing syndication is Tk. 51560.29 Lac which is diversified in the following ten sectors:
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SL
Sector
ABBL Participation
1
Textile
(Fig. in Lac Tk.) 9,533.57
2
Micro-finance
3,000.00
3
Cement
7,990.00
4
Energy & Power
11,997.00
5
Telephone (PSTN)
5,500.00
6
Glass
900.00
7
Sugar
900.00
8
Steel Mills
9081.72
9
Paper
1158.00
10
Chemical
1,500.00
Total
51,560.29
Table: Loan Syndication
6.1.2 Bangladesh Commerce Bank Financing of small and medium Industries The main thrust of financing is given on small and medium Industries. This is the priority sector of our Bank. 19
Financing of Trade Trade Finance includes CC (Cash Credit), SOD (Secured Overdraft) FO (Financial Obligation), SOD (Secured Overdraft) RE (Real Estate) working capital. This will help the local trades and Businessmen to expand their trade and business unhindered Financing of Import & Export All necessary Financing for Import & Export are done by opening L/C, buying documents providing, LIM, PAD, PC and LTR facilities for smooth functioning of foreign Trade. Micro Credit and Micro Enterprise Scheme For poverty alleviation micro credit is provided to poor people without security for their selfsustenance to rehabilitate them in the society. Credit Scheme for Women entrepreneurs For developing Women entrepreneurship in the country this type of credit is extended to unemployed and skilled women, through which they can transform their micro credit in to small enterprises. Consumers Credit Scheme Domestic useable items i.e. Computer, Photocopier, Furniture, Washing Machine, Air Cooler, Refrigerator, Sewing Machine, Car, Pressure Cooker etc are financed for comfortable and modern living of the people of limited source of income Special Credit Scheme for Service holder Under this scheme service holders of govt. bank or autonomous bodies are provided with 6 month's basic salary as loan realizable in 18 equal installments. Professionals are also covered enter this special credit scheme.
6.1.3 Bank Asia Interest Rate General interest & rates are as Bank Aisa declared with the honorable customer is shown below. We offer different rates and interest on different product. Below you will see some tables that include most significant information. The table below contains the rate chart of Bank Asia: 20
Interest Rate on Lending Mid Rate
Maximum Rate
13.00%
13.00%
13.00% 13.00%
13.00% 14.50%
13.00% 13.50%
13.00% 15.00%
7.00%
7.00%
13.00%
13.00%
12.00%
12.00%
13.00%
13.00%
13.00%
13.00%
13.00%
13.00%
13.00% 13.00%
13.00% 13.00%
12.00%
12.50%
16.00%
17.00%
16.00%
17.00%
16.00% 14.50%
17.00% 16.00%
16.00%
17.50%
Type Agriculture Term Loan a)(Large & Medium Scale Industries) Term Loan b)(Small Scale Industries) Working Capital a)(Large & Medium Scale Industries) Working Capital b)(Small Scale Industries) Export Other Commercial Lending SMALL & COTTAGE INDUSTRIES a) With Govt. Refinance SMALL & COTTAGE INDUSTRIES b) Without Govt. Refinance Housing Overdraft (OD) against a)FDR Issued by Bank Asia Ltd Overdraft (OD) against b)FDR Issued by Other Bank Overdraft (OD) against a) MB+, DB+ ,DG+ of Bank Asia Ltd. Overdraft (OD) against Similar Instruments issued by other banks. Micro Credit a. Micro Credit Scheme Micro Credit b. Personal Credit Scheme Micro Credit c. Car Own Scheme Micro Credit d. Consumer Credit Schemes Small Enterprise Loan Others
Table: Interest on lending
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6.1.4 Dutch Bangla Bank Limited Purpose To meet up working capital requirement of Business Target Customers Small or Medium Entrepreneur like : an entity, ideally not a public limited company, does not employ more than 150 persons (if it is manufacturing concern) and 25 persons (if it is a trading concern) and 25 persons (if it is a service concern) and also fulfils the following criteria :
ď ś A service concern with total assets at cost excluding land and building from Tk. 50,000/- to Tk. 10 crore
ď ś A trading concern with total assets at cost excluding land and building from Tk. 50,000/- to Tk. 10 crore
ď ś A manufacturing concern with total assets at cost excluding land and building from Tk. 50,000/- to Tk. 20 crore
Loan Amount: Minimum: TK. 100,000/Maximum: TK. 5,000,000/Clean: Up to Tk. 500,000/Collateralized: Up to Tk. 5,000,000/22
Interest Rate (Floating): Clean @17.00% Collateralized: @16.00% Collateralized with ≼30% Cash Security: @15.00% 100% cash security: @TD+2% spread (considering DBBL TD) and @14% p.a. (considering other cash security/ other bank TD) Processing Fee: 1% of the Sanctioned Limit. Renewal/ Enhancement Fee: 0.50% of the Sanctioned Limit. Tenure: 1 year Renewable (if total credit turnover is at least 4 times of existing limit) Overdue charge: Additional 3% p.a. No EOL to be allowed without approval of the Head Office. Stamp charges & VAT: All relevant Stamp charges & VAT (as per Govt. rules) Eligible Entrepreneur /Owner: Nationality: Bangladeshi by birth Experience: As an entrepreneur must have experience at least 2 (Two) years Age: Minimum 21 years to maximum 65 years For renewal purposes maximum age may be considered up to 70 years
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6.1.5 Dhaka Bank Limited Any Purpose Loan Its time to do a few things you really wanted to. Introducing "Any Purpose Loan" from Dhaka Bank Limited. Now you can get loan up to Tk. 500,000* to spend it any way you choose to. Just walk into any of our branches and walk out loaded. Home Loan The product is a term financing facility to individuals to aid them in their purchases of apartment or house or construction of house. The facility will become affordable to the clients as the repayment is done through fixed installment as commonly known as EMI (equal monthly installment) across the facility period. Depending on the size of the loan, the maximum period of the loan would be 180 months (15 years). Targeted Market The target market for Home Loan will be mainly focused in Dhaka and Chittagong. However, strong recommendation from branches operating in other areas will also be facilitated with the major concentration on the following category.
ď ś Salaried employees of institutions with minimum 3 years continuous service ď ś Self-employed Professionals who are self employed and have at-least 5 years of independent practice in the area of profession. (Example: Doctors, Dentists, Engineers, Chartered Accountants, Architects who are members of their professional institutes.)
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ď ś Businessmen who are permanent residents of Dhaka, Narayangonj, Chittagong and Sylhet with at least 5 years of continued operation in the line of business.
Restrictions and client eligibility 1. Loans are restricted to Bangladeshi nationals falling in the categories mentioned below: The minimum age for any borrower will be 21 years with a maximum age 50 years (at the time of application). The minimum verified Gross Family Monthly Income of the applicant should be BDT
40,000.00.
The family income will include only the income of the applicant and spouse. 2. The maximum permitted Equal Monthly Installment (EMI) paid by the borrower should be no more than the 33% of the Family Monthly Disposable Income (FMDI) of the borrower per month. 3. In calculating FMDI, we propose to use the following industry standard formula: Proven income of obligor PLUS proven income of spouse (if the spouse is working) LESS current monthly loan obligations (if any), other monthly fixed obligations (rent, children’s education, monthly food expenses, etc).
Loan amount limits under the program
Minimum loan amount
Maximum loan amount
BDT 500,000 BDT 3,500,000 4. The maximum loan tenor for different amount of loan is proposed to be as following Loan Amount
5 lac to less tan 10 lac
10 Lac to 35 lac
Max Tenure 5 yrs 10-15yrs (negotiable)* 5. The tenor will be decided at the discretion of the management. Personal Loan
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As part of establishing a Retail Banking franchise of Dhaka Bank Limited, the bank has successfully launched Personal Loan. The product is a term financing facility to individuals to aid them in their purchases of consumer durables or services. The facility becomes affordable to the clients as the repayment is done through fixed installment s commonly known as EMI (equated monthly installment) across the facility period. Depending on the size and purpose of the loan, the number of installments varies from 12 to 48 months.
The target market for personal loan will mainly comprise of following category – a. Salaried employees of institutions in the Dhaka, Chittagong and Sylhet markets. b. Professionals who are self employed and have at-least 3 years of independent practice in the area of profession. c. Businessmen who are permanent residents of Dhaka, Chittagong and Sylhet metropolis with at least 3 years of continued operation in the line of business. Vacation Loan Like the Car Loan, Vacation Loan of Dhaka Bank Limited is a term financing facility to individuals to aid them in their pursuit of spending a vacation in the country or abroad. The facility becomes affordable to the clients as the repayment is done through fixed installment s commonly known as EMI (equal monthly installment) across the facility period. Depending on the size and purpose of the loan, the number of installments varies from 12 to 48 months. Targeted Market The target market for personal loan mainly comprises of the following categories – a. Salaried employees of institutions in the Dhaka, Chittagong, Sylhet markets and where Dhaka Bank operates. b. Professionals who are self employed and have at-least 3 years of independent practice in the area of profession. Businessmen who are permanent residents of cities where Dhaka Bank operates with at least 3 years of continued operation in the line of business. 26
SME Interest & Experience in SME Financing - Dhaka Bank Limited Since inception, the Dhaka Bank has held socio-economic development in high esteem and was among the first to recognize the potentials of SMEs. Dhaka Bank’s Involvement: Recognizing the SME segment’s value additions and employment generation capabilities quite early, the Bank has pioneered SME financing in Bangladesh in 2003, focusing on stimulating the manufacturing sector and actively promoting trading and service businesses. Story of a successful Branch in SME Financing: The Bank started branch operations at Belkuchi Sirajgonj in April 2003. Prior to the Bank’s intervention, the weaving community did not have the financial strength to stock their products till “Eid ul Fitr” when the annual sale takes place. Traders were taking advantage to the situation by buying up entire productions at low prices and liquidating stocks just before “Eid”. With financial services from Dhaka Bank Limited, the weavers have converted to power looms, significantly increased profitability and reduced the involvement of middlemen. We are now working on institutionalizing the learnings and applying them in other areas across Bangladesh, particularly in textiles, light engineering and other manufacturing clusters. Already we have identified several clusters and are working on improving access to finance within these clusters. Experience & Learning In our opinion, the single largest problem of the lower end of the SME sector is that they are unable to fully understand their needs. Even if these needs are understood, they are seldom met with the right product mix. Small business owners are unable to provide banks with required information of the right type and quality. This has created a gap between the borrower and the banks and has served to limit the outreach of SME financial products. In order to overcome this obstacle, Dhaka Bank SME Unit provides comprehensive support to prospective clients in evaluating their business and preparing the required documents in acceptable formats. 27
In this regard, the Dhaka Bank SME Unit has been working in close collaboration with the USAID, the SouthAsia Enterprise Development Facility (SEDF) an International Finance Corporation (IFC) managed multidonor facility and the World Bank.
6.1.6 Eastern Bank Limited EBL Executive Loan Features Loan amount ranging from minimum BDT 50,000 to maximum BDT 1,000,000 or 6 times of gross salary, whichever is lower (in case of govt. officials, the loan amount starts from BDT 30,000) Repayment tenure of 12,24 or 36 months Early full and final settlement allowed
Eligibility Any Salaried Executive can apply for the loan Age: Minimum 23 years, Maximum 60 Years Professional Experience: 5 years of experience with minimum 2 years of continuous employment with current employer Minimum monthly income: BDT Tk. 15,000 for Executives of any private organization BDT Tk. 10,000 for government officials EBL Auto Loan Features Loan amount ranges from BDT 350,000 to BDT 2,000,000 (upto 100% for brand new car and 70% for reconditional car) Competitive interest rates Repayment tenure of 12,24,36,48 or 60 months
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You have the option of pre-paying your loan after a minimum of 6 months of loan disbursement Early full and final settlement allowed Eligibility Age : Minimum 22 years, Maximum 60 Years Professional Experience: Salaried Executives: 3 year of experience Self employed Professional: 2 years practice Business: 2 years experience Minimum monthly income: Minimum monthly income: BDT Tk. 30,000/month
EBL Jibandhara Loan Features Loan Amount ranges from BDT 50,000 to BDT 1,000,000 ( or 12 times of gross salary, whichever is lower). Repayment tenure of 12, 24, 36, 48 or 60 months. Payment option available starting after minimum 6 months of disbursement of loan. Early full and final settelment allowed. No security required. No hidden charges. Eligibility Age : Minimum 22 years, Maximum 60 Years Professional Experience: Salaried Executives : 1 year of experience Self employed Professionals: 2 years of experience Minimum monthly income: Salaried Executives : minimum BDT 15,000 / month Self employed Professionals: minimum BDT 20,000 / month
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EBL First Cash Features Revolving credit facility Pre-determined amount of credit from your current account Interest charged only for the amount you have drawn Interest charged on quarterly basis Repayment at anytime during the stipulated period Option of renewal at your request Eligibility Any earning individual having an FD or other securities like Wage Earner’s Bond, ICB unit certificate etc is eligible to apply EBL Parseloan “There must have been many occasions when you have had some money and needed some more for some specific purpose. EBL Parseloan is the right Product for you, where you give some and we share the rest with you - making life simple for you.” Features Any purpose personal loan facility Loan amount BDT 2,00,000 to BDT 10,00,000 or 12 times of Applicant's Gross Monthly Income EMI based loan repayment facility Repayment Tenure - 12 months to 60 months Available in two versons: 1. EBL Parseloan 30 - where you provide 30% of the applied loan amount in the form of EBL FD; for example, if you need Tk. 10 lac loan, then you need to provide BDT 3 lac as security. 2. EBL Parseloan 50 - where you provide 50% of the applied loan amount in the form of EBL FD; for example, if you need Tk. 10 lac loan, then you need to provide BDT 5 lac as security. 30
Loan facility for both fresh applications and take-over purpose Attactive interest on security amount (FD) making the total loan cost minimal Attractive Loan Interest Rates:
EBL Loan “EBL introduces the most convenient & practical Home Loan that suits your all home financing needs. Let it be for apartment purchase, home construction, extension or renovation - EBL is here with the ultimate solution for you. With so many attractive features in it - the home you wanted to buy, or to extend the existing one or renovate the same is no longer a distant dream.” Features Loan amount BDT 500,000 � 75,00,000 or 50 times of applicant �s Gross Monthly Income, whichever is lower Repayment tenure 3 years to 20 years Attractive Interest rates based on loan amount: Loan Amount
Interest Rate
BDT 5 Lac to 15 Lac
14.00%
BDT 15 Lac+ to 25 Lac
14.25%
BDT 25 Lac+ to 40 Lac
14.50%
BDT 40 Lac+ to 75 Lac
15.00% Table: Interest Rate on Loan
Loan Take-over facility with attractive interest rate option (1% less than existing other Home Loan but not less than 13.5% per annum) Processing fee 1.25% of the loan amount for the fresh applicants and 0% for the take-over loans Loan up to 80% of the property value Advance/Partial Prepayment - Anytime and any amount payment facility available, fee is 1% of the Advance/Partial Prepayment amount. Additional Loan Top up facility available
Eligibility •
Bangladeshi citizen within age range 22 Years 57 years 31
•
Length of Service/Business:
Salaried Executives: Minimum 3 year of experience with 6 month permanent employment with present employer; Contractual Employees of
Supranational Organizations,
international
development organizations & Donor agencies e.g. WHO, FAO, UNDP, CARE etc. will be eligible subject to 1. Minimum length of service 5 years 2. Contract renewed at least twice Professionals: Minimum 3 year of practice in the profession Businessman: Minimum 3 years of involvement in business •
Minimum Income for Individual : BDT 25,000/- per month for Salaried Executives BDT 40,000/- per month for Self Employed and others BDT 50,000/- per month for Businessmen
Joint Applicant - Spouse and immediate family members (father, mother, son, daughter, brother & sister) •
Total Income for Principal and Joint Applicants: BDT 30,000/- per month for Salaried Executives BDT 50,000/- per month for Self Employed, Businessmen and Others
Applicant’s Requisite Documents •
Salaried Executives
1. Letter of Introduction (LOI) strictly as per EBLs format. 2. Offer letter or Release letter from previous employer to prove 3 yrs service experience (if applicants employment period in present service is less than 3 yrs) 3. Salary Slip/Certificate showing all deductionslatest 3 months 4. Bank Statement for the last 12 months 32
5. Declaration of other assets (if any) 6. Evidence of other income (if any) 7. Latest TIN Certificate/IT Return Acknowledgement Copy-only from main income holder & property owner •
Self Employed/ Businessman/Others
For self-employed
Certificate of professional degree and certificate of membership from professional body for self employed professionals
Bank Statement for latest 12 months
Declaration of other assets (if any)
Evidence of other income (if any)
Businessman
Statement of Business details
Latest IT Return Acknowledgement Copy with IT-10B form copy
Latest Profit & Loss account and balance sheet of the business for businessmen
Trade License as proof of business age/Memorandum of Association
Company Statement for latest 18 months and self Bank Statement for latest 12 months
Declaration of other assets (if any)
Evidence of other income (if any)
Latest schedule X. Form 117 in case latest schedule X is not available to substantiate share transfer
Certificate of Incorporation
Registered partnership deed from RJF for partnership concern
Land Title deed of rented premises/property
Valid rental deed with tenants 33
Latest 12 months banks statements in applicants name
Utility bill in the name of applicant for rented property
Requisite Property Documents •
Apartment Purchase on private land
1. Ownership deed of the property (photocopy) 2. Bia deed for 25 years 3. Development agreement (joint venture) with the land owner (if any) 4. Registered Power of attorney 5. Recent Survey Report (math parcha duly attested) 6. Mutation parcha with mutation proposal sheet. 7. Duplicate carbon receipt with mutation order sheet. 8. CS. SA. RS porcha (PS. BS. RS. Porcha applicable only for Chittagong) 9. Up to date Non encumbrance certificate for 12 years 10. Up to date Land tax Receipt (if any) 11. Up to date Holding tax receipt. 12. Approved plan/Layout plan and approval letter by Rajuk/Authoruty. 13. Deed of agreement/Allotment letter. 14. Such other documents as required by the Banks appointed Lawyer. Apartment Purchase on government /leased land 1. Lease Deed/Ownership deed of land 2. Bia deed for 25 years 3. Development agreement (joint venture) with the land owner (if any) 4. Registered Power of attorney deed. 34
5. POA acceptance letter from concerned Govt. Authority. 6. Mutation letter from the relevant Govt. Office 7. Duplicate carbon receipt (DCR) with mutation order Sheet. 8. Up to date Non encumbrance certificate for 12 years 9. Up to date Land tax Receipt. 10. Up to date Holding tax receipt. 11. Permission from Lessor to mortgagee 12. Approved plan/Layout plan and approval letter by Rajuk/ Concerned Authority 13. Deed of agreement / Allotment letter. House Construction/ Extension/ Renovation on private land 1. Ownership/lease deed of land original 2. Bia deed for 25 years 3. Recent Survey Report (math parcha duly attested) 4. Mutation parcha 5. CS, SA & RS Parcha 6. Up to date Non encumbrance certificatefor 12 years 7. Up to date Land tax Receipt 8. Approved plan/Layout plan and approval letter by Rajuk/Authority 9. Proof of Property Insurance House Construction/ Extension/ Renovation on government/leased land 1. Ownership/lease deed of land original 2. Bia deed for 25 years 3. Mutation letter from the relevant Govt. Office 35
4. Up to date Land tax Receipt 5. Permission from Lessor to mortgagee 6. Approved plan/Layout plan and approval letter by Rajuk/Authority
6.1.7 First Security Bank Bai-Murabaha (Deferred Lump Sum/ Installment Sale) Bai-Muajjal (Deferred Installment / Lump Sum Sale) Ijara (Leasing) Musharaka (Joint-Venture Profit-Sharing) Mudaraba (Trustee Profit-Sharing) Bai-Salam (Advance Sale and Purchase) Hire-Purchase Direct Investments Post Import Investment Purchase and Negotiation of Export Bills Inland Bills Purchased Murabaha Import Bills Bai-Muajjal Import Bills Pre Shipment Investment Quard-ul-Hasan (Benevolent Investment) Letter of Guarantee Tender Guarantee Performance Guarantee Guarantee for Sub-Contracts Shipping guarantee Advance Payment guarantee Guarantee in lieu of Security Deposits Guarantee for exemption of Customs Duties 36
Others
6.1.8 Uttara Bank Uttaran Consumer-Credit Scheme:
Motor cycle/car- New or re-conditioned. Refrigerator/ Deep Freeze. Television/ VCR /VCP/VCD Radio/ Two-in-one/ Three – in – one Air-Conditioner/ Water Cooler/ Water Pump Washing Machine. Personal Computer/ UPS/ Printer/ Type writer Sewing Machine. House hold furniture- Wooden & Steel. Cellular Telephone. Fax Photocopier. Electric Fan- Ceiling/ Pedestal/ Table. Bi-Cycle Dish Antenna. Baby Taxi, Tempo/Microbus (For self employed persons) Special Features
No collateral security is required. Simple rate of interest. Quick sanction. 37
Maximum Loan amount Tk.3,00,000/5% incentive on total interest charged
Required Documents:
Documents related to applicant's job to prove himself. Two copies passport size photographs. Photograph of nominee (if any) duly attested by the account holder. Personal Loan: Personal Loan Scheme for Salaried Officers-
Emergency expenses for own marriage of a service- holder or his dependents. Emergency expenses of urgent surgical operation/ medical treatment. Emergency educational expenses of the children for admission/purchase of books, examination fees etc. Features: Special
Any permanent salaried employee aged between 20 to 55 years is eligible to get loan. No collateral security is required. Maximum Amount of loan Tk. 1,00,000. Maximum period of loan up to 3 years. Required Documents: •
Documents related to applicant's job to prove himself.
•
Two copies passport size photographs.
•
Photograph of nominee (if any) duly attested by the account holder.
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6.1.9 Trust Bank AGRI-BUSINESS LOAN Features:
Loan facility from TK. 2.00 lac to 100.00 lac to setup Agro Processing Units or to meet up working capital requirement of the business.
No Mortgage or Equitable Mortgage for Loans up to TK.25 lac. Interest rate 15% (case to case basis). Processing fee 1% to 1.50%. Repayment Period 01(One) year for Time Loan/OD and maximum 03(Three) for Term Loan . Repayment of loan by Equated Monthly Installment (EMI) or from sales proceeds. Eligibility:
Any sole Proprietorship or Partnership firm or Private Ltd. Co. having 03 years successfully business operation
Monthly cash flow to repay the proposed Loan installment Owners in the age group of 25 to 60 years Entrepreneurship Development This product is specially designed for retired other rank army personnel. Features:
Any Business Purpose Loan from Tk. 2.00 lac to 20.00 lac to purchase Machinery & Equipment or to meet up Working Capital requirement.
No Mortgage or Equitable Mortgage for loans up to Tk. 5 lac. Interest rate 15% (case to case basis). 39
Processing fee 1% to 1.50%. Tenor of Loan: For working capital maximum 01 year and for fixed assets purchase maximum 03 years.
Repayment of Loan by Equal Monthly Installment (EMI) or from sales proceeds. Eligibility
Any Sole Proprietorship or Partnership firm preferably having 02 years successful business operation.
Monthly cash flow in support of proposed loan installment. Owners in the age group of 35 to 60 years having completed at least 18 years of service. Loan for Light Engineering Features:
Loan facility from Tk. 2.00 lac to Tk. 50.00 lac for Working Capital or to purchase Machinery & Equipment.
No Mortgage or Equitable Mortgage for loans up to Tk. 25 lac. Interest rate 15% (case to case basis). Processing fee 1% to 1.50%. Loan Repayment Period: Maximum 01(One) year for Time Loan/OD and for Term Loan maximum 05 years.
Repayment of Loan by Equal Monthly Installment (EMI) or from sales proceeds. Eligibility
Any Sole Proprietorship or Partnership firm or Private Ltd. preferably having 03 years successful business operation.
Monthly cash flow to support the proposed loan installment. Owners in the age group of 25 to 60 years.
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Peak Seasons Loan Features:
Loan Facility from Tk.2.00 lac to 20.00 lac for purchasing inventory to meet peak season’s demand for different festivals.
Interest rate 15% (case to case basis). Processing fee 1% to 1.50%. Loan Repayment Period: Maximum 03(Three) months. Repayment of loan by Installment or in Lump Sum within loan period Eligibility
Any Sole Proprietorship or Partnership firm or Private Ltd. Co. having 03 years successful business operation.
Cash flow in support of proposed loan installment. Age of the owners in the range of 25 to 60 years. Loan For Poultry Farm Features:
Loan facility from Tk. 2.00 lac to Tk. 20.00 lac for Poultry Business to meet up working capital requirement.
No Mortgage or Equitable Mortgage for loans up to Tk. 5 lac.* Interest rate 15% (case to case basis). Processing fee 1% to 1.50%. Tenor of loan not exceeding 01 (One) year. Loan to be repaid by Equal Monthly Installment (EMI) or from sales proceeds. Eligibility
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Any Sole Proprietorship or Partnership firm or Private Ltd. Co. having 03 years successful business operation.
Cash flow in support of the proposed loan installment. Owners in the age bracket of 25 to 60 years. Loan for Shopkeepers Features:
To purchase inventory Shopkeepers may enjoy credit facility from Tk. 2.00 lac to 50.00 lac. No Mortgage or Equitable Mortgage for loans up to Tk. 25 lac. Interest rate 15% (case to case basis). Processing fee 1% to 1.50%. Tenor of loan not exceeding 01 (One) year. Facility may be adjusted by Equal Monthly Installment (EMI) or from sales proceeds. Eligibility
Any Sole Proprietorship or any Partnership firm having 03 years successful business operation.
Monthly cash flow to support the proposed loan installment. Owner’s age: 25 to 60 years. Women Entrepreneur Loan Features:
Any business purpose loan from Tk.1.00 lac to Tk. 50.00 lac. No Mortgage or Equitable Mortgage for loans up to Tk. 25 lac. Interest rate 9%. Processing fee 1% to 1.50%. Loan Repayment Period: 01 year for working capital finance and maximum 05 year for fixed assets purchase.
To be repaid by Equal Monthly Installment (EMI) or from sales proceeds. 42
Eligibility
Any Sole Proprietorship or any Partnership firm preferably having 02 years successful business operation.
Monthly cash flow to support the proposed loan installment. Owners in the age group of 20 to 55 years. 6.1.10 The City Bank Auto Loan: Owning a car is no longer a luxury. Car for your family is now a matter of fulfilling a necessity. Appreciating that basic need, City Bank introduces City Drive, a tailor-made auto loan scheme for individuals. Features: Loan amount ranging from Tk. 300,000 to Tk. 20,00,000 Car financing up to 90% of reconditioned or new vehicle price Lower interest rate & upto 100% financing for loan against cash security Loan tenor 12 to 60 months No hidden charges Competitive interest rate Loan processing fee 1% of loan amount. Eligibility Age: 22 to 60 years Experience: Salaried executive total 1 year including 6 months with current employer Experience: Business person/professional 1 year Monthly income: Minimum Tk. 30,000. City Express Cash is a fully secured and revolving facility for any legitimate purpose. The security for the loan should be ideally CBL FDR. Bank would finance against clients CBL FDR or other banks/NBFIs security. 43
City Express Loan is a fully secured and terminating (EMI Based) loan facility for any legitimate purpose. Bank would finance against clients CBL FDR or other bank FDR/NBFIs security. Any Purpose Secured Loan This is any purpose secured loan for any legitimate purpose.
Features: Minimum loan amount Tk. 50,000 & Maximum 90% of the Present Value of CBL FDR or any other security Quick processing Minimum documentation Loan tenor 12 to 60 months No guarantor required No hidden charges. Eligibility Age: 18 + Must be Bangladeshi Any eligible individual, who will provide the cash security. Vacation Loan Whatever the occasion or requirement may be, City Solution - any personal loan from City Bank - is there to solve all your problems and to fulfill all your dreams. You can access this facility from our selected branches across the country. Features: Loan amount ranging from Tk. 50,000 to Tk. 1000,000 Loan tenor 12 to 60 months No guarantor required for the loan amount up to Tk. 3 lac No hidden charges 44
Competitive interest rate Processing fee 1.5% Eligibility Age: 22 to 60 years Experience: Salaried executive total 1 year including 6 months with current employer Experience: Business person 2 years Experience: Professional 1 year Minimum monthly income: Salaried executive Tk. 15,000 self employed Tk. 25,000 and business person Tk. 30,000 Loan Takeover Plan An exclusive offer for other bank's credit worthy customers who can now transfer their personal loan outstanding to City Solution with a preferential interest rate and waiver on processing fee. Eligibility Minimum 6 loan EMI repayment with existing bank A minimum take over loan amount is Tk. 1,00,000 and maximum Tk 9,50,000 Benefits No processing fee No extra cost for loan takeover No processing fee for additional loan 1% reduced from City Solution interest rate.
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6.1.11 Pubali Bank Pubali Bank offers the following Loan & Advances: Micro Credit Small and Medium Enterprise Financing Industrial Loans Working Capital Financing Export Credit Import Credit Bills Purchase Letter of Credit Letter of Guarantee Lease Financing Transport Financing Consumers Loan Scheme 46
House Building Loan
6.1.12 Premier Bank Loan & Advances Loan Products: Project Loan Working Capital Loan Trade Finance (Domestic & International) House Building Finance (Commercial & Residential) Contractors Financing Receivable Financing Cash Credit Over Draft Packing Credit Trust Receipt 47
Guarantee Letters Of Credit Doctors' Loan Scheme: Premier Bank has introduced easy to afford financial assistance program "Doctors' Loan" to financially assist these qualified Doctors & Medical Practitioners as follows:
Up to 100% Lease Finance for Medical Equipment. Up to 100% Lease Finance for Motor Vehicles / Ambulance Loan for Rental Advance, Office decoration, Furnishing etc.
Some of the great features that our Doctors' Loans offer are:
Quick & easy loan processing. Lower interest rate. Lower charges. Rebate for timely repayment. Longer term of repayment. Early repayment without any penalty. Eligibility: Registered Doctors & Medical Practitioners, Eye Specialists, Heart Specialists, Child Specialists, Surgeons, Dentists. Also Hospitals, Clinics and Diagnostic Centres owned & operated by the registered Doctors. Security/Collateral & Terms & Conditions: Flexible Terms & Conditions.
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Collateral is not mandatory. Three (3) advance Lease/Loan installments. Personal Guarantees Machineries/Equipments will be purchased under Hire purchase/Lease
Finance/Consumer Credit Scheme and the ownership will remain in the name of Bank (Hypothecated) duly insured until the borrower repays his debt in full.
Rural Credit Scheme: OBJECTIVES - Alleviation of poverty so as to make people self reliant. - Mobilisation of rural savings. Purpose of loan: Poultry Rice husking Beef & goat fattening Purchase of sewing machine Purchase of milking cow Grocery shop Agro-based handicrafts.
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6.1.13 NCC Bank Limited Credit Policy of NCCBL A credit policy includes all rules relating to loans and advances made by the bank to the borrowers. It includes types of credit extended by banks, method of judging the credit worthiness of borrowers, the collateral or securities that are accepted by the banks and so on. This policy guidelines refer to all credit facilities extended to customers including placement of funds on the interbank market or other transactions with financial institutions. Although, unlike other commercial banks , there is no prescribed and published manual or policy guidelines regarding credit management in NCCBL, it follows some rules which are very necessary for credit management. All credit extension of the bank must comply with the requirements of the Bank Companies Act 1991 and Bangladesh Bank instructions as amended from time to time. Approach to the Bank When a borrower approaches to NCCBL for a loan s/he is required to fulfill the following criteriaa) S/he has to be a client of this bank. b) S/he needs to apply properly describing the purpose of the loan amount needed and his/her capability of repayment. After receiving the application from the client, the branch manager scans the papers and decides if s/he will be allowed for an advance or not. For this manager goes through the following process. 50
Borrower Selection In borrower selection emphasis is given firstly on 3Ms, which are a) Man b) Management c) Money. a) Man: The manager has to study the man applied for an advance. For this s/he gathers information about the applicant’s character, credit worthiness and social status. To judge the credit worthiness of borrowers NCCBL follows some basic principles of lending. These are safety, liquidity, diversification, profitability, suitability, integrity, reliability etc. The manager can obtain information from Branch Records, Credit Information Bureau (CIB) of Bangladesh Bank, Personal interviews with the client, Credit Report, Market Information, Financial Statements (Balance sheet, income statement) etc. b) Management: Management is the heart of the business concern. So a careful judgment has to be made about it. It is sought if there are enough experts and technical know how in the management of the firm. Management’s integrity is also need to be evaluated. c)
Money: If management is heart of the business concern, money is blood, which is another vital factor to survive. A credit manager needs to analyze the debt- equity ratio of the firm. S/he also needs to be sure if there are sufficient assets to recover the advance.
Financial Data Analysis Secondly, the credit manager has to compare financial statements of at least three years. For this s/he takes help of different ratios such as liquidity ratio, solvency ratio, profitability ratio and activity ratio. S/he also needs to examine bank account statement of the applicant very keenly. In addition to analysis, the manager should visit the business concern to get a true picture of it. a. Industry Analysis: In this part, the manager is required to study the business behavior, which includes market demand, competitors and government barriers. b. Lending Risk Analysis: It is a systematic and structural way to assess lending risk, which covers all the factors described above. Here a form has to be completed by the lending officer. If lending risk is found to be low, financing can be done and vice versa. 51
If the applicant is found to be OK after going through all the above process, the branch manager sends it with other necessary papers to the credit division of the Head Office with his/her own recommendation. The credit division after appraisal, sends it to the Board (in the case of amount more than 10 lac) or to the credit committee. The credit committee consists of Managing Director, one Executive Vice President and one Vice President from International Division. If the Board/ Credit Committee agree, the proposal is accepted and is sent back to the credit division. The credit division informs it the branch manager. Following this the branch manager, maintaining other law and regulation sends a sanctioning letter to the applicant.
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6.1.14 First Security Bank Limited Deposit
Al-Wadiah Current Deposit
Mudarabah Savings Deposit
Mudarabah Short Term Deposit
Mudarabah Term Deposit
One Month Three Months Six Months Twelve Months Twenty Four Months Thirty Six Months
Foreign Currency Deposit
Mudarabah Savings Scheme
Monthly Savings Scheme Monthly Profit Scheme More than Double the deposit in 6 years
Consumer Finance Scheme
We are also emphasize on non-fund business and fee based income. Bid bond/ bid security can be issued at our customer's request. Our Bank is posed to extend L/C facilities to its importers / exporters through establishment of correspondent relations and Nostro Accounts with leading banks all over the world. Loan Scheme Investment / Deployment of Funds: Bai-Murabaha (Deferred Lump Sum/ Installment Sale) Bai-Muajjal (Deferred Installment / Lump Sum Sale) Ijara (Leasing) Musharaka (Joint-Venture Profit-Sharing) Mudaraba (Trustee Profit-Sharing) Bai-Salam (Advance Sale and Purchase) 53
Hire-Purchase Direct Investments Post Import Investment Purchase and Negotiation of Export Bills Inland Bills Purchased Murabaha Import Bills Bai-Muajjal Import Bills Pre Shipment Investment Quard-ul-Hasan (Benevolent Investment)
Letter of Guarantee Tender Guarantee Performance Guarantee Guarantee for Sub-Contracts Shipping guarantee Advance Payment guarantee Guarantee in lieu of Security Deposits Guarantee for exemption of Customs Duties Others
Letter of Credit (L/C) / Back to Back Letter of Credit (L/C) Specialized Schemes Consumer Investment Scheme, 54
SME Investment Scheme, Lease Investment Scheme, Hire Purchase, Earnest Money Investment Scheme, Mortgage Investment, Employees House Building Scheme, ATM, VISA Investment Card, EEF, etc.
Financial Products
Deposit
Rate(%)
Al-Wadiah Current Deposit Mudarabah Savings Deposit Mudarabah Short Term Deposit Up to 10 Crore Above 10 Crore On monthly Average Balance
7.00 7.00 7.75
Mudarabah Term Deposit
o For One Month 7.50 o For Three Months & above 8.50 o Above 3 months on any amount 9.00 Non-resident Foreign Currency Deposit Resident Foreign Currency Deposit
Mudarabah Monthly Savings Schemes Mudarabah Monthly Benefit Deposit Schemes Mudarabah Double Benefit Deposit Scheme
Scheme
Credit Rating
Credit Rating Agency of Bangladesh (CRAB) has given BBB 3 (pronounced triple B three) rating in Long Term and “ST-4” rating in Short Term to First Security Islami Bank Limited. Commercial Banks rated ‘BBB' have adequate capacity to meet their financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead the Banks into a weakened capacity to meet their financial commitments. BBB rated banks are subject to moderate credit risk. Such banks are considered medium-grade and as such may possess certain speculative characteristics. At the same time, banks rated “ST-4” in short term are considered to 55
have below average capacity for timely repayment of obligations. Such capacity is highly susceptible to adverse changes in business, economic, or financial conditions than for obligations in higher categories.
6.1.15 IFIC Bank Working Capital Finance Business Enterprises engaged in manufacturing/ trading/ service business are eligible to avail Working Capital Loan to meet day to day expenses for processing of manufacturing and selling product & services. Working capital products include both fund and non-fund based products. Fundbased working capital products include secured over draft, cash credit, packing credit, short-term loans payable on demand bank guarantees. Non-fund based products include bank guarantee, performance guarantees and bid bonds are also supporting the business of our customers. Project Finance
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IFIC Bank provides project loan to set up /BMRE of long-term infrastructure and industrial projects/ service unit on the basis of debt and equity rather than the balance sheets of project sponsors. Project financing have been recognized as an important and crucial mode of finance for a financial institution for substantial growth of its industrial credit vis-Ă -vis managing long term finance. Growth of project finance/Industrial credit of a developing country like Bangladesh is considered as a key parameter for transforming her dream into a mid income country group. Hence, apart from trade and commercial finance; IFIC Bank Ltd. from the very beginning has been an active partner of the private sector in developing large and medium scale industry of the country. The Bank has been financing Term Loan (Industrial) facility for establishing new project and/or BMRE of various projects in the sectors viz. textile, garments, power, steel, telecom, pharmaceuticals, packaging, consumer products, health, CNG refueling, Real estate. Term Finance We are offering short term & mid term finance to you to meet emergency financial needs of our project/business. Import 01. Letter of Credit Business Enterprises can avail Non-funded facility for import / procurement of raw materials, machinery, equipment, merchandise item. 02. Loan against Imported Merchandize (LIM) Business Enterprises engaged in import merchandise can avail working capital for retirement of import documents. 03. Loan against Trust Receipt Business Enterprises engaged in import of merchandise can avail working capital for retirement of import documents. Export 01. Pre-shipment finance Back to Back L/C, EDF, ECC, SOD (Working Capital Finance), Packing Credit. 02. Post-shipment finance Foreign Documentary Bills Purchase, Inward Documentary Bill Purchase. Lease Financing Lease financing became a thrust sector for individual and small enterprise besides medium and large enterprises. IFIC Bank has been providing lease finance facility to its customer for acquisition of manufacturing and service equipments for all major industrial sectors. The facility helps the customer to have better financial flexibility under budgetary constraints and to enjoy tax benefit. IFIC offers financing vehicles/ CNG conversion/ refueling plant/ sea or river transport, capital machinery/ plat/ equipment/ lift / generator/ boiler, construction equipment/ computer for IT education center, medical equipment etc. 57
Syndication Finance IFIC Bank along with other commercial banks has been financing large scale projects under syndication arrangement to raise and meet huge credit need of a company. This arrangement allows the Banks to share expertise among them and diversify its credit risks. To cater the need of leading corporate house IFIC Bank has been raising fund from the banking sector on behalf of the customer through syndication arrangement. SME Banking The growth of Small and Medium enterprises (SMEs) in terms of size and number has multiple effects on the national economy, specifically on employment generation, GDP growth, and poverty alleviation in Bangladesh. At present, Small & Medium Enterprise sector is playing a vital role in creation of new generation entrepreneurs and 'Entrepreneurs Culture' in the country. Experience shows that borrowers of small enterprise sector prefers collateral free loan since normally they cannot offer high value security to cover the exposure. To facilitate SME sector of the country, IFIC Bank provides collateral free credit facilities to the small & medium entrepreneurs across the country whose access to traditional credit facilities are very limited. We are offering 15 different products for selected target groups, such as - Easy Commercial Loan, Retailers Loan, Muldhan Loan, Women Entrepreneur’s Loan (Protyasha), Transport Loan, Working Capital Loan, Project Loan, letter of Contractor's Loan, Bidder's Loan, Working Capital Loan, Project Loan, Letter of Guarantee, Letter of Credit Loan against Imported Merchandize (LIM), Loan against Trust Receipt etc.
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6.1.16 Jamuna Bank Categories of eligible business: a) Grocery/departmental/whole sale store b) Confectionary/bakery (owned by the bakers) c) Stationary shops Cloth materials & small local garment traders d) Shoe makers/shops e) PVC & plastic product traders/small manufacturers f)
Tiles/sanitary items retailers
g) Computer/Photostat/Cyber CafĂŠ. h) Electrical & electronic items retailers i)
Pharmacy
j)
Gift shop/cosmetics shops
k) Restaurant/fast food joints l)
Hardwire shops
m) Glass/ceramic retail outlets n) Sports kit retailers o) Photo studio 59
p) Rod, Cement & C.I. Sheet (Tin) Shop q) Engineering Workshop r) Fertilizer & Pesticide shop Maximum Loan Amount: 1) Up to a maximum of 10.00 lac in single case or 60% of possession value (distress value to be considered) whichever is lower. However, loan size will depend on creditworthiness of the borrower and the decision of the sanctioning authority. 2)
Branch Manager must verify the amount of possession money actually paid before recommending such proposal.
Tenure of the loan limit: Minimum 01 year - Maximum 03 years from the date of disbursement of the loan Eligibility criteria: The applicant must fulfill the following criteria to be eligible for loans and advances under the scheme: a) Shop owner must run the establishment himself, having at least three years of successful business experience b) Valid lease deed for a minimum period of 03 years up to 05 years c) Satisfactory conducted deposit account with JBL for minimum 03 months. d) To deposit the daily sales proceeds in the account maintained with JBL e) Agree to abide by credit rules & regulations of JBL f)
Furnishing net-worth of the applicant/client .
g) Clean CIB h) The bank reserves the right to accept or reject any application without assigning any reason whatsoever. i)
The intending borrower /loanee shall apply through the letter head of the business firm or through a plain paper requesting the branch manager for sanction of loan under the Shop Finance Scheme
Security: 60
a) Simple deposit of valid lease deed of agreement of the shop. b) A tripartite agreement to be signed in between leaseholder/shop owner/Bank- to the effect that the leaseholder cannot rent out or transfer the leased property without the written consent of the Bank. c) The lease deed between the landlord and the borrower must be duly executed & the original lease deed should be kept in the Bank as part of document. d) Lease must contain provisions enabling the landlord to forfeit the lease and enable the bank to enforce a right to sell the possession of the shop to liquidate the default debt (if any). e) Letter of disclaimer by the landlord to facilitate the bank to liquidate the default loan (if any) f)
Equal numbers of post dated cheques covering amount of each loan installment
Insurance All borrowing customers' inventory i.e. Stock-in-trade will be insured against Fire, Rsd & other risks with the Bank's mortgage clause cost of which will be borne by the shop owner/client/borrower. Repayment Schedule: Repayment schedule should be as under: a) In case of 01 year, 10 monthly installments for the loan limit up to Tk. 3.00 lac with 02 month grace period from the date of disbursement b) In case of 02 year, 22 monthly installments for the loan limit up to Tk.6.00 lac with 02 month grace period from the date of disbursement c) In case of 03 year, 34 monthly installments for the loan limit above Tk.6.00 lac with 02 month grace period from the date of disbursement
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6.1.17 Marcentile Bank Consumer Credit Scheme Objectives Help fixed-income people for buying house hold durable. For the amount up to Tk. 1,00,000 the period is two years. Interest rate will be charged quarterly rest. Terms & Conditions Terms & Conditions Interest Rate 16.00% Risk Fund 1.00% SSupervision Charge (per year on outstanding balances) 0.25% Application Fee BDT 200.00 Car Loan Scheme Objectives Help fixed-income people for buying car Interest rate will be charged quarterly rest. Terms & Conditions Maximum loan amount is BDT 25.00 lacs. Tenure of loan is 05 (Five) years Interest Rate 16.00% Risk Fund 1.00% SSupervision Charge (per year on outstanding balances) 0.25% Application Fee BDT 200.00 62
Special Feature BDT 7.50 Lac for reconditioned Car/Jeeps/SUVs and BDT 25.00 Lac for new Cars/Jeeps/SUVs.
Doctors' Credit Scheme Objectives Help new F.C.P.S. or post-graduate doctors for setting up chambers and buying medical equipment. Help experienced doctors for refurbishing chambers and buying medical equipment. Assist private clinics for acquiring modern medical equipment. Interest rate will be charged at quarterly rest. Terms and Conditions Equity » For new doctor 10% » For experienced doctor 15% » For Hospital, Clinic and Diagnostic Center 20% Interest Rate 16.00% Risk Fund Tk. 1.00% Repayment period 5 years
Credit Limit » For new doctor 5.00 Lac. » For experienced doctor 15.00 Lac. » For Hospital, Clinic and Diagnostic Center 50.00 Lac.
Application Fee BDT 200.00 Service Charge / Ledger Fee 0.25% per year on outstanding balances. Rural Development Scheme 63
Objectives • Raise the standard of living of rural people. • Initiative to break the vicious cycle of poverty. • Enhance the purchasing power of rural people. Terms & Conditions Group Formation 30 person in a group 1 group leader 6 sub-groups consisting 5 person each in a group 1 sub-group leader in each sub-group
Credit Limit Maximum Tk. 5,000 per person. Gradually enhanceable up to Tk. 10,000. Interest Rate 14.00%. Risk Fund 1.00. Service Charge 0.25% per year on outstanding balances. Repayment period 1 years. Security: Group guarantee, no collateral
Lease Financing Objectives Assist and encourage entrepreneurs for acquiring capital machinery, medical equipment, automobilesetc. Terms & Conditions
Lease period 3 to 7 years Lease rent @ 16.00% Risk Fund 1.00% Service Charge 0.25% per year on outstanding balances. Security Primary: Ownership of fixed items. Collateral: Landed property, Bank Guarantee, ICB Unit Certificate etc. 64
Personal Loan Scheme Objectives Help fixed-income people for buying house hold Durable For the amount up to Tk. 3,00,000 the period is 03 (Three) years. Interest rate will be charged quarterly res Mode
Interest Rate 16.00% Risk Fund 1.00% Supervision Charge (per year on outstanding balances) 1.00% Application Fee BDT 200
Special Feature The loan amount is directly credited to the customer's account. Loan limit BDT 3.00 Lac or 8 times of monthly evidenced income, whichever is lower. Repayment period Maximum 3 years, that is 36 monthly installment Small Loan Objectives Extend credit facility to small shopkeepers . Give collateral-free credit Mode
Maximum amount of loan Tk. 2,00,000. Interest Rate 16.00% Risk Fund 1.00% Service Charge 0.25% per year on outstanding balances Application Fee BDT 200.00 Loan Limit BDT 2.50 Lac Repayment period 3 years Interest rate will be charged at quarterly rest
6.1.18 Mutual Trust 65
MTB BHAGGOBATI is designed to facilitate finance to women entrepreneur for growth of their business. Those who are elegible Women entrepreneurs having business footage of at least 1 year. Purpose of the Loan Any legal business purposes. Loan Amout: Minimum BDT 100,000/- Maximum BDT 5,00,000/Loan Period: Minimum 12 months. Maximum 36 months Auto Loan To own a car is everyone's dream as well as a part of today's living, which enhances standard and quality of life. Auto Loan scheme has been designed to help materialize your long cherished dream of a car of your own. Purchase of new/ reconditioned cars are allowed under this scheme. Salaried executives, professionals, businessmen, govt. officials or self employed persons are eligible to avail this loan. Loan amount under this scheme is 70% of car value but maximum of Tk. 20 lac. Please contact the nearest branch for details. Small Business loan Small With the objective of extending financial support to small businessmen, this loan scheme has been introduced. It has been designed to get business loans on easy terms and without any hassle. Only the genuine businessmen having entrepreneurship quality and honesty, to run and expand their business smoothly. Maximum loan under the scheme will be up to Tk. 50 lac. No collateral security is required up to Tk. 5 lac. Caollateral security is required for loan above 5 lac.Please contact the nearest branch for details. Doctors Loan MTB Doctor's Loan is designed to provide financial support to the doctors to meet their professional needs who are in private practice and thereby ensure better health service to the patients. Those who are elegible All general practitioners with MBBS degree and all specialist doctors with FCPS, MD, MS and other higher degree in the area of medicine, gynecology, pediatrics, orthopedics, eye, dental, ENT, surgery, cardiology, oncology etc and practicing in the county and who has capacity to repay bank loan. Utilization of the Loan 66
The loan may be utilized for the following purposes: To decorate the existing/new chamber. To purchase medical equipments/instruments as required for practice. To purchase furniture, fixture, AC and other logistic supports as required for the chamber. To make partial payment of advance rent/possession purchase of a chamber. Loan Amout: The loan size may range from Tk.1.00 lac to maximum Tk.8.00 lac. Loan Period: The loan period may range from 01 (one) year to maximum 05 (five) years. Grace period may be allowed up to 03 months.
Home Loan Home Loan Scheme has been introduced to facilitate people to fulfil their dream of a home of their own. It has been designed o help people to get home loans on easy terms and without any hassle. Loan amount under this scheme is maximum Tk. 50 lac. Salaried executives, professionals, businessmen and govt. officials are eligible to avail this loan scheme. The loan is to be repaid by monthly equal instalments including interest within the period ranging from 5 years to 15 years depending on the size of loan.
Home Repair Loan Home Repair/ Renovation Loan Scheme has been designed with a view to help the owners of house/ building/ flat to mitigate their financial need for repair/ renovation of their house/ building/ flat. Only the genuine residential house owners will be eligible to avail the loan facilities to repair or renovate their own house/ building/ flats according to their needs. Maximum loan under the scheme will be up to Tk. 5.00 lac commensurating the monthly income. The loan is to be repaid by monthly equal instalments including interest within maximum 60 months. MTB Krishi Loan Agriculture is a thrust sector of the country. Food security has been a major issue following the recent food crisis almost all over the world including Bangladesh. So it requires support to accelerate growth of agricultural productivity. �MTB Krishi� has been to eke out the funding requirement of the farmers. Utilization of the Loan 67
The loan will be utilized to meet up the following costs: crops: Purchase of quality seeds, fertilizer & pesticide, labor payment, land processing cost, maintenance cost, payment of land rent, irrigation, warehousing & marketing, purchase of machinery & equipments etc. Fisheries: Expand ponds, hatchery, Purchase of renu pona, feed, medicine & related inputs Livestock & Poultry: Purchase of cattle, feed, medicine & related inputs, expansion of shed, poultry cage/ hatchery etc. Loan Amout: Minimum BDT 200,000/- Maximum BDT 3,00,00,000/(Up-to BDT 500,000/- is collateral free and above BDT 500,000/- requires collateral support.) MTB MOUSUMI LOAN MTB Mousumi is designed to help the Small & Medium Enterprises to meet extra finance required during any business season, occasion, festival etc. Utilization of the Loan Finances to RMG (Manufacturer & Trading), Footwear, Imitation Jewelry & Cosmetics, Electronics item, cloth/fabrics, grocery items, agri products (trading) like soybean, coconut, cash crops etc.
Loan Amout: Minimum BDT 200,000/- Maximum BDT 10,00,000/- (Up-to BDT 500,000/- is collateral free and above BDT 500,000/- requires collateral support.) Small Business loan With the objective of extending financial support to small businessmen, this loan scheme has been introduced. It has been designed to get business loans on easy terms and without any hassle. Only the genuine businessmen having entrepreneurship quality and honesty, to run and expand their business smoothly. Maximum loan under the scheme will be up to Tk. 50 lac. No collateral security is required up to Tk. 5 lac. Caollateral security is required for loan above 5 lac.Please contact the nearest branch for details.
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6.1.19 Natoinal Bank Limited NBL offers financial support to small businessmen/enterprise with new products named "Festival Small Business Loan" and "NBL Small Business Loan" has been introduced in the Bank. Benefits (Condition Apply) ď ś Maximum Tk.3.00 lac (Festival Scheme) and Maximum Tk.5.00 lac (Small Business Scheme) . ď ś 3 Months (Festival Scheme) and 5 years (including 1 month grace period (Small Business Scheme)) ď ś Collateral Free Advance.
Any genuine and small businessmen/ entrepreneurs/enterprise having honesty, sincerity, and integrity.
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NBL provides comprehensive banking services to all. types of commercial concerns such as in the industrial sector for export-import purpose as working capital, packing credit, trade finance,Issuance of Import L/Cs,Advising and confirming Export L/Cs. - Bonds and Guarantees . Benefits (Condition Apply) Low interest rate 13.00%-14.50%. Minimum processing time. Low service charges.
NBL offers overdraft facility for corporate customers for day-to day business operations . Benefits (Condition Apply) Low charges in overdraft account maintenance. Facility is available against deposit receipt or mortgage property. Low interest rate 13-16%.
Account Opening Inroductory current account . Others necessary documents as per loan requirement. NBL offers home loan facility for purchasing flats or construction of house . Benefits (Condition Apply) Financing amount extends upto 70% or Tk. 75,00,000 which is highest of total consturction cost. Grace period avilable upto 9 months in flat purchase or 12 months in consturction. Competitive interest rate. No application or processing fee. Eligibility Any bangladeshi citizen or NRB, who is capable of repayment can apply for this loan.
70
6.1.20 BRAC Bank Prothoma Rin "PROTHOMA RIN" is a loan facility for small and medium sized business, which are operated by women entrepreneur. The product offers terminating loan facilities for the purpose of working capital finance and/or fixed assets purchase. Eligibility
Entrepreneurs with minimum 2 years experience in the same line of business Minimum 1(One) year of continuous business history
Loan Limit:
From minimum BDT 3 lac up to maximum of BDT 9.5 lac Features
Loan without Mortgage Easy repayment system Minimum documents Easy & faster processing For excellent borrowers who have paid or are paying in due times, we offer discounted rates 71
Pathshala Rin “Pathshala Rin” is a loan designed to meet the needs of small and medium sized private educational institutions, such as kindergartens, schools and colleges etc. Eligibility
The educational institution must be in operation for minimum 3 years The educational institute must be a profit making concern
Loan Limit:
Minimum BDT 3 lac to maximum BDT 30 lac
Features
Loan upto 9.5 lacs without Mortgage Loan for purchasing fixed assets Easy monthly installment Minimum documents Easy & faster processing Flexible interest rate based on security and loan amount Digoon Rin This is a double loan on your deposit. Now you do not need to encash your savings rather you can take double amount of loan on your deposit for your business expansion. Eligibility
Entrepreneur having minimum 2 years of business activitie The business which must be a going concern for 2 years Cash security (BRAC Bank FDR) 50% of the loan amount
Loan Limit: Minimum of 5 lac to maximum of 30 lac BDT
Features 72
Double amount of loan on your deposit Attractive return against the deposit Flexible repayment plan in monthly installment and single installments Quick disbursement Aroggo Rin “Aroggo” is a loan allowed to various Health service Provider like private clinics, diagnostics centers and doctors' chambers. The product offers fixed assets purchase financing under equated Monthly Installments. Eligibility
Minimum 2(two) years in operation Health center must be located in the same address for at least 6 months Health center must be a profit making concern Doctors having 5 years of experience can avail the loan in his/her personal name Loan Limit:
Minimum of 3 lac to maximum of 30 lac Features
Loan upto 9.5 lacs without Mortgage Minimum documents Easy loan processing Loan repayment schedule is spread up to 3 years Flexible interest rate based on security and loan amount Anonno Rin Anonno Rin” is a business loan designed to finance small scale trading, manufacturing and service ventures, especially to to help small and medium entrepreneurs to meet their short-term cash flow shortages and bridge the fund-flow gaps Eligibility
Entrepreneurs with minimum 2 years experience in the same line of business Business must be a going- concern with more than 1 year in operation Loan Limit:
From BDT 3 lac to BDT 9.5 lac 73
Features
Loan without mortgage Loan for Working Capital Finance and/or fixed assets purchase Easy repayment system of monthly installment or Single Installment For excellent borrowers who have paid or are paying in due times, we offer discounted rates Quick, quality banking throughout the country Business loan Bizness loan is an equated monthly loan facility for all types of business who have healthy bank transactions for the purpose of working capital finance and/or fixed assets purchase. Eligibility
Healthy bank transactions Minimum 3 (three) years of continuous business history BRAC Bank FDR 50% of the loan amount for new loan and 30% of the loan amount for repeat loan Loan Limit:
From minimum BDT 10 lac to maximum of BDT 50 lac Features
Loan against FDR value Monthly installment system up to 60 months Borrower having loan with other financial institute can also avail Bizness Loan Attractive rate of interest on FDR Cash Secured Loan Cash Secured Loan" is a loan facility for small and medium sized business. There are two types of loan facility in the product i.e. Secured Loan and Secured Overdraft. These facilities are fully secured by fixed deposit of BRAC Bank. Eligibility
6 (Six) months experience in the same line of business. BRAC Bank FDR minimum 100% of loan amount Loan Limit:
From minimum BDT 3 lac up to maximum of BDT30 lac 74
Features
Loan against FDR Flexible interest rate based on FDR interest rate and loan value Loan for starting new business Super Supply Loan Super Supply Loan is a loan facility for Suppliers of various large retailers, marketing companies, manufacturing companies and various corporate houses. This product’s main objective is to help various Suppliers to meet their financial requirements. Eligibility
Entrepreneur having 2 (two) year’s experience in the same line of business Operating the current business for last 1 (one) year
Loan Limit:
From minimum BDT 4 lac up to maximum of BDT 30 lac Features
Composite fatality of both Overdraft and Revolving limit Customer can withdraw revolving loan amount as desired Convenient repayment system of Revolving limit i.e. equal monthly installment and single installment
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6.2 Private Banks (Foreign)
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6.2.1 National Bank of Pakistan Students Loan Scheme Pursuant to the announcement made by the Federal Finance Minister in his 2001-2002 budget speech, a STUDENTS LOAN SCHEME (SLS) for Education was launched by the Government of Pakistan in collaboration with major commercial banks of Pakistan (NBP, HBL, UBL, MCB and ABL). Under the Scheme, financial assistance is provided by way of Interest Free Loans to the meritorious students who have financial constraints for pursuing their studies in Scientific, Technical and Professional education within Pakistan. The Scheme is being administered by a high powered committee comprising Deputy Governor, State Bank of Pakistan, Presidents of the commercial banks and representative of Ministry of Finance, Government of Pakistan. ADMINISTRATOR OF THE SCHEME National Bank of Pakistan Eligibility Under the scheme the students are eligible to apply for loans provided: He/She has obtained admission on merit through normal course/procedure in the approved Universities/Colleges of the public sector mentioned hereunder. He/She falls at the time of admission within the age bracket of: He/She has secured 70% marks in the last public examination. He/She has undertaken the study of the subjects given below. He/She is unable to pursue studies due to financial constraints
Repayment The maximum period of repayment of loan is 10-Years from the date of disbursement of first installment. The borrower shall repay the loan in monthly installment after six months from the date of first employment or one year from the date of completion of studies, which ever is earlier. Under the Scheme, loans is available in the following subjects. Other Information
Application Forms are available from the designated branches mentioned above or may be downloaded from National Bank of Pakistan website www.nbp.com.pk/studentloan The students desirous of availing loan under the Scheme may apply on prescribed form for financial assistance subject to he or she has got admission on merit through normal procedure in the Universities/ Colleges afore-mentioned.
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ď ś Applicants are required to submit/send their applications on the prescribed form, duly completed in all respect, to the designated branches indicated against each University/College by the given date. Incomplete application shall not be entertained.
ď ś Students who have availed this facility in the last / previous year(s) need not to apply
6.2.2 Commercial Bank of Ceylon 78
Probriddhi is a medium term loan facility for small and medium enterprise borrowers or self employed professionals to meet their capital requirements. Features: For small and medium enterprises (SME) and self-employed professionals A term loan with a period up to 60 months Up to 200% of the fixed deposit held with the Commercial Bank of Ceylon PLC. subject to a minimum of BDT 2 lacs and maximum of BDT 2 crore. Interest rates guaranteed to interest you Easy to avail Quick disbursement The entire probriddhi loan is to be repaid in equal monthly installments Available in all our Branches in Bangladesh. Auto Loan Auto Loan of CBC paves the way to acquire your dream car in the easiest way. Features · You should be within 21 to 55 years of age. · You should be a confirmed service holder or self employed professional or businessman having minimum two years of service length or business experience. · Your minimum monthly income should be BDT 40,000 in case of service holder and BDT 30,000 in case of self employed professional or businessman with sufficient proof of income. · Loan amount up to 80% of car value subject to a maximum of BDT 2,000,000 · Loan period-Not exceeding 60 months, to be repaid in equal monthly installments · Most competitive and attractive interest rate · Available at All Branches of CBC in Bangladesh.
Trade Com Provide assistance to SME customers for meeting their trade finance requirements at the most convenient way. 79
Features:
Eligibility Criteria - Age should be within 21 to 55 years. In case of limited liability company or partnership concern, the key person should be within the above age range and successfully engaged in the import / export business during the last two years.
Products to be imported / exported - All goods and merchandise acceptable to the Bank. L/C limit up to BDT 20 million. Same day delivery of L/C is ensured. LTR / STL facility for a maximum period of 3 months up to 100% of L/C amount, if required. STL up to 10% of L/C for duty payment, if required. Most competitive and attractive rates for opening L/C. No amendment charges for L/C (except for change in amount & foreign bank charges). No confirmation charges for L/C for import from Hong Kong and China. Most competitive and attractive interest rates for Short Term Loan and LTR facilities. Security - A minimum of 25% of L/C limit to be held in a Deposit account with the bank, hypothecation of stocks with due insurance coverage, personal Guarantee (s), monthly deposits build up and any other securities as may be decided by the bank.
Availability - All Branches & Booths of the Bank.
6.2.3 HSBC Car loan So you've found that new car you've always wanted. Now comes the difficult part - arranging the funding 80
Home loan The decision to buy or renovate a home is one of the most important investment decision you will ever make. Travel loan Wish you had enough money to take an overseas vacation? Or travel to an exotic place of your choice? Lifestyle loan You will be able to take the pleasure of the following benefits by availing this loan. Professional loan You will be able to take the pleasure of the following benefits by availing this loan. Motorbike loan At last you've found the new motorbike that you've always wanted! Student loan Whether it is about securing your child's future or you getting a graduate or postgraduate degree or completing a professional degree while you are still working, requires a considerable amount of investment. Furniture loan You will be able to take the pleasure of the following benefits by availing this loan. Wedding loan You will be able to take the pleasure of the following benefits by availing this loan. CNG conversion loan Save the environment as you save money. HSBC offers a low cost CNG conversion loan solution backed by local knowledge and global expertise. Medical Loan HSBC, backed by local expertise and global financial knowledge, offers a low cost Medical Loan solution under the My Loan scheme. You can now set your mind at ease by making HSBC a part of your life.
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Home Equity Loan Introducing HSBC's Home equity loan - an opportunity for you to release some of the value tied up in your home. Whether you want to renovate your home or expand your own business, you can potentially receive cash loans against the equity in your house. Personal Instalment Loan Wish you had enough money to take an overseas vacation? Or renovate your home? Maybe buy a computer? Now you can do all these apd more, with a Personal Instalment Loan from HSBC.
6.2.4 Habib Bank Limited Scheme of Retirement Benefits: a. There is a Recognised Provident Fund (RTF) in which each employer contributes 10% of their basic salary which is matched by an equal amount of contribution by the bank accumulated Provident fund balance including interest thereon are paid to the members at the lime of their separation from the employment of the bank in accordance with bank's service rules. 82
b. The bank operates a funded gratuity scheme which has approved by the National Board of Revenue as a recognized gratuity fund with effect from January 2001 Employers are entitled to gratuity benefit after completion of minimum 10 (ten) years of service in the company. I he gratuity is calculated on the basis of last basic pay and is payable at the rate of one month's basic pay for every completed year of service Gratuity so calculated are transferred to the fund and charged to expenses of the bank Foreign Currencies transactions/translation a. Transactions in foreign currencies are translated into Taka currencies at the rate of exchange prevailing in such transactions. b. Assets and Liabilities denominated in foreign currencies are translated into Taka Currency At rate; of exchange ruling at the Balance Sheet date Gains and losses on Transactions/translation are dealt with through exchange account. c. Placements with HIM, branches outside Bangladesh have been converted into Taka currency at national rate US$ 1 = Tk 69 19, E.URO 1 = Tk 101 53 and GBP 1 = Tk 118.70 Taxation Provision for income tax has been made @ 45% as prescribed in Finance Act 2008 of the profit made have the Bank by considering taxable add-backs of income and disallowances of expenditures Statement of Liquidity The liquidity statement has been prepared in accordance with the remaining maturity grouping of the value of the assets and liabilities as on the reporting date.
Statutory Reserve As per Section 24(1) of the Bank Companies Act 1991, Hanks which are incorporated outside. Bangladesh does not require setting aside any reserve out of their profit. Off-setting Neither assets nor any liability has been set-off against another assets or liability as on Balance date to make separated disclosure in the financial statements. Pledge of Bank's assets against any loan or guarantee The Bank has not pledged any of its assets as security against any kind of loans taken from any individual or Institution or against any guarantee given to a third party. Category wise segregations of collaterals taken by the Bank against loans and advances
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Category of assets
Nature of Collateral
2008
Ik'000
Land and building Pledge of Stock Hypothecation ofStock Plant & machineries
Motor vehicles Cash and cash equivalent
Tk'OOO
Mortgage
732,362
1,092.000
Registered with RJSC
104,500
86,000
-Do-
2,050,600
-Do-
965,000
1,860,000 885,000
-Do-
5,100 373,800
2,600 201,500
4,231,662
4,127,100
Lien with Bank Total
2007
6.2.5 STATE BANK OF INDIA Significant Accounting Policies (a) Basis of preparation of the Financial Statements The financial statements of the Bank are made up to 31 st December each year, and are prepared under the historical cost convention, and in accordance with first schedule of Banking Companies Act (BCA) of 1991, Bangladesh Bank circulars, Bangladesh Accounting Standards and other laws and rules applicable in Bangladesh on a going concern basis. (b) Revenue Recognition The revenue during the year are recognized as following which satisfy all conditions of revenue recognition as prescribed b)j BAS 18 " Revenue Recognition". 84
(i) Interest is calculated on daily product on unclassified loan and advances but charged on quarterly basis. (ii) Interest is charged on classified loans and advances as per Bangladesh Bank BRPI3 circular No 16 of 1989 and such interest was not taken into income. (ii) Fees and commission income arises on services provided by the bank and recognized on a cash receipt basis. Commission charged to customers on Letters of Credit and Letters of Guarantee are credited to income at the time of effecting the transactions Loans and Advance a) Provision for loans and advances is made on (he basis of year end review by (he management and of instructions contained in Bangladesh Bank BCD Circular no34, dated November 16,1989, BCD Circular no20, Dated December 27,1994, BCD Circular no 12, dated September 4,1995, BRPD Circular no 16 dated December 6,1998 and BRPD Circular no 09, dated May 14,2001. Fixed Assets and Depiieciafion ď ś Depreciable assets are stated at cost less accumulated depreciation. ď ś
Depreciation has been charged on reducing balance method at the following rates on cost of assets for the full year irrespective of their date of purchase.
ď ś No depreciation has been charged during the year of disposal.
6.2.6 WOORI BANK Significant Accounting Policies Basis of Accounting The financial statements of the Bank are made up to December 31, each year and are prepared under the historical cost convention and in accordance with the First Schedule (section 38(4)1 of the Bank Companies Act 1991, Bangladesh Bank circulars, Bangladesh Accounting Standards 30, Companies Act 1991, Securities and Exchange Rules I9H7 and other laws and rules applicable in Bangladesh on a going concern basis. Consolidation A separate set of records for consolidating the statement of affaires and income and expenditure statement of the Units were maintained based on which the financial statements have been prepared. 85
Investment and Interest: Interest on investment in government securities is accounted for as income on accrual basis. Commission charged to customers on letters of credit and letters of guidance an-credited to income at the lime of giving effects to the transactions. Loans and Advances Interest on loans and advances is calculated on a daily product basis but charged and accounted for quarterly on accrual basis. No interest is charged on loan classified as doubtful and bad/loss. Provision for loans and advances is made on the basis of period and review by the management and of instructions contained in Bangladesh Bank BRPD Circular No. 16 of 6 December 1998, BRPD Circular No. 9 of M May 2001, BRPD Circular No. 02 of 15 February 2005, BRPD Circular No. 09 of 20 August 2005, BRPD Circular No. 17 of December 06, 2005 and BRPD Circular No. 19 of 20 December 2005 and BRPD Circular no. 05 dated 05 June,2006.Interest suspense and penal interest, if any, calculated on classified advances is taken as income in the year of receipt of such interest from the defaulting borrowers. Commission and discounts on Bills Purchased and discounted are organized at the time of realization.
6.3 Private Banks (Islamic)
86
6.3.1 Shahjalal Islamic Bank Small and Medium Enterprise (SME) Investment Operation The SME Sector has been declared by the Government as a priority sector. In our country, Small and Medium Enterprises (SMEs) play the pivotal role for employment generation, poverty alleviation and overall economic growth of the country. It has been observed that fund is the major constraint of this sector. Therefore, we need to inject more funds into this sector in a very planned manner to boost-up this sector for the sake of overall economic development of the country. Our country is labour abundant and SMEs are typically labour intensive. So, the sector deserves more investment facility for smooth functioning of the existing enterprises and expansion of the same with a view to retain the workforce active as well as creating more employment opportunities. Further, investment in SMEs can be very effective in reducing poverty as well as ensuring long term economic growth. Shahjalal Islami Bank Limited (SJIBL) is a modern commercial bank governed by the principles of Islamic Shariah, which is committed to implement and materialize the economic and financial principles of Islam in the banking sector. It has undertaken initiatives for investment in SME sector by introducing a number of SME products in the market gradually with a view to patronizing the trade, commerce and industrial entities with equity & justice and to make effective contribution for creating employment opportunities, which will ultimately help the nation for poverty alleviation from the society.
87
6.4 State Owned Banks
88
6.4.1 Janata Bank A vast majority of the Bangladeshis live in the rural areas and their main source of income is agriculture and agro-business. Janata Bank Limited has opened branches in rural areas to cater to the banking needs of rural people. Apart from accepting deposits from the rich and moderately welloff villagers, Janata Bank Limited encourages the poor people to make small savings through different mechanisms. So far lending in rural areas is concerned; Janata Bank Limited has been financing agricultural production and poverty alleviation programs since 1977. It also lends to the poor landless so that they can make a living. The average loan size is about Taka 20,000.00 (around US$ 285). Major Agricultural Credit Programs 1. Special Agricultural Credit program/ short term crop production loan 2. Horticulture development (cultivation of banana, betel leaf, pineapple etc.) 3. Fish/ Shrimp production:(a)Fishery loan program (b)Credit program for fish cultivator selected by Directorate of Fisheries (c)Shrimp culture credit program 4. Irrigation and agricultural equipment Objectives To increase agricultural production and improvement its quality. To gear up socio-economic activities among rural people. To create employment opportunities among rural people through providing economic support. Creating confidence among the beneficiaries on institutional credit and their access to improved production practices / activities. To build up asset by creating saving habit among the rural population Poverty reduction The main features of the major agricultural / rural credit programmes are narrated below: 1) Special agricultural credit program / Short term crop production loan programmes: Purpose of loan 89
Sanctioning of loan to farmers for crop production. Area of operation Unions allocated by Bangladesh Bank under Lead Bank System. Eligibility of loan Farmer possessing 161/2 - 250 decimals of cultivable land or share croppers. Sanctioning Authority Branch Manager is sanctioning loan as per credit norms. Security Crop hypothecation and personal guarantee of the borrowers. Rate of interest-8%. Duration of loan 6 months to 9 months, Maximum 12 months. Mode of disbursement In cash in a single installment.. Repayment of loan Repayable at a time after harvesting and marketing of crops. 2) Horticulture development loan programme: Purpose of loan To extend financial help to the farmers who are interested to cultivate betel-leaf, banana, pine apple etc. Area of operation Allocated unions under Lead Bank System Eligibility of loanee Genuine farmer
Sanctioning Authority Branch Manager is sanctioning loan as per credit norms. Security Hypothecation of produced crops and personal guarantee.. 90
Rate of interest 8%. Duration of loan Maximum 11/2 year from the date of disbursement. Mode of disbursement Loan is disbursed in cash in a single or more than one installment. Repayment of loan Repayable in weekly / monthly / a single installment after crop harvesting and marketing. 3. Fishery Loan Programme: Purpose of loan To increase fish production in pond and to create employment opportunity for pond owners and lease holders by providing credit for pond re-excavation and fish cultivation. Area of operation Allocated unions under Lead Bank System. Eligibility of loan a)Pond owner b) Lease holder of pond. Security Pond, in case of pond owner and other properties in case of lease holder are being taken as a registered mortgage. Rate of interest 8%. Duration of loan 41/2 years Mode of disbursement Loan is disbursed in installments. Repayment of loan
91
Entire amount of loan with interest is repayable by 4 equal installments. First installment is due for recovery after 18 months from the date of disbursement. 3) Credit programme for fish cultivator selected by the Directorate of Fisheries: Fishery resource is an important sector in our economy. It can play a vital role in creating employment opportunity for reduction of poverty. A memorandum of understanding has been signed between Directorate of fisheries and Janata Bank Limited. As per memorandum bank is financing fish cultivators selected by Directorate of Fisheries. Under this programme, no collateral security is required up to Tk.0.05 million of loan amounts. Purpose of the loan & rate of interest is same as that of fishery loan programme. Shrimp Culture Credit Programme: Purpose of loan To encourage the shrimp cultivator to produce more shrimps by utilizing modern production practices in order to earn more foreign exchange. Eligibility of loanee Individual / Group / Cooperative society are eligible for loan. Security Hypothecation of produced shrimp. Collateral security such as land & building are being taken as a registered mortgage. Rate of interest : 8%. Duration of loan 10 months. Mode of disbursement (a) Loan is disbursed in 2/3 installments from January to March. (b) Cash credit (C/C) is disbursed as per usual practice of bank for the10 (ten) acres of land or above. Repayment of loan (a) Loan is repaid by 4 equal monthly installments from July to October. (b) Cash credit is adjustable 3(three) times within 1(one) year. 4) Irrigation & Agricultural Equipment Credit Programme: Purpose of loan
92
Loan is given for the purchase of irrigation equipments i.e Shallow Tube Well (STW), Low Lift Pump(LLP), Deep Tube Well (DTW) etc & Agriculture equipment i.e Tractor, Power Tiller etc. to increase agricultural production. Area of operation Allocated unions under Lead Bank. System. Eligibility of loanee Owner of at least 0.5 acre of land in case of irrigation equipment loan and genuine farmer in case of agricultural equipment loan are eligible. Security A) Hypothecation of equipments purchased by loan money. b) Registered mortgage of land & building which is equivalent to loan amount. Rate of interest 8% Mode of disbursement Loan is disbursed to the supplier through Pay-order against bill. Repayment of loan Entire loan amount with interest is repayable by 11 equal half yearly installments within 6(six) years with a grace period of 6(six) months.
6.5 Specialized Banks 93
6.5.1 Bangladesh Shilpa Rin Songstha Interest Rate on BSRS Loan Sector A.
Rate (%)
Long term Loan Export oriented industries (thrust sector)
10.00
Agro-based Industries
10.00
Small & cottage Industries (priority sector)
11.00
Small & cottage Industries (non-priority sector) ..................... upo Tk. 3.00 crores
1100
..................... upo Tk. 3.00 to 10.00crores
11.00
Large & Medium Industries (priority sector)
10.00
Large & Medium Industries (non-priority sector)
12.50 94
B.
Working Capital Loan Agro-based Industries
12.00
Jute Industries
12.00
Cold storage (potato Preservation) Industries
12.00
Others
12.00
Export Loan C.
D.
E.
F.
RMG, Frozen Foods, Agro Products, Leather Products & shoes
7.00
Working capital against packing credit agreement
8.50
Post Import LTR in case of capital machinery of export oriented industries
10.00
Other Export Loan
7.00
Commercial Loan Jute Trading
12.00
Others
12.00
Bridge Loan: Industrial projects
12.00
Service Industries
12.50
Other Loans Transport
12.50
Brick Field
12.50
Works Order
12.50
Advance against BD Savings certificate (Sanchoy patra)
Advance against Fixed Deposit
2.5% above the rate given on fixed deposit 2.5% above the rate given on 95
fixed deposit
G.
Housing Loan Residential Loan
12.50%
Commercial Loan
14.00%
6.5.2 Bangladesh Krishi Bank Sl. No. 1. a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. r. s. t. u. v. w. x. y. z. aa. ab. ac. 2.
AGRICULTURAL LOAN: (Interest Annual Basis) Crop Tea Production Loan BADC Contract Growers Crop Salt Growers Fishery Shrimp Culture Flower Cultivation Banana Cultivation Sericulture Pan Baraj Goatary Beef Fattening Draft Animal Milch Cow Poultry & Duckary Agri-equipment Irrigation Equipment Rice Husking Sea Fishing Nursery & Horticulture Rural Transport Orchard Mixed Farming Breeding Farming Rearing Farming Layer/Broiler Betel Nut/Coconut Culture Rubber Cultivation Tea Development Loan
TERM LOAN ON INDUSTRY: a. Agro-based Industries (Cottage)
Effective date
Rate of Interest
01-11-2008 01-01-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-11-2008 01-01-2008
10% 11% 10% 10% 11% 11% 10% 10% 10% 10% 11% 11% 10% 11% 11% 10% 10% 10% 10% 10% 10% 10% 10% 11% 11% 11% 11% 11% 11%
01-07-2007
12% 96
b. c. d. e. 3. 4.
Agro-based Industries (Small Industries) Import Substitute Agro-based Industries Export Oriented Industries Fish, Poultry, Goatary, Feed Mill Hatchery
01-07-2007 01-07-2007 01-07-2007 01-07-2007
12.50% 12.50% 12.50% 12.50%
MEDIUM & LARGE INDUSTRY
01-07-2007
12.50%
01-07-2007 01-01-2008 01-07-2007
13% 11% 8%
01-07-2007
7%
01-07-2007
7%
01-07-2007
8%
01-07-2007
14%
01-07-2007
13%
01-07-2007
11%
Working Capital: a. Working Capital/Cash Credit b. C.C. Loan for Tea Production c. Cash Credit 100% Export Oriented Project
5.
EXPORT CREDIT: a.
b. c. d.
6.
7.
Frozen Food & Agricultural goods based Export Credit (Under L/C) Pre-shipment Credit (PSC) Packing Credit, against transport document LTR, PAD, LIM
OTHER COMMERCIAL LOAN: SOCIO ECONOMIC/POVERTY ALLEVIATION PROGRAMS:
Table: Interest Rate on Different Sector’s Loan Crop Loan Out of total annual allocation of Loan portfolio, 60% is earmarked for Crop financing. The Credit program covers all the seasonal crops produced in the country. The loan is disbursed as per norms set by the Bangladesh Bank. The rate of interest for this sector is 8%. The rate of interest may however, vary from time to time. Both the landowner and sharecroppers are normally the target group for this loan. Marginal farmers are also eligible for the loan.
Crop loan is sanctioned on annual basis. Credit passbook is issued to each borrower. Horticulture & Fruit Production: 97
•
Nursery development ( fruits, useful trees, flower, urbary culture, spices etc production & marketing )
•
Banana, papaya, guava, pineapple, melon, water melon, bettle nut etc
•
Mushroom cultivation
•
Aromatic and fine rice
•
Lettuce, capsicum, broccoli, French bean & other vegetables and promotion of export market
•
Spices (onion, garlic, ginger, turmeric etc)
•
Baby corn
•
Fruit production (mango, jackfruit, litchis, lemon, guava, pineapple, banana etc )
•
Floriculture (import substitutes & exportable rajanigandha, ganda, rose, glandules, orchid, christmas tree, bonsai etc) Import alternative fruit production (orange, grapes etc)
Tea: Tea is one of the major exportable items of the country. BKB is the exclusive financing institution providing credit to this sector. The Bank generally provides two types of loan – Tea production loan and Tea development loan. 1. Production Loan is for short-term basis. Rate of interest is 12%. 2. Development loan is term loan. Rate of interest is 11%. 3. Trading loan - Short term loan. Rate of interest is 13%.
6.5.3 Rajshahi Krishi Unnayan Bank National Economic Trend
98
The growth of economy is projected to remain a very strong in 2006, led by a robust growth in the United States and, in most emerging market and developing countries specially China & India. The advanced economies as a group are projected to grow by 3.1 percent, while the other emerging market and developing countries as a group are projected to grow by 7.3 percent in 2006. During FY06 (July 2005 - June 2006), the Bangladesh economy achieved a higher growth underpinned mainly by a strong post-flood recovery in agriculture a notable express in manufacturing activities, despite facing excessive price hike of oil and some other necessary importable in the international market, in addition to the phase of the Multi-Fibre Arrangement (MFA). With a view to achieving higher ecoconomic growth, the Government and the Bangladesh Bank continued to adopt policies to support economic activities to the highest sustainable level, while maintaining a moderate CPI inflation along with turning the import growth to a sustainable level. These politics contributed toward a strong real GDP growth of 6.7 percent in FY06, moderately higher than 6.0 percent of FY05. Economic growth was also aided by strong growth in experts and workers, remittances form abroad. In US dollar terms, exports earning recorded a significant higher growth of 21.6 percent, while the growth oh import payments Source: Bangladesh Bank. Annual Report 2006. Slowed down to a sustainable level at 12.1 percent. At the same time, remittances from non resident Bangladesh nations increased substantially by 24.8 percent. The 6.7 percent real GDP growth in FY06 was underpinned on the supply side, by the post-flood recovery in the agriculture sector and a robust growth in the industries sector, in addition by the continued strong growth in service sector. Growth rate in the agriculture sector recovered well to 4.5 present in FY06 from 2.2 percent of FY05, resulting mainly from a strong growth in crops and horticulture high growth in animal farming subsector, albeit moderately lower than the growth rate of FY05, while forest and related services subsector attained a slightly higher rate of growth in FY06. The agriculture sector recovered well from the last year's flood losses due to strong performance of crops and horticulture sub-sector registered a strong growth of 4.2 percent in FY06 compared with a growth of only 0.2 percent in FY Overall, output of food grains increased by 4.6 percent to 27.3 million metric tons (MMT) in FY Reflecting substantial production increase of Aus, Amon and Boro crops Aus output increased by about 20.0 percent to 1.8 MMT in FY 06 compared to the level of FY 05, Aman output increased by 10.2 percent to 10.8 MMT, The output of Boro rice, grew by 1.4 percent to around 14.0 MMT in FY 06 from the production of FY 05. The higher Boro production was supported by good weather condition, higher disbursement of crops loan and use of huge quantity of certified seeds. Total wheat production in estimated at 0.7 million metric ton in FY 06, 30.0 percent lower than actual production of FY05, reflection shortened winter and a decline of cultivation area as farmers gradually shifted away from wheat to maize production. Maize production exhibited robust performances in FY 06 as farmers brought more area cultivation, attracted by lower production cost, encouraging selling prices and increasing domestic demand particularly for the growing poultry-feed industry. The area of maize cultivation increased to 0.14 million hectare in FY 06 from 0.09 million hectare in FY 05. The animal farming sub-sector grew by 6.3 percent in FY 06 compared to 7.2 percent growth recorded in FY 05 mostly due to expansion of number as well as output of poultry 99
farms. Forest and related services sub-sector recorded slightly higher growth of 5.2 percent in FY 06 compared to a growth of 5.1 percent in FY05. The fishing sub-
Advance Classified By Securities in Merchandising Table-01 Type Merchandising
State Owne d Banks
Specialized Banks
Private Banks(Foreig n Banks)
Private Banks(Incorporate d in Bangladesh)
Private Banks(Islami c Banks)
Total
Export Commodities
25.62
4.15%
.25%
46.54%
23.44%
100%
100
Import Commodities
16.52 %
.90%
1.95%
65.50%
15.13%
100%
Graph: Advance Classified By Securities in Merchandising
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.
Advance Classified By Securities Table-02 Type Merchandising
State Owned Banks
Specialize d Banks
Private Banks(Foreig n Banks)
Private Banks(Incorporate d in Bangladesh)
Private Banks(Islamic Banks)
Total
Real Estate With Financial Obligations
19.46%
54.88%
.20%
16.01%
9.45%
100%
101
Size of Account
33%
45.90%
2.49%
12.80%
5.81%
100%
Economic Purpose
20.38%
6.38%
6.31%
52.64%
14.29%
100%
60 50 40 30 20
Real Estate With Financial Ohbligations
10
Size of Account
0
Economic Purpose
Graph- Advance Classified By Securities 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.
Advanced Classified by Areas Table-03 Type of Area
State Owned Banks
Specialized Banks
Private Banks(Foreign Banks)
Private Banks(Incorporat ed in Bangladesh)
Private Banks(Islamic Banks)
Total
Urban
19.70%
3.50%
6.81%
55.02%
14.97%
100%
Rural
29.31%
43.41%
-
21.86%
5.42%
100%
102
Graph: Advanced Classified by Areas 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 state owned 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.
Advanced Classified by Rates of Interest Table-04 Particulars
70 60 50 40 30 20 10 0
Agriculture, Fisheries and Forestry
3
Industry
2
Agriculture, Fisheries and Forestry Indsutry
103
Graph: Advanced Classified by Rates of Interest 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 state owned 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.
Advances Classified by Major Economics Purpose Table - 05 Particulars
Working Capital Financing
State Owned Banks 10.13%
Specialized Banks 02.44%
Foreign
Private
Banks
Banks
10.15%
56.53%
Islamic Banks
Total
20.75%
100%
Graph: Advances Classified by Major Economics Purpose
104
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 %.
Disbursement of Agricultural Credit Program Table – 06 (Last 05 years) Type
Amount
State Owned Banks 21.29%
Specialized Banks 63.50%
Foreign
Private
Banks
Banks
---
15.21%
Islamic Banks
Total
---
100%
Graph: Disbursement of Agricultural Credit Program 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.
105
Recovery of Agricultural Credit Disbursement Table – 07 (Last 05 years) Type
Percentage Amount
State Owned Banks 30.03%
Specialized Banks 54.75%
Foreign
Private
Banks
Banks
---
15.22%
Islamic Banks
Total
---
100%
Graph: Recovery of Agricultural Credit Disbursement
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%.
106
Advanced Classified by Construction purpose Table-08 Type
Construction
State Owned Banks 24.20%
Specialized Banks 2.17%
Foreign
Private
Banks
Banks
1.20%
59.11%
Islamic Banks 13.32%
Total
100%
Graph: Advanced Classified by Construction purpose 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%.
All Types of Advances Classified by Banks Table-09 107
Type Percentage Amount
State Owned Banks
Specialized Banks
23.78%
7.44%
Foreign
Private
Banks
Banks
7.36%
61.42%
Islamic Banks
Total
16.67%
100%
Graph: All Types of Advances Classified by Banks 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%.
7.0 Growth Rate of Banks
Growth Rate has been calculated by taking data from all of mentioned bank’s Annual Report of 2008. 108
Growth Rate =
7.1 State Owned Banks
= = -17.45
7.2 Specialized Banks
109
= = 0.68
7.3 Private Banks (Foreign)
SL.
Name of the Bank
1
Standard Chartered Bank
-0.012
2
State Bank of India
1.19
3
Habib Bank Limited
0.07619
4
Citi Bank Limited N.A
0.04 110
5
Commercial Bank of Ceylon Limited
0.04
6
National Bank of Pakistan
-0.19
7
Woori Bank
-0.14
8
The Hong Kong & Shanghai Banking Corporation Limited
0.40
9
Bank Al-Falah Limited
0.09
Total will be =1.494
= 0.17
7.4 Private Banks (Incorporated in Bangladesh)
Name Of The Bank 1
AB Bank Limited
=2.58
2
National Bank Limited
=0.23
3
The City Bank Limited
=0.43
4
International Finance Investment and Commerce Bank Limited
= -0.32
5
United Commercial Bank Limited
=0.49
6
Pubali Bank Limited
= 0.12 111
7
Uttara Bank Limited
= 1.78
8
Eastern Bank Limited
= 0.91
9
National Credit and Commerce Bank Limited
= 0.30
10
Prime Bank Limited
= -0.12
11
Southeast Bank Limited
= -0.28
12
Dhaka Bank Limited
= 0.19
13
Dutch Bangla Bank Limited
= 0.32
14
Mercantile Bank Limited
= 0.14
15
Standard Bank Limited
16
One Bank Limited
= 0.04
17
Bangladesh Commerce Bank Limited
= 1.90
18
Mutual Trust Bank Limited
= 0.45
19
Premier Bank Limited
= 7.26
20
The First Security Bank Limited
= 2.40
21
Bank Asia Limited
= 0.39
22
Trust Bank Limited
= 0.94
23
Jamuna Bank Limited
= 4.38
24
BRAC Bank Limited
= 0.57
= -0.015
= 0.57
= 0.95
112
7.5 Private Banks (Islamic)
Name of The Bank 1
Islami Bank Bangladesh Limited
0.87
2
ICB Islamic Bank Limited
0.27
3
Al-Arafah Islami Bank Limited
0.92
4
Social Investment Bank Limited
3.47
5
EXIM Bank Limited
0.18
6
Shahjalal Islamic Bank Limited
0.26
Total will be= 5.97
=0.995
113
8.0 Findings and Conclusion 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. 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.
114