Project On Customer service and credit appraisal procedure of ONE BANK LIMITED PREPARED FOR MR. TOHIDUL ALAM COURSE TEACHER OF FINANCIAL INSTITUTION NAME # ID NO # Mohsina Rahman 200110397 BATCH # 11TH CAMPUS # DHANMONDI BBA. Northern University of Bangladesh. Acknowledgment Today, private commercial banks are facing a lot of competition in the Bangladeshi banking industry. Therefore the banks are emphasizing on the customer services in achieving their goal. And the most important task of a bank is to provide loan to such a customer who will recover the loan successfully.

As a commercial bank works on other funds, it must take special care before following borrowers to have funds. All the steps taken by commercial banks at the time of allowing loans are known as “Credit Policies” of banks. These steps help the bankers to ensure security of invested funds, create hindrances for borrowers. On the other hand too liberal policy will increase insecurity of invested fund. For the preparation of this pre-internship report, we were grateful to our honorable “course teacher” Mr. Md. Touhidul Alam Professor of Financial Institution for completing our pre-internship program in “One Bank limited.

Then we thank to the Vice President of “One Bank Limited” Mr. Md. Aftab Uddin Khan who allowed us to work at GULSHAN BRANCH office at 97- Gulshan Avenue, Dhaka. We are also grateful to all of the stuffs and members of the branch as for cooperating us to their possible extent. Lastly thanks to Safi for having us initial problem solving. Good loan, credit or advance is the most profitable asset for a bank. The largest portion of the operating income is derived from lending. A commercial bank usually wins over its competitors only on the quality and quantity of lending.

General banking provides the foundation of banker-customer relationship. This is the matter where the banks make competition with each other. The regular service given to customers such as depositing or drawing money, selling of instruments to the customers, collection of instruments, keep necessary reserve to serve the customers etc. And the bank needs to maintain customer satisfaction with these activities. Among these activities credit division is the core portion for any commercial bank. Most of the profits of a commercial bank come from credit.

The more a bank will provide credit, loan or advance the more it can gain profit. Foreign trade refers to the trade between the different sovereign states. Foreign trade mainly categorizes into export trade and import trade. For development of the economy in a country foreign trade is important. Financial institution like bank can help the foreign trade of a country through financial accommodation to the foreign trade. The overall condition of “One bank limited” that of credit & advance, foreign exchange, deposit etc. are one of the best among the private commercial banks.

And this study about the “One bank limited” will help us to the followings_ •To a practical know-how about the credit policy of the bank •To assess with the credit requirements •To analyze the financial instruments like lending risk analysis, financial statements and credit management •To get adopt with the real world banking situation And the Officers of ONE Bank Limited are suitably equipped to meet customer expectations and are available at all times to provide a single-window customized and confidential service to each and every person. Overview of One Bank Limited:

ONE Bank Limited was incorporated in May 1999 With the Registrar of Joint Stock Companies under the Companies Act. 1994, as a commercial bank in the private sector. The Bank is pledge-bound to serve the customers and the community with utmost dedication. The prime focus is on efficiency, transparency, precision and motivation with the spirit and conviction to excel as ONE Bank in both value and image. The name ‘ONE Bank’ is derived from the insight and long nourished feelings of the promoters to reach out to the people of all walks of life and progress together towards prosperity in a spirit of oneness.

ONE Bank Limited is sponsored by a group of renowned Bangladeshi industrialists, businesspersons and qualified non-resident Bangladeshi professionals like medical practitioners, scientists & chartered accountants. Mr. Sayeed H. Chowdhury, Chairman of the Bank is the founder of the HRC Group, the much acclaimed and reputed business house of Bangladesh consisting of sixteen Companies with diverse interests which include Ship Owning & Chartering, Tea & Rubber Plantation, Tannery, Real Estate, Bulb Manufacturing, Insurance, Housing Finance etc.

First Vice Chairman, Mr. Zahur Ullah is the Chairman, of Apparel Fair (pvt. ) Ltd. and is involved in the Buying, Manufacturing and Exporting of Readymade Garments and allied products, He is also the Managing Director of GTEX Limited, Labels & Trims Limited, Everest Embroidery Limited and Lamisa Limited. Second Vice Chairman, Mr. Asoke Das Gupta is a reputed businessperson. He is the Chief Executive of IMTREX and the Managing Director of “Uniroyal Trade Limited” and Business Capital Shares & Securities Limited.

He is also a member of the Dhaka and Chittagong Stock Exchange The objective of this bank is to be one of the best banks of Bangladesh, achieve excellence in customer services next to none and superior to all competitors, cater to all differentiated segments of Retail and Wholesale Customers, be a high quality distributor of products and services, use state-of-the-art technology in all spheres of banking. The Bank will be a confluence of the following three interests: •Of the Bank: Profit Maximization and Sustained Growth. Of the Customer: Maximum Benefits and Satisfaction. •Of the Society: Maximization of Welfare. The Bank will also cater to the new expectations of the customers. It will be a customer-driven Bank. As the slogan of the bank is_”… WE MAKE THINGS HAPPEN”. CUSTOMER SERVICES OF ONE BANK LIMITED: As a newly established public limited bank in private sector this bank has committed to provide the best customer service among the banks. This bank was the first Bangladeshi bank to have installed fully integrated computer software to manage its operating system.

It is the first bank in Bangladesh who introduced on-line, real time service facilities for its valued clients. It has set up a booth at the Chittagong port premises to dedicate its customized services to the port users. The bank has made significant contribution towards the country’s industrial development, international trade communication, food processing and service enterprises. One bank is distinguished for its friendly culture, speedy decision –making, in depth credit analysis, fast track communication system and a team of ever-ready service delivering professional bankers.

For supporting to the majority of the people of Bangladesh one bank has started its Islamic banking. It has also launch merchant banking products. And for better service it has introduced ATM, credit cards, phone banking and e-banking services. One bank is also trying to strengthen our customer base and business portfolio by including agriculture and small-medium enterprise sectors. The services one bank provides are as follows_ Service of the professional personnel: The Officers of ONE Bank Limited have, to their credit, decades of banking experience with National/ international banks at home and abroad.

They are suitably equipped to meet customer expectations and are available at all times to provide a single-window customized and confidential service. A state of the art technology banking; The Bank will provide a state-of-the-art technology banking such as Any Branch Banking, ATM Services, Home-Banking, Tele-Banking, and Mobile-Banking etc. Retail banking: Bank limited offers individuals the best services, including the following, to provide complete customer satisfaction: •Deposit Services: Individuals may open Current, Savings, STD and Fixed Deposit Account, Deposit Pension Scheme (DPS) and BCD. Special Deposit Schemes: Customers may also avail facilities under various deposit schemes introduced by the Bank namely Monthly _ Moneymaker. Many more schemes will be introduced gradually. •The Bank will offer a few innovative schemes to Bangladeshi Wage Earners working overseas. •The Bank will also finance self-employed income-generating persons. Institutional banking: ONE Bank Limited will offer various services to foreign missions, NGOs and voluntary organizations, consultants, airlines, shipping lines, contractors, schools, colleges and universities.

The services include mainly the following: •Deposit services •Current Account in both Taka and major foreign currencies •Convertible Taka Accounts •Local and foreign currency remittances •Various types of financing to cater to the banking requirements of multinational clients Corporate banking: ONE Bank Limited caters to the needs of the corporate clients and provides a comprehensive range of financial services, which include: •Corporate Deposit Accounts Project & Infrastructure Finance, Investment Business Counseling, Working Capital and other finances •Bonds and Guarantees Commercial banking: Being a commercial bank, ONE Bank Limited provides comprehensive banking services to all types of commercial concerns. Some of the services are: •Trade Finance •Commodity Finance •Issuance of Import L/Cs •Advising and confirming Export L/Cs. – Bonds and Guarantees •Investment advice •ONE Bank Limited will provide specialized services to Ministries, Autonomous and Semi-autonomous bodies On line banking:

ONE Bank Limited offers ‘Any Branch’ banking service that facilitates its customers to deposit, withdraw and transfer funds through the counters of any of its branches within the country. Merchant banking advisory services: The Bank will provide Merchant Bank advisory services, offer complete packages in areas of promotion of new companies, evaluation of projects, mergers, take-over and acquisitions, liaise with the Government with regard to rules and regulations, management of new issues including underwriting support etc. Capital market operation:

The Bank will also introduce capital market operation, which will include Portfolio Management, Investors Account, Underwriting, Mutual Fund Management, trust Fund Management etc. Islamic banking services: ONE Bank Limited will open Islamic Banking Branches to serve the customers who are interested in banking based on Islamic Shariah. Farm and off-farm credits (Rural): Out of Bank’s social commitment towards the population at the grass-root level, it will participate in farm and off-farm credit programmers in rural Bangladesh to bring in economic buoyancy in the periphery.

Seed money for self-employment: The educated young people with an aptitude for organizing enterprises will be provided with the seed money primarily for self-employment and subsequently will be given advisory services as well as required fund for expansion into a fast growing productive and employment generating venture. Credit to women entrepreneurs: The Bank believes in ‘Equal Opportunity Policy’ and as such has a plan to introduce credit programmers for willing and talented women entrepreneurs. Consumer credit facilities:

The Bank offers a Consumer Credit Scheme, facilitating financial ease in acquiring various day-to-day consumer products such as usable appliances and other items. Counter for payment of bills: Dedicated counters are available at ONE Bank Limited’s branches to receive the payment of various utility (DESA, Mobile Phones) bills. Other services: •Remit funds from one place to another through DD, TT and MT etc. •Conduct all kinds of foreign exchange business including insurance of L/C, Traveler’s Check etc. •Collect Checks, Bills, Dividends, Interest on Securities and issue Pay Orders, etc. •Act as referee for customers Locker facility for safe keeping of valuables and documents ONE Bank Limited is sponsored by a group of renowned Bangladeshi industrialists, businesspersons and qualified non-resident Bangladeshi professionals like medical practitioners, scientists & chartered accountants. Corporate Information: The One Bank Limited Established in 1999 Registered office 45, Dilkusha C/A, Motijheel Dhaka-1000 Bangladesh Phone: (PABX) 9564249 Fax: (88-02) 9564870 E-mail: [email protected] com Swift: ONEBBDDH Website: www. onebankbd. com Auditors Hoda Vasi Chowdhury & Co. Chartered accountants Ispahani Building (3rd Floor) 4~15, Motijheel Commercial Area Dhaka-1000, Bangladesh Phone: (88-02) 9551028, 9556420 Fax: (88-02) 9565318 E-mail: [email protected] net Website: www. deloitte. com Legal services Lee, Khan & Partners Barristers, Attorney & Advocates City heart, Suit-5/8 67 Naya Paltan (4th floor) VIP road, Dhaka-1000 Board of directors: Chairman Mr. Sayeed H. Chowdhury, Vice Chairman Mr. Zahur Ullah Mr. Asoke Das Gupta Managing Director Mr. Syed Nurul Amin Deputy Managing Director Mr. Kaiser A. Chowdhury Executive vice president Mr. Farman R. Chowdhury Company Secretary Mr. John Sarker Management Hierarchy:

Board of directors Managing director Directors Executive vice president Senior vice president Vice president Sr. Asst. vice president First Asst. vice president Asst. vice president Sr. Executive officer Executive officer Senior officer Management trainee officer Junior officer Five years Performance at a glance: (Taka in million) Sl noParticulars 20032002200120001999 1Authorized capital12001000100010001000 2Paid-up capital600221203203203 3Reserve fund986322. 3500 4Capital 847414292228210 5Deposit8847760763992267860 6Advance6051512643921630210 7Investment68863054024080 8Import handled 9814823448862370232 Export handled52133371150118600 10Total Income 106196855619938 11Expenditure80075143616839 12Operating profit26121712031-1 13Net profit 911145611-3 14Total assets99758316743127221224 15No. of correspondents2231871057630 16No. of employees20917813311170 17No. of branches107541 18Loan deposit ratio68. 39%67. 38%68. 64%71. 90%24. 42% 19Earning per share23. 4443. 5127. 765. 66-1. 31 20ROA2. 85%2. 76%2. 36%1. 57%-0. 16% 21Net asset value131. 56163. 80122. 11104. 3598. 69 One bank’s head office credit division analyzes and set credit principles for their smooth credit operation, which is guided by the Bangladesh bank.

These principles followed through in the head office credit division as well as in the branch level. The principles of lending, approval, monitoring and control need to adopt on the basis with the global operational objectives and business strategies of the bank. The bank needed to consider the market to provide suitable credit services because there is chance to have competition and win over the market. Loan and advances are normally financed from customers’ deposits rather than temporary funds or borrowing from other banks.

All credit extension must need to comply with the requirements of the bank’s “Memorandum and Articles of association, act 1991 as amended from time to time, Bangladesh Bank’s instruction, applicable rules and regulations. The authority structure for extension of credits should enable effective adoption to changes in the economic, technological, regulatory and competitive environment within which the bank operates. Performance: Loan administration should contribute; within define risk limitation, to the bank’s achievement of profitable growth and superior return on the bank’s capital.

Advance of the credit should focus on the basis of the total yield for each relationship with customer through transactions should also be profitable. Credit objective extended for the best use to maximize bank’s profit as well as economic growth of the country. But lending decision should be made mainly considering the borrower’s ability to repay. Loan pricing: The loan price or interest on various lending categories will depend on the level of risk and type of security offered. The rate of interest reflects of risk in the transaction. The higher the risk, the higher would be the interest rate.

Interest rate may be reviewed at least once in 6 months and more often when appropriate. All rates should vary with the cost of funds fluctuation based on a spread for profit. All pricing of loans however have relevance with the market condition and be approved the “Executive committee” and the managing director from time to time. Loan pricing- Interest = Real rate of return + Inflation premium + Risk premium Credit limits: Head office set down the credit limits for customers, which are as follows- •Total Facilities: The aggregate of all cash facilities are restricted highest upto 80% of the total customers’ deposits.

It is further governed by the statutory and liquidity reserve requirements of the Bangladesh Bank. •Term facilities: Aggregate long-term facilities should not exceed 20% of the total credit portfolio. Facilities should not allow for a period of 5 years. •Cross border exposure: The country exposure limits may be utilized up to maximum amount for different maturity as follows: Maturity periodMaximum limits Up to one year100% Up to two years50% Up to three years25% More than three years10% Different types of loan provided by “One Bank Limited”: Consumer credit scheme Lease finance.

Hire purchase. Small and medium enterprise credit scheme Loan against shares and securities House building financing scheme Financing schemes for contractors One Bank “Credit card” Working Capital Financing Import financing Export financing Industrial financing Types of Credit Activities: Short term, medium term and long term loans are allowed to individuals, firms or industries for a specific purpose but for a definite period and generally repayable by installment by installment. These loans are provided to the •Large and medium scale industries •Small and cottage industries •Agriculture

Here are some categories of loan described for your kind perusal- House building loan: House building loans are of two categories. One category is for the general people or for the enterprises for construction of house. This could for both residential and commercial purpose. Another category of loan is for the employees of One Bank Limited for purchase or construction of houses. Cash credit hypo: Advances allowed to individuals or firm for trading as well as wholesale purpose or to industries to meet up the working capital requirements against hypothecation of goods as primary security fall under this type of lending.

It could be commercial lending or working capital lending. Cash credit pledge: Financial accommodations to both individual and firms for trading as well as for wholesale or to the industries as working capital against pledge of goods as primary security fall under this category. Cash credit pledges are given on the basis of commercial lending and of industrial lending. Hire-purchase: It is installment credit under which the hire purchase agrees to take the goods on hire at a stated rental, which is inclusive of the repayment of principal as well as the interests for adjustment of the loan within a specified period.

Lease financing: Lease financing is convenient sources of acquiring capital machineries and equipments whereby a client is given opportunity to have an exclusive right to use an asset usually for an agreed period of time against payment of rent. It is repayable by installment and known as term financing. Consumer credit schemes: It is a special credit scheme of the bank finance purchase of consumers’ durable to the fixed income group like middle–class, lower class and upper class also to raise their living standard.

This loan allowed on soft terms against personal guarantee and deposit of specified percentage of equity by the customers. The loan is repayable by monthly installments within a fixed period. Export cash credit: Advances allowed for export of goods. Packing credit: This export credit is given against specific L/C. Credit Rates: Prime Bank Limited offered the rates to the customer for repayment of credits- ItemsRate Consumer credit scheme16% Lease finance14% to 16% Hire purchase14% to 16% Small & Medium enterprises14% to 16% Import finance14% to 16. 5% Export finance14% to 16% House building14% to 16%

Credit card2. 5% per month 30% per year All rates are negotiable by the assign authority. PRINCIPLES OF LENDING: In order to secure a balance between liquidity, profitability and security, One Bank follows the following principles of lending advances and loans, which are as follows- Liquidity: Bank always needs to consider about the liquidity. It is the reason prime Bank chooses such lending which will have sufficient liquidity. Safety: One Bank does lending function only when the project is safe and less risky. Safety depends on- oThe type of the collateral offered by the borrower Ability and willingness of the borrower to repay the loan Diversity: In lending, diversity is extremely important because it minimizes the risk as for investing different sectors like negative correlated sectors. Yield: One Bank is a private sector commercial bank so it considers sufficient yield as well as return on financing project. SELECTION OF BORROWER: Selection of a borrower is a vital step for lending. Of course this is a typical and crucial thing among human abilities. A banker must be careful in selecting borrowers and their projects.

In the lending process, before sanction of credit the banker should get conformed that about 4 ‘C’s which are as follows- 1. Collaterals: It needs to consider that the value of the collaterals and the maximum amount of loan can be given against this. The validity and legality of the collaterals are another concerning matter of selecting the borrower. 2. Character: In order to have select of the borrowers of loan, bank should judge the intension of the borrowers whether he will repay the loan. 3. Capacity: It refers to the borrower’s capabilities of using the amount of loan perfectly thereby repay the loan with least cost. . Capital: The banker must required to judge the financial strength of the individual or corporation that it can handle any uncertain situation as well as repaying lending. But it can be done to a little extent through analyzing the following items_ Loan application: It is the formal format of request letter represents the demand and cause of money. The type and amount of money that required is described here. Financial statements: While to apply for the credit the business firm needs to submit previous financial statements of several accounting periods to the bank.

These statements help the banker to have some general assumptions about the business firm. Study of account: In order to have a better idea about the borrower the banker could make a study of its bank account. He can check the amount of money transferred to the account over months through several accounting period. Market reputation: The bank can study the firm’s position and reputation to have the real estimation of the firm. It may differ the firm reputation with the actual position of the firm due to unawareness about the business.

Project proposal: Banker can have an evaluation about the borrower through the project proposal. A project proposal includes the previous position of the firm, future forecasting, financial statements, and commercial –technical – organizational – financial feasibility. Thereby the project proposal describes an estimated evaluation of the project and the risks related with this project. Report from CIB: It is very important matter to have a report from CIB regarding to this firm. CIB has been established for those firms who take loan from different banks against of same project proposal and collateral.

CIB report describes whether the borrower has taken loan from different banks or not showing the same project proposal. Personal query: The banker can do personal inquiry to the borrower about _ •His capital •His perception regarding to the borrowing loan •Source of repayment •Mortgage offered •Business actually •Etc. By this way a banker can judge the borrower ultimately before giving him loan. In reality it is very tough to understand a human and his thoughts. But rationally, by the following method no one can get escaped having loopholes.

Thus according to the procedure and evolutionary techniques a borrower can be judged. CREDIT APPROVAL: The credit approval process shall be governed by the bank credit policy framework, which can be summarized as the followings_ Credit evaluation principles: According to the credit evaluation principles borrower judgment is mandatory for every level of approval. The lending risk analysis tool containing analysis of both the business and the security risk provided overall ratings of risk in a particular loan under the following process: •Assess risk of failure to repay Decide whether to accept or reject a loan proposal •Set price and terms •Obtain sanctioning documents and disburse loan •Monitor performance and ensure repayment of recovery Lending risk analysis: In this part work is done through_ 1. Business risk: It refers the risk of insufficient cash flow. That is, complete repayment will not occur and repayment will not be occurred in time. Because of_ •Supplier risk •Sales risk •Performance risk •Resilience / flexibility risk •Management competence risk •Management integrity risk 2. Security risk: It refers the risk against the collateral.

In case of any uncertainty bank needs to sell the collateral and recover its money. But it could happen that the value of the collateral has declined. Or the collateral that deposited is false. •Security control risk •Security cover risk Here the risks analysis provides four types of lending risk decisions marks. Which are as follows_ •Good •Acceptable •Marginal •Poor Only the good and acceptable are keeping for further processing. And other marginal and poor are rejected. Credit risk evaluation/ assessment: It is important that to evaluated the risk of any credit.

Evaluation or assessment criteria formed by the bank credit manual and in head office circulars all proposals of credit facilities must be supported by a complete analysis of the proposed credit. It is absolute responsibility of the proposing officer to ensure that all necessary proposal documentations are collected before the facility request is sent to the sanctioning officer. Lending authority: Managing Director Deputy Managing Director Executive Vice President Senior Vice President Vice President Senior Asstt. Vice President Asstt. Vice President Approval under dual signature: All approval of credit facilities must be conveyed under dual signature. •Ideally both the signatories must have the required lending authority. •Two lending officer of the required lending authority are not available, one of the signatory must have the lending authority. Responsibilities for credit policies: Board of directors: •Policies, procedures are established •Delegating authority to approve and review •Approving credit for which authority is not delegated •Approve extension of credit that is contrary to bank’s written credit policies Executive committee: Approving credit facilities delegated by the board. •Supervise and implementation of the board •Reviewing the each extension of credit approval by the head office credit committee or the Managing director •Keeping the board of directors information Policy committee: •Establish the lending policy •Making policies and procedure for reviewing and analyzing to extensions of credit and loan portfolios Head office credit committee: •Review, analyze and approve of credit in accordance with the authority which is established by the board of directors •Evaluate the quality of lending staff To proceed the credit proposal to the executive committee or Board of directors •Make sure the papers are in order •Confirm the procedure is not violating the company procedure as well as the government Branch office credit committee: •Know the borrower fully •Comply with the applicable instructions, manuals, circulars and other rules •Credit proposals submitted to the head office •Check out the necessary financial statements of the borrower •Comply with the necessary control and safeguard •Justification / consideration for the facility •Take monitoring and review about the credit •Continuously verification of the stock reports Visit to the borrower to review the project and find out the facts and make report to the head office DOCUMENTATION: While to make arrangement of the credit procedure there required to prepare some documents which are as follows_ •D. P. •Letter of partnership required for partnership business only •Letter of arrangement •Letter of disbursement •Letter of pledge •Letter of hypothecation •Trust receipts •Letter of lien and ownership •Legal documents for mortgage of property •Copies of sanction letter mentioning details of terms and conditions duly acknowledge by the borrower Documents should be hand written with indelible ink.

Documents should be executed in the presence of branch manager or responsible officer. Documents should be signed with full signature. Any cutting, alteration and erasing is prohibited. Signature of loans in all pages of documents should uniform. Each and every page should be signed. Executor’s signature should be verified by the manager or authorized officer. PROCESS OF LOAN: The steps of the credit procedure is describing bellow_ Step 1: (Selection of borrower): In order to have the interviewing for loan it requires judgment of the following_ •Reputation in business circle. •Competitors •Employees •Qualification. Experience physical fitness •Earnings •Security offered against the loan. •Own stake in business •Eagerness •Expected term of repayment •Normal expenditure of maintaining his family •Knowledge / Experiences to run the business. Beside these things a banker must know the following things related to business_ •Whether the borrower is going to do any speculative business. •When do he is going to start the business. •Does he have any assumption about the popularity and marketability of the products? •Estimation about the availability of raw materials. •Whether the raw materials is produced in our state. If raw materials are imported then how friendly relationship exists between our and that states. •Transport and communication costs. •Liabilities and involvements in other businesses. Keeping these fundamental points in mind the banker need to form a balanced opinion on the following issues like moral ethics. Which refers moral risk in respect of bank about borrower’s reliability on character. And business ethics of the borrower so that as a social element any hazard is not creating. Lastly property risk, which refers borrower’s capital and capabilities, needed to be judged.

If the banker’s opinion is favorable, banker will step in the starting point of lending that of giving a application form to the borrower. Step 2: (Borrower submits application form): Step 3: (Bank evaluate the loan case): In this step the banker scrutinize the loan case, evaluate and correlate the collected information about the party. The sources from which the banker can get information has been described in the phase of “Borrower judgment” of Loan application, Financial statements, Study of account, Market reputation, Project proposal, Registration of Joint Stock Company, Report from CIB, Revenue municipal, VAT return.

Step 4: (Preparation of credit report / Project proposal): All the elements that exist in a project proposal are as follows_ •Name. •Registered address. •Date of compilation of report. •Nature of the firm and date of establishment. •Nature of business. •Investment in the business. •Allied or subsidiary concern, if any. •Brief history regarding the proprietors or owners. •Annual income. •Sales. •Market reputation. •Means. •Bank account in this bank and experience. •Bank accounts in other banks and their experience. •Preparation and signing of the credit report. Revision of the credit report. Whenever the credit report or the project proposal will be ready it need to submit to the bank manager. Step 5: (Submit the project proposal): Step 6: (Assessment): After the manager of the bank found that the proposal is suitable to make loan to it, now in the step 6 it need to check the feasibility of all aspect of the firm likes_ the commercial feasibility, management feasibility, technical feasibility, financial feasibility, economic feasibility further. Step 7: (Recommendations): Step 8: (Sanction)

Step 9: (Sanction advance and other terms and conditions) Step 10: (Repayment and repayment schedule) Step 11: (Interest rate): Bank charges the specific interest rate to the firm against its loan. When the interest rate is fixed up and the firm agrees to pay then the company becomes ready to get loan from the bank. While assessing the credit the banker needs to keep in mind the following points_ Borrower’s own investment Actual valuation of land / building; cost of machineries, quality of machineries etc Availability of raw materials, power, fuel, accessories

Marketing of product, present and future competitors thereby profit Will the advance be recovered? Has the knowledge, skill, tact and foresight ness been applied sincerely? Is the advance goes against bank’s policy, government policy and central bank’s credit restriction policy? Process of consumer credit scheme: Required eligibility for this credit •Govt. employee •Corporate service holder •Bankers, company or service in any financial institution •Defense persons •Teacher of university, college and school •Private service holder •Any professionals like_ doctor, lawyer, engineer, journalist etc. Businessman For the followings customer can enjoy credit: Computer Car T. V. / VCR / Music system A. C. Photocopier Washing machine Home furniture Office furniture Telephone, fax machine etc. All about consumer credit scheme_ ItemsLimits highestInitial depositPeriods New car10 Lac40%3 Years Recondition car7. 5 Lac40%3 Years Photocopier1 Lac40%1 Years Others1 Lac20%2 Years SUPERVISION AND MONITORING: For both at the pre-sanction and post-sanction stages supervision is necessary in order to ensure the safety of money lent. It can be classified into 3 steps. •Supervision •Monitoring •Follow-up

These things are necessary for problem solving like loan to be doubtful; check regular return of fund; check about compliances of terms and conditions etc. And in case of any deviation, necessary correction can be taken to recover the problem. There methods to make supervise and monitor are_ Desk supervision: This method operates through checking periodic reports, discussion, operating statements and cash flow statements. Field supervision / On-site: This method operates through visiting and based on nominee directors. When to supervise, it needs to consider the following things_ •Stock statements Operation of customers’ accounts •Financial position of borrowers and guarantors •Purpose of loan •Confirmation letters of balance and securities •Diary notes •Other accounts •Miscellaneous Early Warning System of loan reviewing and monitoring: The objectives of this system are as follows_ Address problems while adequate alternative action exists. Prevent loan to be bad, interest revenue loss and loan provisions. Warning signals: The warning signals are as follows_ •Material changes •Industry pattern changes •Management composition •Economic trends (Local, international) •Client performance vs. budget •Bank vs. lient relationship •Evidence of weakness in borrower. Corrective measures: The elements of corrective measures are as follows_ •Legal review of documents and situation •Workout strategy and action •Loss evaluation vs. security cover •Stay or leave decision and reclassification •Continuous visits to the client (Defaulter) •Negotiation vs. court action •Legal expenses multiplying LOAN RECOVERY: Recovery plan is one of the components of performance plan. It is a future intended action in respect of recovery. In other words, it is a conscious and deliberate effort to recover all current dues and overdue loans.

Steps for recovery: Loan recovery procedure is a stepwise procedure. The steps are as follows_ Step 1: (Existing loans and advances): •Make due dates of repayment •Regular follow-up •Periodical inspection •Supervise visit •Other necessary steps Step 2: (Overdue loans and advance): •Preparation of quarterly lists likes branch copy, controlling office copy and head office copy. •Attempts are to be made for adjustment of loans before application of quarterly interest. •Loans must be adjusted before classification. •Target for recovery. •Steps for declassification. Other necessary steps for recovery of overdue loans. Step 3: (Provision for classified loan): Step 4: (Interest exemption): Finding out the legitimacy of interest exemption it needs to follow the instruction of Bangladesh Bank and head office. Step 5: (Write off): Finding out the legitimacy of writing off for a particular loan case it needs to follow the instruction of Bangladesh Bank and head office. Step 6: (Others): In case of any other situation, recovery will be happened as the requirements of the Bangladesh Bank and as the requirements of this One bank.

Reasons behind non-recovery of general loans: The reasons for non-recovery of general loans are as follows_ Not careful while identifying the borrowers with 5 seconds Weak points while preparing credit reports. Negligence on preparing sanction advice, borrowers can take advantage of the situation. Other internal or external causes. Reasons behind non-recovery of project loans: The reasons for non-recovery of project loans are as follows_ •Feasibility report is not properly made. •All-important papers / documents are not obtained. •Wrong valuation of pledged goods / mortgage property. When problems or short falls are detected, proper measures are not taken. •Lack of proper control, supervision and monitoring •Inspections are not done regularly •Other lacking Strategies: •Follow-up done with co-obligates •Old loan cleared for new loan •Friendship with the elite people of the society like DC, SP, MP etc. •Undertake crash programs for recovery. Etc. A system in loan recovery: The factors are more subjective than the quantitative criteria just described but generally considered to be more important in identifying problem loans at an early stage. Substandard: Loans would tend to reflect a borrower with he following things_ •Unfavorable regulatory, political or market environment •Balance sheet declining •Qualified auditor’s opinion •Debt restructuring problems Loans would have the foregoing characteristics but even more adverse conditions would exist_ •Uncertain collateral coverage •Consistent failure of borrower to meet commitments The bank’s actions would then be confided to filling suits against the borrower / guarantor and quantifying the security and collateral shortfall vis-a-vis the borrower’s outstanding and the bank’s costs. It is this shortfall, which will determine the ultimate loss to the bank.