final report of dmcbl
TRANSCRIPT
ABSTRACT
In the recent years poverty alleviation has become one of the burning issues worldwide. About
hundred thousand million people are living under poverty line at the end of 2011 all over the world.
A systematic development of a nation mainly depends on the proper alleviation of poverty. For this
reason poverty alleviation have become global challenges, especially in the developing country like
Bangladesh. The micro credit program is playing a vital role in the poverty alleviation. In parallel
of government of a country, many NGOs and economical institutions have initiated different
activities on the basis of Micro credit program to alleviate the poverty. In this article we have
investigated the role of Micro credit to alleviate the rural poverty in Bangladesh. Our main
objective in this paper is to study and analyze the activities on Micro credit program carried out by
(DMCBL) The Dhaka Mercantile Co-operative Bank Ltd., one of the leading Co-operative Banks
in Bangladesh.. This paper focuses the poverty structure of the rural population of the country and
the strategy to alleviate poverty based on both primary and secondary data. The information has
been collected from companies annual reports and talking face-to-face with officials of the
company. In order to make the report i also had to analyze the micro-credit industry as a whole. So,
I also studied how micro-credit is conducted by the companies and how people are getting
benefited in the root level. Getting deep into the system what I have found that, this system works
well for the poor people at the root level. They provide small amount of loan and tell how to utilize
that money so the financial solvency is established when they have no money. Moreover, the
default rate of the loan is very low so, the companies are successful almost every cases. Although
the role of micro-credit is applauded all over the world, there have been some incidents that has
mildly scarred the system i.e. their high interest, way of behaving to those who are default etc. So,
the bottom-line is, if we disregard those sporadic incidents we can see that micro-credit is
alleviating poverty in a large scale and DMCBL is playing a vital role in it along with other
companies.
1. INTRODUCTION
After industrial revolution most of the world still has to challenge with the daily pain of poverty.
Nearly half of the people live in poor countries with an average annual income per head of $400 or
less (Azam, 1997). Bangladesh ranks as the world’s eight and Asian’s fifth most populous country
(Azam, 1997) with a land area of only 147570 sq. km. resulting in a population density of about
961 persons per sq. km. (Population and Housing Census, 2011) which is one of the highest in the
world. It is one of the poorest countries of the world where 76.9 % of the total population live in the
rural areas (Population and Housing Census, 2001). About 49 % of the rural populations live below
the poverty line (Fifth Five Year Plan-1997-2002). Bangladesh is primarily an agricultural country.
About 77% of the populations live in village and 75% of them are dependent on agriculture, which
contribute more than half of the GDP. In recent years, Bangladesh is overwhelmingly characterized
by poverty, disease, malnutrition, illiteracy, unawareness that dominates the lives of the rural poor
(Alamgir, M. 1978),. The under develop ness of the rural economy of Bangladesh is reflected in the
low productivity, high population pressure, underemployment, lack of work opportunities outside
agriculture and the resultant deteriorating living condition of the rural poor. As Bangladesh is one
of the poorest countries in the world having a per capital GDP at current market prices (in US$)
445 (National Accounts Statistics, 2005). In Bangladesh 60% of rural populations are functional
landless, 20% do not even own their homestead. Majority of them are directly or indirectly depend
on agriculture and selling labour. In addition due to the domination of the society by the rural sites
most of the available resources are owned by the upper socio-economic strata. The rural poor are
victim of various kinds of oppression, deprivation and injustice. Land takes the leading role in
generating rural income and its distribution. But above 60-70 percent of the household do not
posses enough land to generate income for subsistence. The available findings on land holding
structure showed a very twisted distribution to land and it has been associated with rise of landless
and marginal farmers in the rural society. The high population growth and low level of economic
activities particularly in rural areas may be identified as important causative factors for high
incidence of poverty (Ahmed and Hossain, 1984). Government of Bangladesh has given priority to
the development of villages and agriculture too. However, the production-oriented development
strategy which the government has been pursuing for a long time can hardly ameliorate the problem
of under employment in the rural economy. Because of a low output elasticity of demand for
labour, 2.8 percent (Rahman, 1999) growth of the cereal output, which is the single major
component of agriculture production in the country, was associated with only 1.4% increase in
demand for labour and during 1977-1982 an impressive 3.3 percent growth in the cereal production
was associated with a growth in agriculture employment of only 2.1 percent per annum (Yunus,
1985). Provision of non-farm credit at a reasonable rate of interest can play a significant role in the
life of rural disadvantaged group. However, the banking institutional in the country could not
manage with the situation for reasons such as:
a) The banker’s preference for handling big rather than petty loans which the rural poor need.
b) The practice of keeping collateral against loans which they can not provide.
c) The formalities for obtaining credit that the illiterate poor find difficult to complete.
Above the circumstances, there arose a need for separate programme for the landless poor in the
village areas to provide banking facilities to the rural mass and to extend a wide variety of financial
assistance to rural people. (DMCBL) The Dhaka Mercantile Co-operative Bank Ltd. was
established to provide loan to the rural disadvantaged group. The main object of the bank is to
extend banking facilities to the poor men and women to eliminate the exploitation of the money
lenders and to create opportunities for self-employment. DMCBL is working beside other
institutions and economical agencies such as BRAC, PROSHIKA, GRAMEEN BANK, RFL, and
RDB etc. which are also contribute to eliminate poverty of Bangladesh.
1.1 Rational of the study
In most of the developing countries in Asia growing attention has been given for rural development
during past two decades. This is because majority of the people live in rural areas where problems
of poverty, inequality, unemployment etc. are increasing rapidly. The percentage of rural
population is as high as 77 in Bangladesh, 95 in Nepal and above 70 in India, Pakistan and Sri-
lanka. The socioeconomic background and population problems have prompted policy makers to
take up specific rural development programme in order to improve quality of life of vast majority
of the rural poor who have not been benefited from the general development programme (Akter,
1996). Though there is some positive in respect of farm productivity and overall economic growth
rate in same developing countries, nevertheless, the extent of poverty, inequality, landlessness and
unemployment have been become widespread in many countries. With a low level of income and
pervasive poverty the development priorities in Bangladesh increasingly focus on efficient growth
policies and provision of basic services to the poor. The factors that create and perpetuate involve a
number of dimension e.g. sewed distributions of assets and land, exploitative land tenure systems,
inequitable access to and control over new technology in irrigation, inadequate employment
opportunities, low labour productivity and wage rates, low growth and unequal distribution of
growth benefits, under developed physical infrastructure and lack of access to basic social services
credit and off-farm activities. Within the general framework, poverty alleviation strategies in the
country put emphasis on accelerated growth generation of productive employment human resources
development and increased self-reliance. Economic growth is recognized as fundamental to
development but not to reduce poverty (Asaduzzaman and Akter, 1990). In order to ensure the
access of the poor to employment and basic social services, the growth-oriented strategies need to
be supported by direct attacks on poverty. Therefore, self- employment creation through a credit led
strategy in the rural area can play a significant role in reducing the rural unemployment and acute
poverty. The project oriented lending programmes and policies of rural credit project department in
Bangladesh could play a crucial role in creation of self-employment opportunities in the country if
they were implemented and pursued with commuted determination. The DMCBL, a famous
innovative credit institution has been making a unique contribution in the creation of productive
self-employment for the poorest of the poor in the rural area of the country. So, Researcher has
selected this area for study.
1.2 Objective of the study
The overall of the study will be to evaluate the role of The Dhaka Mercantile Co-operative Bank in
alleviating poverty. The specific objectives are as follows:
To apply of theoretical knowledge in the practical field.
To understand the real management situation and try to suggest for improving existing
problems.
To analyze the financing system of the Bank.
To examine the profitability and productivity of the Bank.
To acquire knowledge about the every day banking operation of DMCBL.
To suggest appropriate policies for effective use of bank financing for poverty alleviation.
1.3 LIMITATION OF THE STUDY
The researcher have obtained whole hearted co-operation from employee of DMCBL although they
were extremely busy. So they were not able to give much time as they and I would 1ike. Besides,
total duration of internship is not sufficient to give me more than a superficial idea of the
functioning of the various departments I was rotated through. On the way of my study, I have faced
the following problems which may be termed as the Limitation/short coming of the study. Few
limitations are pointed out below:
The main constraint of the study was insufficiency information which is required for the
study.
Since the bank personnel are very busy with their activities, as a result they failed to co-
operate with me to complete this report.
The major problem of the study was short time period. For an analytical purpose, adequate
time is required.
It would have been better if data could be taken from larger sample than what has been
considered here.
It would have been better if data could be taken from all the poverty alleviation activities in
rural areas in our study.
The majority of the loanee respondents do not maintain any record to their income,
expenditure etc. So, they depend on their memories, which made our investigations limited.
ROLE OF MICRO-CREDIT
The Dhaka Mercantile Co-operative Bank Limited (DMCBL), one of the leading Co-operative
Banks in Bangladesh is a well known social welfare organization which has some Investment
Schemes. But the most popular scheme of DMCBL is micro credit. The micro credit activities
guided by DMCBL is being carried out within 60 districts out of 64 (up to February 2012) in
Bangladesh where 90 thousand members most of which are small business people are involved
with this activities and the running capital is BDT 135 millions. My intern period was in the Head
office that’s why I can’t collect the information from the field. But I just collect the information
from personal interview and official documents and have selected only 150 members randomly out
of 90 thousand members to prepare this article. The details analyses are presented in the following.
All the field data provided here have been collected from December 2011 to February 2012.
Educational background of the respondent
Education is the backbone of a nation. It is vital matter to alleviate poverty. To develop the
socioeconomic condition it is a crucial instrument.
The Table 1(a) shows the educational background of the sample respondent. It shows that 8% is
illiterate, 16.67 % can sign only their name, 36 % got primary level, 20 % received junior high
school level, 12.67 % got high school education and only 6.67 % got secondary above secondary
level. From this data it appears that the level of education of DMCBL loanees are not yet to be
satisfactory and so, because the rural poor are unable to change their fortune smoothly.
Age-wage distribution of respondent
The age of an individual respondent is perhaps an important factor for motivating her in accepting
anew and challenging venture. An early entry surely gives her the scope for development over a
long period but late comer gets a few opportunities.
Educational background of the respondent
Level of education No. of
respondentPercentage
Illiterate 12 8Can sign only 25 16.67Primary level 54 36
Junior high school 30 20High school 19 12.67
Above 10 6.67Total 150 100
Table 1(b). Age-wage distribution of respondent
Age group(years)No. of
respondentPercentage
20-30 15 1031-40 60 4041-50 52 34.67
51 and above 23 15.33Total 150 100
The Table 1(b) indicates that 10% loanees’ age lies between 20-30, 40% whose age lies between
31-40, 34.67% are 41-50 and 15.33% age are 51 and above. It shows that large part of loanees
belongs to the age group ranging from 31-40 year and small part is 20-30 year .It is obviously clear
that the loanees from DMCBL are able to change their present economical status.
Marital status of the respondent
DMCBL delivers loan to the needy class people, who are may be Married, Unmarried, Divorced
and Widow. The following table shows the marital status of the respondent.
Above the table 1(c) shows that 20% respondents are unmarried, 72% are married, 6% are divorced
and 2% are widow. It is clear that the majority of loanee are married.
Time required for getting loan
For the effective utilization of credit, it is possibly necessary to use the required amount of credit in
time. Non timely credit makes a man inefficient. Below the table present the timing of DMCBL
loan dispose.
The Table 1(d) shows that the time gap between submission of proposal and receipt of the amount
from 1-7 days of 55.33%, 8-15 days of 37.33% and 15 and above days of 7.33% respondent. It is
clear that the respondent receive the loan in timely.
Table 1(c). Marital status of the respondent
GroupsNo. of
respondentPercentage
Unmarried 30 20Married 108 72Divorced 9 6Widow 3 2Total 150 100
Table 1(d). Time required to get loan
DaysNo. of
respondentPercentage
1-7 83 55.338-15 56 37.33
15 and above 11 7.33Total 150 100
Payment of instalment
The repayment of borrowed money along with interest according to the agreed schedule is an
indication about the improvement in the financial health of the respondent.
The Table 1(e) shows that the respondents found to be very much sound in experience loan
repayment culture. The data provide an indication that there is a positive influence of DMCBL
operation on strengthening the credit repayment ability of the respondents through a marked
improvement in their income.
Income of respondent before and after joining DMCBL
Income status is the important measurement of the respondents’ economical condition. The table
shows the economical positions respondents before joining and after joining the DMCBL.
The table 2(a) shows most of the respondent’s that is 30 percentage monthly income are 10,000-
20,000 before joining the DMCBL But after joining the DMCBL majority respondents income
changes positively. Here 31.33 percent respondent income is 31,000-40,000 taka per month. It is
cleared that the change of income pattern of receiving loans from DMCBL is so significant.
Table 1(e) Payment of instalment
Payment of instalmentNo. of
respondentPercentage
Regular 120 80Irregular 30 20
Total 150 100
Table 2(a). Income of respondent before and after joining DMCBL
Monthly incomesize
Before joining DMCBL After joining DMCBLNo. of
respondentPercentage
No. of respondent
Percentage
Below-10,000 30 20 12 810,000-20,000 45 30 24 1621,000-30,000 30 20 39 2631,000-40,000 22 14.67 47 31.3341,000-50,000 18 12 20 13.3351,000-60,000 3 2 5 3.33
61,000 and above 2 1.33 3 2Total 150 100 150 100
Capital of respondent before and after joining DMCBL
In our country DMCBL provides loan in various sectors. The destitute class people utilize these
loans and create a capital fund after release DMCBL loan.
The Table 2(b) represents that more than 26.67 percent of the total loanees had capital up to taka
100,000 before joining DMCBL 24.67 percent, 20 percent, 16.67 percent, and 12 percent of the
total loanees had capital 100,000-150,000, 150,000-200,000. 200,000-250,000 and 250,000 and
above respectively. But after taking the loan of DMCBL only 7.33 percent of the total respondent
capital up below taka 100,000 and 26.67 percent capital range are TK. 100,000-150,000, 31.33
percent capital range are TK 150,000-200,000, 21.33 percent capital range are TK 200,000-250,000
and 13.33 percent capital range are TK 250,000 and above. It is obvious that, the loanees’ capital
has increased after joining DMCBL.
Methodology
The information of this article basically has collected from primary source which is collected
through personal interview from the selected members and the bank personnel. But hardly any
updated data could be found. In the absence of updated information or data dependence on
secondary data has been inevitable. The necessary information has been collected from the head
office and sample branch of the study areas of DMCBL. However, whenever possible primary data
has been used. Data were also collected by interviewing the responsible officers and from some
documents & statement printed by the bank and website of DMCBL. Bank Annual Report also
helped me in collecting data. Moreover various books, journal and other publications related with
micro credit were used for collecting other information. In this report researcher would try to
Table 2(b). Capital of respondent before and after joining DMCBL
Capital size( Taka )
Before joining DMCBL After joining DMCBL
No. of respondent
PercentageNo. of
respondentPercentage
0-100,000 40 26.67 11 7.33100,000-150,000 37 24.67 40 26.67150,000-200,000 30 20 47 31.33200,000-250,000 25 16.67 32 21.33
250,000 and above 18 12.00 20 13.33Total 150 100.00 150 100.00
follow the appropriate methodology to obtain the necessary primary data and analyze them in the
light of desired objective of the study.
Sources of Data:
The following sources have been used for the purpose of gathering and collecting data as required.
Primary Data:
I) Official records of DMCBL.
II) Face to face conversation.
III) Data collection by own supervision.
Secondary Data:
I) DMCBL Annual report (2005 to 2010)
II) Working papers
III) Office files & Printed forms
IV) Selected books
V) Published & unpublished documents
VI) Website
Organization Over view
Overview of DMCBL
The Dhaka Mercantile Co-operative Bank Limited (DMCBL) was registered with the government
under the then “The Bengal Co-operative Societies Act 1940 (Bengal Act XXI)” on 06.01.1973.
After registration, Bye-laws of the society were prepared for operating its activities.
After its establishment in 1973, DMCBL was put into liquidation process thrice in 1974, 1980 and
1990. After the last liquidation order was withdrawn in 1997, DMCBL started its activities with the
burden of loss of Tk. 28,38,154.00 only. Internal chaos, inefficiency in management and corruption
enhanced the accumulated loss at Tk. 1,11,80,831.00 in 2001-2002 on the basis of prima-facie
information. At this stage, the existing management committee of the bank took its responsibilities
and appointed a leading audit firm, S.F. Ahmed & Company, Chartered Accountants, to ascertain
the position of the Bank. The audit firm ascertained the accumulated loss of the bank at Tk.
2,15,52,580.00 in 2002-2003.
It may be mentioned that due to non-availability of appropriate information and related vouchers,
register, ledger etc. loss to the tune of Tk. 28,38,154.00 estimated for the year 2000-2001 sort up to
Tk. 1,11,80,831.00 in the year 2001-2002. Due to the far sightedness and efficiency of the existing
management committee, the bank took its rebirth in 2003-2004 and activated and earned a profit of
Tk. 8,62,625.00 with the provision of dividend of 10% for its shareholders. As a result, the bank
got the award of the best Co-operative in the country, “Business Award, 2004” by the F.N.S.
Besides, it also got the award of the best Co-operative from “Rafiqul Islam Foundation”.
DMCBL started its journey again in 2001 with existing 08 branches and at present it has total 99
branches located in different parts of the country both in rural and urban areas. Its head office is
located in 19, Indira Road, Farmgate, Tejgaon, Dhaka – 1215.
Vision of the DMCBL:
“To be the trendsetter for innovative banking with excellence & perfection”
Mission of the DMCBL:
“To be the best performing Co-operative Bank in the country”
Objectives of the DMCBL
Developing the standard of living of the limited income group by offering consumer credit.
To improve the socio-economic condition of the members of the society through extension
of investments to their small business, trades, cottage industries etc. for augmentation of
activities by creation of jobs;
Encouraging and motivating the new entrepreneurs to establish industries and business in
line with development of national economy.
Enhancing savings tendency of the people by offering attractive and lucrative new savings
scheme.
Enhancing the mobilization of savings both from urban and rural area.
To procure funds particularly from the small savers for investments;
To extend security free investments to attract the small people towards co-operative
societies;
To help the members of the society for improving individual and social understanding
among themselves for the improvement of their lots; and
To explore the needs of the common people including businessman and professionals.
Contribute to the GDP of the country.
Business philosophy of DMCBL
The business philosophy of DMCBL is to move and develop with the changing new era. Especially
DMCBL operates its activities as quite accurate as possible rather than other co-operative
banks/societies operating in Bangladesh because this bank has come to this position through
substantial step by step. By developing human resource and providing qualitative service DMCBL
will be the leader in co-operative sector in Bangladesh. Side by side DMCBL assist in the
development of national economy.
Organizational Structure of DMCBL
There are three different wings to consist the organizational structure of DMCBL. They are:
Board of Directors
Executive Committee
Senior Executives
Organizational Hierarchy of DMCBL
DMCBL has 13 steps in organizational hierarchy. The entry level post is the Assistant Officer. The
organizational hierarchy is shown below:
DMCBL Corporate & Investment Bank:
DMCBL has emerged as the premier organization for meeting the financial services needs of
corporations, governments, and institutional and individual investors around the country.
Managing Director
Deputy Managing Director
Executive Vice President
Senior Vice President
Vice President
Senior Assistant Vice President
Assistant Vice President
Senior Principal Officer
Principal Officer
Senior Officer
Officer / Probationary Officer
Junior Officer
Assistant Officer
Private Client Group:
Wealth management and financial planning services for affluent and high-net-worth private
investors, small-to-mid-sized businesses, non-profit organizations and family foundations. A
broad range of corporate benefits services and compensation plans to large corporations,
executive financial services, and advisory services to private corporations.
DMCBL Private Co-operative Bank:
Personalized wealth management services for affluent clients.
Retirement Services:
Defined-benefit, defined-contribution, health and welfare services to large and small
businesses and organizations countrywide.
DMCBL Alternative Investments:
Creates and offers efficient investment opportunities through a comprehensive platform of
alternative asset classes and vehicles that try to match the reality of the investor's unique
requirements.
Structure of the bank:
The bank is structured according to the four product divisions: Corporate Banking, Financial
Institutions, Cash Management and Treasury. There are also four other departments that can be
termed as support and these are Operations, Credit Administration, Financial Control and Human
Resource.
Corporate Banking:
The main activities involved in Corporate Banking division of the bank include communication
with customers and calls: The relation manager try to establish contact with key customers; know
about the status of their capabilities. The next step is to collect customer information and make a
detailed analysis of the needs of the client matched with what the bank can offer. After agreement
of both parties, the bank gets approval from the lending unit.
Once a company has become a client with credit relationship, the tasks are not yet over; the relation
manager then have to monitor the performance of the company and ensure that no classification of
credit occurs.
The products offered by the corporate banking division:
Corporate Finance:
Corporate finance and other credit products constitute the core of commercial banking services.
DMCBL offers a full range of financing options that are tailor-made to each of the circumstances of
each client. The lending products are customized based on purpose, tenor, currency and other
criteria. The products and services offered are:
- Commercial Paper or Fixed Income Securities
- Project Finance
Working Capital Finance:
This is basically the funding provided for financing of a particular working capital need, which can
either be short-term loan or overdrafts. Some common forms of working capital finance are
financing of inventory or raw material purchase etc.
Cash Management Services
The products and services offered are:
- Account Services
- Payments & Collections
- Cash Pick-up & Delivery
Financial Institutions:
DMCBL is a local correspondent bank of financial institutions operating in Bangladesh. In FI, the
customers of the bank include the largest nationalized commercial and co-operative banks, which
account for approx. 50% share of the country’s financial market, and also the top tier private sector
banks.
Customers can avail a variety of account services such as payments processing in collections,
investment of funds, view / download daily account statements etc
Cash Management:
Cash Management deals mainly with deposit collection i.e. is involved in liability management of
the bank. For this, the team has to go out on calls to bring about customer deposits and get
companies to open account with DMCBL. Other activities in the department include speed cash
collection.
The products and services offered from this department include:
- Efficient collection mechanisms at different outstation points
- Innovative and competitive deposit products
- Prompt distribution of inward remittance at competitive rates
Other Departments
Human Resource Department (HRD)
This department is very essential and important department for every organization. This is the place
where the employees get the opportunity to get trained and all other human resource related
services are dealt. This department is not directly involved with bank business but working with
those persons who directly & indirectly involved with bank business. The major responsibility of
HRD is employee’s recruitment, posting, transfer, increment, bonus, provident fund, confirmation,
training, hire & fire and so on. Welfare of all departmental employees is on HRD. Therefore, HRD
should be judicious, compassionate and rewarding to all employees.
The major responsibility of HR is as follows:
Employee recruitment
Posting
Transfer
Increment
Established yearly performance bonus
Provident fund
Confirmation
Training
Travel policy
Telephone policy
Hospitalization
Credit Department:
Lending money is one of the main functions of a commercial bank. In the lending process, selection
of borrower is the most crucial and vital job for a banker. Before a customer enjoys credit facilities
it is important that the applicant should qualify for five Cs.
The five Cs are: Character – Intention to pay back the loan, Capacity – Borrower’s competence in
terms of utilizing the fund profitably and generate income, Capital – Financial strength to cover the
risk, Conditions – General business condition between two parties, Collateral – Implies additional
securities. In addition objectives of the credit department are managing credit exposure of the bank,
maintaining credit risk, compliance of DMCB Limited, compliance of Central Bank Ltd,
recovering or collecting dues of retail loans or advances. At present credit division performs
following activities:
Credit Approval Process:
Corporate Credit
Micro Credit
Collection and Monitoring Activity:
Recovery
Risk management
Risk Management Department:
Risk management is one of the administrative departments of DMCB Limited. From its name it is
self explanatory that this department deals with uncertainty and safeguarding the bank against any
sort of uncertainty. There are some core risks of the bank. They are asset liability management risk,
credit risk, money laundering risk and internal control and compliance risk. Asset liability risk can
be broken into various other risks. They are liquidity risk, interest rate risks and market risk. One of
the major risks for any financial institution is credit risk. Credit risk is the risk of a loan to default.
For this reason strict monitoring and proper documentation of customer profile is required. Five
important information about a customer should be properly collected and should be authenticated.
This information is age, profession, nominee, introduction and monthly transaction. If this
information can be properly collected then credit risk can be minimized to a great extent. Finally
there is one risk which is internal control and compliance risk. The reputation of the bank may be at
risk if compliance issues are not maintained. For this reason risk management department has a
compliance wing which deals with policy and process monitoring of the bank.
Financial Control:
The activities of this department include managing the financial books of the bank; checking all
entries of the book are according to standards, preparing daily reports, revenue appropriation and
calculations, setting the internal pricing rates etc.
Central Processing Center (CPC) Department:
CPC process some operation centrally. Main areas of CPC are:
a) Cheque book printing
b) Corporate Salary
c) A/C Opening, signatures scanning.
d) Sanchaypatray Issue ( only for clients)
e) Mysis day opening & day closing.
Asset Operation Department:
Loan is asset to any financial institution. That is why it is very much necessary to ensure that a loan
does not become bad. The first step in ensuring that is to ask for proper documentation of the loan
applicant. A default loan might be very hard to recover due to lack of proper charge documents.
This is where the asset operation department of the bank comes into action. Asset operation
department of the bank acts as a last frontier to mitigate all loan related risks before disbursement
of a loan.
The following diagram shows the flow chart of the loan disbursement procedure.
The functions of asset operation department can be broadly categorized under two heads. The first
one is the disbursement and monitoring of loans. In this case the department disburses loans after
obtaining clean CIB reports of the clients, checking all documents and collecting securities after
proper lien and charges creation after terms of approval. This department also periodically review
conditions of past due loans, limit, expiry and document deficiency.
The next operation of the department is to act as custodian and compliance of the charge documents
and prepare various MIS reports for the central bank and other audit authorities. The documents
that are required by asset operation department can be classified into three parts. First one is the
business verification and related documents of the applicant. Second one is the basic charge
documents like demand promissory note, letter of continuity, letter of pledge letter of
hypothecation and some other documents. The third documents that asset operation department
need to disburse loan is the security documents like post dated cheque, undated cheque for
unsecured loan, fixed deposit or title deed for secured loan.
Impaired Asset Management Department:
This department of the bank looks after the default loans and tries to recover them. It is said that the
less job load this department has, the better it is for the bank itself. The head of IAM directly
reports to the Managing Director of the Bank and this division is an administrative division of the
ClientLoan Application
Business UnitRecommendation
CreditApproval
Asset OperationDocs checking, loan disbursement &
Custodian of securities
bank. This department of the bank has two wings. One wing looks after the impaired assets of SME
wing and another wing looks after the impaired assets of retail business. Normally if a loan
instalment is six months over due, then the credit department hands over the file to IAM for
recovery. IAM first issues a letter in soft language. Then if it does not work, IAM issues further
three letters to the defaulter. If it does not work either, then IAM files a case against the defaulter.
The bank can file a case against a defaulter in three ways. The first one is the Negotiable
Instrument Act of 1881 (Sec 138). It is a civil case. The second option that the bank has is the
Money loan court act of 2003. The third is the fraudulent act that is 420/406/109.
Information Technology Department (IT)
Information Technology department plays a very vital role in this bank. All 99 branches of the
Bank are computerized and the software development team of the Bank has developed a banking
software system named DMCBL Banking Software. More than 95 Branches are running
successfully with Banking Software System and the rest of the branches will be gradually brought
under the Banking Software System. 99 Branches are connected by internet service and the Bank
entered in internet world through its web site www.dmcbl.com.
Website
The website of DMCBL is informative and it provides information about the bank and its products.
It also informs about the coming up new products and current hot news of the bank.
Different Wings of DMCBL:
There are two wings of DMCBL. These are Head Office and Regional Office. Each contains
different branches and sub-branches have been given bellow:
Head Office:
Chairman’s Secretariat
Managing Director’s Secretariat
Boars Department
MIS and IT Department
Marketing Division:
Marketing division is very vital for each financial institution. DMCBL also holds a marketing
division, which contains following departments associated with each other:
Business Development Department
Branches Department
Public Relation Department
Every branch spends a huge amount of money as business development for capturing and
increasing consumer. The functions of this department are:
Maintain market survey in regular
Bring new banking technology to serve consumer quickly.
Audit and Inspection Division:
It consists of two departments. These are:
Internal Audit Department
External Audit Department
Internal audit team audits own branches.
Operations, Technology & ICU (Internal Control Unit)
The Operations department of the bank deals with account opening, deposit management, loan
booking etc; the Technology part involves processing of transactions and maintenance; and ICU is
involved in reconciliation of various accounts and also making sure that every day the suspense
account balance is 0.
Products and Services Offered by DMCBL:
a) Types of Banking Service:
DMCBL is always ready to provide all types of banking as the different needs of different clients.
This bank provides all services through rules and regulations. The different categories of banking
that DMCBL offers are follows:
Retail Banking:
The retail banking comprises the domestic braches network with the specialized customer credit.
Retail banking deals with the banking service to the individuals. DMCBL’s retail banking strategy
is aimed at keeping as closely in tune with the customer’s needs as possible and further improving
the quality of advisory services. As a result, DMCBL offers different product ranges to different
target groups. In this banking individuals may their personal accounts like Current Accounts,
Savings Accounts, FDR Accounts, MSP Accounts, Education Accounts, Marriage Accounts, Hajj
Accounts etc.
Institutional Banking:
DMCBL offers various services to various organizations, contractors, schools, colleges
Universities, doctors etc. The services include Deposit services, Current accounts etc.
Islami Banking:
To provide the Islamic banking services in accordance with the principles of Islamic Shariah,
DMCBL has established Islamic Banking Wing and started its functioning by opening full-fledged
Islamic banking branch on July, 2008. Prominent Islami Banker Mr. Anisul Haque has joined the
Bank as its Islamic Banking Consultant. A dedicated team of experienced Islamic bankers is
working under his active guidance both at head office and branch level. A competent Shariah
Council consisting of Islamic scholars, Ulema, Fukaha and Islamic bankers headed by Mr. Md.
Wadud a prominent Islamic scholar has also been formed to guide the Islamic banking affairs.
Board of directors as well as management of the bank are very much interested to promote Islamic
banking system in the bank aiming at opening more Islamic branches in the near future.
The goals and objectives of Islamic banking Wing are as under:
To facilitate the Islamic banking system in the country
To create new entrepreneurs and to arrange required finance for them
To play effective role for socio economic development of the country
To give assistance in launching welfare oriented economic system under Islamic values
Under this wing DMCBL extends the following Islamic banking services:
Deposit services
Investment services
Under Deposit services the following services are being rendered:
Mudaraba Savings Account
Mudaraba Education Deposit Scheme
Mudaraba Term Deposit Account (with different terms)
Mudaraba Marriage Deposit Scheme
Al-Wadiah Current Deposit Account
Mudaraba Hajj Deposit Scheme
Some other schemes are under process.
Investment Banking:
DMCBL is the first Private Sector Co-operative Bank in our Bangladeshis. Since our inception, we
have been participating in different industrial and national development activities in addition to
normal Trade Finance and SME development. DMCBL has 59 branches within the country.
b) Deposit Service Provided By the DMCBL:
As a bank the business philosophy of DMCBL is to provide innovative banking. The future growth
of the banking industry and its profitability depends on customer satisfaction. So if any financial
institution can prove a satisfactory service success is indisputable.
Loans / Advances:
DMCBL is extending credit facilities in all sectors covering commercial credit lines to the business
community. In addition to that other facilities like micro credit, consumer credit, marriage loan,
education loan, consumer loan, supervisory credit to the farmers, weavers in the agricultural sector
etc. to be extended for development of the country.
In this area DMCBL specially offers two types of schemes for different persons. Every person must
be a member of the DMCBL before take the any kind of loan. Every person must be come through
the official rules and regulations to take loan. These are:
Consumer Credit Scheme
Personal Loan Scheme
Education Loan Scheme
Education Loan Scheme
Investment Services:
DMCBL Islamic Banking Wing provides investment facilities for project finance, working capital
finance, SME finance, consumer / retail baking finance etc. under following modes:
Hire-Purchase under Shirkatul Melk (HPSM): Under this mode the Bank and the client
procure asset such as machinery, land, car etc. on equity participation basis. The Bank rents
out its portion of assets to the client for a certain period. The client pays the rental with a
part of principal amount on monthly / quarterly basis. The client gets its proportionate
ownership with the payment of monthly / quarterly instalments. On maturity, total
ownership of the assets automatically goes to the client as and when final payment of the
account is made.
Ijara or Leasing: It is more or less like the HPSM. In this case equity participation may or
may not exist. Ownership of the asset is not automatically transferred to the client with the
payments of instalments. On maturity, the bank transfers the ownership to the client on
payment of certain transfer fees.
Bai-Muajjal / Bai-Murabaha: These modes are applicable for working capital finance.
Under these schemes bank purchases goods / raw materials as per requirement of the client.
In case of Bai-Muajjal bank receives the sales proceed on deferred payment basis. On the
other hand in case of Bai-Murabaha Bank receives the sale price at the time of delivery of
the goods / raw materials. Before handing over the goods / raw materials the bank generally
keeps the same in its custody under pledge.
Musharaka : Under this mode the Bank and clients jointly participate in a project, in a
scheme or project. Profit is shared between the Bank & the concerned client as per pre-
agreed ratio. On the other hand loss is shared according to capital ratio.
Mudaraba: Under this mode bank finances the scheme as a Shaheb-Al-Maal (owner of the
capital). Profit is shared between the two sides as per pre-agreed ratio.
Sector of Investment:
Islamic Banking Wing of the bank finances in all sectors i.e. Industry, Business, and Agriculture
etc. if purpose of the investment is permissible under Islamic Shariah.
Limit of Investment:
Investment is offered to the extent of single borrower exposure limit as fixed by the Bangladesh
Bank from time to time.
DMCBL Islamic Banking Wing has been continuously trying to expand it’s service horizon
keeping the necessity of valued clients in view and upholding the principle of Islamic Shariah.
Present Status of DMCBL:
Present Network of DMCBL:
DMCBL is one of the largest private-sector co-operative banks in Bangladesh, with years of
experience. Adaptation of modern technology both in terms of equipment and banking practice
ensure efficient service to clients. 99 branches create efficient networking and reach capability.
DMCBL is a bank that serves both clients and country.
The board of Directors consists of 15 members. The bank is headed by the managing Director who
is the Chief Executive. The Head Office is located in 19, Indira Road, Farmgate, Tejgaon, Dhaka –
1215.
Image and Reputation:
The reputation of this bank well indeed. In private sector it is the largest co-operative bank. Most of
districts it is providing services, which are incapable of other private co-operative banks. All the
branches are computerized and people are getting quick benefit from the bank. In rural area
DMCBL has achieve a great goodwill and if the bank can hold this reputation it can earn much
better profit in future within the new competitive era.
Retail Banking:
Practice of Loan and Advances:
Consumer Credit Scheme:
DMCBL has devised and introduced Consumer Credit Scheme to extend credit facility to the
limited and fixed income group to improve their standard of living. Under this scheme the bank
finances their purchase their consumer durable viz. Air Conditioner, freeze, TV, Washing Machine,
Private Car, Jewellery etc. The individual repay the loan in easy monthly instalment.
Objective of the consumer Credit:
To extend credit facility to the limited income group.
To develop standard of living of middle and upper middle class.
To participate in the socio economic development in the country.
Credit available for:
Individual such as confirmed officers/ executives of Government/Semi Government
organizations.
Autonomous bodies,
Corporations, multinational companies, local renowned companies
Banks, insurance companies
Teachers of educational institutions
Officers of armed force, member of professional bodies and
Other self employed persons
Financing Products:
Air conditioners, Refrigerator, Deep freezer, Washing machine
Mobile phone
Cooking range, Micro wave
Furniture, Sewing machine and
Other domestic appliance
Entertainment Items
TV, VCD, VCP
Music system, Sound system, Video camera with accessories etc.
Office equipment:
Personal computer, Photocopier
IPS, UPS
Small non-commercial generator and
Other office equipment
Vehicles:
Car
Microbus
Small jeeps
Motorcycle etc.
Intangibles:
Medical Expenses
Holydays
Marriage
Education
Others:
Home repair
Redecoration and Renovation
Jewellery
Limit:
Through the bank gives the consumer loans, but it has got some limitations.
Procedure for availing the credit facility:
Minimum loan amount : Tk.25,000/- and
Minimum loan amount : Tk.5,00,000/- (for Personal Loan - unsecured).
Minimum loan amount : Tk.10,00,000/- (for Auto Loan - unsecured).
Debt equity ratio:
Equity in the form of margin shall be at least 15% of the value of the item (except for vehicle). For
vehicle, it will be at least 30%. The client/borrowers before disbursement of the loan will deposit
the amount if equity.
Repayment Arrangement:
Equal monthly Instalment for both principal and interest, covering the period of the loan.
Instalment to be paid within the 30th of each month.
Securities and Documentation:
Personal guarantee (for all product specification).
Cash collateral (for secured overdraft / loans).
Charge documents. Cycle registration shall be in the joint names of the bank and the
borrower.
Authority for approval:
Branch Managers jointly with Sub-Manager / Relationship Official. For exceptional cases - the
Senior Executive Vice President (Corporate Banking) or Managing Director.
Monitoring:
The members of the Consumer Banking Department review the position of all the Branches and
monitor each and every account. Letters, reminders or even phone calls are made to any Branch
which fails to realize the instalments timely. The Branches are given time limit to reduce the
overdue liabilities or face the consequence of having to lose their discretionary power of disbursing
further Consumer Loans.
Unsecured Loans:
1. Personal Loan:
Target Customer Employees of reputed Local Corporate, MNCs, NGOs, Airlines,
Private Universities, Schools and Colleges, International Aid
Agencies and UN bodies, Government Employees, Self-employed
Professionals (Doctors, Engineers, Chartered Accountants,
Architects, Consultants), Businessmen.
Purpose Marriages in the family, Purchase of office equipment / accessories,
Purchase of miscellaneous household appliances, Purchase of
Personal Computers, Purchase of audio-video equipment, Purchase
of furniture.
Loan Amount Minimum Tk. 25,000.00 and Maximum Tk. 5,00,000.00
Charges Processing fee: Tk. 250.00 to Tk. 2,500.00 depending on the
sanction amount.
Tenor Minimum 12 months and Maximum 36 months.
Rate of Interest 19.50% p.a. - 21.00% p.a.
Security Hypothecation of the product to be purchased. Two personal
guarantees (as per our list of eligible guarantors)
2. Auto Loan:
Target Customer Employees of reputed Local Corporate, MNCs, NGOs, Airlines,
Private Universities, Schools and Colleges, International Aid
Agencies and UN bodies, Government Employees, Self-employed
Professionals (Doctors, Engineers, Chartered Accountants,
Architects, Consultants), Businessmen.
Purpose To purchase Brand new vehicle, non-registered reconditioned
vehicle.
Loan Amount 70% for the brand new car 60% for the reconditioned car but must
not exceed BDT 10,00,000.00
Charges Application fee: Tk. 500.00, Processing fee: 0.50% on the approved
loan amount or Tk. 5000.00 whichever is higher.
Tenor For reconditioned Car: Maximum 36 months and for Brand new
Car: Maximum 60 months
Rate of Interest 18.50% p.a. – 19.50 p.a.
Security Hypothecation of the vehicle to be purchased. Two personal
guarantees (as per our list of eligible guarantors)
3. Easy Loan (For Executives):
Target Customer The loan is specially designed for salaried people who are employed
in different reputed companies
Purpose Marriages in the family, Purchase of office equipment / accessories,
Purchase of miscellaneous household appliances, Purchase of
Personal Computers, Purchase of audio-video equipment, Purchase
of furniture, Advance rental payment, Trips abroad, Admission/
Education fee of Children etc.
Loan Amount Minimum Tk. 50,000.00 and Maximum Tk. 3,00,000.00
Charges Application fee: Tk. 500.00, Processing fee: 0.50% on the approved
loan amount or Tk. 1000.00 whichever is higher
Tenor Minimum 12 months and Maximum 36 months
Rate of Interest 19.00% p.a.
Security Letter of confirmation from the employer. One personal guarantee
(as per our list of eligible guarantors)
4. Gold Grace (Jewellery Loan):
Target Customer The loan is specially designed for salaried women who are
employed in different reputed companies
Purpose To purchase ornaments/Jewellery for personal use
Loan Amount Minimum Tk. 50,000.00 and Maximum Tk. 3,00,000.00
Charges Application fee: Tk. 500.00 and Processing fee: 0.50% on the
approved loan amount or Tk. 1000.00 whichever is higher
Tenor Minimum 12 months and Maximum 36 months
Rate of Interest 19.00% p.a.
Security Letter of confirmation from the employer. Personal guarantee from
the parents and spouse (if married)
5. House/Office Furnishing/Renovation Loan:
Target Customer Expatriate Bangladeshi nationals who are in business or service
holders. Employees of reputed Banks & Leasing companies, reputed
Local Corporate, MNCs, NGOs, Airlines, Private Universities,
Schools and Colleges, International Aid Agencies and UN bodies.
Government Employees. Self-employed Professionals (Doctors,
Engineers, Chartered Accountants, Architects, Consultants).
Reputed and highly respectable Businessmen with a reliable source
of income
Purpose House/Office Furnishing/ Renovation, For interior decoration /
Titles Stones, Electrical fittings, wooden cabinets / Overall
furnishing and all types of House/Office Renovation, purchase/
furnishing of apartments etc.
Loan Amount Minimum Tk. 1,00,000.00 and Maximum Tk. 10,00,000.00
Charges Application fee: Tk. 500.00 and Processing fee: 0.50% on the
approved loan amount or Tk. 2000.00 whichever is higher
Tenor Minimum 12 months and Maximum 48 months
Rate of Interest 19.00% p.a.
Security Title deed of the House/Office to be furnished/renovated along with
memorandum of deposit of title deed duly supported by a notarized
power of attorney to be kept by the bank as a matter of comfort.
Two personal guarantees (as per our list of eligible guarantors).
Registered mortgaged of the property if the loan amount is more
than Tk. 5.00 lac
6. Staff Loan:
Target Customer All permanent employees of DMCBL
Purpose Marriages in the family, Purchase of office equipment / accessories,
Purchase of miscellaneous household appliances, Purchase of Personal
Computers, Purchase of audio-video equipment, Purchase of furniture
Loan Amount According to the debt burden ration and other criteria
Charges Processing fee: 0.50% on the approved loan amount or Tk. 1000.00
whichever is higher
Tenor Minimum 12 months and Maximum 36 months
Rate of Interest 16.00% p.a.
Security Hypothecation of the product to be purchased
Product Name Education Loan
Target Customer Students Criteria:
• Students of reputed Educational Institutes, such as Public & Private
Universities, Medical Colleges & Engineering Institute.
• Undergraduate & Post graduate Level
• Professionals degrees (Chartered Accountants (CA), Cost &
Management Accountants (CMA), Marine, MBM, MBA)
• Doctorate degree (PhD), FCPS etc.
• Occupation: Student
• Minimum Age: 17 years
• Maximum Age: 40 years
• Educational Qualification: Minimum HSC/A-Level Pass.
Parents Criteria:
Service Holder:
• Individuals with ranks equivalent to Senior Assistant Secretary or
higher would qualify guarantor
• Bank officials (Equivalent to Senior Principal Officer of NCBs,
AVP / Branch Manager of Local and Foreign banks) and Department
Head of Multinational Company or established Local Corporate.
Guarantors must be accepted by the Branch Manager/Head Office.
Businessman:
• Well reputed and widely respected Self-employed professionals
Purpose To Financially Assist The Parents: Admission/Education Fees,
Semester Fees, Study abroad
Loan Amount Minimum Tk. 50,000.00 and Maximum Tk. 3,00,000.00
Charges Application fee: Tk. 500.00 and Processing fee: 0.50% on the approved
loan amount or Tk. 1000.00 whichever is higher
Tenor Minimum 12 months and Maximum 36 months
Rate of Interest 18.50% p.a. – 19.50% p.a.
Security One personal guarantees (as per our list of eligible guarantors)
Secured Loans:
1. Personal Loan:
Target Customer All Clients of DMCBL
Purpose To meet personal requirement of fund
Loan Amount Maximum 95% of the present value of the security
Charges Processing fee: Tk. 1000.00
Tenor Minimum 12 months and Maximum 36 months
Rate of Interest 17.00% p.a. – 18.00% p.a. (subject to type of the security). 2% spread
must be maintained in case of own bank FDR
Security Lien over FDR, BSP, ICB Unit Certificate, RFCD, NFCD, CD
account(s) etc. One personal guarantee in case of third party cash
collateral (as per our list of eligible guarantors)
2. Personal Overdraft:
Target Customer All Clients of ABBL
Purpose To meet personal requirement of fund
Loan Amount Maximum 95% of the present value of the security
Charges Processing fee: Tk. 1000.00
Tenor Revolving with annual review
Rate of Interest 13.50% p.a. - 16.50% p.a. (subject to type of the security). 2% spread
must be maintained in case of own bank FDR
Security Lien over FDR, BSP, ICB Unit Certificate, RFCD, NFCD, and CD
account(s) etc. One personal guarantee in case of third party cash
collateral
Corporate Banking:
At DMCBL we provide complete range of solutions to meet Corporate Customers requirements.
Our Corporate Banking solutions include a broad spectrum of products and services backed by
proven, modern technologies.
Corporate Lending:
Our specialist teams offer a comprehensive service providing finance to large and medium-sized
businesses based in Bangladesh. For more information as to how we might best meet your
corporate debt needs, please contact us at our Corporate Head Office.
We aim to provide tailored financing solutions with a dedicated team who can rapidly respond to
client needs.
Following are some of the products and financial tools of Corporate Banking:
Project Finance
Working Capital Finance
Cash Management
Equity Finance
Corporate Advisory Services
SME Banking:
SME Loan:
Considering the volume, role and contribution of the SMEs, in the last seven years DMCBL has
been patronizing this sector by extending credit facilities of different types and tenor. As of now
65% of the bank’s total loan portfolio is segmented to the SMEs which deserve all out attention in
our plans, projections and forecasting.
As such the bank has emphasized on the following issues:
To provide the best services to the SME sector
To increase the SME portfolio of ABBL significantly
To improve the quality of ABBL’s portfolio
Structure of SME division:
The reporting line in SME:
Customer Relationship Officer (CRO)
Zonal Officer (ZO)
Team Manager (TM)
Field Level:
In the field level there are three types of designated DMCBL staff operates. They are Customer
Relation Officer (CRO), Zonal Officer (ZO) and Territory Officer (TM).
CRO: Customer relationship officers. There are about 860 CRO working all over the country. CRO
are assigned to spot potential entrepreneurs through out the country and motivate them to take loan
from DMCBL. Each CRO falls under their assigned territory and they have to perform their job
within that. They are under direct supervision of the Zonal Officers (ZO). CRO goes to people,
identifies their need and according their need, suggest them to avail loan from DMCBL. CRO are
responsible for evaluating the trustworthiness of the client whether they are capable to repay the
loan or not. To provide loan and ensuring loan repayment are the two main tasks done by the CRO.
SME
Field LevelCRO, ZO, TM, QAO
Head Office LevelCredit, Loan Adm., Fin. Admin, Recovery & MIS
ZO: There are 16 Zonal Officers. These ZO controls the CRO. They visit the spot that the CRO
already located. Each and every enterprise will be visited by ZO. ZO has the authority to sanction
loan highest up to taka 50.00 thousand.
TM: There are 4 team Managers. They supervise the ZO.
QAO: There are 4 Quality Assurance Officer. They perform the job of monitoring. They supervise
the ZO and TM.
Head Office Level:
Credit:
The Credit limit varies depending on the rank.
ZO has the authority to sanction up to highest 50.00 thousand.
TM has the authority to sanction up to highest 1.00 lac
If the credit limit exceed taka 1.00 lac it goes to Credit Committee
If the credit limit exceeds taka 5.00 lac it goes to the Board.
Loan Admin - The posting is done in the system in the Asset Operations Department. Then Loan
Admin sends requisition to Finance Admin.
Finance Admin: Finance Admin take care of the other expenses.
Recovery: Recovery Department prepares an overdue report and informs the TM. Recovery
department keeps track of the money. Legal notices are given to the defaulters.
MIS: MIS department keeps the total record of loan from its sanction to repayment.
SME Sectors in which DMCBL has participated so far:
Agri machinery
Poultry
Animal Feed
Dairy Product
Hotel & Restaurants
Garments Accessories
Furniture : Wooden & Metal
Paint
Printing & Packaging
Aluminium
Clinics and Hospitals
Engineering & Scientific Instruments
SME Banking Process Flow:
DMCBL SME division has been in relentless pursuit to enhance and secure the business portfolios
of thousand of small businesses around the country. As part of its development strategy, the bank
provides loan facilities between 50.00 thousand and 15.00 lac taka to the small and medium
enterprises around the country without any easy access to banks/financial institutes. There are over
860 Customer Relation Officers (CUSTOMER RELATIONSHIIP OFFICER) providing door-to-
door service to clients.
Overview of the Process:
The success of SME largely depends on the selection of a business and the person running it.
DMCBL only provides facilities to business operations with over two years of experience. The
business also needs to be legally registered and must have a valid trade license. The entrepreneur
should also be physically able, preferably between the ages 20 to 50. He/She must have the
necessary technical skills to run the business and have an acceptable social standing in the
community. DMCBL gives equal importance to the guarantor of the loan. The guarantor must have
a net worth equal to 125% of the loan amount. The guarantor should know the entrepreneur well
and should preferable live in the same community. The client must possess an account in DMCBL
against which entrepreneurs can apply for loan.
Customer relation officers search new potential customers by providing door-to-door service. They
talk with clients and monitor their manners, activities of their business and provide the loan to the
potential customers. The customer relation officers also monitor the borrowers’ activities after the
loan disbursement. Monitoring also facilitates the build up of an information base for future
references.
Asset Operations division is responsible for the complete disbursement and closing procedures. The
process starts form the sanction of the SME loan. The respective Customer Relationship Officers
select potential enterprises, collect confidential information about the enterprises, open clients’
accounts in the respective branches, fill up the CIB form and send it to Asset Operations
Department (AOD). AOD sends the CIB form to the Bangladesh Bank to verify the applicants’
status. If the report comes out clean, then the CRO send complete details of the customers. AOD
then prepares a loan file and checks all necessary documents and enters information regarding the
loan in MYSIS, which includes initial ID generation, generating Customer Information Number
(CIF) for client’s individual account or any link accounts, loan account opening, risk fund
collection, and activation of the loan. Loan approval activities are done through KASTLE, includes
accumulating all the CIF numbers thereby generating an unique application id and entering product
type code, approved amount, scheme type, basic information related to the client, business
information, security information, financial information, sales report, stock report, debtor and
creditor information, liability and bank statement and asset financing information. The SME
Division deals with KASTLE and when the CIF id is generated through MYSIS then KASTLE
create a unique application id with accumulation different CIF numbers. Suppose a client may have
one FDR account, one current account, one savings account and thereby applied for a loan. MYSIS
will generate individual CIF numbers for each and every account.
Again when the loan gets approved AOD deals with the post disbursement manual activities,
include sending repayment schedule to the unit offices in paper format, documents stamp
cancellation and sending the loan file to the archive. Apart from that the respective unit heads and
authorized employees can access through MYSIS for repayment schedule. Recovery activities
include receiving SMS/Fax for instalments deposits, entering the instalments information into
MYSIS, printing vouchers, CRO checking SMS/Fax and solving problems, repayment voucher
check and posting. Closing activities include receiving SMS/Fax requesting for closing, accessing
the loan file from the archive in MYSIS, obtaining approval for closing from the concerned
authority, CROs-checking with KASTLE, SMS concerned customer relations officer , and
receiving and printing closing SMS/Fax.
Basic Appraisal of Small & Medium Enterprise:
Business or project appraisal is a technique of evaluating a business from various aspects, primarily
the risks associated with that business enterprise. During an appraisal one has to perform a
feasibility study on different aspects. These are:
a. Management and Personal Aspects
b. Technical Aspects
c. Marketing Aspects
d. Financial Aspects
e. Social Economic Aspects
f. Security Aspect
a. Management and personal aspects: During the appraisal the Customer Relation Officer should
endeavour to obtain details about the prospective borrowers, some of which are:
i. Business related information
ii. Credit History
iii. Liquidity Information
iv. Management Background
In considering the above, one should look at how the business is managed. The CRO should also
consider clients’ previous credit history particularly his loan repayment record. One should also
verify the clients’ bank accounts and amount of balance maintained. Managements’ qualification,
experience, successor and maintenance of records should provide insight in to the business.
b. Technical Aspects: From a business perspective, this aspects deals with design of the system in
place, the operation of the business, the different type of physical resources used, the technology
used, the capacity to handle business and all other inputs (labour, raw materials, utilities etc.)
The technical factors to be investigated during an appraisal are:
The size of project
The process, materials, equipment, and reliability of technical systems to be used
Location of projects
Sustainability of the plans, layout and design used
Total quantity of the goods /Service produced/Traded monthly
Environment of the business and its surrounding areas
Availability to various factors of production, both physical and human
Raw materials availability, price level and its variations
c. Marketing Aspects: A CRO should consider the following factors of a business before making
any loan commitment with a customer:
Total demand and supply of the products in the market
Whether the business operates in growth
Major marketing threats that the business may face.
d. Financial Aspects: This phase checks the financial health of a business through an analysis of
the profit and loss account, balance sheet, cash flows, ratios and requirement of working capital. If
the financial data can be collected properly, it could give a proper picture of the businesses actual
position. How ever, all the data collected must be CRO checked as much as possible with the
physical features of business.
The following things are to be considered and determined at the time of verifying the financial
feasibility of the business:
Current year’s profit/Loss of the business and probable profitability of business after taking
the loan
Determination of assets, liabilities and net worth of the manufacturing/ trading / service
institution before and after taking loan
Present net cash flow of the business after disbursement of loan should be determined,
To know the cash position of the institution
To know the source of income, production and other expenditure of the business probable
financial risks of the business
e. Socio Economic Aspects: CROs should try to establish the contribution of the business to the
country’s GDP, the employment generated, the sort of adverse impact of the business on the
environment, and any other benefits offered.
f. Security Aspects:
Ensure proper survey or verification of the security offered
Ensure attachment of survey report.
Selection of Potential Enterprise for SME:
Enterprise Selection Criteria
The success of SME will largely depend on the selection of a business and man behind it. In terms
of the business (Enterprise), the following attributes should be sought:
1. The business must be in operation for at least two years
2. The business should be environment friendly, no narcotics or tobacco business
3. The business should be legally registered, i.e., valid trade license, income tax or VAT
registration, wherever applicable.
4. The business should be in legal trade, i.e.; smuggling will not be allowed or socially
unacceptable business will not be entertained.
5. The business must have a defined market with a clear potential growth
6. The business must be located ideally close to the market and the source of its raw
materials/suppliers. It should have access to all the utilities, skilled manpower’s that are
required.
7. Any risk assessed by the management in turn will become a credit risk for the bank. So
effort should make to understand the risk faced by the business.
Entrepreneur Selection Criteria
In order to understand the capability of the management behind the business, the following should
be assessed:
1. The entrepreneur should be physically able and in good health, preferably between the age
of 20-50. If he/she is an elderly person closer to 50, it should be seen what the succession
process will be and whether it is clearly defined or not.
2. The entrepreneur must have the necessary technical skill to run the business, i.e. academic
background or vocational training, relevant work experience in another institution or years
of experience in this line of business.
3. The entrepreneur must have and acceptable social standing in the community (People
should speak highly of him), he should possess a high level of integrity (Does not cheat
anyone, generally helps people), and morally sound (Participates in community building)
4. The entrepreneur must possess a high level of enthusiasm and should demonstrate that he is
in control of his business (Confidently replies to all queries) and has the ability to take up
new and fresh challenges to take the business forward.
5. Suppliers or creditors should corroborate that he pays on time and is general in nature
6. Clear-cut indication of source of income and reasonable ability to save.
Guarantor Selection Criteria:
Equally important is the selection of a guarantor. The same attribute applicable for an entrepreneur
is applicable to a guarantor. In addition he should posses the followings:
1. The guarantor must have the ability to repay the entire loan and is economically solvent
(Check his net worth)
2. The guarantor should be aware about all the aspect of SEDF loan and his responsibility
3. Govt. and semi-govt. officials can be selected as a Guarantor such as school teachers,
college teachers, doctors and so on.
4. Police, BDR and Army personnel, political leaders and workers, and Imams of mosques
cannot be selected as a guarantor.
5. The guarantor should know the entrepreneur reasonable well and should preferably live in
the same community
Terms and Conditions of SME Loan:
The SME department of DMCBL will provide micro credit loans to potential borrower under the
following terms and conditions:
The potential borrowers and enterprises have to fulfil the selection criteria
The loan amount is between Tk. 50.00 thousand and 15.00 lac.
SME will impose loan processing fees for evaluation / processing a loan proposal. Loan
processing fee is 0.50% of the sanctioned loan amount.
Loan can be repaid in two ways: In equal daily instalment or monthly instalment.
Loan may have various tenures, such as, 3 months, 4 months, 6 months, 9 months, 12
months, 15 months, 18 months, 24 months, 30 months, 36 months and 48 months.
The borrower must open a bank account with the same bank and branch where the SME has
its account
Approved loans will be disbursed to the client through that account by account payee
cheque in the following manner: Borrower name, Account name, Banks name and Branch’s
name
The borrower will install a signboard in a visible place of business of manufacturing unit
mentioned that financed by “DMCB Limited”.
The borrower has to give necessary and adequate collateral and other securities as per
bank’s requirement and procedures.
SME, DMCBL may provide 100% of the Net Required Working Capital but not exceeding
75% of the aggregate value of the Inventory and Account Receivables. Such loan may be
given for periods not exceeding 18 months. Loan could also be considered for shorter
periods including one time principal repayment facility, as stated in loan product sheet.
In case of fixed asset Financing 50% of the acquisition cost of the fixed asset may be
considered. While evaluating loans against fixed asset, adequate grace period may be
considered depending on the cash generation after the installation of the fixed assets.
Maximum period to be considered including grace period may be for 36 months.
Monitoring:
Monitoring is a system by which the bank can keep track of its clients and their operations. So
monitoring is an essential task for a CRO to know the borrowers activities after the loan
disbursement. This also facilitates the build up of an information base for future reference.
Importance of Monitoring:
Through monitoring a CRO can see whether the enterprise invested the sanctioned amount in the
pre-specified area of his business, how well the business is running, the attitude of the entrepreneur,
cash credit sales and purchase, inventory position, work in process and finished goods etc, This
information will help the CRO /DMCBL to recover the loan accruing to the schedule and to take
the necessary decisions for repeat loans. Moreover, monitoring will also help to reduce
delinquency. Constant visit over the client /borrower ensures fidelity between the bank and the
borrower and tends to foster a report between them.
Areas of Monitoring:
The purpose is to know the entire business condition and all aspects of the borrowers so that
mishap can be avoided.
a. Business Condition:
The most important task of the CRO to monitor the business frequently, it will help him to
understand whether the business is running well or not, and accordingly advice the borrower,
whenever necessary. The frequency of monitoring should be at least once month if all things are in
order.
b. Production:
The CRO will monitor the production activities of the business and if there is any problem in the
production process, the CRO will try to help the entrepreneur to solve the problem. On the other
hand the CRO can also stop the misuse of the loan other than for the purpose for which the loan
was disbursed.
c. Sales:
Monitoring sales proceed is another important task of the CRO it will help him to forecast the
monthly sales revenue, credit sales etc. which will ensure the recovery of the monthly loan
repayments from the enterprise as well as to take necessary steps for future loans.
d. Investment:
It is very important to ensure that the entire loan has been invested in the manner invented. If the
money is utilize in other areas, than it may not be possible to recover the loan.
e. Management of raw materials:
In case of a manufacturing enterprise, management of raw materials is another important area for
monitoring. If more money is blocked in raw materials then necessary, then the enterprise may face
a fund crisis. On the other hand the production will suffer if there are not enough raw materials.
Economic Mapping Survey:
The branch will survey of the business of the entrepreneurs. The objective of the survey is to collect
relevant information about the business, which will help to select potential business for Micro
Credit/SME loans.
Mapping and Survey Method:
To conduct the economic mapping and survey properly, the following process should be followed:
The CRO will prepare a physical map of his working area showing main roads, businesses,
markets and industrial locations. In this map, the CRO will show different kinds of business in
different colours. This map will show the approximate location of all kinds of business within
the area.
The CRO will drive his total working area into several clusters, if possible, after that he will
conduct the survey cluster wise. After completing one cluster, the CRO will start surveying
another cluster.
After the survey, the CRO will preserve the survey form cluster wise in a separate file. Based
on the survey, the CRO will identify the potential businesses to pursue those for Micro
Finance/SME loans.
Therefore, CRO will approach the potential borrowers immediately to process loan application
Loan Sanction Activities:
Select potential enterprise: For Micro Finance/SME loan, in this step the CRO conduct a survey
and identify potential enterprise. Then they communicate with entrepreneurs and discuss with
the Branch Manager.
Loan Presentation: The function of CRO is to prepare loan presentation based on the
information collected and provided by the entrepreneur about their business, land property
(Where mortgage is necessary)
Collect confidential information: Another important function of a CRO is to collect confidential
information about the client from various sources. The sources of information are suppliers
regarding the clients’ payment, customers regarding the delivery of goods of services according
to order, various banks where the client has account which shows the banks transactions nature
of the client.
Open clients’ accounts in the respective branch. DMCBL will disburse the loan through this
account. On the other hand the client will repay by this account. Although there is some
exception occur by the special permission of the authority to repay by a different bank account.
Fill up CIB form: CRO gives a CIB form to the client and the client fill and sign in it. In some
case if the client is illiterate then the CRO fill the form on behalf of the client. Then CRO send
the filled and signed form to the head office.
Sending CIB to Bangladesh Bank: The head office collects all information and sends the CIB
form to Bangladesh Bank for clearance. Bangladesh Bank return this CIB form within 10-12
days with reference no.
CIB report from Bangladesh Bank: In the CIB report Bangladesh Bank use any of the following
reference no:
1. NIL: If the client has no loan facility in any bank or any financial institution then BB
(Bangladesh Bank) use ‘NIL’ in the report
2. UC (Unclassified): if the client has any loan facility in any bank or financial institution and
if the instalment due 0 to 5.99 then BB use UC in the report
3. SS (Substandard): if the client has any loan facility in any bank or financial institution and
if the instalment due 6 to 11.99 then BB use SS in the report
4. DF (Doubtful): if the client has any loan facility in any bank or financial institution and if
the instalment due 12 to 17.99 then BB use DF in the report
5. BL (Bad lose): if the client has any loan facility in any bank or financial institution and if
the instalments due for more than 18 or above months then BB use BL in the report. This
report indicates that the client is defaulter and the bank should not provide loan the client.
Loan Sanction:
The respective branch sanctions loan to the clients up to 1.00 lac and then send the sanction letter
including all necessary charge documents to the asset operation division for disbursement the loan.
If the amount is higher than 1.00 lac then the respective branch sends the proposal to head office,
credit division for sanction. The head office credit division sends the proposal to the credit
committee or board. After sanctions the loan, the sanction letter including all documents send to the
branch for disbursement.
Disbursement of SME loan:
Pre Disbursement Manual Activities
Prepare loan file: Receiving all documents, Credit Officer prepare a loan file with all
documents received the applicant.
Charge documents checking: The credit administration division checks all charge
documents. Following charge documents are checked:
Money receipt (Risk fund)
Sanction letter
Demand promising note (With stamp of Tk 20/=)
Letter of arrangement (With stamp of Tk 150/=)
General loan agreement (With stamp of Tk 150/=)
Letter of undertaken (With stamp of Tk 150/=)
Letter of stocks and goods (With stamp of Tk 150/=)
Letter of hypothecation book debt and receivable(With stamp of Tk 150/=)
Letter of disbursement
Photocopy of trade license
Two guarantors ( one must be Spouse/parents)
If the loan provide for purchase of fixed assets or machineries and if the loan
amount is over Tk 50,000/= then the stamp of a certain amount is require)
Documents deficiency and problem resolving: If there is any error found then it informed
to the respective branch. If the application form is not filled properly then the file send to
the branch to fill the application properly. If any document error found then the credit
administration division asked the branch to send the require documents and the file stored to
the credit administration division.
Prepare disbursement list: The credit administration division lists all new sanctioned
clients’ details and send a request to the treasury through internal mail.
Disbursement of the amount: Sending the list to the treasury of DMCBL for disburse the
amount, the treasury disburse the amount to the client through the branch account of the
clients.
Financial Analysis:
An analysis of historical financial statements of the borrower should be presented. Where reliance
is placed on a guarantor then guarantor’s financial statements should also be analyzed. The
analysis should address the quality and sustainability of earnings, cash flow and the strength of the
borrower’s balance sheet. Specifically, working capital assessment, cash flow, leverage and
profitability should be analyzed. However for small enterprises. However it should be mentioned
here that a large number of enterprises other than limited companies (i.e., grocery shop, general
store, hotel, fish shop, lead workshop, sole proprietorship/partnership firms etc.) may not have
proper books of accounts including balance sheet, profit & loss account and they may not be able to
prepare current and future cash flows due to lack of sophistication and expertise. It is expected that
in such cases, the respective Credit Officer shall assist the borrower(s) in obtaining/developing such
books of accounts as per forms/formats prescribed by each bank.
Complying with lending guidelines:
There should be “Lending Guidelines” that clearly outline the senior management’s view of
business development priorities and the terms and conditions that should be adhered to in order for
loans to be approved. The Lending Guidelines elaborated in this Policy Document shall be
reviewed in every six months to reflect changes in the economic outlook and the evolution of the
bank’s loan portfolio, and be distributed to all lending/marketing officers. The Lending Guidelines
should be approved by the Credit Committee & Board of Directors of the bank based on the
endorsement of the bank’s Head of Credit.
Any departure or deviation from the Lending Guidelines should be explicitly identified in credit
applications and a justification for approval provided. Approval of loans that do not comply with
Lending Guidelines should be restricted to competent authority as decided by bank’s Credit
Committee & Board of Directors.
Complying with PPG:
Officers/Employees related with Approval process should ensure that the proposed facility
complies with the Clauses outlined in the PPG of that particular product. Any departure or
deviation from the PPG should be explicitly identified in credit applications and a justification for
approval provided. Approval of loans that do not comply with PPG should be restricted to
competent authority as decided by bank’s Credit Committee & Board of Directors.
Approval process:
Loan Applications in the prescribed format shall be received at Credit Approval Committee
recommended by credit officer. The credit officer is responsible for loan sales and should be the
owner of the customer relationship, and must be held responsible to ensure the accuracy of the loan
application submitted for approval. They should be familiar with the bank’s Credit Policy and PPG
and should conduct due diligence on new borrowers, purpose of the loans and guarantors. During
recommending for a client it is expected that the respective Officer has adhered to Know Your
Customer (KYC) and Money Laundering guidelines.
Credit Approval Sheet should have, as a minimum, the following details:
Amount and type of loan(s) proposed.
Purpose of loan(s)
Loan Structure (Tenor, Covenants, Repayment Schedule, Interest)
Security (if any)
Approvals must be evidenced in writing. Approval records must be kept on file with the Credit
Applications. Loans and advances on becoming inoperative / stuck up should not be renewed and /
or re-scheduled without getting prior approval from the Credit Committee. In case of loan take over
from any bank/financial institution, then any correspondence should be made with the
bank/financial institution directly, such as security takeover.
Credit assessment:
The evaluation process is carried out based on ‘Lending Guideline’ described in this Policy and the
clauses and documents checklist as per the PPG. The detailed credit risk assessment should be
conducted prior to the approving of any loans. The Credit Risks are detailed in the Risk
Management Chapter of this policy.
Risk grading:
Bank shall formulate a separate risk-grading matrix customized for Micro Financing on the basis of
expert opinion taking into consideration the experience of the Bank in lending the Micro Finance
for last few years.
Approval authority:
Lending Authority is delegated to officers related with approval individually by the Managing
Director in writing. Records of such authority are retained with Head of Credit. Copies of all
Delegation of Lending Authorities are also retained by Credit Administrations Department. Any
breaches from Lending Authority should be reported to the Managing Director and Head of Credit.
The executives charged with approving loans shall have relevant training and experience to carry
out their responsibilities effectively.
Execution of approval authority:
While exercising the lending authority instructions / stipulations contained in the Bank’s Manuals,
instructions issued by Bangladesh Bank and other instructions issued by the Head Office from time
to time should be strictly followed. Lending authority is not transferable or assignable. No lending
officer may approve a credit extension on behalf of others or delegate his authority to others.
Sanction letter:
All letters addressed to the borrowers sanctioning credit facilities should be prepared in duplicate
and signed by two authorized officers of the Bank. Among the two authorized Officer one must be
a Manager of the branch. If the terms and conditions of loan sanction letter are acceptable to him
the borrower should return the duplicate copy duly signed.
Reporting:
A monthly summary of all new facilities approved, renewed, enhanced, and a list of proposals
declined stating reasons thereof shall be reported by branch to the Head of Credit.
DMCBL at a Glance:
Financial Highlights:
SL
NOParticulars
As at 30 June (Taka in lac)
2011 2010 2009 2008 2007
1 Share Capital 287 296 276 246 175
2 Reserve Fund 662 411 227 138 28
3 Total Deposits 37,908 27,735 17,030 11,991 8,835
4 Total Investments 39,416 27,646 16,917 11,927 8,596
5 Micro Investments 26,623 19,720 11,248 7,955 5,519
6 Other Investments 12,793 7,926 5,669 3,972 3,077
7 Total Income 8,589 6,340 4,102 2,896 2,388
8 Total Expenditure 7,959 5,864 3,848 2,635 2,325
9 Net Profit 630 476 254 261 63
10 Total Assets 42,919 30,656 18,916 14,176 9,405
11 Fixed Assets 1,132 882 627 521 476
12 Return of Share Capital 291% 161% 92% 106% 36.36%
13 Return of Assets 1.47% 1.56% 1.34% 1.84% 0.68%
14 Investment Deposit Ratio 103.98% 100.32 99.34% 97.55% 95.74%
15 Dividend 40% 30% 30% 30% 20%
16 No of Employees 1557 1,401 1,064 847 815
17 No of Branches 94 80 67 52 47
18. No of Customers 41,119 39,575 29,670 24,632
Table –A
(Growth rate of Deposits, Investments and Profit/Loss from 2001 to 2011)
Year
July to JuneDeposits
Deposits
Growth
Rate
Investments
Investments
Growth
Rate
Inv./Dep.
RatioProfit / Loss
2000 - 2001 10,680,000 65.43% 5,302,000 77.20% 49.65%(2,838,154)
Up to 30.06.01
2001 - 2002 39,020,000 265.35% 25,932,000 389.09% 66.46% (11,180,831)
2002 - 2003 95,195,000 144.00% 71,203,000 175.00% 74.80% (7,533,595)
2003 – 2004 241,943,000 154.15% 214,757,000 201.61% 88.76% 862,625
2004 – 2005 394,100,000 62.89% 337,517,060 57.16% 85.64% 7,252,279
2005 – 2006 636,149,487 61.42% 568,971,134 68.58% 94.34% 4,447,035
2006 – 2007 883,531,954 38.89% 859,636,522 51.09% 95.74% 6,381,908
2007 – 2008 1,199,081,851 35.71% 1,192,750,792 38.75% 97.55% 26,112,456
2008 - 2009 1,703,034,244 42.03% 1,691,769,656 41.84% 99.34% 25,420,411
2009 - 2010 2,773,555,556 62.86% 2,764,687,429 63.42% 100.32% 47,663,828
2010-2011 3,790,835,512 36.68% 3,941,629,898 42.57% 103.98% 63,006,781
It may be mentioned that due to non-availability of appropriate information and related vouchers,
register, ledger etc. loss to the tune of Tk 2,838,154.00 estimated for the year 2000-2001 shot up to
Tk 1,11,180,831.00 in the year 2001-2002. Due to the far sightedness and efficiency of the existing
management committee, the bank took its rebirth in 2003-2004 and activated and earned a profit of
Tk. 8,62,625.00 with the provision of dividend of 10% for its shareholders. The payment of
dividend increased to 20% for the year 2004-2005 and continued at the same rate for next fiscal
year. And also the payment of dividend increased to 30% for the year 2007-2008 and it also
continued at the same rate for next two fiscal years. The dividends for the year 2010-2011 for the
shareholders of the bank declare is 40%, subjected to approval by next Annual General Meeting
(AGM) .
Classification of Deposit & Savings Scheme:
Deposit:
(a) Savings Deposit.
(b) Current Deposit / Deposit without Interest.
(c) Fixed Deposit / Special Term Deposit.
Savings Scheme:
(a) Monthly Savings Scheme.
(b) Education Savings Scheme.
(c) Marriage Savings Scheme.
(d) Hajj Savings Scheme.
Deposit & Savings Scheme adopted by the Bank proved to be people friendly i.e.; the people of
small means accepted these schemes as their own and invested remarkably. This would be evident
from the outstanding amount of deposits in the deposit & savings scheme for only a period of six
years as given in Table-B bellow.
Table – B
Financial
Year
Al-Wadeeah
Current
Deposits
Mudaraba
Savings
Deposits
Mudaraba
Term
Deposits
Mudaraba
Special
Deposits
Other
Deposits
Total
Deposits
Growth
Rate
2005-06 1,345,602 110,111,828 328,936,701 194,352,441 1,402,915 636,149,48738.89%
2006-07 1,823,450 143,362,154 420,527,608 314,578,599 3,240,143 883,531,954
2007-08 5,614,468 179,056,217 581,700,232 432,319,274 391,660 1,199,081,851 35.71%
2008-09 6,612,408 252,063,903 866,516,499 576,992,489 848,945 1,703,034,244 42.03%
2009-10 227,266,415 178,232,097 1,574,273,003 790,825,920 2,958,121 2,773,555,556 62.86%
2010-11 394,060,833 169,063,812 2,078,222,196 1,147,642,866 1,845,805 3,790,835,512 36.68%
The total Deposit at the end of the previous year was Tk.277.35 (in core). During the year under
review the amount stood at Tk.379.08 (in core) which was 36.68% higher than the position of the
previous year. The proportion of Deposit during the year as given below:
Classification of Loans & Advances:
1. Bai - Murabaha (Micro Investments)
Success of any Co-operative Bank like DMCBL depends on the quality of money it receive and the
quality of money it distributes. Taking this principle as the guiding philosophy, the bank extends
small investments. As these investments are provided without securities it appraises any investment
proposal very cautiously taking the people into consideration.
The bank recovers investment in a number of instalments with profit generally within twelve
months.
Proportion of Deposit For the year of June,2008
15%0%
48%
35%
2%
Savings Curent FDR Special Deposit Sundry
2. Bai - Muazzal (Consumer Investments)
Consumers’ Investment is meant for people of Fixed Income Group i.e. service holder. The
Consumer Investment is repayable within one to two years depending upon the Client’s position.
3. Bai - Murabaha (SOD)
These are allowed against Mudaraba Term Deposit Receipts (MTDR) and Mudaraba Special
Deposits etc. In such case, investment constitutes up to a maximum of the 80% of the deposits and
is realized in monthly instalment basis.
4. Special Scheme Term Investments
Many skilled workers, small traders are not able to procure investments from scheduled banks for
paucity of securities. Considering their locus standing and reputation, they are extended
investments without securities to help them to be self sufficient. Clients are not required to waste
extra time for having investments. They are also not required to come to office to repay
investments. Rather the employees of the bank collect instalments from their door step on daily,
weekly and monthly basis.
5. An instance of Bai - Murabaha (Micro Investments)
If a small trader takes bank’s investment of Tk 10,000.00 and invest in his business, he will have to
pay Tk 100.00 or Tk 80.00 or, Tk 70.00, Tk 60.00 or Tk 50.00 or Tk 40.00 or Tk 30.00 or Tk 20.00
out of the profit of his daily sale proceeds. This payment will be collected by the bank’s employees
directly from his trading/business place/door step. In this process, the entire investment is repaid in
132 days through 107 instalments or 164 days through 136 instalments or 194 days through 158
instalments or 232 days through 188 instalments or 286 days through 232 instalments or 373 days
through 303 instalments or 538 days through 437 instalments or 970 days through 786 instalments.
As a result, the Clients don’t face difficulty and investment becomes his own investment. Around
120,000 members of this society are being benefited through this process.
The total Advance at the end of the previous year was Tk 276.47 (in corer). During the year under
review the amount stood at Tk 394.16 (in corer) which was 42.57% higher than the position of the
previous year. The position of the bank Advance from 2005-2006 to 2010-2011 were given in the
Table – C and the proportion of Advance during the year as given below:
Table – C
Fiscal
Year
Bai -
Mudaraba
(Micro)
Bai -
Mudaraba
(General)
Bai -
Mudaraba
(Cash
Credit)
Bai -
Mudaraba
(SOD)
Bai -
Muazzal
(Consume)
Bai -
Muazzal
(Staff &
Others)
Hire
Purchase
(Rick/Van/
CNG/Ca)
Total
Investments
Growth
Rate
2005-06 359,262,416 129,844,081 24,141,042 36,749,507 16,958,140 828,145 1,187,803 568,971,134 68.58%
2006-07 551,964,600 174,308,426 25,939,399 78,767,336 25,848,029 1,697,008 1,111,724 859,636,522 51.09%
2007-08 795,521,876 207,652,645 25,114,077 112,447,994 37,412,345 13,380,158 1,221,697 1,192,750,792 38..75%
2008-09 1,124,860,599 315,034,388 28,790,093 166,512,245 39,170,281 12,582,547 4,819,503 1,691,769,656 41.84%
2009-10 1,972,026,287 334,162,212 31,176,988 289,888,599 44,030,895 81,749,211 11,653,237 2,764,687,429 63.42%
2010-11 2,662,348,432 383,050,422 40,365,956 465,101,492 47,522,606 333,326,793 9,914,197 3,941,629,898 42.57%
Income, Expenditure and Profit & Loss:
Total Income & Expenditure of the bank during the year were Taka 858,995,155.00 & Taka
795,988,374.00 respectively resulting in a Profit of Taka 63,006,781.00 before appropriation.
Sector wise break - up of Income and Expenditure for the financial year 2010-2011 is shown
below:
Particulars Amount (Tk) % of Income
Income:
Profit on Micro Investments 684,252,242.00 79.66%
Profit on Other Investments 107,703,337.00 12.54%
Membership Fees 5,828,950.00 0.68%
Other Operating Income 61,210,626.62 7.13%
Total Income 858,995,155.62 100%
Expenditure:
Salary and allowance with remuneration 291,701,492.00 36.65%
Profit paid on deposits and others 351,391,804.30 44.15%
Rent, rates and taxes, etc 58,810,799.17 7.39%
Bills and service charge, etc 5,088,399.00 0.64%
Stationery, printing, advertisements, etc 40,067,527.50 5.03%
Depreciation, repair and maintenance 28,086,704.00 3.53%
Other expenses 20,841,648.38 2.62%
Total Expenditure 795,988,374.35 100%
Net Profit for the year 63,006,781.27
During the year 2010-2011 the bank has made provision of Tk 126.01 lac against General Reserve,
Tk 126.01 lac against Bad and Doubtful Investments, Tk 18.90 lac against Co-operative
Development Fund, Tk 31.50 against Staff welfare fund, Tk 12.60 Recreation and sports fund, Tk
31.50 against Incentive bonus, Tk 12.60 against Reserve for profit payable, Tk 31.50 against
Provision for other Liabilities, Tk 118.34 against Dividend (proposed) and Tk 119.72 lac against
other reserve. As such, Retained Earnings for the year stood at Tk 121.08 lac.
Contribution to the Revenue
Earnings of the Government
In operating its activities, the DMCBL has been contributing to the revenue earnings of the
Government considerably. Since the final takeover of the bank by the existing management in
2002-2003, it has been adding revenue to the exchequer of the Government through settlement of
power, water and gas bills and payment of the income tax and value added tax. Volume of revenue
and tax contribution of bank for last 5 years from 2006-2007 to 2010-2011 were as reflected in
Table -D.
Table –D
2006-2007 2007-2008 2008-09 2009-10 2010-11
Power 2,397,678.00 2,683,159.00 3,547,012.00 5,124,479.00 5,879,979.00
Water 177,210.00 277,070.00 355,015.00 514,097.00 666,368.00
Gas 231,762.00 310,475.00 423,743.00 578,077.00 833,693.00
Telephone 1,131,371.00 1,385,201.00 888,903.00 838,199.00 868,084.00
Income Tax 3,182,938.00 5,430,282.00 7,088,253.00 14,448,404.00 16,069,197.00
Vat 401,974.00 637,423.00 1,656,797.00 1,735,722.00 4,182,873.00
TOTAL 7,522,933.00 10,723,610.00 13,959,723.00 23,238,978.00 28,500,194.00
What ever have been told in the Annual Report 2010-2011 is considered from the Auditor’s Report
on the Financial Statements of the Dhaka Mercantile Co-operative Bank Limited for the year ended
30 June, 2011.
Branch Expansion & Modernization:
19 (Nineteen) new branches were opened at 1. Norail 2. Meherpur 3. Jenaidah 4. Magura 5.
Sherpur 6. Chatok, Shunamgonj 7. Hobigonj 8. Chatkhil, Noakhali 9. Matiranga, Khagrachari 10.
Bandarban 11. Kotchandpur, Jhenaidah 12. Pirojpur 13. Bhola 14. Kurigram 15. Chuadanga 16.
Rangamati 17. Nawabgonj 18. Shariatpur and 19. Lalmanirhat. As such the total number of
Branches stood 99 (ninety nine) all over the country. Last one new branch to be opened very
shortly in the next financial year.
Annual General Meeting
The Annual General Meeting of the Bank for the financial year 2009-2010 was held on 05 August,
2010 at Trust Milonayaton, Dhaka Cantonment, Dhaka. The Meeting discussed about Policy Issues,
Budget, Distribution of Profit and Loss, reward to employees, additional bonus to employees,
annual Audited Accounts, appointment of Auditors for the financial year 2010-2011 and overall
performance and other matters of importance and accorded its approvals as and when require. In
the meeting 59 (fifty nine) Branch Managers were awarded crest and cash reward for achieving
target of Profit, Deposit, Investment and their best performance for the year ended 30 June, 2010.
Audit Committee:
Internal Audit
The Internal Audit Committee of the Bank comprises only those Board Members who have
expertise in accounting and audit. Internal Audit function of the Bank has been strengthened to
financial and operating information assess compliance with written policies and procedures of the
bank and other regulatory authorities.
Appointment of Auditors
M/s. S. F. Ahmed & Co. Chartered Accountants was appointed as Auditors of the Bank for 2010-
2011 in the Annual General Meeting. External Auditors are provided absolute freedom and support
as per law in order to ensure that the financial statement drawn up, are in conformity with
Generally Accepted Accounting Principal (GAAP), and International Standards on Auditing (ISA)
as adopted in Bangladesh.
Future Plan
The Dhaka Mercantile Co-operative Bank’s plan to have a poverty free Bangladesh in course of
generation in the new Millennium, reflecting the National dream and be pro-active in fulfilling our
social responsibilities. To meet the needs of our customers, provide fulfilment for our people and
constantly seek to better serve our customer and extend investment facilities of the bank in rural
areas. The Bank is going to introduce various new Investment schemes like education, agriculture
and women entrepreneur cell etc. We are making a work environment to be supportive of
teamwork, enabling the employees to perform of them best of their abilities.
SWOT Analysis of DMCBL:
SWOT is an acronym for the internal strength and weakness of a firm and the environmental
Opportunity and Threat facing that firm. So if we consider DMCBL as a business firm and analyze
the its strength, weakness, opportunity and threats the scenario will be as follows:
Weakness
Lack of proper motivation, training and job rotation.
Lack of experienced employees in junior level management.
Lack of own ATM services.
Strength
Energetic as well as smart team work.
Good Management
Cooperation with each other
Good banker-customer relationship
Excellent monitoring and supervision.
Tendency to leave the bank in quest of flexible environment.
Findings:
The researcher has find out some points by screening the whole study which is expressed as major
findings. The researcher has analyzed the data sincerely and carefully and has tried to identify
appropriate findings. Moreover, conversations with the DMCBL officials were very significant for
these findings.
After overall appraisal of DMCBL, the major findings are as follows:
Position: DMCBL is the pioneer in private sector co-operative banking operations of the
country.
Operational Orientation: Its’ major operations are development & welfare oriented.
Management System: Management system of DMCBL is fully democratic.
Training Facilities: DMCBL provides training facilities to its officer of the bank and also
provides executive development & internship program.
Management Functions: The management functions (from planning to control) are not
clearly present in their various activities.
Computerization: All activities are not computerized.
Opportunity
Expanded market
Growth of sales volume
Change in political environment
Threats
Different services of FCB’S (Phone Banking/Home Ban king)
Daily basis interest on deposit offered by HSBC
Entrance of new PCB’s
Manual Work: Paper-based works are still existed in branch.
Decoration: It is a leading co-operative bank of Bangladesh but it has no attractive
appearance in office environment.
Conclusion:
There are a number of nationalized banks, foreign banks, and local commercial and co-operative
banks operating their activities in Bangladesh. The DMCBL is the largest of co-operative bank in
Bangladesh. For the future planning and the successful operation in achieving in its’ goal in this
current competitive environment this report can be a guideline.
Bank always contribute towards the economic development of a country. DMCBL, compared with
other co-operative banks are contributing more by investing most of their funds in fruitful projects
leading to increase in production. It is obvious that right thinking of this bank including
establishing a successful network over the country and increasing resources, will be able to play a
considerable role in the portfolio of development financing in the developing country like ours.
Mobilization of savings is very important for the economic development of our country. The
various new saving schemes of DMCBL with prospect of higher return could link a huge
population of both rural and urban area with development activities of the whole country. The bank
has computerized all its branches to facilitate the service offered to the customer. Besides this, the
bank is arranging a number of training for the officers to improve the quality of banking service
through development of human resource. Being one of the leading private co-operative banks,
DMCBL is undertaking a lot of socio-economic program.
Recommendations:
In order to get competitive advantage & to deliver quality service, top management should try to
modify the services. For the improvement of the service the following measures should be taken:
Customer’s Convenience: For customer’s convenience, DMCBL should provide more
personnel to deliver faster services to their honourable customer.
Human Development: Development of human resources should be ensured to increase
efficiency in work.
Communication System: Ensure proper communication system and maintenance of
files & machineries should modernize.
R & D: Research & Development wing must be more extensive & rich.
Strategy: Effective strategies must be undertaken against defaulter.
Project Management: ‘Project Management’ must be practiced in case of investing in
the project. Feasibility study of the project, project planning, monitoring & evaluation
should be undertaken.
Managerial Functions: DMCBL must have to follow the management functions (from
planning to control) strictly in all of their business activities and also operation the bank.
Financial Analysis: Branch should have a separate section to analyze the financial
statement for fining its liquidity, profitability & ownership ratios.
Strict Rules for arrival and departure for the employee: Management should strict
about the arrival and departure time for the employees.
Punch Card System: It is very important for the employee when they enter into the
office they should punch their card so that every employee will be punctual to attain the
office.
Job Rotation: In DMCBL job rotation is fully absent job rotation is very important to
make the entire employee efficient for all departments.
Image: Office should be fully decorated to attract people to come into it.
Evaluate customer’s needs from their perspective and explain logically the
shortcomings.
Use of effective MIS.
To deliver quality service top management should try to mitigate the gap between
customer’s expectation & employee’s perception.
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2012.
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FAO, Rome.
Asaduzzaman and Akter (1990). Evaluation of Poverty Alleviation Program. The Bangladesh
Institute of Development Studies, Vol. II, 1990.
Islami Banking. Available: http://www.dmcbl.com/saving-schemes-service. Last accessed February
28, 2012.
Company Profile. Available: http://www.dmcbl.com/company-profile. Last accessed February 29,
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Organizational Structure. Available: http://www.dmcbl.com/organizational-structure. Last
accessed 5th March 2012.
Management Team. Available: http://www.dmcbl.com/management-team. Last accessed 5th March
2012.
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