internship report deposit mobilization of ncc bank

8/10/2019 Internship Report Deposit Mobilization of Ncc Bank

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Background of the Report:

Achievement of high economic growth is the basic principles of present economy policy. Inachieving the objectives the banking sector places an important role. The banking sector channelresources through deposit mobilization and providing credit for different business venture. The

successful running of a bank business depends upon how effective the credit managementrecovered the funds and risk analysis of the bank. NCCBL as a new commercial bank inBangladesh responsibility bestows upon it to ensure efficient and effective operation and soundmanner. I have worked in various Department of NCC Bank Ltd, Uttara Branch. In this report, Iwill try to make an overall analysis on all activities of NCC Bank Ltd specially focuses on creditmanagement & international trade.

Scope of the study

This internship program gives me a great scope or opportunity for gather experience andknowledge in several areas of banking by which I can evaluate or expose myself. During:-e firstfew week of my internship period, I was able to communicate most of the employees of the bank. During the first month I was able to accustom and adapted myself with the workingenvironment of NCC Bank Limited. While preparing this report, I had a great opportunity tohave an in depth knowledge of all the banking activities practices by the “NCC Bank Ltd”. Italso helps me to acquire perspective of a leading private banking in Bangladesh. In term of Bankwe can easily understand that the financial institution deals with money. This study focusesmainly on Credit Approval, Disbursement and Recovery policy. In so doing the loan system,loan evaluation criteria along with the loan administration was covered in the study. The loan products applicants have been segmented and analyzed based on the secondary data provided

which could be conducted on an even broader spectrum. Inclusion of various other topics wouldhave also been helpful.

Rationale of the Study

The word “bank” refers to the financial institution that deals with money transaction.

Commercial banks are the primary contributors of the economy of this country. On one handthey are borrowing money from the locals and on the other hand lending the same to the locals asloans and advances. So he people and the government are very much dependent on banks.Moreover, banks are profit earning concerns, as they collect deposits at the lowest possible costand provide loans and advances at higher rate. The difference between two is the profit for the bank. This report basically deals with the loan and advance management of National Credit andCommerce Bank Limited (NCCBL) covering the areas like General Banking, Loan andAdvance, Foreign Exchange, Remittance, Financial Performance, Online Banking, etc.



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NCC Bank Branches

CHAPTER-2 LITERATURE REVIEW

Literature Review

In Bangladesh, the contribution of banking sector towards the economic growth anddevelopment of both the public and private sectors is enormous. It has been possible for easyaccess to loans and advances.

Muhammed Khaled Latif describes, since the inception of the banking sector, the primefunctions banks have been accomplishing are to mobilize resources from the surplus unit anddeploy in the deficit unit. In that accomplishment banks act as an intermediary being a privilegedcreditor. From experiences it knows that people are not going to withdraw their entire deposit ata time and banks accumulate huge surplus funds in their exchequer ready for lending. Many arich and elite people have resorted to interest waiver. The culture continues till today. Thanks tothe central bank which has devised the classification procedures up to international standard. Forthe early warning system, a bad performing loan is being termed as SMA after three months ofits default and being classified as SS, DF and BL with the expiry of six, nine and 12 monthsrespectively. Loan loss provision has to be provided by the banks on the base for provision that isthe amount of provision will be equal to the amount of the value of eligible security plus the

interest suspense minus the amount of outstanding in the account. In spite of the precautionarymeasures, the loans are being defaulted. Then the question of recovery arises. There are manyrecovery processes such as, regular transaction in the account, amiable settlement with the borrower; rescheduling, attachment of security; auctioning of security and also through filingsuits. But the best among all of the above modes is amiable settlement, because it involves nocost. So, the creation of credit by the banking sector has created the opportunities for the overalldevelopment of the country. Industry, trade and commerce, import and export, communications,information technology and agriculture has experienced a tremendous growth in the recent yearsdue to easy circulation of credit. In spite of the stringent measures, loan defalcation is there,especially in the public sector banks. Credit should not be easily available for consumer goodsand household durables which creates credit crunch and pushes inflation; Concentration of credit

in a single sector or industry must not take place; Credit should be collateralized as far as practicable; Agriculture and agro-based industries should be prioritized; Follow up andmonitoring must be emphasized; Diversion of funds to other business or unproductive sectorsmust be stopped; Proper vetting of the documents should be done by experienced and unbiased panel of lawyers; The Sanctioning authority must be of high moral and ethical standards; Banksinterest must be protected and national interest must be protected, too. Nevertheless,management of credit is a process of hectic exercise of processes, procedures, resources, duediligence, ethics, morality, judgment, values, authority, articulation and analysis. The loan



Corporate Mission

To mobilize financial resources from within and abroad to contribute to Agricultures, Industry &Socio-economic development of the country and to pay a catalytic role in the formation ofcapital market.

Slogan

Where Credit & Commerce Integrates

Values

• Customer focus

• Integrity

• Team Work

• Respect for individual

• Quality

• Responsible citizenship Management Information System.

Motto

The Bank will be a confluence of the following three interests:

Of the Bank: Profit Maximization and Sustained Growth.

Of the Customer: Maximum Benefit and Satisfaction.

Of the Society: Maximization of Welfare.

Profile

National Credit & Commerce Bank Ltd

Phone: +880-2-9561902-4, 9566283, 9563981-3

Fax: +880-2-9566290

Email: [email protected]

Head Office



7-8, Motijheel Commercial Area, Dhaka – 1000, Bangladesh.

Known As: NCCBL

Established: 1993

SWIFT Code: NCCLBDDH

Stock Code: NCCBANK

Category: Commercial

Type: Private

Management Structure

Management of NCCBL is professional and experienced. Top management and policyformulation of the bank is vested on the board of Directors. The boars of directors consist if 26members headed by chairman. Most of the directors are owners of the large business grouphaving high net worth. The executives and officers of the bank execute the policies and programsformulated by the board. The managing director is the chief executive of the bank and he isassisted and supported by other qualified executives like Senior Executive vice-President,

Executive vice president (EVP), Vice President (VP), senior assistant Vice president and otherofficers and staffs. There are nine divisions in this Bank and one training institute.

Departments of NCCBL

If the jobs are not organized considering their interrelationship and are not allocated in a particular department it would be very difficult to control the system effectively NCC Bank

Limited has does this work very well. Different departments of NCCBL are as follows:

Human Resources Division

Personal banking Division

Treasury Division

http://www.dsebd.org/displayCompany.php?name=NCCBANK






Operations Division

Computer and Information Technology Division

Credit Division

Finance & Accounts Division

Financial Institution Division

Audit & Risk Management Division

Branch List:

National Credit and Commerce Bank Limited

Head office

7-8 Motijheel C/A, Dhaka-1000.

Tel: 9561902-4, 9566283, 7117314

Fax: 8802 9566290, Telex: 642821NCL BJ

E-mail: [email protected], Website: www.nccbl_bd.com

Main Branch Agrabad Branch Khatungonj Branch Khulna Branch Babubazar Branch Jubilee Road Branch O.R. Nizam Road Branch Chowhatta Branch

Dhanmondi Branch Moghbazar Branch Gulshan Branch Malibagh Branch Cox‟s Bazar Branch Laldighirpar Branch

Jatrabari Branch Mirpur Branch

Kawran Branch Dilkusha Branch Islam Pur Branch Haliashahar Branch Foreign Exchange Branch Madunaghat Branch Uttara Branch Baralekha Branch

Syedpur Branch Patgram Branch Bariyarhat Branch Nababjong Branch Rajshahi Branch Madhabdi Branch

Elephant Road Branch Anderkilla Branch

http://www.nccbl_bd.com/






Feni Branch Kadamtali Branch Laxmipur Branch

Mitford Branch Bangshal Branch

Majhirghat Branch Moulivibazar Branch Jessore Branch Rangpur Branch

Bogra Branch Hajigonj Branch Nowabpur Road Branch

Madaripur Branch Chakaria Branch

Banani Branch Chaumuni Branch Rangpur Branch

Chitagong epz Branch

Functions of the NCC BANK LTD.

Establishing Banker Customer relationship, Remitting customer‟s money from one place to another,

Collecting bills for customers, Taking deposit and honoring Cheque drawn over Local Office.

Products and services:

Since the commencement of banking operation; National Credit and Commerce bankLtd(NCCBL) has not yet only gained enormous popularity but also in successful in mobilizingdeposit and loan products. The bank has made significant progress within a very short time period due to its dynamic management and introduction of various customer friendly loan anddeposit products. There have also had other departments that can be termed as support and theseare operations, credit administration, financial control and Human Resource. All the productsand services offered by the bank can be classified under three major heads:

Personals Banking

Deposit schemes:

Savings Account.



Current deposit Account. Locker Service. Fixed Deposit Receipt.

Bearer Certificate of Deposit. Short Term Deposit.

Credit & loans:

Consumer credit Scheme Education Credit Scheme Multipurpose loan Loan General Education Credit Scheme Multipurpose loan Loan General

Foreign Currency Account:

Resident Foreign currency Account. Non-Resident Foreign currency Account.

Corporate Banking

Small and Medium Business:

Cash Credit Hypothecation (CC Hypo) Cash Credit Pledge(CC Pledge) Secured Overdraft. SOD against Work Orders.

Large Business

Short Term Industrial Loan Mid Term Industrial Loan Long Term Industrial Loan

Transport Loan CommercialHouseBuilding Loan



Foreign Trade

National Credit and Commerce bank Ltd (NCCBL) provide solutions in the field of international business and trade finance.

Letter of Credit(L/C) Back To Back letter of Credit(BTB) Loan Against Trust Receipt(LTR) loan Against Imported Merchandise(LIM) Packing Cash Credit(PCC) Export Development Fund(EDF) Payment Against Document(PAD)

Bank Guarantee

Lease Financing:

An entrepreneur, under this scheme, may avail of the lease facilities to procure industrialmachinery (without having to purchase it by down payment) with easy repayment schedule. Theclients also get special rebate in their income tax payment under the scheme.

Islamic Banking:

Some of the branch of NCC bank open profit loss sharing term/savings deposit amounts and alsoallow loans on Mudaraba, Musharaka, Murabaha system. Attractive profit is given at the end ofthe year after deducting the banks service fee through proper accounting.

Financial products:

Financial products of the National Credit and Commerce Bank Limited (NCCBL) are mainly inthree different categories:

These are:

Short term financing products Mid term financing products. Long term financing products. Above categories of financing covers the following areas, which are draft with at general

Credit Division.



Agricultural sector. Large and medium term loan. Working capital financing in industrial units including small industries.

Commercial Credit scheme and any other new product as and when launched for. Term loan in small industries

Term loan in small industries. Term loan in commercial house building at urban area & transport loan. Commercial loan.

Micro Credit Financing:

To fulfill its commitment to play a vital role to its socio-economic development of the country NCC bank Ltd has introduce a small and medium scale credit scheme for its customers. Theobjective of the scheme is:

To encourage and develop medium and small entrepreneurs. To provide credit with minimum complexity. To generate employment.

This scheme covers agricultural sector, small and cottage industry, service industry, householddurable and consumer credit, information technology sector and energy sector. The amount ofsmall and medium credit range from 5 Lac to 50 lacks.

Special services:

Consistent with the modern age and competing in a perfectly competitive market. The NationalCredit and Commerce Bank Ltd (NCCBL) has introduced some innovative banking services thatare remarkable in a country like Bangladesh. T services offered by the bank are as follows:

ATM service:

The bank has joined the shared ATM network Bangladesh with a pool of 7 banks. The client ofany member bank will have access to any ATM situated at different location of Dhaka city. This banks client will get 24 hours cash withdrawal and utility bills payment facility. 16 ATMs will be installed gradually in Dhaka city and the network will be extended to other cities if thecountry in the near future.



Credit Card:

To provide best possible customer services to its clients, the bank is going to launch Master

Credit card shortly.

Money Grams:

Money Gram is one of the innovative products of the bank. This has been functioningsatisfactory and rendering prompt and efficient services to the wage earners.

Swift:

The bank has become a member of SWIFT and is providing a fast and accurate communicationnetwork for financial transactions to their valued clients through uninterrupted connectivity withthousands of users institutions in 150 countries around the world.

Deposit Product

NCC Bank Limited is now offering different types product for mobilizing the savings of the

general people.

Current A/C

Savings Bank Deposit A/C

Short Term Deposit A/C

Term Deposit A/C

Premium Term Deposit A/C

Instant Earnings Term Deposit A/C

Special Savings Scheme

Special Fixed Deposit Scheme

NFCD



RFCD

Money Double Program

Table 1: Interest Rate paid to different Deposit liabilities:

Serial Application

Interest rate

1 Savings Bank Deposit A/C 6.00%

2 FDR for 3 months 12.00%


4 FDR for 1 year 12.00%


6 Special Savings Scheme 12.00%

7 Fixed Deposit for Corporate Bodies 9.50% (Maximum)

Loan and Advance Product

The NCC Bank is offering the following loan and advance product to the client for financingdifferent purpose that fulfill the requirements of the bank and have good return to the investmentas well as satisfy the client. The loan and advance products are:

Working Capital Financing

Commercial and Trade Financing

Long Term (Capital) Financing

House Building Financing

Retail and Consumer Financing



SME Financing

Agricultural Financing

Import and Export Financing

Table 2: Interest rate charged on different loans & advances

Serial Application Interest rate

1 Working Capital Financing 14.00%

2 Commercial and Trade Financing 14.50%

3 HouseBuilding Financing 14.00%

4 Retail and Consumer Financing 16.00%

5 SME Financing 16.00%

6 Agricultural Financing 11.50%

7 Import and Export Financing 7.00%

8 Long Term (Capital) Financing 14.00%

Cards

ATM Card

Credit Card (Local, International and Dual)

Remittance Products

Special Interest rate on Savings and Term Deposits

Wage Earners Welfare Deposit Pension Scheme



Loans for Real Estate (Land purchase and House construction/renovation)

Advance against Regular Remittance

Brokerage House

Member, Dhaka Stock Exchange Ltd.

Full Service Depository Participant

Treasury Service

Primary Dealer of Govt. Approved Securities

Remittance Service

Correspondence arrangement with more than 330 Financial Institutions all over the

World for Wage Earners Remittance we have Agency arrangement with 12 reputed

Exchange Houses covering major Locations of our Expatriates

Financial Performance of NCCBL

The NCC Bank Limited is one of the most successful private sector commercial bank in ourcountry. It has achieved the trust of the general people and made reasonable contribution to theeconomy of the country by helping the people investing allowing credit facility.

Profit

NCC Bank Limited registered an operating profit of Tk. 1,267.57 million as of 31 December,2010.Provision for tax for the year amounted to Tk. 577.29 million with a net profit of Tk.479.22 million.



Capital

As on December 31, 2010 the authorized capital of NCC Bank Limited amounted to Tk.2,500.00 million & paid up capital amounted to Tk. 1,201.79 million. The total equity (capital &reserve) of the bank as on December Stood at Tk. 2,417.37 million. The Capital Adequacy Ratio

is 9.78% as on December 31, 2010 which exceed the stipulated requirements for banks inBangladesh.

Deposits

As on December 31, 2010 Total deposits of the bank stood at Tk. 28,147.34 million

excluding call as against Tk. 21,478.22 million excluding call of the previous year.

Table 3: Deposit of NCCBL Tk in million

Year Deposit

2009 21,478.22

2010 28,147.34

Loan and Advances

The Bank recorded a 16.80% growth in advances with total loans and advances portfolio of Tk.24,678.36 million at the end of December 2010 compared to Tk. 20,533.13 million in 2009. NCC Bank is making loan and advances in different areas. he bank continues to explore anddiversify its loan distribution with the objective of efficient use of resources and take utmost precaution to safeguard it. NCCBL also participated in a syndicated loan.



Table 4: Loans & Advances of NCCBL (Tk. in millions)

Year Loans & Advances

2009 20,533.13

2010 24,678.36

International Trade

International Trade is an important constituent of the business portfolio of the bank. The importvalue stood at Tk. 17,646.80 million in 2010 with a growth of 7.73% over the volume of16,296.30 million in 2009. On the other hand, export increased by 9.12% in the year 2010. Totalexport volume of the bank amounted to 8,557.00 million. In 2010 compared to Tk7, 776.30Million in the previous year.

Investment Banking

Lease finance, Hire purchase and Capital Market Operation besides investment in Treasury Billsand Prize Bonds constitute the investment basket of NCCBL. The investment portfolio made upof Government Securities and Shares and Debentures of different listed companies stood at Tk.3,552.08million in 2010 indexing a 15.25% increase over Tk. 3,010.45 million in the previousyear.

Network

NCC BANK LTD. always considers client service the most vital factor to face ever-increasingcompetition and challenge in the Banking sector and as such places on it utmost importance.With that end in view the Bank continued its personalized approach with speed, precision andaccuracy. Presently the number of the branches stood at 57 covering almost al the important places of the country. The numbers of authorized dealer branches are 17. Moreover worldwideinternational correspondents‟ network of the Bank has been continuously expanding covering the

important countries in all the countries of the world. Besides the Bank has arrangement with anumber of Exchange Houses at Singapore, U.A.E., Oman, Qatar, and Kuwait to facilitate



remittances from expatriate Bangladeshis. To cope with modern banking requirement all the branches are being computerized. To develop expertise on computer operation, regular training program of computer for the officers are continuing. The bank has been introduced newcomputer programs (ON-LINE BANKING) with three branches for improving customer serviceand has finalized arrangements with other private commercial banks to introduce ATM. SWIFT

has already been introduced to speed up international transactions and passing of L/Cs at HEADOFFICE. SWIFT will soon be introduced at all the A.D branches of the Bank.

About NCC Bank Uttara Branch

NCC Bank Uttara branch situated at House -12, Road no -12, Sector no-6 Uttara model town,Dhaka. It is one of the busiest banks in uttara. Like other bank it also first thinks about CustomerService first for this reason I chose this branch for my internship program.

General Banking NCC BANK LTD (UTTARA BRANCH):

General Banking in NCCBL uttara branch is considered as the direct customer service center.The clients and customers build their impression whether they are going for further dealings withthe bank or not on the basis of their service. Moreover this is the first impression about the bank.So general section must be taken carefully.

General Banking in NCCBL Uttara branch constitutes with the following sections:

Account Opening Section Remittance Section Cash & Computer Section Clearing Section Bills Section FDR & BCD section

Service of Foreign Exchange Department

L/C opening & L/C amendment

Sanctioning PAD, LIM, LTR, Packing Credit Foreign Bill Purchase Local Bill Purchase



Foreign Currency Account Maintaining Foreign Currency Remitting

Service of lone and advance department:

The following are the Loans and Advance Products of National Credit & Commerce Bank Ltd:

Working Capital Financing. Commercial and Trade Financing. Long Term (Capital) Financing HouseBuilding Financing. Retail and Consumer Financing.

SME Financing.

Agricultural Financing. Import and Export Financing.

Service of Deposit Products:

The following are the Deposit Products of National Credit & Commerce Bank Ltd:

Current A/C. Savings Bank Deposit A/C. Short Term Deposit A/C. Term Deposit A/C. Premium Term Deposit A/C. Instant Earnings Term Deposit A/C. Special Savings Scheme. Special Fixed Deposit Scheme.

NFCD. RFCD. Money Double Program.

Services: Treasury Service:



Primary Dealer of Govt. Approved Securities

Services: Brokerage House:

Member, Dhaka Stock Exchange Ltd. Full Service Depository Participant.

Services: Remittance Service:

Correspondence arrangement with more than 330 Financial Institutions all over the

World. For Wage Earners Remittance we have Agency arrangement with 12 reputed Exchange

Houses covering major Locations of our Expatriates.

Approval, Disbursement and Recovery System of Credit

Loans and Advan

One of the primary functions of commercial banks is sanctioning of credit to the potential borrowers. Bank credit is an important catalyst for bringing about economic development of acountry. Without adequate finance, there can be no growth or maintenance of a stable economy.Bank lending is important for the economy, because it makes possible the financing ofagriculture, commercial and industrial activities of a nation. At the same time a bank will,therefore, distribute its funds among various sectors in a manner as to derive sufficient incomes.Loans and advances comprise the most important asset as well as the primary source of earningfor the financial institutions.

NCC Bank Ltd. being one of the private commercial bank of the country provides funs to

industry and commerce sector for strengthening the economic base of the country. NCCBL playsa vital role in the economic prosperity of the country.

Importance of credit:

Credit plays a very vital role in national economy in the following ways-



It provides working capital for industrialization. It helps to create employment opportunities. Credit controls almost all kinds of production activities of the country.

People‟s purchasing power increases for it. It brings social equity.

Cash generation occurs for its successful performance. Business cycle can run well only by the help of lending system.

Nature of Credit or Advance sanctioned by NCCBL

Lending of money to different kinds of borrowers is one of the most important functions of National Credit and Commerce Bank Ltd (NCCBL). Major amount of income of this Bankcomes from its lending. NCCBL makes advances to different sectors for different purposes, suchas financing in trade and commerce, imports and exports, industries, transport, house building,

agriculture etc.

Direct Facilities (Funded):

1. Cash Credit: Cash credit or continuous credits are those, which form continuous debits andcredits up to a limit and have an expiration date. A service charge which in effect an interestcharge is normally made as a percentage of the value of purchases. Cash credit is generallyallowed against hypothecation or pledge of goods. Hence cash credits are of two types-

a) Cash credit hypothecation

b) Cash credit pledge.

a) Cash credit hypothecation: Cash credit allowed against hypothecation of goods is knownas cash credit hypothecation. In case of hypothecation, borrower retains the ownership and possession of goods on which charge of the lending bank is created. The documents, whichcreate charge of the lending bank on the hypothecated goods is called letter of hypothecation.

b) Cash credit pledge: Under this arrangement a cash credit is sanctioned against pledge ofgoods or raw materials. By signing the letter of pledge, the borrower surrenders the physical possession of the goods under the banks effective control as security for payment of bank dues.The ownership of the goods, however, remains with the borrower. The pledge creates an impliedlien in favor of the bank on the underlying merchandise.



2. Overdrafts: A loan facility on a customer‟s current account at a bank permitting him tooverdraw up to a certain agreed limit for an agreed period. The terms of the loan are normallythat it is repayable on demand or at the expiration date of the agreement.

3. Loan against imported merchandise (LIM/LTR ): This is a loan facility up to a satisfactorylimit to the traders/ customers by a bank against security of the value of the importedmerchandise. This item also includes loan against trust receipts.

4. PAD/BLC/BE: A loan facility provided by the banks to the customers against documents/ bills.

5. Demand Loan: The demand loan is such type of loan the repayment of which is required to be made after a formal notice is given to the borrower by the bank.

6. Export Credit: All advance facilities provided to the exporters by the banks other than cashcredit.

7. Term Loan: A bank advance for a specific period repaid with interest under fixed schedules iscalled term loan. The term loan may be as follows-

a) Short term: up to and including 12 months.

b) Medium term: more than 12 months up to and including 60 months.

c) Long term: more than 60 months.

Indirect Facilities (Non-funded):

1. Guarantee: A credit facility in contingent liabilities form extended by the banks to theirclients for participation in development work like supply of goods and services.

2. Letter of credit: A credit facility in contingent liabilities form provided to the clients by the

banks for import/ procurement of goods and services.

3. Other: All other non-funded facilities, which are not included in any other non-fundedfacilities.

Credit Policy of Bangladesh:



A credit policy can be simply described as a „decision made in advance‟. The loan processing

function of a commercial bank is basically a systematic/organized exercise in decision-making.Decisions made in advance limit the alternate courses of action, which simplify and speed up thedecision-making process. Ability and success of banks in attaining their objectives depends on asound credit policy to a very large extent. Commercial bank, however, do not enjoy complete

freedom in formulation and implementation of their credit policy. Because Bangladesh banknormally formulates the credit policy every financial year. To increase the flow of credit to therural or underdeveloped areas, banks are advised to gear up their efforts in this direction aimingat increasing the credit/deposit ratio in the rural areas for economic development.

Credit Policy of NCCBL:

A credit policy includes all rules relating to loans and advances made by the bank to the borrowers. It includes types of credit extended by banks, method of judging the credit worthinessof borrowers, the collateral or securities that are accepted by the banks and so on. This policyguidelines refer to all credit facilities extended to customers including placement of funds on the

inter bank market or other transactions with financial institutions. Although, unlike othercommercial banks, there is no prescribed and published manual or policy guidelines regardingcredit management in NCCBL, it follows some rules which are very necessary for creditmanagement. All credit extension of the bank must comply with the requirements of the BankCompanies Act 1991 and Bangladesh Bank instructions as amended from time to time.

Approach to the Bank:

When a borrower approaches to NCCBL for a loan s/he is required to fulfill the followingcriteria-

a) S/he has to be a client of this bank.

b) S/he needs to apply properly describing the purpose of the loan amount needed and his/hercapability of repayment.

After receiving the application from the client, the branch manager scans the papers and decidesif s/he will be allowed for an advance or not. For this manager goes through the following process.

Borrower Selection:

In borrower selection emphasis is given firstly on 3Ms, which are

a) Man

b) Management

c) Money.



a) Man: The manager has to study the man applied for an advance. For this s/he gathersinformation about the applicant‟s character, credit worthiness and social status. To judge thecredit worthiness of borrowers NCCBL follows some basic principles of lending. These are

safety, liquidity, diversification, profitability, suitability, integrity, reliability etc. The managercan obtain information from Branch Records, Credit Information Bureau (CIB) of BangladeshBank, Personal interviews with the client, Credit Report, Market Information, FinancialStatements (Balance sheet, income statement) etc.

b) Management: Management is the heart of the business concern. So a careful judgment hasto be made about it. It is sought if there are enough experts and technical know how in themanagement of the firm. Management‟s integrity is also need to be evaluated.

c) Money: If management is heart of the business concern, money is blood, which is anothervital factor to survive. A credit manager needs to analyze the debt- equity ratio of the firm. S/healso needs to be sure if there are sufficient assets to recover the advance.

Financial Data Analysis: Secondly, the credit manager has to compare financial statements of atleast three years. For this s/he takes help of different ratios such as liquidity ratio, solvency ratio, profitability ratio and activity ratio. S/he also needs to examine bank account statement of theapplicant very keenly. In addition to analysis, the manager should visit the business concern toget a true picture of it.

a. Industry Analysis: In this part, the manager is required to study the business behavior, whichincludes market demand, competitors and government barriers.

b. Lending Risk Analysis: It is a systematic and structural way to assess lending risk, whichcovers all the factors described above. Here a form has to be completed by the lending officer. Iflending risk is found to be low, financing can be done and vice versa.

If the applicant is found to be OK after going through all the above process, the branch managersends it with other necessary papers to the credit division of the Head Office with his/her ownrecommendation. The credit division after appraisal, sends it to the Board (in the case of amount

more than 10 lac) or to the credit committee. The credit committee consists of ManagingDirector, one Executive Vice President and one Vice President from International Division. Ifthe Board/ Credit Committee agree, the proposal is accepted and is sent back to the creditdivision. The credit division informs it the branch manager. Following this the branch manager,maintaining other law and regulation sends a sanctioning letter to the applicant.



Security & facility offer letter (FOL)

1. Preparation of facility offer letter.

2. Processing security offer letter.

3. Preparation and dispatch of security documents.

4. Charge creation of registrar of joint stock companies.

5. Creation of legal equitable mortgage of loan.

6. Co-ordinate legal matters with lawyers.

7. Attending customer queries regarding FOL.

8. Issuance of Bank certificate.

9. Coordinate search and inspection report.

10. Responding to auditors of customers.

11. Renewal of hold letters.

12. Cancellation of facilities.

13. Circulation security tracking list to Senior management on a monthly basis after having RM scomments.

14. Update and monitor one off facilities of trade services.

Preparation and Dispatch of Facility offer letter:

1. Receive approval for CARM (Credit and risk management) application through lotus notes.

2. Review the approval terms of CRM.

3. Check whether the facilities are in line with Bangladesh Bank and banking companies actdirectives.



4. Check the CIB (Credit Information Bureau) report from Bangladesh Bank, Memorandum ofarticles & association and search report.

5. Prepare FOL in standard format as per set up service level agreement (SLA).

6. Hand over the draft FOL to the respective RM (Relationship Manager) for checkingamendment and conformation.

7. Discuss with RM regarding different issues of the FOL.

8. Finalize the FOL.

9. Mail the FOL along with security papers to the client for their signing.

10. Receive the duplicate FOL duly signed by the as an indication of the acceptance of the letter.

11. Update SLA tracking, security -tracking list.

12. Review fees will be finalized according to the FOL terms.

Issuance of bank certificate: 1. Receive request from customer or from the auditor issuance of Bank‟s certificate.

2. Verify the signature.

3. Prepare the certificate as the standard format.

4. Realizes charges and VAT.

5. Take signature from the authorized signatories of the bank.

6. Keep a copy of the certificate in credit file.

Cancellation of Facilities:

1. Check the CARM approval for cancellation of facility.

2. Send lotus notes to related departments and RM for “no claim” confirmation.



3. Upon recipient confirmation from concern departments, delete securities, limits & pre facilityfrom NCCBL.

4. Prepare memorandum of satisfaction for vacation of Charges.

5. Advise lawyer for preparing the Deed of Redemption for mortgage.

6. Cancel the securities and transfer them to central store.

Loan Disbursement:

1. Receive customers request letter and verify the signature.

2. Check FOL for terms and condition.

3. Check the invoices.

4. Process the loan.

5. Disburse the loan through A5 debit/Credit vouchers.

6. Send the customers advice through courier.

7. File the documents after final checking.

Loan Rollover:

1. Review customers request letter and verify the signature.

2. Check FOL for terms and conditions.

3. Process the rollover.

4. File the documents after final checking in credit file.

Loan Repayment:



1. Receive customer‟s request letter verify the signature.

2. Check FOL for terms and conditions.

3. Cross the letter with red ink and write “entry passed on”.

4. Process the repayment through A5 debit/credit.

5. File the documents after final checking in repayment file

Important Factors Considered by NCCBL Before Sanctioning Credit:

Though off balance sheet activities play a vital role in a bank‟s earnings, still income earned out

of lending accounts for major portion of income of it. This lending in other words advance may

raise the standard of success of a bank to the highest possible level and at the same time can be asole instrument for liquidation (i.e. premature death of a bank) depending on how this portfolio ishandled. So following factors should be given great emphasis.

Who shall get credit?

It is easier to find out a depositor than finding out a good borrower. Public money in hands of a bad borrower is never safe and secure. Then the question comes whom to lend? In a nut shell theanswer is the entrepreneur who, for attaining his own pecuniary interest as well as mental

satisfaction together with offering additional services and well being to the society at large,undertakes efforts to collect together various types of necessary goods, labor materials, otherwealth etc and by means of application of his wisdom, foresight, creativity, devotion and selfconfidence, takes initiative to add additional utility and value to the collected materials andwealth by bringing change and or modification in their form. It is widely accepted that a goodentrepreneur is a good borrower.

How much to lend:

Over financing and under financing is very common phenomenon in credit portfolio; neither ofwhich is desirable as a sound principal of advance. The highest priority of consideration is that

bank credit must not be extended for speculative purpose and sound credit policy always findsout actual credit need depending on nature, volume, turnover of business as well as capability ofthe prospective borrower, which in turns depends on the test of good entrepreneurship. The mostimportant aspects for consideration is how much a bank can lend taking into consideration itsliquidity position, loan-able fund and commitment already made.



Why to lend:

The recommending as well as sanctioning authority must ascertain and satisfy himself that alladvance are for productive purpose, genuine business and trade need based and neither forspeculative nor for unproductive purpose. It is primary responsibility of recommending officer to

visualize whether the loan, he is recommending for will generate cash to desired extent benefit tothe bank, to the borrower and to the society at large. Bank cannot afford a loan turning bad to thedetriment of institution and the society and for this purpose, the recommending and sanctioningofficer must be acquainted with sound principles of advance and the ways and means to analyzethe risks involved with the proposal processes and the limit sanctioned.

Where to Finance:

Financial activities of a bank, depends upon portfolio management of its funds through deposit.Bank‟s lending activities may be classified into following broad segments-

a) Trade and Commerce:

This segment encompasses large, medium and small business houses dealing with importedconsumer items as well as shopkeepers, distributors, whole sellers, retailers and smallmanufacturers scattered throughout the country. Lending activities of commercial banks in thissegment of trade has traditionally been carried out based on bank-client relationship built upthrough interaction and past track record.

b) Industries:

The domain of industrial financing basically comprises of capital financing in the form of termloans, working capital financing and financing of small and cottage industries. The term loan isfinanced for establishment of new industries or for BMRE of existing industries. The core of NCC Bank‟s lending activities shall be the working capital financing to large, medium and

small-scale industries.

While track record of operational performance of the industries, credit worthiness of theentrepreneur and reasonable security coverage shall form the basis of lending policies. NCC

bank also set aside some budgetary allocation to finance small-scale industries.

c) Lease Financing:

NCC Bank to keep its contribution to the growth of national GDP, accelerate the total economicdevelopment by infusing the fund in productive sector in more efficient and effective way; that‟s



why this bank diversify its portfolio and satisfy the customers‟ need and go for lease finance for

various reasons. These are setting up of small and cottage industries/projects, BMRE of existing projects, transports,

medical equipment, construction equipment and fixed assets of other productive and service

oriented ventures.

d) Consumer Financing:

For the economic development and to help the fixed income group in fulfilling their demand toupgrade the living standard NCC bank introduce consumer finance scheme for:

1. I. Household appliances.2. II. Furniture & fixture.

3.

III. Air conditioner.4.

IV. Fax machine and cellular phone.5. V. Motor cycle/ car/ micro bus6. VI. Other equipments.

e) Real Estate and Civil Construction:

NCC bank financed in this sector on selective basis.

f) Agro-based:

Agriculture is the mainstay of Bangladesh economy being major contributor to the GDP. That‟s

why NCC Bank has the keen interest to contribute towards the growth of economy by financingin the agro-based firms/ industry specially- poultry, fishery and hatchery. Financing will also be provided to export oriented shrimp culture and fish processing industries.

Credit Administration:

The board of directors being at the highest level of organization structure plays an important roleon the credit administration. The board of directors is not directly concerned with the day to dayoperation of the bank. The board has delegated the authority to the managing director. The HeadOffice credit committee and other assigned credit officers under the guidance of the managingdirector approve, direct, monitor and review lending operations throughout the bank and ensurethat the credit policies are adhered to and the credit operation is conducted in an effective way. Inorder to ensure the effective credit portfolio, the board, in turn, monitors the credit department



and ensures placement of qualified officials who have got the right aptitude, formal training infinance, risk analysis, bank credit procedures as well as required experience.

Figure: Credit Administration of NCCBL

Sound Principles of lending:

Sound principle of lending is obvious to avoid loan default tendency and risk elements tosafeguard of public money as well as business of a bank. So ;there must be a principle ofadvance and efforts should be made to make it a sound one for which in depth study must bemade on the following points by the bank:

When the loan is to be given Why the loan is to be given How the loan is to be given What may happen after disbursement of the loan. Generally what happen (from past experience) after disbursement of the loan. Is it hopeful that the borrower will repay the loan Whether loan should be given only in private sector or also in government sector as well Whether only secured loan will be extended or provision should be kept for clean loan

also Whether only short term and mid term loan will be considered or long term will also be

considered

Credit risk grading (CRG):

➔ The credit risk analysis package provides a systematic procedure for analyzing and

quantifying the potential risk. Bangladesh Bank has made it mandatory for commercial banks touse CRG for evaluating credit proposals amounting tk 1 crore.

➔ CRG format is mainly designed for all types of loan except micro credit and agricultural

credit. But it is really impossible to represent all needs in a single format. So, credit officer judgments are needed in this regard.

➔ CRG at the initial stage relies too much on subjective judgment and financial risk has

been given the maximum weight. Therefore there is always a chance to manipulate the ultimaterisk grading.



➔ Another major impediment to the successful Credit risk analysis is that the information

provided by the borrower often does not suit to feed into the CRG format. Therefore the creditofficers need to employ extra time and effort to collect the relevant information from the borrower.

➔ Credit risk analysis is a lengthy process requiring sometimes even more than a month ofthe lack of information and its subjective nature.

Basically five factors influencing the firm’s credit risk grading. These are,

1) Financial risk

2) Business risk

3) Management risk

4) Security risk

5) Relationship risk

FINANCIAL RISK :

Financial risk is the risk which is related to firm‟s financial structure. Ratio analysis is one of the

factors of evaluating financial risk

BUSINESS RISK :

Business risk considers the firms type of business. That means the firms dominating power overthe sector in what its operation is conducted.

MANAGEMENT RISK :

Management risk measure the efficiency of firms management is efficient or not for running the business.

SECURITY RISK:



Every bank wants to give loan on a security basis. They want to see their loan secured. Banksevaluate the firm on the basis of their capacity of refund loan & interests.

RELATIONSHIP RISK :

In this case bank evaluates the relationship with client, whether the clients maintain theiraccounts in the particular bank (loan giver bank)or not.

POINTS:

Financial risk= 50

Business risk= 18

Management risk= 12

Security risk= 10

Relationship risk= 10

These risks may be categorized as under:-

Internal Control and Compliance:

Internal control is the process designed to provide reasonable assurance regarding theachievement of objectives in the effectiveness and efficiency of operations the reliability offinancial reporting and compliance with applicable laws regulation and internal policies.

Foreign exchange risk management:

Today‟s financial institutions engage in achieving starting from import export and remittance to

other product. The bank has the risk to manage those services and maintain the credit.

Credit risk management:



Credit risk is the possibility that borrow or counter party will fail to meet its obligation inaccordance to agreement. Credit risk is arising from the bank dealing with large/small partyindividuals or other bank. Credit risk management is a process that enable bank manage loan portfolio in order to minimize loss and earn an acceptable level to return for shareholders.

Asset and liability management:

Asset and liability management are integral part of the bank management. So it is essential tohave a structured and systematic process to manage the balance sheet.

So bank manager are sincere about the balance sheet.

Guidance Notes on Prevention of Money Laundering:

Money laundering is conversion or transfer of property knowing that such property derived fromserious crime for the purpose of concealing the illicit origin of the property .money laundering isa process vital to making crime worthwhile. Therefore this should be prevented as the moneylaundering use the Banks as their means.

Risks that face by NCCBL:

Risks manifest themselves in many ways and the risks in banking are a result of many diverseactivities. NCCBL is also face some risk in this sector .the most prominent financial risks towhich banks are exposed to be:

Balance sheet risk :

Balance sheet risk can be categorized in two major types of significant risk, where liquidity andinterest rate risk. Changes in market liquidity and interest rate exposes bank /business to the riskof loss which may in extreme threaten the survival of institution.

Interest rate risk:

Interest rate risk is the exposure of a bank s financial condition to adverse movement in interestrates. So NCCBL also face this risk and maintain this risk they take some action, those are toaddress interest rate risk an interest rate profile is prepared where consolidated yield for asset and



liabilities for different maturity bucket are shown for better understanding of profile. Interest raterisk can pose a significant threaten to a bank earning and capital base change in interest rateaffected a bank earning by changing its net interest income and the level of other interestsensitive income and operating expenses. An effective risk management process that maintainsinterest rate risk within prudent level is essential to the safety and soundness of bank.

Liquidity risk:

Liquidity risk means the danger of running out of cash when is needed to cover depositwithdrawals and to meet credit requests from the good customer. The major risk a bank runs isliquidity risk .NCCBL also faces this risk .so NCCBL has to make sure that enough liquidity isavailable to meet fund requirements situations like liquidity crises in the market and policychange by central bank. NCCBL traditionally use the statutory liquidity reserved and their borrower capital in the volatile intern bank money transfer.

Reputational risk :

Reputational risk poses a major threat to a bank .it defined as the potential that adverse publicityregarding bank business practices and association whether accurate or not will cause a loss ofconfidence in the integrity of the institution. We know NCCBL has there owe reputation in themarket .so NCCBL is very concern about this factor for the bank.

Operational risk:

Operational risk can be defined as the risk of direct or indirect loss resulting from inadequate orfailed internal process people and systems or from external events. NCCBL always concernabout operational risk .they always update there data base and make print copy of everytransaction.

Legal risk:

Legal risk is the possibility that adverse judgment or contract that turns out to be unenforceable

can adversely affect the operations of the bank. Bank may become subject to from the failure to practice diligence. Banks will be unable to protect themselves effectively from such legal risk ifthey do not engage in due diligence in identifying their customers and understanding their business.

Funding risk:



Risk management basically is a 5-step process, which involves:

Identification of risks. Quantification of the level of exposures. Policy formulation

Engineering a strategy to transform the exposures into desired form. Monitoring risk levels and restoring them to standards set.

Identification of Risks

Risk can be anything that can hinder the company from meeting its targeted results. Each riskmust he defined precisely in order to facilitate its identification by the various business units.This will also enable banks to have fundamental understanding of activities originating the risks.Such an understanding is essential to evaluate, aspects related to the magnitude of the risks, tenorand the implications they have on accounting aspects. At any point of time, a bank generally will be exposed to a host of risks emanating from the exposures. However, if the bank considers

aggregate values of these risks, without considering each risk independently, there may beimproper estimation of risks due to offsetting. To avoid this, all signs of hidden, economic andcompetitive exposures are to be considered. This is possible when the bank unbundled the riskinvolved in each transaction. This is in fact the most critical step where most of the time needs to be spent. Unless the bank identifies and understands the nature of exposures involved in atransaction, it will not be able to manage them. Further, such unbundling also helps the bank indeciding which risks it will have to manage and which it would prefer to eliminate. The processof unbundling also helps a bank in pricing.

Quantification of Risks

By measuring its risks, a bank is indirectly identifying the consequences of the decisions taken, ifrisks are not quantified, the bank will neither be aware of the consequences of its decisions norwill be in n position to manage the risks. Thus all risks to which the bank is exposed to need to be quantified. Quantification of risks is a crucial task and its accuracy depends crucially on theinformation available. The quality of information coming/rom its various divisions, however,depends on the bank‟s reporting system. The information provided needs to be further evaluated

to ensure that there is an effective and ongoing flow of information. Technology and MIS play acrucial role here.

Setting standards/Policy Formulation:

The next step will be to develop a policy that gives the standard level of exposure that the bankwill have to maintain in order to protect cash flows. Policy is a long-term framework to tacklerisk and hence the frequency of changes taking place in it is very low. Setting policies-for riskmanagement will depend on the banks objectives and its risk tolerance levels. The risk level set by the bank should neither be so high that it goes beyond the bank‟s capacity to manage it, nor

should it be so low that the profitability is affected. The bank should decide on a particular risk



Credit Monitoring and Review:

In the im plied credit rules by NCCBL it is the manager‟s responsibility to monitor the profile andrisk aspect of the credit portfolio. Such monitoring shall be evidenced from the comments of themanager in monthly call or time to time call and visit reports of the assigned officers and be kept

in the credit file with copy to Head Office. All extensions of credit have to be reviewed andgraded at intervals prescribed by the Head Office. The purpose of this procedure is to monitorlending performance and to identify potential delinquent credits. The basis of review andclassification are: risk of the transaction, repayment record of the borrower, collateral conditions,supporting information and documentations and the degree of conformity to bank facilities. Theresponsibilities for review and classification of credit facilities start at branch level and finallyends at the Head Office. Regardless of any formalized times for facility to be reviewed andformally classified by the branch manager or the concerned credit officer.

Credit products:

As part of earning income, banks have to invest their deposits traditional and conventionalmethods like Cash Credit, Secured over Draft Loans in differ ere sectors: HouseBuilding,Transport & Foreign Trade, etc. All these have become us competitive and made assetManagement of the company very difficult. Also opportunities have become limited therebymaking benefit ratios marginal.

Considering all these; Banks have fortunate some credit schemes based on common needs,targeted areas for dispersal of their opportunities among them. These, are known as Consumerfinance, Lease finance, Personal Loan, etc. Mainly these have been represented by difference banks in different name. NCCBL has recently introduced 03 (three) credit product namely personal Loan, House Renovation Loan,& Small Business Loan to supplement or consumer &lease finance schemes designed earlier.

Specialty: these are high income yielding loan.

A: Small Business Loan It has been introduced with the following features: -

Target group Small Businessman who are unable to avail of loan as per existingnorms of Bank.

Objectives Dispersal of loan to the committed small business community



Limit Up to Tk. 5.00 Lac (Maximum)

Eligibility Honest, sincere & High performing having more than 5 yearsexperience.

Refund mode Monthly repayment within 3 to 5 yars

Rate of interest 17% with quarterly rests with application fee Tk. 500/=

B. Personal Loan: Salient features of the Scheme are as follows:

Target group Salaried people of listed organizations

Objectives To meet up certain unwanted emergency expenses.


Eligibility 50% of their home takes salary and employee of listed companies.Refund mode Monthly repayment within 3 to 5 years

Rate of interest 17% with quarterly rests. 10% service charge with application fee Tk.500/=

C. House Renovation Loan: Social features are:

Target group Owners who are unable to meet up repairing/renovation expenses atfrom their own source.

Objectives Renovation/repairing of dilapidated houses.


Eligibility Actual owner of the house having 20 years of construction

Refund mode Repayment by 60 monthly instalments.

Rate of interest 17% interest with quarterly rests. 1% service charge with applicationfee Tk. 500/=

D. Consumer Finance:

Target group People of fixed income group

Objectives To procure household commodities for improving standard of living




Eligibility Acquiring of listed items

Refund mode Monthly repayment within 6 months to 36 months

Rate of interest 17% interest with quarterly rests. 10% service charge withapplication fee Tk. 100/=

E. Lease Finance: An entrepreneur, under this scheme may avail of lease facilities to procureindustrial machinery and equipments, Vehicles, etc. (without having to purchase it by down payment) with easy repayment schedule on case to case basis. Rate of interest under this schemeis 15% P.A. Recently three more credit schemes have been introduced to expand lending base ofthe Bank these are: Festival Business Loan: The scheme designer to help the genuine businessmen to meet the extra finance required during festivals like, Eids, Puja, Disbursement ofthis loan is made in recycling order which is to be stopped 15 days before festival day. MaximumTk. 10,000 Lac is allowable under this Scheme @ 15% interest P.A. at quarterly rest.Application fee is Tk. 500/=

F. Festival Personal Loan: The stymie formulated to meta urgency. financial except, the serviceholders at the time of festivals like Eids, Puma. Any salaried employee aged but 20-50 years andworking in Govt. Skim Gobi. Autonomous : insurance Co., etv. are eligible to avail of this loan.The disburse Cement of this loan starts before I month of festival and continues till festival.Borrower may be allowed travail Foamy. the Tk.15,000% only for minimum 6 months but notmore than 15 quarterly rest. Application fee is Tk.100/-.

G. NCC Bank Housing Loan Scheme:In order to enable the service holder/ professional businessmen in purchasing Flat/House, Constar Action of Building and renovation the, launchedHousing Loan Scheme from September, 2004. The tenure of the loan is trial, years red maximumamount of loan, is Tk.5U:00 lac with interest @ 12% P.A

H. Remittance Local and Foreign: Bank also provides remittance services to, i customers bothlocal and -foreign. Foreign remittance channeled throe Money Gram and placid international andExpress Money helps people in getting money within shortest possible t; from abroad. Local

remittance as usual serving the people effectively.

Classification of Advances:

The prime asset of any financial institution consists of its loans and advances and otherinvestments. These assets are created primarily out of funds received from the depositors, loans



and some other liabilities. The depositors as well as the investors in the institution are interestedin real /realizable value of the assets of the institutions. The creditors are interested, as they wantto know the depth of risk on their deposits, while the equity holders desire to be acquainted withviability of their source of income. The management of the institution as well as their supervisingauthority i.e. the Central Bank, evaluate the assets of the institution keeping in view the aforesaid

aspects. This evaluation at stipulated intervals is called “ Classification of Advances”. It is infact, placing all loans and advances under pre-determined different heads/ classes based on thedepth of risk each and every loan has been exposed to and to bring discipline in financial sectorso far risk elements concerned in credit portfolio of banks.

At present loans and advances are classified under three heads according to degree of riskelement involved these are-

1. Sub-standard2. Doubtful3. Bad

1.Substandard: A loan value of which is impaired by evidence that the borrower is unable torepay but where there is a reasonable prospect that the loan‟s condition can be improved isconsidered as substandard.

2. Doubtful: A loan is doubtful when its value is impaired by evidence that it is unlikely to berepaid in full but that special collection efforts might eventually result in partial recovery.

3. Bad: A loan is considered as bad when it is very unlikely that the loan can be recovered.

Good loans are classified as un-classified loans. Naturally depth of risk is more in doubtful

or bad loans than unclassified ones.

Criterion of classification:

Formerly, loans used to be classified by Bangladesh Bank on qualitative aspect only. Under therevised system status of loans are determined on the basis of the following five criterion

1.

Overdue Criteria2. Required payment in required period i.e. analysis of payment position of a loan within

stipulated period3. Legal action i.e. analysis of possibility to realize a loan by legal action4. Limit overdrawn criteria5. Qualitative judgment.



Recovery of Advance:

A bank‟s profitability and sustainability mostly depends on the recovery of its outstandingamount. Outstanding amount includes both principal and interest because, 80% of bank‟s

earnings comes from advances. A poor recovery rate indicates the weak condition of the banking

operation and vice versa. But in the mid 80s, there started a loan defaulting culture, which is stillin practice. As a result, banking sectors as well as the whole economy is facing a great threatfrom the defaulters. Money circulation has come down at its minimum level. If this cannot bechecked, whole banking system of our country will collapse one day.

(i) Recovery Procedure:

Recovery procedure is a lengthy one that requires efforts of the bank, society and legalinstitutions. It also takes time and money. Like other banks, NCC Bank follows four steps to

recover the outstanding amount. This are-

1. Reminders to the clients

2. Creating social pressures

3. Sending legal notice and

4. Legal action

These four steps are described in detail below-

1. Reminder to the client is given through a formal communication channel. A letter is writtenand properly signed on the bank‟s papers. This letter is issued several times to remind the

honorable loaner to repay his/her outstanding portion.

1. If the loan amount is not yet repaid after sending a series of letters, then social pressure iscreated on the client by persons referred while opening account in the bank.

2. Legal notice is prepared and sent by NCC Bank when above two steps fails to recover theamount. It is a threat to the borrower.

3. The last and final step of the recovery procedure is the help from the court. NCC Banksincerely tries to avoid this kind of situation for its honorable clients but cannot help

doing for its own sustainability.

Loan Default:



A borrower can default for many intentional and unintentional reasons. There has been a mal practice of loan defaulting since the mid 80s. This creates a great threat to the financialinstitutions.

Location of main risk elements and reasons of loan default:

If the manager/sanctioning authority is aware of the prominent reasons of loan default and riskelements, he/she can take precautionary measures to minimize risk elements inrecommending/sanctioning/disbursing a loan. There may be hundreds of reasons for loan defaultout of which following are the prominent causes-

1. Sick Management2. Sick Marketing3. Sick Product

4.

Sick Operation5. Sick Finance6. Sick entrepreneur.

a. Sick Management: Sick Management means lack of integrity, co-operation, financial/marketing knowledge and experience, endurance and judgment

b. Sick Marketing: It means lack of freedom, no restriction, openness (no monopoly), depth,growth and stability.

c. Sick Product: Sick product means lack of quality, competitiveness, demand and durability.

d. Sick Operation: It indicates lack of efficient machineries, skilled labor, good labor relation,utilities, raw materials, access to transport etc.

e. Sick Finance: It is lack of fund, repayment period, flexible rate of interest, matching to assets,collateral, efficient capital market etc.

Campari

1. Character2. Amount of loan3. Means of repayment4. Purpose of loan5. Accountability6. Risk

5 C’s

1. Character2. Capacity3. Capital4. Collateral5. Condition



Tools for appraisal credit

Besides the above-mentioned decision, the managers must ensure materialization of followingsafe guards for proper use and timely realization of loans, commission, interests etc andminimize the risk and hazards:

Safety of fund:

Safety means the assurance of repayment of distributed loans. This depends mainly on integrity, business behavior, and reputation

past experience in the particular line of business, financial solvency, quantum of own equity in business, capability to run own business efficiently, capacity and willingness to repay the loanetc, of the loan.

Security:

It must be ensured that repayment of the loan is secured and for this purpose manager must retainsecurity against loan to fall back upon in case of borrower‟s default. The securities must possessrequired basic qualities such as possession, title deed, parches etc.

Liquidity:

The borrower should have liquid asset so that he can adjust liability on demand and as much as possible loan itself should be quasi liquid so that it can be realized on demand in case of need.

7. Insurance



Purpose:

Purpose of a loan should be production, development and economic benefit oriented.

Profitability:

This is applicable both for bank and borrower

.

Diversification:

Diversification means the distribute of loan to a large number of borrowers rather to a smallnumber of borrowers. This will increase the services of the bank and it will reduce the risk ofloan recovery.

National interest:

Nothing can be done legally if it jeopardizes national interest in any way.

Credit Proposal:

Customers come to the Credit Division of the Bank to take loans. Knowing the category of theloans and the requirements they supply the necessary papers and information.

Credit committee takes that information form credit office and disposes it to the Head officecredit committee. The executive committee takes the decision by the prior decision of the boardof directors whether the load will be sanctioned or not. The decision transferred to the branchoffice with the result.

Credit restriction imposed by Central Bank:



At the time of sanctioning loan, the commercial banks must have to follow the restrictions thatare imposed by the Bangladesh Bank from time to time.

Credit Strategies:

General:

The bank shall provide suitable credit services and products for the market it operates. Creditwill be allowed in manners, which will in no way compromise the Banks standards of excellenceand to customers who will complement such standards. Loans and advances shall normally befinanced from customer‟s deposits and not out of short term temporary funds or borrowing from

other banks. All credit extensions must comply with the requirement of Bank companies Act-

1991 and Bangladesh Banks instructions as may be amended time to time.

Nature of Credit or advance Sanctioned by NCCBL:

Lending of money to different kinds of borrower‟s is one of the most important functions on

NCCBL. Major amount of income of this bank come from its lending.

Direct facilitates:

Term Loan Continuous loan Demand loan

Term Loan:

short term industrial loan, mid term industrial loan, and long term industrial loan,

Transport loan

House building loan Loan against FDR

Short /mid/long term industrial loan:



By industrial credit we mean financing of industrial enterprise in the form of term loan. This may be categorized as follows:

Short term industrial finance: Term of the loan is equal or less than one year. Mid term industrial finance: Term of the loan is up to 5 years. Long term industrial finance: Term of the loan is more than 5 years. An industrial finance is allowed for the purpose: To set up a manufacturing facility To finance for BMRE where B means for balancing, M for modernization, R means for

replacement and E for expansion. Purchasing of adequate inventories comprising of raw materials, stock in process and

finished goods and extending credit to their customers.

Transport loan:

Any finance, which is given against hypothecation of vehicles like trucks, buses, marine vesseletc, is termed as transport loan. Advance under transport sector may be allowed for the following purposes:

Purchase of imported/local assembled Buses, Minibuses, trucks etc. Import if reconditioned buses is subject to import regulations. Construction of purchase of water vessels passengers & cargo vessels locally built.

House building loan:

House building loan means loans that are given for construction of buildings or structures to beused not for residential accommodations of the borrower‟ but for commercial utilization like

renting or sale after the construction.

Loan against FDR :

This kind of loan is allowed by marking lien or creating charge against FDR or other financialinstrument.



Continuous Credit (as working capital finance):

1) Overdrafts

2) SOD (secured overdrafts) against easily en Cashable securities.

3) SOD(secured overdrafts) against work orders

4) cash credit

5) Cash credit(Hypo)

6) Cash credit(Pledge)

7) Overdrafts

8) SOD against FDR

Allocation of loan able funds:

Particulars Percentage (%)

Trade & working capital 45%Industries 25%Small industries & various sectoral finance under

Govt.15%

Real estate & civil construction 5%Agro-based financing 5%

Lease financing 3%Consumer financing 2%

Lending interests of NCCBL:

Working capital financing 14%

Commercial and trade financing 14.5%

House building lone 14%

Retail and consumer financing 16%



SME financing 16%

Agricultural financing 11.5%

Import and Export financing 7.00%

Long term financing 14%

CHAPTER-3

Objectives of the Study :

Broad Objectives:

The broad objective of the study is “Approval, Disbursement and Recovery Policy of Credit” In

NCC Bank Limited over the years of its operations in the Commercial Banking sector inBangladesh.

Specific Objectives:

The specific objectives of this study are as follows:

1. Relate theoretical knowledge with practical experience in several functions of the bank.2. Identify and evaluate different functional services offered by the bank to its clients.3. The process and the personal involved in the various departments of the bank.4. To know about the pattern of the clients who are taking the services from the bank.5.

To analyze the financial performance of NCC Bank Limited over the years of bankingoperations.

It is observed that the study covers a broad area of Loans and Advances, Loan administration and performance evaluation of the credits etc. However, the specific objectives of the study are asfollows,

To provide a detailed description of the product for “Loan Appraisal Policy”.



To analyze the loan evaluation criteria as well as the loan system of “Loan Disbursement

and recovery Policy. To access the loan administration of the bank.

To access the impact of the loan product on the performance of the bank.

Methodology of the Study:

Area of Investigation

As the banking sector is very large, therefore I only focused on specific departments of banks

and taking only consideration of the “Approval, Disbursement and Recovery Policy of Credit” In NCC Bank Limited, where I have been assigned to serve as a interne.

Source of Information:

The study is conducted on the basis of both primary and secondary data.

Primary data

The primary information was gathered through interviews, observation and group discussion.The primary data are collected from all the departments specially Credit Department of NCCBank Limited, Uttara Branch by interviewing personal of the respective departments. The headsof the departments of senior executives have been interviewed. However, the analysis and theexplanation are the authors‟ own.

Secondary data

The secondary information was gathered through Annual Reports, Periodic Publication of theBank, Brochures, Credit Manuals and Loan Administration Manual, Financial Statements of the



banks, website, etc. The data of the study are based on a review of existing broachers,documents and database of NCC Bank Limited.

Limitations of the Study:

In every Research work there exist some limitations that the researchers faces where conductingdifferent activities. In the process of the research work, I came across certain limitations thathamper the actual findings and analysis of my research work. Some of the constraints that I havefaced while conducting the research work are as follows:

The interviewees, who are the personnel involved in the various departments of the bank,may not be well acquainted with the formal procedures of the research work. Therespondents may be biased on certain issues that hamper the total evaluation of theresearch work.

A structured filing procedure is often neglected which also poses difficulty inunderstanding the sequential procedure.

The study conducted can be hampered, as the total evaluation of the industry cannot becovered in a short period of time. In short period of time the actual phenomenon on the performance of the various departments of the bank can just be highlighted and someissues were overlooked.

The personnel of the bank are usually busy with their daily activities and routine tasks;

therefore interacting with them during their office hours was difficult sometimes.Although most of the officers were very helpful and friendly but as because they have

been busy with their works, they could not give enough time to light up my knowledgeabout the Bank‟s activities.

Lack of proper books, journals and articles available for the banks, sometimes createdlimitations for me to understand the banking terms and conditions.



The banking policies and manuals of NCCBL are of confidential in nature and thus it is

difficult to collect the necessary literature and documents within this short time.

None the less, I tried my level best to make this report a good one and despite of manylimitations in my approach, I expect that the reader of this report will a boarder view and ideaabout the “Approval, Disbursement and Recovery Policy of Credit” In NCC Bank Limited.

The limitations faced in conducting the study are

A more comprehensive knowledge of the subject matter might have helped to carry out amore thorough study.

Continuous modification in the policy offering is another limitation judging the performance of loan recovery.

Most of the data used in the report are given on an approximate basis due to bankstendency towards confidentiality. It also served as a major limitation.

CHAPTER-4 FINDINGS OF THE STUDY

Ratio Analysis

Profitability ratio

Return on equity =



2007 =1,400,664,725/5,273,277,362 =26.56%

2008 =1,231,832,174/6,696,770,778 =18.39%

2009 =2,784,218,989/11,745,223,217 =23.71%

2010 =3,002,876,567/16,768,521,255 =17.91%

Return on asset =

2007 =1,400,664,725/79,588,430,798 =1.76%

2008 =1,231,832,174/110,437,103,311 =1.12%

2009 =2,784,218,989/124,806,383,846 =2.23%

2010 =3,002,876,567/152,796,945,827 =1.97%

Net interest margin =

2007 =(7170099616-5266592564)/79588430798 =2.39%2008 =(9095891683-7126309505)/110437103311 =1.78%

2009 =(10856416291-8426118565)/124806383846 =1.95%

2010 =(12023158687-7789506602)/152796945827 =2.77%

Earning per share =

2007 =1,398,792,999/22,750,000 =61.49

2008 =1,231,832,175/35,546,875 =34.65

2009 =2,784,218,989/51,212,521 = 54.37

2010 =3,002,876,567/52,774,028 = 56.9



Retained earnings per share =

2007 =1,112,009,852/22,750,000 =48.88

2008 =1,054,921,127/35,546,875 =29.68

2009 =2,217,834,432/51,212,521 =43.31

2010 =2,691,260,736/52,774,028 =51.00

Retention Ratio =

2007 =1,112,009,852/1,581,382,798 =70.32%

2008 =1,054,921,127/1,547,592,026 =68.17%

2009 =2,217,834,432/3,135,678,230 =70.73%

2010 =2,691,260,736/3,798,836,049 =70.84%

Operating Profit Margin Ratio =

2007 =(4816210375-1559345650)/79588430798 =4.09%

2008 =(5777810297-1930955801)/110437103311 =3.48%

2009 =(8195606688-2906887699)/124806383846 =4.24%

2010 =(9680806328-3602929761)/152796945827 =3.98%

Net profit Margin Ratio =

2007 =1,398,792,999/4,816,210,375 =29.04%



2008 =1,249,015,183/5,819,245,747 =21.46%

2009 =2,823,473,302/8,262,859,422 =34.17%

2010 =3,798,836,049/9,680,806,328 =39.24%

Asset Utilization (AU) =

2007 =4816210375/79588430798 =6.05%

2008 =5819245747/110516618171 =5.27%

2009 =8262859422/124984702326 =6.61%

2010 =9680806328/152796945827 =6.34%

Equity Multiplier (EM) =

2007 =79588430798/5273277362 =15.09

2008 =110516618171/6708227542 =16.47

2009 =124984702326/11796677214 =10.59

2010 =152796945827/16769945827 =9.11

Tax Management efficiency Ratio =

2007 =1398792999/3 256864725 =42.95%

2008 =1249015183/3864393665 =32.32%



2009 =2823473302/5328807974 =52.99%

2010 =3798836049/6077876567 =62.50%

Expense control efficiency ratio (ECE) =

2007 =3256864725/4816210375 =67.62%

2008 =3864393665/5819245747 =66.41%

2009 =5328807974/8262859422 =64.49%

2010 =6077876567/9680806328 =62.78%

Asset management efficiency ratio (AME) =

2007 =4816210375/7 9588430798 =6.05%

2008 =5819245747/110516618171 =5.27%

2009 =8262859422/124984702326 =6.61%

2010 =9680806328/152796945827 =6.34%

Funds Management efficiency ratio (FME) =



2007 =79588430798/5 273277362 =15.09

2008 =110516618171/6708227542 =16.47

2009 =124984702326/11796677214 =10.59

2010 =152796945827/16768521255 =9.11

Leverage Ratio

Total debt =

2007 74,315,153,436/79,588,430,798 = 93.4%

2008 103,740,332,533/110,437,103,311 =93.9%

2009 113,061,160,629/124,806,383,846 =90.6%

2010 136,028,424,572/152,796,945,827 =89.0%

Equity Multiplier (EM) =

2007 =79,588,430,798/5,273,277,362 =.934

2008 =110,437,103,311/6,696,770,778 =.939

2009 =124,806,383,846/11,745,223,217 =.906

2010 =152,796,945,82716,768,521,255 =.890

Efficiency ratio

Operating efficiency Ratio =



2007 =1,559,345,650/4,816,210,375 = 32.4%

2008 =1,930,955,801/5,777,810,297 =33.4%

2009 =2,906,887,699/8,195,606,688 =35.5%

2010 =3,602,929,761/9,680,806,328 =37.2%

Employee productivity ratio =

2007 =4,816,210,375/1,400 =3440150.268

2008 =5,777,810,297/1,551 =3725216.181

2009 =8,195,606,688/1,844 =4444472.174

2010 =9,680,806,328/2,139 =4525856.161

Asset Utilization (AU) =

2007 =4,816,210,375/79,588,430,798 =6.1%

2008 =5,777,810,297/110,437,103,311 =5.2%

2009 =8,195,606,688/124,806,383,946 =6.6%

2010 =9,680,806,328/152,796,945,827 =6.3%

Comments on Performance of NCCBL

Name Means Comment

Profitability Ratios:

ROE Return on Equity Measures the fund managementefficiency.

More efficient in 2007 thanothers but decreasing trend in2009.



ROA Return on Assets measure the asset managementefficiency for a company

It is seen that NCCBL‟s RAOis fluctuating, shows the poor performance then 2009.

Net Interest

Margin How much the company earns interest by using eachamount of asset.

Shows the better performancein 2010, gradual increase from

2008.EPS EPS represents the number of currency earn during

the period on behalf of each outstanding share ofcommon stock. Higher the ratio indicates higher netincome the share of stock is generating.

In 2007 they earn highest61.49 Tk. On behalf of eachoutstanding common stock, In2010 show gradual increase ofEPS from 2008.

Retain

Earning Per

Share

It measures how much of the net income has beenretaining after paying out all dividends.

In 2010 they retain 51 Tk.After paying all dividendswhich is gradually increaseafter 2008.

Retention

Ratio

It shows the percentage of net income that is

retained in the bank after paying of all dividends.

In 2010 bank has the highest

ratio after the big fall after2008.

Operating

Profit Margin

Ratio

Measure how large a spared between total operatingrevenues and total operating expense of a bank thatmanagement has been able to achieve by using theirasset.

In 2009 the bank earn highest4.24 tk by using 100 tk anddecrease in 2010.

Net profit

margin ratio Highest the result show the better performance and in 2010it shows the best result.

AU It measures the percentage of each taka remainingafter all cost and expense including interest tax and preferred stock dividend has been deducted. Itreflects the effectiveness of expense managementcost control service pricing policies the higher theBanks NPM indicates more percentage iscontributing to profit.

The bank earn highest 6.61 tk by using 100 tk asset in 2009,fall down at 2010 (6.34).

EM A higher equity multiplier indicates higher financialleverage, which means the company is relying moreon debt to finance its assets.

In 2009 and 2010 the bank useless liability than 2008, showsthe good performance.

Tax

Management

EfficiencyRatio

The higher ratio indicates the bank could efficientlymanage its tax expense.

Increasingly shows the good performance from 2008 to2010.

Expense

Control

Efficiency

Ratio

The higher ratio indicates the bank could efficientlymanage its expense.

Continuously show the bad performance due to increase ofthe man power, increase branch and other expense.

AME It indicates if the ratio is higher the performances is better in asset management.

It shows the little fluctuation performance during the year



and in 2009 it shows betterthen 2007and 2010.

FME It indicates if the ratio is higher the performances is better in fund management.

It shows the poor performancein 2010 then 2007, 2008, and2010.

Leverage Ratios: Total debt

ratio/ leverage

ratios

It indicates the proportion a firm‟s total asset that isfinanced with borrowed funds. That means out oftotal how much amount is financed by liability.

The bank financed more thanits 90% of asset with borrowedfunds but decrease in 2010.

EM A higher equity multiplier indicates higher financialleverage, which means the company is relying moreon debt to finance its assets.

In 2009 and 2010 the bankrelying less liability than 2008,shows the good performance.

Efficiency Ratios:

Operating

Efficiency

Ratio

It measures whatever the revenue is being generated by the bank from operation, whether it is thatenough to cover all operating expense.

In 2010 the bank cover almost38% of operating expense fromits revenue shows the good performance the other years.

Employee

Productivity

Ratio

It is used to measure the operating efficiency of the bank by increasing the productivity of theemployees through the use of automated equipmentand improved employee training.

In 2010 the bank‟s employees

provide their best performancethen other years.

Asset

Utilization

(AU)

It measures the percentage of each taka remainingafter all cost and expense including interest tax and preferred stock dividend has been deducted. Itreflects the effectiveness of expense managementcost control service pricing policies the higher theBanks NPM indicates more percentage iscontributing to profit.

The bank earn highest 6.61 tk by using 100 tk asset in 2009,fall down at 2010 (6.34).

SWOT Analysis of NCCBL

Strength:

1) Sound profitability growth and high asset quality.

2) Experienced management.

3) Honest, sincere, and dedicated employee competency.



4) Wide market share and stable source of fund.

5) Largest network.

6) High attention on recovery of overdue amount and or pre-overdue situation.

7) Close monitoring on investment clients.

8) High attention on individual performance.

9) High attention on making quality investment and disposal of proposals.

10) All the officials/ manpower are dedicated and honest to serve its own duty.

11) Business ethics of the division is similar to the ethics ands values of mass people of ourcountry.

Weakness

1) Traditional network system and lack of full scale automation.

2) Lack of required ideas in modern investment products.

3) Poor marketing of investment products.

4) Lack of required information specifically on SME.

Opportunity:

1) Scope of market penetration through diversified investment products.

2) Increasing awareness among the clients.

3) Scope of develop new committed entrepreneurs.

4) Country wide branches having wide opportunities to access in different kinds of business.

Threats/ Challenges:



1) Challenge of new entries

2) Challenges related to substitute organization

3) Entrepreneurship development.

4) Misgivings/ wrong propaganda

From the Topic Loans and Advances chapter of the report, the overall Credit approval,disbursement and recovery process have been clarified. Now in the Findings chapter, the reportwill focus on the actual outcome that was the result of the topic analysis. The section of thereport will contain Findings on Credit Assessment stage, Qualitative Analysis of Credit and

overall findings that have an impact on the Business Environment of NCC Bank limited.

Findings on credit Assessment stage

Credit assessment involves rigorous analysis on the prospective borrower, his business andrequired loan amount. NCCBL has a set of professionally sound credit officers who are able tocarry out the job of credit assessment with utmost meticulousness. Yet there are some loopholes

in their activities, which may expose the Bank of Credit Risk situations. Major observations areas follows

Checking Political Connection of Borrower: A significant factor in assessing the

credit-worthiness of a borrower is his/her connection with any political party or pressuregroup, which may benefit or damage the business performance of the borrower whenthere is a change in political regime. The Credit Officers of NCCBL do not precedes any personal that connects any political connectivity.

Dealing with Influential Borrowers: Supervision of large loans by credit officers tend

to be less effective because the big borrowers are influential personnel in the society and



seen to establish and maintain contact with the top executives of the Bank. Big borrowersare in a position: (1) to exert irresistible influence over the credit officers for actions intheir favor and (2) to dictate their credit terms. As per credit policy, NCCBL do not showany relaxation in credit terms sanctioned to any influential borrower. Although many ofthe borrowers of NCCBL are powerful and influential, the Branches do not face any

difficulty in implementing prudential regulations of Bangladesh Bank and credit policiesof NCCBL Head Office, because they are very choosy for selecting a borrower. Genuine business houses are always welcome to NCCBL.

Proper Valuation of securities: The bank normally takes into consideration the present

market value of collaterals as assessed by the nominated surveyor of the Bank. Theforced sale value of collateral security exceeds the lending amount, the loan issanctioned. Thus, NCCBL consider market value of mortgaged property under forcedsale situation when loans become bad and stale, and disposal of assets become inevitable.

Adequate Collateral Security: The collateral securities taken by NCCBL from theclients against their credit facilities always covers probable risk of default. Inadequacy incollaterals takes place due to two reasons: (1) client‟s reluctance in committing adequatecollateral assets against the loan taken (mostly happens with powerful borrowers). (2) bank‟s lenience in enforcing adequate collaterals to be committed by the borrowers.

NCCBL is very alert for these two purposes.

Qualitative Analysis

NCCBL invests its assets in the different portfolios

comprising borrowers from different industries and sectors.

Usually the loans are given to following categories/ sectors:

Working capital

Commercial Loans Term Loan

Small Business Loan Trade finance/ Foreign Exchange Miscellaneous loan



Small Business Loans are small-sized loans which individually expose the bank to smallquantum of credit risks. The bank does not seek sufficient securities against the small borrowersas per the instruction of Bangladesh bank. This is due to the fact that processing, monitoring and

recovery of large number of small loans require larger costs and efforts.

Trade Finance/ Foreign Exchange

These are mostly the credit facilities in the forms of letters of credit and other financinginstruments extended to the imports and exports. There is also a decreasing trend in TradeFinance due to the world wide recession. The Bank earns handsome returns from this indirect

loan facilities in relation to the degree of risk involved.

Miscellaneous Loans

NCCBL extended to various in an attempt to explore new loan areas and also to diversify its loan portfolios. This is evident from the declining volume of miscellaneous loans over the stated periods.

Overall Findings

“Loan Approval, Disbursement and Recovery Policy “is a key product for NCC Bank Limited asit contributes a good portion to the overall profitability of the bank. The balance sheet andincome statement show that it is very profitable bank. Its sales as well as the number of loansdistributed have been increasing steadily over the years.

During the course of the undertaken study, several findings have been stumbled upon with whichhave been summarized and discussed below-

1. The bank is constantly expanding and improving its performance.2. The credit approval policy of NCCBL is very conservative.



1. The loan administration of NCC Bank Limited enables it to ensure a smooth loandisbursement and monitoring system.

1. The empirical evidence of the product suggests that it is performing quite well andcontributes a good portion of the overall profitability of the bank.

1. Over the years the amount of loan approved and disbursed seems an increasing trend ofLoans and advance.

1. The segmentation analysis further suggests that among the borrowers, the workingcapitals are the highest which help the country to develop.

1. Although the current offering for the loan is a lucrative one, there is still scope for furtherimprovement which would be beneficial for the bank as well as the borrowers.

1.

The customer services provided by NCC Bank Limited are superior level due to largeaffiliation and strong brand image.

Financial institutions have always played an imperative role in strengthening the economicinfrastructure of the country. Banks such as NCC Bank Limited has been at the forefront on therole. Among its various products, credit Appraisal policy plays an important role in maintainingits profit. Although right now the products contribution, in comparison to the products is not that

high, it can certainly hoped that with proper modification and policy change it will surely become a large profit earning sector for the bank. The different features of the product identifiesit as a convenient way for the consumers avail loan for a variety of purpose and the loanevaluation criteria‟s also help to assess the different aspects of the product applicants.



Finally it can be argued that Credit Appraisal and Recovery policy of NCC Bank Limited has been operating as per the desired direction. However, I have identified some loopholes of the program that needs special attention. I hope that if the existing problems are addressed properlythe bank will be able to expand the program as per their target and it will continue to providemore revenues in maximizing the wealth of the bank in the years to come.

CHAPTER-5 CONCLUSION & RECOMMENDATION

CONCLUSION

Since the banking services especially the private Banks are doing a good business, it is clear thatmodern people are more concerned about securing their valuable assets and get high-quality and

timely services. For this reason lot of new commercial banks has been established in last fewyears. These banks have made this banking sector very competitive. So, now banks have toorganize their operation and do their operations according to the need of the market. Bankingsectors no more depends on the traditional method of banking. In this competitive world thissector has trenched its wings wide enough to cover any kind of financial services anywhere inthis world. The major tasks for banks, to survive in this competitive environment is by managingits assets and liabilities in an efficient way.

The study was conducted on Approval, disbursement and recovery system of credit carried out

by NCC Bank Limited. Analyzing the procedures of credit Approval, disbursement andrecovery system over the years of operation is main objective of this study. As the study wasconcentrated towards the Loans and Advances, therefore, few limitations occurred whileconducting the study. In spite of having many challenges, adverse economic conditions andmarket patterns during the year NCCBL proved to be successful by offering quality and timelyservices to its customers.

On the basis of convincing reasons, NCC Bank Limited management believes that in thecoming years the bank will try its level best to sustain its earning capacity and maintain a steady

growth. With the current performance of the Bank and with little improvement here and they willcertainly make NCC Bank Limited one of the best Private Bank in Bangladesh in the nearfuture.

RECOMMANDATION



NCC Bank Limited are engaged in promotional activities, it should go for aggressiveadvertising and promotional activities to get a broad geographic coverage. They should makesome plans for all the branches located in different areas, so that the branches can get the

maximum exposure from the surrounding areas. Some recommendations for NCC BankLimited are as follows:

More outdoor promotions such as Billboards can be set up in the commercial areas as

well as the rural areas to make awareness among the clients. In DhakaCity there are veryfew billboards and advertisements of NCC Bank Limited, so the bank should increasethe number of outdoor promotions. Advertisements in the national daily newspapers andelectric media can be given to make customers aware of the new product/service featuresavailable.

More personal selling staffs and employees can be appointed to make ore exposure of the

bank.

NCCBL should increase the number of retail banking products set up a permanent Retail

Banking Department in all the Branches (especially on Dhaka City) as the number ofcustomers taking the services of Retail Banking are increasing day by day

As in today‟s context the decoration of a branch is to be highly concerned by an

organization, therefore NCC Bank Limited will also be take the renovation of the building into consideration.

Filing procedure of NCC Bank Limited should be maintained in a definite and clear

manner. The filing of the papers submitted by the clients and other related documentsshould have to maintain in more specific manner than it followed at this moment. It willsave time and energy of the employees and the documents will be secured.

Decision making process can be made more decentralized. Participative approach should be adopted to gain prompt and effective result. Group discussion can be practiced insome situations to make quick decision making.



NCC Bank Limited should focus more on the Small and Medium Enterprises, as this

sector has the market potential to grow. Along with the Garments sector, the bank shouldalso encourage businessman and entrepreneurs to take Loans and invest in different

sectors such as Jute Industry, Leather Industry, Chemical Industry and Ship building etc.

Expand the export business of NCC Bank Limited for more export financing tominimize the difference between export and import financing.

Information system should be more developed. NCCBL should increase the usage ofInternet fore local and international correspondence. Computer Division needs to be up

dated and extensive for the greater welfare for the branches. The use of moderncommunication software can be used for faster transaction delivery to the clients. TheOnline Banking of NCC Bank Limited is to be implemented properly.

An uninterrupted network system has to be ensured by the bank. It will serve the officialsfrom much hassle and will save time.

The credit sanction procedure should make quicker since competition is very hard intoday‟s business world. People do not want to wait for three to four weeks on an averageto get a loan which is even protected by security.

A little more service quality up gradation may help the bank to hold on to old customers

and avail more new customers. For this purpose the Bank should open up CustomerService Departments in all the branches and Research and Development Division in theCorporate Head Quarter to understand customer needs more accurately.

REFERENCES

v Annual Report of NCCBL of year 2007,2008,2009,2010,2011

v Eugene F. Brigham, joel F. Houston ; Fundamental of financial management;9th edition

internship report deposit mobilization of ncc bank

Documents