intrenship report on rakub

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A STUDY ON “GENARAL BANKING & PERFORMANCE EVALUATION” OF RAJSHAHI KRISHI UNNAYAN BANK, RAJSHAHI BRANCH

An internship is an agreement between a student and a company or organization for a fixed

period of time, such as a semester or quarter. A student agrees to work for them and they agree to mentor and teach the student; internships can offer valuable insight into a particular field or career. Internship is process to gain practical knowledge about some theoretical lesson. It is the application of knowledge, which a candidate has gathered by academic subjects. And thus it helps to better decision making.

The concept of work experience, internships or cooperative education is not a 20 th century development, as many believe. The concept of learning by doing goes back to the guild system in Europe. The idea of combining work and education in America was formally initiated in 1906 by Herman Schneider at the University of Cincinnati where it was referred to as cooperative education. (http://www.intech.mnsu.edu)

Professor Schneider joined the University of Cincinnati in 1903 and began immediately to solicit the interest of the faculty and industrial leaders in the merits of cooperative education. Schneider was convinced of the efficacy of this concept after studying case records of Lehigh University graduates, indicating that those who showed marked engineering ability had worked while attending college.

The concept of internship was introduced in University of Rajshahi with the introduction of Business Faculty. From then internship is an academic requirement for all the students of MBA. Generally this internship program varies from 15 days to 3 months.

Department of Finance and Banking University of Rajshahi

1.1 MEANING OF INTERNSHIP

http://www.intech.mnsu.edu/

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1.2 Objectives of Internship:

The following list of program objectives has been extensively reported in literature

discussing internship programs. The College of Business subscribes to the following objectives but does not expect each student to achieve every objective. Many of the program objectives will only be important to a few students, but each student should achieve a substantial portion of those listed:

Table-1: Objectives of Internship

1. Internships will provide students the opportunity to test their interest in a particular career before permanent commitments are made.

2. Internship students will develop skills in the application of theory to practical work situations.

3. Internships will provide students the opportunity to test their aptitude for a particular career before permanent commitments are made.

4. Internship students will develop skills and techniques directly applicable to their careers.

5. Internships will aid students in adjusting from University to full-time employment.

6. Internships will provide students the opportunity to develop attitudes conducive to effective interpersonal relationships.

7. Internships will increase a student's sense of responsibility.

8. Internship students will be prepared to enter into full-time employment in their area of specialization upon post graduation.

9. Internship students will acquire good work habits.

10. Internship students will develop employment records/references that will enhance employment opportunities.

11. Internships will provide students with an in-depth knowledge of the formal functional activities of a participating organization.

12. Internships will provide students the opportunity to understand informal organizational interrelationships.

13. Internship programs will enhance advancement possibilities of graduates.

14. Internship students will have higher levels of academic performance.


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15. Internship programs will increase student earning potential upon graduation.

16. Internship programs motivate students to continue their education.

1.3 BENEFITS OF INTERNSHIP

Benefits to the Student:

1. Benefits in Career Exploration and Decision-Making2. Networking and Professional Connections 3. Helps a student to match theoretical knowledge with practical experience. 4. Make familiar with the activities of corporations.

Benefits to the Organization:

1. Professionals in the sponsoring organization have access to new concepts and ideas through the intern.

2. The sponsor has a chance to assess the intern without making a long-term commitment.3. The internship can help employers do needed projects.

Benefits to the University

1. Provides an opportunity for the university to relate academic training to job requirements.2. Uses many community facilities and resources for educational purposes making it possible

for the university to provide education in fields that it could not otherwise serve.3. Enables the university to keep abreast of developments in the business and industrial world.4. Provides a direct avenue through which the university can meet community needs. Benefits to the Community

1. Provides the community with an increased source of well-educated workers.2. Provides the community with a labor force that is more thoroughly educated than graduates

who have not had work-experience education and hence works more efficiently.3. Increases cooperation between the community and the university. Increases the possibility

that young people will remain in the community after MBA.

1.4 METHODOLOGY

Both primary and secondary information has been collected for the purpose of this report.

The primary sources of information:

Face to face conversation with the bank officers.

Face to face conversation with the clients.

Exposure on different desk of the bank.

File study.

The secondary sources of information:


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Annual report of RAKUB.

Profile of RAKUB.

Periodicals published by Bangladesh Bank.

Different publications on banking functions, foreign exchange operation and credit policies.

Previous internship reports Prospectus of RAKUB.

1.5 Limitations of Internship

We know that practical training is essential to acquire a complete knowledge. But practical

knowledge is not easy to obtain. There are many limitations of internship. These are as follows:

It is impossible to know fully about an organization within a very short term.

Sometimes an organization cannot provide the real figure of its organization because of secrecy.

Observation of the activities of an organization is difficult tasks.

Lack of necessary elements and aspects are the problem of proper Internship.

Lack of proper data is another problem of practical training.

Lack of proper knowledge for the collection of primary and secondary data

Lack of maintaining proper books and modern technology

In many cases, the bank is not interested provide their information for maintaining secrecy


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At present Bank such lifeblood of economy and importance of the Bank is unlimited. That

economy and trade are turned to concentrate it. Bank does not only help for giving loan, even helps various financial transactions. As a result the importance of banking activates to increase day by day. Bangladesh economy reliant on agriculture and consider the mainstay of economic life of the people. Most of people of our country are depending upon agriculture directly and indirectly. Development of this country depends upon the development of agriculture, because Major portion of National Income comes from agriculture. But the financial conditions of the farmer of our country are not satisfactory and their purchasing power of agriculture’s materials is very low. Most of the farmers live under poverty line. They could not get seeds, fertilizers, modern technology of cultivation and irrigation in proper time. In case, Rajshahi krishi Unnayan Bank provides to supply their needed.

2.1 INTRODUCTION

Rajshahi Krishi Unnayan bank is a specialized bank and the largest sources of agricultural

credit in Rajshahi division. It was established by the president’s order no. 58 of 1986.The main function of the bank was started on 15th March in 1987.At that time RAKUB took over the whole operations of Bangladesh Krishi bank (BKB) within the administrative division of Rajshahi along with its assets and liabilities.

The north-west region of our country is the driest and poorest area with a high population density and low rate of urbanization (13%). The north west-region consists of 16 districts of entire Rajshahi administrative division with an area of 34513 sq. km. and estimated population of 2705 million. The populations of this area are to be suffered poverty from various degrees of deprivation.

To overcome those problems and improve the condition of the poor, RAKUB supply agricultural credit, the bank extends its credit facilities for employment and income generating agro-based industrial and commercial activities. RAKUB is playing a vital role both in agricultural and industrial developments as well as eradication of poverty.

2.2 Historical Background of RAKUB:

i) Past History :

Most of the people of Bangladesh are related with agriculture from the very beginning. The farmers of our country were oppressed in various ways at the time of British rule. We know that many farmers lost their properties because they could not repay their debt. At that time, they took credit from the local lenders and other landlords to produce crops and other purposes. On the others hand they took Dadan from the moneylender, but when they would repay the money with interest, they would become landless day by day. Since the small farmers become the marginal farmers, at first the Indian British Govt. took a step to disburse the agriculture loan to the farmers of the Bengal since 1902, which continued from 1905.

For the socio-economic development of the small and marginal farmers of Bengal, the Indian British Govt. took a step for the second times to disburse agriculture credit in 1932, which continued till 1935.

Some rules and regulation of British and financing condition of local landlord, moneylenders etc like “Dadan” business, farmers become hopeless helpless. Seeing the bad and helpless condition of the farmers, the bold voice of Sher-E-Bangla A.K. Fazlul Haque stood beside the farmers and he tried to establish the “Rin Shalishi Board” for the greater interest of the farmers, as a result many farmers


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who were engaged with the oppression of the moneylenders and landlords, breathed with peace. That is why, the people at that time recollected Sher-E-Bangla as Haque shaheb.

ii) Pakistan period:

In 1947, the Indian was separated from the British rule and in Indian sub-continent two independent countries were originated namely India and Pakistan. Our Bangladesh was indicated as East Pakistan as a part of Pakistan. After that time the Pakistan Govt. recognized a financial institution by the name of Agricultural Development Finance Corporation (ADFC) to disburse loan is agricultural sectors is 1952. In 1957 then the Pakistan Govt. established another financial institutions namely “Pakistan Krishi Bank” feeling the agro-production and the importance of agro-loan. This institution started its function from 1958.

iii) Bangladesh period:

Bangladesh freed through the “Great liberation war is 16 December 1971. After liberation period The ‘Pakistan Krishi Unnayan Bank’ was re-named as “Bangladesh Krishi Unnayan Bank”. After this, the classification of this bank was made as the “Bangladesh Krishi Bank” with the ordinance number 27 of the president 1973.Various organizations are working independently after achieving freedom. As a result, the consciousness of people is increasing than before liberation period. The creation of ‘Water Development Board’, ‘Bangladesh Rice Research Institute’, ‘Rural Electrification Board’ and other necessary institutions are made. Control of flood, rice of new quality and introduction of other crops and the increment of its demand, the increment of demand of people towards the institutional credit a specially SACP or as result of circulating a special credit program amounting to Tk.. 1 core etc. have influenced many farmers to be bank oriented. It becomes very difficult for some limited bank to meet up the multiple demand of loan specially crop-loan. Since Bangladesh is an agro-based country, the demand for the loan of Krishi Bank has increased remarkably. It becomes very difficult for a Dhaka based head office of Krishi Bank to manage agro-loan in the remote areas of the country. For this reason, then the Govt. felt to decentralize the Krishi Bank in the divisional areas. The people of the North-west areas of Bangladesh are lagging behind in all respects than other parts of the country. For this reason, Rajshahi Krishi Unnayan Bank was established in 1986 with the ordinance number 58 of the president. RAKUB started its functioning from 15 March, 1987.

2.3 OBJECTIVES OF RAKUB

The main objectives of RAKUB is to be given loan to the basic sector/sub sector and

supplementary sector of the agriculture such as crops production, animal husbandry, poultry, farming, fishery, livestock dairy, horticulture, forestry, purchasing machinery for irrigation and agriculture goods and inputs trade, storage of agriculture goods, establishment of processing and marketing oriented industry, agro based industry. Some objectives of RAKUB are as follows

1. To provide credit facilities for agricultural development of poor farmers in Rajshahi division.

2. To develop the agro-based industries.

3. To alleviate poverty.

4. To modernize the agricultural.

5. To develop the social state of the villagers.

6. To inspire the farmers for taking loan as micro credit.


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7. To increase self-dependence of land less marginal and small farmer.

8. To develop socio-economic condition of the farmers of the North-West region of the country.

9. To play a vital role to increase agriculture production, create income generating activities.

2.4 FUNCTIONS OF RAKUB

As the largest development partner in the northwest region Rajshahi Krishi Unnayan

Bank aims at overall development of farmers and all the sectors and sub-sectors of agriculture in this region. Besides, catering to agricultural credit the bank performs ancillary functions as financing agri-business and agro-based industries and poverty alleviation programs.

2.5 MANAGEMENT

A seven-member Board of Directors is entrusted with the responsibility of policy

formulation for attainment of growth in agriculture leading to economic development of the country through agricultural credit support. The government appoints all the directors of the board. An executive committee constituted of the Chairman and two other directors including the Managing Director is there for taking emergency decisions. The managing Director is the chief executive of the bank.

2.6 CAPITAL

RAKUB is a governmental banking institute. So the main sources of capital are

government fund, as on 30th June 2011 the details about capital are as follows-

1) Authorized capital: Tk. 7500 million2) Paid up capital : Tk. 5700 million3) Reserve capital : Tk. 208.50 million

2.7 ORGANIZATIONAL STRUCTURE

The head office is stationed at divisional headquarters city of Rajshahi . The branches

network of the bank comprises 367(Rural-306, Urban-61) branches including one in Dhaka. Eighteen

zonal offices stationed in district headquarters control branches under them. The General Manager's

office at Rangpur oversees activities of 9 zones of greater Rangpur, Dinajpur districts. There are 18

independent regional audit offices for conducting regular audit in branches and zonal offices. The

only training institute of the bank is situated at Rajshahi. There are 3309 employees (29.12.2011) of

the bank of which 2046 are officers and 1263 other staffs.


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Exhibit 1: Organizational Structure with details


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2.8 BRANCH NETWORK

Region wise branches of RAKUB are given through table now.

Table-2: Region wise total branches (Up to 29th December, 2011)

SL. No. Zone/Region No.of Branches

01. Rajshahi 25

02. Naogaon 28

03. Natore 21

04. Chapai Nawabgonj 16

05. Bogra (North) 20

06. Bogra (South) 14

07. Pabna 24

08. Jaipurhat 15

09. Rangpur 27

10. Gaibandha 24

11. Nilphamari 20

12. Kurrigram 21

13. Lalmonirhat 17

14. Dinajpur (North) 17

15. Dinajpur (South) 18

17. Thakurgoan 18

18. Panchagarh 18

19. Dhaka 1

20. L.P.O (Rajshahi) 1

21 Sirajgonj 22

Total 367

(Source: Personnel department of RAKUB)


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2.9 RAGULATORY BODY

The board is vested with the responsibility of formulation of policy in line with

attainment of growth in agriculture and economic development of the region through agricultural credit support. The board of directors is constituted by seven members, all appointed by the government. Besides, for emergency decisions there is an executive committee constituted of the chairman of the board and two other members: the managing director and one of the directors elected by the board. The managing director is the chief executive of the bank.

Table-3: Regulatory Body

Chairman Prof. Dr. M. Shah Nowaz Ali

Managing Director Mr. Pradip Kumar Dutta

Director Abdul Mannan

Director Khondoker Jahangir Kabir Rana

Director Prof. Dr. Rustom Ali Ahmed

Director Mr.Bikash Indu Mandal

Secretary A B Siddque


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2.10 HIGHLIGHT OF OVERALL ACTIVITIES OF RAKUB

Table-4: Highlights of overall activities (as on 30th June 2011)

SL. No Particulars Taka

1 Authorized capital ( On 30-06-2011) 750,00,00,000

2 Paid up capital 570,00,00,000

3 Total assets 3765,06,32,550

4 Total deposit 1538,97,55,298

5 Total loan and advances 2711,20,80,472

6 Total contingent liability 70,65,64,886

7 Loan deposit ratio 1:0.57

8 Ratio of classified loan against total loan & advances

1:0.34

9 Profit/(loss) after tax (64,08,65,618)

10 Amount of classified loan 933,35,89,000

11 Provision for classified loan 186,23,22,000

12 Provision for surplus/deficit 89,57,93,000

13 Cost of fund 8.30%

14 Interest earning assets 2574,26,02,983

15 Nonperforming assets 1190,80,29,567

16 Return on investment(ROI) 17,40,545

17 Return on assets (ROA) 197,47,18,147

18 Interest on investment

19 Income per share

20 Income price ratio

Source: www.rakub.org.bd


http://www.rakub.org.bd/

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2.11 RAKUB AT A GLANCE: (Up to 30th June, 2011)

Table-5: RAKUB at a glance

01) Establishment : 15 March, 1987.02) Authorized Capital : Tk. 7500.00 (in million)03) Paid up Capital : Tk. 5700.00 (in million)04) Reserve : Tk. 208.50 (in million)05) Area of RAKUB :

a. Area : Rajshahi & Rangpur Divisionb. Spread : About 34,513 Square.K.M.c. District : 16d. Upazilla : 125e. Union : 1092

i) SACP : 908ii) Non- SACP : 184

f. Total Populations : About 3.50 croreg. Total No. of Family : 51 lakhs.h. Agricultural Family : 32 lakhs.

06) Total Branch : 366i) Municipal : 61ii) Union : 306

07) Total manpower : 3309i) Officers : 2046ii) Workforce : 1263

08) Zonal /Regional office : 1809) Regional Audit office : 1810) Website : www.rakub.org.bd



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3.1 LOCATION

Rajshahi Branch of RAKUB Rajshahi district is started its operation 15 March, 1987 at

Ghoramara, Rajshahi the branch caters the need of agricultural credit alleviation program and at the same time reforms commercial banking function in its geographical area.

3.2 ESTABLISHMENT OF RAJSHAHI BRANCH

Rajshahi Branch of Rajshahi Krishi Unnayn Bank started its operation in 15 March, 1987

as a Rajshahi branch, in Rajshahi. It is located at eastern side of Rajshahi in sonadighimore Rajshahi. It is an ideal branch of head office.

3.3 MAIN OBJECTIVES OF RAJSHAHI BRANCH, RAKUB

Provide credit facilities for agricultural development to poor & marginal farmers of Rajshahi division.

To develop the agro- based industries.

To provide poverty alleviation.

To modernize the agriculture.

To developed the social state of villagers.

To assist farmers in adopting appropriate technologies under the bank's supervision that means helping in modernize the agricultural sector.

To provide general banking service. To earn normal profit for meeting the operational expenses, building reserve and expansion

of activities to cover wider geographical areas.

3.4 FUNCTIONS OF RAJSHAHI BRANCH

Like other banks Rajshahi branch does the following activities:

I. Receive deposit from customers;II. Payment to customers according to payment order given through check by

customers;III. Disbursements of loan and recovery of the given loan;IV. Giving advice to the client of the bank;V. Transfer money from one place to another place;

VI. Western Union Money transfer.


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3.5 RAKUB RAJSHAHI BRANCH AT A GLANCE

Table-6: RAKUB Rajshahi Branch at a glance

1. Establishment 15th March 1987

2. Area About 1315 km2

3. Location Malopara,Rajshahi City Corporation,Shaheeb Bazar Rajshahi.

4. Total no of Accounts 3580

5. Total deposit Tk. 412401453

6. Total no of loanee 4290

7. No of employee 25 (with security guard)

8. No of village 125


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3.6 ORGANIZATION STRUCTURE OF RAKUB, RAJSHAHI BRANCH

Exhibit 2: Organizational Structure of RAKUB, Rajshahi Branch


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3.7 EMPLOYEE SUMMARY

Table-7: Employee summery of Rajshahi branch

SL No Designation Authorized Existing Vacant

01 Assistant General Manager (AGM) 01 01 0

02 Principal officer 01 01 0

03 Senior officer 05 05 0

04 Officer 07 07 0

05 Supervisor 02 02 0

06 Supervisor(Cash) 02 02 0

07 Computer operator 01 01 0

08 Data entry operator 02 02 0

09 Peon 01 01

10 Security Guard 01 1 0

Total 23 23 00

Source: 2nd officer, Rajshahi Branch, RAKUB.


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4.1 INTRODUCTION

The main function of a bank is collect deposit from public or organizations and to give

among them. RAKUB of Rajshahi Branch, Rajshahi also performs General banking includes deposit service, local currency remittance and other related functions, which are discussed in this chapter.

4.2 FUND OF RAKUB

Sources of Fund:

Deposit of customers; Recovered loan; Refining fund from Bangladesh Bank against the paid up loan; Received fund for special loan credit program from various

international institutions; Loan from head office; General reserve; Money receipt from sale of assets; Loan from other branch. By issuing different types of Bill.

Uses of Fund:

Payment to client/Depositors;

Loan disbursement; Payment to other

branch; Payment to head office; Misc. office exp

4.3 SERVICES GIVEN TO CUSTOMER BY RAJSHAHI BRANCH

Different deposit related services provided by the bank are mentioned below;

A) Deposit Service:

1) Current Deposit Account

2) Savings Deposit Account

3) Term Deposit Account

a) Short Term Deposit Account (STD)

b) Deposit Pension Scheme (DPS)

c) RAKUB Deposit Pension Scheme (RDPS)

d) Fixed Deposit Account

B) Commercial Service:

a) Demand Draft (DD)

b) Mail Transfer (MT)

c) Telephone/ Telegraphic Transfer (TT)

d) Payment Order (PO)

C) Loan Service:

a) Short Term Loan

b) Medium Term Loan

c) Long Term Loan

The above services of RAKUB’s Rajshahi branch are discussed in following pages respectively;


Deposits

Demand Deposit Time Deposits

Current A/C STD A/C Saving A/C

FDR DPD RPS HS RSS RGPS

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4.3.1 Deposit Services:

The bank gives importance to accumulation of rural small savings through its branches.

RAKUB renders all sorts of deposit banking services to its over one million valued customers. The bank operates deposit accounts like Savings Bank Accounts, Current Deposit Accounts, and Short Term Deposit Accounts & Fixed Deposit Accounts.

Exhibit 3:

The following three types of accounts are available at Rajshahi branch

1. Current Account:

From this type of account any amount of money is deposited and drawn at any time in the

office hours. There is no interest on current account. Bank over draft is sanctioned based on it. This

account is opened with minimum deposit of Tk.1000.

2. Savings Account:

Savings account opened for the individual customers except companies, firm and Co-operative

society. Money is withdrawn two times a week and deposited at any time in the office hours. If an

account holder draws money from account he/she will not get interest for that month. To open an

account bank requires Tk.200 only.


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3. Term deposits:

a. Short Term Deposit Account (STD):

Short Term Deposit Accounts are opened for company, business firms and government

demonstrative body. This account is operated like current account.

b. Deposit Pension Scheme (DPS):

It is one kind of deposit program circulated by government. In this savings scheme a person

receives the opportunity to build up saving by contributing monthly installment to get an attractive

fixed amount at the end of a specific period. The size of monthly installments is Tk. 100, Tk. 200,

Tk. 300, Tk. 400, Tk. 500, or which is to be deposited within the first week of each month. In this

case compound rate of interest is charged.

c. RAKUB Pension Scheme (RPS):

RAKUB has some savings schemes to motivate the people for savings. In this case RPS is

regarded as the special product of this bank. The RPS is same as DPS. But terms of savings of RPS

are 5 years and 10 years.

d. RAKUB Grameen Pension Scheme (RGPS):

It is for the grameen poor people to motivate them increase in savings. It is same as DPS &

RPS.

e. Fixed Deposit Account (FD):

Fixed deposits are taken for the following terms:

From one month to below three months

Above three months to below six months

Above six months to below one year

Above one year to below three years

Above three years


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Table-8: The rate of interest in deposit accounts

SL. No Types of Accounts Interest rate

1 Current Account No interest

2 Savings Account 7%

3 Fixed Account 8% to 9.5%

4 Short Term Deposit(STD) 4%

5 RAKUB Pension Scheme(RPS) 12%

6

7

Deposit Pension Scheme(DPS)

RAKUB Grameen Pension Scheme(RGPS)

10 to 12%

6%

Source: Manager, Rajshahi Branch, RAKUB

4.3.2 Commercial Services

The following types of commercial service are available in RAKUB’s Rajshahi branch

a. Demand Draft (DD):

DD is the most popular instrument of remitting fund. It is an order to pay money drawn by one

branch Payable to another branch on demand. DD is issued in against at 0.10% (minimum Tk.30

plus vat 15%). When the limit exceed commission amount increased in a certain rate.

b. Mail Transfer (MT):

This branch transfer money another branch of this bank in another place in against of

commission money of this security paper has to be transferred to an account of another branch. Here

the bank commission is 0.10% and the postal charge is Tk.20, telegram cost Tk. 50, telephone cost

Tk. 50.

c. Telegraphic Transfer (TT):

It is the quickest method of remitting fund from one place to another. In this procedure no

instrument is sent to the paying branch. Only message is sent over telephone or telex and the paying

branch makes payment after getting message. Here the bank commission and charge is same to MT

d. Payment Order (PO):

It is a written document. This PO can be encased on that branch from where it is issued.

Several supplier organizations use this PO and here no account is needed to open with bank. It is

issued locally.


Money transfer

Customer check collection

Customer bills collection

DD

Customer services

MT

TT

PO

Western union money transfer

Advice

Same Bank

Other Bank

Electricity Bills

Water Bills

Telephone Bills

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PO Up to Tk. 1000 Up to Tk. 100000 Over Tk. 100000 Up to Tk. 500000 and over

Rate Tk. 20 Tk. 30 Tk. 50 Tk. 100

Exhibit 4: Customer Services at a glance provided by Rajshahi Branch


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Table 9: Commission charged on commercial service

Source: Manager, Rajshahi Branch, RAKUB.

4.3.3 Loan services:

Banks loan portfolio has been classified under the following heads;

a) Short Term Loan (STL): Loan period is 1 year.

b) Medium Term Loan (MTL): Loan period is above 1 to 5 years.

c) Long Term Loan (LTL): Loan period is more than 5 years


Service Charge Tk.

Demand Draft 0.10%(minimum Tk. 30)+VAT

Telegraphic Transfer 0.10%+VAT with Tel. cost

Payment Order

Up to Tk.1000 Tk.20+VAT

Up to Tk.1,00,000 Tk.30+VAT

Over Tk.1,00,000 Tk.50+VAT

Up to Tk.5,00,000and over Tk.100+VAT

Mail Transfer Minimum Tk.30+ Postal cost(Tk.50)+VAT

Cancellation Charge of DD, MT, TT, PO

Up to Tk.500 Tk.25+VAT

Over Tk.500 Tk.50+VAT

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4.4 SECTORS IN WHICH RAKUB EXTEND CREDIT

Rajshahi Krishi Unnayan Bank, Rajshahi branch extends credit in sectors and sub sectors,

which are as follows:

Table -10: Description of project to extend credit

SL. No.

Name of the Project Description of project item

01 Tea industries Seeding production, Tea garden development, Tea marketing.

02 Rubber plantation project

Rubber garden development, Rubber production and marketing.

03 Poultry Poultry boiler farms, Poultry hatchery, Poultry feed and allied project.

04 Mixed farming Dairy live stock and Fishery based horticulture crops; Agriculture based poultry dairy and fishery project.

05 Black Bengal goat production

Black Bengal goats, Sheep & Cattle farming for quality meat production, and Meat processing and Marketing.

06 Dairy farming Milk production, Milk collection and processing.

07 Agro based industries Commercially profitable sweet water fish and Shrimp feed production, Ice plant, Ice-cream factory and so on.

08 Agro-equipment production

Engineering work shop for Agro-equipment, Repairing agro equipment and Marketing.

09 Cold storage Cold storage for potato preservation, Specialized mini-cold storage for fruits, Vegetables and Fish preservation.

10 Export processing Fish freezing plant, Fish dehydration plant, Leather processing and manufacturing Leather products.

11 Animal and fish feed meal production

Poultry and Fish feed meal production, Cattle, Goat, and Lamb feed meal production.

12 Import substituting goods production

Fish net manufacturing/Netting yarn production, Insecticide production.


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4.5 INTEREST RATE ON LOAN

Bank determines the interest rate differently for different sector. Considering interest rate on

deposit, administrative cost, bank rate, interest rate at others bank and financial institutions, competitive money market etc, the banks use its rate of interest on loan.

Table-11: Rate of interest in different sectors.

SL No Heads of loan Rate of interest

01 Crops loan 10%

02 Fisheries 12%

03 Export credit 7%

04 Working capital 13%

05 Commercial purpose 11%

06 Agro-based industries 13%

07 Cottage industries 10%

08 SECP 15%

09 Poverty alleviation 12%

10 Live stock 10%

11

12

Irrigation equipment and firm machinery

Other Special Program

10%

4%

Source: Manager, Rajshahi Branch, RAKUB

4.6 PROCEDURE TO OPEN AN ACCOUNT AT RAJSHAHI BRANCH

Though RAKUB is a specialized Banking institution, it provides commercial Banking facilities.

As a commercial function, it provides opportunity for the customer to open account with the Bank. Opening account is an agreement between the customer and the Banker. The general procedure to open account with RAKUB is given below:

(i) Obtaining proposal from a prospective customer.

(ii) Obtaining the form duly filled up with KYC form

(iii) To Supply the account opening form.

(iv) Obtaining the form properly filled up.

(v) Interviewing the applicant.


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(vi) Having introduction.

(vii) Collecting at least three-specimen signature in the signature card supplied by the Bank.

(viii) Providing deposit book and obtaining initial deposit.

(ix) Having accounts number.

(x) Providing cheque book in order to with draw deposited amount from current and saving account.

In case of joint accounts, the applicant must furnish the following information -

(i) The name of the person who will operate upon the account and sign cheques.

(ii) At the event of death of either or any of the accounts holders how the balance will be paid and to whom the securities will be devolved. The documentary requirements are almost a like the individual accounts. Account opening form and the special instruction must be signed by all the joint account holders to signify their consent.

Things considered to open an account are:

Proper fill up of the application form. Getting an specimen signature of a customer Taking initial deposit in cash.

Basically a person whose age is 18 years or more is competent to open an account with the bank. But there are some special types of account holder like joint account, minor account, illiterate person account, blind person account, Deaf and dumb account etc. The following parties can never open an account with the bank-

Person who is still bankrupt. Person whose mind is unsound. Person who is totally mad.

4.7 PROCEDURE TO CLOSE AN ACCOUNT

In order to close an account (some time before maturity in case of FDR) the holder has to

place a written application to the bank. After receiving the application the bank will deduct service charge at an amount necessary for the respective account as closing fee from the balance and rest of the money is given to the account holder.

4.8 WHEN BANK CLOSE AN ACCOUNT

The relationship between bank and his customer is a contractual one and may be terminated

by either of them. Bank closes an account in the following situations;

1. If a customer places written application to the bank to close his account. 2.If the customer does not properly follow the rules and regulations necessary to operate his account. 3.If the bank is notified the message of death of a customer. 4.If the bank receives a notice regarding the insanity of his customer.


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5.If the bank receives any order from court regarding the closing of the customer’s account.

4.9 TYPES OF ACCOUNTS HOLDER

There are the following types of account holder in RAKUB Rajshahi branch:

I. Individual AccountII. Joint Account

III. Non Business FirmIV. Business Firms.

4.10 SPECIAL TYPES OF ACCOUNT HOLDER

Banker and customer are is a contractual relationship provided and account is opened with

the bank. A person is considered competent when his or her age is eighteen (18) old years or more to open of an account with the RAKUB. Besides these, there are some special types of account holders in Rajshahi branch who are listed below:

i. Minor:

A minor with the RAKUB can open an account, but he or she cannot operate his or her account. The minor will have a guardian who will operate the minor’s account. In this account money can be deposited only and it cannot be withdraw until the minor reaches his or her 18 years old.

ii. Illiterate persons:

Persons who are illiterate can open accounts in the bank but no cheque is supplied to them. They will have to put thumb mark in front of the manager and they are given loose cheque to withdraw money.

iii. Blind persons:

Persons who are blind can open account in the bank and the procedure is same as the illiterate persons. In both the cases, the terms and conditions of opening accounts are to read out in front of them. If they agree with it, the accounts are opened.

iv. Pardanashin Women:

A pardanashin woman can open an account with the RAKUB but she has to agree with the statement that she must be ready to put signature in front of the manager to judge the similarity between her putted signature and the specimen signature at the time of with drawing money.

v. Dumb and Deaf:

The dumb and the deaf can account with the bank but the banker should be cautious about the background and the character of the said persons.

The under mentioned three persons can never open account with the RAKUB.

The individual who is totally mad The individual who is still bankrupt The person whose mind is unsound, that is lunatic.


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4.11 CASH PAYMENT

In this section I gathered practical experience about how a check is honored and how

cash is paid. The formalities involved in honorees of a check and cash payment are given below:

The formalities involved in honorees of a check and cash payment are given below-

COUNTER

Customer places the check to the ledger officer (LO). The LO receives the check, enters its particulars in a register and issues the customer a token.

VERIFYING THE CHECK

The LO now verifies the ledger of the customer. If the customer’s account position is okay, he passes the check to the second officer (SO).

HONORING THE CHECK

The SO compares the customer’s signature given on the check with that on the signature card kept in his custody. If the signature is okay then he makes an entry of the check in another register and cancels it by signing across the check.

CHECK CANCELLATION

Once the check is cancelled that is Okayed for payment it Is brought to the cashier by a peon.

DRAWING MONEY

Cashier enters the amount of the check in the cash register and pays the appropriate amount to the customer.

POSTIN IN THE TRIAL BALANCE

At the end of banking hour a trial balance is prepared from the registers and all the registers are compared with one another.


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4.12 CASH RECEIPT

Customers’ deposits are received in this section of bank. Then the amount received is

credited to the customers’ A/C in the ledger book. The formalities that are followed to receive a customers’ deposit (cash) in the cash receipt section are stated in the following flow chart-

Customer places this cash and deposit slip before the respective officer at

the counter.

After receiving the cash and deposit slip, the officer makes an entry to scroll register book. Then the deposit slip and cash are placed before cashier.

The cashier counts this amount of money first and then makes an entry to another register book. The book is generally called cashbook.

Then the cashier passes the cashbook and deposit slip to the second officer.

After verifying the deposit slip, the second officer returns the counter-folio of the deposit slip to the customer and keeps the other position in his custody.

At the end of banking hour, trial balance is prepared from that cash receipt register.

4.13 CHEQUE HONORING PROCEDURE

I. After placing the cheque, the respective Banker issues a token;II. The Banker also given an entry into register;

III. The Banker puts token number and initial behind the cheque.IV. The Banker provides ledger posting of the cheque amount; and marks it on the cheque,V. The second officer now places a pay order in the cheque.

VI. The cheque is sent to the cashier and, andVII. Finally the cheque amount is paid to the customer against his respective token.


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4.14 CHECK DISHONORED BY BANK

During the internship program, I was taught how a check is dishonored by bank. The statutory

duty of a bank is to honor his customer’s check. But a bank can dishonor a check for various reasons. Some of the reasons for that a bank dishonors his customer’s check are stated below

I. If the customer’s account position is not okay, that is if the amount of money mentioned in the check is greater than customer’s deposit.

II. If the check is torn.III. If the check is post dated or a stolen checks.IV. If the customer’s signature given on the check is a forged one or does not tally with his

specimen signature kept in bank custody.V. If the check is not submitted to the customer within banking hour.

VI. If the duration of issuing the check is more than 6 months.VII. Others.

4.15 CONCEPT ABOUT CASH SCROLL, CLEAN CASH,GENERAL LEDGER AND GENERAL LEDGER ABSTRACT

Cash Scroll:

At first those transactions are maintained in this cash scroll by the authorized officer, which occurred every day. There after the, cashier maintained those transactions in daily transaction register.

Clean Cash:

When the vouchers are closed, the accounts are written in the pure cashbooks. It may be either deposit or expense. The transactions of each head, which have occurred, are written in the specific page of the cashbook under a specific head and debit and credit total are determined. There after, total of every head is written in the right page of the clean cashbooks. But this is the cashbook, the closing balance of the previous day is shown as an initial balance for the next day then the closing balance is determined for that day.

General Ledger:

General Ledger is the heart of a Bank. The balance of clean cash is recorded in this Ledger head wise.

General Ledger Abstract:

The debit balance of various accounts makes General Ledger Abstract. The debit and credit balance of the accounts are maintained in the Abstract in the debit and credit side respectively. Since the double entry system is maintained, therefore its debit and credit are equal.


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4.16 ACCOUNTING PROCEDURE

The main objectives of maintaining the accounting procedure of RAKUB, Rajshahi branch are

to achieve in following goals:

To record the day-to-day transaction. To reflect the financial position periodically. To supply the necessary information for monitoring the Bank activities. The Bank generally uses two types of Books.

A) Control Book:

It presents the immediate accounting figure of the Bank at any time and it includes

Cash Scroll Book Clean Cash Book General Ledger General Ledger Abstract Supplementary Ledger Book

B) Subsidiary Book:

It is used to arrange the total particulars in General ledger and it includes:

Savings Account Ledger Fixed Deposit Ledger Income Ledger Expenses Ledger The General Ledger of RAKUB.

4.17 DIFFERENT TYPE OF VOUCHERS

Voucher is a kind of document which as a proof accuracy.

i) Payment Voucher: Sanctioned crops loans are paid through payment voucher.

ii) Transfer Voucher: This voucher is used to transfer Tk.. from one account to another in case of inter Banking. Its color is yellow.

iii) Debit Voucher: To deposit or get Tk.. Its color is white.

iv) Credit Voucher: Voucher for repayment. Its color is green.

4.18 PROCEDURE OF LOAN RECOVERY

The main responsibility of bank manager and loan officer is to recover the outstanding loan. Rajshahi branch, RAKUB uses the following two procedures with a view to recovering loan;

a) Usual procedure. b) Legal procedure.


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a) Usual Procedure: The usual loan recovery procedure is divided into several steps. They are as follows:

Issue of Demand Notice: Demand notice is issued to the borrower before one month being due of outstanding loan or installment.

Legal Notice: If the borrower does not repay their respective loan and interest after maturity, being received the demand notice registered with acknowledgement by post to the borrower, then the bank should send legal notice to him.

Special Notice: Beside the above two notice a special notice with the signature of DC, UNO is sent to the respective borrower to keep mental pressure on him for repaying the loan.

Field Recovery: Loan officer recover the loan through I.O. receipt by visiting the spot and source of the borrower.

Personal Communication: If the borrower fails to repay his loan installment, the loan officer communicates with the respected persons of that area to give mental pressure to the borrower so that he repays his respective loan.

Loan Recovery Camp: RAKUB, Rajshahi branch made camp in various areas for the recovery of loan. In this case, the manager and other officers were present in the camp and communicate with borrowers. They pursue them morally and tried to encourage them to repay their loan.

Loan recovery with the help of interest exemption: The loan amount which becomes more than double of principle amount and which is not possible to recover with the help of legal action, then those loan can be recovered by exempting interest. By this way bad loan can be recovered.

b) Legal Procedure: When usual procedure for recovering loan becomes failed, then a case is filed against the borrower. The case is generally filed for the following causes;

Unwilling to repay loan although he is financially solvent. Every effort of loan recovery becomes failure.

4.19 DAILY ACTIVITIES OF BRANCH MANAGER

To enter office one or before 10 a.m.

To sign in attendance book.

Utilization and reservation of volt’s key to keep out money from volt. To keep out cash from volts in own hand and start activities.

Distribution of work among the Bank personnel according to their level.


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5. 1 INTRODUCTION

The present study is a pioneering attempt in the field of financial performance of Rajshahi

Branch of RAKUB. It is true that financial performance is really important for realizing original financial position of a bank. This study is taken to enlighten the biases inherent problems of the bank which need a depth analysis for the survival of the bank in the situation of its chronic financial problems. Rajshahi Branch of RAKUB is mainly functioned in the field of agriculture. For developing our overall economic condition it is essential to increase the financial efficiency of Rajshahi Branch of RAKUB. Govt. of Bangladesh has also given greater emphasis on this sector. Profit and loss are the main criteria to evaluate the performance of the banks like others business organizations. A bank can be considered as a successful when it can provide maximum dividend to the shareholders. As a student of MBA I have considered all these matter and planned this study for the performance evaluation.

5.2 CONCEPT OF PERFORMANCE EVALUATION

The performance is bad when the actual items differ from the standard. Financial

performance means the financial strength and weakness of a firm. Therefore, we can say that financial performance is the picture of financial results of a firm.

5.3 OBJECTIVES OF PERFORMANCE EVALUATION

To determine the extent to which management assigned responsibilities have been realized,

To identify the causes of deviation from established performance standard.

To suggest courses of action to rectify out of control situations.

To provide motivation for improving in performance.

To established a basis for comparison between different sectors in companies.

5.4 FINANCIAL ANALYSIS

Financial Analysis refers to an assessment of the viability, stability and profitability of a

business, firm, bank, NBFIs etc. It is performed with a view to assess the financial health of firm by using various financial tools that are applied on the information taken from financial statements and other reports. These reports are usually presented to top management as one of their basis in making business decisions.

5.5 GOALS OF FINANCIAL PERFORMANCE ANALYSIS

Its goal is to assess:

a. P rofitability –

It is the firm’s ability to earn income and sustain growth in both short-term and long-term. A company’s degree of profitability is usually based on the income statement, which reports on the company’s results of operations.


33


b . S olvency –

It is the ability of the firm to pay its obligation to creditors and other third parties in the long-term.

c. L iquidity –

It is the ability of the firm to maintain positive cash flow, while satisfying immediate obligations. Solvency and liquidity both are based on the company’s balance sheet, which indicates the financial condition of a business as of a given point in time.

d. S tability-

It is the firm’s ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company’s stability requires the use of the income statement and the balance sheet, as well as other financial and non-financial indicators.

5.6 DIMENSIONS OF ANALYSIS

Past Performance - Across historical time periods for the same firm (the last 5 years for example),

Future Performance - Using historical figures and certain mathematical and statistical techniques, including present and future values. This extrapolation method is the main source of errors in financial analysis as past statistics can be poor predictors of future prospects.

Comparative Performance - Comparison between similar firms.

Important tools used in the financial analysis of a bank:

Ratio Analysis:

A ratio expresses the mathematical relationship between one quantity to another. Through ratio analysis can identify financial strength and weakness of a firm. By analyzing ratios we can easily understand the actual financial condition of the firm.

Importance of ratio:

To measure general efficiency

To measure financial solvency

Forecasting and planning

To facilitate decision making

Aid in corrective action

Aid in intra-firm comparison

Trend analysis:

Trend analysis is an important criterion which can be used to evaluate the performance of a bank. The trend can represent the growth or decline of a bank over a period of time. Here we have analyzed the trend of total deposit, total loan and advances and net income or loss.


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5.7 TREND ANALYSIS

Here are some Trend Analysis-

5.7.1 TREND ANALYSIS OF TOTAL DEPOSIT

Table 12: The amount of total deposit (from the FY 2008-2009 to 2010-2011)

Financial year 2008-2009 2009-2010 2010-2011Deposits type Number Amount Number Amount Number Amount

Term Deposit 63 121598 71 193937 77 223359

Savings Deposit 2364 16868 2502 19146 2725 25147

Current Deposit 166 14790 286 9271 192 9004

STD 28 46857 29 148017 29 117781

DPS 29 5147 27 5215 26 5376

RPS 319 22149 301 24155 250 23667

RGPS 93 1814 85 2374 59 2044

Huzz Savings Program 01 65 01 83 01 102

RSS 96 351 222 2086 280 4998

Others Deposit 2922 928 2920 962 2925 923

Total 6081 230568 6444 405246 6564 412401

(Source: Report of Rajshahi Branch of RAKUB)

The behavior of deposit are shown in graphically from 2006 to 2011(Figure 1)

2006 2007 2008 2009 2010 2011

2006 2007 2008 2009 2010 2011

293518 290464

164709230568

405246 412401

Total DepositDeposit Amount ( in thousand )

Comment:

Here we see that in 2011 year the deposit is collected huge amount than other previous year and in

year 2008 is the lowest collection of deposit. Because of unavailability of data I present only 3 FY data in Total Deposit table.


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5.7.2 TRENS ANALYSIS OF LOAN DISBURSEMENT

Table 13: The amount of loan Disbursement (From FY 2006-2007 to 2010-2011)

FY Loan disbursement

Payment to depositor

Payment to other branch

Misc. office exp.

2006-07 630.23 3129.81 51.04 223.32

2007-08 205.18 3934.15 1009.34 233.55

2008-09 377.82 6308.02 1349.50 191.97

2009-10 431.02 6460.58 ----- 250.00

2010-11 428.80 9002.78 2634.88 399.97

(Source: Report of Rajshahi Branch of RAKUB)

The behavior of loan Disbursement are shown in graphically (Figure-2)

2006-07 2007-08 2008-09 2009-10 2010-110

100

200

300

400

500

600

700 630.23

205.18

377.82431.02 428.8

Loan disbursement (Amount in thousands)

Comment:

Here we see that in FY 2006-2007 the loan is Disbursed huge amount than other FY. In the FY 2007-2008 it is shown the lowest loan Disbursement in amount.


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5.7.3 TREND ANALYSIS OF LOAN RECOVERY

Table 14: The amount of loan Recover. (From the FY 2006-07 to 2010-11)

Financial year Target Achievement Performance (%)

2006-07 832.62 629.77 75.64%

2007-08 888.40 715.39 80.52%

2008-09 1652.00 1855.87 112.34%

2009-10 283.46 297.31 105.00%

2010-11 386.19 418.83 108.45%

(Source:Report of Rajshahi Branch RAKUB

The behavior of loan Recovery are shown in graphically (Figure 3)

2006-072007-08

2008-092009-10

2010-11

0

400

800

1200

1600

2000

832.62 888.4

1652

283.46 386.19

629.770000000001 715.39

1855.87

297.31 418.83

Target Achievement

Comment:

It is evident from the above table that loan recovery achievement is increased from 2006-07 to 2010-11. The achievement rate is also increased from 2006-07 to 2008-09 and the year from 2009-10 to 2010-11 is decreased but that are preferable. The highest recovery rate is found in 2008-2009 (112.34%) and the lowest recovery is found in 2006-2007 (75.64%).


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5.8 RATIO ANALYSIS

Ratio analysis is an important technique to evaluate the financial performance of a firm. It

is defined as the systematic use of ratio to interpret the financial statements so that the strengths and weakness of a firm as well as its historical performance and current financial condition can be determined.

Liquidity Analysis:

A financial firm is considered liquid if it has ready access to immediately spend able funds at reasonable cost at precisely the time those funds are needed.

5.8.1 CURRENT RATIO

Current ratio measure the ability to meet current debt or obligation with current assets.

Current ratio can be determined by dividing current asset by current liabilities. Current asset include cash and deposit in other bank, agricultural credit loan (Short term), cottage industry loan (Short term), other loans and advance (Short term), cash loan, other asset which can be converted into cash within a year such as marketable securities. On the other hand the current liabilities include demand deposit (general), deposit from banks, other demand liabilities in government sector, private sector, and other sector current year. Current Ratio can be calculated by the following formula

Current ratio=

current assetcurrent libilities

Table 15: The amount of total current assets and current liabilities of Rajshahi branch from 2006 to 2011:

Year Current assets (in thousand)

Current liabilities (in thousand)

Ratios

2007 71724 157550 0.455246

2008 92834 42158 2.202049

2009 57387 115266 0.497866

2010 40256 158236 0.254405

2011 42589 182365 0.233537

(Source: annual report of Rajshahi branch from 2007 to 2011).


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Comment:

Generally we know that higher the current ratio means the greater the liquid position of firm. And actually which amount of ratio is acceptable for firm that depends under which industry it belong. We also know that higher liquidity reduce the profitability. We found in the table that the lowest current ratio in the year 2011 here bank may fall in liquidity crisis and the highest ratio in the 2011. So the Branch position in current ratio is better position to meet the short term obligation as they come due in the year of 2007.

Now we make the average of this ratio using the moving average method. We take 5 years data and we use two year average to make trend of Current ratio of Rajshahi Branch of RAKUB. When we use the moving average we deduct one previous year when we add any new year. Bellow table shows the moving average data of current ratios from 2007-2008 to 2010-2011.

The moving average data of current ratios from 2007-2008 to 2010-2011:

Table 16: Moving Average data of current ratios

Year Average

2007-2008 1.328648

2008-2009 1.349958

2009-2010 0.376136

2010-2011 0.243971

Now Graphically…(Figure 4)

2007-2008

2008-2009

2009-2010

2010-2011

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.328648 1.349958

0.3761360.243971

Average

Average


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Comment:

From the calculations we see that the trend goes down dramatically that means on an average the ability to meet the short term obligation is decreasing.

5.8.2 PROFITABILITY RATIO

RAKUB is a specialized Bank. The entire ratio of Profitability Ratio is not applicable but in

this case we can use operating profit ratio. Operating profit ratio measures the profitability of sales before taxes and interest expense. The purpose of this ratio is to measure the effectiveness of production and sales of the company’s product in generating pretext income for the firm. For any given level of sales the higher the net operating margin the better. It represents the pure profit earned on each sale. Operating profit measures the pure profit because they measure only the profit earned on operating profit margin. The operating profit margin can be calculated as follows:

Operating profit margin =

Operating profitSales

The operating profit of RAKUB, Rajshahi branch in 2007 to 2011 are given bellow:

Table 17: The operating Profit of Rakub

Year Operating profit (in thousands)

2007 1218

2008 (497)

2009 3020

2010 1653

2011 (4457)

(Source: annual report of Rajshahi branch from 2007 to 2011)

Graphically… (Figure 5)

2007 2008 2009 2010 2011

-5000-4000-3000-2000-1000

01000200030004000

Year 2011

Operating profit (in thousand) -4457

Operating profit (in thousand


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Here we see that in 2008 and 2011 the operating loss and in 2007,2009,2010 years RAKUB Rajshahi branch made profit .in year 2009 this branch made highest operating profit.

Now we need sales to calculate the operating profit, here we consider as sales

Sales = total loans Disbursement of this year + total services commission of this year.

The amount of sales of RAKUB, Rajshahi branch in 2006 to 2010 are given bellow:

Table 18: The amount of Sales

Year Sales (thousands)

2007 127689

2008 63243

2009 20563

2010 43315

2011 38200


Graphically… (Figure-6)

2007 2008 2009 2010 20110

20000

40000

60000

80000

100000

120000

140000

Year

YearSales (thousand)

Here we see in year 2007 the sales of Rajshahi branch is highest and in year 2009 is lowest.


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Now we need to find out the Operating profit margin from 2006 to 2010 given bellow:

Table 19: Operating Profit Margin

year Operating profit

Sales Operating profit margin

2007 1218 127689 0.01

2008 -497 63243 -0.008

2009 3020 20563 0.15

2010 1653 43315 0.038

2011 -4457 38200 -0.12

Comment:

Profit margin on sales provide a little useful information since it mixes the effectiveness of

sales in producing profit with the effect of the method of financing on profit , it is useful since it reflects pricing policy relative to cost. From the above calculation we see that in year 2009 operating profit margin is highest and the year 2011 made highest operating loss.

To make trend we need the average of this ratios so we use the moving average to know the behavior of the operating profit of Rajshahi Branch, RAKUB. We use the two year average.

The moving average data of Operating profit margin from FY 2006-2007 to 20010-2011:

Table 20: The moving Average Data of Operating Profit Margin

Year Average

2006-2007 0.001

2007-2008 0.071

2008-2009 0.094

2009-2010 0.094

2010-2011 -0.041


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Graphically… (Figure 7)

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

-0.06

-0.04

-0.02

0

0.02

0.04

0.06

0.08

0.1

0.001

0.071

0.094 0.094

-0.041

Average

Average

Comment:

Though in 2011 shows negative figure of operating Profit Margin but before, that it was upward.

5.8.3 ACTIVITY RATIO

Activity ratios measure the speed with which various accounts are converted into sales or

cash inflows or outflows. With regard to current account, measures of liquidity are generally inadequate because different I n composition of a firm’s current asset and current liabilities can significantly affect its ‘true’ liquidity. It is therefore important to look beyond measure of overall liquidity to assess the activity of current account. There are various important ratios are available but we use the total asset turnover for Rajshahi Branch of RAKUB.

Activity ratios measure the speed with which various accounts are converted into sales or cash inflows or outflows. With regard to current account, measures of liquidity are generally inadequate because different I n composition of a firm’s current asset and current liabilities can significantly affect its ‘true’ liquidity. It is therefore important to look beyond measure of overall liquidity to assess the activity of current account. There are various important ratios are available but we use the total asset turnover for Rajshahi Branch of RAKUB.

Total asset turnover:

Total asset turnover indicates the efficiency with which the firm uses its asset to generate sales. Total asset turnover is calculated as follows:

Total asset turnover =

salesTotal asset


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The amount of total assets of Rajshahi branch,from 2007 to 2011.

Table 21: Amount of Total Assets.

Year Total Asset(in thousands)

2007 361660

2008 352615

2009 307413

2010 489916

2011 516818


We can show the total assets behavior of Rajshahi Branch graphically.(Figure 8)

2007 2008 2009 2010 2011

0

100000

200000

300000

400000

500000

600000

2007 2008 2009 20102011

361660 352615307413

489916 516818

Year Total Asset(in thousand)

In year 2011 the total asset is highest and in year 2009 the total asset is lowest.

Table 22: Total asset turnover in year 2007 to 2011 are given bellow:

Year Sales (thousand) Total Asset(in thousands) Total asset turnover

2007 127689 361660 0.353064

2008 63243 352615 0.179354

2009 20563 307413 0.06689

2010 43315 489916 0.088413

2011 38200 516818 0.073914


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Comment:

Generally higher the firm’s total asset turnover, the more efficiently its asset have been used. This measure is probably of greatest interest to management, because it indicates whether the firm’s operation s has been financially efficient.

Trend of Total asset turnover from 2007 to 2011:

To make trend we need the average of this ratios so we use the moving average to know the behavior of the total asset turnover of Rajshahi Branch, RAKUB. We use the two year average.

Table 23: Average of Total Asset Turnover

Year Average of Total asset turnover

2007-2008 0.266209

2008-2009 0.123122

2009-2010 0.077652

2010-2011 0.081164

Comment:

From the above calculations we see that the trend of average total asset turnover is decreasing up to 2008-2009 but after this session this average of total asset turnover is going up ward, in year 2007-2008, the average of total asset turnover is in good position than other year.


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6.1 FINDINGS OF THE STUDY

The basic findings of the study can be categorized under two head:

1) Aspects of the Problem2) Aspects of the Prospects

Aspects of the Problem:

The process which is followed by this branch in case of loan disbursement is so much lengthy and critical process.

Political Influence is a barrier for the preferable loan disbursements for the authority. Though Disbursement of Loan is increasing now but not in satisfactory way. Current Ratio that is current asset to current liability is significantly lower. Sales are decreasing. Operating profit is decreasing over the year thus profit margin also decreasing. Asset turnover ratio is lower and decreasing day by day. There has no proper training facilities for the personnel related with fund management. We know that agriculture depends mostly on nature so the loan recovery position is hindered

due to natural calamities. RAKUB disburse its loan mainly against the security of land. But in real sense most of the

farmers are landless. All the transactions are recorded manually so information is not organized which creates

problem in decision making.

Aspects of the Prospects:

Amount of Deposit is increasing. Total asset is also increasing. Average profit margin is also increasing. Targeted Recovery of Loan amount is increasing satisfactory way that indicates good

management. From the Month January 2012 new manager (joined July 2011) has taken some steps and he

beliefs coming June closing Branch will figure profit after long time.


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6.2 RECOMMENDATIONS

Recommendation on any matter within a limited time period is very hard task. However, during

my internship program it seems to me that following recommendations could improve the overall performance of the Rajshahi Krishi Unnayan bank,Rajshahi Branch:

Steps should be taken to improve the disbursement of loan. Special care should be taken for recovery of loans. There should have proper supervision. Value of service should be increased. Management Information System should be developed. Proper utilization of fund must be ensured. Policy should be taken in time. Proper step should be taken to fulfill the target in collection & disbursement of fund. Deposit mobilizations have to be increased. Banks personnel behavior should be friendly to their customers. Selection of genuine borrower. Spot investigation must be ensured in case of security. Strong monitoring should be ensured for proper utilization of fund. Diversified sectors are to be identified and financed. The procedure of loan disbursement should not be lengthy. Banks will have to keep itself beyond all political influences. Prompt services are given to the borrower. Maintained credit discipline. In providing loan, land mortgaged security should be preferred for best results. In addition to take legal steps against defaulter, recovery of agricultural loan can be enhanced

by staff incentives for better loan recovery. Most of the borrowers are marginal and landless. So Bank should relax the condition of

collateral.

6.3 CONCLUSION

As financial condition of the rural people of our country is very miserable, so they compel

to diverse their borrowed money for family private expenses and festival expenses. Due to illiterate and lack of technical knowledge, the farmers of our country do not use borrowed money properly. Crops are destroyed in natural calamities like flood, rain with hail, etc. As a result default culture has been created and loan default is one of the major problems of our country.

Loan disbursements of RAKUB have been decreased and recovery has been increased since 2008. It indicates the efficiency of the Management. In the recent time total deposit has been increased. New manager is trying to bring a positive change on overall activities of RAKUB Rajshahi Branch. That is a positive sign for the Branch. We belief and can hope this organization will be a positive role-making entity in our economy in the near future.


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BIBILIOGRAPHY RAKUB annual report- 2006-07, 2007-08, 2008-09, 2009-10& 2010-11.

Statement of affairs of RAKUB Rajshahi Branch for the financial year-2006-07,

2007-08, 2008-09, 2009-10, 2010-11.

Illustrated Oxford dictionary.

Bangladesh Bank Annual Report-2011.

Website of RAKUB www.rakub.org.bd



intrenship report on rakub

Documents

deposit pension

genaral banking

total asset

total asset

executive

operating

agricultural

medium term