Term paper On Credit operations of Bank in Bangladesh Course title: Bank Fund Management Course code: FIN-435

Data of submission: April 02, 2009

Submitted to Sabrina Akhter Lecturer Department of business administration Faculty of business and economics Daffodil international university

Submitted by Md. Azizur Rahaman Program- BBA (sec-A) Course title: Bank Fund Management Course code: FIN-435 Department of Business Administration Faculty of Business and Economics Daffodil international university

Group name: Sixth sense ID No 071-11-1586 082-11-496 082-11-499 09161-11-831 Name Signature Md. Azizur Rahman Nobudip Chandra Roy Md. Mofizul Islam

Letter of transmittal

Date: April 02, 2009

Sabrina Akhter Lecturer Department of business administration Daffodil International University Subject: report on Credit operations of bank in Bangladesh. Dear Madam Here is the report on Credit operations of bank in Bangladesh that we would like to submit for the requirement of our B.B.A program. The purpose of our report is what we study on Bank fund management and tell about credit operations of bank in Bangladesh. In order to the report we conducted with different people tried to get primary and secondary data of our report. In preparing the report, we made sincere effort to present the relevant information pertinent to this report and analyze them accordingly. In this connection, may we, there, urge upon the begin honor of yours to go throw the report and let us know about any change and adjustment on the report, if made.

Yours sincerely

Group name: sixth sense Sec-A Daffodil International University

Letter of Authorization

Date: April 02, 2009

Sabrina Akhter Lecturer Department of business administration Daffodil International University

Subject: declaration regarding the validity of research report. Dear Madam, This is my truthful declaration that the term paper I have prepared is not a copy of any research report previously made by any other student. I also express my honest confirmation in support of the fact that the said Term paper has neither been used before to fulfill my any other course related purposes nor it will be submitted to any other person or authority in future.

Yours truly Group name: sixth sense Sec-A Daffodil International University

Acknowledgement

It is necessary to know the relevance between theory and practical knowledge as well. So, a student can only claim himself as a student of true knowledge by virtue of preparing such kind of assignment report. It is the time to thank all that helped me to complete this report successfully. At the very on set, I would like to express gratitude to my Madam Sabrina Akhter agreeing to supervise the assignment report her eagerness to help in every step of the way encouraged us to propel our self higher. I would like to give thanks all of the people which was helped us to make this report.

Executive Summary
Banks are among the most important financial institutions in the economy. They are the principal source of credit for millions of individual and families and for many

units for government. Most of the Bangladeshi people are lying in the middle and the lower middle classes, especially those who are service holders with limited income. They are struggling to purchase necessary goods to enhance standard to living and ease out other problems faced by them regularly. The main constraint of their limited income that they never allow to purchase whatever they like best for improving their lifestyle. That is why; various types of consumer goods such as car, telephone, refrigerator, color television, washing machine, crockery, air cooler, computer, generator, furniture and many other necessary articles can be purchased by the credit assistance offered by the various commercial banks. Our present study focuses on credit operations of bank in Bangladesh This report has divided into three parts. Part one- Preliminary, part two- Body of the reports and part three- supplemental parts.

Introduction

Our term paper topics name is credit operations of bank in Bangladesh credit operation is an important function of the bank. Bank has credit operations department and The Credit Operations Department will primarily service the lending teams of the bank and also serve as the repository of best practices and act as a consultant to all branches for any queries they may have on credit operations matters. These include ensuring effective delivery of credit services and products to customers, monitoring credit limits, providing proper mechanism for document tracking and capturing and maintaining credit-related information in the recording systems. So in this term paper we discuss or analyze different types of credit service or products which are offered by the bank.

Limitations of the study

We know that data is needed to make the term paper. So data can be collect from two sources such as primary sources and secondary sources. The primary sources are friends, course teacher and respective organization. The employee of the banksdid not agrees to give us information first, second and third times. They dont help us properly. The secondary sources are book, internet, and newspaper etc. The information about this term paper is not available of the internet. So we face many problems when we make this report. Instead of many problems, we make this term paper.

Central Bank and its policies Every bank must be maintained some rules and regulations and central bank provides those rules and regulation. Now we try to see rules and regulations of central bank.

Bangladesh Bank (BB), as the central bank, has legal authority to supervise and regulate all banks and non-bank financial institutions. It performs the traditional central banking roles of note issuance and of being the banker to the government and banks. Given some broad policy goals and objectives, it formulates and implements monetary policy, manages foreign exchange reserves and lays down prudential regulations and conduct monitoring thereof as they apply to the entire banking system. Its prudential regulations include, among others: minimum capital requirements, limits on loan concentration and insider borrowing and guidelines for asset classification and income recognition. The Bangladesh Bank has the power to impose penalties for non-compliance and also to intervene in the management of a bank if serious problem arise. It also has the delegated authority of issuing policy directives regarding the foreign exchange regime. Interest rate policy

Under the Financial sector reform program, banks are free to charge/fix their deposit (Bank /Financial Institutes) and Lending (Bank /Financial Institutes) rates other than Export Credit. At present, Loans at reduced rates (7%) are provided for all sorts of export credit since January 2004. With a view to controlling the price hike and ensuring adequate supply of essential commodities, the rate of interest on loan for import financing of rice, wheat, sugar, edible oil (crude and refined), chickpeas, beans, lentils, onions, spices , dates and powder milk has been temporarily fixed to a maximum of 12%.Now, banks can differentiate interest rate up to 3% considering comparative risk elements involved among borrowers in same lending category. With progressive deregulation of interest rates, banks have been advised to announce the mid-rate of the limit (if any) for different sectors and the banks may change interest 1.5% more or less than the announced mid-rate on the basis of the comparative credit risk. Recently Banks have been advised to upload their deposit and lending interest rate in their respective website. Loan Classification and Provisioning In order to strengthen credit discipline and bring classification and provisioning regulation in line with international standard, Bangladesh Bank issued a master

circular on loan classification and provisioning through BRPD circular no 5 dated June 5, 2006. The revised policy covers an independent assessment of each loan on the basis of objective criteria and qualitative factors which is appended below : Any Continuous Loan/Demand Loan if not repaid/renewed within the fixed expiry date for repayment will be treated as past due/overdue from the following day of the expiry date. A Continuous Loan/Demand loan/Term Loan which will remain overdue for a period of 90 days or more will be put into the "Special Mention Account (SMA)". Interest accrued on "Special Mention Account (SMA)" will be credited to Interest Suspense Account, instead of crediting the same to Income Account. A Continuous Loan/Demand loan is classified as 'Sub-standard' if it is past due/over due for 6 months or beyond but less than 9 months, classified as `Doubtful' if it is past due/over due for 9 months or beyond but less than 12 months and classified as `Bad/Loss' if it is past due/over due for 12 months or beyond. If any installment(s) or part of installment(s) of a Fixed Term Loan is not repaid within the due date, the amount of unpaid installment(s) will be termed as `defaulted installment'. In case of Fixed Term Loans, which are repayable within maximum five years of time- If the amount of 'defaulted installment' is equal to or more than the amount of installment(s) due within 6 (six) months, the entire loan will be classified as "Sub-standard", if the amount is equal to or more than the amount of installment(s) due within 12 (twelve) months, the entire loan will be classified as "Doubtful" and if the amount is equal to or more than the amount of installment(s) due within 18 (eighteen) months, the entire loan will be classified as "Bad/Loss". In case of Fixed Term Loans, which are repayable in more than five years of time and if the amount of 'defaulted installment' is equal to or more than the amount of installment(s) due within 12 (twelve) months, the entire loan will be classified as "Sub-standard". If the amount is due within 18 (eighteen) months, the entire loan will be classified as "Doubtful" and if the amount is due within 24 (twenty four) months, the entire loan will be classified as "Bad/Loss".

The Short-term Agricultural and Micro-Credit will be considered irregular if not repaid within the due date as stipulated in the loan agreement. If the said irregular status continues, the credit will be classified as 'Substandard ' after a period of 12 months, as 'Doubtful' after a period of 36 months and as 'Bad/Loss' after a period of 60 months from the stipulated due date as per loan agreement. Besides, if any situational changes occur in the stipulations in terms of which the loan was extended or if the capital of the borrower is impaired due to adverse conditions or if the value of the securities decreases or if the recovery of the loan becomes uncertain due to any other unfavorable situation, the loan will have to be classified on the basis of qualitative judgment. As regards the provision, banks are required to maintain General Provision against all categories of loans along with off-balance sheet items in the following manner: Particulars Short Term Agri. Consumer Financing Other thanHousing Loans Housing for up 2% 5% 20% 50% 100% 2% 5% 20% 50% 100% 1% 5% 20% 50% 100% 1% 5% 20% 50% 100% & to Small All

forEnterprise other Finance Professionals Financing Credit set up business

Credit Finance Loans and micro credit UC Standard SMA SS DF Classified B/L 5% 5% 5% 100% to set

Professionals business 5% 5% 20% 50% 100%

Besides, banks are required to maintain general provision against Off-balance sheet exposures (i) @ 0.5% 1% (ii)@ in provision provision the effective effective from from following December December 31, 31, manner: 2007 2008 and .

Total amount of deposit (current time)

(Taka in Millions)

Percentage Changes Items Decembe Novembe Decembe December, r, 2008 r, 2008 r, 2007 of 2008

over Novembe Decembe r, 2008 r, 2007 5.57

Demand Deposits* Time

270484

265365

256225

1.93

2072663 2057892 1726818 0.72 20.03 Deposits* Total 2343147 2323257 1983043 0.86 18.16 * Excludes Inter bank and Government Deposits.

Bank Credit
(Taka in Millions)

Percentage Changes Items Decembe Novembe Decembe December, r, 2008 r, 2008 r, 2007 of 2008

over Novembe Decembe r, 2008 r, 2007

Advances including call 1995304 1990032 1630646 0.26 money & balances Bills 145004 135629 131606 6.91 Investments 442324 437460 361073 1.11 Total 2582632 2563121 2123325 0.76 22.36

10.18 22.5 21.63

Interest rates
Weighted End Period of Bank Rate Call Average Money

Schedule

Banks

Wei

Market Rates Borrowing Lending

Average Interest Rate o Deposits Advances

1999 2000 2001 2002 2003 2004 2005 January February March April May June July August September October November December 2006 January February March April

7.00 7.00 7.00 6.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00

7.15 6.82 8.26 9.49 6.88 4.93 13.04 11.49 13.91 12.48 16.10 6.77 5.47 5.84 5.98 7.21 8.15 8.41 14.87 12.12 16.43 21.54

7.61 7.21 8.57 9.56 8.17 5.74 11.35 11.96 13.89 12.33 15.97 6.78 5.45 5.91 6.08 7.21 8.15 8.41 14.87 12.12 16.43 21.54

7.26 7.08 6.75 6.49 6.25 5.56 ------5.58 ------5.62 ------5.9 ----------------------

13.98 13.75 13.42 13.09 12.36 10.83 ------10.74 ------10.93 ------11.14 ----------------------

Body of the report:

To make this report we analyze 12 banks of our country. Those banks are Brac Bank, AB Bank, Dutch bangle Bank, Dhaka Bank, HSBC Bank, South East Bank, IFIC Bank, Janata Bank, Pubali Bank, Sonali Bank, Rupali Bank and Standard cherterd Bank. We analyze different types of credit service or product of those banks. Now we see different types of credit service on different banks. At first we discuss the credit service of Brac Bank and then we discuss others types of credit facilities of bank which are not provided by Brac Bank and which facilities are provided by other 11 banks in Bangladesh.

Credit facilities of Brac Bank

A) Individual loan products 1) Salary Loan

Keep an extra 15 month's salary in your pocket. You can get BRAC Bank Salary loan, Loan against your salary. If you are a salaried individual working in Bangladesh, Please read on. Because Salary Loan from BRAC Bank has been designed with just you in our minds. Maximum Amount: Anywhere between 1.5 lac to 10 lac (maximum) Features

Loan up to 15 times of your Salary * No collateral of cash securities Loan processed just within 24 hours Flexible repayment Equal Monthly Installments (EMIs) over a period of 12 months to 60 months * Person with salary account with BRAC Bank will enjoy 1% less than the prevailing interest rate

2) Doctor's Loan BRAC Bank introducing Doctor's Loan, an exclusive loan facility for the Doctor's fraternity. Now practicing Doctor's can avail this loan very easily to meet their professional needs. So prescribe yourself a dream today. Anti-Headache solution for Doctor's. Maximum Amount: Taka 15 Lac Features

Loan from BDT 2 Lac to BDT 15 Lac No Security Required Loan in 48 Hours

3) Now Loan 'You choose while we pay'!! Life is good making it better when you can enjoy BRAC Bank NoW Loan. In case you need to purchase home appliances, furniture's, computer or other consumer durables for personal use, we offer you the most appropriate solution with our NoW loan. Maximum Amount : 15 times of gross monthly income Features

No Collateral / Cash Security 72 Hour Processing Small Monthly Installments Family members gauarantee

4)Car Loan Why toy with your dreams when you can own one', BRAC Bank Car Loan can stop your dreaming and Start driving Whether you want to purchase a brand new car or a reconditioned one, we have the most customer-friendly car loan scheme available for you. 5) Teachers Loan 'Honest profession, Honest Service'. BRAC Bank Teachers' Loan provides a wedding or a dream holiday, financing a business or surviving an emergency, Teachers Loan can be yours just within three days of application! Maximum Amount

10 times of your gross monthly salary The loan amount stretches from Tk. 50,000 to Tk. 10,00,000 (maximum)

Features

Fastest Processing Time Small Monthly Installments Minimum Loan Documentation

6) Study Loan 'Your gateway to the world' BRAC Bank Study Loan gives your child deserves the best education and you have planned it ahead. But worried about financing? BRAC bank has the perfect solution for your child's future. Maximum Amount : 15 times of your gross monthly income Features

Small Monthly Installments Repayment scheme up to maximum of 5 years Multipurpose facility to meet living expenses, airfare, personal expenses beside tuition as well For both salaried and self employ

7) Travel Loan 'It's time to fly', BRAC Bank Travel Loan opens the door for planning to take a trip abroad and worried about financing? Before you start packing your bags for vacation abroad, you have too many things to take care. Leave your money- matters to us while you pack your bags. Our fast and easy loan processing will simply add excitement to your travel plan. Maximum Amount : 8 to 10 times of gross salary Features

Small Monthly Installments 50% off on Foreign Currency Endorsement Fees For Salaried and self-Employed individuals

8) Credit Card Loan When you have a credit card sky is your limit with BRAC Bank. Now, a credit card is all you need to get a loan from BRAC Bank. Loan can be used for any reason from buying consumer goods, automobile to vacation expenses. Just decide what to do and start planning for it. Maximum Amount : 5 times of credit card limit with a maximum of TK 1,000,000 Features

Any Purpose Loan Status of the facility in just 72 hours Flexible repayable plan in equal monthly installment

9) Top up Loan Is your loan track record playing smooth? BRAC Bank Top Up Loan is easy loan for good borrower. This unsecured loan is designed to meet various personal needs without mentioning the purpose at all. Just apply according to your requirements Maximum Amount: Taka 10 Lac Features

No tiring paper work Facility status within 72 hours of application

10) Secured Loan/ OD A special scheme that allows you to avail cash at nominal interest rates. Your security is kept untouched in the Bank's custody as the value grows. Maximum Amount : Maximum amount can go up to Tk 5 crores. We even allow loans up to even 100% of the value of your securities (conditions apply) Features

You repay only interest at quarterly intervals You are allowed to choose between the quarterly repayment option and the monthly installment option You can avail the facilities in single or in joint names Your interest will be calculated using reducing balance method A wide range of security is acceptable to the Bank. These are: Fixed Deposits at BRAC Bank and other Banks, ICB unit certificates and Wage Earner Development Bonds (special cases) Employer's Guarantee can be the security.

Others individual credit facilities

Now we discuss other credit facilities which are provided by other banks but this service is not provide Brac Bank.

1) Brokerage service generally AB bank provides this service. AB Bank's subsidiary, AB Bank Foundation, which has corporate memberships on the Dhaka and Chittagong Stock Exchanges, can act as brokers on behalf of local and foreign individual and institutional client to trade in the local capital market. AB Bank's Sales & Trading Department will also support brokerage service for offloading shares through direct listing. 2) Wedding loan Features

No personal guarantee or cash security. The loan amount ranges from BDT50,000 to BDT1,000,000 or a maximum of four times of your monthly income, whichever is lower. If you are an Auto Pay customer, you can get six times or if you are a CEPS customer you can get ten times of your monthly income. Competitive interest rates. Low processing fees. You can repay the loan in 12, 24, 36 or 48 months.

3) Easy Loan No limits for personal needs, needs are endless. Our EASY LOAN is to serve your personal financial needs. Just walk-in to any of IFIC's branch and avail your EASY LOAN. Loan repayment Period: 12-36 months. 6) Seed Money for Self-Employment One bank provides this service. The educated young people with an aptitude for organizing enterprises will be

provided with the seed money primarily for self-employment and subsequently will be given advisory services as well as required fund for expansion into a fast growing productive and employment generating venture.

7) Credit to Women Entrepreneurs One bank provides this service.The Bank believes in 'Equal Opportunity Policy' and as such has a plan to introduce credit programmers for willing and talented women entrepreneurs

B) SME products

1) Anonno Rin Anonno Rin is a business loan designed to finance small scale trading, manufacturing and service ventures, especially to to help small and medium entrepreneurs to meet their short-term cash flow shortages and bridge the fund-flow gaps Loan Limit: From BDT 3 lac to BDT 9.5 lac

Features

Loan without mortgage Loan for Working Capital Finance and/or fixed assets purchase Easy repayment system of monthly installment or Single Installment For excellent borrowers who have paid or are paying in due times, we offer discounted rates Quick, quality banking throughout the country

2) Prothoma Rin

"PROTHOMA RIN" is a loan facility for small and medium sized business, which are operated by women entrepreneur. The product offers terminating loan facilities for the purpose of working capital finance and/or fixed assets purchase. Loan Limit: From minimum BDT 3 lac up to maximum of BDT 9.5 lac Features

Loan without Mortgage Easy repayment system Minimum documents Easy & faster processing For excellent borrowers who have paid or are paying in due times, we offer discounted rates

3) BIZNESS Account Bizness Account is an interest bearing current account for sole proprietorship business Entrepreneur. Features

4% interest on daily balance Smart Business Card Cash withdrawal limit in ATM BDT 1,00,000 per day and any amount in POS 24 hour Access to ATMs/ POS Tk-50, 000 withdrawn facility (per day) from ATM & Tk-100, 000 from POS No Minimum Balance, No Ledger Fees, No hidden cost Phone-Banking, Online Banking, SMS Banking, Internet Banking facility

4 ) Pathshala Rin

Pathshala Rin is a loan designed to meet the needs of small and medium sized private educational institutions, such as kindergartens, schools and colleges etc. Loan Limit: Minimum BDT 3 lac to maximum BDT 30 lac Features

Loan upto 9.5 lacs without Mortgage Loan for purchasing fixed assets Easy monthly installment Minimum documents Easy & faster processing Flexible interest rate based on security and loan amount

6) Apurbo Rin Apurbo is a loan facility for Small and Medium business. Apurbo loan has been designed and targeted for relatively bigger business units requiring loan above tk. 8 lacs to 30 lacs. Loan Limit: Starting from BDT 8 lac to maximum of BDT 30 lac Features

Simple loan processing for expanding your business Quick disbursement Disbursement in one or two installments Flexible monthly repayment plan

7) Aroggo Rin Aroggo is a loan allowed to various Health service Provider like private clinics, diagnostics centers and doctors' chambers. The product offers fixed assets purchase financing under equated Monthly Installments. Loan Limit: Minimum of 3 lac to maximum of 30 lac Features

Loan upto 9.5 lacs without Mortgage Minimum documents Easy loan processing Loan repayment schedule is spread up to 3 years Flexible interest rate based on security and loan amount

8) Digoon Rin

This is a double loan on your deposit. Now you do not need to encash your savings rather you can take double amount of loan on your deposit for your business expansion. Loan Limit: Minimum of 5 lac to maximum of 30 lac BDT Features

Double amount of loan on your deposit

Others SME credit facilities

Now we discuss other credit facilities which are provided by other banks but this service is not provide Brac Bank. 1) CNG conversion loan: HSBC Bank offers these credit facilities for her customer. Features

Competitive interest rates Maximum loan tenure 2 years No personal guarantee or cash security required Loan amount ranging from BDT30,000 to BDT50,000

2) Possession Loan IFIC bank provides these credit facilities. For those people running a successful business from rented premises, IFIC BANK is there to finance you for POSSESSION LOAN. So your business can have its own Permanent Address. Loan Size: / How much Loan you can get? Maximum Tk. 5 Lac.

Loan Period: / what is the period to repay your Loan? Maximum 65 years on the date of maturity of the loan. 3) Krishi Khamar Rin Karmasuchi (Proiect): This program was introduced is 1993 by Sonali bank for creating new employment, increase national income & Socio economic development by establishing medium & big project Poultry, Dairy & Fishery) through bank finance. 4) Fisheries credit Program: This service provides sonali bank. This program was designed to extend bank credit for pisciculture in derelict ponds/Tanks/water bodies in 1977 Credit is extended through 200 branches over the country. Maximum ceiling of loan is Tk.5.00 Lac 5) Fertilizer Dealers Credit Program:

This service provides sonali bank .This program was introduced to extend bank credit among the approved fertilizer dealers operating at primary distribution point of BADC for lifting their quota of Fertilizer from BADc for ultimate distribution among the farmers in1981. 6) Sugarcane production loan program in mill Zone area: This service provides sonali bank. This program was introduced in 1975 to increase sugar production. Under this program credit is extended to 11 (eleven) sugar mills for ultimate disbursement among their affiliated farmers.

C) Corporate loan products

Letter of Credit (LC)/ Letter of Guarantee (LG) 1) Letter of Credit (LC): This facility is related to import or local purchase of different items. It is also provided for the import and export of goods (such as raw materials, machinery, equipment, any trading item).

2) Letter of Guarantee (LG): To meet different contractual requirement such as participating in Bid, Performance Guarantee and Advance Payment guarantee for different contractual requirements. 3) Overdraft This is an on-demand credit facility designed to meet day-to-day operational activities of the business, including purchase of raw materials and expenses. 4) Term Loan Short Term Loan/ Revolving Loan: This scheme is to meet different short-term fund requirements of the client. Payment of duty, Tax, VAT and other expenses related to the release of goods from customs through pay orders in the name of customs authority or Bangladesh Bank cheque is payable through this scheme. 5) Lease Finance One of the more convenient long-term sources of acquiring capital machinery and equipment. The client is given an opportunity to have exclusive rights to use an asset, for an agreed period of time, against payment of rent. 6) Loan against Trust Receipt (LATR) This is advancement against a Trust Receipt provided to the client when the documents covering an import shipment are given without payment. Under this system, the client will hold the goods of their sale proceeds in trust for the bank, until the loan allowed against the Trust Receipt is fully paid. 7) Work Order Finance BRAC Bank provides Work Order finance facility for its valued clients. Through this arrangement, clients can avail loan facilities against valid Work Orders up to a certain proportion. 8) Medium Enterprise

Medium Enterprise Unit

The products offered under this sort of financing are versatile in nature and each product is tailored according to the need of the borrower, under certain parameters. The range of organizations this sort of financing caters to include proprietorship concerns, private limited companies, educational institutions as well as NGOs. The purpose of this unit is to serve medium enterprises having facility requirements like a large corporate in nature, but smaller in volumes. The facilities may range from a single-funded or non-funded limit to a composite credit facility that includes various corporate products. We believe that the emerging medium enterprise of today is tomorrows large corporate that will facilitate the true growth of our nation.

Other credit facilities of corporate loan products Now we discuss other credit facilities which are provided by other banks but this service is not provide Brac Bank. 1) Large Loan & Project Finance AB Bank provides the service of large loan and project finance.

In order to cater the demand of client AB Bank has segmented its portfolio in terms of loan size. As per this segmentation any loan over Tk. 10.00 Crore falls under the purview of Large Loan Unit.

In AB Bank, there is also a separate Project Finance unit who evaluate the business. The unit is entrusted to handle the portfolio in a focused manner. AB Bank is always in fore front to support establishment of new projects of diverse nature which will help to broaden the manufacturing arena vis--vis to generate to employment.

2) Securitization of Assets Specially Dhaka bank provides this service.

A powerful and effective means of generating funds for a certain category of institutions, Securitization of Assets is still in its infancy in The need however for such a service is great and there is a lot of support from multilateral financial institutions, such as the World Bank and the Asian Development Bank, for such activities to be developed further in this country. Dhaka Bank intends to take up this challenge and play a significant role in ensuring that Securitization of Assets becomes a normal part of the range of financial instruments available for organizations who can count on a steady, but piecemeal, flow of revenue and want to translate this stream into cash resources with which to carry out further lending activities to new customers. Some practical issues still need to be settled such as those concerning pricing, or the legal framework, but it is expected that, as Dhaka Bank and other institutions pursue more such securitization activities these will be resolved. 3) DP/DA purchase HSBC provides this type of service. A cash advance made to you when you have exported goods to a buyer through Documentary Collections, either on a Documents against Acceptance (DA) or Documents against Payments (DP) basis. 4) Trade Finance This service provides South east Bank. Trade Finance includes both funded and non funded credit. This type of facilities is extended for both domestic and foreign trade. The non funded credit facilities include Letter of Credit (L/C) facility, Acceptance facility (in case of deferred payment L/C) for import of commodities and different types of Bank Guarantees. The cash margin against these facilities varies from 10% to 100% depending upon the products to be imported and Banker-Customer relationship. The standard commission against L/C is 0.50% of the L/C amount for the 1st quarter and 0.30% for the subsequent quarters. The standard commission against BG is 0.60% per quarter. The funded facilities include Letter of Trust Receipt (LTR) facility/ Time Loan as post import finance to retire L/C documents. The tenor of such facilities is preferably

from 45 days to 120 days. In order to meet stopgap of fund of clients, Southeast Bank purchases/ discounts inland bills (IBP), inland documentary bills (IDBP), and foreign documentary bills (FDBP). 5) INDUSTRIAL FINANCING In order to support the development of industrial sector of the country through active participation of private and direct foreign investment, Rupali bank Ltd. has taken appropriate programmes as per Industrial Policy of the Government. The loan portfolio of the Bank includes sizeable investment of fund towards development of thrust industrial sectors like Textile, Jute, Leather, Leather goods, Frozen and semi cooked Shrimps, Footwear, Knit Garments and other small and medium enterprises. Rupali Bank Ltd. is participating in joint venture finance and consortium finance for setting up large-scale projects. The Bank lays special emphasis on agro-based and IT related industries.

Micro credit facilities

Grammen bank and different types of NGOs are provides micro credit facilities of our country. Muhammad younus is a founder of grammen bank and he gets noble prize for micro credit programmes. In this report we try to see the gremmen credits and this credit provides by grammen bank. The word "microcredit" did not exist before the seventies. Now it has become a buzz-word among the development practitioners. In the process, the word has been imputed to mean everything to everybody. No one now gets shocked if somebody uses the term "microcredit" to mean agricultural credit, or rural credit, or cooperative credit, or consumer credit, credit from the savings and loan associations, or from credit unions, or from money lenders. When someone claims microcredit has a thousand year history, or a hundred year history, nobody finds it as an exciting piece of historical information. a) Grameen credit Whenever I use the word "micro credit" I actually have in mind Grameen type micro credit or Grameencredit. But if the person I am talking to understands it as some other

category of microcredit my arguments will not make any sense to him. Let me list below the distinguishing features of Grameencredit. This is an exhaustive list of such features. Not every Grameen type programme has all these features present in the programme. Some programmes are strong in some of the features, while others are strong in some other features. But on the whole they display a general convergence to some basic features on the basis of which they introduce themselves as Grameen replication programmes or Grameen type programmes. General features of Grameencredit are: 1) It promotes credit as a human right. 2) Its mission is to help the poor families to help themselves to overcome poverty. It is targeted to the poor, particularly poor women. 3) Most distinctive feature of Grameencredit is that it is not based on any collateral, or legally enforceable contracts. It is based on "trust", not on legal procedures and system. 4) It is offered for creating self-employment for income-generating activities and housing for the poor, as opposed to consumption. 5) It was initiated as a challenge to the conventional banking which rejected the poor by classifying them to be "not creditworthy". As a result it rejected the basic methodology of the conventional banking and created its own methodology. 6) It provides service at the door-step of the poor based on the principle that the people should not go to the bank, bank should go to the people. 7) In order to obtain loans a borrower must join a group of borrowers. 8) Loans can be received in a continuous sequence. New loan becomes available to a borrower if her previous loan is repaid. 9) All loans are to be paid back in instalments (weekly, or bi-weekly 10) Simultaneously more than one loan can be received by a borrower 11) It comes with both obligatory and voluntary savings programmes for the borrowers. 12) Generally these loans are given through non-profit organizations or through institutions owned primarily by the borrowers. If it is done through for-profit institutions not owned by the borrowers, efforts are

made to keep the interest rate at a level which is close to a level commensurate with sustainability of the programme rather than bringing attractive return for the investors. Grameencredit's thumb-rule is to keep the interest rate as close to the market rate, prevailing in the commercial banking sector, as possible, without sacrificing sustainability. In fixing the interest rate market interest rate is taken as the reference rate, rather than the moneylenders' rate. Reaching the poor is its non-negotiable mission. Reaching sustainability is a directional goal. It must reach sustainability as soon as possible, so that it can expand its outreach without fund constraints. 13) Grameencredit gives high priority on building social capital. It is promoted through formation of groups and centres, developing leadership quality through annual election of group and centre leaders, electing board members when the institution is owned by the borrowers. To develop a social agenda owned by the borrowers, something similar to the "sixteen decisions", it undertakes a process of intensive discussion among the borrowers, and encourage them to take these decisions seriously and implement them. It gives special emphasis on the formation of human capital and concern for protecting environment. It monitors children's education, provides scholarships and student loans for higher education. For formation of human capital it makes efforts to bring technology, like mobile phones, solar power, and promote mechanical power to replace manual power. Credit Delivery System Grameen Bank Credit Delivary means taking credit to the very poor in their villages by means of the essential elements of the Grameen credit delivery system. Now we see total amount of loans and advances of some different banks in Bangladesh: Name of the bank Total amount of Total asset Ratio of loan and advances to total assets( total loans and advances/total loan and advances

Brac bank AB Bank Dhaka bank Janata bank Premier bank Pubali bank

32,461,102,180 56,708,771,906 46,697,705,621 144,678,183,388 23,637,609,419 50,549,167,102

46,382,595,418 84,053,612,585 71,136,842,020 267,157,296,922 32,573,186,557 71,560,665,280

asset) 69.985% 67.468% 65.645% 54.155% 72.568% 70.638%

We know that, in case of ratio of loan and advances to total asset, lower ratio indicate the successful bank. From the table we can see that the ratio of janata bank is lower than other bank. So thats reason we can say that janta bank is more successful bank than other bank. Now we try to analyze the above table by graphically:

300000 250000 200000 amount 150000 in million 100000 50000 0 Brac Primier Janata Pubali Name of the bank Loan and advances total asset

RECOMMENDATIONS:
Following dissimilarities between theories and practices have been observed in the credit department: 1. In case of method of granting security against loan, hypothecation is much risky as compared with other charging security. It is risky because neither the ownership nor possession is passed on it, only a right or interest in the goods is created in favor of the bank. Theoretically, bank provides two types of credit facilities--- direct facilities

(funded) and indirect facilities (non-funded). But bank is being covered indirect facilities fully but not direct facilities. For example, Demand Loan is not available in bank practically. 2. In case of mortgage, only equitable and legal mortgage are commonly used as the charging security in immovable property but theoretically there are other types of mortgage like mortgage by the condition of sales, English mortgage, and anomalous mortgage are not applied in practice. 3. In case of cash credit (pledge), from the theoretical point of view, no collateral security is normally asked for the grant of such credit, but practically security is taken against CC (pledge). 4. Interest rates for different types of loan and advances vary to different customers. A prospective customer is allowed to take credit facilities at a lower interest rate. Again, the interest is charged at a higher rate to a customer who is not so prospective. But I think that there should be a transparent interest policy that will be prospective for the bank, the borrower and the country. 5. It is amusing matter that additional security has to be provided by borrower for loan against trust receipt in order to protect the trust of the customers. Of course trust receipt is one of the securities; it is valueless in the context of Bangladesh. By and large, it can be said that amount of security and charging security are determined by the degree of relationship between the banker and customer.

Conclusions
Bank is an essential industry. We know that bank buy money and sell money. Banks buy money from depositors in the form of interest and sell money buy grants loans to the lenders or investors. So we can say that banks make bridge between the depositors and investors. Generally depositors deposits money from his surplus savings. And investor needs money for his productive purposes. So we can say that we take advantage from banks by deposit money or take credit facilities. Worldwide banks

grant more installment loan to consumers than any other financial institution. In most years there are among the leading buyers of bonds and notes issued by governments to finance public facilities, ranging from auditorium and football stadium to airports and highways. Banks are among the most important sources of short term working capital for business and have become increasingly active in recent years in making long term business loans for new plant and equipment. Moreover, banks reserves are the principal channel for government economic policy to stabilize the economy. For all these reasons, banks are one of the most important societys institutions for us.