INTERNSHIP REPORT ON

Financial Performance Analysis

-

Of Janata Bank Limited

Submitted To:
Controller Of Examinations
National University
Gazipur-1704

Supervised By:
Md. Masuduzzaman Biswas
Co-ordinator
BBA (Professional) Department
Pabna College, Pabna

Submitted By:
K. M. Yousuf Hasan
Roll: 1060351 Registration:1069532 Session: 2009-2010
Program: BBA (Professional), Major: Finance
Pabna College, Pabna
National University

National University, Gazipur

Date of Submission: February 28, 2015

LETTER OF TRANSMITTAL

January 17, 2013

Md. Masuduzzaman Biswas
Co-ordinator
BBA (Professional) Department
Pabna College, Pabna
Subject: Submission of internship report.
Dear Sir,
This is my pleasure to present my Internship Report entitled- Financial Performance
Analysis of Janata Bank Limited.
I would like to thank you for assigning me this subject to prepare the internship report. This
task has been given me opportunity to explore one of the most important aspect of the
Financial Performance Analysis of Janata Bank Limited. I have invested my every effort to

depict the General banking functions performed by JBL.

I believe that the knowledge and experience I gathered during the internship period, will be
helpful in my future professional life. I will be grateful to you if you kindly accept this report.
Thanking you for your time and kind supervision.
Sincerely Yours,
K. M. Yousuf Hasan
Roll: 1060351 Registration: 1069532
Session: 2009-2010
Program: BBA (Professional), Major: Finance
Pabna College, Pabna

ii

CERTIFICATE OF SUPERVISOR

This is to certify that K. M. Yousuf Hasan, a student of BBA, Roll: 1060351,

Registration: 1069532, has successfully completed his Internship program and
submitted the report entitled Financial Performance Analysis of Janata Bank Limited
as a partial fulfillment of the requirement of Bachelor of Business Administration
(BBA) degree from the Department of BBA(professional) in Finance major, Pabna
College, Pabna.
He has done his job according to my supervision and guidance. He has tried his best to
do this report successfully. I think this program will help him to build up his future
career.
I wish his success.

Md. Masuduzzaman Biswas

Co-ordinator
BBA (Professional), Department
Pabna College, Pabna

To Whom It May Concern

This is to certify that K. M. Yousuf Hasan student of BBA (Professional) Department

Pabna College, Pabna major in Finance completed his 03 month Internship program
from 10 December, 2014 to 28 February 2014 successfully with Janata Bank Ltd.
During his Internship, he maintains regularity, obedient to company policy and rules.
I wish great success of his future carrier path.

Best Regards

Md. Shahinur Rahman

Manager
Janata Bank Ltd, Mohakhali Branch, Dhaka-1200

ii

ACKNOWLEDGEMENT

It is great opportunity for me to complete my internship in JANATA BANK. I wish

to acknowledge the assistance of all those people who have contributed a lot and
without their support and cooperation this report could not have been completely
successful.
First, I would like to express my gratitude to almighty ALLAH to give me the
strength to complete the report within the stipulated time. I would like to thank the
Higher Authority of Pabna College for giving me every facility & opportunity to
complete all necessary tasks to prepare the report on such a wonderful and learning
issue. I am deeply indebted my teacher Md. Masuduzzaman Biswas, Co-ordinater,
BBA (Professional) Department, Pabna College, Pabna for his whole-hearted
advice and guidance. Without his suggestions, comments and lucid discussion from
time to time and also giving valuable instructions and suggestions to complete this
paper in an appropriate manner, it would have never been possible on my part to make
the report a good one. Actually he acted as a great source of spirit.
It will be very ungrateful if I dont say my gratitude to the Janata Bank in charge Mr.
Harun ur Rashid (DGM), Mohakhali Corporate Branch Unit of Janata Bank Limited
who helped me a lot during my whole research period. Lastly, I like to give many
special thanks and inexpressible greets to Mr. Dewan Ashraf and Shib Sankar Roy
(EO), & In-Charge, Mohakhali Corporate Branch Unit of Janata Bank Limited,
Mohakhali, Dhaka and others for giving me advice, inspiration and support. Thanks
for all from the core of my heart.

iii

EXECUTIVE SUMMARY

The main focus of this report is on the Financial Performance Analysis of Janata
Bank Limited. In order to focus on the Financial Performance Analysis of Janata Bank
Limited, the study focuses on different loan and advances of Janata Bank Limited,
industry wise Loan and advances and recovery of Loan and advances of Janata Bank
Limited. The study has been conducted mainly based on secondary data. The data are
collected for the period of five years from 2009 to 2013. Some information has also
been collected from the discussion with the officers.
Trend analyses are mainly conducted to analyze credit management. Results of the
study show that there is an increasing trend in deposit and loan of Janata Bank Limited
over the years. Janata Bank Limited has increased its loan advances over the years in
import, export and industrial credit. The classified loan as percentage of total loan and
advances has decreased over the years. The bank should introduce new types of
attractive deposit product, assess the client properly and monitor the customer behavior
properly. Thereby the bank can improve its credit management performance and can be
a leading bank in the banking sectors.

iv

TABLE OF CONTENT

Chapter-1
1.1
1.2
1.3
1.4
1.5

Chapter-2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
2.11
2.12

Chapter-3

02-0 4
02
02
03
03
04

Introduction
Origin of the Report
Objectives of the Report
Methodology of the Report
Scope of the Report
Limitations of the Report

06-13
06
06
07
07
07
08
09
09
10
11
11
13

Company Overview
History of JBL
Mission Statement
Vision Statement
Corporate Objective
JBL at a Glance
Strategies of JBL
Function of Janata Bank Limited:
Human Resources Department:
Organizational Hierarchy:
Organization Structure
Services Provided By Janata Bank Limited
Different product of JBL

16-15
16
16
17

Analysis & Evaluation

3.1
3.2
3.3
3.4

Definition of Loans and Advances

Loans and Advances of JBL
Credit management
Classification and provisioning

3.5

performing loans
Types of Loans and Advances of JBL

of

non-

17

21

Financial Performance Analysis of JBL

3.6

General Procedure of Sanctioning Loans and

23

3.7
3.8

Advances
Recovery Programs to be taken by JBL
Recovery Patterns and Loan and Advances

28
29

3.9
3.10
3.11

Problems in Loan Recovery

Credit Analysis
borrower Creditworthy

30
33
34

3.12
3.13
3.14
3.15
3.16
3.17
3.18
3.19
3.20
3.21
3.22
3.23
3.24
3.25
3.26

Chapter- 4

Loan Monitoring
Handling of Non-Performing Loans
Implications
Principles of Sound Lending
Total deposit of JBL
Total Investment of JBL
Loans and Advances
Credit to Deposit Ratio
Investment to Deposit Ratio
Industry wise Loan and Advances in 2013
Credit Distribution in jute industries
Credit Distribution in Tannery
Credit Distribution in Export
Credit Distribution in Import
Credit Distribution in Industrial credit

Findings, Conclusion and

36
37
37
37
38
40
41
43
44
45
47
54
56
57
59

62-64

Recommendation
4.1
4.2
4.3

Major Findings of the Study

Recommendation
Conclusion

62
63
64

Acronyms
JBL
PAD
LTR
ECC
CIB

Janata Bank Limited

Payment against documents
Loan against trust receipt
Export cash credit
Credit Information Bureau

List of Table and Illustrations

2.1

Total Corporate Branches

Page No.
8

2.2

Organizational Hierarchy

10

2.3

Services Provided By Janata Bank Limited

12

SL.

List of Table

2.4

Different product of Janata Bank Limited

13

3.1

Classification and provisioning of non-

17

3.2
3.3

performing loans
trend of deposit
trend of Investment

38
40

3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.13
3.14
3.15

trend of Loan and Advances

trend of credit to deposit ratio
trend of Investment to deposit ratio
trend of Industry wise Loan and advances
trend of jute industries
trend of tannery industries
trend of Export Credit
trend of Import Credit
trend of Industrial Credit
trend of area basis loans and advances
trend of Classified loans and advances
trend of Bad/Loss for Classified loans and

41
43
44
47
47
48
50
51
53
55
56
57

3.16

advances
trend of Income from Investment

59

List of Illustrations
2.1

Organizational Structure

11

3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11

Total Deposit
Growth Rate of Deposit
Total Investment
Growth Rate of Total Investment
Loans and Advances
Growth Rate of Loans and Advances
Credit to Deposit Ratio
Investment to deposit ratio
Industry wise Loan & Advances
Credit Distribution in jute industries
percentage of Credit Distribution in jute

39
39
40
41
42
42
43
45
46
47
48

3.12
3.13
3.14
3.15
3.16
3.17
3.18

industries
Credit distribution in tannery
percentage of Credit distribution in tannery
Credit distribution in export
percentage of Credit distribution in Export
Credit distribution in import
percentage of Credit distribution in Import
Credit distribution in Industrial credit

49
49
50
51
52
52
53

3.19

percentage of Credit distribution in Industrial

54

3.20

Credit
Geographical area basis distribution of loans

55

3.21

and advances
Classified Loans and Advances

56

3.22

Classified Loans and Advances

57

Chapter One

Introduction

1.1. Origin of the Report:

Now a day, education is not just limited to books and classrooms. From education the
theoretical knowledge is obtained from courses of study, which is only the half way of
the subject matter. Practical knowledge has no alternative. The perfect coordination
between theory and practice is of paramount importance in the context of the modern
business world in order to resolve the dichotomy between these two areas. Therefore,
an opportunity is offered by Dept. of Finance, University of BUBT, for its potential
business graduates to get three months practical experience, which is known, is as
Internship Program. For the competition of this internship program, the author of
the study was placed in a bank namely, Janata Bank Limited for a period of three
months (24th June, 2013 to 24th September, 2013).

1.2. Objectives of the Report:

Broad objective:
The broad objective of the study is to analyze the credit management of Janata Bank
Limited.

Specific objectives:
In order to analyze the credit management of Janata Bank Limited, the following
objectives can be listed as the specific objectives of the report.
To know the lending and recovery procedure of Janata Bank Limited.
To examine the trend of deposit and credit of Janata Bank Limited over the

year.
To analyze the industry wise and division wise loans and advances of Janata

Bank Limited.
2

 To analyze the nonperforming loan of the Janta Bank Limited.

1.3. Methodology of the Report:

The study, Credit management of Janata Bank Limited, is descriptive in nature. The
study has been conducted mainly based on secondary data. Secondary data are
collected for the period of five years from 2009 to 2013. To analyze the credit
management of Janata Bank Limited, data are collected from annual report of Janata
Bank Limited. Website of Janata Bank Limited and different books are also sources of
the secondary data. Though the uses of primary data are limited in the study, some
information has also been collected from discussion with the officers of Janata Bank
Limited. Trend analysis is conducted to analyze the credit management of Janata
Bank Limited. Trend of deposit, credit, division wise and industry wise loan and
advances are analyzed in the study. The analysis of nonperforming loans is also made
to analyze the credit management of Janata Bank Limited. The trend line, pie diagram
are used to analyzed the credit management of Janata Bank Limited. The software like
Microsoft office and Microsoft excel are used for analyzing and reporting data in the
report.

1.4. Scope of the report:

The study, the Credit Management of Janata Bank Limited, is mainly limited to the
analysis of credit management Janata Bank Limited. The study encompasses the
overview of the Janata Bank Limited, lending and recovery procedure and trend of
loan and advances. Division wise loan and advances, industry wise loan and advances

and credit recovery performance of Janata Bank Limited also fall within the scope the
report

1.5. Limitations of the Report:

To prepare a report on the topic like this in a short duration is not easy task. From the
beginning to end, the study has been conducted with the intention of making it as a
complete and truthful one. In preparing this report some problems and limitations
have encountered which are as follows:

The main constraint of the study was insufficiency of information, which was
required for the study. There are various information the bank employee
cannot provide due to security and other corporate obligations.
As the data, in most cases, are not in organized way, the bank failed to provide
all information.
Due to time limitation, many of the aspects could not be discussed in the

present report.
Since the bank personnel were very busy, they could not pay enough time.
Lack of opportunity to access to internal data.
I had to base on secondary data for preparing this report.
Legal action related information was not available.
Lack of in-depth knowledge and analytical ability for writing such report.

Chapter Two

Organization Overview

2.1. History of Janata Bank Ltd:

Janata means people. This is a progressive Bank. Immediately after the emergence of
Bangladesh in 1971, the erstwhile United Bank Limited and Union Bank Limited
were nationalized and renamed as Janata Bank. It has been operating since it's
inception in 1972 both in Bangladesh and overseas. Janata Bank Ltd. has been playing
a significant role in the economic development of the country by mobilizing savings
and channelizing funds into different productive sectors. It is also a major player in
the fields of micro-credit and software development.
Janata Bank Ltd, the second largest commercial Bank in Bangladesh, has an
authorized capital of Tk 20000 million, paid up capital of Tk 8125 million. The Bank
has a total asset of Tk. 44,038.90 corer as on 31st December 2013.
Janata Bank Ltd. Operates through 886 branches including 4 overseas branches at
United Arab Emirates. It is linked with 1223 foreign correspondents all over the
world. The Bank employs more than 15(fifteen) thousand persons. The corporate head
office is located at Dhaka with 38 (thirty eight) Department. As a part the conscious
development of existing Human Resources, Janata Bank through its three training
institutes during the year 2013 imparted training to 4699 officers and staffs. It
computerized 90 important branches; nonstop services introduced in 88 branches;
ONLINE Banking in 60 important branches under important branches under
implementation; ATM, EFT facilities.

2.2. Mission of Janata Bank Ltd:

The mission of the bank is to actively participate in the socio- economic development
of the nation by operating a commercially sound banking organization, providing
credit to viable borrowers, efficiently delivered and competitively priced,
simultaneously protecting depositors funds and providing a satisfactory return on
equity to the owners.

2.3. Corporate Vision:

We aim to provide financial services to meet customer expectations so that customers
feel we are always there when they need us, and can refer us to their friends with
confidence. We want to be a preferred bank of choice with a distinctive identity. To
build a sustainable and respectable financial institution. To be a leading Commercial
Bank, with a social focus, assisting in the economic development of the country. The
Profit of the bank used for the Socio-economic development of the nation as a whole.

2.4. Corporate Objective:

The main objective of Janata Bank Limited is to provide all types of banking service
at the doorsteps of the people. The bank participates in various social and
development programs and also takes part in implementation of various policies and
promises made by the government

2.5. JBL at a Glance:

JBL is one of the largest commercial Bank in Bangladesh.

It operates through 886 fully computerized branches ensuring best possible

and fastest services to its valued clients.

The bank has more than 1223 foreign correspondents worldwide.
Total number of employees nearly 18,976.
The Board of Directors consists of 10 members.

Total Corporate Branches of Janata Bank Limited:

Local Office

Corporate-1 Branch

12

Corporate-2 Branch

40

Overseas Branch

04

Grade-1 Branch

204

Grade-2 Branch

209

Grade-3 Branch

296

Grade-4 Branch

120
Total Branches :

886

Table2.1. Total Corporate Branches

2.6. Strategies of JBL:

JBL Bank Limited mainly follows top down approach to take necessary decisions for
the company. Basically they follow the centralize strategy where the Head Office of
the Bank control and monitor all the activities of its branches. In case of marketing
strategy they basically depend on word of mouth as they are already well reputed for
its long-term service in the banking industry.

2.7. Function of Janata Bank Limited:

8

1)

Mobilization of savings of the people and safe keeping of all types of deposit
account.

2)

Providing banking services to common people through the branches.

3)

Introduce modern Banking services in the country.

4)

Providing various information, guidance and suggestions for promotion of

trade and industry keeping in view of the overall economic development of the
country.

5)

Finance under small business of self employed clients.

6)

Finance of farming and non-farming activities to rural people including

purchase of agricultural equipments.

7)

Developing new products Market surveys before making any finance

8)

Monitoring diversification of portfolio among different sectors.

2.8. Human Resources Department:

In the Janata Bank, this department deals with the employees as the core resources of
the organization. This department mainly emphasize on the recruitment selection of
the employees. They are also motivating the employee to work efficiently and
effectively.

2.9. Organizational Hierarchy:

No.

Name of Directors

Position

1.

Dr. Abul Barkat

Chairman

2.

Dr. Jamaluddin Ahmed FCA

Director

3.

Mr. Md. Nazibar Rahman

Director

4.

Advocate Balaram Podder

Director

5.

Mr. Dabir Uddin Ahmed

Director

6.

Dr. Md. Abdur Rouf Sardar

Director

7.

Al-haj A.K.M. Shahjahan

Director

Dr. R.M. Debnath

Director

Mr. Md. Emdadul Hoque

Director

10

Mr. S.M. Aminur Rahman

CEO & MD

Table2.2. Organizational Hierarchy

2.10. Organization
Structure

of

Janata Bank Ltd:

10

Figure-2.1. Organization Structure of JBL

2.11. Services Provided By Janata Bank Ltd

General Service

Savings Account
Current Account
Corporate Account
Short term Deposit

Deposit Service

Fi Fixed Deposit Scheme

Special Savings Scheme
Special Deposit Scheme
Education Saving Scheme

Loan Scheme

Loan General
Terms Loan
11

Transport Loan
Project Loan
Loan against Imported Merchandise
Loan against Trust Receipt
Loan Against Packing Credits
Loan Against House Building
Housing Loan Scheme
House Repairing Loan Scheme
Consumers Finance Scheme
Festival Small Business Loan Scheme
Festival Personal Loan Scheme
Small Business Loan Scheme
Personal Loan Scheme
Cash Credit

Table2.3. Services Provided By Janata Bank Ltd

Special service provided by Janata Bank Limited:

a) Sale of admission froms of Dhaka University: Janata Bank Limited provide

special service sale admission froms of Dhaka University.
b) Receipts of admission related money: Janata Bank Limited receipts admission
related money.
c) Doing various academic transactions: Janata Bank Limited also doing various
academic transactions.

12

2.12. Different product of Janata Bank Limited:

Taka in million
Sl.

Name of product

No of

No.

loanees

Crop loan program

4% interest for Pulses,Oilseeds,

Outstanding

Amount 2013

354905

8132.83

48.26

6262

203.40

1.21

Spices&Maize Crops
3

Agriculture& Irrigation Equipment

174

10.00

0.06

Fisheries &shrimp culture Credit

818

172.13

1.02

Financing women entrepreneurship

190

54.55

0.32

Diversified Credit Program

48204

1041.38

6.17

Credit for forestry/ horticulture nursery

720

11.25

0.07

NGO linkage loan

44

661.63

3.92

Financing goat and sheep farming

8370

103.86

0.62

10

Gharoa project

3389

68.13

0.40

11

Small business Dev. Loan

144

4.49

0.03

12

Credit program for employees

84852

2866.37

17.00

13

Doctors loan

48

11.04

0.07

14

Cyber-caf loan

1.03

0.01

15

Credit for disable people

109

1.67

0.01

16

Consumers Credit

837

176.78

1.05

17

Agro Based project

480

581.75

3.45

18

Interest free credit program

170

1.70

0.01

19

Others

117911

2749.80

16.32

13

Total

627635

16853.79

Table2.4. Different product of Janata Bank Limited

14

100.0

Chapter Three

Analysis & Evaluation

15

3.1. Loans and Advances:

The main focus of Janata Bank Credit Line/Program is financing business, trade and
industrial activities through an effective delivery system. Janata Bank offers credit to
almost all sectors of commercial activities having productive purpose.
The loan portfolio of the Bank encompasses a wide range of credit programs covering
about 200 items. Credit is also offered to 15 (fifteen) thrust sectors, as earmarked by
the govt., at a reduced interest rate to develop frontier industries. Credit facilities are
offered to individuals, businessmen, small and big business houses, traders,
manufactures, corporate bodies, etc.

Following the guidelines of Bangladesh Bank, credit facilities have been extended to
productive and priority sectors. The outstanding advance of the bank is Tk 257801
million on 31st December 2013. In credit facilities, the Bank has given due importance
to sartorial needs and requirements of both public and private sector.

3.2. Loans and Advances of JBL:

The Bank continued to consolidate and diversify its portfolio in 2013 to have a
diversified client base and portfolio distribution across the sectors to reduce client
specific concentration and industry specific concentration and to reduce overall
portfolio risk. Total loans and advances of the bank stood at Tk. 257801 million
during the year 2013 as compared to Tk. 225732 million of the previous year . Sector
wise allocation of advances revealed a well- diversified portfolio of the bank with
balanced exposure in different sectors. Janata Bank Limited Mirpur-1 Branch is
situated in Mirpur, and Dhaka which is very imported place of Dhaka city. It is a very
big and important branch of JBL. The Branch give various Kinds of Loan to the
16

borrower like CC Hypo (Cash Credit Hypo), CC Pledge (Cash Credit Pledge),
Overdraft (Second Overdraft), UHRL (Uttaran House Repairing Loan), SBL (Small
Business Loan), PL (Personal Loan).

3.3.Credit Management

Loans or credits comprise the most important asset as well as the primary source of
earning for the banking institutions. On the other hand, loan/credit is also the major
source of risk for the bank management. A prudent bank management should always
try to make an appropriate balance between its return and risk involved with the loan
portfolio. Credit appraisal process is the tool, which helps the bank to predict the risk
and return on the proposed project for credit disbursement. To get a clear idea about
credit appraisal process we need to know the key factors of credit appraisal
procedures.
3.4. Classification and provisioning of non-performing loans:

a. Types of

1st stage

2nd stage

3rd stage

4th stage

5th stage

Period

Period

Period

Period

Period

overdue

overdue

overdue

overdue

overdue

Less than

Less than

Less than

Less than 6

Less than 3

18 months

12 months

19 months

months

months

18 months

12 months

9 months

6 months

3 months or

classification

Unclassified

Substandard

or more but or more but or more but or more but

Doubtful

more but less

less than

less than

less than

less than 12

than 6

36 months

24 months

24 months

months

months

36 months

24 months

12 months

9 months

3 months or

or more but or more but or more but or more but

17

more but less

less than

less than

less than

less than 12

than 6

48 months

36 months

24 months

months

months

More than

36 months

36 months

24 months

12 months or

48 months

or more

or more

or more

more

Standard

5%

2%

2%

2%

1%

SMA

5%

5%

5%

5%

5%

Substandard

20%

20%

20%

20%

20%

Doubtful

50%

50%

50%

50%

50%

Bad

100%

100%

100%

100%

100%

c. Period of

Annual

Half yearly

Half yearly

Quarterly

Quarterly

classification

basis

basis

basis

basis

basis

Bad

b. Rate of
provision
Unclassified:

Classified:

For loan classification Bangladesh Bank also issues circular time to time after
27/12/1994 like BPRD circular no 16,9,2,9 and 17 of 6/12/1998, 14/5/2001,
15/3/2005, 25/8/2005, 6/12/2005 and 2006 respectively. Some of these are as follows:
Status, type and definition of classification
Status

Unclassified

loan type

Definition of status

all current loan

all current loans with

required eligible security

Sub Standard (SS)

Continuous/demand/ term overdue is more than 3

loan

months but less than 6

months if default amount
of installment is equal to

When degree of risk for

installment payable in 6
18

non-payable is high but (less than 5 years)

months

there is reasonable respect

that the loan condition can
be improved

If

default

amount

of

installment is equal to
installments payable in 12
more than 5 years

months.
overdue is more than 12
months but less than 36
months

short term agri. credit and

micro credit
Doubtful (DF)

Continuous and demand

overdue is more than 6

months but less than 9

When chance of recovery is

months

uncertain

If

default

amount

of

Term loan less than 5

installment is equal to

years

installments payable in 12
months.

If default amount of
installment is equal to
More than 5 years

installments payable in 12
to 18 months.

19

Overdue is more than 36

months but less than 60
months.
Short term agri. credit and
micro credit
Bad/ loss (BL)

Continuous and demand

overdue is more than 12

months

No security held, borrower

not traceable, time barred
loans, no hope of recovery

If

Term loan

default

amount

of

installment is equal to

(up to 5 years)

installment payable in18

months.
If

default

amount

of

installment is equal to
more than 5 years

installment payable in 24
months.
overdue is more than 60
months

Short term agri. credit and

micro credit
Table3.1. Classification and provisioning of non-performing loans

3.5. Types of Loans and Advances of Janata Bank Limited:

20

Loan product:

a)

Continuous Loan:
Secured over draft against financial obligation.
Secured over draft against work order.
Cash credit (Hypothecation).
Cash credit (pledge).
Export cash credit (ECC).

21

b)

Demand loan:
Loan general.
Demand loan against ship breaking.
Payment against documents (PAD).
Loan against trust receipt (LTR).
Forced loan.
Packing credit.

c)

Term loan:
Project loan.
Transport loan.
House building loan.
Small business loan.
Consumer finance loan.
Lease finance.
Personal loan.

3.6. Lending procedure of Loans and Advances of JBL:

The following procedure is applicable for giving loans and advances to the customer.
These are:

a) Partys application
b) Filling form-A
c) Collecting CIB report from Bangladesh Bank
d) Processing loan proposal
e) Project appraisal
f) Head office approval

22

g) Sanction letter
h) Documentation
i) Disbursement

A. Partys application:
At first borrower has to submit an application to the respective branch for loan, where
he/she has to clearly specify the reason for loan. After receiving the application from
the borrower Bank officer verifies all the information carefully. He also checks the
account maintained by the borrower with the Bank. If the official becomes satisfied
then he gives form-A (prescribed application form of Bank) to the prospective
borrower.

B. Filling Form A:
After satisfying with partys application the applicant need to fill Form-A. It is the
prescribed form provides by the respective branch that contains information of the
borrower. It contains- Name with its factory location, Official address and telephone
number, details of past and present business, its achievement and failures, type of loan
needed etc.

C. Collecting CIB Report from Bangladesh Bank:

After receiving the application for advance, Janata Bank Limited sends a letter to
Bangladesh Bank for obtaining a report from there. This report is called CIB (Credit
Information Bureau) report. Janata Bank Limited generally seeks this report from the
head office for all kinds of Investment. The purpose of this report is to being informed

23

that whether the borrower has taken loan from any other Bank; if yes then whether
the party has any overdue amount or not.

D. Processing loan Proposal:

After receiving CIB report from Bangladesh Bank, then respective branch prepare an
Investment proposal, which contains terms and conditions of Investment for approval
of Head Office. Documents those are necessary for sending Investment proposal are
Loan application, photograph of the borrower duly attested, personal information of
borrower, CIB report, legal opinion, trade license, stock report, net worth calculation
of business and individual, working capital assessment, financial statement, SME
information and CRG. Janata Bank Limited prepares the proposal in a specific form
that contains following relevant information Borrower,
capital structure,
Address,
Account opening date,
Introduced by type of business,
Particulars of previous sanctions,
Security (existing and proposed),
Components on the conduct of the account,
Details of deposit,
Liabilities with other Banks,
24

 CIB report,
Rated capacity of the project (item wise),
Production/purchase during the period,
Sales during the period,
Earning received for the period.

E. Project Appraisal:
It is the pre-investment analysis. Project appraisal in the Banking sector is important
for the following reasons:

To achieve organizational goals.

To recommend if the project is not designed properly.
To justify the soundness of an investment.
To ensure repayment of Bank finance.

Techniques of Project Appraisal:

An appraisal is a systematic exercise to establish that the proposed project is a viable
preposition. Appraising officer checks the various information submitted by the
promoter in first information sheet, application for Investment and Investment
proposal.

Janata Bank Limited considers the following aspects in appraising a proposal.

25

 Technical viability
Commercial viability
Financial viability
Economic viability

The Head Office (HO) mainly checks the technical, commercial and financial
viability of the project. For others HO is dependent on branchs information. But
when the investment size is big, then the HO verifies the authenticity of information
physically.

F. Head Office Approval:

When Head office receive appraisal from the branch then, Head Office again
appraises the project. If it seems to be a viable one, the HO sends it to the Board of
Directors for the approval of the Investment. The Board of Directors (BOD) considers
the proposal and takes decision whether to approve the Investment or not. If the BOD
approves the Investment, the HO sends the approval to the concerned branch. The
respective officer of Head Office appraises the project by preparing a summary named
Top Sheet or Executive Summary and then he sends it to the Head Office Credit
Division for the approval of the Loan. The Head Office Credit Division considers the
proposal and takes decision whether to approve the Investment or not. If the
committee approves the Investment; the HO sends the approval to the concerned
branch.

G. Sanction Letter
After getting the approval of the HO the branch issues sanction letter to the borrower.
A sanction letter contains:
Name of borrower,

26

 Facility allowed,
Purpose,
Rate of interest,
Period of the Investment and mode of adjustment,
Security and Other terms and condition.

H. Documentation:
If the borrower accepts the sanction letter, the Documentation starts. Documentation
is a written statement of fact evidencing certain transactions covering the legal aspects
duly signed by the authorized persons having the legal status. The most common
documents used by the Janata Bank Limited for sanctioning different kinds of
Investment are:
Demand Promissory Note,
Letter of Arrangement,
Letter of Disbursement,
Letter of Installment,
Letter of Continuity,
Trust Receipt,
Counter Guarantee,
Stock Report,
Letter of Lien,
Status Report,

27

 Letter of Hypothecation,
Letter of Guarantee
Documents Relating to Mortgage.

I. Disbursement:
After sanction and completion of all formalities the respective officer disburses the
loan. The officer writes cheque and provides it to the borrower. For this borrower has
to open an account thorough which he/she can withdraw the money.

3.7. Recovery Programs to be taken by JBL Ltd.

To establish credit supervision and monitoring cell in the bank

To re-structure the loan sanctioning and distributing policy of the bank

To sanction loans and advances against sufficient securities as best as

possible

to give more powers to the branch manager in credit management decision

making process

To offer a package of incentives to the sound borrowers

To give more emphasis on short term loans and advances

To impose restrictions on loans and advances for sick industries

To take legal actions quickly against unsound borrowers as best as possible

within the period specified by the law of limitations.

28

3.8. Recovery Patterns and Loan and Advances

Generally Janata bank Ltd. sanctions loans and advances to every sector of an
economy. Before going into details of recovery performance, we have to be familiar
with some terms used in recovery performance:
Disbursement: highest outstanding balance on any date during the reporting
period minus outstanding balance at the end of the preceding period.
Demand for recovery: overdue at the end of the reporting period plus recovery
during the reporting period.
Recovery: highest outstanding balance on any date during the reporting period
minus outstanding balance at the end of the recovery period.
Outstanding: Outstanding figures in the ledger at the end of the reporting
period.
Overdue: Demand for recovery minus recovery.
3.9. Problems in Loan Recovery

There are a lot of reasons for which the loan recovery of the bank is very defective. In
most cases, problems may be raised from sanctioning procedures of loan,
investigation of the project, and investigation of the loans etc. that is, the problem in
loan recovery proves the outcomes of the default process in loan disbursement. The
main reasons of poor loan recovery are categorized in four broad types as follow:

A. Problems created by economic environment

The following problems arise from the effect of economic environment:
29

1. Changing in the management pattern: Changing of management patterns

may delay the recovery of mature loan.
2. Changing in industrial patterns: The nationalized banks sometimes sanction
loan to the losing concern for further improvement of the respective sector, but
in most cases, they fail to achieve progress.
3. Operation of open market economy: In our country mainly industries
become sick and also close their business on account of emerging of open
market economy. The cost of production is high and the quality of goods is not
of required of standard. As a result, they become the losing concerns and the
amount of bad loan increases.
4. Rapid expansion of business: There are many companies which expand their
business rapidly, but the expansion is for short time. In the long run, the
amount of classified loan increases.

B. Problems created by government

The following problems are arisen by the government:
1. External pressure: Janata Bank Ltd. has also faced many problems in
the loan recovery process as a part of continuous pressure from various
interested groups.
2. Loan to government organization: Janata Bank Ltd. is bound to
sanction loan to government organization, though these are losing
concern. For this reason, banks faced problems in loan recovery.
3. Legal problems: Existing rules and regulations are insufficient to cover
the legal aspects of loan recovery. As a result, defaulters can get release
easily from all charges against them.
4. Frequent changes in government policies in regard to recovery of loan.

30

C. Problems created by the bank:

The following problems are created by the banks:
1. Lack of analysis of business risk: Before lending, Janata Bank Ltd. does not

properly analyze the business risk of the borrowers and the bank cannot
forecast whether the business will succeed or fail. If it fails to run well, the
loan becomes classified.
2. Lack of proper valuation of security or mortgage property: In most cases,

bank fails to determine the value of security against the loan. As a result, if
the loan becomes classified, the bank cannot recover its loan through the sale
of mortgage.

D. Other general causes of poor loan recovery:

Apart from the specific reasons creating problems to recoup loan, there exists some
other general causes which have a great impact on creating the problems which are
faced by the Janata Bank Ltd. under study in the loan recovery process. These are:
1. Early sanction and disbursement of loan to the borrowers without proper
inspection of the project by the bank on account of pressure from lobbying
group.
2. Lack evaluation of technical and economic feasibility of the program.
3. Delay in disbursement of credit.
4. Credit is not allowed to actual entrepreneurs.
5. Lack of proper supervision.
6. Illiteracy of borrowers.
7. Negative attitude of borrowers to repay the loan.
8. Deterioration of the value system of the borrowers.
31

9. Money borrowers use their loan-money other than specified project, i.e., if
the loan is sanctioned for industrial purpose; they use the money in house
building or purchase of land for their own purpose.
10. Sometimes borrowers invest their money outside the country. Many
borrowers transfer loan money to abroad where they deposited this money in
their own account or spent some other purpose.
11. Sometimes local borrowers are found to be so much compelled to grant them
loan without proper study due to some unexpected reasons. Since these
borrowers are capable of getting loan by exercising their influence, they can
also escape the repayment liability.
12. Problems responsible for non-implementation and delayed implementation
of project for which the entrepreneurs of the project cannot repay the loan.
The causes of failure may be:

Failure to ascertain the economic availability of the projects

Time lag between approval and sanctioning of the projects
Import of machinery and raw materials both are the problems
of paucity of foreign exchange and procedures of licensing.

All of these reasons discussed above are general reasons for problems loan recovery
of Janata Bank Ltd. Besides these, there are some specific reasons for loan recovery
problems faced continuously by Janata Bank Ltd. They are as:

Loans are given under fictitious names and enterprise

Loans are given without sufficient securities
Approval of the loans in excess of the branch managers power
Improper monitoring and supervision of credit
32

Political misuse if loan programs operated by the public sector banks

Lack of timely action against willful defaulter
Loans are sometimes for economically unsound project.

Problems in loan recovery are the outcome of the default on loans disbursements in
the earlier period.

3.10. Credit Analysis: What makes a Good loan?

Credit analysis is the analysis of financial statement of business customers for the
purpose of lending. It is conducted to determine whether the customer is creditworthy
and whether the customer has sufficient cash flows and backup assets to repay the
loan. The following major issues should examine in credit analysis:

Is the borrower creditworthy?

Whether purpose of the loan is consistent with banks credit policy and

government

regulations?

Whether customer/or his business have the ability to generate enough

cash to repay the loan.

Whether sufficient security has been offered. So that in the event of

default banks fund can be recovered.

Fixing amount of loan, terms and conditions, documentations, etc.

meet the needs of the borrower and to protect the interest of the bank.

33

3.11. Is the borrower Creditworthy?

Janata Bank Limited analysis borrowers credit worthiness by the following ways:
A) Character:
To determine whether the borrower has a responsible attitude towards

borrowed funds and whether he will have every effort to repay what is
owed.
Responsibility, truthfulness, serious purpose, and serious intention to

repay loans make up the characters of the borrower.

B) Capacity:
Whether customer requesting loan has the authority to request loan and

have the legal standing to sign loan agreement and documents.

C) Economic Condition/ Assets:

Whether borrower has sufficient assets to repay the loan.
Other loans and liabilities of the borrower.

D) Credit history/Credit habit:

Whether loans borrowed by the customers previously and how those

earlier loans were handled.

Whether there is any loan default earlier.

34

 Whether legal action has ever been taken against him for recovery of

default loan.
E) Credit Rating:
Credit Ratings of the borrower by credit rating agencies.

F) Purpose of the loan:

Customer must have a well-defined purpose for requesting the loan.
The purpose of the loan must be consistent with the banks existing

credit policy.
The purpose of the loan also should have consistent with government

regulations.

3.12. Loan Monitoring:

Loan monitoring is important to know whether the loan is disbursed correctly or not.
If the monitoring authority thinks that the loan is risky then they want to recover the
loan as early as possible. It includes a reporting system and communication
arrangement between the borrower and the lending institution. The following steps are
followed by respective officer.

Regular communication with the defaulter customers and guarantors

physically and over telephone.

35

 Regular checking the balance of SB/CD/STD accounts of the borrower.

Issuance of appreciation or greeting letter to the regular customers.
Issuance of letter to customers immediately after dishonor of cheque.
Issuance of legal notice to the defaulter customers and guarantors prior to

classification of the loans.

Periodical visit with the customers to maintain relationship and supervision of

supplied articles.
Legal action to be taken after failings all possible efforts to recover the banks

due.

3.13. Handling of Non-Performing Loans:

If a borrower cannot repay installment or interest on a loan after it has become due
then it is called default loan or non-performing loan. It is known as non-performing
because the loan cant perform or generate income for the bank.

3.14. Implications:

36

The implication of non-performing loans are not only depriving of interest but also
stoppage of creating new loans for blockage of the fund and erosion of banks
profitability, liquidity and solvency, which might sometimes lead towards collapse of
a bank. So, it is become essential for policy makers of a bank to study the loan default
scenario on a routine basis for estimating classified loan, making appropriate
provisioning, adopting effective recovery strategy and thus ensuring soundness and
efficiency of the bank.

3.15. Principles of Sound Lending:

a) Safety:
Safety first should be guiding principle of a banker. Janata Bank Limited exercises
the lending function only when it is safe and the risk factor is adequately mitigated
and covered. Safety depends upon:

The repaying capacity and willingness of the borrower is to repay the

advance.

The security offered by the borrower.

b) Liquidity:
The liability of a Bank is repayable of demand or at a short notice. So the Bank has to
maintain its liquidity at a sufficient level. Investment on building, plant, machinery,
land etc. cannot be recovered quickly, so it is less liquid.
c) Profitability:
Profitability is the pre condition for investment. Each individual and organization
invests to get some positive output. Profit is needed to pay interest to depositors,
depreciation, and maintenance, declare dividend to share holders, provide or reserve
against bad and doubtful debts etc. So Janat Bank Limited also disburses advances
when they see positive return from investment.
37

d) Security:

Security is first condition for sound lending. To ensure safety of advances, Banks
takes different types of securities like land, work order etc. Banker should ensure that
the securities are adequate, marketable and free from encumbrances before disburse
the loan.
3.16. Total deposit of JBL:

Year

2009

2010

2011

2012

2013

Total Deposit(Taka

198635.68

221335.75

246175.05

286566.89

361676.69

8.57%

11.42%

11.22%

16.41%

26.21%

In Millions)
Growth

Rate

of

Deposit
Table 3.2: trend of deposit
Source: Janata Bank Limited, Annual report 2009-2013

Graphical Presentation

Figure-3.1: Total Deposit

38

Figure-3.2: Growth Rate of Deposit

Interpretation:
The above graph shows an upward trend in total deposit mobilization of JBL from
2009 to 2013. In 2009, the total deposit was Tk. 198635.68 million but in 2013 it was
Tk. 361676.69 million. Growth rate of deposit has increased over the years except in
2009. This is due to increase in branches and increase in interest rate over the years.

3.17. Total Investment:

Year
Total

2009
Investment(taka

in 55862.93

2010

2011

2012

57823.53

72533.2 57514

Millions)

2013
90905.8
6

Growth Rate of Investment

1.25%

3.50%

25.44% 20.71%

Table 3.3: trend of Investment

Source: Janata Bank Limited, Annual report 2009-2013
39

58.06%

Graphical Presentation

Figure-3.3: Total Investment

Figure-3.4: Growth Rate of Total Investment

Interpretation:
The graph shows that the total investment of Janata bank Limited has increased over
the years. In 2009 the total investment was Tk. 55862.93million. It was increased to
Tk. 90905.86 million in 2013. That means investment has increased by Tk.
35042.93million from 2009 to 2013. The growth of investment has however
fluctuated over the years.

40

3.18. Loans and Advances:

Year
Loans and Advances(in

2009

2010

2011

2012

2013

121204

144678

166359

225732

257801

-12.00%

19.37%

14.99%

35.69%

14.21%

millions)
Growth Rate of Loans and
Advances
Table 3.4: trend of Loan and Advances
Source: Janata Bank Limited, Annual report 2009-2013
Graphical Presentation:

Figure-3.5: Loans and Advances

41

Figure-3.6: Growth Rate of Loans and Advances

Interpretation:
The loans and advances of Janata Bank Limited have increased over the year. In 2009
the total loans and advances was Tk. 121204 million but it was increased to Tk.
257801 million in 2013. It means loans and advances have increased by Tk. 136597
million from 2010 to 2013. Though there is an upward trend in loan and advances, its
growth rate has fluctuating over the years.

3.19. Credit to Deposit Ratio:

Credit to deposit ratio measures the portion of deposit is in the form of loans and
advances
Credit to Deposit Ratio = Total Credit / Total Deposit

Year

2009

2010

2011

2012

2013

Credit to

61.02%

65.36%

67.58%

78.77%

71.28%

Deposit Ratio

Table 3.5: trend of credit to deposit ratio

Source: Janata Bank Limited, Annual report 2009-2013

42

Figure-3.7: Credit to Deposit Ratio

Interpretation:
There is an increasing trend of credit to deposit ratio of JBL from 61.02% in 2009 to
78.77% in 2009. However, the credit to deposit ratio has decreased from 78.77% in
2009 to 71.28% in 2013. This indicates that efficiency of the JBL in using its deposits
into loan and advances.

3.20. Investment to Deposit Ratio:

Investment to deposit ratio measures the portion of deposit used for investment. The
more the ratio is the more the bank is using its deposit as investment

Investment to Deposit Ratio = Total Investments / Total Deposits

43

Year

2009

2010

2011

2012

2013

Investment

28.12%

26.12%

29.46%

20.07%

25.13%

to Deposit
ratio
Table 3.6: trend of Investment to deposit ratio
Source: Janata Bank Limited, Annual report 2009-2013

Graphical Presentation:

Figure-3.8: Investment to deposit ratio

Interpretation:
The investment to deposit ratio has fluctuated over the year. The investment to deposit
ratio of Janata Bank Limited in 2009 was 28.12%, in 2010 it has decreased at 26.12%.

44

However, the investment to deposit ratio has reduced from 28.12% in 2009 to 25.13%
in 2013.

3.21. Industry wise Loan and Advances in 2013:

SL. No.

Particulars

Taka in Millions

In Percentage

Import Credit

60,633

23.51%

Industrial Credit

41,551

16.11%

Export Credit

38,195

14.82%

Rural Credit

16,352

6.34%

Jute Industries

4,627

1.79%

Others

96443

37.41%

Table 3.7: trend of Industry wise Loan and advances

Source: Janata Bank Limited, Annual report 2009-2013
Graphical Presentation:

45

Figure-3.9: Industry wise Loan & Advances in 2013

Interpretation:
The pie graph shows that Janata Bank Limited uses large portion of fund in import
financing which is 23.51% of total credit. The JBL distributed 16.11% in industrial
credit. The JBL provided loan in export and rural credit respectively 14.82% and
6.34% in 2013.

3.22. Industry wise distribution of loans and advances :

a) Credit Distribution in jute industries:

Year
Credit Distribution in jute

2009

2010

2011

2012

2013

8,997.50 8,809.30 9,201.20 12,703.80 4,627.90

industries(taka in millions)

46

Jute industries credit as a

7.42%

6.09%

5.53%

5.63%

1.80%

percentage of total credit

Table 3.8: trend of jute industries
Source: Janata Bank Limited, Annual report 2009-2013
Graphical Presentation:

Figure-3.10: Credit Distribution in jute industries

Figure-3.11: percentage of Credit Distribution in jute industries

Interpretation:
The graph shows that the credit distribution in jute industries has fluctuated year by
year. In 2009, Credit Distribution in jute industries was Tk. 8,997.50 million but in
2013 it was Tk. 4,627.90 million. That means Credit Distribution in jute industries
decreased by Tk. 4369.6 million from 2009 to 2013. The jute industries credit as a
percentage of total credit has decreased by 5.62% from 2009 to 2013.

47

b) Tannery:

year
Credit distribution in tannery(taka in

2009

2010

2011

2012

2013

4150.60 4,613.30 5,315.80 4,722.50

4100

3.42%

1.59

millions)

Tannery credit as a percentage of total

3.19%

3.20%

credit

2.09%

Table 3.9: trend of tannery industries

Source: Janata Bank Limited, Annual report 2009-2013
Graphical Presentation:

Figure-3.12: Credit distribution in tannery

48

Figure-3.13: percentage of Credit distribution in tannery

Interpretation:
The graph shows that credit distribution in tannery has increased from tk 4150.6
million in 2009 to tk 5315.8 million in 2009. The tannery credit, however, decreased
over the last two years. However, the tannery credit as a percentage of total credit has
decrease from 3.42% in 2009 to 1.59% in 2013.

c)

Export credit

year
Credit distribution in
export

2009

2010

2011

2012

2013

14,835.9

15,550

19,082.7

28,266.5

38,195.6

12.24%

10.75%

11.47%

12.52%

14.82%

(taka in millions)

Export credit as a
percentage of total credit

Table 3.10: trend of Export Credit

Source: Janata Bank Limited, Annual report 2009-2013

Graphical Presentation:

49

Figure-3.14: Credit distribution in export

Figure-3.15: percentage of Credit distribution in Export

Interpretation:
The graph shows that the credit distribution in export has increased from Tk 14835.9
million in 2009 to tk 38195.6 million in 2013. That means Credit Distribution in
export increases by tk 23359.7 million from 2009 to 2013. The export credit as a
percentage of total credit has increased by 2.58 % from 2009 to 2013.

d) Import credit:

50

year

2009

Credit distribution in import

14,216.5

(taka in millions)

Import credit as a percentage

11.73%

2010

32,510.0
0

2011

2012

2013

32,704.

52,760.00

60,633.7

80
22.47%

19.66%

0
23.37%

of total credit
Table 3.11: trend of Import Credit
Source: Janata Bank Limited, Annual report 2009-2013
Graphical Presentation:

Figure-3.16: Credit distribution in import

Figure-3.17: percentage of Credit distribution in Import

Interpretation:
51

23.52%

The graph shows that the credit distribution in import credit has increased year by
year. In 2009 credit distribution in import credit was Tk. 14216.50 million but in 2013
it was Tk.60633.50 million. That means credit distribution in import credit increases
by tk 46417 million from 2009 to 2013. The import credit as a percentage of total
credit has increased by11.79 % from 2009 to 2013.

e) Industrial credit:

year
Credit

2009
distribution

Industrial credit

in

(taka in

millions)

Industrial

credit

2010

as

2011

2012

2013

22,372.07 40,054.00 41,551

.00

15,963.90 17,160.00

a 13.17%

11.86%

13.45%

17.74%

percentage of total credit

16.12
%

Table 3.12: trend of Industrial Credit

Source: Janata Bank Limited, Annual report 2009-2013

Graphical Presentation:

52

Figure-3.18: Credit distribution in Industrial credit

Figure-3.19: percentage of Credit distribution in Industrial Credit

Interpretation:
There is an increasing trend in credit distribution in industrial credit. In 2009 Credit
Distribution in industrial credit was Tk. 15963.90 million but in 2013 it was Tk.41551
million. That means credit distribution in industrial credit has increased by tk 25587.1
million from 2009 to 2013. The industrial credit as a percentage of total credit has
increased by 3.12 % from 2009 to 2013.

3.23. Geographical area basis distribution of loans and advances for year 2013:

53

SL.No.

Particulars

Taka in millions

Percentage

Dhaka Division

180,960.03

70.67%

Chittagong Division

37,983.00

14.83%

Khulna Division

15,769.00

6.16%

Barisal Division

2,569.00

1.00%

Rajshahi Division

9,644.00

3.77%

Sylhet Division

1,554.00

.61%

Rangpur division

7,593.00

2.97%

Table 3.13: trend of area basis loans and advances

Source: Janata Bank Limited, Annual report 2009-2013
Graphical Presentation:

Figure-3.20: Geographical area basis distribution of loans and advances

Interpretation:
The above diagram shows that Janata Bank Limited distributed large portion of its
total credit in Dhaka Division. In Dhaka Division JBL distributed 70.67% whereas

54

bank distributed 14.83% in Chittagong Division and 6.16% in Khulna division. It has
been viewed that only 1% of their geographical credit distribution goes to Barisal
division and .61% goes to Sylhet division and 2.97% in Rangpur division.

3.24. Classified Loans and Advances as a percentage of Total Loans and

Advances:

year

2009

Classified Loans and Advances (Tk.

2010

2011

2012

2013

19230

14630

13,424

11,192

14343

Classified Loans and Advances as a 15.87%

10.11%

8.07%

4.96%

5.56%

in Millions)

percentage

of

Total

Loans

and

Advances
Table 3.14: trend of Classified loans and advances
Source: Janata Bank Limited, Annual report 2009-2013
Graphical Presentation:

Figure-3.21: Classified Loans and Advances

55

Figure-3.22: Classified Loans and Advances as a percentage of Total Loans and

Advances
Interpretation:
The classified loan has decreased over the years except in 2013. The classified loan as
percentage of total loan has decreased from 15.87% in 2009 to 4.95% in 2009. This is
good sign for the loan. However the classified loan as a percentage of total loans has
increased in 2013.
3.25. Bad/Loss for classified loans and advances:

year
Bad/Loss for classified loans

2009

2010

2011

2012

2013

15145

11694

10250

9399

10195

78.75%

79.93%

76.36%

83.98

71.08

and advances(Tk. in
Millions)
Bad/Loss percentage of Total
Loans and Advances
Table 3.15: trend of Bad/Loss for Classified loans and advances
Source: Janata Bank Limited, Annual report 2009-2013

Graphical Presentation:

56

Figure-3.23: Bad/Loss for classified loans and advances

Figure-3.24: Percentage Bad/Loss for classified loans and advances

Interpretation:
The graph shows that, the Bad or Loss as a percentage of Classified Loans and
Advances of janata Bank Limited has fluctuated over the years. In 2009 the Bad or
Loss as a percentage of Classified Loans and Advances was 78.75% but in 2013 it
stood at 71.08%. This indicates that bank has succeeded to prevent its classified loan
to become bad or loss.

3.26. Income from Investment:

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year

2009

2010

2011

2012

2013

Income From Investment (taka

1574

4157

5602

6956

6109

7.19%

7.72%

12.09%

6.72%

in millions)
Percentage of Income From 2.81%
Investment
Table 3.16: trend of Income from Investment
Source: Janata Bank Limited, Annual report 2009-2013
Graphical Presentation:

Figure-3.25: Income from Investment

Figure-3.26: Percentage of Income from Investment

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Interpretation:
The graph shows that income from investment has increased from tk 1574 million in
2009 tk 6109 million in 2013. The percentage of income from investment has
fluctuated over the years. The percentage of income from investment has decreased
from 12.09% in 2009 to 6.72% in 2013.

59

Chapter four

Findings, Recommendation
and Conclusion

60

4.1 Major Findings:

The major findings from the analysis of credit management of Janata Bank Limited
are the followings.

The total deposit of Janata Bank Limited has increased over the years. The
growth rate of total deposit has also increased over the year except in 2009.
There is an increasing trend in loan and advances of Janata Bank Limited over
the years. However, the growth of loan and advances has fluctuated over the
years.
Loan and advances in jute and tannery as percentage of total loan and
advances has decreased over the years of analysis.
Janata Bank Limited has increased its loan advances over the years in import,
export and industrial credit.
JBL concentrated more on Dhaka division to provide loan and advances in
2013.
The classified loan as a percentage of total and advances has decreased from
15.87% in 2009 to 5.56% in 2013.

4.2 Recommendation

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The following recommendations can be made based on the findings of analysis of

credit management of Janata Bank Limited.

Bank should give more effort to maintain and improve its trend of deposit by
developing new savings instruments like Probashi Current Account of Brac
Bank Limited that provides the depositors with online banking facility.
JBL provides lower portion of credit in Sylhet and Barisal Division which
were 0.61% and 1.00% respectively in 2013. The bank should increase their
percentage of credit in Sylhet and Barisal Division.
Bank should make valuation of security and mortgage property properly
before sanctioning loan to prevent the loan from being classified.
Bank should monitor the borrower to ensure the proper use of loan.
The JBL should asses the client properly by screenings the information of
client regarding his character, capacity, capital.

4.3 Conclusion:
Credit management is becoming more and more important in today's competitive
business world. It is all the more important in the context of Bangladesh. The tools for
improving management of consumer credit risk have advanced considerably in recent
years. Therefore, as a responsible and reputed commercial bank, Janata Bank has
instituted a contemporary credit risk management system. From the study, it is evident
to very sector and preferential treatments to some big clients should also be stopped.
However that the bank is quite sincere in their approach to managing the consumer
62

credit risk though there are rooms for improvement. They have to be more cautious in
the rec, they follow an in-depth procedure in assessing the credit risk by using the
credit risk grading techniques which provides them a solid ground in the time of any
settlement. From the discussion in this report, it has become clear that credit risk
management is a complex and ongoing process and therefore financial institutions
must take a serious approach in addressing these issues. They have to be up to date in
complying with all the required procedures and must employ competent people who
have the ability to deal with these complex matters. Utmost importance should be
given to environment and obviously for efficient and effective credit risk management
process.

BIBLIOGRAPHY

C.R Kotheri, Research Methodology, Second Edition, 2003-2004, Wishwa Prakashan,

Calcutta, India.
Janata Bank Limited, Annual Report of Janata Bank Limited 2009
Janata Bank Limited, Annual Report of Janata Bank Limited 2009
Janata Bank Limited, Annual Report of Janata Bank Limited 2013
Janata Bank Limited, overview of Janata Bank Limited <http://www.janatabank-

bd.com/jb1.htm> viewed 17 October 2013.

Maheshwari ,S.N. Banking law and practice, 11th edition,2013
63

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