CHAPTER-ONE INTRODUCTION

1.0 Introduction 1.1 Origin of the Study

Now we are living in the age of competition at anything in any places. From that tendency recently Education is also in the age of competition. So different universities and institution in our country upgrade the procedures and standards of teaching. In respect to that, internship is mandatory for our BBA program offered by university. This program is a partial fulfillment of our BBA curriculum. To do so my respected teacher has given me a topic about Banking sector that The General banking and Credit Operation: A Study on Premier Bank Limited

1.2 Objectives of the Study

Every task has a particular aim. A study without objectives cannot reach the destination. My internship program was also directed to some particular targets. The main objectives of this study are General Banking and Credit Operation: A Study on Premier Bank Limited. For searching the overall customer related job I had to find out the general Banking and Credit operation department at this branch. So the objectives of the study conducted in the Premier Bank Limited are mentioned as under: To be apprehended about real banking operations. To know the functions of Premier Bank Limited. To identify the customer servicing systems of the Bank. To detect the employees capability to provide quality service. To find out deviations from theories and reasons of deviation. To make SWOT analysis and recommend if necessary.

1.3 Rationale of the Study

Three types of schedule commercial banks are in operation in our economy. They are Nationalized Commercial Banks, Local Private Commercial Banks and Foreign Private Commercial Banks. PBL has discovered a new horizon in the field of banking area, which offers different General Banking, Credit scheme, Investments and Foreign Exchange banking system. So I have decided to study on the topic General Banking and Credit Operation: A Study on Premier Bank Limited. As the Internship program of the university is an integral part of the BBA program, it is obligatory to undertake such task by the students who desire to complete and successfully end-up their BBA degree. This also provides an opportunity to the students to minimize the gap between theoretical and practical knowledge. During the internship program the teachers of the department are attached to actively and constantly guide the students. Students are required to work on a specific topic based on their theoretical and practical knowledge acquired during the period of the internship program and then submit it to the teacher. That is why I have prepared this report.

1.4 Scope of the Study

This report has been prepared through extensive discussion with bank employees and with the customers. While preparing this report, I had a great opportunity to have an in depth knowledge of all the general banking formula and credit management activities practiced by Premier Bank Ltd. It also helped me to acquire a first hand perspective of a leading private Bank in Bangladesh. Specifically the report covers the following areas: Background of Premier Bank Ltd. General Banking of PBL Credit Management by Premier Bank Ltd.

1.5 Methodology of the Study

The study is performed based on the information extracted from different sources collected by using a specific methodology. This report is analytical in nature. The methodology is as follows. Population: All the Branches of PBL located in everywhere in Bangladesh has been taken into consideration as population. Special focus is given on Meghnaghat Branch where I have completed my internship. Data collection: Source of data of this report can be divided into two categories: Primary Sources Face to Face conversation with the respective officers and staffs. Interviewing officers and staffs. Sharing practical knowledge of officials. Relevant file study provided by the officers concerned. In-depth study of selected cases.

Secondary Sources Annual Report of PBL Audit Reports Website Relevant books, Research papers, Newspapers and Journals. Internet and Study of selected reports. Different Circulars of Bangladesh Bank. Different guidelines of Head Office, Premier Bank Ltd.

1.6 Limitations of the Study

I have tried to present the paper with a very cautious approach. To prepare the report I had to gather different relevant, books, brochures, journals and annual reports of the concerned banks. To prepare this paper I had to face the following constraints: 1. I have seen that it is hard to do the office job and prepare the report at a same time. To collect data I had to visit different libraries and offices, but I used to work in the office from 8.45 AM to 6:30PM. Therefore, it was very tough to arrange the time for report writing and data collection. 2. Unavailability of sufficient written documents as required for making a comprehensive study. 3. As a Bank org. the officers are involved with various functional areas of Premier Bank Ltd. are very busy. So they cannot give me sufficient time as I am required. 4. Due to maintain secrecy they avoid some of my question specially the actual amount of specific items. It is hampered my analysis. 5. On-line system also briar for my study. Because they do all transaction and record by automation system. Due to maintain secrecy they are not allowed to use their On-line. 6. Some officers were absent and some were on their job training when I was carrying on my internship.

CHAPTER-TWO
OVERVIEW OF PREMIER BANK LIMITED
2.1 Introduction
Premier Bank Limited, (PBL) Service First is a fast growing private commercial bank and it is already at the top slot in terms of quality service to the customers and value addition for the shareholders. Yes, in the backdrop of economic liberalization and financial sector reforms, a group of highly successful local entrepreneurs conceived an idea of floating a commercial bank with a different outlook. For them it was competence, excellence and consistent delivery of reliable service with superior value products. Accordingly, The Premier Bank Limited is incorporated in Bangladesh as banking company on June 10, 1999 under Companies Act.1994. Bangladesh Bank, the central bank of Bangladesh, issued banking license on June 17, 1999 under Banking Companies Act.1991. The Head Office of the Premier Bank Limited is located at Banani, one of the fast growing commercial and business areas of Dhaka city.

2.2 Vision of the Bank

The Bank has clear vision towards its ultimate destiny - to be the best amongst the top financial institutions.

2.3 Missions of the Bank

To be the most caring and customer friendly provider of financial services, creating opportunities for more people in more places.

To ensure stability and sound growth whilst enhancing the value of shareholders investments.

To aggressively adopt technology at all levels of operations to improve efficiency and reduce cost per transaction.

To ensure a high level of transparency and ethical standards in all business transacted by the Bank.

To provide congenial atmosphere which will attract competent work force who will be proud and eager to work for the Bank.

To be socially responsible and strive to uplift the quality of life by making effective contribution to national development.

2.4 Objectives of the PBL

PBL is ready to improve the highest quality customer service through new. IT products & services such as ATM. ONLINE BANKING & POINT OF SALES transaction. The Major objective of PBL is to maximize profit through customers satisfaction. The bank plays a vital role in socio-economic development of Bangladesh by developing worldwide network in domestic & international operations.

2.5 Salient Features of PBL

Premier Bank is engaged in conventional commercial banking as well as

Islamic banking based on Islamic Shariah Principles. It is the pioneer in introducing and launching different customer friendly

deposit schemes to tap the savings of the people for channel ling the same to the productive sectors of the economy.

For uplifting the standard of living of the limited income group of the

population, the Bank has introduced Retail Credit Scheme by providing financial assistance in the form of loan to the consumers for procuring household durables.

The Bank is committed to maintaining continuous research and development

to keep pace with modern banking. The operations of the Bank are computer oriented to ensure prompt and

efficient services to the customers.

2.6 About PBL

The Premier Bank Limited provides various commercial banking products and services in Bangladesh. It offers various deposit products, including savings accounts, current accounts, corporate accounts, short term deposit accounts, fixed deposits, double benefit schemes, monthly income schemes, monthly savings schemes, and education savings schemes. The company also provides project loans, working capital loans, trade finance, house building finance, contractors financing, receivable financing, cash credit, over drafts, packing credit, trust receipts, guarantees, and letters of credit. In addition, it offers various credit schemes, including lease finance, consumer credit schemes, doctors loan schemes, small and medium business loan schemes, student credit schemes, rural credit schemes, and agro processing loan schemes. Further, the company provides locker, online banking, and SMS banking services. It operates approximately 38 branches and 5 SME service centers. The company was incorporated in 1999 and is headquartered in Dhaka, Bangladesh.

2.7 Board of Directors

The Board consist of 15 (Fifteen) Directors. The members of the Board of Directors of the Bank hold very respectable positions in the society. They are from highly successful group of Business and Industries in Bangladesh. Out of 15 members one is from Taiwan. Each member of the Board of Directors plays a significant role in the socio-economic domain of the country. A list of the Directors and their shareholding along with associated business is given below:

Dr. H.B.M. Iqbal

Chairman Dr. H.B.M Iqbal

Mr. B.H. Haroon M.P Vice Chairman

Mr. Abdus Salam Murshedy Director

Mr. Shafiqur Rahman Director

Mr.Yeh Cheng Min Director

Mrs. Shaila Shelly Khan Director

Ms. Nawrin Iqbal Director

Mr.Shah Md. Nahyan Haroon Director

Ms. Parsa Amin Director

Mr.Md. Lutfur Rahman Director

Mr.Md. Masud Zaman Director

Mr.Kazi Abdul Mazid Director

Mr. Niaz Habib Managing Director

Management Committee

Mr. Niaz Habib Managing Director

Mr. Abu Haniff Khan Additional Managing Director

Mr. Mokhlesur Rahman Additional Managing Director

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2.8 Management Hierarchy of PBL

Managerial decision-making authority starts from the Principal Officer. The top-level authority goes to the Chairman, the Board of Directors and the Managing Director. Deputy Managing Director Senior Executive Vice President Senior Vice President Vice President Senior Assistant Vice President Assistant Vice President Assistant Vice President Senior Executive Officer Executive Officer Principal Officer Senior Officer Officer Junior Officer 11

2.9 Branch Network of PBL

PBL is operating through 30 branches located in Dhaka, Chittagong, Khulna, Rajshahi, Sylhet, Jessore, Barisal, and Narayangong where the Local branches along with the Principal Branch in Dhaka.

Existing Branches
Chittagong Division Rajshahi division
Rajshahi.

Dhaka Division
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.

Khulna Division 1. 1. 1.
Khulna. 2.

Sylhet Division 1. Sylhet Branch. (IBB)

Barishal Division
1. Barishal .

1. Agrabad. 1. Motijheel. 2. Khatungonj. Dilkusha. 3. Nazim Road Branch. Gulshan . Banani. Mohakhali. Bangshal. Kawran Bazar. Elephant Road. Mohakhali. Dhanmondi. Uttara. Dhaka EPZ. Kakrail. Meghnaghat. Savar bazaar. Narayangonj. Imamgong. Tongi. Bhairab Bazar . Joyedebpur. Ashugong. Zinzira.

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CHAPTER-THREE
GENERAL BANKING OF PREMIER BANK LIMITED
3.1 Account opening:
A person is treated as a client when he/ she open an account on the bank. Then it becomes a contractual relationship between bank and client. The account opening section of Premier Bank Ltd. Meghnaghat branch is very important section. This section takes care of all the relevant duties related to the opening of account. There are different types of account facilities provided by this branch. These are: 1. Current deposit (CD) 2. Saving deposit (SB) 3. Fixed deposit (FDR) 4. Short term deposit (STD) 5. Pension Saving Scheme (PSS) 6. Education Saving Scheme(ESS) 7. Marriage Saving Scheme (MSS) 8. Bearer certificate deposit (BCD).

3.2 Account opening Process:

Step 1 Step 2 Receiving filled up app. form in banks prescribed from monitoring what type of a/c is desired to open. App. form is filled up by the applicant himself/ herself. Two copies of passport size photograph from individual are taken, in case of firm photo of all partners are taken. Application must submit with required document. Introducer must sign application. Card must bear specimen signature. Authorized officer accepts the application. Minimum balance is deposited only cash is accepted. Account is opened and a cheque book and pay-in-slip book is given.

Step 3 Step 4 Step 5

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3.3 General condition of governing accounts:

1. The law rules and regulation of Bangladesh usual custom and procedures common to Banks in Bangladesh will apply to govern the conduct of account opened with the Bank. 2. Any person opening an account will be deemed to have read, understood and accepted the rules governing the account. Minimum balance to be maintained in current A/C. Tk. 10,000/- and in savings A/C Tk. 5,000/3. A suitable introduction by an introducer acceptable to the Bank is required prior to opening of any account. Recent photographs of the account openers duly attested by the introducer must be produced. 4. Each account will be given one account number. This number is to be properly quoted on all letters and/ or documents addressed to the Bank and on all deposit slips. The Bank will not responsible for any loss or damage occurring as a result of wrong quotation of account number. 5. Interest/ commission/ service or maintenance of account charge will be levied by the Bank as determined by the Bank from time to time and as per Bangladesh Bank regulation. 6. The funds available in any of the account holders account (the customer) with the Bank will be considered by the Bank to be a security for any commitment(s) and/ or obligation(s) present and/ or future of the customer to the Bank. In the event of dishonor or non-fulfillment of such obligation(s) and/ or commitment, the Bank is entitled without giving prior notice to the customer to utilize such funds against the obligation(s) and/ or commitment of the customer to the Bank. 7. Any statement of account dispatched to the customer will be considered as approved unless discrepancy (ies) is notified in writing to the Bank within 15 days from the date of dispatch. The Bank is not responsible for the delays or non-delivery due to mail problems. Statement of accounts to be picked-up will be considered as approved even if not pick-up 15 days after the date they are produced. Statements of accounts are not produced when there is no operation during the Month. Those can be obtained on special request. 14

8. Account holders must provide maximum security to the cheque books in there permission and the Bank is not responsible for any loss or misuse must be immediately reported to the Bank and confirmed in writing without delay. 9. When cheques deposited are payable by other Banks or outstation they are available after clearing or collection only. Service charge will be charge @ Tk. 100/- in current account and Tk. 50/- in savings account yearly or as charge by the Bank from time to time as and when required. 10. The Bank reserves the right to close any account without giving prior notice if the conduct of the account is unsatisfactory in the opinion of the Bank or for any other reason(s) what so ever. 11. The balance in the account(s) is payable solely at Premier Bank Ltd. and shall be govern by and subject to laws in effect in Bangladesh. As used herein laws will includes Bank circulars, Modification, regulation and order of the government and Bangladesh Bank including practice in Banking. 12. The Bank reserve the right to amend the present rules at any time in any manner with or without giving prior notice to the account holder(s) separately of to the public. The chequebook will not be issued unless and until all the required formalities are completes.

3.4 Closing of an account:

A customer may close out his/ her account at any time by submitting an application to the branch. The customer should be asked to draw the final cheque for the amount standing to the credit of his account less the amount of closing (Tk.-50/- in PBL) and other incidental charges and surrender the unused leaves of the chequebook. In case of joint account all the joint account holders should signed in the application for closing the account. On receipt of the application the following steps are taken: a) The signature of the account is verified. b) The number unused leaves of the chequebook shall be noted thereon. c) The manager will approve the application. d) Incidental charge should be debited the account. e) The account holder is advised to draw the remaining balance from the a/c.

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3.5 Cheque
A cheque is treated as an important document in the branch. Cheque is an instrument in printed from containing an unconditional order signed by the a/c holder directing a certain person to pay a certain amount of money only to or to the order of a certain person or the bearer of the instant. 3.5.1 Issue of a cheque book: The in charge of the department stock of the cheque book will get to know and to allow entering the DCBIR (Department cheque book issued register) Separate folios of the register are allotted for CD A/C of cheque book of 100 leaves and 10, 15, 25, 50 for SB A/C At the time of opening an A/C the customer is required to sign a cheque book requisition slip (No.S.F.-73) if the A/C opening form is found complete in all respect a cheque book is issued to the client. The account number is written in each page of the chequebook and its requisition slip. The name and account number of the client is also entered in the CBIR The requisition slip should be preserved as voucher. 3.5.2 Loose cheque is issued if The party requires a loose cheque & has the loose check requisition slip supplied to him by the bank. An officer who personally knows him attests the requisition slip. The officer in charge deposit department verifies the signature of the account holder. The approval of the manager has been obtained to issue that loose cheque. The name of the account holder, his account number, date of the loose cheque issued and the amount to be drawn is written of the cheque and its counterfoil. A stamp bearing the bearing the title LOOSE CHEQUE is affixed on the face of the cheque at top under authorized signature.

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3.6 Remittance Section

Remittance means transfer of money from one place to another. In banks it is done in the form of DD (Demand Draft), TT (Telegraphic Transfer) or pay order. The details are as follows:

3.6.1 Demand Draft (D.D.)

Demand draft is that kind of instrument which is payable on demand. A branch issues it to another branch containing and order to pay a certain amount of money to ascertain person. To issue a D.D. the sender of the D.D. should have and A/C with that Issuing Branch. D.D. can be send from one branch to another by cash or cheque. Every bank charges a certain amount as commission for issuing a D.D. the commission is 15% of the worth of DD+VAT (commission*15%) + Telex Taka 40 The Flow chart of the total procedure of issuing Demand Draft is as follows:

Purchaser has an A/C with the branch & purchaser a DD

DD is in favor of a person or a company

The beneficiary deposits the DD in his A/C

His A/C is credited the draft is collected or cleared.

Against Cash: The Customer is asked to complete a form (No. Sf-18) which is treated as an application as well as credit voucher for H.O. Account (Br. Concern). Commission Charges are calculated and inserted in the form. The voucher than given to the customer to deposit the amount. The cashier receives the cash and delivered the voucher to the remittance department against initial in his book.

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Then the draft is prepared and entered in the D.D. issue register. The amount of the draft is protected by the protect to graph. Then the draft No. is written of the voucher.

Draft book and the voucher along with register are sent to officer in charge of the remittance department for part -11 tests, verification and signature. The draft and the voucher are sent to general section head for part-1 test and signature. Then a memorandum is issued to the customer if be desires so.

Payment of D.D.: The followings should be checked before payment of D.D.: D.D. is drawn on the branch. Issuing branchs rubber stamp is fixed. Amount in word & the amount in figure should be same. Verify the test number is tested. The payee must be properly identified in case of cash payment. If D.D is placed before arrival of IBA then make the payment by debiting. Suspense A/C. D.D paid without advice, advice will come than. Particulars of D.D payable & D.D paid without advice is entered in the respective register.

3.6.2 Pay Order:

If any person wants to transfer money within the local areas, where the bank located, then pay order makes the transfer. Difference between Pay Order and Demand Draft is in terms of place only. Pay order is issued for remitting money within the city whereas D.D is issued for within the country. Issue of Pay-Order: To issue a Pay Order the party should maintain an A/C with the bank. The bank also allows special customers without A/C for pay-order in special circumstances. The main feature of

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pay order is that in where (that is in which branch) the P.O. is issued the party should encash the money from the same branch.

Table: charges of issuing pay order: Amount up to (Tk.) 1,00,000 5,00,000 Above 5,00,000 Charge rate (Tk.) 25 60 75 VAT (Tk.) 4 9 11

The procedure for selling P.O. is as follows: a. Purchaser must be an account holder of PBL, Meghnaghat Branch. b. Depositing money with P.O. application form. c. Giving necessary entry in the bills payable (PO) register. d. Payees name, date, P.O. no etc. e. Preparing instrument. f. After it has been scrutinized & approval by higher authority, the instrument is delivered to customer. Signature of customer is taken in the counterpart. Practice and operation of Pay Order (P.O.): Types of P.O.: Account payee only : Only can encash it by depositing it in account. Blank crossed Cash payment Settlement of a P.O.: When P.O. submitted by collecting bank through clearinghouse, the issuing bank gives payment. Thus banks liability is settled by debiting bills payable. But before giving payment it should be examined whether endorsement was given by the collecting bank or not. If not her instrument is dishonored marking Endorsement required. : Any one can encash it by depositing in their account. : Identification regarding payee.

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Collection of P.O.: A customer of PBL who is the payee of a P.O. will deposit it for collection. The instrument is given to the clearing that will place it to the issuing bank in the clearinghouse. Before placement, PBL as a collection bank gives necessary endorsement.

3.6.3 Telegraphic Transfer (T.T):

This is the most usable instrument in remittance section. In local office, T.T is generally done by telex, telephone is also used necessary. Issue of T.T: To issue a T.T the party should maintain an A/C with that issuing Bank. Then a. The customer is asked to complete an application that is also treated as credit voucher for head office account (Branch concern) b. Telegram charges are also recovered from the customer and are credited to income account telegram charges covered a credit voucher is prepared for the customer. c. Text of telegram is written and handed over. d. Then the massage is typed on the form. e. The original telegram & confirmation is sent to the dispatch department. f. IBCA is prepared in duplicated. A Separated register is maintained for T.T issue. Telegraphic transfer is one of the fastest means of transferring money from one branch to another or from one place to another. The T.T issuing bank instrument is given for T.T both parties should have account, as money is transferred. Outgoing T.T- Its Procedure: a) Application by customer along with money given. b) In receipt of money a cost memo is given to the customer containing T.T serial number. The customer informs this number to the awaiting party in the other branch.

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c) Tested fax message is prepared, where T.T serial number of the concern party to whom the money will be credited is mentioned. d) Activity report is received from the telex department confirming transmission of message. Incoming T.T- Procedure: a) After receiving the fax message it is sent for test agree. b) T.T serial number is scrutinized in the T.T in concern branch register.

Payment of T.T: The payment of T.T requires a lot of paper works. Vouchers are made. At first H.O. concern bank is debited with T.T payable credited. Then the T.T payable is debited with partys A/C debited. The receiving party can also take the cash after his A/C is credited. For the payment of T.T caution must be taken because various fraud and forgery. So test no. is required for security.

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CHAPTER- FOUR
SERVICES OF PREMIER BANK LIMITED
PBL is offering 5 types of services. This are-

4.1 Retail Banking

The Retail Banking Division comprises the domestic branch network with the specialized customer credit, real estate finance. Retail banking deals with the banking services to the individuals. Premier Banks retail banking strategy is aimed at keeping as closely in tune with their customers needs as possible and further improving the quality of advisory services. As a result, PBL offers different product ranges to different target groups. It includes the following: Deposits Services: Individuals may open current, savings, STD, fixed deposit Wage Earners Services: PBL offers a few innovative schemes to Customer Loans: PBL provides consumers loan services.

accounts. Bangladeshi wage earners working overseas.

4.2 Institutional Banking

Premier Bank Limited offers various services to foreign mission, NGOs and voluntary organization, consultants, airlines, shipping lines, contractors, schools, colleges, universities, donor agencies and consultants. The services include the following: Deposit scheme 22

Current accounts in both Taka and major foreign currencies. Convertible Taka accounts Local and foreign currency remittances.

Various types of financing to cater to the banking requirements of multinational clients.

4.3 Corporate Banking

A professional account management team caters to the needs to corporate clientele and provides a comprehensive range of financial services to national and multinational companies. Its services include: Corporate deposit accounts Business lending Merchant banking Small and medium enterprises Readymade garments Projects finance investment, constancy and other finances. Syndicated loans. Local and international treasury products. Bonds and guarantees. Skilled and responsive attention to varying lending needs

4.4 Commercial Banking

Being a commercial Bank PBL provides comprehensive banking services to all types of commercial concerns. Some of the services are: Trade finance Issuing of import L/Cs. Advising and confirming export L/Cs. Bonds and guarantees. Investment advice. Project finance opportunities for import substitution and export oriented project. 23

 Leasing: It is a very flexible arrangement, which is tailored to suit most requirements of its clients. Lease financing by Premier Bank is a unique means of funding a firms need for capital equipment without actually lending to the firm.

4.5 Correspondent Banking

Services of correspondent banks include: Current accounts services where settlement is necessary. Issue bonds and guarantees in support of their customer business. Advise letter of credit and negotiation of documents. Market intelligence and status report.

4.6 Deposit:
Savings Account Current Account Corporate Account Short Term Deposit Account Fixed Deposit Special Deposit Scheme Monthly Income Scheme Monthly Savings Scheme Education Savings Scheme

4.6.1 Savings Account: The PBL pays interest (7.0% p.a.) on daily balances on Savings Accounts. Most of the Banks in Bangladesh pay interest on monthly minimum balance. So, if the account holder is maintaining say Tk. 10.00 Lac in his Savings Account with present Banker for 29 days and his deposit balance drops below Tk. 1000 even for a single day, then the account holder is

24

not getting any interest on that amount. There are also several restrictions on withdrawal from the Account to qualify for interest. In Premier Bank, however, the account holder will get interest on any amount that you keep in the account. There is no restriction for withdrawal from the account and we are paying interest @ 7.00 % p.a. on daily balance. PBL hopes that the account holder will take full advantage of this offer and place your deposits with our Bank to earn more. 4.6.2 Current Account: The current account is very much suitable for the businessman or in the name of a company. This account holder does not get any interest but can draw any amount and many times even a single day. Bank charge and excise duty are imposed here. 4.6.3 Corporate Account: PBL is also paying interest @7.00% p.a. on daily balance for corporate customers. It is a savings account that operates like a virtual current account. There is no restriction on withdrawal. Now the account holder can have all the features of current account with the interest of savings account. 4.6.4 Short Term Deposit (STD) Account: PBL pays interest @ 6.50% p.a. on the daily closing balance of Short Term Deposit (STD) Account. Interest is payable on daily closing balance. Any individuals and corporate bodies can open STD account. 4.6.5 Fixed Deposit: PBL pays very competitive rate of interest on Fixed Deposit (FDR). Indicative rate for oneyear deposits at present is 11.50% p.a. The account holder could also deposit for 1/2/3/6/12/24/36 months term - The choice is yours.

Term 1 Month 3 Month

Rate of Interest (% p.a) 9 11.50

Tk. 100 Lac and above (% p.a) 9 11.75

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6 Month 1 Year and above

11.75 12.50

12.00 12.75

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4.6.6 Special Deposit Scheme: Under this scheme, any deposit becomes almost double after 7 years and triple after 10 years. The bank accepts deposit in multiple of Tk. 10,000.00. Terms 5 - Years 7 - Years 10 - Years Initial Deposit Tk.1,00,000/Tk.1,00,000/Tk.1,00,000/Payable at Maturity Tk.1,50,000/Tk.1,80,000/Tk.2,50,000

4.6.7 Monthly Income Scheme: The account holder saving is precious! Let the account holder investment generate a regular monthly income for you through this scheme. The account holder shall get benefit of Tk. 950.00 every month against deposit of Tk. 1, 15,000.00 for 5 years and Tk. 850.00 every month for 3 years. The effective rate of interest is 9.80% and 9.23% respectively. Terms 3 - Years 5 - Years 3 - Years 5 - Years Initial Deposit Tk. 57,500/Tk. 57,500/Tk.1,15,000/Tk.1,15,000/Monthly benefit Tk. 425/Tk. 450/Tk. 850/Tk. 950/-

Deposit of Tk. 50,000 or its multiple is acceptable. 4.6.8 Monthly Savings Scheme: A regular savings pay off when the account holder really needs it. Save small amount in the account holder each month and let the account holder savings grow with time through this Monthly Savings Scheme.

Terms

Monthly deposit

On maturity

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3 - Years 3 - Years 5 - Years 5 - Years

Tk. 500/Tk. 1,000/Tk.500/Tk.1,000/-

Tk.20,750/Tk.41,500/Tk.38,400/Tk.76,800/-

Monthly deposit of Tk. 500 or its multiple is acceptable 4.6.9 Education Savings Scheme: The scheme has been designed to make future educational expenses of your children easier. Against an initial deposit, the bank provides a monthly amount after maturity or payment at a time as the depositor desires. A deposit of Tk. 50,000.00 will be Tk. 80,000.00 after 5 years. You may draw the amount at a time or you may choose to draw by monthly installment of Tk. 1,700.00 for a period of 5 years. Deposit of Tk. 25,000.00 or its multiple is acceptable. Terms (Years) 5 5+5 Minimum Deposit or multiple Tk.25,000/Tk.50,000/Annual Effective Rate 9.85 % 10.05 %

Amount Payable at Maturity 40,000/= at a Time Monthly 850/= (60 Months)

The choice can be in multiples.

4.7 Loans & Advances:

Project Loan Working Capital Loan Trade Finance (Domestic & International) House Building Finance (Commercial & Residential) Receivable Financing Cash Credit Over Draft Packing Credit Trust Receipt Guarantee Letters Of Credit

4.8 Special Credit Schemes:

Lease Finance Consumer Credit Scheme

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Doctors Loan Scheme Small & Medium Business Loan Scheme Student Credit Scheme Rural Credit Scheme - Poverty Alleviation Agro Processing Loan Scheme

Lease Finance: Premier Bank, a fast growing Private Commercial Bank has introduced Lease Finance to facilitate your funding requirement for the procurement of assets in order to grow your business. Premier Bank offers Lease Finance facility for: a) Capital Machinery. b) Medical Equipment. c) Office Equipment. d) Heavy Construction Equipment. e) Lifts, Elevators, Generators, Air conditioners. f) Machinery for Agro based Industry. g) CNG Filling Station. h) Automobiles like Bus, Mini Bus, Truck, Car, Pick up etc. i) Other Costly consumer's durable.

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Benefits of availing Lease Finance: i) Simple Security Arrangements. ii) Prompt service, simplicity and convenient. iii) Financial need meet up without out flowing own fund: Little cash required. Individual can acquire the Lease Assets keeping his Capital intact. Thus leasing helps to build up his fund raising capacity. iv) Tax incentives: Because lease rentals are treated as revenue expenditure and are entirely deductible for lease purpose. v) Extension of credit sources: Leasing does not impair the ability of the Lessee to obtain credit in traditional ways since it does not make any change in the financial structure of the Lessee. vi) Off Balance Sheet item; does not appear in the Lessees Balance Sheet and improves financial Ratios. vii) Financial Flexibility: Through leasing capital will not be tied up with the acquisition of assets. You can invest your costly capital elsewhere for more profitable venture. viii) Sales Aid Device: If you are a Manufacturer / Dealer, you may utilize Leasing as a sales promotion tool for achieving Sales Target. Lease Term: i) In case of Machinery / Equipment (Maximum) up to 5 Years. ii) In case of Vehicle (Maximum) up to 4 Years. Participation: PBL may finance 100% of the Acquisition cost of the Lease Item. Competitive Rate & Charges: Interest Rate, Service Charge and Risk Fund all are competitive and affordable.

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Security: Following collateral securities may be accepted: a) Leased item itself. b) Immovable properties such as Land, Building, etc. c) Encashabel securities like FDR, BSP, Share Certificates of listed companies, ICB unit Certificate, Bank / Insurance Guarantees etc. d) Corporate Guarantees. e) Personal Guarantee of a person acceptable to the Bank. f) Any other Assets acceptable to the bank as security. Lease Rental: The Lessee will pay monthly Lease Rentals through post-dated cheque containing the amount of Rental in each cheque. The Rentals offered by The Premier Bank Limited are modest and more competitive than other Banks or financial Institutions. Lease Deposit: Lessee shall have to deposit 3 months Rentals as Lease Deposit (non-interest bearing Lease Deposit) which shall be refunded /adjusted at expiry of the lease term. Grace Period: In case of Capital Machinery and Equipment, maximum grace period of 6 (six) months may be allowed. Insurance Coverage:

31

The Vehicle / Equipment / Lease Asset(s) shall have to be covered by a Comprehensive Insurance policy throughout the lease term at Lessees own cost in the name of The Premier Bank Limited. The premium shall be on account of the Lessee. Repair and Maintenance: The Lessee is obliged to maintain the Lease Asset(s) in good working order and is solely responsible for any loss or damage as long as it is in his / her possession. Repair or maintenance cost for taking care of normal wear and tear and keeping the Lease Asset in good running condition during the lease period shall be the responsibility of the Lessee. Transfer of Ownership: On final adjustment of the Lease Finance, the Lessee may have an option to purchase the Equipment at the prescribed rate. Besides the above option, the Lessee may renew the lease on year-to-year basis or return the Equipment to the Bank. Consumer Credit Scheme: Objectives: - To extend credit facility to the limited income group. - To develop standard of living of middle and upper middle class people. - To participate in the socio economic development of the country. Purchase of: - Home appliances - Cars - Mobile phones - Furniture - Generator - Water pump etc. Doctors' Loan: Premier Bank found that many Doctors are very much interested to be self-employed but for financial reasons most of them are unable to do the same. Similarly, Experienced Doctors, 32

Specialists and Clinics are also not equipped with the up-to-date Medical tools & equipment for the same financial reason. Premier Bank has introduced easy to afford financial assistance program "Doctors' Loan" to financially assist these qualified Doctors & Medical Practitioners as follows:

Up to 100% Lease Finance for Medical Equipment. Up to 100% Lease Finance for Motor Vehicles / Ambulance Loan for Rental Advance, Office decoration, Furnishing etc.

Some of the great features that our Doctors' Loans offer are:

Quick & easy loan processing. Lower interest rate. Lower charges. Rebate for timely repayment. Longer term of repayment. Early repayment without any penalty.

Eligibility: Registered Doctors & Medical Practitioners, Eye Specialists, Heart Specialists, Child Specialists, Surgeons, Dentists. Also Hospitals, Clinics and Diagnostic Centres owned & operated by the registered Doctors. Security/Collateral & Terms & Conditions:

Flexible Terms & Conditions. Collateral is not mandatory. Three (3) advance Lease/Loan installments. Personal Guarantees. Machineries/Equipments will be purchased under Hire purchase/Lease Fiance/Consumer Credit Scheme and the ownership will remain in the name of Bank (Hypothecated) duly insured until the borrower repays his debt in full.

33

Apartment Loan/Loan for Medical Chamber PBL is not only focusing to improve your professional career but also giving high priority to uplift your living standard by providing Personal Loans. Now individual can also avail personal loan for the following purposes:

Apartment Finance for purchase of residential flat/Chamber up to 50% of value. Repayment can be made in 10 years! Consumer Credit Scheme for purchase of Car, TV, Air Conditioner, Freeze, Computer, Washing Machine etc.

Appling Process: Just call or visit any of PBLs Branches. Officers will be glad to be your financial advisor and provide you the application form and all information in details.

34

CHAPTER- FIVE
FINANCIAL INFORMATION
5.1 PERFORMANCE & GROWTH OF PBL
(In Million Tk.) Particulars
Authorized Capital Paid-up Capital Total capital fund Total Asset Deposits Loans and advances Profit before provision Credit deposit Ratio Income Total expenditure Foreign Trade Remittance % of NPLs to total loans and advances Credit Deposit Ratio Earning per share (Taka) Capital Adequacy Ratio

2004
1000 1000 1312.63 20100.25 18005.20 15383.93 930.93 85.44% 2395.45 1464.52 34108.50 1408.00 0.43% 85.44% 84.40 10.69%

2005
4000 1400 1318.99 22767.84 20290.47 18032.50 899.03 88.87% 2863.86 1964.83 33850.23 1427.40 3.86% 88.87% 32.45 8.24%

2006
4000 1750 1815.58 27170.45 241990.01 20677.68 942.07 85.45% 3622.05 2689.98 38797.18 940.10 4.91% 85.45% 43.63 10.66%

2007
4000 2275 2792.33 32573.19 27114.47 23637.61 998.11 87.18% 4186.33 3188.22 43222.20 1620.60 5.96% 87.18% 4.66 12.66%

2008
4000 1400 3603.03 38723.49 32059.62 30319.53 1272.94 94.57% 5070.04 3797.10 595446.70 2786.40 4.55% 94.57% 38.51 12.71%

35

No of Branches No of employees

21 554

21 605

26 677

27 731

30 834

(Source: Annual Report) 5.2 GRAPHICAL PRESENTATION OF PBL GROWTH 5.2.1 Investment Growth of PBL: Year Tk(in Million) 2004 2750 2005 2240.78 2006 2392.01 2007 3461.45 2008 4107.03

(Source: 2008Annual Report)

In e tm n Go th vs et r w
40 50 40 00 30 50 30 00 20 50 20 00 10 50 10 00 50 0 0 20 04 20 05 20 06 Y ear 20 07 20 08 Fig in million

In e e t v stm n

5.2.2 Deposit Growth of PBL: Year Tk.(in Million) 2004 18005.2 2005 20290.47 2006 24199.01 2007 27114.47 2008 32059.62

(Source: 2008 Annual Report)

36

D p s P itio e o it o n
Fig in million 300 50 300 00 200 50 200 00 100 50 100 00 50 00 0 20 04 20 05 20 06 Y ear 20 07 20 08 D p sit eo

5.2.3 Advance Growth of PBL Year Tk.(in Million) 2004 15383.93 2005 18032.50 2006 20677.68 2007 23637.61 2008 30319.53

(Source: 2008 Annual Report)

A v n eP s n d a c o itio
Fig in million 300 50 300 00 200 50 200 00 100 50 100 00 50 00 0 20 04 20 05 20 06 Y ear 20 07 20 08 A vn d a ce

5.2.4 Operating Profit of PBL: Year 2004 Tk. (in Lac) 930.93 (Source: 2008 Annual Report) 2005 899.03 2006 942.07 2007 998.11 2008 1272.94

37

O perating Profit
1400 Fig in million 1200 1000 800 600 400 200 0 2004 2005 2006 Y ear 2007 2008

5.3 Performance at a glance

(Tk. in million) Particulars Authorised Capital Paid-up Capital Reserve Fund Deposits Advances Investments Foreign Trade Business Foreign Remittance Income Expenditure Operating Profit Fixed Assets Total Assets Book Value per share 2003 1000.00 408.91 130.00 2004 2000.00 557.55 301.08 2005 2000.00 681.45 403.85 2006 2000.00 845.00 543.76 2007 2000.00 1689.99 649.79 2008 2000.00 1689.99 870.22 32059.62 30319.53 4107.03 59546.70 2786.40 5070.04 3797.10 1272.94 298.85 38723.49 184.39

10030.52 18005.20 20290.47 24199.01 27114.47 8095.57 15383.93 18032.50 20677.68 23637.61 1330.20 364.50 1251.76 851.03 400.73 107.90 168.12 2750.00 1408.00 2395.45 1464.52 930.93 149.57 207.69 2242.78 1427.40 2863.86 1964.83 899.03 165.48 203.31 2394.01 940.10 3622.05 2679.98 942.07 163.93 192.44 3463.45 1620.60 4186.33 3188.22 998.11 219.79 145.88 20934.30 33937.38 33571.00 38797.20 43222.20

11096.30 20100.25 22767.84 27170.45 32573.19

38

(Taka) Earning per share Dividend Loan as % of total Deposits Non-Performing Loan as percentage of total Loan Capital Adequacy Ratio Number of Branches No of Foreign Correspondents Number of Employees 67.02 36.35% 80.71% 0.36% 11.76% 17 238 435 84.40 36.84% 85.44% 0.43% 10.69% 21 297 554 32.45 24% 88.87% 3.86% 8.24% 21 345 605 43.63 85.45% 4.91% 10.66% 26 350 677 4.66 87.18% 5.96% 12.66% 27 397 731 38.51 24.00% 94.57% 4.55% 12.71% 30 430 834 10% 7% stock

5.4 Balance Sheet

Balance Sheet at 30 June, 2010 Particulars PROPERTY & ASSETS Cash in Hand (including Foreign Currency) Balance with Bangladesh Bank & Sonali Bank (including Foreign Currency) Balance with other Banks & Fin. Institution Money at Call & Short Notice Investment at cost Loans & Advances Loans, cash credit and overdraft 326,379,920 3,073,542,273 384,326,638 3,218,789,171 320,939,821 2,699,389,111 30.06.2010(Unaudited) Amount in Taka 2009 2008 Amount in Taka Amount inTaka

1,728,450,823 870,000,000 7,885,868,845 41,094,899,636 38,264,148,173

752,698,151 920,000,000 6,513,012,747 33,664,587,265 32,410,471,401

129,698,764 230,000,000 4,292,146,286 30,319,527,312 29,279,443,146

39

Bills discounted and purchased Land, Building, Furniture and Fixtures etc. Other Assets TOTAL ASSETS LIABILITIES & CAPITAL Borrowing:other Banks, Fin. Inst.and Agents Deposits & Other Accounts Current and other Accounts Savings Deposits Fixed Deposits Bills Payable Other Liabilities Total Liabilities Paid-up-Capital Statutory Reserve Other Reserve Retained Earnings Total Shareholders' Equity TOTAL LIABILITIES AND CAPITAL

2,830,751,463 592,659,908 1,465,586,968 57,037,388,373

1,254,115,864 529,550,014 1,360,271,858 47,343,235,844

1,040,084,166 298,846,419 432,943,764 38,723,491,477

1,396,155,449 46,898,797,723 9,499,699,107 2,731,935,420 33,616,183,428 1,050,979,768 3,772,376,876 52,067,330,048 2,914,970,312 1,373,623,526 431,228,753 250,235,734 4,970,058,325 57,037,388,373

1,930,995,165 37,381,956,159 8,908,456,271 3,086,993,046 24,866,054,323 520,452,519 3,392,240,363 42,705,191,687 2,242,284,912 1,148,592,394 433,619,919 813,546,932 4,638,044,157 47,343,235,844

104,100,166 32,059,617,665 7,478,926,349 2,065,441,781 22,046,738,811 468,510,724 3,443,666,968 35,607,384,799 1,689,994,712 870,219,371 555,892,595 3,116,106,678 38,723,491,477

5.5 Profit & Loss Account

For the Half Year ended on 30 June, 2010 (Unaudited) 30.06.2010 Taka Interest Income Interest paid on Deposits & Borrowings Net Interest Income Investment Income Commission, Exchange & 2,262,017,632 (1,549,288,437) 712,729,195 530,466,055 320,066,587 40 30.06.2009 Taka 2,050,563,793 (1,784,722,117) 265,841,676 240,554,018 276,460,408 2008 Taka 3,837,254,457 (2,906,739,580) 930,514,877 372,921,619 608,048,088

Brokerage Other Operating Income Total Operating Income(a) Salaries and Allowances Rent, Taxes, Insurance, Lighting etc. Legal Expenses Postage, Telegram, Telephone, Stamps etc Auditors' Fees Printing, Stationery, Advertisement, etc Chief Executive's Remuneration Directors' Fees Depreciation and repairs of Bank's assets Other Expenditure Total Operating Expenses(b) Profit before Provision(c=a-b) Provision against loans and advances Specific Provision Total Provision(d) Total Profit before Income Tax(c-d) Provision for Income Tax Profit after Taxation Appropriations Statutory Reserve Retained earning for the year Retained earning brought forward Cash Dividend for the year Issue of Bonus Share at Premium Transafer to Dividend equalisation reserve Retained earnings Earning Per Share ( EPS)

257,019,989 1,820,281,826 249,815,583 214,840,671 1,067,437 14,756,740 83,353 81,978,286 2,787,095 1,161,000 33,542,151 95,093,848 695,126,164 1,125,155,662 139,205,000 257,351,672 867,803,990 393,398,656 474,405,334 225,031,132 250,235,734 672,685,400

133,551,480 916,407,582 215,570,045 86,581,244 1,787,818 13,784,072 8,360 36,356,810 4,192,464 776,000 25,882,610 40,671,126 425,610,549 490,797,033

251,816,108 2,163,300,692 390,393,234 123,970,767 4,153,564 23,407,343 295,900 95,035,040 5,981,161 678,800 47,956,049 56,865,383 890,365,205 1,272,935,487 (48,760,000)

(21,456,260) 512,253,293 208,588,739 303,664,554 102,450,659 204,816,290 552,290,200

44,869,050 1,228,066,437 650,745,468 220,427,287 -

3.26

2.71

555,892,595 38.51

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CHAPTER- SIX
CREDIT MANAGEMENT OF PBL
6.1 Know Your Customer (KYC):
The success of a bank and the consistency of its profits depend on the efficiency and safety with which it makes use of its resources- Capital and deposits by lending those resources to various types of borrowers. Selection of customer is important; therefore the first criterion should be Know Your Customer.

42

The major factor in successful lending is ability to judge the Character and Credit-worthiness of the borrower. i) Credit worthiness can be judged on certain general principles, which we should follow in the decision making : a) The integrity of the borrower: - He should be a respectable and honorable man who can be relied on to keep his promises. b) The ability to repay the advance: - This ability will depend on his financial resources, which is meant not only his income but also the property or capital that he possess or will possess. c) The purpose for which the advance is required: - The bank should ensure that the purpose of the loan is such as to make the advance suitable as a matter of banking business. d) The source of repayment of the advance: - The banker should ensure that the product which the borrower has been manufacturing/dealing with, has a good demand in the market. e) The period for which the advance is required: - An advance to a manufacturer to enable him to buy raw materials to fulfill a profitable short-term contract is an advance of temporary character promising sound banking business. ii) Past dealing with the customer may give us a lead to the customers character and trustworthiness, and personal knowledge of the man may confirm any opinion the branch may have formed from the working of an existing account. The branch will also consider the customers local standing, the influence he may be able to exert (e.g. by introducing new customers), and whether he has been a good friend to the bank in the past. Traders or industrialists who require advances for purpose of their business usually have some assets. When advancing to trading customers, therefore, the branch should ask for Balance Sheet and Statements of Income & Expenditure for the previous 2/3 years so

43

that the branch can form an opinion of the value of the customers assets and liabilities, and may obtain a true perspective of the trend of the customers/ borrowers affairs. While meeting an existing / potential customer the officer of the branch must check whether the person with whom he will be dealing with i.e. proprietors/partners/directors are extravagant in personal life style? Living beyond his means? And resort to irregular behavior leading to evasive answers? relationship with us. While considering the business of an individual / entity the branch will value each asset on a forced sale basis. iii) iv) The bank will not grant loans for purely speculative purposes. A business having negative net-worth should not be granted any credit facility if are not covered by cash/quasi cash securities with adequate margin. v) Always refer to Account opening form at the initial stage of your dealings with the customers to establish the identity of the borrower. vi) vii) If the customer is a Public figure the account will be considered a High Risk Account. When opening accounts, the concerned officer must assess the risk that the accounts could be used for money laundering and must classify the accounts as either High Risk or Low Risk. viii) Please get yourself acquainted with, ANTI MONEY LAUNDERING To enable him to form an opinion of their

PROCESSES- prepared by Focus Group on Prevention Money Laundering.

We must establish to our satisfaction that we are dealing with a real person (natural, corporate or legal) and must verify the identity of persons who are authorized to operate any bank or investment, or transact business for the customer.

We suggest an officer of this bank while meeting / discussing with a customer will prepare a file note of the contents of discussion for future reference which may disclose changes of

44

address, telephone number and so on for incorporation/substitution in the AOF and other records.

6.2 Customer Segmentation

Management of credit by segment wise approach is considered effective in the sense that an officer who requires managing in one particular segment gains experience by handling same type of borrowers. And in the course of handling he can expand his experience towards managing and administrating an increased number of accounts with accuracy and confidence. But an officer having number of accounts in various segments, with size and complexity will be constraint to give equitable attention to his job and judgment. More over the segment market approach will create a sense of competition amongst the team members of different segments, which will effectively work towards achieving our annual target for deposit and advance, and a better credit administrative function.

The customer segmentation will be as under: a) Personal segment b) Foreign government segment c) Public sector segment d) Multinational segment e) Local corporate segment f) Others i.e. who does not fall in the above segments

The basic job of our Account officer/Business relationship officer/manager is to manage his risk asset portfolio which, in short, includes appraisal, preparation of sanction advice,

45

documentation,

regular

follow

up,

review

of

the

account

including

restructuring/rescheduling, preparation of periodical return, recovery process etc.

6.3 Discouraged Business Types

The Bank will not grant any facilities to the following Business Types: i) Bridge Loans relying on equity / debt issuance as a source of repayment;

ii) Counter parties in countries subject to UN sanctions; iii) Finance of speculative investments; Finance of Military Equipment/Weapons iv) Bridge Loans relying on equity / debt issuance as a source of repayment; v) Counter parties in countries subject to UN sanctions; vi) Finance of speculative investments; vii) Finance of Military Equipment/Weapons; viii)Highly leveraged Transactions; ix) Lending to Holding Companies; x) Lending to slow moving items; xi) Logging, Mineral Extraction/Mining, Environmentally Sensitive; or other activity that is Ethically or

xii) Lending to companies listed by CIB (Central Bank i.e. Bangladesh Banks Credit Information Bureau) as defaulters or known defaulters / habitual defaulters; xiii)Highly perishable goods stored in godown; xiv)Share lending; xv) Taking an Equity stake in Borrowers etc. We should not grant facilities where our security position is inferior to that of any other financial institution and that: a) Assets pledged / Hypothecated as security should be properly insured. b) Valuation of property taken as security should be conducted prior to granting of loan by a recognized independent valuation firm.

6.4 Cross Border Risk

46

Risk associated with cross border lending. Borrowers of a particular country may be unable or unwillingly to fulfill principle and / or interest obligations. Distinguished from ordinary credit risk because the difficulty arises from a political event, such as: a) Suspension of external payments. b) Synonymous with Political & sovereign risk. c) Third world debt crisis, for example, export documents negotiated for countries like Nigeria. Exceptions can only be granted by the Board.

6.5 Lending Strategy Statement & Risk Asset Management

Abbreviations used in this policy are as under: RAM : Risk Asset Management. ROA : Return on Asset LIM : Loan Against Imported Merchandise LTR : Loan Against Trust Receipt. L/C : Letters of Credit L/G : Letters of Guarantee. M : Million As general guideline companies forming PBL targets should have the following criteria:a) Targets should normally be the top companies and business firms of Bangladesh with a good track record. b) Included in the track record will be annual net worth increase over the past three years. c) PBL should look for a debt / worth relation of 2:1 to maximum 3:1. d) A minimum current ratio 1:1. Exceptions: Borrowing covered at least by 100% of credit balance i.e. Fixed Deposit / Saving Bank balance/ margin etc. in the name of the borrower or guarantor. e) The borrowers integrity and market report must be beyond any question. f) Satisfactory CIB /bank report required. g) Proprietor / partners /directors must have experience in business. h) Where audited accounts are not available actual financials in proper Statements of Income & Expenditure and Balance Sheet form for three years of which the latest one

47

must not be older than three months from the date of submission of proposal should be made available to the bank. i) Minimum after tax profit/ sales margin 5%. j) Annual sales growth must not be less than 10%. k) Minimum annual Net profit from each customer Tk. 2.00 Lac with minimum ROA 3%.

Types of Facilities: Funds based and Non fund based products available with PBL

Amount: up to maximum two/ three times net worth of borrower.

0

Repayment: a) b) c) d) e) f)

Maximum tenure in case of Term Loan 3-8 years; Cash credit / overdraft-12 months; LIM- maximum-120 days; LTR- maximum-120 days; L/C- validity-120 days maximum; L/G- validity maximum 12 months. Margin as per Bank-Customer

relationship.

Pricing: As per Bangladesh Bank and PBLs Pricing. Security: Primary security plus collateral security to be provided for full value of facility with adequate margin. Insurance: In joint names for full value of security plus 10% against FIRE, RSD, Burglary, Earth quake, flood, cyclone, Tempest. (Exemption will be considered on case to case basis). Covenants and Conditions: Only those commodities which are essential consumer items and basic raw materials of the industries having good marketability in short supply should be financed. Duty, sales tax and other landing charges to be borne by the borrowers own sources. Performa for Personal Wealth Statement: a) Name of Borrower with address : b) Name of Proprietor/partner /director with address :

48

c) Name of the owner of the assets : (If assets are owned by more than one Person, please state separately ownership) d) Description of Assets belonging to proprietor /partner/director : Types i) ii) iii) iv) v) vi) vii) Cash Securities Stocks & Shares Receivables Land Building Other Fixed Assets Location Market Price/Value

e) Which of the above assets are encumbered with whom and for what value? f) Connection of proprietor /partner/director with any other business concerns. Provide names of such concerns and percentage of ownership / shares.

Name and Signature of Proprietor / Partner / Director.

49

Risk Asset Management (RAM): Purpose: Effective Risk Asset planning and administration. Objective: Containment of credit losses. Improve profitability of the Bank. Definition of Risk Asset: Risk assets for the purpose of RAM include contingent liabilities such as letters of credit and guarantees also. These contingent liabilities must be treated from a credit approval point of view as having the same credit exposure as funds based assets. Steps in RAM Process: a) Planning: i) Target market criteria - to define desired customer base. Note: Strategy as to desired customer base; consider risk inherent in each market; criteria to define characteristics of an acceptable customer. Understanding of each market-which one shows prospects of growth/ profitability ? ii) Terms of Acceptance of Risk Assets - to define terms of our products (to target customers). Note: Define terms for our products/services to be offered, to produce desired profitability at acceptable risk. Ancillary business? Care! Higher earning prospect cannot justify a bad loan. b) Initiation: i) Client / Prospect Check Vs Criteria.

ii) Evaluation of his needs (know his business and his environment). Note: Bear in mind funds availability; Plan your call. Perhaps you could use visit for a pre-sanction inspection. Do Call Memo. Account Plan.

50

iii) Negotiation: - Terms - Bear in mind customer situation; also the agreed terms of acceptance for the target market. iv) Approval: Compliance with internal credit approval procedure. Note: Facility application package i.e., Credit Memo with full background/financial information, analysis of historical trend, prospects, anticipated profitability vis-a-vis funds based, non-funds and/or exchange business expected. Any exceptions must be listed for approval by appropriate authority.

c) Documentation & Disbursement: Identify particular documents required for each facility and arrange completion. Enlist outside legal assistance where necessary. e.g. when drawing up special consortium / term loan agreements etc. Appraise value of security offered vis--vis Banks needs. N.B.: i) ii) Go through the various items of documentation requiring to be certified in the credit Memo and ensure full completion. Do not disburse until all required documentation is correctly completed. Any exception to this rule must be referred to sanctioning authority. d) Administration: Administration is a continuous process. Effective administration requires a constant and systematic review of the account and client activity. i) ii) iii) iv) Close monitoring of account. Keep abreast with client, his current activity, and expansion/diversification plans etc. Adherence to security requirements. Updating documentation, as required.

51

N.B.: i) ii) iii) iv) v) Be alert to identify any deterioration in the credit. Look for warning signals for early corrective action. Consider down grading, the aim being to highlight risk areas and the need for closer monitoring and control. Plan remedial action in consultation with controlling authority. Remedial Management; work-out; restructure of debt.

A detailed procedure regarding Credit discipline may be based on the following lines:
(i) a) Request for application for facilities in banks printed form; b) Examine the nature of facility required; c) Acknowledge if it merits consideration /reject if the business does not suit us/meets our credit policy requirement / Bangladesh Bank credit restriction. (ii) a) Refer to the liquidity position while considering the facility; b)Consider high yielding, short term, and self-liquidating advances with ancillary business/compensating deposit; c) Prefer quality advances; d) Obtain/prepare credit report on the customer/update the report at least quarterly basis (Banks opinion/CIB reports). (iii) Ensure/request for further documents/papers if a qualitative analysis for accepting the risks is necessary. (iv) (v) Ensure that the borrowing power is in order. Examine Memorandum / Articles of Association with particular reference to borrowing (vi) power.

a) Obtain and examine the security documents.

52

b)Obtain Board resolution, create charge including floating charge on assets hypothecated, book debt and mortgage created in favor of the bank. Assess directors worth and obtain their personal guarantees.
c) Prepare /obtain legal / registered mortgage of the documents/ record in the mortgage

register. d) Diarize the review date of Credit Memo-1/2/3 months earlier from the due date. e) Complete security documentation in all respects/ enter in the security register (safe in) and ledger detailing the security lodged in the safe custody. f) (vii) Insurance of the property Fire, RSD, Burglary, natural calamities. a) Prepare Credit Proposal detailing the terms /obtain approval/ ratification. b) Prepare facility record sheet, which will evidence historical as well as current facilities of the borrowers. c) Call on the customers / prepare call reports /future action program /keep in file. (viii) If risk is acceptable send the customer an offer / sanction letter in duplicate detailing the terms and conditions under which the sanction has been made and obtain the duplicate letter in agreement of the customer duly signed by him. Verify signature and keep the copy in safe custody after obtaining a duplicate for the file. The following points / terms should be kept in mind while preparing the offer / sanction letter: Purpose; Repayment term/tenure/review date; Primary security; Collateral security/ examination of documents by banks lawyer/law charges; Marketability of the security; Valuation of the security; Inventory control/stock report/insurance/ frequent inspection; Rate of interest/commission/quarterly rests; Balance Sheet -Trading Account, Profit & Loss Account/ Cash budget/ Cash flow Statement etc. (ix) flow of cash particularly for repayment daily /weekly/ fortnightly/ annually/ bimonthly/ quarterly/ installments; a) Check on a regular basis main aspects of the cash budget and monitor the

53

b) Ensure that purpose of the facility is properly utilized, no diversification; c) Diarize expiry of insurance policy cover/ record details of the insurance in the insurance register; d) Ensure fortnightly / monthly stock statements/ find out the drawing power / record the value of the stock/ book debts in the stock register; e) Inspect stocks periodically preferably jointly by selective officers; f) Follow Bangladesh Bank regulations. (x) a) Pledge of goods - counting /stacking / recording - ensure method is strictly followed if The quality of goods is dependant on long storage; b) Obtain letter of disclaimer from the godown owner. c)Undertake periodical stock inspection. Bring irregularity to the notice of the concerned account / credit officer / manager immediately d) Display signboard inside and outside the warehouse inscribing under Lien / pledge to The Premier Bank Limited. e) Engage approved C & F agents for clearing and storage of the goods. (xi) (xii) Arrange credit file / segmentation. Follow-up audit / inspection comments

A regular monitoring of the account is imperative to avoid any irregularity that might creep in during the course of the facility. It is also their duty to check the periodical statements pertaining their accounts to ensure correct reporting with brief necessary comments /remarks, and for timely submission to the reporting authorities. Last but not the least we require to examine that an account has not become time barred under the law of limitation.

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6.6 Restrictions on Loans & Advances

a) PBL will not make or commit any facilities to an entity or a number of entities under the ownership of one customer, which exceeds 50% (Fund based 25% & Non fund based 25%) of the capital fund of the bank without obtaining Bangladesh Bank approval. b) Similarly PBL will not make or commit any unsecured and/ or secured facilities to the own Bank Director(s) or his /their dependants exceeding 50% of the shares hold by any Directors subject to a maximum amount of Taka One million without the approval of the Banks Board of Directors and Bangladesh Bank. c) Clearance of Bangladesh Bank, Credit Information Bureau (CIB) is required for granting Credit facility of any amount in order to ascertain that the prospective borrower has no classified loan with other Bank(s). d) PBL will not grant any facility to a customer having default loans outstanding with another bank. e) Our Bank will not grant Loans/Advances against security of its own shares. f) Our Bank will not grant advances to a minor or a company where a minor is holding the majority share.
g) PBL will not make loans against second mortgage of properties whose value is equal and

secured by 1st mortgage. h) PBL will not make advances / loans to enable the borrower to speculate in shares and debenture and / or commodities for hoarding purposes. i) PBL will not make advances against properties in locations where we do not have a branch. j) PBL will not grant loans against accommodation bills. k) PBL will not issue a guarantee of any type whose expiry is beyond three years without having 100% margin.

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6.7 Policy of Financing to Ready Made Garments Industries (RMG)

It may be mentioned that following types of financing are made to export oriented garment / textile industries: a) Capital financing (Term Loan) for import of machinery. b) Back to Back L/C facility. c) Packing Credit facility and d) Negotiation/purchase of export bills. Financing to export oriented Garments industries is lucrative and remunerative to the Bank in the following considerations: i) Major finance is in the form of BTB L/C which is non-funded. ii) Bank earns from export oriented RMG finance in different form: a) b) c) d) L/C commission; Acceptance commission; Exchange Gain; Interest and other miscellaneous income.

iii) It is self-liquidating from export proceeds. iv) Once a Garment client inducted it become a captive client for future & continuous Back to Back L/C, Export and other allied business. v) It is Bulk Credit. vi) It continues throughout the year and not seasonal. vii) Moreover, it contributes to the national economy in generation of Foreign Exchange as well as Employment. Side by side, financing to Garments sector is associated with considerable risk, which are as follows: i) Export failure with resultant stock-lot is a common phenomenon in this sector for various reasons. Once stock-lot is created, Banks finance of large amount get stuck-up.

56

Exporters are not in a position to repay Banks dues from their own source until the export of stock-lot is made. ii) The exporters generally cannot provide adequate collateral security compared to the quantum of credit facilities exposing the Bank to risk. iii) It is Buyers market. Very often, buyers refuse payment of export bills on flimsy ground and bargain for exorbitant discount, causing shortfall in adjustment of Banks dues. iv) Global Economic and Political conditions usually affect the RMG Sector to a great extent. Knit Garments enjoy cash subsidy from the Government, timely release of which by the Government is also very essential. However, recent Government move is to withdraw this facility.

In view of the above advantages as well as the risk factors the Bank should be very selective in allowing finance in the sector. For safety of Banks finance in Garments sector, the following points are to be taken in view: i) PBL should avoid Project / Capital Finance in RMG & give preference for working capital financing to self financed projects. However, our existing factories shall be allowed to import additional machinery for balancing / expansion purpose. ii) PBL should induct only those clients who have minimum 5 years experience in this line & has and excellent proven track record. iii) The credit limit should be consistent with the production capacity & performance of the factory. iv) Back to Back L/Cs should be opened after examining the Credit report, reputation and past performance of the buyers as well as of the export L/C opening Banks. v) There should be sufficient time gap between arrival of fabrics, accessories and validity of export L/C for completing production of RMG to ensue export shipment in time to avoid stock-lot. Minimum 60 days gap is preferable.

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vi)

Effective follow-up, supervision and monitoring at the respective Branch should be made. At least once a month the factory should be visited to evaluate performance & a report be submitted.

vii)

Adequate collateral securities should be insisted against Garments finance. Additionally 2.50% to be deducted from each export bills to build up FDRs which should be held under lien as security. The deduction to be made up to 20% of limits sanctioned /outstanding whichever is higher.

viii)

Pre-shipment Export Credit Guarantee from Sadharan Bima Corporation shall be a general condition for Garments financing. For any deviation from this condition waiver shall be obtained from EC/Board.

ix)

Fire and RSD Insurance Policy shall be obtained on the book value of Plant & Machinery and while on the raw materials, work-in-process and finished goods on it should be obtained on stock declaration basis.

In order to make close & effective monitoring & supervision, it may be a good idea to have a separate Garments Cell. The proposed Cell shall function from Credit Division, Head Office and supervised by an SEO / FAVP.

Job description of Garments Cell shall be as under: i) Receive proposals from the Branches for credit facilities to the Export Oriented Garments industries for processing the same for sanction. ii) Examine / scrutinize the papers / documents submitted by the Branches along with the Credit proposals. They will specially verify the Bond License, Lease Agreement of factory premises of the Garments unit. Fire and other Insurance Policy covering Machinery and stocks. iii) Critically appraise the proposals to assess viability of the project in consideration of Technical, Marketing, Financial, management and Economical / Social aspects etc.

58

iv)

Visit / inspect the factory premises of the Garments unit applying for credit facilities for physical verification of the machinery and other equipments, floor space, location of the factory etc.

v)

Ascertain the production capacity and working capital requirement of the unit to justify Branch recommendation for the facilities. Find out actual exports made by the company during the last 3 years.

vi)

Inspect /verify the proposed collateral securities and assess its value. Collect Photographs of the security / collateral.

vii)

Ascertain and assess past track records, experience, market reputation, credit worthiness and Net worth of the customer.

viii)

Supervise and monitor the production of the unit to ensure timely shipment / export of garments by the Exporters so as to avoid any stock-lot. In this respect they will also verify the registers maintained at the factories for recording actual daily production.

ix)

Review the outstanding Accepted Bills to ensure settlement / payment of the bills on maturity by the Branch.

x) xi)

Review Quota position of the Exporters. Check if segregation of stock imported for each factory is possible from the stock of other garment industries owned by the same person /group.

xii)

Evaluate the overall performance of the Customer for further financing decision (enhancement / curtailment of limit) by the Bank.

xiii)

Inspect the stock-lot from time to time and advised & guide the Exporters for earliest export of the same towards adjustment of the forced loans created there against.

xiv)

Prepare and submit Management Reports on Banks finance to Garments sector to the Board / Executive Committee from time to time.

xv)

Maintain relationship with BGMEA and Export Promotion Bureau to review the Industry trend, Market position and other information. They will obtain Industry Information, Market Information and policies of the Government which are likely to influence the industry.

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xvi)

Garments Cell shall work under the administrative control of the In-charge, Credit Division, Head Office, Dhaka.

xvii)

The following checklist must be prepared by the RMG cell for each RMG Industry financed / to be financed by our Bank:

Check List for the 100% Export Oriented Garment Industry:

i)

Account Opening Stage: a) b) c) d) e) Trade License; Memorandum of Association; Articles of Association; Certificate of Incorporation; Resolution of the Board of Directors.

ii)

Admissibility for Export Business: a) b) c) d) e) Trade License (Renewed); Export License (Renewed); IRC (Renewed); Bonded Warehouse License (Renewed); Tax Holiday Approval from NBR;

(if expiry may be noted for information) f) g) h) BGMEA Membership (Renewed); Fire Protection License from Civil Defense Authority (Renewed); Fire Insurance of Factory stipulating the bank as Beneficiary (Renewed)

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Insurance policies should be obtained for Fire, RSD & Flood for the Machinery (Written Down Value) and for the Stock covering the BTB Limit on declaration basis.

Insurance against Machinery :

Policy for Tk ............................................... Validity ......................................................... Risk covered ................................. Name of Insurance Company .................... Insurance against Stocks : Policy for Tk ............................................... Validity ......................................................... Risk covered .................................. Name of Insurance Company ............................. i) TIN (updated); j) EPB Registration (Renewed); k) Textile Directorate / BOI Registration; l) Confirmation of No Customs Demand (Verification of Pass Book to ascertain that there are no entry of Imported Goods which have not been exported in 2 years). m) PDB / DESA / DESCO / REB sanction of electricity load. n) Lease Agreement Validity if the Factory is on leasehold property. iii) Functional / Financial Review: a) List of Machinery (Category-wise); b) Type of Export (Woven /Knit / etc); c) Items of Export (Shirt, Jacket, Denim, etc); d) Production Capacity as per Machinery; e) Present outstanding liabilities:

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Particulars BTB L/C ABP Packing Credit FDBP FDBC Others (Specify) f) g) h)

Limit

Outstanding

Overdue (if any)

Export during the last 3 (three) years including current year; Projected exports during the next year (12 months); Production Booking Schedule in the Factory;

[No booking shall be beyond 6 (six) months] i) Resume of the Proprietors / Directors regarding their background and

experience (in new case); j) k) Net worth Statements of the Proprietor / Directors in the prescribed format; Others Banks liability & performance if the party is migrating from other

banks; l) m) n) o) i) ii) iii) iv) v) vi) vii) Updated Financial Statements (preferably for 3 years); Number of workers & employees; Number of Vehicles; Monthly Expenses of Factory: Salary Wages Electricity/Water/Gas Rent : : : : :

Directors Remuneration C & F Agents Bills : Others

: 62

Total p) ABP #

------------------------------------------:

List of ABPs as per following format: Amou nt Due date Export L/C # Amount & Expiry date BTB L/C # & Date Progress of Export /Production

Date

q)

List of Export Bills on Collection: Date Amount & Expiry dt. Status of Payment

FDBP / FDBC #

r) s) i)

Quota position & verification of Allocation Letter; Position of Stock-lot if any: Stock-lot should be listed on the basis of Cut Fabrics, Uncut Fabrics or Finished garment. Arrangement for export shall be reviewed.

ii)

If the Stock-lot related to goods already exported but proceeds not realized then following points shall be reviewed:

If the consignments released by the buyer then review the steps taken

for realization of proceeds. If the goods not released by the buyer then review the arrangement to

protect the consignment at the foreign port at bonded warehouse and arrangement to resell the goods.

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It must be reviewed whether goods were exported under Freight

Forwarder Cargo Receipts. If so, actual Bill of Lading should be checked whether it is drawn to the order of the Negotiating Bank. It is mandatory to inform Bangladesh Bank & National Board of

Revenue (NBR) regarding failure of export & stock-lot. Accepted Bills against stock-lot must be paid on maturity date by

creating forced loan. But this shall require post-facto approval from Head Office and Bangladesh Bank. t) In case garments units inducted from other banks, NOC shall be obtained

from their previous Banks within 6 (six) months. u) v) Name of the Major Buyers. Name of the Officer of The Premier Bank who will maintain relationship with

the Customer:

Name

Experience / Background

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6.8 Policy of Doctors Loan Scheme

a) Introduction: We hope that providing loan under easy terms & conditions will certainly have an important / positive effect on our medical services and will enhance the opportunity for our doctors to establish themself as well as to contribute to make our medical services modern enough compared to other countries. This will also enable us to establish Banking Relationship with the Doctors Community who are rich & resourceful. We can get good deposits and also develop profitable lending relationship with the Doctor community. b) Purpose of Loan: Purpose of this loan is to create opportunity for self-employment of the registered MBBS /FCPS / Post Graduate doctors, medical Practitioners by financing them for the following purposes:i) Up-to 100% Lease Finance for acquiring Medical Equipment.

ii) Up-to 100% Lease Finance for Motor Cars / Ambulances. iii) Term Loan for rental advance / decoration & furnishing of chambers. iv) Loan for purchasing of Apartment / Chamber up-to 50% of the cost.

c) Target Group: Registered Doctors such as MBBS, FCPS & Post Graduates, Surgeon and Dentist, Eye Specialists, Heart Specialists, Child Specialists as well as Hospitals, Clinics, Diagnostic Centres owned & operated by registered Doctors. 65

d) Terms & Conditions: The loan amount would be based on the needs / requirements of the borrower on case to case basis. Borrower can avail one or more of the following: i) Lease finance for medical equipments.

ii) Lease finance for motor vehicles / ambulances. iii) Term loan for renting / decorating & furnishing chambers. iv) Personal Loan under Consumer Credit Scheme. v) Loan for purchasing apartment / medical chamber.

cost. 50% of purchase price.

Lease may be allowed up-to 100% of acquisition

Term Loan up-to 80% of cost. For purchase of Apartment / Chamber loan up-to

e) Security: (one or more of the following)

i)

3 (three) advance installments (Compulsory).

ii) Leased financed items ensured in the sole name of the Bank (Compulsory). iii) Personal guarantee of the Borrower(s) & their spouse(s) (Compulsory). iv) Third Party guarantees. v) For purchase of Apartment / Chamber - loan to be secured by Registered Mortgage of the Apartment / Chamber (Compulsory).

66

vi) Credit Insurance. vii) Collaterals in the form of mortgage. viii) Lien on deposits / other financial obligations.

f) Repayment period:

i)

Repayment term will be up-to 4 (four) years for Lease / Loan.

ii) Apartment / Chamber loans may extend up-to 10 (ten) years. iii) Payments will be made in equal monthly installments (EMI). iv) Early repayment may be allowed without any penal interest / charges.

g) Eligible Borrower: Initially the following categories of people shall be eligible to apply for availing loan facilities under this product: i) Registered Medical Practitioners / Doctors such as MBBS, FCPS, Eye Specialists, Heart Specialists, Child Specialists, Surgeon, Dentist etc should have at least 5 years experience. ii) Hospital, Clinic, Diagnostic Centers owned & operated by registered Doctors.

h) Interest Rate & Charges: i) Interest Rate @ 15% p.a. with monthly rest.

ii) Application form will cost Tk 100.00. iii) Loan Processing fee at 0.50% of the loan amount payable along with the submission of the Application Form. In the event of non-approval, the loan processing fee will be refunded.

67

iv) Other charges for Lease finance shall apply such as: Service Charge Risk Fund Transfer fee - 1.00%

- 1.00% - 1.00%

v) Consumer Credit facilities shall be guided by existing policy approved by Board in its 345th EC Meeting held on 07.04.2003. i) Rebate: If any loan is repaid strictly as per sanctioned terms and conditions & within the due date without any rescheduling, a rebate equivalent to 1% (one percent) of the loan will be given to the Borrower.

j) Review of Credit facility: As at the end of March, June, September & December of every year, the Manager shall submit branch wise information about the relationships established with Doctors in the following form: (Tk in Lac) Name & Address of the Doctor Nature of Credit facilities Limit Outstand ing Overdu e (if any) Nature & value of security Amount of Deposits received Remark s

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6.9 Policy of Consumer Credit Scheme (CCS)

a) Objectives: i) ii) To extend credit facility to the limited income group. To develop living standard of middle and upper middle class people.

iii) To participate in the socio-economic development of the country.

b) Assigning Officer for CCS: Every Branch will assign at least 1 (one) officer for CCS on full time basis. The number of officers may be more than 1 (one) in case of need. c) Target Setting: The Head Office will set target for both disbursement and recovery of loans under CCS for individual Branch in every year. d) Eligibility of the Borrowers: i) Service Holder: Officer / Executives from following organizations having confirmed / permanent job and getting the salary as mentioned below with minimum length of service of 2 (two) years within the age between 20-55 years will be eligible for availing loans under Consumer Credit Scheme (CCS): Officers / Executives of any Scheduled Bank and getting minimum

monthly gross salary of Tk 12,000.00.

69

Officers / Executives of any other financial institutions and getting Officers / Executives of any Multinational Company getting minimum

minimum monthly gross salary of Tk 15,000.00. monthly gross salary of Tk 15,000.00. Officers / Executives of any Public Limited Company and getting

minimum monthly gross salary of Tk 20,000.00. Officers of Private Limited Company having corporate structure and

getting minimum monthly gross salary of Tk 30,000.00. Officers of any Government Organization and getting minimum monthly

gross salary of Tk 8,000.00 per month. Teachers of Universities, Colleges and Schools and getting minimum

monthly gross salary of Tk 12,000.00. Officers of Semi Government Organizations and Autonomous Bodies and

getting monthly gross minimum salary of Tk 10,000.00. ii) Self Employed Person: The self employed persons, such as, Doctors, Chartered Accountants, Lawyers or who have their own Business by any nature having minimum income of Tk 35,000.00 per month may be eligible to get loans under CCS. The length of profession shall not be less than three years. (In this case he / she will have to submit supporting papers of profession for last three years). iii) For defense service personnel CCS may be provided, in addition to the conditions and guidelines of this circular, subject to fulfilling the following conditions as per circular no. 3204/R/AG/(PS-1) dated 3rd March, 1999 and any subsequent

70

amendments thereto issued by army headquarter, Adjutant General Branch, Dhaka Cantonment: Employers Certificate should be obtained only form the Commanding

Officer of Borrower's unit. In case of providing credit facility to a soldier, the guarantor should not be

below the rank of Junior Commission Officer. The respective unit of the borrower will provide a guarantee certificate that

the borrower will pay the monthly installment in due course.

e) Non-Eligibility: Proprietorship firm, Limited Companies, Trusts, Clubs, Association, Other institution, Minors (singly or jointly with any adult person) are not eligible for consumer credit.

f) Products / Service to be financed: i) Domestic Appliances: Air Conditioner, Refrigerator, Deep Freezers, Washing Machine, Mobile Phone, Cooking Range, Micro-Wave, Furniture, Sewing Machine, other domestic appliances (we will not finance against photocopier, as Photocopier is not a consumer item). ii) Entertainment items: Television, VCD, VCP, Music System, Sound System, Video Camera with accessories etc. iii) Vehicles: Car, Microbus, Pick-up, Jeep etc. Such vehicles should be new or reconditioned (not second hand vehicles) and must remain unregistered at the time of purchase. iv) Intangibles: Medical expenses, holidays, marriage etc. v) Others: Home repair, redecoration, and renovation.

71

g) Application Form: The client should apply for loan under consumer credit in the Bank's prescribed form Tk 20.00 to be realized for each application form.

h) Down Payment: In respect loan against Vehicles, minimum 30% of quoted price of the vehicle

will be collected as down payment. We may also accept en-cashable security ( e.g. FDR etc). In respect of loan against other than Vehicles, the customers will deposit 1

(one) advance installment in Bank's Sundry Deposit Accounts at the time of disbursement which will be transferred to the respective CCS loan account for full and final settlement of the account.

i) Loan Limit: The loan limit under CCS has distinguished as follows: i) Other than Car, Microbus, Pick-up & Jeep the maximum Loan Limit is Tk 1.00 Lac only but the amount shall be fixed in such a manner that the monthly installment of the loan will not be more than 25% of his / her monthly income. ii) For Car, Microbus, Pick-up & Jeep: Maximum limit Tk 10.00 Lac for new Car; Maximum limit Tk 7.00 Lac for reconditioned Car; Maximum limit Tk 4.00 Lac for Microbus and Maximum limit Tk 3.00 Lac for Pick-up.

Any exception of the above have to be approved from the EC of the Board of Directors of the Bank. j) Delegation of sanctioning power to the Branch:

72

The Branch will exercise delegation for sanctioning CCS loan (other than Vehicle) as per following schedule through Branch Management Committee:

Branch Name Gulshan Dilkusha Imamgonj Kawranbazar Agrabad Motijheel Banani Dhanmondi Khatungonj

Delegation Power (up-to Tk) 1.00 Lac 1.00 Lac 1.00 Lac 1.00 Lac 1.00 Lac 1.00 Lac 1.00 Lac 1.00 Lac 1.00 Lac

Branch Name Uttara Khulna Savar Mohakhali Ashugonj Meghnaghat Elephant Road Sylhet Barisal

Delegation Power (up-to Tk) 1.00 Lac 1.00 Lac 1.00 Lac 1.00 Lac 0.50 Lac 0.50 Lac Nil Nil Nil

In case of loan against vehicles the Branches shall forward the application with the Branch recommendation to the Credit Division, Head Office for approval. All Branches shall constitute Branch Management Committee with the following Executives / Officers: i) ii) iii) iv) Branch Manager Second Officer Credit In-Charge CCS Officer : : : : Chairman Member Member-Secretary

Member-Assistant Secretary

k) Necessary Papers & Loan Approval The client shall apply as per prescribed Form along with the copy of the following papers for approval: i) ii) Application Form duly filled in and verified by the Branch officials. Price quotation / indent of the item to be purchased.

73

iii) Price quotation of the item to be purchased or service to be availed such as home repair, redecoration etc. iv) Cost estimation for Intangibles (medical expenses, holidays, marriage). v) One copy of attested photograph of the applicant (one copy should be retained with the Branch). vi) Guarantor's information in the prescribed form. vii) Borrower's net worth statement. viii) In respect of Service Holder: Salary certificates from the employer; Letter of surety / assurance (where applicable); Last 3 (three) month's Salary Account statement.

ix) In respect of Business Persons / self-employed Persons: Last 6 (six) month's personal Account statements; Trade License / Letter of Incorporation; TIN Certificate; Tax Return (last three years).

Note: All favorable considerations of an applicant and respective guarantors to sanction / forward any CCS loan facility must be mentioned and recorded in the loan proposal. l) Disbursement of Loan: The loan amount will be disbursed through Pay Order directly to the supplier of the products except for Intangibles, Home Repair, Redecoration and Renovation, for which loan amount will be directly credited to client's A/C. m) Interest: As per loan period the following interest rate to be imputed in computer at the time of opening a CCS loan account for interest rate 10% flat:

74

Declared Flat Rate

Loan Period 1 year, 2 years 3 years 4 years 5 years

Rate to be imputed in Computer at the time of opening a CCS Loan 18.00% 18.20% 18.00% 17.60% 17.30%

10%

n) Fees: Service charge 2% (flat) to be received at front end. o) Repayment Arrangement: i) Period of Loan: The consumer loan (other than Vehicle) will be repaid in maximum 24 equal monthly installments. 36 or 48 installments will be allowed in case the loan amount in over Tk 1.00 Lac. The loan amount against new Vehicle will be repaid in maximum 60 equal monthly installments and loan amount against reconditioned vehicle will be repaid in maximum 48 equal monthly installments (here Vehicle not include Motor Cycle). ii) The borrower will have to submit post-dated A/C payee cheques ( one for each installment) in favour of the The Premier Bank Limited prior to the disbursement of the loan. The borrower shall keep sufficient fund in his /her account for the purpose. The rest outstanding, if any, shall be adjusted by the borrower along with the last installment. As such, the last cheque shall be blank. iii) The installment shall be payable within the first week of every month starting from the following month of disbursement of loan. iv) We may serve Legal Notice (by Junior Lawyers) to the defaulting customers, who are not coming forward to settle their Overdue Accounts after vigorous persuasion

75

and the Branches may assign Lawyers for serving Legal Notice (the cost of serving Legal Notice will not be more than Tk 300.00 for each, and the payment of serving Legal Notice will be made by debiting Suspense Account by the concerned Branch).

p) Securities and Documentation: i) For financing consumer durable and vehicles like Air Conditioner, Refrigerator, Deep Freezers, Washing Machine, Mobile Phone, Cooking Range, Micro-Wave, Furniture, Sewing Machine, Television, VCD, VCP, Music System, Sound System, Video Camera with Accessories, Personal Computer, Photocopier, IPS / UPS small non-commercial Generator, Car / Microbus, Pick-up & Jeeps, hypothecation of the purchased item shall be the primary security against the loan under the scheme.

ii)

Loans for Medical expenses, Holidays, Marriage, Home repair, Redecoration, and Renovation will virtually be clean basis. Bank Officers may obtain collateral by way of pledge / lien on financial obligations such as ICB unit certificates, WEDB, FDRs etc. The receipt under MIS, MSS, ESS etc issued by The Premier Bank Limited is also acceptable. In these cases the loan amount should not be exceed 90% value of financial obligation without equity participation.

If the loan facility is covered by 100% deposit of our Bank in the form of FDR, MSS, MIS, or Equity under lien, third party guarantee may not be taken. In this case Letter of Lien & Letter of Authority for en-cashment may be obtained. iii) In case of loan against vehicles registration of the vehicle shall be made in the Bank's name and Comprehensive Insurance covering all possible risks shall have to be obtained by the borrower at his / her cost who will also ensure timely renewal of insurance and other required papers. Photocopy of the following paper should also be obtained. Registration certificate (Blue Book) showing Bank's interest already noted on the certificate so that the vehicle can not be sold without prior approval of the Bank. 76

iv) v)

Guarantor: If the customer is a Government Service Holder or a Bank

employee, we may take 1 (one) personal guarantee and in case of other customer, we may take 2 (two) personal guarantee. vi) Guarantor's Criteria: A Guarantor must be financially sound

and have market reputation and shall be acceptable to the Bank. The Branch Manage shall satisfy that in the event of non payment by the borrower, he will stand up and meet his obligation to repay the loan. vii) Prior to disbursement of loan, the following charge documents

must be completed at borrower's cost: of Tk 20.00; 150.00; 150.00; (joint / several) 150.00; under CCS Letter of Authority : stamp not necessary; Loan Agreement : by affixing adhesive stamp of Tk Personal Guarantee : by affixing adhesive stamp of Tk Letter of Continuity : stamp not necessary; stamp not necessary; : stamp not necessary; D.P. Note : by affixing revenue stamp

Letter of Disbursement : Letter of Revival Letter of Hypothecation :

by affixing adhesive stamp of Tk

viii)

After purchasing the item, Money Receipt & Delivery Challan

there against should be obtained.

77

q) Other Terms and Conditions: i) The borrower shall use the product for his personal use only and shall not lend the item or transfer the ownership / possession to any third person before the loan is adjusted or without prior written permission from the Bank. ii) The borrower shall maintain the article properly and shall be responsible for loss / damage to it during the period of the loan. He /she shall pay all the Bank's dues in full, in case the article is fully damaged, lost, or become unusable due to negligence, carelessness, or inefficient handling. iii) The borrower shall keep the articles available for surprise inspection by any authorized representative of the Bank. iv) The borrower shall immediately inform the Bank of any changes in address or profession related to himself / herself and his / her guarantor. v) The Borrower shall obtain comprehensive insurance policy for car loan at his / her cost in the name of the Bank and bear all other expenses for registration and other purposes as and when required. vi) The borrower will submit a declaration as per prescribed format authorizing his / her monthly salary in case of non payment by the borrower till final adjustment of the loan. vii) The Bank reserves the right to change the rate of interest from time to time.

r) Monitoring: As the credit under CCS is fully supervisory and the success of the scheme depends on proper and persistent supervision, follow-up, persuasion & monitoring, so the Branches need to follow-up & monitor vigorously the A/C's to ensure the expected recovery. The Branch shall send "monthly statement of loan under Consumer Credit Scheme" to Head Office Credit Division as per prescribed format.

78

The management may change rate of interest and fees from time to time under this scheme. In this respect a condition to be incorporated in the sanction letter issued to the borrower /client. s) Condition of CCS (Staff): i) Eligibility: Only the confirmed employees (Junior Officer and above Officer / Executives) of the Bank will be eligible for the CCS (Staff) loan facility. ii) Loan Limit: Designation wise maximum loan limit will be as follows: - From Junior Officer and above : Tk 1.50 Lac - Other Officer including Teller : Tk 0.50 Lac - Sub Staff (Non Officer) : Tk 0.25 Lac

However total monthly deduction from Salary of an employee including CCS loan installment shall not exceed 50% of Gross salary.

An employee can avail fresh CCS loan facility after adjustment of his previous CCS loan liabilities.

Educational expenses of any family member of an employee may be included in the purpose of CCS (Staff) Loan.

Monthly other regular income of an employee may be considered within the gross monthly family income on a case to case basis if necessary at the time of fixing the loan limit.

iii) The amount of loan will be adjusted maximum in 48 (forty-eight) equal monthly installments. iv) Once a loan is fully or partly adjusted, concerned Executive / Officer may avail loan again to buy similar or other item. v) Since the Borrowers are Bank's own Executives / Officers, they will be exempted from the following charges: Down Payment (Advance deposit of installment/Equity);

79

Risk Fund; Service Charge

vi) The monthly installments for availing the loan will be deducted directly from the salary of the concerned Executive / Officer. vii) As the borrowers are Bank's own Executives / Officers and the installments will be deducted directly from the salary, so they will exempted from third party's Personal Guarantee. viii) Interest on loan for Executives /Officers under CCS will be charged @ 12% P.A. ix) The Loans of Executives / Officers under the scheme will be sanctioned by Credit Division, Head Office. x) The Divisional Heads of Head Office and Branch managers will forward loan application of the Executives / Officers of their respective Division / Branch to Credit Division, Head Office duly recommended in the prescribed application format for approval. xi) After approval a sanction letter will be issued in favor of the concerned Executive / Officer, Copy of which will be given to Divisional Head of Head Office / Branch Manager, HRD, FAD for necessary action at their end. xii) After getting the approval the loan will be disbursed directly to the concerned Executive's /Officer's SB/CD/A/c. xiii) Other terms and condition will remain same as the policy of CCS for the customer rather than Bank employees.

t) Conclusion: PBL is confident that the Consumer Credit Scheme will enable the Branch to face the competition from commercial banks both local and foreign. The scheme will also stop diversion of our deposit and loan to other banks offering same scheme and will create a wider customer base for the Bank. We would however, welcome any suggestion from the Branch to implement the scheme smoothly and properly.

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6.10 Policy of Credit Facility secured by Deposit/Cash Collateral (SOD)

Terms & Conditions: i) The Credit facility must be 100% covered by Deposit in our Bank under lien. 10% margin shall be retained in respect of funded facility i.e. Loans & Advances shall not exceed 90% of the deposits. In case of non-funded facility such as L/C or B/G, 100% exposure may be taken. ii) Interest differential between the Loans & Advances and deposits held with our Bank shall be 3% P.A. iii) iv) Commission / Charges for non-funded facility may be reduced by 25%. Proper Letter of Lien and other charge documents shall be obtained. In case the deposits are held in the name of the Third Party, Personal Guarantee of the Depositor will be obtained. v) The facility shall be approved by the Branch Management Committee and they shall submit a monthly statement of all such credit facility extended in the following form which shall be signed by all the members of the Branch Management Committee:

Name of the Borrower

Sanctione d limit

Date of Disburseme nt

Expir y Date

Interest Rate

Interest rate on Deposit

Security

Photocopy of Deposit Receipt and Letter of Lien shall be attached with the statement. Head Office Credit Division will review the statement and bring any irregularity to the attention of Management Committee of the Bank for further action including repo.

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6.11 Policy of Overdraft Receivable

For quick and easy identification of various exposure of the Bank by the name of the Accounting Head in our Statement of Affairs named as "Overdraft Receivable" under Loans & Advances A/C.

Rules of Operations: i) This overdraft account shall be for Working Capital financing against customers Receivables and book Debts. ii) Executive Committee shall approve this limit in favour of each customer which shall be communicated to Branch by Head Office. The limit shall be approved against outstanding Receivables which are not more than 90 days past due. A minimum margin of 25% shall be maintained. iii) iv) v) Each disbursement shall be approved by the Branch Manager. Branch Manager shall personally supervise adjustment of each drawing. Monitoring & Inspection Division of Head Office shall review the transactions in these accounts while they inspect the Branch. vi) Branch Manager must obtain Statement of Receivables at the time of each drawing and on monthly basis till full adjustment. vii) Statement of Bills Receivable as per prescribed format shall be submitted at the time of first disbursement. viii) The customer must undertake to deposit all his collections to their account with our Bank.

6.12 Credit Policy Exception

Policy exceptions are required when:

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a) The overall amount of credit in any one name or group exceeds 50% (Fund based 25% + Non fund based 25%) of our banks capital resources. b) Entering in to under writing commitments; (other than syndicated loans). c) Financing arms or other military equipment. d) Extending credit direct to a holding company or based on the guarantee of a holding company that does not have substantial operating assets and revenues from diversified sources. e) We are in an inferior position as compared to other bank lenders with comparable facilities. f) Final payment date for commercial loans is over five years from date of customers acceptance of commitment. g) Term loan commitments expire beyond six months from the date of credit approval. h) The first amortizing payment for commercial loans occurs later than twelve months from the date of the final draw down. i) Total amortizing payments for commercial loans during the final year exceed 30% of the original amount of the loan.

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CHAPTER- SEVEN SWOT ANALYSIS OF PBL

7.1 SWOT Analysis:
Not surprisingly in the competitive arena of marketing era SWOT analysis is a must based on Product, Price and Promotion of a financial institute like private bank. From the SWOT analysis we can figure out ongoing scenario of the bank. So to have a better view of the present banking practices of Premier Bank Limited. I did the SOWT analysis. 7.1.1 Strength: Usage of faster PC Bank Software Efficient administration Cooperation with each other Fewer default loan Membership with SWIFT Good banker customer relationship Strong Financial Position Energetic as well as smart workforce First position in CAMEL rating Sound working environment

7.1.2 Weakness: Lots of inexpert and laggard assistant officer Reluctance to ad campaign Existing manual voucher Shortage of branch Dominating nature of senior officer

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Entrance of new privet bank Working pressure is high and long time duty of the officers

7.1.3 Opportunity: Huge business area Introducing ATM Card Growth of sales volume Introducing any branch banking through online.

7.1.4 Threats: Existing card service of SCB Different service of FCBs (Phone Banking and home banking) Different classical service of foreign banks Entrance of new banks Political unrest

7.2 Future Prospects of PBL

As they are on the threshold of increasing free market competition there ability and loyalty to their service must be augmented and cater to their need more competently. A large number of commercial banks are already in the market to acquire business. They have nevertheless secured their position in the overall financial arena with diversified opportunities but with extensive competition. This has been possible through constant efforts of very skilled and result-driven workgroups. Within short time period prime bank is going to open its more Islamic banking branches to attract the depositors from the Islamic mentality person. This branch will be operated by Islamic financial system. Beside this more new branches will be opened as part of etension of banking service to all.

7.3 Suggestion for uplift of Premier Bank Ltd:

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With a view to ensuring the vision of Premier Bank Ltd. Some initiatives should be executed on the emergency basis like: Sending the assistant officer to BIBM for better view over pragmatic knowledge they know what they are doing but they dont know how and why they are adopting different banking practices. PBL should establish own Training Institution. To have a strong marketing needed sales executive. Should maintain proper record keeping system to provide quick service. Most of the officers lack in communication skill they should be trained up. When new coming document is come in the morning, quickly forward to the respective officer for accomplish the job. Try to hear about the problem of officer and employee of the bank and solve to motivate them. Try to hear about the new concept development from the lower level also. Recruit the employee from the commerce background. Open a complain and new concept box for the customers.

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CHAPTER- EIGHT CONCLUSION

8.0 Conclusion
Todays business is very competitive and complex. To survive in the relate sector the organization need competitive people and has to take some effective policy. Every country must have a plan for important role in economic activities. Bangladesh is no exception of that. Commercial Banks financial development and economic developments are closely related. Thats why the private commercial banks; are playing significant role in this regard. Premier Bank Ltd is one of the fastest growing banks in respect of service, innovative products and strength among the private commercial banks. Sometimes a bank needs some additional capital to sustain their profitable growth in a steady way. Premier Bank had chosen the most efficient and less risky way of increase capital by floating its shares in the capital market through Initial Public Offering (IPO) After entering in the capital market PBL is trying to maximize the shareholders value in the long run as well as ensure the sound return on investment.

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CHAPTER- NINE RECOMMENDATIONS

9.0 Recommendations
With a view to ensure exciting services and opening up the new window of progression as well as uplift, we should like to present the Premier Bank Ltd. with several recommendations like: General Banking: Formalities in getting ATM card should be simple. Introducing the Customer Day or Care U week and new advertisement on different TV channels. Launching one stop service cell. More skilled persons are needed for reducing busyness. Should have separate ATM booth. Two branches should be under on line banking.

Credit Management:

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Based on the evaluation of different aspects of the credit process of Premier Bank, the following recommendations have been made: In the face of competitive and borrower dominated credit scenario Premier Bank must come up with innovative loan products to meet up the demand of time. In this connection PBL can focus on some more loan products like: Leasing Apartment loan Marriage loan and Education loan. To combat the problem of mobilizing deposit in the form of credit, Premier bank should focus on intensive marketing effort. Entrepreneurship lending should be given due emphasis. As borrower selection is the key to successful lending, Premier Bank should focus on the selection of true borrower. But at the same time it must be taken into account that right borrower selection does not mean that PBL has to adopt conservative lending policy but rather it means that compliance with the KYC or Know Your Customer to ascertain the true purpose of the loan. Care should also be taken so that good borrowers are not discarded due to strict adherence to the lending policy. At the branch level credit department must be adequately capable of collecting the correct and relevant information and analyzing the financial statements quickly and precisely. Credit committees at all levels must work in co-ordination with each other for quick approval of loans and to reduce the loan processing cost. To expedite the lending process, board credit committee meeting should be held twice a month instead of once a month. The bank should benchmark the monitoring techniques practiced by the successful and established banks in Bangladesh.

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 It should take the counseling service from the experienced expatriate to further improve the monitoring techniques. In case of mortgage, care must be taken to accept collateral on second charge. Reporting of all loans should be periodically made to Bangladesh Bank Premier Bank should set up a separate loan monitoring cell, which will be responsible for monitoring its total loan portfolio with special care to the problem loan.

REFERENCES & Bibliography

References
Premier Bank Ltd., Annual Report; 2004, 2005, 2006 , 2007 & 2008 Bangladesh Bank, BRPD Circular 09; August 20,2005, BRPD Circular 02; February 02, 2005, BRPD Circular 09; May 14, 2001 Chowdhury, L. R., A Text Book on Bankers Advances; 2nd Edition; Paradise Printing; 2002 BIBM Abstracts Premier Bank Ltd., Head Office Circulars; 2006, 2007 Premier Bank Ltd., Brochures of Loans and Advances; 2007 http//www.Premierbankltd.com.

Bibliography
Chowdhury, L.R.A text book on Foreign Exchange, Fair Corporation, Dhaka, 2000. Gordon, E. & Natarajan K. Banking Theory, Law & Practices, Himalaya publishing house, Mumbai, 1996. Ministry of commerce, Import policy order 2005-06, Government of Bangladesh, 2005, 2006. K.K. Das- Foreign Trade & Foreign Exchange. 90

 Financial

institutions

and

markets.5th

Edition.Created

by

MoZarDBy

Jeff

Madura.Prof. of Florida Atlantic University,USA. Economic.By Simulation.Prof. of Clliorfonia state University, USA. Business 21st century. 13 USA. Money & Banking By T.T Shethy.Prof. of New Delli University, India.
th

Edition. By Skinner.Prof. of Clliorfonia state University,

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