Beruflich Dokumente
Kultur Dokumente
Part-
Before introducing the Export Import Bank Of Bangladesh Limited. would like to focus some light upon the growth and development of our banking system since independence.
Growth and development of our banking system may be divided into three phases. The complete government ownership and excessive government interference, absence of prudential regulation and inadequate legal support for debt recovery.
The first phase was from 1972 to 1982. The performance of our banking system during 1972 to 1982 was commendable in respect of expanding network and providing easy credit to the society desirable sector but equally frustrating with regard to maintaining viability of customer service.
The second phase from 1983 to 1989 was characterized by denationalization and privatization of banking system without broad-basing the prudential and information regulatory framework. However, these measures of denationalization and privatization could not bring viability and operational efficiency of the banking system.
Under the above circumstances and using the recommendation of World Bank, a Financial Sector Reform Project (FSRP) was undertaken in 1989 by the government that can be identified with third phase of the development of our banking system.
FSRP includes the following measures: Gradually allowing (financial institutions to increase financial product prices according to market forces. Raising the loan class action standard in phases. Improving level of the financial institutions to international standard in phases. Improving the capital positions of Nationalized Commercial Bank (NCB's) and Private Commercial Bank and fixing it at international standard level. Delegating greater autonomy to banks especially in terms of selecting their loan portfolio.
The government of Bangladesh has also enacted some important acts namely financial Institutions Act, 1993, Securities and Exchange Commission Act, 1993, The Companies Act, 1994 and recently Bankruptcy Act, 1007. These reform measures have been aimed at imposing financial discipline on the banks in the short run and making the banks to operate increasingly on the basis of market forces so as to achieve operational efficiency. The commercial banking system dominates Bangladesh's financial sector. Bangladesh Bank is the Central Bank of Bangladesh and the chief regulatory authority in the sector. The banking system is composed of four state-owned commercial banks, five specialized development banks, thirty private commercial Banks and nine foreign commercial banks. The Nobel-prize winning Grameen Bank is a specialized micro-finance institution, which revolutionized the concept of micro-credit and contributed greatly towards poverty reduction and the empowerment of women in Bangladesh.
1.1.1 Central Bank Central Bank of Bangladesh is named as Bangladesh Bank (BB). Pursuant to Bangladesh Bank Order, 1972 the Government of Bangladesh reorganized the Dhaka branch of the State Bank of Pakistan as the central bank of the country, and named it Bangladesh Bank with retrospective effect from 16 December 1971.
1.1.2 Nationalized Commercial Banks The banking system of Bangladesh is dominated by the 3 Nationalized Commercial Banks , which together controlled more than 54% of deposits and operated 3388 branches (54% of the total) as of December 31, 2004.[1] The nationalized commercial banks are:
1.1.3 Private Commercial Banks Private Banks are the highest growth sector due to the dismal performances of government banks (above). They tend to offer better service and products. Agrani Bank Limited] BRAC Bank Limited Eastern Bank Limited Dutch Bangla Bank Limited Dhaka Bank Limited Islami Bank Bangladesh Ltd Pubali Bank Limited Uttara Bank Limited IFIC Bank Limited National Bank Limited The City Bank Limited United Commercial Bank Limited NCC Bank Limited Prime Bank Limited SouthEast Bank Limited Al-Arafah Islami Bank Limited Social Islami Bank Limited Standard Bank Limited One Bank Limited Exim Bank Limited Mercantile Bank Limited Bangladesh Commerce Bank Limited Mutual Trust Bank Limited First Security Islami Bank Limited The Premier Bank Limited Bank Asia Limited Trust Bank Limited Shahjalal Islami Bank Limited Jamuna Bank Limited ICB Islami Bank AB Bank Limited BASIC Bank Limited
1.1.4 Foreign Commercial Banks Citibank HSBC Standard Chartered Bank Commercial Bank of Ceylon State Bank of India Habib Bank National Bank of Pakistan Woori Bank Bank Al falah
1.1.5 Specialized Development Banks Out of the specialized banks, two (Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank) were created to meet the credit needs of the agricultural sector while the other two ( Bangladesh Shilpa Bank (BSB) & Bangladesh Shilpa Rin Sangtha (BSRS) are for extending term loans to the industrial sector. The Specialized banks are: Grameen Bank Bangladesh Krishi Bank Bangladesh Development Bank Ltd Rajshahi Krishi Unnayan Bank BASIC Bank Limited Bangladesh Somobay Bank Limited Ansar VDP Unnyan
This Bank starts functioning from 3rd August, 1999 with its name as Bengal Export Import Bank Limited. On 16th November 1999, it was renamed as Export Import Bank of Bangladesh Limited with Mr. Alamgir Kabir as the Founder Advisor and Mr. Mohammad Lakiotullah as the Founder Managing Director respectively. Both of them have long experience in the financial sector of our country. By their pragmatic decision and management directives in the operational activities, this bank has earned a secured and distinctive position in the banking industry in terms of performance, growth, and excellent management. Under the leadership of Mr. Lakiotullah, the Bank has migrated all of its conventional banking operation into Shariah Based Islami Banking in the year July 2004.
In the year 2006, Mr. Kazi Masihur Rahman became the Managing Director of the bank when Mr. Lakiotullah left the bank after completion of his successful 7 years as MD. Mr. Kazi served in the bank for next five years. Under his leadership, the bank has been placed on a state of the art centralized IT platform with two modern data centers where world renowned core banking software TEMENOS T24 is running along with some alternate delivery channels like ATMs and SMS banking.
1.4 Mission of EXIM Bank Limited The Banks mission gives emphasis to: Provide quality financial services especially in Foreign Trade Continue a contemporary technology based professional banking environment Maintain corporate & business ethics and transparency at all levels Sound Capital Base Ensure sustainable growth and establish full value to the honorable stakeholders Fulfill its social commitments and Above all, to add positive contribution to the national economy.
1.5 Corporate Culture of EXIM Bank Limited During the last two decades Corporate Culture has become an important theme in business as an intangible concept which clearly plays a meaningful role in corporations, affecting employees and organizational operations. It is not the only determinant of business success or failure, a positive culture can be a significant competitive advantage over organizations with which a firm competes. EXIM Bank Limited, as an amenable bank, believe if the employees identify with the
1.6 Shahriah Council of EXIM Bank Limited The Board of directors has formed a Shahriah Supervisory Board for the Bank. Their duty is to monitor the entire Bank's transactional procedures, & assuring its Shahriah compliancy. This Board consists of the following members headed by its Chairman: The tasks of the Shahriah supervisor in summary is replying to queries of the Bank's administration, staff members, shareholders, depositors, & customers, follow up with the Shahriah auditors and provide them with guidance, submitting reports & remarks to the Fatwa & Shahriah Supervision Board and the administration, participating in the Bank's training programs, participating in the supervision over the Allqtisad AHslami magazine, & handling the duty of being the General Secretary of the Board.
1.7 Prime Operational Area of EXIM Bank Limited As a full-fledged Islamic bank in Bangladesh, EXIM Bank extended all Islamic banking services including wide range of saving and investment products, foreign exchange and ancillary services with the support of sophisticated IT and professional management. The investment portfolio of the bank comprises of diversified areas of business and industry sectors. The sectors include textiles, edible oil, ready-made garments, chemicals, cement, telecom, steel, real estate and other service industry including general trade finance. The bank has given utmost importance to acquire quality assets and is committed to retain good customers through customer relationship management and financial counseling. At the same time efforts have been made to explore/induct new clients having good potentiality to diversify and create a well established structured investment portfolio and to minimize overall portfolio risk.
Healthcare service Scholarship program for brilliant poor student Education Promotion Scheme (Interest free loan) Helping people affected by natural calamities Helping people in slum areas Donation to educational institutions to setup computer lab Beautification of Dhaka City
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SENIOR ASSISTANT VICE PRESIDENT ASSISTANT VICE PRESIDENT SENIOR PRINCIPAL OFFICER PRINCIPAL OFFICER EXECUTIVE OFFICER OFFICER PROBITIONARY OFFICER JUNIOR OFFICER ASSISTANT OFFICER TRAINEE ASSISTANT OFFICER
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1.10.1 First private sector bank to open exchange house in UK In order to ensure delivery of smooth and most reliable remittance services to NRBs living and working in UK, Export Import Bank of Bangladesh Limited (EXIM Bank) has started operation of its wholly owned subsidiary EXIM Exchange Company (UK) Ltd. On 30th June 2009 in London, United Kingdom, one of the oldest destinations for the expatriate Bangladeshis. It is the first exchange house owned by a Bangladeshi private bank. Bangladesh Bank Governor Dr. Atiur Rahman inaugurated the exchange house as the Chief Guest, while H.E. Dr. M. Sayeedur Rahman Khan, Honorable High Commissioner, Government of the People's Republic of Bangladesh, was present in the program as special guest. Chairman of EXIM Bank and Director of EXIM Exchange Company (UK) Ltd. Mr. Md Nazrul Islam Mazumder presided over the program. Deputy High Commissioner Mr. Allamah Siddique, Director of EXIM Bank Mr. Muhammed Nurul Fazal Bulbul, Mrs Nasrin Islam, Mr. Abdullah-Al-Zahir Swapan, Mr. Md. Shahidullah, Managing Director of EXIM Bank Mr. Kazi Masihur Rahman and local elites were also present in the opening ceremony. With the opening of EXIM Exchange the Bangladeshi expatriates will now be able to send remittances to their family members back home within shortest possible time through online transfer to all the branches of EXIM Bank. EXIM Exchange Company (UK) Ltd is located at the Universal House of Wentworth Street London which is a very convenient location for the Bangladeshi community and business houses. Unlike any other exchange company operating in UK, as EXIM Exchange is completely owned and supervised by EXIM Bank under the approval of Bangladesh Bank and UK regulators, it is expected to be the most reliable and trusted Exchange House for the NRBs.
1.10.2 Implementation of the world renowned Core Banking Software (TEMENOS T24)
In order to provide IT enabled products and services to our valued customers, bank has implemented a world renowned shariah based centralized core banking software named TEMENOS T24. This software is capable enough to provide all sorts of electronic banking services to the valued customers through various electronic delivery channels.
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1.11 The Activities of EXIM Bank Foundation Corporate Social Responsibility is becoming an increasingly important activity to business in our country as well as other countries around the globe. Many of the corporations have progressively recognized the benefits of providing CSR programs in their various locations. In recent years CSR has become a fundamental business practice and has gained much attention from all the concerned of large companies of our country. EXIM Bank believes that a strong CSR program is an essential element in achieving good business practices and effective leadership. An organizations impact on the economic, social and environmental landscape directly affects their relationships with its stakeholders, in particular investors, employees, customers, business partners, government and communities. The countrys long-standing traditions of respect for family and social networks and high value placed on relationships, social stability and education are well revered by EXIM Bank. EXIM Bank believes in togetherness with its entire stakeholder in a broader inclusive sense to the endless pursuit of glory and success. Since inception in 1999, the term social responsibility is much more emphasized than the term profit maximizing . EXIM Bank always proceeds with resilient support to lessen the desolation of the underprivileged and distressed sector of the country. In this connection, EXIM Bank has established EXIM Bank Foundation in the year 2006 to carry out CSR activities in the most planned and orderly manner.
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Two of our most successful endeavors are EXIM Bank Scholarship Programme, a stipend package for poor and meritorious students that takes care of the beneficiaries throughout their student life, and Education Promotion Scheme, a profit free investment Quard - al - hasanah scheme for insolvent and meritorious students.
EXIM Bank Scholarship Program, launched in 2006 with 61 poor and meritorious students selected from different reputed educational institutions of Dhaka City including Govt. Laboratory High School, Viqarunnissa Noon School and College, Dhaka University, BUET, Dhaka Medical College, etc. Now, stands for 1500 students from around 269 reputed educational institutions across the country on 31st December 2010. The students, who are enrolled in the this program , will be taken care of for their whole educational life subject fulfillment of the eligibility criteria that include satisfactory academic results, non - involvement in student politics, financial insolvency etc. A good deal of money has been disbursed as scholarship under this program. Moreover, EXIM Bank Foundation is going to enroll another 500 new students from reputed universities and university colleges around the country within May, 2011.
Under Education Promotion Scheme, Quard or interest- free loan is provided for poor and meritorious students to help those bear monthly educational expenditure including academic expenses, food, accommodation, etc. The Quard is disbursed to the selected students in monthly installments till their accomplishing the master degree. Under this program the students are required to repay the amount (only the principal amount) in long - term monthly installments after they have joined a confirmed job accomplishing their education properly. By 31st
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Besides natural calamities, fire breaks out sometimes in slum areas that guts the shanties and renders the affected people totally helpless. In that situation, the Bank helps the victims fight against the hard days until return to normal life.
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EXIM Bank has profound homage to the initiatives taken by the Govt. for upholding the spirit of our great liberation war and the fearless freedom fighters. In this respect the bank has donated to Muktijuddho Jadughar Nirman & Jatir Janak Bangga Bandhu SMR Memorial Trust fund.
EXIM Bank believes concerted efforts by the corporate bodies to promote education, generate self-employment, alleviate poverty, develop infra-structure, patronize research works etc. from charity consideration will have a nation building effe
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Designation
Chairman Vice Chairman Director (1) Director (2) Director (3) Director (4) Director (5) Director (6) Director (7) Director (8) Director (9) Director (10) Director (11) Director (12) Director (13) Director (14) Director (15) Director (16) Director (17) Director (18) Director (19) Director (20) Director (21) Managing Director
Name
Mr. Md. Nazrul Islam Mazumder Mr. Md. Abdul Mannan Mr. Md. Nazrul Islam Swapan Mr. Mohammad Abdullah Mr. Md. Altaf Hossain Mrs. Nasreen Islam Mr. Mohammed Shahidullah Mr. A.K.M. Nurul Fazal Al-haj Md. Nurul Amin Mr. Mohammad Omar Farooque Bhuiyan Mr. Abdullah Al-Zahir (Shapan) Mr. Md. Fahim Zaman Pathan Mrs. Nasima Akhter Mr. Zubayer Kabir Mr. Md. Habib Ullah Dawn Mr. Anjan Kumar Saha Mrs. Rizwana K. Riza Major Khandaker Nurul Afser (Retd.) Lt. Col. (Retd) Serajul Islam BP (BAR) Ranjan Chowdhury Md. Fakhrul Islam Mazumder Khandakar Mohammed Saiful Alam Mr. Muhammad Sekandar Khan Mr. Md. Fariduddin Ahmed
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A SWOT analysis has been conducted for Export Import Bank of Bangladesh Ltd. This investigation summarises the key issues from the business environment and the strategic capability of EXIM bank Ltd, that are most likely to impact on strategy development.
STRENGTHS Earned good reputation among customers and regulators within a very short period. Has grown quite rapidly in all spheres of banking services. Gives relatively higher return on deposits in saving schemes than other banks. Lending rate is relatively competitive. Makes it lending decision with utmost prudence and has a very low level of bad and doubtful loans. Service charges are comparatively reasonable. WEAKNESSES Limited advertising and publicity of bank's products and activities. Does not provide proper customer care compared to competitor. Lacks experienced competent as well as proficient manpower in some departments. OPPORTUNITIES Growth of global economy and Bangladesh's foreign trade in the coming years can provide huge growth opportunities. Small & Medium Enterprise (SME) and retail banking can provide good opportunity for growth. Online banking facilities can make the operation of the bank more efficient. Expansion of banking services into other different services. THREATS The macroeconomic situation of the country can deteriorate. Government has been controlling industrial credit. The depreciation of Taka against US dollar is a great threat to foreign exchange transaction and profitability. Intensification of competition in the industry.
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Part-
2 (Chapter#01)
Introduction To The Report/Study
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2.1.3 Scope & Delimitation of the Study Everything has got some scope and limitation. The scope & delimitation of my study are given below:
Scopes:
Investment Division and its Investment banking activities are the prospective topic. Data needed for the interpretation is much easier to access on respect of other commercial banking business related issues. Supervisors in the workplace are very helpful in case of data collection and interpretation. Very realistic problems and questions can be arise from the regarding topic related issues and very helpful for the future career illumination
Limitations:
Time is the first limitation as the duration of the program. The main limitation is to conduct interview on some top level decision makers as they are less interested to share their strategies and also they have very busy schedules. Unavailability of sufficient written documents of Foreign Exchange division as required making a comprehensive study.
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Broad Objective
To acquire knowledge about Investment Banking and its practical concerns in Exim Bank
Limited.
Specific Objectives
To know elaborately about the condition of Investment Program in Bangladesh. To discuss the Investment services offered by Exim Bank Limited To know different Governmental and Bank policies, terms and conditions regarding the Investment Program. To plot a SWOT Analysis of the Investment division of Exim Bank Limited on respect of the market condition. To know about the Documentation process of Investment Program To analyze the overall data and information regarding performing and non-performing Investment Program segments in Exim Bank Limited.
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Part-
2 (Chapter#02)
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Guidelines for Consideration of Loan Rescheduling Applications: While considering loan rescheduling application the banks shall follow the under mentioned guidelines: When a borrower asks for rescheduling of loans the banks shall examine the causes as to
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Rescheduling of Term Loans: The loans which are repayable within a specific time period under a prescribed repayment schedule are treated as Term Loans. For rescheduling such loans following policies shall, henceforth, be followed: Application for first rescheduling will be considered only after cash payment of at least 15% of the overdue installments or 10% of the total outstanding amount of loan, whichever, is less; Rescheduling application for the second time will be considered after cash payment of minimum 30% of the overdue installments or 20% of the total outstanding amount of loan, whichever, is less; Application for rescheduling for more than two times will be considered after cash payment of minimum 50% of the overdue installments or 30% of the total outstanding amount of loan, whichever is less; Explanation: If any loan is rescheduled once before issuance of this policy the conditions set forth in this circular for second rescheduling shall be applicable
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2.2.3 Policy for Loan Write Off In course of conducting credit operations by banks the quality of a portion of their loan portfolio, in many cases, deteriorates and uncertainty arises in realizing such loans and advances. These loans are adversely classified as per existing rules and necessary provision has to be made against such loans. Writing off bad loans having adequate provision is an internationally accepted normal phenomenon in banking business. Owing to the reluctance of banks in Bangladesh in resorting to this system their balance sheets are becoming unnecessarily and artificially inflated. In order to avoid possible legal complications in retaining the claims of the banks over the loans written off section 28 ka has been incorporated in 2001 in the Bank Company Act, 1991. In this context the following policies for writing off loans are being issued for compliance by banks: Banks may, at any time, write off loans classified as bad/loss. Those loans which have been classified as bad/loss for the last five years and for which 100% provisions have been kept should be written off without delay. After issuance of this circular the process of writing off all other loans classified as bad/loss should be started immediately. Under the process the oldest bad/loss classified loans should be considered first for written off. Banks may write off loans by debit to their current year's income account where 100% provision kept is not found adequate for writing off such loans. All out efforts should be continued for realizing written off loans. Cases must be filed in the court of law before writing off any loan for which no legal action has been initiated earlier. A separate "Debt Collection Unit" should be set up in the bank for recovery of written off loans. In order to accelerate the settlement of law suits filed against the written off loans or to realize the receivable written off loans any agency outside the bank can be engaged. A separate ledger must be maintained for written off loans and in the Annual Report/Balance Sheet of banks there must be a separate "notes to the accounts" containing amount of cumulative and current year's loan written off. Inspite of writing off the loans the concerned borrower shall be identified as defaulter as usual. Like other loans and advances, the writing off loans and advances shall be reported to the Credit Information Bureau (CIB) of Bangladesh Bank. Prior approval of Bangladesh Bank shall have to obtained in case of writing off loans sanctioned to the director or ex-director of the bank or loans sanctioned during
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2.2.4 Importance of Documentation Completion of required documentation formalities as per approved sanction letter before disbursement of a loan is necessary to protect the interest of the bank from any distress situation and also necessary for acknowledgement of the debt by the borrower. Correct documentation enables the banker to take legal recourse against the defaulting borrowers. The bankers deal with other peoples money which are repayable on demand. Naturally, the bankers prime consideration is the safety and liquidity of their depositors money. In case of the borrowers inability to repay the loan the banker must have some alternative tangible assets of the borrower to fall back upon to recover the loan. The banker, therefore, tries to create some sort of a charge on any other assets of the borrower in his favor. Such charge makes the asset charged available to the banker when needed in satisfaction of the advances made to him. Herein lies the role and importance played by different types of securities in loans and advances of a Bank.
TYPES OF DOCUMENTS: Documents related to securing loans and advances are classified into the following two categories (a) Charge Documents, and (b) Legal Documents: Charge documents are pre-formatted and printed forms provided by the Bank to the client for execution to create charge on the securities against loans and advances. Legal Documents are legal papers provided by the client certifying the legal status of the borrower, borrowing power, title to goods and property, legal deeds and power of attorney related to creation of charge on securities.
PARTS OF DOCUMENTATION: Apparently there are three parts in documentation, namely: Obtaining instruments/Documents. Stamping. Execution and Registration.
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The following precautions are to be taken at the time of execution of documents: Documents to be filled in and are executed in the presence of the Manager or an authorized officer of the Bank. He must put his initial in pencil so that in future it can be ascertained in whose presence the documents were executed. He may have to depose in a Court in future. The client should sign in accordance with the specimen signature recorded with the Bank. If documents consist of more than one page, all the pages are to be signed by the executants at the end of the form and also at the end of the schedule of securities. Mention of date and place of execution in a document is mandatory. All documents must be duly filled-in before execution. Documents should not be kept blank except one extra set of Promissory Note and Letter of Continuity. There should not be any cutting, overwriting, insertion, cancellation, or alteration in any document. If any such thing happens, it is to be authenticated by all the executants under their recorded signatures. After execution / Registration of documents, these should be entered into the Register (Safe custody Register for Loan Documents) duly scrutinized and initialed by an authorized officer of the Bank. Loan Disbursement of Credit facility should not be allowed before completion of documentation formalities.
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Part-
2 (Chapter#03)
Methodology of the study
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Primary Sources
Desk job on relevant topic at Export Import Bank Of Bangladesh Limited, Narayangonj
Branch
Face to face conversation with the employees Appointment with the top officials members of the Bank.
Secondary Sources
Internal Sources:
Banks Annual Report The investment division of Exim Bank Limited, Narayangonj Branch and employ activity
policy
Different circulars, manuals and files of the bank; The database of the investment division of Exim Bank Limited.
External Sources: Different books and periodicals related to the Investment banking sector. Online journals Different websites
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Part-
2 (Chapter#04)
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Branch Overview
Export Import Bank of Bangladesh Limited
Narayangonj Branch
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Total Deposits
Total advance Demand deposit Time deposit
386256971.32 462532369.25
210325632.96 112239622.37
326992309.78 235867886.53
453649187.97 298040401.14
136698523.24
Profit Investment
56369856.26 39000000
Total Deposits of EXIM Bank Limited (Narayangonj Branch From Year 2006 to 2010)
462532369.3 Taka In Amout
500000000 386256971.3 400000000 296323216.3322658965.7 300000000 169256325.3 200000000 100000000 0 2006 2007 2008 2009
2010
From The graph it can be said that the total number of deposits is increasing every year in EXIM Bank Limited at Narayangonj Branch.
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56369856.26
2006
2007
2008
2009
2010
From The graph it can be said that the profit is increasing day by day in EXIM Bank Limited at Narayangonj Branch which proves a very good situation of this branch.
Total Amount of Investment of EXIM Bank Limited at Narayangonj Branch
180000000 160000000 140000000 120000000 100000000 80000000 60000000 40000000 20000000 0 2006 2007 2008 2009 2010 39000000 59000000 95000000 Taka In Amount 139000000 153000000
From this graph it can said that EXIM Bank Narayangonj Branch is investing a lot of money in every sector from year to year.
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2.4.3 What Is Investment??? In finance and business, an investment is an asset purchased for profit, whether via income, or capital appreciation, or some combination. The entity making the investment is an investor. The opposite of making an investment, or selling the asset, is divestment. Investment has a connotation of a long-term holding period, in contrast to speculation, which is the purchase of assets seeking profit from short-term price movements. In practice, no precise definition distinguishes between investment and speculation. The expected return on investment, or expected ROI, is a measure of the attractiveness of an investment, whether anticipated or realized. In economics, investment represents capital expenditure by companies in an economy or economic model. In this context, investment is distinct from consumer expenditure, government expenditure, and net exports.
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In EXIM BANK LIMITED they invest in two ways; One is Head Office Investment: Head office investment consists of investment in Bangladesh bank, security investment and some foreign investment. Another is investment by the branches. And Branch Investment consists of investment as loans, advances and guarantees business.
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Branch Investment
Branch invest is various sectors as loans and advances. The department of Bank, which deals with these loans and advances, is known as credit department. now I would like to describe about investment department of EXIM BANK LIMITED. According to the principles of Islamic Shariah, EXIM BANK LIMITED invest on the basis of profit and loss sharing system. Earning profit is not the only motive rather than emphasis in given attaining social good and in creating employment opportunities. Further in order to diversity investment portfolio, the bank engaged itself in investment operation through special scheme introducing during the year.
Year
2006 2007 2008 2009 2010
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Investment
8E+09 7E+09 6E+09 5E+09 4E+09 3E+09 2E+09 1E+09 0 2006 2007 2008 2009 2010 3487460000 2894021207 2169435240 4265290000 6860990747
Here it can be said that the total investment of EXIM Bank was at a good position in the year 2006 & 2007 but in 2008 & 2009 the investment went down and in 2010 the Investment was so high it broke all the past years record. This shows that this year narayangonj branch has been successfully able to invest money
A) Agriculture Industry:
Sector
Agriculture Growth of agriculture industry
2006 2007
1330 1351 1.58%
2008
16838 1146.34%
2009
15985 -5.07%
2010
14118 -11.68%
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Agriculture Industry
1400.00% 1200.00% 1000.00% 800.00% 600.00% 400.00% 200.00% 0.00% -200.00%
2006
2007
2008
2009
2010
Here it can be said that the investment growth of agricultural industry was good in the year 2008 but after 2008 the bank didnt invest much money in this sector.
Sector
Pharma, food etc.) Growth Textile,
2004
2005
46183
2006
67381
2007
89823
2008
130630
36.25 %
71.28%
45.90%
33.31%
45.43%
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Growth of Industry (Leather, Pharma, Textile, food etc.) of EXIM Bank Limited
71.28%
45.43%
2006
2007
2008
2009
2010
From this graph it can be said that every year EXIM Bank limited investing their money in Industrial Sector. However in 2010 there has been a slight increase. C) Transport& Communication (In crore Tk)
Sector
Transport& Communication Growth
2006
4004
2007
5467
2008
6987
2009
10414
2010
13721
49.05% 31.76%
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From this graph it can be said that EXIM Bank limited has decreased investing in this sector in the last. From the graph it seems that every alternate year EXIM bank increases its investment in this sector.
D) Trade
Sector
Trade (In crore Tk) Growth
2004
109492
2005
136951
2006
53350
2007
63324
2008
88652
18.64% 25.08%
-61.04%
18.70%
40.00%
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Trade
60.00% 40.00% 20.00% 0.00% -20.00% -40.00% -60.00% -80.00% -61.04% 2006 2007 2008 2009 2010 18.64% 25.08% 18.70% 40.00%
From this graph we can see that other than 2008, in all the other years EXIM Bank has increased its investment it the Trade sector. This shows that it is able to attract a considerable amount of customers from this sector who require investment from EXIM bank.
E) Service Industries
Sector
Service Industries Growth
2006
5269
2007
12812
2008
7398 -42.26%
2009
8101 9.50%
2010
18221 124.92%
59.29% 143.16%
Service Industries
200.00% 150.00% 100.00% 50.00% 0.00% -50.00% -100.00% 2006 2007 2008 -42.26% 59.29% 9.50% 2009 2010 143.16% 124.92%
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2.4.6 Sector Wise Investment Concentration It is particularly important to monitor whether the increase in loans in the economy is concentrated in sectors that are vulnerable to shifts in economic activity. Investment concentration in a specific economic sector or activity (measured as a share of total loans) makes banks vulnerable to adverse developments in that sector or activity. Hence, the quality of a financial institution's investment portfolios is closely related to the financial health and profitability of its borrowers. Table shows that the most of the loans from 2004 to 2008 are concentrated in the industrial investment (around 35.91%) followed by trade (16.53%). The bank allocates lowest amount of its loans for transport sector. (2.59%). Sector wise loans and advances:
Sector
Agriculture Industry
2006
0.82% (Leather, 23.15%
2007 2008
3.97% 34.1% 2.63% 35.91%
2009
4.23% 40.35%
2010
3.99% 46.29%
Capital 12.02%
0.92%
0.56%
0.98%
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0 54.17% 12.02%
From the graph we can see that EXIM bank is giving more emphasizes on Trade & Industrial sector of Bangladesh. The least amount is invested in agricultural sector followed by construction sector. From the previous graphs we found out that each year the amount invested in these two sectors is decreasing probably because EXIM bank does not find much profitability from these sectors. In the trade sector however the amount has increased considerably because of the tendency of this sector contributing more to the profit. Another new addition is Working Capital financing which contributes 12.02%. We have noticed from the previous table that this
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2.4.7 Investment Income from Investment Income derived from investments from the year 2006 to 2010 is given below
Year
Investment Income
675.53 494.34 380.37 246.14 182.03
2006 182.03
2007 246.14
2008 380.37
200 100 0
2009 494.34
2006
2007
2008
2009
2010
From this graph it can be said that EXIM bank limited is earning a lot of profit from year 2006 to 2010 which indicates a good situation of this company in this sector. So we can say that the income from the investment Department is one of the main sources of earning profit of this bank. As EXIM Bank increases its investments from year to year, so it is logical that its income from sanctioning investments is more. The bank has achieved the highest profit in 2010 from any other previous year. So performance of providing investments of the bank is not dissatisfaction.
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Strengths
Export Import Bank of Bangladesh Limited main strength is their members of the Board of Directors, are leading business personalities and reputed industrialists of the country. They have their own training center. Better working environment, which promotes team spirit, creativity, & performance capabilities of its employees. Compared to other banks this bank is in better position in this competitive market. The bank has a better controlling system than the other banks to recover its loan. Skilled, creative & committed manpower.
Weaknesses
Export Import Bank of Bangladesh Limited has not introduced online banking system which has an increasing public demand now days. Lots of works are done manually which slows down the Investment process. There is no separate customer care department, which can work solely with customer care and for continuous improvement of services. The bank couldn't use it's full of capacity to give loan. Shortage of manpower in this division. So during the working hour the employees can't provide proper attention to the customer that enhances customer dissatisfaction.
Opportunities
They have a big opportunity if they provide online Banking system. It does not foresee exciting any of its business lines since it maintains balanced portfolio & it is well-positioned to increase out-thrust into diversified interests. The bank has many loyal customers. Many people in Bangladesh prefer to have money invested from Shariah based banks. Growth of global economy and Bangladesh's foreign trade in the coming years can provide huge growth opportunities.
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Threats
The emergence of several private & foreign banks within the past few years offering similar or more services with less or free charge for the facilities can be a major threat for the bank. The macroeconomic situation of the country can deteriorate. Government has been controlling industrial credit. The depreciation of Taka against US dollar is a great threat to foreign exchange transaction and profitability. Competition has intensified in the industry. Overburden with regulations & frequent changes of policies create problems in adapting clients & complying with rules, which adversely affect the business. Internal clash and discriminations is the biggest threat for them. The other financial instructions are giving loan to customers at a low rate than EXIM bank.
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Part-
2 (Chapter#05)
Findings of The Study
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The main investment businesses are focused on the following sectors/areas Ready Made Garments Hospitals & Clinics IT Related business Agricultural and Agricultural developments items Fishing and fishing business promotion Telecommunication Transportation and communication Forestry and furniture Construction business and housing development Leather and leather goods Plastic and other synthetics Entertainment Photography Ceramic Hotel & tourism
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Age between 21 at the time of application and 60 at the time of maturity Minimum monthly income BDT 25,000.00 Length of service /age of business minimum 2 years For service holder ahead minimum service up to maturity of investment
Eligible items/Article Car Jeep Station wagon Any other vehicle for own/business use Investment Limit Maximum limit Tk.20.00 lac (Investment equity ratio minimum 50:50) Tenure of investment Tenure is maximum 5 years.
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The total amount of investment of the bank stood at tk. 53,637,68 million as on December 31, 2008 as against tk. 40195.24 million as on December 31,2007 showing an increase of tk.
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The bank provides suitable investment services & products for the following sectors Table: Sector-wise Loan Facilities a) Steel & Engineering. b) Food & Allied. c) Agriculture d) Textile & Garments. e) Pharmaceuticals & Chemicals. f) Paper & Paper Products. g) Service Industries. h) Housing & Real Estate. i) Cement. j) Brick Fields. k) Edible Oil. l) Assembling Industry. m) Collage Industry. n) Electronics & Electrical Commodities. o) Construction Company. p) Trading (Retail/Whole sale) q) Others.
2.5.3 Major Investments Categories The Bank has primarily divided all investment facilities into two major categories. In this section they are discussed in details. Izara Bill Baia: These are the investment made by the Bank with fixed repayment schedules. The terms of investment are: Short term Medium term Long term : Up to 12 months : More than 12 and up to 36 months : More than 36 months.
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Continuing loans These are investment having no fixed repayment schedule, but have an expiry date at which it is renewable on satisfactory performance. Investment facilities available under this category are: Bai-Muazzal Continuous Investment allowed to individual/firm for trading as well as wholesale purpose or to industries to meet up the working capital requirements against hypothecation of goods as primary security fall under this type of lending. It is allowed under the categories (i) "Commercial Lending" when the customer is other than an industry and (ii) "Working Capital" when the customer is an industry. Murabaha Financial accommodations to individual/firm for trading as well as for wholesale or to industries as working capital against pledge of goods as primary security fall under this head of investment. It is also a continuous investment and like the above allowed under the categories (i) "Commercial Lending" and (ii) "Working Capital".
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Agriculture Investment facilities to the agricultural sector fall under this category. It is subdivided into two major heads: a) Investment to primary producers: Financing under these categories refers to the investment facilities allowed to production units engaged in farming, fishing, forestry or livestock. b) Investment to dealers/distributors: It refers to the financing allowed to input dealers and (or) distributors in the agricultural sectors.
Izara Bill Baia for Large & Medium Scale Industry This category of investment accommodates the medium and long term financing for capital structure formation of new industries or for expansion of the existing units who are engaged in manufacturing goods and services. Investment Facility available under this category is: Izara (Lease Finance) It is one of the most convenient sources of acquiring capital machinery and equipment whereby a client is given the opportunity to have an exclusive right to use an asset usually for an agreed period of time against payment of rent. It is a term financing repayable by installment. Izara Bill Baia to Small & Cottage Industries These are the medium and long term investment allowed to small & cottage manufacturing industries.
Working Capital Investment allowed to the manufacturing units to meet their working capital requirements, irrespective of their size-big, medium or small, fall under the category. These are usually continuing investment and as such fall under the head "Bai-Muazzal"
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Others Any investment that does not fall in any of the above categories is considered under the category "Others". It includes loans to i) Transport equipments, ii) Construction works including house (commercial/residential), iii) work order finance, iv) personal loan etc. Investment Facilities available under this category are: Izara Bill Baia (House Building): Investment allowed to individual/enterprises for construction of building for commercial purpose fall under this type of investment. The amount is repayable by monthly installment with a specified period. Izara Bill Baia (Staff House Building): Investment allowed to Bank's employees for purchase/construction of house falls under this Loan. Other Loan to Staff: Investment allowed to employees other than for House Building is grouped under head Staff Izara Bill Baia (General). Izara Bill Baia (Hire Purchase): It is a type of installment-based loan under which the purchaser agrees to take the goods on hire at a stated rental, which is inclusive of the repayment of principal as well as profit for adjustment of the loan within a specified period.
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MTDR/PSP/BSP/Insurance Policy/Share etc.). Bai-Muazzal (Work Order): Investment allowed against assignment of work order for execution of contractual work falls under this head. This investment is generally allowed for a definite period and specific purpose not for continuous purpose.
Loan Facilities for single borrower/Group or syndication The bank from time to time allows loan facilities to a single customer/Group (Funded & non funded) up its 50% of total capital out of which funded facilities does not exceed 25% of total capital. In case a proposal in submitted to Head Office, then the Bank considers the extent of the Bank's global exposure (risk) to that customer group.
2.5.5 Investment Facility Parameters Tenure Bank does not ordinarily go for any loan facilities for long-term basis. Short-term loan facilities are for 3 months to 12 months. Medium term loan facilities are for 12 months to 36 months. Long-term loan facilities are for more than 36 months.
Size Maximum 50% (Funded & non-funded) of total capital of the Bank. Maximum 25% (funded) facilities of total capital of the Bank.
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2.5.6 Lending Facilities Restrictions The bank establishes a specific industry sector exposure cap by preparing a sector wise loan budget in order to avoid over concentration in any one-industry sector. The budget is approved by the Board in the month of January every year and includes the following points; Total Facilities: The aggregated of all cash facilities is kept at 80% of customer's deposits. It is also governed by the statutory and liquidity reserve requirement of Bangladesh Bank. Term Facilities: Aggregated long-term facilities are restricted to 20% of the total loan portfolio and are not allowed for a period more than 5 (five) year. Unsecured Facilities: Aggregate bank loans to corporate or individual customers who are not secured by collateral and are allowed on the strength of customer's personal integrity and financial standing or the corporate customer's balance sheet, with or without hypothecation of stock is restricted to 30% of the total loan portfolio. Sector-wise Allocation: Sector-wise allocation of loan budget is made in the month of January of each year with the approval of Executive Committee/Board of Directors. This is reviewed from time to time. Security: Security accepted against loan facilities is properly valued and is affected in accordance with the laws of the country in which the security is held. An appropriate margin of security is taken to reflect such factors as the disposal cost or potential price movement of the underlying assets.
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2.5.8 General Lending Principles of EXIM Bank Lending of funds to the traders, businesses and industrial enterprises constitutes the main business of the bank. A major part of the bank's income is earned from interest and discount on the funds so lent. The business of lending, nevertheless, is not without certain inherent risks. Largely depending on the borrowed funds, a banker cannot afford to take Undue risks in lending. While lending its fund, the bank, therefore, follows a very cautious policy and conducts its business on the basis of the well-known principles of sound lending in order to minimize the risks. The bank usually follows the following lending principles in its credit management operations: Safety: As the bank lends the funds entrusted to it by the depositors, the first and foremost principle of lending is to ensure the safety of the funds lent. By safety it is meant that the borrower is in position to repay the loan, along with interest, according to the terms of the loan contract. The bank takes utmost care in ensuring that the enterprise or business for which a loan is sought is a
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2.5.9 Investment Investigation Lending is one of the most important functions of a bank. Therefore, It is of paramount importance that the bank chooses a reliable borrower. For this the bank places the kind of mechanism(s) that helps it identify the borrower who can be creditworthy. This section deals with some of the mechanisms that the bank employs for this end. Investment Application form A investment application form usually contains information pertaining to the name of the concern, constitution, nature and place of business, year of establishment, borrower's experience in the line, particulars of assets and liabilities, purpose of advance, amount required, period of advance required for, nature of security offered, sources of repayment, names of present bankers with detailed borrowing and other facilities. This is the first step of knowing about the borrower. Personal Interview The bank arranges interview with the borrower to know more about his specific requirements, the prospects of his employing the funds prudently, his capacity to repay and the suitability of the security offered. The main points that are covered in the interview are: his business, all legal documents required for operation of his business (Memorandum and Article of Association, trade and import license), his capital with reference to working capital, his experience in the business, results of financial statements of at least three years, amount of investment and period, purpose of advance, source of repayment, terms of payment, security documents that are offered,
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2.5.10 Investment Recovery The bank has a Recovery Unit (RU) under CRM. It directly manages account with sustained deterioration (a Risk Rating of Sub Standard (6) or worse). The RU's primary function is: Determine Account Action Plan/Recovery Strategy. Pursue all options to maximize recovery. Ensure adequate and timely investment loss provisions are made based on actual and expected losses. Regular review of grade 6 or worse account. 2.5.11 Investment Assessment & Risk Management
Investment Assessment
A thorough loan and risk assessment is conducted prior to the granting of loans and at least annually thereafter for all facilities. The results of this assessment are presented in a loan proposal to Head of Loan Division for approval. The guiding principles for a bank official while collecting and recording information are to remain uninfluenced by extraneous considerations and secondly he maintains contact with all those who can be of assistance. The following steps for completion of Loan Risk assessment for each facility are followed by the bank in conjunction with the guidelines/instructions given in Head Office circulars issued from time to time.
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Risk Management
The following risk areas are addressed for risk management: Borrower Analysis: The majority shareholders, management team and group of affiliate companies are assessed. Any issues regarding lack of management depth, complicated ownership structure or inter group transactions are addressed, and risk mitigated. The bank collects credit information from CIB regarding the borrower's past credit status and exchanges of credit information from other banks or bank opinions. CIB report reflects/includes the name of all the lenders with facility, limit and outstanding. Industry Analysis: The key risk factors of the borrower's industry are assessed. Any issues regarding the borrower's position in the industry, overall industry concerns or competitive forces are addressed and strengths and weaknesses of the borrower relative to its competitors are identified. Supplier/Buyer Analysis: Any customer or supplier concentration is assessed. Any issues regarding the borrower's position in the industry, overall industry concern or competitive forces are addressed and the strengths and weaknesses of the borrower relative to its competition are identified. Historical Financial Analysis: An analysis of a minimum of 3 years historical financial statements of the borrower are presented. Where reliance is placed on a corporate guarantor, guarantor's financial statements are analyzed. The analysis addresses the quality and sustainability of earnings, cash flow and the strength of the Borrowers balance sheet. Specifically, cash flow, leverage and profitability are analyzed. Project Financial Performance: Where term facilities (tenor greater than 1 year) are being proposed, a projection of the borrower's future financial performance are provided, indicating an analysis of the sufficiency of cash flow to service debt repayments. Loans are not granted if projected cash flow is insufficient to repay debts.
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Primary security means the security offered by the borrower himself as cover for the loan. It refers to the asset, which has been bought with the help of the bank. Such as when machinery or some goods have been bought with the help of the bank the machinery and goods constitute the primary security. Primary Security may be either personal security or impersonal security or both. Personal security is given by a borrower by way of duty-executed promissory note,
acceptance/endorsement on a bill of exchange and personal covenants in mortgage deeds or loan agreements. Impersonal security is given when a charge is created by way of pledge/hypothecation/mortgage over the borrower's tangible assets, such as goods and commodity, fixed assets, bills receivables, book debts. Murabaha Post Import (MPI) MPI facility is allowed, as post-import finance against imported goods under the Bank's L/Cs. MPI facility does not exceed invoice value net of L/C margin unless the Bank agrees to finance duties/VAT. However, where market price of the goods is lower than landed cost banks makes necessary arrangement with the customer to obtain additional deposit. Head Office approves the price at which MPI goods to be released to customer or it may be at market price or landed cost whichever is higher. Murabaha Valuation of the goods to be pledged to the Bank against Murabaha limit in no case exceeds:
The landed cost or market prices whichever is lower in case of imported goods. The ex-mill/factory price of market price whichever is lower is case of domestically manufactured commodities as evidenced by invoice.
The wholesale price/competitive market price duly verified by the Branch and approved by Head Office.
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Pledge letter showing detailed particulars of goods with value accompanied by relative cost memo / Invoice. Undertaking on Tk. 150 non-judicial stamp by the client (in case of exemption of Burglary insurance policy.) Letter of Disclaimer from the owner of the warehouse (in case of warehouse rented by the client). Letter of Guarantee (Stamped) of all the partners in their individual capacity (in case of
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2.5.14 Approval Authority After the loan proposal is completely prepared by the branch officers, it is sent to the head office for approval to the approval authority. To ensure proper and orderly conduct of the business of the Bank, the Board of Director empowers the Managing Director and other Executives of the Bank to lend up to certain amount under certain terms and conditions at their discretion. The lending authority is broadly categorized as follows: (1) Board/Executive Committee. (2) Managing Directors (3) Head of Loan Division Authority and responsibilities of each of the above are as follows:
a) Board of Directors Establishes overall policies and procedures for approving & reviewing loans. Delegates authority to approve and review Loans. Approves loan for which authority is not delegated. Approves all extension of loan that is contrary to Bank's written loan policies.
b) Executive Committee of the Board Approves loan facilities as delegated by the Board of Directors. Supervises the implementation of the directives of the Board of Directors. Reviews of each extension of loan approval by the Head Office Loan
Committee/Managing Director. c) Managing Director and Head of Loan Division, Head Office The Managing Director and Head Office Investment Committee constitute a committee and it is responsible for:
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2.5.15 Investment Monitoring To minimize loan losses, the bank put in place monitoring procedures and systems that provide an early indication of the deteriorating financial health of a borrower. The bank officials monitor the followings: Past due principal or profit payments, past due trade bills, account excesses, and branch of loan covenants; Investment terms and conditions, financial statements on a regular basis, and any covenant breaches or exceptions for timely follow up. Timely corrective action to address findings of any internal, external or regular inspection/audit. Computer systems and where automated systems are not available manual processes are used to produce accurate exception reports. Exceptions are followed up on and corrective action taken in a timely manner before the account deteriorated further.
The main focus of this paper is on investment management of EXIM Bank. Besides this the paper also looked at the Islamic banking in Bangladesh as the EXIM bank was converted to an Islamic Shariah based bank in July 2004. Islamic banking in Bangladesh has been a tremendous success over the last decade or so. The annual growth rate of Islamic banking is 30%. Islamic banking is based on cardinal two principles laid down in Shariah: 1) prohibition of interest 2) replacing it with profit sharing wherever feasible and desirable. The study found that the bank has a well-developed lending policy. The bank follows certain general principle of lending such as safety, purpose, liquidity and diversification. All the investment applications go through each of the steps of the investment granting process. The
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Part-
2 (Chapter#06)
Recommendations
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Part-
2 (Chapter#07)
Conclusion
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Success in the banking business largely depends on effective lending. Less the amount of loan losses, the more the income will be from Credit operations. The more the income from Credit operations the more will be the profit of the EXIM Bank and here lies the success of Credit Financing.
Actually EXIM Bank is a private sector bank having a small market share of the industry. Although it is a third generation bank facing government deposit restrictions, it has all the potentials to penetrate in the market. If the weakness are addressed appropriately and opportunities are explored keeping in view the threats behind with a stable and adroit management having regard to appropriate corporate governance and modern automation technology, it is expected that EXIM advance up in the ladder of success in the coming years.
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