Chapter-1: Introduction of Internship Program1.1 Definition of Internship
Internship is an assigned work performed usually at the end of a course curriculum. The goal of internship is to apply one’s theoretical knowledge in practical fields. Thus internship is a pragmatic application of knowledge and achieving practical experience by engaging one self in different and distinct sectors of work. So, internship or practical training is a technique often acquiring practical knowledge. For this reason on Internship is the most important for gaining practical knowledge.
1.2 Rationale of Internship Program
1.2 Rationale of Internship Program
Goods and services are produced for the purpose of using in daily life. Similarly, theoretical knowledge is acquired for the purpose of applying in the practical life. The propensity of application of theoretical knowledge in practical life successfully internship program is absolutely necessary, because theoretical knowledge will be fruitful if it can be applied in the practical life. When we can implement the theoretical knowledge practically, we can say the knowledge is successful. Otherwise the achieved knowledge is valueless. Internship program is the way of implementing the theoretical knowledge practically. However, the importance of internship may be described in the following ways:
ø As internship program is the practical implementation of the theoretical knowledge, it helps to increase the quality and effectiveness of the trainer.
ø We can only know the problems of an organization in directly through theoretical knowledge, but we can know the nature of the problems, problems of the various departments, methods of solving the problems through the practical training. So it is very important to identify the problems and eradicate the problems.
ø The trend of all activities in an organization becomes growing through practical training.
ø By internship program students can understand limitations, shortages and practicability of their knowledge and there by can take necessary action for removing these limitations and shortages.
ø It mentally prepares for their professions.
ø Internship program acts as a bridge between theoretical knowledge and managerial practice.
ø Internship acts as a guideline during the service period.
ø Through internship a student can achieve the ability to find out real problems and can make suitable solutions.
Last of all, we can say that one should give importance of an internship program.
1.3 Objectives of Internship
We can mention of objectives of internship in the following ways:
ø To show guideline for searching various necessary information to solve the organizational problems.
ø To add new information with established ways.
ø To identify problems and recommends to solve them.
ø To realize what kinds of organization can contribute to the economic development of a country.
ø To determine entire actual situation of the organization is an objective of internship training.
ø Another important objective of practical training is to implement the knowledge of practical training in the practical life.
ø To prepare pragmatic report about entire management of organization is another objective.
ø To make comprehensive solutions of problems to increase the diversification and modification of marketing.
ø To show about the conditions of the Bank and its good will to the public.
ø To identify managerial problems and eradicate those.
ø The most important objective of practical training is to seek loan from financial institutions.
Finally, it is very easy for me to conceive of the fact that the internship program facilitates both the students and the Bank. Students can add practical knowledge with their theoretical knowledge and bank can know what is the present condition of various areas of the organization.
Chapter–2
2.1 Prelude
Karmasangsthan Bank is a specialized banking institution in Bangladesh. It is a financial institution. In this sense, it cannot maintain the fully Banking Ordinance. It has no power to receive deposits. It is the main source of self-loan to remove unemployment problem. So, we can say that it plays an important role in creation of employment opportunity and income generation. It participated in socio economic development activities in the Branch area’s people.
2.2 Background of the Study
Internship program is an academic requirement for the student of M.B.A of the department of Accounting & Information Systems, University of Rajshahi. For the Internship every student is required to work in financial institution to satisfy the demand for practical experience. For this reason, I went to Karmasangsthan Bank of Rajshahi Branch, at C.M.B road under the supervision of Professor Habibur Rahman Akan, Department of Accounting & Information Systems, University of Rajshahi.
At first I went to the room of Branch Manager then I submitted a letter to the manager that was issued by the Head of Office of Dhaka. First day I discussed about general function of Karmasangsthan Bank. During my study period I asked them about the overall activities of the bank and they gave me satisfactory answer.
In my little knowledge I can say that knowledge from book and the practical learning are not the same there is a significance difference between the theoretical knowledge and the practical knowledge. So, I think that this practical training is very important.
My present topic is “An overall activities of Karmasangsthan Bank of Rajshahi Branch, Bangladesh.”
2.3 Objective of the study
To find out the overall performance of the Karmasangsthan Bank at Rajshahi Branch
To find out the problem at loan disbursement of Karmasangsthan Bank of Rajshahi Branch
To find out the problem of loan recovery of Karmasangsthan Bank of Rajshahi Branch
To know the other administrative problem of Karmasangsthan Bank of Rajshahi Branch
To provide suggestion for development the overall performance activities of Karmasangsthan Bank of Rajshahi Branch
2.4 Limitation of the Study
There are some problem that I fallen in my study period. They are as follows.
Lack of time: I have got 30 days for my Internship program I think 30 days program is not sufficient to acquire complete knowledge about the overall activities of a bank. For this reason, I could not clearly understand many critically site of this bank.
Administrative secrecy: We know that there are some secret sites of any institute. As a financial institute the Karmasangsthan Bank of Rajshahi Branch was not exception to this regard. The authority kept much information as secret.
Secondary data collection problem: I couldn’t collect as many secondary data as I needed. The scarcity of secondary data was mentionable limitation of my study.
2.5 Methodology
This paper has been prepared based on “An overall activities of Karmasangsthan Bank of Bangladesh in Rajshahi Branch” and its related data. In my total internship program data have been collected from the sources:
Primary Source
Secondary Source
Primary Source: Primary data have been collected from the study filed. Primary data collection methods are as follows:
1. Questionnaire method;
2. Direct interview;
3. Personal communication;
To prepare this report I used the following methods of data collection.
1. Questionnaire method:
At first I make a questionnaire as the direction of my supervisor about the Karmasangsthan Bank. Thus weaving section I collect other concern questions and arrange them in that questionnaire, following this questionnaire and collect information and data from the Karmasangsthan Banks’ executives.
2. Direct interview methods:
I have collected information and data by direct interviewing of the executives and officers of the Karmasangsthan Bank. For the purpose of interview I had prepared a set of questionnaire.
3. Personal communication:
I have gathered data through personal discussion with the officers of different level employees of the Karmasangsthan Bank. They provide information about banking operations. Other information have been collected by personal discussion the coordinating officer, accounts officers, etc. of the Karmasangsthan Bank.
Secondary sources: More over the study is based on secondary sources of information. I have collected secondary data from the following sources:
Audited annual report of Karmasangsthan Bank of Rajshahi Branch
Published papers on recovery of Karmasangsthan Bank of Rajshahi Branch
Published paper on loan advance of Karmasangsthan Bank of Rajshahi Branch
Circular letter and journals
Chapter–3
AN OVERVIEW OF THE KARMASANGSTHAN BANK
3.1 Back ground
The Karmasangsthan Bank was established in 1998 under (VII Ordinance). The establishment of Karmasangsthan Bank was a major step in a series of measures undertaken by the Government to remove the unemployment. And then “The Karmasangsthan Bank Ordinance” was established in 30 June 1998 under The Karmasangsthan Bank Ordinance, No 1(2), 1998. The Karmasangsthan Bank was formally inauguration in 22 September 1998. At first the Bank started its activities in five Divisional City. They are as follows
ø Dhaka
ø Rajshahi
ø Khulna
ø Chittagong
ø Sylhet
At preset the total branch of Karmasangsthan Bank is 92 among them 64 are district level and 28 are Thana Level.
3.3 Capital of Karmasangsthan Bank
Authorized Capital of Karmasangsthan Bank | 300 Crore |
Issued Capital | 100 Crore |
Paid up Capital | 98.5 Crore |
3.4 Capital Structure of Karmasangsthan Bank
A. Receive from Government | 75 .00 Crore | |
B. Receive from Other Bank | ||
| 3.00 Crore | |
| 2.00 Crore | |
| 3.00 Crore | |
| 1.00 Crore | |
| 1.00 Crore | |
| 1.00 Crore | |
| 1.00 Crore | |
| 1.50 Crore | |
| 5.00 Crore | |
| 2.00 Crore | |
| 1.00 Crore | |
| 1.00 Crore | |
| 1.00 | |
Total | 23.50 Crore | |
In Total |  98.50 Crore |
3.5 Operating Activities of Karmasangsthan Bank
There are four project of Karmasangsthan Bank. They are as follows:
- Self loan project
- Agro- based project
- Industrial Labor project
- Risk related project
3.6 Objectives of Karmasangsthan Bank
- To encourage self employment
- To remove the unemployed youngest men and women in our society
- To improve the national economic condition
- To mobilize saving
- To provide poverty alleviation
- To develop the social stage of village
- To develop the agro based industry
3.7 The Overall Performance of Karmasangsthan Bank
(Last seven years)
^ Loan Disbursement And Recovery:
Financial Year | Loan Disbursement | Loan recovery | Balance | |||
Numerical | Amount | Amount | Rate | Numerical | Amount | |
1998-99 to 2002-03 | 32208 | 96.09 | 55.15 | 74% | 22748 | 56.00 |
2003-04 | 10714 | 27.56 | 27.87 | 78% | 24937 | 60.75 |
2004-05 | 22350 | 73.61 | 34.25 | 80% | 40267 | 108.12 |
Total | 65272 | 197.26 | 117.27 | 80% | - | |
^ Profit Earnings and Tax Payment
Financial Year | Total profit earning | Income tax payment | Profit earning Branch |
1998-99 | 5.11 | 2.42 | - |
1999-00 | 6.52 | 2.66 | 01 |
2000-01 | 6.18 | 2.25 | 10 |
2001-02 | 5.87 | 1.66 | 10 |
2002-03 | 5.05 | 1.47 | 13 |
2003-04 | 4.28 | 1.12 | 35 |
2004-05 | 2.72 | 0.90 | 22 |
Total | 35.73 | 12.48 |
^ Creation of Employment:
ó Self loan program | 77523 (Persons) |
ó Agro based program | 6269 (Persons) |
ó Industrial labor program | 6378 (Persons) |
ó Risk related program | 5000 (Persons) |
Total |  89470 (Persons) |
3.8 Monitoring and Supervision of Branch Activities
All the Activities of branches are monitored or supervised by the head office in order to enforce these activities. The ministry of finance subjection to launch 6 regional office of the country. Now at present it ensure the supervision of each project by branch manager.
3.9 Achievement of Karmasangsthan Bank
- The limited employee or personnel operate bank loan disbursement and recovery activities. The loan recovery rate is high position still.
- The bank loan sanctioned to the number of person about 65272 and corresponding employment opportunity is created about 89470.
- The loan is sanctioned security free for short-term period.
- The loan income ability people of the society are benefited in respected of loan.
3.10 Future prospect of Karmasangsthan Bank
- At present a large number of the capable worker of our country are unemployment. Every year many number manpower is adding this unemployment, resulted that the socio economic position is greatly hampered. Consequently the most of the Government or private personnel are not getting employment opportunity.
- Karmasangsthan Bank plays wide role in order to self employment of the unemployment people through sanctioning this loan.
- The exploited programs should be increased resulted that employment opportunities will be increased. There is a better opportunity for the bank personnel to contribute distinguish.
3.11 Future Planning of Karmasangsthan Bank
- To open new branch in each Thana
- To increase employment opportunity through increasing loan flow
- To increase professional efficiency of the bank personnel by changing and recommending of existing organizational structure of this bank.
3.12 Overview of the Rajshahi Branch
3.12.1 Location
Karmasangsthan Bank of Rajshahi Branch started its activities in 8th March 1999 at City Corporation of Rajshahi. It is situated to the middle point of Rajshahi, Kazihata and it is north side of the Shaheb Bazar.
3.12.2 Nature Of Bank
This branch fully service oriented that’s why it does not maintain the banking activities like other commercial bank. It’s all activities is operated through Rajshahi Krishi Unnoyn Bank. It has two accounts in the RAKUB for transacting its activities. These two accounts are
a) Short Term Accounts
b) Current Accounts
3.12.3 Organization Structure of the Rajshahi Branch
3.12.4 Overall Activities
Although there are four project of Karmasangsthan Bank, but Rajshahi Branch of Karmasangsthan Bank started three project. These are as follows:
- Self Loan: Self loan project is the most important project of Karmasangsthan Bank. At first this branch started this project. Self loan gives those people who are unemployed. Actually this loan have given to remove unemployment in our society. They may be educational man or women. The self loan may be two terms
- 1-2 Years term
- 3-5 Years term
Interest rate of self-loan
For business 10 %
Non business / Productive 12 %
3.12.5 Loan Sanctioning project
i. Goose – Chicken farm
ii. Fish farm
iii. Dairy farm
iv. Shrimp farm
v. Manual and small industry
vi. Mix farm
vii. Horticulture
viii. Seri Culture
ix. Nursery and Vegetable garden project
x. Salt industry
xi. Nursing cow and goat
xii. Factory of producing agriculture tools
xiii. Computer training
- Industrial Labor: This loan is sanctioned for the personnel of those industries have been ending up. Mentioned that, the personnel have to make registration in the labor ministry. Labor Ministry sent a registration copy to the branch manager. Industrial labor may be two types
i. Direct
ii. Trained personnel
Rajshahi Branch this loan activities is launched 27 February 2005. and the aggregated loan amount of Tk 62,50,000. But at best loan may be sanctioned about 75,000 for one or two years and here no needed of interest but services charged was recommended.
The service charge 8 %
Loan Sanctioning project
i. Automatic repairing and maintenance
ii. Air condition and refrigeration
iii. Auto electric and air condition
iv. Motor driving
v. Dairy farm
vi. Goat rearing
vii. Poultry farm
- Agro- based: This loan is sanctioned for the purpose of developing agriculture sector. Everybody can get this loan against corresponding security for one or two year’s period. Rajshahi Branch this loan activities is launched 7 February 2005.
Interest rate of Agro-based
For machinery 8 %
Current capital 9 %
Loan Sanctioning project
i. Fruit processing industry
ii. Bread & Biscuit production
iii. Milk processing industry
iv. Flavour and grind masla production
v. Sugarcane processing industry
vi. Dull processing industry
vii. Rayon industry
Interest and service charge are treated as follows:
1. Self-Risk: In the case of self-risk all interest are treated as income.
2. Agro based & industrial labor: Income is treated as the following rate:
i. Industrial labor: According to 8% servicing charge
a. 5% revolving fund
b. 3% income
ii. Agro based:
For 8% interest
i. 5% revolving fund
ii. 3% income
For 9% interest
i. 6 % revolving fund
ii. 3% income
3.12.6 Criteria and Limiting of Loan
Karmasangsthan Bank loan has not definite limit. But the loan based on the nature and size of the project. For person at best 5 lac and for group 20 lac. But mentioned that the person and group loan together not more than 25% of total sanctioning loan of concerned branch.
3.12.7 Security Against Loan
a) For Tk 50,000: Karmasangsthan Bank recommended security free against loan up to 50,000. in this case, guarantor’s may be father, mother, husband, wife against laonee. On the other hand, who have ability to paid up the loan and permanently live in the project area, he may be the guarantor and photo of the guarantor’s land or house document to be submitted.
b) For over 50,000: The loanee must have the document submitted the original copy of his land or house. If the loaner cannot be a guarantor himself then the person who have ability to pay the interest plus total loan he may be the guarantor. And in this case, the guarantor must be submitted the original land and house documents.
c) All loanees are held responsible for their project to the bank.
3.13 Qualification of Getting Bank Loan
The applicant must be conformation to the following condition to receive loan.
- Loanee must be Bangladeshi
- Loanee will be matured enough
- Ability to uses the loan and creditworthyness
- Loanee will disqualified to receive loan if he had loan from other bank
- A minor or witless will be disqualified to have a loan
- Loanee must himself to be enquired in operating of the project
3.14 Take care of loan
Bank insured the taking care of loan, that’s why on of assistant officer after inspecting the proceeds to the project for weekly basis and prepared a monthly report to be submitted on branch manager. Assistant officer finds any problem he has to inform the branch manager immediately branch manager takes effective action to be conveyed the head office in order to maintain bank interest.
3.15 Activities of the Branch
A. Loan Related Activities:
1. Identifying the potential sectors of the area under the branch.
2. Justifying enthusiastic and innovative entrepreneur.
3. Giving preference to pay loan to the unemployment young trained from the Government organizations and government affiliated organizations.
4. Accepting loan offer, Paying loan sanction and quick enquiry
5. Loan documentation, providing loan and ensuring project implementation
6. Appropriate communication network, Ensuring timely installment recovery
7. Sending proposal to the head office that beyond the branch manager sanction power
8. Balancing debt/ loan account based on month
B. Account Related Activities:
1. Achieving the concept of account sectors.
2. Keeping books of account in a well manner
3. Vouching timely in the appropriate account sector and posting to the books of account
4. Sending report according to the demand for head office.
5. Accounting for audit argument timely to settle audit argument
C. Others:
1. Communicating with local administration, Government, Semi – government, Autonomous institutions in a better way.
2. Creating inspiration of the general people regarding the activities of Karmasangsthan Bank.
3. Performing other activities directed by head office.
3.16 Loan Category & Classification
1. Short term Loan: Loan up to Tk 10000 is considered as short loan. This type of loan has to be classified based on objective criteria. Form Cl-2 is to be used for this classification.
2. One time redeemable term loan: Loan above Tk 10000 that is one time redeemable after a specific period is called one time redeemable term loan. This type of loan has to be classified according to quality standard and objective criteria. Form Cl-3 is to be used for such loan classification.
3. Installment redeemable loan: Loan above Tk 10000 that redeemable within a specific period based on installment is called installment redeemable loan. This loan should be classified based on the number of default installment, quality and quantity standard. Form Cl-4 is to be used for such loan classification.
3.17 Advance
In general we know that advance is the present use of future income when we borrow money we are communicating future income to pay for product of services we are using to day.
But in respect of Karmasangsthan Bank advance is paid only the employee data related to the Karmasangsthan Bank Management for built up a house or buying a Motorcycle. Here the interest rate is same to the bank rate.
Table: Showing the Advance paid to the staff of last year
Financial Year | Advance paid |
2004-05 | 160000 |
3.18 Savings
Karmasangsthan Bank maintains a small savings program. It collects weekly Tk. 10 from the loanee and it content a non checking account and here the interest rate 3.5% for 6 month.
Table Showing the Cumulative Savings for Last Five Years
Financial Year | Amount (Tk) |
2004-05 | 244081 |
2003-04 | 214831 |
2002-03 | 185582 |
2001-02 | 151551 |
2000-01 | 87331 |
Chapter–4
LOAN DISBURSEMENT
4.1 Meaning Of Loan Disbursement
Loan disbursement means distribute the loan among the loaner against their various kinds of security. In the head office, there was specific project appraisal committee. The proposal was forwarded b ye the branches. Along with their recommendation after evaluation and inspection of the relevant factors. The main objective of the loan is to finance various project to remove unemployment. The bank has projected a lending target of Tk. 2 crore for the present financial year 2004-05. We have to ensure quality loan disbursement along handsome quality. It depends the following steps-
1. Efficient and motivated man power: Efficient and motivated man power is main fore to achieve the goal of the institution. Without successful implementation of any program cannot be ensured.
2. Suitable plan: There should be a realized plan for glorious output, on the other hand, activities the goal of the institution without planning will bring less output even with hard labor.
3. Selection of genuine borrower: Borrower selection is the vital part of loan disbursement process. If one fail to select the borrower property total efforts related to disbursement of loan will go into vain undoubtedly. So, genuine borrower selection should be ensured first for quality loan disbursement.
4. Spot investigation: A distinct picture of borrower is found from spot investigation, it is just like on X-ray report of a borrower on which correct decision is taken regarding sanction and disbursement of loan.
5. Prompt service If prompt services are not given to the borrower they will be dissatisfied on there is no alteration of prompt service for attaining success in the bank business.
6. Utilization: Without proper utilization of loan amount, loanee will loss his capacity to repay the loan in due time. That’s why strong monitoring should be ensured for proper utilization of loan.
7. target achievement: target of loan disbursement should be achieved with he achievement of profile target. So, strong imitative should be taken from the very beginning of the financial year.
4.2 Purpose of loan disbursement
This bank sanctions loan under various purposes. These are follows
ø To earning profit
ø To help the people to achieve self sufficient
ø To expand their investment facility.
ø TO expand their activities.
ø To remove unemployment.
4.3 Policy of loan disbursement
The rules and regulations followed in field of giving or disbursement of loan are given below-
ø To get loan from Karmasangsthan Bank for any project or business at the first promoters submitted an application to the bank manager.
ø After the application form is submitted the bank verifies different of the sector (or which purpose the loanee have to take the loan) in details. Generally the bank verifies the security of loan, which against the laonee has to taken.
ø There is no need of fees.
4.4 Problems of loan disbursement
When Karmasangsthan Bank wants to disburse loan it faces many problem such as-
ø There is no available fund for sanctioning loan.
ø This bank strictly follow rules and regulation for disbursement of loan.
ø It is consumed time for sanctioning loan because after head office recommendation and inspection then the bank sanction loan.
ø After all economic solvency of this region is not favorable for sanctioning loan among the laonee in this region.
Table Showing The Loan Disbursement Of Self Loan Project
Year | Target (crore) | Disbursement | Achievement |
2004-05 | - | 94,32,500 | |
2003-04 | - | 59,21,000 | |
2002-03 | - | 87,37,000 | |
2001-02 | - | 67,27,000 | |
2000-01 | - | 75,86,000 |
Table Showing The Loan Disbursement Of Agro Based Loan Project
Year | Target (crore) | Disbursement | Achievement |
2004-05 | 11,65,000 |
Table Showing The Loan Disbursement Of Industrial Labor Loan Project
Year | Target (crore) | Disbursement | Achievement |
2004-05 | 62,90,000 |
CHAPTER –5
RECOVERY POLICY AND PROBLEMS
5.1 LOAN RECOVERY POLICY OF THE KARMASANGSTHAN BANK
Loan Recovery: When a bank or other financial institutions distribute a loan to other organization or people, then after regaining from laonee it is called loan recovery, Karmasangsthan Bank, Rajshahi Branch, distributed loan to loanee and recovers this money.
Assessment of group exposure:
If facilities to any one customer group are booked in a number of locations a designated officer shall be responsible for the management of the Bank’s global exposure to that customer’s circumstances which may affect the management of the facility and in particular the credit rating assigned to the customer, shall be documented and advised to the designated officer.
To ascertain repaying ability to each customer a formal assessment shall be carried out on a regular basis. Where a facility is secured, the advance should be based on the current value of the underlying asset. The frequency of these assessments will depend on the quality of the facility, which is based on the classification ratings set out below:
- Unclassified loan, and
- Classified loan.
Unclassified loan: When half or more than half of the total loan in repaid with the due dates by the borrowers that is called unclassified loan. The duration of time in which the loan will be treated as unclassified is less than 12 month from sanctioning loan.
Provisions @ 1% of the base is required for debts in this classification.
Classified loan: When more than half of the total loan or total is unpaid/due over the due date then that loan is called classified loan.
Classified loan may be three types. They are as follows-
a) Substandard loan
b) Doubtful debt loan
c) Bad debt loan
a) Substandard loan: When the total loan is unpaid or due over the 12-24 months then loan is called substandard loan.
Here provision – 20%
b) Doubtful debt loan: When the total loan is unpaid or due over the 24-36 months then that loan is called doubtful debt loan.
Here provision – 20%
c) Bad debt loan: When the total loan is unpaid or due over the more than 36 months then that loan is called Bad debt loan.
Here provision – 100%
LOAN MONITORING AND REVIEW:
It is the responsibility of the Manager to monitor the over all profile and risk aspect of the credit portfolio in accordance with the criteria set down in the Bank Credit Policy. Such monitoring shall be evidenced from the comments of the Manager in monthly call/visit reports of the assigned officers and kept in the credit file with copy to Regional Office/Head Office.
This review shall be formally performed at intervals prescribed by Head Office but it is the responsibility of the Manager to ensure at all times that the credit portfolio meets the standard set forth by the Bank.
Periodic review and follow-up should, aim at ensuring:
a) That terms of approval have been adhered to;
b) That conduct (turnover, regularity of repayments, etc.) of the borrowing accounts during the period under review has been satisfactory or as expected;
c) That the continuing value of collateral is adequate;
d) That there are no adverse trends in market, economic and political conditions which may endanger the reliability of the facility;
e) That the borrower’s business is being satisfactorily conducted a reflected through a review and analysis of their financial and operating statements
All extensions of credit are therefore to be reviewed and graded at intervals prescribed by Head Office. The purpose of this procedure is to monitor lending performance and to identify potential delinquent credits.
The basis of review / classification are risk of the transaction, repayment record, conduct of the account financial capacity and record of the borrower, collateral conditions, supporting information and documentation and the degree of conformity to Bank policies.
IDENTIFICATION OF DELINQUENT FACILITIES:
A facility can be identified as potentially being ‘Delinquent’ as above a by any of the following persons:
a) Second Officer/Credit Officer at a Branch.
b) Branch Manager.
c) Regional Manager.
d) Head Office Audit Division.
e) Head Office Credit Division.
In case any officer in a lending or non-lending function gets information on a Borrower which affects the quality of a credit he must write a memo recording the information addressed to the Branch Manager with a copy to Regional Manger & Head Office Credit Division.
Whenever a facility is identified as ‘Delinquent’ recommendation is to be sent to Regional Manager and to Head Office with full justification for classification of the facility especially in case of classification as Substandard, Doubtful or Loss. Regional Manager will advise their concurrence or otherwise to Head Office with copy to Branch Manager.
It is the responsibility of the Branch Manager / Second Officer/ Credit Officer to timely identify and to try to take necessary steps to avoid classification of any facility.
5.2 PROCEDURE
The main responsibility of bank manager and loan officer is to recovery the outstanding loan in Karmasangsthan Bank. The loan recovery procedure is divided in to several steps. They are as follows:
1. Issue of demand notice: Demand notice is issued before on month being due to outstanding loan or installment. It is sent to the borrower.
2. Legal notice: If the borrower does not repay their respective loan and interest after maturity being received the demand notice under registered with acknowledgement by post to the borrowers the bank should send lower notice to him. And tell him to pay the loan money within 15 days.
3. Special notice: Beside the above two notice a special notice signature by DC, TNO is sent to the respective borrower to keep mental pressure on him for repaying the loan.
4. Field recovery: Loan officer recover the recovered loan through I.O. receipt by visiting the spot and source of the borrower.
5. Personal Communication: If the borrower fails to repay his loan installment, the loan officer communications with the respected persons of that area to give mental pressure to the borrower so that he repays his respective loan.
6. Case filing: When legal action for recovering loan becomes failed, a case is filed against the borrowers. The case is generally filed in the following ways:
i. Unwilling to repay loan although he is financially solvent.
ii. Every effort of loan recovery becomes failure.
Under the loan recovery Act 1871 the following situations case is not filed against the borrowers.
i. If he is financially insolvent
ii. If he failure to success every project
5.3 RULES OF RECOVERY
Karmasangsthan Bank Rajshahi Branch loan recovery from loanee in installment system which system are as follows
i. Weekly
ii. Fortnightly
iii. Monthly
iv. Quarterly
5.4 RECOVERY PROBLEMS OF THE KARMASANGSTHAN BANK
There are lots of problems in any other banking system in Bangladesh. Proper loan recovery is the main problem of the Karmasangsthan Bank in Bangladesh. There are lots of causes, which themselves, directly influence the loan recovery of Karmasangsthan Bank is very defective. In most of the cases, problems may arise from the sanctioning procedures of loan, investigation of the project, investigation of the loanee etc. That is, the problem in loan recovery proves are the outcome of the default process in loan disbursement. The main reasons of poor loan recovery and some other problems of Karmasangsthan Bank are discuss below:
1. Changing in the management pattern may delay the recovery of the matured loan of the bank.
2. The Karmasangsthan Bank sometimes sanctioned loan to the losing concern for further improvement of the respective sector, but in most of the cases, they fail to achieve progress. As a result the amount of non-repayment of loan increases gradually.
3. Bank has also faced many problems in the loan recovery process as a part of continuous pressure from various interested groups. According to the high official of Karmasangsthan Bank, the bank cannot work autonomously though it is an autonomous body.
4. Existing rules and regulation are insufficient to cover the legal aspects of loan recovery. As a result, defaulters can get release easily from all charges against them.
5. Frequent changes in government policies in regard to recovery of loan.
6. Before lending bank does not properly analyze the business risk of the borrowers and bank cannot forecast whether the business will succeed or fail. If the business fail to run well the loan becomes classified.
7. The responsibilities of bank are not ended after disbursement of loan. It should also take care to borrowers whether they used the loan in right way or not. Bank can help the borrowers giving valuable advice, how to use the loan properly. But most of the cases, bank does not perform the above responsibility.
8. In most cases, bank fails to determine the value of security against the loan. As a result, if the loan becomes classified, bank can not recover its loan through the sale of mortgage.
9. Early sanction and disbursement of loan to the borrowers without proper inspection of the project by the bank on account of pressure from lobbing group
10. Lack of evaluation of technical and economic feasibility of the program.
11. Delay in disbursement of credit.
12. Lack of proper supervision.
13. Negative attitude of the borrowers to repay the loan.
14. Lack of competent and required expertise creates a great problem to the non-recovery of loan.
15. Many borrowers do not utilize the loan money in the sanctioning project.
16. Political leaders offer encourages default.
17. Inadequate staff of credit institution and lack of timely persuasion for repayment is also responsible for the loan default.
18. Decrease of product price
19. Damages of former crops.
20. Natural disaster.
5.5 HOW TO SOLVE THE RECOVERY PROBLEMS
1. To give special power to manager
2. To help loanee for proper utilize the loan.
3. To remove the limitation of manager’s activities
4. To remove the weaknesses of applying legal action against loanee.
5. To increase awareness loanee about refund the loan.
6. Karmasangsthan Bank, Rajshahi Branch direct supervised loanee to proper utilized loan.
Table A: Showing the loan recovery of last five years (Self Loan)
Particulars | 2004-05 | 2003-04 |
1-2 years loan (Current) | 6968527 | 5934329 |
3-5 years loan (Current) | 780555 | 1037936 |
1-2 years loan (Over due) | 508882 | 154652 |
3-5 years loan (Over due) | 7201 | 337100 |
8265165 | 7464017 |
Table B: Showing the loan recovery of last five years (Self Loan)
Particulars | 2002-03 | 2001-02 | 2000-01 |
1-2 years loan (Current) | 6292799 | 6515042 | 3132000 |
3-5 years loan (Current) | 1009446 | 275956 | 84000 |
1-2 years loan (Over due) | 186203 | - | - |
3-5 years loan (Over due) | 5000 | - | - |
7493448 | 6790998 | 3216000 |
Table: Showing the loan recovery of last year (agro-based)
Financial Year | Loan recovery |
2004-05 | 103766 |
Table: Showing the loan recovery of last year (Industrial labor)
Financial Year | Loan recovery |
2004-05 | 204813 |
Table: Showing the outstanding loan of last five years (Self loan)
Financial Year | Cumulative Loan Disbursement | Total loan recovery | Outstanding |
2004-05 | 21650980 | 7265165 | 14385815 |
2003-04 | 17883964 | 6860617 | 110233477 |
2002-03 | 18194435 | 7493448 | 10700987 |
2001-02 | 14904615 | 6790998 | 8113617 |
2000-01 | 10319000 | 3216000 | 7103000 |
Table: Showing the interest collection of last five years (Self loan)
Year | Collection |
2004-05 | 1243486 |
2003-04 | 961935 |
2002-03 | 1030346 |
2001-02 | 1077657 |
2000-01 | 231000 |
Table: Showing the interest collection of last year (agro-based)
Financial Year | Loan recovery |
2004-05 | 4358 |
Table: Showing the service charge collection of last year (Industrial labor)
Financial Year | Loan recovery |
2004-05 | 503200 |
Table: Showing the outstanding Interest of last five years (Self loan)
Financial Year | Prior period intersect | Current year interest | Total interest | Interest collected | Outstanding |
2004-05 | 797172 | 1194133 | 1991305 | 1243486 | 479819 |
2003-04 | 499107 | 1260000 | 1759107 | 961935 | 797172 |
2002-03 | 185635 | 1343818 | 529453 | 1030346 | 499107 |
2001-02 | 188945 | 1074347 | 1262392 | 1077657 | 185635 |
2000-01 | 419945 | 419945 | 231000 | 188945 |
Table: Showing the outstanding loan of last year (Agro based)
Financial Year | Loan recovery |
2004-05 | 1080272 |
Table: Showing the outstanding loan of last year (Industrial labor)
Financial Year | Loan recovery |
2004-05 | 6085187 |
Table: Showing the Profit & Loss of last five years
Year | Income | Expenses | Profit/Loss |
2004-05 | 1382148 | 1278898 | 103250.43 |
2003-04 | 1253867 | 979643 | 274224.31 |
2002-03 | 1311673 | 1282367 | 29305.84 |
2001-02 | 102342 | 1171776 | - 48054.00 |
2000-01 | 658000 | 998000 | -340000 |
Karmasangsthan Bank
Rajshahi Branch, Rajshahi
Income & Expenditure Statement
As at ended year 01.07.2004 to 30.06.2005
Income | Expenditure | ||||
Sl. No. | Particulars | Amount | Sl. no. | Particulars | Amount |
1. | Interest on loan & advance | 1175282.00 | 1. | Office salary | 216482.00 |
2. | Service charge | 188700.00 | 2. | Staff salary | 110821.00 |
3. | Interest on deposit | 11527.00 | 3. | Rent | 127976.89 |
4. | Miscellaneous income | 1210.00 | 4. | Medical | 24000.00 |
5. | Interest on advance motorcycle | 3888.00 | 5. | Launch | 43704.00 |
6. | Interest on agro based loan | 1541.00 | 6. | Travel expenses | 25644.00 |
7. | Transfer bill | 1086.00 | |||
8. | Festival bonus | 45320.00 | |||
9. | Electricity bill | 7999.00 | |||
10. | Office rent | 70000.00 | |||
11. | Excise duty | 370.00 | |||
12. | Stationery | 5310.68 | |||
13. | Post expenses | 1770.00 | |||
14. | Telephone | 10300.00 | |||
15. | Transport | 14370.00 | |||
16. | Depreciation | 37859.00 | |||
17. | Miscellaneous Expenses | 4541.00 | |||
18. | Super annuation | 65461.00 | |||
19. | Wages of peon and guard | 44106.00 | |||
20. | Interest paid on fund receivable from head office | 381233.00 | |||
21. | Interest on savings deposit | 8122.00 | |||
22. | Branch transfer expenses | 4282.00 | |||
23. | Communication expenses | 2880.00 | |||
24. | Business development expenses | 1800.00 | |||
25. | News and paper expenses | 2884.00 | |||
26. | Table stationery | 2602.00 | |||
27. | Wage of sweeper | 3600.00 | |||
28. | Continuous paper | 400.00 | |||
29. | Repair and Furniture | 1200.00 | |||
30. | Fringe benefits | 12720.00 | |||
Total Income | 1382184.00 | Total Expenditure | 1278897.57 | ||
CHAPTER-6
FINDINGS, SUGGESTION AND CONCLUSION
In this chapter of the report has been discussed the major findings of the work. During the study period in the Karmasangsthan Bank the researcher also found some problems and included in this chapter. The findings of this chapter mainly introduced and represented findings came out from the chapter seven i.e. from the data analyses and interpretations.
6.1 SUMMARY OF FINDINGS OF THE STUDY
The major finding of the study are given below-
ø Most of the men working there were the students of non-commerce faculty. They have come here by the demand of the day. So they lack pure job satisfaction. Though strict rules are now imposed on the scope of employment for the non-commerce students, which may be beneficiary to the organization.
ø In comparison with other current banks (both government and non government) the Karmasangsthan Bank, to some extent provides less financial and non-financial opportunities. As a result job dissatisfaction in the employees, which is not beneficial to the organization.
ø In response to the lucrative offers by other banks, many potential able and experienced employees leave this bank. Consequentially the organization does not get the outcomes of the costs incurred in training and development.
ø Various sources and uses of fund.
ø Lack of suitable supervision
ø Various problem which constraint to collect and to the proper use of fund
ø There is no available fund for sanctioning loan.
ø This specialized do not strictly follow rules and regulation for disbursement of loan.
ø It is consumed time of sanctioning loan because of procrastination problem recommendation and inspection then the bank sanction loan.
ø All time the security is not certifiable for sanction loan
ø It loan is provided without proper assessment that loan will not be used properly.
ø Karmasangsthan Bank has to maintain the minimum amount of fund to operate the daily activities. But all times they could not keep the available money for the lack of sufficient amount.
ø The whole money of loan is not possible to recovery but this specialized bank’s is reducing day by day which would be harmful for its objective.
ø If the loan disbursement is not in accurate time, borrowers will not be able to sue thee loan. As a result loan recovery will be impossible.
ø The notice are not issued just time, for this reason some time the recovery of the loan is disturbed.
ø Lack of banking knowledge of borrowers is the main problem to collection.
ø Most of the recover are peasant and cant not pay their borrower money in due time. So, property is one of reason of poor recovery.
ø Lack of effective field worker is the other problem for collection for loan.
ø Problem of the classified loan recovery
ø Problems relating to the practical use of fund.
ø Generally Karmasangsthan Bank would like to give to the Self-loan and agro-based sector developing unemployment situation. But all time banks could not reach their goal.
ø Loan officer of the branch should be provided with training facilities and necessary incentives to ensure proper follow up and timely recovery of loan even separate board should be formed to carry on project feasibility study, which may strengthen the better utilization of loans, better returns to the borrowers as well as to this branch also.
ø Better publicity, seminar and workshop on loan and advance may brighten the situation highlighting the needs and problems of the people borrowers.
ø Orientation training of the borrowers may change their mental outlook. Which needs to be emphasized for the better benefits of the borrowers and the bank.
ø For enhancing the socio-economic benefit of the social welfare approach as emphasized by more and advance, close supervision of the same may ensure financial returns as well as social return. This also requires the careful attention of the concerned authorities.
So, at last we can say that the Karmasangsthan Bank of Bangladesh is suffering from both internal and external crises.
6.2 RECOMMENDATIONS
In my study I have recognized several weaknesses in banking system and my recommendation –
ø This is the age of computer and technology. Technology is the means of progress and development. But The Karmasangsthan Bank Ltd. is not advanced in technology than other non-government, national and international Banks, so for the profitability, stability and durability the bank should run on –line banking. But to include every branch in on-line banking is big capital expenditure for this organization, even though the organization can gradually implement this project.
ø It is difficult for some one to acquire a complete knowledge both the commerce and technology. But if both of these knowledge, can be applied together successfully to the organization’s interest, the organization will be more benefited.
ø The Karmasangsthan Bank Ltd. deems to be less careful like Govt. Banks, in providing services than other non-govt. banks, which maintain high standard consumer services. The quality of its service is not satisfactory in comparison to its branches. In this situation, I think, the organization should take more steps to provide better quality services. Then the organization can attain its goals easily.
ø Monitoring and supervising is the precondition of better loan recovery performance of the bank. This bank should improve its monitoring and supervision activities to increase loan recovery performance
ø In this scientific world, sophisticated computer system helps organization to collect and store huge quantities of data for proper decision making. It saves both time and cost of an organization. Karmasangsthan Bank uses manual process for collecting and storing data, which is time consuming and very clumsy task. To remove this difficulty this branch should introduced computerized data based system for quick decision making
ø There should have proper supervision methods so that allotment loan can be used in proper objectives. As result of it is hope that the loan recovery is possible to make form seasonal gained wealth.
ø If various notice declaration is assured against loan in proper period, the loan recovery can take required preparation to pay the loan
ø Effective supervisions system in useful to avoided the misuse of loan. As a result it will be possible to recover loan from the sector.
ø If the bank prepared rule of law for loan recovery, so that the borrowers can bound to pay the money of loan
ø If the bank gives notice against any loan in proper time so that the clients can proper themselves from the starting. As a result the loan recovery will be easy.
ø To utilized the fund properly
CONCLUSION
Actually we know that banks are financial intermediaries, which mobilize and channelized the fund in various sectors. Karmasangsthan Bank provides banking facilities to the people as well as contributes to the economy. During my Internship program I closely observed all the banking activities. And my studies is concern on the overall activities of Karmasangsthan Bank. They are and have observed and learned of the banking activities practices in the bank.
Bangladesh is a country where unemployment problem is the main problem at present a large number of educational men or women are unemployment. To remove this unemployment problem Karmasangsthan Bank disbursement of various types of loan and it is the main objectives of Karmasangsthan Bank is to help the unemployment people and at 1998 to 2005 this bank create of employment 89470 people. At present the total amount of loan disbursement is 409050000 in Rajshahi Branch.
The main problem of this branch is loan recovery. And it is reducing day by day. The major causes unsatisfactory loan recovery is poor implementation of loan procedure and policy of the bank. But the authority of this bank has no effective to recover if government takes such effective steps to improve these recovery problems. It is possible to them. Although the recovery is not satisfactory but the bank earn small profit of the last three years. So, I think if the recovery problem can be solved the profit of this bank will increase day by day.
So, at conclusion, we can say the bank has establishes to achieve a biggest goal and that was remove unemployment in our society and earning profit is not the main objectives. In the point of view this bank is satisfactory position.