Practical Orientation

of National Bank Limited

A Bank for Performance with Potential

Practical Orientation of National Bank Limited

Prepared for:
Ishrat Jahan Tania Assistant Professor Department of Business Administration Stamford University Bangladesh

Prepared by: M. Masudur Rahman

ID: BBA-037 12236 Department Of Business Administration Stamford University Bangladesh

Stamford University Bangladesh

Date of Submission: 01st April 2012

01 April 2012 Ishrat Jahan Tania Assistant Professor Business Administration Department Stamford University, Bangladesh Dear Sir It is with great pleasure that I am going to present my intern paper on Practical Orientation of Natioan Bank Limited. I have worked at National Bank Limited (NBL), Malibagh Branch for three months. Based on this, I have tried to incorporate theories taught with corporate notions. It will give a total overview of banking operation & its related issues. I have tried to include all the practical aspects of operation of JBL & a notion how it is going on under real situation. My attempt is to relate the practical issues to the theories taught backed by your proper guidance. I have tried heart and soul to make the paper as comprehensive as possible. I hope that you will approve the paper and it will meet your standards. In this regard, special gratitude goes to you for forwarding your helping hand time to time.

Sincerely

M. Masudur Rahman
ID # BBA -037 12091

ACKNOWLEDGEMENT

Successful completion of any type of project requires help from a number of persons and as I am still a student and just a novice, I have also taken help from different people during the internship program and for the preparation of this report. Now, here is a petite effort to show my deep gratitude to those helpful persons.

My warmth gratitude goes to many people whose affable cooperation and advice helped me a lot bringing my endeavor into realization. I convey my sincere gratitude to Assistant Professor Ishrat Jahan Tania., Business Administration Department of Stamford University who has given me the opportunity to satisfy my inquisitiveness by allowing me to under take the task.

EXECUTIVE SUMMARY
General Banking provides the foundation of banker-customer relationship. This is an era of keen competition among Banks. It is the most important and preliminary work of a bank. The regular service given to customers such as Depositing or drawing money, selling of instruments to them for remittance purpose, collection of instruments, providing other ancillary services to keep customer section busy. Personnels of this section should posses the required behavior for regular satisfaction of the customers. The Practical Orientation of National Bank Limited, is my assign project. So, I worked in the Account opening, Remittance, Advance, Foreign exchange and Accounts Division, side by side I learn other Banking operation. Lending is the core function of commercial bank. For a bank, good loans or credit or advances are most profitable assets. The largest portion of operating income is derived from lending. A commercial bank usually wins over its competitors only on the quality and quantity of lending. It is therefore, indispensable for a bank to have a well thought policy for executing its lending operation. Foreign trades refer to the trade between the different sovereigns nations of countries. Foreign trade mainly categorizes into export trade and import trade. For development of the economy in a country foreign trade is important. Financial institutions like bank can help the foreign trade of a country through financial accommodation to the foreign trade. The performance of the Natioanl Bank Limited (NBL) as whole is said to be quite standard.

PREFACE
Natioanl Bank Limited (NBL) is a Banking Company registered under the Companies Act, 1994 with its Head Office at 18 Dilkusha Commercial Area, Dhaka-1000. The Bank started its operation from 3rd June 2001. National Bank Limited is a highly capitalized new generation Bank with an Authorized Capital and Paid-up Capital of Tk.1600.00 million and Tk.390.00 million respectively. The Paid-up Capital has been raised to 429.00 million and the total equity of the bank stands at 725.00 million as on June 30, 2005. Currently the Bank has 23 (twenty three) branches 10 in Dhaka, 1 in Gazipur, 4 in Chittagong , 3 in Sylhet 1 in Bogra, 2 in Naogaon, 1 in Munshigang and 1 in Narayanganj (including six Rural Branches). The Bank undertakes all types of banking transactions to support the development of trade and commerce of the country. NBL's services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units. National Bank Ltd., the only Bengali named new generation private commercial bank was established by a group of winning local entrepreneurs conceiving an idea of creating a model banking institution with different outlook to offer the valued customers, a comprehensive range of financial services and innovative products for sustainable mutual growth and prosperity. The sponsors are reputed personalities in the filed of trade, commerce and industries. The Bank is being managed and operated by a group of highly educated and professional team with diversified experience in finance and banking. The Management of the bank constantly focuses on understanding and anticipating customers needs. The scenario of banking business is changing day by day, so the bank's responsibility is to device strategy and new products to cope with the changing environment. National Bank Ltd. has already achieved tremendous progress within only two years. The bank has already ranked as one of the quality service providers & is known for its reputation. National Bank offers different types of Corporate and Personal Banking Services involving all segments of the society within the purview of rules and regulations laid down by the Central Bank and other regulatory authorities.

THE WORLD ECONOMY

In the wake of the new millennium the world economic scenario is fast changing giving rise to various avenues and opportunities as well as the accompanying risks. There are so many avenues for growth, which is the past neither, had to confront with such huge prospects of technological breakthrough and environmental hazards not were there conflicts of such proportions between the ideas of national sovereignty and globalization. As globalization means grater freedom and prosperity, each and every country is in the process of converging incomes and standard of living driver by large international flow of goods and services to bring about shared prosperity. It is also envisaged that globalization would extricate the poor and backward nations of the developing would out of the economic morass and put them on the fast track of progress as well as rationalizes their level and growth. In a country like Bangladesh globalization has more to do with foreign investment and capital flow that an equitable international trade. The international flow has continued to favor rich countries where as it would have been in the event the case was reversed. Bangladesh is participating in the process of integration of her economy into the global one by opening up to international markets and harnessing foreign investment and trade. The developing countries have seen little profit from the recent boom in international financial flows and are suffering great deal from major cuts due to re-allocation in aid flows from advanced and donor countries. In the concept of privatization the state has a smaller role to play and as such the focus is mainly on the market. During the last century, the state and market went hard in hand and functioned to tandem. Due to globalization the concept of market has undergone rapid changes and is well beyond the geographical boundaries of countries.

THE BANGLADESH ECONOMY

Although we have entered a new millennium nobody expects there will be any sudden breakthrough in the economy as it is a continuous process. The economic development of a country requires the use of capital through a sound banking system to provide the necessary finance to various development agencies which have not developed up to expectation due to constrains common to the economy of a third world country. The macro economic development during the year 2002-2003 was marked by a healthy GDP growth and moderate inflation. For the second year running bumper rice harvest maintained growth at above 5% and GDP growth during the FY 2000 was at 5.7% which may be considered as the highest since the beginning of the 1990s. Conversely the growth performance in industry was sluggish with manufacturing growth of 3.3% being one of the lowest rates in recent years. Several adverse factors contributed to this situation, which included disruption in the supply of natural gas, which in turn affected the power supply and production activities. Furthermore, labor disputes during the second quarter of the year badly affected the operation of Chittagong port. In the services sector, growth in transportation, storage and communication contributed to about 13% to the total GDP but growth in trade sector was sluggish due to lower import growth. During the year some positive initiative were take in the banking sector with improvements in the legal and regulatory environment to improve loan recovery but unfortunately the high quantum of non performing assets and under capitalization continued to plague the entire the entire banking sector thus causing a major threat to the macro economic stability. The size of classified loans increased substantially which contributed to lower profitability of the Banks. Investment rate in FY02 showed some increase and the declining trend in private savings was substantially reserved. The national saving rate increased from 11.9% of GDP in FY01 to 14.6% in FY02. This was partly due to increased inward remittances, increase in nominal interest rates and lower rate of inflation. Monetary policy in FY02 continued to accommodate the borrowing needs of the government. Broad money increased from 8.3% to 11% in FY02. Current expenditure exceeded the budgetary target by 3.6% due to higher interest payment on domestic public debts, food grain procurements, defense spending and other subsidies allowed by the government as a result of which the current expenditure-GDP ration increased from 8.7% to 8.9% in FY02. On the revenue side there was a 5% shortfall in revenue collection, which was mainly due to low import growth and progressive weakness in the collection of VAT and income taxes.

TABLE OF CONTENTS (INDEX)

Acknowledgement Executive Summary Preface The World Economy The Bangladesh Economy CHAPTER 1: INTRODUCT 1.1 Report Preview 1.2 Objective of the study 1.3 Methodology 1.4 Limitations 1.5 Background of the study 1.6 Historical Background 1.7 Corporate Slogan CHAPTER 2: AT A GLANCE JBL 2.1 About JBL 2.2 Vision & Mission 2.4 Objectives of JBL 2.5 Strategies of JBL 2.6 Organ gram of JBL 2.7 Corporate Governance 2.8 SOWT Analysis CHAPTER 3: PRODUCT & OTHER SERVICES 3.1 Products and Services 3.2 Corporate Banking 3.3 Personal Banking 3.11 Q-Cash 3.18 Import and Export Handling and Financing 3.18.2 Export Financing 3.19 Branches Network CHAPTER 4: Financial Performance of JBL 4.1 Profit 4.2 Capital Structure 4.3 Capital Adequacy Ratio 4.4 Treasury Operations 4.5 Deposits and Deposits Mix 4.6 Loans and Advances 4.7 Risk Management 4.8 Investment 4.9 Import Business 4.10 Export Business CHAPTER 5: Credit Management 5.1 Loans and Advances 5.2 Sanctioning Loans and Advance 35 35 35 11 11 13-15 15 18 19-25 26 26 27 27 28 28 30 31 31 33 34 1 3 1 2 2 2 3 3 4 4 5 6 7 9 9 10 11

5.3 Credit Policy of the Bank 5.4 The 10 Cs of Good and Bad Loan 5.1.3 Processing and screening of Credit Proposal 5A.3A Securities 5.3 Documentation 5.4 Credit Facilities Extended by JBL 5.4.3 Overdraft CHAPTER 6: Credit Risk Granting System 6.1 Credit Risk Granting System 6.2 Functions of Credit Risk Granting 6.3 Credit Risk Granting Definition CHAPTER 7: Credit Recovery 7.1 Credit Recovery CHAPTER 8: CONCLUSION 8.1 Recommendation 8.2 Conclusion 8.3 Bibliography

35 36 44 46 47 49 52 61 61 63 64 67 67 68 68 69 70