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Letter of Transmittal
31 March, 2018
Jhumi Azad
Lecturer
Department of Business Administration

Stamford University Bangladesh
Subject: Submission of Dissertation Report on “Credit and Risk Management : A Study on Jamuna
Bank Limited”
Dear Madam,
With due respect, I would like to inform you that, it is a great pleasure for me to submit the
Dissertation Report on “Credit and Risk Management : A Study on Jamuna Bank Limited” as a
requirement for the completion of BBA program. I earnestly thank you for your guidance during the
preparation of this report. Any sort of suggestion regarding the report will be greatly acknowledged
and I will be gratified if our report serves its purpose.
I therefore, request you to accept this report and give me proper suggestion to work in my
professional life and I pray and hope that the mistakes, the report may have will be kindly excused.
Lastly, I beg your kind consideration for evaluating this report.
Yours faithfully,
………………..
Name: Jakia Akter
ID: BBA05116072
Batch: 51th (BBA)
Major: Finance

Declaration by the student
I hereby declare that report entitled “Credit and Risk Management : A Study on Jamuna Bank
Limited”. To submitted as per the requirement of the completion of the degree of Bachelor of
Business Administration from Stamford University Bangladesh.
This paper is my work and prepared for academic purpose only. It is not submitted for the award of
any other degree, diploma and fellowship and that the work has not been published in any journal or
magazine.
Name: JakiaAkter
ID : BBA
Batch: 51th (BBA)
Major: Finance

ACONOWLEDGEMENT
All Thanks to Almighty Allah by whose boundless grace I have been able to complete this report
successfully.
With pleasure & respect, I express our profound gratitude to my respected Dissertation Supervisor
Jhumi Azad. It was her imitative enthusiasm and sympathy that was or guideline in the course of
completing this project.
I would like to express our heart-felt gratitude to same friends for their kind co-operation as
supervision to complete this project in due time by giving their valuable views & ideas with all types
of support that they could provide.
At last I express our gratitude to all other who have directly and indirectly co-operated us in the
preparation and completion of report.
Name: Jakia Akter
ID: BBA05116072
Batch: 51th (BBA)
Major: Finance

EXCUTIVE SUMMARY
This Dissertation report is based on my study on Credit and Risk Management statements of 2013,
2014, 2015, 2016 & 2017 of Jamuna Bank Limited. In my Dissertation period, My faculty supervisor
helped me to choose the topic- “Credit and Risk Management : A Study on Jamuna Bank Limited” It
was a great opportunity to experience and gather knowledge of bank Financial Performance.
In my report I had to study Credit Performance Analysis of Jamuna Bank Limited’s Credit and Risk
Management statements for the last five years then had to analyze and give significant comments
regarding the changes in the financial position. Analysis and interpretation of these financial
statements through ratio analysis has now become an important technique for performance appraisal
because the investors, financial experts, management executives and the bankers are always rely on
these ratios to make important decisions. The management team of any bank, investor and the
government agencies always concern about liquidity ratios and adequacy ratios of a bank which
interprets the efficiency of a bank.
As a part of my BBA program, I have analyzed the Credit statements of “Credit and Risk Management
: A Study on Jamuna Bank Limited” to find out its ratios by using its past and current records. After
preparing this report I came to know that analysis of Credit statements through ratios helps to
overcome the past flaws and make the future decisions and strategies. Therefore, it is very necessary
for every organization whether the company’s size is to make financial statement and to analyze it by
ratios.
Chapter 1 (Introduction)
1.1) Background of the Report
This report contains the credit risk grading and credit risk management of Jamuna Bank ltd. Truly
speaking credit risk is essential for the success of the banks and financial institutions. Risk is an integral
part of business and attach due importance of various risks involved in the banking business. Basically
credit risk derives from lending to corporate, individuals and other banks or financial institutions.
In this report I have tried to mention credit risk grading process and ways of measuring credit risk
grading, guidelines prescribed by Bangladesh Bank, Guiding Principle of Credit appraisal of Jamuna
Bank Ltd credit officer.
I have worked in three department of credit of Jamuna Bank Ltd, Santinagar branch.In this report I have
tried my best to make a comprehensive analysis on credit risk management.
1.2) Rational of the Report

As a student of a faculty of business studies, it is helpful to gain the practical knowledge about an
organization and its overall activities. By doing this kind of activities, we can enrich our practical
knowledge .With the application of acquired knowledge we will be able to develop ourselves and
compete globally .So we can say that the rationale of this is comprehensive.
1.3) Objectives of the Report

The first objective of writing this report is to fulfill the partial requirement of the BBA degree.
General Objective
The general objective of this report is to fulfill the requirement of internship report.
Specific objectives
• To acquire practical experience in different banking services of Jamuna Bank Limited.
• To gather knowledge about the transactions of different departments of the bank.
• To know about the Credit products and the way of disbursement.
• To inform the banking credit facilities to the mass people.
• To give some recommendations regarding the credit risk and management division.
1.4) Scope of the Report

Banks have been playing an important role in economic development and contributing immensely to
build the country. Banking sector is fast expanding in our country because of globalization and reform of
private sector. To survive as a key player in this highly competitive and complex business environment a
bank should develop its business focusing the customer’s satisfaction.
1.5) Methodology
The report is descriptive in nature. To prepare a report gathering data is very important. The
information was collected from both primary and secondary sources of data. Regarding the information
required was collected within the organization from the Corporate Division of Jamuna Bank Limited.
Primary data
• Practical desk work.
• Face to face conversation with the respective officers and clients.
• Questionnaire survey of Bank clients and employees.
Secondary data
• Study on Annual Reports of Jamuna Bank Limited.
• Online data from JBL website.
• Published unpublished or personally collected data from bank officers.
Data Analysis and Reporting

Both the qualitative analysis (SWOT analysis, Questionnaire analysis) and quantitative analysis (Financial
data analysis, Ratio analysis) have been used to collect and analyze the gathered data.Besides this
different types of software are used for reporting the gathered information from the analysis,such as-
Microsoft Word and Microsoft Excel.
1.6) Limitations of the Report

Due to some legal obligation and business secrecy the bank was reluctant to provide some sensitive
data. Thus, this study limits only on the available published data and certain degree of formal and
informal interview and limited survey. Although the particular study is extensive in nature, hard effort
was given to make the study worthwhile and meaningful even then there exists some limitation.
Altogether the internship period in the bank was not free from limitations. I faced some problems during
the study, which I am mentioning below:
Lack of time:
I was in the bank for three months so within this short span of time it is very difficult to be
familiar with all the activities of the bank.
Lack of Supervision by the bank officers:

As the officers were busy with their daily working activities, they were not able to give me much time
apart from their daily working activities.
Restricted Information:
There were various types of information’s that the bank officers cannot disclose due to the security and
other corporate obligations.
Other limitation:
As I was a newcomer and had no previous experiences in the banking sector and many practical matters
in the bank were in written form so my own observations may vary from person to person.
Chapter 2 ( Industry Analysis)

2.1) What is Bank?
A bank is a financial institution that accepts deposits from the public and creates credit.[1] Lending
activities can be performed either directly or indirectly through capital markets. Due to their importance
in the financial stability of a country, banks are highly regulated in most countries. Most nations have
institutionalized a system known as fractional reserve banking under which banks hold liquid assets
equal to only a portion of their current liabilities. In addition to other regulations intended to ensure
liquidity, banks are generally subject to minimum capital requirements based on an international set of
capital standards, known as the Basel Accords.
2.2) Origin of the word “Bank”
Middle English: from Old Norse bakki, of Germanic origin; related to bench. The senses ‘set of things in
rows’ and ‘tier of oars’ are from French banc, of the same ultimate origin.
2.3) Economic Functions of Bank
The economic functions of banks include:
1.Issue of money, in the form of banknotes and current accounts subject to cheque or payment at the
customer's order. These claims on banks can act as money because they are negotiable or repayable on
demand, and hence valued at par. They are effectively transferable by mere delivery, in the case of
banknotes, or by drawing a cheque that the payee may bank or cash.
2.Netting and settlement of payments – banks act as both collection and paying agents for customers,
participating in interbank clearing and settlement systems to collect, present, be presented with, and
pay payment instruments. This enables banks to economize on reserves held for settlement of
payments, since inward and outward payments offset each other. It also enables the offsetting of
payment flows between geographical areas, reducing the cost of settlement between them.
3.Credit intermediation – banks borrow and lend back-to-back on their own account as middle men.
4.Credit quality improvement – banks lend money to ordinary commercial and personal borrowers
(ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of
the bank's assets and capital which provides a buffer to absorb losses without defaulting on its
obligations. However, banknotes and deposits are generally unsecured; if the bank gets into difficulty
and pledges assets as security, to raise the funding it needs to continue to operate, this puts the note
holders and depositors in an economically subordinated position.
5.Asset liability mismatch/Maturity transformation – banks borrow more on demand debt and short
term debt, but provide more long term loans. In other words, they borrow short and lend long. With a
stronger credit quality than most other borrowers, banks can do this by aggregating issues (e.g.
accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and redemption of
banknotes), maintaining reserves of cash, investing in marketable securities that can be readily
converted to cash if needed, and raising replacement funding as needed from various sources (e.g.
wholesale cash markets and securities markets).
6.Money creation/destruction – whenever a bank gives out a loan in a fractional-reserve banking

system, a new sum of money is created and conversely, whenever the principal on that loan is repaid
money is destroyed
2.4) Working Process of Bank
A bank is an institution that deals in money and its substitutes and provides other financial services.
Banks accept deposits and make loans and derive a profit from the difference in the interest rates paid
and charged, respectively.
Banks are critical to our economy. The primary function of banks is to put their account holders' money
to use by lending it out to others who can then use it to buy homes, businesses, send kids to college etc.
When you deposit your money in the bank, your money goes into a big pool of money along with
everyone else's, and your account is credited with the amount of your deposit. When you write checks
or make withdrawals, that amount is deducted from your account balance. Interest you earn on your
balance is also added to your account.
Banks create money in the economy by making loans. The amount of money that banks can lend is
directly affected by the reserve requirement set by the Federal Reserve. The reserve requirement is
currently 3 percent to 10 percent of a bank's total deposits. This amount can be held either in cash on
hand or in the bank's reserve account with the Fed. To see how this affects the economy, think about it
like this. When a bank gets a deposit of $100, assuming a reserve requirement of 10 percent, the bank
can then lend out $90. That $90 goes back into the economy, purchasing goods or services, and usually
ends up deposited in another bank. That bank can then lend out $81 of that $90 deposit, and that $81
goes into the economy to purchase goods or services and ultimately is deposited into another bank that
proceeds to lend out a percentage of it.
In this way, money grows and flows throughout the community in a much greater amount than
physically exists. That $100 makes a much larger ripple in the economy than you may realize!
2.5) Objectives of Banking Business

The main objectives of the Bank are listed and prioritized in the Law: To maintain price stability; to
support other objectives of the Government's economic policy, especially growth, employment, and
reducing social gaps; and supporting the stability of the financial system.
2.5.1) Objectives from the owner’s point of view:

a.Increase number of corporate accounts the end of the year.
b.Increase total value of commercial loans the end of the quarter.
c.Increase number of consumer deposit accounts and consumer mortgages the end of the year.
d. Reduce employee turnover by offering a career development and training program by June.
2.5.2) Objectives from the Government’s point of view:
2.5.3) Objectives from the Clients’ point of view:

a.By the end of the quarter decrease number of customer complaints per month by instituting a quality
control process for customer data management.
b.Improve customer service scores in every branch by year-end
c.Reduce customer wait time in line to some minutes by ensuring adequate staffing during peak periods.
The new staffing plan should be completed within weeks.
2.6) Basic Functions of Bank

These functions of banks are explained in following paragraphs of this article.
A. Primary Functions of Banks

The primary functions of a bank are also known as banking functions. They are the main functions of a
bank.
These primary functions of banks are explained below.
1. Accepting Deposits
The bank collects deposits from the public. These deposits can be of different types, such as :-
a.Saving Deposits
b.Fixed Deposits
c.Current Deposits
d.Recurring Deposits
a. Saving Deposits
This type of deposits encourages saving habit among the public. The rate of interest is low. At present it
is about 4% p.a. Withdrawals of deposits are allowed subject to certain restrictions. This account is
suitable to salary and wage earners. This account can be opened in single name or in joint names.
b. Fixed Deposits
Lump sum amount is deposited at one time for a specific period. Higher rate of interest is paid, which
varies with the period of deposit. Withdrawals are not allowed before the expiry of the period. Those
who have surplus funds go for fixed deposit.
c. Current Deposits
This type of account is operated by businessmen. Withdrawals are freely allowed. No interest is paid. In
fact, there are service charges. The account holders can get the benefit of overdraft facility.
d. Recurring Deposits
This type of account is operated by salaried persons and petty traders. A certain sum of money is
periodically deposited into the bank. Withdrawals are permitted only after the expiry of certain period.
A higher rate of interest is paid.
2. Granting of Loans and Advances

The bank advances loans to the business community and other members of the public. The rate charged
is higher than what it pays on deposits. The difference in the interest rates (lending rate and the deposit
rate) is its profit.
The types of bank loans and advances are :-

a.Overdraft
b.Cash Credits
c.Loans
d.Discounting of Bill of Exchange
a. Overdraft
This type of advances are given to current account holders. No separate account is maintained. All
entries are made in the current account. A certain amount is sanctioned as overdraft which can be
withdrawn within a certain period of time say three months or so. Interest is charged on actual amount
withdrawn. An overdraft facility is granted against a collateral security. It is sanctioned to businessman
and firms.
b. Cash Credits
The client is allowed cash credit upto a specific limit fixed in advance. It can be given to current account
holders as well as to others who do not have an account with bank. Separate cash credit account is
maintained. Interest is charged on the amount withdrawn in excess of limit. The cash credit is given
against the security of tangible assets and / or guarantees. The advance is given for a longer period and
a larger amount of loan is sanctioned than that of overdraft.
c. Loans
It is normally for short term say a period of one year or medium term say a period of five years. Now-a-
days, banks do lend money for long term. Repayment of money can be in the form of installments
spread over a period of time or in a lumpsum amount. Interest is charged on the actual amount
sanctioned, whether withdrawn or not. The rate of interest may be slightly lower than what is charged
on overdrafts and cash credits. Loans are normally secured against tangible assets of the company.
d. Discounting of Bill of Exchange

The bank can advance money by discounting or by purchasing bills of exchange both domestic and
foreign bills. The bank pays the bill amount to the drawer or the beneficiary of the bill by deducting
usual discount charges. On maturity, the bill is presented to the drawee or acceptor of the bill and the
amount is collected.
B. Secondary Functions of Banks

The bank performs a number of secondary functions, also called as non-banking functions.
These important secondary functions of banks are explained below.
1. Agency Functions
The bank acts as an agent of its customers. The bank performs a number of agency functions which
includes :-
a.Transfer of Funds
b.Collection of Cheques
c.Periodic Payments
d.Portfolio Management
e.Periodic Collections
f.Other Agency Functions
a. Transfer of Funds
The bank transfer funds from one branch to another or from one place to another.
b. Collection of Cheques
The bank collects the money of the cheques through clearing section of its customers. The bank also
collects money of the bills of exchange.
c. Periodic Payments
On standing instructions of the client, the bank makes periodic payments in respect of electricity bills,
rent, etc.
d. Portfolio Management
The banks also undertakes to purchase and sell the shares and debentures on behalf of the clients and
accordingly debits or credits the account. This facility is called portfolio management.
e. Periodic Collections
The bank collects salary, pension, dividend and such other periodic collections on behalf of the client.
f. Other Agency Functions

They act as trustees, executors, advisers and administrators on behalf of its clients. They act as
representatives of clients to deal with other banks and institutions.
2. General Utility Functions

The bank also performs general utility functions, such as :-
a.Issue of Drafts, Letter of Credits, etc.
b.Locker Facility
c.Underwriting of Shares
d.Dealing in Foreign Exchange
e.Project Reports
f.Social Welfare Programmes
g.Other Utility Functions

a. Issue of Drafts and Letter of Credits
Banks issue drafts for transferring money from one place to another. It also issues letter of credit,
especially in case of, import trade. It also issues travellers' cheques.
b. Locker Facility
The bank provides a locker facility for the safe custody of valuable documents, gold ornaments and
other valuables.
c. Underwriting of Shares
The bank underwrites shares and debentures through its merchant banking division.
d. Dealing in Foreign Exchange

The commercial banks are allowed by RBI to deal in foreign exchange.
e. Project Reports
The bank may also undertake to prepare project reports on behalf of its clients.
f. Social Welfare Programmes

It undertakes social welfare programmes, such as adult literacy programmes, public welfare campaigns,
etc.
g. Other Utility Functions

It acts as a referee to financial standing of customers. It collects creditworthiness information about
clients of its customers. It provides market information to its customers, etc. It provides travellers'
cheque facility.
2.7) Basic principles of Banking Business

Some basic principles of banking business are discussed below:
1. Liquidity:
Liquidity is an important principle of bank lending. Bank lend for short periods only because they lend
public money which can be withdrawn at any time by depositors. They, therefore, advance loans on the
security of such assets which are easily marketable and convertible into cash at a short notice.
A bank chooses such securities in its investment portfolio which possess sufficient liquidity. It is essential
because if the bank needs cash to meet the urgent requirements of its customers, it should be in a
position to sell some of the securities at a very short notice without disturbing their market prices much.
There are certain securities such as central, state and local government bonds which are easily saleable
without affecting their market prices.
2. Safety:
The safety of funds lent is another principle of lending. Safety means that the borrower should be able
to repay the loan and interest in time at regular intervals without default. The repayment of the loan
depends upon the nature of security, the character of the borrower, his capacity to repay and his
financial standing.
Like other investments, bank investments involve risk. But the degree of risk varies with the type of
security. Securities of the central government are safer than those of the state governments and local
bodies. And the securities of state government and local bodies are safer than those of the industrial
concerns. This is because the resources of the central government are much higher than the state and
local governments and of the latter higher than the industrial concerns.
In fact, the share and debentures of industrial concerns are tied to their earnings which may fluctuate
with the business activity in the country. The bank should also take into consideration the debt repaying
ability of the governments while investing in their securities. Political stability and peace and security are
the prerequisites for this.
3. Diversity:
In choosing its investment portfolio, a commercial bank should follow the principle of diversity. It should
not invest its surplus funds in a particular type of security but in different types of securities. It should
choose the shares and debentures of different types of industries situated in different regions of the
country. The same principle should be followed in the case of state governments and local bodies.
Diversification aims at minimising risk of the investment portfolio of a bank.
The principle of diversity also applies to the advancing of loans to varied types of firms, industries,
businesses and trades. A bank should follow the maxim: “Do not keep all eggs in one basket.” It should
spread it risks by giving loans to various trades and industries in different parts of the country.
4. Stability:
Another important principle of a bank’s investment policy should be to invest in those stocks and
securities which possess a high degree of stability in their prices. The bank cannot afford any loss on the
value of its securities. It should, therefore, invest it funds in the shares of reputed companies where the
possibility of decline in their prices is remote.
Government bonds and debentures of companies carry fixed rates of interest. Their value changes with
changes in the market rate of interest. But the bank is forced to liquidate a portion of them to meet its
requirements of cash in cash of financial crisis. Otherwise, they run to their full term of 10 years or more
and changes in the market rate of interest do not affect them much. Thus bank investments in
debentures and bonds are more stable than in the shares of companies.
5. Profitability:
This is the cardinal principle for making investment by a bank. It must earn sufficient profits. It should,
therefore, invest in such securities which was sure a fair and stable return on the funds invested. The
earning capacity of securities and shares depends upon the interest rate and the dividend rate and the
tax benefits they carry.
It is largely the government securities of the centre, state and local bodies that largely carry the
exemption of their interest from taxes. The bank should invest more in such securities rather than in the
shares of new companies which also carry tax exemption. This is because shares of new companies are
not safe investments.
2.8) History of Banking Sector in World

The history of banking began with the first prototype banks where the merchants of the world, who
made grain loans to farmers and traders who carried goods between cities. This was around 2000 BC in
Assyria and Sumeria. Later, in ancient Greece and during the Roman Empire, lenders based in temples
made loans, while accepting deposits and performing the change of money. Archaeology from this
period in ancient China and India also shows evidence of money lending activity.
Many histories position the crucial historical development of a banking system to medieval and
Renaissance Italy and particularly the affluent cities of Florence, Venice and Genoa. The Bardi and
Peruzzi Families dominated banking in 14th century Florence, establishing branches in many other parts
of Europe. The most famous Italian bank was the Medici bank, established by Giovanni Medici in
1397.The oldest bank still in existence is Banca Monte dei Paschi di Siena, headquartered in Siena, Italy,
which has been operating continuously since 1472.
The development of banking spread from northern Italy throughout the Holy Roman Empire, and in the
15th and 16th century to northern Europe. This was followed by a number of important innovations that
took place in Amsterdam during the Dutch Republic in the 17th century, and in London since the 18th
century. During the 20th century, developments in telecommunications and computing caused major
changes to banks' operations and let banks dramatically increase in size and geographic spread. The
financial crisis of 2007–2008 caused many bank failures, including some of the world's largest banks, and
provoked much debate about bank regulation.
2.9) History of Banking Sector in Bangladesh

Before independence
The first modern bank in Bengal was Bank of Hindustan, established in 1770 in Calcutta. It was an
offshoot of trading company Messrs. Alexander and Co., and operated until 1832 when the trading
company failed. The circulation of its notes was limited to Calcutta and its immediate environs.
A number of Calcutta-based banks followed, none which survived beyond the middle of the 19th
century: General Bank of Bengal and Bihar (1733–75); Bengal Bank (1784–91) (no relation to the later
Bank of Bengal); General Bank, later General Bank of India (1786–91); The Commercial Bank (1819–33);
The Calcutta Bank (1824–29); Union Bank (1829–48); Government Savings Bank (1833–unknown); and
The Bank of Mirzapore (c. 1835 – 1837).
The Bank of Calcutta, established in 1806, is the oldest still in existence in some form. It was renamed
Bank of Bengal in 1809, was merged into the Imperial Bank of India in 1921, and became the State Bank
of India in 1955.
The first modern bank headquartered in Dhaka was Dacca Bank, established in 1846. It did a very limited
business and did not issue banknotes. It was purchased by Bank of Bengal in 1862.[6][7] Bank of Bengal
opened branches in Sirajganj and Chittagong in 1873, and in Chandpur in 1900. In 1947, upon the
Partition of Bengal, it had six branches in East Bengal, in Dhaka, Chittagong, Chandpur, Mymensingh,
Rangpur, and Narayanganj.
After independence
The banking system at independence (1971) consisted of two branch offices of the former State Bank of
Pakistan and seventeen large commercial banks, two of which were controlled by Bangladeshi interests
and three by foreigners other than West Pakistanis. There were fourteen smaller commercial banks.
Virtually all banking services were concentrated in urban areas. The newly independent government
immediately designated the Dhaka branch of the State Bank of Pakistan as the central bank and
renamed it the Bangladesh Bank. The bank was responsible for regulating currency, controlling credit
and monetary policy, and administering exchange control and the official foreign exchange reserves. The
Bangladesh government initially nationalised the entire domestic banking system and proceeded to
reorganise and rename the various banks. Foreign-owned banks were permitted to continue doing
business in Bangladesh. The insurance business was also nationalised and became a source of potential
investment funds. Cooperative credit systems and postal savings offices handled service to small
individual and rural accounts. The new banking system succeeded in establishing reasonably efficient
procedures for managing credit and foreign exchange. The primary function of the credit system
throughout the 1970s was to finance trade and the public sector, which together absorbed 75 percent
of total advances.
The government's encouragement during the late 1970s and early 1980s of agricultural development
and private industry brought changes in lending strategies. Managed by the Bangladesh Krishi Bank, a
specialised agricultural banking institution, lending to farmers and fishermen dramatically expanded.
The number of rural bank branches doubled between 1977 and 1985, to more than 3,330.
Denationalisation and private industrial growth led the Bangladesh Bank and the World Bank to focus
their lending on the emerging private manufacturing sector. Scheduled bank advances to private
agriculture, as a percentage of sectoral GDP, rose from 2 percent in FY 1979 to 11 percent in FY 1987,
while advances to private manufacturing rose from 13 percent to 53 percent.
The transformation of finance priorities has brought with it problems in administration. No sound
project-appraisal system was in place to identify viable borrowers and projects. Lending institutions did
not have adequate autonomy to choose borrowers and projects and were often instructed by the
political authorities. In addition, the incentive system for the banks stressed disbursements rather than
recoveries, and the accounting and debt collection systems were inadequate to deal with the problems
of loan recovery. It became more common for borrowers to default on loans than to repay them; the
lending system was simply disbursing grant assistance to private individuals who qualified for loans
more for political than for economic reasons. The rate of recovery on agricultural loans was only 27
percent in FY 1986, and the rate on industrial loans was even worse. As a result of this poor showing,
major donors applied pressure to induce the government and banks to take firmer action to strengthen
internal bank management and credit discipline. As a consequence, recovery rates began to improve in
1987. The National Commission on Money, Credit, and Banking recommended broad structural changes
in Bangladesh's system of financial intermediation early in 1987, many of which were built into a three-
year compensatory financing facility signed by Bangladesh with the IMF in February 1987.
One major exception to the management problems of Bangladeshi banks was the Grameen Bank, begun
as a government project in 1976 and established in 1983 as an independent bank. In the late 1980s, the
bank continued to provide financial resources to the poor on reasonable terms and to generate
productive self-employment without external assistance. Its customers were landless persons who took
small loans for all types of economic activities, including housing. About 70 percent of the borrowers
were women, who were otherwise not much represented in institutional finance. Collective rural
enterprises also could borrow from the Grameen Bank for investments in tube wells, rice and oil mills,
and power looms and for leasing land for joint cultivation. The average loan by the Grameen Bank in the
mid-1980s was around Tk2,000 (US$65), and the maximum was just Tk18,000 (for construction of a tin-
roof house). Repayment terms were 4 percent for rural housing and 8.5 percent for normal lending
operations.
The Grameen Bank extended collateral-free loans to 200,000 landless people in its first 10 years. Most
of its customers had never dealt with formal lending institutions before. The most remarkable
accomplishment was the phenomenal recovery rate; amid the prevailing pattern of bad debts
throughout the Bangladeshi banking system, only 4 percent of Grameen Bank loans were overdue. The
bank had from the outset applied a specialised system of intensive credit supervision that set it apart
from others. Its success, though still on a rather small scale, provided hope that it could continue to
grow and that it could be replicated or adapted to other development-related priorities. The Grameen
Bank was expanding rapidly, planning to have 500 branches throughout the country by the late 1980s.
Beginning in late 1985, the government pursued a tight monetary policy aimed at limiting the growth of
domestic private credit and government borrowing from the banking system. The policy was largely
successful in reducing the growth of the money supply and total domestic credit. Net credit to the
government actually declined in FY 1986. The problem of credit recovery remained a threat to monetary
stability, responsible for serious resource misallocation and harsh inequities. Although the government
had begun effective measures to improve financial discipline, the draconian contraction of credit
availability contained the risk of inadvertently discouraging new economic activity.
Foreign exchange reserves at the end of FY 1986 were US$476 million, equivalent to slightly more than
two months worth of imports. This represented a 20-percent increase of reserves over the previous
year, largely the result of higher remittances by Bangladeshi workers abroad. The country also reduced
imports by about 10 percent to US$2.4 billion. Because of Bangladesh's status as a least developed
country receiving concessional loans, private creditors accounted for only about 6 percent of
outstanding public debt. The external public debt was US$6.4 billion, and annual debt service payments
were US$467 million at the end of FY 1986.
2.10) Overview of Banking Environment in Bangladesh:
The banking system at independence consisted of two branch offices of the former State Bank of
Pakistan and seventeen large commercial banks, two of which were controlled by Bangladeshi interests
and three by foreigners other than West Pakistanis. There were fourteen smaller commercial banks.
Virtually all banking services were concentrated in urban areas. The newly independent government
immediately designated the Dhaka branch of the State Bank of Pakistan as the central bank and
renamed it the Bangladesh Bank. The bank was responsible for regulating currency, controlling credit
and monetary policy, and administering exchange control and the official foreign exchange reserves. The
Bangladesh government initially nationalized the entire domestic banking system and proceeded to
reorganize and rename the various banks. Foreign-owned banks were permitted to continue doing
business in Bangladesh. The insurance business was also nationalized and became a source of potential
investment funds. Cooperative credit systems and postal savings offices handled service to small
individual and rural accounts. The new banking system succeeded in establishing reasonably efficient
procedures for managing credit and foreign exchange. The primary function of the credit system
throughout the 1970s was to finance trade and the public sector, which together absorbed 75 percent
of total advances. The government’s encouragement during the late 1970s and early 1980s of
agricultural development and private industry brought changes in lending strategies. Managed by the
Bangladesh Krishi Bank, a specialized agricultural banking institution, lending to farmers and fishermen
dramatically expanded. The number of rural bank branches doubled between 1977 and 1985, to more
than 3,330. Denationalization and private industrial growth led the Bangladesh Bank and the World
Bank to focus their lending on the emerging private manufacturing sector. Scheduled bank advances to
private agriculture, as a percentage of sect oral GDP, rose from 2 percent in FY 1979 to 11 percent in FY
1987, while advances to private manufacturing rose from 13 percent to 53 percent.
The transformation of finance priorities has brought with it problems in administration. No sound
project-appraisal system was in place to identify viable borrowers and projects. Lending institutions did
not have adequate autonomy to choose borrowers and projects and were often instructed by the
political authorities. In addition, the incentive system for the banks stressed disbursements rather than
recoveries, and the accounting and debt collection systems were inadequate to deal with the problems
of loan recovery. It became more common for borrowers to default on loans than to repay them; the
lending system was simply disbursing grant assistance to private individuals who qualified for loans
more for political than for economic reasons. The rate of recovery on agricultural loans was only 27
percent in FY 1986, and the rate on industrial loans was even worse. As a result of this poor showing,
major donors applied pressure to induce the government and banks to take firmer action to strengthen
internal bank management and credit discipline. As a consequence, recovery rates began to improve in
1987. The National Commission on Money, Credit, and Banking recommended broad structural changes
in Bangladesh’s system of financial intermediation early in 1987, many of which were built into a three-
year compensatory financing facility signed by Bangladesh with the IMF in February 1987.
One major exception to the management problems of Bangladeshi banks was the Grameen Bank, begun
as a government project in 1976 and established in 1983 as an independent bank. In the late 1980s, the
bank continued to provide financial resources to the poor on reasonable terms and to generate
productive self-employment without external assistance. Its customers were landless persons who took
small loans for all types of economic activities, including housing. About 70 percent of the borrowers
were women, who were otherwise not much represented in institutional finance. Collective rural
enterprises also could borrow from the Grameen Bank for investments in tube wells, rice and oil mills,
and power looms and for leasing land for joint cultivation. The average loan by the Grameen Bank in the
mid-1980s was around Tk2,000 (US$65), and the maximum was just Tk18,000 (for construction of a tin-
roof house). Repayment terms were 4 percent for rural housing and 8.5 percent for normal lending
operations.
The Grameen Bank extended collateral-free loans to 200,000 landless people in its first 10 years. Most
of its customers had never dealt with formal lending institutions before. The most remarkable
accomplishment was the phenomenal recovery rate; amid the prevailing pattern of bad debts
throughout the Bangladeshi banking system, only 4 percent of Grameen Bank loans were overdue. The
bank had from the outset applied a specialized system of intensive credit supervision that set it apart
from others. Its success, though still on a rather small scale, provided hope that it could continue to
grow and that it could be replicated or adapted to other development related priorities. The Grameen
Bank was expanding rapidly, planning to have 500 branches throughout the country by the late 1980s.
Beginning in late 1985, the government pursued a tight monetary policy aimed at limiting the growth of
domestic private credit and government borrowing from the banking system. The policy was largely
successful in reducing the growth of the money supply and total domestic credit. Net credit to the
government actually declined in FY 1986. The problem of credit recovery remained a threat to monetary
stability, responsible for serious resource misallocation and harsh inequities. Although the government
had begun effective measures to improve financial discipline, the draconian contraction of credit
availability contained the risk of inadvertently discouraging new economic activity.
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.
2.11) Banks Operated in Bangladesh

The banking sector in Bangladesh consists of several types of institution:
1.Central bank
2.Scheduled Banks
3.State Owned Banks
4.Private Commercial Banks
5.Islamic Commercial Private Banks
6.Foreign Commercial Banks
7.Non-Scheduled Banks
8.Non Bank Financial Institutions
9.Specialized Financial Institutions (Semi Formal Sector)
2.11.1) Central bank

Bangladesh Bank is the central bank of Bangladesh and the chief regulatory authority in the banking
sector.
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.
2.11.2) Objective of Central Bank
The Main objectives of Central Bank are:
1.Price stability both internal & external.
2.Sustainable growth & development.
3.High employment.
4.Economic and efficient use of resources.
5.Stability of financial & payment system.
2.11.3) Functions of Central Bank

The Bangladesh Bank performs all the functions that a central bank in any country is expected to
perform. Such functions include maintaining price stability through economic and monetary policy
measures, managing the country's foreign exchange and gold reserve, and regulating the banking sector
of the country. Like all other central banks, Bangladesh Bank is both the government's banker and the
banker's bank, a "lender of last resort". Bangladesh Bank, like most other central banks, exercises a
monopoly over the issue of currency and banknotes. Except for the one, two, and five taka notes and
coins which are the responsibility of the Ministry of Finance of the Government of Bangladesh. The
major functional areas include :
a.Formulation and implementation of monetary and credit policies.

b.Regulation and supervision of banks and non-bank financial institutions, promotion and development
of domestic financial markets.
c.Management of the country's international reserves.
d.Issuance of currency notes.
e.Regulation and supervision of the payment system.
f.Acting as banker to the government .
g.Money laundering prevention.
h.Collection and furnishing of credit information.
i.Implementation of the Foreign Exchange Regulation Act.
j.Managing a deposit insurance scheme .
2.11.4) Rules and Regulations imposed by Central Bank:

The Bangladesh Bank performs all the functions that a central bank in any country is expected to
perform. Such functions include maintaining price stability through economic and monetary policy
measures, managing the country's foreign exchange and gold reserve, and regulating the banking sector
of the country.
2.12) Scheduled Bank:

There are 57 scheduled banks in Bangladesh who operate under full control and supervision of
Bangladesh Bank which is empowered to do so through Bangladesh Bank Order, 1972 and Bank
Company Act, 1991. Scheduled Banks are classified into following types:
2.12.1) State Owned Commercial Banks:

There are 6 SOCBs which are fully or mostly owned by the Government of Bangladesh. (In 2015,
Government decided to treat BASIC Bank and BDBL as SOCB. )
2.12.2) Private Commercial Banks: There are 40 private commercial banks which are mostly owned by
the private entities. PCBs can be categorized into two groups:
i) Conventional PCBs: 32 conventional PCBs are now operating in the industry. They perform the banking
functions in conventional fashion i.e interest based operations.
ii) Foreign Commercial Banks (FCBs): 9 FCBs are operating in Bangladesh as the branches of the banks
which are incorporated in abroad.
iii) Islami Shariah based PCBs: There are 8 Islami Shariah based PCBs in Bangladesh and they execute
banking activities according to Islami Shariah based principles i.e. Profit-Loss Sharing (PLS) mode. The list
of Islamic banks are:
a.Islami Bank Bangladesh Limited

b.ICB Islamic Bank Limited
c.Al‐Arafah Islami Bank Limited
d.Social Islami Bank Limited
e.Export Import Bank of Bangladesh Limited
f.First Security Islami Bank Limited
g.Shahjalal Islami Bank Limited
h.Union Bank Limited
2.12.3) Specialized Banks:

4 specialized banks are now operating which were established for specific objectives like agricultural
development. These banks are also fully or mostly owned by the Government of Bangladesh.
2.13) Non-scheduled Bank:

There are now 4 non-scheduled banks in Bangladesh which are:
a.Ansar VDP Unnayan Bank

b.Karmashangosthan Bank
c.Probashi Kollyan Bank
d.Jubilee Bank
2.14) Future Prospect of Banking Sector in Bangladesh:

Banking in a global perspective is facing new challenges for every single day that are passing or coming
in the future. If anyone asks me what are the problems that I see in the Banking sector in the upcoming
days. I will say that meeting customer expectation, facing competition among the uprising fin-tech
companies, increasing regulatory pressure, etc. will give some serious challenge to the banking sector
globally. These problems are escalating continuously. Thus traditional banks need to evaluate and
improve their operations so that they will be able to keep up with the pace of change in the banking and
financial industry today and the upcoming days.
Nowadays we hear the following saying more often-

“In a digital economy you either transform or die, there’s no other option left.”
Sometimes bank clients fall victim of phishing attacks where they might unintentionally confer sensitive
information such as usernames, passwords, and credit card details (and, indirectly, money) in malicious
sites. Phishing is a type of social engineering attack often used to steal user data, including login
credentials and credit card numbers. By disguising as a trustworthy entity in an electronic
communication the attackers grab all the necessary information from the innocent people.
That might be the biggest challenge to overcome in this online banking era. Especially in Asian
subcontinent as online banking is becoming increasingly popular thus the phishing attackers like this
continent more for their fraud work as to some user of online banking the idea about using the internet
for money transaction is quite new & challenging. Therefore, phishing, pharming, keylogging, man-in-
the-middle, and man-in-the-browser attacks, etc. are posing a threat to those internet banking users. To
exploit security gaps, fraudsters are using different methods, and they are evolving with new techniques
constantly. They also possess a seasonal nature, targeting countries which have less sophisticated
security infrastructure. So to prevent and deter fraud, banks must lead ahead of the curve through the
regular upgrading of their safety infrastructure.
Implementing security measures for online banking is easier said than done and securing an online
banking channel has many other aspects to it, one of them is to address the channels individually. Also,
another key challenge which banks face is when they upgrade their security infrastructure because then
they need to identify which technologies to adopt and which parts of their infrastructure to change or
improve. Therefore besides providing a robust and secure channel for online banking, banks need to
decide on such solutions that not only suits their needs but also balances security, cost, and
convenience for their customers.
For Bangladeshi Banking industry we have been providing the most secure solutions since 2013.
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Chapter 3 ( Background of the Jamuna Bank Limited)

3.1) An Overview of the Jamuna Bank :
Jamuna Bank Limited (JBL) is Banking Company registered under the Companies Act, 1994 with its Head
Office at Chini Shilpa Bhaban, 3, Dilkusha C/A, Dhaka-1000. The Bank started its operation from 3rd June
2001.
Capital of Jamuna Bank Limited : Jamuna Bank Limited highly capitalized new generation Bank is a
started its operation with an authorized capital of Tk.10,000.00 million and paid up capital of
Tk.4,487.00 million, as of December 2012 Paid up capital of the Bank raised to Tk.83617 million and
number of branches raised to 84 (Eighty Four).
Activities of Jamuna Bank Limited :. JBL the Bank undertakes all types of Banking transactions to support
the development of trade and commerce of the country. JBL's services are also available for the
entrepreneurs to set up new ventures.
Establishment of Jamuna Bank Limited : The only Bengali named new generation private commercial
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 field of trade, commerce and industries. The Bank is being managed and
operated by a group of highly educated and professional team.
Position of Jamuna Bank Limited : The Management of the Bank constantly focuses on understanding
and anticipating customer’s needs. The scenario of Banking business changing day by day. Jamuna Bank
has already ranked the top out as a quality service provider & is known for its reputation.
ATM Booth Information:

The automated teller machine (ATM) has been introduced the JBL customers in the year 2000. It is the
most convenient and prompts way to access cash from the ATM machine provided that the customer
has a debit card. The minimum amount that can be withdrawn is TK 500 and the maximum amount
being TK 20,000. This service is available to the valued customers 24 hours a day, 7 days a week, and
throughout the year.
Number of Branches:
JBL has established total 84 branches over the country and made a smooth network inside the country
as well as throughout the world. The number of increasing branches as year wise is mentioned in the
table.
Branches of JBL from year 2010 to 2014

Years 2010 2011 2012 2013 2014
No. Of Branch 39 54 66 73 84
Number of Branches of JBL
Interpretation : Numbers of branches shows better performance over the years. In 2014 the number has
been increased to 84, which is a good achievement for any private bank. It indicates that the bank is
performing well over the last five years.
Number of Employees
Jamuna Bank Limited, is the pioneer in private banking sector. The numbers of employees increased
throughout its life because of growing nature. In 2013 the number of employees was 1786, which were
1511 in 2012 and 935 in 2010. Number will be increased when the number of branches will be
increased.
Numbers of Employees of JBL from year 2010 to 2014

Years 2010 2011 2012 2013 2014
No. Of employees 935 1215 1511 1786 2,006
Number of Employees of JBL
Interpretation : It seems that as the branches increases, the numbers of the employees also increases to
provide better customer service to retain the passion in the banking sectors. It indicates that the bank is
performing well over the last five years.
JAMUNA BANK LIMITED (JBL) AT A GLIMPSE
Organization Name Jamuna Bank Limited

Short Form JBL
Logo
Corporate Slogan Your Partner For Growth

Operation Started 3rd June, 2001
Chairman Mr. Md. Sirajul Islam Varosha
Managing Director Mr.ShafiqulAlam
Operating profit (2017) Tk. 485 million
Number of Branches (2017) 102
Swift Code JAMUBDDH
Web Page www.jamunabankbd.com
3.2) Mission of the Jamuna Bank Limited:
• Establishing three sector banking model.
• Transformation to a service oriented technology driven profit earning bank.
• Fast accurate and satisfactory customer service.
• To become a leading banking institution.
• To play a significant role in the development of the country.

Vision of Jamuna Bank Limited:
The Bank is committed for satisfying diverse needs of its customers through an array of products at a
competitive price by using appropriate technology and providing timely service so that a sustainable
growth, reasonable return and contribution to the development of the country can be ensured with a
motivated and professional work-force.
Corporate Slogan
“Your Partner for Growth”
Strategies of Jamuna Bank Limited:
• To manage and operate the bank in the most efficient manner to enhance financial performance and
to control cost of fund.
• To strive for customer satisfaction through quality control and delivery of timely services.
• To train and develop all employees and provide them adequate resources so that the customer’s
needs can be responsibly addressed.
• To revive and update policies, procedures and practices to enhance the ability to extend better
services to customers.
• To promote organizational effectiveness by openly communicating company plans, policies, practices

and procedures to all employees in a timely fashion.
• To identify customer’s credits and other banking needs and monitor their perception towards our
performance in meeting those requirements.
• To cultivate a working environment that fosters positive motivation for improved performance
• To diversify portfolio both in the retail and wholesale market.
• To increase direct contact with customers in order to cultivate a closer relationship between the bank
and its customers.
3.3) Ownership Structure of Jamuna Bank Limited:

Board of Directors:
The Board of Directors consists of 13 members elected from the sponsors. The Board of Dirc-7 supreme
body of the Bank.
Executive Committee:
All routine matters beyond the delegated powers of management are decided upon by or routed
through the “ Executive Committee, subject to ratification by the Board of Directors.
Audit Committee:
In line with the guidelines of Bangladesh Bank, a three-member Audit Committee of the Board of
Directors been formed to assists the Board in matters related to Audit and Internal Control System of
the Bank.
Chairman:
Sponsor Directors
Engr.Md. Atiqur Rahman
Al-haj Md. Rezaul Karim Ansari
Mr. Md. Belal Hossain
Mr. Sakhawat Abu Khair
AI-Haj Nur Mohammed
Vice Chairman
Mr. Md. Sirajul Islam Varosha
Directors
Al-haj M. A. Khayer
Engr. A. K. M. Mosharraf Hussain
Mr. Arifur Rahman
Mr. Golam Dastagir Gazi
Bir Protik Mr. Fazlur Rahman
Mr. Md.Tajul Islam
Mr. Md. Mahmuclul Hoque
Mr Md Irshad Karim
Mr. Shaheen Mahmud
Mr. Mohammad Nurul Alam
Shariah Council
Professor Dr. Mustafizur Rahman Mawlana
Mufti Ruhul Amin Mawlana Abdur Razzak
Professor Mowlana Md. Salahuddin & Mr. M Azizul Huq
3.4) Composition of the board:
3.5) Capital and Reserves:

Jamuna Bank Limited has a conviction of maintaining a strong capital base in carrying on operation. It
started it operation on June 03, 2001 with a paid-up capital of Tk.390.00 million divided into 3.90 million
ordinary shares of Tk.100 each. The authorized capital of the Bank is Tk.1600 million divided into 16.00
million of Tk.100 each and stood at Tk. 4,000 million devided into 40 million ordinary shares of Tk.100
each. The Bank’s paid-up capital as at 31st December 2007 stood at Tk.1225.71 million Tk 429.00 was
raised through initial public issue of 4.29 million ordinary shares of Tk 100 each with a premiu- each
while Tk.214.50 million was raised by issue of Bonus Shares in the ratio of 1:4, i.e. one bonus share, on
the holding of 8.58 million ordinary shares as on 31.12.2005, for every 4 shares out of profits upto the
Thus, as on 31st December 2007, the total shareholder’s equity and reserve stood at Tk.1872.72 million.
3.6) Milestones in the development of the Jamuna Bank Limited:
3.7) Management Structure:

JBL is managed by highly professional people.The present Managing Director of the Bank is a forward
looking senior banker having decades of experience and multi discipline of knowledge to his credit both
at home and abroad.He is supported by an educated and skilled professional team with diversified
experience in finance anad banking.The management of the bank constantly focuses on the
understanding and anticipating customers needs and offer solution thereof.Jamuna Bank Limited has
already ranked as ane of the quality service providers and known for its reputation.
3.8) RISK MANAGEMENT:
As a regulatory body Bangladesh Bank wants all bank to take effective measures for implementation of
risk management in banking operations covering the major risks in asset – liability management, credit
risk management, foreign exchange risk management, Internal control and compliance and Money
Laundering Prevention. As these risks are integral parts of banking business JBL has put highest priority
of such risk with intense monitoring of credit portfolios. We believe these will improve our operational
and financial performance along with meeting the regulatory requirements. The bank is constant efforts
to establish superior monitoring of credit risks and returns. For bringing harmonious matching between
assets and liabilities ALCO reviews these on a regular basis for keeping risk in this area to an acceptable
level. The bank pursues an effective internal control system by establishing systems and procedures for
scrutinizing the transactions periodically, encompassing key back up supports and commissioning
regular contingency plans.
3.9) Joint Ventures abroad:
3.10) HDR:
Definition of Human resource management:
Human Resource Management (HRM) has been defined as a process of acquisition, development,
motivation, maintenance & utilization of manpower in the organization. That is Human Resource
Management is related to a few aspect of Human Resources working in the organization.
The human resource major provides 21st-century skills, knowledge, and understanding of human
resource functions in private- and public sector organizational settings A Human Resources
Management specialization provides a student with advanced skills and professional confidence in
managing an organization’s human resources. The focus of the curriculum is on preparing students to
integrate HR functions into an organization’s strategic plan. Topics covered include long-range planning
approaches, developing leadership vision, right sizing and downsizing strategies, international labor
relations and conflict resolution, dealing with trade union, compensation management, labor and safety
issues, global human resource development. This career-focused degree program provides the
groundwork for motivated students to pursue careers in Human Resource Management areas because
Human resource practitioners are increasingly relied upon to make optimal decisions about such topics
as the motivation and productivity, compensation, and performance appraisals of the organizations
human resource. This field is particularly challenging due to the diverse interests of management, labor,
consumers, regulatory agencies, political constituents, and environmental issues in a competitive, global
economy.
Human Resource Management has been defined in many ways by different authors. These definitions
are given below:
Rckey W. Griffin: “ Human Resource Management is the set of organizational activities directed at
attracting, developing and maintaining an effective work force”
Gray Dessler: “ The policies and practices involved in carrying out the people or human resource
aspects of a management position including recruiting, screening, training, rewarding and appraising”.
Human Resource Planning & Development:
Human Resource Management (HRM)
We often hear the term Human Resource Management, Employee Relations and Personnel
Management used in the popular press as well as by Industry experts. Whenever we hear these terms,
we conjure images of efficient managers busily going about their work in glitzy offices. In this article, we
look at the question “what is HRM?” by giving a broad overview of the topic and introducing the readers
to the practice of HRM in contemporary organizations. Though as with all popular perceptions, the
above imagery has some validity, the fact remains that there is much more to the field of HRM and
despite popular depictions of the same, the “art and science” of HRM is indeed complex. We have
chosen the term “art and science” as HRM is both the art of managing people by recourse to creative
and innovative approaches; it is a science as well because of the precision and rigorous application of
theory that is required.
As outlined above, the process of defining HRM leads us to two different definitions. The first definition
of HRM is that it is the process of managing people in organizations in a structured and thorough
manner. This covers the fields of staffing (hiring people), retention of people, pay and perks setting and
Management, performance management, change management and taking care of exits from the
company to round off the activities. This is the traditional definition of HRM which leads some experts to
define it as a modern version of the Personnel Management function that was used earlier.
The second definition of HRM encompasses the management of people in organizations from a macro
perspective i.e. managing people in the form of a collective relationship between management and
employees. This approach focuses on the objectives and outcomes of the HRM function. What this
means is that the HR function in contemporary organizations is concerned with the notions of people
enabling, people development and a focus on making the “employment relationship” fulfilling for both
the management and employees.
These definitions emphasize the difference between Personnel Management as defined in the second
paragraph and human resource management as described in the third paragraph. To put it in one
sentence, personnel management is essentially “workforce” centered whereas human resource
management is “resource” centered. The key difference is HRM in recent times is about fulfilling
management objectives of providing and deploying people and a greater emphasis on planning,
monitoring and control.
Whatever the definition we use the answer to the question as to “what is HRM?” is that it is all about
people in organizations. No wonder that some MNC’s (Multinationals) call the HR managers as People
Managers, People Enablers and the practice as people management. In the 21st century organizations,
the HR manager or the people manager is no longer seen as someone who takes care of the activities
described in the traditional way. In fact, most organizations have different departments dealing with
Staffing, Payroll, and Retention etc. Instead, the HR manager is responsible for managing employee
expectations vis-à-vis the management objectives and reconciling both to ensure employee fulfillment
and realization of management objectives.
3.11) Branch distribution:
Jamuna Bank performing its Banking Service all over the Country with 35 Branches most of them
situated in Dhaka and others in Chittagong, Sylhet, Rajshahi, Comilla, and Khulna.
Name Of Branch Address

Mohakhali Branch 32 Mohakhali C/a Dhaka,
Bangladesh
Moulvi Bazar Branch Moulvi Bazar Dhaka, Bangladesh
Dilkusha Branch 33 Dilkusha C/a Dhaka,
Bangladesh
Agrabad Branch 77-77 Agrabad C/a Chittagong,
Bangladesh
Sonargaon Road Branch 1/G Free School Street,
Sonargaon Dhaka, Bangladesh
Nayabazar Branch 10/3 Malitola, North South Road
1000 Dhaka, Bangladesh
Shantinagar Branch 41/B Chamilibag, Shantinagar
Khatungonj Branch 1575 Pathargata , Koteali
Chittagong, Bangladesh
Gulshan Branch Land View Commercial Center
Naogaon Branch 247 Sadar Road Naogaon,
Bangladesh
Foreign Exchange Branch 2, D.I.T Avenue (Extension) 1000
Dhaka, Bangladesh
Narayanganj Branch Holding No:Old-137,New-207
1400 Narayanganj, Bangladesh
Dhanmondi Branch House No:17,17/a 1205 Dhaka,
Bangladesh
Jublee Road Islamic Banking Modina Tower, Kotwali 4000
Branch Chittagong, Bangladesh
Rajshahi Branch 88, Shaheb Bazar, Zero Point
6100 Rajshahi, Bangladesh
Motijheel Surma Tower 1000 Dhaka,
Bangladesh
Dholaikhal 119/B/1 New Distillary Road,
Banani Tower Hamlet 1213 Dhaka,
Bangladesh
Uttara Singapore Plaza 1230 Dhaka,
Bangladesh
Bhatiyari Newaz Market 4315 Chittagong,
Bangladesh
Mirpur Branch 203/A, 203/1senpara Parbota
Barishal Branch Nasir Complex, Holding No.105,
Sadar Road, Barisal
Bhola Branch Nabarun Center, Holding no:
337-341, Ward no:07, Bhola
Pouroshova, Bhola
Bogra Branch 898 (New), Kabi Nazrul Islam
Sarak, Borogola, Bogra
Dhunot Branch Huzaifa Mansion, Holding
no.305, Dhunot Bazar Road,
Ward no.3, Pourosova: Dhunot,
Upozilla: Dhunot, District: Bogra
Ashugonj Branch London Plaza,Pora
Gudam,Ashugonj
WestBazar,Brahmanbaria
Chandpur Branch Mia Mansion, Holding No:0140,
Ward No:06, Comilla Road,
Pourashova: Chandpur, Thana:
Chandpur Sadar, Dist: Chandpur
Hajigonj Branch Three Star Super Market, Ward
NO:05, Hajigonj Pouroshove, P.S:
Hajigonj, Chandpur
Comilla Branch Trical Tower (Ground Floor),
634/581, South Thakur Para,
Laksham Road, Comilla.
Off-Shore Banking Unit, Dhaka Land View Commercial Centre
Trade Finance Processing Center Baktiar Centre, Pwd Plot No.10,
4210 Chittagong, Bangladesh
Trade Finance Processing Center Hadi Mansion 1000 Dhaka,
Bangladesh
Head Office Printers Building 1000 Dhaka,
Bangladesh
Chapter 4 (Credit and Risk Management activities of Jamuna Bank Limited)

Contemporary banking organizations are exposed to a diverse set of market and non-market risks, and
the management of risk has accordingly become a core function within banks. Banks have invested in
risk management for the good economic reason that their shareholders and creditors demand it. But
bank supervisors, such as the Bangladesh Bank, also have an obvious interest in promoting strong risk
management at banking organizations because a safe and sound banking system is critical to economic
growth and to the stability of financial markets. Indeed, identifying, assessing, and promoting sound risk
management practices have become central elements of good supervisory practice.
Risk Management:
Risk assessment is the process of analyzing potential-losses from a given hazard using a combination of
known information about the situation, knowledge about the underlyirlg process, and judgment about
the information that is not known or well understood.
The process of combining a risk assessment with decisions on how to address that called risk
management. Risk Management part of a larger decision process that co insiders lent in the technical
and social aspects of the risk situation. Risk assessments are per primarily for the purpose of providing
information and insight to those who make d about how mat risk should be managed. Judgment and
values enter to risk assessor the context of what techniques ore should use to objectively describe and
evaluate risk, Judgment and values enter into risk management in the context of what is the most
effective and socially acceptable solution.
credit:
In banking terminology, credit refers to the loans and advances made by the bank to its customers or
borrowers. Bank credit is a credit by which a person who has given the required security to a bank has
liberty to draw to a certain extent agreed upon. It is an arrangement for deferred payment of a loan or
purchase. (Wikipedia dictionary)
Credit means a provision of, or commitment to provide, funds or substitutes for funds, to a borrower,
including off-balance sheet transactions, customers’ lines of credit, overdrafts, bills purchased and
discounted, and finance leases. (Guideline on credit risk management, Bank of Mauritius)
Geographic Distribution of Credit Exposure:

JBL business is concentrated in two major cities- Dhaka and Chittagong as country’s business activities
are concentrated in these two locations. The following table illustrates credit exposure in different
divisions in the year 2013:
Credit Risk:
Credit risk is the possibility that a borrower will fail to meet its obligation in accordance with agreed
terms. Credit risk, therefore, arises from the Bank’s dealings with or lending to corporate, individual and
other Banks or financial institutions.
To prevent excessive flow of credit and proper use of it, banks require taking on the appropriate credit
appraisal procedure to impose financial discipline on borrowers. The procedure that organize, control
and motivate the borrowers will tailed credit management.
Risk is defined as the product of a hazard (such as damage costs) and the probability that this hazard
occurs. In other words, (probability) x (hazard) = risk. The first two values must be known or at least
estimated in order to define risk.
Credit Risk Management Process

Credit risk management process should cover the entire credit cycle starting from the origination of the
credit in a financial institution’s books to the point the credit is extinguished from the books (Morton
Glantz, 2002). It should provide for sound practices in:
Credit processing/appraisal
Credit approval/sanction
Credit documentation
Credit administration
Disbursement
Monitoring and control of individual credits
Monitoring the overall credit portfolio (stress testing)
Credit classification and
Managing problem credits/recovery
Credit Processing/Appraisal:
Credit processing is the stage where all required information on credit is gathered and applications are
screened. Credit application forms should be sufficiently detailed to permit gathering of all information
needed for credit assessment at the outset. Financial institutions should set out pre-qualification
screening criteria, which would act as a guide for their officers to determine the types of credit that are
acceptable. For instance, the criteria may include rejecting applications from blacklisted customers.
These criteria would help institutions avoid processing and screening applications that would be later
rejected.
In the case of loan syndication, a participating financial institution should have a policy to ensure that it
does not place undue reliance on the credit risk analysis carried out by the lead underwriter
As a general rule, the appraisal criteria will focus on:
a) amount and purpose of facilities and sources of repayment;
b) integrity and reputation of the applicant as well as his legal capacity to assume the credit obligation;
c)performance of the borrower in any credit previously granted by the financial institution,
d)the borrower’s capacity to repay based on his business plan, if relevant, and projected cash flows
using different scenarios;
e)cumulative exposure of the borrower to different institutions;
f)physical inspection of the borrower’s business premises as well as the facility that is the subject of the
proposed financing;
g)current and forecast operating environment of the borrower;
h)background information on shareholders, directors and beneficial owners for corporate customers;
and
i)Management capacity of corporate customers .
Credit-approval/Sanction:
Approval authorities should be sanctioned by the board of directors. Approval authorities will cover new
credit approvals, renewals of existing credits, and changes in terms and conditions of previously
approved credits, particularly credit restructuring, all of which should be fully documented and
recorded.The approval process should be based on a system of checks and balances. Some approval
authorities will be reserved for the credit committee in view of the size and complexity of the credit
transaction.
Credit Documentation:
Documentation is an essential part of the credit process and is required for each phase of the credit
cycle, including credit application, credit analysis, credit approval, credit monitoring, collateral valuation,
and impairment recognition, foreclosure of impaired loan and realization of security. Credit applications
must be documented regardless of their approval or rejection. All documentation should be available for
examination by the Bangladesh Bank. Financial institutions must establish policies on information to be
documented at each stage of the credit cycle. For security reasons, financial institutions should consider
keeping only the copies of critical documents (i.e., those of legal value, facility letters, signed loan
agreements) in credit files while retaining the originals in more secure custody. Credit files should also
be stored in fire-proof cabinets and should not be removed from the institution’s premises.
Financial institutions should maintain a checklist that can show that all their policies and procedures
ranging from receiving the credit application to the disbursement of funds have been complied with.
The checklist should also include the identity of individual(s) and/or committee(s) involved in the
decision-making process.
Credit Administration:
Financial institutions must ensure that their credit portfolio is properly administered, that is, loan
agreements are duly prepared, renewal notices are sent systematically and credit files are regularly
updated. A financial institution’s credit administration function should, as a minimum, ensure that:
— credit files are neatly organized, cross-indexed, and their removal from the premises is not
permitted;
— the borrower has registered the required insurance policy in favor of the bank and is regularly
paying the premiums;
— the borrower is making timely repayments of lease rents in respect of charged leasehold properties;
— credit facilities are disbursed only after all the contractual terms and conditions have been met and
all the required documents have been received;
— collateral value is regularly monitored;

Monitoring and Control of Individual Credits:
To safeguard financial institutions against potential losses, problem facilities need to be identified early.
A proper credit monitoring system will provide the basis for taking prompt corrective actions when
warning signs point to deterioration in the financial health of the borrower.
In broad terms, the monitoring activity of the institution will ensure that:
— funds advanced are used only for the purpose stated in the customer’s credit application;
— financial condition of a borrower is regularly tracked and management advised in a timely fashion;
Monitoring the Overall Credit Portfolio (Stress Testing):

An important element of sound credit risk management is analyzing what could potentially go wrong
with individual credits and the overall credit portfolio if conditions/environment in which borrowers
operate change significantly. The results of this analysis should then be factored into the assessment of
the adequacy of provisioning and capital of the institution. Such stress analysis can reveal previously
undetected areas of potential credit risk exposure that could arise in times of crisis.
Possible scenarios that financial institutions should consider in carrying out stress testing include:
— Significant economic or industry sector downturns;
— Adverse market-risk events; and
— Unfavorable liquidity conditions.
Classification of credit:
It is required for the board of directors of a financial institution to “establish credit risk management
policy, and credit impairment recognition and measurement policy, the associated internal controls,
documentation processes and information systems;”
Credit classification process grades individual credits in terms of the expected degree of recoverability.
Financial institutions must have in place the processes and controls to implement the board approved
policies, which will, in turn, be in accord with the proposed guideline.
Loan Facility Parameters:

Jamuna Bank Limited extends and will extend credit for various genuine purposes. One type of advance
requires to be treated differently from other types. Depending on the type financed, ownership pattern,
business mode, cash flow, security and other related matters facility parameters are to be set.
However the general parameters in facility will be as under: –
Nature of Advance Purpose
Limit/Amount of Facility/Maximum Size

Margin/Equity
Rate of Interest
Rate of commission/charges
Mode of disbursement
Mode of repayment
Security
Validity/Maximum tenor
General/Special conditions/ Covenants
Nature of Advances:
Each advance to be made will be categorized under one of the arranged types and will be governed
under the terms & conditions related thereto.
Purpose:
Our lending will be guided by legitimate purpose. Financing for hoarding, speculative purpose and which
will be utilized for degrading the character of the people will be avoided. Credit which will contribute to
production, trade, commerce, import, export, development of Industries, development
activities/Economic growth, infrastructural development, employment generation, poverty alleviation
etc will be stressed.
Limit /Amount of facility/Maximum Size:

Facility will be considered based on assessment of requirement & justification subject to the overall
lending cap as per Bangladesh Bank single party exposure limit.
Margin/Equity:
It will be the general policy of the bank to judiciously ensure stake of the borrower in any financing plan.
Margin will, however, be subject to institutional policy in this regard and central bank policy where
applicable.
Rate of Interest/ Commission and other charges:

Rate of interest will be charged as per declared rate of the bank. Pricing will be basically risk based.
Higher price will be considered for riskier borrowers because of their higher riskinvolved (i.e lower score
obtained by an obligor as per CRG score sheet is called a risky client). Similarly lower price will be
considered for prime clients on the basis of their low risk (Low risk grade clients means where an obligor
obtained higher aggregate score as per CRG score sheet or 100% cash covered or govt./international
Top bank Guarantee).
Mode of disbursement:
In disbursing credit the bank ensures drawing for the purpose the loan has been sanctioned. Where
required visit of the business/site etc are suggested and all subsequent disbursements are made
conditional to full utilization of disbursed money in the preceding phase.
Mode of Adjustment/ Repayment:

For the borrower to exhibit capability to periodically adjust the drawings taken and as such to have idea
regarding the rationale for continuation of the facility, adjustment mode is given. In term of lending,
where revolving transaction is not allowed, adherence to adjustment stipulation ( monthly, quarterly,
half yearly, yearly or otherwise) is suggested to ensure recovery of the loan disbursed.
Security:
Our bank mostly relies/will continue to rely on security based lending, taking into consideration, the
character of the borrower, nature of business cash flow, environmental, economic, business and other
influencing factors. In obtaining security primary and collateral security are suggested. Primary securities
are valued on the basis of landed cost in case on imported goods/ ex-mill or factory price/ whole sale
market price for the local goods. Collateral security of acceptable type having adequate market /sale
value is accepted.
Validity/Expiry/Maximum tenor:
Validity/Expiry date for continuous credit is set at a period not exceeding 1 year. Short term loan mostly
is allowed for trade/ Commerce. This expiry date is virtually the date for adjustment/review of the
facility, subject to periodical and satisfactory turnover of the limit.
Such loans are allowed for adjustment in installments.

Short term : Up to 12 months.
Medium term : More than 12 months and up to 60 months.
Long term : More than 60 months.
Quality of security:
Primary security having adequate market value is accepted .
Perishable goods and seasonal goods are generally discouraged as primary security.
Acceptable financial obligations are preferred.
Receivable bills against work order/supply order funded by Foreign Agencies/ which bear adequate
funding arrangements are preferred.
Documents which are drawn in conformity with the export L/C terms ( i.e. documents which do not have
discrepancies) are accepted for negotiation.
Personal guarantee of those persons having high net worth / assets, satisfactory commitment fulfillment
track record and no connection with any irregular/ classified advance are obtained.
In syndicated financing mortgage is executed on first ranking pari passu basis.
Legal Interest Protection:

Title searches are conducted periodically for collateral both with RJSC and land Registrar for mortgages.
Collateral arrangements are detailed in credit proposal.
Bank’s legal adviser establishes the required legal documentation for a borrower’s legal standing and
enforcement of the bank’s interest.
Mortgage documents are properly vetted by Bank’s legal adviser.
Registered mortgage of property are supported by registered irrevocable general power of attorney to
sell the property.
Bank has proper inventory of standard security documentations vetted by Legal counsel.
Valuation of collateral:
Credit administration department independently will control and match the value of cash collateral
which will be liened to the bank and against which borrowings are/ will be allowed as per approval.
Value of Inventory and machineries supplied by client will be cross checked.
Credit administration department will ensure receivables that actually exist and that past due. Disputed
and other items with impaired collateral value to be identified and removed from collateral pool.
Value is sourced from independent appraisals addressed to the bank.
Insurance:
Bank have taken insurance policy. Insurance policy shall be taken covering all possible risks. Branches
shall ensure that insurance Policy is current and renewed on a timely basis. Insurance shall be obtained
from a reputed company.
Cross Border Risk:

The bank takes/ will take care of /analyze the risks involved with Cross Border lending. Risks associated
with import of a commodity are kept in mind which may basically take the form of failure of the foreign
supplier to: –
Supply goods of specified standard and quality.
Supply the contracted goods timely.
CREDIT ASSESSMENT & RISK GRADING

Credit Assessment:
A thorough credit and risk assessment is to be conducted before granting of loans, and once approved;
all facilities are to be reviewed at least annually. Credit assessment will be presented, in a credit
application duly signed/approved by the official of the branch.
In case an account deviates from the guidelines the same should be identified in credit applications and
justification for approval should be provided by the originating officials of the branch. Bank will conduct
financial analysis on a regular basis & monitor changes in the client’s financial condition.
Before sending proposal to the approving authority, the originating officials of the branch shall ensure
that the following steps/formalities have been taken/completed properly and incorporated in the credit
proposal appropriately:
Current CIB Report obtained

Repayment sources of the borrower has been established by financial analysis
Purpose and amount with types of loan proposed by the borrower stated in the proposal.
Earnings from the relationship properly assessed in the credit proposal.
Pre-sanction Inspection report/call report/site visit report is in place.
Management profile & Capital structure, Constitution, Date of Establishment are stated in the proposal.
Experience of Borrowers, business skills, management & successions are properly mentioned in the
proposal.
Borrower’s Rating in the Industry is assessed along with overall industry concerns and borrower’s
strength & weakness relative to its competitors are identified.
Industry’s position along with supplier and buyer risk is analyzed.
Borrower credit worthiness is established by review of, 3 years historical financial statements and past
track record.
Cash Flow analysis justifying client’s ability to repay is reflected in the credit proposal.
Industry and Business analysis is done in the proposal.
Credit proposals clearly mention current outstanding against all limits.
Audited financials, Large Loan position etc. are reflected in the credit proposals.
Branches ensure that collateral has been properly valued, verified and are managed.
Account conduct of the borrower & his allied concerns have been done.
Adequacy and the extent of Insurance coverage are assessed.
Policy compliance is clearly stated in the Credit Proposal.
Changes in pricing of facilities are highlighted in credit proposal.
Usage of borrowed fund is confirmed through financial statement analysis.
Borrowers Risk Grade has been done as per Bangladesh bank Guidelines examined & approved by the
authorized official and stated in the credit proposal.
CREDIT MEMORANDUM (CM) / CREDIT PROPOSAL:

The Credit Memorandum (CM)/ Credit Proposal should contain:
Correct name of Individual borrower/proprietor/partners/Directors, status in the Co., % of share holding
of the directors in the co./firm. Age, present (residential) and permanent address with phone number
Account number and date of account opening.
Nature of business
Constitution
Capital structure
Date of establishment of business/ Date of incorporation
Date of commencement of business
Business Net worth
Banking relationship history
Management profile
Personal Net worth of the individual/proprietor/partners/directors.
Recycling/ periodical adjustment of the existing credit facility during last 3 years.
CIB status.
Assigned Risk Grade.
Credit allowing capacity of our bank (as per Bangladesh bank single Exposure limit).
Facility Structure: –
Nature of Advance
Amount of Limit
Purpose
Margin/Equity
Interest, Commission, Other charges
Mode of repayment
Validity/Expiry
Security: –
Primary
Collateral
Others
Cost of project (where applicable): –
Land
Building
Other structures
Machineries
Others
Working capital assessment/ Assessment of the requirement.
Financial highlight
Business performance of the client/allied concerns with our bank/ other banks
Import: –
Export: –
Earnings from the client (Last 3 years) and projected earnings from the relationship
Sales profitability (Last 3 years), projected sales
Cash Flow
Experience of Borrowers, business skills, management & successions
SWOT
Major 5 Competitors
Possible risks & Risk mitigating factors
Other Terms, Conditions & Covenants
Risk Assessment Areas:
Borrower Analysis:
Full particulars of the proprietor, partners, directors, etc to be examined, their management capability
to be ascertained. Overall performance and credit status of the allied concerns of the client i.e. group
will be assessed.
Industry Analysis:
Before extending credit in an area, over all business conditions of that area/ sector will be critically
examined, prospects and problems to be ascertained.
Supplier/ Buyer Analysis:

Lending decision will be preceded by an intensive analysis on whether the borrower depends on a single
or a very few customer or gets the supply of the raw materials/ dealing items from a single supplier.
Historical Financial Analysis:

An analysis of a minimum of 3 years historical financial statements of the borrower shall be presented.
The analysis shall address the quality and sustainability of earnings, cash flow and the strength of the
borrower’s balance sheet.
Projected Financial Performance:

Where term facilities are proposed, borrower’s future / projected financial performance should be
provided, indicating an analysis of the sufficiency of cash flow to service debt repayments.
Adherence to lending guidelines:

Credit proposals to be prepared in line with Bank’s lending Guidelines. A credit application/proposal will
clearly mention whether or not the proposal complies with the bank’s lending guidelines.
Mitigating Factors:
In credit assessment, possible risks, such as margin sustainability and / or volatility , high debt load (
leverage/ gearing ), over stocking or debtor issues, rapid growth, acquisition or expansion, new business
line/ product expansion, management changes or succession issues, customer or supplier
concentrations and lack of transparency or industry issues and their mitigating factors to be identified.
Loan Structure:
Amount and tenor of loan will be fixed justifiably depending on income generation prospect, Projected
repayment capacity and the purpose of the loan.
Security:
Our banks’ lending will generally be adequately securitized. Securities to be obtained, will be acceptable,
valuable, easily marketable & defect less.
Credit Risk Grading (CRG):

Credit risk grading is an important tool for credit risk management as it helps the Banks & financial
institutions to understand various dimensions of risk involved in different credit transactions. The
aggregation of such grading across the borrowers, activities and the lines of business can provide better
assessment of the quality of credit portfolio of a bank or a branch. In line with the above expectation
our bank will undertake gradation of credit risks taking into consideration the varied complexities
involved in lending operation. CRG with the above expectation will be a mandatory replacement of LRA.
(Our bank has already adopted a Credit Risk Grading System as per Bangladesh bank CRG Manual. The
details of CRG are as under:-)
DEFINITION OF CREDIT RISK GRADING (CRG):

The Credit Risk Grading (CRG) is a collective definition based on the pre-specified scale and reflects the
underlying credit-risk for a given exposure.
A Credit Risk Grading deploys a number/ alphabet/ symbol as a primary summary indicator of risks
associated with a credit exposure.
Credit Risk Grading is the basic module for developing a Credit Risk Management system.
USE OF CREDIT RISK GRADING:

The Credit Risk Grading matrix will allow application of uniform standards to credits to ensure a
common standardized approach to assess the quality of individual obligor, credit portfolio of a unit, line
of business, the branch or the Bank as a whole.
As evident, the CRG outputs would be relevant for individual credit selection, wherein either a borrower
or a particular exposure/facility is rated
Risk grading would also be relevant for surveillance and monitoring, internal MIS and assessing the
aggregate risk profile of a Bank. It is also relevant for portfolio level analysis.
In case of Fixed Term Loans, which are repayable within maximum 5 (five) years of time: –
If the amount of `defaulted installment’ is equal to or more than the amount of installment(s) due within
6 months, the entire loan will be classified as ‘Sub-standard’.If the amount of ‘defaulted installment’ is
equal to or more than the amount of installment(s) due within 12 months, the entire loan will be
classified as ‘Doubtful’.If the amount of ‘defaulted installment’ is equal to or more than the amount of
installment(s) due within 18 months, the entire loan will be classified as ‘Bad & Loss’.
In case of Fixed Term Loans, which are repayable in more than 5 (five) years of time: –
If the amount of ‘defaulted installment’ is equal to or more than the amount of installment(s) due within
12 months, the entire loan will be classified as ‘Sub-standard.’
If the amount of ‘defaulted installment’ is equal to or more than the amount of installment(s) due within
18 months, the entire loan will be classified as ‘Doubtful’.
If the amount of ‘defaulted installment ‘is equal to or more than the amount of installment(s) due within
24 months, the entire loan will be classified as ‘Bad & Loss’.
Qualitative Judgment:
If any uncertainty or doubt arises in respect of recovery of any Continuous Loan, Demand Loan or Fixed
Term Loan, the same will have to be classified on the basis of qualitative judgment be it classifiable or
not on the basis of objective criteria.
But even if after resorting to proper steps, there exists no certainty of total recovery of the loan, it will
be classified as ‘Doubtful’ and even after exerting the all-out effort, there exists no chance of recovery, it
will be classified as ‘ Bad & Loss’ on the basis of qualitative judgment.
The concerned bank will classify on the basis of qualitative judgment and can declassify the loans if
qualitative improvement does occur.
Chapter 5 (Analysis and Findings)

Deposits & Deposit: Mix:
In commercial Bank operation starts with mobilization of resources i.e. tapping of deposits and then the
same are deployed as loans, advances&. investment for the purpose of maximizing wealth. Thus,
cenobite is the lifeblood of a bank.
In keeping with this axiom JBL attaches utmost importance to the deposit mobilization campaign and to
the optimal dine-sit rid for minimum cost of fund as far as practicable.
The comparative position of Deposits & Deposit Mix of the Bank for the last two years are depicted
below:
TOTAL DEPOSITS ‘ [Source: Annual Report, Jamuna Bank Ltd.
Under the prevailing stiffly competitive market JBL has been able to install confidence customers as to
its commitment to depositorde could mobilize a total deposit of Tk Tk.20924.02 million showing an
increase of TK.6383.92 million being 3G.55 percent.
Cost of Funds (Deposit Cost & Overhead Cost):
The Cost of Funds of JBL in 2007 was 12.49%, which was 20078was 12.26%, 12.18% in 2006. So, it is
noted that in 2009 the cost of funds was big higher than that of 20067& 2008.
SWOT Analysis:
SWOT is for an organization’s strength, weakness, opportunities and threats. The underlying assumption
of a SWOT analysis that managers can better formulate successful strategy after they have carefully
reviewed the organization strengths and weakness in the light of threats and opportunities presented by
the environments. A right strategy can turn fledging organization ink successful one, whereas a wrong
strategy could lead to a disaster. SWOT analysis emphasizes that organizational strategies must result a
good fit between the organization and external environments. Some significant factors of Jamuna Bank
Limited presented below for SWOT Analysis:
Strengths
* As a third generation bank, Jamuna Bank Limited has a very rood credit comparison of other third
generator, banks and also first and second Aeration banks.
* Robust Banking software that helps to cope with modem techniques and facilities the real-time
online banking, sirs banking, debit card & credit t card booth facilities
* More efficient human resources competitive remuneration packages.
* All the branches of Jamuna Bank Limited situated in commercially through out Bangladesh.
* Jamuna Bank is the only bank in Bangladesh that has agreement with Bangladesh Services regards
to inflow rerun trance quickly to all over Bangladesh.
* Jamuna Bank Limited is Authorized Primary Dealer of Government Treason Bonds & Bills,
approved by Bangladesh Bank.
Weakness
Weak marketing strategies.
Jamuna Bank Limited has loan portfolio very few sectors.
Traditional banking approach.
Lack of managerial activities in branch level,
Jamuna Bank Limited has not created market impression on customer service such as other third
generation private banks.
Opportunities
Branches are opening in prime location different parts of Bangladesh each year. Jamuna Bank Limited
has given emphasis on SME segment and going to own SME center all over the Bangladesh.
To expand business and capture the market share and lead the banking sector. Jamuna Bank Foundation
can play a vital role in corporate social activities that increase the image of the bank.
Threats
* Jamuna Bank Limited looses Customer due to customer service.
* In a market oriented industry, it’s very to sustain without marketing.
* Job oriented training is less in Jamuna Bank Limited

* Global market recession Political instability.
Trend Analysis:
Deposit trend of Jamuna Bank Ltd
Year Million of Deposits (Tk)

2004 10450.161
2005 14454.129
2006 17284.811
2007 19279.721
The deposit trend of Jamuna Bank from 2004 to 2007 which we observed is very
much rapidly increasing. The tremendously increase the deposit from 2004 to
2005 which was 10450.161 to14454.129. Finally in 2007 the deposit increase
to19279.721 million deposit.
Trend analysis Loans and Advances:
Loan and advance position of Jamuna Bank:
Year Amount (Million of tk )
2004 6,722.804
2005 11,011.834
2006 12,796.630
2007 14,863.642
2008 18,697.528
Trend analysis of Profit:
Profit of JAMUNA bANK:
Year Million of Profit (Tk)

2007 348.742
2008 479.437
2009 923.123
2010 1243.1857
Ratio Analysis Of Jamuna Bank Ltd:
Sl. No. Particulars 2005 2004 2003
Performance Ratio%
1 Current Ratio 0.242 0.423 1.027
2 Return on Assets 2.39 2.35 1.47
3 Return on Average Assets 1.32 1.34 0.81

(after Tax)
4 Return on Average Equity 28.25 29.46 14.53
5 Net Interest Margin 3.24 3.35 2.49

(average)
6 Net Interest Margin 2.93 2.87 1.93
7 Efficiency Ratio 40.42 39.74 49.24
8 Return on Investment 6.20 6.91 2.93
9 Profit margin 20.76 19.59 13.11
10 Return on Risk Weighted 4.03 4.68 3.57

Assets
11 Burden Coverage 74.19 65.66 56.95

12 Ratio of fees Income 12.07 9.57 8.41
13 Interest Yield 10.68 11.58 11.02.
14 Marginal cost of Fund 6.82 7.19 6.61
15 Burden yield on Advances 12.09 11.90 12.38
16 Profit on Lending 4.87 4.27 5.35
17 Interest expenses to Total 78.59 81.29 82.58

Expenses
18 Salary Exp. To 39.82 48.46 50.11

Total Overhead Expenses
19 Return on paid-up Capital 46.5 36.35 15.68
20 Productivity Ratio 31.37 27.01 30.06
21 2 6.34 6.46 7.32
Asset Quality Ratio%
1 Nonperforming Loan to 0.46 0.04 0.02

Total Loan
2 Loan loss reserve to total 1.13 1.01 1.02

loan
3 NPL Reserve to NPL 20.00 36.75 100.00
4 Loan to Deposit 76.18 64.33 48.98
Capital Ratio%
1 Total Risk-Based Capital 10.17 11.54 15.57

Ratio
2 Leverage Capital ratio 15.18 15.91 14.19

(Capital)
3 Leverage Capital 17.23 17.67 15.22

ratio(equity)
INTERPRETATION OF RATIO ANALYSIS:
Here, a three years ratio analysis has been carried out in order to identify the trend of JBL during their
period 2003-2005. As the annual report of the year 2006 has not been prepared yet by the Bank
analysis, I cannot interpret and analyze the ratios of that year. The analysis of current ratio indicates that
it is in declining trend starting from 1.027 to 0.242. This is a negative symptom for the bank, which
reveals that a bank has less current asset in hand to pay off its current liabilities. In 2005, current ratio
was 0.242, which was far below the standard normal of 2:2. Therefore, this is an alarming trend for the
bank.
The profitability ratio analysis shows the ROE and the ROA of the bank. The ROE shows that it is in an
increasing trend from a 14.53 to 28.25% in 2005. This indicates that the stockholders are having a higher
rate of return for investing their capital or placing their funds at risk. The ROA also shows an increasing
trend in the last there years starting from a 1.47 to 2.39%. This indicates a higher managerial efficiency
and capability in converting the institution assets into net earnings.
The Net interest Margin also shows an increasing trend starting from 1.93% in 2003 to 2.93% in 2005.
This is a tremendous growth in the spread between interest revenues and interest costs of the bank. The
Net Bank Operating Margin also shows an upward trend starting from 0.5% to 1.6% in 2005. This also
shows managerial efficiency in achieving higher operating reveries and controlling operating costs for
the bank.
The Earnings per Share shows an upward trend starting from Tk-14.25/share to Tk46.58/share in 2005.
This indicates that the stockholders are having higher earring sagest each share that they hold in the
bank.
Profit Margin for the bank shows a rapid growth for the last three years starting from a 13.11% in 2003
to 20.76% in 2005. This indicates the efficiency of the management in the effectiveness of expense
management and service pricing policies.
The Return on Investment Ratio of the bank is also in an upward trend from 2.93% to 6.20% in 2005. The
increase in the degree of asset utilization reflects better portfolio management policies (especially the
mix and yield on the bank’s assets).
5.2) Findings:
Jamuna Bank Ltd. is 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 field of trade,
commerce and industries. Findings from my point of veiw are:
Lack of motivation toward the employee.
JBL has not enough branches that is why they can not provide sufficient customer service.
JBL uses flora-bank online software to record day to day transaction.
Some cases the quality the employee is not up to the mark.
JBL offers various types of attractive products to customers.
Now a day most of the customers are using ATM card. Though JBL provides ATM card they do not have
enough ATM booth.
JBL follows some principle for lending.
Interest rate of JBL is high in compare to other bank.
JBL does not have enough features to loan lending sector.
Default rate of JBL is decreasing.
Net income and deposit are increasing year by year.
JBL has strong loan monitorig system.
Jamuna Bank Ltd. is heavily relying on debt and borrowing than equity financing.
Chapter 6 (Recommendations and Conclusion)
6.1) Recommendations
A banker cannot sleep well with bad debts in his portfolio. The failure of commendable banks occurs
mainly due to bad loans, which occurs due to inefficient management of the loans and advances
portfolio. Therefore any banks must be extremely cautious about its lending portfolio and credit policy.
So far Jamuna Bank Limited has been able to manage its credit portfolio skillfully and kept the classified
loan at a very lower rate….. thanks goes to the standard and stringent credit appraisal policy and
practices of the bank. Considering the findings and inlay is in the earlier chapters, JBL can do the
following for further sustainable growth and development.
* The bank should emphasize reducing the classified and non-performing credits by concerted efforts.
* Central monitoring system should be more active to maintain classified loan to a minimum level.
* The Bank should develop the detail outlines and courses of actions to be taken for recovery of
classified loans and advances so as to the classified barometer would not rise again.
* The bank should focus on procedural guidelines that have been devised for meticulous compliance
by the branches for effective Management of Credit Risk
* Interest expenses on Deposits of the Rank may be tried to keep low with due regard to balances
Deposit Mix for the cost and maximizing the profit.
* The research cell of this Bank should be strengthening with the efficient manpower by studying turn
feasibility of introduction of new products, analysis of manpower productivity end similar other which
works and eventually the efficient Management of Credit Risks.
* JBL has to arrange to train up its personnel through adequate training programs and workshops so
as to they can carry out their jobs properly and up to the mark.
* The Bank should strengthen the promotional activities and marketing of different products for
catering its services of the potential customers.
* The Bank should support its corporate culture in order to ensure proper Management of Credit Risk.
* JBL should establish more own ATM machine all over the country, to overcome dependency on
other Bank.
6.2) Conclusion
Jamuna Bank Limited celebrates its 9th anniversary on 3rd June2010 started its operation from in 2001.
Within this tangible period, the Bank has been recognized by the Bangladesh Bank through
improvement of overall asset quality and establishment of well-organized credit risk management.
Credit Management System of JBL is successful (classified loan is only 2.84% whereas the market
average is more that 20%). This success lies on its selection of good borrower and close credit
monitoring system, which reflects on its profitability.
Credit is utmost important factor for a Bank and core income generating source as well as it is involved
with risk. So, decision regarding credit is very important in all respect of the Bank. JBL has proper credit
management policies that describes what type of loans piloted the Bank’s soundness and also help to
meet the need of the communities the Bank serves.
JBL should capitalize its present successful credit management system and try to give better service to
its stakeholders in days to come which can ensure its sustainable growth and development.
Bibliographie:
Annual Report 2006 of the Jamuna Bank.
Annual Report 2009 of the Jamuna Bank.
Annual Report 2010 of the Jamuna Bank
Interview with the Credit In-charge of Jamuna Bank
Interview with the senior officers of Jamuna Bank
Documents of Credit Division.
www.bangladeshbank.com
www.sonalibank.com
www.agronibank.com
www.esternbank.com
www.nationalbank.com
www.hsbcbank.com
www.google.com.bd
www.thecitybank.com
Abreviations:
Appendices:
Balance Sheet of Jamuna Bank Ltd
Period Ending: 2017 2017 2017 2016

30/09 30/06 31/03 31/12
Total Current Assets - - - -

Total Assets 181061.79 175550.51 162927.21 169195.03
Cash & Due from Banks 17942.51 18238.7 17803.67 16162.66
Other Earning Assets, Total 36099.51 41400.33 37510.07 42000.55
Net Loans 122092.81 111429.45 103241.86 106608.39
Property/Plant/Equipment, Total - 2752.64 2579.62 2536.7 2514.97
Net
Property/Plant/Equipment, Total -
- - - -
Gross
Accumulated Depreciation, Total - - - -
Goodwill, Net - - - -
Intangibles, Net - - - -
Long Term Investments - - - -
Other Long Term Assets, Total - - - -
Other Assets, Total 2174.32 1902.4 1834.9 1908.47
Total Current Liabilities - - - -
Total Liabilities 165965.01 159437.49 146603.28 153410.78
Accounts Payable - - - -
Payable/Accrued - - - -
Accrued Expenses - - - -
Total Deposits 147014.1 141690.87 130605.42 130591.62
Other Bearing Liabilities, Total - - - -
Total Short Term Borrowings 3351.6 3154.99 2421.25 10914.34
Current Port. of LT Debt/Capital
- - - -
Leases
Other Current liabilities, Total - - - -
Total Long Term Debt 8010.96 7104.5 6152.31 4727.51
Long Term Debt 8010.96 7104.5 6152.31 4727.51
Capital Lease Obligations - - - -
Total Debt 11362.55 10259.48 8573.57 15641.85
Deferred Income Tax - - - -
Minority Interest - - - -
Other Liabilities, Total 7588.36 7487.14 7424.28 7177.31
Total Equity 15096.78 16113.03 16323.93 15784.25
Redeemable Preferred Stock, Total - - - -
Preferred Stock - Non Redeemable,
- - - -
Net
Common Stock, Total 6141.19 6141.19 6141.19 6141.19
Additional Paid-In Capital - - - -
Retained Earnings (Accumulated
8955.59 9971.83 10182.74 9643.06
Deficit)
Treasury Stock - Common - - - -
ESOP Debt Guarantee - - - -
Unrealized Gain (Loss) - - - -
Other Equity, Total - - - -
Total Liabilities & Shareholders'
181061.79 175550.51 162927.21 169195.03
Equity
Total Common Shares Outstanding 614.12 614.12 614.12 614.12
Total Preferred Shares Outstanding - - - -
* In Millions of BDT (except for per share items)
Income Statement of Jamuna Bank Ltd
Period Ending: 2017 2017 2017 2016

30/09 30/06 31/03 31/12
Net Interest Income 571.12 858.87 800.13 657.65

Loan Loss Provision 311.67 87.81 316.64 191.82
Net Interest Income After Loan
259.45 771.06 483.48 465.84
Loss Provision
Non-Interest Income, Bank 1464.91 1180.85 1096.92 1950.5
Non-Interest Expense, Bank -1052.62 -1053.49 -1007.13 -1266.51
Net Income Before Taxes 671.74 898.42 573.28 1149.83
Provision for Income Taxes 398.68 341.78 331.54 123.26
Net Income After Taxes 273.06 556.64 241.74 1026.57
Minority Interest -0 -0 -0 -
Equity In Affiliates - - - -
U.S GAAP Adjustment - - - -
Net Income Before Extraordinary
273.06 556.64 241.74 1026.57
Items
Total Extraordinary Items - - - -
Net Income 273.06 556.64 241.74 1026.57
Total Adjustments to Net Income - - - -
Income Available to Common
273.06 556.64 241.74 1026.57
Excluding Extraordinary Items
Dilution Adjustment - - - -
Diluted Net Income 273.06 556.64 241.74 1026.57
Diluted Weighted Average Shares 620.58 629.32 629.32 674.94
Diluted EPS Excluding
0.44 0.88 0.38 1.52
Extraordinary Items
DPS - Common Stock Primary Issue - - - 2.05
Diluted Normalized EPS 0.44 0.88 0.36 1.49
Cash Flow Statement of Jamuna Bank Ltd
Period Ending: 2017 2017 2017 2016

30/09 30/06 31/03 31/12
Period Length: 9 Months 6 Months 3 Months 12 Months

Net Income/Starting Line - - - -
Cash From Operating Activities -4655.99 -1033.94 -2502.22 -4466.97
Depreciation/Depletion - - - -
Amortization - - - -
Deferred Taxes - - - -
Non-Cash Items - - - -
Cash Receipts 11711.71 7010.93 3114.19 14983.6
Cash Payments -5764.89 -2866.52 -1021.7 -7301.6
Cash Taxes Paid -1004.99 -506.2 -141.56 -421.27
Cash Interest Paid - - - -
Changes in Working Capital -9597.82 -4672.16 -4453.15 -11727.7
Cash From Investing Activities 4412.41 3105.43 4370.69 4435.97
Capital Expenditures -382.59 -64.65 -21.73 -175.22
Other Investing Cash Flow Items,
4795 3170.08 4392.42 4611.19
Total
Cash From Financing Activities 2024.5 2376.98 1424.8 425.26
Financing Cash Flow Items - - - -
Total Cash Dividends Paid -1258.94 - - -1197.53
Issuance (Retirement) of Stock, Net - - - -
Issuance (Retirement) of Debt, Net 3283.44 2376.98 1424.8 1622.79
Foreign Exchange Effects - - - -
Net Change in Cash 1780.92 4448.47 3293.27 394.26

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Letter of Transmittal

Department of Business Administration

Lastly, I beg your kind consideration for evaluating this report.

Name: Jakia Akter

Batch: 51th (BBA)

Stamford University Bangladesh

Batch: 51th (BBA)

Stamford University Bangladesh

Name: Jakia Akter

Batch: 51th (BBA)

Stamford University Bangladesh

1.1) Background of the Report

1.2) Rational of the Report

1.3) Objectives of the Report

• To gather knowledge about the transactions of different departments of the bank.

• To know about the Credit products and the way of disbursement.

• To inform the banking credit facilities to the mass people.

1.4) Scope of the Report

• Face to face conversation with the respective officers and clients.

• Questionnaire survey of Bank clients and employees.

• Online data from JBL website.

• Published unpublished or personally collected data from bank officers.

Data Analysis and Reporting

1.6) Limitations of the Report

Lack of Supervision by the bank officers:

Chapter 2 ( Industry Analysis)

2.2) Origin of the word “Bank”

2.3) Economic Functions of Bank

The economic functions of banks include:

6.Money creation/destruction – whenever a bank gives out a loan in a fractional-reserve banking

2.4) Working Process of Bank

2.5) Objectives of Banking Business

2.5.1) Objectives from the owner’s point of view:

2.5.2) Objectives from the Government’s point of view:

2.5.3) Objectives from the Clients’ point of view:

2.6) Basic Functions of Bank

A. Primary Functions of Banks

2. Granting of Loans and Advances

The types of bank loans and advances are :-

d.Discounting of Bill of Exchange

d. Discounting of Bill of Exchange

B. Secondary Functions of Banks

These important secondary functions of banks are explained below.

f.Other Agency Functions

f. Other Agency Functions

2. General Utility Functions

a.Issue of Drafts, Letter of Credits, etc.

d.Dealing in Foreign Exchange

f.Social Welfare Programmes

g.Other Utility Functions

d. Dealing in Foreign Exchange

f. Social Welfare Programmes

g. Other Utility Functions

2.7) Basic principles of Banking Business

2.8) History of Banking Sector in World

2.9) History of Banking Sector in Bangladesh

2.10) Overview of Banking Environment in Bangladesh:

2.11) Banks Operated in Bangladesh

2.11.1) Central bank

1.Price stability both internal & external.

2.Sustainable growth & development.

4.Economic and efficient use of resources.

5.Stability of financial & payment system.