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1.1 Origin of the Report

Bachelor of Business Administration (BBA) course requires 3 months attachment with an
organization followed by a report assigned by the supervisor in the organization and endorsed by
the faculty advisor. I took the opportunity to do my internship in National Credit and Commerce
Bank Ltd (NCCBL). My topic of internship is authorized from the head office of NCC Bank Ltd.
My faculty supervisor Sohag Datta, In Charge of Business Administration Department, Dhaka
international university, also approved the topic and authorized me to prepare this report as part
of the fulfillment of internship requirement.

1.2 Background of the Report

I have worked in various Department of NCC Bank Ltd, Motijheel Branch. In this report, I will
try to make an overall analysis on all activities of NCC Bank Ltd specially focuses on credit
management & international trade.

1.3Objective of the Report

The study has been undertaken with following objectives:

General Objective
 To examine the overall investment and credit management of NCC bank Limited.
Specific objective
 To analyze the growth of investment in the bank.
 To see how the loans and advances are provided to the borrower.
 To analyze the growth of advances in the bank.
 To compare the financial performance among several years of the bank and with other
banks.
 To analyze various credit policies of NCC Bank Ltd.
 To examine the credit appraisal procedures followed by NCC bank.
 To study the control mechanisms followed by NCC bank for lending.
 To observe the overall asset quality of NCC bank.
 To recommend some suggestions for further development of NCC bank.

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1.4 Scope of the Report
The study would focus on the following areas of NCC Bank Limited.
 Credit appraisal system of NCC Bank Limited.
 Procedure for different credit facilities.
 Portfolio (of Loan or advances) management of NCC Bank Limited.
 Organization structures and responsibilities of management.
 Each of the above areas would be critically analyzed in order to determine the
 Efficiency of NCC bank’s Credit appraisal and Management system.
1.5 Methodology the report
In collecting the necessary data, a special care has been taken so that the entire variable may not
affect the objectives of the study. Data needed for conducting the study have been collected from
the following sources
a) Primary sources
b) Secondary sources
a) Primary sources
The primary data in this report mainly includes surveying the different departments of the bank.
It includes.
a) Scheduled survey
b) Observation while working in different desks.
c) Informal discussion with professional
b) Secondary sources
Data that were published before for some other reason can be collected using internal and
external sources.
 Internal Secondary data: To furnish the report properly some papers has been collected
from the officials of NCCBL. Information from annual reports, journals, newspapers and
other published documents have been used. The information mainly about investment and
credit was taken from the authorized officer who deals loans and credit in the bank.
 External Secondary Data: For better interpretation some data has been collected
Internet Browsing.

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Page | 4
2. An Overview of NCC Bank Ltd. (NCCBL)

NCC Bank Limited is the leading private sector bank in Bangladesh offering full range of
Personal, Corporate, International Trade, Foreign Exchange, Lease Finance and Capital Market
Services. NCC Bank Limited is the preferred choice in banking for friendly and personalized
services, cutting edge technology, tailored solutions for business needs, global reach in trade and
commerce and high yield on investments, assuring Excellence in Banking Services.

2.1 Background of NCC Bank Limited

National Credit and Commerce Bank Ltd. bears a unique history of its own. The organization
started its journey in the financial sector of the country as an investment company back in 1985.
The aim of the company was to mobilize resources from within and invest them in such way so
as to develop country's Industrial and Trade Sector and playing a catalyst role in the formation of
capital market as well. Its membership with the browse helped the company to a great extent in
this regard. The company operated up to 1992 with 16 branches and thereafter with the
permission of the Central Bank converted in to a fully fledged private commercial Bank in 1993
with paid up capital of Tk. 39.00 corer to serve the nation from a broader platform. Since its
inception NCC Bank Ltd. has acquired commendable reputation by providing sincere
personalized service to its customers in a technology based environment.
The Bank has set up a new standard in financing in the Industrial, Trade and Foreign exchange
business. Its various deposit & credit products have also attracted the clients-both corporate and
individuals who feel comfort in doing business with the Bank. Within this short time the bank
has been successful in positioning itself as progressive and dynamic financial institution in the
country. This is now widely acclaimed by the business community, from small entrepreneur to
big merchant and conglomerates, including top rated corporate and foreign investors, for modern
and innovative ideas and financial solution.

2.2 Mission Statement

Philosophically, a bank is a financial institution, which accepts depositors’ money for safe-
keeping and contracts with the depositors to lend this money at interest to infidel who are in need

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of its use and who can give ample security that the loans will be paid. From the profits made
from lending money at interest the banker agrees to pay the legitimate depositors a fixed sum of
interest besides safe-guarding the deposits. Moreover the bank follows the followings as its
mission:
Maximize the profit within the shortest possible time
Try the best level to satisfy the customer
Establish NCCBL as the best performing bank in the country.

2.3 Vision Statement:

The purpose of the bank is to become “The Bank of Choice” in the communities we serve. We
accomplish this by offering to our customers the financial services they expect while providing a
return to our owners. In accomplishing this mission, the bank has now been free from all the
natures of a problem bank through fulfilling all the conditions set by the central bank. We
proudly say: “NCCBL is’ profit-making and problem-free.”

2.4 Slogan
Where Credit & Commerce Integrates

2.5 Motto
The Bank will be a confluence of the following three interests:
Of the Bank: Profit Maximization and Sustained Growth.
Of the Customer: Maximum Benefit and Satisfaction.
Of the Society: Maximization of Welfare.

2.6 Objectives
Be one of the best banks of Bangladesh.
 Achieve excellence in customer service next to none and superior to all
competitors.
 Cater to all differentiated segments of Retail and Wholesale Customers.
 Be a high quality distributor of product and services.

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  Use state-of the art technology in all spheres of banking.

2.7 Values
 Customer focus
 Integrity
 Team Work
 Respect for individual
 Quality
 Responsible citizenship
2.8 Management Information System
Since its journey as commercial Bank in 1985 NCC Bank Limited has been laying great
emphasis on the use of improved technology. It has gone to online operation system since 2003.
And the new Banking Software Flexible is under process of installation. As a result the bank will
able to give the services of international standards.
2.9 Departments of NCCBL
If the jobs are not organized considering their interrelationship and are not allocated in a
particular department it would be very difficult to control the system effectively. If the
departmentation are not fitted for the particular works there would be haphazard situation and the
performance of a particular department would not be measured. NCC Bank Limited has does this
work very well. Different departments of NCCBL are as follows:
 Human Resources Division
 Personal banking Division
 Treasury Division
 Operations Division
 Computer and Information Technology Division
 Credit Division
 Finance & Accounts Division
 Financial Institution Division
 Audit & Risk Management Division

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2.10Human Resources Management of NCCBL

NCC Bank Limited recognizes that a productive and motivated work force is a prerequisite to
leadership with its customers, its shareholders and in the market it serves. NCC bank treats every
employee with dignity and respect in a supportive environment of trust and openness where
people of different backgrounds can reach their full potential. The bank’s human resources
policy emphasize on providing job satisfaction, growth opportunities, and due recognition of
superior performance. A good working environment reflects and promotes a high level of loyalty
and commitment from the employees. Realizing this NCC Bank limited has placed the utmost
importance on continuous development of its human resources, identify the strength and
weakness of the employee to assess the individual training needs, they are sent for training self-
development. To orient, enhance the banking knowledge of the employees NCC Bank Training
Institute (NCCBTI) organizes both in-house and external training. The remuneration is very
competitive in comparison with industry average. Beside these the recruitment procedure is
comprehensive.

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Page | 9
3. INVESTMENT MANAGEMENT

3.1 Introduction
Investment is the action of deploying funds with the intention and expectation that they will earn
a positive return for the owner. Funds may be invested in either real assets or financial assets.
When resources are used for purchasing fixed and current assets in a production process or for a
trading purpose, that it can be termed as real investment. Specific examples of financial
investments are: deposits of money in a bank account, the purchase of stock in a company.

3.2 Investment

NCC Bank is traditionally known as lending institutions. Investment and loan are the two
strategies of utilization of bank funds. Although the main purpose of these two strategies is to
earn profit. As on 31st December 2016, bank’s total figure of investment was TK20, 840.29
million, recording 89.79 growths over the previous year’s figure of TK.10, 980.81million.
Among others, investment in government Treasury bond helps maintaining liquidity requirement
in one hand& yielding good profit on the other. Besides, Bank’s Primary Dealership in Treasury
Bills also helps to deal in the money market effectively.
(in Million)
25,000

20,000
20,840
15,000
10,981
10,000 9,672
6,527
5,000

0
2014 2015 2016 2017

Figure: Investment (2014-2017)

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Distribution of Investment Portfolio-2017

Prize Bond, 0.02% Investment in

Shares, 3.44%
Prize Bond
Government
Treasury Bills, Investment in Shares
10.28% Zero Coupon
Bonds & Zero Coupon Bonds & Other
Other… Bonds
Government Treasury Bonds

Government Treasury Bills

Government
Treasury Bonds,
85.31%

3.3Objectives and principles of investment

The objective and principle of investment operations of the Bank are:
 To invest fund strictly in accordance with the Principle.
 To diversify its investment portfolio by the size of investment, by sectors (public
&private), by economic purpose, by securities and by geographical area including
industrial, commercial, and agriculture.
 To ensure mutual benefit both for the bank and investment-client by professional
appraisal of investment proposal, judicious sanction of investment, close and constant
supervision and monitoring thereof.
 To make investment keeping the socio economic requirement of the country in view.
 To increase the number of potential investors by making participatory and productive
investment.
 To avoid even highly profitable investment in fields forbidden and are harmful for the
society.
 To encourage social enlistment enterprises

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3.4 Investment process of NCC Bank

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3.5 NCC Bank foundation
One of the distinguishing features of NCC Bank Bangladesh Limited is that its Overall activities
are directed towards the welfare of the society. The welfare activities of NCC Bank Foundation
are as under:

 Income Generating Programs

 Educational Programs
 Health and Medicare Programs
 Humanitarian Help Programs
 Relief and Rehabilitation Programs

3.6 Functions of NCC Bank investment

The invested assets of bank positively contribute to the success of the bank as an institution. The
main functions of bank investment are:

 Maintaining trend of stable income

 Meeting the liquidity gap
 Diversifying the risk of bank funds
 Avoiding centralization of the use of bank funds
 Enhancing income through capital appreciation
 Reducing tax liability
 Arranging protection against interest rate fluctuation
 Ensuring flexibility of asset mix
 Discharging social responsibility to raise goodwill and reputation of the bank
 Participating in the management of the company by purchasing shares
 Playing an important role in establishing and developing capital market.

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3.7 Investment in listed securities
These securities are bought and help primarily for the purpose of selling them in future or held
for dividend income. Unrealized gains are not recognized in the profit and loss account. But
provision for diminution in value of investment is provided in the financial statements which
market price is below the cost price of investment as per Bangladesh Bank guideline.

 Investment in unquoted securities

Investment in unquoted securities is reported at cost under cost method. Adjustment is given for
any shortage of book value over cost for determining the carrying amount of investment in
unquoted securities.

 Investment in subsidiary
Investment in subsidiary is accounted for under the cost method of accounting in the
Bank’s financial statements in accordance with the Bangladesh Accounting Standard-
28.Originally investment in subsidiary is stated in the Bank’s Balance sheet at cost, less
impairment losses if any.

3.8 Special schemes under investment modes

 Household Durable schemes-HDS
 Agricultural Implements Investment schemes(AIIS)
 Housing Investment schemes-HIS
 Real Estate Investment Program-REIP
 Rural Development schemes-RDS
 Transport Investment schemes-TIS
 Car Investment scheme-CIS
 Small Business implements Investment Schemes

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3.9 The valuation methods of investment
All investment securities are initially recognized at cost, being fair value of the consideration
given, including acquisition charges associated with the investment, Premiums are amortized
and discounts accredited, using the effective yield method and are taken to discount income.
The valuation methods of investments used are:

Held to
maturity(HTM)
Methods
Held for
trading(HFT)

Held for maturity (HTM):

Investments which have ‘fixed or determinable payments’ and are intended to be ‘held to
maturity’ other than those that meet the definition of ‘held to amortized cost –others’ are
classified as held to maturity. These investments are subsequently measured at present value as
per Bangladesh Bank guideline. Investments in securities have been revalued as mark to market
as at December31, 2016. The gain of revaluation from the held to maturity securities has been
shown in the statement of changes in equity of December, 2016.

Held for trading (HFT):

Investments classified in this category are acquired principally for the purpose of selling or
repurchasing in short- trading or if designated as such by the management after initial
recognition, investments are measured at fair value and any change in the fair value is
recognized.

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Value of investment has been enumerated as follows

Item Applicable accounting value

Government Treasury Bills-HTM Amortized value
Government Treasury Bills-HFT Present value
Government Treasury Bonds-HTM Amortized Value
Government Treasury Bonds-HFT Present Value
Prize Bond At Cost
Quoted Shares As per BRPD Circular no. 14 dated June 25,
2016.
Un-quoted shares At Cost

3.10 .Discouraged sectors of investment

Investment in following sectors is discouraged by NCC Bank.

 Military equipment/Weapons Finance
 Highly Leveraged transactions.
 Finance of Speculative Investment.
 Logging, Mineral Extraction/Mining, or other activity that is Ethically of
Environmentally Sensitive.
 Lending to companies listed on CIB black list or known defaulters,
Counter parties in countries subject to UN sanctions
 Taking an Equity Stake in borrowers.
 Lending to Holding Companies.
 Bridge Investments relying on equity/debt issuance as a source of repayment.
 Tannery Finance.
 HB- residential who has no other business with the Bank.

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 Chapter-4
Credit Management

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4. CREDIT MANAGEMENT IN NCC BANK LIMITED (NCCBL)

4.1 Overview
The word credit comes from the Latin word “Credo” meaning “I believe”. It is a lender’s trust in
a person’s/ firm’s/ or company’s ability or potential ability and intention to repay. In other
words, credit is the ability to command goods or services of another in return for promise to pay
such goods or services at some specified time in the future. For a bank, it is the main source of
profit and on the other hand, the wrong use of credit would bring disaster not only for the bank
but also for the economy as a whole. The objective of the credit management is to maximize the
performing asset and the minimization of the non-performing asset as well as ensuring the
optimal point of loan and advance and their efficient management. Credit management is a
dynamic field where a certain standard of long-range planning is needed to allocate the fund in
diverse field and to minimize the risk and maximizing the return on the invested fund.
Continuous supervision, monitoring and follow-up are highly required for ensuring the timely
repayment and minimizing the default. Actually the credit portfolio is not only constituted the
bank’s asset structure but also a vital factor of the bank’s success. The overall success in credit
management depends on the banks credit policy, portfolio of credit, monitoring, supervision and
follow-up of the loan and advance. Therefore, while analyzing the credit management of
NCCBL, it is required to analyze its credit policy, credit procedure and quality of credit
portfolio.

4.2 Credit policy of NCCBL

One of the most important ways, a bank can make sure that its loan meet organizational and
regulatory standards and they are profitable is to establish a loan policy. Such a policy gives loan
management a specific guideline in making individual loans decisions and in shaping the bank’s
overall loan portfolio. In NCC Bank Limited there is perhaps a credit policy but there is no credit
written policy.

4.3 Credit principles

In the feature, credit principles include the general guidelines of providing credit by branch
manager or credit officer. In NCC Bank Limited they follow the following guideline while
giving loan and advance to the client. Credit advancement shall focus on the development and
enhancement of customer relationship. All credit extension must comply with the requirements
of Bank’s Memorandum and Article of Association, Banking Company’s Act, Bangladesh
Bank’s instructions, other rules and regulation as amended from time to time. Loans and
advances shall normally be financed from customer’s deposit and not out of temporary funds or
borrowing from other banks. The bank shall provide suitable credit services for the markets in
which it operates. It should be provided to those customers who can make best use of them.

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4.4 Global credit portfolio limit of NCCBL
The features which deals with how much total deposits would be used as lending the proportion
of long term lending, customer exposure, country exposure, proportion of unsecured facility etc.
the most notable ones are: The aggregate of all cash facility will not be more than the 80% of the
customer’s deposit Long term loan must not exceed 20% of the total loan portfolio. Facilities are
not allowed for a period of more than 5 (Five) years. Credit facilities to any one customer group
shall not normally exceed 15% of the capital fund or TK. 100 corers.

4.5 Types of credit

Credit may be classified with reference to elements of time, nature of financing and provision
base.

4.5.1 Classification on the basis of time:

On the basis of elements of time, bank credit may be classified into three heads.
 Continuous loans:
These are the advances having no fixed repayment schedule but have a date at which it is
renewable on satisfactory performance of the clients. Continuous loan mainly includes
"Cash credit both hypothecation and pledge" and "Overdraft".
 Demand loan:
In opening letter of credit (L/C), the clients have to provide the full L/C Amount in
foreign exchange to the bank. To purchase this foreign exchange, bank extends demand
loan to the clients at stipulated margin. No specific repayment date is fixed. However, as
soon as the L/C documents arrive, the bank requests the clients to adjust their loan and to
retire the L/C documents. Demand loans mainly include “Payment against Documents,”
"Loan against imported merchandise (LIM)" and “Later of Trust Receipt".
 Term loan
These are the advances made by the bank with a fixed repayment schedule. Terms loans
mainly include "Consumer credit scheme", "Lease finance"," Hire purchase”, and "Staff
loan". The term loans are defined as follows:

 Short term loan: Upto 12 months.

• Medium term loan: More than 12 months & up to 36 months
• Long term loan: More than 36 months.

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 Table 5: Term loans
Funded Non-funded

Overdraft Letter of credit

Loan Bank guarantee

Consumer credit

LTR

PAD

Cash credit (pledge &

hypo)
Staff loan

Term loan

Packing credit

The varieties used by NCCBL are briefly described below with the common terms and condition.
Banks generally offer different kinds of credit facilities to the customers.
The credit facilities of NCCBL may be broadly classified into five categories. They are as
follows:

 Loans
 Cash Credit
 Overdraft
 Bills purchased and discounted
 Consumer Credit/ personal loan
 They are discussed below accordingly.

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4.5.2 Loan

In case of loan the banker advances a lump sum for a certain period at an agreed rate of interest.
The entire amount is paid on an occasion either in cash or by crediting in his current account,
which he can draw at any time. The interest is charged for the full amount sanctioned whether he
withdraws the money from his account or not. The loan may be repaid in installments or at
expiry of a certain period. Loan may be demand loan or a term loan.

Interest Rate: 12%-15% per annum (Quarterly paid).

Loan 2015 2016 2017

28,329,268,455 32,404,479,032 38,230,926,634

Graph-1

Loan
45,000,000,000

40,000,000,000

35,000,000,000 38,230,926,634

30,000,000,000 32,404,479,032

28,329,268,455
25,000,000,000

20,000,000,000

15,000,000,000

10,000,000,000

5,000,000,000

0
2014 2015 2016

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4.5.3 Cash Credit

In Cash credit, banker specifies a limit called the cash credit limit, for each customer, up to
which the customer is permitted to borrow against the security of tangible assets or guarantees.
Cash credit is given through the cash credit account. The purpose of cash credit is to meet
working capital need of traders, farmers and industrialists.
Rate of Interest: 12%-14%

Renew System: it is renewed in periodic basis (yearly).

Cash Credit 2015 2016 2017

4,672,261,114 6,844,353,324 9,710,795,572

Graph-2

Cash Credit
45,000,000,000
40,000,000,000
35,000,000,000
30,000,000,000
25,000,000,000
20,000,000,000
15,000,000,000
10,000,000,000
5,000,000,000
0
2014 2015 2016

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5.5.4 Overdraft

Overdrafts are those drawings which are allowed by the banker in excess of the balance in the
current account up to a specified amount for definite period as arranged for. These advances are
secured. The loan holder can freely draw money from this account up to the limit and can deposit
money in the account off course, this loan has an expiry date after which renewal or
enhancement is necessary for enjoying such facility. Any deposit in the OD account is treated as
repayment of loan. Interest is charged as balance outstanding on quarterly basis. Overdraft
facilities are generally granted to businessmen for expansion of their business, against the
securities of stock-in-trade, shares, debenture, Government promissory notes, fixed deposit, life
insurance policies etc.

Overdraft 2015 2016 2017

8,550,289,941 9,281,392,979 11,690,527,439

Graph-3

Overdraft
14,000,000,000

12,000,000,000

10,000,000,000

8,000,000,000
Overdraft
6,000,000,000

4,000,000,000

2,000,000,000

0
2014 2015 2016

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5.5.5 Bills purchased and discounted
Banks grant advances to their customers by discounting bill of exchange or pro-note.

Bill purchased and 2015 2016 2017

discounted
983,443,604 1,731,485,986 3,381,630,882

Graph-4

Bills purchased and discounted

4E+09

3.5E+09

3E+09

2.5E+09

2E+09

1.5E+09

1E+09

500000000

0
2014 2015 2016

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4.5.6 Personal Loan (Consumer Credit Scheme)

Objectives:

The objectives of this loan are to provide essential household durable to the fixed income group
(Service Holders) and other eligible borrowers. Car loan, loan for house renovation, vacation
loan, marriage loan and loan for household equipment well as entertainment products are
governed by personal loan program. The Total amount of loans along with the duration in which
these loans taken, need to be repaid is given below

Table 6: Personal loan

Type of product Loan (TK) Lac Tenure

amount
1.Vehicle Up to 7.00 4 to 5 years

2. Household items

3. Household items for 1.00 2 years

Business
4. Household items for service Up to 3.00 2 to 3 years
holders
5. Others Special Considerations Special Considerations

Personal loan is given under personal guarantee of the borrower and another third person known
to the borrower. As this loan is collateral free the rate of interest is little bit high such as 15% to
18%. There is also a processing fee of 1.5% taken at the time of disbursement of the loan.

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4.5.7 Analysis:
If we consider loan, overdraft, bill purchased & discounted and cash credit from above we can
see some similarities. Like in every case we can see the amount of credit is increasing that means
assets of the bank is increasing as well. Because all kinds of loan is asset from the bank’s point
of view. If we look at the amount from 2015-2016 in four cases we can see that they emphasis
more on than any other credit scheme. After loan NCC bank emphasis more on overdraft then
cash credit and after that they maintain a good position on bill purchased & discounted.

Subject Difference between Difference between

2015-2016 2016-2017

Loan 4,075,210,577 5,826,447,602

Cash credit 2,172,092,210 2,866,442,248

Overdraft 731,103,038 2,409,134,460

Bill purchased & discounted 748,042,382 1,650,144,896

Graph-5

Difference between

10%
Loan
9%

Cash credit

Overdraft
28%
53%
Bill purchased &
discounted

Here, we can see that bank invested more on loan, but in case of cash credit in 2016-2017 they
emphasis more on cash credit than the overdraft. After overdraft they emphasis on bill purchased
& discounted and they look after this side least than the other three sides.

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4.6 Credit ratification authority of NCCBL
Credit decisions are heart of all credit works. Generally branch manager and the credit in-charge
of a branch are held responsible for appraising of a loan proposal. The customer request for
credit limit and the credit officer prepares a credit memo and send it to the head office, credit
division. After taking all the relevant information from the branch the head office credit division
sent the credit memo to the credit committee. Credit committee of NCCBL is comprised of
Managing Director and other top-level executives, that is, DMDs and EVPs. If credit committee
is convinced about the merit of the proposal then it is sent the broad of directors. The board is
final authority to approve or decline a proposal. The whole process takes a month or more. In
NCCBL broad meeting occurs once in every week.

4.7 Credit evaluation principles

Some principles or standards of lending are maintained in approving loans in order to keep credit
risk to a minimum level as well as for successful banking business.
The main principles of lending are given below:

 Liquidity:
Liquidity means the availability of bank funds on short notice. The liquidity of an
advance means it repayment on demand on due date or after a short notice. Therefore, the
banks must have to maintain sufficient liquidity to repay its depositors and trade off
between the liquidity and profitability is must.

 Safety:
Safety means the assurance of repayment of distributed loans. Bank is in business to
make money but safety should never be sacrificed for profitability, to ensure the safety of
loan. The borrower should be chosen carefully. He should be a person of good character
& capacity as well as bank must have to maintain eligible number of security from
borrower.

 Profitability:
Banking is a business aiming at earning a good profit. The difference between the interest
received on advances and the interest paid on deposit constitutes a major portion of the
bank income, besides, foreign exchange business is also highly remunerative. The bank
will not enter into a transaction unless a fair return from it is assured.
 Intent:
Banks sanction loans for productive purpose. No advances will be made by bank for
unproductive purposes though the borrower may be free from all risks.
 Security:
The security offered for an advance is an insurance to fall bank upon in cases of need.
Security serves as a safety value for an unexpected emergency. Since risk factors are
involved, security coverage has to be taken before a lending.
 National interest:
Banking industry has significant role to play in the economic development of a country.
The bank would lend if the purpose of the advances can contribute more to the overall
economic development of the country.

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4.8 Pre-disbursement compliance
When the credit proposal are approved the credit officer must have to be ensuredthat the
disbursement of the credit facilities must comply with the directions written inthe credit policy
and circular made by time to time along with checking all thefollowing terms and conditions.

The officer of Loan Administration must collect the acceptance of the customer’s of the terms
and conditions on the duplicate copy of the sanctioned advice.

They will thoroughly examine and ensure that the subject credit facility does not contradict to
any law, rules and regulation of the country, Bangladesh Bank and Deed of the Mortgage and
power of the Attorney to be drafted and executed under the Supervision of the Bank’s Legal
Advisor.

Lawyers certificate to the effect that all the legal formalities (Equitable/ Registered Mortgaged)
has been properly created on the land and building in favor of the bank & bank has acquired the
effective title of the property.

Registered power of attorney has been collected from the borrower (contractor) assigning the
work order favoring the NCCBL and the power of attorney has been registered with the work
order given agency and they have agreed that they will issue all the cheques favoring NCCBL.

The legal documents of the vehicle have been obtained.

Collection of the satisfaction certificate in respect of all the documents both legal and banking
from the lawyer.

Entry has been made in the Safe-in and Safe-out register and the documents are preserved.

After being satisfied all the above terms and conditions the credit in-charge will disburse the loan
amount to the client.

4.9 Documentation of the Loan:

Documentation is obtaining such agreement where all the terms and condition andsecurities are
written and signed by the borrower. It specifies rights and liabilities ofboth the banker and the
borrower. In documentation each type of advances requiresa different set of documents. It also
differs with the nature of securities. Thedocuments should be stamped according to the stamp
Act. There are no hard andfast rules of documentation and it varies from bank to bank.
Generally, thedocuments are taken in the case of a secured advance by NCCBL:

i. Demand promissory note: Here the borrower promises to pay the loan as and when demand by
bank to repay the loan.
ii. Letter of arrangement.
iii. Letter of continuity.

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iv. Letter of hypothecation of goods and capital machinery.
v. Stock report: This report is used for OD and CC. In this report, information about the quality
and quantity of goods hypothecated is furnished.
vi. Memorandum of deposit of title deed of property duly signed by the owners of the property
with resolution of Board of Directors of the company owning the landed.
vii. Personal guarantee of the owners of the property.
viii. Guarantee of all the directors of the company.
ix. Resolution of the board of directors to borrow fund to execute documents and completes other
formalities
x. Form no. XVII/XIX for filling charges with the register of joint stock companies
under relevant section.
xi. Letter of Revival
xii. Letter of lien for advance against FDR.

4.10 Advance
The different types of securities that may be offered to a banker are as follows:
(a) Immovable property
(b) Movable property

i. Pratiraksha Sanchaya Patra, Bangladesh Sanchaya Patra, ICB unit certificate, wage earner
development bond.
ii. Fixed Deposit Receipt
iii. Shares quoted in the Dhaka Stock Exchange and Chittagong Stock Exchange.
iv. Pledge of goods
v. Hypothecation of goods, produce and machinery

4.11 Types of advance

 Securities
Loans Lien or various kinds of Sanchaya Patras, Govt. Securities, FDR, Collateral of
immovable property, shares quoted in stock exchange
Overdraft, Pledge or hypothecation of machinery, land and building on which machinery
are installed, stock in trade, goods products and merchandise.
Bills purchased, Bills itself

 Modes of Charging Security:

A wide range of securities is offered to banks as coverage for loan. In order to make the
securities available to banker, in case of default of customer, a charge should be created
on the security. Creating charge means making it available as a cover for advance. The
following modes of charging securities are applied in the NCC Bank Limited.

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 Lien
A lien is right of banker to hold the debtor’s property until the debt is discharged. Bank
generally retains the assets in his own custody but sometimes these goods are in the
hands of third party with lien marked. When it is in the hand of third party, the third party
cannot discharge it without the permission of bank. Lien gives banker the right to retain
the property not the right to sell. Permission from the appropriate court is necessary. Lien
can be made on moveable goods only such as raw materials, finished goods, shares
debentures etc.

 Pledge
Pledge is also like lien but here bank enjoys more right. Bank can sell the property
without the intervention of any court, in case of default on loan, But for such selling
proper notice must be given to the debtor. To create pledge, physical transfer of goods to
the bank is must.

 Hypothecation
In this charge creation method physically the goods remained in the hand of debtor. But
documents of title to goods are handed over to the banker. This method is also called
equitable charge. Since the goods are in the hand of the borrower, bank inspects the
goods regularly to judge it s quality and quantity for the maximum safety of loan.

 Mortgage:
Mortgage is transfer of interest in specific immovable property. Mortgage is created on
the immovable property like land, building, plant etc. Most common type of mortgage is
legal mortgage in which ownership is transferred to the bank by registration of the
mortgage deed. Another method called equitable mortgage is also used in bank for
creation of charge. Here mere deposit of title to goods is sufficient for creation of charge.

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 .

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Strategy analysis of NCC Bank Ltd.
SWOT analysis:
SWOT stands for Strength, Weakness, and Opportunity & Threat. The SWOT of NCC
Bank has shown below:

Strength
Internal
Factors
Weakness

SWOT
Opportunities
External
Factors
Threats

 InternalFactors
Strength
 NCCBL has 76 well equipped branches and 4 SME centers in Bangladesh.
 Qualified mid level officials and talented management teams are operating the
over all business.
 Aggrement with foreign banks and financial institutions.
 The Banking net Quality of services.
 Realistic decisions by management.
 Ability to afford huge investments in business when needed.
 Reputation of the Bank.
 Good customer service is another major strength.
 The corporate culture of NCC Bank is very much interactive compare to our other
local organization.
Weaknesses:
 Lack of Advertising and promotional activities.
 Lack of employee satisfaction.
 Relatively uncomfortable working environment comparing to industry
competitors.
 Lack of resources when needed.
 Manual working techniques in some vital stages (Remittance processing)
 Lack of real qualified employees in junior level. (Under probationary officers).
 Lack of administrative control over all level of the bank.
 Limitation of information system (Flora).

External Factors

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Opportunities;
 The bank easily can capture the largest market share in Bangladesh.
 Opportunity of introducing new generation banking in Bangladesh.
 Opportunity of customer service improvements.
 Opportunity of improve quality of service by modifying weak wings of the bank.
 Opportunity to improve employee quality by proper training and ensuring discipline in
all levels of the bank.
Opportunity to enter and invest innovative business sectors.

Threats;
 Rapid growth of industry competitors.
 Innovation skill of industry competitors.
 Political environment.
 Bureaucracy in government decisions.
 Weak filtering process in time of recruitment (Lower Level).
 Rapid expansion of multinational bank poses a potential threat to the NCC Bank.

5.1.2 Five forces analysis

Porter’s five forces model is used to analyze the banking sector environment

 Threats of entrants: There is a constant threat of emergence of yet more banks

equipped to satisfy the same banking needs. If we analyze the scenario of last 4 to 5
years we can find that many private banks started their business during this period.

However NCCBL already won customers’ preference and created a brand loyalty
within a large number of clients through promotion and product innovation. If it
remains, it will make difficult for new entrants to take market share away from
NCCBL. A large customer base contributed to economies of scale for NCC Bank. So
the other new entrants face the dilemma of suffering cost disadvantage.

The threats of new entrants are high investment required. Day by day Govt. restrictions
are increasing. Bangladesh Bank is the regularity authority of the commercial bank.
The Bangladesh bank imposes various restrictions to control the bank. The other threats
of new entrants are network restrictions, low saving rates, brand name and recognition.
The banks need a permission from the Bangladesh bank to open a branch.

 Power of suppliers:Suppliers can exert bargaining power on participants in the

industry by raising prices or reducing the quality of purchased goods and service.
Powerful suppliers can thereby squeeze profitability out of an industry unable to
recover cost increases in its own price. Here the bank is considered as supplier. They
have limited freedom to raise the prices of their products. Customers likewise can force
down prices, demand higher quality or more service, and play competitors off against
each other.

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 The power of each important supplier or buyer group depends on a number of
characteristics of its market situation and on the relative importance of its sales or
purchases to the industry compared with its overall business.
In general a supplier group is powerful if

 It is dominated by a few companies and is more concentrated than the sector or industry
it gives services or sells to. But a few banks do not dominate the banking sector in
Bangladesh, so NCCBL in this sense has to improve their service quality according to
the customers’ maximum satisfaction.
 In the banking sector of our country, the products of the banks are not unique or those
are less differentiated.
 It poses a credible threat of integrating forward into the industry’s business. This
provides a check against the industry’s ability to improve the terms on which it
purchases. NCCBL also should keep this in mind from the banking point of view.
 The Industry is not an important customer of the supplier group. If the industry is an
important customer, suppliers’ fortunes will be closely tied to the industry and they will
want to protect the industry through reasonable pricing and assistance in activities like
R&D and lobbying. But for the banking sector, the Industry is an important customer of
the supplier group. So this is very much applicable for a bank like NCCBL.

 Power of buyer: The extent of bargaining power is different for individual customers
for different types of banking. Because the deposits of an individual customer is very
insignificant compared to the total volume of business. There are still few local private
banks with wide range of branch-network and services like NCCBL and many of the
customers of NCCBL don’t want to go for other traditional commercial banks. So their
choice is limited and bargaining power lies with the bank to some extent.

 Threats of substitute: This factor holds very low importance in case of banking
industry. There is no substitute of banking services. On the other hand this kind of
services is regulatedby strong government regulations. It has to do business confirming
the rules of Bangladesh bank (central bank)
Competitive rivalry: Important matters of this force regarding this project:
 Changes in technology will simultaneously affect both the height of the entry barriers
into an industry as well as the projected industry concentration (i.e. a shift in the
minimum efficient scale will occur and the concentration will decrease).
 Changes in the ability to differentiate products will affect the ability of firms to deter
entry via differentiate as well as their ability to avoid price rivalry with one another.

Fierce competition is going on among the private banks for increasing their respective market
share. There are 54 private banks in Bangladesh. Historically Nationalized Commercial Banks
(NCB) had the largest market share among the bank but after the emerging of the private banks
this market share is becoming down. In one sense market share of NCCBL is limited, because
most of its branches are in the urban areas and are targeted to the upper middle-class societies.
Limitation
 There are no party wise files.

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 There are no file lists.
 There are no country wise beneficiary’s credit report files.
 Sanction letter is not kept in the concerned files.
 Inspection of go down is not done & we are depending on the go down keepers having
cores of LIM liabilities.
 Regularization of documentation & other works are not done.
 It was that no letters were send to the parties who haven’t submitted the bill of entry.
 They follow the traditional banking system in general banking department. The entire
general banking procedure is not fully computerized.
 From the clients view introducer is one of the problems to open an account. It is general
problem to all commercial bank.
 NCC Bank uses manual system to verify specimen signature of clients it consumes a lot
of time.
 Lack of update products is also a drawback of the general banking area of the NCC Bank.
The bank provides only some limited traditional services.
 They face troubles with those clients who have not any knowledge in banking
transactions and banking rules.
 NCC Bank has own training Institution for its employees, so they don’t require to train
them in other training Institutions.
 They are not using Data Base Network in information technology Department. So they
have to transfer data from branch to head office by using floppy disk. For example
clearing cheque.
 Bank has no office assistance that’s why officer of Bank transfer papers and documents
from one desk to another, it consumes time of officer and also clients.
 NCC Bank has insufficiencies of Authorized Dealer Branch in respect of the total foreign
exchange business. Bank has 106 branches, which have AD licenses. As a result it total
foreign exchange business is very small in respect of total market.
 The number of branches is not sufficient to cover the country most.
 The bank failed to provide standard recruitment policies in lower level like Assistant
Officer to Junior Officer. As a result the services of the bank face problems in recent
days.

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5.4RECOMMENDATION

 Letter of credit
 Obtain suppliers credit report in the future where applicable.
 Obtain original money receipt in all cases positively.
 Fill up all blank L/C & L/CA opening forms & affix stamps.
 Realize the shortfall amount immediately. Please also obtain original money receipt
against Marine Insurance cover note.
 L/C margin realized after one month.

LIM

 It is very much objectionable that the branch has no control over the LIM goods. All
accounts are running unadjusted for more than 250 days. In some accounts no deposit has
been made since creation of LIM.
 It has been found in some cases that the officer in charge has created the LIM exceeding the
limit, which is a violation of Head office sanction letter. In some case it has been found that
present liability is running for more than 423 days which is violation of banking rule.
 In some cases some accounts has become overdue.
 In some cases it has been found that charge documents are not complete. And also
insurance policies of LIM goods are not properly maintained.

Payment against Document (PAD)

 L/C opened with short margins. Please realize the short full amount. The account
which is running unadjusted for 996 days which is not desirable, purse with the
BLA for early disposal of the case.

 Realize the short full & get the account adjusted without further delay.

LTR
 It has been found that trust receipt exceeding the limit. All accounts are running
for more than 428 days
 Pursue the borrower for adjustments of the accounts.
 No repayment has been observed since creation of LTR

Back to back L/C

 Please mention us Head Office approval against the facilities. Please get the
liabilities adjusted immediately & ensure not to open any L/C without Head
Office permission in future.
 Head office approval for opening of BTB L/C could not be shown. This is
highly irregular.

ABP

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 Bill value has not yet been paid which is a violation of international rules of
foreign trade. Please arrange payment of the overdue bills in case of fraud
loan. Please approach H/O for approval

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Some major findings of NCC Bank Ltd.
 It has been observed that L/C has been opened without obtain IRC.
 It has been observed that L/C has been opened without valid & renewed IRC, TIN
Certificate & other papers required.
 Handling over original copy of L/C of Beneficiary & advising bank to the importer & not
keeping courier receipt in the L/C file.
 It has been observed that opening transferable L/C without protecting banks interest.
 Opening sight L/C as acceptance L/C.
 Opening L/C without incorporating clauses required for compliance of import policy.
 Opening L/C in violation of UCPDC-600.
 Opening L/C without seeking track receipt of Transfer Company approved by Indian
Associations of Banks.
 Opening L/C incorporating unnecessary clauses.
 Opening L/C without obtaining required value of L/CA in cash of +5% or ±10% & also
approval.
 It has been observed that L/C has been opened without section.
 To handover copy document for assessment purpose without obtaining declaration from
the party that he is ready to accept the original documents irrespective of discrepancy.
 It has been observed that L/C has been opened without verifying H.S.Codes.
 It has been observed that L/C has been opened without affixing stamp on the agreement
& signature verification.
 To send telex L/C without approval of concerned official.
 To send amendment without obtaining parties letter.
 To give LTR in the name of LIM without banks effective control.
 To open L/C incorporating terms & condition without seeking certificates or paper.
 To create LIM without obtaining margin & proper documentation.
 To open L/C with of lading not notifying the bank.
 It has been observed that insurance of L/CA without date & showing up property.
 Ending reimbursement authority without any reference number

6.1 Conclusion

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Internship experience plays a vital role for every student to implement his or her theoretical
knowledge to get a practical knowledge from any organization. In order to complete BBA
degree, internship report is one of crucial parts in the final semester for the student of Dhaka
International University..
Bangladesh is a developing country. Without developing banking sectors this country’s business
sector is not possible to progress rapidly. In such conditions NCC Bank is trying to develop
banking sector through welfare and servicing to the people Islamic bank Bangladesh limited is a
bank which operates its activities according to the rules and regulation. Its banking activities are
based on profit \ loss sharing.Banks always contribute towards the economic development of a
country. Compared with other Banks NCC Bank is contributing more by investing most of its
funds in fruitful projects leading to increase in production of the country.

A banker cannot sleep well with bad debts in his portfolio. The failure of commercial 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 NCC Bank Limited has been able to manage its credit portfolio
skillfully and kept the classified loan at a very lower rate thanks go to the standard and stringent
credit appraisal policy and practices of the bank. They will do better if they continue with their
same policy but also they have to maintain the trend as well. (NCC Bank Ltd.)

Bibliography
Category: Books & Articles

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 1. Annual Report of NCC Bank Ltd.

2. Several Booklets From NCCBL

3. Credit Manual of NCC Bank.

4. workshop on Export and Import through L/C

5. Bedi, H.L “practical Banking Advances” UBS Polishers Distributions Ltd.New Delhi.

6. Banking Theory and Practice (Law & Foreign Exchange),

K.C. Shekhar; 2nd Edition

7. “Investment Policy and Control Guidelines” Lecture materials, Official Records.

8. Frederic S.Miskin,”The economics of Money banking And Financial MARKET” Six

Edition. Boston

9. Law and Practice and Theory of Banking

M. Radhawami, S.V. Vasudevan; 3rd Edition.

Category: Web site

1. http://www.nccbank.bd.com
2. http://www.bangladeshbank.bd.org

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