Background of the study

1.1 Introduction

Mutual Trust Bank Limited is one of the leading private commercial bank in Bangladesh. It
has spread its services almost 75 branches with a mission to be the premier financial
institutions in the country providing high quality products and services backed by latest
technology and team of highly motivated personnel to deliver excellence in banking. Mutual
Trust Bank is a bank with efficiency is their power. The core philosophy of the bank is
customer service. Result was achieved due to the continuous focus on customer service.
Providing the quality service was the responsibly of stuff. All employee try to ensure MTBL
3V. The Bank’s team is committed to assure a standard that makes every banking operation a
gratifying experience.

I have tried hare to work in Credit Division to know about the credit granting policies
criteria’s for management of the loan , whether the bank performing adequately as
instruments for facilitate the borrowing or not. By analyzing all these aspects, we have come
to know about borrower’s repayment behavior of Mutual Trust Bank Limited. This is vary
productive practical experience for me to know about the over all credit policy of the bank
and how the bank performing adequately for promoting new lenders.

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Objectives of the Report

The main objective of the study is to evaluate the performance in the area of credit
management of Mutual Trust Bank Ltd .Another objective of this report is to gather practical
knowledge regarding banking system and operation. The objectives of this practical
orientation in bank are as follows:

 To observe the practices of credit policies in real life.

 To identify the credit polices of MTBL
 To know the lending products of MTBL
 To know the supervision, control and recovery of loan and advances.
 TO know about performance of Credit management.
 To identify the problems in credit management.
.
Methodology
PRIMARY SOURCES
The primary sources are as follows:
 Practical work exposures from the different desks.
 Face to face conversation with the respective officers/clients
 Discussion with officials of MTBL.

SECONDARY SOURCES
The secondary sources of data and information are:
 Annual Report of MTBL
 Various books, articles, compilation etc.
 Publication of Mutual Trust Bank Limited
 Relevant file study as provided by the officers concerned.

DATA ANALYSIS
As my topic is credit management analysis, I analyzed my acquired data by using credit
Deposit Ratio. Here I present my data by giving graphs and some mathematical calculation.
For this purpose, I think that I can define my topics with best logical support.

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DESK COVERED DURING PARCTICAL ORIENTATION
 General Banking
 Account Section
 Foreign Exchange
 Credit Department

Scope Of The Report

As I am working in the Mutual Trust Bank ,CDA avenue Branch , I got the opportunity to
learn different part of banking system. The supervisor divided the whole banking system in
three parts. as a result I got the opportunity to work in all the three divisions(General
Banking Division, Credit Division ,Foreign Exchange Division ) .
As my main concern was to identify the customer satisfaction level of consumer credit
scheme , I spent much time in credit division .As I was attached to the credit division I had
to deal with so many customer who already avail loan from MTBL .Form the survey I had
the opportunity to gather information about-
 Who and why people look for CCS.
 The customer who mainly look for this scheme, their income level occupation,
age group, habitants etc.
 What are the benefits those customers look in CCS
 Habit and life style of the customer who takes the loan.
 From where they become acquainted about the scheme.
 The reason of becoming defaulter.
 Measurement of their overall satisfaction level about this loan,

Limitation
Although I have obtained wholehearted co-operation from employee of MTBL ,CDA Avenue
Branch they could not manage enough time to deal with my report . On the way of my
study . I have faced the following problems that my be terms as the limitations /shortcomings
of the study.
 The organization maintained confidentiality in providing some relevant
information, so the author could no incorporate those.
 In short period of time it is not enough to prepare such a big report.

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  The data are very confidential, for that reason it had take much time to
gathering.
 More than 50 borrower’s complete information needed for completing report.
 One employee that is why it was difficult for me to collect the vast amount of
data does not gather all the credit information.
 Bank secrecy was the major problem to collect all sorts of data and disclose it.

Overview Of Mutual Trust Bank Limited

OVERVIEW OF THE ORGANIZATION
Brief history of MTBL
The Company was incorporated on September 29,1999 under the Companies Act 1994 as a
public company limited by shares for carrying out all kinds of banking activities with
Authorized Capital of TK 38,00,000,000 divided in to 380,000,000 Ordinary share of TK 10
each.
The Company was also issued Certificate for Commencement of Business on the same day
was granted license on October 05.1999. By Bangladesh Bank under the Banking Companies
Act 1991. Moreover, started its banking operation on October 24, 1999. As envisaged in the
Memorandum of Association and as licensed by Bangladesh Bank under the Provision of the
Banking Companies Act 1991 the Company started sits banking operation and entitled to
carry put the following types of banking business:
(i) All types of Commercial banking actives including Money Market operation.
(ii) Investment in Merchant Banking activities
(iii) Investment in Company activates
(iv) Financiers promoters capitalists etc
(v) Any related financial services.
The bank is manned and managed by qualified and efficient professional .
Mr. Samson H. Chowdhury, a recognized and leading entrepreneur of the country, is the
Chairman of MTB. He has been an icon of the pharmaceutical industries in Bangladesh for
decades. Mr. Anis A. Khan (AAK) is Managing Director & CEO of Mutual Trust Bank
Limited (MTB), one of Bangladesh’s leading private sector banks, since April 15, 2009. Prior
to joining MTB, AAK headed the country’s largest multiproduct financial institution (non-
banking), and one of its premier merchant/investment banks, IDLC Finance Limited (IDLC),
for six years, as its CEO & Managing Director.

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Vision Of MTBL
Mutual Trust Bank’s vision is based on a philosophy know as MTB3V. We envision MTB to
be:
1) One of the best performing banks in the country
2) The bank of choice and
3) A truly world- class bank.

Mission Of MTBL
We aspire to be the most admired financial institution in the country recognized as a
dynamic , Innovative and client focused Company that offers an array of products and
services in the search for excellence and to create an impressive economic value.

Values Of MTBL
Commitment
 Shareholders- Create sustainable economic value for our shareholders by utilizing an
honest end efficient business methodology.
 Community – Committed to serve the serve the society through employment creation
support community project and events and be responsible corporate citizen.
 Customers – Render state –of –the – art service to our customers offering diversified
products and aspiring to fulfill their banking needs to the best of our abilities.

 Employee – Be reliant on the inherent merit of the employees and honor our
relationships as a tribute to be a part of this renowned financial institution. Work
together to celebrate and reward the unique backgrounds viewpoints skills and talents
of everyone at the work place no matter what the job is.

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Accountability
As a bank we judged solely by the successful execution of our commitments we expect and
embrace the form of judgment .we are accountable for providing the highest level of service
along with meeting the strict requirements of regulatory standards and ethical business
practices.

Agility

We can see things from different perspectives we are open to change and not bounded by
how we have done things in the past. We can respond rapidly and adjust our mode of
operation to meet stakeholder needs and achieve our goals.

Trust
We value mutual, which encompasses transparent and candid communications among all
parties.

Overall MTBL Strategic Objectives

 To ensure inflow of funds at combination of least possible cost

 To maintain a discreet credit policy.
 To enhance versatility and diversification through the penetration of new market
segments thereby fulfilling unmet needs
 To extend financial assistance to the citizenry living at dispersed locations by
expanding the network of branches.
 To improve administrative and organizational structures in order to prepare the
platform for best practices of corporate governance
 To enrich the banking sector with improved awareness on corporate Social
responsibility
 To proved extensive career opportunities through competitive pay and benefits and a
flexible environment.

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Group Corporate Structure

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Retail Banking
Mutual Trust Bank ltd is one of the largest private retail banks in the country and serves the
needs of individual clients through its extensive branch network across the country. It offers
an array of deposit and loan products to cater to financial needs of its large customer base.
During the period under from 22.26 to 2.99 billion.

Trade finance
Financing in International trade to facilitate import and Export is one of the key activities of
the bank. According to the world Economic Survey Wes published by the international
chamber of commerce ICC and the Munich based if institute for economic research in the
state of the global economy business expectations are falling worldwide despite
improvements.

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Import
Import volume of MTB during the year 2010 was BDT 27652.8 million compared to BDT
29721 million in 2009 which shows a fall by 6.96% .The major import finance was in the
areas of raw materials, fabrics and accessories, chemicals, etc.

Export
During the year 2010 total export volume of MTB stood at BDT 16842.85 million compared
to BDT 19676 million of the previous year .This reflects a fall by 14.40% .The bank has
given emphasis on export of traditional. Items like jute, Jute goods .ready made garment.

Treasury Operations
MTB Treasury Departments receives keeps manages and disburses private or public
funds .The activities include the corporate house handling of all financial matter and the
generation of external and internal funds for business .

Money Market
Money markets refers to raising and deploying short term fund with maturity of funds
generally not exceeding one year .MTB money market is one of the most active and
efficient desk in the inter bank market of the country .The money market of the country. The
money market is sub divided into call money tern money market swap repo and reverse repo
etc. MTB treasury department has earned take 35.60 million from call money .TK 189.47
million from term money market taka 0.47 million from repo up to December 2010.

Fixed income
Treasury invests in money market surplus cash after meeting the cash reserve ratio.
Treasury’s main responsibility is to meet CRR & SLR requirements fully as per Banking
company Act .Investment in various government securities like Treasury Bill ,Treasury
bonk in different tenors ,Debenture quality for SLR .MTB actively participates in
Government Securities auction for investment in SLR maintenance and also generation of
risk free fixed return from different Securities investments. MTB Treasury has earned
interest BDT 61.94 million form T-Bone in 2010.

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Primary Dealership (PD)
The Central bank has given approval to Mutual Trust Bank Limited as the primary dealer
(PD) aiming to boost the country’s secondary securities market. The authority has approved
mutual Trust Bank Limited as of PD of the government securities dated November
23,2009 .central Bank has taken the latest move to increase the number of market markers to
bring dynamism in the secondary market .MTB Treasury has earned underwriting
commission of BDT 7.20 million from Bangladesh Bank up to December 2010.The
Treasury department has also sold T-Bill/ Bonds of BDT 9710 million In the second any
market .

Off –Shore Banking Unite (OBU)

MTB off shore Banking Unite (OBU) started its journey in December 2009.The Unite caters
to international Banking requirement involving non-resident’s foreign currency denominated
assets and liabilities. Offshore banking operates under special guidelines form Bangladesh
bank and usually receives some regulatory exemptions and financial advantages.

As a pat of the regular activates of off shore banking MTBL OBU extends all types to trade
finance service to the industrial unite in export processing zones (EPZ) OBU provides
Term Loan facilities and working capital to 100% local owned companies with in EPZ.

In 2010 MTB OBU participated with USD 12 million in a syndicated US dollar Loan facility
to purchase aircraft for Biman Bangladesh Airlines and also extended project financing
facilities of USD 3.07 million In energy sector .Besides MTB OBU supported trade deals
for USD 2.73 million for commodity Import.

MTB Securities Limited (MTBSL)

On September 23,2010 MTB Securities Limited MTBSL emerged as a subsidiary company
of Mutual Trust Bank Limited to render the services of Capital Market activities.

In 2010 the capital market of Bangladesh expanded it terms of its physical size investor’s
participation trade volume and exposure to international markets .DSE has made BDT 2000
corer to BDT 3000 corer transactions on a daily basis. MTBSL successfully taken advantage
of this growth by expanding its branch network number of clients and other policies. MTBSL

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participates in the book building system under the dealer criteria. MTBSL also acts as a
seeing agent of asset Management Company.
MTBL Expansion and diversification
Expansion and diversification are necessary for sustainable growth and MTB is dong that
through proper and careful planning. MTBL already have 71 branches 12 sme/ agri branches
14 MTB Securities branches 10 MTB booth .MTB have got the license for merchant
banking operation and expanding bank among the third generation banks in the country.
MTB’s objectives of expansion and diversification are:
1. To improve core process execution and /or
2. To enhance a business unit’s structural poison

Under these objectives MTB has grown form one to four companies which are
a) Mutual Trust Bank (MTB)
b) MTB Securities Limited(MTBSL)
c) MTB Exchange(UK) Limited(MTBUK) and
d) MTB Capital Limited (MTBCL)
MTB has introduced three new products under Retail Banking. We have also launched new
Retail Finance Centre (RFC) for smooth operation of retail banking and we have ramped up
SME operations. MTB have also expanded off Shore Banking Unit (OBU) operation.

Profit and operating result:

The bank has earned substantial amount profit during the last year compared to preceding
year. The operating profits in BDT in million 1196 in 2008 and BDT in million 1027, and
BDT in million 2001.
Profit Amount (BDT in Million)
2008 1196
2009 1827
2010 2001

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Deposits:

Deposits representing the largest portion to total liabilities accounts for 85% showing an
increasing 8.25% BDT 3492 million to BDT 4586 million our the past three years .MTB
was able to almost double its deposit portfolio from BDT 2477 million the year 2007.to
45846 million in the year 2010. MTB issued subordinate debt at the end of the year 2010. For
amount of BDT 2500 million which added a new era in the balance sheet position of 2010.

Deposit Mix and Growth

Particular Out standing Growth Mix
2010 2009 2010 2009
CD and other area 8591 6511 32% 19% 15%

Bill payable 530 529 - 1% 1%

Saving 5656 5104 11% 12% 12%
deposit
Fixed deposit 25576 26229 (2%) 56% 62%

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Other deposit 5494 3981 38% 12% 9%

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Loan and advances
The total picture of loan and advance of Mutual Trust Bank Limited, are given below:
LOAN AND ADVANCE (2008-2010)
YEAR LOAN AND ADVANCE (BDT in million)
2008 28592
2009 33884
2010 39676

SECROT WISE LOAN AND ADVANCE 31.12.2010

SL Items 2010
Local Currency advances
1 Term Loan 10267.97
2 SME Financing 2646.76
3 Consumer Financing 1378.09
4 House Building Loan 1103.81
5 Trust Receipts 6127.68
6 Cash Credit 5758.85
7 Secured Overdraft 4774.98
8 Lease Finance 169.00

Evaluation Of Loan And Deposit Practice Of MTBL

CREDIT MANGEMENT

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The word credit is derived from the Latin word “credo” meaning I believe. Credit
management is referring to the planning and control of credit made to customer by the bank
.therefore credit management include following activities,
Credit planning
Determination of loan target
Formulation of business policies and Method
Determination of marinating advances
Control of fund made as advances
Recovery of loan.

LOAN PORTFOLIO MANAGEMENT IN BANK

What should be the appropriate size of the loan portfolio is question that is constantly faced
by bank management .However no categorical answer exists to what is the optimum size of a
bank portfolio. Every bank operates within an environment of its own. It is difficult to say
how large the loan portfolio must be computed by an analysis of the various needs priorities
for bank fund. Since this priority vary .It is impossible toady down hard and fast rules
regarding the size of the loan portfolio of an individual or the banking system as a whole
.Nevertheless a number of important factors influencing the loan portfolio of bank are
Capital position risk and portability of various types of loan.

 Tenure of deposit,
 Credit environment ,
 Influence of money and fiscal policies,
 Credit needs of the area cover,

Retail Loan Products

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MTB Personal Loan
The purpose of the personal loan provide by MTBL.
Craving to buy a new laptop. Thinking of a wonderful holiday. Need financial assistance for
your child’s higher education. Want to purchase home appliances. Require marriage-related
expenses. An MTB Personal Loan is your one-stop-solution for all your financial needs to
fulfill any of customer desires.

Features:
Loan amounts from Tk. 50,000 to Tk. 10,00,000
Flexible repayment option of 12 - 60 months
No hidden charges
Competitive interest rate
Easy documentation and quick processing
Option for early settlement

Eligibility:
Age minimum 21 and maximum 60 years at loan maturity
Experience:
Salaried person : 1 year with 6 months permanent employment status
Self employed : 1 year of practice in the profession
Businessperson : 2 years of involvement in the same nature of business
Minimum monthly income:
Salaried executive Tk. 15,000
Self employed Tk. 30,000
Businessperson/Land lord/Land lady Tk. 40,000

Loan Balance transfer or Take over:

Customers enjoying EMI based personal loan with other banks may enjoy the facility of Loan
Balance Transfer.

Eligibility:
Minimum 6 loan EMI repayment with existing bank
Minimum takeover loan amount is Tk. 200,000 and maximum Tk. 9,50,000

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Benefits of Takeover Plan:
No processing fee for loan takeover or balance transfer
Interest rate will be 1% less than ongoing rate
Approved loan amount may be higher than the takeover loan amount

MTB Auto Loan

MTB Auto Loan is available for financing both new and reconditioned cars.

Features:
Loan amounts from Tk. 3,00,000 to Tk. 20,00,000
Flexible repayment of 12 - 60 months
No hidden charges
Competitive interest rate
Easy documentation and quick processing
Option for early settlement

Eligibility:
Age: minimum 21 and maximum 60 years at the end of loan maturity
Experience: Salaried executive total - 2 years
Business person/self employed - 2 years
Monthly income: Minimum Tk. 30,000

MTB Home Loan

Planning to own a home is one of life’s most rewarding challenges. Whether it is purchasing
a new house or a new apartment, MTB has a wide range of home loan options that can be
customized specific need. An experienced, dedicated team of experts and a complete loan
package is in place, to meet all housing finance needs.

Features:
Loan for residential apartment/house purchase
Loan amounts from BDT 5,00,000 to BDT 1,00,00,000

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 Loan tenor from 3 to 25 years
Loan amount up to 80% of the property value
Aggregation of co-applicant’s income
Competitive interest rates
Quick and simple processing and approval time
Loan for apartment under construction
Partial or early settlement options available

Eligibility:
Any financially able person
Age: minimum 21 and maximum 65 years at loan maturity
For 100% cash covered loan: Age- minimum 18 and maximum 70 years at loan maturity
Minimum Income Range:
Salaried person Tk 25,000
Self employed Tk 30,000
Businessperson/Land lord/Land lady Tk 40,000
Experience
Salaried person : 3 years
Self employed : 3 years
Businessperson : 3 years

Loan Takeover Plan:

An exclusive offer for other bank’s credit worthy customers who can transfer their Home
Loan outstanding to MTB with both preferential interest rate and waiver of processing fees.

Eligibility:

Minimum 12 months loan EMI repayment history with existing bank

Property location and other eligibility criteria of general loan are applicable

Benefits of Takeover Plan:

1% reduced rate from regular interest rate
Additional loan amount facility over takeover amount

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 No processing fee for takeover loan amount
No processing fee for additional loan amount

Required documents:
Loan application
Applicant’s National ID/Driving License/Passport copy
Photographs of applicants (studio photo)
Salary certificate for salaried person
Trade license for businessperson
Personal and business account statement for last one year
Applicant’s TIN certificate
Copies of all existing loans’ sanction letter and repayment history for last one year
Rental deed for rental income and ownership deed of rented property
Apartment allotment letter/Deed of agreement/property ownership deed
Other all property related documents’ copy

MTB Home Equity Loan

Features:
Loan for house construction, extension, renovation, face upliftment, finishing work
Loan amounts from BDT 5,00,000 to BDT 1,00,00,000
Loan tenor from 3 to 25 years
Loan amount up to 80% of the property value
Financing at different stages of construction work
Partial disbursement facility of approved loan
Aggregation of co-applicant’s income
Competitive interest rates
Quick and simple processing and approval time
Partial or early settlement options available

Eligibility:
Any financially able person
Age: minimum 21 to maximum 65 years at loan maturity
For 100% cash covered loan: Age - minimum 18 to maximum 70 years at loan maturity

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 Minimum Income Range:
Salaried person Tk 25,000
Self employed Tk 30,000
Businessperson/Land lord/Land lady Tk 40,000
Experience
Salaried person : 3 years
Self employed : 3 years
Businessperson : 3 years

Loan Takeover Plan:

An exclusive offer for other bank’s credit worthy customers who can now transfer their Home
Loan outstanding to MTB with both preferential interest rate and waiver on processing fees.

Eligibility:
Minimum 12 months loan EMI repayment history with existing bank
Property location and other eligibility criteria of general loan are applicable

Benefits of Takeover Plan:

1% reduced rate from regular interest rate
Additional loan amount facility over takeover amount
No processing fee for takeover loan amount
No processing fee for additional loan amount

Required documents:
Loan application
Applicant’s National ID/Driving License/Passport copy
Photographs of applicants (Studio photo)
Salary certificate for salaried person
Trade license for businessperson
Personal and business account statement for last one year
Applicant’s TIN certificate
Copies of all existing loans’ sanction letter and repayment history for last one year
Rental deed for rental income and ownership deed of rented property

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 Deed of agreement/property ownership deed
Other all property related documents’ copy

Card Product
Convenience Instant line of credit. Global recognition and acceptance. Exclusive privileges
and more. Everything you like is in the MTB Visa Card. Our range of Cards help you meet
your financial objectives. So whether you are looking to add to customer buying power,
conducting cashless shopping, or budgeting your expenditure.

MTB Card Products

Credit Cards
Features and Benefits

Worldwide acceptance
Accepted at over 23 million Merchant Establishments around the world, including 110,000
Merchant Establishments in India.

Revolving credit facility

Pay a minimum amount, which is 5% of your total bill amount or any higher amount
whichever is convenient and carry forward the balance to a better financial month.

Free Supplementary card

You can share these wonderful features with your loved ones too - we offer the facility of an
add-on card for your spouse, children or parents. Allow us to offer add-on cards to you FREE
OF COST with our compliments.

Interest free credit facility

Avail of up to 45 days of interest free period from the date of purchase.

Debit Card

Features and Benefits

Banking cum Shopping Card

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MTB Visa Debit card can be used as an ATM card at any VISA ATM across the world, as
well as for making purchases at merchant locations

More Safety, More convenience

MTB Visa Debit card is extremely versatile and simple to use. Just Swipe & Sign to make a
purchase, the way one does with a credit card. It allows you the convenience of paying for
your purchases directly from your bank account, without having to carry any cash!

Itemized Billing
MTB Visa debit card allows you to track your purchases on a regular basis. The details of the
purchases made on your card, along with the date, merchant name and amount are mentioned
in your bank statement.

Corporate Banking
MTBL provide loans that have specified repayment schedule and a floating interest rate with
tenure more than one year but less than ten years. Offering term loans for the following
broader purposes.

Term Finance
Project Finance
Finance for Importing Capital Machinery
Lease Finance
House Building Finance

Working Capital Finance

MTBL take special care in financing to meet our customers' running capital requirements by
offering the following products:

Secured Over Draft (SOD)

Cash Credit (Hypo.)
Cash Against Document
Short Term Loan

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 Inland Bill Purchase (IBP)
Foreign Bill Purchase (FBP)

Trade Finance
MTBL offer export and import finance facilities for our customers depending on their
requirements. Our trade finance service is a unity of funded and non-funded facilities.

Our export finance facilities include:

Back to Back L/C opening
Export Bill Discounting (FDBP and IDBP)
Secured Over Draft (SOD-general/export bill)

Our import finance facilities include:

Loan Against Trust Receipt (LTR)
Term Loan (TR)

Our non-funded trade finance facilities:

L/C Opening (Sight & Deferred)
L/C Advising
L/C Transfer
Bank Guarantee
Secured Over Draft (SOD) in the form of SOD (general/export bill) and SOD (Others-
work order, FDR, land, etc.)
Bank Guarantee in the form of Performance guarantee, Advance Payment gurantee, and
Bidbond.Inland Bill Purchase (IBP) includes mainly government security bills and bonds.
Foreign Bill Purchase (FBP) includes foreign drafts.

MTB Interest Rates on Lending

Categories Rates
1 Agriculture 12.50% (Highest) *
2 Term loan to large, medium, small & cottage industries 13.00% (Highest)**
3 Working Capital a) Large & Medium scale 15.50% (Mid Rate)

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 b) Small scale 15.50% (Mid Rate)
4 Export Finance (PC, ECC) 7.00% (Highest)**
5 Commercial Lending 16.00% (Mid Rate)
6. a) General 15.50% (Mid Rate)
b) Essential Goods (rice, wheat, 12.00% (Highest)**
Import finance
edible oil, lentils, chickpeas, onion,
date and sugar)
7. Housing Loan: a) Commercial 16.00% (Mid Rate)
b) Residential 14.00% (Mid Rate)
8. Consumer Credit 18.00% (Mid Rate)
9. Lease Finance 16.50% (Mid Rate)
10. Loan to Non-Banking Financial Institutions 15.50% (Mid Rate)
11. Loan/SOD against FDR of MTB 3.00% above FDR interest rate
12. SOD against FDR of other Banks 16.50% (Mid Rate)
13. Loan/SOD against other Special Deposit Products of MTB 3.00% above Deposit Product
interest rate
14. Auto Loan 16.50% (Mid Rate)
15. Small Business Loan under SME 16.50% (Mid Rate)
16. Others 16.50% (Mid Rate)

PROCEDURE OF SANCTONING PROJECT LOAN

The procedures of sanctioning project loan below:
a) Loan Application
b) Feasibility study report
c) Technical feasibility
d) Economic feasibility
e) Managerial feasibility
f) Borrower’s declaration collection
g) CIB report and status report collection
h) Credit report preparation
i) Project appraisal
j) Inspection report
k) Credit proposal
l) Head office approval
m) Sanction letter
Findings And Analysis

Analysis ; Literature
For the purpose of accomplishing the research the researcher has to consult result research
articles pertinent to the research .Since lending is a major function of banks and the research

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is related to personal loans , the researcher has consulted several articles which are related to
the banking industry.
The article that the researcher has reviewed is written MD Jahangir Alam and Nurur Rahman
, assistant professor and professor of Dhaka University respectively in 2002. This research
article focuses mainly on the credit assessment principles that are currently used to
determine the credit worthiness of the loan applicant in commercial banks in Bangladesh .
It begins by exploring the existing credit evaluation practice of commercial banks and then
analyzes the factors used for dete4mining creditworthiness on the basis of 5C’s credit,
capacity, capital, conditions, and collateral.
The analysis involves finding the relative contribution of each of these factors in the lending
decision .
The research discussion the guidelines of loan declassification and provisioning system
prescribed by Bangladesh bank and then compares the current classification with
international standards .it also identifies the status of loans with changes in classification
system .the research concludes with suggestions that can ensure operational soundness an
liquidity of he bank through better loan classification policies.

Total Assets:
The bank’s total assets posted a 10.37% increase in 2010 rising from BDT 52,775 million to
BDT 58246 million .A major contributor to this growth was the increase in loans and
advances which jumped by 17.09% or from BDT 33884 million to BTD 39676 million
.Fixed assets of the bank also increased markedly , rising to BDT 765 million from BDT
446 million having an increase of 71.75%.
MTB also had to increase its cash Reserve Requirement CRR maintained with Bangladesh
Bank and its agents. The earnings asset grew at a rate of 11.09% to BDT 51185 million.

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Summary of Assets in Balance Sheet
Particulars Amount outstanding(BDT Millions) % change
Year 2010 Year 2009
Total Assets 58246 52775 10
Loans /Advance 39676 33884 17
Investment 9216 9538 (3)
Fixed Assets 765 446 72
Other assets 1934 2196 (12)

Loans and Advance by the Bank and Subsidiaries

The bank’s exposure to loans and advances increased from BDT 33884 million to BDT
39676 million in 2010 registering a 17.09% growth over last year .MTB’s credit portfolio
is mostly comprised of corporate ,consumer and SME clients.
MTB is delighted to get the fund form Central Bank to finance through offshore banking unit
(OBU) in the year 2010 and it stands USD 15 million i.e. BDT 1057.50 million at the year
end and included in the total position of Loans and Advances.
Over draft against margin loan stands BDT 3330.82 million in the year 2010 from MTB
Securities ltd .a subsidiary of Mutual Trust Bank Limited.

Asset Quality and non performing loans (NPL)

at the end of year 2010 the banks total credits were up by17.09% over 2009 showing an
increase of BDT 5792 million .Despite this large growth loans classified as “ substandard
and below : experienced a reduction by 5.11% which is a remarkable positive sing for the
bank . This allowed the banks NPL ratio to fall from 2.81% to 2.28% dropping below 3%
mark MTB s mission is to make NPL below 1% within three years following the year 2010.
However, the bank has been able to keep the NPL ratio at a manageable level due to the
prudent risk management strategies a committed recovery team and excellent monitoring and
control system that was in place.

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Particular 2010 2009
Total loans and advance 39676 33884
Non performing loans 904 953
NPL ratio 2.28% 2.81%

Mutual Trust Bank Limited

Consolidated Statement of Cash Flow
For the Year ended December 31,2010

2010 2009
BDT BDT
( A) Cash flow from operating operating activities

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Inters Received 5428520094 5017608780
Inters paid on deposits borrowing -3432752386 -3259016332
Dividend income 16832850 10375248
Fees and commission income 802643141 418217312
Recoveries of loans previously written off 1000000
Cash Paid to employees as salaries and allowances -478449569 -374525906
Advance income Tax paid -625663553 -347574469
Cash received from other operational income 384769702 398187158
Cash paid from other operational expenses -725776912 -358290871
Cash flow from operating activities Before changes in net current assets 1344123367 1504980920
Changes in net current asset:
Investment in treasury bond -680595898 2490190686
Loan and advance 5738964774 5245595767
Other asset -234149677 -588475920
Bank deposit -116451597 -773567194
Customers deposit 3835287426 9156891884
Subordinated debt 2500000000
Borrowing from other banks financial institutions and agents 1220423444 3550000000
Other liabilities -45788670 -426285610
1701086634 3182776707
-356963267 4687757627
Net Cash flow from operating activities:
B) Cash flow investing activities
Investment in shares and bonds -569392391 -335824065
Purchase of premises and fixed assets(net) -408497111 -131510249
Net cash flow from investing activities -977889502 4687757627
C) Cash flow from financing activities:
Received from issue of right shares
Dividend paid
Net cash flow from financing activities

D) Net increase in cash fund cash equivalents (A+B+C) 1334852769 4220423313

E) Effect of changes of exchange rates on cash and cash equivalents 235052
F) Opening cash and cash equivalents 8788206245 4567782932
Closing cash and cash equivalents(D+E+F) 7453558528 8788206245
the above closing cash and cash equivalents include:
Cash in hand 52003459 346750709
Balance with Bangladesh bank and its agent bank 2936108671 2757203068
Balance with other banks and financial institutions 3197748640 3607171139
Money at call and short notice
Treasury bill 798263268 2075818430
Prize bond 1464400 1262900
7453588528 8788206245
Net operating cash flow per share -16.84 265.4

Mutual Trust Bank Limited

Balance Sheet
As at December 31.2010
2010 2009
Property And Assets
Cash 345,611,220.00 3103953777

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 In hand ( including foreign currency) 520003549 346750709
With Bangladesh Bank and its agent bank (including foreign
currency) 2936108671 2757203068

Balance with other Bank and financial institutions 2675838121 3607171139

In Bangladesh 21118788032 3337079631
Out Side Bangladesh 557050089 270091508

Money at call and short notice

Investment 9098954386 9537973528
Government 8070955596 8961988755
Others 1027998790 575984773

Loans and advances 37730458690 33883923705

Loans ,cash credit overdrafts etc 35952811858 31493607971
Bills purchased and discounted 1777646832 2390315734

Fixed asset including premises furniture and fixture 722053009 445576880

Other assets 2774026010 2196167040

Non banking assets
Total property and asset 5645744436 52774766068

Borrowing from other banks ,financial institution and agents 1,270,000,000.00 3,550,000,000.00

Deposit and other accounts 45846309207 42354065907

Current deposit and other accounts 859050228 6511156357
Bills payable 529737722 528953937
Savings deposits 5655577091 5104087897
Fixed deposit 25576314337 26229065156
Deposit products 5494177829 3980802560
Other liabilities 2613550331 3186191049
Subordinate debt 2582191780
Total liabilities 52312051318 49090256956
Capital shareholders equity
Paid up capital 211582000 1766318400
Statutory reserve 1219222616 980325611
Revaluation reserve on investments in securities 89590794 383866189
Total shareholders equity 316777324 161777324
Total liabilities and shareholders equity 355218384 392221588
4145391118 3684509112
56457442436 52774766068

Net assets value (NAV) per share 195.58 173.83

Analysis of Deposits :
BDT Million
S.L Items 2010 2009 2008 2007 2006
1 Local Currency Deposits 8,212.05 6,217.26 5,270.62 3,888.86 2,754.54
Current Deposits & other

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 Accounts
2 Bill Payable 529.74 528.95 447.47 525.37 196.72
3 Saving A/C 5,665.58 5104.09 2943.08 2147.30 1439.40
4 Fixed Deposits 25,576.31 26,229.06 22360.68 16334.14 16519.12
5 Deposits Products 5494.18 398.80 2649.28 1836.73 1304.68
Foreign Currency Deposits 188.62 90.30 99.83 44.52 49.58
6 Total Deposits Excluding 45,656.48 42,150.46 33,770.96 24,776.92 22,264.04
Refinance
Refinance 189.83 203.60 49.45
Total Deposits and Refinance 45,846.31 42,354.06 33,820.41 24,776.92 22,264.04

Analysis of Loans and Advances:

BDT Million
SL Items 2010 2009 2008 2007 2006
Local Currency advances
1 Term Loan 10267.97 9369.57 6072.42 3660.65 2342.47
2 SME Financing 2646.76 549.99 301.47 59.23 -
3 Consumer Financing 1378.09 1197.71 668.40 142.59 15.45
4 House Building Loan 1103.81 861.53 805..40 604.08 419.20
5 Trust Receipts 6127.68 6156.53 7610.92 6465.68 6209.07
6 Cash Credit 5758.85 5427.70 4656.65 3749.20 2976.01
7 Secured Overdraft 4774.98 5906.17 3624.78 2946.37 3021.60
8 Lease Finance 169.00 254.55 257.25 251.07 178.32
9 Bills Purchased and discounted 1777.65 2390.31 3027.34 2840.50 2235.10
10 Loans to MTB Securities 2656.83 - - - -
11 Other Loan and Advance 1742.83 1735.82 1496.81 1962.69 1182.87
Sub Total 38404.45 33849.88 28521.44 22682.06 18580.09
Foreign Currency Advances 1271.67 34.04 7.90 1.17 11.43
Total 39676.12 33883.92 28529.34 22683.23 18591.52

Five Years Graphical Review:

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Credit deposit ratio:
Credit deposit ratio = Total loan and advance/Total deposit*100
For 2008, Credit deposit ratio: 28592/33820*100=84.54% (BDT in million)
For 2009, Credit deposit ratio: 33884/42354*100=80.00% (BDT in million)
For 2010, Credit deposit ratio:39676/45846*100=85.54% (BDT in million)

From the above ratio we found that credit deposit ratio is 84.54% ,80.00%, and 85.54 %
respectively in the year 2008,2009,2010. The amount of loan and advance is more than
deposit in the year 2008,2009,and 2010. for that the profit of the bank in the year
2008,2009,and 2010 increased respectively.

Classified and unclassified loan

The total scenario of classified and unclassified loan and advance of he bank are shown in
below:

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Year Classified loan Unclassified Total
2008 25035890000 3556110000 28592000000
2009 31493607971 2390315734 33883923705
2010 35952811858 1777646832 37730458690

Percentage of classified loan

Percentage of classified loan= Total classified loan/ Total Loan and advance *100
For 2008.- 25035890000/2859200000*100=87.56%
For 2009:-31493607971/33883923705*100=92.94%
For 2010:-35952811858/37730458690*100=95.28%
After the above calculation we can say that the percentage rare of classified loans is increased
in 2008 and 2009 comparatively in 2010. In this situation the recovery rate is lower in 2008
and 2009. For that reason bank has to keep a huge amount as a provision against profit.

Findings
After critical analysis of total loan and advances in terms of various aspects we got various
strengths ,weakness ,opportunity and threat of the bank. We like to use SWOT ANALYSIS in
this issue:

SWOT Analysis
SWOT Analysis is the critical analysis about an organization, where the Strengths,
Weaknesses , Opportunity and thetas to that organization are analyzed. It includes all internal
and external aspects of the organization . It can be therefore defined as the analysis of
external and internal environment. The major objective of doing the SWOT Analysis is to
find out internal strengths that is in which areas it is forward than its competitors and
weakness that in which areas it has lacking . At the same time the organization can know the
opportunities that are available in the market for it and the threat ahead form its competitors
or other regulator bodied .

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 SWOT Analysis

Internal Analysis External Analysis

Strength Threats Weakness Opportunity

Figure: SWOT Analysis

I worked Mutual Trust Bank CDA avenue Branch by this time, I tried to find out its strength,
weakness opportunity and threats. I wish this world help the bank to make its service better
and make a greater contribution to the society and to make a higher profit . The result of
SWOT Analysis is as follows:
Strengths
 It has well market reputation in the market
 The performance in the disbursement of loan and advance increase year to year.
 It has several attractive loan and advance schemes.
 It is doing mass baking
 Efficient management is practiced in he bank
Weakness
 It follows long procedure in sanction of loan and advances
 It credit management is not properly sound
 Lack of mortgage in sanction of loan and advances
 There is no marketing initiation in the bank
Opportunity
 Bank can increase the credit scheme
 Bank can improve its marketing and promotional activities
 Bank can offer SME loan in minimum term and condition

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Threats
 The number of private banking is increasing
 Competitors are offering schemes that are more attractive the customer
 Continuous pressure form the government to reduce interest rate
 Some banks are offering 24 hours banking facility
 Huge amount of provision required for classified loans
 The increase rate of default is also threat for the bank.

Credit Management Problem

Problem of Credit Management
Loan default become social culture of Bangladesh. Many renowned businesspersons in our
county is loan defaulter. So credit management is very risky job .because it one customer
default his loan this effected by the whole bank performance .say a branch sanction one
hundred core in a year and make fourteen corer among them one of the customer default say
fifteen Crore as a result the branch will make loss.
So a lot of problem faces by the credit department. Major problems are

a) for achieving profit target they sanctioned the loan in laci of mortgage. For that
reason borrower not willing to pay their loan in due time. They have lack of
monitoring to the borrower.
b) Inadequate data for sound credit management MTBL need to assess sales risk of a
firm. But it is difficult to collect up to date and reliable data like production, trade,
business raw material ,total demand and supply of different products of different firm
, growth ,sales turnover.
c) Inaccurate data of creditor when MTBL sanction loan it require financial statement of
borrower but borrowers not prepare their financial statement accurately .

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 d) Documentation is not an easy job .Expertise is needed for this purpose
e) The lawyers don’t take nay responsibility for his opinion
f) Most of the borrowers changes his behavior after sanctioning loan.
g) Political and other pressure may influence the credit officer.

Policy Implication and Conclusion

Recommendations
1. Adequate disclosure the requirement of adequate disclosure imposes a duty on he
business parties .For healthy development of business environment the bank
authority can request the trade association or chamber of commerce to pressure on
the concerned parties to disclose adequate data.
2. Establish of data bank a data bank may be developed under the guidance of
Bangladesh bank
3. Adequate mortgage they have to ensure proper mortgage against the disbursement of
loan ad advance .its remembered that mortgage should be liquid as early as possible.
4. Prepare proper document bank has to ensure proper document against the loan and of
the creditor.
5. Encourage potential borrower they have encourage borrower for sanction the loan
potential borrowers always try to repay the loan properly.

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CONCLUSIONS:

Loan in MTBL offers a combination of products developed in line with the needs of
customers. In my OCP report seeks to evaluates the loan product offered by MTBL from
several facets of the products. Loan is a primary earning source for all banks. Competition is
intense and continues to grow to attract potential loan applicants in this industry. Therefore it
is important for every bank to differentiate its products on he basis of superior product
features and services to satisfy customers. Although customers are generally satisfied about
the credit facility service of MTBL , there are certain features and formalities which have
dissatisfied the loan applicants . These include miscellaneous charges and longer loan
processing time. In these areas there is indeed a gap between what customers of MTBL
expect (Expectation level) and what actually they are getting (Satisfaction level) .This
means that many customers are dissatisfied due to some areas of the loan facilities offered in
MTBL .
Recommendation have been made base on the discovered problem regarding implementation
of sound credit Management. Mutual Trust Bank Limited is the third generation bank. IT
increasing its services ,facilities and qualities with compare to other commercial bank. the
growth rate of deposit advances and profit also high than other commercial bank. I hope that
MTBL ,CDA Avenue Branch also important role in various social activities.
I wish more success of Mutual Trust Bank Limited, CDA Avenue Branch.

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Biblography

1. Mutual Trust Bank ,Annual Report

2. Financial Express.
3. www. dsebd.com.
4. www.stock Bangladesh.com
5. www.mutual trust bank limited
6. Monthly Business Review ,MTBiz.

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Questionnaire

Mutual Trust Bank Limited, CDA Avenue Branch,

Loan & Advance Division

For the purpose of OCP Report writing i need to some primary data from customer.
That’swhy I need some questionnaire that are given below:

1. Loan Criteria.
a) Short term, b) Mid term, c) Long term.
2. Home Loan payment criteria.
a) Short term, b) Mid term, c) Long term.
3. Loan recovery.
a) Quick, b) Slow.
4. Defolder
a) Minimum, b) Maximum.
5. Loan Appraisal officer efficiency.
a) Good, b) Very Good, c) Best.
6. Loan sanction time.
a) Short, b) Mid, c) Long.

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