Escolar Documentos
Profissional Documentos
Cultura Documentos
Internship Report
Submitted to:
Fahmida Begum
Id No.-19
BBA 7th Batch
University of Dhaka.
ACKNOWLEDGEMENT
Successful completion of any course requires support from various persons. I am very much
fortunate to get the guidance & supervision of my teachers, Premier Bank officials & officials of
other banks.
First of all I express my gratitude to Almighty Allah, The supreme authority of the universe. Then I
would like to express my deep sense of gratitude & sincere appreciation to my internship
supervisor Dr M. Khairul Hossain, Professor, Department of Finance, University of Dhaka for his
continuous support & guidance during the practical orientation period. His suggestions and
comments were really a great source of spirit to make the report a good one.
My sincere gratitude goes to Mr. Dewan Anwarul Latif, Executive Vice President & Manager,
Motijheel Branch, The Premier Bank Limited who gave special attention to me from the very
beginning and whenever I went there. I would also like to thank Mr. Ashraful Azad, FAVP, Motijheel
Branch, The Premier Bank Limited for his cordial attitude and helping hand guides me in all
situations during my tenure in the bank. I would also like to express my gratitude to Mr. M. Shafiqul
Islam, AVP, Motijheel Branch, The Premier Bank Limited for his valuable advice and suggestions.
My special thanks goes to Mr. M. Azizur Rahman Suman, First Executive Officer, Motijheel Branch,
The Premier Bank Limited for his sincere co-operation & valuable advice to make the report
effective during my orientation period.
We recognize the laudable performance of the staff of Bangladesh Bank, AB Bank, Prime Bank.
They really spent much of their valuable time in haste to provide us substantial information with
relevant papers. We are grateful to them because they showed the highest degree of temperament
in answering our relentless questions.
Last but not the least, I would like to thank all of the people who helped me by answering my
questionnaires & providing the information on which I conducted my survey.
Finally in the end I would like to add some words that this report is prepared from the experience
that I had working in the Bank If any errors & mistakes are found in the Report, I hope all of you will
take it as unwilling mistake.
Executive Summary
The internship report titled An analysis of Consumer Credit Scheme of Private
Commercial Banks in Bangladesh ---- the case of Premier Bank limited , is submitted
an partial prerequisite of the BBA program of University of Dhaka. The purpose of this
internship report is to learn how to conduct a professional research by exploring
practically in banking sector. The topic was assigned by my internship supervisor Dr. M.
Khairul Hossain, Professor, Department of Finance, University of Dhaka. In essence it
comprises the comparative analyst that lies on private sector banks of Bangladesh
competing within the business of consumer credit.
To complete this study, I have used structured questionnaire & each of the respondents
has been interviewed through it. To represent an apparent sight I have used tables &
graphs while analysis. My work proceedings- from data collection to report writing was
carried out on the basis of my preliminary work Schedule.
Although this research paper was carried out within short spell of time, but I have tried
my best to impart the accurate & hue information concerning the comparative study on
consumer credit scheme of different banks. I hope tills paper will facilitates Premier Bank
LTD with the latest news flash on consumer credit of different banks.
In order to understand the organization on which the report was carried on, a brief
overview of Premier Bank Limited has been presented. Basically Premier Bank Ltd is a
solid, forward looking, modern local bank with a record of sound performance. It is
discarding its erstwhile conservative mould & in response to current dynamic trends in
financial activities, adopting an aggressive customer focused banking system. The effort
that PBL makes in order to portray the Bank as a brand image it is- trustworthy, efficient,
helpful & committed.
A brief overview of consumer credit scheme has been presented. Factor that affect the
demand for consumer installment credit such as, Consumers disposable income, the real
income for the proceeding year, the size of the monthly installment, the growth in family
formation, Down payment and contract length
In Bangladesh Consumer credit may be defined as credit provided to individuals or
groups to purchase consumer durables. Practically consumer credit is a facility designed
to help the consumer to purchase goods or services for their personal use on the
assumption that the consumers have a stable source of income over the next few years. In
Bangladesh, Consumers Credit Scheme program of different private sector banks and
foreign commercial banks has made a significant change in the middle class fixed income
group for providing household durables. This loan is very much convenient for general
people as well as profitable for the offering banks.
This report deals with the detail description of CCS of Premier Bank Ltd & how the
organization functions in harmony to create & present a visual description as well as
representation of the entire relative in formation. It also highlights on other financial
products & services offered by the Bank & thus prove the importance of this project from
a business perspective. Total outstanding in this segment stood at Tk. 2937.65 lac &
recovery rate was 93.5% as at December 31, 2005.
First of all Islami Bank Bangladesh Limited introduced this loan in 1993. Following their
success other private banks like Prime Bank Ltd., Premier Bank limited, Arab
Bangladesh limited and other introduced this scheme later. Now about to every private
sector banks offers this household durable loan. But among the foreign commercial banks
this is not that much practiced. A Comparative Study, it highlights the similarities as
well as differences on context of Consumer credit scheme of 3 concerned banks
according to Bank Generation such as Arab Bangladesh Bank Ltd (1 st generation bank),
Prime Bank Ltd.(2nd generation Bank), Premier Bank Ltd. The comparison was derived
from the raw facts collected through questionnaire, interviews & by observation.
On the basis of data information a simple SWOT analysis recognize the strengths,
weakness, opportunities & threat of Premier Bank Limited, regarding Consumer Credit
Scheme. Strengths of the consumer credit scheme comprise of ease of sanction and
disbursement, reversal of risk fund as token reward for good payment behavior, and
diversification of credit base on consumer credit scheme. Weaknesses of the consumer
credit scheme comprises of ease of security documentation, trend diversification of fund,
and recovery inefficiencies. Opportunities of the consumer credit scheme comprises of
introduction of new products under consume credit scheme, opportunity of having higher
portfolio in consumer loans, opportunity of higher income in the form of interest spread
and fees, ease of documentation. Threats of the consumer credit scheme comprises of
higher rate of interest, diversification of fund, higher rate of overdue, monitoring
requirements.
In conclusion & Recommendation the overall picture of this research is compressed in
brief & in recommendation part I highlight all the suggestions that I have made as a
researcher, to improve the performance of CCS department of PBL, Motijheel Branch & I
have also presented my work report of my internee program.
The last chapter deals with the part that I have worked as an internee while my internship
program at Premier Bank LTD (Motijheel Branch).
Table of Contents
Contents
Page no.
CHAPTER 1: INTRODUCTION
1-4
1.1
1.2
1.3
1.4
1
2
3-4
4
Methodology
Limitations
4-9
2.1
2.2
2.3
2.4
2.5
2.6
4
5-7
8
8-9
9
9
10-11
CHAPTER
SCHEME
3.1
3.2
3.3
3.4
3:
OVERVIEW
OF
THE
CONSUMER
CREDIT
Introduction
History of Banks in this Scheme &CCS in Bangladesh
Objectives of CCS Policy
Eligibility for CCS Loan
Goods under this Scheme
CCS Execution process
Related Documents
Key Factors of Consumer Credit Scheme
16-31
Introduction
Objectives of the Scheme
The Consumer Loan Products of Premier Bank Limited
Modes of Repayment
Security & documentation
Other Conditions
Steps taken against Defaulter
Follow up, monitoring & supervision
Performance of CCS of PBL
Introduction of loans for Executives/Officers of Premier Bank
Limited under Consumer Credit Scheme
Introduction
Amount of disbursement
Recovery percentage
Amount of outstanding
Number of customers
Sector wise customers
Default analysis
Number of branches offering CCS
Interest factor
Supervision & flexibility
16
19
21
24
APPENDIX
Bibliography
CHAPTER I: INTRODUCTION
Heres one about the middle-aged person who wanted a loan for Tk.10, 000 that will he
repaid within 15 days. The banker pulled out the loan application & asked, What are
you going to do within money? I will buy some fruits & going to sell those in market,
was the respond. Banker was asking for collateral? That man doesnt know what the
collateral is. So the man left bank & went into another. 2 nd bank asked for another
requirement. As he came across one after another banks, different banks asked for
different criterion. Finally one banker decided to make the Tk. 10,000 loan,.
From the above story it is clear that some customers may not know about the specific
product that banks offer. So they have to be well informed about particular product. It is
very common that customers always look for their own benefit. Where ever they will find
flexible procedure or less complex loan procedure, they will approach to that bank. In my
report I have tried my best to find which bank offers the most suitable, desirable
consumer loan package that customer desire for. Consequently the result derives on the
basis of my comparative analysis on consumer credit scheme of different generation
banks in private bank.
1.1
1.2
Banks are in the business of managing risk. If done correctly, the bank will create
economic value obviously. If done incorrectly, real resources will be misallocated, and
the bank may fail.
Historically commercial banking has always depended upon the credit insights of the
banker, his ability to measure the capacity & willingness of a borrower to repay a loan,
his ability to sense, which risks appear to hedge others. These old fashioned concepts are
still relevant in evaluating todays commercial banking, even as we move toward
sophisticated risk management techniques of risk reduction.
Indeed, modern banking is not inherently different from traditional banking, except that
there are now many more financial products & services involved than before.
As the complexity of the financial market has increased, so has the complexity of risk
management. But although modern banking may create sophisticated mathematical
structures, the raw data of these systems remain the credit judgment of the individual loan
officers or credit committee in classifying the risk of a potential loan.
In brief, the bank of the future will generate its profits not only from offering the
technology of the future, but also from using its knowledge & credit evaluation abilities
to extend credit of profitable margins to customers with calculated risks.
However, The Premier Bank Ltd. has been recognized as one of the leading private
commercial banks in Bangladeshi banking sector. Due to free market economy,
competition is growing rapidly along the nationalized, foreign & private Commercial
Banks. Each Bank is trying to make their products & services more attractive to the
customers. Premier Bank Ltd. has launched their Consumer Credit Scheme to keep pace
with the growing expectations with the customers. This report basically deals with the
Consumer Credit Scheme (CCS) of Premier Bank Limited. It also describes the
competitive position of the scheme in the market.
The main purpose of this report is to evaluate the market compatibility of the Consumer
Credit Scheme of Prime Bank Ltd.
1.3
General Objective:
To know about the management system of PBL as a private sector commercial bank, its
formation, its functional, operational & financial aspects.
Project Objective:
I. To present an overview of the Bank.
II. To make a comparison of Consumer Credit Scheme of Premier Bank
Limited with other private sector banks.
III. To identify the problems of existing credit policy
IV. To give suggestions for the development of the credit policy.
V. To appraise the Consumer Credit Scheme of Premier Bank Ltd.
VI. To find out how Consumer Credit Scheme system works.
VII. To assess the impact of Consumer Credit Scheme on Organization Growth
of Premier Bank Ltd.
VIII. To verify the scope of further improvement of CCS.
1.4
1.5
Research Methodology
i. Data Collection:
For this research both primary and secondary data have been collected.
a) Primary Data:
- Discussion with the personnel of PBL & other private commercial banks.
b) Secondary Data:
-
Website of PBL
Sampling Unit
Sample Size
Sampling Area
Abstract terminology and technical terms have been avoided as much as possible so that
any person can understand the theme of the report.
vi. Layout:
All necessary parts of conventional formal report have been followed. The readers are
expected to get a different taste from the report
1.6
Limitations
CHAPTER-II
2000
2001
1000.00
1000.00
222.00
2.86
1856.13
2002
2003
2004
1000.00
1000.00
2000.00
239.76
408.91
557.55
98.24
130.00
301.08
222.00
25.30
2206.39
5373.75 10030.52 18005.20
Advances
1089.22
2057.96
4280.73
Investments
140.15
270.13
680.09
2348.20
8095.57 15383.93
1330.20
2750.00
6158.43
11782.80 20934.30 33937.38
Foreign Remittance
Income
24.62
224.36
57.51
54.80
364.50
1408.00
576.78
1251.76
2395.45
415.41
Expenditure
Operating Profit
Fixed Assets
Total Assets
199.18
25.18
46.79
2832.25
291.27
380.54
851.03
1464.52
196.24
400.73
930.93
73.29
107.90
149.57
124.14
47.59
3448.94
6036.92 11096.30 20100.25
Graphically Presentation:
100.00
3.85
58.68%
-
17.13%
6
103
127
121.68
140.97
168.12
207.69
28.30
67.02
84.40
13.70%
36.35%
79.66%
80.71%
85.44%
1.16%
0.36%
0.43%
9.27%
11.76%
10.69%
12
17
21
156
238
297
281
435
554
26.09
13.50%
93.27%
0.64%
12.47%
7
131
164
The Capital
800
758.72
700
600
500
400
380.6
303.2
300
235.8
200
100
0
1999
2000
2001
2002
2003
2004
Total Deposit
Paid up Capital
12000
450
408.91
400
10030.52
10000
350
8000
300
250
222
239.76
222
6000
5373.75
200
4000
150
100
2000
1424.22
50
0
1999
1856.13
2206.39
2000
2001
2002
2003
2004
1998
1999
2000
2001
2002
2003
2004
8000
7000
6000
5000
4280.73
4000
3000
2057.96
2000
1000
0
1998
1089.22
11.21
2000
2002
2004
Service First: To hold a prime & central focus in the Banks operation.
2.6
To be the most caring & customer friendly provider of financial services, creating
opportunities for more people in more places.
To ensure stability & sound growth which enhancing the value of shareholders
investments.
To provide congenial atmosphere which will attract competent work force that
will be proud & eager to work for the Bank.
To be socially responsible & strive to uplift the quality of life by making effective
contribution to national development.
to finance their household appliances & office equipment. Loans under this Consumer
Credit Scheme are relatively small in amount that is to be repayable with equated
monthly installment.
Open end and close end credit: Open end credit is an on-going credit arrangement with
financier of a revolving nature, such as revolving retail charge account, credit card
arrangement etc. The close-end credit on the other hand, is comparable to a term loan
from a bank, which is granted for a fixed period. It has a closed-end that is within a
stipulated period the credit accounts are monthly installment loans, hire purchase etc.
Loan of money and credit purchase: In case of a credit purchase, the seller himself
extends credit whereas in case of a loan of money, the lender and the seller are not the
same. The loan may either a conditional loan for a particular purpose only of may be a
general person loan. In case of a money loan, the lender has no responsibilities of a seller.
In between these two, there are hybrid forms such as leasing and hire purchase, where a
pure money loan is distinguished as the loan of commodity.
Secured and unsecured credit: Secured credit involves putting up some collateral that
the creditor can take to satisfy the debt in case of default. The collateral may be personal
property, real property of liquid assets. But in case of unsecured credit there is no
collateral. In this case personal guarantee is most suitable.
good number of financial institutions in our country are successfully operating this
scheme.
First of all Islami Bank Ltd. introduced this loan in 1993. Following their success other
private banks like Prime Bank Ltd., Uttara Bank Ltd., Bank Asia, IFIC Bank, Premier
Bank, Mercantile Bank Ltd.& other introduced this scheme later. These days most of the
private sector banks are offering this household durable loan. But very few of those banks
offer this CCS loan extensively. Some of those private sector banks have failed to operate
Consumer Credit Scheme successfully & thus they bound to close-up this program.
4.2 History of Banks in this Scheme
Now it is monitored the name of banks that operate CCS program extensively as much as
possible. Table-1 CCS of Different private Banks:
Name of the Bank
Starting Date
Households Durables
1993
Investments Scheme
3. Prime Bank Ltd.
1995
1996
1997
Personal Finance
1996
Starting Date
1999
1999
1999
2003
1999
1999
Households Loan
1995
1996
Bank
Kengkhito
Prokalpo
Al- Baraka
Scheme
Samagri
Biniog
1997
Consumer
Credit
1997
To sell our services to a wide range of customers and increase our Consumer
Credit Scheme portfolio.
On proper security of the application, banks CCS department will inform the initial
decision (accepted for procedding/decline) to the client within three working days
from the date of application receive.
Second step:
If the application is accepted for processing, branch will provide some additional
papers to the applicant. Those are as followes:
Letter of Guarantee
Applicants will have to submit the previously mentioned forms, duly filled-in-with
The following additional papers:
Attested photocopies of current Tax Receipt, Electric bills & lease agreement ( if
the source of income is house rent as a landlord).
Third step:
In this phase, bank will inspect & evaluate the given information in respect of the
eligibility of the client, feasibility of the information & security of the loan. In completion
of all necessary formalities, the branch in which the application was submitted, will
disburse the loan within 7 working days from receiving date of the additioonal papers.
Price of the item will be given directly to the supplier of th articles through Payment
Order (P.O.) after completion of necessary documentations. The amount of P.O will be
equals to [Owners Equity + Loan Amount]
4.6 Related Documents:
For execution of CCS loan bank usually use two types of documents. One is application
from and other is clear document. A detail of these documents are given bellow:
I. Application Form : The application form contents of the CCS loan of different banks
is about to same & as followed:
a) Personal Details of the applicant: Here, all about the applicant will have to
mention specifically.
b) Employment Details: Here, the applicants have to specify the name of the
organization where he/ she works address, contact no., designation, salary & s
so on.
c) Loan details: Here, the amount of loan, period, interest, clients equity,
purpose of loan, mode of disbursement & repayment & other charges are to
be mentioned.
d) Financial details: Here, total assets, total liability, monthly income, monthly
expenses & all other financial information about the applicants are tobe
mentioned here.
Before disbursing the CCS loan, the following documents must be completed by the
customer or borrower. Legal stamps are needed to be attached on these documents for
legislative reasons.
Letter of Guarantee: This letter of guarantee is two sided. One is borrower side
guarantee. Borrower side guarantee & the other is guarantor side guarantee.
Borrower side guarantee cosists of agreement of all terms & conditions of bank as
well as assurance of proper & regular payment of installment. The guarantor side
guarantee consists of the assurance that guarantor will repay all the outstanding
balances if the borrower fails to do so.
Demand Promissory Note: It contains a promise of the borrower that he/she
will pay on demand to the bank.
Letter of Hypothecation: It consists of the terms & conditions of CCS loan &
borrower is hypothecated for the equipment.
The loan process begins when a customer requests for loan. Therefore, the loan officers
work with prospective borrowers by explaining to them what kind of information they
must provide to the bank. Then the bank makes necessary verifications about the
applicant. If they find that the applicant is suitable & competent for the loan, they sell an
application form to them at a price of Taka 10 to 20, differ from bank to bank.
Amount of loan & duration :
The amount of loan varies from commodity to commodity. Different banks offer different
amount of loan for different commodities. Usually, the ceiling of CCS loan is higher for
vehicle. This loan is disbursed for the period of 1 to 5 years duration.
Security:
For CCS loan on bank demand any kinds of monetary security or mortgage. The only
security for this loan is guarantor in the borrower. This guarantor may be one person or
may be two as the bank demand. The duty of this guarantor (s) is to give the assurance to
the bank that if in any case the borrower fails to pay the installment he/she (guarantor)
with be liable for the whole amount. This Guarantor (s) must be acceptable to the bank.
Down Payment:
Down payment or the borrowers equity of the total loan differ from bank to bank. This
down payment means that the borrower has pay a certain percentage of total price of the
commodity before disbursement of the loan. This percentage usually differs from 10% to
40% for different commodities. The borrower is to open an account in the bank where the
down payment amount and installment are deposited.
Interest & Other Charges:
Interest on CCS loan also differs from bank to bank. The amount of interest on loan,
which is charged by the banks, is ranged from 12% to 16% per year. Every bank
determines the installment amount of the borrower considering this interest rate along
with repayment of loan. Few banks charge penalty interest for the defaulters. Other
charges include service charge and risk fund, which are not refundable and differ from
bank to bank.
Repayment Process:
The CCS loan is to pay through monthly installment with interest, as the bank
determines. The first installment begins from the following month of the disbursement of
LIMITED (PBL).
5.1 Introduction
Premier Bank is one of the leading private sector banks, which is successfully operating
its business in Bangladeshi banking sector. It offers a wider range of banking facility for
its valued customers. One of the beneficiary services for the customers of Premier Bank
Ltd. is Consumer Credit Scheme. This Bank started its CCS in 1999. The Bank is
extending credit facilities through its Consumer Credit Scheme to cater the credit needs
of the fixed income group for household durables & cars/automobiles. Total outstanding
in this segment stood at Tk. 293.77 million & recovery rate was 93% as at December 31,
2005.
objective:
generation Bank):
They Are Mainly offering two schemes under Consumer Credit Scheme:
Personal Loan (Secured)
Personal Loan (Unsecured)
Car Loan
Marriage Loan
Eligibility of customers :
Service Persons:
Officers/executives from following organizations having confirmed/permanent job
& getting the salary as mentioned below with minimum lenth of service of 2 years
within the age between 20-55 years will be eligible for availing loans under
Consumer Credit Scheme:
a. Officers/Executives of any Scheduled Bank & getting minimum
monthly gross salary of Tk.12, 000.
b. Officers/Executives of any other financial institutions & getting
minimum monthly gross salary of Tk. 15,000.
c. Officers/Executives of any Multinational Company getting minimum
monthly gross salary of Tk.15, 000.
d. Officers/Executives of any Public Limited Company & getting
minimum monthly gross salary of Tk. 20,000.
e. Officers of Private Limited Company having corporate structure &
getting minimum monthly gross salary of Tk. 30,000.
f. Officers of any Govt. Organization & getting minimum monthly
gross salary of Tk. 8,000 per month.
g. Teachers of Universities, Colleges & Schools & getting minimum
monthly gross salary of Tk. 12,000.
h. Officers of Semi Government Organizations & Autonomous Bodies
& getting monthly gross minimum salary of Tk. 10,000.
Self Employed Persons:
The self-employed persons, such as, Doctors, Chartered Accountants, Lawyers or who
have their own business by any nature having minimum income of Tk. 35,000 per month
may be eligible to get loans under C.C.S. The lenth of profession shall not be less than
three years. (In this case he/she will have submit supporting papers of profession for last
three years.
ii) Purpose :
For purchasing the following items:
Domestic appliance: Air conditioner, refrigerator, deep freezes, washing machine,
mobile phone, cooking range, micro-wave, motor Cycle, furniture, sewing machine,
Personal Computer, photocopier, I.P.S./ U.P.S., small non-commercial Generator & other
domestic appliances.
Entertainment items: Television, VCD, VCP, music system, sound system, video
Camera with accessories etc.
Loan amount, Down payment, Risk fund, Service charge &
Period:
iii)
Under CCS program of Premier Bank Ltd. a borrower can get maximum Tk. 10 lac.
The loan limit, down payment, risk fund, service charge and period of loans are given
below according to product wise
Sanctioning
Authority
Name of the Loan Limit
Item
Down
Payment
Motor Cycle
Tk. 1 Lac
1
1% of 2% of 2-yrs
advanced
loan
loan
Installment amount amount
Full Limit
PC/Laptop
Tk. 1 Lac
30%
1%
2%
2-yrs
Full Limit
Other Item
Tk1 Lac
1advanced 1%
Installment
2%
2-yrs
Tk. 2Lac
iv.
Risk
Fund
Service
Charge
Period Retail
of Loan Banking
HO/Branc
h
Head
Office
Credit
Commi
ttee
Full
Limit
Security:
Hypothecation of the purchased item shall be the primary security against the loan
under the scheme.
Two Personal guarantee
Undated cheques
i) Eligibility of customers :
Any interested person with a age range have 20 to 55 and having a permanent job
or officer of the following organization can apply for the CCS loan of the bank.
All employees of Government, Semi-Government, Autonomous, NonGovernment organization / Institutes, Self employed business executives who
have regular monthly fixed income and dully repayment capacity.
Monthly income: Govt: Tk. 8,000/-, Se. Govt. & Auto: Tk.10, 000/-, Banks:
Tk.12, 000/-, Fin. Org & Mult. National: Tk.15, 000/-, Pub. Ltd.: Tk. 20,000/-,
Pvt. ltd.: Tk. 30,000/-, teachers: Tk. 12,000/-, Business & Professionals: Tk.
35,000/-.
ii)
Purpose :
Car/
Microbus,
Small jeeps,
Pick-up etc.
Such vehicles should be new or newly reconditioned ( not second hand reconditioned
vehicles) & must remain unregistered at the time of purchase.
iii)
The loan limit, down payment, risk fund, service charge and period of loans are given
below:
Sanctioning Authority
Down Payment
Risk
Fund
Service
Charge
Period
of
Loan
Retail
Banking
HO/Branch
Head
Office
Credit
Committee
Tk. 15 Lac
New Car
Tk.
Lac
10 30%%(Cash/
Instruments)
1%
2%
5-yrs
Tk.
Lac
Recondition
Tk.
Lac
7 30%%(Cash/
Instruments)
1%
2%
4-yrs
Tk. Lac
Tk. 15 Lac
Microbus
Tk.
Lac
4 30%%(Cash/
Instruments)
1%
2%
2-yrs
Tk. Lac
Tk. 15 Lac
Pivk-up
Tk.
Lac
3 30%%(Cash/
Instruments)
1%
2%
2-yrs
Tk. Lac
Tk. 15 Lac
IV) Security :
This scheme is for meeting the fund requirement for marriage purpose of salaried
person in Government/ Semi-Government/ Autonomous bodies/ Multinational
Company/ Banks/ Insurance/ Financial Institutes/ Educational Institutes with
confined 3-years service ahead and businessman having adequate cash flow.
The loan limit, down payment, risk fund, service charge and period of loans are given
below:
Sanctioning Authority
Name
Item
of
Down
Payment
Risk
Fund
Service
Charge
Period Retail
of Loan Banking
Head
Office
1
1% of 2% of 2-yrs
advanced
loan
loan
Installment amount
amount
HO/Branch
Credit
Committee
Full Limit
II) Security :
The receipt under MIS, MSS, ESS etc issued by the Premier Bank Limited is also
acceptable. In these case the loan amount should not exceed 85% value of
financial obligation without equity participation.
of bank guarantee or insurance guarantee. For private organization the guarantors will be
the head (employer) of the organization and a bank accepted personal having a high
social status.
Except these any person who is competent and eligible for the loan can apply for the loan
by depositing Bangladesh Sanchay Patra, Potirakkha Sanchay Patra, Fixed deposit receipt
etc to the concerned bank.
Prior to disbursement of loan, the following charge documents must be completed at
borrowers cost.
Demand Promissory Note
Letter of Agreement
Letter of Hypothecation
Letter of Trust Receipt
Letter of Authority
Letter of Continuity
Letter of Revival
Letter of Disbursement
Personal guarantee of the guarantors.
Money receipt & Delivery challan for the items purchased (after purchasing the
item.
The borrower shall use the product for his personal use only & shall not the lend
the item or transfer the ownership/possession to any third person before the loan
is adjusted or without prior written permission from the Bank.
The borrower shall maintain the article properly & shall be responsible for
loss/damage to it during the period of the loan. He/she shall pay all the Banks
dues in full, in case the article is fully damaged, lost or become unusable due to
negligence, carelessness to inefficient handling.
Client will bear all necessary expenses relating to license, registration, insurance
etc, of the goods supplied.
The client will bound to allow the banks authorized agent and representatives to
inspect good as and when required.
The borrower shall immediately inform the Bank of any changes in address or
profession related to himself/herself & his/her guarantor.
The borrower shall obtain comprehensive insurance policy for car loan at his/her
cost in the joint name of the Bank & bear all other expenses for registration &
other purposes as & when required.
The borrower will submit a declaration as per enclosed format authorizing his/her
monthly salary in case of non payment by the borrower till final adjustment of the
loan.
The Bank reserves the right to change the rate of interest from time to time.
Telephone contact
Cheque bounce letter
Overdue recover letter
Letter to guarantors
Letter to authority
Legal notice to borrower and guarantor suit notice.
Premier bank Limited in these contexts is very much successful. It started the CCS
operation from the beginning of its banking operation with keeping a separate cell to deal
and look after the program in each branch. The bank to be the pioneer in the field of
consumers credit scheme program as it is in the field of banking operation.
(Tk.
In Lac)
Year
2003
Household
loan
1592.1
2004
2005
durable
149.0
Others
loan
_
1580.5
1481.2
314.24
1929.6
2676.9
900.89
3000
2500
2000
1500
1000
500
0
Household
durable loan
Car loan
Others loan
Am ount of CCSTk In
Lac
Car loan
3000
2000
Household
durable loan
1000
Car loan
Year
Others loan
(Tk.
2003
Household
loan
949.4
durable
2004
807.5
1019.0
189.94
2005
1929.6
2676.9
900.89
Car loan
118.2
Others loan
_
Graphically presentation:
Car loan
100%
Others
93.72%
2004
92%
91%
2005
90.50%
86.25
Year
2003
110%
100%
90%
80%
70%
Car Loan
Others
2003 2004 2005
Year
A maximum loan of Tk. 1,50,000/-(one lac fifty thousand) only will be allowed to
any executive/officer at a time for one or more items.
Since the borrowers are Banks own Executive/Officers, they will be exempted
from the following charges:
I. Down payment (advance deposit of installment/equity)
II. Risk Fund
III. Service charge
The monthly installments for availing the loan will be deducted directly from the
salary of the concerned Executive/Officer.
As the borrower are Banks own Executive/Officers & the installments will be
deducted directly from the salary, so they will exempt from third partys Personal
guarantee.
Interest on loan for Executive/Officers under C.C.S. will be charged @ 12% P.A.
Credit Division, Head Office, will sanction the loans to Executive/Officers of the
Bank under the scheme.
The divisional Heads of Head office & Branch Managers will forward loan
application of the Executive/Officers of their respective Division/Branch to
credit Division, Head Office duly recommended in the enclosed application
format for approval.
After getting the approval the loan will be disbursed directly to the concerned
Executive/Officers SB/CD A/C.
Other terms & condition will remain same as the policy of CCS for the customer
rather than Bank employees.
Premier Bank LTD provides necessary finance to the Under Served limited income
group who needs access to formal credit to purchase consumer durables & improve their
standard of living. Such credit facility recognizes as Consumer Credit Scheme (CCS).
Premier Bank offers different products, like refrigerator, computer, car etc under
consumer credit scheme & that serves only on the basis of personal consumption not for
business purpose. Premier Bank started its CCS in 1999.
Rather than Premier Bank LTD, Islamic Bank Bangladesh Ltd provides loans to the
limited earner group to acquire domestic durable, like: refrigerator, television, computer
etc. This particular scheme is known as House Hold Durable Scheme, Dhaka Bank
identifies such scheme as personal loan, where it offers household item, computer, car
etc. Its personal loan scheme has started from 2001; Prime Bank LTD provides necessary
finance to the Under Served limited income group who needs access to formal credit to
purchase consumer durables & improve their standard of living. Such credit facility
recognizes as Consumer Credit Scheme (CCS). On the contrary foreign private banks
like, HSBC (commencing year of personal loan: 1997) & Standard Chartered Bank
(starting year of personal credit: 1999) their concept of consumer credit scheme varies
from local private sector bank. Both of them are providing loans to consumer but under
different schemes. For an example; HSBC offers credit facility under diverse schemes.
Such as : car loan regarded as personal loan, home loan & these are regarded as consumer
loan. It does not provide any financial assistance particularly for such small items, like;
refrigerator, television. Standard Chartered Bank offers such credit facility in the name of
different scheme, like; personal loan etc.
For the comparative study of Consumer Credit Scheme of Premier Bank Limited I have chose
some other Commercial Banks. They are:
1) Prime Bank (2nd generation bank)
2) Arab Bangladesh Bank (1nst generation bank)
To ting the credit facility to the middle class limited income group not
Eligibility of customers:
Employees of Government
Semi-Government
Autonomous
Sector Corporations
Professionals
Business Executives
Businessman and Self Employed Persons who have regular and monthly fixed
income with repayment capacity.
Non-Officers are also included where the monthly installment size will not exceed
one third of their take home salary.
Purpose:
For purchasing the following items:
Motor Cycle
Personal Computer
Photocopier/Fax Machine
Television
Refrigerator
Audio-video Equipment
Furniture
The loan limit, down payment, risk fund, service charge and period of
loans are given below:
Sanctioning Authority
Name of the Item Loan
Limit
Down
Payment
Risk
Fund
Service Period
Charge of
Loan
Retail
Banking
HO/Branch
Motor Cycle
Tk. 1 Lac
10%
1%
1%
2-yrs
Full Limit
PC/Laptop
Tk. 1 Lac
10%
1%
1%
2-yrs
Full Limit
Photocopier/Fax
Tk. 1 Lac
10%
1%
1%
2-yrs
Full Limit
Other
Item/Furniture
Tk. 5 Lac
10%
1%
1%
3-yrs
Tk. 3 Lac
Head
Office
Credit
Committee
Full Limit
Security:
Two Personal guarantee
Undated cheques
Eligibility of customers:
Employees of Government
Semi-Government
Autonomous
Sector Corporations
Professionals
Business Executives
Businessman and Self Employed Persons who have regular and monthly fixed
income with repayment capacity.
Purpose:
Car
Jeep
Station Wagon
Pick up Van
Cover Van
The loan limit, down payment, risk fund, service charge and period of
loans are given below:
Sanctioning Authority
Name of the Item Loan
Limit
Down
Payment
Risk
Fund
Service Period
Charge of
Loan
Retail
Banking
HO/Branch
Head
Office
Credit
Committee
New Vehicle
Tk.
Lac
40 10%
Nil
1%
5-yrs
Tk. 10 Lac
Tk. 15 Lac
Recondition
Vehicle
Tk.
Lac
15 10%
Nil
1%
4-yrs
Tk. 8 Lac
Tk. 15 Lac
Bus/Truck
for Tk.
corporate bodies Lac
for own use only
40 10%
Nil
1%
5-yrs
Security:
Two Personal guarantee
Undated cheques
Registration of the Vehicle in the name of the bank.
The loan limit, down payment, risk fund, service charge and period of
loans are given below:
Sanctioning Authority
Name of the Item Loan
Limit
Down
Payment
Risk
Fund
Service Period
Charge of
Loan
Retail
Banking
HO/Branch
Head
Office
Credit
Committee
General
Practitioner
MBBS/ BDS
Tk. 5 Lac
10%
Nil
1%
4-yrs
Tk. 3 Lac
Full Limit
Specialized
Doctor
Tk.
Lac
10 10%
Nil
1%
5-yrs
Tk. 5 Lac
Full Limit
Security:
Two Personal guarantee
Undated cheques
The ownership of Medical equipments to be purchased must be hypothecated to
the bank under hire purchase mood.
Loan limit is 8 times of gross salary that have Salary account with us and 6 times
of gross salary who have not salary account with us subject to highest Tk. 3.00
Lac.
The loan limit, down payment, risk fund, service charge and period of
loans are given below:
Sanctioning Authority
Name of the Item Loan
Down
Risk
Service Period
Retail
Head
Salaried Person
Limit
Payment
Fund
Charge
of
Loan
Banking
HO/Branch
Tk. 3 Lac
Nil
1%
1%
2-yrs
Tk.
Lac
Office
Credit
Committee
[Note: Risk fund is Nil who has salary account with us].
Security:
Two Personal gaurantee
Undated cheques
Lien on Service benefit of the concerned employee from the employer
The loan limit, down payment, risk fund, service charge and period of
loans are given below:
Sanctioning Authority
Name of the Item Loan
Limit
Salaried Person
Tk.
Lac
Down
Payment
1.50 Nil
Risk
Fund
Service Period
Charge of
Loan
Retail
Banking
HO/Branch
1%
1%
Full Limit
[Note: Risk fund is Nil who has salary account with us].
Security:
Two Personal guarantee
Undated cheques
2-yrs
Head
Office
Credit
Committee
This scheme is for meeting the fund requirement for higher education of children
of salaried person in Government/ Semi-Government/ Autonomous bodies/
Multinational Company/ Banks/ Insurance/ Financial Institutes/ Educational
Institutes with confined 3-years service ahead and businessman having adequate
cash flow.
The loan limit, down payment, risk fund, service charge and period of
loans are given below:
Sanctioning Authority
Name of the Loan Limit
Item
Down
Payment
Risk
Fund
Service Period
Charge of
Loan
Retail
Banking
HO/Branch
Salaried
Person/
Businessman
10%
1%
1%
Tk.
Lac
Tk. 3 Lac
2-yrs
Head
Office
Credit
Committee
Security:
Two Personal guarantee
Undated cheques
The loan limit, down payment, risk fund, service charge and period of
loans are given below:
Sanctioning Authority
Name of the Loan Limit
Down
Risk
Service Period
Retail
Head
Item
Salaried
Person/
Businessman
Tk. 2 Lac
Payment
Fund
Charge
of
Loan
Banking
HO/Branch
10%
1%
1%
3-yrs
Tk.
Lac
Office
Credit
Committee
Security:
Two Personal guarantee
Undated cheques
The loan limit, down payment, risk fund, service charge and period of
loans are given below:
Sanctioning Authority
Name of the Loan Limit
Item
Down
Payment
Risk
Fund
Service Period
Charge of
Loan
Retail
Banking
HO/Branch
Salaried
Person/
Businessman
10%
1%
1%
Tk.
Lac
Tk. 3 Lac
Security:
Two Personal guarantee
Undated cheques
3-yrs
Head
Office
Credit
Committee
This scheme is for meeting the fund requirement for CNG conversion of vehicles for
those who are salaried person in Government/ Semi-Government/ Autonomous bodies/
Multinational Company/ Banks/ Insurance/ Financial Institutes/ Educational Institutes
with confined 3-years service ahead and businessman having adequate cash flow and
corporate bodies.
The loan limit, down payment, risk fund (nil), service charge and period of
loans are given below:
Sanctioning Authority
Name of the Loan Limit
Item
Down
Payment
Service
Charge
10%
Corporate
bodies
10%
Tk. 1 Lac
Period
of
Loan
Retail
Banking
HO/Branch
Head
Office
Credit
Committee
Security:
One or Two Personal gaurantee
Undated cheques
Hospitalization Loan
Eligible Criteria:
The age limit should be in between 25-60 years
Bangladeshi Citizen
This loan shall be available for the salaried person i.e. employee of the
Govt./Semi govt./Autonomous bodies/MultinationalCo./Banks/Inurance/Financial
Inst./Educational Inst with confirmed 3 years service ahead and businessman
having adequate cash flow.
Before allowing loan the prescription, medical Report of Doctors thereof be
recorded.
Letter of introduction to be obtained from employer with a salary certificate for
service holder and trade License for businessman.
Persons having own house in municipal area, T&T telephone connection and
insurance policy shall be given preferences.
Initially Dhaka and Chittagong metropolitan City will be covered under this
scheme.
This loan would be provided for treatment in the following hospitals or clinics of
Dhaka and Chittagong:
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
XI.
XII.
XIII.
XIV.
XV.
BIRDEM
Holy family Hospital
Central Hospital
Monwara Hospital
Samrita Hospital
XVI.
XVII.
XVIII.
XIX.
XX.
Medinova
Comfort Diagnostic Center
& Hospital
Metropoliton Hospital
Bangladesh Medical
Sikder Medical
Ibne Sina Hospital
Dhaka Renal Center
Gastro lever Clinic
Islami Bank Hospital
Lab Aid Cardiac Hospital
XXI.
XXII.
XXIII.
XXIV.
XXV.
XXVI.
XXVII.
XXVIII.
XXIX.
XXX.
Loan Ceiling:
90% of the estimated cost up to a maximum of loan amount Tk. 5.00 lac. However the
monthly repayment of the customer should not exceed 30% of his/her take home salary.
Documents to be obtained:
The customer will execute the following documents:
D.P note
Letter of Authority
Letter of Guarantee
Loan Agreement under Consumer Loan Retail Banking
Mode of repayment:
Repayment of loans including accrued interest will be made by equal monthly
installments, which will start from the following month of the disbursement of loan.
Before disbursement of loan, the customer will deposit crossed cheque covering the total
number of monthly installments in favor of the bank which will have to be presented for
collection on the due dates. Installments will be paid within 7th day of each month.
However prepayment is allowed.
Other Conditions:
a) Customer will intimate the bank of any change of his address immediately after
the change.
b) If the customer fails to repay the monthly installment within due date, penal
interest will be charged at the rate of 2% on the outstanding amount, which will
be realized along with the overdue installments.
c) The Customer is at liberty to repay the entire outstanding amount in lump sum
before expiry of validity period of the loan.
one installment is not paid then it has become overdue. Actions are taken on the basis of
default installment.
If one month installment is due then concerned officer will call a phone to the
client:
In case of installment due for two months letter is given to the client and
phone is also called;
In case of three months phone and letter to client as well as visit is done;
If installment is not given within four months then letter is given to the
guarantor;
If installment is not given within five months then legal notice is send to the
client;
In spite of all these steps if installment is not given then case is sued against
the client.
In case of installment due for six months the loan is treated as classified loan.
4. Interest shall be charged @ 11% p.a. or 3% less than the average lending
rate allowed to the general public, whichever is higher for CCS loans to
the banks employees at quarterly rest since the lending rate has been
reduced 1% to 2% recently.
5. Employees are allowed CCS loans to purchase computer & mobile phone
even of they have outstanding CCS loan for other items subject to have
available room within the loan ceiling.
6. FAVP may avail of loan of Tk. 1.5 lac to buy private car but in that event
they will not be entitled to avail of any loan for other items. The amount of
such loan should be adjusted by 48 (forty-eight) equal monthly
installments. The monthly installment should not exceed 50% of take
home salary excluding employees House Building Loan Installments.
7. The amount of loan for computer & other items excluding mobile phone
should be adjusted by 48 equal monthly installments. The monthly
installments should not be exceeds 50% of take home salary excluding
employees House Building Loan Installments.
8. Once a loan is fully adjusted, concerned executives/officers may avail loan
again to buy similar or other items. However car loan cannot be repeated
within a period of 5 years from the date of availing the loan.
9. Since the borrowers are Banks own executives/officers, they will be
exempted from the following payment:
a. Down payment
b. Payment of risk fund
c. Service charge
10. Since the borrowers are Banks executives/officers, the monthly
installments for availing of loan shall be deducted directly from monthly
salary of concerned executives/officers.
purchase the necessary goods AB Bank Ltd. executes its CCS program. The broad and
specific objectives of this scheme are.
To increase the work ability of job holders and self-employed people through the
improvement of their standard of living.
b.
Holding an S/B, C/D Account with any Branch of Arab Bangladesh Bank Limited or
any other Bank.
Age group: 25 - 52 years.
Minimum 2 (Two) years work experience.
Income
Tk.15,000/(for
Personal
Loan
unsecured).
Income Tk.25, 000/- (for Auto Loan - unsecured).
Debt burden maximum 30% for all categories.
c.
d.
e.
f.
Visualizing the present scenario, Arab Bangladesh Bank Limited has relaunched the
Consumer Credit Scheme into 6 (Six) product Brands as follows:
1.
2.
3.
4.
5.
6.
Obtain the prescribed application form along with the folder and fill-in the detailed
b.
c.
d.
e.
information required.
Open an account with the Bank under proper introduction.
Submit required papers along with the quotation for purchase of proposed product or
for any other purpose.
One undated cheque for total payment amount (Loan tenor : equal monthly
installment).
Charge documents to be signed by applicant / guarantors.
Rate of Interest :
Products
a. Personal Loan (secured).
b. Personal Overdraft (secured).
c. Personal Loan (unsecured).
Interest Rate
11% p. a. (with 2% spread on ABBL FDR)
11% p. a. (with 2% spread on ABBL FDR)
15% - 16% p. a. (as per decision of Branch
Manager)
d. Q-Cash Staff Overdraft (unsecured). 13% p. a.
e. Q-Cash
Customer
Overdraft
16% p. a.
(unsecured).
f. Auto Loan (unsecured).
15% p. a.
Vehicles: New and recondition car. Motorcycle, Baby Taxi, Tempo, Micro Bus,
Bicycles.
Ceiling Amount
Tk. 30 lac
Tk. 2 lac
Down Payment
30%
25%
Period
3 Years
3 Years
Tk. 2 lac
Tk. 1 lac
Tk. 2 lac
25%
25%
25%
2Years
2Years
2 Years
The entire loan amount along with interest has to pay in the equal monthly installments.
Rate
Application form
Tk. 10
Interest rate
16.5% (Simple
interest yearly)
Processing fees
Stamp Charge
Tk. 1220
Penalty interest
Yearly 2%
Rebate
5% on total interest
rate
Details/Modes
of collection
Cash received during the
issue of Form
of Equated
with
monthly
installments
Cash deposited during of
disbursement
Cash deposited during of
disbursement
In
case
of
default
installments
Calculating during final
adjustment
Mode of Repayment
From the following month of disbursement of goods the borrower is to pay his/her
installment. This installment must have to pay on or before 7th of the month, otherwise
the borrower will be considered as defaulter. From the beginning the borrower will pay
cheques all installments to the bank. The bank will debit the borrower account in each
month for each installment is each with in the first week of the month.
Letter of guarantee.
Letter of undertaking.
Deed of hypothecation.
Demand promissory note
Bank accepted Guarantor
Purchase Receipt in the name of client
The acceptance of borrower to pay installments in due time
Advance cheques for all installments
Hire Purchase Agreements.
Other Conditions:
After delivery of the article, client will be responsible if the articles are damaged.
Thus the client will be liable to adjust the banks dues on demand.
Customer will have to inform the bank in case of any change in his address or
service, immediately after the change.
The customers will have to keep all the articles available, for the inspection of the
bank officials when required.
If the borrower defaults the payments of 3 consecutive installments, the bank will
render the client liable to hand over the articles to the bank.
with
the
defaulter
customers
&
guarantors
Monitoring:
The members of the Consumer Banking Department review the position of all the
Branches and monitor each and every account. Letters, reminders or even phone calls are
made to any Branch, which fails to realize the installments timely. The Branches are
given time limit to reduce the overdue liabilities or face the consequence of having to
lose their discretionary power of disbursing further Consumer Loans.
AB Bank Ltd.
1997
21
27
42
20 to 55
TK. 10 Lac
5 Years
20% to 30%
17% p.a.
1%
1%
Tk.10
20 to 52
TK. 10 Lac
5 Years
10% to 20%
13.5%p.a.
2%
1%
Tk.10
20 to 55
TK. 5 Lac
4 Years
25 % to 30%
15%
1.5%
2%
Tk.10
AB Bank Ltd.
2002
Premier
Bank Ltd.
599.35
3404
519
2003
1741.19
4405
1309
2004
3375.94
4705
1219
2005
5507.39
4288
1301
Amont in lac
12000
10000
8000
6000
4000
2000
0
2002
2004
Year
AB
Bank
Ltd.
Prime
Bank
Ltd.
Premier
Bank
Ltd.
From the above table we see that the amount of disbursement is increasing gradually. The
recovery rate is good among the banks. The recovery rate is high in the AB bank among
the observed PCBs.
7.3 Recovery Percentage:
Year
Premier
Bank Ltd.
AB Bank Ltd.
2002
97
94.51
96
2003
94.02
94.23
94.02
2004
94.00
93.02
96.02
2005
93.05
93.69
93
AB Bank Ltd.
Year
The recovery rate is good among the banks. The recovery rate is high in the AB bank
among the observed PCBs.
7.4 Amount of Outstanding:
Year wise outstanding of the selected banks for the last six years is as follows.
Table: Amount of outstanding
(Figures in lac)
Year
Premier
Prime Bank Ltd.
Bank Ltd.
2000
2001
2002
2003
2004
2005
158
191
391.07
1067.54
2016.44
2937.65
2002
3727
5016
5703
7419
12238
AB Bank Ltd.
710
952
1202
1352
1402
20
02
20
03
20
04
20
05
20
01
15000
10000
5000
0
20
00
Amount in Lac
amount of outstanding
Year
Premier
Bank Ltd.
Prime
Bank Ltd.
AB Bank
Ltd.
Outstanding amount depends on the period of loan, that means if the loan of disbursed for
a loan period of time then the amount of outstanding will be high. Again if the rate of
default accounts increases then the total amount of outstanding increases as well.
7.5 Number of Customers
Number of customers depends on the range of customer group to whom the loan is
offered and the period of operation. So it is very simple that the number of customer of a
bank will be high, who operate the scheme for a longer period of time and offers the loan
to a wider range of customers category. To judge the strong position in the field of CCS
in the context of total customer, one should consider the yearly growth rate of customers.
Total number of customers and its growth rate are given in the following table and graph
respectively.
Table : Cumulative number of customer
Year
Premier Prime
Bank Ltd. Bank
Ltd.
AB Bank
Ltd.
25000
2000
20000
2001
15000
2330
5641
7641
10141
11641
2002
10000
2003
5000
2004
Lt
d.
Ba
nk
AB
Pr
im
e
Ba
nk
Lt
d.
Lt
d.
0
Ba
nk
14128
17512
18512
19412
20537
3250
5750
7750
8250
8775
Pr
em
ie
r
2000
2001
2002
2003
2004
From the above table and the line chart we see that the number of customers is increasing
in all the selected banks. Here the increasing number of customers is much higher in the
PCBs than the FCBs. Though we know that the number of branches is lower in the FCBs
than the PCBs. The FCBs do there banking with very selective customers.
7.6 Sector wise Customers
Most of the banks offers CCS loan to all type of customer group, who have a monthly
fixed income. But the proportion of sector wise customers to whom the loan is offered
varies from bank to bank. Some bank offers this loan to service holders on the other hand
other banks keep the loan facility open to all types of the customers. The sector wise
proportion of the selected banks is as bellow.
Table : Sector wise proportion of customer
Service
(Govt.)
Service
(Pvt.)
Premier
Bank Ltd.
55
Prime
Bank Ltd.
60
AB Bank
Ltd.
20
20
20
40
Business
Others
20
5
15
5
30
10
We see that the PCBs prefer service holder both the Govt. sector and the Pvt. Sectors to
be their client under the scheme.
7.7 Default analysis
Analysis of CCS program of the banks in the context of default rate is another better way
to find out the strength of a bank in this scheme. The Premier bank has a large number of
default rate compared with its total customers. The rate of default is an indicator of
performance in the field of CCS program. In the following table the rate of default rate in
terms of total customers of the selected banks is given.
Table: Proportion of defaulters
Premi Prime
er
Bank Ltd.
Bank
Ltd.
Total
8720
17512
Customers
Defaulters
1200
2189
Proportion
13.76 12.5%
AB Bank
Ltd.
5641
767
13.6%
Total defaulters and the rate of default in terms of total customers are comparatively low
in the Prime Bank.
6.7 Number of branches offering CCS
Another key point of judge extensiveness of CCS program of a bank is the operating area
that means in how many branches the bank operates the scheme. In the following table
the numbers of branches offering the CCS loan of selected banks are given.
Table: Number of branches offering CCS
Total
Branches
Offering
Branches
Premier
Bank
Ltd
21
Prime
Bank
Ltd.
24
AB Bank
Ltd.
21
24
58
58
Most of the banks operate CCS program through their all branches. except Uttara Bank
Ltd. as it operates banking operation all over the country through many branches. From
this point of view we do not see any difference between the FCBs and the PCBs in our
country.
7.7 Interest factor
Among the banks interest on CCS varies from bank to bank. The rate is also differing on
the customer relation and the previous record of the customer. The different interest rates
of the banks are given bellow.
Table 13: Rate of interest of the selected banks
Premier
Prime Bank AB
Bank
Bank Ltd.
Ltd.
Ltd.
17%
16%
15%
At a glance it seems that all PCBs in our country charge at a fixed rate on CCS loan
amount. In Premier Bank Ltd. the interest is comparatively high than other selected
Banks.
7.8 Supervision and Flexibility
Among the selected banks some banks appoint separate supervising agents to look after
the program where other banks supervise the scheme through their own officers. To
supervise the CCS program actually the target of the CCS scheme are the middle class
fixed earning group of the society. And they need a low repayment schedule. So the
banks fix the repayment schedule according to their choice. Foreign banks are very much
flexible in this regard. So the possibility of repayment increases and supervision is less
required.
Chapter 8
Weaknesses:
1. Security Documentation: there are some weaknesses in the documentation
process of the credit sanctioned under Consumer Credit Scheme. Spouses
guarantee, which is a very vital collateral for such loans, is not mandatory as
collateral for such loans in this bank. It could protect the Bank in the demise of
the borrower of such credit facility. Moreover, the bank could go for taking a
single check covering the full loan amount as a collateral security.
2. Diversification of fund: As the proceeds of this loan is not given to the seller of
the commodity directly, except Car Loan, there is always a chance of fund
diversification. Bank may select a panel of suppliers for different commodities
and allow credit facilities against commodities of the panel sellers. It can earn a
substantial profit as commission of such trading, in excess of its interest income.
3. Recovery inefficiencies: the same group of officers/executives does Credit
appraisal, credit disbursement, credit administration and credit recoveries. For the
Opportunities:
1. Introduction of New Products under Consume Credit Scheme: Bank may
introduce new products considering the needs of individuals, distinguishable
professionals, such as: Executive Loan; IT Loan; Engineers Loan; Lawyers
Loan, Education Loan, Marriage Loan etc. thus the Bank may impart
diversification in their portfolio and reduce the manageable risk.
2. Opportunity of having higher portfolio in Consumer Loans: Civilization of
Bangladesh is a on going process which is following an upward trend. The
portfolio of consumer loan is expected to be increased with that of the civilization.
3. Opportunity of Higher Income in the form of interest spread and fees: Rate of
spread on the lending and borrowing is highest for the consumer loans and
substantial fees are earned in the form of commission, risk fund and service
charge.
4. Ease of documentation: Documentation of such loan is easier as it is mainly
paper based and requires execution by least number of people.
Threats:
1. Rate of Interest: Rate of interest of the consumer credit schemes is at the higher
side of the market [effective rate of interest is 18.00% on monthly rest,
approximately], though its reflection at the nominal rate of interest [10.00% flat]
is low. Once people have the feelings to feel the actual rate of interest, it is
expected people would be less interest to enjoy such facility.
2. Diversification of fund: As bank does not pay the proceeds of disbursement of
this loan to the account of the beneficiary/supplier, there exists a chance of fund
diversification, which is observed at the consumer credit schemes of this Bank.
3. Higher rate of Overdue: It is observed that rate of overdue of Consumer Credit
Loans is relatively higher than the then types of loans. Due to diversification of
customers among different segment of people in the society, recovery is highly
laborious and cumbersome if credit processing is not done properly.
4. Monitoring requirements: Selection of clients, sanctioning, disbursing and
recovering of overdue loans under Consumer Credit Scheme is highly technical
and laborious. The cost of monitoring is high if selection is not proper and not
done carefully.
Chapter: 9
There are some charges for the loan disbursement like Risk fund that should be
reduced & definitely refundable after the repayment of the installments.
Loan disbursement procedure should be within 1 day after the application of the
CCS.
Recovery of the loan by the monthly installment should be done through the
automated adjusted installment software by the banks.
Interest rate differential should be there to encourage a group of people.
The equal monthly installment chart should be enrolled to the brochure according
to the various loan amounts.
Every branch should be provided a target for selling the CCS loan & the top most
sellers would be rewarded by the monetary benefits that would encourage the
employers.
Workshop on CCS loan should be arranged for initiating new ideas between the
concerned officer & Retail credit division to initiate new concepts & ideas to
compete with other banks.
At least 2 loans fair should be arranged to sell the large amount of loans & the
special waiver should be offered at that time.
Various festivals loan (Eid, Puja) should be provided for the different people.
During the period of festival loans loan-processing fees should be nil & interest
rate waiver should be offered to sell the large amount.
Total marketing team should be prompt enough to initiate the large number of
customers every month.
The advertising media like Banner add, billboard, brochures & sometimes through
the TV channel various CCS facilities should be communicated.
Sometimes the customer should be offered the cash incentives for managing new
clients.
Customers should be offered the interest rate waiver for the following loan
application if he completes the due time repayment.