Loan and Advance Management Procedure of BASIC Bank Limited PDF

Internship Report
On
Loan & Advance Management Procedure

Of
BASIC Bank Limited
i
Internship Report
On
Loan & Advance Management Procedure

Of
BASIC Bank Limited
Prepared For
Md. Moniruzzaman
Senior Lecturer
Department of Business Administration
Stamford University Bangladesh
Prepared By
Anik Islam Khan

ID: BBA 051 16003
BBA Program
Batch: 51
Major: Finance
Date of Submission: January 30, 2017
STAMFORD UNIVERSITY BANGLADESH
ii
Letter of Transmittal
January 30, 2017
Mr. Md. Moniruzzaman
Senior Lecturer
Stamford University Bangladesh.
Subject: Submission of the internship report.
Dear Sir,
With due respect, I would like to inform you that, it is a great pleasure for me to submit the
working report on Loan & Advance Management Procedure of BASIC Bank Ltd. As a
requirement to complete my BBA program. My internship period started from 14th September
2016 to 15th December 2016.
It was a great pleasure for me to have the opportunity to work on this bank. I endeavor my best
to come up with a good report.
I would be very happy to provide you with any clarification regarding the report.
Please contact with me if you have any query and please kindly accept my paper and oblige me
thereby.
Thank you,
Sincerely yours,
Anik Islam Khan

ID: BBA 051 16003
BBA Program
Batch: 51
iii
Internship Report
I here announce that the extensive study entitled

Loan & Advance Management Procedure of BASIC Bank Limited
Prepared in partial accomplishment of the Requirement for the award of the degree
Bachelor of Business Administration

From
Is my original work and not put forward for

The award of any other degree / diploma / fellowship
Or other similar term or honor
Anik Islam Khan

BBA 051 16003
iv
To Whom It May Concern
This is to certify that the internee report on Loan & Advance Management Procedure of
BASIC Bank Limited For the degree Bachelor of Business Administration (BBA) major in
Finance from Stamford University Bangladesh carried out by Anik Islam Khan, Student
ID # BBA 051 16003 under my supervision. No part of the internship report has been
submitted for any degree diploma, title, or recognition before.
Md. Moniruzzaman
Senior Lecturer
Stamford University Bangladesh.
v
Acknowledgment
At the very beginning, I would like to express my deepest gratitude to the Almighty Allah for
giving me the ability and strength to finish the task successfully within the scheduled time. This
report Loan & Advance Management Procedure BASIC Bank Ltd. has been prepared to fulfill
the requirement of BBA degree.
I would like to express my heartiest gratitude to my supervisor, Md. Moniruzzaman, Senior

Lecturer, Department of Business Administration, Stamford University Bangladesh for his
continuous guidance, valuable suggestions, encouragement, patience and also for giving me the
opportunity to prepare this report.
During the time of my internship at BASIC Bank, Dilkusha Branch, I have found many people
who have co-operated me by providing data, suggestions and inspiration. I would like to thank
Mr. A K M Masudur Rahman, GM and branch in charge of BASIC Bank, Dilkusha Branch &
Mrs. Sadia Akter Shahin, AGM, BASIC Bank, Dilkusha Branch. Besides that I am grateful to
each and every employees of BASIC Bank, Dilkusha Branch for their co-operation.
Finally, my sincere gratitude goes to my all the other colleagues in the bank and teachers of my
major and minor discipline in the university, who helped me whenever I needed.
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Executive Summery
Banking industry is one of the most significant parts of economy. It is compared as the heart of
economy as it circulates money. This report is prepared to focus on BASIC bank, one of the state
owned banks in Bangladesh. Though the bank was established specially to support small
industries and commerce, now it is operating as a state owned commercial bank. The loan &
advance management procedure of BASIC bank ltd is analyzed and presented in this report.
This report is broadly categorized in six different chapters. Bank is the most important financial
institution in the economy. It plays vital role in the economy by providing means of payment and
in mobilizing resources. The prime objective of my internship program is to collect the practical
work experience in the arena of banking. During the study, I have faced so many limitations like
as time limit, legal obligation, little time to consult with management etc. To prepare this report
all the necessary information collected from both primary and secondary sources of data.
The BASIC Bank Limited was established as a banking company in January 1989. The Bank
started its operation as a joint venture enterprise; the Government of Bangladesh on 4th June
1992 became owner of the bank by taking its all shares. Thus the Bank is state-owned. However,
the Bank is not nationalized; it operates like a private bank as before. The mission, vision and the
strategy of the bank is quite different from the other banks. To ensure secured banking is one of
the goals and objectives of the bank. BASIC Bank works closely with its clients, the regulatory
authorities, the shareholders, banks and other financial institutions. This bank also achieved lots
of milestones rather than other banks. The risk management of the bank covers core risk areas of
banking viz. Now, the BASIC Bank operates their operation by 68 branches in Bangladesh.
General banking is the starting point of all the banking operations. It is the department, which
provides day-to-day services to the customers. Function of this department is account opening
section, clearing section, account section, cash section etc. On the other hand, the foreign
exchange department of the bank has a huge impact on export and import activities of
Bangladesh. Besides these services, BASIC Bank also provides other services and some kinds of
value added services.
vii
Lending being the most important function of commercial bank, every bank should have own
credit policy. There are different types of credit facilities offered by BASIC Bank. Like as, home
loan, car loan, demand loan, term loan, SME loan etc. Broadly, there are two types of loan such
as- retail loan and corporate loan. For each different types of loan, credit officer have follow
different steps to accomplish credit activities appropriately. BASIC Bank Limited was rated by
Credit Rating Agency of Bangladesh Limited (CRAB). Risk assessment or analysis is all about
understanding the risk associated with lending money. Until and unless risks are not assessed and
measured it will not be possible to control risks. Credit risk assessment process in the Bank shall
be governed by some principles.
Both the qualitative analysis (SWOT analysis) and quantitative analysis (Financial data analysis,
Ratio analysis) have been used to collect and analyze the gathered data. Besides this different
types of software are used for reporting the gathered information from the analysis, such as-
Microsoft Word, Microsoft Excel. It also included the summary of finding. Finding of the report
said about the prior and neglected sector of the credit facilities.
The last chapter ends with recommendations and conclusions. As the result I tried to give some
suggestions to the base of my knowledge and experience which I have achieved during
internship at BASIC Bank, Dilkusha Branch, for further growth in loan & advance expansion of
this Branch.
I have tried to make clear understanding about loan & advance management procedure and
findings their loopholes. Here I have face some problems during working on report. Time limit is
not sufficient for preparing an outstanding report. I hope this report, despite its many limitations,
will be a gateway to have a clear concept about the loan & advance management procedure of
BASIC Bank Ltd.
viii
Table of Content
Content No Page No
Chapter 1
Introduction of the Report 1-6
1.1 Origin of the Report 2

1.2 Background of the Study 2
1.3 Rational of the study 3
1.4 Objective of the Report 3
1.5 Scope of the Report 4
1.6 Limitation of the Report 4
1.7 Methodology of the Report 5
Chapter 2
Background of the Organization 7-24
2.1 An Overview of the Organization 8

2.2 Vision, Mission, Strategy Statement 9
2.3 Goals & Objectives of BASIC Bank Ltd. 10
2.4 Functions of BASIC Bank Ltd. 11
2.5 Ownership Structure 11
2.6 Composition of the Board 12
2.7 Management Structure 13
2.8 Capital and Reserve 14
2.9 Corporate Profile of BASIC Bank Ltd. 15
2.10 Milestones in the Development of the Organization 16
2.11 Risk Management 17
2.12 Human Research Department (HRD) 23
2.13 Division-wise Branch Distribution 24
Chapter 3
General Activities of BASIC Bank Ltd 25-51
3.1 General Banking 26

3.2 Instruction for Handling Account Holders 35
3.3 Money Transaction 40
3.4 Balance Inquiries & Statement 41
3.5 Other Services 42
3.6 Value Added Services 42
3.7 Fund Transfer 42
3.8 Foreign Exchange 43
3.9 Treasury 50
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Chapter 4
Loan & Advance Analysis 52-78
4.1 Loan & Advance Management of BASIC Bank Ltd. 53

4.2 Loan & Advance 53
4.3 Function of Loan & Advance Division 54
4.4 Different Types of Loan & Advance Facilities 55
4.5 Credit Rating Report 59
4.6 Operational Guidelines for Different Credit Facilities 59
4.7 Overall Procedure for Sanctioning Loan 68
4.8 Credit Administration 73
4.9 Credit Monitoring 74
4.10 Credit Risk Assessment 74
4.11 Credit Risk Grading (CRG) System 78
Chapter 5
Analysis and Findings 79-106
5.1 SWOT Analysis 80

5.2 Ratio Analysis 82
5.3 Trend Analysis 93
5.4 Comparison among BASIC Bank, Prime Bank, South East 103
Bank Ltd
5.5 Findings 105
Chapter 6
Recommendation and Conclusion 107-129
6.1 Recommendation 108

6.2 Conclusion 109
Bibliography 110
Abbreviation 111
Appendix 114
x
List of Table
Table No. Page No.

1 Capital and Reserve 14
2 Corporate profile BASIC Bank Ltd at a glance 15
3 BASIC Bank Ltd credit rating report at a glance 59
4 Different Risk Components 78
5 Credit Risk Grading 78
SWOT Analysis
6 SWOT Analysis 81
Ratio Analysis
7 Current Ratio 83
8 Quick Ratio 84
9 Net Loans to Deposit Ratio 84
10 Loan Loss Reserve to Gross Loan Ratio 85
11 Liquid Asset to Total Asset Ratio 86
12 Liquid Asset to Total Liabilities Ratio 87
13 Deposit to Total Asset Ratio 88
14 Deposit to Equity Ratio 88
15 Equity Multiplier 89
16 Return on Assets 90
17 Return on Equity 91
18 Return on Deposit 91
19 Cost of Income Ratios 92
Trend Analysis
20 Deposits 93
21 Deposits 94
22 Investment 94
23 Loan and Advances 95
24 Authorized Capital 96
25 Paid up Capital 97
26 Long Term Liabilities 98
27 Total Assets 99
28 Total Liabilities 100
29 Major Types of Credit Sectors 101
30 Geographical Distribution of Credit Exposures 102
Comparison
31 Total Assets Comparison 104
32 Loans Advances Comparison 104
xi
List of Figure
Figure Page
No. No.
1 Management Structure 13
2 Division wise Branch Distribution 24
3 Account Opening Procedure 28
4 Procedure of Issuance of a Cheque Book 29
5 Foreign Exchange in Brief 43
6 SWOT Analysis 80
Ratio analysis
7 Current Ratio 83
8 Quick Ratio 84
9 Net Loans to Deposit Ratio 85
10 Loan Loss Reserve to Gross Loan Ratio 86
11 Liquid Asset to Total Asset Ratio 86
12 Liquid Asset to Total Liabilities Ratio 87
13 Deposit to Total Asset Ratio 88
14 Deposit to Equity Ratio 89
15 Equity Multiplier 89
16 Return on Asset 90
17 Return on Equity 91
18 Return on Deposit 92
19 Cost of Income Ratios 92
Trend analysis
20 Deposits 93
21 Deposits 94
22 Investment 95
23 Loan and Advances 96
24 Authorized Capital 97
25 Paid up Capital 98
26 Long Term Liabilities 99
27 Total Asset 100
28 Total Liabilities 101
29 Major Types of Credit Sectors 102
30 Geographical Distribution of Credit Exposures 103
Comparison
31 Total Assets Comparison 104
32 Loans and Advances Comparison 105
xii
Introduction of the Report
Basic Bank Limited Page 1

1.1 Origin of the Report
Placement or internship program is an obligatory part of BBA (Bachelor of Business

Administration) program, STAMFORD UNIVERSITY BANGLADESH that bridge the gap
between the theoretical knowledge and practical situation. I was assigned to the BASIC Bank at
Dilkusha Branch to take the real banking experience in order to reinforce knowledge acquired so
far from the BBA program. So the preparation and submission of this report is very important for
the completion of the Bachelor of Business Administration (BBA). In this internship program,
each student selects a project for study, completes the study and prepares a report with
recommendation for solution of the problem. This report is tentatively prepared to complete my
BBA program and assigned by Md. Moniruzzaman.
1.2 Background of the Study
Bank is the most important financial institution in the economy. It plays vital role in the
economy by providing means of payment and in mobilizing resources. The economic
development of a country depends on the development of banking sector to a great extent. The
dependence of banking sector in modern economy is increasing day by day because this sector
ultimately contributes to run the wheel of development in a more dynamic way. Todays modern
banks are not only provides traditional banking, rather banks are expanding the menu of financial
services, banks are making the untouchable service touchable for their customers. The changing
and expanding role of banking has made the banking business more complex and competitive.
For survival and growth of this business demands creativity, specialization and knowledge and
adoption of new technology are used. But technology, creativity, specialization all these cannot
support a bank to survive unless the services are marketed in the right track. For this banks need
experts who will able to run the business even in against the wind.
Banks provide important capital in the form of loan and advances which are subject to non-
repayment which is termed as credit risk, the chance that a loan will not be repaid timely. The
main concern of the banks is credit risk and its management as credit or loans and advances are
the main source of income for them.

The loan and credit department is one of the most important departments of any bank. The
money mobilized from ultimate surplus units are allocated through this department to the
ultimate deficit unit (borrower). Success of this department keeps a great influence on the overall
profit of a bank. Again, Failure of this department may lead the bank to huge losses or even to
bankruptcy. Like any other bank BASIC banks credit division also tries to do their job perfectly.
I have worked in the Loan & Advance Department of BASIC Bank Limited.
1.3 Rationale of the Study
Due to the increased competition of the increased number of commercial banks and the growing
economy, the expectations of the customers have also increased than ever before. Realizing the
present condition, banks, especially the commercial banks are trying to elevate their loan giving
service as much as reachable to their customers. The most serious difficulty facing the financial
sector especially commercial bank is loan and advance risks. When banks sanction credit there is
a possibility of defaulting whether the credit can be recovered or not so there is a scope to study
how banks manage their loan and advance risk. What kind of strategies they follow to minimize
loan and advance risks. No commercial banks can deny this risk they have to perform banking
operation facing this risk.
1.4 Objective of the Report
The prime objective of my internship program is to collect the practical work experience in the
arena of banking that helps me to fulfill the requirement of my BBA program under the
department of finance of Stamford University Bangladesh.
1.4.1 The Main Objectives of the Study Are

To find out the actual loan and advance management procedure happening in a private
commercial bank in Bangladesh.
To fulfill the requirement for the completion of BBA program.

1.4.2 The Secondary Objectives of This Report Are
To know the operation of corporate Branch of BASIC Bank Ltd.
To develop knowledge and a clear understanding about loan and advance management
procedure of BASIC Bank Ltd.
To describe the corporate customer service process of BASIC Bank Limited.
To analyze the barriers faced by the BASIC Bank in providing service to their customers.
To suggest a supportive role in the progress of banking system in financial sector.
To know about the objectives and planning of BASIC Bank Ltd.
To identify the major strength and weakness of BASIC Bank Ltd.
To know how the branches are efficiently controlled.
To identify whether all process are perfectly and effectively practiced or not.
1.5 Scope of the Report
BASIC Bank Limited is now well growing and it is operating 68 branches in different parts of
Bangladesh. The scope of the study will be limited to the organizational setup, function and
operation of the Basic Bank in Bangladesh. This report mainly encompasses the performance of
BASIC Bank Limited in comparison to the overall credit sector in Bangladesh. This report
consists of the writers observations and on the job experiences during the internship period in
the foreign exchange department in BASIC Bank Limited. For the purpose of my internship
program, I was assigned at the Dilkusha corporate Branch and this provided me the way to get
myself familiarized with banking environment for the first time indeed. I have an opportunity to
gather experience by working in corporate Branch.
1.6 Limitation of the Report
During the study, I have faced the following limitations:

The main limitation of this report is time frame. The time limit for the internship is only
three months, and we have to understand the whole banking procedure and have to
prepare a report within such limited time.

The study was limited by the size of the sample.
Due to some legal obligation and business, secrecy bank was reluctant to provide data.
For this reason, the study limits only on the available published data and certain degree of
formal and informal interview.
The Management/officers are very busy with their jobs, which lead a little time to consult
with them.
I am working in one branch. I dont know what procedures other branches are following.
1.7 Methodology of the Report
In conducting this study the following methodology was adopted in collecting data &
information as well as preparation of the reports.
1.7.1 Research Type

This is a Descriptive Research, which briefly reveals the overall activities of the BASIC Bank
Limited and also critically analyzes the Loan and Advance Management Procedure of this
bank.
To prepare this report all the necessary information collected from both primary and secondary
sources of data.
1.7.2 Primary Sources of Data

In the preparation of this report, data was collected from different primary sources. The
techniques were used to collect data are:
Observation while working at credit dept.
Informal Discussion with employees and clients
In-Depth interview & Focus Group discussion.

1.7.3 Secondary Sources of Data
Internal Sources
There have some internal sources of data.
Annual Reports of BASIC Bank Ltd.
Manuals and brochures of BASIC Bank limited.
Other published documents of the bank.
BASIC banks Website.
External Sources
There also have some external sources of data.
Credit Manual of BASIC Bank Ltd.
Internet.
Guideline of Bangladesh Bank.
File study.
Statement of affairs.
Books.
Articles.
Journals.
Newspaper.
Web browsing.
Other related research reports.
1.7.4 Data Analysis and Reporting

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

Background of the Organization

2.1 An Overview of the Organization
The BASIC Bank Limited (Bangladesh Small Industries and Commerce Bank Limited) was
established as a banking company under the erstwhile Companies Act 1913 and launched its
operation in January 1989. The Banking Companies Act 1991 governs it. The Bank started its
operation as a joint venture enterprise of the then BCC Foundation with 70 percent shares and
the Government of Bangladesh with 30 percent shares. The BCC Foundation being
nonfunctional following the closure of the BCCI, the Government of Bangladesh took over 70
percent shares of the BCC Foundation on 4th June 1992 and became100 percent owner of the
Bank. Thus the Bank is state-owned. However, the Bank is not nationalized; it operates like a
private bank as before. Adjudged one of the soundest banks in Bangladesh, BASIC Bank is
unique in its objectives. It is blend of development and commercial banking function mix. It is
one of the specialized banks in Bangladesh which takes pride itself as the pioneer in financing to
small and medium scale industries. By-laws of constitution the bank is obliged to invest its 50%
loanable fund for development and growth of Small and Medium Scale industries
accommodating the growing number of non-farming labor force. It motto is to boost Small and
Medium industries as it is now being treated as employment generating machine across the world
for creating employment opportunities and thus to reduce poverty and raise income of the
developing society. With the prudent and true guidance of the Board, BASIC continued to
register growth in prime areas-expansion through opening of new branches, launching on-line
services and widening ATM cards facility covering broader area and targeting opening of
exchange houses abroad and notable achievement in profit, capital and assets. The Banks
achievement over the years offers ample testimony of success in the strength of our industrial-
commercial focused based business mix, as well as the exercising franchise of client-oriented
model of banking that allowed us to overcome all barriers and contemporary challenges of the
time.
Being treated as development bank BASIC works with local and international a genies like
Government.

2.2 Mission, Vision, Strategy Statement
2.2.1 Mission
Establishing the bank as a strong and a socially responsible bank in the market and society with
good fundamentals by:
Offering best value based greener products and services;
Embracing appropriate knowledge and technology;
Creating an environment for professional, efficient and motivated pool of human
resources;
Establishing a culture of innovation and continuous improvement;
Ensuring maximum return/value to shareholders;
Establishing good corporate governance and compliance culture;
Maintaining good relations with shareholders; and
Forecasting financial inclusion and opening up a human side of banking.
2.2.2 Vision
To be a bank of choice by intertwining excellence in customer service experience, optimum
profitability with efficiency, imitable corporate culture in terms of compliant banking activities,
efficient and motivated human resources and endless quest for becoming the best corporate
citizen through serving people for progress.
2.2.3 Strategy Statement

Financing establishment of small units of industries and business and facilitate their growth
Small Balance Sheet size composed of quality assets.
Steady and sustainable growth.
Investment in a cautious way.
Adoption of new banking technology.
To employ funds for profitable purposes in various fields with special emphasis on small
scale industries.

To undertake project promotion on identify profitable areas of investment.
To search for newer avenues for investment and develop new products to suit such needs.
To establish linkage with other institutions which are engaged in financing micro
enterprises.
To cooperate and collaborate with institutions entrusted with the responsibility of
promoting and aiding SSI sector.
2.3 Goals & Objectives of BASIC Bank Ltd.
BASIC Bank is always ready to maintain the highest quality of services by upgrading banking
technology prudence in management and by applying high standard of business ethics through its
established commitment and heritage.
To invest 50 percent of loanable funds in financing small and medium industries sector;
To serve the depositors in safekeeping and growing their savings;
To contract or negotiate all kinds of loan, aid or assistance, private or public, from any
source, local or foreign and to take all such steps as may be required to complete and
effectuate such deals;
To act as agent for the sale and purchase of any stocks, shares or securities or for any
other monetary or mercantile transaction;
To guarantee or become liable for the payment of money or for the performance of any
obligation and generally to transact all kinds of guarantee business and also transact all
kinds of agency business;
To promote the development of small and medium industries and to provide finance to all
kinds of banking facilities and to provide technical services to small and medium
industries in Bangladesh;
To develop a culture of compassionate banking;
To establish and open offices and branches to carry on all or any of the above businesses
within the country and abroad, provided prior permission is obtained from the
Bangladesh bank and carry on, transact, undertake and conduct the business of banking in
all its branches and to transact and do all relevant matters and things; and

To ensure secured banking.
2.4 Functions of BASIC Bank Ltd.
2.4.1 The Bank Offers

Term loans to industries especially to small-scale enterprises.
Full-fledged commercial banking service including collection of deposit, short term trade
finance, working capital finance in processing and manufacturing units and financing and
facilitating international trade.
Technical support to Small Scale Industries (SSIs) in order to enable them to run their
enterprises successfully.
Micro credit to the urban poor through linkage with Non- Government Organizations
(NGOs) with a view to facilitating their access to the formal financial market for the
mobilization of resources.
In order to perform the above tasks, BASIC Bank works closely with its clients, the regulatory
authorities, the shareholders, banks and other financial institutions.
2.5 Ownership Structure
The Bank came into being as outcome of the pragmatic thinking of the policy makers of the
country of urgency for a bank in the private sector for financing small scale Industries (SSIs). At
the outset, it had been a joint venture enterprise of the defunct BCC Foundation with 70 percent
shares and the Government of Bangladesh (GOB) with the remaining 30 percent shares. After
the closure of BCCI, when BCC Foundation became nonfunctional the Government of
Bangladesh took over 100 percent ownership of the Bank on June 4, 1992. Thus it is recognized
as a state-owned Bank.

2.6 Composition of the Board
2.6.1 Board of Directors

Mr. Alauddin A. Majid Chairman
Mr. Kazi Shofiqul Azam Director
Mrs. Parag Director
Mr. Hasan Mahmood, FCA Director
Ms. Raihana Aneesa Yusuf Ali Director
Mr. Md. Mamun-Al-Rashid Director
Mr. Tabarak Hussain Director
Mr. Mahbubur Rahman Bhuiyan Director
Mr. Khondoker Md. Iqbal Managing Director
2.6.2 Audit Committee

Mr. Hasan Mahmood, FCA Chairman
Ms. Parag Member
2.6.3 Risk Management Committee

Ms. Raihana Aneesa Yusuf Ali Chairperson
Mr. Md. Mamun-Al-Rashid Member
2.6.4 Executive Committee

Mr. Alauddin A. Majid Chairman
Ms. Raihana Aneesa Yusuf Ali Director
Mr. Md. Mamun-Al-Rashid Director
Mr. Khondoker Md. Iqbal Managing Director
2.6.5 Company Secretary

Mr. Md. Hasan Imam Company Secretary, HOMC

2.7 Management Structure
Chairman
Board of directors
Managing Director
Risk Audit
Management Committee
Deputy Managing Director
Executive Committee
General Manager
Deputy General Manager
Assistant General Manager
Manager
Deputy Manager
Assistant Manger
Officer
OOOOOOOOOOOOOOOOOOOOOOOO
Assistant Officer
OOOO
Jr. Officer (Marketing)
Figure 1: Management Structure

2.8 Capital and Reserve
Statement of Changes in Equity for the year ended 31 December 2015:
Items Amount (TK)
Paid up capital 10846982500

Total Capital (8512446006)
Capital Surplus / (Deficit) (19785806006)
Statutory Reserve 2224690642
Other Reserves 17595795867
Total Assets 194173358107
Total Deposits 148167229641
Total Loans & Advances 128807012281
Total Shareholders Equity 25947090000
Total Contingents Liabilities 11584474388
Profit (Loss) after Tax & Provision (3140361573)
Table 1: Capital and Reserve

2.9 Corporate Profile of BASIC Bank Ltd.
(Profile as per last Annual Report 2015)
Name of the bank BASIC Bank Ltd.
Ownership : Government of the Peoples Republic of Bangladesh
Logo :
Date of Incorporation : August 02, 1988
Date of Starting Operation : January 21, 1989
Authorized Capital : Tk. 16000.00 Million
Paid-up-capital : Tk. 10846.98 Million
Total Deposits : Tk. 148167.23 Million
Total Loans & Advances : Tk. 128807.01 Million
Total Shareholders Equity : Tk. 25947.09 Million
Chairman : Mr. Alauddin A. Majid
Managing Director : Mr. Khondokar Md. Iqbal
Directors :7
Number of Branches : 68
Number of Employees : 2163
Head Office : Sena Kalyan Bhaban 195, Motijheel, Dhaka-1000.
Banking Software used : KASTLE CORE BANKING SOFTWARE (KCBS)
Credit Rating : CRAB:-
Types of Rating Entry Government

(Stand-alone Support Entity
Basis)
Long Term B A
Short Term ST-5 ST-3
Table 2: Corporate profile BASIC Bank Ltd at a glance

2.10 Milestones in the Development of the Organization
Incorporation of the Company 02.08.1988

Certificate of Commencement of Business 02.08.1988
License issued by Bangladesh Bank 10.08.1988
Inauguration of the first Branch, Motijheel 15.01.1989
Commencement of business from the Motijheel Branch 21.01.1989
Introduction to SME concept & started in Bangladesh 21.01.1989
Developed own Banking Software 22.07.1991
Government of Bangladesh took the ownership of the Bank 04.06.1992
Green Banking Initiatives 20.08.1992
Completion of 10 years of Service 21.01.1999
Registered of Joint Stock Companies 29.03.2001
In-house EAGLE Core Banking Software 17.04.2005
Recipient of ICAB 2nd Best Published Accounts Award-2007 04.12.2008
Completion of 20 years of Service 21.01.2009
Agreement with KASTLE for Core Banking Software KASTLE CORE-v142 18.03.2010
Bank Sponsored 3 Leading Football Clubs of Bangladesh Premier League 02.08.2011
Launching of ATM 13.03.2012
Opening of 50th Branch 27.03.2012
Exclusive Sponsor to BOA for organizing the 8th Bangladesh Games 20.02.2012
Achievement of DITF Best Corporate Stall Award-2014 04.02.2014
Launching of SMS Alert Service 30.01.2015
rd
Recipient of Best School Banking Award 2015 (3 ) from Bangladesh Bank 19.05.2016
Achievement of 1st Prize at the International SME Fair-2016 in Chittagong 05.12.2016

2.11 Risk Management
The risk of BASIC Bank Limited is defined as the possibility of losses, financial or otherwise.
The risk management of the Bank covers core risk areas of banking viz. credit risk, liquidity risk,
market risk that includes foreign exchange risk, interest rate risk, equity risk, operational risk &
reputation risk arising from money laundering incidents. The prime objective of the risk
management is that the Bank evaluates & takes well calculative business risk & thereby
safeguards the Banks capital, its financial resources & profitability from various business risks
through its own measures & through implementing Bangladesh Bank guidelines & following
some best practices as under:
2.11.1 Credit Risk

It arises mainly from lending, trade finance and leasing and treasury businesses. It can be
described as the potential loss arising from the failure of a counter party to perform as per
contractual agreement with the Bank. The failure may result from unwillingness of the
counterparty or deterioration in his or her financial condition.
The bank has six credit divisions namely Industrial Credit Division (ICD), Commercial
Credit Division (CCD), Micro Credit and Special Finance Division (MCSFD), Small
Enterprise Division (SED), Consumer Finance Division (CFD) and Trade Finance Division
(TFD) focused on different areas/sectors of the economy and entrusted with the duties
of Credit Appraisal to ensure the merit of loan proposals. The bank ensures strict
management of credit quality by analyzing/assessing borrower risk an historical
repayment performance of the borrower, historical and projected financial statements,
industry outlook, collateral coverage of the proposed credit facility, market reputation
of the borrower and any other relevant aspects. To manage its credit risk at a tolerable
level, the Bank prepares an Annual Credit Budget where the amount of loan to each
sector is allocated on yearly basis, Budgeted allocation to each sector is monitored or
adjusted periodically on the basis of national economic trends, business or sector
viability, the bank's credit position and profitability, the central bank's regulations and
guidelines, availability of investable fund and so on. Moreover, total aggregate loan
and advances of branches are allocated and controlled on the basis of the credit

budget. The bank also has a Credit Administration Division (CAD) that oversees and
ensures proper documentation pertaining to the approved credit facilities.
The Bank takes its lending decision based on the credit risk assessment report by the
appraisal team. In determining Single borrower/large loan limit, the instructions of
Bangladesh Bank are strictly followed. Internal audit is conducted at periodical
intervals to ensure compliance of Bank's & Regulatory Polices. Loans are classified as
per BB guidelines. Concentration of single borrower/large loan limit is shown in the
notes to the financial statements.
2.11.2 Liquidity Risk

The object of liquidity risk management is to ensure that all foreseeable funding
commitments and deposit withdrawals can be met when due. To this end, the Bank is
maintaining a diversified and stable funding base comprising of core retail and
corporate deposits and institutional balance. Management of liquidity and funding is
carried out by Treasury Division under approved policy guidelines. Treasury Front
Office is supported by a very structured Back Office. A Mid Office Division has also been
created as per requirement of Bangladesh Bank. The Liquidity management is
monitored by Asset Liability Committee (ALCO) on a regular basis. A written
contingency plan is in place to manage extreme situation.
2.11.3 Market Risk

The exposure of market risk of the Bank is restricted to foreign exchange risk, interest
rate risk & equity risk.
Foreign Exchange Risk
Foreign exchange risk is defined as the potential change in earnings due to change in
market prices. The foreign exchange risk of the Bank is minimal as all the transactions
are carried out on behalf of the customers against underlying L/C commitments and
other remittance requirements. No foreign exchange dealing on Bank's account was
conducted during the year.
Treasury Division independently conducts the transactions, Back Office of Treasury is

responsible for verification of the deals & passing of their entries in the books of
account and Mid Office of Treasury monitors dealer's adherence to various internal,
regulatory and counter party limits. All foreign exchange transactions are revalued at
Mark-to-Market rate as determined by the bank as mid rate at the month end & the mid
rate is being published by the Treasury Division of the bank as per approved policy. All
Nostro accounts are reconciled on a monthly basis & outstanding entry beyond 30
days is reviewed by the management for its settlement. The position maintained by
bank at the end of day was within the stipulated limit prescribed by the Bangladesh
Bank.
Interest Rate Risk
Interest rate risk may arise either from trading portfolio or non-trading portfolio. The
short-term movement in interest rate is negligible or nil. Interest rate risk of
non-trading business arises from mismatches between future yield of an asset & its
funding cost. Asset liability Committee monitors interest rate movement on a regular
basis.
Equity Risk
Equity risk arises from movement in market value of equities held. The risks are
monitored by Investment Committee under a well designed policy framework. The
market value of equities held was however higher than the cost price at the balance sheet
date.
2.11.4 Reputation Risk Arising From Money Laundering Incidences

Money laundering risk is defined as the loss of reputation and expenses incurred as
penalty for being negligent in prevention of money laundering. Money Laundering
and Terrorist Financing has been identified as a major threat to the financial services
community. The management of the Bank has taken prevention of money laundering
and terrorist financing as part of the Bank's risk management strategies. Anti-Money
Laundering Guideline and 'Prevention of Terrorist Financing Policy' of the Bank was
approved by the Board of Directors of the Bank in its 188th meeting held on 31 Jan
2006 & subsequently revised by the Board of Directors of the Bank in its 318th meeting

held on 27 Dec 2012.
The Bank has established a separate division namely Anti-Money Laundering Division
(AMLD) for mitigating Money Laundering and Terrorist Financing related risks. One of
the Deputy Managing Directors is acting as the Chief Anti-Money Laundering
Compliance Officer (CAMLCO) of the Bank. In addition, Central Compliance Unit (CCU)
has been formed to develop and review institutional strategy and program for
preventing money laundering and terrorist financing of the Bank. Our Audit and
Inspection Division conducts audit for an effective Anti Money Laundering System
Check throughout the year. Moreover, members of CCU and employees of AMLD pay
visit to Branches to supervise the AML procedures and functions at branch level as and
when required. AMLD is continuously monitoring and reviewing overall Bank's
compliance to prevent ML/TF risks. A draft "Money Laundering and Terrorist Financing
Risk Assessment Guidelines" have been prepared for assessing and mitigating ML/TF
risks of the Bank. The Guidelines is going to be placed before the Board of Directors for
approval. Besides, a senior level executive from each Branch is working as a Branch
Anti-Money Laundering Compliance Officer (BAMLCO). Sound Know Your Customer
(KYC) and Transaction Monitoring Policies are in place to recognize the risk associated
with accounts.
Bangladesh Bank has implemented goAML software for CTR and STR reporting
purpose. Bank is providing CTR/STR data through goAML software on regular basis. It
is the requirement of Bangladesh Bank to report cash transaction of BDT 10 Lac and
above in a single day in a single account and suspicious transaction as and when
detected.
BASIC Bank Training Institute arranges training program throughout the year to
develop awareness and skill for identifying suspicious activities/transactions.
2.11.5 Operational Risk

Operational risk may arise from error and fraud due to lack of internal control and
compliance. Management through Compliance Division controls operational
procedure of the Bank. Audit and Inspection Division undertakes periodical and special
audit of the branches and divisions at the Head Office for review of the operation and

compliance of statutory requirements. The Audit Committee of the Board
subsequently reviews the reports of the Compliance Division.
2.11.6 Asset Liability Management

Asset Liability Management (ALM) is a risk management technique designed to earn an
adequate return while maintaining a comfortable surplus of assets beyond liabilities.
The scope of ALM function can be described as liquidity risk management,
management of market risks, trading risk management, funding and capital planning,
profit planning, growth projection, etc.
The ALM committee usually makes decisions on financial direction of the Bank. The
ALCO's goal is to manage the sources and uses of funds, identify balance sheet
management issues like balance sheet gap, interest rate gap etc. ALCC also reviews
liquidity contingency plan and implements asset and liability pricing strategy for the
Bank.
2.11.7 ICT Risk Management

ICT risk refers to the potential of ensuing harmful effects that an organization may
suffer from intentional or unintentional threats to information and information
technology systems. Managing ICT risk is part of running regular operation of the Bank
nowadays. Failure to manage ICT risk may lead to serious security breaches, financial
losses & even business discontinuity. Hence, it is imperative that there should be a
mechanism to identify, assess and mitigate ICT risk. BASIC Bank Limited, with the
approval of the Board, has adopted an ICT policy in compliance with ICT security
guidelines of Bangladesh Bank covering various aspects of ICT risk management.
Based on the policy the Bank has taken necessary measures for mitigating ICT risk and
impending hazards through implementing proper strategies and processes of
identifying, appreciating, analyzing and assessing the same. The Bank has also taken
necessary initiatives which would make a positive impact on improving ICT segment of
core risk+B28s management. All observations by Bangladesh Bank, related to ICT segment of
core risks management are being complied in time. Necessary measures are also
being taken to minimize manual intervention, as much as possible, by
implementing automatic handling of network level and server level failure. Moreover,
necessary initiatives are also being taken to comply with the ICT related issues
mentioned in the circular of Bangladesh Bank regarding Self-Assessment of Anti Fraud
Internal Controls. Internal ICT audit by Audit and Inspection Division of Head Office in
different branches of the Bank are being carried out regularly. The ICT Systems of BASIC
Bank Limited may have weaknesses/vulnerabilities and wrong configurations in
internal/external networks, operating systems, web servers, web applications,
databases etc. As a result, BASIC Bank has taken initiatives to perform the job of
Vulnerability Assessment (VA), Penetration Test (PT) and Configuration Review (CR) to
identify weaknesses/vulnerabilities of the ICT Systems of the Bank so that appropriate
actions can be taken to correct/mitigate these threats/risks.
2.11.8 Internal Control and Compliance

The primary objectives of Internal Control and Compliance are to help the bank
perform better through the use of its resources, identify its weaknesses, take
appropriate measures to overcome the same and ensure compliance with regulatory
framework including applicable laws and regulations. Internal Control and Compliance
of the Bank includes three fold functions viz. Internal Audit of Branches and Divisions
of Head Office, Monitoring of operational activity of the bank to assess the risk of
individual Branches/Divisions and Compliance of Internal Audit of Branches &
Divisions and Bangladesh Bank Audit Reports including Bangladesh Bank Special Audit
Reports on Core Risks & Cash Incentive and Government Audit Reports. These
functions are being carried out by 03 (three) divisions namely Audit & Inspection
Division, Audit Findings Monitoring Division and Compliance Division. The Audit
Committee of the Board subsequently reviews the lapses identified by Audit and
Inspection Division as well as compliance of these lapses. The Audit Committee also
reviews periodic financial statements of the bank, Bangladesh Bank Inspection Reports
and other issues indicated in the Bangladesh Bank Guidelines. Necessary steps
are taken on the basis of observation & suggestion of the Committee.

2.11.9 Fraud & Forgeries
Activities are such as theft, corruption, conspiracy, embezzlement, money
laundering, bribery & extortion. Fraud risk is one of the components of
Operational risk. Operational risk focuses on the risks associated with errors or
events in transaction processing or other operations. We are absolutely
committed to maintain an honest, open & well intentioned atmosphere within
the organization. We are also committed to prevent fraud and detection of fraud.
Fraud & Forgery has emerged as one of the major threats in banking sector
with regular development of avenues by the fraudsters.
In the year 2015, ICC Division of the bank has started to further develop the Risk
&Fraud awareness culture among the employees & reduce the likelihood of
fraud occurring in the Bank. Audit Division of BASIC Bank Limited has arranged to
conduct Spot Inspection on Anti Fraud Internal Control (AFIC) systems to protect the
bank from anticipated fraud & forgery in addition to regular comprehensive Audit &
Inspection in the branches. In 2015, ICC Division has conducted 29 spot inspections
and 68 regular spot inspections.
In connection with dealing the situation and ensuring safety checking measures
against fraud & forgery related issues, ICC division has developed a questionnaire/
checklist to perform spot AFIC, which will continue through regular review,
up-gradation & improvisation.
2.12 Human Research Department (HRD)
The functions of Human Resources Department are strategic, planning and policy formulation
for compensation, recruitment, promotion, training, development and appraisal. This department
also contributes to employees' performance by providing standard of training.
Ensures security of the company.
Ensures value actability.
To assist the top-level decision making process on compensation, promotion, training,
development and appraisal.

Communicate with all external and internal entities.
Monitor leave, payroll, increments and allowances etc.
Maintains financial flows related to HRD.
Plan and arrange the development training programs for the employees.
2.13 Division-wise Branch Distribution
Sylhet Dhaka
05 27
Mymensingh
Chittagong
02
14
Barisal Khulna
03 09
Rangpur
Bangladesh Rajshahi
02 06
68
Figure 2: Division wise branch distribution

General Activities of BASIC Bank Ltd

3.1 General Banking
General banking is the starting point of all the banking operations. It is the department, which
provides day-to-day services to the customers. Every day it receives deposits from the customers
and meets their demand for cash by honoring cheques. It opens new accounts, remit funds, issues
bank drafts and pay orders etc. Since bank is confined to provide the services every day. General
banking is also known as retail banking. Function of this Department is given below:
Account Opening Section
Clearing Section
Account Section
Cash Section
3.1.1 Account Opening Section

The relationship started with the customer and the bank by opening the account. Initially all the
accounts are opened with a deposit of money by the customer. But in this day there are several
types of rules and regulation provided by the government for opening the account. This is only
for the terrorist arise of our country that damages the total nation. Now if anyone wanted to open
his/her account then they must sign in the money laundering, they have to tell about their money
sources and face various types of question.
Accepting Deposit
Opening of account
Cheque book issue
Transfer of account
Closing of account
Accepting of Deposit
Deposits are life blood of a commercial bank. Without deposit there are no accounts can be
opened? Accepting deposits is one of the main classic functions of banks. The relationship
between a banker and his customer begins with the opening of an account by the former in the
name of the letter. There are ten officers performing various functions in this department. The
deposits those are accepted by Basic Bank Ltd may be classified in to:

Fixed Deposit
Current Deposit
Special Notice Deposit
Savings Deposit
RFC Deposit
NFC Deposit
Deposit Schemes
Double Benefit Scheme
Monthly Gainer Scheme
BASIC School Banking Scheme
Swapnopuron Savings Scheme
Chalantika Deposit Scheme
BASIC Fortune Plus
BASIC DPS Plus
Premium Plus CD
Pothosisu Savings Scheme
Muktiyoddha Savings Scheme
Krishok Savings Scheme
RMG Worker Savings
Leather Industry Worker Saving
Opening of Account
It is said that, there is no banker customer relationship if there is no A\C of a person in that bank.
By opening an A/C banker and customer create a contractual relationship. However, selection of
customer for opening an account is very crucial for a Bank.

Account opening procedure in flow chart
1. Applicant fills up the relevant application form
2. He / She required filling up the specimen signature card
3. For individual introduction is needed by an a/c holder
4. The authorized officers analyze the introduction and examine the documents submitted.
5. Issuance of deposit slip and the deposit must be made in cash. No cheque or draft is
acceptable to the Bank.
6. After depositing the cash, cheque book is issued.
7. Account is opened.
Figure 3: Account Opening Procedure

Necessary Documents for Opening an Account
Photocopy of National ID Card of applicant
Photocopy of Birth Certificate of applicant
Photocopy of National ID Card of nominee
Photocopy of Birth Certificate of nominee
Introducer signature
Two passport size photos of applicant
One passport size photo of nominee
Photocopy of Tin Certificate
Issuing of Cheque Book
Cheque book is an important part of account transaction or payment system in the banking
channel. As such, the process of issuance cheque book is also an important and integral part of
banking. Generally a cheque book contains number of detachable cheque leaves such as 10 Nos,
20 Nos, 50 Nos etc. issued by the bank to the account holders. The process of issuance of cheque
books undergo a series of activities performed by the account holder, issuers as well as the
suppliers of cheque books.
Procedure of issuance of a cheque book in flowchart
Requisition slip filled Banker Banker issues new check

properly along with the book if everything is right
checkbook number verifies the slip
Enter the new checkbook number in the register book against

the specific customers name
Figure 4: Procedure of Issuance of a Cheque Book
Transfer of Account
Proper care must be exercised while transferring any account to other branch similarly when any
account is transferred-in from other branch.
All such transfer cases must be brought to the knowledge of the Branch Manager.
Signature of the account holder on the application to be verified and the reason for
transfer to be examined.
Unused cheques to be received back from the account holder before any such transfer.
Closing of Account
Upon the request of a customer, an account can be closed. After receiving an application from
the customer to close an Account, the following procedure is followed by a banker.
Closing of Accounts by the account holders
A banker can also close the account of his customer or stop the operation of the account under
following considerable circumstances:
Application of the Account Holder is to be obtained stating reason of the closing.
Signature of the Account Holder to be verified.
Permission of BM to be obtained on the application.
Unused cheques to be surrendered by the account holder and to be destroyed by the
Branch Manager keeping proper record.
Related charges/commission to be realized.
Closing balances to be paid to the account holder by the cheque drawn by the account
holder or by a Payment Order.
Account Opening Forms, Specimen Signature Card and other related papers to be marked
CLOSED and to be filled separately for record.
Closing of Accounts by the Bank
A banker can stop payment of cheque of his customer under following considerable
circumstances.
When the account holder is not desirable to the bank.
When the account holder is convicted for fraud/forgeries in the court of law.
When the account holder is found habitual to draw cheques without prior arranging fund
there-against.
When bank considers that the concerned account is not remunerative.
Any other reason considered fit/justified by the bank.
The account holder must be given prior notice to close the account giving sufficient time for the
purpose. The unused cheques must be collected from the account holder and to be destroyed
keeping proper record.

3.1.2 Clearing Section
BASIC Bank Local Office branch performs the bill clearing function through Local office.
BASIC Bank Local office acts as the agent of all BASIC Bank branches for the clearing house of
the Bangladesh Bank. There are two types of cheque which are-
Inward clearing cheque
Outward clearing cheque
Inward Clearing Cheque
Inward cheques are those ones drawn the respective branch which have been presented on other
banks and will be cleared/honored through the clearing house of Bangladesh Bank. For example
the cheque drawn on BASIC Bank Local Office Branch then the cheque is called inward cheque
of BASIC Bank Local Office Branch. These cheques are received from the clearing house of
BASIC Bank Ltd. Clearing process is:
Partys A/C ------------Dr.
General Account ------------Cr.
Outward clearing cheque
Outward cheques are those ones drawn on other bank branches which are presented on the
concerned branch for collection through clearing house of Bangladesh Bank. These cheques are
called outward cheques. These Cheques are cleared in two ways: Firstly, if any branch of our
bank exists within the clearing house area of drawee bank, then we send the Cheque to that
branch of our bank and that branch collects the proceeds through clearing house formalities and
sends IBCA to us. In second way, if there is no branch of our bank, then we directly send the
Cheque to the drawee bank and request them to send the proceeds by PO or DD or by in any
other means.
Possibility of dishonor
Unlike Cheque, there is no possibility of dishonoring of PO / DD / TT because before issuing,
issuing bank takes out the amount of the instrument in advance from the customer common for
all instruments.
Cancellation of Cheques
The cancellation officer should be an authorized officer of the bank/ branch.

He/ She shall keep all Specimen Signature Card under his effective control during
transaction hours.
The cancellation officer shall retain only the signature cards admitted by the authorized
officer in serial order.
Before passing any cheque, the signature of the drawer must be verified. In case,
signature of the drawer differs, cheques shall not be passed unless the drawers
confirmation is obtained or a reference is made to Manager for his instruction.
The cancellation officer shall not pass any cheque unless cheque is posted in the
computer system.
He/ she should cheque the irregularities of the cheque if any.
The cheque series number with Prefix should be checked to safeguard fraud and
forgeries.
The cancellation shall be done by drawing redline across the signature of the drawer of
the cheque. He/ She shall sign in full in red ink near the drawers signature.
Cheques over Tk. 50,000/- shall be cancelled by two authorized officers jointly. Branch
must issue office order regarding cheque passing schedule according to its size and
volume of work load. The cancellation officer shall follow the schedule in variably.
In case of cash payment cheque a Pay Cash stamp shall be affixed on the cheque and
signed by the cancellation officer.
Payment of Cheques After Banking Hours
Payment of cheques after banking hours should be discouraged. Payment to the drawer only may
be made in special cases as deemed by the Manager. The cheque should be paid after
ascertaining sufficient balance in the account and on completion of other formalities. However,
such cheques should bear date of actual payment or prior to that date.
Dishonor of Cheques/ Instrument
Bankers are under legal obligation to honor customers cheque if funds permit. If they honor a
cheque through oversight when there are no funds to the credit of the drawers account Bank
may lose the money. On other hand, if they dishonor it through inadvertence they may pay
damage for wrongful dishonors. Therefore, it is incumbent upon the bankers to proceed with
caution in the matter of dishonoring cheque drawn on them. A banker is not under statutory
obligation to give a written answer on a dishonored cheque. But as per practice, as well as
agreement of Bankers Clearing House a banker should return it with Return Memo giving the
appropriate reason for the dishonor. While giving such reasons, due care should be taken to see
that the credit of the customer is not damaged by an unwarranted/ exaggerated answer. It should
also be ensured that such reason does not mislead the payee. In the event of dishonoring a cheque
it must be entered in the Cheque Returned Register and the authorized officer must sign in the
register and the Cheque Return Memo.
The following reasons are generally used for returning cheques/ instruments
Effects not cleared, please present again.
Not arranged for
Payees endorsement required.
Payees endorsement irregular.
Payees endorsement illegible.
Drawers signature differs from specimen recorded in the office.
Endorsement requires banks confirmation.
Alteration requires drawers signature in full.
Cheque is post dated.
Cheque is out of date.
Exceeds arrangement.
Amount in words and figures differ.
Crossed cheque must be presented through bank.
Payment stopped by the drawer.
Full cover not received.
Vernacular endorsement requires confirmation
Instrument Mutilated/ requires confirmation.
Banks discharge irregular/ required.
Not drawn on us.
Funds insufficient.
Cheque incomplete.
Clearing stamp required.
Clearing date irregular.

3.1.3 Account Section
Accounts Department is called as the nerve Centre of the bank. In banking business, transactions
are done every day and these transactions are to be recorded properly and systematically as the
banks deal with the depositors money.
Daily Task
Recording the transactions in the cashbook.
Recording the transactions in general and subsidiary ledger.
Preparing the daily position of the branch comprising of deposit and cash.
Preparing the daily Statement of Affairs showing all the assets and liability of the branch
as per General Ledger and Subsidiary Ledger separately.
Making payment of all the expenses of the branch.
Recording inter branch fund transfer and providing accounting treatment in this regard.
Checking whether all the vouchers are correctly passed to ensure the conformity with the
Activity Report; if otherwise making it correct by calling the respective official to
rectify the voucher.
Recording of the vouchers in the Voucher Register.
Packing of the correct vouchers according to the debit voucher and the credit voucher.
Periodic Task:
Preparing the monthly salary statements for the employees.
Publishing the basic data of the branch.
Preparing the weekly position for the branch which is sent to the Head Office to maintain
Cash Reserve Requirement (C.R.R).
Preparing the monthly position for the branch which is sent to the Head Office to
maintain Statutory Liquidity Requirement (S.L.R).
Preparing the weekly position for the branch comprising of the break-up of sector wise
deposit, credit etc.
Preparing the weekly position for the branch comprising of denomination wise statement
of cash in tills.
Preparing the budget for the branch by fixing the target regarding profit and deposit so as
to take necessary steps to generate and mobilize deposit.

Preparing an Extract which is a summary of all the transactions of the Head Office
account with the branch to reconcile all the transactions held among the accounts of all
the branches.
3.1.4 Cash Section

Cash department is the most vital and sensitive organ of the branch as it deals with all kinds of
cash transactions. This department starts the day with cash in vault. Each day some cash that is
opening cash balance are transferred to the cash officers from the cash vault. Net figure of this
cash receipts and payments are added to the opening cash balance. The figure is called closing
balance. This closing balance is then added to the vault. And this is the final cash balance figure
for the bank at the end of any particular day.
3.2 Instruction for Handling Account Holders
3.2.1 Individual Account

Most of the accounts of a branch are individual. As such they deserve regular attention of the
members of the staff of a branch. An individual account holder may nominate his near and dear
ones to inherit his deposit in case of his death. He/ she can also give mandate or authority to
operate his account in his short absence.
3.2.2 Joint Accounts

At the time of opening accounts in the name of two or more persons, clear and specific
instructions shall be obtained regarding operation of the account and payment of balance
to the survivor(s) or surviving members in the event of death of one or more joint account
holders.
The instructions as far as possible shall be obtained in the hand writing of the parties
concerned, under the signatures of all the joint account holders.
Instructions in the either or Survivorship form may be taken in the following manner.
If the account is opened in the name of two persons instruction may be: Either or
Survivor or singly or jointly.

If the account is in the names of more than two persons instructions may be: By either or
Survivor singly or by any two or more of them or by all of them.
In the absence of specific instructions in the Either or Survivorship form, balance of the
joint account will be payable to the survivors and the legal representatives of the
deceased joint account holders.
In the event of any of the Joint Account holders becoming bankrupts, all operation in the
joint account shall be stopped until fresh instructions are given by the remaining solvent
account holders jointly under their signature and the official assignee.
In the event of death of any joint account holders, the survivor or survivors shall be
requested to close the old account and open a new account in the name of surviving
account holders.
No overdraft shall be allowed in a joint account unless it is operated jointly by all the
parties of the account and charge documents in respect of advance are also signed by all
of them.
Account payee cheque in the name of one of the account holders may be deposited in
their joint name account for collection.
3.2.3 Accounts of Proprietorship Concern

While opening accounts in the names of proprietorship concern care should be exercised
that the person opening account is the proprietor of the firm. Obtaining trade license
issued by Municipal Authority/ Union Parishad can be a proof. On specific instruction the
account may be operated by persons authorized by the proprietor.
In case of death of proprietor, all operations in the account shall be stopped. Procedure
laid down in Para (r) may be followed. On the death of the proprietor authority given by
him ceases and the authority holder cannot be allowed to operate the account.
3.2.4 Accounts of Partnership Firm

A partnership account shall be allowed to be opened and operated by any one partner of
the firm under his signature provided a partnership letter has been signed by all the
partners of the firm in their individual capacity.

Partnership Deed or Partnership Letter should be thoroughly studied to know the names
and address of all the partners. Nature of business, names of partners authorized to
operate the account including authority to draw, endorse, accept bills, mortgage and sell
property belonging to firm. It should also be ascertained about the position of the firm on
retirement of any partner, death or insolvency of any partner.
In case of death of partner, if the deceased partner was operating the account singly, the
balance shall be paid to the heirs of the deceased and the surviving partners as per orders
of the Court agreement or arrived at between the surviving partners and heirs of the
deceased. In the later case, the recipient shall execute indemnity bond as explained in
Para regarding deceased account.
If a partnership Deed is submitted the same should be accepted and recorded with the
bank.
In case of death of a partner who was not operating the account the surviving partners
shall be advised to close the partnership account and open a new account.
An operating partner may give mandate to a third person to operate the account in place
of him.
3.2.5 Accounts of Joint Stock Companies

A Joint Stock Company is a separate legal entity. The shareholders may die or become
insolvent. The company shall continue to exist unless the number of share holders falls
below the minimum number of members.
The minimum number of members is two and maximum is 50 excluding employees and
ex employees. Private Limited Company cannot invite public to subscribe to its shares
and therefore, not required to issue a prospect us. Right to transfer share is restricted. It
can commence business as soon as it receives certificate of incorporation. It need not
obtain Certificate of Commencement of Business.
Public Limited Company must have minimum of seven members. There is no restriction
on maximum number though it is always advisable to keep it within manageable limit. A
public Limited Company raises its capital generally through public issues and therefore, a
prospectus is required to be issued. Share of public Limited Company can be transferred.

It however cannot commence business until and unless Certificate of Commencement of
Business has been obtained.
Approval of Head Office to be obtained for opening account in the name of a New Public
Limited Company for the deposit of share money.
No cheque book shall be issued or withdrawals allowed from the account of the newly
floated companies unless a certified copy of commencement of business is produced by
the company.
Account of Limited Companies operated by the Managing Agents of the company shall
not be opened or allowed to be operated unless a certified copy of the Managing Agents,
Agreement is obtained and the authority of the persons signing on behalf of the firm or
company or the Managing Agent is verified.
No advance shall be allowed to any company unless it is ascertained that Memorandum
and Articles of Association of the Company authorize the company in that behalf. And it
is authorized to secure the advance against securities offered by it.
3.2.6 Accounts of Clubs/ Societies/ Associations

No overdraft shall be allowed in the accounts of clubs. Societies and Associations
without prior approval of Head Office.
No cheque drawn on the accounts of Clubs and Societies shall be collected for credit to
private account of the office bearers of the societies and clubs.
In case of transfer or death of any of the office bearer of the club/ society operating the
account, all operation shall be stopped until such time that a fresh resolution is passed in
future by The Executive/ Managing Committee determining the method of its operation
and delegation of powers to the new office bears, and advised to the Bank.
3.2.7 Accounts Opened Under Power of Attorney

Accounts shall be opened only on submission of Power of Attorney received under a
covering letter signed by the principal. A copy of the Power of Attorney shall be retained
on verification of the original.

The verified copy of the Power of Attorney to be placed in the Power of Attorney file,
marking the number and date of its registration with the branch in the Power of Attorney
Register.
Relevant Clauses of the Power of Attorney shall be scrutinized specially with regard to
the opening of accounts, the borrowing power, and power to draw bills or accept them.
If no power is given to borrow, care should be exercised that the account does not get
overdrawn either casually or on regular basis. Overdraft in excess of the powers given to
the Manager/ Agent under his Power of Attorney shall not be allowed under any
circumstances.
Branch shall exercise care that the Manager/ Agent is not allowed to delegate his powers
to a Third party for the purpose of substitution of his power.
It shall be ascertained that the Power of Attorney is not conditional on happening of
eventuality.
It shall be ensured that the Power of Attorney is properly witnessed and registered with
the Sub Registrar/ District Registrar.
3.2.8 Unclaimed Accounts

Current and Savings Bank Accounts dormant/ inoperative for 5 years may be treated as
unclaimed accounts.
Overdue Fixed Deposits, Demand Draft Payable, T.T. Payable, Sundry Deposits, Pay
Order outstanding for 3 (three) years and above may be treated as unclaimed accounts.
All these accounts be listed out and retained in file for reference.
No interest shall be applied to Savings/ Fixed Deposit Account if treated unclaimed.
However, Branch shall follow Bangladesh Bank and Head Office circulars on the above
from time to time.

3.3 Money Transaction
Sending/Transfer money from one place to another place for the customer is another important
service of banks. And this service is an important part of countrys payment system. For this
service, people, especially businessmen can transfer funds from one place to another place very
quickly.
Demand Draft
Pay order
Online Transaction
Demand Draft
Demand Draft is an order of issuing bank on another branch of the same bank to pay specified
sum of money to payee on demand. Its payment from ordered branch. Outside the clearing
house area of issuing branch, Payee can also be the purchaser. Payment process of the paying
bank:
Confirm that the DD is not forged one
Confirm with sent advice
Check the Test Code
Make payment
For this service Bank only takes commission and telex charge.
Pay order
Pay Order gives the payee the right to claim payment from the issuing bank. Its payment from
the issuing branch only. Generally used to remit fund are within the clearinghouse area of issuing
branch. Its Payment is made through clearing. For, thats service bank takes commission and vat
charge.
Online Transaction
Issuing branch requests specified money to the specific payee on demand by online. Its Payment
from ordered branch. Generally used to Remit fund anywhere in the country. Payment process of
the paying bank:
Confirm issuing branch
Confirm Payee A/C

Confirm amount
Make payment
Receive advice
For this service bank does not take any charge/Commission.
3.4 Balance Inquiries & Statement
3.4.1 Balance Inquiries

The account holder may enquire about his/her balance in the account. The client may be
advised to fill and sign the Balance Requisition Slip (BRS) or to produce the Letter of
Authority (LOA) duly signed by the account holder.
The signature of the account holder shall be verified on the BRS or LOA before
disclosing the balance.
If a slip is required to be sent by mail or hand, it shall be sent in a closed envelope
addressed to the account holder.
3.4.2 Balance Certificate

In the event of a balance certificate required by an account holder, he/she may be provided with
such certificate as per computer print report recorded by the branch against his/her written
request. Certificate may be delivered as per instruction of the account holder.
3.4.2 Balance Confirmation

In a computerized system of accounts, the computer program will provide print report of
balance confirmation of Accounts along with a sub-joined part. It will contain the full
address of the account holder. The balance confirmation shall be dispatched to account
holder in a window envelope. Follow-up should be made to get back the sub-joined part
duly signed by the account holder.
On receipt of the confirmation from the party regarding his/her balance duly signed, it
shall be preserved in a file after verification of signature.

Balance confirmation for debit balances in case of over-draft, cash Credit and/or loan
accounts shall be dealt with separately. The sub-joined part to be received from clients
duly signed by them and preserved in their document file after verification of signature.
3.5 Other Services
Beside loan and account services; BASIC Bank Ltd. serve customer in some new area;
SMS Banking
Phone Banking
Utility Bills Pay Service
3.6 Value Added Services
These services add additional value with main services;

Freedom fighter scheme
Pothosisu scheme
Insurance coverage deposit scheme
Senior citizen scheme
3.7 Fund Transfer
For transforming fund BASIC Bank Ltd. use five types via;
Inter-Branch Money Transfer
SWIFT
Issuing and Encasing Foreign Drafts
Electronic Fund Transfer (BEFTN)
Bangladesh Automated Cheque Processing System (BACPS)

3.8 Foreign Exchange
The definition of a foreign exchange is the exchange of one currency for another by
governments, businesses and residents in two different countries. Foreign Exchange is the
exchange of one currency for another or the conversion of one currency into another currency.
Foreign exchange also refers to the global market where currencies are traded virtually around-
the-clock. The term foreign exchange is usually abbreviated as "forex" and occasionally as "FX."
This is the process by which people in different countries pay each other by exchanging different
types of money. Any currency other than the local currency which is used in settling
international transactions is called foreign currency. FOREIGN EXCHANGE operation is one of
major activities of a commercial bank. These operations are also important for a countrys
overall trade situation. This department of a bank has a huge impact on export and import
activities of a country. Following discussion is based on the activities and there procedure.
3.8.1 Major Foreign Exchange Activities

There are mainly three major foreign exchange activities. The activities are listed below:
Export
Import
Remittance
Figure 5: Foreign Exchange in Brief

3.8.2 Regulations Regarding Foreign Exchange Activities
Our foreign exchange transactions are being controlled by the following local regulations:
Foreign exchange regulatory act
Foreign Exchange Regulation Act (FERA). 1947 enacted on 11th March 1947 in the then British
India, provides the legal basis for regulation the foreign exchange. This act was adapted in
Pakistan and lastly in Bangladesh.
Guidelines for foreign exchange transactions
This publication issued by Bangladesh Bank in the year 1996 in two volumes. This is a
compilation of the instructions to be followed by the Authorized Dealers in transactions relating
to foreign exchange.
Foreign exchange circular
Bangladesh Bank issues F.E. circular from time to time to control the export import business and
remittance that is to control the foreign exchange.
Export-import policy
Ministry of commerce issues Export Policy and Import Policy giving basic formalities for Import
and Export Business.
Public notice
Some times CCI &E issues public notice for any kind of change in Foreign Exchange
Transaction.
Instructions from ministries
Different ministries of the Govt. sometimes instruct the authorized dealer directly or through
Bangladesh Bank to follow something required for the government.
3.8.3 Letter of Credit

A letter of credit is a letter issued by a bank (known as the opening or the issuing bank) at the
instance of its customer (known as the opener) addressed to a person (beneficiary) undertaking
that the bills drawn by the beneficiary will be duly honored by it (opening bank) provided certain
conditions mentioned in the letter gave been complied with.

3.8.3 Letter of Credit
Irrevocable L/C
Revocable L/C
Add-confirmed L/C
Revolving L/C
Lean Clause
Straight Documentary Credit
Documentary Letter of Credit
Clean Letter of credit
Green Clause L/C
Red Clause L/C
Restricted L/C
Transferable L/C
Irrevocable Negotiation Documentary Credit
With Resources & Without Resources to Drawers
3.8.4 Different Parties Involved in Foreign Exchange Transactions
3.8.4 Documents Required for Foreign Exchange Transaction

Export-Import transactions ask for the following documents:
Transport Documents

Insurance Documents
Commercial Invoice
Other Documents
3.8.5 Import
Import is the flow of goods and services purchased by economic agents located in one country
from economic agents located in another. Hence, import of merchandise essentially involves two
things: bringing of goods physically into the country and remittance of foreign exchange towards
the cost of the merchandise and services connected with its dispatch to the importer. In case of
import, the importers are asked by their exporters to open letters of credit so that their payment
against goods is ensured.
Import trade in Bangladesh is controlled under the Import and Export control Act 1950.
Authorized Dealer Banks will import the goods into Bangladesh following the import policy,
public notice, F.E. circular and other instructions from competent authorities from time to time.
Procedure of Import
Import of merchandise essentially involves two things:
Bringing of goods physically into the country
Remittance of foreign exchange towards the cost of the merchandise
The Ministry of Commerce through the Chief Controller of Import regulates physical import and
Exports being office at the important trade center while Bangladesh Bank regulates the payment
for the imports through its various departments. The following are the steps involved in import of
merchandise into Bangladesh.
Registration of Import
In terms of the Importers, Exporters and Indenters (Registration) Order 1981, no person can
import goods into Bangladesh unless he is registered with the Chief Controller of Import and
Export or exempted from the provisions of the said order. So the following documents are
required to be submitted to the licensing authority for registration as importers:
Questionnaire form duly filled in and signed
Income tax registration certificate
Trade License from the Municipal or Local Authority

Bank certificate
Nationality certificate
Partnership Deed where applicable
Certificate of Registration with the Registrar of Joint Stock Companies and
Memorandum and Articles of Association in case of Private and Public Ltd. Co.
Certificate from the Chamber of Commerce/Registered Trade Association
Ownership documents or rent receipts of the place of business
Any other documents required under the relevant import policy.
After submission of the above documents and payment of requisite fees, if the documents are
found in order and the C.C.I & E is satisfied, the Import Registration Certificate (IRC) is issued
to the applicant-importer.
Import Policy
The Chief Controller of Imports and Exports announces the Import Policy concerning various
aspects of imports. The main points covered by the import policy are the following:
Items eligible for imports during the shipping period.
Procedure for formation of groups.
The dates for opening of L/C and shipment.
The rules for re-validation of the License/LCA and the L/C.
Licensing for Imports
Most imports into Bangladesh require a license from the Licensing Authority. In recent years, the
task of licensing has been delegated to the commercial banks. It is done by LCA (Letter of Credit
Authorization Form). Blank LCA forms can be obtained by the importer from their banker. The
following documents are required to be submitted by the import to his banker.
LCA Form property filled-in and signed.
LC Application.
Purchase Contract in the shape of an Indent or Proforma Invoice.
Insurance Cover Note.
Membership Certificate from a chamber of Commerce and Industry or Registered Trade
Association.
Import Registration Certificate (IRC).

Receipt of LCA Form and the required documents, the bank should carefully scrutinize
the documents.
Signature of the customer on the L/C application to be verified by authorized/ designated officer.
L/C application with all supporting papers to be checked to ensured that the required papers are
as per requirement of Guidelines for Foreign Exchange Transactions and are consistent to each
other.
3.8.6 Export
Export means outflow of goods and services produced in one country, which purchase by
Government, Firms and individuals of other countries. Development of a country depends on its
participation in the international trade by increasing production and export of commodities and
service sector. By way of this a country can improve Employment Generation-Income level-
Savings-Growth-Economic Development.
The imports and exports trade in Bangladesh is regulated by the Import & Exports Control Act
1950. There are number of formalities an exporter has to fulfill before and after execution of
export, some of are under:
Procedure/ Formalities for Export
The imports and exports trade is regulated by the Import & Exports Control Act 1950. There are
number of formalities an exporter has to fulfill before and after execution of export, some of are
as under: The intending exporter has to register with CCI&E and obtained Export Registration
Certificate [ERC]. The ERC number is to be used in all places relating to exports.
Export Letter of Credit
The export is normally executed against letters of credit opened by overseas buyers. Sometimes
shipments are made on CAD, DP, DA or consignment basis without cover of L/C. When export
is made against L/C, the exporter should examine the following terms of L/C to avoid any future
complicity to execute the order:
The terms and conditions of L/C are definite, clear and explicit and also are in conformity
with those of the contract.
The L/C should be an irrevocable one and be confirmed by the advising bank.

If the import of the goods is under control in buyers country, the buyer holds a valid
import license.
If the L/C is transferable or otherwise, it should be clearly mentioned in the L/C.
The L/C should provide sufficient time for shipment and a reasonable time for
negotiation. If nothing were mentioned, the shipper would be allowed 21 days to
negotiate the documents.
If any of the terms of the L/C appears to be vague, ambiguous or too difficult for the banker to
ensure compliance, the banker should immediately refer to the concerned correspondent by letter
or cable and get the vagueness removed before advising his L/C to the beneficiary (exporter). On
the other hand, if the exporter finds any provisions inconsistent with the underlying contract, he
should immediately ask the buyer to carry out necessary amendments though the L/C opening
bank.
Pre-shipment Credit
Pre-shipment credit is given to the exporters, for the activities prior to shipment of goods for
export. Some example of Pre-shipment credit: Cash for local procurement of raw materials and
its related expenses, Procuring & Processing of goods for export, Packing and transportation of
goods for export, Payment of insurance premium, Inspection fees, Freight charges etc.
Pre-shipment credits are like the following forms:
Export Cash Credit (Hypothecation)
Export Cash Credit (Pledge)
Export Cash Credit Against Trust Receipt
Packing Credits
Back to Back Letter f Credit
Post Shipment Payment
Usually the exporter cannot afford to wait for a long time for payment to local
manufacturer/supplier and other financial obligations. Resulting which the exporters need post-
shipment credit facility. Considering the genuine need, and worthiness of export and other
security measures bank allow credit facility to exporters.
Some form of post shipment credit facility is:
Negotiation of Documents Under L/C
Purchase FO DP & DA Bills
Against Bills For Collection
Examination and Negotiation of Export Documents
There are many instances where exporters involve themselves in committing fraud so while
exporters tendered export documents for negotiation, special care should be taken in checking
the said documents to avoid fraud forgery and protect the interest of the bank. Following are
some important checking points:
Know Your Exporter
Proper Checking of Export L/C
Proper Checking of Export Documents
Processing of FDBP
3.8.7 Foreign Remittance

These remittance services are providing for exchange foreign currency. These services are as
follows:
Foreign Demand Draft
Endorsements of US$ in passport
Travelers Cheque
3.9 Treasury
Treasury services are a function of an investment bank which provides transaction, investment,
and information services for chief financial officers or treasurers. Treasury services concentrates
and invests client money, and provides trade finance and logistics solutions as well as
safeguards, values, clears and services securities and portfolios for investors and broker-dealers.
Treasury Services is a transaction intensive and system intensive business. This is a source of
risk free fees income for the banks.

The key offerings under treasury services include
Accounts Receivable Services
Helping the client with products and solutions for receiving/collecting money for business deals/
sales/ service provided from its business partners, clients and large set of retail customers, more
quickly and effectively. Example: outstanding bills and invoices.
Accounts Payable Services
Bank is helping the client with products and solutions for making payments to its business
partners, clients and retail customers.
Liquidity Management Services
Helping the CFO of a company to manage short term assets and liabilities and have the optimum
amount of working capital. e.g. moving funds between different global accounts held by the
client and investing excess cash to earn income, cash forecasting tool etc.
Reporting Services
Under this the service provider helps the client consolidate its receivables and payable positions
across the countries of operation, across various currencies and reports a net payable / receivable
position in each currency. This is very useful is taking business decisions on FX and capital
management. Rather than purchasing the required currency in small bits and pieces across the
globe, the treasury can negotiate better rates for a consolidated open position.
Trade Finance Services
Helping the client trade across borders and ensure the delivery and timely collection of payments
e.g., letters of credit, document collection services.

Loan & Advance Analysis

4.1 Loan & Advance Management of BASIC Bank Ltd.
Agreement, in which a borrower receives something of value now, with the agreement to repay
the Credit, is a contractual lender at some date in the future. One of the basic functions of the
bank is to deposit extraction and credit extension. And managing credit operations is the crying
need for any bank. The objective of the credit management is to maximize the performing asset
and the minimization of the non-performing asset as well as ensuring the optimal point of loans
and advances and their efficient management.
The loan and credit department is one of the most important departments of any bank. The
money mobilized from ultimate surplus units are allocated through this department to the
ultimate deficit unit (borrower). Success of this department keeps a great influence on the overall
profit of a bank. Again, Failure of this department may lead the bank to huge losses or even to
bankruptcy. Like any other bank BASIC banks loan & advance division also tries to do their job
perfectly.
4.2 Loan & Advance
Lending being the most important function of commercial bank, every bank should have own
credit policy. The loans & Advance of BASIC Bank Limited has been formulated of the plan of
ALL NEW LOANS TO BE GOODS LOANS; the plan was formed on the basis of the following
objectives:
To deliver general banking services to the public and credit to viable borrowers at
a reasonable cost
To maximize the profit of the bank by making sound lending
To deliver credit to viable borrowing at a reasonable cost
To provide satisfactory return on investment
To assist the social and economic development of the country
But in BASIC Bank Ltd. most of the lending officers are not familiar with their written credit
policy or lending guidelines. They have got only some oral instruction from the senior
management or in charge of credit. If all the lending officers of BASIC Bank Ltd. thoroughly

know and understand their credit policy it will be very helpful for them to do their job more
efficiently.
4.3 Function of Loan & Advance Division
Money lending is one of the main functions of a commercial bank. In the lending process,
selection of borrower is the most crucial and vital job for a banker. Before a customer enjoys
credit facilities it is important that the applicant should qualify for five Cs. The five Cs are:
Character Intention to pay back the loan
Capacity Borrowers competence in terms of utilizing the fund profitably and
generate income
Capital Financial strength to Lending cover the risk
Conditions General business condition between two parties
Collateral Implies additional securities
In addition, objectives of the loan & advance department are managing credit exposure of the
bank, maintaining credit risk, compliance of Central Bank Ltd. recovering or collecting dues of
retail loans or advances. At present loan & advance division performs following activities:
Dealing with Corporate & Retail Credit
Perform Collection and Monitoring Activity
Support Recovery & Risk Management
Besides this, the activities of this department include managing the financial books of the bank,
checking all entries of the book are according to standards, preparing daily reports for
Bangladesh Bank, revenue appropriation and calculations, setting the internal pricing rates etc.

4.4 Different Types of Loan & Advance Facilities
There are different types o credit facilities offered by BASIC Bank from which some of are
explaining below:
4.4.1 Overdraft
The word overdraft means the act of overdrawing from the Bank account. In other words, the
account holder withdraws more money from the Current Account than has been deposited in it.
The loan holder can freely draw money from this account up to the limit and can deposit money
in the account. The Overdraft loan has an expiry date after which renewal or enhancement is
necessary for enjoying such facility. Any deposit in the overdraft account is treated as repayment
of loan. Interest is charged as balance outstanding on quarterly basis. Overdraft facilities are
generally granted to businessmen.
4.4.2 Cash Credit

In Cash credit, banker specifies a limit called the cash credit limit, for each customer up to which
the customer is permitted to borrow against the security of tangible assets or guarantees. Cash
credit is given through the cash credit account. The purpose of cash credit is to meet working
capital need of traders, farmers and industrialists. Cash credit in true sense is against pledge of
goods. Cash credit is also allowed against hypothecation of goods.
4.4.3 Demand Loan

In opening letter of credit (L/C), the clients have to provide the full L/C amount in foreign
exchange to the bank. To purchase this foreign exchange, bank extends demand loan to the
clients at stipulated margin. No specific repayment date is fixed. However, as soon as the L/C
documents arrive, the bank requests the clients to adjust their loan and to retire the L/C
documents. Demand loans mainly include Payment against Documents, "Loan against
imported merchandise (LIM)" and Later of Trust Receipt".

4.4.4 Term Loan
These are the advances made by the bank with a fixed repayment schedule. Terms loans mainly
include "Consumer credit scheme", "Lease finance"," Hire purchase, and "Staff loan". The term
loans are defined as follows:
Short term loan: Up to 12 months.
Medium term loan: More than 12 months & up to 36 months
Long term loan: More than 36 months.
Classification on characteristics of financing:
4.4.5 Bill Discounting

Under this type of lending, Bank takes the bill drawn by borrower on his (borrower's) customer
and pays him immediately deducting some amount as discount/commission. The Bank then
presents the Bill to the borrower's customer on the due date of the Bill and collects the total
amount. If the bill is delayed, the borrower or his customer pays the Bank a pre-determined
interest depending upon the terms of transaction.
4.4.6 Loan
In case of loan the banker advances a lump sum for a certain period at an agreed rate of interest.
The entire amount is paid on an occasion either in cash or by crediting in his current account,
which he can draw at any time. The interest is charged for the full amount sanctioned whether he
withdraws the money from his account or not. The loan may be repaid in installments or at
expiry of a certain period. Loan may be demand loan or a term loan.
4.4.7 Short Term Loan

Term loan extended for short period usually up to One year is term as STL. This type of loan
may or may not have specific repayment schedule. However STL with repayment schedule is
preferable. Suppose, Short Term Agricultural Loan and Micro Credit is enlisted by Agricultural
Credit division of Bangladesh Bank in its annual loan program. Loans disbursed in agricultural
sector for a period not more than 12 months are also included in this category. Short term

microcredits are the credits not exceeding BDT 25,000/- (taka twenty five thousand) only and
repayable within twelve months.
4.4.8 Lease Finance

These types of finance are made to acquire the assets selected by the borrower (lessee) for hiring
of the same at a certain agreed terms and conditions with the bank (lesser). In this case bank
retains ownership of the assets and borrower possesses and uses the same on payment of rental as
per contract. In this case no down payment is required and usually purchase option is not
permitted.
4.4.9 Letter of Credit (L/C)

This is a pre-import finance which is made in the form of commitment on behalf of the client to
pay an agreed sum of money to the beneficiary of the L/C upon fulfillment of terms and
conditions of the credit. Thus at this stage bank does not directly assume any liability, as such the
same is termed as contingent liability.
4.4.10 Home Loan

Home Loan is a term loan facility to purchase your desired home/flat. BASIC Bank Ltd. also
provide home loan under following situation
Who Can Apply?
-Salaried Individuals
-Professionals
-Business Persons
Age Limit: Loans are only available to Bangladeshi nationals:
-Minimum age of eligibility: 25 years
-Maximum age of eligibility: 65 years
Loan Size:
-Minimum: BDT 5, 00,000
-Maximum: BDT 75, 00,000
Tenure: Maximum 15 Years depending on the size and credibility.

Interest Rate: Depending on the size and tenure, BASIC Bank Home Loan interest rates vary
from 12% to 13.50%
Security: Registered Mortgage of the House/Apartment
Govt. Charges: As per Government Specification.
Other Terms & Conditions: Minimum Gross Family Income: BDT 40,000.00
4.4.11 Corporate Loan

Any loan exceeding 1, 00, 00,000 BDT and issued for business and trade purposes is defined as
corporate loan. Such loans mainly serve the purpose of initials for the establishment of industry
or large scale factory.
4.4.12 Bank Guarantee

Bank Guarantee is one sort of non funded facility. Bank Guarantee is an irrevocable obligation of
a bank to pay a pre-agreed amount of money to a third party on behalf of a customer of a bank. A
contract of guarantee is thus secondary contract, the principal contract being between the
beneficiary/creditor and the principal/principal debtor themselves to which guarantor is not apart.
If the promise or the liability in the principal contract is not fulfilled or discharged, only then the
liability of guarantor or surety arises.
4.4.13 Syndicate Loan

These are the loans usually involving huge amount of credit and such to reduce a particular
banks stake. A number of banks/financial institutions participate in such credit, known as loan
Syndication. The bank primarily approached/arranging the credit is known as the lead or
Managing bank.
4.4.14 SME (Small & Medium Enterprise) Loan

This type of loan is disbursed for business purposes but the amount loaned does not exceed
1,00,00,000 BDT. The amount loaned here serves the purpose of potential (partial) working
capital for small and medium business ventures.

After the branch manager has ensured that the credit will be a profitable propositioning for the
bank, he should then turn his attention to the cash flow situation of the borrower. The banks
credit can be classified into three main categories, as follows:
A very short-term advance will be liquidated by funds received in the very near future,
such as advances against foreign or local bills or bridge functioning where evidence of
credit sanction from another financial institution is available.
Provision for current assets; this type facility is needed for trading or manufacturing
activities.
Long term loans, generally over 5 years; example of such facilities as investment in plant
and machinery, a farm or a shop, generally, a long term is repaid out profits generated by
the business.
4.5 Credit Rating Report
BASIC Bank Limited was rated by Credit Rating Agency of Bangladesh Limited (CRAB) on the
basis of Audited Financial Statements as on December 31, 2015. The summary of Rating is
represented below:
Types of Rating Entry Government Support Entity

(Stand-alone Basis)
Long Term B A
Short Term ST-5 ST-3
Table 3: BASIC Bank Ltd credit rating report at a glance
4.6 Operational Guidelines for Different Credit Facilities
Broadly, there are two types of loan such as- Retail Loan and Corporate Loan. For each different
types of loan, credit officer have follow different steps to accomplish credit activities
appropriately. Each and every step is given below for various purposes of loan.

4.6.1 Retail Loan
Retail loan can be classified into different types which are as follows-
Secured Overdraft (FO-FDR, DPS)
In case of Fresh loan
Receiving customer Application (RFCL)
Receiving the Instrument (FDR, DPS) duly discharged by the client
Verification of the Instrument, signature verification & lien marking from General
Banking Division
Preparation of Office Note
Preparation of sanction advice & get it accepted by the client
Obtain charge documents from the clients
Mail limit request form to Credit Admin, Head Office for limit insertion
Deduct charges
Stamping the charge documents
Entry of Security Documents in the SISO Register
Safekeeping of Security Documents in the Safety Vault.
In case of Renewal
Receiving customer Application
Preparation of Sanction Advice & get it accepted by the client
In case of Enhancement
Receiving new Instrument (FDR, DPS) duly discharged by the client
Banking Division

Deduct charges
In case of Reduction
Ensure outstanding has brought down (By cash or encashment of FDR)
Mail limit request form to Credit Admin, Head Office for limit reduction
Return of Original Instrument (if adjustment by cash)
Entry the release of Instrument in the SISO Register (Take clients signature on the
register).
In case of closing the Account
Receiving customer Application with cheque book (if issued)
Ensure adjustment of outstanding liability (By cash or encashment of FDR
Mail limit cancellation request form to Credit Admin, Head Office
Close the account
Return of Original Instrument (if adjustment by cash)
Entry the release of Instrument in the SISO Register (Take clients signature on the
register).
And Follow-up
Issue Letters to the clients for renewal before one month of the expiry date.
Call the clients for renewal at least one week before the expiry date.
Issue Letters to the clients for payment of Interest/EOL within one week of each quarter
end.
Call the clients for payment of Interest/EOL on regular basis.
Regular update of the spread in line with the change of FDR interest rate

Regular follow up of the EOL SOD Accounts so that outstanding does not exceed the
security (encashment) value.
Regular follow up of the Expired SOD Accounts so that it does not become classified.
Personal Loan
Application & Disbursement
Receiving customer Application in prescribed form along with required documents &
Application fee.
Receiving CIB Undertaking for the Applicant & Guarantor along with fee
Scrutinize the Application Form & attached documents carefully
Forward the Application Form & CIB Undertaking to Head Office (if found in order and
you are satisfied)
Follow-up the progress of the file in Retail Banking Division
Preparation of Sanction Advice & get it accepted by the client after getting approval from
Head Office
Obtain signature on the charge documents from the client
Obtain 3 unfilled Cheques from the client
Ensure deposit of charges by the client in the link account
Disburse the Loan by transferring the amount to clients Savings Account after
completion of documentation as per H.O. approval
Follow-up
After disbursement, ensure regular payment of monthly installment by the clients
Prepare the overdue list in the first working day of every month
Call all the defaulting borrowers for recovery of overdue installments throughout month
Call the Guarantors if the client is unreachable over phone or if the client breach
commitment of payment several times.
Issue 1st reminder letter to client if 1 installment due
Issue 2nd reminder letter to client if 2 installment due

Issue 3rd reminder letter to client & guarantor if 3installment due and forward the
shadow file to Monitoring Unit, Head Office
Visit clients residence if above procedure does not work.
Car Loan
Application fee.
you are satisfied)
Head Office
Issue Purchase Order in favor of the Car Vendor with other related documents
Obtain all required Car Documents (copy of Registration & Insurance cover note,
Original Delivery Challan, Bill, Money Receipt, and Insurance Policy) and cross match
those with the sanction & Quotation
Physically verify the vehicle (Reg. No., Engine No. & Chassis No.)
Ensure deposit of charges by the client in the link account
Disburse the Loan vide Pay Order favoring Car Vendor after completion of
documentation as per H.O. approval
Follow-up
Same as Personal Loan.

Home Loan
Application fee.
Visit the property to physically verify the possession & ownership and also obtain
valuation Report by the Surveyor
you are satisfied)
Head Office
Obtain all land related documents from the client and get it verified by the lawyer
(Vetting the Documents)
Execute Tripartite Agreement as per Lawyers draft.
Documentation
Obtain Charge Documents, Cheques, Tripartite Documents & Land related Documents
before disbursement,
Follow-up regularly whether registration formalities has been completed or not
Obtain Title Deed, DCR, Mutation, Rent Receipt, DCC Holding Tax Receipt after
completion of registration of the Flat
Obtain RAJUKs NOC for Mortgage if RAJUKs property
Obtain Draft of Mortgage Deed from lawyer
Complete Mortgage formalities in the concerned Sub-Registry office
Obtain Certified Copy of Mortgage Deed

Follow-up
Same as Personal Loan
4.6.2 Corporate Loan

Again corporate loan can be classified under two types which are as follows-
Bank Guarantee
Case to Case
Receiving customer Application (RFCL)
Receiving the Instrument (FDR) duly discharged by the client (if margin given by FDR)
Banking Division (if margin given by FDR)
Draft the Bank Guarantee as per format & Print it.
Pass issuance Entry in the system (taking required margin & deduct charges)
Limit Clients
Draft the Bank Guarantee as per format & Print it.
Pass issuance Entry in the system (taking required margin & deduct charges)
Amendments
Draft the amendment letter & Print it.
Pass amendment Entry in the system (deduct charges)
Reverse
Receiving customer Application along with Original Bank Guarantee
Pass reversal/closing Entry in the system (refund the margin)

Follow-up
After Expiry of the BG immediately inform the client to return the BG or extend time
If the client does not come forward within 1 week, issue 1st Reminder Letter to the
beneficiary of BG giving 15 days time
If the beneficiary does not return the BG within 15 days, issue 2nd Reminder Letter the
beneficiary of BG giving 15 days time
If the beneficiary does not return the BG within 15 days, issue 3rd & Final Reminder
Letter to the beneficiary of BG giving 15 days time
If the beneficiary does not return the BG within 15 days, reverse the BG without the
original one.
SME
In case of New Proposal
Receiving customer Application (RFCL) along with required documents
Receiving CIB Undertaking for the Applicant & owners along with fee
Forward the CIB Undertaking to Head Office
Scrutinize the attached documents carefully
Visit clients business places (office, factory, go down etc.) and proposed mortgage
property & prepares visit report
Valuation of proposed mortgage property by enlisted surveyors
Prepare & forward the Proposal to Head Office (if you are satisfied)
Follow-up the progress of the file in SME Unit
Head Office
Obtain land related documents from the client and forward to Lawyer for vetting
If the docs are in order get the draft of Mortgage Deed & other security documents (as
per sanction) from the lawyer
Complete the Mortgage formalities in the concerned Sub-Registry office
File charge with RJSC (if limited company)
Obtain Notarized IGPA to sell Hypothecated Stock & Machinery (where applicable)
Obtain undated Cheques from the clients as per sanction

Obtain Insurance Policy from the clients as per sanction
Obtain Undertaking in 150 Taka stamp paper as per sanction
Collect certified copy of Mortgage Deed
Insert Signboard on the mortgage property/factory and preserve a photograph of that in
the file
Send all the Documents to lawyer for obtaining Letter of Satisfaction
Send Compliance Certificate to Credit Admin, Head Office with copy of LS
Mails limit request form to Credit Admin, Head Office for limit insertion/ disbursement.
In case of Renewal & Enhancement
Receiving customer Application (RFCL) along with required documents (Stock Report,
Renewed Trade License)
Receiving CIB Undertaking for the Applicant & owners along with fee
Forward the CIB Undertaking to Head Office
Scrutinize the attached documents carefully
Visit clients business places (office, factory, go down etc.) and proposed mortgage
property & prepares visit report
Prepare & forward the Proposal to Head Office (along with security compliance
Certificate & LS)
Follow-up the progress of the file in SME Unit
Head Office
Obtain signature on the fresh set of charge documents from the client
Obtain Insurance Policy (renewal) from the clients as per sanction
Send Compliance Certificate to Credit Admin, Head Office
Mails limit request form to Credit Admin, Head Office for limit insertion/ disbursement.

4.7 Overall Procedure for Sanctioning Loan
The following procedure need to be followed for giving advances to the customer. These are:
Partys application
Filling form-A
Collecting CIB report from Bangladesh Bank
Processing loan proposal
Project appraisal
Head office approval
Sanction letter
Documentation
Disbursement.
4.7.1 Partys application

At first borrower had to submit an application to the respective branch for loan, where he/she has
to clearly specify the reason for loan. After receiving the application form the borrower Bank
officer verifies all the information carefully. He also checks the account maintains by the
borrower with the Bank. If the official becomes satisfied then he gives form-A (prescribed
application form of Bank) to the prospective borrower.
4.7.2 Filling FormA

After satisfying with partys application the applicant need to fill Form-A. It is the prescribed
form provides by the respective branch that contains information of the borrower. It contains-
Name with its factory location, Official address and telephone number, details of past and
present business, its achievement and failures, type of loan needed etc.
4.7.3 Collecting CIB Report from Bangladesh Bank

After receiving the application for advance, BASIC Bank sends a letter to Bangladesh Bank for
obtaining a report from there. This report is called CIB (Credit Information Bureau) report.
BASIC Bank generally seeks this report from the head office for all kinds of investment. The

purpose of this report is to being informed that whether the borrower has taken loan from any
other Bank; if yes then whether the party has any overdue amount or not.
4.7.4 Processing loan Proposal

After receiving CIB report from Bangladesh Bank, then respective branch prepare an Investment
proposal, which contains terms and conditions of Investment for approval of Head Office.
Documents those are necessary for sending Investment proposal are:
Necessary Documents
While advancing money, banks create a lot of documents, which are required to be signed by the
borrowers before the disbursement of the loan. Of them some are technically called charge
documents. Necessary steps and documents:
Loan application form duly signed by the customer.
Acceptance of the term and conditions of sanction advice.
Trade license.
In Case Of Partnership Firm, copy of registered partnership deed duly certified as true
copy or a partnership deed on non-judicial stamp of taka-150 denomination duly
notarized.
In Case Of Limited Company:
Copy of board resolution of the company for availing credit facilities and authorizing
managing director/chairman/director for execution of documents and operation of the
accounts.
Copy of memorandum and articles of association of the company including certificate
of incorporation duly certified by Registered Joint Stock Companies (RJSC) and
attested by the managing director and accompanied by an up-to-date list of directors
An undertaking not to change the management of the company and the memorandum
and article of the company without prior permission
Copy of last audited financial statement up to last 3 years.
Personal guarantee of the directors including the chairman and managing director.
An undertaking not to change the management of the company and the memorandum
and article of the company without prior permission

Certificate of registration of charges over the fixed and floating assets of the company
duly issued by RJSC.
Certificate of registration of amendment of charges over the fixed and floating assets
of the company duly issued by RJSC in case of repeat loan or change in terms and
conditions of sanction advice regarding loan amount and securities etc.
Demand promissory notes.
Letter of hypothecation of stocks and goods.
Letter of hypothecation of books debts and receivable.
Letter of hypothecation of plant and machinery.
Personal letter of guarantee.
Required Docks for Retail (Individual) Loan
Photograph- 2 Copies
Passport/National ID/Driving License
Visiting card/company ID
Tin
Trade license (For Businessman)
LOI (For service holder)
Utility Bill (electricity/WASA/Gas)
Bank statement- last 6 months
Quotation (For Auto or HHD)
Partnership Deed (for partnership firm)
Company memorandum
Rental/Lease/Title Deed
Certificate of professional degree
Guarantor
Spouse- photo with signature, Attested by applicant
Eligible photo with signature, Attested by the applicant, Visiting card, TIN
Sanction letter with Related Bank Statement (If Enjoying Any Loan).
Required Docks for SME
Total stock
Total sale for 1 year

Guarantor
Photograph
Visiting card
TIN
Trade license
4.7.5 Project Appraisal

It is the pre-investment analysis. Project appraisal in the Banking sector is important for the
Following reasons:
To achieve organizational goals
To recommend if the project is not designed properly
To justify the soundness of an investment
To ensure repayment of Bank finance.
Techniques of Project Appraisal
An appraisal is a systematic exercise to establish that the proposed project is a viable preposition.
Appraising officer checks the various information submitted by the promoter in first information
sheet, application for Investment and Investment proposal.
The Head Office (HO) mainly checks the technical, commercial and financial viability of the
project. For others, HO is dependent on branchs information. But when the investment size is
big, then the HO verifies the authenticity of information physically.
4.7.6 Head Office Approval

When Head office receive appraisal from the branch then, Head Office again appraises the
project. If it seems to be a viable one, the HO sends it to the Board of Directors for the approval
of the Investment. The Board of Directors (BOD) considers the proposal and takes decision
whether to approve the Investment or not. If the BOD approves the investment, the HO sends the
approval to the concerned branch.
The respective officer of Head Office appraises the project by preparing a summary named Top
Sheet or Executive Summary and then he send it to the Head Office Credit Division for the
approval of the Loan. The Head Office Credit Division considers the proposal and takes decision

whether to approve the Investment or not. If the committee approves the investment; the HO
sends the approval to the concerned branch.
4.7.7 Sanction Letter

After getting the approval of the HO the branch issues sanction letter to the borrower. A sanction
letter contains:
Name of borrower,
Facility allowed,
Purpose,
Rate of interest,
Period of the Investment and mode of adjustment,
Security and Other terms and condition.
4.7.8 Documentation
If the borrower accepts the sanction letter, the Documentation starts. Documentation is a written
statement of fact evidencing certain transactions covering the legal aspects duly signed by the
authorized persons having the legal status. The most common documents used by the BASIC
Bank for sanctioning different kinds of Investment are:
Joint Promissory Note,
Letter of Arrangement,
Letter of Disbursement,
Letter of Installment,
Letter of Continuity,
Trust Receipt,
Counter Guarantee,
Stock Report,
Letter of Lien,
Status Report,
Letter of Hypothecation,
Letter of Guarantee
Documents Relating to Mortgage.
4.7.8 Disbursement
After sanction and completion of all formalities the respective officer disburses the loan. The
officer writes cheque and provides it to the borrower. For this borrower has to open an account
through which he/she can withdraw the money.
Strategies for Recovery: Recovery of loan can be made in the following three methods.
Persuasive Recovery
The first step in recovery procedure is private communication that creates a mental pressure on
borrower to repay the loan. In this situation bank can provide some advice to the borrower for
repaying the loan.
Voluntarily
In this method, some steps are followed for recovering loan. These are:
Building Task Force
Arranging Seminar
Loan Rescheduling Policy
Waiver of Interest Rate
Legal Recovery
When all steps fail to keep an account regular and the borrower does not pay the installments and
interests then the bank take necessary legal steps against the borrower for realization of its dues.
In this case Artha Rin Adalat Law 2003 plays an important role for collecting the loan.
4.8 Credit Administration
The administration function is critical in ensuring that proper documentation and approvals are in
place prior to the disbursement of loan facilities. For this reason it is essential that the function
credit administration be strictly segregated from relationship management/ marketing in order
the possibility of controls being compromised of issues not being highlighted at the appropriate
level.

4.9 Credit Monitoring
To minimize credit losses, monitoring procedures and systems shall be in place that provides an
early indication of the deteriorating financial health of a borrower. At a minimum, systems shall
be in place to report the following exceptions to relevant executives in CRM and RM team: Past
due principal or interest payments, past due trade bills, account excesses, and breach of loan
covenants.
Loan terms and conditions are monitored, financial statements are received on regular
basis, and any covenant braches or exceptions are referred to CRG and the RM team for
timely follow-up.
Timely corrective action is taken to address finding of internal, external or regulator
inspection/audit.
All borrower relationships/loan facilities are reviewed and approved through the
submission of a credit proposal at least annually.
4.10 Credit Risk Assessment
Risk assessment or analysis is all about understanding the risk associated with lending money.
Until and unless risks are not assessed and measured it will not be possible to control risks. The
primary factor determining the quality of the Banks credit portfolio is the ability of each
borrower to honor, on timely basis, all credit commitments made to the Bank. This must be
accurately determined by the authorized Credit Officers/ Executives prior to approval. Therefore
a thorough credit risk assessment shall be conducted prior to the sanction of any credit facilities.
While assessing a credit proposal total emphasis shall be given on repayment potential of loans
out of funds generated from borrowers business (cash flow) instead of realization potential of
underlying securities. Credit risk assessment process in the Bank shall be governed by the
following principles:

4.10.1 Assessment Frequency
A comprehensive Credit Assessment (Due Diligence) shall be conducted before sanction of any
loan. Thereafter, it will be done annually for all types of credit facilities Demand Loan,
Continuous Loan and Term Loan.
4.10.2 Assessment Documentation

The result of the Credit Assessment shall have to be presented in the Credit Assessment Form
enclosed in. Initially, it will be originated by the Relationship Officer of the Branch and
reassessed in Corporate Banking Division. Credit Review Department of Credit Risk
Management Division will review the risk factors and facility structure to determine that all the
risks have been properly assessed and Risk mitigation measures have been taken and all banks
policy requirements & regulatory requirements have been addressed. All evidences of credit
assessment have to be filed properly in the respective Credit File.
4.10.3 KYC Policy

Banks KYC policy applicable for depositors shall also be applicable for borrowing customers.
The prescribed credit application form will disclose the information of the client. In addition,
before sanctioning any credit facility the concerned relationship officer must physically visit the
business premises of the customer, talk with important personalities of the locality, collect
information on the borrower from his/her existing banker, if any to know financial status,
capacity, competence, experience and summarize all these information in the Pre-sanction
Inspection Report. The report serves as preliminary information about the prospective borrower
before a detailed evaluation is undertaken.
4.10.4 Accountability
The Relationship Manager (presently Head of Branch) shall be the owner of the customer
relationship and be held responsible to ensure the accuracy of the entire credit
application/assessment form submitted for approval. He/she will be responsible for conducting
due diligence on the borrower, principals and guarantors.

4.10.5 Filling up Credit Assessment Form
Bank requires sufficient information to enable comprehensive assessment of the true risk profile
of the borrower. Hence, Credit Assessment Form must be filled in with accurate information in
full. No field in the assessment form should be erased or left vacant. If information is not
available, concerned field should be filled in with Information Not Available with proper
justification.
4.10.6 Credit Requirement

Credit requirement of the borrower must be assessed properly. The relationship officer will apply
prudence to find out actual credit requirement of the borrower and place his/her findings in the
Credit Assessment Form.
4.10.7 Repayment Source

Repayment source of the borrower is to be validated in the Credit Assessment Form by cash flow
and other financial analysis. For such analysis, at least three years financials are to be reviewed.
Loan amount and tenor must commensurate with the repayment capacity of the borrower.
4.10.8 Risk & Mitigating Factors

Risks inherent in a credit proposal shall have to be identified and appropriate mitigating factors
should be applied. Critical success factors should be analyzed. These are to be summarized in the
Credit Assessment Form.
4.10.9 Collateral
Collateral offered against a credit facility shall properly be valued and verified by the concerned
Relationship Officer and/or Relationship Manager and revalued and re-verified annually in the
subsequent period. In addition to the valuation of the Relationship Officer/Manager, the same
collateral must be valued and verified by an enlisted surveyor of the Bank if the total credit
facility to the concerned customer exceeds BDT Lac (Taka Twenty Five Lac). Any
valuation of collateral must be supported by the photograph and site map, where applicable.

4.10.10 Insurance Coverage
Adequacy and extent of insurance coverage must be assessed in the Credit Assessment Form.
Customers preference for not taking required insurance policy must be justified properly and it
must be mentioned as deviation. The policy must be obtained from approved insurer of the Bank.
4.10.11 Adherence to Policy

It should be clarified whether the customer has agreed to comply with banks internal policy and
external regulatory requirements. Any deviation from the policy or other internal or external
requirements must be justified properly and mentioned as Deviation in the Credit Assessment
Form. Furthermore, the originating officer will affix a declaration in the Credit Assessment Form
that the proposal does not contradict with any rules and regulations of the Bank, Banking
Companies Act, any circulars of Bangladesh Bank etc.
4.10.12 Syndicated Loans

Proposal for syndicated loans shall be analyzed with respect to risk and return in the same
manner as directly sourced loans. In case of participation in a syndication deal, Bank will
independently assess the proposal and will not solely depend on the credit assessment of the
Lead Arranger.
4.10.13 Change in Pricing

Any changes in the pricing of an existing credit facility must be highlighted and to be justified in
the Credit Assessment Form.

4.11 Credit Risk Grading (CRG) System
Credit risk grading is an important tool for credit risk management as it helps the Banks &
financial institutions to understand various dimensions of risk involved in different credit
Financial Risk 50%
Business risk 18%
Management risk 12%
Security risk 10%
Relationship risk 10%
Table 4: Different Risk Components
Input data to arrive at score Finally, data is put on Excel based CRG matrix for getting the score.
Number Grading Short Score
1 Superior SUP Fully cash secured, secured by govt.
guarantee/international bank guarantee
2 Good GD 85+
3 Acceptable ACCPT 75-84
4 Marginal/Watch list MG/WL 65-74
5 Special Mention SM 55-64
6 Substandard SS 45-64
7 Doubtful DF 35-44
8 Bad/Loss BL Less than 35
Table 5: Credit Risk Grading

Analysis and Findings

5.1 SWOT Analysis
SWOT analysis refers to analysis of strengths, weaknesses, opportunities and threats of an

organization. This facilitates the organization to make its future performance improved in
comparison to its competitors. An organization can also study its current position through SWOT
analysis.
Strength
(S)
Oppertunity Weakness
(O) SWOT (W)
Threat
(T)
Figure 6: SWOT Analysis
For all of these, SWOT analysis is considered as an important tool for making changes in the
strategic management of an organization. Through direct observation and discussion with the
BASIC officials I am able to point out some major strength and weaknesses as well as some
threats and opportunities regarding the various issues of the Bank such as
Organizational identity
Service level
Operational efficiency
Technology
Employee efficiency etc. along with many other issues

Strengths Weaknesses
Top management Dependent on fixed deposits
Corporate culture Moderate risk management system
Various Products and Services Absence of strong marketing activities
Strong employee bonding Not enough innovative products
Efficient Performance Discouraging small entrepreneurs
Strong financial position
Opportunities Threats
Country wide network Similar products are offered by other
Introducing more branches Banks
Introducing special corporate scheme Default Loans
Real time online banking Industrial Downturn
Creation of brand image Increased Competition in the market
Table 6: SWOT Analysis
5.1.1 Strengths
BASIC Bank is one of the leading providers of financial services. With its strong corporate
image and identity, it has better positioned itself in the minds of customers. The employees of
BASIC Bank have a strong sense of commitment towards organization and also feel proud and a
sense of belonging towards BASIC Bank. They are very enthusiastic as well as self motivated
towards their responsibilities. BASIC Bank provides hassle-free customer services to its client.
Another positive thing is that net profit is gradually increasing over the years.
5.1.2 Weakness
BASIC Bank provides clean Import Loan to most of its solvent clients. But they usually do not
want to finance small entrepreneurs whose financial standing is not clean to them. BASIC Bank
currently dont have any strong marketing activities through mass media e.g. Television, Radio.

Although they do a lot of CSR activities compared to other banks. The account maintenance cost
for BASIC Bank is comparatively high. In the long run, this might turn out to be a negative issue
for BASIC Bank Ltd.
5.1.3 Opportunities
Bangladesh is a developing country to satisfy the needs of the huge population, so BASIC Bank
has great opportunity to grab the customer by providing greater services. Besides this, BASIC
Bank has employed experienced managers to facilitate its operation. There is certain software
which enables customers to deposit and withdraw money from any bank with the cheque or
deposit of any other bank thus poses as an opportunity for BASIC Bank as the number of
transactions would drastically increase.
5.1.3 Threats
The upcoming private, local, & multinational banks posses serious threats to the existing
banking network of BASIC Bank. Now-a-days different foreign and private banks are also
offering similar type of products with an almost similar profit margin like BASIC Bank. Besides
this industrial downturn trend has seen due to unemployment, inflation which can cause threats
to the banking.
5.2 Ratio Analysis
Ratio analysis is one of the major tools of analysis. A single variable cannot all the time provide
correct information. Though trend analysis plays a vital role in the field of analysis, there are
always some other factor, that are needed to be considered. More clearly, when one variable is
linked with other variable or the result is obtained in percentage or proportion of other variable,
it becomes more accurate. The ratio analyses of BASIC bank are conducted under four head.
Such as:
Liquidity ratios
Asset management ratios
Debt management ratios
Profitability ratios
Ratio analysis is presented below:
5.2.1 Liquidity Ratios

Liquidity ratios are known as a class of financial metrics used to determine companys ability to
pay off its debt obligations. The higher value liquidity ratio is the higher safety margin for bank.
The liquidity ratios of BASIC bank are presented below:
Current Ratio
This ratio gives an idea of the company's ability to pay back its short-term liabilities
with its short-term assets. The higher the current ratio, the more capable the company is
of paying its obligations. A ratio under 1 suggests that the company would be unable to
pay off its obligations if they came due at that point.
Formula: Current Ratio = Current Assets / Current Liabilities
2011 2012 2013 2014 2015

Current 1.14 1.09 1.12 1.12 1.14
Ratio
Table 7: Current Ratio
Current Ratio's Trend

1.14
1.12
1.1
1.08
1.06 Current Ratio's Trend
2011
2012
2013
2014
2015
Figure 7: Current Ratio

Comment: In the current ratio of BASIC Bank Limited it is noticed that the current ratio from
2011-2015 are 1.14, 1.09, 1.12, 1.12 & 1.14 respectively. There was a normal trend of changes
Quick Ratio
Inventories typically are the least liquid of a firms current assets, so they are the assets on which
losses are most likely to occur in the event of a quick liquidation. A measure of the firms
ability to pay off short term obligations without relying on the sale of inventories is important.
Formula: Quick Ratio = (Current assets Inventory)/ Current Liabilities
2011 2012 2013 2014 2015

Quick Ratio 1.12 1.09 1.03 1.01 1.05
Table 8: Quick Ratio
Quick Ratio's Trend

1.12
1.1
1.08
1.06
1.04
1.02 Quick Ratio's Trend
1
0.98
0.96
0.94
2011 2012 2013 2014 2015
Figure 8: Quick Ratio
Comment: From this graph it is found that quick ratio of BASIC bank was decreasing from
2011 to 2014 and then it increased in 2015.
Net Loans to Deposit (Total Borrowing) Ratio
Net loans to deposit ratio shows the percentage of loan disbursed from total deposit amount.
Formula: Net Loans Deposit (Total Borrowing) = Net Loans / Total Deposits
2011 2012 2013 2014 2015

NLD Ratio 0.88 0.93 0.80 0.63 0.87
Table 9: Net Loans to Deposit Ratio
Net Loans to Deposit Ratio's Trend

1
0.8
0.6
Net Loans to Deposit Ratio's
0.4 Trend
0.2
0
2011 2012 2013 2014 2015
Figure 9: Net Loans to Deposit Ratio
Comment: From the graph it is seen that net loan to deposit ratio was increasing till 2012 after
that it is decreasing. And then it increases in 2015. It indicates that from 2013 to 2015 BASIC
bank are not providing the large portion of deposit as loan.
5.2.2 Asset Management Ratios

Asset management ratios measure the success of business to manage its asset to generate income.
Loan Loss Reserve to Gross Loans (LRGL) Ratio
Loan loss ratio to gross loans ratio shows the percentage of provision against gross loan.
Formula: LRGL Ratio = Loan Loss Reserve / Gross reserve
2011 2012 2013 2014 2015

NRGL Ratio 0.007 0.018 0.012 0.000 0.006
Table 10: Loan Loss Reserve to Gross Loan Ratio

Loan Loss Reserve to Gross Loan Ratio's Trend
0.02
0.015
Loan Loss Reserve to Gross Loan

0.01
Ratio's Trend
0.005
0
2011 2012 2013 2014 2015
Figure 10: Loan Loss Reserve to Gross Loan Ratio
Comment: From this graph it is clear that BASIC bank made provision to face bad loans. It was
in 2011, 0.07% then it increased in 2012, after that it declined. In 2014 there was no provision
prevails. But in 2015 is increased 0.06%.
Liquid Asset to Total Asset Ratio
Liquid asset to total asset ratio shows that the percent of liquid asset in total asset.
Formula: Liquid Asset to Total Asset Ratio = Liquid Asset / Total Asset
2011 2012 2013 2014 2015

LATA Ratio 0.11 0.08 0.10 0.10 0.11
Table 11: Liquid Asset to Total Asset Ratio
Liquid Asset to Total Asset Ratio's Trend
0.12
0.1
0.08
Liquid Asset to Total Asset Ratio's
0.06
Trend
0.04
0.02
0
2011 2012 2013 2014 2015
Figure 11: Liquid Asset to Total Asset Ratio

Comment: From the graph it is found that the liquid asset to total asset ratio was higher during
the year 2011 after that it is declining. In the year 2013 and 2014 it is stable. After that it
increases in 2015.
Liquid Asset to Total Liabilities Ratio
Liquid asset to total liabilities ratio states that the amount of liquid asset to meet up liabilities.
Formula: Liquid Asset to Total Liabilities Ratio = Liquid Asset / Total Liabilities
2011 2012 2013 2014 2015

LATL Ratio 0.12 0.08 0.11 0.11 0.14
Table 12: Liquid Asset to Total Liabilities Ratio
Liquid Asset to Total Liabilities Ratio's Trend

0.14
0.12
0.1
0.08
Liquid Asset to Total Liabilities
0.06 Ratio's Trend
0.04
0.02
0
2011 2012 2013 2014 2015
Figure 12: Liquid Asset to Total Liabilities Ratio
Comment: From the graph it can be determined that the loan to total deposit ratio was not too
higher during the year 2011, 2012. In the year 2013 and 2014 it is stable. After that it is
increasing.
5.2.3 Debt Management Ratios

Debt management ratio measures the total debt amount compared to its financing amount.
Deposit to Total Asset Ratio
This ratio measures the amount of deposit (debt) in percent of total asset.
Formula: Deposit to Total Asset Ratio = Total Deposit / Total Asset

2011 2012 2013 2014 2015
DTA Ratio 0.80 0.79 0.85 0.81 0.76
Table 13: Deposit to Total Asset Ratio
Deposit to Total Asset Ratio's Trend

0.86
0.84
0.82
0.8
0.78 Deposit to Total Asset Ratio's
0.76 Trend
0.74
0.72
0.7
2011 2012 2013 2014 2015
Figure 13: Deposit to Total Asset Ratio
Comment: Deposit to total asset ratio shows that in 2013 it was .85 and after that it is declining.
Deposit to Equity Ratio
Deposit to Equity Ratio shows the amount of deposit (debt) in percentage of equity.
Formula: Deposit to Equity (DE) Ratio = Total Deposit / Total Equity
2011 2012 2013 2014 2015

DE Ratio 11.32 13.45 22.15 10.67 5.71
Table 14: Deposit to Equity Ratio

Deposit to Equity Ratio's Trend
25
20
15
Deposit to Equity Ratio's Trend
10
0
2011 2012 2013 2014 2015
Figure 14: Deposit to Equity Ratio
Comment: Deposit to total equity ratio shows there are some ups and downs in the year 2011 to
2014. The highest value reached at 2013, 22.15 and lowest at 2015, 5.71.
Equity Multiplier
Equity multiplier is a ratio that represents the amount of total asset with the times of equity.
Formula: Equity Multiplier (EM) = Total Asset / Total Equity
2011 2012 2013 2014 2015

EM 14.23 16.98 26.01 13.15 7.48
Table 15: Equity Multiplier
Equity Multiplier's Trend
30
25
20
15 Equity Multiplier's Trend
10
5
0
2011 2012 2013 2014 2015
Figure 15: Equity Multiplier

Comment: Here the equity multiplier in 2011 was 14.23. After that it was increasing till 2013.
In 2014 it declined to 13.15. And its also declined in 2015.
5.2.4 Profitability Ratios

Profitability ratios access the ability of business to generate earning compared to expenses.
Return on Assets (ROA)
Net profit / Total assets: Return on asset measures the how much net income obtained from total
asset.
Formula: Return on Asset (ROA) = Net Profit / Total Asset
2011 2012 2013 2014 2015

ROA 0.013 0.0003 -0.003 -0.006 -0.016
Table 16: Return on Assets
Return on Asset's Trend
0.015
0.01
0.005
0 Return on Asset's Trend
-0.005 2011 2012 2013 2014 2015
-0.01
-0.015
-0.02
Figure 16: Return on Asset
Comment: In the Return on asset ratio of BASIC Bank it is seen that the ratio decreases
gradually from 2011 to 2015. In the year 2013 it was declined out of control.
Return on Equity (ROE)
Return on equity measures the percentage of net income in proportion to total equity.
Formula: Return on Equity (ROE) = Net Profit / Total Equity

2011 2012 2013 2014 2015
ROE 0.18 0.00 -0.09 -0.08 -0.12
Table 17: Return on Equity
Return on Equity's Trend

0.2
0.15
0.1
0.05
Return on Equity's Trend
0
2011 2012 2013 2014 2015
-0.05
-0.1
-0.15
Figure 17: Return on Equity
Comment: As return on equity is closely related with net income. With positive net income it
provides positive value. From 2011 to 2012 it was positive. With the net loss started in 2013 it
became negative.
Return on Deposit (ROD)
Return on deposits measures how much revenue is gained from deposit.
Formula: Return on Deposit = Net Profit / Total Deposit
2011 2012 2013 2014 2015

ROD 0.016 0.000 -0.004 -0.008 -0.021
Table 18: Return on Deposit

Return on Deposit's Trend
0.02
0.01
0 Return on Deposit's Trend

2011 2012 2013 2014 2015
-0.01
-0.02
-0.03
Figure 18: Return on Deposit
Comment: As Return on Deposit is closely related with net income. With positive net income it
provides positive value. From 20011 to 2012 it was positive. With the net loss started in 2013 it
became negative.
Cost to Income Ratio
Cost to income ratio states that the amount of cost incurred in percentage of total income.
Formula: Cost of Income (COI) Ratio = Cost / Total Income
2011 2012 2013 2014 2015

COI 0.67 0.86 1.88 -2.47 -2.02
Table 19: Cost of Income Ratios
Cost of Income Ratio's Trend
0 Cost of Income Ratio's Trend

2011 2012 2013 2014 2015
-1
-2
-3
Figure 19: Cost of Income Ratios

Comment: Here, cost to income ratio was increasing from 2011 to 2013. In the year 2014 and
2015 it became negative.
5.3 Trend Analysis
5.3.1 Deposits
Not only the quantum of deposits but also brought about qualitative changes in The Bank
mobilized total deposits of Tk.148,167.23 million as of December, 2015 as compared to
Tk.139,934.06 million in 2014. Competitive interest rates, attractive deposit products, deposit
mobilization efforts of the employees and confidence reposed by the customers in the Bank
contributed to the notable growth in deposits. The Bank introduced a number of attractive
deposit schemes to cater to the requirement of small and medium savers. It is improved deposits
structure. The deposit mix of the Bank as on December 31, 2015 was as follows:
Taka in million
Year Current and Other Bills payable Savings Fixed Deposits
Accounts
2015 4734.86 619.96 3497.32 139315.10
Table 20: Deposits
Deposits
Fixed Deposit
Current & Other Accounts
Savings
Bills Payable
Figure 20: Deposits

Taka in Million
2011 2012 2013 2014 2015

Deposit 62650.73 87693.23 134493.45 139934.06 148167.23
Table 21: Deposits
Deposits
160000
140000
120000
100000
80000
Deposits
60000
40000
20000
0
2011 2012 2013 2014 2015
Figure 21: Deposits
5.3.2 Investment
The investment portfolio of the Bank during the year 2013 was Tk.56940 million against
Tk.45862 million in the previous year. The portfolio of investment included Government
Treasury Bills, Prize Bonds etc. The Bank has always given emphasis on investment of Funds in
high yield areas simultaneously maintaining Statutory Liquidity Requirements (SLR) as fixed by
Bangladesh Bank.
Taka in Million
2011 2012 2013 2014 2015
Investment 13760.82 14111.57 34584.88 37299.33 44677.93
Table 22: Investment

Investment
2011
2012
2013
2014
2015
Figure 22: Investment
5.3.3 Loan and Advance

Year 2013 saw many ups and downs in the economic field of the country. The capital market
witnessed unprecedented surge from the middle of the year and also the market started to
decrease in the last quarter. The commercial banks faced liquidity problem and had to squeeze
their lending to some extent. Loans and advances portfolio stood at Tk.128807.01 million as on
31st December, 2015 in comparison to Tk. 89392.85 million as on 31st December, 2014. The
loan portfolio of the bank covered different sectors like readymade garments, textile, spinning,
dyeing, ceramics, pharmaceuticals, telecommunication, petroleum, steel, and engineering, ship
scrapping, cement, edible oil, sugar industry, real estate, transport, agriculture, SME and other
commercial products ensuring diversification without concentration in any septic sector.
Taka in Million
2011 2012 2013 2014 2015
Loan and 56884.76 85955.76 109428.44 89392.85 128807.01
Advances
Table 23: Loan and Advances

Loan and Advances
2011
2012
2013
2014
2015
Figure 23: Loan and Advances
5.3.4 Authorized Capital

When a bank applies for permission for operation to central bank, authorized committee sanction
a capital limit for bank. Bank cannot develop capital more than the limit. This is called
authorized capital. When need, bank can again apply for increasing the limit of authorized capital
to authorized committee. Authorized capital stay same in more than one year until the limit is
changed.
Taka in million
2011 2012 2013 2014 2015
Authorized 5000 5000 5000 25000 25000
Capital
Table 24: Authorized Capital

Authorized Capital
25000
20000
15000
Authorized Capital
10000
5000
0
2011 2012 2013 2014 2015
Figure 24: Authorized Capital
5.3.5 Paid up Capital

After sanctioning authorized capital bank starts to develop capital. The part of authorized capital
is arranged by bank is called paid up capital. Paid up capital cannot exceed authorized capital.
Bank hold paid up capital from own capital, share holders, board members, investors, bank loan,
selling securities etc. Paid up capital is increased every year if bank wants.
Taka in million
2011 2012 2013 2014 2015
Paid up 2357.59 2946.98 2946.98 2946.98 10846.98
Capital
Table 25: Paid up Capital

Paid up Capital
12000
10000
8000
6000 Paid up Capital
4000
2000
0
2011 2012 2013 2014 2015
Figure 25: Paid up Capital
BASIC Banks paid up capital was BDT 2357.59 million in 2011. It was increasing to BDT
2946.98 million in 2012. After that it was stable from 2012 to 2014. Then its increased
surprisingly to BDT 10846.98 million in 2015.
5.3.6 Long Term Liabilities

For bank liabilities are deposits collected from customers, loans from other banks, bank capital.
Liabilities consist of short term liabilities and long term liabilities. FDR, various saving scheme,
long term loan from other banks, shareholders equity, banks own capital etc are long term
liabilities. If long term liabilities are more than short term liabilities then it is very good for bank
and overall banking system and finally for the economy.
Taka in Million
2011 2012 2013 2014 2015
Long Term 2788.15 3742.93 2780.50 2673.97 2482.94
Liabilities
Table 26: Long Term Liabilities

Long Term Liabilities
4000
3500
3000
2500
2000 Long Term Liabilities
1500
1000
500
0
2011 2012 2013 2014 2015
Figure 26: Long Term Liabilities
Comment: Long term liabilities were increasing from 2011 to 2012. After that it was decreasing
to 2015. During year of 2015, it was BDT 2482.94 million.
5.3.7 Total Assets

For bank assets are cash, loan, investment, fixed assets. Assets are two types- short term assets
and long term assets. Assets regarding 1 year or less than 1 year maturity are short term assets.
Assets with more than one year maturity are long term assets. From short term loan, bank makes
more profit than long term. Short term loan and short term securities are profitable for bank.
Total Asset = Short Term Asset + Long Term Asset
Taka in Million
2011 2012 2013 2014 2015
Total Assets: 78031.73 109682.06 157072.19 171118.53 194173.36
Table 27: Total assets

Total Assets
200000
150000
100000
50000
Total assets
0
2011
2012
2013
2014
2015
Figure 27: Total Assets

Comment: Total assets had grown in five years. During 2011, total assets were BDT 78031.73
million that was increased in 2014 to BDT 171118.53 million. Next 2015, it made little improved
to BDT 194173.36 million than 2014.
5.3.8 Total Liabilities

Total liabilities consist of long term liabilities and short term liabilities. Long term liabilities are
FDR, various saving scheme, long term loan from other banks, shareholders equity, banks own
capital. Short term liabilities are all current accounts, short term loans from other banks, short
term loans from central bank, short term securities issued by bank.
Total Liabilities = Short Term Liabilities + Long Term Liabilities
Taka in Million
2011 2012 2013 2014 2015
Total 72549.97 103241.48 151033.01 158104.60 168226.27
Liabilities:
Table 28: Total Liabilities

Total Liabilities
200000
150000
100000
50000
Total Liabilities
0
2011
2012
2013
2014
2015
Figure 28: Total liabilities

Comment: Total liabilities were increasing in a continuous way. During 2011, BASIC Banks
Total liabilities were BDT 72549.97 million. After two years, in 2014, liabilities were BDT
158104.60 million. Next 2015, it had little improved to BDT 168226.27 million.
5.3.9 Credit Distribution Sectors

In 2015, major types of credit exposures are given below.
2015 Taka in Crore
Term Loan (TL) 4499.79
Cash Credit (CC) 3271.71
Overdraft (OD) 1817.54
Export/Packing Credit (EPC) 37.79
Loan Against Trust Receipt (LATR) 805.45
Real Estate Loan (REL) 754.05
Transport Loan (TL) 652.36
Micro Credit Financing (MCF) 210.32
Staff Loan (SL) 96.54
Bill Purchased & Discounted (BPD) 112.15
Others (O) 623.00
Total 12880.70
Table 29: Major Types of Credit Sectors

Major Types of Credit Sectors
Term Loan
Cash Credit
Overdraft
Export/Packing Credit
Loan Against Trust Receipt
Real Estate Loan
Transport Loan
Micro Credit Financing
Staff Loan
Figure 29: Major Types of Credit Sectors

Comment: BASIC Banks term loan and cash credit is huge rather than other loans. Then in the
third position is overdraft. As we see in the above pie chart, BASIC Bank created a perfect
portfolio in 2015.
5.3.10 Geographical Distribution of Credit Exposure

In 2015, geographical distribution of credit exposures is given below.
Division Taka in Crore
Dhaka 10825.33
Chittagong 1155.87
Rajshahi 246.00
Khulna 318.20
Barisal 23.71
Sylhet 107.34
Rangpur 182.70
Mymensingh 21.55
Total 12880.70
Table 30: Geographical Distribution of Credit Exposures

Geographical Distribution of Credit Exposures
Dhaka
Chittagong
Rajshahi
Khulna
Barisal
Sylhet
Rangpur
Mymensingh
Figure 30: Geographical Distribution of Credit Exposures

Comment: In the geographical distribution of credit exposures pie chart we can see that, the
huge amount of credit is distributed in Dhaka Division. This is really high rather than other
divisions. Then the second highest distribution of credit is Chittagong Division. And rest of
credit is distributed to others division.
5.4 Comparison among BASIC Bank, Prime Bank, South East

Bank Ltd
5.4.1 Total Assets

Total assets are consists of short term assets and long term assets. Short term assets are cash,
short term loans, and short term securities. Long term assets are long term loans, long term
securities, and fixed assets. Short term loans and Short term securities are profitable than long
term loans and long term securities.
Short Term Assets = Cash + Short Term Loan + Short Term Securities
Long Term Assets = Long Term Loan + Long Term Securities + Fixed Assets
Total Assets = Short Term Assets + Long Term Assets

Taka in Million
BASIC PBL SEBL
2014 171118.53 243869.61 236608.40
2015 194173.36 266833.40 260718.03
Table 31: Total Assets Comparison
2014
South East Bank Ltd
Prime Bank Ltd
BASIC Bank Ltd
2015
0 50000 100000 150000 200000 250000 300000
Figure 31: Total Assets Comparison

Comment: In 2014, total assets of BASIC Bank were BDT 17118.53 million, and then it is
increased in 2015 to BDT 194173.36 million. As well as, the Prime Bank was BDT 243869.61
million, and then it is also increased in 2015 to BDT 266833.40 million. And South East Bank
was BDT 236608.40 million in 2014, and in 2015 it is increased to BDT 260718.03 million.
5.4.1 Loan and Advance

Loan and advance plays an important role in the banking sector. So, loan and advance
comparison among other bank is given below.
Taka in Million
BASIC PBL SEBL
2014 89392.85 153589.27 147070.81
2015 128807.01 160890.04 168878.46
Table 32: Loans and Advances Comparison

2014
BASIC Bank Ltd
Prime Bank Ltd
South East Bank Ltd
2015
0 50000 100000 150000 200000
Figure 32: Loans and Advances Comparison

Comment: In 2014, loans and advances of BASIC Bank were BDT 89392.85 million, and then
it is huge increased in 2015 to BDT 128807.01 million. As well as, the Prime Bank was BDT
153589.27 million, and then it is a little bit increased in 2015 to BDT 160890.04 million. And
South East Bank was BDT 147070.81 million in 2014, and in 2015 it is increased to BDT
168878.46 million.
5.5 Findings
After completing the analysis some points has come regarding the loan and advance of BASIC
bank. The findings of the report are presented below:
BASIC banks profit has been dramatically declined from 2012. Because, they could not
recover the credit from the loan borrower
Also net interest income is negative in the year 2015 which trend is started from the year of
2012. Here also the same reason.
Though BASIC bank is in loss the operating expenses are increasing.
Though loan and advance of BASIC bank is increasing with time. In 2013, the loan advance
is dramatically increased, and also in the year of 2015. But, return on asset is not increasing
in a steady growth, it has been dramatically declined.
Maximum amount of loan is provided to the long-term industrial sectors. They intentionally
ignore the agriculture sector because of riskiness and safety issues.

Investment approval process of BASIC bank is well structured but not extended.
As we seen percentage of nonperforming loan is increasing year by year that means their
current strategy regarding recovery of loan is not working appropriately.
In branch investment recovery is satisfactory level, but it should be monitored.
Lack of proper knowledge of the client about the modes of investment.
BASIC Bank use KASTLE CORE software for performing their banking activities. But the
software is often hanged as because of slower upgrade of data by vender. Therefore it delays
to performing banking activities at time.
All the organizations including banks are now mostly depends on computer but employees
do not have much knowledge on computer.
Advertising and promotion is one of the weak point of BASIC Bank Limited, BASIC
Bank Limited does not have any effective promotional activities and advertisement, but
other banks have better promotional strategy. Therefore most customers are not known about
their banking activities.
It has lack of available branches in remote areas of business and services. As a result, bank
loses many opportunities to raise their profit.
Day by day new upcoming banks are coming with many new services which are a threat for
the bank. So increased number of new bank creates sever competition in loan & advance
banking. As a result, bank loses many opportunities to increase their customers.
BASIC bank doesnt arrange any desk and fixed any task for their intern. Therefore they
dont get any chance to learn banking activities by doing practical task.
Significant percentage of revenue comes from Dilkusha Branch considering BASIC zone.
But there is only three credit officer to handle all primary loans and advance activities.
BASIC Banks both loan processing service charge and loan processing time is quite high
compare to their competitors.

Recommendations and Conclusion

6.1 Recommendations
Following recommendations are prepared in the light of findings:

The top level management should try to find the reasons behind this dramatic decline of
profit.
Net interest income is negative, it means that the bank is taking deposit at higher interest
rate and lending at lower interest rate. The products, in which high interest is paid, should
be controlled.
The operating expense should be allowed by considering income of bank.
Provision is kept to face the loss incurred from various risks. So it should be kept to
protect the capital.
Efficiency of asset management should be enhanced.
BASIC Bank Ltd. may increase branches in remote areas and start loan & advance
operation in those branches in a small limit. It will be more close to get back previous
reputation of BASIC Bank.
Maximum amount of loan is provided to the long-term industrial sectors. They
intentionally ignore the agriculture sector because of riskiness and safety issues. But for
the overall economic development of the country they should diversify their loaning
agriculture as well as SME sectors.
The bank can provide a student loan. In many countries bank provide this facility. This
may encourage the students to come forward to do something for the economies as well
as it will differentiate BASIC Bank Ltd. a bit.
BASIC Bank needs to put more attention toward the expansion of branch network as well
as ATM Booths.
They should do more marketing activities to improve their presence in the minds of their
potential target market. As we see that, Media coverage of BASIC Bank is not so strong.
To attract new clients, they should go for mass media coverage like TV, Radio etc.
New investment sector is booming rapidly. BASIC Bank should identified those
untapped areas of business and invest in those sector such as Gas plant, condensed milk
project, ship breaking etc.

Proper implementation of the investment plan and investment policy should be re planned
each year.
6.2 Conclusion
As an internee of BASIC Bank Ltd, I have truly enjoying my internship from the learning and
experience viewpoint. I am confident that this three months internship program at BASIC Bank
will definitely help me to realize my further carrier in the job market. As there are lots of local
and foreign banks in Bangladesh the BASIC Bank is promising commercial Bank among them.
In this competitive market BASIC Bank has to compete the others commercial banks in
Bangladesh. At the end of the report it can be mentioned that, Economic emancipation is our
largest victory. Better banking system can pave the way of this greatest achievement. BASIC
bank has been playing a very vital role in this arena. This is my close look of the vision during
my training period there. Contribution of this bank for our industrial development was
unparalleled. At present time the bank is being operated as a state owned commercial bank. But
it needs some modification which is the demand of the time. So, necessary steps such as reforms,
restructuring should be taken to run the banking system smoothly and efficiently as we know it
very well that a sound banking system can ensure a strong financial structure in a country.

Bibliography
Annual Reports
Annual Report of BASIC Bank Limited, (Year ended December 31, 2015-2011)
Annual Report of Prime Bank Limited, (Year ended December 31, 2014 & 2015)
Annual Report of South East Bank Limited, (Year ended December 31, 2014 & 2015)
Book
Financial Statement Analysis George Foster
Essentials of Managerial Finance Basley & Brigham
The Economics of Money, Banking, and Financial markets Frederic S. Mishkin
Credit Division Manual of BASIC
Web site
http://www.basicbanklimited.com
http://www.investopedia.com
http://www.businessdictionary.com
http://www.wikipedia.org
http://www.bangladesh-bank.org

Abbreviations
Chapter 1
BASIC Bangladesh Small Industries and Commerce
BBA Bachelors of Business Administration
Chapter 2
AFIC Anti Fraud Internal Control
ALCO Asset Liability Committee
ALM Asset Liability Management
AMLD Anti-Money Laundering Division
ATM Automated Teller Machine
BAMLCO Branch Anti-Money Laundering Compliance Officer
BB Bangladesh Bank
BCCI Bank of Credit & Commerce Industries
BOA Bangladesh Olympic Association
CAD Credit Administration Division
CAMLCO Chief Anti-Money Laundering Compliance Officer
CCD Commercial Credit Division
CCU Central Compliance Unit
CFD Consumer Finance Division
CR Configuration Review
CRAB Credit Rating Agency of Bangladesh
DITF Dhaka International Trade Fair
GOB Government of Bangladesh
HRD Human Research Department
HOMC Head Office Management Committee
ICD Industrial Credit Division
Jr. Junior
KCBS KASTLE CORE Banking Software

KYC Know Your Customer
L/C Letter of Credit
MCSFD Micro Credit and Special Finance Division
NGOs Non-Government Organizations
PT Penetration Test
SED Small Enterprise Division
SSIs Small Scale Industries
TFD Trade Finance Division
VA Vulnerability Assessment
Chapter 3
A/C Account
BM Branch Manager
BRS Balance Requisition Slip
CIB Credit information bureau
DD Demand Draft
DPS Deposit Pension Scheme
IBCA Inward bills for collection account
IRC Import Registration Certificate
LOA Letter of Authority
NFC Non-residential Foreign Currency
PO Pay order
RFC Residential Foreign Currency
RMG Readymade Garments
SND Special Notice Deposit
TT Telegraphic Transfer
VAT Value Added Tax
Chapter 4
BDT Bangladeshi Taka

BG Bank Guarantee
BOD Board of Directors
CIB Credit Information Bureau
CRG Credit Risk Grading
DCC Dhaka City Corporation
HO Head Office
KYC Know Your Customer
L/C Letter of credit
LIM Loan against imported merchandize
RAJUK Rajdhani Unnayan Kotripokkho
RJSC Registered Joint Stock Companies
SME Small & Medium Enterprise
SND Special Notice Deposit
STL Short Term Loan

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Internship Report

Loan & Advance Management Procedure

Loan & Advance Management Procedure

Anik Islam Khan

Date of Submission: January 30, 2017

STAMFORD UNIVERSITY BANGLADESH

Subject: Submission of the internship report.

Anik Islam Khan

I here announce that the extensive study entitled

Bachelor of Business Administration

Is my original work and not put forward for

Anik Islam Khan

To Whom It May Concern

I would like to express my heartiest gratitude to my supervisor, Md. Moniruzzaman, Senior

1.1 Origin of the Report 2

2.1 An Overview of the Organization 8

3.1 General Banking 26

4.1 Loan & Advance Management of BASIC Bank Ltd. 53

5.1 SWOT Analysis 80

6.1 Recommendation 108

Table No. Page No.

Basic Bank Limited Page 1

Placement or internship program is an obligatory part of BBA (Bachelor of Business

1.2 Background of the Study

Basic Bank Limited Page 2

1.3 Rationale of the Study

1.4 Objective of the Report

1.4.1 The Main Objectives of the Study Are

Basic Bank Limited Page 3

1.5 Scope of the Report

1.6 Limitation of the Report

During the study, I have faced the following limitations:

Basic Bank Limited Page 4

1.7 Methodology of the Report

1.7.1 Research Type

1.7.2 Primary Sources of Data

Basic Bank Limited Page 5

1.7.4 Data Analysis and Reporting

Basic Bank Limited Page 6

Basic Bank Limited Page 7

Basic Bank Limited Page 8

2.2.3 Strategy Statement

Basic Bank Limited Page 9

2.3 Goals & Objectives of BASIC Bank Ltd.

Basic Bank Limited Page 10

2.4 Functions of BASIC Bank Ltd.

2.4.1 The Bank Offers

2.5 Ownership Structure

Basic Bank Limited Page 11

2.6.1 Board of Directors

2.6.2 Audit Committee

2.6.3 Risk Management Committee

2.6.4 Executive Committee

2.6.5 Company Secretary

Basic Bank Limited Page 12

Deputy General Manager

Assistant General Manager

Figure 1: Management Structure

Basic Bank Limited Page 13

Statement of Changes in Equity for the year ended 31 December 2015:

Items Amount (TK)

Paid up capital 10846982500

Table 1: Capital and Reserve