Introduction of the Study

1.0 Background and origin of the report

Banking concept has been evolved since the rapid development of Information
Technology. Nowadays almost all over the world, retail-banking concept is a wellorchestrated name which has indeed added a new feather to the gamete of banking
lexicon.
From the very beginning, the credit exposure of JBL has been focused on commercial
lending that is international trade Finance, domestic trade finance, contractor/supply
finance etc Though there was an business environment due to the world economic
recession throughout the year JBL was in constant efforts to explore different areas of
credit operation and could raise the credit portfolios to Tk 49430.50 million in 2010 with
an increase of Tk 17242.84 million (53.40%) over the preceding year. In order to ensure
compliance with regulatory requirements for avoiding risk of exposure to single
borrower, concentration on large loans, to bring in excellence in credit operation in
relation to risk management, yield, exposure, tenure, collaterals, security valuation etc.
JBL strived for further diversification of credit portfolios. Its credit facilities were
concentrated on trade Finance, Agriculture, and related sectors, Project Finance, SME
finance, wholesale and retail trade for developing infrastructure of the country. Jamuna
Bank Limited always maintain well- diversified portfolio.
One of the prudent conditions of ensuring profit is to minimize risk. Such defaults by one
of the corporate clients and the adverse effect of political situation at the end of 2010 have
made the bank management to rethink about its existing credit portfolio with an emphasis
on retail credit.

1.1 Rational of the study

According to Math (2010), demand and credit cycle in retail credit is less volatile than
that of corporate credit. He also mentioned that, credit risk can be well diversified through
retail credit as loan amounts are relatively small. Because of wide spread interest rate,
revenue can be higher since clients are too fragmented to bargain effectively.
The loan portfolio of JBL has been increased by Tk. 17242.84 million from Tk 32287.66
million at the end of 2010.At the end of 2010 registering 53.40% growth over the
previous years. But the bank management has recently felt the need to expand its credit
facility on retail credit sector which is almost unattended by bank till now. Day by day,
the fixed income earning population is increasing in number and therefore, the market for
retail credit is expanding with large opportunities for banks.
Again according to Clark et al. (2010), at the bank level, the principle attraction of retail
credit lending seems to be the belief that, its revenues are stable and thus can offset
volatility of non-retail business. As JBL management is emphasizing its focus on retail
credit, this study aims to investigate the feasibility of expanding the retail credit operation
in JBL. More specifically, this study wants to explore the problems and prospects of retail
credit in context of Jamuna Bank Limited in Bangladesh.

1.2 Objectives of the report

The main objectives of the study are follows:
Broad Objectives:
To fulfill the requirement for the completion of graduate (BBA) program.
To the problems and prospects of retail credit of JBL.

Specific Objectives:
To make an overview of JBL
To describe the process of Retail Credit
To identify the problem of Retail Credit

1.3 Methodology of the study

Both primary and secondary data have been collected. I have gathered primary data by
personal interview of the Executives of JBL. Mainly I have discussed with them verbally.
I collected information from them and the annual report of Jamuna Bank Limited that was
provided by Mohakhali Branch I used journals, brochures, manuals and several books on
Finance and Banking to prepare this report.
That is for preparing the report smoothly and accurately I used primary data and
secondary data.

a) Primary Sources:
Direct interviews with relevant personnel.
Experts opinion
Official records of JBL.

b) Secondary Sources:
Relevant paper and publications
Annual reports of JBL.
Relevant books and references

1.4 Limitation of the report

The present report is a record of some activities especially Retail Credit. There are so
many aspects of this bank that deserve to study. But due to various limitations and
absence of relevant documents such study could not be done. Some limitations are given
below:

Lack of Information or Data: Adequate and in-depth well-organized

information is not available for access. Though the officials tried to assist,
sometimes their working pressure couldn't give me proper assistance what
I needed. There is some information which need special permission from
top level is not always achievable.
Time Constraint: It is something like impossible to cover the entire Overall
Banking Performance and performance phenomena exploiting a three month time
period while an employee or an officer is awarded with one or two year
probationary period to do his or her particular job.
Secrecy of Information: Some of the information needed to explore the current
market scenario of the company was not disclosed.
Lack of Experience: Though I have prepared many reports before, I had no
experience of internship. So inexperience is one of the main constraints of the
study.

Jamuna Bank Limited at a Glance

2.0 An overview of Jamuna Bank Limited

Jamuna Bank Limited is one of the leading private commercial banks in Bangladesh
that has achieved tremendous popularity and credibility among the people for its
products & services. It is a public limited company and its shares are traded in Dhaka
and Chittagong stock exchange. The bank undertakes all types of banking transaction to
support the development of trade and commerce in the country. JBLs service is also
available for the entrepreneurs to set up new ventures of industrial units. To provide
clientele services in respect of international trade it has established wide, corresponding
Banking relationship with local and foreign banks covering major trade and financial
interest home and abroad.

2.1 Historical Background of JBL

Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies
Act 1994 with its Head Office at Printers Building, 5 Rajuk Avenue Dhaka-1000. The
bank started its operation from 3rd June 2001. Jamuna Bank Limited (JBL,) is a highly
capitalized new generation Bank with an Authorized capital of 4000 and Paid-up
capital Tk.1621.88 million. The total capital/equity of the bank stands at Tk. 6408.55
million as on December 31, 2010 and the number of branches rose to 66(including
SME center). The bank gives special emphasis on export, import, trade finance
SME finance Retail credit and finance to woman Entrepreneurs.

2.2 Corporate Slogan of JBL

Your Partner For Growth
2.3 Vision of JBL
To become a leading banking institution and to play a pivotal role in the development
of the country

2.4 Mission of JBL

The Bank is committed to satisfying diverse needs of its customers through an array of
products at a competitive price by using appropriate technology and providing timely
service so that a sustainable growth, reasonable return and contribution to the
development of the country can be ensured with a motivated and professional workforce.

2.5 Objectives of JBL

To remain one of the best banks in Bangladesh in terms of profitability and assets
quality.
To introduce fully automated systems through integration of information
technology.
To ensure an adequate rate of return on investment
To maintain a healthy growth of business with desired image.
To maintain adequate control systems and transparency in procedures.
To maintain adequate control systems and transparency in procedures.
To develop and retain a quality work-force through an effective human Resources
Management System.
To ensure optimum utilization of all available resources.

To pursue an effective system of management by ensuring compliance to

ethical norms, transparency and accountability at all levels.

2.6 Strategies of JBL

To manage and operate the Bank in the most efficient manner to
enhance financial performance and to control cost of fund.
To strive for customer satisfaction through quality control and delivery
of timely services.
To identify customers credit and other banking needs and monitor
their perception towards our performance in meeting those requirement.
To review and update policies, procedures and practices to enhance the
ability to extend better services to customers.
To train and develop all employees and provide adequate resources so
that customer needs car, be responsibly addressed.
To promote organizational effectiveness by openly communicating
company plans, policies, practices and procedures to all employees in a timely
fashion
To cultivate a working environment that fosters positive motivation for
or improved performance
To diversify portfolio both in the retail and wholesale market.

To increase direct contract with customers in order to cultivate a closer

relationship between the bank and its customers.

Organogram of Jamuna Bank Limited

Chairman
Board of Directors
Vice Chairman
Executive
Committee

Audit
Committee

Managing Director
Senior Executive Vice President

Additional Managing
Director
Senior Vice President
Senior Asst. Vice President

Vice President
Asst. Vice President

Senior Executive Officer

Executive Officer
Provisional Officer

Figure 02: Organogram of Jamuna Bank Limited

2.7

CORE VALUES

Chief Adviser

For the customers: Providing with caring services by being innovative in the
development of new banking products and services.
For the shareholders: Maximizing wealth of the Bank.
For the employees: Respecting worth and dignity of individual employees
devoting their energies for the progress of the Bank.
For the community: Strengthening the corporate values and taking environment
and social risks and reward into account.

2.8 Services of JBL

On line Banking
Retail Banking
Remittance and Collection
Import and Export handling and financing
Corporate banking
Loan Syndication
Project Finance
Investment Banking
Lease Finance
Hire Purchase
24 hours Banking-Cash ATM Facility
SME Loan

2.9 Products of JBL

All types of deposit products

The Client maintain different type of deposit accounts they are----Current Account
Savings Account
Short Term Deposit Account
Foreign Currency Account

2.9.1 Special Deposit Scheme

Monthly Savings Scheme
Students Deposit Scheme
Car Deposit Scheme
Pension Deposit Scheme
Money Multiplier
Small Savings Scheme
Double Growth Scheme
Triple Growth Scheme
Lacpoati Deposit Scheme
Education Deposit Scheme
Marriage Deposit Scheme
Rural Deposit Scheme
Crorepati Deposit Scheme

2.9.2 Loan Products

Letter of Credit
Bank Guarantee
Cash Credit
SOD
Loan (general)Hire Purchase
Lease Finance
LIM
LTR
Work-order Finance
10

Export Finance
House Building Loan
LDBP and
FDBP

2.9.3 SME Credit Scheme

Double Loan
Loan for purchase of professional right for shop/business
Festival Credit
Shop/Business office renovation Loan
Loan for purchasing capital machinery & vehicle
Working Capital/trade finance
Flexible working capital loan
Loan for Women Entrepreneur
Loan for Herbal Industry

2.9.4 Retail Credit Product

Any Purpose lifestyle Loan
Car loan
Household Durable Loans
Doctors Loan
Marriage Loan
Education Loan
Loan against Salary
Travel Loan
Hospitalization Loan
CNG conversion Loan
Consumer Credit Scheme
JBL Credit Card

2.9.5 Electronic Products

11

Internet banking
24 hours ATM
Debit card
Credit card
Telephone banking

2.10 CORPORATE PROFILE

Corporate History of Jamuna Bank LimitedName of the Bank
Status
Corporate Slogan
Commencement of operation
Authorized capital
Paid up capital

Jamuna Bank Limited

Private Limited company
Your partner for growth
June 03, 2001
The 1000.00 crore.

Industry
Nature of Business

The 223.00 crore

Banking industry of Bangladesh
Banking Business with different

Target customers
Number of Branches
Number of SME Centre
Number of employees

financial services/products.
Individuals and corporate customers
60
06
1511

Source: Web Site-jamunabankbd.com

2.11 Management
JBL is managed by highly professional people. The present Managing Director of the
Bank is a forward looking senior banker having decades of experience and multi
discipline of knowledge to his credit both at home and abroad. He is supported by an
educated and skilled professional team with diversified experience in finance and
banking. The management of the bank constantly focuses on the understanding and
12

anticipating customers needs and offer solution thereof. Jamuna Bank Limited has
already achieved tremendous progress with in a short period of its operation. The Bank is
already ranked as one of the quality service providers and known for its reputation.

2.12 JBL Corporate Culture

Employees of JBL share certain common values, which helps to create a JBL culture.
.
The client comes first.
Search for professional excellence.
Openness to new ideas & new methods
toDirector
encourage
creativity.
Managing
(MD)
Managing Director (MD)

Quick decision-making.
Additional
Flexibility and prompt response.
Additional Managing
Managing Director(AMD)
Director(AMD)

A sense of professional ethics.

Deputy
Deputy Managing
Managing Director
Director (DMD)
(DMD)
Senior
Senior Executive
Executive Vice
Vice President
President (SEVP)
(SEVP)
Executive
Executive Vice
Vice President
President (EVP)
(EVP)
Senior
Senior Vice
Vice President
President (SVP)
(SVP)
Vice
Vice President
President (VP)
(VP)
Senior
Senior Asst.
Asst. Vice
Vice President
President (SAVP)
(SAVP)

2.13

Asst.
Asst. Vice
Vice President
President (AVP)
(AVP)

JBL Managerial Hierarchy

Fig: Figure
shows
Managerial
Hierarchy
of JBL
First
Asst.
Vice
(FAVP)
First
Asst.
Vice President
President
(FAVP)
Junior
Junior Asst.
Asst. Vice
Vice President
President (JAVP)
(JAVP)
Senior
Senior Executive
Executive Officer
Officer (SEO)
(SEO)
Executive
Executive Officer
Officer (EO)
(EO)
First
Officer
13
First Executive
Executive
Officer (FEO)
(FEO)
Officer
Officer

Source: Official Website

Source: Web Site-www.jamunabankbd.com

2.14 Branches Network of JBL

Jamuna Bank Limited is the Private bank in Bangladesh. There are 70 branches all over
the country. Among them 38 Branches in Dhaka Zone, 12 Branches in Chittagong
Zone,13 Branches in Rajshahi Zone, 3 Branches in Sylhet Zone, 2 Branches in Comilla
Zone, 1Branch in Barisal Zone and 1 Branch in Khulna. Up to November 2011.
Table: Total Branches of Jamuna Bank Limited

14

wikipedia

Zone
Dhaka Zone
Chittagong
Rajshahi
Sylhet
Comilla
Barisal
Khulna
Total

Branches
38
12
13
3
2
1
1
70

Source:

3.0 History of Mohakhali Branch

Jamuna Bank Limited, Mohakhali Branch is situated at the second floor, Wireless gate
32-,Mohakhali, Dhaka-1212 .The bank is established in October 18, 2010. It has been
providing banking services for the customers of Mohakhali Commercial area.

3.1 Departments of the Branch

Account opening (Front Desk) department.
General Banking Department.
Cash department.
Investment department.

15

 Foreign Exchange department.

Clearing department.
Remittance department
Account and Administration department
Finance and Administration department

3.2 Number of Employees

Fig: Figure shows Branch Employees

SL No.

Designation

Number of
Employees

01
02
03
04
05
06
07
08
09

Vice President & Manager

First Assist. Vice President & sub-Manager
Junior Asst. Vice President
Senior Executive Officer
Executive Officers
Probationary Officer
First Officer
Accounts Officer
Staffs

Total
Source: office documents

16

1
1
3
5
7
10
12
5
6
50

3.3 Organ gram of Mohakhali Branch

Fig: Figure shows Organ gram of Mohakhali Branch

Manager and VP
(Md:Mofazzal Hossain)
(M. Shamsul Arefin)

Sub-Manager
(S.M Mahafuzul
Karim)

Accounts
Opening
(Mr.Rezbi)

Cash
Department

Opening

FCD (Finance
Control Department)

Nurul Amin
Shamol Mondol
Salma Ferdous

Tellers
1.Marjia Akter
(Probitonary Officer)
2.Moin Hossain(First
Officer)

17

JAVP
(Faisal Hossain)

Clearing
Department

Senior Executive Officer

(Md:Shibli)

Remittance
Foreign
Exchange
CleFaring
ExecutiveO fficer
(Faruk Ahmed)

4.0 Position of Internship activities:

For the achievement of my BBA Program, I have completed my three months internship
program from Mohakhali Branch of Jamuna Bank Ltd. I joined on 1 st February, 2012 and
completed my internship period successfully on 30th April, 2012.
This three month I have done lots of work in Jamuna Bank Limited Mohakhali Branch. I
involved seven departments in Jamuna Bank Limited Mohakhali Branch as an officer. It
was a great experience for me because of the new environment and also a different
culture. Those departments are following:
1. Account Opening
2. Deposit
3. Remittances
4. Clearing

18

4.1 Duties performed in Account opening section:

I was assigned for the first time after getting the order of internship program. Every day I
opened many accounts like savings account, current account, fixed deposit accounts and
monthly savings scheme. Every day I opened 10 to 15 accounts

4.2 Duties performed in deposit department:

In this department I was under the inspection of several activities and I was there up to 20
days approximately.

4.3 Duties performed in Local Remittance:

I gave some TT and DD payable entry. Non client services like T. T. and Pay order and
follow up with clients. Avoid the stop order PO, DD.

4.4 Duties performed in Clearing Department:

Clearing department plays a vital role in General Banking. Every day I received huge
cheque and give receiving seal and initial. Then I posted those cheque and prepare to send
clearing house in principal branch of Jamuna Bank. I received cheques DD, PO, etc. from
depositors attached with a deposit slip. I was there up to 10 days approximately.

19

Theoretical Frame Work of Retail Credit

5.0 Concept of Retail Credit

Todays banking industry is experiencing renewed interest in retail credit as one of the
strategic key tools of risk diversification. Retail credit lending is one kind of services that
banks provide to individuals with a cluster of products through branches, internet and
other channels (Clark et al., 2007).
According to Gopinath (2005), retail credit is, however, quite broad in nature - it refers to
the different retail credit products that commercial banks provide to individual customers.

20

Retail credit is becoming an increasingly complex concept to define. The operation of

providing retail credit is called retail lending or retail credit financing. While pure retail
credit is generally conceived to be the provision of mass market lending services to
private individuals, it has been expanded over the years to include in many cases services
provided to small- and medium sized business people.
Again, retail or consumer credit refers to the debts (credits) of consumers involved in
procuring consumer goods for the consumption of themselves and their families
(Westerfield, 1998).Stiroh (2004) has described retail lending as hotter than Vindaloo,
considering the fact that, Vindaloo the Indian-English innovative curry available in the
restaurants of London is very hot and spicy.
It seems that, retail lending is perceived to be the in-thing in todays world of banking. He
has also mentioned that today's retail lending sector is characterized by three basic
characteristics: multiple products (home loan, car loan, vacation loan, travel loan etc),

multiple channels of distribution (call centre, branch, internet and multiple customer
groups (consumer, small and corporate business people for daily needs).

5.1 Retail Credit Practices in Jamuna Bank Limited (JBL)

The Jamuna Bank Limited started to provide retail credit from the year 2007.For unstable
Net Interest margin and Regulatory barriers in corporate investment JBL need to earn Net
interest Income. So, JBL have to give emphasize on earning service charge from Non
funded business, SME and Retail Credit because JBL want to expand its retail credit as a
part of risk diversification strategy. Since then, retail credit has been targeted for
significant further growth.

5.2 Target Clients

Any Bangladeshi individual who has the capacity to repay loan is allowed to apply for
JBL retail credit. In specific terms-

21

The salaried executives of multinational companies.

Officials of middle to large size local corporations.
Government officials.
Officials working in semi- government, autonomous bodies.
Officials working in reputed NGOs,
International aid agencies and UN bodies,
Any tax paying businessmen of repute and

5.3 Brief details of the Retail products of JBL are given below

5.3. (a) Car Loan

JBL introduce Car loan for purchasing non-commercial, new and reconditioned vehicles
for personal use of individual.

Features of Car Loan

Features

Description

Loan Amount(Min)
Loan amount(Max)
Rate of Interest
Tenor

Tk. 5,00,000(For both new and reconditioned car)

Tk 20, 00,000 or 90% of the vehicle price.
16%
6 years (max) for brand new cars and 5 years (max) for
reconditioned car.

Down payment
Repayment method
Disbursement mode

10% of the loan amount

Monthly equal installment
Pay order directly issued in the name of respective car
company.

Other charges

1% on the loan amount or Tk. 1000 whichever is

higher+15%VAT

Penalty Charge
Stamp Charge

2% of the installment overdue

Tk. 470
22

Early Settlement
Criteria for application(Age
limit)

At any time with no penalty charge

Any Bangladeshi citizen of 25-60 years at the time of
maturity of loan.

Minimum Monthly Income

Tk. 20,000 for salaried individuals

Tk. 40,000 for businessman

Guarantors

Two persons.

5.3. (b) Household Durables Loan

For purchasing household durables like television, refrigerator, air-conditioner, washing
machine, computers and other household furniture for personal use, any individual can
apply for this loan.

Features of Household Durables Loan

Features
Loan Amount(Min)
Loan amount(Max)
Rate of Interest
Tenor
Down payment
Repayment method
Disbursement mode
Other charges
Risk fund
Penalty Charge
Stamp Charge
Early Settlement

Description
Tk. 50,000
Tk 5, 00,000 or 90% of the product price.
15%
4 years(max).
10% of the loan amount
Monthly equal installment
Pay order directly issued in the name of respective
company of purchase.
1% on the loan amount or Tk. 1000 whichever is
higher+15%VAT
1% on loan amount.
2% of the installment overdue
Tk. 470
At any time with no penalty charge

23

Criteria for
application(Age limit)
Minimum service length

Minimum Monthly
Income

Any Bangladeshi citizen of 21-60 years at the time of

maturity of loan.
Minimum service length of 1 year and must be a
confirmed employee (For salaried individual)
A business record of minimum 3 years(For self-employed
person)
Tk. 10,000 for salaried individuals and
Tk. 15,000-25,000 for businessman

Guarantors

Two persons.

5.3. (c) Any purpose Loan

For miscellaneous personal financial purposes such as, house renovation, marriage in the
family, rental payments, trips abroad, purchasing of different household items etc., any
individual can get this type of loan.

Features of any Purpose Loan

Features
Loan Amount(Min)
Loan amount(Max)
Rate of Interest
Tenor
Down payment
Repayment method
Disbursement mode
Other charges
Risk fund
Penalty Charge
Stamp Charge
Early Settlement
Criteria for
application(Age limit)

Description
Tk. 50,000
Tk 5, 00,000.
16%
5 years(max).
10% of the loan amount
Monthly equal installment
Savings account of clients or sometimes cash disbursement.
1% on the loan amount or Tk. 1000 whichever is
higher+15%VAT
1% on loan amount.
2% of the installment overdue
Tk. 320
At any time with no penalty charge
Any Bangladeshi citizen of 25-65 years at the time of
maturity of loan.

24

Minimum service length

Minimum service length of 2 year and must be a confirmed

employee(For salaried individual)

Minimum Monthly
Income

Tk. 15,000 for salaried individuals

Tk. 50,000 for businessmen

Guarantors

Two persons

5.3. (d) Doctors Loan

JBL introduce Doctors Loan for purchasing different medical equipments, machineries,
tools or other relevant items to fulfill professional needs of them.

Features of Doctors Loan

Features

Description

Loan Amount(Min)
Loan amount(Max)

Tk. 1,00,000
Tk 5, 00,000 for general practitioners.
Tk. 10,00,000 for specialist doctors that is , holding post
graduation degree

Rate of Interest
Tenor
Down payment
Repayment method
Disbursement mode
Other charges

16 %
5 years (max).
10% of the loan amount
Monthly equal installment
Clients savings account or sometimes cash disbursement
1% on the loan amount or Tk. 1000 whichever is
higher+15%VAT

Risk fund
Penalty Charge
Stamp Charge
Early Settlement

1% on loan amount.
2% of the installment overdue
Tk. 470
At any time with no penalty charge

25

Criteria for
application(Age limit)

Any Bangladeshi citizen of 25-65 years at the time of

maturity of loan.

Minimum service length

For salaried individuals, must be confirmed of an

established organization.
For self employed person, a professional experience of
minimum 2 years is required.
Tk. 10,000 for salaried individuals and
Tk. 25,000 for self- employed

Minimum Monthly
Income
Guarantors

Two persons.

5.3.(g) Loan against salary

This loan has given to meet the financial needs for any acceptable purpose.

Features of Loan against Salary

Features
Loan Amount(Min)
Loan amount(Max)
Rate of Interest
Tenor
Down payment
Repayment method
Disbursement mode
Other charges
Risk fund
Penalty Charge
Stamp Charge
Early Settlement
Criteria for application
(Age limit)

Description
Tk. 1,00,000.00
Tk.5,00,000.00 or 12 times gross salary ,which is lower
17%
3 years (max).
N/A
Monthly equal installment
Clients savings account or sometimes cash disbursement.
1% on the loan amount or Tk. 1000 whichever is
higher+15%VAT
N/A
4%
Tk. 320
At any time with no penalty charge
Any Bangladeshi citizen of 21-59 years at the time of
maturity of loan.

26

Minimum service length

Minimum service length of 1 year and must be a confirmed

employee (For salaried individual)

Minimum Monthly
Income
Guarantors

Tk-15,000
Two persons.

5.3 (h) Travel Loan

To meet the financial needs for travel this loan can be given.

Features of Travel Loan

Features
Loan Amount(Min)
Loan amount(Max)
Rate of Interest
Tenor
Down payment
Repayment method
Disbursement mode
Other charges
Risk fund
Penalty Charge
Stamp Charge
Early Settlement

Description
Tk. 20,000
Tk 2, 00,000.
16%
3 years (max).
10% of the loan amount
Monthly equal installment
Clients savings account or sometimes cash disbursement.
1% on the loan amount or Tk. 1000 whichever is
higher+15%VAT
1% on loan amount.
2% of the installment overdue
Tk. 320
At any time with no penalty charge

27

Criteria for
application(Age limit)

Any Bangladeshi citizen of 25-65 years at the time of

maturity of loan.

Minimum service length

Minimum Monthly
Income

Guarantors

Minimum service length of 2 year and must be a

confirmed employee(For salaried individual)
Tk. 12,000 for salaried individuals and Tk. 25,000 for
businessmen(For rented people)
Tk. 10,000 for Govt., Semi-Govt and autonomous bodies
employees.
Two persons.

5.3 (i) Hospitalization Loan

To meet the financial needs for treatment purposes in well-reputed hospitals/clinics of
Dhaka and Chittagong, any individual can get this loan

Features of Hospitalization Loan

Features
Loan Amount (Min)
Loan Amount (Max)
Rate of Interest
Tenor
Down payment
Repayment method
Disbursement mode
Other charges
Risk fund
Penalty Charge
Stamp Charge
Early Settlement

Description
90% of the total treatment cost
Tk 5,00,000.00
16%
2 years (max).
N/A
Monthly equal installment
Clients savings account .In case of salaried individuals,
sometimes cash disbursement may happen.
1% on the loan amount or Tk. 1000 whichever is
higher+15%VAT
1% on loan amount.
2% of the installment overdue
Tk. 320
At any time with no penalty charge

28

Criteria for
application(Age limit)
Minimum service length

25-65 years at the time of maturity of loan.

Minimum service length of 2 year and must be a confirmed
employee(For salaried individual)

Minimum Monthly
Income

Tk. 10,000 for salaried individuals

Tk. 25,000 for businessmen

Guarantors

Two persons.

5.3(j) CNG Conversion Loan

For converting vehicles from carbon based fuel to Compressed Natural Gas system, this
loan is offered to individuals.

Features of CNG Conversion Loan

Features
Loan Amount(Min)
Loan amount(Max)
Rate of Interest
Tenor
Down payment
Repayment method
Disbursement mode
Other charges
Risk fund
Penalty Charge
Stamp Charge
Early Settlement

Description
N/A
Tk 1, 00,000.
16%
1.5 years (max).
10% of the loan amount
Monthly equal installment
In the form of pay-order
1% on the loan amount or Tk. 1000 whichever is
higher+15%VAT
N/A
2% of the installment overdue
Tk. 320
At any time with no penalty charge

29

Criteria for
application(Age limit)

Any Bangladeshi citizen of 21-65 years at the time of

maturity of loan.

Minimum service length

Minimum Monthly
Income

Minimum service length of 2 year and must be a

confirmed employee (For salaried individual).
For self-employed individual, a business record of
minimum 4 years.
Tk. 10,000 for salaried individuals
Tk. 25,000 for businessmen

Guarantors

Two persons.

5.4 Required documents for applying Loan

To apply for any of the above retail loan of JBL, a client needs his/her photographs, copy
of passport/National ID card, last one years bank statement, copy of TIN, trade
license(for businessmen), personal net worth statement, deceleration of liability position
and monthly income. Again client have to submit the 2 copies photograph, copy of
National ID/Passport, TIN of the guarantors.
One of the special criteria of retail credit or consumer credit is that, it is an unsecured loan
as there is no requirement for collateral except letter of guarantee.

5.4. (1) Required Charge Documents

Duly filled in loan application form with terms and condition signed

Promissory Note

Demand Promissory Note

Letter of Guarantee

Letter of Set-Off

Irrevocable Letter of Authority to repossess the vehicle(for car loan)

Ownership transfer form signed by customer(for car loan)

Letter of Introduction(for salaried person) and

Letter of offer with full terms and conditions stated therein and duly accepted.

30

5.5 Credit Assessment, Approval and Disbursement Procedure

The prior condition for any credit disbursement is to critically assess and approve the
credit proposal that is the client selection and assessment. In case of retail credit it should
be done more crucially as retail lending is one of the types of unsecured individual
lending without collateral. 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 that is, repayment of loan installment on time.
In JBL, more emphasis is given on repayment potential of loans out of funds generated
from borrowers business (cash flow) instead of realization potential of underlying
securities while assessing a retail credit proposal. Following are the steps that are
maintained in JBL for assessing any retail credit proposal.

5.5.0 Credit Application

The first stage of retail credit assessment and approval process is a client application that
contains the following information:

Telephone and address contact details

Employment/business details

Income Details

Income and Expenditure Statement

Personal Net worth Statement

Residence details

Credit references and guarantors details

Basically, branches receive the client application with other required papers necessary for
different retail loans.

31

5.5.1 Contact Point Verification (CPV)

Verification is a key part of application process. Contact point verification is done for all
applicants except for the High Net Worth individuals or the clients having good account
relationship with Bank. The objective of this process is to check the declared/undeclared
information of the applicants. CPV includes:

Applicants Residence, business/office address, phone, status

Guarantors Information Verification

Bank statement and other income documents verification.

In most of the times, CPV is done by branch managers. CPV is done by third party
agency also to enable the client selection of better accounts for accelerated processing and
quick rejection of those having negative/inadequate information. Then the Retail Officer
verify data which collected by third part.

5.5.2 Guarantee
One of the fundamental perquisites for securing retail credit is to obtain guarantee
acceptable to the bank by way of social status and perceived creditworthiness. Retail
credit officers at branch level check the guarantors information very carefully. In case of
guarantors, following are the rules that are maintained:

Existing guarantor of any other loan of the bank will not be accepted as
other guarantor for other loans.

Any existing borrowers will not be taken into account as a guarantor for
any other loan.

Guarantee from the Chairman, Managing Director and Directors of

Corporate facility clients and obtaining will be allowed after the prior
approval of Head Office.

32

All guarantors will be verified whether they have any relationship with
banks earlier with either positive or negative status.

5.5.3 De duplication check

To know the financial position of the client Retail Credit Department send a specific form
of client to Bangladesh Bank which name is CIB (Credit Information Bureau).After
verify the position of the client CIB returned back to the branch, if the report is negative
Banks decline the client, otherwise the retail credit officers of the branch make a credit
proposal for further assessment and approval. Then the credit proposal along with
documents is sent to Retail Credit Head Office (RHO).Up to this point at branch level, it
required 7 to 10 days for processing.

5.5.4 Credit Assessment

While assessing credit risk for new customers Gross Monthly Income (GMI) /
Validated Income will be evaluated and documented.
In calculating Gross Monthly Income the applicants (1) salary income (2) rent
Income (3) Joint applicant Income (4) income from Investment (5) income of
Proprietorship Business (6) income from Private Limited Company and/or other
form of income may come under consideration.
As a general guideline, the maximum credit limit for each account will be calculated
as follows:

Credit Limit Matrix:

Credit Score Obtained

Multiplication Factor

Less than 45
45-50
51-55
56-60
61-65
66-70
71-75
76-80

0
1
2
3
4
5
6
7

33

81-85
86-90
91 and above

Proposed

Max.

Limit

Credit

8
9
10

GMI of the Applicant (validated by RBD) * Multiplication

Factor

For example, an applicants validated GMI is Tk. 18,000

Credit Score is 65 and
Factor for his range is 4
So Maximum Allowable Credit Limit = Tk .18, 000 * 4 = Tk. 72,000.00

The credit multiplication factor has been kept conservative initially, which shall be
revised from time to time. However any customer proving successful credit record shall
become eligible for score flexibility.

5.5.5 Credit Approval Process

There is a credit approval authority to finally decide whether the retail loan should be
sanctioned or not. The authority includes

The Board of Directors

The Executive Committee of the Board

The Managing Director

The Deputy Managing Director

34

Retail Credit Committee

After presenting the credit proposals, the authority critically analyzes the aspects and after
that, they finally decide about the retail credit sanction. The members of the authority
have some individual delegation power of retail credit, which is limited by Tk. amount.
Up to this point, three to four days are required for processing.

5.5.6 Credit Disbursement

After loan approval vendor will receive a facility confirmation letter. On the basis of that
customer will open a SB account with the branch nominated by the customer. Then he/she
will deposit the amount of down payment, service charge including VAT, risk fund, stamp
cost. After that the vendor will be paid the total value of the item in the form of Pay
Order.

5.6 Number of Clients in Retail Credit

In the year 2007, 2008 and 2009, 2010 the total numbers of clients in different retail
credit were 1594, 2843, 4696 and 8312 respectively.

5.7 Promotional Activities

For promotional activities, JBL has recruited

Around eighty number of Direct Sales Agents (DSA) who reaches from door
to door to aware people about JBL retail credit.

Paper advertisements are sometimes there JBL sometimes arranges retail loan
fair.

35

Analysis and Findings

6.1 Comparative analyses with two leading banks with Eastern Bank
Limited (EBL) & Dhaka Bank Limited

Comparison of retail credit interest income among for banks Figures in

Cr
36

.
Bank
s

JBL
EBL
DBL

Years
2008

2009

11.09
11.86
6.82

14.29
32.45
4.89

Growth
over
2010
2009
28.85% 21.94
173.60% 59.80
-28.30% 8.77

Growth over
2010

2011

53.53%
84.28%
79.34%

33.24
106.64
12.39

Growth
Over
2011
51.50%
78.83%
41.28%

Sources of Data: Annual Reports of JBL, EBL& DBL in 2008-2011

According to the above table, it can be easily observed that, EBL has always highest
amount of interest income in the four consecutive years among these three banks. As the
Jamuna Bank limited is very much new in this sector but the interest income is
satisfactory.

Number of Clients in Retail Credit

Bank
s
JBL
EBL
DBL

Years
2008
1594
4963
4311

2009
2843
9489
4894

2010
4696
8960
5443

2011
8312
10236
5726

Table 26: Comparison of number of clients in retail credit among three banks

Types of Retail Credit Products Offered

The retail credit products offered by three banks shown in table-01 are following
Table: Comparison of retail credit products offered among three banks

Sl.
1.

JBL
Car Loan

EBL
Car Loan

37

DBL
Car Loan

2.

Any Purpose Loan

Jibandhara or Any Purpose

Loan

Personal or Any
Purpose Loan

3.

Household Durables
Loan
Doctors Loan

Executive Loan

Vacation Loan

Utshabs or Vacation Loan

Home Loan

4.
5.
6.
7.
8.
9.
10.

Marriage Loan
Education Loan
Loan against Salary
Travel Loan
Hospitalization Loan
CNG Conversion Loan
Table-01

Different Features of Similar Products Offered

There is only one type of product that is similar among JBL, EBL&DBL which is
Personal Loan or Any Purpose Loan. The comparative features of this loan among three
banks are shown in the following table:

Comparative Features of Any Purpose Loan among three banks

Features
Banks
Loan amount(min)

JBL
Tk. 50,000

EBL
Tk. 50,000 or 10-12 times of
gross salary

DBL
Tk. 25,000

Loan amount(max)
Rate of Interest
Tenor

Tk. 5,00,000
16%
1-5 years

Tk. 10,00,000
21%
1-5 years

Tk. 5,00,00
18%
1-4 years

38

Criteria(Age limit)
Down Payment
Repayment Method
Days needed for
disbursement
Disbursement Mood

Disbursement System

25-65 years at the time of

maturity of loan

22-60 years at the time of

maturity

21-60 at the time of

10% of total amount

30% of total amount

Monthly equal
installment
7-10 days

Monthly equal installment

Clients savings account,

sometimes cash for
salaried person

Clients savings account. In

most of the times cash.

N/A

Monthly equal inst

5-7 days

21 days

Clients savings a

Decentralized

Centralized

Centralized

1% on loan amount or
Tk. 1000 whichever is
higher+15%VAT on that
amount

1.5% on the loan

amount

1.5% of the
loan amount
+15%VAT

1% on loan amount

N/A

N/A

Penalty
Charge(Amount on
installment overdue)

2%

3%

4%

Stamp Charge
Early Settlement with
cost on total
outstanding amount

Tk. 320
Any time at free of cost

Tk. 600
Any time, 2%
( before 12 months),
1% (12 months and
above)

Tk. 740
At any time
with 2.5% cost

No. of Guarantors
Mostly preferred client

Two persons
Salaried Individuals
Self-Employed person

One person
Salaried Individuals
Self-employed
person
Businessmen.

Two persons
Salaried
Individuals
Self-employed
person
Businessmen

Other
Charges(Processing
Fee)
Risk Fund

According to above table, it can be commented that, EBL and DBL, two major
competitors of JBL have already targeted different classes of people in the society. EBL is
already enjoying larger market share in terms of both disbursed amount and interest
income. DBL has targeted greater segments and trying to come upfront with other
attractive features and promotional activities in retail credit.

39

Promotional activities
In the following table-2, the medium of promotional activities are shown for three banks.

Table 2: Comparison of promotional activities among three banks

JBL
Direct Sales Agent(DSA)

EBL

DBL

Display media advertisement

Print media advertisement

Billboard
Fair arrangement

Table-2
According to the above table-2, EBL has a complete promotional activities compared
with other two banks .JBL has only three wings in promotional activities.

6.2 Trend Analysis

Here I have taken 5 years data of Loan & Advances of Jamuna Bank Ltd. Using List
Square Method The Following trend equation will be obtained
Yc = 2643.38+889.38X
To fit a straight line the following value will be obtained

In 2006,Yc = 864.62

In 2007,Yc= 1753.62

In 2008,Yc= 2643.38

In 2009,Yc= 3532.38

In 2010,Yc= 4422.14
40

To fit a straight line trend in the above data are plotted:

The trend line indicates upward trend, because the value of trend equation
increases over every year.

6.3 Regression Analysis

2006
1728.48

20007
2092.40

2008
2730.80

2009
4235.62

2010
6067.36

Loan &
1279.66
Advance
Let Deposit = X
Loan & Advance= Y

1661.75

2103.69

3228.77

4943.05

Deposit

To analyze the regression, we have used Karl Pearson method. Under this
method there are two equations

Regression equation X on Y

X = a + by
X = 172.44+1.21Y

Here X is dependent variable, & Y is independent variable. This equation indicates that,
the value of X(Deposit) will increases when the value of Y(Loan & Advances) increases
and vice versa. So in the context of Jamuna Bank Ltd, it will be cleared that when loan &
advances increases that mean deposit will also increases and vice versa.

Regression equation Y on X
Y = a + bX
Y = -154.49+0.83X

Here Y is dependent variable, & X is independent variable. This equation indicates that,
the value of Y(Loan & Advances) will increases when the value of X(Deposit) increases
and vice versa. So in the context of Jamuna Bank Ltd, it will be cleared that when
deposit increases that mean loan & advances will also increases and vice versa.

41

6.4 Correlation of coefficient

r = 0.99
In this case there is very high degree of positive correlation between two
variables (i.e. Deposit and Loan & Advances). Thus when the total amount of
deposit goes up then the amount of loan & advances also goes up.

6.5 Coefficient of Determination:

r2= 98.01%
It means that, 98.01% of the variation in the dependent variable has been
explained by the independent variable.

6.6 Key Financial Indicators

Some key financial indicators are given in graphical presentation:

Operating profit
Profit after tax
Earnings per share(EPS)
Net Asset Value Per Share(NAV)

Market Price Per Share

Price Earning Ratio Per Share
Shareholder's Equity
Shareholder's Equity(Million)
Investment
Deposit & Advances
42

 Net interest Income

Utilization of Fund
Concentration of Loans & Advances:

Though changing economic business conditions, the financial performance of JBL was
expectedly consistent. Besides, restraining aggressive lending, JBL diversified its funding
sources, recovered more bad loans, enhanced quality of assets fostered control and
compliances during the year. Although number of shares increased due to stock dividend,
basic earning share (EPS) increased, Net asset value per share (NAV), Market price per
share, Shareholders equity, Net interest income also increased.

6.7 SWOT Analysis:

SWOT analysis is an important tool for evaluating the companys Strengths, Weaknesses,
Opportunities and Threats. It helps the organization to identify how to evaluate its
performance and scan the macro environment, which in turn would help organization to
navigate in the turbulent ocean of competition.

6.7.1 Strengths:
Top Management
The top management of the bank is a key strength for the JBL, Mohakhali branch
and the contributed heavily towards the growth and development of the bank. The
top management officials all have had reputed of banking experience, skill and
proficiency.
Branch Reputation
This Branch has already established a favorable reputation for the bank. Lot of customer
has relation with the branch and they are happy from the service of this branch.
Facilities and equipment

43

JBL, Mohakhali branch has adequate physical facilities and equipments to provide better
services to the customers. The bank has computerized and online banking operations
under the software called Flora banking operations. Counting machines in the teller
counters have been installed for speedy service of the cash counters. Computerized
statements for the customers as well as for the internal use of the banks are also available.
Impressive branch
This creates a positive image in the minds of the potential customers and many people get
attracted to the bank. This is also an indirect marketing campaign for the bank for
attracting customers. 70 branches of the bank are impressive and are attractive to
customer.
Interactive corporate culture
JBL, Mohakhali branch has an interactive corporate culture. Unlike other local
organization, JBL, Mohakhali branchs work environment is very friendly, interactive and
formal. There are no hidden barriers or boundaries while interacting among the superior
or the subordinate. The Banks likely work environment boosts up the spirit and
motivation of the employees.

Team work at mid level and lower level

At JBL, Mohakhali branch mid level and lower level management, there are often team
works. Many jobs are performed in groups of two or three in order to reduce the burden
of the workload and enhance the process of completion of the job.
Now giving bellow some other strengths given bellow:

Experienced Top level management with satisfactory capital base.

Knowledge based operations, management culture and sustainability of growth.

IT infrastructure that helps to cope with modern techniques and facilities like realtime online banking, debit card & credit card booth facilities.

44

Corporate Social Responsibility (CSR) is gaining fast global acceptance and

socially equitable business practices.

Good understanding between employees.

Adequate financial resources.

An acknowledged market leader.

Efficient and dedicated employees.

6.7.2 Weakness:
Advertising and promoting
Advertising and promoting is the one of the weak point of the Bank. JBL,
Mohakhali branch does not have any effective truck for aggressive marketing activities.
This lacking pushes the bank far behind form the other competitor.
Technology
The bank uses technology for online banking is very poor. The flora
banking system does not give standard level of service that need to
keep good relation with customer.
ATM
This is the fastest growing modern banking concept. The bank should grab this
opportunity and take preparation for launching ATM.
Now giving bellows some other weakness given bellow:

Missing some key skills.

No specific policy following by the employees.

Unexpected close of Flora Banking server system.

Unable to pay large amount of cash from cash in-charge on customer demand.

Excessive loan expansion for getting high rate of profit.

Lack of adequate supervision of old and familiar borrowers.

6.7.3 Opportunities
Diversification
Jamuna Bank Limited can pursue a diversification strategy in expanding its current line of
business. The management can consider options of starting merchant banking or diversify

45

in to leasing and insurance. By expanding their business portfolio, the bank can reduce
their business risk.
Credit cards and Tele banking
These are the new retail banking services provided by the foreign banks. JBL, Mohakhali
branch can evaluate the option of launching credit cards and Tele banking system.
Now giving bellows some other opportunities given bellow:

Through ATM service, an account holder can easily operate their banking
transactions.

Efficient human resources and competitive remuneration packages.

The company has huge lot of capital fund so the company should invest or introduce
new Product line or services.

Ability to serve additional customer groups or expand into new markets or segments

6.7.4 Threats:
Multinational banks
The emergence of multinational banks and their rapid expansion poses a potential threat
to the new growing private banks. Due to the booming energy sector, more foreign banks
are expected to arrive in Bangladesh. Moreover, the already existing foreign banks such
as Standard Chartered are now pursuing an aggressive branch expansion strategy. Since
the foreign banks have tremendous financial strength, it will pose a threat to local banks.
Upcoming banks
The upcoming private local banks can also pose a threat to the existing private
commercial banks like Jamuna Bank Limited. It is expected that in the next few years
more local private banks may emerge. If that happens the intensity of competition will
rise further and banks will have to develop strategies to compete against an on slaughter
of foreign banks.
Contemporary banks
The contemporary banks of Jamuna Bank Limited such as Dhaka bank, and Estern Bank
are its major rivals. These banks are carrying out aggressive step to attract lucrative
clients as well as big time depositors.
Now giving bellows some other threats given bellow:

Enlarge contest day-to-day with other competitors.

46

Collapse share price in capital market.

Problems in recovering classified loans.

Technical incompetence decrease customers faith.

Not stable in political environment.

Huge numbers of competitors.

This facilities the organization to make their existing line of performance and also foresee
the future to improve their performance in comparison to their competitors base on
SWOT analysis.

Findings
6.8 Problems of Jamuna Bank Limited (JBL) in Retail
Credit Operation
From the above description and comparative analysis with two other banks, following
problems are found in Jamuna Bank Retail Credit, which is given below:
47

 Less diversified target client segments

JBL currently is allowing retail credit disbursement to a few individuals who are
businessmen. Again, salaried individuals are getting preference in terms of retail credit.
Though the numbers of fixed income earning people are increasing day by day, there is an
existing large segment of business people of different types in Bangladesh who needs
retail loan frequently rather than salaried individuals. Also, the self-professionals related
to the legal activities and media are not there in the target clients segment. This narrow
focus on target clients is reducing the market share of JBL in retail lending.

Lengthy Assessment Procedure

For the compliance of prudential guidelines of Bangladesh Bank, 2004, JBL asks for CIB
report for an amount of TK. 2, 00,000 and more. As it takes seven to ten days for CIB to
be returned back to the branches, almost 10-15 working days are needed by JBL to
disburse retail credit.
Now days, people are too busy to spend longer time for having a smaller amount of loan
for their personal need. For this longer assessment process that is widening the time
interval between a loan application reception and loan disbursement has resulted less
number of clients and has also affected the interest income.

Decentralized Disbursement System

The retail credit disbursement process of Jamuna Bank is decentralized which is also a
barrier for it to take steps for more expansion in retail credit. As the credits sanctioned are
disbursed from branch level, most of the employees of credit department in branches are
engaged with disbursement related activities in most of the times which hampers the
branch activities to attend more clients.

48

 Inadequate Promotional Activities

JBL has currently direct sales agent (DSA) and paper advertisement only this two
medium for frequent promotional activities in retail credit. Sometimes it arranges fair for
retail credit. In the present time perspective, multimedia activities have expanded in such
a way that, larger number of people watch television and listen in radios rather than
reading newspaper. People are also attracted by colorful billboards in the road .JBL has
taken no steps for promotional activities up to now in display media and so on which can
also be a cause for having lesser market share than the competitors

6.9 Prospects of Jamuna Bank Limited (JBL) in

Retail Credit Operation
From the above study and competitive analysis on Jamuna Bank, the prospects that are
found are following:

Diversified Product Portfolio

JBL currently has diversified product portfolio. From the above comparison, it can be
easily observed that, the other immediate major competitors like Eastern Bank, Dhaka
Bank have only three to four types of product and with these products, they are trying to
capture middle-class, upper middle class and upper class peoples personal credit need.
But Jamuna Bank has separate cells for separate client segments which is one of the
important aspects of JBL. This is one of the crucial prospects for PBL to proceed with
retail credit further.

Lower interest rate and related cost

49

It can be said confidently from the above comparison that, JBL has the lowest interest rate
in terms of all retail credit products among its competitors which is an opportunity for it
to attract new clients.
Again, in terms of processing fee, stamp charge and early settlement cost, wherein its
other competitors are taking higher amount and charges for early settlement, JBL charges
the lowest amount and allows its client for early settlement at free of cost, which is
convenient for clients.

Lower credit amount and credit cycle

In some retail products, JBL offers different lowest amount and time interval as a
minimum which is also a convenience for the clients of a developing country like
Bangladesh. In Bangladesh, most of the fixed income earning people have income range
within Tk. 15,000-50,000.For them to avail an amount of retail credit for more than Tk.
50,000-5,00,000 to fulfill personal needs is almost impossible. Lower tenor of credit
lessens the burden from clients and inspires them to take more credit which is currently
offered by JBL.

Protection against defaulter

As JBL asks for CIB for any amount of TK. 50,000 and above, it protects JBL of holding
default clients and secures the income generated by retail credit.

7.1 Conclusion
Retail lending has been a spectacular innovation in the private commercial banking sector
in recent years. The growth of retail lending, especially, in a developing countrys
economy, is attributable to the rapid advances in information technology, the evolving
macroeconomic environment, financial market reform, and several micro-level demand
and supply side factors.
50

In todays Bangladesh, banks, especially, the private commercial banks consistently point
to the stability of revenue and profit as the most important feature of retail lending and a
key motivation for the recent interest. In particular, retail stability is seen as valuable for
commercial banks seeking to offset the volatility of riskier business lines, such as trading
and other capital-market activities. While retail lending offers phenomenal opportunities
for growth, the challenges are equally daunting. How far the JBL retail banking will be
able to exist in retail banking industry in future will depend upon the capacity building of
the banks to meet the challenges and make use of the opportunities profitably.
From the above analysis and comparison, it has been proved that, Jamuna Bank though
has some problems, yet it has lots of opportunities to carry on its retail lending business.
Diversified product portfolio, lower rate of charges etc is the favorable features of JBL for
clients. If Jamuna Bank follows the above recommendations, to cope up its problem,
Jamuna Bank will be able to continue to chart in this traded path

7.2 Recommendations
With the consideration of the above whole study especially the problems and prospects, I
suggest the JBL management to think about the following points:

JBL management should take care of its IT development. If there is an online

system between Retail Credit Head Office (RHO) and branches, the

51

applications along with necessary documents will be able to be transferred in

short time and with less costs for assessment into the RHO. It will also reduce
the disbursement time interval and JBL will be able to get more clients.

JBL has currently decentralized retail credit disbursement system which is

requiring more time for even any small amount of loan. In this case, JBL
should develop a central database system which will enable the RHO of JBL
to disburse any amount of retail credit directly from Head Office. It will not
only reduce the loan disbursement time interval but also helps branches of JBL
to be more retail client oriented. This central database system will also enable
RHO to identify any retail client of any branch at any time, which will ensure
highest level of monitoring and quality control.

JBL management should take more steps to promotional activities.

Television advertisement, creating billboard, recruiting more sales agents and
arranging retail loan fair can add a large opportunity in achieving more market
segments.

They should take necessary steps regarding conservative security.

As they provide less maturity period so to attract customer they can increase
the installment period so it will be flexible to the customers.

References:
A Book for Total Credit Policy for Jamuna Bank.
Bangladesh Bank (2007).Prudential Regulations for Consumer Financing.
Clark, T., Dick, A., Hirtle, B., Stiroh, K., & Williams, R.(2007).The Role of retail
in U.S Banking
Dhaka Bank Limited (2008).Annual Report.

52

Dhaka Bank Limited (2009).Annual Report.

Dhaka Bank Limited (2010)Annual Report.
Dhaka Bank Limited (2011).Annual Report.
Eastern Bank Limited (2008).Annual Report.
Eastern Bank Limited (2009).Annual Report.
Eastern Bank Limited (2010).Annual Report.
Eastern Bank Limited (2011).Annual Report
Gopinath, S. (2005, May).Retail Banking-Opportunities and Challenges. Paper
presented at the
Industry. Journal of Economic Policy Review, 1-18.
Jamuna Bank Limited(2008).Annual Report.
Jamuna Bank Limited (2009).Annual Report.
Jamuna Bank Limited (2010).Annual Report.
Jamuna Bank Limited (2011).Annual Report.
Jamuna Bank Limited (2008).Retail Banking Credit Policy Manual.
Stiroh, J.(2004).Diversification in Banking. Journal of Money, Credit and
Banking, 39(1), 49-81.
http://www.Jamuna bank-bd.com/ accessed
Wikipedia

53

Appendix
Trend Analysis
YEAR
2006
2007
2008
2009
2010
N= 5

Loan &
Advances
Y
1279.66
1661.75
2103.69
3228.77
4943.05
Y = 13216.92

Deviation
X

XY

-2
-1
0
+1
+2
=0

- 2559.32
- 1661.75
0000
+3228.77
+9886.10
XY =
8893.80

4
1
0
1
4
X2 =10

Using least square method,

The equation of straight line trend is:
Yc= 2643.38+889.38X
Where, a=Y/N
=13216.92/5
= 2643.38

And,

b=XY/ X2
=8893.80/10
= 889.38

54

(Fig crore)
Yc =
2643.38
+889.38X
864.62
1753.62
2643.38
3532.38
4422.14

Regression Analysis

Deposit
Loan &
Advance

2006
1728.48

20007
2092.40

2008
2730.80

2009
4235.62

2010
6067.36

1279.66

1661.75

2103.69

3228.77

4943.05

Let Deposit = X
Loan & Advance= Y
Year
X
2006
1728.48

Y
1279.66

X2
2987643.11

Y2
1637529.72

2007

2092.40

1661.75

4378137.76

2761413.06

2008

2730.80

2103.69

7457268.64

4425511.62

2009

4235.62

3228.77

17940476.78

10424955.71

2010

6067.36

4943.05

36812857.37

24433743.30

Y=
13216.92

X2=69576383.66

Y2=43683153.41

N= 5 X=16854.66

To analyze the regression, we have used Karl Pearson method. Under this
method there are two equations

Regression equation X on Y

X = a + by

55

XY
2211
866.7
2
3477
045.7
0
5744
756.6
5
1367
5842.
79
2999
1263.
85
XY
=
5510
0775.
71

XY-(X*Y)/N

Where, b=
Y2-(Y)2/N

55100775.71-(16854.66*13216.92)/5
43683153.41-(13216.92)2/5

=1.21
And, a= X - bY
=X /n b*Y/n
= 16854.66/5 (1.21)*13216.92/5
= 3370.93 3198.49
= 172.44
X=172.44+ 1.21Y

Regression equation Y on X
Y = a + bX

Where, b=

XY-(X*Y)/N

X2-(X)2/N

55100775.71- (16854.66 * 13216.92)/5

69576383.66 (16854.66)2/5
= 10547437.14 / 12760470.92
= 0.83
a=Y-bX
= Y /n b*X/n
= 13216.92/5 (.83)* 16854.66/5
= 2643.38 2797.87
= -154.49
Y= -154.49 + .83X

56

Correlation Co-efficient
r = XY/X2Y2
=55100775.71

69576383.66*43683153.41

=0 .99

Coefficient of Determination
r2= (0 .99)2 =0.98=98.01%

57