Welcome

M.M.Abdullah
S.N: 20111105009
MBA,Second Semester
Department of Management Studies
Faculty of Business Studies
Bangabandhu Sheikh Mujibur Rahman Science & Technology University
 TITLE:
Loan Disbursement and Recovery System of a state
owned Bank: A special study on Janata Bank Limited,
Elephant Road Corporate Branch, Dhaka
 Executive Summary
Banking business mainly maintains flow of funds from depositors to investors. In doing so,
banks need to collect deposit from the depositors and then distribute those as loan to the
investors. Here, Loan Disbursement and Recovery System, it is most simply defined as the
potential that a bank borrower or counterparty will fail to meet its obligations in accordance
with agreed terms.The goal of Loan Disbursement and Recovery System is to maximize
a banks risk adjusted rate of return by maintaining loan risk exposure within
acceptable parameters. The effective management of loan is a critical component of a
comprehensive approach to risk management and essential to the long-term success of
any banking organization.The report points out the various functions and activities of
Loan Disbursement and Recovery System of Janata Bank Ltd, Elephant Road Corporate
Branch.
 CHAPTER 1-INTRODUCTION
1.1. Introduction of the Report
Commercial Bank performs various responsibilities now a day. Providing Loans and
Advances is one of the main duties among them. Basically credit is the institutional
arrangement of lending funds mainly to the traders and industrial entrepreneurs by the
banking company. The major portion of banks funds is employed by various ways of loans
and advances, which is the most profitable employment of its funds.
1.2. Origin of the Study
The internship report is prepared as a partial fulfillment of the requirement of MBA
program. The report is prepared based on Loan Disbursement and Recovery System of a
state owned Bank: A special Study on Janata Bank Limited, Elephant Road Corporate
Branch During the internship program, I have worked as an internee at Janata Bank
Limited, Elephant Road Corporate Branch. During this period I learned how the host
organization works with the help of the internal supervisor.
 1.3. Objectives of the Study

The overall objective of the study is to know the Loan Disbursement and Recovery
System of a state owned Bank: A special Study on Janata Bank Limited, Elephant
Road Corporate Branch The specific objectives of the study are as follows: -
To understand the activities of Loan Disbursement and Recovery System of JBL.
To know the terms and conditions of the loan disbursement and recovery system of
JBL
To identify the problems related to loan repayment of JBL.
To know the overall services of JBL.
1.4. Scope of the study
Banks play an important role in the economy of a nation. Banking Institutions are
indispensable in a modern economy and banks play the role of vein in the
economic body of the society. Banks also play pivotal role in the economic
development of the country and form the core of money market in an advanced
country. In this study, the main thrust is given on Loan Disbursement and
Recovery System of Janata Bank Ltd. because loan encompasses the banking
done by the mass people.
 1.5. Research Methods
The Primary Sources are as follows:-

I worked 3 months as an intern at Janata Bank Limited, Elephant Road Corporate Branch

During my internship time, I discussed with officials about the loan disbursement and
recovery system of JBL.

Sharing practical knowledge of officials.

The secondary Sources are as follows:-

Annual report of Janata Bank Limited
Web sites
Periodicals Published by Bangladesh Bank
Study related books and journals
1.6. Limitations of the study
I have faced the following obstacles while preparing this report:
Loan Disbursement and Recovery System of Janata Bank Limited, Elephant Road
Corporate Branch is highly confidential for the employee.
This branch is very busy all the office time thats why I did not get much time to collect
all the information from the officials
Sufficient records, publications were not available
The information was not found in a structured way.
There were some restrictions to have access to the information confidential by the
authority.
There was no separate loan recovery division.
 CHAPTER - TWO
AN OVERVIEW OF JANATA BANK LTD.
2.1. Origin of Janata Bank Limited

Janata Bank, one of the largest commercial bank in the country, was established under Bangladesh
Bank (Nationalization) Order 1972 (Presidency Order of 1972). By taking over branches of former
United Bank Limited and Union Bank Limited, were two private banks performing class
banking over the country. After the birth of Bangladesh on 16th December 1971, newly formed
Janata Bank for mass banking got special facilities from the government to work as nationalized
commercial bank all over the country. It becomes the largest commercial bank of the country with
906 branches including 4 overseas branches at United Arab Emirates. It is linked with 1239 foreign
correspondents all over the world. Total employees of JBL are more than 14 thousands (14,244).
Its head office located at Janata Bhaban at Motijheel C/A, the heart of the capital city, Dhaka.
 Corporate Information
Name of the Company : Janata Bank Limited
CEO & Managing Director : Md. Abdus Salam
Legal Status : Public Limited Company
Registered Office : Janata bhaban 110, Motijheel Commercial
Area, Dhaka, Bangladesh
Deposit (31.12.3015) : Tk. 4, 73,989 million
Authorized Capital (31.12.2016) : Tk. 30,000 million
Paid up Capital (31.12.2016) : Tk. 19,140 million
Operating Profit (31.12.2016) : Tk. 10,683 million
Reserve: Tk.8202.00 million
Total asset : Tk. 282423.00 million (as on 30th Nov 2009)
Number of Branches : 906 br. including 4 overseas branches at U.A.E
Subsidiary Companies : 1. Janata Capital and Investment Company Ltd.

2. Janata Exchange Company SRL, Italy

Phone Number : 9551337, 9565384, 9567675, 9560000, 9560027-30
SWIFT : JANB BD DH
Website : www.janatabank-bd.com
Organizational Structure of Janata bank limited
2.2. Vision of Janata Bank Limited
To become the effective largest commercial bank in Bangladesh to
support socio-economic development of the country and to be a
leading bank in South Asia.

2.3. Mission of Janata Bank Limited

Janata Bank Limited will be an effective commercial bank by
maintaining a stable growth strategy, delivering high quality financial
products, providing excellent customer service through an experienced
management team and ensuring good corporate governance in every
step of banking network.
2.4. Products of Janata Bank Limited
2.5. Services of Janata Bank Limited
2.6. Core Values of Janata Bank Limited
 2.7. Future Outlook of Janata Bank Limited
JBL will concentrate its focus on the following areas-

JBL is well placed to meet the challenges of 2017 and will strive to achieve the opportunity for growth.

Continue to launch new deposit, loan products and innovative banking services.

Carry on expansion of branch network in rural and urban area.

The Bank will give more emphases on green banking, corporate social responsibility, financial inclusion etc.

Continue to develop the employees database and borrowers database.

Shifting of branches, branch up-gradation and renovation will be continuing at commercially important locations.

The Bank will maintain strong support to the budding sectors such as retail, ME, remittance and financial
inclusive programmers.

Techniques are taken but it is not certain that there may not be JBL will bring the SME under the mainstream of
BL will bring the SME.
 CHAPTER - THREE
PROJECT PART OF JANATA BANK LTD.

3.1. Learning activities

While working as an intern at Janata Bank Limited, Elephant Road Corporate Branch, account opening, loan and
advance, foreign remittance, cheque issue and deposit sections were main learning activities. Working there one can
learn how to open bank account, how to issue cheque and mainly how to disburse loan and recover. The title of this
internship report is Loan Disbursement and Recovery System of Janata Bank Limited: A Study on Elephant Road
Corporate Branch, so maximum works have done at loan disbursement and recovery section.

3.2. Definition of loan:

Loan is a contractual agreement, in which a borrower receives something of value now, with the agreement to repay the
lender at some date in the future. One of the basic functions of bank is deposit extraction and credit extension. It helps
this kind of organizations to earn around 80% of the total revenue. Managing Loan operation, thus, is the crying need
for any bank. A loan in terms of small business finance is a sum of money advanced to a business that must be repaid,
with interest at some point in the future. The lender must bear the risk that the borrower may not repay the loan. The
interest rate charged is the price for that risk. A loan is money, classified as debt, for temporary use.
3.3. Types of loan
1.Continuous Loan:
Secured Over Draft Against Financial Obligation [SOD(FO)]
Secured Over Draft Against Work Order [SOD(G)]
Cash Credit (Hypothecation)
Cash Credit (Pledge)
Export Cash Credit (ECC)
2.Demand Loan:
Loan general
Demand loan against ship breaking
Payment against documents (pad)
Loan against import merchandise (LIM)
3.Term Loan
Project loan
Transport loan
House building loan
Small business loan
4. Other special scheme
a) Credit for Employees: This type of credit is given to the employees of the bank to meet up the emergency needs at 12%

interest rate. Advance cheques of monthly salary are considered as security that is repaid within 2 years in 24 installments.

b) Consumer Credit Scheme: Consumer Credit Scheme is related to relatively new field of collateral free finance of the

Bank. People with limited income can avail of this credit facility to buy household goods including computer and other

consumer durables. Interest rate is 12% that is repaid between 1 and 2 years.

c) Personal Loan Scheme: Personal Loan Scheme has been introduced to extend credit facilities to cater to the credit

needs of low and medium income group for any purpose. Government and semi-government officials, employees of

autonomous bodies, banks and other financial organizations and multinational companies are eligible for the loan facilities.

d) Financing in IT Sectors: Today, we are living in the age of information that is Internet. To accelerate the growth of

information and expanding IT business in our country and to attract young energetic in IT professions, Janata Bank Limited

has launched a new credit scheme titled Financing Computer Software Development & Data Export. Interest rate is
e) Car Loan Scheme: Car Loan Scheme has been introduced to enable middle- income people to

purchase Cars/SUVs/Jeeps. Governments and semi-government officials, employees of autonomous

bodies, banks and other financial organizations, are eligible for the loan facilities.

f) Financing of Industries: Janata Bank Limited entrusted with the responsibility of developing

industries within the frame work of Industrial policy of the Government of Bangladesh and credit

norms of Bangladesh Bank:

i) Cash credit:

A cash credit is a fluctuation account and is operated in the same way as a current account on which

an overdraft has been sanctioned under this system the banker specification a limit called the cash

credit limit for each customer up to borrow against the security of tangible assets or guarantee. The

interest rate is 15% for cash credit.

ii) Overdraft:
In case of advances sanctioned by way of our draft the customer sanctioned a
limit unto which he can over draw his current account within a stipulated
period. This is a fluctuating account where the balance sometimes may be
debit and sometimes may be credit overdraft may be of the following three
types:
a) Temporary overdraft.
b) Clean overdraft.
c) Secured overdraft.
But this branch does not allow any temporary and clean overdraft. Only
secured overdraft is available here into two following categories:
1. Overdraft against work order.
2. Over order against security paper.
iii) Industrial loan:

This branch disburses some industrial credit function like working capital of industries
(Pledge, Hypothecation).

iii) Staff loan:

When the bank lends its money to its staff then it is called staff loan. The following types
of loan are supply to the staff:

a. House building loan.

b. Loan against provident fund.

c. Loan for motor cycle and bicycle.

3.4. Terms and conditions of loan disbursement
At the time of lending, bank judges the customer's credit worthiness. Bank collects
information from various sources for the security of credit information which is very
essential for unsecured loan. Bank can collect information from the following sources:

(1) Loan application form

(2) Ownership and changes there in.

(3) Analysis of Financial statement.

(4) Analysis of past Transaction made with the Bank.

(5) Credit Information Bureau Report (CIB Report)

(6) Personal interview.

 3.5. Loan disbursement and recovery system of JBL
It is the duty of the recovery department of the Bank to recover the landed fund within the stipulated
time and if the borrower fails to repay the money within the specific period, Bank will declare him
as a defaulter and recover the fund by selling the securities given by the borrower or by freezing his
account or make a suit against him.

3.5.1. Loan disbursement procedure

First, one must open a bank account and make some transactions .It makes a good relationship. Then
the client submits a request for loan. The credit officers make survey for the collection of
information and banks special surveyor also makes a separate survey. Then they makes valuation of
mortgage. After that bank collects clients NID, picture, trade license, A/C transaction report, land
valuation report and guarantee paper of two guarantor and open loan file. The guarantor must be a
well -established person. Then the bank sanctions the loan and takes necessary steps for monitoring.
3.5.2. Loan recovery procedures

It is the duty of the Bank to recover the landed fund within the stipulated time and if
the borrower fails to repay the money within the specific period Bank will declare
him as a defaulter and recover the fund by selling the securities given by the
borrower or by freezing his account or make a suit against him.

Strategies for recovery:

Recovery of loan can be made in the following 3 methods.

1) Persuasive

2) Voluntarily

3) Legally
1) Persuasive recovery:
If the borrower didnt paid the due amount of loan in time then the first step of bank is
private communication with him. It creates a mental pressure on borrower to repay the
loan amount. In this case bank can provide some advice to the borrower for repaying the
loan.
2) Voluntarily recovery:
In this method, some steps are followed for recovering loan. This are-
Building Task Force
Arranging seminar
Loan rescheduling policy
Waiver of interest rate
3) Legal recovery:
When all steps fails to keep an account regular and the borrower does not pay the
installments and interests then bank take necessary legal steps against the borrower for
 3.6.SWOT analysis of JBL
STRENGTHS
As a large bank, it has qualified and experienced manpower.
Branch location is suitable for business.
Banks assets position is quite satisfactory and now there is no fund crisis.
Bank has requisite wealth to sustain in the various challenges of market economy
Being a nationalized banking organization, it always gets government support in all of its
operations.
WEAKNESS
As many employers retired from the bank, there is a crisis for manpower in the bank.
Bureaucrat official process hampered the daily internal workflow.
Lack of motivation for the workers.
Low salary structure for the employees.
In some cases management-employee relation is not good
3.6.SWOT analysis of JBL
OPPURTUNITIES
Expansion of new investment areas.
Scope for automation will open a big door of opportunity.
In case of fund crisis Janata Bank gets government support.
The bank undertakes need-based training program.
THREATS
Newly developed privatized and foreign banks.
Facing a great competition with other commercial banks and financial
institutions.
Loan recovery systems are very weak.
Policies are not practiced properly.
 CHAPTER - FOUR
RESULTS & DISCUSSIONS

4.1. Questionnaire design & measures

To know the customers information.
To make a clear concept about the Terms and conditions for getting loan.
To know the information of repayment and problems related to repayment of loan.
Information about utilization of loan.
Information of other services of JBL.
4.1.1 Customers information
Number of male customers =27
Number of female customers =3
Average age of the customers =42
4.1.2. Terms and conditions of loan
4.1.3. Satisfaction level with terms and conditions
4.1.4 Repayment patterns of loan
4.1.5 Problems related to repayment of loan
4.1.6 Utilization of loan
4.2 Sector wise loan disbursement and recovery
Sector wise loan disbursement and recovery
4.3 Year wise Loan Disbursement and Recovery analysis
 4.4 FINDINGS OF THE STUDY
Every bank has its own loan disbursement and recovery procedure. I tried my best to collect data for the report
and find out the reality. Based on the data generated during my internship period I have summed up my
findings here and I think this will help me to achieve my objectives:-
From this study I have found the customer related information like their opinion satisfaction level
dissatisfaction, repayment pattern, and repayment rate related problems and overall services of Janata Bank
Limited, Elephant Road Corporate Branch.
To know the recovery system I have come to know the repayment pattern also .Here 83% people are regular
to repay their loan but the rest are irregular and overdue.
I could also found the utilization pattern and utilization rate of the customer .From this study I have known
that 80% people make proper utilization of their loan and 20% people are not aware about their loan
utilization.
There are also some reasons behind default of loan, Here 40% people default because of shortage of time
26.67% of people due to shortage of money 13.33% due to old loan repay and 20% are because of high
interest rate.
I have found the Sector wise loan disbursement and recovery rate from 1 may, 2011 to 30, Feb 2017, here
the highest recovery rate was in 2014 that was 97.73%.
 4.5. Recommendations
Firstly, the loan policy and the loan sanction procedure should be made flexible and easy.

Secondly, Janata Bank Limited, Elephant Road Corporate Branch should increase their loan products to compete in
the market .

Thirdly, Strict supervision must be adopted in case of loan recovery as well as Time to time visit to the projects
should be done by the bank officers.

Fourthly, the website of the bank should be more informative that customers get the all information about the
different activities and facilities of the bank.

Fifthly, all the loan documentations have to done honestly and the bank should concentrate more on proper
documentation of all types of loans to make the department trustworthy & healthy.

Sixthly, there should be a Recovery Unit to manage directly the account with sustained deterioration. To encourage
Recovery Unit, incentive program may also be introduced

Finally, Janata Bank Limited, Elephant road Corporate Branch should build separate loan recovery division.
 4.6. Conclusion:

Janata Bank Limited is the fastest growing State-owned Commercial Banks in Bangladesh. In
this report I briefly discussed loan disbursement and recovery system of Janata bank limited.
Loan disbursement and recovery system occupy a very important role in banking. A bank is a
business enterprise of the country. It is a profit-seeking concern as any other commercial and
industrial organization. A Bank cannot be benefited only by taking deposits from public with
finding proper avenues for investing them in profitable venture now to boost up its standard
of service. But one alarming thing is that sometimes the banks do not ensure better trained
manpower. The loan applied for by the borrower must not be employed for unproductive
purpose. They always trying to improve their loan disbursement and recovery policy for
minimizing loss and maximizing profit and various measures are undertaken to develop the
loan disbursement and recovery system.
 CHAPTER - FIVE
LESSONS FROM INTERNSHIP

On the basis of previous analysis and practical experience of 3 months internship program, the following skills
that I learned during the internship period:
We know that loan disbursement & recovery system is the crusial banking task. For that reason I was
concentrated myself in this section during my internship. I was learned about how to disburse loan &
recover that loan from the customers.
I was also learned about different types of characteristics that are very much required during opening
accounts such as clients photography , clients signature , national id card or passport , nominees
information , nominees photography etc.
I also learned about different types of requirements that are varies based the type of customers such as for
Sole Proprietorship valid registration card, tin certificates are required, for partnership, Partnership Deed
and Partners letter of authority to open account and authorization for operation are specially required.
I was learned about cash book issuing and different types of cheque book issuing.
This Internship is developed my skills in the application of theory to practical work situations, to cope with
new environment, and understand interpersonal relationship.
I have analyzed the JBLs SWOT.
5.1 References
Annual report of Janata bank ltd.2010-2011 (available at http://www.jbl.com) (accessed time-11/02/2017,10:23:45)

Annual report of Janata bank ltd.2011-2012 (available at http://www.jbl.com) (accessed time-11/02/2017,10:45:45)

Annual report of Janata bank ltd.2012-2013 (available at http://www.jbl.com) (accessed time-22/02/2017,09:29:25)

Annual report of Janata bank ltd.2013-2014 (available at http://www.jbl.com) (accessed time-19/02/2017,12:33:23)

Annual report of Janata bank ltd.2014-2015 (available at http://www.jbl.com) (accessed time-28/02/2017,08:24:25)

Annual report of Janata bank ltd.2015-2016 (available at http://www.jbl.com) (accessed time-15/03/2017,12:15:40)

www.jb.com.bd 2017 (available at http://www.jbl.com) (accessed time-28/03/2017,9:55:55)

www.bangladesh-bank.org 2016 (available at http://www.jbl.com) (accessed time-24/03/2017,12:33:47)

www.mof.gov.bd 2016 (available at http://www.jbl.com) (accessed time-27/03/2017,9:27:15)

Investopedia.com 2016 (available at http://www.jbl.com) (accessed time-17/03/2017,11:45:35)

Rose, S.P (2008): Bank Management and Financial Services, Seventh Edition.

Zeithaml (2010) Service Marketing -4th edition, SERVQUAL Model (pg: 116- 155).
Present market scenario
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