Shuvajit Bhattacharjee

Chapter 1 AN OVERVIEW OF RAKUB Department of Finance | University of Rajshahi 1 1.1 Introduction: We are the students of the University of Rajshahi, Department of Finance and Banking. According to the Ordinance of the Business Faculty at the Rajshahi University in BBA Programme, We have to send in some organizations to acquire some practical knowledge that is called internship. As a student of Finance and Banking we are to complete our internship program mainly on Financial Organization; Banking sector are given preference here. For internship we were divided in some group, 12 students in our group were sent in Rajshahi krishi Unnayan Bank, Binodpur Branch to complete our internship. We were given two weeks long to complete our internship program which was not enough to get overall practical knowledge on banking sector. But as a student of Finance and Banking we tried hard to get on over all idea on banking sector from RAKUB. We are very much grateful to our honorable teacher, Professor Dr. Hafizur Rahman, Manager of Binodpur Branch of RAKUB, other officials and workers who helped us in many ways during the whole period of our internship program. This study has divided into two parts: 1. General Banking. 2. Selected Topics. The group of each student was given different topics. My topic was loan disbursement and loan recovery. It is not surprising that there is a close relationship in our work and report as we 6 studied on general banking in the same time. With the co-operation and inspiration and valuable advices of my respected supervisor, I got some practical knowledge that is placed afterwards. Department of Finance | University of Rajshahi 2 Rajshahi Krishi Unnayan Bank (RAKUB) at a Glance 1.2 “RAKUB” RAKUB is a specialized bank. It is the only bank whose Head office is situated outside the capital. RAKUB is the largest source of agricultural credit in Rajshahi division & Rangpur division. Besides supplying agricultural credit, the bank extends its credit facilities for employment and income generating agro-based industrial and commercial activities. Diversified off-farm rural economic activities and poverty alleviating program apart from these the bank performs other banking functions as like as commercial banks. 1.3 Background of RAKUB: i) Past History: Most of the people of our country are dependent on agriculture. The farmers of this country were oppressed in various ways at the time of British rule. We know that many farmers lost their belongings because they could not repay their debt. At that time, the indigenous lenders and other landlords supplied credit to produce crops to the farmers. They took ‘Dadan’ from the moneylender and when they would repay the money with interest, they would become landless day by day. Since the small farmers become the marginal farmers, at first the Indian British Govt. took a step to disburse the agriculture loan to the farmers of the Bengal since 1902, which continued from 1905. After this, the Indian British Govt. took a step for the second times to disburse agriculture credit for the socio-economic development of the small and marginal farmers of Bengal in 1932, which continued till 1935. At the time of British rule, the people of Bengal was included in the “Dadan” business of indigenous landlord, moneylenders etc, as a results all the belonging of Department of Finance | University of Rajshahi 3 the farmers were sold is the bid and they had to stay with much difficulties. Seeing the bad and helpless condition of the farmers, the bold voice of Sher-E-Bangla A.K. Fazlul Haque stood beside the farmers and he tried to establish the “Rin Shalishi Board” for the greater interest of the farmers, as a result many farmers who were engaged with the oppression of the moneylenders and landlords, breathed with peace. That is why, the people at that time recollected Sher-EBangla as Haque shaheb. ii) Pakistan period: In 1947, the Indian subcontinent was freed from the British rule and in Indian subcontinent two independent countries were originated namely India and Pakistan. Our Bangladesh was indicated as East Pakistan as a part of Pakistan. Then the Pakistan Govt. established a financial institution by the name of Agricultural Development Finance Corporation (ADFC) to disburse loan is agricultural sectors is 1952. In 1957 then the Pakistan Govt. established another financial institutions namely “Pakistan Krishi Bank” feeling the agro-production and the importance of agro-loan. This institution started its function from 1958. After this, in 1961, “Pakistan Agricultural Development Bank” was established merging with the two state owned loan institutions and though the disbursement of agriculture-loan, the system of giving state facilities to the farmers in many ways continuous. iii) Bangladesh period: The emergence of Bangladesh is made through the “Great liberation war in 16th December 1971. The ‘Pakistan Krishi Unnayan Bank’ was re-named as “Bangladesh Krishi Unnayan Bank”. After this, the nomenclature of this bank was made as the “Bangladesh Krishi Bank” with the ordinance number 27 of the president 1973. Department of Finance | University of Rajshahi 4 After the emergence of Bangladesh and with the passage of time, various organizations are working independently. As a result, the consciousness of people is increasing than before. The creation of ‘Water Development Board’, ‘Bangladesh Rice Research Institute’, ‘Rural Electrification Board’ and other necessary institutions are made. Control of flood, rice of new quality and introduction of other crops and the increment of its demand, the increment of demand of people towards the institutional credit a specially SACP or as result of circulating a special credit program amounting to Tk. 1 core etc. have influenced many farmers to be bank oriented. It becomes very difficult for some limited bank to meet up the multiple demand of loan specially crop-loan. Since Bangladesh is an agro-based country, the demand for the loan of Krishi Bank has increased remarkably. It becomes very difficult for a Dhaka based head office of Krishi Bank to manage agro-loan in the remote areas of the country. For this reason, then the Govt. felt to decentralize the Krishi Bank in the divisional areas. The people of the Northern areas of Bangladesh are lagging behind in all respects than other parts of the country. For this reason, Rajshahi Krishi Unnayan Bank was established in 1986 with the ordinance number 58 of the president. RAKUB started its functioning from 15 March, 1987. 1.4 Objectives of RAKUB: The main objectives of RAKUB are as follows: a) To provide credit facilities for all kinds of agricultural and agro- based economic activities keeping in view the needs of small and marginal farmers. b) To earn a normal profit for meeting the operational expenses, building of reserve and expansion of activities to cover wider geographical area. c) To extend counseling and advisory services to the borrowers/ entrepreneurs etc. in utilizing credit facilities of the bank. Department of Finance | University of Rajshahi 5 1.5 Capital and its Sources: RAKUB is a governmental banking institute. So the main sources of capital are government fund, as on 31 March 2018 the details about capital are as follows1. Authorized capital : Tk. 1000 crore 2. Paid up capital : Tk. 570 crore 3. Total capital : Tk. 534.44 million 4. Capital deficit : Tk. 895.46 million 5. Reserve capital : Tk. 708.49 million 6. Recovered loan : Tk- million 7. Collected Deposit : Tk- million 8. Refinance of Bangladesh Bank : Tk- million Department of Finance | University of Rajshahi 6 1.6 Organizational Structure: Source: Personnel department of RAKUB Department of Finance | University of Rajshahi 7 1.7 Organizational set up: The affairs of business of the bank are managed through three functional tiers:  The Head Office  The Zonal/ Regional offices  The Branches Head Office: The head office of RAKUB is stationed at 280 km far from capital city Dhaka, at North-west divisional city Rajshahi. All operation is controlled by head office. The managing Director is assisted by the three following functional divisions. Each headed by a General Manager: a) Administration Division: Name of Department Functions Personnel Department Recruiting and selecting the required the required human recourses. Managing compensation and various retirement facilities. Human Resource Management Organizing the necessary training and Department development activities. common services Department It serves as a coordinating and communicating unit among different department of RAKUB. Central Accounts Department-I The task offered by accounts department areCentral Accounts Department-II Documentation of various financial transactions and events. Recording of transactions which satisfy the specified accounting criteria. Preparation of necessary financial statements and report for both internal and external purpose. Department of Finance | University of Rajshahi 8 b) Operational Division: Name of Department Branches control Department. Functions This department controls the activities of branches and supply information to the higher authority about to open a branch , to close a Loans and Advances Its main function is to find out borrowers, Department-I analysis their financial position to disburse loan Loans and Advances and sanction loan to the specified borrowers. It Department-II also gives advises the borrowers for proper use loan. Research and Development The functions of R&D dept. are to publish Department. articles, make research on how they can improve their effectiveness and efficiency & how they can increase the recovery of distributed loan. Budget and Expenditure Control This department prepares budgets for different Department. departments and branches regarding revenue, expenditure, loan, deposits etc. c) Audit Accounts and Recovery Division: Name of Department Loan Recovery Department-I Functions Its function is to take proper step on classified Loan Recovery Department-II loans e.g. the loan which is still due after passing Audit and Inspection the payment period. Its activities are to audit internally of various Department departments and branches after a certain interval. 1.8 Region/Zone Wise Branch of RAKUB: Table: Region wise total branches (Up to 31 July, 2018) Department of Finance | University of Rajshahi 9 SL. No. Zone/Region No. of Branches 01. Rajshahi 26 02. Naogaon 29 03. Natore 20 04. 05. 06. Chapai Nawabgonj Bogra (North) Bogra (South) 16 18 17 07. Pabna 24 08. Jaipurhat 15 09. Rangpur 27 10. Gaibandha 24 11. Nilphamari 20 12. Kurrigram 20 13. Lalmonirhat 17 14. Dinajpur (North) 17 15. Dinajpur (South) 18 17. Thakurgoan 19 18. Panchagarh 18 19. Dhaka 1 20. L.P.O (Rajshahi) 1 21 Sirajgonj 22 Total Source: Personnel department of RAKUB 377 1.9 Employee Summery: Table: Employee Summary of RAKUB - ) Department of Finance | University of Rajshahi 10 Designation Authorized 1.Managing Director (MD) Existing Vacant 01 01 - 01 01 - 3.General Manager (GM) 05 05 - 4. Deputy General Manager(DGM) 45 38 7 5.Assistant General Manager(AGM) 87 78 9 6.Senior Principal officer(SPO) 222 201 21 7.Principal officer(PO) 462 337 125 8.Senior officer(SO) 949 514 435 9.Officer 1600 987 613 3233 2,353 880 2618 1,167 1451 58581 3520 2331 2.Deputy Managing Director (DMD) Total Officer 10.Other Employee Total Source: Personnel department of RAKUB Department of Finance | University of Rajshahi 11 1.10 Training Institute: The only training Institute at Rajshahi Imparts training to the junior and mid-level officers and other staff according to the annual training program designed on such subjects of professional interest as management of credit and accounts, Commercial banking, audit and inspection etc. 1.11 0ffice Automation: A local area network (LAN) connects all computers in departments at head office. Internet connections in the head office as well as field offices have facilitated exchange of information through e-mail. The bank has its own website www.rakub.org.bd to represent it to the cyber world. Computerized branch banking has been introduced on experimental basis in two branches of the bank. Necessary steps have been taken to set up a complete computer department at head office. The bank has been giving much importance to training courses for enhancing computer skill of officers and other staff. 1.12 Audit and Inspection: Internal audit and inspection plays an important role in establishing transparency and accountability of the bank's accounting system. Besides there are commercial audit, Bangladesh Bank inspection and external audit for detecting and checking repetition of irregularities frauds and forgeries, if any, in different levels. The government appointed M/s Zoha Zaman Kabir Rashid & Company, Chartered Accountants and M/s Khan Wahab Shafiq Rahman & Company, Chartered Accountants for conducting audit for the financial year-. The audit report submitted by them on- was sent to the ministry of finance on- after approval of the Board of Directors. Department of Finance | University of Rajshahi 12 1.13 Highlights of overall activities of RAKUB: Table: Highlights of overall activities as on 31st July 2018 SL. No Particulars Taka 1 Paid up capital ( On-) 570,00,00,000 2 Total capital (53,44,00,000) 3 Surplus capital(Deficit) (453,44,00,000) 4 Total assets 4929,73,99,628 5 Total deposit 1953,44,34,106 6 Total loan and advances 3835,99,91,284 7 Total contingent liability - 8 Loan deposit ratio 1:0.51 9 Ratio of classified loan against total loan & 1:0.36 advances 10 Profit/(loss) after tax (64,08,65,614) 11 Amount of classified loan 933,35,89,000 12 Provision for classified loan (186,23,22,000) 13 Provision for surplus/deficit ( 89,57,93,000) 14 Cost of fund 15 Interest earning assets 2574,26,02,983 16 Non performing assets 1190,80,29,567 - Return on investment(ROI) Return on assets (ROA) Interest on investment Income per share Income price ratio 1.10% 1,974,718,747 1,740,545 - Source: www.rakub.org.bd Department of Finance | University of Rajshahi 13 1.14 RAKUB at a Glance : (Up to 31st July 2018) 01) Establishment : 15 March, 1987. 02) Authorized Capital : Tk. 1000 crore 03) Paid up Capital : Tk. 570 crore 04) Area of RAKUB: a. Area : Rajshahi Division and Rangpur Division b. Spread : 34,513 Square K.M. c. District : 16 d. Upazilla : 123 e. Union : 1092 i) SACP : 452 ii) Non- SACP : 640 f. Total Populations : about 4 cores g. Total No. of Family : 64 lakhs. h. Agricultural Family : 46lakhs. 05) Total Branch : 377 06) Total manpower : 3269 i) Officers : 2039 ii) Workforce : 1230 07) Zonal /Regional office : 18 08) Regional Audit office : 18 09) Regional officer : 13 10) Zonal officer : 5 11) Website : www.rakub.org.bd Department of Finance | University of Rajshahi 14 Chapter 2 AN OVERVIEW OF RAKUB, BINODPUR BRANCH, RAJSHAHI Department of Finance | University of Rajshahi 15 Department of Finance | University of Rajshahi 16 2.1 Location of Binodpur Branch: Binodpur Branch of RAKUB Rajshahi district. Nawhata road, Rajshahi, the branch is situated in Binodpur Thana of Rajshahi district. The office building of the branch is on the west side of Rajshahi at Nawdapara Bazar. The branch caters the need of agricultural credit, finances agricultural business, agro-based industries and poverty alleviation programs and at the same time performs commercial banking functions in its geographical area. 2.2 Establishment of Binodpur Branch: Binodpur Branch as one of an ideal branch of Bangladesh Krishi Bank (BKB) was established on 19th December, 1983. But it started its operation as a branch of RAKUB on 15th March, 1987. Its initial capital was only Tk. 80,000. After is establishment till to date it has passed 17 years of its operation. 2.3 Rajshahi Krishi Unnayan Bank RAKUB'S of Binodpur Branch at a Glance: Table 2.1: Binodpur Branch at a Glance Establishment date Operation date Authorized Capital(Head Office) Area Total population (2011) Number of Unions Numbers of Village Current Account Saving Account Fixed Deposit Account DPS RPS RGPS STD Others Total Number of Account Number of lonee 19th December, 1983. 15th March,- Taka (Crore) Nawhata Pourashava and word no. 17 of Rajshahi city corporation. 17234 1 Union & 1 ward of city corporation- Department of Finance | University of Rajshahi 17 2.4 Employee summery of Binodpur Branch: There are 13 employees of RAKUB, Binodpur Branch, Rajshahi. Their designation is given below: Table: Employee summery of Binodpur Branch: S.L. No. 1. 2. Designation No. of Personnel Manager Md. Fazle Karim Principal officer Sorkar Naimun Nahar 1 1 Second Officer 3. Jobaida Nasrin 2 Md. Tosikul Alom Officer 4 Anurkoli Alom 2 Rostom Ali 5 Cashier Laila Nazmun Nahar 1 Data Entry Operator 6 Md. Shofiqur Rahman 2 Abdul Motaleb Source: RAKUB'S Binodpur Branch, Rajshahi. Department of Finance | University of Rajshahi 18 2.5 Organizational Structure of Binodpur Branch: Manager (SPO) Senior Officer Officer Cashier Data Entry Operator Peon Guard 2.6 Sources of Capital & Fund: The major sources of capital fund are as follows:  Paid up capital of the bank Tk. 570 crore.  Recovery of loan.  Collection deposits.  Re-financing of Bangladesh Bank. Department of Finance | University of Rajshahi 19 Chapter 3 GENERAL BANKING Department of Finance | University of Rajshahi 20 3.1 Introduction: The main function of a bank is collect deposit from public or organizations and to give among them. RAKUB of Binodpur Branch, Rajshahi also performs General banking includes deposit service, local currency remittance, locker facility and other related functions, which are discussed in this chapter. 3.2 Opening an Account: Though RAKUB is a specialized Banking institution, it provides commercial Banking facilities. As a commercial function, it provides opportunity for the customer to open account with the Bank. Opening account is an agreement between the customer and the Banker. The general procedure to open account with RAKUB is given below: (i) Obtaining proposal from a prospective customer. (ii) To Supply the account opening form. (iii) Obtaining the form properly filled up. (iv) Interviewing the applicant. (v) Having introduction. (vi) Collecting at least three-specimen signature in the signature card supplied by the Bank. (vii) Providing deposit book and obtaining initial deposit. (viii) Having accounts number. (ix) Providing cheque book in order to with draw deposited amount from current and saving account. Department of Finance | University of Rajshahi 21 In case of joint accounts, the applicant must furnish the following information (i) The name of the person who will operate upon the account and sign cheques. (ii) At the event of death of either or any of the accounts holders how the balance will be paid and to whom the securities will be devolved. The documentary requirements are almost a like the individual accounts. Account opening form and the special instruction must be signed by all the joint account holders to signify their consent. If the client is a private or public limited company then the company has to give a special instruction about the type of the account and the operation the account. Specimen signature of the person who is authorized to open and operate the account and the sources of their authority are needed. Their source of authority is a must. (i) Memorandum and articles of association of the company. (ii) Power of authoring or (iii) Resolution of board of directors. Before opening an account with RAKUB, the Banker should observe the following general precautions: (i) Observing whether the application form is properly filled up. (ii) Getting and preserving specimen signature of a client. (iii) Getting introduction (iv) Taking initial deposit in cash. (v) The Banker should verify some important documents like memorandum of association, article of association, registration certificate incorporation, and trade licensee etc. Department of Finance | University of Rajshahi 22 3.3 Different Types of Deposit Accounts: The bank gives importance to accumulation of rural small savings through its branches. RAKUB renders all sorts of deposit banking services to its over one million valued customers. The bank operates deposit accounts like Savings Bank Accounts, Current Deposit Accounts, Short Term Deposit Accounts and Fixed Deposit Accounts. Deposits Demand Deposit STD A/C Current A/C FDR Time Deposits DPD Saving A/C RPS HS ES RGPS The different types of clients mentioned above can open different types of deposit accounts. These deposit accounts have different features and phenomenon. The deposits that are taken by the Binodpur Branch can be classified into two heads demand deposits and time deposits. (A) Demand deposit This type of deposit is payable on demand. It includes current and serving account. The whole amount of current account and saving account is termed as demand deposit. Department of Finance | University of Rajshahi 23 i) Current Account: Now a day’s current account is a popular and important Account in this time. This account is normally opened for businessman or business organization No interest is given on it. The initial deposit of RAKUB, in this account is Tk. 1000 and balance must be maintained at least at this amount. In this case, the account holder can with draw or deposit his or her money at his or her wish within the Office hour. Customers can with drawn bank overdraft if they have long term relation and goodwill. If balance remain less than 1000 then changes of personal account and commercial account Tk. 50 and Tk. 150 respectively. Bank cannot invest current account money. Customers withdraw money thought check. There are 76 current account in this branch and 63 alive among them. Basically a person whose age is 18 years or more can be open this account. ii) Short Term Deposit Account: Short- term deposit account is opened for company/firm/government administrative body. This account is operated like current account. If 7 days written notice is placed to the bank in each withdraw, then the bank gives 2.5% interest on S.T.D. There are 10 STD account in this branch and 6 account in alive. iii) Saving Account This account is opened for the individual customer without the companies or firms or Co-Operative society. The minimum initial deposit of savings account is Tk 100 and this amount must always be maintained. RAKUB provides interest @ 4% per annum. There are 1247 savings account in this branch and 2200 is alive among them. Minimum 18 years man can open this account. Department of Finance | University of Rajshahi 24 (B) Time Deposit: Time deposit is not repayable on demand. This is repayable after the expiration of a certain period. Time deposits are classified into four deeds namely, DPS, RPS, FDR, RGPS, ES and HS. i) Deposit Pension Scheme (DPS) It is one kind of program circulated by the government. Under this savings scheme, a person receives the opportunity to build up savings by contributing monthly installments to get an attractive fixed amount at the end of specified period. The size of the monthly installments is Tk. 100, Tk. 200, Tk. 300, Tk. 400 Which is to be deposited within the first week of each month In this case, compound rate of interest is charged. But this DPS has not been operating in RAKUB rather the old accounts have been continuing. Only one DPS account in this Branch RAKUB provides interest @ 15% up to date 20 years. ii) FDR (Fixed Deposit Receipt): Fixed deposit Account: This is a deposit Scheme where an instrument is issued for the full amount payable after a specified period against deposit of a certain amount. Duration of various FDR& rates of interest against them are as follows: Table- 4.1 Duration from 3 months to below 6 months from 6 months to below 1 year from 1 year to below 2 years 2 years & above (not more than 5 years) Rate of interest 6.00 percent 6.25 percent 6.50 percent 7.00 percent Source: http://www.bangladesh-bank.org/econdata/econdata.html (iii) RPS (RAKUB Person Savings Scheme) Department of Finance | University of Rajshahi 25 RAKUB has some savings schemes to motivate the people for savings. In this case RPS is regarded as the special product of this Bank. The RPS is same as DPS. But the terms of savings of RPS are 5 years and 10 years. Interest is credited to the accounts of the depositors in June every year. (iv) RGPS (RAKUB Grameen Pension Scheme) This scheme was lunched to support the liquidity problem arising from maturing of RPS. The interest rate of RGPS is 6% for both 5 and 10 years. Following the table shows installment and return of the scheme: Monthly Deposit Tk 300 Tk 500 Tk 1,000 Return after 5 years 20,214 33,801 67,977 Return after 10 years 46,218 77,620 155,837 (v) Education Savings: Education Saving scheme from fiscal year 2004-05 this saving scheme has started. To meet future educational expenses, father mother or guardian opens this saving account. During this saving scheme may normally 5 to 10 years. Installment may be Tk. 200, Tk. 300, Tk. 500 and Tk. 1000. Following the table shows installment and return of the scheme: Monthly Deposit Tk 200 Tk 300 Tk 500 Tk 1,000 Return after 5 years 13,482 20,214 33,801 67,977 Return after 10 years 30,597 46,218 77,620 155,837 (vi) Hajj Saving: From the fiscal year 2004-05 Hajj Saving has started this scheme to meet the Haji expenses. This is a non interest bearing scheme. This saving scheme for Department of Finance | University of Rajshahi 26 1 to 10 year any Bangladesh Muslim can open this saving account monthly installment may be 1459 or more. . Following the table shows installment and return of the scheme: Monthly Deposit 10 yrs- Tk 1459 9 Yrs- Tk 1575 8 yrs- Tk 1719 7 yrs- Tk 1905 6 yrs- Tk 2153 Monthly Deposit 5 yrs- Tk 2500 4 yrs- Tk 3021 3 yrs- Tk 3889 2 yrs- Tk 5625 1 yr- Tk 10834 3.4 Closing an Account: During the study we were taught how to close a bank account before maturity. In order to close an account before maturity the holder has to place a written application to the bank. After receiving the application the bank will deduct service charge at an amount necessary for the respective account as closing fee from the balance and rest of the money is given to the account holder. 3.5 When Bank Closes an Account: The relationship between bank and his customer is a contractual one and may be terminated by either of them. Bank closes an account in the following situations: i. If a customer places written application to the bank to close his account. ii. If the customer does not properly follow the rules and regulations necessary to operate his account. iii. If the bank is notified the message of death of a customer. iv. If the bank receives a notice regarding the insanity of his customer. v. If the bank receives a garnishee order from court. vi. Others. Department of Finance | University of Rajshahi 27 3.6 Types of Account holder: There are the following types of account holder in RAKUB Binodpur Branch: i. Individual account ii. Joint account iii. Joint Stock Company account iv. Public limited company v. Autonomous institutions vi. Non business firm vii. Business representatives. 3.7 Special Types of Account holder: Banker and customer are is a contractual relationship provided and account is opened with the bank. A person is considered competent when his or her age is eighteen (18) old years or more to open of an account with the RAKUB. Besides these, there are some special types of account holders in Binodpur Branch who are listed below: (i) Minor: A minor with the RAKUB can open an account, but he or she cannot operate his or her account. The minor will have a guardian who will operate the minor’s account. In this account money can be deposited only and it can not be withdraw until the minor reaches his or her 18 years old. (ii) Illiterate persons: Department of Finance | University of Rajshahi 28 Persons who are illiterate can open accounts in the bank but no cheque is supplied to them. They will have to put thumb mark in front of the manager and they are given loose cheque to withdraw money. COUNTER (iii) Blind persons: Customer places the cheque to the ledger officer (LO). The LO receives the cheque, enters its particulars in a register and issues the Persons whocustomer are blindacan open account in the bank and the procedure is same as the token. illiterate persons. In both the cases, the terms and conditions of opening accounts are to read out in front of them. If they agree with it, the accounts are opened. (iv) Pardanashin Women: VERIFYING THE CHEQUE The LO now verifies the ledger of the customer. If the customer’s account is okay, he passes the the cheque to the second A pardanashin womanposition can open an account with RAKUB but sheofficer has to agree (SO). with the statement that she must be ready to put signature in front of the manager to judge the similarity between her putted signature and the specimen signature at the time of with drawing money. HONORING THE CHEQUE TheDeaf: SO compares the customer’s signature given on the cheque with (v) Dumb and that on the signature card kept in his custody. If the signature is okay then he makes an entry of the cheque in another register and cancels The dumb and the deaf can account with the bank but the banker should be it by signing across the cheque. cautious about the background and the character of the said persons. The under mentioned three persons can never open account with the RAKUB. (i) The individual who is totally mad (ii) The individual who is still bankrupt CHEQUE CANCELLATION Once the cheque is cancelled that is Okayed for payment it is brought (iii) toThe person by whose mind is unsound, that is lunatic. the cashier a peon. 3.8 Cash Payment: In this section I gathered practical experience about how a check is honored and DRAWING MONEY how cash isCashier paid. enters The formalities involved in in honorees a check and cash the amount of the cheque the cash of register and pays appropriate payment arethe given below:- amount to the customer. POSTIN IN THE TRIAL BALANCE Department Finance | University of Rajshahi At the end of banking hour a of trial balance is prepared from the 29 registers and all the registers are compared with one another. 3.9 Cash Receipt: Department of Finance | University of Rajshahi 30 Customers’ deposits are received in this section of bank. Then the amount received is credited to the customers’ A/C in the ledger book. The formalities that are followed to receive a customers’ deposit (cash) in the cash receipt section are stated in the following flow chart- Customer places this cash and deposit slip before the respective officer at the counter. After receiving the cash and deposit slip, the officer makes an entry to scroll register book. Then the deposit slip and cash are placed before cashier. The cashier counts this amount of money first and then makes an entry to another register book. The book is generally called cashbook. Then the cashier passes the cashbook and deposit slip to the second officer. After verifying the deposit slip, the second officer returns the counter-folio of the deposit slip to the customer and keeps the other position in his custody. At the end of banking hour, trial balance is prepared from that cash receipt register. 3.10 Cheque Honoring Procedure: Department of Finance | University of Rajshahi 31 (i) After placing the cheque, the respective Banker issues a token; (ii) The Banker also given an entry into register; (iii) The Banker puts token number and initial behind the cheque. (iv) The Banker provides ledger posting of the cheque amount; and marks it on the cheque, (v) The second officer now places a pay order in the cheque. (vi) The cheque is sent to the cashier and, and (vii) Finally the cheque amount is paid to the customer against his respective token. 3.11 Cheque Dishonored by Bank: During the internship program, I was taught how a cheque is dishonored by bank. The statutory duty of a bank is to honor his customer’s cheque. But a bank can dishonor a cheque for various reasons. Some of the reasons for that a bank dishonors his customer’s cheque are stated below1. If the customer’s account position is not okay, that is if the amount of money mentioned in the cheque is greater than customer’s deposit. 2. If the cheque is torn. 3. If the cheque is post dated or a stolen cheques. 4. If the customer’s signature given on the cheque is a forged one or does not tally with his specimen signature kept in bank custody. 5. If the cheque is not submitted to the customer within banking hour. 6. If the duration of issuing the cheque is more than 6 months. 3.12 Accounting Procedure: Department of Finance | University of Rajshahi 32 The main objectives of maintaining the accounting procedure of RAKUB, Binodpur Branch are to achieve in following goals: (i) To record the day-to-day transaction. (ii) To reflect the financial position periodically (iii) To supply the necessary information for monitoring the Bank activities. The Bank generally uses two types of Books. A) Control Book: It presents the immediate accounting figure of the Bank at any time and it includes (i) Cash Scroll Book (ii) Clean Cash Book (iii) General Ledger (iv) General Ledger Abstract (v) Supplementary Ledger Book B) Subsidiary Books are used to arrange the total particulars in General ledger and it includes: (i) Savings Account Ledger (ii) Fixed Deposit Ledger (iii) Income Ledger (iv) Expenses Ledger (v) The General Ledger of RAKUB. 3.13 Concept about Cash Scroll, Clean Cash, General Ledger and General Ledger Abstract: Department of Finance | University of Rajshahi 33 Cash Scroll: At first those transactions are maintained in this cash scroll by the authorized officer, which occurred every day. There after the, cashier maintained those transactions in daily transaction register. Clean Cash: When the vouchers are closed, the accounts are written in the pure cashbooks. It may be either deposit or expense. The transactions of each head, which have occurred, are written in the specific page of the cashbook under a specific head and debit and credit total are determined. There after, total of every head is written in the right page of the clean cashbooks. But this is the cashbook, the closing balance of the previous day is shown as an initial balance for the next day then the closing balance is determined for that day. General Ledger: General Ledger is the heart of a Bank. The balance of clean cash is recorded in this Ledger head wise. General Ledger Abstract: The debit balance of various accounts makes General Ledger Abstract. The debit and credit balance of the accounts are maintained in the Abstract in the debit and credit side respectively. Since the double entry system is maintained, therefore its debit and credit are equal. 3.14 Different types of Voucher: Department of Finance | University of Rajshahi 34 Voucher is a kind of document which as a proof accuracy. i) Payment Voucher: Sanctioned crops loans are paid through payment voucher. ii) Transfer Voucher: This voucher is used to transfer Tk. from one account to another in case of inter Banking. Its color is yellow. iii) Debit Voucher: To deposit or get Tk. Its color is white. iv) Credit Voucher: Voucher for repayment. Its color is green. 3.15 Remittance: The system of transmitting or sending money from one branch to another branch of the same bank or from one bank to another bank within a country is known as remittance. It is one of the important functional areas of a bank. A bank can earn handsome fees as commission from the dealings of money remittance. Demand Draft (DD): DD is the most widely used instrument of remitting fund. It is order to pay money drawn by one branch of a bank upon another branch of same bank for a particular amount of money that is payable to order and demand. Procedures of Remitting Money through DD: The procedures of remitting money through DD are stated briefly in below At first, the sender of money is advised to fill up a form and deposit the cash. The form is usually called DD application form or credit voucher.  The senders of money fills up the voucher appropriately and place it with cash before the officer at cash receipt section. Department of Finance | University of Rajshahi 35  After receiving the voucher and cash, the officer counts the money and charges a fee as commission. Here it is mentionable that the commission for DD up to Tk 10,000 is Tk. 10 for per 1000 and Tk. 1 for every thousand above Tk. 10,000.  After that, the voucher is sent to the concerned officer of remittance section.  Here the officer prepares a paper instrument called “Demand Draft (DD)” and enters the amount in the draft issue register.  Draft book and DD along with the register are then sent to the officer in charge for checking. If every thing is Okayed, the officer signs the DD and voucher and keeps the register and counter foil of the DD.  After that the DD is issued to the sender of money. At this stage he can send the DD to the receiver branch by post or any other ways,  After issuing the DD and handing over it to the sender of money, the DD issuing branch sends an advice to the receiver branch about DD.  Finally, the DD receiver branch makes payment to the bearer of DD. i.e. payee after completing the necessary formalities. Mail Transfer (MT): MT is another widely used instrument of remitting fund from one branch of a bank to another branch of the same bank. It is not used to remit fund from one bank to another. MT is nearly same as DD. Procedures of Remitting Money through MT: The procedures of remitting money through MT are almost same as the procedures of remitting fund through DD. But there are some exceptions in this system”- Department of Finance | University of Rajshahi 36  In case of MT, the sender of money is not provided with the MT paper but a receipt. The branch sends the MT paper under its own responsibility by mail to the MT receiving branch.  The commission for MT up to Tk. 10 for per 1000 and Tk 1 for every thousand above Tk 10,000.  The postal charge is Tk 10 for every MT issue and any amount of money.  The MT issuing branch has to send a secret message i.e. Test to the MT receiving branch. It is must for any amount of money. Here the amount of money, issuing date and other particulates are mentioned. To maintain the secrecy of the message sent, the issuing branch codes the message by a particular number consisting of different digits. After receiving the message, the paying branch decodes it by using the predetermined techniques. This process is called test. If every thing is Okayed, the paying branch makes payment to the payee. Telegraphic Transfer (TT): TT is the fastest means of remitting fund between two branches of the same bank. Fund cannot be remitted from one bank to another bank through TT. Procedures of Remitting Money through TT:  The primary formalities that have to be maintained to remit money through TT are same as DD and MT.  The commission for MT up to Tk. 10,000 is Tk 10 per TK 1000 and Tk 1 for every thousand above Tk 10,000.  Here a fee of Tk 20 is charged as telegraphic charge for every TT issue and for any amount of money. Department of Finance | University of Rajshahi 37  In case of TT, no paper instrument is sent to the paying branch. Rather the TT issuing branch sends a TT advice through telephone, telegraph, Fax or telex to the paying branch. In sending message, the branch keeps necessary secrecy.  Side by side, the TT issuing branch sends an advice to the head office of the bank.  After receiving the message, the paying branch tests to decode the message. If every thing is obeyed, then the branch makes payment to the payee. After that the branch sends an advice to the head office to reconcile the accounts of both branches.  In case of TT, test is must for every issue and for any amount of money. PO (Payment Order): It is a written document, This PO can be in cashed on that Branch from where it is issued, several supplier organizations use this PO and here no A/C is needed to open with there Bank. It is issued locally. Advice: Advice is simply making of adjustment between Debit and credit. Here no cash remittance is happened. RAKUB can transact among its various Branches with the help of such Advice. 3.16 Daily Cash Transaction Register: The name of cashier is mentioned at the right corner of its upper part. All payments are recorded at right hand side and all receipts are recorded at left-hand side. Right hand side contains voucher no. The account’s name, name of the payer, column of amount in Tk. On the other hand left-hand side contains voucher no., name of the account/head from which expenditure occurs, receiver name, column Department of Finance | University of Rajshahi 38 of amount in Tk. The names of cashier, Second Officer, Manager, are mentioned of its lower portion. When cheque will be enchased, it will be recorded in daily cash transaction register.  Night Safe Register: It contains date, denomination of Tk., signature of Manager and cashier. Each day’s closing balance (in cash, prize bond) is recorded in it. 3.17 Daily activities of Branch Manager to operate the Bank:  To enter office one or before 9 a.m.  To sign in attendance book.  Utilization and reservation of volt’s key to keep out money from volt.  To keep out cash from volts in own hand and start activities.  Distribution of work among the Bank personnel according to their level. After 9.15 a.m. the Branch Manager locks the attendance book in a particular place. If any Bank personnel come to office after due time, the Branch Manager does not give permission to sign in attendance book and launch allowance for that day. Department of Finance | University of Rajshahi 39 Chapter 4 LOAN DISBURSEMENT AND RECOVERY Department of Finance | University of Rajshahi 40 4.1 Introduction: The management of specialized banks assets must be conducted in a profitable and safety. Safety is essential to commercial banking since banks hold billions of Taka of deposits of individuals, business, and governments. Profit is also necessary for the successful operation of a bank. Lending is the most profitable as well as the most risky function preformed by specialized banks. Therefore, it must be done efficiently and with a minimum of loss so credit management is essential for the bank. 4.2 Objectives of the Study: Primary objective of the study is to provide some practical knowledge, which will increase the practical experience with theoretical knowledge. It helps to achieve real knowledge, technique and experience. Some other objectives of the study are to know about the followings:  Assess the loan disbursement and recovery position of the bank  Analyze the problems and difficulty in recovery process.  Recommend on the findings.  New Techniques used in decision-making.  To suggest some measure for improvement of the profitability position of Bank. 4.3 Methodology of the Study: In my total internship program data have been collected both from primary and secondary sources. We talked to some of the officers and staffs of Rajshahi Krishi Unnayan Bank, Binodpur Branch is relation to different policies and regulations. Moreover the study is based mainly on secondary sources of information collected from audited annual reports an account of Rajshahi Krishi Unnayan Bank, Binodpur Branch. Some information is also collected from different relevant Department of Finance | University of Rajshahi 41 publication in various professional journals. Collected data for this study can be classified in the following ways: (a) Primary data (b) Secondary data (a) Primary data These type of data are provided by  DGM (Deposit Management of RAKUB)  Senior Principal offices (Deposit Management of RAKUB)  Senior officers (Deposit Management of RAKUB) (b) Secondary data These type of data have been collected from  Annual reports of RAKUB.  Various statistical chart & graphs of the Bank.  Published papers on loans.  Various books and journals.  Bank’s annual affairs. 4.4 Definition of Loan: “A credit may be defined as money lent at interest or on profit. It is nothing but temporary parting with one’s (an individual or an institution) resources in order to augment the purchasing power of the receiver of such facility with a promise to return the same with interest profit or otherwise as mutually agreed upon.” Department of Finance | University of Rajshahi 42 4.5 Types of Loan: Loan is the main source to earn income. RAKUB Binodpur Branch provides three types of loan:  Short term loan: A short-term loan is the loan, which is fully repaid within one year or below one year.  Medium term loan: Medium term loan is the loan, which is fully repaid within more than one year to five years.  Long term loan: Loan-term loan is the loan, which is fully repaid more than five years. 4.6 Loan disbursement Scenario Binodpur Branch of RAKUB: Position of targeted and actual Loan disbursement on last 5 years: (Amount in thousands Tk) Year- Loan Disbursement Target and Achievement Target achievement- Percentage- Sources: Statement of Affairs, RAKUB, Binodpur Branch, Rajshahi. *Achievement rate = Achievement T arg et ×100 Graph: Bar Diagram Present by the Last 5 years disbursement target and achievement (amount in thousands Tk.) Department of Finance | University of Rajshahi 43 Comment: It is evident that from the above table during 2014-15 to-. Loan disbursement target are increased gradually on the other hand Loan achievement is not increasing gradually rather there are a decreasing trend in the financial year from 2014-15 to- Actual loan disbursement decreased from the previous year in 2016, 2017 and 2018 but only increased in 2019 year. Loan disbursement is not satisfactory. Here highest achievement rate in the year -) is 141.10% and during all the year achievement rate is less than 100%. So the bank should more carefully estimate its target. Because the bank’s lowest achievement rate is 75.68%. 4.7 Leading Program of RAKUB, Binodpur Branch: The main objectives of RAKUB are to help the marginal farmers of North West region in agriculture development. RAKUB of Binodpur Branch invest its collected deposit to other bank and to give loan in different terms to farmers. Current account cannot be invested. Saving deposit in ST and FD can be invested in different term. Bank has given top priority to all the sub-sectors and associated sectors of agriculture for achievement of desired business Goal. The seven priority sub-sectors of lending are as follows: Department of Finance | University of Rajshahi 44 1. Crop Production: The bank finance all the summer crops, winter crops, horticulture crops & nursery etc. High yielding and high value crops and seeds production is particularly encouraged. Crop sub sector alone holds 4066 thousands in-. Fishery: it is the second most priority sector. Identify method and modern technology in fish cultivation. It excavation and reservation of ponds round the year re-cultivation of species, which have repaid Growth, cultivation of sweet water prawn and other fishes. The bank makes use of expertise of the concerned government agencies for bringing more ponds/water bodies under also identified financing of small fish hatcheries as potential component of its loan portfolio. Total loan in this sector in 2014-15 is Tk. 1100 thousands. 3. Live Stock: The bank extends credit facilities or systemic and commercial live stock farming which includes dairy, beef fattening poultry raising and setting up of hatcheries which in turn is expected to increase production of mil, meat and eggs, the main sources of portion. As the marginal and small farmer’s access to mechanized farming is restrained by want of cash and collateral, the bank has big lending window of draft animal for cultivation of land transportation of agriculture produces and other farming activities. Total loan in this sector in 2014-15 is Tk. 3512 thousands. 4. Irrigation Equipment And Firm Machinery: In today’s technology based farming of high yielding and high volume crops, Mechanization of cultivation, irrigation and pest control is indispensable; to cope with the situation financing power tillers tractors, tub wells, power machinery’s are being treated as an important. 5. Agro-Based Industries or SME: The operational jurisdiction of bank is noted for its agriculture potentials. The bank pay due importance to setting up agroindustries for preservation, processing and marketing of agricultural produces Department of Finance | University of Rajshahi 45 having back word linkage with basic sub-sectors of crop, fishery, live stock and forestation. Manufacturing and marketing of agricultural implements are also encouraged. Agro-industries for import substitution are specially encouraged by offering moderate terms of financing. Total loan in this sector in 2010-11 is Tk. 700 thousands. 6. Poverty Alleviation: The poverty strikes northwest Bangladesh is characterized by comparatively lower rate of saving, inadequate capital accumulation and slim employment opportunities. The existing collateral based banking system is also of little use in respect of extending support to the millions of land less people. Address to problem the bank has been financial collateral free micro credit for income and employment generation through its poverty alleviation 7. Continuous Loans: The bank grants cash credit/working capital facilities for maximum period of 12 months for procurement of raw materials for industrials units, trading and marketing of agriculture outputs and inputs and commercial farming. Total loan in this sector in 2015-16 is Tk. 1800 thousands. The total loan disbursement and sector wise loan disbursement during- are shown below. Loan disbursements: Amount in thousands Department of Finance | University of Rajshahi 46 Crops Fisheries Live-stocks Irrigation Equipment and Firm machineries Agro based industries & SME Cash Credit Poverty alleviation others Total - - - - - 3738 - - - - - 4.8 Main credit portfolio of RAKUB Binodpur Branch: Main credit portfolio of RAKUB Binodpur Branch a) Food Crops : Paddy, Wheat, Potato, Sugarcane, Master, Seed, Sunflower Seed, Ginger, Onion, Water, Motor, Winter/Summer b) Cash Crops : Vegetables, Banana, Mango etc. Jute, Cotton, Tobacco, Betel Leaf etc c) Processing : Small and cottage industries. Maketign capital etc. and Marketing d) Agro-based : Rice/has king mills, flour mills, Dall(pluses) Mills, Fruits : processing industries, Light earning work shops, Ice plants etc Loan against fertilizer and pesticide, cash credit loan for : : : agro-products and small enterprise etc. Draft aimals, Dairy, Poultry, Goatery, Deef fttering etc Rickshaw-Van, Rickshaw, Bullock cart, Country boat etc. Power tiller, Tractor and other machineries. : : RSCP, SECP. Fishery, Orchard, Nursery etc. : Loan against fixed deposits. industries project e) Commercial loan f) Live stock g) Transport h)Farm machineries i)Micro credit j)Special agricultural activities k) Others 4.9 Rate of Interest on Loan: Department of Finance | University of Rajshahi 47 Bank usually determines various rate of interest in different sectors. The rate of interest changes overtime and becomes effective from prescribed date. But rate of interest can not be changed when the Disbursed loan is funded from the foreign aids. The variation of interest rate higher upon credit program and tenure of the loan are as follows. The rate of interest, which exists at present, is as follows: Rate of Interest on Loan Loan heads Crop( Without security) Continuous Poverty alleviation Fishery Live stock Irrigation equipment & firm machinery Agro-based industry Others Rate of interest 10% 13-15% 6-14% 12.5-13% 11-13% 12% 12% 10%-12% LOAN RECOVERY 4.10 Introduction: When a bank or any financial institutions distribute a loan to other organization or people, then after over the maturity period regaining from borrowers it is called loan recovery. And therefore RAKUB, Rajshahi Brach, Distributed loan to borrowers and recovers this money by its recovery proceedings. RAKUB, Binodpur Branch, recovery’s loan under two heads namelya. Unclassified loan: When half or more than half of the total loan is repaid within the due dates by the borrowers then it is called unclassified loan. The duration of time in which the loan will be treated as unclassified is less than 12 months from sanctioning the loan. Department of Finance | University of Rajshahi 48 b. Classified loan: When more than half of the total loan or total is unpaid / due over the due date then that loan is called classified loan. Classified loans can be sub standard, Doubtful and bad. The criteria of these classification of classified loans are as follows: 1. For short term loan: Short term loan are classified by RAKUB, Binodpur Branch in three categoriesi) Crop loan and micro credit:  Age of overdue, 12 months-Irregular.  Age of overdue 13-36 months-Substandard  Age of overdue 36-60 months-Doubt.  Age of overdue: Above 60 months Bad. ii) Cash credit-and working capital  From 6 months but less than 9 months- Substandard.  From 9 mouths but less than 12 months-Doubt.  From 12 mouths above-Bad. iii) Demand Loan  From 6 months but less than 9 months- Substandard.  From 9 months but less than 12 months- Doubtful.  From 12 months above- Bad. 2. Medium Term loan (Up to 5 years):  From 0 months but less than 6 months- Substandard. Department of Finance | University of Rajshahi 49  From 6 months but less than 12 months- Doubtful.  From 12 months but less than 18 months - Bad. 3. Long term loan (Above 5 years)  From 0 months but less than 12 months-Substandard.  From 12 months but less than 18 mounts - Doubtful.  From 18 months but less than 24 months-Bad. 4.11 Rules of Recovery: RAKUB, Binodpur Branch, recollects loan from borrowers in installments. The system of installments is as follows: i) Weekly ii) Monthly iii) Semi annually 4.12 Loan recovery procedure: The important task of RAKUB is to recovery the outstanding loans. The main responsibility of branch manager and field supervisor are to recover the outstanding loans in RAKUB. The branch manager gets sound planning and makes policy to recover the loan. Thus recoverable all loans are to be timely. The loan recovery procedure is divided into several steps. These are as follows: A) Recovery: Rajshahi Krishi Unnayan Bank (RAKUB) makes a schedule to recovery the outstanding loan. There are several schedules to pay of difference types of loans. Different schedules to pay loan for various objectives. These are as follows: Department of Finance | University of Rajshahi 50  Schedule to pay of crops loan are fixed according to Bangladesh Bank (BB) and its rules.  For project loan, Schedule to loan are to be adjusted, when production are started commercially.  For working capital loans, loan to be paid in due time. B) Statement of loan: The statement of loan plays a vital role to makes loan recovery. It is an initial instrument for office and field. Name and address of borrowers are in this and address of borrowers is in this statement. This statement is prepared at the beginning of financial year. It mentions that it is helpful for disbursement loan. C) Various types of notice: There are various types of notice to recovery of loan, which are serially sent to the borrowers. These are demand notice, legal notice, special notice, field recovery, loan recovery camp, co-operation of U.P. chairman and case filling. Now the brief descriptions on above notices are as under: Issue of demand notice: Demand notice is issued before on month being due of outstanding loan or installment. It is sent to the borrower. Legal notice: If the borrowed does not repay their respective loans and interest after maturity, being received the demand notice under registered with acknowledgement by post to the borrowers. The bank should send lawyer notice to him. Special Notice: Beside the above, two notice a special notice signature by DC, TNO is sent to the respective borrower to keep mental pressure on him for repaying the loan. Department of Finance | University of Rajshahi 51 Field recovery: Loan offer recover the recovered loan through IO. Receipt by visiting the spot and source of the borrower. Personal communication: If the borrower fails to repay his loan installment the loan office communication with the respective person of that area to give mental pressure to the borrower so that repays his respective loan. Loan recovery camp: RAKUB set- up camp in various areas for the recovery of his loan. In this issue, the respective manager and other officer were present in the camp and communicated with borrowers. They give them moral persuasions and try to encourage them, so that they repay their loan. Case filing: When legal action for recovering loan becomes failed, a case is filed against the borrowers. A schedule of cases is given below for the last five years. Interest exemption: The loan amount which becomes more than double in principal and which is not possible to recovery with the help of legal action then loan can be recovered by exempting interest. By this way, bad loan can be recovered. 4.13 Causes of default: The borrower cannot make loan payment in due time in various causes. The main causes are as follows.  Natural calamity destroy the crops, for this reason the borrower unable to pay in due time.  RAKUB cannot take proper step against the influential borrower.  The borrower does not use the loan properly.  The borrower do not pay loan in due time. Department of Finance | University of Rajshahi 52 4.14 RAKUB’S steps against default: When a borrower defaults to pay loan, RAKUB takes some steps against those borrower. These are  Firstly, the bank issued demand notice to borrower.  If borrower do not pay loan on the basis demand notice, then RAKUB issues legal notice.  Again, if borrower is failure to pay loan, RAKUB issues special notice.  Finally, if borrower default to pay loan then RAKUB file case against the borrower. 4.15 Loan Recovery Scenario of RAKUB, Binodpur Branch: a) Total loan recovery target and achievement: The following table shows the total loan recovery target and achievement during 2014-15 to 2018-19. All are in thousands. Year- Loan Recovery Target and Achievement Target achievement- Percentage- Department of Finance | University of Rajshahi 53 Sources: Statement of Affairs, RAKUB, Binodpur Branch, Rajshahi. *Achievement rate = Achievement T arg et ×100 Graph: Bar Diagram Present by the Last 5 years recovery target and achievement (amount in thousands Tk.) Comment: It is evident that from the above table during 2014-15 to-. Loan recovery target follows an upward trend and also actual Loan recovery achievement is following an upward trend in the financial year from 2014-15 to 2018-19. Actual loan recovery increased from the previous year in 2017 and 2018 but only decreased in 2014 and 2016 year. But Loan recovery achievement rate is very satisfactory. Here highest achievement rate in the year -) is 213.64% and during all the year achievement rate is greater than 100%. So the bank should more carefully maintain its achievement rate. b) Loan recovery and sector wise loan recovery: The following table shows the total loan recovery and sector wise loan recovery. Crops 2014-15 2015-16 2016-17 2017-18 2018-19 4823 6288 6041 6148 5567 Department of Finance | University of Rajshahi 54 Fisheries 0 45 29 30 272 4598 4845 5151 4102 4358 473 232 679 82 187 0 0 0 2782 2175 Cash Credit 5430 7124 0 1559 3580 Poverty alleviation 1836 1162 2816 212 98 others 2184 5882 10355 12834 9707 Total 19344 25578 25071 27749 25944 Livestock Irrigation Equipment and Firm machineries Agro based industries & SME Sources: Statement of Affairs, RAKUB, Binodpur Branch, Rajshahi c) Total loan disbursement and Loan recovery: The following table shows the comparison between loan disbursement and Loan recovery during 2014-15 to 2018-19. Year- Loan Disbursement and Recovery Disbursement Recovery- Percentage- Sources: Statement of Affairs, RAKUB, Binodpur Branch, Rajshahi *recovery rate = re cov ery ×100 disbursement Graph: Bar Diagram Present by the Last 5 years actual disbursement and recovery (amount in thousands Tk.) Department of Finance | University of Rajshahi 55 Above table and bar chart shows that the recovery position of the bank is satisfactory. All the year except- the recovery is greater than the total disbursement. The recovery is 129.71% in 2015-16. So generally it can be said that the bank is doing its business in a good manner. d) Sector wise loan disbursement and recovery scenario: in the below we will see how much the bank disburse to and how much the bank recover from its customers. Crops: The following table shows actual disbursement and recovery of the bank for the crops production. Crops Year disbursement (amount in thousands) recovery Percentage 2014-15 4712 4823 102.36 2015-16 6271 6288 100.27 2016-17 6343 6041 95.24 2017-18 5320 6148 115.56 Department of Finance | University of Rajshahi 56 2018-19 4066 5567 136.92 Sources: Statement of Affairs, RAKUB, Binodpur Branch, Rajshahi *recovery rate = re cov ery ×100 disbursement Graph: Bar Diagram Present by the Last 5 years disbursement target and recovery from crops sector (amount in thousands Tk.) Comment: from the table and chart we see the bank is recovering its money from its customers approximately in full. Last 5 years the bank’s recovery rate in crop sector is above 100% or near 100%. So the bank is doing better in the position. The bank should maintain it in future. Fisheries: The following table shows actual disbursement and recovery of the bank for the fisheries production. Department of Finance | University of Rajshahi 57 Fisheries Year- disbursement (amount in thousands recovery - Percentage- 0 ----3 24.73 Sources: Statement of Affairs, RAKUB, Binodpur Branch, Rajshahi *recovery rate = re cov ery ×100 disbursement Graph: Bar Diagram Present by the Last 5 years disbursement target and recovery from fisheries sector (amount in thousands Tk.) Comment: from the table and chart we see the bank is not recovering its money from its customers properly. Last 5 years the bank’s recovery rate in this sector is not satisfactory. The highest rate is 24.73%. Though in 2017-18 and 2018-19 there is disbursement but there is recovery, we cannot say that the bank is doing well here. The bank should take necessary steps to increase its rate here. Department of Finance | University of Rajshahi 58 Live-stocks: The following table shows actual disbursement and recovery of the bank for the live-stocks production. Year Livestocks (amount in thousands disbursement recovery Percentage- Sources: Statement of Affairs, RAKUB, Binodpur Branch, Rajshahi *recovery rate = re cov ery ×100 disbursement Graph: Bar Diagram Present by the Last 5 years disbursement target and recovery from livestock sector (amount in thousands Tk.). Department of Finance | University of Rajshahi 59 Comment: from the table and chart we see the bank is recovering its money from its customers approximately in full. Last 5 years the bank’s recovery rate in livestock sector is above 100%. So the bank is doing better in the position. The bank should maintain it in future. Irrigation Equipment and Firm machineries: The following table shows actual disbursement and recovery of the bank for the Irrigation Equipment and Firm machineries production. Year- *recovery rate = Irrigation Equipment and Firm (amount in machineries thousands disbursement- recovery- Percentage- ------- re cov ery ×100 disbursement Department of Finance | University of Rajshahi 60 Graph:Diagram Present by the Last 5 years disbursement target and recovery from Irrigation Equipment and Firm machineries sector (amount in thousands) Comment: from the table and chart we see the bank is recovering its money from its customers approximately in full. Last 5 years the bank’s recovery rate in Irrigation Equipment and Firm machineries sector is above 100% and even there is no disbursement but there is recovery in 2017-18 and 2018-19. So the bank is doing better in the position. The bank should maintain it in future. Agro based industries & SME: The following table shows actual disbursement and recovery of the bank for the Agro based industries & SME production. (amount in Year Agrobased industries & SME disbursement 2014-15 thousands recovery 0 Percentage 0 Department of Finance | University of Rajshahi 0 61 2015-16 0 0 0 2016-17 0 0 0 2017-18 2800 2782 99.36 2018-19 700 2175 310.71 Sources: Statement of Affairs, RAKUB, Binodpur Branch, Rajshahi *recovery rate = re cov ery ×100 disbursement Graph: Pie Chart Present by the Last 5 years disbursement target and recovery from Agro based industries & SME sector (amount in thousands Tk.) Comment: from the table and chart we see the bank is recovering its money from its customers approximately in full. Last 2 years the bank’s recovery rate in Agro Department of Finance | University of Rajshahi 62 based industries & SME sector is above 100% and closely 100% in 2014-15 and 2019-19. We see in earlier 3 years no disbursement and recovery. Actually RAKUB initiates SME loan in 2015. In previous only agro based loan is made in this sector irregularly. So the bank is doing better in the position. The bank should maintain it in future. Cash Credit: The following table shows actual disbursement and recovery of the bank for the Cash Credit production. Year- Cash Credit disbursement- recovery- (amount in thousands Percentage- Sources: Statement of Affairs, RAKUB, Binodpur Branch, Rajshahi *recovery rate = re cov ery ×100 disbursement Graph: Bar Diagram Present by the Last 5 years disbursement target and recovery from Cash Credit sector (amount in thousands Tk.). Department of Finance | University of Rajshahi 63 Comment: from the table and chart we see the bank is not recovering its money from its customers properly. Last 5 years the bank’s recovery rate in this sector is not satisfactory. The highest rate is 198.89%. Though in 2015-16, 2014-15 and 2018-19 the recovery rates are high enough but in 2017-18, there is disbursement but there is recovery and in- the recovery is low. So we cannot say that the bank is doing well here. The bank should take necessary steps to increase its rate here. Poverty alleviation: The following table shows actual disbursement and recovery of the bank for the fisheries production. Year Poverty alleviation disbursement (amount in thousands recovery Percentage 2014-15 1729 1836 106.19 2015-16 137 1162 848.18 2016-17 211 2816 1334.60 2017-18 0 212 --- 2018-19 0 98 --- Department of Finance | University of Rajshahi 64 Sources: Statement of Affairs, RAKUB, Binodpur Branch, Rajshahi *recovery rate = re cov ery ×100 disbursement Graph: Bar Diagram Present by the Last 5 years disbursement target and recovery from Cash Credit sector (amount in thousands Tk.). Comment: from the table and chart we see the bank is recovering its money from its customers approximately in full. Last 5 years the bank’s recovery rate in poverty alleviation sector is above 100% and even there is no disbursement but there is recovery in 2014-15 and 2018-19. So the bank is doing better in the position. The bank should maintain it in future. Others: The following table shows actual disbursement and recovery of the bank for the fisheries production. Year others (amount in thousands Department of Finance | University of Rajshahi 65 - disbursement- recovery- Percentage- Sources: Statement of Affairs, RAKUB, Binodpur Branch, Rajshahi *recovery rate = re cov ery ×100 disbursement Graph: Bar Diagram Present by the Last 5 years disbursement target and recovery from Cash Credit sector (amount in thousands Tk.). Comment: from the table and chart we see the bank is not recovering its money from its customers properly. Last 5 years the bank’s recovery rate in this sector is not satisfactory. The highest rate is 105.30%. Only in 2014-15 and 2018-19 there is more recovery than disbursement but there less recovery in other 3 years, we cannot say that the bank is doing well here. The bank should take necessary steps to increase its rate here. 4.16 Other recovery position of the Bank: Department of Finance | University of Rajshahi 66 a) The position of recovery of unclassified loan: The following table shows the total loan recovery during 2014-15 to 2018-19. All are in thousands. Unclassified loan recovery Amount In thousands 2014-15 2015-16 2016-17 2017-18 2018-19 Principal 15653 22311 21688 23973 20071 interest 1904 2770 2720 3278 2858 24408 27251 22929 other 8 Total 17557 25089 Comment: The line shows the upward trend during the last 5 years. Still there is Fluctuation in the series. So the bank should be careful in the recovery process. a) The position of recovery of classified loan: The following table shows the total loan recovery during 2014-15 to 2018-19. All are in thousands Classified loan recovery thousands 2014-15 2015-16 2016-17 2017-18 2018-19 1263 303 444 330 2572 489 141 219 165 435 other 35 45 3 8 Total 1787 489 498 3015 Principal interest 663 Comment: The line shows the downward trend during the last 5 years. Still there is Fluctuation in the series. So the bank should be careful in the recovery process. Department of Finance | University of Rajshahi 67 4.17 The loan disbursement, recovery and balance of loan to Staff: The following table shows loan disbursement, recovery and balance of loan to Staff. Staff loan disbursement Thousands 2014-15 2015-16 2016-17 2017-18 2018-19 131 0 2000 1109 1495 Stuff 1266 75 795 460 1420 Total 1397 75 2795 1569 2915 Officers Staff loan recovery 2014-15 2015-16 2016-17 2017-18 2018-19 69 71 108 100 114 Stuff 105 159 143 56 130 Total 174 230 251 156 244 Officers Balance of Stuff loan 2014-15 2015-16 2016-17 2017-18 2018-19 Officers 1165 1506 5025 4695 7079 Stuff 3688 3962 4735 6371 5326 Total 4853 5468 9760 11066 12405 Total loan disbursement, recovery and balance of stuff loan summarized from the above table. Total 2014-15 2015-16 2016-17 2017-18 2018-19 disbursement 4853 5468 9760 11066 12405 Department of Finance | University of Rajshahi 68 recovery 174 230 251 156 244 balance 9706 10936 19520 22132 24810 Comment: From the above table and bar chart we see the loan disbursement is very greater than recovery. Since the recovery is very low, the balance of the stuff loan in very high. The bank should take necessary step to recover the staff loan regularly. 4.18 The impact analysis between total loan disbursement and recovery. We know there is a positive relationship. Also there is a linear relationship. So the equation between loan disbursement and loan recovery will be Y= α + βX+ c Table: The following bar presents by the Last 5 years loan disbursement, recovery and balance from stuff loan (amount in thousands Tk.). Loan Disbursement and Recovery Year 2014-15 Disbursement (X) Recovery (Y) 19873 19344 Department of Finance | University of Rajshahi 69 2015-16 19720 25578 2016-17 30055 25071 2017-18 26401 27749 2018-19 23589 25944 Department of Finance | University of Rajshahi 70 Chapter 5 FINDINGS, RECOMMENDATIONS AND CONCLUSION Department of Finance | University of Rajshahi 71 5.1 Findings: In my study I specially scrutinized the loan disbursement and recovery position of RAKUB, Binodpur Branch. I found the followings. 1. The overall disbursement of the bank is satisfactory. The bank in achieving its target in lending every year. So the bank is doing here as expected. 2. The bank’s total disbursement is dominated by crops loan, cash credit and livestock. Also other sector loans are a huge amount. These sectors are crucial for the bank. 3. In each current year the disbursement and the recovery are not always offsetting each other. There is fluctuation during the given years. 4. The overall recovery of the bank is satisfactory. Every year it is recovering more than 100% or nearly 100%. 5. The recovery in various sectors is not equally satisfactory. In crops, livestock, Irrigation Equipment and Firm machineries, Agro based industries & SME and Poverty alleviation is satisfactory. 6. But in Fisheries, Cash Credit and Others sector the recovery is not satisfactory. The bank is not doing well here. 7. Also it is seen that the recovery from both classified and unclassified loans is following the upward trend. 8. But the disbursement to and recovery from the staffs of the bank is coordinating. The balance remaining is accumulating every year. 9. Finally I showed that the general idea that if loan disbursement increases the recovery also increases is statistically insignificant in case of this branch disbursement and recovery. There is no statistical positive relationship between disbursement and recovery. Department of Finance | University of Rajshahi 72 Also I found some reasons why the recovery in some sectors is not as expected. They are as follows: Problems of loan recovery: We know RAKUB provides maximum loan in rural areas especially in agro-based industry. Income generation from agro-based industry is usually low. For this reason, loan recovery is the main problem for RAKUB. The major problems of recovery of loan are as follows: 1. In most case less recovery occurs due to borrower unwillingness to pay the loan in order to have various advantages from the government 2. In many circumstances, the loan recovery is hindered for natural disastrous such as flood, draught, thunderstorm etc. 3. Failed to provide the farmers with loans in proper time and farmers cannot utilize their borrowings and repay in time. 4. The notice is not issued in accurate time 5. Lack of banking knowledge to the borrowers 6. Lack of effective field working 7. Providing loan without proper assessment 8. Lack of proper planning and inefficient fund management 9. Lack of proper supervision. Department of Finance | University of Rajshahi 73 5.2 Recommendation: From the findings and analysis of the problem of recovery I recommend the followings. 1. The bank should follow a strict loan disbursement and recovery procedure and implement it. 2. It should maintain the present overall disbursement estimation and achievement. 3. It should assess the borrowers’ ability very well. The bank should know about borrowers’ physical, financial and social position prior to provide loans. 4. The bank should concentrate to recover loan in sector wise. It should target each sector to recover loan properly. 5. It should train its personnel to be more effective and efficient so that they can recover the loans and understand the behavior of the borrowers. 6. It should increase the supervision over the borrowers assets placed as security. 7. Even if someone is default, it should take immediate necessary steps to recover the loan legally. 8. Finally all the personnel should be sincere and honest to disburse and recover the loans. Otherwise the bank should follow the means of appropriate penalty. Department of Finance | University of Rajshahi 74 Department of Finance | University of Rajshahi 75 5.3 Conclusion: Bank is a financial intermediary that mobilizes the idle funds of the people into productive investments. It serves the people by collecting deposits, disbursing loan and providing various types of customer services. As a branch of a special bank, RAKUB Binodpur Branch, Rajshahi has been rendering services to its customer from very beginning of its establishment. During my internship program, I was introduced with different kinds of services rendered by this branch. Since it is not possible to focus on all the functions of the bank from a 15-days internship program, my report is mainly based on loan disbursement and recovery of this branch. In previous pages, I have analyzed total loan disbursement and recovery position of the branch. In analyzing the data provided by the bank, it is seen that the loan disbursement and recovery position of the branch is satisfactory but not sufficient. Though I have observed general banking functions of this branch, my study is concentrated on evaluation of overall branch performance in loan disbursement and recovery. I have already recommended on my findings. Department of Finance | University of Rajshahi 76 BIBLIOGRAPHY A. Books: 1. KOTHERY, CR Research Methodology (Second Edition) India wishwaProkason. 2. Lowrence J. Gitman, principle of managerial finance, 10th edition, (published by pearson education, singapore). 3. PANDEY, I, M: Financial Management (Vikas Publishing Private Ltd. Delhi51) 7th Revised Edition-1979. 4. Prosanna Chandra: Projects Planning, Analysis, Financing and Review (5th Edition Tata Mcgraw hill) 5. Raquib, Abdur, “Agricultural loan recovery problem in Bangladesh.” Krishi Bank Paraikrama, Vol-11, Jan-June-1990, pp-2-26. 6. Roy, Provash Chandra, (2004)“A study of credit need and credit allocation to farmers: Role of RAKUB.” Journal of institute of bankers, Bangladesh, Vol51, No-1, June-2004, pp-29-57 7. Shaha, Abhinaya Chandra: Principles of Business Finance 2nd Edition, August 1996. B. Articles: 1. Annual Report of RAKUB. 2. Deposit Ledger of RAKUB. 3. Different Types of Report. 4. Loan Ledger of RAKUB. 5. Training Institution Booklet. C. Experts:  Manager, Second officer, Senior officer, Junior officer,  www.rakub.org.bd. Department of Finance | University of Rajshahi 77