Full & final ovi

1
CHAPTER- 01
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The internship program of MBA student of the faculty of business studies is a vital part
of MBA program. So we need proper application of our knowledge to get some benefit
from our theoretical knowledge to make it more effective.
We engage ourselves in such field to make proper use of our knowledge in our practical
life. Only when we come to know about the benefit of the theoretical knowledge, such
an application is made possible through internship. After compliance of the program
period a student must present the report on assigned topic to the supervisor and the
department. The program period is three month. During this period I worked with
employees of the organization. In consulting with my supervisor of the department and
bank employee I have selected a topic. My internship topic is “A Study on Loan
Sanctions & Recovery of Bangladesh Development Bank Limited”
The perfect coordination between theory and practice is of paramount importance in
the context of the modern business world in order to resolve the dichotomy between the
theoretical and practical areas. Any academic course of the study has a great value when
it has particular application in the real life. Only theoretical knowledge bears little
importance unless it is applicable to the practical life. When theoretical knowledge is
obtained from a course study it is only the halfway of the subject matter. So we need
proper application of our knowledge to get some benefits from our theoretical
knowledge and to make it more fruitful. Such application is made possible through
internship. For the completion of this internship program, the author of the study was

2
placed in a bank namely, “Bangladesh Development Bank Ltd.”. Internship Program
brings a student closer to the real life situation and thereby helps to launch a career with
some prior experience. My internship is on the loan sanction & loan recovery of BDBL.
1.2 OBJECTIVES OF THE REPORT
The prime objectives of the study are to evaluate the Loan performance of BDBL.
Besides this, there are some other objectives which are as follows:
 To analyse the loan management by BDBL.
 To highlight the credit and recovery procedures.
 To get an idea about the condition of loan default mechanism of BDBL.
 To find out the contribution of BDBL towards the economy of Bangladesh.
1.3 SCOPE OF THE REPORT
I have been selected for my internship program at Head office of Bangladesh
Development Bank Limited. The main focus of my report is to analysis the Loan
Sanctions & Recovery of Bangladesh Development Bank Limited. Bank gives me the
permission to work as an intern in the following department-
 Human Resource Management Department
 Principle Branch
 Loan Operation Department
 SME Department
 Loan Recovery Department.

3
I have collect information from the bank & the working areas of my internship will
mainly in Administrative Division, General banking division & Development Banking
Division.
1.4 LIMITATIONS OF THE REPORT
I have also faced some problems during my internship that can be considered as
limitations of study. This internship report is my first assignment outside our course
curriculum in the practical life. In performing this report my lacking of proper
knowledge greatly influenced in this performance. Besides this, some limitations in
preparing this report have been faced. The main limitations are as follows:
 Confidentiality is the main problem; as a result some confidential facts were not
sufficiently disclosed by the respective personnel.
 Lack of available up-to-date information
 Only few days’ internship’s experience is not enough to find out all the pros and
cons of such a vast project.
 As Bangladesh Development Bank Ltd. is a large financial institution; it is very
difficult to understand each and every aspect of its operation within a very short
period of time.
1.5 STRUCTURE OF THE REPORT
I prepared this report six chapters. In chapter one describes the Origin of the Report,
Background of the Study, Objectives of the Report, Scope of the Report, Limitations of
the Report & Structure of the Report.
In chapter two, I tried to describe the brief overview of banking in Bangladesh and
overview of Bangladesh Development Bank Limited (BDBL). It covers detailed

4
information about BDBL. Here I also present corporate information about BDBL. Here
I find the financial & ratio analysis of BDBL. On the basis of that I finally figure out
the SWOT analysis of the BDBL.
In chapter three, I briefly describe the loan sanction practice of BDBL and Sector wise
loan performance analysis BDBL describe.
Chapter four tells about the recovery of loan. It also describes the Process of Loan
Appraisal, Issue of loan application form, Instruction & co-operation to fill up the form,
Scrutiny of loan application and other paper evaluation of loan proposed, Preparation
of appraisal report, Technical analysis, Financial analysis & Economic analysis / market
analysis and a clear picture of loan portfolio and loan administration.
Chapter five represents the Findings and analysis regarding the Objectives.
And in last and sixth chapter I have drawn the conclusion in the light of overall
discussion and also given recommendations on the base of given findings.
I have analysed these reports and documents highlight of analytical review. Some
graphical presentation, statistical tools, and table to find out different types of analytical
result, growth rates and trend analysis have also been used.

5
CHAPTER-2
AN OVERVIEW OF THE ORGANIZATION
2.1 BACKGROUND OF BANGLADESH DEVELOPMENT LTD BANK
With the decision of the Government, Bangladesh Development Bank Ltd. (BDBL)
was incorporated on 16 November, 2009 as a Limited Company under the Companies
Act. 1994 by merger of former Bangladesh Shiplap Bank (BSB) and Bangladesh
Shiplap Ran Sanest (BSRS) are two Development Financial Institutions (Dais) in the
public sector. Bangladesh Shiplap Bank (BSB) was established in October 31, 1972 for
accelerating the industrial pace of the country through providing loans and equity to the
industrial projects as per Bangladesh Shop Bank Order, 1972 (President's Order No.
129 of 1972). With the same objective, Bangladesh Shiplap Ran Sanest (BSRS) was
also established in October 31, 1972 as per Bangladesh Shiplap Ran Sanest Order, 1972
(President's Order NO. 128 of 1972.
In order to carry on business activities of Bangladesh Bank issued banking licence
on 19-11-2009.Two Vendor Agreements were signed between the Governments of the
People’s Republic of Bangladesh and the BDBL on 31 December, 2009 to acquire and
take over all of their (BSB & BSRS) assets, benefits, rights, powers, authorities,
privileges, liabilities, borrowings and obligations and to carry on with the same
business. As a public limited company, BDBL formally embarked its journey on
January 03, 2012.It extends financial assistance for setting up industries and provides
all kinds of commercial banking services to its customers through its branch network
in Bangladesh. The BDBL also inherited membership of Dhaka Stock Exchange
Limited (DSE) and Citation Stock Exchange Limited (CSE). In order to contribute to

6
the capital market, it acts as stock dealer and operates two brokerage houses, one at
Motijheel and the other at Kawran Bazaar. These provide which are providing services
to investors- n small and medium. The BDBL is also managing a close and Mutual
Fund with paid up capital of TYK. 5.00 Crore.
2.2 CORPORATE INFORMATION:
Table-2.1: List of Corporate information
1. Name Bangladesh Development Bank Limited.
2. Legal Status Public Limited Company
3. Date of incorporation November 16, 2009
4 Banking Licensee obtained November 19, 2009 issued by
Bangladesh Bank
5 Vendors’ Agreement Signed December 31, 2009 between the
Government and Board of Directors of
BDBL nominated by the Government
6 Formal Inauguration January 03, 2010
7 Registered Office BDBL Bhaban, 8, Rajuk Avenue,
Dhaka-1000
8 Authorized Capital TK 1000 crore
9 Paid up capital TK 100.00 crore
10 Reserve TK. 2270 million
11 Total Assets TK 16747 million
12 Total Human Resource 1025
13 Number of Zonal Office 4
14 Number of Branch Office 21
15 .Membership Dhaka Stock Exchange & Chittagong
Stock Exchange Ltd
16 Launching of retail banking April 2010
17 Corporate Tax Rate 42.50 %
18 Auditors MESSERS ACNABIN AND HUDA
VASI CHOWDHURY & CO
19 Legal Adviser & Consultant A. K. M. Nazrul Islam ,Bar-AT-Law
20 Credit Rating Agency CRISL
21 Income Tax Advisor K. M. HASAN & CO
22 Face Value per share TK.100.00
23 Web Site www.bdbl.com.bd
On January 3, 2013 the bank started with 17 Branches, 4 Zonal Offices and 21
Departments in Head Office. Two new departments namely credit Risk Management

7
Department and International Banking Department have been added. They plan to open
gradually 10 more branches in different commercially and geographically important
places of the country and have already got permission from the Central bank for opening
three new branches in Dhaka, Narayanganj and Khatungonj in Chattanooga which are
under process. Sites in Dhaka, Narayanganj and Khatungonj have already been selected
and these three branches may be inaugurated within September & October, 2013
respectively. We know that Present BDBL come from BSB and BSRS. When BSB
operate their banking activities only Loan section. And same activities were BSRS. So
their employee condition is limited size. But now they are start commercial activities.
So need their more employees. On the basis of HR Department of we know that their
current employee number is 1025.
2.3 OPERATIONAL ACTIVITIES OF THE BANK
Bangladesh Development Bank Ltd. continued its operational activities as was done
former BSB & BSRS to make a defective contribution towards industrial development
of the having comparative opportunities, export prospects, forward and backward
linkages and local technology as well as indigenous raw material based and eco-friendly
projects. Commercial banking and capital market operation were also other area of
businesses.
2.4 LOAN APPLICATION RECEIVED
In 2013, the Bank received 757 loan proposals with loan amount of TK. 73.56 crore.
Among these loan applications, 24 loan proposals were for long term loan and 31 for
SME, loan while the others included 19 for cash credit and 683 for consumer’s credit
and commercial loan.

8
 Sanction and disbursement of term loan: The Bank kept on sanctioning of term
loans during 2013 also. This year long term local currency loan of TK. 35.93 crore
was sanctioned to 37 projects while the Bank disbursed term loan TYK. 37.11 crore
to 47 projects / loan proposals in the form of local currency at the year end of 2013.
 Sanction and disbursement of short term loan: During the year 2013, the bank
sanctioned working capital loan of TYK. 31.61 core to 18 projects and disbursed
TYK. 30.32 core to 16 projects. The Bank also sanctioned consumer credit TYK.
9.56 crore was disbursed against 630 loan proposals. The details of sanction and
disbursement of term loan including short term loan were shown below in Table-
2.2 :
Table-2.2: Sanction and disbursement of loan in 2013
Nature of Loan
Sanction Disbursements
No. Of
Projects/
Proposal
Amount
in Core
Taka
No. Of
projects/
proposals
Amount
in crore
Taka
A. Long Term Loan
47 37.11
1)Loan for new project 13 10.50
2)Loan for BMREproject 2 1.05
3)Additional loan for existing
project
4 20.41
4)Loan for SME 18 3.96
Sub Total : 37 35.93 47 37.11
B. Short Term Loan
1. Cash Credit 18 31.61 16 30.32
2. Consumer Credit 639 9.70 630 9.56
3. Commercial Loan 13 0.08 13 0.08
Sub Total 670 41.39 659 39.96
Grand Total (A+B) : 707 77.32 706 77.07
2.5 LOAN RECOVERED
Recovery of loan is crucial index to measure the success of a lending organisation. |The
Bank strengthened its recovery drive for realising loans and dues from its borrowers

9
and notable success achieved. In 2013, total recovery target of loans was TYK. 163 .08
crore, against which actual cash recovery was TK. 170.52 crore, showing about a 5%
rise over the target. It showed core from written off loan were recovered during the
reporting year. The outstanding loan of TK. 39.85 core was regularised through
rescheduling and replacement of bad and doubtful loan accounts of 17 projects. Loan
recovery scenario was depicted in Table -2.3:
Table-2.3: Recovery of loans during 2013
Category of Loans Recovery Target Amount Recovered
Unclassified 96.80 122.32
Classified 26.28 23.56
Written-off 40.00 24.64
Total 163.08 170.52
2.6 FINANCIAL STATEMENT & RATIO ANALYSIS
Ratio Analysis is used as a way of analysing the performance of a company or
organization. As banks have very different operating structures than regular industrial
companies, it stands to reason that investors have a different set of fundamental factors
to consider, when evaluating banks. This is not meant as an exhaustive or complete list
of the financial details an investor needs to consider, when contemplating a bank
investment. I choose BDBL & Agroni for financial statement & ratio analysis.
2.6.1 LOAN GROWTH
For many banks, loan growth is as important as revenue growth to most industrial
companies. The trouble with loan growth is that it is very difficult for an outside
investor to evaluate the quality of the borrowers that the bank is serving. Above-average

10
loan growth can mean that the bank has targeted attractive new markets, or has a low-
cost capital base that allows it to charge less for its loans. On the other hand, above
average loan growth can also mean that a bank is pricing its money more cheaply,
loosening its credit standards or somehow encouraging borrowers to move over their
business.
Figure-2.1: loan Growth
In this figure we find that loan growth of BDBL is not much better than Agroni Bank.
In 2011-2012 BDBL loan growth is improved compared to Agroni bank. But in 2012-
2013 BDBL loan growth is improved but it not better than Agroni Bank.
2.6.2 DEPOSIT GROWTH
As previously discussed, deposits are the most common, and almost always the
cheapest, source of loanable funds for banks. Accordingly, deposit growth gives
investors a sense of how much lending a bank can do. There are some important factors
to consider with this number. First, the cost of those funds is important; a bank that
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
2011 2012 2013
Agroni 12,236,085, 13,256,184, 19,085,656,
BDBL 10,046,075, 14,743,064, 15,457,176,
Millions
Loan Growth
Agroni
BDBL

11
grows its deposits by offering more generous rates, is not in the same competitive
position as a bank that can produce the same deposit growth at lower rates. Also, deposit
growth has to be analysed in the context of loan growth and the bank management's
plans for loan growth. Accumulating deposits, particularly at higher rates, is actually
bad for earnings if the bank cannot profitably deploy those funds.
Figure-2.2: Deposit Growth
In this figure we see that the BDBL deposit growth is improved but compare to the
Agroni Bank it’s not better. Agroni Bank deposit growth is much better than BDBL.
2.6.3 LOAN/DEPOSIT RATIO
The Loan/Deposit Ratio helps assess a bank's liquidity, and by extension, the
aggressiveness of the bank's management. If the loan/deposit ratio is too high, the bank
could be vulnerable to any sudden adverse changes in its deposit base. Conversely, if
the loan/deposit ratio is too low, the bank is holding on to unproductive capital and
earning less than it should.Loans in the numerator of the formula are investments or
0
5,000
10,000
15,000
20,000
25,000
2011 2012 2013
Agroni 16,283,624, 20,326,011, 22,208,360,
BDBL 4,706,790,9 12,945,566, 19,988,788,
Millions
Deposit Growth
Agroni
BDBL

12
assets for a bank. Deposits in the denominator of the formula can be considered the
same as debt as the individual depositors are essentially granting monies to the bank
with a return equal to the deposit rates and that can be called upon at any time. In these
respects, the loan to deposit ratio is similar to a liquidity ratio and debt ratio.
Figure-2.3: Loan/Deposit Ratio
In this figure we find that BDBL loan deposit ratio comparing with Agroni bank loan
deposit ratio is reduce year to year.
2.7 SWOT ANALYSIS OF THE ORGANIZATION
SWOT analysis is a tool that identifies the strengths, weaknesses, opportunities and
threats of an organization. Specifically, SWOT is a basic, straightforward model that
assesses what an organization can and cannot do as well as its potential opportunities
and threats. The method of SWOT analysis is to take the information from an
environmental analysis and separate it into internal (strengths and weaknesses) and
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
2011 2012 2013
Agroni 163.51% 139.13% 86.95%
BDBL 132.43% 148.48% 73.13%
Loan/Deposit Ratio
Agroni
BDBL

13
external issues (opportunities and threats). Once this is completed, SWOT analysis
determines what may assist the firm in accomplishing its objectives, and what obstacles
must be overcome or minimized to achieve desired results. In case of BDBL SWOT
analysis is given below:
S
TRENGTHS
W
EAKNESSES
O
PPORTUNITIES
T
HREATS
1. Weak internal control and
working environment.
2. Limited publication even
they have no particular
books on BSB that may
cover everything.
3. Lack of co-ordination in
the policies or directives.
1. There are huge demand of
micro-credit, small and
medium scale finance.
2. Bangladeshi economy is
expanding rapidly.
3. Many opportunities of
innovation in the Banking
industry.
1. More and less all the
competitors in the
baking industry are
competent.
2. Too much interrupted by
international assistance
institution like World
Bank, IMF, WTO etc.
1. Only one industrial bank of
our country.
2. Strong capital & asset base.
3. Deep focus on quality
control.
4. A dedicated line of human
resource & internal control
and compliance.
Figure-2.4: SWOT analysis of BDBL

14
2.7.1 STRENGTH OF BDBL
BDDL is a development finance institution. It plays significant role in the industrial
development of Bangladesh. Its untiring endeavor is remarkable. As a finance
institution it has both strength and weakness. All the contribution of BDBL is the
consequences due to its strength. On the other hand failure of BDBL is for
unconsciousness and unauthorized exercise of power. It is indeed that the contribution
of BDBL is below the expectation. BDBL has some skill manpower such as Engineer,
Economist, Business executives, lower and so forth. Their capabilities are deteriorating
for lack of proper working environment and unexpected political pressure. In some
cases they are not able to work independently. If BDBL can use his personnel
sufficiently, it will be profitable in future.
BDBL has greater capacity to collect money from foreign countries. It may come
through loan aid, grant etc. and BDBL has many potential sectors where it can disburse
more money as loan. If BDBL able to merge between two (resource mobilization and
loan disburse), it will give good results for the economy as well.
BDBL is only one industrial bank of our country. All industrial must have to go BDBL
for industrial loan. They can take these opportunities through their willingness and
service mentally.
2.7.2 WEAKNESS OF BDBL
Working environment& internal control of BDBL is weak. Many people are working
in a big room. As a result office room has converted into a noisy place. As a big
organization has limited publication even they have no particular books on BSB that
may cover everything. Lack of co-ordination in the policies or directives are shown in
this BDBL.

15
2.7.3 OPPORTUNITY OF BDBL
The opportunity of BDBL is that it can regain its market and role by developing some
remedial measures, such as making a market research cell, enabling the BOD
independent. There are huge demand of micro-credit in that time & economy is
expanding rapidly in Bangladesh. It can also reduce the processing time of loan sanction
and strengthening its recover drive. However, it should diversify its products and
services to compete with the ever rising private commercial bank.
2.7.4 THREATS TO THE BDBL
There are many threats to the BDBL most strong one is the rising money market of
Bangladesh. There are now so many private commercial banks that provide credit of
various terms to the existing and new business. That is why; the demand of BDBL’s
loan is decreasing over the last decade. The business people do not want to wait three
to four months for taking loan. They want one sop service. So time will come when the
demand of loan of BDBL would never attract the entrepreneurs. International assistance
institution like World Bank, IMF &WTO are interrupt by many ways.

16
CHAPTER- 03
LOAN SANCTION PRACTICE OFBDBL
3.1 INTRODUCTION:
After appraising the project, project appraisal committee submits the project appraisal
report on the basis of that a project is approved. If the project is approved, loan is
sanctioned to the proposed project. During FY 2012-13, the bank sanctioned total long
term loan of tk.436 million to 27 projects and FY 2011-12, sanctioned loan was tk.918
to 20 projects.
3.2 LOAN SANCTIONS PROCEDURE:
First of all, a client who wants to have a loan ask for an application form, which is
known as Bangladesh Standard Questionnaire form (BSQE).He has to pay one eight of
one percent cash money 1/8th of 1% of the total loan amount with the filled form. The
person is required to submit necessary papers and documents by the bank the
information generally consists of following:
 Name of the product.
 Name & designation of the entrepreneur.
 Type of project &Type of products.
 Site of the project.
 Amount of the project.
 Copy of memorandum, articles of association and other papers relating to
legality of the projects.
 Site, production process flow diagram etc.

17
When all the required papers and documents are submitted along with the fee TK.1000
plus 1/8th of 1% of total loan amount, the proposal is then under consideration of
judging the project viability.
3.3 SECTOR-WISE POSITION OF BANK’S LOAN PORTFOLIO:
Table-3.1: Sector-wise Loan Portfolio
Sectors No. of project
Total Loan
outstanding (In
Million Taka )
Food and Allied Products……
Jute and Allied products……..
Cotton. Woolen and Synthetic
Textiles……………………….
Paper, Paper Products and
Printing………………………
Tannery and Leather Products
Non Metallic Mineral Products.
Metal Products ……………..
Electrical Machinery and Goods
Machinery & spare parts……
Water Transport…………….
Chemical & Pharmaceuticals.
Petro Chemical Products…..
Service Industries…………..
Miscellaneous ………………
48
1
49
6
4
3
5
1
4
4
14
3
30
3
352
1
4635
124
79
4
19
33
20
54
228
107
196
76
3.4 SECTOR-WISE POSITION OF BANK’S LOAN PORTFOLIO:
Here are some sector that I present graphically. I summarized last five years data to
execute this figure that are given here:

18
3.4.1 JUTE & ALLIED PRODUCTS:
Figure-3.1: Jute & allied products.
During FY 2012-13 total members of jute and Allied products projects in
the loan portfolio stood at 1 with a total loan outstanding of Tk. 1 million.
In the preceding year under this sector the total member of projects of the
loan portfolio stood at 2 with a total loan outstanding of Tk. 1.38 million.
In FY 2012-13 the member of project 1 and loan amount Tk. 0.38 mil lion
are decreased comparing to the FY 2011-12 under this jute and allied
products.
During FY 2008-09 to FY 2012-13 there is decreased trend from previous
year. During FY 2008-09 total member of Jute and allied products projects
in the loan outstanding of Tk. 674 million, total member of projects 5 and
loan outstanding amount Tk. 673 million is decreased in FY 2012- 13
comparing to the FY 2008-09 under this jute and allied products.
2008-09 2009-10 2010-11 2011-12 2012-13
No. of Project 5 3 3 2 1
Total Loan outstanding 674 538 535.75 1.38 1
5 3 3 2 1
674
538 535.75
1.38 1
0
100
200
300
400
500
600
700
800
Jute & Allied products
No. of Project Total Loan outstanding

19
3.4.2 COTTON, WOOLEN AND SYNTHETIC TEXTILES:
Figure-3.2: Cotton, woolen and synthetic Textiles.
During FY 2012-13 total members of cotton, wooden and synthetic textiles
projects in the loan portfolio stood at 49 with a total loan outstanding of Tk.
4653 million. In the preceding year under this sector the total no. of projects
of the loan portfolio stood at 52 with a total loan outstanding Tk. 4401.15
million. In FY 2012-13 the total member of projects 3 are decreased and
loan outstanding amount Tk. 234 million are increased comparing to the
financial year 2011-12 under this cotton wooden and synthetic Textiles
sectors.
During financial year 2008-09 total number of cotton woolen and synth etic
Textiles projects in the loan portfolio stood at 87 with a total loan
outstanding at Tk. 4148 million. The total member of projects 38 is
increased and loan outstanding Tk. 487 million is also decreased compa ring
2008-09 2009-10 2010-11 2011-12 2012-13
No. of Project 87 53 53 52 49
87 53 53 52 49
4148
5304
4322.43 4401.15
4635
0
1000
2000
3000
4000
5000
6000
Cotton, woolen and synthetic Textiles

20
to the financial year 2012-13 under this cotton woolen and authentic Textiles
sectors.
3.4.3 FOOD & ALLIED PRODUCTS:
Figure-3.3: Food and allied products.
During FY 2012-13 total number of food and allied products projects in the
loan portfolio stood at 48 with a total loan outstanding of Tk. 352 million.
In FY 2011-12 total numbers of projects and total loan outstanding are
decreased comparing to the previous FY under this Food and Allied
products.
2008-09 2009-10 2010-11 2011-12 2012-13
No. of Project 46 31 43 46 48
46 31 43 46 48
1335
491
224.2 246.16
352
0
200
400
600
800
1000
1200
1400
1600
Food and allied products

21
3.4.4 ELECTRICAL MACHINERY AND GOODS:
Figure-3.4: Electrical Machinery and goods.
During FY 2012-13 total numbers of machinery and spare parts projects in
the loan portfolio stood at 1 with a total loan outstanding of Tk. 33 million.
loan portfolio stood also 1 with a total loan outstanding of Tk. 21 million.
In FY 2011-12 total numbers of projects remain unchanged but loan amount
decreased comparing to the FY 2012-13 under this Machinery and spare
parts sectors.
2008-09 2009-10 2010-11 2011-12 2012-13
Amount of loan 354 0 16 21 33
6 0 1 1 1
354
0 16 21 33
0
50
100
150
200
250
300
350
400
Electrical Machinery and goods
No. of Project Amount of loan

22
3.4.5 PETRO CHEMICAL:
Figure-3.5: Petro Chemical Products
During FY 2012-13 total number of Petro Chemical Products projects in the
loan portfolio stood 4 with a total loan outstanding of Tk. 123million.
In FY 2012-13 total numbers of projects and total loan outstanding are
decreased comparing to the previous FY under this Service Industries.
2008-09 2009-10 2010-11 2011-12 2012-13
Amount of loan 102 133 121 123 107
5 5 5 4 3
102
133
121 123
107
0
20
40
60
80
100
120
140
Petro Chemical
No. of Project Amount of loan

23
3.5 LOAN SANCTION SCENERY OF BDBL OVER LAST 10 YEARS
(Amount in thousand BDT)
Here 10 years loan sanction of BSB to various sectors has been shown in the table
3.2:
Table-3.2: Loan Sanction of BDBL in 10 years
Loan Sanction of BDBL in 10 years
Name of the
Projects
2003-
04
2004
-05
2005
-06
2006-
07
2007-
08
2008
-09
2009
-10
2010-
11 2011-
12
2012-
13
Textiles 2528
52
4400
93
6284
98
64562
8
6857
94
5304
00
428
690
43224
3 1303
10
47590
00
Electrical 255 365 697 5208 1009 0 0 1581
2055
0
33000
Food & Allied 1759
1
1958
7
2059
7
17819 2265
0
4910
0
292
26
22402
2461
60
35200
0
Jute & Allied 1581
8
4038
5
1832
4
19313 3051
3
5380
0
536
71
53575 1380
1000
Machinery &
Metallic
Products
8785 3909 4093 7101 8019 7600 111
9
1083
2526
0
20000
Petrol
Chemicals
3711 6300 3055 3379 6226 1330
0
126
49
12084
1224
50
10700
0
Rubber 95 109 235 315 301 398 0 0
- -
Service 2555
5
2059
4
2582
9
27829 3084
5
2040
0
228
38
22450
2071
10
19600
0
Tannery 1888
0
2020
0
1322
0
13441 1550
9
1000
0
109
03
10606
8933
0
79000
Water
Transport
8097 5011 4525 3518 6074
5
5028 603
0
6916
7440
0
54000
Total 3485
67
5561
93
7181
46
90076
4
9059
9
5862
00
565
126
56302
0
5699
740
59650
00

24
CHAPTER -4
RECOVERY OF LOAN
4.1 INTRODUCTION
Loan recovery is a crucial index to measure the success of a lending organization. The
success and failure of a lending organization largely depends on its drive for realizing
loans and dues from its borrowers. In 2011-12, was tk.900 million, against which actual
cash recovery was tk.981.20 million constituting 100+ percent of the target. But during
the reporting year, outstanding loan of tk. 423.00 million is regularized through
rescheduling and replacement of bad and doubtful loan accounts of 16 projects. In FY
year cash recovery was tk. 1065.71 million and the amount of loan regularized through
replacement was tk. 280.20 million.
4.2 RECOVERY OF LOAN
Table-4.1: Recovery of Loan
Category of loan Loan Amount recovered (Million Taka)
2011-12 2012-13
A) Long Term Loan:
Long Term project loan 735 596
Bridge Loan .40 .29
Staff loan 48 62
Administered Loan 38
Sub-Total 784 696
B) Short Term Loan :
Working Capital Loan 67 58
C) Others
Debenture/ Shares/ loan against
FDR
11 16
Written off Loan 120 138
Sub- Total: 131 154
Grand Total (A+B+C) 981 908.29

25
4.3 LOAN RECOVERY METHODS:
BSB usually follow a formal way to recover its loan. Normally before an installment
falls due they issue many reminders to remind sponsor to prepare to pay loan. They use
phone call, formal letter, and physical visiting to remind the sponsor to prepare for
paying installment on due time. Formally, central recovery department perform this
duty. The officers of central recovery department go for physical visit to project site
twice in a year. By this visiting they try to understand the present condition of the
project and predict future position of the project. By analyzing the condition of the
project, they suggest sponsors to take necessary to measure to sustain project and
increase the cash flow. Sometime they offer them additional credit to strengthen their
cash generation, which is called cash credit. However, the recovery method of BSB is
not still modern and sophisticated one like the existing private lending and financial
organization.
Some Other Technique Which Are Applied by BSB to Recover the Loan and Advances
are as follows.
 BDBL ensures regular recovery of loans as per repayment schedule
 BDBL reserves the right to nominate its officers to act as directors on the BOD
of the company.
 The borrowers who pay their installments of the principal loan, interest, and
other charges on or before due date as per repayment schedule may be allowed
rebate at a rate of 5% on interest by BSB Board.
 Personal properties of directors, managing directors are attached as collateral
securities and law department-1 recovers it.
 Visit the project personally by BSB concerned department officers.

26
 At first negotiation personally for rescheduling or others without legal action
through noticing. Personal negotiation gives positive result to recover the loan
then legal action.
Thus it can be said that the officers of BSB try hard and fast to recover the advances
in any way
4.4 SECTOR-WISE LOAN RECOVERY OVER 10 YEARS
Here I present 10 sectors from which BSB recovered loan over 10 years. By the loan
recovery table, we will better be able to understand about the performance of BSB in
regarding loan collection and sector-wise performance of loan collection.
4.4.1: JUTE AND ALLIED PRODUCTS
In collection of loan money in Jute and Allied Products is remarkably upward trend
except in FY2012-13. But during FY 2008-09 was recovered tk. 70272.
Figure-4.1: Jute and Allied Products
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
2012-
13
Jute & Allied Products 41458 44371 28171 26285 43001 70272 14972 10182 9170 116000
41458 44371
28171 26285
43001
70272
14972
10182 9170
116000
0
20000
40000
60000
80000
100000
120000
140000
Jute & Allied Products

27
4.4.2: COTTON WOOLEN AND SYNTHETIC TEXTILES
The highest recovery of this sector is tk. 702722 thousand in the year 2008-09 and other
years are medium position. So this sector is in volatile position because increasing and
decreasing pattern in existed in these sectors.
Figure-4.2: Cotton Woolen and Synthetic textiles
4.4.3: FOOD AND ALLIED PRODUCTS
Food and Allied sectors in respect of collection of loan money from the sponsors is
positive because it is also a positive sector in our country.
Figure-4.3: Food and Allied Products
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
2012-
13
Cotton Woolen & Synthetic
textiles
414589443717281719262854430019702722811319640390612120555940
414589443717
281719262854
430019
702722
811319
640390612120
555940
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
Cotton Woolen & Synthetic textiles
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
2012-
13
Food & Allied Products 13319 17574 19270 19907 25160 25232 17809 30902 25160 32900
13319
17574
19270 19907
25160 25232
17809
30902
25160
32900
0
5000
10000
15000
20000
25000
30000
35000
Food & Allied Products

28
4.4.4: ELECTRICAL MACHINERY AND GOODS
This sector was a downward trend from FY 2003-04 to 2009-10. But from 2010-11 to
2012-13 is well recovery position.
Figure-4.4: Electrical Machinery and Goods
4.4.5: PETRO-CHEMICALS
Loan recovery in these sectors is also in volatile positive. However in 2012-13 the
more loans are recovered.
Figure-4.5: Petro-chemicals
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
2012-
13
Electrical Machinery & Goods 176 270 175 130 161 431 881 1825 2800 4552
176 270 175 130 161 431
881
1825
2800
4552
0
1000
2000
3000
4000
5000
Electrical Machinery & Goods
Electrical Machinery & Goods
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
2012-
13
Petro-chemicals 2629 3101 2711 7400 2468 3561 51612 24915 17210 27310
2629 3101 2711
7400
2468 3561
51612
24915
17210
27310
0
10000
20000
30000
40000
50000
60000
Petro-chemicals
Petro-chemicals

29
CHAPTER- 5
FINDINGS AND ANALYSIS
5.1. FINDINGS ON LOAN SANCTION:
 BDBL grants normally four kinds of loans such as, continuous loans, demand loan,
fixed term loans, and short term agriculture and micro finance credit.
 During 1995-96, the Bank started sanctioning working capital to the project that
they financed, but in this case they incurred huge losses being unable to recover the
loan.
 BDBL uses project appraisal technique comprising technical, market, financial,
economic, and management & organization analysis.
 The main problems can be summarized in the following way:
 Sponsors always tend to overstate their future cash flow, revenue and
income and understate the risk with capturing market and expenses.
 Market don’t remain same over the years especially over the time gap
between loan sanction and loan recovery.
 Loan sanction process is not always free from political pressure.
 Lengthy procedure and long time involved in the appraisal of project.
 Sometimes, there is pressure groups’ involvement in sanctioning loan.
 Many projects are sanctioned loan due to influence of political and pressure
group.
 Sometimes, the amount of loan sanction is more than that is required by the
project because of over invoicing from the part of sponsors.
 Lack of eagerness to devote themselves for bank because of lower benefits
is given to employees.

30
5.2: FINDINGS ABOUT THE LOAN RECOVERY:
 After sanctioning loan, the implementation department recovers the first and
second installments then the recovery department takes the duty of recovering
the rest of the installments.
 The recovery process is not satisfactory because the persons involved in the
recovery process show lax or laggardness.
 Usually they inform the borrowers before 15 days of the scheduled date of
payment about his/her next upcoming installment due.
 Visiting to the borrowers premises is hardly done before the loan is defaulted.
 The recovery department makes the replacement of loan and rescheduling of the
loan when necessary.
 The recovery department cannot coerce or make bound to repay the loan
because of pressure from political and other higher management.
 Every government makes impediment in their normal recovery process
especially if the borrower is linked with that political party.

31
CHAPTER-6
CONCLUSIONS AND RECOMMENDATIONS
6.1 CONCLUSION
Most of the banks of Bangladesh are offering a wide array of financial services
including new types of loans and advances and some whole new services are launched
every year. As a DFI, BDBL also has to discover new avenues to reach its goal. It is a
state owned bank. For this reason it should go to the people’s heart through various
schemes. It should follow a mix lending policies designed to improve the quality of its
portfolio and reduce its risk exposure so that in near future when competition among
banks will serve more it can stand with its own entity. Now BDBL is trying to operate
its business successfully in this country.
The success has been resulted from the prediction, commitment and dynamic leadership
of its management. For success, BDBL has to consider the behavioral issues of this
bank’s customers. By proliferation of new advance service expanding use of automated
equipment and electronic transfer of financial information, BDBL can be a truly
fascinating institution in the near future. The institutional future of the bank depends on
its ability to achieve a substantially higher recovery ratio and profitability in future.
And this achievement will help BDBL to overcome its image crisis.

32
6.2 RECOMMENDATIONS
It is very difficult to give any recommendation about the operation of BDBL because
I have not worked here; rather I listened to the personnel of BDBL. However, as per
as I understand, I can some recommendations about loan sanction & recovery
6.2.1. RECOMMENDATIONS FOR LOAN SANCTIONS
 Project appraisal technique should strictly be followed through the loan sanction
process.
 Relevant and accurate data about project should be collected.
 Persons involved in project appraisal should have more expertise and practical
knowledge.
 In analyzing the viability of a project, market of the products or services and
management should rigorously be analyzed.
 The time of loan sanction should be reduced; it should not be more than 20-30
days.
 For reducing time, the Bank should instruct the borrower to bring all the
documents needed by the documentation department and the functions of loan
operation department and documentation department should simultaneously be
done.
 Over invoicing should be checked and detected by expertise. The real price of
machinery should be found out by using various sources.

33
6.2.2. RECOMMENDATIONS FOR RECOVERY DEPARTMENT
 Recovery drive should be reshuffled and strengthened.
 At least before 30-45 days of scheduled time of installments due, the borrowers
should be reminded about the installments is falling due.
 The defaulting borrower should be monitored so that he cannot channel his fund
to other business of firms.
 They should assist the sponsors if he requires continuing his business operation
and generating cash to repay loan.
 No political or other pressure should be considered for loan recovery.

34
Bibliography
 Bangladesh Development Bank annual report 2012/2013
 Bangladesh Shilpa Bank Annual Report 2008/2009
 Bangladesh Development Bank annual report , 2007/2008
 Different Project Appraisal reports of BDBL.
 Loan sanctioning letter of BDBL.
 Bangladesh Shilpa Bank Ordinance 1972.
 Manual of different departments of BDBL.
 Different project appraisal reports of BDBL
 Loan sanctioning letter of BDBL
 Bangladesh Shilpa Bank Ordinance 1972
 Manual of Different department of BDBL
 Debnath, Dr. R.M., Business of Banking, Dhaka: Lotus Publishers, 2008.
 Website-http://www.bdbl.com.bd

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