soft copy

“©Daffodil International University”
INTERNSHIP REPORT
ON
An Evaluation of the Business Loan of National Bank
Limited
(Elephant Road Branch), Dhaka
Supervised By:
Masud Ibn Rahman
Associate Professor
Department of Business Administration
Faculty of Business & Economics
Daffodil International University
Prepared By:
Mahabub Alam
Id: 111-11-1903

An Evaluation of the
Business Loan
Of
National Bank Limited
(Elephant Road Branch)
Dhaka.

INTERNSHIP REPORT
On
An Evaluation of the Business Loan of
Prepared By:
Mahabub Alam
Id: 111-11-1903

An Evaluation of the Business Loan of
Supervised By:
Masud Ibn Rahman
Associate Professor
Submitted By:
Mahabub Alam
Id: 111-11-1903
Host Organization:
Elephant Road Branch, Dhaka
3 Elephant Road, Dhaka – 1205

LETTER OF TRANSMITTAL
13 September 2014
Masud Ibn Rahman
Associate Professor
Subject: Submission of Internship Report
Dear Sir,
I am pleased to submit the internship report on An Evaluation of the Business Loan of
National Bank Limited. As par academic requirement I had completed the internship report
.I have completed the assignment with each department as per internship program and
collected information from various primary and secondary data sources. I tried my best to
do this work properly and make it as much presentable.
I appreciate this opportunity for my placement in internship program to unite the practical
experience and gaining theoretical knowledge on banking activities. Writing this report is a
great opportunity and interesting experience for me. I like to thank you for providing me with
such opportunity. Despite of some limitations, I sincerely hope that my report will meet
requirement set for me.
Yours Sincerely,
Mahabub Alam
Id: 111-11-1903
I

APPROVAL CERTIFICATE
Mahabub Alam, Id: 111-11-1903, major in Finance, Department of Business Administration,
and Daffodil International University has completed internship report under my supervision.
He has done this report on An Evaluation of the Business Loan of National Bank Limited,
(Elephant Road Branch) as a part of requirement of obtaining the degree of Bachelor of
Business Administration.
I have gone through the report and found it a well written report. He has completed the report
by himself. I wish him every success in life.
Masud Ibn Rahman
Associate Professor
II

ACKNOWLWDGEMENT
By the name God the report has been completed. However, the special thanks to my
honorable supervisor Masud Ibn Rahman, Associate Professor, Department of Business
Administration, Faculty of Business & Economics, Daffodil International University. The
supervisor and support that he gave truly help the progression and smoothness of the
internship program. The cooperation is much indeed appreciated.
I am grateful to Md. Rahanur Islam, Senior Principle Officer and Mahamuda Akter, Junior
Officer of National Bank Ltd. For their invaluable support and guidance that led to the
successfully completion of my internship project.
Finally my special thanks go to the whole Branch team of National Bank Ltd. , Elephant
Road Branch for their continuous support, inspiration and giving me the opportunity to deal
with different clients.
III

DEDICATION
I dedicate this effort to my Parents & Teachers who
Guide & encourage me during the course Of My
Studies and preparation of this Report.
IV

EXECUTIVE SUMMARY
This report is a combination of three months internship program in National Bank Limited
(NBL) Elephant Road Branch, prepared as the partial requirement of BBA program. The
report focuses on the three months working experiences. This report will give a clear idea
about Business Loan of National Bank Limited.
The main objective of the report is to know about the Business Loan and the procedure
followed by the bank for sanctioning Business Loan. This bank tries to provide higher quality
services in case of sanctioning the Business Loan. The information of the report has collected
from primary and secondary data sources of the National Bank Limited. It include source of
existing data, such as Operational manual, official website, Banking journals, Research
papers and financial statement. After analyzing data, it was found that customer have tried to
get Business Loan from National Bank Limited. But the Business Loan sanctioning
procedure is time consuming. That’s why bank its losing its valuable customers in Business
Loan department. Therefore, National Bank Limited should give more effort to make well
establish market in the context of Bangladesh and be more flexible to disburse Business
Loan.
V

Chapters Particulars Page No
Letter of Transmittal I
Approval Certificate II
Acknowledgement III
Dedication IV
Executive Summary V
Chapter#1
Introduction
1.1 Introduction 01
1.2 Background of the Study 02
1.3 Scope of the Study 02
1.4 Objective of the Study 02
1.5 Methodology of the Study 03-04
1.6 Limitation of the Study 05
Chapter#2
Organization Profile
2.1 Background 06-07
2.2 Vision and Mission 07
2.3 Management Structure 08
2.4 Core Values of NBL 10
2.5 Banking Services and Facilities 12-17
Chapter#3
Credit and Loan
3.1 Credit 18
3.2 Loan 18
3.3 Credit Risk 18
3.4 Classification of Credit Risk 19
3.5 Importance of Credit Risk 19
3.6 Credit Risk Management by NBL 19
Table of Contents

Chapter#4
Business Loan
4.1 Background 20
4.2 General Procedure of Loan and Advance 21
4.3 Total Loan Category and Interest Rate 22
4.4 Lending Caps 23
4.5 Compliance of Bangladesh Bank 24
4.6 Terms and Condition of Loan 24
4.7 Selection of Enterprise for Loan 25-26
4.8 Loan Recovery Activities 27-28
4.9 Loans and Advances of National Bank Limited 29
Chapter#5 Analysis 30-35
Chapter#6 Findings & Recommendations 36-37
Conclusion & References 38-39

Organization Profile
Table no 2.3.0 Management Structure 08
Table no 2.3.1 Board of Directors 09
Table no 2.3.2 Division of NBL 09
Table no 2.3.3 Organ Gram of NBL 10
Table no 2.4.1 Core Values of NBL 10
Table no 2.4.2 Five years performance at a Glance 11
Credit and Loan
Chart no 3.4 Classification of credit risk. 19
Business Loan
Table no 4.2 General Procedure of Loan and Advance 21
Table no 4.3 Total Loan Category and Interest Rate 22-23
Table no 4.4 Lending Caps 23
Table no 4.8 Loan Recovery Activities 27
Table no 4.9 Loans and Advances of National Bank Limited 29-30
Analysis
Figure no 5.1 Percentage of Loan Disbarment 31
Figure no 5.2 Percentage Loan Defaulting 32
Figure no 5.3 Business Loan Growth Rate 33
Figure no 5.4 Percentage of loan Borrowers. 34
Figure no 5.5 Percentage of Taken Loan 35
Figure no 5.6 Percentage Business Experiences of Loan Borrowers 36
List of Figures/Table

1. INTRODUCTION
1.1 Introduction
National bank limited has its own prosperous past, glorious present, prospective feature and
under processing project and activities. Established as the first private sector bank fully
owned by Bangladeshi entrepreneurs, NBL has been flourishing as the largest private sector
bank with the passage of time after facing many stress and strain. The members of the board
of directors are creative businessman and leading industrialists of the country.
National Bank Limited was born as the first hundred percent Bangladeshi owned bank in
private sector. From the very inception, it was the firm determination of National Bank
Limited to play a vital role in the national economy. They are determined to bring back the
long forgotten taste of banking services and flavors. They want to serve each one promptly
and with a sense of dedication and dignity.
The then President of the People’s Republic of Bangladesh Justice Ahsanuddin Chowdhury
inaugurated the bank formally on the March 28,1983 but the first branch at 48,Dilkhusha
Commercial Area, Dhaka started commercial operation on march 23,1983. The 2nd branch
was opened on 11th May 1983 at Khatungonj, Chittagong.
The emergence of National Bank Limited in the private sector was an important event in the
banking area of Bangladesh. When the nation was in the grip of severe recession, the
government took the farsighted decision to allow the private sector to revive the economy of
the country. Several dynamic entrepreneurs came forward for establishing a bank with a
motto to revitalize the economy of the country.
1

1.2 Background of the Study
The internship program is mandatory requirement for the students who are graduating from
the Faculty of Business & Economics under the program Bachelor of Business
Administration of Daffodil International University. It has to undergo a three-month
long internship program to gain some practical exposure about corporate world. Upon the
completion of this program, the students have to submit an internship report, which reflects
their knowledge as well as activities during the program. In relation to that was assigned to
prepare a report on An Evaluation of the Business Loan of National Bank Limited. The
purpose of this report is to focus practical Experiences of my day-to-day work as a part of
internship period.
1.3 Scope of the study
After completing 122 credits in Daffodil International University there were an opportunity to
get appointment in one of the largest and renowned National Bank Limited which explored a
vast scope of the study. Scopes for the study depicted as follow:
1. Loan and Advance procedure followed by the National Bank Limited
2. Background and Prospective of National Bank Limited
1.4 Objectives of the Study
General Objective:
 The main objective of the study is to evaluate the Business Loan Activities of
National Bank Limited, Elephant Road Branch.
Secondary Objectives:
 To know about the loan and advance services offer By National Bank Ltd.
 To recognize the necessity and objective of Business Loan.
 To describe Loan and advance sanction process and requirement.
 To analyze the Business Loan sanction and recovery procedure of National Bank
Limited.
 To make recommendations regarding the Bank’s from loan process.
2

1.5 Methodology of the Study
Data were collected in a systematic procedure and analyzed. Those Steps Are:-
Step-1: Problem formulated and prepares questioners according to the need
Step-2: Survey among the customers and officer of NBL of Elephant Road Branch by using
these questioners
Step-3: Arrange the data of the customer responds
Step-4: Analyze the data
The study requires various types of information of present policies, procedures and methods
of Banking Operation. The research is an exploratory in nature and both the primary and
secondary data available have been used in preparing this report.
Sources of Data:
Primary Data:
 Interview: Face to face conversation with the respective officers and customers of the
branch to collect information.
 Practical Work Experience: Working in different desk of the branch helped to
collect some information that makes the report informative.
Secondary Data
The secondary data were collected to clarify different conceptual matters from internet and
annual report used. Sources of secondary information can be defined as follows:
Internal Sources:
• NBL management annual report 2013.
• Bank’s Self-made customer surveys.
• Previous Interns surveys.
External Sources:
• Newspapers.
• Website of National Bank Limited
• Bangladesh Bank Circular (www.bangladesh-bank.org)
3

Target Population:
The target population of the study is the respective officers, staffs and customer of the branch
of Elephant Road, National Bank Limited.
Sampling Technique:
For selecting a sample size from population the study use the simple random sampling. In this
technique, each employee or customer of the branch has an equal chance of being selected as
subject. The entire process of sampling is done in a single step with each subject selected
independently of the other members of the population.
For reduce bias/error in sampling technique here some technique used. Those are:-
 Use clear, appropriate language in the survey questions.
 Make sure both relevant questions and competent respondents.
 Avoid double-barreled questions.
Sampling Size:
The sample size of the study is 30 which include
 Head of branch
 Loan in-charge
 One executive officer of loan and advance department
 Two junior officer of General banking department
 25 customers
Method of Data Collection
Observation Method: How people behave and interact in public open spaces. Observe
systematically, become a participant observer or case study.
Data Analysis:
The data they were analyzed by using Excel and Simple Statistical techniques like mean
percentages were used to describe the data.
4

1.6 Limitation of the Study
The present study was not out of limitations. But as an internship student it was a great
opportunity for me to know banking activities of Bangladesh, especially the National Bank
Limited. Some of the constraints are as follows:
 Relevant papers and documents were not available sufficiently.
 It was little difficult to get the actual information.
 Sometimes the officials had been unable to provide information because of their huge
routine work.
 In many causes up to date information is not available.
 Due to time constraints the sample size for the survey is small.
 The website of the bank is not provided enough information.
5

2. ORGANIZATION PROFILE
2.1 Background
National Bank Limited has its prosperous past, glorious present, prospective future and under
processing projects and activities. Established as the first private sector bank fully owned by
Bangladeshi entrepreneurs, NBL has been flourishing as the largest private sector Bank with
the passage of time after facing many stress and strain. The members of the board of directors
are creative businessmen and leading industrialists of the country. To keep pace with time
and in harmony with national and international economic activities and for rendering all
modern services, NBL, as a financial institution, automated all its branches with computer
networks in accordance with the competitive commercial demand of time. Keeping the target
in mind, NBL has taken preparations to open 15 new branches and 5 SME centers by the year
2009. In addition, NBL further is expanding their presence through developing and
expanding the SME financing, Any Branch Banking and Off-shore Banking facilities.
National Bank Limited was born as the first hundred percent Bangladeshi owned Bank in the
private sector. From the very inception, it was the firm determination of National Bank
Limited to play a vital role in the national economy. At present, NBL has been carrying on
business through its 112 branches spread all over the country. Since the very beginning, the
bank has exerted much emphasis on overseas operations and handled a sizable quantum of
home bound foreign remittance. It has drawing arrangements with 415 correspondents in 75
countries of the world, as well as with 37 overseas Exchange Companies located in 13
countries. NBL was the first domestic bank to establish agency arrangements with the world
famous Western Union in order to facilitate quick and safe remittance of the valuable foreign
exchanges earned by the expatriate Bangladeshi nationals. This has meant that the expatriates
can remit their hard-earned money to the country with much ease, confidence, and safety.
NBL was also the first among domestic banks to introduce International Master Card in
Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power Card. The
Bank has in its use the latest information technology services of SWIFT and REUTERS.
NBL has been continuing its small credit programmers for disbursement of collateral free
agricultural loans among the poor farmers of Barindra area in Rajshahi.
6

Since its inception, the bank was aware of complying with Corporate Social Responsibility.
In this direction, NBL has remained associated with the development of education, healthcare
and has sponsored sporting and cultural activities. During times of natural disasters like
floods, cyclones, landslides, NBL has extended its hand to mitigate the sufferings of victims.
It established the National Bank Foundation in 1989 to remain involved with social welfare
activities. The foundation runs the NBL Public School & College at Moghbazar where
present enrolment is 1140. Besides awarding scholarship to the meritorious children of the
employees, the bank has also extended financial support for their education.
The Transparency and accountability of a financial institution are reflected in its Annual
Report containing its Balance Sheet and Profit & Loss Account. In recognition of this, NBL
was awarded Crest in 1999 and 2000, and Certificate of Appreciation in 2001 by the Institute
of Chartered Accountants of Bangladesh.
2.2 Vision and Mission
Vision
Ensuring highest standard of clientele services through best application of latest information
technology, making due contribution to the national economy and establishing ourselves
firmly at home and abroad as a front ranking bank of the country are our cherished vision.
Mission
Effort for expansion of our activities at home and abroad by adding new dimensions to our
banking services are being continued unabated. Alongside, we are also putting highest
priority in ensuring transparency, accountability, and improved clientele service as well as to
our commitment to serve the society, through which we want to get closer and closer to the
people of all strata. Winning an everlasting seat in the hears of the people as a caring
companion in uplifting the national economic standard through continuous s up gradation and
diversification of our clientele services in line with national and international requirements is
the desired goal we want to reach.
7

2.3.0 Management Structure
National bank limited is a centralized organization and operates its activities are designed on
the basis of traditional banking business, such as credit, international division, investment,
administration, and operation etc. NBL has a formal organizational structure that is highly
specialized and centralized. The whole organizational structure is given below-
Figure 2.3.0: Management Structure
8

2.3.1 Board of Directors
MR. ZAINUL HAQUE SIKDER : Chairman
MS. PARVEEN HAQUE SIKDER : Director
ALHAJ KHALILUR RAHMAN : Director
MR. ZAKARIA TAHER : Director
MRS. MONOWARA SIKDER : Director
MR. MOAZZAM HOSSAIN : Director
MR. RICK HAQUE SIKDER : Director
MR. SALIM RAHMAN : Director
MR. RON HAQUE SIKDER : Director
MR. MABROOR HOSSAIN : Director
MR. MD. ANWAR HOSSAIN : Independent Director
MR. A K MSHAFIQUL RAHMAN : Managing Director
Table 2.3.1: Board of Directors
2.3.2 Division of NBL
Table 2.3.2: Division of NBL
9

2.3.3 Organ Gram of NBL
Figure 2.3.3: Organ Gram of NBL
2.4 Core Values of NBL
Integrity Open
Communication
Performa
nce
Driven
Continuous
Self
Improveme
nt
Quality Teamwork
NBL protects
and safeguards
all customer
information.NBL
treats everyone
in an equitable
and consistent
manner.NBL
creates an
environment
which earns and
customer trust.
NBL builds
customer
relationships based
on integrity and
respect.NBL offers
a full line of
products and
excellent
service.NBL is
committed to the
prosperity of the
customers and
shareholders.
In NBL
customers
and
employees
are judged
in terms of
their
performan
ce
Continues
learning self-
challenge
and strive
make ways
for self
improvement
of workforce
at NBL.
NBL offers
hassle free
better
service
timely.NBL
builds up
quality
assets in the
portfolio.
Interaction open
communication
and maintaining
positive attitude
reflect the
commitment to a
supportive
environment
based on
teamwork.
Table 2.4.1: Core Values of NBL
10

2.4.2 Five Years Performance at a Glance
(In Million Taka)
Particular 2009 2010 2011 2012 2013
Authorized
Capital
7450.00 17500.00 17500.00 17500.00 17500.00
Paid up Capital 2846.54 4412.13 8603.65 14196.03 14196.03
Total
Shareholders'
Equity
8916.76 19105.60 21522.57 22374.27 23816.77
Deposits 76834.13 102471.83 128215.97 157331.73 192299.19
Investment 12315.20 24993.32 30334.63 54326.46 56370.12
Loan 65129.29 92003.56 115388.89 126169.79 147459.39
Profit Before Tax
& Provision
3397.69 8940.60 9591.94 3725.20 3640.73
Profit Before Tax 2309.46 1826.57 2496.86 3944.10 4360.41
Profit After Tax 2070.47 6860.34 6085.70 1487.91 2086.37
Total Assets 91931.63 134732.31 169037.38 205207.33 234926.87
Import Business 77539.77 96442.57 104570.90 94137.40 98540.79
Export Business 38398.85 47812.47 60893.90 69062.90 65349.40
Remittance 44381.50 49145.30 54469.40 66513.90 68350.49
Core Capital
(Tier-A)
7329.92 14202.96 20316.05 21730.56 28710.69
Supplementary
Capital (Tier-ll)
1794.70 4987.83 4589.07 4696.48 4871.30
Tier-l Capital
Ratio
6.92% 9.10% 10.32% 10.52% 8.21%
Tier-ll Capital
Ratio
1.69% 3.19% 2.33% 2.27% 1.95%
Total Capital 9124.62 19190.79 24905.13 24905.13 30317.76
Earnings per
Share (Taka)
7.27 15.57 7.11 1.01 1.47
Price Earnings
Ratio (Times)
13.78 24.04 15.88 21.05 30.05
Bonus Share 55% 95% 65% n/a 10%
Number of
Employees
2960 3442 3758 3919 5669
Number of
Branches
131 145 154 165 175
Table 2.4.2: Five years performance at a Glance
11

2.5 Banking Services and Facilities
2.5.1 Services
National Bank Limited offers different types of Corporate and Personal Banking Services
involving all segments of the society within the purview of the rules and regulations as laid
down by the Central Bank and other Regulatory Authorities.
General Banking Division consists of the following fields of activities:
 Receiving/Collecting deposits
 Issuance of Cheque Book, DD, TT, P.O
 Receiving/Collecting Deposits
Our Branch is collecting two types of deposits, such as:
 Demand deposits
 Time Deposits.
 Demand Deposits
These sorts of Deposits are payable without any notification. Our branch is collecting
the above deposits through the following way: By opening of;
 Current account &
 Saving account
 Current Deposits (CD A/C)
Current Deposits (CD A/c) is a running A/c where a customer can draw money
frequently/continuously. Funds of CD A/c shall be payable on demand. Bank does not
allow any interests on CD A/c. CD A/c are generally opened by Business men, Public
Institutions, Corporate Bodies & other organizations. National Bank Limited provides
the following types of current account:
 Current account for individual (There must be a nominee)
 Joint current account (There must be a nominee)
 Proprietorship current account: It may be CD A/c (Current Proprietor A/c)
12

 Savings A/C
Savings accounts are opened to encourage the people to save money and collect their
savings. Benefits –
 Interest rate of 4.00% on minimum monthly balance
 Minimum balance Tk. 1000
 Maintenance charge yearly Tk. 600
 Time Deposits
Time deposits are payable at a fixed date or after notification. Our Branch receives
Time deposits through fixed deposits receipt (FDR), Short-term deposit (STD), MSS
(Monthly Saving Scheme), SDS (Special Deposit Scheme) etc.
 Fixed Deposits (FD)
Fixed Deposits (FD A/c) shall be opened for a longer period such as 3 (three) months
to 3 (three) years or more. Generally who wants to invest his money safely can open
FD A/c. The interest of FD A/c is negotiable & it depends on the volume of deposit
and period
 Issuance of DD, TT & PO
This Bank offers DD, TT & PO for transferring the funds from one place to another to
our Customer. It is Called Inland Remittance. It is one kind of sources of Income of
the Branch.
 Issuance of DD. (Demand Draft)
DD is a written order from one branch to another branch of the same Bank. It is not
payable to bearer of the instrument. In practice, we cannot issue DD between
Branches within the same city.
 Issuance of TT. (Telegraphic Transfer)
TT is one kind of telegraphic/Telephonic message order to pay someone the fund
between two Branches of the same Bank.
13

 Issuance of PO (Pay Order)
PO is a written order, issued by branch of Bank to pay a certain amount to a specific
person or organization. Whose favor we issue PO is called Payee. Some time PO is
sold to individual on payment of value, and then the individual is called the purchaser.
 NBL ATM Service
National Bank Limited has introduced ATM service to its Customers. The card will
enable to save our valued customers from any kind of predicament in emergency
situation and time consuming formalities. NBL ATM Card will give our distinguished
Clients the opportunity to withdraw cash at any time, even in holidays, 24 hours a
day, 7 days a week. Western Union Money Transfer Joining with the world's largest
money transfer service "Western Union", NBL has introduced Bangladesh to the
faster track of money remittance. Now money transfer between Bangladesh and any
other part of the globe is safer and faster than ever before.
 Credit Card
Through its Credit Card, National Bank Limited has not only initiated a new scheme
but also brought a new life style concept in Bangladesh. Now the dangers and the
worries of carrying cash money are memories of the past.
 Daily Activities of NBL as Clearing
Clearing is one of the important jobs of a bank. To run the banking business smoothly
and to provide serve to customer, every bank has to collect cheques, POs, Drafts, etc..
In a word, we can say, the bank needs to collect or pay money on behalf of its A/c
holder against A/c payee instruments. The process by which way the bank collects or
pays the money is called clearing.
14

 Clearing House
Clearing House is a place where various Banks’ representatives gather with their
Clearing Instrument and settle each other’s claims. Clearing is held under the
supervision of the Central Bank. In our country, Bangladesh Bank controls the
clearinghouse. Bangladesh Bank has divided the whole country in various clearing
zones such as, Dhaka, Chittagong, Khulna, Barishal etc. Some where Sonali Bank
arranges & controls the clearing house as a representative of Bangladesh Bank.
Our NBL Elephant Road Branch is a member of Dhaka Clearing House and our
clearinghouse sits in Bangladesh bank. We cannot do our clearing jobs directly. We
do our clearing jobs through our Head office at Dilkusha C/A, Dhaka.
There are two kinds of Clearing as:
 Outward Clearing
 Inward Clearing
 Outward Clearing
The A/c holders of our Branch deposit other Bank’s instrument in their A/c for
collection.
 Inward Clearing
On the other hand, the A/c Holder of our Branch gives our Branch’s instrument to
their party who is not our A/c holder as payment. The party deposits the following
instruments in their A/c for Collection through clearing house.
LBC Cheques: LBC Stands for Local Bills Collection. LBC is a process of collection
of instrument, which is held between the two different Branches of the Same Bank in
the Same Clearing House..
OBC Cheques: OBC stands for Out Wards Bills Collection. Like LBC it is a process
of collection of instrument which is held between the two different Branches of the
Same Bank in the Different Clearing House/Different City.
15

 IBC (Inward Bill Collection)
We collect the instrument on behalf of a customer through LBC/OBC which is drawn
on other Branches of our Bank. Like this collection we also make payment on behalf
of NBL customer against LBC/OBC instrument, which are received from other
Branch but drawn on our Branch.
 Writing of Advices:
Every Branch of NBL has to write Advice for updating their inter Branch Transaction.
To serve NBL customer promptly we have to pay or receive deposits on behalf of our
other branches. We receive or payment this deposit through advice in case of Branch
to Branch transactions.
 Account Section
Accounts department is very important department of general banking. There are
many transactions are made in every day in bank. Here the transactions are recording
properly. If there is any fault made then the accounts section may check it and do
action against it. To avoid these mishaps, the bank provides accounts department;
whose function is to check the mistakes in passing vouchers or wrong entries or fraud
or forgery.
 Foreign Exchange
Various services regarding foreign exchange provided by NBL can be segregated into
four broad categories:
 Import
This section perform the major function of import procedure in favor of its clients and
provide import financing through guarantee, LIM, PAD, LTR etc.
16

 Letter of Credit (L/C)
L/C is a letter from the importer’s bank to the exporter that the bills if drawn as per
terms and conditions are compiled with will be honored or accepted for deferred
payment on presentation. Requirements of opening an L/C are: Trade license, IRC,
Membership Certificate, TIN and VAT Certificate, Bond License, Memorandum of
Articles (In case of a limited co.), Registered Deed (Partnership Firm), Resolution and
Photographs
 Parties to Documentary credit
 Commercial Parties
a) Applicant: The applicant is normally the buyer of the goods.
b) Beneficiary: the beneficiary is normally the seller of the goods who receives
payment.
 Bankers
a) Issuing Bank: The issuing bank or the opening bank is one, which issues the
credit.
b) Advising Bank: The Advising Bank advises the credit to the beneficiary thereby
authenticating the genuineness of the credit. It is normally situated in the
country/place of the beneficiary.
c) Conforming Bank: A Confirming Bank is one which adds its guarantee to the
credit opened by another bank
d) Nominated Bank: A Nominated Bank is that bank nominated by the issuing bank
to pay, to incur a deferred payment liability, to accept drafts or to negotiate credit.
e) Reimbursing Bank: A Reimbursing Bank is the bank authorized to honor
reimbursement claims in settlement of negotiation/acceptance/payment logged with it
by the negotiating/accepting/paying Bank.
17

 Export
Export is the process of selling goods and services to the other country. It has an
immense contribution to generating income for the bank.
Requirements for the export procedure:
In order to export any goods or service to overseas, the exporter should have attested
the photocopies of the following documents with the up to date export registration
certificate. Other requirements are Commercial Invoice, Certificate of origin,
Beneficiary certificate (where the exporter tells about the goods he/she wants to
export), Beneficiary fax (confirmation of sending goods to the importer), Packing list,
Draft, Transport documents and Insurance Documents.
If the bank authority satisfies with all the information provided by the exporter, steps
are taken to smooth out the process of export regarding collection of money or
opening back to back L/C.
Opening back-to-back L/C is a letter of credit backed by the original L/C or the
mother L/C to open a new L/C. The bank provides it to the exporter to import the raw
material from overseas in order to produce the exportable commodity for the
importer. It encourages the exporter to produce more exportable goods.
 Foreign Remittance
Foreign Inward Remittance The remittance in foreign currency, which is received
from outside the country to our country is known as Foreign Inward Remittance.
Foreign Outward Remittance Foreign Outward Remittance is funds remitted to
overseas on behalf of the client.
NBL is an authorized dealer of American Express T/C. at the same time; they can sell
T/C and dollar. Every morning they get a telex from the Head Office, which carries
the rate of the foreign currency transaction of the day. The payment to the customer is
made instantly by debiting “foreign bill purchase” account.
18

3. Credit and Loan
3.1 Credit
In banking terminology, credit refers to the loan and advances made by the bank to its
customers or borrowers, Banks credit is a credit by which a person who has given the
required security to a bank has liberty to draw to ascertain extent agreed upon. It is an
arrangement for deferred payment of a loan purchase. Credit means a provision of, or
commitment to provide, funds or substitutes for funds, to a borrower, including off-balance
sheet transactions, customers, lines of credit, overdrafts, bills purchased and discounted, and
finance leases.
Classification of credit
 Overdraft
 Lease Financing
 House Building
 Small and Medium Enterprise
 Consumer Credit Scheme
 Trade Finance
3.2 Loan
A loan in terms of small business finance is a sum of money advanced to a business that must
be repaid, with interest at some point in the future. The lender must bear the risk that the
borrower may not repay the loan.
3.3 Credit Risk
“Credit Risk is the potential of loss arising out of the inability or unwillingness of a customer
or counterparty to meet its commitments in relation to lending, trading, hedging, settlement
and other financial transactions”. Credit Risk comes from a bank’s dealing with individuals,
corporate, banks and financial institutions or a sovereign. Credit Risk could steam from both
on-balance sheet and off-balance activities. Philosophy behind Credit Risk Management:
Higher the risk, Higher the expected reward.
19

3.4 Classification of Credit Risk
There are two types of credit risk, namely external risk factors and internal risk factors
Figure: 3.4 Classification of credit risk.
3.5 Importance of Credit Risk
The reason behind managing credit risks are as follows
1) Increase shareholder value
a) Value creation
b) Value preservation
c) Capital optimization
2) Instill confidence in the market place
3) Alleviate regulatory constraints and distortions thereof.
3.6 Credit Risk Management by NBL
National bank organ gram has been re-structured with inclusion of a separate risk
management unit in line with the regulatory requirement to address and supervise the existing
and potential business and capital risks .The specialized unit cautions the bank against any
financial and operational risk at macro level impacting the micro functionalities It oversees
the management of various core risk management guidelines prescribed Bangladesh bank and
approved by the bank in different functional areas, credit, foreign exchange, asset and
liability management, internal control and compliance, money laundering and information
communication technology risks apart from capital adequacy risk.
20
External Risk Internal Risk
Classification of Credit Risk

4. Business Loan
4.1 Background
National Bank Limited offers financial support to small businessmen/enterprise with new
products named "Festival Small Business Loan" and "NBL Small Business Loan" has been
introduced in the Bank. The Credit is worldwide recognized as engines of economic growth.
Though it is strongly believed that with the right policies and frameworks, loan play a crucial
role for the economy of a developing country like Bangladesh, but the small and medium
entrepreneurs were overlooked over the years. Micro lenders are working here by providing
very small amount of loan to poor people and on the other hand commercial banks have been
providing bigger amount of loans to larger industries and trading organizations.
NBL is one of the market leaders in providing loans to Small and Medium Entrepreneurs. It
has established strong infrastructure for loan financing all over the country. In line with that,
the bank has expanded loan financing activities through its large network of 121 branches and
10 loan service centers attracting entrepreneurs in various fields of trade and industry. The
bank is contributing to the employment creation in two ways. First of all, it provides loan to
the small enterprise and thus help it to expand. The expanded enterprise requires more
workers. Secondly, Small & Medium Enterprise banking requires educated and energetic
people to provide better service and support to entrepreneurs. The focus of National Bank
Limited is to encourage manufacturing through loan financing. The NBL is providing loan to
entrepreneurs to purchase fixed assets or raw materials that contribute to the increased
production. Another important reason behind loan banking is to spread the knowledge and
experience among entrepreneurs. The loan banking staff gain knowledge from various
businesses and share that knowledge with the entrepreneurs to help them to make crucial
decision regarding their business.
21

Category Business Loan
Description NBL offers financial support to small businessmen/enterprise with new
products named "Festival Small Business Loan" and "NBL Small
Business Loan" has been introduced in the Bank.
Benefit - Maximum Tk.3.00 lac (Festival Scheme) and Maximum Tk.5.00 lac
(Small,Business Scheme) .
- 3 Months (Festival Scheme) and 5 years (including 1 month grace
period(Small,Business Scheme))
- Collateral Free Advance.
Loan Amount Tk.5.00 lac
Tenure 5 Years
Eligibility Any genuine and small businessmen/ entrepreneurs/enterprise having
honesty, sincerity, and integrity.
4.2 General Procedure of Loan and Advance
Figure: 4.2 General Procedures of Loan and Advance
22

4.3 Total Loan Category and Interest Rate
Sl No Category of Loan
Interest Rate
Annually
1.
Agricultural Loan
(a) Advance against primary products including Agri-term
loans
(b) Other Agri
16.00%
(maximum)
2
 Term Loan for Large & Medium Industries
 Term Loan for Small & Cottage Industries non
PPG Loan
16.00%
(maximum)
3
Working Capital for Industry
a) Large and Medium loan
b) Small & Cottage Industries non PPG Loan
16.50%
(medium)
16.00% (mid
rate)
4
Trade Finance
a. Import Finance
i. Rate of on Import items as mentioned in
BRPD Circular MAY 01,2014
ii. Rate of Interest on other import items
b. Cash Credit (Hypo & Pledge)
c. SOD against work order
16.00 %
17 %
16.00 %
5
House Building Loan (Commercial / General ) excluding
retail 16.00 %
6
Others:
a) SOD (Loan against FDR of
other Bank)
b) SOD (Loan against FDR of our
Bank)
c) Loan against NBL Scheme
Deposit
16.50-18.50 %
16.00 %
16.50 %

7
For Products Package based:
a. Small NBL House Loan Scheme
b. NBL-small Business loan
c. NBL-Lease Financing
d. NBL-Weaver Loan
e. NBL-Micro Loan
16.00%
(maximum)
16.00-17.00 %
16.00%
(maximum)
15.00-17.00 %
(range)
15.00 %
(Fixed)
Table: 4.3 Total Loan Categories and Interest Rate
4.4 Lending Caps
National bank Limited is very much aware of over concentration of credit in a particular area,
which may under some situation, create disaster for the bank. Keeping this in consideration
and also the overall business, trend, prospects, problems, risks, and mitigates, pricing,
owner’s stake in business competitors involvement, safety, liquidity security etc. The bank
will be guided by the following lending caps.
Government policy and National bank’s credit focus generally:
Sector Caps Percent
Trade and commerce 45
SME 10
Industry 10
Project finance-long term 10
Retail or consumer(CCS) 10
Agro credit 05
Work or supply order 05
Others 05
Total 100
Table: 4.4 Lending Caps
24

4.5 Compliance of Bangladesh Bank
In the previous sections of this report we have critically analyzed National Bank’s existing
credit risk management system as well as Bangladesh bank‘s best practices guidelines for
managing credit risk management system with the BB best practices guideline we see that
National Bank lack some of the best practices in the banking industry which can be generated
in the following way.
In the above analysis we have seen that national bank limited has no written credit policy
though it follows some policy. As there is no written credit policy branch manager sometimes
get confused whether to go with a project or not.
Thus National Bank limited should have a lending guideline available in every branch so that
credit officers can take quick decision whether to accept or reject a project. The lending
guideline should be including the following:-
 Industry or business segment focus
 Types of loan facilities
 Detail of single borrower/group limit
 Lending caps
 Discouraged business type
 Loan facility parameters
 Cross border risk
4.6 Terms and Condition of Loan
The loan department of National Bank Ltd will provide loans to potential borrower under the
following terms and condition:
 The potential borrowers and enterprises have to fulfill the selection criteria.
 Loan can be repaid in two ways:
 In equal monthly loan installment with monthly interest payment,
 By one single payment at maturity
25

 The borrowers must open a bank account with the same bank and branch where
the loan unit has its account.
 Approved loan will be disbursed to the client through that account by account
payee cheque in the following manner: Borrower name, Account name, Banks
name and Branch’s name.
 The borrower will install a signboard in a visible place of business of
manufacturing unit mentioned that financed by “National Bank Limited”.
 The borrower has to give necessary and adequate collateral and other securities as
per bank’s requirement and procedures.
 National Bank may provide 100% of the Net Required Working Capital but not
exceeding 75% of the aggregate value of the Inventory and Account Receivables
 In case of fixed asset financing 50% of the acquisition cost of the fixed asset may
be considered. While evaluating loans against fixed asset, adequate grace period
may be considered depending on the cash generation after the installation of the
fixed assets.
 Mode of repayment: The loan will be repaid within 2 years(with 1 month grace
period) by 23 equal monthly installment each including interest balance if any
must be adjusted with the last installment, entire liability must be adjusted within
the stipulated period.
 Repayment will be started after 1 month from the date of disbursement i.e. the
client will enjoy 1 month grace period.
 Loan installment will have to be paid regularly. If any installment is not paid in
time, the borrower will be treated as a defaulter and penal interest will be charged
on the defaulted amount.
 Repayment will be made in loan a/c.
26

4.7 Selection of Enterprise for Loan
Enterprise Selection
1. The success of loan will largely depends on the selection of a business and man
behind it. In order to understand the capability of the management behind the
business, the following should be assessed:
2. The entrepreneur should be physically able and in good health, preferably between the
age of 21-60. If he/she is an elderly person closer to 60, it should be seen what the
succession process will be and whether it is clearly defined or not.
3. The entrepreneur must have the necessary technical skill to run the business, i.e
academic background or vocational training, relevant work experience in another
institution or years of experience in this line of business.
4. The entrepreneur must have and acceptable social standing in the community (People
should speak highly of him), he should possess a high level of integrity (Does not
cheat anyone, generally helps people), and morally sound (Participates in community
building)
5. The entrepreneur must possess a high level of enthusiasm and should demonstrate that
he is in control of his business (Confidently replies to all queries) and has the ability
to take up new and fresh challenges to take the business forward.
6. Suppliers or creditors should corroborate that he pays on time and is general in nature
7. Clear-cut indication of source of income and reasonable ability to save.
Guarantor Selection
1. Equally important is the selection of a guarantor. The same attribute applicable for an
entrepreneur is applicable to a guarantor. In addition he should posses the followings:
2. The guarantor must have the ability to repay the entire loan and is economically
solvent ( Check his net worth)
3. The guarantor should be aware about all the aspect of loan and his responsibility
4. Govt. and semi-govt. officials can be selected as a Guarantor such as schoolteacher,
college teacher, doctor etc.
5. Police, BDR and Army persons, political leaders and workers, and Imam of mosque
cannot be selected as a guarantor.
27

4.8 Loan Recovery Activities
For collecting the repayment of NBL loan financing the following collection steps to be taken
:
Table: 4.8 Loan Recovery Activities
28

4.9 Loans and Advances of National Bank Limited
With a view to improve the quality and soundness of Loan portfolio, the bank arranges more
strict procedure for risk assessment, lending decisions and monitoring functions at the time of
granting Loans and Advances. The emphasis on maintaining the quality of assets has
rendered a diversified and well-structured advances portfolio. I have furnished below the loan
and advance position of National Bank Limited to comparison its progress for last five years.
Amount of different types of Advances of NBL
Year
2009 2010 2011 2012 2013
Loan and Advances 36,475.74 50,665.07 65,129.29 92,003.56 115,388.89
Figure: 4.9 Loans and Advance
Here it can be observed from the chart that the growth rate of loans and advances has been
increased day by day. National Bank Limited extended its credit in different sectors like
Agriculture, pharmaceuticals, textiles and garments, chemical industries, Food and allied,
transport and communications industries, electronics and automobiles industries, housing and
constructions industries, engineering and metals industries, energy and power industries,
services industries and many other industries.
29
0
20000
40000
60000
80000
100000
120000
1 2 3 4 5
2009 2010 2011 2012 2013
36,475.74
50,665.07
65,129.29
92,003.56
115,388.89

5. Analysis
5.1 Amount of loan Disbarments
National Bank Limited is one of the market leaders in loan financing over the last few years.
As the scope of businesses is growing, disbursement in loan financing has been increasing
significantly
Loan 2009 2010 2011 2012 2013
Lease Financing 38.12 39.78 41.20 42.34 43.80
Cash Credit 26.47 27.57 28.96 30.22 31.78
Trade Financing 10 8.42 7.66 7.20 7.16
SME Loan 15.78 13.54 12.32 11.58 8.57
Figure: 5.1 Percentage of Loan Disbarment
Figure: 5.1 Percentage of Loan Disbarment
30
1960
1980
2000
2020
2040
2060
2080
2100
2120
1 2 3 4 5
2009 2010 2011 2012 2013
38.12 39.78 41.2 42.34 43.8
26.47 27.57 28.96 30.22 31.78
10 8.42
7.66 7.2
7.1615.78 13.54 12.32 11.58 8.57
Loan Lease Financing Cash Credit Trade Financing SME Loan

5.2 ReasonsBehind Loan Defaulting
Among the 102 defaulters 24% were absconded. 50% default the loan due to business closed.
It occurs if a company becomes financially insolvent because of natural disasters or any other
reasons. 6% of defaulters were deceased. Case was filed to 16% of defaulters. Finally 4%
default the loan due to other reasons.
Reasons Frequency (f) Percentage (%)
Absconded 25 24
Business closed 51 50
Deceased 6 6
Case file 16 16
Others 4 4
Total 102 100
Figure: 5.2 Percentage Loan Defaulting
Figure: 5.2 Percentage Loan Defaulting
31
Absconded
24%
Business closed
50%
Deceased
6%
Casefile
16%
Others
4%

5.3 Business LoanGrowth Rate
Loan 2009 2010 2011 2012 2013
Growth rate 18.86% 25.513% 13.84% 33.37% 25.12%
Figure: 5.3 Total Loan Growth Rate
Figure: 5.3 Business Loan Growth Rate
From the Chart and the Table shown above, it is also seen that from the year 2009 to 2013 the
amount has been increased steadily. In the year 2013, the total loan of National Bank Limited
has reached 115,388.89million tk. which is 25.12% more from the year 2010. It indicates that
the bank is performing well over the last five years in collecting loan.
32
2009
2010
2011
2012
2013
18.86%
25.51%
13.84%
33.37%
25.12%
Total Loan Growth Rate
Growth rate

5.4 Nature of loan Borrowers
Most of the borrowers (75%) are involved in trading business. 10% borrowers are involved in
production and 10% entrepreneurs provide service. Only 5% of borrowers have others type of
business.
Nature of Business Frequency (f) Percentage (%)
Trading 2076 75
Manufacturing 277 10
Service 277 10
Others 138 5
Total 2768 100
Figure: 5.4 Percentage of loan Borrowers
Figure: 5.4 Percentage of loan Borrowers.
33
Trading
75%
Manufacturing
10%
Service
10%
Others
5%
Percentage of Loan Borrowers

5.5 Purpose of Taken Loan
Among the borrowers, 20% took loan for gaining working capital. Majority of the borrowers
(75%) took loan for business expansion and only 5% took loan for other purposes.
Purpose of Loan Frequency (f) Percentage (%)
Gain working capital 554 20
Business Expansion 2076 75
Others 138 5
Total 2768 100
Figure: 5.5 Percentage of Taken Loan
Figure: 5.5 Percentage of Taken Loan
34
Gain working
capital
20%
Business
Expansion
75%
Others
5%
Percentage of Taken Loan

5. 6 Business Experiences of Loan Borrowers
Business experience is one of the important criteria for the eligibility of being a borrower.
From the following table, it is clearly seen that most of the borrowers (34%) have business
experiences ranging from 5 to 10 years. 28% have experiences for less than 5 years. 18%
have business experiences for 10 to 15 years. Only 7% have experience for 20 years.
Experience Frequency (f) Percentage (%)
Below 5 years 775 28
5-10 years 941 34
10-15 years 498 18
15-20 years 360 13
20 years or more 194 7
Total 2768 100
Figure: 5.6 Percentages of Experiences of Loan Borrowers
Figure: 5.6 Percentage Business Experiences of Loan Borrowers
35
BELOW 5 YEARS (28 %)
5-10 YEARS (34 %)
10-15 YEARS (18 %)
15-20 YEARS (13 %)
20 YEARS OR ABOVE (7 %)

Findings
While working at National Bank Limited, (Elephant Road Branch) attained to a newer kind
of experience. After the collection and analysis of data than get some findings. These findings
are completely from the personal view. Those are given below:
 Business Loan is the most popular loan of National Bank Limited.
 The growth rate of Business Loan is tremendous. It was increasing for the last few years.
 The loan and advances department takes a long time to process a Business Loan because
the process of sanctioning loan is done manually.
 Percentage of taken Business Loan is very high. All types of business holder always try
to get loan but they has no knowledge about loan. So the loan defaulting system rises
highly.
 The Business Loan of National Bank Limited is overall good. There some reserves for the
classified and unclassified loans. From the data see that the provision for both types of
loan is increasing day by day.
36

Recommendations
For the probable solution of the identified problems ensure better progress to National Bank
in future, some necessary steps are recommended bellow on the basis of collected data,
observation, expert staffs opinion and my knowledge and judgment…
 National Bank Limited also focus on the Business Loan marketing side and informing
the customers about the Business Loan benefit and loan rate.
 National Bank Limited tries to avoid giving Business Loan the political person who
had bad reputation of loan repaying.
 Develop more customized parameters for Business Loan credit approval process
under the general guideline of BB to increase its market.
37

Conclusion
Today’s business is very competitive and complex. To survive in the related sector the
organization need competitive people and has to take some effective policy. Every country
must have a plan for important role in economic activities. Bangladesh is no exception of
that. Commercial banks financial development and economic developments are closely
related. That’s why the private commercial banks are playing significant role in this regard.
The National Bank Limited (NBL) is one of the best banks in respect of service, profitability
and strength among the private commercial banks in our country and also to play a catalyst
role in the formation of capital market. National bank Limited bears a unique history of its
own. The bank has set up a new standard in financing in the Industrial, Trade and foreign
Exchange business. Its various deposit and credit products have also attracted the clients-both
corporate and individuals who feel comfort in doing business with the bank.
NBL is now been called a modern bank that undertakes all its operations at an international
standard. Over the years, NBL has built itself as one of the pillars of Bangladesh’s financial
sector and is playing a pivotal role in extending the role of the private sector of the economy.
38

References
Website
 Organization profile of NBL, Retrieved 15 May 2014,
Web site: http://www.nbl.com.bd/
 Dhaka Stock Exchange(DSE), Retrieved 22 May 2014,
Web site: http://www.dsebd.org/displayCompany.php?name=NBL
 Cash credit, Retrieved 15 June 2014, From, uslegal.com,
Web site: http://definitions.uslegal.com/search/?q=cash+credit
 Loan procedure. Retrieved 20 June 2014, From
investinganswers.com,Website:http://www.investinganswers.com/financial-
dictionary/debt-bankruptcy/loan-procedure-4851
Book
 Annual report of NBL (2009, 2010, 2011, 2012, 2013)
 National Bank Ltd, Guidelines Manual of 2013.
 National Bank Ltd, Daily Affairs of Elephant Road Branch.
39

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