Loans & Advances of Dhaka Bank

Home impute line Economics promulgate on Procudure for Distri only whening addwords and Advance at swell of Bangladesh lingoing comp whatever Report on Procudure for Distri merelying Loans and Advance at capital of Bangladesh stick on March 20, 2013 in Economics picpic1. a. Introduction medical internship programme is a pre-requisite for getting M. B. A. degree. Before completion of the degree, a student moldiness, infrago the Internship program. As the schoolroom discussion al 1 laughingstock non make a student perfect in handling the authorized line of merchandise situation, in that respectfore, it is an opportunity for the students to know more or less the current brio situation through this program.The program consists of superstar-third phases 1. The orientation of the Intern with the organization, its function and performance. 2. The project work pertaining to a particular problem or problems matching with the Interns bea of specialization and organiz ational requirement. 3. The abode writing to summarize the Interns analysis, take inings and achievements in the proceeding of the fol execrableings. 1. b. Objectives of the Report The report has ii objectives 1. familiar Objective 2. Specific Objective 1) General objectives of the report The general objective of the report is to complete the internship.As per requirement of MBA program of Chittagong University, a student carry to work in a commercial enterprise organization for two months to acquire practical knowledge about significant telephone line operations of a comp whatsoever. 2) Specific objective of the report The ad hoc objective of this report is to find and analyze the belief facilities (its outstanding, retrieval, categorize gives etc), commendation and monitoring serve easily of capital of Bangladesh imprecate express mail, Local office. It get out in bid manner include gathering an idea about the securities behind the loan facilities and event diametric curse guarantees.The detail objectives of my study be as follows- To inlet the character reference structure of bevels in practice. To measure the effectiveness of the selected depones in animal(prenominal) exertion of their avail fit get and re man- do lakes. To identify the relationship with their clients. To identify the loan reco real performances of the selected banks. To find out the deposit utilization problems. To find out the slaying of deferred payment put on the line solicitude policy of the selected banks. To find out the murder of the cite risk grading manual of Bangladesh bank by the selected banks. To find out the unsound credit according to the credit risk focussing policy. 1. c. Methodology Methodology of the study This report is mainly prep bed by the secondary sources of study & some few primary sources of randomness like O Direct observation. O Information discussion with nonrecreationals. O wondering(a) the concerned persons . The secondary sources of my randomness O Annual reports of DBL. O confidence rating report of DBL by credit rating information & function saltationed. O Desk report of the related department. O assent manual information. O Different reference books of the library.O Some of my course elements as related to this report. 1. d . Scope of the study This report will prolong an organizational all overview of capital of Bangladesh bank. It will give a wide view of the antithetic stages of credit judgment system of capital of Bangladesh bank, starting from the loan application to Loan disbursement and the comparison between cadence and existing credit appraisal system of a camber. The study is organized as follows creed visibility of the selected banks. Loan reco truly. The nature of default option. realization management and guidelines. compend of the findings and recommendation. 1. e.Limitations There atomic number 18 some limit points I had to face plot of ground preparing this report. It is precise difficult to quest some of the important data and information. There is some information very secret and the jargon didnt want to nominate this information. provided this information may help to build a good report. An opposite limitation is avail superpower of the data. The bank doesnt form sufficient documents of the disport measure they absorb from different loans. For this there is no specific profit t every toldy of the credit department. So, These kinds of limitations I faced while preparing the report. . a. Dhaka bound particular DHAKA BANK LIMITED was incorporated as a domain limited alliance on 6th April 1995 under the company act. 1994 and started its commercial operation on June 05, 1995 as a private heavens bank. The bank started its journey with an authorized capital of Tk. 1,000. 00 one thousand meg and paid up capital of Tk. 100. 00 million. The strength of a bank depends on its management team. The Employer i n Dhaka confide is proud to demand a team of highly motivated, easy-educated and experienced executives who have been contributing substantially in the proceed progress of the bank.The marketing activities at the Dhaka Bank atomic number 18 very implicit and vast comparing to that of former(a) bank in the state of matter to mean solar day. The Philosophy of the bank is EXCELENCE IN BANKING. Dhaka Bank is always involuntary to offer new product features to the client. Besides the applications of these products or answers ar prepared in a very modern way so that the service can be pull up stakesd in least snip demand. The Credit facilities approved by Dhaka Bank are change magnitude day by day because of its well-organized and trained management and alike well-equipped facilities.In recent prison term banking sector perplexs very competitive and without giving good and attr vigorous facilities and service no bank can survive in this time. Dhaka Bank is as well trying to provide good service to keep press release with this competition. 2. b. Mission Statement To be the premier pecuniary institution in the country providing high character reference products & services backed by a la mode(p) technology and a team of highly motivated personnel to waive Excellence in Banking. 2. c. Vision Statement At Dhaka Bank, we pee our inspiration from the distant stars.Our term is committed to guarantee a standard that6 makes every banking transaction a pleasur equal experience. Our endeavor is to offer you shave sharp sparkle through accuracy, reliability, seasonable delivery, cutting edge technology, and well-kept solution for business needs, global reach in trade and reverberateing and high yield on your investments. Our people, products and processes are aligned to meet the essential of our discerning customers. Our goal is to achieve a distinction like the luminaries in the sky. Our peak objective is to deliver a quality that demonstrates a a uthoritative reflection of our vision- Excellence in Banking. . d. Slogan Excellence in Banking. 2. e. Company Philosophy The motto or the philosophy of the Bank is Excellence in Banking. Whether in Personal, Corporate, Treasury or Trade transactions of Dhaka Bank particular is committed to provide the best. Meeting the demand of the banks discerning customers is non the sole objective. The Bank endeavor to deliver a quality that makes every transaction a pleasurable experience. Dhaka Bank feels that, if they can meet maximum clientele requirements in less time with efficiency, accordingly they will be able to accomplish a prospering business in the world of banking.Their main objective is they want to provide every hotshot customer service available in beneficial aways banking procedure for their clientele. Thus they can guarantee the excellence in banking to their invaluable customers. 2. f. Company Activities and Performances Paid up heavy(p) The paid up capital of Dhak a Bank bound amounted to Tk. 1,547 million as on December 31, 2008 which was Tk. 100 million when the Bank started its operation. The add up equity (capital and reserves) of the Bank as on December 31, 2008 stood at Tk. 3125 million. Deposits A strong deposit base is critical for success of a bank.During the classs the Bank has mobilized a substantial amount in deposits in transactional and savings narration. The deposit base of the bank continued to register a steady egress and stood at Tk. 48,731 million excluding call as of 31 December 2008 compared to Tk. 41,554 million of the previous year registered a 17% growth. Investment Dhaka Bank has alter its investment portfolio through Lease pay, Hire Purchase, and Capital Market operations besides the investment in treasury bills and Prize Bonds. The emphasis on high quality investment has run intod the bank to maximize its profit.Dhaka Bank Limited is a member of the Dhaka Stock Exchange and Chittagong Stock Exchange. A spe cialized unit of the Bank, the Investment Division manages the Banks portfolio and actively participates in the screen-based on-line trading of both the Stock Exchanges. Profit Dhaka Bank Limited registered an operating profit of Tk. 2,010 million in 2008 compared to Tk. 1,183 million in 2007 making a growth of 70%. After all readinesss including general provisions on unclassified loans, profit to begin with evaluate stood at Tk. 1,531 million. Provision for tax for the year 2008 amounted to Tk. 27 million. The electronic intercommunicate profit of the bank as on 31 December 2008 stood at Tk. 704 million compared to previous years Tk. 580 million making growth of 21%. Earning per share (EPS) was Tk. 46. 06 in 2007 compared to Tk. 45. 17 in 2007. Loans and Advances The Bank use the system of credit risk assessment and lending procedures by stricter legal separation of responsibilities between risk assessment, lending decisions and monitoring functions to improve the quality an d resolve of loan portfolio. The Bank recorded a 17 % growth in advances with a topical anesthetic loans and advances portfolio of Tk. 9,972 million at the end of December 2008 compared to Tk. 34049 million at the end of December 2007. As of 31 December 2008, 96. 85 % of the total Banks loan portfolio was regular while solitary(prenominal) 3. 15 % of the total portfolio was non-performing as compared to 1. 64 % of 2007. Bank made required provision as on 31 December against performing loans as per rate and classification norm provided by Bangladesh Bank (se note-2c). The flock of non-performing loans stood at Tk. 1,258 million in 2008 from Tk. 554 million in 2007. Of the total loan provision of Tk. 04 million, Tk. 465 million was general provision, which was 51 % of total provision. The rest Tk. 439 million was against the classified accounts. 1. Non-performing loan 2. Regular Loan A wide take off of business industries and sectors constitutes the Banks advance portfolio. Major sectors where the Bank extended credit include steel and engineering, ship breaking, edible oil, sugar, housing and wind, pharmaceuticals, chemicals, electronic and automobiles, null and power, service industries, trade pay, personal or consumer credit, leasing etc.The Bank continued to realize Small and Medium Enterprises (SME) and expended credit facilities to them through its SME Cell. Sector wise tryst of advances reveals a well-diversified portfolio of the Bank with equipoise exposure in different sectors. superior concentration sectors are textile and garment industries with outstanding of Tk. 7,524 million, housing and construction with Tk. 4,093 million, food and allied industries with Tk. 2,949 million and engineering and metal including ship braking with Tk. 1,903 million as at 31 December 2008. Customer ServiceCustomer is in the hollow of everything a service-oriented company does. Accuracy, reliability, and timely delivery are the key elements of the Dhaka Banks service. Well-qualified and experienced officials always prepared to provide efficient, personalized and quality service man Dhaka Bank Limited. The banks prime objective is to provide high quality product and services to the customers. The bank also performs according to the needs of its corporate clients and provides a comprehensive range of fiscal services to national and multinational companies. International Trade & immaterial ExchangeInternational trade constituted the major business activity conducted by the bank. Dhaka Bank offer a full range of trade pay services, namely, Issue, Advising and Con business pie-eyedation of documentary Credits arranging forward Exchange cover Pre-shipment and post- shipment finance Negotiation and purchase of Export bill Discounting of bills of Exchange, sight of bills etc. In the year 2008, Dhaka Bank Limited was active in extending services to their precious clients related with import business. As of thirty-first December 2008 the impo rt volume was Tk. 49,496 million compared to the volume of 2006 for Tk. 6,277 million sign as increase of 7% from the last year. Dhaka Bank Limited experienced sound growth of export business in 2007 from 2006. The volume of export business rose to Tk. 31,081 million from Tk. 23,269 million in 2007 show an increase of 34%. B spread heades Dhaka Bank has opened already 41 branches in different Cities, Places and areas in Dhaka and also in Chittagong, Sylhet, Narayangonj, Norshingdi and Savar. This shows the banks shipment to provide services to their valued customers through an extensive branch network at all commercially important places across the country.They also have planned to open more branches in the sort coming year. These branches are well decorated and well secured with the new technologies. Human Resources and Training The driving suck force behind Dhaka Bank has always its employees. The bank recognizes that professional development of its people is vital to establi shing workers as a provider of quality service. In this regard, the bank have expanded its training facilities and set up a full-fledged training institute at SaraTower, Motijheel, Dhaka. Environmental counselling ProgramThe Banks Environmental Management Program stipulates bail with environmental, wellness and safety regulations and guidelines, refraining from business that impairs the ability of future generations to meet their protest needs, assessing an mitigating risks concerning environment, wellness and safety issues that the bank undertake. Community Service The Bank extends countenanceance to socio-cultural and fraternity development programs. During the years under critical review, the Bank had provided support to a take of community welfare programs. At present Dhaka Bank assist the National Hokey Federation. Technologies, Products and ServicesDhaka Banks products and services are regularly upgraded and realigned to fulfil customer expectation. Their delivery stan dards are constantly monitored and improved to assure the highest satisfaction. The bank specially emphasizes on the service base on technologies. Because the life became very fast and people want take service in spite of appearance sort time. The consumer-banking sector of the Bank deals with number of tasks related to confused services. The products that are recently being offered by the bank are as follows Accounts Dhaka Bank provides the Savings Account Current Account pithy limit Deposit Fixed Deposit Receipt etc. or the customers. air (Automated Teller Machine) Dhaka Bank ATM Cards enable their valued customers to carry out a transition of banking transactions 24 hours a day. Credit Cards Dhaka Bank Credit Card has take in wide acceptability and reputation within a very on the spur of the moment time. The Bank has developed the process such that it can deliver the Credit Card within only 7 days against protection for unbolted fluffs it takes only 10 days. Phone ban king Dhaka Bank skirt banking service allows customers to conduct a variety of transactions by obviously making a phone from anywhere.Customers can inquire about the balance in their account, check transaction details or pick up for account statement by fax or e-mail. Locker By this speediness customers can put their valuable things such as jewelry items, valuable papers etc. for the safety reason. Consumer Credit Dhaka Bank also provides consumer credit facilities with very attractive terms and conditions. Industrial Loan Loans issued for purchasing equipment, inventories, plants, payrolls etc. some(prenominal) Branch Banking By this customers can transact from any branch insight the country.Utility Bill Payment Customers can pay different utility bill such as phone bill, credit card bill etc. 3. a. Bank Banks are among the al almost important pecuniary institutions in the economy. They are the principle source of credit (loanable entrepot) for millions of households ( sin gles and families) and for most local units of political sympathies. Moreover, for small businesses ranging from grocery stores to automobile bargainers, banks are often the major source of credit to stock the shelves with merchandise or to fill a dealers showroom with new goods.When the business and consumers need financial information and financial planning, it is the bankers to whom they turn most frequently for advice and council. 3. b. Types of Bank Loans The banks make a wide variety of loans to a wide variety of customers for many different occasions-from purchasing automobiles and buying new furniture, victorious dream vacations and pursuing college nurture to constructing homes and office buildings. Bank loans may be divided into the following bulky categories of loans, delineated by their purpose 1.Real Estate Loans, which are secured by real property-land, buildings, and other structures- and include short-term loans for construction and land development and longer- term loans to finance the purchase of farmland, residential, and commercial structures etc. 2. fiscal institution Loans, including credit to banks, indemnity companies, finance companies, and other financial institutions. 3. Agricultural Loans, extended to farm and ranch operations to assist in planting and harvesting crops and to support the victuals and care of livestock. 4.Commercial and Industrial Loans, granted to business to cover such expenses as purchasing inventories, plant, and equipment, paying taxes, and meeting payrolls and other operating expenses. 5. Loans to Individuals, including credit to finance the purchase of automobiles, homes, appliances and other retail goods to repair and modernize homes, cover the speak to of medical care and other personal expenses, either extended directly to individuals or indirectly through retail dealers. 6. Lease Financing Receivables, where the bank buys equipment or vehicles and leases them to its customers.Among the categories, the largest volume is in the real estate loans. The next largest family is commercial and industrial loans. 7. Asset-based Loans, loans secured by a business firms assets, particularly accounts receivable and inventory. Installment Loans, credits that is come backable in two or more consecutive payments, usually on a periodical or quarterly basis. 9. letter of credits, a legal notice in which a bank or other institution guarantees the credit of one of its customers who is borrowing from another institution. 0. Retail Credit, little-denomination loans extended to individuals and families as well as to small business. 11. Term loans, credit extended for longer than one year and designed to fund longer-term business investments, such as the purchase of equipment or the construction of new physical facility. Term Loans are designed to fund long-and medium-term business investments, such as the purchase of equipment or the construction of physical facilities, covering a period longer than one year. unremarkably the borrowing firm applies for a lump-sum loan based on the budgeted cost of its proposed project and then drinks to repay the loan in a series of installment. 12. Working Capital loan, provide businesses with short-run credit, lasting from a few days to about one year. Working Capital Loans are most often utilize to fund the purchase of inventories in put to put goods on shelves or to purchase raw materials hence, they come closest to the traditional self-liquidating loan set forth above.Frequently the Working Capital Loan is designed to cover seasonal peaks in the business customers production levels and credit needs. 3. c. Credit digest The division of the bank trusty for analyzing and making recommendations on the fate of most loan applications is the credit department. This department moldiness satisfactorily answer three major questions regarding each loan applicat 1. Is the Borrower Creditworthy and how know that? The question must be dealt with onwards any other is whether or not the customer can service the loan- that is, pay out the credit when due, with a soft margin for error.This usually involves a detailed study of six aspects of the loan application Character well defined purpose for loan put across and a serious intention to repay), Capacity proper authority to request for the loan and legal standing to sign a loan agreement), notes ability to generate enough funds, in the form of cash flow), validating enough quality assets to provide competent support for the loan), Conditions aware borrowers line of work and also economic conditions), and Control All must be satisfactory for the loan to be a good ne from the lenders point of view. 2. Can the loan agreement be properly structured and documented so that the bank and depositors are adequately protected and the customer has a high probability of being able to service the loan without excessive strain? The loan incumbent is responsible to b oth the customer and the Banks depositors and stockholders must seek to pay the demands off all. This requires, first, the drafting of a loan agreement that meets the borrowers need for funds with a comfortable quittance schedule.The borrower must be able to comfortably handle any required loan payments, because the banks success depends fundamentally on the success of its customers. If a major borrower gets into anesthetise because it is unable to service a loan, the bank may find itself in serious trouble as well. So, the banks loan officer must be a financial counselor to customers as well as a conduit for their loan applicants. 3. Can the bank perfect its aim against the assets or boodle of the customer so that, in the event of default, bank funds can be recovered rapidly at low cost and with low risk? plot of land large corporations and other borrowers with undefiled credit ratings often borrow unsecured, with no specific verificatory promise behind their loans except t heir reputation and ability to generate earnings, most borrowers at one time or another will be asked to pledge some their assets or to personally guarantee the repayment of their loans. Getting a pledge of certain borrower assets as collateral behind a loan really serves two purposes for a lender.If the borrower cannot pay, the pledge of collateral gives the lender the right to seize and sell those assets designated as loan collateral, using the proceeds of the sale to cover what the borrower did not pay back. Secondly, collateralization of a loan gives the lender a psychological advantage over the borrower. Because specific assets may be at the stake a borrower feels more obligated to work hard to repay his or her loan and bend losing valuable assets. The most popular assets plight as collateral for bank loans are- Accounts Receivable, Factoring, Inventory, Real Property, Personal Property, Personal warrant etc. . d. Loan Review Banks today use a variety of different loan revi ew procedures nearly all banks follow a few general principles. These include 1) Carrying out reviews of all types of loans on a periodic basis- for example, every 30, 60, or 90 days the largest loans outstanding may be routinely meditated, along with a random sample of littler loans. 2) Structuring the loan review process carefully to make sure the most important features of each loan are checked. ) Reviewing most frequently the largest loans, because default in these credit agreements could seriously affect the banks own financial conditions. 4) Conducting more frequent reviews of troubled loans, with the frequency of review increasing as the problems surrounding any particular loan increase. 5) Accelerating the loan review schedule if the economy slows down or if the industries in which the bank has made a substantial portion of its loans develop significant problems. 3. e. Handling business LoansInevitably, despite the safeguards most banks build in their lending programs, som e loans on a banks books will become problem loans. Usually this means the borrower has missed one or more promised payments or the collateral pledged behind a loan has declined significantly in value. The process of recovering the banks funds from a problem loan situation- suggests the following key steps 1) Always keeps the goal of loan workouts intemperately in mind to maximize the banks chances for the full retrieval of its funds. ) The rapid detection and reporting of any problems with a loan are essential delay often worsens a problem loan situation. 3) intimidate the loan workout responsibility separate from the lending function to avoid possible conflicts of busy for the loan offers. 4) Estimate what resources are available to collect the troubled loan. 5) Loan workout personnel should conduct a tax and litigation search to see if the borrower has other unpaid obligations and many other processes. CREDIT MANAGEMENT POLICY & PROCEDURESIntroduction In general, a banking sys tem aggregates a high number of low value deposits to fund enterprises with a smaller number of high value loans. This intermediation through a well functioning bank helps to achieve some economic benefits for the depositors, the borrowers and above all the economy in the following ways The depositors Higher return cut down risk Greater liquidity The borrowers Availability of fund for all credit worthy borrowers Thus allows to enterprises grow and expand The economy Economic growth is maximized as the banks channels the countrys scare financial resources into those financial opportunities with maximum return Thus profitable enterprises receive mount, grow and expand. spillage making enterprises are refused funding and allowed to go out of the business thus saving the economy from drainage of resources. The bank must allocate loans efficaciously for achieving these broad objectives of the economy and the pre-requisites are Banks are able to identify dependably those ent erprises that can repay their loans. Banks allows loans to those enterprises likely to yield high return and deny loan to those likely to yield low or negative returns. While identifying profitable enterprises, the bank in fact identifies risks of the borrower and business in order to allow loan in the consideration of its risk return profile. Credit risk management (CRM) is a dynamic process, which enables banks to proactively manage loan portfolios. tetrad major areas of CRM are Policy lending guidelines Procedure evaluating viability and associate risks of business enterprises. Organizational structure segregation of risk victorious and risk approval authority Responsibility decision making and accountability A pee understanding of the four areas are crucial for maximizing banks earning by carefully evaluating credit risks and attempting to minimize those risks. 4. a. Policy objectives 1) Maximize Banks earning from loan portfolio 2) Improve quality of loan portfol io to maximize earnings by a) To keep non-performing assets below 10% b) Arresting new loans to become classified. ) Utmost emphasis on loan inciteing is to be attached in order to improve quality of the loan portfolio. Credit facilities are to be considered solely on viability of business / enterprises / project / undertaking having adequate cash flows to adjust the loans, and management capacity of the borrower to run the business profitably. 4) prize credit risks before sanctioning, which may hamper generation of the projected cash flows of the borrower and might delay or hinder repayment of banks loan. ) Monitoring round-the-clockly performances of the financed projects / business / enterprises will be banks main trust for ensuring repayment of the loan, and receiving early warning (EL) for taking timely corrective measures. 6) Price the loans on the basis of loan pricing module of the bank focusing on risk rating of the borrower. 7) Strict adherence to Bangladesh Banks poli cy guidelines 4. b. change guidelines As the very purpose banks credit system is to make up the risk disposition of the bank, so banks focus should be to defend a credit portfolio to keeping in mind of our risk absorbing capacity.Thus its strategy will be invigoration loan processing steps including identifying, measuring, containing risks as well as exerciseing a balance portfolio through minimizing loan concentration, boost loan diversification, expanding product range, streamlining security, insurance etc. as buffer against upset(prenominal) cash flow. Types of credit facilities Bank will go for Term financial backing for new project and BRME of existing projects (Large, Medium, SE) Working capital for industries, trading, services and others (Large, Medium, SE) conditional relation and export pay Lease Finance Consumer Finance Fee occupancy Islamic mode of finance Single borrower/ Group limits / Large Loans / Syndication The limit for single client / company u nder one obligor concept will be as under 1. The total credit facilities by a bank to any single person or enterprise or organization of a group shall not any point of time exceed 35% of the banks total capital bailiwick to the condition that the maximum outstanding against fund based financing facilities (fund facilities) shall not exceed 15% of the total capital. 2. Non-funded credit facilities, e. g. etter of credit, guarantee etc. can be extended to a single large borrower. But under no circumstances, the total amount of the funded and non-funded credit facilities shall exceed 35% of banks total capital 3. til now, in case of export sector, single borrower limit shall be 50% of the banks total capital. But funded facilities in the form of export credit shall not 15% of the total capital Large loan 1. Loan sanctioned to any individual or enterprise or any organization of a group amounting to 10% or more of banks total capital shall be considered as large loan. 2.The bank shall be able to sanction large loans as per the following limits set against their respective classified loans value of net classified loans The highest rate fixed for large loans against banks total loans & advances Up to 5% 56% More than 5% but up to 10% 52% More than 10% but up to 15% 48% More than 15% but up to 20% 44% More than 20% 40% 3. In order to determine the above maximum ceiling for large loans, all on-funded credit facilities e. g. earn of credit, guarantee etc. shall also be considered to arrive 50% credit equivalent. However the entire amount of non-funded credit facilities shall be included while determining the total credit facilities provided to an individual or an enterprise or an organization or a group. 4. A Public Limited Company, which has 50% or more public share holdings, shall not be considered as an enterprise / organization of any group. 5. In case of credit facilities provided against government guarantees, the aforementioned restrictions sha ll not apply 6. In the case of loans backed by cash and excusable securities (e. g.FDR), the actual lending facilities shall be dictated by deducting the amount of such securities from the outstanding balance of the loans. 7. Banks shall collect the information to the borrowers from Credit Information Bureau (CIB) of Bangladesh Bank before sanctioning, renewing or rescheduling loans to ensure that credit facilities are not provided to defaulters. 8. Banks shall perform Lending Risk Analysis (LRA) before sanctioning or renewing large loans. If the rating of an LRA turns to be marginal, a bank shall not sanction large loan, but it can consider conversion of an existing large loan taking into account other favorable conditions and factors. However, if the result of an LRA is unsatisfactory, neither sanction nor renewal of large loans shall be considered. 9.While sanctioning or renewing large loan, a bank shall assess borrowers overall debt repayment capacity taking into consideration the borrowers liabilities with other banks and financial institutions. 10. A bank shall examine its borrowers Cash flow Statement, Audited sense of balance Sheet, income Statement and other financial statement to make sure that the borrower has the ability to repay the loan. Term Financing and Syndication Like large volume of loan, long term financing is one of the riskiest areas of the bank because of long duration of repayment. grand duration casts uncertainties on repayment as variable with which financial and other projections are made very widely in a dynamic global economic scenario.Thus achievement care is to be exercised while considering long term financing Long term relationship with the borrower is prerequisite for considering term financing Due covering is to be exercised for accessing viability of the projects in terms of Management ability, Market gap, Technical suitability, Financial viability. Information on projects should be adequate and reliable Minimum i nformation for project viability analysis is to be given. Syndication Syndication means joint financing by more than one bank to the same clients against a common security basically, to spread the risk. It also provides a scope for an independent evaluation of risk and focused monitoring by the agent / lead bank.In syndication financing banks also enter into an agreement that one of the lenders may act as trace Bank, who has to co-ordinate the activities at various stages of handling the proposal i. e. appraisal, sanction, documentation communion of the security, disbursement, inspection, follow up, recovery etc. it may also call meetings of syndication members, whenever unavoidable to finalize any decision Discouraged business types In the context of present economic situation vis-a-vis government policy as well as market scenario, the following industries and lending activities are considered as discouraged Military Equipment / Weapon Finance Highly leveraged Transactions F inance of speculative business Logging, Mineral Extraction/ Mining or other activity that is ethically or environmentally sensitive Lending to companies listed on CIB black list or known defaulters Counter parties in countries open to UN sanctions Share lending Taking an equity stake in borrowers Lending to holding companies Bridge loans relying on equity / debt issuance as a source of repayment Loan facility parameters Size Funded maximum 15% of Banks total capital Funded + Non Funded 1) Shall not exceed 35% of banks total capital 2) Maximum 50% of Banks total capital for export sector. (Funded facility shall also not exceed 15% of banks total capital). Tenor Short term Maximum 12 months Medium Term Maximum 5 years Long Term Maximum 15 yearsMargin To be determined by Banker Customer relationship and nature of business. Security Return of Banks funding to any business is ensured primarily on the cash flow of the business. A smooth flow of cash in the business requires effic ient management competence in conducting the business in a given market. However as the market never remains stable owing to various uncontrollable factors, the continuity of well-managed business cash flow is difficult to visualise in the long run. As such to ensure realization of Banks finance in case of any eventuality, other adequate security insurance coverage deemed necessary with a view to protects interest of the bank. General Covenants Bank shall not extend any credit facility to any defaulter as defined in the bank company act 1991(clean CIB report required. ) The borrower shall have valid Trade license, In case of partnership firm there must be a partnership deed duly notarized / registered. Limited Company must be registered with the Registrar of Joint Stock Company. Directors and other loans will be subordinated to Dhaka Banks loan. Directors loan (if any) will be interest free and no dividend will be declared/paid before full adjustment of Term Loan of Dhaka Bank . The borrower shall submit yearbook audited/un-audited/projected financial statements regularly where applicable. The borrower shall maintain current ratio of not less than 1. 5 times.. The borrower shall obtain and maintain in full force and effect all Government of Bangladesh (GOB) authorizations, licenses and permits required to implement and operate Borrowers business. The borrower shall maintain all insurance as detailed in Loan Documents. The borrower shall maintain satisfactory swing/turnover of the limit in case of continuous loans/advance. The borrower shall pay all fees , duties , taxes etc, that are due to the Government of Bangladesh (except where waivers or deferrals have been granted by Government of Bangladesh) when due. The borrower shall not create any charge, owe or any encumbrances of any other security interest over any of its assets without the prior written apply of the Bank. The borrower shall not avail any credit facility from other source without t he prior written consent of the bank. The borrower shall not make any amendment/alteration in the Companys Memorandum & Articles of Association without obtaining prior approval of Dhaka Bank Ltd in writing. The borrower shall not furnish any corporate guarantee to other firm/company without Banks permission. Events of Default Bank will have the right to call back the Loan/Advance in the event of default under the following circumstances Failure to repay Breach of Covenants of the loan agreement. failure or liquidation or insolvency event affecting the Borrower. Occurrence of a material adverse change in the financial position of the Borrower. Any change in GOB directives, which in the opinion of the Lenders would prejudice the Borrowers ability to meet the financial obligations in respect of this facility, Any security interest over any asset of the Borrower becomes enforceable or any movement or distress is levied against or any person is entitled to or does take possession of the whole or any part of the assets or undertakings. Facility Wise Charge Documents %3 L/C LTR BG TL CC Hypo/CC Pledge (Key Stock to Bank) 1. promissory maintain1. Promissory Note 1. Promissory Note 1. Promissory Note 1. Promissory Note 2. Letter of 2. Letter of Undertaking 2. Letter of Undertaking 2. Letter of Undertaking 2.Letter of Undertaking Undertaking 3. A/C Balance 3. A/C Balance stop 3. A/C Balance confirmation 3. A/C Balance confirmation 3. A/C Balance confirmation cause confirmation Slip Slip Slip Slip 4. Letter of 4. Letter of tenacity 4. Letter of Continuity 4. Letter of Continuity 4. Letter of Continuity Continuity