Rasel Final Cop

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur
CHAPTER-ONE
Introduction
Department of Management Studies

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1.1 Introduction:
Now a days money is unavoidable for running any business with comfortable mood. It is
a pertinent issue that todays banking sectors existence is totally impossible without
money. Since money is considered as the life blood of business and thats why the
importance of banking system all over the world is increasing day by day. It is quite
impossible for any country to develop in industrial, commercial and agricultural sectors
without sound banking system in modern economic era. Bangladesh is the third world
nation in south Asia. In here all sectors are closely related with agriculture. To keep a
deep concentration on agricultural sector the govt. of Bangladesh has established two
specialized Krishi bank and one is Rajshahi Krishi Unnayan Bank for northern part of
Bangladesh. Since Rajshahi Krishi Unnayan Bank is a specialized bank for agriculture
and thats why most of the work of RAKUB is related to agriculture. RAKUB has limited
countence on foreign exchange operation although it is one of the significant functions of
the traditional bank. The recent economic servey-2014 shows that about 47.30% people
directly engage in agriculture. Since agriculture has a remarkable influence on overall
economy, so RAKUB plays a vital role in overall economy of our country in northern
part of BD specially. The Main activities of RAKUB are sanction of loan for agricultural
development in different micro credit programs. After all RAKUB plays a significant role
to overcome the problems of agriculture and improves the condition of agro-production
with the supply of soft- loan.
1.2 Origin of the Report:

Internship program is a three months real life work experience with maintaining some
clear rules and regulations which can capable to me as an adaptive apprentice with any
organization. its a crucial part for a business background student. As a student of BBA
program at Begum Rokeya University an intern can acquire a lot of practical knowledge
with joining as a apprentice of different organizations. Basically these organizations
should represent todays corporate society. After a successful completion with an
organization a student must submit a research paper to demonstrate his or her ability to
work in the corporate world because the report is considered as an aphorism. This report
is a result of the internship placement in RAKUB which is one a specialized bank.

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The topic of this paper was selected by discussing with honorable supervisor, Md.
Masud Rana, Assistant Professor, Dept. of Management Studies The topic of the report is
Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,
Rangpur. Banking Sector is expanding its hand in different financial event every day. At
the same time the banking process is becoming faster, easier and the banking arena is
becoming wider. As the demand for better service increases day by day, they are coming
with different innovative ideas & product. In order to survive in the competitive field of
the banking sector, all banking organizations are looking for better services opportunities
to provide better service. The main concentration was Credit Management of Rajshahi
Krishi Unnayan Bank, Pairabond Branch, Rangpur. Besides, a brief overviews has given
about the activities and operating areas of Rajshahi Krishi Unnayan Bank.
I was sent to Rajshahi Krishi Unnayan Bank(Pairabond Branch) to take the real life
exposure of the activities of banking institution for three months from 28 July, 2015 to 27
October, 2015.
1.3 Rational of the study:

After a successful completion with the organization a student must submit a research
paper to demonstrate his or her ability to work in the corporate world. This report is a
result of the internship placement in RAKUB which is one of the leading specialized
banks in banking sector specially for Rajshahi and Rangpur division.
1.4 Objectives of The study:

The objectives of this study is to examine the lending program of RAKUB, Pairabond,
Rangpur to achieve this study seeks to realize the following:
1. To explore different credit program of RAKUB, Pairabond Branch.
2. To assess the credit management of RAKUB, Pairabond Branch.
3. To assess the loan disbursement position of RAKUB, Pairabond Branch during
this year.
4. To assess the loan recovery position of RAKUB, Pairabond Branch, Rangpur.

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1.5 Methodology of the study:

Methodology of the study comprises of questionnaire method, direct observation, direct
talking with executives and officers, graphic representation, statistical analysis etc.
Qualitative and quantitative information are collected through different media. Basically
information is collected in following way;
1. Primary sources: Primary sources are the sources from where information is collected
directly. In this case information is collected from field. The ways through which I have
collected information in my internship program are described below:
Questionnaire method: Questionnaire method is one of the most usual systems used in
collecting data or information. Questionnaire is two types such as open ended
questionnaire and close ended questionnaire. I have prepared an open ended a
questionnaire under the supervision of my respected supervisor about different functions
and mainly Credit Management of RAKUB ,Pairabond Branch, Pairabond Branch of
RAKUB. The manager and specially the second officer of the branch answer most of my
questions. The questionnaire is given at the end of the report.
a. Observation method: According to oxford dictionary the observation means the act
of watching something carefully for a period of time specially to learn something. I went
to the Pairabond Branch of RAKUB and observed the different activities of officers and
the different problems and requirements of customers through which I have collected
some information.
b. Interview] method: The interview is face to face interpersonal discussion in which
one person asks pertinent question to a person called respondent about a selected topic or
area. I have collected some information through asking the officers.
2. Secondary sources: When an investigator uses the data which has already been
collected by others, such sources or data are called secondary sources or data. I have
collected some secondary information which is already published by the bank authori]ty.
I have collected secondary information from the following sources:
Annual Report of RAKUB
Different Journals
Economic Survey-2014

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1.6 Scope of Report:

AS the Internship was conducted at Pairabond Branch, Rangpur of Rajshahi Krishi
Unnayan Bank, the scope of the study is mostly confined with the day to day activities of
the branch. The report mainly covers credit management activities of the branch.
Moreover, there is an overall brief discussion about the Rajshahi Krishi Unnayan Bank
and operations of the other wings of Pairabond Branch, Rangpur, such as the activities of
the General Banking and Loan Recovery section.
1.7 Data Analysis and Reporting:

Both the qualitative analysis (Questionnaire analysis) and quantitative analysis (Financial
data analysis) have been used to collect and analyze the gathered data. Microsoft office
word 2007 is used to analyzing & presenting data.
1.8 Limitation of the study:

Rajshahi Krishi Unnayan Bank plays an important role in developing the agricultural
sector as well as poverty alleviation and socio-economic development of the Rangpur
Division. The activities of this bank are widely dispersed, but time was constraint which
prevents to acquire complete and sufficient knowledge about the credit management of
Rajshahi Krishi Unnayan Bank. Due to the shortage of time, it is not possible to collect
the all data about this Bank. But reporter tried best to prepare this report properly and
effectively.

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CHAPTER-TWO
A Corporate Overview of
RAKUB

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2.1 General Concept of RAKUB:

Rajshahi Krishi Unnayan Bank (RAKUB) a state owned financial institution was
established by the presidents order no. 58 of 1986. The Bank started functioning on
March 15 1987. RAKUB took over the operations of Bangladesh Krishi Bank (BKB)
within the administrative division of Rajshahi along with its assets and liabilities.
The north west-region comprises of 16 districts of entire Rajshahi & Rangpur
administrative division with an area of 34513 sq. km. and estimated population of 2705
million. The region is the driest and poorest area with a high population density and low
rate of urbanization (13%), poverty is concerted in the country side with 59% of rural
population suffering from various degrees of deprivation.
To overcome those problems and to improve the condition of the poor Rajshahi Krishi
Unnayan Bank (RAKUB) was established in 1986. RAKUB is playing a vital role both in
agricultural and development of country as well as eradication of property.
2.2 Historical Background of Rajshahi Krishi Unnayan Bank:

2.2.1 British Period:
In the British regime, the people of bangle was included in the Dadon business of
indigenous landlord, moneylender etc. As a result, all the belongings of the farmers were
sold in the bid and they had to stay with much difficulty. In this circumstances Shar-eBangla. A.K. Fazlul Haque established Rin Salishi Board for the sack of farmers. As a
result, many farmers who were engaged with the exploitation by the moneylenders and
landlords, breathed with peace.
2.2.2 Pakistan Period:
In 1947 the Indian sub-continent was freed from the British colonial rule and in the
Indian sub-continent originated by the two independent states namely India and Pakistan.
Bangladesh was indicated as East Pakistan as a part of Pakistan. In 1952 Pakistan
government established Agricultural Development Finance Corporation (ADFC) to
disburse loan in agriculture sector. Pakistan government realized the importance of agroloan and agricultural production, established a financial institution named Pakistan
Krishi Bank. Pakistan Krishi Bank started its operations from 1958.

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These two states owned financial institution merged in 1962 and established a new
financial institution named Pakistan Agriculture Development Bank (ADBP). This
institution provides state facilities to the farmers in many ways.
2.2.3 Bangladesh period:
The evolution of Bangladesh made through the Great Liberation War on 16 December
in 1972. After independence of Bangladesh Pakistan Krishi Unnayan Bank was
renamed as Bangladesh Krishi Unnayan Bank. The presidents ordinance number
27, in 1973, Pakistan Krishi Unnayan Bank renamed Bangladesh Krishi Unnayan
Bank. After the evolution of Bangladesh and with the time being, various organizations
are working independently and freely. For that reason the consciousness of people is
increased. The creation of Water Development Board, Bangladesh Risce Research
Institution, Rural Electrification Board, and other necessary institutions are made.
Control of flood, rice of new quality and introduction of other high yielding crops and the
increasing demand d of its, institutional loan demand of farmers increased. In the earlier
time people were not familiar with bank loan or institutional loan, for that reason they
lend from their relatives and friends. But vow bank offer various types of loan to the
farmers and they are somewhat bank oriented now. But it becomes very difficult for some
limited banks to meet up the multiple demand of loan specially crop loan. Since
Bangladesh is an agro-based country; the demand for the loan of Krishi Bank has been
increased remarkably. It becomes very difficult for a Dhaka based head office of Krishi
Bank to manage agro-loan in the remote areas of the country. For this reason, government
felt to decentralize the Krishi Bank in the divisional areas and Rajshahi division was the
first choice. The Northern areas of Bangladesh were not developed in comparison with
other areas of Bangladesh; it is one of the main reasons of establishing RAKUB. Rajshahi
Krishi Unnayan Bank was established in 1986 with the ordinance number 58 of the
president. RAKUB started its operations from 15 March 1987.

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2.2.4 Present Condition:

Institutional agricultural credit plays a crucial role in the modernization of agriculture.
Adequate flow of credit can remove the financial constraints of the farmers and provide
the incentive to adopt new technologies that would otherwise be more slowly accepted.
Credit facilities also help the process of commercialization of subsistence agriculture.
RAKUB realized this situation and performed their job tremendously. Development of
agro-based industries, self-employment, solving unemployment problems, providing
money for expansion of socio-economic activities and provide consultancy are the main
objective of establishing RAKUB. After the construction of Jamuna Multipurpose Bridge,
this responsibility has been increased tremendously. In the very beginning of RAKUB,
the number of branches was 253. Now the number of branches is 376. At his outset of
bank, the credit balance was Tk 610 corers and now credit balance is Tk 1406 corers. For
the well being of all industries farmers in the northwest region in Bangladesh, RAKUB is
continuing relentless efforts and taking more than one hundred and seven loan programs.
2.2.5 Establishment of Rajshahi Krishi Unnayan Bank:

Rajshahi Krishi Unnayan Bank started its operation after liberation war as Bangladesh
Krishi Bank. But in 15th March 1987 it was separated from Bangladesh Krishi Bank &
named as Rajshahi Krishi Unnayan Bank.
2.3 Location:
RAKUB is situated in the divisional city of Rajshahi. It is the central point of Rajshahi
city. RAKUB is 280 km far to the northwest from the capital of Dhaka, Bangladesh. The
head office of RAKUB is located in Kazihata, Greater Road Rajshahi. It is 270 km from
capital city of Dhaka.
2.4 Vision of RAKUB:

To turn the northwest area into a developed area through developing agriculture
sectors
2.5 Mission of RAKUB:

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To turn the RAKUB into a profitable organization

To turn the RAKUB into a self-reliant organization
2.6 Objectives of RAKUB:

To provide credit facilities for agricultural development of poor farmers.
To provide credit facilities for the socio economical development of poor farmers.
To save money as deposit (Hajj Saving, Education Saving, Rural Pension Saving
and others) for future expenditure or needs.
To provide credit facilities for increasing crops production.
To provide credit facilities for poverty alleviation.
To provide credit facilities for creating small firm as Livestock & Poultry, Fishery,
Hatchery.
To encourage the small entrepreneurship via providing credit facilities.
To provide credit facilities for creating self-independence.
To increase income and remove poverty of the people of Bangladesh.
To supply Agricultural inputs and service to the entrepreneur.
To develop and create employment opportunities.
To provide credit facilities for developing humanity.
2.7 Management of RAKUB:

The board of directors is vested with the responsibility of formulation of policy in line
with attainment of growth in agriculture and economic development of the region through
agricultural credit support. The board of directors is constituted of seven members, all are
appointed by the government. Besides, for emergency decisions, there is an executive
committee constituted of the chairman and two other board members, the managing
director and one of the directors elected by the board. The managing director is the chief
executive of the bank.
2.8 RAKUB AT A GLANCE RAKUB :( Up to 29th Dec, 2014):

01)
02)
Establishment
Authorized Capital
:
:
15 March, 1987.
Tk. 1000.00 cores
03)
04)
Paid up Capital
Reserve
:
:
Tk. 570.00 (in cores)

Tk. 208.50 (in millions)

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Area of RAKUB:
a. Area
b. Spread
c. District
d. Upazilla
e. Union
i) SACP
ii) Non- SACP
f. Total Populations
g. Total No. of Family
h. Agricultural Family
:
:
:
:
:
:
:
:
:
:
Rajshahi & Rangpur Division

34,513 Square K.M.
16
125
1092
908
184
About 3.50 crore
51 lakhs.
32 lakhs.
06) Total Branch

i) Municipal
ii) Union
07) Total manpower
i) Officers
ii) Workforce
08) Zonal /Regional office
09) Regional Audit office
10) Regional officer
11) Zonal officer
14) Website
:
:
:
:
:
:
:
:
:
:
:
377
64
313
3309
2046
1263
18
18
13
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www.rakub.org.bd
2.9 Organizational Setup:

The affairs of business of the bank are managed through three functional tiers:
The Head Office
The Zonal/ Regional offices
The Branches
2.9.1 Head Office:

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The head office of RAKUB is stationed at 280 km far from capital city Dhaka, at Northwest divisional city Rajshahi. All operation is control by head office. The managing
Director is assisted by the three following functional divisions. Each headed by a General
Manager:
Administration and Accounts Division.
Operation Division.
Audit and Recovery Division
The three divisions further divided into 12 departments are as follows:
2.9.1. a) Administration and Accounts Department:
Personnel Department
Common Services Department
Central Accounts Department-I
Central Accounts Department-II
2.9.1. b) Operation Division:

Branches control Department.
Loans and Advances Department-I
Loans and Advances Department-II
Research and Development Department.
Budget and Expenditure Control Department.
2.9.1. c) Audit and Recovery Division:

Loan Recovery Department-I
Loan Recovery Department-II
Audit and Inspection Department
2.9.2 Supervision and control:

The zonal offices are headed by Deputy General Managers while Regional offices by
Assistant General Managers.
2.9.3 Vigilance:
The functions of the Audit offices are to keep the branches regular. The Audit offices
accomplish auditing of the branches on half-yearly basis Regional Audit offices are
directly controlled by the audit and Inspection Department of the head office and by no
way influenced by the local Regional on zonal offices.
2.9.4 Training Institute:


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The only training Institute at Rajshahi imparts training to the junior and mid-level
officers and other staff according to the annual training program designed on such
subjects of professional interest as management of credit and accounts.Commercial
banking, audit and inspection etc.
2.10 Organizational Structure of RAKUB:

The Head Office of the bank is stationed at Rajshahi. The branch-network comprises 367
branches including one in Dhaka. It has also eighteen zonal and regional offices. The
bank has a training institute located at Rajshahi. Total workforce of 3309 as on 29-122014 was composed of 2046 officers and 1263 other staffs. Regional offices stationed in
district headquarters control branches under them. There are independent regional audit
offices for conducting regular audit in branches as well as in regional and zonal offices.

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2.10.1 Employee summary (up to June- 2015):
Designation
Authorized
Exist

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1.Managing Directors (MD)

2.Deputy Managing Directors (DMD)
3.General Manager (GM)
4. Deputy General Manager(DGM)
5.Assistant general Manager(AGM)
6.Senior Principal officer(SPO)
7.Principal officer(PO)
8.Senior officer(SO)
9.Officer
Total Officer
10.Other Employee
Total
01
01
03
36
66
147
336
620
900
2110
2126
4236
01
03
28
58
138
271
299
723
1521
1889
3410
Source: Personnel Department of Rajshahi Krishi Unnayan Bank
2.10.2 Branch Network:

Region wise total branches (Up to 20 March, 2015)
SL. No.
Zone/Region
No. of Branches
01.
Rajshahi
26
02.
Naogaon
28
03.
Natore
21
04.
Chapai Nawabgonj
16
05.
Bogra (North)
20
06.
Bogra (South)
14
07.
Pabna
24
08.
Jaipurhat
15
09.
Rangpur
26
10.
Gaibandha
24
11.
Nilphamari
20
12.
Kurrigram
21
13.
Lalmonirhat
17

17
14.
Dinajpur (North)
17
15.
Dinajpur (South)
18
17.
Thakurgoan
18
18.
Panchagarh
18
19.
Dhaka
20.
L.P.O (Rajshahi)
21
Sirajgonj
22
Total
367
Source: Personnel department of RAKUB
2.11 Role of RAKUB in the Development of North West Region:

Rajshahi Krishi Unnayan Bank (RAKUB) has been playing a vital role for the
development of the agriculture in North-West region. Although RAKUB is specialized
for agricultural loan but the general commercial activities of this bank is very much wide.
The main role of RAKUB is to develop the agro-based industries, self-employment,
solving the unemployment problem and supply of money for the expansion of socialeconomic activities. Its responsibilities have been increased after the construction of
Bangabandhu Bridge over Jamuna River, which connected NorthWest region with the
eastern region of the country. On account of economic development of the farmers of the
North-West region of the country RAKUB is continuing its restless efforts with more
than 107 loan program.
2.12 Main Activities of RAKUB:

The main activities of RAKUB are:

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Disbursement of loans
Recovery of loans
Deposit mobilization

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CHAPTER-THREE
An overview of RAKUB,
Pairabond Branch
3.1 Location:
RAKUB, Pairabond Branch, Rangpur is situated in the Rangpur district. Pairabond
Branch is about 20 km far to the south from the Rangpur city. It is out of City
Corporation area. Its office is located at Boiragigonj, besides of Rangpur to Dhaka
highway. Its office is in 1st floor of a building.
3.2 Some features of RAKUB, Pairabond Branch:

RAKUB is engaged in conventional commercial banking.

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It is the pioneer in introducing and launching different customer friendly Deposit

Schemes to tap savings of the people for channeling the same to the productive
sectors of the economy.
For uplifting the standard of living of the limited income group of the population,
the Bank has introduced Consumer Credit Scheme by providing financial
assistance in the form of loan to the consumers for procuring household durable,
which already have encouraging responses.
The Bank is committed to continuous research and development so as to keep
pace with modern banking.
The operations of the Bank are computerized to ensure prompt and efficient
services to the customers.
The Bank has introduced camera surveillance system to strengthen the security services
inside the Bank
3.3 Organization Structure of RAKUB, Pairabond Branch:

The organizational structure of Pairabond Branch with designation and no. of employees
are shown in the following table:
Sl. No.
Designation
No. of employee
01.
Manager
01
02.
Second officer
01
03.
Principal Officer

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04.
Senior Officer
01
05.
Officer
03
06.
Cashier
01
07.
Computer operators
01
Peon and Guard
01
Total
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Table-2: Organization Structure of RAKUB, Pairabond Branch

Source: RAKUB Pairabond Branch daily attendance register
3.4 Service Given to Customers by Pairabond Branch:

A) Credit Service:
a) Short Term Loan
b) Medium Term Loan
c) c) Long Term Loan 18

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B) Deposit Service:
Though a specialized bank, RAKUB performs most deposit banking activities like
commercial banks. Special products of the bank include deposit schemes like
a) Current Deposit Account
b) Savings Deposit Account
c) Term Deposit Account:
Short Term Deposit Account (STD)
RAKUB Sanchay Scheme (RSS),
Krishak Sanchay Scheme (KSS),
RAKUB Double Money Scheme (RDMS),
RAKUB Daily Profit Scheme (RDPS),
RAKUB Grameen Pension Scheme (RGPS),
RAKUB Monthly Profit Scheme (RDPS),
RAKUB Triple Money Scheme (RTMS),
RAKUB Monthly Sanchay Scheme (RMSS),
RAKUB Millionaire Deposit Scheme (RMDS).
C) Commercial Service:
a. Demand Draft (DD)
b. Mail Transfer (MT)
c. Telephone/ Telegraphic Transfer (TT)
d. Payment Order (PO)

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3.5 Banks Financing Policy of RAKUB, Pairabond Branch:

This branch is committed to provide high quality services to its constituents through
different financial products and profitable utilization of fund and contribute to the growth
of GDP of the country by financing trade and commerce, helping industrialization,
boosting export, creating employment opportunities for the educated youth and
encouraging micro-credit leading to poverty alleviation and improving the quality of life
of the people and thereby contributing to the overall socio-economic development of the
country. The Banks policies for financing in different major sectors are summarized in
the following table:
SL
Sectors
Policies
1)
Textile / Spinning/ Sweater/ Knitting/ Denims & To expand
2)
Garments
Cement
To
3)
Construction / Real estate / House building
maintain
To expand
4)
Telecommunication
To expand
5)
Communication
Selective
6)
Information Technology (IT) Project
basis
To expand
7)
Agro-based Industry
To expand
8)
Hospital / Clinic / School / College / University
Selective
9)
Healthcare / Pharmaceuticals / Medicine
basis
Selective
10)
Electrical / Electronic appliance
basis
To expand
11)
Finance to NBFI
Selective
basis

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12)
Special Program : Consumer Credit Scheme, SME To expand

Financing Scheme, Doctors Credit Scheme, Woman
Entrepreneurs Development Project, Personal Loan
Scheme, Small Loan Scheme, Lease Finance
Scheme, Earnest Money Financing Scheme, Car
Loan, HBL (General ) / Mortgage Loan, Employees
House Building Scheme, ATM, VISA Credit Card,
13)
EEF, etc.
Plastic / Packaging
Selective
basis
14)
Leather
Selective
basis
15)
Steel and Engineering
To expand
16)
Edible oil
To expand
17)
Scrap Vessel
Restricted
18)
Paper / Pulp / Partex
way
To expand
19)
Chemicals
Restricted
Others
way
Based
20)
on
merit
3.6 Ledger and Account Section of RAKUB, Pairabond

Branch:

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It is a very important section. Accounting in modern society plays a very significant role
for submitting all necessary returns & statements such as: p & L position, Balance sheet
and all other performance in various fields like income, expenditure, deposit, advances,
export, import etc.
Accounting works of this branch are as follows:
3.6.1 The Name of the Main Account Book:
Pay in slip book

General ledger
Clean cash book
General ledger abstract book
Supplementary ledger book
Cash scroll book
Transfer scroll book
3.6.2 Name of the Statement of Account Department:
Statement of suspense account sundry debtors

Statement of advance
Statement of clearing adjustment account
Statement of advice against salary

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Statement of salary and allowances

Statement of income
Statement of Expenditure
Statement of Affairs (Balance sheet)
Statement of cash in hand
Statement of cash credit
3.6.3 Name of Subsidiary Register:
Weakly statements:
D.D paid/ payable register.
T.T payable register.
S.D.R issuing register.
Pay order-issuing register.
Pay slip-issuing register.
O.B.C registers.
Clearing check return registers.
Cash receipt register etc.
3.7 The general banking activities of Rajshahi Krishi Unnayan Bank,

Pairabond Branch:
Although Rajshahi Krishi Unnayan Bank is a specialized bank for agricultural sector but
it want to lead conventional banking system for enhancing its customer satisfaction.
There have some general banking activities of RAKUB and these are:
3.7.1 Opening an account: To its customers Rajshahi Krishi Unnayan Bank gives
opportunity to open an account like other bans.
Procedure to Open an Account in Pairabond Branch : RAKUB provides opportunity
for opening an account to customers like other banks. To open a Current Deposit A/C,
Savings Deposit A/C an individual has to carry out the following procedure given below:
Obtain a prescribed application form from the bank.
Submit the duly completed form with necessary papers to the concerned
officer
Face a brief interview
Put specimen signature in the signature card supplied by the bank
The applicant should deposit minimum taka 100/- to open an account
Deposit of money

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Get counter folio of the payment slip.

With the prescribed application form, the applicant should submit the following papers
and informations.
Nationality certificate from the appropriate authority.
Two copies of recent passport size photographs.
If the applicant is a service holder he should collect employee certificate
from his employer and is to be submitted.
The applicants signature should be identified by an introducer who has a
CD A/C with the respective branch.
Things considered to open an account are:
Proper fill up of the application form.
Getting an specimen signature of a customer
Taking initial deposit in cash.
Basically a person whose age is 18 years or more can be competent to open an account
with the bank. But there are some special types of account holder like joint account,
minor account illiterate person account, blind person account, Deaf and dumb account
etc. The following parties can never open an account with the bank
Person who is still bankrupt.

Person whose mind is unsound.
Person who is totally mad.
3.7.2 Procedure to Close an Account in Pairabond Branch:

In order to close an account (some time before maturity in case of FDR) the holder has to
place a written application to the bank. After receiving the application the bank will
deduct service charge at an amount necessary for the respective account as closing fee
from the balance and rest of the money is given to the account holder.
When Bank Closes an Account:
The relationship between bank and his customer is a contractual one and may be
terminated by either of them. Bank closes an account in the following situations:If a customer places written application to the bank to close his account.
1. If the customer does not properly follow the rules and regulations
necessary to operate his account.
2. If the bank is notified the message of death of a customer.

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3. If the bank receives a notice regarding the insanity of his customer.

4. If the bank receives a garnishee order from court.
3.7.3 Special types of account:

Basically a person whose age is 18 years or more can be competent to open an account
with the bank. But there are some special types of account holder like joint account,
minor account illiterate person account, blind person account, Deaf and dumb account
etc.
Who cannot open an account: The following parties can never open an account with the
bank The person who is still bankrupt.
The person whose mind is unsound.
The person who is totally mad.
3. 7.4 Different Types of Accounts:

The other accounts that Rajshahi Krishi Unnayan Bank allows opening for its customer
are given below:
1. Current account: From this account any amount is deposited and drawn in any time
of office hours. There is no interest on current account. Loan is sanctioned based on it.
This account is opened with a recommendation Tk.1000.
2. Savings Account: Savings accounts opened for the customers except companies or
firm and co-operative society. Money is withdrawn 2 times a week and deposited any
time of office hours from this accounts Tk.50 is required to open this account.
3. Short Term Deposit Account: Short- term deposit account is opened for
company/firm/government administrative body. This account is operated like current
account. If 7 days written notice is placed to the bank in every withdraw, then the bank
gives 2.5% interest on S.T.D.

29
4. Deposit Pension Scheme (DPS): In this Savings Scheme a person is given an

opportunity for getting an attractive amount at the end of the specified term. The size of
monthly installments is Tk.100, Tk.200, Tk.300, Tk.400 and Tk.500 which is to be
deposited within 1st week of a month. This scheme is not operating in Rajshahi Krishi
Unnayan Bank rather the old account is continuing. There is 15% interest of D.P.S.
5. Rajshahi Krishi Unnayan Bank pension saving Scheme (RPS): RPS is a special
produce of this bank. This Scheme is same as D.P.S but its interest rate is lower than
D.P.S.
6. Fixed Deposit Receipt (FDR): This is a deposit Scheme where an instrument is issued
for the full amount payable after a specified period against deposit of a certain amount.
Duration of various FDR& rates of interest against them are as follows:
Duration
3 months & above but below 6 months
6 months & above but below 1 year
1 year & above but below 2 years
2 years & above
Rate of Interest
6.00%
6.25%
6.50%
7.00%
3.8 Remittance:
The of Rajshahi Krishi Unnayan Bank transfers money from one branch to another in
following ways3.8.1 Demand Draft (DD):
DD is the most popular instrument of remitting fund. It is an order to pay money drawn
by one branch Payable to another branch on demand. DD is issued in against at Tk.15
commission up to Tk.1000. When the limit exceed commission amount increased in a
certain rate.
3.8.2 Mail Transfer (MT):
This branch transfers money another branch of this bank in another place in against of
commission money of this security paper has to be transferred to an account of another
branch. Here the bank commission is Tk.1.5 per Tk.1000 and the postal charge is Tk.10.
3.8.3 Telegraphic Transfer (TT):
It is the quickest method of remitting fund from one place to another. In this procedure no
instrument is sent to the paying branch. Only message is sent over telephone or telex and

30
the paying branch makes payment after getting message. Due to lack of technology this
branch cannot operate TT.
3.8.4 Payment order (PO):
It is a written document. This PO can be encased on that branch from where it is issued.
Several supplier organizations use this PO and here no account is needed to open with
bank. It is issued locally. Rajshahi Krishi Unnayan Bank becomes popular by following
ways above.
3.8.5 Pure or Clean Cash Book:
When the vouchers are closed the accounts are written in the pure cashbooks. It may be
either deposit or expense. The transactions of each bead, which have been occurred, are
written in the specific age of the cashbook under a specific head and debit and credit total
are determine. Thereafter, total of the each head is written in the right page of the clean
pass book. But in the cash book the closing balance of the previous day is shown as initial
balance for the next day. Then the closing balance is determined for that day.
3.8.6 General Ledger:

The transaction is carried out to the general ledger to find out the mistake of the clean
cashbook. General ledger is not carried out in different name but come in main head.
Ledger credit and debit balance must be equal.
3.8.7 General Ledger Abstract:
The debit and credit balance of various accounts makes general ledger abstract. The debit
and credit balance of the accounts are maintained in the abstract in the debit and credit
side respectively. Since the double entry system is maintained therefore its debit and
credit balance are equal.
3.8.8 Voucher:
Voucher is a kind of document, which as a proof of accuracy of Rajshahi Krishi Unnayan
Bank treats it as a journal. The following vouches are used in Rajshahi Krishi Unnayan
Bank Debit Voucher: Its used for expenditure. Its color is white.
Credit Voucher: Its used for received. Its color is green.

31
Transfer Voucher: This voucher is used to transfer taka. From one account
to another in case of inter banking, its color is yellow.
Debit and credit voucher is used to file or in books.
Transfer voucher is used in the bank.
3.8.9 Cash scroll:
At first those transactions are maintained in this cash scroll by the authorized officer,
which occurred every day. Thereafter the cashier maintained those transactions in daily
transaction register. For this official member are followed.
3.9 Loan and advance

Rajshahi Krishi Unnayan Bank was established mainly on the objective of the
development of agriculture. But Rajshahi Krishi Unnayan Bank not only delivers
agricultural loan but also disburses different loan, such as:
A) Agriculture credit:
Rajshahi Krishi Unnayan Bank is a specialized bank and its main objective is to improve
the agricultural production. For this reason it provides basically agricultural credit.
B) Cash Credit:
It is a commons lending with this arrangement the drawn is allowed to borrow money up
to a certain limit. But the borrower is not required to withdraw the sanctioned amount at
once.
He can draw money when he requires and also can put back money onetime. Interest is
charged only the amount withdrawn not on the total amount sanctioned.
C) Advance against deposit:
This bank provides credit to the depositors under the following program Advance against fixed deposit
Deposit pension scheme
Short term over draft

32
CHAPTER-FOUR
CREDIT MANAGEMENT

33
4.1 Introduction:
The management of specialized banks assets must be conducted in a profitable and safe
manner. Safety is essential to commercial banking since banks hold billions of Taka of
deposits of individuals, business, and governments. Profit is also necessary for the
successful operation of a bank. Lending is the most profitable as well as the most risky
function preformed by specialized banks. Therefore, it must be done efficiently and with
a minimum of loss so credit management is essential for the bank.
4.2 Definition of credit:

A credit may be defined as money lent at interest or on profit. It is nothing but temporary
parting with ones [an individual or an institution] resources in order to augment the
purchasing power of the receiver of such facility with a promise to return the same with
interest profit or otherwise as mutually agreed upon.
4.3 Importance of bank credit:

34
Banks lending is very important to the economy. It makes possible for the financing of
the agricultural, commercial and industrial activities of the nation:
To produce capital goods which are used later in the production of consumable
goods.
Banks loan also make possible production for inventory.
Availability of bank loans the farmer is able to purchase seed, feed, and fertilizer.
4.4 Some additional causes:

1) Crop credit
2) Cash crop credit
3) Horticulture credit
4) Warehouse credit
5) Rural housing credit
6) Poultry & Fisheries
7) Small & Cottage industries credit
8) Agri-Mechanization credit
9) Improved seed Credit
10) Other Tools Machines credit.
4.5 Types of credit:

Rajshahi Krishi Unnayan Bank generally deals with credit business. Credit is the main
source to earn income. Rajshahi Krishi Unnayan Bank provides three types of loan:
a) Short term loan: A short-term loan is the loan, which is fully repaid within one year
or below one year.
b) Medium term loan: Medium term loan is the loan, which is fully repaid within more
than one year to five years.
c) Long term loan: Long-term loan is the loan, which is fully repaid more than five
years.
Over drafts: In the case of advances sanctioned by way of overdrafts, the customer is
sanctioned a limit up to which he can over draw his current account within a stipulated

35
period In case where the customer can not offer any kind of security expect his personal
security the facility is termed as a clean overdraft, on the other Hand, where the customer
offers a security acceptable to the bank facility is treated as a secured overdraft.
Doubtful loans: Doubtful loan are those that are considered by bank examines to be
doubtful of repayment, such loans are considered to contain some loss but the amount
cannot be ascertained.
4.6 Credit management:

Lending is the one function of specialized banking. The successful banker is a successful
lender. The tools used to manage lending are credit analysis, budgeting and supervision.
Lending also has to be enlightened by a competitive but reasonable policy for interest
charges on loans.
Banks are major financial institutions, which coordinate between borrowers and lender.
They mobilize funds from one group of people at low rate and lend the same to other
groups of people at the highest rate of return to maximize profit. Unless the fund
functions are efficiently planned and executed the bank cant achieves its maximum
potential profit, the specific Objectives of credit management as well as the bank
management in a specialized bank are:
To provide service in special sector.

To maximize earnings.
To provide adequate liquidity and cash.
To manage the loan and investment portfolios in the best possible manner so as to
ensure profitability.
To maintain reserve for contingencies.
Credit management in banking is mainly liable to its concerned authority. At any cost
they have to bind to keep its funds in safety and returnable with maximum profit from the
investment

36
4.7 Main credit portfolio of RAKUB, Pairabond Branch,Rangpur:

a) Food Crops
: Paddy, Wheat, Potato, Sugarcane, Master seed, Sunflower

seed, Ginger, Onion, Water motor, Winter/ Summer vegetables,
Banana, Mango etc.

b) Cash Crops
: Jute, cotton, Tobacco, Betel leaf etc.
c) Processing and Marketing : Small and cottage industries, Marketing capital etc.
d) Agro-based industries : Rice/has king mills, flour mills, Dall (pulses) Mills, Fruit
project
processing industries, Light earning work shops, Ice plants etc.
e) Commercial loan
: Loan against fertilizer and pesticide, cash credit loan for agro-
products and small enterprise etc.

f) Live stock
: Draft animals, dairy, Poultry, Goatery, Beef fattering etc.
g) Transport
: Rickshaw-Van, Rickshaw, Bullock cart, Country boat etc.e
h) Farm machineries
: Power tiller, Tractor and other machineries.
i) Micro credit
: RSCP, SECP.
j)
Special
agricultural : Fishery, Orchard, Nursery etc.
activities
k) Others
: Loan against fixed deposits.

37
4.8 Security Provisions:

RAKUB maintains the security listed below in recovering the loans without risk:
i) Lien: It is a right to retain the property/goods of the borrower as security until the debit is
adjusted. In this case, the banker can only hold the possession of the goods he cannot sell them. A
bankers lien is a general lien. He can sell the securities under lien after giving reasonable notice
to the borrower.
ii) Pledge: Pledge is created only for movable property like goods, document etc. In case of
pledge the ownership of the goods remains with pledged but the possession of the goods vests
with pledge until the loan is recovered. Pledge does not occur until the goods are transferred. The
pledged goods are returned to the owner after the loan is adjusted. If the borrower fails to repay
the loan, the banker can sell the pledged goods after giving reasonable notice to him.
iii) Mortgage: Only the immovable properties are kept under mortgage. It is a method of creating
charge on immovable properties.
iv) Hypothecation: Hypothecation is nothing but the mortgage of movable property. It is an
extended idea of pledge. In this case both possession and ownership remains with the borrower
but by the hypothecation agreement he undertaken to transfer possession whenever required. Here
the lender possesses the right of a pledge. Hypothecation is very much risky and RAKUB does
not want utilize this method for creating charges.
4.9 Various Lending Programs of RAKUB:

Agriculture and agriculturists are the facts of activities of RAKUB. The economic condition of
the farmers is very dependent on the performance of agriculture. Considering these facts,
RAKUB has given to priority to all the subsection and associated sectors of agriculture for
achievement of desired business goal. However, a brief description of lending programs of
RAKUB is given below:
i)
Cash Credit:
A cash credit is an arrangement by which a banker allows his customer to borrow money up to a
certain limit. This is a permanent arrangement and need not to draw the full amount sanctioned at
once but draw the amount as when that is required. Thus, cash credit is an active and running A/C

38
to which deposit and withdrawal may be exercised frequently. Interest is charged only for the
amount charged. Cash credit arrangement is usually made against security of commodity
hypothecated or pledged with the bank. Sometimes the bank provides the cash credit facility
against personal security too. Normally, cash credit is allowed for one year.
ii)
Over Draft:
Overdraft is an arrangement between a banker and his customer by which the letter is allowed to
withdraw over and above his credit balance in the current A/C up to an agreed limit. This is only a
temporary accommodation usually granted against securities. The borrower is permitted to draw
and repay any number of times. The total amount overdrawn does not exceed the agreed limit.
The interest is charged only for the amount over drawn and not the whole amount sanctioned.
Overdraft facilities are generally granted to business against securities of stock in trade, debenture
etc. Generally, overdraft is three types:
a) Temporary overdraft
b) Clean overdraft
c) Secured overdraft
iii) Crop Loan:
The bank finance all the summer crop, winter crops and nursery etc. High yielding and high value
crops and seeds production is particularly encouraged crops sub sector alone occupies about 60%
of the lending budget the bank.
iv) Fishery:
It is the second most priority sector. Identify method and modern technology in fish cultivation. It
excavation and reservation of ponds round the year cultivation of species, which have repaid
growth, cultivation of sweet water prawn and other fishes. The bank makes use of expertise of the
concerned government agencies for bringing more ponds/water bodies under cultivation and

39
increasing productivity. The bank has also identified financing of small fish hatcheries as
potential component of its loan portfolio.
v) Live Stock:
The bank extends credit facilities or systematic and commercial live stock farming, which
includes dairy, beef, fattening poultry raising and setting up of hatcheries, which in turn is
expected to increase production of milk, meat and eggs, the main sources of portion. As the
marginal and small farmers access to mechanize farming is restrained by want of cash and
collateral the bank has big lending window of draft animals for cultivation of land has big lending
window of draft animals for cultivation of land transportation of agriculture produces and other
farming activities.
vi) Irrigation Equipment and Firm Machinery:
Today technology based farming for high yielding and high volume of crops, mechanization of
cultivation, irrigation and pest control is indispensable, to cope with the situation and pest control
is indispensable. To cope with the situation RAKUB financing for power tillers, tractors, tube
wells, power machineries are being treated as an important associated sector of lending.
vii)
Agro- based Industries:

The operational jurisdiction of the bank is noted for its agricultural potentials. This is noted for
its agricultural potentials. The bank pay due importance to setup agro industries for preservation,
processing and marketing of agricultural products having backward linkage with basic sub sectors
of crop, fishery, live stock and forestation, manufacturing and marketing of agricultural
implements are also encouraged. Agro industries for import substitution are specially encouraged
by offering moderate terms of financing.
viii)
Poverty Alleviation:

40
The poverty strikes North West Bangladesh is characterized by comparatively lower rate of
saving, inadequate capital accumulation and poor employment opportunities. The existing
collateral based banking system is also of little use in respect of extending support to the millions
of landless people. To address the problem the bank has been financing collateral free microcredit for income and employment generation through its poverty alleviation credit program.
RAKUB also gives some loan on cottage industry. We know, the industry, which is built-up in a
cottage or house, is a cottage industry.
4.10 Rate of interest on credit:

Bank usually determines various rates of interest in different sectors. The rate of interest
changes overtime and becomes effective from prescribed date. But rate of interest can not
be changed when the
Disbursed loan is funded from the foreign aids. The variation of interest rate hinge upon
credit program and tenure of the loan.The rate of interest, which exists at present, is as
follows:
Crop Loan
14%
Other agro-loan -
14%
Export credit
10%
Commercial
15%
Cottage Industry
14%
Other weeper/ program
12%
SAWANIRVAR
11%
Large and medium scale industries
13-14%
SECP 15 Other Special Programs
10.6-18%

41
CHAPTER-FIVE
Loan Disbursement of Rajshahi
Krishi Unnayan Bank, Pairabond
Branch,Rangpur.

42
5.1 Loan Disbursement of Rajshahi Krishi Unnayan Bank,

Pairabond Branch:
The main objectives of the Bank are to finance in agriculture, agro-based industries, agrobusiness, cottage industries and poverty alleviation program. The bank also provides
general banking services.
It is known to all that, the strong base of RAKUB, Pairabond Branch is totally dependent
on sound investment. Because, interest on credit is the main source of income. That is
why qualitative Credit disbursement is so much important as well as quality to increase
total income of the bank. If they want to get more profit, they have to ensure Credit
disbursement along with hand some quality; it depends on the following steps:
i. Efficient and motivated manpower: Efficient and motivated manpower is
main force to achieve the goal of the institution without which successful
implementation of any program cannot be ensure. It is great assets of
organization.
ii. Suitable plan: There should be a realize plan for glorious output, on the other
hand, activities the goal of the institution without planning will bring less
output even with hard labor.
iii. Selection of genuine borrower: Borrower selection is the vital part of Credit
disbursement process. If one fail to select the borrower property total efforts
related to disbursement of Credit will go in vain undoubtedly. So genuine
borrower selection should be ensuring first for quality Credit disbursement.
iv. Spot investigation: A distinct picture of a borrower is found from spot
investigation, it is just like on X-ray report of a borrower on which correct
decisions is taken regarding sanction and disbursement of Credit.

43
v. Prompt service: If prompt services are not given to the borrower they will be
dissatisfied on there is no alternative of prompt service for attaining success in
the bank business.
vi. Utilization: Without proper utilization of Credit amount, Creditee will loss his
capacity to repay the Credit in due time, that is why strong monitoring should
be ensured for proper utilization of Credit.
vii. Target achievement: Target of Credit disbursement should be achieved with
the achievement of profile target. So strong initiative should be taken from the
very beginning of the financial year.
viii. Credit discipline: Credit discipline should be maintained strictly. So that
RAKUB, Pairabond Branch can stand on the strong base of sound investment,
which will ensure expected income.
5.2 Loan Areas:

RAKUB provide loan both agro-based and non-farming sector. There are eight main loan
areas of RAKUB; out of eight loan areas it gives preference on the following loan areas:
Crop Production;
Fishery;
Livestock & Poultry:
Irrigation Equipment &Farm Machinery
Agro-industry & Agri-business:
Poverty alleviation:
5.3 Term Wise loan disbursement:

Bank disburse Credit in various terms: According to the maturity, Credit can be divided
into three parts namely,
I.
Short-term Credit: This Credit is to repay within the period of at least 18
II.
III.
months.
Mid-term Credit: This Credit is unpayable above 18 months but below 5 years.
Long-term Credit: The repayable period is above 5 years, incurs of long term
Credit.

44
5.4 Percentage of granting loan in against of security:

RAKUB maintains various types of security. It may be mortgage properties, lien, pledge,
hypothecation etc. Bankers take securities because the borrower may be fail to repay. In
this case by taking some legal steps banker can sell the mortgage security and recovery
their money.
In lending policy RAKUB grant loan in against of security but never grant 100% of the
total value of security. The percentage of advanced on security is given below:
(i) If the security is crops land:
For single ownership 75% of the total value of security. In case of joint ownership 50%
of the value of total security.
(ii) In case of urban areas land:
75% of the total value of security (In all cases)
Risk Assessment:
By considering the following aspects RAKUB assess the risk in both rural & urban area:
3Rs:
Return
Repayment capacity
Risk bearing ability
3Cs:
Character
Capital
Capacity to repay loan

45
5.5 Selection of Borrower:

Selection of borrower is the important factor in loan disbursement. The following subject
matter should be considered in loan disbursement.
Citizen of Bangladesh.
Adult
Ability to utilize loan.
Not defaulter.
The registrar of Joint Stock Company must register limited company.
In case of co-operation society, the registrar of co-operative society must be
registered it.
Not bankrupt or not unsound minded.
When Bank select borrower closely consider the following four P
1.
2.
3.
4.
P = Person
P = Purpose
P = Profitability
P = property / security
Borrower apply for sanctioning loan by the prescribed form, which is provided by the
bank and bank rates predetermined fees, then borrower submit application form along
with fees. The rate of loan application form fees of RAKUB is as follows: Amount of Loan
TK 1000 to TK 6000
TK 6001 to TK 7500
TK 7501 to TK 100000
Above TK 100000
Source Pairabond Branch,Rangpur, RAKUB.
Rate of Application Fee

Nil
TK 15
TK 2 for per thousand and fraction
TK 200 Plus TK 1 for per thousand
5.6 Loan disbursement procedure:

Bank provides loans by collecting deposits and other sources of funds. The RAKUB has
various types of loan disbursement programs. Before disbursing loan bank follows the
following sanctioning process:
1. Application for loan:
A borrower first applies for loan to sanction certain amount of loan allowing with certain
required papers & documents.

46
2. Credit investigation:
Bank lends its depositors money; therefore, it is required to return back in the ordinary
course of business.
Selection of the borrower: A careful and systematic study of the affairs of the
intending borrower is needed to the right selection of borrower. Therefore lending
banker should analyze 5C of borrower- Character, capacity, capital, collateral and
condition.
Lending principles: The banker should consider lending principles these are
Safety, Security, Liquidity, Profitability, Purpose, national interest, Diversity.
Personal interview: For assessing attitude, skill, achievement needs, knowledge
etc.
Collect information from various sources: Banks own record, borrowers loan
application, spot verification, reports from friends & relatives other sources.
3. Credit proposal appraisal:
The following have to be considered for these feasibility testing- Location, land &
building, product, raw material.
Profitability, cost, demand of sales.
Cash flow, income statement.
Planning, organizing, marketing etc.
4. Documentation:
The security offered for an advance is only a caution. A banker would not normally like
to recover the advance from the sale of security. A banker accepts properly as security,
which is highly liquid, easily realized, easily marketable, sound title, easy to store, stable
in its market price.
The bankers create charge on the security by following methods:
Lien: It is the right to retain the property or goods of the borrower as security until
the debt are adjusted. In this case the banker can only hold the possession of the
goods; he can sell them after giving reasonable notice to the borrower.
Ledge: It is created only for movable property like goods, document etc. In case
of it the ownership of goods remains with the banker but possession of goods rests
with the loan.

Mortgage: Only immovable properties are kept under mortgage total possession
of the property is not transferred, only the interest is transferred. In case the

47
mortgager fail to repay the loan the bank gets right to recover the debt out of the
sale of the mortgage property.

Hypothecation: In this case both possession and ownership remains with the
borrower.
Classification of securities:
Personal: Personal bond, promissory note, letter of acceptance etc.
Impersonal: Land, shares, building, stocks, goods etc.
Direct/ Indirect: Direct security is deposited by the customer himself and the
indirect is deposited by the third parts.
Advance against FDR.
Advance against insurance policies.
Advance against hypothecation and pledge.
Collateral: It means these securities, which run parallel to or side by side with
personal right of action against a debtor in respect of on advance. These types of
securities are Share certificates, bearers bind, insurance policies, and Legal
mortgage.
Guarantee: At times when the personal security and collateral is not considered
sufficient to a banker then he may ask for a guarantee of third party whose
financial ability and credit standard is acceptable to the Bank.
5. Execution of Documents:
It is the procedure of stamping a document. If mistake arises it is to be cancelled. So it is
to be properly signed and correctly filled by the executants. The following are to be
observed at the time of execution:
The documents filed by the executants correctly.

Specimen signature.
The entire page is to be signed by all the executants.
Should not have cutting, overwriting. Documents should be kept safely.

48
5.7 Problems of Loan Disbursement:

Pairabond Branch Office, RAKUB faced the following problems in disbursing crop loan
i. Loans are not sanctioned in proper head and real lone due to political influence
ii. Lack of proper mortgage against loan.
iii. Deficiency of adequate human resource.
iv. Lack of real loanee.
v. Insufficient fund of the bank.
vi. Loons are not disbursed properly as a result of the dishonesty of the officers.
vii. Inflexibility of the government policies in disbursing loan.
viii. Wants of sound guarantor.
5.8 Loan Disbursement of RAKUB by Profession wise:

Profession
Percentage of Total Loan
Service
19.58%
Agriculture
35%
Small Business
17%
Poultry
5.45%
Small Enterprise
13.66%
Others
9.15%

49
Source: Rajshahi Krishi Unnayan Bank, Pairabond branch, Rangpur

Comment: Here Agriculture profession is the highest loan taker from total loan. Then
next highest is the service profession. And poultry profession is the lowest loan taker.
Percentage
Service
9%
Agriculture
20%
Small Business
14%
Poultry
5%
Small Enterprise
Others
17%
35%
Fig: Graphical representation of Profession wise Loan Disbursement
5.9 Level of Customer Satisfaction (Survey on 50 Customers):

Level of Satisfaction
High Satisfaction
Moderate Satisfaction
Satisfaction
Less Satisfaction
Dissatisfaction
Number
11
8
23
3
5
Percentage
22%
16%
46%
6%
10%

50
Comment: I found out the level of satisfaction of customer from 50 customers. Here
satisfaction rate is the highest and lowest is the less satisfaction which is 6%.
Percentage
6%
10%
High Satisfaction
22%
Moderate Satisfaction
Satisfaction
16%
46%
Less Satisfaction
Dissatisfaction
Fig: Graphical representation of customer satisfaction
5.10 Loan disbursement situation of Rajshahi Krishi Unnayan Bank,

Pairabond Branch,Rangpur:
5.10.1 Position of Loan disbursement of last five years. (Amount in Lac- TK)
Financial year Loan Disbursement target Total Loan
Achievement rate
Achievement
2010-2011
2011-2012
210.00
245.00
192.95
169.53
92%
69%

51
2012-2013
2013-2014
2014-2015
199.00
210.00
205.00
217.82
220.30
217.89
109%
105%
106%
Source: Rajshahi Krishi Unnayan Bank, Pairabond branch, Rangpur

* Achievement rate = 100
100%
90%
80%
70%
60%
50%
Column1
40%
Loan Disbursment
30%
20%
10%
0%
Fig: Graphical representation of total loan disbursement of RAKUB, Pairabond

Branch,Rangpur.
5.11 Loan disbursement for 2010-2011:

Pairabond Branch projected a lending target of TK 210.00 Lac for the financial year
2010-2011. Disbursement of Loan during the year amounted to TK 192.95 Lac (92
percent of the target). For a Reform expansion the Loan portfolio the following seven
sections were given priority in investment planning.
1.Crops 2.Continuous loans 3.Poverty alleviation. 4.Fishery 5.Livestock
6.Irrigation
equipment and farm machinery 7.Agro-based industries

The highest amount at TK 97.50 Lac was disbursed for Crops, the next highest amount of
TK 27.50 in continuous loan. Total Disbursement was TK 9.82 Lac less than that of the
previous year.

52
Position of disbursement of the financial year 2010-2011(Amount in Lac TK)
Items
Crops
Continuous loans
Poverty Alleviation
Fishery
Live stock
Irrigation equipment and farm machinery
Agro-based industries
Others
Total
2010-2011
Target Achievement
102.00 97.50
30.00 27.50
7.00 2.50
1.00 0.43
1.00 1.00
3.00 9.72
66.00 54.3
210.00 192.95
Achievement rate
95.59%
91.67%
35.71%
43%
100%
324%
82.27%
92%
Source: Rajshahi Krishi Unnayan Bank, Pairabond Branch, Rangpur
* Achievement rate 100

Comment: It is evident, from the above table that Irrigation equipment and farm
machinery is the highest achievement percentage which is 324% and Poverty Alleviation
is the lowest achievement percentage which is 35.71% Others disbursement items is not
considered here and Agro-based industries is nil.

53
120
100
80
60
40
Target
20
Column1
Fig: Graphical representation of sector wise loan disbursement of RAKUB, Pairabond

Branch,Rangpur.

Pairabond Branch Projected a lending target of TK 245.00 Lac for the financial year
1. Crops 2.Continuous loans 3.Poverty alleviation. 4. Fishery 5.Livestock 6.Irrigation
equipment and farm machinery 7.Agro-based industries.
The highest amount of TK 109.00 Lac was disbursed for Crops. The next higher amount
of TK 13.75 Lac as disbursement of continuous loan. Total disbursement was TK 23.42
Lac lower than that of the previous year.
Items
Crops
Continuous loans
Poverty Alleviation
2011-2012
Target Achievement
110.00 109.00
20.00 13.75
8.50 4.21
Achievement rate
99.09%
68.75%
49.53%

54
Fishery
Live stock
1.50 0.90
5.00 Agro-based industries
Others
100.00 41.67
Total
245.00 169.53
60%
41.67%
69%

Comment: It is evident. From the above table that Crops Loan is the highest achievement
percentage which is 99.09 % and others is the lowest achievement percentage which
41.67%. Other disbursement item is not considered here.
120
100
80
60
Target
40
Column1
20
0
Fig: Graphical representation of sector wise loan disbursement of RAKUB, Pairabond Branch,Rangpur

Pairabond Branch Projected a lending target of TK 199.00 Lac for the financial year
1.Crops 2.Continuous loans 3.Poverty alleviation. 4.Fishery 5.Livestock
equipment and farm machinery 7.Agro-based industries.
6.Irrigation

55
The highest amount of TK 119.50 Lac was disbursed for Crops. The next highest amount
of TK 10.35 Lac was disbursement of continuous loan. Total disbursement was TK 48.29
Lac higher than that of the previous year.
2012-2013
Target Achievement
Crops
120.00 119.50
Continuous loans
20.00 10.35
Poverty Alleviation
6.50 3.38
Fishery
Live stock
3.50 2.50
10.00 Agro-based industries
Others
39.00 82.09
Total
199.00 217.82
Items
Achievement rate
99.58%
51.75%
52%
71.43%
210.49%
109%

Comment: It is evident. From the above table others Loan is the highest achievement
percentage which is 210.49 % and Continuous loans is the lowest achievement
percentage which 51.75%. Other disbursement item is not considered here.

56
120
100
80
60
40
20
0
Target
Achievement
Column1
Fig: Graphical representation of sector wise loan disbursement of RAKUB, Pairabond Branch,Rangpur.

Pairabond Branch projected lending target of TK 210.00 Lac. Disbursement of loan
during the year amounted to TK 220.00 Lac (105percent of the target). For a reform
expansion of the loan portfolio the following seven sectors were given priority in
investment planning.
Loan disbursement at livestock, Irrigation equipment and farm machinery and poverty
alleviation less than the target, there was no Loan disbursement at Agro-based industries
sector.

57
Position of Loan disbursement for the financial year 2013-2014 (Amount in Lac TK)
2013-2014
Target Achievement
Items
Crops
87.00 95.50
Continuous loans
19.00 28.38
Poverty Alleviation
10.50 9.60
Fishery
Live stock
1.80
0.60
2.50
3.00
Others
89.20 83.22
Total
210.00 220.30
Achievement rate
109.77%
149.36%
91.43%
33.33%
120%
93.29%
105%
100
90
80
70
60
50
40
30
20
10
0
Target
Column1

Branch,Rangpur.
5.15 Loan disbursement of 2014-2015:


58
Pairabond Branch projected a lending target of TK 205.00 Lac for the financial year
2014-2015. Disbursement of loan during the year amounted to TK 217.89 Lac (106
percent of the target). For a reform expansion of the loan portfolio the following seven
sectors were given priority in investment planning.
1. Crops
2. Continuous loans
3. Poverty alleviation.
4. Fishery
5. Livestock
6. Irrigation equipment and farm machinery
7. Agro-based industries
Position of Loan disbursement for the financial year 2014-2015. (Amount in Lac TK).
Items
2014-2015
Target Achievement
Achievement rate
Crops
Continuous loans
Poverty Alleviation
Fishery
Live stock
Others
Total
85.00
28.00
8.00
2.50
5.00
6.00
70.50
205.00
106.92%
107.14%
68.75%
30%
83.83%
118.92%
106.%
90.89
30.00
5.50
0.75
5.03
86.22
217.89

*Achievement rate = 100

59
100
90
80
70
60
50
40
30
20
10
0
85
70.5
28
8
2.5
Target
Column1

Branch,Rangpur.

60
CHAPTER-SIX
Loan recovery of Rajshahi
Krishi Unnayan Bank,
Pairabond
Branch,Rangpur

61
6.1 Introduction:
When a bank or other financial institutions distribute a loan to other organization or
people, then after regaining from loan it is called loan recovery, Rajshahi Krishi Unnayan
Bank distributed loan to loan and recovers this money. Rajshahi Krishi Unnayan Bank
recover loan under two basesa. Unclassified loan, and
b. Classified loan.
a. Unclassified loan: When half or more than half of the total loan is repaid within the
due dates by the borrowers then that is called unclassified loan. The duration of time in
which the loan will be treated as unclassified is less than 12 months from sanctioning
loan.
b. Classified loan: When more than half of the total loan or total is unpaid / due over the
due date then that loan is called classified loan. Classified loans can be sub standard,
Doubtful and bad. The criteria of these classifications of classified loans are as follows:
1. For short term loan: Short term loan are classified by Rajshahi Krishi Unnayan Bank in
three categoriesi) Crop loan and micro credit:
a)
b)
c)
d)
Age of overdue, 12 months Irregular.

Age of overdue 13-36 months Substandard
Age of overdue 36-60 months Doubtful.
Age of overdue: Above 60 months Bad.
ii) Cash credit-and working capital:

a) From 6 months but less than 9 months- Substandard.
b) From 9 mouths but less than 12 months-Doubtful.
c) From 12 mouths above Bad.
iii) Demand Loan:
b) From 9 months but less than 12 months- Doubtful.
c) From 12 months above- Bad.
2. Medium loan (Up to 5 years):
b) From 6 months but less than 12 months- Doubtful.

62
c) From 12 months but less than 18 months Bad.

3) Long term loan (Above 5 years):
a) From 0 months but less than 12 months-Substandard.
b) From 12 months but less than 18 mounts Doubtful.
c) From 18 months but less than 24 months-Bad.
6.2 Procedure of loan recovery:

The main responsibility of bank manager and loan officer is to recovery the outstanding
loan in Rajshahi Krishi Unnayan Bank. Two-recovery procedures are1. Usual procedure.
2. Legal procedure.
a) Usual procedure: The usual loan recovery procedure is divided into several steps. They
are as follows:
1. Issue of demand notice: Demand notice is issue before on month being due of
outstanding loan or installment. It is sent to the borrower.
2. Legal notice: It the borrower does not repay their respective loans and interest
after maturity being received the demeaned notice under registered with
acknowledgement by post to the borrowers the bank should send lower notice to
him.
3. Special notice: Beside the above to notice a special notice signature by DC, TNO
is sent to the respective borrower to keep mental pressure on him for repaying the
loan.
4. Field recovery: Loan officer recover the recovered loan through I.O. receipt by
visiting the spot and source of the borrower.
5. Personal Communication: If the borrower fails to repay his loan installment, the
loan officer communicates with the respected persons of that area to give mental
pressure to the borrower so that he repays his respective loan.
6. Loan Recovery Camp: Rajshahi Krishi Unnayan Bank made camp in various
areas for the recovery of his loan, in this issue; the manager and other officer were
present in the camp and communicated with borrowers. They gave them moral
persuasion and tried to encourage them, so that they could repay their loan.
7. Loan recovery with the help of interest exemption the loan amount which
becomes more than double in principle and interest and which is not possible to

63
recover with the help of legal action then those loan can be recovered by
exempting interest. By this way bad loan can be recovered.
b) Legal procedure: When legal action for recovering loan becomes failed a case in filed
against the borrowers. The case is generally filed in the following ways:
1. Unwilling to repay loan although he is financially solvent.
2. Every effort of loan recovery becomes failure.
6.3 Rules of Recovery:

Rajshahi Krishi Unnayan Bank, Rangpur Branch loan recoveries from loan in installment
system are as follows:
i.
ii.
iii.
Weekly
Fortnightly
Monthly.
6.4 Causes of defaulter:

The loan cannot be loan payment in due time in various causes:
i.
Natural calamity destroy the crops, for this reason the loan unable to pay loan in
ii.
due time.
Rajshahi Krishi Unnayan Bank cannot take proper step against the loan for
iii.
iv.
v.
influential man.
The loan cannot use the loan in proper.
The loan do not pay loan in more time.
Lack of loan supervision.
6.5 Causes of low recovery:

i.
Negative attitudes of the local elites to repay loan- In most of the cases, the
influential persons due to their political and social power are not interested to
repay the loan. Because of their political influence, credit officers cannot take
any effective measure for loan recovery from them. Sometimes, loan received
ii.
by them for a specific purpose is also diverted to other purposes.

Damage of crops due to flood- Sometimes, the farmers have some valid
reasons for non-repayment of loan in spites of their willingness of repayment

64
of loan. In the case of crop failure due to natural disaster like flood, drought,
iii.
etc., it becomes really difficult for the farmers to repay loan in time.
Unproductive use of loan- The time involved in processing loan is such that
the farmers usually receive credit at the end of the specific crop season even
iv.
after harvesting of the crop.

Shortage of credit personnel- The branch has shortage of manpower to
evaluate credit worthiness of the borrowers, identification of real borrowers,
v.
and supervision and recovery of loan.

Corruption of the bank employees- In some cases, the bank officers take bribe
from the defaulters and avoid responsibilities of realization of loan from the
vi.
borrowers.
Inability of the farmers to repay loan- Farmers need credit not only for
agricultural production but also for consumption for their survival, particularly
by marginal farmers. This sometimes compels them to divert agricultural
credit to consumption and other unproductive purposes which ultimately lead
vii.
to their low repayment capacity.

Benami loan received particularly by U.P. chairman/Member- Sometimes the
rural influential, particularly Union Parishad Chairman and Members receive
Benami loan. It happens particularly due to shortage of credit personnel who
have to disburse credit in a short notice and do not have enough time to
identify genuine borrowers.
6.6 Loan Recovery scenario of Rajshahi Krishi Unnayan Bank,

Pairabond Branch:
6.6.1 Loan Recovery of Last five years. (Amount in Lac Taka)
Financial year Target
Achievement Recovery rate
2010-2011
143.50
214.64
150%
2011-2012
210.00
202.59
96%
2012-2013
232.00
257.98
114%
2013-2014
240.00
245.00
102%
2014-2015
255.00
259.00
101.56%
Source: Pairabond Branch of Rajshahi Krishi Unnayan Bank

65
Recovery rate = 100
300
250
200
Target
150
Achievement
100
50
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
Fig: Graphical representation of sector wise loan recovery of RAKUB, Pairabond

Branch, Rangpur.
6.6.2 Loan Recovery for 2010-2011:

Loan recovery target was TK 143.50 Lac and Achievement was 214.64 Lac (150 percent
of the target)
Major items wise position of Loan Recovery 01-07-2010 to 30-6-2011 (Amount in Lac)
Items
Target
Crops
70.00
Continuous loans
45.00
Poverty Alleviation
7.00
Fishery
Live stock
4.00
Irrigation equipment and farm 4.00
Achievement
99.00
57.50
7.50
6.80
8.50
Achievement rate
141.43%
127.78%
107.14%
170%
212.50%
machinery

66
Others
13.50
35.34
Total
143.50
214.64
Source: Rajshahi Krishi Unnayan Bank, Pairabond Branch
261.77%
150%
Comment: From the above table it is shown that Crop loans recovery is the highest
achievement amount of TK 99.00 Lac which 46.12% of total achievement and Livestock
6.80 is the lowest achievement, which is 3.17% of the total achievement. Others recovery
items are not consider here.
100
90
80
70
60
50
40
30
20
10
0
Target
Column1

Branch,Rangpur.

of the target)
Major items wise position of Loan Recovery 01-07-2011 to 30-6.2012 (Amount in Lac)
Items
Crops
Continuous loans
Poverty Alleviation
Target
98.00
40.00
5.00
Achievement
85.00
32.50
3.00
Achievement rate
86.73%
81.25%
60%

67
Fishery
4.75
Live stock
6.50
3.50
4.75
4.00
machinery
Others
49.75
69.84
Total
210.00
202.59
73.68%
73.08%
66.67%
140.38%
96%
Comment: From the above table it is shown that Crops loans recovery is the highest
achievement amount of TK 85.00 Lac which 41.97% of total achievement and Poverty
Alleviation is the lowest achievement which is 1.48% of the total achievement and there
is no target and achievement in Agro-based Industries . Others recovery items are not
considered here.
100
90
80
70
60
50
40
30
20
10
0
Target
Column1

Branch,Rangpur.

68

of the target).
Major items wise position of Loan Recovery 01-07-2012 to 30-6.2013 (Amount in Lac)
Items
Target
Crops
90.00
Continuous loans
35.00
Poverty Alleviation
5.75
Fishery
4.00
Live stock
5.00
Achievement
97.00
40.50
5.00
4.75
3.50
8.00
Achievement rate
107.78%
115.71%
86.96%
118.75%
70%
80%
machinery
Others
Total
99.23
257.98
120.64%
114%
82.25
232.00
Source: Loan and Advance Department of RAKUB,Pairabond Branch,Rangpur.

69
100
90
80
70
60
50
40
30
20
10
0
Target
Column1

Branch,Rangpur.

Loan Recovery target was TK 240.00 Lac and Loan recovery achievement was TK
245.00 Lac (102 percent of target)
Major items wise loan recovery position 01-07-2013 to 30-06-2014 (Amount in Lac)
Items
Target
Crops
93.00
Continuous loans
34.00
Poverty Alleviation
7.50
Fishery
5.50
Live stock
3.50
Achievement
95.18
30.50
4.00
4.25
3.85
5.00
Achievement rate
102.34%
89.70%
53.33%
77.27%
110.00%
74.07%
machinery
Others
89.75
102.22
113.89%
Total
240.00
245.00
102%
Source: Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

70
120
100
80
60
Target
40
Achievement
20
0

Branch,Rangpur.

Loan Recovery target was TK 255 Lac and Loan recovery achievement was TK 259 Lac
(101.5 percent of target)
Major items wise loan recovery position 01-07-2014 to 30-06-2015 (Amount in Lac)
Items
Target
Crops
120.00
Continuous loans
45.00
Poverty Alleviation
11.50
Fishery
10.00
Live stock
14.00
Achievement
110.50
50.25
10.50
8.75
10.50
7.30
machinery
Others
46.50
61.37
Total
255.00
259.00
Achievement rate
92.08%
111.66%
91.30%
87.5%
75%
91.25%
131.97%
101.5%

71
120
100
80
60
Target
40
Achievement
20
0

Branch,Rangpur.
6.7 Scenario of Default Loan of RAKUB, Pairabond Branch,Rangpur.

(Amount in Lac):
Financial Year
Target
2010-2011
91.75
2011-2012
109.13
2012-2013
130.00
2013-2014
141.00
2014-2015
149.00
Source: RAKUB, Pairabond Branch
Achievement
74.30
78.62
105.93
119.00
127.00
Achievement rate
81%
72%
81%
84.39%
85.23%

72
160
140
120
100
Target
80
Column1
60
40
20
0
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
Comment: From the above table it is shown that 2010-2011 to 2014-2015 default loan
target and achievement are increased gradually.
6.8 Scenario of Balance of Bad Debts of RAKUB,Pairabond

Branch,Rangpur (Amount in Lac):
Financial Year
Amount
2010-2011
522.84
2011-2012
532.87
2012-2013
585.76
2013-2014
605.83
2014-2015
617.23
Source:RAKUB, Pairabond Branch, Rangpur

73
Amount
620
600
580
560
540
520
500
480
460
585.76
522.84
605.83
617.23
Amount
532.87
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
Comment: : From the above table it is shown that 2010-2011 to 2014-2015 amount of bad
debts target and achievement are increased gradually.

74
CHAPTER-SEVEN
FINDINGS & ANALYSIS
7.1 Findings of the Study:

The overall performance of credit management of the RAKUB, Pairabond
Branch, is not satisfactory enough. The following problems have been identified
during the internship period: Sector-based sanction credit is not properly used.
Proper communication with loanee is not maintained by field workers and it is not
efficiently monitoring by management.
Most of the poor illiterate farmers do not able to fulfill whole conditions for
achieving credit facilities. As a result they cannot receive credit from the bank,
instead of their necessity of credit.
Settlements of certificate cases are not properly repaid.
As a specialized Krishi Unnayan Bank, money transfer and other representational
activities are very limited.

75
Credit distribution is delay due to formalities.

Problem of classified credit recovery etc.
Though RAKUB credit collection rate was very good, due to lack of an
appropriate credit approval environment classified credit is increasing day by day.
Though credit proposal & credit recommendations are prepared by the branch
credit
committee,
nowadays
many
credits
are
approved
without
the
approval/recommendation of Branch Credit Committee (BCC)
7.1.1 SWOT Analysis of Rajshahi Krishi Unnayan Bank, Pairabond

Branch:
SWOT analysis is the most important element to analysis the overall situation of any
organization, strength, weakness opportunity and threat are the including elements of
SWOT. It is possible to balancing the strength and weakness of internal environment with
the opportunity and threat of external environment. It is easy to achieve the goals to face
any situation through analyzing those elements carefully. I have included SWOT analysis
in my study for this reason. I think that corporate body can be able to through this SWOT
analysis and they can take necessary step to overcome any challenges.
Here, the overall evaluation of a banks strength, weakness, opportunity and threat is
called SWOT analysis.
S = Strength (Positive+ Internal)
W = Weakness (Negative + Internal)
O = Opportunity (External + Positive)

76
T = Threat (External + Negative)

In general, a business unit has key external macro environment forces
(demographic / economic, technological, political / legal, and social / cultural) and
internal microenvironment actors (customer, competitors, channels) that affect its ability
to earn profits.
SWOT is internal and external factor of a bank. Internal factors are controllable but
external factors are uncontrollable. Internal factors are management related that is
controlled by the bank. The impact of SWOT may negative or positive on the bank.
Favorable impact of SWOT can create organizational growth and unfavorable SWOT
creates organizational problem.
Objective of SWOT analysis:
i) To Asses overall strong competitive position.
ii) To decide whether to continue current strategy or not.
iii) To determine possible course of actions.
iv) Development of functional strategy.
Strength:
A strength is a resource skill or other advantage relative to competitors and the needs of
market a firm serves or anticipates saving. Strength is a distinctive competence that gives
the firm a comparative advantage in the market place.
RAKUB is a govt. specialized bank. It has more capacity to adopt new technology when
the environment will be changed. This Pairabond Branch has various types of strength
elements. Such king of strength are representing below:
i.
The image/ Goodwill of this branch are very good. ii) The market share of this
ii.
branch is satisfactory than others specialized bank in Rangpur

The product portfolio or scheme of this branch is exception than other private
iii.
Bank of this district such as, National Bank, RAKUB Bank, AB Bank.
The branch has good communication with their client. For this the client of this
iv.
branch is too much loyal upon this branch.

The branch has huge amount of deposit and market potentiality.

77
v.
This branch has skilled and experienced personnel whom are properly handle
vi.
client's need in right time and right place.

The branch is providing various consumer credit scheme, commercial net work,
standard documents keeping, computerized services, money transfer system, and
vii.
international connection.
Skill communication with other branch and corporate head office to solve any
viii.
king of client oriented problem.

The working place of this branch is too much upgraded so the employee feels
interest to work here and have enough security for the personnel and client.
Weakness:
A weakness is a limitation or deficiency in resources, skills and capabilities that seriously
impedes effective performance.
When I study in Pairabond Branch some problem surface me. Those internal problems
mention in the below:
i.
Corporate head office provides various types of product or scheme but Pairabond
ii.
Branch cannot provide those entire scheme to the client still now.
The credit section of head office sanction various types of credit but Pairabond
iii.
Branch cannot able to provide all those credit scheme to the client.
This branch does not operate extensive promotional activities among upper to
lower level people regarding the various scheme and credit section and customer
iv.
service.
All kinds of decision taken by the top management so in many times this branch
v.
cannot able quick service.

This branch has no own ATM booth facilities for the clients which facilities are
available in other branch.

78
Opportunity:
A marketing opportunity is an attractive area of relevant marketing action in which a
particular organization or company is likely is enjoy a differential advantage. It is an area
of customer need in which a company can perform profitably.
In my study on Pairabond Branch some opportunity surface to me. Those opportunities of
Pairabond Branch are given below:
Rangpur is very old town. It is a big region in North Bengal. There is a lot of
cultivating land here. Peoples of Rangpur cultivate different kinds of agricultural
product. For this reason, various types of agro based industry set up in Rangpur.
To set up those types of industry huge capital is needed those people try to collect
their capital Bank loan? So there is a great opportunity for banking section to
provide credit facilities and other banking service to fulfill the need of
businessman and other professional people.

The importers can open their L/C for operating their import business in a
Pairabond Branch is very nearest position for those people. For these reason, it is
a great opportunity for this branch to capture those importer by providing our
unique banking service business occurs here, the people withdraw and deposit
foreign currency in this branch.

Many types of middle class people live in Rangpur. Rajshahi Krishi Unnayan
Bank provides various types of products/schemes and credit facilities to fulfill
banking need of those people. So, it is great opportunity for this branch to collect
deposit from them and the bank give credit facilities to the loan seeker from those
deposit funds.
In the modern time the all business activities are operating by modern technology.
To collect the modern technology the business man has to invest large capital to
get modern service in business field. If the businessman gets those modern
technological services they have to take setter under the shadow of Bank to fulfill
their capital requirement and transfer money. So, it is a great opportunity to the
branch to sell credit card to set up online banking service. Computer / Internet
based service to provide up graded banking service.

79
Threat:
An environmental threat is a challenge posed by an unfavorable trend of spec RAKUB
disturbance in the environment that would head in the absence of purposeful action, to
the stagnation or demise of an organization or company, product. When I study on
Pairabond Branch I observed that this Bank faces various types threat. Such kind of
threats are representing below:
There are three well-known national Bank such as Sonali Bank, Agrani Bank,
Janata Bank. The people are too much familiar with that Bank since a long
time as that Bank establishes early time than RAKUB Bank. That reason the
public image is more upon those Banks than RAKUB Bank. So, it is threat
for RAKUB to create an extra image among those people.

At present the main competitors of RAKUB are National Bank, AB Bank,
Islami Bank, UCBL and other equal Bank. Recent, a new private Bank named
Mercantile Bank Ltd. is operating their activities and through a challenge
upon Rajshahi Krishi Unnayan Bank.

Recent time Finance planning ministry have impose some rules and regulation
such as- low interest on credit scheme money laundering act which are
creating pressure for the RAKUB to expand their scheme and other facilities.

80
CHAPTRE-EIGHT

81
Recommendations &
Conclusions
8.1 Recommendations:
Since Rajshahi Krishi Unnayan Bank is the nationalized bank of Bangladesh. It must
have to remove its limitation in banking service. In this study, several weaknesses have
been recognized in banking services and the recommendations are given below:
Banks should identify and manage credit risk inherent in all products and
activities. Banks should ensure that the risks of products and activities new to
them are subject to adequate risk management procedures and controls before
being introduced or undertaken, and approved in advance by the board of
directors or its appropriate committee.
Banks must operate within sound, well-defined credit-granting criteria. These
criteria should include a clear indication of the banks target market and a
thorough understanding of the borrower or counterparty, as well as the purpose
and structure of the credit, and its source of repayment.
Banks should establish overall credit limits at the level of individual borrowers
and counterparties, and groups of connected counterparties that aggregate in

82
comparable and meaningful manner different types of exposures, both in the

banking and trading book and on and off the balance sheet.
Banks should have a clearly-established process in place for approving new
credits as well as the amendment, renewal and re-financing of existing credits.
One of the business strategies is promotion. Successful business depends how
they can promote their products or services to the customer. To improve the
business status, the RAKUB Bank should introduce more promotional programs.
To reduce the centralization risk RAKUB should decentralized in making decision
of credit approval as well as open new branch outside of the two cities.
Introduction of ATM/E-Cash, E-Commerce, Tele Banking, Credit Card etc may
have to attract the customers outside of Rajshahi or Rangpur through providing
better service.
Also recommendation about the followings:

I.
Process and procedures of lending should be liberalized keeping in view the
II.
problems and constraints faced by the borrower.

Better publicity, Seminar and workshop on loan and advance may brighten the
III.
IV.
V.
VI.
situation highlighting the needs, and problems of the borrowers.

Efficient and motivated man power for sanctioning loan
Spot investigation for loan allotment.
Strong monitoring should be ensured for proper utilization of loan.
Increase the number of employees to provide more satisfactory service to the
VII.
customer.
Branch should develop its IT facilities.
8.2 Conclusion:
Credit Management is the principal function of a bank and large portion of bank income
generated from loan disbursement and recovery. Bank should always remember that his
dealing loan by money collected from others bank and depositors should always not only
be attractive to higher yielding loan proposal but also bank should seriously think about

83
whether the granted loan will be recovered timely or not. If bank once fail to recover loan
will fail to meet depositors demand.
This branch has not yet produced better performance in recovering those loans given to
small borrowers. The major causes behind this low recovery are poor implementation of
loan procedures and policy by the bank. The branch should take care of this very
important aspect to baking for its smooth survival in the coming days.
So, the overall efficiency of credit management system is not highly satisfactory position.
But another hopeful news is to us that the Rajshahi Krishi Unnayan Bank has begun to
earn profit.
Appendices

84
i. Questionnaire:
1. When was the branch established?
2. Where is it located?
3. What roles does the bank play in its working area?
4. What is the managerial structure of this branch?
5. How many unions does this branch?
6. What are the products & services does the branch?
7. Which sectors does the branch provide loans?
8. Have there any facilities for term-wise loan disbursement?
9. What was the target & achievement amount of loan disbursement of the branch?
10. Have there any sector-wise target for loan disbursement?
11. What is the loan disbursement procedure of this branch?
12. What security requirement does the branch need to provide loan?
13. Who can be a loanne?
14. What was the target & achievement amount of loan recovery of the branch?
15. Have there any sector-wise target for loan recovery?
16. What is the loan recovery procedure of this branch?
17. What are the causes of default of loan? What are the steps taken by RAKUB
against a loan defaulter?
18. Does the branch manage the credit policy of Bangladesh Bank regularly?
19. Does the branch work for SME?
20. Does the branch work for mobile banking?

85
21. What social responsibilities does the branch perform?
II. References:
Text Book
1. General Banking, 1st edition, L.R Chowdhury
2. Banking & Insurance book, Khalekuzzaman
Websites
1. www.rakub.org.bd
2. www.bangladesh-bank.org.bd
3. www.creditmanagementworld.com
Annual Reports
1. 01.Rajshahi Krishi Unnayan Bank 2012- 2013
2. 02.Economic Survey-2014
Published Document & Banking manual
1. Khan, Dr. A R, Bank Management; A fund emphasis, (1st ed.-2008), Dhaka:
Ruby Publications.
2. Raquib, Abdur, Agricultural loan recovery problem in Bangladesh. Krishi
Bank Paraikrama, Vol-11, Jan-June-1990, pp-2-26.
3. Credit Division Manual of Rajshahi Krishi Unnayan Bank
4. General Ledger Abstract of RAKUB, Pairabanda Branch.

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Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

Department of Management Studies

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

1.2 Origin of the Report:

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

1.3 Rational of the study:

1.4 Objectives of The study:

Department of Management Studies

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

1.5 Methodology of the study:

Department of Management Studies

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

1.6 Scope of Report:

1.7 Data Analysis and Reporting:

1.8 Limitation of the study:

Department of Management Studies

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

Department of Management Studies

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

2.1 General Concept of RAKUB:

2.2 Historical Background of Rajshahi Krishi Unnayan Bank:

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

Department of Management Studies

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

2.2.4 Present Condition:

2.2.5 Establishment of Rajshahi Krishi Unnayan Bank:

2.4 Vision of RAKUB:

2.5 Mission of RAKUB:

Department of Management Studies

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

To turn the RAKUB into a profitable organization

2.6 Objectives of RAKUB:

2.7 Management of RAKUB:

2.8 RAKUB AT A GLANCE RAKUB :( Up to 29th Dec, 2014):

Tk. 570.00 (in cores)

Department of Management Studies

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

Rajshahi & Rangpur Division

06) Total Branch

2.9 Organizational Setup:

2.9.1 Head Office:

Department of Management Studies

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

2.9.1. a) Administration and Accounts Department:

2.9.1. b) Operation Division:

2.9.1. c) Audit and Recovery Division:

2.9.2 Supervision and control:

2.9.4 Training Institute:

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

2.10 Organizational Structure of RAKUB:

Department of Management Studies

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

Department of Management Studies

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

2.10.1 Employee summary (up to June- 2015):

Credit Management: A Study on Rajshahi Krishi Unnayan Bank, Pairabond Branch,Rangpur

1.Managing Directors (MD)

Source: Personnel Department of Rajshahi Krishi Unnayan Bank

2.10.2 Branch Network: