BA Overview

8/2/2019 BA Overview

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1.3 SCOPE OF THE STUDYThis study is based of on theoretical and practical analysis. However the scope of the

study is confined within the region of CDA Avenue Branch, Chittagong.

The study will focus on the following areas ----

The kinds of consumer credit facilities extended by Bank Asia Limited.

General Procedure for getting different kinds of consumer credit facilities.

How different kinds of projects are appraised at Bank Asia Limited. Present scenario of Consumer Credit Policy.

Each of the above areas is critically analyzed in order to determine the efficiency of

Bank Asia Limited, CDA Avenue Branch.

1.4 Methodology:

A method involves a process or technique in which various stages or steps collecting

data/information are explained and the analytical techniques are defined. The report is

composed of both primary and secondary data or sources.

Primary Data:

Primary data have been collected by informal interview with the officers. Some

information regarding my report objects has been collected through discussion with

different executives of the Bank.

Secondary Data:

Secondary data means data those are already available i.e. they refer to the data,

which have already been collected and analyzed by someone else.


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I used the following sources of secondary data.i. Credit Manual of the Bank.

ii. Annual Reports of the Bank.

iii . Different Documents of the Bank.

1.5 Limitation of the study

This study report is based upon primary and secondary source of information from the

documents and databases of the Bank. Though I tried my level best to produce acomprehensive and well-organized report on the Bank. The study that has been

conducted in Bank Asia Limited has certainly some limitations, which are as follows-

A short course of time is allowed for the program.

The customers some times unable to provide information because of their busytime.

The employees of the Bank are very busy to provide accurate information aboutsome particular matters.

The bank has naturally shown us some indifference connecting its mostconfidential information.


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2.0 AN OVERVIEW OF THE BANK

2.1 THE WORD BANK

The word Bank originated by Italian word Banco means long tool. In ancient time

Italian Jews merchants used to do business of lending money by setting on the tools.

Audit is assumed that, the Word Bank derived from the word Banco (Tools) to meet

the expenses of war 1171 one type credit certificate was launched in Italy at an interest

rate 5%. It was called a Monte in Italian language and Bank in German language.

Then German was widely used in Italy. As a result, the Word Bank gradually changed

to the word Banco from which the word Bank originated.

2.2 Bank Asia

The present day Banking structure has evolved over several decades. The far-reaching

program of economic reform is being carried out at present towards efficient utilization

of scarce resources and the development of private entrepreneurship. In a fast changing

business environment, financial intermediaries are lift to be guided by market forces

rather than regulations. Competition is strengthened by the entry of new and innovative

providers of financial services through the development of money market and the

capital market under the ongoing financial liberalization program. Bank Asia Ltd.

emerges as a new Bank in the private sector to operate in the commercial area of the

country. Presently the Bank is not operating in the rural area. But in near future they

have plan to extent the branch lithe rural areas.

Management of the bank


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MANAGING DIRECTOR

The members of board of directors sponsor the paid up capital of the Bank. The Bank is

managed by experienced officers committed to provide highly efficient personalized

and quality services. There is no conventional system of Clark guard &peon in the

Bank. The security aspect is locked & managed through private security agency. The

Bank has a good number of professional managers to manage competitive & complex

situation efficiently & effectively. They follow the formal relationship among the

different level of the management.

Board of Directors

The first Board of Directors of the Bank was constituted with 13 Directors. According

to Article 128 of the Articles of Association of the Bank, four Directors of the Bank

will retire in this Annual General Meeting. They all have expressed their desire for re-election, being eligible for the same. Since the Bank has floated its share, for public

subscription, two Directors will be elected from the public shareholders

Organogram Of Bank Asia Ltd.

SENIOR EXECUTIVE VICE PRESIDENT(SEVP)

EXECUTIVE VICE PRESIDENT (EVP)

SENIOR VICE PRESIDENT (SVP)


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VICE PRESIDENT (VP)

FIRST VICE PRESIDENT (FVP)

ASSISTANCE VICE PRESIDENT (AVP)

FIRST ASSISTANCE VICE PRESIDENT (FAVP)

SENIOR EXECUTIVE OFFICER

EXECUTIVE OFFICER

JUNIOR OFFICER

OFFICER

SENIOR OFFICER

ASSISTANCE OFFICER

TELLER

BANKING OFFICER


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Recently Bank Asia offers its second IPO of 20 Crore and for this amount of share the

initial application was for Tk- 1100 crore which indicates that the Bank has got a brand

image in the market and has got the faith of the customer. Such response from the

investor provides the bank more confidence over its operation and helps to take forward

looking decision.

2.4 BOARD OF DIRECTORS

C a s h

A c c o u n t s

R e m i t t a n c e

C l e a r i n g

C u s t o m e r S e r

G e n e r a l B a n k

O v e r d r a f t

S e c u r e d O v e r

T e r m L o a n

P e r s o n a l C r e

S t a f f L o a n

L T R

F D B P

M o n e y + +

L o a n G e n e r

L D B P

P A D

C r e d i t /

A d v a n c e

I m p o r t

E x p o r t

R e m i t t a n c e

F o r e i g n E x c h a

B a n k i n g S e r v i


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3.0 CONSUMER FINANCING- AN OVERVIEW OFPOLICY

'Consumer financing' means any financing allowed to individuals for meeting their

personal, family or household needs. The facilities categorized as Consumer Financing

are given as under:

(i) Credit Cards forms of clean lending with a maximum limit of Tk.

500,000/- to a single borrower. Supplementary credit cards shall be

considered part of the principal borrower for this purpose. The bank shall

secure the limits exceeding Tk. 500,000/- appropriately. Corporate Card

will not fall under this category and shall be regulated by exiting

guideline/regulations for lending.

(ii) Auto Loans (Secured by way of hypothecation /charge on vehicle).

(iii)Housing Finance (secured by mortgage on the property. e.g.

house/flat/land).

(iv)Consumer Durables Loans for purchasing various consumer items for

personal use or use in the family.

(v) Loans for Professionals only for professionals like doctors, engineers,

architects, IT professionals, and management consultants.

(vi)Unsecured Personal Loans for payment/ purchase of goods service and

expenses.


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3. For every type of consumer finance activity, the bank shall develop a specific

Product Program Guide (PPG). The program shall include the

objective/quantitative parameters for the eligibility of the borrower and determining

the maximum permissible limit per borrower. The PPG will also indicate the

maximum permissible exposure bank will take against each product.

4. Bank shall put in place an efficient computer based MIS for the purpose of consumer

finance, which should be able to effectively cater to the needs of consumer financing

portfolio and should be flexible enough to generate necessary information reports used

by the management for effective monitoring of the bank's exposure in the area. The

MIS is expected to generate the following periodical reports:

Delinquency reports (for 30, 60, 90 180 & 360 days and above) on monthly

basis.

Reports interrelating delinquencies with various type of customers of

various attributes of the customers to enable the management to take

important policy decisions and make appropriate modifications in the lending

program.

Quarterly product wise profit and loss account duly adjusted with the

provision on account of classified accounts.

3. The bank shall develop comprehensive recovery procedures for the delinquent

consumer loans. The recovery procedures may vary from product to product.

However, distinct and objective triggers should be prescribed for taking pre-

planned enforcement/recovery measures.


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develop an appropriate procedure for repossession of the vehicles and shall ensure thatprocedure is strictly in accordance with law.

3.4.20 REGULATION - 20

A detailed repayment schedule should be provided to the borrower at the outset. Where

alterations become imminent because of late payment or prepayment and the

installment amount or period changes significantly, the revised schedule should be

provided to the borrower at earliest convenience of the bank but not later than 15 days

of the change. Further even in case of insignificant changes, upon the request of the

customer, the bank shall provide him revised repayment schedule free of cost.

3.4.21 REGULATION 21

The banks desirous of financing the purchase of used cars shall prepare uniform

guidelines for determining value of the used vehicles. However, in no case the bank

shall finance the cars older than five year.


The banks should ensure that a good number of authorized auto dealers are placed at

their panel to eliminate the caches of collusion of other unethical practices.


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Banks shall either engage professional staff or arrange sufficient training for theirconcerned officials evaluate the property, assess the genuineness and integrity of the

title documents, etc.


The bank's management should put in place a mechanism to monitor conditions in the

real estate market (or other product market) to ensure that its policies are aligned to

current market conditions.


Banks must develop floating rate products for extending housing finance, thereby

managing interest rate risk to avoid its adverse effects. Banks also must develop in-

house system to stress test their housing portfolio against adverse movements in

interest rates as also maturity mismatches.

REGULATIONS FOR PERSONAL LOANS INCLUDINGLOANS FOR THE PURCHASE OF CONSUMERDURABLES


Limits per person for such loans will be Tk.3 lakh with out any securities. However,

banks may lend higher amounts provided the loans are secured appropriately. But, in no

case, the loan amount will be allowed to exceed Tk.10 lakh. The loan secured against

liquid securities shall however, be exempt from this limit.


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g. Constitution

Some other important matters:

Whether the firm is registered or not

Borrowing powers

Worth of the client in the business and as well as partners

Purpose of the advance consistent with the company object

Existing borrowing

Verification of prior charges

3.6 Preferred Organizational Structure

An appropriate structure for Consumer Credit must be in place to ensure that the

segregation of the marketing / sales function from Approval / Risk Management

and also Credit Administration.

Credit approval should be centralized within the Consumer Credit Division. All

applications must be approved by the Head of Consumer Credit or delegated

Corporate Office Executive/ Regional Head.


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4.1 Auto Loan

This product will allow car financing to the customer segment. Under this

scheme, the vehicle is hypothecated to the bank only. In addition to this

registration requirement, on a case-to-case basis, bank may also secure the loan

partially by the commonly acceptable form of cash/quasi cash securitiesavailable in the market.

Auto Loan :Customer Segment

Any Bangladeshi who has the capacity to repay bank loan. In specific terms,

these could be salaried executives of multinational and middle to large size local

corporate, Government officials, Officials working in reputed NGOs (Non

Government Organizations), international aid agencies & UN bodies, any tax

paying businessmen of repute, any employed / self-employed tax-paying

individual having a reliable source of income

Auto Loan : Purpose

Purchase of non-commercial new and reconditioned vehicles for personal use

only.

Auto Loan : Nationality

Bangladeshi only

Auto Loan : Age Limit


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size local corporate, Government officials, Officials working in reputed NGOs(Non Government Organizations), international aid agencies &

UN bodies, any tax paying businessmen of repute, any employed / self-employed

tax-paying individual having a reliable source of income.

Consumer Durables Loan : Purpose

Consumer durables for personal/ family use. Items like Television, Refrigerator,

Air Conditioner, Audio-Video Equipments, Washing Machine, Personal

Computers, other household furniture/ appliances etc.

Consumer Durables Loan : Nationality

Bangladeshi only

Consumer Durables Loan : Age

Minimum age (years) : 25

Maximum age (years) : 65 years at loan

maturity

Consumer Durables Loan : Minimum Service / length of

business

- For salaried individual, minimum total service length of 3 years;

- Govt Employees must be confirmed on job;

- For self employed individual, a business record of minimum 4 years.


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Consumer Durables Loan : Minimum Income

Monthly surplus income (after meeting expenses) shall be at least two times of

the installment amount.

Consumer Durables Loan : Loan Size

Minimum : Tk. 50,000/=Maximum : Tk. 300,000/=

Consumer Durables Loan : Loan to Price Ratio

Financing maximum 80% of the cost of the item is allowed.

Consumer Durables Loan : Security/ Collateral

Hypothecation over purchased assets.

Comprehensive insurance over assets (Policy must be renewed every year

and copy of the policy must be submitted to the bank)

Post dated cheques for each 6 monthly installment

One undated cheque for full loan value including full interest to be taken in

advance.


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Professional Loans : Customer Segment

Any Bangladeshi in the following professions as self employed or salaried

people:

- Doctors or medical professionals

- Engineers

- Architects

- IT professionals

- Management Consultants

Professional Loans :Purpose

For purchase of items to support professional needs of above customer segment

(e.g. purchase of X-ray machine, Dental chair, medical beds, ultra- sonogram

machine, engineering/ mechanical tools, purchase of office equipments/

accessories, etc.)

Professional Loans: Nationality

Bangladeshi only

Professional Loans : Age

Minimum age (years) : 25

Maximum age (years) : 65 years at loan maturity


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Professional : Tenor

Minimum 12 months

Maximum 48 months

Professional Loans: Repayment Method

Equal Monthly Installments

Professional Loans :Disbursement Mode

Payment to be made by issuing Pay Order in favor of vendors by crediting

customers Savings/ Current account with our bank.

Professional Loans : Debt Burden Ratio (DBR %)

Monthly Installment size will be maximum 33% of Monthly Net Income.

Professional Loans : Verification of Personal Details and

Quotation

Details of an applicant to be verified by a banks officer/ third party (nominated

by bank) before an approval is accorded.

Letter from employer with details of employment and salary


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House Finance: Maximum exposure under this product

20% of Banks equity.

4.6 Credit Card

The target market consists of salaried and self-employed individuals generally with a

minimum gross income of Tk. 10,000 per month and usually at least 21 years of age for

a primary card and 18 years of age for a supplementary card. Cards are not normally

issued to individuals over 60 years old. Applicant must be a citizen of Bangladesh.

Credit Card: Target Market

Salaried & Self-employed.

Credit Card: Nationality

Bangladeshi only.

Credit Card: Age

For Primary card 21 years to 60 years

For Supplementary card 18 years to 60 years

Credit Card: Business Existence

1 year for self employed only.


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Credit Card: Determination of Income

Salaried: Gross Monthly Income (GMI) is defined as the total income of an

applicant including overtime and other allowances received on a regular basis

before any deductions/loan installments as reflected in the salary certificate or pay-

slips or the bank statements.

Where free accommodation is provided by the employer, up to 25% of the salary

and allowances as mentioned in the salary certificate may be added to arrive at G

Self-employed: GMI is defined as the average monthly income of an applicant after

deduction of all business expenses. GMI is determined on the basis of Income Tax

Return (IT 88) and/or Bank Statement(s).

a. Income Tax Return (IT 88) shows gross yearly income (before deduction),

which is divided by twelve to arrive at GMI.

b. Personal (or company account statement in case of sole proprietorship) and/or

company bank statements are considered as supporting income documents.

Bank statement is analyzed to calculate average monthly credit (both frequency

& volume) and average monthly balance. In calculating GMI, maximum 50%

of average monthly credit can be taken into consideration. Depending on the

nature, frequency and size of business and cash flow, credit


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c. Analysts will use their discretion to decide on the appropriate discountedpercentage to be taken to calculate GMI. As a general rule, the average monthly

balance should cover at least 30% (minimum repayment option being 5%) of

the approved credit limit. For calculating GMI from company bank statement,

the appropriate discounted percentage will be applied first and then the

applicants share of the business (ownership share %).

Credit Card: Debt Burden Ratio

Defined as the amount of monthly loan repayments of an individual as

declared in the application or identified in the bank statements taken as a

percentage of the gross income.

For applicants provided with accommodation by employer/having own house,

up to 25% of gross income may be added to gross income while calculating

the DB ratio.

In cases where DB ratio exceeds prescribed norms, spousal income may

be added to enable recalculate DB ratio provided this income is substantiated

and the proof of relationship is given.

Credit Card: Documentation

Documents usually sought from the applicants are:

Salary certificate : Signed by Manager

Accounts/HR/Admin/Finance/Personnel or equivalent on official letterhead). In

case of Govt. Employees copy of Pay Bill acknowledged by Treasury.


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The loan-processing time is lengthy, which is not good for borrower. Most of the time spent for correspondence between

Head Office and branch.

There Human resource management are not that much efficient

to do the work. Their lacking of knowledge and they are not that

much well organized.

6.1 RECOMMENDATION

It is highly recommended to improve and diversify in accordance with

the customers need and expectations to more than loyal in the long run

business.


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through the cordial assistance of its members. I had the scope to focus on consumercredit policy. After completion the whole project it can be realized that Bank Asia is in

a competitive position in this viable environment. Working as an intern in the Bank

Asia, I got practical experiences of the demands of consumer credit and also the banks

effort to meet them. The bank should maintain a well-structured communication from

upper level to lower level. Each official should be valued and treated as a part of the

bank and they must have the privilege to devote themselves for the betterment of

services of the bank.

This is a company, which has so far shown good performance and holds the strongest

position in the banking market. Overall, the bank must make a positive attempt to be

more outward looking in their goals and aware of what is happening.

I hope, in spite of my all limitations, this experience of sharing works with such

working environment will help me a lot in professional life. This has a remarkable

impact on the economic growth of our country and financial support of

individuals.

BA Overview

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