1

CHAPTER ONE
INTRODUCTION
 2

1.1 Introduction
Bangladesh economy is predominately an agrarian one and dependence on agriculture is
considered to be the mainstay of economic life of the people. 85% people of our country
are depending upon agriculture directly and indirectly. But the financial conditions of the
farmer of our country are not satisfactory.
As Bangladesh is an agro-based country, the demand for the agri-loan of Krishi Bank has
been increased highly. It was very difficult for Dhaka based head office of Bangladesh
Krishi Bank (BKB) to manage agri-loan in the remote areas of the country. For this
reason the government wanted to decentralize the Krishi Bank in the divisional areas. The
people of the northern areas of Bangladesh are lagging behind in all respects than the
other parts of the country. That is why Rajshahi Krishi Unnayan Bank (RAKUB) was
established by the President's Ordinance No. 58 of 1986 with the aim of providing
institutional agricultural credit for optimum utilization of agricultural potentials of
Rajshahi Division. Taking over the branches and offices along with assets and liabilities
of the Bangladesh Krishi Bank within Rajshahi division, the bank started functioning on
15 March 1987.

1.2 Objective of the study:

The main objective of the study is to examine the lending program of RAKUB,
Mougachi Branch for the period 2018 to 2019. To achieve this objective, the study seeks
to realize the following:

i. To describe the condition of types of loan of RAKUB, Mougachi Branch.

ii. To evaluate the sector wise Loan disbursement and recovery policy of this
branch.

iii. To provide some recommendations for the improvement of loan and advance
management of this branch.
 3

1.3 Scope of the Study:

This internship program gives me a great scope or opportunity for gather experience and
knowledge in several areas of banking by which I can evaluate or expose myself. As I
was working in the Govt. Banking of Rajshahi Krishi Unnayan Bank, I got the
opportunity to learn different part of banking system, which is performed in this Branch,
as it was my topic of the report. During my Internship, the supervisor divided into the
whole banking in three parts as a result I got the opportunity to work in auditing Govt.
banking and others activities. These helped me much to know about the activities. As my
report topic is mainly focused on Auditing scenario of Rajshahi Krishi Unnayan Bank, so
here I tried to focus on to the every transactional report and the different types of
vouchers in order to maintain the sorting & check out the mistakes and the errors and
solve the mistakes & errors. Secondly, I also tried to collect the Govt. Banking data and
what factors are considered for increasing human skill by providing questionnaire and
collect data from the employees about Govt. Banking Activities of Rajshahi Krishi
Unnayan Bank.

1.4 Methodology

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;

 Primary sources of information

 secondary sources of information
Above mentioned sources are described below;

 Primary sources: Primary data are measurements observed and recorded as part of
an original study. 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;
 4

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 Mougachi 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. But one true
thing is that I could not ask question to the officer in all the time when I
cannot understand, the reason is that in my branch the month of recovery is
going on, so most of the officer stay busy in most of the time.
 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
authority. I have collected secondary information from the following sources;
a. Statement of affairs of the branch
b. Documents supplied by branch
c. Different articles
d. Magazines and papers
e. Bank’s website
f. Rules and regulations provided by agricultural credit department of
Bangladesh bank.
g. Annual report of the bank from 2018 to 2019.
h. Some statistical graphs and charts of the bank.

1.5 Limitations of the Study

We know that practical training is essential to acquire a complete knowledge. But

practical knowledge is not easy to obtain. There are many limitations of internship. These
are as follows:

 It is impossible to know fully about an organization within a very short term.

 Sometimes an organization cannot provide the real figure of its organization
because of secrecy.
 5

 Observation of the activities of an organization is difficult tasks.

 Lack of necessary elements and aspects are the problem of proper Internship.
 Lack of proper knowledge for the collection of primary and secondary data.
 Lack of maintaining proper books and modern technology.
 In many cases, the bank is not interested provide their information for maintaining
secrecy.
 6

CHAPTER TWO
AN OVERVIEW OF RAJSHAHI KRISHI
UNNAYAN BANK
 7

2.1 Rajshahi Krishi Unnayan Bank

Bangladesh is a small country of 87,191 villages. The development of this small country
is mainly depends on the development of the 87,191villages of the country. And in these
villages live about 84.68% of her entire population. The people of this village are
dependent on agriculture. So to develop these villages we should develop at first
agriculture and agro-based industries. And for this purpose the govt. of Bangladesh
established krishi bank. So Rajshahi Krishi Unnayan Bank is financial institution based
on agro-based. Rajshahi Krishi Unnayan Bank gives credit in Rajshahi division.

Rajshahi Krishi Unnayan Bank (RAKUB) a state owned financial institution was established
by the president’s 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.

2.2 Background of Rajshahi Krishi Unnayan Bank (RAKUB)

Rajshahi Krishi Unnayan Bank was established with the aim of catering to the farmer’s
need of institutional agricultural credit in Rajshahi division. The bank started functioning
on March 15, 1987. The authorized capital of the bank amounted to Tk. 150 crores. At
the outset the amount of paid up capital was Tk. 5 crores that is reached to Tk. 108 crores
at present. The amount of reserve capital is Tk. 20.88 crores and deposit from customers
Tk 894.46 crores.

The agriculture development finance corporation (ADFC) was established by the Govt. of
Pakistan in 1952, it become Agricultural Development Bank of Pakistan (ADBP) in
February 1961. On 16th December, 1971, the ADBP became Agriculture Development
Bank of Bangladesh (ADBB) and subsequently named as Bangladesh Krishi Bank (BKB)
under Bangladesh Krishi Bank order 1973 (President order No. 27 of 1973). The BKB
was established for the development of agriculture of the country. But it is not possible to
maintain all the jobs for BKB, because we are a densely populated country. Realizing the
 8

need of development of the northern region of the country, the Govt. established Rajshahi
Krishi Unnayan Bank ordinance 1986 (Ordinance No. 58/1986).

The head office of RAKUB is located at the divisional headquarters city of Rajshahi.
There are 377 branches, 18 zonal and 23 regional offices of RAKUB. The bank has a
training institute located at Rajshahi. Total workforce of 3497 as on June-2013 is
composed of 2243 officers and 1254 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.
Table 2.1: Showing the number of branches of RAKUB.

Total Branches 377

Zonal Offices 18

Regional Offices 23

Total Work Forces 3497

Out of Rajshahi division there is only one branch in Dhaka. Taking over the assets and
liabilities of BKB within Rajshahi division, the bank went into operation on March-15, 1987.

2.3 Objectives of RAKUB

The main objective of RAKUB is to play a vital role to increase agriculture production,
create income-generally. The main objectives of RAKUB are as follows:
i. To find out the credit related activities.
ii. To explore different credit program of RAKUB
iii. To tress out the problems in credit related activities.
iv. To assess the loan policy of RAKUB,
v. To assess loan recovery performance during 2015-2016 to 2018-2019
vi. To explore different credit program of RAKUB.
vii. To measure the effectiveness of this activities.
viii. To recommend the solution.
 9

ix. To develop the agro-based industries.

x. To alleviate poverty.
xi. To modernize the agricultural sector.
xii. To develop the social status of the villagers.

2.4 Management
There are ten members in its board of Managing directors who are nominated by the
Govt. of Bangladesh and they formulate policy to operate the Bank. Out of the Ten
members one is Managing Director, One
Sub- Directors and one is Second Director, and Four are Directors are state employees
and the rest are not. Besides this, And Three Members are D.E.O Managing director is
the chief officer of the Bank.

2.5 Capital and its sources

RAKUB is a governmental banking institute. So the main sources of capital are
government fund, as on 30 June, 2019
The details about capital are as follows-
 Authorized capital : Tk. 10000 million

 Paid up capital : Tk. 7000 million

 Reserve capital : Tk. 208.50 million

2.6 Functions of RAKUB

As the largest development partner in the northwest region Rajshahi Krishi Unnayan Bank aims at
overall development of the farmers and all the sectors and sub-sectors of agriculture in this region.
Besides catering to agricultural credit, financing agri-business and agro-based industries, activities
related to socio-economic development and poverty alleviation programs, the bank performs most
commercial banking function.
 10

2.7 Organizational structure

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 29-12-
2019 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.
 11

ORGANIZATIONAL STRUCTURE

Board of Directors

Secretariat
Managing Director

Public Relation Secretariat of M.D.

General Manager General Manager General Manager

Adm.& A/C. Operating Audit& Recovery

General Service Dept. Resource & Loan Recovery Dept-1.

evelopment Dept

Central Account Budget& Cost Control Loan Recovery

Dept-1 Dept. Dep-2.

Central Account Branch control Loan Recovery

Dept-2 Dept. Dept-2

Personnel Loan & Advance Regional Audit

Management Dept. Dept-2 office- 18

Training institute Loan & Advance

Dept-1

LPO Dhaka Zonal Regional Regional Regional Zonal Regional

Branch Office Office Office Office Office Office
Rajshahi Naugoan Nawabgong Natore Pabna Sirajganj

Regional
Branch Branch Branch Branch Branch Branch Office
18 22 13 17 19 19 Natore
Regional
Office Branch Branch
Rangpur 21 14 Zonal
Branch Office
Regional
Office Branch 15 Pabna
Thakurgoan 13
Branch
12 Regional
Regional Office
Office Sirajganj
Branch Branch Branch Branch Branch Branch Branch
Phanchogor 16 17 16 15 17 18 17

Regional Zonal Regional Regional Regional Regional

Office Office Office Office Office Office
Dinajpur Dinajpur Lalmonirhat Nilfamary Kurigram Gaibanda
 12

2.8 RAKUB at a Glance : (As On June 30, 2019)

01) Establishment : 15th March, 1987.
02) Authorized Capital : Tk. 10000.00 (in million).
03) Paid up Capital : Tk. 7000.00 (in million).
04) Reserve : Tk. 208.50 (in million)
05) Area of RAKUB :
(a). Area : Rajshahi &Rangpur Division
(b). Spread : 34,513 Square.K.M.
(c)District : 16
(d). Upazilla : 125
(e). Union : 1092
i) SACP : 452
ii) Non- SACP : 640
(f). Total Populations : About 4.50 crore
(g). Total No. of Families : 61 lakhs.
(h). Agricultural Families : 38 lakhs.
06) Total Branch : 377
i) Municipal : 72
ii) Union : 305
07) Total manpower : 5982
08) Zonal /Regional offices : 18
09) Regional Audit offices : 18
10) Regional officer : 23
11) Zonal officer : 18
12) Amount of Deposit : Tk. 1814.00 crore
13) Total Loan disbursement : Tk. 502.91crore
i) Crops : Tk. 244.38 crore
ii) Non Crops : Tk. 258.53 crore
14) Total Loan Recovery Tk. 618.66 crore
i) Classified : Tk. 133.42 crore
ii) Unclassified : Tk. 485.24 crore
15) Total Number of Client : 3891825
i) Borrower : 882398
ii) Depositor : 3009027
www.rakub.org.bd
 13

2.9 Organizational set up

The affairs of business of the bank are managed through three functional tiers:

 The Head Office

 The Zonal/ Regional offices

 The Branches

Head office: The head office of RAKUB is stationed at 280 km far from capital city
Dhaka, at North-west divisional city Rajshahi. All operation is controlled 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 17 departments are as follows:

a) Administration Division:

 Personnel Department

 Common Services Department

 Computer Department

 Budget and expenditure control Department

 Training Institute

 Human resource Department

b) Operation Division:

 Branches control Department.

 Loans and Advances Department-I

 Loans and Advances Department-II

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 Research and Development Department.

c) Audit Accounts and Recovery Division:

 Loan Recovery Department-I

 Loan Recovery Department-II

 Audit and Inspection Department

 Central Account Department-1

 Central Account Department-2

2.10 Training Institute

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.

2.11 0ffice automation

A local area network (LAN) connects all computers in departments at head office.
Internet connections in the head office as well as field offices have facilitated exchange
of information through e-mail. The bank has its own website www.rakub.org.bd to
represent it to the cyber world. Computerized branch banking has been introduced on
experimental basis in two branches of the bank. Necessary steps have been taken to set up
a complete computer department at head office. The bank has been giving much
importance to training courses for enhancing computer skill of officers and other staff.

2.12 Poverty alleviation credit programs

The bank has been disbursing micro-credit for poverty alleviation in the 16 northwestern
districts since inception. Besides, the bank finances short term collateral free credit under
select individual or group based programs for income generating activities among poor
and unemployed youth in compliance with government policy. The bank has financed Tk.
289.03 million as against of Tk. 340 million annual disbursement target in 11 poverty
 15

alleviation credit programs in the year 2018-19. Following are the bank’s poverty
alleviation credit program;

i. RAKUB, self-help credit program(RSCP)

ii. Marginal & small farm system crop intensification project

iii. Swanirvar credit program

iv. Shogorip (Food grain go down credit program)

v. UN Capital development fund credit program

vi. Women entrepreneurship development program

vii. Pilot employment generation program

viii. Semi-intensive goat rearing program

ix. Medicinal plants/orchard nursery

x. Credit program for the disable persons

xi. Zero poverty loan scheme

2.13 Employee Summary of Rajshahi Krishi Unnayan Bank:

Table 2.2: Employee Summary of RAKUB (Up to June, 2019)

Designation Authorized

1.Managing Directors (MD) 01

2. Sub-Managing Directors (DMD) 01

3.Second Director ( SD) 01

 16

4. Director 4

5.D.E.O 3

Total 10

Source: Personnel department of RAKUB Mougachi Branch, Rajshahi

 17

2.14 Financial Incentives for Loan Recovery

The bank had to work out plans to buttress estimated deficit of interest income in the
wake of lowered rate. Twenty-one workshops participated by branch managers and field
staffs were held at zonal levels to find the way out. Borrower-friendly atmosphere in
Renewal and camps bring the bank and its customers close together, encourages the
borrowers to repay earlier loans and enroll as fresh borrowers if needed.
 18

CHAPTER THREE
FUNCTIONAL ACTIVITIES OF RAJSHAHI
KRISHI UNNAYAN BANK AT MOUGACHI
BRANCH
 19

3.1 Location

To find a branch of Rajshahi Krishi Unnayan Bank nearby you in Rajshahi; Maugachi would be
your best choice which is located at Maugachi, Mohanpur, Rajshahi is definitely close to your
location. Learn physical address, location, contact number, routing number, SWIFT code, service
hours and what times and days this branch will be open and closed. Dial +880721 800176 to
connect the branch and have experience with its best services.

3.2 RAKUB, Mougachi Branch at a glance:

i. Establishment : 14 March, 2010

ii. Location : Rajshahi District.
iii. Number of union : 04 (excluding City Corporation)
iv. Number of village : 105
v. Area : 1015 S.K.M
vi. Total population : 1, 90,013
vii. No. of Farming Families : 508
viii. No. of loanee Families : 1517
ix. No. of village market : 105
x. Major crops : Rice, potato and Banana
xi. Loan disbursement :
Target : 57832(TK. In thousands)
Achievement : 42880(TK. In thousands)
Performance : 74.15%
xii. Loan recovery :
Target : 38619(TK. In thousands)
Achievement : 41883(TK. in thousands)
Performance : 104.45%
xiii. No. of employees : 23
xiv. Contact Address:

Phone No. : 01717-671001

E-mail : Rajshahi@rajbd.Com
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3.3 Functions of Mougachi Branch

Like other banks Mougachi Branch does the following activities:

I. Receive deposit from customers

II. Payment to customers according to payment order given through check
by customers.
III. Disbursements of loan and recovery of the given loan.
IV. Giving advice to the client of the bank
V. Transfer money from one place to another place.

3.4 Services given to customers by Mougachi Branch

Different deposit related services provided by the bank are mentioned below;

3.4.1 Deposit Service:

i. Current Deposit Account

ii. Savings Deposit Account
iii. Term Deposit Account
a) Short Term Deposit Account (STD)
b) Deposit Pension Scheme (DPS)
c) RAKUB Deposit Pension Scheme (RDPS)
d) Fixed Deposit Account

3.4.2 Commercial Service:

a) Demand Draft (DD)

b) Mail Transfer (MT)
c) Telephone/ Telegraphic Transfer (TT)
d) Payment Order (PO)

3.4.3 Loan Service:

 21

a) Short Term Loan

b) Medium Term Loan
c) Long Term Loan

The above services of RAKUB’s Mougachi Branch are discussed in following pages
respectively;

A. Deposit Services:

The following 3 types of accounts are available at Mougachi Branch

1. Current Account:

From this type of account any amount of money is deposited and drawn at any time in the
office hours. There is no interest on current account. Bank over draft is sanctioned based
on it. This account is opened with minimum deposit of Tk.1000.

2. Savings Account:

Savings account opened for the individual customers except companies, firm and Co-
operative society. Money is withdrawn two times a week and deposited at any time in the
office hours. If an account holder draws money from account he/she will not get interest
for that month. To open an account bank requires Tk.200 only.

3. Term deposits:

A term deposit is a fixed-term deposit held at a financial institution. They are generally short-
term deposits with maturities ranging anywhere from a month to a few years. When a term
deposit is purchased, the client understands that the money can only be withdrawn after the
term has ended or by giving a predetermined number of days notice. 

a. Short Term Deposit Account (STD):

Short Term Deposit Accounts are opened for company, business firms and government
demonstrative body. This account is operated like current account.

b. Deposit Pension Scheme (DPS):

It is one kind of deposit program circulated by government. In this savings scheme a

person receives the opportunity to build up saving by contributing monthly installment to
 22

get an attractive fixed amount at the end of a specific period. The size of monthly
installments is Tk. 100, Tk. 200, Tk. 300, Tk. 400, Tk. 500, or which is to be deposited
within the first week of each month. In this case compound rate of interest is charged.

c. Rajshahi Pension Scheme (RPS):

Rajshahi has some savings schemes to motivate the people for savings. In this case RPS
is regarded as the special product of this bank. The RPS is same as DPS. But terms of
savings of RPS are 5 years and 10 years.

d. Rajshahi Grameen Pension Scheme (RGPS):

It is for the Grameen poor people to motivate them increase in savings. It is same as DPS
& RPS.

e. Fixed Deposit Account (FD):

Fixed deposits are taken for the following terms:

From one month to below three months

Above three months to below six months

Above six months to below one year

Above one year to below three years

Above three years

B) Commercial Functions of RAKUB’s Mougachi Branch:

The following types of commercial service are available in RAKUB’s Mougachi Branch

a. 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.20
commission up to Tk.1000. When the limit exceed commission amount increased in a
certain rate.
 23

b. Mail Transfer (MT):

This branch transfer 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 minimum Tk.30 and the postal charge is Tk.50.

c. 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
the paying branch makes payment after getting message. Due to lack of technology this
branch cannot operate TT.

d. 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.

Table-3.1: Commission charged on commercial service

Service Charge Tk.

Demand Draft Tk.20+VAT

Telegraphic Transfer Tk.30+VAT

Payment Order

Up to Tk.1000 Tk.20+VAT

Up to Tk.1,00,000 Tk.30+VAT

Over Tk.1,00,000 Tk.50+VAT

Up to Tk.5,00,000and over Tk.100+VAT

Mail Transfer Minimum Tk.30+ Postal

cost(Tk.50)+VAT
 24

Cancellation Charge of DD, MT, TT, PO

Up to Tk.500 Tk.25+VAT

Over Tk.500 Tk.50+VAT

C) Loan services:

Banks loan portfolio has been classified under the following heads;

a) Short Term Loan (STL): Loan period is 1 year.

b) Medium Term Loan (MTL): Loan period is above 1 year to 5 years.

c) Long Term Loan (LTL): Loan period is more than 5 years

3.5 Procedure to open an Account at Mougachi Branch:

Rajshahi 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;

a. Obtain a prescribed application form from the bank.

b. Submit the duly completed form with necessary papers to the concerned officer.

c. Face a brief interview

d. Put specimen signature in the signature card supplied by the bank

e. Deposit of money

f. Get counter folio of the payment slip.

With the prescribed application form, the applicant should submit the following papers
and information.

a) Nationality certificate from the appropriate authority.

b) Two copies of recent passport size photograph.

c) If the applicant is a service holder he should collect employee certificate from

his employer and is to be submitted.
 25

d) The applicant’s signature should be identified by an introducer who has a

Current Deposit A/C with the respective branch.

e) The applicant should deposit minimum taka 200/- to open an account.

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 6 years or more is 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.

3.6 Procedure to close an Account

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.

3.7 When bank close 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.

 If the customer does not properly follow the rules and regulations necessary
to operate his account.
 26

3.8 Organizational structure of Mougachi Branch

The organizational structure of Mougachi Branch is shown below through diagram:

Manager (AGM)

Principal Officer

Senior Officer

Officer

Supervisor

Supervisor (Cash)

Computer Operator

Data Entry Operator

Peon

Security Guard
 27

CHAPTER FOUR

LOANS AND ADVANCES

 28

Loan and Advances

The management of specialized bank’s assets must be conducted in a profitable and

safety. Safety is essential to commercial banking since banks hold billions of taka of
deposits of individuals, businesses, and government. Profit is also necessary for the
successful operation of a bank. Lending is the most profitable as well as the most risky
function performed by specialized banks. Therefore, it must be done efficiently and with
a least amount of loss so credit management is essential for the bank.

4.1 Types of Loan and Payment Period

There are two categories of loans in RAKUB. These are as follows:

a. Unclassified loan:
b. Classified loan.

4.1.1 Unclassified loan

When half or more than half of the total loan is repaid within the due dates by the
borrowers than it 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. UC loan can be
standard (S) & Special Mention Account (SMA).

 Over due for the period less than 3 months Standard (S)
 Over due for the period 90 days or more Special Mention Account (SMA). It has
activated form 31 December, 2015.Classified loan

When more than half of special mention Account (SMA) loan or total is
unpaid/due over the due data then that loan is called classified loan. Classified loans can
be sub-standard, Doubtful and Bad. There are four criteria for classifying loans. These are-

a) Continuous loan

i. Overdue for a period of 6 months but less than 12 months sub Standard (SS).
 29

ii. Overdue for 9 months but less than 12 months Doubtful (DF).
iii. Overdue for 12 months above Bad/Loss (BL).

b) Demand loan
In case of demand loan borrowers are bound to repay the loan at the time when the bank
want such as forced Lim, PAD, FBP, IBP etc.

i. From 9 months but less than 9 months Substandard (SS).

ii. From 9 months but less than 12 months Doubtful (DF).
iii. From 12 moths and above Bad/Loss (BL).

Loans which are repayable within certain period under certain pay index is called term
loan.
(i) Up to 5 years

 Form 0 months but less than 9 Months Substandard (SS).

 From 6 months but less than 12 months Doubtful (DF).
 From 12 months and above- Bad/Loss (BD).

(ii) Above 5 years

 From 0 moths but less than 6 months – substandard (SS).

 From 12 months but less than 18 months Doubtful (DF).
 From 18 months but less than 24 months –Bad/Loss (BL).

d) Short term agricultural and micro credit

According to the annual credit program of agriculture department of Bangladesh
Bank listed short term loan is called short term agricultural credit. Short term micro credit
means the loans which are payable up to 12 months and the amount is up to Tk. 10, 00.

 Up to 12 months – unclassified
 Above 12 months but less than 26 month – Substandard (SS).
 Above 36 months up to 30 months-Doubtful (DF).
 Above 60 months –Bad/Loss (BL).
 30

4.1.2 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 classification of classified loans are as follows:

4.2 Main Credit Portfolio of RAKUB Mougachi Branch, Rajshahi

Table 4.1 Main Credit Portfolio of RAKUB Mougachi Branch, Rajshahi

a) Food Crops : Paddy, wheat, Winter/Summer vegetables, Banana, etc.

b) Cash Crops : Jute, Betel leaf etc.

c)Agro-based : Rice/has mills, flour mills, Dall (pulses) mills, etc.

industries project

d) Commercial loan : Loan against fertilizer and pesticide, cash credit loan for
agro- products and small enterprise etc.

e) Live stock : Draft animals, dairy, poultry, Goiter, Beef flattering etc.

f) Farm machineries : Power tiller, Tractor and other machineries.

g)Special agricultural : Fishery, Orchard, Nursery etc.

activities

h) Other : Loan against fixed deposits.

Source: Mougachi Branch, Rajshahi of RAKUB

4.3 Rate of Interest on Various Loans

Bank determines the interest rate differently for different sector. Considering interest rate
on deposit, administrative cost, bank rate, interest rate at other banks and financial
institutions, competitive money market etc, the bank uses its rate of interest on loan.
 31

Table 4.2 Interest rate of credit

Crops loan 12% RSS,RGPS 9%

Other agro- loans 15.5% SWANIRVAR 11%

Commercial 15.5% Other special program 10.5-18%

Other off-farm 15.5%

Source: Mougachi Branch, RAKUB

 32

4.4 Loan Handing Diagram

Getting Loan Proposal from the client Collecting Information Evaluating Proposal

Evaluating by
agent

Branch level evaluation

Sanctioning and documentation of loan

Decision

Disbursing loan

Supervision of the loan

Recovery of the loan

Usual Legal
recovery recovery
 33

Security of Loans

For all term loans tangible security is essential. And therefore papers documents relating
to security properties are to be attached with the loan applications:

a) Copies of records of rights (ledger).

b) Original deed of conveyance and rent receipts.
c) When acquired through a action certificate of sales delivery of possession and rent
receipts.
d) When properties have been acquired through in heritance-original records of rights
names and ages of all heirs a genealogical chart and rent receipts.
e) When properties have been acquired through lease-original lease deed and rent
receipts.
f) When properties have been acquired through gift-original deed, gift deed and rent
receipts.
g) When properties are under waqf-debtor, trust original waqfnama and permission from
the waqf commissioner to create mortgage in favor of the Bank.
h) When properties belong to a minor permission from the district judge for creating
mortgage in favour of the Bank.
i) Any other documents/papers essential as an evidence for establishment of ownership.

Lending Program of RAKUB

The economic condition of the farmers is totally dependent on the performance

of agriculture and Agriculturist are the Facts of Activities other bank. It has given total
priority to all the sub sectors and associated sectors of agriculture for achievement of
desired business Goal. The Seven priority sub sectors of landing are as follows:

I. Crop production: The bank finances all the summer crops. Winter crops,
horticulture crops& nursery etc. High yielding and high value crops and seeds production
 34

is particularly encouraged. Crop sub sector alone occupies 29.31% of the lending budget
of the bank.
II. Fisher: It is the second most priority sector identifies 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 increasing productivity. The bank has
also identified financing of small fish hatcheries as potential component of its loan
portfolio.
III.Live Stock: The bank extends credit facilities or systemic and commercial livestock
farming which includes dray, 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 mechanized farming is restrained
by want of cash and collation of land transportation of agriculture produces and other
forming activities.
IV. Irrigation equipment and firm machinery : In two days technology based faming
of high based among of high yielding and high volume crops, Mechanization of
cultivation, irrigation and pest control is indispensable; To Cop (Crop) with the situation
and pest control is indispensable. To crop with situation financing power tillers tractors,
tub wells, power machineries are being treated as an important.
V. Agro based industries: The operational jurisdiction of bank is noted for its
agricultural potentials. The bank pay due importance to setting up agro-industries for
preservation, processing and marketing of agricultural produces having back word
linkage with basic sub-sectors of crop, fishery livestock 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.
VI. Poverty Alleviation: The poverty strikes northwest Bangladesh is characterized by
comparatively lower rate of saving, inadequate capital accumulation and slim
employment opportunities. The existing collateral based banking system is also of little
use in respect of extending support to the millions of land less people. To address to
 35

problem the bank has been financial collateral free micro credit for income and
employment generation through its poverty alleviation credit program.
VII. Continuous loans: The bank grants cash credit/ working capital facilities for
maximum period of 12 months for procurement of raw materials for industrials units,
trading and marketing of agriculture outputs and inputs and commercial farming.

4.5 Selection of Loanees

Some important considered for Loan disbursement by the bank. These are as follows:
i. Loanee must be Bangladeshi

ii. They must be matured.

iii. They will not be loan defaulter.
iv. For Ltd. Company the joint stock company register must register it .
v. For Co-operative society it must be registered
vi. They have ability to proper use and payable capacity and goodwill.
vii. They will not be mad and mental disorder. For the process of selecting loanee,
bank considers “4 p’s”

i. Person
ii. Purpose
iii. Profitability
iv. Proper or Security
 36

CHAPTER FIVE

LOAN DISBURSEMENT
 37

Loan disbursement:
It is known to all that the strong base of RAKUB Mougachi Branch, Rajshahi is totally
dependent on sound investment. As interest on loan is the main source of income. That is
why qualitative Loan disbursement is so much important as well as quality to increase
total income of the bank.

5.1 Loan Sanction Procedure:

Based on information available in the appraisal report, credit report, leg mate credit,
Needs of the farmer client should be carefully analyzed by the sanctioning authority.
Before according section analysis of status of application, credit worthiness liabilities,
project viability from technical, financial, economic, Marketing and management point of
view. As soon and the security is finalized and the sanctioning authority is satisfied he
should proceed for sanction of loan advance.
 38

5.2 Loan handling diagram:

Getting Loan Collecting Evaluating

Proposal from information proposal
the client

Evaluating
by agent

Branch level
evaluation

Sanctioning and
documentation Decision
of loan

Disbursing Head office Branch

loan level level

Supervision of
the loan

Recovery of
the loan

Usual Legal
recovery recovery

Source: Manager of Mougachi Branch RAKUB

 39

5.3 Qualification of loanee:

Some important are considered for Loan disbursement by the bank. These are as follows:
Loanee must be Bangladeshi
 They must be matured
 They will not loan defaulter
 For ltd co. the joint stock company register must be needed
 For co-operative society it must be registered.
 They have ability to proper use and payable capacity and goodwill
 They will not mad and mental disorder. For the process of selecting loanee, bank
considers “4 p’s”
 Person
 Purpose
 Profitability
 Proper or Security

5.4 Documentation:
After the loan or advance become effective, the manager should ask the borrowers
promptly to comply with the loan covenants stipulations and execute the documents.
Correct documentation is essential securing safe repayment of loan and advances.

5.5 Security:
RAKUB maintain the security listed below in recovering the loans without risk.
(i) Lien: It’s 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 banker’s lien is a general hen. 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 pledge but the possession of the goods
vests with pledge until the loan is recovered. Pledge does not occur until the goods are
 40

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.

Disbursement of loan:
Before release of sanctioned loan or advance, all terms and conditions as laid down in the
sanction letter are to be fully complied with. To that effect, the following basic
requirements:
a) Loan affectivity terms and conditions as to collateral security and equity of the
borrower shall be fully met.
b) Specified documentations as specified in the sanction letter must be completed.
c) Verification of encumbrances of security properties.
i. Non-encumbrances certificate.
ii. Execution of Halapnama.
a) Creation of charge on the collateral security: In case of limited company, the charges
on the company assets should be limited
b) Within 21 days from the date of creation of charge, by registered post to the register,
joint stock company.
c) Insurance for:
iii. Security properties, as applicable.
iv. Assets creates or to be created out of a loan fund or with two equity.
v. Stock of goods pledged with the bank as collateral shall be taken with appropriate
risk cover.
d) Any other stipulations as per sanction letter.

5.6 Loan Supervision and Monitory:

 41

Under its charter, the bank is required, as for as possible, to ensure that a loan is spent on
the purpose for which it is made, and if this requirement is not complied with by the
borrower, the bank may require the repayment of the loan forthwith.
i. Primary responsibility of the manager is to supervise and monitor the cash
loan/WCL project and term loan stage by stage, ensure project constriction work,
acquiring kind items and project goods as per approved arrangement specified in
the sanction letter.
ii. Bank finance project should be inspected by the regional manager and manager
periodically, to assess physical conditions of the projects facilities and the level of
the project’s capacity utilization.

iii. Cash loans are liable to misuse for non-productive process. Special attention
must, Therefore, by given on borrowers past antecedents. When releasing cash
loans. When substantial cash amount is required to be drawing by a borrower for
civil works of a project, WCL for requiring goods the managers must be
particularly. Vigilant on the usage of loan. Total responsibility for credit super
vision of cash credit/WCL lies with the manager.
iv. The manager should deploy a project supervision officer after documentation are
release of first loan installment with the assignment of over all project
supervision the duties of the PSO has been laid down in Ch: 25.07. The PSO
should be stationed in the project site or nearby and see for himself the project
developmental work and inform the progress to the manager through progress
report predictably.
v. After inspection, the manager/authorized officer should countersign the
Borrower’s acknowledgement receipt under his signature and seal. Only after
such counter-signature in the Borrower’s acknowledgment receipt, supplier’s bill
con be processed for payment the branch should complete the verification of
goods supplied by a supplier with a week and process payment of supplier’s bill
promptly when the same is in order.
 42

Table 5.1:- Position of disbursement & Achievement Working capital loan.

Financial year Loan disbursement Total Loan Achievement rate

target Achievement

28.00 20.25 75.90%

2014-2015

32.00 28.92 90.38%

2015-2016

35.00 31.80 90.86%

2016-2017

40.00 35.78 89.45%

2017-2018

43.00 46.18 107.40%

2018-2019

b) Source: RAKUB, Mougachi Branch, Rajshahi

5.7 Loan disbursement Scenario, Mougachi Branch, Rajshahi of RAKUB

Table 5.2: Position of Loan disbursement on last five year. (Amount in Lakh TK)

Financial year Loan disbursement Total Loan Achievement rate

target Achievement

125.00 108.96 87.17%

2014-2015

260.00 230.16 88.52%

2015-2016

230.00 206.80 89.91%

2016-2017

235.00 208.19 88.59%

2017-2018
 43

405.00 391.76 97.94%

2018-2019

Source: RAKUB, Mougachi Branch, Rajshahi

* Achievement rate =  100

900
Fig-5.1 Bar
800 Diagram
700 Presentation
600 of Last five
500 Achievement rate years Loan
400 Total Loan Achievement
Loan Disbursement target disbursement
300
(amount in
200
lakh Tk.)
100

Comment: It is evident, from the Above table that 2017-2018 to 2018-2019 Loan
disbursement target are increased gradually .On the other hand Loan achievement is also
 44

increase gradually. But in the financial year 2018-2019 Loan disbursement target
decreased from the previous year but in this year Loan disbursement is not Satisfactory.
Here highest achievement rate in the year (2017-2019) is 97.94% and lowest
achievement rate in the year(2017-2019) is 87.17

5.8 Loan disbursement for 2012-2013.

RAKUB, Mougachi Branch, Rajshahi projected lending target of TK 125 Lakh.

Disbursement of loan during the year amounted to TK 108.96 Lakh (87.17% percent of
the target). For a reform expansion of the loan portfolio the following seven sectors were
given priority in investment planning.
Crops Cash/WCL loans Poverty alleviation. Fishery  Livestock Irrigation
equipment and farm machinery  Agro-based industries

WCL=(Working capital loan)

Table- 5.3 Position of Loan disbursement for the financial year 2014-2015 (Amount in
Lakh TK)

Items 2014-2015
Achievement rate
Target Achievement
Crops 25.00 25.40 101.60%
Cash/WCL loans 30.00 20.90 69.67%
Live stock 40.00 44.61 111.53%
Others 20.00 18.05 90.25%
Total 125.00 108.96 87.17%

Source: RAKUB Mougachi Branch, Rajshahi

Achievement rate =  100
 45

Fig: 5.2 Sector wise disbursement: 2014-2015

2014-2015 Target
10%

Crops
13%
Cash/WCL loans
Live stock
Others
52%
Total
17%

8%

Comment: It
is evident. From the Above table that Live stock is the highest achievement percentage
that is 111.53% and Cash/WCL loans is the lowest achievement percentage, which is

5.9 Loan disbursement of 2015-2016

RAKUB, Mougachi Branch projected a lending target of TK 260 Lakh for the financial
year 2015-2016. Disbursement of loan during the year amounted to TK 230.16 Lakh
88.52 percent of the target).

Table-5.4: Position of disbursement of the financial year 2015-2016.

(Amount in Lakh TK).

2015-2016

Items

Target Achievement Achievement rate

Crops 30.00 26.69 89.87%

Cash/WCL loans 40.00 38.92 97.30%

 46

Fishery 15.00 14.50 97.67

Live stock 110.00 98.27 89.33%

Others 15.00 11.03 73.53%

Total 260.00 230.16 88.52%

Source: RAKUB, Mougachi Branch, Rajshahi

Achievement rate =  100

Fig-5.3: Sector
2015-2016 Target wise

6%
disbursement-
Crops
9% 2015-2016
Cash/WCL loans
3%
Fishery
Live stock
55% Others
23% Total

3%

Comment: It is evident, from the above table that Fishery is the highest achievement
percentage which is 97.67% and Others is the lowest achievement percentage which is
73.53% .Others disbursement items is not considered here
 47

5.10 Loan disbursement for 2016-2017

RAKUB Mougachi Branch, Rajshahi projected a lending target of TK 230.00 Lakh for
the financial year 2016-2017. Disbursement of Loan during the year amounted to TK
206.80 Lakh (89.91 percent of the target).
Table-5.5 Position of disbursement of the financial year 2016-2017.
(Amount in Lakh TK).

2016-2017
Items
Target Achievement Achievement rate
Crops 40.00 34.26 85.65%
Cash/WCL loans 25.00 19.80 79.20%
Poverty Alleviation 50.00 51.20 102.40%
Fishery 8.00 7.75 96.87%
Live stock 100.00 88.00 88.00%
Others 7.00 5.79 82.71%
Total 230.00 206.80 89.91%
Source: RAKUB Mougachi Branch, Rajshahi

* Achievement rate  100

Fig-5.4: Sector wise disbursement-2016-2017

 48

120

100

80

Target
60
Achievement

40

20

0
Crops Cash/WCL Poverty Fishery Live stock Others
loans Alleviation

Comment: It is evident, from the above table that Poverty alleviation is the highest
achievement percentage which is 102.40% and Cash/WCL loans
is the lowest achievement percentage which is 79.20%. Others disbursement items is not
considered here and fishery achievement is
5.11 Loan disbursement for 2017-2018
RAKUB, Mougachi Branch, Rajshahi Projected a lending target of TK 235.00 Lakh for
the financial year 2017-2018. Disbursement of Loan during the year amounted to TK
208.19 Lakh (88.59percent of the target).

Table-5.6: Position of disbursement of the financial year 2017-2018. (Amount in

Lakh TK).

2017-2018
Items
Target Achievement Achievement rate

Crops 30.00 24.46 81.53%

 49

Cash/WCL loans 55.00 60.78 110.50%

SME 40.00 44.50 111.25%

Fishery 25.00 20.00 80.00%

Live stock 70.00 46.85 66.92%

Others 15.00 11.60 77.33%

Total 235.00 208.19 88.59%

Source: RAKUB, Mougachi Branch, Rajshahi

* Achievement rate =  100

Fig-5.5: Sector wise disbursement-2017-2018

80

70

60

50
Target
40
Achievement
30

20

10

0
Crops Cash/WCL SME Fishery Live stock Others
loans

Comment: It is evident. From the above table that SME Loan in the highest achievement
percentage which is 111.25 % and Live stock is the lowest achievement percentage
which 66.92%. Other disbursement item is not considered here.

5.12 Loan disbursement for 2018-2019

 50

RAKUB, Mougachi Branch, Rajshahi Projected a lending target of TK 397Lakh for the
financial year 2018-2019. Disbursement of Loan during the year amounted to TK 391.76
Lakh (98.68percent of the target)

Table-5.7 Position of disbursement of the financial year 2018-2019.

(Amount in Lakh TK).

2018-2019
Items
Target Achievement Achievement rate
Crops 30.00 18.86 62.86%
Cash/WCL loans 67.00 62.87 93.74%
SME 70.00 64 91.43%
Fishery 25.00 20 80.00%
Live stock 100.00 123.18 123.18%
Others 105.00 102.85 97.95%
Total 405.00 391.76 98.68%
Source: RAKUK Mougachi Branch, Rajshahi
* Achievement rate =  100

Fig-5.6: Sector wise disbursement-2018-2019

 51

140

120

100

80
Target
Achievement
60

40

20

0
Crops Cash/WCL SME Fishery Live stock Others
loans

Comment: It is evident. From the above table that Live stock in the highest achievement
percentage which is 123.18 % and Crops is the lowest achievement percentage which
62.86%.
 52

CHAPTER SIX

LOAN RECOVERY PROCEDURE

 53

6.1 Identification Unclassified loan, and Classified loan.

When a bank or other financial institutions distribute a loan to other organization or
people, then after regaining from loanee it is called loan recovery, RAKUB, Mougachi
Branch, Rajshahi, Distributed loan to loanee and recovers this money. RAKUB,
Mougachi Branch, Rajshahi, recover’s loan under two basis-
a. 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 classification of classified loans are as follows:
6.1.1 For short term loan: Short term loan are classified by RAKUB, Mougachi Branch
in three categories-
i) Crop loan and micro credit:
Age of over due, 12 months Irregular.
Age of over due 13-36 months Substandard
Age of over due 36-60 months Doubtful.
Age of over due: Above 60 months Bad.
ii) Cash credit-and working capital
From 6 months but less than 9 months- Substandard.
From 9 mouths but less than 12 months-Doubtful.
From 12 mouths above Bad.
iii) Demand Loan
From 6 months but less than 9 months- Substandard.
From 9 months but less than 12 months- Doubtful.
From 12 months above- Bad.
 54

6.1.2 Medium loan (Up to 5 years):

From 0 months but less than 6 months- Substandard.
From 6 months but less than 12 months- Doubtful.
From 12 months but less than 18 months - Bad.

6.1.3 Long term loan (Above 5 years)

From 0 months but less than 12 months-Substandard.
From 12 months but less than 18 mounts - Doubtful.
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 RAKUB, Mougachi Branch. Two-recovery procedures are-

a) Usual procedure.
b) Legal procedure.
a) Usual procedure: The usual loan recovery procedure is divided into several
steps. They are as follows:

i. Issue of demand notice: Demand notice is issue before on month being due of
out standing loan or installment. It is sent to the borrower.
ii. 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.
iii. 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.
iv. Field recovery: Loan officer recover the recovered loan through I.O. receipt by
visiting the spot and source of the borrower.
 55

v. 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.
vi. Loan Recovery Camp: RAKUB, Mougachi Branch, Rajshahi 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.
vii. 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
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:

i. Unwilling to repay loan although he is financially solvent.

ii. Every effort of loan recovery becomes failure.

6.2.1 Rules of Recovery

RAKUB, Mougachi Branch, Rajshahi, loan recovery from loane in installment system are
as follows:
i. Weekly
ii. Fortnightly
iii. Monthly.

6.2.2 Causes of defaulter:

The loanee cannot loan payment in due time in various causes:
Natural calamity destroy the crops, for this reason the loanee unable to pay loan in due
time.
 56

i. RAKUB, Mougachi Branch cannot take proper step against the loanee for
influential man.
ii. The loanee cannot use the loan in proper.
iii. The loanee do not pay loan in more time.
iv. Lack of loan supervision.
6.2.3 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 to their political influence, credit officers cannot take any
effective measure for loan recovery from them. Sometimes, loan received by them
for a specific
ii) purpose is also diverted to other purposes.

iii) 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 of loan. In
the case of crop failure due to natural disaster like flood, drought, etc., it becomes
really difficult for the farmers to repay loan in time.

iv) 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 after
harvesting of the crop. For that matter, credit does not help in increasing
production rather it is actually spent for non-farm expenses.

v) Shortage of credit personnel- The branch has shortage of manpower to evaluate

credit worthiness of the borrowers, identification of real borrowers, and
supervision and recovery of loan.

vi) Lack of legal action by the banks against defaulters- Neither the Bank
Manager nor the supervisors have any authority and power to take effective
measures or administrative action against defaulters. For that reason, the
defaulters do not bother for requests of loan repayment by them. Moreover, legal
action against defaulters has rarely been taken.
 57

vii) 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
borrowers.

viii) 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 compel them to divert agricultural credit to
consumption and other unproductive purposes which untimately lead to their low
repayment capacity.

ix) ‘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.

x) Accessibility to alternative credit institutions- There are a number of credit

institutions which are working independently. So non-repayment of loan to one
institution does not affect in receiving loan from another institution.

xi) Evaluation of banker’s efficiency- Performance of a bank personnel is judged

on the basis of amount deposited by him, not on the amount of loan recovered.
Further, there is practically no incentive for him to increase recovery amount.

xii) Inadequate training facilities for credit officers and their qualifications- The
persons involved in agricultural credit operations in rural bank branches have
poor educational background with inadequate training. Banking training program
has hardly anything regarding agricultural credit operations which affect loan
recovery performances of the Banks.
 58

CHAPTER SEVEN

FINDINGS, RECOMMENDATIONS &

CONCLUSION
 59

7.1 Findings

The overall performance of credit management of the overall RAKUB is not satisfactory
enough. The following problems have been identified during the internship period:
 Sector-based sanction loan is not properly used.
 Lack of proper communication with loanees by field worker and in inefficient
monitoring by management.
 Most of the poor illiterate farmers are not able to give necessary security to the
bank. As a result they cannot receive loan from the bank, inspire of their necessity
of loan.
 Natural calamities like flood, droughts etc. are obstacles to the recovery function.
 Another problem lies in timely issue of notice.
 Problem is repaid settlement of certificate case.
 As specialized Krishi Unnayan Bank money transfer and other representational
activities are very limited.
 Defective supervision of loan.
 Delay loan distribution.
 Heavy interest on the loan.
 Large amounts of money remain outstanding.
 Problem of classified loan recovery etc.

 Aspects of prospects
RAKUB has some strong sides that are definitely prospective. We can compress the
prospective aspects in the following points:

 Cost of fund is being reduced in recent year.

 Loan disbursement position is excellent.
 RAKUB emphasize on proper supervision and control.
 For training and human resources development, a training institute has
established.
 60

 RAKUB is trying to bring transparency in administration.

 RAKUB installed Local Area Network (LAN) to get instant communication
facilities.
 RAKUB developed its website and stepped into the cyber world.

Now, it is generating profit, although in recent past, it was a loser bank.

7.2 Recommendations

80% people of our total population live in rural area. Most of them are involved in
agro-based area income generating activities. But it is not reality that these people cannot
execute their function for inadequate capital. For this reason need of RAKUB is a must.
Now I would like to suggest in the light of analysis and interpretation to overcome
existing problems:

 There should have proper supervision methods so that allotted loan can be used in
proper objectives. It’s a result it is hope that the loan recovery is possible to make
from seasonal gained wealth.
 For urgent certificate case solution there should have kindly governmental order
so that certificate officers play an important role.
 To reduce the interest rate.
 To utilize the fund properly.
 RAKUB should be more careful for Loan disbursement and recovery.
 Proper training can ensure skilled employee.
 For quick recovery Banks rules and regulations must be applied strictly.
 In case of Loan disbursement selection procedure is to be based on previous
performance.
 It is required to create a bonus system for the employee to recovery the loan etc.
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7.3 Conclusion
I have acquainted with all types of services provided by this bank after approval of
“Internship Program” from the managing director of RAKUB, Rajshahi, I went to
Mougachi Branch, Rajshahi and got much practical knowledge about banking, like-
account opening procedure, token issue, posting and collection of cheque, cash receipt
and payment, remittance, credit management and I have got extra knowledge about that.
Loan default is a regular phenomenon in our country. The RAKUB, Mougachi Branch,
Rajshahi is not the exception in this respect. Indiscriminate disbursement of loan is one of
the main causes of loan default. Moreover, at the time of national election the political
leaders declare that they would abolish the principal amount of loan with interest and
withdraw the certificate cases if they are empowered, as a result, the farmers think that
their loan would be exempted. In this way loan becomes default. Apart from these
impediments, the overall Loan disbursement and recovery position of the branch is net
satisfactory and it reveals that the farmers are becoming able to utilize their loan
effectively and efficiently in case of supervised credit. From the above discussion and
interpretation of the information we can say that RAKUB is a rural based agriculture
financing bank. Because this bank provides loans for all the essentials of agro-based
sector. Therefore if I want to evaluate the branch performance focusing on the various
aspects of the branch it clearly indicates that branch slowly improves its position.
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BIBLIOGRAPHY

1. Alan Bryman & Emma Bell, Business research methods 3 rd edition Oxford
University press 2011.
2. K.K. DEWETT, Modern Economic theory, Ram Nagar, New Delhi 2008.
3. KOTHERY, CR Research Methodology (Second Edition) India wishwa
Prokason.

4. Manager, Second Officer, Senior Officer, Data Entry Operator of RAKUB,

Mougachi Branch.
5. Annual Reports of RAKUB.
6. Deposit Ledger of RAKUB.
7. Loan Ledger of RAKUB.
8. Training Institution Booklet.
9. www.google.com
10. www.rakub.org.bd.
11. www.wikipedia.com.