Letter of Transmittal

December 8, 2019
To
Sonia Munmun
Assistant Professor
Department of Finance
Jagannath University

Subject: Submission of Internship Report “A Comparative Analysis of Non Performing

Loan of State Owned Commercial Banks in Bangladesh: A study on Sonali Bank
Limited”

Dear Madam,
With due respect, I would like to inform you that, it is a great pleasure for me to submit the
internship report on “A Comparative Analysis of Non Performing Loan Sector of State
Owned Commercial Banks in Bangladesh: A study on Sonali Bank Limited”, as it a
fulfillment of partial requirement to achieve EMBA degree under the curriculum of Jagannath
University, Bangladesh.

To prepare this report, I have gathered what I believe to be the most complete information
available on Operating Performance of Sonali Bank Limited and enjoyed working thereon.
The experience I have gathered during this requirement.

So, I fervent requesting and hope that you would be kind enough to accept my report and
oblige thereby.

Sincerely your
_______________
Mazharul Islam

ID: M18130203388

EMBA Program (13th Batch)

Department of Finance

Jagannath University

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 Supervisor’s Declaration

This is to certify that, Mazharul Islam, ID: M18130203388, Department of Finance, is a

regular student of 6th semester (final semester) of EMBA program, Jagannath University. She
has completed an internship report on “A Comparative Analysis of Non Performing Loan
Sector of State Owned Commercial Banks in Bangladesh: A study on Sonali Bank
Limited”, under my supervision which is a fulfillment of partial requirement of obtaining
EMBA Degree.

During this period of internship program, his devotion, sincerity, honesty and modesty were
very much impressive and praise worthy.

I wish his success in all his future endeavors.

…………………
Sonia Munmun
Assistant Professor
Department of Finance
Faculty of Business Studies
Jagannath University.

ii
 Student’s Declaration

I affirmed that the Internship Report “A Comparative Analysis of Non Performing Loan
of State Owned Commercial Banks in Bangladesh: A study on Sonali Bank Limited”,
being submitted for the Internship part of EMBA program is the original work carried out by
me. I further declare that this Internship Report is based on my original work and no part of
this project has been published or submitted to anybody.

Sincerely your

_______________
Mazharul Islam
ID: M18130203388
EMBA Program (13th Batch)
Department of Finance
Jagannath University

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 Acknowledgment

First of all, I am expressing my heartfelt gratitude to the Almighty Allah, the most Merciful
and Benevolent for his special kindness to give me the opportunity to complete the internship
successfully and prepare are internship report timely.

I would like to express my gratitude to the authority of Jagannath University for providing
me such an opportunity. I also give my sincere Gratitude to my honorable supervisor, Sonia
Munmun, Department of Finance, Faculty of Business Studies, Jagannath University for his
continuous guidance, individual suggestion, continuous encouragement and unfailing
enthusiasms throughout the process of completion of this report.

I would like to extend my deepest appreciation to all my faculty member of Department of

Finance, Jagannath University for their individual contribution and cooperation in advancing
this report and hereby completing my EMBA program successfully. I would also like to
express my special thanks to the staffs of the college for their excellent administration
supports.

I am also thankful to the Head of Human Resources Division of Sonali Bank Limited for
giving me the opportunity to do the internship in Sonali Bank Limited. I also thankful my
beloved all employees of Sonali Bank Limited, Motijheel Branch,Dhaka. Working with them
has been a pleasant .

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 Executive Summary

The internship report is designed basis on my theoretical knowledge and Practical experience.
It is designed to have a practical knowledge while passing through the theoretical
understanding. The report is the result of three months internship program with Sonali Bank
Limited. Motijheel Branch, Dhaka.
Smooth and efficient flow of saving-investment process is a prerequisite for the economic
development of a country. Bangladesh, being a developing country and with an
underdeveloped capital market, mainly depends on the intermediary role of commercial
banks for mobilizing internal saving and providing capital to the investor. Thus, it matters
greatly how well our financial sector is functioning. Looking at the performance of our
financial sector for the last decade or so, I observe that our banking sector is heavily
burdened with a high percentage of non-performing loans (NPLs). A Non-performing loan is
a loan that is in default or close to being in default. Many loans become non-performing after
being in default for 90 days, but this can depend on the contract terms (Bangladesh-bank.org,
2015).

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 Table of Content

SL.NO. Particulars Page No.

Letter of Transmittal i
Supervisor’ Declaration ii
Student’s Declaration iii
Acknowledgement iv
Executive summary v
Table of Content
Chapter 1 Introduction 01
1.1 Origin of the Study: 02
1.2 Objectives of the study 02
1.3 Scope of the study 02
1.4 Methodology of the study 02
1.5 Limitations of the study 03
Chapter 2 Overview of Mercantile Bank Limited 04
2.0 Overview of Sonali Bank Limited 05
2.1 Operational Network: 05
2.2 Historical Background of Sonali Bank Limited: 06
2.3 Corporate profile of Sonali Bank Limited: 07
2.4 Vision and Mission of Sonali Bank Limited 07
2.5 Corporate Slogan of the Bank: 08
2.6 Corporate Logo of the Bank: 08
2.7 Core Values: 08
2.8 Organogram of Sonali Bank Limited 09
2.9 Board of Directors 10
2.10 Business Unit of Sonali Bank Limited: 11
2.11 Sources and Uses of Funds 12
2.12 Credit Rating of Sonali Bank Limited 13
Chapter 3 Conceptual Framework Regarding Non-Performing Loan 15
3.0 3.0 Conceptual Framework Regarding Non-Performing Loan 15
3.1 Categories of Loans and Advances 16
3.2 Basis for Loan Classification 17
3.3 Maintenance of Provision 19
Chapter- Loans and Recovery System (Sonali Bank Limited) 21
04

4.0 Loans and Recovery System (Sonali Bank Limited) 22

4.1 Loan Disbursement principles: 22
4.2 Creditworthiness of a borrower: 23
4.3 Credit Risk Assessment: 23
4.4 Process of Loan recovery in short: 26
4.5 Loan Classification- Provisioning: 27
Chapter-05 Loans and Advances of Sonali Bank Limited 28
5.0 Loans and Advances of Sonali Bank Limited (Motijheel Branch) 29
5.1 Loans & Advances: 29
5.2 Preparation of Credit Report: 29

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 5.3 Classification on the basis of time: 29
5.4 Classification of the loan on the basis of objective: 31
5.5 Credit Structuring: 33
5.6 Credit Investigation: 37
5.7 Credit Approval: 38
5.8 Recovery: 38
5.9 Credit Program 39
Chapter-06 Analysis of Non Performing Loansof Sonali Bank Limited 41
6.0 Analysis of Non Performing Loans of Sonali Bank Limited 42
(Motijheel Brunch )
6.1 Non Performing Loans 42
6.2 Provitions for Loans and advances 43
6.3 Net Profit after Tax of Sonali Bank Limited (Motijheel Brunch ) 44
6.4 Regression Analysis 45
6.5 Regression Analysis for Sonali Bank Limited 45
6.6 Causes and Effects of Non Performing Loans 46
6.7 Effect of Non Performing Loans 50
6.8 Comparison of Five Bank Analysis 53
6.9 Regression Analysis: 63
Chapter 7 Findings, Recommendation & Conclusion 69
7.1 Findings 70
7.2 Recommendations 71
7.3 Conclusion 72
Bibliography 73

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 Internship Report
On
A Comparative Analysis of Non Performing Loan of State Owned
Commercial Banks in Bangladesh: A study on Sonali Bank Limited

Submitted To:
Department of Finance
Jagannath University

Supervised By:
Sonia Munmun
Assistant Professor
Department of Finance
Jagannath University.

Submitted By:
Mazharul Islam
ID: M18130203388
EMBA Program (13th Batch)
Department of Finance
Jagannath University

Date of Submission: 8th December 2019

viii