CHAPTER -1

INTRODUCTION

1
1.1 Introduction:
In the age of modern civilization bank is playing a significant role to keep the
economic development wheel moving. The corporation of the bank is needed in every
economic activity. In fact there is hardly any aspect of development activity where
state inspired or otherwise where bank do not have role to play. The growing trend of
banking services is found significant after the new economic reforms in Bangladesh.
Now-a-days there are fairly well developed banking system with different classes of
banks – public sector banks, foreign banks, private sector banks – both old and new
generation, agriculture banks and co-operative banks with the Bangladesh Bank as
the fountain Head of the system. Today, Banking sector acts as a backbone of
Bangladesh economy which reflects as a supporter during the period of boom and
recession. These banks specially work in the field of promotion of capital
encouragement of entrepreneurship, employment opportunities etc. Due to
globalization, money transfer and other important task is easily done by banks. In
export and import sector most of the institution stake loan from bank and they also
give or take their payment though bank, for opening L/C bank is also needed. For our
agriculture sector farmers take loan from agriculture bank. Not only the giving loan
but also in other task like mortgage, deposit, social task and many other sector bank
has involved. The major portion of bank’s funds is employed by various ways of
loans and advances, which is the most profitable employment its funds so lent. The
job in this department starts from the application made by client; approve the same,
which is disbursed to customers.
Internship program so called work attachment program is essential for every BBA
student, I have an opportunity of spending a period of three months with a reputed
organization where I observed and learned the practice and management. I am very
lucky that Janata Bank Ltd. (JBL) gave me that opportunity to work as an intern. JBL
has countrywide branch network thorough, which they provide a comprehensive
banking service to their customers, which includes wealthy individuals, corporate
clients and financial institutions. Customer’s satisfaction is the top priority of the
bank. Bank in its goal has mentioned that customer’s expectations will be meeting
through innovative financial products and services.
1.2 Origin of the Study:
Bachelor of Business Administration (BBA) program requires three months from 26 th
May to 26th August, 2019.Attachment with an organization followed by a report
assigned by supervisor in the organization. I took the opportunity to do my internship
program in Janata Bank Limited, Corporate Branch, Rangpur. My topic of internship
program is selected by my supervisor Md. Sazib Miyan, Assistant professor,
Department of Finance and Banking, Begum Rokeya University, Rangpur. The report
was prepared on “Loan Disbursement and Recovery System: A Study on Janata Bank
Limited, Corporate Branch, Rangpur”. This study is a brief overview of the daily
activities done during the internship report.
1.3 Objectives of the Study:
1.3.1 Main Objectives:
Internship is a process to achieve practical knowledge about some theoretical lesson.
It’s most important aspect is to acquire knowledge about the real position. As a
practical subject, Management needs some practical knowledge which covers by
internship. In this regard, the main objective of the study is to know about Loan
disbursement and Recovery System, Janata Bank Limited, Corporate Branch,
Rangpur.
1.3.2 Supporting Objectives:
The supporting objectives of this study are as follows:
 Understanding the different commercial banking systems.
 Understanding how a Commercial Bank runs its business operations.
 To know how a commercial Bank earns its profits through loan and advances.
 To know the key functions of Loan disbursement and Recovery System.
 To apply theoretical knowledge into practical area.
 To be familiar with the banking management system.
 To evaluate the performance of Loan disbursement and Recovery System
Banking division.
 To know the banking operational guideline of a bank.
  To measure the customer perception on service quality and satisfaction
towards the Loan disbursement and Recovery System activities.
 To find out basic appraisal of Approval loan.
11. To make some recommendations and conclusion to further the
development of loan disbursement and recovery system of Janata Bank
Limited, Corporate Branch, Rangpur.
1.4 Scope of the Study:
Janata Bank Limited is a large Banking organization. It has several departments. It is not
possible for an internee to cover the entire departments of Janata Bank Limited in his or
her study within the short period of time of internship and they do not get access to all
departments also. The writer is focused on the small medium enterprise loan scheme of
Janata Bank Limited and on its present status, problem and prospects in details. It is not
discussed about the investment scheme, deposit scheme or other scheme in the report.
The study is provided the scopes of knowing the followings:
 The entire concept of SME, House, Car, Line of credit etc.
 Characteristic of SME loan as a sophisticated area of finance.
 Recent performance level of Janata Bank Limited loan disbursement and
Recovery system in the country.
 Problem with Credit approval loan disbursement and Recovery system.
1.5 Methodology of the Study:
This report is based on qualitative type of study. The methodology of this report is
totally different from conventional reports. This report basically emphasizes on the
practical observation. Almost the entire report has been conducted based on practical
observation and short survey.
1.6 Sources of Data Collection:
To prepare the report and find out problem required data is collected from two sources
are below.
1. Primary sources
2. Secondary sources
 The Primary Sources:
  Face-to-face discussion with the relevant officials.
 Practical/ hands-on experience of working at the Credit and Recovery department.
 Study of background material and relevant files provided by the officers
concerned.
 Some question answer over telephone from customers.
 Secondary Sources:
 Annual report of Janata Bank Limited.
 Different text books
 Official web site of Janata Bank Limited and other bank.
 Different manuals of Janata Bank Limited(JB)
 Different websites.
 Bangladesh Bank Report.
 Bangladesh Economic Review.
 Data processing and analysis:
To find out the final result from the collecting data, I am used the following computer
programs:
 Ms word
 Ms Excel
1.7 Significant of the Study:
The prime reason of this study is to become familiar with the practical business world
and to attain practical knowledge about the Banking and Corporate world, which is so
much essential for each and every business student to meet the extreme growing
challenges in job market. It is also known to all of us that there is no alternative of
practical knowledge and the practical knowledge is much more durable and useful
than the theoretical knowledge. This study will help me to get a true picture of the
practical business world, particularly of banking business and also to attain practical
knowledge on the various spheres of banking business. So this study is of paramount
importance for each and every student regardless of his/her study area or discipline.
1.8 Limitation of the Study:
I faced the following obstacles while preparing this report.
  Loan and Advance department of JBL is highly confidential for the employee.
 Sufficient records, publications or website regarding customer services were not
available for Loan and Advance department of JBL.
 The information of Loan and Advance department of JBL not found in a
structured way.
 There were some restrictions to have access to the information confidential by
concerned authority.
 In the study areas, the authorities are not willing to express accurate data
easily for the reason of their confidentiality.
 Relevant data and documents collection were difficult due to the
organization confidentiality.
 Due to bureaucratic environment I can’t contract with the employee properly
for my research.
 Saver Branch is very busy branch. In this branch employees get very little
time to teach theoretical knowledge to the trainee.
 The executives of the bank could not give adequate time because of their work.
 Only three months were not sufficient to collect and understand all the
activities related to the general Banking.
1.9 Literature Review:
Takirambudde, (1981) Bank is such a financial institution which collects money in
current, savings or fixed deposit account; collects cheques as deposits and pays money
from the depositors account through cheques.

S. Bhattacharya and Thakor, (1993) Bank provides service to its clients and in turn
receives perquisites in different forms.

M.J.A Siddikee, S. Parvin, and M.S. Hossain, (2013) Bank is a financial intermediary
institution which deals in loans and advances.

K.J. Hossain, (2018) Bank is an institution which collects idle money temporarily from
the public and lends to other people as per need.
J.G. Hulsmann, (2000) Bank is such an institution which creates money by money
only.
K. Amoako-Gyampah,and M. Acquaah, (2008) The business environment of a
developing economy has a significant impact on the profitability and performance of
the banks.As a result, the whole macroeconomic and business environment has a
significant impact on the profitability and performance of the banks.

K. Paufula, (2003) Commercial banks have a strong appraisal system that allows few
sectors to access credit and carry out little loan monitoring and fellow up and
experiencing lower levels of recovery lending to poor loan portfolio performance
while micro finance though charging high interest rate have been experiencing higher
loan recovery.

A.M. Santomero, (1997) The real risk from credit is the deviation of portfolio
performance from its expected value. Accordingly, Credit risk is diversifiable, but
difficult to eliminate completely. This is particularly true for banks that lend in local
markets and accurate estimates of loss are difficult to obtain.

M. Samsuddoha, (2009) personal installment loan services of foreign commercial

banks are more dynamic, technology oriented and aggressive customer services than
the local commercial bank.

Stiglitz, (1981) Identified five roles of financial institutions: they act as intermediaries
between savers and borrowers; they relive the savers the risk of lending, they
therefore encourage savers to lend without bearing the associated risk; they provide
facilities such as savings deposits which act as savers investment. They therefore
provide investment opportunities for savers while at the same time mobilizing capital
for ultimate investment; they play role of the same time in the financial market by
taking surplus liquidity and providing it when needed; they provide savers with
expects in financial management to manage their future funds.
Ingham (2002) Describe credit as the provision of recourses such as granting a loan
by one party to another party where the second party does not reimburse the first
party immediately, thereby generating a debt, and instead arranges either to repay
those resources of equal value at a later date. The classical definition of risk was
provided by knight (1994) as the situation in which the real risk from credit is the
deviation of portfolio performance from its expected value. Accordingly, Credit risk
is diversifiable, but difficult to eliminate completely.