CHAPTER-ONE

1.1 Introduction:
Bangladesh is an agro-based country, essentially are endeavoring for rapid
development of the country. More or less 80 percent people directly or in directly
depend on agriculture for their occupation and live in villages .But it is a matter of
great sorrow that farmers of our country get less facility in agricultural inputs
especially agricultural credit. Due to the lack of credit at proper time they cannot
produce crops at proper efficiency. So the responsibility of rural banks needs to be
increased. Because If current agricultural trends continue, by the year 2020 in
Bangladesh food shortage will increase many times, .The lower calorie intake could
lead to poverty, malnutrition and hunger. In an attempt to alleviate some of these
potential problems, several institutional and non-institutional sources of rural credit
have been made available to Africans. It is hoped that, in the long term, credit will
enable the poor to invest in agricultural and non-agricultural productive assets, to
adopt new technologies and farming methods, and to minimize environmental
degradation. Bangladesh, like other developing countries, has traditionally
experienced low productivity, low income levels, low domestic savings,
unemployment, and malnutrition. The Bangladesh government, through the
Bangladesh Bank , established Rural Banks to channel credit to productive rural
ventures and promote rural development. Rural development is a strategy intended to
improve the economic and social life of the rural poor (World Bank 1975). Rural
credit has been used in Bangladesh to enable the poor to weather shocks without
selling the productive assets the poor need for protection against future shocks (FAO
1994). Lets have a short trip about rural banking.

Economy of Bangladesh is surviving to get rid to get and from the world most
underdevelopment economics. One of the reasons may be its underdevelopment
banking system. Since 1990 Bangladesh government has taken a lot of financial
sector reforming measures for making financial sector as well as making more and
transparent a formulation and implementation of this reform activities have also been
participated by different international organization like world bank. There many
functional institute to control the national economy of the country. Bank is one the
institutions of such kind. The term bank can be defined as a financial institution that
controls monitory flow of a country by means of investment, savings issuing, and loan
and through other financial activities. According to Cayern cross “A bank is financial
intermediate a dealer in loans and debt”. To serve the purpose, the Rajshahi Krishi
Unnayan Bank is working in Bangladesh with a theme of “Excellence in Banking”.
As the consequence, this report focuses on Agricultural Banking System: A driving
force in rural development.

1.2 Scope of the study:

The presentation of the organizational structure and policy of Rajshahi Krishi
Unnayan Bank and investigating the strategies applied by it provide the scope of the
report. The scope of Report is limited to overall description of the company, its
services, and its position in the industry and its rural development analysis. The scope
of the study is limited to organizational setup functions, and performances. Materials
& data used to complete the report are collected from officials of the bank with due
permission.

1.3 Objective of the Study:

The first objective of witting this report is to fulfill the partial requirements of the
BBA program. Other objective of the report is to familiarize with the operation in the
Banking arena including management overview of bank and analysis of banking
operation in different section. More especially the objectives of the study.

 To Identify Challenges in Agriculture Banking.

 To Findout the cause of Loan default.
 To provide Credit facilities for the agricultural development of poor farmers.

1.2 Statement of the Problem:

The Bangladesh government has made several attempts to promote rural development
in an effort to increase the living standard of the people who reside in rural areas.
These projects have failed for several reasons, including the high cost of living for
farmers, and the lack of coordination between government agencies. More farmers in
the rural areas do have problems in dealing with the rural banks or the credit
institutions. Some of these problems include preparing viable business proposals and
collateral securities that the banks do demand. Meanwhile, majority of the farmers are
not well educated in order to plan or write their own business proposals. In addition, it
becomes very difficult for the farmers to secure loans because of the collateral
securities demanded by the banks. Some of the banks even look at the scale of the
farm before granting loans. The most alarming problem that the farmers do face is the
high interest rates or bank charges. It is very difficult these days for the farmers to
borrow money from the rural banks because of the high interest rates. More of the
farmers do even end up by selling their lands or assets in order to pay the loans they
have borrowed. This research will therefore look at the impact of rural banks on
farmers in the rural areas.

1.3 Justification Of The Study:

As Bangladesh is an agro-based-country, agricultural sector and farmers can play an
important role for economic development .Study on agriculture and on farmers are
necessary for the development of this sector. More or less 80 percent people directly
or in directly depend on agriculture for their occupation A major part of our GDP
comes from agriculture. So, productivity in agricultural production should be increase
for the national development. But no systematic study so far has been conducted on
this topic sector. Since bank is an financial institution, it should be establish in rural
areas to serve rural farmers. As a profit making organization banks fear to establish
their branch at rural areas. But it has been that rural banking is indispensable if the
nation is to develop its rural area will development of one’s rural area may not be
realized it the serious of commercial banks are not at the reach of our rural dwellers.
That’s why production possibility of our country is hampered. Again, our country is
not so far advanced in the research on agriculture as compared to other developed
countries. As a result farmers of our country is in backward position. My proposal
will give importance to the impact of rural banking in the life and activities of
farmers. It will provide information about different agent and organization involved in
rural credit .The main objective of the study is to identify the impacts of rural banking
on rural farmers. I have selected Rajshahi district because most of the people in this
area are farmers and I have the locality there. The study will be helpful for policy
makers in formulating policy concerning the development of agriculture and farmers.
So I think my research will effectively identify the key factors that impact farmers in
case rural banking transaction. I also think that, after completion of my research I
shall be able to provide an effective recommendation for rural bank as well as
government to make effective banking system that is helpful for farmers and economy
of Bangladesh.

1.5 Limitation of the study:

The study is constrained with some limitations. Some of these limitations are given
below:

 I have worked only on General banking sector in this bank. I have gathered
enough knowledge on this sector but there are many other departments, where
I could not attend. So could not acquire satisfactory knowledge on banking
sector.
 The employees of Rajshahi Krishi Unnayan Bank remain so much busy with
their own work that it is quiet tough provide time for making the concept clear
in a particular area.
 Every organization has their own secrecy that is not revealed to others. While
collecting data i.e. interviewing the employee, they did not disclose much
information for the sake of the confidentially of the organization.
 Time constraints impede me to make in depth study.
 In many cases, up to date information was not published.
 I had to base on secondary data for preparing this report.
 I am not experienced enough to complete the study because I am a person of
new hand on such study.

1.6 Review of The Literature:

This section of the study seeks to find out what others have written about the subject
matter .This section primarily deals with what other authors have done in regard to
this subject matter. But in Bangladesh few works have been done in regard to this
subject. So I have reviewed most of my literature from foreign authors.

Samuel Kewaku Ebeng (2008) ,Ghana. He conducted a study at Abokobi areas. The
main aim of the study is to identify the impacts of rural banking on rural farmers
.This study examined the impact of rural banking on rural farmers in Ghana. The
convenient sampling procedure was used to select thirty (30) farmers and four
workers at the rural bank studied for the research. Regression analysis was the major
statistical tool used to analyze the data collected from the rural bank. SPSS and
Microsoft Excel software were used for the analysis. From the research, it was found
out that the higher the interest rate, the lower the demand for loans.

Namara Martha (2012) conducted a study in Uganda . This research papers under the
topic “Rural Banking in Uganda: It’s Impact on Rural Farmers”. The main aim of the
study is to identify the impacts of rural banking on rural farmers. This study examined
the impact of rural banking on rural farmers in Uganda. It was found out that all the
farmers do save their monies at the financial institutions. In addition, the major type
of account they do open is a Savings Account. 66.7 percent of the farmers have
applied for a loan before. 33.3 percent did not even attempt to apply for a loan
because of the fear they have for the high interest rates. Some of the requirements
needed to borrow money are a viable business proposal or a business plan, four
guarantors who are salary workers and collateral securities. The reason why the banks
do ask for these items is to protect the interest of the bank and propel customers’
commitment to payment of the loan. In addition, the interest rates are too high for the
small or peasant farmers to cope with. This is because, those who borrowed money
from the bank, found it difficult to pay the loans back. This resulted in the sale of
assets and the collapse of most of these farms.

Sharma (1967) stated that for agricultural development, credit is an important input
which ensures adequate working capital as well as infrastructural development.
Adequate credit increases the agricultural output. Agricultural credit and agricultural
development goes by hand in hand, hence the farmer should be provided adequate and
cheap credit (Dutta and Sundaram, 2005). It is supported by Kanthimathinadhan
(2005) and suggested that without cheap credit is not possible for small and marginal
farmers to survive.

Shetty (2004) and Shivaloganathan suggested in their work that better institutional
credit facilities is highly essential for agricultural growth. Shivaloganathan suggested
multi-agency approach in order to fill gap between supply and need of credit in
agricultural sector.

Pathania(1987) analyzed the utilization of cooperative credit in agricultural sector and

concluded that with the proper utilization of Cooperative credit the farmers can
increase their productivity. It was strongly supported by Sharma (1989), Modi and Rai
(1993), Sathey (1996) and Patnaik (1999). Mamoria and Tripathy (2003) rightly
stated that the agricultural output and efficiency largely depened upon the inputs
applied and methods adopted. B.Subrahmanyam (2005) viewed that Cooperative rural
credit delivery system has been farmer-friendly and has out reached to serve
agriculture.
Uma (2012) conducted a study on impact of rural banking on farmers. The main
objective of the research was to identify the key factors that impact the farmers. After
a effective research she found that the more interest rate is high the low the demand
for credit among the farmers. She suggests to reduce the rate under the control of
farmers.

Ubam (2012) make an study on “Effects of Rural Banking Scheme on the Investment
Potentials of Rural Farmers in Ebonyi State”. The main objective was to find out the
impact of rural banking scheme on investment potential of rural farmers. The study
determined the effect of rural banking scheme on the investment potentials of rural
farmers in Ebonyi State. A total of 218 farmers and 6 banks were selected using
multi-stage random and purposive sampling techniques respectively. Data collected
were analyzed using both descriptive and inferential statistics. Results showed that
most (90.8%) of the respondents accessed loans from NACRDB Ltd and also there
was an increase in the volume of loan disbursed to farmers between 2003 and 2004
and a continuous decrease between 2005 and 2007. Bureaucracy (61.9%), distance to
the bank (55.5%), level of collateral (54.1%), size of farm (49.1%) and credit
worthiness (39.4%) (Table 2) affected significantly the amount of loan demanded by
farmers.

Jinan et al.(2008), conducted a study on the topic: impact of rural development

scheme of islami bank Bangladesh limited on beneficiaries in Mymensingh area. The
present study was conducted to assess the impact of investment provided under “Rural
Development Scheme” (RDS) of the “Islami Bank Bangladesh Limited” (IBBL) on
the basis of using data collected from 25 respondents of each of group of investors,
agriculture and business of the five selected villages in sadar upazila of Mymensingh
district. Total household annual incomes were Tk. 59696 and Tk. 87332 respectively
for the agriculture group and business group. The beneficiaries have increased their
income (61 percent in agriculture sector and 89 percent in business sector) by using
RDS credit. After joining the RDS, there was a remarkable improvement in the living
standard of the participant households.
 Chapter-2
Overview of the Organization

2.1 Introduction

The Name of the institution is Rajshahi Krishi Unnayan Bank (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 and poverty alleviation programs the bank
performs commercial banking functions.

2.2 RAKUB:

Bangladesh is agriculture based country from the very beginning. Most of the
people depend on agriculture. From British period to date farmers of this country were
dominated in various ways. To save the farmers from village money lenders British
Govt. took step in special program in order to disburse the agri-loan to the farmers in
1905.

Therefore, in 1932 India-British Govt. took a step for the socio-economic

development of the small and marginal farmers of Bengal to disburse agri-loan.

The Government of Pakistan period (1952) established a financial institution

named “Agricultural development finance corporation” (ADFC) on account of
disbursement of loan in agricultural sector. Feeling the importance of agri-production
and agri-loan the Pakistani Govt. established another bank namely “Pakistan Krishi
Bank” in 1957. After liberation Bangladesh Govt. denoted the Pakistan Krishi Bank
as Rajshahi Krishi Unnayan Bank (RAKUB) in 1973 according to the Presidential
order 27. As Bangladesh is an agro-based country, the demand for the agri-loan of
Krishi Bank bas been increased highly. To manage agri-loan it become very difficult
for Dhaka based head office of Krishi Bank 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 in 1986 according to the
president’s ordinance no 58 Rajshahi Krishi Unnayan Bank (RAKUB) was
established. From March 15, 1987 RAKUB started its functioning.

2.3 Vision of RAKUB:

Rajshahi Krishi Unnayan Bank believes in togetherness with its customer, in its
march on the road to growth and progress with services. To achieve the desired goal,
there will be pursuit of excellence at all stages with a climate of continuous
improvement, because, Rajshahi Krishi Unnayan Bank believes the line of excellence
is never ending. Bank’s strategic plans and networking will strengthen its competitive
edge over others in rapidly changing competitive environment. Its personalized
quality service to the customers with the trend of constant improvement will be
cornerstone to achieve our operational success.

2.4 Mission of RAKIB:

Rajshahi Krishi Unnayan Bank has chalked out the following corporate
objectives in order to ensure smooth achievement of its goals:
 To be the most caring, customer friendly and service government bank.
 To ensure ethics and transparency in all levels.
 To ensure sustainable growth and establish full value of the
shareholders.
 Above all, to add effective contribution to the national economy.
 Eventually the Bank emphasizes on:
 Providing efficient customer service
 Being trusted repository of customers’ money and their financial adviser
 Making its products superior and rewarding to the customers
 Display team spirit and professionalism
 Sound Capital Base
 Fulfilling its social commitments by expanding its charitable and
humanitarian activities.
2.5 Objectives of Rajshahi Krishi Unnayan Bank:
The primary objective of RAKUB is to provide credit facilities to the farmers for the
development of agriculture and entrepreneurs engaged in development of agro-based
and cottage industries. The Bank is guided in accordance with the policies and
principles of the Government of the Peoples Republic of Bangladesh.

The Bank started commercial functioning since 1977 to generate more loanable fund
from the idle rural and urban savings and invest them for the betterment of our
economy. For smooth operation, as a part of internal control and compliance system.

2.6 Functions of RAKUB:

As the largest development partner in the Northwest region, RAKUB aims at

overall development of farmers and all the sectors and sub-sectors of agriculture in
this region. Besides, catering to agricultural credit financing, agro-business and agro-
based industries and poverty alleviation programs the bank performs ancillary
banking functions.

A seven-member Board of Directors is entrusted with the responsibility of

policy formulation for promotion of growth in agriculture leading to economic
development of the country through agricultural credit support. The government
appoints all the directors of the board. Also an executive committee constituted by the
Chairman and two other directors including the Managing Director is there for taking
emergency decisions. The Managing Director is the chief executive of the Bank.

2.7 Organizational Structure:

Rajshahi Krishi Unnayan Bank (RAKUB) was established by the President's

Ordinance No. 58 of 1986 (later replaced by 'Rajshahi Krishi Unnayan Bank Act,
2014'). It took over the operations of 253 branches of Bangladesh Krishi Bank of the
Rajshahi administrative division (presently Rajshahi and Rangpur divisions) and then
started functioning on March 15, 1987. There are 383 branches of the bank including
LPO and Dhaka branch among which 194 are in Rajshahi and 187 in Rangpur
division. Number of rural branches are 333 while urban 50. RAKUB is the only
specialized nationalized bank having its head office outside Dhaka, i.e. at Rajshahi.
2.8 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.
A) HEAD OFFICE:
The head office of RAKUB is located at 280 km far from capital city Dhaka,
North-west divisional city Rajshahi. All operation is control by head office. The
managing Director is assisted by the three following functional divisions. Each
headed by a General Manager:
 Administration and Accounts Division.
 Operation Division.

The three divisions further divided into 12 departments are as follows:

Administration and Accounts Department

 Personnel Department
 Common Services Department
 Central Accounts Department-I
 Central Accounts Department-II
Operation Division:
 Branches control Department.
 Loans and Advances Department-I
 Loans and Advances Department-II
 Research and Development Department.
 Budget and Expenditure Control Department.
Audit and Recovery Division:
 Loan Recovery Department-I
 Loan Recovery Department-II
 Audit and Inspection Department
For each division there is a general. Who is the head of that division?
B) Branch Network:
Table-1Region wise total branches (Up to June 2022)

Rajshahi 26
Naogaon 26
Natore 20
Chapai Nawabgonj 16
Bogra (North) 18
Bogra (South) 18
Pabna 22
Jaipurhat 15
Rangpur 25
Gaibandha 23
Nilphamari 20
Kurrigram 17
Lalmonirhat 17
Dinajpur (North) 18
Dinajpur (South) 17
Thakurgoan 18
Panchagarh 1
Dhaka 1
L.P.O (Rajshahi) 383

C) Supervision and control:

The zonal offices are headed by Deputy General Managers while Regional
offices by Assistant General Managers.

D) Vigilance:
The functions of the Audit offices are to keep the branches regular. The Audit
offices accomplish auditing of the branches on half-yearly basis Regional Audit
offices are directly controlled by the audit and Inspection Department of the head
office and by no way influenced by the local Regional on zonal offices.

E) 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.

2.9 Capital and it sources:

Establishment : 15 March 1987
Autdorized Capital : Tk. 1000 Crore
Paid up Capital : Tk. 825 Crore
Total No. of Branches : 383
Rajshahi & Rangpur
Region :
Divisions
Area : 34,513 Square KM
District : 16
Upazila (administrative tier in between district &
: 125
union)
Municipality : 87
Union (lowest administrative tier) : 1100
Total Population : 3.40 Crore
2.10 Employee summary (up to may- 2021):

Designation Authorized Exist

1.Managing Directors (MD) 01 01

2.Deputy Managing Directors (DMD) 01 01

3.General Manager (GM) 03 03

4. Deputy General Manager(DGM) 25 16

5.Assistant general Manager(AGM) 48 32

6.Senior Principal officer(SPO) 120 90

7.Principal officer(PO) 319 235

8.Senior officer(SO) 594 469

9.Officer 897 770

Total Officer 2008 1617

10.Other Employee 2163 1970

Total 4171 3587

Source: Personnel Department of RAKUB.

2.11. Organizational structure of RAKUB in Binodpur Branch Rajshahi:

Manager

Second Officer

Officer

Supervisor

Casher

Peon

2.12 Accounting procedure:

The main objectives of maintaining the accounting procedure of RAKUB Binodpur

Branch Rajshahi are to achieve the following goals.
1. To record day-to-day transaction
2. To reflect the financial position periodically
3. To supply necessary information for monitoring the bank activities
In this cash transaction, other transaction are recorded in the books of accounts under
the double entry system. In this bank, generally two types of books are used.
A. Control Books:
It represents the immediate accounting picture of the bank at any time and it includes-
1.Cash Scroll Book
2.Clean Cash Book
3.General Ledger Abstract
4.Supplementary ledger Book
B. Subsidiary Books:
Subsidiary Books are used to affiance the total particulars in General ledger and it
includes
1.Saving account ledger
2.Fixed deposit ledger
3.Income ledger
4.Expenses ledger
5.The general ledger of RAKUB,
Products and Services of Rajshahi Krishi Unnayan Bank:

 Letter of Credit (LC)

 Bill purchase/Discount
 Export Credit (Pre Shipment & Post Shipment)
 Remittance (Inward, Outward)
 Collection, Purchase and Sale of Foreign Currency and Travelers Cheques.
 Maintenance of Student education file.
 Guarantees in Foreign Currency.
 Foreign Currency accounts.
 NFCD (Non-Resident Foreign Currency Deposit) A/C.
 RFCD (Resident Foreign Currency Deposit) A/C
 Forward Contracts
 Correspondent Banking Relations.
 Taka Drawing Arrangement
 Dealing Room

Import Finance
RAKUB deals in all kinds of Documentary Credit operation under different credit Lines/
Aid/Loan/Grants/cash etc.
RAKUB finances the following import sectors of the economy:

 All kinds of Capital Machineries for the development of economy giving

special emphasis on Agro based industries/Ready made Garments industries
and imports substitute industries.
  Import of all kinds of industrial Raw Materials for the industries. Any other
improved items and specially items directed by the government.

Figure: International trade

(b) Export Finance
RAKUB supports exports of any kind giving special emphasis on the following
financial assistance to all kinds of export oriented industries and other products
especially export of fruits & vegetables
 Offers confessional rate of interest for Export Finance.
 Does all activities in exports, such as:
 Export bill negotiation /Purchase/Collection.
 Helps the export firms for getting export incentive.
 Financial support for materializing the export order.
(c) Foreign Remittance:
RAKUB plays an important role in the field of foreign remittances. Most of the
RAKUB branches (942) located at the remote areas of rural Bangladesh. The
Bangladeshi people working abroad and their relatives in the country maintain bank
accounts with RAKUB branches. Bank has an arrangement to allow Bangladeshi
people working abroad to send their foreign currencies to their relatives at home.
Necessary steps have been taken to widen this sector so that the Bank can serve more
people and collect more remittance

Figure: Foreign Remittance

(d) S.W.I.F.T. (Society for Worldwide Interbank Financial
Telecommunication):
Rajshahi Krishi Unnayan Bank is now a proud member of SWIFT. It is connected
with modern international financial telecommunication system. L/C
advising/transferring and quick transfers of remittances as well as other financial
correspondences have become very easy & speedy with the installation of SWIFT.
Rajshahi Krishi Unnayan Bank's SWIFT BIC IS BANGLADESH.

e) Dealing Room
RAKUB is actively considering the introduction of treasury operation i.e. dealing
room operation in its International Department, Head Office, Dhaka to transact
foreign currency trading in Inter Bank FC market both at home and abroad.

(f) Foreign exchanges activities

RAKUB extends its service to the travelers by endorsement of cash FC/TC in

passports.
RAKUB renders Hajj services to the pilgrims which is 3rd highest in the banking
sector.
RAKUB deals in spot and forward sale and purchase of foreign currency in local
inter-bank market

Figure: Foreign exchanges activities

2.13 Classifications of RAKUB‟s credit disbursement:
The total credit disbursement of RAKUB can be classified into three major groups
these are:
1. Short term loan
2. Medium term loan
3. And long term loan
But for the purpose of making diversification modernized as and marketing oriented
of agriculture and above all for the improvement of living standard of the rural
people RAKUB has determined seven crucial sector for the loan disbursement
considering their possibility and labor intensive. These are shown below:

 Crops
 Fisheries
 Live stock
 Agricultural product & equipment
 Agro based industries
 Micro credit
 Chapter-3
Activities of RAKUB
3.1 Introduction:
RAKUB is the largest source of agricultural credit in Rajshahi division.
Besides supplying agricultural credit, the bank extends its credit facilities to
employment and income-generating agro based industrial and commercial activities,
diversified of farm rural economic activities and poverty alleviating programs, a part
from these, the bank. RAKUB has been playing an active role in the rural economy
for serving the purpose of achieving cherished goal of national economic
development through agriculture development.

3.2 The main activities of RAKUB:

a) Disbursement of Loans:

 Major item of loan disbursement:

A. Crops loan
B. Live stock
C. Agro based industrial loan
D. Fishery
E. Continuous
F. Poverty alleviation
G. Irrigation equipment & Firm machinery
H. Cottage Industry
Interest on credit:
Particular‟s Rates (in %)

Crops 8%

Exports 9%

Working Capital 10%

Commercial 14%

Others of Firm 14%

Cottage industry 12%

b) Recovery of Loan:

When a bank or other financial institutions distribute a loan to other

organization or people, then after regaining from lonee it is called loan recovery,
RAKUB, Binodpur Branch Rajshahi, Distributed loan to loanee and recovers this
money. RAKUB, Binodpur Branch Rajshahi, recover’s loan under two basis-
a. Unclassified loan, and
b. Classified loan

c) Deposit mobilization:
Deposit is the most important source of ready to invest fund. The Bank
initiated a special drive for collecting low cost deposit. A significant number of
people in northwestern Region are under employed with near

To zero marginal income. Out of total 349 branches 208 are located at union
level. As such, the bank continued small savings schemes suitable for this section of
people and tried hard for hunting institutional deposits.

3.3 Like other banks, the general banking activities of RAKUB are given below:
3.3.1 Opening an account:
To its customers RAKUB gives opportunity to open an account like other banks. The
following things are considered to open an account:
 Observing whether the application form is properly filled in.
 Getting an preserving specimen signature of a customer
 Taking initial deposit in cash.

Special types of account: Basically a person whose age is 18 years or more can be
competent to open an account with the bank. But there are some special types of
account holder like joint account, minor account illiterate person account, blind
person account, Deaf and dumb account etc.
Who cannot open an account: The following parties can never open an account with
the bank-
 The person who is still bankrupt.
  The person whose mind is unsound.
 The person who is totally mad.
3.3.2 Different Types of Accounts:
The other accounts that RAKUB allows opening for its customer are given
below:
1. Current account: From this account any amount is deposited and drawn in
any time of office hours. There is no interest on current account. Loan is
sanctioned based on it. This account is opened with a recommendation
Tk.1000. Total amount of current A/C in Binodpur Branch Rajshahi of
RAKUB is Tk 7050000
2. Savings Account: Savings accounts opened for the customers except companies or
firm and co-operative society. Money is withdrawn 2 times a week and
deposited any time of office hours from this accounts Tk.50 is required to
open this account. There is 4% interest on saving account. Total amount of
saving A/C in Binodpur Branch Rajshahi of RAKUB is Tk.9388000
3. Short Term Deposit Account: Short- term deposit account is opened for
company/firm/government administrative body. This account is operated like
current account. If 7 days written notice is placed to the bank in every
withdraw, then the bank gives 2.5% interest on S.T.D. In the present time the
total amount of STD A/C in Binodpur Branch Rajshahi of RAKUB is
Tk.3680000

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

opportunity for getting an attractive amount at the end of the specified term. The size
of monthly installments is Tk.100, Tk.200, Tk.300, Tk.400 and Tk.500 which is to be
deposited within 1st week of a month. This scheme is not operating in RAKUB rather
the old account is continuing. There is 15% interest of D.P.S.

5. RAKUB pension saving Scheme (RPS): RPS is a special produce of this bank.
This Scheme is same as D.P.S but its interest rate is lower than D.P.S.
In present time the total amount under this Scheme is Tk.3866000
6. Fixed Deposit Receipt (FDR): This is a deposit Scheme where an instrument
is issued for the full amount payable after a specified period against deposit of
a certain amount.

Duration of various FDR& rates of interest against them are as follows:

Duration Rate of Interest
3 months & above but below 6 months 6.00%
6 months & above but below 1 year 6.25%
1 year & above but below 2 years 6.50%
2 years & above 7.00%
Total amount of FDR in Binodpur Branch Rajshahi of RAKUB is Tk.3372000
(27.02.05)

3.3.3 Remittance:
The Binodpur Branch Rajshahi of RAKUB transfers money from one branch to
another in following ways-

Demand Draft (DD):

DD is the most popular instrument of remitting fund. It is an order to pay money
drawn by one branch Payable to another branch on demand. DD is issued in against at
Tk.15 commission up to Tk.1000. When the limit exceed commission amount
increased in a certain rate.

Mail Transfer (MT):

This branch transfers money another branch of this bank in another place in
against of commission money of this security paper has to be transferred to an account
of another branch. Here the bank commission is Tk.1.5 per Tk.1000 and the postal
charge is Tk.10.

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.

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.
3.3.4 Pure or Clean Cash Book.

When the vouchers are closed the accounts are written in the pure cashbooks.
It may be either deposit or expense. The transactions of each bead, which have been
occurred, are written in the specific age of the cashbook under a specific head and
debit and credit total are determine. Thereafter, total of the each head is written in the
right page of the clean pass book. But in the cash book the closing balance of the
previous day is shown as initial balance for the next day. Then the closing balance is
determined for that day.

3.3.5 General Ledger:

The transaction is carried out to the general ledger to find out the mistake of
the clean cashbook. General ledger is not carried out in different name but come in
main head. Ledger credit and debit balance must be equal.

3.3.6 General Ledger Abstract:

The debit and credit balance of various accounts makes general ledger
abstract. The debit and credit balance of the accounts are maintained in the abstract in
the debit and credit side respectively. Since the double entry system is maintained
therefore its debit and credit balance are equal.

3.3.7 Voucher:
Voucher is a kind of document, which as a proof of accuracy Binodpur Branch
Rajshahi of RAKUB treats it as a journal. The following vouches are used in
RAKUB-
  Debit Voucher: It's used for expenditure. Its color is white.
 Credit Voucher: It's used for received. Its color is green.
 Transfer Voucher: This voucher is used to transfer taka. from one
Account to another in case of inter banking, its color is yellow.
 Debit and credit voucher is used to file or in books.
 Transfer voucher is used in the bank.
3.3.8 Cash scroll:
At first those transactions are maintained in this cash scroll by the authorized officer,
which occurred every day. Thereafter the cashier maintained those transactions in
daily transaction register. For this official member are followed.
3.3.9 Loan and advance:
RAKUB was established mainly on the objective of the development of agriculture.
But RAKUB not only delivers agricultural loan but also disburses different loan, such
as:
A) Agriculture credit:
RAKUB is a specialized bank and its main objective is to improve the agricultural
production. For this reason it provides basically agricultural credit.
B) Cash Credit:
It is a commons lending with this arrangement the drawn is allowed to borrow money
up to a certain limit. But the borrower is not required to withdraw the sanctioned
amount at once.
He can draw money when he requires and also can put back money onetime. Interest
is charged only the amount withdrawn not on the total amount sanctioned.
C) Advance against deposit:
This bank provides credit to the depositors under the following program-
 Advance against fixed deposit
 Deposit pension scheme
 Short term over draft
The bank imposes some conditions in giving those loans. The required conditions are:
 Land ownership
 Fixed margin
 Necessary deposit etc.
3.4 Special Programs:
Some special programs introduced in the previous years continued in 2019-2022.
Those programs and some area based special programs undertaken by the bank cited
below.
 Expanded Maize Cultivation
 Nursery for Medicinal plant and orchid
 RAKUB Milk village
 Small scale poultry

3.4.1 Poverty Alleviation Program:

 RAKUB self help credit program (RSCP)
 Potato seeds production program
 Cotton Production program
 Fresh water Shrimp culture
 Fisheries &Live stock Department RAKUB joint program
 Poverty alleviation Through Goat rearing program
 Credit for small scale Tea plantation project
3.4.2 Foreign Aided Projects:
Two foreign aided credit programs namely SECP (Small Enterprises
Development Credit Project) & NCDP(North- West Crop Diversification Project)
were introduced during the year 2000-2001.
3.5 Some other activities are:
 Long-term fund management.
 Human Resource Development Program.
o Main objectives of HRD program were-
 Enhancing self-motivation of the bank employees.
 Creating congenial working atmosphere
 Increasing professional skill through effective training
programs
 Introducing need-based and output oriented training.
 Chapter-Four: Methodology

4.1 METHODOLOGY:

This study has been directed through analyzing information and data from secondary
materials. Secondary sources of data have been use and analyzed due to availability
and Accessibility. We have collected some secondary information which is already
published by the bank authority, various annual reports, statistical reports, books,
magzines, websites of Rajshahi Krishi Unnayan Bank, World Bank, various kinds of
journal and articles, other websites. etc.

4.2 THE RESEARCH DESIGN :

The research design used is survey design. Research design is the specific data
analysis techniques or methods that the researcher intends to use. The survey design
involves the collection and analysis of data, and finding out the answers concerning
the current status of the subject. Also, it is a study of variables in their natural setting
or under usual circumstances. This comprises observation of facts, formulation of
hypothesis, collection and classification of data, interpretation of data, formulation of
theories, application of facts and predictions. Since human behavior is difficult and
cannot be predicted, it makes the results of the research at times not to be applicable
to the population.

4.3 SELECTION OF THE STUDY AREA:

In the line of the objectives of the study, Rajshahi Binodpur Branch, Rajshahi will be
selected for conducting the research

4.4 POPULATION :

The target population is farmers in Rajshahi district, specifically, experienced farmers

from the area. I shall provide some questionnaires to Bank in that locality .
4.5 INSTRUMENT :

A questionnaire is the major instrument that will be used to collect the data.ie primary
data. The questionnaire will be used in order to get a standard form of answers or
response.

4.6 DATA COLLECTION PROCEDURE :

After finding the data, it has been checked and verified to make sure that the answer
to each objective of the study. After that data have been tabulated and analyzed using
descriptive statistics. The data sources are mentioned in each table and other
descriptive statistics mentioned in this study. Moreover, this study has been followed
the characteristics of descriptive research in its nature because we have descriptively
analyzed our data.

4.7 DATA ANALYSIS :

Frequencies, percentages, bar graphs, regression analysis and correlation coefficient

will be used to analyze the data. SPSS software and Microsoft Excel will be used for
all the analysis.

4.8 EXPECRED OUTPUT:

If I accomplish the above items of this research successfully then I will expect the
following results may come from my study-

 Research report
 Policy recommendations
 Publication as an article in the journal.
 Chapter-Five
RESULTS AND DISCUSSION

5.1 Definition of Loan

Institutions and individuals face some situation when they feel the necessity of
collection, achieving or using something for which they may not have adequate
purchasing power. On the other hand there are individuals and institutions that have
surplus fund after fulfilling both of their recurring and investment requirements. By
the way of deposit banks take these surplus funds in their custody. Banks again transfer
these for a specific duration in exchange of some interest or profit to those who don‟t
have required purchasing power but have the capacity to utilize borrowed funds for
some productive and profitable purpose or projects. Here temporary means that the
user will return the money after some time as per the terms of the contracts.

In banking area many types of financial facilities are extended to the clients with the
expectation of getting the dame returned along with interest. This provided
“Purchasing Power” can be termed as loan, credit or advance. Banks can provide
loans in different ways. Loan can be in cash or in non-cash form. If any client takes
advantage from bank by using the bank‟s goodwill through making a contract
this will be treated as “Goodwill Loan” of the bank.

According to the dictionary of Banking & Finance, loan can be defined as “The
lending of a sum of money by a lender to a borrower to be repaid with a certain
amount of interest. Timothy W Koch defines loan as “Formal contract between a
bank and borrower to provide a fixed amount of credit for a specific period of time.

From above discussion we can say that as profit oriented business organization if
bank gives its resources temporarily under certain conditions and for a specific
duration it will be called loan.
2.2 Classification of bank loan
a) Classification based on security
1. Unsecured loans: Banks provides loans without any type of collateral
to the reliable person or institutions as clients having profound
goodwill, excellent track records or sometimes to the very poor
clients.

2. Partly secured loans: If the amount of loans is not fully secured

rather partial amount of collateral is provided to cover the loan
sanctioned, it is called partially secured loans.

3. Fully secured loans: secured loans means any which is guaranteed by

the borrower giving valuable property as security. If the loan is
given by taking the security of the amount exceeding the amount of
security is provided to cover the loan sanctioned or just equal to the
amount of loan it is called fully secured loan.

b) Classification based on term:

1. Short term loans: This loan is sanctioned for less than one year.
Short term loan can be two types. One is loan provided for
immediate use and payable on demand and another loan is payable
on short notice.

2. Mid-term loans: usually loans with the maturity of one year to five years are
called mid term loans.

3. Long term loans: loan with the maturity of more than five years are called long
term loans.

c) classified based on users :

1. Individual loans:

a) Consumers loans: Banks provide for durable goods appliances and

commodities like Freeze, TV , Computer, Car, Furniture.
b) Housing Loan: this includes loan to the fixed or low income people for housing
purpose. This loan is usually intermediate term and long term.
c) Education and other loan: some of the bank also provide loan for the society in
order to meet their educational and other needs after being sure about the repayment.

2. Industry loans:

a) Working capital loan: This type of loan is given to the business or industry to
provide capital required for purchasing raw materials, paying wages, and fuel
expenses.

b) Fixed capital loan: Huge amount of capital is required for procurement and
replacement of machinery and equipments.

3. Loan for business persons:

a) Working capital loan: for maintaining day to day expenses business persons need
working capital. By providing working capital loans banks help to solve the
working capital needs of businessman.

b) Export import loans: banks also help in export import firms by issuing L/C, bill
of credits, discounting, direct loans.

4. Loans for farmers:

a) Corps loan: for buying seeds, cows, fertilizers farmers need money. Banks
provide them with crops loan for this purposes.

b) Non crops loan: farmers also need money for poultry, fisheries, agro
business and other purposes. Banks provide them with non crops.

c) Farming equipment loans: to purchase farming equipment banks also

provide loans to farmers. Farming equipments may include power tillers,
tractors etc.

5. Loan for landless people:

a) Small business loan: bank may provide loans to landless people to
establish income generating micro enterprise.
 b) Housing loan: bank may issue housing loan to those who have small piece of
land but
don‟t have any recourse to build a house just to protect them from rains and heavy sun
shine.

c) Medical loan: loans may be given to landless people also for medical
purposes.

5.3 Sources of loan able fund

Banking is a business which runs on the confidence and trust of people. This
confidence is enjoyed by banks enables them to mobilize funds from the various
categories of sources of funds comprising these :

a) Deposit from the public in various accounts.

b) Undistributed profit.
c) Borrowing from head office and other branches of RAKUB.

5.4 Loan disbursement

Loan disbursement is the procedure of distribution of loan among the various
interested individual. The strong base of RAKUB, Binodpur Branch Rajshahi is
totally dependent on sound investment because interest on loan is the main source
of income. That is why qualitative loan disbursement is much emphasized here as
well as it leads to increase in total income of the bank. The bank authority sanction
loan in a compliance with the rules and regulations determined by the highest
decision making authority of the bank.

5.5 Features of borrowers

Borrowers selection is an important factor in disbursement of loan. The mentioned
factors are required to be considered in selection of a borrower.
a) Borrower must be matured.
b) Borrower must have the ability to use the loan in a productive way.
c) Borrower must not be loan defaulter.
d) For co- operative society it must be registered.
e) Borrower must not have any mental disorder.
5.5 Procedure of Loan Recovery
The main responsibility of bank manager and loan manager is to recover the
outstanding loans. Binodpur Branch Rajshahi uses the following procedures to
recover the loans.
a) Conventional tools .
b) Legal tools.
Conventional tools: The usual loan recovery procedure is divided into several steps,
they are as follows:
1. Issue of demand notice: Demand notice is issued to the borrower before one
month being due of outstanding loan or installment.
2. Legal Notice: If the borrower doesn‟t repay his respective loan and interest
after maturity, being received the demand notice with acknowledgement by
post to the borrower then the bank should send legal notice.
3. Special Notice: Besides the above two notices a special notice with the
signature of UNO is sent to the respective borrower to keep mental pressure on
him for repayment.
4. Field Recovery :Loan officer recover the loan through I.O receipt by visiting the
spot and source of the borrower.
5. Personal Communication: If the borrower fails to pay his loan installment, the
loan officer communicates with the respected person of that area to give mental
pressure to repay the loan.
6. Loan Recovery Camp: sometimes bank made camp to recover loans from
different areas. In this case the manager and the loan officer present the camp and
communicate with the borrower.
7. Loan recover with help of interest exemption: The loan amount that has
become double of principal and which is not possible to recover with the help of
legal action then those loan can be recovered by exempting interest.
Legal Tools : When usual procedure for recovering loan becomes failed then a
case is filed against the borrower. The case is generally filed for the following
causes:
a) Unwilling to repay the loan although he is financially solvent.
b) Every effort of loan recovery becomes failure.
5.6 Procedure of Loan Recovery
The main responsibility of bank manager and loan officer is to recover the
outstanding loan, Binodpur Branch Rajshahi, RAKUB uses the following two
procedures with a view to recovering loan;

a) Conventional tools/techniques
b) Legal tools/ techniques.
a) Conventional tools/ techniques: The usual loan recovery procedure is divided into
several steps. They are as follows:
1. Issue of Demand Notice: Demand notice is issued to the borrower before one
month being due of outstanding loan or installment.
2. Legal Notice: If the borrower does not repay their respective loan and interest
after maturity, being received the demand notice registered with acknowledgement by
post to the borrower, then the bank should send legal notice to him.
3. Special Notice: Beside the above two notice a special notice with the signature of
DC, UNO is sent to the respective borrower to keep mental pressure on him for
repaying the loan.
4. Field Recovery: Loan officer recover the loan through I.O receipt by visiting the
spot and source of the borrower.
5. Personal communication: If the borrower fails to repay his loan installment, the
loan officer communicates with the respected persons of that area to give mental
pressure to the borrower so that the repays his respective loan.
6. Loan Recovery camp: RAKUB, Binodpur Branch Rajshahi made camp in various
areas for the recovery of loan. In this case, the manager and other officers were
present in the camp and communicate with borrowers. They purpose them morally
and tried to encourage them to repay their loan.
7. Loan recovery with the help of interest exemption: The loan amount which
becomes more than double of principle amount 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 tools/ techniques: When usual procedure for recovering loan becomes
failed, then a case is filed against the borrower. The case is generally filed for the
following causes;
i. Unwilling to repay loan although he is financially solvent.
ii. Every effort of loan recovery becomes failure.
5.7 Disturbing Factors for Loan Recovery
RAKUB is the largest partner of agricultural development in Rajshahi & Rangpur
division. But the bank incurred losses every year because of low recovery of loan.
The disturbing factors for loan recovery are given below:
1. Negative attitudes of the local elites to repay Loan: In most of the cases, the
influential persons due to their political and social power are not interested to
repay the loan. Because of their political influence, credit officers cannot take
any effective measure for loan recovery from them. Sometimes, loan revived
by them for a specific purpose is also diverted to other purposes.
2. 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 crops, they failed due to natural disaster like flood,
drought etc. It makes really difficult for the farmers to repay loan in time.
3. 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 spend for non-farm activities.
4. 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
5. Lack of legal action by the banks against defaulters: Neither the bank
manager nor the supervisor has any authority and power to take effective
measures or administrative action against defaulters. For that reason, the
defaulters do not care the requests of loan repayment. Moreover, legal action
against defaulters has rarely been taken.
6. 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.
7. Inability of the farmers to repay loan: Farmers need credit not only for
agricultural production but also for consumption for their survival, particularly
for the marginal farmers. This sometimes complex them to divert agricultural
credit to consumption and other unproductive which ultimately lead to the low
repayment
8. „Benami‟ loan received particularly by U.P chairman/ Member: Sometimes
the rural influential, particularly Union Parishad Chairman and Member
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.
9. 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.
10. Evaluation of bankers‟ efficiency: Performance of bank personnel is
judged on the basis of the amount of deposit, not on the amount of loan
recovered. Further, there is practically no incentive for them to increase
recovery.
5.8 Loan Disbursement
It is known that the strong base of RAKUB, Binodpur Branch Rajshahi, Rangpur is
totally dependent on sound investment because 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.

The bank has projected a lending target of Tk.3510000000 for the financial year
2016-2017. We want to get more profit, we have to ensure loan disbursement along
with hand some quality, it depends on the following step:

1. Efficient and motivated manpower: Efficient and motivated manpower is

main force to achieve the goal of the institution without which successful
implementation of any program cannot be ensure. It is great assets of
organization.

2. Suitable plan: There should be a realize plan for glorious output, on the other
hand, activities the goal of the institution without planning will bring less
output even with hard labor.

3. Selection of genuine borrower: Borrower selection is the vital part of loan

disbursement process. If one fails to select the borrower property total efforts
related to disbursement of loan will go in vain undoubtedly. So genuine
borrower selection
should be ensured first for quality loan disbursement.

4. Spot investigation: A distinct picture of a borrower are found from spot

investigation, it is just like on X-ray report of a borrower on which correct
decisions is taken regarding sanction and disbursement of loan.

6. Prompt service: If prompt services are not given to the borrower they will be
dissatisfied on there is no alternative of prompt service for attaining success in
the bank business.
7. Utilization: Without proper utilization of loan amount, loanee will loss his
capacity to repay the loan in due time, that is why strong monitoring should be
ensured for proper utilization of loan.
 5.9 Sectors Wise Loans Disbursement in 2019-2021
(Amount in Thousand)
Amount Percentage
Sectors 2022 2021 2020 2019 (%)
Crop 2643 1577 664 1170 2.26
Fisheries 2300 0 0 0 0.86
Animal Resources 11005 6990 6590 10394 13.10
Agro-based Industries 9000 11100 26900 58200 39.41
CMSME 35590 29900 10465 7050 31.09
Poverty Alleviation 400 147 49 0 0.22
Others 17570 4105 8397 4696 13.02
Total 78508 53819 53065 81510 100%

Table 4.1: Sector wise Loans Disbursement in 2019-2022

Figure 4.1: Sector wise Loans Disbursement in 2019-2022

Interpretation: RAKUB provides the highest amount of Loan 39.41% of their total
Loan amount in Agro-based Industry. They also provide 31.09% in CMSME, 13.10%
in Animal Resources and others 13.02.RAKUB provides the maximum portion of
loan in their total loan amount in the Agro-based Industry.
 5.10 Total Loan Recovery
(Amount in Thousand)
Amount Percentage
Sectors 2022 2021 2020 2019 (%)
Crop 2063 365 805 1726 1.02
Fisheries 0 0 0 0 0
Animal Resources 20651 22634 24323 38930 22.07
Agro-based Industries 14130 4946 28066 42149 18.49
CMSME 127467 118639 4438 10632 54.10
Poverty Alleviation 0 0 0 0 0
Others 6079 4930 6118 3629 4.29
Total 170390 151514 63750 97066 100%
Table 4.2: Total Loan Recovery in 2019-2022

Figure 4.2: Total Loan Recovery in 2019-2022

Interpretation: From the above table it is shown that CMSME loans recovery is
the highest achievement amount of TK 261176, which 54.10% of total
achievement and Fisheries & Poverty Alleviation is the lowest achievement, which
is 0.00% of the total achievement.
 5.11 Classified loans /NPLs trend
(Amount in Thousand)
Amount Percentage
Sectors
2022 2021 2020 2019 (%)
Crop 4144 2447 1821 1674 2.76
Fisheries 2300 0 0 0 0.63
Animal Resources 34086 35753 35890 37647 39.32
Agro-based Industries 13780 18104 30459 33642 26.32
CMSME 31548 21229 12315 11461 20.99
Poverty Alleviation 452 98 5805 0 1.75
Others 8265 3176 12227 6256 8.20
Total 94575 80807 98517 90680 100%

Table 4.3: Classified Loans/NPLs trend in 2019-2022

Figure 4.3: Classified Loans/NPLs trend

Interpretation: From the above table it is shown that Animal Resources is the
highest NPL trend amount of TK 143376, which 39.32% of lowest NPL trend
Fisheries & Poverty Alleviation is the lowest NPL, which is 0.63% & 1.75% of the
lowest NPL.
5.12 Political Influence:
All of us discern that the government institution of LDC is heavily exaggerated by
political persuade. So RAKUB is not out of these consequences and this is the main
cause of the loan recuperation problem.

5.13 Classified Loan Problem:

A classified loan is fairly enhanced than others but the rate of collection of classified
loans the number of customers repaid is less. This problem can generate a solemn risk
for this sector.

5.14 Causes of Default:

Owing to a variety of factors, the lender is unable to reply the loan on time. The first
explanation is that natural disasters kill crops, and as a result, the investor is unable to
pay on time. RAKUB is sometimes unable to take the necessary action against a
strong loaner. The creditor does not make proper use of the loan and does not repay it
on time.

5.15 Sector-Wise Loan Payment Problem:

Binodpur branch accentuates mainly production sectors such as crops, Fisheries,
Livestock and SME. But this cannot sure an equal allocation for a well-balanced
economy.

4.5 Higher Non-interest cost of Institutional Credit:

Alam (1981) discovered four kinds of non-interest costs of institutional loans like (a)
application fees, supporting loan requirement of stamp and documents; (b) form
filling and writing;(c) travelling for loan negotiation cost and; (d) cost of entertaining.