Part: FOUR

Credit Management of
The premier bank ltd.

Part: Four
Credit Management

Credit Management:

Credit management is a term used to identify accounting functions usually conducted under the umbrella of Accounts Receivables. Essentially, this collection of processes involves qualifying the extension of credit to a customer, monitors the reception and logging of payments on outstanding invoices, the initiation of collection procedures, and the resolution of disputes or queries regarding charges on a customer invoice. When functioning efficiently, credit management serves as an excellent way for the business to remain financially stable.

The process of credit management begins with accurately assessing the credit-worthiness of the customer base. This is particularly important if the company chooses to extend some type of credit line or revolving credit to certain customers. Proper credit management calls for setting specific criteria that a customer must meet before receiving this type of credit arrangement. As part of the evaluation process, credit management also calls for determining the total credit line that will be extended to a given customer.

Several factors are used as part of the credit management process to evaluate and qualify a customer for the receipt of some form of commercial credit. This includes gathering data on the potential customer’s current financial condition, including the current credit score. The current ratio between income and outstanding financial obligations will also be taken into consideration. Competent credit management seeks to not only protect the vendor from possible losses, but also protect the customer from creating more debt obligations that cannot be settled in a timely manner.

After establishing the credit limit for a customer, credit management focuses on providing the client with accurate and timely statements or invoices. The invoices must be delivered to the customer in a reasonable amount of time before the due date, thus providing the customer with a reasonable period to comply with the purchase terms. The period between delivery of the invoice and the due date should also allow enough time for the customer to review the invoice and contact the vendor if there are any questions or concerns about a line item on the invoice. This allows all parties concerned time to review the question and come to some type of resolution.

When the process of credit management functions efficiently, everyone involved benefits from the effort. The vendor has a reasonable amount of assurance that invoices issued to a client will be paid within terms, or that regular minimum payments will be received on credit account balances. Customers have the opportunity to build a strong rapport with the vendor and thus create a solid credit reference.

4.1 Objectives of Credit Management:

It is the responsibility of the manager of the credit department to plan and direct the activities of the credit function within the guidelines of company policy.
The goals and objectives of credit department of Premier Bank Ltd includes: • Increase sales and profit through a better understanding and skillful handling of all credit functions • Match risk Conditions in which the decision maker has to estimate the likelihood of certain outcomes. and reward through customer and financial analysis Compare a customer's financial performance, including current, quick ratios, debt ratios to those of others in the industry, highlighting problem areas, and perhaps even identifying the problem(s). (See Financial Ratios.) • Monitor, protect In a draft collection transaction, the formal legal process of registering that payment or acceptance of the draft has been demanded but the drawee has refused to pay or accept the draft. draft A negotiable instrument that calls for payment of money. The drawer (or seller) orders in writing for the drawee (or buyer) to pay a specific amount of money to the drawer on a certain date. Also called a bill of exchange. collection transaction, the formal legal process of registering that payment or acceptance When a drawee acknowledges in writing on the face of the draft that the buyer will pay the draft at maturity. (See also Draft, Drawee.) of the draft has been demanded but the drawee The person, company, or bank upon which a draft is drawn. has refused to pay or accept the draft. draf A negotiable Quality belonging to a document to transfer ownership of money, goods, or other items of value specified in the document by endorsement and/or delivery of the document. endorsemen Writing one's name upon paper for the purpose of transferring the title The exclusive rights, powers, privileges and immunities to property, real and personal, tangible and intangible. . t and/or delivery of the document. instrument A right to the payment of money such as agency notes, commercial pape The unsecured promissory notes of large, financially sound corporations. r, T-Bills, certificates of deposit (CD's), banker's acceptances and repurchase agreements. that calls for payment of money A medium of exchange; coined or stamped currency. . The drawer The person, company, or bank that creates the draft and receives payment. (or seller) orders in writing for the drawee (or buyer) to pay a specific amount of money to the drawer on a certain date. Also called a bill of exchange (See Draft.) . t collection transaction, the formal legal process of registering that payment or acceptanc When a drawee acknowledges in writing on the face of the draft that the buyer will pay the draft at maturity. (See also Draft, Drawee.) e of the draft has been demanded but the drawe The person, company, or bank upon which a draft is drawn. e has refused to pay or accept the draft. and manage the company's investment in accounts receivable A clai A right to payment or other equitable remedy in the event of a breach of contract. m against a customer for services rendered or goods sold on credit. • Communicate the condition, cost and trend of the company's investment in receivables Any money owed an enterprise, whether or not they are currently due. to management • Convert accounts receivable to cash in a timely manner • Increase cooperation between sales and credit • Maintain and increase goodwill An intangible asset of a business due to such favorable factors as location, product superiority, reputation, and managerial skills. in customer relations • Coordinate credit activities with all departments • Train and supervise credit department personnel • Educate other departments about credit and the credit function • Control operating costs and expenses • Reduce bad debt

4.2 Discouraged Business Types

The Bank will not grant any facilities to the following Business Types: i) Bridge Loans relying on equity / debt issuance as a source of repayment; ii) Counter parties in countries subject to UN sanctions; iii) Finance of speculative investments; iv) Bridge Loans relying on equity / debt issuance as a source of repayment; v) Counter parties in countries subject to UN sanctions; vi) Finance of speculative investments; vii) Finance of Military Equipment/weapons; viii) Highly leveraged Transactions; ix) Lending to Holding Companies; x) Lending to slow moving items; xi) Logging, Mineral Extraction/Mining, or other activity that is Ethically or Environmentally Sensitive; xii) Lending to companies listed by CIB (Central Bank i.e. Bangladesh Bank’s Credit Information Bureau) as defaulters or known defaulters / habitual defaulters; xiii) Highly perishable goods stored in go down; xiv) Share lending; xv) Taking an Equity stake in Borrowers etc.
PBL should not grant facilities where our security position is inferior to that of any other financial institution and that: -
a) Assets pledged / Hypothecated as security should be properly insured.
b) Valuation of property taken as security should be conducted prior to granting of loan by a recognized independent valuation firm.

4.3 Cross Border Risk

Risk associated with cross border lending. Borrowers of a particular country may be unable or unwillingly to fulfill principle and / or interest obligations. Distinguished from ordinary credit risk because the difficulty arises from a political event, such as: - a) Suspension of external payments. b) Synonymous with Political & sovereign risk. c) Third world debt crisis, for example, export documents negotiated for countries like Nigeria.
Exceptions can only be granted by the Board.

4.4 Lending Strategy Statement & Risk Asset Management

Abbreviations used in this policy areas under: RAM : Risk Asset Management. ROA : Return on Asset LIM : Loan against Imported Merchandise LTR : Loan against Trust Receipt. L/C : Letters of Credit L/G : Letters of Guarantee. M : Million
As general guideline companies forming PBL targets should have the following criteria:-
a) Targets should normally be the top companies and business firms of Bangladesh with a good track record.
b) Included in the track record will be annual net worth increase over the past three years.
c) PBL should look for a debt / worth relation of 2:1 to maximum 3:1.
d) A minimum current ratio 1:1.
Exceptions: Borrowing covered at least by 100% of credit balance i.e. Fixed Deposit / Saving Bank balance/ margin etc. in the name of the borrower or guarantor.
e) The borrowers’ integrity and market report must be beyond any question.
f) Satisfactory CIB /bank report required.
g) Proprietor / partners /directors must have experience in business.
h) Where audited accounts are not available actual financials in proper Statements of Income & Expenditure and Balance Sheet form for three years of which the latest one must not be older than three months from the date of submission of proposal should be made available to the bank.
i) Minimum after tax profit/ sales margin 5%.
j) Annual sales growth must not be less than 10%.
k) Minimum annual Net profit from each customer Tk. 2.00 Lac with minimum ROA 3%.
Types of Facilities: Funds based and Non fund based products available with PBL
Amount: up to maximum two/ three times net worth of borrower.

Repayment: a) Maximum tenure in case of Term Loan 3-8 years; b) Cash credit / overdraft-12 months; c) LIM- maximum-120 days; d) LTR- maximum-120 days; e) L/C- validity-120 day’s maximum; f) L/G- validity maximum 12 months. Margin as per Bank-Customer relationship.

Pricing: As per Bangladesh Bank and PBL’s Pricing.
Security: Primary security plus collateral security to be provided for full value of facility with adequate margin.
Insurance: In joint names for full value of security plus 10% against FIRE, RSD, Burglary, Earth quake, flood, cyclone, Tempest. (Exemption will be considered on case to case basis).
Covenants and Conditions: Only those commodities which are essential consumer items and basic raw materials of the industries having good marketability in short supply should be financed. Duty, sales tax and other landing charges to be borne by the borrowers’ own sources.

Risk Asset Management (RAM):

Purpose: Effective Risk Asset planning and administration.

Objective: Containment of credit losses. Improve profitability of the Bank.

Definition of ‘Risk Asset’: Risk assets for the purpose of RAM include contingent liabilities such as letters of credit and guarantees also. These contingent liabilities must be treated from a credit approval point of view as having the same credit exposure as funds based assets.

Steps in RAM Process:

a) Planning: i) Target market criteria - to define desired customer base.

Note: Strategy as to desired customer base; consider risk inherent in each market; criteria to define characteristics of an acceptable customer. Understanding of each market-which one shows prospects of growth/ profitability?

ii) Terms of Acceptance of Risk Assets - to define terms of our products (to target customers).

Note: Define terms for our products/services to be offered, to produce desired profitability at acceptable risk. Ancillary business?

Care! Higher earning prospect cannot justify a bad loan.

b) Initiation: i) Client / Prospect Check Vs Criteria.

ii) Evaluation of his needs (know his business and his environment).

Note: Bear in mind funds availability; Plan customer call. Perhaps customer could use visit for a presentation inspection. Do Call Memo. Account Plan.

iii) Negotiation: - Terms - Bear in mind customer situation; also the agreed terms of acceptance for the target market.

iv) Approval: Compliance with internal credit approval procedure.

Note: Facility application package i.e., Credit Memo with full background/financial information, analysis of historical trend, prospects, anticipated profitability vis-à-vis funds based, non funds and/or exchange business expected. Any exceptions must be listed for approval by appropriate authority.

c) Documentation & Disbursement:
Identify particular documents required for each facility and arrange completion. Enlist outside legal assistance where necessary. E.g. when drawing up special consortium / term loan agreements etc.

Appraise value of security offered vis-à-vis Bank’s needs.

d) Administration:
Administration is a continuous process. Effective administration requires a constant and systematic review of the account and client activity. i) Close monitoring of account. ii) Keep abreast with client, his current activity, expansion/diversification plans etc. iii) Adherence to security requirements. iv) Updating documentation, as required.

A detailed procedure regarding Credit discipline is based on the following lines by PBL:

i) a) Request for application for facilities in banks printed form; b) Examine the nature of facility required; c) Acknowledge if it merits consideration /reject if the business does not suit us/meets our credit policy requirement / Bangladesh Bank credit restriction.

ii) a) Refer to the liquidity position while considering the facility; b) Consider high yielding, short term, and self-liquidating advances with ancillary business/compensating deposit; c) Prefer quality advances; d) Obtain/prepare credit report on the customer/update the report at least quarterly basis (Banks’ opinion/CIB reports).

iii) Ensure/request for further documents/papers if a qualitative analysis for accepting the risks is necessary.

iv) Ensure that the borrowing power is in order.

v) Examine Memorandum / Articles of Association with particular reference to borrowing power.

vi) a) Obtain and examine the security documents. b) Obtain Board resolution, create charge including floating charge on assets hypothecated, book debt and mortgage created in favor of the bank. Assess directors’ worth and obtain their personal guarantees. c) Prepare /obtain legal / registered mortgage of the documents/ record in the mortgage register. d) Diarize the review date of Credit Memo-1/2/3 months earlier from the due date. e) Complete security documentation in all respects/ enter in the security register (safe in) and ledger detailing the security lodged in the safe custody. f) Insurance of the property –Fire, RSD, Burglary, natural calamities.

vii) a) Prepare Credit Proposal detailing the terms /obtain approval/ ratification. b) Prepare facility record sheet, which will evidence historical as well as current facilities of the borrowers. c) Call on the customers / prepare call reports /future action program /keep in file.

viii) If risk is acceptable send the customer an offer / sanction letter in duplicate detailing the terms and conditions under which the sanction has been made and obtain the duplicate letter in agreement of the customer duly signed by him. Verify signature and keep the copy in safe custody after obtaining a duplicate for the file. The following points / terms should be kept in mind while preparing the offer / sanction letter: -

Purpose; Repayment term/tenure/review date; Primary security; Collateral security/ examination of documents by banks lawyer/law charges; Marketability of the security; Valuation of the security; Inventory control/stock report/insurance/ frequent inspection; Rate of interest/commission/quarterly rests; Balance Sheet -Trading Account, Profit & Loss Account/ Cash budget/ Cash flow Statement etc. ix) a) Check on a regular basis main aspects of the cash budget and monitor the flow of cash particularly for repayment daily /weekly/ fortnightly/ annually/ bimonthly/ quarterly/ installments;

b) Ensure that purpose of the facility is properly utilized, no diversification; c) Diarize expiry of insurance policy cover/ record details of the insurance in the insurance register; d) Ensure fortnightly / monthly stock statements/ find out the drawing power / record the value of the stock/ book debts in the stock register; e) Inspect stocks periodically –preferably jointly by selective officers; f) Follow Bangladesh Bank regulations.

x) a) Pledge of goods - counting /stacking / recording - ensure method is strictly followed if the quality of goods is dependent on long storage; b) Obtain letter of disclaimer from the go down owner. c) Undertake periodical stock inspection. Bring irregularity to the notice of the concerned account / credit officer / manager immediately d) Display signboard inside and outside the warehouse inscribing under “Lien / pledge to The Premier Bank Limited”. e) Engage approved C & F agents for clearing and storage of the goods.

xi) Arrange credit file / segmentation.

xii) Follow-up audit / inspection comments

A regular monitoring of the account is imperative to avoid any irregularity that might creep in during the course of the facility. It is also their duty to check the periodical statements pertaining their accounts to ensure correct reporting with brief necessary comments /remarks, and for timely submission to the reporting authorities.

Last but not the least PBL require to examine that an account has not become time barred under the law of limitation.

4.5 Restrictions on Loans & Advances

a) PBL will not make or commit any facilities to an entity or a number of entities under the ownership of one customer, which exceeds 50% (Fund based 25% & Non fund based 25%) of the capital fund of the bank without obtaining Bangladesh Bank approval.

b) Similarly PBL will not make or commit any unsecured and/ or secured facilities to the own Bank Director(s) or his /their dependants exceeding 50% of the shares hold by any Directors subject to a maximum amount of Taka One million without the approval of the Bank’s Board of Directors and Bangladesh Bank.

c) Clearance of Bangladesh Bank, Credit Information Bureau (CIB) is required for granting Credit facility of any amount in order to ascertain that the prospective borrower has no classified loan with other Bank(s).

d) PBL will not grant any facility to a customer having default loans outstanding with another bank.

e) Our Bank will not grant Loans/Advances against security of its own shares.

f) Our Bank will not grant advances to a minor or a company where a minor is holding the majority share.

g) PBL will not make loans against second mortgage of properties whose value is equal and secured by 1st mortgage.

h) PBL will not make advances / loans to enable the borrower to speculate in shares and debenture and / or commodities for hoarding purposes.

i) PBL will not make advances against properties in locations where PBL do not have a branch.

j) PBL will not grant loans against accommodation bills.

k) PBL will not issue a guarantee of any type whose expiry is beyond three years without having 100% margin.

4.6 Policy for Taking over Loan from other Bank

During normal course of Banking, PBL take over loans from other Banks. While taking over loans may be necessary and rewarding in a competitive environment, PBL have to be very cautious that the loan which PBL are going to take over is a good and remunerative one.

• The following policy guidelines shall be followed for taking over loans:

a) PBL shall not take over any loan, which is running overdue with their existing Bank.

b) PBL shall not take over any loan which has been rescheduled in any Bank.

c) PBL shall not take over any loan of a company/firm/individual who has classified liability in its name or in the name of its sister/allied concern(s) with any Bank.

d) PBL will not take over the loan of any sector which has vulnerable future and whose market may face difficulty due to anticipated change of international as well as domestic policy.

e) While processing credit proposals which involves taking over of loans from other Banks, must collect a copy of the latest sanction letter, copies of statement of accounts, and review the existing terms and conditions.

f) Generally, PBL shall not give credit facilities at terms and conditions which are inferior to those of their existing lender. Any exception shall be fully justified in the credit proposals.

g) PBL should encourage the customers to repay the liabilities with their existing Bankers from their own resources, obtain release of securities/collateral etc and then borrow from our Bank by pledging the necessary securities/collateral.

h) Where PBL have to take over securities/collaterals from Banks and repay the liabilities of the customers by creating loans in bank Books, PBL must, after due sanction of the limits, follow the under noted procedure:

i) The customer shall write a letter addressed to their existing Banker giving clear instructions to deliver all the documents relating to mortgaged property and other securities to the authorized representative of The Premier Bank Limited on adjustment of their liabilities. A copy of the letter shall be endorsed to us.

ii) The Branch, which is going to take over the loan, will write a letter to the existing Banker of the customer to confirm the outstanding liability position of the customer with them and the particulars of the mortgage/securities held with them. The Branch will also ask for the consent of the existing Banker of the customer to deliver the property documents and other securities to us relating to the loans to the authorized representative of our Bank upon adjustment of liabilities. Existing Bank shall also execute redemption deed for the mortgaged property as per draft approved by our lawyer.

iii) On getting consent in writing from the existing Banker of the customer, our Branch must obtain all charge documents from the customers along with authority to us to create loan for the amount and issue Pay Order within the sanctioned limit for adjustment of the liability of the customer.

iv) If our Bank decides to take over contingent liabilities of the customer, the Branch may issue Guarantee to the existing banker covering the contingent liabilities. The form of the Guarantee must be approved from Head Office.

Counter Guarantee must be obtained from the customer (backed by Board’s Resolution where necessary) for timely settlement of the contingent liabilities. Post-dated cheque(s) shall be obtained from the customer.

The customer shall pay commission to the Bank for the Bank Guarantee(s) to be issued by us for taking over non-funded liability.

v) The customer must undertake in writing to the effect that he/she shall arrange redemption of the mortgaged property with his existing Banker immediately after adjustment of the liability with his/her existing Banker by us and arrange with the Bank for handing over original title deeds and other chain of documents/papers relating to the property as well as other security and documents to the authorized representative of The Premier Bank Limited for creation of Mortgage/Charges in favor of PBL.

vi) The Branch must obtain Note of Satisfaction of Charges from the existing Banker and file for Registration of First Charges with the Registrar of Joint Stock Companies and Firms. All relevant forms regarding creation of charges (RJSC Form No. XVIII, etc) should be completed and got signed by the borrower before creating any loan.

vii) All charge documents including Memorandum of Deposit of Title Deeds to be obtained duly signed by the customer /mortgagor before issuance of Pay Order/Bank Guarantee. Registered Mortgage must be completed immediately on receipt of original Title Deeds from the existing Banker of the customer.

viii) An undertaking to be obtained from the customer(s) on Non-judicial Stamp to the effect that they will adjust liabilities from their own sources on demand to The Premier Bank Limited if their existing Banker does not redeem mortgages/release securities. The draft of the undertaking shall be vetted by our Lawyer.

ix) Prior to creation any loan and payment to the existing bank, the customer shall give photocopy of all mortgaged deeds and sign in advance the proposed Registered Mortgage Deed keeping the date in blank, which may be registered later on getting original documents from existing banker and also NOC from RAJUK, if necessary. Application for NOC from RAJUK or any other authorities required for creating Registered Mortgage should be obtained before creation of loan.

x) Only after Registered Mortgage is created and all legal and banking documentation (charge documents) are obtained, the Branch will allow the borrower to avail the remaining facilities.

4.7 Policy of Financing to Ready Made Garments Industries (RMG)

It may be mentioned that following types of financing are made to export oriented garment / textile industries:

a) Capital financing (Term Loan) for import of machinery.

b) Back to Back L/C facility.

c) Packing Credit facility and

d) Negotiation/purchase of export bills.

• Financing to export oriented Garments industries is lucrative and remunerative to the Bank in the following considerations:

i) Major finance is in the form of BTB L/C which is non-funded. ii) Bank earns from export oriented RMG finance in different form: a) L/C commission; b) Acceptance commission; c) Exchange Gain; d) Interest and other miscellaneous income. iii) It is self-liquidating from export proceeds. iv) Once a Garment client inducted it become a captive client for future & continuous Back to Back L/C, Export and other allied business. v) It is Bulk Credit. vi) It continues throughout the year and not seasonal. vii) Moreover, it contributes to the national economy in generation of Foreign Exchange as well as Employment.
Side by side, financing to Garments sector is associated with considerable risk, which are as follows: i) Export failure with resultant stock-lot is a common phenomenon in this sector for various reasons. Once stock-lot is created, Bank’s finance of large amount gets stuck-up. Exporters are not in a position to repay Bank’s dues from their own source until the export of stock-lot is made.

ii) The exporters generally cannot provide adequate collateral security compared to the quantum of credit facilities exposing the Bank to risk.

iii) It is Buyers’ market. Very often, buyers refuse payment of export bills on flimsy ground and bargain for exorbitant discount, causing shortfall in adjustment of Bank’s dues.

iv) Global Economic and Political conditions usually affect the RMG Sector to a great extent. Knit Garments enjoy cash subsidy from the Government, timely release of which by the Government is also very essential. However, recent Government move is to withdraw this facility.

4.8 Policy of Small & Medium Enterprise (SME) Scheme

Background:
Bangladesh is a high densely populated and one of the poorest countries of the world. Per capita income of our country is $ 385 (app). Job opportunity is very scanty. Unemployment rate is approximately 45% and population below poverty line is 36%. So, it is a prime issue for the nation to generate income through creation of job opportunity & employment. It is not easy to create job opportunity at large scale. As a financial institution, PBL can increase self-employment through financial support.
There are many small and medium entrepreneurs in our country who have innovative ideas, spirit and potentiality to do something productive for local consumers as well as export abroad. They can generate income and contribute to the GDP. They may also provide employment to other people. Development and growth of Small and Medium Enterprises is playing a vital role in the National Development. Such type of entrepreneurs cannot go a long way for want of financial support because they have no access to institutional credit facilities, as they cannot provide collateral security as demanded for such credit facility.

The entrepreneurs who have no scope to avail any credit facility from formal financial institutions they are bound to take credit facility for maintaining their entrepreneurship from non-formal institutions/individuals with high rate to continue their effort.

The Premier Bank Limited is committed to play positive role in the socio-economic development of the country. So, PBL can introduce Small & Medium Enterprise (SME) Credit Scheme to contribute our effort in the socio-economic development of our country.

Credit Scheme for Small and medium Enterprises is very popular in most of the developed and developing countries of the world. If PBL look at south East Asia, China, Taiwan, Hong Kong, South Korea etc, PBL will find that small and medium businesses are the real engine of growth in those countries. 50% of United States exports are created by companies with 19 (nineteen) or fewer employees. The global economy of the 21st century will be dominated by Small and Medium sized players. A good number of banking and non-financial institutions in our country are successfully operating this Scheme.

• The Major features of the Policy of SME Credit Scheme will be as follows:

a) Objectives of the Scheme:

i) To provide credit facilities to the small and medium size entrepreneurs located in Urban & Sub-urban areas and easily accessible by our Branches. ii) To flow credit for creation of employment and generation of income on a sustainable basis through development of small & medium enterprises. iii) To assist potential entrepreneurs to improve their living standard. iv) To reduce dependence on money lenders. v) To make self-reliant small and medium enterprises. vi) To develop savings habit and making social contact with banking facilities. vii) To inspire for undertaking small projects for creation employment through income generating activities. viii) To participate in the socio-economic development of the country.

b) Concepts: Small & Medium Business Enterprise refers to those enterprise:-

i) Where goods are produced, recycled, repaired or traded in traditional way; ii) Where total bank investment is limited between Tk 1.00 Lac to Tk 75.00 Lac; iii) Where 20 or less workers are engaged on wages or commission basis; iv) The net fixed assets (excluding land and buildings) of borrowers may not exceed equivalent of US $ 250,000.00 (Tk 150.00 Lac app.).
c) Target Group:

Initially, Small & Medium Size Entrepreneurs located within the vicinity of our branches will be the target area under this program. The Entrepreneurs should have an existing profitable business or a viable business plan.

d) Eligibility for Credit Facilities:
The following criteria have to be met by the applicant to qualify for a loan from The Premier Bank Limited under its SME Credit Scheme:

i) The entrepreneurs must be literate i.e. capable of reading & writing. ii) The entrepreneurs should be skilled in managing his / her business and has experience of successfully managing the business for at least 5 (five) years at the same location. If they have moved their business location before 5 (five) years, satisfactory reason must be available. iii) The age of the entrepreneurs must be between 20 years to 55 years. iv) If the applicant is an individual, the Borrower must be a national or permanent resident of Bangladesh. If the Borrower is a company / firm or other business entity it must be registered in Bangladesh and majority shares owned by Bangladeshi’s. v) The applicant must be 100% privately owned, controlled and operated. vi) The applicant’s principal place of business must be in Bangladesh. vii) If acceptable collateral security cannot be provided, the borrower should arrange for 2 (two) acceptable personal guarantees. The type of guarantors depends on size of the loan and business. In accepting a person as guarantor his social standing, income and asset shall be considered. Any default borrower or unreliable person shall not be accepted as guarantor. However, guarantor will be determined on a case to case basis. The decision whether collateral will be required or not shall rest with the Bank. viii) If the applicant is a member of any social organization / association, he should arrange a corporate guarantee of the association / organization through formal regulation (if any). ix) The applicant should arrange to execute a tripartite agreement with the Bank and any third person who is financially related with him directly (if any). x) The project shall be financially viable and socially desirable. xi) The Sponsor / applicant shall have reputation in the society. xii) There should be some innovation / creativity in the project. xiii) Proper utilization and timely repayment of previous loan will be considered as a proven track record of the applicant for renewal & enhancement of credit facility.
e) Restricted Business: i) Production, Marketing, Trading of alcoholic, narcotic and other intoxicating drug or liquor. ii) Production and Trading of any item banded by the Government. iii) Any activity not permissible by the law of the land.
f) Loan Ceiling: Loan ceiling for urban area: i) Minimum Tk 1.00 Lac. ii) Maximum Tk 75.00 Lac.
g) Purpose: i) Working capital; ii) Capital Machinery; iii) Delivery Van / Transport for business purpose; iv) Refurnishing office / Business premises.
h) Mode of Finance: i) Cash Credit; ii) Hire purchase / Lease Finance; iii) Term Loan.
i) Loan Renewal: Successive loans depend on track record of previous loan. Usually, repayment behavior and expansion of business by the borrower are the main considerations for renewal and enhancement of the loan amount.

j) Interest Rate: 8% p.a. (flat). True rate will be charged with monthly rest.
As per loan period the following interest to be imputed in computer at the time of opening a SME loan account for the interest rate of 8% flat:
|Declared Flat Rate Declared on 31st Dec, |Loan Period |Rate to be imputed in Computer |
|2009 | | |
|8% flat |1 year |14.45% |
| |2 year |14.70% |
| |3 year |14.55% |
| |4 year |14.35% |
| |5 year |14.15% |

k) Supervision Charge: 1% on loan amount will be realized at the time of disbursement.
l) Risk Fund: 1% on loan amount will be realized at the time of disbursement.
m) Securities:
It is a supervisory credit scheme. Tangible security in the form of mortgage may not be available in all the cases. Security will be stipulated on a case to case basis inter-alia as under (one or several of the following): i) Registered mortgage of land & building. ii) Equitable mortgage / Assignment of possession right. iii) Assignment of Contracts and / or Trade Receivables not older than 90 days. iv) Hypothecation of machineries, equipment, vehicles, stock-in-trade, raw materials, work-in-process and finished goods. v) Personal Guarantee from person(s) acceptable to the Bank. vi) If the applicant is a member of any social organization / association, he should arrange a corporate guarantee of the association / organization through formal resolution. vii) Tripartite agreement with Bank and any third person who is financially related with the applicant directly. viii) Post-dated checks covering all installments / total dues. ix) Lien on deposits / saving certificates / financial obligations. x) Any other securities deemed suitable by the Bank depending on the situation like Insurance Guarantee, Corporate Guarantee, Assignment of Contract, Security Money etc. xi) Guarantee of USAID for 50% of the exposure or any other authority acceptable to the Bank Management (subject to availability).

4.9 Policy of Doctors’ Loan Scheme

a) Introduction: PBL hope that providing loan under easy terms & conditions will certainly have an important positive effect on our medical services and will enhance the opportunity for our doctors to establish themselves as well as to contribute to make our medical services modern enough compared to other countries. This will also enable us to establish Banking Relationship with the Doctors Community who is rich & resourceful. PBL can get good deposits and also develop profitable lending relationship with the Doctor’ community.

b) Purpose of Loan: Purpose of this loan is to create opportunity for self-employment of the registered MBBS /FCPS / Post Graduate doctors, medical Practitioners by financing them for the following purposes:-

xii) Up-to 100% Lease Finance for acquiring Medical Equipment.

xiii) Up-to 100% Lease Finance for Motor Cars / Ambulances.

xiv) Term Loan for rental advance / decoration & furnishing of chambers.

xv) Loan for purchasing of Apartment / Chamber up-to 50% of the cost

c) Target Group: Registered Doctors such as MBBS, FCPS & Post Graduates, Surgeon and Dentist, Eye Specialists, Heart Specialists, Child Specialists as well as Hospitals, Clinics, Diagnostic Centers owned & operated by registered Doctors.

d) Terms & Conditions: The loan amount would be based on the needs / requirements of the borrower on case to case basis. Borrower can avail one or more of the following:

i) Lease finance for medical equipments.

ii) Lease finance for motor vehicles / ambulances.

iii) Term loan for renting / decorating & furnishing chambers.

iv) Personal Loan under Consumer Credit Scheme.

v) Loan for purchasing apartment / medical chamber.

← Lease may be allowed up-to 100% of acquisition cost.

← Term Loan up-to 80% of cost.

← For purchase of Apartment / Chamber – loan up-to 50% of purchase price.

e) Security: (one or more of the following) i) 3 (three) advance installments (Compulsory).

ii) Leased financed items ensured in the sole name of the Bank (Compulsory).

iii) Personal guarantee of the Borrower(s) & their spouse(s) (Compulsory).

iv) Third Party guarantees.

v) For purchase of Apartment / Chamber - loan to be secured by Registered Mortgage of the Apartment / Chamber (Compulsory).

vi) Credit Insurance.

vii) Collaterals in the form of mortgage.

viii) Lien on deposits / other financial obligations.

f) Repayment period: i) Repayment term will be up-to 4 (four) years for Lease / Loan.

ii) Apartment / Chamber loans may extend up-to 10 (ten) years.

iii) Payments will be made in equal monthly installments (EMI).

iv) Early repayment may be allowed without any penal interest / charges.

g) Eligible Borrower: Initially the following categories of people shall be eligible to apply for availing loan facilities under this product:

i) Registered Medical Practitioners / Doctors such as MBBS, FCPS, Eye Specialists, Heart Specialists, Child Specialists, Surgeon, and Dentist etc should have at least 5 years experience.

ii) Hospital, Clinic, Diagnostic Centers owned & operated by registered Doctors.

h) Interest Rate & Charges: i) Interest Rate @ 15% p.a. with monthly rest.

ii) Application form will cost Tk 100.00.

iii) Loan Processing fee at 0.50% of the loan amount payable along with the submission of the Application Form. In the event of non-approval, the loan processing fee will be refunded.

iv) Other charges for Lease finance shall apply such as:

Service Charge - 1.00%

Risk Fund - 1.00%

Transfer fee - 1.00%

v) Consumer Credit facilities shall be guided by existing policy approved by Board.

i) Rebate: If any loan is repaid strictly as per sanctioned terms and conditions & within the due date without any rescheduling, a rebate equivalent to 1% (one percent) of the loan will be given to the Borrower.
j) Review of Credit facility: As at the end of March, June, September & December of every year, the Manager submits branch wise information about the relationships established with Doctors.

4.10 Policy of Consumer Credit Scheme (CCS)

a) Objectives: i) To extend credit facility to the limited income group. ii) To develop living standard of middle and upper middle class people. iii) To participate in the socio-economic development of the country.
b) Assigning Officer for CCS: Every Branch will assign at least 1 (one) officer for CCS on full time basis. The number of officers may be more than 1 (one) in case of need.
c) Target Setting: The Head Office will set target for both disbursement and recovery of loans under CCS for individual Branch in every year.
d) Eligibility of the Borrowers: i) Service Holder: Officer / Executives from following organizations having confirmed / permanent job and getting the salary as mentioned below with minimum length of service of 2 (two) years within the age between 20-55 years will be eligible for availing loans under Consumer Credit Scheme (CCS): ← Officers / Executives of any Scheduled Bank and getting minimum monthly gross salary of Tk 12,000.00. ← Officers / Executives of any other financial institutions and getting minimum monthly gross salary of Tk 15,000.00. ← Officers / Executives of any Multinational Company getting minimum monthly gross salary of Tk 15,000.00. ← Officers / Executives of any Public Limited Company and getting minimum monthly gross salary of Tk 20,000.00. ← Officers of Private Limited Company having corporate structure and getting minimum monthly gross salary of Tk 30,000.00. ← Officers of any Government Organization and getting minimum monthly gross salary of Tk 8,000.00 per month. ← Teachers of Universities, Colleges and Schools and getting minimum monthly gross salary of Tk 12,000.00. ← Officers of Semi Government Organizations and Autonomous Bodies and getting monthly gross minimum salary of Tk 10,000.00. ii) Self Employed Person: The self employed persons, such as, Doctors, Chartered Accountants, Lawyers or who have their own Business by any nature having minimum income of Tk 35,000.00 per month may be eligible to get loans under CCS. The length of profession shall not be less than three years. (In this case he / she will have to submit supporting papers of profession for last three years). iii) Defense Service Personnel: For defense service personnel CCS may be provided, in addition to the conditions and guidelines of this circular, subject to fulfilling the following conditions as per circular no. 3204/R/AG/ (PS-1) dated 3rd March, 1999 and any subsequent amendments thereto issued by army headquarter, Adjutant General Branch, Dhaka Cantonment: ← Employers Certificate should be obtained only form the Commanding Officer of Borrower's unit. ← In case of providing credit facility to a soldier, the guarantor should not be below the rank of Junior Commission Officer. ← The respective unit of the borrower will provide a guarantee certificate that the borrower will pay the monthly installment in due course.

e) Non-Eligibility: Proprietorship firm, Limited Companies, Trusts, Clubs, Association, Other institution, Minors (singly or jointly with any adult person) are not eligible for consumer credit.

f) Products / Service to be financed i) Domestic Appliances: Air Conditioner, Refrigerator, Deep Freezers, Washing Machine, Mobile Phone, Cooking Range, Micro-Wave, Furniture, Sewing Machine, other domestic appliances (PBL will not finance against photocopier, as Photocopier is not a consumer item). ii) Entertainment items: Television, VCD, VCP, Music System, Sound System, Video Camera with accessories etc. iii) Vehicles: Car, Microbus, Pick-up, Jeep etc. Such vehicles should be new or reconditioned (not second hand vehicles) and must remain unregistered at the time of purchase. iv) Intangibles: Medical expenses, holidays, marriage etc. v) Others: Home repair, redecoration, and renovation.

g) Application Form: The client should apply for loan under consumer credit in the Bank's prescribed form Tk 20.00 to be realized for each application form.

h) Down Payment: ← In respect loan against Vehicles, minimum 30% of quoted price of the vehicle will be collected as down payment. PBL may also accept en-cashable security (e.g. FDR etc). ← In respect of loan against other than Vehicles, the customers will deposit 1 (one) advance installment in Bank's Sundry Deposit Accounts at the time of disbursement which will be transferred to the respective CCS loan account for full and final settlement of the account.

i) Loan Limit: The loan limit under CCS has distinguished as follows: i) Other than Car, Microbus, Pick-up & Jeep the maximum Loan Limit is Tk 1.00 Lac only but the amount shall be fixed in such a manner that the monthly installment of the loan will not be more than 25% of his / her monthly income. ii) For Car, Microbus, Pick-up & Jeep: ← Maximum limit Tk 10.00 Lac for new Car; ← Maximum limit Tk 7.00 Lac for reconditioned Car; ← Maximum limit Tk 4.00 Lac for Microbus and ← Maximum limit Tk 3.00 Lac for Pick-up.

Any exception of the above have to be approved from the EC of the Board of Directors of the Bank.

j) Delegation of sanctioning power to the Branch: The Branch will exercise delegation for sanctioning CCS loan (other than Vehicle) as per following schedule through Branch Management Committee:

|Branch Name |Delegation Power | |Branch Name |Delegation Power (up-to Tk) |
| |(up-to Tk) | | | |
|Gulshan |1.00 Lac | |Uttara |1.00 Lac |
|Dilkusha |1.00 Lac | |Khulna |1.00 Lac |
|Imamgonj |1.00 Lac | |Savar |1.00 Lac |
|Kawranbazar |1.00 Lac | |Mohakhali |1.00 Lac |
|Agrabad |1.00 Lac | |Ashugonj |0.50 Lac |
|Motijheel |1.00 Lac | |Meghnaghat |0.50 Lac |
|Banani |1.00 Lac | |Elephant Road |Nil |
|Dhanmondi |1.00 Lac | |Sylhet |Nil |
|Khatungonj |1.00 Lac | |Barisal |Nil |

In case of loan against vehicles the Branches shall forward the application with the Branch recommendation to the Credit Division, Head Office for approval.

All Branches shall constitute Branch Management Committee with the following Executives / Officers: i) Branch Manager : Chairman ii) Second Officer : Member iii) Credit In-Charge : Member-Secretary iv) CCS Officer : Member-Assistant Secretary

k) Necessary Papers & Loan Approval: The client shall apply as per prescribed Form along with the copy of the following papers for approval: i) Application Form duly filled in and verified by the Branch officials. ii) Price quotation / indent of the item to be purchased. iii) Price quotation of the item to be purchased or service to be availed such as home repair, redecoration etc. iv) Cost estimation for Intangibles (medical expenses, holidays, marriage). v) One copy of attested photograph of the applicant (one copy should be retained with the Branch). vi) Guarantor's information in the prescribed form. vii) Borrower's net worth statement. viii) In respect of Service Holder: ← Salary certificates from the employer; ← Letter of surety / assurance (where applicable); ← Last 3 (three) month's Salary Account statement. ix) In respect of Business Persons / self-employed Persons: ← Last 6 (six) month's personal Account statements; ← Trade License / Letter of Incorporation; ← TIN Certificate; ← Tax Return (last three years).
Note: All favorable considerations of an applicant and respective guarantors to sanction / forward any CCS loan facility must be mentioned and recorded in the loan proposal.

l) Disbursement of Loan: The loan amount will be disbursed through Pay Order directly to the supplier of the products except for Intangibles, Home Repair, Redecoration and Renovation, for which loan amount will be directly credited to client's A/C.

m) Interest: As per loan period the following interest rate to be imputed in computer at the time of opening a CCS loan account for interest rate 10% flat:

|Declared Flat Rate on 31st december,2009 |Loan Period |Rate to be imputed in Computer at the time of|
| | |opening a CCS Loan |
| |1 year |18.00% |
| | | |
|10% | | |
| |2 years |18.20% |
| |3 years |18.00% |
| |4 years |17.60% |
| |5 years |17.30% |

n) Fees: Service charge 2% (flat) to be received at front end.

o) Repayment Arrangement: i) Period of Loan: ← The consumer loan (other than Vehicle) will be repaid in maximum 24 equal monthly installments. 36 or 48 installments will be allowed in case the loan amount in over Tk 1.00 Lac. ← The loan amount against new Vehicle will be repaid in maximum 60 equal monthly installments and loan amount against reconditioned vehicle will be repaid in maximum 48 equal monthly installments (here Vehicle not include Motor Cycle). ii) The borrower will have to submit post-dated A/C payee cheques (one for each installment) in favor of The Premier Bank Limited prior to the disbursement of the loan. The borrower shall keep sufficient fund in his /her account for the purpose. The rest outstanding, if any, shall be adjusted by the borrower along with the last installment. As such, the last cheque shall be blank. iii) The installment shall be payable within the first week of every month starting from the following month of disbursement of loan. iv) PBL may serve Legal Notice (by Junior Lawyers) to the defaulting customers, who are not coming forward to settle their Overdue Accounts after vigorous persuasion and the Branches may assign Lawyers for serving Legal Notice (the cost of serving Legal Notice will not be more than Tk 300.00 for each, and the payment of serving Legal Notice will be made by debiting Suspense Account by the concerned Branch).

p) Securities and Documentation: i) For financing consumer durable and vehicles like Air Conditioner, Refrigerator, Deep Freezers, Washing Machine, Mobile Phone, Cooking Range, Micro-Wave, Furniture, Sewing Machine, Television, VCD, VCP, Music System, Sound System, Video Camera with Accessories, Personal Computer, Photocopier, IPS / UPS small non-commercial Generator, Car / Microbus, Pick-up & Jeeps, hypothecation of the purchased item shall be the primary security against the loan under the scheme.

ii) Loans for Medical expenses, Holidays, Marriage, Home repair, Redecoration, and Renovation will virtually be clean basis. Bank Officers may obtain collateral by way of pledge / lien on financial obligations such as ICB unit certificates, PBLDB, FDRs etc. The receipt under MIS, MSS, ESS etc issued by The Premier Bank Limited is also acceptable. In these cases the loan amount should not be exceed 90% value of financial obligation without equity participation.

If the loan facility is covered by 100% deposit of our Bank in the form of FDR, MSS, MIS, or Equity under lien, third party guarantee may not be taken. In this case Letter of Lien & Letter of Authority for en-casement may be obtained.

iii) In case of loan against vehicles registration of the vehicle shall be made in the Bank's name and Comprehensive Insurance covering all possible risks shall have to be obtained by the borrower at his / her cost who will also ensure timely renewal of insurance and other required papers. Photocopy of the following paper should also be obtained.

Registration certificate (Blue Book) showing Bank's interest already noted on the certificate so that the vehicle cannot be sold without prior approval of the Bank.

iv) Guarantor: If the customer is a Government Service Holder or a Bank employee, PBL may take 1 (one) personal guarantee and in case of other customer, PBL may take 2 (two) personal guarantee.

v) Guarantor's Criteria: A Guarantor must be financially sound and have market reputation and shall be acceptable to the Bank. The Branch Manage shall satisfy that in the event of nonpayment by the borrower, he will stand up and meet his obligation to repay the loan.

vi) Prior to disbursement of loan, the following charge documents must be completed at borrower's cost:

← D.P. Note : by affixing revenue stamp of Tk 20.00; ← Letter of Continuity : stamp not necessary; ← Letter of Disbursement : stamp not necessary; ← Letter of Revival : stamp not necessary; ← Letter of Hypothecation : by affixing adhesive stamp of Tk 150.00; ← Personal Guarantee : by affixing adhesive stamp of Tk 150.00; (joint / several) ← Loan Agreement : by affixing adhesive stamp of Tk 150.00; under CCS ← Letter of Authority : stamp not necessary;

vii) After purchasing the item, Money Receipt & Delivery Challan there against should be obtained.

q) Other Terms and Conditions: i) The borrower shall use the product for his personal use only and shall not lend the item or transfer the ownership / possession to any third person before the loan is adjusted or without prior written permission from the Bank. ii) The borrower shall maintain the article properly and shall be responsible for loss / damage to it during the period of the loan. He /she shall pay all the Bank's dues in full, in case the article is fully damaged, lost, or become unusable due to negligence, carelessness, or inefficient handling. iii) The borrower shall keep the articles available for surprise inspection by any authorized representative of the Bank. iv) The borrower shall immediately inform the Bank of any changes in address or profession related to himself / herself and his / her guarantor. v) The Borrower shall obtain comprehensive insurance policy for car loan at his / her cost in the name of the Bank and bear all other expenses for registration and other purposes as and when required. vi) The borrower will submit a declaration as per prescribed format authorizing his / her monthly salary in case of nonpayment by the borrower till final adjustment of the loan. vii) The Bank reserves the right to change the rate of interest from time to time.
r) Monitoring: As the credit under CCS is fully supervisory and the success of the scheme depends on proper and persistent supervision, follow-up, persuasion & monitoring, so the Branches need to follow-up & monitor vigorously the A/C's to ensure the expected recovery.

The Branch shall send "monthly statement of loan under Consumer Credit Scheme" to Head Office Credit Division as per prescribed format.

The management may change rate of interest and fees from time to time under this scheme. In this respect a condition to be incorporated in the sanction letter issued to the borrower /client.

s) Condition of CCS (Staff): i) Eligibility: Only the confirmed employees (Junior Officer and above Officer / Executives) of the Bank will be eligible for the CCS (Staff) loan facility. ii) Loan Limit: ← Designation wise maximum loan limit will be as follows: - From Junior Officer and above : Tk 1.50 Lac - Other Officer including Teller : Tk 0.50 Lac - Sub Staff (Non Officer) : Tk 0.25 Lac ← However total monthly deduction from Salary of an employee including CCS loan installment shall not exceed 50% of Gross salary. ← An employee can avail fresh CCS loan facility after adjustment of his previous CCS loan liabilities. ← Educational expenses of any family member of an employee may be included in the purpose of CCS (Staff) Loan. ← Monthly other regular income of an employee may be considered within the gross monthly family income on a case to case basis if necessary at the time of fixing the loan limit. iii) The amount of loan will be adjusted maximum in 48 (forty-eight) equal monthly installments. iv) Once a loan is fully or partly adjusted, concerned Executive / Officer may avail loan again to buy similar or other item. v) Since the Borrowers are Bank's own Executives / Officers, they will be exempted from the following charges: - Down Payment (Advance deposit of installment/Equity); - Risk Fund; - Service Charge vi) The monthly installments for availing the loan will be deducted directly from the salary of the concerned Executive / Officer. vii) As the borrowers are Bank's own Executives / Officers and the installments will be deducted directly from the salary, so they will exempted from third party's Personal Guarantee. viii) Interest on loan for Executives /Officers under CCS will be charged @ 12% P.A. ix) The Loans of Executives / Officers under the scheme will be sanctioned by Credit Division, Head Office. x) The Divisional Heads of Head Office and Branch managers will forward loan application of the Executives / Officers of their respective Division / Branch to Credit Division, Head Office duly recommended in the prescribed application format for approval. xi) After approval a sanction letter will be issued in favor of the concerned Executive / Officer, Copy of which will be given to Divisional Head of Head Office / Branch Manager, HRD, FAD for necessary action at their end. xii) After getting the approval the loan will be disbursed directly to the concerned Executive's /Officer's SB/CD/A/c. xiii) Other terms and condition will remain same as the policy of CCS for the customer rather than Bank employees.

4.11 Policy of Credit Facility secured by Deposit/Cash Collateral (SOD)

Terms & Conditions: i) The Credit facility must be 100% covered by Deposit in our Bank under lien. 10% margin shall be retained in respect of funded facility i.e. Loans & Advances shall not exceed 90% of the deposits. In case of non-funded facility such as L/C or B/G, 100% exposure may be taken. ii) Interest differential between the Loans & Advances and deposits held with our Bank shall be 3% P.A. iii) Commission / Charges for non-funded facility may be reduced by 25%. iv) Proper Letter of Lien and other charge documents shall be obtained. In case the deposits are held in the name of the Third Party, Personal Guarantee of the Depositor will be obtained. v) The facility shall be approved by the Branch Management Committee and they shall submit a monthly statement of all such credit facility. vi) Photocopy of Deposit Receipt and Letter of Lien shall be attached with the statement. vii) Head Office Credit Division will review the statement and bring any irregularity to the attention of Management Committee of the Bank for further action including report to EC / Board.

4.12 Policy of Purchase / Discount / SOD (acceptance finance) of Local Export Bills and opening of L/C’s at 50% cash margin /en-cashable securities

The Branch may exercise the delegation for Purchase / Discount & SOD (Acceptance Finance) of Local Export Bills and opening of L/Cs at 50% cash margin / en-cashable securities without any post import facility under the following terms & conditions: i) The following delegation of business power for purchase and /or discount of Local Export Bills may be exercised: EVP/SVP : Tk 200.00 Lac VP/FVP : Tk 100.00 Lac AVP/FAVP : Tk 50.00 Lac MANCOM : Tk 500.00 Lac

Conditions for the Delegation:
a) The above limit is for single customer or group. (All companies in a group shall be treated as single customer).
b) The bills must be purchased / discounted strictly as per policy.
c) In case of SOD (Acceptance Finance) the branches must comply with the same policies procedure as for the discount / purchase.
d) Any exception to policy will require approval from EC / Board.
e) The authority shall be exercise by the FAVP / AVP / FVP / VP / SVP / EVP when they are posted as a Branch Manager along with the other members of the Branch Management Committee. ii) The following delegation of business power for opening of Sight Documentary L/Cs at 50% margin in the form of cash or en-cashable securities without any post import facility as under: EVP/SVP : Tk 200.00 Lac VP/FVP : Tk 100.00 Lac AVP/FAVP : Tk 50.00 Lac MANCOM : Tk 500.00 Lac

Conditions for the Delegation:
a) The above limit is for single customer or group. (All companies in a group shall be treated as single customer).
b) L/Cs where not less than 50% margin in the form of cash or en-cashable securities received and where no post import finance is required shall be eligible.
c) Stand by L/C will not be eligible.
d) L/Cs for import of capital machinery will not be eligible.
e) DP L/Cs or BTB L/Cs will not be eligible.
f) L/Cs for import of perishable goods will not be eligible.
g) No funded facility shall be allowed for such L/C.
h) The authority shall be exercise by the FAVP / AVP / FVP / VP / SVP / EVP when they are posted as a Branch Manager along with the other members of the Branch Management Committee.
Fortnightly statements as per prescribed format of all credit facilities extended by the Branch Management Committee should be sent to Head Office for review to enhance compliance of the rules and regulations. The statement should be sent as on every 15th and last day of the months.

4.13 Policy of Overdraft Receivable

For quick and easy identification of various exposure of the Bank by the name of the Accounting Head in our Statement of Affairs named as "Overdraft Receivable" under Loans & Advances A/C.

• Rules of Operations:

i) This overdraft account shall be for Working Capital financing against customers Receivables and book Debts. ii) Executive Committee shall approve this limit in favor of each customer which shall be communicated to Branch by Head Office. The limit shall be approved against outstanding Receivables which are not more than 90 days past due. A minimum margin of 25% shall be maintained. iii) Each disbursement shall be approved by the Branch Manager. iv) Branch Manager shall personally supervise adjustment of each drawing. v) Monitoring & Inspection Division of Head Office shall review the transactions in these accounts while they inspect the Branch. vi) Branch Manager must obtain Statement of Receivables at the time of each drawing and on monthly basis till full adjustment. vii) Statement of Bills Receivable as per prescribed format shall be submitted at the time of first disbursement. viii) The customer must undertake to deposit all his collections to their account with our Bank.

4.14 Credit Policy Exception

• Policy exceptions are required when:

a) The overall amount of credit in any one name or group exceeds 50% (Fund based 25% + Non fund based 25%) of our bank’s capital resources.
b) Entering in to under writing commitments; (other than syndicated loans).
c) Financing arms or other military equipment.
d) Extending credit direct to a holding company or based on the guarantee of a holding company that does not have substantial operating assets and revenues from diversified sources.
e) PBL are in an inferior position as compared to other bank lenders with comparable facilities.
f) Final payment date for commercial loans is over five years from date of customers’ acceptance of commitment.
g) Term loan commitments expire beyond six months from the date of credit approval.
h) The first amortizing payment for commercial loans occurs later than twelve months from the date of the final draw down.
i) Total amortizing payments for commercial loans during the final year exceed 30% of the original amount of the loan.

4.15 Financial Condition Of Credit Management From Year 2005-2009

• Classification Of Loans

| |
|Classification Of Loans |
|Year |
| |2005 |2006 |2007 |2008 |2009 |
|Loans considered good in respect of which the Bank is fully | | | | | |
|secured |1288 |1454 |1564 |2164 |2477 |
| | | | | | |
|Loans considered good against which the Bank holds no | | | | | |
|security other than the debtors’ personal security; |- |- |153 |234 |253 |
| | | | | | |
|Loans considered good secured by the personal undertaking of | | | | | |
|one or more parties in addition to the personal security of the | | | | | |
|debtors |515 |612 |646 |633 |635 |
| | | | | | |
|Loans adversely classified but provision not | | | | | |
|maintained there against |- |- |- |- |- |
| | | | | | |
|Loans due by directors or officers of the Bank or any of them | | | | | |
|either separately or jointly with any other persons |10 |13 |15 |21 |29 |
| | | | | | |
|Loans due from companies or firms in which the directors of | | | | | |
|the Bank are interested as directors, partners or managing | | | | | |
|agents or in case of private companies, as members |0.08 |- |- |- |- |
| | | | | | |
|Due from banking companies |- |- |- |- |- |
| | | | | | |
|Amount of classified loans on which interest has not been | | | | | |
|charged |69 |101 |140 |137 |61 |
| | | | | | |
|(a) Increase/decrease of provision (specific) |- | | | | |
| | | | | | |
|Amount of loan written off |- | | | | |
| | | | | | |
|Amount realised against loan previously written off |- | | | | |
| | | | | | |
|(b) Provision kept against loans classified as bad /loss | | | | | |
|on the date of preparing Balance Sheet |32 |45 |91 |56 |32 |
| | | | | | |
|(c) Interest charged in interest suspense account |8.9 |18 |34 |44 |55 |
| | | | | | |
|Written off loan | | | | | |
| | | | | | |
|During the period/year |- |- |- |14 |4 |
| | | | | | |
|Cumulative to-date |- |- |- |- |- |

|Loans considered good in respect of which the Bank is fully secured; |
|Year |2005 |2006 |2007 |2008 |2009 |
|Amount In Taka(Crore) |1288 |1454 |1564 |2164 |2477 |

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|Loans due by directors or officers of the Bank or any of them |
| |
|Year |2005 |2006 |2007 |2008 |2009 |
| Amount In Taka (Crore)|10 |13 |15 |21 |29 |

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| |
|Loans Classified During The Year |
|Year |2005 |2006 |2007 |2008 |2009 |
| Amount In Taka (Crore)|69 |101.2 |140.6 |137 |61.8 |

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