...bankruptcy and don't want to dilute existing shares. It can also signal a commitment to increase output to rival firms. Disadvantages - Increases the company's risk level. Company is more sensitive to economic downturns, interest rate variability, and changes in market conditions. Has to be re-paid. There is less risk appetite in making investment decisions as a result. Loan covenants have to be met. Assets may be taken as collateral if the firm cannot pay. . Explain the difference between subordinate debentures and debentures. A subordinated debenture is a bond or debt obligation issued by a corporation that has junior priority status relative to other bondholders of the company in the event of a liquidation or dissolution. Since the claims of subordinated debentures are lower than those of other corporate creditors, they carry greater investment risk. Subordinated debentures are backed or secured only by the full faith and credit of the issuing corporation. A debenture is a document that either creates a debt or acknowledges it, and it is a debt without collateral. Debenture is thus like a certificate of loan or a loan bond evidencing the fact that the company is liable to pay a...
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...Internship Report on Overall banking operations; A practical study on JBL, Kadirgonj branch, Rajshahi Submitted to the Department of Management of Rajshahi University in partial fulfillment of requirement for the award of the MBA degree Under the supervision of Prof. Dr. ANM Jahangir Kabir Department of Management University of Rajshahi Rajshahi- 6205 By Md. Rokonuzzaman Exam Roll No: 04107262 MBA in Management Session: 2003-2004 University of Rajshahi Rajshahi- 6205 April 20, 2010 MBA; Internship repot 0 Department of Management University of Rajshahi Rajshahi- 6205 Chapter objectives To be acquainted with the Background of JBL. To know about the Role and Function of JBL as a Commercial Bank. To be acquainted with different Branches of JBL at Rajshahi. To be acquainted with the Background of JBL, Kadirgonj Branch; Rajshahi. MBA; Internship repot 1 Department of Management University of Rajshahi Rajshahi- 6205 Theoretical discussion Janata Bank Limited, one of the state owned commercial banks in Bangladesh, has an authorized capital of Tk. 20000 million (approx. US$ 289.85 million), paid up capital of Tk. 5000.00 million, reserve of Tk.8202.00 million and retained surplus Tk. 2737.00 million. The Bank has a total asset of Tk. 282423.00 million as on 30th November 2009. Immediately after the emergence of Bangladesh in 1971, the erstwhile United Bank Limited and Union Bank Limited were renamed as Janata Bank. On 15th November, 2007 the bank has been corporatised and...
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...ASIAN JOURNAL OF MANAGEMENT RESEARCH Online Open Access publishing platform for Management Research © Copyright 2010 All rights reserved Integrated Publishing association Review Article ISSN 2229 – 3795 Non performing assets: Issues, Causes and remedial Solution Poongavanam.S H.O.D., Department of Management studies, Ranippettai Engineering College, Thenkaddapanthangal, Walaja Taluk, Vellore District. -632513 Tamil Nadu. s.poongavanam@gmailo.com ABSTRACT The banking industry has undergone a sea change after the first phase of economic liberalization in 1991 and hence credit management. While the primary function of banks is to lend funds as loans to various sectors such as agriculture, industry, personal loans, housing loans etc., in recent times the banks have become very cautious in extending loans, this is due to mounting nonperforming assets (NPAs). Therefore, an NPA account not only reduces profitability of banks by provisioning in the profit and loss account, but their carrying cost is also increased which results in excess & avoidable management attention. Apart from this, a high level of NPA also puts strain on a banks net worth because banks are under pressure to maintain a desired level of Capital Adequacy and in the absence of comfortable profit level, banks eventually look towards their internal financial strength to fulfill the norms thereby slowly eroding the net worth. Considering all the above facts banking industry has to give more importance to...
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...Risk and risk management 1. Credit Risk – The risk of loss of principal or loss of a financial reward stemming from a borrower's failure to repay a loan or otherwise meet a contractual obligation. Credit risk arises whenever a borrower is expecting to use future cash flows to pay a current debt. Investors are compensated for assuming credit risk by way of interest payments from the borrower or issuer of a debt obligation. The higher the perceived credit risk, the higher the rate of interest that investors will demand for lending their capital. Credit risks are calculated based on the borrowers' overall ability to repay. This calculation includes the borrowers' collateral assets, revenue-generating ability and taxing authority (such as for government and municipal bonds). 1) Total loans to assets The loans to assets ratio measures the total loans outstanding as a percentage of total assets. The higher this ratio indicates a bank is loaned up and its liquidity is low. The higher the ratio, the more risky a bank may be to higher defaults. This figure is determined as follows: Loans to Assets = ( Loans / Total Assets ) 2) Nonperforming loans/total loans Nonperforming loans, or NPL, are loans that are no longer producing income for the bank that owns them. Loans become nonperforming when borrowers stop making payments and the loans enter default. The exact classification can vary from institution to institution, but a loan is usually considered to be nonperforming after...
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...| Debt Management Program in the Philippines | The first debt and debt service reduction operation the World Bank financed was the Debt Management Program Loan to the Philippines, approved in 1990. Its main objective was to help restore the Philippines' creditworthiness by reducing the destabilizing pressures exerted by an excessive debt-service burden. The government, having inherited a huge debt service obligation, formulated a debt restructuring program for the country and a request for debt-relief from creditors, with assistance from the Bank and the IMF. Several events helped improve the Philippines' creditworthiness. Three of them are particularly relevant to the operation. First, the government adopted a program of deep structural and macroeconomic reform. Second, it reduced the debt stock by about $650 million equivalent, or about 2.3 percent of its outstanding debt at the time, using Bank and IMF financing to buy back $1.46 billion of debt from commercial banks at 50 percent discount. And finally, by signaling confidence in the Philippines' commitment to sound macroeconomic reform, the Debt Management Loan opened up international financial markets for the country. However, the program's success also led to a new problem. It encouraged new loans and other inflows of capital, which eventually became a major source of monetary problems and instability. The resulting increase in inflation forced the government to rein in the economy, suppressing growth; the currency...
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...definition of loan, definition of SME, general principles of lending, loan monitoring and control, access to credit as well as repayment performance: theory and practice. 2.1 Definition of loan A loan is a type of debt like all debt instruments, a loan entrails the redistribution of financial assets over time, between the lender and the borrower. The borrower initially receives an amount of money from the lender which they pay back, using but not always in regular installment. Types of loans There are many different types of loans you can take out. When you are looking to borrow money, it’s important that you know your options. i. Open-ended loans: they are loans that you can borrow over and over again. Credit cards and lines of credit are the most common types of open-ended loans. With both of these loans, you have a credit limit that you can purchase against. Each time you make a purchase, your available credit decreases. As you make payments, your available increases allowing you to use the same credit over and over. ii. Closed-ended loans: this cannot be borrowed once they have been repaid. As you make payments on closed-ended loans, the balance of the loan goes down. However, you do not have any available credit you can use on closed-ended loans. Instead, if you need to borrow more money, you would have to apply for another loan. Common types of closed-ended loans include mortgage loans, auto loans and students’ loans. iii. Secured loans: These are loans that rely on...
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...term paper on “Unethical practice of Sonali Bank Ltd” Submission Date: 30-11-2013 Letter of Transmittal November 30, 2011 To Dr. A. R. Khan Professor Department of Banking Faculty of Business Studies University of Dhaka Subject: Submission of Term Paper on Social Responsibility & Business Ethics. Dear Sir, As instructed and part of our academic program under EMBA, I do hereby submit my report on ‘Unethical practice of Sonali Bank Ltd.’ for your kind review and necessary reference. While preparing this report, I tried my best to follow the guidelines you have given and also have gathered some practical experience. I hope that this report will meet your expectation. I have engaged our intense efforts to bring out this study report with the target of achieving perfection but we are in a little doubt how far I have attained it. It was a great pleasure for me to work on this report. I shall be glad to furnish you with any explanation, if necessary. I shall be highly obliged if you kindly accept my report. Sincerely yours, Abu Sadat Md. Salim I.D No: 51221026 21st Batch Acknowledgement It gives me much pleasure to recall with cordial reverence and deepest of gratitude the indispensable guidance, constant encouragement and unparallel stimulation that influenced untiring efforts. Sympathetic advice and invaluable suggestions of our respectable teacher...
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...becomes a crucial and high priority mission in such risky environment. Question 1: First, it is important and necessary to identify all the kind of risk Wellfleet Bank faces in this strategy. Syndicated and leveraged loans have played important roles in Wellfleet Banks’ corporate bank business since 2004. Facility for Gatwick Gold Corporation, with a large amount of debt already, a 1-year bridging loan of $1billion is considered as a leveraged loan. Gatwick Gold Corporation had committed a $50 million facility before. A sudden increase in this limit by $1 billion surprised relationship manager Jaidev Kapoor, who had 10-year working experience in Wellfleet. In addition, a syndicated loan agreement is the kind of loan in which a borrower requires a large or sophisticated facility or multiple types of facility by the channel through funding from a group of lenders. It facilitates the loan process by combining several separate bilateral loans, each with different terms and conditions, into one agreement between the borrower and the whole group of banks. Term loan facility and revolving loan facility are the two major types of facility commonly syndicated. Under a term loan facility, lenders only provide a specified amount of capital over the period of loan at a fixed interest rate. In contrast, lenders provide an aggregate amount of capital in several times over...
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...Susan Yuska at the Chicago Fed was very helpful in guiding me through the Bank Holding Company Database. http://www.bof.fi ISBN 978-952-462-340-7 ISSN 0785-3572 (print) ISBN 978-952-462-341-4 ISSN 1456-6184 (online) Helsinki 2006 The effect of lenders’ credit risk transfer activities on borrowing firms’ equity returns Bank of Finland Research Discussion Papers 31/2006 Ian W Marsh Monetary Policy and Research Department Abstract Although innovative credit risk transfer techniques help to allocate risk more optimally, policymakers worry that they may detrimentally affect the effort spent by financial intermediaries in screening and monitoring credit exposures. This paper examines the equity market’s response to loan announcements. In common with the literature it reports a significantly positive average excess return – the well known ‘bank certification’ effect. However, if the lending bank is known to...
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...“Credit Management and performance evaluation of National Bank Limited” Chapter – 01 Introduction OF THE REPORT 1.1 Introduction National bank limited (NBL) is a full service scheduled commercial bank. It has both local and International Institutional Shareholder. The bank is primarily driven with a view of creating opportunities and pursuing market niches not traditionally meet by conventional banks. National Bank has been motivated to provide “best-in-the-class” services to its diverse assortment of customers spread across the country under an on-line banking dais. Today, National Bank is one of the fastest growing banks in the country. In order to support the planned growth of its distribution, network and its various business segments, National Bank is currently looking for impressive goal oriented, enthusiastic, individuals for various business operations. The bank wants to build a profitable and socially responsible financial institution. It carefully listen to the market and business potentials, It is also assisting stakeholders to build a progressive, healthy, democratic and poverty free Bangladesh. It helps make communities and economy of the country stronger and to help people achieve their financial goals. The bank maintains a high level of standards in everything for our customers, our shareholders, our acquaintances and our communities upon, which the future affluence of our company rests. Risk is inherent in all aspects of a commercial operation...
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...Polytechnic University of the Philippines College of Accountancy and Finance DEPARTMENT OF BANKING AND FINANCE Sta. Mesa, Manila ------------------------------------------------- COMPARATIVE ANALYSIS OF THE PERSONAL FINANCIAL MANAGEMENT PRACTICES OF SELECTED CALL CENTER AGENTS IN CITIGROUP BUSINESS PROCESS SOLUTIONS, MAKATI CITY ------------------------------------------------- In Partial Fulfillment of the Requirement in the Subject Methods of Research (FINA 3073) ------------------------------------------------- By ARTAGO, JEANNE L. BASIG, FRANZESSE CLYEDELLE E. GARCIA, JAMEE P. SERRANO, SHARMINE C. SOLIMAN, CERMI JANE V. BBF 4 – 10S October 2013 ------------------------------------------------- PROF. MELVIN JASON DE VERA ACKNOWLEDGEMENT In making this study possible, the researchers would like to give their deepest gratitude to the following people: Prof. Melvin Jason S. De Vera, research adviser, for his support and for patiently giving an advice in accomplishing this study; Prof. Bernadette M. Panibio, for approving this study; Mr. Randy C. Chang of Citigroup Business Process Solutions, for helping the researchers in conducting the survey; The parents and guardians of the researchers, for consistently giving moral and financial support, encouragement and inspiration; and Most of all, the Almighty God, for giving the strength, knowledge, wisdom and courage the researchers need in order to fulfill this study. THE RESEARCHERS ...
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...Chapter-1 Introduction of the report 1.1 Origin of the report Reporting means the written presentation of the evidence and findings of a research. After completion of the internship program report submission is essential. The report is based on a topic that can satisfy both organization and my academic institution. Internship is the last part of my BBA course. Being a BBA student internship and report submission is essential for me. Without completion of internship and submission of report I cannot be able to complete my BBA course. This report is submitted to my internship supervisor, Shishir K. Rouph, Visiting Faculty, University Of Development Alternative, after completion of the three months internship program in the BASIC Bank Limited ( Bangshal Branch). I have assigned a topic “Credit Operating Procedure of BASIC Bank Ltd.” and the BASIC Bank authority gave me the opportunity to work at the Bangshal Branch for three months on the topic. 1.2 Rationale of the Study In the later 19th century, finance was a part of the Economics. But due to the globalization and more expansion of international trade, Finance plays the major role for the economic development. The development of a modern economy would not have been possible without the use of money. Bank is an important and essential financial institution for the necessity of the use of money and the protection of money. Due to the globalization and technological innovation, banking business has become...
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...microcredit loan operations. She lives with her husband, Mr. Abdus Salam, a daughter and two sons. At present all her children go to school and she is able to bear both the educational and family expenses. Along with that she is now able to make some personal savings additional to general savings of "Jonaki samiti". But things were not the same even few years earlier. Her husband was a day labourer and it was very hard to bear family expenses with his single income. Their life was becoming tougher day by day and Rabeya wanted to do a bit by herself to help her husband from this growing desolation. One day she came to know that a samiti named "Jonaki" operated by Coast Trust, provides loan wih nominal conditions for a number of Income Generating Activities (IGAs). Sooner she spoke to the Chairperson of the "Jonaki Samiti" and became a memeber of that samity. After accomplishing all the regulations together with general savings she got her first loan installment of Taka 7000. She invested the money in vegetable cultivation. Subsequently she was able to sell some amount of vegetable per week after meeting her own family demand which helped her husband with additional income. In the intervening time she was able to save Taka 3000 along with the ragular savings of samiti and gradually she repaid the loan. After the repayment of first loan amount she applied again for an amount of Taka 20,000. Considering her financial condition and determination "Jonaki Samiti" sanctioned the loan. Inspired...
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...bank: * processing of payments by way of telegraphic transfer, EFTPOS, internet banking, or other means * issuing bank drafts and bank cheques * accepting money on term deposit * lending money by overdraft, instalment loan, or other means * providing documentary and standby letter of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures * safekeeping of documents and other items in safe deposit boxes * sales, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products as a “financial supermarket” * cash management and treasury * merchant banking and private equity financing * traditionally, large commercial banks also underwrite bonds, and make markets in currency, interest rates, and credit-related securities, but today large commercial banks usually have an investment bank arm that is involved in the mentioned activities. Types of loan provided: Secured loan - borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan Mortgage loan - money is used to purchase the property Unsecured loan - loans that are not secured against the borrower's assets (e.g bank overdraft) Trade services and finance: Citibank offer a full suite of trade solutions to support your business growth and expansion. Dedicated trade advisors to handle your...
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...review the global best practices in the banking sector and examines in the possibility of introducing these in the banking industry of Bangladesh. Four 'Focus Groups' were formed with participation from Nationalized Commercial Banks, Private Commercial Banks & Foreign Banks with representatives from the Bangladesh Bank as team coordinators to look into the practices of the best performing banks both at home and abroad. These focus groups identified and selected five core risk areas and produce a document that would be a basic risk management model for each of the five 'core' risk areas of banking. The five core risk areas are as follows- a) Credit Risks; b) Asset and Liability/Balance Sheet Risks; c) Foreign Exchange Risks; d) Internal Control and Compliance Risks; and e) Money Laundering Risks. Bangladesh Bank in one of it’s circular (BRPD Circular no.17) advised the commercial banks of Bangladesh to put in place an effective risk management system by December, 2003 based on the guidelines sent to them. I am working in the Credit Department of Dhaka Bank Limited, Islampur Branch. In this report, I will try to make a comparative analysis between Bangladesh Bank’s suggested best practices guideline for managing credit risk and...
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