INTERNSHIP REPORT

ON

A STUDY ON FINANCIAL PERFORMANCE WITH

RESPECT TO LOANS AND ADVANCES

OF

SOUTHEAST BANK LTD

STAMFORD UNIVERSITY BANGLADESH

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 INTERNSHIP REPORT

ON

A STUDY ON FINANCIAL PERFORMANCE WITH

RESPECT TO LOANS AND ADVANCES

OF

SOUTHEAST BANK LTD

SOUTHEAST BANK LIMITED

Page | ii
 INTERNSHIP REPORT

ON
A STUDY ON FINANCIAL PERFORMANCE WITH
RESPECT TO LOANS AND ADVANCES
OF
SOUTHEAST BANK LTD

SUPERVISED BY:

Nigar Sultana
(internship Supervisor)
Assistant Professor
Department of Business Administration
Stamford University Bangladesh

PREPARED BY:

Md. Nishat Hossain

ID: BBA 059 18091
BBA Program
Batch: 059 (D)
Major in Accounting
Department of Business Administration
Stamford University Bangladesh

Date of Submission: 26/11/2019

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 Letter of Transmittal
Date: August 19, 2019
Nigar Sultana
Assistant Professor
Department of Business Administration
Stamford University Bangladesh
Subject: Submission of Internship report on “A Study on Financial Performance with Respect
to Loans and Advances of Southeast Bank Ltd”
Dear Madam,

I am very pleased to submit you my internship report “A Study on Financial Performance with
Respect to Loans and Advances of Southeast Bank Ltd”. It has been a great contentment for
me to have the opportunity to apply my academic knowledge in practical field. The theoretical
knowledge is of no worth if it is not applied in reality. The report is prepared on the basis of the
theoretical and practical learning from the 3-month internship program in SEBL.

I tried my level best to put meticulous effort for the preparation of this report. As an intern it is
usual that shortcomings or flaws may arise and it may lack professionalism in some cases. For any
unintentional inadequacy in the report, your sympathetic consideration would be highly
appreciated. Furthermore, I will wholeheartedly welcome any clarification and suggestion about
any view and conception disseminated in the report. I truly appreciate your patience and support.
I sincerely expect that you would be kind enough to accept my report for evaluation and oblige
thereby.

Yours Sincerely,

…………………………………..
Md. Nishat Hossain
Id no: BBA 059 18091
Batch: 059 (D)
BBA (Major in Accounting)
Department of Business Administration
Stamford University Bangladesh

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Certificate of the organization

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 Supervisor Certificate

This is to certify that the Internship report on entitled A Study on Financial Performance with
Respect to Loans and Advances of Southeast Bank Limited. submitted for the award of the
degree of bachelor of business administration in accounting from the Stamford University
Bangladesh is an authentic research carried out by Md. Nishat Hossain BBA-059 18091 under my
supervision.

He is permitted to submit the thesis report and I wish his every success in life.

…………………..

Nigar Sultana

(Internship supervisor)

Assistant Professor

Department of business administration

Stamford University Bangladesh

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 Student’s Declaration

I’m Md. Nishat Hossain, Id no: BBA 05918091, a student of Business Administration, Stamford
University Bangladesh, hereby that, the report entitled A Study on Financial Performance with
Respect to loans and Advances of Southeast Bank Ltd.is an original work done by me under
the supervision of Nigar Sultana, Assistant Professor of Department of Business Administration
of Stamford University Bangladesh.

No part of this report has been submitted by me for any degree, diploma, title or recognition
before.

………………………………………..

Name: Md. Nishat Hossain

ID No: BBA 05918091

Batch no: 059 (D)

Major: Accounting

Department of Business Administration

Stamford University Bangladesh

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 Acknowledgement

At first, I should thank Almighty Allah for enabling me to complete my internship report in time.
I got appointed to work as an intern at Southeast Bank Limited, Corporate branch. I gathered
experience as I worked in an office environment. It was a great pleasure for preparing Internship
report on the “A Study on Financial Performance with Respect to Loans and Advances of
Southeast Bank Limited”. I would like to hank and convey my gratitude to honorable Supervisor,
Nigar Sultana (Assistant Professor, Department of Business Administration of Stamford
University Bangladesh) for letting me to prepare this report and I would also like to express my
sincere appreciation to her for her wholehearted support and guidance.

I am also grateful to the management of Southeast Bank Limited for offering me to Internship
training. My special thanks to Mr. Abidur Rahman Chowdhury (Executive Vice President) at
Southeast Bank Limited, Corporate Branch both of the respected executive’s works behind me
doing my internship.

For their constant guidance and help in completing this report and saving my valuable time
placement and on time termination of internship period. At last I must mention the wonderful
working environment and co-operative group behavior of this bank that has enabled me a great
deal to do and observe the banking activities during my internship period of three months. Finally,
I would like to acknowledge all the officers and staffs their help and co-operation whose
continuous support has enriched my Knowledge in Banking

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 Executive summary

Today necessity of a bank as a financial institution is undeniable. A country is financially rich

when it has modern financial institution of its own. These institutions play a vital role in the field
of financial stability of a country. Banking sector is one of the stable financial institutions of a
country. Due to Globalization and Technological changes, the banking business has become very
competitive now a day. All banks are competing to give effective real time service to their
customers. For giving friendly service to the customers they need experienced and well educated
working force.

The overall approach of the report is a descriptive one as it goes into the depth of service quality
of SEBL. Here both primary and secondary information were used. Interview was the basic
techniques comply to primary data from any people within the organization. Information about the
varieties of activities within the Correspondent Banking Department was collected through
interviewed. Among the secondary sources to collect data regarding the company’s performance
over the past five years are publications, Annual reports of SEBL, Different circulars and papers
of SEBL, Term papers of SEBL Training manuals, Credit Manual General Operation manual.
Banking lecture sheet within the organization helped me to gather data about the organization.

This internship report composed of five chapters. In chapter one I describe the background,
objective, scope, methodology, and limitation. Chapter two elaborates the overview of the
Bangladesh banking sector which includes historical background of banking operations of bank.
In the chapter three, overview of the organization as background of the organization, board of
directors, mission, vision, organization structure, product & service, list of branch, profitability
position of the bank last five years and liability & shareholder equity position last five years.

Chapter four includes on a study on financial performance with respect to loan and advances of
Southeast Bank Limited. The whole system has been described elaborately keeping in mind the
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most important segments. In addition, the diagrams Loan Approval Process and Loan Grading
score sheet add a clear understanding of the system.

Chapter five includes the analysis and findings. The analysis includes –SWOT analysis of SEBL,
satisfactory level analysis by calculation employee satisfaction ratio and overall common findings.

At last chapter I gave some suggestions and draw the conclusion

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 List of Acronyms

AIS Accounting Information System

A /D Authorized Dealer
B/L Bill of Landing
BB L/C Back to Back Letter credit
CAD Cash against Document
CSR Corporate social Responsibilities
EFT Electronic Fund Transfer
EXP Export Forms
FDI Foreign Direct Investment
FDR Fixed Deposit Receipt
IRC Important Registration Certification
IT International Trade
L/C Letter of Credit
OBC OUT Ward bill collection
PC Packing Credit
PDC Post-dated Cheque
SD saving Deposit
SND Short Notice Deposit
SOD Secured Over Draft
STD Short Term Deposit
SEBL Southeast Bank Limited

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 Table of Contents

Serial No Content Page

No
Inter Cover 1 I
Inter Cover 2 II
Inter Cover 3 III
Letter of Transmittal IV
Certificate Provided by Bank V
Certificate of Supervisor VI
Declaration of students VII
Acknowledgement VIII
Executive Summary IX-X
List of Acronyms XI
Table of Contents XII- XV
List of Tables XVI
Table of Figures ⅩVII
Chapter- 01 ( Introduction ) 1

1.1 Introduction 2
1.2 Background of the study 2-3
1.3 Methodology of the study 3

1.4 Objective of the study 3

1.4.1 Primary Sources 4

1.4.2 Secondary Sources 4

1.5 Scope of the study 4

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1.6 Limitation of the study 5
Chapter- 02 ( An Overview Of Banking Sector In 6
Bangladesh)
2.1 Definition of Bank 7
2.2 Objective of Bank 7
2.3 Historical Background of the Banking in Bangladesh 8-10
2.4 History of Baking Operation Of Bangladesh 11-13
2.5 Currently Operated Bank in Bangladesh 14-15
16
Chapter- 03( Overview Of The Organization )

3.1 Historical Background of Southeast Bank Limited 17-18

3.2 Composition of the Board 18
3.2.1 Board of Directors 18-19
3.2.2 Audit Committee 19
3.2.3 Risk Management Committee 19
3.2.4 Executive Committee 20
3.2.5 Shariah Supervisory Committee 20
3.2.6 Senior Management Team 21
3.3 Vision of SEBL 21
3.4 Mission of SEBL 21
3.5 Organization Structure/ Hierarchy of the organization 22-23
3.6 Products & Services 23-25
3.7 Bank Operation Area 25
3.8 Achievements 26
3.9 List of Branch 26
3.10 Capital & Reserves 26

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3.11 Profitability Position of the Bank for Last 5 Years 27
3.12 Total Assets Position Of The Bank Last Five Years 28
3.13 Total Liability & Shareholder Equity Position for Last
Five Years 28

Chapter- 04 ( A Study On Financial Performance 29

With Respect To Loans And Advances )
4.1 Introduction 30
4.2 Definition Credit 30
4.3 Loan and Advance 30
4.4 Different Types of Loan & Advance Facilities 31-35
4.4.1 Overdraft 31
4.4.2 Cash Credit 31
4.4.3 Demand Loan 31
4.4.4 Term Loan 31-32
4.4.5 Bill Discounting 32
4.4.6 Loan 32
4.4.7 Short Term Loan 32
4.4.8 Letter of Credit (L/C) 33
4.4.9 Home Loan 33
4.4.10 Bank Guarantee 34
4.4.11 Car Loan 34
4.4.12 Marriage Loan 34
4.4.13 Travel Loan 34-35
4.4.14 Loan against Salary 35
4.4.15 Education Loan 35
4.5 Loan Process 35

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 4.5.1 Application for the Loan 35
4.5.2 Preparation of loan proposal 36
4.6 Loan Procedure of SEBL 37
4.7 Documentation 38
4.8 Assessment of the loan proposal 38-39
4.9 Credit approval process 40
4.10 Securities 41
4.11 Loan Disbursement 41
Chapter-05 (Analysis and Findings) 42
5.1 Loans and Advances (Type wise loan) 43
5.2 Sector-wise Allocation of Loans and Advances 44-45
5.3 Geographical Location Wise 46-47
5.4 Ratio of Non-performing loan to Total loan 48
5.5 Loan & Advances (Total Deposits and Total Loan & 49
Advances)
5.6 SWOT Analysis 50-52
5.7 Findings 53-54
Chapter -06 (Recommendation and Conclusion) 55
6.1 Recommendation 56
6.2 Conclusion 57-58
6.3 References 59
Appendix 60

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 List of Tables

Table Page
Number
Table 1: Currently Operated Bank in Bangladesh 14-15
Table 2: Board of Directors List 18-19
Table 3: Audit Committee 19
Table 4: Risk Management Committee 19
Table 5: Executive Committee 20
Table 6: Shariah Supervisory Committee 20
Table 7: Senior Management Team 21
Table 8: Organization Structure/ Hierarchy of the Organization 22-23
Table 9: Profitability Position of the Bank Last Five Years 27
Table 10: Total Asset Position of the Bank Last Five Years 28
Table 11: Total Liability& Shareholders Position for Last Five 28
Years
Table-12: Type Wise Lone 43
Table-13: Sector-Wise Allocation of Loans and Advances 44
Table-14: Geographical Location Wise 46
Table-15: Ratio of Non-performing loan to Total loan 48
Table-16: Total Deposits and Total Loan& Advances 49

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 Table of Figures

Figure Page
Number
Figure 1-: Loan Procedure of SEBL 37
Figure 2- : Credit Approval Process 40
Figure 3- :Type Wise Lone 43
Figure 4- : Sector-Wise Allocation of Loans and Advances 45
Figure 5- : Geographical Location Wise 47
Figure 6- : Ratio of Non-performing loans to total loans 48

Figure 7-: Loan to deposit ratio 49

Figure-8-: SWOT Analysis 50

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 CHAPTER 1
INTRODUCTION

Topics to be covered:

1.1. Introduction
1.2. Background of the study
1.3. Objective of the Study
1.4. Methodology of the Stud
1.4.1. Primary Sources
1.4.2. Secondary Sources
1.5. Scope of the study
1.6. Limitation of the study

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1.1: Introduction

Generally, by the word “Bank” we can easily understand that the financial institution deals with
money. But there are different types of banks such as; Central Banks, Commercial Bank, Saving
Banks, Banks, Industrial Banks, Co-operative Banks etc. But when we are the term “Bank” without
any prefix, or qualification, if refers to the ‘commercial bank’. Commercial banks are the primary
contribution to the economy of a country.

We can say commercial banks are a profit-making institution that holds the deposits of individual
& business in checking & saving account and then uses these funds to make loans. Both general
public and the government are dependent on the services of banks as the financial intermediary.
As banks are profit-earning concern they collect deposit at the lowest possible cost and provided
loans and advances at higher cost. The difference between two are the profit for the bank.

Banking sector is expanding its hand in different financial events every day. At the same time the
banking process is becoming faster, easier and the banking area is becoming wider. As the demand
for better service increase day by day, they are coming with different innovative ideas & products.
In order to survive in the competitive field of the banking sector, all banking organization are
looking for better service opportunities to provide their fellow clients. As a result, it has become
essential for every person to have idea on the bank and banking procedure.

1.2: Background of the study:

A developed banking sector plays a vital role for financial stability of a country. In the BBA
program, the internship is one of the vital parts, which has to be done by every student. The
internship program provides an opportunity for the student to minimize the gap between theoretical
and practical knowledge and will help in practical life. After completing my Bachelors of Business
Administration (BBA) as a student I wanted to complete my Internship program from a reputed
Bank which would be helpful for my future professional career. I got this great opportunity to
perform my internship program in the Southeast bank ltd. I have completed internship program
based on theoretical and practical knowledge. I was sent to Corporate Branch. It was three months’
practical orientation program. This report is originated as the requirement of SEBL.

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I have selected Loans and Advances of SEBL as my concentration topic. I have worked in
Regulatory Reporting Department mainly. As an Accounting student I liked to choose Financial
Performance with Respect to loan and Advances as the topic of my internship report.

1.3: Objective of the Study:

 To fulfill the partial requirements of getting BBA degree from Stamford University
Bangladesh

 To get an overall idea about the overall credit disbursement procedures of Southeast Bank
Ltd (SEBL)

 To know about the Credit products of SEBL.

 To create an exposure on the performance of Credit department of SEBL.

 To know the banking product and services.

 To gather practical knowledge regarding banking system and operations

 To get the real life Experience in the Banking sector.

1.4: Methodology of the Study:

The report is prepared on the basic of an overview of loans and advances of Southeast Bank Ltd.
To conduct the overall study at first I explored the sources of Primary and Secondary information
and data. Different files of the department and statement prepared by credit department helped me
to prepare this report. To present financial performance of SEBL, I used the Annual Report of
2014 to2018 of Southeast Bank Ltd. For preparing this report I have used some graphical
representation to find out different types of analytical and interpretation.

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Primary Sources

 Official records of Southeast Bank Ltd (SEUL)

 Face to face conversation with the client
 Personal Interview face to face conversation and in depth interview with the respective
officers of the branch.
 Personal observation – observing the procedure of banking activities followed by each
department.
 Practical work exposures on different areas of the branch.

Secondary Sources

 Study to Annual report of Southeast Bank Limited.

 Relevant file study as provided by the officers concerned.
 Other manual information.
 Online data from SEBL website.
 Various publication of the Bangladesh Bank.

1.5: Scope of the study:

This report has been prepared on the basis of experience gathered during the period of internship.
For preparing this report I have also got information from Annual report and other third party
websites. Bank performs different activities such as deposit collection, providing loans and
advances, foreign exchange related activities etc. but scope of this report is limited to loans and
advances of Southeast bank limited

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1.6: Limitation of the study:

 Only 12 weeks were not sufficient to collect and understand all the activities related to
Banking.
 In the research areas, the authorities could not express to us accurate data easily for the
reason of their confidentiality.
 The executives of the bank could not give adequate time because of their work.
 All the interpretation and conclusion about the result of study is based on the analyst own
perspective.
 Every organization wants to maintain the confidentiality of the information.
 For the lack of our practical knowledge, some shortcoming may be available in the paper.
 The bank has naturally shown us some indifference connecting its most confidential
information.
 The executives of SEBL were too busy to spare time for the internee.

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 CHAPTER 2
An Overview of Banking Sector in
Bangladesh

Topics to be covered:

2.1. Definition of Bank

2.2. Objective of Bank

2.3. Historical Background of the Banking in Bangladesh

2.4. History of Baking Operation of Bangladesh

2.5. Currently Operated Bank in Bangladesh

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2.1: Definition of Bank:

A bank is an establishment which trades with money with the aim to earn profit. It is an
establishment for deposit custody & issue of money and also for granting loans and discounting
bills and facilitating transmission of remittances from one place to another.

From the view point of The Oxford Eng. Dictionary “Banking is a business of a banker, keeping
or management of a bank”.

Banking means the accepting for the purpose of landing or investment of deposit of money from
the public, repayable on demand or otherwise and withdrawal by Cheque, draft, order or otherwise,
“Indian Banking Companies Act”

2.2: Objective of Bank:

A bank established with various objective. The objective is stated below:

 From viewpoints of Bank owners:

i. Earning profits
ii. Goodwill
iii. Raising Efficiency
iv. Rendering Service
v. Investment of Capital
 From viewpoints of Government:
i. Issue of note and currencies
ii. Capital formation
iii. Capital investment &industries
iv. Money market control
 From viewpoints of Bank Clients:
i. Deposits
ii. Safety
iii. Advisors & consultants
iv. Presentative on trustee
v. Raising living standard

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2.3: Historical Background of the Banking in Bangladesh:

The word bank, which means a financial intermediary that collects deposits from savers and
disburses loans to the fund seekers and acts as the principal medium internal resources
mobilization of an economy, is not the result of a short period. Instead, it has to pass through a
very long period.

In the ancient age, people had to satisfy all of their needs by themselves. At this stage, there was
no surplus production. Hence the concept of transaction was yet to be introduced. But, as the
division of work took place in the society, there was surplus as well as deficit production in each
society. This lead to the introduction of ‘BARTER SYSTEM’ in which commodities were
exchanged for commodities directly. But this transaction system could not last for a long time for
some problems such as:

Double coincidence of needs: this means the needs of two persons must meet the surplus that they
have. For example, one person has some surplus rice and another person has some surplus cloths.
If they the person with rice has the need of cloths and the person with cloth needs rice, only then
the transaction will take place. But it was difficult Indivisibility of goods: all goods are not divisible
and not of same worth. This caused a big problem for transaction. For example, a cow is not
exchangeable for 1-meter cloth, neither it can be dividable in smaller units.

As result, people had o think for a mechanism that would solve these problems and facilitate the
transaction process. This resulted in the introduction of money in the form of stone, metals, bones
etc.

After the introduction of money, the volume of transactions increased to a great extent. People
with surplus money started to feel insecure about their money. At that stage, goldsmiths, priests,
businessmen were the most honorable and trusted people in the society. People started to keep
their surplus money and jewelry deposited with them. They lent this money without any charge to
those who needed money. This was the ‘transaction of utmost faith’. From here, the history of
bank counts.

After some time, businessmen started to charge some charges on those who took loan from them.
It was the goldsmiths who introduced the ‘deposit slips’ in the history. Day by day, volume and
complexity of transactions kept increasing, so as the concept of bank.

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The banking systems of ancient age and the banking systems of modern age are two distinctively
separate entities. The situations and flaws that resulted the banking systems in the present form are
highlighted below:

As early as 2000 B.C., Babylonians had developed a system of bank. In ancient Greece and Rome,
the practice of granting credit was widely prevailed. ‘Traces of Credit by compensation and by
transfer’ orders were found in Assyria, Phoenicia and Egypt before the system attained full
development in Greece and Rome. The book of old Hindu saw giver, MANU, is full of regulations
for governing credit. He speaks of judicial proceedings credit instruments were called for, interest
on loans, on bankers, users and even of the renewals of commercial papers.

In Rome, bankers were called Argentarii. Some banks carried business on their own account and
others were appointed by the Government to receive the taxes. They used to transact their business
on the similar lines as those of the modern banks. Loan banks which lent money to the poor without
any interest on the security of land for a period of 3 of 4 years were also common in Rome.

The Bank of Venice, established in 1157, is supposed to be the most ancient bank. It was not a
bank in the modern sense being simply an office for the transfer of public debt.

History shows the existence of a ‘Monte’ in the Florence in 1336/ the meaning of ‘Monte’ is given
in the Italian Dictionary 1959 as ‘a standing bank or amount of money, as they have in diverse
cities of Italy’. Banbrigge, an English writer, speaks about ‘the three banks of Venice’ meaning
the three public loans of Monte.

As early as 1349, the drapers of Barcelona carried on business of banking. It was subject to official
regulations. The drapers were not allowed to commence business until they had given sufficient
security. During 1401, a public bank was established in Barcelona. It used to exchange money,
receive deposits, discount bills of exchange, both for citizens and foreigners. During 1407, the
Bank of Genoa was established. The Bank of Amsterdam was established in 1609 to meet the
needs merchants of the city. It accepted all kinds of specie on deposits. These deposits could be
withdrawn on demand or transferred from the account of one person to another. The bank also
adopted a plan by which a depositor received a kind of certificate entitling him to withdraw his
deposits within six months. These written orders, in the course of time, came to be used in the

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same manner as the modern cheque. It is interesting to see that most on the European banks now
in existence were formed on the modes of the Bank of Amsterdam.

The beginning of the English banking may correctly be attributed to the London goldsmiths. They
used to receive their customers’ valuables and funds for safety custody and issue receipts
acknowledging the same. These notes, in the course of time, became payable to bearer on demand
and hence enjoyed considerable circulation. In fact, the goldsmiths’ notes may be considered as
the precursor of the bank note. The business of the goldsmiths got a rude shock by the ill treatment
of the Government of Charles II, under the Cabal ministry. In the words of Bagehot; “It had
perpetrated one of those monstrous frauds which are likewise gross blunders”. The goldsmiths
used to deposit their reserve of treasure in the ‘Exchequer’ with the sanction and under the care of
government. But Charles II shut down the Exchequer and paid nothing to the goldsmiths.
However, the ruin of goldsmiths marks a turning point in the history of the English banking. It led
to the growth of private banking and the establishment of the ‘Bank of England’.

In the India, as early as Vedic period, banking existed in the crudest form. The bloods of Manu
contain references regarding deposits, pledges and policy of loans and rates of interest. Truly,
banking in those days largely meant money lending and they did not know the complicated
mechanisms modern banking. This is true not only in case of India but also in case of other
countries.

The evolution of banking institutions became more and more organized as the time passed. In
various periods, different amendments were made in different countries throughout the world. So,
different countries have different contributions to the banking institutions to appear in the present
form.

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2.4: History of Baking Operation of Bangladesh:

2.4.1. Before independence:

The first modern bank in Bengal was Bank of Hindustan, established in 1770 in Calcutta. It was
an offshoot of trading company Messrs. Alexander and Co., and operated until 1832 when the
trading company failed. The circulation of its notes was limited to Calcutta and its immediate
environs.

A number of Calcutta-based banks followed, none which survived beyond the middle of the 19th
century: General Bank of Bengal and Bihar (1733–75); Bengal Bank (1784–91) (no relation to the
later Bank of Bengal); General Bank, later General Bank of India (1786–91); The Commercial
Bank (1819–33); The Calcutta Bank (1824–29); Union Bank (1829–48); Government Savings
Bank (1833–unknown); and The Bank of Mirzapore (c. 1835 – 1837).

The Bank of Calcutta, established in 1806, is the oldest still in existence in some form. It was
renamed Bank of Bengal in 1809, was merged into the Imperial Bank of India in 1921, and became
the State Bank of India in 1955.

The first modern bank headquartered in Dhaka was Dacca Bank, established in 1846. It did a very
limited business and did not issue banknotes. It was purchased by Bank of Bengal in 1862. Bank
of Bengal opened branches in Sirajganj and Chittagong in 1873, and in Chandpur in 1900. In 1947,
upon the Partition of Bengal, it had six branches in East Bengal, in Dhaka, Chittagong, Chandpur,
Mymensingh, Rangpur, and Narayanganj.

2.4.2. After independence:

The banking system at independence (1971) consisted of two branch offices of the former State
Bank of Pakistan and seventeen large commercial banks, two of which were controlled by
Bangladeshi interests and three by foreigners other than West Pakistanis. There were fourteen
smaller commercial banks.

Foreign exchange reserves at the end of FY 1986 were US$476 million, equivalent to slightly more
than two months’ worth of imports. This represented a 20-percent increase of reserves over the

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previous year, largely the result of higher remittances by Bangladeshi workers abroad. The country
also reduced imports by about 10 percent to US$2.4 billion. Because of Bangladesh's status as a
least developed country receiving concessional loans, private creditors accounted for only about 6
percent of outstanding public debt.

One major exception to the management problems of Bangladeshi banks was the Grameen Bank,
begun as a government project in 1976 and established in 1983 as an independent bank. In the late
1980s, the bank continued to provide financial resources to the poor on reasonable terms and to
generate productive self-employment without external assistance. Its customers were landless
persons who took small loans for all types of economic activities, including housing. About 70
percent of the borrowers were women, who were otherwise not much represented in institutional
finance. Collective rural enterprises also could borrow from the Grameen Bank for investments in
tube wells, rice and oil mills, and power looms and for leasing land for joint cultivation. The
average loan by the Grameen Bank in the mid-1980s was around Taka 2,000 (US$65), and the
maximum was just Taka 18,000 (for construction of a tin-roof house). Repayment terms were 4
percent for rural housing and 8.5 percent for normal lending operations.

The government's encouragement during the late 1970s and early 1980s of agricultural
development and private industry brought changes in lending strategies. Managed by the
Bangladesh Krishi Bank, a specialized agricultural banking institution, lending to farmers and
fishermen dramatically expanded. The number of rural bank branches doubled between 1977 and
1985, to more than 3,330. Denationalization and private industrial growth led the Bangladesh Bank
and the World Bank to focus their lending on the emerging private manufacturing sector.
Scheduled bank advances to private agriculture, as a percentage of sectorial GDP, rose from 2
percent in FY 1979 to 11 percent in FY 1987, while advances to private manufacturing rose from
13 percent to 53 percent.

The Grameen Bank extended collateral-free loans to 200,000 landless people in its first 10 years

Virtually all banking services were concentrated in urban areas. The newly independent
government immediately designated the Dhaka branch of the State Bank of Pakistan as the central
bank and renamed it the Bangladesh Bank. The bank was responsible for regulating currency,
controlling credit and monetary policy, and administering exchange control and the official foreign
exchange reserves. The Bangladesh government initially nationalized the entire domestic banking

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system and proceeded to reorganize and rename the various banks. Foreign-owned banks were
permitted to continue doing business in Bangladesh. The insurance business was also nationalized
and became a source of potential investment funds. Cooperative credit systems and postal savings
offices handled service to small individual and rural accounts. The new banking system succeeded
in establishing reasonably efficient procedures for managing credit and foreign exchange. The
primary function of the credit system throughout the 1970s was to finance trade and the public
sector, which together absorbed 75 percent of total advances.

Banking sector in Bangladesh is one of the major sectors, which contributes significantly to the
national economy. The sector comprises a number of banks in various categories. Considering
ownership, the sector can be classified in to four major categories-such as

 Nationalized commercial banks (NCBs),

 Specialized banks (SPBs),
 Private commercial banks (PCBs)
 Trans-national Banks (TNBs) (Islam, 2001).

The commercial banking system put on vital role in Bangladesh’s financial sector. Bangladesh
bank is the central bank of Bangladesh and the principal regulator of the sector. Bangladesh have
total of 55 states owned, private, foreign and specialize banks. The banking system consists of-

 Four state-owned commercial banks,

 31 private commercial banks,
 10 specialized development banks,
 10 foreign commercial banks.

Page | 13
2.5: Currently Operated Bank in Bangladesh:

Table-1: Currently Operated Bank in Bangladesh

Nationalized Banks Private Commercial Foreign Banks Specialized Banks

Banks
Somali Bank Limited United Commercial Bank Citibank Karmasangsthan Bank
Limited
Agrani Bank Limited Mutual Trust Bank Limited HSBC Bangladesh Krishi Bank
Rupali Bank Limited BRAC Bank Limited Standard Chartered RajshahiKrishiUnnayan
Bank Bank
Janata Bank Limited Eastern Bank Limited Commercial Bank Progoti Co-agent
of Ceylon Landmortgage Bank
Limited (Progoti Bank)
Dutch Bangla Bank Limited State Bank of India Grameen Bank
Dhaka Bank Limited Habib Bank Bangladesh Development
Limited Bank Limited
Islami Bank Bangladesh Ltd National Bank of Bangladesh Somobay Bank
Pakistan Limited
Uttara Bank Limited Woori Bank
Pubali Bank Limited Bank Alfalah
IFIC Bank Limited ICICI Bank

National Bank Limited

The City Bank Limited
NCC Bank Limited
Mercantile Bank Limited
Prime Bank Limited
Southeast Bank Limited
Al-ArafahIslami Bank
Limited

Page | 14
Social Islami Bank Limited
Standard Bank Limited
One Bank Limited
Exim Bank Limited
Bangladesh Commerce Bank
Limited
First Security Islami Bank
Limited
The Premier Bank Limited
Bank Asia Limited
Trust Bank Limited
ShahjalalIslami Bank Limited
Jamuna Bank Limited
ICB Islamic Bank
AB Bank
Union Bank
Modhumati Bank
The Farmers' Bank
Midland Bank
Meghna Bank
South Bangla Agriculture and
Commerce Bank
Sources: Bangladesh Bank Website

Page | 15
 CHAPTER 3
OVERVIEW OF SOUTHEASTBANK
LIMITED
Topics to be covered:
3.1. Historical Background of Southeast Bank Limited
3.2. Composition of the Board
3.2.1. Board of Directors
3.2.2. Audit Committee
3.2.3. Risk Management Committee
3.2.4. Executive Committee
3.2.5. Shariah Supervisory Committee
3.2.6. Senior Management Team
3.3. Vision of SEBL
3.4. Mission of SEBL
3.5. Organization Structure/ Hierarchy of the organization
3.6. Products & Services
3.7. Bank Operation Area
3.8. Achievements
3.9. List of Branch
3.10. Capital & Reserves
3.11. Profitability Position of the Bank for Last 5 Years
3.12. Total Assets Position of the Bank Last Five Years
3.13. Total Liability & Shareholder Equity Position for Last Five Years

Page | 16
3.1: Historical Background of Southeast Bank Limited:
Southeast Bank Limited is a scheduled commercial bank in the private sector established under
the ambit of Bank Company Act, 1991 and incorporated as a Public Limited Company under
Companies Act, 1994 on March 12, 1995. The Bank started commercial banking operations on
May 25, 1995. During this short span of time the Bank is successful in positioning itself as a
progressive and dynamic financial institution in the country. The bank had been widely acclaimed
by the business community, from small entrepreneurs to large traders and industrial
conglomerates, including the top-rated corporate borrowers for its forward - looking business
outlook and innovative financial solutions. Thus within this very short period of time it has been
able to create an image and earn significant reputation in the country's banking sector as a Bank
with Vision. Presently, it has 65 branches.

Southeast Bank Limited has been licensed by the Government of Bangladesh as a Scheduled
commercial bank in the private sector in pursuance of the policy of liberalization of banking and
financial services and facilities in Bangladesh. In view of the above, the Bank within a period of
10 years of its operation achieved a remarkable success and met up capital adequacy requirement
of Bangladesh Bank.

It has been growing fast as one of the leaders of the new generation banks in the private sector in
respect of business and profitability as it is evident from the financial statements for the last 10
years. Southeast Bank Limited emerged as a new commercial bank to provide efficient banking
services and to contribute socio-economic development of the country. Southeast Bank
Limited(SEBL) was established on 17th April, 1995 with an Authorized Capital of Tk. 1000
Million and Paid up Capital of Tk. 100 Million (raised to Tk. 200 Million in 1997) by a group of
highly successful entrepreneurs from various fields of economic activities such as shipping, oil,
finance, garments, textiles and insurance etc. It is a full licensed scheduled Commercial Bank set
up in the private sector in pursuance of the policy of the Government to liberalize Banking &
Financial services. The former Government of the Bangladesh Bank Mr. Lutfar Rahman Sarkar
was the first Managing Director of the Bank. The Bank is being managed by highly professional
people having wide experience in The Bank provides a broad range of financial services to its
customers and corporate clients. The Board of Directors consists of eminent personalities from the
realm of commerce and industries of the country. The Bank is manned and managed by qualified

Page | 17
and efficient professionals. The name of the honorable chairman is Md. AlamgirKabir, Mr. Ragib
Ali is the Vice Chairman of the bank. The Bank is not depending only on interest earnings; rather
it strives hard to go for fee-based income from non-fund activities of the bank. This type of
business includes capital market operations like underwriting, portfolio management, mutual fund
management, investors' account as well as commission-based business like Letter of Guarantee,
Inland remittance, 9 Foreign remittances etc. These businesses usually do not involve Bank's fund,
but on the contrary, offer immense opportunity and scope to expand bank services to the members
of public at large. The head office of the Bank is situated at 61, Dilkusha Commercial Area, Dhaka-
1000.

3.2: Composition of the Board:

3.2.1: Board of Directors

Table 2- Board of Directors List

Name of the Respective Person Designation

Mr. AlamgirKabir, FCA Chairman

Mrs. Duluma Ahmed Vice Chairperson

Mr. M. A. Kashem Directors

Mr. Azim Uddin Ahmed Directors

Mrs. Jusna Ara Kashem Directors

Mr. MdAkikur Rahman Directors

Mrs. Rehana Rahman Directors

Mrs. SiratMonira Directors

Mr. Syed Sajedul Karim Independent Director

Page | 18
Dr. QuaziMesbahuddin Ahmed Independent Director

Mr. Zakir Ahmed Khan Advisor

Mr. M. Kamal Hossain Managing Director

3.2.2: Audit Committee

Table 3– Audit Committee

Name of the Respective Person Designation

Mr. Syed Sajedul Karim Chairman

Mrs. Duluma Ahmed Member

Mrs. JusnaAraKashem Member

Mrs. Rehana Rahman Member

Dr. QuaziMesbahuddin Ahmed Member

3.2.3: Risk Management Committee

Table 4- Risk Management Committee

Name of the Respective Person Designation

Mr. Alamgir Kabir, FCA Chairman
Mr. M. A. Kashem Member
Mr. Azim Uddin Ahmed Member
Mr. Syed Sajedul Karim Member

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3.2.4: Executive Committee
Table 5- Executive Committee

Name of the Respective Person Designation

Mr. AlamgirKabir, FCA Chairman
Mr. M. A. Kashem Member
Mr. Azim Uddin Ahmed Member
Mr. MdAkikur Rahman Member
Mr. M. Kamal Hossain Member

3.2.5: Shariah Supervisory Committee

Table 6- Shariah Supervisory Committee

Name of the Respective Person Designation

Professor Maoulana Mohammad Salah-Uddin Chairman
M. Kamaluddin Chowdhury Member
Moulana Mohammad Kafiluddin Sarkar Member
Mr. AlamgirKabir, FCA Member
Mr. M. A. Kashem Member
Mr. Azim Uddin Ahmed Member
Mr. M. Kamal Hossain Member

Page | 20
3.2.6: Senior Management

Table 7-Senior Management Team

Name of the Respective Person Designation

Mr. M. Kamal Hossain Managing Director
Mr. S.M.Mainuddin Chowdhury Additional Managing Director
Mr. Anwar Uddin Deputy Managing Director

3.3: Vision of SEBL:

Southeast Bank Limited has different mission which playing an important role in Bangladesh.

 High quality financial services with state of the art technology

 Fast customer service

 Sustainable growth strategy

 Follow ethical standards in business

 Steady return on shareholders’ ‘equity

3.4: Mission of SEBL:

Southeast Bank Limited has different vision which playing an important role in Bangladesh.

It is especial!" important for managers and executives in any organization to agree upon the basic
vision that the firm strives of achieve in the long term. A clear vision provides the foundation for
developing a comprehensive mission statement. So the vision statement should be established first
and foremost. Southeast Bank has established their vision statement to achieve their long-term
Objectives, their vision is to stand out as a pioneer banking institution in Bangladesh and contribute
significantly to the national economy.

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3.5: Organization Structure/ Hierarchy of the Organization

Table 8-Organization Structure/ Hierarchy of the Organization

CHAIRMAN

MANAGING DIRECTOR

DEPUTY MANAGINGDIRECTOR

EXECUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

VICE PRESIDENT

SENIOR ASSISTANT VICE PRESIDENT

ASSISTANT VICE PRESIDENT

FIRST ASSISTANT VICE PRESIDENT

SENIOR EXECUTIVE OFFICER

EXECUTIVE OFFICER

SENIOR OFFICER

Page | 22
 OFFICER

JUNIOR OFFICER

ASSISTANT OFFICER

TRAINEE ASSISTANT OFFICER

3.6: Products & Services:

Conventional Banking
 Savings (SB) Account
 Current (CD) Account
 Special Notice Deposit (SND)
 Fixed Deposit Receipt (FDR)
 Monthly Savings Scheme (MSS)
 Pension Savings Scheme (PSS)
 Monthly Income Scheme (MIS)
 Millionaire Deposit Scheme (MDS)

Islamic Banking

 Mudaraba Savings (MSB) Account

 Al-Wadiah Current (CD) Account

 Mudaraba Special Notice Deposit (MSND)

Page | 23
  Mudaraba Term Deposit Reciept (MTDR)

 Mudaraba Monthly Savings Scheme (MMSS)

 Mudaraba Pension Savings Scheme (MPSS)

 Mudaraba Monthly Income Scheme (MMIS)

 Mudaraba Millionaire Deposit Scheme (MMDS)

Loans & Advances

 Working Capital Finance

 Overdraft
 Project Finance
 Syndicated Loan
 Packing Credit
 Loan Against Export Bill
 Loan Against Trust Reciept

SEBL Cards
 SEBL Credit Card
 SEBL Debit Card
 SEBL My Remit Card

Foreign Remittance
 Remittance Services

 Issuance of Bonds

 Overseas Partners

 Contact Person

Page | 24
 Foreign Trade

 Import-Export Services
 Offshore Banking
 FATCA Compliance

SME Banking

 Working capital.
 Fixed assets.
 Delivery Van / Transport for business purpose.
 Renovation of shop / office / business premises.

3.7: Bank Operation Area:

General Bank:

 Account Opening
 Receiving cheque for Clearing, Transport, and Dispatch
 Issuance of cheque
 Issuance of PO (pay order), DD (Demand Draft)
 Fund Transfer
 Closing and Transfer of Accounts
 Maintaining the locker of the bank
 Opening and Maintaining of FDR and other scheme Deposits
 Utility bill, rent of building and work of accounts department was done by GB because
they don’t have any separate accounts department
 Maintaining on-line Voucher

Page | 25
3.8: Achievements
We endeavor to achieve our objectives in the area of corporate social responsibility in the
following manner:
 Supporting charitable ventures, relief operations and environment protection.
 Coming to the aid of the poor and the needy people of the society.
 Maintaining high compliance standard in regard to all relevant laws and regulations of all
regulatory bodies.
 Supporting art, education, sports, culture, healthcare etc.
 Promoting good community relation to foster a relationship of understanding, trust and
credibility.
 Observing environment related laws and regulations and working for sustainable
development of the society.
 Supporting development of the women community.
 Assistance in enforcement of law and order in the society.
 Carrying on energy and resource-saving activities within the Bank.

3.9: List of Branch:

There are total 133 branches of Southeast Bank Limited situated in 34 districts in Bangladesh.

3.10: Capital & Reserves:

Capital Structure:

Capital structure of social investment bank Ltd. is as under:

 Authorized capital

(10,000,000,000 ordinary shares of Tk 1000 each)

 Paid up capital

(7,382,986,420 ordinary shares of Tk 1000 each)

Statutory Reserve 5,025.80 Million Tk/-

The directors may revise the capital structure from time to time according to need.

Page | 26
3.11: Profitability Position of the Bank for Last 5 Years
Table 9- Profitability Position of the Bank Last Five Years
Year Millions Taka

Sources: Annual Reports

Page | 27
3.12: Total Assets Position of the Bank Last Five Years
Table 10- Total Asset Position of the Bank Last Five Years
Year Millions of Taka
Particulars 2014 2015 2016 2017 2018

Cash 15,457 15,997 17,831 20,979 21,515

Balance with other 5,720 3,337 3,979 4,162 6,258

Bank
Investment 54,526 56,888 59,455 60,323 62,884

Loan& Advance 147,957 169,379 189,365 231,851 265,204

Fixed Assets 7,761 7,751 8,614 8,709 8,782

Other Assets 4,247 5,977 8,478 9,241 9,554

Total Assets 236,216 260,253 291,993 338,909 381,095

Sources: Annual Reports

3.13: Total Liability & Shareholder Equity Position for Last Five Years
Table 11- Total Liability& Shareholders Position for Last Five Years
Year Millions of Taka
Particular 2014 2015 2016 2017 2018

Total Liability 211,697 233,028 265,470 313,148 353,044

Total Shareholders’ equity 24,519 27,225 26,523 25,762 28,051

Total liability & shareholder 236,216 260,253 291,993 338,909 381,095

equity
Sources: Annual Reports

Page | 28
 CHAPTER - 4

A STUDY ONFINANCIAL PERFORMANCE

WITH RESPECT TO LOANS AND ADVANCES
OF SOUTHEAST BANK LIMITED
Topics to be covered:

4.1. Introduction
4.2. Definition Credit
4.3. Loan and Advance
4.4. Different Types of Loan & Advance Facilities
4.5. Loan Process
4.6. Loan Procedure of SEBL
4.7. Documentation
4.8. Assessment of the loan proposal
4.9. Credit approval process
4.10. Securities
4.11. Loan Disbursement

Page | 29
4.1 Introduction:

Banking business consists of borrowing and lending. Banks act as intermediaries between surplus
and deficit economic units. Thus a banker is a dealer in money and credit. Banks accept deposit
from large number of customers and then lend a major portion of the accumulated money to those
who wish to borrow. In this process banks secure reasonable return to the savers, make funds
available to the borrowers at a cost and earn a profit after covering the cost of funds. Banks, besides
their role of intermediation between savers and borrowers and providing an effective payment
mechanism, have been allowed to diversify into many new areas of better paying business
activities.

4.2: Definition Credit:

Credit is generally defined as an agreement between a lender and a borrower, who

promises to repay the lender at a later date generally with interest. In accounting,
a credit may either decreases assets or increases liabilities and equity on a company's
balance sheet.

4.3: Loan and Advance:

Lending being the most important function of commercial Bank, every Bank should have own
credit policy. The loans & Advance of any Bank has been formulated of the plan of provides good
loan. This plan was formed on the basis of the following objectives:

 To deliver general Banking services to the public and credit to viable borrowers at a
reasonable cost
 To maximize the profit of the Bank by making sound lending
 To deliver credit to viable borrowing at a reasonable cost
 To provide satisfactory return on investment
 To assist the social and economic development of the country

Page | 30
4.4: Different Types of Loan & Advance Facilities:

There are different types of credit facilities offered by commercial Banks from which some of our
explaining below:

4.4.1. Overdraft

The word overdraft means the act of overdrawing from the Bank account. In other words, the
account holder withdraws more money from the Current Account than has been deposited in it.

The loan holder can freely draw money from this account up to the limit and can deposit money
in the account. The Overdraft loan has an expiry date after which renewal or enhancement is
necessary for enjoying such facility. Any deposit in the overdraft account is treated as repayment
of loan. Interest is charged as balance outstanding on quarterly basis. Overdraft facilities are
generally granted to businessmen

4.4.2. Cash Credit

In Cash credit, Banker specifies a limit called the cash credit limit, for each customer up to which
the customer is permitted to borrow against the security of tangible assets or guarantees. Cash
credit is given through the cash credit account. The purpose of cash credit is to meet working
capital need of traders, farmers and industrialists. Cash credit in true sense is against pledge of
goods. Cash credit is also allowed against hypothecation of goods.

4.4.3. Demand Loan

In opening letter of credit (L/C), the clients have to provide the full L/C amount in foreign
exchange to the Bank. To purchase this foreign exchange, Bank extends demand loan to the clients
at stipulated margin. No specific repayment date is fixed. However, as soon as the L/C documents
arrive, the Bank requests the clients to adjust their loan and to retire the L/C documents. Demand
loans mainly include “Payment against Documents,” "Loan against imported merchandise (LIM)"
and “Later of Trust Receipt".
4.4.4. Term Loan
These are the advances made by the Bank with a fixed repayment schedule. Terms loans mainly

Page | 31
include "Consumer credit scheme", "Lease finance"," Hire purchase”, and "Staff loan". The term
loans are defined as follows:
a) Short Term Loan: Up to 12 months.
b) Medium Term Loan: More than 12 months & up to 36 months
c) Long Term Loan: More than 36 months.
Classification on characteristics of financing.

4.4.5. Bill Discounting

Under this type of lending, Bank takes the bill drawn by borrower on his (borrower's) customer
and pays him immediately deducting some amount as discount/commission. The Bank then
presents the Bill to the borrower's customer on the due date of the Bill and collects the total amount.
If the bill is delayed, the borrower or his customer pays the Bank a pre-determined interest
depending upon the terms of transaction.

4.4.6. Loan
In case of loan the Banker advances a lump sum for a certain period at an agreed rate of interest.
The entire amount is paid on an occasion either in cash or by crediting in his current account,
which he can draw at any time. The interest is charged for the full amount sanctioned whether he
withdraws the money from his account or not. The loan may be repaid in installments or at expiry
of a certain period. Loan may be demand loan or a term loan

4.4.7. Short Term Loan

Term loan extended for short period usually up to One year is term as STL. This type of loan may
or may not have specific repayment schedule. However, STL with repayment schedule is
preferable. Suppose, Short Term Agricultural Loan and Micro Credit is enlisted by Agricultural
Credit division of Bangladesh Bank in, annual loan program. Loans disbursed in agricultural sector
for a period not more than 12 months are also included in this category. Short term microcredits
are the credits not exceeding BDT 25,000/- (taka twenty-five thousand) only and repayable within
twelve months.

Page | 32
4.4.8. Letter of Credit (L/C)
This is a pre-import finance which is made in the form of commitment on behalf of the client to
pay an agreed sum of money to the beneficiary of the L/C upon fulfillment of terms and conditions
of the credit. Thus, at this stage Bank does not directly assume any liability, as such the same is
termed as contingent liability.

4.4.9. Home Loan

Home Loan is a term loan facility to purchase your desired home/flat. Commercial Banks also
provide home loan under following situation.

Who Can Apply?

- Salaried Individuals
- Professionals
- Business Persons
Age Limit: Loans are only available to Bangladeshi nationals:
- Minimum age of eligibility - 21 years
- Maximum age of eligibility - 65 years
Loan Size:
- Minimum: BDT 500,000 (Five Lac Only)
- Maximum: BDT 7,500,000 (Seventy-Five Lac Only)
Tenure - Maximum 15 Years depending on the size and credibility.
Interest Rate - Depending on the size and tenure, BASIC Bank Home Loan
interest rates vary from 12% to 13.50%
Security - Registered Mortgage of the House/Apartment
Govt. Charges- As per Government Specification.
Other Terms - Minimum Gross Family IncomeBDT 40,000 (Forty Thousand)

Page | 33
4.4.10. Bank Guarantee

Bank Guarantee is one sort of non-funded facility. Bank Guarantee is an irrevocable obligation of
a Bank to pay a pre-agreed amount of money to a third party on behalf of a customer of a Bank. A
contract of guarantee is thus secondary contract, the principal contract being between the
beneficiary/creditor and the principal/principal debtor themselves to which guarantor is not apart.
If the promise or the liability in the principal contract is not fulfilled or discharged, only then the
liability of guarantor or surety arises

4.4.11. Car Loan

There are minimum criteria to get the loan. If the applicant is a service holder, then the applicant’s
monthly income must be at least Tk.20000 and if the applicant is a business man then the income
must be at least TK.40000. The age limit of the borrower must be between 25-60 years. The down
payment of the loan must be 10%. The interest rate is 16%. Car Loan only sanctioned for the cars
manufactured in Japan. The car for which the loan will be sanctioned must not be older than 2004
model Japanese Car. Bank generally does not invest for the car exceeding 20 laces. Exceptional
cases may be considered if the Bank is satisfied about the repayment capacity of the client as well
as client’s social status. The loan is sanctioned for six years at a maximum.

4.4.12. Marriage Loan

Commercial Bank’s marriage loan enables people to organize and celebrate the marriage in style.
Any self-employed or service holder can be benefited under this loan scheme. The maximum loan
limit sanctioned for this purpose is Tk.300000. The eligible applicant’s monthly income must be
between Tk.10000-Tk. 25000. Besides, the age limit of the borrower must be between 25-65 year
(at the time of repayment). The interest rate is 16%. The maximum Loan Periodic three years.

4.4.13. Travel Loan

When planning an overseas vacation or making a trip to chosen exotic location, financing may be
an issue. This loan is to facilitate for those who loves to travel. For travel purpose, any self-
employed or service holder can apply for this loan scheme. In case of businessman the applicant
must have at least five years of successful track record. The eligible applicant’s monthly income
must be between Tk.10,000-Tk. 25,000. The age limit of the borrower must be between 25-65 year

Page | 34
(at the time of Repayment). The interest rate is 16%. The maximum loan limit sanctioned for this
purpose is Tk.200,000. Maximum Loan Periodic three years.

4.4.14. Loan against Salary

To face unpredictability in life commercial Banks have introduced Loan against salary. This
produced is tailored to provide loan to fixed income people against their salary to mitigate any
emergency need. Any self-employed or service holder can be benefited under this loan scheme
if the minimum employment period is one year. To be eligible the applicant should have a
Bank account in any Bank with in Bangladesh and should have satisfactory transaction. The
maximum loan limit sanctioned for this purpose is Tk.300,000. If the
get eight times higher of his/her take total take home salary per month at a maximum. If the
applicant has maintaining account in different Bank, then he will get 6 times higher of his/her
total take home salary at maximum. The age limit of the borrower must be between 21-65 year
(at the time of repayment). The rate of interest is 16%. Maximum Loan Period is three years.

4.4.15. Education Loan

For higher education parents of a student can apply for the loan. Here, the applicant would be the
guardian having income and the beneficiary would be the children of that applicant. If the applicant
is a service holder, then the applicant’s monthly income must be minimum Tk.12000 and if the
applicant is self-employed then the applicant’s monthly income must be Tk.25000 at a minimum.
To be eligible the applicant should have a Bank account in any Bank with in Bangladesh and
should have satisfactory transaction. The age limit of the applicant must be between 25-60 year (at
the time of repayment). The rate of interest is 16%. Maximum loan sanctioned for this purpose is
5 lacs. Maximum loan period is 4 years.

4.5 Loan Process:

4.5.1: Application for the loan

The loan process start with the submission of loan application by the borrower. The borrower
submits the loan application to the branch manager. In the loan application the borrower provides
following information

Page | 35
  Personal detail of applicant
 Nature of business
 Amount and duration of the loan
 Purpose of the loan
 Details of the collateral

4.5.2: Preparation of loan proposal

Based on financial and management analysis and need of the client and his capability of operating
the business, RM shall design the credit keeping in mind on the following issues:

 Purpose of the credit

 Experience in the similar business
 Risk, Remuneration
 Ancillary business
 Validity Loan Period & Business Profitability
 Debt Equity Ratio
 Repayment capacity & Production capacity
 Market demand of the product

Page | 36
4.6: Loan Procedure of SEBL:

Figure: - 1 Loan Procedure of SEBL

Collecting Evaluating project

Getting Loan Proposal from
Information and proposal
the client

About Client Evaluating

About by Agent
project
Legal

Legal Assessment Evaluating Collateral

Branch
Sanctioning and Decision level
Supervision Disbursing
documentation
of the loan Loan of loan

Recovery of the loan

Branch level
Head office level

Usual Recovery Legal Recovery

Page | 37
4.7: Documentation:

Before sending proposal to the approving authority, the branch ensures that the following
documents have been completed properly:

 Current CIB report

 Audited financial report
 Forecasted Financial statement
 CRG score sheet of the business
 Bank statement regarding the bank transaction of the borrower.
 Net worth of the business
 Net worth of the individual
 Total debit and credit of the business
 Trade license of the business
 Income tax return of the borrower

4.8: Assessment of the loan proposal:

Borrower Analysis
The majority shareholders, management team and group or affiliate companies should be
assessed. Any issues regarding lack of management depth, complicated ownership structures or
inter-group transactions should be addressed, and risks mitigated.

Industry Analysis
The key risk factors of the borrower’s industry should be assessed. Any issues regarding the
borrower’s position in the industry, overall industry concerns or competitive forces should be
addressed and the strengths and weaknesses of the borrower relative to its competition should
be identified.

Page | 38
Supplier/Buyer Analysis
Any customer or supplier concentration should be addressed, as these could have a significant
impact on the future viability of the borrower.

Historical Financial Analysis

Preferably an analysis of a minimum of 3 years’ historical financial statements of the borrower
should be presented. Where reliance is placed on a corporate guarantor, guarantor financial
statements should also be analyzed. The analysis should address the quality and sustainability of
earnings, cash flow and the strength of the borrower’s balance sheet. Specifically, cash flow,
leverage and profitability must be analyzed.

Projected Financial Performance

Where term facilities (tenor > 1 year) are being proposed, a projection of the borrower’s future
financial performance should be provided, indicating an analysis of the sufficiency of cash flow
to service debt repayments. Facilities should not be granted if projected cash flow is insufficient
to repay debts.

Credit Background
Credit application should clearly state the status of the borrower in the CIB (Credit Information
Bureau) report. The application should also contain liability status with other Banks and FI’s
and also should obtain their opinion of past credit behavior.

Account Conduct
For existing borrowers, the historic performance in meeting repayment obligations (trade
payments, cheques, interest and principal payments, etc.) should be assessed

Page | 39
4.9: Credit approval process:
Figure-2: Credit Approval Process

Credit application processed and recommended by credit officers

Branch credit committee

Branch Manager

Regional office

Regional office credit committee

Regional Head

Head office –Credit Division

Head office –Credit committee

Deputy managing director(Credit)

Managing Director

Executive committee

Page | 40
4.10: Securities:
Modes of securities
 Pledge
 Hypothecation
 Lien
 Mortgage

Documentation of loan agreement

Following documents are compulsory while giving loans:
 Letter of guarantee
 Letter of authority
 Letter of recall the loan
 Letter of continuity
 Letter of revival
 Letter of undertaking

4.11: Loan Disbursement:

After completing all the necessary steps for sanctioning loans bank will create a loan account by
the name of the borrower and deposit the money to that account. Bank will give cheque book to
the party and advise them to draw the money and use it as soon as possible.

Loan and Advance Disbursement of SEBL

In the last five-year loan growth was moderate. Particularly the last three years’ growth of loan
was high. It was the result of changing the policy. Especially sanction limit of the branch
manager was increased.

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 CHAPTER 5
ANALYSIS AND FINDINGS

Topics to be covered:

5.1. Loans and Advances (Type wise loan)

5.2.Sector-wise Allocation of Loans and Advances

5.3.Geographical Location Wise

5.4.Classification and Unclassified Loans and advances

5.5.Loan & Advances (Total Deposits and Total Loan& Advances)

5.6. SWOT Analysis

5.7. Findings

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5.1: Type wise loan:
Table-12: Type Wise Lone

Year Millions Taka

Particular 2014 2015 2016 2017 2018

Overdraft 39,080 38,618 45,297 52,900 58,604

Demand Loan 35,258 4,551 5,026 6,523 7,447

Term Loan 48,267 60,081 69,051 79,529 99,359

Cash credit 39,080 38,618 45,297 52,900 58,604

Sources: Annual Reports

Figure 3- Type Wise Loan for 2018

Interpretation:

The table and the graph show that, type wise loan of SEBL shows an increasing pattern though it
has negative growth demand loan in 2015,2016,2017, 2018 & cash credit in 2015. Over the last
five years’ overdraft, term loan & cash credit last three years it has been increasing,

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5.2: Sector-wise Allocation of Loans and Advances

Table-13: Sector-Wise Allocation of Loans and Advances

Year Millions Taka

Particular 2014 2015 2016 2017 2018

Government 3,588 4,340 5,416 6,669 8,556

Private 163,601 174,096 195,804 216,023 255,193

Agriculture 621 1,554 2,439 3,432 2,630

Industry 33,096 38,720 43,734 99,835 127,251

Service Industry 2,033 2,221 2,725 43,128 36,477

Consumer Credit 42.862951 51 61 3,449 4,052

Sources: Annual Reports

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 Figure 4- : Sector-Wise Allocation of Loans and Advances

SECTOR-WISE ALLOCATION OF LOANS AND ADVANCES

2014 2015 2016 2017 2018

80.60%
78.78%
78.27%

58.78%
57.99%

29.41%
26.80%
17.52%
17.48%
16.30%

11.58%
8.40%
2.16%

1.97%
1.96%

1.80%
1.77%

1.09%
1.00%
1.00%
0.97%
0.92%

0.92%
0.93%
0.70%

0.61%
0.31%

0.02%
0.02%
0.02%
GOVERNMENT PR IVATE AGR IC ULTUR E INDUSTR Y
S E R V I C E I N D UCS O
TRNY
SUM E R C R E DIT

Interpretation:

In the last five years, Sector-Wise Allocation of Loans and Advances of SEBL shows an
increasing pattern. Its Balances of Government Sectors Growth in the years 2014, 2015, 2016,
2017, and 2018 are the Millions 3588 ,4340, ,416, 6669, and 8556; private sectors Growth in the
years 2014, 2015, 2016, 2017, and 2018 are the Millions 163601, 174096, 195804, 216023,
255193 and other sectors are normally increasing respectively.

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5.3: Geographical Location Wise:

Table-14: Geographical Location Wise

Year Millions Taka

Particular 2014 2015 2016 2017 2018

Dhaka Division 99,096 118,175 132,471 163,691 197,183

Chittagong Division 34,075 34,266 34,266 42,983 42,217

Khulna Division 1,360 1,496 1,204 1,700 1,471

Sylhet Division 3,420 3,527 3,334 3,279 3,239

Barisal Division 82 90 158 1,700 1,471

Rajshahi Division 143 2,293 3,919 4,537 5,014

Rangpur Division 680 751 1,204 818 836

Mymensingh Division 300 80 525 386 386

Sources: Annual Reports

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 Figure 5- : Geographical Location Wise

Sylhet Division
Mymensingh Division Geographical Location Wise 2018
1%
0% Khulna Division
1%
Rangpur Division
Chittagong Division 0%
17%
Rajshahi Division Dhaka Division
2% Chittagong Division
Khulna Division
Sylhet Division
Barisal Division
Barisal Division Rajshahi Division
1% Dhaka Division
Rangpur Division
78%
Mymensingh Division

Interpretation:

In the last five years, Geographical location wise loan 2014-2018 Dhaka division provided high
78% increases. But another division loan low rate provides. Geographical wise another division
wise loan rate increase. Geographical location wise loan 5 years’ data chart. Discuss this chart
2014 year Dhaka division 102,512.52 increased, next 2015 years Dhaka division 118,17.46
increased. then next 2016 years 132,470,6.127 increased, next 2017 years163,690.79 increased.
Finally, this 2018 years 197,182.73 increased. Dhaka division day by day increased but another
division are not increased .

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5.4: Ratio of Non-performing loan to Total loan:

Table-15: - Ratio of Non-performing loan to Total loan

Year Millions Taka

Particulars 2014 2015 2016 2017 2018

Total loan 147,957 169,379 189,365 231,851 265,204

Non-performing loan 4,312.82 4,435.12 7,102.86 11,880.92 150,279.98

Ratio of Non-performing 0.029 0.026 0.037 0.051 0.56

loans to total loans

Sources: Annual Reports

Figure 6- : Ratio of Non-performing loans to total loans

Ratio of Non-performing loans to total loans

0.56

0.037 0.051
0.029 0.026
2014 2015 2016 2017 2018

Interpretation:

The table and the graph show that, ratio of non-performing loans to total loan of SEBL shows an
increasing pattern though it has negative growth in 2015. Over the last four years it has been
increasing.

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5.5: Loan & Advances

Table-16: Total Deposits and Total Loan& Advances

Year Millions Taka

Particular 2014 2015 2016 2017 2018

Total Deposits 189,472 210,436 230,534 269,833 298,321

Total Loan& Advances 147,071 168,878 191,866 234,317 267,672

Net Loan to deposit ratio 0.69 0.5 0.92 0.72 0.83

Sources: Annual Reports

Figure 7-: Loan to deposit ratio

Net Loan to deposit ratio

Net Loan to deposit ratio

0.92
0.83
0.69 0.72

0.5

2014 2015 2016 2017 2018

Interpretation:

From the graph it is observed that net loan to deposit ratio was high in 2014. In 2015 , it was decreased
after that it was increasing from 2016 to 2018 .

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5.5: SWOT Analysis:

SWOT analysis (strengths, weaknesses, opportunities and threats analysis) is a framework for
identifying and analyzing the internal and external factors that can have an impact on the
viability of a project, product, place or person

•WEAKNESSES
•Strength •Internal Negative
•Internal Positive Factor
Factor

S W

O T
•OPPORTUNITIES •THREAT
•External Positive •External Negative
Factor Factor

Figure-8: SWOT Analysis

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 Weakness:
 SEBL lacks well trained human
resource in some area.
 It lacks aggressive advertising and
promotion.
 The procedure of credit policy is to long
compare to other bank.
Strength:
 Time consuming delivery of checks and
 SEBL is financially sound company.
ATM card.
 It provides its customer excellent quality
 Few owned ATM booth.
and consistent in every service.
 Lack of technological expertise.
 It utilizes state of the art technology to
 Employees are not motivated in some
ensure consistent quality and operation.
areas.
 It has research and training division.
 Insufficient employees in some areas.
 It already achieved goodwill among the
country.
 It has skilled risk management authority.
 It provides its workforce an excellent
place to work.

Opportunities: Threats:
 SEBL can introduce more innovative  The worldwide trend of merger and
and modern customer service. acquisition in financial institution is
 Internet banking can give a wide causing problems. Frequency taka
opportunity.

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 Many braches can be open in local devaluation and foreign exchange rate
fluctuation is causing problems.
 Lot of new bank is coming in the

remote area as its high demand.

 SEBL can recruit experienced, efficient
and knowledge officers and stuff as it
scenario with new service.
offer good working environment.
 Local competitors can capture huge
market share by offering similar
products

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5.6: Findings:

As a commercial private bank, SEBL must ensure faster services by removing the problems. From
my study on the overall performance and activities of SEBL I have got some major findings, which
are given below:

 Type wise loan was Overdraft, Demand loan, Term loan, and Cash credit five years’ data
loan discuss (2014-2018). 3 loan are increase and demand loan are decrease. Demand loan
5 years’ loan aren’t profit. We should discuss board of directors & member’s why demand
loan decrease.
 Sector-wise Allocation of Loans and Advances Government loan and Private loan five
years’ data Discuss (2014-2018) years Government loan increase and Private loan
decrease.
 Geographical Location Wise (2014-2018) 5 years’ data discuss 8 divisions. Dhaka division
increase.
 Total loan and Non-performing loan discuss (2014-2018) 5 years’ data. Total loan
increase and non-performing loan decrease.
 Total Deposit and Total loan discuss (2014-2018) 5 years’ data. Total Deposit increase
and Total loan medium increase.
 Bangladesh bank credit management policies requires bank to set lending guideline which
SEBL does and reviews on annual basis.
 SEBL’s detailed product definition shows that each product falls under Bangladesh bank
broad classification of loan product.
 SEBL follows the BB guideline regarding discouraged lending activities.
 Both interest rate on deposit and loan are lower compared to other strong participants of
the market.
 The profitability ratio indicates that in last five year SEBL made adequate profit which is
in mounting trends.

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 SEBL is much strong in capital adequacy along with good management of liquidity but the
asset quality is not so good.
 Modern banking service like online Banking, wide range of ATM service, and one stop
banking service are available.
 The number of employee is not enough according to the total customer it serves through
its all branches.
 Foreign exchange contribution is appreciable to total income.

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 CHAPTER 6

RECOMMENDATION AND CONCLUSION

Topics to be covered:

6.1. Recommendation
6.2. Conclusion
6.3. References

Page | 55
6.1: Recommendation;

The recommendations given below are not decisions; rather they are only suggestions to improve
the customer’s service in order to fulfill the customer’s satisfaction so that customers give more
preference to SEBL. The recommendations are given below:

 Develop more customized parameters for credit approval process under the general
guideline of BB to increase its market.
 More research and innovative ideas should be made.
 SEBL should give more emphasize on liquidity management in a balanced way.
 Emphasize on more advertisements should be made.
 Website of SEBL Bangladesh need to be enriched.
 Continuous improvement should be made in the lending procedure which would reduce
the default risk of the bank and increase profitability.
 All the branches should be computerized.
 Employees should be given training for better customer service.
 ATM booths should be increased

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6.2: Conclusion:

Banking is the backbone of national economy. Banking sector no more depends on only on a
traditional method of banking. Banking industry has been treated as a prospective financial
sector in Bangladesh. Bangladesh’s banking system is heavily affected by bad loans. This is not
only makes conservative, contracts the lending system, it discourages investment. As a result,
the growth of the economy is impeded. One major reason for default loan is banks ineffectiveness
of assessing credit risk of a proposed investment. With time Bangladesh bank has set rules and
general guidelines to help banks asses risk and mitigate their credit risk. In spite of that many
banks fail to attract good credit and run profitably. Thus it is not only the guidance provided by
the Bangladesh bank that a commercial lending institution need to follow own lending policies
should be in place to ensure maximum effectiveness of credit assessment.

Credit risk management is becoming more and more important in today's competitive business
world. It is all the more important in the context of Bangladesh. The tools for improving
management of consumer credit risk have advanced considerably in recent years. Therefore, as
a responsible and reputed commercial bank, SEBL has instituted a contemporary credit risk
management system. From the study, it is evident that the bank is quite sincere in their approach
to managing the consumer credit risk though there are rooms for improvement. They have to be
more cautious in the recovery sector and preferential treatments to some big clients should also
be stopped. However, they follow an in-depth procedure in assessing the credit risk by using the
credit risk grading techniques which provides them a solid ground in the time of any settlement.

From the discussion in this report, it has become clear that credit risk management is a complex
and ongoing process and therefore financial institutions must take a serious approach in
addressing these issues. They have to be up to date in complying with all the required procedures
and must employ competent people who have the ability to deal with these complex matters.
Utmost importance should be given to the improvement of the networking system which is
essential for modern banking environment and obviously for efficient and effective credit risk
management process.

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SEBL is well prepared to and capable of meeting the demand for a broad range of banking
services. It has got adequate resources, both human and physical, to provide the customers with
the best possible services. SEBL has already developed goodwill among its client by offering its
excellent services. This success has resulted from the dedication, commitment and dynamic
leadership of its management over the periods. But they must concentrate more on customer
oriented services and provide better technological advancement relating to banking activities.

Page | 58
6.3: References:

1. Annual report of Southeast Bank Limited

2. www.southeastbank.com.bd
3. Rayhan, S., Ahmed, S., & Mondal, R. (2018). Performance Evaluation and
Competitive Analysis of State Owned Commercial Banks in Bangladesh.
Iiste.org. Retrieved 12 November 2017, from
http://www.iiste.org/Journals/index.php/RJFA/article/view/330
4. https://www.southeastbank.com.bd/?page=annual_reports
5. https://bb.org.bd/links/index.php

Page | 59
 APPENDIX

CORPORATE PROFILE OF SEBL:

Name of the Company : Southeast Bank Limited
Chairman : Alamgir Kabir, FCA
Vice Chairman : Ragib Ali
Managing Director : Mahbubul Alam
Company Secretary : Muhammad Shahjahan
Legal Status : Public Limited Company
Date of Incorporation : March 12, 1995
Registered Office : Eunoos Trade Centre 52-53, Dilkusha
C/A(Level 2,3&16), Dhaka-1000
Line of Business : Banking
Authorized Capital : Tk.10,000.00 million
Paid Up Capital : 3,422.64 million
Year of Initial Public Offer : 1999
Stock Exchange Listing : April 10, 2000 (DSE) & April 24, 2000
(CSE)

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