Internship Report on Credit Management System of Bangladesh Shilpa Bank

This report will mainly focus on the Project Appraisal practice of Bangladesh Shilpa Bank. The proposed study will cover the appraisal practice, procedures and techniques followed by the loan operation department (LOD) in the preparation of Implementation Policies and Practices of Bangladesh Shilpa Bank.
A huge amount of capital investment is very much needed both in private and public sectors for any country. In order to get maximum benefits from such capital investment the loan operation and implementation is very important. For a developing country like Bangladesh, any error in loan operation and implementation decision will have an adverse impact on capital investment decision and capital structure of the country.
For a developing country like Bangladesh a huge amount of capital investment is very much needed both in private and public sector. In order to get maximum benefits from such capital investment the appraisal is very important. Any error in appraisal will have an adverse impact on capital investment decision, which in turn will also have an adverse impact on capital structure of the country. Project appraisal means the examination of project before that is undertaken. It refers to the evaluation of projects and Department. an appraisal team consisting of engineer, economist and financial analyst has appraisal the project. This report critically evaluates the proposed project through technical analysis, market analysis, economic analysis and financial evaluation. When the project is found to be technically feasible, financially rewarding and economically & commercially viable only then that project is financed by BSB. This study will make an attempt to the project Appraisal Practice of BSB.

1.2 Objectives of this study:
The main objectives of this study are to scrutinize the Loan Operation and Implementation Policies and Practices of Bangladesh Shilpa Bank. To do this, my study examines how Bangladesh Shilpa Bank appraises project, what information needs from the entrepreneur, what aspects of a project need to be scrutinized and evaluate, what strategy Bangladesh Shilpa Bank takes in successful implementation of a project.

1.3 Methodology of Collecting Data:
This is a descriptive type of research that has undertaken insights and understanding about overall operation of Bangladesh Shilpa Bank. This report is prepared on the basis of primary and secondary data. The relevant data information was collected through direct interview of the personnel engaged in various departments of Bangladesh Shilpa Bank. The secondary data source is annual report of the BSB, which were collected from personal visit to the bank. The subject matter related to methodology of this report is the following:
Primary sources:
Direct Interviews & Conversation
Official records
Observation of various organizational procedures
Expert opinion
Secondary sources:
Annual reports of BSB
Relevant papers and different books and publications
Manual of different departments
Periodical publications
BSB order 1972
1.4 Limitations of the study:
The main limitations of the study are as follows:
v Due to the shortage of time I could not get at depth knowledge of the loan operation and implementation policies and practices of Bangladesh Shilpa Bank, as the period for which I was assigned to department of Bangladesh Shilpa Bank was very short and it was only one and half month.
v Many personnel of the BSB reluctant to provide useful information.
v Most of the information about the topic relevant in this purpose was secret from the point of view of organization. So this kind of information could not be collected.
v Sufficient records, publications, facts and figures are not available. These constraints narrowed the scope of the real analysis.

2.1 Overview of financial structure of Bangladesh.
Financial structure primarily depends on the level of economic and social development of a particular country. It involves through a historical process along with the level of development different kinds of financial institution grow and develop to meet different kinds of needs of economic and social development. Hence financial structure or system varies from one country to another. As for Bangladesh, financial structure is at the formative stage. Its classification is best with problems because rigid classification often becomes unrealistic. However, for academic process, financial institution in Bangladesh may broadly be divided into two groups.

A: Banking institutions and
B : Non-bank financial institutions

2.1.1Bangladeshi banking during British period:
In ‘Presidency Bank of Bengal’ Sukhomoy Roy-a wealthy merchant was one of the director. Gopimohan Tagor was one of the director of the `Commercial Bank’ (1819). Raghram Goswami was one of the partners of ‘Calcutta Bank’ (1824).
In 1829 prince Dwarakanath Tagore-grandfather of Rabindranath Tagore-established the ‘Union Bank’ in Calcutta along with British Partners. This was the first bank where the Bengalese and British had equal dominance.
In the wake of ‘Swadeshi’ movement during early twentieth century, Bangalees founded a good number of banks. These are: ‘Comilla Banking Corporation’ (1922) ‘Pioneer Bank’ New Standard Bank, Hoogly Bank’ (1932). ‘Nath Bank’. It is said that the district of Comilla Banking institutions in pre-partitioned Bengal. ‘Commila Banking Corporation; was established by Naren Dutta-a Zamindars Industries Dutta and Shantibhusan Duta formed ‘Comilla Union Bank’. Akhil Dutta Founded ‘pioneer Bank’ during the same time. A.T.M. Shaidul Islam of Faridpur and former mayor of Calcutta Zakaria funded ‘Indian Crescent Bank.

2.1.2 Bangladeshi banking during Pakistani period:
During Pakistani period (1947-1971), only two banks were established by the Bengalese in the then East Pakistan (now Bangladesh), Fully Bengalee owned bank in the then East Pakistan was ‘Eastern Banking Corporation’ Bank Ltd. (1965) and partly Bengalee owned was ‘Eastern Mercantile Bank Ltd. (1959). The prominent sponsors of ‘Eastern Banking Corporation were industrialist Jahural Islam, former chief engineer Abdul Jabbar and captain jagadish Debanath. Among the prominent sponsors of ‘Eastern Mercantile Bank’ were O.R. Nizam, M.R. Siddiquy, Khan Bahadur Muzibur, industrialist Habibur Rahman and A.H. Khan.

2.1.3 Banking in Bangladeshi period
When Bangladesh was fully liberate on December 16, 1971 the banking sector was a very small one. It consists of only about 1,100 branches with a total deposit of about Tk. 300 cores only. The Government of People’s Republic of Bangladesh took over the assets and liabilities of all the branches of Pakistan owned banks operating in Bangladesh and two banks owned by the Bengalese. On nationalization, the position was as follows:

It will appear from the above information that banking in independent Bangladesh started with only 06 nationalized commercial banks. In the subsequent years following independence, however, number of banks has substantially increased. As of today (2000-2001) number of commercial banks stands at 4 including 4 Islamic banks and 13 foreign banks in 2000-2001, in addition to these 46 commercial banks, there are 09 specialized banks including 03 agricultural banks, and I cooperative bank. In total more than 6,150 branches were in operation having more than Tk. 81,000 cores of deposits during 2000-2001.
2.2 Banking sector and its contribution to the national economy:

The economic structure of Bangladesh is agriculture based. Most of the industries of our country are depend on agriculture. For savings and formation of capital is normally difficult on view of Bangladesh. Moreover, now days there are various financial institution (government, private and foreign) have been set-up in the country. Various, Side by side, government has also set-up various specialized banks and financial institutions. These banks and financial institutions contribute in different way on your economic development. Especially, bank business plays an important role on contribution criteria are listed below:

a. Creation of medium of exchange
b. Collection of savings and formation of capital
c. Supply of capital
d. Development of home trade.
e. Help of foreign trade
f. Industrial development, agricultural development of small and cottage industries.
g. Increase government revenue.
h. Credit to government, public and private firm etc.