Analysis of Loan and Advance Activities

Abstract

Commercial banks lend money to different categories of borrowers for various purposes with aview to generating revenue. Accordingly, while processing and appraising a loan proposal, banks essentially analyze the information relating to borrowers, assess the purposes of loan and determine the viability of the loan proposal. If the proposal is sound and safe for lending, loan is sanctioned and disbursed. The report discusses about the management practices of different credit facilities, approval process, monitoring and performance of the bank under study. Janata Bank Limited is the second largest Government owned Bank. It operates credit facilities for business purpose as well as welfare of the economy. Bank has finance at the rural level at a very low interest rate. It has also Special loan procedures for the rural farmers. This helps for the development of the rural economy of the country. This report is categorized in four different chapters. Firstly, it contains the introduction of the study, secondly, theoverview of the organization. Thirdly, Concept and Analysis of the impact of loans and advances and also contain Bangladesh Bank guidelines. Next discussion is the analysis and findings about different variables of facilities. At the end, the report makes some valuable policies implication from the analysis. The introduction part of the report discussed about the origin of the report where mentioned that this report is a part of the fulfillment required to complete the BBA degree under the Sonargaon University curriculum. The objective of the report is to analyze the loan activities in Janata Bank Limited. In this report, I have used mainly secondary data. But I have also used some primary data. To prepare this report I have faced some difficulties and limitations like insufficient of current information, relevant to the report. All required information was not available in any specific branch of the bank and there was also limited opportunity to visit more than one branch. In the next chapter, I have made an overview of Janata Bank Limited. Here I have tried to focus the bank’s history of the organization, its mission and vision, organizational hierarchy, network, major products and services, SWOT analysis of the Janata Bank Limited. In the third chapter, I have done some analysis in terms of loan and advances. The analysis of this report shows different comparisons among the amount of loan disbursement, provision for loan, loan recovery and earnings from loan. This report also shows the trend of deposit collection, approval of loans and advances. In this report, it has been found that the increasing amount loan disbursement also increases its operating income and the recovery rate is also increasing. Even if the rates are increasing, operating profit did not come up to the expected level in 2019 due to decrease in interest income and increase of interest expenses as compare to those previous years. Loans and advances yield is also lower in 2019 which stood 11.44% compared to 12.39% in 2013. But the management of the bank is now very concern and proactive about recovery of loans. So, the percentage of recovery is increase in 2019 but still they have to work a lot on it as Janata Bank Ltd. is highly suffers on loan default. At the last chapter this report contains the findings, policy implications from the analysis and conclusion about the Loans and Advances procedure of Janata Bank Limited. Due to lower demand of loan, the business of JBL has also been obstructed in 2019.So, JBL should take proactive measure to mitigate various sort of risk in changing business environment which includes credit risk, liquidity risk, and operational risk are comprehensively dealt with and systematically managed by reasonable limit and control. This bank should more conscious about analyzing the ability of the repayment of the borrower, the value of the collateral and the risk involved with it.As a government owned bank, Janata Bank Ltd. faces different problems for loan facilities. But still it has more transparent Credit program than other government banks. It has improved its recovery program and this provide its operating profit 2059260.40 Crore in 2019 Year