MEANING OF CREDIT

MEANING OF CREDIT

Credit means a promise of future payment in kinds or in money given in exchange for present money, goods, or services. So credit does not necessarily require money. The credit concept can be applied in barter economics as well, based on the direct exchange of goods and services.

According to investopedia.com

1. A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some date in the future, generally with interest. The term also refers to the borrowing capacity of an individual or company
2. An accounting entry that either decreases assets or increases liabilities and equity on the company’s balance sheet. On the company’s income statement, a debit will reduce net income, while a credit will increase net income. 

Credit is one of the most important functions of a commercial bank and with the modern concept of social order and participation of commercial banks in various phases of commercial, industrial, agricultural and other economic activities of the country, it is of paramount importance that banks have to be very careful while choosing a borrower:- 

1.  Before sanctioning a loan a banker carefully appraises the loan proposal of the borrower & to determine their credit worthiness on the basis of principles of sound lending simply an appraisal of loan proposal is not a guarantee against risk of non-payment by the borrowers. This is only a part of the job. The other and equally important responsibility of the lending banker is to follow-up and supervises the use of the credit. 
2. So, a banker while sanctioning any loan should ensure that the credit facility is allowed to the genuine borrowers for genuine economic purposes, money lending properly used for generation of income through increased economic activities and the borrowed money is repaid in time. All these can be ensured through an effective supervision and follow-up-system of the advances. 
3. Supervision and follow-up are closely related. Supervision gives more emphasis on proper end-use and follow-up gives more emphasis on timely recovery of advances. By supervision we mean to have a proper control over the borrowers’ operation to ensure the end use of funds. 
4. Supervision keeps track of the end-use of fund lent. It includes adequate arrangement by bank for maintaining close contact with the borrower and his activities in order to remain well informed about the position and progress of the project financed and to offer appropriate guidance to the borrower, where necessary.

SIGNIFICANCE OF CREDIT

According to Bangladesh bank, significance of credit can be realized from the both macro and micro aspects of economy. At macro level credit is influenced by quantity of money, level of economic activity, imports and net foreign assets. At micro level, credit influences behavior of economic sector (industry, agriculture) and behavior of economic agents (business, financial institution, households).

CATEGORY OF LOAN AND ADVANCES

Bank offers loan and advances to traders, businessman, and industrialists against security of same assets or on the basis of personal security or guarantee of borrower in either cases the bank bear the risk of default in repayment. So the matter of credit authorization is sensitive.
According to Bangladesh Bank (central bank of Bangladesh0 there are mainly five kinds of loan, which are as follows:

• Cash Credit (CC): Those loans which have no specific payment period and any party or businessman take from the bank as he/she/they can do transaction any time but in such category there will be an expiry date and loan limit which is compulsory. Such as credit (CC) and over draft (OD).
• Demand Loan: Such loan is payable to bank when the bank will charge to the party to pay, for example: forced time. 
•  Fixed term (below 5 year) or time loan: The loan which is payable at specific term and specific payment schedule is known as fixed term. Such as project loan. 
•  Fixed term (above 5 year) or term loan:  this types of loan is also like fixed term loan below 5 years, it is also above specific term of pay and fixed payment schedule to recover his/her/their loan. CL-5 from is used to report for loan of above 5 years. 
• Short term agricultural credit and micro credit: short term agricultural credit will include the short term credit as listed under the annual credit program issued by agricultural credit department of Bangladesh bank. Short term credit include any micro credits for less than TK-25000/= and repayable within less than 12 months, be those termed in any names such as non-agricultural credit, self-reliant credit, weaver credit.

MEANING OF CREDIT MANAGEMENT

Credit management is to manage the credit cycle process. It is the way to handle the money, which a consumer borrows from banks or credit providers. It involves the policies and practices that followed by a bank or financial institution in receiving payments from their customers. It is usually regarded as assuring that buyers pay on time, credit costs are kept low, and poor debts are managed in such a manner that payment is received without damaging the relationship with the buyer.

IMPORTANCE OF BANK LOAN:

Bank loans have an increasing role for corporate activities. In most countries, bank loans are the main source of financing for small and medium-sized enterprises. Even though the role of banks decreases in the last years, banks take advantage of a privileged position which allows them to provide liquidity cheaply than other intermediaries. The activities of those corporate clients are often reluctant, in providing the complete and real information about them. As a result the information asymmetry may have a negative impact both on banks and companies. The most important effects of the financial and economic crisis on the companies are the drastic drop in demand for goods and services and a tightening in credit terms, which are severely affecting their cash flows. Also, companies face financing constraints which often amplify the effects of crisis.

AN OVERVIEW OF JAMUNA BANK LIMITED (JBL)

Jamuna Bank Limited (JBL) is the leading private sector bank in Bangladesh offering full range of Personal, Corporate, International Trade, Foreign Exchange, Lease Finance and Capital Market Services. Jamuna Bank Limited is the preferred choice in banking for friendly and personalized services, cutting edge technology, tailored solutions for business needs, global reach in trade and commerce and high yield on investments, assuring excellence in banking services.

STATUS OF JAMUNA BANK LIMITED

Jamuna Bank Limited (JBL) is a Banking Company registered under the Companies Act, 1994 with its Head Office at Chini Shilpa Bhaban, 3, Dilkusha C/A, Dhaka-1000. The Bank started its operation from 3rd June 2001. Jamuna Bank Limited is a highly capitalized new generation Bank with an Authorized Capital and Paid-up Capital of Tk.10000 million and Tk.4488 million respectively. The Paid-up capital has been raised to 840 million and the total equity of the bank stands at 8325 million as on December 31, 2014. JBL undertakes all types of banking transactions to support the development of trade and commerce of the country. JBL's services are also available for the entrepreneurs to set up new ventures and BMRE of industrial units. Jamuna Bank Ltd. the only Bengali named new generation private commercial bank was established by a group of winning local entrepreneurs conceiving an idea of creating a model banking institution with different outlook to offer the valued customers, a comprehensive range of financial services and innovative products for sustainable mutual growth and prosperity. The sponsors are reputed personalities in the filed of trade, commerce and industries. The Bank is being managed and operated by a group of highly educated and professional team with diversified experience in finance and banking. The Management of the bank constantly focuses on understanding and anticipating customers needs. The scenario of banking business is changing day by day, so the bank's responsibility is to device strategy and new products to cope with the changing environment. Jamuna Bank Ltd. has already achieved tremendous 15 Credit Department of JBL progress within only fifteen years. The bank has already ranked at top of the quality service providers & is known for its reputation. Jamuna Bank Ltd. offers different types of Corporate and Personal Banking Services involving all segments of the society within the purview of rules and regulations laid down by the Central Bank and other regulatory authorities.

As per the provisions of Bangladesh Bank license, the Bank has offered initially its shares to public by Pre – IPO and subsequently sold shares to the public through IPO in the year 2004. The shares of the Bank are listed with both Dhaka Stock Exchange Ltd. & Chittagong Stock Exchange Ltd.

PRODUCT AND SERVICE OFFERINGS

The Bank has a collection of mode that prepared financial products and services. Such products are based on Monthly Savings Schemes, Consumer Credit Schemes, Lease Finance and Personal Loan for Women and Shop Finance Scheme etc. Jamuna Bank Ltd, also familiar with Q-cash ATM cards for its valued customers providing 24 hours banking services through Debit Cards.JBL offers the following services to valued customer. The Bank is providing different types of services. Some of them are mentioned in below:

Deposit Schemes

a.      Remittance and Collection

b.      Import and Export handling and Finance

c.      Loan Syndication

d.      Project Finance

e.      Investment Banking

f.       Lease Finance

g.     Hire purchase

h.      Personal Loan for Woman

i.       24-hours Banking: Q-Cash ATM facility

j.       Islamic Banking

k.     Corporate Banking

l.       Consumer Credit Scheme

m.    International Banking

Islami Banking Branch:

In the year 2004, Jamuna Bank Limited opened another Islamic banking branch at Jubilee Road, Chittagong on November 27, 2004. The already existing Nayabazar Islamic Banking Branch started its operations from October 25, 2003, the total Islamic banking branches stands at 02 (Two). Profit & Loss Account of the Islam! Banking Branches below: JBL’s Shariah Council consists of 06 (Six) members, among them 02 (two) are Khatib, 01 (one) is Ex-Economic Advisor, 01 (One) is Vice chancellor, Islami University, 01 (One) is Principal and other one is Banker. During the year 2009, the Shariah council of JBL conducted 03 meetings to discuss all aspects of Islamic Branches operation.

Portfolio Management Service:

Since inception, we have achieved an unparalleled reputation as a leading Merchant Banker through providing portfolio management services by maintaining a high level of professional expertise and integrity in client relationships. Keeping customer preferences as an investor in mind, Jamuna Bank Ltd. has designed Investors’ Discretionary Account (IDA) and Bank’s Discretionary Account (BDA). In these accounts the customers may enjoy loan facilities at a ratio 1:1 for investments in private placement, IPO, and secondary market operations.

JBL Special Banking Services:

Special Banking services of Jamuna Bank are considering the Personal services. The bank is offering wide-ranging products and services. These services and products are matching with the customer’s requirements. Transactions of accounts, savings schemes or loan facilities from Jamuna Bank Ltd make available for every customer in a unique and uniform mixture of easy and expert service superiority. JBL offers the Special Banking Services like Current Deposit Account, Savings Deposit Account, Short Term Deposit Account, and Fixed Deposit Accounts. It also offers attractive rates on various deposit schemes.

JBL Corporate Banking Services:

Jamuna Bank Ltd. offers a complete range of advisory, financing and operational services to its corporate client groups combining trade, treasury, investment and transactional banking activities in one package. The corporate Banking specialists will render high class service for speedy approvals and efficient processing to satisfy customer needs.

Online Banking:

Jamuna Bank Limited has introduced real-time any branch banking on December 31, 2010. Now, customers can withdraw and deposit money from any of its The valued customers can also enjoy 24 hours banking service through ATM card from any of Q-cash ATMs located.

Types of Deposit account:

There are several types of deposit accounts. Each account has different characteristics and every account has some specific purpose to serve.JBL offers the following key Personal Banking Services. According to their uniqueness they are described as follows:

i. Savings Account:

It is the general account of the JBL individual or more than two persons can open a savings account on JBL. The officers and authorize persons are issuing cheque book, deposit slips and statement of account to the holder of savings. The officer justifies the information that is submitted by the account holder for opening of the account. The officers of the bank process account-opening formalities.

ii. Current Deposit Account:

JBL is one of the newly established well-reputed third generation private commercial bank in Bangladesh. It operates very diverse current account operation. They serve various types of customers, like current account for private limited company, current account for public limited company, current account for partnership business, etc.

iii. Foreign Currency Account:

The JBL also operate Foreign Currency Account for Bangladeshi Wage Earners or for Foreign Nationals/Company/Firms etc. to send their valued earned foreign currency into the country.

iv. Short Term Deposit Account (STD):

JBL also offers Short Term Deposit to its valued customers. Short Term Deposit is a deposit account where the payment of interest is paid on month basis. These items include the deposits for a period ranging from 7 (seven) days to 89 (eighty-nine) days. These types of liabilities are payable on special notice or after a specified period other than the fixed deposits. Some of these types of deposits are of the nature of time deposits. The rate of interest on STD account is 4.5% per annum. There are some rules and regulations that must be maintained by the STD account holder. If the STD account holder wants to withdraw the money from the account they have to inform the bank before, otherwise the account holder may not get the interest in full amount.

Schemes:

Schemes are the most important sources of enhancing banks deposit. Mainly bank is the lender of money, which is deposited by various types of depositor. These schemes are different in nature and types and also in interest rates. These deposits give the customers to deposit the idle money in profit earning schemes and also provide the security. Jamuna Bank limited as third profit earning to the depositors and generation modern and technology based modern commercial bank offers various types of customer’s friendly deposit schemes to its valued customers. These schemes are highly also unique in security.

Marriage Deposit Scheme:

 Marriage of children, especially daughter is a matter of great concern to the parents. Marriage of children involves expense of considerable amount. Prudent parents make effort for gradual building of fund as per their capacity to meet the matrimonial expense of their children specially daughters. Parents get relief and can have peace of mind if they can arrange the necessary fund for marriage of their children.

The core values, core strength and core competencies of JBL are given below: 

Core Values	Core Strength	Core Competencies
Integrity	Transparent and quick decision making	knowledge
Respect	Efficient team of performers	Experience and expertise
Fairness	Satisfied customers	Customer orientation / focus
Harmony	Internal control	Transparency
Team sprit	Skilled risk management	Determination
Courtesy	Diversification	Zeal of improvement
Commitment		Pursuit of discipline growth strategy
Service excellent		Reliability

 

SLOGAN

The slogan of Jamuna Bank limited is “Your Partner For Growth” 

FOUNDATION OF SEBL’S STRENGTH

JBL’s Vision:

To become a leading banking institution by playing a significant role in the development of the country.

JBL’s Missions:

The bank is committed to satisfy diverse need of its customers through an array of products at a competitive price by using appropriate technology and providing timely service so that a sustainable growth, reasonable return and contribution to the development of the country can be ensure with a motivated and professional workforce. 

JBL’s Commitment to Client

- Provide service with high degree of professionalism and use of modern technology

- Create long-term relationship based on mutual trust

- Share their values and beliefs

- Respond to customer needs with speed and accuracy

- Grow as our customer grow

- Provide products and service at competitive pricing

- Ensure safety and security of customers’ valuables trust with us 

 

 

MANAGEMENT HIERARCHY OF JAMUNA BANK LIMITED