Internship Report on Analysis of Loan Disbursement and Recovery Problems of the National Bank PLC

Posted on 25th Oct 2024 10:38:46 PM Accounting and Information Systems


1.1 Definition of Internship

Internship is an assigned work performed usually at the end of a course curriculum. The goal of internship is to apply one’s theoretical knowledge in practical fields. Thus internship is a pragmatic application of knowledge and achieving practical experience by engaging oneself in different and distinct sectors of work. 

1.2 Rationale of Internship Program

Goods and services are produced for the purpose of using in daily life. Similarly, theoretical knowledge is acquired for the purpose of applying in the practical life. The propensity of application of theoretical knowledge in practical life successfully internship program is absolutely necessary, because theoretical knowledge will be fruitful if it can be applied in the practical life. When we can implement the theoretical knowledge practically, we can say the knowledge is successful. Otherwise the achieved knowledge is valueless. Internship program is the way of implementing the theoretical knowledge practically. 

However, the importance of internship may be described in the following ways: 

· As internship program is the practical implementation of the theoretical knowledge, it helps to increase the quality and effectiveness of the trainer. 

· We can only know the problems of an organization in directly through theoretical knowledge, but we can know the nature of the problems, problems of the various departments, methods of solving the problems through the practical training. So it is very important to identify the problems and eradicate the problems. 

· The trend of all activities in an organization becomes growing through practical training.

· By internship program students can understand limitations, shortages and practicability of their knowledge and thereby can take necessary action for removing these limitations and shortages. 

· It mentally prepares for their professions.

· Internship program acts as a bridge between theoretical knowledge and managerial practice. 

· Internship acts as a guideline during the service period.

· Through internship a student can achieve the ability to find out real problems and can make suitable solutions. 

Last of all, we can say that one should give importance of an internship program. 

1.3 Objectives of Internship

The specific objectives of the internship are to identify the nature of the problems of loan management in the field of National Bank PLC, Head Office, Dilkusha Branch, evaluation of loans and advances issues during the period to find out the major limiting factors standing on the way of this field to find out the impact of this problems on the managerial efficiency of National Bank PLC, Head Office, Dilkusha Branch, during the period and to suggest ways of incasing managerial efficiency of the units through policy development. 

However, we can mention of objectives of internship in the following ways: 

· To show guideline for searching various necessary information to solve the organizational problems. 

· To add new information with established ways. 

· To identify problems and recommends to solve them. 

· To realize what kinds of organization can contribute to the economic development of a country.

· To determine entire actual situation of the organization is an objective of internship training. 

· Another important objective of practical training is to implement the knowledge of practical training in the practical life. 

· To prepare pragmatic report about entire management of organization is another objective. 

· To make comprehensive solutions of problems to increase the diversification and modification of marketing. 

· To show about the conditions of the Bank and its good will to the public. 

· To identify managerial problems and eradicate those. 

· The most important objective of practical training is to seek loan from financial institutions.

Finally, it is very easy for me to conceive of the fact that the internship program facilitates both the students and the Bank. Students can add practical knowledge with their theoretical knowledge and bank can know what is the present condition of various areas of the organization.

2.1 Introduction

Bank is a profit making financial institution. Two essential functions of commercial banks may best be summarized as the borrowing and lending money. It borrows money by taking all kinds of deposits in different form like current, time and savings. Thus a commercial banker, whether it be through current account or fixed deposit account, mobilizes the savings of the society. Then it provides this money to those who are in need of it by granting overdrafts or fixed loans or by discounting bills of exchange or promissory notes. A commercial bank renders very valuable service to the community by increasing the productive capacity of the country and thereby accelerating the pace of economic development. It gathers the small savings of the people, thus reducing to the lowest limits idle money. Then it combines these small holdings in amounts large enough to be profitably employed in those enterprises where they are most called for the most needed (Shekhar 1999).

Banks and financial institutions are very much essential for the overall development of the country. Market economy or free economy is a widely used concept about the present economy of Bangladesh. The country took the concept in the late seventies with the privatization of a significant number of public enterprises. The practices of free market economy started from the eighties with the changing of the world economy. A number of initiatives were taken from the nineties to increase the competition and efficiency in money market, improvement of loan related law and order situation and improve the financial base of the banks of the country. It is worth noting here the main functions of a commercial bank as follows:

1. A commercial bank collects and manages deposits. It provides checking facilities and interest for its customers’ deposits, which may be either demand or time deposits of different maturity. Thus, a commercial bank serves as safe custody for peoples’ money as well as a medium of investment.

2. A commercial bank extends credit to a great variety of borrowers through loans as well as by purchasing securities. In fact, most business trade and industry today are either fully or partly financed by commercial banks.

3. In addition to the above, commercial banks provide a variety of other services to their customers e.g. remittance facilities, credit information about customers, financial advice and collection of debts and dues etc.

4. Besides, banks provide a number of trust services to their customers. These services may be either corporate trust services, which arise in connection with the issue of bonds, personal trust services under which they manage property on behalf of their clients or corporate pension funds under individual firms providing retirement benefits for their employees.

In view of above as well as many other services they provide, commercial banks are often called department stores of finances. In Bangladesh too this definition is equally applicable because of the ever expanding role that commercial bank plays today in the national economy from financing the economic activities of the rural poor and unemployed youth up to negotiation abroad for financing the nation’s foreign trade and industry (Ahmed 1999).

2.2 Statement of the Problem

The continuing crisis of accumulation of non-performing and defaulted bank loans has emerged as one of the most serious constraints in the path of economic development of Bangladesh in the nineties as banking remains the main intermediary vehicle of harnessing investible capital for accelerating the growth of the productive sectors in Bangladesh in the absence of a healthy capital market. Let us start the discussion of the problem by providing and outlining the genesis of the crisis. Right from the start of the post-colonial Pakistani era, economic development policies of Pakistan centered around growth-oriented ‘modernization paradigm’, wherein industrialization was assigned the top priority in the allocation of investible funds from the institutional credit sources in the name of providing employment to the vast multitude of the so-called ‘disguisedly unemployed labor force’. This state-patronized effort of development of an industrial entrepreneurial class in Pakistan miserably failed to provide adequate quantum of formal industrial employment even in West Pakistan, (not to speak of relatively deprived East Pakistan), and it was regarded as one of the main factors behind the rapid growth of ‘regional economic disparity’ between the two provinces of Pakistan, which fuelled the liberation struggle of Bangladesh. Banking was blamed as a principal mechanism of siphoning – off capital from the then East Pakistan, and, therefore, nationalization of the banks and insurance companies, became one of the most popular issues in the election manifesto of the Awami League the election of Pakistan in 1970. 

So, after the liberation of Bangladesh, the Awami League Government’s decision to nationalize the banks and insurance companies operating in Bangladesh (except a few foreign banks) should be considered a logical step in the light of the spirit of the liberation war which enshrined the four state principles of Bangali nationalism, democracy, secularism and socialism. But, the Herculean task of re-organization of the nationalized banks in the chaotic, war-ravaged and crisis-ridden post-liberation years, and a very rapid expansion of banking network in rural Bangladesh created some daunting problems for the banking sector, especially because of the fact that the banking sector was asked by the state to share the burden of keeping afloat the state-owned enterprises, which emerged in no time after nationalization as the most corrupted, undisciplined, over-manned and mis-managed concerns mired in a sea of recurrent losses in the backdrop of the political and administrative inexperience of the post-liberation regime. In addition to this massive burden, the banking sector was assigned the task of developing a new Bangladeshi entrepreneurial class to complement the government efforts of productive investment through the state-run sector corporations. 

In this scenario, the nationalized banks were involved in two sorts of pressure situations: On the one hand, the almost insatiable demand for credit from the loss-making state-owned enterprises kept the banks under constant pressure due to a shortage of adequate liquidity. On the other hand, the newly emerging so-called ‘briefcase-businessmen’ in connection with politics and politicians, top bureaucrats and top bankers, political functionaries themselves, and retired military and civil bureaucrats were constantly lobbying for accessing to bank credit, and, in the process, were vitiating the work-atmosphere in the banks by alluring a section of the bankers to indulge in corruption and malpractice’s. It is now widely recognized that today’s millionaires of Bangladesh came mostly from the ranks of those ‘briefcase-businessmen’ and the groups mentioned, who could successfully establish and maintain these types of patron-client relationship with the bankers, and in the process, created a host of millionaires from amongst those bankers themselves, who had actively connived and harvested the illicit ‘margins’ in exchange of the favors rationed out to those fortunate loaners. 

The political changes of 1975 ushered in an era of political culture, wherein corruption gradually became institutionalized, and the economy of rent-seeking took firm roots in the body-politic of Bangladesh. Overt and covert military rule for the next 15 years has led to both ‘commercialization’ and ‘criminalization’ of politics in Bangladesh. In the process, sanctioning of bank loans became one of the prime victims of the buying and selling process afflicting the political party affiliation process, as a popular mechanism for doling out financial favors to party leaders as well as political cadres. This politicization of the banking practices has seriously hampered the institutional disciplines of the banks, where professional expertise, integrity and ethical values have become exceptions to some extent rather than rules. Ex-bankers emerged as financiers of the newly floated private banks, but there was no mechanism to make them accountable or to know about the sources of their ‘Aladin’s lamp’. Defaulters of bank loans taken from nationalized banks or state owned development finance institutions (DFIs) swelled the rank of directors of the newly established private banks, but nobody intervened on behalf of the loan-giving banks caught in the middle with defaulted loans. The laws, rules and regulations relating to banking remained mostly in the books; and the judicial process utterly failed to take the willful defaulters to task, thereby making the process of lender’s recourse on borrowers almost a mockery in Bangladesh. Therefore, we surmise that behind all these malaises, the nature of the state and of politics played the real villainous role by patronizing and developing a class of ‘comprador bourgeoisie’ in Bangladesh, created, nursed and constantly nourished by state-patronage. And, in this nursing process, bank loans were rampantly used as lucrative doles. 

In the eighties, the rapid liberalization of Bangladesh’s import regime has created the so-called ‘sick-industry syndrome’, which provided a potent excuse for some, and created genuine hardships regarding repayment of bank loans for the others. The domestic industries have been bearing the brunt of this ill-advisedly too rapid pace of liberalization of Bangladesh’s international trade without appropriating preparatory policy measures. The political doldrums of the late-eighties provided additional excuses to these swelling groups of defaulters. The BNP government of 1991-96 tried to stem the root in this field in the initial years of its term. (Though, the decision to write-off small loans unto Tk. 5000/- right after assuming power was a definite blunder from the point of view of creating proper atmosphere for loan repayment!). A list of to defaulters was published in the press. The financial sector-reforming project was lunched and completed. The Bank Companies Act 1991 was enacted. Financial Loan Courts were established. Some semblance of discipline was brought back in the banking sector. But, dogged by the problem of chronically stagnating investment scene, and forced by the legacy of commercialized politics and statecraft, the BNP government of Begum Khaleda Zia repeated the blunders of its predecessors of providing lavish encouragement in bank management to ease and expedite the process of term lending, especially according to its own political exigencies at the later stages of its rule, which added a massive amount of fuel to the fire of the so-called ‘default culture’. The present government inherited an already precarious situation in 1996, but has since been fighting the menace doggedly. But, the hangover of the earlier lending sprees continues to blunt the banking sector even today by sustaining the momentum of the build-up of the defaulted loans of the earlier two decades. The problem has reached such a magnitude by the end of the decade. 

2.3 Objectives of the Study

The main objective of the study is to evaluate the effectiveness of lending program of NBL for the period 1991 to 2002. To achieve this objective, the study seeks to realize the followings:

1. To examine the loans and advances of National Bank PLC during 1997 to 2002

2. To assess the investment and recovery position of National Bank PLC during 1997 to 2002.

3. To evaluate the financial performance of National Bank PLC during 1997 to 2002.

4. To find out problems and provide recommendations for the improvement of overall performance of the Bank.

2.4 Rationale of the Study

Commercial Banks in Bangladesh in general are suffering from chronic situation of default culture. National Bank PLC is not an exception to this. Profitability and productivity are highly important for the survival of any bank. Various studies have been done but no such study is found. Researcher was motivated to select this area through the scholastic suggestions of my honorable supervisor. This study may be helpful for the policy makers and other concerned authorities. 

2.5 Chapter Outline

This internship report has been consistent often chapters. The first chapter is included in the introduction of internship program, objective of the internship program and the importance of the internship program. The second chapter has been included with the introduction of the report, objectives of the report, rationale of the study. Chapter three deals with methodology of the study, scope of the study and chapter layout. Chapter four and five has introduced the Background of the National Bank PLC, and the organizational structure of the bank. Chapter six is included the loan policy of The National Bank PLC. Chapter seven has introduced the data analysis and interpretation of the study. Chapter eight consisted with the recovery policy and recovery problems of the study bank. Chapter nine included the findings of the study and general problems of the bank. And chapter ten consists with the recommendations and conclusion of the report.

 

Contact us to read the full 'Internship Report' internshipreport12@gmail.com

 

CONTENTS

INTRODUCTION OF INTERNSHIP PROGRAM

Definition of Internship

Rational of Internship Program

Objectives of Internship

INTRODUCTION

Introduction

Statement of the Problem

Objectives of the Study

Rational of the Study

Chapter Outline

METHODOLOGY

Introduction

Methods of sampling

Methods of collection

Data Analysis Techniques

Scope of the Study

BACKGROUND AND ACTIVITIES OF THE NATIONAL BANK PLC

Introduction

Activities of the National Bank PLC

At a Glance of the Operational Performance of NBL

ORGANIZATIONAL STRUCTURE OF THE NATIONAL BANK PLC

Introduction

Organizational Structure of National Bank PLC

CREDIT POLICY AND CONTROL GUIDELINES OF NATIONAL BANK PLC



Recent Post

Categories