PROCEDURE FOR GIVING ADVANCE:

? The potential borrower will submit application to bank or financial institution for loan by filling up of a specific Application form.

The Application form (request for Credit Limit) contains following particulars:

a) Name of the Borrower -----

b) A/C No. -------------

c) Business address (with telephone no.) [Residential address and Permanent address] ------

d) Introducer’s name, A/C no. & address -----

e) Date of establishment/ incorporation ------

f) Trade license number, date and expiry date (Photocopy of trade license enclosed) --------

g) GIR/TR no. & amount of income tax paid last year ------

h) Constitution/ Status (Mention whether sole proprietorship/ partnership/ Public Ltd. company/ Private Ltd. company) --------

i) Particulars of individual/ Proprietor/ Partners/ Directors (Name & Designation, father’s/ Husband’s name, present & permanent address with Telephone no., % of shares held) ------

j) Experience and background of Individual/Proprietors/ Partners/ Directors --------

k) Full particulars of assets in the personal name of Individual/ Proprietor/ Partners/ Directors with valuation -----------

l) Names of Subsidiaries/ Affiliates, percentage of share holding and nature of business ------

m) Nature and details of business/ products (for which credit facility is applied for), Markets (Present market price per unite, Factory price), Estimated sales for next one year ............

n) Credit facilities required (type, amount, period, purpose, and mode of adjustment) ..........

o) Details of securities offered with estimated value (Primary security, Collateral security, market value of the security) ..........

p) Details of liabilities in the name of the client or in the name of any other partners/Directors or Subsidiaries/Affiliates Nature of advance, amount, security and validity of limit) .....

q) Balance Sheet/ Income Statement of Statement of Accounts of the following years attached (Preferably last 3 years) ........

r) Other relevant information .........

s) Proposed debt/equity ratio .........

t) Signature of the Applicant ..............

? After receiving the loan application form, bank or financial institution sends a letter to Bangladesh Bank for obtaining a report from there. This report is called CIB (Credit information Bureau) report. This report is usually collects this report if the loan amount exceeds Tk. 50 Lac. But banks or financial institutions usually collects this report if the loan amount exceeds Tk.1 Lac. The purpose of this report is to being informed that whether the borrower has taken loan from any other bank; if ‘yes’ then whether these loans are classified or not.

? After receiving CIB report if the Bank thinks that the prospective borrower will be a good borrower, then the bank will scrutinize the documents. In this stage, the Bank will look whether the documents are properly filled up and signed.

? Then comes processing stage. In this stage, the Bank will prepare a Proposal A proposal contains following relevant information .......

a) Name of the Borrower ---
b) Nature of Limit -----
c) Purpose of Limit ------
d) Extent of Limit ---
e) Security ---
f) Margin ---
g) Rate of Interest -------
h) Repayment -------
i) Validity -------

Branch incumbent has the discretionary power to sanction loan (SOD) up to a fixed amount against financial obligations by informing Head Office. But in that case, the Branch Manager has to give attention to the following matters:

- The interest rate of the loan must not be less than 4.5% and
- The borrower must maintain 10% margin.

Except this case, the branch has to send the proposal to the Head Office. Head Office will prepare a minute and submit it before the Executive Committee (EC). The minute has to be passed by EC. After passing the minute, it will be sent to Central Bank (Bangladesh Bank) for approval in case of following:

........ If the proposed limit exceeds 15% of Bank’s equity;
......... If the proposed limit against cash collateral securities exceeds 25% of Bank’s equity.

? After the sanction advice, Bank will collect necessary documents (charge documents). These documents are --------

a) Joint Promissory Note
b) Single Promissory Note
c) Letter of Undertaking
d) Loan Disbursement Letter
a) Debit Figure Confirmation Sheet
b) Letter of Continuity
c) Letter of Authority
d) Letter of Revival
e) Right of Recall the Loan.
f) Letter of Guarantee
g) Letter of Indemnity
h) Trust Receipt
i) Hypothecation of Goods
j) Hypothecation of Vehicles
k) Counter Guarantee
l) Letter of Lien
m) Letter of Lien in case of advance against FDR
n) Letter of Lien And Authority for advances to third parties against Fixed Deposit/Call Deposit/Special Deposit or Margin or margin deposits.
o) Letter of Authority to encase FDR
p) Letter of Agreement for Packing Credit
q) Letter of Guarantee for opening L/C
r) Charges over Bonds or Certificates or shares etc. by third person, firm or company to secure specific and general liability.
s) Memorandum of Deposit of Title Deeds
t) Hypothecation of goods to secure a Demand Cash Credit Or Overdraft/Loan amount
u) Guarantee by Third party.
For withdrawing the loan amount, the customer creates a CD account and the loan is transferred to the CD A/C. Afterwards the customer can withdraw the money.

FEASIBILITY REPORT:
This report is from borrower’s point of view. He or she prepares this report and submitted to the bank.

CREDIT LINE PROPOSAL:
In this step of the term loan the branch sends a credit line proposal to the head office for approval of the term loan. The credit line proposal contains the following particulars:

? Fresh/Renewal/Revision of the term loan
? Borrower name
? Types of business
? Capital structure
? Particulars of previous transaction
? Existing vis-a-vis proposed credit limits
? Movement of the accounts
? Liabilities of sister concerns

PROJECT APPRAISAL:
It is the reinvestment analysis done by the banker before a project he approved. Project appraisal in the banking sector needed for the following reasons:

? To justify the soundness of an investment
? To ensure repayment of bank finance
? To achieve organizational goals
? To recommend if the project is not designed properly

TECHNIQUES OF PROJECT APPRAISAL:
An appraisal is a systematic exercise to establish that the proposed project is a viable preposition. The appraising officer checks the various details submitted by the promoter in first information sheet, credit application form, feasibility report. SIBL considers the following aspects in apprising:

? Entrepreneur
? Viability of the project:

o Technical viability (location and site of the project).
o Commercial viability (This study indicates evaluation of a project’s feasibility in terms of market).
o Financial viability.
o Economic Viability.
o Management and organization viability.