Report on Loan Policies of Standard Bank Limited (Part-1)
Subject: Economics, Finance | Topics: ,

Executive Summary 

Banks and other financial institutions play an important role in the financial intermediation and thereby contribute to the overall economy. Standard Bank Limited started banking operation on 11th of May, 1999 & commenced commercial operation on 3rd June, 1999; and since then it is trying to satisfy customers’ needs in full speed.

The credit department of the bank plays a vital role in keeping its operation smooth. In the case, the relationship of banker & customer take the form of creditor and debtor. Standard Bank offers different types of loans and advances, which are mainly, categorized under 2 heads, namely

Small Enterprise Loan &

Consumer Financing.

The various types of loans that fall under the category of Small Enterprise Loan are: Easy Commercial Loan, Retailers Loan, Transport Loan, Commercial House Building Loan, Possession Right Loan, Contractor’s Loan, Letter of Guarantee, Working Capital Loan, Letter of Credit, Loan against Imported Merchandise, Loan against Trust Receipt, Builders’ Loan, & Project Loan.

And the loans under Consumer Financing are: Easy Loan, Consumer Durable Loan, Parua Loan, Thikana Loan, Flexi Loan, Peshajeebi Loan.

This report highlights the loan policies of Standard Bank Limited; explain different issues regarding the disbursement of loans such as: sector where loans are provided, purposes of the loan, eligibility to get loans, documents required, interest charged on loans, & also the rate of penal interest in case of late repayment.

From my observation, some weaknesses of the loan policies of Standard Bank Limited are detected, such as high interest rate, charging of loan processing fee, penal interest, maximum size of the loan is small, maximum term of the loan is low etc. And finally, few changes are recommended in the policy to remove the pitfalls & to improve the overall loan policies.

1.1   Background

It has long been recognized that credit is an important tool in increasing productivity and thereby increasing the income of borrower. Adequate flow of credit can remove the financial constrains on the borrower. There has been phenomenal growth in the flow of credit after liberation due to government’s desire to increase productivity in the country. All the credit institutions were glared up through a dynamic credit policy to disburse both short term and long term credit. As a result, the flow of credit has increased significantly. As the volume of the loans has increased substantially over the years, the percentage of loan default increased gradually. This study is kind of analyzing the Loan Management of Standard Bank. It is providing different types of Loan Secured Overdraft (SOD), Loan (general), House Building Loan (Staff), Term Loan (Industrial) Term Loan (Others), Staff Loan Against Provident Fund, Consumer Credit Scheme (CCS)

1.2   Origin of the report

This report originates to fulfill the requirement of studying BBA Program of Dhaka University. This program has been designed to facilitate the students with basic theoretical and practical knowledge in the job activities in the context of Bangladesh as well as worldwide.

Since the BBA program is an integrated, practical and theoretical method of learning, the students of this program are required to have practical exposure in any kind of business organization after the completion of his theoretical part in the classroom. This report has been prepared on practical orientation.

1.3   Objectives of the Report

Objectives of this report are as follows

To identify the sectors the bank is providing loans.

To identify the customer segment.

To have some practical exposure that will be helpful in the practical life.

To gather knowledge about loan and advance.

1.4. Scope of the Study

I have prepared my report on SBL, Topkhana Road Branch. I focused only on the Loans & Advances Division of the Topkhana Road Branch. Necessary data and information was collected mainly from the credit division of this Branch.

1.5. Methodology

This report is based on primary & secondary data. For more clarification and better understanding, I have collected primary data in the form of depth interview and personal observation.

The Primary Sources

Conversation with the respective executives & officers of the concerned branch of the Bank.

Informal conversation with the clients.

Practical work exposures from the different desks of the various departments of the Branch covered.

The Secondary Sources

Annual Reports of Standard Bank Ltd.

Periodicals published by Bangladesh Bank.

Web site of Standard Bank Limited.

1.6 Limitations

This study is subject to the following limitations:

Access to the required information was restricted.

Most of the employees of the bank were busy and they did not co-operate me substantially in spite of having desire to do that.

There are lack of adequate data and information on the relevant topic as these data are treated as very much confidential.

To prepare such report it is needed more time, but the report is made only within the one & half months time period.

2.1. Profile of Standard Bank Limited

Standard Bank Limited (SBL) was incorporated in Bangladesh as a Public Limited Company with limited liability under the Companies Act, 1994 on 11th May 1999 & commenced commercial operation on 3rd June, 1999. The Bank went for the public issue of shares on in 2003 and its shares are listed with Dhaka Stock Exchange and Chittagong Stock Exchange. Now it has 30 Branches all over Bangladesh.

2.2 Financial Highlights

                                                                                           (Figure in Million Taka)

Particulars20012002200320042005200620072008
Authorized Capital750750125012501250125030003000
Paid Up Capital20020020066075991010931967
Shareholders’ Equity212.65220.05285.25857.031100141217642767
Deposits2054.122749.074101.565612.42873112043.391422019214
Loans & Advances751.782365.183495.714952.24780110183.591263417311

2.3. Human Resource Department

The Bank has a Human Resource Development & Research Department to develop human resources internally. The Academy is equipped with professional library, modern training aids professional faculty and other facility. It is now under Personnel & Human Resource Development & Research Division. The Academy conducts regularly foundation courses, specialized courses and seminars on different areas of banking to take care of the professional needs.

2.4. Vision & Mission

Vision: To be a modern Bank having the object of building a sound national economy & to contribute significantly to the Public Exchequer.

Mission: To be the best private commercial bank in Bangladesh in terms of efficiency; capital adequacy, asset quality, sound management and profitability having strong liquidity.

2.5. Corporate Information

Name of the company

Standard Bank Limited.
Legal FormA public limited company incorporated in Bangladesh on 11th of May, 1999 under the Companies Act, 1994 and listed in Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited.
Registered OfficeMetropolition Chamber Building (3rd  Floor)122-124, Motijheel, C/ADhaka-1000, Bangladesh
Telephone7175698,7169134,9560299,9558375
Telex No7176367, 7169078
SWIFT CodeSDBLBDDH
E-mailsblho@bangla.net
Web Pagewww.standarabankbd.com
AuditorsKhan Wahab Shafique Rahman & Co.55, Dilkusha C/A, Dhaka – 1000.

2.6. Profile of Topkhana Road Branch

Topkhana Road Branch of Standard Bank Limited, one of the profitable Branch is located at Press Club (2nd Floor), Topkhana Road, Dhaka. It started its journey  31st October 1989, Now it has 26 employees (Male 18 & Female 08) which includes one VP & relationship manager, one AVP, four SSO, four SO, Seven officer Grade-I & Three Officer Grade-II, Three computer officer, three cash officer, one office assistant (SG), two security staff, two office attendant.

2.7. Organ gram of Topkhana Road Branch

Capture

3.1 Loan Documentation

For all facilities, bank must obtain (as applicable) and limiting to following documents before disbursement of loan can be made:

1) Loan Application Form duly signed by the customer.

2) Acceptance of the terms and conditions advice.

3) Trade license.

4) In Case of Partnership firm:

Copy of Registered partnership Deed duly as true Copy or a Partnership Deed on one- judicial Stamp of TK. 150 denomination duly notarized.

5) In Case of Limited Company:

a)      Copy of memorandum & articles of association of the company including ‘certificates of incorporation’ duly certified by Registrar of Joint stock companies (RJSC) and attested by the Managing Director (MD) accompanied by an up- to- date of directors.

b)      Copy of Board Resolution of the company for availing credit facilities and authorizing Managing Director/ Chairmen/ Director for execution of documents and operation of the accounts.

c)      An undertaking of not changing the management of the company and the memorandum and articles of the company without prior permission of the bank.

d)      Copy of audited financial statement up to last 3 years.

e)      Personal Guarantee of all the Directors including the Chairman and Managing Director.

f)       Certificate of registration of charge over the fixed and floating assets of the company duly issued by RJSC.

g)      Certificate of registration of memorandum of charges over the fixed & floating assets of the company duly issued by RJSC in case of repeat loan or charge terms and condition of sanction advice loan amount, securities etc.

6) Demand promissory note.

7) Letter of hypothecation of stock and goods.

8) Letter of hypothecation of book debts & receivables.

9) Letter of hypothecation of plant & machinery.

10) Charge on fixed assets.

11) Personal letter of guarantee.

12) Wherever practical, insurance policy for 110% of the stock value covering all risks with banks mortgage clause in joint name of the bank client.

In the case of individual person-

2 (two) copy passport size photographs of intending borrower & guarantor.

Letter of introduction from employer (where required).

Bank Statement (for last 6 months).

Personal net worth statement.

Copy of passport/ Voter ID/Driving License (if any).

Utility bill copy (Telephone/ Gas/ Electricity) – any one.

Salary Certificate/ Trade License.

T.I. Number.

Copy of offer letter from recognized College/ University for studying abroad.

For local private university/ medical college, submission of evidence related to admission and cost. CIB report on the borrower as required.

In the case of sole proprietorship firm-

One copy passport size photograph of the owner.

Copy of trade license.

Personal net worth statement.

Hypothecation of stock.

Personal guarantee of a businessman having business at the same area or any person acceptable to the bank.

3.2. Policy Guidelines for Bank:

1. Product Program Guidelines.

2. Segmentation of Duties.

3. Credit Approval.

4. Credit Administration.

5. Risk Management.

6. Collection & Remedial Management.

3.3. Guidelines for bank for giving loan

These guidelines include objective/ quantitative parameters for the eligibility of the borrowers and determine the maximum permission limit per borrower. Fundamentally, credit policies and procedures can never sufficiently capture all the complexities of the product. Therefore, the following credit principles are the ultimate reface for making financing decisions:

Assess the entrepreneur’s character for integrity and willingness to repay.

Only lend when the entrepreneur has capacity and ability to repay.

Only extend credit if bank can sufficiently understand and manage the risk.

Use common sense and past experience in conjunction with through evaluation and credit analysis.

Do not base decision solely on customer’s reputation, accepted practice, other lender’s risk assessment or the recommendation of other officers.

Be proactive in identifying, managing and communicating credit risk.

Be diligent in ensuring that credit exposures and activities comply with the requirement set out in product program.

3.4. Small Enterprise Loan

SBL Bank provides the following different types of loans for Small Enterprise:

1. Easy Commercial Loan2.Retailers Loan
3. Transport Loan 4. Commercial House Building Loan
5. Possession Right Loan6. Contractor’s Loan
7. Letter of Guarantee8. Working Capital Loan
9. Letter of Credit10. Loan Against Imported Merchandise (LIM)
11. Loan Against Trust  Receipt12. Builder’s Loan
13. Project Loan—————————————-

A brief description on the most favorable loans are given below-

Easy Commercial Loan

Issue

Details

1. Customer segmentIndividual, business enterprises (other than Public Limited Company) engaged in any business.
2. PurposeTo meet business requirement.
3. Nature of loan                       Overdraft/ loan general.
4. Nationality  Bangladeshi
5. Eligibility   Customer of the respective branch having Shop / business place in the command area.
6. Age limit for key persons     Minimum age 21 (twenty one) years.
7. SecurityPledge of instrument duly discharged by the other (where applicable).FDR/ other deposits of Standard Bank Ltd.FDR/other financial instrument issued from other banks.

ICB unit certificate.

PSS account

Demand shares of A& B group traded in SDE

Any other government security eligible for credit facility (ies).

8. Maximum allowable Limita)  Maximum 90% of the face value of FDR/NCD/WEDB. Face Value wound means the original amount for which the   FDR/NCD/WEDB was issued or the amount renewed. b)  Maximum 90% of the MIS amount where interest is not   allowed to be withdrawn until adjustment of the abilityc)  Maximum 70% of the MIS amount where interest is allowed to be withdrawn on monthly basis.

d)  Maximum 100% of the deposited principal amount of PSS account where the deposited amount is not less than TK. 10,000.

e)  Maximum 90% of the face value of ICB unit certificate or quoted ICB buying price whichever is less.

f)  Up to 60% of 6 months average price of shares under A&B group but not exceeding TK. 35.00 lac.

g)  Deviation of above criteria may be considered on special case.

9. Required documentsTrade License. CIB report of the borrower. Memorandum and Articles of association along with certificate of incorporation and resolution from board of directors of the company. Deed of partnership along with letter of partnership bank’s prescribed format.
10. Penal interest                                       Additional 2% per annum on the overdue amount.
11. Maximum term of loan (Tenor)         12 (Twelve Month)
12. Mode of Repayment                            Lump sum within validity.            
13. Disbursement mode                            Overdrawing in CD account/credit to parties CD account in case of loan general.
14. Loan processing fee                            TK. 500.
15. Verification of information                Bank nominated agency or bank official will verify the address of the business enterprise, residence of both borrowers & guarantors.
16. Disbursement pre- conditions1. Acceptance of sanction terms 2. Clean CIB report 3. Payment of all chargers. 4. Deposit of instrument duly discharged 5. Executions of all charge documents confirmation of Lien on security from issuing branch.
17. Legal documentsi) D.P. Note ii)  Letter of arrangement. iii)  Letter of disbursement (for Loan).  iv) Letter of installment (For loan) v) Letter of continuity (For SOD limit). vi) Letter of lien on security. vii)  Letter of authority for encashment of securities. viii) Surrender Form (for ICB unit certificate). x) Pledge of request form 19-1 signed by share holder. xi)  Incase of shares in the name of Sponsors/Directors of the company two separate declarations are to be obtained in  terms of Bangladesh Bank letter no  BRPD (p)/661/13(cha)/2005-3400 dated 25.9.2005.

Retailers’ Loan

Issue

Details

1. Customer segment        Individual/ proprietorship firm engaged in retail business.
2. Nature of facility          Term Loan.
3. Nationality   Bangladeshi.
4. EligibilityAny small and retail business house having valid trade license and must have an account with Standard Bank Ltd.
5. Age Limit                      Minimum Age 21 (twenty one) years
6. Required documents    One copy passport size photograph, copy of trade license, personal net worth statement.
7. Security  Hypothecation of stock, personal guarantee of a businessman having business at the same area or any person acceptable to the bank. Personal guarantee of spouse/ parents.
8. TenorMaximum 24 months
9. Maximum loan limit      Maximum Tk.1 (one) lac.
10. Rate of interest                15% per year with quarterly rest.
11. Penal interest                   2.5% is to be obtained on overdue amount (if).
12. Service Charge                1% on the loan amount to be obtained as service charge.
13. Legal documents                      D.P. noteLetter of arrangement.Letter of disbursement (for Loan).

Letter of installment (for loan).

Personal guarantee of guarantor.

Personal guarantee of Spouse/Parents.

 

Transport Loan

Issue

Details

1. Customer segment                Individual, business enterprise (other than public limited company) engaged in transport business.
2. Purpose  Purchase of road/ water transport for commercial use.
3. Nationality  Bangladeshi
4. Eligibility           Customer of the respective branch having business house/ office in the command area with at least two years experiences in their lien business.
5. Age limit for key persons              Minimum age 25 yearsMaximum age 65 years on the date of maturity of the Loan
6. Maximum loan limit                 Maximum Tk.50,00,000 (fifty lac only)
7. Debit equity ratio                     60:40.
8. Security/ Collateral:(Primary)                             Hypothecation of vehicles. The vehicles to be registered with BRT/BIETA/ Mercantile & Marine department with bank mortgage clause. Comprehensive insurance in the joint name of the bank & borrower.
9. Collateral security                 Legal mortgage of land & building within city corporation and/ or municipal area preferably 1st party.Registered power of attorney to sell the mortgaged properties without intervention of court.Personal guarantee of spouse/ parents. (Incase of individual/ proprietorship firm)

Personal guarantee of partners / Directors ( incase of partnership firm  /private limited company)

Registration of charges with joint stock companies under relevant section

10. Required documents      One copy passport size photograph of intending borrowers as well as guarantors.Valid trade license.TIN certificate.

Bank statement for last six months.

Submission of financial statement.

Quotation of vehicle accepted by the intending borrower.

Original Title Deed of the property.

CS, SA,RS & Hal parcha.

Mutation with DCR.

Up to date rent receipt.

Municipal tax receipt.

Non- encumbrance certificate.

No objection/permission from competent authority for mortgage of properties where required.

CIB report on the borrower.

Partnership deed registered with RJSC & firm along with letter of partnership on bank’s prescribed format.

Memorandum & articles of Association along with certificate of incorporation duly certified by RJSC and resolution from the Board of Directors.

Copy of up to date list of directors.

11. Debt Burden Ratio                Maximum 60% based on average net monthly return.
12. Rate of interest                      14.50%
13. Penal interest  Additional 2% on the overdue amount.
14. Maximum term of loan        Maximum 48 months.
15. Grace period                          One month from the date of 1st disbursement.
16. Repayment    By monthly installment after one month from the expire of grace period.
17. Disbursement mode                  Payment to the vendor through PO/DD.
18. Loan processing fee                  1% on loan amount to be realized at the time of disbursement loan.
19. Service charge                           0.50% on loan amount to be realized at the time of disbursement of loan.
20. Verification of information      Bank’s nominated agency or Bank official will verify the address of the business enterprise, residence of both borrowers & guarantors.
21. Substantiation of income         1. Details of income statement2. Cash flow statement3. Banks statements

4. Income Tax Return of last period.

22. Disbursement pre-conditions      Acceptance of sanction terms.Clear CIB Report.Completion of mortgage formalities & execution of necessary charges documents.

Payment of all charges.

Verification of address, all telephone numbers of borrower & guarantor.

23. Legal documents      D.P NoteLetter of arrangement.Letter of disbursement (for loan).

Letter of installment (for loan).

Letter of hypothecation of vehicles

Letter of authority to debit the account.

Memorandum of deposit to tile deed.

Deed of Mortgage

Registered power of attorney to sell the mortgage property without intervention of court.

Letter of guarantee

Board resolution to borrow fund including completion of documentation as per Memorandum & Article of association.

Registration of vehicle with bank mortgage clause.

Comprehensive insurance coverage with bank mortgage clause.

Pledge of financial obligation where applicable.

Letter of lien where applicable.

Twelve post-dated cheques in favor of bank for payment of monthly installment cash duly singed by the borrower. After 1 year fresh cheque to be obtained along with memorandum of deposit of cheques.

Commercial House Building Loan

Issue

Details

1. Customer segment                            Individual, business enterprise (other than public      limited Company) having commercial plot.
2. Purpose    Construction of commercial plot.
3. Eligibility   Any individual /business house in the command area having account with the branch..
4. Age limit for key persons                         Minimum age 25 yearsMaximum age 65 years on the date of maturity of the loan.
5. Minimum income                               Average minimum income from the business is to be sufficient to repay the liability.
6. Loan size                                            Maximum Tk.50, 00,000.
7. Debt Equity ratio                                70:30 of construction cost.
8. Security/ Collateral                                  Legal mortgage of land and building within City Corporation or Municipal area.Registered power of attorney without invention of court.Personal guarantee of spouse/ parents.

Personal guarantee of partners/directors

Registration of chargers with joint stock companies under relevant section, where required.

Pledge of financial instrument if any.

9. Required documents                            One copy passport size photograph of proprietor/ partner / managing director as well as guarantors.Valid trade license.TIN certificate.

Bank statement for last six months

Submission of financial statement

Original Title Deed of the property.

Bia deed.

CS, SA, RS & Hal parcha.

Mutation with DCR.

Up to date rent paid receipt.

Site Map

Non- encumbrance certificate.

Approver plan for construction from the competent authority.

Estimated cost of construction by a civil engineer.

CIB report on the borrower

Partnership deed registered with letter of partnership on bank’s prescribed format.

Memorandum & articles of association along with certificate of incorporation duly certified by RJSC and resolution from the Board of Directors.

Copy of up to date list of directors.

10. Debt Burden Ratio                     Maximum 60% of net monthly return
11. Monthly installment sizeX100 average monthly return
12. Rate of interest                              14.50%
13. Penal interest                                  Additional 2% on the overdue amount.
14. Maximum term of loan                   Maximum 5 years excluding grace period.
15. Grace period                                    One month from the date of 1st disbursement.
16. Repayment   Installment as per repayment schedule.
17. Disbursement mode                         Phase- wise disbursement against progress of work.
18. Loan processing fee                          1% on loan amount to be realized at the time of disbursement of loan.
19. Service charge                                    0.25% on loan amount to be realized at the time of disbursement of loan.
20. Verification of information              Bank’s nominated agency or bank official will verify of the business enterprise,   residence of both borrowers & guarantors.
21. Substantiation of income 1. Details of income statement2. Cash flow statement3. Banks statements

4. Income Tax Return of last period.

22. Legal documents      D.P NoteLetter of arrangement.Letter of disbursement (for Loan).

Letter of installment (For loan).

Letter of authority to debit the account.

Memorandum of Deposit to Tile deed.

Deed of Mortgage

Registered power of attorney to sell the mortgage property without intervention of court.

Letter of guaranties

Board resolution to borrow fund including completion of documentation as per Memorandum & Article of association.

Registration of vehicle with bank mortgage clause.

Comprehensive insurance coverage with bank mortgage clause.

Pledge of financial obligation where applicable.

Letter of lien where applicable.

Possession Right Loan

Issue

Details

1. Customer segment               Proprietorship concern having no collateral security to offer other than possession right of shop.
2. PurposeFixed working capital.
3. Nature of Loan                     Term loan
4. Eligibility   Customer of the respective branch having shop/                        business place in the command area at least 2(two) years experience in their line of business.
5. Age limit for key persons           Minimum age 25 yearsMaximum age 65 years on the date of maturity of the loan.
6. Average minimum monthly returnsAverage minimum monthly return from the  business should be at least three times of equated  monthly installment.
7. Loan size                                          Maximum Tk.5,00,00,000/
8. Debt Equity ratio                            50:50
9. Security/ Collateral: (Primary)      Hypothecation of stocks duly insured with bank mortgage.
10. Collateral security      Tripartite agreement among the Bank, Lessor & Borrower to the effect that the Lessee and Lessor can not transfer possession right of the property without prior consent of the bank,.Confirmation from the concerned authority that no transfer of ownership will be allowed without prior written consent of the bank.Personal guarantee of spouse/parents.

Personal guarantee from an individual acceptable to the bank.

One cheque covering residual amount of loan duly signed by the borrower.

Memorandum deposit of cheques.

11. Required documents      One copy passport size photograph of Proprietor/ partner / Managing Director as well as guarantors.Valid trade licenseTIN certificate

Bank statement for last six months

Submission of financial statement

Original Title Deed of the property.

CIB Report of the borrower.

Stock report.

Copy of drug license /Homeopathic license

Up to date rent paid receipt of the shop

12. Debt Burden Ratio             Maximum 50% based on average net monthly returns.
13. Rate of interest                   15%
14. Penal interest                      Additional 2% on the overdue amount.
15. Maximum term of loan       Maximum 36 months.
16. Mode of repayment             By monthly installment effective from the following month of disbursement of loan.
17. Disbursement mode            Single disbursement to borrower’s CD/A/C
18. Loan processing fee            Tk.2,000/-) to be realized at the time of disbursement of loan.          
19. Service charge                     0.050% on loan amount to be realized at the time of disbursement of loan.
20. Verification of information  Bank’s nominated agency or bank official will  verify of the business enterprise, residence of both borrowers & guarantors.
21. Substantiation of income             Details of income statementCash flow statementBanks statements

Income Tax Return of last period.

22. Legal documents      D.P NoteLetter of arrangement.Letter of disbursement (for loan).

Letter of installment (for loan).

Letter of Hypothecation of stock.

Letter of authority to debit the account.

Memorandum of Deposit to Tile deed.

Insurance Policy

Tripartite agreement among the Bank, Lessor & Borrower to the effect that the Lessee and Lessor can not transfer possession right of the property without prior consent of the Bank,

One bank cheque dated maturity date of loan duly singed by the borrower.

Memorandum or deposited of possession right deed.

Letter of confirmation from the concerned authority that no transfer of ownership will be allowed without prior written consent of the bank.

Contractors’ Loan

Issue

Details

1. Customer segment                     Individual, business enterprise (other than public limited company) having commercial plot.
2. PurposeTo execute work order awarded by Govt./ semi Govt.& autonomous bodies.
3. Nature of Loan                          Secured overdraft
4. Nationality     Bangladeshi.
5. Eligibility    Any business house in the command area having at least 2(two) years experience in their line of business.
6. Age limit for key persons              Minimum age 25 yearsMaximum age 65 years on the date of maturity of the loan
7. Loan size                                 Maximum Tk.50,00,000/
8. Debt Equity ratio                    50:50
9. Security/ Collateral (Primary)       Legal mortgage of land and building within City Corporation or Municipal area.Registered power of attorney to sell the mortgaged properties without invention of court.
10. Collateral security      Assignment of work order.
11. Required documents                   One copy passport size photograph of proprietor/ partner / Managing Director as well as guarantors.Valid trade license.TIN certificate.

Bank statement for last six months

Submission of financial statement

Original Title Deed of the property.

CIB report of the borrower

12. Debt Burden Ratio                      A maximum 50% net monthly return
13. Rate of interest                             15%
14. Penal interest                                Additional 2% on the overdue amount.
15. Maximum term of loan                Maximum 36 months.
16. Grace period                                One month from the date of 1st disbursement
17. Mode Repayment                        By monthly installment effective from the following month of disbursement of loan.
18. Disbursement mode                    Single disbursement to borrower’s CD/A/C.
19. Loan processing fee                    TK.2000 to be realized at the time on disbursement of loan.
20. Service charge                            0.25% on loan amount to be realized at the time of disbursement of loan.
21. Verification of information         Bank’s nominated agency or bank official will verify of the business enterprise, residence of both borrowers &guarantors.
22. Substantiation of income                   Details of income statementCash flow statementBanks statements

Income Tax Return of last period.

Letter of Guarantee

Issue

Details

1. Customer Segment                       Business enterprise (other than public Limited Co.) engaged in construction, supply and other businesses.
2. Purpose         To participate in tender(s) invited by Govt./ Semi govt. & autonomous bodies.To execute job against work order award from different agencies.Any other obligation.
3. Nature of facility                         Bank Guarantee
4. Eligibility  Customer of the respective branch having business place in the command area with at least 2 (two) years experience on their line of business.
5. Age limit for key person(s)             Minimum age 25 years.
6. Security (primary)Counter Guarantee.
7. Collateral security      Legal mortgage of land building within city corporation and/or Municipal area preferably 1st party,Registration of power of attorney to sell the mortgaged property without intervention of courtLine on financial obligation.

Personal guarantee of spouse/parents.

Personal guarantee of partners / directors.

8. Required documents       One copy passport size photograph of intending borrowers as well as guarantorsValid trade licenseCopy of valid enlistment certificate of the contractor.

TIN certificate

CIB report of the borrower

Bank statement for last six months

Submission of financial statement

Original Title Deed of the property.

Mutation with DCR.

Up to date rent receipt.

Municipal tax receipt.

No objection/permission from competent authority for mortgage of properties where required.

Memorandum & articles of association along with certificate of incorporation duly certified by RJSC and resolution from the Board of Directors.

Copy of up to date list of directors.

Copy of work order awarded with copy of items of agreement

9. Margin     Depends on banker-customer relationship.
10. Guarantee periodAs per requirement and acceptable to the bank.
11. Commission           @0.50% per quarter or part thereof minimum Tk.300/-@ 0.25% per quarter or part thereof minimum tk-300/-Where the bank guarantee is partially covered by FDR, commission to be charged at pro-rata basis in the manner as stated above.

Where fully covered by cash margin Tk-500/- to be realized as service charge.

Working Capital Loan

Issue

Details

1. Customer Segment                      Business enterprises (other than public limited company) engaged in manufacturing, trading        business.
2. Purpose   To meet working capital requirement.
3. Nature of loan                                   Cash credit.
4. Eligibility        Firm/ companies incorporated in Bangladesh.Customer of the respective branch having shop/ business place in the command area with at least 2 (two) years experience on their line of business.
5. Age limit for key persons                   Minimum age 25 yearsMaximum age 65 years on the date of maturity of the loan.
6. Loan size                                         Maximum Tk.50,00,000/-
7. Debt Equity Ratio                           Depending on the nature and risk in the business.
8. Security (primary)      Hypothecation of stock in trade duly insured with bank mortgage clause.Pledge of stocks duly insured with bank mortgage clause
9. Collateral Security      Legal mortgage of land and building within City Corporation or Municipal area.Registered power of attorney without invention of court.Personal guarantee of spouse/parents.

Personal guarantee of partners/Directors.

Registration of chargers with joint stock companies under relevant section, where required.

Lien of financial obligation.

Hypothecation of machinery, where required.

10. Required documents      One copy passport size photograph of intending borrowers as well as guarantorsValid trade license.Copy of valid enlistment certificate of the contractor.

TIN certificate

CIB report of the borrower

Bank statement for last six months

Submission of financial statement

Original Title Deed of the property.

Up to date rent receipt.

Municipal tax receipt.

No objection/permission from competent authority for mortgage of properties where required.

Memorandum & articles of association along with certificate of incorporation duly certified by RJSC and resolution from the Board of Directors.

Copy of up to date list of directors.

11. Rate of interest                      14.50%
12. Penal interest                         Additional 2% on the overdue amount
13. Maximum term of loan         Maximum 12 Months.
14. Grace period                           One month from the date of 1st disbursement
15. Disbursement mode                Drawing as per D.P
16. Loan processing fee                 TK.2000/- to be realized at the time of disbursement of loan.
17. Service charge                          0.25% on loan amount or maximum Tk.5000/-.
18. Verification of information     Bank’s nominated agency or bank official will verify of the business enterprise, residence of both.
19. Substantiation of income                Details of income statementBanks statements
20. Disbursement:Pre –Conditions         Acceptance of sanction termsClean CIB ReportCompletion of mortgage formalities where applicable

Execution of necessary charge documents

Payments of all charges processing fees, service charge etc.

Verification of all addresses, all telephone numbers of borrower & guarantor.

Insurance coverage as per sanctioned terms

Stocks report duly verified by the branch official.

21. Legal documents              D.P NoteLetter of arrangement.Letter of disbursement (for loan).

Letter of installment (For loan).

Letter of hypothecation of stock.

Letter of authority to debit the account.

Letter of pledge.

Letter of continuity.

Letter of disclaimer.

Letter of guarantee.

Registered partnership deed.

Loan against Imported Merchandise

Issue

Details

1. Customer Segment                    Business enterprise (other than public limited company) engaged in imported business.
2. Purpose  For clearance of imported consignment.
3. Margin    Depends on banker customer relationship.
4. Security  Imported goods to be stored at godown under effective control of bank duly insured covering  all relevant risks.
5. Required documents      Application from the importer.Imported goods should be cleared through approved clearing agent of bank nominated by the importer.
6. Rate of interest                             14.50% p.a. with quarterly rest or as revised form time to time.
7. Penal interest                                 Additional 2% per annum on the overdue amount, if any.
8. Maximum term of loan                 As per nature of imported items and or Bangladesh Bank guidelines if any.
9. Repayment of loans                             Lump-sum.Delivery to be made against proportionate payment of landed cost of the items including accrued interest, Go-down, Rent , Insurance & other charges.
10. Disbursement mode                            Imported goods to be cleared as per term of sanction.
11. Disbursement  pre-condition      Request of the importer for clearance of imported consignment.Imported documents to be handed over to the bank’s approved clearing agentPayment of margin by the importer if any.

Payment of others charges.

12. Legal documents                                    D.P. NoteLetter of arrangement.Letter of disbursement (for Loan).

Letter of authority to debit the account.

Letter of pledge.

Letter of disclaimer where applicable.

Personal guarantee.

Registration of charge with the RJSC under relevant section.

Deed of registered mortgage.

Registered power of attorney to sell the mortgaged property without intervention of court.

Bidders Loan

Issue

Details

1. Customer segment     Individual business enterprise (other than public                                                                            limited company) engaged in construction and supply business.
2. PurposeFor issuance of payment order/ security deposit.
3. Nature of Loan           Loan general (resolving)
4. NationalityBangladeshi.
5. EligibilityAny business house in the command area of the branch having at least 2 (two) years experience in their line of business. The enterprise to be enlisted with Govt/Semi Govt/ autonomous bodies not below the status of category ‘C’.
6. Age limit for key persons      Minimum age 21 yearsMaximum age 60 in case of proprietorship firm.
7. Loan size                     Maximum Tk.50,00,000/-
8. SecurityLegal mortgage of land & building within city corporation and municipal area preferably 1st party. Registered power of attorney to sell the mortgaged properties without intervention of court. Personal guarantee of parties/directorspledge of  financial instrument if applicable.
9. Verification of informationBank’s nominated agency or bank official will verify the address of the business enterprise, residence of both borrowers & guarantors including stock and position of the borrower.
10. Substantiation of Income      Bank statement for last 6(six) months.Financial statementTIN Certificate.

Disbursement pre- condition: acceptance of terms of sanction.

Clean CIB Report.

Completion of mortgage formalities & execution of necessary charge documents.

Payment of all charges

Verification of all address, all telephone numbers of borrower & guarantor.

11. Legal Documents                        D.P. Note.Letter of arrangementLetter of disbursement.

Letter of authority to debit the account

Memorandum of deposit of Title deed.

Deed of mortgage registered with Dist. Sub –registrar.

Registered power of attorney to sell the mortgage property without intervention of court.

Board resolution to borrow fund including completion of documentation in consistence with Memorandum or Article.

List of the directors of the company

Registered partnership deed along with letter of partnership.

Personal guarantee of spouses/ parents

Personal guarantee of partners/ directors.

Some more parts of this post-

Report On Loan Policies Of Standard Bank Limited (Part-1)

Report On Loan Policies Of Standard Bank Limited (Part-2)

Report On Loan Policies Of Standard Bank Limited (Part-3)

 

Related Economics Paper: