bangladesh

Bangladesh Development Bank LTD.

1.Introduction:

Bangladesh Development Bank Limited (BDBL) is a fully state owned Commercial Bank of Bangladesh. In addition commercial banking, BDBL provides financial and technical assistance to broaden the private as well as public sector industrial base of the country. It prioritizes, especially, Export Oriented/Export Linkage industrial units, Efficient Import Substitution, Joint Ventures, Commercialization of local technology and promotion of agro-based industry.

2.Establishment and Status of the Bank:
Bangladesh Development Bank Limited (“BDBL” or the “Bank”) was incorporated under the Companies Act, 1994. On 16 November 2009 to acquire and take-over, as going concern, the undertakings and businesses of statutory bodies of Bangladesh Shilpa Bank(BSB) and Bangladesh Shilpa Rin Sangstha (BSRS) constituted respectively under the Bangladesh Shilpa Bank Order, 1972 (President Order No.129 of 1972) and Bangladesh Shilpa Rin Sangstha Order, 1972 (President Order No.128 of 1972) with all of their assets, benefits, rights, powers, authorities, privileges, liabilities, borrowings and obligations and to carry on with the same business. Two vendors agreement was executed between the Government of the people’s Republic of Bangladesh and Bangladesh Development Bank Limited on 31 December 2009 in this regard. The registered office of the Bank is located at 8 Rajuk Avenue, Motijheel, Dhaka-1000. BDBL established a security company named BDBL Securities Limited, a fully owned subsidiary company which was incorporated on 23 May, 2011 with the Registrar of Joint Stock Companies & Firms with paid up capital of Tk. 100.00 million. The company is a member of Dhaka Stock Exchange Ltd. (DSE) and Chittagong Stock Exchange Ltd. And obtained Stock Broker and Stock Dealer License of DSE on 18.01.2012

3.concise information of BDBL

Name | : | Bangladesh Development Bank, a state-owned commercial Bank (formed through merger of Bangladesh Shilpa Bank & Bangladesh Shilpa Rin Sangstha) | Legal Status | : | Public Limited Company | Date of incorporation | : | November 16, 2009 | Banking License obtained | : | November 19, 2009 issued by Bangladesh Bank | Vendors Agreement Signed | : | December 31, 2009 between the Government and Board of Directors of BDBL nominated by the Government. | Formal Inauguration | : | January 03, 2010 | Registered Office | : | BDBL Bhaban, 8, Rajuk Avenue, Dhaka-1000 | Authorized Capital | : | Tk.10000 million | Paid Up Capital | : | Tk. 4000 million | Reserve (As on 01.01.2010) | : | Tk. 2270 million | Total Assets (As on 01.01.2010) | | Tk. 16747 million | Total Human Resource | : | 781 | Number of Zonal Office | : | 4 | Number of Branch Office | : | 17 | Membership | : | Dhaka Stock Exchange & Chittagong Stock Exchange Ltd. |

4.Management and Administration of BDBL:
The overall policy formation and the general direction of BDBL operation vest on a board of directors appointed by the government. The board of directors consists of nine members including the Chairman and Managing Director .Non government shareholder subscribing to the capital of the bank shall eventually elect 4 Directors from amongst themselves. The managing director in chief conducting the overall banking issues. In every branch there has branch manager who controls the branch and under them several employee works in an branch. They are cashier, SME officer, executive officer etc.

5.Vision ,Mission ,Strategic priorities of BDBL:
VISION

To emerge as the country’s prime Financial Institution for supporting private sector industrial and other projects of great significance to the country’s economic development. Also be active participant in commercial banking by introducing new lines of product and providing excellent services to the customers.

MISSION * To be competitive with other Banks and Financial Institutions in rendering services ; * To contribute to the country’s socio-economic development by identifying new and profitable areas for investment ; * To mobilize deposit for productive investment ; * To expand branch network in commercially and geographically important places ; * To employ quality human resources and enhance their capability through motivation and right –type of training at home and abroad. * To delegate maximum authority ensuring proper accountability ; * To maintain continuous improvement and up-gradation in business policies and procedures ; * To adopt and adapt to new technology ; * To maximize profit by strong, efficient and prudent financial performance ; and * To introduce new product lines according to market needs. |

VALUES

Customer focus | Provide smart, efficient, transparent and courteous services. | Social Responsibility | Practice corporate social responsibility. |

STRATEGIC PRIORITIES * Invest in Eco – friendly industries that help mitigate environmental degradation by lending more for renewable energy, and effluent treatment plants and other projects that employ energy efficient low-emission technologies including agro-based industries, small power projects, ICT, transport and infrastructure projects. * Select and invest industrial projects where location advantages like local availability of raw materials, good infrastructural facilities (road communication, transport facilities, etc.) and utilities (power, gas, water, etc.) shall be available. * Limit project loan to Tk. 15 crore maximum and Tk.2 crore minimum (for large projects). Arrange and participate in syndicated loan for projects above Tk. 15 crore. * Identify prospective and entrepreneurs and investors/ clients and motivate, guide and help them select profitable industrial venture for investment. * Regularly publish financial disclosures. * Undertake from time to time SWOT (Strength, Weakness, Opportunity and Threats) analysis for reviewing bank’s market position. | 6. Objectives of BDBL: * To provide loan in development project of the country. * To provide loan in governmental infrastructure projects. * To make the country industrially developed. * To mobilize deposit for productive investment. * To maximize profit through providing loan in profitable industrial project. * To help to expand industry through providing loan. * Encourage the industrialization helping financially. * Maintain continuous improvement.

7.Zonal Offices:
BDBL has four zonal offices in four major zone .The list of zonal offices is Shown below:

Zonal Offices | Address | Dhaka Zone | 12, karwanbazar, Dhaka. | Chittagong Zone | BDBL Bhaban, 106, Agrabad C/A, Chittagong. | Rajshahi Zone | 108/6, kumerpara, Rajshahi. | Khulna Zone | 25-26, KDA Commercial Area, Uper Jessor Road, Khulna |

8.Branch offices:

| Code | Branch Name | Address | | 65 | Principal Branch, Dhaka | 8,Rajuk Avenue, Motijheel, Dhaka. | | 66 | Motijheel Branch, Dhaka | 49, Motijheel, AK Khan Building ,Dhaka. | | 67 | Karwanbazar Branch, Dhaka | 12, karwanbazar, Dhaka. | | 53 | Bogra Branch | Khan Plaza ( 1st Floor), Chakjadu Road, Badurtola, Bogra. | | 61 | Pabna Branch | Bhai Bhai Super Market,
Abdul Hamid Road, Pabna.
(Current Charge) | | 63 | Dinajpur Branch | Abedin plaza, Gonesh Tola, Dinajpur. | | 59 | Barisal Branch | Dr. Sobhan Complex, 130/C, Sadar Road (2nd Floor), Barisal. | | 64 | Faridpur Branch | Chamber Building, Mojib Sarak, Nilltoli, Faridpur. | | 60 | Mymensingh Branch | 19/D Shaheb Ali Road, Notun Bazar, Mymensingh. | | 55 | Comilla Branch | Samobay Bank Bhaban, kandir par, commilla. | | 62 | Noakhali Branch | 460, Dakhin Bazar, Choumohoni, Noakhali | | 54 | Sylhet Branch | 1375-kha Syed Complex 3rd Floor, Amborkhana, Sylhet. | | 57 | Rangpur Branch | Sharif Building, Station Road, Rangpur. | | 58 | Jhenidah Branch | Roni Tower, 1st floor, 18, Moulana Bhasani Sarak, Jhinaidha. | | 51 | Agrabad Branch | BDBL Bhaban, 106, Agrabad C/A, Chittagong. | | 56 | Rajshahi Branch | 108/6, kumerpara, Rajshahi | | 52 | Khulna Branch | 25-26,KDA Commercial Area, Uper Jessor Road, Khulna. | | 69 | Narayanganj Branch | 10, S M Maleh Road( 1st and 2nd Floor), Tan Bazar, Narayanganj. | | 71 | Elephant Road Branch | 299, Elephant Road, Dhaka. | | 70 | Khatungang Branch | 6 Ramjoy Mohajan Lane, Asadgang, Khatungang, Chittagong | | 72 | Ashuganj Branch (Palli Branch) | Holding No-117, Station Road, Ashuganj, Brahmanbaria. | | 73 | Madhabdi Branch | J and J Tower, Soto Madhobdi, Jalpotti Road, Madhobdi, Narsingdi. | | 74 | Mokamtola Branch | Rashida Market, Mokamtala Bazar, Shibganj, Bogura. | | 75 | Cox's bazar Branch | Uma Barmij Market, Main Road Techpara, Cox's bazaar | | 76 | Hossainpur Branch | Mofij Mention, School Road, Hossainpur Bazar, Kishorganj. | | 77 | Ashulia Branch | | | |

9.Activities of BDBL :
a. Principal Activities:
Bangladesh Development Bank Limited extends financial assistance both in local and foreign currencies for setting up new industries and provides all kinds of commercial banking services to its customer through its branches in Bangladesh. The BDBL inherited membership of Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited, acts as stock dealer and operate two brokerage houses. The BDBL is now managing a close-end Mutual Fund with paid up capital of Tk. 5.00 crore.

b. Banking activities * Granting of loan; * Selling securities of company; * Working as a underwriter for the company; * Lending money in industrialization and any development activities; * Discounting bill of company * Working as a financial intermediary between two company * Safe keeping of valuables of customer. * Taking part in financial activities.

c. Departmental activities of BDBL :
Bangladesh Development Bank encompasses of various department and Zonal offices through which it performs its activities .To perform effectively and efficiently BDBL in its board meeting has determined the schedule activities of various departments and zonal offices and they supposed to perform the task accordingly and respective employee have to report according to organizational hierarchy. Among these departments worked in 8 departments. Major activities of these departments are mentioned below in dept. wise.

i)Loan Operation Department(LOD) :
BDBL grants loan on the basis of some criteria .The first activities of loan granting are done by the loan operation department. Any entrepreneur who wants to borrow money from BDBL must fulfill at first Bank Standard
Questionaire Form (BSQF) terms of TK. 1000.These process are as follows:
1. At first an application form supplies to the entrepreneur.
2. After filling up the application form it is submitted by the entrepreneur
3. A project appraisal letter is supplied by the entrepreneur.
4. After analyzing the project appraisal the board decides the loan should be sanctioned or not.
5. If the loan is sanctioned it is forwarded to the project implementation department. ii)Project Implementation Department(PID):
If the loan is granted by loan operation department, it is forwarded to project implementation department. PID performs following activities:
1.Undertaking necessary initiative after granting loan in favor of the project.
2.Making necessary attempt to give the loan a stage by stage after the loan granting
3.Monitoring the machinery of the project. Inspection, monitoring, taking Any kind of advice regarding to any machine related problem from machinery department. 4.Inspection and monitoring of experimental production and extension of loan period.
5.Making the Final Construction Report(FCR)and transferring it to Central
Recovery Department(CRD) and concerned department authorities. iii)Documentation and Machinery Procurement Department:
After sanctioning loan by Loan Operation Department, the Documentation
Department issues a letter to the parties to produce necessary documents.
Those documents are : i) Memorandum of Association. ii) Articles of Association.

1.The land upon which the project will be established. Document of
This land must be produced.
2.The document that reveal that the land were not sold within proceeding two years.
3.Receipts of rent.
4.Documentation on fee
5. Mouja map Then a form is filled up .These documents are sent to lawyer .If everything is ok., it is transferred to Project Implementation Department. iv)Central Recovery Department
Project Implementation Department makes a repayment schedule and given it to the borrower. This department inspects the project after every 6 months to see whether there any leakage. If the borrower fails to repay the loan as the application of the borrower ,it is rescheduled. Sometimes a portion on interest
Is exempted. If the borrower fails to repay the loan ,than it is transferred to
Law Department to take legal action on the application of the borrower.
v)Project Rehabilitation Department: The objective of BDBL is to make industrialization of the country . But many of the projects which are loaned by BDBL become sick to carry on their projects.
There are many reasons so government tries to revise the proposed project for greater advancement of the country.
The main activities and responsibility of Project Rehabilitation Department are as follows: 1. When files are transferred to Project Rehabilitation Department, it trace the cause of sickness and recommend to take initiative to rehabilitate a project. The rehabilitation process starts after the recommendation of the advisory committee formed by the general manager
2.verification of the proposal regarding rehabilitation recommend preparing the implementation schedule and taking necessary initiatives to take care the project and deciding the single or joint management if the bank finance over the project is necessary. 2. Retraction of the bank participation stage by stage from the project which is profitable vi)Law Department:
There are two law departments such as Law Department -1 and Law
Department-2. Law Department -1 functions for head office and Law department-2 functions for branch office outside of Dhaka. If the bank fails to recover its loan in the normal way ,it must undertaken alternative action and file case in the court through its Law Dept.

Vii)Human Resource Department:
The HRD perform the following activities: * To coordinate and evaluate the branch and regional stuff activities. * To take step and implement for opening new branch office. * To maintain relationship with Government and other institution. * To prepare and implement policy about human resources and relative activities. * To control the administration of human resources of the bank. * To give loan for house building, by cycle and ensure their proper utilization * To take program and implement for developing human resources. * To make appointment, promotion and appraising skill of officer and staff.
1o.List of Industrial sectors that BDBL can issue loan:

* Food and related goods industry. * Fruits /vegetables processing industries. * Textile industries. * Spinning industries. * Specialized textiles. * Knit composite industries. * Leather related goods industries. * Leather shoe industries. * Chemical and pharmaceuticals. * Servicing industries. * BSCIR developed technology dependent projects. * * * * * 11.Roles of BDBL in developing Bangladesh * The main objective of BDBL is to provide loan at industrial sector. Roles of BDBL at industrial sector is given below: * Help to expand industry amongst the country; * Increase investment in development project; * Help to reduce poverty through massive industrialization; * Increase the production of goods; * Social development through carrying out social responsibility; * Developing health sector through granting loan in such project; * Rural development; * Provide loan facilities to industry as well to people; * Human development through increase income and job opportunity; * Developing the health sector through sanctioning loan in purchasing modern medical instrument both to govt. and non govt. hospital; * * * * * * * * * * * * 12.Loan /Credit Scheme: Loan /Credit Scheme | Home Building Loan (Residential /Commercial) | Purpose | Completion of construction of a house (Residential / Commercial). | Loan Limit | Maximum Tk.50, 00,000 for District level Tk.80,00,000 for Division level; and Tk.100,00,000 for City Corporation except Dhaka and Chittagong. (For Dhaka and Chittagong City Corporation; loan limit will be determined according to the Project cost/ Area) | Time Period | 01-05 years. | Interest Rate | 16% per annum. (Compound) | Revolving Cash Credit(House Building loan for developers) | Purpose | Construction of Commercial cum Residential Building / Commercial Building. | Loan Limit | Loan limit will be determined according to the Project cost/ Area. | Time Period | 01 year (period may be extended up to 18 months). | Rate of Interest | 16% per annum.(Compound) | Cash Credit | Purpose | Loan is provided for trading. | Loan Limit | From Tk.50,000 .00 and above. | Time Period | 1 year. | Interest Rate | 16% per annum. (Compound) | Working Capital Loan | Purpose | Loan is provided to industries for purchasing inputs and for recurring expenses. | Loan Limit | From Tk.50,000 .00 and above. | Time Period | 1 year. | Interest Rate | 16% per annum. (Compound) | Personal Loan Scheme | Purpose | Personal Loan may be availed for purchasing of house hold items / services like purchasing TV, DVD, Computer, Motorcycle, Furniture, Medical Services etc. | Loan Limit | Minimum Tk.25000 to maximum Tk.10,00,000. | Time Period | Minimum 24 months to Maximum 60 months. | Interest Rate | 16% per annum. (Simple) | Consumer Loan Scheme | Purpose | Consumer Loan may be availed for purchasing consumer goods. | Loan Limit | Tk.10,000 to Tk.10,00,000. | Time Period | 1 to 5 years. | Interest Rate | 16% per annum. (Simple) | |

13.Deposit Interest Rate: | Sl. | Category Of Deposit | Revised rate of interest
November 15, 2012 (%) | 1 | Savings | Any Amount | 6.00% | 2 | Special Notice Deposit | Below 1.00 Crore | 5.00% | | | 1 Crore to below 25 Crore | 5.25% | | | 25 Crore to below 50 Crore | 5.50% | | | 50 Crore to below 100 Crore | 6.00% | | | 100 Crore & above | 6.50% | 3 | FDR for 1 month & above but less than 2 months | Below 20.00 Lac | 7.00% | | | 20 Lac & above | - | | | | | 4 | FDR for 2 month & above but less than 3 months | Below 20.00 Lac | 7.50% | | | 20 Lac & above | - | | | | | 5 | FDR for 3 month & above but less than 6 months | Below 20.00 Lac | 9.50% | | | 20 Lac & above | 12.50% | | | | | 6 | FDR for 6 month & above but less than 12 months | Below 20.00 Lac | 9.75% | | | 20 Lac & above | 12.50% | | | | | 7 | FDR for 1 year & above but less than 2 years | Below 20.00 Lac | 10.50% | | | 20 Lac & above | 12.50% | | | | | 8 | FDR for 2 year & above but less than 3 years | Below 20.00 Lac | 11.00% | | | 20 Lac & above | 12.50% | | | | | 9 | FDR for 3 year & above but less than 5 years | Below 20.00 Lac | 11.50% | | | 20 Lac & above | 12.50% | | | | |

14.Interest charged on lending:

| Sl. | Category Of Lending | Revised rate of interest
November 15, 2012 (%) | 1 | Term Loan for Large & Medium Industries | Dairy, Poultry, Fishery & Hatchery Loan | 15.00% | | | Agri Industrial Term Loan | 15.00% | | | Priority based Industrial Term Loan | 15.00% | | | Exporting Industrial Term Loan | 15.00% | | | Refrigeration for Preservation of Potatoes (Project) | 15.00% | | | Other Large & Medium Industrial Term Loan | 15.00% | | | Loan under Lease Financing | 17.00% | 2 | Term Loan for Small & Cottage Industries | Term Loan for Small & Cottage Industries (Project) | 15.00% | 3 | SME Loan | Project Loan (Service & Industry) | 15.00% | | | Working Capital (Service & Industry) | 15.00% | | | Women Entrepreneur Loan | 14.00% | | | | | 4 | Working Capital Loan | Agro based Industry/Project | 16.00% | | | Husking Industry | 16.00% | | | Potato Refrigeration | 16.00% | | | Other Working Capital Loan | 17.00% | | | | | 5 | Import Loan | LIM, PID, LTR | 17.00% | | | All types of Demand Loan including Import Loan | 17.00% | | | | | 6 | Export Loan | Ready mate Garments (Pre-shipment/Packing Credit) | The interest rate of working capital loan will be applicable when 7.00% time expired. | | | Freezing Food Export (Pre-shipment/Packing Credit) | Same | | | Leather Export(Pre-shipment/Packing Credit) | Same | | | Tea Export(Pre-shipment/Packing Credit) | Same | | | Packing Credit (Jute Export) | Same | | | | | 7 | Agriculture Loan (Except Industry) | 10.00% | 10.00% | 8 | Others | Transport | 10.00% | | | Brickyard(General) | 10.00% | | | Auto bix | 10.00% | | | Work Order | 10.00% | | | Own name of depositors/FDR of that bank against third person | 3% more than FRD rate | | | Loan against other bank's FDR | 10.00% | | | Loan against National investment bond, ICB Unit, Insurance Policy, Share, Debenture | 10.00% | | | Loan against Wage Earner | 10.00% | | | Utility based Industry | 10.00% | | | Loan against DPS | 3% more than DPS rate | | | Different Savings Scheme | 3% more than Savings Scheme | | | Commercial House Building in Urban area | 10.00% | | | Residential House Building in Urban area | 10.00% | | | Jute Business | 10.00% | | | Diagnostic Business | 10.00% | | | House Renovation Loan | 10.00% | | | Consumer Credit | 10.00% | | | Personal Loan/Special Loan for Service Holder | 10.00% | | | Over Draft | 10.00% | | | Other Loan | 10.00% |

15.Significant Accounting Policies of BDBL
i) Basis of Presentation of Financial Statements
The financial statements are prepared on a going concern basis under the historical cost convention, except revaluation of fixed assets, and in accordance with the First Schedule (Section 38) of the Banking Companies Act. 1991, Banking Regulation and Policy Department Circular No. 14 of 25 June 2003 and 15 of 9 November 2009, other Bangladesh Bank circulars, Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) to the extent that those BAS and BFRS do not contradict with the mandatory compliance of the Bangladesh Banks requirement. Wherever appropriate, such principles are explained in succeeding notes.

Ii) Consolidation of Accounts
A separate set of records for consolidating the statements of affairs and income and expenditure statements of the branches are maintained at the head office of the Bank based on which these financial statements have been prepared. iii)Fixed Assets and Depreciation
Fixed assets, except land and premises (buildings) are stated at cost less accumulated depreciation as per BAS-16. Land and premises (buildings) are shown at revalued amount.
5 Depreciation is charged on fixed assets other than motor vehicles & computer on reducing balance method. Depreciation on motor vehicles & computer is charged on straight-line method. The relevant rates for depreciation are as follows:

Assets | Rates | Building/PremisesFurniture and FixturesElectric/Gas InstallationTypewriters, Ceiling fans, Office Equipment (Including Computer)&SBBL GunMotor Cars & Other Vehicles | 2.5%10.0%20.0%20.0%20.0% |
Depreciation at the applicable rates is charged proportionately on additions made during the year from the month of their acquisition.
Upon disposal of items of fixed assets the net book values are eliminated from the accounts and the resulting gains or losses, if any, are transferred to Profit and Loss Account. Repairs and maintenance costs of fixed assets are charged to Profit and Loss Account when incurred. iv) Investments
i. Investments in quoted shares are stated at lower of cost and market price. Market value of shares is considered on aggregate portfolio basis at the year-end. Cost price being lower than market value, investment in shares is stated at cost price. ii. Investment in debenture is stated at cost less redemption. iii. Interest income on investment is recognized on accrual basis. Capital gain on disposal of investments is recognized as investment income when it is realized. iv. Provision for investment in unquoted shares is made when there is an objective evidence of impairment (i.e. net assets below equity).
v. Provision for investment in quoted shares is done on the basis of the shortfall of the market price and cost price for the traded issues. But, in case of any suspended shares provisions made for the entire cost price. vi. Dividend income is recognized on cash basis in the year in which it is received. vii. Bonus shares received are accounted for at nil value. viii. Profit/ Loss on sale of investments are accounted for by deducting the average cost of investments from selling price thereof.
v)Loans and Advances
i. Loans and advances have been stated at gross value as per requirement of the central bank. ii. Interest on unclassified loans and advance are calculated on a daily product basis but charged and accounted for on quarterly basis and in some cases on yearly basis. iii. No interest is charged on loan classified as bad and loss. iv. Interest is charged on classified loans and advances other than bad and loss as per
BCD Circular # 34 of 1989, BCD Circular # 20 of 1994, BCD Circular # 12 of
1995, BRPD Circular # 16 of 1998 and BRPD Circular # 9 of 2001 and such interest is not included in income and credited to interest suspense account.
v. Interest and penal interest, if any, calculated on classified loans and advances is taken as income in the year of receipt of such interest from the defaulting borrowers. vi. Provision for loans and advances are made on the basis of information furnished by the branches and of instructions contained in Bangladesh Bank BCD Circular # 12 dated 4 September 1995, BRPD Circular # 16 dated 6 December 1998, BRPD Circular # 9 dated 14 May 2001, BRPD Circular # 02 dated 15 February 2005, BRPD Circular # 9 of August 2005, BRPD Circular # 17 dated 6 December 2005, BRPD Circular # 5 dated 5 June 2006, BRPD Circular # 08 dated 07 August 2007 and BRPD Circular # 05 dated 5 April 2008, stating the following rates vii. Loans and advances are written-off as per BRPD Circular # 2 dated 13 January,2003. vi) Rental Income
Rental income is accounted for on accrual basis.

vii) Commission on Letters of Credit and Letters of Guarantee Commission charged to customers on letters of credit and letters of guarantee are credited to income at the time of effecting the transactions. viii)Cash Flow Statement
Cash flow statement has been prepared in accordance with the Bangladesh accounting standard-7 “Cash Flow Statement” under the direct method as recommended in BRPD circular no. 14 on 25 June, 2003 issued by the Banking Regulation and Policy Department of Bangladesh Bank. ix) Off-Balance Sheet Items
As per the Bangladesh Bank Guidelines Off-balance sheet items have been disclosed under contingent liabilities and other commitments. The Bank has maintained general provision @ 1% against off-balance sheet exposures (L/C and Guarantee) as per BRPD Circular #10, dated September 18, 2007.

x) Statement of Changes in Equity
Statement of changes in Equity is prepared principally in accordance with BAS-1“Presentation of Financial Statements” and under the guidelines of Bangladesh Bank BRPD Circular No.14 dated 25, June 2003. xi)Liquidity Statement
The liquidity statement has been prepared in accordance with the remaining maturity grouping of the value of the assets and liabilities as on the reporting date.
i. Balance with other banks and financial institutions, money at call short notice etc are on the basis of their maturity term ii. Investments are on the basis of their respective maturity. iii. Loans and advances are on the basis of their repayment schedule. iv. Property, plant and equipment (lined assets) are on the basis of their useful lives.
v. Other assets are on the basis of their realization / amortization. vi. Borrowing from Government and other agencies, etc. as per their maturity. vii. Deposits and other accounts are on the basis of their maturity and payment. viii. Provisions and other liabilities are on the basis of their payment/adjustment schedule.

xii)Retirement Benefit Scheme

The Bank is continuing following retirement benefit schemes as applicable for the employees of erstwhile Bangladesh Shilpa Bank and Bangladesh Shilpa Rin Sangstha:
i. Gratuity and CPF Scheme:
(a) Contributory Provident Fund
(b) Gratuity Scheme ii. GPF and Pension & Death cum Retirement Benefit Scheme:
(a) General Provident Fund (GPF)
(b) Pension & Death cum Retirement Benefit Scheme:
Contribution to the above retirement schemes is made by the Bank as per rules and regulations of the respective schemes. These schemes are managed and administered by separate trust formed for that purpose.

xiii) Statutory Reserve& provision for taxation
The Bank Companies Act, 1991 requires the Bank to transfer from its current year’s profit before tax to reserve until such reserve together with share premium account equals to its paid up capital. Accordingly 20% of the current years profit before tax (PBT) has been transferred to this reserve .
Provision for current income tax has been made @ 42.50% as prescribed in the Finance Act,2011 on accounting profit made by the Bank after considering some of the add backs to income and disallowances of expenditure as per income tax laws.

16)Audit Committee:
An audit committee has been reconstituted by the Board of Directors of the Bank in its 44th meeting held on 30 June, 2011. The member of the Audit Committee as on 31 December 2011 is as under: SL NO. | Name | Qualification | Status with the bank | Status with the Committee | 1 | Prof. Santi Naryan Ghosh | B.Com(hons) M.Com in Accounting,MBA | Director | Convener | of 2 | Mr. Dewan Nurul Islam | MBA,FCA | Director | Member | 3 | Mr. Amalendu Mukherjee | MSC . in Marine Science | Director | Member | 4 | Mr. Niaz Rahim | MBA,LLB | Director | Member | 5 | Selima Ahmad | B.Com(hons) M.Com in Management | Director | Member | Activities of this audit committee
The committee reviews the policy and planning executed by the Board Directors for smooth operation of the bank. The committee acknowledges their responsibility for the system of internal controls, effectiveness and suitable monitoring procedures, proper accounting policies, compliance with the regulations, computerization system, management information system, different risk management of the bank, etc. The committee also ensures the implementation of International Accounting Standards (IAS)and International Financial Reporting Standards (IFRS) as adopted in Bangladesh as BAS and BFRS and other applicable laws at the time of preparation of the annual financial statements. The committee meets with the external auditors and top management of the bank at the time of reviewing the annual financial statements. The committee also reports to the Board of Directors on the findings detected by the Internal Audit Division, External Auditors and Bangladesh Bank Inspection Team on a regular basis. During the year 2012 the committee conducted 5 (five) meetings in which among others ,the following issues were discussed:
-Recovery and adjustment from written-off projects
-Secured Overdraft Loans against FDR, Savings Scheme and IBC Unit Certificate
-Approval of Audited Accounts of BDBL for the year 2011

17)Problems regarding smooth performance of BDBL: * Lack of accountability of the appraisal team. * Slow information flow. * Inappropriate feasibility study. * Lengthy departmental coordination. * Inadequate risk analysis procedure. * Weak monitoring system. * Insufficient control on project implementation. * Management conflict. * Working environment is modernized. * Insufficient equipment in banking service. * Improper cost estimation. * Lack of support from government monitoring body.

18)Problems regarding loan sanction:
In most of the case loan sanction procedure of BDBL is being potentially biased. Sometimes, there is pressure groups involvement in sanctioning loan. Many viable projects do not get sanction of loan due to absence of bribe and pressure from political and other pressure group. In case of sanctioning loan some high officials practice nepotism. Sometimes , the amount of loan sanction is more than that is required by the project because of over invoicing from the part of sponsors.

19)Problems regarding loan recovery: * Sometimes bank has to provide loans and advances under political and bureaucratic pressure without conducting a proper Credit Analysis of the borrower. * Weak recovery trend due to corruption negligence and political pressure. * Sometimes inefficient allocation of resources have created huge amount of bad debts. * Other procedure BDBL follow is not suitable in present condition for recovery of loan.

2o)Recommendation: * Loan sanction procedure should be free from political biasness. * Experienced and motivated entrepreneur should be given priority in case of sanctioning the loan. * The time of loan sanction should not be more than 20-30 days. * Practice of nepotism by high officials of BDBL should be totally stopped. * For reducing time ,the bank should instruct the borrower to bring all documents needed by the documentation dept. * The functions of loan Operation Dept. and Documentation Dept should simultaneously done. * Over invoicing should be checked and detected by using expertise. The real price of machinery should be found out using various sources. * Loan recovery procedure should not be influenced by political interference. * Recovery drive should be strengthened.. * At least before 30-40 days of scheduled time of installment due the borrower should be reminded about the installment is falling due. * The defaulting borrower should be monitored so that he cannot turn fund into other business. * Central observation committee can be estimated to analyze ,evaluate, solute proper loan recovery * Job satisfaction of employee should be ensured. * Legal action should be taken by authority when any officer take advantages illegally. * Transparency should be prevailed in financial statement.
21.Conclusion:

BDBL is fully state owned commercial bank .It aims at massive industrialization of the country. It lends money in times of formation of industry or company .it also grants short term and long term loan to running industry or company for several operations. Thus it encourages the massive industrialization and development of the country.