Loan Disbursement

According to ordinance of RAKUB 1986, it was established in the administrative area of Rajshahi division. It operates banking activities to increase agricultural production, to develop overall economic condition, to develop small and cottage industries, to develop agro-based industries, and to improve socio-economic activities.

4.1 Loan Areas:

RAKUB provide loan both agro-based and non-farming sector. There are eight main loan areas of RAKUB; out of eight loan areas it gives preference on the following loan areas, viz:

v    Crop Production;

v    Fishery;

v    Livestock & Poultry:

v    Irrigation Equipment &Farm Machinery

v    Agro-industry & Agri-business:

v    Poverty alleviation:

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The poverty-stricken area of north-west Bangladesh is characterized by comparatively lower rate of savings, inadequate capital accumulation and slim employment opportunities. The existing collateral-based banking system is also of little use in respect of extending support to the millions of landless people. To address the problem, the Bank has been financing collateral-free micro-credit for income and employment generation through its poverty alleviation credit programs.

The RAKUB provide some loan to their customer. These are

Ø     Consumers' Credit (District & Upazila Branches)

Ø     Service-holders' Credit (District & Upazila Branches)

Ø     Small Traders' Credit(All Branches)

4.2 Term Wise loan disbursement:

Bank disburse loan in various term wise, such as small, medium and long term.

·              Short Term: Short-term loan is repayable within 18 months.

·              Medium Term: Medium term loan is repayable from 18 months to 5 years.

·              Long term: Long-term loan is repayable above 5 years.

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4.3 Selection of Borrower:

Selection of borrower is the important factor in loan disbursement. The following subject matter should be considered in loan disbursement.

·              Citizen of Bangladesh

·              Adult

·              Ability to utilize loan

·              Not defaulter

·              The registrar of Joint Stock Company must register limited company.

·              In case of co-operation society, the registrar of co-operative society must be registered it.

·              Not bankrupt or not unsound minded.

When Bank select borrower closely consider the following four “P”

·              P = Person

·              P = Purpose

·              P = Profitability

·              P = property / security

Borrower apply fro sanctioning loan by the prescribed form, which is provided by the bank and bank rates predetermined fees, then borrower submit

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application form along with fees. The rate of loan application form fees of RAKUB is as follows: -

Amount of Loan	Rate of Application Fee
TK 1000 to TK 6000	Nil
TK 6001 to TK 7500	TK 15
TK 7501 to TK 100000	TK 2 for per thousand and fraction
Above TK 100000	TK 200 Plus TK 1 for per thousand

Source: Rajshahi Branch Office, RAKUB.

4.4   Loan Case Investigation:

Loan applicant must submit necessary papers along with loan application. After submitting necessary papers, responsible officer take some step against loan application. Loan officer investigate the information of loan application to go to the spot and evaluate loan application consciously.

Loan case evaluation officer scrutinize the necessary papers and documents of security and he /she will go to the local land office.

4.5 Forecasting:

There are three types of forecasting form of RAKUB. Loan officer write a report about project appraisal. Loan forecasting or loan evaluation is very important. In the time of forecasting, loan officer considered the amount of loan, sources of equipment in case of equipment loan, and the availability of

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equipment, project viability in case of project loan, suitable use of loan etc. apart from this loan officer attached income and expenditure statement, cash payment and receiving statement with the forecasting report.

4.6 Loan disbursement:

On the basis of forecasting statement the responsible officer investigate the actual need of loan. If loan officer satisfied to the loan proposal he / she may sanction loan. Before sanction of loan, making necessary papers correctly is essential. According to condition of loan sanction, loan officer made necessary documents such as: mortgage paper, hypothecations papers, pledged agreement, SP note etc.

Bank disburse loan in various ways, such as: cash, purchase receipt, or installment. In case of installment loan bank investigate the past installment and experience of the borrower.

Sector -wise loan disbursement of Rajshahi branch RAKUB of financial year 2005-2006.

                                                                                     (Tk in lack)

Sector	Target	Achievement
Crops	60.00	37.30
Fisheries	2.00	Nil
Haler Balad	36.00	39.81
Agriculture	10.00	1.87
Current loan	25.00	5.75
Poverty alleviation	2.00	Nil
Irrigation equipment	6.00	.58
Others	7.00	49.08
Total	148	134.39

Source: Rajshahi Branch Office, RAKUB.

4.7 Interest Rate of Loan:

Bank imposes various types of interest on the various types of loan. Interest rate is flexible; it may change on the basis of time and situation. The rate of interest of term loan in as follows:

Sector	%
Crops	2.8
Livestock	9
Fishery	9
Farm Macinery	9
Agro-Industry	10
Cash Credit	12-14
Poverty Allev.	6-12

4.8   LONG TERM FUND MANAGEMENT

Proper implementation of long-term fund management planning of RAKUB reform program ensured creation of safety fund of Tk 1192.40 million at the end of the financial year 2004-2005. RAKUB repaid dues to Bangladesh Bank to the tune of Tk 1680.98 million and to BKB Tk 87.84 million. Dues to those banks stood at Tk 15606.70 million and Tk 342.11 million respectively on 30.06.05. Borrowing through the refinance window during the year amounted to Tk 3514.50 million.

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Table 8: Position of loan disbursement, refinance drawn and repaid (1998-99 through 2004-05)

			Tk million
Financial year	Loan disbursed	Refinance drawn	Refinance repaid
1998-99	3166.10	1969.80	826.10
1999-00	3661.32	312.00	344.60
2000-01	4238.21	1.28	679.49
2001-02	4790.70	1751.88	862.39
2002-03	5744.34	2009.60	1653.40
2003-04	6767.30	2290.70	1596.00
2004-05	8696.80	3514.50	1681.00

Target and achievement of loan disbursement Rajshahi branch office RAKUB

From the financial year 2000-01 to 2005-06.

Year	Target (In lacks)	Achievement (In lacks)	% of achievement
2000-01	100.00	97.29	97%
2001-02	111.50	101.37	91%
2003-04	165.00	109.00	66%
2004-05	225.21	141.19	63%
2005-06	201.00	134.39	67%

Source: Rajshahi Branch Office, RAKUB.

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We see from the above table the loan disbursement target achieved tremendously.

Target and achievement of loan disbursement represents graphically below: -

The data of loan disbursed by the Rajshahi branch of RAKUB is shown below by line chart.

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7.8 PROBLEMS OF LOAN DISBURSEMENT:

Rajshahi Branch Office, RAKUB faced the following problems in disbursing crop loan –

        i.            Loans are not sanctioned in proper head and real lone due to political influence

     ii.            Lack of proper mortgage against loan.

   iii.            Deficiency of adequate human resource.

    iv.            Lack of real loanee.

       v.            Insufficient fund of the bank.

    vi.            Loons are not disbursed properly as a result of the dishonesty of the officers.

  vii.            Inflexibility of the government policies in disbursing loan.

viii.            Wants of sound guarantor.