Rajshahi Krishi Unnayan Bank

 

 

Annual Report 2004-05

 

 

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Managing Director’s Report

 

To our pleasure, Rajshahi Krishi Unnayan Bank reached record high loan disbursement and retained rhythm of classified loan recovery during the financial year 2004-05. Though the bank's prospect of profit making was frustrated as a result of reduction of rate of interest on agricultural credit in compliance to government policy to boost flow of credit in this sector. However, the bank tried to cope with the changed situation by enhancing loan disbursement and classified loan recovery targets, introducing new products and at the same time correcting rates on deposit.

 

 

Efforts of the board and management to adequately plan, direct, control, monitor, and evaluate the institution’s lending operations is an essential component of a well-managed institution. I, on behalf of the management express thanks and gratitude to the chairman of the board of directors, Mr Md Ruhul Kabir Rizvi and all the other directors for their all out cooperation, able guidance and effective direction.

 

I must express gratitude amongst others to the Governor of Bangladesh Bank, Dr Saleh Uddin Ahmed and Finance Secretary, Mr Zakir Ahmed Khan for their necessary co­operation in different stages of the bank's operation during the financial year under report.

 

Thanks are also extended to banks and financial institutions for cooperation and supports. I congratulate the officers and other staff of all levels for their enthusiasm, skill, endurance and concerted efforts towards achievement of individual performance targets by dint of which the bank ushered in a new era of dynamism in exploiting business potentials.

 

At last, my thanks go to our two million valued customers for whose wholehearted and compassionate support and co-operation the bank has been continuing its activities smoothly and effectively.

 

 

(Md. Ashraf Ali)

Managing Director

1.00 ESTABLISHMENT

Rajshahi Krishi Unnayan Bank (RAKUB) was established by the President's Ordinance No. 58 of 1986 with the aim of providing institutional agricultural credit for optimum utilization of agricultural potentials of Rajshahi Division. Taking over all the 253 branches and other offices along with assets and liabilities of the Bangladesh Krishi Bank within Rajshahi Division, RAKUB started functioning on 15 March 1987.

 

2.00 FUNCTIONS

As the largest development partner in the northwest region Rajshahi Krishi Unnayan Bank aims at overall development of the farmers and all the sectors and sub-sectors of agriculture in this region. Besides catering to agricultural credit, financing agri-business and agro-based industries, activities related to socio-economic development and poverty alleviation programs, the bank performs most commercial banking functions.

 

3.00 CAPITAL

Authorized capital of Rajshahi Krishi Unnayan Bank amounted to Tk 1500.00 million, paid up capital Tk1500.00 million and reserve Tk208.50 million as on 30 June 2005.

 

4.00 MANAGEMENT

A seven-member Board of Directors is entrusted with the responsibility of policy formulation for promotion of growth in agriculture leading to economic development of the country through agricultural credit support. The government appoints all the directors of the board. An executive committee constituted by the Chairman and two other directors including the Managing Director is there for taking emergency decisions. The Managing Director is the chief executive of the bank.

 

5.00 ORGANIZATIONAL STRUCTURE

 

The head office of the bank is stationed at Rajshahi. The branch-network comprises 353 branches including one in Dhaka. One General manager's office at Rangpur, eighteen zonal offices stationed in district headquarters control branches under them. There are 18 independent regional audit offices under direct control of the head office for conducting regular audit in branches as well as in zonal offices. The bank has a training institute at Rajshahi. Out of total workforce of 3,524 officers counted 1,570 and other staff 1,954 as on 30 June 2005.

 

6.00 NATIONAL ECONOMIC TREND[1]

6.1 The world economy is projected to achieve a moderate expansion in 2005, led by a robust growth in the United States and, in most emerging market and developing countries, notably in China. The advanced economies as a group are projected to grow by 2.5 percent, while the other emerging market and developing countries as a group are projected to grow by 6.4 percent in 2005, led by China.

6.2 During FY05, the Bangladesh economy was confronted with serious challenges, among others, the impact of devastating floods, the excessive price hike of oil and some other importables in the international market, in addition to the termination of the Multi-Fiber Arrangement (MFA). To cope with these challenges, the Government and the Bangladesh Bank adopted a series of policies to enhance the resilience of the economy, while maintaining macroeconomic stability. These policies significantly contributed toward maintaining real GDP growth at a satisfactory level of 5.4 percent in FY05, albeit lower than 6.3 percent of FY04. Economic growth was aided by continuing rebound in exports, imports and remittances. In U.S. dollar terms export earning recorded a growth of 14.7 percent while imports payments surged by 21.4 percent. At the same time, remittances from non-resident Bangladesh nationals increased by 11.8 percent.

 

6.3 The 5.4 percent real GDP growth in FY05 was underpinned by improvements in industrial production and services, reflecting expansion in both domestic and external demand. On the supply side, industry and services sectors attained higher rates of growth (8.6 in industries  sector and 6.6 in services sector) in FY05. Growth rate in agriculture sector, on the other hand, decelerated to 0.3 percent in FY05 from 4.1 percent of FY04, resulting mainly from a significant reduction of output in crops and horticulture sub-sector due to the adverse impact of floods. Annual average CPI (base FY96) inflation as of end June 2005 was 6.5 percent, compared with 5.8 percent as of end June 2004.

 

6.4 The agriculture sector, mainly crops, was severely affected by the onset of floods in FY05. As a result, crops and horticulture sub-sector registered a negative growth of 3.3 percent in FY05 compared with a robust growth of 4.3 percent in FY04. Overall, output of food grains declined by 4.1 percent to 26.3 million ton in FY05, reflecting substantial production decline of Aus and Aman crops. The devastating floods damaged the output of Aus (a relatively minor crop). Aus output declined by about 18 percent to 1.5 million ton in FY05 compared to the level of FY04. Due to dry spell prevailing during harvesting time, Aman crop declined by 14.9 percent to 9.8 million ton, also reflecting a decline of cultivation area. With a view to recovering loss of crops, farmers gave relentless efforts along with timely seed distribution by the government under post flood agricultural rehabilitation program and channeling huge amount of crops loan; the output of Boro rice, the single largest crop, increased by 6.7 percent to 13.7 million ton in FY05 from the actual production of FY04. Wheat cultivation area experienced a fall as a result of switching over to maize cultivation by the farmers. Despite initial setbacks in the animal-farming sub-sector due to the floods, poultry production recovered fast and registered a healthy growth in FY05. Forest and related services sub-sector also recorded a marginally higher growth of 4.3 percent in FY05 compared to 4.2 percent in FY04. The fishing sub-sector recorded 4.0 percent growth in FY05 compared to 3.1 percent growth in FY04.

6.5 In the aftermath of the disaster, flow of agricultural credit disbursement was strengthened, and program-based annual disbursement targets by the NCBs and specialized banks were pursued during the year to ensure uninterrupted flow of credit for the sector. The actual disbursement of Taka 49.57 billion against the disbursement target of Taka 55.38 billion during FY05 was 22.46 percent higher than the previous year’s total disbursement of Taka 40.48 billion. In disbursement of agricultural and rural finance, two specialized banks viz. BKB and RAKUB, four NCBs and BRDB played key roles. RAKUB and BRDB over performed their disbursement targets by 12.26 percent and 2.63 percent respectively. Disbursements of NCBs and BKB, on the other hand, fell short of targets by 33.02 percent and 5.00 percent respectively. About 68.45 percent of disbursement was as short term lending and the rest 31.56 percent was in the form of long-term loans for irrigation equipments, agricultural machinery, livestock etc. The lion share of the short-term credit was disbursed for production of crops and poverty alleviation programs constituting 62.13 percent and 35.13 percent respectively of total short-term loans.

6.6  Outstanding agricultural loan amounted to Tk 140.40 billion at the end of FY05 which is10.50 percent higher than that of FY04. Recovery of agricultural credit during FY05 increased by 1.15 percent to Tk 31.71 billion from the recovery made in FY04. Despite the decision to reschedule the overdue agricultural loans of the borrowers in the flood-affected areas of the country in FY04, the recovery position improved mainly due to serious recovery drive taken by the banks and institutions. The incentive measures introduced previously for recovery of stuck-up loans also continued in FY05 which, inter alia, included persuasion through various types of fairs, negotiations, demand notice, intensive supervision etc. The MIRACLE (maximum incentive for recovery of classified loan entirely) policy of BKB, PARL (participation of all for recovery of loan) and BUP (bottom up planning) strategies of RAKUB may have contributed to modest improvement in recovery during FY05.

 

6.7 Attributed to steady growth of export income and remittance the country’s foreign exchange reserve increased to US$ 2,930 million at end-June 2005 compared to US$ 2,705 million in 2004.

 

Performance of RAKUB: 2004-05

 

7.00RAKUB'S PERSPECTIVEPLAN:2001-2010

Inspired with the success of the reform program, the bank introduced in 1999-2000, the bank has launched a long-term perspective plan on the basis of midterm evaluation in 2001-2002. The new plan aimed at offsetting accumulated loss and earning real profit by the culminating year 2010. The reforms program aims at efficient loan portfolio management by prudent placement of workforce and finding new catalysts. Effective measures were taken for implementation of the perspective plan, which included MBO (management by objectives) for stimulating activities and PARL (participation of all in recovery of total loans) for augmenting overall operational activities in field offices as well as controlling offices. Aiming at reducing classified loans and increasing performing asset BUP (bottom up planning) strategy was adopted to ensure involvement of all concerned starting from the field staff in the branches to the chief executive of the bank in the head office. Other important aspects include efficient fund management, enhancement of commercial banking activities, expanding branches network and increasing manpower efficiency.

 

In order to counterbalancing shortfall in annual income emanating from reduced rate of interest on loans the bank enhanced loan disbursement target for the year and reduced interest rate on deposits. Steps were also taken for reducing rate of classified loans, improving income from commercial banking, managing bank's property efficiently and recovering dues. The year was declared as the "Year of Customer Service Improvement: 2004-2005". The year has shown expected momentum in loan disbursement and recovery and also recovery of substantial amount of classified loans.

 

Table 1: Position of outstanding loan, classified loan and recovery of classified loan

 

 

 

8.00 LOAN DISBURSEMENT

8.1 Against the lending target of Tk 8500.00 million for the financial year 2004-2005 the bank disbursed Tk 8,697.00 million (102 percent of yearly target) among 340,633 borrowers.

 

Table 2: Sub-sector wise loan disbursement

				(Tk million)
Sub-sector	2004-05			2003-04
	Target	Achieve ment	Borrowers	Target	Achieve ment	Borrowers
Crops	4800.00	4357.00	214951	4200.00	3742.80	196129
Fishery	50.00	89.00	734	40.00	40.10	632
Livestock	350.00	497.00	23119	300 .00	417.00	17634
Farm machinery	60.00	71.00	785	80 00	44.60	748
Agro-based industries	250.00	341.00	641	450. 00	160. 40	691
Cash Credit	1400.00	1933.00	8329	850. 00	1368. 40	4809
Poverty Alleviation	250.00	226.00	25718	180. 00	160. 50	13909
Others	840.00	1183.00	66356	900. 00	833. 50	58116
Total	8000.00	8697.00	340633	7000. 00	6767. 30	292668

 

 

8.2 Special Credit Programs

Consumers' Credit Scheme

The bank has coined a new credit scheme entitled “Consumers’ Credit Scheme” for the fixed income target group permanent staff of government agencies, autonomous bodies and semi-government organizations. The aim of the scheme is to empower them to purchase means of transportation, electronic gadgets and furniture etc.for improvement of quality of life. Maximum credit limit under the scheme has been fixed at Tk 300 thousand for vehicles, 100 thousand for electronic gadgets and furniture. Rate of interest under the scheme is 12 percent per annum. Branch managers are delegated with the business power to sanction the loans irrespective of amount. The loans are repayable in equal monthly installments in four years. Tk 9 million has been disbursed among 109 borrowers up to 30-06-2005.

 

Credit for Small Holding Tea Plantation

Tea plantation in Tentulia under Panchagarh district began just 3 years back. RAKUB has been with the program since then. So far 21 companies including Tetulia Tea Co. Ltd., Dahuk Tea Estate and Kazi & Kazi Tea Estate have already made satisfactory progress in setting up tea gardens and processing units. The bank has triggered a credit program for the marginal and small farmers for tea plantation in the area. An MOU has been signed between RAKUB and Bangladesh Tea Board (BTB) for financing smallholdings tea plantation. So far Tk 8 million has been disbursed among 27 smallholdings and a tea garden.

 

Potato Seeds Production

The bank has been financing under the joint credit program to Contract Growers of BADC for potato seeds production. Twelve branches of the bank spread over nine zones disburse credit at 8 percent per annum under the program. BADC supplies inputs like seeds, fertilizer, and pesticide to the farmers and provides extension services. RAKUB, on the other hand ,provides crop hypothecation credit at moderate terms. Harvest is collected from the farmers by BADC as potato seeds and helps the bank recover the loans. An amount of Tk 7.12 million has been disbursed among 258 borrowers during the year under report.

 

Poverty Alleviation Credit Programs

The bank has been disbursing micro-credit for poverty alleviation in the 16 northwestern districts since inception. Besides, the bank finances short-term collateral-free credit under select individual or group-based programs for income generating activities among poor and unemployed youths in compliance with government policy.

The bank has financed Tk 226.00 million as against of Tk 250.00 million annual disbursement target in 11 poverty alleviation credit programs during the year under report. Following are the bank’s poverty alleviation credit programs:

 

1) RAKUB self-help credit program (RSCP)

RSCP is RAKUB's own group-based credit program introduced in 1994 in all the districts of Rajshahi division except Kurigram. The bank provides collateral-free small loans to poor and unemployed persons for income generating activities under the program through 129 branches. Outstanding loan under the project amounted to Tk 153.00 million on 30-06-2005.

 

2) Marginal & Small Farm system crop intensification project (MSFSCIP Kurigram)

 

The project meant for Kurigram district aims at increasing productivity in farm as well as off-farm activities, helping target group people achieve sustainable development, resist the increasing trend of losing land under cultivation and attain self-dependence. MSFSCIP, the ministry of agriculture assisted project, was originally funded by IFAD and technically supported by German agency GTZ.

 

3) Swanirvar credit program

The bank has been implementing RAKUB-Swanirvar joint credit program since 1987 through its 71 branches in nine districts. The program finances Tk10,000 collateral-free credit per group of poor borrowers at 10 percent per annum in such income generating activities as food processing, tree-farming, fishery and livestock farming. Outstanding loan as on 30-06-2005 amounted to Tk182 million.

 

4)       Shogorip (Food grain go-down credit program)

 

RAKUB has been implementing the program under Swiss government assistance since 1988 as support to the sharecroppers and marginal and small farmers opportune, so that they can sell their produces at favorable price. Sixteen warehouses are managed in 16 districts under the program. Rate of interest under the program is 11 percent. Outstanding loan as on 30-06-2005 amounted to five  million taka.

 

5)       UN Capital Development Fund (UNCDF) credit program

 

Under the BSCIC (Bangladesh Small & Cottage Industries Corporation) assisted program, implemented by RAKUB since 1987 credit facilities are extended to entrepreneurs of cottage industries for creating self-employment opportunities. The program aims at economic development and uplifting the craftsmen. Outstanding loan as on 30-06-2005 amounted to Tk 97 million.

6)       Women Entrerpreneurship Development program  (WEDP)

 

The BSCIC assisted program implemented by RAKUB since 1987 aims at promoting cottage industries and encouraging women entrepreneurship. Outstanding loan as on 30-06-2005 amounted to Tk 12 million.

 

7)       Pilot Employment Generation Program (PEGP)

 

The BSCIC assisted program aims at employment generation among rural poor women and women artisans in selected areas. Outstanding loan as on 30-06-2005 amounted to Tk12 million.

 

8)       Semi-intensive Goat-rearing Program

The bank introduced the special credit program of semi-intensive goat ­rearing for poverty alleviation in 2002. The program extends collateral-free credit up to Tk15,000 for one to four years' term at 10 percent per annum rate of interest. The program envisages augmenting income of the unemployed, meeting the demand of protein and at the same time earning foreign exchange by exporting goatskin. The bank disbursed Tk49.00 million under the program during fiscal 2004-2005.

 

9)       Medicinal plants /orchids nursery

Rajshahi Krishi Unnayan Bank has launched a credit program for entrepreneurs of traditional Ayurvedic and Unani medicine nursery of medicinal plants, growing orchids and producing trees for fruits and timbers with a view to making the tree plantation program of the government a success and creating self-employment opportunities for the less educated and unemployed youths. The bank provides credit of Tk 20,000 per bigha (0.33 acre) and Tk 54,000 per acre for nursery at eight percent per annum. An amount Tk 5 million  has been disbursed among 314 borrowers during the year under report.

 

10) Credit Program for the Disabled Persons

RAKUB provides credit to the disabled persons for alleviation of poverty, creation of self-­employment opportunities and development of socio-economic condition. The bank extends collateral-free credit up to Tk 50,000 for poultry, duckery, goatery, dairy, beef fattening, sewing machine, computer and small trading. Tk 4.00 million has been disbursed among 395 disabled persons up to 30-06-2005.

 

11) Zero Poverty Loan Scheme

The bank has initiated a special group-based micro-credit program during the year under report entitled "Zero-poverty Loan Scheme" for the extreme poverty stricken 23 upazilas in greater Rangpur district. Poor people in the area pledge farm-labor at lower price to landlords during lean season of August-September for borrowing money. The program implemented through 65 branches is expected to restrain the tendency and eradicate poverty in the region by providing up to Tk 3000 collateral-free credit repayable in 15 fortnightly installments to day-laborers at only six percent interest rate. Male and female groups are formed consisting of 6 to ten members. The members should be active, of the same status and same occupation. For defaulted loans 8 percent interest is charged. Outstanding loan as on 30-06-2005 amounted to Tk 33 million.

 

8.3 Agro-based Industries

The northwest region is advantageously placed for production of high-quality raw materials. To exploit potentials of agro-based industries expansion in the northwest region RAKUB has taken special scheme to intensify financial support in the sector.

The bank has taken pragmatic steps for attracting entrepreneurs for establishing agro-based industries for preservation and processing of agricultural produces in the region. The “entrepreneurs’ advisory cell” in the head office provides advisory services to the entrepreneurs. “Project Evaluation Committee” (PEC) evaluates the projects before financing.  An amount of Tk341 million was disbursed against targeted amount of Tk250 million during fiscal 2004-2005 for setting up different types of industries.

 

Table 3: Select Agro-based Industries financed by RAKUB during 2004-2005

Name of the project	Purpose
Siam Flower Mills Pvt. Ltd., Shibgonj, Chapai Nawabgonj	Quality atta/flour production
Shah Sultan Feed Mills, Gabtoli, Bogra	Poultry and animal feed production
Bengal Goat Breeding Farm, Santhia, Pabna	Production of improved goat kids
Baghabari Cattle Feed Pvt. Ltd., Shahzadpur, Sirajgonj	Animal feed production
Jamuna Seeds Storage, Kalupara, Rajshahi	Preservation of quality potato seeds

 

8.4 Foreign Aided Projects

Small Enterprises Development Credit Project (SECP)

Small Enterprises Development Credit Project (SECP) has been launched under Norwegian assistance to promote new small enterprises and streamline existing ones in fifty upazilas of greater Rajshahi, Bogra and Pabna districts. The project, under active supervision of the ministry of finance aims at disbursement of security free credit starting from Tk15,000 up to Tk75,000 during the project period of five years. The project is expected to create 68,000 new jobs through entrepreneurship development and income generating activities. Twenty percent of total credit will be earmarked for women entrepreneurs. The project went into operation in fiscal 2002-2003. Tk122.55 million has been disbursed under the program to 4,054 trained entrepreneurs till 30-06-2005.

 

 

 North West Crop Diversification Project (NCDP)

The bank has undertaken a project named North-west Crop Diversification Project (NCDP) under financial assistance of Asian Development Bank. The project is under implementation by the Department of Agricultural Extension (DAE) under the Ministry of Agriculture in sixty upazilas of sixteen districts of Rajshahi division. The project aims at production of high value crops by small and marginal farmers and expansion of agri-business. Four NGOs, BRAC, PROSHIKA, GKF & RDRS will disburse loans to small farmers’ groups for high value crops production and RAKUB will disburse loan for agri-business development. Department of Agriculture Extension (DAE) will arrange training to farmers for different crops. Credit facility will be extended for high-value crop production to 160,000 trained farmers of the project area. Tk 46.41 million has been disbursed to 10 entrepreneurs for development of agri-business till 30.06.05. While the NGOs offered training to105,000 farmers and disbursed credit of Tk 671.30 million for production of high ­value crops.

 

8.5 Interest rate

In line with government policy the bank lowered interest rate on loans and advances twice during  the last year to smarten up credit flow in the agricultural sector. Interest rate on loans and advances remained within eight to ten percent during the year. The bank charged 6 percent, the lowest ever rate for Zero Poverty Credit Program.

 

9.00 LOAN RECOVERY

9.1 The bank recovered Tk 6,829.30 million during the year as against target of Tk 7,000.00 million hitting 98 percent. Year's loan recovery was up Tk 56.91 million compared to the previous year.

 

9.2 Strategies followed during the year for recovering loans included: earmarking loan recovery targets for zones at the outset of the fiscal, evolving effective plans to achieve 100 percent of loan recovery target, recovering loans already classified and also those tending to be classified, declassifying loans, rescheduling in demanding cases to widen the scope of interest income, updating defaulters’ list, addressing all loan accounts with no part repayment, weekly and monthly progress monitoring, keeping in constant touch with "Top Twenty" defaulters at branch and zonal levels, achieving targets of writing off loans and recovering loans written off earlier, intensifying awareness about "Artha Reen Adalat Act 2003" and all out efforts to prevent loan cases being barred by law of limitation.

 

9.3 Financial incentives for recovery of CL & implementation of PARL

 

The bank had to work out plans to buttress estimated deficit of interest income in the wake of lowered rate. Twenty-one workshops participated by branch managers and field staffs were held at zonal levels to find the way out. Training programs for branch managers and field staff, loan recovery camps, super camps, Reenmela, customers' gatherings were also held. The managing director, other executive officers and mobile teams from head office attended these workshops and extended all out cooperation to the mangers and field officers. Borrower-friendly atmosphere in Reenmela and camps bring the bank and its customers close together, encourages the borrowers to repay earlier loans and enroll as fresh borrowers if needed.

 

Table 4: Achievement under financial incentives program during 2004-2005                 

 

Tk million
Item	Number	Amount
Target of CL recovery	-	1530.00
Achievement	-	1107.10
Target of closing CL accounts	22000	-
Achievement	8665	-
•      No. of cases	-	186.20
•     Amount recovered
Partly recovered cases
•      Number of cases	13365	-
•     Amount of part recovery	-	920.90

 

Table 5:Comparative position of classified and unclassified loan recovery     

 

 

 

10.00 DEPOSIT MOBILIZATION

10.1Deposit is the most important source of ready to invest fund of the bank. Interest paid on deposits occupies the largest part of the bank’s total expenditure. For collecting fund the bank initiated special attention on collecting low cost deposit. Special guidelines were given in the workshops, camps and super camps for collecting deposit and maintaining liquidity. Rates of interest on deposits remained within 2.50 to 7.00 percent during the year under report.

10.2 The bank secured deposit of Tk 785.34 million against annual target of Tk1500.00 million. Deposit as on 30 June 2005 amounted to Tk 11566.03 million and number of depositors reached 1,108,970.

 

Table 6:Deposit mix on 30 June 2005

 

			Tk million
Type of deposits	As on 30 June 2005		As on 30 June 2004
	Number	Amount	Number	Amount
Current	22708	1082.10	18195	767.98
Savings	816016	2187.33	735300	1933.27
Fixed	17239	4026.50	17310	4633.76
DPS	1911	145.50	8502	599.19
Other	251096	4124.60	258245	2886.14
Total	1108970	11566.03	1037552	10820.34

 

Table 7: Year wise position of deposit

                                                                                                                                            

				Tk million
Financial year	Initial balance	Target	Actual achievement excluding interest	Balance at the end of the year including interest
1998-99	3195.59	1100 00	173.60	3675.89
1999-00	3675.89	1100 00	1018.38	5051.94
2000 01	5051.94	1210 00	1182.74	6702.88
2001-02	6702.88	1400 00	1754.06	9052.10
2002-03	9052.10	1500 00	1289.77	10658.21
2003-04	10658.21	1700 00	162.10	10820.34
2004-05	10150.58	1500.00	785.34	11566.03

 

 

 

10.3 Three new deposit schemes were coined during the year under report, namely 1) Hajj Savings Scheme, 2) Rural Pension Savings Scheme, and 3) Education Savings Scheme.

 

11.00 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.

 

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

 

 

 

12.00 HRD PROGRAM

 

12.1 Effective human resource management and development is a must for successful implementation of RAKUB Perspective Plan: 2001-2010. Human resource development of the bank during the year was underpinned by:

·       Enhancing self-motivation of the bank employees

·     Creating congenial working atmosphere

·     Increasing professional skill through effective training programs

·       Introducing need-based and output oriented training

 

12.2 Training programs were tailored to cope with the objectives of successful implementation of the bank's programs and expansion of business. The trainees attended courses well equipped with detailed information regarding their respective duties. Brainstorming sessions were held and take-home assignments based on strategy and action plans were provided to them for implementation of the techniques narrated in the training courses.

12.3 During the year 1,233 officers and staff participated in 38 training courses and workshops held at the training institute on different professional fields like processing of agricultural produces, anti-money laundering surveillance and modern banking, customer service development, project and continuous credit appraisal, banking ethics and efficiency development, poverty alleviation and micro-credit, Artha Reen (Money Loan) Act 2003 and certificate cases, basic orientation on computer & Internet operation, loan recovery and reduction of provision, increasing income from commercial banking, collecting low-cost deposit. In addition, outreach courses at field level offices were also organized under supervision of the training institute. Workshops participated by the zonal managers and regional audit officers were held for evaluating success and failure of performance of the zones.

12.4 During the financial 118 officers participated in training courses on different professional fields at Bangladesh Institute of Bank Management (BIBM), Bangladesh Bank Training Academy (BBTA) and Regional Public Administration Training Centre (RPATC).

 

12.5 Transparency in administration

Efforts were taken to ensure transparency and accountability in all stages of administration of the bank. In order to increase quality of operational efficiency and affirm internal control MBO (management by objectives), a management tool for ensuring quantifiable and participative performance of the employees was followed meticulously both in the head office as well as field level for increasing operational efficiency and internal control. MBO persuades annual target of individual performance of employees of all levels. The progress is monitored and reviewed on monthly basis. During the year the bank took initiative to make use of the opportunity of promotion of employees created by the revd organogram as approved by the ministry of finance.

 

13.00 OFFICE AUTOMATION

 

A local area network (LAN) connects all computers in departments at head office. Internet connections in the head office as well as field offices have facilitated exchange of information through e-mail. The bank has its own website www.rakub.org.bd to represent it to the cyber world. Computerized branch banking has been introduced on experimental basis in two branches of the bank. Necessary steps have been taken to set up a complete computer department at the head office. The bank has been giving importance to training courses for enhancing computer skill of officers and other staff.

 

14.00 BRANCH EXPANSION

Number of branches of the bank as on 30 June 2005 was 353 including three branches opened during the year. Still opening of four more branches was in the pipeline.

 

15.00 CERTIFICATE & ARTHA REEN CASES

During the year 1,136 certificate cases were disposed off effecting realization of classified loans amounting to Tk29.63 million. An amount of Tk 646.98 million was involved against 20,597 unsettled certificate cases as on 30 June 2005.

During the same period 962 Artha Reen cases were settled against which an amount of Tk 57.56 million was realized. Pending 6,503 Artha Reen cases involved Tk1256.56 million as on 30 June 2005.

 

16.00 AUDIT & INSPECTION

Internal audit and inspection plays an important role in consolidating transparency and accountability of the bank's accounting system. Besides there are commercial audit, Bangladesh Bank Inspection and external audit for detecting and checking repetition of irregularities frauds and forgeries, if any, in different levels.

 

Table 9: Position of audit objections

FY	Number of objections
	Raised				Settled
	Internal audit	Commercial audit	BB inspection	Total
2000-01	93335	11537	14747	119619	17428
2001-02	100615	11113	18693	130421	35114
2002-03	94471	13236	17185	114892	53415
2003-04	70374	1288	7038	78700	28001
2004-05	59680	1095	5083	65858	31889

 

The government appointed M/s Zoha Zaman Kabir Rashid & Company, Chartered Accountants and M/s Khan Wahab Shafiq Rahman & Company, Chartered Accountants for conducting audit for the financial year 2004-2005. The audit report submitted by them on 31-01-2006 had been sent to the ministry of finance on 19-02-2006 after approval of the Board of Directors.

 

17.00 THE BOARD OF DIRECTORS' MEETINGS

During the year 337 memoranda were presented before the board of directors in 17 meetings. The board gave decisions on 252 of which 227 have already been implemented and the rest 25 remained underway.

 

18.00 PROFIT & LOSS

All-out efforts and commitment of the employees at field level for realization of classified loans yielded success. The bank could not post profit during the year as a result of low interest income in the wake of reduction of interest rate.  Total income during the year of Tk 1,602.96 million and expenditure Tk 1,969.35 million resulted in net loss of Tk 366.39 million. Accumulated loss at the year ending amounted to Tk 1,806.69 million.

 

Table 10: Position of income and expenditure                           

		Tk million
Heads of Income/ Expenditure	2004-05	2003-04
Income	1602.96	1756.16
Income from loans & advances	1485.76	1666.25
Other Income	117.20	89.91
Expenditure	1969.35	1707.90
Revenue expenditure	958.80	733.90
Financial expenditure	1010.55	974.00

 

Table 11: Income-expenditure and profit & loss

 

				Tk million
FY	Income	Expenditure	Profit/(Loss)	Accumulated loss
1998-99	655.26	1272.53	(617.27)	3071.10a
1999-00	1199.03	1177.68	21.35	1780.60b
2000-01	1134.37	1110.45	23.92	1756.68
2001-02	1462.65	1309.30	153.35	1603.33
2002-03	1650.10	1535.35	114.75	1488.58
2003-04	1756.16	1707.90	48.26	1440.30
2004-05	1602.97	1969.35	(366.39)	1806.69

 

 

a) It was decided that for agricultural loans up to Tk 0.30 million principal and equal amount of interest would be realized and rest interest would be waived. Accordingly Tk 976.60 million of provision and accumulated loss was reversed.

b) Tk 1,269.10 million ,interest remitted on dues to BKB adjusted against the accumulated loss.

 

19.00 RAKUB’S PERSPECTIVE PLAN: 2001-2010

 

This was the fourth year of the RAKUB Perspective Plan. Bank’s operational activities tracked the directives of the perspective plan throughout the year. On the backdrop of negative impact upon overall income and profit earning of the bank due to reduced interest rates of deposit and advance, the bank took precautionary measures of counter balancing the shortfall by enhancing disbursement of new loans, recovery and rescheduling of classified loans and raising income from commercial banking activities. In addition, measures were taken to curtail expenditure on controllable items. In spite of all the measures, the bank’s profit making was thwarted. The bank plans to undertake a midterm evaluation on the RAKUB perspective plan as per demand of the changed scenario.

Table 12: Estimated income under perspective plan

 

								(Million Tk)
Sources of income	2003 -04	2004 -05	2005 -06	2006 07	2007 -08	2008- 09	2009 -10	Average
								Amount	%
Interest on unclassified loan	760	800	840	880	920	950	1000	840	48
Interest on fresh loan	110	110	120	130	130	130	140	120	7
Recovery from classified loan
By adjusting deferred income	200	210	220	230	230	240	250	230	13
w By rescheduling	30	30	30	40	40	50	50	40	2
w Interest income on deposit	130	130	140	140	140	150	150	140	8
Income from loan provisioning	260	280	290	300	310	320	330	280	16
Interest on staff loan	40	40	40	50	50	50	50	40	3
Commercial income	10	10	10	10	10	20	20	10	1
Miscellaneous	30	30	30	30	50	50	50	30	2
Total income	1570	1640	1720	1810	1880	1960	2040	1730	100