Reform Programs

The bank had been earning profit before introduction of Financial Sector Reforms Program (FSRP) in 1991. RAKUB like other banks in the country introduced FSRP in 1991. FSRP made it mandatory for the banks to classify advances and make adequate provision against classified advances. Thereafter it became a regular feature for RAKUB to post sizable amount of loss at the annual closings of accounts. Various measures were tried to find a way out. At last the bank got the break through in 1999. A comprehensive "RAKUB Reforms Program" was launched and it brought the much awaited profit by the end of financial year 1999-2000. The reform program was initially meant for five years (1999-2004).

three goals of the reforms program

    steer the bank commercially and profitably
    reduce classified loans gradually by effective loan recovery
    re-invest recovered money in sub-sectors of agriculture

Bank personnel engaged in recovery of classified loans are awarded 10 per cent of the realized interest as cash incentive. The money-spinning scheme has been considered a great success in involving the field staff and junior level officers in the branches to intensify their loan recovery drives. Recently the program has been modified by a government order.

Based on a mid-term evaluation of the ongoing reform program the Bank launched a long term perspective plan spanning the period from 2001 through 2010. The program envisions to offset Tk 1750 million accumulated loss and turn to be a profit making public enterprise in real terms by the year 2010.

RAKUB has been earning profit for the last three consecutive financial years: Tk 21.40 million in 1999-2000, Tk 24.30 million in 2000-2001 and surpassing all past records Tk 153.40 million in 2001-2002.

salient features

introduce pragmatic targets of loan disbursement, recovery and deposit mobilization
reduce classified loan from 54 to 21 per cent
earn profit by Tk 180 million per year on an average and gain a real profit of Tk 30 million in the terminal year (2010)
put emphasis on good investment, effective loan recovery, human resource development, realizing arrears and effective fund management
ensure evaluation of the performance in each three years
keep watch on individual income and expense items for the sake of increasing income and reducing expenditure
introduce MBO (management by objective) in headquarters and each tier of field offices for increasing operational efficiency and affirming internal control

estimated annual growth rate
loan disbursement: 8 per cent
loan recovery: 9 per cent
recovery of classified loan: 6 per cent
recovery of unclassified loan: 10 per cent
deposit mobilization: 13 per cent
income: 5 per cent
profit: 7 per cent

strategies

implement the action program on MBO (management by objective), MBP (management by participation),
PARL (participation of all in recovery of total loans) and strategic planning through bottom up approach
arrange employment of adequate manpower for carrying out additional activities
increase bank's tangible assets and make proper use of unutilized land properties of the bank
enhance authorized capital and paid up capital to a satisfactory level
undertake an efficient fund management campaign
open new branches in potential areas
increase bank's income through effective commercial banking endeavors
increase foreign exchange business/increase remittance
speed up computerization process
delegation of certificate power to the managers
manpower development through domestic/overseas training/study tours of bank officials/staff
motivation through massive training/workshop in grassroots level

Perspective Plan activities of RAKUB (2001 thro' 2010)

(Million Tk)

Financial year	Loan Disbursement target	Loan recovery target	CL recovery target	UCL recovery target	Outstanding loan			CL %	Deposit collection target	Deposit balance	Income	Expense	Profit	Cumulative (loss)/ balance
Financial year	Loan Disbursement target	Loan recovery target	CL recovery target	UCL recovery target	CL	UCL	Total	CL %	Deposit collection target	Deposit balance	Income	Expense	Profit	Cumulative (loss)/ balance
2000-01 Base year	4200	4200	1680	2520	7850	5090	12940	61	1220	6730	1130	1110	20	(1750)
2001-02	4700	4700	1680	3020	7610	6450	14060	54	2010	9050	1460	1310	150	(1600)
2002-03	5410	5010	1680	3960	7080	8100	15180	47	2400	11450	1500	1340	160	(1440)
2003-04	6060	5510	1130	4380	6660	9580	16240	41	2600	14050	1570	1400	170	(1270)
2004-05	6660	6010	1210	4800	6260	11110	17370	36	2900	16950	1640	1460	180	(1090)
2005-06	7100	6610	1290	5320	5940	12650	18590	32	3300	20250	1720	1530	190	(900)
2006-07	7740	7200	1380	5820	5650	14240	19890	28	3800	24050	1810	1600	210	(690)
2007-08	8440	7920	1440	6480	5420	15870	21290	25	4400	28450	1880	1660	220	(470)
2008-09	9200	8720	1520	7200	5200	17360	22560	23	5100	33550	1960	1720	240	(230)
2009-10	10000	9500	1600	7900	5000	18910	23910	21	6000	39550	2040	1780	260	+ 30

MBO (management by objectives)

MBO is a comprehensive management system based on measurable and participatively set objectives. It has been introduced in the bank at the outset of 2002-03 with a view to increasing the operational efficiency and affirming internal control of the bank which is a prerequisite for transparent operation and accountable administration. Farmers and entrepreneurs of the region are expected to have easy access to credit as a result of efficient bank management.

PARL an aiding factor to the Perspective Plan

Aiming at achievement of annual targets of disbursement and recovery of loans, deposit mobilization and profit maximization through boosting activities, RAKUB has introduced PARL (participation of all in recovery of total loans) in 2001-2002.

objectives

recovery of loans from top 20 defaulters at all levels through committees headed by high officials

implementation of the slogan "2001-2002: the year of recovery of classified loans"

implementation of the slogan "2002-2003: the year of increasing profit"

implementation of action plan for recovery of classified loan and profit maximization

implementation of action plan for quick disposal of certificate cases and money loan cases

holding monthly meetings of task-force for settlement of court cases

implementation and modification of ongoing MIRACLE

taking care of time-barred loan cases affected by law of limitation

formation of PEC (project evaluation committee) and its implementation in the field levels

organizing camps and greater camps for spot recovery of loans

introduction of mobile teams to supervise field activities

crash program for profit earning

holding grassroots level workshops with the participation of managers and field workers.

: office automation; The bank has been pursuing a five-year plan (2006-2010) of computerization through its computer department inaugurated on 8 September 2005. Training programs have been taken up for increasing computer literacy specially among junior and mid-level bank officials. The reform programs aim at raising the level of efficiency through increased use of computers.