Case Study: 2 (PPP Washing and Dyeing Plant):

PPP is a washing and dyeing plant based in Narayangonj. PPP supplies to a garment’s factory whose has an agreement with GAP and Nike. Recently the Bangladesh Government published a notification that an Effluent Treatment Plant (ETP) for such activity is compulsory. This washing and dyeing plant has an existing credit line with SME Bank Limited(SBL). SBL is a SME-focused Bank. PPP has always been a premier client of SBL. PPP is now approaching the bank for fresh loans.

Discuss and answer the following:

1.    Why should SBL finance PPP Washing and Dyeing?

2.    What are the issues SBL needs to consider in order to make sure PPP Washing and Dyeing is not going to be a defaulter?

3.    In the long run what sort of environmental and social benefits can PPP Washing and Dyeing ensure for Bangladesh?

Study Result:

Positive Findings:

1.     PPP has always been a premier client of SME Bank Limited (SBL).

2.     Previous transaction with SME Bank Limited (SBL) is good.

3.     PPP is a washing and dyeing plant.

4.     PPP is a growing concern productive washing and dyeing plant.

5.     PPP use modern technology in its washing and dyeing plant.

6.     Dyeing product is high demanded in the foreign market.

7.     PPP supplies to a garment’s factory whose has an agreement with GAP and Nike.

8.     The firm has strong management.

9.     IRR is over 20%.

Negative Findings:

1.     There is no security offered by PPP as a guarantee to the SBL.

2.     Has no Effluent Treatment Plant (ETP) for such activity is compulsory.

3.     There is no collateral security provided for the loan by PPP.

4.     PPP has an existing credit with SME Bank Limited (SBL).

Comment:

Requirement:-1

PPP is a growing up productive dyeing plant. Previous transaction with SBL is good and always been a premier client.  Its IRR is good. PPP supplies to a garment’s factory whose has an agreement with GAP and Nike. According to the banking low and practice a bank can provide loan to their trusty client with out any security in high rate of interest. Now in Bangladesh this practice started.  So if SBL provide loan to PPP without security, SBL earn a high rate of interest. Because the bank is more at risk with an unsecured loan, the interest rates tend to be higher than with a secured loan.

PPP does not pay fully its previous loan. If SBL do not provide new fresh loan the firm can not run its organizational activity. If the firm does not run its organizational activity it will be insolvent and not be able to pay previous loan. For recover previous loan SBL should rescheduled the previous loan amount and provide new fresh loan to PPP.

Unsecured advance are granted with caution and within certain limits only because in-case of defaults by the borrower bank will fall in a difficulty to recover the loan amount. For that the credit must negotiate credit amount with PPP at 50% to 60% or below on total demand of PPP’s authority to reduce the bank’s credit risk.

Requirement:-2

SME Bank Ltd. (SBL) is an SME-focused bank. From positive and negative findings and judgments SBL interested to provide loan to PPP a washing and dyeing plant. For that some issues SBL needs to consider in order to make sure Tough PPP Dyeing Plant is not going to be a defaulter. The issues are classified into two categories.

1.     Before loan disbursement.

2.     After loan disbursement.

Before the loan disbursement:

Client: PPP Washing and Dyeing Plant is a good client and has an existing credit line with SME Bank Ltd (SBL). It has always been a premier client of SBL.

Business: PPP is a  washing and dyeing plant which use cotton and color as their raw materials. The firm supplies cloths to the local market. Their product is in high demand due to the local customers. As a result there is huge possibility to earn more profit.

Product Demand:  SME Bank Ltd (SBL) need to be ensure that  PPP’s product is highly demanded to the market. Because if the product is not demanded in the market PPP will not make profit and fall in a difficulty to pay the loan’s installment.

Security: PPP Washing and Dyeing Plant offered no security as a guarantee to the SBL for their present loan. But  in their previous loan they provide necessary security which is existing now.

Act as contract: SME Bank Ltd. (SBL) knows that the PPP Washing and Dyeing Plant is capable to act as contact i.e. timely pay installment because PPP already proved them self as premier client. As a result bank can make sure in the matter of returning loan.

Previous credit: PPP Washing and Dyeing Plant has a previous credit with SME Bank Ltd (SBL). On the other hand crisis situations are passing by them. But the management body trust if they get fresh loan they overcome this crisis period. As a result they will be able to pay previous and present loan.

Effluent Treatment Plant (ETP): PPP Washing and Dyeing Plant must ensure the SBL that they will use Effluent Treatment Plant (ETP) to manage their poultry waste after getting the loan.

Management System: SME Bank Ltd (SBL) need to ensure that PPP Washing and Dyeing Plant will take necessary spate to make strong their management body.

After the loan disbursement:

a)    Follow-up:

A bank must aware about the unsecured disbursed loan because in case of default by the borrower the bank will fall in a difficulty to recover the advance. SBL’s credit officer must take necessary steps to follow up the loan from the next day of the disbursement.

b) Supervision:

There are two types of supervision. On side supervision and off side supervision. When PPP’s owner or responsible representative comes to the bank physically credit officer talk with him/her about the present condition of the plant and loan amount and encourage him/her to pay the loan timely. When plant’s owner or responsible representative does not come to the bank, credit officer remained them about the loan and time of payment by sending mail or formal letter.

b)    Monitoring:

To avoid the PPP Washing and Dyeing are as  defaulter the SBL must send a credit officer to PPP Washing and Dyeing plant who visit and monitor PPP’s activities and remained the authority about the time and amount of loan.

From this above discussion it is said that SME Bank Ltd (SBL) needs to consider the above mentioned issues to make sure PPP Washing and Dyeing Plant is not going to be a defaulter.

Requirement:-3

PPP is a washing and dyeing plant. It uses cloths and chemical color as its row materials. This mill can obtain some environmental and social benefits for Bangladesh. Discussions are given below:

Environmental benefits will be obtained by PPP Washing and Dyeing Plant:

Environment make free from pollution: Chemical is a thing which is bad for environment. It makes land infertile. PPP Washing and Dyeing plant aids to mitigate the pollution by using scrap metal as a row material.

Reduce water pollution: By using Effluent Treatment Plant (ETP) PPP Washing and Dyeing plant can manage their chemical wastes is harmful to the pure water.

Social benefits will be obtained by PPP Washing and Dyeing Plant:

Creat new job opportunity:  PPP Washing and Dyeing plant can create new job opportunity for many people.

Supply product according demand:  PPP Washing and Dyeing plant can supplies cloths to the local garment’s factory whose has an agreement with foreign buyers.

Helps bank to run its business: PPP Washing and Dyeing plant borrows money for its business from the bank. As a result it directly helps bank to run its business.

Provide quality product: PPP Washing and Dyeing plant produce quality full product. People of Bangladesh can enhance their living standard by using this quality product.

Earn foreign revenue: PPP Washing and Dyeing plant can earn foreign revenue indirectly by supplies goods to the local garment’s factory whose has an agreement with foreign buyers.

Help related business: PPP Washing and Dyeing plant helps related business to buying raw materials from them and selling product to them.

Support garment’s sector: PPP Washing and Dyeing plant can support local garment’s to supply their raw materials.

From the above discussion, it can say that PPP Washing and Dyeing plant can ensure environmental and social benefits for Bangladesh by taking such kinds of steps.

Limitations:

1.     Previous loan amount and due part of the loan have not given here.

2.     Present demand of the loan has not given.

3.     SME Bank Ltd.’s (SBL) banking credit policy has not given.

4.     Rate of interest of SME Bank Ltd. (SBL) has not given.

5.     Assuming here there is no security and collateral security offered by PPP as a guarantee to the SBL.

6.     A credit officer can only recommend for sanctioning the loan but he/she has no ability to sanction and disbursement the loan.

Case Study:-3 (Tough Re-rolling Mill)

Tough Re-rolling Mill is a  producing mill using scrap metal. Tough re-rolling mill supplies rods to the local construction industries. Their product is in high demand due to the current  boom in the construction industry.

Last week, a worker lost a leg in melted iron and the company had to pay for his treatment. As there is no electricity during the day, the workers sleep during the day and only work at night. Every month the electricity bills are increasing. Overhead costs are going up. Recently the Bangladesh Government informed the company that they will have to vacate the premises as it was built on a canal. Government now wants to re-excavate the canal.

This re-rolling mill has an existing credit line with SME Bank Ltd (SBL). SBL is an SME-focused Bank. Tough Re-rolling Mill has always been a premier client of SBL. Tough Re-rolling       Mill is now approaching the bank for fresh loans.

Discuss and answer the following:

1.    Why should SBL finance Tough Re-rolling Mill?

2.    What are the SBL needs to consider in order to make sure tough re-rolling mill is not going to be a defaulter?

3.    In the long run what sort of environmental and social benefits can Tough Re-rolling Mill ensure for Bangladesh?

Study Result:

Positive Findings:

1.     Tough Re-rolling Mill has always been a premier client of SBL.

2.     Tough Re-rolling Mill is a productive mill.

3.     A growing concern productive re-rolling mill.

4.     Tough Re-rolling Mill use modern technology in its re-rolling mill.

5.     This mill supplies rods to the local construction industries.

6.     Their product is in high demand due to the current boom in the construction industry.

7.     IRR is over 20%

Negative Findings:

1. Tough Re-rolling Mill built their re-rolling mill on a canal.
2. They have no land for built their re-rolling mill. 
3. They need fresh loans for switch their re-rolling mill in new place.
4. There is no security offered by Tough Re-rolling Mill as a guarantee to the SBL. 
5. There is no collateral security provided for the loan by Tough Re-rolling Mill.
6. Tough Re-rolling Mill has an existing credit with SME Bank Limited (SBL).
7. Management is not strong.
8.  There is no electricity during the day.
9. Workers sleep during the day and only work at night.
10.  Every month the electricity bills are increasing.
11.  Overhead cost are going up in day by day.

Comment:

Requirement:-1

Tough Re-rolling Mill is a growing up productive re-rolling mill. Previous transaction with SBL is good and always been a premier client. Their product is in high demand due to the current boom in the construction industry. Its IRR is good. This mill supplies rods to the local construction industries. According to the banking low and practice a bank can provide loan to their trusty client with out any security in high rate of interest.  Now in Bangladesh this practice started. So SBL should provide loan. If SBL provide loan to Tough Re-rolling Mill without security, SBL earn a high rate of interest. Because the bank is more at risk with an unsecured loan, the interest rates tend to be higher than with a secured loan.

Tough Re-rolling Mill does not pay fully its previous loan. If SBL do not provide new fresh loan the firm can not run its organizational activity. If the firm does not run its organizational activity it will be insolvent and not be able to pay previous loan. For recover previous loan SBL should rescheduled the previous loan amount and provide new fresh loan to Tough Re-rolling Mill.

          Unsecured advance are granted with caution and within certain limits only because in-case of default by the borrower bank will fall in a difficulty to recover the loan amount. For that the credit must negotiate credit amount with Tough Re-rolling Mill at 50% to 60% or below on total demand of Tough Re-rolling Mill’s authority to reduce the bank’s credit risk.

Requirement:-2

SME Bank Ltd. (SBL) is an SME-focused bank. From positive and negative findings and judgments SBL interested to provide loan to Tough Re-rolling Mill. For that some issues SBL needs to consider in order to make sure Tough Re-rolling Mill is not going to be a defaulter. The issues are classified into two categories.

1.     Before the loan disbursement.

2.     After the loan disbursement.

Before the loan disbursement:

Client: Tough Re-rolling Mill is a good client and has an existing credit line with SME Bank Ltd (SBL). It has always been a premier client of SBL.

Business: Re-rolling Mill is a  road producing mill which use scrap metal as a road materials. The mill supplies rods to the local construction industries. Their product is in high demand due to the current boom in the construction industry. They can also supply their additional or surplus product to the local market. As a result there is huge possibility to earn more profit.

Product Demand:  SME Bank Ltd (SBL) need to be ensure that  Re-rolling Mill’s product is highly demanded to the market. Because if the product is not demanded in the market Re-rolling Mill will not make profit and fall in a difficulty to pay the loan’s installment.

Security: Re-rolling Mill offered no security as a guarantee to the SBL for their present loan. But  in their previous loan they provide necessary security which is existing now.

 Effluent Treatment Plant (ETP): Re-rolling Mill must ensure the SBL that they will use Effluent Treatment Plant (ETP) to manage their poultry waste after getting the loan.

Management System: SME Bank Ltd. (SBL)  need to ensure that Re-rolling Mill will take necessary stapes to make strong their management body.

Act as contract: SME Bank Ltd. (SBL) knows that the mill is capable to act as contact i.e. timely pay installment because Re-rolling Mill already proved them self as premier client. As a result bank can make sure in the matter of returning loan.

Responsibility: Re-rolling Mill is responsible to the worker. Last week, a worker lost a leg in melted iron and the company had to pay for his treatment. That’s a good sign of responsibility. From that it is understood the mail will be responsible enough to return the loan.

Previous credit: Re-rolling Mill has a previous credit with SME Bank Ltd (SBL). On the other hand crisis situations are passing by them. But the management body trust if they get fresh loan they overcome this crisis period. As a result they will be able to pay previous and present loan.

After the loan disbursement:

a)    Follow-up:

A bank must aware about the unsecured disbursed loan because in case of default by the borrower the bank will fall in a difficulty to recover the advance. SBL’s credit officer must take necessary steps to follow up the loan from the next day of the disbursement.

b)    Supervision:

There are two types of supervision. On side supervision and off side supervision. When Tough Re-rolling Mill’s owner or responsible representative comes to the bank physically credit officer talk with him/her about the present condition of the mill and loan amount and encourage him/her to pay the loan timely. When Mill’s owner or responsible representative does not come to the bank, credit officer remained them about the loan and time of payment sending mail or formal letter.

c)     Monitoring:

To avoid the Tough Re-rolling Mill are as  defaulter the SBL must send a credit officer to Tough Re-rolling Mill who visit and monitor Mill’s activities and remained the authority about the time and amount of loan.

From this above discussion it is said that SME Bank Ltd (SBL) needs to consider the above mentioned issues to make sure Tough Re-rolling Mill is not going to be a defaulter.

Requirement:-3

Tough Re-rolling Mill is a rod processing mill. It use scrap metal as its row materials. This mill can obtain some environmental and social benefits for Bangladesh. Discussions are given below:

Environmental benefits will be obtained by Tough Re-rolling Mill:

Environment make free from pollution: Scrap metal is a thing which is bad for environment. It makes land infertile. Tough Re-rolling Mill aids to mitigate the pollution by using scrap metal as a row material.

Reduce air pollution: Tough Re-rolling Mill use modern technology which creates a little smoke. Other organization can encourage by it’s and can use modern technology.

Reduce water pollution: By using Effluent Treatment Plant (ETP) Tough Re-rolling Mill can manage its waste which can reduce water pollution.

            Social benefits will be obtained by Tough Re-rolling Mill:

New job opportunity:  Tough Re-rolling Mill can create new job opportunity for many people.

Supply product according demand:  Tough Re-rolling Mill supplies rods to the local construction industries.

Helps bank to run its business: Tough Re-rolling Mill borrows money for its business from the bank. As a result it directly helps bank to run its business.

Provide quality product: Tough Re-rolling Mill produce quality full product. People of Bangladesh can enhance their living standard by using this quality product.

From the above discussion, it can say that Tough Re-rolling Mill can ensure environmental and social benefits for Bangladesh by taking such kinds of steps.

Limitations:

1.     Previous loan amount and due part of the loan have not given.

2.     Present demand of the loan has not given.

3.     SME Bank Ltd. (SBL) banking credit policy has not given.

4.     Rate of interest of SME Bank Ltd. (SBL) has not given.

5.     Assuming here there is no security and collateral security offered by Tough Re-rolling Mill as a guarantee to the SBL.

6.     A credit officer can only recommend for sanctioning the loan but he/she has no ability to sanction and disbursement the loan.

What is the purpose of science?

Perhaps the most general description is that the purpose of science is to produce useful models of reality.

Most scientific investigations use some form of the scientific method. You can find out more about the scientific method here.

Science as defined above is sometimes called pure science to differentiate it from applied science, which is the application of research to human needs. Fields of science are commonly classified along two major lines:
   - Natural sciences, the study of the natural world, and
   - Social sciences, the systematic study of human behavior and society. 

www.sciencemadesimple.com

Definition of Capital

Capital will be categorized into two tiers: Tier 1 i.e., Core Capital comprises the highest quality
capital elements and Tier 2 i.e., Supplementary Capital represents other elements which fall short
of some of the characteristics of the core capital but contribute to the overall strength of a bank1.
The constituents of core capital and supplementary capital are enclosed at Annexure - I.
Revaluation reserves against held to maturity (HTM) securities (up to 50% of the revaluation
reserves) has been added to the components of supplementary capital. Besides, 'Hedging the price
risk of commodity transactions' has been included in Short-term self liquidating trade related
contingencies.

By: Bangladesh Bank

Science and Knowledge

So what does all this mean? It means that science does not presently, and probably never can, give statements of absolute eternal truth - it only provides theories. We know that those theories will probably be refined in the future, and some of them may even be discarded in favor of theories that make more sense in light of data generated by future scientists. However, our present theories are our best available explanations of the world. They explain, and have been tested against, a vast amount of information.

Consider some of the information against which we've tested our theories:

·  We've examined the DNA, cells, tissues, organs, and bodies of thousands if not millions of species of organisms, from bacteria to cacti to great blue whales, at scales from electron microscopy to global ecology.

·  We've examined the physical behaviour of particles ranging in size from quarks to stars and at times scales from femtoseconds to millions of years.

·  We've characterized the 90 or so chemical elements that occur naturally on earth and several more that we've synthesized.

·  We've poked at nearly every rock on the earth's surface and drilled as much as six miles into the earth to recover and examine more.

·  We've used seismology to study the earth's internal structure, both detecting shallow faults and examining the behavior of the planet's core.

·  We've studied the earth's oceans with dredges, bottles, buoys, boats, drillships, submersibles, and satellites.

·  We've monitored and sampled Earth's atmosphere at a global scale on a minute-by-minute basis.

·  We've scanned outer space with telescopes employing radiation ranging in wavelength from infrared to X-rays, and we've sent probes to examine both our sun and the distant planets of our solar system.

·  We've personally explored the surface of our moon and brought back rocks from there, and we've sampled a huge number of meteorites to learn more about matter from beyond our planet.
     We will do more in the centuries to come, but we've already assembled a vast array of information on which to build the theories that are our present scientific understanding of the universe.

     This leaves people with a choice today. One option is to accept, perhaps with some skepticism, the scientific (and only theoretical) understanding of the natural world, which is derived from all the observations and measurements described above. The other option, or perhaps an other option, is to accept traditional understandings³ of the natural world developed centuries or even millenia ago by people who, regardless how wise or well-meaning, had only sharp eyes and fertile imaginations as their best tools.

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