22 095 mkh

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University of Dhaka
Faculty of Business of Studies
Department of Finance
Internship Report
Liquidity Management of Janata Bank Ltd.
Prepared for:
Muhammad Kamrul Hasan
Assistant Professor
Faculty of Business Studies
University of Dhaka
Prepared by:
Md. Abdur Rashid
ID: 22-095
BBA 22nd
Batch
University of Dhaka
Date of Submission:19th August, 2020

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Supervisor’s Certificate
This is to certify that, Md. Abdur Rashid, ID: 22-095 is regular student of BBA 22nd
Batch,
Department of Finance, Faculty of Business Studies; University of Dhaka has effectively
completed the assigned “Internship Program” on the topic of “Liquidity Management of Janata
Bank Ltd. under my guidelines as integral requirement of BBA (Bachelor of Business
Administration) degree.
He has completed his job properly according to my special guidelines. He has tried his best to
complete the requirements of the internship program. I hope the experiences of the internship will
help him in practical life.
He is allowed to submit the internship report. I wish his bright future.
…………………………...
Muammad Kamrul Hasan
Assistant Professor
University of Dhaka

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Letter of Transmittal
19th
Agust,2020
Muammad Kamrul Hasan
Assistant Professor
University of Dhaka
Subject: Submission of internship report on “Liquidity Management of Janata Bank Ltd”
Dear Sir,
This is pleasure for me to submit the report on “Liquidity Management of Janata Bank Ltd”
which is completed following the guidelines of the honorable supervisor. It is integral requirement
of the BBA (Bachelor of Business Administration) program under the Department of Finance,
Faculty of Business Studies, University of Dhaka.
I think that it would help me to develop the reporting skills in financial dimension. Besides, the
experiences which I have gathered from internship program would help me in future practical life.
I have tried my best to make the report worthy. Please consider the unintentional faults and
limitations in the report due the human constraints.
I am grateful to you for guidelines to prepare the report properly. I always ready to you for any
kind of questions regarding the report.
Sincerely yours
……………………
Md. Abdur Rashid
ID No: 22-095
University of Dhaka

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Acknowledgement
At first, I would like to be grateful to Allah for giving me the chances and capability to complete
my internship report within the planned time.
In every stages of work of preparing report and conducing study, I got assistance from numerous
people and scholastic honorable teachers. I’m exceptionally thankful to them and would like to
recognize them with my appreciation.
I would like to express my earnest appreciation to my internship supervisor Muammad Kamrul
Hasan for his persistent direction and supervision to prepare this report. His earnest direction,
untiring co-operation and unending motivation helped me to overcome all the constraints that I
confronted to conducting study and prepare the report.
In the times of internship, I’m exceptionally much satisfied and favored to have a few neighborly
coworkers at Dhakeswari Branch, Janata Bank Ltd. They attempted their best to supply all the
valuable information that I got to complete my report effectively. It is truly delight for me to be
obliged to all of them for their agreeable support.

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Executive Summary
The principal function of each and every bank is to acquire deposits and provide loan. Every people
have faith on the bank and save their money for securities and getting some interest. Bank performs
truthful position to maintain its functions properly. They collect cash from them as credit score
and provide loan to the needy people in exchange of some interest. The profitability of bank in the
mainly rely on well management of the bank. For ensuring its suitable functions, banks need to
maintain its liquid assets and liabilities.
Throughout this internship report I’m going to speaking about the liquidity management of Janata
Bank Ltd. and its corresponding aspect. My internship report has been divided in some chapter on
the basis of understanding the study. Additionally, I’ve discussed the management method of
Janata Bank Ltd. and structure of the bank that will help to get primary notion about the Janata
Bank Ltd and scope and limitations that I confronted in times of getting ready this report. I tried
my best to encompass some introductory contents about the report I have selected. I firmly think
that this will assist to get a clear view about the exclusive functions of Janata Bank Ltd.
As my topic is about liquidity management of Janata Bank Ltd. so it’s required to give view about
the core issue of the liquidity management of the Janata Bank Ltd. Additionally, I’ve brought the
liquidity management guideline of Bangladesh Bank and tried my best to collect facts about the
liquidity management of Janata Bank Ltd. that the bank has conducted. All these records about the
SLR and CRR condition of Janata Bank Ltd have considered in preparing the report. Liquidity
management refers the management of the liquid assets and maintains reserves to attain goals
following the rules and regulations of the Bangladesh Bank. Loan and advances management of a
bank has significant effect on the liquidity risk of the bank. So Janata Bank Ltd. evaluates the
applicant for a loan carefully to provide loan a right person. In every stages of works of Janata
Bank Ltd. have to follow the guidelines and regulations of central bank of Bangladesh. The
internship program helps me to know the management process of the Janata Bank Ltd.
Finally, I would like say that, Liquidity management is core issue of bank financial management,
so every bank should keep careful attention on the liquidity management of the bank.

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Table of Content
Chapter No. Chapter Name Page No.
Part-A Internship at JBL 1
Part-B About the report 4
1 Introduction 5
1.1 Scope and objectives 5
1.2 Methodology 5
1.3 Limitations of the report 6
2 Theoretical background 7
2.1 Liquidity 8
2.2 Liquidity management 8
2.3 Significance of liquidity management 8
2.4 Liquidity management in bank 9
2.5 Liquidity management process 9
2.6 Bank liquidity 9
2.7 Previous study on liquidity management of bank 10
3 Financial market in Bangladesh 12
3.1 Money market 13
3.2 Capital market 14
3.3 Foreign exchange (FE) market 15
3.4 Bangladesh Bank regulation in liquidity management 15
4 Research method 16
4.1 Current assets (CA) of JBL 17
4.2 Current liabilities (CL) of JBL 17
4.3 Liquidity needs estimation of JBL 22
4.4 Meeting liquidity needs of JBL 24
4.5 Liquidity ratios of JBL 25
4.6 Regression analysis 26
5 Conclusion 29

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Part-A:
Internship at Janata Bank Ltd.(JBL)

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The Role the Internship
I have worked at Dhakeswari Branch, Janata Bank Ltd. for 3 months from 5th
Januarary, 2020 to
5th
April, 2020. The work environment of at Dhakeswari Branch of JBL is very well, so I have
enjoyed my works in internship period. All the staffs and officers of the bank are well mannered
with me, so I blessed on them. I noticed in Dhakeswari branch that they conducted their works by
individually or group wise. I learnt many new things by working via 360 rotation process at
Dhakeswari Branch, JBL. The following are the quick elaboration of job responsibility in
internship period.
Opening a New Account
❖ Firstly, I would like to say that interns are not permitted to open a new account due to the
regulation of the bank. But I assisted many people to fill up the account creation form.
Then I submitted the account creation form to the certain bank officers. Since the complete
account creation process is not permitted to me, I noticed the followings in the new account
creation process.
▪ Firstly, a individual has got to apply through the endorsed form where the following
information are included like name of the branch, type of the account, present and
permanent address of the applicant, date of birth, nationality, passport number, occupation
of the applicant, nominee, special advice, initial deposit, specimen signature of the
applicant and introducer’s information, if he wanted a new account in the bank.
❖ The clients are obligated to bring following essentials to open a new account-
▪ An existing client of the bank
▪ A nominee
▪ Passport size photo (2 copies) verified by the introducer and national ID card (Nominee’s
card isn't required).
▪ Specimen signature of the applicant in account creation form should be verified by the
introducer.
▪ Then the concerned specialist will distribute a number for the new account. The client
needs to store the “initial deposit” by filling up a depositing slip. The amount of the initial
deposit is varying from account to account like current account taka 10000 and saving
account taka1000.
After fulfillment the stated requirements, the certain bank officer upload the data as input and
give a customer unique new account number. Then, the new account holder is provided a
cheque book for withdrawing money from the account. The cheque book can be hold different
number of pages like 10/20/50/100 pages depending on the category of the account.

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Daily Transaction File Organization
▪ To conduct the banking function smoothly the bank should keep different types of
documents like ledger, opening and closing entry and daily book etc.
▪ The certain officer of the bank is obligated to preserve documents on current basis.
▪ These documents are absolutely needed in one time within the month when branch audit
held. The performance of bank officers is evaluated every month based on these preserved
documents at end of the month.
Recording Different Types of Utility Bills
▪ Utility bill collection division is one of the busy division of the Dhakeswari Branch of
JBL.I have got the opportunity to work in this division and get the experiences of the work
of recording bills.
▪ Utility department mainly worked to collect the tuition fees, electricity bills and different
types of government utility bills etc.
Loan Disbursement Function
The main function of the bank is disbursing loans to the applicant based on the result the financial
and moral feasibility test. Dhakeswari Branch, JBL provides mainly two types of loan viz. personal
loan and corporate loan. Loan disbursement process of the bank is very critical. Since I worked as
intern, I have not permitted to the loan disbursement process. But the branch manager of the
Dhakeswari Branch, JBL has given the clear idea about the loan disbursement process. The loan
disbursement process can be following way:
(1). Receiving application: In this first stage, the bank collects the loan application forms the
applicants.
(2). Evaluation of loan applicant: In this stage the team of the bank officers evaluates the loan
application. At this step they try to judge the financial and moral feasibility of the applicant.
(3). Loan disbursement: If the result of the evaluation of the applicant is positive, then the bank
sanctioned loan to the applicant.

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Part-B: About the Report

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1.0. Introduction
Bank is a financial institution that plays critical roles in the development of the economy. The
banks are engaged in providing different types of financial services to the client and earn profit
from the charging fees for providing financial services. Loan disbursement and recovery is one of
the important functions of the bank. It collects deposits from the surplus unit and provide loan to
the deficit unit of the economy. From granting loan, the bank charges higher interest than the
interest on the deposit to generate profit for the bank.
The economy of the one country cannot run smoothly without the sophisticated banking system.
The other financial institutions like insurance company, nonbank financial institution and co-
operative play important roles to run the economy.
Liquidity management is an important function of the bank. The bank has to maintain a sound
liquidity position to promote the financial condition of the bank. In recent times, the phenomena
of cash crisis of the bank have emphasized on the liquidity management of the bank.
1.1. Scope and Objectives
Banking industry is one of the large industries in the economy of Bangladesh. As the Janata Bank
Ltd is govt. owned commercial bank, the scope of study on it is very critical. Liquidity
management of the bank covers the areas of cash collection, loan disbursement and payables to
central bank and others bank too. The objectives of the report are given below:
▪ To get idea about the liquidity management of the Janata Bank Ltd.
▪ To develop the liquidity management skills of banks.
▪ To determine the liquidity needs of the Janata Bank Ltd.
▪ To evaluate the liquidity statement of the Janata Bank Ltd. using different statistical
software.
▪ To compare the theoretical practice and real-life application of liquidity management of
bank.
1.2. Methodology
I have collected data from different sources for preparing the report. The data sources (secondary)
are articulated below:
▪ Janata Bank Ltd. (JBL) websites
▪ Annual report of the JBL of the years of 2014, 2015, 2016, 2017 and 2018.
▪ Bank Record proving from the bank.
▪ Different article on liquidity management from online.

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1.3. Limitations of the Report
There are few limitations in preparing this report as I am a fresh in the study in liquidity
management of the Janata Bank Ltd. The limitations of the report are articulated below:
▪ Janata Bank Ltd. is not following specific liquidity management practice.
▪ For confidentiality of the bank account, the Janata Bank Ltd. is not providing precise
information about the liability management of the JBL.
▪ I have proper knowledge constraint because I am student and have not proper idea about
the banking industry practices.
▪ The bank officers are not co-operative to all necessary information.

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Chapter-2: Theoretical Background

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2.1. Liquidity
Liquidity means the degree of the convertibility to cash of any assets without any significant loss
arising from the market. Short term security is a major portion of the liquid asset. To run the day
to day activities, the firm need optimum amount of liquid asset to pay the current obligations.
2.2. Liquidity Management
Liquidity management is process by which the firm maintain optimum liquid asset by managing
cash, cash from different sources and short-term obligation. Now the company use many
sophisticated software to determine the optimum amount of liquidity needs. Ratio analysis is one
of the tools which can easily express the liquidity condition of the firm.
2.2.1. Liquidity Ratio:
Liquidity ratio measures the liquidity condition of the firm. If the liquidity ratio is high, then the
bank or firm is in safe zone to cover its short-term obligations. The two major types of liquidity
ratio are discussed below:
Current Ratio: Current ratio measure the ability of the firm to pay the short-term obligations
using the short-term asset. The formula for calculating the current ratio is given below.
Current Ratio= Current Asset/Current Liabilities
Debt to Asset Ratio: This ratio indicates the amount of debt relative to asset of the firm. It
basically measures the financial risk of the firm.
Debt to Asset Ratio= Total Debt/Total Asset
2.3. Significance of Liquidity Management
Liquidity management is a very essential tool for ensuring liquidity position of the firm. Sound
liquidity position is a prerequisite for generating optimum profit for the firm. If the firm is fail to
maintain the optimum liquidity, then the firm is not able to run smoothly. Liquidity needs
forecasting is necessary to determine liquidity needs in future which help the firm to overcome the
unpredictable liquidity needs. The major objectives of the liquidity management are discussed
below,
▪ Meeting the short-term obligations properly.
▪ Ensuring the optimum liquidity needs of the firm.
▪ Decreasing unnecessary liquidity assets of the firms.
▪ Meeting the statutory reserve requirement.
▪ Increasing the confidence of the stake holder.

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2.4. Liquidity Management in Bank
Liquidity management helps the bank to meet the different types of obligation arising from the
market. Liquidity management is very essential activity of the bank because it helps the firm to
increase financial feasibility. Modern technology helps the firm to manage liquidity efficiently.
But, globalization made the liquidity management very complex. There are few prominent
procedures in liquidity management in banking industry of Bangladesh. These are
▪ Determination of liquidity structure of the bank.
▪ Determination of liquidity needs of the bank and find the sources to fund of the liquidity
needs.
▪ Considering foreign currency transaction when determine the liquidity needs of the firm.
▪ Appropriate plan for the liquidity management of the bank.
▪ Constant monitoring of the financial market to adjust to liquidity management.
▪ Internal controls should be strong to manage the liquidity risk.
▪ Constant initiatives to improve the liquidity condition of the bank.
2.5. Liquidity Management Process
The liquidity management process consists of 3 steps, viz identification of liquidity, management
of liquidity and optimization of liquidity. Each of the steps is independent and interdependent to
succeed the liquidity management process. These steps are discussed below,
(1). Identification of liquidity: In this stage, the firm works to determine the liquidity position of
the firm. So, it needs to collect information about its own firm, other firms in same or different
industry, financial market, and foreign exchange market etc. Liquidity position forecasting is
crucial task at this stage.
(2). Management of liquidity: Management of liquidity requires managing liquidity related
transaction to optimize the profitability of the firm. Firm should pay the short term obligation in
late and receive the cash from short term receivable s early as possible. The always try to collect
fund from the lowest cost sources to meet the liquidity need. If the firm strategically maintains the
sound liquidity position of the firm, it would be able to add value to the firm.
(3). Optimization of liquidity: Optimization of liquidity means the initiatives of the firm to meet
the liquidity related challenges of the firm arising from the market. The firm always tries to
optimize its liquidity position to optimize the profitability of the firm. Liquidity optimization
decreases the financial risk of the firm.
2.6. Bank Liquidity
Liquidity means the degree of the convertibility of the assets or security to cash without having
any significant loss arising from the market. Cash on hand is a most liquid asset. It is always ready

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to pay all types of obligations. The asset that needs significant effort to sell the asset in the market
is illiquid asset. In this case there is possibility of loss arising from the market. The bank should
invest in the liquid assets rather than illiquid assets. Because, it can sell the liquid asset in market
to meet the liquidity needs that can arise from the unpredictable withdrawal of the fund. Besides,
the bank borrows from the interbank market on the contrary of liquid asset that can be used as
collateral.
If the bank high amount liquid asset, it indicates that it has huge amount of cash in hand and interest
rate is low. At this situation the bank should invest the fund in different business at optimum
interest.
Bank liquid Asset: Liquid assets are easily converted to the cash without any significant loss. For
easiness for convertibility the liquid asset has two important characteristics viz marketability and
transferability. The major types of the liquid assets are stock, bond, money market instrument etc.
The bank should forecast the liquidity needs to runs smoothly in the market. The major types of
liquid assets of the bank are given below,
▪ Cash reserve: The bank should reserve adequate amount of cash to meet the clients’
immediate withdrawal orders. If the bank cannot meet the client withdrawal orders, it has
a possibility of forcing to bankrupt.
▪ Accounts receivables: Account receivables are amount money that the bank has right to
collect from obligators. It generates from the unpaid servicing charges, interest income and
loan to another bank etc.
▪ Reserve in central bank (BB): According banking regulation of Bangladesh, every bank
has obligation to keep reserve 5.5% of the total capital to run the banking business in
Bangladesh. In this case, the reserve can withdraw from the Bangladesh Bank to its
liquidity needs.
▪ Reserve with the other bank: In case of liquidity needs, the bank can loan money from
other bank in which the bank hold account. It can improve the financial position of the
firm.
All the liquid assets have few prominent characteristics. These characteristics are discussed
below,
▪ Marketability: The liquid assets have marketability to sale the assets in market easily
without any significant loss.
▪ Market price stability: The liquid assets should have stable market price that means
the price of the asset fluctuate rigidly.
▪ Reinvestment: The liquid assets can be sold in the market easily with any significant
loss arising from market price. If the investors sale the assets, after then they can take
reposition on the same type of liquid assets easily.
2.7. Previous Study on the Liquidity Management of Bank
There are many scholars who can express their views about the liquidity management of the bank.
Among them the prominent views of the famous scholars are discussed below,

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Eljelly says that, liquid assets of the bank are the deposited money of the bank that can be used to
meet the short-term obligation of the bank. He also emphasis that, working capital management of
the bank is also crucial to maintain the sound liquidity position of the bank.
Anurag and Priyanka say that, commercial bank move deposits from the surplus sources to the
deficit sources. It has an important role in smoothing the economy.
Francis said that, liquidity management is very important for the welfare of the economy. One
economy cannot grow without efficient liquidity management of the bank. If the bank ensures the
excellent liquidity management, then the bank would be able to cover any losses from the bad debt
and run smoothly in depressed economy.
Reheman (2007) stated that loopholes in liquidity management of the bank can grab the growth
and profitability of the bank. So, the bank should pay special look on the liquidity management of
the firm.
Bhunia (2010) also highlighted that liquidity management of bank is investment of the excess
liquidity and funding of the deficit liquidity. Efficient liquidity management can depress financial
risk of the bank.
Zein Lin (2012) said that liquidity management covers the special function bank like collection of
deposits, generates income from investment and paying short term obligations. Sound financial
position of the bank largely depends on the excellent liquidity management of the firm.

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Chapter-3: Financial Markets in Bangladesh

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3.1. Money Market
There are two types financial market in Bangladesh, viz money market capital market. Money
market is a market in where short-term securities are traded. In money market, the participants are
raising or investing money for the one year or less than one year. The major types of money market
securities are elaborated below,
3.1.1. Treasury bill: Treasury bill is a one kind of security which is sold by treasury of Bangladesh
for rising fund for the one year or less than one year. It is marketed in discounted prices and
redeemed at the maturities period at face value of the bill.
Table 1: Treasury bill yield in Bangladesh.
Maturity of the treasury bill Yield%
7 days Bid is not accepted in this year
14 days Bid is not accepted in this year
30 days 2.96
91 days 6.74-7.14
182 days 6.93-7.50
364 days 7.25-7.49
Data source: Bangladesh Bank website.
3.1.2. Commercial paper: Commercial paper is a one type of security which is issued by the non-
govt. firm to raise cash from the market. In Bangladesh, all the commercial papers are interest
bearing to generate revenues for the investor. Only financially solvent reputed firm can issues
commercial paper to raise fund to meet their immediate demand of fund. The listed bank of the
Bangladesh can be worked as agent to market the commercial paper.
Table 2: Commercial paper in Bangladesh.
Issuer Lead manager Amount (TK,
Million)
ACI (October, 2013) Eastern Bank Ltd 5
ACI (June, 2013) Eastern Bank Ltd 5
Shanta Properties Ltd (August 2014) City Bank Ltd 5
Pran Agro Ltd (December 2014) Eastern Bank Ltd 4.5
Bengal Plastics Ltd (February, 2015) Mutual Trust Bank Ltd 5
ACI Ltd (March 2015) IDLC Finance Ltd 7.5
Data source: Websites of the stated firms.
3.1.3. Repurchase agreement: Repurchase agreement is one type of security in which the seller
sale the certain amount of securities on the agreement that the seller repurchase the securities after
certain period at the premium price. In repo the premium price less the original price determine
the income for the buyer of the repo and interest expenses for the seller.

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Table 3: Repo auction in 2018
Total
number of
auction
held during
the year
Tenor
Bids received Bids accepted Interest
rate on
accepted
bids
No. of
bids
FV (TK
Billion)
No. of
bids
FV (TK
Billion)
4
1day/2 day 2 3.4 2 3.04 6.75
3day/7 day 3 2.79 3 2.69 6.75
Total 5 5.83 5 5.73 6.75
Data source: Annual report of Bangladesh Bank of 2017-18.
3.1.4. Reverse repo: Reverse repo works in an opposite system of the repo. In case of reverse
repo, the buy the securities on the agreement he will sell the securities after certain period to
original seller. Bangladesh Bank can use reverse repo to supply money in financial market of
Bangladesh and ensure the stability of the financial market of Bangladesh.
Table 4: Reverse repo auction in 2015
Auction date
Bids received Bids accepted
Tenor Total bids Amount
(TK)
Total bids Amount
(TK)
16th
Nov. 2015 1 day 15 7058 15 2046.6
Total 15 7058 15 2046.6
12th
Nov. 2015 1day 12 6474 15 2105
Total 12 6474 15 2105
11 Nov. 2015 1day 15 7627 15 2136
Total 15 7627 15 2136
Data source: Annual report of Bangladesh Bank 2017-2018.
3.2. Capital Market
3.2.1. Stock Market
The financial market in which the long-term securities are traded is called capital market.
Bangladesh has two capital market viz. Dhaka Stock Exchange and Chittagong Stock Exchange.
These exchanges provide the opportunity of primary market and secondary market to the
stakeholders. Bangladesh Security and Exchanges Commission regulate the DSE and CSE capital
market of Bangladesh.
3.2.2. Bond Market
There is bond market in Bangladesh, but it does not work vigorously. Now a day Bangladeshi
companies have no any outstanding bond in the market. The treasury of the govt. of Bangladesh
issued different types of bonds in 2018 viz. Treasury bond and Islamic investment treasury bond.
Primary dealer acts as lead manager to make the treasury bond market.

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Table 5: Govt. treasury bond auction in 2018
Tenor
(Year)
Bids offered Bids accepted Bonds in
2018 (TK
in billions)
Range of
yield (%)
No. FV (TK in
billions)
No. FV (TK in
billions)
2 429 202.46 143 58.14 100.50 3.41-5.32
5 404 121.73 221 53.58 287.70 5.63-5.98
10 499 149.86 249 63.87 518.49 6.71-7.41
15 258 70.16 85 27.22 238.66 7.24-8.2
20 274 70.47 133 25.21 208.87 7.87-8.82
Total 1864 614.68 831 251 1354.22 3.42-8.82
Data source: Annual report of the Bangladesh Bank of 2017-18.
Table 6: Islamic investment bond.
Particulars 2016 (TK in Billions) 2017 (TK in billions) 2018 (TK in billions)
Sale 122.94 84.01 92.95
Financing 37.80 54.70 81.20
Net balance 85.14 29.31 11.75
Data source: Annual report of Bangladesh Bank of 2017-18.
3.4. Foreign Exchange Market
Foreign exchange market is market, in which there is opportunity to exchange home currency to
foreign currency and vice versa. In 1994, IMF declared that Bangladeshi taka is convertible to any
currency. The investors who have foreign investment, he is subject to foreign exchange risk due
to convertibility of profit and investment from foreign currency to home currency. From 2003, the
exchange market of Bangladesh exposes to floating exchange rate.
3.5. Bangladesh Bank Regulation in Liquidity Management
Bangladesh Bank regulates the banking industry of Bangladesh to maintain the stability of the
economy of the Bangladesh. By setting CRR and SLR, BB can affect the liquidity position of the
bank. Every bank should maintain minimum liquidity balance with the Bangladesh Bank as CRR
and SLR and some balance to meet the demand of the depositor. There is slight difference about
the SLR and CRR regulation for the conventional commercial bank and Islamic bank. The
guideline for the SLR and CRR is given below,
Table 7: SLR and CRR in Bangladesh.
Types of Bank SLR (%) CRR (%)
Commercial bank 10.5 5.5
Islamic bank 18.5 5.5
Data source: Monetary policy statement of 2019-20.

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Chapter-4: Research Method

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4.1. Current Assets (CA) of JBL
Current asset is a one type of asset that can be easily converted to cash to pay the any kind of
obligations of the bank. Current asset also can be used to pay the day to day expenses of the bank
Janata Bank Ltd. has a various kind of liquid assets. Those are given below,
▪ Cash in hand
▪ Loan and advances
▪ Investment
▪ Call money loan to other bank
▪ Account balance with the other bank.
4.2. Current Liabilities (CL) of JBL
Current liabilities of the bank are the short term liabilities that can be forced the bank to pay within
1 one year or less than 1 year. If the bank want to pay the current liabilities smoothly, the bank
should keeps the adequate amount of current assets to pay the current obligation. The balance sheet
of the Janata Bank Ltd. shows the following current liabilities,
▪ Deposits from the client
▪ Provision and others liabilities
▪ Borrowing
▪ Accounts in others bank.
The graph-1 of the cash in hand of the Janata Bank Ltd. is given below,
Graph-1: Cash in hand of JBL
Data source: Annual report of JBL from 2014 to 2018.
3800
4000
4200
4400
4600
4800
5000
5200
2018 2017 2016 2015 2014
Cash in hand ( Millions)
Cash in hand ( Millions)

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The cash in hand of the Janata Bank Ltd. is increasing from year to year except 2017. In 2017, the
JBL invested huge amount of money, so the cash in hand decreased in 2017. The challenge for the
JBL in the increasing trend cash in hand is to utilize the fund to generate maximum return.
The Graph-2 shows the deposits from the 2014to 2018.
Graph-2: Deposits of JBL
From the above graph we can see that deposit of the JBL is decreasing from year to year due
unsatisfactory service quality and low interest rate on the deposits account. So, JBL should take
attractive investment to increase interest rate on the deposits for attracting deposits from the
customers.
Sometimes Janata Bank Ltd. needs borrowing to meet the liquidity and investment needs. The
profitability of the JBL may depend on the borrowing from the cheap sources. The graph-3 shows
the borrowing of the JBL from different banks and financial institutions.
0
100000
200000
300000
400000
500000
600000
700000
800000
2018 2017 2016 2015 2014
Deposits (Millions)
Deposits
(Millions)

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Graph-3: Borrowing of JBL.
In the above graph, we can see the borrowing of the JBL is increasing from 2014 to 2018 to meet
the investment and liquidity needs. So, they should invest in profitable project to covers the interest
expenses of borrowing.
Balance with the other banks and financial institutions are one of the determinants of the liquidity
position of the bank. The graph-4 of the balance with other banks and financial institutions is given
below,
Graph-4: Balance with other bank and financial institution.
In the above graph, we can see that balance with other banks and financial is increasing from 2014
to 2017 except 2018. It indicates that, the financial condition of the JBL has improved. On the
0
5000
10000
15000
20000
2018 2017 2016 2015 2014
Borrowing (Millions)
Borrowing (Millions)
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
2018 2017 2016 2015 2014
Balance with Other Bank and FI (Millions)
Balance with
Other Bank and FI
(Millions)

20 | P a g e
hand, the bank should invest the bank balance in a profitable project to increase the profitability
of the bank.
Liquidity gap is one of the key determinants to determine the financial condition of the bank.
Liquidity gap is the difference between the assets and liabilities of the banks. The graph-5 of
liquidity gap of JBL from 2014-2018 is given below,
Graph-5: Liquidity gap of JBL.
From the above graph, we can see the positive liquidity gap is creasing from 2014 to 2018. It
indicates that, the sound liquidity position of the JBL. But the JBL should be cautious to utilize
the asset of the JBL due to add additional value to the firm.
CRR is one of the key determinants of the liquidity position of the JBL. CRR is percentage of
average of demand and time deposit.
The graph-6 presents the CRR position of the JBL relative to the CRR requirement.
Table-8: Required CRR and JBL CRR
Year Required CRR (%) JBL CRR (%)
2018 5.5 5.92
2017 5.5 6.67
2016 5.5 6.74
2015 5.5 6.49
2014 5.5 6.83
Data source: Annual report of JBL and MPS from 2014 to 2018.
0
100000
200000
300000
400000
500000
600000
700000
800000
2018 2017 2016 2015 2014
Liquidity gap (Millions)
Liquidity gap
(Millions)

21 | P a g e
Graph-6: Required CRR and JBL CRR
From the above graph, we can see that the JBL CRR was always above the required CRR of 5.5%
and it was also in increasing trend from 2014 to 2018. So, we can say that, the liquidity position
of the JBL is very sound than the other bank. So, it is possible for JBL to pay the obligations in a
bad economic condition.
SLR situation of the JBL also determine the soundness of the liquidity condition of the JBL. SLR
is a percentage of the average demand and time deposits. The graph-7 shows the SLR condition of
the JBL from 2014 to 2018.
Table-9: Required SLR and JBL SLR
Year Required SLR (%) JBL SLR (%)
2018 18.5 19.93
2017 18.5 23.79
2016 18.5 35.95
2015 18.5 39.38
2014 18.5 37.98
5.4
5.6
5.8
6
6.2
6.4
6.6
6.8
7
2018 2017 2016 2015 2014
JBL CRR (%)
JBL CRR (%)

22 | P a g e
Graph-7: Required SLR and JBL SLR.
From the above graph, we can see that JBL maintained it SLR above the required SLR from 2014
to 2018. It also indicates that, the JBL maintained SLR decreased from year to year from 2014 to
2018 due to investment in the profitable project.
4.3. Liquidity Needs Estimation of JBL
Every bank needs to estimate the liquidity need of future, so that it can overcome any uncongenial
circumstances arising from the market. Liquidity needs estimation needs different types of data
like deposit from the customers, loan and advances, interest rate and different types of expenses
etc. There are two ways of estimating the liquidity needs of JBL viz. structure of the deposit
method and sources and usage of fund method.
4.3.1. Structure of Deposit Method
In structure of deposit method of estimation of liquidity need, we need different types of deposit
information of JBL. Besides, we also need the probability of the withdrawals of each type of
deposit. In this case, we assign probability based on the previous experience of withdrawal. The
long-term deposit has a low risk due to the low probability of withdrawal, midterm deposit has a
moderate risk due to the moderate probability of withdrawal and short-term deposit has a high risk
due to high probability of withdrawal.
We assume that, the long-term deposit has probability of withdrawal of 40%, the medium-term
deposit has probability of withdrawal of 60% and short-term deposit has a probability of
withdrawal of 90%. We also assume 13% growth rate of each type of deposit, which is lump sum
of GDP growth rate and inflation rate of Bangladesh. We treat fixed deposit as long-term deposit;
0
5
10
15
20
25
30
35
40
45
2018 2017 2016 2015 2014
JBL SLR (%)
JBL SLR (%)

23 | P a g e
saving deposit, term deposit and sundry deposit as medium-term deposit, and current deposit as a
short-term deposit. The estimation of liquidity needs for 2020 is calculated below,
Table 10: Estimation of liquidity need in structure of deposit method
Year Types of
deposits
Amount of
deposit
(Millions)
Probability of
withdrawal
Withdrawal
(Millions)
2016 Long term 461225 0.40 184490
Medium term 131779 0.60 79067
Short term 65889 0.90 59300
Expected withdrawal 322858
2017 Long term 521184 0.40 208474
Medium term 148910 0.60 89346
Short term 74455 0.90 67009
2018 Long term 588938 0.40 235575
Medium term 168268 0.60 100961
Short term 84134 0.90 75721
2019 Long term 665500 0.40 266200
Medium term 191143 0.60 114086
Short term 95071 0.90 85564
2020 Long term 752015 0.40 300806
Medium term 215992 0.60 129595
Short term 107430 0.90 96687
4.3.2. Sources and Usage of Fund Method
In sources and usage of fund method, we need to forecast the different components of the liquidity
needs schedule like deposit demand change, loan and advance demand change and growth rate of
the deposit and loan. We assume the growth rate of loan is 15% and the growth rate of deposit is
13% which is based on the JBL historical growth in loan and deposit.

24 | P a g e
Table-11: Estimation of liquidity needs in sources and usage of fund method.
(In millions)
Year Estimated
total loan
Estimated
total deposit
Estimated
change in
loan
Estimated
change
deposit
liquidity
needs
2016 422900.12 658894.12
2017 486335.14 744550.35 63435.02 85656.23 -22221.21
2018 559285.41 841341.90 72950.27 96791.55 -23841.28
2019 643178.22 950716.35 83892.81 109374.45 -25481.64
2020 739654.95 1074309.47 96476.73 123593.13 -27116.39
From the above table, we can see that the JBL has excess liquidity in the previous year and has a
possibility of positive liquidity in 2020.
4.4. Meeting the Liquidity Needs of JBL
There are two ways of managing liquidity of a bank. These are asset management and liability
management. JBL follows the two ways to managing liquidity needs.
4.4.1. Asset Management
In case of asset management, JBL use the asset portion the bank to manage the liquidity of the
bank. Cash near asset can be used to meeting the liquidity requirement of the bank.
(1). Primary reserve requirement: JBL meet their primary reserve liquidity need which is sum
of CRR and SLR using the cash collected from different sources. If the bank cannot be able to the
primary reserve requirement, then bank cannot run smoothly in the market.
(2). Secondary reserve requirement: JBL has no restriction to how it fills the secondary reserve
requirement. But it has to use cash and cash near asset to fill this requirement. Cash near asset are
the asset that can be easily converted to cash such as treasury bill, loan and advance to other bank,
short term security etc.
(3). Aggressive liquidity management: In case of aggressive liquidity management, the JBL take
risky actions to meet the liquidity needs of the bank. If interest rate is rising, then JBL sale the
long-term bond from holding and fulfill the liquidity demand. This approach increase it interest
income from the position to short term security.
4.4.2. Liability Management
JBL can use the liability management to meet the liquidity needs of the bank. In liability
management the JBL can utilize liability components of the balance to fulfill its liquidity demand.
If the bank needs to full fill the cash crisis, it may borrow money from the other bank to fill the
needs. Basically, JBL loan money from the other bank to meet the immediate liquidity demand.

25 | P a g e
JBL forecast its liquidity needs of future. So it arranges it borrowing system to the unfortunate
liquidity demand. JBL always try to maintain tradeoff between liquidity and profitability to
decrease the funding cost and increase the profitability of the bank.
4.5. Liquidity Ratios of JBL
Liquidity ratio analysis gives the picture of the liquidity condition of the bank. So we need liquidity
ratio analysis on JBL to see the liquidity condition of the JBL. At first, we look on the total deposit
of JBL from 2014 to 2018. The graph-8 presents the total deposit ratio from 2014 to 2018.
Graph-8: Total deposit ratio.
From the above graph, we can see that deposit ratio is higher than 80% in the last 5 years except
2018. As the deposit ratio of JBL is high relative to other banks, then its liquidity risk is lower than
the other bank. Because deposit from client is low vulnerable to liquidity risk and interest expenses.
Now we go to the loan to deposit ratio of JBL. The graph-9 presents the loan to deposit ratio of
JBL from 2014 to 2018
0.7500
0.7600
0.7700
0.7800
0.7900
0.8000
0.8100
0.8200
0.8300
2018 2017 2016 2015 2014
Total Deposit Ratio
Total Deposit Ratio

26 | P a g e
Graph-9: Loan to deposit ratio.
.
From the above graph we can see that, the loan to deposit ratio is increasing from 2014 to 2018. It
indicates that the illiquid asset is increasing from year to year. Because, JBL, s major portion of
loan is long term, so shortly recovery is not possible. So JBL should be cautious in sanctioning
long term loan.
4.6. Regression Analysis
Now, I can show regression analysis using on the different variables of JBL and economy of
Bangladesh. In the regression analysis, we take deposit of JBL as a dependent variable and interest
rate, inflation rate, exchange rate and GDP growth rate as independent variables. For our analysis,
I have collected regarding these variables from 2000 to 2018. The interpretation of these variables
are given in the following table,
0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
2018 2017 2016 2015 2014
Loan to Deposit Ratio
Loan to Deposit
Ratio

27 | P a g e
Table-8: Variables for regression analysis.
Variables Signs Interpretation
(1). Deposit D I take deposit of the JBL as
dependent variable. It is a
deposit from client from 2000
to 2018.
(2). Deposit Interest rate DIR It is independent variable.
Average yearly deposit interest
rates have taken to conduct this
analysis.
(3). Inflation rate IFR I have taken it as an
independent variable. Inflation
rates (nominal) of last 18 years
have taken to conduct this
analysis.
(4). Exchange rate ER Dollar exchange rates of last 18
years.
(5). GDP growth rate GDP GDP growth rates of
Bangladesh of last 18 years.
The regression inputs of these stated variables are given in appendix and summary output of the
regression analysis is given below,
From the above summary output, we can see that R-square is 0.9358. It indicate that, dependent
variable deposit of the JBL is 93.58% represented by the independent variables of deposit interest
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.935778
R Square 0.8756805
Adjusted R Square 0.8401607
Standard Error 80143.741
Observations 19
ANOVA
df SS MS F Significance F
Regression 4 6.33394E+11 1.58E+11 24.65327 3.27227E-06
Residual 14 89922269123 6.42E+09
Total 18 7.23316E+11
Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept -936527.22 165249.0993 -5.66737 5.81E-05 -1290951.284 -582103.15 -1290951.28 -582103.1494
Deposit Interest Rate -8867.212 13308.29756 -0.66629 0.516055 -37410.67137 19676.2474 -37410.6714 19676.24735
Inflation Rate -25372.041 9116.739818 -2.78302 0.014662 -44925.50344 -5818.5792 -44925.5034 -5818.579165
Exchange Rate 21212.215 3570.496637 5.940971 3.6E-05 13554.26158 28870.1688 13554.2616 28870.16885
GDP Growth Rate 2899.473 34046.69915 0.085162 0.933339 -70123.43386 75922.3799 -70123.4339 75922.37989

28 | P a g e
rate, inflation rate, exchange rate and GDP growth rate. The standard deviation of the regression
statistics is standard error which is 80143.74.
There are negative relationships between deposit of JBL and; deposit interest rate and inflation
rate. Because, real interest rate was low in the recent years due to the high inflation rate prevailing
in the economy of Bangladesh. Besides it cut real income level of the people. And there is positive
relationship between deposit of JBL and; exchange rate and GDP growth rate. Because, the high
growth in GDP increases the income level of the people due to increase the employment in the
economy and high exchange rate encourage the foreign investors to invest in this country.
From the analysis we can determine the regression equation as follows,
D = -936527.22 - 8867.21DIR - 25372.04IFR + 21212.22ER + 2899.47GDP
The interpretation of the regression analysis is given below,
▪ If other variables are 0, then the deposit would be -936527.22 million.
▪ If deposit interest rate is increased by 1% with other variables held constant, the deposit
would be decreased by 8867.21 million and vice versa.
▪ If Inflation rate is increased by 1% with other variables held constant, the deposit would
be decreased by 25372.04 million and vice versa.
▪ If exchange rate is increased by 1% with other variables held constant, the deposit would
be increased by 21212.22 million and vice versa. And
▪ If GDP growth rate is increased by 1% with other variables held constant, the deposit would
be increased by 2899.47 million and vice versa.

29 | P a g e
Chapter-5: Conclusion

30 | P a g e
Liquidity management is a management of liquidity position of any bank. Sound liquidity position
of a bank helps to meet any kind of liquid obligations easily. So, proper liquidity management is
very essential for a bank.
Based on the analysis in this report we can say that, JBL liquidity management and liquidity
condition is satisfactory. Credit risk and liquidity risk are very important for any bank. JBL
manages it liquidity in such a way that mitigates these risks. Compare to the other banks, its
liquidity management is efficient to add value to the JBL stakeholders and economy of
Bangladesh. JBL should focus on the implement of Basel-I instead of implanting Basel-II in the
organization. Basel-I increases its employees’ efficiency of bank. When the efficiency of the JBL
increased, then the financial performance and liquidity performance of the bank also increased. As
the financial market is blooming, JBL should implement the new strategies for grabbing the market
share. Otherwise, the market condition of JBL would be deteriorated.
The SLR and CRR condition of the JBL are very strong. But we see that, JBL maintain excess
SLR and CRR than required requirement. So, it should focus to reduce these to the required
requirement to generate more revenue and decrease the opportunity cost of the funds. In the
analysis, we can see that, the JBL, s major portion of deposits have invested in the long-term loan.
So, it there is possibility of illiquidity from the long-term loan. For this reason, the JBL should
cautious to loan to loaners, so that the unfortunate illiquidity conditions of the banks cannot be
aroused.
Now, JBL are trying to expand it dimensions to rural areas to collect deposits from the rural people.
But it is not successful yet. So, it should be careful to implement it strategies to so be successful
in this base. From the report we notice that, the JBL has huge amount of idle deposits. So JBL
should utilize these deposits to increase its liquidity position and profitability.

31 | P a g e
Bibliography
(1). Annual Reports of Janata Bank Ltd.
(2). Annual Report of Bangladesh Bank
(3). Monetary policy statement-2019-20 of Bangladesh Bank
(4). World Bank website
(5). Janata Bank Ltd. Website
(6). Wikipedia.org.com
(7). Academia.com
(8). Commercial Banking, 3rd
Edition, Benton E. Gup& James Colari

32 | P a g e
Appendix
Year
Deposit
(Millions)
Deposit Interest
Rate
Inflation
Rate
Exchange
Rate
GDP Growth
Rate
2018 675548 6.66 5.54 83.46 7.86
2017 649441 5.61 5.7 80.44 7.28
2016 641819 6.19 5.51 78.47 7.11
2015 568911 8.24 6.19 77.95 6.55
2014 516011 9.8 6.99 77.64 6.06
2013 478560 11.72 7.53 78.1 6.01
2012 409860 10.22 6.21 81.86 6.52
2011 361702 8.84 11.4 74.15 6.46
2010 286567 7.21 8.13 69.65 5.57
2009 246175 7.81 5.42 69.04 5.05
2008 221336 7.55 8.9 68.6 6.01
2007 198636 6.99 9.11 68.87 7.06
2006 182947 5.99 6.77 68.93 6.67
2005 168897 5.53 7.05 64.32 6.54
2004 151036 5.8 7.59 59.51 5.24
2003 138597 7.11 5.67 58.15 4.74
2002 138893 7.91 3.33 57.89 3.83
2001 125066 9.15 2.01 55.81 5.07
2000 104678 8.69 2.21 52.14 5.29
Data source: World Bank website, Janata Bank website.

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