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Introduction

CHAPTER 1
Introduction
1.1 Objective of the study
1.2 Methodoloy
1.! "ources of d#t#
1.$ %i&it#tion of the study.
Credit Ad&inistr#tion' A c#se study of (irst "ecurity )#n* %td.
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Introduction
I+TRO,-CTIO+
Bank is a financial intermediary whose prime function is to move scarce resources in the
form of credit from savers to those who borrow for consumption and investment. In a
modern society, banks are very much important to the economy because of their ability to
create money. Lending comprises a very large portion of a bank's total assets and forms
the backbone of the bank. Interest on lending constitutes the highest proportion of income
of a bank. As such, credit uality remains the prime indicator of a bank's success.
!nsound "redit reduces the ability of a bank to provide credit towards good borrowers
and undermine liuidity and solvency. #herefore good lending practice is very important
for the profitability and success of a bank.
#o achieve a perceptible improvement in the credit delivery system of the bank, it is
necessary to develop a sound credit policy and use modern techniues for credit
appraisal. Lending involves the risk of default. $roper analysis of the credit proposals is
reuired to assess the risks in a uantifiable manner and then find out ways and means to
cover the risk. #he degree of risk associated with a credit must be %udged properly before
approval. Lending is a %udgment, which depends on the ability to assess the shortcomings
in the proposal and identify the risk involved. #he ability to take proper and timely
measures to minimi&e the risk is very important for the purpose.
#he modern concept of lending has shifted from the security'oriented approach to
business viability one. #he emphasis is given on the likelihood of repayment, business
viability, management competence and management integrity of the proposed debtor. As
the prevailing legal system of the country makes it difficult for the bank to depend on
collateral, the ultimate security of the bank is the commercial success of the borrower.
Adeuate emphasis on management and business risks is important as much as analysis
of security risk.
Credit Ad&inistr#tion' A c#se study of (irst "ecurity )#n* %td.
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Introduction
"redit administration is one of the most discussed matters in our country, which is
suffering seriously for rapid e)pansion of banks default loan. It occurs because of
selection of loan proposal with false or fabricated data, poor credit administration,
political pressure etc. Banks are alleged to continuously preparing various types of acts
for preventing default cost and ensuring perfect lending. *o I decided to work in such an
important and interesting field.
1.1 O).ECTI/E O( THE "T-,0
#he ob%ectives behind conducting this study were as under'
#o focus on the theoretical developments of some key areas i.e. asset liability
management, "redit risk, "redit Administration as per "redit +isk ,anagement
guideline by the "entral Bank.
#o focus on the credit operation of the banking sector in Bangladesh.
#o analyse the credit performance of -irst *ecurity Bank Ltd.
#o identify the problems with credit administration and suggested measures.
1.2 METHO,O%O10 O( THE "T-,0
In order to accomplish the study ob%ectives, the under mentioned methods were taken .
"ollection of data from both sources 'primary as well as secondary.
Literature review of previous studies.
+atio analysis
"omparative study of loans and advances among different types of banks.

Credit Ad&inistr#tion' A c#se study of (irst "ecurity )#n* %td.


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Introduction
$ortfolio analysis of loans in terms of sector, loan type and performance over the
year 01222'34456
1.! "O-RCE" O( ,ATA
#he set of information has been collected from both primary and secondary sources.
$rimary sources are as under.
7ata furnished by credit officers of 7ilkusha branch.
7ata furnished by credit officers of 8ead 9ffice.
*econdary sources are as under.
7ifferent circulars issued by Bangladesh bank.
7ifferent circulars issued by credit division of -irst *ecurity Bank Ltd.
"redit manual of -irst *ecurity Bank Ltd.
Annual reports of -irst *ecurity Bank Ltd.
1.$ %IMITATIO+ O( THE "T-,0
As the report prepared with a short span of time, the report could not be made
comprehensive and conclusive. ,ainly the report could be made descriptive. *ome usual
constraints I did face during the course of my investigation. #hese are as under'
,y full time %ob responsibility in the bank impedes me to make in'depth study:
In many cases, organi&ed information is not yet published:
Credit Ad&inistr#tion' A c#se study of (irst "ecurity )#n* %td.
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Introduction
,ainly I have to base on secondary data for preparing this report.
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Credit Ad&inistr#tion' A c#se study of (irst "ecurity )#n* %td.
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