Professional Documents
Culture Documents
A comparative analysis on three selected Banks(National Bank, Sonali Bank & Islamic bank
Bangladesh Limited)
By
Southeast University
07, January 2015
By
__________________
Sadia Noor Khan
Lecturer
School of Business
Southeast University
Letter of Transmittal
7th January, 2015
Sadia Noor Khan
Lecturer,
School of Business
Southeast University
Subject: Submission of the internship working report.
Dear Madam,
I am glad to submit my report on the topic as you have assigned me to prepare an internship
report on retail banking a comparative analysis on three selected banks as a partial requirement.
Now I am looking forward for your kind appraisal regarding internship report.
You would be glad to hear that I have given my best effort to prepare the report with relevant
information that I have collected from National Bank Limited, Gulshan Branch and from other
relevant sources during my internship program. I have the great pleasure to have the opportunity
to study on Credit Risk Management of National Bank Limited. It is meaningful to mention
that the knowledge I have gathered during the internship period, it will help me in practical field
of professions.
In spite of various inadequacies I have tried to cover all the relevant affairs. It is quite worthy to
mention that without your kind hearted guidance and cooperation it would not be possible for me
to authenticate this paper. I will be pleased and grateful to you to answer any sort of quarry you
think necessary.
Sincerely yours,
_________________
Ashis Kumar Barman
ID-2013110001094
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Certification
This is to certify that Ashis Kumar Barman ID: 2013110001094, student of the
MBA program of Southeast University Bangladesh has done a project work titled
Credit Risk Management- A comparative analysis on three selected Banks- (National
Bank, Sonali Bank & Islamic bank Bangladesh Limited) under my supervision and
guidance. The student is found to be intelligent, sincere and hardworking.
Name:
Name:
Member: 1
Member: 2
Supervisor
iii
Acknowledgment
A warm felicitation goes for me to acknowledge the people, who hold the desirability for
encouraging, praising, assisting as well as believing me on the tasks of marketing activities what
I have worked through my internship period. First of all I would like to take the opportunity to
thank, Sadia Noor Khan Lecturer, Southeast University & my internship supervisor for providing
me guidelines, help in assisting my report. She was constantly supporting me with his inspiring
personality. I will always be always thankful for his extraordinary reinforcement. I am not have
been successful in complete the report without the active support and cooperation from many
persons in the National Bank Limited, Gulshan Branch. I have tried my best and also worked
hard for preparing this report. I also want to express my strong gratitude to MR. SOFIQUL
ISLAM (PO) for his enthusiastic cooperation and supervision during the preparation of the
report. I am grateful to him for his suggestions and all instance observations to prepare the
report. I would also like to thank to the officials of National Bank Limited, Gulshan Branch
especially MR.SYED SHAHINUR ISLAM, (AVP), MR RABIUL ISLAM, (AVP),
MR.
MD.JAHANGIR HOSSAIN (AVP), MS. MILIA HAQUE (PO), MS. SHARMINA IASMIN
(PO), MS.SADIA AFRIN (PO), MR. MD. SHAH ALAM (SEO), MR. MD. ZASHIM UDDIN
(SEO), MS SHAMIMA SULTANA (SEO), MR. NAHIAN KHAN (E.O), MRS. FOUZIA
AFRIN KHAN (E.O), MR.MOHAMMAD SHAHJALAL (E.O), MR FAISAL JUBAIR
JO(GEN) and a very special thanks goes to MR. MD SHEL FAISAL, SVP of National Bank
Limited, Gulshan Branch for providing all the support in the organization. Special thanks go to
the respondents, who spared their time generously, and took the trouble of answering my queries
and helped me to complete my study.
iv
Executive Summary
Banks and other financial institutions play a vital role in forecasting the economic and social
condition of a country. Banks in Bangladesh now constitutes the core of the countrys organized
financial system. They mobilize the savings of people and channel the resources toward
different sectors of the economy. Customer satisfaction is one of the most vital reflections of
the progression toward advancement and development for any service institution. As service
providing organization, providing best service is one of the mottos of the commercial banks.
With the customers perception as well as satisfaction, the mirror image of service quality in
private commercial banks can be obtained. The achievement of the customers satisfaction is
the key feedback to improve service quality. Financial conditions have analyzed more to
determine the organizational position. This study is mainly focused on credit risk management
of National Bank Ltd. Like the other private commercial banks, NBL also competing with
others to flourish in this country. Providing loan service is only means to flourish. Therefore,
measuring the level of customer satisfaction is very crucial. Measuring customer satisfaction is
not any single task. Customers expectations are also required to measure the level of customer
satisfaction. Therefore, total required information has collected through the questionnaire. After
essential calculations, it has found that the customers of National Bank Ltd. are overall satisfied
regarding the provided services of the bank. The mean value customers perception is 4.03 and
the expected mean value is4.88. As the perceived mean value is over 4, the level of customer
satisfaction of National Bank Ltd. is Good. In addition, the expected mean value demonstrate
that, the customers are not expecting just about World Class services. As the expectation
level of human being has no bounds, there are difference between the expectation and
perception. There is no predicament in the world that does not have any remedy. Customers
also provide many suggestions to improve the level of provided services of NBL. Those
suggestions are incorporate in this report after some modification by consulting some related
research work. By implementing these recommendation levels of satisfaction of NBL can be
improved.
Table of content
i.
ii.
iii.
iv.
v.
Letter of Transmittal
Bank Certificate
Supervisor Certificate
Acknowledgement
Executive Summery
Chapter
No.
Title
Page No.
Introduction
1.1
2-4
1.2
1.3
4-5
1.4
6-7
1.5
8-9
1.6
10-17
1.7
18
1.8
18
1.9
19
1.10
19
1.11
20
21
2.1
Definitions of risk
22
2.2
22-23
2.3
23-26
Chapter
One
Chapter
Two
2.4
26-30
2.5
30
2.6
Organizational Structure
30-32
2.7
32
2.8
32-35
2.9
35-36
2.10
36
2.11
Lending Guidelines
36
2.12
37
2.13
38-41
2.14
41
2.15
42-43
2.16
Performance Evaluation
44
2.17
Financial Performance
45-50
2.18
51-56
financial Ratios
2.19
Key Findings
56-57
2.20
57
58
3.1
Conclusion
59
3.2
Recommendation
61
3.3
Bibliography
62
ChapterThree
Chapter-1
Introduction
1|Page
1.1
National Bank Limited (NBL) is a Public Company Limited by shares in the Country, with
commendable operating performance. Directed by the mission to provide prompt and efficient
services to clients, NBL provides a wide range of commercial banking services also. Bank has
achieved success among its peer group within a short span of time with its professional and
dedicated team of management having long experience, commendable knowledge and expertise
in convention with modern banking. With all its resources, the management of the Bank firmly
believes that the Bank would be able to encounter problems that may arise both at micro and
macroeconomic levels. NBL incorporated in Bangladesh under company Act 1994. It is also
guided by The Bank Company Act 1991 (and its subsequent amendments) and Bangladesh Bank
Ordinance 1972, so as to enable the company for doing banking business. National Bank Limited
has its prosperous past, glorious present, prospective future and under processing projects and
activities. Established as the first private sector Bank fully owned by Bangladeshi entrepreneurs,
NBL has been flourishing as the largest private sector Bank with the passage of time after facing
many stress and strain. The member of the board of directors is creative businessman and leading
industrialist of the country. To keep pace with time and in harmony with national and
international economic activities and for rendering all modern services, NBL, as a financial
institution automated all its branches with computer network in accordance with the competitive
commercial demand of time. Moreover, considering its forth-coming future the infrastructure of
the Bank has been rearranging. The expectation of all class businessman, entrepreneurs and
general public is much more to NBL. National Bank Limited was born as the first hundred
percent Bangladeshi owned Bank in the private sector. From the very inception it is the firm
determination of National Bank Limited to play a vital role in the national economy. They are
determined to bring back the long forgotten taste of banking services and flavors. They want to
serve each one promptly and with a sense of dedication and dignity. The emergence of National
Bank Limited in the private sector is an important event in the Banking arena of Bangladesh.
When the nation was in the grip of severe recession, Govt. took the farsighted decision to allow
in the private sector to revive the economy of the country. Several dynamic entrepreneurs came
forward for establishing a bank with a motto to revitalize the economy of the country. The then
2|Page
Scheme, Consumers Credit Scheme and NBL Housing Loan, NBL Small Business Loan, Small
House Loan Scheme, Festival Small Business loan etc. to combine the people of lower and
middle-income group.
1.2
NBL is to become A Bank for Performance with Potential by transforming the way they do
business and developing a truly unique financial institution that delivers superior growth and
financial performance and be the most recognizable brand in the financial service in Bangladesh.
NBL dreams to become the bank of choice of the general public, which includes both the
consumer and the corporate clients. They want to build such an image that whenever people will
think of a bank, they will think of NBL. In order to build up such an image, NBL has taken up
some attractive promotional campaign. They are targeting the young generation in particular
because research has shown that people usually have a soft corner for the first bank of their lives
and tend to stick to it if they are satisfied with its services. With this plan in mind, NBL is trying
to project itself as a vibrant and dynamic organization by introducing state-of-the-art banking
technology that will make banking easier and hassle-free to the young generation.
1.3
The main task of the NBL is to accept deposited from various customers through various
accounts.
Provides loans on easy terms and condition
It creates loan deposit
The bank invest it fund into profitable sector
It transfers money by Demand Draft (DD), Pay Order (PO) and Telegraphic Transfer etc
The bank is doing the transaction of bill of exchange, Cheque etc. on behalf of the clients
NBL assists in the Foreign Exchange by issuing Letter of Credit
The bank insures the securities of valuable documents of clients
It brings the increasing power of dimension of transaction
4|Page
Above all, NBL helps the businessmen financially by giving discount facility for bill of
exchange and by providing the facility of Letter of Guarantee
Outstanding customer service
Effective and efficient operations
Strong capital liquidity
Expense discipline
NBL Conservative lending policy
Strict also operates according to certain key Business Values
The highest personal standard of integrity at all levels
Commitment to truth and fair dealing
Openly esteemed commitment to quality and competence
A minimum of bureaucracy
Fast decisions and implementation
Putting the Groups interests ahead of the individuals
The appropriate delegation of authority with accountability
Fair and objective employer
Merit approach to recruitment/selection/promotion process
The promotion of good environmental practice and sustainable development, and
commitment to the welfare and development of each local community
A commitment for complying with the spirit and letter of all laws and regulations
5|Page
1.4
The growth of world economy, according to World Banks study on Global Economic Prospects
2005, has been broadening over the past few years. Real GDP growth of the world is expected to
be 3.20% in the year 2005 which is remarkably higher than that of the previous years due to
improvements in macroeconomic fundamentals, enhanced structural flexibility, a stronger
economic climate and progress toward reducing trade barriers. However, International Monetary
Fund (IMF) had forecasted 4.30% growth for 2005. The economic growth had gained
momentum and now well entrenched in most of Asia, which represents a solid starting point for
long term growth and in all possibilities would increase the likelihood of the developing
countries to meet their Millennium Development Goals. If such favorable environment sustains
for long, the developing countries would surely be able to achieve rapid and sustained per capita
growth at a level of 3.50% per annum between 2006 and 2015, which would enable them to
halve the incidence of extreme poverty by 2015. Global growth rate slowed down to some extent
in the year 2005 and is expected to slide further to 3.20% in the year 2006, mainly due to
increase in oil and commodities price. According to Global Economic Prospects 2005, high oil
prices have dramatically worsened the poverty of the poorest oil importing countries. These
spiraling fuel prices have acted as an impediment to recovery of the worlds economies of some
countries which did not fully participate in the global expansion. On the other hand, the high fuel
prices acted as a moderating influence, where aggregate demands were already buoyant. This is
not surprising because services are assumed to be income elastic and a relative rise in the share
consumption is understood. This effect is reinforced by the relatively high rate of productivity
growth in manufacturing. In high growth regions in East Asia and South Asia, where GDP is
forecasted to be 5.40% and 6.30% respectively for the year 2005, exists two contrasting scenario.
In South Asia the employment in agriculture shifted mostly to services, with a small increase in
industrial output. In East Asia, employment in agriculture shifted more evenly between industry
and services. However, long-term growth in South Asia is forecasted to average about 5.50%
during 2006-2015 as the contribution to growth from the private sector continued to rise. The
Government continued to take necessary measures with a view to recovering the losses caused
by the devastating floods and other natural calamities of the previous year. Efforts were made to
6|Page
boost export and loans were extended for rapid and sustainable development and expansion of
the Small & Medium Enterprise (SME). In the year 2005, the country again passed through a
year of socio-political chaos. Series of terrorist activities across the country stifled investors
confidence and curtailed the economic activities to some extent. Even with all these adversities
brewing around, the country successfully combated the aftermath of post MFA era. GDP growth
is likely to exceed 5.40% in FY 2005. With the exception of agriculture, the growth in
production was broad based covering wide range of activities in non-crop agriculture, industries
and services. Robust annual growth of manufacturing sector, estimated at 8.50% by the Bureau
of Statistics, is partly the result of strong growth in the fourth quarter. It is reflected in the
movement of quantum index of the manufacturing industries, covering mainly, medium and
large-scale industries, which witnessed about 8.80% growth in the fourth quarter of FY 2005.
Consumer Price Index (CPI) inflation, according to the study of Economic Trend by Bangladesh
Bank, exhibited a moderate trend during the first half of the year and showed an upward trend in
the second half of FY 2005. The point-to-point inflation during the year increased from 5.50% in
December 2004 to 6.70% in March 2005 and further to 7.40% in June-2005. The growth in the
operating profit of the private banking sector in the year 2005 registered at 29% over 2004. On
the other hand, the macroeconomic challenges, faced by the policymakers, were to facilitate
orderly adjustments of exchange rate and interest rate in order to maintain macroeconomic
balance in the face of external sector adversities of continuing escalation in oil price and post
MFA era uncertainties. The ethos of NBL for pursuing its activities in social arena has got
further momentum with enthusiasm and support. National Bank Foundation was established by
the board of directors of National Bank in 1989. With the financial help of the foundation,
National Bank Public School and College was established at Mogbazar, Dhaka. After
establishment, NBL is continuously facilitating with sports and cultural activities. As a
continuation of it, NBL has patronized the National Bank Volleyball league arranged by
Bangladesh Volleyball federation. NBL never hesitate to extent the hand of help in case of
natural calamities and national cultural festival.
7|Page
1.5
Directors (Owners)
8|Page
Officer
Assistant officer
Junior Officer
Probationary Officer
9|Page
1.6
Efforts for expansion of NBL activities at home and abroad by adding new dimensions to our
banking services are being continued unabated. Alongside, NBL are also putting highest priority
in ensuring transparency, account ability, improved clientele service as well as to their
commitment to serve the society through which they want to get closer and closer to the people
of all strata. Winning an everlasting seat in the hearts of the people as a caring companion in
uplifting the national economic standard through continuous up gradation and diversification of
our clientele services in line with national and international requirements is the desired goal we
want to reach. At present, NBL has been carrying on business through its 106 branches spread all
over the country. Besides, the Bank has drawn arrangement with 415 correspondents in 75
countries of the world as well as with 32 overseas Exchange Companies. NBL was the first
domestic bank to establish agency arrangement with the world famous Western Union in order to
facilitate quick and safe remittance of the valuable foreign exchanges earned by the expatriate
Bangladeshi nationals. NBL was also the first among domestic banks to introduce international
Master Card in Bangladesh. In the meantime, NBL has also introduced the Visa Card and Power
Card. The Bank has in its use the latest information technology services of SWIFT and
REUTERS. NBL has been continuing its small credit programmed for disbursement of collateral
free agricultural loans among the poor farmers of Barindra area in Rajshahi district for improving
their lot. Alongside banking activities, NBL is actively involved in sports and games as well as in
various Socio-Cultural activities. Up to September 2006, the total number of workforce of NBL
stood at 2239, which include 1689 officers and executives and 550 staff.
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Product Scheme
Current Deposit:
National Bank Limited offers customers current deposit facility for day-to-day business
transaction without any restriction.
Benefits (Condition Apply)
Minimum balance Tk.2000.
Minimum maintenance charge yearly Tk. 800.
No hidden costs.
Standing Instruction Arrangement are available for operating account.
Easy access to our other facilities.
Account Opening
copies of recent photograph of account holder.
TIN certificate.
Nominees Photograph.
Valid photocopy of Voter ID Card.
Home Loan:
NBL offers home loan facility for purchasing flats or construction of house.
SME Loan:
NBL offers financial support to small businessmen/enterprise with new products named
Festival Small Business Loan and NBL Small Business Loan has been introduced in the
Bank.
Consumer Loan:
NBL offers consumer credit facility for retail customers.
Financing items
Electronics consumer products.
Computer or Computer accessories.
Trade Finance:
NBL provides comprehensive banking services to all. types of commercial concerns such as in
the industrial sector for export-import purpose as working capital, packing credit, trade finance,
Issuance of Import L/Cs, Advising and confirming Export L/Cs. Bonds and Guarantees .
Savings Deposit:
National Bank Limited offers customers a basal free and low charges savings account through
the branches all over Bangladesh.
Current Deposit:
National Bank Limited offers customers current deposit facility for day-to-day business
transaction without any restriction.
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Account Opening
Copies of recent photograph of account holder.
TIN certificate.
Nominees Photograph.
Valid photocopy of Voter ID Card.
RFC Deposit:
National Bank Limited gives opportunity to maintain foreign currency account through its
Authorized Dealer Branches. Bangladesh nationals residing abroad or foreign nationals
residing abroad or Bangladesh and foreign firms operating in Bangladesh or abroad or
Foreign missions and their expatriate employees.
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NFC Deposit:
National Bank Limited gives opportunity to maintain foreign currency account through its
Authorized Dealer Branches. All non resident Bangladeshi nationals and persons of
Bangladesh origin including those having dual nationality and ordinarily residing abroad may
maintain interest bearing NFCD Account.
Benefits (Condition Apply)
NFCD Account can be opened for One month, Three months, Six months and One
Year through US Dollar, Pound Starling, Japanese Yen and Euro.
The initial minimum amount of $1000 or 500 Pound Starling or equivalent other
designated currency.
Monthly Savings:
National Bank Limited offers monthly savings scheme for its retail customers.
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Fixed Deposit:
National Bank Limited offers fixed term savings that will scale up your savings amount with
the time.
Overdraft:
NBL offers overdraft facility for corporate customers for day-today business operations .
Opening
Introductory current account.
Others necessary documents as per loan requirement
Western Union:
Joining with the worlds largest money transfer service Western Union, NBL has introduced
Bangladesh to the faster track of money remittance. Now money transfer between Bangladesh
and any other part of the globe is safer and faster than ever before. This simple transfer system,
being on line eliminates the complex process and makes it easy and convenient for both the
sender and the receiver. Through NBL Western Union Money Transfer Service, your money
will reach its destination within a few minutes.
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Credit Card:
Credit card is the newest concept in our country. In our country Credit card was first introduced
by the National bank ltd. master card is a name of popular credit card band and it is worldwide
accepted credit card. Credit card is safe, instant and universal money. National bank ltd issued
two types of credit card, which is as follows:
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Charges for ATM card: ATM card holders have to pay 1000 taka annually and in the case of card lost subscriber also
pay additional 300 taka.
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(a)Primary Source
I have collected primary information by interviewing employees, managers, observing various
organizational procedures, structures. Primary data were mostly derived from the discussion with
the employees of the organization.
(b)Secondary Source
I have elaborated different types of secondary data in my research. Sources of secondary
information can be defined as follows:
Internal Sources
Banks Annual Report 2011- 2013
Group Instruction Manual & Business Instruction Manual
Prior research report
External Sources
Different books and periodicals related to the banking sector
Bangladesh Bank Circulars
Website Information
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Through there are some limitations I have tried my best to collect adequate data and information
to make the report meaningful.
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Chapter-2
Findings & Analysis
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sanction activities. Credit management is important as it helps the banks and financial
institutions to understand various dimensions of risk involved in different credit transactions. At
the pre-sanction stage, credit management helps the sanctioning authority to decide whether to
lend or not to lend, what should be the loan price, what should be the extent of exposure, what
should be the appropriate credit facility, what are the various facilities, what are the various risk
mitigation tools to put a cap on the risk level. At the post-sanctioning stage, the bank can decide
about the depth of the review of renewal, frequency of review, periodicity of the grading, and
other precautions to be taken.
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documentation
to
ensure
security
protection,
documentation
completeness,
documentation integrity and proper insurance policy. He/she also conducts site visit to verify
security existence. Assessment of security control risk requires analyzing the possibility of
obtaining favorable judgment and analyzing the case with which the bank could take the
possession and liquidate the securities.
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Policy guidelines:
Lending guidelines
Credit assessment and risk grading
Approval authority
Segregation of duties
Internal control and compliance
Program Guidelines
Approval process
Credit administration
Credit monitoring
Credit recovers
26 | P a g e
Policy guidelines
a. Lending guidelines:
The lending guidelines include the following:
Industry and Business Segment Focus
Types of loan facilities
Single borrowers/ group limits/ syndication
Lending caps
Discouraged business types
Purpose of loans
Security arrangement
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Risk is graded as per Lending Risk Analysis (LRA), Bangladesh Banks Guidelines of
classification of loans and advances.
c. Approval Authority:
Approval authority may be as the following:
Credit approval authority has been delegated to Branch Manager, Credit Committee
by the MD/ Board
MD/ Board:
Approvals must be evidenced in writing. Approval records must be kept on file with
credit application
The aggregate exposure to any borrower or borrowing group must be used to determine
the approval authority required.
d. Segregation of Duties:
Banks should aim at segregating the following lending function:
Credit administration
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d. Credit recovery: The recovery unit of branch should directly manage accounts with
sustained deterioration (a risk rating of sub-standard or worse).
Credit Risk Management
Determine account action plan/ recovery strategy
Pursue all options to maximize recovery, including placing customers into
receivership or liquidation as appropriate.
Ensure adequate and timely loan loss provisions are made based on actual and
expected losses.
Term financing for new project had BMRE of existing projects (large, medium, SME).
Working capital for industries, trading services and others (large, medium, SME).
Lease finance
Small loan for traders, micro enterprise and other productive small venture.
Consumer finance
Fee business
30 | P a g e
2. Each bank, depending upon its size, should constitute a Credit Risk Management Committee
(CRMC), ideally comprising of head of credit risk management Department, credit department
and treasury. This committee reporting to banks risk management committee should be
empowered to oversee credit risk taking activities and overall credit risk management function.
The CRMC should be mainly responsible for,
The implementation of the credit risk policy / strategy approved by the Board.
Monitor credit risk on a bank-wide basis and ensure compliance with limits approved by
the Board.
Recommend to the Board, for its approval, clear policies on standards for presentation
of credit proposals, financial covenants, rating standards and benchmarks.
Decide delegation of credit approving powers, prudential limits on large credit
exposures, standards for loan collateral, portfolio management, loan review mechanism,
risk concentrations, risk monitoring and evaluation, pricing of loans, provisioning,
regulatory/legal compliance, etc.
3. Further, to maintain credit discipline and to enunciate credit risk management and control
process there should be a separate function independent of loan origination function. Credit
policy formulation, credit limit setting, monitoring of credit exceptions / exposures and review
/monitoring of documentation are functions that should be performed independently of the loan
origination function. For small banks where it might not be feasible to establish such structural
hierarchy, there should be adequate compensating measures to maintain credit discipline
introduce adequate checks and balances and standards to address potential conflicts of interest.
Ideally, the banks should institute a Credit Risk Management Department (CRMD). Typical
functions of CRMD include:
To follow a holistic approach in management of risks inherent in banks portfolio and
ensure the risks remain within the boundaries established by the Board or Credit Risk
Management Committee.
The department also ensures that business lines comply with risk parameters and
prudential limits established by the Board or CRMC.
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BB introduced Credit Risk Grading, a new version of assessing credit risk grading to make the
mechanism easier to implement. It is a mandatory replacement of LRA as per BRPD Circular
No18,
Definition of CRG: Based on the pre-specified scale reflecting the credit-risk for an exposure.
A credit Risk Grading deploys a number/alphabet/symbol as a primary summary indicator of
risks associated with a credit exposure.
33 | P a g e
CRG helps:
Promote banks safety and soundness.
Measure credit risks.
Management monitor change and trend in risk level.
Management manages risk to optimize return.
Use of Credit Risk Grading:
CRG allows application of Uniform Standards to Credits.
Obligor-Level Analysis (CRG output is used)
Credit selection and pricing.
Monitoring and internal MIS and assessing the aggregate risk profile of a Bank.
CRG Review:
Risk Grading
Annually
Marginal/Watch list
Half yearly
Quarterly
Special Attention:
Ensure implementation of the instructions provided in Credit Operations Division, CAD
and Bangladesh Bank regarding Credit Risk Grading.
Officers who will approve Risk Grading shall have necessary competence and overall
understanding of CRG Manual.
Ensure completion of CRG Form for all the accounts having Early Warning Signals.
Prepare financials preferably form audited Accounts.
Ensure calculation of financial ratios correctly.
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a. Legal consideration: The banks legal lending limit and other constraints should be set
forth to avoid inadvertent violation of banking regulations.
b. Delegation of authority: Each individual authorized to extend credit should know
precisely how much and under what conditions he or she may commit the banks funds. These
authorities should be approved, at least annually, by written resolution of the board of directors
and kept current at all times.
c. Types of credit extension: One of the most substances parts of a loan is a delineation
of which types of loans are acceptable and which type are not
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e. Market Area: Each bank should establish its proper market area, based upon, among
other things, the size and sophistication of its organization its capital standpoint, defining ones
market area is probably more important in the lending function than in any other aspect of
banking.
f. Loan Standard: This is a definition of the types of credit to be expended, wherein the
qualitative standards for acceptable loans are set forth.
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PURPOSE
Business capital / Working capital.
Against F.O/ Work Order/ supply order.
Payment of accepted bills at maturity before receipt of
export proceeds.
Acquiring capital assets/ purchasing, constriction
finishing, expansion, repair, renovation of house/ flats/
real estate business etc.
Financing for the period of non- receipt of
reimbursement from Bangladesh bank.
For import/ local procurement of goods/ service.
For making payment of the L/C obligation against
receipt of document.
Retirement of shipping document.
Retirement of shipping document.
Meeting financial requirement of the export at preshipment stage against export L/C.
As post shipment finances against local/ foreign export
bills.
Import of raw/ packing materials against export L/C.
For submission of tender/ to obtain and offer as
security against work order, supply order/ for gas
electricity connection against delivery of goods against
release of goods without or against partial payment by
customer etc.
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Sector Caps
45%
SME
10%
10%
10%
10%
Agro credit
5%
5%
Others
5%
Total
100%
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categorized under one of the arranged types and will be governed under the terms and
conditions related thereto.
2.13.3.2 Purpose:
Our leading will be guided by legitimate purpose, financing for hoarding, speculative purpose
and which will be utilized for degrading the character of the people will avoided. Credit which
will contribute to production, trade, commerce, import, export, development of industry,
development activities.
2.13.3.3 Limit/ amount of facility/ maximum size:
Facility will be considered based on assessment of requirement & justification subject to the
overall leading caps as per Bangladesh bank single party exposure limit.
2.13.3.4 Margin/ Equity:
It will be the general policy of the bank to judiciously ensure stake of the borrower in any
financing plan. Margin will however be subject to institution policy in this regard and central
bank policy where applicable.
2.13.3.5 Rate of interest/ Commission:
Rate of interest will be charged as per declared rate of the bank. Pricing will be basically risk
based. Higher price will be considered for riskier borrower because of higher risk involved.
(I.e. lower score obtain by an obligor as per CRG score sheet is called a risky client). Similarly
lower prices will be considered for prime clients on the basis of their low risk. (Low risk grade
client means where an obligor obtained higher aggregate score as per CRG score sheet or 100%
cash covered or govt. international top bank guarantee).
2.13.3.6 Insurance:
Our bank have insurable interest on a property an asset obtain insurance policy as per norms
against credit facilities extended in order to protect our banks interest. Insurance
policy shall
same. The property is valued by the branch official by applying prudence and considering
prevailing rate in the location area of the property.
Assessment of the customer integrity and willingness to repay will form basis
of leading.
Customer having capacity and ability to repay shall only be lent.
4
5
Credit will be extended in the areas risks of which can be sufficiently understood
and managed.
Independent credit participation in the credit process shall be ensured.
10
11
12
The bank will provide suitable credit service and products for the market in which
it operate.
Credit will be allowed in a manner which will in no way to compromise.
13
14
All credit extension must comply with the requirement of banking companys act
1991 and amendment thereof from time to time.
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43 | P a g e
Performance Evaluation
44 | P a g e
2011
2012
2013
National Bank
24,960.42
26,460.36
27,705.46
Solali Bank
44,208.8
(3,345.09)
28,281.66
Islami Bank
26,820.3
39,701.6
43,786.6
Capital
50,000.00
43,786.60
40,000.00
30,000.00
27,705.46
28,281.66
2011
20,000.00
2012
2013
10,000.00
National Bank
Sonali Bank
Islami Bank
(10,000.00)
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Asset
Bank Name
2011
2012
2013
National Bank
169,037.98
205,207.33
235,173.80
Solali Bank
852,852.2
754,616.07
852,852.20
Islami Bank
273,104
482,664.8
549,979.11
Asset
852,852.20
900,000.00
800,000.00
700,000.00
549,979.11
600,000.00
500,000.00
2011
400,000.00
2012
300,000.00
2013
235,173.80
200,000.00
100,000.00
0.00
National Bank
Sonali Bank
Islami Bank
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Deposit
Bank Name
2011
2012
2013
National Bank
135,458.2
157,331.73
193,642.9
Solali Bank
533,192.2
599,293.7
685,894.6
Islami Bank
341,854
417,844
473,141
Deposit
800,000.00
685,894.60
700,000.00
600,000.00
473,141
500,000.00
2011
400,000.00
2012
300,000.00
200,000.00
2013
193,642.90
100,000.00
0.00
National Bank
Sonali Bank
Islami Bank
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Investment
Bank Name
2011
2012
2013
National Bank
29,994.03
54,326.46
56,827.5
Solali Bank
132,089.1
147,019
270,411.2
Islami Bank
305,841
372,921
406,805
Investment
450,000.00
406,805
400,000.00
350,000.00
300,000.00
270,411.20
250,000.00
2011
200,000.00
2012
150,000.00
2013
100,000.00
56,827.50
50,000.00
0.00
National Bank
Sonali Bank
Islami Bank
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2013
2012
2011
National Bank
116,063.02
126,169.8
151,098.9
Solali Bank
345,991.3
378,147.05
313,450.5
Islami Bank
345,991.34
378,147.05
343,450.5
350,000.00
313,450.50
300,000.00
250,000.00
2011
200,000.00
2012
151,098.90
150,000.00
2013
100,000.00
50,000.00
0.00
National Bank
Sonali Bank
Islami Bank
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Liabilities:
Bank Name
2011
2012
2013
National Bank
146,992.8
182,833.06
211,244.16
Solali Bank
639,481.3
732,215.6
802,966.4
Islami Bank
341,672.1
442,963.2
506,190.4
Liabilites
900,000.00
802,966.40
800,000.00
700,000.00
600,000.00
506,190.40
500,000.00
2011
400,000.00
2012
300,000.00
2013
211,244.16
200,000.00
100,000.00
0.00
National Bank
Sonali Bank
Islami Bank
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Bank Name
2011
2012
2013
National Bank
0.60%
0.80%
0.96%
Solali Bank
0.45%
1.42%
-2.86%
Islami Bank
0.75%
1.27%
0.96%
ROE
2.00%
1.00%
0.96%
0.96%
0.00%
-1.00%
2011
National Bank
Sonali Bank
2012
2013
-2.00%
-3.00%
Islami Bank
-2.86%
-4.00%
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ROI
A performance measure used to evaluate the efficiency of an investment or to compare the
efficiency of a number of different investments.
Bank Name
2011
2012
2013
National Bank
9.02%
0.80%
0.96%
Solali Bank
7.38%
1.42%
-2.86%
Islami Bank
10.12%
12.21%
9.45%
ROI
15.00%
9.45%
10.00%
5.00%
2011
2012
0.96%
2013
0.00%
-5.00%
National Bank
Sonali Bank
-2.86%
Islami Bank
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Cost of Fund
The interest rate paid by financial institutions for the funds that they deploy in their business.
The cost of funds is one of the most important input costs for a financial institution, since a lower
cost will generate better returns when the funds are deployed in the form of short-term and longterm loans to borrowers. The spread between the cost of funds and the interest rate charged to
borrowers represents one of the main sources of profit for most financial institutions.
Bank Name
2011
2012
2013
National Bank
10.22%
0.80%
0.96%
Solali Bank
1.11%
1.42%
-2.86%
Islami Bank
9.32%
9.45%
10.21%
Cost of Fund
15.00%
10.21%
10.00%
2011
5.00%
2012
0.96%
2013
0.00%
National Bank
-5.00%
Sonali Bank
-2.86%
Islami Bank
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2011
2012
2013
National Bank
72.21%
80.19%
78.03%
Solali Bank
64.10%
63.10%
50.07%
Islami Bank
80.10%
85.18%
82.35%
82.35%
78.03%
50.07%
2011
2012
2013
National Bank
Sonali Bank
Islami Bank
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NBL
Sonali Bank
Islami Bank
Provision shortfall
1,461.48
(161.70)
2,465.00
Adjusted capital
27,705.46
50,302.10
60,415.00
Total deposit
193,642.90
685,894.60
473,141.00
Classified loan
75,062.30
135,725.00
121,531.00
Total loan
151,098.90
313,450.50
343,450.50
Total asset
235,173.80
852,852.20
549,979.11
Net income
4,356.60
3,580.10
5,055.30
Liquid asset
147,459.30
49,491.50
127,000.00
Total RWA
835,960.74
2,091,134.30
1,683,036.91
Rating
NBL
Sonali Bank
Islami Bank
3.31
2.41
3.59
0.50
0.43
0.35
Management Rating
4.00
5.00
6.00
Earning Rating
1.85
0.42
0.92
Liquidity
1.21
1.24
1.16
Composite Rating
1.60
2.60
3.60
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56 | P a g e
Customers are satisfied with the price charged by National Bank Limited Bank but they
are not too much aware about the pricing strategy. Customers awareness should be
build over pricing strategy.
The offices should be decorated with the help of interior design companies.
Customers are the heart of the organization. They should provide more space in the
office and if possible they should have some entertainment facility.
The employee of the branch should be trained continuously.
The National Bank Limited Bank should recruit more employees having commerce
backgrounds.
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Chapter-3
Conclusion & Suggestions
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3.1 Conclusion:
During the 12 weeks internship program at NBL, almost all the desk has been observed more or
less. For gaining knowledge of practical banking and to compare this practical knowledge with
theoretical knowledge. Though all departments and sections are covered in the internship
program, it is not possible to go to the depth or each activities of division because of time
limitation. So, objectives of this internship program have not been fulfilled with complete
satisfaction. However, highest effort has been given to achieve the objectives the internship
program. National Bank Limited has been trying to operate its business successfully since 1983.
The bank has already developed good image and goodwill among its clients by offering excellent
services. Today, the whole Banking sector is facing a tough competition and challenge. In this
situation our Branch is in good position than any other Bank of its locality and day-by-day we
are increasing our activities & goodwill. Within 20 years of its operation, the bank has grabbed a
position in the banking sector. According to the CAMEL rating the banks performance are 3,
which is satisfactory. It is expected that in a year or so the rating will be 1, which is strong. So
we can say that overall performance is good in banking sector of Bangladesh. From the practical
implementation of customer dealing procedure during the whole period of my practical
orientation in National Bank Limited Bank I have reached a firm and concrete conclusion in a
very confident way. I believe that my realization will be in harmony with most of the banking
thinkers. It is quite evident that to build up an effective and efficient banking system to the
highest desire level computerized transaction is must. Success in the banking business largely
depends on effective lending. Less the amount of loan losses, the more the income will be from
credit operation s. the more the income from credit operations the more will be the profit of the
National Bank Limited and here lays the success of credit financing. It can be argued that though
the results achieved so far are not satisfactory, credit financing is a modern scientific technique
for enhancing National Bank Limited banks strength and there lies the opportunities to make it
more effective in the future for our own benefit. From the learning and experience point of view
I can say that I really enjoyed my internship at National Bank Limited. From the very first day. I
am confident that this 03 (three) months internship program at National Bank limited, will
definitely help me to realize my further carrier in the job market.
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Recommendation
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3.2 Recommendation
Though the bank is making a huge amount of profit and gencratil1g a large volume of deposit,
based on my working experience at Nationa1 Bank limited, Credit card division, I would like to
put up the following recommendations.
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3.3 Bibliography
1. National Bank Limited Annul Report 2013, 2012, 2011.
2. National Bank Limited Financial Statement 2013, 2012, 2011
3. http://www.nblbd.com/
4. Sonali Bank Limited Annul Report 2013, 2012, 2011.
5. Sonali Bank Limited Financial Statement 2013, 2012, 2011
6. http://www.sonalibank.com.bd/
7. Islami Bank Bangladesh Limited Annul Report 2013, 2012, 2011.
8. Islami Bank Bangladesh Limited Financial Statement 2013, 2012, 2011
9. http://www.islamibankbd.com/
10. http://www.bangladesh-bank.org/
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