Report On Credit Risk Management On National Bank LTD

Credit Risk Management
1.1 Origin of the Report

This report is an internship report prepared as a requirement for the completion of the MBA
program. The primary goal of the internship was to provide an on the job exposure to the student
and an opportunity for translation of theoretical conceptions in real life situation. We, the students,
were placed in enterprises, organizations, research institutions as well as development projects.
In this connection, after the completions of the MBA program, I was assigned to the Credit Risk
Management of the National Bank Limited for practical orientation. I chose the topic Credit risk
Management in National Bank Ltd. for my internship report under the supervision of Md. Shajul
Islam,
Lecturer
(Accounting),
Department
of
Business
Administration,
Stamford
UniversityBangladesh.
1.2 Background of the report:
Last year Bangladesh Bank undertook a project to review the global best practices in the banking
sector and examines in the possibility of introducing these in the banking industry of Bangladesh.
Four Focus Groups were formed with participation from Nationalized Commercial Banks, Private
Commercial Banks & Foreign Banks with representatives from the Bangladesh Bank as team
coordinators to look into the practices of the best performing banks both at home and abroad.
These focus groups identified and selected five core risk areas and produce a document that
would be a basic risk management model for each of the five core risk areas of banking. The
five core risk areas are as followsa) Credit Risks;
b) Asset and Liability/Balance Sheet Risks;
c) Foreign Exchange Risks;
d) Internal Control and Compliance Risks; and
e) Money Laundering Risks.
Bangladesh Bank in one of its circular (BRPD Circular no.17) advised the commercial banks of
Bangladesh to put in place an effective risk management system by December, 2003 based on
the guidelines sent to them.
I am working in the Credit Department of National Bank Limited. In this report, I will try to make a
comparative analysis between Bangladesh Bank suggested best practices guideline for
managing credit risk and National Bank Limited existing credit policy.
1.3 Rationale of the report:
The internship program is very helpful to bridge the gap between the theoretical knowledge and
real life experience as the part of the Bachelor of Business Administration (MBA) program. This
internship report has been designed to have a practical experience through the theoretical
understanding. For the completion of this internship program I have been placed in Bank named
National Bank Limited. I decided to work on the practices of general banking activities of the
bank. The report focuses on the practices of the general banking activities.
1.4 Objective of the study:
The objective of the internship program is to familiarize students with the real business situation,
to compare them with the business theories & at last stage make a report on assign task.
The study has been undertaken with the following objectives:
To complete the partial fulfillment of the requirement of MBA Degree
To know the general banking activities of National Bank Ltd
To apprise the principal activities and evaluate performance of the National Bank Ltd
To analysis the pros and cons of the conventional ideas about credit operation of a Bank.
To have better orientation on credit management activities specially credit policy and practices,
credit appraisal, credit-processing steps, credit management, financing in various sector and
recovery, loan classification method and practices of National Bank Limited (NBL).
To compare the existing credit policy of National bank limited with that of best
Practices guideline given by Bangladesh Bank, the central bank of Bangladesh.

To identify and suggest scopes of improvement in credit management of NBL.
To get an overall idea about the performance of National Bank Ltd.
To fulfill the requirement of the internship program under MBA program
1.5 Scope of the Report:
This internship is a part of Business Administration degree that provides an on the job experience
to students. I was placed at National Bank Limited as an internee for three months duration. This
internship program was my very first on-the-job exposure and provides me with learning
experience and knowledge in several areas. During the first few week of my internship period, I
was able to get accustomed to the working environment of National Bank Limited. As the
internship continued, I not only learned about the activities and operation of correspondent Bank,
but I also gathered some
Knowledge about the basic business activities of banking in first one-month of my internship
period.
This internship report covers all the trade related products handled by National Bank Ltd such
as Dispatch, Cash department, Account opening, Cheque clearing, Local remittance, Accounts,
Loan division, Credit card division, Foreign exchange, Western Money Union etc.
This has been prepared through extensive discussion with bank employees and with the
customer. While preparing this report, I had a great opportunity to have an in depth knowledge of
all the banking activities practices by the National Bank Ltd. It also helps me to acquire a first
hand perspective of a leading private banking in Bangladesh.
Generally, by the word Bank we can easily understand that the financial institution deals with
money. But there are different types of banks such as; Central Banks, Commercial Banks, Saving
Banks, Investment Banks, Industrial Banks, Cooperative Banks etc. But we are used the term
Bank without any prefix, or qualification, it refer to the commercial banks. Commercial banks
are the primary contributions to the economy of a country. Therefore we can say commercial
banks are profit-making
Institutions that hold the deposit of individuals 7 business in checking & savings accounts and
then uses these founds to make loans
Both general public and the government are dependent on the services of banks as the financial
intermediary. As, banks are profit earning concern; they collect deposit at the lowest possible cost
and provides loans and advances at higher cost. The differences between two are the profit for
the bank the bank.
A company can increase efficiency through a number of steps. These include exploiting
economies of scale and learning effects, adopting flexible manufacturing technologies,
reducing customer defection rate, getting R&D function to design products that are easily to
manufacture, upgrading the skills of employees through training, introducing self-managing team,
linking pay to performance building a company wide to efficiency through strong leadership, and
designing structures that facilitate cooperation among different functions in pursuit the efficiency
goal
Efficiency of customer is related with progression of operation. We can identify the efficiency of
customer services by studying the progress of National Bank Limited from starting to at present.
The progress of National Bank Limited is very rapid with concern of its profits making and
growth of its operation within the country towards the countrys economy.
National Bank Limited pursues decentralized management policies and gives adequate work
freedom to the employees. This results in less pressure for the worker and acts as a motivational
tool for them, which gives them, increased encouragement and inspiration to move up the leader
of success. Overall I have experienced a very friendly and supporting environment at National
Bank Limited which gave me the pleasure and satisfaction to be a part of them for a while.
The study would focus on the following areas of National Bank Limited.
Credit appraisal system of National Bank Limited.
Procedure for different credit facilities.
Portfolio (of Loan or advances) management of National Bank Limited.
Organization structures and responsibilities of management
1.6 Methodology of the study:
The following methodology will be followed for the study:
Both primary and secondary data sources will be used to generate this report. Primary data
sources are scheduled survey, informal discussion with professionals and observation while
working in different desks. The secondary data sources are annual reports, manuals, and
brochures of National Bank limited and different publications of Bangladesh Bank.
To identify the implementation, supervision, monitoring and repayment practice- interview with the
employee and extensive study of the existing file was and practical case observation was done.
1.7 Source of data:
To perform the study data sources are to be identified and collected, the data are to classified,
analyzed, interpreted and presented in a systematic.
i) Primary Sources Face to face conversation with the official staff.

Practical desk work
Simple Depth interview technique was used by asking number open-ended questions to
collect the information.
Relevant file study as provide by the concerned officer.
ii) Secondary Sources:
Annual Report ( 2005, 2006 and 2008) National Bank Limited
Credit Risk Manual (2005), National Bank.

1.8 Limitation of the study:
The present study was not out of limitations. But it was a great opportunity for me to know the
banking activities of Bangladesh specially National Bank Limited. The study carried on has the
following limitations:
The main constraint of the study is inadequate access to information, which has hampered the
scope of the analysis required for the study.

Some problems create confusions regarding verification of data.
The time is insufficient to know all activities.
It was very difficult to collect the information from various personnel for their job constraint.
As some of the fields of banking are still not covered by our courses, there was difficulty in
understanding some activities.

Because of the limitation of information, some assumption was made. So there may be some
personal mistake in the report.
Chapter 02
Background of banking
2.1 Definition of bank:
The Jews in Jerusalem introduced a kind of banking in the form of money lending before the birth
of Christ. The word Bank was probably derived from the word bench as during ancient time
Jews
used
to
do
money
-lending
business
sitting
on
long
benches.
First modern banking was introduced in 1668 in Stockholm as Savings Pis Bank which opened
up
new
era
of
banking
activities
throughout
the
European
Mainland.
In the South Asian region, early banking system was introduced by the Afghan traders popularly
known as Kabuliwallas. Muslim businessmen from Kabul, Afghanistan came to India and started
money lending business in exchange of interest sometime in 1312 A.D. They were known as
Kabuliwallas
A bank is a financial institution whose primary activity is to act as a payment agent for customers
and to borrow and lend money. It is an institution for receiving, keeping, and lending money.
Banks have influenced economies and politics for centuries. Historically, the primary purpose of a
bank was to provide loans to trading companies. Banks provided funds to allow businesses to
purchase inventory, and collected those funds back with interest when the goods were sold. For
centuries, the banking industry only dealt with businesses, not consumers. Banking services
have expanded to include services directed at individuals, and risk in these much smaller
transactions are pooled.
The name bank derives from the Italian word banco desk/bench, used during the Renaissance
by Florentines bankers, who used to make their transactions above a desk covered by a green
tablecloth.[2]However, there are traces of banking activity even in ancient times.In fact, the word
traces its origins back to the Ancient Roman Empire, where moneylenders would set up their
stalls in the middle of enclosed courtyards called macella on a long bench called a bancu, from
which the words banco and bank are derived. As a moneychanger, the merchant at the bancu did
not so much invest money as merely convert the foreign currency into the only legal tender in
Romethat of the Imperial Mint.[3]
2.1.1 Law of banking:

Banking law is based on a contractual analysis of the relationship between the bank and
the customer. The definition of bank is given above, and the definition of customer is any person
for whom the bank agrees to conduct an account.
The law implies rights and obligations into this relationship as follows:
1.
The bank account balance is the financial position between the bank and the customer, when
the account is in credit, the bank owes the balance to the customer, when the account is
overdrawn, the customer owes the balance to the bank.
2.
The bank engages to pay the customers cheques up to the amount standing to the credit of
the customers account, plus any agreed overdraft limit.
3.
The bank may not pay from the customers account without a mandate from the customer, e.g.
a cheque drawn by the customer.
4.
The bank engages to promptly collect the cheques deposited to the customers account as the
customers agent, and to credit the proceeds to the customers account.
5.
right to combine the customers accounts, since each account is just an aspect of the same
credit relationship.
6.
The bank has a lien on cheques deposited to the customers account, to the extent that the
customer is indebted to the bank.
7.
The bank must not disclose the details of the transactions going through the customers
account unless the customer consents, there is a public duty to disclose, the banks interests
require it, or under compulsion of law.
2.2 Historical background of the banking institution in Bangladesh:
Banks have influenced economies and politics for centuries. Historically, the primary purpose of a
bank was to provide loans to trading companies. Banks provided funds to allow businesses to
purchase inventory, and collected those funds back with interest when the goods were sold. For
centuries, the banking industry only dealt with businesses, not consumers. Banking services
have expanded to include services directed at individuals, and risks in these much smaller
transactions are pooled.The name bank derives from the Italian word banco desk/bench, used
during the Renaissance by Florentines bankers, who used to make their transactions above a
desk covered by a green tablecloth. [2] However, there are traces of banking activity even in
ancient times.
In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders would
set up their stalls in the middle of enclosed courtyards called macella on a long bench called
a bancu, from which the words banco and bank are derived. As a moneychanger, the merchant at
the bancu did not so much invest money as merely convert the foreign currency into the only
legal tender in Romethat of the Imperial Mint.[3]
2.3 Beginning Banking operation in Bangladesh:
After independence of Bangladesh the government of Bangladesh was formally to change the
administration of the territory now constitute Bangladesh. The government promulgated a law
called Bangladesh bank order 1971 (acting president order no 2 of 1971). By this order the state
bank of Pakistan was declared to be deemed as Bangladesh bank and officers, branches and
assets of said state bank was declared to be deemed as officers, branches of Bangladesh bank.
On the date there existed 14 scheduled banks with about 3042 branches all over the world.
On the 16th December 1971 there existed the following 12 banks in Bangladesh namely:
Existing Bank
1.
2.
3.
National bank.
Bank of Bahawalpur Ltd
Premir Bank Ltd.
New Bank
Sonali Bank
4. Habib Bank Ltd

4. Commerce Bank Ltd
Agrani Bank
6. United Bank Ltd.

6. Union Bank Ltd.
Janata Bank
8. Muslim Commercial Bank Ltd.

8. Standard Bank Ltd.
8. Australasia Bank Ltd
11. Eastern Mercantile Bank Ltd.
12. Eastern Banking Corporation Ltd.
Rupali Bank
Pubali Bank
Uttara Bank
2.4 Banking operation of Bangladesh:

The number of banks in all now stands at 49 inBangladesh. Out of the 49 banks, four are
Nationalized Commercial Banks (NCBs), 28 local private commercial banks, 12 foreign banks
and the rest five are Development Financial Institutions (DFIs).
Sonali Bank is the largest among the NCBs while Pubali is leading in the private ones. Among the
12 foreign banks, Standard Chartered has become the largest in the country. Besides the
scheduled banks, Samabai (Cooperative) Bank, Ansar-VDP Bank, Karmasansthan (Employment)
Bank and Grameen bank are functioning in the financial sector. The number of total branches of
all scheduled banks is 6,038 as of June 2000. Of the branches, 39.95 per cent (2,412) are
located in the urban areas and 60.05 per cent (3,626) in the rural areas. Of the branches NCBs
hold 3,616, private commercial banks 1,214, foreign banks 31 and specialized banks 1,177.
Bangladesh Bank (BB) regulates and supervises the activities of all banks. The BB is now
carrying out a reform program to ensure quality services by the banks.
Chapter 03
Background of National Bank Ltd.
3.1 Background of National Bank Ltd. (NBL):
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 forthcoming future the infrastructure of the Bank has been rearranging. The expectation of all class
businessman, entrepreneurs and general public is much more to NBL. Keeping the target in mind
NBL has taken preparation to open new branches by the year 2008. The expectation of all class
businessman, entrepreneurs and general public is much more to NBL. Keeping the target in mind
NBL has taken preparation to open new branches by the year 2008.
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. We are determined to bring back the long forgotten taste of
banking services and flavors. We 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 President of the Peoples Republic of Bangladesh Justice Ahsanuddin Chowdhury
inaugurated the bank formally on March 28, 1983 but the first branch at 48, Dilkusha Commercial
Area, Dhaka started commercial operation on March 23, 1983. The 2nd Branch was opened on
11th May 1983 at Khatungonj, Chittagong.
At present, NBL has been carrying on business through its 101 branches spread all over the
country. Besides, the Bank has drawing 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 programme 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.
The year 2006 marked the addition of yet another golden stair in the chronicle of NBLs success
story. Compared to 2005, Foreign exchange business of the Bank increased by 34.40% to Tk.
5186 crore, of which export, import and remittance business increased by 34.16%, 31.27% and
56.50% respectively. Total assets of the Bank stood at Tk. 4483 crore on 30.09.2006.
Our Bank invested 25% equity in Gulf Overseas Exchange Company LLC, a joint venture
Exchange Company in Oman, operating since November, 1985 under the management of our
Bank. The Bank received Riyal Omani 11875 equivalent to Tk.2.10 million as dividend for the
year 2006.
Now NBL is on line to establish trade and communication with the Prime International banking
companies of the world. As a result NBL will be able to build a strong root in international banking
horizon. Bank has been drawing arrangement with well conversant money transfer service
agency Western Union. It has a full time arrangement for speedy transfer of money all over the
world.
Banking is not only a profit-oriented commercial institution but it has a public base and social
commitment. Admitting this true NBL is going on with its diversified banking activities. NBL
introduced National Bank Monthly Savings Scheme (NMS), Special Deposit 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 middleincome group.
3.2 Corporate information:
3.2.1 Board of Directors:
MS. PARVEEN HAQUE SIKDER
Chairperson
MRS HELENA RAHMAN
Director
MR. A. B. TAJUL ISLAM
Director
MR. ZAKARIA TAHER
Director
MR. SHAHADAT HOSSAIN (SALIM)
MR. M. G. MURTAZA
MR. LT. COL. (RETD.) MD. AZIZUL ASHRAF, PSC
MR. A. M. NURUL ISLAM
Director
Director
Director
Director
MR. SALIM RAHMAN
Director
MR. S. M. SHAMEEM IQBAL
Director
PROF. MAHBUB AHMED
Director
CAPT. ABU SAYEED MONIR
Director
MR. M. AMINUZZAMAN
Managing Director& CEO
Organ gram of the NBL in Broadly
3.3 Number of branches:

At present, NBL has been carrying on business through its 101 branches spread all over the
country. Besides, the Bank has drawing 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.
3.3.1 The list of Branches with opening date of National Bank Limited:
SL. No
Branch name
Opening Date
SL. No
Branch name
Opening Date
Head office
23.03.83
47
Kawranbazar
27.08.89
01
Dilkusha
23.03.83
48
North BK.HI.RD
15.07.90
02
Khatungonj
11.05.83
49
Paglabazar
29.08.90
03
Imamgonj
08.06.83
50
Shibganj
24.12.90
04
Agrabad
16.08.83
51
Saver
30.01.91
05
Rajshahi
28.08.83
52
Chapaienawabgonj
10.02.94
06
Rangpur
31.08.83
53
Islampur
28.02.94
07
Khulna
12.09.83
54
Pahartoli
13.04.94
08
Sylhet
06.11.83
55
Bhola
01.06.94
09
Comilla
30.01.84
56
Jhalakathi
02.06.94
10
Narayangonj
12.03.84
57
Motileel
26.12.94
11
Feni
09.05.84
58
Subid bazar
19.06.95
12
Bangshal
31.07.84
59
Sk. Mojib RD
28.06.95
13
Barisal
10.10.84
60
Ishwardi
27.08.95
14
Bogra
04.12.84
61
Joypurhat
14.05.96
15
Elephand road
18.05.85
62
Dhanmondi
22.06.96
16
Jubilee Road
10.11.85
63
Coxsbazar
05.02.97
17
Chowmohoni
10.11.85
64
Kishorgonj
07.06.97
18
Moulovibazar
16.07.86
65
KDA Khulna
30.09.97
19
Sreemongal
17.07.86
66
Gulshan
19. 10.99
20
F. exchange
09.10.86
67
Uttara
29.05.01
21
Brahmanbaria
08.11.86
68
Mirpur
31.05.01
22
Narsindhi
25.11.86
69
Bishwanath
12.06.01
23
Satkhira
30.11.86
70
Hobigonj
14.06.01
24
Tongi
23.02.87
71
Gajipur
25.10.01
25
Mymensing
24.02.87
72
Z.H.SikdarWomenCollege
04.11.01
11.08.97
26
Faridpur
26.02.87
73
Thakurgaon
08.11.01
27
Jesshor
28.02.87
74
Jamalpur
15.11.01
28
Dagondhuiyn
27.06.87
75
Sherpur
24.12.01
29
chandpur
17.08.87
76
Chauddagram
14.02.02
30
Babubazar
31.08.87
77
Gopalgonj
21.06.06
31
Malibagh
04.11.87
78
Sreenagar
10.07.06
32
Mirpur bazaar
05.12.87
79
Modupur
06.07.06
33
Tajpur
28.02.88
80
Godagari
23.07.06
34
Zindabazar
12.04.88
81
Naria
11.09.06
35
Pabna
17.04.88
82
Bhanga
14.09.06
36
Dinajpur
05.06.88
83
Chowgacha
17.09.06
37
Saidpur
19.06.88
84
Natore
18.09.06
38
Noaogaon
07.06.88
85
Sunamgonj
20.90.06
39
Sirajgon
14.08.88
86
Muradpur
19.11.06
40
Kushtia
16.08.88
87
Bashurhat
28.11.06
41
Patiya
14.09.88
88
Charfession
12.12.06
42
Mohakhali
31.10.88
89
Mohammadpur
20.12.06
43
Bebianibazar
26.12.88
90
LakeCircus
24.12.06
44
Sandwip
15.03.89
91
Mirsarai
.27.12.06
45
Banbura
04.04.89
46
Chaktai
24.06.89
3.4 Number of employee:

Up to September 2006, the total number of workforce of NBL stood at 2239, which include 1689
officers and executives and 550 staff.
3.5 Vision statement of the bank:
Ensuring highest standard of clientele services through best application of latest information
technology, making due contribution to the national economy and establishing ourselves firmly at
home and abroad as a front ranking bank of the country are our cherished vision.
3.6 Mission statement of the bank:
Efforts for expansion of our activities at home and abroad by adding new dimensions to our
banking services are being continued unabated. Alongside, we are also putting highest priority in
ensuring transparency, account ability, improved clientele service as well as to our commitment to
serve the society through which we 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.
3.7 Objective of the Bank:

Alongside up gradation and diversification of banking service to provide maximum
satisfaction to the respected clients, nourishing saving habit among the general people by offering
them attractive savings oriented products, thereby assisting economic development.
To build up a deep-rooted and harmonies banker-customer relationship by dispensing

prompted improved services to the clients.
To make best use of the hard-earned investment of our valued shareholders.
Simultaneously, play our due part in developing a vibrant capital market by ensuring more effective
participation of the Bank in the share market.
To make best use of latest technologies for giving the clients a taste of modern banking so
as to encourage them to continue and feel proud of banking with NBL.

To respond to the need of the time by participating in syndicated large loans financing,
thereby expanding the area of investment of the Bank.

To gain confidence of all quarters involved in the economic development of the country
through pursuance of a policy of continuous adjustment and coordination of the Banks external
trade programmers with the dynamism inherent in the international trade and payments system.
3.8 Product Scheme

3.8.1Current 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
2 copies of recent photograph of account holder.
TIN certificate.
Nominees Photograph.
Valid photocopy of Voter ID Card.
3.8.2Home Loan:
NBL offers home loan facility for purchasing flats or construction of house .
Financing amount extends upto 70% or Tk. 75,00,000 which is highest of total construction cost.
Grace period period available upto 9 months in flat purchase or 12 months in construction.
Competitive interest rate.
3.8.3 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.
Maximum Tk.3.00 lac (Festival Scheme) and Maximum Tk.5.00 lac (Small Business Scheme) .
3 Months (Festival Scheme) and 5 years (including 1 month grace period (Small Business
Scheme))
Collateral Free Advance.
Any genuine and small businessmen/ entrepreneurs/enterprise having honesty, sincerity, and
integrity.
3.8.4Consumer Loan:
NBL offers consumer credit facility for retail customers.
Financing items
Electronics consumer products.

Computer or Computer accessories.
3.8.5 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 .
Low interest rate 13.00%-14.50%.
Minimum processing time.
Low service charges.
3.8.6 Savings Deposit:
National Bank Limited offers customers a basal free and low charges savings account through
the branches all over Bangladesh.
Benefits(Condition Apply)
Interest rate of 6.00% on average monthly balance.
Maintenance charge yearly Tk. 400.
No hidden costs.
Standing Instruction Arrangement are available for operating account.t Opening
Valid photocopy of Voter ID Card
3.8.7 Current Deposit:
National Bank Limited offers customers current deposit facility for day-to-day business
transaction without any restriction.
No hidden costs.
Standing Instruction Arrangement are available for operating account.
Easy access to our other facilities.
Account Opening
TIN certificate.
Valid photocopy of Voter ID Card.
3.8.9 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.
No initial deposit is required to open the account.
Interest will be offered 1.75% for US Dollar Account , 3.00 % for EURO Account and 3.25% for
GBP Account.
They will get interest on daily product basis on the credit balance (minimum balance of US$
1,000/- or GBP 500/- at least for 30 days) maintaining in the account.
Passport Copy.
ID of residence in abroad.
3.8.10 NFC Deposit:
National Bank Limited gives opportunity to maintain foreign currency account thorugh 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.
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.
3.8.11 Monthly Savings:
National Bank Limited offers monthly savings scheme for its retail customers.
Monthly amount can be 500 and multiple of it.

Premature encashment is available for urgent need.
Loan facility can be available up to 80% against NMS account balance.
Standing instruction facility can be available to auto transfer installment to NMS account.
1 copy of your recent photograph.
3.8.12 Short Term Deposit:
National Bank Limited offers interest on customers short term savings and gives facility to
withdraw money any time.
Minimum balance Tk. 2000.
Standing Instruction Arrangement are available for operating account
3.8.13 Fixed Deposit:
National Bank Limited offers fixed term savings that will scale up your savings amount with the
time.
Any amount can be deposited.
Premature encashment facility is available.
Overdraft facility available against term receipt.
1 copy of recent photograph of account holder.
3.8.14 Overdraft:
NBL offers overdraft facility for corporate customers for day-to day business operations .
Low charges in overdraft account maintenance.
Facility is available against deposit receipt or mortgage property.
Low interest rate 13-16%.
Opening
Introductory current account .
Others necessary documents as per loan requirement
3.8.15 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.
Money transfer from anywhere in the World to Bangladesh in minutes.
3.8.16 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 world wide accepted credit card. Credit card is safe, instant and universal money. National
bank ltd issued two types of credit card, which is as follows:
Local credit card:
Local credit card is two types, such as gold card and silver card.
Gold card limit is 45000 taka to 100000 taka
Silver card limit is 10000 taka to 45000 taka
Requirement for local credit card:FDR.STD account Loan
Tax identification number
Two copy passport size photo

International credit card:It has also two types, such as gold card and silver card.
For international purpose gold card limit is 2000 us dollar to 4000 us dollar.
For international purpose silver card limit is 1000us dollar to 2000us dollar.
Requirement for international credit card: Pass port photocopy (first five pages)
Two copy passport size photo.
TIN number
FDR, STD, SB account lien
Through its Credit Card. National Bank Limited has not only initiated a new scheme but also
brought a new life style concept in Bangladesh. Now the dangers and the worries of carrying
cash money are memories of the past. Credit Card.
3.8.17 NBL ATM Services:
ATM means automated teller machine. NBL ATM card give opportunity to their customer that they
can withdraw their money at any time, any days even holidays. By using ATM subscriber can give
various utility bill such as telephone, gas, electricity bills etc. actually ATM card is a debit card.
National Bank Limited has introduced ATM service to its Customers. The card will enable to save
our valued customers from any kind of predicament in emergency situation and time consuming
formalities. NBL ATM Card will give our distinguished Clients the opportunity to withdraw cash at
any time, even in holidays, 24 hours a day, and 7 days a week.
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.
3.8.18 NBL Power Card:
It is a prepaid card. No need of any account of NBL branch. Application form available at any NBL
branch and card center. No annual fee for the first year. Renewal fee tk 200.00 only. Local card
limit 1000at minimum or its multiple. International card limit-US$ 500.00 at minimum. Refill
through any NBL branch. Drawing cash from NBL ATMs free of charge & from ATMs under QCash network-Tk 10.00 per transaction from other ATM-Tk 100.00. Loading fee for international
card will be charged @1% of the loaded amount. Cash withdraw fee (abroad) 2% of the cash
drawn amount or US $.2.00, whichever is higher. Accepted at all VISA POS merchants. Cash
withdrawal at all ATM booths bearing VISA and Q-Cash logo.( Except HSBC Bangladesh). Utility
bill payment. It is a prepaid card. No need of any account of NBL branch. Application form
available at any NBL branch and card center. No annual fee for the first year. Renewal fee Tk
200.00 only. Local card limit 1000at minimum or its multiple. International card limit-US$ 500.00
at minimum. Refill through any NBL branch.
ATM Location:
Branch
Location
District
Satmasjid Road
761 , Satmashjid Road , Dhanmondi
Dhaka
Uttara
HossainTower , Next to over Bridge
Dhaka
Dilkusha
48, Dilkusha C/A
Dhaka
Gulshan
97/1 , Gulshan Aenue
Dhaka
Malibagh
474, Malibagh, DIT Road
Dhaka
Karwan Bazar
BTMC Bhavan, Karawan Bazar
Dhaka
Dhaka Varsity
AdministritiveBuilding
Dhaka
3.9 General banking:

3.9.1 Account Opening Department:
Another function of the banking is A/C opening. The establish a banker and customer
relationship account opening is the first step. Opening of account binds the banker and customer
into contractual relationship. A bank has to maintain different types of accounts for different
purposes. National Bank Limited offers the general deposit products in the form of various
accounts.
Saving Account.
o
Current Account.
o
Short term deposit Account.
o
Fixed deposit Account.
Savings account is that account whose interest rate is higher then current account and saving
account holder can withdraw two times in a week. Savings account can be open by individual,
joint name or club, society, association etc.
3.9.3 Current account (CD):
Current account is that types account where depositor can withdraw his deposited money at any
time there is no restriction. Current account can be divided into following such as:
Individual current account
Proprietorship current
Partnership
Limited Companies
Trustees/ clubs/ association/ and different types of institution etc.

3.10 SWOT analysis of the NBL
3.10.1 Strengths:
NBL provides its customers excellent and consistent quality in every service. It is of highest
priority that customer is totally satisfied.

NBL draws its strength from the adaptabilssity and dynamism it possesses. It has quickly
adapted to world class standard in terms banking services. NBL has also adapted state of the art
technology to connect with world for better communication to integrate facilities.
All the level of the management are solely directed to maintain a culture for the betterment
of the quality of the service and development a corporate brand image in the market through
organization wide team approach and open communication system.
NBL utilizes state of the art technology to ensure consistent quality and operation. The
proof of that can be found in one of its branches, Scotia that is equipped with Reuters and
SWIFT. All these facilities will be introduced in every branch vary shortly.
On of the key-contributing factors behind the sources of NBL are its employees who are
highly trained and most competent in their own field. NBL provides their employees training both
in- house and out side job.
NBL is free from dependence from the ever-disruptive owner supply of our public sources.
The required power is enervated by the company through enervator fed on diesel. Water
enervation at present is also done by deep tube wells on site and is abundant in quality.
NBL provides its workforce an excellent place to work in. total complex has been centrally
conditioned. The interior decoration was done exquisitely with the choice of soothing colors and
blend of artistic that is comparable to any multinational bank.
NBL provides the western union money transfer service for these customers are easily
getting the foreign money.

NBL also provide power card service facility. First year Bank is not providing any service
charge for the power card.
3.10.2 Weaknesses:
NBL has very limited human resources compared to its financial activities. There are
not many people to perform most of the tasks. As a result many of the employees are burdened
with extra workloads and works late hours without any overtime facilities. This might cause high
employee turnover that will prove to be too costly to avoid.

Few of the NBLs products offered to its clients like Personal credit (PC) are lying idle due
to proper marketing initiative from the management. These products call easily be made available
in attractive way to increase its client base as well as its deposit status.
3.10.3 Opportunities:
Government of Bangladesh has rendered its full support to the banking sector for a sound
financial status of the country, as it is becoming one of the vital sources of employment in the
country now. Such government concern will facilitate and support the long tern vision for NBL.
Emergence of e-banking will open more scope for NBL to reach the clients not only in
Bangladesh but also in global arena. It is also facilitate wide area network in between the buyer
and the population units of NBL to smooth operation to meet the desired need with least deviation.
3.10.4 Threats:
Government of Bangladesh has rendered its full support to the banking sector for a sound
financial status of the country, as it is becoming one of the vital sources of employment in the
country now. Such government concern will facilitate and support the long tern vision for NBL.
Emergence of e-banking will open more scope for NBL to reach the clients not only in
Bangladesh but also in global arena. It is also facilitate wide area network in between the buyer
and the population units of NBL to smooth operation to meet the desired need with least deviation.
Chapter 04
Risk Management of National Bank Limited
4.1 Definitions of risk:
Risk is a concept that denotes a potential negative impact to some characteristic of value that
may arise from a future event, or we can say that Risks are events or conditions that may occur,
and whose occurrence, if it does take place, has a harmful or negative effect.
Risk is a commercial strategic board game, produced by Parker Brothers (now a division of
Hasbro). It was invented by French movie director Albert Lamorisse, and originally released in
1957, as La Conqute du Monde (The Conquest of the World), in France.
Risk is an album by thrash metal band Megadeth released in 1999. Risk is also notable as the
last original Megadeth release to feature long time Megadeth guitarist Marty Friedman. This
album is the first Megadeth recording with drummer Jimmy DeGrasso.
The probability of harmful consequences, or expected losses (deaths, injuries, property,
livelihoods, economic activity disrupted or environment damaged) resulting from interactions
between natural or human-induced hazards and vulnerable conditions
Risk is a science fiction short story by Isaac Asimov, first published in the May 1955 issue of
Astounding Science Fiction, and reprinted in the collections The Rest of the Robots (1964) and
The Complete Robot (1982).
4.2 Definition of Credit risk:
Risk is inherent in all commercial operations. For banks and financial institutions credit risk is an
essential factor, which needs to be managed properly. Credit risk virtually is the possibility that a
borrower will fail to repay debt in accordance with the terms of sanction. Credit risk therefore
arises from the banks lending operations. In the present days state of deregulation and
globalization banks range of activities have increased, so also are the bank. Expansion of bank
lending operations covering new products have focused the bank to confront newer risk areas
and therefore to work out proper risk addressing devices. Credit risks are so exhaustive that a
single device can not encompass all the risk.
As National bank is providing credit facility out of its total available funds, it has to manage these
credits very efficiently. An efficient credit management system comprises many things and this
cover the pre-sanction activities to post-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.
4.3 Credit risk and Bangladesh bank:
The Financial Sector Reform Project (FSRP) has designed the LRA package, which provides a
systematic procedure for analyzing and quantifying the potential credit risk. Bangladesh Bank has
directed all commercial bank to use LRA technique for evaluating credit proposal amounting to
Tk. 10 million and above. The objective of LRA is to assess
The credit risk in quantifiable manner and then finds out ways & means to cover the risk.
However, some commercial banks employ LRA technique as a credit appraisal tool for evaluating
credit proposals amounting to Tk. 5 million and above. Broadly LRA package divides the credit
risk
into
two
categories,
namely
Business risk & Security risk.

A detail interpretation of these risks and the procedure for evaluating the credit as follows
4.3.1 Business risk:
It refers to the risk that the business falls to generate sufficient cash flow to repay the loan.
Business risk is subdivided into two categories.
4.3.2 Industry risk.
The risk that the company fails to repay for the external reason. It is subdivide into supplies risk
and sales risk.
4.3.3 Supplies risk:
It indicates that the business suffers from external disruption to the supply of imputes.
Components of supplies risk are as raw material, Labor, power, machinery, equipment, factory
premises etc.
4.3.4 Sales risk:
This refers to the risk that the business suffers from external disruption of sales. Sales may be
disrupted by changes to market size, increasing in competition, change in the regulation or due to
the loss of single large customer. Sales risk is determined by analyzing production or marketing
system, industry situation, Government policy, and competitor profile and companies strategies.
4.3.5 Company risk:
This refers to the risk that the company fails for internal reasons. Company risk is subdivided into
company position risk and Management risks.
4.3.6 Company position risk:
Within an industry each and every company holds a position. This position is very competitive.
Due to the weakness in the companys position in the industry, a company is the risk for failure.
That means, company position risk is the risk of failure due to weakness in the companies
position in the industry. It is subdivided into performance risk and resilience risk.
4.3.7 Performance risk:
This risk refers to the risk that the companys position is so weak that it will be unable to repay the
loan even under Favor able external condition. Performance risk assessed by SWOT (Strength,
Weakness, Opportunity and Threat) analysis, Trend analysis, Cash flow forecast analysis and
credit report analysis (i.e. CIB repot from Bangladesh Bank).
4.3.8 Resilience risk:
Resilience means to recover early injury, this refers to risk that the company falls due to resilience
to unexpected external conditions. The resilience of a company depends on its leverage, liquidity
and strength of connection of its owner or directors. The resilience risk is determined by
analyzing different financial ratio, flexibility of production process, shareholders willingness to
support the company if need arise and political and private affiliation of owners and key
personnel.
4.3.9 Management risk:
The management risk refers to the risk that the company fails due to management not exploiting
effectively the companys position. Management risk is subdivided into management competence
risk and integrity risk.
4.3.10 Management competence risk:

This refers to the risk that falls because the management is incompetent. The competence of
management depends upon their ability to manage the companys business efficiently and
effectively. The assessment of management competence depends on management ability and
management team work. Management ability is determined by analyzing the ability of owner or
board of the members first and then key personnel for finance and operation. Management..
4.3.11 Management integrity risk:
This refers to the risk that the company fails to repay the loan amount due to lack of management
integrity. Management integrity is a combination of honesty and dependability.
4.3.12 Security risk:

This sort of risk is associated with the realized value of the security, which may not cover the
exposure of loan. Exposure means principal plus outstanding interest. The security risk is
subdivided into two major heads i.e. security control risk and security cover risk.
4.3.13 Security control risk:
This risk refers to the risk that the bank falls to realize the security because of banks control over
the security offered by the borrower i.e. incomplete documents. The risk of failure to realize the
security depends on the difficulty in obtaining favorable judgment and taking possession of
security. For analyzing the security control risk the credit office is required to verify 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.
4.3.14 Security covers risk:
This refers to the risk that the realized value of security is less than exposure. Security cover risk
depends on speed of realization and liquidation value. For analyzing security cover risk, the
official requires assessing the power of the customer to prolong the legal process and to analyze
the market demand for the security For assessment of security control risk, the officials times the
time that would require to liquidate the security and assess the risk and estimates the security
value at liquidation and assess the rise
4.4 Process of Credit risk:
Credit Management Policy for any commercial bank must have been prepared in accordance
with the Policy Guidelines of Bangladesh Banks Focus Group on Credit and Risk Management
with some changes to meet particular banks internal needs.
Credit management must be organized in such a process that the bank can minimize its losses
for payment of expected dividend to the shareholders. The purpose of this process is to provide
directional guidelines that will improve the risk management culture, establish minimum
standards for segregation of duties and responsibilities, and assist in the ongoing improvement of
concerned bank.
The guidelines for credit management may be organized into the following sections:
Policy guidelines
a.
Lending guidelines
b. Credit assessment and risk grading

c. Approval authority
d. Segregation of duties
e. Internal control and compliance
Program Guidelines
a. Approval process
b. Credit administration
c. Credit monitoring
d. Credit recovers
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
As a minimum, the followings are discouraged:

Military equipment/ weapons finance
Highly leveraged transactions
Finance of speculative investments
Logging, mineral extraction/ mining, or other activity that is ethically or environmentally
sensitive
Lending to companies listed on CIB black list or known
Counter parties in countries subject to UN sanctions

Lending to holding companies.
b. Credit Assessment and Risk Grading:

A thorough credit and risk assessment should be conducted prior to the granting of loans, and at
least annually thereafter for all facilities.
Credit Applications should summaries the results of the risk assessment and include, as a
minimum, the following details:
Environment or social risk inputs

Amount and type of loan (s) proposed
Purpose of loans
Loan structure ( tenor, covenants, repayment schedule, interest)
Security arrangement
Any other risk or issue
Risk triggers and action plan-condition prudent, etc.
Risk is graded as per Lending Risk Analysis (LRA), Bangladesh Banks Guidelines of
classification of loans and advances.
1.
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
Delegated approval authorities shall be reviewed annually by 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 approval/ risk management
Relationship management/ marketing
Credit administration
e.
Internal Control and Compliance:
Banks must have a segregated internal audit/ control department charged with
audits of all branches.
conducting
Program Guidelines
a. Approval process: The following diagram illustrates an example of the approval process:
b. Credit administration: The credit administration function is critical in ensuring that proper
documentation and approvals are in place prior to the disbursement of loan facilities.
c. Credit monitoring: To minimized credit losses, monitoring procedures and systems should be
in place that provides an early indication of the deteriorating financial health of borrower.
d. Credit recovery: The recovery unit of branch should directly manage accounts with
sustained deterioration (a risk rating of sub-standard or worse). The primary functions of recovery
unit are:
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.
4.5 Types of credit risk:
Term financing for new project had BMRE of existing projects (large, medium, SME).
Working capital for industries, trading services and others (large, medium, SME).
Trade finance for import and export
Lease finance
Small loan for traders, micro enterprise and other productive small venture.
Consumer finance
Fee business
4.6 Importance of credit risk:

The importance of credit risk management for banking is tremendous. Banks and other financial
institutions are often faced with risks that are mostly of financial nature. These institutions must
balance risks as well as returns. For a bank to have a large consumer base, it must offer loan
products that are reasonable enough. However, if the interest rates in loan products are too low,
the bank will suffer from losses. In terms of equity, a bank must have substantial amount of
capital on its reserve, but not too much that it misses the Investment revenue and not too little
that it lead itself to financial instability and to the risk of regulatory non-compliance.
Credit risk management, in finance terms, refers to the process of risk assessment that comes in
an investment. Risk often comes in investing and in the allocation of capital. The risks must be
assessed so as to derive a sound investment decision. Likewise, the assessment of risk is also
crucial in coming up with the position to balance risks and returns.
Banks are constantly faced with risks. There are certain risks in the process of granting loans to
certain clients. There can be more risks involved if the loan is extended to unworthy debtors.
Certain risks may also come when banks offer securities and other forms of investments.
The risk of losses that result in the default of payment of the debtors is a kind of risk that must be
expected. Because of the exposure of banks to many risks, it is only reasonable for a bank to
keep substantial amount of capital to protect its solvency and to maintain its economic stability.
The second Basel Accords provides statements of its rules regarding the regulation of the banks
capital allocation in connection with the level of risks the bank is exposed to. The greater the
bank is exposed to risks, the greater the amount of capital must be when it comes to its reserves,
so as to maintain its solvency and stability.
risk management must play its role then to help banks be in compliance with Basel II Accord and
other regulatory bodies.
To manage and assess the risks faced by banks, it is important to make certain estimates,
conduct monitoring, and perform reviews of the performance of the bank. However, because
banks are into lending and investing practices, it is relevant to make reviews on loans and to
scrutinize and analyze portfolios. Loan reviews and portfolio analysis are crucial then in
determining the credit and investment risks
The complexity and emergence of various securities and derivatives is a factor banks must be
active in managing the risks. The credit risk management system used by many banks today has
complexity; however, it can help in the assessment of risks by analyzing the credits and
determining the probability of defaults and risks of losses.
Credit risk management for banking is a very useful system, especially if the risks are in line with
the survival of banks in the business world.
4.7 Credit risk planning:
There are some objectives behind a written credit policy of National Bank that are as follows:
v To provide a guideline for giving loan.
v Prompt response to the customer need.
v Shorten the procedure of giving loan.
v Reduce the volume of work from top level management.
v Delegation of authority of work from top level of management.
v To check and balance the operational activities
4.8 Tools of credit risk:
For credit management, a firm may use tools available to them. Such tools include Credit Risk
Grading (CRG) and Financial Spread Sheet (FSS). Credit risk grading is an important for credit
risk management as it helps the banks and financial institutions to understand various
dimensions of risk involved in different credit transactions. The aggregation of such grading
across the borrowers, activities and the lines of business can provide better assessment of the
quality of credit portfolio of a bank or branch.
The Lending Risk Analysis (LRA) manual introduced in 1993 by the Bangladesh Bank has been
in practice for mandatory use by the banks and financial institutions for loan size of BDT 1.00
crore and above. However, the LRA manual suffers from a lot of subjectivity, sometimes creating
confusion to the lending bankers in terms of selection of credit proposals on the basis of risk
exposure. Meanwhile in 2003 end, Bangladesh Bank provided guidelines for credit risk
management of banks wherein it recommended, interalia, the introduction of Risk Grade Score
Card for risk assessment of credit proposals.
Bangladesh Bank expects all commercial banks to have a well defined credit risk management
system which delivers accurate and timely grading. In practice, a banks credit risk grading
system should reflect the complexity of its lending activities and the overall level of risk involved.
4.9 Essential Components of a Sound Credit Policy
There can be some variations based on the needs of a particular organization, but at least the
following areas should be covered in any comprehensive statement of credit policy and National
Banks policy also covers these areas:
1.
Legal consideration: The banks legal lending limit and other constraints should be set
forth
to
2.
avoid
inadvertent
violation
of
banking
regulations.
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
3.
of
current
at
all
times.
Types of credit extension: One of the most substances parts of a loan is a delineation
which
types
of
loans
are
acceptable
and
which
type
are
not

4.
Pricing: In any profit motivated endeavor, the price to be charged for the goods or
services rendered is of paramount without it, individuals have few guidelines for quoting retag or
fees, and the variations resulting from human nature will be a source of customer dissatisfaction.
5.
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.
6.
Loan Standard: This is a definition of the types of credit to be expended, wherein the
qualitative standards for acceptable loans are set forth.
4.10 Focus on Industry and Business Segment

Industry segment focuses on Textile, Pharmaceuticals, Agro-based, Food and allied,
Telecommunication, Power generation and distribution, Health care, Entertainment Services,
Chemicals, Transport, Infrastructure development, Linkage industry, Information technology,
Ceramics, Others as decided from tome to time. And business segment focuses on Distribution,
Brick field, Rice mill/ flour mill/ oil mill, Work order, Yarn trading, Cloth merchant, Industrial spares,
Hardware, Electronic and electrical goods, Construction materials, Fish trading, Grocery,
Wholesale/ retail, Others as dedicated from time to time
4.11 Lending Guidelines

As the bank has a rate of non-performing loans. Banks risk taking applied should be contained
and our focus should be to maintain a credit portfolio keeping in mind of banks capital adequacy
and recovery strength. Thus banks strategy will be invigorating loan processing steps including
identifying , measuring , containing risks as well as maintaining a balance portfolio through

minimizing loan concentration , encouraging loan diversification , expanding product range ,
streamlining security , insurance etc. as buffer again unexpected.
Chapter 05
Credit Evaluation Process
5.1 Indebtedness, Rural and Urban:
Indebtedness means the amount borrowed by the people from various sources for
investment in the various fields. Rural indebtedness is the amount borrowed by the agriculturists
from various sources. This amount is to be used for the improvement in agriculture, for the
purchase of improved agricultural implements, better seeds, fertilizers, etc. But the amount, thus
borrowed, is not generally used for the purpose for which it is borrowed. The funds are utilized
for unproductive purposes such as orthodox, customs heavy expenditure on ceremonial
activities, weddings, festivals, etc.
By urban indebtedness is meant the amount borrowed by the industrialists, traders and
other business community. Their business needs are met to some extent by the commercial
banks and government agencies, but, for incurring non-productive expenditure, they have to
resort to borrowing from the money-lenders. Contrary to the indebtedness, the amount borrowed
is generally utilized for the use in the respective establishments.
The commercial banks in the district generally charge interest from 7 per cent to 13 per
cent, according to the amount advanced and security offered. The banks advance loans on the
pledge of goods movable or immovable. The movable goods are kept in the custody of the
banks. The average lending rate in the Central Co-operative Financial Institutions ranges in
between 6 to 8 per cent, depending upon the nature and purpose of loans. The co-operative
societies advance loans at the rate of interest ranging from 2 to 8 percent. Loans advanced,
under the State Aid to Industries Act, 1935, carry interest from 2 to 6 percent.
The indebtedness money-lenders charge interest varying from 12 to 25 percent. The
loans advanced by the unregistered money-lenders carry much higher rate of interest, usually
ranging from 60 to 100 percent, per annum. The indigenous bankers are either going out to the
picture or they are trying to fall in line with the modern banking institutions. There is hardly any
case where usury is noticed these days.
The interest is sometimes calculated in kind, too, in rural areas. It is done only in case
where loan is advance in kind. Such interest varies from 25 to 50 percent on the loan advance in
kind, i.e., is one quintal of wheat is advanced as loan, it will fetch one quintal 25 kilos or one
quintal fifty kilos to the creditors, as the case may be. Such loans are advanced by landlords, but
this practice is by and by disappearing because of the coming up of co-operative institutions
which extend financial assistance liberally to the rural areas.
5.2 Role of Private Money-lenders and Financiers
Money-lenders. Though the institution of private money-lending has lost its importance,
yet it has not been completely eliminated. It is regarded as a necessary agency where the
modern banking has not developed. The illiterate and conservative people, who have not been
fully acquainted with the modern banking practices or have not brought themselves into the cooperative fold, still go to the doors of the private money-lenders.
The money-lenders or the Banian still dominates the rural sector of the district economy.
His supremacy in the field of rural finance is still unchallenged. The business of the moneylenders is generally a family concern. His working capital is his own. He grants
He follows indigenous methods of keeping he charges is out of proportion to the rate of interest
charged by the other banking institutions.
In the primitive agriculture society, the indigenous money-lender constituted the main and
only source of finance to a large section of population. He served in many ways the agriculturist
who required money for the purchase of food and other necessaries of life, for social and
religious ceremonies and for securing agriculture requisites such as seeds, bullock etc. In times
of drought and famine, agriculturists used to borrow heavily from the money-lender against the
security of agricultural lands return the debts at harvest time. These debts, not regularly repaid
by the farmers, piled up through generation and created in succeeding years the problem of rural
indebtedness. In the absence of any adequate protection to the debtor in the form of State
regulation the money-lender indulged in a number of malpractices and caused hardships to the
debtors. The Government had, therefore, to intervene to prevent money-lenders from indulging
in malpractices. The various Acts passed by the Government checked the activities of the
money-lenders. The rise and growth of modern banking institutions also affected their business
adversely.
Till recently, private money-lending was regarded as a hereditary profession. There was a
separate class which was having money-lending as its regular profession. The children of this
class generally used to adopt the same profession in turn. The passing of the Punjab Regulation
of Accounts Act, 1930, affected the private money-lending business adversely. Though the class
of professional money-lending still exists, yet it has either left money-lending as a profession or
has refined this profession in line with the modern practice of m0ney0lending. Now the moneylenders are required to get themselves registered with
5.3 Government and Semi-Government Credit Agencies
Till recently, the system of indigenous money-lending as a source of finance, both in rural
and urban areas, was common. But the development of Government/Semi Government credit
agencies gave a death blow to it. The Government/Semi Government agencies are: (i) The
Punjab Financial Corporation. It was established in1953 under the State Financial Corporation
Act, 1951, with the object of providing medium and long-term loans to industrial concerns located
in the Punjab State to the extent of Rs 20 lakhs in the case of a public limited company or a
registered co-operative society and 10 lakhs in other case, at a rate of interest of 3 percent above
the bank rate, with a minimum of 9 percent per annum. This amount is repayable in 10 years.
The loans are advanced on the security of land, building, plant and machinery, by way of first
registered mortgage, with a margin of 40 percent of the net assessed value. In case of
Government guarantee, the margin is reduced to 25 percent. ; (ii) The Khadi and Village
Industries Commission. It caters to the financial needs of the khadi and village industries for
short-term loans. ; (iii) Joint Stock Banks ; and (iv) Co-operative banks.
Financial assistance is also rendered by the State Department of Industries under the
State
Aid
to
Industries
Act,
1935,
for
expansion/modernization of existing units.
setting
up
new
industrial
units
and
for
The Government also advances loans to the
agriculturists of agricultural purpose such as purchase of fertilizers, seeds, cattle, tractors,

agricultural implements, etc
5.4 Joint-Stock Banks
The banks registered under the Indian Companies Act, 1913, come under this head.
Organized on modern lines of joint-stock companies with limited liability, the joint-stock banks are
usually referred to as commercial banks.
The modern banking institutions in the country had a very chequered history. The
beginning of the 20th century was a turning point in their development. The Swadeshi movement
gave a great fillip to the banking industry. A good number of banks were started by enterprising
Indian businessmen and capitalists. However, there were several banking failures. The first two
decades of the 20th century were characterized by progress of banking as well as bank
closures. The World-Wars I (1914-18) and II (1939-45) brought acceleration progress. During
the thirties also there was a banking crises. The passage of the Banking Companies Act, 1949,
in the banking legislation in India. This Act was amended from time to time.
In the Gurdaspur District, in the beginning, there was at Gurdaspur a branch of the Doaba
Bank Ltd., but it had a very short life. Thereafter, a branch of the Peoples Bank of Northern India
Ltd. was opened. Though fro a sometime it had a good business, yet it also went into liquidation.
Batala had a branch of Sahukara Bank Ltd. The Amrit Bank Ltd. with its Head Office at Amritsar,
opened a branch at Gurdaspur in 1939 and another one at Batala. The Batala branch was
closed after about a year but another was opened at Dinanagar. At that time, the Amrit Bank was
the only commercial bank at Gurdaspur. Later on, the Central Bank of India Ltd. And the Imperial
Bank of India (now the State Bank of India) also opened their branches there, but these closed
soon after. After the lapse of some period, the Bharat Bank Ltd. and the Punjab National Bank
Ltd. opened their branches at Gurdaspur (in 1944),
5.5 Leading Guidelines of NBL:
This section details fundamental credit risk management policies that are recommended for
adoption by all banks in Bangladesh. The guidelines contained herein outline general principles
that are designed to govern the implementation of more detailed lending procedures and risk
grading systems within individual banks
5.5.1 Types of loan facilities:
National Bank has been offering wide range of credit facilities as under:
NAME
PURPOSE
Cash credit(Hypo & Pledge)
Business capital / Working capital.
SOD ( General)
Against F.O/ Work Order/ supply order.
SOD ( Export )
Payment of accepted bills at maturity before receipt of export

proceeds.
Loan ( Gen. )
Acquiring capital assets/ purchasing, constriction finishing,

expansion, repair, renovation of house/ flats/ real estate
business etc.
LCA ( Loans against cash assistance )
Financing for the period of non- receipt of reimbursement from

Bangladesh bank.
LC ( Local and foreign) Sight & on deferred payment basis
For import/ local procurement of goods/ service.
PAD
For making payment of the L/C obligation against receipt of

document.
LTR
Retirement of shipping document.
LIM
Retirement of shipping document.
PC
Meeting financial requirement of the export at pre- shipment

stage against export L/C.
LDBP/FDBP
As post shipment finances against local/ foreign export bills.
BTB L/C
Import of raw/ packing materials against export L/C.
Bank guarantee local/ foreign
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.
5.5.2. Single borrower/ group limits/ syndication:

National bank ltd pursues / will continue to pursue the policy of avoiding too much loan
concentration to a single borrower group in order to by pass possible threat in event of such
advance turning sticky. In a bid to keep credit risk at the minimum level in respect of larger but
prospective advance, National bank will prefer syndicated financing after proper feasibility study.
5.5.3. Leading caps:
National bank ltd is very much aware of over concentration of credit in a particular area, which
may under some situation, create disaster for the bank. Keeping this in consideration and also
the over all business, trend, prospects/ potentials, problems, risk & mitigates, pricing owners
stake in business, business competition involvement safety, liquidity, security etc.
Our bank will be guided by the following leading caps generally:
Sector Caps
Trade and commerce
45%
SME
10%
Industry- working capital
10%
Project finance- loan term
10%
Retail/ consumer ( CCS )
10%
Agro credit
5%
Work/ supply order ( contractual finance )
5%
Others
5%
Total
100%
5.5.4.1 Nature of advanced:

Each advanced to be made will be 5.5.4 Loan facilities parameters:
National bank ltd extends and will credit for various genuine purpose. One types of advance
requires to be treated different from other types. Depending on the types financed ownership
pattern, business mode, cash flow, security and other related maters facility parameters
categorized under one of the arranged types and will be governed under the terms and
conditions related thereto.
5.5.4.2 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.
5.5.4.3 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.
5.5.4.4 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.
5.5.4.5 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).
5.5.4.6 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 take timely basis. Insurance should take from a reputed company.
5.5.4.7 Security:
Our bank mostly relies/ will continue to rely on security based leading taking into consideration
the character of the borrower nature of business cash flow, environmental, economical, business
and other influencing factor.
Collateral security of acceptable type having adequate market sale value is accepted. Collateral
property is judiciously valued before accepting the same. The property is valued by the branch
official by applying prudence and considering prevailing rate in the location area of the property.
5.6 Credit Principles of NBL:
To achieve our goal for maximizing the stockholders value and protect the interest of the
depositors as well as to improve the quality of banks assets as fundamentally sound financial
institution, we will abide by but will not be limited to the following credit principles, which should
guide our behavior in our leading decisions:
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.
Possibility of default will be worked out before lending.
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.
Ethical behavior in all credit activities shall be ensured.
Be proactive in identifying, managing and communicating credit risk.
Be diligent in ensuring that credit exposures and activities including processing function complying with NBL
requirements as well requirement of regulatory authority.
Risk is reward to be optimized.
10
Diversified credit portfolio to be built and maintained.
11
Credit will normally be financed from customers deposit.
12
The bank will provide suitable credit service and products for the market in which it operate.
13
Credit will be allowed in a manner which will in no way to compromise.
14
All credit extension must comply with the requirement of banking companys act 1991 and amendment thereof
from time to time.
5.7 Credit Evaluation Process of NBL:
National bank will follow the following evaluation process:

Prevailing credit practices in the market.
Credit worthiness, background and track records of the borrower.
Financial standing of the borrower supported by financial statement and other documentary
evidence.
Legal jurisdiction and implications of applicable laws.
Effect of any applicable regulations and laws.

Purpose of the loan/facility.
Tenure of the loan/facility.
Viability of the business concern.
Cash flow analysis and also projection thereof.
Quality value and adequacy of security if available.
Risk taking capacity of the borrower.
Entrepreneurship and managerial capability of the borrower.
Reliability of the source of repayment.
Volume of risk in relation to the risk taking capacity of the bank or company concern.
Profitability of the personal to the bank or company concerned.
Credit risk grading.
Yield from the facility.
Market aspect.
Total global expansion of the borrower.
CIB status.
Chapter 06
Highlights of Financial Performance
6.1 Highlights on the overall activities of the NBL for the year2007, 2006, 2005 and
2004.
(Taka in Million)
SL. No
Particular
2007
2006
2005
2004
01
Paid-up Capital
1208.21
805.47
619.59
516.33
02
Total Capital
4711.49
3237.88
2658.03
2088.69
03
Capital surplus/Deficit
1117.41
04
Total Asset
56526.96
05
Total Deposits
47961.23
06
Total Loan and Advances
07
Total Contingent Liabilities
352. 87
3 54.19
307.04
38400.37
35127.30
40350.87
32984.05
28973.39
36475.75
32709.68
27020.21
23129.65
26801.08
19737.75
16645.76
12897.66
46796.04
and commitments
08
Loan Deposit Ratio
76.05%
81.06%
81.92%
79.83%
09
Ratio of Classified Loan to
4.53%
6.01%
7.06%
17.24%
Total Loan and Advances

10
Profit after Tax & provision
1238.11
507.49
271.67
170.02
11
Amount of Classified Loans
1651.10
1967.16
1906.40
3988.59
947.75
1161.61
967.21
1966.65
during the Currant year

12
Provision
kept
against
classified loans
13
Provision surplus or deficit
430.30
352.62
73.95
185.00
14
Cost of Fund
6.35%
6.15%
5.58%
5.55%
15
Interest earning Assets
47506.42
44194.85
34162.47
30973.49
16
Non Interest earning Assets
9020.57
2601.19
5470.26
4153.81
17
Return on Investment (ROI)
14.31%
5.62%
8.25%
6.62%
18
Return on Assets(ROA)
4.29%
2.50%
2.22%
2.09%
19
Income from Investment
1110.43
321.95
294.05
289.51
20
Earning per share (Taka)
102.47
63.01
43.85
27.44
21
Net Income per share (Taka)
102.47
63.01
43.85
27.44
22
Price Earning Ratio (Times)
14.32
12.07
17.02
17.32
6.2 Ratio Analysis:
Financial ratios are constructed by forming ratios of accounting data contained in the banks
reports of income (i.c balance sheet). Ratio analysis is a part of financial analysis. A ratio analysis
is defined as the indicated quotient of two mathematical expressions and as the relationship
between two or more things. In financial analysis a ratio is use as a benchmark for evaluation
the financial position and performance of a bank. A wide verity of financial ratio can be calculated
to assess different characteristics of financial performance. To evaluate a particular financial ratio
for a bank, comparison with peer group bank is often used. Also it is benefited to track the ratio
over time relative to other banks. Even without comparison with other bank. Ratio trends over
time may provide valuable information about the bank performance.
To measure the performance of the bank it is important to measure source of the ratios to get a
clear picture about the bank and its activities. Some of the important ratios are Return and asset
ratio (ROA), Return on equity (ROE), profit margin and asset utilization ratio.
6.2.1 Profit Margin Ratio:
The profit margin gives some ingredients to judge the ability of management to control expense,
including taxes give a particular level of operating income. The profit margin ratios are as follows:
Profit Margin
2005
2006
2007
NBL
21.59
20.63
14.82
SIBL
11.00
15.49
14.40
IBBL
7.15
9.25
14.45
6.2.2 Rate of return on asset (ROA):

The rate of return on asset is frequently used to evaluate banks management. The ROA measure
the ability of management to utilize the real and financial resource of the banks to generate
returns. It indicates net income per taka of total assets owned during the period. The ROA of the
banks are as follows:
ROA
2005
2006
2007
NBL
2.22
2.50
4.29
SIBL
1.25
2.15
3.75
IBBL
1.92
2.05
3.25
6.2.3 Rate of return on Equity (ROE):
The rate of return on equity is considered as a well judgment in analyzing a banks financial
health. ROE shows what contribution the equity capital has on net income. It measures the
percentage return on each dollar of stockholders equity is the aggregate return to stockholders
before disbursing dividends.
The higher return the better as banks can add more to retained earnings and pay more in cash
dividends when profits are higher. The ROE of the banks are
ROE
2005
2006
2007
NBL
7.90
8.64
5.56
SIBL
4.51
5.12
8.46
IBBL
8.15
8.60
8.04
6.3 Asset Utilization Ratio:

The asset utilization ratio represents the ability of management to employ assets effectively to
generate revenues. Bank assets fall into one of four general categories. Loans investment
securities non interest cash and due from banks and other assets. The assets utilization ratios
are:
Assets Utilization
2005
2006
2007
NBL
29.22
43.55
30.15
SIBL
6.75
16.33
7.26
IBBL
10.9
12.74
17.08
6.4 Risk ratio Analysis:

It is very important for bank to measure its risk associated with its operation. Without identifying
risk no bank can success in future rather it will face liquidity operational and market risk.
Therefore it is very important measure risk and takes necessary steps against it.
6.4.1 Equity Multiplier (EM):
Equity multiplier measures financial leverage and represents both profit and risk measure. EM
affects banks profits because it has a multiplier impact on ROA to determine a banks ROE. It
should be obvious that a higher equity multiplier can increase both ROE and the growth rate of
the bank as long as ROA is positive. On the downside if ROA is negative ROA will be margined in
a negative direction.
Equity Multiplier
2005
2006
2007
NBL
27.61
34.16
23.30
SIBL
10.00
21.00
28.00
IBBL
18.97
16.00
18.64
6.4.2 The investment ratio:

The investment ratio indicates that extent to which assets are developed to loans as opposed to
other assets, including cash securities and plant and equipment. The greater the greater the
banks ability to generate income as interest that the bank owns.
Investment Ratio
2005
2006
2007
NBL
8.25
5.62
14.31
SIBL
46.25
31.08
45.53
IBBL
52.95
20.15
40.63
6.5 Liquidity Ratio:

Liquidity can be defined as the extent to whom the bank has funds available to meet cash
demands for loans and deposit withdrawals. The failure of bank meet its obligations due to lack of
sufficient liquidity , will result in a poor creditworthiness, loss of creditors confidence or even in
legal tangles resulting in the closure of the bank. A very high degree of liquidity is also
unexpected idle cash earn nothing. Therefore it is necessary to strike a proper balance between
high liquidity and lack of liquidity. The most common ratio are as follows:
6.5.1 Cash Ratio:
Cash including vault cash, deposit at other banks and cash items in the process of collection. All
these earn no interest. As such bank management should attempt to minimize its investment in
these assets. On the other hand, it is the most liquid asset. Banks must maintain liquid assets to
meet up any sudden need. Lower cash ratio indicates higher risk or it will lose its reputation.
Therefore banks have to maintain an optimal cash ratios of the bank are 2005 to 2007
Cash Ratio
2005
2006
2007
NBL
4.50
4.96
4.17
SIBL
34.15
18.37
15.92
IBBL
19
20.04
20.11
Performance at a glance:
Highlights on the overall activities of the Bank
Taka in Million
Particulars
Jun-08
Jun-07
Authorized Capital
2,450.00
2,450.00
Paid up Capital
1,872.72
1,208.21
Reserve Fund
3,760.56
2,645.23
Equity Fund (Capital and Reserve)
5,633.29
3,853.44
Deposits
53,739.54
45,177.67
Loans & Advances
44,800.18
32,695.14
Provision Required
1,371.00
1,162.67
Provision Kept
1,599.97
1,323.06
Investment
7,780.47
7,959.47
Import Business
48,226.62
27,543.34
Export Business
18,447.50
14,131.12
Total Income
4,398.56
3,342.26
Total Expenditure
2,361.90
2,259.69
Operating Profit
2,036.65
1,082.57
Net Profit after Tax and Provisions
1,065.94
580.47
Fixed Assets
1,898.05
1,711.03
Total Assets
65,168.91
53,576.12
(Percentage)
Capital Adequacy Ratio
13.31%
12.25%
% of Classified Loan & Advance
5.91%
7.10%
Advance Deposit Ratio
83.37%
72.37%
Cost of Fund
6.40%
6.54%
Return on Assets (ROA)
6.25%
4.04%
(Amount in Taka)
Earnings per Share (EPS) -Annualized
113.84
102.47
Book Value per Share
300.81
318.94
Market Value per Share
985.50
851.50
8.66
8.31
Price Earning Ratio (Times)
(In number)
Number of Foreign Correspondents
Number of Shareholders
Number of Employees
Number of Branches
405
395
14,221
11,633
2,632
2,277
101
92
8.2 Conclusion & Recommendation for the NBL:

It is also very difficult for me to give any recommendation with my little working experience but I
have tried as my best to give best recommendation above shortcomings (its may be its not sweet
able for NBL)

NBL should give more freedom to their branches for taking decisions and their head office
should take decision more quickly.

NBL should build separate loan recovery division if it happed then their classified loan
amount will reduce and they can invest more.

NBL, Inter Bank Transaction is made by advice but it is unsecured for bank so NBL have to
build net working system between branches and head office.

NBL should go through the online banking as early as possible for better service to the
customer.
NBL should increase own investment in different sectors as like Islami Bank Ltd. if they can
increase their own investment then their cost of capital will reduce.
NBL, Human Resources Department should train their employees with computer
knowledge and their Human Resources Department should arrange training program frequently.
NBL, management should take decision more quickly.
NBL should use group incentives so that employee can share their experience, strength and
can work smoothly.

Their statement should be computerized which is cost effective and safe.
It has been seen that NBL marketing activates are not sufficient but now a days proper
marketing is important for creating good image in target customer mind. They should increase
promotion campaign and they should participate in social activities for creating good image in
target customer mind.

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Credit Risk Management

1.1 Origin of the Report

To know the general banking activities of National Bank Ltd

Practices guideline given by Bangladesh Bank, the central bank of Bangladesh.

i) Primary Sources Face to face conversation with the official staff.

ii) Secondary Sources:

Annual Report ( 2005, 2006 and 2008) National Bank Limited

Credit Risk Manual (2005), National Bank.

scope of the analysis required for the study.

understanding some activities.

2.1.1 Law of banking:

4. Habib Bank Ltd

6. United Bank Ltd.

8. Muslim Commercial Bank Ltd.

2.4 Banking operation of Bangladesh:

3.2.1 Board of Directors:

MS. PARVEEN HAQUE SIKDER

MRS HELENA RAHMAN

MR. A. B. TAJUL ISLAM

MR. ZAKARIA TAHER

MR. SHAHADAT HOSSAIN (SALIM)

MR. LT. COL. (RETD.) MD. AZIZUL ASHRAF, PSC

MR. A. M. NURUL ISLAM

MR. SALIM RAHMAN

MR. S. M. SHAMEEM IQBAL

PROF. MAHBUB AHMED

CAPT. ABU SAYEED MONIR

Managing Director& CEO

Credit Risk Management

Organ gram of the NBL in Broadly

3.3 Number of branches:

3.4 Number of employee:

3.7 Objective of the Bank:

To build up a deep-rooted and harmonies banker-customer relationship by dispensing

To make best use of the hard-earned investment of our valued shareholders.

as to encourage them to continue and feel proud of banking with NBL.

thereby expanding the area of investment of the Bank.

3.8 Product Scheme

Electronics consumer products.

Monthly amount can be 500 and multiple of it.

Local credit card:

Two copy passport size photo

Two copy passport size photo.

761 , Satmashjid Road , Dhanmondi

HossainTower , Next to over Bridge

48, Dilkusha C/A

97/1 , Gulshan Aenue

474, Malibagh, DIT Road

BTMC Bhavan, Karawan Bazar

3.9 General banking:

Trustees/ clubs/ association/ and different types of institution etc.

priority that customer is totally satisfied.

getting the foreign money.

employee turnover that will prove to be too costly to avoid.

Business risk & Security risk.

4.3.10 Management competence risk:

4.3.12 Security risk:

b. Credit assessment and risk grading

Industry and Business Segment Focus

Types of loan facilities

Single borrowers/ group limits/ syndication

Discouraged business types

As a minimum, the followings are discouraged: