Executive Summary

This Internship Report covers the details of Bank Asia’s practices about credit
management activities emphasizing the approval and risk management process. The
report consists of the writer’s observation and on the job experiences during the
internship period in the credit department of Corporate Branch, Bank Asia Limited. The
report mainly emphasizes the sequential activities involved in credit approval process,
analytical techniques used by Bank Asia for credit analysis as an integral part of the
credit approval process. The report also focuses on the risk management techniques
adopted by Bank Asia both in pre-sanction and post-sanction period of a credit. Finally
the report incorporates an evaluation of the different aspects of the lending process and
risk management techniques and makes some recommendations.

Bank Asia offers both funded and non funded credit facilities to its customers. Bank Asia
follows some specific principals for its credit activities, which involve Know Your
Customer (KYC), safety, liquidity, profitability, purpose and spread.

The lending procedure followed by Bank Asia consists of a set of sequential activities. In
these sequential activities, both bank officials and potential borrowers play significant
role
Credit analysis if the borrower is found sound for lending, the bank proceeds to prepare
the credit proposal. The credit proposal consists mainly of a brief description of the
borrower, purpose of the loan, collateral, and expiry of the credit line, amount, interest
rate and the result of the credit analysis. The credit proposal is prepared to facilitate the
approval of that particular loan either by Corporate Office credit committee or by the
Board of Directors.

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Bank Asia does not have any fixed time duration to complete lending process for a
particular loan proposal. The total duration of the time required to complete the lending
process varies with the nature of credit, collection of information, nature of information,
analysis of information, preparation of the proposal, corporate office scrutiny, board
approval, preparation of sanction advice, creation and collection of charges documents
and actual disbursement of loan.
Bank Asia must try to reduce the time required by a particular lending process to be
completed. The Higher the duration, the higher the loan processing cost.

Bank Asia is currently facing problem in mobilizing its deposits in the form of credit.
Number of banks operating in the market is more but number of potential and good
borrower is less. Therefore Bank Asia should adopt aggressive marketing for its loan
products. The bank must find unexpected but profitable sector for financing. Along side,
to expedite the lending process right borrower has to be selected with strict adherence to
KYC, relevant information has to be collected quickly, analysis must be done precisely
and faster, credit proposal has to be prepared in a way that will represent a transparent
picture of the borrower’s financial strength and business potential and finally to reduce
the time involved in the lending process. Board meeting for the approval of large loans
should have twice a month.

Lending is the main income generating activity for all banks including Bank Asia.
Lending involves both risk and profit. But a sound lending process supported by
quantitative analysis, qualitative judgment and a separate credit monitoring cell can
reduce the risk to a certain extent. So far Bank Asia has maintained a very good loan
portfolio and its lending process is reasonably sound. Bank Asia will be able to manage
its lending process and management techniques more effectively and efficiently.

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