Internship Report On:

Credit Risk Management Of

Brac Bank LTD
A case Study on Jamal khan Branch

Internship report on:

Credit Risk Management Of
Brac Bank LTD
A case Study on Jamal khan Branch

(This Internship Report Is Submitted For the Partial Fulfillment of the Degree of Bachelor of
Business of Administration with a Major in Finance)

Supervised By
Ms.Tanvina Tabasum
Lecturer
Faculty of Business studies
Premier University, Chittagong.
Prepared By
Name: Pulak Das
Student ID: 1022231211
Program: RMBA
Major in finance
Submission Date: 29-01-2013

Premier
University
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Letter of Transmittal
Date: 29-01-2013
To
The Supervisor
Ms.Tanvina Tabasum
Lecturer
Faculty of Business studies
Premier University, Chittagong.
Sub: Prayer for submission of internship report on Credit Risk Management of Brac
Bank LTD.
.
Madam,
Here is the Internship Report I am required to submit to he faculty as a part of the completion of
RMBA program. My topic is evaluation of asset liability management of a commercial bank. I
choose Brac Bank Limited, Jamal khan Branch. For doing so, I had to collect data from various
sections of the said branch Brac Bank Ltd, such as, Credit Department, Foreign Trade
Department etc.
I hope that the information placed through this Report will provide you enough information
about Brac Bank activities. I am always available to discuss the same with you to be abreast of
the time.

Sincerely yours

(.........................)
Name: Pulak Das
Student ID: 1022231211
Program: RMBA
Major in finance

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Acknowledgement
I am very much grateful to Almighty for giving me the scope having a degree in Business
Education and to prepare this term paper. I pay gratitude to the Supervisor of my report, The
Supervisor Ms.Tanvina Tabasum
, Lecturer Department of finance. Faculty of Business studies, Premier University, Chittaging. I
also pay honor to the teachers for their contribution. I am also grateful to Honorable Chief
Executive Officer of Brac Bank Ltd. Jamal Khan branch who has given me the Practical
Knowledge about the banking operations.

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Executive summary
Brac Bank mainly deals with large corporate customers seeking large loan facilities. But for
banks, loans are the largest and most obvious source of risk. Experience in recent years has
shown that absence of proper management of such risk has resulted in significant losses or even
crippling losses for a number of banking institutions. Effective credit risk management is
therefore vital to ensure that a banking institutions credit activities are conducted in a prudent
manner and the risk of potential bank failures reduced. So, appropriate policies, procedures and
systems should be implemented at each financial institution for identifying, measuring,
monitoring and controlling credit risk effectively.
BBL follows a centralized approach in extending its credit. Relationship Managers (RM) brings
in new customers and prepares credit proposals for them. The proposal package is then sent to
the Credit Risk Management (CRM) department analyzes the risk mitigating factors and sends
the proposal with recommendation to the credit approving authority. Credit approving authority
approves the proposal or denies it and sends the same to CRM again. BBL has a written credit
policy manual. It fully complies with Bangladesh Bank Guidelines. BBL does not extend credit
to a business, if it does not understand the business. The process of credit assessment is also
guided by the central bank directives. A thorough credit and risk assessment is conducted prior
to the granting of loans, and at least annually thereafter for all facilities. The loan structure is
matched with the cash conversion cycle of the business and appropriate security is taken as
collateral. In short, credits are not extended relying on just the borrowers or sponsoring units
reputation in Brac Bank Limited.

Table of Content
Chapter-1
(Introductionary Aspects)

1.1

Introduction

1.2

Methodology of the study

1.3

Scope of the study

1.4

Limitation of the study

Chapter-2
(Theoretical Aspects)
2.1

Credit Risk

5
6-7

Chapter-3
Company Profile

3.1

Brac Bank Ltd.

3.2

Objective & Goals

3.3

Mission of BBL

10

3.4

Vision of BBL

10

3.5

Nature of the Business

10

3.6

Products & Services

11

3.7

Departments of BBL

11

3.8

Features of BBL

12

3.9

Network of Branches

12

3.10

Organizational Flow

13

3.11

Corporate Profile

14

Chapter-4
Credit Risk Management in BBL

9
9-10

15

4.1

Credit Risk Management in BBL

16

4.2

Credit Policy of BBL

16

4.3

Credit Principles

17

4.4

Global Credit Portfolio limit of BBL

17
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4.5

Types of Credit

4.6

Credit Ratification Authority of BBL

4.7

Credit Evaluation Principles

4.8

Loan Administration

4.9

Security Against Advances

4.10

Credit Monitoring and Review

Chapter-5
Credit Appraisal Process of BBL

17-20
21
21-22
22
22-24
25
26

5.0

Credit Appraisal Process of BBL

5.1

Guiding Principle of Credit appraisal of BBL

5.2

Steps Involved In Credit Processing

28-31

5.3

Lending Risk Analysis Modern Technique of Credit

Appraisal

31-34

5.4

Credit Appraising & Presentation of Credit Proposal

For Final Approval

34

5.5

Credit Issue Procedure Flowchart

34

5.6

Case Study on Sanctioning of BDT 3.90 Crores To Silk

Line Paribahan Under Large Loan Scheme

35-41

Chapter-6
Loan classifications and provisioning System of BBL

42

6.1

Introduction to loan of classifications and provisioning

System of BBL

43

6.2

Loan Classification

6.3

Qualitative Judgment

46

6.4

Status of Classified Loans, Sub-standard Loans and

Bad/Loss Loans for all Banks

47

6.5

Loan Provisioning system of BBL, 2001

Chapter-7
Findings, recommendation & conclusion

7.0

Findings, recommendation & conclusion

27-28
28

43-46

47-48
49
50
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7.1

Findings

50-51

7.2

Recommendation

52-53

7.3

Conclusion

54

References

55

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