Title of the subject

Assignment of Project Management (MGT

503)

Submitted to:

Dr. Engr. N. Shams Choudhury, PMP

Adjunct Faculty (Associate Professor)
Submitted by:
Sayeda Sumaiya Nazim
ID: 15161201062
Intake: 35
Date:

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Letter of Transmittal
30 July 2016
Dr. Engr. N. Shams Choudhury, PMP
Associate Professor
Adjunct Faculty
Bangladesh University of Business & Technology (BUBT)
Subject: Submission of Project report on Credit Management of NCC Bank
Dear Sir,
I am pleased to submit this Project report titled Credit Management of NCC Bank for
acquiring the practical knowledge of this course. It was my endeavor to present all that I learned
during my Project preparation period and analyze the gathered guest satisfaction data on NCC
Bank.
It will be my profound pleasure if this project report can give a fair idea on the concerned issue. I
hope you will be pleased to accept my report and oblige thereby.
Sincerely yours

_________
Sayeda Sumaiya Nazim
ID: 15161201062
Intake: 35th
Section: 2
Program : MBA
BUBT

Executive summary
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Todays world is dynamic and competitive therefore organizations looking for Talent, extrovert
graduates who belong to high degree of adaptability quality. Todays business graduates will be
the core part of business organization. Therefore, business graduates need to have both
theoretical & practical knowledge to manage the business activity properly. In order to be
familiar with Report Writing and to gain some practical knowledge about report writing our
honorable teacher Mr. Thawhidul Kabir gives the task of Report Writing program as a part of
the Course named (Managerial Communication & Report Writing). Practical knowledge has no
alternative. The perfect coordination between theory and practice is of paramount importance in
the context of the modern business world in order to resolve the dichotomy between these two
areas.

Table of Contents
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Chapter

Chapter
One

Chapter
Two

Topic Name

Page
No.

Introductory Part

07-12

1.1 Introduction

07

1.2 Objectives of the Study

07

1.3 Data used in the study

08

1.4 Data Analyzing and Reporting

08

1.5 Limitations of Report

08

2.1 Back ground and History of SEBL

09

2.2 Vision of SEBL

10

2 .4 Objectives of the Bank

11

2.5 Corporate Governance

12

Theoretical aspect

13-18

3. Loan & Advances

14-15

4. Borrower selection, loan applications

16

Credit Risk Components and Key

Parameters

16

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Chapter
Three

Chapter
Four

4.2 Recovery of Loans & Advances

17

5.1 Total Deposit

17

5.2 Total Loan & Advances

18

Analyses

19-22

5.3 Industry Wise Concentration of Loan &

Advances (2013)

19

5.4 Geographical credit distribution of

SEBL

20

5.5 Income from Investment

21

5.6 Deposit of SEBL as % of total National

Deposit

22

Findings & Recommendation

23-24

6.1 Findings

23

6.2 Conclusion

23

6.3 Recommendation

24

Bibliography

25

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Chapter One:
Introduction & Overview of

SEBL

1.1 Introduction:
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Financial institutions are investment intermediaries linking the savers and users of fund. These
intermediaries are interposed between the ultimate borrowers and lenders permitting them
efficient transfer of funds. Individuals having surplus funds can lend them for reasonable return
to entrepreneurs who need funds to take the advantage of economically and financially viable
investment opportunities. The key to successful banking lays in the ability of balance many
activities simultaneously. The bank must maintain a healthy growth rate, while at the same time
it must take action to minimize the risks it faces. The bank must also maintain enough cash on
hand to meet obligations. All of these are related to sound performance of a bank.
1.2 Objectives of the Study:
The main objective of the report is to analyze the overall credit management process of
Southeast Bank Limited. The following aspect can be listed as the specific objectives for this
report:
To know about the overall procedure of loan disbursement & recovery process
of SEBL.
To compare the credit operation of the bank with literature statement.
To analyze the credit growth prospect of SEBL.
To observe the credit growth rate of different industries
To analyze the status of loan classification of the bank.

To analyze the geographical location wise concentration of loan & advances

of SEBL.

To evaluate the credit performance of SEBL within the banking industry

1.3 Data used in the study:

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The study is mainly based on secondary data. The annual report of SEBL, website of SEBL,
annual report of Bangladesh Bank and different text book are the major data sources in this
report. Though the use of primary data are very limited in this report, some informantion has
been collected from the opinions of officials of SEBL. The secondary data are collected for the
period of five years from 2012 to 2015.
1.4 Data Analyzing and Reporting:
Trend analysis and comparative analysis are made to analyze the credit management of SEBL.
Trend of deposit, loan and advances, industry wise loan and advances, investment, income are
analyzed in the stdy. A comparative analysis of deposit,credit, non performing loan, credit to
deposit ratio of SEBL with industry average are made. Software like microsoft word, Excel are
used for analyzing and reporting purpose of the report.
1.5 Limitations of Report:
Though I have given utmost effort to prepare this paper but there are some limitations of the
study. Such are as follows:
The main constrain of the study was insufficiency of information, which was required for
the study. There was various information the bank employee cant provide due to
confidential and other corporate obligations.
Lack of opportunity to visit more than one branch.
The functions and activities of SEBL are too vast, so they change their strategy day by
day. As a result I cant collect update information & strategy.
As I am student it is not possible for me to collect all the necessary information.
Lake of Experience to evaluate credit performance of SEBL within the banking industry

2.1 Back ground and History of SEBL:

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Southeast Bank Limited (SEBL), A Bank with Vision, emerged in the Commercial Banking
Industry of Bangladesh in 1995. It was incorporated on March 12, 1995 as a public limited
organization according to the Companies Act 1994. The commencement of its banking
operations occurred on May 25, 1995 by the Principal Branch located at 1, Dilkusha Commercial
Area, Dhaka. The inception of SEBL is the outcome of a successful group of prominent and nonresident Bangladeshi investors whose vision was to contribute to the countrys economy through
commercial banking. Southeast Bank Limited began its services with the inaugural Chairman
Mr. Mohammad AbulKashem, Vice Chairman Mr. Ragib Ali and the former President and
Managing Director Mr. Shah Mohammad Nurul Alam. In 1995, the Bank used to provide
services to its clients through only five branches situated in different strategic locations and has
increased its total number of branches to 103 by 2014. Bangladesh Institute of Bank
Management (BIBM) and other training institutes are providing regular training and orientation
courses to update the skills and knowledge of the officers and staffs of the Bank (FBCCI).[2]

Name of the Company

Southeast Bank Limited

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Legal Status
Date of Incorporation
Registered Office
Chairman
Vice Chairman
Managing Director
Company Secretary
Line of Bussiness
Authorized Capital
Paid up Capital
Date of Opening of First Branch
Year of Initial Public Offer
Stock Exchange Listing
Company Auditors

Public Limited Company

March 12,1995
Eunoos Trade Centre 52-53, Dilkusha C/A (level 2,3 &
16), Dhaka-1000
Alamgir Kabir, FCA
Ragib Ali
Shahid Hossain
Muhammad Shahjahan
Banking (Both conventional and Islamic Banking)
BDT 10000 million
BDT 8732.86 million
May 25, 1995
1999
April 10, 2000 (DSE) & April 24, 200 (CSE)
Howladar Yunus & Co. & Syful Shamsul Alam& Co.

Tax Consultant
Legal Advisors
Credit Rating Company
Validity of the Credit Rating
No. of Foreign Corresponderts
Phone
Fax
SWIFT
E-mail

Akhter Zamil & Co.

The Law Syndicate
Credit Rating Information & Services Ltd (CRISL)
June 29, 2014
778
9571115 (Hunting)
9550086, 9550093 & 9563102
SEBDBDDHXXX
Info@southeastbank.com.bd

Website
Name of the Bank,s Subsidiary Companies

Htt://www.southeastbank.com.bd
Southeast Bank Capital Services Ltd

Corporate Profile:
2.2 Vision of SEBL:

To be a premier banking institution in Bangladesh and contribute significantly to the national

economy
2.3 Mission of SEBL:

High quality financial services with the state of the art technology.
Fast customer services.
Sustainable growth strategies.
High ethical standards in business.
Steady return on shareholder equity.
Innovative banking at a competitive price.
Attraction and retention of quality human resource.

2 .4 Objectives of the Bank:

There are some objectives of this bank, which are as follows:

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To establish, maintain, carry on, transact, undertake and conduct all types of banking,
financial, investment and trust business in Bangladesh and abroad.

To form, establish and organize abroad any bank, company, institution, organization,
either single or joint collaboration for partnership with any individual, bank, company,
institution, organization, or any other government agency for the purpose of carrying of
business, financial investment or any other business as provided hereafter.

To carry on any business relating to wage earners scheme as may be allowed by the
Bangladesh Bank from time to time including maintaining of foreign currency accounts.

To conduct or negotiate all kinds of loan and assistance, private or public, from any
source, local and foreign, and to take all such steps as may be required to complete such
deals.

To form, promote, organize, participate and aid in forming, promoting, organizing any
bank, company, institution, organization, or any holding company in Bangladesh and
abroad for the purpose of undertaking any banking, financial and investment or trust
business.

Communication to corporate social responsibility (FBCCI).[2]

2.5 Corporate Governance

Corporate governance refers to the system of structures, rights, duties, and obligations by which
corporations are directed and controlled.
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Corporate Governance is defined as a set of systems, processes and principles which ensure that
company is governed for the best interest of all stakeholders.(Southeast Bank Ltd., 2009-2013).

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Chapter: Two
Theoretical Aspects
&
Analyses

3.1 Loan & Advances:

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Loan: In finance, a loan is a debt evidenced by a note which specifies, among other things, the
principal amount, interest rate, and date of repayment. A loan entails the reallocation of the
subject asset(s) for a period of time, between the lender and the borrower.
In a loan, the borrower initially receives or borrows an amount of money, called the principal,
from the lender, and is obligated to pay back or repay an equal amount of money to the lender at
a later time. Typically, the money is paid back in regular installments, or partial repayments; in
an annuity, each installment is the same amount (Signoriello, Vincent J., 2011).
Advance:
An advance is an amount of money that is loaned from future earnings. For example, if you get a
$500 advance on your salary, you next paycheck will be decreased by $500 to repay the money
you borrowed from that paycheck.
3.2 Loan Categories:
All loans and advances are grouped into four categories for the purpose of classification, namely
(a)

Continuous Loan

(b)

Demand Loan

(c)

Fixed Term Loan

(d)

Short Term Agriculture & Micro Credit

3.3 Credit Management:

The word credit comes from the Latin word Credo meaning I believe. It is a lenders trust in
a persons/firms/ or company, s ability or potential ability and intention to repay. In other words,
credit is the ability to command goods or services of another in return for promise to pay such
goods or services at some specified time in the future. (federalreserve.gov, 2015).
3.4 Objectives of credit management:
The of the credit management is to maximized the performing asset and the minimization of the
non-performing asset as well as ensuring the optimal point of loan and advance and their
efficient management. Credit is a dynamic filed where a certain standard of long-range planning
is needed to allocate the fund in diverse filed and to minimize the risk and maximizing the return
on the invested fund. Continuous supervision, monitoring and follow-up are highly required for
ensuring the timely repayment and minimizing the default. (federalreserve.gov, 2015)
3.5 Credit risk management:
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Credit risk arises from the potential that a borrower or counterparty will fail to perform on an
obligation. For most banks, loans are the largest and most obvious source of credit risk
(federalreserve.gov, 2015).
Credit risk management encompasses identification, measurement, matching, monitoring and
control of the credit risk exposures to ensure that:
The individuals who take or manage risks clearly understand it.
The organizations risk exposure is within the limits established by
board of
The expected payoffs compensate the risks taken.
Risk taking decisions are explicit and clear.
Sufficient capital as a buffer is available to take risk.

Simple guideline to Manage Credit and Credit risk:

Figure: Simple guideline to manage Credit and credit risk

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4.1 Borrower selection, loan applications & their processing steps and approval process in
Southeast Bank Limited:
In bank, a borrower is the party in a loan agreement which receives money or other instrument
from a lender (bank) and promises to repay the lender (bank) in accordance with agreed terms.
So, selection of borrower is an important component of the credit granting process. Inappropriate
borrower selections are noisy signals that could have economic consequences for lenders.
Professional loan officers analyze financial and non-financial information of proposed borrowers
and set preferred levels of collateral and covenants (Southeast Bank Ltd., 2014).
Credit Risk Components and Key Parameters:
As a part of appraisal on loan application, Credit Risk analysis is mandatory to minimize risk of
lending. In assessment of credit risk, we follow integrated Credit Risk Grading model initiated
by Bangladesh Bank.
Credit Risk-100%
Financial
Risk-50%

Business /

Management

Security

Relationship

Industrial Risk-

Risk -12%

Risk-10%

Risk-10%

18%
Leverage

Size of business

Experience

Security coverage

Account conduct

Liquidity

Age of business

Succession

Collateral

Utilization of limit

coverage
Profitability

Business outlook Team work

Support

Compliance of Covenants /
Condition

Coverage

Industry growth

Personal deposit

Market
competition
Barriers

to

business
Table 4.1: Credit Risk Grading model initiated by Bangladesh Bank.

4.2 Recovery of Loans & Advances:

Monitoring of loans and advances is the only way to ensure smooth recovery of the money
extended to the borrower. The basic idea behind monitoring is to eliminate the possibility of
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lending money to borrowers who may fail to repay the loans or who are likely to divert loan
money for inappropriate purposes (Bangladesh Bank, 2014).
5.1 Total Deposit:
Year
2009
Amount of 96669.5
Deposit

2010
107253.2

2011
127178.2

2012
152901.2

2013
177519.5

Growth
Rate

10.94%

18.57%

20.22%

16.10%

40.68%

Table 5.1: Total Deposit (TK in millions)

(Annual Report of SEBL, 2009-13)

Graphical Presentation:

Figure 5.1: Total Amount of Deposit

Figure 5.1: Growth rate of Deposit

Interpretation: The above graph shows a better position in 2009 the total deposit TK 96669.5
million in 2013 the deposit was TK 177519.46 million. The growth of deposit has upward trend
over the years. This increasing trend of deposit was mainly due to expansion of banking.
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5.2 Total Loan & Advances:

Year

2009

Amount of
Loan
Growth Rate

2010

2011

2012

2013

77497.57

93981.2

107288.56

126968.97

134863.82

28.55%

21.26%

14.15%

18.34%

6.21%

Annual Report of SEBL, (2009-13)

Table 5.3: Total Loan & Advances (TK in millions)

Figure 5.3: Total loan & advances

Graphical Presentation:

Figure 5.3: Growth rate of total loan & advances

5.3 Industry Wise Concentration of Loan and Advances (2013):

Industry
Agricultural Sector
Industry

% of Loan & Advances

0.69%
21.59%
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Working capital financing

Export credit
Commercial credit
Small and cottage industries
Others
Total

23.52%
4.11%
31.49%
0.45%
18.15%
100%
(Annual Report of SEBL, 2009-13)

Graphical Presentation:

Figure 5.6: Industry Wise Concentration of Loan and Advances (2013)

Interpretation: The graph shows SEBL distributes most of its credit to commercial sector it
gives 31.49% of its total credit in commercial sector. The also gives 23.52% of its credit in
working capital financing. The gives 21.59% of its credit in industry.

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5.4 Geographical credit distribution of SEBL:

Division

Contribution in 2013

Percentage

Dhaka
Chittagong
Khulna
Sylhet
Rangpur
Barisal
Rajshahi

91,711.84
32,954.08
537.76
2,935.92
529.85
80.84
2,048.46

69.61%
25.54%
0.62%
2.28%
0.39%
0.06%
1.51%

(Annual Report of SEBL, 2009-13)

Figure 5.7: Geographical credit distribution

Interpretation: The above figure shows that SEBL distributes a large portion of credit in Dhaka
division. In Dhaka division the bank distributes 69.61% where Chittagong division gets 25.54%
and Rajshahi division gets 1.51% Dhaka and Chittagong are industrial area thats why these two
division have large distribution.

5.5 Income from Investment:

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Year
Total
Investment
Growth Rate

2009
2615.81

2010
3788.42

2011
3267.90

2012
3208.57

2013
4713.18

48.93%

44.83%

-13.74%

-1.81%

46.89%

Table: Income from Investment

(Annual Report of SEBL, 2009-13)

Figure: Income from Investment

Figure: Growth Rate from Investment

Interpretation: Income from investment has fluctuated over the year.

5.6 Deposit of SEBL as % of total National Deposit:

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Year
National
Deposit (in
Billion)
Total Deposit
(in Billion)
Percentage

2009
3037.8

2010
3858.9

2011
4484.4

2012
5130.3

2013
5628.9

96669.5

107253.2

127178.2

152901.2

177519.5

3.18%

2.78%

2.84%

2.98%

3.15%

Table 6.1: Deposit SEBL as % of total National Deposit

Source: Annual report of SEBL & Bangladesh Bank (2009-2013)

Figure6.1: Deposit SEBL as % of total National Deposit

Interpretation: The above graph shows that deposit of SEBL as percentage of total national
deposit has fluctuated over the years. From 2010 there is an increasing trend in the percentage. In
2010 the percentage was 2.78% and in 2013 the percentage was 3.15%.

6.1 Findings:
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The analysis of credit management of SEBL reveals the following major findings:
Deposit of SEBL has increased over the year. Through the growth rate is decreasing. The

deposit of SEBL as percentage of national deposit has increased from 2010.

Credit to deposit ratio of SEBL has fluctuated over the year. It decreased in 2013.
Growth rate of loan and advance has fluctuated over the year in 2013 it decreased.
Credit of SEBL as percentage of total credit has fluctuated over the years.
Total investment has increased over the years. Income from investment has fluctuated

over the years.

SEBL distributed most of it loan in commercial credit, working capital financing and
industrial sectors. It gives les loan in agriculture sector.
It distributes most of it loan in Dhaka division.
Classified loan as percentage of total loan has decreased in 2013.
6.2 Conclusion:
Despite fierce competition in the banking industry, highly volatile money & foreign
exchange market and intensified political unrest; South East Bank Limited was able to
achieve substantial growth in all business segments in the year 2009 2013. Credit Rating &
Information Services Limited (CRISL) rated the Bank as ST -2 for short term (6 month)
considering its good profitability, best asset quality and diversified product lines. The Bank is
very successful in management of its credit risk. The bank follows its self-developed Credit
Risk Grading Model, by fulfilling the requirement of the guideline of Bangladesh Bank. The
Banks performance regarding to credit recovery is the best compared to its peer group. The
Bank has to try very hard to hold on this competitive advantage, because a banks ultimate
success depends on the selection of appropriate borrower. A few changes in the Credit Risk
Grading system and more consciousness in selecting the potential borrowers will help the
Bank to achieve the goal of becoming a market leader in banking industry.

6.3 Recommendation:

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The findings from the analysis require the following recommendations that may help the
SEBL to improve its credit management and to be a key remember in the banking sector
of Bangladesh.
The deposit mobilization of SEBL is increasing over the years. So the bank
should give more effort to maintain and improve its deposit mobilization rate by
increasing its service quality, developing new saving instruments.
The bank gives very small amount of loan in agriculture sectors and should and
cottage. It should give more loans in this sector. As industries the more stage
sector in the economy of BD.
Bank gives most of its loan in Dhaka division. The bank should diversify its loan
in other division.
Bank should give more loan from its deposit, otherwise cost of liquidity will
increase that will reduce the probability of the bank.
Loan should be given more carefully to lower the classified loan, as bad or loss
percentage of classified loan is in external level.
The borrower should be monitored properly to ensure the proper use.
Loan for specified purpose to avoid moral hazard.

Bibliography
(2009-13). Annual Report of SEBL. dilkusha, Motijheel: juma press.
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federalreserve.gov. (2015, January 29). Retrieved 12 27, 2015, from

federalreserve:
http://www.federalreserve.gov/bankinforeg/topics/credit_risk.htm
wikipedia.org. (2015, January). Retrieved December 27, 2016, from
wikipedia: https://en.wikipedia.org/wiki/Credit_manager
Bangladesh Bank. (2014, June 15). www.bangladeshbank.org.com. Retrieved
12 27, 2015, from www.bangladeshbank:
http://bangladeshbank.org.bd/
Ltd, S. B. (2013-2014). Background of SEBL. Dhaka.
Signoriello, Vincent J. (2011). Maxthon cloud Browser. Retrieved from
Maxthon cloud Browser: https://en.wikipedia.org/wiki/Loan
Southeast Bank Ltd. (2014, May 25). www.southeastbank.com. Retrieved
from southeastbank: https://www.southwestbank.com/

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