Executive Summary
This internship report is a partial
requirement for the Evening MBA Program (EMBA). As part of the internship
program, we were placed in City Bank Ltd. at Progoti Soroni Branch in Dhaka
during the period of internship. We have landed a lot about commercial Banking
operation of this organization.
Retail Banking is one of the most
vital risks for any commercial bank. Credit risk arises from nonperformance by
a borrower. It may arise from either an inability or an unwillingness to
perform in the pre-commitment contracted manner. The real risk from credit is
the deviation of portfolio performance from its expected value. Different types
of loan providing the corporate
people also business person. Loan may provide as a short term also long term. The
credit risk of a bank also affects the book value of a bank. The more credit of
a particular is in risk, the more probability of a bank to be insolvent.
Therefore, the status of depositor in the bank is at risk and probability of
incurring loss from their deposited value. In other way the risk of a
commercial bank is calculated through long term and short term rating by the
credit rating agencies. Issue in credit
card to the corporate person as a short loan facility.
In our whole report, we have worked on the credit risk of
City Bank Limited. During the preparation of the report, we provide the last
nine years information of City Bank from 2007 to 2016. In the whole report we
have also explained the credit policy and credit risk management of City Bank.
It’s has given 56321.89 (million tk) loan in 2016 and its outstanding balance
at the end of year 2016 was 39724.18 (million tk).
Finally, we like to conclude that City Bank is one of the
most promising and fast growing banks in our country. According to its
operational excellence, it is now competing with some renowned foreign
commercial banks which are operating in our country. Hopefully it may achieve
its target to simplify the banking system in Bangladesh.
Introduction
At
the arena of globalization and technological innovation, banking business has
become more competitive. To cope with this, bankers should have huge
theoretical knowledge and professional skill as well as technical basis. Bank
is one of the most important financial intermediaries. Limited is a place where we could learn the
business dealings. This bank has introduced some modern banking scheme that has
got high market demand. As it maintain the pace with the competitive business
world, its activities, culture, philosophy and style leads an intern to the
best at any field of working life. As an intern of this bank, we have got the
opportunity to acquire the idea about the real banking world.
Risk is the element of uncertainty or
possibility of loss that prevail in any business transaction in any place, in
any mode and at any time. In the financial arena, enterprise risks can be
broadly categorized as Credit Risk, Operational Risk, Market Risk and Other
Risk. Credit risk is the possibility that a borrower or counter party will fail
to meet agreed obligations. Globally, more than 50% of total risk elements in
Banks and Financial Institution (FI) s are credit risk alone. Thus managing
credit risk for efficient management of a FI has gradually become the most
crucial task. Retail Banking
encompasses identification, measurement, matching mitigations, monitoring and
control of the credit risk exposures. As a leading bank of Bangladesh, Limited
has a fully functioning department to perform the crucial task of Credit Risk
Management (CRM).
1.1Objectives of the Study
To make the critical analysis evaluation
of credit assessment risk management of Limited. To find out a way to minimize
the core risk of the bank. To analyze the financial stamens and different parts
of annual report of the bank and find out the relationship among loan and
advances, deposit, liabilities, assets, net profit etc.
1.2Origin of The Report
The report entitled “Retail
Banking of City Bank Ltd” has been prepared as a partial fulfillment of EMBA
degree authorized by the Department of Finance, Jagannath
University.
1.3 Scope and Rationale of the study
Currently,
the financial market is in turmoil with the international financial crisis and
debt crisis interacted with each other. The uncertainty in the economic
recovery is hovering over developed
a. Firstly, a sound banking system is instrumental
to the sustainable development of the real economy.
b. Secondly, a sound banking system needs
regulatory standards which advance with the times.
The
main focus of the study is evaluation of Retail
Banking Activities. The topic is fixed. But the report has to cover
overview of the bank’s objectives, functions, management, business policy, and
other things.
1.4
Methodology of The Study
Sources of Data
To
make the study well-furnished I had to collect information from a variety of
sources that can be categorized into primary & secondary data sources.
Primary data are collected through consulting with officials, observing various
registers, notes taken from day to day working, and notes
Taken
by conversation with customers and so on. Therefore, both primary and secondary
data is used in this report. There are relative tables and figures in this
report to compare the analysis which is based on both primary and secondary
data. Secondary data is emphasized more than the primary data in this report.
1.5 Variables:
a. For the project
paper, the variables are –
b.
Total Deposit collection
c.
Total Loans and Advances
d.
Net profit
e.
Total Liabilities
f.
Interest Rate.
g.
Problems solving attitude.
1.6
Methods of Collecting Data
The techniques of
collecting primary data are not same as the techniques of collecting secondary
Data. The different
methods and tools of collecting primary and secondary data is used in this
Report are described as
follows
1.7
Collecting primary data
Various
types of data and information is collected with help of our practical
experience and queries from the executives while doing my internship at the
Bank. we have collect City Bank’s information regarding the overview of the
bank from various departments and divisions of the bank, their significance and
importance, annual report analysis team and personals, operations and
procedures of doing business, the progress made by these departments in 2016
etc. are collected from these sources.
1.08 Data Analysis
We have taken the methodology of gathering
information & verifying those through applying tally on the information
collected from different internal (annual reports, Journals & other
published documents of the Limited)
& external sources (Annual report of Bangladesh Bank, Newspapers, Internet
Browsing etc.) We have applied the statistical method SPSS (statistical
analysis in social science) for Data Analysis. The abbreviation of SPSS is
Statistical Package for Social Science. By using SPSS We have calculated the
followings:
We have calculated the
followings by using Microsoft excel (office Software):
a. Graphical
presentation of data
b. Ratio Analysis
c. Debt Equity Ratio
d. Earnings per Share
Ratio
e. Market Price Ratio
f. Current Ratio
g. Gross Profit Ratio
Organizational Overview
2.1
Background of the Banking Industry
The
history of banking is as old as the history of many. Generally, to the
necessity for keeping the money safe, the business of banking comes in to
existence. The evolution if money solved the problem of ‘Barter System’.
Earlier there are two groups of people. One group felt the need of honest and
faithful person to keep their surplus money safe and the other group owing to
transaction felt the need of some person who could provide money. As a result
based on two groups a kind of businessman came in to picture. They used to keep
the money as deposit for security and give loans to the needy people. This is
how the banking sector has developed.
Bank’
was established according to the order of Bangladesh Bank and this order
effective from 16th December 1971. Bangladesh Bank was given the duty to act as
the Central Bank of Bangladesh.
2.2 Overview of City bank limited
City Bank
Limited is one of the largest and oldest private-sector commercial banks in
Bangladesh, with years of experience. Adaptation of modern technology both in
terms of equipment and banking practice ensures efficient service to clients.
211 branches at home and 600 affiliates worldwide create efficient networking
and reach capability. City Bank Limited is a bank that serves both clients and
country. It operates through 211 fully computerized branches ensuring
best possible and fastest services to its valued clients.
a. The bank has more than 600 foreign
correspondents worldwide.
b. Total number of employees nearly 3,562.
c. The Board of Directors consists of 13
members.
d. The bank is headed by the Managing Director who
is the Chief Executive Officer.
2.3 History
of City bank limited
City bank
Limited was initially introduced as Eastern Banking Corporation in the year of
1965. Its head office was situated in Dhaka. In the year of 1972 the bank was
introduced as a nationalized bank (Order No.26 of 1972) named as City Bank
Limited. After that it was functioned its activities as a nationalized bank
like other six nationalized bank of Bangladesh. As a part of government policy
the bank was functioned its activities and contributes in the national economy.
In the year of 1983- 1985 the bank was privatized. In this regard City Bank
Limited was formed as a private Bank in 1985. Since then the bank has been
taking various steps that are very much effective in the context of the economy
of Bangladesh. Then the bank has taken significant steps and contributed highly
in the national economy. According to the rules and regulation of Bangladesh
bank, City Bank Limited has taken all kinds of commercial Banking activities
and made itself as a successful commercial bank of Bangladesh. The main motive
is to capture the competitive environment of banking sector and gain profit.
Corporate information, 2015
Registered
name of the company
|
City
Bank Limited
|
Established
|
1965
|
Nationalized
|
1972
|
Legal
Form
|
As
per company act, 1994
|
Registered
Office
|
City
Bank Bhaban
47, Bir Uttom Shahid Ashfaq-us-samad Road, P.O. Box No. 217 & 818, Dhaka-1000, Bangladesh. |
Authorized
capital
|
5,000 ( in millions)
|
Paid
up capital
|
2,396 ( in millions)
|
Number
of Branches
|
211
|
Deposit
|
65,868 ( in millions)
|
Investment
|
18,591.1 ( in millions)
|
2.4
Vision
of the Cbl
a.
To be the leading commercial bank in the country & contribute maximum to
the welfare for the people of the country.
b.
Prime objective is to deliver a quality that demonstrates a true reflection of
their vision.
c.
Excellence in banking.
d.
Creation of Capital
2.5 Mission of CBL
a.
To be the most caring and customer friendly provider of financial services,
creating opportunities for more people in more places.
b.
To improving productivity and profitability, and thereby enhancing shareholder
value.
c.
To ensure stability
and sound growth
while enhancing the
value of shareholders investment.
2.6 Goal of CBL
Short term goal
Increase
financial services day by day. Earn satisfactory profit by giving services to
the customer
Long term goal
Maximize
the wealth of shareholders and want to be a leading bank in the Banking sector
of Bangladesh.
2.7
IN The City Bank issue four types of credit card. Such as:
1. The American Express Platinum Credit Card
2. The American Express Gold
Credit Card
3. The American Express Credit
Card
4.
The Agora American Express Card issued by City Bank
Comment
3.8.
Interest income from
loan & advances
Year
Interest Income
from Loan & Advances (million tk.)
2014
216.42
2015
309.12
2016
330.99
Comment:
3.9.
Division-wise loans and
advances
Division
2014
(million)
2015
(million)
2016
(million)
Dhaka
25432.03
25680.82
32188.70
Chittagong
5040.42
5839.60
5598.17
Sylhet
468.34
712.59
1131.33
Rajshahi
2485.78
3186.10
4350.57
khulna
2738.04
2800.74
371.79
Comment
3.10.
Growth of loan &advances
Year
Growth rate [%]
2007
8.43
2008
-5.16
2009
-18.10
2010
-0.98
2011
14.87
2012
15.16
2013
8.42
2014
30.42
2015
6.21
2016
23.37
Comment
Year
Loans to deposit ratio
2006
86%
2007
85%
2008
79%
2009
60%
2010
54%
2011
59%
2012
64%
2013
65%
2014
73%
2015
66%
2016
74%
Year
Interest Income
from Loan & Advances (million tk.)
2014
216.42
2015
309.12
2016
330.99
Division
2014
(million)
2015
(million)
2016
(million)
Dhaka
25432.03
25680.82
32188.70
Chittagong
5040.42
5839.60
5598.17
Sylhet
468.34
712.59
1131.33
Rajshahi
2485.78
3186.10
4350.57
khulna
Barisal
2738.04
976.71
2800.74
1231.48
371.79
1685.90
Year
|
Growth rate [%]
|
2007
|
8.43
|
2008
|
-5.16
|
2009
|
-18.10
|
2010
|
-0.98
|
2011
|
14.87
|
2012
|
15.16
|
2013
|
8.42
|
2014
|
30.42
|
2015
|
6.21
|
2016
|
23.37
|
Year
|
Loans to deposit ratio
|
2006
|
86%
|
2007
|
85%
|
2008
|
79%
|
2009
|
60%
|
2010
|
54%
|
2011
|
59%
|
2012
|
64%
|
2013
|
65%
|
2014
|
73%
|
2015
|
66%
|
2016
|
74%
|
Comment
It is observable that loans and advances
never exceeded from deposit. For non-Islamic bank Bangladesh bank rules is that
eighty percent of total deposit can provide loans and advances .Loans to
deposit ratio of CBL is volatile, which is shown 2006-2016.
3.13. Concentration of loans and advances in total
assets
Table shows the
concentration of loans and advances in total assets of City Bank. The high concentration of loans and
advances indicates vulnerability of assets to credit risk. Here it is noticeable
that ratio of total loans and advances to total assets is increasing from year
to year.
Table-10: Total Loan & advances-Total Assets Ratio
Year
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
Ratio
(%)
|
70.99
|
67.34
|
62.04
|
48.41
|
46.85
|
51.95
|
55.65
|
53.87
|
63.55
|
54.83
|
59.76
|
Comment
Decrease loan & advance to total asset
ratio City Bank because of volatile financial situation of Bangladesh &
beyond of Bangladesh .From the above figure it can be concluded that the ratio
of total loans and advances of City Bank is higher. Here the lowest ratio is
46.85 % in 2010. So, City Bank should care their total loans to assets ratio
3.14 Classified Loans
Every Bank has to
send a monthly CIB Report to the Bangladesh Bank for amounts due up to TK.50,
000 mentioning the name of the borrower and the purpose for which loan has been
sanctioned and a monthly statement for the amount due more TK.1 crore.
Bangladesh Bank provides CL (Classification Form) to every bank for preparing
this report. According to Bangladesh Bank there are four types of loan .Status of loans and advances is one of the
criterions of judging the performance of a bank. In case of classified or
unsound loan City Bank's performance has not been so quite impressive as the
table discloses. With the increase of loan disbursement the amount of
classified loan, especially substandard loan, has increased quite fast in 2012.
In 2014 bad/loss loan also increased more than 11 folds from previous year.If
any borrower fails to repay his amount or installment within the following time
period then it will fall under the following classification status:
Classification
|
Types of loan
|
|||
Continuous loan (C/C; O/D.)
|
Demand loan (LIM; PAD;
|
Term loan up to 5 years
|
Term loan above 5 years
|
|
Special Mention A/c
|
3 Months or more
|
3 Months or more
|
3 Months or more
|
9 Months or more
|
Unclassified
|
Less than 3 months
|
Less than 3 months
|
Less than 3 months
|
Less than 3 months
|
Substandard
|
6 months or more but less than 9 months
|
6 months or more but less than 9 months
|
6 months or more but less than 12 months
|
12 months or more; less than 18 months
|
Doubtful
|
9 months or more but less than 12 months
|
9 months or more but less than 12 months
|
12 months or more
|
18 months or more
|
Bad loan
|
12 months or more
|
12 months or more
|
18 months or more
|
24 months or more
|
Table-11 :
Classification of Unsound Loan/Loan
Year
|
Substandard
|
Doubtful
|
Bad/loss
|
Total Classified Loan
|
2014
|
157805000
|
146381000
|
2329660000
|
2633846000
|
2015
|
170377000
|
173986000
|
2497632000
|
2841995000
|
2016
|
228883000
|
318556000
|
2131240000
|
2678679000
|
Year
|
Ratio (%) of Classified Loan Against Total Loan and
Advances
|
2008
|
32.13 %
|
2009
|
27.06%
|
2010
|
22.14%
|
2011
|
16.15%
|
2012
|
15.04%
|
2013
|
12.39%
|
2014
|
7.09%
|
Table-12: Ratio (%) of Classified Loan against Total Loan
and Advance
3.15
Regression Analysis:
Regression:
Regression
is a statistical technique to determine the linear relationship between two or
more variables.
Regression
shows the relationship between one independent variable (X) and a dependent
variable (Y), as in the formula below:
y
= a + bx
Multiple Regressions:
Multiple
linear regressions are the most common form of linear regression
analysis. As a predictive analysis, the multiple linear regressions are
used to explain the relationship between one continuous dependent variable and
two or more independent variables.
The
equation that describes a multiple regression relationship is:
y = a + b1x1 +
b2x2 + b3x3 + … bnxn
+ e
Year
|
Dependent Variable
|
Independent Variables
|
|||
Net interset income (Y)
|
House Building loan (X1)
|
Lease Finance (X2)
|
Hire purchase shirkatul melk(X3)
|
Over Draft (X4)
|
|
2007
|
3296
|
98
|
80
|
87
|
256
|
2008
|
3520
|
85
|
67
|
65
|
286
|
2009
|
3789
|
104
|
78
|
127
|
351
|
2010
|
4,227
|
122
|
87
|
29
|
355
|
2011
|
4,321
|
103
|
108
|
1,660
|
348
|
2012
|
4770
|
536
|
111
|
1,536
|
360
|
2013
|
5,019
|
236
|
80
|
1,213
|
352
|
2014
|
5,122
|
642
|
53
|
1,108
|
366
|
2015
|
5,506
|
416
|
106
|
1,129
|
378
|
2016
|
6,477
|
589
|
89
|
1,207
|
382
|
SUMMARY OUTPUT
|
||||||||
Regression Statistics
|
||||||||
Multiple R
|
0.899787
|
|||||||
R Square
|
0.809617
|
|||||||
Adjusted R Square
|
0.657311
|
|||||||
Standard Error
|
570.9808
|
|||||||
Observations
|
10
|
|||||||
ANOVA
|
||||||||
df
|
SS
|
MS
|
F
|
Significance F
|
||||
Regression
|
4
|
6932100
|
1733025
|
5.315716
|
0.047825
|
|||
Residual
|
5
|
1630096
|
326019.1
|
|||||
Total
|
9
|
8562196
|
||||||
Coefficients
|
Standard Error
|
t Stat
|
P-value
|
Lower 95%
|
Upper 95%
|
Lower 95.0%
|
Upper 95.0%
|
|
Intercept
|
68.62487
|
2086.569
|
0.032889
|
0.975036
|
-5295.07
|
5432.322
|
-5295.07
|
5432.322
|
House Building loan (X1)
|
1.998175
|
1.285963
|
1.553835
|
0.180937
|
-1.3075
|
5.303849
|
-1.3075
|
5.303849
|
Lease Finance (X2)
|
1.557765
|
13.34063
|
0.116769
|
0.911589
|
-32.7354
|
35.85094
|
-32.7354
|
35.85094
|
Hire purchase shirkatul melk(X3)
|
0.147554
|
0.464727
|
0.317506
|
0.76369
|
-1.04706
|
1.342172
|
-1.04706
|
1.342172
|
Over Draft (X4)
|
10.76348
|
6.6325
|
1.622839
|
0.165551
|
-6.2859
|
27.81287
|
-6.2859
|
27.81287
|
RESIDUAL OUTPUT
|
||||||||
Observation
|
Predicted Net interest income (Y)
|
Residuals
|
||||||
1
|
3157.356
|
138.6444
|
||||||
2
|
3430.787
|
89.21338
|
||||||
3
|
4194.662
|
-405.662
|
||||||
4
|
4273.243
|
-46.2427
|
||||||
5
|
4433.306
|
-112.306
|
||||||
6
|
5414.054
|
-644.054
|
||||||
7
|
4632.543
|
386.4566
|
||||||
8
|
5536.938
|
-414.938
|
||||||
9
|
5300.173
|
205.8272
|
||||||
10
|
5673.938
|
803.0618
|
||||||
Comments:
R
Square equals 0.809617 this
value is generally considered a Moderate effect. The closer to 1, the
better the regression line fits the data.
Multiple
R is the Square root of R2. Multiple R square 0.899787 implies
that there is a strong positive relationship among the variables.
¢ The
Analysis of Variance table is also known as the ANOVA table (for Analysis Of
Variance). It tells the story of how the regression equation accounts for
variability in the response variable.
¢ The
column labeled Source has three rows: Regression, Residual, and Total. The
column labeled Sum of Squares describes the variability in the response
variable, Y.
¢ df=
n-1=10-1=9
¢ The
column labeled significance F has the associated P-value.
¢ At
Significance level 0.05, the model is significant since 0.047825<
0.05
Significance level:
Elements
|
P-value
|
P-value
|
House Building loan (X1)
|
0.180937
|
Significant
|
Lease Finance (X2)
|
0.911589
|
Insignificant
|
Hire purchase shirkatul melk(X3)
|
0.76369
|
Insignificant
|
Over Draft (X4)
|
0.165551
|
Significant
|
Loan Policy
4.1
Policy of Loan of
Recovery
Loan recovery is an important function of
City Bank like loan disbursement. Basically, success of the bank depends on the
performance of loan recovery. For these reason City Bank follows some rules and
regulation of loan recovery. These are –
Ø General Policy
Ø Statutory policy
General
Policy
At first City Bank pursues general policy to
recover loan. It is an easy and simple way of credit collection. The general
policies are:
a. To inspire with courage pay back of the
installment money in due time.
b. To provide reward for those lenders who
clear off his installment money in due time.
c. To provide
punishment for those borrowers who do not pay back the installment money in
time.
d. To supervise
credit.
Statutory
Policy
When City Bank cannot recover its disbursed
loan through general policies then City Bank follows statutory rules and
regulation to recover disbursed loan. It is a complex system of loan recovery.
4.2 Loan
Recovery Procedure
Demand Notice
Demand Notice is issued before one month of
being due of outstanding loan or installment through field supervisor of mail.
Legal Notice
If the borrower do not repay their respective
loans and interest after maturity in spite of receiving the demand notice by
the bank sends legal notice by registered mail with acknowledgement.
Special
Notice
Besides the aforesaid two notices, a special
notice signed by DC, TNO is sent to respective borrower to keep mental pressure
on him for paying the loan.
Field
Recovery
Loan officer recovers the recovered loan
through L.O. receipts by visiting the spot and houses of the borrower.
Loan
Recovery Camp
During the harvesting period, loan recovery
camp can be set up on the spot for recovering loan.
Case
Filing
If all the procedure except legal action of
recovering loan fails, then certificate case filed against
Borrower. If the borrower is in the following
category then case has to be field with priority. Unwilling to repay loan
although he is financially solvent. Every effort of loan recovery becomes
failure. Detrimental to the interest of bank loan.
4.3.
Cause of Poor Recovery
of Loan
4.3.1 Error in selecting
appropriate
Loan recovery mainly depends upon selecting
appropriate loan. If the bank sanctions loan an in appropriate party it is
impossible to recover the loan during its recovery period. His appropriate loan
means the party will be honest, socially acceptable and able to repay the loan.
But in case of selecting loan this procedure is no fully maintained by the
branch. So, a large number of loan becomes defaulter in every year.
4.3.2 Granting
consumer loans are not appropriate
Historically, most banks did not actively
pursue loan account from individual and families, believing that the relatively
small size of most consumer loan and their relatively high default rate would
make such lending unprofitable.
4.3.3
Lack of intensive inspection
It is the major cause of poor recovery. If
the bank properly supervise the loan utilization and other considerable factor,
then recovery position must be satisfactory. But because of dishonesty or
misuse of job duties bank failed to inspect the disbursed loan. As a result a
huge amount of loan is not recovered every year.
4.3.4 Influence
of local prominent
Many local elite’s misguides loaned not to
pay loan. It is one of the most important barriers to recover loan timely.
4.3.5
Lack of public awareness
Most of the in our country are not aware of
social and economic condition of country. They do not try to understand that if
they do not repay the loan to bank timely then the bank cannot play significant
role in the economy.
4.3.6
Political
situation
Sometimes
political situation create great barrier to recover the loan. Such as some time
government takes decision to exempt loan and much political leader default a
large number of loans by miss use of their power.
4.3.7
Cause of Poor Recovery of Loan
a. To meet with the borrower and to inspire
him to repay at least 2 days in a week.
b. If the borrower does not come to repay
then the bank should take the help of administration.
c. Bank should try to convince the borrower
that the legal action or try rule of law will go against him.
Findings,
Recommendations and Conclusion
5.1
FINDINGS
The loan and advance department takes a long
time to process a loan because the of sanctioning loan is done manually. Since
loan and advance department is not fully automated there is a high risk of losing
documents of disbursed loan.
a)
The banks
do not provide more loan in the small and cottage industry and the
agricultural, fishing and forestry also.
b) Online banking facilities, ATM services and
mobile banking facility are not available.
c)
Absence
of some concept of fist generation banking such as E-Cash, Debit/Credit Card,
Special Scheme for Fixed Deposit etc.
d)
Political
pressure is another limitation to recovery of loan. Due to various above
mentioned problems, the recovery of disburse loan become impossible. As a
result most of the disbursed loan remains unpaid
e)
Lack of
technological resources as well as Internet banking
f)
Lack of
Technical Knowledge of the staff about modern banking business
g)
Week
Salary Structure compare to other bank of same category
h) The lack of necessary rules, which are
required to collects loans
i)
City
bank limited does not update its Websites regularly; as a result the clients
are unable to gather information.
j)
Lack of
attention of CBL for customer’s needs.
k)
Lack of
effective management information system (MIS)
5.2 RECOMMENDATIONS
The failure
of commendable banks occurs mainly due
to bad loans, which occurs due to inefficient management of the loans and
advances portfolio. Based on the evaluation of different
aspects of CBL, the following recommendations have been proposed:
a)
The bank should emphasize on
reducing the classified and non-performing credits by concerted efforts
b)
In the credit department, strict supervision is necessary to avoid loan
defaulters. Bank official should do regular visit to the projects.
c) CBL
need to avoid nepotism.
d) Politically influenced lending or project finance should be
checked.
e) The
average number of days required for sanctioning and disbursement of credit
against specific loan proposal should be reduced.
f) Strict
Supervision must be adapted in case of high risk borrowers. Time to time visit
to the projects should be done by the bank officers.
g) Credit
officers must be skilled enough to understand the manipulated and distorted
financial statements.
h)
Central monitoring system should be more active to maintain classified
loan to a minimum level.
i)
Care should also be taken so that good
borrowers are not discarded due to strict adherence to the lending policy.
j)
Manager of the branch should monitor the
activities of the officers so that the clients get efficient service.
k) CBL
need to maintain the ISG negative as the bank rate is decreasing.
l)
Maintain the SLR properly. Two year the
bank is failed to maintain the minimum SLR.
m) Make
sure the stability of the loan collection.
n) An uninterrupted network system has to be ensured. It will save
the officials from much hassle and will save time.
o) Filing is a very important component of proper documentation. It
has to be dealt with importance.
p) Salary scale should be increased to motivate extremely
dissatisfied employees and to reduce misconduct.
q) Vaults security should be increased.
r) To attract more credit clients should seek new marketing strategy.
s) CBL
should conduct close monitoring during validity/repayment period of loan.
t) Gear
up persuasion right from initial stage of its default/non-payment of
installments.
u)
Understanding reasons of non-payment to
obviate the problem.
5.3 CONCLUSION
We have focused and analyzed on Credit Risk
Management in City Bank Limited. The banking sector in any country plays an
important role in economic activities. Bangladesh is no exception of that as
its financial development and economic development are closely related. That is
why the private commercial banks are playing significant role in this regard. This
report focused and analyzed on Credit Risk Management in CBL. In the past
decade there has been a revolution in the communication media through the
introduction of internet and other
forms of secure dial-up media. This had an immense impact on all the sectors of
the industry specially the banking sector. Traditionally in order to execute
banking transaction a customer would require coming at the bank. City Bank Ltd. is much different
in any terms. Its activities are vast and in cases unique to any other bank.
Its deposits and loans are huge compared to other banks. It finances government
projects, provides unique services to people in need, even in places it works
as central bank. This Bank often makes decision for the welfare of general
public despite risk of credit exposure. The bank has established a sound credit
risk management and credit risk mitigation policy. Compliance with Basel II
norms helps the Bank to improve their profitability through better credit risk
management systems In recent years; the bank has been exposed to credit risk
due large scale loan defaults. Top managements malpractice and mismanagement
caused less return on investment. Recovery from top 20 loan defaulters in
2014 was only 37 percent. As for non-performing loans recovery, City Bank Ltd.
Achieved 50 percent of the target. (The Daily Star, March 27, 2014)
So CBL can focus on their strengths to
materialize the opportunities hidden for them in the banking industry and also
they can work on their weakness to develop the product effectively and grab
more opportunity hidden in the banking industry. With their strengths CBL can
also reduce the threats existing in the market. They have strengths with their
solid brand image and experience and skills as well, with which they are being
CBL to satisfy the customers with their wide range of products and services.
BIBLIOGRAPHY
Ø Kapoor, V.K. (1999)
General Banking, Sultan Chand & Sons. New Delhi, India
Ø L.R. Chowdhury, A
Textbook on Banker’s Advances, Fair Corporation, Second Edition 2002
Ø L.R. Suneja,
Bankers Securities against advances
Ø Pandey, I. M.
(1997) Financial Management, Vikas Publication House Pvt. Ltd. New Delhi, India
Ø Gupta, S.P. and
M.P. Gupta (1994) Business Statistics: Sultan Chand & Sons, New Delhi,
India
Ø Philip Kotler,
Marketing Management, Millennium ed. Prentice Hall, India 2005.
Ø Instruction Circular of City bank.
Ø Annual Report of City Bank ltd.
Ø Bangladesh Bank
Circular & CBL circular
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