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Online management, finance and business courses to suit your learning needs, budget and schedule. The global financial crisis of 2007-09 has become a defining event in history and will cast a long shadow over financial markets for many years to come. The events of the period highlighted many issues, not least of which was some extraordinary mismanagement of credit risk. To help achieve this we offer a highly customer focused approach to all aspects of our business. So it is very important to make sure that all deposits are invested in such projects which strengthen the bank’s financial position.
Consulta nuestras Condiciones de uso y nuestra Politica de privacidad para mas informacion. Consulta nuestra Politica de privacidad y nuestras Condiciones de uso para mas informacion.
The crisis showed how banks can lose billions, or even go out of business, due to their failure to identify, measure, and manage credit risk correctly.This tutorial looks at the structures banks should have in place to manage credit risk, from the creation of a robust control environment with high-level participation to judicious usage of securitization and credit derivatives for more precise risk management. In addition to a bank’s own risk tolerance, regulators concerned with systemic risk require banks to hold credit risk capital so that banks can survive most loss scenarios. The credit risk arises when it assumes that the borrower will default, that is, they will not repay the principal and interest on a timely basis. So that, bank should perform a credit analysis on each loan assessment to fail the capacity of borrower capacity to repay the loan.Bangladesh Bank (BB) evaluates the overall performance of all banks and based on the evaluation it ranked banks into different categories. The bank that does not follow these guidelines properly falls in the rank of ‘marginal’ and ‘unsatisfactory’, means fall in the criteria of a Problem Bank. When bank falls in the criteria of Problem Bank for defaulting on loan, it faces a lot of problems and restrictions in operation.
Agrani Bank Ltd has introduced a credit risk management manual under the guidelines of Bangladesh bank. Introductory View of the report title Agrani Bank Ltd is a state owned scheduled bank in Bangladesh. It has a vital contribution towards lending and investment in economy because Agrani Bank Ltd. We know that The Bangladesh Bank (BB) has placed few banks in the category of problem banks. A problem bank emerged from its past poor management of loan portfolio and operational inefficiency.According to the BB requirement Agrani Bank Ltd has been coordinating their procedure for short term or long term financing. And this is why I named the topic as ‘Credit Risk Management of Agrani Bank Ltd ’  Objectives Of The Study    Preparation and presentation of this report contains few specific objectives.
Data have been collected from office records, discussions with employees and from different paper circulars and annual report of Agrani Bank Ltd.
For the report preparation, concepts and techniques are gathered from bank manuals and relevant books.2. Data collectionData were collected personally from Agrani bank Ltd, head office and Agrani bank training institute. The authority Agrani Bank Ltd rechecked these collected data before entering them into data base system.3. Fieldwork As part of the assignment, I visited Agrani Bank Ltd , Head Office and Agrani bank training institute.
Corrective measures initiated from trial running were incorporated and redrafted the fact sheets accordingly.
For this purpose we have utilized most convenient database platform to safeguard entered data and also to generate different report from the database.LimitationsAgrani Bank Ltd is a public bank.
On the other hand they are not bound and have no accountability to provide all support with my demand. That’s why I can not disclose any numerical information in this report which I have achieved about our clients.OVERVIEW OF AGRANI BANK LIMITEDBackgroundAgrani Bank Ltd is a nationalized commercial bank operating since 1972.
249 working branches together with 37 closed ones) situated in Bangladesh territory of former Habib Bank Limited and Commerce Bank Limited operating in the East Pakistan.

Agrani Bank, as a nationalized commercial bank, has emphasised a lot more on providing services than on extraction profits conventionally.
Keeping this in view the bank’s expansion of network and its activity   have not been kept confined to urban areas only but also have been spread to pastoral vicinities.
This account  provides them an opportunity to save a portion of their current income and entitle to get interest that can be used to meet future contingencies. This is an interest bearing account and Agrani Bank provides 4% interest, based on the’ balance interest may be paid monthly or annual  or other time intervals, which is higher than short-term deposits but lower than fixed deposits posits account. Bank imposes certain restrictions on the numbers and amount of with withdrawals from a savings account. An advance notice of seven days is needed (i) to withdraw money more than twice in a week or (ii) to withdraw money more than 25% of balance amount, otherwise the account holder will not be entitled to any interest of that particular month. Advance can be taken against fixed deposit, One can withdraw the amount of fixed deposit before the maturity of period but the person will be entitled the previous ceiling interest.
However, one has to deposit the amount for a period of minimum 3 months to become eligible for interest. Board of directors implement administrative, business and financial power and internal policy of bank under the power or authority vested upon board by the government.
The following diagram shows the structure of the Board of Directors of the bank:The total number of officer is 6597 and staff is 5534 in 2009.
Most important activities of a bank are deposit collection and disbursement of collected deposit as advance and credit.
It has to meet its operational expenses, to pay for the deposits and as well as to earn profit. Nationalized commercial banks are not able run their business profitably though the private commercial banks are doing well.  If the nationalized bank faces loss for subsequent years, it is not possible for the government to carry on the bank. Further there is a pressure on the government to hand over the nationalized banks to private sector by the donor agencies like World Bank.. In the view of this to sustain their existence nationalized banks need to perform in better ways.
So bank must allow its credit more cautious so that there is minimum number of loan defaulter at the same time bank earns a handsome amount of interest to meet up its expenses.
But banker should not invest its entire money; it has to keep the required money to meet its operational expenses and withdrawal of the depositors. Requirement of the firm against the hypothecation of the goods they traded as the primary security.Cash credit (pledge). Export financing is mainly of two types:i)  Pre shipment financingii) Post shipment financingPre- shipment credit facilities are essentially a short form credit, which is to be liquidated by purchasing of export bill covering the particular shipment. This limits annual growth of its Loans and Advances portfolio to five per cent, and also establishes a maximum funded and non-funded exposure limit to a single client or group to five percent of the Bank’s paid-up capital (BDT248 crore). In connection with loan amounts between BDT1 million and less than BDT5 million, appraisals must be verified and counter-signed by the Head of Credit Processing at the Zone level.
The Bank use the lower of the internal or external valuations. Pricing of Financial AssistanceFunding for project loans may be sourced from either internally-generated funds or from external institutions (both local and foreign). Repayments for medium- and long-term loans shall (depending on the cash flow capability of the project) be made over a period of between three (3) to ten (10) years inclusive of the grace period, provided that the final maturity date is  exceed the maximum period provided for under the terms of external lines of credit when these are used. AuthorizationNo officer or staff, or operating or non-operating unit of the Bank approve or otherwise commit the Bank to any credit, guarantee, or investment without prior written authorization of the Credit Guidelines.
Furthermore, no officer or staff may make or enter into any unauthorized arrangements that would result in the rescheduling, restructuring of existing loan schedules or the postponement of the recovery of the Bank’s loans or investments without similar authorization. Any breach of this policy is treated as a fraudulent and criminal act, and deal with accordingly.DocumentationAll forms of credit, investments or variations thereof, and the security to cover these, require proper documentation in accordance with approved legal forms and formats.
Communications with customers concerning their approved facilities should incorporate all standard as well as special conditions that may be imposed from time to time and, in line with best practice, the customers should signify their written conformity thereto.
No modifications or deletions of approved terms and conditions will be allowed without specific authorization from the Board of Directors or the appropriate committee .For monitoring and verification purposes, loan files for each borrower should incorporate a duly-accomplished checklist of credit documents This checklist is  always  available for inspection by management and auditors.
The structure and reporting lines are diagrammed below: Credit Risk ManagementThis is a specialized middle office unit whose principal tasks are to evaluate the magnitude, direction and distribution of risks in credit operations and portfolios, and to recommend to the MD-CEO (through the Credit Committee) the appropriate structures, processes and procedures to control these.
Annual plans are geared to select those healthy borrowing segments of the economy that are projected to contribute to the Bank’s business growth and profit objectives. The Bank maintain an array of appropriate lending and investment products to meet the needs of these borrowing segments.Product ManualsThe Bank maintain up-to-date manuals on all credit products and services.

Scorecard variations are developed over time, to conform to product-market segmentation. Approval ProceduresAll facilities strictly require the approval of designated authorities at least one level higher than the originating branch stations, zones, and corporate branches.
Exceptions to this requirement involve loans to micro-enterprises or for rural and crop programs. These are retained in a secure manner preferably stored within fire- and burglar-proof premises(e.g. LCs, Letters of Guarantee) that bind the Bank to potential financial and legal obligations, are the final and most critical control stage of the credit and investment process.
They have the obligation to monitor the accounts’ business and performance of credit obligations through client calls (evidenced by call reports) and obtaining periodic financial reports. It conduct portfolio analyses for the purpose of evaluating portfolio performance and detecting any deterioration in the risk exposures.
The adequacy of provisions must be reviewed at least quarterly and the Bank should pursue a loan workout arrangement (e.g. For these types of accounts, the NPL Unit may recommend further accounting  treatments(such  as  additional  loan  loss  provisions)  depending  on  the perceptions concerning the Bank’s security position. Recommend write-off for accounts with no hope of recovery, and blacklist the borrowers to ensure they are never entertained in the future. If this department is efficient, the project is supposed to run successfully and loan amount is supposed to be recovered.
But for this smooth recovery, many other things need to be modified in time of loan sanctioning. As per my concern, I observed there are some limitations in credit operation department and some of them relate to Agrani Bank’s own institutional strength & weakness and some of them relate to the borrowers.
The findings are as follows;In most of the cases, if a client comes to take loan, the questionnaire form filling becomes hard for him and takes a lot of time. So this form should be modified and easy for the person filling it.Duration of time for preparing appraisal report after submitting and managing all the documents and papers, the loan operation department takes almost three months and in some cases, it cross three months and takes 5 or 6 months.
The problem is that within this time period, project that was viable for that time becomes obsolete getting loan and starting business.Lack of proper updated technology.
As far as I know only cash section is computerized. To judge a project accurately, technicians experienced in the particular field should be there.
There are some engineers to judge technical viability but is not sufficient for varieties of proposed project. Political violence, it is a crucial limiting factor.
Since the Agrani bank is 100% government body owned, the government body or the political pressure some time make the department to grant the loan to the project which is not viable and feasible. This creates a lot of problems to recover the loan and the loan deemed to be bad. Recruitment, young persons can work with young power, skill and inspiration.
New generation is being developing themselves with latest technology, education and world of challenge.
This is my observation that the lecture of credit risk management and negative barriers of sanctioning finance should be discussed widely than before.
So if other thing is remaining constant, sanctioning procedure should not be delayed.          Policy should be distinctive and dynamic which has more acceptability to the borrowers.
Policy should be made at the consideration of regional, financial, continental, demographical, economical, psycho graphical.          At last Agrani Bank Ltd should develop the proper environment so that borrowers can bargain or negotiate about loan and finance. Because Agrani Bank Ltd  must have think about borrowers needs, wants and demands and beside his profitability.          Political power should not be considered to maintain credit management module and project finance procedure. I am really glad to be oriented to this sector through the nation’s one of the largest commercial bank “Agrani Bank Ltd”.
It has strong performance on General Banking, Loans &Advances, Industrial credit and foreign exchange. Agrani Bank continues to play its lending role in socio-economic development of the country as a companion of independent Bangladesh.
Since the inception of Agrani Bank, it has been rendering its’ banking services to meet the needs of the state and the nation and to cope up with the demands of mass people of the country giving priority to service.

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